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Economic Article Archive for 2009

 

Economy
 
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The recession is over but the depression has just begun
by Edward Harrison
Posted December 22, 2009

Early this year, I wrote a post “We are in depression”, which called the ongoing downturn a depression with a small ‘d.’ I was optimistic that policymakers could engineer a fake recovery predicated on stimulus and asset price reflation – and this was bullish for financial shares if not the broader stock market. But, we are witnessing temporary salves for a deeper structural problem.

So my goal was to find data which disproved my original thesis. But, I came away more convinced that we are in a tenuous cyclical upturn. This post will discuss why we are in a depression, not a recession and what this means about likely future economic and investing paths. I pull together a number of threads from previous posts, so it is pretty long. I have shortened it in order to pull all of the ideas into one post. So, please read the linked posts for background as I left out a lot of the detail in order to create this narrative. Let’s start here then with the crux of the issue: debt. More...

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A Practical Way to End "Too Big to Fail"
by Morgan Housel
Posted December 19, 2009

The ironclad rule of change is that it gets harder to rationalize as you move away from the "wake-up" event. Today, one year after Wall Street soiled itself, nothing has changed. And make no mistake: The farther we get from last fall, the harder it'll be to rationalize meaningful financial reform.

Take the problem of "too big to fail." The best way to end it is to man up and break banks apart. But since banks suddenly appear young and spry again, finding the backbone to do so seems like a pipe dream. There's no more sense of urgency. There's no more panic. It's getting harder and harder to rationalize groundbreaking change. Why break up Goldman Sachs (NYSE: GS) when it's doing better than ever? That's the unfortunate mindset today. More...

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Taxing the Speculators
by Paul Krugman
Posted November 27, 2009

Should we use taxes to deter financial speculation? Yes, say top British officials, who oversee the City of London, one of the world’s two great banking centers. Other European governments agree — and they’re right. Unfortunately, United States officials — especially Timothy Geithner, the Treasury secretary — are dead set against the proposal. Let’s hope they reconsider: a financial transactions tax is an idea whose time has come.

Such a tax would be a trivial expense for people engaged in foreign trade or long-term investment; but it would be a major disincentive for people trying to make a fast buck (or euro, or yen) by outguessing the markets over the course of a few days or weeks. It would, as Tobin said, “throw some sand in the well-greased wheels” of speculation. It would be a trivial expense for long-term investors, but it would deter much of the churning that now takes place in our hyperactive financial markets. More...

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The Economic Crisis and What Must be Done
by Richard C. Cook
Posted November 24, 200
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EconomyThe United States does not control its own destiny. Rather it is controlled by an international financial elite, of which the American branch works out of big New York banks like J.P. Morgan Chase, Wall Street investment firms such as Goldman Sachs, and the Federal Reserve System. They in turn control the White House, Congress, the military, the mass media, the intelligence agencies, both political parties, the universities, etc. No one can rise to the top in any of these institutions without the elite’s stamp of approval.

It is madness because the big decisions are not made by the U.S., by Congress, or by the Obama administration. The U.S. has, for half-a-century, been marching to the tune played by the international financial elite, and this fact did not change with the election of 2008. The financiers have put the people of this nation $57 trillion in debt, according to the latest reports, counting debt at the federal, state, business, and household levels. Interest alone on this debt is over $3 trillion of a GDP of $14 trillion. Failure of our political leadership to deal with this tragedy over the past three decades is nothing less than treason. More...

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Red Alert: The Second Wave of The Financial Tsunami
by Matthias Chang
Posted November 23, 2009

The Wave Is gathering force & could hit between the first & second quarter of 2010. The present fallout can be summarized in simple terms:

Should a bankrupt country (the US) be allowed to use money created out of thin air to pay for goods produced with the sweat and tears of hardworking citizens of exporting countries? Adding insult to injury, the same dollars are now purchasing a lot less than before. So what is the use of being paid in a currency that is losing rapidly its value?

On the other hand, the US is telling the whole world, especially the Chinese that if they are not happy with the status quo, there is nothing to stop them from selling to the other countries and accepting their currencies. But if they want to sell to the mighty USA, they must accept US toilet paper reserve currency and its right to create monies out of thin air!

This is the ultimate poker game and whosoever blinks first loses and will suffer irreparable financial consequences. But who has the winning hand? More...

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Confiscation Through Inflation
by Mike Hewitt
Posted November 19, 2009

EconomyCongress has authorized the Federal Reserve to manage the nation's money supply. The Federal Reserve was created on December 23, 1913 with the signing of the Federal Reserve Act by President Woodrow Wilson. According to the Federal Reserve website "...it is an independent entity within government, having both public purposes and private aspects."The Mission Statement of the Federal Reserve, as stated on their website, is "...to provide the nation with a safer, more flexible, and more stable monetary and financial system." In the first seven years of providing the nation with a "more stable monetary system", the U.S. dollar lost one-half of its value. Today, the U.S. dollar is worth less than a nickel was in 1913!

I would like to ask the U.S. Federal Reserve what their definition of the word "stable" is. More...

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Obama's China Junket: "We're Opening Doors for Wall Street and Nothing More"
by Mike Whitney
Posted November 19, 2009

China's dollar-peg creates an unfair advantage for China's manufactured goods, but so what? The Congress could change that in a minute by applying trade sanctions. But they won't. Because Congress is owned by Wall Street, and Wall Street thrives on the current system. Here's how it works: China sells the US cheap lead-based widgets, and then recycles the dollars into US Treasurys and "complex and utterly worthless" financial products. This provides the gargantuan investment banks with an endless flow of cheap capital to goose stocks and fatten the bottom line. Of course, the process does have it's shortcomings, like the fact that it crushes the domestic work-force, but that's how it was designed to work anyway. What economists call "unsustainable imbalances" are praised at the big brokerage houses as "windfall profits". The total destruction of the US labor movement is just an added perk for these well-heeled, flag-waving, uber-patriots.

So, a large portion of China's industrial capacity is actually "China-based multinational corporations". Now that's interesting. So US workers are actually competing with US industries that are using sweatshop labor to enrich themselves while savaging the American middle class. Great. I wonder how many of these "industry leaders" affix the stars-n-stripes to their lapel each morning before they trundle off to work? More...

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It's Time to End 'Too Big to Fail'
By Ilan Moscovitz and Morgan Housel
Posted November 17, 2009

EconomyOf the 8,195 banks in this nation, just four, JPMorgan Chase, Citigroup, Wells Fargo, and Bank of America control nearly 40% of the deposits. Those four, plus Goldman Sachs, hold 97% of the industry's notional derivative exposure.

These statistics would be hilarious if they weren't true, and if the banks behind them didn't have the power to manipulate vast portions of the economy. We spent the latter half of 2008 feeling the wrath of "too big to fail." Today, banks are bigger than ever. We need to end that.

We all know the downside of "too big to fail." They screw up; we pay the price. Yet many people (mostly bankers) still defend the practice. So rather than firing off reasons why "too big to fail" is such a menace -- you already know those -- we'll refute the arguments defending it.

Start with the first argument -- that post-Lehman, the problem has evaporated. JPMorgan Chase CEO Jamie Dimon, for example, recently argued that his bank wasn't too big to fail. Wrong. JPMorgan Chase is not very likely to fail at the moment, but let's not pretend that the eruption of its balance sheet, with more than $79 trillion in notional derivative exposure (we're not making that number up) wouldn't annihilate everything in sight. More...

