By Golem XIV
What have Mark to Market accounting rules got to do with English forests and Fire sales?
Officially? Nothing whatsoever. In my opinion? Everything.
But it requires reminding ourselves how we got to where we are now.
Back in 2008 the big banks were in fear for their lives, weighed down as they were with hundreds of billions in loans that were defaulting and assets that were losing value as the markets for them plunged and then closed. The bank's bad loans meant they had no cash flowing IN with which to pay their own debts. And their capital was flowing OUT as the value of the assets they had in their vaults declined along with the markets in which they were valued.
They were running out of cash and needed a ton of it FAST. And they needed to stop their assets losing value, or they would be forced to sell more and more of them to raise capital to replace the value they had lost.
The banks had to find solutions to these two separate but related problems.
The losses from bad loans, the so called 'Toxic Debts', they solved by getting Henry Paulson to tell Congress that unless it bailed out the banks, there would be social breakdown and tanks on the streets. The $700 billion Troubled Asset Relief Programme (TARP) was duly passed by a cowed US Congress on 3rd October 2008. The banks now had a new source of cash to replace that which they were NOT getting from their stupid loans. And that new source was you and me.
The second problem was trickier. How were the banks to stop their assets from losing value? The reason they were losing value was because fewer and fewer people wanted to buy them and those who did offered lower and lower prices because the whole market was in free fall. Not a good moment for anyone to find they had to sell assets to get a little capital. Such a sale is called a fire-sale.
From the moment the banks realized they were in such trouble that they might be forced in to fire sales, they and their friends began a furious and relentless campaign to have Mark to Market accounting rules suspended. Mark to market, also known as 'Fair Value' accounting simply says your asset is worth what you can sell it for on the open market. Simple. Or it would be for you and me. The banks raised all sorts complications which I will write about soon.
Whatever your opinion about Mark to Market one thing remains true, the banks were desperate to have these rules suspended because a market valuation of their assets showed they were insolvent one and all. That would not do. A lot of very rich and powerful people would have found, overnight, that they were no longer either rich or powerful.
The banks knew they couldn't stop their assets losing value, so they did the next best thing. They got the accounting rules changed so they no longer had to tell people that their assets were losing value. If they didn't have to tell people, then who could say the assets had lost any value.
After a frantic year of flooding lobbying money into the accounts of the relevant Senators and Congressmen and women, Mark to Market rules were suspended on 2nd April of 2009. They were replaced by rules called Mark to Model by which the banks could "..use significant judgement in gauging prices of some investments..."
And suddenly the banks were no longer insolvent and some handy bank-designed 'stress tests' were subsequently run to prove it.
Now fast forward to 2011.
Today the nations who bailed out the banks by taking the banks' debts on to the national debt, are in terrible trouble themselves. Sovereign debt levels are so bloated that nations are being warned that they MUST lower their debt levels and raise some cash. And who is warning them? Turns out it is the same banks and financial system whose debts we bailed out.
So far we have borrowed money and printed money and both options are maxed out. Plus we are now not getting as much cash flow IN to the exchequer because our tax base is shrinking due in turn to rising unemployment. Two years ago cash flow was the banks problems. Now, magically it is ours.
And now our ever helpful and expert friends in the financial world are advising that we absolutely must cut spending on everything non-essential - which means anything that isn't a further bank bail out and bond purchase. (Those we are told are absolutely essential to ensure 'the recovery' continues and does not stall.) And they are further advising that we could also raise some badly needed cash - by selling a few assets!
You might remember how this exactly what was suggested to Greece - that it could pay some of its debts by selling the odd island, or how Ireland could sell off its motorways or airports or electricity grid.
In the UK the advice is being taken up with unsuppressed glee. The British Government has just announced that it plans to sell off a quarter of a million hectares of woodland that is currently owned by the people.
No one asked us, but don't worry there will be a 'consultation' no doubt.
Our government is not selling this land because it's an intrinsically good idea to not own any forests or because now is a propitious moment to sell. The government is selling because they say 'we must', in order to tackle our debts, whether it's a good moment or not, And let's face it, in a recession it's not a good moment. Thus it is a 'forced' sale - a fire sale.
But who I ask will have the money to buy all these forests? Will you?
The banks have cash. And what is more so do the bankers who work there. Take RBS for example. In 2009 RBS made a loss of 3.6 billion pounds. It had no money to pay anyone for anything. But that didn't stop them because we had put into the banks tens of billions. So the bank, decided to reward the very same bankers who had bankrupted the bank and lost 3.6 billion that year alone, 1.6 billion pounds in bonuses.
The bank did not pay that money. Remember the banks had no money. It had lost all its money. WE paid those bankers.
Now what do you think those bankers will do with 1.6 billion pounds in bonuses. What to buy? Oh the decisions! I know how, about a darling little woodland. There are going to be plenty for sale within easy reach of The City.
And for those big commercial forests, well, what will be needed there are some bank loans. So the banks will loan the money, our money, to companies and funds and 'high net worth individuals' (other bankers) who want to snap up a forest on sale at fire-sale prices. And the banks will turn around and trumpet how they are lending in to the real economy!
The entire sale aims, according to the government's own figures to raise about £140 - 200 million. The debt we have saddled ourselves with as a direct result of bailing out the banks, according to more of the government's own figures is somewhere between 800 billion and 1.4 trillion Pounds. 200 million from the forests will be 0.2 billion or between one four hundredth and one seven hundredth of the debt paid off! Worth it? A good use of the nation's forests.
"Every little helps" though, doesn't it? And those leases will be up in only 150 years during which time we won't miss them, no restrictions on access will have been introduced and absolutely no harm will have come to them. Trust us, we're bankers!
I wonder why Mr Cameron and Mr Osbourne, feel it will be better to get this widow's mite from selling a half to three quarters of the last remaining open public woodland into private hands rather than squeeze 200 million back from the banks whose bail out caused our debts to balloon as they have?
Are we selling things because it will really help then long term health of this nation, or are we doing so because this is a perfect opportunity to strip the nation of assets at fire-sale prices? A perfect privatization. Push the nation into a fire sale which does what the Tories have always wanted and set up the banks for their promised recovery by letting them buy up assets at knock down prices. Two victories for half the price of one.
And in the logic of fire sales, as one nation sells at knock down prices it lowers the value of similar assets held by other nations. Ireland won't be able to get more for its forest than we sell ours for. The logic of fire sales, the reason the banks were so appalled at the prospect of their own assets being sold this way, is that fire sales create a downward spiral. Just exactly the buying opportunity banks love when they are fire is burning someone else's house down not theirs.
You see banks have a love hate relationship with fire sales. They hate having to sell their assets at fire sale prices but love it when anyone else does.
Monday, January 31, 2011
Vernon Smith on Balance Sheet Recessions
By Mike Konczal
The Nobel-winning economist Vernon Smith has an editorial in Newsweek – Mired in Disequilibrium – about balance sheet recessions and how to get out of them:
…Some 23 percent of homeowners owe more than their home is worth on the market, and their demand for goods is restrained by the need to pay down debt. This is the essence of a balance-sheet recession, and is what underlies the so-called Keynesian liquidity trap….
There are three routes to restoring equilibrium:
• Inflate the prices of all other goods, including labor, while housing demand remains stuck in its negative equity loop. Fed policy has been consistent with this objective since 2008 with no evidence of success, as is typical in severe balance-sheet recessions.
• Allow the household deleveraging process to grind through an extended period of low GDP growth and high unemployment until we gradually recover. This option will surely succeed in due course, but not without high annual opportunity cost in terms of lost wealth creation. This was the path followed in the Depression.
• Do for households what the Fed sought for the banks: the Treasury (facilitated by Fed monetary ease and bank capital requirements) finances the banks to restate the principal on current negative-equity mortgage loans, restoring them to new mark-to-market zero-equity baselines.
The last option, in principle, seeks to reboot homeowners’ damaged balance sheets in an effort to arrest a prolonged deleveraging process and more quickly restore household demand to levels no longer dominated by negative home equity. It is analogous to a mortgage “margin call” with public funding of the restored household balance sheets.
I regard the third option as far better than the stimulus, while recognizing that forgiving debt—whether bank or household debt—is never good policy. But please keep in mind that we have had no good options.
This is similar to a March 2009 proposal in Slate by Eric Posner and Luigi Zingales that would take the hardest hit zip codes and reset their mortgage under the condition that the bank gets half the upside of any future appreciation.
These two plans sound like really complicated programs, large-enough in scale to be inefficient. Which is a waste, since we already have this great system for writing down and managing burdensome debt, and it’s this marvelous thing called our bankruptcy laws. Sadly there’s a defect in it that prevents bankruptcy courts from writing down single-family principle residence mortgage. Just so you know, the “cramdown” people knew that the foreclosures and the negative equity was going to ravage our economy for a decade like years ago.
We could easily pass a streamlined, modified version of bankruptcy just for this crisis. Adam Levitin has proposed this with his Chapter M for Mortgage bankruptcy. It would remove foreclosure actions from state court to federal bankruptcy court. Successful petitions can be offered a standardized pre-packaged bankruptcy plan. The plan would be based on HAMP modification guidelines (interest rate reduction to achieve 31% DTI goal, but without federal funding) plus cramdown to address negative equity.
We can make this fair on the backend. If the homeowner redefaults we can speed up the foreclosure process. It wouldn’t affect non-mortgage lenders. It is fast-tracked relative to traditional Chapter 13. It can have clawback mechanisms to address potential future appreciation.
And going through the process can give the lender clean title. Because there’s this whole issue of who owns what in the securitization chain which is a few court cases away from putting our financial system over a cliff. And the best feature is that it has no cost to the federal government. Like other smart policy, it builds off already existing infrastructure, so it can be started immediately using existing courts and Chapter 7 panel trustees for sales.
Why doesn’t this happen?
Real Talk
Vernon Smith is a libertarian. The general rule for libertarians and their approaches they have to re-regulating the financial system is that they need to be able to move at least a handful of Republicans. This has certainly been the dynamic over the past three years, particularly when it comes to Dodd-Frank. With all GOP votes playing Waterloo, fighting any type of accomplishment that Obama could pass and taking marching orders from the financial lobbyists, the median voter becomes Blue Dogs and New Democrats who are ultimately not going to do anything that threatens Wall Street. And the better libertarian ideas aren’t going to get anywhere.
One of the most consistent things about the energy of the Tea Party is their opposition to any interventions for suffering homeowners. As the Wall Street Journal reported, FreedomWorks was AstroTurfing anti-foreclosure relief with sites like AngryRenter back in March 2008. For all the talk about how the Tea Party is a group of populists who hate bailouts of Wall Street, the actual Santelli “Rant of the Year” was about HAMP, the ineffectual mortgage modification program, not TARP. He didn’t want to subsidize “the losers.”
Over the past three years, the Blue Dogs and new Democrats have shown no interest in anything like this. Matt Stoller called it in November 2007 when the bankrutpcy modification fight was in full force:
If you want to know why we haven’t heard much about the subprime mortgage mess from Democrats, it’s because there’s an intraparty fight brewing in the House of Representatives over what to do….the reason the subprime mortgage meltdown is so problematic is because homeowners can’t renegotiate mortgages for primary residences in bankruptcy court. If you declare bankruptcy, you still can’t get out from under your mortgage debt, which essentially enslaves people whose home value has dropped lower than their debt amount…
The good news is that Brad Miller, Linda T. Sánchez, Barney Frank, and Mel Watt have a bill in Congress that empowers bankruptcy courts to restructure mortgages for primary residences….It’s a very sane and reasonable approach that lets people declare bankruptcy and get our from under horrific levels of debt.
The interesting news is that 16 fellow Democrats are opposing this bill because it will impact the Bankruptcy Bill provisions they passed in 2005. Who are these lovely people? If you guessed ‘Blue Dogs’, you’d be right….
It’s time to understand that Bush Dogs are part of a working conservative majority. They are not our friends, they are not our allies, they are political opponents who want to bail out wealthy investors and hurt people trapped in subprime mortgage markets. Politically, they are also the people hurting Democratic capacity to differentiate ourselves as populists and capture swing areas and exurban Republicans hurt by the housing meltdown.
And here we are, with sky-high unemployment for the foreseeable future.
The Nobel-winning economist Vernon Smith has an editorial in Newsweek – Mired in Disequilibrium – about balance sheet recessions and how to get out of them:
…Some 23 percent of homeowners owe more than their home is worth on the market, and their demand for goods is restrained by the need to pay down debt. This is the essence of a balance-sheet recession, and is what underlies the so-called Keynesian liquidity trap….
There are three routes to restoring equilibrium:
• Inflate the prices of all other goods, including labor, while housing demand remains stuck in its negative equity loop. Fed policy has been consistent with this objective since 2008 with no evidence of success, as is typical in severe balance-sheet recessions.
• Allow the household deleveraging process to grind through an extended period of low GDP growth and high unemployment until we gradually recover. This option will surely succeed in due course, but not without high annual opportunity cost in terms of lost wealth creation. This was the path followed in the Depression.
• Do for households what the Fed sought for the banks: the Treasury (facilitated by Fed monetary ease and bank capital requirements) finances the banks to restate the principal on current negative-equity mortgage loans, restoring them to new mark-to-market zero-equity baselines.
The last option, in principle, seeks to reboot homeowners’ damaged balance sheets in an effort to arrest a prolonged deleveraging process and more quickly restore household demand to levels no longer dominated by negative home equity. It is analogous to a mortgage “margin call” with public funding of the restored household balance sheets.
I regard the third option as far better than the stimulus, while recognizing that forgiving debt—whether bank or household debt—is never good policy. But please keep in mind that we have had no good options.
This is similar to a March 2009 proposal in Slate by Eric Posner and Luigi Zingales that would take the hardest hit zip codes and reset their mortgage under the condition that the bank gets half the upside of any future appreciation.
These two plans sound like really complicated programs, large-enough in scale to be inefficient. Which is a waste, since we already have this great system for writing down and managing burdensome debt, and it’s this marvelous thing called our bankruptcy laws. Sadly there’s a defect in it that prevents bankruptcy courts from writing down single-family principle residence mortgage. Just so you know, the “cramdown” people knew that the foreclosures and the negative equity was going to ravage our economy for a decade like years ago.
We could easily pass a streamlined, modified version of bankruptcy just for this crisis. Adam Levitin has proposed this with his Chapter M for Mortgage bankruptcy. It would remove foreclosure actions from state court to federal bankruptcy court. Successful petitions can be offered a standardized pre-packaged bankruptcy plan. The plan would be based on HAMP modification guidelines (interest rate reduction to achieve 31% DTI goal, but without federal funding) plus cramdown to address negative equity.
We can make this fair on the backend. If the homeowner redefaults we can speed up the foreclosure process. It wouldn’t affect non-mortgage lenders. It is fast-tracked relative to traditional Chapter 13. It can have clawback mechanisms to address potential future appreciation.
And going through the process can give the lender clean title. Because there’s this whole issue of who owns what in the securitization chain which is a few court cases away from putting our financial system over a cliff. And the best feature is that it has no cost to the federal government. Like other smart policy, it builds off already existing infrastructure, so it can be started immediately using existing courts and Chapter 7 panel trustees for sales.
Why doesn’t this happen?
Real Talk
Vernon Smith is a libertarian. The general rule for libertarians and their approaches they have to re-regulating the financial system is that they need to be able to move at least a handful of Republicans. This has certainly been the dynamic over the past three years, particularly when it comes to Dodd-Frank. With all GOP votes playing Waterloo, fighting any type of accomplishment that Obama could pass and taking marching orders from the financial lobbyists, the median voter becomes Blue Dogs and New Democrats who are ultimately not going to do anything that threatens Wall Street. And the better libertarian ideas aren’t going to get anywhere.
One of the most consistent things about the energy of the Tea Party is their opposition to any interventions for suffering homeowners. As the Wall Street Journal reported, FreedomWorks was AstroTurfing anti-foreclosure relief with sites like AngryRenter back in March 2008. For all the talk about how the Tea Party is a group of populists who hate bailouts of Wall Street, the actual Santelli “Rant of the Year” was about HAMP, the ineffectual mortgage modification program, not TARP. He didn’t want to subsidize “the losers.”
