The Crash of 2016?

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!

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Beware: The Machiavellian Mortgage Scam Continues

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 title to 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

Links:

Landmark National Bank v. Kesler

How Bad Can It Be for SEC Whistle-Blowers?

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.



MERS – TOO MANY DEAD DUCKS

“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."

Clouded Titles (Who really owns your home?)


Banks’ Lobbyists Help in Drafting Financial Bills

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Sentencing Two Populations to Generations of Debt Slavery

The first real test of establishing America’s commitment to "democracy" came from Greece after WWII. During the war, the Left Wing National Liberation Front had provided the majority of resistance to the Nazis. It also set up interim governments across the nation. Though its military government leaders were communist, the partisan governments bore no resemblance to Stalinist Russia. They were decentralized and participatory. The peasants were treated fairly and their status, raised. It was a real people’s government. The goal was to make Greece independent, free from all ties.

But Winston Churchill claimed anarchy and demanded the return of the monarchy. He wanted to keep Greece in their sphere of influence in the Mediterranean for their own political ends. In other words, they wanted to restore the old order in Greece. They wanted the King back on his throne because he was the best guarantee of British interest in Greece: political, economic, and strategic, despite the fact that all of the Greek people hated the oppressive regime of the King.

So America stepped in and a network of concentration camps were set up across the Greek islands while right winged death squads terrorized villages. A favorite technique was beheading. President Truman gave $400 million to aid in restoring the old order. In 1947, 74,000 tons of military equipment was sent to Greece including massive stocks of napalm, and during the Civil War in Greece, the Truman Doctrine was announced which was in effect to crush the peasant and worker based anti-Nazi resistance and restore the traditional fascist order. As a result, 150,000 Greeks were killed. Greece was the first major police task which the United States took on in the postwar world.

Fast forward almost 60 years, and the European feudal system is scapegoating Greece, along with its tiny neighbor, Cyprus --many Cypriots consider themselves Greeks; they share the same National Anthem, are Orthodox and of course they speak Greek--once again, only this time, instead of tanks, they're using banks.

"At least 1,600 Greek businesses - from shipping, retail to tourism - will suffer from the Cyprus bailout deal announced on Sunday after a showdown between Brussels and Nicosia, according to Vasilis Korkidis, head of the National Confederation of Greek Commerce (ESEE).

“The tragic situation in Cyprus will certainly have immediate effects on the Greek market, since a large part of the domestic businesses maintain close ties with Cypriot companies,” Korkidis said in a statement on Tuesday. He was particularly critical of the capital controls and the impending haircut on large deposits (over 100,000 euros) expected to be more than 40%.

Greece's exports to Cyprus exceed 1billion euros annually and the country is Cyprus’ biggest trade partner, followed by the United Kingdom and Germany.

According to Korkidis, the Eurogroup’s Cyprus deal establishes new, severely punitive rules for countries needing emergency aid in the future.

He also slammed the Eurogroup deal (which he called the "German plan" to stress the key role played by German Chancellor Angela Merkel in the negotiations) for “crippling” Cyprus. He said the deal is “tragic” because it “sentences” Cyprus - the country’s markets and economy - to a long period of recession and debt.

Without blinking an eye, the troika of International Monetary Fund, European Commission and European Central Bank (ECB) wipes out the savings of a people, while imposing draconian capital controls, sentencing two populations to generations of debt slavery. This is the new model. Other countries will surely follow.

Links:

List Released With 132 Names Who Pulled Cyprus Deposits Ahead Of "Confiscation Day"

With every passing day, it becomes clearer and clearer the Cyprus deposit confiscation "news" was the most unsurprising outcome for the nation's financial system and was known by virtually everyone on the ground days and weeks in advance: first it was disclosed that Russians had been pulling their money, then it was suggested the president himself had made sure some €21 million of his family's money was parked safely in London, then we showed a massive surge in Cyprus deposit outflows in February, and now the latest news is that a list of 132 companies and individuals has emerged who withdrew their €-denominated deposits in the two weeks from March 1 to March 15, among which the previously noted company Loutsios & Sons which is alleged to have ties with the current Cypriot president Anastasiadis.

From Sigma:

"Money transfers made within 15 days, namely from 1 until March 15. On Friday, March 15, had met the Eurogroup, which officially decided to impose a tax on deposits by companies and individuals in all financial institutions in Cyprus.

These 132 companies and individuals have withdrawn all deposits in euros, dollars and rubles, which were transferred to other banks outside Cyprus.

The disclosure of the list, which shows that the outflow of deposits from local banks other financial institutions outside Cyprus became massively raises suspicion that some had inside information about the decisions taken by the other 16 eurozone countries in exchange for financing deficits of the economy.

In listings, and the company is Loutsios and Sons Ltd, which carried 21 million deposit in a UK bank, while the owner of the company is alleged to have family ties with the President of the Republic, Nikos Anastasiadis.

The first column are names of companies and individuals in the second record of the amounts withdrawn in the third column refers to the amount withdrawn in the same currency, the currency in the fourth and the fifth and last column refers to the date of transfer.

The Timeline of the Unfolding Eurozone Crisis

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QE3 and the Global Land Grab

You can't create wealth out of thin air; therefore it's plain to see that money is not wealth, it's the mechanism used to transfer wealth from we the taxpayers to the ruling class. For instance, when Ben Bernanke prints new money (QE3), who gets first dibs on that money? His wealthy friends, of course. And then, in turn, they lend it out at quadruple the price and/or purchase up all of the finite resources--especially land, farmland, that is. Why? He who controls the food controls the world.