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Goldman Sach’s Undisclosed Role in AIG’s Distress
By Janet Tavakoli
Posted November 10, 2009

EconomyGoldman wasn’t the only contributor to the systemic risk that nearly toppled the global financial markets, but it was the key contributor to the systemic risk posed by AIG’s near bankruptcy. When it came to the credit derivatives American International Group, Inc. (AIG) was required to mark‐to‐market, Goldman was the 800‐pound gorilla. Calls for billions of dollars in collateral pushed AIG to the edge of disaster. The entire financial system was imperiled, and Goldman Sachs would have been exposed to billions in devastating losses.

uring AIG’s bailout, Goldman had influence over the decision to use public funds to pay 100 cents on the dollar for these CDOs (the underlying risk of the credit derivatives), but none of the information about the volume of Goldman’s trades with AIG -or the Goldman CDOs hedged by AIG’s other counterparties - was made public. Goldman’s public disclosures in September 2008 obscured its contribution to AIG’s near bankruptcy and the need to bailout Goldman’s trading partners in AIG related transactions. Goldman’s trading activities played a starring role in the near collapse of the global markets. More...

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U.S. Budget Deficit Debt Crisis, Austrian, East European or Glide Option Solution?
By John Mauldin
Posted November 7, 2009

I am outraged at the paltry proposed financial "reforms." Rahm Emanuel said that no crisis should be allowed to go to waste. The Obama administration is wasting this one. How can we allow banks to be too big to fail? Where is the reinstatement of Glass-Steagall? If we are going to allow large banks to exist, then their leverage must be reduced to the point where their failure would not risk the system and require taxpayer dollars. I don't care if that makes them less profitable. They are making those large profits because they have taxpayers implicitly behind them, and I get no dividend payments from them, the last time I checked. Where is Fannie and Freddie reform (and their breakup)? No mention of an exchange for credit default swaps? (And yes, I know that such an exchange would reduce the number of swaps and the profitability of them. That is the point. They are dangerous if allowed to become too big a market.) This bill reads as if bank lobbyists wrote it. Where is the populist outrage? We have let the fox set up the rules for running the hen house. Shame on us all if we allow this to happen. More...

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Cut Wall St Out! How States Can Finance Their Own Recovery
Posted November 3, 2009
by Ellen Brown

2.7 million jobs have been lost since the stimulus plan began. California has lost 336,400 jobs. Arizona has lost 77,300. Michigan has lost 137,300. A total of 49 states and the District of Columbia have all reported net job losses. The sole state to actually gain jobs is an unlikely candidate for the distinction: North Dakota. North Dakota is also one of only two states expected to meet their budgets in 2010. (The other is Montana.) The state not only has no funding problems, but this year it has a budget surplus of $1.3 billion, the largest it has ever had.

Why is North Dakota doing so well, when other states are suffering the ravages of a deepening credit crisis? Its secret may be that it has its own credit machine. North Dakota is the only state in the Union to own its own bank. The Bank of North Dakota (BND) was established by the state legislature in 1919, specifically to free farmers and small businessmen from the clutches of out-of-state bankers and railroad men. The bank's stated mission is to deliver sound financial services that promote agriculture, commerce and industry in North Dakota. More...

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U.S. Dollar Fiat Reserve Currency Root of the Global Financial Crisis
by Richard Karn
Posted Nov 1, 2009

At some point, interventionists will chance upon spending programs that actually have a positive effect on the economy long term. These will not center on projects like insulating schools or filling potholes or increasing our reliance on alternate energy sources, all of which have a place, however removed, in that they promote energy efficiency, but on sponsoring significant infrastructure projects that will serve to support, restore and expand our capacity for economic growth and increase our competitiveness. There is no end to the infrastructure work needing to be done in this regard: electrical transmission and base-load generation, water and wastewater treatment, rail expansion and electrification, light rail and public transport, ports and waterways, oil and gas pipelines and refining; after 30 years of neglect, the list seems endless.

Certainly, we have neglected the infrastructure that supports our economy, threatening our productive base, but we are convinced that in order for the US to regain its economic footing, we will have to turn to our aging but still formidable productive capacities. We are constantly bombarded with stories about imperial over-reach and the decline of the American Empire, how uncompetitive we are, and an endless litany of what is going wrong—and much has. Somehow though, Americans have been given to understand that our manufacturing sector has been gutted and shipped lock, stock and barrel to China, which much to financial sector lobbyists’ chagrin, is patently untrue. More...

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Is Your Bank Sitting In the Trillion Dollar Derivative Minefield?
By Graham Summers
Posted October 29, 2009

EconomyI’ve been warning about the Trillion Dollar Ticking Time Bomb of derivatives for months now. As a brief recap, let’s consider the following:
1) The current notional value of derivatives on US commercial banks’ balance sheets is $203 trillion.
2) 97% of these ($196 trillion) sit on FIVE banks’ balance sheets (more on this shortly)
3) If even 1% of this $203 trillion is “at risk” … you’re talking about $2 TRILLION in at risk bets made in the derivatives market
4) If 10% of that 1% end badly, you’re talking about $200 billion in losses

Total equity at the five banks is $737 billion. So if you assume that only 1% of derivatives are “at risk” (odds are it’s more) and 10% of that at risk money is lost, you’ve wiped out nearly 1/3 of the banks’ equity. More...

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Fall of the Dollar on G-20 Finance Ministers Agenda
by Bob Chapman
Posted October 26, 2009

In remarks that will fuel the row around excessive pay, Lord Griffiths, vice-chairman of Goldman Sachs International and a former adviser to Margaret Thatcher, said banks should not be ashamed of rewarding their staff. Speaking to an audience at St Paul's Cathedral in London about morality in the marketplace last night, Griffiths said the British public should "tolerate the inequality as a way to achieve greater prosperity for all".

With public anger mounting at the forecast of bumper bonuses for bankers only a year after the industry was rescued by the taxpayer, he said bankers' bonuses should be seen as part of a longer-term investment in Britain's economy. "I believe that we should be thinking about the medium-term common good, not the short -term common good ... We should not, therefore, be ashamed of offering compensation in an internationally competitive market which ensures the bank businesses here and employs British people," he said. More...

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5 evil things credit card companies can (still) do
By Julianne Pepitone
Posted October 23, 2009

President Obama discussed credit-card reform in Rio Rancho, N.M., in May.Credit card companies are socking it to consumers left and right. They're hiking interest rates to as much as 36% and doubling minimum monthly payments, frustrating customers who are already cash-strapped and credit-crunched. At the same time, credit card companies have been hard at work coming up with new ways to boost profits while sidestepping the reforms.

No current laws cap credit card interest rates, according to Pamela Banks of Consumers Union, the nonprofit publisher of Consumer Reports, so technically the sky's the limit. But the CARD act will help curb abusive practices. As of February, issuers won't be able to arbitrarily raise rates on existing balances. But cardholders will still be subject to interest hikes for late payments and various other infractions. Fees aren't just rising -- they're multiplying. Cardholders are getting slapped with fees they've never seen before. The hitch: New laws can address only existing fees and business practices; they can't predict what credit card companies will do in the future. Consumer outrage is boiling over. More...

