Barbarians of Wealth E-Book

Sandy Franks

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Agora Series
• Sprache: Englisch

Seitenzahl: 628

Veröffentlichungsjahr: 2010

Beschreibung

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.

Leseprobe

Contents

Foreword

Acknowledgments

Introduction

Part One: Great Barbarians of History

Chapter 1: Attila the Hun: The Scourge of God

Attila’s Retaliation

The Cost of Peace—Attila’s Cash Cow

Aëtius and Attila—A Double-Headed Coin

The Battle of Châlons—Attila’s Fate is Sealed

Pride over Prejudice—Attila’s Only Defeat

The Death of Attila

Chapter 2: Charlemagne: The Clandestine Barbarian

The Piety of Charlemagne

The Christian Kingdom

The Saxon Wars

The Conquest of Lombardy and the Imperial Throne

A New King Is Crowned

Chapter 3: The Vikings: Savage Pirates, Savvy Traders

Conquest and Colonization

A New Economy

The Last King of England

The Normans—the Norsemen

William the Viking Conqueror

Chapter 4: Genghis Khan: Mighty Warrior

The Capture of Hoelun

The Making of Genghis Khan

The Bow Is Strung: Genghis Sets His Sights on China

The Empire Grows Fat

Putin Khan

Part Two: Banks: The Barbarians of Money

Chapter 5: The Brotherhood of Power

From Failed Banknotes to a Failed Fiat Money System

Short on Funds

Tally Sticks Serve as Fiat Money System

France’s National Debt Becomes a Bargaining Tool

The Bubble Caused by Banque Royale

Origins of the U.S. Banking System

The First Bank Bubble

Chapter 6: Race to the Bottom Line

Mismanaged

Regulation Q

Panic of 1819

The Panic of 1837

The Panic of 1893

Chapter 7: Say Goodbye to Gold

The Government’s Main Bank

Gold’s Domination

Barbarians Hoard Gold

Worthless Money

Twenty-One Days in July

Too Much Gold

Chapter 8: The Gatekeepers

Born into Banking

Slow Victory

For the People

Our Fate Is Sealed

Barbarians Control the Money

A Poisonous Drug

Chapter 9: Money for Nothing

Run, Rabbit, Run

Money for Everyone

Creating a Mountain of Debt

The Struggle to Be Debt-Free

Chapter 10: The Barbarians’ Powerful Ally

Crushed Dreams

Barbarian Greed

An Industry Is Born

Part Three: The Barbarians of Wall Street

Chapter 11: The Scourge of Wall Street

History of Goldman Sachs

Goldman and the Subprime Crisis

The Dot-com Era

Merrill Lynch—The Evil Twin

Credit Suisse, First Boston:The Lesser-Known Barbarian

A Tight Circle

Chapter 12: Epic Tool of Destruction

The Smartest Woman on Wall Street

Not All Derivatives Are Bad

Making a Business out of Credit Derivatives

A Credit Mania Takes Hold

Playing Wall Street Russian Roulette

From Insurance to Credit Defaults

The Cancer Had Spread

Lessons Not Learned

Chapter 13: The Brotherhood of Banks

Explosion in Banking Business

Investment Banks Blossom

Two Systems in One

Not Equal among Banks

Banks Become Gamblers

Lines in the Sand

Greenspan Tears Glass-Steagall into Pieces

The Man Who Ransacked Wall Street

America’s Future Prosperity Is Destroyed

Chapter 14: Wall Street Bloodlines

The Family Ties of Wall Street and Washington

Blood Lines Run Deep

In Plain Sight

The Working Group

Longtime Wall Street Friend

Greenspan’s Legacy Lives

Part Four: Political Barbarians

Chapter 15: The Monied-Class Rulers and Demigods

Demigods

Robert Morris: The Viking

The Creation of Taxes and the Booty of Credit

The Panics of the Markets

Chapter 16: Barbarians in the Lobby

Government and Corporate Scandals

Political Corruption

Political Scoundrel

Chapter 17: Global Barbarians

Government Thugs

Controlling the Pipeline

Part Five: Protection Strategies

Chapter 18: Diversification: The Key to Wealth Protection

Asset Allocation

Reasons for Shifting Your Portfolio

Chapter 19: Precious Metals: Inflation Protection Strategies

Hedging against Inflation

Alternative Investments Offer Strong Returns

Gold Fund

Silver ETFs

Silver and Gold Futures

Physical Gold and Silver

Every Portfolio Should Have Gold or Silver

Chapter 20: Barbarians of Wealth, Castles of Currency

All Currencies Follow Fundamentals

Fed Barbarians Withhold Key Numbers

An Admission of Guilt

Use Their Weapons against Them

Maneuverability Will Keep You Alive

Chapter 21: Arm Yourself with Ultra-Resource-Rich Countries

Debt Horde Invasion Clears the Way for Real Wealth

Ultra-Resource-Rich Investments

Four Principles of Rich Countries

O, Canada: Land of Rich Resources

Norway: Former Vikings Turned Safe Haven

Australia: Boy Wonder of the Natural World

Hong Kong: King of the Asian Financial World

Singapore: The Switzerland of Asia

How to Play Ultra-Resource-Rich Countries and Currencies

Notes

About the Authors

Index

Barbarians of Wealth

Copyright © 2011 by Sandy Franks and Sara Nunnally. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

ISBN 978-0-470-76814-3 (cloth); ISBN 978-0-470-94657-2 (ebk); ISBN 978-0-470-94658-9 (ebk)

This book is dedicated to my husband Mark, my son Zachary, and my daughter Rachael, who have supported me not just in writing this book but in all my endeavors and who serve as my source of inspiration and pride; to my mother and father, who are without a doubt the world’s best parents; and to my brothers and sister, who keep me smiling.

