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Economic Articles for 2010

 

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Wall Street's Pentagon Papers: Biggest Financial Scam In World History
by David DeGraw
Posted December 31, 2010

Bernacke exposedWhat if the greatest scam ever perpetrated was blatantly exposed, and the US media didn't cover it? Does that mean the scam could keep going? That's what we are about to find out.

I understand the importance of the new WikiLeaks documents. However, we must not let them distract us from the new information the Federal Reserve was forced to release. Even if WikiLeaks reveals documents from inside a large American bank, as huge as that could be, it will most likely pale in comparison to what we just found out from the one-time peek we got into the inner-workings of the Federal Reserve. This is the Wall Street equivalent of the Pentagon Papers.

I've written many reports detailing the crimes of Wall Street during this crisis. The level of fraud, from top to bottom, has been staggering. The lack of accountability and the complete disregard for the rule of law have made me and many of my colleagues extremely cynical and jaded when it comes to new evidence to pile on top of the mountain that we have already gathered. But we must not let our cynicism cloud our vision on the details within this new information.

Just when I thought the banksters couldn't possibly shock me anymore… they did. More...

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Big Risk: $1.2 Quadrillion Derivatives Market Dwarfs World GDP
by Peter Cohan
Posted December 24, 2010

Derivative tradingOne of the biggest risks to the world's financial health is the $1.2 quadrillion derivatives market. It's complex, it's unregulated, and it ought to be of concern to world leaders that its notional value is 20 times the size of the world economy. But traders rule the roost -- and as much as risk managers and regulators might want to limit that risk, they lack the power or knowledge to do so.

A quadrillion is a big number: 1,000 times a trillion. (1 Million Billion). Yet according to one of the world's leading derivatives experts, Paul Wilmott, who holds a doctorate in applied mathematics from Oxford University, $1.2 quadrillion is the so-called notional value of the worldwide derivatives market. To put that in perspective, the world's annual gross domestic product is between $50 trillion and $60 trillion. More...

As more and more money flows into this casino, less and less is available for productive enterprises.As a result the economy continues to shrink while unemployment figures are manipulated to make the public think that unemployment numbers are dropping.

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America's Second Great Depression 2010 Year-End Update
by Mike Stathis
Posted December 19, 2010

European riotsWe are witnessing by far the most colossal level of fraud and theft in world history. The devastating effects from this heist will be felt for many decades. Rather than the real perpetrators of the global collapse being held accountable, they have been rewarded for their crimes through tax payer bailouts, accounting trickery and a collapse in interest rates, all of which has allowed Wall Street to pay out higher bonuses than even prior to the collapse.

Have you ever asked yourself why TARP funds are insufficient to fund smaller banks but they are sufficient to fund the largely insolvent banking cartel? As more banks fail or are seized (which does not necessarily indicate they have failed in my opinion) the number of problem banks continues to increase.

By now, you should understand what's going on. Unfortunately, the vast majority of Americans have no idea what's happening because the media continues to pump out lies, while distracting Americans using an onslaught of trash TV. More...

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Chinese Take-Out Of The U.S. Economy, Debt Crisis Triggering Reserves Conversion into Gold and Silver
by Jim Willie CB
Posted December 16, 2010

GreenspanThe Chinese really must think the American strategy and behavior to be braindead and self-destructive. The US helped them assemble a manufacturing industry, replaced US income with debt, and finally faces the Grim Reaper in a national episode of systemic failure. The US leadership is as stupid and mindless as the population is driven by compulsive consumption over the cliff, as the nation faces ruin. The Jackass warning has been for five years that the Chinese experiment would end in tragedy, and that when a preponderance of USTreasury debt is owned by foreigners, especially a single foreign nation, the Untied States will lose its sovereignty.

The new jobs created in China to enable the lower cost in producing exports to the US consumer, hellbent on consuming his entire house in home equity, hellbent on consuming his entire future in order to live for today. The result would be assuredly lost jobs in America. It was obvious to all except the clueless cast of hack US economists. They proclaimed that the lower costs of production would enable cheaper imports into the USEconomy, a new wave of spawned growth with ripple effects in benefit, wider distribution from this vast Asian pool, more retail jobs, and a new American growth spurt. What utter nonsense! But they continue to ply their trade. More...

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Fed Names Recipients of $3.3 Trillion in Crisis Aid
by Craig Torres and Scott Lanman
Posted December 1, 2010

Federal reserveThe Federal Reserve, under orders from Congress, today named the counterparties of about 21,000 transactions from $3.3 trillion in aid provided to stem the worst financial panic since the Great Depression.

Bank of America Corp. and Wells Fargo & Co. were among the biggest borrowers from one program, the Term Auction Facility, with as much as $45 billion apiece. Some aid went to U.S. units of foreign institutions, including Switzerland's UBS AG, France's Societe Generale and Germany's Dresdner Bank AG. The Fed posted the data on its website to comply with a provision in July's Dodd-Frank law overhauling financial regulation. More...

Most of the money went to bail out the very same elites who created this mess. The productive sectors of Main Street and those they employ saw very little of this money.

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Destructive Neoliberal Economic Austerity
by Stephen Lendman
Posted November 27, 2010

Depression soup lineInstead of vitally needed stimulus, Washington and European governments dictate austerity. The pretext of deficit reduction is being used to transfer more wealth to those already with too much, plus the usual canard over the urgency to save national banking systems.