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Death of Petro-Dollar, Told Ya So
By Jim Willie CB
Posted October 8, 2009

The story hit like a thief in the night, even bearing Biblical proportions. The end of the exclusive sale of MidEast oil in USDollars, the rise of Russian and Chinese influence in the Persian Gulf, the rise in importance for the Intl Monetary Fund basket of currencies, the final clarion call for the free ride by Americans on the Dollar Credit Card, and hidden implications that the Saudis must shop for a new security lord in the region with broad military might, these are revolutionary steps with profound geopolitical implications. The back-to-back stories in the UK Independent struck like powerful bolts of lightning in the middle of the night from a North American perspective. This is truly incredible news. The US will soon no longer be permitted to sell its indulgences. This is major Paradigm Shift material.

When one combines the 0% US interest rate feeder system that shreds the USDollar with leveraged machinery designed by Wall Street itself, with the US$ rejection heralded by the Saudis side by side with their numerous global customers, the conclusion is easy. That is, easy except to the biased bankers who continue to occupy the corridors of finance on Wall Street. The conclusion is the death of the USDollar is written in stone, and a USTreasury default lies down the road. More...

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How Deregulation Trashed the US Economy and Government Intervention Became the Only Way Out
by Greg Guma
Posted September 21, 2009

Remember the panic-inducing headlines of 2008? Government Takes Over Troubled Mortgage Giants, Lehman Brothers Files for Bankruptcy, Bank of America Buys Merrill Lynch, and Stock Prices Plummet – that last one just as the government announced an $85 billion emergency loan to rescue insurance giant AIG. And that was just the beginning.

Next came the $700 billion bailout of “distressed” banks, a plan that gave Treasury Secretary Henry Paulson and the lame-duck Bush administration unprecedented power. We need to "remove the distressed assets from the financial system," argued Paulson, who had resigned as CEO of Goldman Sachs to become Treasury “czar” in 2006 – after amassing a personal net worth of $700 million during his time at the bank. More...

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Is China Going to Go “Nuclear”?
by Graham Summers
Posted September 13, 2009

In case you have not heard the news, China has announced that it will be instructing its state-owned enterprises to potentially default on their derivatives contracts. As I have written extensively in the past, the derivatives market is a massive time bomb just waiting to go off. China’s latest move may be the match that lights the fuse.

All told, US Commercial banks own $202 trillion in derivatives in notional value. To put that number into perspective, it’s roughly four times the global GDP. And 96% of this exposure sits on five banks’ balance sheets. Now consider that, combined, the top five banks (JP Morgan, Goldman, BofA, Citi, and HSBC) have roughly $700 billion in equity, and that’s it only 1% of the derivatives outstanding are actually “at risk.” Things are coming to a head in a very REAL way on the global stage, and it is not looking good at all. More...

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A Year After a Cataclysm, Little Change on Wall St.
by Alex Berenson
Posted September 12, 2009

One year after the collapse of Lehman Brothers, the surprise is not how much has changed in the financial industry, but how little.

Backstopped by huge federal guarantees, the biggest banks have restructured only around the edges. Employment in the industry has fallen just 8 percent since last September. Only a handful of big hedge funds have closed. Pay is already returning to precrash levels, topped by the 30,000 employees of Goldman Sachs, who are on track to earn an average of $700,000 this year. Nor are major pay cuts likely, according to a report last week from J.P. Morgan Securities. Executives at most big banks have kept their jobs. Financial stocks have soared since their winter lows. More...

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Rolling the Dice Again
By Ralph Nader
Posted September 12, 2009

The Wall Street gang is at it again! It’s been one year since Wall Street’s collapse and bailout took trillions from taxpayers and the sinking economy. The speculative instruments that pulled down the economy were those super-risky sub-prime mortgages, credit default swaps, collaterized debt obligations—you know—Las Vegas East, using other peoples’ savings. As if to elaborate their gigantic con job, the investment banks, guaranteed by you the taxpayers, are now packaging life insurance policies in what sane, on the ground businesses would consider deranged exotic money plays.

The wild and crazy derivative spree is about to inject a new and recklessly ghoulish game of chance into the financial industry. The Wall Street casino boys are already drooling over the huge fees they expect to collect. Whatever wreckage occurs down the road will soak the investors. Washington, standby for another bailout! More.......

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Dismantling the Temple
By William Greider
Posted September 10, 2009

The financial crisis has propelled the Federal Reserve into an excruciating political dilemma. The Fed is at the zenith of its influence, using its extraordinary powers to rescue the economy. Yet the extreme irregularity of its behavior is producing a legitimacy crisis for the central bank. The remote technocrats at the Fed who decide money and credit policy for the nation are deliberately opaque and little understood by most Americans. For the first time in generations, they are now threatened with popular rebellion.

Where did the central bank get all the money it is handing out? Basically, the Fed printed it, out of thin air. That is what central banks do. Who told the Fed governors they could do this? Nobody, really--not Congress or the president. The Federal Reserve Board, alone among government agencies, does not submit its budgets to Congress for authorization and appropriation. It raises its own money, sets its own priorities. More...

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China to Default on Derivative Contracts
By Ted Butler
Posted Spetember 4, 2009

A remarkable story recently appeared in a leading Chinese business publication that threatens to upend the world of commodities. It seems that the government of China may be preparing the way for state-owned investment funds to walk away or default on OTC commodity derivatives contracts held with foreign banks if those contracts cause loss to the funds.

What does this all mean and where do we go from here? Get ready for great and growing silver price volatility. This much is clear – the long anticipated default of the massive OTC silver derivatives position by China appears to be at hand. It’s hard to imagine a more profound event. All at once, the backing and excuse for the concentrated short position on the COMEX is exposed for the fraud it has always been. No longer can the CFTC pretend that the COMEX silver short position is backed by anything legitimate. Not when China, itself, is saying it may default. So many game changes have emerged in silver over the past few months that it is hard to appreciate them all. These recent announcements by China concerning its future intentions on select OTC commodity derivatives could be the most important of all. More...

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Fiat Money in Death Throes
by Antal E. Fekete
Posted July 5, 2009

Make no mistake about it: in this credit collapse we are witnessing the death throes of irredeemable currency. In vain have governments and their client banks tried, for hundreds of years, to graft this repulsive and degenerate bastard on the living organism of society. The result was always the same: the healthy organism rejected the unnatural implant in its own good time. The present episode is no different from earlier ones except, perhaps, in the degree of the conceitedness of the perpetrators, and in their contempt for the native intelligence of man.
Governments which employ irredeemable currency grab unconditional control over foreign trade, exchange rates, foreign investments and travel, even the amount of currency an individual can take in or out of the country. The more powerful governments will buy the allegiance of the less powerful. Out of this feudalistic web of allegiances financed by irredeemable currency come various adventures in fomenting and waging wars in far-away lands, spilling the blood of the young people of the nation for causes alien to them. More...

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America: ‘Sold Out’ for $5.2 Billion!
By: Lorimer Wilson
Posted June 25, 2009

The country is in financial crisis and instead of the financial oligarchy being broken up to permit essential reform they are continuing to use their influence to prevent precisely the sorts of reforms that are needed immediately to pull the economy out of its nosedive. Moreover, our legislators seem unwilling to act against these powerful financiers opting instead to succumb to their power and influence and continue to give them what they deem to be in their best interest instead of that of the taxpayers’. Rosenfield goes one step further in claiming that the Money Industry has, in fact, bought control of the American political system and, in the process, betrayed America’s trust in them. They are still in control and there is no end in sight.

