JP Morgan's Supreme Influence in World War & The Credit Crisis
My father used to speak about a company he says was responsible for World War 2. That is how I first heard of the German Company called I.G. Farben or better known as AG. They had such influence and economic power that they single handedly made it feasible for Nazi Germany to almost take over the world. Read on to see how JP Morgan fits in to the picture.
- History of I.G. Farben
- Why was I.G. Farben important to Nazi Germany?
- JP Morgan's Role in The Credit Crisis
History of I.G. Farben
I.G. Farben started in 1924. Charles Dawes with the help of J.P.Morgan brokered the borrowing of $800 million or (about 20 Billion in today's terms of the value of USD) in foreign loans. This money consolidated gigantic chemical and steel combinations into monopolies, one of which was I.G. Farben.
Wall Street made the deal possible. Three brokerages: National City, Harris Forbes & Company and Dillon Read & Company, together brokered 75% of the loans used in creating these monopolies.
Why was I.G. Farben important to Nazi Germany?
They were a well organized company of 100,000 people of which 18% were professionals on salary and the rest working class. A little less then 3% percent were university educated.
They had a reputation that stemmed from WW1 as the producer of chlorine gas. I.G. Farben was the sole manufacture of Zyklon B, the lethal gas that was utilized in Auschwitz among other human extermination sites during WW2. This was not the main importance the company played. The principle key that I.G. Farben gave to Adof Hitler was the industrial secret of being able to turn coal into gasoline or hydrogenation as it's called as the Germans native gasoline production capabilities were non-existent. Standard Oil working closely with I.G. Farben was key to refining the combustible needed for the Nazi government and army.
JP Morgan's Role in The Credit Crisis
Short answer: they single handedly caused it. There was a team specializing in derivatives at JP Morgan that was key in the pioneering and creation of credit derivatives like the credit default swap. The first scandal was when CDS were created that allowed Exxon to get loans from JP Morgan while JP Morgan simultaneously transferred the risk to the European Bank of Reconstruction & Development. JP Morgan then came up with the BISTRO, which are essentially a bundle of CDS called CDO's or Collateralized Debt Obligations.
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