In addition to the OPEC covering Wall Street Journal reporter, David Bird, who went missing on January 10, 2014, within two weeks, at least seven high profile financial executives have died under mysterious circumstances.
On January 26, 2014, Tim Dickenson, a U.K.-based communications director at Swiss Re AG, died The circumstances surrounding his death are undisclosed.
That same day, William Broeksmit, a former senior manager at Deutsche Bank--under investigation for potentially rigging the Foreign Exchange markets-- with close ties to co-Chief Executive Anshu Jain, was found hanging in his home, from an apparent suicide.
The next day, January 27, 2014, 51-year old Karl Slym, handpicked by Ratan Tata to revive the fortunes of Tata Motors in India, died in Bangkok on Sunday in a freak accident at the hotel where he was staying. Police said he may have committed suicide.
The next day, January 28, 2014, Gabriel Magee, a 39-year-old senior manager at JP Morgan’s European headquarters, jumped 500ft from the top of the bank’s headquarters in central London on January 27, landing on an adjacent 9 story roof.
The next day, January 29, 2014, Mike Dueker, the chief economist at Russell Investments, fell down a 50 foot embankment in what police described as a suicide.
“Mike Dueker, the chief economist at Russell Investments, was found dead at the side of a highway that leads to the Tacoma Narrows Bridge in Washington state, according to the Pierce County Sheriff’s Department. He was 50.
He may have jumped over a 4-foot (1.2-meter) fence before falling down a 40- to 50-foot embankment, Pierce County Detective Ed Troyer said yesterday. He said the death appeared to be a suicide.
Then, on February 3, 2014, 37-year old, JP Morgan Global Equities Trading Executive, Ryan Henry Crane, was found dead. Crane, who oversaw the trade platforms had close working ties to the aforementioned deceased Gabriel Magee of JP Morgan's London office. The cause of death will be determined when a toxicology report is completed in about six weeks.
Soon after, on February 7, 2014, Richard Talley, 57, founder of American Title Services in Centennial, Colorado, was found dead after apparently shooting himself seven or eight times in the head and chest with a nail gun. Suicide? Really? That ranks up there with strangling oneself as Veritas Capital Founder Robert B. McKeon--who later purchased DynCorp, the private military contractor with a history of child trafficking--apparently accomplished.
So what's going on, here? Were these men killed because they knew too much? Did they flip during prosecution investigation? Thus, assassinated to prevent insider testimony concerning the colossal multi-trillion dollar fraud in the global financial casino ? Or did they all just decide to kill themselves after reading the writing on the wall?
Read more...
I've always believed that we, the American, live in the best of all possible worlds and much to my surprise, after all I've learned, and after all I've complained about, I still do, although to a much lesser degree, of course. I realized this when I came across the headline," America Is the Most Inhumane Developed Country on the Planet..." My immediate reaction, at the gut level, was shock.. that is, until I had time to think about the extraordinary incarceration rate, the millions and millions of people without health insurance, the millions and millions of people without enough food to eat, without safe shelter, without the means to pay off exorbitant student loan debt, without full employment, or in an increasing number of cases, without employment at all....
However, if I didn't know just how inhumane our nation has become, the fourth edition of the Credit Suisse Global Wealth Databook (2013) cinched it for me. The report ranked the US as the most unequal of all advanced economies. The Gini coefficient-, the standard measure of a nation's wealth-inequality (a Gini coefficient of zero expresses perfect equality) in the U.S. is 85.1. That's right, we're thee number one most unequal of the 20 developed nations in the world! 75.4% of all U.S. wealth is owned by by the top 10%! Followed by:
Denmark, with 72.2% of its wealth owned by the top 10%, Switzerland, with 71.5% of its wealth owned by the top 10%, Sweden, with 71.1% of its wealth owned by the top 10%, Israel, with 68.9% of its wealth owned by the top 10% Norway, with 65.9% of its wealth owned by the top 10%, Germany, with 61.7% of its wealth owned by the top 10%, Singapore, with 61.1% of its wealth owned by the top 10% Ireland, with 58.4% of its wealth owned by the top 10%, New Zealand, with 57.6% of its wealth owned by the top 10% Canada, with 57.4% of its wealth owned by the top 10%, Netherlands, with 54.6% of its wealth owned by the top 10% Spain, with 54% of its wealth owned by the top 10% U.K., with 53.3% of its wealth owned by the top 10%, Italy, with 49.8% of its wealth owned by the top 10% Japan, with 49.1% of its wealth owned by the top 10%, Finland, with 44.9% of its wealth owned by the top 10%
Hell, we even beat Chile (72.5%), India (73.8%), Indonesia (75.0%), and South Africa (74.8%)!
At the other end of the wealth spectrum, the bottom 90% of the U.S. population own only 24.6% of all the privately held wealth in our nation, whereas in most of the other developed nations, the bottom 90% own, on average, approximately 40% of the wealth.
Moreover, not surprisingly, this so-called "economic recovery" has only benefited the richest Americans, as the richest 1% of Americans have received 95% of the income-gains since the 2008 financial crash, raising their incomes by 31.4%.
Once again, this should come as no surprise in a world where the richest 300 people on earth have more money than the poorest 3 billion.
Is the response to the 2008 financial meltdown a band-aid fix that "punished none of the financial abusers, propped up the major culprits at the expense of consumers and taxpayers, and brought us closer to an even worse disaster?" That is the question radio host Thom Hartmann, author of “The Crash of 2016: The Plot to Destroy America and What We Can Do to Stop It,” answers on NPR's show, The Takeaway..
Hartmann claims the crash of 2008, that really began in 2006 when housing started to collapse, is still ongoing, despite the over-the-top performance of the stock market. Millions of people have fallen out of the middle class since the 1980s, including 700,000 in the last couple of years, driving wealth inequality to an all time high. These enormous concentrations of wealth are not being used productively in the economy as they are invested internationally and stored in Swiss bank accounts.
One of the main problems is that banking has replaced manufacturing as the fundamental impetus of our economy, yet it creates no wealth, not to mention, Glass-Steagall Act (1933) has never been replaced so the banks are still gambling with our deposits. Then there is the the quantitative easing program that's devaluing our currency more and more every day. Half of the program is buying toxic securities--junk--from the banks to the tune of $35-$40 billion per month. That is they're buying junk left on the books of the banks left over from the unregulated derivatives market that Phil Gramm created in 1999 and 2000 when the Gramm-Leach-Bliley (GLB) Act of 1999 was passed and even more importantly, the Commodities Futures Modernization Act (CFMA) a law that opened the door to unregulated trading of credit default swaps, the financial instruments blamed, for the 2008 economic meltdown. The passing of this Act catapulted the derivatives market to $800 trillion in 2008! (Keep in mind, the GDP of the entire planet is $65 trillion.) Right after the crash in 2008, It fell to $500 trillion, but according to the Bank of International Settlements it's back up to $800 trillion!
Since the wheels of commerce started to spin, there's always been some sort of commodities futures market in play, where farmers and merchants could lock in on actual physical things--pork bellies, wheat, oil, etc.--in advance at a fixed price. Up until 2000, the commodities futures market ran through the Chicago Board of Trade and has always been transparent. For example, airlines could hedge their bets by buying futures in oil. With the CFMA it became possible to make these kind of bets on the non-physical, and it became possible to make bets on bets on bets. In other words, they've created an economy that has absolutely no value!
As income inequality continues to rise and more people fall into poverty, or near poverty, innocent children bear the brunt. According to a new study by the Southern Education Foundation (SEF), "A New Majority: Low Income Students in the South and the Nation", "low income children are a majority of students in the public schools of 17 states across the nation - and 13 of those states are in the South. Without fundamental improvements in how the South and the nation educate low income students, the trends that this report documents will ricochet across all aspects of American society for generations to come."
Unfortunately, problems faced by children coming from households where poverty is a daily fact of life are only exacerbated by conditions in schools that are severely lacking funds, as in the Philadelphia school district, where they suffer from a $304 million deficit--where thousands of staff and teacher positions have already been eliminated in recent years--which threatens to devastate Philadelphia, putting its school children in harm's way.
“In 2011, Gov. Tom Corbett cut $1 billion in state school aid. The cut fell hardest on Philadelphia and other districts with high enrollments of poor children, English language learners, and students with disabilities...
The state aid cut has devastated Philadelphia. Tens of neighborhood schools closed. Class sizes of 30 or more. No art, music and physical education. Librarians and support staff gone. A handful of high school guidance counselors left with astronomical case loads. Children are now in harm's way from the loss of school nurses, social workers and security personnel.
The Governor's aid cut has transformed Philadelphia into an education wasteland, consigning students to schools without the most basic resources."
