More Ponzi Scheming From Ben Bernanke

Isn't this part of why we have an Occupy Wall Street movement today?

Federal Reserve Ponzi Schemer, Ben Bernanke is at it again. He is out there hoping that Congress and Mr.  Suck-Up Obama will hand over a cool $800B in free cash to bail out the banksta suckuhs, once again. Their toxic and crumbling Mortgage Backed Securities are shriveling up in value, as European investors are about to let their crappy US Banksta MBS losses go for a fraction of their value in order to raise cash. In addition to banksta MBS assets shriveling, the Fed is scheming ways to prevent banksta held  foreclosures from having to hit the market at significantly reduced prices. Their plan is to make the taxpayers fund bonds that will allow private equity firms, like the one Romney loves so much (Bain Capital) to buy up blocks of foreclosures at a fraction of the market value and rent them out. This scheme keeps those homes off the market artificially keeping home prices inflated.

How is this possible? Well, the financial predatory banksta sector, which is really a banking crime syndicate, are  the campaign contributors, or financial pimps, to the Washington legislators and president, and therefore, a calling in of their chips by  pressing Congress to allow for Treasury cash to be used for this Bernanke Ponzi Scheme, or QE3.

Read all about it below:

Bernanke's Double-Whammy  The Foreclosure-to-Rental Screwjob  by MIKE WHITNEY 1/13-15/12

From Counterpunch.org

Federal Reserve chairman Ben Bernanke wants US taxpayers to purchase more of the garbage loans and mortgage-backed securities (MBS) that the big banks still have on their books. (Cash for trash) That’s the impetus behind the Fed’s 26-page white paper that was delivered to Congress last Wednesday. The document outlines the Fed’s plan for ‘stabilizing the housing market’, which is a phrase that Bernanke employs when he wants to provide more buy-backs, giveaways, subsidies and other corporate welfare to big finance.

“Restoring the health of the housing market is a necessary part of a broader strategy for economic recovery,”  Bernanke opined in a letter to the Senate Banking and House Financial Services committees.

Indeed. The housing depression continues into its 5th year with no end in sight, mainly because the people who created the crisis are still in positions of power. And, they’re still offering the same remedies, too, like handing the banks another blank check to save them from losses on their bad bets. That’s what this new “housing stabilization” boondoggle is really all about, bailing out the bankers. Here’s a summary from Bloomberg:

“Bernanke’s Fed study said “more might be done,” including eliminating entirely the reduced fees for risky loans, “more comprehensively” cutting lenders’ put-back risks; and further streamlining refinancing for other Fannie Mae and Freddie Mac borrowers. The U.S. also should consider having Fannie Mae and Freddie Mac refinance loans not already backed by the government, which would add credit risk for the companies, according to the report….” (Bloomberg)

First of all, Fannie and Freddie only return loans (“put-backs”) that don’t meet their standards and which the banks foisted on them so they wouldn’t have to face the losses. The idea that the publicly-funded GSE’s should just “eat the losses” is ridiculous.

And, why–in heaven’s name–would congress want to take on more risk when they can keep millions of people in their homes by simply reducing the principle on their mortgages to the present value of the house? (aka–”Cramdowns”) Naturally, the losses would have to be absorbed by the banks who–by everyone’s admission–were responsible for the present crisis due to their lax lending standards and, oftentimes, fraudulent behavior. This would lead to a restructuring of the country’s biggest banks through a Resolution Trust Corporation (RTC) so their toxic assets and backlog of foreclosed properties can be auctioned off as soon as possible.

This is a straightforward way to fix the housing market and it should have been done long ago. Bernanke’s solution is not only unreasonable, it’s also deceitful. Here’s more from the Fed’s paper: “Continued weakness in the housing market poses a significant barrier to a more vigorous economic recovery”..(without action)…“the adjustment process will take longer and incur more deadweight losses, pushing house prices lower and thereby prolonging the downward pressure on the wealth of current homeowners and the resultant drag on the economy at large.”

Did it really take Bernanke 5 years to figure out that housing is a “drag on the economy”?

No, of course not. So, what’s going on now that has suddenly spurred him to act?

Well, for one thing, the banks are losing a great deal of money on the mortgage-backed securities (MBS) that they bought in the last few years. Here’s the story in the Wall Street Journal:

“After flickering to life early in 2011, the market for subprime- and other risky residential-mortgage bonds has returned to its comatose state. And many investors believe a revival could be years away.

