The attention that Taibbi is receiving for the Rolling Stone essay, The $9 Billion Witness: Meet JPMorgan Chase’s Worst Nightmare, may push forward a serious debate on the systemic corruption that is common knowledge among informed observers of the financial structure. Zero Hedge can always be depended upon to incisively sum up the issue.
“In reality, there is nothing surprising in Matt Taibbi’s latest piece since returning to Rolling Stone from the Intercept, as it tells a story everyone is by now is all too familiar with: a former bank employee (in this case Alayne Fleischmann) who was a worker in a bank’s (in this case JPM) mortgage operations group, where she observed and engaged in what she describes as “massive criminal securities fraud” and who was fired after trying to bring the attention of those above her to said “criminal” activity.
The story doesn’t end there, and as Carmen Segarra already showed, when she revealed that Goldman runs the NY Fed, once Alayne was let go and tried to “whistleblow” on the house of Jimon from the outside, she found the that US Department of Justice headed by Eric Holder is just as, if not more, corrupt, and in his desperate attempt to prevent discovery and bring JPM et al to justice, he would stretch the statue of limitations on frauds committed during the crisis long enough to where nobody had any legal recourse any more, up to and including the US taxpayer.”
Well, that is a sober and tragic assessment. Even more heartbreaking is the statement made by Ms. Fleischmann as reported in Straight Line Logic.
“And now, with Holder about to leave office and his Justice Department reportedly wrapping up its final settlements, the state is effectively putting the finishing touches on what will amount to a sweeping, industrywide effort to bury the facts of a whole generation of Wall Street corruption. “I could be sued into bankruptcy,” she says. “I could lose my license to practice law. I could lose everything. But if we don’t start speaking up, then this really is all we’re going to get: the biggest financial cover-up in history.”
The only coherent response that regular citizens can exert, when dealing with the mega financial houses, is to avoid entanglements whenever possible. What good is it to establish accounts, whether as loans, savings or investments, when the rules of survival are stacked against main street customers?
Firms like JP Morgan or Goldman are not terrified by fines because they are protected by the “To Big To Fail” culture. Bailouts are a way of life and infusion of easy money into the liquidity flow of balance sheets employ the most creative accounting techniques to cover up accurate net worth.
The threat of principals actually doing jail time is so remote that the probability is far greater that the next Secretary of the Treasury will come from their ranks.
This plight produces a true dilemma of confidence. In this environment only brave souls dare become a whistleblower. Public support for such individuals like Fleischmann and Segarra is faint because neither are public persons, readily recognized by most people. This lack of notoriety as individuals is far less important than the criminal activity both are documenting.
However, in a media driven and social networking society, the personality of celebrity far out paces the substance of the offenses. Matt Taibbi’s star persona, deserved or manufactured, illustrates that getting attention through the clutter and noise of the sound bites is possible. For an unknown person, getting your 15 minutes of fame requires even more creative strategies, to expose the basic purpose in the news revelations.
The dying main stream presstitutes will not confront the intrinsic nature of the abuses because their own financial futures depend upon Wall Street support. Yet, struggling Middle America foolishly rely upon their reporting and advice in most financial matters.
JPMorgan Chase’s Worst Nightmare fundamentally is the unwinding of the derivative debt black hole of their making. The essential risk of a collapse and implosion of the financial manipulated markets only grows because no effort or willingness exists to purge the system of crooked companies, practices or individuals. The culture of corruption survives because the pattern of exposing and demanding justice is so brutally punished.
How can meaningful accountability come from internal reform, when the price of disclosure is the end of your professional endeavors and even your livelihood?
Arguments, data and evidence of generational embedded fraud have been made by some of the most intuitive minds on finance and economics. Nonetheless, the degeneracy accelerates. The wolves of Wall Street target their prey when they lobby regulators to allow for more exotic financial products that are designed to fleece the public and place the entire monitory system in greater jeopardy.
Activists rally during elections cycles to pressure the establishment. The Occupy Wall Street movement, misguided on potential solutions, did muster awareness with media exposure. However, most taxpayers do not exert sufficient outrage about the selling out of their financial security.
Stopping “massive criminal securities fraud” is a true national security requirement. Internet revelations can only expose the latest schemes. As stated in the essay, Repeal of Glass-Steagall and the Too Big To Fail Culture, is a major reason for the current unsustainable breakdown in trust and lack of liability consequences for financial institutions.
Take the opportunity of the Alayne Fleischmann disclosures to demand that your newly elected representatives exert the courage to advance a national debate on a major overhaul of the ground rules for Wall Street.
While the prospects are slim that any constructive and critical legislation will come out of the new Congress, public indignation needs to grow and intensify. The battle for economic viability and perseverance of capital is being lost for ordinary citizens. An angry constituency is necessary to confront the outrageous abuses that pass as normal conduct. The sacrifices of Alayne Fleischmann and Carmen Segarra need not be in vain. Mobilize for action; boycott the big banks and security fraudsters.
“It’s not the underlying economics that’s driving things, it’s central bank liquidity.”
— Matt King, Citigroup
Soaring auto sales are not so much a sign of a strong economy as they are an indication of financial hanky-panky. We saw this same type of fakery play out in housing between 2004 – 2006, when prices went through the roof due to a mortgage-lending scam (“subprime”) that crashed the stock market and sent the economy reeling. Now the bigtime money guys are at it again, writing up auto loans for anyone who can sit upright in a chair and scribble an “X” on the dotted line. As a result, car sales have surged to over 16 million for the last 6 months. (A full 7 million more than the low point in January, 2009.) And it’s not hard to see why either. The finance gurus are packaging these sketchy subprimes into bonds, offloading them on eager investors, and recycling the profits into more crappy loans. It’s a perfect circle and it won’t end until the loans start blowing up, jittery investors head for the exits, and Uncle Sugar rides to the rescue with more bailouts.
But we’re getting ahead of ourselves. First take a look at these charts by House of Debt which shows the disparity between auto spending and other types of spending since the end of the slump in 2009.
House of Debt: “New auto purchases have driven the consumer spending recovery to a large degree. The chart below shows the spending recovery for new auto sales and for all other retail spending…
From 2009 to 2013, spending on new autos increased by 40% in nominal terms. All other spending increased by only 20%. Further, excluding autos, 2013 saw lower growth in nominal retail spending than 2012…
The concern is that a lot of auto purchases are being fueled with debt, given a strong recovery in the auto loan market. Below is the net flow of auto loans from 2002 to 2013. It is a net flow because it includes pay downs in addition to new originations. As it shows, auto lending in 2012 and 2013 tops any other year during the previous expansion from 2002 to 2007 (although it is still below the amount of new auto loans in 2000 and 2001).
(“Another Debt-Fueled Spending Spree?” House of Debt)
How about that? So there’s a bigger debt bubble in auto loans today than there was before the bust. But why? Is it because demand is strong, jobs are plentiful, wages are rising, the economy is growing, and people are optimistic about the future?
Heck, no. It’s because rates are low, credit is easy, and dealers are ready to put anyone with a license and a heartbeat into a brand-spanking new car no questions asked. Here are the details from an article in the New York Times titled “In a Subprime Bubble for Used Cars, Borrowers Pay Sky-High Rates” by Jessica Silver-Greenberg and Michael Corkery:
”Auto loans to people with tarnished credit have risen more than 130 percent in the five years since the immediate aftermath of the financial crisis, with roughly one in four new auto loans last year going to borrowers considered subprime — people with credit scores at or below 640.
The explosive growth is being driven by some of the same dynamics that were at work in subprime mortgages. A wave of money is pouring into subprime autos, as the high rates and steady profits of the loans attract investors. Just as Wall Street stoked the boom in mortgages, some of the nation’s biggest banks and private equity firms are feeding the growth in subprime auto loans by investing in lenders and making money available for loans.
And, like subprime mortgages before the financial crisis, many subprime auto loans are bundled into complex bonds and sold as securities by banks to insurance companies, mutual funds and public pension funds — a process that creates ever-greater demand for loans.
The New York Times examined more than 100 bankruptcy court cases, dozens of civil lawsuits against lenders and hundreds of loan documents and found that subprime auto loans can come with interest rates that can exceed 23 percent. The loans were typically at least twice the size of the value of the used cars purchased, including dozens of battered vehicles with mechanical defects hidden from borrowers. Such loans can thrust already vulnerable borrowers further into debt, even propelling some into bankruptcy, according to the court records, as well as interviews with borrowers and lawyers in 19 states.
In another echo of the mortgage boom, The Times investigation also found dozens of loans that included incorrect information about borrowers’ income and employment, leading people who had lost their jobs, were in bankruptcy or were living on Social Security to qualify for loans that they could never afford.” (“In a Subprime Bubble for Used Cars, Borrowers Pay Sky-High Rates”, New York Times)
Can you believe that this kind of chicanery is going on in broad daylight without the regulators stepping in? Think about it for a minute: If the NYT’s journalists can find “dozens of loans that included incorrect information about borrowers’ income and employment”, then why can’t the government regulators? It’s ridiculous. What we’re talking about here is a new version of “liar’s loans” where dealers are helping people who don’t have the means to repay the debt, to fudge the details on their loan application so they can drive off in a shiny new Impala.
Haven’t we seen this movie before?
Here’s more from USA Today: “In the first quarter of 2014, 24.9% of all new-car loans were 73 to 84 months long. Four years ago, less than 10% of loans were that long. In fact, such lengthy terms have pulled the average new-car loan to 66 months. That’s an all-time record.”
7 years to pay off a car? You got to be kidding me? It’s like a second mortgage. And there’s more, too. The average monthly payment and average amount financed hit record highs in the first quarter too. This is from Auto News:
“The average monthly new-vehicle payment was $474 in the first quarter, up 3.3 percent from a year ago. The average monthly used-vehicle payment was $352, up 1.1 percent, Experian Automotive said.
Also in the first quarter, the average amount financed on a new-vehicle loan was $27,612, an increase of $964, or 3.6 percent. For used vehicles, the average amount financed was $17,927, up $395 or 2.3 percent.”
So Americans are not just loading on more debt, they’re also assuming that they’re financial situation is going to be stable enough to make these large payments well into the future. Good luck with that.
It’s also worth noting that, in many transactions, dealers are actually lending more than the value of the vehicle. According to Reuters David Henry,
“The average loan-to-value on new cars rose to 110.6 percent… On used cars it rose to 133.2 percent…
Auto lenders often provide loans that exceed the value of cars they are financing because borrowers want cash to pay sales taxes and fees.”
(“U.S. car buyers borrow more as rates fall and standards loosen“, David Henry, Reuters)
Let me see if I got this straight: You walk onto a car lot without a dime in your pocket, and drive off in a brand new car with everything paid for upfront? Such a deal! Can you see why we think that the sales numbers are a big fake? This isn’t the sign of a strong economy. It’s the sign of another gigantic credit bubble rip-off. But what do the dealers get out of this thing? Is it really worth their while to botch the underwriting when they know that eventually they’ll have to repossess the vehicle? Sure, it is, because there’s big money in stuffing people into loans they can’t afford.
Here’s how the Times explains it: ”Auto loans to borrowers considered subprime, those with credit scores at or below 640, have spiked in the last five years. The jump has been driven in large part by the demand among investors for securities backed by the loans, which offer high returns at a time of low interest rates. Roughly 25 percent of all new auto loans made last year were subprime, and the volume of subprime auto loans reached more than $145 billion in the first three months of this year.”
Bingo. So not only do they make dough on the high interest rates they charge their subprime borrowers, (Sometimes 23 percent or more.) they also make it by selling the loan to investors who are eager to buy any manner of crappy bond provided it offers a better return than US Treasuries. This is the mess Bernanke created by fixing interest rates at zero for nearly 6 years. Zirp (zero interest rate policy) unavoidably leads to excessive risk taking by yield-crazed speculators. The voracious appetite for subprime securities (ABS–Asset-Backed Securities) has even surprised the bond issuers who are constantly beating the bushes looking for sketchier products. This is from the same article by the NY Times:
“Investors, seeking a higher return when interest rates are low, recently flocked to buy a bond issue from Prestige Financial Services of Utah. Orders to invest in the $390 million debt deal were four times greater than the amount of available securities.
What is backing many of these securities? Auto loans made to people who have been in bankruptcy.
An affiliate of the Larry H. Miller Group of Companies, Prestige specializes in making the loans to people in bankruptcy, packaging them into securities and then selling them to investors.
“It’s been a hot space,” Richard L. Hyde, the firm’s chief operating officer, said during an interview in March. Investors are betting on risky borrowers. The average interest rate on loans bundled into Prestige’s latest offering, for example, is 18.6 percent, up slightly from a similar offering rolled out a year earlier…. To meet that rising demand, Wall Street snatches up more and more loans to package into the complex investments.” (NYT)
HA! Now there’s a good way to feather the old retirement fund; load up on bonds made up of loans to people who’ve gone bust.
This is the impact that zero rates have on investor behavior. The abundance of cheap and plentiful liquidity invariably leads to trouble. And there are victims in this Central Bank-authored gold rush too, namely the unsophisticated borrowers who pay prohibitively high rates on beater vehicles that are typically worth less-than-half the value of the loan. (Check the NYT article for examples.)
The Times also notes that the ratings agencies have been playing along with the finance companies just as they did during the subprime mortgage fiasco. Here’s more from the Times:
“Rating agencies, which assess the quality of the bonds, are helping fuel the boom. They are giving many of these securities top ratings, which clears the way for major investors, from pension funds to employee retirement accounts, to buy the bonds. In March, for example, Standard & Poor’s blessed most of Prestige’s bond with a triple-A rating. Slices of a similar bond that Prestige sold last year also fetched the highest rating from S.&P. A large slice of that bond is held in mutual funds managed by BlackRock, one of the world’s largest money managers.” (NYT)
Ask yourself this, dear reader: How are the ratings agencies able to give “many of these securities top ratings”, when the investigators from the Times found “dozens of loans that included incorrect information about borrowers’ income and employment, leading people who had lost their jobs, were in bankruptcy or were living on Social Security to qualify for loans that they could never afford”?
Let’s face it: The regulatory changes in Dodd-Frank haven’t done a damn thing to protect the victims of these dodgy subprime schemes. Borrowers and investors are both getting gouged by a system that only protects the interests of the perpetrators. The sad fact is that nothing has changed. The system is just as corrupt as it was when Lehman went down.
So, how long can this go on before the market implodes?
According to the Times:
“financial firms are beginning to see signs of strain. In the first three months of this year, banks had to write off as entirely uncollectable an average of $8,541 of each delinquent auto loan, up about 15 percent from a year earlier, according to Experian…
In another sign of trouble ahead, repossessions, while still relatively low, increased nearly 78 percent to an estimated 388,000 cars in the first three months of the year from the same period a year earlier, according to the latest data provided by Experian. The number of borrowers who are more than 60 days late on their car payments also jumped in 22 states during that period….” (NYT)
(According to Amber Nelson at loan.com: “In the second quarter, the value of all auto loans late by 60 days or more was more than $4 billion, up 27 percent from the prior year, according to Experian.”)