Over the past three years, the Blue Dogs and new Democrats have shown no interest in anything like this. Matt Stoller called it in November 2007 when the bankrutpcy modification fight was in full force:
If you want to know why we haven’t heard much about the subprime mortgage mess from Democrats, it’s because there’s an intraparty fight brewing in the House of Representatives over what to do….the reason the subprime mortgage meltdown is so problematic is because homeowners can’t renegotiate mortgages for primary residences in bankruptcy court. If you declare bankruptcy, you still can’t get out from under your mortgage debt, which essentially enslaves people whose home value has dropped lower than their debt amount…
The good news is that Brad Miller, Linda T. Sánchez, Barney Frank, and Mel Watt have a bill in Congress that empowers bankruptcy courts to restructure mortgages for primary residences….It’s a very sane and reasonable approach that lets people declare bankruptcy and get our from under horrific levels of debt.
The interesting news is that 16 fellow Democrats are opposing this bill because it will impact the Bankruptcy Bill provisions they passed in 2005. Who are these lovely people? If you guessed ‘Blue Dogs’, you’d be right….
It’s time to understand that Bush Dogs are part of a working conservative majority. They are not our friends, they are not our allies, they are political opponents who want to bail out wealthy investors and hurt people trapped in subprime mortgage markets. Politically, they are also the people hurting Democratic capacity to differentiate ourselves as populists and capture swing areas and exurban Republicans hurt by the housing meltdown.
And here we are, with sky-high unemployment for the foreseeable future.
Too young not to work, too old to get a job
By Ezra Klein
Washington Post
Pew's new report on long-term unemployment is sobering stuff:
Thirty percent of those who are jobless have been unemployed a year or more (long-term unemployment) as of December 2010. Equaling 4.2 million people -- roughly the population of Kentucky -- this is 25 percent more people affected by long-term unemployment than a year prior (December 2009, 3.4 million)....Using the CPS data, Pew calculated that the persistent problem of long-term unemployment is occurring across education and age groups but those who are older than 55 are most likely to remain jobless for a year or more. Additionally, a high level of education only provides limited protection against long-term unemployment -- the rates are similar across degree attainment: 31 percent of unemployed workers with a bachelor’s degree have been out of work for a year or more, compared to 36 percent of high school graduates and 33 percent of high school drop-outs.
The interplay between age and unemployment really worries me. On some level, we have a rosy view of "structural unemployment": It's a guy in Reno, Nev., who has skills better suited to the job market in Boulder, Colo. That's not an easy problem to fix -- our Reno resident doesn't scan Boulder's "help wanted" ads -- but it at least points toward a way the problem can be fixed. But a lot of older workers have found that employers just don't want to hire them. They are, in the words of one job-seeker in Warren County, N.J., "too young not to work, but to old to work." Or, more to the point, too old to get a job. When they apply for jobs much below their previous position, they're rejected as overqualified. When they try to hold the line, employers default to younger workers. And in both cases, there's a quiet assumption that young workers will be better at learning new skills than older workers will be.
Eventually, the unemployment rate in this country will come down. But it's very likely that there'll still be a core of a couple of million hardcore unemployed -- people who're a bit older, who're underwater on their houses in an area with a weak labor market, and who are becoming less employable as both their age and their time out of work come to seem more and more glaring on their resumes. What are we going to do for them?
Washington Post
Pew's new report on long-term unemployment is sobering stuff:
Thirty percent of those who are jobless have been unemployed a year or more (long-term unemployment) as of December 2010. Equaling 4.2 million people -- roughly the population of Kentucky -- this is 25 percent more people affected by long-term unemployment than a year prior (December 2009, 3.4 million)....Using the CPS data, Pew calculated that the persistent problem of long-term unemployment is occurring across education and age groups but those who are older than 55 are most likely to remain jobless for a year or more. Additionally, a high level of education only provides limited protection against long-term unemployment -- the rates are similar across degree attainment: 31 percent of unemployed workers with a bachelor’s degree have been out of work for a year or more, compared to 36 percent of high school graduates and 33 percent of high school drop-outs.
The interplay between age and unemployment really worries me. On some level, we have a rosy view of "structural unemployment": It's a guy in Reno, Nev., who has skills better suited to the job market in Boulder, Colo. That's not an easy problem to fix -- our Reno resident doesn't scan Boulder's "help wanted" ads -- but it at least points toward a way the problem can be fixed. But a lot of older workers have found that employers just don't want to hire them. They are, in the words of one job-seeker in Warren County, N.J., "too young not to work, but to old to work." Or, more to the point, too old to get a job. When they apply for jobs much below their previous position, they're rejected as overqualified. When they try to hold the line, employers default to younger workers. And in both cases, there's a quiet assumption that young workers will be better at learning new skills than older workers will be.
Eventually, the unemployment rate in this country will come down. But it's very likely that there'll still be a core of a couple of million hardcore unemployed -- people who're a bit older, who're underwater on their houses in an area with a weak labor market, and who are becoming less employable as both their age and their time out of work come to seem more and more glaring on their resumes. What are we going to do for them?
U.S. regulator struggles to gain faulty mortgage info
Reuters
Fannie Mae's and Freddie Mac's effort to challenge the quality of the riskiest mortgage bonds they own is proving a tough slog despite the power of their federal regulator, according to sources close to the banks and regulator.
Nothing has been heard from the regulator, the Federal Housing Finance Agency, on 64 subpoenas it issued banks in July for detailed information on subprime and other Wall Street mortgage bonds purchased by the U.S. home loan giants at the peak of the housing market.
The delays are fueling suspenseful buzz among investors, who are hoping the top housing regulator's investigation will help jump start their efforts to prove fault on private-label mortgage securities. Just 20 percent of the information requested by the FHFA has been delivered, with some banks resisting the regulator's demands, one source said.
Should the FHFA find fault on the securities it would increase pressure on banks to buy back bad mortgages which could result in $90 billion in losses, according to analysts.
"There are people looking at the success the FHFA has in getting the information," said Scott Buchta, head of investment strategy at Braver Stern Securities in Chicago. "There's so many people trying to get through the fortress. Once someone gets through the wall, others may pile on."
Investors have been looking for Fannie Mae and Freddie Mac -- powerful investors themselves with leverage over banks -- to make inroads with trustees in charge of overseeing bond issues, including release of information. The two owned nearly $150 billion of the bonds as of September, mostly by Freddie Mac.
In dispute are "representations and warranties," or contractual statements of loan quality. Violations, from home occupancy and appraisal errors to outright fraud, are at the root of a growing investor movement to hold banks accountable for losses, which for Fannie Mae and Freddie Mac have been largely borne by U.S. taxpayers.
Investor outrage has sparked several lawsuits against banks, including those by bond insurer MBIA Inc and some Federal Home Loan Banks. Many more are expected.
Getting loan data is only the first step. But trustees have been a hurdle to investors, claiming contracts that govern the securities prevent them from taking action without evidence of reason, and a mandate from 25 percent of trust owners.
"Slowly, information is coming out, and none is positive for banks," said Bill Frey, president of Greenwich Financial Services. Banks are stalling, he said.
Fannie Mae and Freddie Mac have been more successful in getting banks to buy back loans sold into government-backed securitizations, where they have unique control. They have received $20.9 billion in repurchase proceeds in the 44 months through August, or about 60 percent of what was requested, a government report said on Thursday.
Sources with a bank and a servicer say the FHFA requests on private mortgage bonds are vast, including data on origination, servicing and related e-mails. Some data could violate consumer privacy acts, and has to be scrubbed, delaying response time, the sources said.
"It's a lot of documentation that is a burden to get together, given the volume of loans the banks have" with Fannie Mae and Freddie Mac, said a lawyer working with a subpoena.
FHFA, Freddie Mac and Fannie Mae spokesmen declined to comment on the subpoenas.
Investors in the past year have begun to make some inroads on their own, emboldened in late 2010 by revelations of faulty bank foreclosure practices. In a separate tack, Freddie Mac has partnered with bond giant PIMCO and other to fight for Countrywide loan repurchases by Bank of America, which last month announced a "constructive dialogue" was underway.
Elsewhere, Deutsche Bank AG is fighting JPMorgan Chase & Co to provide more than 500,000 loan files for a group investors that own 99 bonds with mortgages from failed lender Washington Mutual. JPMorgan and the Federal Deposit Insurance Corp. as WaMu's receiver asked the court to dismiss the case, drawing a memorandum of dispute this month by Deutsche Bank lawyers, including Talcott Franklin.
Franklin first made a splash last year by rallying at least 125 investors to pool efforts to force trustees to scrutinize loans and servicing practices, and to pursue loan "put-backs." Investors in Franklin's RMBS Clearinghouse have ownership in more than a third of the $1.5 trillion RMBS market, and voting rights on some 2,600 mortgage trusts.
"I think you'll definitely start to see some action there," said William Callan, president of Declaration Management & Research, a manager of $11 billion in assets and part of Franklin's clearinghouse.
Fannie Mae's and Freddie Mac's effort to challenge the quality of the riskiest mortgage bonds they own is proving a tough slog despite the power of their federal regulator, according to sources close to the banks and regulator.
Nothing has been heard from the regulator, the Federal Housing Finance Agency, on 64 subpoenas it issued banks in July for detailed information on subprime and other Wall Street mortgage bonds purchased by the U.S. home loan giants at the peak of the housing market.
The delays are fueling suspenseful buzz among investors, who are hoping the top housing regulator's investigation will help jump start their efforts to prove fault on private-label mortgage securities. Just 20 percent of the information requested by the FHFA has been delivered, with some banks resisting the regulator's demands, one source said.
Should the FHFA find fault on the securities it would increase pressure on banks to buy back bad mortgages which could result in $90 billion in losses, according to analysts.
"There are people looking at the success the FHFA has in getting the information," said Scott Buchta, head of investment strategy at Braver Stern Securities in Chicago. "There's so many people trying to get through the fortress. Once someone gets through the wall, others may pile on."
Investors have been looking for Fannie Mae and Freddie Mac -- powerful investors themselves with leverage over banks -- to make inroads with trustees in charge of overseeing bond issues, including release of information. The two owned nearly $150 billion of the bonds as of September, mostly by Freddie Mac.
In dispute are "representations and warranties," or contractual statements of loan quality. Violations, from home occupancy and appraisal errors to outright fraud, are at the root of a growing investor movement to hold banks accountable for losses, which for Fannie Mae and Freddie Mac have been largely borne by U.S. taxpayers.
Investor outrage has sparked several lawsuits against banks, including those by bond insurer MBIA Inc and some Federal Home Loan Banks. Many more are expected.
Getting loan data is only the first step. But trustees have been a hurdle to investors, claiming contracts that govern the securities prevent them from taking action without evidence of reason, and a mandate from 25 percent of trust owners.
"Slowly, information is coming out, and none is positive for banks," said Bill Frey, president of Greenwich Financial Services. Banks are stalling, he said.
Fannie Mae and Freddie Mac have been more successful in getting banks to buy back loans sold into government-backed securitizations, where they have unique control. They have received $20.9 billion in repurchase proceeds in the 44 months through August, or about 60 percent of what was requested, a government report said on Thursday.
Sources with a bank and a servicer say the FHFA requests on private mortgage bonds are vast, including data on origination, servicing and related e-mails. Some data could violate consumer privacy acts, and has to be scrubbed, delaying response time, the sources said.
"It's a lot of documentation that is a burden to get together, given the volume of loans the banks have" with Fannie Mae and Freddie Mac, said a lawyer working with a subpoena.
FHFA, Freddie Mac and Fannie Mae spokesmen declined to comment on the subpoenas.
Investors in the past year have begun to make some inroads on their own, emboldened in late 2010 by revelations of faulty bank foreclosure practices. In a separate tack, Freddie Mac has partnered with bond giant PIMCO and other to fight for Countrywide loan repurchases by Bank of America, which last month announced a "constructive dialogue" was underway.
Elsewhere, Deutsche Bank AG is fighting JPMorgan Chase & Co to provide more than 500,000 loan files for a group investors that own 99 bonds with mortgages from failed lender Washington Mutual. JPMorgan and the Federal Deposit Insurance Corp. as WaMu's receiver asked the court to dismiss the case, drawing a memorandum of dispute this month by Deutsche Bank lawyers, including Talcott Franklin.
Franklin first made a splash last year by rallying at least 125 investors to pool efforts to force trustees to scrutinize loans and servicing practices, and to pursue loan "put-backs." Investors in Franklin's RMBS Clearinghouse have ownership in more than a third of the $1.5 trillion RMBS market, and voting rights on some 2,600 mortgage trusts.
"I think you'll definitely start to see some action there," said William Callan, president of Declaration Management & Research, a manager of $11 billion in assets and part of Franklin's clearinghouse.
Local judges get tough on foreclosure documents
By John Futty
The Columbus Dispatch
In response to a national outcry over fraudulent foreclosure filings, three Franklin County judges are requiring lawyers to verify that all of the documents in residential-foreclosure actions are valid.
Six of the lawyers affected by the order are fighting back. They have asked the Ohio Supreme Court to prohibit the judges from requiring them to sign "certifications" on behalf of their clients. The dispute could slow the processing of some foreclosure cases.
The complaint, seeking what is known as a writ of prohibition, was filed by the lawyers in December and names Common Pleas Judges John F. Bender, Kimberly Cocroft and Guy Reece.
The Franklin County prosecutor's office, which is defending the judges, has until Monday to file a response.
Among the 17 judges in the Common Pleas general division, at least two others - Laurel Beatty and David W. Fais - had intended to mail the orders to lawyers but stopped after the complaint was filed with the Supreme Court.
The New York State court system began requiring lawyers to certify the accuracy of foreclosure documents in October. That action, believed to be the first by a court system in the nation, has not been challenged.
Cocroft said the action was prompted by growing concerns about the foreclosure process.
"Before we sign off on foreclosures, we want to make sure we are diligent in confirming the accuracy of those filings," she said. "It's a life-changing event."
Reece said there are alternatives for lawyers who don't want to sign the certification.
"They have the option of showing up in court, having a hearing and producing the evidence," he said.
Bender declined to comment.
The complaint states that requiring lawyers to comply with the judges' order forces them "to divulge the details of specific communications ... protected by the attorney-client privilege." John C. Greiner, a Cleveland attorney representing the lawyers, said he was not authorized to discuss the complaint.
State attorneys general across the nation, including then-Ohio Attorney General Richard Cordray, announced in October that they were investigating fraudulent foreclosure filings.
The controversy was driven in part by the revelation that some law firms and major lenders were using so-called "robo-signers" to complete affidavits on foreclosures without reading the documents or verifying ownership of the mortgages' notes.
The attorneys general found cases in which the homeowner actually was not in default on the mortgage or the amount owed to the lender was inflated. In others, there was inadequate proof that the lender filing the action actually held the debt.
In October, The Dispatch examined the files of more than 130 people whose houses were slated for auction and identified at least 55 whose foreclosure cases contained mistakes, omissions of crucial evidence or questionable affidavits.
Bender, Cocroft and Reece each had more than 200 foreclosure cases on their dockets when they began sending the orders to lawyers in late November. None is tracking the number of cases affected by the legal dispute.
The judges told the lawyers that they must "personally certify the authenticity and accuracy of all documents" in support of a residential-foreclosure filing. If a lawyer doesn't comply, the judge will not grant a motion for default or summary judgment, but will instead schedule the case for trial.
That could delay a case for as long as a year.
Cocroft and Reece said most lawyers have complied with the requirement. Staff members for the judges said some lawyers have dismissed foreclosure actions, presumably to re-file them after assembling the necessary documents or after the Supreme Court rules.
The six lawyers who filed the complaint include Brian L. Williams of Columbus as well as lawyers from Cleveland, Cincinnati, Dayton and Beechwood.
"The court is attempting to carte blanche circumvent the attorney-client privilege of all plaintiff litigants in mortgage foreclosure cases, no matter the facts and without first discovering ... any evidence of a crime" or misconduct, Cleveland lawyer Richard S. Koblentz wrote in a supporting opinion filed with the complaint.
Administrative Judge Charles C. Schneider said he is scrutinizing foreclosures filed by lenders who were investigated by Cordray, but he isn't requiring certifications from lawyers. He considers the order redundant.
Rule 11 of the Ohio Rules of Civil Procedure, he said, requires that any lawyer filing a case has read the documents and "has reason to believe there are good grounds to support it."
If a lawyer files any case without reading the supporting documents, "he's already in violation of Rule 11," Schneider said.
"That's just my opinion," the judge said. "Each individual judge will have to decide how to handle this."
The Columbus Dispatch
In response to a national outcry over fraudulent foreclosure filings, three Franklin County judges are requiring lawyers to verify that all of the documents in residential-foreclosure actions are valid.
