FedUpUSA

Archive for November 5th, 2010

James Galbraith wrote an article today that truly gets to the heart of this matter.

The original sin of Obama’s presidency was to assign economic policy to a closed circle of bank-friendly economists and Bush carryovers. Larry Summers. Timothy Geithner. Ben Bernanke. These men had no personal commitment to the goal of an early recovery, no stake in the Democratic Party, no interest in the larger success of Barack Obama. Their primary goal, instead, was and remains to protect their own past decisions and their own professional futures.

I won’t argue with his point here, but really, the same could be said about George W. Bush.  These were the same people running the economics policy behind him during his presidency.  Matter of fact, if we examine the players closely, these guys have been running the show for a very long time.  Many of them were around over a decade ago and were integral in designing our current Ponzi scheme.  We have documented Hank Paulson’s lobbying for removal of leverage limits and his being at the helm of Goldman Sachs when their little subprime ‘investment vehicles’ began to turn sour. 

Up to a point, one can defend the decisions taken in September-October 2008 under the stress of a rapidly collapsing financial system. The Bush administration was, by that time, nearly defunct. Panic was in the air, as was political blackmail — with the threat that the October through January months might be irreparably brutal. Stopgaps were needed, they were concocted, and they held the line.

No, I can’t defend those actions at all. I don’t care how ‘scared’ the administration and Congress were, the fact that they were scared by the very people that created this mess tells me that they should have immediately questioned what they were being told.  It’s like catching a burgler stealing your television in the middle of the night and he says, ‘Oh, really, I need to do this for your own good – if I don’t steal this TV, you’re just going to sit around all day watch and get fat; so, I’m saving you – but you should give me all your food, just to be sure.’  Who in their right mind is going to believe that?  Well, Congress and the Bush administration apparently did.

But one cannot defend the actions of Team Obama on taking office. Law, policy and politics all pointed in one direction: turn the systemically dangerous banks over to Sheila Bair and the Federal Deposit Insurance Corporation. Insure the depositors, replace the management, fire the lobbyists, audit the books, prosecute the frauds, and restructure and downsize the institutions. The financial system would have been cleaned up. And the big bankers would have been beaten as a political force.

Team Obama did none of these things. Instead they announced “stress tests,” plainly designed so as to obscure the banks’ true condition. They pressured the Federal Accounting Standards Board to permit the banks to ignore the market value of their toxic assets. Management stayed in place. They prosecuted no one. The Fed cut the cost of funds to zero. The President justified all this by repeating, many times, that the goal of policy was “to get credit flowing again.”

The banks threw a party. Reported profits soared, as did bonuses. With free funds, the banks could make money with no risk, by lending back to the Treasury. They could boom the stock market. They could make a mint on proprietary trading. Their losses on mortgages were concealed — until the fact came out that they’d so neglected basic mortgage paperwork, as to be unable to foreclose in many cases, without the help of forged documents and perjured affidavits.

But new loans? The big banks had given up on that. They no longer did real underwriting. And anyway, who could qualify? Businesses mostly had no investment plans. And homeowners were, to an increasing degree, upside-down on their mortgages and therefore unqualified to refinance.

These facts were obvious to everybody, fueling rage at “bailouts.” They also underlie the economy’s failure to create jobs.

And here is where I cannot possibly state this any better.  This is the heart of our entire problem.  The fact is, until the insolvent TARP banks are dismantled and every person involved in perpetrating this fraud is prosecuted, we have absolutely no hope of any economic recovery.  All our taxpayer money,  the product of our hard work, will continue to be used to prop up the insolvent banks in order to hide their massive fraud which was perpetrated against us.  None of this money gets lent out or otherwise put into the economy.  It all goes to bankers’ bonuses and to conceal their festering ‘assets,’ to pay for them to foreclose on people’s homes and even more devastating, for the big banks’ to speculate in commodities (oil, food), pushing up the prices of things we need to survive.   Meanwhile, starved for cash, which is all being sucked up by the banks, American businesses are dying, taking with them thousands of jobs. 