So, yeah, the trouble is mounting, but that doesn’t mean that this madness won’t continue for some time to come. It probably will. It’ll probably drag-on until the economy turns south and more borrowers start falling behind on their payments. That will lead to more defaults, heavier losses on auto bonds, and a hasty race to the exits by investors. Isn’t that how the subprime mortgage scam played out?
Indeed. But at least there are signs of hope on the regulatory front. Check out this clip from an article at CNBC:
“In August, both Santander Consumer and General Motors Financial Co. acknowledged receiving Justice Department subpoenas in connection with a probe over possible violations of civil-fraud laws. And the Consumer Financial Protection Bureau and the Securities and Exchange Commission have both stepped up their scrutiny of the auto-loan market.” (“New debt crisis fear: Subprime auto loans“, CNBC)
So the SEC, the DOJ, and the CFPB are actually investigating the underwriting practices of these behemoth finance companies to see if they violated “civil fraud laws”?
Will wonders never cease?
Just don’t hold your breath waiting for convictions.
15 Reasons Why Americans Think We’re Still in a Recession…
1: Wage Stagnation: Why America’s Workers Need Faster Wage Growth—And What We Can Do About It, Elise Gould, EPI
Economic Policy Institute:
“The hourly compensation of a typical worker grew in tandem with productivity from 1948-1973. …. After 1973, productivity grew strongly, especially after 1995, while the typical worker’s compensation was relatively stagnant. This divergence of pay and productivity has meant that many workers were not benefitting from productivity growth—the economy could afford higher pay but it was not providing it.
Between 1979 and 2013, productivity grew 64.9 percent, while hourly compensation of production and nonsupervisory workers, who comprise over 80 percent of the private-sector workforce, grew just 8.0 percent. Productivity thus grew eight times faster than typical worker compensation…” (EPI)
(Note: Flatlining wages are the Number 1 reason that the majority of Americans still think we’re in a recession.)
2: Most people still haven’t recouped what they lost in the crash: Typical Household Wealth Has Plunged 36% Since 2003, Zero Hedge
“According to a new study by the Russell Sage Foundation, the inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36% decline… Welcome to America’s Lost Decade.
Simply put, the NY Times notes, it’s not merely an issue of the rich getting richer. The typical American household has been getting poorer, too.
The reasons for these declines are complex and controversial, but one point seems clear: When only a few people are winning and more than half the population is losing, surely something is amiss. (chart)”
3: Most working people are still living hand-to-mouth: 76% of Americans are living paycheck-to-paycheck, CNN Money
“Roughly three-quarters of Americans are living paycheck-to-paycheck, with little to no emergency savings, according to a survey released by Bankrate.com Monday.
Fewer than one in four Americans have enough money in their savings account to cover at least six months of expenses, enough to help cushion the blow of a job loss, medical emergency or some other unexpected event, according to the survey of 1,000 adults. Meanwhile, 50% of those surveyed have less than a three-month cushion and 27% had no savings at all…
Last week, online lender CashNetUSA said 22% of the 1,000 people it recently surveyed had less than $100 in savings to cover an emergency, while 46% had less than $800. After paying debts and taking care of housing, car and child care-related expenses, the respondents said there just isn’t enough money left over for saving more.”
4: Millennials are Drowning in Red Ink: Biggest economic threat? Student loan debt, USA Today
“Total student loan debt has grown more than 150% since 2005… We have more than $1.2 trillion of student loan debt…
And while 6.7 million borrowers in repayment mode are delinquent, the sad fact is that many lenders aren’t exactly incentivized to work with borrowers. Unlike all other forms of debt, student loans can’t be discharged in bankruptcy. Moreover, lenders can garnish wages and even Social Security benefits to get repaid…
In 2005 student loans accounted for less than 13% of the total debt load for adults age 20-29. Today, student loans account for nearly 37% of that group’s outstanding debt. Student loan debt’s slice of the total debt pie for the age group nearly tripled! The average loan balance for that age group is now more than $25,500, up from $15,900 in 2005.”
5: Downward mobility is the new reality: Middle-Class Death Watch: As Poverty Spreads, 28 Percent of Americans Fall Out of Middle Class, Truthout
“The promise of the American dream has given many hope that they themselves could one day rise up the economic ladder. But according to a study released those already in financially-stable circumstances should fear falling down a few rungs too. The study… found that nearly a third of Americans who were part of the middle class as teenagers in the 1970s have fallen out of it as adults… its findings suggest the relative ease with which people in the U.S. can end up in low-income, low-opportunity lifestyles — even if they started out with a number of advantages. Though the American middle class has been repeatedly invoked as a key factor in any economic turnaround, numerous reports have suggested that the middle class enjoys less existential security than it did a generation ago, thanks to stagnating incomes and the decline of the industrial sector.”
6: People are more vulnerable than ever: “More Than Half Of All Americans Can’t Come Up With $400 In Emergency Cash… Unless They Borrow“, Personal Liberty
“According to a Federal Reserve report on American households’ “economic well-being” in 2013, fewer than half of all Americans said they’d be able to come up with four Benjamins on short notice to deal with an unexpected expense…
Under a section titled “Savings,” the report notes that “[s]avings are depleted for many households after the recession,” and lists the following findings:
*Among those who had savings prior to 2008, 57 percent reported using up some or all of their savings in the Great Recession and its aftermath.
*39 percent of respondents reported having a rainy day fund adequate to cover three months of expenses.
*Only 48 percent of respondents said that they would completely cover a hypothetical emergency expense costing $400 without selling something or borrowing money.
7: Working people are getting poorer: The Typical Household, Now Worth a Third, New York Times
“The inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36 percent decline, according to a study financed by the Russell Sage Foundation.
Those are the figures for a household at the median point in the wealth distribution — the level at which there are an equal number of households whose worth is higher and lower. But during the same period, the net worth of wealthy households increased substantially….“The housing bubble basically hid a trend of declining financial wealth at the median that began in 2001,” said Fabian T. Pfeffer, the University of Michigan professor who is lead author of the Russell Sage Foundation study.
The reasons for these declines are complex and controversial, but one point seems clear: When only a few people are winning and more than half the population is losing, surely something is amiss.”
8: Most people can’t even afford to get their teeth fixed: 7 things the middle class can’t afford anymore, USA Today
“A vacation is an extra expense that many middle-earners cannot afford without sacrificing something else. A Statista survey found that this year 54% of people gave up purchasing big ticket items like TVs or electronics so they can go on a vacation. Others made sacrifices like reducing or eliminating their trips to the movies (47%), reducing or eliminating trips out to restaurants (43%), or avoiding purchasing small ticket items like new clothing (43%).
3–To pay off debt…
According to the U.S. Department of Health and Human Services, “the U.S. spends about $64 billion each year on oral health care — just 4% is paid by Government programs.” About 108 million people in the U.S. have no dental coverage and even those who are covered may have trouble getting the care they need, the department reports.”
9: The good, high-paying jobs have vanished: Recovery Has Created Far More Low-Wage Jobs Than Better-Paid Ones, New York Times
“The deep recession wiped out primarily high-wage and middle-wage jobs. Yet the strongest employment growth during the sluggish recovery has been in low-wage work, at places like strip malls and fast-food restaurants.
In essence, the poor economy has replaced good jobs with bad ones. That is the conclusion of anew report from the National Employment Law Project, a research and advocacy group, analyzing employment trends four years into the recovery.
“Fast food is driving the bulk of the job growth at the low end — the job gains there are absolutely phenomenal,” said Michael Evangelist, the report’s author. “If this is the reality — if these jobs are here to stay and are going to be making up a considerable part of the economy — the question is, how do we make them better?”
10: More workers are throwing in the towel: Labor Participation Rate Drops To 36 Year Low; Record 92.6 Million Americans Not In Labor Force, Zero Hedge
“For those curious why the US unemployment rate just slid once more to a meager 5.9%, the lowest print since the summer of 2008, the answer is the same one we have shown every month since 2010: the collapse in the labor force participation rate, which in September slid from an already three decade low 62.8% to 62.7% – the lowest in over 36 years, matching the February 1978 lows. And while according to the Household Survey, 232,000 people found jobs, what is more disturbing is that the people not in the labor force, rose to a new record high, increasing by 315,000 to 92.6 million!
Bottom line: Unemployment has gone down because more people aren’t working and have fallen off the radar.”
11: Nearly twice as many people still rely on Food Stamps than before the recession: Food-stamp use is falling from its peak, Marketwatch
“Food-stamp use is finally moving away from the peak. At 46.1 million people, total food-stamp usage is down about 4% from its high in December 2012 of 47.8 million. Only eight states in March (the latest data available) were up from the same month of 2013.
It’s still not great news, however, considering there were 26.3 million people receiving food stamps in 2007…”
12: The ocean of red ink continues to grow: American Household Credit Card Debt Statistics: 2014, Nerd Wallet Finance
Nerd Wallet Finance:
U.S. household consumer debt profile:
*Average credit card debt: $15,607
*Average mortgage debt: $153,500
*Average student loan debt: $32,656
In total, American consumers owe:
*$11.63 trillion in debt
*An increase of 3.8% from last year
*$880.5 billion in credit card debt
*$8.07 trillion in mortgages
*$1,120.3 billion in student loans
*An increase of 11.5% from last year
13: No Recovery for working people: The collapse of household income in the US, World Socialist Web Site
“The US Federal Reserve’s latest Survey of Consumer Finances, released last Thursday, documents a devastating decline in economic conditions for a large majority of the population during the so-called economic recovery.
The report reveals that between 2007 and 2013, the income of a typical US household fell 12 percent. The median American household now earns $6,400 less per year than it did in 2007.
Source: Federal Reserve Survey of Consumer Finances
Much of the decline occurred during the “recovery” presided over by the Obama administration. In the three years between 2010 and 2013, the annual income of a typical household fell by an additional 5 percent.
The report also shows that wealth has become even more concentrated in the topmost economic layers. The wealth share of the top 3 percent climbed from 44.8 percent in 1989 to 54.4 percent in 2013. The share of wealth held by the bottom 90 percent fell from 33.2 percent in 1989 to 24.7 percent in 2013.”
14: Most people will work until they die: The Greatest Retirement Crisis In American History, Forbes
“We are on the precipice of the greatest retirement crisis in the history of the world. In the decades to come, we will witness millions of elderly Americans, the Baby Boomers and others, slipping into poverty.
Too frail to work, too poor to retire will become the “new normal” for many elderly Americans.
That dire prediction… is already coming true. Our national demographics, coupled with indisputable glaringly insufficient retirement savings and human physiology, suggest that a catastrophic outcome for at least a significant percentage of our elderly population is inevitable. With the average 401(k) balance for 65 year olds estimated at $25,000 by independent experts …the decades many elders will spend in forced or elected “retirement” will be grim…
The signs of the coming retirement crisis are all around you. Who’s bagging your groceries: a young high school kid or an older “retiree” who had to go back to work to supplement his income or qualify for health insurance?”
15: Americans are more pessimistic about the future, Polling Report
According to a CNN/ORC Poll May 29-June 1, 2014:
“Do you agree or disagree? The American dream has become impossible for most people to achieve.”
According to a NBC News/Wall Street Journal Poll conducted by the polling organizations of Peter Hart (D) and Bill McInturff (R). April 23-27, 2014:
“Do you agree or disagree with the following statement? Because of the widening gap between the incomes of the wealthy and everyone else, America is no longer a country where everyone, regardless of their background, has an opportunity to get ahead and move up to a better standard of living.”Agree: 54%
Also, according to a CBS News Poll. Jan. 17-21, 2014. N=1,018 adults nationwide.
“Looking to the future, do you think most children in this country will grow up to be better off or worse off than their parents?”Better off: 34%
Worse off: 63%
The majority of people in the United States, no longer believe in the American dream, or that America is the land of opportunity, or that their children will have a better standard of living than their own. They’ve grown more pessimistic because they haven’t seen the changes they were hoping for, and because their lives are just as hard as they were right after the crash. In fact, according to a 2014 Public Religion Research Institute poll– 72 percent of those surveyed said they think “the economy is still in recession.”
Judging by the info in the 15 links above, they’re probably right.
Here we go again.
Last week, the country’s biggest mortgage lenders scored a couple of key victories that will allow them to ease lending standards, crank out more toxic assets, and inflate another housing bubble. Here’s what’s going on.
On Monday, the head of the Federal Housing Finance Agency (FHFA), Mel Watt, announced that Fannie and Freddie would slash the minimum down-payment requirement on mortgages from 5 percent to 3 percent while making loans more available to people with spotty credit. If this all sounds hauntingly familiar, it should. It was less than 7 years ago that shoddy lending practices blew up the financial system precipitating the deepest slump since the Great Depression. Now Watt wants to repeat that catastrophe by pumping up another credit bubble. Here’s the story from the Washington Post:
“When it comes to taking out a mortgage, two factors can stand in the way: the price of the mortgage,…and the borrower’s credit profile.”
On Monday, the head of the agency that oversees the mortgage giants Fannie Mae and Freddie Mac outlined … how he plans to make it easier for borrowers on both fronts. Mel Watt, director of the Federal Housing Finance Agency, did not give exact timing on the initiatives. But most of them are designed to encourage the industry to extend mortgages to a broader swath of borrowers.
Here’s what Watt said about his plans in a speech at the Mortgage Bankers Association annual convention in Las Vegas:
Saving enough money for a downpayment is often cited as the toughest hurdle for first-time buyers in particular. Watt said that Fannie and Freddie are working to develop “sensible and responsible” guidelines that will allow them to buy mortgages with down payments as low as 3 percent, instead of the 5 percent minimum that both institutions currently require.”
Does Watt really want to “encourage the industry to extend mortgages to a broader swath of borrowers” or is this just another scam to enrich bankers at the expense of the public? It might be worth noting at this point that Watt’s political history casts doubt on his real objectives. According to Open Secrets, among the Top 20 contributors to Watt’s 2009-2010 campaign were Goldman Sachs, Bank of America, Citigroup Inc., Bank of New York Mellon, American bankers Association, US Bancorp, and The National Association of Realtors. (“Top 20 Contributors, 2009-2010“, Open Secrets)
Man oh man, this guy’s got all of Wall Street rooting for him. Why is that, I wonder? Is it because he’s faithfully executing his office and defending the public’s interests or is it because he’s a reliable stooge who brings home the bacon for fatcat bankers and their brood?
