The Role of Goldman Sachs in Engineering Global Financial Crises
How Goldman Sachs is Behind the Takeover of National Infrastructure and Banking in its Bid for Global Domination
This is Part II of the series The True Origins of China’s ‘Social Credit System.’
The True Origins of China’s “Social Credit System” Part I
One of the most infamous criticisms of China over the past several years that has formed the basis for viewing the country as an Orwellian surveillance state and its citizens as mere drone-like-automatons is its supposed “social credit system.” But what if I were to tell you that the origin of this Orwellian “social credit system” and the fintech (finan…
Free-markets, Deregulation and “The Largest Bank Heist in History”
The global economic crash of 2008 cost tens of millions of people their savings, their jobs and their homes. The government regulators who should’ve been protecting the citizens had done nothing.
The result of Lehman Brothers and AIG collapsing was a global recession. Costing the world tens of trillions of dollars and rendered 30 million people unemployed globally.[1]
It also doubled the national debt of the United States.
As we can see in the above graph, the rapid increase in U.S. debt begins in the 1980s at the onset of deregulation and is accelerated dramatically after the 2008 crash.
In the 1980s the financial industry exploded. The investment banks went public giving them huge amounts of stockholder money. In the traditional investment banking model, the one that had been operating for over a century before, the partners put the money up and thus, would obviously watch their money very carefully.
One of the moral hazards that began to creep up with these investment banks going public was that the decisions that the CEO and partners of these firms were making were now involving massive amounts of money that were not their own and that was not being watched very carefully at all. In other words, major investment firms like Lehman Brothers (f. 1850), Merrill Lynch (f. 1914), Goldman Sachs (f. 1869), Bear Stearns (f. 1923) and Morgan Stanley (f. 1935) were making decisions on risk that would no longer affect the salaries (and bonuses) of their CEO, partners and managers.
The 1980s were full of cut-throat dealings in mergers and acquisitions. Increasingly there was nothing that could protect small and medium-sized enterprises (SMEs)[2] if a much larger one wished to purchase (or “acquire”) them, and often with not even the desire to see the company expand and further succeed. Many of the acquisitions made during this period involved the actual scrapping of these companies into pieces sold off to the highest bidders, the workers laid-off after decades of working for a company that had at one time dedicated itself to a high-standard of quality in what they were manufacturing or providing as a service, such as airlines.
Ironically, in the increasingly “free-market” world of the 1980s and on, which people were told was a good thing because it would increase competition and thus promote the best and most excellent, the opposite was true. In truth, “free-market” meant the rule of the most powerful and influential. Larger companies and institutions purchased their competitors and scrapped them into pieces. Excellence if you were small now often sealed the end of the road, at best your company would be bought for a generous sum and continued under their massive rubric, at worse it would be purchased for pennies and eviscerated. The only thing certain was that you were not free to see your company through past a certain point of success under solely your own helm.
This new world of finance was made possible by the joint initiative of the Reagan Administration and Margaret Thatcher’s cabinet in the UK.
In 1981 President Ronald Reagan (1981-1989) chose as his Treasury of Secretary the CEO of the investment bank Merrill Lynch, Donald Regan (1981-1985). Regan had served as the CEO of Merrill Lynch for nearly ten years, from 1971 to 1980, before accepting the position of U.S. Treasury Secretary. It was Donald Regan[3] who promoted a new financial system that would be coined “Reagonomics.” Its critics and opponents called it “trickle-down economics” or “voodoo economics,” Reagan and his advocates preferred to call it “free-market economics.”
Whatever you want to call it - it started a 30-year period of radical financial deregulation.
In 1982 the Reagan Administration (or perhaps more aptly called the Regan Administration) deregulated savings-and-loan companies allowing them to make risky investments with depositors’ money. By the end of the decade hundreds of savings-and-loan companies had failed. This crisis cost taxpayers $124 billion and cost many people their life savings.[4]
As NBC News anchor Tom Brokaw famously stated: “It may be the biggest bank heist in our history.” referring to the savings and loan (S&L) fraud. And I think that is a pretty accurate statement, however, it pales in comparison to what would occur in 2008 as we will soon see.
“It may be the biggest bank heist in our history.” referring to the savings and loan fraud. Tom Brokaw NBC News. Clip from Inside Job (2010) Documentary.
However, unlike 2008, thousands of savings and loans executives actually went to jail for looting their companies. One of the most extreme cases was Charles Keating who ran the American Continental Corporation and the Lincoln Savings and Loan Association.
The 2010 documentary Inside Job, discusses how in 1985 when federal regulators began investigating him, Keating hired Alan Greenspan. This was two years before Greenspan would become Chairman of the Federal Reserve in 1987. Before this he had worked as an economic adviser for the Ford Administration and Nixon Administration, as well as the President of the Council on Foreign Relations from 1982 to 1988. In a letter to regulators, Greenspan praised Keating’s sound business plans and expertise and said he saw no risk in allowing Keating to invest customer’s money. Keating reportedly paid Greenspan $40,000.[5]
Keating went to prison shortly afterwards, convicted in both federal and state courts of many counts of fraud, racketeering and conspiracy. When Lincoln S&L Association failed in 1989 it cost the federal government over $3 billion and about 23,000 customers were left with worthless bonds.[6]
Alan Greenspan for his sound advice on Keating to regulators, one of the worse cases of fraud during the S&L debacle, was promoted to Chairman of the Federal Reserve by President Reagan. He was reappointed this position under President Clinton and George W. Bush, serving as Chairman of the Federal Reserve from 1987-2006, a total of over 18 years. Greenspan was the second longest serving chairman in the history of the Federal Reserve, missing first place by just a few months.[7]
Deregulation opened the doors to financial instability rather than stability, and the 1980s and 1990s resulted in the failure of about a third of U.S. savings and loan institutions, costing taxpayers $124 billion.
This American crusade for free-markets was happening in lock-step with the British crusade for the very same thing.
The UK under British Prime Minister Margaret Thatcher (1979-1990) came to be known as the era of “Thatcherism” where she and her Administration championed radical free-market reform, deregulation and neoliberal policies resulting in widespread privatization.
Both Reagan and Thatcher promoted minimal government intervention in the economy and strict control over public spending aiming to reduce the role of the state in the economy and they began to sell state-owned industries including telecommunications, utilities, transportation, energy etc. to private companies.
In fact, Thatcher’s government had specifically brought in Goldman Sachs to oversee the selling-off of these state-owned companies as an official adviser to the British Government in the 1980s.
In their own fluff piece documentary of themselves, Goldman Sachs at 150,[8] they describe how “the beginning of deregulation was the beginning of globalisation.” And how the deregulation policies of both Thatcher and Reagan allowed Goldman Sachs out of the cage effectively.
With these new wings of flight, Goldman Sachs began to work closely with the British Government and the City of London in the privatizations of great nationalised entities as an official advisor.[9] According to Goldman Sachs’ own biography, they handled every single one of these cases in the UK except for one.[10]
They then went on, in their own words into Germany to do the very same thing, then Scandinavia, then France, then Italy and pretty much everywhere else and as they put it “revolutionized finance in all of Europe.”[11]
Thus, according to Goldman Sachs themselves, they oversaw the privatization of finance in pretty much all of Europe, beginning first in the UK.
According to Goldman Sachs this liberated these previously state-owned entities to fully participate in the financial markets.
During the Clinton Administration deregulation continued under Alan Greenspan as Chairman of the Federal Reserve and Treasury Secretaries Robert Rubin (1995-1999), former chairman of Goldman Sachs and Treasury Secretary Larry Summers (1999-2001), later becoming the President of Harvard from 2001-2006. Robert Rubin is recognised as the long-time mentor of Larry Summers.[12]
According to the documentary Inside Job (2010):
By the late 1990s the financial sector had consolidated into a few gigantic firms, each of them so large that their failure could threaten the whole system.
