Debtor's Prison For
The 21st Century
26 September 1998 -- FEARING GLOBAL MELTDOWN, FEDERAL
RESERVE OFFICIALS LEAD RESCUE OF SPECULATORS FROM
COLOSSAL LOSSES, BANKRUPTCY.
On Wednesday, as Congress constructed a debtor's prison for the 21st Century in which millions of Americans will live out their entire lives, the Federal Reserve Bank of New York -- acting in the name of the ordinary citizens of this country -- organized a rescue mission for an enormous, highly leveraged currency speculation fund called Long Term Capital Management (LTCM), whose operations have been shrouded in such secrecy that creditors and shareholders have not had a clear understanding of the scope of the company's activities nor the risks it was assuming.
Many of the 15 major banks and brokerages in the rescue party that raised $3,500,000,000 to infuse into LTCM in return for a controlling interest in the company were invested in LTCM shares or had loaned LTCM money to use in placing its nearly $100,000,000,000 worth of bets on the continuous changes in relative currency values.
As The Wall Street Journal explains in extensive, multipage coverage in their Friday edition (25 September, page 1), our Federal Reserve officials acted out of fear that the imminent failure of LTCM could have triggered a global financial meltdown.
(This fear overrode any concern that such a rescue of private investors organized by public officials erases the negative consequences of bad investment decisions, rewards reckless risk-taking, and destroys the trustworthiness of the market. It is also overrode growing doubts in financial circles that those running the approximately $100,000,000,000 hedge fund by use of esoteric computer trading programs could be trusted to reconcile someone's checking account statement. )
11 September 1998 -- "JAPAN'S DARKEST HOUR. --Today's South China Morning Post quotes Japan's chief economic planner, Taichi Sakaiya: "Japan is in its darkest hour. This is the first time we have suffered minus growth for three consecutive quarters since the end of World War II."
article from R.W. Mann's Coffee House, Bookshop, and Newsstand
images by Teri Williams
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