With all this fear-mongering about the U.S. going into default, I think it's important to understand that the government is the largest investor in the companies its supposed to be regulating and 2/3 of its revenue comes from investments (every government agency maintains its accounts in what is called the "Comprehensive Annual Financial Report" or CAFR, which is NOT the taxpayer"budget". It is the general accounting structure for government, a FULL DISCLOSURE of all assets and liabilities), NOT taxes. So one might ask the government the following questions: how do you regulate a company when you're sharing in its profits? How do you avoid conflict of interest when that conflict is embedded in the established system? How do you act without considering the revenue potential of your actions? How do you protect us from corporate evil when you are the largest most powerful corporation in the world? Government power and wealth is corporate power and wealth. There is no separation between government and corporate agendas. It should be readily apparent through the continuing passage of laws that profit government, as well as not only the lack of enforcement applied when the political/corporate elite break the law, but their rewards as in the recent bailouts.
“They tell us that our taxpayer budgets are continuously short of money from debt, taxes, tariffs, tolls, fines, levies, fees, dues, duties, orders, finance charges, excises, audits, permits, licenses , contracts, legalities, acts, rules, regulations, restrictions, requirements, requisites, prerequisites, post requisites, documentation, obligations, restraints, constraints, options, conditions, causes, tenure, status, etiquette, postage limits, speed limits, size limits, weight limits, closed circuit tv, red-light cameras, citations, tickets, quotas, equal opportunity, signs, signals, boundaries, borders, fences, zones, zoning, associations, directives, mandates, sanctions, liabilities, confiscation, eminent domain, restraint, restraining orders, position, possession, influence, ownership, control, lawsuits, punishment, capital punishment, bail, detention, psychiatric observations, rendition, custody, confinement, captivity, incarceration, arrest, manhunts, warrant, required insurance, prescriptions, registration, referrals, waiting lists, free speech zones, terrorist watch-lists, no-fly lists, and, classified information,. These are all sources of revenue for government. In other words, taxation without representation." -- Clint Richardson
The only thing that's in our favor is the government's need to pose as a public servant who performs legitimate tasks, but that mask seems to be dropping more and more every day while we continue to wring our hands and buy into the outright lies that the mainstream media report, 24/7, in order to ensure that their masters--the unaccountable federal government--remain immune from their ever-increasing legalized "crimes". This continuous threat of government shut-downs, defaults, and going over "fiscal cliffs" is nothing but pure fiction. The reality is that our government is not interested in providing public service, because there is money to be made at our expense by promoting and creating legislation that practically guarantee corporate agendas. Keep in mind that government, directly or indirectly, own 70% of all equities on the stock markets and 80% of the Fed’s income goes back to the treasury!
How do we know this? It is thanks to Mr Walter Burien and Mr. Clint Richardson, who have exposed a huge piece of the puzzle: that the government owns it all by investment, that we can liberate ourselves from this false reality. We all need to learn that the political elites profit immensely from this ongoing government-by-crisis political theater that unfolds before our eyes everyday on FOX News, CNN, MSNBC, etc. We need to learn that the outrageous revenues that government collects through taxes, fees, permits, licenses, penalties and various forms of corruption, piracy and theft is permanently lost to public benefit.
However, to most of us, it's much easier to digest the promoted fictions and fallacies about the Federal Reserve and the "default" that they threaten us with through, as Clint Richardson says, the "daily feeding frenzy of misinformation surrounding this investment and currency scam, where inaccuracy and downright fiction rule over any comprehension of what the Fed really is, what it does, and who its master is," than to wade through the 479 pages of deliberately confusing and boring truth that lay within the audited financial statements of the Federal Reserve and the 185,000 government CAFRs of the United States government.
From Walter Burien:
** Government was NOT supposed to operate at a profit. How did they get around this restriction?
ANSWER: If for example a city had a 100-million dollar profit for the year from any of its operations, at a stroke of a pen they create or deposit into a "liability fund" and poof, there goes the profit re-designated now as a liability.
Here is the link to the Board of Governors Comprehensive Annual Financial Report (CAFR), . for 2011, the latest and 98th audit of the Federal Reserve. According to Clint Richardson, "it explains how everything operates, its foreign investments and foreign currency swaps and schemes, its many separate limited liability corporate holdings like Maiden Lane, its dealings and bailouts with AIG, Bears Stearns, and JP Morgan, and of course its assets and liabilities balance sheet."
“Within this 479 pages of dry and boring financial reporting is a full description of the Fed’s operations, including the basic financial happenings of each individual reserve bank. Yeah, I know, it doesn’t have the flair of a good “Secrets of the Temple” or “Creatures” type of novel, but its got all the actual facts and figures from TARP to SOMA. Why? Because this is what is required by federal law.
If you want to know about the Fed, read the CAFR.
If you want to know about your city, read the CAFR.
If you want to know about your county, state, district, or any other governmental agency or corporation, read the CAFR.
Here are a few highlights:
Board of Governors of the Federal Reserve System
Washington, D.C.
May 2012
To: The Speaker of the House of Representatives:
Pursuant to the requirements of section 10 of the Federal Reserve Act, I am pleased to submit the ninety-eighth annual report of the Board of Governors of the Federal Reserve System. This report covers operations of the Board during calendar year 2011.
To be sure, job cuts--and some might say, massive job cuts--are a daily event, but what about jobs created? According to the Household Survey, of the 953,000 jobs created in 2013, 77%, or 731,000 are part-time (full-time=35 hours or more per week, part-time=less than 35 hours per week) so as Zero Hedge has been saying for over three years, the workplace in America is radically changing right before our eyes, although, unlike Zero Hedge, I certainly don't think Obamacare is the reason behind the transition to a part-time work force. Jobs were sent away a long time ago and our current economy was/is a creation decades in the making. Don't forget that the financial crisis started under 'W' who started two wars, created the TSA, passed the Patriot Act, pushed for the bailouts, and spent more than every president prior to him.
Moreover, we're fighting for full-time jobs that should be paying at least 40-60k but are instead paying 15-30k with less benefits and no job security, not to mention, the huge student loan debt that most people have to pay off no matter what kind of job they get.
In 2008, U.S. foreclosure filings shot up by 81% nationwide, and since the financial crisis began in September 2008, there have been almost 5 million completed foreclosures across the country, with millions more expected over the next few years. It's easy to conclude that this disaster was merely a result of incompetence but when you add up all of the facts, it becomes clear this calamity was the result of something much more Machiavellian (“Machiavellism” justifies power politics without ethical standards) at work. Moreover these Machiavellian powers are doing everything in their power to continue the biggest financial swindle in history. And if you think you're in the clear just because you haven't been foreclosed upon, think again.
By design, it's very confusing, so the following is my attempt to clarify matters for myself as well as for anyone else who might be interested.
Firstly, we were set up. Since the early to mid 1990s, in particular, Americans were strongly encouraged to buy their own home...whatever it takes, get yourself a home. Policies and programs (guarantees, tax breaks, etc.) were created to encourage home ownership, to finance the "American Dream". And it worked. The government pushed home ownership past 69% in 2004. Not to mention, the banks opened up the floodgates and made credit available to anyone, regardless of income. In fact, between 2003-2008, income wasn't even required! NINJA (No Income No Job No Asset) loans and LIAR loans-loans structured to fail--predominated.
Meanwhile, Wall Street was ready to cash in on the financial ignorance of We, the Suckers. Thanks to the creation of MERS ( Mortgage Electronic Registration Systems, Inc. a subsidiary of MERSCORP, Inc.), in 1995, and the securitization instruments like SPVs (Special Purpose Vehicle) or SIV (Special Investment Vehicle) they were all set up to track the transfers electronically on Wall Street, obfuscating the chain of title, as our promissory notes, split off from the deed, were securatized-- sliced and diced and sold and resold 30 times over--without our permission. Hello robo-signing! Of course, nothing was recorded in the land records, and the counties were not paid their fees. In other words, the chain of title goes one way and the chain of custody, (the movement and location of physical evidence from the time it is obtained until the time it is presented in court) the other.
Most of us presume the chain of title on our property is clean and in order, however, you may be shocked to find out otherwise, especially if you brought your home after 1997. The financial swindlers who created the mortgage loan securitization scam made sure of it. Even if you are current--paying your mortgage on time every month--if you settled anytime over the last two decades, there is a very good chance you have a cloud on your titleto the note.
What is a clouded title? It's an apparent claim or encumbrance, such as a lien, that, if true, impairs the right of the owner to transfer his or her property free and clear of the interests of any other party. In other words, a breach in your chain of title that might jeopardize the conveyance of that title. Obviously this could very well reduce the value and marketability of your property.