That's right, the global tycoons, especially since the financial crisis in 2008, have been buying up farmland all over the planet at an alarming rate, while subsistence farmers are losing their land and their way of life. They're being priced out of existence as the New World Agricultural Order unfolds.



Meanwhile, the Fed is quietly acquiring massive amounts of property in the US through their purchase of mortgage-backed securities. There are an estimated 1.5 million homes currently in the foreclosure process. Under the current QE3, Bernanke will own those properties once the foreclosure is complete. The point? To create a huge land-grab within the US where the Fed owns massive amounts of land and can leverage this acquisition against the American public as the transition becomes apparent.

Oh, and the Federal Housing Finance Administration (FHFA) recently announced that “strategic defaulters”, i.e. those homeowners who have abandoned their mortgage because they could not afford to make the monthly payments will be jailed for this “crime”.

So what we have here are banks, agencies and government "manipulating" the market toward their own agenda at the expense of we the people. Nothing new here.

Links:

'Shadow REO': As Many as 90% of Foreclosed Properties Held Off the Market, Estimates Suggest

Supposedly, these homes are being released in bulk to major conglomerates who have billions of dollars to buy them for pennies on the dollar and fix and sell them or lease them out. The banks are selling in bulk to them with the understanding that they are not to be sold within a certain amount of time

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Will the US Economy Be In Free-fall by Autumn?

Greece and the EU have monopolized headlines recently in the mainstream media. Meanwhile, according to the Global Europe Anticipation Bulletin, another financial crisis is brewing that will make 2008 "seem like a small summer storm."

An IMF working paper, entitled, Systemic Banking Crisis Database: An update  by Luc Laeven and Fabián Valencia shows that most banking crises start in September.

Five of the biggest banks in the United States are crafting living wills in case they fail, as part of government-mandated contingency planning that could push them to untangle their complex operations.

At the same time, banks continue to get backdoor bailouts. 

Below are six ways the big banks rake in cash every day from services that are supposed to help working Americans.

1. Big Contracts for Food Stamps

Suzanne Merkelson at Republic Reports points out that Supplemental Nutrition Assistance Program (SNAP) benefits—the program formerly known as food stamps, which provides food aid to families—increased to $72 billion last year (from $30 billion in 2007).

And as the lousy economy keeps people relying on benefits to feed their families, big banks keep benefiting from the program too. A new paper [PDF] from Michele Simon finds that SNAP “represents the largest, most overlooked corporate subsidy in the farm bill.” Merkelson writes:

While SNAP is a federal program, USDA and the states work together to administer the program. States contract with banks, who authorize payments (Electronic Bank Transfers or EBTs) from the Federal Reserve to retailers. J.P. Morgan Chase has contracts in half the states “indicating a lack of competition and significant market power,” according to Simon. How much are these deals worth? In New York, one seven-year deal originally gave the bank $112 million for its services, but was recently amended to add another $14.3 million.

JP Morgan spends a bunch of money lobbying the Department of Agriculture on this program, making sure they get what they want—a big paycheck from state taxpayers.

And the best part? When you have a problem with your JP Morgan SNAP benefits card? You call a JP Morgan call center for help—and that call center just might be in India.

So to recap: big bank makes money off a program that helps people who are unemployed—and creates jobs in India with that money, rather than creating them here in the US.

2. Making Money Off the Unemployed

The banks get paid directly by the state to handle the SNAP program, but that's far from the only program designed to help the victims of the lousy economy that has turned into a cash cow for the banks that created the crisis in the first place.

Unemployment benefits in 41 states are provided through Wall Street giants like Bank of America, Wells Fargo, and JP Morgan Chase. In South Carolina, for instance, customers get a prepaid debit card from Bank of America to access their unemployment benefits—which is, of course, fee-free at a Bank of America ATM. But for rural South Carolinians, the nearest Bank of America ATM might be 50 miles away. Shawana Busby, a South Carolina user of the program, tells the Huffington Post that she's probably spent $350 in fees to access her benefits—which are $264 a week. Another user of the cards, Sandra Gortman, tells the Huffington Post that she was pressured to adopt the prepaid card, and then when she used it to put gas in her car, the gas station put a hold on her card for $75, which didn't come off for three days. When she called to check on the hold, she was charged a customer service fee. (The bank has now eliminated such fees.)

The bank also collects a 3-cent fee from the state each time it “facilitates” a transfer on a prepaid card. It also gets those fees for direct-depositing unemployment benefits into someone's bank account.

3. Sweet Campus Deals to Prey on Students While Distributing Federal Student Aid Money

A recent report from USPIRG, “The Campus Debit Card Trap,” dug into the deals that universities, both public and private, make with banks to produce student ID cards and more significantly, actually handle and disburse student financial aid. In other words, young people who've already signed up for a lifetime of student debt are being preyed on further by banks that can charge them fees just to access their money. (And, remember, those same big banks are already making big bucks on student aid.)

USPIRG found that 32 of the 50 largest public 4-year universities and 26 of the largest 50 community colleges—the schools in part supported by taxpayers—had deals with banks to provide debit or prepaid cards for students. The campuses often get money from the banks for the privilege of access to students, and the banks then make their money back in fees—and possibly other ways, too. Mela Heestand, writing for AlterNet about the protests at the University of California Davis that drove US Bank to close its campus bank branch, pointed out that “university contracts with banks encourage tuition hikes, because banks stand to profit directly from rising tuition, while the administration comes to rely on funding from bank contracts.” US Bank has agreements at 52 campuses around the country.

