Tuesday, August 31, 2010

Fighting Foreclosure

From Implode O Meter:

Over 62 million mortgages are now held in the name of MERS, an electronic recording system devised by and for the convenience of the mortgage industry. A California bankruptcy court, following landmark cases in other jurisdictions, recently held that this electronic shortcut breaks the chain of title, voiding foreclosure. The logical result could be 62 million homes that are foreclosure-proof.

In a Newsweek article a year ago called "Too Big to Jail: Why Prosecutors Won’t Hit Wall Street Hard in the Subprime Scandal," Michael Hirsch wrote that we were unlikely to see trials and convictions like those in the savings and loan scandals of the 1980s, because fraud and blame have been so widespread that there is no one to single out and jail. Said Hirsch:

“The sad irony is that in pleading collective guilt, most of Wall Street will escape whipping for a scheme that makes Bernie Madoff's shenanigans look like pickpocketing. At the crest of the real-estate bubble, fraud was systemic and Wall Street had essentially gone into the loan-sharking business.”

“Unfortunately,” he added, “prosecution of fraud is the only way you're going to get reform on Wall Street.”

Sure enough, a year later we got a banking reform bill that was so watered down that Wall Street got nearly everything it wanted. The too-big-to-fails, rather than being whittled down to size, have grown even bigger, circumventing antitrust laws; and they are being allowed to carry on pretty much as before. The Federal Reserve, rather than being called on the carpet, has been given even more power; and the Consumer Protection Agency -- the main part of the bill with teeth – has been put under the Fed’s watchful eye. Congress and the Justice Department seem to have bowed out, leaving no one to hold the finance industry to account.

But the best laid plans even of Wall Street can sometimes go awry. In an ironic twist, the industry may wind up tripping over its own Achilles heel, the Mortgage Electronic Registration Systems or MERS. An online computer software program for tracking mortgage ownership and rights, MERS is, according to its website, “an innovative process that simplifies the way mortgage ownership and servicing rights are originated, sold and tracked. Created by the real estate finance industry, MERS eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans.” Or as Karl Denninger puts it, “MERS own website claims that it exists for the purpose of circumventing assignments and documenting ownership!”

MERS was developed in the early 1990s by a number of financial entities, including Bank of America, Countrywide, Fannie Mae, and Freddie Mac, allegedly to allow consumers to pay less for mortgage loans. That did not actually happen, but what MERS did allow was the securitization and shuffling around of mortgages behind a veil of anonymity. The result was not only to cheat local governments out of their recording fees but to defeat the purpose of the recording laws, which was to guarantee purchasers clean title. Worse, MERS facilitated an explosion of predatory lending in which lenders could not be held to account because they could not be identified, either by the preyed-upon borrowers or by the investors seduced into buying bundles of worthless mortgages. As alleged in a Nevada class action called Lopez vs. Executive Trustee Services, et al.:

“Before MERS, it would not have been possible for mortgages with no market value . . . to be sold at a profit or collateralized and sold as mortgage-backed securities. Before MERS, it would not have been possible for the Defendant banks and AIG to conceal from government regulators the extent of risk of financial losses those entities faced from the predatory origination of residential loans and the fraudulent re-sale and securitization of those otherwise non-marketable loans. Before MERS, the actual beneficiary of every Deed of Trust on every parcel in the United States and the State of Nevada could be readily ascertained by merely reviewing the public records at the local recorder’s office where documents reflecting any ownership interest in real property are kept. . . .

“After MERS, . . . the servicing rights were transferred after the origination of the loan to an entity so large that communication with the servicer became difficult if not impossible. . . . The servicer was interested in only one thing – making a profit from the foreclosure of the borrower’s residence – so that the entire predatory cycle of fraudulent origination, resale, and securitization of yet another predatory loan could occur again. This is the legacy of MERS, and the entire scheme was predicated upon the fraudulent designation of MERS as the ‘beneficiary’ under millions of deeds of trust in Nevada and other states.”

MERS now holds over 62 million mortgages in its name, including over half of all new U.S. residential mortgage loans. But courts are increasingly ruling that MERS is merely a nominee, without standing to foreclose on the collateral that makes up a major portion of the portfolios of

some very large banks. It seems the banks claiming to be the real parties in interest may have short-circuited themselves out of the chain of title entitling them to the collateral.

Technicality or Fatal Flaw?

To foreclose on real property, the plaintiff must be able to produce a promissory note or assignment establishing title. Early cases focused on MERS’ inability to produce such a note, but most courts continued to consider the note a mere technicality and ignored it. Landmark newer opinions, however, stress that this defect is not just a procedural but a substantive failure, one that is fatal to the plaintiff’s case.

The latest of these decisions came down in California on May 20, 2010, in a bankruptcy case called In re Walker, Case no. 10-21656-E–11. The court held that MERS could not foreclose because it was a mere nominee, and that as a result plaintiff Citibank could not collect on its claim. The judge opined:

“Since no evidence of MERS’ ownership of the underlying note has been offered, and other courts have concluded that MERS does not own the underlying notes, this court is convinced that MERS had no interest it could transfer to Citibank. Since MERS did not own the underlying note, it could not transfer the beneficial interest of the Deed of Trust to another. Any attempt to transfer the beneficial interest of a trust deed without ownership of the underlying note is void under California law.”

In support, the judge cited In Re Vargas (California Bankruptcy Court); Landmark v. Kesler (Kansas Supreme Court); LaSalle Bank v. Lamy (a New York case); and In Re Foreclosure Cases (the “Boyko” decision from Ohio Federal Court). (For more on these earlier cases, see here, here and here.) The court concluded:

“Since the claimant, Citibank, has not established that it is the owner of the promissory note secured by the trust deed, Citibank is unable to assert a claim for payment in this case.”

The broad impact the case could have on California foreclosures is suggested by attorney Jeff Barnes, who writes:

“This opinion . . . serves as a legal basis to challenge any foreclosure in California based on a MERS assignment; to seek to void any MERS assignment of the Deed of Trust or the note to a third party for purposes of foreclosure; and should be sufficient for a borrower to not only obtain a TRO [temporary restraining order] against a Trustee’s Sale, but also a Preliminary Injunction barring any sale pending any litigation filed by the borrower challenging a foreclosure based on a MERS assignment.”

While not binding on courts in other jurisdictions, the ruling could serve as persuasive precedent there as well, because the court cited non-bankruptcy cases related to the lack of authority of MERS, and because the opinion is consistent with prior rulings in Idaho and Nevada Bankruptcy courts on the same issue.

RICO and Fraud Charges

Other suits go beyond merely challenging title to alleging criminal activity. On July 26, 2010, a class action was filed in Florida seeking relief against MERS and an associated legal firm for racketeering and mail fraud. It alleges that the defendants used “the artifice of MERS to sabotage the judicial process to the detriment of borrowers;” that “to perpetuate the scheme, MERS was and is used in a way so that the average consumer, or even legal professional, can never determine who or what was or is ultimately receiving the benefits of any mortgage payments;” that the scheme depended on “the MERS artifice and the ability to generate any necessary ‘assignment’ which flowed from it;” and that “by engaging in a pattern of racketeering activity, specifically ‘mail or wire fraud,’ the Defendants . . . participated in a criminal enterprise affecting interstate commerce.”

Local governments deprived of filing fees may also be getting into the act, at least through representatives suing on their behalf. Qui tam actions allow for a private party or “whistle blower” to bring suit on behalf of the government for a past or present fraud on it. In State of California ex rel. Barrett R. Bates, filed May 10, 2010, the plaintiff qui tam sued on behalf of a long list of local governments in California against MERS and a number of lenders, including Bank of America, JPMorgan Chase and Wells Fargo, for “wrongfully bypass[ing] the counties’ recording requirements; divest[ing] the borrowers of the right to know who owned the promissory note . . .; and record[ing] false documents to initiate and pursue non-judicial foreclosures, and to otherwise decrease or avoid payment of fees to the Counties and the Cities where the real estate is located.” The complaint notes that “MERS claims to have ‘saved’ at least $2.4 billion dollars in recording costs,” meaning it has helped avoid billions of dollars in fees otherwise accruing to local governments. The plaintiff sues for treble damages for all recording fees not paid during the past ten years, and for civil penalties of between $5,000 and $10,000 for each unpaid or underpaid recording fee and each false document recorded during that period, potentially a hefty sum. Similar suits have been filed by the same plaintiff qui tam in Nevada and Tennessee.

Axing the Bankers’ Money Tree

Most courts continue to look the other way on MERS’ lack of standing to sue, but the argument has picked up enough steam to consider the rather stunning implications. If MERS is not the title holder of properties held in its name, the chain of title has been broken, and no one may have standing to sue. In MERS v. Nebaska Department of Banking and Finance, MERS insisted that it had no actionable interest in title, and the court agreed.

An August 2010 article in Mother Jones titled “Fannie and Freddie’s Foreclosure Barons” exposes a widespread practice of “foreclosure mills” in backdating assignments after foreclosures have been filed. Not only is this perjury, a prosecutable offense, but if MERS was never the title holder, there is nothing to assign. The defaulting homeowners could wind up with free and clear title.

In Florida, Jacksonville Area Legal Aid attorney April Charney has been using the missing-note argument ever since she first identified that weakness in the lenders’ case in 2004. Five years later, she says, some of those homeowners are still in their homes. According to a Huffington Post article titled “‘Produce the Note’ Movement Helps Stall Foreclosures”:

“Because of the missing ownership documentation, Charney is now starting to file quiet title actions, hoping to get her homeowner clients full title to their homes (a quiet title action ‘quiets’ all other claims). Charney says she’s helped thousands of homeowners delay or prevent foreclosure, and trained thousands of lawyers across the country on how to protect homeowners and battle in court.”

