Do you have this uncomforable feeling that your financial situation has been declining since 2008? We know that those on Wall Street who caused the financial crash are thriving while those on mainstreet are struggling. If you buy a home for $100,000 it will likely have cost $250,000 once your loan is paid off. So taxpayers are paying more to those that financed the project than to those that built it. Are you alright with that? Well, there is an answer: Public Banks.

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Prosperity For Main Street, Not Wall Street
Posted on February 4, 2014 by ErnieM

Another great video from Rudy Avizius and Mike Krauss –
http://youtu.be/8b856VzNlSE

Once on a web discussion, I was criticized for risking being mislead by visiting Alex Jones' sites. My reply was that I trust myself to see past his overwrought outbursts and "separate the wheat from the chaff." In fact I find INFOWARs an excellent source of reliable information. So could it be possible that the flagrant manipulation of gold documented by Roberts and Kranzler (my yesterday's re-post) is on the verge of collapsing the western world's financial system? Just in case, you should make sure that your savings accounts are not in any of the "too big to fail" banks (see why in the link below)!

http://impactglassman.blogspot.mx/2013/08/the-criminal-big-banks-have-run-up-600.html

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Third Banker Commits Suicide Within a Week

Why are banking executives killing themselves?

Paul Joseph Watson

Infowars.com                                                                                                                                 Original Here
January 31, 2014

A third banker has committed suicide within the space of a week, once again prompting speculation that some kind of financial collapse could be just around the corner.

“Mike Dueker, the chief economist at Russell Investments, was found dead at the side of a highway that leads to the Tacoma Narrows Bridge in Washington state, according to the Pierce County Sheriff’s Department. He was 50,” reports Bloomberg.

Dueker fell down a 50 foot embankment in what police are describing as a suicide. He was reported missing on January 29 by friends, who said he had been “having problems at work.”

Dueker’s apparent suicide follows those of London banking executives Gabriel Magee and Bill Broeksmit.

Magee, a 39-year-old senior manager at JP Morgan’s European headquarters, jumped 500ft from the top of the bank’s headquarters in central London on Tuesday, landing on an adjacent 9 story roof.

Last Sunday, former Deutsche Bank executive Broeksmit was found dead at his South Kensington home after police responded to reports of a man found hanging at a house. According to reports, Broeksmit had “close ties to co-chief executive Anshu Jain.”

In addition, a U.K.-based communications director at Swiss Re AG also died last week but the cause of death has not been made public.

Banker suicides would be expected in the aftermath of a major stock market collapse, but the Dow Jones hit a record high just last month, although recent days have seen markets suffer heavy losses.

Some have speculated that the suicides could be related to a flurry of recent indications that some kind of major financial crash is approaching.

Earlier this week, Russian lender ‘My Bank’ banned all cash withdrawals until next week, while UK-based HSBC imposed capital controls on customers attempting to withdraw larger sums of money.

Are the spate of banker suicides merely a coincidence, or do they point to something rotten in the heart of the financial system which has yet to be revealed to the public?

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Paul Joseph Watson is the editor and writer for Infowars.com and Prison Planet.com. He is the author of Order Out Of Chaos. Watson is also a host for Infowars Nightly News.

This article was posted: Friday, January 31, 2014 at 11:19 am

"[T]he White House tells us that ObamaCare is a worthy program even though those who are supposed to be helped by it aren’t because of large deductibles, copays, and Medicaid estate recovery. The cost of this non-help is a doubling of the policy premiums on those insured Americans who did not need ObamaCare and the reclassification by employers of workers’ jobs from full-time to part-time in order to avoid medical insurance costs. All it took was campaign contributions from the insurance industry to turn a policy that hurts most and helps none into a worthy program. Worthy, of course, for the insurance companies." [excerpt]

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The Case of the Missing Recovery — Paul Craig Roberts

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January 3, 2013 | Original Here                                              Go here to sign up to receive email notice of this news letter

The Case of the Missing Recovery

Paul Craig Roberts

Have you seen the economic recovery? I haven’t either. But it is bound to be around here somewhere, because the National Bureau of Economic Research spotted it in June 2009, four and one-half years ago.

It is a shy and reclusive recovery, like the “New Economy” and all those promised new economy jobs. I haven’t seen them either, but we know they are here, somewhere, because the economists said so.

Congress must have seen all those jobs before they went home for Christmas, because our representatives let extended unemployment benefits expire for 1.3 million unemployed Americans, who have not yet met up with those new economy jobs, or even with an old economy job for that matter.

By letting extended unemployment benefits expire, Congress figures that they saved 1.3 million Americans from becoming lifelong bums of the nanny state and living off the public purse. After all, who do those unemployed Americans think they are? A bank too big to fail? The military-security complex? Israel?

What the unemployed need to do is to form a lobby organization and make campaign contributions.

Just as economists don’t recognize facts that are inconsistent with corporate grants, career ambitions, and being on the speaking circuit, our representatives don’t recognize facts inconsistent with campaign contributions.

For example, our representative in the White House tells us that ObamaCare is a worthy program even though those who are supposed to be helped by it aren’t because of large deductibles, copays, and Medicaid estate recovery. The cost of this non-help is a doubling of the policy premiums on those insured Americans who did not need ObamaCare and the reclassification by employers of workers’ jobs from full-time to part-time in order to avoid medical insurance costs. All it took was campaign contributions from the insurance industry to turn a policy that hurts most and helps none into a worthy program. Worthy, of course, for the insurance companies.

Keep in mind that it is the people who could not afford medical insurance who have to come up with their part of the premium or pay a penalty. How do people who have no discretionary income come up with what are to them large sums of money? Are they going to eat less, drive less, dress less? If so, what happens to people employed in those industries when demand falls? Apparently, this was too big a thought for the White House occupant, his economists, and our representatives in Congress.

According to the official wage statistics for 2012 http://www.ssa.gov/cgi-bin/netcomp.cgi?year=2012 , forty percent of the US work force earned less than $20,000, fifty-three percent earned less than $30,000, and seventy-three percent earned less than $50,000. The median wage or salary was $27,519. The amounts are in current dollars and they are compensation amounts subject to state and federal income taxes and to Social Security and Medicare payroll taxes. In other words, the take home pay is less.