— Sandy Franks

For my great loves . . .

— Sara Nunnally

Foreword

Authors Sandy Franks and Sara Nunnally have chosen a loaded word for their title: barbarian. It can mean so many different things to so many different people that we must begin by wondering what it means to the authors. In anticipation of the next 1,000 words, the answer is: I don’t know; but I can take a guess.

There is no disputing that the way of the world includes many things that might be labeled barbaric. Some of them will seem wrong to readers. Others will seem necessary. And some will even seem desirable. Most of the civilized world felt that water-boarding a prisoner was not only reprehensible but illegal and barbaric. Former U.S. President George W. Bush, however, said that he was glad he had allowed it.

And how about Goldman Sachs’ handling of its credit derivatives? Is it barbaric to create an investment that you know will blow up on your client? Is it barbaric to create special instruments for the Greek government so that it can mislead investors and regulators as to how much debt it is carrying?

What is barbaric and what isn’t?

Barbarism most commonly means uncivilized. But that doesn’t take us very far. The Greeks accused everyone who was not Greek of being a barbarian. The word itself is believed to be onomatopoetic; the Greeks thought foreigners sounded like they were babbling, “Bar . . . bar . . . bar.” The Romans had much the same view of foreigners. So did the Chinese. So universal is the description of foreigners as barbarians that we could come to believe the word is not actually pejorative. Maybe it could be replaced with stranger, or people unlike us.

But there is another aspect to the word: the uncivilized side of it. This kind of barbarian is not just foreign, either to the Greeks or to the authors of this book. Nor is he the innocent savage of Rousseau’s imagination. This barbarian is the fellow you don’t want to meet in the jungle or in the boardroom. He will ambush you in the forest of Teutoburg, throw you down a well in Calcutta, or rip you off with hedge fund fees.

A barbarian is not only unlike us; he is also wild, savage, untrustworthy, and violent. So when we think of the barbarians of finance, we have to include the Little Bighorn in our thoughts. A financial barbarian is not a noble savage. He is a ruthless cutthroat and a cad.

But what does that mean, exactly? The mark of a barbarian is that he is literally uncivilized. Being civilized originally referred to living in a town. Uncivilized people, like the Irish before the Viking invasions, don’t have towns. So they don’t have the rules and refinements that city life requires. At least, that’s the idea. Hunters and gatherers, by this definition, are not civilized. A hunter is a killer. A gatherer takes what he finds. In the world before the agricultural revolution, a hunter/gatherer probably needed little encouragement to hunt his fellow men and to gather up their possessions and their women.

Living in a civilized, sedentary community, by contrast, required new codes of behavior. The instinct for reciprocity probably predates city life and even the species itself. It was easily applied to property. A hunted animal belonged to no one. A domesticated animal needed an owner. If you couldn’t control an animal and exploit it, it wouldn’t have been worthwhile feeding him. We can imagine that owners could only anticipate that their property rights would be respected if they respected others’ property. Thus a general rule evolved that hadn’t been necessary in the uncivilized world.

Obviously, people don’t want to be robbed or cheated. So there we have our definition: A barbarian is someone who is uncivilized, meaning he is either unaware of or unwilling to abide by the rules of civilized life. Thus, a barbarian of finance is one who doesn’t honor the codes of civilized financial behavior. He lies. He cheats. He steals. He doesn’t do unto others as he would have them do unto him.

No need to put too fine a point on it. Most people try to provide a fair service for a fair exchange. “Do unto others . . .” is a good policy for business as well as life, generally. And yet there are plenty of barbarians too—people who lie, cheat, and steal whenever it suits them.

Note that the rules of civilization are often confused with the rules laid down by the barbarians themselves. When Attila swept over modern-day Turkey, he subdued town after town. He killed those who opposed him. He made slaves of others. He replaced existing governments, whatever they were, with another one—his own. Henceforth, he was the law; he made the rules; the tax collectors were his own men. These rules were not reciprocal; they were simply imposed.

This brings up another essential distinction between civilization and barbarism. Civilized life depends on cooperative, mutually respected rules. Barbarism depends on coercion. Civilization works by persuasion; barbarism functions by brute force. A group of people might agree to contribute to a fund for their mutual protection, for example. Forced tribute, however, even if is it supposedly for the protection of the payers, is barbaric.

Once he got to the gates of Constantinople, Attila seemed unstoppable. The Eastern Empire enjoyed Rome’s protection. But in the fifth century, Rome was too weak to defend even its second most important city. So instead of fighting off the Huns, the Romans bought them off.