If courts overwhelmed with foreclosures decide to take up the cause, the result could be millions of struggling homeowners with the banks off their backs, and millions of homes no longer on the books of some too-big-to-fail banks. Without those assets, the banks could again be looking at bankruptcy. As was pointed out in a San Francisco Chronicle article by attorney Sean Olender following the October 2007 Boyko decision:

“The ticking time bomb in the U.S. banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process.

“. . . The loans at issue dwarf the capital available at the largest U.S. banks combined, and investor lawsuits would raise stunning liability sufficient to cause even the largest U.S. banks to fail . . . .”

Nationalization of these giant banks might be the next logical step – a step that some commentators said should have been taken in the first place. When the banking system of Sweden collapsed following a housing bubble in the 1990s, nationalization of the banks worked out very well for that country.

The Swedish banks were largely privatized again when they got back on their feet, but it might be a good idea to keep some banks as publicly-owned entities, on the model of the Commonwealth Bank of Australia. For most of the 20th century it served as a “people’s bank,” making low interest loans to consumers and businesses through branches all over the country.

With the strengthened position of Wall Street following the 2008 bailout and the tepid 2010 banking reform bill, the U.S. is far from nationalizing its mega-banks now. But a committed homeowner movement to tear off the predatory mask called MERS could yet turn the tide. While courts are not likely to let 62 million homeowners off scot free, the defect in title created by MERS could give them significant new leverage at the bargaining table.

Ellen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest of eleven books, she turns those skills to an analysis of the Federal Reserve and “the money trust.” She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her websites are www.webofdebt.com, www.ellenbrown.com, and www.public-banking.com.

Monday, August 30, 2010

Conspiracy Theorist

I had dinner with friends Saturday evening and the after dinner talk took a slightly odd turn- the wives sat on the couch and had a separate conversation while the men sat around the dining room table digesting organic cow and pesto pasta while drinking left over wine. It struck me as odd because the arrangement, into which we fell separating men from women seemed reminiscent of an earlier era when women removed themselves and men passed the port and cigars. The men I was sitting with are in their 30s, centrist Democrats and scientists. I was the old fart holding out for the notion, radical to them, that the future was not going to be in any way shape or form, equivalent economically to the immediate past. I have taken to telling myself that tomorrow's economy will never be as good as yesterday's and when I made this pronouncement they laughed at me.

The notion that the American middle class is slipping into the abyss of poverty doesn't seem like a very radical notion to me, and so even though I do not prophesy, this "prediction" did not seem very bold to me. It seemed bold to the youngsters at the table. They are convinced the old economy is coming back, though how exactly they couldn't say. They seem to be fed by the demons of television news arguing that if people wanted work they could find it, a notion so bizarre to me that I knew not what to say. Who amongst us enjoys the social and physical degradation of unemployment? Who would refuse a job if offered? Who chooses unemployment voluntarily when official government statistics indicate the highest levels of unemployed in decades? They thought I was being silly. I showed them the Shadow Government Statistics page on the web. They read it, they understood it, they rejected it.

The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers.

The U-3 unemployment rate is the monthly headline number. The U-6 unemployment rate is the Bureau of Labor Statistics’ (BLS) broadest unemployment measure, including short-term discouraged and other marginally-attached workers as well as those forced to work part-time because they cannot find full-time employment.

Ha! they said triumphantly- it includes the marginally employed! They aren't unemployed! Right I said, they are the ones working a few hours a day with no benefits. How do you pay the rent on four hours a day? Indeed the very school district where these young tykes work has cut back the hours of many office clerks to just four hours a day. They are not, in my estimation properly employed. The youngsters glossed over my point.

When I suggested that there is something wrong in an economy that can't sustain the middle class on an average wage, I did get a nod of notional agreement. "I have wondered about that." So why is that? I explained as best I could how Elizabeth Warren researched that question and came up with some surprising answers in this video.
They looked at her analysis of fixed costs for families decades ago, when only one parent had to go to work, and fixed costs today when two parents work and can't get ahead, and the youngsters nodded, unwillingly but they accepted it was rational.

So then I came to the core of my argument about the economic slump that is unraveling our world. I made the claim that this time it is worse than past declines because our leaders, political and economic are working hand-in-glove to make sure we lose out. Our leaders, I insisted, don't want or need an American middle class, therefore we have to go. They scoffed. "I don't believe anyone can carry out such an elaborate plan!" one said. I was at pains to point out that the demise of the American Middle Class isn't a plan conceived in the heat of battle, not was it drawn up by a few thousand corporate leaders over lunch. I maintain it is a plan that has evolved over thirty years of patiently trying to dismantle every vestige of the New Deal and the Great Society. And it started with Ronald Reagan, the front man for the voices of a new American century. The demands to increase military spending and decrease taxes created vast deficits which have to be plugged by slashing government programs that serve the poor. This makes government inefficient therefore slash even more. This has been the drumbeat since 1981 and so loud has it been that President Clinton, the youngsters' hero joined in. Indeed abolishing welfare gave us a budget surplus by the end of his terms and they crowed about that.

Naturally President Bush increased the tempo and started up bigger wars and failed to cut spending and ran up even bigger deficits. Meanwhile it was clear to the elites that sneaking in tax cuts, fiddling with banking laws and cutting corners to increase corporate profits were not going to garner any attention from the masses. Even today with budget deficits everywhere there is a notion that a three percent tax break for the very wealthy should not be re-instituted even as services for the poor continue to get cut. They don't need the three percent, they just need to see they can get away with demanding it and have us meet their demands. The youngsters at the table scoffed at my theory calling me a conspiracy theorist. I shrugged. They think it is ludicrous to imagine corporate leaders planning to ship jobs overseas, to reduce domestic employment, to destroy unions, to allow health care costs to spiral out of reach of the middle class. They think I am a lunatic for imagining that our future is one of third world poverty.

At this point I am trying to learn to accept that fact that many Americans really don't want to change their belief systems to accommodate reality. If they believe that President Obama is an effective president, telling these youngsters that he is acting like a tool of corporate elites doesn't change their perception of the president; it changes their perception of me. I am a conspiracy theorist.

Friday, August 27, 2010


How Hyperinflation Will Happen
By Tyler Durden on zero hedge.

Right now, we are in the middle of deflation. The Global Depression we are experiencing has squeezed both aggregate demand levels and aggregate asset prices as never before. Since the credit crunch of September 2008, the U.S. and world economies have been slowly circling the deflationary drain.

To counter this, the U.S. government has been running massive deficits, as it seeks to prop up aggregate demand levels by way of fiscal “stimulus” spending—the classic Keynesian move, the same old prescription since donkey’s ears.

But the stimulus, apart from being slow and inefficient, has simply not been enough to offset the fall in consumer spending.

For its part, the Federal Reserve has been busy propping up all assets—including Treasuries—by way of “quantitative easing”.

The Fed is terrified of the U.S. economy falling into a deflationary death-spiral: Lack of liquidity, leading to lower prices, leading to unemployment, leading to lower consumption, leading to still lower prices, the entire economy grinding down to a halt. So the Fed has bought up assets of all kinds, in order to inject liquidity into the system, and bouy asset price levels so as to prevent this deflationary deep-freeze—and will continue to do so. After all, when your only tool is a hammer, every problem looks like a nail.

But this Fed policy—call it “money-printing”, call it “liquidity injections”, call it “asset price stabilization”—has been overwhelmed by the credit contraction. Just as the Federal government has been unable to fill in the fall in aggregate demand by way of stimulus, the Fed has expanded its balance sheet from some $900 billion in the Fall of ’08, to about $2.3 trillion today—but that additional $1.4 trillion has been no match for the loss of credit. At best, the Fed has been able to alleviate the worst effects of the deflation—it certainly has not turned the deflationary environment into anything resembling inflation.

Yields are low, unemployment up, CPI numbers are down (and under some metrics, negative)—in short, everything screams “deflation”.

Therefore, the notion of talking about hyperinflation now, in this current macro-economic environment, would seem . . . well . . . crazy. Right?

Wrong: I would argue that the next step down in this world-historical Global Depression which we are experiencing will be hyperinflation.

Most people dismiss the very notion of hyperinflation occurring in the United States as something only tin-foil hatters, gold-bugs, and Right-wing survivalists drool about. In fact, most sensible people don’t even bother arguing the issue at all—everyone knows that only fools bother arguing with a bigger fool.

A minority, though—and God bless ’em—actually do go ahead and go through the motions of talking to the crazies ranting about hyperinflation. These amiable souls diligently point out that in a deflationary environment—where commodity prices are more or less stable, there are downward pressures on wages, asset prices are falling, and credit markets are shrinking—inflation is impossible. Therefore, hyperinflation is even more impossible.

This outlook seems sensible—if we fall for the trap of thinking that hyperinflation is an extention of inflation. If we think that hyperinflation is simply inflation on steroids—inflation-plus—inflation with balls—then it would seem to be the case that, in our current deflationary economic environment, hyperinflation is not simply a long way off, but flat-out ridiculous.

But hyperinflation is not an extension or amplification of inflation. Inflation and hyperinflation are two very distinct animals. They look the same—because in both cases, the currency loses its purchasing power—but they are not the same.

Inflation is when the economy overheats: It’s when an economy’s consumables (labor and commodities) are so in-demand because of economic growth, coupled with an expansionist credit environment, that the consumables rise in price. This forces all goods and services to rise in price as well, so that producers can keep up with costs. It is essentially a demand-driven phenomena.