How can you tell? Well, it's highly recommended you either do, or get a COTA (Chain of Title Assessment), a forensic loan audit to to determine if it was properly executed, especially to uncover any of the various misapplications of borrower's payments that generate revenue for the servicer, and/or a securitization audit which is directed at the REMIC process of sponsoring and registering the trust and its issuance of securities (Watch out for scams!). Keep in mind, the information gathered during these audits are just that, information, until it's submitted as evidence and the judge decides that the information is accurate and clearly demonstrates error or wrongdoing on the part of the other party, not to mention the judge's acceptance of the person who conducted the audit as credible.
But before you begin this arduous task, get out your deed of trust and look for a MIN # (MERS Identification Number). It should be right next to your document title. If you see this number, it's almost certain your title has been compromised, as over 70 million homes are affected. The bottom line is that the homeowner is not obliged to pay the WRONG lender!
Remember, MERS is a shell entity, a bankruptcy remote entity that is basically a computer. It has no employees, no assets, no liabilities, no income, and no expenses. It’s an electronic database managed by MERS Corp Holding, INC It is the brainchild of the Mortgage Bankers Association – Fannie Mae, Freddie Mac, land title association and all the major banks, yet it.has essentially destroyed 400 years of recorded property rights in the U.S. And, as admitted in testimony, most of the original notes were destroyed after the scanning, which, according to Carpenter v. Longan - 83 U.S. 271 (1872), the uncoupling of the deed and the note renders the note null and void. Hence, without the original promissory note, any copies used as evidence in court are sure to be counterfeit. So how are the banks getting around this issue? Well, so far, the ignorance of the public, and the supposed ignorance of the attorneys and judges seems to be working out quite well for them. Nevertheless, now that people are waking up to their scheme, the banks are doing their utmost to create pro-bankster legislation and there are already plans to legalize these counterfeit notes, which they will call eNotes and eMortgages.
Let's take the state of Florida as an example. Currently, there is a backlog of 366,250 foreclosure cases just sitting there waiting to be processed, not to mention, they expect another 680,000 foreclosures within the next three years. What are they waiting for? More than likely, Florida's fast-track foreclosure bill, H.B. 87 to go through.
H.B. 87 is very likely to become law by mid-June unless Governor Rick Scott decides to exercise his veto power, which seems unlikely at this point. This is a gift to the banks and to make matters even worse, they’re using the foreclosure settlement money to run it through. If this bill becomes law, it essentially gives banks that wrongfully foreclose on your property a go pass. They get to keep the house and the homeowner can’t come back and claim they’ve been wronged.
“Significantly, the new legislation will shift the burden of proof in mortgage foreclosure cases from the plaintiff (bank), to the defendant (homeowner). Thus, if H.B. 87 is ratified, the homeowner will now have to prove that the bank lacks the legal right to foreclose at the very onset of the proceedings. This shift will significantly restrict the homeowner’s ability to defend the case as banks will now be able to seek what is being termed an “expedited foreclosure.”
A title agent addressing the subcommittee on this fast-track foreclosure bill warned them not to buy a foreclosed property because it's almost impossible to tell which titles are infected with fraud. Of course, it's not just Florida; it's nationwide. According to HUD and Fannie and Freddie, the majority of foreclosure inventory that they'll try to sell to unsuspecting people is concentrated in California, Florida, Georgia, Illinois, Minnesota, Missouri, Michigan, Ohio, Texas. They've even admitted to relying on companies like Fidelity National Financial which has a huge myriad of title companies to whitewash the titles to these properties. In other words, when you buy one of these properties, you're indemnifying them from suit.
Pro Bankster Legislation:
H.R. 992 - This bill exempts broad swathes of trades from new regulation and could authorize bailouts for credit default swaps
H.B. 87 - see above
Washington State Bill SHB 1435 covers up the felonious business practices by covering up reconveyance issues in allowing banks to foreclose without providing official promissary note. All they will have to present is a Declaration of Ownership. These properties are being reconveyed regularly by the large lending institutions with only a “Lost Note Affidavit” and an indemnity agreement between the parties.
“Escrow and title are not bringing the original note to the table. We need a bill that mandates producing the original note, not a copy or an affidavit, before a reconveyance can occur. A homeowner does not know if they are paying off the right bank since the loan is securitized and serviced. This bill will create more red tape for the borrower and cause fraudulent defaults and foreclosure. This is not addressing the real problem, but rather it is
covering it up.“
What about government's role?
Now, banks are only part of the equation. Without the protection of government, in particular, the justice department, this treasonous deception would've failed before it started. To be sure, from the get go, our oh-so-trustworthy politicians and the banksters marched in lockstep.
From the government encouragement of home ownership to the repeal of Glass-Steagall to deregulation to the resignation of Criminal Division Chief, Lanny Breuer after a Frontline documentary aired, exposing his role--and Eric Holder's role-- in allowing the banksters to bury their crimes to Breuer's return to Covington and Burling, one of Washington's biggest white shoe law firms to represent MERS in court, to the persecution, silencing and yes, even death of whistleblowers, such as Dr. Joseph H. Zernik, Ph.D. and now deceased notary, Tracy Lawrence, Lynn Szymoniak, Kyle Lagow, amongst many others, the banks and government ensure its progression.
It’s important to emphasize that the whistleblowers whose actions were False Claims Act cases involving fraud against the federal government have legal protection whereas if your whistleblowing case does NOT fall within the narrow confines of this law, you have NO legal protections and it is practically impossible to get media attention and/or legal representation even if you have money to pay attorneys.
“I believe that the level of corruption in Los Angeles increased, but also diversified. The collapse of the housing market is a huge court corruption scandal, where the judges and the bankers are acting as a racket.
And Los Angeles was identified already in the early 2000s in FBI reports as ‘the epicenter of the epidemic of real estate and mortgage fraud.’ In my reports I documented that at least as early as 1998 they had a routine for real estate fraud in the court in collusion with a straw purchaser.
The fraud being perpetrated on the people of the United States in recent years through the financial crisis is unprecedented in human history, and it results in dispossession of the people on a scale typically seen only in war.” -- Dr. Joseph H. Zernik, in hiding since 2010
What is a REMIC (Real Estate Mortgage Investment Conduit)? They are a form of IRS tax shelter sold to investors as part of the mortgage-backed securities package (Real Estate Mortgage Investment Conduit (“REMIC”) pursuant to I.R.C. §§860A-G). The documents that killed the REMICs may actually help save your home.
“Actually, the banks patented nearly every single move they made – even the behavioral aspects of dealing with the customers, judges, politicians, etc. as if to legitimize their scheme...The patent extensively outlines the legal requirements for the magical change of the negotiable promissory note into securities instruments chopped up into pieces for distribution to numerous investors who were to become the “Certificate-holders” of securitized REMIC trusts."
Japan has debt that is 20 times its annual tax revenue which essentially means it is already insolvent. So, in a giant experiment, Japan's central bank made a drastic shift in monetary policy today, it's doubling its monetary base.
George Soros seems almost hopeful. He's buying up all the gold, and off-loading all of his equity positions in major financial stocks. Take a look at the 13-F report he filed with the SEC. Moreover, billionaire John Paulson, who made $20 billion off the sub-prime mortgage meltdown, is also going gold crazy. Not to mention the central banks. They're buying up gold in great quantity. In fact, central bank gold demand doubled since last quarter!
So Soros is backing up his words of warning, stated in Newsweek, with action in more ways than one. Let's not forget Soros's Management Fund purchased enough grain elevators and food production sites to become thethird largest conglomerate in the food industry in the U.S.
“I am not here to cheer you up. The situation is about as serious and difficult as I’ve experienced in my career,” Soros tells Newsweek. “We are facing an extremely difficult time, comparable in many ways to the 1930s, the Great Depression. We are facing now a general retrenchment in the developed world, which threatens to put us in a decade of more stagnation, or worse. The best-case scenario is a deflationary environment. The worst-case scenario is a collapse of the financial system.”
[...]
As anger rises, riots on the streets of American cities are inevitable. “Yes, yes, yes,” he says, almost gleefully. The response to the unrest could be more damaging than the violence itself. “It will be an excuse for cracking down and using strong-arm tactics to maintain law and order, which, carried to an extreme, could bring about a repressive political system, a society where individual liberty is much more constrained, which would be a break with the tradition of the United States.”
However, there are even more disturbing signs and/or clues that indicate economic collapse may be closer than we think. In addition to the billionaires and the central bank gold grab, here are some more interesting occurrences that make you go hmmm:
1.U.S. banks told to make plans for preventing collapse -- Uhm, shouldn't banks already have recovery plans? Banks are pulling in record profits right now, but you can bet your bottom dollar that should we see another economic collapse in the near future, the banks will be first in line for handouts, despite what this article reports.
