domenica 7 novembre 2010

Slain bank CEO left no trail

Nov. 5, 2010

Slain executive left no trail of financial irregularities, bank says


The body of Mt. Clemens bank president and CEO David Widlak shows a gunshot wound, according to a second autopsy report.   (Free Press and family photos)

The body of Mt. Clemens bank president and CEO David Widlak shows a gunshot wound, according to a second autopsy report. (Free Press and family photos)

Community Central Bank said today a forensic analysis found no irregularities in its operations since the disappearance and death of former CEO David Widlak. Nevertheless, the bank has entered into a consent order to take corrective measures to improve its financial condition and operations. “The independent analysis did not identify any unauthorized or problematic transactions, or any circumvention of internal controls on the part of Mr. Widlak,” Ray Colonius, the bank’s chief financial officer and acting CEO, said in a news release. “We remain baffled and deeply saddened by the violent death of our friend and colleague.”
Widlak, 62, of Grosse Pointe Farms walked out of the Mt. Clemens bank Sept. 19. His office was found in disarray the next morning. Duck hunters found his decomposing body in Lake St. Clair nearly four weeks later.
An autopsy by Macomb County Medical Examiner Dr. Daniel Spitz found no blunt force trauma. A second, independent autopsy commissioned by the family and performed by Oakland County Medical Examiner Dr. L.J. Dragovic found a gunshot wound to the back of Widlak’s neck. Macomb County Sheriff’s divers then found Widlak’s missing .38-caliber handgun in the lake.
It is unknown if the gun is the one that was used in the shooting. State Police are analyzing the gun and bullet and bullet fragments found in Widlak’s body.
The Sheriff’s Office is investigating the death as a homicide, but suicide has not been ruled out.
Plante & Moran, PLLC conducted the independent audit of the bank.
According to the release, the bank entered into a consent order with the Federal Deposit Insurance Corporation and the Michigan Office of Financial and Insurance Regulation. The consent order is effective Nov. 1.
Customer deposits remain fully insured.
The bank has agreed to increase board oversight and conduct an independent study of management; improve regulatory capital ratios; charge-off certain classified assets; reduce its level of loan delinquencies and problem assets; limit lending to certain borrowers; revise lending and collection policies; adopt and implement new profit, strategic and liquidity plans, and correct loan underwriting and credit administration deficiencies.

Read more:
Slain executive left no trail of financial irregularities, bank says | | Detroit Free Press

BofA, Citi, Wells warn of mortgage lawsuits

The Seattle Times, November 5, 2010

BofA, Citi, Wells warn of mortgage lawsuits

Large U.S. banks are saying they could face rising costs related to litigation related to mortgage loans.

The Associated Press


Large U.S. banks are saying they could face rising costs related to litigation related to mortgage loans.

In regulatory filings Friday, Bank of America Corp., Citigroup Inc., and Wells Fargo & Co. warned that they are being sued by investors which could lead to losses.

The foreclosure crisis has heated up in recent weeks as BofA, JPMorgan Chase & Co. and GMAC Mortgage halted foreclosures after evidence emerged of improper paperwork on foreclosure documents. Many of the the foreclosures stem from sub-prime mortgages that were issued during the real estate bubble prior to the financial crisis.

Many large investors who bought the mortgage-backed securities are suing banks, saying that the banks didn't conform to underwriting standards when they wrote the mortgages. Those investors are now trying force the banks to buy those investments back. The lawsuits have worried investors because of the still unknown amount of costs that will be involved for the banks as they defend the lawsuits.

BofA, the largest U.S. bank, said on Friday it is facing several lawsuits from investors who bought more than $375 billion mortgage-backed securities. The bank also said it expects costs to rise in the fourth quarter and to continue through next year from legal expenses and as it deploys more resources to foreclosures.

Citigroup too said it was being sued by several investors including Charles Schwab Corp., the Federal Home Loan Banks of Chicago and Indianapolis, for its underwriting process of residential mortgage-backed securities.

Wells Fargo also said in its quarterly regulatory filing that it was being sued, and that it "cannot estimate the possible loss or range of loss" from the mortgage-related litigation.

Chart: Stock Market Rallies

Chart of the Day

To provide some perspective to the current Dow rally that began nearly 20 months ago, all major market rallies of the last 110 years are plotted on today's chart. Each dot represents a major stock market rally as measured by the Dow. As today's chart illustrates, the Dow has begun a major rally 27 times over the past 110 years which equates to an average of one rally every four years. Also, most major rallies (73%) resulted in a gain of between 30% and 150% and lasted between 200 and 800 trading days -- highlighted in today's chart with a light blue shaded box. As it stands right now, the current Dow rally (hollow blue dot labeled you are here) is still somewhat short in duration and below average in magnitude when compared to all the stock market rallies that occurred since 1900. It is worth noting, however, that the current rally is in line with the more typical rallies (see light blue shaded box) of the past 110 years.

