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The biggest problem facing investors today is that “the rules” of the game change almost every year.
What I mean is that any basic rule investors took for granted could be thrown out the window. Indeed, in the last five years we’ve seen:
1) Accounting standards at financial institutions suspended.
2) Capital requirements for banks (Basel III) postponed multiple times.
3) Fraud go unpunished.
4) Obvious insider trading amongst political officials and banking insiders.
5) Central bankers openly admit that they will lie to investors.
Why are so many laws and rules being thrown out?
The Powers That Be are committed to propping the system up by any means possible.
Spain’s banking system, by any reasonable analysis, is totally bankrupt.
The reason for this is that Spanish banks are all packed to the brim with garbage assets (mortgage loans and Spanish Government bonds… which aren’t worth the paper they’re printed on).
Consider the story of Bankia.
Bankia was formed by merging seven bankrupt regional Spanish banks in 2010.
The new bank was funded by Spain’s Government rescue fund… which received “preference shares” in return for over €4 billion (from taxpayers).
These preference shares were shares that a) yielded 7.75% and b) would get paid before ordinary investors if Bankia failed again. So right away, the Spanish Government was taking taxpayer money to give itself preferential treatment over ordinary investors.
Indeed, those investors who owned shares in the seven banks that merged to form Bankia lost their shirts. They were wiped out and lost everything.
Bankia was then taken public in 2011. Spanish investment bankers convinced the Spanish public that the bank was a fantastic investment. Over 98% of the shares were sold to Spanish investors.
One year later, Bankia was bankrupt again, and required the single largest bailout in Spain’s history: €19 billion. Spain took over the bank and Bankia shares were frozen on the market (meaning you couldn’t sell them if you wanted to).
When the bailout took place, Bankia shareholders were all but wiped out, forced to take huge losses as part of the deal. The vast majority of them were individual investors (the bank currently faces a lawsuit for over 140,000 claims of mis-selling shares).
So that’s two wipeouts in as many years.
The bank was taken public a year a second time later in May 2013. Once again Bankia shares promptly collapsed, losing 80% of their value in a matter of days. And once again, it was ordinary investors who got destroyed.
Indeed, things were so awful that a police officer stabbed a Bankia banker who sold him over €300,000 worth of shares (the banker had convinced him it was a great investment).
Which brings us to today.
Bankia remains completely bankrupt. But its executives and the Spanish Government continue to claim that things are improving and that the bank is on the up and up. Indeed, just a few weeks ago, the Wall Street Journal wrote an article titled “Investors Show Interest in Bankia.”
The story featured a quote from Spain’s Finance Minister that, “… it is logical. The perception of Spain has improved and Banki has improved a lot.”
Bear in mind, this is a bank that has wiped out investors THREE times in the last THREE YEARS. So that’s three different rounds of individual investors being told that Bankia was a great investment and losing everything.
Every single one of these wipeouts was preceded by both bankers and Spanish Government officials claiming that “everything had been fixed” and that Bankia was a success story.
And now the Spanish Government is trying to convince them to line up for a fourth round.
This kind of fraud and lawlessness is unbelievable to me. But it is indeed how the world works today. Those who have power will do anything they can to retain it. This includes, lying, cheating, and stealing.
And while certain items relating to this story are unique, the morals to Bankia’s tale can be broadly applied across the board to the economy/ financial today.
Those morals are:
1) Those in charge of regulating the system will lie, cheat and steal rather than be honest to those who they are meant to protect (individual investors)
2) Any financial problem that surfaces will be dealt with via fraud or lies rather than taking a hit. This will include short selling bans, stocks being frozen, bail-ins, and worse.
3) When the inevitable collapse finally does hit, it will be individual investors and the general public who get screwed.
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Chris Hedges: The Detention of Greenwald’s Partner on Terrorism Charges Amounts to the “Criminalization of Journalism”.
Last Friday it was reported that British officials detained David Miranda, the partner of journalist Glenn Greenwald, earlier this year at London’s Heathrow Airport for his alleged, quote, espionage and, quote, terrorism for transporting documents provided by former NSA whistleblower Edward Snowden.
Now joining us to discuss this and other recent revelations about the NSA is Chris Hedges. Chris is a Pulitzer Prize-winning journalist, former Middle East bureau chief for The New York Times. He’s a columnist for Truthdig, author of many books, including the best-selling Days of Destruction, Days of Revolt.
Thank you so much for joining us, Chris.
CHRIS HEDGES, JOURNALIST, SENIOR FELLOW AT THE NATION INSTITUTE: Thank you.
NOOR: So, Chris, let’s start off by getting your response to the British government accusing David Miranda, the partner of journalist Glenn Greenwald, who often collaborates with Greenwald, of, quote, espionage and terrorism and saying those were some of the reasons why they held him for hours on end at Heathrow without letting him speak to his lawyer or anyone else.
HEDGES: Well, they didn’t just told him. They seized all of his electronic equipment–his computer, his phone–because they were looking for some of the files that Greenwald has been using to publish his stories that were leaked by Edward Snowden. And this is just part of the criminalization of journalism which has taken place not only within the United States but within countries like Great Britain as well.