U.S. regulators directed five of the country's biggest banks, including Bank of America Corp and Goldman Sachs Group Inc, to develop plans for staving off collapse if they faced serious problems, emphasizing that the banks could not count on government help.
"an increase in the reserve ratio will cause many banks to become under-capitalized with the stroke of a pen thereby causing a banking crisis which will result in another bailout for the big banks, another consolidation of power in the banking industry, another tightening of credit for main street, another economic crash, and austerity for the rest of us.
[...]
I'll explain what going from a reserve capital ratio of 4% to 6% will do. With a capital ratio of 4%, a bank can lend $25,000 for each $1,000 of capital which includes funds raised through stock offerings, retained earnings and deposits. With a capital ratio of 6%, a bank can lend $16,667 for each $1,000 in capital. Since banks produce earnings by lending, most banks want to lend as much as is allowed, so this increase in the reserve ratio will immediately cause most banks to become undercapitalized thereby needing to be taken over and bailed out. After the new rule takes effect, banks that are lending more than 2/3rds of what is currently allowed will be undercapitalized, so that is most banks."
3.611 bankster resignations in seven months -- American Kabuki posted each and every one of them from 9/1/11 to 4/22/12...from world banks to investment houses to money funds to etc.
Hollow point bullets are so lethal that the Geneva Convention does not allow their use on the battle field in time of war. Hollow point bullets don’t just stop or hurt people, they penetrate the body, spread out, fragment and cause maximum damage to the body’s organs. Death often follows." -- Maj. Gen. Curry
Moreover, Curry added that during the Iraq War the U.S. military used 70 million rounds of ammunition per year. Compare that with the 450 million rounds of hollowpoint bullets ordered in March by the Department of Homeland Security, and the additional 750 million rounds of hollow point bullets(DHS) ordered recently. That's over 1 billion hollow points in less than six months!
"What has largely been DELIBERATELY ignored by the media – though, I know full well they are more than aware – is that these thieves were insolvent when they were given trillions of US taxpayer money in the heist that was called a financial crisis in ’08. What the banks have done, along with their criminally complicit politicians is to craft the biggest fraud and the subsequent transfer of wealth in man’s history…using the outrageous and audacious fear tactic of too big to fail. The truth is, what was too big to allow to fail was the lie most all of the actors involved knew about and perpetuated.
The derivatives market is where the banks have been gambling away unabated since said financial crisis came to light in the first place. They’ve continued to manipulate the prices of the commodities market to keep their collective theft on going with Wall Street and Washington cheering it on. This is criminal, pure and simple and the government is attempting to quietly prepare militarily to deal with “we the people” when it becomes plainly apparent this ponzi scheme called the central bank is seen for what it is: An engine of theft and destroyer of the middle class’s wealth.
Private lenders have preyed upon unsuspecting young people desiring to further their education for years. Of course, they have intentionally targeted those coming from poor socio-economic backgrounds. What else is new?
Well, now that the student debt bubble has accumulated over $1 trillion in student loan debt, starting July 1, Federal Pell Grants are set to be cut for hundreds of thousands of students across the US. Whats more, the Senate "blocked President Obama’s student loan interest-rate reduction plan and also shot down a GOP proposal, leaving the chamber without a solution and little more than a month to go before rates are scheduled to double".
The reforms will save $11 billion over 10 years, according to reports. Students will lose the $5,550-a-year grants in order to find the savings.
"The loss of Pell Grants could put college out of reach" for many students with fiscal hardships, the newspaper reported.
Under old rules, students who had taken at least six units of college courses but who did not have a diploma were eligible for the loans. The new rule eliminates the Pell Grants as well as other subsidized loans for the students, known as "ability-to-benefit" students.
Here's the thing. We're told the government can't find a way to pay for extending student loan rates, yet, we're not told that the government earns more money on these student loans than they pay out! Meanwhile, half of all college graduates are either unemployed or underemployed. And unlike a mortgage, one cannot walk away from one's student loan debt, even if one can't walk, can't talk...in other words, in a coma, as student loan debt cannot be expunged, nor forgiven.
Read more...
When Time Magazine reports on the homeless middle-class, you know it's bad.
Economic despair is beginning to spread rapidly in America. As you read this, there are millions of American families that are just barely hanging on by their fingernails. For a growing number of Americans, it has become an all-out battle just to be able to afford to sleep under a roof and put a little bit of food on the table. Sadly, there are more people than ever that are losing that battle. Tonight, tens of thousands of formerly middle class Americans will be sleeping in their cars, even though that is illegal in many U.S. cities. Tens of thousands of others will be sleeping in tent cities or on the streets. Meanwhile, communities all over America are passing measures that are meant to push tent cities and homeless people out of their areas. It turns out that once you lose your job and your home in this country you become something of an outcast. Sadly, the number of "outcasts" is going to continue to grow as the U.S. economy continues to collapse.
Most Americans that end up living in their cars on in tent cities never thought that it would happen to them.
Homeless man, who considers himself to be the richest man on earth, gives $9,000 to homeless woman
The system of global capitalism fundamentally changed in the 1970s. From the end of the second world war until 1973, there were relatively few financial crisis because finance was tightly regulated. Banking was confined to the states; therefore, regulated on a state by state basis.
In the 1960s, there were three local banks that dominated the state of Maryland, and this was the case across the nation until the consolidation of banks across state lines began, and then, shortly after, across international lines. Thus, the deregulation of financial institutions began.
However, the easy transference of funds that made finance capital so fluid, enabling it to chase the highest return, also permitted industry and production to go off shore very easily. As a result, the flow of production capacity to China, the Philippines, etc, which, of course, effected the labor force in more ways than one: lack of jobs and wage repression, and eventually, the deindustrialization of America.
Initially, the deregulation process impacted the African American community. The elimination of so many occupations that used to lift minorities out of poverty led to the marginalization and disenfranchisement of black males, in particular. The criminal justice system gladly stepped in and scooped them up. Then the "war on drugs" sealed the deal, skyrocketing the black inmate population. Between 1986 and 1997, the number of blacks incarcerated for drug offenses alone increased by 799%! The total incarceration rate for black males in 1980 was 3,544 versus 528 for white males. In 1990 one in four black males, under 30, was under the control of the criminal justice system, and in 1995 the percentage had increased to one-third.
Fast forward to 2008, and although the black population continues to bear the brunt of the financial crisis, as usual, people of all races, including the white middle-class population, cannot escape its brutality this time.
And, that does not include their homes, jewelry, cars, yachts or any other of their luxury goods! Meanwhile the rest of us must accept austerity to one degree or another, "the world’s high net worth individuals (HNWIs)1 expanded in population and wealth in 2010 surpassing 2007 pre-crisis levels in nearly every region, according the 15th Annual World Wealth Report released today by Merrill Lynch Global Wealth Management and Capgemini.
Remember, we’re not talking total wealth here, only investible assets. The Capgemini-Merrill Lynch tallies don’t include the residences wealthy people call home, their diamonds, their luxury cars and yachts, or any other personal luxury goods and collectibles that sit in wealthy households.
[...]
The world’s ultra rich, those 103,000 deep pockets with at least $30 million to invest, could afford to pay off the entire national debt of the world’s biggest deadbeat nations without having to sacrifice a single Rolls or Bentley.
40% of the world's wealthiest live in the United States
Read more...
Jason S. posted the following 25 questions in response to, Can Economic Recovery Plow Ahead? on the NPR program On Pointtoday, for those people who believe the economic recovery is real.
#1) In what universe is an economy with 39.68 million Americans on food stamps considered to be a healthy, recovering economy? In fact, the U.S. Department of Agriculture forecasts that enrollment in the food stamp program will exceed 43 million Americans in 2011. Is a rapidly increasing number of Americans on food stamps a good sign or a bad sign for the economy?
#2) According to RealtyTrac, foreclosure filings were reported on 367,056 properties in the month of March. This was an increase of almost 19 percent from February, and it was the highest monthly total since RealtyTrac began issuing its report back in January 2005. So can you please explain again how the U.S. real estate market is getting better?
#3) The Mortgage Bankers Association just announced that more than 10 percent of U.S. homeowners with a mortgage had missed at least one payment in the January-March period. That was a record high and up from 9.1 percent a year ago. Do you think that is an indication that the U.S. housing market is recovering?
#4) How can the U.S. real estate market be considered healthy when, for the first time in modern history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together?