In other words, make ordinary people bear the burden of bailing out banking giants responsible for the severest economic crisis since the Great Depression. How? The usual IMF solution, involving preservation of capital at the expense of workers - a package including wage and benefit cuts, less social spending, privatization of state resources, mass layoffs, deregulation, lower "onerous" taxes, maintaining corporate debt service, and harsh crackdowns against resisters.

In the 1980s, it was called Reaganomics, trickle down, and Thatcherism. Today it's destructive "shock therapy" called austerity, the same scheme pitting capital against people - disposable workers tossed out for big money's gain.

It's how predatory capitalism works, destructively for so many to enrich an elite few - snake oil peddled as an economic elixir, corrupted politicians and central bankers forcing harmful policies that, in fact, don't work. More...

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QE2 & The Great Misdiagnosis
by Jim Willie CB
Posted November 26, 2010

Bank fraudThe backdrop has turned dire on several front simultaneously. The great millstone around the USEconomy's neck continues to drag it down. CoreLogic reported 2.1 million units have created a swamp in Shadow inventory of the housing market. That equates to 23 months inventory, whereas normal is 7 months.

New money does not cure an insolvent banking system or insolvent households. It presents a new problem of significiant price inflation. They want it, so they can call it growth!! Producing high value products efficiently and cost effectively makes the nation competitive. Imposing a fair tax structure that is stable, reasonable, and with proper incentives makes it competitive. Having an active legal prosecution staff to combat bond fraud and defense appropriation fraud makes it competitive. Having a strong education system makes it competitive. A weaker currency raises the cost structure, increases import costs, and assists the export trade if a nation has one. The United States has shipped a large segment of it away in the last 10 years to China, after having shipped a larger segment away in the 1980 decade to the Pacific Rim. Not only did the US promote its financial sector, but it denigrated the industrial sector as dirty. By removing a significant portion of the nation's capacity to generate legitimate added value income, the USEconomy was left vulnerable to debt overload and insolvency. More...

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Global Financial System Crisis, Collapse in Consumer Spending, Unemployment, Rising Prices
by Bob Chapman
Posted November 21,2010

economic collapseMost companies have laid off as many workers as they dare too and will lay off more as revenues continue to fall. Investors believe that $600 billions in QE2 will make things lots better. The economy, again, is not being targeted. What is being targeted again is the financial sector, particularly the stock market. Those who own the Fed and those within that system must be saved. The market has to be saved because if it is not the last vestiges of personal wealth will disappear. If that happens the middle class and retirees will go ballistic and into panic.

They will increase the public's comfort zone and keep the unemployed at bay – at least for now. The stock market the Fed is trying to save is rife with corruption, so much so that investors are leaving in droves. As a price for keeping the market going at a high level the SEC and CFTC turn a blind eye to blatant wrong doing in the form of naked shorting and flash trading, which is front running. These criminals are being allowed to run loose in our markets, particularly hedge funds. We see complaint after complaint after complaint in the thousands totally ignored and if you challenge either agency your problem gets worse. We have seen it first hand, and there is no longer anyone there to defend and protect you. How can investors risk their funds in such an environment, run by a criminal syndicate? Don't forget we spent 28 years on Wall Street, so we know what they are up too and what we are dealing with.

The Fed, and the administration, had best do something constructive fast, because deterioration is upon us and once it gets going it will be very hard to stop. Inflation could lead to hyperinflation and then to deflationary depression. A fact that is really disconcerting is that half of investors are bullish on the economy and the market. The question is how long will QE2 last this time, and how much has already been discounted? Leading indicators are weak, so we see investors basing decisions quickly on the affects of QE2, which is not viable long term. Confidence otherwise is not evident and employment has declined in the past quarter as layoffs continue. Job openings are three times worse, which portends poorly for the future. More...

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Gold and Silver Correct From Extremely Overbought Levels, But Too Early for a New Upleg
by Clive Maund
Posted November 2, 2010

Debt collapseA category 5 financial hurricane is bearing down on us and the eye of the storm is headed for the US. While the whole world will be affected by it, the worst effects by far will be experienced by the overstretched debt-wracked countries such as Britain and the US, which are parasitic service economies with little manufacturing capacity that nurture the mistaken belief that the rest of the world will continue sending them cheap goods produced by real labor in exchange for electronically created worthless credits and IOU's including junk such as Treasuries in perpetuity. Tough luck when the Chinese decide to supply their own needy people with the goods they manufacture - no more massive Wal-Mart boats laden with cheap goodies cruising the high seas to the US. Where are Americans going to get the goods from then? - it's difficult to buy domestically manufactured goods if there are no factories at home.

Whenever the lower and middle classes manage to acquire any significant capital, collectively speaking, they are systematically fleeced of it. That is what is happening now in the US housing market - and what is set to happen in the depths of the coming depression when property becomes virtually worthless is that millions will become dispossessed of their properties. At that point the elites will move in and buy up vast tracts of commercial and residential Real Estate at pennies on the dollar, and millions of former homeowners will face the choice between living in a tent city or moving back into their former home as rent paying tenants. This is the reason why savers and the prudent in the US are punished so harshly - they don't want people acquiring capital and thus the power of self-determination, they want them to go out and spend to generate ever greater profits for their vast business interests - so they drop interest rates to the floor (which they can of course use in their hugely profitable carry trade activities) and encourage the little guy to get up to his neck in debt. Jacked up interest rates can later be used as a tool to winkle the little guy out of his house. More...

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The Largest Heist in History Building the Great Pyramid, The Global Financial Crisis Explained
by Greg Pytel
Posted October 20, 2010

Pyramid SchemeThis article was accepted as evidence and published by the British Parliament, House of Commons, Treasury Committee.

