Economics is for Everyone!


predatory lending

savings and loan debacle

Office of Thrift Supervision

hedge funds and earned income

living and dying through cooperation

economics in America after Ronald Reagan

the best thing you can do for America is go shopping!

derivatives, churning financial instruments, Alan Greenspan, housing bubbles and FIRE!

"Our whole economy is designed to people that they want more."
- David Colander

"Any crisis generates centrifugal forces that tend to strengthen central government power. Most nations view the current financial crisis as having been created by the financial elite in New York and London in cooperation with their increasingly laissez-faire governments." - Dick K. Nanto

"When Larry Summers, Obama's chief economic advisor, piously tells us that the administration's hands are tied because we all must abide "by the rule of law," perhaps it's time to ask:
What rule and for whom?" - Tim Rutten March 18, 2009 LA Times

Without Knowledge of the Past There is No Future

Economics is defined as:

The science of household affairs, or of domestic management.

The social science that deals with the production, distribution and consumption of goods and services
as well as the theory and management of economic systems.

It is the duty of those who are in charge of the organization of society to give every individual the opportunity of acquiring the necessary talent or skill and the means of utilizing such a talent so that that individual may exercise their inherent talent in the pursuit of a livelihood.

"There's only one kind of leadership malpractice:
wasting the lives of those we lead." - Susan Cram

"Wherever politics intrudes upon economic life, political success is readily attained by saying what people like to hear rather than what is demonstrably true. Instead of safeguarding truth and honesty, the State then tends to become a major source of insincerity and mendacity."
– Hans F. Sennholz

"The Federal Reserve's attempt at a quick fix for the economy through lowered interest rates to encourage personal borrowing will put pressure on a Treasury Department that has to offer competitive worldwide interest rates to attract money used to finance the $9 trillion national debt.

Karl Marx, whose economic analyses are strikingly prescient and relevant today, demonstrated how the credit economy is one way that central banking systems attempt to stretch out and soften the boundary where the private accumulation of profit from production runs up against the waning purchasing power of the consuming public. This is exactly what we see here on both a domestic and international scale, where - ironically for a country that coerces all others into central banking systems - America is effectively bankrupt.

In a nation whose governing parties and increasingly wealthy corporate elite can't restrain themselves from devastating and costly imperialist wars overseas while at the same time impoverishing ever-growing numbers of the struggling and poor at home, there isn't going to be any good economic news for most people." - Eric Brill 01/08

"Asset-price inflation fueled by the Federal Reserve – is giving way to debt deflation. The United States and other countries have reached a limit in which scheduled interest and amortization absorb the entire economic surplus of so many individuals, corporations and government bodies that new construction, investment and employment are grinding to a halt. Families, real estate investors and corporations are obliged to use their entire disposable income to pay their creditors or face bankruptcy." - Michael Hudson 06/08

"Why is it that promising help to ordinary people is pandering
but giving aid to corporations is serious economic policy?" - Jean Lecuyer

The savings and loan debacle began the regression of the American republic into a "plutonomy" - a society in which the largest economic gains flow to an ever smaller portion of the population creating a decadent social order that poorly rewards human labor. (Could this be an explanation for why 'Americans will not work' - meager wages?)

At the end of the century this trend continued. From 1999 to 2004, the inflation adjusted income of the bottom 90% of all American households grew by 2%, compared with a 57% jump for the richest 10%.

"We must abandon the weird notion that the wealthy can only be motivated by huge sums of money but workers' behavior will not change if they are paid less than it costs to live." - Robert Lee Hotchkiss

"In times past, bankruptcy would have wiped out the bad debts. The problem with debt write-offs is that bad savings go by the boards too. But today, the very wealthy hold most of the savings, so the government doesn’t want to have them take a loss. It would rather wipe out pensioners, consumers, workers, industrial companies and foreign investors. So debts will be kept on the books and the economy will slowly be strangled by debt deflation." - Michael Hudson 06/08

Playing the Pension Funds

Here's Where State Pension Systems Are In The Most Trouble

American workers losing the most economic ground are those with high school, community college and four-year degrees. {Tuition and fees increased 439 percent from 1982 to 2007 - median family income rose 147 percent.}

Globalization, automation, outsourcing and illegal immigration have hurt technicians, mechanics, mid-level managers, engineers and software programmers with more than 700,000 middle class information industry jobs lost between 2001 and 2004.

During the 1930s American government put 3 million unemployeed workers to work building roads, bridges and dams and planted millions of trees to prevent soil erosion. The transportation networks helped cities increase industrial productivity. Rural electrification programs lifted sections of the Midwest and South out of darkness bringing television (and reduced birth rates).

In the 1950s, under the Dwight Eisenhower administration, the interstate highway system reduced travel times increasing economic efficiency. An unprecedented growth in home ownership for working and middle class families occurred as they were able to borrow against the money they had on deposit in their local savings and loan.

The capital investment in infrastructure and communities, not in securitized commercial over-the-counter (OTC) paper, created one of the most prosperous periods in American history.

"The government needs to invest in America. To receive government funding, cities should be required to use local contractors and workers. Corporations that outsource should be taxed at much higher rates than those that contribute directly to the American economy by maintaining their operations within America." - Elizabeth Eyerman

A comprehensive program to rebuild the nation's highways and bridges, upgrade its ports, construct and expand energy lifelines, build renewable energy genearting capacity, enlarge public transportation systems while renewing, reclaiming and revitalizing deteriorated mono-cultured land and industrialy stressed natural habitats in an ecologically sustainable manner could generate millions of good-paying jobs, but instead the rulers of America, American aristocracy have sunk all the money into hedge funds betting on OTC derivatives in the hopes of ever increasing share of the ever decreasing tangible wealth of a stripped Earth. (Used to be natural wholesome apple pie now it is whipped soy-product sweetened with high fructose corn syrup and flavored with yummy chemical flavorings!)

American leadership has largely abandoned policies that led to balanced prosperous economic expansion beneficial to the average working American citizen in favor of short sighted manipulation of resources gains or by betting on the future value of intangible assets.

Earth's population overall is exploding, and the best idea American aristocracy can come up with to solve the economic problem of an aging populace is to increase the population through illegal immigration?

"As the middle class continues to flee the increasingly expensive Southland, and the rich wall themselves up on hills and in towers, the city of Los Angeles grows each year more congested, degraded and balkanized. How will millions more people, most of whom are poor and undereducated, halt this decline?" - John L. Murphy

"Unchecked population growth from our nation's unofficial open-borders policy is contributing not, only to gridlock but is stressing our schools, emergency rooms, the environment and our overall quality of life. It's completely unsustainable." - Maria Fotopoulos

"Elites are less likely to be inconvenienced by illegal immigration. They are hiring illegals, not competing against them for work." - Wayne Cornelius, director of the Center for Comparative Immigration Studies, UC San Diego

"George W. Bush has said that these illegal immigration will "do the jobs that Americans won't do." I have a question. Who did these jobs before 12 million people sneaked into the country? Crops got picked, lawns got mowed, construction was done, hotels had housekeeping services, trash was hauled away, your house got cleaned. Those things all got done by somebody. This is about low wages, not "jobs Americans won't do." Please come up with a better excuse to justify these people who broke the law staying in the country." - Pat Parrish

"We are often told that ‘Americans won't do that job,' but never does a businessman or politician add the other half of that argument, namely, ‘at the meager wage that I am willing to pay.'" - Gary Peters

"The blame for our illegal immigration mess belongs squarely in the laps of power hungry politicians and greedy corporate fat cats. If it weren't for those who supposedly represent all Americans kowtowing to big business interests that, over the years, have threatened to withhold all important dollars from the politicos' campaign war chests unless they were guaranteed an endless supply of cheap labor from south of the border, we wouldn't have the catastrophic immigration situation that we have today." - Blake Kleckner

"Victor Hugo correctly stated, "There is one thing stronger than all the kings and queens, and all the armies of the Earth combined, and that is the power of an idea whose time has come."

And that idea is that no society can indefinitely allow a relentless flood of illegal immigrants to contravene its laws, violate its borders, overwhelm its infrastructure and social systems, diminish job possibilities for its indigenous uneducated and poor and degrade its way of life as is happening throughout America.

Whenever we hear smaltzy blather about 'the jobs that nobody wants' what is really at stake are 'jobs that pay less than most Americans need to support their families'." - Michael Scott

Why don't we try to fix our economic systems in question rather than simply procreate until the Earth's resources are reduced to the point at which they can no longer support human life?

Rampant materialistic consumerism must give way to a more balance view of life on Earth, in which everyone has the right to a reasonable standard of living and in which resources are conserved

"The Senate has again (June 22, 2006) voted against raising the minimum wage, which has been stuck at $5.15 an hour since 1997. This would provide a full-time employee with an annual salary of $10,712. On the other hand, congressional salaries have gone from $133,600 in 1997 to $165,200 now, an annual average raise of about $3,500. Isn't there something wrong with this picture?" - Donna Le Blanc

The Center for Housing Policy study found that from 1996 to 2006 all major types of homeowner-related expenses rose faster than incomes. The National Housing Conference, a research affiliate, reported mortgage payments rose 46%, utilities 43%, property taxes 66% and homeowner insurance 83%, while homeowner incomes increased only 36.3%. During the same period rents rose 51% while renters' incomes rose only 31.4%.

When the need for justice and social equality is universally recognized then the reality that "all must prosper for one to prosper" will have been recognized.

Civilization is created by a implied social contract between the participants that requires all participants to be treated fairly and receive sustenance. The withholding of sustenance from those on the bottom tier of the social pyramid breaches the social contract. When the social contract of civilization is abnegated by those in the upper echelon of the pyramid the collapse of the civilization bound by the implied social contract inevitably occurs as those on the bottom tier find the social contract to be null and void.

The Trouble with Civilization
Ancient cities reveal the vulnerabilities of modern societies

"The concept of "us" and "them" is no longer relevant, as our neighbors' interests are ours as well. Caring for our neighbors interests is essentially caring for our own future." - Tenzin Gyatso, the Dalai Lama

"Poverty is the root of all evil." - Diane Dixon

boy are you stupid

savings and loans debacle

"While my experience as Assistant Secretary cleaning up significant mortgage fraud that lost the government billions during the 1980s confirmed that HUD’s financial reputation was deserved, leading the FHA provided invaluable insight into how government management of the economy one neighborhood at a time really harms communities." - Catherine Austin Fitts

{One example of HUD's failure is the Dollar Program. HUD would sell a foreclosed home in it's possession to the local city government for a dollar. Local city government was supposed to sell the home to a low income family but typically sold it to a speculator who later sold it at a substantial profit.

In the mid 1990's the Hamilton Securities Group designed software titled Community Wizard that mapped the financial flows of HUD government money to specific communities. The Hamilton Securities Group, a HUD contractor, was attempting to create value out of repossessed HUD properties. The idea was to return any excess market value to the community in which the repossession took place. Instead of selling repossessed properties at below market value where investment bankers could pick them up for pennies on the dollar and resell them at substantial profits thanks to HUD regulations the idea was to allow people in the community to purchase the distressed property creating equity value for the new community based property owners. Once the flow of government funds became transparent it quickly became apparent that departments of the federal government were complicit in the laundering of massive quantities of money from criminal activities. During the criminal investigation of the Hamilton Securities Group the departments of the federal government acted in a normative manner - normal for a fascist police state.

" We were later to discover that the Department of Justice was using CACI International Inc as a litigation support contractor on our case. CACI was the leading supplier of Geographic Information Systems software and services to the U.S. government who later was in the headlines as a result of their connections to the prison at Abu Grahbi in Iraq. This begs the question whether DOJ was paying our competitor to help themselves to our proprietary software and databases. Some time after our entire digital infrastructure was taken over, DOJ came out with a geographic information systems mapping tool to help support increased community policing and enforcement product. You had to wonder if this was the "Sheriff of Nottingham's" answer to Community Wizard - rather than using software to allow citizens to understand what government was doing, why not use software to provide increased surveillance of citizens by government.

While in possession of our offices, the HUD OIG investigators took empty shredding bins, filled them up with trash and then - from a separate floor - found and added corporate accounting files and then staged photo-taking by the HUD IG General Counsel, Judith Hetherton, who then sent us a letter alleging obstruction of justice as evidenced by our "throwing out" corporate accounting records. We were saved by a property manager who witnessed this charade and decided to help us out after he saw the intentional - and very disgusting - trashing of the The Hamilton Securities Group offices and was touched by our efforts to clean it up. The property manager had come to the U.S. from Latin America - presumably to find freedom from lawless government. One of our attorneys went into the office when the federal investigators were there and came out shaking. He said to me, "My parents left Germany to get away from these people. Now they are here. Where do I go?"

When we were next allowed in our offices one evening in mid-March, we took the main server and brought it back to my home. The next day, a HUD auditor was stunned to see it gone - he assumed that everything would be wiped clean and sold. He asked where the server was and one of my partners said, "we took it last night." At which point the HUD auditor said, "You can't do that. My instructions are you are not allowed to have any of the knowledge." He then could not come up with a rational reason or lawful basis as to why that was so and why The Hamilton Securities Group was to be denied access to its own property.

The fastest way to connect the dots would have been for me and my teammates to have looked at the maps of high HUD single family defaults contiguous to areas of significant narcotics trafficking that we had posted on the Internet and then use the Hamilton Securities software tools and databases to dig deeply into government financial flows in the same areas, including patterns of potential mortgage and mortgage securities fraud. The destruction, suppression and theft of our software tools, databases and computer system was arranged by a series of events between late 1997 and early 1998 that was orchestrated throughout government." - Catherine Austin Fitts

CACI International Inc, motto Ever Vigilant, provides services and solutions to federal clients "for national security, improve communications and collaboration, secure the integrity of information systems and networks, enhance data collection and analysis, and increase efficiency and mission effectiveness." According to the CACI paper Assymetric Threat Global Snapshot, November 2009 the greatest future terrorist threats will emanate from within from disgruntled radicalized Americans who are sympathetic with Islamic jihad. "There is consensus that asymmetric threats, including acts of terrorism, will be a prominent feature of the threat environment." -, National Security Strategy

Herb Karr and Harry Max Markowitz* founded California Analysis Center Inc., precursor to CACI International Inc., in Santa Monica, California. Harry Max Markowitz, a University of Chicago graduate, received the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.}

By the late 1970's, with interest rates raised to stratospheric heights by Paul Adolph Volker* in an attempt to reign in inflation, most savings and loans fixed rate assets rate of return were considerably below the prevailing rate of Federal Reserve funds. In other words the loans were upside down. The savings and loans were paying, let's say 12 percent, for loan capital but their return on previous released capital was only 6 percent.

In 1980 deregulation legislation to address the problem created by a portfolio full of long-term, low fixed-rate assets, so the federal government sought to offer savings and loans additional investment opportunities and adjustable rate mortgages were allowed. No longer was the savings and loans looked upon as a neighborhood financial asset - now Wall Street saw the savings and loan "cash cow" as a valuable asset to be "levered" accordingly. The Wall Street financial institutions that controlled the Federal Reserve began their assault on the wealth of the American middle class.

credit card debt

The deregulation legislation known as the Gain-St Germain Depository Institutions Act of 1982 expanded acceptable savings and loans investments by permitting savings and loans to make short-term consumer loans, issue credit cards, and make commercial real estate loans, among other things. This was the Federal Reserve's, following orders of the international monetary cartel, suggested method of stoking the fires of American (and international) commerce after dumping water on the entire economy by increasing the prime loan rate to 21.5% on December 12, 1980.

Financial egineers and experts claimed that broader investment opportunities would allow savings and loans to better diversify their portfolios enabling them to increase their short-term earnings and financial stabilty.

"A major increase in US monetary pumping began in the early 80's with the advent of financial deregulation, which, for all its merits in permitting financial entrepreneurship, also removed various restrictions on banks' lending "out of thin air."" - Frank Shostak

Orginally savings and loans executives set out with the intention of restoring their institutions to financial health.

A fundamental reality faced the management of newly insolvent financial institutions. Beginning from a situation where liabilities exceed assets, managers cannot overcome financial problems by pursuing a conservative investment course. In the absence of a capital infusion to boost assets past liabilities (and return the institution to solvency), managers must substantially increase portfolio risk if they are serious about regaining financial health. (Short sale contracts and futures options for sale! Replayed in 2008 with OTC derivatives.)

In the 1980 and 1982 deregulation legislation, the federal government provided the means for increased risk taking while ignoring the need for capital investments (on purpose!). The legislation lowered capital requirements and revised the accounting rules so that the savings and loans reported fractional reserve equity was artificially boosted.

Savings and loans executives began to look for new lending and investment opportunities that promised high rates of returns. (Fast forward 2004 - ARM's, option ARM's, buydown, flexible, interest-only, 50 year, reverse, negative amortization leading to - mortgage securitization, credit default swaps, etc.)

If all went well, the institution would regain its financial health, and savings and loans owners had nothing left to lose if the new investments soured.

When investments soured, savings and loans executives responded by raising rates paid on certificates of deposits - CDs - to garner more deposits and to make new investments which promised still higher returns. The industry's interest rate problem, stemming from the syndicate of the soulless' agent Paul Adolph Volker's attempt to reign in inflation, thus became a credit quality problem. (Paul Adolph Volker played a central role in implementing the first stage of financial deregulation, which was conducive to mass bankruptcies, mergers and acquisitions, leading up to the 1987 financial crisis.)

