DSK, Blair, Geithner, Rubin: from politics to finance

23 December 2014 by Eric Toussaint


The collusion between governments and big business has gone public. At the head of several governments, in important ministerial posts or at the presidency of the ECB, we find men and women who are part and parcel of the world of high finance, in particular former directors of Goldman Sachs. Certain high-profile politicians are rewarded with jobs in big banks once they have fulfilled their loyal service to Big Capital. This revolving-door complicity is not new; it has gained momentum and visibility and become more obvious and systematic than ever before.

DSK

The French Socialist Dominique Strauss-Kahn (‘DSK’), who was France’s economy and finance minister towards the end of the 1990s, then Managing Director of the IMF IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org
(2007-2011), from which he was compelled to resign, has been on the board of the Anatevka Group, now known as Leyne, Strauss-Kahn and Partners (LSK) since 2013, seeking to develop international investment banking activities. DSK is advisor to several foreign governments, including Serbia and South Sudan, and several corporations, such as the Russian Regional Development Bank, the Russian Direct Investment Fund Investment fund
Investment funds
Private equity investment funds (sometimes called ’mutual funds’ seek to invest in companies according to certain criteria; of which they most often are specialized: capital-risk, capital development funds, leveraged buy-out (LBO), which reflect the different levels of the company’s maturity.
, the National Credit Bank and a consortium of Moroccan Banks. The group employs around one hundred people in several European countries (Luxembourg, Belgium, Israel, Monaco, Switzerland and Romania) and in tax havens. In March 2014 he launched the DSK Global Investment Fund, a hedge fund set up to speculate on the commodity markets and on interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. -rates. [1]

On 23 October 2014, Thierry Leyne, DSK’s partner at the head of LSK, committed suicide in Tel Aviv. DSK announced “Thierry Leyne had set up a financial company that mostly did asset Asset Something belonging to an individual or a business that has value or the power to earn money (FT). The opposite of assets are liabilities, that is the part of the balance sheet reflecting a company’s resources (the capital contributed by the partners, provisions for contingencies and charges, as well as the outstanding debts). management. There was no investment bank activity, I was to create this branch around consultancy services mainly for governments, and secondarily for companies”. He added that Mr. Leyne “had taken on several excessive debts”, and had “a colourful reputation”. DSK said that he had been drawn to this business man, “that had a good track record for creating companies that were subsequently sold to major banks for very tidy sums”.

Asked by Agence France Press (AFP) if LSK had any ’dirty money’, the former IMF boss replied “not to my knowledge”. [2] Dominique Strauss-Kahn resigned as President of LSK just three days before Thierry Leyne died. On 3 October 2014 a court in Luxembourg had pronounced summary conviction of the LSK group, its subsidiary “Assya” and its major shareholder, Thierry Leyne who were ordered to pay €2 million to the insurance company “Bâloise-Vie Luxembourg”, that had claimed repayment of securities back in July 2014. In November 2014 LSK announced, through a brief press release, that it has suspended payments: “After the tragic death of Thierry Leyne, acting President, the LSK board have uncovered unknown liabilities Liabilities The part of the balance-sheet that comprises the resources available to a company (equity provided by the partners, provisions for risks and charges, debts). that seriously aggravate the delicate LSK financial situation (...) The Board found that the new information called into question the continuation of the company LSK, whose credit is irreparably compromised. Consequently, it is decided to declare the suspension of payments”. [3]

On 7 November 2014, the commercial court of Luxembourg declared LSK to be bankrupt. DSK and Leyne had also wanted to create the DSK Global Fund, a Hedge Fund for currency markets, commodities Commodities The goods exchanged on the commodities market, traditionally raw materials such as metals and fuels, and cereals. and interest rates Interest rates When A lends money to B, B repays the amount lent by A (the capital) as well as a supplementary sum known as interest, so that A has an interest in agreeing to this financial operation. The interest is determined by the interest rate, which may be high or low. To take a very simple example: if A borrows 100 million dollars for 10 years at a fixed interest rate of 5%, the first year he will repay a tenth of the capital initially borrowed (10 million dollars) plus 5% of the capital owed, i.e. 5 million dollars, that is a total of 15 million dollars. In the second year, he will again repay 10% of the capital borrowed, but the 5% now only applies to the remaining 90 million dollars still due, i.e. 4.5 million dollars, or a total of 14.5 million dollars. And so on, until the tenth year when he will repay the last 10 million dollars, plus 5% of that remaining 10 million dollars, i.e. 0.5 million dollars, giving a total of 10.5 million dollars. Over 10 years, the total amount repaid will come to 127.5 million dollars. The repayment of the capital is not usually made in equal instalments. In the initial years, the repayment concerns mainly the interest, and the proportion of capital repaid increases over the years. In this case, if repayments are stopped, the capital still due is higher…

The nominal interest rate is the rate at which the loan is contracted. The real interest rate is the nominal rate reduced by the rate of inflation.
speculation. [4] This fund intended to attract $2 billion from investors in emerging countries such as China.