- Where's the Dow headed? The answer may surprise you. Find out right now with the exclusive & Barron's recommended charts of Chart of the Day Plus.

Movimiento por la Segunda República Argentina

Movimiento por la Segunda República Argentina - (MSRA)

Comunicado de Prensa - 5 de noviembre de 2010 -


Despues del 27 de octubre…



El MSRA - Movimiento por la Segunda República Argentina - conforma una propuesta

integral e integradora, que permitirá a la Argentina superar su actual decadencia.

Sus Cinco Pilares Fundamentales son el punto de partida para elaborar un

Proyecto Nacional Argentino, realizable y pragmático.

Segunda República Argentina: una Idea cuyo momento ha llegado...

Vea video con propuesta en:

Vea nuestro video describiendo nuestra propuesta Fundacional de una Segunda República Argentina en los siguientes links

Parte 1: El Contexto:

Parte 2: Las Premisas:

Parte 3: Los 5 Ejes Fundamentales:

Adhesiones a:

Movimiento por la Segunda República Argentina (MSRA)

Adrian Salbuchi



By Ellen Brown (about the author)

For OpEdNews: Ellen Brown - Writer

For two years, politicians have danced around the nationalization issue, but ForeclosureGate may be the last straw. The megabanks are too big to fail, but they aren't too big to reorganize as federal institutions serving the public interest.

In January 2009, only a week into Obama's presidency, David Sanger reported in The New York Times that nationalizing the banks was being discussed. Privately, the Obama economic team was conceding that more taxpayer money was going to be needed to shore up the banks. When asked whether nationalization was a good idea, House speaker Nancy Pelosi replied:

"Well, whatever you want to call it . . . . If we are strengthening them, then the American people should get some of the upside of that strengthening. Some people call that nationalization.

"I'm not talking about total ownership," she quickly cautioned -- stopping herself by posing a question: "Would we have ever thought we would see the day when we'd be using that terminology? "Nationalization of the banks?' "

Noted Matthew Rothschild in a March 2009 editorial:

[T]hat's the problem today. The word "nationalization" shuts off the debate. Never mind that Britain, facing the same crisis we are, just nationalized the Bank of Scotland. Never mind that Ronald Reagan himself considered such an option during a global banking crisis in the early 1980s.

Although nationalization sounds like socialism, it is actually what is supposed to happen under our capitalist system when a major bank goes bankrupt. The bank is put into receivership under the FDIC, which takes it over.

What fits the socialist label more, in fact, is the TARP bank bailout, sometimes called "welfare for the rich." The banks' losses and risks have been socialized but the profits have not. The bankers have been feasting on our dime without sharing the spread.

And that was before ForeclosureGate the uncovering of massive fraud in the foreclosure process. Investors are now suing to put defective loans back on bank balance sheets. If they win, the banks will be hopelessly under water.

"The unraveling of the " foreclosure - gate' could mean banking crisis 2.0," warned economist Dian Chu on October 21, 2010.

Banking Crisis 2.0 Means TARP II

The significance of ForeclosureGate is being downplayed in the media, but independent analysts warn that it could be the tsunami that takes the big players down.

John Lekas, senior portfolio manager of the Leader Short Term Bond Fund, said on The Street on November 2, 2010, that the banks will prevail in the lawsuits brought by investors. The paperwork issues, he said, are just "technical mumbo jumbo;" there is no way to unwind years of complex paperwork and securitizations.

But Yves Smith, writing in The New York Times on October 30, says it's not that easy:

The banks and other players in the securitization industry now seem to be looking to Congress to snap its fingers to make the whole problem go away, preferably with a law that relieves them of liability for their bad behavior. But any such legislative fiat would bulldoze regions of state laws on real estate and trusts, not to mention the Uniform Commercial Code. A challenge on constitutional grounds would be inevitable.

Asking for Congress's help would also require the banks to tacitly admit that they routinely broke their own contracts and made misrepresentations to investors in their Securities and Exchange Commission filings. Would Congress dare shield them from well-deserved litigation when the banks themselves use every minor customer deviation from incomprehensible contracts as an excuse to charge a fee?

Chris Whalen of Institutional Risk Analytics told Fox Business News on October 1 that the government needs to restructure the largest banks. "Restructuring" in this context means bankruptcy receivership. "You can't prevent it," said Whalen. " We've wasted two years, and haven't restructured the top banks, but for Citi . Bank of America will need to be restructured ; this isn't about the documentation problem, this is because [of the high] cost of servicing the property."

Profs. William Black and Randall Wray are calling for receivership for another reason -- the industry has engaged in flagrant, widespread fraud. " There was fraud at every step in the home finance food chain," they wrote in the Huffington Post on October 25:

[T]he appraisers were paid to overvalue real estate; mortgage brokers were paid to induce borrowers to accept loan terms they could not possibly afford; loan applications overstated the borrowers' incomes; speculators lied when they claimed that six different homes were their principal dwelling; mortgage securitizers made false reps and warranties about the quality of the packaged loans; credit ratings agencies were overpaid to overrate the securities sold on to investors; and investment banks stuffed collateralized debt obligations with toxic securities that were handpicked by hedge fund managers to ensure they would self destruct.