In 1998 Citicorp and Travelers merged to form Citigroup the largest financial services company in the world. The merger violated the Glass-Steagall Act,[13] a law passed after the Great Depression preventing banks with consumer deposits from engaging in risky investment-banking activities.
It was illegal to acquire Travelers. Greenspan said nothing. The Federal Reserve gave them an exemption for a year and then they got the law passed.
In 1999 at the urging of Summers and Rubin, Congress passed the Gramm-Leach-Bliley Act known to some as the Citigroup Relief Act. It overturned Glass-Steagall and cleared the way for future mergers.
Robert Rubin would later make $126 million as Vice Chairman of Citigroup.
The next crisis came at the end of the 1990s. The investment banks fueled a massive bubble in internet stocks which was followed by a crash in 2001 that caused $5 trillion in investment losses.
The Securities and Exchange Commission [SEC], the federal agency that had been created during the Depression to regulate investment banking, had done nothing.
These investment banks had promoted internet companies they knew would fail, which sounds awfully similar to the present financial crisis brewing. Stock analysts were paid by how much business they brought in. In December 2002, ten investment banks settled the case for a total of $1.4 billion and promised to change their ways. Despite the hefty fines, they did not have to admit to any wrongdoing.
These ten investment banks which had caused $5 trillion in investment losses, paid a $1.4 billion fine in total spread out amongst themselves.
And the list of fraud and criminal activity by banks just kept growing. This included the funneling of drug money.
Citibank, whose parent is Citigroup (the bank that Greenspan wavered Glass-Steagall to allow an illegal merger between Citicorp and Travelers to form Citigroup), was found guilty by a Mexican Inquiry of funneling $100 million of drug money out of Mexico.
HSBC and Standard Chartered would also be found guilty of funneling drug money, and in the case of HSBC, the funding of terrorism and weapons trafficking, including a great deal of drug money involving Mexico.
The Dope Trade and the Crown: A Very-British Wealth of Nations
The following is from my book “The Empire on Which the Black Sun Never Set.”
The CIA were also implicated in the training of drug cartels in Mexico and a former Green Beret was involved in setting up a bank to deal with this drug money coming out of Mexico and other places in Latin America.
The CIA's complicity in the Mexican Drug Cartels (including military training at Fort Bragg)
The following is an except from Paul L. William’s book “Operation Gladio: The Unholy Alliance between the Vatican, the CIA, and the Mafia”:
In fact, intelligence agencies, military and finance often intermingled in the United States, including the case of Goldman Sachs CEO Henry “Hank” Paulson, as we shall soon see.
Citibank, JP Morgan and Merrill Lynch were also found guilty of helping Enron conceal fraud and were fined in total $385 million. But while these firms faced unprecedented fines they never have to admit to any wrongdoing. A practice that continues today.
Beginning in the 1990s deregulation and advances in technology led to an explosion of complex financial products called derivatives. Economists and bankers claimed they made the markets safer but instead they made them more unstable. Using derivatives, bankers could gamble on virtually anything. The rise and fall of oil prices, the bankruptcy of a company, even the weather.
By the late 1990s, derivatives were a 50 trillion-dollar unregulated market.[14]
According to Inside Job (2010):
In 1998 Brooksley Born tried to regulate them. After running the derivatives practice at Arnold and Porter, Born was chosen by Clinton to chair the Commodity Futures Trading Commission (CFTC) which oversaw the derivatives market. In May 1998 the CFTC issued a proposal to regulate derivatives.
Clinton’s Treasury Department had an immediate response.
The banks were now heavily reliant on these sort of activities for their earnings.
Shortly after her call with Larry Summers [where he attempted to put some heavy-handed pressure on her to drop this proposal to regulate derivatives], Greenspan, Rubin and SEC chairman Arthur Levitt, issued a joint statement condemning Born and recommending legalisation to keep derivatives unregulated.”
Alan Greenspan would state to the House Committee on Banking and Financial Services on July 24, 1998: “Regulation of derivative transactions that are privately negotiated by professionals is unnecessary.”
She was overruled first by the Clinton Administration and then by Congress. To prevent any future attempts to regulate derivatives, in 2000, Senator Phil Gramm took a major role in getting a bill passed that pretty much exempted derivatives from regulation.
On June 21, 2000, Senator Phil Gramm serving as Chairman of the Senate Banking Committee stated: “They [derivatives] are unifying markets, they are reducing regulatory burden. I believe that we need to do it.”
After leaving the Senate, Phil Gramm became the Vice-Chairman of UBS. His wife Wendy served on the board of Enron from 1993 until the company filed for bankruptcy in late 2001. For those who are not aware, the Enron scandal was a massive corporate fraud that culminated in the 2001 bankruptcy of Enron Corporation. Executives utilized dubious accounting methods and secret off-balance-sheet partnerships to hide billions in debt and fabricate unrealized profits, ultimately destroying the company, bankrupting thousands of employees, and leading to federal criminal convictions.
During this period Larry Summer as U.S. Treasury Secretary stated “It is our great hope that it will be possible to move this year on legislation that, in a suitable way goes to create legal certainty for OTC[15] derivatives.”
Larry Summers later made $20 million as a consultant to a hedge fund that relied heavily on derivatives.[16] Alan Greenspan as Chairman of the Federal Reserve would state to Congress during this period, “I wish to associate myself with all of the remarks of Secretary Summers.”
In December of 2000 Congress passed the Commodity Futures Modernization Act HR 5660. It banned the regulation of derivatives. As a result, the use of derivatives and financial innovation exploded dramatically after 2000.
At this point the industry was dominated by five investment banks: Goldman Sachs, Morgan Stanley, Lehman Brothers, Merrill Lynch, Bear Stearns. Two financial conglomerates: Citigroup and JP Morgan. Three securities insurance companies: AIG, MBIA, AMBAC. And three rating agencies: Moody’s, Standard & Poor’s, and Fitch.
Linking them all together was the Securitization Food Chain. A new system which connected trillions of dollars in mortgages and other loans with investors all over the world.
The 2010 documentary Inside Job did a good summary of how this system works and thus will be quoted extensively here:
Securitization means the people who make the loan [i.e. the lender] are no longer at risk if they [i.e. the borrower] fail to repay. In the old system, when a homeowner paid their mortgage every month their money went to their local lender. And since mortgages took decades to repay, lenders were careful.
In the new system, lenders sold mortgages to investment banks. The investment banks combined thousands of mortgages and loans including car loans, student loans, and credit card debt to create complex derivatives called collateralized debt obligations or CDOs.
The investment banks then sold the CDOs to investors. Now when home owners paid their mortgages the money went to investors all over the world.
The investment banks paid rating agencies to evaluate the CDOs and many of them were given a triple A rating, which is the highest possible investment grade. This made CDOs popular with retirement funds which could only purchase highly rated securities.
Lenders didn’t care anymore if a borrower could repay so they started making riskier loans. The investment banks didn’t care either, the more CDOs they sold the higher their profits. And the rating agencies which were paid by the investment banks had no liability if their ratings of CDOs proved wrong.
Subprime loans are riskier loans. Thousands of subprime loans were combined to create CDOs many of them still received triple-A ratings.
The investment banks actually preferred subprime loans, because they carried higher interest rates. This led to a massive increase in predatory lending.
Borrowers were needlessly placed in expensive subprime loans and many loans were given to people who could not repay them.
The most profitable products were predatory loans. The banker makes the most money if they put you in a subprime loan.
Suddenly hundreds of billions of dollars a year were flowing through the securitization chain. Since anyone could get a mortgage, home purchases and housing prices skyrocketed. The result was the biggest financial bubble in history.
The subprime lending alone increased from $30 billion a year in funding to over $600 billion a year in 10 years. All of the major investment banks were in on this.