#5) With the U.S. Congress planning to quadruple oil taxes, what do you think that is going to do to the price of gasoline in the United States and how do you think that will affect the U.S. economy?
#6) Do you think that it is a good sign that Arnold Schwarzenegger, the governor of the state of California, says that “terrible cuts” are urgently needed in order to avoid a complete financial disaster in his state?
#7) But it just isn’t California that is in trouble. Dozens of U.S. states are in such bad financial shape that they are getting ready for their biggest budget cuts in decades. What do you think all of those budget cuts will do to the economy?
#8) In March, the U.S. trade deficit widened to its highest level since December 2008. Month after month after month we buy much more from the rest of the world than they buy from us. Wealth is draining out of the United States at an unprecedented rate. So is the fact that the gigantic U.S. trade deficit is actually getting bigger a good sign or a bad sign for the U.S. economy?
#9) Considering the fact that the U.S. government is projected to have a 1.6 trillion dollar deficit in 2010, and considering the fact that if you went out and spent one dollar every single second it would take you more than 31,000 years to spend a trillion dollars, how can anyone in their right mind claim that the U.S. economy is getting healthier when we are getting into so much debt?
#10) The U.S. Treasury Department recently announced that the U.S. government suffered a wider-than-expected budget deficit of 82.69 billion dollars in April. So is the fact that the red ink of the U.S. government is actually worse than projected a good sign or a bad sign?
#11) According to one new report, the U.S. national debt will reach 100 percent of GDP by the year 2015. So is that a sign of economic recovery or of economic disaster?
#12) Monstrous amounts of oil continue to gush freely into the Gulf of Mexico, and analysts are already projecting that the seafood and tourism industries along the Gulf coast will be devastated for decades by this unprecedented environmental disaster. In light of those facts, how in the world can anyone project that the U.S. economy will soon be stronger than ever?
#13) The FDIC’s list of problem banks recently hit a 17-year high. Do you think that an increasing number of small banks failing is a good sign or a bad sign for the U.S. economy?
#14) The FDIC is backing 8,000 banks that have a total of $13 trillion in assets with a deposit insurance fund that is basically flat broke. So what do you think will happen if a significant number of small banks do start failing?
#15) Existing home sales in the United States jumped 7.6 percent in April. That is the good news. The bad news is that this increase only happened because the deadline to take advantage of the temporary home buyer tax credit (government bribe) was looming. So now that there is no more tax credit for home buyers, what will that do to home sales?
#16) Both Fannie Mae and Freddie Mac recently told the U.S. government that they are going to need even more bailout money. So what does it say about the U.S. economy when the two “pillars” of the U.S. mortgage industry are government-backed financial black holes that the U.S. government has to relentlessly pour money into?
#17) 43 percent of Americans have less than $10,000 saved for retirement. Tens of millions of Americans find themselves just one lawsuit, one really bad traffic accident or one very serious illness away from financial ruin. With so many Americans living on the edge, how can you say that the economy is healthy?
#18) The mayor of Detroit says that the real unemployment rate in his city is somewhere around 50 percent. So can the U.S. really be experiencing an economic recovery when so many are still unemployed in one of America’s biggest cities?
#19) Gallup’s measure of underemployment hit 20.0% on March 15th. That was up from 19.7% two weeks earlier and 19.5% at the start of the year. Do you think that is a good trend or a bad trend?
#20) One new poll shows that 76 percent of Americans believe that the U.S. economy is still in a recession. So are the vast majority of Americans just stupid or could we still actually be in a recession?
#21) The bottom 40 percent of those living in the United States now collectively own less than 1 percent of the nation’s wealth. So is Barack Obama’s mantra that “what is good for Wall Street is good for Main Street” actually true?
#22) Richard Russell, the famous author of the Dow Theory Letters, says that Americans should sell anything they can sell in order to get liquid because of the economic trouble that is coming. Do you think that Richard Russell is delusional or could he possibly have a point?
#23) Defaults on apartment building mortgages held by U.S. banks climbed to a record 4.6 percent in the first quarter of 2010. In fact, that was almost twice the level of a year earlier. Does that look like a good trend to you?
#24) In March, the price of fresh and dried vegetables in the United States soared 49.3% – the most in 16 years. Is it a sign of a healthy economy when food prices are increasing so dramatically?
#25) 1.41 million Americans filed for personal bankruptcy in 2009 – a 32 percent increase over 2008. Not only that, more Americans filed for bankruptcy in March 2010 than during any month since U.S. bankruptcy law was tightened in October 2005. So shouldn’t we at least wait until the number of Americans filing for bankruptcy is not setting new all-time records before we even dare whisper the words “economic recovery”?
Well over a year after the federal government weighed in with trillions of dollars to "rescue" our economy from the financial crisis, nothing has really changed. If anything, the issues that helped to collapse the economy are bigger than ever, and the only people prospering right now are the same people who caused this catastrophe, while the rest of us continue to suffer from their actions. We can no longer afford to let tax-dodging, Goldman Sachs/Wall Street insiders (the predator class) to take the financial helm and drive this country and world into another disaster, possibly much worse than September 2008.
Perhaps the most explosive revelation is that Geithner's subordinates at the New York Fed instructed AIG executives to evade securities law and conceal from the public the $62 billion the insurance company paid out on contracts with the largest investment houses and banks. AIG was already bankrupt and 80 percent owned by the government, kept afloat solely with the billions being injected by the central bank. Yet the Fed told the company to pay off the bankers at full value—100 percent on the dollar—without negotiating a better deal for the public. The bankers would not have collected a dime if the government hadn't come to the rescue.
The Fed, other words, gave the largest, most prestigious banks a very sweet deal—much sweeter than anything the banks or the federal government will offer to homeowners facing mortgage foreclosure. The central bank, in effect, was operating a backdoor bank bailout that nobody could see. The public billions devoted to AIG went in one door at the insurance company and came out another door to the private banks. Goldman Sachs alone collected $13 billion.
Failure to disclose is a big no-no in corporate finance. People can go to jail if they willfully withhold material information from shareholders and the Securities and Exchange Commission (SEC), or they may be sued for investor fraud. Yet that is what the New York Fed told AIG to do. The company officers wanted to report fully to the SEC. Their Fed overseers told them to take out the disclosure out of their report to the SEC (the facts were ultimately not disclosed until five months later). The Fed, remember, is the government's principal banking regulator. It is supposed to enforce the laws, not tell regulated firms to break them.
Despite the fact that a trained chimp could perform as well as Goldman Sachs, given all the help (TARP; $13 billion from AIG, because it was a counter party; free access to credit from the Federal Reserve; FDIC guaranteed debt...) they've received since the collapse of our economy, not to mention, the welfare recipients have not returned the favor by issuing credit to we, the people and to small business,the engine of job creation...despite all of that, they tell us we should tolerate the inequality...that it is good for all of us.
But, should we really be grateful to Reagan? And for all of those people responsible for the financialization(the increase in the size and significance of financial markets and financial institutions) of our economy?The Reagan revolution that helped to create the greatest state of inequality in the history of our nation? Is Wall Street really, "all that"? And one has to wonder, did people at Goldman Sachs know what was coming down the pike? More than that, did they knowingly push us into this crisis, knowing they could milk it for all its worth, while we, the suckers take it on the chin?
Well, it's hard to believe otherwise as they rake in their great fortunes at our expense. But hey, they claim inequality is good for us. Let's see if they're right.
We already know that Goldman Sachs Group Inc boasted third-quarter profits of $3.19 billion a few days ago. We know that Goldman Sachs Group Inc., set aside $16.7 billion for compensation and benefits in the first nine months of 2009, which is up 46% from a year earlier. We know that Goldman Sachs is cashing in like crazy.
And now we know, at a discussion panel titled, "What is the Price of Morality in the Marketplace?" a Goldman Sachs international adviser defended what can only be called over-the-top compensation in the finance industry, as his company plans a near-record year for pay, explaining that putting all this money in the pockets of the men who brought this economy down will help boost the economy.
“We have to tolerate the inequality as a way to achieve greater prosperity and opportunity for all.”
“They may be an enormous amount of money for one person, but they are how our people in the city in all industries get paid, whether you drive a cab, work in a restaurant, work in a store, whether you are a municipal employee.
All of this gets filtered down through our economy. No matter what you think about the propriety of any individual person’s bonus, we want companies in the city, and we are dependent on Wall Street finance, to do well.” - Mayor Bloomberg
So, is Wall Street performance really, as Mayor Bloomberg said, beneficial to us? Or is Wall Street simply a big myth? Does it really serve the function of allocating credit in the economy?
* Not according to the graph (left), which shows the percentage of capital expenditures by U.S. non-financial companies that was raised in U.S. financial markets from 1952 to 2006.