The rapid expansion experienced by savings and loans bent on outgrowing their problems would not have been possible when computer technology was limited, deposit interest rates were strictly controlled and deposit markets were local markets.

In the past depositors had no reason to send funds to savings and loans halfway across America. Deregulation of deposit interest rates coupled with rapidly advancing computer technology changed that by making possible a nationwide market in deposits - the overnight transfer. Expansive federal deposit insurance (FDIC) put insolvent savings and loans in a position to abuse the new market. (The FDIC, after nearly becoming insolvent, asked to be bailed out by the banks in 2009.)

Weak institutions needed continued infusions of funds to pay operating expenses and to support increased investments.

Federally insured depositors were largely unconcerned about the health of the institutions in which they placed their money - federally insured deposit, no worrys.

Undercapitalized savings and loans assured themselves a continuous inflow of funds by simply offering to pay slightly higher interest rates than their competitors.

During the 1980s funds flowed from stronger banks and savings and loans to the weakest depositories.

Federal deposit insurance short-circuited the market's natural risk-braking mechanisms and for many savings and loans during the 1980s, the absence of regulatory supervision was particularly acute. (For depositors placing $100,000 or less in any single institution, all federally insured banks and savings and loans represent the same risk, and rational investors seek to maximize their returns.)

Healthy savings and loans were asked to pay increasing deposit insurance premiums to protect depositors in failed institutions and consequently gained little or no cost advantage from the fact that they were well capitalized. To retain their customers, more conservative savings and loans executives often had to match the interest rates set by weak institutions. (This eventually lead to the reduction in capital reserves to all time lows at the beginning of the 21st century and to leverage rates of up to 33 times fractional reserves.)

When federal regulators did get around to dealing with insolvent institutions they would remove bad assets and inject capital before selling the savings and loans to new investors. (See Stanford L. Kurland)

Savings and loans executives who had maneuvered through the worst pitfalls of the period then found themselves competing against counterparts revitalized by taxpayer funds.

In the late 1970s and early 1980s congressmen's long-time friends and acquaintances - acknowledged pillars of the community - approached them to seek relief for the industry. (Think Charles Keating!)

The widespread tendency of political decision makers to focus on the short term contributed to their willingness to ignore the growing crisis.

{Instant replay: "Our financial catastrophe, like Bernard Madoff's* pyramid scheme, required all sorts of important, plugged-in people to sacrifice our collective long-term interests for short-term gain. The tyranny of the short term has extended itself with frightening ease into the entities that were meant to, one way or another, discipline Wall Street, and force it to consider its enlightened self-interest." - Michael Lewis & David Einhorn 01/09/08

"Bernie was known for his generous philanthropy, especially to Zionist, Jewish and Israeli causes. But Madoff was no Robin Hood, his philanthropic and charity contributions facilitated access to the rich and wealthy who served on the boards of the recipient institutions and proved that he was ‘one of them’ a kind of super-rich ‘intimate’ of the same elite class. The shock, awe and heart attacks that followed Madoff’s confession that he was ‘running a Ponzi scheme’ drew as much anger for the money lost and the fall from the moneyed class as for the embarrassment of knowing that the world’s biggest exploiters and smartest swindlers on Wall Street, were completely ‘taken’ by one of their own.

Madoff’s swindle and fraudulent behavior is not the result of personal moral failure. It is the product of a systemic imperative and the economic culture, which informs the highest circles of our class structure. The paper economy, hedge funds and all the ‘sophisticated financial instruments’ are all ‘Ponzi schemes’ – they are not based on producing and selling goods and services. They are financial bets on future financial paper growth based on securing future buyers to pay off earlier cash ins." - James Petras}

It is ironic that Ronald Reagan's administration, rhetorically dedicated to free markets, could have condoned the policies that short-circuited market discipline where savings and loans were concerned.

"Imagine learning to play basketball, except in consecutive decades they changed the surface from hardwood to AstroTurf, replaced the basket with a painted target and then had dedicated five-man defensive and offensive specialist squads. Why learn skills when the rules keep changing? Yes, there are basics, but financial literacy doesn't make sense when you have no sense of control over the future of your finances. I think the wrong people are being blamed for the problem. After two horrific housing debacles (in the '80s and today), it's time the brilliant financial minds admitted that deregulating the savings and loan industry was a mistake. Deregulation destroyed a haven for middle class assets, in which we essentially funded our futures with our mortgages and taxes. It created predictability for us. Interest rate differentials were minimized in that controlled market, and loan decisions were made on the basis of well-established track records." - Brian Balek 01/08

When the cheap money of the post September 11, 2001 economy dried up a significant percentage of sub-prime mortgages went into default. As interest rates rose those who had purchased at the peak in the run up of housing prices or those who had overextended themselves hoping for a continuing run up in the price of housing found they could not refinance as there homes had less value at higher interest rates.

Mortgages with lower interest rates have lower payments. When interest rates go up mortgage payments increase proportionally. If the increase in income had kept pace with the increase in mortgage costs then there would not be a problem.

Unfortunately that has not been the case!

It's the Interest, Stupid! Why Bankers Rule the World

The best thing you can do for America is go shopping!

predatory lending
& the office of the comptroller of the currency

"Tight residential real estate markets and low mortgage rates fueled a five-year property boom as the number of U.S. households paying more than half their incomes for housing jumped from 13.8 million in 2001 to 17.9 million in 2007." - Brian Louis

From 2004 to 2007, as subprime lending grew from a small corner of the mortgage market lending standards fell disgracefully, and dubious transactions became common. In October 2007 the National Association of Realtors predicted that housing prices would fall 1.5%. By January 2009 prices had fallen 29 % in 20 major cities from their peak in the summer of 2006.

"Sometime after 2003, as federal regulation folded like a cheap suitcase, the business press institutionally lost whatever taste it had for head-on investigations of core practices of powerful institutions. We know that the lending industry from 2004 through 2006 was not just pushing it. It had become unhinged - institutionally corrupt, rotten, like a fish, from the head. Wall Street demand for mortgages became so frenzied that female wholesale buyers were "expected" to trade sex for them with male retail brokers. Post-crash reporting has given short shrift to the breathtaking corruption that overran the mortgage business - document tampering, forgery, verbal and written misrepresentations, changing of terms at closing, nondisclosure of fees, rates, and penalties, and a boiler-room culture." - Dean Starkman

"Madison Avenue helped drive the expansion of Americans use of credit cards. There was a lot of money to be made by collecting fees for debt creation and debt service, and the largest banks wanted in on the action. Clever marketing campaigns led the public to believe that it could access luxury items and vacations that were once thought to be out of reach, and fueled a growing desire among many Americans to live life like the wealthy.

The 1980s was the age of a paradigm shift in American politics. The U.S. transformed itself into a country where the profit motive supplanted the public good. The rich were taking it all for themselves and letting the good times roll and everyone who wasn't rich wanted to be or act as if they were rich. Commercial advertisements told viewers that their credit card was accepted "everywhere you want to be," became omnipresent as did commercials set to popular music such as the rock band Queen's song, "I Want it All," promising that if you "want it all" and "want it now," you could in fact get what you want merely by swiping your credit card.

Commercial advertisements appeal to the Id that Sigmund Freud defined in his psychoanalytic theory. The Id acts according to what Freud termed the pleasure principle, seeking immediate gratification by satisfying psychological needs without accounting for reason or reality.

Advertisers suggested people could purchase the 10-day Caribbean cruise or expensive diamond ring that was once restricted to those with higher income levels creating the illusion that debt was equal to wealth.

What mattered was how high their credit line was not how much debt they had. As a result, credit cards were soon at the heart of a new materialist culture that had people of widely varying income levels and ages going into debt to fuel their desire for more stuff. Debt drove a lucrative credit card industry which became even more lucrative for credit card issuers after it received favorable court rulings in 1978 and 1996. " - Paul C. Wright

"A few years ago, I discovered that my domicile was more than a household - it was, and still is, a piggy bank in disguise. This happened when the mortgage industry began bombarding me with pitches encouraging me to crack open the bank. I'll admit I was naive enough to be taken in by this new financial scheme and used the ready cash to improve the property. Once hooked, I decided to purchase a better car and create an investment account. Next, I tapped into it to bail out a struggling offspring and shore up a retirement portfolio. All this said, I now have a humongous mortgage and barely enough income to make the nut on a monthly basis. A house is really a domicile; a place to relax and embrace the family in a sheltered environment. It ought not be a ready source of cash, and it never ought to be a speculative tool subject to high-risk ploys. The time has come to cover the bets; it's really tragic to see so many of us unable to do so." - Earl H. Hygh 01/08

"Predatory lenders deserve a lot of blame for foreclosures and bankruptcies. If real wages kept up with rising productivity and inflation over the years, more working Americans could meet their mortgage payments. If tax policy had not helped shift wealth distribution to the richest, more would be ensconced in their own living rooms. If labor laws kept pace with the flourishing corporate world, maybe a bigger share of those skyrocketing profits would keep the sheriff from the door. The fact that the American dream of homeownership is now being exported abroad or into the pockets of CEOs is not simply the result of naive purchasers and their unscrupulous lenders. It's also the result of the way the economy has been working or, more accurately, not been working. How odd to think that the hopes of everyone owning a piece of property is now as utopian as the collectivist dreams of communism." - Doug Doepke

"There are a lot of empty places in Flint, as well as Detroit and other cities, as American ideologues pushed the corporatists plank of Free Trade and destroyed the middle class that used to live there. This serves as the prime example of why Russia took the way of protectionism in the late 1990s and 2000s and grew its middle class, tripling the average income." - Mat Rodina, Pravda

"Several years ago, state attorneys general and others involved in consumer protection began to notice a marked increase in a range of predatory lending practices by mortgage lenders. Even though predatory lending was becoming a national problem, the Bush administration looked the other way and did nothing to protect American homeowners. In fact, the government chose instead to align itself with the banks that were victimizing consumers. . . . Several state legislatures, including New York's, enacted laws aimed at curbing such practices. . . .Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye to.

Let me explain: The administration accomplished this feat through an obscure federal [Treasury] agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers. In 2003 the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules. But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation." - Elliot Spitzer, Washington Post, February 13, 2008

"Between 1999 and 2004, more than half the states, both red (North Carolina, 1999; South Carolina, 2004) and blue (California, 2001; New York, 2003), passed anti-predatory-lending laws. Georgia touched off a firestorm in 2002 when it sought to hold Wall Street bundlers and holders of mortgage-backed securities responsible for mortgages that were fraudulently conceived. Beginning in 2004 Michigan and forty-nine other states battled the U.S. Comptroller of the Currency and the banking industry (and The Wall Street Journal’s editorial page) for the right to examine the books of Wachovia’s mortgage unit, a fight the Supreme Court decided in Wachovia’s favor in 2007 - about a year before it cratered." - Dean Starkman

{According to the New York Times, "on February 13 [the day Spitzer's Op Ed went up on the Washington Post website] federal agents of the Office of the Comptroller of the Currency staked out his hotel in Washington. Elliot Spitizer's dalliance with a prostitute became headline news on March 10.

elliot spitzer

Mainstream news never questioned the actions of the Office of the Comptroller of the Currency.

Elliot Spitzer's desire to curtail predatory lending was not in the interests of the syndicate of the soulless. Elliot Spitzer was forced to resign his governorship because he screwed a girl from New Jersey who was introduced by "friends".

Shortly thereafter, according to Greg Palast, the Federal Reserve, for the first time in its history, loaned a selected coterie of banks one-fifth of a trillion dollars to guarantee these banks mortgage-backed junk bonds based on the predatory loans made.}

"One is struck by the similarities with the Savings and Loan scandal which was allowed to continue through the Reagan 1980s, long after it became apparent that deliberate bankruptcy was being used by unscrupulous profiteers to amass illegal fortunes at what was ultimately public expense. The long drawn-out housing bubble of the current Bush decade, and particularly the derivative bubble that was floated upon it, allowed the Bush administration to help offset the trillion-dollar-plus cost of its Iraq misadventure." - Peter Dale Scott

On January 22, 2009 the federal government reported that new-home construction plunged to an all-time low in December, capping the worst year for builders on records dating back to 1959.

According to an estimate by the National Association of Home Builders, at least 20,000 builders - mostly smaller builders and about a fifth of the total nationwide - went out of business in 2007 and 2008. Ivy Zelman estimates that losses on land and construction loans could eventually reach $165 billion. At the 2008 National Association of Home Builders convention in Washington Ivy Zelman stated that the perhaps the only way to clear the backlog of foreclosed homes was to "burn them down."

"The reality is, we're seeing conditions in home construction and home finance that are the worst since the Depression." - Steve Fritts, associate director of risk management policy at the Federal Deposit Insurance Corporation 01/09

"In California, the median existing single-family home price dropped 37 percent in April to $256,700 from a year earlier, according to the state Association of Realtors." - Brian Louis, June 11, 2009

A landmark ruling in a recent Kansas Supreme Court case may have given millions of distressed homeowners the legal wedge they need to avoid foreclosure. In Landmark National Bank v. Kesler, 2009 Kan. LEXIS 834, the Kansas Supreme Court held that a nominee company called Mortgage Electronic Registration Systems (MERS) has no right or standing to bring an action for foreclosure. Over 60 million mortgages are currently reported to be held by MERS.

"The development of "electronic" mortgages managed by MERS went hand in hand with the "securitization" of mortgage loans chopping them into pieces and selling them off to investors. In the heyday of mortgage securitizations, before investors got wise to their risks, lenders would slice up loans, bundle them into "financial products" called "collateralized debt obligations" (CDOs), ostensibly insure them against default by wrapping them in derivatives called "credit default swaps," and sell them to pension funds, municipal funds, foreign investment funds, and so forth. There were many secured parties, and the pieces kept changing hands; but MERS supposedly kept track of all these changes electronically. MERS would register and record mortgage loans in its name, and it would bring foreclosure actions in its name. MERS not only facilitated the rapid turnover of mortgages and mortgage-backed securities, but it has served as a sort of "corporate shield" that protects investors from claims by borrowers concerning predatory lending practices." - Ellen Brown

"MERS has reduced transparency in the mortgage market in two ways. First, consumers and their counsel can no longer turn to the public recording systems to learn the identity of the holder of their note. Today, county recording systems are increasingly full of one meaningless name, MERS, repeated over and over again. But more importantly, all across the country, MERS now brings foreclosure proceedings in its own name even though it is not the financial party in interest. This is problematic because MERS is not prepared for or equipped to provide responses to consumers' discovery requests with respect to predatory lending claims and defenses. In effect, the securitization conduit attempts to use a faceless and seemingly innocent proxy with no knowledge of predatory origination or servicing behavior to do the dirty work of seizing the consumer's home. . . . So imposing is this opaque corporate wall, that in a "vast" number of foreclosures, MERS actually succeeds in foreclosing without producing the original note "the legal sine qua non of foreclosure" much less documentation that could support predatory lending defenses." - Timothy McCandless

"By statute, assignment of the mortgage carries with it the assignment of the debt. . . . Indeed, in the event that a mortgage loan somehow separates interests of the note and the deed of trust, with the deed of trust lying with some independent entity, the mortgage may become unenforceable. The practical effect of splitting the deed of trust from the promissory note is to make it impossible for the holder of the note to foreclose, unless the holder of the deed of trust is the agent of the holder of the note. Without the agency relationship, the person holding only the note lacks the power to foreclose in the event of default. The person holding only the deed of trust will never experience default because only the holder of the note is entitled to payment of the underlying obligation. The mortgage loan becomes ineffectual when the note holder did not also hold the deed of trust." - Kansas Supreme Court

"MERS as straw man lacks standing to foreclose, but so does original lender, although it was a signatory to the deal. The lender lacks standing because title had to pass to the secured parties for the arrangement to legally qualify as a "security." The lender has been paid in full and has no further legal interest in the claim. Only the securities holders have skin in the game; but they have no standing to foreclose, because they were not signatories to the original agreement. They cannot satisfy the basic requirement of contract law that a plaintiff suing on a written contract must produce a signed contract proving he is entitled to relief." - Ellen Brown


Nearly one in 10 homeowners with mortgages, about five million households, was at least one payment behind in the third quarter the Mortgage Bankers Association said in its November 2009 survey. The overall third-quarter delinquency rate is the highest since the association began keeping records in 1972. It is up from about one in 14 mortgage holders in the third quarter of 2008. The mortgage bankers expect foreclosures to peak in 2011.

"I've been pretty bearish on this big ugly pig stuck in the python and this cements my view that home prices are going back down," said the housing consultant Ivy Zelman.

The Soma Grand, a new 246-unit building in downtown San Francisco where one-bedrooms cost in excess of $500,000, received F.H.A. certification early in the summer of 2009 . A half-dozen buyers since then used F.H.A. insurance.