Hyperinflation is the loss of faith in the currency. Prices rise in a hyperinflationary environment just like in an inflationary environment, but they rise not because people want more money for their labor or for commodities, but because people are trying to get out of the currency. It’s not that they want more money—they want less of the currency: So they will pay anything for a good which is not the currency.

Right now, the U.S. government is indebted to about 100% of GDP, with a yearly fiscal deficit of about 10% of GDP, and no end in sight. For its part, the Federal Reserve is purchasing Treasuries, in order to finance the fiscal shortfall, both directly (the recently unveiled QE-lite) and indirectly (through the Too Big To Fail banks). The Fed is satisfying two objectives: One, supporting the government in its efforts to maintain aggregate demand levels, and two, supporting asset prices, and thereby prevent further deflationary erosion. The Fed is calculating that either path—increase in aggregate demand levels or increase in aggregate asset values—leads to the same thing: A recovery in the economy.

This recovery is not going to happen—that’s the news we’ve been getting as of late. Amid all this hopeful talk about “avoiding a double-dip”, it turns out that we didn’t avoid a double-dip—we never really managed to claw our way out of the first dip. No matter all the stimulus, no matter all the alphabet-soup liquidity windows over the past 2 years, the inescapable fact is that the economy has been—and is headed—down.

But both the Federal government and the Federal Reserve are hell-bent on using the same old tired tools to “fix the economy”—stimulus on the one hand, liquidity injections on the other.

It’s those very fixes that are pulling us closer to the edge. Why? Because the economy is in no better shape than it was in September 2008—and both the Federal Reserve and the Federal government have shot their wad. They got nothin’ left, after trillions in stimulus and trillions more in balance sheet expansion—

—but they have accomplished one thing: They have undermined Treasuries. These policies have turned Treasuries into the spit-and-baling wire of the U.S. financial system—they are literally the only things holding the whole economy together.

In other words, Treasuries are now the New and Improved Toxic Asset. Everyone knows that they are overvalued, everyone knows their yields are absurd—yet everyone tiptoes around that truth as delicately as if it were a bomb. Which is actually what it is.

So this is how hyperinflation will happen:

One day—when nothing much is going on in the markets, but general nervousness is running like a low-grade fever (as has been the case for a while now)—there will be a commodities burp: A slight but sudden rise in the price of a necessary commodity, such as oil.

This will jiggle Treasury yields, as asset managers will reduce their Treasury allocations, and go into the pressured commodity, in order to catch a profit. (Actually it won’t even be the asset managers—it will be their programmed trades.) These asset managers will sell Treasuries because, effectively, it’s become the principal asset they have to sell.

It won’t be the volume of the sell-off that will pique Bernanke and the drones at the Fed—it will be the timing. It’ll happen right before a largish Treasury auction. So Bernanke and the Fed will buy Treasuries, in an effort to counteract the sell-off and maintain low yields—they want to maintain low yields in order to discourage deflation. But they’ll also want to keep the Treasury cheaply funded. QE-lite has already set the stage for direct Fed buys of Treasuries. The world didn’t end. So the Fed will feel confident as it moves forward and nips this Treasury yield jiggle in the bud.

The Fed’s buying of Treasuries will occur in such a way that it will encourage asset managers to dump even more Treasuries into the Fed’s waiting arms. This dumping of Treasuries won’t be out of fear, at least not initially. Most likely, in the first 15 minutes or so of this event, the sell-off in Treasuries will be orderly, and carried out with the idea (at the time) of picking up those selfsame Treasuries a bit cheaper down the line.

However, the Fed will interpret this sell-off as a run on Treasuries. The Fed is already attuned to the bond markets’ fear that there’s a “Treasury bubble”. So the Fed will open its liquidity windows, and buy up every Treasury in sight, precisely so as to maintain “asset price stability” and “calm the markets”.

The Too Big To Fail banks will play a crucial part in this game. See, the problem with the American Zombies is, they weren’t nationalized. They got the best bits of nationalization—total liquidity, suspension of accounting and regulatory rules—but they still get to act under their own volition, and in their own best interest. Hence their obscene bonuses, paid out in the teeth of their practical bankruptcy. Hence their lack of lending into the weakened economy. Hence their hoarding of bailout monies, and predatory business practices. They’ve understood that, to get that sweet bail-out money (and those yummy bonuses), they have had to play the Fed’s game and buy up Treasuries, and thereby help disguise the monetization of the fiscal debt that has been going on since the Fed began purchasing the toxic assets from their balance sheets in 2008.

But they don’t have to do what the Fed tells them, much less what the Treasury tells them. Since they weren’t really nationalized, they’re not under anyone’s thumb. They can do as they please—and they have boatloads of Treasuries on their balance sheets.

So the TBTF banks, on seeing this run on Treasuries, will add to the panic by acting in their own best interests: They will be among the first to step off Treasuries. They will be the bleeding edge of the wave.

Here the panic phase of the event begins: Asset managers—on seeing this massive Fed buy of Treasuries, and the American Zombies selling Treasuries, all of this happening within days of a largish Treasury auction—will dump their own Treasuries en masse. They will be aware how precarious the U.S. economy is, how over-indebted the government is, how U.S. Treasuries look a lot like Greek debt. They’re not stupid: Everyone is aware of the idea of a “Treasury bubble” making the rounds. A lot of people—myself included—think that the Fed, the Treasury and the American Zombies are colluding in a triangular trade in Treasury bonds, carrying out a de facto Stealth Monetization: The Treasury issues the debt to finance fiscal spending, the TBTF banks buy them, with money provided to them by the Fed.

Whether it’s true or not is actually beside the point—there is the widespread perception that that is what’s going on. In a panic, widespread perception is your trading strategy.

So when the Fed begins buying Treasuries full-blast to prop up their prices, these asset managers will all decide, “Time to get out of Dodge—now.”

Note how it will not be China or Japan who all of a sudden decide to get out of Treasuries—those two countries will actually be left holding the bag. Rather, it will be American and (depending on the time of day when the event happens) European asset managers who get out of Treasuries first. It will be a flash panic—much like the flash-crash of last May. The events I describe above will happen in a very short span of time—less than an hour, probably. But unlike the event in May, there will be no rebound.

Notice, too, that Treasuries will maintain their yields in the face of this sell-off, at least initially. Why? Because the Fed, so determined to maintain “price stability”, will at first prevent yields from widening—which is precisely why so many will decide to sell into the panic: The Bernanke Backstop won’t soothe the markets—rather, it will make it too tempting not to sell.

The first of the asset managers or TBTF banks who are out of Treasuries will look for a place to park their cash—obviously. Where will all this ready cash go?


By the end of that terrible day, commodites of all stripes—precious and industrial metals, oil, foodstuffs—will shoot the moon. But it will not be because ordinary citizens have lost faith in the dollar (that will happen in the days and weeks ahead)—it will happen because once Treasuries are not the sure store of value, where are all those money managers supposed to stick all these dollars? In a big old vault? Under the mattress? In euros?

Commodities: At the time of the panic, commodities will be perceived as the only sure store of value, if Treasuries are suddenly anathema to the market—just as Treasuries were perceived as the only sure store of value, once so many of the MBS’s and CMBS’s went sour in 2007 and 2008.

It won’t be commodity ETF’s, or derivatives—those will be dismissed (rightfully) as being even less safe than Treasuries. Unlike before the Fall of ’08, this go-around, people will pay attention to counterparty risk. So the run on commodities will be for actual, feel-it-’cause-it’s-there commodities. By the end of the day of this panic, commodities will have risen between 50% and 100%. By week’s end, we’re talking 150% to 250%. (My private guess is gold will be finessed, but silver will shoot up the most—to $100 an ounce within the week.)

Of course, once commodities start to balloon, that’s when ordinary citizens will get their first taste of hyperinflation. They’ll see it at the gas pumps.

If oil spikes from $74 to $150 in a day, and then to $300 in a matter of a week—perfectly possible, in the midst of a panic—the gallon of gasoline will go to, what: $10? $15? $20?

So what happens then? People—regular Main Street people—will be crazy to buy up commodities (heating oil, food, gasoline, whatever) and buy them now while they are still more-or-less affordable, rather than later, when that $15 gallon of gas shoots to $30 per gallon.

If everyone decides at roughly the same time to exchange one good—currency—for another good—commodities—what happens to the relative price of one and the relative value of the other? Easy: One soars, the other collapses.

When people freak out and begin panic-buying basic commodities, their ordinary financial assets—equities, bonds, etc.—will collapse: Everyone will be rushing to get cash, so as to turn around and buy commodities.

So immediately after the Treasury markets tank, equities will fall catastrophically, probably within the next few days following the Treasury panic. This collapse in equity prices will bring an equivalent burst in commodity prices—the second leg up, if you will.

This sell-off of assets in pursuit of commodities will be self-reinforcing: There won’t be anything to stop it. As it spills over into the everyday economy, regular people will panic and start unloading hard assets—durable goods, cars and trucks, houses—in order to get commodities, principally heating oil, gas and foodstuffs. In other words, real-world assets will not appreciate or even hold their value, when the hyperinflation comes.

This is something hyperinflationist-skeptics never quite seem to grasp: In hyperinflation, asset prices don’t skyrocket—they collapse, both nominally and in relation to consumable commodities. A $300,000 house falls to $60,000 or less, or better yet, 50 ounces of silver—because in a hyperinflationist episode, a house is worthless, whereas 50 bits of silver can actually buy you stuff you might need.

