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Posts Tagged ‘free enterprise’

Trash life of a man

For no rede than his bad luck;

What motive you seek

If he simply wants control

His life to hell, if so be?

Mart can swing back and forth

And throw lives to penury and want,-

And leave men to gutter.

Even so good folks bless their own kind

By mart’s munificence.

Hypocrisy thrives where chance rules

And throw a loaded dice.

Trash life of a man

For no rede than his bad luck;

What motive you seek

if your wine tastes but poison

And aftertaste (is) horror of hell

While Lazarus lay at the gate?

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Aesop Fables

The fox who got trapped

A fox while strolling through a woodland came across an old tree that had stood the test of ages. ‘Liberty tree!’ cried the fox with his patriotic feelings welling within. It was grand old tree that had majesty. The roots were well dug into the soil and the branches were all spread to catch the sunshine all through the year.
Mr. Fox saw a large gap and said, ‘I smell food.’ He dived through the gap to investigate. As he had imagined it was parcel of food left by some workmen. Whoever left there had evidently forgotten. ‘Finders keepers!’ the fox knew that in a system of free enterprise his initiative had to be rewarded. He ate and ate till his belly was fit to burst. Only that he found himself trapped in the hollow of the tree and panic set in. He hollered and sang patriotic songs hoping that he would be delivered. Oh no one came. Then a fox passed by and Mr. Fox shouted and he was heard.
The passing fox asked what was the matter and he said he could not get out.
The fox shrugged his shoulders and said, ‘You big capitalist fox, sweat it out. Once you have digested and feel hungry it is time to come out as you went in.’
Mr. Fox ‘ You mean there is no such thing as manifest destiny?’
‘Oh don’t be ridiculous,’ he said,’ You are in no way set apart to exploit opportunities all through.’
Mr. Fox didn’t like to be told that he was a fool but he did get out of the gap when he had trimmed himself by starvation.
benny

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While Europe was in upheaval what with france and Germany were in direct conflict the USA was toting the profits and losses of the divisive Civil War. Naturally carpetbaggers were all over the place and their schemes found the right climate under the Reconstruction program. Ulysses S. Grant was inaugurated as President of the USA like Dwight D. Eisenhover on the strength of his military acumen. On the same day of his elevation his opponent Robert E. Lee was breathing his last. So much for the background.
Enter two shady wheeler- dealers one of them is James Fisk Jr., who made his fortune selling fifty-three million dollars of watered down Erie Railway stock.The other was equally unscrupulous Jay Gould. Once they had struck a deal with Boss Tweed they were playing for very high stakes. Boss Tweed ran New York as though it were his personal fiefdom. His Tammany Hall ring had their finger in every pie. It was time for them to corner the United States gold market and it began in September, 1869.
In order to prevent Treasury from making difficulties Gould secretly enlisted the aid of his friend Abel R. Corbin who was married to President Ulysses S. Grant’s sister. He was hardly onto five months in office. President was certainly a military genius but naive about the intricacies of government finance. Corbin’s advice to keep the price of gold high sounded right since he explained that such an act would boost the nation’s economy. Grant gave his assent while Fisk and Gould went on a rampage cornering the gold market when the price was low.(On 2 September Gould began buying gold on a large scale; on 15 September, Fisk also began buying heavily and soon forced the price from $135 to $140.)
In late September the President realized his error. Immediately he ordered the Treasury to release the nation’s bullion reserve onto the market. Gold prices plummeted. The stock market crashed. It is known as Black Friday of 1869. Gould who was sufficiently warned in advance sold his gold in time and made an eleven million dollar profit. Don’t you believe when one tells you there is honor among thieves. Not in this case. Gould didn’t forewarn his partner who lost everything including even the shirt off his back.
Five days later sans gold but laden with plenty of names and dates Fisk went over to the NY Herald ready to tell all. The names included Gould, Corbin, assistant treasurer Daniel Butterfield and most explosive of it all,Grant himself. President Grant was vulnerable and the newspaper was in a dilemma. If Bennet ( who was Fiske’s drinking companion) didn’t publish a rival paper would soon get hold of it. His instinct told it was a scoop of a lifetime. If it went awry his position in the USA would be precarious.
He made his reporters thoroughly investigate and report. At last the Hearld published the news where the President’s role was down played and Bennet’s connection with Fisk was altogether deleted.
aftermath
In time of its publishing the newspaper tycoon Bennet escaped to Paris for the furore to die down.
It was while in Paris looking for another scoop that James Gordon Bennet Jr. hit upon the idea of sending Henry Morton Stanley a reporter under his pay to Africa and this would change his life altogether. His meeting Dr. Livingstone at Ujiji was sensational.
Jay Gould
During the Great Southwest Railroad Strike of 1886 he hired strikebreakers; according to labor unionists, he said at the time, “I can hire one-half of the working class to kill the other half.”There is an anecdote where this robber baron was fleeing from law and all his ill-gotten gains were in tact in his valise. He seemed to have told with a laugh,’Nothing is lost except honor.’
James Fisk
On the other hand Fisk died relatively young. He was shot by Ed. S. Stokes.
Fiske a married man had a relationship with Josie Mansfield a show-girl. Mansfield eventually fell in love with Fisk’s business associate Edward S. Stokes.
In a bid for money, Mansfield and Stokes tried to blackmail Fisk by threatening the publication of letters written by Fisk to Mansfield that allegedly proved Fisk’s legal wrongdoings. A legal and public relations battle followed, but Fisk refused to pay Mansfield anything. Increasingly frustrated and flirting with bankruptcy, Stokes shot and killed Fisk in New York city on January 6, 1872. Fisk gave a dying declaration identifying Stokes as the killer, and Stokes served four years of a six year prison sentence for manslaughter. Fisk was loved and mourned by the workingmen of New York and the Erie Railroad. During the Stokes trial, Fiske’s quick assistance to the victims of the Great Chicago Fire was remembered in a song, “Jim Fisk (He Never Went Back on the Poor)”.