To put these incomes into some perspective, the poverty threshold for a family of four in 2013 was $23,550.

In recent years, the only incomes that have been growing in real terms are those few at the top of the income distribution. Those at the top have benefitted from “performance bonuses,” often acquired by laying off workers or by replacing US workers with cheaper foreign labor, and from the rise in stock and bond prices caused by the Federal Reserve’s policy of quantitative easing. Everyone else has experienced a decline in real income and wealth.

As only slightly more than one percent of Americans make more than $200,000 annually and less than four-tenths of one percent make $1,000,000 or more annually, there are not enough people with discretionary income to drive the economy with consumer spending. When real median family income and real per capita income ceased to grow and began falling, Federal Reserve chairman Alan Greenspan substituted a credit expansion to take the place of the missing growth in income. However, as consumers became loaded with debt, it was no longer possible to expand consumer spending with credit expansion.

World War II left the US economy the only undamaged industrial and manufacturing center. Prosperity ensued. But by the 1970s the Keynesian demand management economic policy had produced stagflation. Reagan’s supply-side policy was able to give the US economy another 20 years. But the collapse of the Soviet Union brought an era of jobs offshoring to large Asian economies that formerly were closed to Western capital. Once corporate executives realized that they could earn multi-million dollar performance bonuses by moving US jobs abroad and once they were threatened by Wall Street and shareholder advocates with takeovers if they did not, American capitalism began giving the US economy to other countries, mainly located in Asia. As high productivity manufacturing and professional service jobs (such as software engineering) moved offshore, US incomes stagnated and fell.

As real income growth stagnated, wives entered the work force to compensate. Children were educated by refinancing the home mortgage and using the equity in the family home or with student loans that they do not earn enough to repay. Since the December 2007 downturn, Americans have used up their coping mechanisms. Homes have been refinanced. IRAs raided. Savings drawn down. Grown children, now adults, are back home with parents. The falling labor force participation rate signals that the economy can no longer provide jobs for the workforce. In such a situation, economic recovery is impossible.

What the Treasury and Federal Reserve have done, with the complicity of the White House, Congress, economists, and the media, is to focus on rescuing a half dozen banks “too big to fail.” The consequence of focusing economic policy on saving the banks is rigged financial markets and massive stock and bond market bubbles. To protect the dollar’s exchange value from quantitative easing, the price of gold has been forced down in the paper futures market, with the consequence that physical gold is shipped to Asia where it is unavailable as a refuge for Americans faced with currency depreciation.

At a time when most Americans are running out of coping mechanisms, the US faces a possible financial collapse and a high rate of inflation from dollar depreciation as the Fed pours out newly created money in an effort to support the rigged financial markets.

It remains to be seen whether the chickens can be kept from coming home to roost for another year.

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Greg Hunter interviews Paul Craig Roberts on the fate of the US dollar, who will ultimately pull the trigger, and when.

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Fate of Dollar is the Fate of U.S. Power - Dr. Paul Craig Roberts

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4 NOVEMBER 2013

By Greg Hunter’s USAWatchdog.com 
Former Assistant Treasury Secretary Dr. Paul Craig Roberts says, “The fate of the dollar is the fate of United States Power.”  Dr. Roberts goes on to say, “The whole question of the dollar’s longevity depends on the willingness of other countries to continue holding dollars and dollar denominated assets while the Federal Reserve prints a trillion dollars a year to prop up the big banks and to finance the federal budget deficit.”  There are many ways countries are currently moving away from the dollar.  One of the most startling, says Dr. Roberts, “China is accumulating very large quantities of gold.  So, this does show that the dollar may have a limited life as the supreme currency.”  With global NSA spying scandals, if the dollar starts coming under attack in the currency markets, Dr. Roberts predicts, “All of this makes it very difficult if there is a run on the dollar for the Treasury and the Federal Reserve to call up these foreign governments and say help us stop this run.”  Don’t think the Fed is ever going to stop printing money because Dr. Roberts contends, “They’re trapped because you can’t expect them to say let’s blow up the world right now so we don’t have a crisis in the dollar next year.”  Join Greg Hunter as he goes One-on-One with economist Dr. Paul Craig Roberts.    

http://youtu.be/GIMiKBbdGzo

Greg Hunter, Creator of USAWatchdog

Related Posts:

• Washington is Arranging Support of the Dollar-Paul Craig…
• If Bullion Were Not a Threat Government Would Not Attack It-
• America is Going to Crash Big Time-Paul Craig Roberts
• Syria will Lead to World War III and it will be Nuclear-Paul
• Paul Craig Roberts-Obama Could Govern as a Dictator

I suppose that many of you who visit my blog are, like me, retired with a pension or adequate savings to live out the rest of our lives in comfort. In the meantime, even Americans with degrees in engineering, physics, or other professions requiring higher education cannot find jobs anywhere except for the likes of Walmart, Home Depot, McDonalds, etc., which at their pleasure may employ them for no more than 30 hours a week, thus making them ineligible for either a pension or Obama care, which as explained here by PCR is a bad deal for most.

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Obamacare Is Another Private Sector Rip-Off Of Americans

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October 1, 2013 | Original Here                                              Go here to sign up to receive email notice of this news letter

Obamacare Is Another Private Sector Rip-Off Of Americans
 
The private sector allied with government is a second IRS

Paul Craig Roberts

The government of the “world’s only superpower,” the “exceptional,” the “indispensable” country, claims to know what is best for Syria, Iraq, Afghanistan, Libya, Yemen, Pakistan, Somalia, Mali, Russia, Venezuela, Bolivia, Ecuador, Brazil, China, indeed for the entire world. However, the “indispensable” country cannot even govern itself, much less the world over which the “superpower” desires hegemony. The government of the “world’s only superpower” has shut itself down.

The government has shut itself down, because it cannot deal with the budget deficit and mounting public debt caused by twelve years of wars, by financial deregulation that allows “banks too big to fail” to loot the taxpayers, and by the loss of jobs, GDP, and tax base that jobs offshoring forced by Wall Street caused.

