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Archive for October 18th, 2010

Foreclosuregate: Originated from rampant “Control Fraud”?

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An excerpt from the Hammer Forum presentation “The Great American Bank Robbery” by William Black, former bank regulator, now a PhD white collar criminologist and economics professor. This presentation will tell you all you need to know!

Written by aurick

18/10/2010 at 11:39 pm

Betraying the Oligarchs — Federal Reserve a big part of the problem?

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by Justice Litle, Editorial Director, Taipan Publishing Group
Posted originally Oct 14, 2010

“WHAT WOULD YOU HAVE THEM DO?” So asks reader Richard M., in response to [my previous piece] on the Federal Reserve. There is zero chance the Fed would ever take my advice. But if, by some miracle they had an interest in hearing it, here is what I would advise.

I would tell the dog to bite the hand that feeds it. I would tell the Federal Reserve that the servant must betray its master. Those who throw the levers of power and benefit greatly from everything the Federal Reserve does must be allowed to feel pain — real and significant pain — in order that the country might heal.

To understand what I mean, it is first necessary to understand something else. As we have outlined at length in these pages, the Federal Reserve does not serve the people of the United States of America. It serves banks and financial institutions. And even then, the Fed does not serve all banks and institutions, but only the most powerful and connected of these.

And still, the concentration of power does not stop there. Within the halls of the favored banks and institutions, there are those who wield power over all their fellows. These are the men who, by and large, tell the Federal Reserve what to do and why. These are the men who must be betrayed for the sake of the country at large. (It is not going to happen, but the question, again, is what would happen were it up to me.)

One of my favorite articles of the past few years is a piece called “The Quiet Coup” by Simon Johnson. (You can find that article here.) Johnson, a former chief economist for the International Monetary Fund, speaks of financial oligarchy. He describes how the U.S. government has been captured by high-placed financial interests, and how these interests are making recovery impossible. This is still true, I think.

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The last resort of a dying economic system: From “Beggar thy neighbor” to “Beggar thyself”

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by Tyler Durden
Originally posted on Oct 17, 2010

The phrase of the week comes from The Privateer’s Bill Buckler, who has coined the one term that best describes the lunacy that has gripped the world: “Beggar Thyself.” Unlike the 1930s when the theme of the day was “beggar thy neighbor” and which culminated in World War 2, this time the emerging paradigm is one in which the first to defect wins… if only for a few seconds. Because when the “beggar thyself” process is complete, it will mark the end of not only the central banking regime, and the days of excess wealth accrual to the financiers of the world, but also the termination of the 140 year old Bismarckian “welfare state” which is the primary culprit for the creation of trillions of imaginary wealth out of thin paper. When the fiat system ends, so will end the hallucination that developed societies are capable of providing for their hundreds of millions of existing and future retirees. And with that will come the “social instability” that always marks the closure of a failed monetary regime and the admission of global bankruptcy.

From the October 17th edition of Bill Buckler’s Privateer:

What Other Choice Is There??:
IN THE HUNDREDS OF ARTICLES APPEARING IN THE MAINSTREAM FINANCIAL press all over the world and especially the English-speaking world, one headline stood out. It was this: “Currency wars are necessary if all else fails”. The headline appeared in the October 11 edition of the UK Telegraph.

The contents of the article are not germane. What is germane is the naked contention that the nation or nations which will emerge the “strongest” from the current financial malaise is the nation or nations which succeed in devaluing their currency faster than any other. Only in that way can the “currency wars” be won. If these “wars” develop further, they will become a race to see who can come up with a worthless currency faster than anybody else. The 1930s coined the phrase “beggar thy neighbour”.  Today, the financial potentates have gone one better. They are working on a “beggar thyself” policy.

Co-operative debt-based stimulus didn’t “work” and neither have “austerity” programs, according to the IMF. Their “World Economic Outlook” comes to the conclusion that the world can neither “stimulate” its way out of the current GFC nor get there via “austerity” programs. And it isn’t too sanguine on the prospects of currency wars either. As the IMF report noted: “Not all countries can reduce the value of their currency and increase net exports at the same time”. After all, they tried that in the 1930s. The only thing that “saved the day” then was a REAL war, not one on the foreign exchanges.

