MEDIA ROOTS— Recently, economic journalist Doug Henwood was interviewed on Pacifica Radio’s “Against the Grain” to dispel various myths he and his interviewer tied to the Occupy Wall Street Movement.  One of which was about the Federal Reserve being the source of all evil.

The Federal Reserve System is the private U.S. central bank which controls our monetary policy.  And although Federal Reserve Banks are “privately owned and locally controlled corporations,” run by ruling-class elitists, we’d be worse without it, claimed Henwood.

The interviewer associated OWS concerns over the Fed with conspiracist quackery, but avoided all of the real perils of the Fed in its current structure.  Henwood’s main arguments in favour of the Fed included assuring, contrary to popular belief; it wasn’t nefariously hatched up at some secret meeting on Jekyll Island, but that it was instead “a project of many decades undertaken by the ruling-class.”  Gee, that makes me feel much better…

The scale of our modern economy, per Henwood, necessitates a central bank capable of injecting liquidity into the system swiftly in times of crisis, something the gold standard could not do.  Henwood also cited Bernanke regarding the virtues of stimulus, despite the fact that stimulus is rigged for the 1% to horde capital whilst the 99% pray for crumbs and sink deeper into debt.

The biggest problem is that the Federal Reserve system works above the law, which is why Bank of America has gotten away with dumping $75 Trillion of derivatives on U.S. taxpayers with Federal approval.  With the Fed having to answer to no one, why wouldn’t its ruling-class drivers horde profits whilst shifting liabilities onto taxpayers?  It’s unlikely to be due to the benevolence of their hearts.

Messina

***

SEEKING ALPHA— Bloomberg reports that Bank of America (BAC) has shifted about $22 trillion worth of derivative obligations from Merrill Lynch and the BAC holding company to the FDIC insured retail deposit division. Along with this information came the revelation that the FDIC insured unit was already stuffed with $53 trillion worth of these potentially toxic obligations, making a total of $75 trillion.

Many big banks, including Bank of America, issue derivatives because, if they are not triggered, they are highly profitable to the issuer, and result in big bonus payments to the executives who administer them. If they are triggered, of course, the obligations fall upon the corporate entity, not the executives involved. Ultimately, by allowing existing gambling bets to remain in insured retail banks, and endorsing the shift of additional bets into the insured retail division, the obligation falls upon the U.S. taxpayers and dollar-denominated savers.

Even if we net out the notional value of the derivatives involved, down to the net potential obligation, the amount is so large that the United States could not hope to pay it off without a major dollar devaluation, if a major contingency actually occurred and a large part of the derivatives were triggered. But, if such an event ever occurs, Bank of America’s derivatives counter-parties will, as usual, be made whole, while the American people suffer. This all has the blessing of the Federal Reserve, which approved the transfer of derivatives from Merrill Lynch to the insured retail unit of BAC before it was done.

The FDIC opposed the move, but there is nothing the FDIC can do, except file a petition for a writ of mandamus in court, against the Federal Reserve, seeking a declaration that the approval was illegal. But, the FDIC would lose, because Congress has given the Federal Reserve Board ultimate power to do whatever it wishes.

So, the bottom line is this: When something bad happens, and the derivative obligations are triggered, the FDIC will be on the hook, thanks to the Federal Reserve. The counter-parties of Bank of America, both inside America and elsewhere around the world, will be safely bailed out by the full faith and credit of the USA. Meanwhile, the taxpayers and dollar denominated savers will be fleeced again. This latest example of misconduct illustrates the error of allowing a bank-controlled entity, like the Federal Reserve, complete power over the nation’s monetary system. The so-called “reforms” enacted by Congress, in the wake of the 2008 crash, have vested more, and not less, power in the Federal Reserve, and supplied us with more, rather than less instability and problems.

This is not an isolated instance. JP Morgan Chase (JPM) is being allowed to house its unstable derivative obligations within its FDIC insured retail banking unit. Other big banks do the same. So long as the Federal Reserve exists and/or other financial regulatory agencies continue to be run by a revolving door staff that moves in and out of industry and government, crony capitalism will be alive and well in America. No amount of Dodd-Frank or Volcker rule legislation will ever protect savers, taxpayers or the American people. Profits will continue to be privatized and losses socialized.

Read more about how Bank Of America Dumps $75 Trillion In Derivatives On U.S. Taxpayers With Federal Approval.

© 2011 Seeking Alpha

MEDIA ROOTS – On Wednesday, November 2, 2011, the Media Roots team was on the ground in the streets of Oakland witnessing some great energy and bringing you first-hand coverage of the historic Occupy Oakland General Strike. 