As with any pyramid scheme (and as long as there is still cash in the scheme) the beneficiaries are the operators of the scheme and "customers" who know when to get out of it. During the hectic dawn of the current financial crisis it is very likely that bank executives realised that it was the time that their pyramid started collapsing. This easily explains why banks stopped trusting one another and interbank lending collapsed. It was impossible to predict which node (financial institution) of a pyramid scheme would collapse next. There was a very distinct risk that if a bank lent money to another, the next day the bank-borrower may be bust and the money would be gone.

The collapse process, always an instant one, is accelerated by a dramatic loss of confidence amongst the pyramid customers. Once a single customer cannot withdraw his deposit, a great number of others start demanding payouts. City executives must have known this mechanism and explained to the government officials that unless the state shifts its weight injecting cash, guaranteeing deposits and lending, the system was bound to collapse. More...

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The Deep Cause Of The Great Financial Crisis: The Peace Diktat Of Versailles
by: Professor Emeritus
Posted October 5, 2010

treaty of VersaillesAccording to a recent news item, not widely circulated, after more than 90 years of slavery, on October 3, 2010, Germany made the final payment for its World War I debt. This event is highly symbolic. It gives me great pleasure to be one of the first to congratulate you, literally hours after the German people were finally freed from debt slavery.

I have been a student of money and credit for over fifty years. I could summarize the result of my studies as follows: Most, if not all, the great events in the history of mankind since the advent of money, have a causal explanation. The causes are to be found in the use or abuse of money and credit -- provided that we penetrate historiography sufficiently deeply.

The Great Depression of the 1930's, in particular, the unprecedented world-wide unemployment was caused by the decision of the victorious Entente powers to return to the gold standard after World War I, BUT without allowing the clearing house of the gold standard, the international bill market, to make a comeback.

This decision was made in secret. It has never been made public. But there can be no doubt about the fact that in 1920 everybody, even Keynes himself, admitted the desirability of an expeditious return to the gold standard. Had there been no decision to ban it, bill trading would have started spontaneously. More...

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Gold and the Currency Markets
by Bob Chapman
Posted September 30, 2010

GoldIt is interesting to watch Wall Street defy reality. This is a scene we've observed since the early 1960s, the effect of debt on the economy and the nation and in turn on its currency. The result of the profligacy over all those years is the biggest bull market in history in gold and silver. As we write gold is toying with $1,300 and silver with $21.50. Each day a new high is reached in spite of a pending options expiration and the perpetual market rigging and manipulation by the US government.

One of the things that astound us is that few professionals have seen this coming over the past 10-1/2 years, and even those that do believe do not think this is an earth-shaking event. What we are about to experience is an event that only occurs every 300 to 500 years. All we can imagine is that they have a very limited perspective of history and particularly economic and financial history. More...

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Ultimate Bailout: The $100 Trillion Cram Down
by Chris Kitze
Posted September 30, 2010

Steering the courseIf you've never heard of a "Cram Down", you are about to get a first hand lesson on the receiving end of the biggest one in history. The words "Cram Down" used to be reserved for companies in bankruptcy or smaller venture backed companies that run out of cash and are recapitalized by "cramming down" the equity held by existing shareholders. The only other alternative to closing the doors is to reorganize the ownership structure to attract new capital and keep it in business. Those who don't have the money to play in the next round -- i.e. don't have a money printing press -- will get wiped out . Having personally experienced a number of these unpleasant affairs in various businesses, you are definitely better off giving than receiving a Cram Down.

Because a Cram Down changes the ownership structure of a company, this one will change the ownership of the U.S. Never underestimate the politicians and bankers taking the easy way out. Printing money and kicking a bigger can down the road is always easier than facing the reality of your debts. More...

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The Credit Meltdown and Wall Street's Shadow Banking System
by Ellen Brown
Posted September 26, 2010

Bank of North DakotaWhile we're waiting for the Calvary to swoop down from Washington and save us – something that could take a while – we might consider setting up some state-owned banks. The Bank of North Dakota, currently the country's only state-owned bank, is very stable and very profitable, returning a 26% dividend to the state. A bank of that sort could be an attractive investment for all those state and local rainy day funds, pension funds and other local government funds looking for greater returns from the low-risk investments allowed by their legislative mandates. We need to set up some banks that serve the needs of the real economy rather than those of Wall Street bankers, brokers and their super-rich clients for yet more bonuses, bailouts and paper profits. State-owned banks could fill the role the Wall Street banks have declined to fill, providing an effective credit engine for state and local economies. More...

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The Tax-Cut Racket
by Paul Krugman
Posted September 18, 2010

Paul Krugman"Nice middle class you got here," said Mitch McConnell, the Senate minority leader. "It would be a shame if something happened to it."

O.K., he didn't actually say that. But he might as well have, because that's what the current confrontation over taxes amounts to. Mr. McConnell, who was self-righteously denouncing the budget deficit just the other day, now wants to blow that deficit up with big tax cuts for the rich. But he doesn't have the votes. So he's trying to get what he wants by pointing a gun at the heads of middle-class families, threatening to force a jump in their taxes unless he gets paid off with hugely expensive tax breaks for the wealthy. More...

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Who Owns the American Dollar?
Stanislav Mishin
Posted September 15, 2010

DollarsAt first glance, this would seem like a rather silly, stupid and pointless question. Why, the average person would answer, the American people own it. Or rather, if one had to get more technical, the American government, which is in turn, being a Republic, owned by the people, one in the same.

But, as most such simple seeming things in life, the truth is neither simple or straight forward and the answer is neither silly, stupid or pointless, but indeed is critical to the well being of nations and hundreds of millions if not billions of people.

