Financial expert Zubi Diamond, author of Wizards of Wall Street, says that Republican proposals to fix the economy are deficient because they fail to protect invested capital in the stock market from the hedge fund short sellers.
Republican Representatives Paul Ryan and John Boehner, who voted for the $700 billion big bank bailouts that began under President Bush, have put forward much-publicized proposals to solve the economic crisis.
But Diamond says he has had no luck in getting Boehner—or other top Republicans—to pay any attention to his detailed and specific plan to save the economy by reinstating the safeguard regulations that protect invested capital and shareholder rights.
He argues that, until and unless the hedge fund short sellers are prohibited from looting the publicly traded companies, real economic growth cannot take place. It is this capital, he notes, that funds the loans for borrowers, the day-to-day operations of the corporations, their payrolls and the funds they needed for growth and expansion. “This is the money needed for job creation and employment,” he asserts.
Diamond predicts that the current crisis—and the failure of Congressional Republicans to offer a viable alternative—will give President Obama the excuse he needs to nationalize the banks and further the process of socializing the U.S. economy.
According to a story in the New York Times, small investors have fled the market to the tune of $33.12 billion in the first seven months of this year. “One of the phenomena of the last several decades has been the rise of the individual investor,” noted the Times. “As Americans have become more responsible for their own retirement, they have poured money into stocks with such faith that half of the country’s households now own shares directly or through mutual funds, which are by far the most popular way Americans invest in stocks. So the turnabout is striking.”
The hedge fund short sellers are represented by the Managed Funds Association (MFA), considered the most powerful special interest group in Washington, D.C. Its president is Richard F. Baker, a former Republican member of Congress. Another hedge fund operator, Paul Singer of Elliott Management, a member of the MFA, is a major contributor to the Republican Party and gay rights causes.
Special Interest Politics
The MFA spent $980,000 on lobbying federal officials and members of Congress in the second quarter of this year. The MFA spent $1.37 million on lobbying in the first quarter. Member of the MFA also raise money for members of Congress.
Their mission is to maintain secrecy over their operations and remain free from federal regulation. “Unlike mutual funds,” notes the Associated Press, “hedge funds don’t have to register with the SEC [Securities and Exchange Commission] and thus don’t have to disclose who runs them, how much money they manage and what securities they buy.”
Ryan’s economic “Roadmap for America’s Future” has received rave reviews in the conservative press but contains no proposals to reform Wall Street and regulate the hedge fund short sellers. It proposes tax cuts, spending freezes and reductions, and private Social Security accounts.
House Republican Leader John Boehner’s August 24 remarks to the City Club of Cleveland on jobs and the economy were noteworthy for the call to fire President Obama’s economic team. He recommended Ryan’s proposal and called for tax cuts, spending reductions, and more free trade agreements. But his speech failed to include proposals for reform of Wall Street.
Alluding to Republican distaste for federal regulation, Diamond said, “Proponents of deregulation should have the common sense to differentiate between good necessary regulations that are required to protect property ownership, the value of our homes, and investor capital, from bad unnecessary regulations which hamper free market capitalism and business freedom.”
Republicans, however, have continued hammering Obama over the scheduled termination of the Bush tax cuts.
“Tax cuts are good but they will not solve the economic crisis or create jobs in the private sector,” Diamond argues. “What is needed is legal protection for the invested capital, and the protection of the value of our homes.”
As such, Ryan’s much-ballyhooed budget proposal for personal investment accounts for future retirees, in order to provide “additional capital stock for the U.S. economy,” does not provide any real security or capital. Ryan calls for the government to “guarantee” those contributions, putting the taxpayers on the hook for the depletion of those accounts if and when the hedge fund short sellers loot the economy.
Without safeguards, the “additional capital stock” will be ripe for the picking, and the government will be on the hook for these losses as well, producing even more debt, Diamond says.
The Ryan proposal is not new. Some conservative columnists and commentators have long noted that Social Security is going broke but then argue that letting people invest some of their Social Security taxes in private accounts will help save the system and produce more benefits in the long run.
Diamond notes that the assumption behind such a scenario is that the stock market continues to inspire confidence in people. But the exodus of small investors from the market means that ordinary Americans have seen the volatility in the market, brought on by hedge fund short sellers who use computerized programs to devastate companies and entire sectors of the economy, and want out.