The Republicans are using the fight over the limit on new public debt to block Obamacare. The Republicans are right to oppose Obamacare, but they are opposing Obamacare largely for ideological reasons when there are very good sound reasons to oppose Obamacare.
 
Last February 3, I posted on this website a column, “Obamacare: A Deception,” written by an expert on the subject. http://www.paulcraigroberts.org/2013/02/03/obamacare-a-primer/

When Republicans for ideological reasons blocked a single-payer health system like the rest of the developed world has and, indeed, even some developing countries have, the Obama regime, needing a victory, went to the insurance companies and told them to come up with a health care plan that the insurance lobby could get passed by Congress. Obamacare was written by the private insurance industry with the goal of raising its profits with 50 million mandated new customers.

Obamacare works for the insurance companies, but not for the uninsured. The cost of using Obamacare is prohibitive for those who most need the health coverage. The cost of the premiums net of the government subsidy is large. It amounts to a substantial pay cut for people struggling to pay their bills. In addition to the premium cost, it is prohibitive for hard pressed Americans to use the policies because of the deductibles and co-pays. For the very poor, who are thrown into Medicaid systems, any assets they might have, such as a home, are subject to confiscation to cover their Medicaid bills. The only people other than the insurance companies who benefit from Obamacare are the down and out who are devoid of all assets.

This might prove to be a growing percentage of Americans. On September 19 the New York Times on the front page of the business section reported what I have reported for years: that real median family incomes in the US are where they were a quarter of a century ago. In other words, in a quarter of a century there has been no income growth for the median American family.

In 2013 payroll employment is below where it was six years ago. During 2013 most of the new jobs, barely sufficient to stay even with population growth and insufficient to recover the job loss from the recession, have been part-time jobs that do not provide any discretionary income with which to drive a consumer economy.

Obamacare has resulted in the health insurance companies, who thought that they would be living in high profits from the mandated health coverage, being outsmarted by employers, who have reduced their full-time workers to part-time in order to avoid Omamacare’s requirement to provide health coverage to those employees who work 30 hours a week or more.

Employers can get away with this, because jobs are hard to find. The lack of employment opportunities results in Americans with engineering degrees working as retail sales clerks and as shelf stockers in Walmart and Home Depot. Despite the abundance of unemployed and under-employed American technical and engineering workers, the large corporations lobby Congress for more H-1B visas to bring in lowly paid foreigners with the argument that there is a shortage of qualified Americans for technical work.

As I have pointed out so many times, if there were a shortage of engineering and technical workers, salaries would be rising, not falling.

For millions of employees, Obamacare means cut hours and less take home pay plus out-of-pocket expenses to purchase an Obamacare health policy. For most people covered by Obamacare, this is a lose-lose situation.

It is also a lose-loss situation for the vast majority of the young. Most young people, unless they have jobs that provide health coverage, do without it, because the chances of the young having heart attacks, cancer, and other serious health problems is low.

Obamacare, however, requires the healthy young to pay premiums for coverage or to pay a penalty to the IRS.

In my day this might not have been a problem. However, today there are few jobs for the young that pay enough to have an independent existence. The monthly payroll jobs reports do not show well-paying jobs. The Labor Department’s projections of future jobs are not jobs that pay well. For the youth, it seems that the penalty is less than the premium, so youthful penalties paid out of waitress and bartender tips will subsidize the unusable Obamacare health policies for the poor adults who are not thrown into Medicaid, which confiscates their assets, if any.

Obamacare benefits only two classes of people. It benefits employers who drop their employees working hours below the hours specified for Obamacare coverage, and it benefits the insurance companies or the IRS who collect the premiums and penalties.
 
Many of the people who pay the premiums won’t be able to use the policies because of co-pays and deductions.

The very poor with no assets might receive health care if they reside in states that accept the Medicaid provisions of Obamacare.

In 21st century America, the few people who have experienced income gains are the executives and shareholders of firms who offshored their production for US markets, Wall Street which makes bets covered by the Federal Reserve, and the military-security complex which has been enriched by the neoconservatives’ wars.

Every other American has lost.

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The Justice (sic) Department finally cracks down on the big banks ...well, actually only a couple minnows. The sharks are allowed to go free. Wouldn'd it be nice to have a Justice Department with teeth rather than "sic."

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 theREALnews                                                                               Permalink

The Government is Finally Arresting Wall Street Bankers...For Losing Wall Street's Money
 
The Dept. of Justice will let JP Morgan's London Whale off the hook while prosecuting low-level traders. - August 14, 2013

Bio

William K. Black, author of THE BEST WAY TO ROB A BANK IS TO OWN ONE, teaches economics and law at the University of Missouri Kansas City (UMKC). He was the Executive Director of the Institute for Fraud Prevention from 2005-2007. He has taught previously at the LBJ School of Public Affairs at the University of Texas at Austin and at Santa Clara University, where he was also the distinguished scholar in residence for insurance law and a visiting scholar at the Markkula Center for Applied Ethics. Black was litigation director of the Federal Home Loan Bank Board, deputy director of the FSLIC, SVP and general counsel of the Federal Home Loan Bank of San Francisco, and senior deputy chief counsel, Office of Thrift Supervision. He was deputy director of the National Commission on Financial Institution Reform, Recovery and Enforcement. Black developed the concept of "control fraud" frauds in which the CEO or head of state uses the entity as a "weapon." Control frauds cause greater financial losses than all other forms of property crime combined. He recently helped the World Bank develop anti-corruption initiatives and served as an expert for OFHEO in its enforcement action against Fannie Mae's former senior management.

Take your savings acounts out of the "too big to fail banks" before they confiscate them. It's perfectly legal ...and inevitable, given the precarious conditions of the big banks due to their derivative speculations and the fact that futher taxpayer bailouts are now against the law. It's called a "bail-in." The FDIC can't save you, it's already broke. And don't let your stock broker keep your cash in money market funds, because these are mostly run by TBTF banks.

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Bail-out Is Out, Bail-in Is In: Time for Some Publicly-Owned Banks

Posted on April 29, 2013 by Ellen Brown

“[W]ith Cyprus . . . the game itself changed. By raiding the depositors’ accounts, a major central bank has gone where they would not previously have dared. The Rubicon has been crossed.”