(After the protests that shuttered the US Bank branch, twelve activists were arrested and face up to 11 years in prison and $1 million in fines.)

Students are the ones bearing the costs of access to money they're already paying interest on, and USPIRG points out that the fees are “steep and frequent,” including per-swipe fees, inactivity fees (yes, you read that right), overdraft fees and fees to reload their prepaid cards. And financial aid that is paid to students through a debit card is subject, just like any other card, to ATM fees if students use an ATM not owned by the bank that currently has their money. The Department of Education has rules on this practice, banning banks from charging fees if they provide “convenient” ATMs for the students' use, but their definition of “convenient” is vague—leaving students at the mercy of a single ATM on campus, which produces long lines and leaves no alternative if it breaks or runs out of cash.

4. Cashing in on Tax Returns

It's not only your unemployment, financial aid, or SNAP benefits that the big banks control these days—they also might come between you and your tax return.

Once again, South Carolina takes the lead, claiming to save the taxpayer money by cutting a deal with Bank of America, this time to send out tax returns in the form of—you guessed it—prepaid debit cards from Bank of America. And just like with unemployment benefits and financial aid (or your regular, consumer bank card), the bank is making its money collecting fees from people trying to access their own money.

“They’re not even nickel and diming people, they’re five-dollaring and 10-dollaring people,” Sue Berkowitz, Director of the Appleseed Legal Justice Center, says.

Oh, and the bank got this deal through a no-bid contract—the Department of Revenue calls them “the best fit” for the program. The program isn't mandatory but, the Palmetto Public Record notes, it's opt-out, not opt-in. Which means that unless you request otherwise, your money will be given to you through Bank of America—which in addition to sticking you with ATM fees and other charges, is going to make interest on your money while it's sitting in their account.

5. Refinancing Homes Means Big Bucks for Banks

Getting the big banks to refinance mortgages and help people facing foreclosure stay in their homes has been a huge fight, with activists around the country putting their bodies on the line, physically occupying homes to keep residents in them.

Now the program that's supposed to help those struggling homeowners looks instead to be a big fat handout to the same banks that were preying on borrowers to begin with. According to the Wall Street Journal, banks that service mortgages could make as much as $12 billion by refinancing under the newest version of the Home Affordable Refinance Program (HARP 2.0). And the borrowers? Oh, they'll save money, too—somewhere around $2.5 billion, maybe $5 billion tops.

The program is supposed to let underwater borrowers who've made all their payments in good faith refinance their mortgages at current market value. But, Bonnie Kavoussi at the Huffington Post notes, instead those banks are able to charge steep fees and above-market interest rates.

Shaun Donovan, the current Secretary of Housing and Urban Development calls it “a monopoly on refinancing,” saying at a Senate hearing, "Whoever holds their current loan, whoever is the servicer, they can charge [borrowers]—and we're seeing this—very high fees."

6. Profiting Off The Very Idea of Another Big Bailout

In case all this profit enabled by the government wasn't enough for you, perhaps the most disturbing recent bank-related news is a report by the “wild socialists” at Bloomberg that, “JPMorgan receives a government subsidy worth about $14 billion a year, according to research published by the International Monetary Fund and our own analysis of bank balance sheets.”

They explain:

In recent decades, governments and central banks around the world have developed a consistent pattern of behavior when trouble strikes banks that are large or interconnected enough to threaten the broader economy: They step in to ensure that all the bank’s creditors, not just depositors, are paid in full. Although typically necessary to prevent permanent economic damage, such bailouts encourage a reckless confidence among creditors. They assume the government will always make them whole, so they become willing to lend at lower rates, particularly to systemically important banks.

In other words, because we bailed them out once, the expectation that we'll do it again is actually making the banks money. Other lenders are willing to lend money to the “systemically important banks” (read: banks that got bailed out by the US government because they were “too big to fail”) at lower interest rates because they presume that they'll always get their money back since the government will make sure the banks don't go belly up. So the biggest banks are paying less in interest than medium-size and small banks--and that adds up to billions.

So they're profiting just from being too big to fail. And each time there's a crisis, the expectation of government support actually grows—as of 2009, Bloomberg notes, they're saving about 0.8 percent every time they borrow. The total benefit to the big banks just of the expectation that there will be another bailout? About $76 billion a year—which Bloomberg points out is equal to their total profit from the past twelve months, and is more than the federal government spends each year on education.

Brad Sherman, a Representative from California, asked Jamie Dimon this week, before Congress, “[H]ow can medium size banks compete against you when your cost of capital is reduced by 80 basis points, 0.8 percent, because of a belief that if they go under we'll let 'em go under, but if you go under we'll bail out your creditors?”

Dimon, of course, claimed that it wasn't true, and that he borrowed in the marketplace, “with the smartest people in the world.” But it looks like the smartest people in the world are getting a whole lot of help—and making a whole lot of money—off of college students and taxpayers, off the working poor and unemployed in the U.S.

Household debt has soared far above wages for decades.  In fact, 30 million workers made below $10,000 per year in 2010.Suffice to say, far too many are in crisis already. In other words, the big crisis is here. It just hasn't hit those we call upper middle class yet.

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The Bankruptcy Law Changes of 2005, Rehypothecation, MF Global, and Crisis.

Did you know that the changes made to the bankruptcy laws reordered the subordination of creditors? It's true. Bondholders used to be the most senior of creditors in a bankruptcy. Now, derivative holders are the most senior. That means derivative counterparties gained a strong bankruptcy privilege, according to Prof. Dr. Enrico Perotti, professor of international finance at Amsterdam Business School.