But still, the global financial potentates keep thrashing around inside their own context looking frantically for a way to overcome their plight. As they want the citizens of the nations they “represent” to see it, they have no choice. If they for one second admitted that the entire system as it is presently constituted is deficient by its very nature, they would instantly have the “social instability” they are warning us against.

In other words, with each passing day the fraud that is the concept of Bismarckian social cohesion and stability, brought to you by a hundred years of central banker subjugation, like a putrid onion, loses layer after layer of its mask, until soon the entire world will see behind the lie. The resultant explosion in pent up decades of anger could easily make all prior conflicts seem tame in comparison. Hopefully it can be avoided. But for that to happen, the fate of the dollar as the reserve currency must and will end. Buckler again:

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Doug Casey on the Violence of the Storm, the Destruction of the Middle Class and the Coming Gold Standard

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from The Daily Bell – with  Ron Holland
Posted originally October 10, 2010

The Daily Bell is pleased to present an exclusive interview with Doug Casey (left)

Introduction: Doug Casey has appeared on hundreds of radio and TV shows, and has been the subject of articles in People, US, Time, Forbes, The Washington Post, and numerous other publications. For nearly three decades, Doug Casey and his team have been correctly predicting major budding trends in the overall economy and commodity markets.

Daily Bell: Have things improved with the economy since this summer?

Doug Casey: No, not fundamentally. The money they threw at the auto industry with the Cash for Clunkers program just stole sales from the future, and destroyed hundreds of thousands of serviceable vehicles. The tax rebates they offered to the people buying houses also stole sales from the future, but more importantly induced a bunch of people who couldn’t really afford houses to buy, and get in debt – this as the market heads lower. Some of the 100s of billions of dollars that they created in these, and other stimuli, have filtered down into the economy – although most of it has just enriched the bankers and made some people feel richer than they really are. But that’s exactly what’s caused the problem; it’s not a solution. These things only make people think they are richer than they really are, induce them to live above their means, and dig themselves into a bigger hole. Everything that the government has done is not just wrong; it’s exactly the opposite of the right thing. So the economy will get worse based on what the government has done.

Daily Bell: Are we still headed for a Greater Depression?

Doug Casey: There is no question about that as far as I am concerned. The Greater Depression has started in earnest. Let’s define the term. A depression is a period of time when most people’s standard of living drops significantly; that’s actually happening in the United States. Another definition of a depression is a period of time when distortions and misallocations of capital in the economy are liquidated – that happens largely through bankruptcies and unemployment. Both of those things are already high, and are going to increase significantly. Regrettably, and unnecessarily, the Greater Depression is going to last a long time. It was caused by government intervention in the economy, and the government is ensuring it will go on much longer than need be. We can’t talk about recovery in a matter of months or even in a couple of years. I’m afraid this is going to be quite dismal for a lot of people …

Daily Bell: You indicated we were in the eye of the storm in the summer. Are we emerging on the other side?

Doug Casey: I think as we come out the other side of the hurricane, it’s going to be much more violent and longer lasting and further reaching than it was in 2007 and 2008 when it was quite unpleasant, so hang on to your hat. They’ve likely averted a deflation but have almost guaranteed very high levels of inflation. But it’s not all gloom and doom. Many individuals will continue creating capital, and technology will continue advancing.

Daily Bell: Where is gold headed?

Doug Casey: I have been a gold bug philosophically for many, many years, but not always a gold bull. The higher something goes, generally, the less I like it. Although I always keep in mind that “the trend is your friend”, I’m essentially a value buyer, not a trend follower. But the fact of the matter is, I don’t know what else you can be in besides gold, and silver today. We are in a strange twilight zone right now, where there are no bargains in the world right now, everything seems to be over priced. Gold itself is not cheap anymore, the way it was 10 years ago. But on the other hand, the gold bull market is intact and I think it is going significantly higher for a lot of reasons. You’ve got to own gold. It’s the only financial asset that’s not simultaneously someone else’s liability. What’s really hard to understand are “dollar bugs”.

Daily Bell: What’s going to happen to the euro?

