Good Old-Fashioned 1950’s Corruption

Economist Ray Fisman has a fascinating piece in Slate about insider trading surrounding a 1950’s C.I.A. coup in Guatemala, and how some economists uncovered it.

Fisman is one of the authors of the excellent book Economic Gangsters, discussed by Justin Wolfers here.


Here's what I think would be a more interesting scenario:

The CIA needs to fund its covert operations with as little paper trail heading back to the US Government as possible. So in order to fund (or partially fund) their missions, they set up BS investment holding companies all over the world. When they know they're going to strike a target that has market ramifications, they advise their BS holding companies to buy up the stock of said companies in the weeks beforehand.

By doing so, they generate a clean money trail, and shore up funding for future missions...

/Removes tin foil hat.


great post- should be required reading for anyone who wants to understand modern imperialism- and I agree with martin g and econobiker in highlighting the high level of corruption from the energy industry lobby in the bush administration- certainly Saddam was originally attacked for not following orders, but no doubt the second attack was more integrated into the energy industry's plans for hegemony


I personally think that Iraq was attacked to get it out of the black market for oil.

The idea is thus: Saddam had been undercutting the market after Gulf War 1 in order to rebuild his palaces, army, and buy Uday a few more exotic sports cars. By dumping oil at under-market pricing (and screwing his people out of it), he ruined profits for the other oil producing countries.

The whole UN "Oil for Food, Medicine, etc" deal allowed this dumping to go on with a legitimate screen. Finally the Saudis, et al, got tweeked enough at this illegal dumping. When their allie Bush (from an oil connected family) got made President in 2000 they wanted him to "do something" about Saddam. Remember that Clinton was just happy to lob some missles in every so often on the Iraqies- he definitely wasn't going there...

The fly-in-the-ointment of the Iraq schedule for Bush was Bin Laden (and his crazy band of psycho religious zealot flyboys) eminating from the sh**hole backwater of Afganistan-a land of no resources except under-educated populace ruled by local religious zealots. So Bush had to divert his attention to the Afgan arena for a while before he could help the oil producers by removing rogue oil sman Saddam from the market.

Just my opinion...


martin g

I'm still wondering what went on in Cheney's pre 9/11 energy policy meetings. What did the anonymous industry rep's ask for? Did they discuss how to end the Iraq embargo while hiding how much it would further their business interests? It should be considered that the contracts that American companies are now looking to make in Iraq are not about owning the oil, they are about sharing in the oil profits by being the ones who pump and transport it.

Just another nutty conspiracy theory, except that Bush practically said as much when he stated that American companies have an exclusive right to this business opportunity because it would be unilateral US military action that created it.

science minded

a curious problem- referring to "scoundrals responsible for so much suffering." I just came across the very reverse of what a bit of a scoundral recognized that he might accomplish long-term in the interest human happiness. I will not mention his name. This is just a thought for now.


Great post but Historians have known this for years, good to see Economists are finally catching up. First heard this story at University (SFU), in a class about American foreign policy. I believe the professor was Nicholas Guyatt, he has a couple of books out.