America’s economic system is where it is today because gambling became the financial sector’s principal preoccupation. The pile of chips grew so big that the Money Industry displaced real businesses that provided real goods, services and jobs. If we are to see the meaningful regulation we need, Congress must adopt the view that Wall Street has no legitimate seat at the table. With Wall Street having destroyed the system that enriched its high flyers, and plunged the global economy into deep recession, it’s time for Congress to tell Wall Street that its political investments have also gone bad. This time, legislating must be to control Wall Street, not further Wall Street’s control. More...

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Bankers Are Scared. Are You?
by Gary North
Posted June 13, 2009

There have been some major bank failures and a few dozen local bank failures. The FDIC has depleted its reserves of T-bills. The Federal Reserve and the Treasury have subsidized these liquidations. The losses continue anyway. Commercial real estate is plummeting, and will produce hundreds of billions of dollars in losses for commercial banks. The residential housing market continues to plummet, with waves of mortgage re-sets scheduled for 2010 and 2011. There is end in sight. But the FED has kept the largest banks, now gutted, from going under. It has done this by doubling its balance sheet. This balance sheet serves as legal reserves for commercial banks. Because commercial bankers are petrified, they are not lending to the general public. They are lending to the FED. More...

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Economic Policymakers Have Created A Perfect Storm
By Paul Craig Roberts
Posted June 8, 2009

Economic news remains focused on banks and housing, while the threat mounts to the US dollar from massive federal budget deficits in fiscal years 2009 and 2010. Every sector of the US economy is in trouble. Former US manufacturing firms have been turned into marketing companies trying to sell their foreign-made goods to domestic consumers who have seen their jobs be moved offshore. Much of what is left of US manufacturing--the auto industry--is in bankruptcy. More decline awaits housing and commercial real estate. The dollar is sliding, and interest rates are rising, despite the Federal Reserve’s attempts to hold interest rates down. More.....

Paul Craig Roberts was Assistant Secretary of the Treasury during President Reagan’s first term.  He was Associate Editor of the Wall Street Journal.

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How to Lower the U.S. Deficit Without Killing Social Security
by Shamus Cooke
Posted September 4, 2009

Workers are not so naive to think that the Bush/Obama bailouts — the fiscal crime of the century — will earn them “profits.” Just the opposite is the case. The profits that some giant banks are reporting are direct results of the bailout, itself a gigantic “forced borrowing” from working Americans, who will be paying the debt with their cherished social programs unless they mount an organized protest.

Make no mistake, the corporate elite want the U.S. deficit taken care of and they don’t want to pay higher taxes to do it. They rightfully fear that foreign investors — most notably China and Japan — will quit feeding the American debt machine unless the deficit is drastically reduced. Instead of making workers pay off the deficit, the corporate elite should be forced to. A plan of action to accomplish this might look something like this:
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The Federal Reserve Must Die
Posted August 24, 2009
By Jim Quinn

“The Federal Reserve in collaboration with the giant banks has created the greatest financial crisis the world has ever seen. The foolish notion that unlimited amounts of money and credit created out of thin air can provide sustainable economic growth has delivered this crisis to us. Instead of economic growth and stable prices, (The Fed) has given us a system of government and finance that now threatens the world financial and political institutions. Pursuing the same policy of excessive spending, debt expansion and monetary inflation can only compound the problems that prevent the required corrections. Doubling the money supply didn’t work, quadrupling it won’t work either. Buying up the bad debt of privileged institutions and dumping worthless assets on the American people is morally wrong and economically futile.” - Representative from Texas Ron Paul questioning Federal Reserve Chairman Ben Bernanke
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The Second Wave of The Depression: Hyperinflation Likely
By Webster Tarpley
Posted August 17, 2009

The second wave of the world economic depression is coming soon. Larry Summers, the economics czar of the Wall Street puppet regime currently in power in Washington, recently confessed to the Financial Times in an unguarded moment: “I don’t think the worst is over ….” A few weeks earlier, Jacques Attali, who served in the 1980s as the main economics adviser to French President Mitterrand, told an audience at the International Economic and Financial Forum (FIEF) in Paris that the world might well soon face a planetary Weimar “in the form of a hyperinflationary depression similar to the German events of 1922 - 1923.

The next wave is likely to involve a worldwide dollar panic. Using ballpark figures, we can say that there are about $4 to $5 trillion sloshing around the world in the form of hot money, US Treasury securities, Euro dollars, and various forms of zeno-dollars. Japan has about a trillion, China almost $2 trillion, and so forth. It is naturally very unwise for a developing country like China to hold so many dollars rather than using them to purchase needed infrastructure and capital goods, and the Chinese leaders are now very uncomfortable with their own foolish decision, which was of course taken under heavy US pressure. But the point is that this $4.5 trillion overhang is by its very nature exceedingly unstable. More...

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Why No One Won a Pulitzer for Financial Reporting
Posted August 16, 2009
by Mike Stathis

Amidst the biggest financial crisis since the Great Depression (if not ever) and the biggest Ponzi scheme ever, (the real estate-banking Ponzi scheme) not one of the 65 Pulitzer Prizes was awarded for coverage of the events surrounding the “financial crisis.” Ironically, the media has yet to identify this crisis as the biggest Ponzi scheme ever, confirming their incompetence.

Today, America’s mainstream media machine is primarily owned by a small group of men. And they don’t just own television networks or newspapers. They own television networks AND newspapers AND radio stations. This is why you get the same bull regardless where you turn. This carefully guarded control has created a very dangerous form of censorship that few realize because America’s media industry puts out the same messages and rarely allows an open platform for the exchange of opposing viewpoints by credible experts. I know this from first-hand experience. More....

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Report Shows Bonuses Paid by Bailed-Out Banks
By Eric Dash
Posted July 30, 2009

The Wall Street millionaire club had nearly 5,000 members in 2008. At least 4,793 bankers and traders were paid more than $1 million in bonuses last year even as profits at the biggest banks dwindled and they accepted tens of billions of dollars of taxpayer money, according to a report released on Thursday by the New York attorney general’s office.

Wall Street bonuses have come under intense scrutiny from lawmakers and regulators who say they believe that freewheeling pay practices contributed to the financial crisis. Banks have long paid their executives bonuses to supplement smaller salaries, but governance experts say that the nine-figure payouts during Wall Street’s worst year in decades shows the link between pay and performance has been frayed. More....

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The Dark Years are here
by Egon von Greyerz
Posted July 27, 2009

The money printing phase is normally the last stage of an empire before it collapses and this is where the US is now. The US dollar became the reserve currency of the world when the US was strong economically. But as the US economy started to weaken in the 1960-70’s the US government found a much better method for maintaining a strong economy. It started to print paper that it sold to other nations or exchanged for goods and services. For almost 50 years this has been the most clever way ever devised of maintaining the living standards of an economically deteriorating nation without even having to spend any resources on building an empire. It is a Ponzi scheme which has worked for several decades but slowly the world is now waking up to the fact that they are holding worthless paper printed by the US Government.

With the escalation of money printing markets will be flooded with government paper which nobody wants, leaving governments to buy its own junk. The two countries with the worst problems are the UK and the US and their precarious situation will emerge first. Within the next few months rating agencies are likely to downgrade both countries’ debt. This will lead to the value of the treasury bonds and gilts collapsing and interest rates quickly moving up into the teens. The higher rates will make the financing costs of the debt to up exponentially leading to more money printing and higher interest rates. This is the “perfect” vicious circle that will end in a hyperinflationary depression. More.....