Geithner, Summers and Bernanke should have known this. One can be fairly sure that they did know it. But Geithner and Bernanke had cast their lots, with continuity and coverup. And Summers, with his own record of deregulation, could hardly have complained.

They did know.  It was all intentional.  They wanted to cover up the fraud and corruption because once the American people knew how they had been robbing us blind and increasing the prices we paid for everything from homes to cars to food and gas, they might be afraid we’d react like this:

President Obama didn’t see this. Or perhaps, he didn’t want to see it. His presidential campaign was, after all, from the beginning financed from Wall Street. He chose his team, knowing exactly who they were. And this tells us what we need to know, about who he really is.

Who Obama really is, is the same as pretty much everyone in Washington DC - they are the ‘elite’ who like their closed system of bankers > Wall Street > government just the way it is.  That’s why it is said that Wall Street never backs a loser.  More accurately Wall Street creates the winners.  It suits them just fine.  Eventually though, they’ll have stolen everything and there will be nothing left to steal.  Do we have to wait that long America?  Is that when you’ll finally figure it out and be enraged enough to force this looting operation to stop?  I think it should be clear by now that waiting for the government to stop a looting operation that they benefit from is not only stupid, it’s never going to happen.  It’s up to you.

STOP THE LOOTING AND START PROSECUTING!

Wall Street is paying out recorded bonuses, courtesy of YOU the taxpayer.  Yet where is the outrage?

Gerald Celente talks about ‘bonus madness’….

Text from youtube – While millions of Americans are unemployed and the national debt is soaring, it seems top financial executives are far from feeling the pinch.  A recent Wall Street Journal survey estimates they’ll receive a staggering $144 billion dollars in compensation and benefits this year. This amount is equal to the U.S. stimulus package approved by Congress in 2008.  Trend forecaster Gerald Celente says Americans are failing to react to the payouts, because the financiers’ fanbase in the mainstream media is distracting public opinion.

Taiwanese animators seem to have a firm grasp on what is going on here in the U.S.:

Pretty sad when the people in Taiwan understand the outright theft of the American people better than we do.

Don’t forget what Bill Black has been making very clear the past few weeks – The payouts are based on fictional FASB accounting, leading to fictional profits, and billions in bonuses for bank executives running the scam.

Covering up the losses had three real (carefully unstated) purposes: (1) permitting evasions of the PCA [Prompt Corrective Action law], (2) allowing the banks to remove themselves from the strictures of the TARP program even if they are, in reality, insolvent, and (3) allowing insolvent and impaired banks to pay their senior executives huge bonuses on the basis of the (fictional) income that results when a bank does not recognize its losses.

How long will the American people allow their money and their way of life to be stolen by the bankers?  How long will the American people allow Congress to permit this to continue?

STOP THE LOOTING AND START PROSECUTING!

That’s the most common question I get these days in my email and forum.

People are waking up and getting it.

But everyone wants a way to save them – an investment strategy, a place to hide their assets, etc.

Let me give you the answer folks, and you’re not going to like it:

There is only one way, and that is to save everyone.  That is, to force this crap to stop – by whatever means are necessary – and possible.

Yeah, that’s a strong statement.  It’s also true.

Let’s presume that we don’t do this.  That Bernanke does his QE2 thing as threatened and announced.  It won’t work – it can’t, because the commodity price ramps will cause margin compression and destruction of those in the middle and lower classes.  That in turn means people buy less, which means employers fire, not hire.

That in turn will cause him to believe he has to do more.  This is his thesis.  So he will.

And that will in turn impose even more effective tax on America.

At some point one of two things happens: Either the world blows the dollar off and it literally collapses in value by half in the space of a few days, or we get into a printing spiral that debases the currency so fast that prices change between the time you go to work and get home.  But your wages won’t go up because of exporting our labor to China, so you will slowly – or not-so-slowly – be unable to buy necessities – food and energy, along with medical care.