—Eric Sprott, Shree Kargutkar, “Caveat Depositor”

The crossing of the Rubicon into the confiscation of depositor funds was not a one-off emergency measure limited to Cyprus.  Similar “bail-in” policies are now appearing in multiple countries.  (See my earlier articles here.)  What triggered the new rules may have been a series of game-changing events including the refusal of Iceland to bail out its banks and their depositors; Bank of America’s commingling of its ominously risky derivatives arm with its depository arm over the objections of the FDIC; and the fact that most EU banks are now insolvent.  A crisis in a major nation such as Spain or Italy could lead to a chain of defaults beyond anyone’s control, and beyond the ability of federal deposit insurance schemes to reimburse depositors.

The new rules for keeping the too-big-to-fail banks alive: use creditor funds, including uninsured deposits, to recapitalize failing banks.

But isn’t that theft?

Perhaps, but it’s legal theft.  By law, when you put your money into a deposit account, your money becomes the property of the bank.  You become an unsecured creditor with a claim against the bank.  Before the Federal Deposit Insurance Corporation (FDIC) was instituted in 1934, U.S. depositors routinely lost their money when banks went bankrupt.  Your deposits are protected only up to the $250,000 insurance limit, and only to the extent that the FDIC has the money to cover deposit claims or can come up with it.

The question then is, how secure is the FDIC?

Can the FDIC Go Bankrupt?

In 2009, when the FDIC fund went $8.2 billion in the hole, Chairwoman Sheila Bair assured depositors that their money was protected by a hefty credit line with the Treasury. But the FDIC is funded with premiums from its member banks, which had to replenish the fund. The special assessment required to do it was crippling for the smaller banks, and that was just to recover $8.2 billion.  What happens when Bank of America or JPMorganChase, which have commingled their massive derivatives casinos with their depositary arms, is propelled into bankruptcy by a major derivatives fiasco?  These two banks both have deposits exceeding $1 trillion, and they both have derivatives books with notional values exceeding the GDP of the world.

Bank of America Corporation moved its trillions in derivatives (mostly credit default swaps) from its Merrill Lynch unit to its banking subsidiary in 2011.  It did not get regulatory approval but just acted at the request of frightened counterparties, following a downgrade by Moody’s. The FDIC opposed the move, reportedly protesting that the FDIC would be subjected to the risk of becoming insolvent if BofA were to file for bankruptcy.  But the Federal Reserve favored the move, in order to give relief to the bank holding company.  (Proof positive, says former regulator Bill Black, that the Fed is working for the banks and not for us. “Any competent regulator would have said: ‘No, Hell NO!’”)

The reason this risky move would subject the FDIC to insolvency, as explained in my earlier article here, is that under the Bankruptcy Reform Act of 2005, derivatives counter-parties are given preference over all other creditors and customers of the bankrupt financial institution, including FDIC insured depositors. Normally, the FDIC would have the powers as trustee in receivership to protect the failed bank’s collateral for payments made to depositors. But the FDIC’s powers are overridden by the special status of derivatives.  (Remember MF Global?  The reason its customers lost their segregated customer funds to the derivatives claimants was that derivatives have super-priority in bankruptcy.)

The FDIC has only about $25 billion in its deposit insurance fund, which is mandated by law to keep a balance equivalent to only 1.15 percent of insured deposits.  And the Dodd-Frank Act (Section 716) now bans taxpayer bailouts of most speculative derivatives activities.  Drawing on the FDIC’s credit line with the Treasury to cover a BofA or JPMorgan derivatives bust would be the equivalent of a taxpayer bailout, at least if the money were not paid back; and imposing that burden on the FDIC’s member banks is something they can ill afford.

BofA is not the only bank threatening to wipe out the federal deposit insurance funds that most countries have.  According to Willem Buiter, chief economist at Citigroup, most EU banks are zombies. And that explains the impetus for the new “bail in” policies, which put the burden instead on the unsecured creditors, including the depositors.  Below is some additional corroborating research on these new, game-changing bail-in schemes.

Depositors Beware

An interesting series of commentaries starts with one on the website of Sprott Asset Management Inc. titled “Caveat Depositor,” in which Eric Sprott and Shree Kargutkar note that the US, UK, EU, and Canada have all built the new “bail in” template to avoid imposing risk on their governments and taxpayers.  They write:

[M]ost depositors naively assume that their deposits are 100% safe in their banks and trust them to safeguard their savings. Under the new “template” all lenders (including depositors) to the bank can be forced to “bail in” their respective banks. 

Dave of Denver then followed up on the Sprott commentary in an April 3 entry on his blog The Golden Truth, in which he pointed out that the new template has long been agreed to by the G20 countries:

Because the use of taxpayer-funded bailouts would likely no longer be tolerated by the public, a new bank rescue plan was needed.  As it turns out, this new “bail-in” model is based on an agreement that was the result of a bank bail-out model that was drafted by a sub-committee of the BIS (Bank for International Settlement) and endorsed at a G20 summit in 2011. For those of you who don’t know, the BIS is the global “Central Bank” of Central Banks. As such it is the world’s most powerful financial institution.

The links are in Dave’s April 1 article, which states:

The new approach has been agreed at the highest levels . . . It has been a topic under consideration since the publication by the Financial Stability Board (a BIS committee) of a paper, Key Attributes of Effective Resolution Regimes for Financial Institutions in October 2011, which was endorsed at the Cannes G20 summit the following month. This was followed by a consultative document in November 2012, Recovery and Resolution Planning: Making the Key Attributes Requirements Operational.

Dave goes on:

[W]hat is commonly referred to as a “bail-in” in Cyprus is actually a global bank rescue model that was derived and ratified nearly two years ago. . . . [B]ank deposits in excess of Government insured amount in any bank in any country will be treated like unsecured debt if the bank goes belly-up and is restructured in some form.