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Mass Layoffs: The Continuing Devastation
by Gary North
Posted July 25, 2009

A mass layoff is likely to take place in one town. They are not individual layoffs spread across several plants or regions. They are likely to hit one plant. The company shuts down a division. It finds that the entire output of a plant or a division is no longer profitable. When this happens, the loss of income is concentrated in one geographical area. This hits housing harder than if the layoffs had been spread across several plants located in different towns.

Without warning, every fired person must scramble to get a job. The local market finds it costly to absorb all of them at once. The obvious response of employers is to offer a lower salary without fringe benefits. The job-seekers are not in a position to negotiate. They have bills to pay. One of these bills is the monthly mortgage. It is a large share of the household budget. The family will resist skipping this payment. But, if they are facing a mortgage that is now larger than the market value of the home, they are tempted to stop paying. More...

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Three United States Gold Scenarios, Fort Knox, Fort Hocks or Fort Shocks
By: Stewart Dougherty
Posted July 23, 2009

For 72 years, the building at the intersection of Bullion Boulevard and Gold Vault Road in Fort Knox, Kentucky has symbolized the financial strength of the United States of America. The United States Bullion Depository, better known as Fort Knox, is said to contain 147.3 million troy ounces of gold, over half the nation’s total reported gold bullion holdings of 261.5 million troy ounces. The remaining 114 million ounces are said to be stored at the Denver and Philadelphia Mints, the West Point Bullion Depository, and the San Francisco Assay Office. Assuming a price of $1,000 / ounce, the nation’s gold is worth $261.5 billion. If the metal is actually there, it represents the largest sovereign stockpile of gold bullion in the world.

However, the gold holdings of the U.S. have not been audited in more than 50 years. One reason given for the lack of an audit is that it would be “too expensive” to conduct one. An audit would cost a few million dollars, at most, so using cost as a reason for not performing it strains belief when placed in the context of the country’s Fiscal Year 2009 deficit of $2,000,000,000,000.00+, and federal debt of $11,600,000,000,000.00+. It is curious that one of the few places within the government where costs appear to be of concern relates to an audit of the one, true monetary asset possessed by the American people. More...

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Evolving Economic Crisis: Review of Market Trends
by Bob Chapman
Posted July 10, 2009


Between now and 2013, $5 trillion in wealth will have to be liquidated. A good part of that will occur over the next 3-1/2 years. That means continued monetization and depression and an ever-depreciating dollar. This depression will last 8 to 20 years. The workweek has fallen to 33.1 hours. We see that number below 30 next year.

Probably more than 50% of workers will stop funding 401(k)’s, IRA’s and Roth’s. Twenty-five percent of companies are suspending 401(k)’s and that number will grow. That will have a devastating affect on the stock and bond markets. Again, get out of all stocks except gold and silver shares and Canadian Treasuries. Get out of corporate bonds. Interest rates will rise over the next two years. Get rid of cash value life insurance policies and annuities. No CDs of any kind. Unemployment has doubled in seven months from 7 to 14 million. In the previous eight years, due to free trade, globalization, offshoring and outsourcing, we lost 5 million jobs. We are calling U6 unemployment at 20.5%. Officially it is 16.5%. Even the Center for Labor Market Studies at Northeastern University says real unemployment is 18.2%.

Our President is just realizing that he is presiding over the bankruptcy of the US. In order to bring this to a halt he would have to cut mandatory programs that underline the welfare state, which makes up 60% of the budget. We see no chance of that happening. That means in the next three years the Treasury will go broke. Once the insolvency occurs welfare, Social Security and Medicare will end along with many other programs. Imperial America will cease to exist. Those occupations in Japan, South Korea, Europe, Iraq, Afghanistan and hundreds of other bases, will end, unable to be financed. The burden will be too much to any longer bare. More....

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Why I Would Manipulate Silver, IF
By: Jason Hommel, Silver Stock Report
Posted July 8, 2009

Goldman Sachs has admitted that they have a computer program that can be used to manipulate markets. “The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways” For over ten years, www.GATA.org has gathered information and admissions from central bankers and major bullion banks that the price of gold on the world market is manipulated lower than it should be. Well, one more admission is close enough for me to be counted as one more proof.

First, they have those "manipulation trading programs" admitted by Goldman Sachs.

Second, their positions are so large, that those who are short, ARE the market, and I'm sure they use their computer programs to only sell "just enough" to move the market price nearly at will.

Third, they know their own clients' books, and stop losses, and can run the price of silver to trigger those stop losses to take over client long positions, so their clients lose money. More...

For more information on COMEX manipulation, Ted Butler has been following this issue for years. His website will provide you with more excellent information on how our markets are not what they appear to be and how our regulators have failed us.

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Fiat Money in Death Throes
by Antal E. Fekete
Posted July 5, 2009

Make no mistake about it: in this credit collapse we are witnessing the death throes of irredeemable currency. In vain have governments and their client banks tried, for hundreds of years, to graft this repulsive and degenerate bastard on the living organism of society. The result was always the same: the healthy organism rejected the unnatural implant in its own good time. The present episode is no different from earlier ones except, perhaps, in the degree of the conceitedness of the perpetrators, and in their contempt for the native intelligence of man.
Governments which employ irredeemable currency grab unconditional control over foreign trade, exchange rates, foreign investments and travel, even the amount of currency an individual can take in or out of the country. The more powerful governments will buy the allegiance of the less powerful. Out of this feudalistic web of allegiances financed by irredeemable currency come various adventures in fomenting and waging wars in far-away lands, spilling the blood of the young people of the nation for causes alien to them. More...

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America: ‘Sold Out’ for $5.2 Billion!
By: Lorimer Wilson
Posted June 25, 2009

The country is in financial crisis and instead of the financial oligarchy being broken up to permit essential reform they are continuing to use their influence to prevent precisely the sorts of reforms that are needed immediately to pull the economy out of its nosedive. Moreover, our legislators seem unwilling to act against these powerful financiers opting instead to succumb to their power and influence and continue to give them what they deem to be in their best interest instead of that of the taxpayers’. Rosenfield goes one step further in claiming that the Money Industry has, in fact, bought control of the American political system and, in the process, betrayed America’s trust in them. They are still in control and there is no end in sight.

America’s economic system is where it is today because gambling became the financial sector’s principal preoccupation. The pile of chips grew so big that the Money Industry displaced real businesses that provided real goods, services and jobs. If we are to see the meaningful regulation we need, Congress must adopt the view that Wall Street has no legitimate seat at the table. With Wall Street having destroyed the system that enriched its high flyers, and plunged the global economy into deep recession, it’s time for Congress to tell Wall Street that its political investments have also gone bad. This time, legislating must be to control Wall Street, not further Wall Street’s control. More...

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Bankers Are Scared. Are You?
by Gary North
Posted June 13, 2009

There have been some major bank failures and a few dozen local bank failures. The FDIC has depleted its reserves of T-bills. The Federal Reserve and the Treasury have subsidized these liquidations. The losses continue anyway. Commercial real estate is plummeting, and will produce hundreds of billions of dollars in losses for commercial banks. The residential housing market continues to plummet, with waves of mortgage re-sets scheduled for 2010 and 2011. There is end in sight. But the FED has kept the largest banks, now gutted, from going under. It has done this by doubling its balance sheet. This balance sheet serves as legal reserves for commercial banks. Because commercial bankers are petrified, they are not lending to the general public. They are lending to the FED. More...