Countrywide Financial the largest subprime lender issued $97 billion worth in loans.
It made over $11 billion in profits as a result.
On Wall Street annual cash bonuses spiked. Traders and CEOs became enormously wealthy during the bubble.
Lehman Brothers was a top underwriter of subprime lending. Their CEO, Richard Fuld, took home $485 million.
By 2006 about 40% of all profits of S&P 500 firms was coming from financial institutions. It was a global Ponzi scheme. It was not real income; money was created and then defaulted on.
Through the Home Ownership and Equity Protection Act the Federal Reserve Board had broad authority to regulate the mortgage industry. But Fed Chairman Alan Greenspan refused to use it. [Alan Greenspan was anti-regulation. He “didn’t believe in it.”]
The Securities and Exchange Commission conducted no major investigations of the investment banks during the bubble.
During the bubble investment banks were borrowing heavily to buy more loans and create more CDOs. The ratio between borrowed money and the banks’ own money was called leverage. The more the banks borrowed the higher their leverage.
In 2004 Henry Paulson the CEO of Goldman Sachs helped lobby the SEC to relax the limits on leverage allowing the banks to sharply increase their borrowing. The SEC somehow decided to let investment banks gamble a lot more.
On April 28, 2004, the SEC met to consider lifting the leverage limits on the investment banks.
Investment banks began leveraging up to the level of 33:1 which means a tiny 3% decrease in the value of their asset base would leave them insolvent.
There was another ticking time bomb in the financial system. AIG, the world’s largest insurance company was selling huge quantities of derivatives called credit default swaps. For investors who owned CDOs, credit default swaps worked like an insurance policy. An investor who purchased a credit default swap paid AIG a quarterly premium. If the CDO went bad, AIG promised to pay the investor for their losses.
But unlike regular insurance, speculators could also buy credit default swaps from AIG in order to bet against CDOs they didn’t own.
Since credit default swaps were unregulated, AIG didn’t have to put aside any money to cover potential losses. Instead, AIG paid its employees huge cash bonuses as soon as contracts were signed. But if the CDOs later went bad AIG would be on the hook.
AIG’s Financial Products division in London issued $500 billion worth of credit default swaps during the bubble many of them for CDOs backed by subprime mortgages. The 400 employees at AIGFP made $3.5 billion between 2000 and 2007.
Goldman Sachs sold at least $3.1 billion of these toxic CDOs in the first half of 2006. The CEO of Goldman Sachs at this time was Henry Paulson, the highest paid CEO on Wall Street.
Paulson had to sell his $485 million of Goldman stock when he went to work for the government. But because of a law passed by the first President Bush, he didn’t have to pay any taxes on it. It saved him $50 million.
Public Employees Retirement System of Mississippi sued Goldman Sachs, they had lost millions on bad CDOs that had been given a high rating by Goldman Sachs.
By late 2006 Goldman had taken things a step further. It didn’t just sell toxic CDOs it started betting against them at the same time it was telling customers that they were high-quality investments.
By purchasing credit default swaps from AIG, Goldman could bet against CDOs it didn’t own and get paid when the CDOs failed.
Goldman Sachs bought at least $22 billion of credit default swaps from AIG.
It was so much that Goldman realized that AIG itself might go bankrupt. So they spent $150 million insuring themselves against AIG’s potential collapse.
Then in 2007 Goldman went even further. They started selling CDOs specifically designed so that the more money their customers lost the more money Goldman Sachs made.
In April 2010 they were forced to testify before Congress. [When Goldman Sachs CEO Lloyd Blankfein had to testify in front of Congress he effectively said this was not illegal and thus they could not be held accountable for fraud.]
Hedge fund manager John Paulson [Paulson & Co.] made $12 billion betting against the mortgage market. When Paulson ran out of mortgage securities to bet against, he worked with Goldman Sachs and Deutsche Bank to create more CDOs.
Morgan Stanley was also selling mortgage securities it was betting against, and is now being sued by the Government Employees’ Retirement Fund of the Virgin Islands for fraud.
The hedge funds Tricadia and Magnetar made billions betting against CDOs they had designed with Merrill Lynch, JP Morgan, and Lehman Brothers. The CDOs were sold to customers as safe investments.
The three rating agencies, Moody’s, S&P and Fitch made billions of dollars giving high ratings to risky securities. Moody’s the largest rating agency quadrupled its profits between 2000 and 2007.
Moody’s and S&P get compensated based on putting out ratings reports. And the more structured securities they gave a triple-A rating to, the higher their earnings were going to be for the quarter. Imagine going to the New York Times and saying “If you write a positive story I’ll pay you $500,000 but if you don’t, I’ll give you nothing.”
The rating agencies could have stopped the party [and just like the regulators, they didn’t but in fact were complicit].
Securitization food chain imploded and the market for CDOs collapsed leaving the investment banks holding hundreds of billions of dollars in loans, CDOs and real estate they couldn’t sell.
At a G7 meeting in Tokyo, February 9, 2008, Paulson stated “We are going to keep growing okay? And, obviously, I’ll say it: If you are growing you are not in recession right? I mean, we all know that.”
The recession actually started four months before Paulson made this statement.
In March 2008, the investment bank Bear Stearns ran out of cash and was acquired for $2 a share by JP Morgan Chase. The deal was backed by $30 billion in emergency guarantees from the Federal Reserve.
[By July 2008 Henry Paulson continued to testify and publicly declare that everything was under control. During a time when the government could have stepped in and minimised the financial fallout.]
On September 7, 2008 Henry Paulson announced the federal takeover of Fannie Mae and Freddie Mac, two giant mortgage lenders on the brink of collapse, he stated that day “Nothing about our actions today reflects a changed view of the housing correction or the strength of other U.S. financial institutions.”
Two days later Lehman Brothers announced record losses of $3.2 billion and its stock collapsed.
Merrill Lynch was also on the brink of a disaster and they were acquired by Bank of America within days. The British bank Barclays was the only bank interested in acquiring Lehman’s but the [British] government wanted some guarantees. Paulson refused. Neither Lehman nor the [U.S.] federal government had done any planning for bankruptcy.
The oldest money market fund in the nation wrote off roughly ¾ of a billion dollars in bad debt issued by the now bankrupt Lehman Brothers.
That same week AIG owed $13 billion to holders of credit default swaps and it didn’t have the money.
On September 17th AIG is taken over by the government and one day later Paulson and Bernanke ask Congress for $700 billion to bail out the banks. They warned the alternative would be a catastrophic collapse.
When AIG was bailed out the owners of its credit default swaps, the most prominent of which was Goldman Sachs, were paid $61 billion the next day.
Paulson, Bernanke and Tim Geithner forced AIG to pay 100 cents on the dollar rather than negotiate lower prices. Eventually, the AIG bailout cost taxpayers over $150 billion. A hundred and sixty billion dollars went through AIG, fourteen billion went to Goldmans Sachs.
At the same time Paulson and Geithner forced AIG to surrender its right to sue Goldman and the other banks for fraud.
[Foreclosures in the United States reached 6 million by early 2010 with an estimated total of 9 million after a few more years of reverberating fallout.][18]
The top five executives at Lehman Brothers made over a billion dollars between 2000 and 2007. And when the firm went bankrupt they got to keep all the money.
Angelo Mozilo CEO of Countrywide made $470 million between 2003 and 2008. $140 million came from dumping his Countrywide stock in the 12 months before the company collapsed.
Stan O’Neal the CEO of Merrill Lynch received $90 million in 2006 and 2007 alone. After driving his firm into the ground, Merrill Lynch’s board of directors allowed him to resign and he collected $161 million in severance.
O’Neal’s successor, John Thain, was paid $87 million in 2007. And in December 2008, two months after Merrill was bailed out by U.S. taxpayers, Thain and Merrill’s board handed out billions in bonuses.