Six of the lawyers affected by the order are fighting back. They have asked the Ohio Supreme Court to prohibit the judges from requiring them to sign "certifications" on behalf of their clients. The dispute could slow the processing of some foreclosure cases.
The complaint, seeking what is known as a writ of prohibition, was filed by the lawyers in December and names Common Pleas Judges John F. Bender, Kimberly Cocroft and Guy Reece.
The Franklin County prosecutor's office, which is defending the judges, has until Monday to file a response.
Among the 17 judges in the Common Pleas general division, at least two others - Laurel Beatty and David W. Fais - had intended to mail the orders to lawyers but stopped after the complaint was filed with the Supreme Court.
The New York State court system began requiring lawyers to certify the accuracy of foreclosure documents in October. That action, believed to be the first by a court system in the nation, has not been challenged.
Cocroft said the action was prompted by growing concerns about the foreclosure process.
"Before we sign off on foreclosures, we want to make sure we are diligent in confirming the accuracy of those filings," she said. "It's a life-changing event."
Reece said there are alternatives for lawyers who don't want to sign the certification.
"They have the option of showing up in court, having a hearing and producing the evidence," he said.
Bender declined to comment.
The complaint states that requiring lawyers to comply with the judges' order forces them "to divulge the details of specific communications ... protected by the attorney-client privilege." John C. Greiner, a Cleveland attorney representing the lawyers, said he was not authorized to discuss the complaint.
State attorneys general across the nation, including then-Ohio Attorney General Richard Cordray, announced in October that they were investigating fraudulent foreclosure filings.
The controversy was driven in part by the revelation that some law firms and major lenders were using so-called "robo-signers" to complete affidavits on foreclosures without reading the documents or verifying ownership of the mortgages' notes.
The attorneys general found cases in which the homeowner actually was not in default on the mortgage or the amount owed to the lender was inflated. In others, there was inadequate proof that the lender filing the action actually held the debt.
In October, The Dispatch examined the files of more than 130 people whose houses were slated for auction and identified at least 55 whose foreclosure cases contained mistakes, omissions of crucial evidence or questionable affidavits.
Bender, Cocroft and Reece each had more than 200 foreclosure cases on their dockets when they began sending the orders to lawyers in late November. None is tracking the number of cases affected by the legal dispute.
The judges told the lawyers that they must "personally certify the authenticity and accuracy of all documents" in support of a residential-foreclosure filing. If a lawyer doesn't comply, the judge will not grant a motion for default or summary judgment, but will instead schedule the case for trial.
That could delay a case for as long as a year.
Cocroft and Reece said most lawyers have complied with the requirement. Staff members for the judges said some lawyers have dismissed foreclosure actions, presumably to re-file them after assembling the necessary documents or after the Supreme Court rules.
The six lawyers who filed the complaint include Brian L. Williams of Columbus as well as lawyers from Cleveland, Cincinnati, Dayton and Beechwood.
"The court is attempting to carte blanche circumvent the attorney-client privilege of all plaintiff litigants in mortgage foreclosure cases, no matter the facts and without first discovering ... any evidence of a crime" or misconduct, Cleveland lawyer Richard S. Koblentz wrote in a supporting opinion filed with the complaint.
Administrative Judge Charles C. Schneider said he is scrutinizing foreclosures filed by lenders who were investigated by Cordray, but he isn't requiring certifications from lawyers. He considers the order redundant.
Rule 11 of the Ohio Rules of Civil Procedure, he said, requires that any lawyer filing a case has read the documents and "has reason to believe there are good grounds to support it."
If a lawyer files any case without reading the supporting documents, "he's already in violation of Rule 11," Schneider said.
"That's just my opinion," the judge said. "Each individual judge will have to decide how to handle this."
Judge upholds Bankruptcy Court’s right to launch foreclosure mediation program
By Christine Dunn
ProJo.com
PROVIDENCE –– In a decision issued Friday, U.S. Bankruptcy Court Judge Arthur N. Votolato upheld the court’s right to establish a mediation program for homeowners facing foreclosure.
Votolato implemented the program, called the loss mitigation program, in November 2009. It does not require lenders to issue loan modifications, but it requires them to engage in good-faith negotiations with borrowers who want to modify their mortgages.
With the decision, Votolato overruled objections to the program filed by creditors in two bankruptcy cases. The creditors are PHH Mortgage Corp., doing business as PHH Mortgage Service Center, and Ocwen Loan Serving LLC as servicer of Deutsche Bank National Trust Co.
The cases involve homeowners Alberto G. Sosa and Jason E. and Bridget L. Lawton.
“Today’s decision by Judge Votolato is a win for Rhode Island homeowners,” said U.S. Sen. Sheldon Whitehouse, D-R.I. “The Rhode Island bankruptcy court’s foreclosure-mediation program helps distressed families to cut through the red tape of our broken mortgage modification process and has already saved at least 100 homes in our state.
“I hope today’s decision will encourage other bankruptcy districts to follow Rhode Island’s lead and adopt similar programs.”
In Friday’s decision, Votolato stated the program “was implemented in response to the home mortgage and foreclosure crisis generally,” and also because the court “repeatedly had to postpone hearings” due to delays that debtors were experiencing in seeking out-of-court mortgage-loan modifications.
“This practice of parties repeatedly seeking more time simply because they had not yet connected was counterproductive, it was a huge waste of time for the parties and the Court, and was forcing needless litigation ...” the order stated. “...We decided to break the log jam” by introducing a process that would open “communications between debtors and the lenders’ decision-makers.”
At a hearing in October, Whitehouse praised Votolato’s program, saying it is especially needed because of the documented failures of the federal government’s flagship foreclosure-prevention program, the Home Affordable Modification Program.
Just $4 billion of the $30 billion budgeted for HAMP is likely to be spent, and only a fraction of eligible homeowners will be assisted by the program, according to a December report from the Congressional Oversight Panel.
Whitehouse will chair a Senate Judiciary Committee hearing Tuesday to examine the success of bankruptcy court mediation programs.
The Center for Responsible Lending projects that 31,192 homes in Rhode Island will proceed to foreclosure during the years 2009 to 2012.
ProJo.com
PROVIDENCE –– In a decision issued Friday, U.S. Bankruptcy Court Judge Arthur N. Votolato upheld the court’s right to establish a mediation program for homeowners facing foreclosure.
Votolato implemented the program, called the loss mitigation program, in November 2009. It does not require lenders to issue loan modifications, but it requires them to engage in good-faith negotiations with borrowers who want to modify their mortgages.
With the decision, Votolato overruled objections to the program filed by creditors in two bankruptcy cases. The creditors are PHH Mortgage Corp., doing business as PHH Mortgage Service Center, and Ocwen Loan Serving LLC as servicer of Deutsche Bank National Trust Co.
The cases involve homeowners Alberto G. Sosa and Jason E. and Bridget L. Lawton.
“Today’s decision by Judge Votolato is a win for Rhode Island homeowners,” said U.S. Sen. Sheldon Whitehouse, D-R.I. “The Rhode Island bankruptcy court’s foreclosure-mediation program helps distressed families to cut through the red tape of our broken mortgage modification process and has already saved at least 100 homes in our state.
“I hope today’s decision will encourage other bankruptcy districts to follow Rhode Island’s lead and adopt similar programs.”
In Friday’s decision, Votolato stated the program “was implemented in response to the home mortgage and foreclosure crisis generally,” and also because the court “repeatedly had to postpone hearings” due to delays that debtors were experiencing in seeking out-of-court mortgage-loan modifications.
“This practice of parties repeatedly seeking more time simply because they had not yet connected was counterproductive, it was a huge waste of time for the parties and the Court, and was forcing needless litigation ...” the order stated. “...We decided to break the log jam” by introducing a process that would open “communications between debtors and the lenders’ decision-makers.”
At a hearing in October, Whitehouse praised Votolato’s program, saying it is especially needed because of the documented failures of the federal government’s flagship foreclosure-prevention program, the Home Affordable Modification Program.
Just $4 billion of the $30 billion budgeted for HAMP is likely to be spent, and only a fraction of eligible homeowners will be assisted by the program, according to a December report from the Congressional Oversight Panel.
Whitehouse will chair a Senate Judiciary Committee hearing Tuesday to examine the success of bankruptcy court mediation programs.
The Center for Responsible Lending projects that 31,192 homes in Rhode Island will proceed to foreclosure during the years 2009 to 2012.
FCIC Document Dive
by Jeff Larson
ProPublica
When the Financial Crisis Inquiry Commission released its final report on the causes of the financial crisis, it released an extensive document archive. We've tried to make searching through it a bit easier. Use the form below to search for people, places, or organizations mentioned in the documents. Here are some interesting items we found. You can also view this database on DocumentCloud.
http://www.propublica.org/special/fcic-document-dive
ProPublica
When the Financial Crisis Inquiry Commission released its final report on the causes of the financial crisis, it released an extensive document archive. We've tried to make searching through it a bit easier. Use the form below to search for people, places, or organizations mentioned in the documents. Here are some interesting items we found. You can also view this database on DocumentCloud.
http://www.propublica.org/special/fcic-document-dive
Larry Kudlow.... My God, He Gets It
by Karl Denninger
Now I'm getting a bit more impressed..... with CNBS!
I'm pretty impressed with Larry's view here. He's either thinking, reading Tickers or both. Seeing reality - cost-push inflation absolutely massacres people who have lower per-capita GDP as the cost of those commodities gets rammed up their chute - is a new one in the mainstream media.
"To the extent that you're talking about lower-income countries and emerging markets more generally...."
Yeah.
Of course some of these clowns come back to "core" (ignore food and energy, even though everyone has to consume both); which is more-important to you? Those things you cannot stop buying without going either cold or hungry, right?
Listen to the clowns Larry has on the show with him. They're perfectly happy to try to "take advantage" of the monetary policies that are literally starving people around the world to the point that they riot!
Where are the calls for Bernanke to cut this crap out?
Missing, that's where. That makes every one of these people complicit in what's happening.
How does all their investment outlook change if a radical group gets ahold of Egypt's F-16s and decides to shove a few of them them up America's ass whether by direct or indirect means?
Place your bets folks; if we get this outcome, we deserve it.
Now I'm getting a bit more impressed..... with CNBS!
I'm pretty impressed with Larry's view here. He's either thinking, reading Tickers or both. Seeing reality - cost-push inflation absolutely massacres people who have lower per-capita GDP as the cost of those commodities gets rammed up their chute - is a new one in the mainstream media.
"To the extent that you're talking about lower-income countries and emerging markets more generally...."
Yeah.
Of course some of these clowns come back to "core" (ignore food and energy, even though everyone has to consume both); which is more-important to you? Those things you cannot stop buying without going either cold or hungry, right?
Listen to the clowns Larry has on the show with him. They're perfectly happy to try to "take advantage" of the monetary policies that are literally starving people around the world to the point that they riot!
Where are the calls for Bernanke to cut this crap out?
Missing, that's where. That makes every one of these people complicit in what's happening.
How does all their investment outlook change if a radical group gets ahold of Egypt's F-16s and decides to shove a few of them them up America's ass whether by direct or indirect means?
Place your bets folks; if we get this outcome, we deserve it.
Now THAT Is A Warrantless Search!
by Karl Denninger
DHS has to be salivating over this development:
At a recent presentation for investors, Microsoft said the ability to see into consumer's living rooms means advertising opportunities. Kinect's cameras can be used to identify people, or objects. Then share shopper's preferences with advertisers. Brett Gordon teaches Marketing at Columbia University.
Like a bong? A gun? A person on a wanted list?
My-oh-my, Microsoft, of course, says that this will not be shared without permission.
Uh huh. And only the people who you give permission to will be able to see inside your living room, right?
Well, not quite.
See, unknown to many people is the fact that there are back doors in most central routing equipment used by Internet companies these days. These back doors allow the government to duplicate and redirect streams of data wherever they want and they generate no logs when used.
How hard would it be to pick off the fact that a particular data stream was from a Kinect and, oh, "borrow" it via such a copy? Answer: It is trivial given the infrastructure that exists right now in the core of The Internet.
Camera + network = potential spying device.
Camera + Internet Connection + other than an explicit act by the user to turn on said camera and capture an image in each and every case?
Instant and permanent destruction of any hint of privacy you think you have.
The most-mundane possibilities are bad enough - do you want an advertiser to see your daughter in her underwear playing a video game when she thinks she's doing so alone?
It only gets worse - much worse - from there.
DHS has to be salivating over this development:
At a recent presentation for investors, Microsoft said the ability to see into consumer's living rooms means advertising opportunities. Kinect's cameras can be used to identify people, or objects. Then share shopper's preferences with advertisers. Brett Gordon teaches Marketing at Columbia University.
Like a bong? A gun? A person on a wanted list?
My-oh-my, Microsoft, of course, says that this will not be shared without permission.
Uh huh. And only the people who you give permission to will be able to see inside your living room, right?
Well, not quite.
See, unknown to many people is the fact that there are back doors in most central routing equipment used by Internet companies these days. These back doors allow the government to duplicate and redirect streams of data wherever they want and they generate no logs when used.
How hard would it be to pick off the fact that a particular data stream was from a Kinect and, oh, "borrow" it via such a copy? Answer: It is trivial given the infrastructure that exists right now in the core of The Internet.
Camera + network = potential spying device.
Camera + Internet Connection + other than an explicit act by the user to turn on said camera and capture an image in each and every case?
Instant and permanent destruction of any hint of privacy you think you have.
The most-mundane possibilities are bad enough - do you want an advertiser to see your daughter in her underwear playing a video game when she thinks she's doing so alone?
It only gets worse - much worse - from there.
The Most Amazing Egypt Video
"We will not be silenced, whether you're a Christian or a Muslim, whether you're an atheist, you will demand your god damned rights, and we will have our rights, one way or the other! We will never be silenced!" (0:45)
Derek Silvers: How To Start A Revolution
Awesome short clip. Brilliant in its simplicity. Watch a movement happen, start to finish, in under 2 minutes.
Bank Of America, Wikileaks And Eric Holder - What The U.S. Attorney General Doesn't Want You To Know
By Dr. Pitchfork
It is hard to imagine a more convoluted clusterf*** of corruption. Consider it the latest chapter in the story of upside-down, post-bailout, Bizarro-World America. The US attorney general, Eric Holder, has been going hammer and tongs at the U.S. Constitution and Bill of Rights in order to silence a news organization, Wikileaks, which is about to publish bombshell evidence of corruption -- and possible criminal activity -- at one of America’s largest banks. Meanwhile, Bank of America, the likely target of Wikileaks’ next big story, refuses to process payments for Wikileaks, presses on with its dirty foreclosure and and debt collection practices, and continues to lie about the value of assets on its books. At the same time, Holder has gone almost two years without mustering the courage to investigate or indict a single executive at even one of America’s largest banks. And although Wikileaks promises to lay in his lap several gigabytes of evidence that might lead to such an indictment, Holder has instead initiated “an active, ongoing criminal investigation” of Wikileaks!
But here's the question no one seems to be asking:
■Why hasn't Eric Holder asked to see the evidence, which Wikileaks claims to have, that executives at one of our largest banks may have committed serious crimes?
Let's be honest, Holder doesn't really give a rip about financial crimes, but the media should at least be asking him why he doesn't want to see the evidence. We know he'd love to get his hands on Julian Assange's hard drive -- why doesn't he want to see Brian Moynihan's (or Ken Lewis's)?
For some reason, Holder and the rest of the Obama administration would rather endanger our Constitutional rights to due process and a free press by persecuting journalists on specious charges, than to actually do their job and enforce the law.
Once again, the banks and bankers are protected at all costs, while the little people (and our Constitutional rights!) must pay the price. Why is Holder going after Wikileaks and why isn’t he already investigating or indicting people at Bank of America? Who does Holder think he works for – us or the big banks?
It’s hard not to conclude that the answer to these questions was revealed recently in the unfortunately chosen words of Rep. Spencer Bachus (R-AL): “Washington and the regulators are there to serve the banks.” But this only confirms something Sen. Dick Durbin (D-IL) said a couple of years ago.
We would love to be able to find some heroes among the political class working to thwart all this villany, but there aren’t any. Ironically, Republicans and their apparatchiks (as well as Joe Lieberman) have been criticizing Holder and Obama for not doing more to side-step the Constitution and indict, or indeed assassinate, Julian Assange and anyone else associated with Wikileaks. This is so typical of Washington.