Prices on some bonds, which are backed by mortgages that don’t meet the standards needed to get backing from government-controlled companies like Fannie Mae and Freddie Mac, plummeted as much as 30% last year. The ABX, an index that tracks the value of subprime bonds, ended the year at 43.44 cents on the dollar, down from 59.90 cents at year-end 2010 and a peak of 62.68 cents in February 2011

While that decline pushed yields up to as much as 17%—bond yields rise as prices fall—many fund managers have pulled out of the market due to worries about further price declines. Moreover, repeated downgrades have left too few investment-grade securities for them to own. Wall Street banks, which traditionally have played a key role in the market matching buyers and sellers, are backing away ahead of new regulations that will make it more expensive to hold riskier assets.” (Investors Sour on Subprime Bonds, WSJ)

So, Wall Street’s financial geniuses got back into the MBS-biz (for a second time) and got whacked again? That’s right; and now they want John Q. Public to pay for it with another bailout.

And, there’s more to this story, too. European banks own roughly $100 billion of these mortgage-backed turkeys which they’re presently shedding like crazy in order to meet new capital requirements. That means US bank balance sheets are dripping red as the value of their financial asset-stockpile continues to plunge. That’s  why Sugar Daddy Bernanke has stepped in, because it’s time for another multi-billion dollar bank rescue.

Look, the Fed has already purchased over $1.25 trillion of these toxic MBS which represents humongous long-term losses for the taxpayer. Do we really need more of this sludge?

Bernanke promised that the first round of quantitative easing (QE1) would boost employment (It hasn’t) and improve housing sales (it never happened) The only uptick in sales occurred because the colluding banks deliberately reduced the supply of foreclosed homes they put on the market. The reduction has led to a massive 1.7 million backlog of housing units (shadow inventory) that will eventually be dumped onto the market triggering another sharp decline in housing prices. Bernanke wants to do something about the bulging inventory as well as prop up the value of sagging MBS. So, the Fed’s plan actually has two main objectives; in other words, it’s the double whammy. Here’s more from Bloomberg:

 “Since the Fed started buying $1.25 trillion of mortgage bonds in January 2009, the value of U.S. housing has fallen 4.1 percent, and is down 32 percent from its 2006 peak, according to an S&P/Case-Shiller index. The central bank is poised to buy about $200 billion this year, or more than 20 percent of new loans, as it reinvests debt that’s being paid off. Some Fed officials have said they may support additional purchases that Barclays Capital estimates could total as much as $750 billion.”

 Did you catch that? Taxpayers are going to get slammed for another $750 billion. That’s nearly as much as Obama’s American Recovery and Reinvestment Act (ARRA), the fiscal stimulus that added 2 percent to GDP and kept unemployment from rocketing to 13 percent. Bernanke wants to throw that same amount down a Wall Street sinkhole.

So maybe you think this won’t happen, after all, could Congress really be so gullible as to fall for Bernanke’s fearmongering flim-flam again?

Maybe and maybe not. But there are some pretty wealthy and well-connected people who are betting that the Fed will do as it’s told and pave the way for another hefty bailout. In fact, the world’s largest bond fund (Pimco) has stumped up a mountain of cash betting that good buddy Bernanke will get the printing presses whirring sometime in mid-January. Here’s the story from Zero Hedge:

 ”….in December the fund (Total Return Fund or TRF) doubled down on its QE3 all in bet, by “borrowing” even more cash, or a record $78 billion, using the proceeds to buy even more MBS, as well as Treasurys, which hit a combined 31% of the TRF’s holdings. In other words, between MBS and USTs, Pimco holds a whopping 79% of total, mostly in very long duration exposure. In fact, this combination of long duration and pre-QE exposure has not been seen at PIMCO since late 2008, early 2009, meaning that as many banks have been suggesting, (Bill) Gross is convinced that the Fed will announce if not outright QE3 this January, then at least intimate it is coming.”(“Pimco Doubles Down On All In Bet Fed Will Monetize MBS”, Zero Hedge)

 So what does Pimco know that we don’t know? More importantly, from whom are they getting their information?

And, there’s another thing, too. This whole deal about converting foreclosed homes into rental properties is another scam. Here’s the scoop from another article in the Wall Street Journal:

 “The paper also signaled that the Fed…. will try to involve banks more directly in housing-revival approaches… One area involves efforts to turn foreclosed homes into rental properties….

Banking regulations typically direct banks to sell foreclosed homes quickly, although the rules do recognize this isn’t always practical and so these properties can be held up to five years. The Fed said it is now “contemplating issuing guidance” to banks and regulators that would possibly allow banks to turn some of these foreclosed homes into rental properties…..The hope is this may help stanch the flow of foreclosed properties into markets…” (“Fed Up With the Depressed State of Housing”, Wall Street Journal)

 Bingo. The banks are not only sitting on 1.7 million shadow inventory of homes they’ve stockpiled to keep prices artificially high. They also have millions more in the pipeline when a settlement is finally reached on the robo-signing scandal. So, what are they going to do with all that backlog?

