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| Bernie Madoff in better times |
But the bankers, those guys the US taxpayer bailed out, are going along as they always have, conniving and looting the wealth of society created by others, namely us. This plunder becomes so blatant at times, and more importantly involves renegade capitalists stealing from their own kind (there is supposed to be honor among thieves) that they have to curb it a little.
We all remember Bernie Madoff, the Ponzi scheme guy that made off with $50 billion dollars of rich peoples’ money. He is serving a 150-year sentence for presiding over a $19 billion fraud. Some 60 lawsuits have been filed by the trustee charged with recovering money for Madoff’s victims seeking, “$40bn from dozens of banks, hedge funds and individuals” the Financial Times reports. (1)
The numbers are staggering. Now it turns out that one of the oldest and most prestigious of the US moneylenders JP Morgan, knew all about Madoff’s shaky deals and said nothing about it according to a lawsuit filed against that company. The suit is attempting to recoup $1 billion in “fees and profits” that JP Morgan made as Madoff’s banker along with $5 billion in damages.
It’s incredible when you think about it. Apparently, the bankers “ignored billions of dollars in suspicious transfers” says the Times. The Wall Street Journal reporting on the issue says that JP Morgan bankers discussed the possibility that Madoff was operating a Ponzi scheme and that his returns were “too good to be true”. (2)
It’s almost hard to believe that with the flow of such vast amounts of cash, or alleged cash I suppose, there were no serious checks; even the one’s Bernie was writing. The financial world calls these checks on activity, “diligence.” “The bank didn’t pay attention to billions of dollars passing through the Madoff firm’s main JP Morgan account”, the WSJ article points out adding that, “much of it by handwritten check.”
An attorney for the trustee describes the situation, “They had legally, (JP Morgan) an obligation to make an inquiry and they didn’t,,” he says, “You’re literally seeing millions of dollars going in and out on a daily basis and not one phone call is made.” (3)
Naturally, JP Morgan denies having any knowledge of Madoff’s dealings.
Along with this, whistleblowers have come forward detailing how banks swindled public pension funds out of millions of dollars by overcharging them for the fees on foreign exchange transactions. The Forex market as it is called is a $4 trillion a day international currency exchange market. If, for instance, a manufacturer buys commodities from another country with a different currency it can pay in that country’s currency even though its income is in US dollars. The FOREX exchange also deals with investment and trading of currencies. (4) A huge percentage of the activity there is simply speculation on currencies, buying one currency and investing in another---gambling. This activity can bring down governments, squash economies and create untold misery for millions of people.
What the banks have been accused of doing is when an agency like California’s CALPERS invests our pension money in the global stock market it has to convert our currency in to the currency of the country in which it is investing. The Wall Street Journal describes how the banks skim money off the top according to lawsuits filed, “The banks didn’t charge them (the pension funds) the currency rates that the banks paid but, consistently charged them the highest currency conversion prices of the day and pocketed the difference.” (5) Naturally the banks deny any wrongdoing. Much of the billions of dollars these characters rake in is through fees of some sort or another.
The point of all this is not just to make us angry. It’s important for me to remind myself and other workers that there is absolutely no need for the lowering of living standards, cuts in jobs, wages, and social services from health care to education that politicians like Jerry Brown here in California are advocating. We have to overcome what Christopher Hill, the English historian called the “Stop in the mind” and raise our expectations.
In fact, there is plenty of wealth around for everyone in the world to have a decent place to live, medical care and basic necessities like clean drinking water; this is not Utopian. The annual UN fact book gives the cost of such measures and it is minimal compared to the theft and the waste of resources that is an inherent part of the capitalist economy.
Just taxing trades on the exchanges like the FOREX would bring in billions of dollars. When you buy a car or a pack of cigarettes you pay a consumption tax. But when a trader buys shares or speculates with currencies on the FOREX, these purchases are not taxed. The Tobin Tax is a controversial (for speculators and Wall Street) tax measure that the so-called friends of Labor like Jerry Brown never raise.
While supporting the demand to tax the rich, as long capitalists are the actual owners of the banks and finance system, and more importantly the owners of the capital, the accumulated surplus value that has its source in the unpaid Labor of the working class, this kind of fraudulent economics will continue and the misapplication of capital, of society’s resources will continue.
As the revolutionary Arab masses who have risen up against the dictators and their US backers will learn, the only solution is for the working class to first recognize that we can govern society, that we can manage it in a more efficient and humane way. The struggle for state power, for the possession of all the organs of society that enable it to function including the financial structures and the capital in them is the only long-term solution to these crises.
(1) JP Morgan risk officer warned on Madoff: Financial Times 2-04-11
(2) JP Morgan Abetted Madoff: WSJ 2-04-11
(3) Ibid
(4) Read more about FOREX here
(5) States Widen Currency---Trade Probes: WSJ2-03-11
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