mercoledì 6 gennaio 2010

Iceland leader vetoes bank repayments bill

BBC, 5 January 2010

Iceland leader vetoes bank repayments bill

Olafur Ragnar Grimsson: "The participation of the nation in the final agreement is the only viable outcome."

Iceland's president has refused to sign a controversial bill to repay $5bn (£3.1bn) to the UK and the Netherlands.

President Olafur Ragnar Grimsson said he would instead hold a referendum on the bill, following public protests.

The legislation was designed to compensate governments forced to bail out their savers with Icesave accounts following Iceland's banking collapse.

Opponents argue the terms of the payments will unfairly hurt Iceland and its recovery from economic crisis.

Some reports say those opponents form a large majority of Icelanders - some 70% are said to be likely to vote "no" in a referendum.

Legislation to repay the money was approved by Iceland's parliament in December, but the approval of the president is also required before it can be passed into law.

It is now up to the government to decide how to proceed. It must consider whether to go ahead with a referendum or whether to withdraw the bill and reopen negotiations with the UK and the Netherlands about a repayment schedule.

The right to choose

The government has seen significant public opposition to the bill.

THE STORY SO FAR...
Early October 2008: Icelandic banks collapse forcing the government to take control
October 2008: Amid a bitter row with Iceland over who should pay, UK and the Netherlands promise to compensate their nationals who have Icesave accounts
November 2008: IMF approves $2.1bn loan for Iceland. Financial support from other countries brings total amount to $10bn.
June 2009: Iceland's new government agrees to reimburse UK and Netherlands
August 2009: Icelandic parliament approves first Icesave bill detailing payment schedule
September 2009: UK and the Netherlands reject payment terms
December 2009: Amended bill with more stringent conditions approved by parliament

On Saturday, the president received a petition calling for the bill to be vetoed, signed by almost a quarter of the country's population.

Campaigners against the bill say that the Icelandic public are being forced to pay for the mistakes of banks.

The total compensation package equates to about 12,000 euros ($17,300; £10,800) per Icelandic citizen.

Announcing the decision to hold a referendum on the bill, President Grimsson said that the Icelandic public had the right to choose.

"It is the job of the president of Iceland to make sure the nation's will is answered," he said.

"I have decided... to take the new law to the nation. The referendum will take place as quickly as possible."

Lending doubts

In response to the decision, the Icelandic parliament, which approved the new bill last month, said the move could further tarnish Iceland's image abroad.

ANALYSIS
Ingibjorg Thordardottir, BBC News
By Ingibjorg Thordardottir, BBC News

The president's decision to call a referendum on the Icesave law is likely to be met with mixed reactions by the Icelandic people. Many believe Iceland is paying too much back to Britain and the Netherlands and want the law courts to decide what the fair repayment amount should be.

Others say that passing the law is fundamental to Iceland's economic recovery - especially since bodies like the IMF and the Nordic countries have said they will not release much needed loans unless an Icesave agreement is finalised.

The decision is a blow to the Icelandic government which sees the legislation as a vital step in Iceland's economic recovery. It will now have to decide whether to withdraw the bill and try to renegotiate a different deal with the UK and the Netherlands or to go ahead with a referendum.

The prime minister has already made it clear that Iceland will honour its international obligations but has not said how that will be done. But the president says that a referendum is the the only way for there to be a fair and conclusive result for the Icelandic people to this drawn-out crisis.

"Uncertainty... in the formal dealings with others countries can have unforeseen, wide-ranging and potentially damaging consequences for our society," warned Johanna Sigurdardottir, Iceland's Prime Minister.

The Treasury's City Minister, Lord Myners, said he shared the Icelandic parliament's disappointment, and warned the public against voting against the bill in the referendum

"The Icelandic people, if they took that decision, would effectively be saying that Iceland doesn't want to be part of the international financial system," he said.

The Dutch government said Iceland was still "compelled to pay back the money".

BBC Brussels correspondent Dominic Hughes said the longer-term impacts of the decision could be significant for both political and economic reasons.

"It's seen as a blow to the country's hopes of a quick entry to the European Union," he said.

"In fact, the whole debate has soured feeling in Iceland towards the EU.

"It also throws doubt on further aid payments to Iceland from international lenders."

Iceland's credit status has already taken a knock. One agency that grades the fitness of a country's finances, Fitch Ratings, has put the country's debt rating at "junk" status, meaning it must pay a higher interest rate to attract borrowers who are not certain to be paid back.

The crisis in Iceland's banks forced it to borrow billions of dollars from the International Monetary Fund (IMF) - loans made on the condition that the issue of Icesave compensation would be resolved.

La quarta funzione costituzionale dello Stato

La quarta funzione costituzionale dello Stato: la Sovranità Monetaria
- di Giacinto Auriti -

Quando la moneta era d’oro, lo stato aveva la sovranità monetaria perché la moneta, sin dall’emissione, era proprietà del portatore. Dei valori monetari partecipava tutta la collettività secondo il principio della società organica che è la proiezione storica dell’apologo di Menenio Agrippa: lo stomaco gode della sua funzione a parità di condizioni con tutte le membra.

Con l’avvento dello stato costituzionale, la quarta funzione dello stato è stata assunta dai grandi usurai. Ciò spiega perché la Rivoluzione Francese fu promossa dalla Banca d’Inghilterra e dall’eresia protestante che entrò in Europa continentale non con la fondazione di una “chiesa”, ma di una “banca”: la Banca Protestante presieduta dal Necker, consigliere finanziario di Luigi XIV.

I banchieri ben sapevano che il valore sta nel “tempo” non nello “spazio”: è una “previsione” e non una “merce”, tanto è vero che la moneta ha un valore arbitrariamente illimitato, anche se il simbolo è di costo nullo (carta). Anche il valore dell’oro non stava nel metallo, ma nella “previsione di poter comprare”.

Facendo leva sul riflesso condizionato causato dall’abitudine secolare di dare sempre un corrispettivo per avere denaro, le banche centrali hanno emesso la moneta col corrispettivo del debito, cioè “prestandola”. In tal modo i grandi usurai non si sono solo limitati ad espropriare i popoli dei valori monetari, ma li hanno indebitati di altrettanto, caricando, sin dall’origine, il costo del denaro del 200%. In tal modo le monarchie cattoliche della vecchia Europa sono crollate perché trasformate da “proprietarie” in “debitrici” del proprio denaro. I banchieri si sono comprati i re, digiuni di cultura monetaria, con il corrispettivo del debito, cioè “arricchendoli” di “moneta-debito”: la c.d. “moneta nominale”.

Quando la moneta era d’oro chi trovava la pepita se ne appropriava senza indebitarsi verso la miniera e questa regola valeva per tutti: re, nobili e plebei.

Con l’avvento dello stato costituzionale, al posto della miniera sta la banca centrale, al posto della pepita un pezzo di carta, al posto della proprietà il debito perché la banca emette moneta solo prestandola e la moneta circola gravata del debito non dovuto al signoraggio bancario.