What marked Attila as a barbarian was not the fact that he didn’t wear a toga or a business suit. It was that he did business in an uncivilized way. So do many people today. In 2008 and 2009, Wall Street nearly melted down. Instead of abiding by the contracts and agreements in place at the time, the U.S. government and Wall Street itself colluded to gazump them. The feds seized some of America’s biggest corporations while Wall Street was bought off.

Readers will be surprised by the extended focus on history in this book. The authors are not announcing a new theory of history, nor are they elaborating on an old one. Nor are they merely trying to fill the gaps in our historical knowledge.

Instead, the role of the barbarian is illustrated by a broad display of history, almost as if we were watching a historical epic at a 3-D theater. We discover, for example, much about Attila’s troubled relations with the declining Roman Empire. We are also reminded of the extent of his reach into Europe and what a close call the Battle of Châlons was.

The slide of events shows the slippery interplay of barbarism and civilization. The Vikings did great mischief to England, Ireland, and Scotland but were then absorbed into more civilized life. In fact, they contributed greatly to civilizing the English! The Norsemen formed towns which then became trading centers. And it was they who began the sea-borne commerce that would later be essential to Britain’s empire.

While the English came to terms with the Vikings, the men from the North were also harassing the Franks on the continent. After failing to take Paris, Rollo, a renegade from Denmark, settled in what is today Normandy. Scarely five generations later, his great-great-great-grandson William invaded England. During four years of ruthless conquest he almost exterminated the local aristocracy, stole its lands, and established a Norman command hierarchy in its place. This land-based Norman aristocracy was fiercely independent, jealous of its rights, and resistant to the tribute (taxes) imposed by William’s descendants. It largely created the English system of government which the colonists brought to America and from which the U.S. Constitution and other foundational documents are derived.

Then, in their bid for independence, was it barbaric for the colonies to allow Robert Morris to prey on English shipping? Morris was the biggest financial backer of the American Revolution. Arguably, he did it not because he was a great fan of democracy. The revolutionary government gave him cover to steal property from the English. His private fleet captured 1,500 British vessels, making Morris one of the richest men in the colonies.

The authors tell these stories, some from ancient history and some from yesterday’s newspapers. The reader can draw his own conclusions.

—William Bonner, President of Agora Publishing,

Author of Empire of Debt, Financial Reckoning Day, and Mobs, Messiahs, and Markets

Acknowledgments

I would like to thank my mentors Bill Bonner and Mark Ford for teaching me the value of good ideas. They have shared with me many valuable business and life experiences, for which I will always be grateful.

I would also like to personally thank Sara Nunnally for taking on this tremendous challenge with me. I’ve always enjoyed her viewpoints and welcome her ideas. She’s a wonderful researcher and writer.

Of course there are many more people to thank for their support, and my list could truly never be considered complete. I can only acknowledge some of them on this page, including the great thinkers and writers of my company, the Taipan Publishing Group: Justice Litle, Adam Lass, Byran Bottarelli, Zachary Scheidt; Kent Lucas, Michael Robinson, Michael Sankowski, Joey McLiney; and Chip Biggs.

I also need to acknowledge other members of my company, the Taipan Publishing Group, including Jeanne Smith, Erin Beale, Jeffrey Little, and the many other staff members who work vigorously to make the Taipan Publishing Group a wonderful company.

My list of acknowledgments wouldn’t be complete without mentioning Laura Davis, Daryl Berver, and Dan Denning, who have become my most cherished friends.

And last but certainly not least, I couldn’t have undertaken this task without the encouragement and support of my husband, Mark, and my children, Zachary and Rachael, for which I am most grateful.

—Sandy Franks

I would like to thank Taipan Publishing Group for giving me the curiosity to foray into the history of wealth and its disappearance, and the abundance of time needed to accomplish such a task. I’d also like to thank all my dogs for keeping me company on the couch throughout the whole process.

—Sara Nunnally

Introduction

On April 16, 2010, the Securities and Exchange Commission (SEC) charged Goldman, Sachs & Co. and one of its vice presidents for defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages as the U.S. housing market was beginning to falter.

In an e-mail to a girl he was dating, Fabrice Tourre, a Goldman Sachs trader named in the SEC suit, writing about the mortgage investments he was trading, described them as “Frankenstein turning against his own inventor.”1

His invention was Abacus 2007-AC1, a security backed by subprime loans. Tourre created the security when the market was on an upswing. However, led by greed, Tourre continued selling the securities after the market turned downward.

When credit rating agencies started downgrading the securities, Goldman Sachs executives were more than pleased because they were secretly betting against them. Goldman Sachs executive Donald Mullen wrote, “Sounds like we will make serious money.”2

Unlike many people, we weren’t surprised when the SEC filed charges against Goldman Sachs. That’s because we knew the firm was capable of dirty investment deeds. The truth is Goldman was a major player in subprime derivatives that brought down the world economy.

However, Abacus 2007-AC1 isn’t the only risky mortgage-related financial product Goldman sold to institutions. You can go back to April 27, 2006. That’s when Goldman created the mortgage security known as GSAMP Trust 2006-S3.

Goldman’s GSAMP Trust 2006-S3 security was made up entirely of subprime loans. Goldman Sachs bought the loans from several different mortgage companies throughout the United States that had granted thousands of non-creditworthy borrowers millions of dollars in mortgage loans.