Either way the end point is the same.  The government becomes unable to issue Social Security, Medicare and Medicaid checks, along with paying people like the Military.  At the same time you’re literally being starved to death.  In desperation the government will then attempt to seize everything through some form – whether it be through massive fines and forfeiture, or whether it is through simple tax increases.  That of course will simply make it worse.

You can try to hide in something like Gold, but it won’t do you a bit of good.  The government is not that dumb.  They already have in the law provisions requiring reporting of transactions over $600.  They’ll go to a fully-electronic currency (we’re damn close to being there now) and force clearing of all transactions through The Fed.  This will effectively create a 100% reportable – and taxable – data stream. 

If you try to barter around it, and you will, they’ll fix that too.  Treasury will simply expand the already existing IRS program for “rats.”  Your neighbor and everyone else will be “enticed” with a 20% reward for all “off-grid” transactions that they report.  And civil forfeiture will be used to literally steal everything you own when – not if – you get caught.

Forget it folks, unless you’re planning on going Rambo.  And if you’re going to do that, you may as well get started now.  You’ll go to prison or die – but over time people dying for what they believe is nothing new.  We call them terrorists when they lose – and freedom fighters when they win.  In 1776 a bunch of men decided they had enough, and they pledged their lives, their fortunes and their sacred honors.  They, in aggregate, won and thus are “freedom fighters” - but some of them also died.

All the noise I hear – all words and bluster behind keyboards but no gunshots - tell me that nobody’s prepared to do that.  So quit babbling about it.  All that does is get you on the No-Fly list and a visit from the guys in the black (and armored) Escalades.  Don’t bother with ”sound and fury” nonsense.  You’re not only wasting your breath you’ll get arrested – for nothing.

No, the only solution is for the people to get pissed off enough to rise up peacefully but in a form and fashion that makes clear that we’re not talking, we’re demanding.  We’re putting in front of Congress and other officials positions that are not “polite requests” – they’re instructions, as all citizens are entitled to put forward to their elected officials.

The people en-masse must come to the conclusion that this will not be allowed to stand.

Enforcement of that mandate does not require unlawful acts.  There may be some people who decide to embark on them, but that’s not the message that is being sent or intended.

No, instead the message to send is that we have choices that are lawful and peaceful, and we will exercise them in full.

• We will not do business with banksters who caused this or any merchant who does.

• We will not work overtime or even work hard; we will instead engage in consumer withdrawal, making as little as possible and drawing as much from the government as we can.   That is, we will try to suck the government teat dry and lawfully minimize what we give both to big corporations and government.
• We will NOT cooperate with law enforcement.  “You have the right to remain silent” is an absolute.  This already takes place in parts of America – go try to investigate a crime in some gang-ridden place.  Nobody will talk.  Well, we can make that the rule everywhere – we can make the decision that the government is a bunch of gangsters, and we will not help them.  Our eyes are closed when it comes to Government.  All we will respond with is a polite ”Have a nice day.”
• We WILL picket, protest, and show up in front of banksters and politicians homes – not just offices.  We have a right of free speech in The Constitution and we will use it.  You don’t have to listen, but the streets are PUBLIC PLACES.  Peaceful protests – but lots of them, in your face, every single day.  Public shaming is very effective.  If you want to be in a public role – running a big publicly-traded bank or in a political office you’re fair game to have signs waved in your face no matter where you are.  Sure, they’ll withdraw from the public – that’s fine.  Guess what?  Barricading themselves inside a fort hurts them – and their families – more than it hurts us.
• We WILL intentionally ostracize both banksters and politicians.  We will NOT cut their hair, sell them gas or groceries, or fix their air conditioners.  A Bankster comes into church, they sit in an empty pew – nobody will get within 10′ of them.  Communion?  Surely you jest.  You want 20% of our income as a tax due to QE2?  Fine.  You can have it, but you’re cutting your own hair, your own grass, and fixing your own damn car.  We won’t rent you an apartment, we won’t quote your new windows or a new roof.  In short, we’re going to say “screw you”, and every time we see you on the street, we’re going to say it literally and loudly, just to make sure you understand.  If that drives them into isolation, that’s good, not bad.  The Amish call it “shunning.”  It’s part of your civil rights – you have a right to freedom of association, which includes the right not to associate.  Guess what – being a bankster or politician isn’t a protected class.