In March of 2008 AIG’s Financial Products division lost $11 billion. Instead of being fired, Joseph Cassano the head of AIGFP was kept on as a consultant for a million dollars a month.
In the U.S. the banks are now bigger and more powerful and more concentrated than ever before. JP Morgan took over Bear Stearns and then WaMu (Washington Mutual). Bank of America took over Countrywide and Merrill Lynch. Wells Fargo took over Wachovia.
[Not only were the regulators and rating agencies found to be complicit in the money heist, but Academia as well.]
The Analysis Group, Charles River Associates, Compass Lexecom and the Law and Economics Consulting Group manage a multi-billion industry that provides academic experts for hire. Two bankers who used these services were Ralph Cioffi and Matthew Tannin, Bearn Stearns hedge fund managers prosecuted for securities fraud. After hiring the Analysis Group they were acquitted. Glen Hubbard was paid $100,000 to testify in their defense [the Dean of Columbia Business School].
[Some of the fallout from the triumphs and tribulations of “free-market”, deregulation and derivatives:]
It was this younger generation coming out of the 2008 crash that for the first time in American history were less educated and less prosperous than their parents.
Tim Geithner became the U.S. Treasury Secretary under Obama one of the key players in the decision to pay Goldman Sachs 100 cents on the dollar for its bets against mortgages.
The new Fed president was William C. Dudley the former chief economist for Goldman Sachs.
Chief of Staff of the Treasury Department became Mark Patterson a former lobbyist for Goldman. One of the Senior Treasury Advisors was Lewis Sachs who oversaw Tricadia a company heavily involved in betting against the mortgage securities it was selling.
To head the Commodity Futures Trading Commission Obama picked Gary Gensler, a former Goldman Sachs executive who had helped ban the regulation of derivatives.
To run the SEC, Obama picked Mary Schapiro the former CEO of FINRA the investment banking industry’s self-regulation body.
Obama’s chief economic adviser was Larry Summers [the protégé of Goldman Sachs’ Robert Rubin].
In 2009 Obama reappointed Ben Bernanke as Fed Chairman.
[Obama’s presidential campaign ran on the promise to increase regulation and investigate those responsible for the 2008 crash. However, once he was elected, his most senior advisors in his Administration were in fact the very people who had built the Ponzi structure. Obama had hired the architects of the 2008 crash, allowing them to cover up their trail while holding government positions.]
By mid 2010 not a single senior financial executive had been criminally prosecuted or even arrested. No special prosecutor had been appointed. Not a single firm had been prosecuted criminally for securities fraud or accounting fraud.
The Obama Administration has made no attempt to recover any of the compensation given to financial executives during the bubble.
That is how it has worked since the “Too Big To Fail” era began.
It might as well be called “Too Big to Prosecute.” These banks, and even their CEOs, are deemed too big, and thus the fines they pay are just a fraction of the fraud they are found guilty of committing less we risk the bank going under. This has been on a cycle of wash-rinse-repeat since the 1980s when radical deregulation began and we effectively gave Wall Street an infinite number of Monopoly “get out of jail” cards.
We are told that they are ‘too big to fail,’ but what no one ever seems to ask is “are they too big to regulate?” The truth is that the entire financial system structure, including the regulators, rating agencies and members of academia holding tenure in the economics department at prestigious universities, are all complicit in this endless looting of honest taxpayers and honest business incomes. It is sheer insanity to think that this cycle will stop on its own, when everyone that has some influence on the oversight of this system are getting a slice of the pie.
It can only stop when regulation is put in place that enforces sound banking practices (such as the Glass-Steagall Act), when derivatives are regulated and not allowed to be created as WMDs, when the grey line becomes a clear line, when breaking the law is not a hypothetical or an “opinion”, when those guilty of especially large sums of fraud go to jail for a long time and not just a few months or a couple of years or not at all.
The poverty level of the average American is reaching fever-pitch. And yet there seems to be hardly a peep about finally reigning in Wall Street, not even the behemoth level of fraud committed during the 2008 crash appears to be a good enough incentive. And it is highly concerning when the present Treasury Secretary Scott Bessent is calling for even further deregulation. According to him, the 2006-2008 period had robust regulation, despite the fact that derivatives were not regulated at all.
On April 29, 2025, during a White House press briefing on the Trump administration’s first 100 days, Scott Bessent said “The big tax on consumers that goes unnoticed is deregulation or [I mean] regulation. And we are deregulating and bringing that down. So, you know, from a household income point of view, we would expect real purchasing increases.”[19]
It is unlikely that Bessent is not aware of what was truly behind the scenes of the 2008 crash. After all, he is the man who worked as the first lieutenant to George Soros and triumphs over playing an instrumental role in earning Soros the title “the man who broke the Bank of England.” Americans who laud this appear not to understand what this in fact signifies. It was not an attack on the City of London at the end of the day, but on the livelihood of the average British person. It was the average British person who lost money from Soros and Bessent’s predatory acts, not the City of London.
On top of destroying the real economy, pensions, unions and savings of British civilians, it is also a fact that the Soros-Bessent ‘breaking of the Bank of England’ gave the City of London a special crisis to manage as they ‘postponed’ entering the Euro trap that they had set for foolish European nations under the Maastrich Treaty framework.
George Soros will feature prominently in Part III of this series and will give you a better idea of the sort of man Bessent was closely working for.
It appears we are living in an age where foolishness abounds, and we are now celebrating the very looters of our hard-earn living as our liberators, while these very same people are in fact propping up the bank mafia, that consists of Wall Street and the City of London in front of all of our eyes. Denial is a powerful thing…
And it just so happens that this is the man that is in the role of Treasury Secretary while we are in the midst of another financial crash, this one threatening to be on a much larger scale. Coincidence? Perhaps, if you think Hank Paulson’s position as Treasury Secretary from 2006-2009 was also a coincidence…
Interestingly, Goldman Sachs itself would only go public in 1999, way after most of the other investment firms. As they discuss in their documentary, the subject was a controversial one amongst the partners. Going public typically meant losing a certain amount of control over the direction and values of the firm. The new board would constitute not members of those who held the most senior ranks within the actual firm, but those who owned the largest stake in the institution.
Most of the major investment firms had gone public long before Goldman Sachs. Merrill Lynch went public in 1971, Bear Stearns in 1985, Morgan Stanely in 1986, and Lehman Brothers in 1994.
Goldman Sachs, more so than any other investment firm, had carefully crafted for itself an internal culture of “family,” “values” and “ideology.” Goldman Sachs for its employees was not meant to be just a stage in a career, it was an indoctrination process that would forever change how you viewed the world and your role in it.
They very much wanted to protect this self-crafted culture and “tradition” as they say in their documentary. Going public threatened to sacrifice this centerpiece. Robert Rubin and Henry “Hank” Paulson formed the core leadership of Goldman Sachs in the 90s. According to their own biography, it was Robert Rubin who finally convinced the board to go public.[20] A way had been found to allow Goldman Sachs to go public and yet remain largely unchanged.
When Goldman Sachs went public it had the second largest IPO in history at that point, nearly 90% of the stock went to the firms’ current and retired employees. Barely 12% of its stock went to non-Goldman investors.[21]
They had found a way to massively increase the amount of money Goldman Sachs had access to for its new mission of globalisation, without having to sacrifice the core “culture” and “ideology” of their institution. By “keeping it in the family” so to speak, their going public was in reality more a reconstruction of the underlying partnership.
It is interesting that Robert Rubin is credited with this move of Goldman Sachs, considering they only went public in 1999. Robert Rubin worked for Goldman Sachs for nearly three decades (26 years). However, Robert Rubin was supposed to have officially left Goldman Sachs as its co-chairman to become the Director of the National Economic Council under President Clinton from 1993-1995 and the U.S. Treasury Secretary from 1995-1999. Clearly, Rubin had remained in close contact with Goldman Sachs, including Hank Paulson.