That’s easy. They’ll schluff it off on the taxpayer by creating a foreclosure-to-rental swindle where the government provides lavish incentives for banks and private equity scavengers to buy the homes (in bulk) for pennies on the dollar with loans provided by–you guessed it–Uncle Sam.  Here’s a summary of what’s going on behind the scenes:

 “As the Obama administration and federal regulators work on a program to sell government-owned foreclosures in bulk to investors, those investors aren’t wasting any time stockpiling cash and buying foreclosed properties at auction and from the major banks.

Oakland, California-based Waypoint Real Estate Group, a major acquirer of so-called “REO to Rental” (Real Estate Owned) just announced a partnership with a private equity firm, Menlo Park, California-based GI Partners, to buy foreclosed properties….

“Our approach to buying distressed single-family houses, renovating them, and leasing to residents who are committed to a path to future home ownership is a viable solution to our nation’s housing crisis,” said Colin Wiel, managing director and co-founder of Waypoint in a press release. “Our partnership with GI Partners ensures we can take the next step in our company’s evolution.”

GI is taking an increasingly popular bet on distressed real estate, closing on a $400 million fund with Waypoint, which has plans to purchase $1 billion in distressed real estate assets over the next two years, according to its release. (“Private Equity Readying a Run on Foreclosures”, Diana Olick, CNBC)

 So, what do these guys know that we don’t know? And why are they plunking down big money when the details have not even been released yet?

None of this really passes the smell test, does it? The only thing we know for sure is that the “fix is in” and that Bernanke will do what he always does when the banks are in a pinch. Throw them a lifeline.

MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion, forthcoming from AK Press. He can be reached at fergiewhitney@msn.com

http://www.counterpunch.org/2012/01/13/the-foreclosure-to-rental-screwjob/

Why Is Obama NOT Listening?

Bank of America is about to transfer trillions of toxic derivative dollars onto the Fed. Hasn't this White House learned anything after the AIG rip-off? Have we not had enough of credit default swaps being covered by the taxpayers creating a national security risk.

BofA Said to Split Regulators Over Moving Merrill Derivatives to Bank Unit

By Bob Ivry, Hugh Son and Christine Harper - Oct 18, 2011

Bank of America Corp. (BAC), hit by a credit downgrade last month, has moved derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits, according to people with direct knowledge of the situation.

The Federal Reserve and Federal Deposit Insurance Corp. disagree over the transfers, which are being requested by counterparties, said the people, who asked to remain anonymous because they weren’t authorized to speak publicly. The Fed has signaled that it favors moving the derivatives to give relief to the bank holding company, while the FDIC, which would have to pay off depositors in the event of a bank failure, is objecting, said the people. The bank doesn’t believe regulatory approval is needed, said people with knowledge of its position.

Three years after taxpayers rescued some of the biggest U.S. lenders, regulators are grappling with how to protect FDIC- insured bank accounts from risks generated by investment-banking operations. Bank of America, which got a $45 billion bailout during the financial crisis, had $1.04 trillion in deposits as of midyear, ranking it second among U.S. firms.

“The concern is that there is always an enormous temptation to dump the losers on the insured institution,” said William Black, professor of economics and law at the University of Missouri-Kansas City and a former bank regulator. “We should have fairly tight restrictions on that.”

Accommodating Clients

Jerry Dubrowski, a spokesman for Charlotte, North Carolina- based Bank of America, declined to comment on the transfers or the firm’s discussions with regulators. The company “continues to accommodate the needs of our clients through each of our multiple trading entities, including Bank of America NA,” he said in an e-mailed statement, referring to the company’s deposit-taking unit.

Barbara Hagenbaugh, a Fed spokeswoman, said she couldn’t discuss supervision of specific institutions. Greg Hernandez, an FDIC spokesman, declined to comment.

Bank of America posted a $6.2 billion third-quarter profit today, compared with a loss of $7.3 billion a year earlier, as credit quality improved and the firm booked one-time accounting gains. The lender rose 7.3 percent to $6.47 at 1:54 p.m. in New York trading, making it the day’s best performer in the Dow Jones Industrial Average. Credit-default swaps on Bank of America eased 10 basis points to a mid-price of 380 as of 11:49 a.m. in New York, according to broker Phoenix Partners Group.

Moody’s Investors Service downgraded Bank of America’s long-term credit ratings Sept. 21, cutting both the holding company and the retail bank two notches apiece. The holding company fell to Baa1, the third-lowest investment-grade rank, from A2, while the retail bank declined to A2 from Aa3.

Moody’s Downgrade

The Moody’s downgrade spurred some of Merrill’s partners to ask that contracts be moved to the retail unit, which has a higher credit rating, according to people familiar with the transactions. Transferring derivatives also can help the parent company minimize the collateral it must post on contracts and the potential costs to terminate trades after Moody’s decision, said a person familiar with the matter.