On November 12, 2009 FHA said that its cash reserves had dwindled significantly since 2008 as more borrowers defaulted on their mortgages. "FHA's capital reserve ratio, which is determined through findings from the independent actuarial study, measures reserves held in excess of those needed to cover projected losses over the next 30 years. The review projects the capital reserve ratio to be 0.53 percent of total insurance in force this year, below the two-percent statutory threshold." - Melanie Roussell, HUD Secretary, FHA COMMISSIONER REPORT ON FHA'S FINANCES

Office of Thrift Supervision

"The Office of Thrift Supervision championed the thrift industry's growth during the housing boom and called programs that extended mortgages to previously unqualified borrowers as "innovations."
- Binyamin Appelbaum and Ellen Nakashima

"Our goal is to allow thrifts to operate with a wide breadth of freedom from regulatory intrusion."
- James Gilleran

This photo from 2003 shows two regulators: John Reich (then Vice Chairman of the FDIC and later at the OTS) and James Gilleran of the Office of Thrift Supervision (with the chainsaw) and representatives of three banker trade associations: James McLaughlin

James Gilleran of the Office of Thrift Supervision (with the chainsaw) and John Reich (then Vice Chairman of the FDIC and later at the OTS) and representatives of three banker trade associations: James McLaughlin of the American Bankers Association, Harry Doherty of America's Community Bankers, and Ken Guenther of the Independent Community Bankers of America.

James Gilleran, an impassioned advocate of deregulation, cut a quarter of the agency's 1,200 employees between 2001 and 2004, even though the value of loans and other assets of the firms regulated by the Office of Thrift Supervision doubled over the same period.

The Office of Thrift Supervision was responsible for regulating Superior (a warning of things to come), Countrywide Financial, IndyMac Bancorp, Washington Mutual, and Downey Savings and Loan Association among others.

"The whole Superior episode should have served as a warning." - Ellen Seidman

Scott M. Polakoff claimed the Office of Thrift Supervision closely monitored allowances for loan losses and considered them sufficient.

"Are banks going to fail when events occur well beyond the confines of reasonable expectation or modeling? The answer is yes." - Scott M. Polakoff

The Office of Thrift Supervision's "reasonable expectations" and "modeling" was based on faulty assumptions.

The reasonable expectations that Scott M. Polakoff spoke of were assumptions that even though incomes were stagnant and individuals could barely afford marked down loan payments those same individuals were going to earn double or triple their original income within the next 3 to 5 years when loans reset and mortgage payments were doubled or tripled.

Countrywide Financial said in an investor presentation it would have refused 89 percent of its 2006 borrowers and 83 percent of its 2005 borrowers if it had been required to assure the fact that borrowers could continue to make payments at loan terms.
(Countrywide Financial is now known as Bank of America Home Loans.)

{Stanford L. Kurland, Countrywide's former president and 27 year veteran, acknowledges pushing Countrywide into the type of higher-risk loans - loans that came with low "teaser" interest rates. Stanford L. Kurland, a peon in the syndicate of the soulless, was at the center of that culture shift at Countrywide which started in 2003.

Now through a sweetheart deal with federal banking officials Stanford L. Kurland is able to purchase deliquent mortgages - in January PennyMac purchased $558 million of mortgages that the Federal Deposit Insurance Corp. acquired last year after First National Bank of Nevada failed - for his new company PennyMac for pennies on the dollar (thus the name PennyMac).

Stanford L. Kurland then renegotiates the mortgage with the mortgagee writing down the value of the mortgage and reducing the interest rate. According to Eric Lipton PennyMac stands to make a profit of at least 50 percent on mortgage defaults. Others suggest PennyMac’s investments may return 15 percent to 25 percent a year.

"Kurland is seeking to capitalize on a situation that was a product of his own creation. It is tragic and ironic. But then again, greed is a growth industry." - Blair A. Nicholas

Stanford L. Kurland pushed loans to people who could not afford the reset mortgage payment and then, once the institutions that held those loans could not meet the newly imposed capital requirements of the Bank of International Settlements and were forced into bankruptcy, purchases the loans for pennies on the dollar from the federal government reciever. Then Stanford L. Kurland renegotiates the loans reaping a second profit from those original high-risk loans - the losses on the original high-risk loan are then paid by the lender with no resort - the taxpayer. Bankers, including the peon Stanford L. Kurland, saw in advance a way to profit on the predatory lending debacle twice!}

Washington Mutual stated in a December 2006 securities filing that it was continuing to qualify borrowers based on their ability to afford a teaser interest rate.

Darryl W. Dochow, the Office of Thrift Supervision's official in charge of regulating Washington Mutual, IndyMac, Countrywide Financial and Downey Savings and Loan Association, played a key role in the collapse of Charles Keating's Lincoln Savings and Loan by delaying and impeding proper oversight of that thrift's operations.

Darryl W. Dochow, Ellen Seidman, James Gilleran and Scott M. Polakoff knew what was happening and let it happen. Washington Mutual paid 13 percent of the Office of Thrift Supervision's 's budget in the 2007-2008 fiscal year while Countrywide provided 5 percent.

"Americans aren't financially illiterate. Americans are willing to work, budget, scrimp and save to achieve the American dream. The trouble is that this American dream eludes most but the upper class. Three decades ago, a single income could purchase a house and pay taxes, utilities, gas, insurance, etc. That was a time when you could buy a new home for about $20,000. Today, no single-income earner can afford to buy a house even at the "bargain" price of $400,000. How does someone purchase a house or even keep up with rent and modern living expenses earning $30,000 a year? Today, debt - not hard work and saving - makes the American dream possible. Instead of creating an Office of Financial Education or an Advisory Council on Financial Literacy (sounds Orwellian), our government should instead investigate why home prices, gas prices, food prices, insurance prices and healthcare prices have skyrocketed over the years while salaries have remained relatively stagnant." - Regina Powers 01/08

"Why anyone would be surprised by the growing number of foreclosures is beyond me. Years of unchecked, artificial inflation of housing prices made homes unaffordable to average Californians or drove them to suspect financing options. This is less a reflection of a changing economic climate and more an end result of a period of unbridled greed that showed no concern over whether home buyers could really carry the debt incurred." - David D. Manos II

"Entranced by laissez faire-y tales regulators ignored warnings and let many of the worst subprime mortgages originated outside the banking system, beyond the reach of any federal regulator. For this litany of errors, many people in authority owe millions of Americans an apology." - Alan S. Blinder

Office of Comptroller of the Currency and the Office of Thrift Supervision reported on April 3, 2009 that loan modifications that reduced payments by at least 10% seemed to keep mortgagees from defaulting. The same report also noted that at least half of the loan modifications resulted in no reduction from the original payment amount due to penalties and back interest.

rethink economics

The Network of Global Corporate Control

Who Runs the World ? – Network Analysis
Reveals 'Super Entity' of Global Corporate Control

Revealed – the capitalist network that runs the world

Financial Core of the Transnational Corporate Class

The Global 1%: Exposing the Transnational Ruling Class

How the Billionaires’ Shadow Government Works

Meet The Secretive Group That Runs The World

Global Systemic Economic Crisis 2015:
The Tenets of the American Empire vs. BRICS and Euro-Russian Trade

economics in America after Ronald Reagan

"Economic history is a long record of government policies that failed
because they were designed with a bold disregard for the laws of economics."
– Ludwig von Mises

"The advantages of a college degree are being erased. The same thing that happened to non college educated employees during the last recession is now happening to college educated employees." - Marcus Courtenay

"American aristocracy long ago sold out our nation and its people to the international banking cartel of which the Rockefeller and Morgan interests have been the chief representatives for over a century. Most of the growth since Ronald Reagan was elected president in 1980 has been only on paper through financial bubbles." - Richard C. Cook

abolished Glass-Stegall

Larry Summers and the Secret "End-Game" Memo

After the stock market crash of 1929, Congress passed a series of laws designed to restrict the ability of Wall Street to manipulate markets through the banking industry.

The Glass-Steagall Act of 1933 separated commercial banks,
which accepted deposits and issued loans, from investment banks, which underwrote stocks and bonds.

This was the governing principle for more than half a century.

Then along came Alan Greenspan*.

A known role of the Federal Reserve Board is to set monetary policy.

A less publicized part of the job is to regulate America's banks.

alan greenspan
"Mr. Chairman, we have in this country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve banks. The Federal Reserve Board has cheated the government of the United States and the people of the United States out of enough money to pay the national debt.

The depredations and the iniquities of the Federal Reserve Board and the Federal Reserve banks acting together have cost this country enough money to pay the national debt several times over.

This evil institution has impoverished and ruined the people of the United States; has bankrupted itself, and has practically bankrupted our Government. It has done this through the maladministration of that law by which the Federal Reserve Board was created, and through the corrupt practices of the moneyed vultures who control it.

Some people think the Federal Reserve central banks are United States Government institutions. They are not government institutions. They are private credit monopolies, if not - will the controllers please step forward - those who prey upon the people of the United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lenders.

In that dark crew of financial pirates there are those who would cut a man's throat to get a dollar out of his pocket; there are those who send money into States to buy votes to control our legislation; and there are those who maintain an international propaganda for the purpose of deceiving us and of wheedling us into the granting of new concessions which will permit them to cover up their past misdeeds and set again in motion their gigantic train of crime.

Those 12 private credit monopolies were deceitfully and disloyally foisted upon this country by bankers who came here from Europe and who repaid us for our hospitality by undermining our American institutions." - Louis T. McFadden chairman of the House Banking Committee Congressional Record, House pages 1295 and 1296, June 10, 1932

Congress passed the Glass-Steagall Act/Banking Act
and Franklin Delano Roosevelt signed it into law in 1933.

The movement to use the Federal Reserve Board to kill Glass-Steagall began in 1986 when the Federal Reserve Board reinterpreted the existing law to allow commercial banks to derive a minuscule 5% of their revenues from investment banking activities.

In 1989, Alan Greenspan bumped it up to 10%.

In 1996, Alan Greenspan basically obliterated Glass-Steagall when he upped the limit to 25%.

Alan Greenspan: The Federal Reserve Is Above The Law

The Federal Reserve Explained In 7 Minutes

The Federal Reserve as an Instrument of War

Priceless: How The Federal Reserve Bought The Economics Profession

How One Woman Tried—and Failed—to Stop the Fed From Driving the US Into Recession

“Dark Alliance” 2.0: The Federal Reserve, Wall Street and the Laundering of Drug Money

How Goldman Controls The New York Fed: 47.5 Hours of Secret Recordings and a Culture Clash

Inside the New York Fed: Secret Recordings and a Culture Clash

We can't grow ourselves out of debt, no matter what the Federal Reserve does


When Citicorp and Travelers Group merged in 1998, forming the behemoth Citigroup.

In essence Glass-Steagall was dead.

"What we are seeing is the creation of a highly concentrated financial oligarchy – precisely the power that the Glass-Steagall Act was designed to prevent. A combination of deregulation and “moral hazard” bailouts – for the top of the economic pyramid, not the bottom – will polarize the economy all the more." - Michael Hudson

{Travelers, at the time of merger, was a diverse group of financial concerns that had been brought together under CEO Sanford Weill. Its roots came from Commercial Credit, a subsidiary of Control Data Systems that Sanford Weill took private in November. Two years later, Sanford Weill mastered the buyout of Primerica - a conglomerate that had already bought life insurer A L Williams as well as stock broker Smith Barney. Travelers then acquired Shearson Lehman - which was headed by Sanford Weill until 1985 and merged it with Smith Barney. In November 1997, Travelers purchased Salomon Brothers in a $9 billion deal. Sanford Weill, owned almost 17 million Citigroup shares as of April 2006. (Lazard Freres- France's biggest investment bank- is owned by the Lazard and David-Weill families - old Genoese banking scions.)

In the 4th quarter of 2007 Citigroup posted a $10 billion loss. In 2007 21,200 Citigroup employees were laid off. Citigroup's single largest shareholder became Abu Dhabi Investment Authority, the investment arm of Abu Dhabi government, with a $7.5 billion injection of capital in late 2007 in exchange for a 4.9 percent stake which pays a $1.7 billion a year dividend. This capital injection helped cover the $10 billion lose in the subprime mortgage market. The second largest Citigroup shareholder, with a 3.6 percent stake, is now Kingdom Holding Company owned by Prince Al-Waleed bin Talal of Saudi Arabia. $6.88 billion of prefered stock was sold to an investment fund controlled by the government of Singapore.

(In 2005 16 United States Senators and 30 United States Represenatives owned stock in Citigroup. Did they recuse themselves from voting on the bailout?)

"The government injected an additional $20 billion into Citigroup, on top of the $25 billion it invested a few weeks ago. It also said that it would cover 90 percent of the losses on those $306 billion in securities after Citigroup suffers the first $29 billion of losses. Citigroup, like many others, had sought to insure itself against losses with a variety of transactions, including the purchase of insurance, only to learn that the losses were overwhelming those who had promised to pay. Insurance on the assets was issued both by the bond insurers and by others that wrote what were known as credit default swaps, which amounted to insurance but were not regulated in the same way. Those who wrote large amounts of such insurance are now in trouble, either negotiating to pay claims for less than promised or, in the case of the American International Group, still in business only because of a government bailout. The AIG officials responsible for writing the swaps told investors they would never suffer any losses." - Floyd Norris, November 24, 2008

"Credit default swaps, which are derivatives, are an unregulated type of insurance in which one side bets that a company will default and the other side, or counterparty, gambles that the firm won’t fail." - David Evans and Caroline Salas}

In 1999, the Gramm-Leach-Bliley Act, officially repealing the Glass-Steagall Act of 1933, was signed into law by William Jefferson Clinton. The merger of commercial and investment banking once again allowed the bankers to use FDIC insured personal deposits to purchase "financial instruments" from hedge funds.

"Glass-Steagall is no longer appropriate to the economy in which we live." - William Jefferson Clinton

"Scores of banks failed in the Great Depression as a result of unsound banking practices, and their failure only deepened the crisis. Glass-Steagall was intended to protect our financial system by insulating commercial banking from other forms of risk. It was one of several stabilizers designed to keep a similar tragedy from recurring. Now Congress is about to repeal that economic stabilizer without putting any comparable safeguard in its place." - Paul Wellstone

"Even if we got a return to positive growth - an economy that was growing at 1 percent would be an economy with rising unemployment. I don't think we can hold out the prospect we'll stabilize at the current level." - Larry Summers 4/9/09

{Larry Summers is the man directly responsible for the financial institution meltdown. As William Jefferson Clinton's Treasury Secretary from July 1999 - January 2001 Larry Summers shaped and pushed the financial deregulation that unleashed the present crisis. Larry Summers was Treasury Secretary after July 1999 when his boss, Robert Rubin left to become Vice Chairman of Citigroup, where Rubin went on to advance the colossal agenda of deregulated finance directly. In 2000 Larry Summers backed the Commodity Futures Modernization Act that incredibly mandated that financial derivatives, including in energy, could be traded between financial institutions completely without government oversight. Larry Summers did consulting work for hedge fund managers Kenneth D. Brody and Frank P. Brosens of Taconic Capital Advisors from 2004 to 2006. Larry Summers advised an elite corps of math wizards and scientists devising investment strategies for the hedge fund D. E. Shaw & Company from late 2006 to late 2008 and "earned" $5.2 million. Larry Summers circle of friends include the hedge fund managers Nancy Zimmerman, Laurence D. Fink, H. Rodgin Cohen, Orin S. Kramer, Ralph L. Schlosstein and Eric M. Mindich. Larry Summers directly profited from the deregulation he vigorously supported. Larry Summers had Harvard purchase interest rate default swaps when he was president of Harvard that ended up costing Harvard over $1 billion.}

"The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron - a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers." - Matt Taibbi

During the first phase of deregulation the financial industry had a near-meltdown in 1998 triggered by the collapse of the hedge fund Long-Term Capital Management. Although the shareholders lost their assets the creditors were paid off by the Federal Reserve. The loss of $4 billion in five weeks were followed by a precipitous drop in stock value across the board. Sometimes touted as the 'tech bubble' this wiped out much of the paper wealth of lower echelon corporate management, members of the middle class, in the form of ‘under water' stock options. (‘under water' stock options are granted at a price higher than the price the grantee can now sell the stock for on the open market thus returning the wealth to controlling corporate interests.)

"The Fed assembled a consortium of banks to rescue Long-Term Capital Management, and it took 15 months, from September 1998 to January 2000, to negotiate their way out of trades tied to more than $1 trillion in bets." - Richard Teitelbaum and Hugh Son

"The SEC's best estimate is that there are now approximately 8,800 hedge funds, with approximately $1.2 trillion of assets. If this estimate is accurate, it implies a remarkable growth in hedge fund assets of almost 3,000% in the last 16 years. We are also seeing hedge funds becoming more active in such varied activities as the market for corporate control, private lending, and the trading of crude petroleum. Hedge fund account for about 30% of all United States equity trading volume. Investment strategies or operations of hedge fund include their use of derivatives trading, leverage, and short selling. The number of enforcement cases against hedge fund advisers has grown from just four in 2001 to more than 90 since then. These cases involve hedge fund managers who have misappropriated funds assets; engaged in insider trading; misrepresented portfolio performance; falsified their experience and credentials; and lied about past returns."
- Securities and Exchange Commission Chairman Christopher Cox, July 25, 2006 (Yet they missed Bernie Madoff!)