Con un costo iniziale del denaro, all’origine, del 260% comprensivo di capitale ed interessi, si è resa impossibile la puntualità dei pagamenti. È nata così l’epidemia del “suicidio da insolvenza” che non ha precedenti nella storia e che è il segno dell’avvento dell’usurocrazia.

Le vicende scandalose dei drammi economici, che hanno dilaniato la società del nostro tempo, impongono ormai l’assoluta, inderogabile necessità, di considerare nella costituzione la funzione monetaria dello stato. Fino ad oggi ciò non era possibile perché mancavano i due cardini fondamentali della scienza monetaria: a) la definizione del valore monetario come valore indotto, e b) la legge della rarità monetaria che, in sintesi, sono i seguenti: a)Il valore indotto - Posto che ogni unità di misura ha la qualità corrispondente a ciò che deve misurare, come il metro ha la qualità della lunghezza perché misura la lunghezza, la moneta ha la qualità del valore perché misura il valore e la qualità della rarità perché sono rari (economici) i beni di cui misura il valore.. La moneta è pertanto misura del valore e valore della misura che è il potere d’acquisto che basa sulla previsione di poter acquistare (creata per convenzione come ogni misura) e non sulla riserva. b) La legge della rarità monetaria. Poiché il prezzo di mercato non è solo l’indice del valore dei beni, ma anche del punto di saturazione del mercato – per cui il mercato è saturo quando i prezzi tendono a coincidere con i costi di produzione - solo quando questa coincidenza tende a verificarsi, occorre fermare sia la produzione dei beni che l’emissione monetaria.

Su questi fondamentali principi è possibile concepire la funzione monetaria come quarto potere dello stato costituzionale perché consentono di definire il “dover essere” dell’organo monetario. All’attuale “arbitrio” dei governatori delle banche centrali va sostituita la “discrezionalità tecnica” di una funzione organica, esattamente definita ed eticamente e giuridicamente limitata e finalizzata al bene comune, non a quello dell’usura.

L’emissione e l’utilizzazione della moneta vanno programmate sulle finalità di interesse pubblico e privato senza alcun problema di rarità perché – liberata la moneta (con la scoperta del valore indotto) dall’equivoco della riserva (peraltro abolita dal 15 agosto 1971) – l’emissione monetaria va commisurata alla quantità dei beni e servizi misurati e misurabili nel valore, considerando come tali, non solo i beni e servizi esistenti, ma anche quelli previsti. La previsione dei beni producendi è, di per se, un bene (Si pensi ad es. al valore di un brevetto).

Per quanto riguarda la destinazione d’interesse pubblico, va evidenziato che – dichiarata la moneta di proprietà dei cittadini – lo stato dovrà trattenere all’origine quanto necessario per esigenze fiscali e di pubblica utilità, liberando i contribuenti dal peso di milioni di ore di lavoro banalmente distrutti per mere formalità contabili e amministrative.

Merita inoltre di essere evidenziato il comportamento delle banche centrali che pretendono di vantare, come pubblico interesse, la destinazione a “riserva” anche dei beni diversi dall’oro. La riserva aveva un significato quando la banconota era convertibile in oro a richiesta del portatore. È diventata ormai una ridicola sceneggiata, per mascherare la truffa dell’emissione con cui la banca centrale consegue un arricchimento parassitario pari alla differenza – duplicata dall’equivalente prestito – tra costo tipografico e valore nominale della moneta.

Per quanto riguarda la destinazione d’interesse privato, va precisato che ad ogni cittadino spetta, all’atto dell’emissione, la sua quota di “reddito monetario di cittadinanza”, in attuazione del disposto del 2° co. dell’art. 42 della Costituzione, che prevede l’accesso alla proprietà per tutti.

Si realizza in tal modo un diritto della persona con contenuto patrimoniale, non come elemosina di stato, ma come acquisto della proprietà, a titolo originario, perché ogni membro della collettività contribuisce a creare il valore convenzionale della moneta, per il solo fatto che l’accetta. Col reddito di cittadinanza si finanziano i produttori, finanziando i consumatori, che è l’unico modo razionale per evitare elargizioni di moneta in base a scelte arbitrarie e clientelari.

Sostituendo all’oro il simbolo cartaceo, la moneta nominale ha acquistato due qualità tra loro in contrasto, anche se non incompatibili: la rarità programmata ed il costo nullo che hanno dovuto operare nell’esperienza della circolazione monetaria esasperando la separazione culturale tra quelli che sanno: i padroni del signoraggio monetario, e quelli che non sanno: gli altri.

In conclusione, il quarto potere costituzionale deve essere concepito sulla finalità di restituire allo stato la funzione monetaria ed al popolo la proprietà della moneta. Questa riforma è diventata ormai indispensabile per uscire dall’asservimento al “signoraggio bancario” e dare inizio ad un regime di democrazia integrale in cui i popoli non abbiano solo la sovranità politica, ma anche quella monetaria, per vivere tempi nuovi a dimensione umana, liberi dall’angoscia dell’insolvenza ineluttabile dei debiti non dovuti alla grande usura.

Fonte: http://www.signoraggio.info/sovranita_monetaria_auriti.htm

martedì 5 gennaio 2010

Class action: faro su legame banche-Bankitalia

Class action: faro su legame banche-Bankitalia


(ANSA) - ROMA, 4 GEN - Le associazioni di consumatori Adusbef e Federconsumatori "hanno dato mandato ai loro legali di studiare una class action contro il sistema bancario che essendo proprietario della Banca d'Italia ne condiziona pesantemente le attività di ordine ispettivo". Lo indicano le due associazioni in una nota. Per Adusbef-Federconsumatori Bankitalia non è "mai intervenuta" per "rimuovere comportamenti fraudolenti e pratiche commerciali scorrette a danno dei consumatori ed utenti costretti nel tempo a pagare costi di accesso elevatissimi, i più cari di Europa, ai servizi bancari". Nella nota si accenna per esempio ai tassi di interesse praticati dalle banche italiane, "con un costo del denaro più elevato al Sud rispetto al resto del Paese, ed in generale più alto di un buon 0,50% sui mutui e di un +1,37% sui prestiti personali rispetto alla media praticata dalle banche europee".
"La Banca d'Italia non può continuare ad assumere il ruolo di notaio delle malefatte bancarie", scrivono Elio Lannutti per Adusbef e Rosario Trefiletti per Federconsumatori. Che spiegano: "Sono proprio i dati di Bankitalia su tassi,condizioni e loro variazioni, oltre alle segnalazioni al Parlamento effettuate nel tempo dall'Antitrust, suffragati da numerose sentenze di condanna ottenute dall'Adusbef in tutte le sedi di giudizio, fino alla Cassazione ed alla Corte Costituzionale in merito ai tassi anatocistici ed ai mutui usurari, ad ispirare una class action congiunta contro il sistema bancario, Abi in primis e la Banca d'Italia, per gravissima lesione dei diritti ed interessi dei consumatori ed utenti bancari". Infine "anche sulla odiosa prassi della commissione di massimo scoperto,resuscitata dalle banche in forme e modalità più onerose per aggirare il divieto di legge,ed oggetto di una corposa censura dell'Antitrust a Governo e Parlamento, Adusbef e Federconsumatori, promuoveranno una class action per punire comportamenti fraudolenti della generalità dei banchieri a danno dei consumatori".(ANSA)

lunedì 4 gennaio 2010

Escape from Pottersville: The North Dakota Model

Ellen Brown

Ellen Brown

Huffington Post, January 4, 2010 02:30 PM

Escape from Pottersville: The North Dakota Model for Capitalizing Community Banks


The recent proposal to vote with our feet by shifting our deposits from Wall Street to community banks is a great start. However, community banks are not suffering from a lack of deposits so much as from a lack of the capital they need to make new loans, and investment capital today is scarce. There is a way out of this dilemma, demonstrated for over 90 years by the innovative state of North Dakota -- a partnership in which community banks are backed by the deep pockets of a state-owned bank.