This is such a farce, isn’t it? I mean, c’mon, do you really think that the big banks make political contributions out of the kindness of their heart or because they want something in return? And do you really think that a guy who is supported by Goldman Sachs has your “best interests” in mind? Don’t make me laugh.
The reason that Obama picked Watt was because he knew he could be trusted to do whatever Wall Street wanted, and that’s precisely what he’s doing. Smaller down payments and looser underwriting are just the beginning; teaser rates, balloon payments, and liars loans are bound to follow. In fact, there’s a funny story about credit scores in the Washington Post that explains what’s really going on behind the scenes. See if you can figure it out:
“Most housing advocates agree that a bigger bang for the buck would come from having lenders lower the unusually high credit scores that they’re now demanding from borrowers.
After the housing market tanked, Fannie and Freddie forced the industry to buy back billions of dollars in loans. In a bid to protect themselves from further financial penalties, lenders reacted by imposing credit scores that exceed what Fannie and Freddie require. Housing experts say the push to hold lenders accountable for loose lending practices of the past steered the industry toward the highest-quality borrowers, undermining the mission of Fannie and Freddie to serve the broader population, including low- to moderate- income borrowers.
Today, the average credit score on a loan backed by Fannie and Freddie is close to 745, versus about 710 in the early 2000s, according to Moody’s Analytics. And lenders say they won’t ease up until the government clarifies rules that dictate when Fannie and Freddie can take action against them.” (Washington Post)
Can you see what’s going on? The banks have been requiring higher credit scores than Fannie or Freddie.
But why? After all, the banks are in the lending business, so the more loans they issue the more money they make, right?
Right. But the banks don’t care about the short-term dough. They’d rather withhold credit and slow the economy in order to blackmail the government into doing what they want.
And what do they want?
They want looser regulations and they want to know that Fannie and Freddie aren’t going to demand their money back (“put backs”) when they sell them crappy mortgages that won’t get repaid. You see, the banks figure that once they’ve off-loaded a loan to Fannie and Freddie, their job is done. So, if the mortgage blows up two months later, they don’t think they should have to pay for it. They want the taxpayer to pay for it. That’s what they’ve been whining about for the last 5 years. And that’s what Watt is trying to fix for them. Here’s the story from Dave Dayen:
“Watt signaled to mortgage bankers that they can loosen their underwriting standards, and that Fannie and Freddie will purchase the loans anyway, without much recourse if they turn sour. The lending industry welcomed the announcement as a way to ease uncertainty and boost home purchases, a key indicator for the economy. But it’s actually a surrender to the incorrect idea that expanding risky lending can create economic growth.
Watt’s remarks come amid a concerted effort by the mortgage industry to roll back regulations meant to prevent the type of housing market that nearly obliterated the economy in 2008. Bankers have complained to the media that the oppressive hand of government prevents them from lending to anyone with less-than-perfect credit. Average borrower credit scores are historically high, and lenders make even eligible borrowers jump through enough hoops to garner publicity. Why, even Ben Bernanke can’t get a refinance done! (Actually, he could, and fairly easily, but the anecdote serves the industry’s argument.)
(“The Mortgage Industry Is Strangling the Housing Market and Blaming the Government“, Dave Dayen, The New Republic)
Can you see what a fraud this is? 6 years have passed since Lehman crashed and the scum-sucking bankers are still fighting tooth-and-nail to unwind the meager provisions that have been put in place to avoid another system-shattering disaster. It’s crazy. These guys should all be in Gitmo pounding rocks and instead they’re setting the regulatory agenda. Explain that to me? And this whole thing about blackmailing the government because they don’t want to be held responsible for the bad mortgages they sold to the GSE’s is particularly irritating. Here’s more from Dave Dayen:
“After the housing market tanked, Fannie and Freddie forced the industry to buy back billions of dollars in loans. In a bid to protect themselves from further financial penalties, lenders reacted by imposing credit scores that exceed what Fannie and Freddie require. ….And lenders say they won’t ease up until the government clarifies rules that dictate when Fannie and Freddie can take action against them.”
So the industry has engaged in an insidious tactic: tightening lending well beyond required standards, and then claiming the GSEs make it impossible for them to do business. For example, Fannie and Freddie require a minimum 680 credit score to purchase most loans, but lenders are setting their targets at 740. They are rejecting eligible borrowers….so they can profit much more from a regulation-free zone down the line.
So, I ask you, dear reader; is that blackmail or is it blackmail?
And what does Watt mean when he talks about “developing sensible and responsible guidelines’ that will allow them (borrowers) to buy mortgages with down payments as low as 3 percent”?
What a joke. Using traditional underwriting standards, (the likes of which had been used for the entire post-war period until we handed the system over to the banks) a lender would require a 10 or 20 percent down, decent credit scores, and a job. The only reason Watt wants to wave those requirements is so the banks can fire-up the old credit engine and dump more crap-ass mortgages on Uncle Sam. That’s the whole thing in a nutshell. It’s infuriating!
Let me fill you in on a little secret: Down payments matter! In fact, people who put more down on a home (who have “more skin in the game”) are much less likely to default. According to David Battany, executive vice president of PennyMac, “there is a strong correlation between down payments to mortgage default. The risk of default almost doubles with every 1%.”
Economist Dean Baker says the same thing in a recent blog post:
“The delinquency rate, which closely follows the default rate, is several times higher for people who put 5 percent or less down on a house than for people who put 20 percent or more down.
Contrary to what some folks seem to believe, getting moderate income people into a home that they subsequently lose to foreclosure or a distressed sale is not an effective way for them to build wealth, even if it does help build the wealth of the banks.”
(“Low Down Payment Mortgages Have Much Higher Default Rates“, Dean Baker, CEPR)
Now take a look at this chart from Dr. Housing Bubble which helps to illustrate the dangers of low down payments in terms of increased delinquencies:
Data on mortgage delinquencies by downpayment. Source: Felix Salmon
“When the mortgage industry starts complaining about the 14 million people who would be denied the chance to buy a qualified mortgage if they don’t have a 5% downpayment, it’s worth remembering that qualified mortgages for people who don’t have a 5% downpayment have a delinquency rate of 16% over the course of the whole housing cycle.” (“Why a sizable down payment is important“, Dr. Housing Bubble)
So despite what Watt thinks, higher down payments mean fewer defaults, fewer foreclosures, fewer shocks to the market, and greater financial stability.
And here’s something else that Watt should mull over: The housing market isn’t broken and doesn’t need to be fixed. It’s doing just fine, thank you very much. First of all, sales and prices are already above their historic trend. Check it out from economist Dean Baker:
“If we compare total sales (new and existing homes) with sales in the pre-bubble years 1993-1995, they would actually be somewhat higher today, even after adjusting for population growth. While there may be an issue of many people being unable to qualify for mortgages because of their credit history, this does not appear to be having a negative effect on the state of market. Prices are already about 20 percent above their trend levels.” (“Total Home Sales Are At or Above Trend“, Dean Baker, CEPR)
Got it? Sales and prices are ALREADY where they should be, so there’s no need to lower down payments and ease credit to start another orgy of speculation. We don’t need that.
Second, the quality of today’s mortgages ARE BETTER THAN EVER, so why mess with success? Take a look at this from Black Knight Financial Services and you’ll see what I mean:
“Today, the Data and Analytics division of Black Knight Financial Services … released its November Mortgage Monitor Report, which found that loans originated in 2013 are proving to be the best-performing mortgages on record…..
“Looking at the most current mortgage origination data, several points become clear,” said Herb Blecher, senior vice president of Black Knight Financial Services’ Data & Analytics division. “First is that heightened credit standards have resulted in this year being the best-performing vintage on record. Even adjusting for some of these changes, such as credit scores and loan-to-values, we are seeing total delinquencies for 2013 loans at extremely low levels across every product category.”
Okay, so sales and prices are fine and mortgage quality is excellent. So why not leave the bloody system alone? As the saying goes: If it ain’t broke, don’t fix it.
But you know why they’re going to keep tinkering with the housing market. Everyone knows why. It’s because the banks can’t inflate another big-honking credit bubble unless they churn out zillions of shi**y mortgages that they offload onto Fannie and Freddie. That’s just the name of the game: Grind out the product (mortgages), pack it into sausages (securities and bonds), leverage up to your eyeballs (borrow as much as humanly possible), and dump the junk-paper on yield-chasing baboons who think they’re buying triple A “risk free” bonds.
Garbage in, garbage out. Isn’t this how the banks make their money?
You bet it is, and in that regard things have gotten a helluva a lot scarier since last Wednesday’s announcement that the banks are NOT going to be required to hold any capital against the securities they create from bundles of mortgages.
You read that right. According to the New York Times: “there will be no risk retention to speak of, at least on residential mortgage loans that are securitized.”
But how can that be, after all, it wasn’t subprime mortgages that blew up the financial system (subprime mortgages only totaled $1.5 at their peak), but the nearly $10 trillion in subprime infected mortgage-backed securities (MBS) that stopped trading in the secondary market after a French Bank stopped taking redemptions in July 2007. (a full year before the crisis brought down Lehman Brothers) . That’s what brought the whole rattling financial system to a grinding halt. Clearly, if the banks had had a stake in those shabby MBS— that is, if they were required to set aside 5 or 10 percent capital as insurance in the event that some of these toxic assets went south– then the whole financial collapse could have been avoided, right?
Right. It could have been avoided. But the banks don’t want to hold any capital against their stockpile of rancid assets, in fact, they don’t want to use their own freaking money at all, which is why 90 percent of all mortgages are financed by Uncle Sugar. It’s because the banks are just as broke as they were in 2008 when the system went off the cliff. Here’s a summary from the New York Times:
“Once upon a time, those who made loans would profit only if the loan were paid back. If the borrower defaulted, the lender would suffer.
That idea must have seemed quaint in 2005, as the mortgage lending boom reached a peak on the back of mushrooming private securitizations of mortgages, which were intended to transfer the risk away from those who made the loans to investors with no real knowledge of what was going on.
Less well remembered is that there was a raft of real estate securitizations once before, in the 1920s. The securities were not as complicated, but they had the same goal — making it possible for lenders to profit without risking capital.
The Dodd-Frank Act of 2010 set out to clean that up. Now, there would be “risk retention.” Lenders would have to have “skin in the game.” Not 100 percent of the risk, as in the old days when banks made mortgage loans and retained them until they were paid back, but enough to make the banks care whether the loans were repaid.
At least that was the idea. The details were left to regulators, and it took more than four years for them to settle on the details, which they did this week.
The result is that there will be no risk retention to speak of, at least on residential mortgage loans that are securitized.
“…..Under Dodd-Frank, the general rule was to be that if a lender wanted to securitize mortgages, that lender had to keep at least 5 percent of the risk…….But when the final rule was adopted this week, that idea was dropped.” (“Banks Again Avoid Having Any Skin in the Game”, New York Times)
No skin in the game, you say?
That means the taxpayer is accepting 100 percent of the risk. How fair is that?
Let’s review: The banks used to lend money to creditworthy borrowers and keep the loans on their books.
They don’t do that anymore, in fact, they’re not really banks at all, they’re just intermediaries who sell their loans to the USG or investors.
This arrangement has changed the incentives structure. Now the goal is quantity not quality. “How many loans can I churn-out and dump on Uncle Sam or mutual funds etc.” That’s how bankers think now. That’s the objective.
Regulations are bad because regulations stipulate that loans must be of a certain quality, which reduces the volume of loans and shrinks profits. (Can’t have that!) Therefore, the banks must use their money to hand-pick their own regulators (“You’re doin’ a heckuva job, Mel”) and ferociously lobby against any rules that limit their ability to issue credit to anyone who can fog a mirror. Now you understand how modern-day banking works.
It would be hard to imagine a more corrupt system.
Conspiracy theorists, those who look for the facts, ignoring the pressure of jeers, flawed appeals to authority, and intimidation, are the sanest among us. The steady migration of investigative journalists, who turn their backs on more lucrative employment, is only one indication of this.
In a recent article, Scientific Study Reveals Conspiracy Theorists The Most Sane Of All, the author, J. D. Hayes, cites a recent study, published July 2013, by psychologists Michael J. Wood and Karen M. Douglas of the University of Kent in the UK. It was entitled “‘What about Building 7?’ A Social Psychological Study of Online Discussion of 9/11 Conspiracy Theories.”
Their conclusion is that, contrary to those mainstream media stereotypes, “conspiracy theorists” appear to be more sane than people who accept official versions of controversial and contested events.
Attempts to demonize our perception on conspiracy theorists erects barriers to protect those whose profits are endangered by the truth.
These techniques for manufacturing opinion were outlined by Edward Bernays, whose book, “Propaganda,” asserts those who rule should use the trust accorded them in exactly this way.
Interestingly, Leo Strauss, whose political philosophy is in alignment with Bernays, asserted the same opinion. Strauss’ work was largely adopted by those who call themselves NeoConservatives who are anything but Conservative.
The opinion shared was that those in power are justified to lie, cheat and steal to keep and increase their power. The Kochs use these techniques in business and politically.
The use of the term, “Conspiracy Theory” increased rapidly in the wake of the JFK assassination due to its pejorative use in the MSM. This worked to stifle questions already being raised.
The issue which underlies the article by William Saletan, Conspiracy Theorists Aren’t Really Skeptics attempts to validate intellectual bullying, a logical extension of the philosophies of Bernays and Strauss. You don’t get more MSM than the Washington Post.
In the original formulation of American society those in positions of authority were morally and ethically obligated to explain themselves. The facts were to be available to all. Journalists investigated and reported the truth, as they saw it. This changed.
Saletan raised the issue of human psychology but failed to mention a perplexing issue which has long troubled us. This is the presence of those without conscience. For most of the 20th Century therapists believed these individuals could change, the problem was psychological. Today we know this is a neurological issue.
Advances in neurobiology have brought objective understanding. Now, thousands of criminals have been identified as psychopaths using an fMRI. The scan identified malfunctions in areas of the amygdala, which is now known to be associated with conscience, empathy, and compassion.
According to Dr. Robert Hare, serial murderers and con-men are always psychopaths. But Hare has also noted many who are also psychopathic are not violent and well able to control their impulses to gain far more expansive goals.
These individuals are highly intelligent. At any time there are 20,000 psychopaths with I.Q.s over 180 at large in the United States.
It would be instructive to see test results from MRI scans done on Dick Cheney, Karl Rove, and their cadre.
The cost of psychopathy has been calculated at around 360 billion a year – in the US. This does not include the highly intelligent ones which, clearly cost far more, given the impact of Cheney and company on America. Could the people who so desperately wanted torture as a tool be emotionally normal?
Today, experts believe the explanation for the financial meltdown now ongoing can be explained by the concentration of psychopathic individuals in corporations, finance and government.