{Short-sellers attempt to profit from an expected decline in the price of a fungible financial instrument. Typically, the short-seller will "borrow" fungible financial instruments - bonds, securities, stock, futures contracts, OTC's, CDS', ad infinitum - at a certain price and resell them. The short-seller then hopes to be able to purchase identical fungible security instruments to repay the loan at a lower price than originally purchased shortly before the loan comes due. Profit comes when the fungible financial instrument declines in value.}

"With the Long-Term Capital bailout as a precedent, creditors came to believe that their loans to unsound financial institutions would be made good by the Fed - as long as the collapse of those institutions would threaten the global credit system. Bolstered by this sense of security, bad loans mushroomed. The major creditors of the fund included Bear Stearns, Merrill Lynch and Lehman Brothers, all of which went on to lend and invest recklessly. The ad hoc aspect of the bailout created a precedent for what has come to be called “regulation by deal” - now the government’s modus operandi." - Tyler Cowen, December 26, 2008

"I continue to be concerned about the influence of pooled vehicles in the marketplace. I see it as a ticking time bomb that is going to blow at some point." - Securities and Exchange Commission Chairman William H. Donaldson, May 24, 2007

Those "pooled vehicles" were used for leveraged buyouts, by hedge funds and as a source of quick profit in investment banking industry for both issuers and sellers of the securitized commercial paper, in other words collateralized debt obligations (CDO).

The Leveraged Buyout of America

A good solution to the too-big-to-fail problem is to
break up any monopolistic institution that becomes too-big-to-fail!

"We can't let them fail because it would bring the entire banking system down." - Barack Obama

The Sherman Antitrust Act of 1890 and the Clayton Antitrust Act of 1914 should be enforced as written!

Interdependence in huge systems is what allowed the financial engineers to rape the people of the Earth!

De-centralized systems have no such systemic flaws!

kabal trust bank

hedge funds and earned income

A hedge fund is a private investment fund. Hedge funds are not currently subject to any direct regulation by the SEC, the NASD, or any other federal regulating commissions. Hedge funds may hold long or short assets, may enter into futures, swaps, short selling schemes, security investment vehicles or other derivative contracts. Some hedge funds focus on other financial instruments including commodity futures, options, and emerging market debt. Hedge funds focus on and may place funds in anything that is touted as a "security." (Note: A security may be simply an electronic entry in a software system that is fungible, ie. you can trade it for an electronic entry in a different software system.) As hedge funds typically use leverage/gearing or debt to invest, the positions they can take in the financial markets are larger than their assets under management. At the end of 2006 it was estimated that hedge funds had $1.9 trillion of assets.

"Assets held by hedge funds surged to nearly $2 trillion as of the start of 2008, from $375 billion in 1998, according to estimates from Hedge Fund Research. Two out of three hedge funds lost money in 2008. The number of hedge funds peaked in 2008 at 10,233, according to Hedge Fund Research, and fell just 4 percent during the year. Hedge funds still manage $1.6 trillion. Of the hedge funds that lost money last year, the average loss was 29 percent, according to estimates from, a research firm."- Louise Story 01/17/09

"I believe there's been a near-consensus that hedge funds can cause systemic risk."
- Carolyn B. Maloney, member of the House Financial Services Committee

Hedge fund managers are the best paid individuals on Earth.
(Hedge fund managers hold their capital assets one year and one day by using Dick Cheney's creative accounting methods. Short term assets magically become long term assets!)

Edward Lampert "earned" managing hedge funds $1.02 billion in 2004 and $1.3 billion in 2006.

James Harris Simons "earned" managing hedge funds $1.6 billion in 2005 and $1.7 billion in 2006.

T. Boone Pickens "earned" managing hedge funds $1.5 billion in 2005.

Ken Griffin "earned" managing hedge funds $1.5 billion in 2005.

George Soros "earned" managing hedge funds $1 billion in 2007.

Managing hedge funds in 2007 - Stephen Cohen "earned" $900 million, Bruce Kovner "earned" $715 million, Paul Tudor Jones "earned" $690 million, Tim Barakett "earned" $675 million, David Tepper "earned" $670 million, Carl Icahn "earned" $600 million.

"Wall Street has many decent, honorable people, but they work in a system that fundamentally compromises people's ethics. The high pay is like an anesthetic that numbs you from feeling how you are being corrupted. Not only that, many honest people who work there would agree with an even more extreme statement: It's hard to make a living legally on Wall Street. The goal of investing is to get an edge, whereas the securities laws presume all investors should have the same information at once. If ever there was a recipe for a system rife with abuse, this is it. The harder that money managers, traders and analysts must work to get information that gives them that edge, the more likely some are to cross a legal line. The tippees feel self-righteous about using the information, no matter how it was obtained. They see themselves as leveling a playing field skewed by lying company managers who are aided and abetted by cynical investment bankers and invertebrate analysts who (still) do bankers' bidding out of concern for their careers. It goes without saying (because it can't be publicly acknowledged) that the millions of dollars of business that an institutional client is doing with an investment bank means they will be treated much better than a small retail client who is paying a 1 percent wrap fee on a $50,000 account. Victims of their own success, the banks have severely aggravated this situation by going public, then taking on too many masters to "diversify" earnings: institutional money managers, retail investors, investment-banking clients, prime brokerage clients, "financial sponsors" (private-equity and buyout funds), their own asset-management arms, and proprietary traders. It is all but impossible for people at investment banks to serve all these clients - whose interests conflict - while doing their real job: to satisfy the quarterly earnings expectations of the banks' investors. " - Alice Schroeder

{According to Bloomberg billionaire hedge fund manager John Paulson made $3 billion by shorting financials in anticipation of the American housing market collapse. John Paulson is also believed to have made 311 million pounds ($428 million) from September to February by short selling Lloyds Banking Group Plc and HBOS Plc.}

This "unearned" income was taxed at the capital gains rate of 15%!
Self-employed small businessmen paid 15.3% in social security taxes alone!
15.3% paid on every dollar earned by carpenters, plumbers, florists, dentists, mechanics, ad infinitum!
In the reality of the tax code: gamblers pay less on their winnings than breadwinners do on their labor!

Different rules for different classes is class warfare !

Many Fortune 500 Firms Pay Less in Income Taxes Than You

"Congratulations on pointing out the outrage of tax-breaks for hedge fund managers." - Robert Siebert

Truth is, when those who have benefitted the most don't pay their fair share of taxes, the tax burden gets shifted to workaday people and the shrinking middle class, where it has a far bigger effect on the overall standard of living. Perhaps the real question is, are we going to have a tax structure based on fairness or continue to support economic policies that amount to socialism for the rich ?" - Shawn Casey O'Brien 3/25/08

"Since 1960 each of the seven previous recoveries ended with a greater percentage of women at work than when it began. Working women now earn a third of America's total household income, and by and large, only those homes with a working wife have made real gains in their standard of living over the last eight years. Yet, over that same period, the percentage of women employed outside the home has fallen to where it was 12 years ago. Meanwhile, the median hourly pay of women 25 to 48 years of age has fallen from $15.04 in 2004 to $14.84 last year. This corrosive pattern holds true, according to the federal statistics, for all American women, regardless of education, race, ethnicity or marital or familial status." - Tim Rutten 07/08

"One of the basic assumptions of capitalism is that anyone paid huge sums of money must be very smart. Before the crash, much of America had fallen deeply into unsustainable debt because it had no other way to maintain its standard of living. That's because for so many years almost all the gains of economic growth had been going to a relatively small number of people at the top. Had the people at the top of corporate America, Wall Street banks and hedge funds not taken a disproportionate share, most Americans would not have felt the necessity to borrow so much." - Robert B. Reich*, 12/27/09

"Most working mothers work because their families cannot survive without their paychecks. Therefore, by definition, families in which the wife is not required to work are families feeling a little less crushed by the new economy. Lucky them. The high number of married women and mothers in the workforce is not a feminist triumph; it is merely the result of economic pressures that have reshaped the American family since the 1980s. I don't know any working mothers who wouldn't be happier if their husbands could support the family by themselves."- Renee Leask

"The real argument isn't that the top 1% percent pay 40% of federal income taxes, but how they are taxed. Wage earners can be taxed up to 35%. Capital-gains earners generally can be taxed as high as 15%. Under this formula, the individuals whose wealth works for them, by accruing interest and wealth from stocks, are rewarded by the government for being wealthy enough not to have to work. The rest are penalized for showing up to work." - Brain T. Finney

In America the average weekly earnings in 2007 were 15% below the
1972 peak in relative terms according to the Bureau of Labor Statistics.

"The average American family head will be forced to do twenty years
labor to pay taxes in his or her lifetime.
" – James Bovard

  churning financial instruments,      
    Alan Greenspan,    
      housing bubbles &  

"What we have found over the years in the marketplace is that derivatives have been an extraordinarily useful vehicle to transfer risk from those who shouldn't be taking it to those who are willing to and are capable of doing so." - Alan Greenspan 2003
Apparently Alan Greenspan meant the working American taxpayer was willing and capable!

“Clearly, derivatives are a centerpiece of the crisis, and Alan Greenspan
was the leading proponent of the deregulation of derivatives." - Frank Partnoy 10/08/08

"They said they were ensuring the "efficient allocation of capital," but they were allocating a suspicious amount of capital to themselves. Wall Street, in short, royally screwed Main Street."
- Maureen Tkacik

"They were going to take a lot of sewage and mix it up in a different way and say it's not sewage. The laws of nature are such that it keeps its sewage-like qualities." - Charles Thomas Munger

"The derivatives market is $531 trillion, up from $106 trillion in 2002 and a relative pittance just two decades ago.
Alan Greenspan banked on the good will of Wall Street to self-regulate." - Peter S. Goodman 10/08/09

"In a market system based on trust, reputation has a significant economic value." - Alan Greenspan

"You will go down as the greatest chairman in the history of the Federal Reserve."- Phil Gramm to Alan Greenspan, Senate Banking Committee, hearing February 1999

"The banks are trying to win back their losses by arbitrage operations, borrowing from the Federal Reserve at a low interest rate and lending at a higher one, and gambling on options. But options and derivatives are a zero-sum game: one party’s gain is another’s loss. So the banks collectively are simply painting themselves into a deeper corner. They hope they can tell the Federal Reserve and Treasury to keep bailing them out or else they’ll fail and cost the FDIC even more money to make good on insuring the “bad savings” that have been steered into these bad debts and bad gambles. The Federal Reserve and Treasury certainly seem more willing to bail out the big financial institutions than to bail out savers, pensioners, Social Security recipients and other small fry. They thus follow the traditional “Big fish eat little fish” principle of favoring the vested interests." - Michael Hudson 06/08

Preparing To Asset-strip Local Government? The Fed’s Bizarre New Rules

“The sudden failure or abrupt withdrawal from trading of any of these large United States dealers could cause liquidity problems in the markets and could also pose risks to others, including federally insured banks and the financial system as a whole. In some cases intervention has and could result in a financial bailout paid for or guaranteed by taxpayers."
- Charles A. Bowsher, Comptroller General, Government Accountability Office 1994

In 1997, the Commodity Futures Trading Commission chairwoman Brooksley E. Born, concerned that unfettered, opaque trading could "threaten our regulated markets or, indeed, our economy without any federal agency knowing about it," called for greater disclosure of trades and reserves to cushion against losses and sought to extend the Commodity Futures Trading Commission regulatory reach into derivatives. Brooksley E. Born's opinions incited fierce opposition from top officials of the Treasury Department, the Federal Reserve and the Securities and Exchange Commission including Alan Greenspan and Robert E. Rubin* who claimed traders would take their business overseas.

"While OTC derivatives serve important economic functions, these products, like any complex financial instrument, can present significant risks if misused or misunderstood. A number of large, well-publicized financial losses over the last few years have focused the attention of the financial services industry, its regulators, derivatives end-users and the general public on potential problems and abuses in the OTC derivatives market." - Commodity Futures Trading Commission, May 1998

Larry Summers, deputy secretary of the Treasury, Robert Rubin, the secretary of the Treasury, and Alan Greenspan, the chairman of the Federal Reserve at that time worked overtime to insure that derivatives would not be regulated. Larry Summers testified before Congress that "the shadow of regulatory uncertainty over an otherwise thriving market - raised risks for the stability and competitiveness of American derivative trading." Larry Summers blasted the Commodity Futures Trading Commission for having raised" the possibility of regulation over this market." Even "small regulatory changes," Larry Summers cautioned, could throw the whole system out of whack.

In November 1999, senior regulators - including Alan Greenspan and Robert E. Rubin - recommended that Congress permanently strip the Commodity Futures Trading Commission of regulatory authority over derivatives.

{"The Madoff* scandal finally revealed the SEC for what it has become. Created to protect investors from financial predators, the commission has evolved into a mechanism for protecting financial predators with political clout. The SEC.seldom penalizes serious corporate and management malfeasance - out of some misguided notion that to do so would cause stock prices to fall, shareholders to suffer and confidence to be undermined. The commission's most recent director of enforcement is the general counsel at JP Morgan Chase; the enforcement chief before him became general counsel at Deutsche Bank; and one of his predecessors became a managing director for Credit Suisse before moving on to Morgan Stanley. A casual observer could be forgiven for thinking that the whole point of landing the job as the SEC's director of enforcement is to position oneself for the better paying one on Wall Street." - Michael Lewis & David Einhorn

JP Morgan Chase generated $5.6 billion profit in 2008. Matt Zames, a Long-Term Capital Management veteran, ran the JP Morgan Chase derivatives trading desk. JP Morgan Chase profited from the collapse of Lehman Brothers and the takeover of Bear Stearns. JP Morgan Chase dominates derivatives trading - $87.7 trillion worth of outstanding contracts as of September 30, 2008.

On March 11, 2009 Jamie Dimon, chief executive officer of JP Morgan Chase & Co., said the federal government can rescue the financial system by the end of the year if officials start cooperating and stop the “vilification” of corporate America.}

"Chicago's laissez-faire imprint underpins everything from Ronald Reagan's 1981 tax cuts and the fall of communism that decade to quantitative investment strategies. In 1972, Milton Friedman helped persuade Treasury Secretary George Shultz, former dean of Chicago's business school, to approve the first financial futures contracts in foreign currencies. Such derivatives grew more complex after Chicago economists created the mathematical formulas to price them, helping spawn a $683 trillion derivatives market that's proved to be a root of today's financial system breakdown." - John Lippert 12/23/08

a trillion = $1,000,000,000,000

What does one TRILLION dollars look like?

$683,000,000,000,000 worth of collateralized debt?

America's Derivative Market :
Unbelievably Huge & Totally Unregulated

World Derivatives Market Estimated As Big As
$1.2 Quadrillion Notional, as Banks Fight Efforts to Rein It In

Making the most of borrowed time
Speech delivered by Mr Jaime Caruana,
General Manager of the BIS

According to quarterly report issued by the Bank of International Settlements in December 2008 , the total outstanding notional amount of over-the- counter (OTC) derivatives in the world was $683 trillion while the gross market value for those same instruments was $22 trillion.

Myron Scholes, the "father" of financial derivatives, won the Riksbank Prize in Economics in 1997 for inventing the model that led to financial derivatives. Myron Scholes has declared that derivatives and credit default swaps have gotten so dangerously out of hand that authorities should shut down the market and start over with regulation in place to begin with.

"In terms of conventional economics, it may actually be in an individual's rational self-interest to engage in activities that render the earth uninhabitable. This is potentially true even on the collective level: given the exponential nature of future cash flow discounting, it may be more in our "rational self-interest" to liquidate all natural capital right now - cash in the earth - than to safeguard it for future generations. After all, the net present value of an eternal annual cash flow of one trillion dollars is only some twenty trillion dollars (at a 5% discount rate). Economically speaking, it would be more rational to destroy the planet in ten years while generating income of $100 trillion, than to settle for a sustainable level of $3 trillion a year." - Charles Eisenstein

David X. Li's Gaussian copula function

David X. Li's Gaussian copula function

"Li's formula, known as a Gaussian copula function, looked like an unambiguously positive breakthrough, a piece of financial technology that allowed hugely complex risks to be modeled with more ease and accuracy than ever before. With his brilliant spark of mathematical legerdemain, Li made it possible for traders to sell vast quantities of new securities, expanding financial markets to unimaginable levels." - Felix Salmon

{The financial engineers of profit-driven innovation agree that mathematical models of risk simply failed to take into account all of the variables. According to expert consensus risk models proved myopic, too simple-minded. The financial engineers focused on variables concerned with expected returns and the default risk of financial instruments. Mathematical models failed to take into account the reality that financial instruments in the final analysis must be based on actual assets that exist in reality as objects within the biosphere. The variables neglected include an out of control debt spiral based on never ending growth within a closed finite biological system experiencing catastrophic environmental degradation world wide at a rapidly increasing pace.}

"The Chicago School bears the blame for providing a seeming intellectual foundation for the idea that markets are self-adjusting and the best role for government is to do nothing." - Joseph Stiglitz

Perhaps Chicago School of Economics ideologues can explain to America how the churning of stocks, futures, swaps, options, short selling schemes, security investment vehicles, structured investment vehicles, collateralized debt obligations, credit derivative contracts, credit default swaps, mortgage-backed securities, collateralized loan obligations, auction rate securities, commodity futures, guaranteed investment contracts, auction-rate securities, off-balance-sheet finance and emerging market debt helps strengthen America?