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Economics for Dummies

In trying to understand the economic meltdown of 2008 what we need to accept is a simple truth no single cause shall ever be found(1). Scholarly hairsplitting on the Great Depression of 1929 has not yet settled what caused it.The school of Milton Friedman and of Joseph Maynard Keynes have their adherents and their positions are deeply entrenched so any of these more or less expresses itself in the economic thinking of nations. Those who believe in a large role for the state in the economy believe it was mostly a failure of the free markets and those who believe in free markets believe it was mostly a failure of government that compounded the problem. This being the case one cannot rest assured a single cause made it happen. Such inexactness rules the market forces just as supply- demand can never match without pricing coming into the play. Thus there are many factors that caused the meltdown of 2008 or depression of 29..

One law was set in place as a result of the Depression of 29.

Glass- Steagall Law of 1933 divided banks into commercial and investment banking. This law resulted in Federal Deposit Insurance Corporation for insuring bank deposits.Rediscounting is a way of providing financing to a bank or other financial institution. Especially in the 1800s and early 1900s, banks made loans to their customers by “discounting” their customer’s notes.

Such a note is a paper document, in a specified form, in which the borrower promises to pay a certain amount at a specified, future date. For example, assume that a customer wants to borrow $1000 for one year. In exchange for giving him $1000 today, the bank might ask him to sign a note promising to pay $1100 one year from now. The bank is “discounting” the note by giving the customer less than the note’s $1100 face value. The extra $100 is the bank’s compensation for providing the $1000 to the customer before the note matures,The Federal Reserve System in turn provided financing to the bank by rediscounting this note by giving the bank $1050 in exchange for this note. This Federal Reserve System was the bugbear for certain financiers who vilified it as state intervening in the free market.

Why should these financiers castigate FRS if they were set in place to oversee an orderly transaction between supply and demand factions across the counter?

Naturally for those who wanted to take risks and self aggrandize the law was an obstacle. Gramm-Leach Bliley act of 1999 was enacted precisely to cut the ground from under the feet of FRS from effectively functioning. This was done to give unfair advantage to Citicorp a commercial bank holding company.

Citicorp-a commercial bank holding company merged with an insurance company in 1998 to form Citigroup, a corporation combining banking, securities and insurance services.This combination, announced in 1998, would have violated the Glass-Steagall Act and the Bank Holding Company act of 1956 by combining securities insurance and banking. The law was passed to legalize these mergers on a permanent basis.