With this new massive influx of money from going public, with the second largest IPO in history at the time, a great deal of possibilities had now opened themselves up for Goldman Sachs and it would be Hank Paulson who would oversee this next phase of globalisation.
A Global Controlled Disintegration à la Goldman Sachs
“Perhaps in the circumstances, the objective of ‘controlled disintegration’—modest as it may seem to be—is indeed a legitimate goal…”[22]
- Paul Volcker in a November 1978 speech at the University of Warwick titled “The Political Economy of the Dollar.” Volcker served as Chairman of the Federal Reserve from 1979 to 1987.
Over 10 million workers in China lost their jobs as Americans cut back on spending as a result of the 2008 crash that wiped out many American families’ life savings. The 2008 crash would have reverberations throughout the world, costing tens of trillions of dollars and rendering 30 million people unemployed.[23]
It was during these trying times that former Goldman Sachs CEO (1999-2006) Hank Paulson served as U.S. Treasury Secretary (2006-2009).
His background is an interesting one. Paulson was a Staff Assistant Secretary of Defense at the Pentagon from 1970 to 1972.[24] He then worked for the Nixon Administration serving as the assistant to John Ehrlichman from 1972 to 1973.
John Daniel Ehrlichman served as White House Counsel and Assistant to the President for Domestic Affairs under Richard Nixon. He was an important influence on Nixon’s domestic policy.[25] Ehrlichman became Nixon’s first White House Counsel before becoming Chief Domestic Advisor. It was then that he became a member of Nixon’s inner circle.[26] He and close friend H. R. Haldeman, whom he had met at UCLA, were ‘referred to jointly as “The Berlin Wall” by White House staffers because of their German-sounding family names and penchant for isolating Nixon from other advisors and anyone seeking an audience with him.’[27] Both were deeply implicated in the Watergate scandal. In fact, Ehrlichman created “The Plumbers”, the group at the center of the Watergate scandal.
Hank Paulson was assistant to Ehrlichman from 1972-1973 overlapping the period of the Watergate scandal which broke out in June 1972.
One year after, he joins Goldman Sachs in 1974 and becomes partner in 1982. He served on the board of directors from 1994 to 2006 and became co-chairman and co-chief executive officer in 1998, and sole chairman and CEO in January 1999 until 2006.
During his time at Goldman Sachs, Paulson had made a lot of inroads amongst certain Chinese political elites. It is reported that during this time he had visited China more than 70 times.[28] This was during a time when China was being heavily courted by the United States to adopt free-market reforms.
Paulson was especially interested in U.S.-Chinese relations as Treasury Secretary and was known to have persuaded President George W. Bush to allow him to spearhead and lead the U.S.-China Strategic Economic Dialogue, a forum and mechanism under which the two countries addressed global areas of immediate and long-term strategic and economic interest.
In the spring of 2007, Paulson warned an audience at the Shanghai Futures Exchange that China needed to free up capital markets to avoid losing potential economic growth, saying: “An open, competitive, and liberalized financial market can effectively allocate scarce resources in a manner that promotes stability and prosperity far better than governmental intervention.”
That is, in the midst of America’s own economic crash that would reach a peak-pitch one year later, Paulson was organizing hard to bring China further into free-markets, deregulation and derivatives.
Despite the endless denials from Paulson that anything was wrong but rather that the economy was doing “okay” between 2006 to 2008 and well into 2009 even, the truth was that Paulson was not only aware that there was indeed a tsunami headed for America’s financial market, but that he had in fact worked to build that tsunami up.
Recall Goldman Sachs’ central role in credit default swaps, speculation on bad CDOs they were in fact giving high ratings to and encouraging their clients to invest in, and insuring themselves against the collapse of AIG that they knew was coming and were complicit in. This was all happening under Henry Paulson, who was the CEO of Goldman Sachs from 1999 to 2006. The highest paid man on Wall Street.
Basically, Bush had hired one of the central engineers of the 2008 crash as U.S. Treasury Secretary! And this man was in turn traveling to other parts of the world, with an especial focus on China to spread the disease. Recall that the disease had already been spread throughout Europe during the 1980s as per Goldman Sachs’ own biography.
In addition, Paulson as CEO of Goldman had successfully lobbied the SEC to relax leverage limits on investment banks. This deregulation allowed Goldman Sachs and other firms to sharply increase their borrowing and take massive, unmanageable risks using complex derivatives including credit default swaps.
It was under Paulson’s leadership that Goldman Sachs aggressively created and sold billions of dollars worth of CDOs to investors. The firm then utilized credit default swaps to bet against the very same, often toxic, securities they were selling to their clients.
And it was under Paulson, as U.S. Treasury Secretary, that he was positioned as the central architect of the 2008 bank bailouts (such as TARP – Troubled Asset Relief Program). In other words, he decided the reorganization of the entire American financial system, who was going to come out on top, who was going to sink to the bottom, and who was going to acquire whom.
In fact, in the midst of the economic crash, Paulson as Treasury Secretary continued in his role of giving bad advice to investors, claiming everything was for the most part under control and that there was no cause for serious concern, certainly nothing that should influence what investors were already investing in.
With the passage of H.R. 1424, Paulson became the manager of the United States Emergency Economic Stabilization fund. He also became a member of the newly established Financial Stability Oversight Board that oversaw the Troubled Assets Relief Program (TARP).
Ironically, the radical free-market proponent Hank Paulson, was very hands-on indeed in organizing financial reform and restructuring as U.S. Treasury Secretary, of course, only after it was too late to avoid the full brunt of an economic crash that is.
Leading up to the crash, however, Paulson took a remarkably hands-off approach.
In August 2007, Paulson stated that the U.S. subprime mortgage fallout remained largely contained due to the strongest global economy in decades.[29]
In May 2008, The Wall Street Journal wrote that Paulson said U.S. financial markets are emerging from the credit crunch that many economists believe has pushed the country to the brink of recession. “I do believe that the worst is likely to be behind us,” Paulson told the newspaper in an interview.[30]
On July 20, 2008, after the failure of IndyMac Bank, Paulson reassured the public by saying, “It’s a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation.”[31] Ironically, Paulson would state that the ”list of troubled banks will grow” but insisted nonetheless that the banks were safe.
On November 18, 2008, in a testimony before the U.S. House Committee on Financial Services, Paulson told lawmakers:
“There is no playbook for responding to turmoil we have never faced. We adjusted our strategy to reflect the facts of a severe market crisis always keeping focused on Congress’s goal and our goal – to stabilize the financial system that is integral to the everyday lives of all Americans.”[32]
He stated on another occasion:
“Well, as you know, we’re working through a difficult period in our financial markets right now as we work off some of the past excesses. But the American people can remain confident in the soundness and the resilience of our financial system,” Paulson said soon after the Lehman Brothers bankruptcy.[33]
This is the man we are supposed to believe could not have possibly understood the depth and seriousness of the 2008 financial crisis nor be in a position to reduce the massive global fallout that ensued.
Right. Not a very subtle evil villain plot if you ask me….
It was Lloyd Blankfein that became CEO of Goldman Sachs during this crucial period of 2006-2010 overseeing the firms safe landing in the midst of carnage and mayhem in the financial markets. Blankfein would continue on as CEO until 2018, serving as the longest CEO of Goldman Sachs for a total of 12 years.
Although China would be hit hard by the reverberations of America’s 2008 crash, they had not followed Paulson’s “advice” to the degree that he wished them to do so. We will talk more about how China escaped free-market “shock therapy” in Part III of this series, which features George Soros prominently, Bessent’s previous boss.