The special bankruptcy treatment extended to mortgage-backed repos and derivative transactions in 2005 played a crucial role in the financial crisis of 2008. Because they were the two main sources of systemic risk in the financial crisis of 2008.

Professor Perotti outlined how over the 2002-2005 period, bankruptcy laws were changed in all EU countries and the US, and secured financial credit (repos) and derivative counterparties gained a strong bankruptcy privilege, amounting to de facto “superiority”, as counterparties could gain immediate repossession of collateral in default (so-called “safe harbor claims”, as opposed to having to accept the “automatic stay” which protects the debtor in Chapter 11 for example)..

With that in mind, consider that banks/ securities brokerage, rehypothecate assets, including 401k, IRA, and even general savings accounts allow the rehypothecation of their assets. Check the fine print of your account agreement.

What is rehypothecation?

It is the practice that allows collateral posted by, let's say, a hedge fund to its prime broker to be used again as collateral by that prime broker for its own funding. In other words, if a firm rehypothecates its assets with its client's assets - co-mingling client funds - and then uses these funds to buy derivatives, the derivative holder can lay claim to the brokerage assets if that firm declares bankruptcy. If this is allowed to continue, it will set a precedent that will enable creditor firms to raid and steal your assets.

This is part of the reason JP Morgan was able to seize MF Global's assets the moment they claimed bankruptcy.

So, it's possible that the next time a firm fails, whomever is the counterparty on the bankrupt organization's credit default swap, will have precedent to step in and steal client money to settle their claims.

For a  less alarmist view which goes into great detail, see:

Revisiting Rehypothecation: JP Morgan Markets Its Latest Doomsday Machine (or Why Repo May Blow Up the Financial System Again)

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$18.7 Billion Missing From Bush's Plane Full of $20 Billion in Shrink-Wrapped Cash

Six years, and three audits later, the US still cannot account for $18.7 billion of the $20 billion that George W, shrink-wrapped, stuffed into a C 130, and then hurled it like a ho for turning free tricks, overseas to Iraq for distribution. Oh, you thought it was $6.6 billion that went missing? Wrong. That figure has now tripled.

This was money that had come from Iraqi development fund - oil sales, surplus funds from the UN oil-for-food programme and seized Iraqi assets.  Moreover, the documents of expenditure are missing. Who got it, where it was spent, or whether anything was actually built with the money is "unknown".  Yeah right, you can make a good faith bet that someone knows.   Just like someone knows where the $2.3 trillion missing, reported on 9/10/01, went. Such a coincidence that the very next day, three towers -- probably containing much of that information --  and thousands of people --  who most certainly had a clue -- dissolve into dust.

The bottom line is that the American government was responsible for safeguarding that money, and they did not. Yet, a bank-teller's drawer, is found to be one penny short, or over (as I learned long ago), and that person can potentially go to jail. Yes...to jail, if it's found out that he or she added or took a penny to break even.

Billions, and trillions of dollars go missing on a regular basis, since W entered office, and it's no big deal?!? Come on people! How much evidence do you need to figure out that stone-cold, straight up gangster thugs, rollin' deep, and bustin' caps in anyone who gets in their way, transformed the United States of America into their own personal Babylon? That is, if there ever was a United States of America. I'm still trying to figure that one out.

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Countries Most Likely to Go Belly Up.

Well, at least we escaped extreme risk this time; however, according to Advisor Analyst, "while Europe is being forced to do all that amid sovereign debt crisis in the middle of widespread protests over raised pension age and austerity measures, the U.S. and other “high fiscal risk” countries seem be set up as the wave 2 of this global fiscal chain of events."

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The Financial Crisis Inquiry Commission Report Names Names and Places Blame.

Surprise! Surprise! The Financial Crisis Inquiry Commission's final report (and index, which can be found at a separate link) actually mentions people by name, and claims the financial crisis was not a surprise.  It goes as far as to say that there was a "systemic breakdown in accountability and ethics."

There is even a Financial Crisis Inquiry Commission website that contains, or will contain "a stockpile of materials—including documents and emails, video of the Commission’s public hearings, testimony, and supporting research—that can be studied for years to come. Much of what is footnoted in this report can be found on the website."

"As this report goes to print, there are more than 26 million Americans who are out of work, cannot find full-time work, or have given up looking for work. About
four million families have lost their homes to foreclosure and another four and a half million have slipped into the foreclosure process or are seriously behind on their mortgage payments. Nearly $11 trillion in household wealth has vanished, with retirement accounts and life savings swept away. Businesses, large and small, have felt the sting of a deep recession. There is much anger about what has transpired, and justifiably so. Many people who abided by all the rules now find themselves out of work and uncertain about their future prospects. The collateral damage of this crisis has been real people and real communities. The impacts of this crisis are likely to be felt for a generation. And the nation faces no easy path to renewed economic strength."

Conclusions in a nutshell:

We conclude this financial crisis was avoidable.

We conclude widespread failures in financial regulation and supervision
proved devastating to the stability of the nation’s financial markets

We conclude dramatic failures of corporate governance and risk management
at many systemically important financial institutions were a key cause of this crisis.

We conclude a combination of excessive borrowing, risky investments, and lack
of transparency put the financial system on a collision course with crisis

We conclude the government was ill prepared for the crisis, and its inconsistent
response added to the uncertainty and panic in the financial markets.

We conclude there was a systemic breakdown in accountability and ethics.

We conclude collapsing mortgage-lending standards and the mortgage securitization
pipeline lit and spread the flame of contagion and crisis.