Basic issues of freedom and the rule of law are twisted and distorted so as to result in another skirmish in the culture war, which can then be used as fodder for political fundraising and campaign attack ads. The Democrats trample on the Constitution like it’s the grapes of wrath and the Republicans still find a way to charge them with being “soft on terror."
The upshot, as usual, is that bankers are thereby able to ride off into the sunset with their taxpayer subsidies and million-dollar bonuses. As usual, everyone gets what they want except the American people
It is hard to imagine a more convoluted clusterf*** of corruption. Consider it the latest chapter in the story of upside-down, post-bailout, Bizarro-World America. The US attorney general, Eric Holder, has been going hammer and tongs at the U.S. Constitution and Bill of Rights in order to silence a news organization, Wikileaks, which is about to publish bombshell evidence of corruption -- and possible criminal activity -- at one of America’s largest banks. Meanwhile, Bank of America, the likely target of Wikileaks’ next big story, refuses to process payments for Wikileaks, presses on with its dirty foreclosure and and debt collection practices, and continues to lie about the value of assets on its books. At the same time, Holder has gone almost two years without mustering the courage to investigate or indict a single executive at even one of America’s largest banks. And although Wikileaks promises to lay in his lap several gigabytes of evidence that might lead to such an indictment, Holder has instead initiated “an active, ongoing criminal investigation” of Wikileaks!
But here's the question no one seems to be asking:
■Why hasn't Eric Holder asked to see the evidence, which Wikileaks claims to have, that executives at one of our largest banks may have committed serious crimes?
Let's be honest, Holder doesn't really give a rip about financial crimes, but the media should at least be asking him why he doesn't want to see the evidence. We know he'd love to get his hands on Julian Assange's hard drive -- why doesn't he want to see Brian Moynihan's (or Ken Lewis's)?
For some reason, Holder and the rest of the Obama administration would rather endanger our Constitutional rights to due process and a free press by persecuting journalists on specious charges, than to actually do their job and enforce the law.
Once again, the banks and bankers are protected at all costs, while the little people (and our Constitutional rights!) must pay the price. Why is Holder going after Wikileaks and why isn’t he already investigating or indicting people at Bank of America? Who does Holder think he works for – us or the big banks?
It’s hard not to conclude that the answer to these questions was revealed recently in the unfortunately chosen words of Rep. Spencer Bachus (R-AL): “Washington and the regulators are there to serve the banks.” But this only confirms something Sen. Dick Durbin (D-IL) said a couple of years ago.
We would love to be able to find some heroes among the political class working to thwart all this villany, but there aren’t any. Ironically, Republicans and their apparatchiks (as well as Joe Lieberman) have been criticizing Holder and Obama for not doing more to side-step the Constitution and indict, or indeed assassinate, Julian Assange and anyone else associated with Wikileaks. This is so typical of Washington.
Basic issues of freedom and the rule of law are twisted and distorted so as to result in another skirmish in the culture war, which can then be used as fodder for political fundraising and campaign attack ads. The Democrats trample on the Constitution like it’s the grapes of wrath and the Republicans still find a way to charge them with being “soft on terror."
The upshot, as usual, is that bankers are thereby able to ride off into the sunset with their taxpayer subsidies and million-dollar bonuses. As usual, everyone gets what they want except the American people
Inflationary Holocaust Survival Guide
by Phoenix Capital Research
The following is an excerpt from our FREE report detailing how to prepare one’s portfolio for the coming Inflationary Holocaust.
Are you ready for the Inflationary Holocaust?
As I’m sure you’re aware, starting in July 2007, the financial markets entered one of the most severe crises in history. And as the Crisis unfolded, the Feds (the Federal Reserve, Treasury Department, and the Federal Government) tried to prop up the financial system with numerous interventions. A brief recap of their moves are as follows:
•The Federal Reserve cutting interest rates from 5.25-0.25% (Sept ’07-today)
•The Bear Stearns deal/ Fed taking on $30 billion in junk mortgages (March ’08)
•The Fed opens up various lending windows to investment banks (March ’08)
•The SEC proposes banning short-selling on financial stocks (July ’08)
•Hank Paulson gets a blank check for Fannie/Freddie but promises not to use it (July ’08)
•Hank Paulson uses the blank check with Fannie/ Freddie spending $400 billion in the process (Sept ’08).
•The Fed takes over insurance company AIG (Sept ’08) for $85 billion.
•The Fed doles out $25 billion for the auto makers (Sept ’08)
•The Feds kick off the $700 billion Troubled Assets Relief Program (TARP) with the Government taking stakes in private banks (Oct ’08)
•The Fed offers to buy commercial paper (non-bank debt) from non-financial firms (Oct ’08)
•The Fed offers $540 billion to backstop money market funds (Oct ’08)
•The Feds agree to back up to $280 billion of Citigroup’s liabilities (Oct ’08).
•$40 billion more to AIG (Nov ’08)
•Feds agree to back up $140 billion of Bank of America’s liabilities (Jan ’09)
•Obama’s $787 Billion Stimulus (Jan ’09)
•QE lite (August ’10)
•QE 2 (November ’10)
And that’s a BRIEF recap.
Everyone knows the US has a debt problem. And there are only two ways to deal with a debt problem.
1) Sell off assets to pay off debt
2) Inflate the debt away
The Feds chose Option #2. They chose to try and inflate away our gargantuan debts. We’re not talking about millions or even billions of dollars either. We’re talking about TRILLIONS.
Now, $1 trillion is a tough number to get your head around. Here’s a little visualization to help you…Imagine you had a stack of $1,000 bills. $1 million would be a stack eight inches high. $1 billion would be over 800 feet high (think of the Washington Monument). And $1 trillion would be a stack 142 MILES high.
You simply cannot throw this kind of money around without creating inflation at some point. Indeed, from the looks of the headlines, it’s already hitting now:
Food Prices Hit Record High. What Now?
On Wednesday, the UN's Food and Agriculture Organization announced that food prices for basic commodities had hit record highs last month – above and beyond the soaring prices in 2008 that sparked worldwide protests and food hoarding from Haiti to Egypt to the Philippines. Though the news has yet to evolve into the kind of crisis that unfolded that year, this round has not been without incident. In November, in China rioted in their cafeteria over the increase in school lunch prices (our story on that here) and just yesterday, protests broke out in Algiers after sharp rises in the price of milk, flour and sugar in Algeria.
http://ecocentric.blogs.time.com/2011/01/07/food-prices-hit-record-high-what-now/#ixzz1Ce48SybA
Money Rates in Developing Nations Rise Most Since 2008 on Inflation, Egypt
Money-market rates in developing nations are increasing at the fastest pace since 2008 as central banks from China to Brazil lift borrowing costs and banks hoard cash on concern unrest in Egypt may destabilize the Middle East.
http://www.bloomberg.com/news/2011-01-30/egypt-spurs-jump-in-developing-money-market-rates.html
High Inflation Seen as Threat to India’s Booming Economy
In India, fears are growing that runaway inflation could slowdown the brisk growth of its economy, which was among the fastest to recover from the global financial crisis. In particular, a huge rise in food prices has emerged as a major worry for a country with millions of poor people.
http://www.voanews.com/english/news/asia/High-Inflation-Seen-as-Threat-to-Indias-Booming-Economy- 114924089.html
However, all is not lost. I’ve identified three investments that should all soar as the inflationary storm takes hold. I’ve detailed all three in our FREE Special Report.
To continue with the rest of our FREE Inflationary Holocaust Survival Guide, swing by http://www.gainspainscapital.com and click on FREE REPORTS. This 14-page report details not only what’s likely to come, but how to prepare for it. And it’s all 100% FREE.
Good Investing!
The following is an excerpt from our FREE report detailing how to prepare one’s portfolio for the coming Inflationary Holocaust.
Are you ready for the Inflationary Holocaust?
As I’m sure you’re aware, starting in July 2007, the financial markets entered one of the most severe crises in history. And as the Crisis unfolded, the Feds (the Federal Reserve, Treasury Department, and the Federal Government) tried to prop up the financial system with numerous interventions. A brief recap of their moves are as follows:
•The Federal Reserve cutting interest rates from 5.25-0.25% (Sept ’07-today)
•The Bear Stearns deal/ Fed taking on $30 billion in junk mortgages (March ’08)
•The Fed opens up various lending windows to investment banks (March ’08)
•The SEC proposes banning short-selling on financial stocks (July ’08)
•Hank Paulson gets a blank check for Fannie/Freddie but promises not to use it (July ’08)
•Hank Paulson uses the blank check with Fannie/ Freddie spending $400 billion in the process (Sept ’08).
•The Fed takes over insurance company AIG (Sept ’08) for $85 billion.
•The Fed doles out $25 billion for the auto makers (Sept ’08)
•The Feds kick off the $700 billion Troubled Assets Relief Program (TARP) with the Government taking stakes in private banks (Oct ’08)
•The Fed offers to buy commercial paper (non-bank debt) from non-financial firms (Oct ’08)
•The Fed offers $540 billion to backstop money market funds (Oct ’08)
•The Feds agree to back up to $280 billion of Citigroup’s liabilities (Oct ’08).
•$40 billion more to AIG (Nov ’08)
•Feds agree to back up $140 billion of Bank of America’s liabilities (Jan ’09)
•Obama’s $787 Billion Stimulus (Jan ’09)
•QE lite (August ’10)
•QE 2 (November ’10)
And that’s a BRIEF recap.
Everyone knows the US has a debt problem. And there are only two ways to deal with a debt problem.
1) Sell off assets to pay off debt
2) Inflate the debt away
The Feds chose Option #2. They chose to try and inflate away our gargantuan debts. We’re not talking about millions or even billions of dollars either. We’re talking about TRILLIONS.
Now, $1 trillion is a tough number to get your head around. Here’s a little visualization to help you…Imagine you had a stack of $1,000 bills. $1 million would be a stack eight inches high. $1 billion would be over 800 feet high (think of the Washington Monument). And $1 trillion would be a stack 142 MILES high.
You simply cannot throw this kind of money around without creating inflation at some point. Indeed, from the looks of the headlines, it’s already hitting now:
Food Prices Hit Record High. What Now?
On Wednesday, the UN's Food and Agriculture Organization announced that food prices for basic commodities had hit record highs last month – above and beyond the soaring prices in 2008 that sparked worldwide protests and food hoarding from Haiti to Egypt to the Philippines. Though the news has yet to evolve into the kind of crisis that unfolded that year, this round has not been without incident. In November, in China rioted in their cafeteria over the increase in school lunch prices (our story on that here) and just yesterday, protests broke out in Algiers after sharp rises in the price of milk, flour and sugar in Algeria.
http://ecocentric.blogs.time.com/2011/01/07/food-prices-hit-record-high-what-now/#ixzz1Ce48SybA
Money Rates in Developing Nations Rise Most Since 2008 on Inflation, Egypt
Money-market rates in developing nations are increasing at the fastest pace since 2008 as central banks from China to Brazil lift borrowing costs and banks hoard cash on concern unrest in Egypt may destabilize the Middle East.
http://www.bloomberg.com/news/2011-01-30/egypt-spurs-jump-in-developing-money-market-rates.html
High Inflation Seen as Threat to India’s Booming Economy
In India, fears are growing that runaway inflation could slowdown the brisk growth of its economy, which was among the fastest to recover from the global financial crisis. In particular, a huge rise in food prices has emerged as a major worry for a country with millions of poor people.
http://www.voanews.com/english/news/asia/High-Inflation-Seen-as-Threat-to-Indias-Booming-Economy- 114924089.html
However, all is not lost. I’ve identified three investments that should all soar as the inflationary storm takes hold. I’ve detailed all three in our FREE Special Report.
To continue with the rest of our FREE Inflationary Holocaust Survival Guide, swing by http://www.gainspainscapital.com and click on FREE REPORTS. This 14-page report details not only what’s likely to come, but how to prepare for it. And it’s all 100% FREE.
Good Investing!
American Eulogy
by Jim Quinn of The Burning Platform
The Founding Fathers described the kind of country they were shaping on July 4, 1776 with the most well known sentence in the English language:
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. - Declaration of Independence
In 1776, America was an idea born of noble intentions. An idea that every citizen had the opportunity to succeed, prosper and achieve based upon their hard work and abilities. The government did not provide advantages or a safety net for its citizens. People were free to succeed or fail based upon their own merits. America had a frontier spirit because it was still a frontier. Individual effort, intellect and willingness to sweat allowed you to move up the socio-economic ladder. The government provided a National Defense, and very little else. In 1794, the country had a population of 4.4 million and a GDP of $310 million. Government spending totaled $7.1 million, or 2.3% of GDP, and was split between Defense and interest on the Revolutionary War debt. Today, Federal Government spending totals $3.7 trillion, or 25% of GDP.
James Truslow Adams in his 1931 Epic of America described the America that once existed in reality, but only exists as a phantom today:
“The American Dream is that dream of a land in which life should be better and richer and fuller for every man, with opportunity for each according to ability or achievement. It is a difficult dream for the European upper classes to interpret adequately, also too many of us ourselves have grown weary and mistrustful of it. It is not a dream of motor cars and high wages merely, but a dream of social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position.”
“The American Dream that has lured tens of millions of all nations to our shores in the past century has not been a dream of material plenty, though that has doubtlessly counted heavily. It has been a dream of being able to grow to fullest development as a man and woman, unhampered by the barriers which had slowly been erected in the older civilizations, unrepressed by social orders which had developed for the benefit of classes rather than for the simple human being of any and every class.” - James Truslow Adams - Epic of America
His assessment of the American Dream was made in 1931. He saw signs that the American Dream had begun to die. He was right. The American Dream began to develop a terminal illness in 1913 with the creation of the Federal Reserve and the passage of the 16th Amendment to the Constitution, creating a permanent income tax.
At the outset of the last century America was still a vital, free, growing country on the rise. The song of the century began as a joyous ballad and ended as a funeral dirge. The creation of a Central Bank, which could create inflation on demand, and allowing politicians the ability to buy votes through pork spending, paid for with ever increasing taxation, have sucked the life out of the American Dream. According to the Federal Reserve’s own website, their mandates were clear. Below are those mandates and an assessment of their success.
Conducting the nation’s monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates.
• Due to loose monetary policy in the 1920′s, the Federal Reserve created a stock bubble, a stock market crash of 89%, a decade long Great Depression, and unemployment of 25% in the 1930′s.
•Due to loose monetary policies in the 1970′s, the Federal Reserve created raging inflation that reached 14% in the early 1980′s and needed to raise interest rates to 18% in order to break the back of inflation, resulting in unemployment surging to 9.7% in 1982.
•Due to loose monetary policies in the early 2000′s, the Federal Reserve created the largest housing bubble in history, with the subsequent collapse bringing the financial system to within hours of collapse, and driving unemployment to 9.9% in 2009.
•Due to the loosest monetary policy in history, today, inflation has begun to rage across the globe, leading to riots, protests and bloody revolutions, with more on the way.
•The Federal Reserve has achieved their stable prices mandate by inflating away 96% of the purchasing power of the US dollar in less than 100 years. The price of gold continues to soar, as faith in the US dollar diminishes by the minute. I guess stability is in the eye of the beholder.
Supervising and regulating banking institutions to ensure the safety and soundness of the nation’s banking and financial system and to protect the credit rights of consumers.
• The Federal Reserve’s supervisory and regulatory expertise can be observed in the graph above. This graph doesn’t do the Fed justice, as it begins in 1934. Sixteen years after its origination, the Fed managed to let 10,000 out of 25,000 banks in the country fail between 1929 and 1932.
•Their glorious history also includes residing over the failure of 2,800 banks during the 1980′s S&L crisis.
•While protecting their mega-bank Wall Street masters, the Fed has allowed over 300 small banks to go under so far. There are 900 banks on the troubled list that will eventually meet their maker.
Maintaining the stability of the financial system and containing systemic risk that may arise in financial markets.
•Generally, maintaining the stability of the financial system and containing systematic risk doesn’t include allowing the worldwide financial system to come within hours of collapse as described by Rep. Paul Kanjorski:
“On Thursday [the 18th], at about 11 o’clock in the morning, the Federal Reserve noticed a tremendous drawdown of money market accounts in the United States to a tune of $550 billion being drawn out in a matter of an hour or two. The Treasury opened up its window to help. They pumped $105 billion into the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks.
They decided to close the operation, close down the money accounts, and announce a guarantee of $250,000 per account so there wouldn’t be further panic and there. And that’s what actually happened. If they had not done that their estimation was that by two o’clock that afternoon, $5.5 trillion would have been drawn out of the money market system of the United States, would have collapsed the entire economy of the United States, and within 24 hours the world economy would have collapsed.