For the truth of it, neither the people of America nor the government of America owns the US dollar. How's that, you say? Well, if one was to really dive just a bit deeper, before hitting the rocks just under the US greenback pond, one would quickly discover that the actual US dollar has not existed since 1913, where it was effectively killed. What is now called the US dollar is actually a Federal Reserve Note, says it right at the top of each bill. Why does that matter? Read on.

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Filtering Through the Noise
by Mike Stathis
Posted September 10, 2010

DepressionWall Street and Washington hacks scattered throughout America's media monopoly continue to mislead the public, with debates about a double-dip recession as if this terminology has legitimacy. Understand that anyone who uses this bogus term has NO CREDIBILITY, as I have previously discussed.

Sadly, everyone who enters a discussion about the economy has chosen to adhere to buzz words created by hacks without bothering to question whether they're applicable. This includes the perma-bears and gold bugs. They're all followers in thought. They're all behind the curve.

Understand that the revisions in economic growth have not yet been adequately factored into the stock market in my opinion. Perhaps the reason accounting for this is because investors fail to realize these downward revisions represent a future trend. Once they realize this fact, the stock market is likely to take some big hits. More...

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Successful Government Economic Policies? For Whom?
By Dr. Ron Paul
Posted Spetember 8, 2010

Ron PaulThese policies are not working for the 9.6% of Americans who are out of work, nor for the over16% underemployed. They are not working for nearly 3 million Americans who have declared bankruptcy in the last two years, or the 40 million currently on food stamps. Nearly 1 in 6 Americans depend on those and other government anti-poverty programs such as Medicaid and unemployment benefits. As more Americans are added to the unemployment rolls, the tax base from which to hand out their benefits is shrinking. Still, businesses are being taxed and regulated out of the market, adding to the problem. What solutions are put forth? More government spending - even as each citizen's portion of the public debt is over $43,000 and expected to increase by $250,000 over the next 40 years. More...

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Global Collapse of the Fiat Money System
by Matthias Chang
Posted September 1, 2010

Depression ChartReaders of my articles will recall that I have warned as far back as December 2006, that the global banks will collapse when the Financial Tsunami hits the global economy in 2007. And as they say, the rest is history.

When the ball hits the ceiling fan, sometime early 2011 at the earliest, there will be massive bank runs.

I expect that the FED and other central banks will pre-empt such a run and will do the following:

1) Disallow cash withdrawals from banks beyond a certain amount, say US$1,000 per day; 2) Disallow cash transactions up to a certain amount, say US$10,000 for certain transactions; 3) Transactions (investments) for metals (gold and silver) will be restricted; 4) Worst-case scenario – the confiscation of gold AS HAPPENED IN WORLD WAR II. 5) Imposition of capital controls etc.; 6) Legislations that will compel most daily commercial transactions to be conducted through Debit and or Credit Cards; 7) Legislations to make it a criminal offence for any contraventions of the above. More...

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Gold and Silver Protection From Economic Cancer and Desperation of QE2
by Jim Willie CB
Posted August 25, 2010

Black HoleHistory is being made. The American public has never been no nervous, perhaps fearful of something dreadful and imminent. The global monetary system is crumbling. The typical stimulus has failed to jumpstart the USEconomy. The 20 months of near 0% short-term official interest rate has failed to revive the moribund US housing market.

Let me make a paradoxical point: THE UNITED STATES WILL BEGIN A RECOVERY WHEN THE TOO BIG TO FAIL BANKS ARE PLOWED UNDER. They are blocking remedy and restructure. They are resisting liquidation of badly impaired assets. They do not lend money, as their credit engines are broken, since they are dead entities that occupy space in the US financial sector. They cast large long shadows. Their removal from the scene of the crime would surely light a fuse of credit derivative accidents, the likes of which the world has never seen. Let's try THAT experiment!! Why the leading economists cannot see that credit is down since the big banks are dead is beyond me. More...

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A Wealthy Economic Stimulus Needed
By James Quinn
Posted August 8, 2010

PissboyOfficial spokesperson for the wealthy Larry Ellison, CEO of Oracle who "earned" $146 billion over the last decade while shareholders received a negative 45% return on their investment, has announced a dramatic cutback in his lifestyle. He has voluntarily agreed to reduce his compensation to $145.5 billion over the next decade while cutting back on his yacht racing from 4 days per week to 3 days per week. The impact on the San Jose economy could be devastating.

There are multiple reports of the wealthy making dramatic cutbacks such as:

  • Cutting their staffs of butlers, cooks, house cleaners, gardeners, and piss boys from 45 to 43.
  • They are only sending their personal shoppers to Tiffanies 4 days per week rather than 5 and they have reduced the daily spend from $5,000 to $4,800.
  • Using the small helicopter to fly the 15 minutes from their gated 45 acre estate to JP Morgan's headquarters.
  • Many of the rich are only filling their Olympic size pools to 4/5 of capacity to save on water.
  • John Kerry is reportedly considering downsizing from his 76 foot yacht called Isabel to a 75 foot yacht named Bourgeoisie in order to send a message to the "little people", that he feels our pain.
  • Many of the Wall Street ruling class are only eating out six days per week and have purposely restricted themselves to Le Bernardin and Masa only for lunch.
  • The ruling elite have scaled back their month long vacations in the Hamptons to only 3 1/2 weeks. More...
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Four Deformations of the Apocalypse
By David Stockman
Posted August 5, 2010

BankruptcyIF there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing. The nation's public debt — if honestly reckoned to include municipal bonds and the $7 trillion of new deficits baked into the cake through 2015 — will soon reach $18 trillion. That's a Greece-scale 120 percent of gross domestic product, and fairly screams out for austerity and sacrifice. It is therefore unseemly for the Senate minority leader, Mitch McConnell, to insist that the nation's wealthiest taxpayers be spared even a three-percentage-point rate increase.