Jesse at Jesse’s Café Americain then picked up the thread and pointed out that it is not just direct deposits that are at risk. The too-big-to-fail banks have commingled accounts in a web of debt that spreads globally. Stock brokerages keep their money market funds in overnight sweeps in TBTF banks, and many credit unions do their banking at large TBTF correspondent banks:

You say you have money in a pension fund and an IRA at XYZ bank?  Oops, it is really on deposit in you-know-who’s bank.  You say you have money in a brokerage account?  Oops, it is really being held overnight in their TBTF bank.  Remember MF Global?  Who can say how far the entanglements go?  The current financial system and market structure is crazy with hidden risk, insider dealings, control frauds, and subtle dangers.

Also at Risk: Pension Funds and Public Revenues 

William Buiter, writing in the UK Financial Times in March 2009, defended the bail-in approach as better than the alternative.  But he acknowledged that the “unsecured creditors” who would take the hit were chiefly “pensioners drawing their pensions from pension funds heavily invested in unsecured bank debt and owners of insurance policies with insurance companies holding unsecured bank debt,” and that these unsecured creditors “would suffer a large decline in financial wealth and disposable income that would cause them to cut back sharply on consumption.”

The deposits of U.S. pension funds are well over the insured limit of $250,000.  They will get raided just as the pension funds did in Cyprus, and so will the insurance companies.  Who else?

Most state and local governments also keep far more on deposit than $250,000, and they keep these revenues largely in TBTF banks.  Community banks are not large enough to service the complicated banking needs of governments, and they are unwilling or unable to come up with the collateral that is required to secure public funds over the $250,000 FDIC limit.

The question is, how secure are the public funds in the TBTF banks?  Like the depositors who think FDIC insurance protects them, public officials assume their funds are protected by the collateral posted by their depository banks.  But the collateral is liable to be long gone in a major derivatives bust, since derivatives claimants have super-priority in bankruptcy over every other claim, secured or unsecured, including those of state and local governments.

The Cyprus Wakeup Call

Robert Teitelbaum wrote in a May 2011 article titled “The Case Against Favored Treatment of Derivatives”:

. . . Dodd-Frank did not touch favored status [of derivatives] and despite all the sound and fury, . . . there are very few signs from either party that anyone with any clout is suddenly about to revisit that decision and simplify bankruptcy treatment. Why? Because for all its relative straightforwardness compared to more difficult fixes, derivatives remains a mysterious black box to most Americans . . . .  [A]s the sense of urgency to reform passes . . . we return to a situation of technical interest to only a few, most of whom have their own particular self-interest in mind.

But that was in 2011, before the Cyprus alarm bells went off.  It is time to pry open the black box, get educated, and get organized.  Here are three things that need to be done for starters:

• Protect depositor funds from derivative raids by repealing the super-priority status of derivatives.
• Separate depository banking from investment banking by repealing the Commodity Futures Modernization Act of 2000 and reinstating the Glass-Steagall Act.
• Protect both public and private revenues by establishing a network of publicly-owned banks, on the model of the Bank of North Dakota.

For more information on the public bank option, see here. Learn more at the Public Banking Institute conference June 2-4 in San Rafael, California, featuring Matt Taibbi, Birgitta Jonsdottir, Gar Alperovitz and others.  

Ellen Brown is an attorney, chairman of the Public Banking Institute, and the author of eleven books, including Web of Debt: The Shocking Truth About Our Money System and How We Can Break Free. Her websites are webofdebt.com and ellenbrown.com.

THE "FISCAL CLIFF" IS POCKET CHANGE WHETHER OR NOT CONGRESS DOES ANYTHING ABOUT IT, WHEREAS JUST FOUR "TOO BIG TO FAIL" U.S. BANKS HAVE DERIVATIVE EXPOSURE EQUAL TO 3.3 TIMES THE *WORLD* GROSS DOMESTIC PRODUCT. SHOULD THE AMERICAN POOR, STRUGGLING MIDDLE CLASS, AND ELDERLY HAVE TO FOREFIT THEIR SOCIAL SAFETY NET TO COVER ONE HALF OF ONE PERCENT OF THESE IRRESPONSIBLE BANKS' GAMBLING DEBTS?

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The Fiscal Cliff Is A Diversion: The Derivatives Tsunami and the Dollar Bubble

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December 17, 2012 | Original Here


The “fiscal cliff” is another hoax designed to shift the attention of policymakers, the media, and the attentive public, if any, from huge problems to small ones.
 
The fiscal cliff is automatic spending cuts and tax increases in order to reduce the deficit by an insignificant amount over ten years if Congress takes no action itself to cut spending and to raise taxes. In other words, the “fiscal cliff” is going to happen either way.
 
The problem from the standpoint of conventional economics with the fiscal cliff is that it amounts to a double-barrel dose of austerity delivered to a faltering and recessionary economy. Ever since John Maynard Keynes, most economists have understood that austerity is not the answer to recession or depression.
 
Regardless, the fiscal cliff is about small numbers compared to the Derivatives Tsunami or to bond market and dollar market bubbles.
 
The fiscal cliff requires that the federal government cut spending by $1.3 trillion over ten years. The Guardian reports that means the federal deficit has to be reduced about $109 billion per year or 3 percent of the current budget. http://www.guardian.co.uk/world/2012/nov/27/fiscal-cliff-explained-spending-cuts-tax-hikes More simply, just divide $1.3 trillion by ten and it comes to $130 billion per year. This can be done by simply taking a three month vacation each year from Washington’s wars.
 
The Derivatives Tsunami and the bond and dollar bubbles are of a different magnitude.
 
Last June 5 in “Collapse At Hand” http://www.paulcraigroberts.org/2012/06/05/collapse-at-hand/ I pointed out that according to the Office of the Comptroller of the Currency’s fourth quarter report for 2011, about 95% of the $230 trillion in US derivative exposure was held by four US financial institutions: JP Morgan Chase Bank, Bank of America, Citibank, and Goldman Sachs.
Prior to financial deregulation, essentially the repeal of the Glass-Steagall Act and the non-regulation of derivatives–a joint achievement of the Clinton administration and the Republican Party–Chase, Bank of America, and Citibank were commercial banks that took depositors’ deposits and made loans to businesses and consumers and purchased Treasury bonds with any extra reserves.
 