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Economic Policymakers Have Created A Perfect Storm
By Paul Craig Roberts
Posted June 8, 2009

Economic news remains focused on banks and housing, while the threat mounts to the US dollar from massive federal budget deficits in fiscal years 2009 and 2010. Every sector of the US economy is in trouble. Former US manufacturing firms have been turned into marketing companies trying to sell their foreign-made goods to domestic consumers who have seen their jobs be moved offshore. Much of what is left of US manufacturing--the auto industry--is in bankruptcy. More decline awaits housing and commercial real estate. The dollar is sliding, and interest rates are rising, despite the Federal Reserve’s attempts to hold interest rates down. More.....

Paul Craig Roberts was Assistant Secretary of the Treasury during President Reagan’s first term.  He was Associate Editor of the Wall Street Journal.

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Grand Theft Auto: How Stevie the Rat bankrupted GM
by Greg Palast
Posted June 1, 2009

When a company goes bankrupt, everyone takes a hit: fair or not, workers lose some contract wages, stockholders get wiped out and creditors get fragments of what's left. That's the law. What workers don't lose are their pensions (including old-age health funds) already taken from their wages and held in their name.

But not this time. Steve Rattner (the new "car czar") has a different plan for GM: grab the pension funds to pay off Morgan and Citi. Here's the scheme: Rattner is demanding the bankruptcy court simply wipe away the money GM owes workers for their retirement health insurance. Cash in the insurance fund would be replace by GM stock. The percentage may be 17% of GM's stock - or 25%. Whatever, 17% or 25% is worth, well ... just try paying for your dialysis with 50 shares of bankrupt auto stock.

Yet Citibank and Morgan, says Rattner, should get their whole enchilada - $6 billion right now and in cash - from a company that can't pay for auto parts or worker eye exams. This is dangerous business: The Rattner plan opens the floodgate to every politically-connected or down-on-their-luck company seeking to drain health care retirement funds. Pensions are wiped away and two connected banks don't even get a haircut? How come Citi and Morgan aren't asked, like workers and other creditors, to take stock in GM? With GM's last dying dimes about to fall into one pocket, and the Obama Treasury in his other pocket, Morgan's Jamie Dimon is correct in saying that the last twelve months will prove to be the bank's "finest year ever." More....

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Government and Financial Institutions Controlled by Evil Men,
Trillions Stolen from the American People

by James Quinn
Posted May 28, 2009

When the banking cartel succeeded in creating the Federal Reserve Bank in 1913, control of money in the United States was put into the hands of bankers whose sole purpose is to enrich themselves at the expense of the citizens of the country. Their relentless printing of money has resulted in the dollar losing 96% of its value since 1913. The printing of dollars has allowed politicians to spend money today and make unfunded commitments decades into the future. The systematic inflation created by the Federal Reserve is immoral as it impoverishes the middle class and senior citizens for the benefit of bankers, the elite rich and entrenched politicians. Much of the moral decay in our nation can be traced to the manipulation of money in the last 8 decades.

The elite will make the case that we live in a modern world with modern standards, based on modern thought. They use the media to manipulate the masses into believing that evil is actually good. As the citizens of the country allow this to happen, the hangman’s scaffold grows ever larger. Our parents taught us right from wrong. It is black and white. Only those in power want the world to be bathed in shades of grey. This allows them to commit fraud, manipulate public opinion, utilize leverage to make risky bets with taxpayer funds, and use wealth and power to secure more wealth and power. The unelected bureaucrats in the back pocket of the banking cartel designed a bailout plan that attempts to keep the evil bankers in control of our economy. More....

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Death Watch
The past has condemned us. Only the future can save us
by Darryl Robert Schoon
Posted May 21, 2009

The world economy is now on the verge of a total systemic breakdown. The mechanism
underlying the present credit-based system is now broken; for its two critical underpinnings, banks and government are not just broken—far more importantly, both are now literally flat broke.

Prior to the Great Depression, the collapse of the 1920s bubble unleashed a cascade of defaulting debt that buried lenders and borrowers alike. Then, governments were not bankrupt; today, governments are as broke as those they are attempting to save. The siren’s call of credit lured both the innocent and greedy alike to wager what instead should have put aside for a rainy day. More...

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Dangerous Unintended Consequences:
How Banking Bailouts, Buyouts and Nationalization
Can Only Prolong America’s Second Great Depression
and Weaken Any Subsequent Recovery
by Martin D. Weiss, Ph.D
Posted May 14, 2009

AIG is big, but it, too, is not alone. Yes, in a February 26 memorandum, AIG made the case that its $2 trillion in credit default swaps (CDS) would have been the big event that could have caused a global collapse. And indeed, its counterparties alone have $36 trillion in assets. But AIG’s CDS portfolio is just one of many: Citibank’s portfolio has $2.9 trillion, almost a trillion more than AIG’s at its peak. JPMorgan Chase has $9.2 trillion, or almost five times more than AIG. And globally, the Bank of International Settlements (BIS) reports a total of $57.3 trillion in credit default swaps, more than 28 times larger than AIG’s CDS portfolio.

Clearly, the money available to the U.S. government is too small for a crisis of these dimensions. But at the same time, the massive sums being committed by the U.S. government are also too much: In the U.S. banking industry, shotgun mergers, buyouts and bailouts are accomplishing little more than shifting their toxic assets like DDT up the food chain. And the government it’s promises to buy up the toxic paper have done little more than encourage banks to hold on, piling up even bigger losses. More...

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Conspiracy at Bank of America?
By Matt Koppenheffer
Posted April 24, 2009

Conspiracy theorists must have been doing a joyous jig today as news broke that Bank of America (NYSE: BAC) CEO Ken Lewis was supposedly strong-armed by the government to keep mum on the losses at Merrill Lynch. This builds on previous speculation that B of A was forced to buy Merrill as Merrill's situation began to look Lehman-esque, and opens a whole new Pandora's box on a situation that is already one big snafu.

But the story's importance spreads beyond the shock-and-awe factor. As investors, we need to be wary of the wide-ranging consequences of this bombshell. More....

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The Financial War Against Iceland
Being defeated by debt is as deadly as outright military warfare.
by Prof Michael Hudson

Iceland is under attack – not militarily­ but financially. It owes more than it can pay. This threatens debtors with forfeiture of what remains of their homes and other assets. The government is being told to sell off the nation’s public domain, its natural resources and public enterprises to pay the financial gambling debts run up irresponsibly by a new banking class. This class is seeking to increase its wealth and power despite the fact that its debt-leveraging strategy already has plunged the economy into bankruptcy. On top of this, creditors are seeking to enact permanent taxes and sell off public assets to pay for bailouts to themselves.

To put Iceland’s financial dilemma in perspective, examine how other countries have dealt with huge debt obligations. Historically, the path of least resistance has been to “inflate their way out of debt.” The idea is to pay debts with “cheap money” in terms of its reduced purchasing power. Governments do this by printing money and running budget deficits (spending more than they take in through taxes) large enough to raise prices as this new money chases the same volume of goods. That is how Rome depreciated its currency in antiquity, and how America managed to erode much of its own debt in the 1970s – and how the dollar’s falling international value has wiped out much of the U.S. international debt in recent years. This price inflation reduces the debt burden – as long as wages and other income rise in tandem.