Although the corporate media tried to shift the focus from the crimes of the ruling-class to petty vandalism by unrelated opportunists, for the tens of thousands in attendance, as this footage evidences, the daylong events were about solidarity and peaceful protest against the obscene inequality borne of class warfare waged by the 1% against the 99%. Various businesses closed in solidarity, as the Oakland City Administrator gave City workers the day off to participate.

Media Roots covered the day’s events from Oscar Grant Plaza where a festive atmosphere of unions serving barbeque, speeches, arts, and multicultural activities set the positive tone.  Participants included parents with children and teachers amongst the diverse spectrum of people.  As the day progressed, the marches swelled to some 10,000 protesters with multiple marches shutting down various Oakland banks, including Bank of America, Chase, Wells Fargo, and Citibank.  By that evening, tens of thousands of peaceful protesters successfully shut down the Port of Oakland, the nation’s fifth busiest port.

Messina

***

Media Roots delivers first-hand coverage of Occupy Oakland’s historic General Strike.

Check out our live Media Roots Radio two hour coverage of the strike here.

Check out Abby Martin’s photojournalism from the day of the strike here.

MEDIA ROOTS- In an empirical study using complex systems analysis models, mathematical theorists in Zurich have revealed the architecture of transnational corporations’ (TNCs) interconnectedness. The report bolsters the charges made of late by the Occupy Wall Street Movement touting society’s obscene inequality—1% of the population owns almost half of all U.S. wealth.  This study’s findings, an uncanny correlative of the individual TNC to the individual ruling-class elitist, reveal that less than 1% of all TNCs essentially control 40% of the global economy. 

Messina

***

NEW SCIENTIST— AS PROTESTS against financial power sweep the world this week, science may have confirmed the protesters’ worst fears. An analysis of the relationships between 43,000 transnational corporations has identified a relatively small group of companies, mainly banks, with disproportionate power over the global economy.

The study’s assumptions have attracted some criticism, but complex systems analysts contacted by New Scientist say it is a unique effort to untangle control in the global economy. Pushing the analysis further, they say, could help to identify ways of making global capitalism more stable.

The idea that a few bankers control a large chunk of the global economy might not seem like news to New York’s Occupy Wall Street movement and protesters elsewhere (see photo). But the study, by a trio of complex systems theorists at the Swiss Federal Institute of Technology in Zurich, is the first to go beyond ideology to empirically identify such a network of power. It combines the mathematics long used to model natural systems with comprehensive corporate data to map ownership among the world’s transnational corporations (TNCs).

“Reality is so complex, we must move away from dogma, whether it’s conspiracy theories or free-market,” says James Glattfelder. “Our analysis is reality-based.”

The work, to be published in PLoS One, revealed a core of 1318 companies with interlocking ownerships (see image). Each of the 1318 had ties to two or more other companies, and on average they were connected to 20. What’s more, although they represented 20 per cent of global operating revenues, the 1318 appeared to collectively own through their shares the majority of the world’s large blue chip and manufacturing firms – the “real” economy – representing a further 60 per cent of global revenues.

When the team further untangled the web of ownership, it found much of it tracked back to a “super-entity” of 147 even more tightly knit companies – all of their ownership was held by other members of the super-entity – that controlled 40 per cent of the total wealth in the network. “In effect, less than 1 per cent of the companies were able to control 40 per cent of the entire network,” says Glattfelder. Most were financial institutions. The top 20 included Barclays Bank, JPMorgan Chase & Co, and The Goldman Sachs Group.

Read more about the capitalist network that runs the world.

© 2011 Reed Business Information Ltd.

Image by PLoS One

MEDIA ROOTS – On Wednesday, November 2, 2011, Abby Martin of Media Roots was on the front lines of the bedlam in the streets of Oakland providing unembedded coverage during the aftermath of the Occupy Oakland general strike and shutdown of the Port of Oakland.

Tens of thousands of peaceful protesters successfully shut down the Port of Oakland, the nation’s fifth largest port, at 8pm earlier that evening.  About two hours later, so-called “Black Bloc” ‘anarchists,’ or opportunists, arrived in downtown Oakland, smashing windows of banks and setting trash cans on fire.

In full riot gear, the Oakland PD lined up at about 11:30 pm and marched toward the rally, now tainted by masked “Black Bloc” saboteurs.  Police started firing smoke grenades and tear gas into the crowd of people, provoking some, particularly the masked “Black Bloc” individuals, to respond by throwing bottles and other objects back at the police.  Rather than detaining the individuals engaging in property destruction, the police advanced on everyone in sight.

After the crowd scattered, the police lined up in apparent hammer-and-anvil formation to close in and arrest the remaining protesters at the Occupy Oakland encampment.

MR

***

 Abby Martin, Media Roots Founder, catches a dose of tear gas reporting from the front lines.