More fundamentally, Mr. McConnell's stand puts the lie to the Republican pretense that its new monetarist and supply-side doctrines are rooted in its traditional financial philosophy. Republicans used to believe that prosperity depended upon the regular balancing of accounts — in government, in international trade, on the ledgers of central banks and in the financial affairs of private households and businesses, too. But the new catechism, as practiced by Republican policymakers for decades now, has amounted to little more than money printing and deficit finance — vulgar Keynesianism robed in the ideological vestments of the prosperous classes. More...

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Cut Wall Street Out! How States Can Finance Their Own Economic Recovery
by Ellen Brown
Posted August 3, 2010

Cut out Wall StPouring money into the private banking system has only fixed the economy for bankers and the wealthy; it has not done much to address either the fundamental problem of unemployment or the debt trap so many Americans find themselves in.

President Obama's $787 billion stimulus plan has so far failed to halt the growth of unemployment: 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.

In this dark firmament, however, one bright star shines. The sole state to actually gain jobs is an unlikely candidate for the distinction: More...

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BP Collapse Potentially More Devastating than Lehman!
By Gordon T. Long
Posted July 29, 2010

Deepwater HorizonAs horrific as the gulf environmental catastrophe is, an even more intractable and cataclysmic disaster may be looming. The yet unknowable costs associated with clean-up, litigation and compensation damages due to arguably the world's worst environmental tragedy, may be in the process of triggering a credit event by British Petroleum (BP) that will be equally devastating to global over-the-counter (OTC) derivatives. The potential contagion may eventually show that Lehman Bros. and Bear Stearns were simply early warning signals of the devastation lurking and continuing to grow unchecked in the $615T OTC Derivatives market.

Now credit has been cut to BP. Counter-parties will not accept their name beyond one year in duration. This is unheard of. A giant is on the ropes. If he falls, the very earth may shake as he hits the ground. As we are beginning to see, the Western pension structure, financial trading and global credit are all inter-twined. BP is central to this, as a massive supplier of what many believe(d) to be AAA credit. So while we see banks roll over and die, and sovereign entities begin to falter… we now have a major oil company on the verge of going under. Another leg of the global economic "chair" is being viciously kicked out from under us." More...

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Four Shocking Bombshells Bernanke Did NOT Tell Congress About Last Week
by Martin D. Weiss Ph.D.
Posted July 28, 2010

Housing startsWhat is the invisible force that's suddenly gutting the housing market, driving consumer confidence into a sinkhole, and killing the recovery that Washington was so avidly touting just a few months ago?

Bernanke won't say. But the answer is clear: The recovery had very little substance to begin with. Rather, it was, in essence, a mirage — a dead cat bounce bought and paid for by Washington's massive bailouts, stimulus programs, and money printing.

Put another way, the recession never really ended. Yes, we saw some growth in GDP. And yes, thanks to that growth, some companies are still reporting better earnings — the news that spurred a rally in the stock market last week. But at the core of the economy, the fires that started the recession are still burning intensely. More...

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It’s the End of the World As We Know It
by Philip R. Davis
Posted July 18, 2010

Job cemeteryHow does one decrease the cost of labor in America?
Well first, you have to bust the unions. Check.
Then you have to create a pressing need for people to work - perhaps give them easy access to credit and then get them to go so deeply into debt that they will have to work until they die to pay them off. Check.
It also helps if you push up the cost of living by manipulating commodity prices. Check.
Then, take away people’s retirement savings. Check.
Lower interest rates to make savings futile and interest income inadequate. Check.
And finally, threaten to take away the 12% a year that people have been saving for retirement by labeling Social Security an "entitlement" program - as if it wasn’t money Americans worked their whole lives to save and gave to the government in good faith. Check. More...

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Stop The Parasites
by Graham Summers
Posted June 18, 2010

tapeworm parasiteWell, we had another flash Crash yesterday, just like the one on May 6, 2010. The only difference is, this time the stocks in question went up instead of down.

In case you missed it, Washington Post’s stock went from $458 to $900 per share in the blink of an eye. All the orders at $900 were cancelled and the market authorities did the usual, “move along folks, nothing to see here,” bit.

The culprits in both incidents (May 6 and yesterday) were High Frequency Trading Programs (HFTPs).

The HFTP industry (and lobbying efforts), always defend their actions by stating that they provide liquidity or make sure the markets are efficient or other nonsensical arguments that fall apart the minute you spend more than 10 seconds thinking about them. More...

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The End Game for Wall Street
By Ilan Moscovitz
Posted June 8, 2010

JO Morgan ChaseDo you remember swaps, those frequently risky and opaque derivatives that nearly brought down the global economy in 2008? They're used for insurance and for gambling, but despite having a notional value estimated at $450 trillion, some of the most dangerous swaps remain totally unregulated, even two years after the financial crisis.

But first, it's important for us to recognize just how crazy and dangerous the swaps market currently is. For example:

No one has any idea what they are worth. Imagine if there were no stock exchanges, and the vast majority of stocks traded over the counter. Five banks -- Goldman Sachs (NYSE: GS), JPMorgan Chase (NYSE: JPM), Morgan Stanley (NYSE: MS), Citigroup (NYSE: C), and Bank of America (NYSE: BAC) -- cornered the market, and only they had access to stock prices.

