Barbarians of Wealth

Protecting Yourself from Today's Financial Attilas

Sandy Franks, Sara Nunnally

• Publisher: Wiley
• Year: 2010
• Print ISBN: 9780470768143
• eBook ISBN: 9780470946589
• Edition: 1
• Topic: Negocios y empresa
• Subtopic: Negocios en general

How the actions of a few in Europe destroyed the prosperity of the many (and how it's happening again now in America)

After the fall of the Roman Empire, vicious barbaric tribes including the Hunds lead by Atilla, the Mongols, Charlemagne and the Vikings invaded Europe, plundering property and destroying homes. But, they didn't just steal and destroy property in the villages; they also stole and destroyed any prosperity the villagers had previously enjoyed. What's worse is the barbarians of the Dark Ages did all of this not out of any deeply held religious or political belief, but, rather, for the oldest reason in the book – their own personal financial gain. Some things never change.

Barbarians of Wealth examines how the greedy, self-serving decisions of a select group of politicians and financial institutions negatively impacts the economy and, ultimately, destroys America's prosperity and the American way of life. Compelling and engaging, the book

• Details how Goldman Sachs peddled mortgage backed securities up and down Wall Street while secretly betting against their demise
• Discusses how Sanford Weill, founder of Citigroup spent $100 million lobbying for the repeal of the Glass-Steagall Act that prevented the merger of commercial and investment banks and got his way.
• Examines Christopher Dodd, head of the U.S. Senate Banking Committee, has enriched himself while driving down the prosperity of his constituents
• Offers up examples of other modern barbarians, including the Federal Reserve, Alan Greenspan, Hank Paulson, and Timothy Geithner.
• Highlights greed driven tactics of Wall Street corporations including JP Morgan, Merrill Lynch, and Salomon Brothers.

Barbarians of Wealth is a timely must read for hard-working Americans concerned with their prosperity, as well as for those fascinated with the inner workings of Washington and Wall Street.

Part One

GREAT BARBARIANS OF HISTORY

Chapter 1

Attila the Hun: The Scourge of God

Attila! One of the most notorious barbarians of the Dark Ages, his name struck fear into the heart of the Western world. A Roman historian called him “a man born to shake the races of the world, a terror to all lands.”1 Saint Jerome called the Huns the “wolves from the North.”

His enemies called him the Scourge of God.

Attila was even rumored to have killed his own brother in a staged hunting accident. This Hunnic king’s brutal raids and constant plundering shook the foundations of the Roman Empire, and brought the great city of Constantinople to its knees—twice.

And each time, Attila left with hoards of cash and thousands of pounds of gold in tribute as Rome was forced to buy peace.

Attila was power-hungry and ruthless. He said, “For what fortress, what city, in the wide extent of the Roman Empire, can hope to exist, secure and impregnable, if it is our pleasure that it should be erased from the earth?”2

As Attila and his Huns marched on Constantinople, the historian Callinicus wrote:

The barbarian nation of the Huns, which was in Thrace, became so great that more than a hundred cities were captured and Constantinople almost came into danger and most men fled from it. . . . And there were so many murders and bloodlettings that the dead could not be numbered. Ay, for they took captive the churches and monasteries and slew the monks and maidens in great numbers.3

More favorable historians would tell you that Attila was not swayed by the riches his pillaging brought. Renatus Profuturus Frigeridus, a Roman historian, said Attila was “renowned for the arts of peace, without avarice and little swayed by desire.”4

But that doesn’t hold much water. Under Attila’s rule, Eastern Rome’s tribute to the Huns doubled in 435, and then tripled in 443.

Attila knew how to negotiate with an iron fist. He was a master at breaking the spirit of those he conquered. Paying Attila the ransom he demanded was easier than suffering more devastation and despair.

For example, the Eastern Empire had already been paying tribute to the Huns with an annual payment of 350 Roman pounds. In 435, Attila and his brother marched into Roman territory, threatening to take more land unless their demands were met.