With the repeal of Glass-Steagall these honest commercial banks became gambling casinos, like the investment bank, Goldman Sachs, betting not only their own money but also depositors money on uncovered bets on interest rates, currency exchange rates, mortgages, and prices of commodities and equities.
 
These bets soon exceeded many times not only US GDP but world GDP. Indeed, the gambling bets of JP Morgan Chase Bank alone are equal to world Gross Domestic Product.
According to the first quarter 2012 report from the Comptroller of the Currency, total derivative exposure of US banks has fallen insignificantly from the previous quarter to $227 trillion. The exposure of the 4 US banks accounts for almost of all of the exposure and is many multiples of their assets or of their risk capital.
 
The Derivatives Tsunami is the result of the handful of fools and corrupt public officials who deregulated the US financial system. Today merely four US banks have derivative exposure equal to 3.3 times world Gross Domestic Product. When I was a US Treasury official, such a possibility would have been considered beyond science fiction.
 
Hopefully, much of the derivative exposure somehow nets out so that the net exposure, while still larger than many countries’ GDPs, is not in the hundreds of trillions of dollars. Still, the situation is so worrying to the Federal Reserve that after announcing a third round of quantitative easing, that is, printing money to buy bonds–both US Treasuries and the banks’ bad assets–the Fed has just announced that it is doubling its QE 3 purchases.
 
In other words, the entire economic policy of the United States is dedicated to saving four banks that are too large to fail. The banks are too large to fail only because deregulation permitted financial concentration, as if the Anti-Trust Act did not exist.
 
The purpose of QE is to keep the prices of debt, which supports the banks’ bets, high. The Federal Reserve claims that the purpose of its massive monetization of debt is to help the economy with low interest rates and increased home sales. But the Fed’s policy is hurting the economy by depriving savers, especially the retired, of interest income, forcing them to draw down their savings. Real interest rates paid on CDs, money market funds, and bonds are lower than the rate of inflation.
 
Moreover, the money that the Fed is creating in order to bail out the four banks is making holders of dollars, both at home and abroad, nervous. If investors desert the dollar and its exchange value falls, the price of the financial instruments that the Fed’s purchases are supporting will also fall, and interest rates will rise. The only way the Fed could support the dollar would be to raise interest rates. In that event, bond holders would be wiped out, and the interest charges on the government’s debt would explode.
 
With such a catastrophe following the previous stock and real estate collapses, the remains of people’s wealth would be wiped out. Investors have been deserting equities for “safe” US Treasuries. This is why the Fed can keep bond prices so high that the real interest rate is negative.
 
The hyped threat of the fiscal cliff is immaterial compared to the threat of the derivatives overhang and the threat to the US dollar and bond market of the Federal Reserve’s commitment to save four US banks.
 
Once again, the media and its master, the US government, hide the real issues behind a fake one. The fiscal cliff has become the way for the Republicans to save the country from bankruptcy by destroying the social safety net put in place during the 1930s, supplemented by Lyndon Johnson’s “Great Society” in the mid-1960s.
 
Now that there are no jobs, now that real family incomes have been stagnant or declining for decades, and now that wealth and income have been concentrated in few hands is the time, Republicans say, to destroy the social safety net so that we don’t fall over the fiscal cliff.
In human history, such a policy usually produces revolt and revolution, which is what the US so desperately needs.
 
Perhaps our stupid and corrupt policymakers are doing us a favor after all.

DO REPUBLICAN REPRESENTATIVES ELECTED FROM THE RANKS OF THE TEA PARTY KEEP THEIR PROMISES TO THOSE WHO ELECTED THEM? NOPE!

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Cenk Ugyur & Josh Israel Talk About The Tea Party Bankrolling

http://www.youtube.com/watch?v=HgQGGDOdYIU&feature=colike

Published on May 22, 2012 by jasondavis13

www.thinkprogress.org

By Josh Israel and Adam Peck on May 21, 2012 at 3:45 pm

The 15 freshmen Republican representatives in the House Tea Party Caucus each ran in 2010 on a populist anti-Wall Street message, highlighting their opposition to bank bailouts like the 2008 Troubled Asset Relief Program (TARP) and criticizing Washington for enabling the banking sector as it became "Too Big to Fail." After winning, all fifteen received significant PAC contributions from the banking industry — and have become a reliable vote and mouthpiece for the financial industry, a ThinkProgress analysis of campaign contributions, voting records and public statements reveals.

Rather than campaigning on a typical pro-business platform, the Tea Party freshmen tapped into public resentment of big banks and bailouts. For example, then-candidate Sandy Adams (R-FL) said on her campaign website that she "opposes government bailouts" and "would have voted against TARP and the auto bailout." Jeff Landry (R-LA) said bailouts of private businesses had "corrupted our free market system by rewarding the irresponsible and penalizing the responsible," blasting "bank bailouts, which led to taxpayer money directly or indirectly going into multi-million dollar bonuses."

But in Congress, the Tea Party has toed the line for big banks. Eleven of the 15 have become co-sponsors of H.R. 3461, a top priority for the ABA. According to Americans for Financial Reform, the legislation would "tilt the playing field further in the direction of excessive deference to industry interests and tie the hands of regulators attempting to protect the public interest." The bill would make it harder for bank examiners to do their job, giving regulatory responsibilities to an industry that's already shown it can't police itself.

The lone Tea Party freshman member of the Financial Services Committee, Rep. Stephen Fincher (R-TN), has consistently voted with the industry and the Republican majority for weaker regulation of the sector.

And of the 15, all but McKinley and Rep. Tim Huelskamp (R-KS) voted for the GOP's 2013 budget proposal, which included the repeal of a key component of the financial sector regulation.

Their rhetoric has also become extremely friendly to the financial industry. Rep. Joe Walsh (R-IL) famously yelled at a constituent: "Don't blame banks, and don't blame the marketplace for the mess we're in right now! I am tired of hearing that crap! This pisses me off!" Rep. Diane Black (R-TN) bashed financial regulations as "part of a pattern of government interference in the private sector." Rep. Blake Fahrenthold (R-TX) warned "excessive regulations will hurt our financial institutions." Rep. David McKinley (R-WV) said that by regulating banking and financial institutions, "what they're doing is getting into our lives. And many of us are trying to find a way to get them to pull back." And several of the freshmen criticized Dodd-Frank's regulations for limiting credit availability for small businesses.