Players all down the line were able to game the system, suggesting there is something radically wrong not just with the players but with the system itself. Would it be sufficient just to throw the culprits in jail? And which culprits? One reason there have been so few arrests to date is that "everyone was doing it." Virtually the whole securitized mortgage industry might have to be put behind bars.

The Need for Permanent Reform

The Kanjorski amendment to the Banking Reform Bill passed in July allows federal regulators to preemptively break up large financial institutions that pose a threat to U.S. financial or economic stability. In the financial crises of the 1930s and 1980s, the banks were purged of their toxic miscreations and delivered back to private owners, who proceeded to engage in the same sorts of chicanery all over again. It could be time to take the next logical step and nationalize not just the losses but the banks themselves, and not just temporarily but permanently.

The logic of that sort of reform was addressed by Willem Buiter, chief economist of Citigroup and formerly a member of the Bank of England's Monetary Policy Committee, in The Financial Times following the bailout of AIG in September 2008. He wrote:

If financial behemoths like AIG are too large and/or too interconnected to fail but not too smart to get themselves into situations where they need to be bailed out, then what is the case for letting private firms engage in such kinds of activities in the first place?

Is the reality of the modern, transactions-oriented model of financial capitalism indeed that large private firms make enormous private profits when the going is good and get bailed out and taken into temporary public ownership when the going gets bad, with the tax payer taking the risk and the losses?

If so, then why not keep these activities in permanent public ownership? There is a long-standing argument that there is no real case for private ownership of deposit-taking banking institutions, because these cannot exist safely without a deposit guarantee and/or lender of last resort facilities, that are ultimately underwritten by the taxpayer.

Even where private deposit insurance exists, this is only sufficient to handle bank runs on a subset of the banks in the system. Private banks collectively cannot self-insure against a generalised run on the banks. Once the state underwrites the deposits or makes alternative funding available as lender of last resort, deposit-based banking is a license to print money. [Emphasis added.]

Nearly all money today is created as bank credit or debt. (That includes the money created by the Federal Reserve, a bank, and lent to the federal government when it buys federal securities.) Credit or d ebt is simply a legal agreements to pay in the future. Legal agreements are properly overseen by the judiciary, a branch of government. Perhaps it is time to make banking a fourth branch of government.

That probably won't happen any time soon, but in the meantime we can try a few experiments in public banking, beginning with the Bank of America, predicted to be the first of the behemoths to be put into receivership.

Leo Panitch, Canada Research Chair in comparative political economy at York University, wrote in The Globe and Mail in December 2009 that "there has long been a strong case for turning the banks into a public utility, given that they can't exist in complex modern society without states guaranteeing their deposits and central banks constantly acting as lenders of last resort."

Nationalization Is Looking Better

David Sanger wrote in The New York Times in January 2009:

Mr. Obama's advisers say they are acutely aware that if the government is perceived as running the banks, the administration would come under enormous political pressure to halt foreclosures or lend money to ailing projects in cities or states with powerful constituencies, which could imperil the effort to steer the banks away from the cliff. "The nightmare scenarios are endless," one of the administration's senior officials said.

Today, that scenario is looking less like a nightmare and more like relief. Calls have been made for a national moratorium on foreclosures. If the banks were nationalized, the government could move to restructure the mortgages, perhaps at subsidized rates.

Lending money to ailing projects in cities and states is also sounding rather promising. Despite massive bailouts by the taxpayers and the Fed, the banks are still not lending to local governments, local businesses or consumers. Matthew Rothschild, writing in March 2009, quoted Robert Pollin, professor of economics at the University of Massachusetts at Amherst:

"Relative to a year ago, lending in the U.S. economy is down an astonishing 90 percent. The government needs to take over the banks now, and force them to start lending."

When the private sector fails, the public sector needs to step in. Under public ownership, wrote Nobel Prize winner Joseph Stiglitz in January 2009, "the incentives of the banks can be aligned better with those of the country. And it is in the national interest that prudent lending be restarted."

For a model, Congress can look to the nation's only state-owned bank, the Bank of North Dakota. The 91-year-old BND has served its community well. As of March 2010, North Dakota was the only state boasting a budget surplus; it had the lowest default rate in the country; it had the lowest unemployment rate in the country; and it had received a 2009 dividend from the BND of $58.1 million, quite a large sum for a sparsely populated state.

For our newly-elected Congress, the only alternative may be to start budgeting for TARP II.