The characteristics of the condition include calloused unconcern for others. This accounts for the oil companies which routinely externalize their costs, leaving those harmed by the toxic waste they cause, to struggle and die.
Those without conscience, willing to lie for their own profit, have long been with us. But today they can avoid the troublesome issue of having their actions known and understood. They have learned to spin.
To ensure this continues they must continue manufacturing public opinion about their previous actions. This is why they began using the term, “Conspiracy Theory.” They work vigorously to ensure the facts remain hidden.
Refusing to accept the officially mandated opinion on any subject, be in the JFK assassination or whether or not to give your child pharmaceuticals as treatment for ADHD has been used to categorize individuals who refuse to accept predigested conclusions as crazy, stupid or paranoid. When this happens, rest assured, some corporation’s profits could be impacted.
This is a form of control intended to intimidate and inject fear. It also marginalizes vast numbers of people, keeping them in fear so they can be controlled.
To that end they, I call them Greedvilleins, also use our love of each other, country, loyalty, and trust, to manipulate us into wars which profit them and place us in perpetual debt.
If you limit what is acceptable to hold as opinions and deny people full access to the facts you destroy the trust basis of our society. Emotionally normal people are not comfortable when they cannot trust those around them.
These are rational responses to existing conditions.
What is insane is trusting psychopaths. Yet these are now common in finance and government. You can be sure they will routinely act with a sublime lack of conscience, for your freedom, your assets and your very life.
To cope with these conditions many still refuse to think about it, thus avoiding extreme anxiety. Others, for instance those who look for the facts, and are demeaned as “conspiracy theorists.”
The presence of highly intelligent psychopaths among us, who generally avoid being prosecuted, is one of these explanations.
Saladan’s article passes today as investigative journalism. It pays well and explains why so many truly honest journalists left to work in the alternative media.
Ever since the 2008 financial collapse, banks have reduced their lending while accumulating U.S. Treasuries. On the surface placing capital into the safest depositor may seem prudent. On the other hand, Why Big Banks Are Suddenly Interested in Talking to You Again? According to Inc, “After years of turning away small-business borrowers, the country’s largest banks are now granting one out of five loan applications they receive. The 20 percent benchmark represents a post-recession high for big banks (assets of $10B+). Further, small banks have been approving more than half of the funding requests they receive.”
Such news would normally be welcomed. The Sovereign Man article, Here’s Why US Banks Are Now Extremely Vulnerable, presents a sober warning that the banking industry is at risk from a bond market sell-off.
“In just the last month alone American banks increased their holdings of US treasuries by $54 billion, to a record $1.99 trillion.
Facing $127 trillion in unfunded liabilities – which is nearly double 2012’s total global output – and with no inclination to reduce those numbers at all, at this point disaster for the US is entirely unavoidable.
Under the rather arbitrary Bank of International Settlements Basel capital adequacy rules government debt rated at least AA continues to carry a “zero risk” weighting. Meaning that banks do not need to set aside capital against it.
Beyond that, regulations imposed after the last crash to reduce risk require banks to hold $100 billion in liquid assets, which of course includes bonds. Thus, they are not only encouraged, but actually forced to buy government bonds.”
The fundamental change in the last six years is that the banks were rescued from normal capital requirements under a zero interest rate discount window. The inevitable result starved the small business and personal borrowing market from obtaining loans. With the loosing of funds to finance business and consumers, could the dire warning that the banks understand they need to rotate out of Treasuries, be the reason for the shift in lending?
However, the rush to come into compliance has America’s Banks Pile Up Treasuries as Deposits Overwhelm Lending. This explanation of a change in regulation ordains that U.S. Bonds are still a necessary component in their balance sheet.
“Rules approved Sept. 3 by the Fed, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. leave banks about $100 billion short of the $2.5 trillion in easy-to-sell assets that they need to meet the liquidity standard, according to the Fed. Lenders must reach 80 percent of their liquidity coverage ratios by January and have until the start of 2017 to reach full compliance.”
Illustrating this point, “Bank of America alone may need to purchase as much as $65 billion of government debt to become fully compliant, according to report last month from Marty Mosby, a banking analyst at Memphis, Tennessee-based Vining Sparks.”
Providing additional encouragement is a WSJ report that U.S. Bank Profits Near Record Levels.
“On the heels of the financial crisis, some lawmakers, regulators and consumers complained that banks weren’t lending enough. But steady improvement in credit quality, or borrowers’ ability to repay loans, is prompting banks not only to lend more but also to ease their standards.
The higher loan levels come as banks are easing up on their underwriting standards to borrowers. A Federal Reserve survey of senior loan officers released last week found that lenders were loosening standards and loan terms for commercial and industrial loans and commercial real-estate loans.”
Reconciling the need to keep buying treasuries and originating new loans to satisfy business demand is a challenging objective. By returning to the old fashion business model, of actually making loans to customers, banks are generating significant profits.
While graphs show the downward trend in loans since TARP, the current upturn is ready to be charted. Lending money for productive enterprise has contributed to a rise in GDP. The transition to a consumer based economy is dependent on the flow of transactions. When the pace of the velocity of money increases and confidence strengthens, prosperity usually follows.
The different in this feeble recovery phase is that the debt assumed by the Treasury, monetized within Federal Reserve liabilities, requires servicing no matter the health of the general economy. Near zero or cost free interest rates is approaching an expected crisis of uninterrupted maintenance. The exact trigger that drives up rates, while elusive to forecast, is inevitable in coming.
The Money Show article, Rising Rates? Beware of Big Banks, describes the predicament accordingly.
“The reality is that traditional commercial and consumer lending is no longer the big money maker that it used to be for banks. Since the 2008 financial crisis, households and businesses have been deleveraging—paying down debt—and demand for loans has been limp.
In recent years, the big banks have fattened their profits mainly from capital-markets businesses: Mergers and acquisitions, stock and bond offerings, and other types of trading. Rising interest rates also make the cost of capital go up for businesses, which can result in less deal making, lowering financing fees for the banks.”
Hype that loan demands have returned in earnest is overstated. Coming off such a low level, any modest increase looks bigger than it really is. That revered business cycle, simply is no longer the same.
So what happens in the catch-22 scenario when banks are adjusting to different capital requirements and Treasuries drop in price with a rise in interest rates? That’s the 64 trillion dollar question.
Banking is more about mathematics than business acumen when additional debt created money is needed to pay the service of obligations that come due. The roll over can be staggering. Banksters make up the monetary rules. That $127 trillion nut is bigger than all the bank reserves put together.
For those who argue the economy can grow its way out of this liquidity squeeze must have a time frame longer than the imaginative bag of tricks left in the vaults of banks.
You can’t believe a word the United States or its mainstream media say about the current conflict involving The Islamic State (ISIS).
You can’t believe a word France or the United Kingdom say about ISIS.
You can’t believe a word Turkey, Saudi Arabia, Qatar, Kuwait, Jordan, or the United Arab Emirates say about ISIS. Can you say for sure which side of the conflict any of these mideast countries actually finances, arms, or trains, if in fact it’s only one side? Why do they allow their angry young men to join Islamic extremists? Why has NATO-member Turkey allowed so many Islamic extremists to cross into Syria? Is Turkey more concerned with wiping out the Islamic State or the Kurds under siege by ISIS? Are these countries, or the Western powers, more concerned with overthrowing ISIS or overthrowing the Syrian government of Bashar al-Assad?
You can’t believe the so-called “moderate” Syrian rebels. You can’t even believe that they are moderate. They have their hands in everything, and everyone has their hands in them.
Iran, Hezbollah and Syria have been fighting ISIS or its precursors for years, but the United States refuses to join forces with any of these entities in the struggle. Nor does Washington impose sanctions on any country for supporting ISIS as it quickly did against Russia for its alleged role in Ukraine.
The groundwork for this awful mess of political and religious horrors sweeping through the Middle East was laid – laid deeply – by the United States during 35 years (1979-2014) of overthrowing the secular governments of Afghanistan, Iraq, Libya, and Syria. (Adding to the mess in the same period we should not forget the US endlessly bombing Pakistan, Somalia and Yemen.) You cannot destroy modern, relatively developed and educated societies, ripping apart the social, political, economic and legal fabric, torturing thousands, killing millions, and expect civilization and human decency to survive.
Particularly crucial in this groundwork was the US decision to essentially throw 400,000 Iraqis with military training, including a full officer corps, out onto the streets of its cities, jobless. It was a formula for creating an insurgency. Humiliated and embittered, some of those men would later join various resistance groups operating against the American military occupation. It’s safe to say that the majority of armored vehicles, weapons, ammunition, and explosives taking lives every minute in the Middle East are stamped “Made in USA”.
And all of Washington’s horses, all of Washington’s men, cannot put this world back together again. The world now knows these places as “failed states”.
Meanwhile, the United States bombs Syria daily, ostensibly because the US is at war with ISIS, but at the same time seriously damaging the oil capacity of the country (a third of the Syrian government’s budget), the government’s military capabilities, its infrastructure, even its granaries, taking countless innocent lives, destroying ancient sites; all making the recovery of an Assad-led Syria, or any Syria, highly unlikely. Washington is undoubtedly looking for ways to devastate Iran as well under the cover of fighting ISIS.
Nothing good can be said about this whole beastly situation. All the options are awful. All the participants, on all sides, are very suspect, if not criminally insane. It may be the end of the world. To which I say … Good riddance. Nice try, humans; in fact, GREAT TRY … but good riddance. ISIS … Ebola … Climate Change … nuclear radiation … The Empire … Which one will do us in first? … Have a nice day.
Is the world actually so much more evil and scary today than it was in the 1950s of my upbringing, for which I grow more nostalgic with each new horror? Or is it that the horrors of today are so much better reported, as we swim in a sea of news and videos?
After seeing several ISIS videos on the Internet, filled with the most disgusting scenes, particularly against women, my thought is this: Give them their own country; everyone who’s in that place now who wants to leave, will be helped to do so; everyone from all over the world who wants to go there will be helped to get there. Once they’re there, they can all do whatever they want, but they can’t leave without going through a rigorous interview at a neighboring border to ascertain whether they’ve recovered their attachment to humanity. However, since very few women, presumably, would go there, the country would not last very long.
The Berlin Wall – Another Cold War Myth
November 9 will mark the 25th anniversary of the tearing down of the Berlin Wall. The extravagant hoopla began months ago in Berlin. In the United States we can expect all the Cold War clichés about The Free World vs. Communist Tyranny to be trotted out and the simple tale of how the wall came to be will be repeated: In 1961, the East Berlin communists built a wall to keep their oppressed citizens from escaping to West Berlin and freedom. Why? Because commies don’t like people to be free, to learn the “truth”. What other reason could there have been?
First of all, before the wall went up in 1961 thousands of East Germans had been commuting to the West for jobs each day and then returning to the East in the evening; many others went back and forth for shopping or other reasons. So they were clearly not being held in the East against their will. Why then was the wall built? There were two major reasons:
1) The West was bedeviling the East with a vigorous campaign of recruiting East German professionals and skilled workers, who had been educated at the expense of the Communist government. This eventually led to a serious labor and production crisis in the East. As one indication of this, the New York Times reported in 1963: “West Berlin suffered economically from the wall by the loss of about 60,000 skilled workmen who had commuted daily from their homes in East Berlin to their places of work in West Berlin.”
It should be noted that in 1999, USA Today reported: “When the Berlin Wall crumbled , East Germans imagined a life of freedom where consumer goods were abundant and hardships would fade. Ten years later, a remarkable 51% say they were happier with communism.” Earlier polls would likely have shown even more than 51% expressing such a sentiment, for in the ten years many of those who remembered life in East Germany with some fondness had passed away; although even 10 years later, in 2009, the Washington Post could report: “Westerners [in Berlin] say they are fed up with the tendency of their eastern counterparts to wax nostalgic about communist times.”
It was in the post-unification period that a new Russian and eastern Europe proverb was born: “Everything the Communists said about Communism was a lie, but everything they said about capitalism turned out to be the truth.”
It should be further noted that the division of Germany into two states in 1949 – setting the stage for 40 years of Cold War hostility – was an American decision, not a Soviet one.
2) During the 1950s, American coldwarriors in West Germany instituted a crude campaign of sabotage and subversion against East Germany designed to throw that country’s economic and administrative machinery out of gear. The CIA and other US intelligence and military services recruited, equipped, trained and financed German activist groups and individuals, of West and East, to carry out actions which ran the spectrum from juvenile delinquency to terrorism; anything to make life difficult for the East German people and weaken their support of the government; anything to make the commies look bad.
It was a remarkable undertaking. The United States and its agents used explosives, arson, short circuiting, and other methods to damage power stations, shipyards, canals, docks, public buildings, gas stations, public transportation, bridges, etc; they derailed freight trains, seriously injuring workers; burned 12 cars of a freight train and destroyed air pressure hoses of others; used acids to damage vital factory machinery; put sand in the turbine of a factory, bringing it to a standstill; set fire to a tile-producing factory; promoted work slow-downs in factories; killed 7,000 cows of a co-operative dairy through poisoning; added soap to powdered milk destined for East German schools; were in possession, when arrested, of a large quantity of the poison cantharidin with which it was planned to produce poisoned cigarettes to kill leading East Germans; set off stink bombs to disrupt political meetings; attempted to disrupt the World Youth Festival in East Berlin by sending out forged invitations, false promises of free bed and board, false notices of cancellations, etc.; carried out attacks on participants with explosives, firebombs, and tire-puncturing equipment; forged and distributed large quantities of food ration cards to cause confusion, shortages and resentment; sent out forged tax notices and other government directives and documents to foster disorganization and inefficiency within industry and unions … all this and much more.
The Woodrow Wilson International Center for Scholars, of Washington, DC, conservative coldwarriors, in one of their Cold War International History Project Working Papers (#58, p.9) states: “The open border in Berlin exposed the GDR [East Germany] to massive espionage and subversion and, as the two documents in the appendices show, its closure gave the Communist state greater security.”
Throughout the 1950s, the East Germans and the Soviet Union repeatedly lodged complaints with the Soviets’ erstwhile allies in the West and with the United Nations about specific sabotage and espionage activities and called for the closure of the offices in West Germany they claimed were responsible, and for which they provided names and addresses. Their complaints fell on deaf ears. Inevitably, the East Germans began to tighten up entry into the country from the West, leading eventually to the infamous wall. However, even after the wall was built there was regular, albeit limited, legal emigration from east to west. In 1984, for example, East Germany allowed 40,000 people to leave. In 1985, East German newspapers claimed that more than 20,000 former citizens who had settled in the West wanted to return home after becoming disillusioned with the capitalist system. The West German government said that 14,300 East Germans had gone back over the previous 10 years.