This story is worthy of Oliver Stone’s Wall Street: Money Never Sleeps, Martin Scorsese’s The Wolf of Wall Street, or even Costa-Gavras’ Capital, but this is not fiction. It all quietly happened in 2014 capitalism without much ado in the mainstream media.

Tony Blair

Tony Blair, the former Prime Minister of the UK, is also doing well. In 2013 his personal fortune was estimated at somewhere between £30 and £60 million, accumulated by trading Market activities
trading
Buying and selling of financial instruments such as shares, futures, derivatives, options, and warrants conducted in the hope of making a short-term profit.
. He directs a group of small companies that all have their head offices in the same five-storey building in Grosvenor Square, in London’s diplomatic district. A hundred or so people have their offices there, including an ex-director of Barclays Investment Bank, David Lyon, who runs Firerush Ventures, the financial branch of what has come to be known as ‘Tony Blair Inc.’ Among Blair’s collaborators are former managers from Lehman Brothers and JPMorgan. Tony Blair also sits on the international advisory board of said JP Morgan! [5] Also, Tony Blair is doing excellent business with Saudi Arabia [6] and has created several “philanthropic” funds! [7] To top it all, he is now favourable to the European Union. [8]

Tim G et Robert R

On the other side of the pond, Tim Geithner, President Obama’s ex-Secretary of the Treasury, has been president of Warburg Pincus, a Wall Street investment bank, since 2013.

His predecessor Robert Rubin, ex-Secretary of the Treasury under Bill Clinton, joined Citigroup in 1999 after having abrogated the Glass-Steagall Act, thus enabling the creation of Citigroup. Between 1999 and 2008, Citigroup has paid him $166 million in different forms of remuneration. [9]

It is clear that the crossed interests between politics and finance are numerous and often very well rewarded.

Translation: Mike Krolikowski, Christine Pagnoulle



Eric Toussaint, is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège. He is the President of CADTM Belgium (www.cadtm.org), and sits on the Scientific Council of ATTAC France. He is the co-author, with Damien Millet of Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. He is the author of many essays including one on Jacques de Groote entitled Procès d’un homme exemplaire (The Trial of an Exemplary Man), Al Dante, Marseille, 2013, and wrote with Damien Millet, AAA. Audit Annulation Autre politique (Audit, Abolition, Alternative Politics), Le Seuil, Paris, 2012.

Footnotes

[1Financial Times, ‘Strauss-Kahn to launch fund’, 21 March 2014.

[3Le Monde, “LSK, l’ancien fonds d’investissement de DSK, se déclare en cessation de paiements”, publié le 5 November 2014, http://www.lemonde.fr/argent/article/2014/11/05/lsk-l-ancienne-societe-financiere-de-dsk-se-declare-en-cessation-de-paiements_4518706_1657007.html (French)

[4Financial Times, « Strauss-Kahn to launch fund », 21 March 2014.

[5Financial Times, ‘Fine dining for Dimon at the Palace’, 23-24 November 2014.

[7See Tony Blair’s official website, in which his charitable endeavours are highlighted http://www.tonyblairoffice.org/

[9See Damien Millet and Eric Toussaint, La Crise, quelles crises ? (The Crisis: Which Crises?), Brussels: Aden, 2009, Chapter 4, pp. 58-59.

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Eric Toussaint

is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège, is the spokesperson of the CADTM International, and sits on the Scientific Council of ATTAC France.
He is the author of Bankocracy (2015); The Life and Crimes of an Exemplary Man (2014); Glance in the Rear View Mirror. Neoliberal Ideology From its Origins to the Present, Haymarket books, Chicago, 2012 (see here), etc.
See his bibliography: https://en.wikipedia.org/wiki/%C3%89ric_Toussaint
He co-authored World debt figures 2015 with Pierre Gottiniaux, Daniel Munevar and Antonio Sanabria (2015); and with Damien Millet Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. Since the 4th April 2015 he is the scientific coordinator of the Greek Truth Commission on Public Debt.

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