Usura: appello alle Camere di Commercio

Al Presidente della Camera di Commercio di Parma,

Al Presidente della Camera di Commercio di Modena,

Al Presidente della Camera di Commercio di Piacenza,

Al Presidente della Camera di Commercio di Reggio Emilia

In qualità di responsabile regionale del Forum Antiusura Bancaria, mi permetto portare alla Vs attenzione il gravissimo problema dell’usura presente nella maggioranza dei conti, dell’anatocismo e dei derivati che hanno pesato e pesano sui bilanci aziendali più della crisi e spesso hanno portato al fallimento di aziende sane che producevano prodotti che il mercato ancora richiede.

La Camera di Commercio di Bologna organizza nel pomeriggio di oggi un convegno sull’anatocismo e prodotti derivati.

Credo sarebbe doveroso portare a conoscenza dei piccoli-medi imprenditori, della possibilità di richiedere la restituzione degli interessi anatocistici dall’inizio del rapporto!

Purtroppo, commercialisti e legali non ne fanno cenno, o meglio, sono pochi coloro i quali sono disponibili a schierarsi contro il sistema bancario che incute timore al punto che più che cittadini sembriamo sudditi.

La sola restituzione degli interessi anatocistici, se il rapporto è longevo, genererà liquidità per le aziende che oggi faticano ad ottenerla dagli istituti di credito.

Apprezzabile l’apertura della Camera di Commercio di Bologna che potrà essere un invito per tutte le Camere della Regione Emilia Romagna, a diffondere conoscenza.

Grazie per l’attenzione.

Parma,5 novembre 2010

wally bonvicini

Forum Antiusura Bancaria

via Caselli 7

43126 Parma

tel 0521 985610

fax 0521 984556

Appello agli avvocati italiani da parte dell'avv. On. A. L. Marra:

sabato 6 novembre 2010



November 2, 2010

In an October 25, 2010 letter from Deutsche Bank to “All Holders of Residential Mortgage Backed Securities For Which Deutsche Bank National Trust Company or Deutsche Bank Trust Company Americas Acts As Securitization Trustee”, DB reports on “alleged deficiencies” in certain foreclosure proceedings and advises of the prior issuance, by the DB Trustee, of an “Urgent and Time-Sensitive Memorandum” dated October 8, 2010 to its Securitization Loan Servicers regarding servicing foreclosure procedures, demanding that the servicers “comply with all applicable laws relating to foreclosures”. The thrust of this letter, as we see it, is to shift the blame for any wrongful foreclosure practices to the servicers, saying “we told them to comply with the law”, the inference being that DB was not aware of the fraudulent foreclosure practices being engaged in by their servicers and “agents” (that being the attorneys and trustee sale companies who prosecute judicial and non-judicial foreclosures for DB as “trustee”).

Please. Foreclosures are delivered in file boxes to the servicers and attorneys and DB did not engage in any oversight to make sure their own agents (servicers and attorneys) complied with the law? Do they think the investors just fell off the back of the turnip truck?

The October 8, 2010 “Urgent and Time Sensitive” Memorandum attached to the October 25, 2010 Memo makes things even more interesting. Here are some select quotes:

“The Governing Documents typically require the Trustee to furnish the Servicer with powers of attorney that allow the Servicer to sign documents and institute legal actions, including foreclosure proceedings, in the name of the Trustee on behalf of the Trusts in connection with these servicing activities…. Recent media reports suggest that the Alleged Foreclosure Deficiencies may include the execution and filing by certain servicers and their agents of potentially defective documents, possibly containing alleged untrue assertions of fact, in connection with certain foreclosure proceedings. The reported scope of such alleged practices raises the possibility that such documents may have been filed in connection with foreclosure proceedings relating to mortgage loans owned by the Trusts and may have been executed under color of one or more powers of attorney granted to Servicers pursuant to the Governing Documents. Any such actions by a servicer or its agents would constitute a breach of that Servicer’s obligations under the Governing Documents and applicable law.”

Read that carefully: “raises the possibility” that deficient documents “may” have been filed under “color of” powers of attorney, and if so, this would constitute a breach of contract and violations of law. Disputed issues of material fact precluding summary judgment, anyone? Telling the servicers that any counterclaim for wrongful or illegal foreclosure is the problem of the servicer and their attorneys? We don’t think so. Agent liability generally flows upstream to the principal, sometimes even in instances where the agent committed illegal acts, and contractual disclaimers are not always a defense.

So what we have here is DB tacitly admitting that its servicers and attorneys “possibly” filed fraudulent foreclosure documents (which we all know did in fact happen, with “robo-signer” assignments, backdated notaries, etc.), which if done “under color of” required powers of attorney, is illegal on more than one front.

As those of us who defend foreclosures in the judicial states know, there is NEVER, EVER, any such power of attorney attached to a foreclosure Complaint showing that the servicer or agent had authority to file the foreclosure, and when we request documentary evidence of such authority in discovery, we get “objections” as “irrelevant”. We have also not seen any such POAs or documented compliance with these or the Governing Documents recorded in non-judicial foreclosures we defend, either.