Bank of America estimated in an August regulatory filing that a two-level downgrade by all ratings companies would have required that it post $3.3 billion in additional collateral and termination payments, based on over-the-counter derivatives and other trading agreements as of June 30. The figure doesn’t include possible collateral payments due to “variable interest entities,” which the firm is evaluating, it said in the filing.

Dubrowski declined to comment on collateral or termination payments after the downgrade.

‘Be Prepared’

Bank of America’s rating is now four grades below the one Moody’s assigned to JPMorgan Chase & Co. (JPM), the biggest U.S. bank by deposits at midyear, and a level below the rating given to Citigroup Inc. (C), the third-biggest. Bank of America is the only U.S. lender that lacks a rating of A3 or higher among the five firms listed by the Office of the Comptroller of the Currency as having the biggest derivatives books.

“We had worked very hard over the course of the last nine months to be prepared to the extent that we did receive a downgrade, and feel very good about the way that we’ve minimized the potential impact” Bank of America Chief Financial Officer Bruce Thompson said in a conference call today with analysts. “Since the downgrade, we have not seen any change in our global excess liquidity sources.”

Derivatives are financial instruments used to hedge risks or for speculation. They’re derived from stocks, bonds, loans, currencies and commodities, or linked to specific events such as changes in the weather or interest rates.

Dodd-Frank Rules

Keeping such deals separate from FDIC-insured savings has been a cornerstone of U.S. regulation for decades, including last year’s Dodd-Frank overhaul of Wall Street regulation.

The legislation gave the FDIC, which liquidates failing banks, expanded powers to dismantle large financial institutions in danger of failing. The agency can borrow from the Treasury Department to finance the biggest lenders’ operations to stem bank runs. It’s required to recoup taxpayer money used during the resolution process through fees on the largest firms.

Bank of America benefited from two injections of U.S. bailout funds during the financial crisis. The first, in 2008, included $15 billion for the bank and $10 billion for Merrill, which the bank had agreed to buy. The second round of $20 billion came in January 2009 after Merrill’s losses in its final quarter as an independent firm surpassed $15 billion, raising doubts about the bank’s stability if the takeover proceeded. The U.S. also offered to guarantee $118 billion of assets held by the combined company, mostly at Merrill. The company repaid federal bailout funds in 2009 with interest.

‘The Normal Course’

Bank of America’s holding company -- the parent of both the retail bank and the Merrill Lynch securities unit -- held almost $75 trillion of derivatives at the end of June, according to data compiled by the OCC. About $53 trillion, or 71 percent, were within Bank of America NA, according to the data, which represent the notional values of the trades.

That compares with JPMorgan’s deposit-taking entity, JPMorgan Chase Bank NA, which contained 99 percent of the New York-based firm’s $79 trillion of notional derivatives, the OCC data show.

The moves by Bank of America are part of “the normal course of dealings that we’ve had with counterparties since Merrill Lynch and BofA came together,” Thompson said today.

‘Created a Firewall’

Moving derivatives contracts between units of a bank holding company is limited under Section 23A of the Federal Reserve Act, which is designed to prevent a lender’s affiliates from benefiting from its federal subsidy and to protect the bank from excessive risk originating at the non-bank affiliate, said Saule T. Omarova, a law professor at the University of North Carolina at Chapel Hill School of Law.

“Congress doesn’t want a bank’s FDIC insurance and access to the Fed discount window to somehow benefit an affiliate, so they created a firewall,” Omarova said. The discount window has been open to banks as the lender of last resort since 1914.

As a general rule, as long as transactions involve high- quality assets and don’t exceed certain quantitative limitations, they should be allowed under the Federal Reserve Act, Omarova said.

In 2009, the Fed granted Section 23A exemptions to the banking arms of Ally Financial Inc., HSBC Holdings Plc, Fifth Third Bancorp, ING Groep NV, General Electric Co., Northern Trust Corp., CIT Group Inc., Morgan Stanley and Goldman Sachs Group Inc., among others, according to letters posted on the Fed’s website.

The central bank terminated exemptions last year for retail-banking units of JPMorgan, Citigroup, Barclays Plc, Royal Bank of Scotland Plc and Deutsche Bank AG. The Fed also ended an exemption for Bank of America in March 2010 and in September of that year approved a new one.

Section 23A “is among the most important tools that U.S. bank regulators have to protect the safety and soundness of U.S. banks,” Scott Alvarez, the Fed’s general counsel, told Congress in March 2008.

To contact the reporters on this story: Bob Ivry in New York at bivry@bloomberg.net; Hugh Son in New York at hson1@bloomberg.net; Christine Harper in New York atcharper@bloomberg.net.