In other words, while it's true the dollar volume of financial trading has increased by an enormous amount - over three trillion dollars traded in U.S. financial markets each day - almost none of it is directed to toward creating real wealth.
The second graph (Private Investment in Capital Equipment as a Percent of GDP), shows that non-financial companies (NFC) do not use the stock market to raise funds for capital improvement programs.usury, speculation
"Figure 5.3 shows net funds raised through equity issuance, this time as a percent of capital expenditures ...It is evident that the stock market has not historically been a major source of NFC funds. On a quarterly basis, its contribution never exceeds 18 percent of capital expenditures. On average its contribution has been below 10 percent, even in the 1952-1980 period before (the increase in stock buybacks. However, there is a dramatic change in the relationship between the stock market and the NFCs starting in the early 1980s. Except for brief periods, in the post-1980 era the net equity issuance of the NFCs has been negative and often large. The NFCs have indeed been buying back their own stocks. The stock market has turned into an institution through which NFCs channel funds to financial markets, not the other way around."
The bottom line is that Wall Street and the financial elites, over the last three decades, have convinced us that we are here to serve money, that money is "god". However the opposite is true, money is here to serve us, to serve humanity. Money is nothing without us. In fact, considering money is created with one keystroke, it is nothing with us. We, the people, including atheists, if they believe in and use our monetary system, worship what amounts to nothing. We've been had.
Bill Moyers interviews William K. Black, the former senior regulator who cracked down on banks during the savings and loan crisis of the 1980s. about the financial crisis.
Transcript:
BILL MOYERS: Welcome to the Journal.
For months now, revelations of the wholesale greed and blatant transgressions of Wall Street have reminded us that "The Best Way to Rob a Bank Is to Own One." In fact, the man you're about to meet wrote a book with just that title. It was based upon his experience as a tough regulator during one of the darkest chapters in our financial history: the savings and loan scandal in the late 1980s.
WILLIAM K. BLACK: These numbers as large as they are, vastly understate the problem of fraud.
BILL MOYERS: Bill Black was in New York this week for a conference at the John Jay College of Criminal Justice where scholars and journalists gathered to ask the question, "How do they get away with it?" Well, no one has asked that question more often than Bill Black.
The former Director of the Institute for Fraud Prevention now teaches Economics and Law at the University of Missouri, Kansas City. During the savings and loan crisis, it was Black who accused then-house speaker Jim Wright and five US Senators, including John Glenn and John McCain, of doing favors for the S&L's in exchange for contributions and other perks. The senators got off with a slap on the wrist, but so enraged was one of those bankers, Charles Keating — after whom the senate's so-called "Keating Five" were named — he sent a memo that read, in part, "get Black — kill him dead." Metaphorically, of course. Of course.
Now Black is focused on an even greater scandal, and he spares no one — not even the President he worked hard to elect, Barack Obama. But his main targets are the Wall Street barons, heirs of an earlier generation whose scandalous rip-offs of wealth back in the 1930s earned them comparison to Al Capone and the mob, and the nickname "banksters."
Bill Black, welcome to the Journal.
WILLIAM K. BLACK: Thank you.
BILL MOYERS: I was taken with your candor at the conference here in New York to hear you say that this crisis we're going through, this economic and financial meltdown is driven by fraud. What's your definition of fraud?
WILLIAM K. BLACK: Fraud is deceit. And the essence of fraud is, "I create trust in you, and then I betray that trust, and get you to give me something of value." And as a result, there's no more effective acid against trust than fraud, especially fraud by top elites, and that's what we have.
BILL MOYERS: In your book, you make it clear that calculated dishonesty by people in charge is at the heart of most large corporate failures and scandals, including, of course, the S&L, but is that true? Is that what you're saying here, that it was in the boardrooms and the CEO offices where this fraud began?
WILLIAM K. BLACK: Absolutely.
BILL MOYERS: How did they do it? What do you mean?
WILLIAM K. BLACK: Well, the way that you do it is to make really bad loans, because they pay better. Then you grow extremely rapidly, in other words, you're a Ponzi-like scheme. And the third thing you do is we call it leverage. That just means borrowing a lot of money, and the combination creates a situation where you have guaranteed record profits in the early years. That makes you rich, through the bonuses that modern executive compensation has produced. It also makes it inevitable that there's going to be a disaster down the road.
BILL MOYERS: So you're suggesting, saying that CEOs of some of these banks and mortgage firms in order to increase their own personal income, deliberately set out to make bad loans?
WILLIAM K. BLACK: Yes.
BILL MOYERS: How do they get away with it? I mean, what about their own checks and balances in the company? What about their accounting divisions?
WILLIAM K. BLACK: All of those checks and balances report to the CEO, so if the CEO goes bad, all of the checks and balances are easily overcome. And the art form is not simply to defeat those internal controls, but to suborn them, to turn them into your greatest allies. And the bonus programs are exactly how you do that.
BILL MOYERS: If I wanted to go looking for the parties to this, with a good bird dog, where would you send me?
WILLIAM K. BLACK: Well, that's exactly what hasn't happened. We haven't looked, all right? The Bush Administration essentially got rid of regulation, so if nobody was looking, you were able to do this with impunity and that's exactly what happened. Where would you look? You'd look at the specialty lenders. The lenders that did almost all of their work in the sub-prime and what's called Alt-A, liars' loans.
BILL MOYERS: Yeah. Liars' loans--
WILLIAM K. BLACK: Liars' loans.
BILL MOYERS: Why did they call them liars' loans?
WILLIAM K. BLACK: Because they were liars' loans.
BILL MOYERS: And they knew it?
WILLIAM K. BLACK: They knew it. They knew that they were frauds.
WILLIAM K. BLACK: Liars' loans mean that we don't check. You tell us what your income is. You tell us what your job is. You tell us what your assets are, and we agree to believe you. We won't check on any of those things. And by the way, you get a better deal if you inflate your income and your job history and your assets.
BILL MOYERS: You think they really said that to borrowers?
WILLIAM K. BLACK: We know that they said that to borrowers. In fact, they were also called, in the trade, ninja loans.
BILL MOYERS: Ninja?
WILLIAM K. BLACK: Yeah, because no income verification, no job verification, no asset verification.
BILL MOYERS: You're talking about significant American companies.
WILLIAM K. BLACK: Huge! One company produced as many losses as the entire Savings and Loan debacle.
BILL MOYERS: Which company?
WILLIAM K. BLACK: IndyMac specialized in making liars' loans. In 2006 alone, it sold $80 billion dollars of liars' loans to other companies. $80 billion.
BILL MOYERS: And was this happening exclusively in this sub-prime mortgage business?
WILLIAM K. BLACK: No, and that's a big part of the story as well. Even prime loans began to have non-verification. Even Ronald Reagan, you know, said, "Trust, but verify." They just gutted the verification process. We know that will produce enormous fraud, under economic theory, criminology theory, and two thousand years of life experience.
BILL MOYERS: Is it possible that these complex instruments were deliberately created so swindlers could exploit them?
WILLIAM K. BLACK: Oh, absolutely. This stuff, the exotic stuff that you're talking about was created out of things like liars' loans, that were known to be extraordinarily bad. And now it was getting triple-A ratings. Now a triple-A rating is supposed to mean there is zero credit risk. So you take something that not only has significant, it has crushing risk. That's why it's toxic. And you create this fiction that it has zero risk. That itself, of course, is a fraudulent exercise. And again, there was nobody looking, during the Bush years. So finally, only a year ago, we started to have a Congressional investigation of some of these rating agencies, and it's scandalous what came out. What we know now is that the rating agencies never looked at a single loan file. When they finally did look, after the markets had completely collapsed, they found, and I'm quoting Fitch, the smallest of the rating agencies, "the results were disconcerting, in that there was the appearance of fraud in nearly every file we examined."
BILL MOYERS: So if your assumption is correct, your evidence is sound, the bank, the lending company, created a fraud. And the ratings agency that is supposed to test the value of these assets knowingly entered into the fraud. Both parties are committing fraud by intention.
WILLIAM K. BLACK: Right, and the investment banker that — we call it pooling — puts together these bad mortgages, these liars' loans, and creates the toxic waste of these derivatives. All of them do that. And then they sell it to the world and the world just thinks because it has a triple-A rating it must actually be safe. Well, instead, there are 60 and 80 percent losses on these things, because of course they, in reality, are toxic waste.
BILL MOYERS: You're describing what Bernie Madoff did to a limited number of people. But you're saying it's systemic, a systemic Ponzi scheme.
WILLIAM K. BLACK: Oh, Bernie was a piker. He doesn't even get into the front ranks of a Ponzi scheme...
