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LECTURE TRANSCRIPTS BASED ON THE
BOOK THAT COULD HAVE ALERTED YOU
OF THE GLOBAL FINANCIAL CRISIS THAT
WALL STREET, ALAN GREENSPAN,
AND THE FEDERAL RESERVE
FAILED TO SEE COMING !
Book recommended by :
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International paperback edition
currently available through
www.amazon.com
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For the first time in American History and in the Age of
Turbulence, find out what Alan Greenspan failed to see !

ORIGINS OF THE FINANCIAL CRISIS IN WALL STREET
Copyright © 2009 by Shivaprasad Srikantia. All rights reserved.
Contains extracts from the book titled AMERICAN CAPITALISM,
AMERICANOMICS, & MULTINATIONAL CORPORATIONS - The concealed
economic and political secrets of capitalism that made America
a superpower in less than one century, by Shiv Srikantia.
PLEASE CLICK ON BOTTOM RIGHT CORNER OF THIS TEXT
WINDOW TO VIEW THIS ESSAY IN FULL SCREEN MODE
Through widespread ignorance, the unstable nature of American capitalism had been adroitly hidden
from public view for nearly 50 years. The recent fiascos have uncovered holes. The Federal Reserve
administration was overly dependent on mathematical models that did not reflect economic reality.
What the Federal Reserve projects as sound fundamentals for a stable economy may actually be
unsound in reality. Incidentally, research shows that stock market crashes have occurred despite low
inflation, low interest rates, and low unemployment levels. This suggests that the mere presence of
sound economic fundamentals do not ward off stock market crashes or obstruct the generation of
economic bubbles.
President John Kennedy was deeply suspicious of the Federal Reserve. In a vicious power struggle,
the Federal Reserve had taken away vital powers from Congress in matters relating to the supply of
money. John Kennedy abhorred the idea of the Federal Reserve consorting with Wall Street banking
mammoths to control the supply of money. Afer John Fitzgerald Kennedy was assassinated, the
Federal Reserve became an institutional apparatus utilized by the banking giants to fabricate public
perception and create economic illusions. Major banks from London, Germany, Paris, and Amsterdam
influenced the Federal Reserve. John Kennedy firmly held the view that the Federal Reserve violated
the spirit of the American Constitution. But common citizenry within the American democracy were
kept unaware that big banks were clandestinely controlling the supply of money through the Federal
Reserve apparatus. In fact, powerful banking cartels in New York managed to have politicians and
legislators make laws that forbid financial analysts from publicly making negative statements about
the economic health of banking institutions. This censorship system was put in place to hide facts
from the general public. Therefore, common citizens walking down the streets of America could not
be forewarned about potential bank failures in Wall Street. Another issue hidden from the public was
that the Federal Deposit Insurance Corporation (FDIC) that insured bank deposits did not have
adequate financial muscle to handle multiple bank failures during a highly contagious financial
epidemic. Incidentally, within a span of twelve months, nearly 50 banks in America went belly up like
dying insects.
Economies might actually chug along better with a small string of bubbles. Therefore, the American
Federal Reserve seemed open to the idea of making the economy run with a precise set of
mathematically stacked bubbles. The Federal Reserve helped create economic bubbles periodically
raising and lowering interest rates. The pivotal idea was to create containable bubble cycles within
well defined parameters. Perhaps, it was believed that containable bubbles would initially provide a
positive impetus to the economy and later deflate without explosive violence. Bubble economies
typically run through a course of 14 years. However, mid-term catastrophes may occur after the first
7 years. A successfully run financial bubble scam can run undetected for a period of 14 years.
Wall Street bankers and the Federal Reserve also evolved a brilliant financial scheme where big
chunks of economic shock could be transferred to unsuspecting economies of European nations. For
instance, many foreign banks had been carefully conned to make risky investments in American
mortgage-backed securities. This way, banks in Europe were forced to take some of the shock from
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Wall Street catastrophes. In fact, in the recent financial crisis, the Federal Reserve was unwilling to
publicize information on the list of foreign and local banking institutions that were a part of the AIG
bailout package. The Federal Reserve wished to conceal the identities of AIG derivative
counterparties. The element of secrecy clearly points to the likelihood that the Federal Reserve is
being covertly used by a powerful banking cartel orchestrating speculative financial rackets on a
global scale.