Our fearless editor and leader Arianna Huffington just posted an article that has sparked a remarkable wave of interest, evoking nearly 5,000 comments in less than a week. Called "Move Your Money," the article maintains that we can get credit flowing again on Main Street by moving our money out of the Wall Street behemoths and into our local community banks. This solution has been suggested before, but Arianna added the very appealing draw of a video clip featuring Jimmy Stewart in It's a Wonderful Life. In the holiday season, we are all hungry for a glimpse of that wonderful movie that used to be a mainstay of Christmas, showing daily throughout the holidays. The copyright holders have suddenly gotten very Scrooge-like and are allowing it to be shown only once a year on NBC. Whatever their motives, Wall Street no doubt approves of this restriction, since the movie continually reminded viewers of the potentially villainous nature of Big Banking.

Pulling our money out of Wall Street and putting it into our local community banks is an idea with definite popular appeal. Unfortunately, however, this move alone won't be sufficient to strengthen the small banks. Community banks lack capital -- money that belongs to the bank -- and the deposits of customers don't count as capital. Rather, they represent liabilities of the bank, since the money has to be available for the depositors on demand. Bank "capital" is the money paid in by investors plus accumulated retained earnings. It is the net worth of the bank, or assets minus liabilities. Lending ability is limited by a bank's assets, not its deposits; and today, investors willing to build up the asset base of small community banks are scarce, due to the banks' increasing propensity to go bankrupt.

It's a Wonderful Life actually illustrated the weakness of local community banking without major capital backup. George Bailey's bank was a savings and loan, which lent out the deposits of its customers. It "borrowed short and lent long," meaning it took in short-term deposits and made long-term mortgage loans with them. When the customers panicked and all came for their deposits at once, the money was not to be had. George's neighbors and family saved the day by raiding their cookie jars, but that miracle cannot be counted on outside Hollywood.

The savings and loan model collapsed completely in the 1980s. Since then, all banks have been allowed to create credit as needed just by writing it as loans on their books, a system called "fractional reserve" lending. Banks can do this up to a certain limit, which used to be capped by a "reserve requirement" of 10%. That meant the bank had to have on hand a sum equal to 10% of its deposits, either in its vault as cash or in the bank's reserve account at its local Federal Reserve bank. But many exceptions were carved out of the rule, and the banks devised ways to get around it.

That was when the Bank for International Settlements stepped in and imposed "capital requirements." The BIS is the "central bankers' central bank" in Basel, Switzerland. In 1988, its Basel Committee on Banking Supervision published a set of minimal requirements for banks, called Basel I. No longer would "reserves" in the form of other people's deposits be sufficient to cover loan losses. The Committee said that loans had to be classified according to risk, and that the banks had to maintain real capital - their own money - generally equal to 8% of these "risk-weighted" assets. Half of this had to be "Tier 1" capital, completely liquid assets in the form of equity owned by shareholders -- funds paid in by investors plus retained earnings. The other half could include such things as unencumbered real estate and loans, but they still had to be the bank's own assets, not the depositors'.

For a number of years, U.S. banks managed to get around this rule too. They did it by removing loans from their books, bundling them up as "securities," and selling them off to investors. But when the "shadow lenders" - the investors buying the bundled loans - realized these securities were far more risky than alleged, they exited the market; and they aren't expected to return any time soon. That means banks are now stuck with their loans; and if the loans go into default, as many are doing, the assets of the banks must be marked down. The banks can then become "zombie banks" (unable to make new loans) or can go bankrupt and have to close their doors.

The final blow to the easy credit provided by U.S. banks came with another stricture on capital, called Basel II. It manifested in the U.S. as the "mark-to-market" rule, which required a bank's loan portfolio to be valued at what it could be sold for (the "market"), not its original book value. In today's unfavorable market, that meant a huge drop in asset value for the banks, dramatically reducing their ability to generate new loans. When the announcement was made in November 2007 that this rule was going to be imposed on U.S. banks, credit dried up and the stock market plunged. The market did not begin to recover until 2009, when the rule was largely lifted. However, on December 17, 2009, the Basel Committee announced plans to impose even tighter capital requirements. The foreseeable result is the collapse of yet more community banks and the drying up of yet more credit on Main Street.

Anchoring Community Banks to State-owned Banks

Where can our floundering community banks get the capital to make room on their books for substantial new loans? An innovative answer is provided by the state of North Dakota, one of only two states (along with Montana) expected to meet its budget in 2010. North Dakota was also the only state to actually gain jobs in 2009 while other states were losing them. Since 2000, North Dakota's GNP has grown 56 percent, personal income has grown 43 percent and wages have grown 34 percent. The state not only has no funding problems, but in 2009 it had a budget surplus of $1.3 billion, the largest it ever had -- not bad for a state of only 700,000 people.

North Dakota is the only state in the union to own its own bank. The Bank of North Dakota (BND) was established by the state legislature in 1919 specifically to free farmers and small businessmen from the clutches of out-of-state bankers and railroad men. Its populist organizers originally conceived of the bank as a credit union-like institution that would provide an alternative to predatory lenders, but conservative interests later took control and suppressed these commercial lending functions. The BND now chiefly acts as a central bank, with functions similar to those of a branch of the Federal Reserve.

However, the BND differs from the Federal Reserve in significant ways. The stock of the branches of the Fed is 100% privately owned by banks. The BND is 100% owned by the state, and it is required to operate in the interest of the public. Its stated mission is to deliver sound financial services that promote agriculture, commerce and industry in North Dakota.

Although the BND is operated in the public interest, it avoids rivalry with private banks by partnering with them. Most lending is originated by a local bank. The BND then comes in to participate in the loan, share risk, buy down the interest rate and buy up loans, thereby freeing up banks to lend more. One of the BND's functions is to provide a secondary market for real estate loans, which it buys from local banks. Its residential loan portfolio is now $500 billion to $600 billion. This function has helped the state avoid the credit crisis that afflicted Wall Street when the secondary market for loans collapsed in late 2007 and helped it reduce its foreclosure rate. The secondary market provided by the "shadow lenders" is provided in North Dakota by the BND, something other state banks could do for their community banks as well.