But Goldman Sachs isn’t the only financial firm that deserves blame for wreaking havoc on the global economy. There are others that are just as guilty.

This is one of the compelling reasons we decided to write Barbarians of Wealth. In this book, we’ll show you how reckless decisions and actions by certain people and companies severely cripple the financial prosperity of the American public. In many ways their actions are no different from the barbarians of the Dark Ages.

Economic Destruction

After the fall of the Roman Empire, Europe was invaded many times by various barbaric tribes including Attila the Hun; the great Charlemagne; the Mongols (from Asia), led by Genghis Kahn; and the Vikings, invading pirates of the sea.

These barbaric tribes plundered villages throughout Europe, destroying homes, farms, and often entire villages. In their wake, they left masses of people impoverished, with all hopes of personal prosperity crushed. They were ruthless. And the destruction and devastation they caused was for their own personal gain.

Almost 15 centuries later, modern-day barbarians have left a path of economic destruction far greater than that caused by hurricanes or earthquakes.

Who are these modern-day barbarians of wealth? One is the U.S. banking industry, including the Federal Reserve. The decisions they make on monetary policy and interest rates affects the entire U.S. economy and therefore the wealth of many hardworking Americans.

By the first half of 2010, the Fed had already spent $2 trillion to bail out Wall Street’s banks and the U.S. mortgage market. Our national debt now stands at $12.8 trillion. And it will probably only get worse.

But we can’t talk about the Federal Reserve without talking about its leaders. Just as each barbaric tribe had a leader, so do these modern-day barbarians. For the banking industry, we name Alan Greenspan as a modern-day barbaric leader.

In his imperious “wisdom,” Greenspan lowered interest rates, which created an era of rampant credit. As he lowered interest rates, capital costs were dramatically reduced and suddenly the worst business plans and most feeble management could appear brilliant. Institutions took on more risk than they were capable of properly managing. Many Americans began purchasing well beyond their means.

Alan passed his low interest rate philosophy down to his modern-day barbarian heir, Ben Bernanke. This era of mass credit reached a level so great that when the credit bubble it created burst, millions of people lost their jobs, and home values were destroyed, as well as trillions in 401(k) retirement plans.

Other modern-day barbarians of wealth are the major Wall Street institutions such as Goldman Sachs, J.P. Morgan, CitiGroup, AIG, and a host of others, including credit rating agencies such as Moody’s, Standard and Poor’s, and Fitch.

These investment firms helped transform illiquid financial assets into standardized, liquid, marketable securities such as mortgage-backed securities, which we now know contributed to the global financial recession of 2008.

The combined size of these derivatives grew almost 30 percent in the first half of 2007, when it reached a size of $370 trillion.

And what about Washington’s role? Or, more specifically, what man was near the top of political power and was also a major principle of a Wall Street firm? None other than Henry Paulson, named runner-up for Time’s Person of the Year 2008 for his knee-jerk reaction to inject $700 billion into the financial system. Before taking office as Secretary of the Treasury, Paulson was CEO of Goldman Sachs. By the way, all three successive CEOs of Goldman Sachs followed Paulson into government.

The cronyism doesn’t stop there. Timothy Geithner, current Secretary of the Treasury, was Paulson’s protégé. He allegedly, while head of the Federal Reserve Bank of New York, had AIG keep quiet some details about its payments to banks (like Goldman Sachs and Société Générale) during the financial crisis.

Of course, no listing of modern-day barbarians of wealth would be complete without adding members of Congress. In this book, we pinpoint certain members of Congress such as Christopher Dodd, head of the U.S. Senate Banking Committee, who acted more on his own behalf than that of his constituents.

Dodd received privileged VIP loans from Countrywide Financial, loans that the people he represents could never receive. And Countrywide Financial was the first mortgage to go under in the credit crisis.

Defend Your Wealth

Sun Tzu said in his book The Art of War, “It is only one who is thoroughly acquainted with the evils of war that can thoroughly understand the profitable way of carrying it on.”3 You can’t fully understand the motives of modern-day barbarians until you have at least looked back at the barbarians of the past. The first four chapters of this book detail the exploits and invasions of the most ruthless and cunning barbarians of the Dark Ages. Because we live in a civilized society, you might think that because we are 1,000 years removed from the Dark Ages, our advanced era cannot support the cruelty and greed of Attila or the Vikings. To believe so puts your wealth and prosperity at risk.

Today’s stakes are very high: our economic world as we know it—the very foundation of our society. The tools the modern-day barbarians use are no longer trebuchets or Mongolian bows. They’re computer programs and toxic assets. But they’re designed to leave you penniless and dumbfounded as surely as a barbaric invasion.

These modern-day barbarians are “thoroughly acquainted with the evils of war,” and they definitely know how to make it profitable.

Barbarians of Wealth is a walking tour through the history of our economy. Along the journey, you’ll learn about the people and events that shaped our financial future and how those actions have impacted your future financial well-being. The list of modern-day barbarians is long and their actions detailed.

Knowing how these barbarians—both from the past and the present—operate gets you one step closer to regaining your financial freedom.

But Barbarians of Wealth wouldn’t be complete without offering you specific strategies you can undertake to protect your financial future. We’ve dedicated the last section of this book to showing you not only how to protect what prosperity you have left, but how to win back the wealth today’s financial barbarians have stolen from you.