The Federal Reserve played an indirect role in misleading investors in the dotcom bubble and the real
estate bubble. In both these instances, it tried to create American wealth out of thin air. In American
capitalism, the rejection of the Gold Standard for currency was part of a grander design. Republicans
in the Richard Nixon administration had probably realized that severing the link between currency
and gold would allow greater prosperity through public deception. Meanwhile, wealthy Republicans
of the Reagan generation began to believe that financial markets could regulate themselves.
In America, stock market crashes are typically engineered to occur in February, March, June, and
September. The financial fraternity uses the services of a new breed of mathematicians known as
financial engineers. Financial engineers are interested in studying risk and uncertainty to navigate
through an economy riddled with bubbles. Instead of trying to understand how genuine free market
economics actually plays out, economists and financial engineers are trying to create a virtual reality
bubble game that moves away from ground reality and encourages speculation and counter-
speculation. There are shrewd financial tycoons in Wall Street who know how to navigate adeptly
through economic bubbles and become richer.
At the time of World War II, Japan and Germany were America’s worst enemies. After the great war
however, bankers in America, Japan, and Germany shook hands and became partners in business.
After World War II, Japan and Germany poured money into Wall Street to create economic bubbles.
Wall Street became the preferred venue for orchestrating billion dollar financial scams with a
transcontinental footprint. This scam structure was devised intentionally by an international cartel of
bankers, business tycoons, bureaucrats, and politicians. Swiss banks were part of an extensive
international setup to carry out large scale money laundering in complete secrecy.
The key reason for the financial fiascos in America was a financial experiment that failed.
Mathematicians and economists were trying to force the American economy to run according to an
exotic mathematical model they created. In plain terms, this was as challenging as attempting to make
mother nature follow the weather patterns forecasted on the NBC evening news channel.
In financial circles, Wall Street executives were known for making shady deals. In many historical
instances, Wall Street executives have been known to be brilliantly unscrupulous. However, at one
point in time, America’s Treasury Secretary was a former Wall Street executive. The idea of allowing
the American Treasury to be run by former Wall Street executives might appear distressing. But
economists from the Chicago school might collectively point out that many types of deception and
fraud actually have a positive impact on the American economy. In many capitalistic societies, the
very pillars that support a nation’s economy largely depend on public perception. It follows that some
amount of public deception may actually turn out to be good for the economy. Wall street tycoons will
claim that deception can be used effectively as a purgative to relieve economic constipation.
In Japan, high savings rates gradually lead to excess funds available for speculative investments.
Between 1986 and 1990, the Japanese economy supported economic bubbles that successfully inflated
stock prices and land prices. Japan’s real estate industry was politically very powerful. Low interest
rates created real estate bubbles that encouraged speculation. With ruthless speculation, the price of
real estate in Tokyo ripped through roofs. Through economic bubbles, the Japanese added more fizz
and sparkle to stock market transactions. In the last century, over half a dozen economic institutions
in Japan have collapsed. However, Japanese society sees these casualties as a part of healthy
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competition in everyday life. Every year, thousands of factories in Japan shut down due to ruthless
competition. Incidentally, history records reveal that stock market indices in Japan have witnessed an
800 percent jump in just 15 years.
A great deal of share price fluctuations in the stock market and fluctuations in international currency
exchange rates occur everyday. It is this type of irrational speculation that causes the price of oil
barrels to rise and fall. Speculators can gradually destroy the industrial framework of a nation. There
is no running away from this discomforting fact. The fixation on stock markets can ruin good
companies. The fact that the share prices of General Motors sharply fell from an outrageously high
$ 75 to a horrendously low $ 3 shows that there is something radically wrong with the way stock
markets evaluate businesses. Companies are either overvalued or undervalued by speculators. More
than inefficiency or outdated technology, random guessing by bad speculators can ruin a good
engineering company. Unfortunately, the world economy is being run by speculators, while orthodox
industrial production is losing meaning.
Some Western economists feel that the thrift practiced by Asian nations are partly responsible for the
financial crisis in the West. Emerging Asian economies experiencing high growth rates and high
incomes began living frugally and stashing away enormous sums of money. Wealth accumulated
through savings was then channeled into speculative investments in real estate the stock markets.
Some Asian money was also funneled into America and Europe. The scene was now set to create
economic bubbles. Quite simply, many banking institutions in America collapsed under the
psychological weight of all this money. Perhaps, Wall Street handled the sudden influx of money
from Asia in an irresponsible way. They gambled with the money.