Look, at this point folks we have a former Chief Underwriter for Citibank who has testified under oath, in written form, that they were knowingly making bad loans to people.  It wasn’t an accident, and it wasn’t carelessness – certainly not when they took these knowingly-bad loans and sold them to investors.

Yet people still use Citibank credit cards.  They still write checks on a Citibank account.  Some of you own businesses that still do business with these clowns for loans, for checking accounts and for payroll services. Again: Some of you who are reading this are still doing business with them, and with merchants who use them, even though this former Chief Underwriter testified under oath that EIGHTY PERCENT of the loans his business unit made in 2007 were defective.

Eighty percent folks.

Eight in ten.

Nearly ALL.

You’re doing business with a firm that has had a former executive admit to intentionally screwing you and our government, six months later, has done nothing about it. 

Why?

You are being taxed for the explicit purpose of hiding these losses.

That is the purpose of “QE2″.

It is not to “help the economy.”

It is to hide the bad loans that are still sitting out there and are still rotting away – bad loans that were made on purpose.

That cost – that loss – is being inexorably shifted to you, and you are consenting to it.

You are being lied to by the politicians, by the bankers, and by the media.  They’re running advertisements for these institutions on their television stations while they tell you that “it’s all ok” and “QE2 means everything will go up in price.”

Listen to that very carefully folks: Everything will go up in price.

When you go to the store, what do you seek?  You seek lower prices, right?  America loves a sale.

That’s DEFLATION. 

And it’s what you, as a shopper, want, seek, desire and are motivated by.

You’re being told that you can’t have it – and you won’t have it – because these people are intentionally destroying the value of your dollar so you wind up paying for their frauds!

But it’s not their dollar.

Its your dollar.

This nation is yours. 

Its currency is yours. 

And the actions of these people - Bernanke, Congress and the rest – ultimately only happen because you consent.

Are you going to continue to consent?

Once more, can I ask why?  Do you like being screwed?  Do you like high taxes – especially illegally-imposed back-door taxes used to fill in the holes in the fraudsters’ balance sheets – the very holes that were created through the process that caused you, or your neighbor, to wind up with a bubble house and an un-affordable mortgage – one that was or will be foreclosed upon?

Let’s assume you refuse to continue to consent.

If you choose to protest, to withdraw consent, and to engage in every lawful act available to you to stop it, when do you consider the job “done” and stop?

That’s up to the politicians, but I’ll put forward my standards for what would be “sufficient” for me to call my job done and stop writing Tickers.

The politicians can choose tomorrow to initiate forensic audits, mark everything to the market, force the bogus loans out into the open and, likely, take these firms into receivership.  Detonate the bad debt, renegotiate the loans that are viable and have a lower loss in doing so rather than foreclosing, clear the balance sheets.  Break the big banks up, bar the executives from any financial or publicly-traded firm for life.  Refer anything crooked found to prosecutors with instructions to not only prosecute but seek forfeiture of all the ill-gotten gains.  Impeach Bernanke and make clear, through changes to law if necessary, that “price stability” means just that – we all go to the store seeking mild deflation every day, and we insist that The Fed both stop trying to prevent it and leave those with savings able to earn a decent low-risk return by ceasing their tampering with interest rates and protection of scammers and frauds.

If and when they make that decision, we the people stop, because we will no longer have anything to be pissed off about.

Until then, we don’t – and if that means that the banksters and politicians wind up with hair down to their ankles, a leaky roof, a broken car and a hundred people waving signs in their faces every time they open their door?

So be it.

Will you step up, or are you going to continue to consent to being assaulted?

Remember folks – the difference between sexual assault and just plain sex is consent.

Which is happening to you?