Putting these strategies in place can make an appreciable difference in your financial life.

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 interest during his time as Treasury secretary.

Paulson spearheaded U.S.-China relations and led the U.S.-China Strategic Economic Dialogue. At the Shanghai Futures Exchange, he told people, “An open, competitive, and liberalized financial market can effectively allocate scarce resources in a manner that promotes stability and prosperity far better than governmental intervention.”20

Figure 1.1 Hunnic Empire in the region of Attila

Source: Perry-Castañeda Library Map Collection, from William R. Shepherd, Historical Atlas (1911; 8th ed. Barnes & Noble, 1956), taken from www.emersonkent.com/map_archive/attila_empire_450.htm.

Like a double-headed coin—a sort of “Heads, I win; tails, you lose” scenario.

Meaning, don’t interfere. And that’s what got both Attila and Paulson in trouble in the end. It was Attila’s biggest—some say only—flub as king of the Huns, and how his terrifying horde of barbarians faded away into nothing more than a fantastic history for spirited Hungarians.

The Battle of Châlons—Attila’s Fate is Sealed

It wasn’t just for Attila’s honor that the Huns marched against Western Rome, though the temptation of Rome’s riches would’ve been enough.

A succession battle in the Frankish kingdom widened the rift between Rome and Attila. After Clodion, king of the Franks, died with 20 years of what could be called peaceful reign under his belt, his two sons fell to fighting over the kingdom. Fatefully, the younger son, Meroveus, sought the help of Aëtius and Rome, while the older son courted Attila.

This was a key alliance for the king of the Huns, as it provided a safe passage across the Rhine—and, as Gibbons puts it, an honorable pretense for the invasion of Gaul.21

With a sure foothold across the Rhine, Attila would be able to sweep down on the Western Empire, or west into Visigoth territory. Either way, Attila’s position would open the floodgate for plunder and pillaging aplenty for his Huns.

As Attila raised the call, tens, perhaps hundreds of thousands of eager tribes lined up for what looked to be an easy rout of the Old Empire—and a huge payday. They took Cologne, Mainz, and Worms on the banks of the Rhine. “Advancing in three columns through modern-day Belgium, the Huns spread terror and destruction,” wrote Richard Gordon in Military History. “Town after town was destroyed, including Metz, Cambrai, Strasbourg, Rheims, Amiens and Worms. Paris was saved only because the Huns considered it too small to be worth the trouble of a siege.”22

It was a masterful first strike, and Attila and his Huns were weighed down with plunder. However, it was at this point that things started turning against the barbarian king.

During this first sweeping invasion that Gibbons describes as a “promiscuous massacre,”23 Aëtius was beseeching the Visigoths under the rule of King Theodoric to join him against Attila. Theodoric had refused—until the Scourge of God reached Orléans, a scant 100 miles away from Visigoth lands in western France.

Theodoric thought it better to forget the past injustices between his people and Rome in favor of preservation. With Attila, there would be slaughter.

As the Huns marched on Orléans, Aëtius and Theodoric rushed to the city. Orléans was held by King Sangiban, and Aëtius doubted the king’s loyalty. This was the land where Rome had settled the Alans, whose distant homelands between the Caspian and Black Seas were now under Attila’s rule.

Aëtius was right to fear, for just as he and the Visigoths arrived at Orléans, King Sangiban was opening the city to Attila and the Huns.

In a quick attack, Aëtius and Theodoric diverted the Huns, who prudently retreated to the open fields of Châlons, just east of Paris. This is where Attila could have chosen to quit the field, having gained an enormous amount of wealth, and hightail it back across the Rhine.

But Attila turned, and sealed his fate.

Pride over Prejudice—Attila’s Only Defeat

The two sides aligned for battle on the flat plains, with only a small hill on Attila’s left flank as a point of advantage. Rome and her allies arranged themselves with the Alans in the middle, where they could be watched, with Theodoric and his sons to the right and Aëtius and the Romans to the left.

Attila arranged his troops with his fearsome Huns front and center, with the Gepids on his right and the Ostrogoths on his left, facing the singular hill. It was this hill that would be the first fight of the battle. Theodoric’s son Thorismund, armed with heavy cavalry, advanced on the hill, warding off the Ostrogoths and the Huns, though both sides took heavy casualties.24

Next, Attila—at the center of his host of warriors, standing on the front line—charged the Alans at the center of Aëtius’s and Theodoric’s armies, and quickly turned on the Visigoths, separating Theodoric from Aëtius. Thorismund was quick to respond from his hilltop vantage and charged into the flanks of the Ostrogoths who had partially surrounded his father’s army. The charge broke the lines, and the Ostrogoths wheeled around to retreat, with the Huns barely escaping to the safety of the wagons.

From here, it was pure mayhem. Historical sources give conflicting versions of the rest of the battle. One says that Attila successfully cut off Theodoric from the Roman army, and that the Visigoth king was killed in battle, poetically and tragically speared by Andages, an Ostrogoth noble, and trampled by his own horses.25

Another says that Theodoric and his son Thorismund thwarted Attila’s attack, forcing him to retreat to his wagons by nightfall. The Visigoth king was accidentally thrown from his horse, and his death was not noticed until later that evening.