One cultural issue that makes America so different from other nations is her optimistic belief that all
problems in the urban universe can be phrased as simple mathematical equations and solved elegantly
by a computer. In the American banking industry, arcane mathematics and computer simulations were
being used in place of precious human intuition to assess financial risk. For nearly two decades,
American mathematicians have been trying to discover the use of integral calculus, matrix algebra,
and game theory to run civil society. Several decades ago, a mathematical prodigy named Arnold
Rothstein, had dropped out of school to devote his time to evolving sophisticated success formulas
for gambling, loan sharking, and racketeering operations. Eventually, the Rothstein algorithms found
their way into institutions in Wall Street. Thereafter, in 1981, Ronald Reagan brought about more
financial deregulation. The new objective of American capitalism was to consolidate economic and
political power in the hands of a few. This was done to move political power to the rich classes.
In the last century, many American business corporations went bankrupt primarily because they let
computers solve business management problems. The unique power of human intuition could never
be incorporated into computer programs. Software packages typically oversimplified business
problems and provided a solution based on a mechanical algorithm. The absence of human intuition
in decision making wrecked many American manufacturing companies. Incidentally, rigorous
mathematical analysis and computer simulations at the War Room of the Pentagon had revealed that
the war in Iraq could be won in a few days. The war simulation computers serving the George Bush
administration oversimplified the invasion, guaranteed a quick victory, and grossly miscalculated the
cost of war. Unfortunately, the passion for misapplied mathematics has landed the American nation
in a lot of trouble.
Until 1925, nations of the world looked up to America to help set higher ethical standards. At that
time in history, America was perceived as a role model nation with a praiseworthy agenda. The
original intent of American imperialism was to persuasively thrust industrial culture over agrarian
nations languishing in poverty. The laudable goal of American imperialism was to extricate third
world nations from poverty and make them somewhat prosperous. Americans from the old school
were essentially imperialists with noble intentions. After 1950 however, there was a shift in values
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in the international political arena. After dismantling their colonies, nations in Europe wished to
discover new ways of pillaging poor nations for economic gain. So, industrializing nations of the
world looked up to America to help set lower ethical standards to facilitate unfair trade, business, and
speculation in the markets.
The story of America is an enthralling rags to riches story. Without the mandate of common citizens
in the American democracy, American capitalism firmly hinged on the idea of attaining economic
prosperity at the expense of others. Though mainstream cultural values in America opposed
imperialism and unfair trade, an underlying structure of political ignorance in American society
allowed politicians with ties to imperialistic multinational corporations to come to power in the White
House. In the American democracy, citizens had voting rights but very little political influence. For
over 70 years, American multinational corporations in search of crude oil and mineral deposits have
engaged in industrial banditry. Subsequently, the corporate tax scheme funneled a part of the pillaged
wealth into the American Treasury. Therefore, the American government was utilizing multinational
corporations as middle men in a gigantic scheme of looting third world nations. The critical point to
note is that governments are not sacrosanct organizations as widely believed. All over the world,
governments are manipulated by special interest groups and the ruling elite.
The opulence visible in American cities and the White House banquet halls was fundamentally wealth
pillaged from poor nations in South America. The enormous sums of money the American government
invested in scientific research, medical research, and NASA apace programs was actually money
ilegally annexed from weaker nations. With the key idea of reviving faltering economies after World
War II, America was chosen to lead industrial societies in Europe down a fresh pathway of
consumerism, crafty trade politics, rouge warfare, and corporate fraud. One distinct cultural advantage
America had over European nations was that she did not have a critical pool of left wing intellectuals
who would stand up and raise issues of ethical propriety. So, American corporate executives could
perfect the art of economic deception and corporate fraud without hindrance from high brow
intellectuals.
In December 2008, the former Chairman of NASDAQ was arrested by law enforcement agencies on
suspicion of running an illegal $ 50 billion pyramid money scheme. At present, about 50, 000 cases
of corporate fraud are under Federal investigation in America. In modern societies, rapid
industrialization had created education systems that focused narrowly on teaching technology, medical
science, accounting, and money management. Industrial societies neglected liberal arts education that
could have brought a greater level of social civility in a world of ruthless competition. Wall Street
bankers without a good liberal arts education have clearly exhibited a lack of inner conscience. They
have also failed to discover that there is more to a civilized society than just financial transactions.
Psychoanalysts have been researching the complex behavioral patterns of American chief executives.
Psychologists have observed that narcissistic traits can propel executives to high positions of power.
In management boardrooms, narcissism and haughtiness are actually considered leadership qualities.