Also note the curious fact: the Gramm-Leach-Bliley Act was passed in November 1999, repealing portions of the BHCA and the Glass-Steagall Act, allowing banks, brokerages, and insurance companies to merge, thus making the Citigroup/Traveler Group merger legal.Top Citigroup officials were allowed to review and approve drafts of the legislation before it was formally introduced.

Also noteworthy is this:After resigning as Treasury Secretary and while secretly in negotiations to head Citigroup, Robert Rubin helped broker the final deal to pass the bill. He later became one of three CEOs that headed up CitiCorp.

Was Citigroup for serving the nation or for serving the vested interests?

2

Two years ago (2007)Citigroup was worth $273bn. Now it is worth just 20bn. This loss was not incurred in the pursuit of giving service to the clients fairly and responsibly as was expected of a commercial bank according to its original avowed principles. In the climate of reaganomics and unfettered risk taking to give heavy profits to a chosen few, the CitiCorp outplayed itself. The citiCorp was in trouble It tried to cover its credit crisis by brazenly trying to do just the opposite:Citigroup suffered a significant setback at the end of September, when its deal to buy regional bank Wachovia was trumped by an offer from rival Wells Fargo.(If the deal had gone through, it would have given Citigroup billions in additional deposits, boosting investors’ confidence and possibly preventing the steep share price sell-off.)

It has been battered by the meltdown in sub-prime mortgages – made to people on low incomes or poor credit ratings.

Citi has lost heavily, and its share price has fallen from over $55 in 2006 to less than $4, on par with lows last seen in late November when the US Treasury announced a $45bn rescue plan accompanied by a $306bn guarantee for Citi’s most risky loans.

If the bank had been allowed to collapse, it could have caused financial havoc around the globe, seizing up fragile lending markets and causing untold losses among institutions holding debt and financial products backed by the company.

Citigroup’s operations stretch around the globe with 200 million personal bank accounts in more than 100 countries.

In 2007, the bank’s total revenues topped $159bn, not far off the GDP of Chile.

Recent creation

Citigroup itself as a unified institution is relatively new. It was formed in 1998 through the $140bn merger of the bank Citicorp and the financial conglomerate and insurance firm Travelers Group.

However, the history of the bank dates back to the earliest years of the United States, with the foundation of the City Bank of New York in 1812.

Ever since, the bank has played a central role in the financial history of the US.

By 1895 the National City Bank of New York, as it had become, was the largest bank in America.

In 1918 it was the first American bank with more than $1bn in assets, and by 1929 had become the world’s biggest commercial bank.

In 1955 the bank altered its name to the First National City Bank of New York, and then in 1976 became Citibank – while its holding company changed its name to Citicorp.

In the 1970s, the bank was one of the first to pioneer the use of ATM machines, and by the 1990s it had become the world’s largest issuer of credit cards and charge cards.

Mergers

Through a series of big mergers, Citi then built itself into a financial giant – offering customers everything from personal bank accounts and credit cards, to investment banking and wealth management.

The idea behind these mergers, with banks such as Mexico’s Banamex and Poland’s Bank Handlowy, was to create a financial group which would be big enough to deal with any crisis.

However, critics say that crucially Citi failed to control its expenses, and as it grew it became unwieldy and unfocused.

The losses that Citigroup built up as as result of the credit crisis have exposed some of the bank’s problems that critics claim had been hidden by profits during the years of booming house prices.

Group profit soared from $17.8bn in 2003 to $21.5 billion in 2006.

But as the crisis intensified, Citigroup’s fall has been equally dramatic, culminating in the $8.29bn loss during the October to December quarter in 2008.

Without such a deal, Citigroup had few options but to go cap in hand to the US government.

Ack: wikipedia, BBC News16 January 2009 -tim bowler- business reporter/ citigroup)

benny

(1)In relation to the 1929 downturn, historians emphasize structural factors like massive bank failures and the stock market crash, while economists (such as Barry Eichengreen, Milton Friedman and Peter Temin) point to monetary factors such as actions by the US Federal Reserve that contracted the money supply, and Britain’s decision to return to the Gold Standard at pre-World War I parities (US$4.86:£1).