The “flash crash” on May 6, 2010, went beyond anything that should rationally be expected in trading activities and was a wake-up call to ordinary investors.
The hedge fund short sellers discovered on this day through “price discovery” that no one stepped up to buy Accenture (ticker symbol ACN) until the stock price dropped as low as one cent from $44.
Zubi Diamond asks, “How would like your home and bank account to be subjected to price discovery and have your whole net worth sold for one cent because no one stepped up immediately at that very moment to put a bid on your net worth as they manipulated the price downward through unrestricted short selling.”
On the other hand, he asks, “How would you like to be the person who paid $44 per share and then the computerized hedge fund short selling kicked in, drove down your share price to one cent in the name of price discovery, forced you into liquidation and they walk away with your invested capital? That is the reality and evil of unrestricted computerized hedge fund short selling.”
Until the Congress fixes the problem, he argues, there will be no investor confidence and people will have no faith in private accounts of any kind.
Diamond says. “If you want to speculate on the direction of the price of a stock which you do not own, it is allowed in America, but with some rules and regulations to ensure that you do not manipulate the stock prices causing it to move in one direction or the other to suit your purpose.”
Members of MFA lobbied the SEC to remove those rules and regulations by claiming that short selling is useful for price discovery—that is, the price for a specific commodity or security through basic supply and demand factors—even if it is unrestricted.
Diamond says that Republicans have to get beyond the Bush-era playbook of tax cuts and deregulation and understand that it was the Bush Administration that began the process under SEC chairman Christopher Cox that opened up the market to blatant manipulation by the hedge fund short sellers. Only when regulations such as the uptick rule are brought back, and mark to market accounting is completely ended and replaced with book value cost accounting, can there be any hope of restoring confidence in the system. Only then is real economic growth possible.
Diamond says, “The countries that restrict short selling will see their economy grow and expand. The countries that have unrestricted short selling will slide into a depression with no hope of recovery until short selling is either restricted or banned.”
He notes, “India banned short selling. Their economy is growing, expanding, and over-heating. China banned short selling. Their economy is growing, over-heating, and expanding. Australia has a short sale restriction regulation. Their economy is growing, expanding and over-heating.”
He notes that Germany in mid-May 2010 banned naked short selling and just three months later their economy registered a record GDP growth expansion.
To make matters worse, Diamond notes that the Financial Accounting Standards Board (FASB) is proposing to impose mark-to-market accounting on bank loans. It previously did this to bank assets with disastrous results.
“They want the banks to use mark-to-market accounting on their outstanding loans, forcing them to lower the value of the outstanding loans to what someone will be willing to pay for that loan today instead of using the book value of the loan. This will cause a lending freeze and whatever life that is left in this economy will come to a halt. It will devalue the banks and plunge us not only into a double dip recession but a depression.”
“The enemies of capitalism are at it again,” he says.
Public TV Hijacked by Propagandists
By Jerry Kenney*
Imagine the shock that some viewers must have felt when they first clicked on their public TV station’s new digital sub-channels expecting to see more shows like Big Bird or Mr. Rodger’s Neighborhood, only to find programming more attuned to the views of Osama bin Laden and Vladimir Putin.
About thirty non-commercial TV stations around the U.S. are airing “MHz Network Worldview,” which includes programs from Al Jazeera English, the Kremlin’s “Russia Today” and other foreign state-controlled instruments of propaganda. MHz Worldview is also available in the Washington, D.C. area.
MHz Networks’ slogan is “Many voices. One world.” A non-profit entity, it is designed for “globally-minded people.”
One of the controversial programs broadcast on MHz1 WNVC-DT every Sunday is titled, “Living Islam in America,” described as “a thirty minute discussion-magazine formatted television series with a primary goal of educating the general population about the faith & culture of Islam and the burgeoning Muslim communities throughout America.”
The host, Johari Abdul Malik, is described by his supporters as an advocate of non-violence. However, the Investigative Project on Terrorism says that he supports radical and political Islamic causes. It reports, “At a 2001 conference hosted by the Islamic Association of Palestine, a now defunct propaganda branch of the Specially Designated Terrorist organization Hamas, he called for attacks against Israeli infrastructure to show Muslim displeasure with Israel’s treatment of Palestinians.”