Other services the Bank provides include guarantees for entrepreneurial startups and student loans, the purchase of municipal bonds from public institutions, and a well-funded disaster loan program. When North Dakota failed to meet its state budget a few years ago, the BND met the shortfall. The BND has an account with the Federal Reserve Bank, but its deposits are not insured by the FDIC. Rather, they are guaranteed by the State of North Dakota itself - a prudent move today, when the FDIC is verging on bankruptcy.

A New Vision for a New Decade

A state-owned bank has enormous advantages over smaller private institutions: states own huge amounts of capital (cash, investments, buildings, land, parks and other infrastructure), and they can think farther ahead than their quarterly profit statements, allowing them to take long-term risks. Their asset bases are not marred by oversized salaries and bonuses, they have no shareholders expecting a sizable cut, and they have not marred their books with bad derivatives bets, unmarketable collateralized debt obligations and mark-to-market accounting problems.

The BND is set up as a dba: "the State of North Dakota doing business as the Bank of North Dakota." Technically, that makes the capital of the state the capital of the bank. The BND's return on equity is about 25 percent. It pays a hefty dividend to the state, projected at over $60 million in 2009. In the last decade, the BND has turned back a third of a billion dollars to the state's general fund, offsetting taxes.

By law, the state and all its agencies must deposit their funds in the bank, which pays a competitive interest rate to the state treasurer. The bank also accepts funds from other depositors. These copious deposits can then be used to plow money back into the state in the form of loans.

Although the BND operates mainly as a "bankers' bank," other publicly-owned banks, including the Commonwealth Bank of Australia, have successfully engaged in direct commercial lending as well. This has proven to be a win-win for both the borrowers and the government. The public bank model also offers exciting possibilities for refinancing the state's own debts and funding infrastructure nearly interest-free. For a fuller discussion, see "Cut Wall Street Out! How States Can Finance Their Own Recovery."

For three centuries, the United States has thrived on what Benjamin Franklin called "ready money" and today we call "ready credit." We can have that abundance again, by generating our own credit through our own state and local banks. Just as George Bailey needed a visit from an angel to point the way, so we just need the vision to see the possibilities.

Arianna's vision for moving our money from the large banks into our local community banks is a very admirable first step. However, those community banks are not likely to have sufficient capital to free up credit for their local businesses and other customers without the partnership of state-owned banks, or the publicly-owned banks of counties and larger cities, which also have ample capital assets. A number of states, counties, and cities are actively exploring this option. The BND model shows us how government-owned banks and community banks can work together to get money flowing back to Main Street again.

Follow Ellen Brown on Twitter: www.twitter.com/ellenhbrown

How Goldman Sachs Made Tens of B of $ from the Economic Collapse

How Goldman Sachs Made Tens of Billions of Dollars from the Economic Collapse of America


Investment banking giant Goldman Sachs has become perhaps the most prominent symbol for everything that is wrong with the U.S. financial system, but most Americans cannot even begin to explain what they do or how they have made tens of billions of dollars from the economic collapse of America. The truth is that what Goldman Sachs did was fairly simple, and there may not have even been anything "illegal" about it (although they are now being investigated by the SEC among others).

The following is how Goldman Sachs made tens of billions of dollars from the economic collapse of America in four easy steps....

Step 1: Sell mortgage-related securities that are absolute junk to trusting clients at vastly overinflated prices.

Step 2: Bet against those same mortgage-related securities and make massive bets against the U.S. housing market so that your firm will make massive profits when the U.S. economy collapses.

Step 3: Have ex-Goldman executives in key positions of power in the U.S. government so that bailout money can be funneled to entities such as AIG that Goldman has made these bets with so that they can get paid after they win their bets.

Step 4: Collect the profits - Goldman Sachs is having their "most successful year" and will end up reporting approximately $50 billion in revenue for 2009.

So is it right for the biggest fish on Wall Street to make tens of billions of dollars by betting that the U.S. housing market will collapse?

You see, when you are talking about a financial giant the size of Goldman Sachs, the line between "betting that something will happen" and "making something happen" gets blurred very quickly.

Not that Goldman Sachs was the only one betting against the housing market.

According to the New York Times, firms like Deutsche Bank and Morgan Stanley also created mortgage-related securities and then bet that they would fail.....

Goldman was not the only firm that peddled these complex securities — known as synthetic collateralized debt obligations, or C.D.O.’s — and then made financial bets against them, called selling short in Wall Street parlance. Others that created similar securities and then bet they would fail, according to Wall Street traders, include Deutsche Bank and Morgan Stanley, as well as smaller firms like Tricadia Inc.

But certainly Goldman Sachs was the most prominent financial player involved in this type of activity.

In fact, without mentioning specifics, Goldman has even admitted publicly to wrongdoing. On November 17th, 2008 Goldman Sachs CEO Lloyd Blankfein even issued a public apology....

"We participated in things that were clearly wrong and have reason to regret."

But complicated financial transactions are something that most Americans simply do not understand, so the public outrage towards Goldman Sachs and others has been somewhat limited. But that does not change the very serious nature of the activities that Goldman was involved in....


"The simultaneous selling of securities to customers and shorting them because they believed they were going to default is the most cynical use of credit information that I have ever seen,"
Sylvain Raynes, an expert in structured finance at R & R Consulting in New York,recently told The New York Times. "When you buy protection against an event that you have a hand in causing, you are buying fire insurance on someone else’s house and then committing arson."


But the sad thing is that many Americans do not even understand what Goldman Sachs is. Goldman Sachs was founded in 1869 and has forged a reputation as one of the elite financial institutions in the entire world. They only hire "the best and the brightest" and Ivy League graduates flock to the firm. Of the five major investment banks that dominated Wall Street before the crash, only Goldman Sachs and Morgan Stanley have survived. Merrill Lynch and Bear Stearns were severely damaged by the crash and ended up being purchased by retail banks and Lehman Brothers ended up folding.

There are persistent rumors that Goldman played a major role in the collapse of Bear Stearns and that ex-Goldman CEO Hank Paulson could have done much more to bail out Lehman Brothers, but perhaps nobody will ever know the full truth. All we do know is that at the end of the crash several of Goldman's competitors were destroyed and Goldman found itself in a more dominant position than ever.

The truth is that Goldman is a financial shark and they do not apologize for it.

An article in Rolling Stone recently put it this way....

"The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money."

So how did Goldman Sachs prosper so greatly in an environment that destroyed their competitors?

The following is an extended breakdown of just how Goldman Sachs was able to reap tens of billions of dollars in profits from the collapse of the U.S. housing market....

Step 1: Sell mortgage-related securities that are absolute junk to trusting clients at vastly overinflated prices.

In late 2006, Goldman Sachs made some fundamental changes in the way that they were approaching the U.S. housing market. According to a McClatchy report, Goldman spokesman Michael DuVally said that the firm decided at that time to reduce its mortgage risks by selling off subprime mortgage-related securities and by purchasing credit-default swaps to hedge against a serious downturn in the U.S. housing market.

The key moment came in December 2006. After "10 straight days of losses" in Goldman's mortgage business, Chief Financial Officer David Viniar called a meeting of key Goldman personnel.

Vanity Fair described the results of that meeting this way....