Now we talked at that time about what would have happened if that happened. It would have been the end of our economic system and our political system as we know it.”
Providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation’s payments system.
•It seems this is the only mandate the Federal Reserve has taken seriously is providing services to its owners, the banks. Did the bankers and politicians that met on Jekyll Island to mastermind this Central Bank envision that those services would include: buying $1.5 trillion of toxic mortgages from the banks; allowing the mega-banks to borrow from the Fed at 0% and reinvest those funds at 2.5% risk free; pumping $600 billion directly into the stock market through their QE2 scam; allowing banks to falsely overstate the value of their mortgage and commercial loans; and never ever enforcing basic risk management regulations.
•While providing Wall Street banks with billions of unearned risk free profits, 0% interest rates further impoverish the savers and senior citizens of the country. The Federal Reserve has fulfilled their unstated mandate of enriching bankers at the expense of middle class Americans.
To strengthen U.S. standing in the world economy.
•The Federal Reserve’s affect on the world economy is best revealed in a pictorial tribute to their policies:
TUNISIA
The Federal Reserve has not been alone in killing the American Dream. Politicians since 1913 have done their part in suffocating the dream. The tax code consisted of 400 pages in 1913 and tax rates ranged from 1% to 7%. In less than a century politicians of both parties have carved out 70,000 pages of payoffs, entitlements, and bribes for their contributors and constituents. Tax rates now range from 10% to 35%. Those 70,000 pages of rules, regulations and tax breaks do not benefit the average middle class American. They benefit those who had the money and power to buy off a Congressman.
The Federal Reserve and the US Tax Code bastardized the American Dream, created barriers to economic advancement, and supported the accumulation of wealth and power by a select few. The ruling elite have used their power and control over the media to convince the majority of Americans that the American Dream is about accumulating material possessions with debt. The American Dream no longer meant attaining the fullest measure of your capabilities, but living in the biggest McMansion, driving the nicest BMW, watching the biggest TV and wearing the latest fashions, all acquired with debt. America is dying.
Green Day captures the essence of America since the turn of the century. The country has been in the throes of mass hysteria since 9/11. The once independent, self sufficient individualists that populated this country have become dependent, government reliant, quivering shadows of the frontiersmen that created this country. In the name of safety and security, the American people have allowed their government to accumulate complete control over every aspect of our lives. Only a country in the grip of mass hysteria would allow their leaders to run the National Debt from $5.8 trillion to $14.1 trillion in less than 10 years. Only a country in the clutches of mass hysteria could believe they could get rich by trading internet stocks and houses to a greater fool. Only a country seized by mass hysteria would allow its leaders to promote democracy at the point of a cruise missile as we continue to fight $3 trillion wars in the Middle East, while nearly tripling the amount spent on Defense to more than $1 trillion per year.
Defense Budget Breakdown for 2011
Defense-related expenditure 2011 Budget request & Mandatory spending Calculation
DOD spending $721.3 billion Base budget + “Overseas Contingency Operations”
FBI counter-terrorism $2.7 billion At least one-third FBI budget.
International Affairs $10.1–$54.2 billion At minimum, foreign arms sales. At most, entire State budget
Energy Department, defense-related $20.9 billion
Veterans Affairs $66.2 billion
Homeland Security $54.7 billion
NASA, satellites $3.4–$8.5 billion Between 20% and 50% of NASA’s total budget
Veterans pensions $58.4 billion
Other defense-related mandatory spending $7.5 billion
Interest on debt incurred in past wars $114.8–$454.2 billion Between 23% and 91% of total interest
Total Spending $1.060–$1.449 trillion
If you had told someone on September 10, 2001 that ten years later America would be running $1.5 trillion annual deficits, fighting two wars of choice in countries that despise our presence, and had not only not addressed the $100 billion of unfunded welfare liabilities but added billions more with Medicare D and Obamacare, they would have thought you were a crazy doomster predicting the end of the world. They would have put you away in a padded cell if you had further predicted that politicians would cut taxes three separate times, that the Wall Street banks that leveraged themselves 40 to 1 and destroyed the financial system were handed $2 trillion of taxpayer funds so they could pay themselves multi-million dollar bonuses, and that the Federal Reserve would triple its balance sheet to $2.45 trillion by running its printing presses at hyper-speed and handing the money to those same Wall Street Mega-Banks.
Whenever an act doesn’t make sense and seems irrational, you need to ask yourself, “who benefits?” Who has benefitted from the hysteria? The answer is in plain sight. The moneyed interests benefitted. The military industrial complex benefitted. The Federal Government bureaucracy benefitted. Wall Street bankers benefitted. Mega-corporations and their CEOs benefitted. The top 1% ruling elite gained more wealth and more power. They created the mass hysteria with the assistance of their corporate owned mainstream media and completed their pillaging of the middle class with the cooperation of regulators, rating agencies and their ultimate weapon, the privately owned Federal Reserve bank, that has enriched its owners while impoverishing those whose only aspiration was to do an honest day’s work, raise their families, and live in relative comfort, safety, and happiness.
The modern world in no way resembles the world James Truslow Adams wrote so passionately about in 1931. Green Day’s version of bureaucratic lies, high definition TVs for the poor, contempt for those who use their minds, and a debt flooded system that is falling apart is an accurate assessment of America today. The modern world is ruled by the few with wealth and power, sustained by government. The misinformation and propaganda dished out by the mainstream media creates a smokescreen that obscures who wields the true power in this country. The corporate mainstream media has done such a good job spreading the Big Lie that a vast number of Americans actually admire and worship the ultra-rich.
Most Americans still believe the fairy tale of the American Dream, that no matter how humble your beginnings, everyone has a fair chance to become rich in America. The truth is that the wealthy ruling class owns the country. The top 1% control 43% of the financial wealth of the nation. The top 10% control 83% of the financial wealth of the nation. There is a misperception that the ultra-rich earn their wealth. The facts show otherwise. In 2008, only 19% of the income reported by the 13,480 individuals or families making over $10 million came from wages and salaries. Remember the financial crisis of 2008-2009 that wiped out 7 million jobs, cut the value of many homes in half, and required a taxpayer bailout of Wall Street? According to research done by economist Edward Wolff, ”there has been an “astounding” 36.1% drop in the wealth (marketable assets) of the median household since the peak of the housing bubble in 2007. By contrast, the wealth of the top 1% of households dropped by far less: just 11.1%. So as of April 2010, it looks like the wealth distribution is even more unequal than it was in 2007.”
Source: William Domhoff
The bottom 90% own less than 19% of stocks and mutual funds in the country. Reality is that the 10% richest Americans own the country. The top 1% control 50% of the investment assets and only 5% of the total debt in the country. The bottom 90% control 12% of the investment assets and are burdened with 73% of the total debt. You can clearly see that the Wall Street bailout and the current Federal Reserve QE2 plan to boost stock prices have only benefitted the top 10% richest Americans. What is good for Wall Street is not good for Main Street. The American middle class has been lured into debt by the purveyors of debt, the ultra-rich elite who control the financial industry. The further into debt the bottom 90% descend, the greater the enrichment of the ruling class. This is why Wall Street shysters, political hacks and the corporate mainstream media have urged Americans to whip out those credit cards and “Save America” by spending money they don’t have, again. It is reminiscent of President Bush’s heartfelt plea to the American public to defeat terrorism by buying a GM car with 0% down.
The propaganda that is constantly pounded into the brains of Americans about “death taxes” and the rich paying more than their fair share of taxes is part of the Big Lie perpetrated by the powerful ruling class. The “huge” issue of estate tax impacts only the few thousand richest Americans. According to a study published by the Federal Reserve Bank of Cleveland, only 1.6% of Americans receive $100,000 or more in inheritance. Another 1.1% receive $50,000 to $100,000. On the other hand, 91.9% receive nothing (Kotlikoff & Gokhale, 2000). The richest families in the country provide the funding for the mainstream media propaganda needed to eliminate estate taxes.
The Death of America
“Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There never was a democracy yet that did not commit suicide.” – John Adams
Two hundred and thirty five years ago, our Founding Fathers declared that we all had the unalienable rights of life, liberty and the pursuit of happiness. These rights have been restricted and bastardized over two centuries. Liberties have been severely restricted as your government tracks you through your social security number, is able to monitor your phone and internet communications, and regulates your education, healthcare, business, and a thousand other daily activities. The right to happiness was based upon James Treslow Adams’ view that we were free to attain ”the fullest stature of which they are innately capable”. The happiness of becoming a success through your individual exertion, intelligence and efforts has been subverted by the happiness of material goods acquired through the use of debt, peddled by the ruling class.
The American Dream where every person had the opportunity to live a richer and fuller life began to die in 1913. Every generation born in this country had an excellent chance to live a better life than their parents. Relentless progress was the American way. I have three teenage sons. Based on the actions of this country’s ruling oligarchy, I doubt that my sons will live a richer and fuller life than myself. The debts are too extreme, the military overreach too excessive, the looting by the financial class too great, the political corruption too extensive, and the opportunities too few. The dream of a social order where everyone could rise to the highest level of their capabilities regardless of their birth has been systematically squashed. With 66% of households making less than $65,000 and college costs out of reach for 80% of Americans without incurring crushing levels of debt, the chances for most Americans to climb the social ladder through educational advancement are nil. Even if they do graduate from college, the CEOs in corporate America, who “earn” 300 times the average worker, have outsourced their jobs to China and India.
The ruling class provides their children with private schooling and necessary preparation to keep their place in the social order. Wealth begets wealth. The elite send their kids to the elite Ivy League schools and use their connections with their fellow ruling elite to get them jobs on Wall Street, the prestigious connected corporations or government jobs in Washington DC. The wealth of the few has erected barriers to advancement of the many. America has progressively become a stratified class oriented society that has begun to spiral downward as the ruling class has gone too far. The revolutions flaring across the globe are occurring because the ruling class went too far and took too much. The ruling class in America should take note. They have shattered the American Dream and the retribution from those who have been swindled will be unexpected and violent.
The Founding Fathers described the kind of country they were shaping on July 4, 1776 with the most well known sentence in the English language:
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. - Declaration of Independence
In 1776, America was an idea born of noble intentions. An idea that every citizen had the opportunity to succeed, prosper and achieve based upon their hard work and abilities. The government did not provide advantages or a safety net for its citizens. People were free to succeed or fail based upon their own merits. America had a frontier spirit because it was still a frontier. Individual effort, intellect and willingness to sweat allowed you to move up the socio-economic ladder. The government provided a National Defense, and very little else. In 1794, the country had a population of 4.4 million and a GDP of $310 million. Government spending totaled $7.1 million, or 2.3% of GDP, and was split between Defense and interest on the Revolutionary War debt. Today, Federal Government spending totals $3.7 trillion, or 25% of GDP.
James Truslow Adams in his 1931 Epic of America described the America that once existed in reality, but only exists as a phantom today:
“The American Dream is that dream of a land in which life should be better and richer and fuller for every man, with opportunity for each according to ability or achievement. It is a difficult dream for the European upper classes to interpret adequately, also too many of us ourselves have grown weary and mistrustful of it. It is not a dream of motor cars and high wages merely, but a dream of social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position.”
“The American Dream that has lured tens of millions of all nations to our shores in the past century has not been a dream of material plenty, though that has doubtlessly counted heavily. It has been a dream of being able to grow to fullest development as a man and woman, unhampered by the barriers which had slowly been erected in the older civilizations, unrepressed by social orders which had developed for the benefit of classes rather than for the simple human being of any and every class.” - James Truslow Adams - Epic of America
His assessment of the American Dream was made in 1931. He saw signs that the American Dream had begun to die. He was right. The American Dream began to develop a terminal illness in 1913 with the creation of the Federal Reserve and the passage of the 16th Amendment to the Constitution, creating a permanent income tax.
At the outset of the last century America was still a vital, free, growing country on the rise. The song of the century began as a joyous ballad and ended as a funeral dirge. The creation of a Central Bank, which could create inflation on demand, and allowing politicians the ability to buy votes through pork spending, paid for with ever increasing taxation, have sucked the life out of the American Dream. According to the Federal Reserve’s own website, their mandates were clear. Below are those mandates and an assessment of their success.
Conducting the nation’s monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates.
• Due to loose monetary policy in the 1920′s, the Federal Reserve created a stock bubble, a stock market crash of 89%, a decade long Great Depression, and unemployment of 25% in the 1930′s.
•Due to loose monetary policies in the 1970′s, the Federal Reserve created raging inflation that reached 14% in the early 1980′s and needed to raise interest rates to 18% in order to break the back of inflation, resulting in unemployment surging to 9.7% in 1982.
•Due to loose monetary policies in the early 2000′s, the Federal Reserve created the largest housing bubble in history, with the subsequent collapse bringing the financial system to within hours of collapse, and driving unemployment to 9.9% in 2009.
•Due to the loosest monetary policy in history, today, inflation has begun to rage across the globe, leading to riots, protests and bloody revolutions, with more on the way.
•The Federal Reserve has achieved their stable prices mandate by inflating away 96% of the purchasing power of the US dollar in less than 100 years. The price of gold continues to soar, as faith in the US dollar diminishes by the minute. I guess stability is in the eye of the beholder.
Supervising and regulating banking institutions to ensure the safety and soundness of the nation’s banking and financial system and to protect the credit rights of consumers.
• The Federal Reserve’s supervisory and regulatory expertise can be observed in the graph above. This graph doesn’t do the Fed justice, as it begins in 1934. Sixteen years after its origination, the Fed managed to let 10,000 out of 25,000 banks in the country fail between 1929 and 1932.
•Their glorious history also includes residing over the failure of 2,800 banks during the 1980′s S&L crisis.
•While protecting their mega-bank Wall Street masters, the Fed has allowed over 300 small banks to go under so far. There are 900 banks on the troubled list that will eventually meet their maker.
Maintaining the stability of the financial system and containing systemic risk that may arise in financial markets.
•Generally, maintaining the stability of the financial system and containing systematic risk doesn’t include allowing the worldwide financial system to come within hours of collapse as described by Rep. Paul Kanjorski:
“On Thursday [the 18th], at about 11 o’clock in the morning, the Federal Reserve noticed a tremendous drawdown of money market accounts in the United States to a tune of $550 billion being drawn out in a matter of an hour or two. The Treasury opened up its window to help. They pumped $105 billion into the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks.
They decided to close the operation, close down the money accounts, and announce a guarantee of $250,000 per account so there wouldn’t be further panic and there. And that’s what actually happened. If they had not done that their estimation was that by two o’clock that afternoon, $5.5 trillion would have been drawn out of the money market system of the United States, would have collapsed the entire economy of the United States, and within 24 hours the world economy would have collapsed.
Now we talked at that time about what would have happened if that happened. It would have been the end of our economic system and our political system as we know it.”
Providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation’s payments system.
•It seems this is the only mandate the Federal Reserve has taken seriously is providing services to its owners, the banks. Did the bankers and politicians that met on Jekyll Island to mastermind this Central Bank envision that those services would include: buying $1.5 trillion of toxic mortgages from the banks; allowing the mega-banks to borrow from the Fed at 0% and reinvest those funds at 2.5% risk free; pumping $600 billion directly into the stock market through their QE2 scam; allowing banks to falsely overstate the value of their mortgage and commercial loans; and never ever enforcing basic risk management regulations.
•While providing Wall Street banks with billions of unearned risk free profits, 0% interest rates further impoverish the savers and senior citizens of the country. The Federal Reserve has fulfilled their unstated mandate of enriching bankers at the expense of middle class Americans.
To strengthen U.S. standing in the world economy.
•The Federal Reserve’s affect on the world economy is best revealed in a pictorial tribute to their policies:
TUNISIA
ALGERIA
EGYTP
The Federal Reserve has not been alone in killing the American Dream. Politicians since 1913 have done their part in suffocating the dream. The tax code consisted of 400 pages in 1913 and tax rates ranged from 1% to 7%. In less than a century politicians of both parties have carved out 70,000 pages of payoffs, entitlements, and bribes for their contributors and constituents. Tax rates now range from 10% to 35%. Those 70,000 pages of rules, regulations and tax breaks do not benefit the average middle class American. They benefit those who had the money and power to buy off a Congressman.
The Federal Reserve and the US Tax Code bastardized the American Dream, created barriers to economic advancement, and supported the accumulation of wealth and power by a select few. The ruling elite have used their power and control over the media to convince the majority of Americans that the American Dream is about accumulating material possessions with debt. The American Dream no longer meant attaining the fullest measure of your capabilities, but living in the biggest McMansion, driving the nicest BMW, watching the biggest TV and wearing the latest fashions, all acquired with debt. America is dying.