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Bill Moyers Interview with William Black
How Wall Street Robs the Banks that it Owns
Posted April 8, 2009

The financial industry brought the economy to its knees, but how did they get away with it? With the nation wondering how to hold the bankers accountable, Bill Moyers sits down with William K. Black, the former senior regulator who cracked down on banks during the savings and loan crisis of the 1980s. In this video, Black offers his analysis of what went wrong and his critique of the bailouts.

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America's Financial Oligarchy Is Still in Control
By: Lorimer Wilson
Posted April 6, 2009

The country is in financial crisis and instead of the financial oligarchy being broken up to permit essential reform they are continuing to use their influence to prevent precisely the sorts of reforms that are needed immediately to pull the economy out of its nosedive. Unfortunately, our legislators seem unwilling to act against these powerful financiers opting instead to succumb to their power and influence and continue to give them what they deem to be in their best interest instead of that of the taxpayers'. All this is happening because of the false belief that large financial institutions and free-flowing capital markets are crucial to America 's position in the world … and always and utterly convinced that whatever the banks say is true and what they want is necessary. The government's velvet-glove approach with the banks is deeply troubling, for one simple reason: it is inadequate to change the behavior of a financial sector accustomed to doing business on its own terms, at a time when that behavior must change. There is no better time to take such action than now but it is evident that reform is but a pipe dream. America 's financial oligarchy is still in control and, as such, the long-term consequences will be dire!

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Dangerous Unintended Consequences
By Martin D. Weiss, Ph.D.
Posted March 24, 2009

Clearly, the money available to the U.S. government is too small for a crisis of these dimensions. But at the same time, the massive sums being committed by the U.S. government are also too much: In the U.S. banking industry, shotgun mergers, buyouts and bailouts are accomplishing little more than shifting their toxic assets like DDT up the food chain. And the government’s promises to buy up the toxic paper have done little more than encourage banks to hold on, piling up even bigger losses.

The money spent or committed by the government so far is also too much for another,less known reason:
Hidden in an obscure corner of the derivatives market is a unique credit default swap that virtually no one is talking about — contracts on the default of the United States Treasury bonds. Quietly and without fanfare, a small but growing number of investors are not only thinking the unthinkable, they’re actually spending money on it, bidding up the premiums on Treasury bond credit default swaps to 14 times their 2007 level. This is an early warning of the next big shoe to drop in the debt crisis — serious potential damage to the credit, credibility and borrowing power of the United States Treasury.

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The Big Takeover
By Matt Taibbi

Posted March 24, 2009

People are pissed off about this financial crisis, and about this bailout, but they're not pissed off enough. The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup d'état. They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of the government by a small class of connected insiders, who used money to control elections, buy influence and systematically weaken financial regulations.

The crisis was the coup de grâce: Given virtually free rein over the economy, these same insiders first wrecked the financial world, then cunningly granted themselves nearly unlimited emergency powers to clean up their own mess. And so the gambling-addict leaders of companies like AIG end up not penniless and in jail, but with an Alien-style death grip on the Treasury and the Federal Reserve - "our partners in the government," as Liddy put it with a shockingly casual matter-of-factness after the most recent bailout

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Profits & Power From THE SCANDAL Beneath The Scandal
By DEEPCASTER LLC
Posted March 20, 2009

Leading Members of The Financial and Economic Establishment were viciously attacking insurance giant AIG (primary purveyor of Credit Default Swaps) earlier this week for granting Millions in employee bonuses while taking nearly two hundred billion dollars in U.S. Taxpayer funded Bailout Money. Their attacks were echoed by Kept Politicians and Media Talking Heads.

Yes, the Outrage is justified. But, the Bonus Scandal Outrage increasingly appears to be an Intentional Smokescreen hiding The Much Bigger SCANDAL. Indeed, it appears that the REAL SCANDAL involves 100 times the amount of the Bonus Scandal - - apparently payments were funneled through AIG to the mega-bank Private Owners of the Fed itself. Buttressing this case was AIG’s recently releasing a list of U.S. and European Banks, which received multi-billion dollar U.S. Taxpayer-financed bailout funds through the AIG Bailout.

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Successful parasites do not kill their hosts
By Rudy Avizius

Posted March 19, 2009

In biology there are life forms known as parasites. Parasites are organisms that live off the “life” of other host organisms feeding on these hosts to sustain their own existence. These parasites cannot live without the “energy” they take from the host and are therefore totally dependent on them.  A host is an organism that is capable of surviving on its own and therefore represents a food or energy source for the parasite. Generally if the host dies, the parasite will also die making it not in the interest of the parasite to kill its host.  Even if the death of the host does not cause the death of the parasite, it will keep them from being able to further exploit the host.

Then we have the parasites in our economy. These are people who require the producers in order to survive and cannot survive without them. Examples of these people include bankers, financial analysts, stock brokers, pit traders and others.

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The Issue: The New Depression
by EIC
Posted March 19, 2009

During the Great Depression we had the capacity to innovate, manufacture and otherwise create wealth that could drag us out of the hole we were in. Today, we no longer have that capability. We have forfeited that ability through disastrous trade policies that have shipped the majority of America’s manufacturing prowess across the border and overseas. Without the capability to manufacture and create wealth, the U.S. will never truly recover.

Our country currently operates on foreign loans because our government constantly spends beyond its budget. With a lower credit rating, the government would find it more difficult to procure loans and eventually may be frozen out (just as “subprime” borrowers are today) of its needed credit lines. When that happens, the end will have officially arrived and the United States will without a doubt be in, possibly this nation’s worst depression. The question is no longer whether or not this is possible, the question is when this possibility will materialize.

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Reforming the Global Financial System by Flushing Out the Parasites
By Nikki Alexander
Posted March 13, 2009

Throughout his political life Thomas Jefferson fought off the covert attempts of European bankers to control the nation's money supply through a privately-owned central bank. Andrew Jackson succeeded in defeating these racketeers, nationalizing the banks and paying off the public debt. Our country then flourished without inflation. When Abraham Lincoln issued ‘greenbacks' that deprived private bankers of their monopoly control of the nation's money supply he was assassinated. The international bankers battled for more than a century to establish a private central bank in the United States with the exclusive right to print their own fiat notes and exchange them for government debt. They succeeded in 1913 with The Federal Reserve Act, a covert coup that authorized a private central bank to create money out of nothing, lend it to the government with interest and control the national money supply, expanding or contracting it at will. Representative Charles Lindbergh called the Act "the worst legislative crime of the ages." Fifty years later, President John F. Kennedy almost restored our Constitutional monetary system when he issued debt-free Treasury Notes. He too was assassinated.

Although governments have inherent authority to create their own money, they foolishly borrow it from central banks, with interest. A central bank fabricates fiat notes (paper money) and credit by “lending” them into existence, in return for treasury bonds of the host government ~ taxpayer IOUs. This “money” has no pre-existing substance in reality and is conjured up through accounting entries. It is literally created out of nothing.

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The Banking Crisis, What Really Happened from 2001 to 2007
By MJ
Posted March 13, 2009

All magic tricks have at there core simple devices to perform the illusion; mirrors, sleight of hand and misdirection. Money is a store of wealth or its worthless paper. In an electronic world it's a byte. The wealth was spent and the money gone well before late 2007 and it was spent by bankers on themselves. The rest is misdirection. The idea that Bankers create wealth or can bring productivity to the economic cycle is an illusion.