The two brothers met with the Romans on horseback outside the city of Margus, intimidating the Romans enough to force a new treaty with even better terms: 700 Roman pounds in tribute, and eight solidi ransom for every Roman prisoner taken by the Huns. (There are 72 solidi to a pound.) The Huns were also awarded the right to trade on the banks of the Danube.5

Attila’s Retaliation

Edward Gibbons, author of The Decline and Fall of the Roman Empire, wrote, “The kings of the Huns assumed the solid benefits, as well as the vain honors, of the negotiation. They dictated the conditions of peace, and each condition was an insult on the majesty of the empire.”6

But instead of keeping its promise, Eastern Rome reneged on the treaty.

Even more foolhardy, in 440, even as Attila was threatening invasion, the bishop of Margus allegedly went out and robbed the graves of some Hunnic royalty, taking the treasures back within the city walls of Margus. This gave Attila the excuse to attack a market across the Danube, raze the fortress at Constantia, and demand the bishop and the stolen treasure be turned over.

Rome did not turn the bishop over, or return the Hunnic grave treasures. If this pretense of stolen treasure was true—and Gibbons asserts that it was not, writing that the Huns’ attack was unprovoked—this was probably the Eastern Empire’s worst decision. The Huns came in force, Attila’s sweeping invasion driving the Romans back out of the Balkans.

Richard Gordon, author of “Battle of Châlons: Attila the Hun Versus Flavius Aëtius,” published in the magazine Military History, wrote, “Attila’s warriors sacked Belgrade and numerous other centers . . . defeating Roman armies three times in succession and penetrating as far as the outskirts of Constantinople itself.”7

The Huns’ retaliation overwhelmed Eastern Rome’s defenses. Crossing the Danube, thousands of Huns struck swiftly, sweeping in for 500 miles, pushing the Romans back as far as Constantinople.

The Huns now had thousands of captives who, at eight solidi apiece, were very valuable. Thrace and Macedonia were pillaged and stripped of all their riches. This was enough to cause the Eastern Emperor Theodosius to sue for peace.

And yet after this resounding defeat, Rome still did not honor its peace treaty. At dispute were captives on both sides. Rome would not pay for all the prisoners taken, nor would they turn over Attila’s subjects who had fled.

Attila showed no mercy. He would be paid the money he demanded. In 442, he attacked again, laid waste the military city of Ratiaria, and besieged Naissus with battering rams and towers.

Priscus of Panium, a contemporary of Attila and author of Fragmenta Historicorum Graecorum, told of this siege, chronicling, “Then the enemy brought up scaling ladders. And so in some places the wall was toppled by the rams and elsewhere men on the battlements were overpowered by the multitude of siege engines.”8

The city fell. Attila’s terms were paid willingly.

The Cost of Peace—Attila’s Cash Cow

Peace was Attila’s cash cow. He was now exacting a tribute of 2,100 Roman pounds, plus a 6,000 pound fine. Roman hostages were now ransomed for 12 solidi. This single attack on Constantinople cost Rome the equivalent of $107.6 million and a huge parcel of land in Thrace.9

This amount was devastating for the crippled empire. After fighting Africans at Carthage, the Visigoths in Gaul, and Attila at Constantinople, Rome was quickly running out of cash. The tripling of its annual tribute to the Huns forced Rome to levy a war tax.

Priscus wrote, “Those registered in the senate paid, as the war tax, sums of gold specified in proportion to their proper rank, and for many their good fortune brought a change in life. For they paid under torture what those assigned to do this by the emperor assessed them.”10

Roman senators auctioned off their wives’ jewels and the rich decorations of their houses, such as heavy silver tables and gold vases. What a humiliation for the Great Empire! Gold in hand, the Huns left Constantinople in shambles and continued their push west into the rich, ripe Balkans.

That was their game—attack and pillage, then demand tribute. Attila and the Huns believed that exacting tribute was the ultimate form of superiority.

In all, it’s estimated that between 443 and 450, Rome paid Attila 22,000 pounds of gold.11 That’s $387.2 million, or $55.3 million a year—or a daily payoff of more than $151,500. The Huns were very rich indeed.

This type of barbarism—smart military tactics with crafty negotiation—nearly bankrupted the Roman Empire.

What’s truly barbaric about all the loot and plunder Attila won—aside from the cruel and ghastly acts that decimated huge city centers—is that only Attila’s select cadre of commanders and generals reaped the benefits of the Huns’ barbarism.