We conclude over-the-counter derivatives contributed significantly to this
crisis.

We conclude the failures of credit rating agencies were essential cogs in the
wheel of financial destruction.

Yet, who continues to pay the price?  We, the people. 

Professor Mark J. Perry, at his blog CARPE DIEM posted:

Real GDP finally increased above its pre-recession level in the fourth quarter of 2010, and the $13.38 trillion of real GDP (2005 dollars) was the highest-ever quarterly output in U.S. history, slightly higher than the previous record of $13.36 trillion in the fourth quarter of 2007.

But here’s what’s really amazing and is illustrated in the bottom chart: The U.S. produced slightly more output in Q4 2010 (by 0.14%) than in Q4 2007 when the recession started, but with 7.2 million fewer workers (almost 5%)!

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Most Comprehensive and Clear Explanation of Foreclosure Crisis Yet.

If you want the real story that is not being reported by mainstream media (because of course, they would rather blame the people losing their homes), and if you want a very clear and logical explanation of the foreclosure crisis, listen to Harry Shearer interview Yves Smith  of Naked Capitalism.  I listened to it today on  NPR's  Le Show today.

In a nutshell, Harry Shearer and Yves Smith discuss the mortgage ownership, mortgage modification and the role of incentivized MERS (Mortgage Electronic Registration System​) "servicers" in the foreclosure disaster.

Some of the notes I took because I have a short memory. I strongly urge everyone to listen for themselves.

• Mortgages or notes travel a very circuitous journey through intermediary parties on their way to the mortgage lockbox (trust), which must ring as a "true sale".  All parties must sign the note over - from a to b to c to d - to establish bankruptcy remoteness.
• The banks try to minimize this as an issue and tell us it's a matter of sloppy paperwork. Not true.
• Between 2002-2005, the banks quit doing the things they agreed to do to get the mortgages into the legal lockbox (trusts). In other words, the banking industry changed their procedures to save fees and hassle and never bothered to change their legal contracts. Unfortunately, the way the agreements were set up made it virtually impossible to go back and fix things after the fact.
• MERS has a bizarre corporate structure. It is almost a virtual company with 47-48 employees  (they outsource through EDS). In addition to the 47 MERS employees, there are approximately 20,000 signing officers authorized on its behalf, who have never received a dime from MERS, and who work full time for another company - sometimes a bankrupt company.  Only these 'MERS members' have access to MERS, who actually handle the payments, and the administrative duties that the bank used to handle when the bank held onto the mortgage.
• MERS, the foreclosure mill, tracks morgage servicing rights (who is servicing the loan and who owns the loan). Compliance is voluntary and there is no penalty for not inputting the data, so the A-B-C-D transfers, if even done at all, were not always inputted.
• The MERS handshake (electronic handshake) is supposed to ensure a transfer can’t happen without both parties in agreement, however, in practice, documents have the signature of the same person as representative of both parties.  Poorly paid robo-signers were/are used to sign/stamp affidavits.
• Banks aren’t foreclosing quickly due to large inventory.  The Obama Administration doesn’t want the perception of the right to foreclose in question.
• Foreclosure is a very lucrative activity for the ​servicers who get paid first. They have different motivations from that of the investor, and their fees continue to pile up during the default period to be paid out upon sale.
• Investors are being hurt by the foreclosures. The "prudent limit your loss behavior" that applies to almost all types of lending does not apply in the case of foreclosures (For example, lender write-down...repaying loan at a reduced rate). Instead, the losses the investors are suffering upon foreclosure are, on average, over 70% of the mortgage amount. ​
• The servicers gamed HAMP, forcing people into delinquency, while keeping them on the hook, making them think they're working on mortgage modification when in reality they're processing foreclosure.  
• The media hasn't covered this at all until the robo-signing scandal broke.  Foreclosure attorneys are dismissed as little more than ambulance chasers whereas banks have credibility and all of the media access.

Kemp vs. Countrywide.

• The Countrywide employee (10 years) chosen by Bank of America (who now owns Countrywide ) to represent the bank in this legal case said it was their practice not to transfer the mortgage into the trust. 

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Are the World's Wealthiest People Pulling Out While We Continue to Drink the Kool-Aid?

The world is chock-full of money, so why does everyone seem to be getting poorer? Well, not everyone.  Speak of the devil, what is going on in the world of the elite?  Because they seem to know something we don't. But what else is new?

First things first. The Federal Reserve plans on stepping up its expansionary monetary policy even further in November, and the rest of the world is responding accordingly, by devaluing its own currency. Quantitative easing is the name of the game. This Fed policy is supposed to keep interest rates as low as possible by purchasing government securities, or other securities from the market, thereby flooding financial institutions with capital in an effort to promote increased lending and liquidity.

Now, keep in mind that the interest rate is essentially the price of money, and although, people like former Fed Chair Alan Greenspan would have you believe he promoted the idea of free markets, he did not. Because, at the same time he's preaching the gospel of laissez-faire capitalism, his heavy hand was busy intervening, controlling the price of money (interest rates).

You will find a good explanation of debt monetization here.

Anyway, Nobel Prize winning economist, Joseph Stiglitz thinks the ultra-loose monetary policies by the Federal Reserve is throwing the world into chaos rather than helping global economic recovery.

"The irony is that the Fed is creating all this liquidity with the hope that it will revive the American economy. It's doing nothing for the American economy, but it's causing chaos over the rest of the world. It's a very strange policy that they are pursuing." -- Joseph Stiglitz

Back to the wealthy.  Why the hurry to move assets out of the financial system? Do they know something we don't?
Well, they know one thing for sure: the Federal Reserve will go as far as it takes to protects their ASSets.