HEAR NO EVIL, SEE NO EVIL, SPEAK NO EVIL: THE NEW MOTTO OF A BIPARTISAN CONGRESSIONAL SUBCOMMITTEE SEEKING TO UNDERSTAND FINANCIAL DERIVATIVES: "WE MUST NOT SPEAK UNCOMFORABLE TRUTHS TO POWER."

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 theREALnews                                                                               Permalink

Bill Black on “Career Limiting Gestures” 

Bill Black on being “disinvited” to brief Congress because he might “bash the banks” 

Precis

I’ve just been definitively disinvited, for the second time in my career, from briefing members of Congress (in this case, about derivatives) on the grounds that they fear “bank bashing”.

By Bill Black

When I was the Deputy Director of FSLIC, House Banking Committee Chairman St Germain was helping Speaker Wright hold the FSLIC recapitalization bill hostage to extort favors for Texas control frauds, including Don Dixon’s Vernon Savings (which was providing prostitutes to the State of Texas’ top S&L regulator and was building towards having 96% of its ADC loans in default – which is why we referred to it as “Vermin”). The attack on our agency was that we were mad dogs biased against Texas S&Ls and causing the Texas crisis by closing too many insolvent but well-run Texas S&Ls. Our response had many elements, but one of our principal points was that the Texas S&Ls we were closing were typically control frauds. At this juncture, St Germain’s staffers made a mistake. They requested that we testify on a host of issues, but the invite letter had a zinger, premised on an article saying that the Feds were slow to prosecute frauds in the Southwest. The invite specifically called for us to respond and discuss the role of fraud in the Southwest. We used the opportunity to explain the extensive role of fraud in Texas S&L failures.

The day of the hearing, I walked toward the witness table, but was called over by St Germain’s chief of staff. He proceeded to disinvite us from testifying on the grounds that we had filed non-responsive testimony. (We had, of course, responded to every inquiry they made. They simply hated the response because we documented the enormous role that control fraud was playing in causing Texas S&Ls to fail.)

Today, I received definitive word that I had been disinvited from a bipartisan briefing of members of Congress on the subject of financial derivatives. I have deleted the name of the staffer because he is not the issue. The relevant email thread is below.

The member of Congress putting the event together is one of the strongest advocates of the need for banking reform. I have assisted the Member’s staff in the past in such efforts. The Member’s chief of staff called me today. His position is that I was never invited to participate and that it was unfortunate that I booked the flights and put UMKC on the hook for the non-refundable fares and hotel before informing his office that I was accepting their inquiry about participation (as opposed to invitation). He explains that it is impossible physically to have me participate and that the decision not to have me participate has nothing to do with concerns about “balance” or “bank bashing.” I emphasize also that, unlike St Germain’s disinvitation the email thread states an interest in inviting me to speak at future briefings. I hope that such invitations will be made. The Member and the Member’s staff were polite while St Germain’s chief of staff was deliberately rude.

Nevertheless, I think that the Chief of Staff’s phone call to me explaining their view that I was never invited makes my point. We all know that is simple to add a panelist. What is really going on is that things are so toxic in Congress now, and the largest banks are so sensitive to any criticism, that the progressives fear that any criticism of bank practices that will cause the next financial crisis will be considered “bank bashing” and will cause Republicans to be unwilling to participate. The fact that I have a 30 year record of non-partisan service to the nation on banking matters, including service as a banker with the Federal Home Loan Bank of San Francisco, does not count in such a world. We must not speak uncomfortable truths to power. You will see that it is his staff that informed me that the concerns that prevented me from joining the panel were maintaining a “consensus” about the panel’s “balance” and avoiding “bank bashing.”

I remain supportive, of course, of members of Congress reaching out and getting facts about our financial system, so I hope that the Member’s efforts to create a series of bipartisan briefings succeed. Self-censorship, however, is most debilitating form of censorship. A “consensus” that seeks to minimize any criticism of the “too big to fail” banks on the grounds that criticism equates to “bank bashing” is a consensus to play ostrich.

Excerpts from the e mail thread: 

From: Sent: Wednesday, May 23, 2012 5:34 PM To: Black, William Subject: Re: Financial Services Panel Series: Derivatives

Mr. Black, 

It was nice speaking with you earlier and I thank you for your consideration. Currently, the panel information is as follows:

Financial Services Panel Series: Derivatives Thursday, May 31 2:00 p.m. to 4:00 p.m. Rayburn 2226

Moderator: – CNBC or Bloomberg

Panelists:

Wallace Turbeville – Senior Fellow, Demos (Formerly of Goldman Sachs) -John Parsons – Senior Lecturer in Finance, MIT -Nela Richardson – Senior Economic Analyst, Bloomberg Government (formerly of Freddie Mac and the Commodities Futures Trading Commission) -Marcus Stanley – Policy Director, Americans for Financial Reform (AFR) -Chris Young – International Swaps and Derivatives Association (ISDA) -Mark Calabria – Dir. Of Financial Regulation Studies, CATO Institute

Please let me know if you have any questions or suggestions.

From: Black, William [mailto:blackw@umkc.edu] Sent: Thursday, May 24, 2012 10:28 PM To: Subject: RE: Financial Services Panel Series: Derivatives

I am pleased to accept your invitation to participate on the panel. My cell is [redacted]. I’ll be flying in from California. Please send me information on logistics/venue etc. as soon as you have more details.

Best, Bill

Best regards,

May 25, 2012 10:36 a.m.

I want to sincerely thank you for your willingness to participate and contribute to the discussion. Unfortunately, we cannot add any additional participants to the panel. In efforts to proceed in a bipartisan manner, we have achieved a nice balance of individuals who will accommodate various points of views on derivatives regulations. Accordingly, adding another participant at this time would disrupt that balance and will spark concerns with our Republican colleagues.

I apologize for any inconvenience this may have caused, but I do hope you will consider joining us for the next panel we are convening to discuss the Volcker Rule. Next week’s panel is intended to be the first in a series and I intend to reach out to you again and Mr. Greenberg.