"After a now famous meeting in David Viniar’s office on December 14, 2006, Goldman’s traders began to protect the firm against further declines in the market. Just as you can short the S&P 500, the traders took short positions in an index that tracked the price of mortgage-backed securities. They also either sold assets they owned to others at losses or dramatically marked down the price on their own books. In the aftermath of the crisis, criticism erupted that Goldman had continued to sell mortgage-backed securities to its clients while betting against those very securities for its own account. Clearly, in the simplest terms possible, this is true: while Goldman was never the biggest underwriter of C.D.O.’s (collateralized debt obligations—Wall Street’s vehicle of choice for mortgage-backed securities), the firm did remain in the top five until the summer of 2007, when the market crashed to a halt."

So Goldman Sachs proceeded to sell approximately $39 billion of its own mortgage securities in 2006 and 2007 and they sold at least $17 billion more mortgage securities for others, but they never told the buyers of those securities that Goldman was secretly betting that a significant drop in U.S. housing prices would send the value of those mortgage securities plummeting.

These sales and the massive clandestine wagers placed by Goldman enabled the firm to pass most of its potential losses on to others prior to the collapse of the U.S. housing market.

But many of the investors who got the short end of the stick were not pleased. When they discovered that what Goldman had promoted as triple-A rated investments were actually a bunch of garbage, many of them were absolutely furious.

"The Securities and Exchange Commission should be very interested in any financial company that secretly decides a financial product is a loser and then goes out and actively markets that product or very similar products to unsuspecting customers without disclosing its true opinion," said Boston University economics professor Laurence Kotlikoff. "This is fraud and should be prosecuted."

One of the victims of this fraud was the state of Mississippi....

"Mississippi Attorney General Jim Hood, whose state has lost $5 million of the $6 million it invested in Goldman's subprime mortgage-backed bonds in 2006, said the state's funds are likely to lose "hundreds of millions of dollars" on those and similar bonds."

Another one of the victims of this fraud was California's retirement system for public employees....

"California's huge public employees' retirement system, known as CALPERS, purchased $64.4 million in subprime mortgage-backed bonds from Goldman on March 1, 2007. While that represented a tiny percentage of the fund's holdings, in July CALPERS listed the bonds' value at $16.6 million, a drop of nearly 75 percent, according to documents obtained through a state public records request."

So who is left holding the bag in cases such as these?

The taxpayers.

And that is just fine with Goldman Sachs. Just as long as they keep raking in huge profits.

Vanity Fair was even more blunt regarding this injustice....

"Goldman’s management team was almost flawless in its execution. But how many people needed government help because of the things Goldman sold them?"

The truth is that a lot of people needed help because of the things Goldman sold them, but up until now Goldman has completely gotten away with it.

Step 2: Bet against those same mortgage-related securities and make massive bets against the U.S. housing market so that your firm will make massive profits when the U.S. economy collapses.

Not only did Goldman sell mortgage-related securities that were absolute junk to investors at vastly overinflated prices, they also placed massive bets that the U.S. housing market would absolutely collapse.

The New York Times recently described how Goldman used a new index known as the ABX to make many of these bets....

"A handful of investors and Wall Street traders, however, anticipated the crisis. In 2006, Wall Street had introduced a new index, called the ABX, that became a way to invest in the direction of mortgage securities. The index allowed traders to bet on or against pools of mortgages with different risk characteristics, just as stock indexes enable traders to bet on whether the overall stock market, or technology stocks or bank stocks, will go up or down.

Goldman, among others on Wall Street, has said since the collapse that it made big money by using the ABX to bet against the housing market. Worried about a housing bubble, top Goldman executives decided in December 2006 to change the firm’s overall stance on the mortgage market, from positive to negative, though it did not disclose that publicly."

These bets would only make money for Goldman Sachs if the U.S. housing market declined.

So if the biggest giant on Wall Street has a huge financial incentive to see the U.S. housing market fail, what do you think the odds are that they are going to do anything to support it?

Step 3: Have ex-Goldman executives in key positions of power in the U.S. government so that bailout money can be funneled to entities such as AIG that Goldman has made these bets with so that they could get paid.

For years, Goldman Sachs has encouraged executives to serve in U.S. government positions. Now they are world famous for the amount of influence their former employees have over government policy.

For example, according to the New York Times, Treasury Secretary Hank Paulson (also a former Goldman CEO) spoke with the current CEO of Goldman Sachs about two dozen times during the week of the bailout, although Paulson says that he obtained an "ethics waiver" before doing so.

So does an "ethics waiver" make everything okay?

But the sad thing is that is not an isolated example.

It turns out that Goldman benefited greatly from a number of decisions made by their former CEO while he was Treasury Secretary....

*Goldman greatly benefited when Paulson elected not to save rival Lehman Brothers from collapse. Paulson certainly stepped in to help Fannie Mae, Freddie Mac and AIG, but apparently had no problem with letting Lehman Brothers fall apart.

*Under Paulson's direction, Goldman ended up receiving bailout money (which they may or may not have needed) from the U.S. government and has since paid back much of that money with interest. So why didn't Bear Stearns or Lehman Brothers get the bailout funds that they needed?

*Goldman greatly benefitted when Paulson organized a massive rescue of American International Group while in constant telephone contact with Goldman CEO Blankfein. AIG ultimately ended up using $12.9 billion taxpayer dollars to pay off every single penny that it owed to Goldman.

But it is not just Paulson who has had significant influence in Washington.

On October 16th, Adam Storch, a Goldman Sachs vice president, was named managing executive of the SEC's enforcement division. What do you think the odds are that he will crack down hard on Goldman?

In addition, former Goldman Sachs lobbyist Mark Patterson is the chief of staff for current Treasury Secretary Timothy Geithner.

In fact, ex-Goldman employees are seemingly everywhere. According to Vanity Fair, at one G-7 meeting an anonymous source identified at least 24 out of 32 finance officials in attendance as ex-Goldman employees.

The influence of Goldman Sachs even reaches to the White House. Goldman was Barack Obama's number one campaign donor, and its employees gave $981,000 to his campaign.

If you don't think that kind of money does not buy influence then you are delusional.

Goldman used some of that powerful influence to get the U.S. government to bail out AIG so that AIG could pay off the bets that Goldman had made with them. In a recent article, Vanity Fair described part of what went down....

"After the government bailout of A.I.G., in order to end the collateral calls on the insurance giant, the New York Federal Reserve—whose chairman at the time was former Goldman chairman Steve Friedman—decided to purchase a slew of the securities that A.I.G. had insured, including $14 billion of those on which Goldman had purchased insurance. The government—meaning taxpayers—did so at full price, although according to a recent Bloomberg story, there had been negotiations with A.I.G. to do so at a 40 percent discount. Goldman says that the New York Fed broached the topic of a discount only once. The firm’s response: a flat no. While no one will ever know what would have happened had A.I.G. gone under, the essence of what did happen is perfectly clear. As a recent report by the Office of the Special Inspector General for tarpput it, the decision to pay full price “effectively transferred tens of billions of dollars of cash from the Government to A.I.G.’s counterparties.” Or to put it another way: because Goldman felt it was owed its billions by A.I.G., the firm took it from taxpayers instead."

