The Confidential Memo at the Heart of the Global Financial Crisis

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When a little birdie dropped the End Game memo through my window, its content was so explosive, so sick and plain evil, I just couldn't believe it. The Memo confirmed every conspiracy freaks 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 in Greece, 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 Obamas leading choice for Chairman of the US Federal Reserve, the worlds central bank. If the confidential memo is authentic, then Summers shouldnt 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 dont have cigar- smoking, rich, craz y 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

To avoid Summers having to call his office to get the phone numbers (which, under US law, would have to appear on public logs), Geithner listed the private lines of what were then the five most powerful CEOs on the planet. And here they are: Goldman Sachs: John Corz ine (212)902- 8281 Merrill Lynch: David Kamanski (212)449- 6868 Bank of America: David Coulter (415)622- 2255 Citibank: John Reed (212)559- 2732 Chase Manhattan: Walter Shipley (212)270- 1380 Lamy was right: They dont smoke cigars. Go ahead and dial them. I did, and sure enough, got a cheery personal hello from Reed cheery until I revealed I wasn't Larry Summers. (Note: The other numbers were swiftly disconnected. And Corz ine cant be reached while he faces criminal charges.) It's not the little cabal of confabs held by Summers and the banksters thats so troubling. The horror is in the purpose of the "end game itself. 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. Bankers Go Bananas Why in the world would any nation agree to let its banking system be boarded and seiz ed by financial pirates like JP Morgan? The answer, in the case of Ecuador, was bananas . Ecuador was truly a banana republic. The yellow fruit was that nations life- and- death source of hard currency. If it refused to sign the new FSA, Ecuador could feed its bananas to the monkeys and go back into bankruptcy. Ecuador signed.

And so on with every single nation bullied into signing . Every nation but one, I should say. Braz ils new President, Inacio Lula da Silva, refused. In retaliation, Braz il was threatened with a virtual embargo of its products by the European Union's Trade Commissioner, one Peter Mandelson, according to another confidential memo I got my hands on. But Lulas refusenik stance paid off for Braz il which, alone among Western nations, survived and thrived during the 2007- 9 bank crisis. China signed but got its pound of flesh in return. It opened its banking sector a crack in return for access and control of the US auto parts and other markets. (Swiftly, two million US jobs shifted to China.) The new FSA pulled the lid off the Pandoras box of worldwide derivatives trade. Among the notorious transactions legalised: Goldman Sachs (where Treasury Secretary Rubin had been co- chairman) worked a secret euroderivatives swap with Greece which, ultimately, destroyed that nation. Ecuador, its own banking sector de- regulated and demolished, exploded into riots. Argentina had to sell off its oil companies (to the Spanish) and water systems (to Enron) while its teachers hunted for food in garbage cans. Then, Bankers Gone Wild in the Euroz one dove headfirst into derivatives pools without knowing how to swim and the continent is now being sold off in tiny, cheap pieces to Germany. Of course, it was not just threats that sold the FSA, but temptation as well. After all, every evil starts with one bite of an apple offered by a snake. The apple: the gleaming piles of lucre hidden in the FSA for local elites. The snake was named Larry. Does all this evil and pain flow from a single memo? Of course not: the evil was The Game itself, as played by the banker clique. The memo only revealed their game- plan for checkmate. And the memo reveals a lot about Summers and Obama. While billions of sorry souls are still hurting from worldwide banker- made disaster, Rubin and Summers didnt do too badly. Rubins deregulation of banks had permitted the creation of a financial monstrosity called Citigroup. Within weeks of leaving office, Rubin was named director, then Chairman of Citigroup which went bankrupt while managing to pay Rubin a total of $126 million. Then Rubin took on another post: as key campaign benefactor to a young State Senator, Barack Obama. Only days after his election as President, Obama, at Rubins insistence, gave Summers the odd post of US Economics Tsar and made Geithner his Tsarina (that is, Secretary of Treasury). In 2010, Summers gave up his royalist robes to return to consulting for Citibank and other creatures of bank deregulation whose payments have raised Summers net worth by $31 million since the end- game memo. That Obama would, at Robert Rubins demand, now choose Summers to run the Federal Reserve Board means that, unfortunately, we are far from the end of the game. Special thanks to expert Mary Bottari of Bankster USA www.BanksterUSA.org without whom our investigation could not have begun. The film of my meeting with WTO chief Lamy was originally created for Ring of Fire, hosted by Mike Papantonio and Robert F. Kennedy Jr. Further discussion of the documents I laid before Lamy can be found in The Generalissimo of Globalization, Chapter 12 of Vultures Picnic by Greg Palast (Constable Robinson 2012). Follow Greg on Twitter: @Greg_Palast