Let’s also not forget that while East Germany completely denazified, in West Germany for more than a decade after the war, the highest government positions in the executive, legislative, and judicial branches contained numerous former and “former” Nazis.
Finally, it must be remembered, that Eastern Europe became communist because Hitler, with the approval of the West, used it as a highway to reach the Soviet Union to wipe out Bolshevism forever, and that the Russians in World War I and II, lost about 40 million people because the West had used this highway to invade Russia. It should not be surprising that after World War II the Soviet Union was determined to close down the highway.
For an additional and very interesting view of the Berlin Wall anniversary, see the article “Humpty Dumpty and the Fall of Berlin’s Wall” by Victor Grossman. Grossman (née Steve Wechsler) fled the US Army in Germany under pressure from McCarthy-era threats and became a journalist and author during his years in the (East) German Democratic Republic. He still lives in Berlin and mails out his “Berlin Bulletin” on German developments on an irregular basis. You can subscribe to it firstname.lastname@example.org. His autobiography: “Crossing the River: a Memoir of the American Left, the Cold War and Life in East Germany” was published by University of Massachusetts Press. He claims to be the only person in the world with diplomas from both Harvard University and Karl Marx University in Leipzig.
Al Franken, the liberal’s darling
I receive a continuous stream of emails from “progressive” organizations asking me to vote for Senator Franken or contribute to his re-election campaign this November, and I don’t even live in Minnesota. Even if I could vote for him, I wouldn’t. No one who was a supporter of the war in Iraq will get my vote unless they unequivocally renounce that support. And I don’t mean renounce it like Hillary Clinton’s nonsense about not having known enough.
Franken, the former Saturday Night Live comedian, would like you to believe that he’s been against the war in Iraq since it began. But he went to Iraq at least four times to entertain the troops. Does that make sense? Why does the military bring entertainers to soldiers? To lift the soldiers’ spirits of course. And why does the military want to lift the soldiers’ spirits? Because a happier soldier does his job better. And what is the soldier’s job? All the charming war crimes and human-rights violations that I and others have documented in great detail for many years. Doesn’t Franken know what American soldiers do for a living?
A year after the US invasion in 2003, Franken criticized the Bush administration because they “failed to send enough troops to do the job right.” What “job” did the man think the troops were sent to do that had not been performed to his standards because of lack of manpower? Did he want them to be more efficient at killing Iraqis who resisted the occupation? The volunteer American troops in Iraq did not even have the defense of having been drafted against their wishes.
Franken has been lifting soldiers’ spirits for a long time. In 2009 he was honored by the United Service Organization (USO) for his ten years of entertaining troops abroad. That includes Kosovo in 1999, as imperialist an occupation as you’ll want to see. He called his USO experience “one of the best things I’ve ever done.” Franken has also spoken at West Point (2005), encouraging the next generation of imperialist warriors. Is this a man to challenge the militarization of America at home and abroad? No more so than Barack Obama.
Tom Hayden wrote this about Franken in 2005 when Franken had a regular program on the Air America radio network: “Is anyone else disappointed with Al Franken’s daily defense of the continued war in Iraq? Not Bush’s version of the war, because that would undermine Air America’s laudable purpose of rallying an anti-Bush audience. But, well, Kerry’s version of the war, one that can be better managed and won, somehow with better body armor and fewer torture cells.”
While in Iraq to entertain the troops, Franken declared that the Bush administration “blew the diplomacy so we didn’t have a real coalition,” then failed to send enough troops to do the job right. “Out of sheer hubris, they have put the lives of these guys in jeopardy.”
Franken was implying that if the United States had been more successful in bribing and threatening other countries to lend their name to the coalition fighting the war in Iraq the United States would have had a better chance of WINNING the war.
Is this the sentiment of someone opposed to the war? Or in support of it? It is the mind of an American liberal in all its beautiful mushiness.
- Derived from William Astore, “Investing in Junk Armies”, TomDispatch, October 14, 2014
- New York Times, June 27, 1963, p.12
- USA Today, October 11, 1999, p.1
- Washington Post, May 12, 2009; see a similar story November 5, 2009
- Carolyn Eisenberg, “Drawing the Line: The American Decision to Divide Germany, 1944-1949” (1996); or see a concise review of this book by Kai Bird in The Nation, December 16, 1996
- See William Blum, “Killing Hope: US Military and CIA Interventions Since World War II”, p.400, note 8, for a list of sources for the details of the sabotage and subversion.
- The Guardian (London), March 7, 1985
- Washington Post, February 16, 2004
- Star Tribune, Minneapolis, March 26, 2009
- Huffington Post, June 2005
- Washington Post, February 16, 2004
“Financial markets are faced with uncertainty that isn’t going away. The slowdown in Europe is probably in the early innings, the Fed hasn’t begun to raise interest rates, and geopolitical crises seem to pop up by the day.” Jeff Cox, Finance editor, CNBC
Six years of zero rates and trillions of dollars of asset purchases couldn’t stop stocks from falling sharply on Wednesday. All three major indices moved deep into the red, with the Dow Jones leading the pack, dropping an eye-watering 460 points before rebounding nearly 300 points by the end of the session. Risk-free assets, particularly US Treasuries, rallied hard on the flight-to-safety move with the benchmark 10-year Treasury yield slipping to a Depression era 1.87 percent before climbing back above the 2 percent mark. US financials were the worst hit sector, taking it on the chin for 9 percent by mid-day, while Brent crude was soundly walloped, falling to a 47-month low on oversupply and deflation fears. Stock market gains for the year had nearly been wiped out before a miraculous about-face turned Armageddon into a so-so day with survivable losses. Even so, analysts have already started paring back their estimates for 4th quarter growth while traders stocked up on antacid for Thursday’s opening bell.
The proximate cause of Wednesday’s bloodbath was weaker than expected economic data from Europe–which is sliding towards its third recession in five years– droopy retail sales in the US, and a report from Department of Labor showing that wholesale prices for producers are edging closer towards deflation, the opposite of what the Fed is trying to achieve via its aggressive monetary policy.
But the real trigger for the selloff was not the dismal data, but the policies that have been in place since the Financial Crisis of 2008. While the Obama administration has steadily decreased demand by shaving the deficits which provide vital fiscal stimulus for the economy, (On Wednesday, the USG announced the budget deficit fell to $483 billion, the lowest since 2008) the Federal Reserve has been providing trillions of dollars of cheap money to the banks and brokerages. The result of this one-two combo has not only been the biggest transfer of wealth in human history, but also “a fundamental breakdown in the functioning of the global capitalist economy.” As the International Monetary Fund (IMF) noted in a recent paper on the global recovery: “a pickup in investment has not yet materialized…reflecting concerns about low medium-term growth potential and subdued private consumption.” Demand shortfalls in the advanced countries “could lead to sustained global economic weakness over a five-year period.” (IMF report records global economic breakdown, Nick Beams, World Socialist Web Site)
Simply put: The Fed’s policies have made investors richer, but they haven’t created opportunities for recycling profits, which is a critical part of capitalism’s so called virtuous circle. Anemic investment, means less hiring, less spending, weaker demand and slower growth, all of which are visible in today’s sluggish, underperforming economy. Pumping money into financial assets (QE) can fatten the bank accounts of rich speculators, but it doesn’t do jack for the economy. It just creates bubbles that burst in a flurry of panic selling. Here’s more from Larry Elliot at the Guardian:
“Six years after the global banking system had its near-death experience, interest rates are still at emergency levels. Even attaining the mediocre levels of activity expected by the IMF in the developed countries requires central banks to continue providing large amounts of stimulus. The hope has been that copious amounts of dirt-cheap money will find its way into productive uses, with private investment leading to stronger and better balanced growth.
It hasn’t happened like that. Instead, as the IMF rightly pointed out, the money has not gone into economic risk-taking but into financial risk-taking. Animal spirits of entrepreneurs have remained weak but asset prices have been strong. Tighter controls on banks have been accompanied by the emergence of a powerful and largely unchecked shadow banking system. Investors have been piling into all sorts of dodgy-looking schemes, just as they did pre-2007. Recovery, such as it is, is once again reliant on rising debt levels. Central bankers know this but also know that jacking up interest rates would push their economies back into recession. They cross their fingers and hope for the best.” (World leaders play war games as the next financial crisis looms, Larry Elliot, Guardian)
The policies implemented by the Obama administration and Fed have achieved precisely what they were designed to achieve; they’ve enriched the voracious plutocrats who run the system but left everyone else scraping by on less and less. An article in the Washington Post explains what’s going on in greater detail. Here’s a short excerpt from the piece titled “Why is the recovery so weak? It’s the austerity, stupid”:
“Welcome to Austerity U.S.A., where the deficit is back below 3 percent of GDP and growth is still disappointing—which aren’t unrelated facts.
It started when the stimulus ran out. Then state and local governments had to balance their budgets amidst a still-weak economy. And finally, there was the debt ceiling deal with its staggered $2.1 trillion of cuts over the next decade. Add it all up, and there’s been a big fiscal tightening the past few years, something like 4 percent of potential GDP. Indeed, as Paul Krugman points out, real government spending per capita has been falling faster now than any time since the Korean War demobilization. (chart)
Fiscal Impact Measure
Source: Hutchins Center
And, as you can see above, all this austerity has been hurting GDP growth since 2011. It shows the Hutchins Center’s new “fiscal impact measure,” which looks at how much total government tax-and-spending decisions have helped or harmed growth. The dark blue line is what policy has actually done, and the light blue one is what a neutral policy would have done. So, in other words, if the dark blue line is below the light blue one, like it has the last three years, then policy has subtracted from growth.” (Why is the recovery so weak? It’s the austerity, stupid. Washington Post)
By cutting the deficits, Obama reduced the blood flow to the real economy and weakened demand. That’s what torpedoed the recovery. In contrast, stocks and bonds have done remarkably well, mainly because the Fed pumped $4 trillion into financial assets which was a taken as a greenlight by risk takers everywhere to load up on everything from overpriced equities to low-yield junk. Now, after more than three years without as much as a 10 percent correction, the momentum has shifted, volatility has returned, earnings are looking wobbly, and the fear is palpable. Stocks appear to be headed for a major repricing event. Here’s how investment guru John Hussman sums it up in his Weekly Market Comment:
“Our concerns at present mirror those that we expressed at the 2000 and 2007 peaks, as we again observe an overvalued, overbought, overbullish extreme that is now coupled with a clear deterioration in market internals, a widening of credit spreads, and a breakdown in our measures of trend uniformity…
…it has become urgent for investors to carefully examine all risk exposures. When extreme valuations on historically reliable measures, lopsided bullishness, and compressed risk premiums are joined by deteriorating market internals, widening credit spreads, and a breakdown in trend uniformity, it’s advisable to make certain that the long position you have is the long position you want over the remainder of the market cycle. As conditions stand, we currently observe the ingredients of a market crash.” (The Ingredients of a Market Crash, John P. Hussman, Ph.D., Hussman Funds)
Sounds ominous, doesn’t it? And Hussman is not alone either. The bearish mood on Wall Street is gaining pace even among those who focus more on geopolitical issues than fundamentals, like the Bank for International Settlements’ Guy Debelle who said in an interview on CNBC on Tuesday that he was concerned about the possibility of a “violent” market drop, particularly in bonds.
“If I had told you that there were heightened tensions in the Middle East and Eastern Europe, uncertainty about the turning point in U.S. monetary policy, a succession of strong U.S. job numbers, uncertainty about the future direction of policy in Europe and Japan, as well as increased concern about the strength of the Chinese economy, you would not be expecting that to make for a benign time in financial markets,” Guy Debelle of the BIS said. “But that is what we have seen for much of this year.” (CNBC)
But stocks aren’t cratering because of tensions in the Middle East or Eastern Europe. That’s baloney. And they’re not falling because of decelerating global growth, plunging oil prices or Ebola. They’re falling because no one knows what the heck is going to happen when QE stops at the end of October. That’s what has everyone in a lather.
Keep in mind, that 20 percent of the current market cap (more than $4 trillion) is stock buybacks, that is, corporations that have bought their own shares to juice prices. Do you really think that corporate bosses are going to play as fast and loose after the Fed stops its liquidity injections?
Not on your life. They’re going to pull in their horns and see what happens next. And if things go sideways, (which they very well could) they’re going to cash in and call it a day. That’s going to drive down stock prices and send markets reeling.
Stocks have nearly tripled since March 2009 when the Fed started this “credit easing” fiasco. So if stocks rode higher on an ocean of Fed liquidity, then how low are they going to go when the spigot is turned off? There are some, like technical strategist Abigail Doolittle, who think the S and P 500 could suffer a major heart attack, dropping as much as 60 percent before equities touch down. Check it out from CNBC:
“(Abigail) Doolittle, founder of Peak Theories Research, has made headlines lately suggesting a market correction worse than anyone thinks is ahead. The long-term possibility, she has said, is a 60 percent collapse for the S&P 500.
In early August, Doolittle was warning both of a looming “super spike” in the CBOE Volatility Index as well as a “death cross” in the 10-year Treasury note.
And so it’s come to pass at least for the VIX, which has jumped 74 percent over the past three months and crossed the 20 threshold that historically has served as a dividing line between complacency and fear. That’s its highest level in nearly two years. From Doolittle’s perspective, the spike represents a bad-news/bad-news scenario … that the near-term selling action is likely to continue and even accelerate…
…she thinks “violent waves of selling action” could send the VIX all the way to 90—even beyond its peak during the financial crisis.” (CNBC)
Now maybe Doolittle is just exaggerating or paranoid, but her conclusions do seem to square with CNN Money. Here’s a clip from yesterday’s article:
“CNNMoney’s Fear & Greed Index is a good indicator of market momentum. Today it hit zero. That’s a huge red flag and showcases extreme fear in the stock market. The only other time the index ever touched that low point is in August 2011 — shortly after Standard & Poor’s downgraded the U.S. debt.
Volatility — or what some are calling “market whiplash” — is clearly back in the market. The VIX, an index that measures volatility and is one of the factors that goes into the Fear & Greed Index — spiked again today. It’s up a whopping 60% in the past week alone.” (Extreme Fear in stock market, CNN Money)
So fear and volatility are back, but liquidity has suddenly gone missing. That sounds like a prescription for disaster to me. So what can we expect in the weeks to come?
Well, more of the same, at least that’s how Pimco’s former chief executive officer Mohamed El Erian sees it. Here’s how he summed it up on Wednesday in a Bloomberg editorial:
“Though unlikely to be as dramatic as today, market volatility can be expected to continue in the days and weeks to come as two forces compete: first, the forced deleveraging of certain investors, particularly overstretched hedge funds registering big October losses; second, central banks scrambling to say all sorts of reassuring things. All of this will serve to reinforce October’s longstanding reputation as a threatening month for investors around the world.” (October’s Wild Ride Isn’t Over Yet, Mohamed A. El-Erian, Bloomberg)
Did he say “forced deleveraging”?