[Author’s note: This series is going to be longer than originally expected with several additional instalments that will be added to the original structure. Everything will be discussed that I promised to cover in Part I of this series but may be further pushed back in this series.]
However, the crash was not the work of just one man. It was the work of many, among the most notable being Chairmans of the Federal Reserve Paul Volcker (1979-1987), Alan Greenspan (1987-2006), and Ben Bernanke (2006-2014), Goldman Sachs man turned U.S. Treasury Secretary Robert Rubin (1995-1999), his protégé Larry Summers who served as Deputy Treasury Secretary under Rubin (1995-1999) and later as U.S Treasury Secretary (1999-2001), Summers was succeeded by Paul H. O’Neill as U.S. Treasury Secretary (2001-2002) a former chairman of the RAND Corporation. O’Neill was succeeded by John W. Snow (2003-2006) who had worked for Reagan in the 1980s as part of a four-man advisory group on regulatory policy.
There was another player that featured prominently in the engineering of this controlled disintegration – Tim Geithner.
Tim Geithner you could say was literally born to play this role, raised from a young age to be a major player in this vision for a new world order.
Geithner was born in 1961, his father was director of the Ford Foundation’s Asia program in New York during the 1990s, after working for the U.S. Agency for International Development in Zambia and Zimbabwe.[34]
During the early 1980s, Geithner’s father oversaw the Ford Foundation’s microfinance programs in Indonesia being developed by Ann Dunham Soetoro, Barack Obama’s mother, meeting at least once in Jakarta.[35]
Perhaps this explains why Obama decided to pick Geithner as his U.S. Treasury Secretary sharing a common vision that went back generations…
Geithner’s maternal grandfather served as vice-president of public relations for the Ford Motor Company from 1952 to 1964 and advised President Eisenhower as well as Nelson Rockefeller and George W. Romney on their respective presidential campaigns.[36]
His uncle served in the departments of Defense, Justice and State as well as the United Nations.[37]
Geithner spent most of his childhood living abroad, including Zimbabwe, Zambia, India, and Thailand, graduating from high school in Bangkok.[38] He studied Mandarin at the Peking University in 1981, and at Beijing Normal University in 1982.[39]
Like his father and grandfather, Geithner graduated from Dartmouth, earning a B.A. in Government and Asian studies. He then went on to graduate from John Hopkins University earning an M.A. in International Economics and East Asian studies.[40] He also studied Japanese.
Geithner went on to work for Kissinger Associates in Washington, D.C., from 1985 to 1988.[41] This is highly relevant to Geithner’s global role as an economic reformer. In 1982, under the direction of Kissinger, President Reagan would sign NSDD 77 under Cold War duress, which would launch Project Democracy, a sardonic name for a Trojan Horse.
NSDD 77 allowed Project Democracy the reins over “covert action on a broad scale” as well as overt public actions later to be associated with the National Endowment for Democracy (NED).
The structure of the NED essentially functions as a private CIA political operations arm of an invisible, secret government beyond accountability and beyond the reach of the law.
For more on this story refer here:
The Enemy Within: A Story of the Purge of American Intelligence
“Western Europe has only 20 to 30 more years of democracy left in it; after that it will slide, engineless and rudderless, under the surrounding sea of dictatorship, and whether the dictation comes from a politburo or a junta will not make that much difference.”
As we will see in Part III and IV of this series, both the CIA and MI6 played prominent roles in their hard-line attempt to get China to adopt radical free-market reforms.
Geithner later served as an attaché at the Embassy of the United States in Tokyo, then as deputy assistant secretary for International Monetary and Financial Policy (1995–1996), Senior Deputy Assistant Secretary for International Affairs (1996–1997), and Assistant Secretary for International Affairs (1997–1998).[42] He served as Under Secretary of the Treasury of International Affairs from 1998-2001, during this period he worked under Secretaries Robert Rubin and Larry Summers, who are widely considered as his mentors.[43]
While at the Treasury Department, he helped manage (or perhaps engineer) financial crises in Brazil, Mexico, Indonesia, South Korea and Thailand.[44] [45] In other words, Geithner was the point-man to manage international financial crises of the 1990s as a senior official in the Clinton Treasury Department.
This would have most notably included the Asian Crisis that tsunamied into Asia in the late 1990s, hitting Japan the hardest and leaving in its wake a wave of suicides. The Tiger Economies[46] of South Korea, Indonesia and Thailand were also hit hard. Ironically, or not so ironic if you understand how the game is played, these were among the most westernised economies in Asia. In other words, they were the economies that most readily adopted western radical free-market reforms.
The causes for this Asian crash went as far back as 1993. In that year, the Asian Tiger Economies – South Korea, Thailand, Indonesia – implemented a policy of aggressive deregulation of their capital accounts and the establishment of international banking facilities, which enabled the corporate and banking sectors to borrow liberally from abroad, the first time in the postwar era that borrowers could do so. In reality, there was no need for the Asian Tiger Economies to borrow money from abroad. All the money necessary for domestic investment could be created at home.[47]
As a result of the Asian Crisis, these economies had to further succumb to the orders of the Western financial diktat in how they were to reorganise their financial and banking sectors. The crisis was treated as proof by the western financial institutions that Asia still had much to learn. What was the medicine prescribed? Further deregulation of course!
These Asian Tiger economies never fathomed that the United States itself would enter into an even bigger financial crisis than what they experienced in the late 1990s. During the Clinton Administration it was easy to give off the impression that the western financial system was stable and strong and an excellent role model.
Note that it was after this period of financial crises hitting back-to-back around the world (by men trained in “managing” crises) that China was being courted heavily by Hank Paulson, among others as we will see in Part III, to adopt more radical free-market reforms, claiming that it would be a deterrent to financial upheaval.
As we will discuss in Part III of this series, it is because China did not adopt these reforms to the degree the U.S. wished that they were able to come out relatively well from the financial crises that would hit them from 2006-2009 from the U.S. economic crash and then between 2013-2018 as a result of the P2P loan crisis (first discussed in Part I of this series).
Just like derivatives, such as credit-default swaps, P2P loans were an Anglo-American creation (discussed in Part I) made up of complex algorithms to mask their true nature. Using the veneer that they were created to lessen economic hardship; they were in fact created to drive the knife ever deeper.
In 2001, Geithner left the Treasury to join the Council on Foreign Relations as a Senior Fellow in the International Economics department.[48] He was director of the Policy Development and Review Department at the International Monetary Fund from 2001 to 2003.[49]
Geithner then serves as the President of the Federal Reserve from 2003 to 2009. As President of the New York Fed, Geithner was a central figure in the U.S. government’s response to the 2008 financial crisis.
The Washington Post could not have come up with a better headline summing up Geithner’s legacy by 2008.
After 6 years as President of the Federal Reserve (2003-2009), President Obama selected Geithner for his Treasury Secretary, a position he held from 2009-2013.
During the 2008 fiasco, Geithner had worked closely with Paulson. They organised the rescue and fire sale of Bear Stearns to JP Morgan. In fact, the Fed agreed to provide financing for the deal and support up to $30 billion of Bear Stearns’s “less-liquid assets”, despite some internal protests.[50]
In doing so, the New York Fed allowed Bear Stearns itself to calculate the value of assets acquired by the government and exposed itself to losses should those assets have declined in value, though JPMorgan agreed to absorb the first $1 billion in losses.[51] [52]
The New York Fed stored these assets in the Maiden Lane limited liability company and awarded no-bid contracts to the Wall Street asset manager BlackRock for management of the assets, with the intent of ridding itself of the assets within 10 years.[53] [54]
For the relevance of BlackRock see:
Recall in Part I of this series that Goldman Sachs is the common denominator linking BlackRock (GIP), Project Stargate, Open AI, Microsoft, Alibaba, Tencent and SoftBank. The fact that Goldman Sachs was at the center of engineering the 2008 crash and overseeing financial and banking reform in its wake should be viewed in direct connection to these other projects.