BILL MOYERS: But you're saying our system became a Ponzi scheme.
WILLIAM K. BLACK: Our system...
BILL MOYERS: Our financial system...
WILLIAM K. BLACK: Became a Ponzi scheme. Everybody was buying a pig in the poke. But they were buying a pig in the poke with a pretty pink ribbon, and the pink ribbon said, "Triple-A."
BILL MOYERS: Is there a law against liars' loans?
WILLIAM K. BLACK: Not directly, but there, of course, many laws against fraud, and liars' loans are fraudulent.
BILL MOYERS: Because...
WILLIAM K. BLACK: Because they're not going to be repaid and because they had false representations. They involve deceit, which is the essence of fraud.
BILL MOYERS: Why is it so hard to prosecute? Why hasn't anyone been brought to justice over this?
WILLIAM K. BLACK: Because they didn't even begin to investigate the major lenders until the market had actually collapsed, which is completely contrary to what we did successfully in the Savings and Loan crisis, right? Even while the institutions were reporting they were the most profitable savings and loan in America, we knew they were frauds. And we were moving to close them down. Here, the Justice Department, even though it very appropriately warned, in 2004, that there was an epidemic...
BILL MOYERS: Who did?
WILLIAM K. BLACK: The FBI publicly warned, in September 2004 that there was an epidemic of mortgage fraud, that if it was allowed to continue it would produce a crisis at least as large as the Savings and Loan debacle. And that they were going to make sure that they didn't let that happen. So what goes wrong? After 9/11, the attacks, the Justice Department transfers 500 white-collar specialists in the FBI to national terrorism. Well, we can all understand that. But then, the Bush administration refused to replace the missing 500 agents. So even today, again, as you say, this crisis is 1000 times worse, perhaps, certainly 100 times worse, than the Savings and Loan crisis. There are one-fifth as many FBI agents as worked the Savings and Loan crisis.
BILL MOYERS: You talk about the Bush administration. Of course, there's that famous photograph of some of the regulators in 2003, who come to a press conference with a chainsaw suggesting that they're going to slash, cut business loose from regulation, right?
WILLIAM K. BLACK: Well, they succeeded. And in that picture, by the way, the other — three of the other guys with pruning shears are the...
BILL MOYERS: That's right.
WILLIAM K. BLACK: They're the trade representatives. They're the lobbyists for the bankers. And everybody's grinning. The government's working together with the industry to destroy regulation. Well, we now know what happens when you destroy regulation. You get the biggest financial calamity of anybody under the age of 80.
BILL MOYERS: But I can point you to statements by Larry Summers, who was then Bill Clinton's Secretary of the Treasury, or the other Clinton Secretary of the Treasury, Rubin. I can point you to suspects in both parties, right?
WILLIAM K. BLACK: There were two really big things, under the Clinton administration. One, they got rid of the law that came out of the real-world disasters of the Great Depression. We learned a lot of things in the Great Depression. And one is we had to separate what's called commercial banking from investment banking. That's the Glass-Steagall law. But we thought we were much smarter, supposedly. So we got rid of that law, and that was bipartisan. And the other thing is we passed a law, because there was a very good regulator, Brooksley Born, that everybody should know about and probably doesn't. She tried to do the right thing to regulate one of these exotic derivatives that you're talking about. We call them C.D.F.S. And Summers, Rubin, and Phil Gramm came together to say not only will we block this particular regulation. We will pass a law that says you can't regulate. And it's this type of derivative that is most involved in the AIG scandal. AIG all by itself, cost the same as the entire Savings and Loan debacle.
BILL MOYERS: What did AIG contribute? What did they do wrong?
WILLIAM K. BLACK: They made bad loans. Their type of loan was to sell a guarantee, right? And they charged a lot of fees up front. So, they booked a lot of income. Paid enormous bonuses. The bonuses we're thinking about now, they're much smaller than these bonuses that were also the product of accounting fraud. And they got very, very rich. But, of course, then they had guaranteed this toxic waste. These liars' loans. Well, we've just gone through why those toxic waste, those liars' loans, are going to have enormous losses. And so, you have to pay the guarantee on those enormous losses. And you go bankrupt. Except that you don't in the modern world, because you've come to the United States, and the taxpayers play the fool. Under Secretary Geithner and under Secretary Paulson before him... we took $5 billion dollars, for example, in U.S. taxpayer money. And sent it to a huge Swiss Bank called UBS. At the same time that that bank was defrauding the taxpayers of America. And we were bringing a criminal case against them. We eventually get them to pay a $780 million fine, but wait, we gave them $5 billion. So, the taxpayers of America paid the fine of a Swiss Bank. And why are we bailing out somebody who that is defrauding us?
BILL MOYERS: And why...
WILLIAM K. BLACK: How mad is this?
BILL MOYERS: What is your explanation for why the bankers who created this mess are still calling the shots?
WILLIAM K. BLACK: Well, that, especially after what's just happened at G.M., that's... it's scandalous.
BILL MOYERS: Why are they firing the president of G.M. and not firing the head of all these banks that are involved?
WILLIAM K. BLACK: There are two reasons. One, they're much closer to the bankers. These are people from the banking industry. And they have a lot more sympathy. In fact, they're outright hostile to autoworkers, as you can see. They want to bash all of their contracts. But when they get to banking, they say, รข€˜contracts, sacred.' But the other element of your question is we don't want to change the bankers, because if we do, if we put honest people in, who didn't cause the problem, their first job would be to find the scope of the problem. And that would destroy the cover up.
BILL MOYERS: The cover up?
WILLIAM K. BLACK: Sure. The cover up.
BILL MOYERS: That's a serious charge.
WILLIAM K. BLACK: Of course.
BILL MOYERS: Who's covering up?
WILLIAM K. BLACK: Geithner is charging, is covering up. Just like Paulson did before him. Geithner is publicly saying that it's going to take $2 trillion — a trillion is a thousand billion — $2 trillion taxpayer dollars to deal with this problem. But they're allowing all the banks to report that they're not only solvent, but fully capitalized. Both statements can't be true. It can't be that they need $2 trillion, because they have masses losses, and that they're fine.
These are all people who have failed. Paulson failed, Geithner failed. They were all promoted because they failed, not because...
BILL MOYERS: What do you mean?
WILLIAM K. BLACK: Well, Geithner has, was one of our nation's top regulators, during the entire subprime scandal, that I just described. He took absolutely no effective action. He gave no warning. He did nothing in response to the FBI warning that there was an epidemic of fraud. All this pig in the poke stuff happened under him. So, in his phrase about legacy assets. Well he's a failed legacy regulator.
BILL MOYERS: But he denies that he was a regulator. Let me show you some of his testimony before Congress. Take a look at this.
TIMOTHY GEITHNER: I've never been a regulator, for better or worse. And I think you're right to say that we have to be very skeptical that regulation can solve all of these problems. We have parts of our system that are overwhelmed by regulation.
Overwhelmed by regulation! It wasn't the absence of regulation that was the problem, it was despite the presence of regulation you've got huge risks that build up.
WILLIAM K. BLACK: Well, he may be right that he never regulated, but his job was to regulate. That was his mission statement.
BILL MOYERS: As?
WILLIAM K. BLACK: As president of the Federal Reserve Bank of New York, which is responsible for regulating most of the largest bank holding companies in America. And he's completely wrong that we had too much regulation in some of these areas. I mean, he gives no details, obviously. But that's just plain wrong.
BILL MOYERS: How is this happening? I mean why is it happening?
WILLIAM K. BLACK: Until you get the facts, it's harder to blow all this up. And, of course, the entire strategy is to keep people from getting the facts.
BILL MOYERS: What facts?
WILLIAM K. BLACK: The facts about how bad the condition of the banks is. So, as long as I keep the old CEO who caused the problems, is he going to go vigorously around finding the problems? Finding the frauds?
BILL MOYERS: You--
WILLIAM K. BLACK: Taking away people's bonuses?
BILL MOYERS: To hear you say this is unusual because you supported Barack Obama, during the campaign. But you're seeming disillusioned now.
WILLIAM K. BLACK: Well, certainly in the financial sphere, I am. I think, first, the policies are substantively bad. Second, I think they completely lack integrity. Third, they violate the rule of law. This is being done just like Secretary Paulson did it. In violation of the law. We adopted a law after the Savings and Loan crisis, called the Prompt Corrective Action Law. And it requires them to close these institutions. And they're refusing to obey the law.
BILL MOYERS: In other words, they could have closed these banks without nationalizing them?
WILLIAM K. BLACK: Well, you do a receivership. No one -- Ronald Reagan did receiverships. Nobody called it nationalization.