Though Attila was forced back to his wagons, he would not back down. Even the Visigoths’ historians likened Attila to a lion encompassed in his den, and after several attempts to avenge his father’s death were thwarted by showers of arrows, Thorismund was talked into leaving the field of battle. Aëtius allowed Attila to retreat after it was clear that the Huns would never back down. Rather than risk his Roman army, Aëtius let Attila slink back to Hunnic territory.

This allowed the Roman general to have all the spoils of victory for himself, and also headed off any Gothic pride at victory on the battlefield. Aëtius knew that if Attila remained a threat, the Visigoth threat would always remain checked.

The scene at Châlons was one of pure carnage. Gibbons wrote:

The number of the slain amounted to one hundred and sixty-two thousand, or, according to another account, three hundred thousand persons; and these incredible exaggerations suppose a real and effective loss sufficient to justify the historian’s remark, that whole generations may be swept away by the madness of kings, in the space of a single hour.26

These kinds of numbers don’t matter to a barbarian like Attila. The number of coins in his treasury matters, or the number of wives at his camp. But ruthlessness overpowers prudence in Hunnic culture, which is why, only one year after the Battle of Châlons, Attila invaded Rome again—and this time, the barbarian Visigoths did not come to Aëtius’s aid.

The only card Rome had to play was negotiating for peace, and an embassy was quickly dispatched to Attila. In this embassy was none other than the future Pope Leo I, then a bishop, who successfully bribed Attila with enough gold and the promise of the deliverance of his bride Honoria to make him go away.27

The Death of Attila

In early 453, as he took a young bride named Idilco to his bed, Attila suffered a nasal hemorrhage and drowned in his own blood at the age of 49.28

Priscus reports:

Worn out by excessive merriment at his wedding and sodden with sleep and wine he lay on his back. In this position a hemorrhage which ordinarily would have flowed from his nose, since it was hindered from its accustomed channels, poured down his throat in deadly passage and killed him. So drunkenness put a shameful end to a king famed in war.29

This is a stunning end to one of the most notorious barbarians of all time.

Of course, controversy surrounds his death: Was he poisoned? Did his new bride kill him?

A full 80 years after Attila’s death, Count Marcellinus, a Roman chronicler, wrote, “Attila, King of the Huns and ravager of the provinces of Europe, was pierced by the hand and blade of his wife.”30 And more recently, Michael Babcock asserted that the Emperor Marcian was behind Attila’s death, in his 2005 book The Night Attila Died: Solving the Murder of Attila the Hun.31

After his death, the Huns fell into disarray as Attila’s sons squabbled over the riches the Hunnic Empire had gained under their father’s rule. Within a year, the ferocious Huns were defeated and scattered across the Pannonian plains. They would not bother Rome again.

Whether from natural causes, overindulgence, a young bride’s fear, or political will, Attila’s death highlights the transient nature of the barbarian’s rise to wealth and power. His smash-and-grab tactics allowed for only momentary gain that simply vanished in the wind in the absence of real prosperity.

And indeed, his barbarism sucked the prosperity out of every land his Hunnic feet touched.

Today’s barbarians of wealth have learned a lot from Attila. Have we not seen the Hank “the Hun” Paulson smash and grab $700 billion to allegedly rescue the financial system from imminent collapse? Have we not seen the nationalistic President Hugo Chavez force international companies to give up their stakes in lucrative oil fields off the coast of Venezuela?

We’ve seen AIG throw a lavish retreat for its employees as the financial world collapsed around them. We’ve seen Attila-like investment banks heap multimillion-dollar bonuses on their CEOs while raking in taxpayer-funded bailouts.

Yes, barbarism was never the same after Attila, though the world would soon come to know barbarians of a different ilk—ones with silk tongues and righteous causes, ones with the might of empires behind them.

Ones like Charlemagne—Charles the Great, the Father of Europe.

Chapter 2

Charlemagne: The Clandestine Barbarian

When you think of barbarians, you think of rough bands of brigands, pooling their resources to ravage the countryside and harry the larger empires. Pillaging and plundering—mob warfare—come to mind. The Goths, the Mongols, the Huns, the Vikings . . . The tribes you hear about would as soon cut your throat for your gold necklace as look at you, or would burn your little thatch hut and haul off your virgin daughter.

You don’t normally think of such historical heroes as Charles the Great—known as Charlemagne.

Why would you? His campaigns were made under the cross, in the name of Christianity, and his deeds have earned him the moniker “the Father of Europe.” He united many warring tribes under his banner and expanded the Carolingian Empire down into Italy, ushering peace and prosperity across middle Europe.

But he achieved these successes through constant campaigning, snuffing out rebellion, and bringing his enemies to heel. That’s why we call him the clandestine barbarian.

The triumphs of Charles the Great marked the brightest spot of the Dark Ages, and his vassal kings were wealthy beyond belief. He himself was known to despise rich clothing or costumes, and rarely wore bejeweled attire, choosing instead to dress more like a commoner.1 But Charles knew the power of wealth on display and lined his banquet tables with plates and cups of silver and gold.