By all appearances, the way the wealthiest people in the world are rushing to gain exclusive access to real gold, as they buy it up by the ton, gold just might become extremely scarce in the future, as if it's not already. 

Even the Federal Reserve is selling its paper gold and buying up real gold.  Everyone knows if the financial system collapses, paper gold is worthless, right?  The price of real physical gold goes up as paper gold trades lower and lower and lower. Like everything else, precious metals will never find their true free trade value. That's the scam plan, anyway. Gold bubbles are created the same way other bubbles are created – by converting a limited item to unlimited, by fiat.

JPMorgan reopened its New York gold vault.

JPMorgan has reopened an underground gold vault in New York that was mothballed in the 1990s, in the latest sign of the soaring appetite for bullion.

Investors are piling money into gold in record quantities, pushing the price on Friday to a record nominal high of more than $1,320 a troy ounce. That has made the vaulting business highly lucrative, since banks often charge a small percentage of the value of the gold stored.

And why are insiders in such a rush to get out? 

Insider Selling To Buying: 2,341 To 1 "...insiders in these names sold a combined $200 million in stock in the last week alone (following Oracle insider sales of $223 million in the prior week). Insiders can. not. wait. to. get. out. fast. enough."

So, as more and more high income Americans are reduced to living paycheck to paycheck and record numbers apply for government anti-poverty programs, those at the top are cashing out.

Thirty percent of workers with salaries of $100,000 or more said they are living paycheck to paycheck, up from 21 percent last year, according to the survey of 4,400 workers nationwide.

Overall, 61 percent said they always or usually live paycheck to paycheck, up from 49 percent in 2008 and 43 percent in 2007.

To cope, Americans have been cutting back on how much they save.

Some 21 percent of all respondents said they have reduced their 401(k) contributions or personal savings in the last six months in order to get by, while 23 percent of the $100,000-and-over group said they had done so.

While some Americans have cut back on what they set aside, others have stopped saving all together.

Links:

Calculate your net worth, if you dare.

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When Greed and Ignorance Eliminate Truth

Miles Fiedler (Dallas Roberts), a fictional think tank analyst at a fictional New York City based federal intelligence agency on AMC's new show, Rubicon, in a frenzied state, said something like, 'When you incentivize sons of bitches should it be any surprise the world's going to hell', and right there, he summed up what's wrong with our once great nation.

After decades of  encouraging  greed, power and profit to trump everything else, it's no wonder our financial system transformed into something that only works for those at the very top.  As John Bogle, the founder of Vanguard says, “We have turned an industry of stewardship and turned it into a industry of salesmanship”.

Greed has replaced the integrity of the marketplace. Our financial system is now a financial industry whose agenda includes making the ignorant more ignorant, which in turn makes the wealthy, wealthier.

Questions are not stupid; the stupidity is in not asking them. Once you engage yourself and start inquiring, every effort will be made to make you feel stupid and worthless. Just know, the more stupid and worthless you are made to feel, the closer you are to the truth.

"Civil government, so far as it is instituted for the security of property, is in reality instituted for the defense of the rich against the poor, or of those who have some property against those who have none at all." -- Adam Smith. (1776). Wealth of Nations

"Out of this modern civilization economic royalists carved new dynasties. New kingdoms were built upon concentration of control over material things. Through new uses of corporations, banks and securities, new machinery of industry and agriculture, of labor and capital - all undreamed of by the Fathers - the whole structure of modern life was impressed into this royal service." -- Franklin Delano Roosevelt, speech in Philadelphia on June 27, 1936

"These economic royalists complain that we seek to overthrow the institutions of America. What they really complain of is that we seek to take away their power. Our allegiance to American institutions requires the overthrow of this kind of power. In vain they seek to hide behind the flag and the Constitution. In their blindness they forget what the flag and the Constitution stand for." -- Franklin D. Roosevelt, 1936 speech

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Let's Hope the Whistle-Blowers Blow.

After the biggest "crash" in 80-years, despite the fact that deliberate fraud, greed, and corruption, on a massive scale, greatly contributed to our new economic reality, it appears that the men who crashed the world will never face the consequences of their criminal actions...with the exception of one man, poster child, Bernie Madoff.

Of course, punishing the financial players responsible for crashing the world is not an easy task when most of the laws governing the actions of these people were all but stripped away over the last few decades.

However, there is good news. The new financial reform law includes big cash incentives for whistle-blowers.

The new financial reform law has what some lawyers call a secret weapon against fraud on Wall Street and in corporate America: the promise of a million-dollar jackpot to insiders who reveal an illegal scheme to the government.

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Reform Passes But Six Banks With More than $9 Trillion in Assets Still Dominate

After an economic crisis that pushed the banking industry to the brink of collapse, froze credit markets, and led to $700 billion in taxpayer bailouts, the toughest set of market rules since the Great Depression will soon become law, with Senate passage of the legislation hours ago. The bill will promote financial stability by improving accountability and transparency in the financial system, improve oversight, bolster consumer protection, and reform the derivatives market, amongst other things. Sounds pretty good so far, right?

Well, when you consider President Obama's 90-page white paper that he proposed back in June 2009 grew to a 2,300-page bill due to the addition of lobbied provisions that no doubt diluted the Bank Act considerably, one has to wonder if the bill tackles the rot at the very core of our financial system. The overhaul won’t shrink banks deemed too big to fail, and it leaves intact a financial industry dominated by six banks with more than $9 trillion of combined assets.