So in order to buy shares of Microsoft, instead of just looking up its $26 price, you would have to call up Goldman Sachs and ask how much Microsoft will cost you. Goldman offers to sell you Microsoft at $30 per share, offers to buy shares from another customer at $20 per share, and pockets $10 for every share of Microsoft traded. That's basically how the anti-competitive swaps market works. It's an economically inefficient system that benefits too-big-to-fail banks by allowing them to rip off their customers. More...

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Call To Act, Save And Strengthen Financial Reform
by Danny Schechter
Posted June 7, 2010

In DEbt We TrustWe have less than a month to go before the Congress votes on financial reform. Ironically, the deadline seems to be July 4th, our independence day, an occasion that will likely usher in ever more dependence on Wall Street despite appearances.

Matt Taibbi reports real reform is a goner, “The financial-services industry has reportedly flooded the Capitol with more than 2,000 paid lobbyists; even veteran members are stunned by the intensity of the blitz. "They're trying everything," says Sen. Sherrod Brown, a Democrat from Ohio. Wall Street's army is especially imposing given that the main (really, the only) progressive coalition working the other side of the aisle, Americans for Financial Reform, has been in existence less than a year – and has just 60 unpaid "volunteer" lobbyists working the Senate halls.”

Not only are scammers getting off free; they are being overpaid in the process--- allowed to keep their gargantuan bonuses and obscene salaries. More...

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A Better Solution Than TARP
by Rudy Avizius
Posted June 1, 2010


EconomyOur government has committed $12,200 Billion in bailouts, guarantees, and backstops to the very same people who created this economic mess. Most of this money has not found its way to Main Street but instead has lined the pockets of the Wall Street types. Part of this was the $700 Billion TARP program. This video explains how instead of TARP, we could have used this money to LEVERAGE productive endeavors on Main Street that would have both employed our people and helped to reduce the federal deficits. Video...
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The Big Short - How Wall St Destroyed Main St
by Jim Quinn
Posted May 29, 2010

Steven EismanDay after day, bankers have been paraded before Congressional committees regarding their role in the financial crisis which brought the financial system to the edge of the abyss on September 18,2008. Every one has claimed that they were not responsible in any way for the disaster. They blame once in a lifetime circumstances that no one could have anticipated. It was a perfect storm and they had no way of knowing. These Harvard MBA Wall Street geniuses, who collected compensation in excess of $100 million each before the collapse, had no idea what was going on within their own firms. Ignorance and stupidity is no excuse for losing a trillion dollars.

The truth is that the CEO’s of all the Wall Street banks encouraged a casino culture of greed and gambling. The generation of fees became the sole driving incentive for every firm. It started with collateralizing subprime mortgages into packages of mortgage backed securities. Then they created Credit Default Swaps as insurance on these mortgages. When they ran out of chumps to put into houses, they created side bets with Credit Default Obligations that didn’t require an actual homeowner. More...

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Gold Correction Factors, Hidden Dollar Swap Hammer
By Jim Willie CB
Posted May 27, 2010

Lawrence Summers asleep on the jobHats off to the Wall Street financial syndicate. They arranged a 1000-point stock market descent precisely on the day (May 6th) the Financial Regulatory bill had a key provision being scripted for auditing the US Federal Reserve. The US Senators blinked, watered down the provision, and will force an audit but only for certain TARP-related events. At least it is a foot in the door to the corrupted halls. The Flash Crash, as it is known, has turned the US stock market even more into a round robin competitive backyard for Wall Street firms, where 73% of the NYSE trading volume used to be derived from their computer program trades. Figure even more now. The US stock market has become the butt of jokes. Miraculous recoveries after 3:30pm are standard these days, like Tuesday.

The most striking and predictable aspects of the Fin-Reg Bill are how the USFed has even more power than before. The original plan was to limit its power. So again, hats off to the syndicate. They took the honorable motive to limit syndicate powers and to audit the USFed, and turned it into even more USFed powers, like the rod to dissolve any financial firm that endangers the US financial system. Or should it be said endangers the syndicate? Goldman Sachs bribery to the US Congressional members must have played a prominent role. That is the capitalism at work in the United States. More...

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America's Ten Most Corrupt Capitalists
By Zach Carter
Posted May 16, 2010

sharksWall Street's captains of industry and top policymakers in Washington are often the same people. A lot of them get rich by playing for both teams.

The financial crisis has unveiled a new set of public villains—corrupt corporate capitalists who leveraged their connections in government for their own personal profit. During the Clinton and Bush administrations, many of these schemers were worshiped as geniuses, heroes or icons of American progress. But today we know these opportunists for what they are: Deregulatory hacks hellbent on making a profit at any cost. Without further ado, here are the 10 most corrupt capitalists in the U.S. economy. Click here to see the names of these true humanitarians.

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Take Action! How We Can Save OUR Economy
By Tiffiny Cheng, David DeGraw and Kevin Zeese
Posted May 14, 2010

EconomyThe next few weeks will culminate into a defining moment in American history and lay the course for our economic future. After two years of being asleep at the switch, Congress is finally stepping up and taking action on financial reform. The resulting bill will be a clear indication and definitive proof as to who is actually running our country. Will it reinforce the dominance of the Wall Street elite, or will it mark a rebirth of the rule of law and economic prosperity for millions of Americans who have seen their standard of living decline?

The early indications are ominous, two of the most crucial aspects of true reform have already been dealt a severe blow. The amendment to break up the “too big to fail” banks has been voted down, and the bill to audit the Federal Reserve has been gutted of important provisions.