Green Day captures the essence of America since the turn of the century. The country has been in the throes of mass hysteria since 9/11. The once independent, self sufficient individualists that populated this country have become dependent, government reliant, quivering shadows of the frontiersmen that created this country. In the name of safety and security, the American people have allowed their government to accumulate complete control over every aspect of our lives. Only a country in the grip of mass hysteria would allow their leaders to run the National Debt from $5.8 trillion to $14.1 trillion in less than 10 years. Only a country in the clutches of mass hysteria could believe they could get rich by trading internet stocks and houses to a greater fool. Only a country seized by mass hysteria would allow its leaders to promote democracy at the point of a cruise missile as we continue to fight $3 trillion wars in the Middle East, while nearly tripling the amount spent on Defense to more than $1 trillion per year.
Defense Budget Breakdown for 2011
Defense-related expenditure 2011 Budget request & Mandatory spending Calculation
DOD spending $721.3 billion Base budget + “Overseas Contingency Operations”
FBI counter-terrorism $2.7 billion At least one-third FBI budget.
International Affairs $10.1–$54.2 billion At minimum, foreign arms sales. At most, entire State budget
Energy Department, defense-related $20.9 billion
Veterans Affairs $66.2 billion
Homeland Security $54.7 billion
NASA, satellites $3.4–$8.5 billion Between 20% and 50% of NASA’s total budget
Veterans pensions $58.4 billion
Other defense-related mandatory spending $7.5 billion
Interest on debt incurred in past wars $114.8–$454.2 billion Between 23% and 91% of total interest
Total Spending $1.060–$1.449 trillion
If you had told someone on September 10, 2001 that ten years later America would be running $1.5 trillion annual deficits, fighting two wars of choice in countries that despise our presence, and had not only not addressed the $100 billion of unfunded welfare liabilities but added billions more with Medicare D and Obamacare, they would have thought you were a crazy doomster predicting the end of the world. They would have put you away in a padded cell if you had further predicted that politicians would cut taxes three separate times, that the Wall Street banks that leveraged themselves 40 to 1 and destroyed the financial system were handed $2 trillion of taxpayer funds so they could pay themselves multi-million dollar bonuses, and that the Federal Reserve would triple its balance sheet to $2.45 trillion by running its printing presses at hyper-speed and handing the money to those same Wall Street Mega-Banks.
Whenever an act doesn’t make sense and seems irrational, you need to ask yourself, “who benefits?” Who has benefitted from the hysteria? The answer is in plain sight. The moneyed interests benefitted. The military industrial complex benefitted. The Federal Government bureaucracy benefitted. Wall Street bankers benefitted. Mega-corporations and their CEOs benefitted. The top 1% ruling elite gained more wealth and more power. They created the mass hysteria with the assistance of their corporate owned mainstream media and completed their pillaging of the middle class with the cooperation of regulators, rating agencies and their ultimate weapon, the privately owned Federal Reserve bank, that has enriched its owners while impoverishing those whose only aspiration was to do an honest day’s work, raise their families, and live in relative comfort, safety, and happiness.
The modern world in no way resembles the world James Truslow Adams wrote so passionately about in 1931. Green Day’s version of bureaucratic lies, high definition TVs for the poor, contempt for those who use their minds, and a debt flooded system that is falling apart is an accurate assessment of America today. The modern world is ruled by the few with wealth and power, sustained by government. The misinformation and propaganda dished out by the mainstream media creates a smokescreen that obscures who wields the true power in this country. The corporate mainstream media has done such a good job spreading the Big Lie that a vast number of Americans actually admire and worship the ultra-rich.
Most Americans still believe the fairy tale of the American Dream, that no matter how humble your beginnings, everyone has a fair chance to become rich in America. The truth is that the wealthy ruling class owns the country. The top 1% control 43% of the financial wealth of the nation. The top 10% control 83% of the financial wealth of the nation. There is a misperception that the ultra-rich earn their wealth. The facts show otherwise. In 2008, only 19% of the income reported by the 13,480 individuals or families making over $10 million came from wages and salaries. Remember the financial crisis of 2008-2009 that wiped out 7 million jobs, cut the value of many homes in half, and required a taxpayer bailout of Wall Street? According to research done by economist Edward Wolff, ”there has been an “astounding” 36.1% drop in the wealth (marketable assets) of the median household since the peak of the housing bubble in 2007. By contrast, the wealth of the top 1% of households dropped by far less: just 11.1%. So as of April 2010, it looks like the wealth distribution is even more unequal than it was in 2007.”
Source: William Domhoff
The bottom 90% own less than 19% of stocks and mutual funds in the country. Reality is that the 10% richest Americans own the country. The top 1% control 50% of the investment assets and only 5% of the total debt in the country. The bottom 90% control 12% of the investment assets and are burdened with 73% of the total debt. You can clearly see that the Wall Street bailout and the current Federal Reserve QE2 plan to boost stock prices have only benefitted the top 10% richest Americans. What is good for Wall Street is not good for Main Street. The American middle class has been lured into debt by the purveyors of debt, the ultra-rich elite who control the financial industry. The further into debt the bottom 90% descend, the greater the enrichment of the ruling class. This is why Wall Street shysters, political hacks and the corporate mainstream media have urged Americans to whip out those credit cards and “Save America” by spending money they don’t have, again. It is reminiscent of President Bush’s heartfelt plea to the American public to defeat terrorism by buying a GM car with 0% down.
The propaganda that is constantly pounded into the brains of Americans about “death taxes” and the rich paying more than their fair share of taxes is part of the Big Lie perpetrated by the powerful ruling class. The “huge” issue of estate tax impacts only the few thousand richest Americans. According to a study published by the Federal Reserve Bank of Cleveland, only 1.6% of Americans receive $100,000 or more in inheritance. Another 1.1% receive $50,000 to $100,000. On the other hand, 91.9% receive nothing (Kotlikoff & Gokhale, 2000). The richest families in the country provide the funding for the mainstream media propaganda needed to eliminate estate taxes.
The lies about the ultra-rich paying more than their fair share of taxes are refuted in the graph above. The top 1% actually pays a lower percentage of their income than the next 9%. The tax code isn’t 70,000 pages for nothing. The ultra-rich have used their wealth to great advantage by having loopholes and tax dodges inserted into the tax code by their bought off congressmen. The average American can’t afford high powered tax specialists and lawyers to help them stash their wealth in off-shore tax havens in the Caribbean and Switzerland. The consistent theme in America today is that the middle class gets screwed and the ultra-rich ruling class accumulates more wealth and power.
The Death of America
“Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There never was a democracy yet that did not commit suicide.” – John Adams
Two hundred and thirty five years ago, our Founding Fathers declared that we all had the unalienable rights of life, liberty and the pursuit of happiness. These rights have been restricted and bastardized over two centuries. Liberties have been severely restricted as your government tracks you through your social security number, is able to monitor your phone and internet communications, and regulates your education, healthcare, business, and a thousand other daily activities. The right to happiness was based upon James Treslow Adams’ view that we were free to attain ”the fullest stature of which they are innately capable”. The happiness of becoming a success through your individual exertion, intelligence and efforts has been subverted by the happiness of material goods acquired through the use of debt, peddled by the ruling class.
The American Dream where every person had the opportunity to live a richer and fuller life began to die in 1913. Every generation born in this country had an excellent chance to live a better life than their parents. Relentless progress was the American way. I have three teenage sons. Based on the actions of this country’s ruling oligarchy, I doubt that my sons will live a richer and fuller life than myself. The debts are too extreme, the military overreach too excessive, the looting by the financial class too great, the political corruption too extensive, and the opportunities too few. The dream of a social order where everyone could rise to the highest level of their capabilities regardless of their birth has been systematically squashed. With 66% of households making less than $65,000 and college costs out of reach for 80% of Americans without incurring crushing levels of debt, the chances for most Americans to climb the social ladder through educational advancement are nil. Even if they do graduate from college, the CEOs in corporate America, who “earn” 300 times the average worker, have outsourced their jobs to China and India.
The ruling class provides their children with private schooling and necessary preparation to keep their place in the social order. Wealth begets wealth. The elite send their kids to the elite Ivy League schools and use their connections with their fellow ruling elite to get them jobs on Wall Street, the prestigious connected corporations or government jobs in Washington DC. The wealth of the few has erected barriers to advancement of the many. America has progressively become a stratified class oriented society that has begun to spiral downward as the ruling class has gone too far. The revolutions flaring across the globe are occurring because the ruling class went too far and took too much. The ruling class in America should take note. They have shattered the American Dream and the retribution from those who have been swindled will be unexpected and violent.
Kill Switch: Obama Administration Fears Egypt-Style Revolt In U.S.
Paul Joseph Watson
Prison Planet.com
Obama decries Internet shut-down in Egypt while his own administration prepares to enact same draconian powers to crush dissent during times of political upheaval in America
The Obama administration is busy attempting to pass legislation that would give the President a kill switch for the Internet in the United States while at the same time decrying Egyptian authorities for shutting down the Internet in a bid to deflate the unfolding revolution against Hosni Mubarak. The reason is simple – the government fears an Egypt-style revolt occurring in the U.S. and wants to block access to the world wide web if and when it happens.
Chicago radio host and occasional Alex Jones Show guest Mancow Muller called it right during an appearance on Mike Huckabee’s show this weekend.
“It’s in all the newspapers, ‘Ohblahblah’, we’ve got to free up Twitter, we’ve got to free up the Internet and Facebook for these poor Egyptians – this is the President that let Wikileaks and all of this stuff happen,” said Mancow.
“They create the problems and we react to fear — the the four letter f-word that controls the masses and they offer the solution, “they” being the government. This is the President that wants the kill switch for the Internet….he wants a kill switch.”
“They fear….social networking, Twitter, Facebook, all of this stuff, but oh, no, we must have it in Egypt, but we don’t want to have it in America.”
Mancow also pointed out how Egyptians were rioting over an economic fallout that has led to crippling tax hikes, wage reductions and spiraling food prices, a similar situation to what is unfolding in America, making reference to how Illinois state authorities recently agreed to hike taxes by a whopping 66 percent.
As we have illustrated, despite invoking supposedly genuine security concerns, the only time governments have resorted to shutting down the world wide web is when they feel the need to crush legitimate dissent against the state.
Indeed, at the height of the Stuxnet worm attack, the crisis was cited as another reason why cybersecurity legislation giving government control of the Internet was necessary. It later emerged that the Stuxnet virus itself was created by the US and Israel to target Iran’s nuclear program.
The Communist Chinese government is now blocking searches for the word “Egypt” on social networking websites in China, reflecting “the government’s fears that the protests in Egypt could whip up unrest in China.”
Sina.com public relations officer Ma Taotao confirms that Chinese searches for Egypt are blocked on its instant messaging site, Sina Weibo.
Ma says the company itself did not make the decision, but is only following the “relevant Chinese laws and regulations.” He gives no details and does not say which government department is responsible. He says he does not know how long the restriction will be in force.
The authoritarian Chinese government routinely blocks Internet access when it wishes to derail organized protests and marches, a telling lesson for Americans given the fact that cybersecurity guru Senator Joseph Lieberman openly admitted that the goal of the new kill switch in the U.S. was to mimic the Chinese system of Internet censorship.
“Right now China, the government, can disconnect parts of its Internet in case of war and we need to have that here too,” Lieberman told CNN’s Candy Crowley last year.
However, China’s “war” is not against foreign terrorists or hackers, it’s against people who dare to use the Internet to express dissent against government atrocities or corruption. China’s system of Internet policing is about crushing freedom of speech during times of political upheaval and has nothing to do with legitimate security concerns.
It’s a system concentrated around state oppression of any individual or group that seeks to use the Internet to draw attention to political causes frowned upon by the authorities.
China has exercised its power to shut down the Internet, something that Lieberman wants to introduce in the U.S., at politically sensitive times in order to stem the flow of information about government abuse of its citizens. During the anti-government riots which occurred in July 2009, the Chinese government completely shut down the Internet across the entire northwestern region of Xinjiang for days. In several regions, the authorities completely cut off the Internet for nearly a year. Major news and discussion portals used by the Muslim Uighurs in the area remain blocked. Similarly, Internet access in parts of Tibet is routinely restricted as part of government efforts to pre-empt and neutralize unrest.
Twitter, Facebook and Youtube are all banned in China and even sanitized government approved versions of these websites are now being shut down for long periods of time so that they can “remove all politically sensitive content under orders from Chinese internet authorities”.
Web censorship in China intensified after a micro-blogger began to expose the fact that many government officials, executives and judges had lied about obtaining degrees from prestigious universities. The government responded to the embarrassment by ordering websites to temporarily go into “maintenance” mode while they removed the pertinent material. What this has to do with fighting a “war,” as Lieberman claims, is anyone’s guess.
The Chinese system that Lieberman wants to bring to the United States is not only about censoring material critical of the state, it’s about identifying those who post it and thereby creating a chilling atmosphere that discourages others from exercising free speech in fear that they might be the next victims of the thought police. News websites in China now require users to register their true identities in order to leave comments.
This move towards abolishing Internet anonymity and creating a virtual ID card is a key centerpiece of Lieberman’s cybersecurity agenda.
This strategy revolves around, “The creation of a system for identity management that would allow citizens to use additional authentication techniques, such as physical tokens or modules on mobile phones, to verify who they are before buying things online or accessing such sensitive information as health or banking records.”
Only with this government-issued “token” will Internet users be allowed to “able to move from website to website,” a system not too far removed from what China proposed and rejected for being too authoritarian.
The examples of Egypt and China in shutting down Internet access to quell dissent against the state tell us everything we need to know about the motivations behind this odious policy and why it has no place in America, a supposedly free country.
While Obama criticizes Egyptian authorities for shutting down web access to disrupt protesters, his own administration prepares to launch a fresh attempt at instituting the exact same powers in America, which as recent history clearly demonstrates, represent tools for tyrannical regimes who wish to silence legitimate political opposition.
Prison Planet.com
Obama decries Internet shut-down in Egypt while his own administration prepares to enact same draconian powers to crush dissent during times of political upheaval in America
The Obama administration is busy attempting to pass legislation that would give the President a kill switch for the Internet in the United States while at the same time decrying Egyptian authorities for shutting down the Internet in a bid to deflate the unfolding revolution against Hosni Mubarak. The reason is simple – the government fears an Egypt-style revolt occurring in the U.S. and wants to block access to the world wide web if and when it happens.
Chicago radio host and occasional Alex Jones Show guest Mancow Muller called it right during an appearance on Mike Huckabee’s show this weekend.
“It’s in all the newspapers, ‘Ohblahblah’, we’ve got to free up Twitter, we’ve got to free up the Internet and Facebook for these poor Egyptians – this is the President that let Wikileaks and all of this stuff happen,” said Mancow.
“They create the problems and we react to fear — the the four letter f-word that controls the masses and they offer the solution, “they” being the government. This is the President that wants the kill switch for the Internet….he wants a kill switch.”
“They fear….social networking, Twitter, Facebook, all of this stuff, but oh, no, we must have it in Egypt, but we don’t want to have it in America.”
Mancow also pointed out how Egyptians were rioting over an economic fallout that has led to crippling tax hikes, wage reductions and spiraling food prices, a similar situation to what is unfolding in America, making reference to how Illinois state authorities recently agreed to hike taxes by a whopping 66 percent.
As we have illustrated, despite invoking supposedly genuine security concerns, the only time governments have resorted to shutting down the world wide web is when they feel the need to crush legitimate dissent against the state.
Indeed, at the height of the Stuxnet worm attack, the crisis was cited as another reason why cybersecurity legislation giving government control of the Internet was necessary. It later emerged that the Stuxnet virus itself was created by the US and Israel to target Iran’s nuclear program.
The Communist Chinese government is now blocking searches for the word “Egypt” on social networking websites in China, reflecting “the government’s fears that the protests in Egypt could whip up unrest in China.”
Sina.com public relations officer Ma Taotao confirms that Chinese searches for Egypt are blocked on its instant messaging site, Sina Weibo.
Ma says the company itself did not make the decision, but is only following the “relevant Chinese laws and regulations.” He gives no details and does not say which government department is responsible. He says he does not know how long the restriction will be in force.