The True Origins of China’s “Social Credit System” Part I
One of the most infamous criticisms of China over the past several years that has formed the basis for viewing the country as an Orwellian surveillance state and its citizens as mere drone-like-automatons is its supposed “social credit system.” But what if I were to tell you that the origin of this Orwellian “social credit system” and the fintech (finan…
As part of Geithner’s prescription to stabilize the financial market, he proposed that the traditional investment banks Goldman Sachs and Morgan Stanley transform themselves into bank holding companies to ensure continuing access to funding. Both banks completed the restructuring by September 21, 2009. [55] [56]
Although President Obama expressed strong support for Geithner, outrage over hundreds of millions of dollars in bonus payments (or employee “retention” payments) by the American International Group, which had received more than $170 billion in federal bailout aid, undermined public support in early 2009. In March 2009, AIG paid $165 million in bonuses to its financial products division, the unit responsible for the company’s near collapse the year prior, following $55 million paid to the same division in December 2008 and $121 million in bonus payments to senior executives.[57] [58]
In early November 2008, a joint committee of the Federal Reserve, Ernst & Young, and AIG concluded that the bonus payments, which were in contracts predating the government takeover, could not be legally stopped.[59]
Wikipedia writes:
In his book Bailout: How Washington Abandoned Main Street While Rescuing Wall Street, Neil Barofsky argues that Geithner never had the intention to utilize the Home Affordable Modification Program as intended by Congress. Instead of providing relief for homeowners to avoid foreclosures, it was Geithner’s plan that the bank should proceed with these foreclosures. Geithner said that he “estimates” that the banks “can handle ten million foreclosures, over time”, and that HAMP “will help foam the runway for them” by “keeping the full flush of foreclosures from hitting the financial system all at the same time.”[60]
As such, “banks participating in the program have rejected four million borrowers’ requests for help, or 72 percent of their applications, since the process began.”[61]
Citimortgage [owned by the notorious Citigroup that Greenspan wavered Glass Steagall to allow for its formation] and JPMorgan Chase were among the banks that refused the most HAMP claims. As such, the program only helped 887,001 people out of the over 4 Million people that were originally estimated to be able to benefit from the program.
In written comments to the Senate Finance Committee during his confirmation hearings, Geithner stated that the new administration believed China was “manipulating” its currency and that the Obama administration would act “aggressively” using “all the diplomatic avenues” to change China’s currency practices. The Obama administration would pressure China diplomatically to change this practice more strongly than the George W. Bush Administration had done. The United States maintained that China’s actions hurt American businesses and contributed to the 2008 financial crisis.[62]
Yes, you read right. Geithner as U.S. Treasury Secretary under Obama - who along with Hillary Clinton as Secretary of State and Jake Sullivan as Director of Policy Planning and Deputy Chief of Staff would organise hard in their Pivot to Asia stance - actually had the nerve to blame China for America’s 2008 crash….unfortunately too many Americans appear more than willing to accept these sort of condescending deflections from the real source of the problem that lies deep, very deep within American institutions today.
Instead of Obama focusing on addressing the underlying causes of the 2008 crash like he had campaigned on, that was the result of behemoth levels of fraud committed by the highest most powerful financial institutions in the United States…he decided to turn his attention to China and began increasing a military encirclement of the country.
Perhaps this was punishment for China not following the advice of Henry Paulson in setting up their own hangman’s noose, aka radical free-market reforms?
In July 2018, The Washington Post revealed that Mariner Finance, a company owned by the private equity firm, Warburg Pincus, of which Geithner was President (and now Chairman), engaged in predatory lending behavior. The Post’s interview with many former employees of Mariner Finance included a manager trainee at a branch in Nashville who characterized the company’s business model as “a way of monetizing poor people.” [63] [64]
On March 31, 2008, Henry Paulson released “The Department of the Treasury Blueprint for a Modernized Financial Regulatory Structure“. In remarks announcing the release of the report, Paulson cited the need to overhaul the financial regulatory system, saying:
“But capital markets and the financial services industry have evolved significantly over the past decade. Globalization and financial innovation, such as securitization, have provided benefits to domestic and global economic growth; while highlighting new risks to financial markets. We should and can have a structure that is designed for the world we live in, one that is more flexible, one that can better adapt to change, one that will allow us to more effectively deal with inevitable market disruptions and one that will better protect investors and consumers.”[65]
It was clear that what Paulson had in mind in this “Blueprint for a Modernized Financial Regulatory Structure” did not refer to just the United States alone, but the entire world.
According to Paulson, the only lesson one could confidently take from the 2008 crash was that the world had not undergone sufficient deregulation. As Goldman Sachs remarked themselves, the era of deregulation opened the doors to the era of globalisation. Without the former one cannot have the latter.
On November 20, 2008, during remarks at the Ronald Reagan Presidential Library, Henry Paulson said
“We are working through a severe financial crisis caused by many factors, including government inaction and mistaken actions, outdated U.S. and global financial regulatory systems, and by the excessive risk-taking of financial institutions. This combination of factors led to a critical stage this fall when the entire U.S. financial system was at risk. This should never happen again. The United States must lead global financial reform efforts, and we must start by getting our own house in order.”[66]
In the midst of another financial crash brewing, this one threatening to be on a much larger global scale - we might do well to re-evaluate the significance when Lloyd Blankfein makes the statement in 2026 “I smell [another] crash coming”….
Due to the length of this article (they are always a lot longer than originally intended, the discussion of what China did to reign in Big Tech will be discussed in Part III, this is for certain. Part III will also include a discussion on how China escaped “shock therapy” in the 90s into the 2000s, where George Soros will feature prominently.
In Part IV of this series, I will discuss the involvement of the CIA and MI6 in their attempt to impose free-market reforms. This story will also involve Falun Gong.
In future instalments I will discuss the true origin of social credit, the significance of South Africa in all of this, as well as China’s move towards digital banking.
Cynthia Chung is the President of the Rising Tide Foundation and author of the books “The Shaping of a World Religion” & “The Empire on Which the Black Sun Never Set,” consider supporting her work by making a donation and subscribing to her substack page Through A Glass Darkly.
Footnotes:
[1] Inside Job (2010) Documentary
[2] SMEs: Small and Medium-sized Enterprises, are crucial to the economy, and used to represent 99% of all businesses in the United States and EU, providing significant employment opportunities.
[3] Regan studied at Harvard University before he served in the U.S. Marine Corps, achieving the rank of lieutenant colonel.
[4] Inside Job (2010) Documentary
[5] Inside Job (2010) Documentary.
[6] https://en.wikipedia.org/wiki/Charles_Keating
[7] The longest serving chairman of the Federal Reserve was William McChesney Martin Jr. (1951-1970) who served for 19 years. Greenspan was just a few months shy from being the longest serving chairman.
[8] Goldman Sachs at 150 Documentary. Part 6
[9] Ibid
[10] Ibid
[11] Ibid
[12] https://en.wikipedia.org/wiki/Larry_Summers
[13] Glass Steagall footnote
[14] Inside Job (2010) Documentary
[15] OTC (over-the-counter) derivatives are privately negotiated financial contracts between two parties, allowing customized risk management and investment strategies outside of formal exchanges.