The Federal Reserve is entering uncharted territory with this second phase of quantitative easing.  The public may or may not be aware that the Fed has already embarked on quantitative easing (QE1) and has grown their balance sheet by $1.7 trillion (that’s $1,700,000,000,000) by exchanging U.S. Treasuries for questionable assets including a shopping mall in Oklahoma.  It is obvious that the Fed is betting on the public being unaware of this action to continue on their unabashed shadow bailout of the banking industry.  Some think that this will somehow cause residential real estate prices to boom.  Yet this flies directly in the face of a middle class that is quickly seeing their nominal income decrease.  How will they support higher home prices?  It doesn’t compute but what is certain is the demise of the U.S. dollar is already happening.

 The U.S. dollar has been on a multi-decade swing to the bottom:

The Fed is doing all it can to induce inflation but there is a troubling back story.  The middle class is growing, just not in the U.S.  Global companies are now forcing the labor pool to take lower wages or perish and many S&P 500 companies now make a large portion of their revenues overseas.  So a lower dollar is not a big deal for them.  In fact, it allows their foreign assets to appreciate in dollar terms and that is largely one reason why the stock market is doing so well while the actual real economy in this country is faltering.  Look at the above chart.  The U.S. dollar has lost 50 percent of its value since 1986.  In fact, since June of this year the dollar has shed 11 percent of its value.  The trend is obvious and it is clear.  If the Federal Reserve can print money at will, why should people have faith in the currency at the hands of a few central bankers?

People tend to believe that quantitative easing will boost housing values.  If $1.7 trillion didn’t boost values why would $600 billion?

Source:  Calculated Risk

Homeowner’s equity is still trending lower.  The only reason the actual figure has jumped a bit recently is because of all the foreclosures.  After all, once someone loses their home you can’t use that in the figures above but the pain is still very real.  The Fed is gambling large and the U.S. dollar is at the center here.  They make it no secret that higher inflation is what they are seeking.  But personal incomes are not going up.  In fact, the income data is downright scary for the U.S.:

“(Sudden Debt) The largest group of wage earners – a massive 24 million or 16% of the total – made between 1 red cent and $4,999.99.  On average they earned $2,016.

The average wage for everyone was $39,054, but the median was a mere $26,261.  Two thirds of all workers made less than $40,000.”

The median wage in the U.S. is $26,261 based on Social Security data.  This makes sense given the median household income from Census data shows it at $50,000.  How is the Fed going to juice incomes with quantitative easing just by keeping interest rates lower?  The major risk we will now face is another bubble elsewhere as banks begin chasing profits elsewhere but how does this help the American economy?  The Fed is essentially turning into the rating agencies of a few years ago.  They are gambling with the seal of approval of the U.S. and allowing banks to use the American credit standard to speculate in a number of toxic items.  We need to remember that brand needs to be protected and right now the banking system is stomping on the brand that is the U.S. dollar.

There is little evidence that the past intervention from the Fed has helped the American economy.  Unemployment and underemployment is up to 17.1 percent.  The Fed went into this dark abyss in 2008:

If we look at the unemployment and underemployment rate which is a better measure of the health of the economy, we’ll notice that QE1 did very little in stopping the underemployment rate from spiking by 70 percent in two years:

When the Fed embarked on QE1 the U6 rate was at 10 percent.  Today after the $1.7 trillion balance sheet expansion the unemployment and underemployment rate is up to 17.1 percent.  It is no wonder why home prices are not moving anywhere.  The proof is above.  Why should we expect any different course moving forward?  The reality is, the middle class is being exported abroad and banks are having full access to the taxpayer wallet to gamble globally.

My Budget360

This story is so outrageous that I cannot figure out why it has not gone viral on the internet. Unicredit America Inc, a debt collection firm, had people dress up (pretending to be police), serve fake papers to people requiring them to show up in court.

People showed up in a fake court for a fake hearing with a fake witness stand, and an individual in black pretending to be a judge.

Please consider Debt Collector Scam Reaches New Low: The Unicredit Bogus “Courtroom” Scam

It isn’t easy for consumers to protect themselves these days, from robo-signers, foreclosure-rescue scams, and all manner of abusive collection tactics, but the Unicredit scam may take the prize for sheer audacity. It seems that Erie, Pennsylvania debt collection agency Unicredit not only set up a fake courtroom, complete with phony judge, with which to bamboozle and intimidate, but it dressed up employees like sheriff’s deputies to “serve” faked court papers on consumers.