Right now, I’m guessing that sensible people who’ve read this far are dismissing me as being full of shit—or at least victim of my own imagination. These sensible people, if they deign to engage in the scenario I’ve outlined above, will argue that the government—be it the Fed or the Treasury or a combination thereof—will find a way to stem the panic in Treasuries (if there ever is one), and put a stop to hyperinflation (if such a foolish and outlandish notion ever came to pass in America).

Uh-huh: So the Government will save us, is that it? Okay, so then my question is, How?

Let’s take the Fed: How could they stop a run on Treasuries? Answer: They can’t. See, the Fed has already been shoring up Treasuries—that was their strategy in 2008—’09: Buy up toxic assets from the TBTF banks, and have them turn around and buy Treasuries instead, all the while carefully monitoring Treasuries for signs of weakness. If Treasuries now turn toxic, what’s the Fed supposed to do? Bernanke long ago ran out of ammo: He’s just waving an empty gun around. If there’s a run on Treasuries, and he starts buying them to prop them up, it’ll only give incentive to other Treasury holders to get out now while the getting’s still good. If everyone decides to get out of Treasuries, then Bernanke and the Fed can do absolutely nothing effective. They’re at the mercy of events—in fact, they have been for quite a while already. They just haven’t realized it.

Well if the Fed can’t stop this, how about the Federal government—surely they can stop this, right?

In a word, no. They certainly lack the means to prevent a run on Treasuries. And as to hyperinflation, what exactly would the Federal government do to stop it? Implement price controls? That will only give rise to a rampant black market. Put soldiers out on the street? America is too big. Squirt out more “stimulus”? Sure, pump even more currency into a rapidly hyperinflating everyday economy—right . . .

(BTW, I actually think that this last option is something the Federal government might be foolish enough to try. Some moron like Palin or Biden might well advocate this idea of helter-skelter money-printing so as to “help all hard-working Americans”. And if they carried it out, this would bring us American-made images of people using bundles of dollars to feed their chimneys. I actually don’t think that politicians are so stupid as to actually start printing money to “fight rising prices”—but hey, when it comes to stupidity, you never know how far they can go.)

In fact, the only way the Federal government might be able to ameliorate the situation is if it decided to seize control of major supermarkets and gas stations, and hand out cupon cards of some sort, for basic staples—in other words, food rationing. This might prevent riots and protect the poor, the infirm and the old—it certainly won’t change the underlying problem, which will be hyperinflation.

“This is all bloody ridiculous,” I can practically hear the hyperinflation skeptics fume. “We’re just going through what the Japanese experienced: Just like the U.S., they went into massive government stimulus—hell, they invented quantitative easing—and look what’s happened to them: Stagnation, yes—hyperinflation, no.”

That’s right: The parallels with Japan are remarkably similar—except for one key difference. Japanese sovereign debt is infinitely more stable than America’s, because in Japan, the people are savers—they own the Japanese debt. In America, the people are broke, and the Nervous Nelly banks own the debt. That’s why Japanese sovereign debt is solid, whereas American Treasuries are soap-bubble-fragile.

That’s why I think there’ll be hyperinflation in America—that bubble’s soon to pop. I’m guessing if it doesn’t happen this fall, it’ll happen next fall, without question before the end of 2011.

The question for us now—ad portas to this hyperinflationary event—is, what to do?

Neanderthal survivalists spend all their time thinking about post-Apocalypse America. The real trick, however, is to prepare for after the end of the Apocalypse.

The first thing to realize, of course, is that hyperinflation might well happen—but it will end. It won’t be a never-ending situation—America won’t end up like in some post-Apocalyptic, Mad Max: Beyond Thuderdome industrial wasteland/playground. Admittedly, that would be cool, but it’s not gonna happen—that’s just survivalist daydreams.

Instead, after a spell of hyperinflation, America will end up pretty much like it is today—only with a bad hangover. Actually, a hyperinflationist spell might be a good thing: It would finally clean out all the bad debts in the economy, the crap that the Fed and the Federal government refused to clean out when they had the chance in 2007–’09. It would break down and reset asset prices to more realistic levels—no more $12 million one-bedroom co-ops on the UES. And all in all, a hyperinflationist catastrophe might in the long run be better for the health of the U.S. economy and the morale of the American people, as opposed to a long drawn-out stagnation. Ask the Japanese if they would have preferred a couple-three really bad years, instead of Two Lost Decades, and the answer won’t be surprising. But I digress.

Like Rothschild said, “Buy when there’s blood on the streets.” The thing to do to prepare for hyperinflation would be to invest in a diversified hard-metal basket before the event—no equities, no ETF’s, no derivatives. If and when hyperinflation happens, and things get bad (and I mean really bad), take that hard-metal basket and—right in the teeth of the crisis—buy residential property, as well as equities in long-lasting industries; mining, pharma and chemicals especially, but no value-added companies, like tech, aerospace or industrials. The reason is, at the peak of hyperinflation, the most valuable assets will be dirt-cheap—especially equities—especially real estate.

I have no idea what will happen after we reach the point where $100 is no longer enough to buy a cup of coffee—but I do know that, after such a hyperinflationist period, there’ll be a “new dollar” or some such, with a few zeroes knocked off the old dollar, and things will slowly get back to a new normal. I have no idea the shape of that new normal. I wouldn’t be surprised if that new normal has a quasi or de facto dictatorship, and certainly some form of wage-and-price controls—I’d say it’s likely, but for now that’s not relevant.

What is relevant is, the current situation cannot long continue. The Global Depression we are in is being exacerbated by the very measures being used to fix it—stimulus is putting pressure on Treasuries, which are being shored up by the Fed. This obviously cannot have a happy ending. Therefore, the smart money prepares for what it believes is going to happen next.

I think we’re going to have hyperinflation. I hope I have managed to explain why.

Thursday, August 26, 2010

Breaking Point

From naked capitalism by Yves Smith:

Normally, I don’t report on anecdotes from my immediate circle, but a set of conversations in less than a 24 hour period suggests that even those comparatively unaffected by the crisis are bracing themselves for the possibility of sudden, large-scale, adverse changes. And that sort of gnawing worry seems to be growing in New York despite being buoyed by TARP funds and covert bank subsidies.

When out on my rounds the day before yesterday, I ran into an old McKinsey colleague, who had subsequently had impressively titled jobs in Big Firms You Heard Of before semi-retiring to manage family money. He and his very accomplished wife were big Bush donors and had been invited to both inaugurations.

He made short order of niceties and got to the point: “We need more fiscal stimulus. Obama did too little and too much of what he spent on was liberal pork. We could and need to spend a lot on infrastructure. This is looking a lot like 1936. I’m afraid it could get really ugly. And I’m particularly worried that the Republicans will win big this fall. They’ll cut even deeper, that’s the last thing we need right now.”

No I am not making this up, and yes, this is one of the last people I would have expected to express this line of thinking.

Less than 24 hours later, I had lunch with a two long standing, keen observers and participants in the New York scene, as in very involved in some of the city’s important institutions. Both have witnessed the shift in values over the last thirty years and the rising stratification, particularly at the top end (New York has always been plutocratic, but it formerly had a large upper middle class and a much smaller and much less isolated upper crust).

They started by commenting on my Bill Gross post, which had mentioned the appalling Steve Schwarzman contention that taxing private equity overlords more on their carried interest was like HItler invading Poland. Schwarzman is not only not retreating from his remark, he is convinced that the reason the economy is so lousy is that rich men like him are not getting their way (this is if anything an understatement of their account. Both men expect his head to be the first on a pike).

The conversation turned to whether the US was going towards revolution or fascism. One argued for the a continuation of trends underway: that the continuing weakness of the Obama Administration (and the discrediting of other members of the elite) meant there was a power vacuum. The obvious group to exploit it is the most strident, uncompromising opportunists, an area where the extreme right has a monopoly. The other, who has ben reading up on the French Revolutions. took issue with the conventional idea that a revolution is impossible in America: “In France, the trigger was that people were hungry. We are close to that point than most think.” He stressed the desensitization to violence (video games, more and more violence) plus widespread gun ownership. And he pointed to rising and underreported crime in the city, for instance, assaults of cab drivers.

He also noted that he believed that there were a lot of people (and he meant in the upper income strata) who were barely holding on, keeping up appearances, and hoping something would break their way. Some might get lucky, but most will hit the wall financially.

This was an engaging and lively conversation, but it you stepped back, the content was grim. Another thread was the decay in values, that there has been two generations of parents not setting boundaries for their children. One lives next to one of the elite private schools and likes children, but called those in his ‘hood as “monsters,” describing how a boy was beating up on his nanny and he had to intercede.

These data points don’t converge neatly, but they suggest a deep-rooted anxiety that economic and social structures are near a breaking point, and whatever comes next is not likely to be pretty.

Wednesday, August 25, 2010

Bank Fraud Banksters

I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
Thomas Jefferson, (Attributed)

Written by Naomi Wolf, as reported on the naked capitalism website.

In 2005 I started to notice irregularities in a checking account I held with WaMu; but the irregularities were ambiguous. I sought at various times over the course of the next two years to go over all my statements — but had trouble getting all my records from both on line banking and from my branch itself. A busy working parent, I was certainly not as proactive as I should have been — and, like many consumers of bank services, since we had family accounts and two mortgages at WaMu for many years, and had good relationships with our local branch, I also made the mistake of trusting the bank.

I noticed eventually that checkbooks were missing from my home, and finally my accountant got enough of the records to see an unmistakable pattern of fraud, and called my attention to it. I filed a police report and alerted WaMu to the fraud. For month….I complied with what the WaMu bank officials directed me to do — which was to leave the accounts open so they could investigate, they said, the fraud. If the fraud is reported within six months of confirmation of fraud, it is liable for the loss.