Golden goblets and silver platters, gem-crusted armor and jeweled swords—these chieftains wore their wealth. Gibbons wrote, “The Huns were ambitious of displaying those riches which were the fruit and evidence of their victories: the trappings of their horses, their swords, and even their shoes, were studded with gold and precious stones; and their tables were profusely spread with plates, and goblets, and vases of gold and silver, which had been fashioned by the labor of Grecian artists.”12

Not only that, but when the Huns settled in Gaul and began a diverse economy based on trade and labor, Attila collected food and tribute from his own people.

Taxes and tribute . . . sound familiar?

Today’s barbarians do the same thing. They even have the swords.

Take Hank Paulson, for example, the former CEO of Goldman Sachs and the seventy-fourth Treasury secretary. He was also Time magazine’s Person of the Year 200813 for his knee-jerk reaction to inject $700 billion into the financial system.

Paulson told banks they would be forced to take the money, whether they wanted it or not. In a memo given to the banks, he wrote, “If a capital infusion is not appealing, you should be aware that your regulator will require it in any circumstance.”14

And what did Paulson and the government get in exchange? Stock in the companies, and a lot of interest on the bailout loans, as we saw when financial institutions released earnings for 2009. Citigroup had to pay $8 billion in pretaxes for paying back its TARP loans early. That led to the company posting a loss of $7.14 billion for the last quarter of the year.15

We’ll talk more about Hank “the Hun” Paulson in later chapters, but his barbaric tactics forced businesses to carve up their companies in tribute to the government’s economic plan. Not unlike Attila holding his sword to the throat of Constantinople, requiring a tripling of his annual tribute, is it?

Aëtius and Attila—A Double-Headed Coin

Much as modern-day barbarians share their tactics (and wealth) with a select circle of friends and partners, Attila discerned that befriending a powerful Roman soldier could help him expand his empire.

He found that partnership in Aëtius, a young political hostage of both the Goths and the Huns. Political hostages were a means of making sure both sides held up their ends of the deal. The lives of the hostages were at stake. One false move and the boy Aëtius would have been killed.

For three years, Aëtius was with the Goths under King Alaric I. Then the boy, who was the son of a Roman soldier and a wealthy Roman woman, was sent to the Huns, in the care of King Rua—none other than Attila’s uncle.16 There it is said he learned his ruthlessness, but also forged a great friendship and trust.

Aëtius even sent his son Carpilio to be educated in Attila’s camp.

Later, in 433, Aëtius sought out the safety of the Huns after marching against his Roman rival Bonifacius. Though Aëtius lost the battle, Bonifacius was killed, leaving Aëtius as the strongest Roman general in the Empire. This promotion wasn’t looked on favorably by Rome, and Aëtius was forced into a short exile for the death of Bonifacius.

The Huns welcomed him, remembering his time with them as a hostage and his trust in sending his son to learn from them.

Aëtius returned from exile backed by 60,000 Huns,17 and forced the Empress Placidia to grant him clemency. Placidia was half-sister to Honorius, Western Rome’s emperor until his death in 423. Honorius left no heir, which sparked a bit of a struggle for the throne.

This 60,000-strong show of solidarity wasn’t the only example of how Aëtius and the Huns got on. The Roman general even engaged the Huns to help defeat the Burgundians in Gaul in 437. More than 20,000 died at the hands of the Huns, and Aëtius rose to great acclaim in Rome.18 In 449, Aëtius signed an agreement with the Huns, allowing some of them to settle in Pannonia, or modern-day western Hungary, and parts of eastern Austria, down into Serbia, Croatia, and Slovenia.

One can make an interesting comparison between the relationship of Attila and Aëtius and the relationship between Hank “the Hun” Paulson and China. During his time as CEO of Goldman Sachs, Paulson traveled to China 70 times,19 creating extremely close ties that some might suspect constituted a conflict of...

Table of contents

• Cover
• Contents
• Halftitle
• Title
• Copyright
• Dedication
• Foreword
• Acknowledgments
• Introduction
• Part One: Great Barbarians of History
• Part Two: Banks: The Barbarians of Money
• Part Three: The Barbarians of Wall Street
• Part Four: Political Barbarians
• Part Five: Protection Strategies
• Notes
• About the Authors
• Index