"By allowing money to flow in the direction of less impedance the invisible hand of the free market effectively balances the economy." - Chicago School of Economics ideologue

Chicago School of Economics MBA's: Jon Stevens Corzine began his career in banking and finance, Senator, former CEO of Goldman Sachs, the 54th Democratic Governor of New Jersey from 2006 to 2010, estimated he won $400 million during the 1999 initial public offering of Goldman Sachs, $1.2 billion disappeared like magic from his investment fim IM Global in 2011 and know one seems to know were it went ; Peter Peterson, David Booth

Corzine’s Crime of the Century

Simply churning financial instruments does not wealth create!!!

"In the last quarter of a century the whole American economic system has lived off the speculations generated by the financial sector - sometimes given the acronym FIRE (for finance, insurance and real estate). FIRE has grown exponentially while, in the country's industrial heartland in particular, much of the rest of the economy has withered away. FIRE carries enormous weight and the capacity to do great harm. Its growth, moreover, has fed a proliferation of financial activities and assets so complex and arcane that even their designers don't fully understand how they operate.

Today's Wall Street fabricators of avant-garde financial instruments are actually called "financial engineers." They got their training in "labs" much like Dr. Frankenstein's, located places like Wharton, Princeton, Harvard and Berkeley which is based upon the laissez-faire economic ideology of Milton Friedman and the Chicago School of Economics. Each time one of their concoctions goes south, like the bewildering "security investment vehicles" that helped precipitate the mortgage industry collapse, they scratch their heads in bewilderment - always making sure, of course, that they have financial life rafts handy, while investors, employees, suppliers and whole communities go down with the ship.

This tsunami of bad business is about to wash over an already very-sick economy. While the old regime, the Reagan-Bush counterrevolution, has lived off the heady vapors of the FIRE sector, it has left in its wake a deindustrialized nation, full of super-exploited immigrants and millions of families whose earnings have suffered steady erosion. Two wage-earners, working longer hours, are now needed to (barely) sustain a standard of living once earned by one. And that doesn't count the melting away of health insurance, pensions and other forms of protection against the vicissitudes of the free market or natural calamities." - Steve Fraser 01/08

"Neoliberal (neo-con in America) economists in the last three decades have denied the possibility of a replay of the worldwide destructiveness of the Great Depression that followed the collapse of the speculative bubble created by unfettered US financial markets of the 'Roaring Twenties'. They fooled themselves into thinking that false prosperity built on debt could be sustainable with monetary indulgence. Now history is repeating itself, this time with a new, more lethal virus that has infested deregulated global financial markets with 'innovative' debt securitization, structured finance and maverick banking operations flooded with excess liquidity released by accommodative central banks. A massive structure of phantom wealth was built on the quicksand of debt manipulation." - Henry C. K. Liu 11/15/08

"Until the last year, the biggest growth industry within the U.S. had been the financial sector, producing profits of over $500 billion as late as 2006. In other words, the U.S. has replaced working for a living with the manipulation of money and the extraction of interest, either by lending it or by brokering the lending and investment by foreigners. In order to enrich themselves, the financiers, with a lot of help from the government, created the merger/buyout bubble of the 1980s, the bubble of the 1990s, and the housing/equity/hedge fund/derivative bubble of the 2000s." - Richard C. Cook 03/02/09

"In all, the finance, insurance, and real estate industries spent a record $475 million on campaign contributions to congressional candidates in the 2008 cycle. The finance industry – including companies that got billions in taxpayer bailout money because they're "too big to fail" – spent more than $300 million in 2009 on lobbying to influence regulatory reforms. Finance retains nearly five lobbyists for every member of Congress." - Gail Russell Chaddock

The 34 Congressional House representitives who offered amendments to weaken consumer protections collectively received $3.8 million in campaign funds from the financial sector in 2009, according to analysis by Consumer Watch and the Center for Responsive Politics.

in corporations we trust

"Between 1973 and 1985, the U.S. financial sector accounted for about 16 percent of domestic corporate profits. In the 1990s, it ranged from 21 percent to 30 percent. After 2000 it soared to 41 percent." - David Brooks

"God gave us a brain to think, to think naturally and in simple terms, and not in a complicated way.

When we think naturally and use common sense to address problems we will be able to arrive at simple solutions. Unfortunately our education system tortures us mentally and forces us to think in complicated ways. Our teachers, economists, politicians and so-called experts in God and religion make mountains out of mole-hills, turning simple truths into complex arguments.

These "experts" need to make things look difficult to survive
and to make sure that we have to rely upon them for solutions.

When I explain in simple terms, they refused to accept the explanation.

Consider the following simple explanation:

1. Financial engineering: new ways of gambling
2. Investors: gamblers
3. Stock & Futures Markets: casinos
4. Financial Analysts: casinos' salesmen / women
5. Bonds: I.O.Us.
6. Banks: Dishonest Money-lenders (actual money-lenders cannot create "money out of thin air"!)
7. Currencies: fiat money toilet paper
8. Derivative markets: Ponzi schemes

Common sense tells us that if our income is only $X and we borrow 30 times in excess of $X,
there is no way that we can repay the debt, unless our gambling bets pay out in excess of 30 times the original amount of $X.

Common sense tells us that the banks, fearing a systemic banking collapse will lie and cover up the con-game." - Matthias Chang

Timeline of the Asian financial crisis

"Auction-rate preferred securities is the largest fraud ever perpetuated by Wall Street on investors." - Harry Newton
Bankrupt Grand Chevrolet Firms Closed

Eight Charged in $50-Million Car Loan Fraud

"Let's hope we are all wealthy and retired by the time this house of cards falls."
- Standard & Poor analyst 'texting' about collateralized debt obligations

{The preceeding text message was submitted to a congressional oversite committee questioning the need for a $700 billion bailout! }
{Note: Congressmen (and women) have substantial sums invested in the current system - they can not be impartial! }

"During the bull market of the 1960s, finance and insurance together accounted for less than 4 percent of G.D.P. Until 1982 Dow Jones Industrial Average contained not a single financial company. After 1980, in the deregulation-minded Reagan era, old-fashioned banking was increasingly replaced by wheeling and dealing on a grand scale. The new system was much bigger than the old regime: On the eve of the current crisis, finance and insurance accounted for 8 percent of G.D.P., more than twice their share in the 1960s. By early last year, the Dow contained five financial companies - including A.I.G., Citigroup and Bank of America.

Underlying the glamorous new world of finance was the process of securitization. Loans no longer stayed with the lender. Instead, they were sold on to others, who sliced, diced and puréed individual debts to synthesize new assets. Subprime mortgages, credit card debts, car loans - all went into the financial system's juicer. Out came sweet-tasting AAA investments. And financial wizards were lavishly rewarded for overseeing the process.

But the wizards were frauds and their magic turned out to be no more than a collection of cheap stage tricks. Above all, the key promise of securitization - that it would make the financial system more robust by spreading risk more widely - turned out to be a lie. Banks used securitization to increase their risk and in the process they made the economy more, not less, vulnerable to financial disruption." - Paul Krugman* 03/26/09

"Look what casino corporatism has brought us.

Giant corporations arose early in the last century followed by wars, depression, and more wars. After World War II, corporatism was fully consolidated, particularly within the United States, the most advanced corporatist economy, and for some years thereafter the only healthy major one unravaged by war.

As a result, corporate America flourished, grew larger and more dominant. Profit-making oligopolies and monopolies resulted competing not on price but mainly in the areas of cost-cutting and the sales effort. Out of this grew surpluses, and the economy's problem was to absorb it to avoid stagnation. It led to overcapacity, so key was to find additional outlets beyond materialistic consumption and investment or face "economic malaise."

Beginning in the late 1960s and 1970s, financialization came to the rescue, and "to some extent (shifted) control over the economy from corporate boardrooms to the financial markets. Corporations were increasingly seen as bundles of assets, the more liquid the better.

A new "monopoly finance" corporatism was advanced to exploit it.

It produced new outlets for surplus in the FIRE sector (finance, insurance, and real estate), mostly for speculation, not capital goods investments in plant and equipment, transportation, and public utilities that earlier fueled business cycle expansions.

The 1980s saw an unprecedented upsurge of debt in the economy. In the 1970s, it was about one-and-a-half times GDP. By 1985, it was double, and by 2005 it was three-and-a-times GDP, rising, and approaching the $44 trillion (level) for the entire world. Ever since, the way was open for a proliferation of financial instruments and markets, which (until the present) proved to be literally unlimited.

Keynes warned about "enterprise becoming the bubble on a whirlpool of speculation" like in the 1920s, the price being the Great Depression.

Unable to find profitable outlets within the productive economy, corporatists sought opportunities through financialization, speculation, casino corporatism, while the financial system responded with a bewildering array of new financial instruments - including stock futures, options, derivatives, hedge funds, etc.

As a result, a financial superstructure took on a life of its own that today is consuming world economies.

Bubbles eventually grow and always burst. Minor by comparison, the 1997-98 Asian crisis showed how fast contagion can spread. Today it's global and out-of-control. No one's sure how to contain it, so bankers are printing trillions in a desperate attempt to socialize losses, privatize profits, and pump life back into a corpse through a sort of shell game or grandest of grand theft process of sucking wealth from the public.

Speculation and debt need more of it to prosper, but in the end it's a losing game." - Stephen Lendman

Scapegoat Economics 2015

Goldman Sachs Proof that God hates its Customers

How Goldman Sachs Helped Greece to Mask its True Debt

Goldman Sachs Shorted Greek Debt After It Arranged Those Shady Swaps

"Over the years bank services and bank risks migrated outside of the regulatory safety net. Wall Street securities firms, for example, developed the commercial paper market, which replaced much of banks' short-term corporate lending. Investment banks like Merrill Lynch were never subject to the same kind of safety and soundness regulation as commercial banks. Newer market participants, like hedge funds, were not subject to any regulation at all. Even regulated banks were gradually allowed to own securities and insurance businesses within a holding company structure, and they were allowed to hold highly-risky speculative positions in off-balance-sheet "special purpose" entities." - Mark Jickling

"Since the beginning of the last decade, required reserve balances have fallen dramatically. The decline stems in part from regulatory action: the Federal Reserve eliminated reserve requirements on large time deposits in 1990 and lowered the requirements on transaction accounts in 1992. But a far more important source of the decline in required reserves has been the growth of sweep accounts. In the most common form of sweeping, funds in bank customers' retail checking accounts are shifted overnight into savings accounts exempt from reserve requirements and then returned to customers' checking accounts the next business day. Largely as a result of this practice, today only 30 percent of banks are bound by a reserve balance requirement." - Federal Reserve Bank of New York, 2002

Investment banks were able to "balance" and prove adequate reserves by "securitizing" loans which allow those investment banks to move those loans off their balance sheets.

There are two ways to securitize a loan: sell the securitized loan as a bond (originally made popular by Michael Robert Milken* as junk bonds); or "synthetic" securitization: use derivatives to get rid of the default risk (with credit default swaps) and lock in the interest rate due on the loan (with interest-rate swaps).

Once a investment bank securitizes a loan that loan is moved off the balance sheet. Once a loan has been moved off the balance sheet the capitalization ratio improves and the investment banks can make even more loans.

Investment banks created trillions of dollars of credit without maintaining adequate capital reserves (leveraged up to 33 to 1, 3.3 times higher than the traditional fractional reserve of 10 to 1) by providing mortgages, student loans and credit card loans to millions of loan applicants who had no documentation, no income, no collateral and a bad credit history for enormous short term profits! Investment banks did this without tying up any of their capital reserves while con-vincing the purchasers of the securitized commercial paper (toxic debt) that there was no risk of default! (and the gods of Washington made sure of that!! - after the fact!!?? - on the taxpayers dime!!!)

In 2004 the Securities and Exchange Commission allowed financial institutions/securities dealers to raise their leverage sharply from a typical leverage of 12-to-1to around 33-to-1. Under 33-to-1 leverage, a mere 3 percent decline in asset values wipes out a financial institution/securities dealer.
(Under the repeal of the Glass-Stegal Act under William Jefferson Clinton
financial institutions could deal securities/commercial paper and issue insurance.)

On March 23, 2009 Treasury Secretary Timothy Franz Geithner, a protégé of Henry Kissinger*, announced his latest plan which seeks to harness government and private resources to purchase an initial half-trillion dollars of off-balance-sheet toxic debt of investment banks. Timothy Geithner held out the expectation that the program eventually could grow to $1 trillion. At the end of 2008 off-balance-sheet assets, much of it securitized credit-card debt, at just the four biggest U.S. banks - Bank of America Corp., Citigroup Inc., JP Morgan Chase & Co. and Wells Fargo & Co. - were about $5.2 trillion, according to their 2008 annual filings.

{On April 24, 2009 JP Morgan's nonperforming on-balance-sheet assets assets grew 185 percent in the past year to $14.7 billion. Bank of America's bad assets increased 229 percent to $25.7 billion. Problem assets at New York-based Citigroup Inc. rose 128 percent to $27.4 billion, and San Francisco-based Wells Fargo & Co.'s jumped 180 percent to $12.6 billion.}

"Bank-like investment strategies - such as the use of leverage (or borrowed money) and financing long-term investments with short-term debt - became common outside the safety net provided by deposit insurance and strong regulation. As a result, nonbank institutions became vulnerable to runs - if markets lost confidence in them, their sources of funds could dry up. And these nonbank runs could also be contagious, although this was not widely recognized before the current crisis.

Another notable development of the past two or three decades is the development of complex and hard-to-value financial instruments. For example, simple debt contracts like home mortgages were sold by the original lenders and packaged into bonds with a wide range of risk and reward characteristics. These bonds were often pooled again and sliced and diced into even more complex packages. Synthetic securities were created based on derivative instruments that replicate the price changes of an asset without requiring actual ownership of the asset itself. The relationship between the performance of an underlying financial asset and the complex security or derivative based on it was never simple, and under crisis conditions has proved to be completely unpredictable.

Complexity reduces transparency. Neither regulators nor market participants can easily assess the true financial condition of firms that hold or trade these newer instruments. Since large parts of derivatives markets are unregulated, there is a global web of financial claims and counterclaims that is essentially invisible to financial supervisors and market participants alike.

Key characteristics that produced this systemic vulnerability include: the use of complex financial instruments, whose value is often linked by complex formulae to the value of other instruments or financial variables, and for which no active trading markets exist; extensive use of leverage, or borrowed funds, which permits institutions to take larger market positions with a given capital base, increasing potential profits (but also losses); and the practice of moving risky financial speculation off the books, into nominally independent accounting entities, so that the results do not appear in the financial accounts of the parent financial institution." - Mark Jickling

"More than 100 securities cases involving losses of $400 billion were filed against financial firms last year, according to Cornerstone Research." - Vikas Bajaj 01/19/08

"In its latest push to compel confidence the authorities are placing enormous pressure on the Financial Accounting Standards Board to suspend "mark-to-market" accounting. Basically, this means that the banks will not have to account for the actual value of the assets on their books but can claim instead that they are worth whatever they paid for them.

The Treasury, the Federal Reserve and the SEC all seem to view propping up stock prices as a critical part of their mission - indeed, the Federal Reserve sometimes seems more concerned than the average Wall Street trader with the market's day-to-day movements." - Michael Lewis & David Einhorn 01/03/08

On December 12, 1980 Federal Reserve Board chairman Paul Adolph VolkerBB /CFR/TC raised the prime loan rate to 21.5% which set the stage for the Savings and Loan Debacle and later the Global Financial Meltdown.

"I was working in the Carter White House in 1979-80. Unbeknownst to the president, Federal Reserve Chairman Paul Volcker, another Rockefeller protégé, suddenly raised interest rates to fight the inflation the bankers had caused by the OPEC oil price deals, and plunged the nation into recession. Carter was made to look weak and uninformed and was defeated in the election of 1980 by Republican candidate Ronald Reagan.

It was through the "Reagan Revolution" that the regulatory controls over the banking industry were lifted, mainly in allowing the banks to use their fractional reserve privileges in making mortgage loans.

Volcker's recession shattered American manufacturing and hastened the flight of jobs abroad.

Under the "Reagan Doctrine," the U.S. military embarked on an unprecedented mission of world conquest by attacking one small nation at a time, starting with Nicaragua. Global capitalism was also on the march, with the U.S. armed forces its own private police force." - Richard C. Cook {Actually the US has been doing work for the syndicate of the soulless since 1833.}

In 1987 Alan Greenspan* inherited an economy primed for expansion after the severe downturn caused by Paul Adolph Volker historically high interest rates.

Alan Greenspan's greatest accomplishment was using oblique statements to create an aura of mysticism around monetary policy that never actually existed.

When Eric J. Weiner interviewed Harvard economist John Kenneth Galbraith for his book, "What Goes Up: The Uncensored History of Modern Wall street", John Kenneth Galbraith described Alan Greenspan's management of the publicity surrounding the movement of interest rates as "one of the brilliant theatrical exercises of all time."