To contact the editors responsible for this story: Gary Putka at gputka@bloomberg.net; David Scheer at dscheer@bloomberg.net.

Max Keiser speaks about the situation the banks are in.

"This week Max Keiser and co-host, Stacy Herbert, talk about the European penny drops as more banks need more bailouts while the public debt clock ticks up to $40 trillion. In the second half of the show, Max Keiser interviews Michael Betancourt about the threat that Occupy Wall Street presents to our modern form of capitalism that relies on ignorance and passivity in the population in order to operate schemes of fraud and bubbles."

William Black Calling Out Lehman Brother's Fraud, and Failure Of Bernanke and Geithner

The Washington Stage Performance Starring Barack Obama

I am not sure how much the American people understand exactly what is happening in this nation in regards to the de-evolution of our standard-of-living, and overall way of life. There is a massive paradigm shift coming our way, which will affect around 80% of the country, and most dramatically, 70% of the population. It is not a matter of if, but more likely when.

Once you realize that what is being said in Washington is really a script to a massive David Mamet-like stage performance, you will see that there are more players than those on the stage. It all resembles the film, The Spanish Prisoner. It is basically a giant con game played upon an individual in possession of a corporate secret. There is more to the story, so I won’t spoil it, since it is very cool to watch!

But what is happening is a giant con game being played upon the average American, which will affect them for years and years to come. What is amazing is just how many people are watching something different unfolding. They are more engaged in what is happening on the periphery instead of what is happening at the core. They are upset with Obama’s determination with health care reform, and believe it is a government take-over of their health care insurance, when in reality their health care insurance has already been taken over by an industry that has caused millions of personal bankruptcies. Out of the 1.4 million personal bankruptcies, over 60% are because of medical bankruptcies. And out of those people, 75% had health care insurance.

Just this week we learned that the hypocrite Sarah Palin, after quitting her seat as governor, all the while condemning universal health care, was going to Canada for medical treatment. So much for using her own private health insurance when needed for her own care. When really desperate, use the Canadian’s socialized health care system instead, right Sarah?

These same people are seeing their roads filled with potholes the size of Baltimore, bridges decaying all over the place, empty shopping malls, and local community storefronts with for-rent signs propped in the glass windows. In small town America, we will see many more become ghost towns. These same people are victims and don’t really get it just yet.

This Washington stage performance is starring Barack Obama, and his cast members, which include his cabinet, Ben Bernanke, and others, such as Robert Rubin. But those people standing behind the curtain are the key to the script. This is an interactive stage performance because Congress is in the audience. We are watching it from afar, and really do not have a strong influence over the action, since we are thinly scattered all around the country. But nevertheless, our voices enmasse, are being heard through protests.

But what many of us know is that this entire political theater performance is filled with a fear, a silent fear, of actually fixing the problems that are destroying the very core of what this nation has achieved. There is a fear of fixing a very broken economy because to fix it properly would require a profound declaration that there has been collusion by those behind the curtain to keep it broken. And those who are standing out of sight, as I have said in previous posts, are the most powerful people in the country. They were able to control Lil’BoyBush, and now, they are controlling Barack Obama. The Shadow Cast members behind the curtain are directing the stage performance. The show should be called The Federalized Crime Syndicate Operations of the U.S. Government (FCSO).

What is occurring is the continuation of the transfer of wealth from the working classes to the top 1% of the income earners. Because of the shift of Treasury money to the Federal Reserve, and the process of off-handing toxic financial syndicate debt to the Federal Reserve for the taxpayers to cover, as well as for the Fed to increase the FCSOs liquidity as a result of the toxic debt exchanges in order to illegitimately prop up asset value prices; the public will ultimately be responsible for this subside to the rich asset classes’ return to full wealth values.

This blogspot has been posting many pieces on the fact that what exists in this county is financial crime syndicate operation. Much of it clearly performed in the open for all Americans to watch, but those in Washington continue to endorse it.

Washington’s infrastructure stimulus spending has gone into full body scanning machines (Chertoff Group) sold by former Homeland Security boss, under Lil’Boy,  Michael Chertoff. Let’s keep those former government insiders in the cash flow money loop provided by the US Treasury. Feeding from the public trough in and out of government. The other “infrastructure stimulus” appears to be the rebuilding of Iraq and Afghanistan, yet our streets, schools, bridges, mass transit systems, and rail systems can go to rot.

The US, being a sovereign nation, has allowed itself to be hijacked by the ‘FCSO’. For 30 plus years, this banking slim mobster take-over of our government and monetary system has been sanctioned with the phony legitimacy of those in power. The US is no longer a sovereign country, since the mega-investment banking crime syndicate has been allowed to manipulate currencies, the amount of money placed in circulation, interest rates at the consumer credit lending level, the level of debt and chicanery used to make us believing that such unauditable debt can be magically turned into capital, when inadequate or non-existent, as a result of this illusionary act. These financial crime syndicate operators have significantly controlled the political process and outcomes in the US, and around the world. The fact is that they have become the masters-of-ceremonies when buying and selling our government.