So what about all of the thousands of small businesses that are failing and what about the millions of Americans that are losing their jobs and homes?

Do they get bailouts?

Of course not.

But the U.S. government definitely made sure that AIG and Goldman were taken care of.

Step 4: Collect the profits - Goldman Sachs is having their "most successful year" and will end up reporting approximately $50 billion in revenue for 2009.

Goldman Sachs ranks #1 in annual net income when compared with 86 peers in the investment services sector. They are on course for their best year ever.

Yes, they are having a really good "crisis".

Goldman Sachs is on course to surpass $50 billion in revenue in 2009 and to pay its employees more than $20 billion in year-end bonuses.

20 billion just in bonuses?

That would mean that the average bonus for all Goldman employees would be over $700,000.

No wonder everyone wants to work for them.

It's good to be on the winning side.

So just how are they making so much money?

In their recent article, Vanity Fair described it this way....

"But because so many of Goldman’s competitors were gone or disabled, spreads—the difference between the price at which you sell and buy a variety of securities—were wider than they had been in years, meaning that Goldman could practically mint money. By acting at the moment it did, with Lehman out and Merrill Lynch down for the count, the government enabled this situation.

The other reason for Goldman’s profits is that the government has flooded the system with money, not just the money it used to rescue the financial system but hundreds of billions more in stimulus, in support of the housing market, and in the Federal Reserve’s purchases of securities."

But all of this success has not come without controversy. In fact, Goldman executives are very much aware of the growing backlash against the firm.

Senior officials at Goldman Sachs have reportedly loaded up on firearms and are now equipped to defend themselves if there is a "populist uprising" against the bank.

In addition, Goldman Sachs employees are now not allowed to gather in groups of 12 or more outside the office. The firm very much discouraged "holiday parties" as they most definitely did not want to be seen as celebrating the downfall of the U.S. economy.

But the truth is that Goldman Sachs won because so many others lost.

In his very revealing article on Goldman Sachs in Rolling Stone, Matt Taibbi described how Goldman keeps making money from the bursting of these economic bubbles....

"They achieve this using the same playbook over and over again. The formula is relatively simple: Goldman positions itself in the middle of a speculative bubble, selling investments they know are crap. Then they hoover up vast sums from the middle and lower floors of society with the aid of a crippled and corrupt state that allows it to rewrite the rules in exchange for the relative pennies the bank throws at political patronage. Finally, when it all goes bust, leaving millions of ordinary citizens broke and starving, they begin the entire process over again, riding in to rescue us all by lending us back our own money at interest, selling themselves as men above greed, just a bunch of really smart guys keeping the wheels greased. They've been pulling this same stunt over and over since the 1920s — and now they're preparing to do it again, creating what may be the biggest and most audacious bubble yet."

The truth is that in this latest economic collapse there were millions of losers and just a few winners.

Goldman Sachs was one of those winners.

So will they lose next time?

Not likely.

In their recent article, Vanity Fair quoted an anonymous source in the financial industry as saying the following....

"Are they the Yankees? No, the Yankees actually lose! Goldman never loses."

ORGANIZED CRIME AND GOVERNMENT


ORGANIZED CRIME AND GOVERNMENT


By Michael LeMieux
January 4, 2010
NewsWithViews.com

Scenario: You’re working hard at building your business. You come in early each morning, check your stock, arrange the shelves, sweep the floor, and get the till ready for what you hope will be another busy day.

Things are going well when a man enters the store wearing a black suit coat and a fedora. He walks straight up to the counter not looking at any of the merchandise and he locks his eyes with yours. “Who is the owner here?” he asks. You reply that you are. He then proceeds to tell you that for the privilege of operating this business and for the protection he provides he demands that you pay him thirty percent of all the profit from your business. He further tells you that if you refuse then some very bad things just might happen and you could lose it all.

We have seen this scenario played out many times in old movies of the gangster lore. The mobster would demand protection payments even when the protection you are paying for was from that very same gang. And if you did not pay you would end up losing everything.

Now I am going to ask what some would deem a ridiculous question; what is the difference between the government and organized crime?

When I ask this question most people would reply that the government does what it does within the confines of the law! Oh, really? What is the basis of all law in the United States; the Constitution, right? How many times have we had laws deemed unconstitutional? Plenty! How many times have people had their lives ruined and sent to jail for years only to find out they were innocent. Thousands! How many times have we heard of Constitutional violations by all the various levels of government? Too many to number!

So what is the real difference between government and organized crime? In my opinion it is the ability to amass force against the victims. Organized crime may be able to get 20 or 30 guys together to run a neighborhood. The government can get hundreds of thousands.

Case in point; how many people if they were told that they have a tax burden placed on them by the government would ‘voluntarily’ pay that tax if they were also told no one will bother them if they did not pay it? Besides the exception to the rule the vast majority will not. So why do we pay taxes to the government? We do so because if we do not men with guns will show up at our door and take our belongings, take our home, and possibly put us in a cell for years and years. This is called coercion, doing something out of fear of the consequences of not doing it, even when we would not otherwise do so.

Why do we, for the most part, buckle our seat belt when we get in a car? Besides being the smart thing to do for safety, we do it because we know that if we get stopped we will be punished for not doing what the parent government said we had to do. There is really no crime involved because there is no injured party you just did not comply with what you were told to do.

Unless we are believers in precognition, knowing something is going to happen before it does, an officer cannot arrest or cite you before a crime has been committed but in this case you are treated as a criminal because you did not do what you were told! Nothing criminal took place, no property damage, no personal injury, but you are damaged by having to pay a fine and points put on your license. Oh, I guess a little loss of liberty is okay to keep us safe, right?

Now parents this may sound very familiar, and even for those that can remember back to when you were children, and you asked why you had to do something and were responded to with ‘because I said so.’ That is exactly what thousands of these statutes consist of; no criminal intent, no injured party, no attempt to gain something that is not ours, and in many cases only a desire to be left alone. Yet each and every day citizens of the states of this nation are criminalized because they ‘did not comply’ with the wishes of the mob, I mean government.

Don’t get me wrong government is a necessary evil but one that must be held firmly in the grasp of those that create it. Thomas Paine said: “Government, even in its best state, is but a necessary evil, in its worst state, an intolerable one.” A question to ponder; who determines when it has become intolerable?

In defense of the government there is a great difference between the mob and our government. The mob is doing what it is doing solely for self enrichment. The government, however well intentioned, is governed by the nature of all governments and that is to expand its power to fulfill it designed creation. The problem though is that its goals, when taken to the extreme, suffocate those to whom it is supposed to benefit.


Case in point, one of the primary responsibilities of government is the protection of the nation. In order to do so a government must know what is going on around them so they can thwart off any attack against them. Over time when your mission is to look for the evil that may attack you you start looking everywhere. Before long there is evil everywhere you look.

During my career with the government I have been involved in creating plans for varying missions. When building a plan one must look at all possible scenarios and determine certain courses of action to defeat those scenarios. For domestic defense one must also entertain the likelihood of internal or domestic threats. Even though the domestic threat might be the least likely to occur you cannot ignore it. The problem is that the least likely scenario is the easiest to monitor, the easiest to respond to, and the easiest to control.