"Former Federal Reserve Board chairman Alan Greenspan defined his role rather narrowly. Rather than being the custodian for the American economy, he encouraged - or at the very least did not discourage boom-and-bust cycles, enriching a few people at the expense of everyone else. Perhaps he couldn't have done more, but to gush over his legacy when our economy is facing a bursting housing bubble, ever increasing budget and trade deficits and the impending retirement of the baby boomers is simply premature." - Sridhar Subramanian

"The idea that we’re even in a business “cycle” is whistling in the dark. If we’re in a cycle, then that implies there’s an automatic recovery in store. This happy free-market idea was developed at the National Bureau of Economic Research by opponents of government regulatory policy. But the economy doesn’t move by a sine curve. There is a slow buildup, and a sudden plunge, so the shape is ratchet-shaped. This is why 19th-century writers didn’t speak of economic cycles, but rather of periodic financial crises." - Michael Hudson

"The Federal Reserve Board allowed the growth of an $8 trillion housing bubble ($110,000 of housing bubble "wealth" for every homeowner) in the years from 1996 to 2006. While this bubble was easily recognizable to competent economists, the entire political and financial establishments managed to ignore the housing bubble until it began to burst last year." - Dean Baker, March 24, 2008

"One sign of a newly assertive Wall Street emerged recently when a bevy of bailed-out firms, including Citigroup, JP Morgan and Goldman Sachs, formed a new lobby calling itself the Coalition for Business Finance Reform. Its goal: to stand against heavy regulation of "over-the-counter" derivatives, in other words customized contracts that are traded off an exchange. Companies like these kinds of contracts, which are agreed to privately between firms, because they allow them to tailor a hedge perfectly against a firm-specific risk for a certain time period. But in order to safeguard its right to negotiate these cheaper private contracts, Wall Street is apparently willing to argue for the same lack of public transparency and to permit the systemic risk that led to the crash." - Michael Hirsh 04/10/09

"What's astonishing to me is that the special interests opposing reform contributed to the failure of the financial system. They're trying to safeguard the system that failed, and Congress is listening to them." - Ed Mierzwinski

"The injunction of Jesus to love others as ourselves is an endorsement of self-interest."
- Brian Griffiths, Goldman Sachs public relations man

{In November 2009 Goldman announced it was going to help 10,000 small business' by teaching them how to run a business as Goldman would. To apply for special funding small business revenues must be between $150,000 and $4M in most recent fiscal year, there must be at least four full-time employees, the business must have been operating for at least two years and must be willing to take on more debt to create more jobs in predominantly underserved markets. And when the your business can no longer pay the interest on the new debt that Goldman so obligingly gives to those that meet their criteria then you can turn over the keys to Goldman.}

In 2006, Wall Street introduced a new index, called the ABX, that became a way to bet on the value of mortgage securities. The index allowed traders to bet on or against pools of mortgages with different risk characteristics, just as stock indexes enable traders to bet on whether the overall stock market, or technology stocks or bank stocks, will go up or down. Goldman, among others on Wall Street, has said since the collapse that it made big money by using the ABX to bet against the housing market.

"The simultaneous selling of securities to customers and shorting them because they believed they were going to default is the most cynical use of credit information that I have ever seen." - Sylvain R. Raynes

It is widely and correctly understood that Wall Street, with Goldman as a leader and with regulators in thrall, helped to inflate and profited from a credit bubble that burst and cost tens of millions of Americans their jobs, incomes, savings and home equity.

meltdown and bailout

"There was nothing accidental about the crisis." - Paul Krugman

"This has gone beyond Greece, at this point, the markets smell the blood, and they're picking off each weak link." - Win Thin, senior currency strategist at Brown Brothers Harriman committing of the Greek meltdown of 2010

"I think that virtually everybody associated with the financial world contributed to it. Some of it stemmed from greed, some from stupidity, some from people saying the other guy was doing it." - Warren Buffet on the meltdown

From the start of 2007 until September 2008 Moody's Investors Service downgraded more than $449 billion in securities similar to Gemstone VII or 82 percent of all those outstanding. Moody's also downgraded more than three-quarters of collateralized debt obligation securities that it once rated AAA.

"The bond is backed by 9,000 second mortgages used by borrowers who put down little or no money to buy homes. Nearly a quarter of the loans are delinquent, and losses on defaulted mortgages are averaging 40 percent. The security once had a top rating, triple-A." - Vikas Bajaj and Stephen Labaton

Bonds backed by second mortgages where purchasers put no money down were rated triple-A? The rating agency must have expected prices to keep spiraling upward. For prices to keep spiraling upward it would be necessary for incomes to keep spiraling upward. Oh now I get it - the Wall Street investment bankers looked at their own income history and expected all Americans to have the same kind of upwardly spiraling income! Golly gee whillikers I thought they had access to the latest economic data!

S&P, Moody’s and Fitch control 98 percent of the market for debt ratings in the U.S.. The three credit rating corporations graded Lehman debt A-1 the day it filed for bankruptcy. State regulators depend on credit grades to monitor the safety of $450 billion of bonds held by U.S. insurance companies. The rating companies reaped a bonanza in fees earlier this decade as they worked with financial firms to manufacture collateralized debt obligations.On Sept. 16, one day after the three credit rating firms downgraded AIG’s double-A score by two to three grades, private contract provisions that AIG had with banks around the world based on credit rating changes forced the insurer to hand over billions of dollars of collateral. Credit raters are paid by the companies whose debt they analyze so the ratings reflect a bias. Credit raters are likely to charge $400 million in fees to taxpayer's for TALF credit ratings.

"To promote competition, in the 1970s ratings agencies were allowed to switch from having investors pay for ratings to having the issuers of debt pay for them. That led the ratings agencies to compete for business by currying favor with investment banks that would pay handsomely for the ratings they wanted. Wall Street paid as much as $1 million for some ratings, and ratings agency profits soared. This new revenue stream swamped earnings from ordinary ratings." - Kevin G. Hall "In 2001, Moody's had revenues of $800.7 million; in 2005, they were up to $1.73 billion; and in 2006, $2.037 billion. The exploding profits were fees from packaging . . . and for granting the top-class AAA ratings, which were supposed to mean they were as safe as U.S. government securities." - Lawrence McDonald

"Everyone else goes out and does factual verification or due diligence. The credit rating agencies state that they are just assuming the facts that they are given. This system will not get fixed until someone credible does the necessary due diligence." - John Coffee

“Ratings agencies abjectly failed in serving the interests of investors. They’ve benefited from the monopoly status that they’ve achieved with a tremendous amount of assistance from regulators." - SEC Commissioner Kathleen Casey

“We’ve hung the entire global economy on ratings." - Eric Dinallo

Major banks and other financial institutions around the world reported losses of approximately $435 billion as of July 17, 2008. The ability of corporations to obtain funds through the issuance of commercial paper was affected as liquidity concerns drove central banks around the world to refuse to re-negotiate commercial paper or renew loans to banks and financial institutions that no longer could meet the newly revised central banking regulatory standards of the Bank of International Settlements.

In June 2008,Merrill Lynch seized $850 million worth of the underlying collateral from Bear Stearns but only recouped $100 million in auction. In March of 2008 the Federal Reserve forced the sale of Bear Stearns to JP Morgan Chase for ten dollars per share, a price far below the previous 52-week high of $133.20 per share.

On July 9, 2008, IndyMac bank's shares closed at $0.31 in trading on the New York Stock Exchange, a loss of over 99% from its high of $50 in 2006. IndyMac Bank was seized on July 11, 2008 and was the fourth largest bank failure in United States history. IndyMac Bank held $32 billion in assets.

On September 25, 2008 the Office of Thrift Supervision (OTS) seized Washington Mutual and placed it into the receivership of the Federal Deposit Insurance Corporation (FDIC). The FDIC sold most of Washington Mutual's assets and liabilities, including covered bonds and other secured debt in a 2007 SEC filing valued at $327.9 billion, to JP Morgan Chase for $1.9 billion.

On October 7, 2008, the Federal Reserve announced that it was using its emergency authority under Section 13(3) of the Federal Reserve Act to establish a Commercial Paper Funding Facility. By the end of October, the Federal Reserve had purchased more than $100 billion in commercial paper.

On November 23, 2008, the Fed and Treasury announced a rescue package for Citigroup to provide insurance against large losses on bundled securities and derivatives of approximately $306 billion backed by residential and commercial real estate. Citigroup agreed to absorb the first $29 billion in losses on the bundled securities and derivatives; the government will then cover 90% of losses that exceed that figure. Citigroup spent $1.77 million on lobbying fees in the fourth quarter of 2008.

“The last six months have made it abundantly clear
that voluntary regulation does not work." - Christopher Cox

The director of the Federal Housing Finance Agency (FHFA), James B. Lockhart III on September 7, 2008 announced his decision to place two privately operated government sponsored enterprises, Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation), into conservatorship run by FHFA. Even though over 98 percent of Fannie's loans were paying timely during 2008, $270 billion in loans that Fannie Mae had purchased or guaranteed between 2005 and 2008 were now considered risky. Fannie Mae and Freddie Mac each had a positive net worth as of the date of the takeover which was triggered by credit default swap derivative contracts.

"Credit default swaps are essentially insurance policies covering the losses on securities in the event of a default. Financial institutions buy them to protect themselves if an investment they hold goes south. It's like bookies trading bets, with banks and hedge funds gambling on whether an investment (say, a pile of subprime mortgages bundled into a security) will succeed or fail. Because of the swap-related provisions of Gramm's bill - which were supported by Fed chairman Alan Greenspan and Treasury secretary Larry Summers - a $62 trillion market (nearly four times the size of the entire United States stock market) remained utterly unregulated, no one made sure the banks and hedge funds had the assets to cover the losses they guaranteed." - David Corn

In the credit default swap market, the standard contracts typically used between parties to a swap define the action of placing Fannie Mae and Freddie Mac into conservatorship to be equivalent to bankruptcy, because of the change in corporate control.

In credit default swap parlance, this is termed a credit event, and that triggers the settling of outstanding contracts for the derivatives, which are used to hedge or speculate on the potential risk that a company will default on its bonds.

Fannie Mae and Freddie Mac had approximately $ 1.5 trillion in bonds outstanding, and since the market in credit default swaps is not public, there is no central reporting mechanism to verify how many credit default swaps are linked to those bonds. (In effect these derivative contracts for credit default swaps rewrite applicable jurisprudence and negate existing national laws in favor of criminal international elite's jurisprudence. On April 22, 2009 David Kellermann, CFO of Freddie Mac, committed suicide. A fitting and honorable end for a financial wizard!)

To avoid increased loses of as much as $2.4 billion in credit default swaps in 2008 Fannie Mae unveiled the "HomeSaver Advance" plan to provide "foreclosure prevention assistance to distressed borrowers." About 71,000 cash advances to forestall foreclosure with an average value of $6,500 for a total of $462 million were made in 2008. As of spring 2009 Fannie Mae valued those loans at $8 million.

"Credit-default swaps may not be Exhibit No. 1 in the case against financial complexity, but they are useful evidence. Whatever credit defaults are in theory, in practice they have become mainly side bets on whether some company, or some subprime mortgage-backed bond, some municipality, or even the United States government will go bust. In the extreme case, subprime mortgage bonds were created so that smart investors, using credit-default swaps, could bet against them. Call it insurance if you like, but it's not the insurance most people know. It's more like buying fire insurance on your neighbor's house, possibly for many times the value of that house - from a company that probably doesn't have any real ability to pay you if someone sets fire to the whole neighborhood." - Michael Lewis & David Einhorn 01/03/08

"On September 7, 2008, the Federal Housing Finance Agency (FHFA) placed Fannie Mae and Freddie Mac, two government-sponsored enterprises (GSEs) that play a critical role in the United States home mortgage market, in conservatorship. As conservator, the FHFA has full powers to control the assets and operations of the firms. This means that the United States taxpayer now stands behind about $5 trillion of GSE-issued debt." - Mark Jickling, November 24, 2008

"When Fannie Mae and Freddie Mac were taken into conservatorship by the government, they were leveraged at an eye-popping 100 to 1." - Mike Whitney

On March 11, 2009 Freddie Mac asked for $31 billion in additional aid after posting a gargantuan loss of more than $50 billion last year. The loss' were driven by $13.2 billion in hedged trades, $7.2 billion in credit losses from the declining housing market conditions and $7.5 billion in write-downs of the value of its mortgage-backed securities. The company also took a charge of $8.3 billion for now-worthless tax credits.
send in the antichrist

By the end of September of 2008 Lehman Brothers went into bankruptcy, Merrill Lynch acquired Lehman Brothers and was in turn acquired by Bank of America while Morgan Stanley and Goldman Sachs changed their corporate structures to become bank holding companies. (Until September 2008, the month of the Lehman Brothers collapse, the Federal Reserve had held the expansion of the Monetary Base virtually flat. US Treasury Secretary Tim Geithner, participated in the decision to let Lehman Brothers fail "to teach a lesson" when he was president of the New York Federal Reserve.)

"Hedge funds are now targeting each other. Morgan Stanley and Goldman Sachs, who made obscene profits by shorting stocks in the past, are vociferously against the practice now that their stocks are the ones being destroyed." - Bruce Goodman

{At Goldman Sachs Group, Inc. employees earned an avarage of $622,000 in 2006 on a profit of $9.4 billion. Morgan Stanley CEO John Mack bonus for 2006 was $40 million. Much of the commercial paper wealth (over-the-counter derivatives) in 2006 was made on takeovers and leveraged buyouts.}

Between March and September 2008, a seven month period, the five largest investment bankers on Wall Street effectively went bankrupt.

Merrill Lynch was sold to Bank of America for 0.8595 shares of Bank of America common stock for each Merrill Lynch common share, or about $50 billion or $29 per share. The market valuation of Merrill Lynch was about $ 100 billion one year earlier.

{Bank of America purchase of Merrill Lynch closed January 1. During the final quarter of 2008 Merrill Lynch lost $15.3 billion. Part of that loss included annual bonuses to employees before the deal closed as well as a $1.2 million office redecoration with a $87,000 rug and a $68,000 credenza for CEO John A. Thain who requested a $30 million to $40 million bonus for his stewardship of Merrill Lynch.}

In August 2008, Morgan Stanley was contracted by the United States Department of the Treasury to advise the government on potential rescue strategies for Fannie Mae and Freddie Mac. On September 21, 2008, it was reported that the Federal Reserve allowed Morgan Stanley to change its status from investment bank to bank holding company in order to survive the global economic meltdown of 2008.

In 2005, Goldman Sachs received approximately $1.6 billion in taxpayer subsidies (mostly through Liberty Bonds) from New York City and state taxpayers to finance the a new headquarters near the World Financial Center in Lower Manhattan.

{Some of the people employed by Goldman Sachs includes George Herbert Walker Bush (managing director at Lehman Brothers), Robert Zoellick (World Bank president)BB CFRTC, Henry Paulson (United States Treasury Secretary), Robert Rubin* (ex-United States Treasury Secretary, ex-Chairman of Citigroup, mentor of United States Treasury Secretary is Tim Geithner), John Thain (Chairman and CEO, Merrill Lynch, and former chairman of the NYSE), Henry H. Fowler, (58th United States Secretary of the Treasury), Edward Lampert (hedge fund manager), Michael Cohrs (head of Global Banking at Deutsche Bank), Mark Carney (current governor of the Bank of Canada), Robert Steel (CEO of Wachovia), Ed Liddy (CEO of AIG), Neel Kashkari, Stephen Friedman (chairman of the President's Foreign Intelligence Advisory Board and of the Intelligence Oversight Board, board member of Memorial Sloan-Kettering Cancer Center, The Aspen Institute and the Council on Foreign Relations, Chairman Emeritus of the Executive Committee of the Brookings Institution, director Federal Reserve Bank of New York), Mark Patterson (Treasury chief of staff), Gary Gensler (Commodity Futures Trading Commission), ... Barack Obama received $981,000 for his campaign from Goldman employees.}

"AIG, in addition to being one of the largest providers of traditional lines of insurance, was a leading participant in the market for credit default swaps (CDS), instruments that are linked to corporate credit conditions. In the aftermath of the Lehman Brothers bankruptcy and the Fannie and Freddie takeover, AIG was exposed to significant CDS losses. " - Mark Jickling

dow jones

On September 16, 2008 American International Group (AIG), an insurance corporation received an $85 billion infusion from the Federal Reserve for an 80% non-voting equity stake. AIG, at the time the 18th-largest publically traded corporation on Earth, was delisted from the Dow Jones Industrial Average on September 22, 2008. The AIG family of corporations, the largest underwriter of commercial and industrial insurance, held at this time a $447 billion portfolio of credit-default swap contracts.

"Now AIG's solvency and liquidity is in our national interest. It operates in 130 countries. There's no entity like it in the world. It serves many, many purposes for the United States. So to have AIG go down would be very negative to the United States' interest, and business in those countries. They won't understand our government let this happen to it. I think it would undermine the credibility of our own government. When you're starting to unwind counterparty transactions worldwide in a company the size of AIG, it will take about ten years to do. What was happening was short-sellers would short AIG stock, so that would make the stock go down. And because of the stock going down they would have to put up more collateral on their credit default swap business. The governor of New York has worked with the insurance department to modify the regulations permitting AIG subsidiaries to move up about $20 billion of excess assets as a means of helping. That will help. But on the regulatory front, other than a bridge loan, that's all they need." - Maurice R. Greenberg, September 17, 2008, Council of Foreign Relations interview

Maurice Raymond "Hank" Greenberg, previous chairman and controlling owner of AIG insurance, manager of the third largest capital investment pool in the world, was floated as a possible CIA Director in 1995.