The Shadow Cast members has been pressing Senate Banking Committee Chairman, Chris Dodd-D-Conn. to fall into lock step. They have been pressing him to prevent a Consumer Financial Protection Agency from having any independence or political power. They have been forcing Dodd to make sure that any chief financial regulator duties would be performed by the Federal Reserve chairman, or stationed inside the Treasury so that the chief regulator would have all his/her teeth removed before taking the position.

David DeGraw, the author of The Economic Elite Vs. The People Of The United States, has written extensively how those behind the curtain, the Shadow Cast, are engaged in economic terrorism against working Americans. He begins his article, “Economic Terrorism": The Consequences are Poverty and Mass Unemployment, with this quote written by Michael Lind, ““The American oligarchy spares no pains in promoting the belief that it does not exist, but the success of its disappearing act depends on equally strenuous efforts on the part of an American public anxious to believe in egalitarian fictions and unwilling to see what is hidden in plain sight.” Lind is the Policy Director of the New America’s Economic Growth Program.

Mr. DeGraw wrote, “In total, Americans have lost $5 trillion from their pensions and savings since the economic crisis began and $13 trillion in the value of their homes. During the first full year of the crisis, workers between the age of 55 - 60, who have worked for 20 - 29 years, have lost an average of 25% off their 401k. Personal debt has risen from 65% of income in 1980 to 125% today. Over five million US families have already lost their homes, in total 13 million US families are expected to lose their home by 2014, with 25% of current mortgages underwater. Deutsche Bank has an even grimmer prediction: “The percentage of ‘underwater’ loans may rise to 48 percent, or 25 million homes.” Every day 10,000 US homes enter foreclosure. Statistics show that an increasing number of these people are not finding shelter elsewhere, there are now over 3 million homeless Americans, the fastest growing segment of the homeless population is single parents with children.”

And here is more: “The millions struggling to find work are just part of the story. Due to the fact that we now have a record high [when there are] six people for every one-job opening; companies have been able to further increase the workload on their remaining employees. They have been able to increase the amount of hours Americans are working, reduce wages and drastically cut back on benefits. Even though Americans were already the most productive workers in the world before the economic crisis, in the third quarter of 2009, average worker productivity increased by an annualized rate of 9.5%, at the same time unit labor cost decreased by 5.2%. This has led to record profits for many companies. Of the 220 companies in the S&P 500 who have reported fourth-quarter results thus far, 78% of them had “better-than-expected profits” with earnings 17% above expectations, “the highest for any quarter since Thomson Reuters began tracking data.

According to the Bureau of Labor Statistics, the national median wage was only $32,390 per year in 2008, and median household income fell by 3.6% while the unemployment rate was 5.8%. With the unemployment rate now at 10%, median income has been falling at a 5% rate and is expected to continue its decline. Not surprisingly, Americans’ job satisfaction level is now at an all time low.

There are also a growing number of employed people who, despite having a job, are still living in poverty. There are at least 15 million workers who now fall into this rapidly growing category. $32,390 a year is not going to get you far in today’s economy, and half of the country is making less than that. This is why many Americans are now forced to work two jobs to provide for their family to hopefully make ends meet.” (End)

Phillip Davis wrote in Seekingalpha.com, in his piece, “America’s Commodity Crisis”, “Commodities are a TAX. They are the worst kind of tax because they flatly (not progressively) charge every man, woman and child in this country more money for the same food, fuel, shelter and clothing that they had to have last week in order to live. It doesn’t matter if those people are trying to save or trying to tighten their belts or trying to get out of debt - high commodity prices are a shake-down that rips money out of the pockets of the middle class and funnels it to the very, very small class of commodity producers, commodity speculators and the people who finance them and collect the fees.

Over 99% of the people in this country do not own mines or oil wells (and I’m not counting small farmers because they are literally raped by speculators and bankers, often leaving them worse-off than the consumers) or huge plantations and they do not buy futures contracts on margin with cash they borrow at prime plus 0.5% nor do they own tankers filled with 2M barrels of crude that they arbitrage along the crack spread, looking for an opportune moment to deliver their goods (hopefully during a crisis) at a maximum profit.

So 99% of the people in this country don’t even own a commodity ETF - they have no way to profit from high commodity prices and they need to eat, and they need to buy clothing and have shelter and they need fuel to heat or cool their homes and go from place to place. There is a word for people like that, at the bottom end of a transaction they have no control over - VICTIMS!” (End)

Who is Mr. Davis? He is a stocks and option trader, among other things. His clients are wealthy, but he understands exactly what is happening to the rest of us. He gets it!