So as a government you start instituting ‘protections’ into the system to try and thwart such things from happening. These protections start to infringe on what many in the society deem as rights, even though the intent is to keep them safe. Then more restrictions are enacted, travel documentations, increased taxation to pay for enhancements and departments that run them. Soon the government starts to look at their own population as an even bigger threat as more and more rumblings are being detected within the communities. Protests are becoming more and more frequent and even prior government workers and soldiers are starting to mix with the protestors.

Suddenly the government identifies vast sections of the population that can no longer be trusted or may need to be identified as potential terrorists because they have skills and knowledge above that of the regular citizenry. So you put out warnings to the local police intelligence units to be watchful for anyone who displays certain political positions on bumper stickers, or if they display prior association with the military and pro Second Amendment position, they may be a threat. Soon the government needs to expand even more due to the expansion of the perceived threat and the cycle is renewed; like a self licking ice cream cone.

As Thomas Paine so plainly stated; governments are at best necessary evils, what is the purpose for which OUR government was created?

The Declaration of Independence tells us that we are endowed, upon our creation, with certain unalienable Rights and “That to secure these rights, Governments are instituted…” The Constitution states the government is there to “establish justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessing of Liberty to ourselves and our Posterity…”

Nowhere in these documents or the reasons for their creation do I find that they are to burden the populace under massive taxation, control the populace under hundreds of thousands of intrusive laws, steal from the populace without due process and without a trial (current takings laws and withholding), more and more taxes, and licensing of rights that are not supposed to be infringed upon when in fact they are supposed to be protecting them.

As our forefathers knew, and many of us have forgotten or never learned, governments on the whole are much like man in general. They are prone to abuses, self aggrandizement, power hungry, and corruptible. Every government, every society in the history of mankind has undergone this cycle of government corruption and we are no different.

We have Congressmen admitting that they do not decide whether a law is constitutional before they vote on it, even though they swore an oath to support and defend the Constitution. I ask how can you support and defend something when you are voting on laws that you know may not be constitutional. We have courts and judges that will not allow the Constitution to be a defense or will not allow the law to be presented as a defense (Tax court), yet people are sentenced to years in prison for supposedly breaking the very same laws that would acquit them.

We have people in the White House who are self admitted communists, Marxists, and followers of Mao with the ear of the President. We have a President whose actions and words at the best slant toward socialism and at worst embraces communism. We have federal takeovers of vast sections of industry, an ever expanding deficit with attempts to increase that deficit by trillions, laws enacted to fight terrorism that point their efforts inward toward our own citizens, ever expanding powers given to monitor, track, invade the rights of the very people they were created to protect.

As a parent I sometimes wanted to be able to put my child in a padded room where I could guarantee that they would not get hurt, that no evil could get to them, that their every need would be met (food, shelter, safety, etc). But I realized that they would never become all they could be if they did not have the liberty to make their own choices, bear the responsibility of those choices, and to overcome adversity.

Perhaps; if we just gave in to the will of the all knowing and protective government we would all be taken care of and we wouldn’t be hurt by the evils of the world or even by our own actions. But then I remembered the old adage of Paul, “When I was a child, I spake as a child, I understood as a child: but when I became a man, I put away childish things.” We must take the responsibility for where we are in relation to our government on ourselves. It is our responsibility to reign in a government that has gone far beyond the scope for which they were created. Just as a parent must reign in a wayward child we like wise must do so with our current wayward child.

It is time to put away childish things!

© 2010 Michael LeMieux - All Rights Reserved


Michael LeMieux was born in Midwest City, Oklahoma in 1956 and graduated from Weber State University in Utah with a degree in Computer Science. He served in both the US Navy and US Army (Active duty and National Guard) and trained in multiple intelligence disciplines and was a qualified paratrooper. He served with the 19th Special Forces Group, while in the National Guard, as a Special Forces tactical intelligence team member. He served tours to Kuwait and Afghanistan where he received the Purple Heart for injuries received in combat.

Mr. LeMieux left military duty at the end of 2005 after being medically discharged with over 19 years of combined military experience. He currently works as an intelligence contractor to the US government.

Michael is a strict constitutionalist who believes in interpreting the constitution by the original intent of the founding fathers. His research has led him to the conclusion that the republic founded by the Constitution is no longer honored by our government. That those who rule America today are doing so with the interest of the federal government in mind and not the Citizens. Michael believes that all three branches of government have strayed far from the checks and balances built into the Constitution and they have failed the American people. A clear example is the Second Amendment, which the Supreme Court and the founders have all said was an individual right and could not be "infringed" upon, now has more than 20,000 state and federal laws regulating every aspect of the individuals right, a definite infringement. He has traveled around the world living in 14 States of the Union including Hawaii, and visited (for various lengths of time) in Spain, Afghanistan, Kuwait, Korea, Scotland, Pakistan, Mauritius, Somalia, Diego Garcia, Australia, Philippines, England, Italy, Germany, and Puerto Rico.

Michael now lives in Nebraska with his wife, two of his three children, Mother-in-Law and grandchild. His hobbies include shooting, wood-working, writing, amateur inventor and scuba diving when he can find the time.

Contact Michael through his Website: www.constitutiondenied.com

domenica 3 gennaio 2010

The Federal Reserve Bank

The Federal Reserve Bank: The fundamental promise of a central bank like the Federal Reserve is economic stability. The theory is that manipulating the value of the currency allows financial booms to go higher, and crashes to be more mild. If growth becomes speculative and unsustainable, the central bank can make the price of money go up and force some deleveraging of risky investments - again, promising to make the crashes more mild. The period leading up to the American revolution was characterized by increasingly authoritarian legislation from England. Acts passed in 1764 had a particularly harsh effect on the previously robust colonial economy. The Sugar Act was in effect a tax cut on easily smuggled molasses, and a new tax on commodities that England more directly controlled trade over. The navy would be used in increased capacity to enforce trade laws and collect duties. Perhaps even more significant than the militarization and expansion of taxes was the Currency Act passed later in the year 1764.

"The colonies suffered a constant shortage of currency with which to conduct trade. There were no gold or silver mines and currency could only be obtained through trade as regulated by Great Britain. Many of the colonies felt no alternative to printing their own paper money in the form of Bills of Credit." The result was a true free market of currency - each bank competed, exchange rates fluctuated wildly, and merchants were hesitant to accept these notes as payment. Of course, they didn't have 24-hour digital Forex markets, but I'll hold off opinions on the viability of unregulated currency for another time. England's response was to seize control of the colonial money supply - forbidding banks, cities, and colony governments from printing their own. This law, passed so soon after the Sugar Act, started to really bring revolutionary tension inside the colonies to a higher level. American bankers had learned early on that debasing a currency through inflation is a helpful way to pay off perpetual trade deficits - but Britain proved that the buyer of the currency would only take the deal for so long... Following the (first) American Revolution, the "First Bank of the United States" was chartered to pay off collective war debts, and effectively distribute the cost of the revolution proportionately throughout all of the states. Although the bank had vocal and harsh skeptics, it only controlled about 20% of the nation's money supply.