So here’s what needs to be done: In all ”Deutsche Bank as Trustee” instituted foreclosures, discovery needs to be demanded as to these alleged “powers of attorney”, all evidence of compliance therewith, all evidence of oversight/monitering to insure compliance, etc., and without such evidence, motions for summary judgment (and/or, to dismiss in judicial foreclosures) should be filed by the borrower’s attorney. If these documents start magically appearing (like post-filing “assignments” with backdated effective dates and backdated notaries started appearing), well, the attorneys know what to do.

The final thought: if DB issued such a warning to its servicers and agents, we have to believe that Wells Fargo, Bank of America, US Bank, and the other “securitized trustee banks” either have, are, or should be issuing similar warnings. If not, that is just more evidence of lack of authority and compliance with the law, leading to further defenses to foreclosure.

Jeff Barnes, Esq.,


di Ida Magli

BUR 2010


"L'Unione Europea, proposta più di cinquant'anni fa come un grande passo verso il futuro, nel 2007 ci è stata imposta come un processo giusto e inesorabile...
Oggi, i risultati sono davanti agli occhi di tutti, eppure in molti faticano a vederli, perché ormai la macchina degli interessi politici ed economici che l'ha messa in moto ha censurato le coscienze anche degli italiani, che accettano l'Unione come un dato di fatto, e con essa la perdita dell'identità nazionale, così come diversi diritti personali.
In questo personalissimo e forte pamphlet, Ida Magli, tra i primi e più autorevoli oppositori dell'Unione, risale all'origine di questo disastro, andando a cercare, nella storia e nei suoi incontri, i principali colpevoli, senza sconti a nessuno, dalla cattiva politica alla Chiesa, dagli intellettuali pavidi ai banchieri pronti a imporre su tutti la loro legge. Il risultato è la storia di come un progetto nato solo sulle carte geografiche ha contribuito a renderci più poveri, meno sicuri, e certamente meno liberi".

Remember: Caso Unipol-Bnl

ì 22 maggio 2007, 12:24

Caso Unipol-Bnl, così Visco cercò di fermare la Finanza

Nel luglio del 2006 il numero due dell'Economia ordinò al generale Speciale di rimuovere gli ufficiali che indagavano anche sulla scalata delle coop rosse a Bnl. Il comandante: "Minacciò conseguenze se non avessi agito subito". Leggi i verbali. GUARDA IL VIDEOEDITORIALE di Maurizio Belpietro: "Perché il viceministro non si dimette?"