In Michael Whitney’s brilliant piece, “Why They Should Be Indicted: The Case Against Bernanke and Greenspan”, Counterpunch.org, he clearly states that there is a clear-cut case to indict them for being the human vehicles who have allowed the financial crime syndicate, ie. economic terrorists, to take over the monetary system of this country. He writes that there appears to be enough proof that Ben Bernanke and Alan Greenspan aided and abetted the banks and other financial institutions in the sale of fraudulent loans to investors. He goes on to say that on one hand “Bernanke denies culpability in the meltdown, but--at the same time—[he] eagerly points out that the Federal Reserve is the chief regulator responsible for overseeing the “large complex financial firms that pose a threat to the stability of the financial system.” So, which is it? Does he accept responsibility or not? Here is a statement Bernanke made earlier in the week during an appearance before the Senate Banking Committee which may help to clarify the point.”

Bernanke said, “I think that stripping the Federal Reserve of supervisory authorities in the light of the recent crisis would be a grave mistake…we’ve learned from the crisis large complex financial firms that pose a threat to the stability of the financial system need strong consolidated supervision…”

Mr. Whitney responds to say that by saying that “Bernanke admits that the Fed is the ‘primary regulator’ that is responsible for “strong consolidated supervision” over “large complex financial firms that pose a threat to the stability.” If we accept his definition, than we must also accept that the Fed should be held accountable when it abuses its authority and puts the system at risk…at the very least, the Fed it guilty of criminal negligence.” (End)

Throughout the piece, Mr. Whitney quotes competent and brilliant economists who support the claim that the Fed purposefully executed a plan to transfer the nation’s wealth to the ‘FCSO’.

Georgewashington2.blogspot.com posted: Nobel Prize-Winning Economist: Federal Reserve System is Corrupt and Undermines Democracy,

“Joseph Stiglitz - former head economist at the World Bank and a Nobel-prize winner - said yesterday that the very structure of the Federal Reserve system is so fraught with conflicts that it is "corrupt" and undermines democracy.

[Furthermore], Stiglitz said: If we [i.e. the World Bank] had seen a governance structure that corresponds to our Federal Reserve system, we would have been yelling and screaming and saying that country does not deserve any assistance, this is a corrupt governing structure. Stiglitz pointed out that - if another country had presented a plan to reform its financial system, and included a regulatory regime that copied the makeup of the Federal Reserve system - "it would have been a big signal that something is wrong."

The Fed, and Treasury have done everything they can to put our economic system at risk in order to make sure that the top 1%, or top 400 people, remain in financial and political power. They have done this by making sure that this economy is debt based. They took mortgages and created investment vehicles, ie. capital assets, using that debt. They insured that debt using AIG as they were betting that the mortgage debt would go bust, since so much of it was bogus. They created debt-based, and over-leveraged instruments off of previously debt-based derivatives and securities. This was done over and over again. They colluded with the Federal Reserve to take on their toxic mortgage debt, and create money from that debt. They claimed that toxic debt was collateral capital, therefore, the Fed could go forward and print money using its Quantitative Easing policy.

The Federal Reserve prints money allowing the FCSO to borrow it at a zero percent interest rate, and hands over toxic, worthless mortgage based debt securities as collateral. Then the FCSO buys Treasury bonds and receives a 3+percent interest rate return. Then, when the government needs money, they borrow it from the FCSO, and pay interest to them for the use of the money that was originally at zero percent interest, and sitting in the Federal Reserve vaults. In those vaults, or depository, were the Treasury revenues, which were later lent to the financial crime syndicate, and then borrowed back from them for a price! Does any of this make a bit of sense? Is this not a type of Ponzi scheme? Is this not a way to further enrich the richest people in the country without them every really having to lift a finger to earn it? It is basically a planned Treasury theft.

Dr. Ellen Brown, in her piece, “What Goes Around Comes Around IMF-Style Austerity Comes To America”, masterfully explains what is going on behind the curtain. She points out that one of the Shadow Cast members is the Blackstone Group, and is currently chaired by hedge fund magnate Peter G. Peterson, former chair of the Council on Foreign Relations and one-time-head of the New York Federal Reserve. He is also founder of the Peter Peterson Foundation, which is engaged in imposing itself on Congress. The Blackstone Group has been hired by Congress to dispense government bailout funds to AIG. His foundation is spearheading a massive effort to remake Social Security and Medicare benefit allocations as a way to bring about fiscal governmental responsibility Peterson Foundation style. In other words, punish working Americans for what the corporate elite has created through their government take over.