The authoritarian Chinese government routinely blocks Internet access when it wishes to derail organized protests and marches, a telling lesson for Americans given the fact that cybersecurity guru Senator Joseph Lieberman openly admitted that the goal of the new kill switch in the U.S. was to mimic the Chinese system of Internet censorship.
“Right now China, the government, can disconnect parts of its Internet in case of war and we need to have that here too,” Lieberman told CNN’s Candy Crowley last year.
However, China’s “war” is not against foreign terrorists or hackers, it’s against people who dare to use the Internet to express dissent against government atrocities or corruption. China’s system of Internet policing is about crushing freedom of speech during times of political upheaval and has nothing to do with legitimate security concerns.
It’s a system concentrated around state oppression of any individual or group that seeks to use the Internet to draw attention to political causes frowned upon by the authorities.
China has exercised its power to shut down the Internet, something that Lieberman wants to introduce in the U.S., at politically sensitive times in order to stem the flow of information about government abuse of its citizens. During the anti-government riots which occurred in July 2009, the Chinese government completely shut down the Internet across the entire northwestern region of Xinjiang for days. In several regions, the authorities completely cut off the Internet for nearly a year. Major news and discussion portals used by the Muslim Uighurs in the area remain blocked. Similarly, Internet access in parts of Tibet is routinely restricted as part of government efforts to pre-empt and neutralize unrest.
Twitter, Facebook and Youtube are all banned in China and even sanitized government approved versions of these websites are now being shut down for long periods of time so that they can “remove all politically sensitive content under orders from Chinese internet authorities”.
Web censorship in China intensified after a micro-blogger began to expose the fact that many government officials, executives and judges had lied about obtaining degrees from prestigious universities. The government responded to the embarrassment by ordering websites to temporarily go into “maintenance” mode while they removed the pertinent material. What this has to do with fighting a “war,” as Lieberman claims, is anyone’s guess.
The Chinese system that Lieberman wants to bring to the United States is not only about censoring material critical of the state, it’s about identifying those who post it and thereby creating a chilling atmosphere that discourages others from exercising free speech in fear that they might be the next victims of the thought police. News websites in China now require users to register their true identities in order to leave comments.
This move towards abolishing Internet anonymity and creating a virtual ID card is a key centerpiece of Lieberman’s cybersecurity agenda.
This strategy revolves around, “The creation of a system for identity management that would allow citizens to use additional authentication techniques, such as physical tokens or modules on mobile phones, to verify who they are before buying things online or accessing such sensitive information as health or banking records.”
Only with this government-issued “token” will Internet users be allowed to “able to move from website to website,” a system not too far removed from what China proposed and rejected for being too authoritarian.
The examples of Egypt and China in shutting down Internet access to quell dissent against the state tell us everything we need to know about the motivations behind this odious policy and why it has no place in America, a supposedly free country.
While Obama criticizes Egyptian authorities for shutting down web access to disrupt protesters, his own administration prepares to launch a fresh attempt at instituting the exact same powers in America, which as recent history clearly demonstrates, represent tools for tyrannical regimes who wish to silence legitimate political opposition.
FBI involved in hundreds of violations in national-security investigations
By Tribune Washington Bureau
The FBI disclosed to a presidential board that it was involved in nearly 800 violations of laws, regulations or policies governing national-security investigations from 2001 to 2008, but the government won't provide details or say whether anyone was disciplined, according to a report by a privacy-watchdog group.
The San Francisco-based Electronic Frontier Foundation sued under the Freedom of Information Act to obtain about 2,500 documents the FBI submitted to the President's Intelligence Oversight Board.
The board was created in 1976 to monitor U.S. intelligence gathering.
Intelligence agencies are required to submit reports to the board about suspected violations of civil-rights-related laws or presidential orders.
The nonprofit foundation said it obtained documents from a variety of intelligence agencies, but most of the records were so heavily censored they couldn't be properly evaluated.
The FBI provided the most substantive disclosures, although the documents were redacted to withhold names, exact dates and other identifying details, and they don't say what action was taken to remedy or punish the violations.
Nevertheless, the documents "constitute the most complete picture of post- 9/11 FBI intelligence abuses available to the public," says the report, which is to be released Monday but was obtained in advance by the Tribune Washington Bureau.
"The documents suggest," the report says, "that FBI intelligence investigations have compromised the civil liberties of American citizens far more frequently, and to a greater extent, than was previously assumed."
The new disclosures come as the Patriot Act is up for renewal in Congress before it expires in February.
The FBI disclosed to a presidential board that it was involved in nearly 800 violations of laws, regulations or policies governing national-security investigations from 2001 to 2008, but the government won't provide details or say whether anyone was disciplined, according to a report by a privacy-watchdog group.
The San Francisco-based Electronic Frontier Foundation sued under the Freedom of Information Act to obtain about 2,500 documents the FBI submitted to the President's Intelligence Oversight Board.
The board was created in 1976 to monitor U.S. intelligence gathering.
Intelligence agencies are required to submit reports to the board about suspected violations of civil-rights-related laws or presidential orders.
The nonprofit foundation said it obtained documents from a variety of intelligence agencies, but most of the records were so heavily censored they couldn't be properly evaluated.
The FBI provided the most substantive disclosures, although the documents were redacted to withhold names, exact dates and other identifying details, and they don't say what action was taken to remedy or punish the violations.
Nevertheless, the documents "constitute the most complete picture of post- 9/11 FBI intelligence abuses available to the public," says the report, which is to be released Monday but was obtained in advance by the Tribune Washington Bureau.
"The documents suggest," the report says, "that FBI intelligence investigations have compromised the civil liberties of American citizens far more frequently, and to a greater extent, than was previously assumed."
The new disclosures come as the Patriot Act is up for renewal in Congress before it expires in February.
Arizona’s “Save My Home AZ” Program Saves [Drum Roll Please] ONE Home
by twist
Last year the state of Arizona started the Save My Home AZ program with $125 million from the Obama administration. And now, nearly a year later, the program has saved exactly ONE home: [Thanks M!]
Of the 1,055 Arizona homeowners who have applied, only one has qualified for help from the program. A National Bank borrower is slated to get $40,000 knocked off a distressed home loan. Executive Vice President Greg Wessel declined to give details about the borrower, but he said two or three more are up for approval.
Can you see the headlines in the Arizona Republic if all three of those additional borrowers are approved? “Save My Home AZ Triples Success Rate In 2011!” It makes you feel good to see your tax dollars at work, doesn’t it?
editor's note: I said 4 months ago that this programs were a charade !!
The same will happen in California
Last year the state of Arizona started the Save My Home AZ program with $125 million from the Obama administration. And now, nearly a year later, the program has saved exactly ONE home: [Thanks M!]
Of the 1,055 Arizona homeowners who have applied, only one has qualified for help from the program. A National Bank borrower is slated to get $40,000 knocked off a distressed home loan. Executive Vice President Greg Wessel declined to give details about the borrower, but he said two or three more are up for approval.
Can you see the headlines in the Arizona Republic if all three of those additional borrowers are approved? “Save My Home AZ Triples Success Rate In 2011!” It makes you feel good to see your tax dollars at work, doesn’t it?
editor's note: I said 4 months ago that this programs were a charade !!
The same will happen in California
How 'Mainstream' Economics Miseducates About Money and the Fed
by Thomas J. DiLorenzo
The Coming Currency Crisis and the Downfall of the Dollar
The Coming Currency Crisis and the Downfall of the Dollar
Former Managing Director of Goldman Sachs: Egyptians, Greeks, Tunisians and British Are All Protesting Against Pillaging of Their Economies
By Washington's Blog
Nomi Prins - former managing director of Goldman Sachs and head of the international analytics group at Bear Stearns in London - notes that the Egyptian people are rebelling against being pillaged by giant, international banks and their own government as much as anything else.
She also points out that the Greek, British, Tunisian and other protesters are all in the same boat:
The ongoing demonstrations in Egypt are as much, if not more, about the mass deterioration of economic conditions and the harsh result of years of financial deregulation, than the political ideology that some of the media seems more focused on.
According to the CIA's World Fact-book depiction of Egypt's economy, "Cairo from 2004 to 2008 aggressively pursued economic reforms to attract foreign investment and facilitate GDP growth." And, while that was happening, "Despite the relatively high levels of economic growth over the past few years, living conditions for the average Egyptian remain poor."
Unemployment in Egypt is hovering just below the 10% mark, like in the US, though similarly, this figure grossly underestimates underemployment, quality of employment, prospects for employment, and the growing youth population with a dismal job future. Nearly 20% of the country live below the poverty line (compared to 14% and growing in the US) and 10% of the population controls 28% of household income (compared to 30% in the US). [By the most commonly used measure of inequality - the Gini Coefficient - the U.S. has much higher inequality than Egypt]. But, these figures, as in the US, have been accelerating in ways that undermine financial security of the majority of the population, and have been doing so for more than have a decade.
Around 2005, Egypt decided to transform its financial system in order to increase its appeal as a magnet for foreign investment, notably banks and real estate speculators. Egypt reduced cumbersome bureaucracy and regulations around foreign property investment through decree (number 583.) International luxury property firms depicted the country as a mecca (of the tax-haven variety) for property speculation, a country offering no capital gains taxes on real estate transactions, no stamp duty, and no inheritance tax.
But, Egypt's more devastating economic transformation centered around its decision to aggressively sell off its national banks as a matter of foreign and financial policy between 2005 and early 2008 (around the time that US banks were stoking a global sub-prime and other forms-of-debt and leverage oriented crisis). Having opened its real estate to foreign investment and private equity speculation, the next step in the deregulation of the country's banks was spurring international bank takeovers complete with new bank openings, where international banks could begin plowing Egyptians for fees. Citigroup, for example, launched the first Cards reward program in 2005, followed by other banks.
According to an article in Executive Magazine in early 2007, which touted the competitive bidding, acquistion and rebranding of Egyptian banks by foreign banks and growth of foreign M&A action, the biggest bank deal of 2006 was the sale of one of the four largest state-run banks, Bank of Alexandria, to Italian bank, Gruppo Sanpaolo IMI. This, a much larger deal than the 70% acquisition by Greek's Piraeus Bank of the Egyptian Commercial Bank in 2005, one of the first deals to be blessed by the Central Bank of Egypt and the Ministry of Investment that unleashed the sale of Egypt's banking system to the highest international bidders.
The greater the pace of foreign bank influx and take-overs to 'modernize' Egypt's banking system, inevitably the more short-term, "hot" money poured into Egypt. Pieces of Egypt, or its companies, continued to be purchased by foreign conglomerates, trickling off when the global financial crisis brewed full force in 2008, though not before Goldman Sachs Strategic Investments Limited in the UK bought a $70 million chunk of Palm Hills Development SAE, a high-end real estate developer, in March, 2008.
When a country, among other shortcomings, relinquishes its financial system and its population's well-being to the pursuit of 'good deals', there is going to be substantial fallout. The citizens protesting in the streets of Greece, England, Tunisia, Egypt and anywhere else, may be revolting on a national basis against individual leaderships that have shafted them, but they have a common bond; they are revolting against a world besotted with benefiting the powerful and the deal-makers at the expense of ordinary people.
Nomi Prins - former managing director of Goldman Sachs and head of the international analytics group at Bear Stearns in London - notes that the Egyptian people are rebelling against being pillaged by giant, international banks and their own government as much as anything else.
She also points out that the Greek, British, Tunisian and other protesters are all in the same boat:
The ongoing demonstrations in Egypt are as much, if not more, about the mass deterioration of economic conditions and the harsh result of years of financial deregulation, than the political ideology that some of the media seems more focused on.
According to the CIA's World Fact-book depiction of Egypt's economy, "Cairo from 2004 to 2008 aggressively pursued economic reforms to attract foreign investment and facilitate GDP growth." And, while that was happening, "Despite the relatively high levels of economic growth over the past few years, living conditions for the average Egyptian remain poor."
Unemployment in Egypt is hovering just below the 10% mark, like in the US, though similarly, this figure grossly underestimates underemployment, quality of employment, prospects for employment, and the growing youth population with a dismal job future. Nearly 20% of the country live below the poverty line (compared to 14% and growing in the US) and 10% of the population controls 28% of household income (compared to 30% in the US). [By the most commonly used measure of inequality - the Gini Coefficient - the U.S. has much higher inequality than Egypt]. But, these figures, as in the US, have been accelerating in ways that undermine financial security of the majority of the population, and have been doing so for more than have a decade.
Around 2005, Egypt decided to transform its financial system in order to increase its appeal as a magnet for foreign investment, notably banks and real estate speculators. Egypt reduced cumbersome bureaucracy and regulations around foreign property investment through decree (number 583.) International luxury property firms depicted the country as a mecca (of the tax-haven variety) for property speculation, a country offering no capital gains taxes on real estate transactions, no stamp duty, and no inheritance tax.
But, Egypt's more devastating economic transformation centered around its decision to aggressively sell off its national banks as a matter of foreign and financial policy between 2005 and early 2008 (around the time that US banks were stoking a global sub-prime and other forms-of-debt and leverage oriented crisis). Having opened its real estate to foreign investment and private equity speculation, the next step in the deregulation of the country's banks was spurring international bank takeovers complete with new bank openings, where international banks could begin plowing Egyptians for fees. Citigroup, for example, launched the first Cards reward program in 2005, followed by other banks.
According to an article in Executive Magazine in early 2007, which touted the competitive bidding, acquistion and rebranding of Egyptian banks by foreign banks and growth of foreign M&A action, the biggest bank deal of 2006 was the sale of one of the four largest state-run banks, Bank of Alexandria, to Italian bank, Gruppo Sanpaolo IMI. This, a much larger deal than the 70% acquisition by Greek's Piraeus Bank of the Egyptian Commercial Bank in 2005, one of the first deals to be blessed by the Central Bank of Egypt and the Ministry of Investment that unleashed the sale of Egypt's banking system to the highest international bidders.
The greater the pace of foreign bank influx and take-overs to 'modernize' Egypt's banking system, inevitably the more short-term, "hot" money poured into Egypt. Pieces of Egypt, or its companies, continued to be purchased by foreign conglomerates, trickling off when the global financial crisis brewed full force in 2008, though not before Goldman Sachs Strategic Investments Limited in the UK bought a $70 million chunk of Palm Hills Development SAE, a high-end real estate developer, in March, 2008.
When a country, among other shortcomings, relinquishes its financial system and its population's well-being to the pursuit of 'good deals', there is going to be substantial fallout. The citizens protesting in the streets of Greece, England, Tunisia, Egypt and anywhere else, may be revolting on a national basis against individual leaderships that have shafted them, but they have a common bond; they are revolting against a world besotted with benefiting the powerful and the deal-makers at the expense of ordinary people.
Update on conditions in Ireland…another letter from Ireland (ground cero of the expanding world wide economic banksters crisis)
by Dan Crawford
Ireland, Land of Thieves, Charlatans and Sodomites… Zeus-Boy
We’re forced to do silly things out of desperation, things that other nations don’t have to resort to. For instance, we’ve the lowest corporate tax rate in Europe at 12.5%. Sarkozy recently excoriated us for this. But we use it as an incentive to bait the multi-nationals. We’ve no other choice. Why else would the big companies bother locating here? If the labour market is cheaper elsewhere then we have to compete somehow, we're told. We lure them in by offering them tax shelters. We even set aside developed estates for them and we build their factories when they come, with the Taoiseach on hand to cut the ribbons. Their overheads remain very low and then we allow them to siphon all their profits out of the country. Talk about being recolonized by self-imposed deference, but Ireland is a dependent economy and does what it must do to survive.
There are other options, of course. There’s the old reliable one of emigration. 100,000 people will leave Ireland this year alone, and the numbers are rising, again. That’s one way of solving unemployment, but it’s not completely or satisfactorily solving our problem. Our crisis. As of this month, the CSO (Central Statistics Office) http://www.cso.ie/statistics/sasunemprates.htm quotes the unemployment rate at 14.1%, that’s over 400,000 people out of work. Those people will be on the dole or getting some version of welfare, which starts at €197 per week and rises according to number of dependents.
The CSO’s figures are frightening. They say that of the over 800,000 mortgages http://www.cso.ie/statistics/sasunemprates.htm in the country, worth €120 billion, 40,000 are in arrears and that figure will rise to 70,000 in the coming year: the banks will be forced to repossess these houses. But the banks don’t want all that property. What good is it to them? They especially don’t want to be shackled with toxic real estate when so many are already in negative equity. Every town and village in the country sports its token ghost estate, the relic of the boom years, a reminder of the savage greed that swiftly plunged us into ruin. More on that in a bit. The ESB [Electricity Supply Board http://www.esb.ie/main/home/index.jsp ] are shutting off service to 50 homes per month for non-payment of bills.