Charlemagne exhibited many of the traits we see in modern-day politicians, whom we also call barbarians of wealth. He knew the power of campaigning. He also recognized that he had to keep his vassal kings’ appetite for wealth satisfied, or they would rise up and try to overthrow him. They respected strength of arms and money, so he bribed them with riches from his dynastic expansions.

This isn’t much different from how politicians behave when campaigning for votes from their constituents—or the backdoor deals they negotiate with one another and with corporate lobbyists in order to get bills passed. Consider the deal made between Senate Majority Leader Harry Reid and Senator Ben Nelson to get the sixtieth vote needed to pass President Obama’s health care reform bill.

Ben Nelson (D-NE) was induced to cast the decisive vote in exchange for a special provision exempting his state from a mandate imposed on states to pay for Medicaid expansion. This is one example of modern-day bribes used by our political leaders. In later chapters, we’ll learn more about the dirty deeds of our modern-day politicians. For now, let’s return to Charlemagne’s rule as the clandestine barbarian.

Charlemagne ruled with an iron fist—or rather, a steel sword. Born sometime in the 740s (the specific date is still under debate; some historians say 742, while others say 747 or 748), he was the grandson of Charles Martel—Charles the Hammer—a masterful military general.

The Hammer was responsible for subduing the eastern duchies of Bavaria and Alemannia, and the southern duchies of Aquitaine and Provence. He successfully protected the western provinces from the invading Muslim armies that occupied modern-day Spain.2

Charlemagne’s father, too, was handy with the sword. Pepin III (a.k.a. Pepin the Short, or Pippin) rose to power under the last of the Merovingian kings, Childeric III, who was essentially a figurehead, wishing instead for a monastic life.3 (You may remember that Aëtius, the Roman general who drove out Attila and the Huns in the Battle of Châlons, supported the younger Frankish prince for the throne in 451, while Attila supported the older, after the death of King Clodion. According to some sources, that young prince—who succeeded to become king of the Franks, as Rome declared victory at Châlons—was named Meroveus.)4

Childeric was considered an impotent power, and for all intents and purposes, Pepin ruled the Franks as the mayor of the palace—which means he had control of the armies and magnates.

As tensions grew in southern Italy with the Lombards, Pepin had Childeric deposed by the Pope, and his first action as king of the Franks was to march on the Lombard king Aistulf, who had expanded into Roman territory. Pepin was victorious and the ancient capital of the Western Empire, Ravenna, was returned to the papacy.

Needless to say, Charlemagne had some big shoes to fill—and the clandestine barbarian was more than up to the challenge.

The Piety of Charlemagne

His kindness and control were key characteristics of Charlemagne. Everything from his plain dress to his piety was conservative and, perhaps, reverent. Charles the Great even put huge amounts of the gold and silver won in his campaigns into the hands of the church to build monasteries and places of worship. He fairly lavished them with riches.

In Charles’s time, there were 600 monasteries throughout his lands,5 and as he defeated the rebellious barbarians, like the Saxons, he forced them to be baptized—under pain of death. Then the newly conquered Christians had to pay tithes (just like every other Frank) to the church, and forfeit large plots of land “for the benefit of the missions,” according to Thomas Shahan and The Catholic Encyclopedia.6

And with all of Charlemagne’s conquests, there was always a flow of money into the government and through to the church.

With the gold and the wealth that the kings and princes of Spain presented to Charlemagne, the emperor built the Church of Saint James during the three years that he remained in the country. He established a patriarch and canons there, according to the rule of Saint Isidore the confessor. He built the church nobly, decorating it with bells, silken cloths, books, texts, crosses, calixes, and other ornaments.

With the rest of the gold and silver that he brought from Spain he constructed many churches on his return to France. These include the Church of Our Lady Saint Mary and the Church of Saint James in Aix-la-Chapelle; more churches of Saint James in Béziers, in Toulouse, and in Gascony, in the city of Axa (Dax); the Church of Saint John of Sorges, on the pilgrims’ road; a sixth Church of Saint James, in the city of Paris, between the Seine and Montmartre; as well as innumerable churches and abbeys that he built and founded throughout the world.7

In contemporary times, we can see a similar relationship between Alan Greenspan and Wall Street.

Greenspan was the chairman of the Federal Reserve from 1987 through 2006. In 1987, the markets were crashing. After he was nominated, the bond markets experienced their largest one-day drop in half a decade. Then the stock markets went haywire. The Dow Jones Industrial Average lost 22.61 percent on the infamous day dubbed Black Monday, October 19.8

Alan “the Great” Greenspan responded to this crisis by saying that the Fed would “serve as a source of liquidity to support the economic and financial system.” This response would reappear as a trump card for any crisis during his tenure, such as when he flooded the system with dollars during the Asian financial crisis in the late 1990s.9

Another way Greenspan shoveled money into Wall Street’s coffers was by playing with interest rates. After the tragedy of September 11, 2001, and the revealing of several corporate scandals that also rocked the markets, Alan the Great slashed interest rates bit by bit until in 2004, the Federal Fund rate was only 1 percent.10 And that allowed markets easy access to money.

Between 2004 and 2007—when the house of cards came crashing down—the Dow Jones Industrial Average gained 27 percent. That’s 9 percent a year. And from Black Monday in 1987 until Greenspan left office on January 31, 2006, the Dow Jones has gained 525 percent, or 27.6 percent a year.