We cannot just sit back and let politicians, who are overly influenced by campaign funding and lobbying activities on the part of the big banks who have plunged us into this crisis, decide our future without us. Our passive unwillingness to stand up for our own rights is part of the reason we are in this crisis to begin with. Right now is the most pivotal time for us to make our voice heard. More...

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The Darkside of the Looking Glass:
The Corruption of our Capital Markets

Dr. Patrick Byrne
Posted May 14, 2010

EconomyRogue Wall Street firms are strangling the financial system. Overstock.com CEO Dr. Patrick Byrne explains illegal naked short selling, its roots and risks, in terms anybody can understand. This is a must watch for anyone who invests in the stock market so they can understand how their investments are being used to manipulate the markets. Video...

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Crisis expert says derivatives market still 'grave threat'
By Chris Oliver, MarketWatch
Posted May 10, 2010

EconomyRisks of a major accident from derivatives use remain -- or may even be on the rise -- amid a wave of re-leveraging, according to an expert of the causes of the global financial crisis.

Noted financial author Richard Duncan said banks and other financial institutions are beginning to pile back into the opaque financial instruments, as the total value of such contracts is "probably back" to $650 trillion. (That is actually 650,000 BILLION!)

"This is a grave threat not only to the financial sector but also the entire global economy," Duncan said in a telephone interview with MarketWatch from his home in Bangkok as he prepares for a U.S. tour of his 2009 book, The Corruption of Capitalism. More...

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Bowing To China: What It Means To Our Future
By John Myers
Posted May 3, 2010

Economy“Let China sleep, for when China awakes she will shake the world.” Napoleon Bonaparte.

American greed and extravagance has awakened China, and an eastern shadow is being cast on an indebted and divided America. At stake is our economic future.

It seems hard to believe but in just two generations, from Richard Nixon to Barack Obama, America has crumpled from world kingpin to global has-been. In fact this month President Obama bowed before Paramount Leader of China, Hu Jintao, at the nuclear security summit. It wasn’t until 2006, or 30 years after Mao’s death, that China accumulated its first $1 trillion in foreign reserves. Yet by last April that amount had doubled to $2 trillion and by the end of this year Beijing may hold in its hands $3 trillion in foreign reserves. If Obama gets his way, $1 trillion of that sum will be in liquid Treasury instruments. All that money has a lot of strings. More...

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Is It Time for Law Abiding American Citizens to Stop Paying Their Taxes and Start a New Government?
By David DeGraw
Posted May 2, 2010

EconomyNow that I have your attention, I want to make it clear to you that I am being rational and serious when I ask this question: Is it time for law abiding American citizens to stop paying their taxes and start a new government?

Before you roll your eyes and dismiss me as some “extremist,” let me explain the situation to those who are unfamiliar with my past reports. In my report on the Economic Elite Vs. The People of the United States, I lay out the case proving that our economy and tax system has become an organized criminal operation. I defy anyone who spends time researching and analyzing the facts and overwhelming evidence to support this claim to prove otherwise. I invite anyone who thinks I’m wrong to a debate on national television. I’m talking to you, Tim Geithner, Ben Bernanke, Larry Summers, Lloyd Blankfein, Jamie Dimon and President Obama! More...

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How To Make a $Million Dollars
by Rudy Avizius
Posted May 1, 2010

People across the country are using this corporate welfare scheme to make millions. The Wall St types tell us that they are geniuses and need to be paid obscene amounts of money to be able to attract and retain quality people. In reality, these people are not geniuses, but rather they are INSIDERS who gorge at the public trough and use the system to have taxpayers provide them with essentially free money. You need to know this information, because YOU the taxpayer are paying for this.

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Sultans Of Swap: Fearing the Gearing!
by Gordon T Long
Posted March 5, 2010

EconomyThe US is no longer primarily a manufacturing economy nor a service economy. The US has been operating as a Financial Economy since the Dot Com bubble. To survive and indeed prosper in this Financial Economy, corporate America was forced to use its balance sheet both as an engine of growth and as a corporate defense. Multi-national conglomerates have aggressively practiced this for the last decade. Exactly the same way the financial & banking industry is structured to "borrowing short and lend long", American industry has steadily shortened its lending duration to shorter and shorter, less costly, short-term financing. The use of Commercial Paper, easily rolled over on monthly and quarterly periods, was substantially cheaper than issuing longer term corporate notes and bonds. Corporations like GM (GMAC), Ford (Ford Credit), GE (GE Capital) had long ago stopped being industrial corporations. They were financial corporation's leveraging their highly competitive credit ratings to borrow extensively while 'leveraging-up' their balance sheets. Corporations were quick to realize it gave them an unfair competitive advantage in the new emerging world of financial engineering. The less sophisticated were forced to follow or be 'gobbled up" by competitors with elevated stock valuations.

Private Equity firms "bought more than 3000 American corporations from 2000 to 2008, employing close to 10 million people - nearly 1 of every 10 workers in the private sector. The formula was simple: buy a target company with a small down payment and lots of other people's money. Leverage it with huge loans using the acquired company - not the Private Equity firm - as collateral. Cut short-term costs through radical layoffs. Resell at a profit within 5 years, before the cuts & debt have totally crippled the business. More...

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Will the US Devalue the Dollar?
by Darryl Robert Schoon
Posted March 4, 2010

EconomyThe ability to wage war on credit gave the West an insurmountable advantage over the East. The West’s credit, however, has now turned to debt and the West has lost its advantage. But the return to parity will not be easy. The three hundred year economic expansion fueled by debt-based capital markets is coming to an end and with it, the hegemony of the West over the East. During that period, debt-based paper money propelled first England then the US to world dominion because of the ability to wage war on credit and to print money ad infinitum.