NOOR: Britain doesn’t have the same safeguards for journalists as places like the U.S. do. It was also reported earlier this year that the British authorities threatened to seize The Guardian‘s hard drives containing a lot of this material. What are the bigger–what’s the bigger ramifications for journalism not only in Britain but the rest of the world?
HEDGES: Well, there aren’t any safeguards left within the United States as well. I mean, remember that the security and surveillance state seized all of the AP phone records. And let’s not forget that the security and surveillance state has the phone–all of the electronic communications of every journalist in this country. They’ve used the Espionage Act aggressively seven times, the last time being against Snowden, to make sure nobody does talk to the press to expose the inner workings of power.
So we once had, at least legally, more protection as journalists than were provided to journalists in Great Britain. But all of it’s gone up in smoke, both here and there. There is no protection left. Jim Risen at The New York Times is fighting back against government efforts to make him reveal his sources in the story on more or less wiretapping, and he said that he would be willing to go to jail rather than give up those sources. So this is kind of a global assault where we’re not at this point any more protected here than we are anywhere else. And what this really, I think, points to is the fact that the security and surveillance state is global and it serves, essentially, global power, which is corporate.
NOOR: Now, the NSA and its defenders, they cite 54 terrorist plots they have been able to supposedly thwart due to this massive spying. But a recent report by ProPublica found that the NSA was only able to provide evidence in four of those cases. Why do you think the NSA is not providing additional evidence for those remaining 50 cases?
HEDGES: Well, because they’re lying. And, you know, government officials like Clapper have been lying throughout this entire process. Barack Obama has lied. And that’s just part of, you know, the spin that they’re throwing out.
What’s interesting is that a lot of times when they lie, they get caught because of courageous whistleblowers like Snowden who expose their lives. And I was a victim of this in the–I was part of one of the plaintiffs in the Amnesty International v. Clapper lawsuit that went to the Supreme Court. And the Supreme Court threw out the case because they said I and the other plaintiffs did not have standing. And they made that judgment on the fact that the government said that if any of us were being watched or had government surveillance, we would be informed.
Well, we now know that the government lied, and we know the government lied because of the leaks by Snowden. So this is a government that, like most governments, has a very callous regard for the truth. And, you know, if you believe that they stopped 54 terrorism plots, then, you know, come see me. I’ll sell you land in Florida, the Brooklyn Bridge.
NOOR: Ed Snowden has continued to provide outlets like The New York Times, which released a front-page story Sunday about ongoing new information about NSA programs, yet backers and supporters of the NSA continue to push back. Some of the arguments include saying, if you have nothing to hide, there is nothing to worry about; this NSA spying shouldn’t concern you. Is there any historical precedent for citizens to be concerned about government surveillance? And how do you respond to arguments such as those?
HEDGES: Well, you don’t want to give this kind of power to the state, because–and I speak as a journalist–because it makes it absolutely impossible to carry out any serious investigation of power. No source is going to reach out to you, because they know full well that the government has all of the electronic footprints that you make in trying to contact a journalist. And I think one of the reasons that Snowden went public almost immediately is that he knew that the government had all of Greenwald’s communications and it he would very quickly trace it back to him. That’s the problem.
It’s not a matter of nothing to hide. That’s an inverted question. The government has a lot to hide. And this kind of mechanism is a kind of a failsafe device by which whatever the government wants to do, however criminal, however corrupt, however fraudulent, however anticonstitutional, it never gets found out. That’s the real issue.
NOOR: And in light of Snowden’s revelations about how the U.S. government is spying on the German government, including tapping Angela Merkel’s cell phone, over 50 public figures in Germany have called for the German government to grant Snowden asylum. What’s your response to this growing–both the growing backlash against what Snowden has revealed and growing support in places like Germany that he be protected?
HEDGES: Well, I hope he does get granted asylum. He’s only got a kind of temporary one-year asylum in Russia. And I hope some government steps in to give him the kind of safeguards that he should have within this country but is probably never going to get. You know.
I mean, the tapping of Merkel’s phone is a kind of window into how this pervasive intrusion of privacy and surveillance has nothing to do with terrorism. It has to do with iron control, even among people who are purported to be our allies. And it isn’t just Merkel–I mean, the millions of records that they swept up in Spain and France. And it is a absolutely staggering intrusion into the lives not only of Americans but of foreign citizens. And it has nothing to do with protecting those citizens, and it has everything to do with protecting a state, security and surveillance state, corporate state that has less and less legitimacy as these kind of revelations become more public. You know, it’s clear that we have undergone a kind of corporate coup d’état in slow motion, and it’s global.
NOOR: Chris Hedges, thank you so much for joining us.
HEDGES: Thank you.
NOOR: You can follow The Real News @TheRealNews on Twitter, and you can follow me @JaisalNoor. Feel free to Tweet me questions, comments, or story suggestions.
Thank you so much for joining us.