Nel luglio del 2006 il viceministro dell’Economia Vincenzo Visco esercitò ripetute e pressoché quotidiane pressioni sul comandante generale della Guardia di Finanza, Roberto Speciale, e gli pose un perentorio aut aut affinché azzerasse senza motivazioni l’intero vertice della GdF della Lombardia. Ufficiali impegnati, tra l’altro, in delicate indagini come quelle sulla scalata a Bnl da parte di Unipol e coop rosse. Visco aprì quindi una crisi istituzionale con il vertice del Corpo militare, arrivando a pronunciare un’oscura minaccia al comandante generale (GUARDA IL VIDEOEDITORIALE di Maurizio Belpietro: "Perché il viceministro non si dimette?"). Lamette a verbale lo stesso Speciale: «Visco mi disse - ha dichiarato nell’interrogatorio reso all’avvocato generale Manuela Romei Pasetti - che se non avessi ottemperato a queste direttive erano chiare le conseguenze cui sarei andato incontro». Pubblicamente, invece, il vice ministro in quegli stessi giorni cercava di stemperare ogni polemica. Liquidando il caso come «avvicendamenti unicamente riconducibili ad esigenze di servizio». Il Giornale ricostruisce invece, ora dopo ora, la storia di questa ingerenza, dell’intromissione del potere politico su un corpo militare. Con un vice ministro che prima ordina al capo della GdF di rimuovere ufficiali, quando per i trasferimenti c’è un apposito iter procedurale interno. Poi dispone di concordare le scelte con due sottoposti, facendo saltare lo stesso ordine gerarchico della Finanza. Fino al 17 luglio quando Speciale ventila le dimissioni: «Risposi al vice ministro che l’osservanza delle regole è stata da sempre il faro della mia vita. Di non poter pertanto assecondare queste sue ultime richieste e che pertanto ero pronto a rassegnare il mandato». La storia inizia alle 17 di giovedì 13 luglio quando, durante un drammatico incontro, Visco sventola sotto il naso del comandante generale un foglietto indicante i nomi dei quattro ufficiali da mandare via da Milano. Senza nemmeno preavvisare, come avviene invece di rito chiedendo persino un parere, la procura che coordina le indagini degli ufficiali coinvolti. Non solo. Visco dispose anche «perentoriamente », a detta di Speciale, di concertare ogni decisione d’impiego futura direttamente con due sottoposti, i generali Italo Pappa e l’allora capo dei reparti d’istruzione Sergio Favaro. Che il Vice Ministro aveva appena incontrato. Insomma, una sorta di «commissariamento», pregiudicando le prerogative e l’autonomia del comandante generale. Visco ordina quindi a Speciale di spostare i gradi vertice della Lombardia e di coinvolgere Favaro e Pappa. E così, sempre stando alla ricostruzione dello stesso Speciale, Pappa e Favaro prima si incontrano tra di loro, predisponendo le ipotesi di avvicendamenti. Poi Pappa va dal numero uno con il piano operativo. Ma arriva l’intoppo non previsto. Scende in capo il procuratore capo di Milano, Manlio Minale che, allarmato, chiede ragione delle voci su azzeramenti della GdF in Lombardia. Teme «serie problematiche alla prosecuzione delle delicate indagini in corso». Ovvero, Unipol, Bnl, Antonveneta e Telecom. Speciale dice chiaro e tondo che è stato Visco a ordinare, aprendo così uno scontro tra diversi poteri. Minale è allibito, chiede a Speciale «delucidazioni scritte », coinvolge la Procura generale e l’Avvocato generale. Che apre un fascicolo e lunedì 17 interroga in gran segreto sia Speciale che il capo di Stato Maggiore Emilio Spaziante. Prima però, venerdì, Speciale ricorda di esser stato sottoposto a pressioni di ogni tipo. Visco telefona, manda lettere, cerca il numero uno, fa chiamare dal proprio staff. Quei trasferimenti s’hanno da fare. Basta leggere qui a fianco il verbale del comandante generale per capire la portata di questa ingerenza. Speciale prende tempo, sa benissimo che se dispone i trasferimenti, compie un abuso. Deve seguire le norme, coinvolgendo gli interessati. Alle 20.15 trova una mezza misura: ordina a Pappa di far partire gli avvisi di avvio dei procedimenti di trasferimento. La situazione precipita domenica notte. Alle 22.50 l’Ansa dà notizia dell’azzeramento della Gdfmettendo in collegamento con le indagini Unipol. Visco s’infuria, chiede «immediata smentita » a Speciale. E intanto alle 24 ci pensa lui: normali avvicendamenti. In piena notte il comandante generale convoca d’urgenza i suoi collaboratori più stretti, Spaziante e il sottocapo Poletti. Più tardi la GdF esce con un imbarazzato comunicato. Ma ormai il vice ministro deve sentire che la vicenda sta sfuggendo di mano. L’indomani mattina si scontra con Speciale perché temporeggia, gli ordina ancora di trasferire gli ufficiali, pronuncia oscure minacce. Alle 12 Pappa e Favaro si rifanno vivi con il numero uno dicendogli di concordare con loro quanto scrivere a Minale. Ordine di Visco. Ma ormai la vicenda ha assunto una dimensione pubblica e politica: le indiscrezioni sono già sui giornali. Ma gran parte della storia non viene riportata dai media. Speciale blocca i trasferimenti. L’avvocatura generale di Milano interroga Speciale, Spaziante, Pappa e Favaro. Senza risposta la domanda cruciale: Visco perché voleva azzerare a ogni costo la gerarchia militare a Milano?