Thanks again for your assistance and the resources you provided earlier in the week. And I hope you enjoy the Memorial Day weekend.

Best regards, 

——————————- 

Sent using BlackBerry 

From: Black, William [mailto:blackw@umkc.edu] > Sent: Friday, May 25, 2012 02:17 PM 

To: 

Subject: Re: Financial Services Panel Series: Derivatives > > We have already booked the flights and hotel in response to your invitation. Please reconsider. > > This will cause our school a serious loss and me considerable embarrassment after I called in favors to be able to accept.

From: Black, William [mailto:blackw@umkc.edu] 

Sent: Friday, May 25, 2012 02:33 PM 

To: 

Subject: Re: Financial Services Panel Series: Derivatives

FYI, I have testified to Congress five times about this crisis and two of those appearances (once in each chamber) were as the Republican designated witness so I won’t throw off any bipartisan balance—quite the opposite. 

Best, Bill

Sent: Sun 5/27/2012 11:16 AM

In case you did not receive my voice message I wanted to once again apologize for any incovenience you may have incurred and thank you for your willingness to participate. As I mentioned before, in the time between my initial call to your office and when we spoke last week, I had confirmed the participation of several others who agreed to do so under the understanding that the panel would be bipartisan and non confrontational. Quite frankly, many of the trade associations were hesitant to speak in public because of what they thought would be a public ‘bank bashing.’ So for this initial panel, we have tread carefully because we want Republican participation and we want to keep these forums ongoing. It is my hope that your colleagues and university will understand that we tried to accomodate another participant, but we just could not make it work without disrupting consensus. I will be in touch with you regarding the next panel we are organizing to discuss the Volcker Rule.

Tuesday 5/29/12 10:41 a.m.

Unfortunately, we cannot accommodate an additional participant. I understand and appreciate your experience, but the factors I outlined in the previous email still exist and this change would compromise the consensus we have achieved. I do wish you would have confirmed your availability with me before making arrangements. When we last spoke, it was my understanding that you had to check your schedule first. So I was a little surprised that you were so quickly able to clear your schedule and make flight arrangements before we had a follow-up conversation. In any event, your previous work as a regulator during the S&L crisis is highly noted and I do think your primary knowledge and insight is helpful as Congress and the agencies grapple with the 21st century financial regulation. To that end, I do hope you will consider participation in the follow up panel, and I sincerely apologize for any inconvenience you have incurred.

Best, Bill Black

Bio

William K. Black, author of THE BEST WAY TO ROB A BANK IS TO OWN ONE, teaches economics and law at the University of Missouri -- Kansas City (UMKC). He was the Executive Director of the Institute for Fraud Prevention from 2005-2007. He has taught previously at the LBJ School of Public Affairs at the University of Texas at Austin and at Santa Clara University, where he was also the distinguished scholar in residence for insurance law and a visiting scholar at the Markkula Center for Applied Ethics. Black was litigation director of the Federal Home Loan Bank Board, deputy director of the FSLIC, SVP and general counsel of the Federal Home Loan Bank of San Francisco, and senior deputy chief counsel, Office of Thrift Supervision. He was deputy director of the National Commission on Financial Institution Reform, Recovery and Enforcement. Black developed the concept of "control fraud" -- frauds in which the CEO or head of state uses the entity as a "weapon." Control frauds cause greater financial losses than all other forms of property crime combined. He recently helped the World Bank develop anti-corruption initiatives and served as an expert for OFHEO in its enforcement action against Fannie Mae's former senior management.

CAPITAL ACCOUNT: THE WASHINGTON DC OFFICE OF A NEWS SERVICE BASED IN RUSSIA GETS TO THE HEART OF MATTERS AFFECTING THE WORLD'S ECONOMIES

Capital Account can be accessed here and subscribed to if you wish.

I have known of Russia Today (RT) from videos I had come across at random.  But it was only a few days ago I that was clued in to Capital Account by Paul Craig Roberts, an economist who was Assistant Secretary of the Treasury under Ronald Reagan and occasionally picks bones with with Keynsian economists.  However, in the present-day state of the world's economy, PCR explicitly recommended the videos below of interviews with Keynsian economists Michael Hudson and Bill Black, presumably because he agrees with their analyses. The host and commentator of Capital Account, Lauren Lyster, is incredibly well versed in issues affecting the economy. I confess that I haven't watched the U.S. "mainstream media" news analyses in a month of Sundays, so I hope that some readers of this post who have will append comments on their impressions of the similarities and differences.

http://www.youtube.com/watch?feature=player_profilepage&v=zJhGExuAmtE

Michael Hudson, "Technocrats are Lobbyists for the Wall Street Gang"

12/07/11


While the failure of MF Global (together with its CEO Jon Corzine) is at the center of the present discussion, it is not the only large financial institution that lacks the collateral to cover it's gambling debts. Indeed, all of the large banks in the U.S. and many of those in Europe are presently on "life support," to pick a metaphor.

http://www.youtube.com/watch?feature=player_profilepage&v=hHcMKxp30gs
William K. Black: Justice Department is the Dog that has Refused to Bark for a Decade
12/08/11



http://www.youtube.com/user/CapitalAccount?feature=watch#p/f/14/xFlV_js4j_o

Gerald Celente, "They are Robbing Celente to pay the Goldman Sachs Gang"

12/13/11


Unlike the videos above, the following is a full length show.

Jon Corzine, CEO of MF Global (and former CEO of Goldman Sachs, U.S. Senator, and New Jersey Governor), apparently presided over MF Global's taking money from customer savings accounts for use as collateral for a speculative "investments" by the supposedly-segregated investment division, which lost big time. American Farmers and airlines are among the victims. Many of the European banks are in the same situation. The fall in gold prices is viewed by interviewee Karl Denninger as being the result of the big banks in this situation selling off all their tangible assets to cover a landslide of withdrawals from savings accounts.


http://www.youtube.com/watch?feature=player_profilepage&v=P0N_tHh8f4U

Capital Account: Gold sinking, Dollar rising - are we facing a Financial Crisis worse than 2008?

12/15/11