BILL MOYERS: And that's a law?
WILLIAM K. BLACK: That's the law.
BILL MOYERS: So, Paulson could have done this? Geithner could do this?
WILLIAM K. BLACK: Not could. Was mandated--
BILL MOYERS: By the law.
WILLIAM K. BLACK: By the law.
BILL MOYERS: This law, you're talking about.
WILLIAM K. BLACK: Yes.
BILL MOYERS: What the reason they give for not doing it?
WILLIAM K. BLACK: They ignore it. And nobody calls them on it.
BILL MOYERS: Well, where's Congress? Where's the press? Where--
WILLIAM K. BLACK: Well, where's the Pecora investigation?
BILL MOYERS: The what?
WILLIAM K. BLACK: The Pecora investigation. The Great Depression, we said, "Hey, we have to learn the facts. What caused this disaster, so that we can take steps, like pass the Glass-Steagall law, that will prevent future disasters?" Where's our investigation?
What would happen if after a plane crashes, we said, "Oh, we don't want to look in the past. We want to be forward looking. Many people might have been, you know, we don't want to pass blame. No. We have a nonpartisan, skilled inquiry. We spend lots of money on, get really bright people. And we find out, to the best of our ability, what caused every single major plane crash in America. And because of that, aviation has an extraordinarily good safety record. We ought to follow the same policies in the financial sphere. We have to find out what caused the disasters, or we will keep reliving them. And here, we've got a double tragedy. It isn't just that we are failing to learn from the mistakes of the past. We're failing to learn from the successes of the past.
BILL MOYERS: What do you mean?
WILLIAM K. BLACK: In the Savings and Loan debacle, we developed excellent ways for dealing with the frauds, and for dealing with the failed institutions. And for 15 years after the Savings and Loan crisis, didn't matter which party was in power, the U.S. Treasury Secretary would fly over to Tokyo and tell the Japanese, "You ought to do things the way we did in the Savings and Loan crisis, because it worked really well. Instead you're covering up the bank losses, because you know, you say you need confidence. And so, we have to lie to the people to create confidence. And it doesn't work. You will cause your recession to continue and continue." And the Japanese call it the lost decade. That was the result. So, now we get in trouble, and what do we do? We adopt the Japanese approach of lying about the assets. And you know what? It's working just as well as it did in Japan.
BILL MOYERS: Yeah. Are you saying that Timothy Geithner, the Secretary of the Treasury, and others in the administration, with the banks, are engaged in a cover up to keep us from knowing what went wrong?
WILLIAM K. BLACK: Absolutely.
BILL MOYERS: You are.
WILLIAM K. BLACK: Absolutely, because they are scared to death. All right? They're scared to death of a collapse. They're afraid that if they admit the truth, that many of the large banks are insolvent. They think Americans are a bunch of cowards, and that we'll run screaming to the exits. And we won't rely on deposit insurance. And, by the way, you can rely on deposit insurance. And it's foolishness. All right? Now, it may be worse than that. You can impute more cynical motives. But I think they are sincerely just panicked about, "We just can't let the big banks fail." That's wrong.
BILL MOYERS: But what might happen, at this point, if in fact they keep from us the true health of the banks?
WILLIAM K. BLACK: Well, then the banks will, as they did in Japan, either stay enormously weak, or Treasury will be forced to increasingly absurd giveaways of taxpayer money. We've seen how horrific AIG -- and remember, they kept secrets from everyone.
BILL MOYERS: A.I.G. did?
WILLIAM K. BLACK: What we're doing with -- no, Treasury and both administrations. The Bush administration and now the Obama administration kept secret from us what was being done with AIG. AIG was being used secretly to bail out favored banks like UBS and like Goldman Sachs. Secretary Paulson's firm, that he had come from being CEO. It got the largest amount of money. $12.9 billion. And they didn't want us to know that. And it was only Congressional pressure, and not Congressional pressure, by the way, on Geithner, but Congressional pressure on AIG.
Where Congress said, "We will not give you a single penny more unless we know who received the money." And, you know, when he was Treasury Secretary, Paulson created a recommendation group to tell Treasury what they ought to do with AIG. And he put Goldman Sachs on it.
BILL MOYERS: Even though Goldman Sachs had a big vested stake.
WILLIAM K. BLACK: Massive stake. And even though he had just been CEO of Goldman Sachs before becoming Treasury Secretary. Now, in most stages in American history, that would be a scandal of such proportions that he wouldn't be allowed in civilized society.
BILL MOYERS: Yeah, like a conflict of interest, it seems.
WILLIAM K. BLACK: Massive conflict of interests.
BILL MOYERS: So, how did he get away with it?
WILLIAM K. BLACK: I don't know whether we've lost our capability of outrage. Or whether the cover up has been so successful that people just don't have the facts to react to it.
BILL MOYERS: Who's going to get the facts?
WILLIAM K. BLACK: We need some chairmen or chairwomen--
BILL MOYERS: In Congress.
WILLIAM K. BLACK: --in Congress, to hold the necessary hearings. And we can blast this out. But if you leave the failed CEOs in place, it isn't just that they're terrible business people, though they are. It isn't just that they lack integrity, though they do. Because they were engaged in these frauds. But they're not going to disclose the truth about the assets.
BILL MOYERS: And we have to know that, in order to know what?
WILLIAM K. BLACK: To know everything. To know who committed the frauds. Whose bonuses we should recover. How much the assets are worth. How much they should be sold for. Is the bank insolvent, such that we should resolve it in this way? It's the predicate, right? You need to know the facts to make intelligent decisions. And they're deliberately leaving in place the people that caused the problem, because they don't want the facts. And this is not new. The Reagan Administration's central priority, at all times, during the Savings and Loan crisis, was covering up the losses.
BILL MOYERS: So, you're saying that people in power, political power, and financial power, act in concert when their own behinds are in the ringer, right?
WILLIAM K. BLACK: That's right. And it's particularly a crisis that brings this out, because then the class of the banker says, "You've got to keep the information away from the public or everything will collapse. If they understand how bad it is, they'll run for the exits."
BILL MOYERS: Yeah, and this week in New York, at this conference, you described this as more than a financial crisis. You called it a moral crisis.
WILLIAM K. BLACK: Yes.
BILL MOYERS: Why?
WILLIAM K. BLACK: Because it is a fundamental lack of integrity. But also because, if you look back at crises, an economist who is also a presidential appointee, as a regulator in the Savings and Loan industry, right here in New York, Larry White, wrote a book about the Savings and Loan crisis. And he said, you know, one of the most interesting questions is why so few people engaged in fraud? Because objectively, you could have gotten away with it. But only about ten percent of the CEOs, engaged in fraud. So, 90 percent of them were restrained by ethics and integrity. So, far more than law or by F.B.I. agents, it's our integrity that often prevents the greatest abuses. And what we had in this crisis, instead of the Savings and Loan, is the most elite institutions in America engaging or facilitating fraud.
BILL MOYERS: This wound that you say has been inflicted on American life. The loss of worker's income. And security and pensions and future happened, because of the misconduct of a relatively few, very well-heeled people, in very well-decorated corporate suites, right?
WILLIAM K. BLACK: Right.
BILL MOYERS: It was relatively a handful of people.
WILLIAM K. BLACK: And their ideologies, which swept away regulation. So, in the example, regulation means that cheaters don't prosper. So, instead of being bad for capitalism, it's what saves capitalism. "Honest purveyors prosper" is what we want. And you need regulation and law enforcement to be able to do this. The tragedy of this crisis is it didn't need to happen at all.
BILL MOYERS: When you wake in the middle of the night, thinking about your work, what do you make of that? What do you tell yourself?
WILLIAM K. BLACK: There's a saying that we took great comfort in. It's actually by the Dutch, who were fighting this impossible war for independence against what was then the most powerful nation in the world, Spain. And their motto was, "It is not necessary to hope in order to persevere."
Now, going forward, get rid of the people that have caused the problems. That's a pretty straightforward thing, as well. Why would we keep CEOs and CFOs and other senior officers, that caused the problems? That's facially nuts. That's our current system.
So stop that current system. We're hiding the losses, instead of trying to find out the real losses. Stop that, because you need good information to make good decisions, right? Follow what works instead of what's failed. Start appointing people who have records of success, instead of records of failure. That would be another nice place to start. There are lots of things we can do. Even today, as late as it is. Even though they've had a terrible start to the administration. They could change, and they could change within weeks. And by the way, the folks who are the better regulators, they paid their taxes. So, you can get them through the vetting process a lot quicker.
BILL MOYERS: William Black, thank you very much for being with me on the Journal.