Abdul-Malik said, “I am gonna teach you now. You can blow up bridges, but you cannot kill people who are innocent on their way to work. You can blow up power supplies… the water supply, you can do all forms of sabotage and let the world know that we are doing it like this because they have a respect for the lives of innocent people.”
Abdul-Malik has also been quoted as saying, “before Allah closes our eyes for the last time you will see Islam move from being the second largest religion in America—that’s where we are now —to being the first religion in America.”
American taxpayers are helping to put this material on the air whether they watch it or not.
This odd-couple arrangement with some tax supported TV stations (not to be confused with the PBS network) has been a windfall for many foreign-propaganda machines. After years of struggling to obtain carriage on American TV outlets, some foreign governments not only get multiple hours of free national broadcast airtime each week, but as a bonus, they get a few dangerously naive souls, mostly from academia (who own many of these stations) insisting that foreign governments actually have a First Amendment right to free carriage on tax-supported public TV. Their spokespeople imply that to remove the programs would go against their affiliate agreements, constitute censorship and even violate the lofty principles of academic freedom.
I do agree that MHz Network Worldview is educational TV because the very first day that I watched it I learned that: (1) The U.S. spends too much money on intelligence gathering (2) The U.S. is a fascist country and (3) Harry Truman was a war criminal. Gosh, I didn’t know that!
These are examples of the propaganda being disseminated through the foreign networks carried by MHz.
One would think that the oil-rich Emir of Qatar, who bankrolled Al Jazeera, would already have enough of our petrodollars in his pockets to buy his own doggone airtime just like Rupert Murdoch did when he started Fox News Channel. If the Emir can’t find a commercial station stupid enough to air his twisted version of the world, he could always lease access on cable, just like the other infomercial kings do. That would satisfy any First Amendment concerns without forcing our great grandchildren to borrow even more money to buy airtime for him.
One station that I spoke with said that while they may not like some of MHz Networks programs, they cannot pre-empt them even if they want to.
They cite their affiliation agreement which reads: “The Station shall distribute the Program Service in full as delivered to the Station by the Network and during the time periods provided for herein, without any additions, insertions, alterations or deletions of any kind not otherwise covered in this agreement.” Some might interpret that as an “unauthorized transfer of control” of a station.
In effect, foreign propagandists have hijacked public television stations made possible by the American taxpayers.
I always thought that public TV stations adhered to production standards that put a substantial emphasis on accuracy in content. But obviously something has changed.
This has come about because the digital transition has given stations a lot more air time to fill. They find themselves with many more channels to program but unfortunately only the same paltry amount of creativity, initiative and common sense with which to do so. So, being desperately in need of filler, they turn to almost anyone with a satellite uplink and a program feed. I call it state-of-the-art technology in the service of medieval ideology.
It seems that some bureaucrat-broadcasters are willing to air almost anything knowing that no matter how misleading, irresponsible or reprehensible it may be, they can always justify it in the name of improved global understanding, academic freedom or free speech. Take your pick. That is, if they are even aware that they are airing it at all.
The very first MHz affiliate program manager that I contacted was at WDSC-TV in Daytona Beach, Florida. She appeared not to have known for nearly seven months that her station was even airing Al Jazeera English (AJE). She found out only after she received a complaint from a soldier. Apparently, they don’t even watch their own channels. After she finally did watch one episode of AJE, she concluded that it was “innocuous”.
Maybe it was the multi-million dollar studio in Washington D.C. with anchors wearing designer suits and having proper British accents that brought her to that conclusion. Everyone knows that Jihadist propaganda can only emanate from a dusty cave somewhere in the Middle East decorated with war maps and AK-47s.
The bottom line is this: U.S. taxpayers should not be forced to subsidize the distribution in the U.S. of another country’s propaganda. Period.
With regard to censorship, there is however, one country’s state-sponsored programming that is censored by federal law. That country is the good ole US of A.