giovedì 4 novembre 2010

Nicoletta Forcheri intervistata da Giovanna Canzano

Fed's Quantitative Easing to Starve Middle Class Americans

Fed's Quantitative Easing to Starve Middle Class Americans
The Federal Reserve today announced that they will be implementing $600 billion in additional quantitative easing by the end of June 2011. The Federal Reserve will maintain its current policy of reinvesting principal payments from its security holdings and will expand its balance sheet by an additional $75 billion per month. The total announced balance sheet expansion was $100 billion higher than the public consensus of $500 billion. The Federal Reserve will continue to hold interest rates at record low levels of 0% to 0.25%, where they have been for nearly two years.
Quantitative easing is nothing more than the Federal Reserve printing money and creating inflation. This quantitative easing steals from the purchasing power of the incomes and savings of all Americans. While Americans are distracted by the mainstream media with daily debates by the Democrats and Republicans about taxes, U.S. taxes have almost no where near the effect on the lives of middle class Americans as does the Federal Reserve's monetary policy and quantitative easing. Instead of millions of Americans attending "tea party" events in Washington with Glenn Beck and Sarah Palin, they should be marching outside of the Federal Reserve building in New York chanting "End the Fed".
As highlighted in NIA's new documentary 'End of Liberty', which just surpassed 170,000 views in three days, prices of nearly all agricultural commodities have been spiraling out of control in recent months just in anticipation of today's quantitative easing announcement. In the past 60 days alone, cotton prices are up 54%, corn prices are up 29%, soybean prices are up 22%, orange juice prices are up 17%, and sugar prices are up 51%. Meanwhile, the Dow Jones has only gained 9%.
The Federal Reserve is doing everything in its power to push stock market prices up so that the government can take credit for an "economic recovery", but as NIA has been warning for years, inflation gravitates most towards the goods that Americans need most in order to live and survive. There is nothing that Americans need more than food. The agricultural commodity price increases of the past two months will begin to make their way into all supermarkets nationwide during the next few months. Americans who have been struggling just to make their mortgage payments, will now be forced to stop paying their mortgage in order to buy food. Instead of hoping to get the latest Apple gadget for Christmas this holiday season, American children better be grateful if their parents are able just to put food on the table.
After the financial crisis of late-2008/early-2009 when the Federal Reserve implemented its first round of quantitative easing, the Dow Jones rallied by 74% from its low of 6,469.95 in March of 2009 to a high of 11,257.93 in April of 2010. By the Dow Jones rallying, the U.S. government was able to take credit for creating an "economic recovery", despite the fact that unemployment remained near multi-decade highs. NIA released a documentary on May 13th called 'Meltup', in which we said, "The truth is, our economy is not recovering, prices are rising only due to inflation." NIA proclaimed in 'Meltup', "If stocks were to see a nominal decline one last time, we will likely see Bernanke shoot up his largest ever dose of quantitative easing."
On July 19th, with the Dow Jones having declined by 11% from its April high down to 10,073.68, everybody in the mainstream media was talking about the threat of deflation. NIA released an article on July 19th entitled, "Double-Dip Recession Does Not Mean Deflation" in which we said, "NIA believes the Federal Reserve is quietly getting ready to implement 'The Mother of All Quantitative Easing'." NIA went on to say, "NIA fears that come this October, Bernanke is likely to shoot up his largest ever dose of quantitative easing."
Today, NIA's prediction for the most part came true. The Federal Reserve announced massive quantitative easing ($600 billion) and our timing was almost perfect (we missed October by a few days). This isn't quite what we consider to be the "The Mother of All Quantitative Easing", but don't worry, the Fed will announce additional quantitative easing soon if the slightest hint of deflation reappears.
Current U.S. price inflation based on the consumer price index (CPI) is 1.5% and the Federal Reserve wants to see this number increase to 2%. The truth is, the U.S. Bureau of Labor Statistics (BLS) uses geometric weighting and hedonics to artificially manipulate this number lower than the real rate of inflation in order to keep American's social security payment increases as low as possible so that politicians in Washington have more of your money to spend. Based on the way the U.S. government previously calculated price inflation before the BLS's latest tactics to manipulate the CPI as low as possible, NIA believes current year-over-year price inflation is at least 5%.
No human being alive, especially Federal Reserve Chairman Ben Bernanke, is smart enough to perfectly manage the rate of price inflation by printing money. By expanding the balance sheet by $600 billion, NIA believes the real price inflation rate will rise above 10% in early 2011. Once Americans realize just how rapidly their dollars are being debased and losing their purchasing power, it could cause a rush out of the U.S. dollar and trigger hyperinflation as early as year 2012.
America no longer has a free market economy. For everybody on Wall Street to be so fixated on the words that come out of Bernanke's mouth, it shows that the economic system we have is extremely fragile and vulnerable to collapse at any time. With prices of assets soaring in recent months just in anticipation of Bernanke's quantitative easing announcement, it shows that the world's financial system is already flooded with trillions of dollars in excess liquidity. Unless the U.S. government immediately implements dramatic spending cuts across the board, NIA believes the world is going to lose confidence in the U.S. dollar and it will be impossible for the U.S. to survive past the year 2015 without the U.S. dollar becoming worthless.
The fact that the Republicans took control of the House of Representatives last night is completely meaningless. If the U.S. government is to implement the spending cuts necessary in order to prevent hyperinflation, Americans will be faced with a second Great Depression, which NIA believes is a necessity and much better than the alternative. However, the Republicans will not risk being held responsible for the next Great Depression, because it will ensure Obama gets reelected in 2012. Therefore, NIA predicts that nothing is going to change with the Republicans taking over the House.
The only good news that came so far this week is that Rand Paul was elected to the U.S. Senate. NIA predicted in our top 10 predictions for 2010 that Rand Paul would win both the Republican nomination for U.S. Senate in the State of Kentucky and the U.S. Senate seat and we are very proud that Rand Paul was victorious. NIA considers Rand Paul to be the true leader of the Tea Party movement because he fully understands the hyperinflation that awaits as a result of the Federal Reserve's actions.
NIA hopes to see Rand Paul filibuster any attempts by the U.S. Senate to raise the ceiling on our national debt. There is no reason to have a national debt ceiling if every time we reach it, Congress raises it. NIA prays that Rand Paul proposes a Balanced Budget Amendment in 2011, because this should be our government's top priority if it wants to restore confidence in the U.S. dollar and prevent a complete societal collapse.
NIA would like to apologize for the minor technical problems in the last two minutes of NIA's new 1 hour and 14 minute documentary 'End of Liberty', during the time in which NIA's President Gerard Adams was speaking. This small audio problem was caused by YouTube and out of our control. To make up for this, NIA's President will be featured in an exclusive NIA video later this month explaining in detail the hyperinflationary crisis that is ahead and how NIA members can prosper while the rest of America goes broke. As you know, NIA's President made a 378% return on his investment in silver call options that he suggested to you in February. He believes there will be many more opportunities similar to this for NIA members to become wealthy in the years ahead as the rest of America goes broke.
The most important thing for you to do to help your family members and friends survive the upcoming hyperinflationary crisis is to help them become educated to the truth. Tell them to become members of NIA for free at and ask them to read our articles and watch our documentaries. If they have any questions about the U.S. economy or inflation, they can browse through our comprehensive 'NIAnswers' database and if their question hasn't already been answered by us, they can submit it to us to be added to the database. NIA will soon be announcing its most important new 'NIAnswers' of the past several months. Also, on December 7th, NIA will be releasing its latest update to its review of the major online sellers of gold and silver bullion.