Then the same officials who had directed me to keep the accounts open, disappeared — systematically, for just over six months. When I sought to talk to the fraud department, I still could not get records — including my own missing bank statements — even to see the full extent of my losses. The bank officials who had directed me to keep my accounts open were unavailable at the branch — over the course of many attempts to speak with them. The police at the Sixth Precinct needed to see the missing documents, but even they could not force WaMu to hand over their — my — records. (WaMu’s own internal emails cite a $300,000 figure for my loss from fraud — I still did not have enough of my records to identify the loss. It is illegal, by the way, to withhold from an account holder his or her own records).

At eight months after the fraud discovery was confirmed — eight months of trying to communicate with officials and a fraud department who were oddly unavailable or unresponsive — I received a form letter from the WaMu Fraud Department advising me that according to the regulations, I had had a six month window for taking action; and (since WaMu had played out the clock for eight months) the letter asserted that I had waited ‘too long’ and my case was closed.

Inadvertently, subsequent to that, a WaMu bank official handed me the wrong file — wrong from his point of view; illuminating from mine, and from any consumer’s. It contained emails, some of which you can see at TheSmokingGun.com, from WaMu bank officials to one another — and including emails from and to their counsel, PR department and and the fraud department — that take as given that stonewalling a client with a fraud claim on the bank is standard practice; and yet one freaked-out bank official in the emails warns his colleagues that if their mechanisms in this regard became known, their practices would be all over the newspapers.

I was stunned by what seemed from the emails to be a systemic practice. Why would a bank want to perpetuate bank fraud rather than fight it?

As I researched the issue and spoke to other consumer bank account holders whose accounts had been corrupted by fraud, and to consumer advocates, I learned how systemic experiences such as mine — and worse experiences — are becoming. I heard from consumers across the country from all walks of life who had also been misdirected by their banks, or told that for various technical reasons their corrupted accounts could not be closed, and then faced difficulty reaching fraud departments or officials once the fraud was confirmed….

Customers assume that banking regulation and Congressional oversight means that if they find fraud on their checking accounts, there is accountability — which is not in fact the case; strong bank lobbyists translate into weak protections for consumers and, as you can see from the emails, the bank’s reasonable assumption that most customers in this situation will not be able to hold them accountable. And indeed, since legal action is time-consuming and expensive, most defrauded bank customers do eventually give up and go away…..a bank’s fraud investigation department is actually likely fraudulently representing itself as the customer’s, rather than solely the bank’s, advocate. Banks such as WaMu — and now Chase, which bought WaMu — expect such people to simply go away. They — and we — should, rather, reach out to our elected representatives for wholesale reform — and put each and every such case on line, so consumers can see the worst offenders for themselves, and, with the power of the internet and their own consumer choices, protect themselves and demand accountability.

So, the new way we carry out civil disobedience is to mess with the bankers? Not exactly Paul Revere b ut perahps it's the best we can do.

Tuesday, August 24, 2010

From The Citizen newspaper:

District 2
George Neugent 54.86% (3,570)
Danny Coll 45.14% (2,937)
District 4
David Rice 64.79% (4,199)
Mario Di Gennaro 35.21% (2,282)

District 1
* Robin Smith-Martin 46.49% (5,855)
* Barbara Bowers 38.93% (4,903)
Judy Wild 14.58% (1,836)
District 5
Ron Martin 45.37% (5,872)
Debra Walker 29.87% (3,866)
Bruce Swango 13.22% (1,711)
Richard Bradley 11.54% (1,493)

District 2 (Rep.)
Dick Rudell 55.78% (3,255)
Howard Hubbard 44.22% (2,580)
District 2 (Dem.)
Dan Dombroski 57.07% (2,707)
Jay Marzella 42.93% (2,036)
District 5
Jack Bridges 62.36% (3,640)
Anthony Gibbons 37.64% (2,197)

Group 3
William Reagan Ptomey 64.87% (8,718)
Demetrios Efstratiou 35.13% (4,722)

** District 120
Morgan McPherson 54.63% (3,420)
Matt Gardi 45.37% (2,840)

Should the schools superintendent be:
Hired 63.83% (8,695)
Elected 36.17% (4,928)

From the Miami Herald:

Governor - GOP Primary
August 24, 2010 - 08:50PM ET
Florida - 3330 of 6867 Precincts Reporting - 48%
Name Party Votes Vote %
Scott , Rick GOP 442,540 46%
McCollum , Bill GOP 411,908 43%
McCalister , Mike GOP 100,025 10%

Governor - Dem Primary
August 24, 2010 - 08:53PM ET
Florida - 3400 of 6867 Precincts Reporting - 50%
Name Party Votes Vote %
Sink , Alex Dem 447,488 76%
Moore , Brian Dem 137,506 24%

U.S. Senate - GOP Primary
August 24, 2010 - 08:53PM ET
Florida - 3495 of 6867 Precincts Reporting - 51%
Name Party Votes Vote %
Rubio , Marco GOP 805,115 84%
Kogut , William GOP 87,779 9%
Escoffery , William GOP 64,448 7%

U.S. Senate - Dem Primary
August 24, 2010 - 08:50PM ET
Florida - 3478 of 6867 Precincts Reporting - 51%
Name Party Votes Vote %
Meek , Kendrick Dem 332,821 54%
Greene , Jeff Dem 204,463 33%
Burkett , Glenn Dem 45,876 7%
Ferre , Maurice Dem 33,582 5%

Meek, Rubio declared winners in U.S. Senate primary

The two worst candidates so Crist certainly gets my vote.

Primary Day

We rode to the polls my wife and I after she got back from work. It was a somber gray afternoon, not bright and sunny but hot and muggy and dark. My wife and I went to the polls on Summerland Key and we met some neighbors doing the collective thing, like good citizens should. My Democrat ballot paper was rather thin and I didn't vote for Attorney General as I had no idea who to select, though anyone would be better than Bill McCollum, the incumbent who is doing his best to court religious zealots in his drive for ever higher public office, the Governor's mansion he hopes. I hope not, decidedly.

I always ask myself what good does it do, my vote, but I am a confirmed participant in the act of voting. It's like reading the newspaper; sometimes I think I would live better if i didn't do it, but voting and reading the paper has become a habit, and when I vote I see myself as part of a continuum of voters who have probably done the same thing over the century since universal suffrage at least, and felt that not voting at all is the lesser of two evils. They let us vote; we pretend it matters. Perhaps one day I shall accidentally help elect another FDR, a true leader, not afraid to force principles down the throats of the unprincipled, a voice for us at the bottom. Until then I shall keep going back and giving it my best shot.

A Walking Dead Zombie Country

From Chaostheorien, http://www.chaostheorien.de/startseite a rather startling view of the future in the US if you only pay attention to the mainstream.

Freitag, 20. August 2010 00:23
von Lars Schall

The high-profile financial pundit Max Keiser doesn’t shy away from crystal-clear, unmistakable statements. The following exclusive interview is no exception. Mr. Keiser sees an attack exercised against the majority of people in the U.S., sets out why gold is in no bubble at all, points at a remarkable move by the Harvard University, and has an advice to some US-American billionaires disguised as noble philanthropists: “Just pay your taxes and shut up!”

Max Keiser, born January 23, 1960 in New Rochelle, N.Y., USA, has been involved with markets and finance for 25 years. He started his career as a stock broker on Wall Street after graduating 1983 from New York University.

He is the inventor of the "Virtual Specialist Technology" (US patent number 5950176)- a software system used by the Hollywood Stock Exchange, and is the creator, co-founder and former CEO of HSX Holdings/Hollywood Stock Exchange, which allows traders to exchange virtual securities such as "MovieStocks" and "StarBonds," and a convertible virtual currency, the Hollywood Dollar. The Hollywood Stock Exchange remains until today the highest volume stock exchange in the world. He currently has a patent pending for “crowd funding media properties” used in his latest creation, “piratefilm.com”.

Mr. Keiser presented / produced TV and Radio formats at NBC, CBS, BBC, BBC World News, and the English programme of Al-Jazeera. For Iran’s Press TV he’s the host of “On the Edge,” and with his co-host, Stacy Herbert, he presents for the Russian broadcaster RT TV the “Keiser Report” (see for more at: http://maxkeiser.com/ ). In addition, he has appeared as a financial pundit on a number of news-networks.

To his success as a financial analyst belong the following predictions:

•In the September 2004 issue of The Ecologist magazine, Keiser correctly predicted the 2008 collapse of Fannie Mae and Freddie Mac when he wrote, "My guess is that the two stocks that look the likeliest to implode at the hands of derivative-wielding Wall Street financial types (and other fundamentalists) preying on a US economy made weak by cheap money are Fannie Mae and Freddie Mac."
• In 2006 he correctly predicted that sub-prime mortgage-backed securities would be the cause of recession by 2008.

•In 2007 he correctly predicted the break-down of Iceland's economy in 2008.

•In 2009 he correctly predicted that Cantor Fitzgerald would fail in their attempt to launch box office futures contracts (based on his intellectual property).
Max Keiser, who’s also a frequent contributor to “The Huffington Post” (http://www.huffingtonpost.com/max-keiser ), lives in Paris, France.

Mr. Keiser, in your initial email you wrote to me:

“The key to understanding the current situation is to understand that house prices, jobs, wages, and pensions in the US are all being attacked with original-issue debt dollar junk.

This will continue until the middle class has been completely wiped out.”

Can you elaborate on this, please?