"Between July and September of 2008, (AIG) spent more than $2 million to lobby Congress, the Treasury Department, the Federal Reserve and the White House." - Ben Protes

By May 2009 The federal government had injected $182.5 billion into American International Group (AIG) to pay off credit-default swap contracts. The following banks received bailout funds through AIG on defaulting securties:

Deustche Bank ($5.4 billion), Société Générale ( $11 billion), Goldman Sachs ($8.1 billion), Citadel Investment Group, Calyon, Barclays, Bank of America, Merril Lynch, UBS, DZ Bank, Bank of Montreal, Rabobank, Royal Bank of Scotland, HSBC and Barclays Global Investors

$9,000,000,000,000 MISSING From The Federal Reserve !!!

"There was no reason to pay the contracts in full." - Janet Tavakoli

"Tens of billions of dollars of government money was funneled directly to A.I.G.'s counterparties." - Neil M. Barofsky

"The big banks' profits are totally bogus. The new accounting rules, the stress tests: They're all part of a major effort to put lipstick on a pig." - Martin Weiss

{Three trustees, Jill Considine (NY Fed, Depository Trust & Clearing Corp., Ambac Financial Group Inc.), Chester Feldberg (NY Fed, Barclays Americas) and Douglas Foshee (NY Fed, Halliburton & El Paso Corp.), were appointed to control AIG in January 2009 by the New York Federal Reserve Bank to oversee the federal government’s 77.9 percent equity stake. The New York Fed retained the right to remove the trustee. New York Fed President William Dudley worked until 2007 as Goldman Sachs’s chief economist. Stephen Friedman, who resigned as New York Fed chairman May 7, was once CEO of Goldman Sachs. JP Morgan Chase & Co. CEO Jamie Dimon and Richard Carrion, chairman and CEO of Banco Popular de Puerto Rico, are also on the New York Fed board, along with General Electric Co. CEO Jeffrey Immelt.}

"Few observers outside Wall Street understand that the hundreds of billions of dollars pumped into by the Fed of NY and Treasury, funds used to keep the creditors from a default, has been used to fund the payout at face value of credit default swap contracts or “CDS," insurance written by AIG against senior traunches of collateralized debt obligations or “CDOs." The Paulson/Geithner model for dealing with troubled financial institutions such as AIG with net unfunded obligations to pay CDS contracts seems to be to simply provide the needed liquidity and hope for the best. Fed and AIG officials have even been attempting to purchase the CDOs insured by AIG in an attempt to tear up the CDS contracts. But these efforts only focus on a small part of AIG's CDS book. Until we rid the markets of CDS, there will be no restoring investor confidence in financial institutions." - Chris Whalen

"When AIG finally got up from its seat at the Wall Street casino, broke and busted in the afterdawn light, it owed money all over town - and that a huge chunk of your taxpayer dollars in this particular bailout scam will be going to pay off the other high rollers at its table. Or that this was a casino unique among all casinos, one where middle-class taxpayers cover the bets of billionaires." - Matt Taibbi

American International Group (AIG) has four public relations firms on its payroll" - Kekst & Company, Sard Verbinnen, Hill & Knowlton and Burson-Marsteller - in addition to its own PR staff. AIG's "public relations army" hasn't seemed to make its executives PR savvy. On a conference call, AIG chief restructuring officer Paula Reynolds unwisely quipped that it might be 'better to go to jail' than have to deal with the intricacies of securities laws as they apply to AIG's situation. Michael Weisskopf reports that Sard Verbinnen & Co. "helps to structure statements on the bailout, Kekst & Co. focuses on sales of assets to pay back federal loans, Burson-Marsteller handles controversial issues and Hill & Knowlton fields inquiries from Capitol Hill and prepares congressional testimony for company officials."

AIG announced on March 15, 2009 it would be paying $218 million in bonuses. 73 AIG employees were promised over $1 million each. American Investment Group (AIG) is suing the federal government to recover $306.1 million of taxes, interest and penalties from the Internal Revenue Service. Defense contractors in Iraq were required to buy life and casualty coverage for their workers. AIG estimated the cost of insurance would be $73.1 million from 2003 to 2006 but charged Kellogg, Brown & Root nearly four times that amount $284.3 million.

"Recent developments in finance make it possible to unbundle the risks embedded in traditional financial instruments. A mortgage, for example, carries credit risk, interest rate risk, and prepayment risk, but with derivatives and CDOs, each of these risks can be disaggregated and made the basis of a financial bet. That a strategy is likely to fail spectacularly every ten or twenty years is not a disincentive to the leveraged trader: he will probably receive several large annual bonuses before the bad year comes." - Mark Jickling

"Wall Street's pay structure, in which bonuses are based on short-term profits, encouraged employees to act like gamblers at a casino - and let them collect their winnings while the roulette wheel was still spinning. To earn bigger bonuses, many traders ignored or played down the risks they took until their bonuses were paid. Their bosses often turned a blind eye because it was in their interest as well." - Louise Story

"U.S. taxpayers may be on the hook for as much as $23.7 trillion to bolster the economy and bail out financial companies." - Neil Barofsky, special inspector general for the Treasury's Troubled Asset Relief Program July, 2009

"Sovereign wealth funds operated by China, Singapore, Abu Dhabi, and other countries have taken large equity stakes in Citigroup, Merrill Lynch, Morgan Stanley, and other firms, including leading European financial institutions." - Mark Jickling

"We are mortgaging the future of our children and grandchildren at record rates, and that is not only an issue of fiscal irresponsibility, it's an issue of immorality." - David Walker, former Comptroller General of the United States

"Recovery will fail unless we break the financial oligarchy that is blocking essential reform."
- Simon Johnson, former chief economist at the International Monetary Fund

"The most recent report from the Comptroller of the Currency seems to have gone unnoticed in Washington and the press. If banks are not lending because of increased capital requirements in the face of credit default swaps, other derivatives and loan defaults then the report goes a long way in describing exactly why. The assets are comprised largely of real estate, residential mortgage, student, car and credit card loans. With the rise in defaulting mortgages, delinquent credit card and other debt the problem can only get worse. To recapitalize the banks to the point where exposure is low enough to encourage lending would take trillions and that's before any more fallout from the collapsing economy. Lending also requires creditworthy borrowers, the number of which is in a nosedive. The $165 trillion in notional derivatives and the associated credit risk related to $15 trillion in credit default swaps illustrated below is the poison apple that the taxpayer has been forced to bite into." - Andrew Hughes, 01/27/09

According to Jan Hatzius, chief American economist of Goldman Sachs, as of January 2009 banks had absorbed about $1 trillion in losses on mortgages and other bad debt and still needed to absorb another $1.1 trillion in losses.

Credit Exposure to Capital ratio. Amounts in $Millions




Credit Exposure to Capital Ratio

JP Morgan Chase








Bank Of America








Keiser Report: JP Morgan's Financial Herpes

JP Morgan invented credit-default swaps
to give Exxon credit line for Valdez liability

Bank of America Smacked
with Foreclosure Fraud Lawsuits

HSBC: The World’s Dirtiest Bank

HSBC Helped Terrorists, Iran,
Mexican Drug Cartels Launder Money, Senate Report Says

"Dirty Money" Foundation of US Growth and Empire

Citibank schemed with firm to hide its woes: Ex-Dewey partner

Pritzker’s Superior Bank Subprime Losses Blemish Resume

"When the "credit crunch" began and Washington began the rush to solve the problem with taxpayer cash, no accounting of this derivative nightmare was ever brought to bear. In all the deliberations and press releases there was not a single mention of the fact that the primary cause of the bank collapse was due to these 'time bombs'". It was widely discussed in the blogosphere but, like the real reasons for invading Iraq, never made it in to the mainstream media. As with Iraq, one would have to assume that the reason was to obfuscate the facts and cajole a shocked public in to accepting as a remedy whatever was proposed by Paulson, Bernanke and Bush. The latter had to be completely aware of the OCC data at the time and to assume that they did not is simply not credible. It would have been completely obvious that $700 Billion would do absolutely nothing to alleviate the crisis. As witnessed in the ensuing months since the TARP bill, how the money was used has been obfuscated and concealed. This was always a scam. Even as the economic indicators broke one record after another, the recipients of the TARP funds were selling Credit Default Swaps to each other, betting on each other's downfall. They knew the game was up and wanted to profit on the way down as much as they had on the way up. All the major Banks on Wall St. are seeing mounting losses and the failure of one will increase the losses of the other. They are joined at the hip and will fall like a house of cards." - Andrew Hughes 1/27/09

"America's five largest banks, which already have received $145 billion in taxpayer bailout dollars, still face potentially catastrophic losses from exotic investments if economic conditions substantially worsen, their latest financial reports show. "Citibank, Bank of America, HSBC Bank USA, Wells Fargo Bank and JP Morgan Chase reported that their "current" net loss risks from derivatives insurance-like bets tied to a loan or other underlying asset surged to $587 billion as of Dec. 31. Buried in end-of-the-year regulatory reports that McClatchy has reviewed, the figures reflect a jump of 49 percent in just 90 days.

The banks' quarterly financial reports show that as of 12/ 31/09: JP Morgan had potential current derivatives losses of $241.2 billion, outstripping its $144 billion in reserves, and future exposure of $299 billion; Citibank had potential current losses of $140.3 billion, exceeding its $108 billion in reserves, and future losses of $161.2 billion; Bank of America reported $80.4 billion in current exposure, below its $122.4 billion reserve, but $218 billion in total exposure; HSBC Bank USA had current potential losses of $62 billion, more than triple its reserves, and potential total exposure of $95 billion; San Francisco-based Wells Fargo, which agreed to take over Charlotte-based Wachovia in October, reported current potential losses totaling nearly $64 billion, below the banks' combined reserves of $104 billion, but total future risks of about $109 billion." - McClatchy newspaper 3/08/2009

"In the minds of too many , not only regular people but also top politicians , the financial crisis is already behind us. That way of thinking is dangerous. The global economic crisis continues." - Dominique Strauss-Kahn, IMF Managing Director, 09/12/09

"After spending a lifetime denouncing socialism as inherently unfair, Wall Street is now doing a hideous parody as if "socialism for the rich" were not an oxymoron in the first place. Take into account the appointments of Larry Summers* at the White House and the conspicuous leadership role in the bailout played by Barney Frank* in the House and Chuck Schumer* in the Senate. Families, businesses and government have to spend more wage income, profits and tax revenues on debt service instead of buying goods and services. So why is the solution to this debt overhead held to be yet MORE debt? Is there not something crazy here? It would take only $1 trillion or so to simply let "the market" work its magic in the context of renewed debtor-oriented bankruptcy laws to cure the debt problem. But that the government wants to make creditors whole - creditors who are the largest political campaign contributors and lobbyists these days." - Michael Hudson

"The entire economic growth system, where one regional center prints money without respite and consumes material wealth, while another regional center manufactures inexpensive goods and saves money printed by other governments, has suffered a major setback.

Protectionism will prove inevitable during the crisis, all of us must display a sense of proportion. Excessive intervention in economic activity and blind faith in the state's omnipotence is a mistake. The concentration of surplus assets in the hands of the state is a negative aspect of anti-crisis measures in virtually every nation. In the 20th century, the Soviet Union made the state's role absolute. In the long run, this made the Soviet economy totally uncompetitive.

Unjustified swelling of the budgetary deficit and the accumulation of public debts are just as destructive as adventurous stock-jobbing. This means we must assess the real situation and write off all hopeless debts and bad assets. The economy of the future must become an economy of real values. A system based on cooperation between several major centers must replace the obsolete unipolar world concept. It is necessary to return to a balanced prices based on an equilibrium between supply and demand, to strip pricing of a speculative element generated by many derivative financial instruments." - Vladimir Putin, 01/29/09 Davos

On April 2, 2009 the Financial Accounting Standards Board relaxed the "mark-to-market" rule. Financial institutions were given the go ahead to value their derivative assets (toxic debt) in a "mark-to-model" manner. For the first quarter of 2009 financial institutions were given the go ahead to use Dick Cheney's creative accounting methods to value their toxic debt at whatever value their mathematical models predicted. In other words financial institutions were allowed to value their toxic debt at whatever value they felt they should be as opposed to their actual value in the market.

"The announcement April 2, 2009 by the Financial Accounting Standards Board (FASB) weakening "mark-to-market" accounting rules allowing banks to value their toxic debt at inflated prices. This was not only an immediate boost to banks' balance sheets and reported profits, it also showed that the government will give Wall Street a green light to continue the same methods of fraud and double bookkeeping that triggered the breakdown of the financial system in the first place." - Tom Eley

{On October 30, 2008 the American Securitization Forum met to discuss the future of their $10.7 trillion industry. George Miller and other members were concerned that Financial Accounting Standards Board was going to create new rules to govern off-balance sheet securitization.

"Miller was trying to safeguard an accounting rule for off-the-books assets that helped U.S. banks export toxic debt around the world." - Alan and Ian Katz

If the Financial Accounting Standards Board had listened to George Miller the worldwide economic meltdown due to toxic debt marketing sales and off-balance sheet securitization could have gone on a little longer before the devil took his due. Maybe the new rules of the Financial Accounting Standards Board will revitalize the sale of toxic debt.

"Government cannot prevent nature from taking its course."
- David Rosenberg, chief North American economist at Merrill Lynch



!!! BAILOUT !!! (or TARP)

"When we look at the financial calamity that brought down Bear-Stearns and Lehman Brothers, some are fond of saying that "moral hazard" is still at play because stockholders lost money and employees lost jobs. But tell that to the stockholders and employees. They were not the ones deciding to take the outsized risks on loans that were nothing more than scams to create short-term wealth from long-term disaster." - Curtis White

"Threats of martial law were used to get this reprehensible bailout legislation passed."
- Peter Dale Scott

“We see TARP as an insurance policy. No matter how bad it gets, we’re going to be one of the remaining banks."- John C. Hope III, Whitney National Bank chairman

"The Wall Street banks - which are the recipients of the bailout money - are also the brokers and underwriters of the United States public debt. We are dealing with an absurd circular relationship: To finance the bailout, Washington must borrow from the banks, which are the recipients of the bailout." - Michel Chossudovsky

"The bailout plan promoted by Secretary of the Treasury Henry "Hank" Paulson amounts to a sum of money that is superior to the Louisiana Purchase, the New Deal, the Marshall Plan, the Apollo Lunar Project, the Korean War, the Vietnam War, the invasion of Iraq and other large government expenditures - combined!" - José Miguel Alonso Trabanco

"Under the Paulson plan, the government would buy mortgages and mortgage-backed securities for more than they are worth. The Paulson plan returns to the wondrous fiction that assets are worth what someone says they are worth, rather than what someone will actually pay. Financial companies have been saying for months now that market prices for mortgage securities were unreasonably low, although none of them seemed eager to buy at those prices. Among the companies that most vigorously pushed the idea were the American International Group (AIG)and Freddie Mac. The Federal Reserve and the Treasury think that the prices have fallen too far. The plan proposed by the Bush administration did not call for buying such securities at "current low prices." Ben Bernanke, the Federal Reserve chairman, explained to legislators this week, the price the government would pay is to be the "hold-to-maturity price" of these securities, not the "fire-sale price" they would now fetch in an open free market. The goal is to recapitalize the banking system by placing a floor under the prices of securities that never should have been issued." - Floyd Norris

"In the past year there have been at least seven different bailouts, and six different strategies. And none of them seem to have pleased anyone except a handful of financiers. Rather than tackle the source of the problem, the people running the bailout desperately want to reinflate the credit bubble, prop up the stock market and head off a recession." - Michael Lewis & David Einhorn 01/03/08

"A review of investor presentations and conference calls by executives of some two dozen banks around the country found that few cited lending as a priority. An overwhelming majority saw the bailout program as a no-strings-attached windfall that could be used to pay down debt, acquire other businesses or invest for the future. A Congressional oversight panel reported on January 9 that it found no evidence the bailout program had been used to prevent foreclosures. At least seven banks that received TARP money have since bought other companies." - Mike McIntire, 01/17/09

"The foreclosure plan carries many of the same drawbacks as the stimulus bill. Both are full of good intentions and comforting provisions for those who find themselves in financial trouble. Both pay lip service to words like "stimulus" and "incentives." But in the end, both of these headline programs rely on government to make the decisions, to pick the winners and losers, and to subsidize those solutions with money taken from people who aren't in financial trouble - yet!" - Terry Savage 02/23/2009

"According to University of Massachusetts economist Thomas Ferguson the Bush/Obama bank bailouts alone will cause a permanent addition of interest payments on the national debt of $100 billion a year forever. That means every American will pay, during the course of his or her lifetime, over $20,000 to rescue the banks from their bad loans. To put that number in perspective, it equates to 2-1/2 years of tuition at a state university that instead will be paid to the government of China or a similar foreign investor. Yes, America , that is what your elected government just decided you will do." - Richard C. Cook 03/02/09

Breakdown of 8.5 trillion rescue plan
December 2008

At the end of March of 2009, Bloomberg reported that the federal government and the Federal Reserve have spent, lent or committed $12.8 trillion. This is $42,105 for every man, woman and child in America and 14 times the $900 billion of currency in circulation.

America's gross domestic product was $14.2 trillion in 2008.