Uh huh. So, after a 6 year bacchanal, the Fed is finally going to take away the punch bowl and force the revelers to pay down their debts, clean up their balance sheets, and take a few less risks. Is that it?
Yep. It sure looks like it. But, that could change in the blink of an eye, after all, the Fed has its friends to think of. Which means that Ms. Yellen could announce QE4 any day now.
The cozy relationship between financial institutions and their respective regulators has long been known. Concern from reformers and activists comes from all stripes of ideological perspectives. With the attention that Carmen Segarra, the whistleblower of Wall Street, has gained, the noise from the banking establishment pushes back. Here comes the expected spin from the Fed, The New York Fed Slams Tape-Recording Whistleblower, Says She Was Fired After Just 7 Months Over Performance. Read their Statement Regarding New York Fed Supervision. So what is this controversy all about?
How dare a mere low level regulator document the goings on within the financial establishment, Inside the New York Fed: Secret Recordings and a Culture Clash, writes.
“As ProPublica reported last year, Segarra sued the New York Fed and her bosses, claiming she was retaliated against for refusing to back down from a negative finding about Goldman Sachs. A judge threw out the case this year without ruling on the merits, saying the facts didn’t fit the statute under which she sued.
At the bottom of a document filed in the case, however, her lawyer disclosed a stunning fact: Segarra had made a series of audio recordings while at the New York Fed. Worried about what she was witnessing, Segarra wanted a record in case events were disputed. So she had purchased a tiny recorder at the Spy Store and began capturing what took place at Goldman and with her bosses.
Segarra ultimately recorded about 46 hours of meetings and conversations with her colleagues. Many of these events document key moments leading to her firing. But against the backdrop of the Beim report, they also offer an intimate study of the New York Fed’s culture at a pivotal moment in its effort to become a more forceful financial supervisor. Fed deliberations, confidential by regulation, rarely become public.”
In an attempt at damage control, the Fed was looking for a favorable review. What they got was not what they wanted, N.Y. Fed Staff Afraid to Speak Up, Secret Review Found.
“The investigation, conducted by Columbia University finance professor David Beim, was initially confidential but was later released by the Financial Crisis Inquiry Commission.
Mr. Beim’s report called on the New York Fed to demand that its regulatory staffers maintain a “more distanced, high-level and skeptical view” of how the banks they oversee make money.”
A Short History of the Breathtaking Cluelessness of U.S. Financial Regulators, is outlined by the Motley Fool analysis. Any serious observer of the cozy relationships that permeate the financial community knows all too well, that the revolving door turns when favorable regulation decisions spin in the right direction.
The significance of this latest scandal, points out just how the regulation process is conducted in the suites of money manipulation. This next account is most telling; You Should Listen To The Goldman New York Fed Story.
“This American Life has a banking supervision story that turns on secret recordings made by a former employee of the New York Fed, Carmen Segarra, and it’s pretty good, because it shows how regulators basically do a lot of their regulating of banks through meetings, with no action items after. That’s weird, and it’s instructive to see how intertwined banking and supervision are. There’s a killer meeting after a meeting with Goldman Sachs where Fed employees talk about what happened, and – though we don’t know what was left on the cutting room floor – the modesty of the regulatory options being considered is fascinating. Nothing about fines, stopping certain sorts of deals, stern letters, or anything else. The talk is self-congratulation (for having that meeting with Goldman) and “let’s not get too judgmental, here, guys.”
The takeaway of the story, which is blessedly not an example of the “me mad, banksters bad!” genre, is that this kind of regulation isn’t very effective. It clearly hasn’t prevented banks from being insanely profitable until recently, in a way that you’d think would get competed away in open markets.”
Why is Goldman exempt from any meaningful oversight? William D. Cohen over at Politico provides an answer to the question, Why the Fed Will Always Wimp Out on Goldman.
“Although Michael Silva, Segarra’s superior, didn’t doubt that the Goldman-Santander transaction was legal, he didn’t think it passed the smell test. “It’s pretty apparent when you think this thing through that it’s basically window dressing that’s designed to help Banco Santander artificially enhance its capital position,” he told his New York Fed team before a meeting on the topic with Goldman executives.”
Segarra thought her boss’s pre-occupation with whether Goldman “should” have done the deal, or been allowed to do the deal, was all just a big waste of time and obfuscated the larger issue that Goldman, and other Wall Street banks, were busy pushing around a key regulator – the New York Fed – rather than the other way around. She worried that her bosses were focusing on “fuzzy” and “esoteric” issues such as Goldman’s “reputational risk.” Silva also shared with Segarra that it was all moot anyway, because Tom Baxter, the New York Fed’s general counsel, had, he said, “reined him in” on the subject. “I was all fired up, and he doesn’t want me getting the Fed to assert powers it doesn’t have,” Silva tells Segarra, according to the tape recording.”
Breaking down all the details and dialogues that transpire in the normal course of banking reviews comes down to the undeniable fact that Goldman is in charge of the process. The ownership of the Federal Reserve, a private entity, is ultimately owned by the shadow families that control the major financial institutions. Only a very naïve analysis or a compromised minion of the financial elite Plutocracy would dispute the power and clout that is applied to the political nature of regulatory oversight.
Bankster’s earn this graphic title by the way they conduct their protection racket. Courageous regulators like Carmen Segarra are treated as traitors to a system that is designed to facilitate every abuse that firms like Goldman can devise. Now you know who really owns the gold, because they make up whatever rules that foster their financial corruption.
Seldom does the enormous bond market turn on the fate of a single trader. Well, the news that Bill Gross was leaving Pimco under suspicious circumstances did not go unnoticed. The WSJ writes:
“The yield on the 10-year benchmark Treasury note was hovering around 2.506% immediately before the disclosure that Mr. Gross was leaving the hundreds-of-billions of dollars in Treasurys and other debt he oversaw at Pimco to go to rival firm Janus Capital Group Inc.
Within a half-hour, the yield jumped to 2.546%. While a move of 0.04 percentage point may not seem like much in that period of time, it was perceptible enough in the $12 trillion Treasury market that several traders and strategists attributed it to the news about Mr. Gross.”
Attempting to explain the reasons for his departure, The Economist speculates in the essay, Overthrowing the Bond King. “There appear to be three main reasons behind Mr Gross’s abrupt exit. The immediate cause was his abrasive management style . . . Moreover, Mr. Gross’s public behavior has grown increasingly peculiar of late . . . Such mis-steps might have been forgiven had Mr. Gross’s charmed streak as an investor continued. But over the past three years, several misjudgments have caused his funds to lag.”
At this point What You Need to Know About SEC’s Investigation of Pimco, centers on a relatively small $3.6 billion ETF, exchange-traded fund.
“Apparently, Pimco went around buying up small blocks of bonds, known as “odd lots,” at discounts. Pimco then marked their prices upwards using estimates of their values derived from larger blocks of bonds.
If Pimco really couldn’t resell the bonds at the new, higher prices it seems off base. But it also seems plausible the bonds might genuinely be worth more in Pimco’s hands than they were in the hands of whoever sold them.”
The mystic that Pimco enjoyed in bond trading may have sunk from the implications of SEC snooping. Gross seems like he is sprinting for the exit, but is this all that is in play? Investor’s Business Daily paints a smiley face on the open door that Gross’ transfer of loyalties as a positive for Janus Capital Group.
Now step back from these headlines and examine the concerns that have been floated about the bond market for a very long time. Money Beat in an account suggests that aBond Bubble Will Burst in a ‘Very Bad Way’ and reports on the recent Bloomberg’s Markets Most Influential Summit.
“Bonds are at ridiculous levels,” Julian Robertson, founder of one of the earliest hedge funds in Tiger Management Corp., said on a panel at the Bloomberg Markets Most Influential Summit. “It’s a world-wide phenomenon that governments are buying bonds to keep their countries moving along economically.”
Howard Marks, the chairman of Oaktree Capital Group LLC, said interest rates are “unnaturally low today.” Leon Cooperman, founder of Omega Advisors Inc. and former partner at Goldman Sachs, said bonds are “very overvalued.”
Forecasting the direction of government bonds usually focuses on predicting what central banks will do to drive interest rates, either up or down. Since consensus in market watchers has long announced that U.S. Bonds yields are unnaturally low, the calls for a turn upward in interest rates seem ridiculously overdue in coming.
All that seems reasonable; however, the Federal Reserve is playing a much different game from the responding to the normal business cycle.
Since the financial meltdown of 2008-2009, the charts and metric gauges for predicting market movements require a complete overhaul. Betting on U.S. Bonds no longer is based solely on domestic factors.
ZeroHedge cites David Tepper Is Back, Sees “Beginning Of The End” Of Bond Bubble.
“Empirically, Tepper may be right: in the past every time a central bank has launched a massive easing program (think QE1, QE2, Twist, QE3, etc.) it resulted in aggressive stock buying offset by bond selling. The issue is when said programs came to an end, and led to major selloffs in equities, pushing bonds to newer and lower record low yields. So perhaps for the time being, we may have seen the lows in the 10Year and in the periphery. The question is what happens when Europe’s latest “Private QE” operation comes to an end: just how massive will the bond bid be when all the money currently invested in risk assets decided to shift out all in one move.
More importantly, it also explains why central banks now have to work in a constant, staggered basis when easing, as the global capital markets simply cannot exist in a world in which every single central bank stops cold turkey with the “market” manipulation and/or liquidity injections.”
Within this context, why all the hullabaloo over Bill Gross jumping ship? While price inflation is real and grossly underreported, currency deflation still persists over the last six years. Now some may claim this phenomenon proves that stability in the bond market exists. Conversely, if this measure is acceptable to institutional bondholders, are they not accepting very low returns out of fear that the economy still hangs on a precipice.
Always remember that bonds are loans that have an obligation for repayment. Stability is maintained in the core indebtedness with the reimbursement settlement of the principal. Most governments are able to string along the unavoidable roll over so that new funds are raised to refinance.
Not so in every case from private or corporate debt. Just ask the bond holders from GM, better known as “Government Motors”.
Government bonds make up the essential float in the paper trade. As long as the global collateralization of bonds is honored, the planet may be able to avoid the fate of Greece. Pimco is but a pimple when compared to the Federal Reserve’s monetization of U.S. Treasury debt.
Bond professional traders look for an edge. Firms may risk their own capital, but most brokers look to skim an easy commission. It’s the institutions who have the most at stake and need a stable bond market. When not if, the bubble busts or deflates, the air is going to escape and blow over average investors.
Remember the days when an entrepreneur would perfect their whiz kid ideas in a garage and bring them to market? Did Steve Wozniak ever envision the behemoth that Apple would become and the cult camp that worships every new product that flows from their robotic coolie assembly lines? Riots Over Rotten Apple Mania describes an example of the forbidding underbelly of corporatist business model that Apple exemplifies so dramatically. Notwithstanding this record of 21th century sweat factories, do the venture vulture capitalists of Silicon Valley interject added value in the products and services they fund or do this culture of touting IPO offerings simply game a system to print money based upon imaginary dreams?
The Economic Policy Journal article, Silicon Valley Investor Joins The Corporatism March, cites Ron Conway, a Silicon Valley angel investor, who has backed many of the tech companies that we know and love.”
“Conway wrote a piece for Techcrunch where he’s calling for the other Fascism. Remember the Fascist Mussolini from Italy. It was he who said, “Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power.”
“Gone are the days when the tech community can innovate and run their businesses in spite of government. As we saw with the SOPA/PIPA debate, public policy has a direct and significant impact on startups and the investors who support them.
Whether it is regulations that stifle innovation or tax policies that hinder job creation, government has a major role in the success or failure of a startup. It is critically important for the tech community to engage in public policy.”
Silicon Valley companies are not limited to IT development, just as much as investment funding is not wholly occupied from Wall Street firms. The principle is the same wherever the money comes from, as the Rise of the “venture corporatists” explores in an account about John Doerr of Kleiner Perkins Caufield & Byers.
“None of the alternative energy sources being developed today – solar, wind, geothermal, or biomass–is close to financial sustainability, which means that the supersize returns V.C. funds depend on will require massive government subsidies, regulations, and mandates… So Doerr has launched an audacious campaign to invest millions in handpicked political candidates and influential political action committees, to push for subsidies and pro-greentech policies and require the government to purchase the kinds of fuels and technologies his startups will be marketing. Since 2000, Doerr and his wife, Ann, have contributed more than $31 million to political candidates and causes.
In essence, Doerr is helping to create the biggest new market the world has seen since the dawn of the oil industry–and asking for taxpayer dollars to do it.”
“Green” alternative energy has more to do with replicating money than producing sustainable energy. Instead of writing code for computer-generated speech, the paradigm at play buys the ambassadors of government policy, circuitously as part of the business plan.
Lachlan Markay sums up the paradox for investors and the public in The Venture Corporatists. “As long as green technology remains not simply an economic venture but a moral one, taxpayers will continue to nobly lose money as politically connected “social entrepreneurs” reap a windfall.”
Here lies the rub. What exactly is the moral imperative? The lament of Alex Shud Bayley in No, I still don’t want to work for Google makes a universal point.
“Since I’ve been out of the Silicon-Valley-centred tech industry, I’ve become increasingly convinced that it’s morally bankrupt and essentially toxic to our society. Companies like Google and Facebook — in common with most public companies — have interests that are frequently in conflict with the wellbeing of — I was going to say their customers or their users, but I’ll say “people” in general, since it’s wider than that. People who use their systems directly, people who don’t — we’re all affected by it, and although some of the outcomes are positive a disturbingly high number of them are negative: the erosion of privacy, of consumer rights, of the public domain and fair use, of meaningful connections between people and a sense of true community, of beauty and care taken in craftsmanship, of our very physical wellbeing. No amount of employee benefits or underfunded Google.org projects can counteract that.”
The notion that Silicon Valley business enterprises automatically advance civilization and improve the human condition is one of the most disturbing viewpoints that have infected the smart phone sect. Placing the blame solely on tech executives avoids the reprehensible relationship that Ron Conway is so eager to exploit.
The article, Why DC And Silicon Valley Don’t Mix Well seems to agree.
“The thing that DC should be most focused on is “fixes to previous government efforts that tried but failed to fix a problem that turned out not to need a regulatory solution.” Other industries seem to want handouts and investments and the like, but you don’t see that much in Silicon Valley.”
However, some executives excel in screwing up a once reliable service. Silicon Valley corporatist companies often fail. The next likely candidate for a downfall is Yahoo. Marissa Mayer’s tenure as CEO may be numbered according to Eric Jackson, founder and managing partner of hedge fund Ironfire Capital.