Yes, it’s a Financial Holocaust. It is designed to destroy the American middle-class. We face an original-issue deflation, if you will. It is as if Michael Milken ran the Fed. If you look at the work of Steve Keen (http://www.debtdeflation.com/blogs/ ), an economist in Australia and one of a very few economists who got the crisis of the past three years accurate, you understand that the banking system does not work on a system where deposits are the basis for fractional reserve. The banking system works on the basis of loans used as the collateral for more loans.

That means that the origination of all the fractional reserve lending that is going on is just more debt. There are no retail deposit reserves or wholesale deposit reserves, just original issue dollar based junk debt. And when you understand that debt is at the bottom of the pyramid and that there’s no equity at all, or capital as this term is usually understood, then you understand that the banks and the policy makers are continuing a programme at the behest of Wall Street to commit a Financial Holocaust to eliminate the majority in America, which is the middle-class. Wall Street banks with their CDS's, High Frequency Trading and bogus market making are injecting the equivalent of financial Zyklon B into the American and world economy.

With regard to the U.S. economy, would you agree with Paul Krugman, who wrote not a long time ago that the lights in the U.S. are about to go out?

Paul Krugman is a salon monkey. You can quote me on that.

Okay, no problem (laughs).

He is a tool of the New York Times. If it wasn’t for the New York Times, no one would read Paul Krugman. He has absolutely nothing credible to say. He is merely a mouthpiece for neo-liberal clap-trap. Any minute you spend reading Paul Krugman is a minute of your life that you’ll never get back.

How does the mainstream media not only in the U.S., but in the Western hemisphere in general, play its part to ascertain its recipients that everything is more or less alright?

Well, the mainstream media is owned by the banking system. There is no widely disseminated media-outlet that is not owned by the banking system. Every media-outlet in the United States – Fox News, CNN, the New York Times etc. – is an extension of CNBC and James Cramer.

How do you feel in this context about the attempts to regulate the internet?

It’s a sad chapter in American history, because the internet came into being as the result of the good will of the American taxpayer. Now you have private corporations like Google and Verizon, who are stealing it. That’s unconscionable. It’s a hanging offense. If there would be any justice, the principles of Google and Verizon would be strung up and beaten.

Will those attempts have bad effects for the journalism that’s going on in the internet?


What is your take on the “Financial Reform Act” that passed Congress a few weeks ago? Does it deserve its name?

No. I’ve talked with Bill Black about this and he made all the salient points: it’s purely cosmetic, does nothing to address the structural problems and is dead on arrival.[2]

You’ve already mentioned the problem of deflation. The Federal Reserve tries to fix this problem, allegedly, with a new round of quantative easing. Will this not make everything worse?

Well, getting back to the original question: the Fed can only issue debt. So they’re trying to fix the debt-deflation problem by issuing more debt. Whatever drugs Ben Bernanke is on, he should either take less, take more or change his prescription.

Related to the deflation in the U.S., many pundits compare the United States with the deflationary Japan of the early 1990’s until today. Do you agree with this analogy or do you rather share the opinion as it was expressed by Egon von Greyerz, the co-founder of “Matterhorn Asset Management AG” in Zurich, who said that the U.S. is in a very different situation than Japan was and is?[3]

When Japan started their deflationary spiral, they had huge savings. America has no savings. The best comparison for me is to compare the U.S. in 2010 with Argentina in 2000.

Why so?

Because the problem in America is that the bankers and the politicians conspire to loot the country of whatever money they can yet steal. We see a kleptocracy in action and the people will be left homeless and starving.

This is done by design?

People steal money on purpose (laughs). The kleptocrats steal money, because they want to steal money. They don’t accidently steal money. It’s done on purpose. It’s premeditated. Thieves steal money, because they want the money.

Let’s take a look at the crisis of the euro. It seems to be less acute for now, but it will come back, right?

Everything is going to be devaluated against gold.

And gold is not in a bubble?

Anyone who says gold is in a bubble, is talking out of their ass. When assets go into a bubble-price, you have an extremely popular ownership of that asset. Take for example the dotcom-stocks in the 1990’s or the S&P in the 1980’s – you had a very large percentage of the population participating in the formation of those bubbles. In the case of gold bullion, less than one per cent of the global investable assets are in gold. Not only isn’t it in a bubble, the real bull market in gold hasn’t even started. It’s still in a bear-market. Let me put it to you that way: gold is still in a bear-market.

During an interview with me, the President and Chief Investment Strategist of the investment research and wealth consulting firm SmartKnowledgeU, LLC (http://www.smartknowledgeu.com ), J. S. Kim, told me the following:

“I think if U.S. regulators stepped in and said Goldman Sachs, HSBC and JPMorgan couldn’t participate in the gold and silver futures-market for three weeks – I really think you would see the gold and silver price more than double in that time.”[4]

Do you agree on that estimation?

Yes, he’s right. For instance in the case of JP Morgan, they have something like 30.000 contracts short in the silver futures-market. So if they would have to close up their shorts, the price of silver would at least double – and then it would start to really move higher.

Would you then also agree that the Gold Anti-Trust Action Committee, GATA, had a good reason to cause some trouble for the CFTC related to this problem?

The Gold Anti-Trust Action Committee are a dedicated group of whistleblowers that I hope will continue in their work to expose the market-manipulations and insider-tradings that are plaguing the precious-metal markets.

What are your thoughts with regards to the recent statement by the central bank of China, the People’s Bank of China, to implement a regular gold market in its country, and that the commercial banks in India are asking the Indian central bank to do the same?

At the moment there is an enormous example of what you might call game-theory. There are China, Russia and Germany as the three biggest players in this global exercise of game-theory. One of those three countries will be the first to announce a gold-backed currency. At that moment, every other central bank in the world will have to announce a similar move, because if they don’t, then they risk losing a huge capital flight out of their currency. It is just a matter of time before one of these countries announces a gold-backed currency and the price of gold triples.

In the case of China, obviously they want to squeeze every last drop out of the brain-dead American consumer. When the American consumer has bought the last plastic toy and show shovel made in China from Wal Mart that he can buy from the borrowed money on the 100th uncollateralized credit-card and they can’t hyper-consume one penny more, like the fat guy who eats the wafer at the end of the meal in the famous Monty Python sketch – who then explodes in a storm of half eaten fois gras and guts - then China will drop the bomb by announcing a gold-backed currency and the sale of a trillion in U.S.-government securities.

In the case of Germany, you really believe it would be able to issue a gold-backed currency?

Germany has always held on to their gold. Germany isn’t a country that is anxious to get rid of its gold. It has a very substantial position in gold and I am surprised that the Bundesbank has not announced increased purchase of gold yet. Maybe they have something cooking on the side, I don’t know. But I believe that the gnomes in Zurich and Berlin are smart enough to see what’s happening. They know that a country with a large gold position is going to do well.

One final question on precious metals: do you think that silver could outperform gold in the long run?

Yes, sure.

Okay, then let’s change the subject. What is your opinion on BP’s so called “oil spill”? Do we really get the information that we would need in order to assess the true magnitude of the catastrophe in the Gulf of Mexico?

The most revealing aspect of the BP oil spill was that it showed to the world that America currently has no President.

In the sense that Mr. Obama is something like a doppelganger of Mr. Bush during Katrina?

Much worse. At least with Bush you knew where he stood. I believe with Obama there is nobody home. He is a ghost. He doesn’t do anything. He is a Manshurian Candidate, he is a robot, he is nothing. He has done nothing, he is doing nothing, he will never do anything. Obama is just waiting to get a job at Goldman Sachs or JP Morgan in three or four years time and that’s it. The White House is a way to improve his resume. The BP oil spill revealed that America is running with no leadership at all. There is nobody at the helm of the ship. It’s running wild with no leadership whatsoever.

Do you expect BP will go bankrupt because of the oil spill?

Well, the principles of BP are going to make lots of money, no matter what happens. The shareholders of BP are going to struggle, but the insiders of BP will be fine.

Will the disaster in the Gulf of Mexico have effects for the price of oil and commodity prices in general?

The biggest driver in oil price has got to be the global contraction in production. The three biggest fields in the world, Ghawar in Saudi-Arabia, Burgan in Kuwait, and Cantarell in Mexico are the only super-fields we have. There has not been a super-field discovered in 20 years. Cantarell in Mexico is down sharply, so that Mexico will be an energy-importer soon. Burgan in Kuwait – down sharply. Ghawar in Saudi-Arabia – my sources tell me there are similar losses of production to Kuwait. Of course, the Saudis publicly say that their reserves are being replaced exactly as they have for the last ten years. But I have travelled in the region and have talked to people in the region. There is no reason to believe that this information is correct.

So the reserves are running out. This will obviously put a floor on the price of oil. Now, on the demand-side you still have strong demand in Asia and elsewhere in the world. The Peak-Oil story is really the number one driver. The BP aspect is a minor part of the overall Peak-Oil story.

Would you say that the Peak-Oil story deserves much more coverage and attention by the media, policy makers and so on?

The entire economy of the world runs on oil. This is a story that is ignored, because the implications are really catastrophic if the price of oil starts to run away. It would mean that all trade stops. So global trade would end as we know it and the current owners of the global media would be in the service of an entirely new set of power players at the top with America nowhere in site.

Therefore Peak Oil means the end of Globalization?

Globalization peaked as well about two or three years ago. We hit Peak Globalization. Globalization is on the wane.

One country with the largest deposits of oil and natural gas in the world is Iran. Do you think that the beating of the war drums, that we can hear at an increasing level, are much closer connected to this fact than to an alleged nuclear weapons programme?