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Capitalism is where hope of affluence is the carrot that leads the ass; crapitalism is the stick that the system applies on the way for no good reason than greed takes over it.

benny

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The US government’s latest bailout strategy will target big investors to buy more than $1 trillion in troubled assets from the banks. ‘The hope is that, free from the drag of subprime mortgage debt and other bad investments, banks will be more likely to start lending money again and the economy will rebound’.

But investors said Monday they were unlikely to buy into the idea unless the government puts up a lot of the money and promises to absorb a lot of the losses if things go badly.

“The first loss has got to be the government’s,” said Wall Street veteran Muriel Siebert, who runs the brokerage Muriel Siebert & Co. “Maybe the first 25 percent of losses. We don’t know what’s in some of those bonds.”

Billionaire Wilbur Ross, who runs the private equity firm WL Ross & Co., said investors want to know how much risk the government will accept if the investments go sour, and how much money the government is willing to put up — likely in the way of low-interest loans.’
Investors want the Obama administration to give them a free hand in other words to continue business as usual. Had they learned to be committed and responsible with other people’s money this LaurelenHardian ‘fine mess’ would not have arisen in the first place. Now it looks the investors want to play with tax money of the Americans once again. Of course all that havoc they would create if their optimism were to go haywire in future transactions they can blame it on the Administration. This must be what motivates their demand for a deal.( ack: Matt Apuzzo and Stevenson Jacobs, Associated Press)
benny

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How Open End Kept His Promise©
(selected from the Adventures of Open End. Open End was a pirate who only wanted a piece of the action at a time when the kings of Old Europe thought the Americas was ready for plucking. There was so much gold and silver over which no one had any exclusive rights, divine or otherwise. The Divine Rights that Europe touted in their domain didn’t extend there. Open End saw so much wealth and exclaimed, “I have needs therefore I exist.” Philosopher Descartes could not have summed it more succinctly. Only after he said ‘yea’ to free enterprise did he realize all he deserved for his pains was a rope from the yard arm. Well he knew how to play the game while the Kingdoms of this world played the Great Game.

Out of seven adventures this story is the first.)
…While Queen Elizabeth ruled England, Old Spain together with Portugal would have carved the wealth of Americas between themselves if they could. But news such as this cannot be hid for long. It was only a matter of time the news reached the ears of the Sultan of the Ottoman Empire.
“The New World shall never survive this!” exclaimed those officials who counseled the Sultan; but he had his own plate full at the moment. He did not care for the Americas or Helios.
Helios was a one-camel town in his empire, which was collapsing under neglect. In a small town where the only exciting feature was the town- gate that led one out, Murcius, a young lad was dying of boredom. Day by day. He would have got out. But where to? He had no idea.
Oblivious of what momentous events were being played out on the open seas Murcius tried to liven up his miserable life a little. Helios did not particularly inspire him. He thought at first Tripoli was where the action was. For his neighbor’s son, the one who worked for an Agha in Istanbul had come on leave and told him the streets anywhere in the chief city of the Ottoman Empire were paved with gold. He said, ’Murcius you ought to do something with your life.’ Murcius, young and hot blooded that he was, knew he had a sure lead. He would not waste his life with slim pickings in Tripoli. So it was to Turkey he went before the law began showing undue interest in him. He knew he could be nailed over some petty thieving done in the past.
He laughed all the way to Asia Minor thinking what he had escaped. His town didn’t mean a thing. ”What a dump!” thus he dismissed the land of his fathers. He would have liked to step down in style in Istanbul but a little fracas aboard the dhow made it impossible. As a result the other passengers caught him hand and foot and threw him unceremoniously over board. They were also in that vessel for the same reason as he. ‘One less to compete with’, thought they.
This incident made him realize that it was a meeting with Destiny. There was no doubt of that. He saw a great white shark, which surfaced as if out of nowhere. The murderous shark didn’t waver but made a beeline towards him and it meant business. He was a good swimmer so he gave a stiff competition to it. He was saved in time. At that moment hazily he thought, an angel had come down, to save him. Just as what that old monk in Helios had been telling. From that moment he was sold out to his belief: he was a child of Destiny!….

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