Compared to today's central bank, it was nothing. Thomas Jefferson argued vocally against the institution of the bank, mostly citing constitutional concerns and the limitations of government found in the 10th amendment. There was one additional quote that hints at the deeper structural flaw of a central bank in a supposedly free capitalist economy. "the existing banks will, without a doubt, enter into arrangements for lending their agency, and the more favorable, as there will be a competition among them for it; whereas the bill delivers us up bound to the national bank, who are free to refuse all arrangement, but on their own terms, and the public not free, on such refusal, to employ any other bank" –Thomas Jefferson. Basically, the existing banks will fight over gaining favor with the central bank - rather than improving their performance relative to a free market. The profit margins associated with collusion would obviously outweigh the potential profits gained from legitimate business. The Second Bank of the United States was passed five years after the first bank's charter expired. An early enemy of central banking, President James Madison, was looking for a way to stabilize the currency in 1816. This bank was also quite temporary - it would only stay in operation until 1833 when President Andrew Jackson would end federal deposits at the institution.

The charter expired in 1836 and the private corporation was bankrupt and liquidated by 1841. While the South had been the major opponent of central banking systems, the end of the Civil War allowed for (and also made necessary) the system of national banks that would dominate the next fifty years. The Office of the Comptroller of the Currency (OCC) says that this post-war period of a unified national currency and system of national banks "worked well." [3] Taxes on state banks were imposed to encourage people to use the national banks - but liquidity problems persisted as the money supply did not match the economic cycles. Overall, the American economy continued to grow faster than Europe, but the period did not bring economic stability by any stretch of the imagination. Several panics and runs on the bank - and it became a fact of life under this system of competing nationalized banks. In 1873, 1893, 1901, and 1907 significant panics caused a series of bank failures.

The new system wasn't stable at all, in fact, many suspected it was wraught with fraud and manipulation. The Federal Reserve Bank of Minneapolis is not shy about attributing the causes of the Panic of 1907 to financial manipulation from the existing banking establishment. "If Knickerbocker Trust would falter, then Congress and the public would lose faith in all trust companies and banks would stand to gain, the bankers reasoned." In timing with natural economic cycles, major banks including J.P. Morgan and Chase launched an all-out assault on Heinze's Knickerbocker Trust. Financial institutions on the inside started silently selling off assets in the competitor, and headlines about a few bad loans started making top spots in the newspapers. The run on Knickerbocker turned into a general panic - and the Federal Government would come to the rescue of its privately owned "National Banks." During the Panic of 1907, "Depositors 'run' on the Knickerbocker Bank. J.P. Morgan and James Stillman of First National City Bank (Citibank) act as a "central bank," providing liquidity ... [to stop the bank run] President Theodore Roosevelt provides Morgan with $25 million in government funds ... to control the panic. Morgan, acting as a one-man central bank, decides which firms will fail and which firms will survive." How did JP Morgan get so powerful that the government would provide them with funding to increase their power? They had key influence with positions inside the Administrations.

They had senators, congressmen, lobbyists, media moguls all working for them. In 1886, a group of millionaires purchased Jekyll Island and converted it into a winter retreat and hunting ground, the USA's most exclusive club. By 1900, the club's roster represented 1/6th of the world's wealth. Names like Astor, Vanderbilt, Morgan, Pulitzer and Gould filled the club's register. Non- members, regardless of stature, were not allowed. Dignitaries like Winston Churchill and President McKinley were refused admission. In 1908, the year after a national money panic purportedly created by J. P. Morgan, Congress established, in 1908, a National Monetary Authority. In 1910 another, more secretive, group was formed consisting of the chiefs of major corporations and banks in this country. The group left secretly by rail from Hoboken, New Jersey, and traveled anonymously to the hunting lodge on Jekyll Island. In fact, the Clubhouse/hotel on the island has two conference rooms named for the "Federal Reserve." The meeting was so secret that none referred to the other by his last name. Why the need for secrecy?

Frank Vanderlip wrote later in the Saturday Evening Post, "...it would have been fatal to Senator Aldrich's plan to have it known that he was calling on anybody from Wall Street to help him in preparing his bill...I do not feel it is any exaggeration to speak of our secret expedition to Jekyll Island as the occasion of the actual conception of what eventually became the Federal Reserve System." At Jekyll Island, the true draftsman for the Federal Reserve was Paul Warburg. The plan was simple. The new central bank could not be called a central bank because America did not want one, so it had to be given a deceptive name. Ostensibly, the bank was to be controlled by Congress, but a majority of its members were to be selected by the private banks that would own its stock. To keep the public from thinking that the Federal Reserve would be controlled from New York, a system of twelve regional banks was designed. Given the concentration of money and credit in New York, the Federal Reserve Bank of New York controlled the system, making the regional concept initially nothing but a ruse.

The board and chairman were to be selected by the President, but in the words of Colonel Edward House, the board would serve such a term as to "put them out of the power of the President." The power over the creation of money was to be taken from the people and placed in the hands of private bankers who could expand or contract credit as they felt best suited their needs. Why the opposition to a central bank? Americans at the time knew of the destruction to the economy the European central banks had caused to their respective countries and to countries who became their debtors. They saw the large- scale government deficit spending and debt creation that occurred in Europe. But European financial moguls didn't rest until the New World was within their orbit. In 1902, Paul Warburg, a friend and associate of the Rothschilds and an expert on European central banking, came to this country as a partner in Kuhn, Loeb and Company.

He married the daughter of Solomon Loeb, one of the founders of the firm. The head of Kuhn, Loeb was Jacob Schiff, whose gift of $20 million in gold to the struggling Russian communists in 1917 no doubt saved their revolution. The Fed controls the banking system in the USA, not the Congress nor the people indirectly (as the Constitution dictates). The U.S. central bank strategy is a product of European banking interests. Government interventionists got their wish in 1913 with the Federal Reserve (and income tax amendment). Just in time, too, because the nation needed a new source of unlimited cash to finance both sides of WW1 and eventually our own entry to the war. After the war, with both sides owing us debt through the federal reserve backed banks, the center of finance moved from London to New York. But did the Federal Reserve reign in the money trusts and interlocking directorates? Not by a long shot. If anything, the Federal Reserve granted new powers to the National Banks by permitting overseas branches and new types of banking services. The greatest gift to the bankers, was a virtually unlimited supply of loans when they experience liquidity problems.

From the early 1920s to 1929, the monetary supply expanded at a rapid pace and the nation experienced wild economic growth. Curiously, however, the number of banks started to decline for the first time in American history. Toward the end of the period, speculation and loose money had propelled asset and equity prices to unreal levels. The stock market crashed, and as the banks struggled with liquidity problems, the Federal Reserve actually cut the money supply. Without a doubt, this is the greatest financial panic and economic collapse in American history - and it never could have happened on this scale without the Fed's intervention. The number of banks crashed and a few of the old robber barons' banks managed to swoop in and grab up thousands of competitors for pennies on the dollar.

The following documentary is called America: From Freedom to Fascism:

This next documentary is called, The Money Masters:

This documentary is called, Monopoly Men: