Great 2004 (that’s right 2004) discussion of “Too Big to Fail” and Derivative Risks…

[Junkdrawer]

Back in 2004, a woman with the alias of “Smithy” put together a truly amazing series of educational programs called “The Wizards of Money”. The website WizardsOfMoney.org is now down, but the programs have been archived and transcribed here:

http://www.antiscia.com/wizardsofmoney/

Two small samples:

From Episode 2 ("Financial Risk Transfer")

...

Banks want to hold as little capital as possible, so that they can create a maximum amount of loans (or money) that can bring in higher profits. From their perspective a safety net has an "opportunity cost" which limits the profits they can make. "But aren’t they worried about not having enough of a safety net if their bets go bad?", you might ask. Well, not if they are "too big to fail" and the public will be called upon to bail them out if their bets go bad. This is where a growing danger lurks for all of us. From a public interest perspective conservative (higher) capital levels are a good thing. They help to prevent banks from taking excessive risks which often lead to publicly funded bailouts to rescue them from insolvency.

...

From Episode 11 ("House Lever-Edge at the Derivatives Casino")

...

Consider the young, unregulated credit default swap market, the newest, hottest game on the block. This enables institutions that lend money to high credit risks to buy insurance on those risks. For example, a bank with high loan exposures to certain lenders can pay a premium to a third party for a credit default swap, a form of credit insurance, whereby the bank would get reimbursed by the credit swap seller if the borrower defaulted. The bank is thus able to take this credit risk OFF its balance sheet and thereby is no longer required to hold the regulated amount of equity capital, or "safety net", against the risky credit risk. This means that the bank can further increase its leverage. If the seller of the credit default swap is not a bank, and especially if it is one of the unregulated hedge funds, then there may be no capital requirements (safety nets, or leverage limits) on such credit exposures. Therefore through the use of credit default swaps the overall financial system safety net shrinks and leverage and associated risks of collapse are increased, as always to be borne by depositors and taxpayers if things get too out of hand.

...

Smithy, whereever you are, ya done good kid. It’s a shame that the wrong people are always the ones given power…

[geckosfeet]

1. Presuambly this stuff is in accounting textbooks these days,,,

cause anyone going into accounting should know it. And anyone working for the SEC or other financial regulatory body should know it. And they should act to protect the public from having to bail these mfkers out ever again.

[Junkdrawer]

2. A friend at work relates this discussion at a poker game....

Someone said that the FED was privately owned and is thus fairly immune to Congressional oversight.

One of the players was a banker who said "Not true, the FED is a branch of the Federal Government."

When several other players at the game confirmed that, while the chairman is appointed by the President, the FED itself is privately owned, the banker said "I didn't know that."

True story.

[ColbertWatcher]

6. I wonder how many other people would be surprised to learn about this? n/t

[Junkdrawer]

8. On a thread the other day, an authoritative DUer....

laughed at all the stupid posters who believed the "libertarian nonsense" that the FED was privately owned.

And the beat goes on...

[ColbertWatcher]

9. DUers notwithstanding, what about the public at large? n/t

[Junkdrawer]

10. I think most people are clueless about how money is created....

and that this ignorance is cultivated.

But I think that the current crisis has opened up the possibility of a teaching moment.

[ColbertWatcher]

11. Yes, a teaching moment. I agree. n/t

[Gabi Hayes]

4. amen, but their job isn't to watch out for us, it's to cover for THEM. they just

went right out and made no bones at all about it from the getgo for eight years.

what Clinton did/allowed under his republican/lite regime just set the groundwork.

this four-five year old collection shows that it wasn't anything that couldn't be figured out. media is the real culprit here, as always, because they did all they could with bread and circuses reporting to keep the average shmuck from digging past the flotsam and jetsam of National Enquirer reportage-style "news" gathering (cemented into the taxonomy during the Clinton 'scandals') and realizing what global capitalism-run-rampant was doing to the world

anybody else think it's way too late to do anything about it?

http://www.youtube.com/watch?v=Z64bNZgK4GY&feature=related

''Gilliam's version adds his own Monty Python flavor of dark comedy to an already twisted story of a State in a perpetual state of War through techniques of "double-speak" & constant fabrication & alteration of history.
Neocon strategists are not unfamiliar with Orwellian Authoritarianism. In the book "The Long Short War" neocon Christopher Hitchens admits to studying George Orwell's "1984" for tips on how to control the masses. In fact he got his Doctorate Degree by studying "1984".''