Health Care in Ireland is totally banjaxed: My father who is 80 spent three nights on a trolley in a hallway last year because there were no beds available. He is no longer able to regulate his body temperature because he suffers from leukemia and other complications, so he nearly shivered to death in the one place he went to for care. My sister is a doctor but she could do nothing. Our Health Care system was dismantled and then rebuilt in order to centralize it, hospitals were closed all over the country and acute services scaled back or abandoned altogether. A moratorium on hiring nurses and doctors was instituted and all administrative staff downsized.
The Minister for Health who oversaw this fiasco, Mary Harney, has just resigned her ministerial post and will get a lump sum of €310,000 plus a pension when she leaves office. We like to reward incompetence in Ireland. Education isn’t faring any better: we dumb down our students and prepare them for a life of servitude and passivity. A moratorium has also been placed on the hiring of new teachers, a freeze more like, and funding has been withdrawn from special needs projects. Almost every other state run body is experiencing the same level of incompetence, and yet the nation is expected to grow its economy enough to pay its debts and still balance its books.
It’s not helpful to speak about the criminal behavior that got our country into this debacle. We’re not allowed to focus on the deranged and delusional freak-show that was the hybrid known as the Celtic Tiger. Our attention is quickly diverted if we mention how local councils all over the country used their zoning powers to wheedle dirty money from developers [this being their only way to raise money] in order to line the pockets of avaricious landowners and bankers. Many of these useless developments were erected on flood plains or dangerously unsuitable terrain. It didn’t matter so long as the bonanza was in full tilt.
We’re supposed to forget that the bankers were throwing money at these developers and builders, money they didn’t have, and never had, money they were borrowing from German savers anxious to invest their surplus. Nobody thought for one second any of this would have to be repaid. Meanwhile, a select group were living the high life, like oil barons or movie stars jetting here and there, flying their private planes and helicopters all over the country to race meetings and golf tournaments and toddler birthday parties. And when they ran out of suitable sump holes in Ireland they spread their good cheer abroad. Over €1,265 billion was invested by Irish citizens abroad in 2009. One shouldn’t mention that the bankers were in the pockets of the builders, who were in the pockets of the developers, who were in the pockets of the politicians and that the resulting circle jerk which met in secret every few days, regular as clockwork, had a grand old wanking session. It is downright begrudgery to allude to the financial regulator or the governor of the Central Bank or to ask how they could sleep so soundly through the nightmare that was the rape of their country.
But the house of cards was destined to collapse and when it eventually did we all know what happened next. It’s yesterday's news now: the good old boys in the government provided all the safety nets their hand-shandy buddies needed, bailouts, emergency loans, triage funding, congratulatory pats on the ass and golden mickey shakes when they fled the country. It has emerged that our Taoiseach personally guaranteed the odious thugs at Anglo http://www.tribune.ie/business/news/article/2011/jan/16/book-review-the-fitzpatrick-tapes/ and used NTMA http://www.thejournal.ie/drumm-claims-cowen-asked-ntma-to-invest-in-anglo-2011-01/ mone [resources reserved by Treasury Management for the daily running of the country], to infuse their defunct and toxic bank with the exchequer 's funds. The government then nationalized those broken banks, claimed their problems were systemic and shackled the tax-payer with their very private and self-inflicted debt.
The banks debts has now become our sovereign debts, just as NAMA nationalized all the ghost estates and turned the inflated and non-buyable property over to the citizens, as if they’d acquired a new portfolio. Merrill-Lynch was solicited for its counsel prior to the fiasco and advised against a blanket bank guarantee.
That didn’t matter, cronies is cronies, the old boys club needed bailing and the subservient and pliant peasantry could be directed to cough and pay up. That’s what we do so well in Ireland – we rant and rave, we purge and we vent the pent, we get sloshed or high, then we return home in the early hours with our dignity between our legs, all limp and shriveled up, poxed and ridden, and we bend the deferential knee, bare our arses for the ritualistic buggery and we thank our sado-masochistic sodomites for giving us a good hammering. We did it for 800 years. It's in our blood. And when the Brits left, we installed the church as sodomite-in-chief, just in case we might think ourselves free, self-determining, and independent. We daren’t ask or hold anyone accountable. What’s the use when the slick politicians will only lie and cheat their way out of culpability anyway? We’ll shoulder the burden and we’ll always be ready with the Vaseline.
Besides, our politicians are incorrigible, especially the fuckheads in Fianna Fáil, who’ve been in power for most of our republic’s history. They’ve sold our future into slavery, thrown away our sovereignty, reduced a nation to penury, dismantled an infrastructure that was the envy of the civilized world, broken every institution, shown contempt for the people and utterly disgraced our country. They've said to our neighbours across the pond, 'you were right all along; we were incapable of governing ourselves. We tried and look at the mess we made of things.' Instead of focusing on the emergency state we now find ourselves in with mass emigration, mass unemployment, a colossal and unmanageable debt, inflation rising and a very bleak future in store, what do these fuckers do? They propose patriotism for the rest of us and entitlement for themselves: we are expected to live on fresh air as they feather their own nests. I can only imagine if a man like Dan Breen http://en.wikipedia.org/wiki/Dan_Breen were alive today to see what has been made of his sacrifice.
Instead of serving the people, as they were elected to do, these fools turn inward and bicker amongst themselves; their only public statements now are pontifications about their own virtues and to engage in cynical electioneering. Instead of working together, all of them, to save the country they destroyed, they resort to internecine feuds, screaming and yelling at one another across the floor of the Dáil chamber, tearing one another asunder, raising votes of no confidence in their own leader, voting in and out that leader, threatening to resign, and then resigning [six cabinet ministers resigned their posts last week], but not before receiving their handsome Ex Gratia lump sums and, rather than face the truth of his political demise, the leader who has lost half his cabinet persists in the delusion that he can still run the country with a mandate, he refuses to step down or call an election, but then finally he agrees to resign as the leader of his party while remaining as Taoiseach. Such grotesque shenanigans have robbed the people of any confidence they might still have had in the political process. People are pissed off, royally pissed off, not that they will do anything about it.
Our country is a joke, a farce. We’re a disgrace.
Our politicians are gombeen men and women. They’re still only out for number one. While the country is being flushed down into the sewer and the citizenry is drowning in tidal waves of slurry, these clueless, incompetent and shameless bastards are only worried only about whether their political party will survive, whether this or that machination is good for the party, whether the party will be strengthened or weakened going in to the next general election. It’s all a load of tripe. They don’t care about the people. They’ve grown so cynical and greedy, with their Mercs and perks, their expense accounts and their lump sums and pensions, their endless bailouts and their profligate sense of entitlement that the people don’t even compute in their perfidious calculus. It’s all about themselves, their self-interest, their advancement, their self-aggrandizement.
They will never want for anything again, so it’s easy for them to be cavalier about austerity and to bandy about the patriotic buzz words. They’re secure and protected. And we’re the mindless cretins who have protected them. Ireland is broken and on a deathward spiral. The country's in a shambles and why wouldn’t it be when Biffo’s http://www.broadsheet.ie/wp-content/gallery/cowen-apology-slide-show/731-brian-cowen-tg4-launch.jpg is the ugly mug we present to the world. If it’s true people get the representatives they deserve, then we Irish aren't worth a bucketful of rabid mongrel’s piss.
Ireland, Land of Thieves, Charlatans and Sodomites… Zeus-Boy
We’re forced to do silly things out of desperation, things that other nations don’t have to resort to. For instance, we’ve the lowest corporate tax rate in Europe at 12.5%. Sarkozy recently excoriated us for this. But we use it as an incentive to bait the multi-nationals. We’ve no other choice. Why else would the big companies bother locating here? If the labour market is cheaper elsewhere then we have to compete somehow, we're told. We lure them in by offering them tax shelters. We even set aside developed estates for them and we build their factories when they come, with the Taoiseach on hand to cut the ribbons. Their overheads remain very low and then we allow them to siphon all their profits out of the country. Talk about being recolonized by self-imposed deference, but Ireland is a dependent economy and does what it must do to survive.
There are other options, of course. There’s the old reliable one of emigration. 100,000 people will leave Ireland this year alone, and the numbers are rising, again. That’s one way of solving unemployment, but it’s not completely or satisfactorily solving our problem. Our crisis. As of this month, the CSO (Central Statistics Office) http://www.cso.ie/statistics/sasunemprates.htm quotes the unemployment rate at 14.1%, that’s over 400,000 people out of work. Those people will be on the dole or getting some version of welfare, which starts at €197 per week and rises according to number of dependents.
The CSO’s figures are frightening. They say that of the over 800,000 mortgages http://www.cso.ie/statistics/sasunemprates.htm in the country, worth €120 billion, 40,000 are in arrears and that figure will rise to 70,000 in the coming year: the banks will be forced to repossess these houses. But the banks don’t want all that property. What good is it to them? They especially don’t want to be shackled with toxic real estate when so many are already in negative equity. Every town and village in the country sports its token ghost estate, the relic of the boom years, a reminder of the savage greed that swiftly plunged us into ruin. More on that in a bit. The ESB [Electricity Supply Board http://www.esb.ie/main/home/index.jsp ] are shutting off service to 50 homes per month for non-payment of bills.
Health Care in Ireland is totally banjaxed: My father who is 80 spent three nights on a trolley in a hallway last year because there were no beds available. He is no longer able to regulate his body temperature because he suffers from leukemia and other complications, so he nearly shivered to death in the one place he went to for care. My sister is a doctor but she could do nothing. Our Health Care system was dismantled and then rebuilt in order to centralize it, hospitals were closed all over the country and acute services scaled back or abandoned altogether. A moratorium on hiring nurses and doctors was instituted and all administrative staff downsized.
The Minister for Health who oversaw this fiasco, Mary Harney, has just resigned her ministerial post and will get a lump sum of €310,000 plus a pension when she leaves office. We like to reward incompetence in Ireland. Education isn’t faring any better: we dumb down our students and prepare them for a life of servitude and passivity. A moratorium has also been placed on the hiring of new teachers, a freeze more like, and funding has been withdrawn from special needs projects. Almost every other state run body is experiencing the same level of incompetence, and yet the nation is expected to grow its economy enough to pay its debts and still balance its books.
It’s not helpful to speak about the criminal behavior that got our country into this debacle. We’re not allowed to focus on the deranged and delusional freak-show that was the hybrid known as the Celtic Tiger. Our attention is quickly diverted if we mention how local councils all over the country used their zoning powers to wheedle dirty money from developers [this being their only way to raise money] in order to line the pockets of avaricious landowners and bankers. Many of these useless developments were erected on flood plains or dangerously unsuitable terrain. It didn’t matter so long as the bonanza was in full tilt.
We’re supposed to forget that the bankers were throwing money at these developers and builders, money they didn’t have, and never had, money they were borrowing from German savers anxious to invest their surplus. Nobody thought for one second any of this would have to be repaid. Meanwhile, a select group were living the high life, like oil barons or movie stars jetting here and there, flying their private planes and helicopters all over the country to race meetings and golf tournaments and toddler birthday parties. And when they ran out of suitable sump holes in Ireland they spread their good cheer abroad. Over €1,265 billion was invested by Irish citizens abroad in 2009. One shouldn’t mention that the bankers were in the pockets of the builders, who were in the pockets of the developers, who were in the pockets of the politicians and that the resulting circle jerk which met in secret every few days, regular as clockwork, had a grand old wanking session. It is downright begrudgery to allude to the financial regulator or the governor of the Central Bank or to ask how they could sleep so soundly through the nightmare that was the rape of their country.
But the house of cards was destined to collapse and when it eventually did we all know what happened next. It’s yesterday's news now: the good old boys in the government provided all the safety nets their hand-shandy buddies needed, bailouts, emergency loans, triage funding, congratulatory pats on the ass and golden mickey shakes when they fled the country. It has emerged that our Taoiseach personally guaranteed the odious thugs at Anglo http://www.tribune.ie/business/news/article/2011/jan/16/book-review-the-fitzpatrick-tapes/ and used NTMA http://www.thejournal.ie/drumm-claims-cowen-asked-ntma-to-invest-in-anglo-2011-01/ mone [resources reserved by Treasury Management for the daily running of the country], to infuse their defunct and toxic bank with the exchequer 's funds. The government then nationalized those broken banks, claimed their problems were systemic and shackled the tax-payer with their very private and self-inflicted debt.
The banks debts has now become our sovereign debts, just as NAMA nationalized all the ghost estates and turned the inflated and non-buyable property over to the citizens, as if they’d acquired a new portfolio. Merrill-Lynch was solicited for its counsel prior to the fiasco and advised against a blanket bank guarantee.
That didn’t matter, cronies is cronies, the old boys club needed bailing and the subservient and pliant peasantry could be directed to cough and pay up. That’s what we do so well in Ireland – we rant and rave, we purge and we vent the pent, we get sloshed or high, then we return home in the early hours with our dignity between our legs, all limp and shriveled up, poxed and ridden, and we bend the deferential knee, bare our arses for the ritualistic buggery and we thank our sado-masochistic sodomites for giving us a good hammering. We did it for 800 years. It's in our blood. And when the Brits left, we installed the church as sodomite-in-chief, just in case we might think ourselves free, self-determining, and independent. We daren’t ask or hold anyone accountable. What’s the use when the slick politicians will only lie and cheat their way out of culpability anyway? We’ll shoulder the burden and we’ll always be ready with the Vaseline.
Besides, our politicians are incorrigible, especially the fuckheads in Fianna Fáil, who’ve been in power for most of our republic’s history. They’ve sold our future into slavery, thrown away our sovereignty, reduced a nation to penury, dismantled an infrastructure that was the envy of the civilized world, broken every institution, shown contempt for the people and utterly disgraced our country. They've said to our neighbours across the pond, 'you were right all along; we were incapable of governing ourselves. We tried and look at the mess we made of things.' Instead of focusing on the emergency state we now find ourselves in with mass emigration, mass unemployment, a colossal and unmanageable debt, inflation rising and a very bleak future in store, what do these fuckers do? They propose patriotism for the rest of us and entitlement for themselves: we are expected to live on fresh air as they feather their own nests. I can only imagine if a man like Dan Breen http://en.wikipedia.org/wiki/Dan_Breen were alive today to see what has been made of his sacrifice.
Instead of serving the people, as they were elected to do, these fools turn inward and bicker amongst themselves; their only public statements now are pontifications about their own virtues and to engage in cynical electioneering. Instead of working together, all of them, to save the country they destroyed, they resort to internecine feuds, screaming and yelling at one another across the floor of the Dáil chamber, tearing one another asunder, raising votes of no confidence in their own leader, voting in and out that leader, threatening to resign, and then resigning [six cabinet ministers resigned their posts last week], but not before receiving their handsome Ex Gratia lump sums and, rather than face the truth of his political demise, the leader who has lost half his cabinet persists in the delusion that he can still run the country with a mandate, he refuses to step down or call an election, but then finally he agrees to resign as the leader of his party while remaining as Taoiseach. Such grotesque shenanigans have robbed the people of any confidence they might still have had in the political process. People are pissed off, royally pissed off, not that they will do anything about it.
Our country is a joke, a farce. We’re a disgrace.
Our politicians are gombeen men and women. They’re still only out for number one. While the country is being flushed down into the sewer and the citizenry is drowning in tidal waves of slurry, these clueless, incompetent and shameless bastards are only worried only about whether their political party will survive, whether this or that machination is good for the party, whether the party will be strengthened or weakened going in to the next general election. It’s all a load of tripe. They don’t care about the people. They’ve grown so cynical and greedy, with their Mercs and perks, their expense accounts and their lump sums and pensions, their endless bailouts and their profligate sense of entitlement that the people don’t even compute in their perfidious calculus. It’s all about themselves, their self-interest, their advancement, their self-aggrandizement.
They will never want for anything again, so it’s easy for them to be cavalier about austerity and to bandy about the patriotic buzz words. They’re secure and protected. And we’re the mindless cretins who have protected them. Ireland is broken and on a deathward spiral. The country's in a shambles and why wouldn’t it be when Biffo’s http://www.broadsheet.ie/wp-content/gallery/cowen-apology-slide-show/731-brian-cowen-tg4-launch.jpg is the ugly mug we present to the world. If it’s true people get the representatives they deserve, then we Irish aren't worth a bucketful of rabid mongrel’s piss.
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