Yet, at the end of the day, essentially nothing in the entire legislation will reduce the potential for massive system risk as we head into the next credit cycle. -- Simon Johnson

While the reform has now been passed, it leaves plenty of unanswered questions:

“Although we agree that there needs to be careful consideration and application of the legislation, the outcome in the short run seems to be that banks continue to conserve capital and maintain excess levels of liquidity while they await the final rules. This could have the effect of dampening economic growth and delaying the economic recovery, until there is a clearer picture of where some of these major issues will shake out,” CreditSights says.

Moreover, it is not convinced that the bill does enough to correct the problems in the financial industry that led to the crisis in the first place. CreditSights argues that the bill doesn’t do enough to improve the credit risk assessment process, and does not address the frequent power imbalance between the front office exposure originators/traders and the back-office risk managers. It also worries that the new oversight bodies are comprised of regulators and central bankers who missed the red flags leading up to the crisis in the first place.

Raters and regulators must be independent of, and possess the authority needed to gain the respect of the banksters, otherwise financial reform is meaningless.

The deregulation of the last 30 years has all but destroyed the the banking reforms and size caps on the banks imposed in the 1930s. However, The Kanjorski Amendment , part of the Dodd-Frank bill gives federal regulators the right and the responsibility to limit big banks and break them up if and when they pose a “grave risk” to financial stability.

So, while regulators can be very effective in curbing the abuses that led us to the brink of financial collapse in 2008, they must have the power to instill the fear of severe consequences should the banksters step out of line.

“The key lesson of the last decade is that financial regulators must use their powers, rather than coddle industry interests.” --Representative Paul Kanjorski,

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More Record Profits for the Banks. More Pain and Suffering For Us.

This time it's the Federal Reserve...windfall profits totaling $52.1 billion, of which $46.1 billion is turned over to the Treasury Department. I guess that's supposed to make us all feel good.

Well, it might if we knew the Fed is/was truly operating in the public interest and not of Wall Street (considering Wall Street is able to borrow money at zero percent interest from the Fed, thus reducing their funding costs and increasing the profit on every transaction).

The reality is we do not know much of anything because the Fed monitors and oversees itself. That's right. There has never ever been a comprehensive independent audit of the Fed, and we know what absolute power does .

Yes, we are told that the Fed is a non-profit organization that turns over its profits to the U.S. Treasury, after all expenses, but that's not quite the whole truth. The truth is the Fed has the privilege of creating money out of thin air. That means they get to put that freshly created money to use right away, at no cost. That means that those profits earned from interest, paid by we, the taxpayers, are not turned over to our government, but kept by the private member banks, "seigniorage privilege".

Not to mention, the Fed's policy of keeping interest rates artificially low leads to monetary inflation, which leads to less purchasing power for you and me. So, the Fed ensures that we, the people pay higher interest rates, and at the same time, guarantees our dollars won't be worth as much.

Oh, and if you're wondering why inflation has not run completely amok, it's because when the unemployment rate is over 10%, it acts as a deflationary tool.

Yep, when the Fed screws things up through its irrational greed for greater and greater inputs of unearned income, we the people - the producing class - always pays. There is no such thing as a crisis suffered only by the investor class (who produce nothing), even when it's 100% their doing. Always, the people pay the highest price.

“I have never yet had anyone who could, through the use of logic and reason, justify the Federal Government borrowing the use of its own money....I believe the time will come when people will demand that this be changed. I believe the time will come in this country when they will actually blame you and me and everyone else connected with the Congress for sitting idly by and permitting such an idiotic system to continue.”Wright Patman (1893-1976), chairman of the House of Representatives Committee on Banking and Currency for 40 years. For 20 of those years, he introduced legislation to repeal the Federal Reserve Banking Act of 1913.

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Worthy of Your Trust?

With good reason, our trust is in short supply today. We have lost so much so quickly to the global "free" capital markets. However, as much as we have collectively lost, too many of us are still blinded to the fact that the only intervention into the markets was/ is on behalf of the the elites, thus they go on believing the propaganda that blames "socialism" and the poor for the collapse of our economy. Even those who suffer from a lack of healthcare, lack of employment, lack of retirement, etc. swallow this hogwash and continue to support the idea that universal healthcare will somehow destroy this great nation.

The F.B.I. estimated that lending institutions and banks are 80% responsible for the financial crisis that we, the people are still reeling from. Mortgage fraud and predatory lending triggered the financial crisis and these institutions were able to get away with it because of the drastic reduction in regulation and oversight. This accompanied by the failure of what was left of the ravaged regulatory system to implement the vital checks and balances needed to deter what William K. Black calls, “control fraud” drained much of our trust from what used to be an overly trustworthy nation of hyper-consumers. So, it's imperative that we direct the little trust left to the worthy and not toward the same people who robbed us blind.

Control frauds are crimes led by the head of state or CEO that use the nation or company as a fraud vehicle.Waves of “control fraud” can cause economic collapses, damage and discredit key institutions vital to good political governance, and erode trust. The defining element of fraud is deceit – the criminal creates and then betrays trust. Fraud, therefore, is the strongest acid to eat away at trust. Endemic control fraud causes institutions and trust to become friable – to crumble – and produce economic stagnation. -- William K. Black, "When Fragile becomes Friable: Endemic Control Fraud as a Cause of Economic Stagnation and Collapse"

The Prompt Corrective Action Law (PCA), was "adopted largely in response to the enormous cost to the taxpayers of our predecessor’s failed strategy of not closing insolvent S&Ls". However, this law was completely ignored by the powers that be.