"The Federal Reserve is buying an insurance company? Where exactly is that covered in the Federal Reserve Act? This is not your ordinary “nationalization” like the purchase of Fannie/Freddie stock by the United States Treasury. The Federal Reserve has the power to print the national money supply, but it is not actually a part of the American government. It is a private banking corporation owned by a consortium of private banks. The banking industry just bought the world’s largest insurance company, and they used taxpayer money to do it.

The bank bailout bill that just passed the Senate and is being deliberated in the House would turn the banks' worst assets into good United States dollars. The covered instruments eligible for conversion include the black hole of derivatives. Derivatives held by American banks are now estimated at $180 trillion. How will the Treasury acquire the dollars to buy all these disastrously bad bank assets? The money will no doubt come from an issue of United States securities, or debt; but who will lend to a nation that already has the highest federal debt in the world, one that is growing exponentially? The likely answer is the Federal Reserve, the bankers' bank that acts as "lender of last resort" when there are no other takers. The Federal Reserve is a private banking corporation owned by its member banks. The Federal Reserve returns the interest on the bonds it "monetizes" to the government, but only after deducting its operating costs and a 6% guaranteed return for each of its many bank shareholders. The upshot is that we the American people will be paying interest to the banks to bail out the banks from their own follies!" - Ellen Hodgson Brown

“I was telling a friend, ‘this must have been how the Politburo felt." - Jeb Mason, the Treasury’s liaison to businesses commenting on the deluge of requests from lobbyists for money on the TARP announcements

"Some lobbyists, Mr. Mason said, had called him even though they did not have any clients looking to get into the program or worried about its restrictions. They were merely seeking intelligence on which industries would be deemed eligible for assistance. He suspects they were representing hedge funds that wanted to trade on that information." - Mark Landler & David D. Kirkpatrick November 11, 2008

"This financial meltdown involved a broad national breakdown in personal responsibility, government regulation and financial ethics. So many people were in on it: People who had no business buying a home, with nothing down and nothing to pay for two years; people who had no business pushing such mortgages, but made fortunes doing so; people who had no business bundling those loans into securities and selling them to third parties, as if they were AAA bonds, but made fortunes doing so; people who had no business rating those loans as AAA, but made a fortunes doing so; and people who had no business buying those bonds and putting them on their balance sheets so they could earn a little better yield, but made fortunes doing so." - Thomas L. Friedman

"Over the last 20 years American financial institutions have taken on more and more risk, with the blessing of regulators, with hardly a word from the rating agencies, which, incidentally, are paid by the issuers of the bonds they rate. The American International Group (AIG), Fannie Mae, Freddie Mac, General Electric and the municipal bond guarantors Ambac Financial and MBIA all had triple-A ratings. It's almost as if the higher the rating of a financial institution, the more likely it was to contribute to financial catastrophe. These oligopolies, which are actually sanctioned by the S.E.C., didn't merely do their jobs badly. They didn't simply miss a few calls here and there. In pursuit of their own short-term earnings, they did exactly the opposite of what they were meant to do: rather than expose financial risk they systematically disguised it. " - Michael Lewis & David Einhorn

Christopher "Kit" Taylor, the former chief regulator and executive director of the Municipal Securities Rulemaking Board from 1978 to 2007, said the members of the board wouldn't allow the group to set rules on credit default swaps and derivatives for the $2.69 trillion municipal bond market.

"The big firms didn't want us touching derivatives. They said, ‘Don't talk about it, Kit.' I saw more bankers looking out for their self interest in my last years at the MSRB. The attitude had changed from, ‘What can we do for the good of the market,’ to, ‘What can we I do to ensure the future of my business.’ The profit wasn’t in the underwriting, it was in the swap. Right up until the day we went to real-time disclosure, I was getting calls from bankers wanting to delay it. The only ones who benefited from delaying transparency were those who profited from the trades."- Christopher "Kit" Taylor

Congress set up the MSRB in 1975 to make rules for firms that underwrite trade and sell municipal debt. The board is funded by fees paid by member firms, which generated revenue of $22.2 million in fiscal 2008. As a self-regulatory organization, members of the industry are granted the authority to supervise their own practices. A 15-member board oversees the organization and 10 of the directors are from Wall Street firms. Enforcement is handled by the U.S. Securities and Exchange Commission. Taxpayers in Detroit ($400 million), Jefferson County ($657 million), Alabama, and local California governments suffered more than $1 billion of losses.

Between November 25, 2008 to July 8, 2009 financial institutions issued $274 billion of debt under the Temporary Liquidity Guarantee Program. The program opened a channel of funding for financial institutions unable to borrow in U.S. markets after the September collapse of Lehman Brothers Holdings Inc. GMAC Financial Services, formerly known as General Motors Acceptance Corporation, the auto and home lender that received $13.5 billion from U.S. taxpayers in exchange for corporate debt in the form of junk bonds, became a bank in December to qualify for the Temporary Liquidity Guarantee Program. To protect $10 million of GMAC junk bonds annually with a five-year credit-default swap contract it costs $895,000. To protect the entire $13.5 billion in GMAC junk bonds annually will cost over $1.2 billion annually.

"It's finally dawning on market players and investors that Wall Street's interest and those of investors have never been aligned." - Thomas C. Priore, CEO of ICP Capital

For the most excellent job the failed Wall Street investment bankers did
in 2008 they collected an estimated $18.4 billion in bonuses for the year.

{According to a report released July 30,2009 by Andrew M. Cuomo the nine financial institutions receiving the most federal bailout money paid at least 4,793 of their investment bankers/traders bonuses of more than $1 million apiece for 2008. At Goldman Sachs bonuses of more than $1 million went to 953 investment bankers/traders - just 200 people collectively were paid nearly $1 billion in total. Morgan Stanley awarded seven-figure bonuses to 428 investment bankers/traders with $577 million shared by 101 people. JP Morgan paid 1,626 investment bankers/traders bonuses of $1 million or more. At Citigroup and Bank of America million-dollar awards were distributed to hundreds of investment bankers/traders. The bonus pools at the nine banks that received bailout money was $32.6 billion, while those banks lost $81 billion.

Bonuses paid to investment bankers/traders were not tied to national economic growth or a reasonable percentage of company profits. Bonuses were generally greater than the net income of the financial institutions. Morgan Stanley, for example, had $1.7 billion in earnings and paid $4.5 billion in bonuses. Goldman Sachs had $2.3 billion in earnings and paid $4.8 billion in bonuses. JP Morgan Chase had $5.6 billion in earnings and paid $8.7 billion in bonuses. Citigroup and Merrill Lynch, "zombie banks," paid $5.3 billion and $3.6 billion in bonuses, respectively - although they lost more than $27 billion each in earnings.

The American people were told by Wall Street investment bankers/taders that these bonuses must be paid to retain talent. The Wall Street investment bankers/traders also claim that regulation of derivatives and hedge funds will cause Wall Street investment bankers/traders to move their operations overseas. It is really a shame that the Wall Street investment bankers/traders did not move overseas many years ago - America might not have become the dog eat dog culture of the commercial gods of materialism that it has become - a culture in which everything has a price!}

living and dying through cooperation

Chimps outwit humans in games of strategy

common chimpanzees are more competitive with one another than humans are
humans, in contrast, are highly prosocial and normally quite cooperative
Note: televised game shows are to teach humans to mimic apes !
Welcome to Planet of the Apes !!!

"We disassociated the source of our financial benefits from what we saw happening around us that we knew was wrong." - Catherine Austin Fitts

"We are in the midst of a crash course in economic inter-connectedness."
- Episcopal Bishop Katharine Jefferts Schori July 12, 2009

"Economic freedom is an essential requisite for political freedom. Enabling people to cooperate with one another without coercion or central direction reduces the area over which political power is exercised." – Milton Friedman economist, Presidential Medal of Freedom, Riksbank Prize

"Society itself may be defined as nothing else but the combination of individuals for cooperative effort. Without social cooperation man could not achieve the barest fraction of the ends and satisfactions that he has achieved with it. The realm of economic cooperation occupies a far larger part of our daily lives than most of us are commonly aware of, or even willing to admit. Marriage and family are, among other things, a form not only of biological but of economic cooperation." - Henry Hazlitt

"Man has almost constant occasion for the help of his brethren, and it is vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favor, and show them that it is for their own advantage to do for him what he requires of them." - Adam Smith

An immoral economic system compels a society's moral decline.

Through devotion to the current corporate fiat-money credit-based economic system, American government has enshrined all the disadvantages and none of the advantages of democracy. We now have a government based on dissent, in which delay is a common tactic. Secrecy is regularly employed so imbecilic measures that never produce the results predicted can be enacted.

Corruption is a moral failure; it is ubiquitous in societies permeated by immorality. The current corporate fiat-money credit-based economic system institutionalizes immorality diffusing it throughout society. Empirical evidence for this claim is pervasive.

The popular conception of the American economic system is this: individuals, acting in their own self-interest as economic agents, engage in economic activities that bring them the greatest financial rewards thereby maximizing the economic well-being of society as a whole.

Experience does not validate this view.

Congressmen defend the morality of their actions by appealing to this prevailing popular conception. Congressmen are doing exactly as popular conception recommends - just like businessmen and criminals.

The result is that commonly held moral values are dismissed as irrelevant and society sinks into immorality. An immoral economic system compels a society's moral decline. Such declines are systemic and not accidental.

The intellectual and moral failures of the corporatists and the current corporate fiat-money credit-based economic system reflect the ideology failure of the economics of corporatism and the credit-based monetary system.

The inadequate and shoddy economic arguments of corporatist ideologues parallels the bankruptcy of the military-industrial-entertainment social cultural system in which they are embedded.

We are told endlessly that our very civilization is dependent on keeping in check the violent tendencies of those who envy our "developed" social culture.

But what about those violent tendencies in human nature?

With images of tales of violence on Our television screens and in Our newspapers it may seem a strange to point out that the truth is humans are becoming less violent.

Recent evidence about violence among animal species, such as the chimpanzee, and among hunter-gatherer and early agricultural societies shows that mankind has undergone a remarkable pacifist revolution in the last 10 millenniums.

Humans are unique among species in their elaborate spreading of labor among strangers. Unlike that other uniquely human attribute, language, our ability to cooperate with strangers did not evolve gradually during prehistory. Only 10,000 years ago - a blink of an eye in evolutionary time - humans still hunted in family bands and were suspicious of strangers, fighting those they could not flee. They were only cautiously beginning to accept the rudiments of trade.

Yet today, we live and work among strangers and depend upon millions more.

What has made this possible?

The answer is both institutional and psychological. Once human beings settled down to agricultural and could no longer flee unwelcome strangers, human beings were forced to develop the institutions that now sustain cooperation between strangers - cities, markets and the law.

Humans could do so because of two psychological mechanisms:

First, a capacity for rational calculation of the costs and benefits of cooperation and,

Second, a tendency for reciprocity, the willingness to repay kindness with kindness and betrayal with revenge.

Although neither emotional condition initially came into being to help individuals deal with strangers both allowed us to do so, once strangers became an inescapable fact of life.

In many hunter-gatherer and early agricultural societies archeological evidence suggest that up to 40% of deaths may have been because of violence.

The worldwide average rate of violent death (a little over 1% of all deaths) is almost certainly as low as it has ever been.

The deadliest violence is perpetrated not by individuals but by groups - gangs, armies, terrorist networks. Human cooperation is double-edged. Not only is it the foundation of social trust, it also makes for the most successful acts of aggression between groups. Like chimpanzees, though with more lethal refinement, human beings harness altruism, solidarity and the skills of rational reflection in pursuit of warfare. Industrialization, networking, information technology and human capital dramatically increase Our efficiency at making war.

We must reinforce those law-abiding institutions and networks that have restrained the violence to which Our adrenaline and testosterone dispose us and that have built the peace and prosperity of modern society.

"Executives are in the business world for themselves first, and public trading of companies' stocks is mostly a thinly disguised mechanism to allow executives and directors to profit from inside knowledge and favors." - Danila Oder

"We've known forever that idiots and greedy individuals are in control. Just look at the George W. Bush administration. More and more mergers, selling American companies and jobs to foreigners, corporations running our government, transferring the wealth of the many to the few, the dumbing down and muting of the press and on and on.

Where is the outrage in this nation? Will it all end, finally, when there is only Walmart and McDonald's left and there is no one who can afford its product except those who stole all the money? These plutocrats should all be known for what they are - traitors. "- Michael Boshears, March 2005

"In regards to the reorganization of the bankruptcy law I have to confess when the guy with the Indian accent called to sign up my 13-year-old son for a Visa credit card, I was somewhat annoyed. When I called my congressman's office and spoke to someone who didn't give a you-know-what, I was more than somewhat annoyed, I was angry. I guess we have the best government that credit card companies can buy." - Karen Weston

"One day after George W. Bush took the nation's middle class to task for its free-wheeling ways by signing the bankruptcy reform bill, the Republican controlled House votes to give away billions in tax breaks and incentives to those stalwarts of fiscal responsibility - the energy industry. It's so comforting to know our government has its priorities in order." -David Silva

"Congress made it more difficult for the common person to file bankruptcy, the president signed it into law and now the high court has made it much more difficult for the common person to sue corporations and big business for wrongdoing. That proves that the old adage, "money returning to its rightful owners, the rich," is working." - Kenneth Tuxford

"With the national debt at $8 trillion and growing daily, and a trade deficit of more than $700 billion, George W. Bush's desire to take $39 million from programs for the poor and give the rich a $70 million tax cut, while asking $70 billion more for Iraq, is not just abject fiscal irresponsibility. It's totally insane. If a business operated this way, it would be bankrupt. If a person operated this way, he would be homeless. If a country operates this way, it's on the path to self-destruction." - Tim Noworyta, 02/2006

"Banking establishments are
more dangerous than standing armies."
- Thomas Jefferson

To work in high finance one has to divorce oneself from the reality of the human suffering that is caused directly by the funneling of the fruits of one's labor into paying for the right to use the fungible assets created through a few strokes on a computer keyboard and registered in the financial system's database.

Morality must be checked at the door much as the Pharisees checked their morality at the temple door when they allowed the soulless money changers to set up their financial operations in the temple.

One can serve Mammon or God (God as defined by living life naturally in harmony with the Earth while elevating the needs of life above the acquisition of material possessions) - not both. It is no wonder that all that is good in a human - charity, compassion, empathy - is suppressed by the elevation of all that is evil - pride, greed and lust.

Each individual human has the basic human right to the basic necessities of life but no one has the right to more resorces than he or she can use. The man or woman that controls an inordinate amount of resources has become corrupt and has very little chance of finding God and living life in God.

"A wealthy man has as much chance of reaching heaven as a camel has in passing through the eye of a needle"- Jesus

Those that accept and support tyranny over the lives of others are as much to blame as those that commit tyrannical acts.

See Adam Smith

See John Maynard Keynes

See John Kenneth Galbraith

See Social Control

See The Global Economy

See The Evil of Banality

See American aristocracy

See The Corruption of the American Dream

See The Subversion of American Democracy
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unique library index

This web site is not a commercial web site and is presented for educational purposes only.

This website defines a new perspective with which to engage reality to which its author adheres. The author feels that the falsification of reality outside personal experience has created a populace unable to discern propaganda from reality and that this has been done purposefully by an international corporate cartel through their agents who wish to foist a corrupt version of reality on the human race. Religious intolerance occurs when any group refuses to tolerate religious practices, religious beliefs or persons due to their religious ideology. This web site marks the founding of a system of philosophy named The Truth of the Way of Life - a rational gnostic mystery religion based on reason which requires no leap of faith, accepts no tithes, has no supreme leader, no church buildings and in which each and every individual is encouraged to develop a personal relation with the Creator and Sustainer through the pursuit of the knowledge of reality in the hope of curing the spiritual corruption that has enveloped the human spirit. The tenets of The Truth of the Way of Life are spelled out in detail on this web site by the author. Violent acts against individuals due to their religious beliefs in America is considered a “hate crime."

This web site in no way condones violence. To the contrary the intent here is to reduce the violence that is already occurring due to the international corporate cartels desire to control the human race. The international corporate cartel already controls the world central banking system, mass media worldwide, the global industrial military entertainment complex and is responsible for the collapse of morals, the elevation of self-centered behavior and the destruction of global ecosystems. Civilization is based on cooperation. Cooperation does not occur at the point of a gun.

American social mores and values have declined precipitously over the last century as the corrupt international cartel has garnered more and more power. This power rests in the ability to deceive the populace in general through mass media by pressing emotional buttons which have been preprogrammed into the population through prior mass media psychological operations. The results have been the destruction of the family and the destruction of social structures that do not adhere to the corrupt international elites vision of a perfect world. Through distraction and coercion the direction of thought of the bulk of the population has been directed toward solutions proposed by the corrupt international elite that further consolidates their power and which further their purposes.

All views and opinions presented on this web site are the views and opinions of individual human men and women that, through their writings, showed the capacity for intelligent, reasonable, rational, insightful and unpopular thought. All factual information presented on this web site is believed to be true and accurate and is presented as originally presented in print media which may or may not have originally presented the facts truthfully. Opinion and thoughts have been adapted, edited, corrected, redacted, combined, added to, re-edited and re-corrected as nearly all opinion and thought has been throughout time but has been done so in the spirit of the original writer with the intent of making his or her thoughts and opinions clearer and relevant to the reader in the present time.

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