“Jackson says that since Mayer took over she has spent $2 billion buying companies and that most of those acquisitions have been for naught.
“Can you name any other acquisition Yahoo has made besides Tumblr? If not, what does that say about them?” Jackson writes at Forbes. “If these small acquisitions were mostly talent-driven as characterized by management, why was it necessary to spend, say, $30 million to hire 3 people from a dying company? Was this really the best use of shareholder capital? Yahoo should not [be] responsible for bailing out VCs from their failed investments. This isn’t TARP.”
Deplorably, many tech corporatists are mismanaged like Yahoo. Divesting a significant portion of Yahoo’s stake at the Alibaba IPO, raises a much needed current valuation, but what does this transaction do to improve the service? The Corporatists only care about tapping the rigged markets for immediate gain.
Back when we took biology classes in high school, we all studied the life-cycle of the caterpillar, right? Where it went from being a caterpillar to spinning a cocoon to becoming a butterfly to laying its eggs to hatching back into a caterpillar again, right?
I’m thinking that this life-cycle is rather similar to the life-cycle of Wall Street & War Street’s huge, scary war machine — which started out being mostly financed by American taxpayers, right? But then as the “world’s greatest super-power” began to grow and grow, its insatiable appetite for more and more weaponization began to grow and grow too — and it started to need a whole big bunch of more “lettuce” to pay for these weapons as well.
And so even though the huge amount of taxes paid by our parents and grandparents had clearly been enough to keep the American armies of World War II afloat, the American military-industrial complex of the 21st century really couldn’t just rely on just us lowly taxpayers to keep their huge new American “peace-keeping” forces supplied — especially with so many of us now not even having any more income left to tax!
There was definitely no longer enough “lettuce” left in the United States to keep this big caterpillar fed, right?
So how is Wall Street & War Street going to continue to feed its insatiable appetite? By expanding its reach, right? By conquering other countries and then getting these new vassals to finance their own destruction — and to also finance the American weapons machine as well. Whew! Bad news for the conquered countries — but good news for American taxpayers. We don’t get stuck with the bill at the end of the meal. Maybe.
And so Africa is forced to pay for its own colonization. And the Middle East is forced to pay for its own colonization. And Europe is forced to pay for its own colonization. And so on and so forth. You get the idea, right?
So then the big fat happy American war machine caterpillar finally begins spinning its cocoon. And soon that part of its life-cycle is accomplished, thanks to tanks and guns and NATO and the World Bank and the IMF.
And then what happens next? Out pops a big beautiful butterfly, right? Well, not exactly. The butterfly then dies in the cocoon? Not that either. What actually happens next is that the butterfly goes on to lay even more eggs — but they are eggs of destruction, and soon the whole world will have been eaten up by its infinite number of baby vassals and baby wars, gobbling up everything in sight.
Just look what happened to the American war machine’s babies in Ukraine. That whole country is now toast after it let the Iron Butterfly in. And its baby, Israel? Almost every “gardener” in the world hates Israel now — because it has become yet another caterpillar pest, eating up everything in sight.
And just look at those ISIS “rebels” in Syria that the American war machine has sponsored, supported, encouraged and trained. John McCain even had his photo taken with some of these guys.
According to Rick Sterling, writing in Counterpunch, “The names of James Foley and Steven Sotloff can be added to those of about 200,000 Syrians who have died as a direct consequence of US policy of regime change by proxy war in Syria.”
And according to journalist Thierry Meyssan, “We know from the British news agency Reuters that, in January 2014, a secret session of Congress voted financing and arming the Free Syrian Army, the Islamic Front, and Al-Nosra Front of the Islamic Emirate until September 30, 2014…[and] finally, in mid-February, a two-day seminar at the US National Security Council was attended by heads of allied secret services involved in Syria, definitely to prepare the EIS offensive in Iraq.”
But now America’s war machine is currently bombing the crap out of ISIS, its own baby. Eating it alive too. What’s with that?
Nigeria thought it could cuddle up to this butterfly mother too. Well, Nigeria’s oil is now paying for America’s endless wars. And so is Iraq’s oil. And Syria’s oil. And Libya’s. Libyan “rebel” leaders thought they could kiss up to its mother as well — and now they also have had their heads bitten off by good old Mom.
And Saudi Arabia had better watch out. It is next. That’s all I gotta say about that.
I guess that the only difference between the life-cycle of the caterpillar and the life-cycle of the American war machine is thatcaterpillars turn into butterflies, go on to lay more eggs and so the cycle continues — whereas the American war machine just eats its young.
Calling it treason: When American leaders steal over 11 trillion dollars from US taxpayers
“None dare call it treason,” intoned various Joe McCarthy supporters back in the 1950s. But I’m daring to call it treason now — when the very people that Americans elect and trust set about to deliberately and purposely steal all our money so they can run a serial-killer torture chamber in our basement.
What red-blooded decent patriotic American has ever said, “Gee, I want to spend my tax money on Abu Ghraib and blowing up women and children and ‘full spectrum dominance’ rather than infrastructure and schools!” But yet that is where our money is now going. In my book, that is treason.
People are starving on the mean streets of New York City and Houston and Miami so that others can afford to bomb women and children in Syria, Libya, Iraq, Palestine and Ukraine. Sounds like treason to me.
We Americans have neglected our own country for far too long. And if we ourselves don’t stop the American military-industrial complex’s war machine, then we too should be tried for treason and sent to jail for forsaking the precious values of freedom and equality that this country was founded upon.
Us. Off to jail too — along with the faceless serial-killer treasonous ogres in Washington who hide behind their benevolent Jason-like masks of Patriotism and War.
Forget about alleged Russian aggression and land grabbing in Ukraine – the real problem for the United States is Vladimir Putin. To be more precise, the real problem is a strong, independent Russia under the leadership of President Putin, a Russia that stands up for its national rights, respect for international norms and which is not prepared to simply roll over to placate American hegemonic selfish interests, like propping up its bankrupt dollar.
As the American-led NATO military alliance meets in Wales this week, it is obvious that Washington and its European minions are thrashing around trying to find a new purpose for an organization that was formed 65 years ago during the Cold War. The summit in the Welsh city of Newport is being billed as «the most important meeting of NATO since the end of the Cold War» – might we wonder why? – more than two decades ago.
US President Barack Obama is in attendance with 60 world leaders, including those of the 28 NATO member states. Shamelessly, there is much high-flown rhetoric about «defending Europe from Russian aggression». NATO secretary general Anders Fogh Rasmussen even had the gall to state, at the opening of the conference, that «Russia is attacking Ukraine».
«So we continue to call on Russia to pull back its troops from Ukrainian borders, and stop the flow of weapons and fighters into Ukraine», said Rasmussen without a modicum of evidence, or even a semblance of citing evidence.
The day before the NATO summit opened, Barack Obama, speaking in Estonia, used the very same kind of provocative rhetoric, accusing Russia of aggression in Ukraine and violating international law. The American president rolled off slanderous words about «Russian-financed, Russian-armed, Russian-trained, Russian-supported and often Russian-directed separatists in Ukraine».
As Russia’s envoy to NATO, Alexandr Grushko, said of such accusations mouthed by Western leaders, «they are not facts, they are forgeries». Grushko said that NATO was escalating tensions with Russia without any evidence to support its reckless conduct. «There have been no troop build-ups or movements of military hardware», he added.
It is astounding that all the militarist hype surrounding the NATO conference, along with bombastic declarations of collective security and vows to protection «our members in Eastern Europe», has been invoked with absolutely no credible proof, such as satellite images of Russian troop and tank movements, missile launches or aircraft incursions of Ukrainian territory. It’s like policy is being made on the basis of fantasy and preconceptions.
However, that’s not to say that there aren’t real concerns at play. There most certainly are. But the Western powers and their dutiful so-called news media are in full propaganda mode to conceal what those underlying concerns are.
What Obama and other senior US figures have been emphasizing over the past six months has been the need for European members of NATO to «step up to the plate» in terms of financing NATO. For most of its 65-year existence, the US has largely funded the workings of NATO, being by far the largest member. There is good reason for this historical American largesse. NATO has served as the US vehicle to exert a dominant military, political and economic presence over Europe. Without NATO, Washington would have significantly reduced influence over its European «allies». In particular, Washington might have to witness a natural historical tendency for closer political and economic ties between Europe and Russia, if it were not for NATO’s grip on the continent.
It is significant that over the past two decades since the end of the Cold War – and hence arguably the end of NATO’s purpose – European funding of the organization fell from over 30 per cent down to nearly 20 per cent. In other words, that suggests that European states were losing interest in NATO as having any relevance in the post-Cold War era. It seems that what Washington is hell-bent on doing is to revive the relevance of NATO by talking up the threat to European security from Russia. A revived NATO means a revived US presence in Europe, which is essential for American global hegemony.
This would give the real meaning for why Washington has taken the lead over past year in escalating tensions with Russia over Ukraine. This has in turn led to a growing chasm between Moscow and Europe, where up to recently there were cordial diplomatic relations based on substantial economic and trade partnerships.
Of course in this political endeavour Washington has found willing European accomplices to accentuate tensions. The British government has played a trusted lackey role for the American agenda, as has the US handpicked junta in Kiev led by Arseniy Yatsenyuk, as well as the pro-Western regimes in Poland and the Baltic states.
This underlying agenda of American geopolitical hegemony – not alleged Russian aggression – was betrayed earlier this week during the joint speeches of Barack Obama and his Estonian counterpart Toomas Hendrik Ilves. When both leaders were asked about their views on the 1997 Founding Act between NATO and Russia, they said that the commitment to non-expansion by NATO was now redundant because the «landscape had changed».
The American-educated Estonian leader said: «That was the security environment of 1997, when Boris Yeltsin was [Russian] President, and there had been no violations of either the UN Charter or the 1975 Helsinki Final Act, the 1990 Paris Charter».
Note that Ilves reiterates groundless assertions that Russia has committed violations of the UN Charter and other treaties. But what is telling is his reference to former Russian leader Boris Yeltsin. Yeltsin was acceptable to American and Europeans because he was seen as a weak, pliable figure that allowed Western capital free rein in the newly opened Russian territory following the collapse of the Soviet Union. Yelstin’s era was also a time of rampant corruption by Russian oligarchs who were closely associated with Western capital. That corrosive culture came to a halt with the election of Vladimir Putin twice as president between 2000-2008, and again in 2012.
In his speech, Obama concurred that «much has changed» since the NATO-Russia Founding Act of 1997, making the latter non-applicable. But Obama’s words gave more away about the deeper political concerns. He said of Russia: «I’ve said consistently our preference is a strong, productive, cooperative Russia. But the way to achieve that is by abiding to international norms, to improving the economy, to focusing on how they can actually produce goods and services that other people want and give opportunity to their people and educate them. That’s not the path that they’ve been pursuing over the last several years. It’s certainly not in evidence when it comes to their strategy in Ukraine».
So what Obama, that is, Washington, is concerned about is not Ukraine or alleged Russian aggression, but rather issues of «economic production and cooperation» – that is cooperation with Western capital. What’s more, «that’s not the path that they’ve [Russian government] been pursuing over the last several years». In other words, that’s not what Russia is permitting the West under the tenure of President Vladimir Putin; and this predates the recent crisis in Ukraine.
These real, underlying American concerns about Putin’s Russia not playing American ball were spelled out in an opinion column in the New York Times earlier this year, on March 23, by the former US ambassador to Moscow, Michael McFaul.
Notwithstanding false claims about annexing Crimea, McFaul writes: «The decision by President Vladimir V Putin of Russia to annex Crimea ended the post-Cold War era in Europe. Since the late Gorbachev-Reagan years, the era was defined by zigzags of cooperation and disputes between Russia and the West, but always with an underlying sense that Russia was gradually joining the international order. No more».
The former American ambassador goes on to lament «the collapse of the Soviet order did not lead smoothly to a transition to democracy and markets inside Russia, or Russia’s integration into the West». In other words, Russia did not make a smooth transition that suited American interests.
McFaul lays the blame for this lack of Russian «integration into the West» on President Putin, accusing him of being «an autocrat» and of harking back to the days of the old Soviet Union. McFaul’s invective against Putin is just slander, but what it barely conceals is that Washington is acutely disgruntled with how it perceives Putin’s Russia as not acting like a vassal state, as it was intended to be under Yeltsin at the time of signing the Founding Act between NATO and Russia.
That is why Washington now wants to scrap the Founding Act, and to push NATO expansion around Russia’s borders.
McFaul ended his NY Times column by calling for isolation and punitive sanctions on Russia, a policy that has become ever more pointed in subsequent months.
And it is more than a coincidence that America’s rulers have stepped up their aggression towards Russia since President Putin has embarked on a raft of regional trade and development alliances with Eurasian countries, Iran, China, and other BRICS nations, as well as Latin America. Putin’s declared moves to replace the US dollar with bilateral currencies for transactions in energy trade has also marked him out as a threat to US hegemonic interests. Putin’s Russia has also stood by its Syrian Arab ally over the past three years rather than relenting to the US-NATO criminal agenda of regime change in that country.
This is the context for why Washington is corralling NATO with the «crisis in Ukraine». It is not about Russian aggression. It is about Putin being an independent world leader who is not bowing down to American imperial dictate.
The power of moral sanction is something Wall Street takes very seriously. So seriously, in fact, that over the last two decades, hostile takeovers of authentic civil society organizations, known for exercising moral sanction (i.e., Sierra Club and Pacifica Radio Network), have evolved into full-fledged displacement by corporate false fronts (i.e., Avaaz and 350).
While the membership-based Sierra Club and Pacifica Radio Network fought back and reclaimed their boards of directors, false fronts and compromised NGOs (i.e. Amnesty International USA) have become what is known as imperial civil society. Used to justify privatization, austerity, and military aggression by NATO and the US, they reflect a perversion of moral sanction.
As Maximilian Forte writes in Civil Society, NGOs, and Saving the Needy, the main purpose of the burgeoning civil society fad – that comprises the international bureaucracy of neoliberalism – is to legitimate anti-democratic politics. In order to take over basic functions and powers of the state, this bureaucracy – engaged in development, governance and aid – justifies itself by creating a “need,” thereby cornering the market on “humanity.”
With corporate and government funding, often laundered through banks and foundations, international NGOs inspire pathos by constantly producing images of despair — thus allowing them to dominate discourse from an emotional vantage point. As a market-oriented institutional apparatus, this vast bureaucracy works hand in hand with military and finance authorities, thus functioning as Trojan horses on a par with transnational organized crime.
As a fifth column of fascism, imperial civil society – funded by such entities as Rockefeller Brothers Fund, Ford Foundation, and Soros Open Society Institute – operates worldwide (in tandem with official false fronts like USAID, National Endowment for Democracy, and US Institute for Peace) to subvert sovereignty and derail democracy in favor of US hegemony.