Terry Gilliam/Brazil documentary

I: http://www.youtube.com/watch?v=VBFqVMSDsdY&feature=related

II: http://www.youtube.com/watch?v=oYdiGNhKnEw&feature=related

III: http://www.youtube.com/watch?v=sWUkGrEAb0U&feature=related

EDIT....not sure if these go together, as I haven't watched them all, and there appear to be two different ones. will fix if necessary, or include the other, as well, if it's worthwhile....the one I'm watching is very good so far

here's the other one:

http://www.youtube.com/watch?v=K_pQ5l47VyQ&feature=related

http://www.youtube.com/watch?v=bE8zkPpN3dc&feature=related

[Junkdrawer]

7. "Brazil" was ahead of its time...And as far as Hitchens...

check my sig line...

[Gabi Hayes]

13. a warning that has become a manual.

something along these lines:

http://www.lewrockwell.com/orig6/bender2.html

Karl Rove & the Spectre of Freud’s Nephew
by Stephen Bender

"The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country… We are governed, our minds molded, our tastes formed, our ideas suggested, largely by men we have never heard of. This is a logical result of the way in which our democratic society is organized… "

So opens Propaganda (1928), one of several strikingly frank analyses of western social psychology written by Edward Bernays. This nephew of Sigmund Freud founded the public relations industry in the United States.

Mr. Bernays lived a fascinating life. He first got involved in high stakes politics when he "warmed up" the dour Calvin Coolidge by arranging the first presidential celebrity photo op in 1928. For the private sector, Bernays engineered a most notorious publicity stunt for the American Tobacco Company, by single-handedly neutralizing the taboo against women smoking in public. He organized a "Torches of Freedom" march down Broadway by ten smoking debutantes during the 1929 Easter Parade. With the help of feminists – some of whom understood the "right to smoke" as libratory – Bernays expertly publicized this spectacle, thus setting in motion the expected stir on op-ed pages across the land.

For Bernays, truth in public affairs did not exist per se. Rather, truth was the product of the "public relations counsel" forging prevailing "public opinion." It should be said that he readily recognized the ethical implications of his work, as witnessed in his later anti-smoking advocacy, after the dangers of cigarettes became known in the late-1950s. He could also be, in his own curious way, a humanitarian – as reflected in his work promoting the NAACP and anti-syphilis public education.

For Bernays, however, the necessity of controlling the public mind was a crucially important matter confronting the better element, a group in which he clearly included himself. In his first work, the hugely influential Crystallizing Public Opinion (1923), Bernays noted that the establishment of public education and the gradual extension of the right to vote caused consternation among western elites. The use of public relations techniques, then, was a way for the minority to "so mold the mind of the masses that they will throw their newly gained strength in the desired direction."

[Supersedeas]

19. outstanding Gabi!

[ColbertWatcher]

3. Let's here it for anonymous researchers! Way to go Smithy! Kicked, rec'd and bookmarked! n/t

[Gabi Hayes]

5. check my post above. you might "enjoy" it, if that's the right word.

sort of the way I 'enjoyed' watching Brazil

[Junkdrawer]

12. BTW: I highly recommend the audios....

Well worth your time...

[Gabi Hayes]

14. can you turn mp3s into Ipod material?

I got one in september and have 2 songs on it.

been meaning to put podcasts/books/etc, on, but don't have the inclination to figure it out, as it came with zero instructions, basically

[Junkdrawer]

15. Sure. ITunes will do it for you...n/t

[Gabi Hayes]

16. thx, but how do you download from that site to Itunes?

I don't know how, and the little tiny booklet I got with the Ipod doesn't say how.

I spose there must be a site that shows how, but can you bear with me on this and give me a quick headsup?

[Junkdrawer]

17. Right click each mp3 title and select "Save target as..."

Save them to a folder on your computer. Later you can import them from there to Itunes and then sync your ipod.

[Junkdrawer]

18. Kick

:kick:

[glitch]

20. Too late to rec, but this series needs a kick

Smithy is an excellent teacher of basics, thank you for posting.

[Junkdrawer]

21. Anyone know what ever became of "Smithy"?

What an amazing woman...