In addition, Peter Peterson’s Blackstone Group is pushing for a mandatory government savings plan for all Americans to be administered by the Social Security Administration. This makes Wall Street salivate, since a good portion would be invested in Wall Street stocks. As Peterson’s group has embedded itself inside the government policy machine, as it feeds from the public trough, as well, he has been contracted to manage around $100B, that is one-half of the total pot of the federal employee’s savings plan, through his Blackrock Financial. I would say there appears a conflict of interest: working for the government, profiting off the government, and influencing government fiscal policy all at the same time. This appears perfectly OK by those performing on the Washington stage.

So much of what is going on upon the Washington stage is to convince working Americans that to issue any more money for stimulus is bad, that the creation of debt is bad, and that the only way to fix the problem is to squeeze on the middle class, and to make them further indebted to the corporate elite through increased fees, higher gas prices, higher food prices, current taxing levels, and higher commodity prices, as well as lower wages, while staying shackled to their employer’s health care plan and the banker’s mortgage contract. No health care mobility for YOU!

If you were to have a single-payer health care system, more than likely your wages would increase because you would have job mobility as you carried your health care elsewhere. Your employer might actually negotiate a wage increase in order to keep you working instead of leaving. Also, the opportunity for starting up your own business would open up. Ultimately, employers would not have to use profits or operating expenses for health care. The FSCO is against this.

What many fail to understand is that when workers have less money to spend, the tax base shrinks, less federal, state and local taxes flow through the system, taxes are likely to increase to cover shortfalls and losses, unemployment increases forcing government to support out-of-work citizens to survive, underemployment squeezes personal budgets, less personal savings, higher debt burdens occur as households use credit cards to pay weekly bills, their assistance in college tuition, and pay medical costs.

One way or another, the government will have to spend money on people and jobs. Either through stimulus, or personal disaster relief payments.

President Obama is planting the fear in Americans that he must look at ways to cut the budget because our rising debt is extremely harmful to our recovery. The fact is that we are paying less than 4% of GDP on the debt’s interest payments.

Dr. Brown writes that we are lucky that the US is able to pay its debts in dollars, which is not always the case with other countries suffering from debt burdens. “We have been deluded into thinking that “fiscal responsibility” (read “austerity”) is something for our benefit, something we actually need in order to save the country from bankruptcy. In the massive campaign to educate us to the perils of the federal debt, we have been repeatedly warned that the debt is disastrously large; that when foreign lenders decide to pull the plug on it, the U.S. will have to declare bankruptcy; and that all this is the fault of the citizenry for borrowing and spending too much. We are admonished to tighten our belts and save more; and since we can’t seem to impose that discipline on ourselves, the government will have to do it for us with a “mandatory savings” plan. The American people, who are already suffering massive unemployment and cutbacks in government services, will have to sacrifice more and pay the piper more, just as in those debt-strapped countries forced into austerity measures by the IMF.

Fortunately for us, however, there is a major difference between our debt and the debts of Greece, Latvia and Iceland. Our debt is owed in our own currency – U.S. dollars. Our government has the power to fix its solvency problems itself, by simply issuing the money it needs to pay off or refinance its debt. That time-tested solution goes back to the colonial scrip of the American colonists and the “Greenbacks” issued by Abraham Lincoln to avoid paying 24-36% interest rates.”

She writes, “But there is a solution to that too. The government can just mandate that the Federal Reserve buy the government’s debt, and that the Fed not sell the bonds to private lenders. The Federal Reserve states on its website that it rebates its profits to the government after deducting its costs, making the money nearly interest-free.

All the fear-mongering about the economy collapsing when the Chinese and other investors stop buying our debt is yet another red herring. The Fed can buy the debt itself – as it has been stealthily doing. That is actually a better alternative than selling the debt to foreigners, since it means we really will owe the debt only to ourselves, as Roosevelt was assured by his advisors when he agreed to the deficit approach in the 1930s; and this debt-turned-into-dollars will be nearly interest-free.

Better yet would be to either nationalize or abolish the Fed and fund the government directly with Greenbacks as President Lincoln did. What the Fed does the Treasury Department can do, for the cost of administration. There would be no shareholders or bondholders to siphon earnings, which could be recycled into public accounts to fund national, state and local budgets at zero or near-zero interest rates. Eliminating debt service payments would allow state and federal income taxes to be slashed; and the public managers of this money, rather than hiding behind a veil of secrecy, would be opening their books for all to see.” (End)

As has been written here, we are all but pawns of this Washington stage performance. It does not have to be this way. There are some obvious solutions, but President Obama and Congress are failing to strip away the curtain and unveil to the people the reasons that motivate the actions of the Shadow Cast members, when they could, at last, finally be declared as well deserving Shadow Cast-Aways.

Thanks for reading, jerry

http://eye-on-washington.blogspot.com