[16] Inside Job (2010) Documentary
[17] Inside Job (2010) Documentary
[18] Inside Job (2010) Documentary
[19] White House Trump 100 Days | Rev
[20] Goldman Sachs at 150 Documentary. Part 6
[21] Ibid
[22] Paul Volcker famously discussed “controlled disintegration” in a November 1978 speech at the University of Warwick. He did not coin the phrase; rather, he quoted and analyzed a statement by the late economist Fred Hirsch. The quote and context surrounding this idea can be found in Volcker’s speech, titled “The Political Economy of the Dollar”. In his speech, Volcker highlighted Hirsch’s view that a “’controlled disintegration in the world economy is a legitimate objective for the 1980’s’”. Volcker explained that this concept reflects the conflict between international economic integration and the desire of modern democracies to maintain national autonomy. He added that while interdependence is clear, the practical instinct is to exert independence, making “’controlled disintegration’—modest as it may seem to be—is indeed a legitimate goal,” even though the phrase left him “uneasy”
[23] Inside Job (2010) Documentary
[24] “Henry M. Paulson Jr.” Archived June 26, 2010, at the Wayback Machine, The Nature Conservancy 2006
[25] Interestingly, Paulson’s prominent advocacy for environmentalism appears to be directly influence by John Ehlichman who was also a strong proponent. Rinde, Meir (2017). “Richard Nixon and the Rise of American Environmentalism”. Distillations. 3 (1): 16–29.
[26] https://en.wikipedia.org/wiki/John_Ehrlichman
[27] https://en.wikipedia.org/wiki/John_Ehrlichman
[28] “U.S. faces global funding crisis, warns Merrill Lynch”. The Daily Telegraph. London. July 16, 2008. Archived from the original on July 17, 2008.
[29] Lawder, David (August 1, 2007). “Paulson sees subprime woes contained”. Reuters.
[30] https://www.cnbc.com/2008/05/06/paulson-says-markets-emerging-from-crunch-wsj.html
[31] “List Of Troubled Banks Will Grow, Paulson Says”. CBS News. July 20, 2008. Archived from the original on December 2, 2008
[32] “Testimony by Treasury Secretary Henry M. Paulson Jr”. Treasury.gov. November 18, 2008.
[33] Daniel Gross (September 17, 2008). “The Fundamentals of Our Economy Are Strong”. Slate.
[34] ] “Ford Foundation Links Parents of Obama and Treasury Secretary Nominee”. The Chronicle of Philanthropy. December 3, 2008. Archived from the original on December 11, 2008.
[35] “Ford Foundation Links Parents of Obama and Treasury Secretary Nominee”. The Chronicle of Philanthropy. December 3, 2008. Archived from the original on December 11, 2008.
[36] https://en.wikipedia.org/wiki/Timothy_Geithner
[37] Milton, Susan (November 25, 2008). “Treasury nominee has ties to Orleans”. Cape Cod Times. Archived from the original on March 6, 2012.
[38] Farley, Kate (October 3, 2008). “Family describes Geithner ‘83’s youth”. The Dartmouth. Hanover, NH. Archived from the original on December 21, 2008.
[39] Speech by Secretary Geithner Archived 2014-10-25 at the Wayback Machine 24 October 2014
[40] Farley, Kate (October 3, 2008). “Family describes Geithner ‘83’s youth”. The Dartmouth. Hanover, NH. Archived from the original on December 21, 2008.
[41] Fuerbringer, Jonathan (October 16, 2003). “I.M.F. Official Is Named President of New York Fed”. The New York Times. Business.
[42] “Timothy F. Geithner” Who’s Who. Marquis Who’s Who. November 22, 2008.
[43] Becker, Jo; Morgenstern, Gretchen (April 26, 2009). “Geithner, as Member and Overseer, Forged Ties to Finance Club”. The New York Times.
[44] Irwin, Neil (November 22, 2008). “A Treasury Contender Schooled in Crisis”. The Washington Post. p. A6. “Before becoming the Federal Reserve’s chief emissary to Wall Street in 2003, he [Geithner] helped manage the international crises of the 1990s as a senior official in the Clinton Treasury Department.”
[45] “Obama picks Geithner as treasury secretary”. The Financial Express. Mumbai. November 23, 2008. Retrieved November 23, 2008. Geithner is a protege of Lawrence Summers and has been involved in the bailouts of Brazil, Mexico, Indonesia, South Korea and Thailand in the 1990s as the treasury undersecretary
[46] Tiger Economy refers to an economy that is quickly developing and growing in Asia.
[47] https://cynthiachung.substack.com/p/why-shinzo-abe-was-assassinated-towards
[48] “Timothy F. Geithner”. Experts. Council on Foreign Relations. February 2013.
[49] “Timothy F. Geithner” Who’s Who. Marquis Who’s Who. November 22, 2008.
[50] Sorkin, Andrew Ross (March 17, 2008). “JP Morgan Pays $2 a Share for Bear Stearns”. The New York Times.
[51] Labaton, Stephen (April 4, 2008). “Testimony Offers Details of Bear Stearns Deal”. The New York Times.
[52] Sidel, Robin; Berman, Dennis K.; Kelly, Kate (March 17, 2008). “J.P. Morgan Buys Bear in Fire Sale, As Fed Widens Credit to Avert Crisis”. The Wall Street Journal.
[53] Labaton, Stephen (April 4, 2008). “Testimony Offers Details of Bear Stearns Deal”. The New York Times.
[54] “July 7: Meeting About Maiden Lane, Followed by Dinner With Ralph Schlosstein”.
[55] Stewart, James B. (September 21, 2009). “Eight Days”. The New Yorker.
[56] “Morgan Stanley Granted Federal Bank Holding Company Status By U.S. Federal Reserve Board of Governors”
[57] Fletcher, Michael A.; Faiola, Anthony (March 23, 2009). “Advisers To Obama Wary of Bonus Tax”. The Washington Post.
[58] Andrews, Edmund L.; Baker, Peter (March 14, 2009). “A.I.G. Planning Huge Bonuses After $170 Billion Bailout”. The New York Times.
[59] Phillips, Michael M.; Reddy, Sudeep (March 23, 2009). “Geithner Aides Worked With AIG for Months on Bonuses”. The Wall Street Journal.
[60] Barofsky, Neil M. (2012). Bailout : an inside account of how Washington abandoned Main Street while rescuing Wall Street. New York: Free Press.
[61] “Banks reject 72% of applicants under HAMP program”. The Real Deal Miami. August 9, 2015.
[62] Moore, Malcolm (January 23, 2009). “Timothy Geithner currency ‘manipulation’ accusation angers China”. The Daily Telegraph. London. Archived from the original on January 12, 2022.
[63] “’A way of monetizing poor people’: How private equity firms make money offering loans to cash-strapped Americans”. The Washington Post. July 1, 2018. ‘A way of monetizing poor people’: How private equity firms make money offering loans to cash-strapped Americans
[64] “Private equity firms are the new predatory lenders: Report”. www.cbsnews.com. July 9, 2018.
[65] “Remarks by Secretary Henry M. Paulson, Jr. on Blueprint for Regulatory Reform”. www.treasury.gov.
[66] “Remarks by Secretary Henry M. Paulson Jr. at The Ronald Reagan Presidential Library”. Treasury.gov. November 20, 2008.
Cynthia Chung’s articles remind me of my youthful love of the Hardy Boys novels. I couldn’t wait for the next one and was never disappointed. I would read them using a torch under my blankets after lights out. Similarly, I await Chung’s offerings with the same keen sense of anticipation and am never let down.
This Goldman Sachs article unfolds like a well crafted, intelligent true crime documentary destined to become a smash hit movie at the box office, replete as it is with bad guys doing terrible things without any qualms, knowing that the cops would turn a blind eye with the D.A.’s approval.
But Chung’s article is much more than that. It’s an indictment of American criminal law and its entanglement with crooked politics and bent politicians. In my opinion it points to a slippery slope toward U.S. fascism and I use that term advisedly. I urge people to read it. They won’t be disappointed.
THE PONZI SCHEME/CASINO THAT IS U.S. & WORLD NEO-LIBERAL ECONOMICS REVEALED! GREAT PRESENTATION!