Doug Casey: As I said before the euro is an Esperanto currency, a completely artificial construct. All of these countries in Europe have very different cultures, they speak different languages; they have different financial structures. The euro can’t possibly last. It’s going to fall apart. Like all fiat currencies, it’s going to reach its intrinsic value.

Daily Bell: Are we closer to a break up of the EU?

Doug Casey: I think it’s inevitable that it will fall apart, it’s just a question of time. That trend is still underway. Europe’s history is one of constant wars and conflicts. Why should that change now? It’s likely that we’ll see more political entities evolve. Orwell was right in many ways, but we won’t see three or four “super states”, as he posited. It’s much more likely there will be more breakups – like Yugoslavia and the USSR.

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The Coming Collapse of the Real Estate Market

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by Charles Hugh Smith
Posted originally October 14, 2010

The system for financing mortgages and regulating that financing has failed, completely and utterly. The mortgage and real estate markets are now in collapse.

POSITIVE FEEDBACK LOOPS LEAD TO COLLAPSE. WELCOME TO THE U.S. HOUSING AND MORTGAGE MARKETS. As I have documented here numerous times, the entire U.S. mortgage market has already been socialized: 99% of all mortgages are backed by the three FFFs –Fannie, Freddie and FHA – and the Federal Reserve has purchased a staggering $1.2 trillion in mortgage-backed assets in the past year or so to maintain the illusion that there is a market for mortgage-backed securities.

There is a market, but only because the mortgages are backed by the Federal Government and propped up by the Federal Reserve.

The mortgage market is completely dependent on government guarantees and quasi-Government purchases of securitized mortgages. If the mortgage market were truly socialized, then the Central State would own the banks which originate, service and own the mortgages.

But then the private owners and managers of the “too big to fail” banks would not be reaping hundreds of billions in profits and bonuses. And since the banking industry has effectively captured the processes of governance (that is, Congress and the various regulatory agencies), then what we have is a system of private ownership of the revenue and profits generated by the mortgage industry and public absorption of the risks and losses.

Could anything be sweeter for the big banks? No.

The incestuous nature of the system is breathtaking. The Fed creates the credit which enables the mortgages, the Treasury guarantees the mortgages via Fannie, Freddie and FHA, the Fed buys the mortgages ($1.3 trillion in mortgages are on their balance sheet) and the private banks collect the fees and profits.

One of the core tenets of the Survival critique is the State/Financial Plutocracy partnership. There are many examples of this partnership (crony capitalism in which the State is the “enforcer” which collects the national income and distributes it to its private-sector cronies), but perhaps none so blatant and pure as the mortgage/banking sector.

But now the entire legal basis for that privatized-profits, socialized losses system has dissolved. The foreclosure scandal is not just a “scandal” in which various frauds were brought to light; it is the failure of the entire system of originating mortgages that props up the entire real estate market.

I recently reported on the depth of the crisis for AOL’s Daily Finance: The Foreclosure Crisis: Eroding Trust and Ending the Recovery? The mainstream financial media has been forced to gingerly poke around the delicate topic, and surprise, it is difficult to put a positive spin on the crisis:

Document Questions Cloud Recovery: Agents Fear Housing Could Stall as Uncertainty on Foreclosures Unnerves Buyers, Especially Investors.

“Title companies would be crazy to ensure title on anything remotely associated with a foreclosed property because we don’t know how this is going to resolve itself,” said Mark Hanson, an independent housing analyst in Menlo Park, Calif. The result: Not only could sales slow on foreclosures now listed for sale, but it could also become harder to sell or refinance properties that have been foreclosed upon at some point in the past few years.

Real-estate agents are particularly worried about the situation’s impact on investors, the buyers who fix up foreclosed homes for resale. Investors accounted for 21% of all home sales in August, according to the National Association of Realtors.

Little-Known MERS faces big challenges in foreclosure battle: Success in challenging MERS’ role in a foreclosure could mean the owner of a mortgage holds a loan without claim to the house as collateral, Mr. Weissman said. That result could set off a chain reaction reducing the value of mortgage servicing rights, an asset many banks keep as an investment. Are we headed for housing Armageddon?

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