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.

"...the real scandal of 2009 was the failure to even have an indictment, much less a conviction, of any of the major senior insiders at the nonprime lending specialists. And the second biggest scandal... would be the regulators that didn't bark. You can't get effective criminal prosecutions on any large scale against sophisticated frauds of this nature without very effective regulators." -- William K. Black, a white-collar criminologist and Associate Professor of Economics and Law at the University of Missouri-Kansas

Congress should pass additional legislation early in 2010 to overhaul the financial regulatory system and give the SEC and other watchdog agencies more resources and authority to police shadowy corners of the financial markets. But if this legislation goes through, will it be enough? How much longer will the band-aid approach give us? Isn't it about time we address the corruption at its core, and redirect our trust to those of us who are worthy?

The problem is, in order to find out who is worthy, it's essential that we remove the money from our political system, which will, at the very least, remove the inmates in charge of the political asylum. Then, and only then, can we can put our trust in those we elect to serve us.

Why Is Geithner Continuing Paulson's Policy of Violating the Law?

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Greedy Leaders and Perverted Rewards.

The CEO of General Electric, told the West Point Military Academy, Wednesday, that we've come to the end of an era of excessive greed and meanness.

"We are at the end of a difficult generation of business leadership, and maybe leadership in general. Tough-mindedness, a good trait, was replaced by meanness and greed, both terrible traits. Rewards became perverted. The richest people made the most mistakes with the least accountability. In too many situations, leaders divided us instead of bringing us together." -- General Electric Co Chief Executive Jeff Immelt said in a speech at West Point on Wednesday.

Unfortunately, as nice it is to hear these words coming from a corporate chief amongst chiefs, Mr. Immelt's words will only echo hollow in the vast emptiness that exists between the ears of his peers.

Before our white brothers arrived to make us civilized men,we didn't have any kind of prison. Because of this, we had no delinquents. Without a prison, there can be no delinquents. We had no locks nor keys and therefore among us there were no thieves. When someone was so poor that he couldn't afford a horse, a tent or a blanket, he would, in that case, receive it all as a gift.
We were too uncivilized to give great importance to private property.
We didn't know any kind of money and consequently, the value of a human being was not determined by his wealth. We had no written laws laid down, no lawyers, no politicians, therefore we were not able to cheat and swindle one another. We were really in bad shape before the white men arrived and I don't know how to explain how we were able to manage without these fundamental things that (so they tell us) are so necessary for a civilized society. -- John (Fire) Lame Deer Sioux Lakota - 1903-1976 .

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The United States of American Debt

The national debt in the U.S. climbed to $7.17 trillion in November and the U.S.’s debt burden will climb to 97.5 % of GDP next year from 87.4 %, according to the Organization for Economic Cooperation and Development.

According to Moody's Wall Street ratings analytics, the U.K. and the U.S. have “resilient” Aaa ratings, as opposed to the “resistant” top ratings of Canada, Germany, France, Switzerland, and New Zealand.

What does that mean?

Well, Moody's defines "resilient" as “Aaa countries whose public finances are deteriorating considerably and may therefore test the Aaa boundaries, but which display, in our opinion, an adequate reaction capacity to rise to the challenging and rebound,” whereas, "resistant" are countries who "started from a more robust position and won’t see debt exceeding levels consistent with their Aaa status."

How big is the debt limit, you ask? Well, it should be $14 trillion after the chamber votes to increase it a fourth time in 18 months by $1.8 trillion or $1.9 trillion, more than twice the size of each of the past three debt limit increases.

However, not to worry as Moody's sees no threat to U.S. top rating for now.

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Banksters Cashing In On Ignorance.

Most of us lack the financial understanding to make informed decisions about what directly affect our lives as is evidenced in recent events, in particular the subprime mortgage crisis, not to mention, the personal bankruptcies, high levels of credit card debt, lack of retirement planning, etc.

Why is this so? Well, the number one reason is that our education system completely fails to teach anything about the very thing we will all be required to manage: the almighty dollar. We need to focus our national attention to addressing this weakness in our national educational system. Fighting financial ignorance and winning this battle is our only hope.

This video should make it perfectly clear how easy it was to convince people to sign on the dotted line regarding the subprime mortgages.

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Credit-Default Swaps Solution For Too Big To Fail?

"Too Big to Fail" refers to the idea that our government cannot allow the large, highly interconnected financial institutions to fail because as one goes, so do the rest. This would result in economic disaster.

The most dangerous legacy of the financial crisis is the perception that some institutions are too big to fail. This perception distorts competition and the allocation of capital, favoring risk-taking and incubating the conditions for the next crisis. Ignoring the problem will only make it bigger. Intelligent regulation is essential. We have proposed a new market-based capital requirement system that we believe is superior to current regulatory proposals.

Well, what if the "tools for the fix" can be found inside the banks themselves? The following article, How the Tricks That Crashed Wall Street Can Save the World propose the following:

There is a way forward, beyond new regulators, new requirements, and new rules, for the banks to figure out how to skirt. An intervention mechanism centered within banks and reliant on market signals will work much better than a Washington edict. And we believe such a system is possible to create and put in place.

The way to do it, contrary though it might seem, lies in the much-maligned credit-default swaps (CDSs), which are like insurance policies against a loan defaulting and whose value rises as the chance of failure increases. When these contracts are traded on an exchange that ensures that they are properly collateralized, they provide a daily assessment of the risk of a loan's default. Our idea is to use this timely information to monitor banks.

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