That era is now ending because the critical balance between credit-driven expansion and debt-driven contraction has now shifted significantly in favor of the latter; and in 2010, both East and West now find themselves on the edge of a growing deflationary sinkhole created by the sequential collapse of two large US bubbles, the dot.com and US real estate bubbles.

Capitalism cannot function unless its constantly compounding debt is serviced and/or paid down. Today, the US, the world’s largest debtor, can no longer pay what it owes except by rolling its debt forward and borrowing more, what the late economist Hyman Minsky called ponzi-financing, financing common in the final stages of mature capital systems. More...

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Armageddon
by Martin D. Weiss, Ph.D.
Posted February 23, 2010

If you thought Wall Street’s debt crisis was traumatic, wait till you the see the consequences of Washington’s debt crisis! Never before in history has a world power like the U.S. been so utterly buried in debt! And never before has that debt been financed so massively by foreign investors!

Washington’s debt crisis represents a unique, unparalleled, and unimaginable convergence of circumstances. Because no one can answer this simple question being asked by former GAO chief David Walker:

Who will bail out America? Not you, not me, and not 300 million Americans! Not China, not Japan, nor all the powers on Earth put together! They’re simply not big enough. They don’t have the money.

Yet, despite the utter gravity of our plight, nothing is being done to change our course. In recent weeks, Congress could not even agree to study the issue. They could not vote on a deficit commission.

The president has just appointed a separate commission. But even after moons of deliberation, it will have no authority to bring its recommendations to a vote in Congress — let alone get them passed. More...

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Avoid These Cash Machines
By Jim Royal
Posted February 9, 2010

When KKR bought Dollar General in 2007, it and fellow investors put up just $2.8 billion and borrowed the remaining $4.5 billion. At that time, Dollar General had just $260 million in debt, the interest on which it could easily cover with its earnings. Fast-forward to November 2009 and the IPO. Dollar General suddenly had about $4.2 billion in debt, and its ability to support its own debt is severely crimped. In fact, the business has to pay about 39% of its operating income just in interest. Ouch!

That sudden debt spike shows that KKR and its co-investors simply transferred their borrowings of $4.5 billion onto Dollar General's balance sheet. For their efforts, they took home a 150% paper profit (based on the IPO price), excluding fees and the costs of some rather minimal work they performed in reorganizing Dollar General -- much of which was charged to Dollar General.

As a final kick to the curb, just before making it a public company, the private-equity giant paid itself and other investors a fat dividend, to the tune of $239 million -- more than double what Dollar General earned in that quarter. As a public company, Dollar General doesn't even pay a dividend. And that's not the amazing part. More...

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Obama, Now Fire Geithner and Summers
by Richard C Cook
Posted January 22, 2010

Since becoming charter members of the Obama administration, both Geithner and Summers favored a much milder approach to bank reform. According to the Washington Post, industry executives were “startled and disheartened that Geithner was overruled” in favor of Volcker’s approach. Under Geithner’s watch, though, the banks have been using taxpayers’ money not to restart lending but to take over smaller banks, invest in the stock market, and continue to pay their executives obscene bonuses.

The poor bankers, now standing like deer in the headlights, are breaking our hearts. Their flight from the stock market, which began yesterday, caused an immediate drop in the Dow Jones Industrial Average of over 200 points. It shows the stranglehold the banks have had on the nation’s wealth. But in reality, the proposed “Volcker Rule” should be only the first step in the nation’s recovery from the worst financial crime spree in history.

Think about it for a minute. Banks are allowed to create credit “out of thin air” only under a public charter. It is a fiduciary trust that should be regarded as sacrosanct. One way this trust has been abused has been for banks to use this created credit to buy companies whose employees are then fired and assets stripped before the company is sold at a profit to pay off the loans and the bankers’ brokerage fees. If this isn’t a crime against the national interest, what is? More...

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Goldman Sachs Front Runs Executive Orders
The International Forecaster
Posted January 17, 2010

Goldman Sachs has admitted that they have been front running and opportuning against their clients in the fundamental strategies group, which is not subject to the same regulatory rules that equity research departments are. That is why they are called “Hannibal Lecter” in the business.

They have been setting up clients to take losses so their trading would be profitable. That is like eating your own children. This is the bottom of the moral and ethical totem pole.

The notional value of derivatives held by US commercial banks rose $804 billion in the third quarter, or 0.49%, to $204.3 trillion. That consisted of 1,065 banks, a fall of 45 from the prior quarter. Five major banks held 97% of the amounts and 88% of the exposure. The CEO’s are sorry for their risky behavior, but they are still engaged in it in a bigger way than ever. More...

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Investment Opportunity or Economic Catasrophe? Coming Soon
By Deep Caster LLC
Posted January 16, 2010

“…To put it bluntly, Faber says, ‘we are doomed’…

Faber, a long-time critic of U.S. policies, argues the private sector acted rationally after 2008 by deleveraging and increasing its savings. The government, on the other hand, added more debt and leverage. They can get away with it for now because interest rates are low. Eventually, interest rates will rise, causing the public sector debt bubble to burst under the weight of government entitlement programs like Medicare, Medicaid and Social Security…

The only way out is for the government to print more dollars. Of course, that leads to inflation and a weak dollar. And, even worse, he says, ‘to distract the attention of ordinary people you go to war’… ”

Now this is a guaranteed rape job. More...

 
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