Proprietary Trading Banks Will Become Extinct

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The Libor Fixing Scandal of interest rates has shown precisely what I wrote about in Behind The curtain. I have personally witnessed the trading mentality of the commodities trader from the ’70s consume Wall Street when it began with the PhiBro takeover of the bond trading house Solomon Brothers – the mentor of so much from Mayor Bloomberg and Warren Buffett (forging him into a commodity trader), to the later blow up of Long Term Capital Management in 1998 with the first Fed bailout under the unspoken term of Too Big To Fail. The Libor scandal is not much different than the Solomon Brothers getting caught manipulating the US Treasury bond auctions. The NY of the Nineties is no more.

Why I Left Goldman SachsNow, JPMorgan Chase & Co is pulling out of the panel that sets Australia’s benchmark interbank lending rates, joining UBS in an exodus from regional rate setting panels in the wake of the Libor rate rigging scandal. Little by little, banks that became so greedy involved in proprietary trading are being forced out of business outside the USA.

So much effort has gone into trying to claim Greg Smith was nonsense and to try to silence me because the truth is the truth. New York has fallen from grace so hard, only a fool cannot see that the once might institutions that rose ONLY in the ’90s, are dying faster than anyone suspects. Nobody had a front row seat as much as I had. I even went to dinner with the head of Deutsche Bank in Asia asking me how we became so big, ABM Amro visited us in Princeton and expressed interest in buying our firm. I attended political dinners at the National Gallery for the IMF thrown by Edmond Safra, and was invited to the central bank of China after the bankers created the 1997 Asian Currency Crisis to help understand and defend against them for it was not much different from the attack on the pound in 1992. What Greg Smith explained and the NY press tried desperately to criticize to protect the banks was SPOT ON. He stated a culture that anyone in the industry knew was commonplace.

You cannot shit on your clients, trade against them, and expect to build loyalty. This is no way to run a business. Then you do a reverse takeover of government to ensure you control both parties and can dance between the rain drops above the law. You takeover the prosecution and courts to remain above the law even from clients. This is all coming to an end. When the world blows up again – there will be no blank check book anymore. It’s over! The mighty will fall. Once the sovereign debt crisis blooms, they will lose their special too big to fail status. Other countries have woken up to this nonsense of the UNTOUCHABLES and the NY institutionalized press have been exposed for what they are – anything but unbiased and free of corruption much as the sad case for Washington. Oligarchies always come to an end – but they are never pretty.