Well, clearly it has always been the story since the 1970’s, that the world reserve currency, the US dollar, is backed by the Saudi Petrodollarization. Everything is related to the Saudi-Petrodollar story over the past 35 years. But the most interesting thing that I find related to the rumoured pending attack by Israel of Iran, is this: a few days ago, Harvard University divested themselves entirely out of all their Israeli investments.[5] Why did they do that? In my view they anticipate that the United States will not be behind Israel when it will attack Iran. The United States will do to Israel what they did to South Vietnam, which is to say that they will abandon Israel. Nobody will support them. So the shekel and the Tel Aviv stock exchange are probably gonna be marked down by 80-90%. Harvard University obviously understands this. That’s why they dumped every shekel-based security they have in their portfolio, because that exchange is gonna go belly-up. Hold onto your matzahs, it’s gonna be a bumpy ride.

Paul Craig Roberts wrote in an essay called “The Ecstacy of Empire: How close is America’s Demise?”, that was published this week, the following:

“The United States and the welfare of its 300 million people cannot be restored unless the neocons, Wall Street, the corporations, and their servile slaves in Congress and the White House can be defeated.

Without a revolution, Americans are history.”

Do you share my opinion that the United States belongs to the least places in the world, where a revolution has to be expected right now?

America died two years ago. It’s a walking dead-zombie country, and anybody who still lives in that country should re-familiarize themselves with cotton-picking, because once the dollar crashes, the only crop that America will be able to export, is cotton. It will be King Cotton again. It will be 1840 again. The only job available will be as a cotton-picker working on a Wal Mart or Goldman Sachs plantation. This is the reality of the situation. There is no turning back at this point. The die has been cast. The American experience lasted from 1776 to 2008. Those were the years it was kicking ass and taking names. But the second Obama took office, who took Larry Summers and Timothy Geithner with him – it died. That was the end. Every day since then has been Post-America.

At the end of this interview I would like to know what you think about this PR-event by some of the most prominent billionaires in the U.S., who announced that they will donate a large portion of their wealth in order to disguise them as a noble bunch of philanthropists, I assume.

I think it would be better if those guys just paid their taxes. What percentage of the Fortune-500 companies pay tax? Something like only 10 per cent. How about just pay your taxes and shut up!

Thank you very much for taking your time, Mr. Keiser!

Monday, August 23, 2010

Carefree Leaders

At dinner I made the comment that I felt let down by our country's leaders who have given up even pretending to give a toss about we the people.

"It's always been like that," another dinner guest said firmly from across the table.

"Then I feel like a late comer," I said. "This realization has only just descended on me, " I replied before the conversation veered off in a completely different direction.

Which left me wondering why this time it feels different, and the sense that the destruction of middle class wealth is real and it's planned and it benefits someone at the top. Perhaps everyone at the top.

I grew up in a world where the social contract required that wealth though permitted in large quantities, had to be shared among lesser mortals to some modest degree. The idea was that people withe wealth spread it around, provided work, used it to build things and in this manner the economy grew, the masses made enough to live and not foment revolt and the wealthy lived their lives out of sight and pretty much out of mind. Everyone was happy.

What I see today is something very different occurring. There has grown a chasm between the very very wealthy and the rest of us. As Joe Bageant outs it so nicely, politic ans who are millionaires in their own right collect the crumbs from the extremely wealthy and do their bidding. Politicians run interference for the elites by giving us the crumbs of the crumbs to fight over, selling us a story that makes no sense, nationalism, xenophobia, envy etc... and all the while the elites are raping the wealth.

Going back to the dinner table conversation, I don't see this state of affairs as having "always been like that." The big changes came with the fall of the Berlin Wall. In 1987 the stock market crashed and no one flinched. By the early 1990s the United States had won the cold war and Russia was crumbling. There was no longer anyone to compete with, there was no need to maintain a welfare state in the US to prove we were as compassionate as the Commies that we could indeed take care of our poor and hopeless failures. Communism depressed everyone to the same level of misery but for us in the west it played a loud propaganda game telling us we were tools of capitalist monsters. As long as Communism was alive our capitalist leaders had to prove them wrong. Since then there has been no need for our leaders to do anything of the sort.

And so the pillaging of our collective wealth has been ramped up. It is commonplace in the US to denigrate politicians, which in some measure is fair enough. The problem is that there is still a reverence in the US for a classless wealthy elite like Jeff Greene, Florida's billionaire candidate for US Senate in the Democratic primary. He presents himself as a self made man who can do the same for the poor and feeble of south Florida. He is asking people to vote for him who have lost every vestige of hope in the crash that propelled him to incredible wealth. Greene is also a playboy who entertains starlets on his 145 foot yacht and sails around the world in drunken orgies. The ideal lifestyle for a modern senator you might imagine. Yet he has the gall to ask for people's vote instead of living his extravagant life behind a decent curtain of privacy.

There is no moral obligation anymore for the wealthy to take care of the poor. The concept, good for millennia, has been abandoned by neo conservatives and trumpeted as the hypocrisy of losers and wimps. Workers with no health insurance cheer when single payer health care is beaten down, the unemployed are lazy and deserve no benefits and Social Security is a plot by the government to destroy our Freedom. And the Neanderthals on the right cheer as their leaders lead them into a world of no social compact, no prosperity, no shared wealth, no future that is better than the past.

Why should I pay taxes? they ask. Well, they haven't bothered for a long time so I suppose why should they start now? Taxes are for fools and little people, and now we lose our roads, our libraries, our social safety nets, all the trappings of daily life the rich don't need. We call it the Eisenhower Interstate system for a reason. No president since FDR has iterated a list of rights and freedoms for the people like that old rich cripple did. Yet we are supposed to revere President Reagan the leader who led this descent into poverty.

No, things haven't always been this disconnected, this bad. They are now and they cannot get better unless we can find a ruling class with a conscience. And where to do that I just don't know.

Sunday, August 22, 2010

Seniors on Catfood

From Alternet:

Wow. Alan Grayson’s probable GOP opponent seriously wants to put retirees on a catfood diet:

A Republican House candidate in Florida wants senior citizens to share the burden of reducing the national budget deficit through cuts to Social Security benefits.

“My number one priority would be to cut spending, turn off the spigot. We can do that, and the way we would do that is to roll back the budget to 2007,” said Daniel Webster during a Tea Party forum for Republican candidates gunning for firebrand Democrat Alan Grayson’s job.

“Just three years ago, if we would take that budget and pass it today just as it was, does it roll back some salary increases? Yes,” Webster continued. “Does it get rid of TARP and health care and all of the other things, including the stimulus package? Yes, it does that. Does it take back some of the COLAs for the entitlement programs? Yes, it does that, too. But it’s only three years ago. If we took that budget and passed it, it would self-balance in two more years.”

Aside from all the other idiocy (and convenient ignoring of the bloated Pentagon budget) what this translates into for senior citizens is this:

Cost of Living Adjustments (COLAs) in 2008 and 2009, of 2.3 percent and 5.8 percent, respectively, amounted to roughly $100 per retiree every month.

Sure, those are the people who should have to pay for Webster’s party’s looting of the treasury and deregulation of the financial system. That’s only fair. Besides, only losers would care about the loss of 100 bucks a month. They deserve to suffer.

These guys are so offensive, with their blithe talk about “rolling back” everything to 2007 and turning off the spigot. Well, it isn’t 2007, it’s 2010 and we’re dealing with an economic crisis of huge proportions caused by bozos just like him who turned this country into a disaster zone with the policies they governed under — in 2007!

I’m to the point that I can hardly even stand to listen to the swill they spew. These privileged creeps love to prescribe “sacrifice” for little old ladies and children (and the love to drop bombs on them too.) But ask them to pay a penny more in taxes and they whine and pout like spoiled little princes and threaten to blow up the whole country if anyone even tries it.

Anybody know where you can buy cheap pitchforks these days?

Thursday, August 19, 2010

Mortgage Backed Securities

So what do you know about Mortgage Backed Securities? That's the question you ask at the dinner table to kill off conversation about the economic crisis and steer it back to something safe, like environmental destruction or the quality of lettuce at Winn Dixie compared to that found in Publix. Mortgage Backed Securities are the foundation of the pyramid scheme that sank the US economy in 2008, and if you think the economy sank because people unable to pay back loans conned the banks you are sorely mistaken.

Here's the problem: if you can't make the mortgage payments on your home loan the traditional approach is to go to the bank and ask for help. In this traditional scenario the banker's best interest is most likely to help you stay afloat if at all possible. Indeed the bank may do better by say, reducing your interest, thus preserving the book value of the loan and keeping you current and the house occupied. Working together, the home "owner" fallen on hard times and the bank can find a way to keep a community asset intact and keep a productive family in their home. Everyone wins.

In the new banking paradigm those of us who view this scenario as good for everyone shake our heads in disbelief as banks across the United States prefer to let families fail on their mortgage payments, give them no help, kick them out of their homes and leave the houses empty and deteriorating while unoccupied. It makes no sense. Where's Jimmy Stewart's little bank when you need common sense banking?

The thing is this supervised destruction of the US housing market makes perfect sense to the people in charge of raping our economy. That's because banks have created a mortgage market that pays everyone to fail. Thanks to deregulation by the government banks a decade ago could get into investment (ie: risky but high profit) banking and sell mortgages as investments. Modern banksters don't hold mortgages in their safes and limit themselves to collecting payments. They collect payments as mortgage managers for investors scattered around the world. Those investors bought securities backed by US real estate at a time when the US housing market was red hot. It seemed like a sure thing, buy a slice (in French a tranche, so sophisticated!) of a mortgage package and let the US banks collect the payments and pass on the profits.