The Financial Times economics editor Martin Wolf warned in Friday's column of the dangers of our present course. He said: "If large institutions are too big and interconnected to fail... then talk of maintaining them as “commercial” operations... is a sick joke. Such banks are not commercial operations; they are expensive wards of the state and must be treated as such. “

And if you are American reading this and don't believe you are in the largest fraud in history. AIG just gave 50 billion USD from the USA tax payer to crony banks such as Deutch Bank , Goldman Sachs and HSBC. Enough money to give universal health care to every American. Who owns AIG the state does. Who owns the state the banks do. Look how high congress jumped….

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Criminal Banks and Brokers Continue To Ply Their Trade
By: Richard J. Greene
Posted February 27, 2009

Stealing From You and Me As the Public Carries On Its Belief in Fantasies - What ever would possess intelligent professionals such as those running the finances of major financial institutions to leverage their equity 88 to one in the case of Citigroup and 134 to one in the case of Bank of America? JP Morgan's credit exposure to financial derivatives, (financial weapons of mass destruction) at last glance exceeded 400 to 1!

Their use of off market derivatives have reached as high as over $1 quadrillion in financial bets that have made a mockery of price discovery in the traditional markets. Here is a question I haven't seen asked: Where are all the tax revenues from all of this unfathomable black market trading? Just 1% of $1 quadrillion is $10 trillion. Shouldn't at least that much have resulted in someone's tax liability? More corruption. Former Fed Chairman Paul Volcker who is credited with bringing inflation to its knees in the early 1980's still claims his biggest error was not capping the gold price. So here again is more of the same; instead of letting gold, one of the natural alarms of inflation or an unsound financial system, do its job; the plan should have been to send false signals to the marketplace that everything was okay. This is what the Government is doing today except on an even grander scale. They lie to their citizens and misrepresent facts to achieve their own end purposes. Nowhere is this more clear than regarding the current state of Government economic statistics. It is absolutely imperative that Americans educate themselves on what has caused our current economic problems.

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February 24, 2009
Understanding Money and War--Part I
By R. D. Bradshaw

“The Fed is also directly responsible for monetary inflation and the decline in the US standard of living since its year-end 1913 inception and especially since the 1970s. From the late 18th century to 1913, virtually no inflation existed under the gold standard except during times of war. Using government data, it now takes over $2000 to equal $100 of pre-Fed purchasing power. In other words, a 1913 dollar is worth about a nickel today.

“At that time, a dollar was defined as 1/20 of an ounce of gold or about an ounce of silver. The Fed then changed the standard away from precious metals to the full faith and credit of the government. Ever since (except for periods such as the 1930s) inflation eroded the currency's value and (more than ever) continues to do it today…

“Under the Federal Reserve System (besides inflation), we've had rising consumer debt; record budget and trade deficits; a soaring national debt; a high level of personal and business bankruptcies; today, millions of home foreclosures; high unemployment; the loss of the nation's manufacturing base; growing millions in poverty; an unprecedented wealth gap between the rich and all others; and a hugely unstable economy now lurching into crisis mode...

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February 23, 2009
Global systemic crisis – New tipping-point in March 2009:
'When the world becomes aware that this crisis is worse than the 1930s crisis'

Public announcement GEAB N°30

LEAP/E2020 anticipates than the unfolding global systemic crisis will experience in March 2009 a new tipping point of similar magnitude to the September 2008 one. According to our team, at that period of the year, the general public will become aware of three major destabilizing processes at work in the global economy, i.e.:

• the length of the crisis
• the explosion of unemployment worldwide
• the risk of sudden collapse of all capital-based pension systems

National governments and international institutions only have three months left to prepare themselves to the next blow, one that could go along severe risks of social chaos. The countries which are not properly equipped to cope with a surge in unemployment and major risks on pensions will be seriously destabilized by this new public awareness.

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February 21, 2009
Get ready for a wave of bank failures
By David Ellis, CNNMoney.com staff writer
In less than two months, regulators have seized 14 banks. Experts think many more banks will collapse before the financial crisis is over.For six consecutive weeks, industry regulators have seized control of a bank after the market closed on Friday, bringing the total number of failed banks so far this year to 14. To put that into perspective, 25 banks failed in 2008, suggesting that the rate of failures is quickening as the economic crisis deepens. At the current rate, nearly 100 institutions -- with a combined $50 billion in assets will collapse by year's end.
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February 5, 2009
The Big Picture
Part 3 - What can we do?

by Rudy Avizius

In Part 1 of this series, we examined how our “leaders” and “experts” ignored the warning signs of an impending economic storm and ended up with huge trade deficits, growing budget deficits, rising consumer debt, the collapse and loss of trust for our financial sector, the erosion of our middle class, significantly increased corporate debt levels, the United States as the world’s largest debtor nation, a planet on the verge of potentially catastrophic climate change, and out of control population growth.

In Part 2, we examined how the government response has essentially rewarded the same people who created this economic mess with massive bailouts, guarantees, cash injections that have the taxpayer on the hook for $trillions. The article showed how the government people running the bailout were complicit in this fraud, how its actions have essentially been ineffective in rescuing the banks that are effectively insolvent, and have failed to stop the downward spiral of the economy. 

One would be hard pressed to look into history and see any society where national savings have been defrauded on such a scale and the perpetrators rewarded with more money. In Part 3 we will explore some of the things we can do on both the government and personal levels.

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January 29, 2009
The Big Picture
Part 2 - The government response

by Rudy Avizius

In the first part of this article we examined how we got ourselves into this economic mess and how our “leaders” and “experts” missed so many warning signs. In this second of 3 parts we will examine what the government response has been.

Our political leaders who once thought that we could spend and borrow our way to prosperity now seem to recognize that indeed something is very wrong. However they still do not view the “big picture” and have instead focused on individual elements of the problem without taking a holistic approach. Their reaction to the economic mess was to pass bailout bills worth over $700 billion, provide insolvent banks with taxpayer cash, guarantee bad debts, and purchase toxic assets. This response has channeled most of the resources mentioned to our financial institutions in order to “increase their liquidity”.

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January 28, 2009
The Big Picture
Part 1 - How did we get here?

by Rudy Avizius

As the environmental, financial, and economic situation continues to deteriorate around us, we need to step back and take a look at the big picture. We need to see how we ended up in this economic mess, what the government response has been, and what we can do to climb out of this hole that we have collectively dug ourselves into. We are starting to see that our perceived prosperity has really been an illusion and was totally unsustainable. The goal of this article will be to provide a simplified examination of the big picture. It will be broken into 3 parts, the first will examine how we got into this mess, the second will examine the government’s response, and the third will provide suggestions on how we can start the process of rebuilding this nation’s ability to create wealth and prosperity for all.

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January 10, 2009
Too Big to Fail?
A mortal threat to the nation’s economy and national security

by Rudy Avizius

As our economy continues to decline and we have bailouts, loans, and guarantees that now total into the $trillions of dollars, let’s examine who is getting these funds and why. These funds are not going to the community banks, mom and pop stores, or other small enterprises. They are going to huge conglomerate corporations that have been deemed “too big to fail” and therefore represent a threat to the nation’s financial security. These conglomerates are the result of acquisitions and mergers over the last few decades that has had the effect of reducing competition and consumer choice. In the end this has the ultimate effect of raising prices which would by definition increase profit margins.

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