Lately, top executive talent is being more closely equated with the ability to conceive new accounting
schemes and engage in financial gimmicks that help boost share prices. American executives measure
their self worth by the perks they receive. Top executives have to flaunt their corporate perks to gain
political clout within their fraternity. In corporate boardrooms, executives who travel in sleek
corporate jets and choppers command more respect than those who travel first class. Executives who
practice austerity run the risk of eroding the brand image of American companies. A former executive
of Merill Lynch had to spend over a million dollars to remodel his office while his company was in
dire straits. Obviously, the remodeling was an urgent attempt to help boost the sagging image of the
company and help restore confidence.
Quite often, corporate executives of ailing businesses in America intentionally flaunt their perks to
restore public confidence. Incidentally, when Citicorp experienced financial problems, the executives
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clinched the idea of buying a corporate jet to boost the company’s image. Perhaps, with the honorable
intention of restoring faith in American financial institutions, the executive board of Citicorp was
willing to cough up $ 50 million for a brand new corporate jet. However, the ploy backfired when
President Barack Obama expressed extreme displeasure at the way Federal bailout money way being
inappropriately allocated for corporate perks and bonuses.
The practice of paying undeservedly high salaries and bonuses for underperforming corporate
executives in Wall Street suggests that the elitist classes have formed their own financial club. Boys
of this fortune club are insulated from the vagaries of economic recessions. Members of the fortune
club are entitled to generous bonuses and golden parachutes even when dark clouds appear over the
nation’s economic horizon. American executives of the fortune club can pay themselves hefty bonuses
and uncork champaign bottles even when their businesses are going bankrupt. Furthermore, tax payers
money in the form of Federal bailout packages can be legally utilized for paying bonuses to corporate
executives of sinking businesses. In fact, during the recent economic downturn, incompetent Wall
Street executives took home nearly $ 18 billion in bonuses. Perhaps, the fortune club might point out
that the bonus packages were stimulus packages intended to motivate underperforming executives in
the fortune club.
The recent financial crisis had Hillary Clinton do a reality check and discover that the economies of
America and China were gravely intertwined. In reality, during her recent visit to China, Hillary
Clinton urged China communists to support instruments of the American Treasury. Chinese
communists hold $ 650 billion worth of American securities. At times of economic distress, when
communists buy American Treasury bills, they would essentially be bailing out the American
government. Therefore, the trade relationship between China and America is actually a laughable
financial relationship of dependence between communists and capitalists. Interestingly, the economic
success of communism in China is tied to the economic success of capitalism in America. The
corollary also holds true.
Certain varieties of capitalism in rich countries are sustainable only when cheap labor, cheap minerals,
and cheap consumer goods imports are available from impoverished countries. Many American
companies cannot survive in business unless they out source high skill jobs to low wage countries and
cut payroll costs. Their business models are not sustainable with wages prevailing in America. In
industrial societies, rapid economic growth and inflation benefit the rich faster than they benefit the
poor. In other words, when rapid economic growth begins to occur, economic components that benefit
the rich rise more steeply than the components that benefit the poor. This phenomenon widens the
economic divide between the rich and poor. Therefore, most communist governments intentionally
seek gradual economic growth. Unlike capitalist states, socialist states wish to control key industries
and carefully restrict economic growth to smaller increments. To communists, GDP and economic
growth rates are ideologically less important than the welfare of the starving proletariat. Therefore,
it would be inappropriate to compare growth rates in parallel while evaluating the performances of
capitalist and socialist economies.
Neither communism nor capitalism in their present forms have the functional sophistication to be able
to help nations maintain independently sustainable economies. In fact, both types of economic
operating systems have their share of glitches, and bugs. However, until a better economic system is
devised, communism and capitalism should both remain as unviable alternatives within the world’s
ecological system. In the last century, economic research was hampered by politicians who failed to
see communism and capitalism as purely economic issues.
By about 1960, the economic issues relating to capitalism and communism began to be politicized in
international circles. Instead of amicably sitting down at a round table and objectively examining the
pros and cons of these two economic systems, politicians were trying to find a military solution. Here
was an economic issue that politicians were trying to solve using military might. Instead of getting
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top economists from America, Europe, and Asia to take a serious look at the flaws within capitalism
and communism, Henry Kissinger was busy closing the missile gap between America and the Soviet
Union.
There have been serious allegations from socialist groups that governments in third world countries
are being corrupted by multinational corporations. Fanatics of socialism often pointed out that
capitalists had played a major role in corrupting socialist governments of third world nations. Poorly
paid bureaucrats in socialist states had been found to accept bribes from capitalists. Due to widespread
capitalistic corruption in the international political arena, socialism was never given a fair chance to
succeed.
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