Which worked nicely when the market was rising and profits were being harvested everywhere like ripe fruit in autumn. However when the market turned, the bubble burst and debtors stopped paying their mortgages the tranches become worthless. Or perhaps not, perhaps the investments were insured by AIG who promised to pay out on all those investments if they failed. When they failed all at once AIG was overwhelmed and took 180 billion of US taxpayer dollars to "survive."

Meanwhile the banks were sitting pretty. What did they care if mortgage debtors failed to pay? The investments were held by the unfortunate tranche holders and all the banks were taking were payments for managing the accounts. No wonder they sold mortgages to anyone who asked! It didn't matter to the bankers if the prospects for payback were dismal because the banks never stood to lose anything.

When you understand that fact you understand the heart of the melt down. Hopeless cases got mortgages not because they outwitted the banks but they got the mortgages because everyone wanted to sell them a hopeless mortgage with a falsely low interest rate and they were over powered by the advertising. Even the President of the United States was telling people to buy homes- it was the American Dream! House prices were rising and mortgages cost next to nothing...

So now we have banks holding failing investments and home "owners" failing to pay their mortgages as they become unemployed, ill or lose their investment income. But the banks don't care! They hold the houses anyway, even empty and decaying, because on the books they still look like viable, valuable assets. Then they slowly sell the empty homes off, slowly so as not to flood the market and wreck it completely. So they sell the houses for far less than their mortgages are worth and they take a bath right? Wrong! Their investors with their tranches take a loss, but even those losses are mitigated.

Here's the real trick: US taxpayers are funding 80% of the difference of the original mortgage value and the short sale price. The banks pocket more fees and tranche investors round the world get a fair chunk of their investment back, in another transfer of wealth from American taxpayers to the very wealthy worldwide.

With these kinds of scams operating it's no wonder banks aren't modifying loans to keep people in their homes. Firstly they can't because they would have to get all the investors in all the tranches to agree to the modification. Secondly with Fannie Mae and Freddie Mac on the hook for all the failed mortgages they get most of their money back- from us!

So, now you know the scam do you still feel like blaming the impoverished little people who saw the dream of home ownership realised for the first time in their lives with "affordable mortgages?" Do you really think they pulled one over on the inventors of the mortgage backed security? Buy a tranche of pizza and a beer and sit down to figure that one out.

Sunday, August 15, 2010

How To Take Over The World

By Richard C Cooke of Market Oracle.

“They make a desolation and call it peace.” -Tacitus

Was Alan Greenspan really as dumb as he looks in creating the late housing bubble that threatens to bring the entire Western debt-based economy crashing down?

Was something as easy to foresee as this really the trigger for a meltdown that could destroy the world’s financial system? Or was it done, perhaps, “accidentally on purpose”?

And if so, why?

Let’s turn to the U.S. personage that conspiracy theorists most often mention as being at the epicenter of whatever elite plan is reputed to exist. This would be David Rockefeller, the 92-year-old multibillionaire godfather of the world’s financial elite.

The lengthy Wikipedia article on Rockefeller provides the following version of a celebrated statement he allegedly made in an opening speech at the Bilderberg conference in Baden-Baden, Germany, in June 1991:

“We are grateful to the Washington Post, the New York Times, Time magazine, and other great publications whose directors have attended our meetings and respected their promises of discretion for almost forty years. It would have been impossible for us to develop our plan for the world if we had been subject to the bright lights of publicity during these years. But the world is now more sophisticated and prepared to march towards a world government which will never again know war, but only peace and prosperity for the whole of humanity. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in the past centuries.”

This speech was made 17 years ago. It came at the beginning in the U.S. of the Bill Clinton administration. Rockefeller speaks of an “us.” This “us,” he says, has been having meetings for almost 40 years. If you add the 17 years since he gave the speech it was 57 years ago—two full generations.

Not only has “us” developed a “plan for the world,” but the attempt to “develop” the plan has evidently been successful, at least in Rockefeller’s mind. The ultimate goal of “us” is to create “the supranational sovereignty of an intellectual elite and world bankers.” This will lead, he says, toward a “world government which will never again know war.”

Just as an intellectual exercise, let’s assume that David Rockefeller is as important and powerful a person as he seems to think he is. Let’s give the man some credit and assume that he and “us” have in fact succeeded to a degree.

This would mean that the major decisions and events since Rockefeller gave the speech in 1991 have probably also been part of the plan or that they have at least represented its features and intent.

Therefore by examining these decisions and events we can determine whether in fact Rockefeller is being truthful in his assessment that the Utopia he has in mind is on its way or has at least come closer to being realized. In no particular order, some of these decisions and events are as follows:

The implementation of the North American Free Trade Agreement by the Bill Clinton and George W. Bush administrations has led to the elimination of millions of U.S. manufacturing jobs as well as the destruction of U.S. family farming in favor of global agribusiness.

Similar free trade agreements, including those under the auspices of the World Trade Organization, have led to export of millions of additional manufacturing jobs to China and elsewhere.

Average family income in the U.S. has steadily eroded while the share of the nation’s wealth held by the richest income brackets has soared. Some Wall Street hedge fund managers are making $1 billion a year while the number of homeless, including war veterans, pushes a million.

The housing bubble has led to a huge inflation of real estate prices in the U.S. Millions of homes are falling into the hands of the bankers through foreclosure. The cost of land and rentals has further decimated family agriculture as well as small business. Rising property taxes based on inflated land assessments have forced millions of lower-and middle-income people and elderly out of their homes.

The fact that bankers now control national monetary systems in their entirety, under laws where money is introduced only through lending at interest, has resulted in a massive debt pyramid that is teetering on collapse. This “monetarist” system was pioneered by Rockefeller-family funded economists at the University of Chicago. The rub is that when the pyramid comes down and everyone goes bankrupt the banks which have been creating money “out of thin air” will then be able to seize valuable assets for pennies on the dollar, as J.P. Morgan Chase is preparing to do with the businesses owned by Carlyle Capital. Meaningful regulation of the financial industry has been abandoned by government, and any politician that stands in the way, such as Eliot Spitzer, is destroyed.

The total tax burden on Americans from federal, state, and local governments now exceeds forty percent of income and is rising. Today, with a recession starting, the Democratic-controlled Congress, while supporting the minuscule “stimulus” rebate, is hypocritically raising taxes further, even for middle-income earners. Back taxes, along with student loans, can no longer be eliminated by bankruptcy protection.

Gasoline prices are soaring even as companies like Exxon-Mobil are recording record profits. Other commodity prices are going up steadily, including food prices, with some countries starting to experience near-famine conditions. 40 million people in America are officially classified as “food insecure.”

Corporate control of water and mineral resources has removed much of what is available from the public commons, and the deregulation of energy production has led to huge increases in the costs of electricity in many areas.

The destruction of family farming in the U.S. by NAFTA (along with family farming in Mexico and Canada) has been mirrored by policies toward other nations on the part of the International Monetary Fund and World Bank. Around the world, due to pressure from the “Washington consensus,” local food self-sufficiency has been replaced by raising of crops primarily for export. Migration off the land has fed the population of huge slums around the cities of underdeveloped countries.

Since the 1980s the U.S. has been fighting wars throughout the world either directly or by proxy. The former Yugoslavia was dismembered by NATO. Under cover of 9/11 and by utilizing off-the-shelf plans, the U.S. is now engaged in the military conquest and permanent military occupation of the Middle East. A worldwide encirclement of Russia and China by U.S. and NATO forces is underway, and a new push to militarize space has begun. The Western powers are clearly preparing for at least the possibility of another world war.

The expansion of the U.S. military empire abroad is mirrored by the creation of a totalitarian system of surveillance at home, whereby the activities of private citizens are spied upon and tracked by technology and systems which have been put into place under the heading of the “War on Terror.” Human microchip implants for tracking purposes are starting to be used. The military-industrial complex has become the nation’s largest and most successful industry with tens of thousands of planners engaged in devising new and better ways, both overt and covert, to destroy both foreign and domestic “enemies.”

Meanwhile, the U.S. has the largest prison population of any country on earth. Plus everyday life for millions of people is a crushing burden of government, insurance, and financial fees, charges, and paperwork. And the simplest business transactions are burdened by rake-offs for legions of accountants, lawyers, bureaucrats, brokers, speculators, and middlemen.

Finally, the deteriorating conditions of everyday life have given rise to an extraordinary level of stress-related disease, as well as epidemic alcohol and drug addiction. Governments themselves around the world engage in drug trafficking. Instead of working to lower stress levels, public policy is skewed in favor of an enormous prescription drug industry that grows rich off the declining level of health through treatment of symptoms rather than causes. Many of these heavily-advertised medications themselves have devastating side-effects.

This list should at least give us enough to go on in order to ask a hard question. Assuming again that all these things are parts of the elitist plan which Mr. Rockefeller boasts to have been developing, isn’t it a little strange that the means which have been selected to achieve “peace and prosperity for the whole of humanity” involve so much violence, deception, oppression, exploitation, graft, and theft?

In fact it looks to me as though “our plan for the world” is one that is based on genocide, world war, police control of populations, and seizure of the world’s resources by the financial elite and their puppet politicians and military forces.

In particular, could there be a better way to accomplish all this than what appears to be a concentrated plan to remove from people everywhere in the world the ability to raise their own food? After all, genocide by starvation may be slow, but it is very effective. Especially when it can be blamed on “market forces.”

And can it be that the “us” which is doing all these things, including the great David Rockefeller himself, are just criminals who have somehow taken over the seats of power? If so, they are criminals who have done everything they can to watch their backs and cover their tracks, including a chokehold over the educational system and the monopolistic mainstream media.

One thing is certain: The voters of America have never knowingly agreed to any of this.