VAZOU MEMORANDO SECRETO: mega-crise gestada em 1997. Na tramóia: Tesouro e MegaBancos.
The Memo confirmed every conspiracy freak’s fantasy: that in the late 1990s, the top US Treasury officials secretly conspired with a small cabal of banker big-shots to rip apart financial regulation across the planet. When you see 26.3 percent unemployment in Spain, desperation and hunger inGreece, riots in Indonesia and Detroit in bankruptcy, go back to this End Game memo, the genesis of the blood and tears.
The Treasury official playing the bankers’ secret End Game was Larry Summers. Today, Summers is Barack Obama’s leading choice for Chairman of the US Federal Reserve, the world’s central bank. If the confidential memo is authentic, then Summers shouldn’t be serving on the Fed, he should be serving hard time in some dungeon reserved for the criminally insane of the finance world. The memo is authentic. I had to fly to Geneva to get confirmation and wangle a meeting with the Secretary General of the World Trade Organisation, Pascal Lamy. Lamy, the Generalissimo of Globalisation, told me, “The WTO was not created as some dark cabal of multinationals secretly cooking plots against the people... We don’t have cigar-smoking, rich, crazy bankers negotiating.” Then I showed him the memo.
It begins with Larry Summers’ flunky, Timothy Geithner, reminding his boss to call the Bank bigshots to order their lobbyist armies to march: “As we enter the end-game of the WTO financial services negotiations, I believe it would be a good idea for you to touch base with the CEOs…” Let me explain: The year was 1997. US Treasury Secretary Robert Rubin was pushing hard to de-regulate banks. That required, first, repeal of the Glass-Steagall Act to dismantle the barrier between commercial banks and investment banks. It was like replacing bank vaults with roulette wheels. Second, the banks wanted the right to play a new high-risk game: “derivatives trading”. JP Morgan alone would soon carry $88 trillion of these pseudo-securities on its books as “assets”. Deputy Treasury Secretary Summers (soon to replace Rubin as Secretary) body-blocked any attempt to control derivatives. But what was the use of turning US banks into derivatives casinos if money would flee to nations with safer banking laws? The answer conceived by the Big Bank Five: eliminate controls on banks in every nation on the planet -- in one single move. It was as brilliant as it was insanely dangerous. How could they pull off this mad caper? The bankers' and Summers' game was to use the Financial Services Agreement (or FSA), an abstruse and benign addendum to the international trade agreements policed by the World Trade Organisation.
Until the bankers began their play, the WTO agreements dealt simply with trade in goods – that is, my cars for your bananas. The new rules devised by Summers and the banks would force all nations to accept trade in "bads" – toxic assets like financial derivatives. Until the bankers’ re-draft of the FSA, each nation controlled and chartered the banks within their own borders. The new rules of the game would force every nation to open their markets to Citibank, JP Morgan and their derivatives “products”. And all 156 nations in the WTO would have to smash down their own Glass-Steagall divisions between commercial savings banks and the investment banks that gamble with derivatives. The job of turning the FSA into the bankers’ battering ram was given to Geithner, who was named Ambassador to the World Trade Organisation.