Yes, domestic broadcasting of the Voice of America’s foreign programs has been prohibited by the Smith-Mundt Act since the 1940’s. I haven’t heard MHz Networks or any of its affiliates make any effort to UNcensor VOA. Go figure.
Nine years ago, fanatical Jihadists used civilian airliners as missiles in waging their war on our form of government. Military experts call it “Asymmetric Warfare” when one foe with far fewer military resources than the other must resort to strategies that exploit the other side’s weakness and if possible use the other side’s resources against him.
Any serious warrior also knows the value of wartime propaganda and its ability to manipulate a foe’s attitude toward the war in general with the ultimate goal of lowering the other side’s will to fight.
Let’s make sure that tax-supported public TV isn’t being hijacked, too, for use as a propaganda machine.
*Jerry Kenney is an independent television producer from Daytona Beach Florida, a graduate of Daytona State College, and a volunteer pilot for charity medical flights. He can be contacted at email@example.com
Financial expert and author Zubi Diamond has focused attention on the notorious hedge fund short sellers who brought on the 2008 economic and financial crisis that paved the way for Barack Obama’s election as president. These short sellers, such as George Soros, made billions of dollars betting on the collapse of the subprime mortgage industry as ordinary Americans lost their savings.
“They subverted our capitalist system economy in order to achieve a regime change in America. They looted the country and visited financial violence on the American people. American families bear the brunt of the destruction of capitalism and the installation of socialism in their country with job losses, home foreclosures, and retirement portfolio wipe-outs,” Diamond charges.
The major media, he said, have concealed the truth about what has happened from the American people. He explained, “Most Americans cannot even imagine the fact that this calamitous crisis was deliberately engineered by enemies and traitors within our borders.”
Diamond urged the media to start educating the public about what is happening and what needs to be done.
His recommendations include:
- Reinstate the uptick rule.
- Remove mark-to-market accounting and replace it with historic cost accounting.
- Dismantle and discontinue trading on all the short Exchange Traded Funds (ETFs), also called leveraged inverse ETFs.
- Reinstate the circuit breakers and the trading curb to kick in whenever the Dow Jones drops 150 points.
- Regulate the hedge funds just like mutual funds and pension funds are regulated.
Spotlight on the Media
Media Urged to Censor Obama Religion Stories
In a major liberal initiative to curtail discussion of President Obama’s religious identity, over 70 Christian leaders and denominational heads have signed a letter saying that questions about the religious philosophy of the President of the United States should be ignored and suppressed by the major media. The letter demands that the media “offer no further support or airtime to those who misrepresent and call into question the President’s Christian faith.”
The apparent initiator of the letter is Obama associate Jim Wallis of Sojourners, a group funded by atheist George Soros.
The Eleison Group, which represents the Democratic Congressional Campaign Committee and Wallis’s Sojourners group, arranged the release of the letter and has handled publicity for it.
Obama’s aides have claimed the President is a committed and practicing Christian and that he was baptized in Jeremiah Wright’s Trinity United Church of Christ. But he has gone to church only a few times since he became President.
AIM has quoted directly from Obama’s books about his spiritual and political journey. We have pointed out that Obama’s claim about his own baptism, as reported in his second memoir, The Audacity of Hope, is subject to interpretation because of the lack of detail about how and when he was baptized and by whom. It appears, based on information provided by Obama’s own church, that Obama was describing only how he became a member of that church.
Obama’s claim of being baptized is presented in the context of discussing the fact that he was not born and baptized a Christian. He describes his Muslim father and grandfather and attendance in a Muslim school as he was growing up. Obama acknowledges that, before he joined Wright’s church, some people regarded him as a Muslim. Wright himself dabbled in Islam before establishing his church, Obama concedes.
The proof of the baptism claim is precisely what is lacking in his book. There is no need or demand for a baptismal certificate, but there is no detail about the ceremony, other than talking about a walk down an aisle and a profession of faith, and no information about who performed the baptism and who attended. Traditionally, water is used in such a ceremony. There is no reference to water in Obama’s book.
To add further to the mystery, AIM cited evidence that Christian baptisms were not required to join Wright’s church, which emphasized liberation theology, and that Muslims were permitted to join and not disavow their faith.
The controversy will not go away just because a few religious leaders demand that the media stop covering it.