Overthrowing and destabilizing governments, using NGOs like Avaaz as provocateurs, puts authentic non-profits and journalists at risk. Indeed, the imperial network of financiers like Soros makes NGO entrepreneurs in the pro-war champagne circuit accomplices in crimes against humanity. As frontline opportunists in the psywar waged against public consciousness, these false fronts legitimate “humanitarian warfare” and “free-market environmentalism,” employed against indigenous peoples and independent states.
With help from Ford, Rockefeller, Gates and Soros, imperial civil society is admittedly a formidable foe, but not an invulnerable one. Built on a foundation of fraud, the power of moral sanction they have hijacked can effectively be turned against them. While false fronts are able to dominate social media, they do not own our minds; they are merely social engineers operating under false pretenses that we can reject at will.
Jay Taber is an associate scholar of the Center for World Indigenous Studies, a contributing editor of Fourth World Journal, and a featured columnist at IC Magazine.
The New World Order has been in place for centuries. Is it not time to start calling the NWO by another name? A descriptive term that encapsulates the essence of the beast would be a Nefarious Warrior Organism. Such a phrase strips away the ridiculous notion that there is any order in the malevolent organization of the parasitic global structure, based upon perpetual and permanent warfare. This depiction more closely resembles reality, even if the master mass media refuses to acknowledge How the World Really Works. Discard any condemnation that criticism of the established order rests upon conspiratorial fantasy or pre-medieval prejudices. Explaining away or ignoring basic human nature in a “PC” culture ultimately requires the adoption of a depraved Totalitarian Collectivism system.
Students of world affairs are not strangers to the practice of lies and deception. One of the grand daddies of the Nefarious Warrior Organism, and infamous war criminal, Henry Kissinger has a new book, World Order. An excerpt published in the Wall Street Journal, Henry Kissinger on the Assembly of a New World Order, spews the same poppycock that underpins the destructive policies and practices that has the world ripe for an apocalyptic conflict, needed to rescue the banksters of international finance from their derivative Ponzi scheme.
“Libya is in civil war, fundamentalist armies are building a self-declared caliphate across Syria and Iraq and Afghanistan’s young democracy is on the verge of paralysis. To these troubles are added a resurgence of tensions with Russia and a relationship with China divided between pledges of cooperation and public recrimination. The concept of order that has underpinned the modern era is in crisis.
The international order thus faces a paradox: Its prosperity is dependent on the success of globalization, but the process produces a political reaction that often works counter to its aspirations.”
How convenient to disregard the fact that incessant conflicts are direct results of policy maker schemes in Washington, London, Israel and the global sanctuaries and redoubts where the Mattoids reside. Policy objectives, invariably implemented with force, coercion and military carnage is the real reason why the NATO enforcement machine was not disbanded with the ending of the Cold War.
Over a decade ago the essay, NATO a Dinosaur Overdue for Extinction stated that national sovereignty of individual states was never an objective after the collapse of the Soviet Empire. Quite to the contrary, NATO’s expansion to accept the Czech Republic, Hungary and Poland (1999), Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia, Slovenia (2004), and Albania and Croatia (2009) as members illustrates that the purpose of NATO clearly has a focus on becoming the global police force for the NWO.
“If the breakdown in NATO is destined to avail an opportunity to curtail the Yankee Hyperpower, the alternative need not be the formation of another suspect alliance. It is not unpatriotic to advocate the wisdom in an America First policy. NATO doesn’t secure or advance our country, but only provides the military command and enforcement that imposes the will of global masters. Resistance and opposition against an independent EU rapid defense force, comes not from the nations of Europe, but from the elites that control the mechanisms of global power. NATO is one of their tools. Alliances are one of their methods. And suppression of viable self determination is their cherished goal.”
Seasoned observers of the backstabbing game of international intrigue must love the way that The State Department’s New World Order Agenda rears its ugly head with NeoCons running U.S. foreign policy.
“That esteem champion of national sovereignty, Victoria Nuland, Assistant Secretary of State for European Affairs, is hardly a protector of the duly elected Ukrainian government. Actively working to depose that regime for one acceptable to the EU/NATO system claims such actions as legal and sound policy, for the good of the Ukrainians. When Toby Gati, the former White House senior director for Russia, defended Nuland, the futility of a joint cooperative strategy exposes the reality of blowback to the EU.”
In order to understand the true nature of the psychopathic motives and vicious tactics that threaten a global conflagration, examine Victoria Nuland’s family ties: The Permanent Government in action. Kevin MacDonald dares reveals the family tree structure of the NeoCon clan of subversive fifth column infiltrators within our own government.
“Ethnic networking and ties cemented by marriage are on display in the flap over Assistant Secretary of State Victoria Nuland’s phone conversation with Geoffrey Pyatt, U.S. Ambassador to Ukraine. As VDARE’s Steve Sailer puts it, Nuland is a member of a talented, energetic [Jewish] family that is part of the Permanent Government of the United States.”
The expected result of such treachery is that the IMF and EU Capture of Ukraine becomes the spark that ignites a fuse set to explode into an intended Ukrainian civil war.
“It should be obvious that the recent putsch and regime change in the Ukraine inspired and backed by the U.S. shadow government, benefits the international banksters. For the average EU resident, only further economic displacement and diminished prospects can be expected from any inclusion of Ukraine into the EU dictatorial structure.”
Of course, the actual target, slated for removal is Vladimir Putin Nemesis of the New World Order. Russian defiance of the Nefarious Warrior Organism cannot stand.
“The context for any serious discussion on foreign affairs must start with the admission that the New World Order is the dominant controller of political power, especially in western countries. The NeoCon/NeoLib cabal dictates worldwide compliance. Nations conform to the financial supremacy of banksters, administered by handpicked political stooges. Global governance is the end game destined for all states. Individual nations slated for extinction are doomed as long as the NWO advances their worldwide imperium.”
The terror of descending into an abyss that triggers a nuclear World War III is actually a ruse. Such a holocaust will not happen by chance. Only when the transcendent Satanist elites have all their prey in the sights of their directed fallout, will the button be pushed.
China is certainly part of the NWO gang of comrades. The prospect for their involvement seems more likely than Russian recklessness. Ready for World War III with China?, has that old black magic of Kissinger come alive with the designated strategy intended to defeat America.
“China does not want an apocalyptic war with the United States. They are content to wage economic and financial warfare. Notwithstanding the trade dependency that the globalist cabal originated by the Nixon-Kissinger tools with the Red Communists, the authoritarian People’s Republic of China, are winning the financial battle.”
NATO’s belligerent and bellicose deployments around Russia are part of a plan to isolate, marginalize and shatter the economy and influence of Putin in the region. Neutering the Russian Bear facilitates the spread of central banking direction over the natural resources and across the time zones of this dissident former commie.
Since all obedient Marxists sing the song of the Internationale as they report to the gnomes of the Bank of International Settlement, do not be duped into thinking that NATO is a force for stability and legitimate defense. Involvements from Afghanistan to Kosovo or Iraq to Libya, demonstrates there are no short list deployments. The tentacles of drone assaults have nonconforming regimes posed for eventual collateral damage. As the Nefarious Warrior Organism metastasizes, the cancer becomes terminal. Actually blowing up the planet risks the destruction of property. Just the risk of universal annihilation serves the extortionist better, by maintaining a campaign of everlasting fear. NATO becomes the strong-arm enforcer, wheeling brass knuckle punches, when tribute payments become late.
Killing hundreds of millions if not billions is far more efficient using germ warfare in a mutation of a designer pandemic. NATO’s intimidation best functions as a warning of potential incursion than an actual skirmish on a battlefield. The next arms race is to advance electronic countermeasures to protect the flow of debt collection. The NWO can encircle the few remaining enclaves of freedom, but rebel states confined to benign reservations, cannot expect much better.
Dread that World War III is on the horizon is most useful to the elites that play the puppeteer game of diversion and slide of hand. As independent countries fall into the cauldron of globalism stew, the only morsel that remains of the sweet taste of liberty resides in the memory recesses of the past.
The masters of global chaos, served well with the life work of Henry Kissinger and Zibigneiw Brzezinski, prosper on the suffering of the rest of humanity. Such megalomaniacs see the military-industrial-security complex as a continuum of a scorched earth campaign of Attila the Hun. Destruction and carnage reign, since the only empire that exists is the one that keeps the NWO elites in control.
America is long dead and the echoes of the past only serve as remembrance of the purported rendering of the NATO’s motto – ANIMUS IN CONSULENDO LIBER. Somehow, the translation, “Man’s mind ranges unrestrained in counsel”, seems only to apply inside the dementia of the Nefarious Warrior Organism.
When I was in India several years ago, I learned a lot about its historic caste system and the role of its “untouchables”. But I never put two and two together — that we might have “untouchables” and a caste system here in America too — until I saw photos of what happened in Ferguson, Missouri, this August. http://www.stltoday.com/news/
When I was in the Peace Corps in South Africa, I learned all about its grim apartheid practices in the past. But I never actually figured it out — until Ferguson — that America practiced apartheid too, and that the old apartheid bantustans of South Africa strongly resemble modern African-American bantustans like Ferguson; deliberately kept isolated, controlled and apart from the rest of America until there is almost no hope of ever getting out of them except by doing hard time in prison. http://www.blackagendareport.
When I visited the slums of Kampala, I was struck by what a third-world country Uganda was, with many of its poorest citizens being jobless, homeless, hopeless and living a bleak hand-to-mouth existence. But it never occurred to me that parts of America have similar unemployment rates, sparse education systems and the hopelessness of a third-world country too — until Ferguson gave me that new perspective. http://www.
In Israel/Palestine, I saw people constantly discriminated against “not by the content of their character but by the color of their skin,” to paraphrase Martin Luther King. But not until Ferguson, where whites clearly hold all the power and use it corruptlyhttp://stlouis.cbslocal.com/
When I was embedded in Iraq, I saw American tanks and weaponry like you wouldn’t believe, used on Iraqi civilians to keep them in line. But it wasn’t until I saw videos of Ferguson that I realized that the use of tanks and military weaponry have become standard warfare procedure against civilians here in America too. http://readersupportednews.
When I was in Burma, I saw minorities being labeled as inferior, being called insulting names and constantly being accused of laziness, stupidity, immorality and violence to the point where in some cases the minorities actually started suffering from the Stockholm Syndrome and becoming all the things that they were constantly being labeled as — but I never really brought this connection back home until Ferguson. http://readersupportednews.
When I was in Honduras, I heard tales about how Ronald Reagan funded his brutal death squads there by having the CIA fly whole plane-loads of drugs into secret airfields in Arkansas via “Air America” and then sell all those drugs in the ghettos here at home.
I knew that, back in the 1980s, the sudden availability of cheap crack cocaine had hit America’s Black communities like a ton of bricks — but I hadn’t really realized how much this crack epidemic had hurt these communities, even decades later, until I saw what the results of this evil agenda of deliberately choreographing drug sales in America’s ghettos had done to the societal fabric of American cities and towns like Ferguson back in the 1980s — and how hard, even today, that “authorities” are still fighting to keep the residents of places like Ferguson from ever putting their lives back together again.
When I was in Afghanistan, I constantly heard all kinds of stories about how American military planes would arrive there all loaded up with military supplies and then fly back to America loaded down with heroin, and that the dirty-money made on these ventures would help finance the American military-industrial complex’s Forever Wars.
But I never thought to associate all of this foreign drug trafficking with the breakdown of African-American cultural norms due to the sudden availability of huge amounts of heroin in ghettos all across our own nation — at least not until Ferguson caused me to see that the break-down of cultural norms in American ghettos had been carefully orchestrated and planned to do just that. And while turning a profit too — so that our own impoverished ghetto bantustans here at home are actually helping to finance the American military-industrial complex’s grim slaughter-for-empire abroad. Think about it. http://2.bp.blogspot.com/-
When I was an election observer in Syria last June, I soon learned not to trust anything the American and British mainstream media claimed about election fraud there. There was no election fraud there. Period. https://www.youtube.com/watch?
Shame on me for so easily seeing all the bias, racism, apartheid, military brutality, corruption, caste systems and just down-right immoral behavior by ruling-class Brahmans that routinely happens in other countries — but failing to see that all these grim tactics are being used right here at home too. http://readersupportednews.
And shame on America for letting all this profiling, perfidy, pilfering and prejudice go on for so long back here at home — where we Americans are supposedly civilized and moral, and supposedly hold ourselves to the higher ideals of liberty, equality and democracy. http://vimeo.com/84249535
What a waste of human resources, human compassion and human life.
Something drastic must be done immediately to rectify this grim situation if we are ever going to pull the emergency brake on America’s rapid downward descent into feudalism and fascism — starting with using the trillions of dollars that we will save when we put a stop to ruthless military adventurism, and instead use that money to open world-class schools in every ghetto (and even in every non-ghetto) in the land, and to provide decent, chemical-free non-mutated food on every table too. http://www.
We now live in a nation where
doctors destroy health
lawyers destroy justice
universities destroy knowledge
governments destroy freedom
the press destroys information
religion destroys morals
and our banks
destroy the economy.
PS: Can American taxpayers really afford to pay for the occupation of Ukraine, Palestine, Iraq, Syria and Ferguson? Plus why would we want to? http://www.
The American military-industrial complex is currently spending 1.5 million dollars a day on military operations in Iraq. Imagine if that money was being spent to send Black kids to college — or to supply a college education to all American kids too for that matter. http://www.theguardian.com/
Every single patriotic American who loves his or her country needs to immediately get on the phone (and not even just go on FaceBook either) and make calls to Congress, the White House and the Supreme Court — bluntly telling them, “I’m sick of war!” https://www.aclu.org/secure/
PPS: “But Jane,” you might say, “those people in Ferguson blatantly stole stuff and looted and defied the law.” Yeah they did. But then so did Cliven Bundy — and nobody seemed to object to that. Angry Ferguson-Americans obviously need to learn how to steal and loot and defy the law Bundy-style! Fox News will probably even make them heroes. And maybe Bundy could even give them some tips.
Or maybe the citizens of Ferguson can get some tips from the primitive horde of neo-Nazis that the American military-industrial complex has recently hired (for five billion dollars) to shoot up and loot Ukraine — including but not limited to that Malaysian airplane that we never read about any more after it became public knowledge that Ukrainian neo-Nazis, not Putin, shot it down. http://www.wsws.org/en/
When I was in Ukraine several years ago, everything was peaceful — but just look at it now. It’s a war zone. And just another example of our tax dollars at work abroad destroying people’s lives rather than fixing people’s lives here at home.
I wouldn’t mind at all if that five billion dollars had been spent here at home instead. It could have bought Ferguson a new library, several new schools and probably a new hospital too. http://www.globalresearch.ca/