The Unicredit scam, as outrageous as it is, differs mainly in scope from tactics that are commonly used by creditors and collection agencies, whose stock in trade is to mislead, exaggerate, and intimidate.

And while I haven’t seen the pseudo-courtroom scam before, the pseudo-law enforcement official is nothing new.

It’s not always easy when you are scared and someone is breathing down your neck, but again, that is a debt collector’s stock in trade. The more urgent he makes everything sound, the more likely you won’t slow down to think, and ask yourself some practical questions.

The most important and most practical advice is to go see an attorney. If you’re being threatened with legal action, an attorney can tell you what really can (and can’t) happen. If you’ve already been intimidated or scammed into giving up something you shouldn’t have, an attorney can tell you how to redress the situation. An attorney can also help you come up with a plan for addressing persistent credit problems, explain your options, and tell you what you can do about it. Knowledge is power, and it is the best, and most effective weapon you can have in protecting yourself from scam artists of all kinds–even the ones you owe.

I concur with the advice of Dana Wilkinson, Attorney at Law who wrote the above. If you are facing financial difficulties, please see the article for additional tips on how to protect yourself.

For still more reasons on why you need to consult an attorney in these matters please consider

• Before Walking Away Consult An Attorney
• How to Find a Bankruptcy Attorney

Pennsylvania Attorney General Files Charges

How could anyone at Unicredit possibly think what they did was legal?

Straight from the Pennsylvania Attorney Generals website: Erie debt collection company sued; accused of using bogus “hearings” and fake “courtroom” to collect from consumers

Attorney General Tom Corbett today announced that a consumer protection lawsuit has been filed against an Erie debt collection company accused of using deceptive tactics to mislead, confuse or coerce consumers – including the use of bogus “hearings” allegedly held in a company office that was decorated to look like a courtroom.

Corbett said the civil lawsuit was filed by the Attorney General’s Bureau of Consumer Protection against Unicredit America Inc., with corporate and business offices located at 1537 West 39th St., Erie, also identified as the “Unicredit Debt Resolution Center.”

“This is an unconscionable attempt to use fake court proceedings to deceive, mislead or frighten consumers into making payments or surrendering valuables to Unicredit without following lawful procedures for debt collection,” Corbett said. “Consumers also allegedly received dubious ‘hearing notices’ and letters – often hand-delivered by individuals who appear to be Sheriff Deputies – which implied they would be taken into custody by the Sheriff if they failed to appear at the phony court for ‘hearings’ or ‘depositions’.”

Corbett said that in conjunction with the lawsuit, the Attorney General’s Office has also filed a petition for special and preliminary injunction, asking the court to freeze all Unicredit assets; prohibit the company from engaging in any debt collection; immediately cease all bogus hearings or depositions; and to provide detailed information about company bank accounts, assets and business records.

Question Authority

Max Keiser talked about this incredible scheme in Fake Markets! Fake Finance

Max Keiser and co-host, Stacy Herbert, look at the scandals of fake judges using fake deputies to collect fake debts in fake courts and of Irish austerity under imposed under fake pretences. In the second half of the show Max talks to David McWilliams about Ireland’s first ever economics festival, Kilkenomics, and the financial and banking crisis that inspired it.

The video is 25 minutes but covers a wide variety of topics including “fake authorities” in the US and Ireland demanding repayments in fraudulent ways.

The video is well worth a listen in entirety.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com

“Foreclosure Weekly” has shifted to a monthly format, with special reports being issued on an occasional basis.

Here is the November issue of “Foreclosure Monthly.” The revelations from the foreclosure debacle are no longer considered newsworthy by the mainstream media, but we in the econoblogosphere continue our coverage despite the semi-official MSM policy of ignoring the whole mess as irrelevant to the glories of a rising stock market.

Of Two Minds