To many, this behavior seems appropriate, but when the market gets too big and demanding, soon there’s not enough money to satisfy it, and the pendulum swings.

This happened to the Frankish kingdom after Charlemagne’s death. His character was so big, and his influence so wide-reaching, that his successor, Louis the Pious, could not live up to the kingdom’s—and church’s—expectations.

This is the heart of clandestine barbarism: The union and stability of Charlemagne’s empire depended on the life of a single man: he initiated the dangerous practice of dividing his kingdoms among his sons; and after his numerous diets, the whole constitution was left to fluctuate between the disorders of anarchy and despotism.11

The Christian Kingdom

Charlemagne’s campaigning efforts also led to a rapid expansion of Christianity. He often forced newly subdued tribes to be baptized, and then taxed them in support of the church. Derek Wilson, author of Charlemagne: A Biography, wrote, “Any leader who comes with armed support in the name of a compelling faith is sure of a following. The faith that underpinned Charlemagne’s reign, and that would become the most powerful the world has ever seen, was militant Christianity.”12

This wasn’t just an expedient way of subduing the masses. Charles believed it was his divine mission to bring Christianity to the pagan peoples. He just did this at the point of his sword.

Susan Wise Bauer, author of The History of the Medieval World: From the Conversion of Constantine to the First Crusade, wrote:

First, Charles wanted to expand his empire to the north; the land around the Rhine was rich, and the Saxon tribes were not well united. . . . The following year [in 773], he crossed the Alps, set on punishing [the Lombard King] Desiderius for his plots and aiming to claim Italy for his own.13

Rome was in trouble. It was surrounded by the Lombards, who were intent on making this city their capital. They’d been chipping away at the old empire for decades. Indeed, in Charles’s father’s time, the Lombards had captured the old Western Roman Empire’s capital of Ravenna.

The Pope, Stephen II, was forced to call on Pepin III, Charlemagne’s father, to expel the Lombards from papal lands. He was successful, but Lombardy was never truly brought to heel in Pepin’s time.

Charlemagne found himself at the edge of a conflict that would determine his place in history. Christianity was the unifying factor for his empire. His rule encompassed a vast variety of cultures and languages. Faith was a commonality that helped Charles the Great keep his people loyal—and they adored him for it.

This made a relationship with Rome and the Pope extremely important—but it was a balancing act. Charlemagne, however devout he was, did not want to appear to be under the thumb of the Pope. In fact, it was a Frankish ideal that the king ruled over all his subjects, including the clergy.

So it was in late 773 that Pope Hadrian I beseeched Charles the Great to save Rome from the designs of the Lombard king, Desiderius. Charlemagne responded quickly—far more quickly than Desiderius expected, as the Pope’s summons came after the campaign season, and the Franks would have to cross the daunting Alps with winter coming on.

According to Derek Wilson, Desiderius thought the winter weather would do the work for him. “At the very worst,” he wrote, “Desiderius would be obliged to agree to a truce and make promises that he would have no intention of keeping. But Desiderius was in for more shocks than one.”14

Rather than withdrawing as winter set in and the snow piled up around the Lombard capital of Pavia, Charlemagne dug in and besieged the city. It was a long wait through bitter-cold months, and as spring worked its way north in 774, Desiderius still saw Charles’ armies camped on his doorstep.

But it wasn’t until full summer that the Lombard king called for a truce. Einhard, Charlemagne’s biographer, wrote, “Charles did not cease, after declaring war, until he had exhausted King Desiderius by a long siege, and forced him to surrender at discretion.”15

Unlike his father, Pepin III, Charlemagne assumed control over Lombardy, taking the Iron Crown for his own. With the threat of Lombardy removed, the Pope was indebted to the king of the Franks, and their friendship was mutually beneficial: The king was the protector of the church, while the Pope provided that religious cohesion that helped Charlemagne rule his many peoples.

We see this protector role played out centuries later by Alan “the Great” Greenspan. Alan was the protector of Wall Street investment banks and corporations. As Chairman of the Federal Reserve, Alan began to slowly pull apart the Glass-Steagall Act, which had kept banking and commercial banking activities separate.

Alan justified his unraveling of that act by suggesting that the greedy fat cats on Wall Street could regulate themselves in a type of “establishment radicalism,” so termed by Richard Eskow.16 In return, his Wall Street comrades would sing his praises. He would become known as “the Maestro.”

The Saxon Wars

The Saxon wars were about three things: border security, money, and ideology.

The relationship between the Franks and the Saxons was one of constant conflict. At times there was peace, and Saxony was part of Francia. At other times, there was war.

After the fall of the Western Roman Empire, the Franks became Christianized. The Saxons held on to their own beliefs, a pagan religion that worshiped (in part) the Irminsul, or “great pillar,” that symbolically connects earth and heaven.17

Their paganism was a large part of Charlemagne’s justification for war. After his first few battles with the Saxons, Charles divided the territory up into missionary districts. He instituted rules, and established churches and monasteries. But the Saxons’ quid pro quo was to submit to Charlemagne and, when his back was turned, go back to their old ways of living. This caused the king to tighten the thumbscrews.