Backstage dell'intervista a Marra di Nicoletta Forcheri

mercoledì 3 novembre 2010

Intervista all'avv. On. Alfonso Luigi Marra

L'intervista di Nicoletta Forcheri all'avv. On. Alfonso Luigi Marra, in quattro parti:

Parte prima:
Intervista all'avv. A.L. Marra - di Nicoletta Forcheri

Parte seconda:
Intervista all'avv. A.L. Marra - di Nicoletta Forcheri

Parte terza:
Intervista all'avv. A.L. Marra - di Nicoletta Forcheri

Quarta ed ultima parte dell'intervista a Marra:

Intervista a Marco Saba su Alba-Med

Marco Saba intervista Jacopo Fo

Ok, siamo ad Alcatraz. Tornando da Roma, vediamo che c'è un corso di Yoga Demenziale nella Libera Repubblica di Alcatraz, a Gubbio, da Jacopo. Qualche strana risonanza interiore mi attira e mi spinge ad una intervista sulla questione Am-lire e moneta in generale... e la magia si compie.
Senza volere, emergono particolari curiosi, interessanti ed inediti. Intanto qualche foto:

Nicoletta intervista Jacopo...

E poi il video:

Maurizio Blondet intervista Marco Saba

Maurizio Blondet intervista Marco Saba (1 di 2)

Maurizio Blondet intervista Marco Saba (2 di 2)

Bilderberg Chairman Davignon contacts the White Dragon Society


Weekly Geopolitical News and Analysis101101: Bilderberg Chairman Davignon contacts the White Dragon Society promising “we are after the same people.”

In a sign events are coming to a climax, the Chairman of the shadowy Bilderberg group, Viscount Etienne Davignon, contacted the White Dragon Society last week saying his group did not oppose the filing of a Rico anti-organized crime lawsuit against Daniele Dal Bosco, the Davos Forum and the United Nations. Davignon also said that “I sleep well at night,” because he was guilty of no wrongdoing. If he is sincere, we would like him to invite various internet journalists to a press conference where he can answer questions about sensitive topics like planned genocide. In any case, the contact is a clear sign the global campaign against the shadowy backers of the Federal Reserve Board Crime syndicate is starting to hit home.

Weekly Geopolitical News and Analysis

lunedì 1 novembre 2010

How China Buys US Debt While Burying Its Own

How China Buys US Debt While Burying Its Own

by: Ellen Brown, t r u t h o u t | News Analysis

Laborers in Nanchang, China. (Photo: televiseus)

China may be as heavily in debt as we are. It just has a different way of keeping its books - which makes a high-profile political ad sponsored by Citizens Against Government Waste, a fiscally conservative think tank, particularly ironic. Set in a lecture hall in China in 2030, the controversial ad shows a Chinese professor lecturing on the fall of empires: Greece, Rome, Great Britain, the United States ...

"They all make the same mistakes," he says. "Turning their backs on the principles that made them great. America tried to spend and tax itself out of a great recession. Enormous so-called stimulus spending, massive changes to health care, government takeover of private industries and crushing debt."

Of course, he says, because the Chinese owned the debt, they are now masters of the Americans. The students laugh. The ad concludes, "You can change the future. You have to."

James Fallows, writing in the Atlantic, remarks:

"The ad has the Chinese official saying that America collapsed because, in the midst of a recession, it relied on (a) government stimulus spending, (b) big changes in its health care systems and (c) public intervention in major industries - all of which of course, have been crucial parts of China's (successful) anti-recession policy."

That is one anomaly. Another is that China has managed to keep its debt remarkably low despite decades of massive government spending. According to the IMF, China's cumulative gross debt is only about 22 percent of 2010 GDP, compared to a US gross debt that is 94 percent of 2010 GDP.

What is China's secret? According to financial commentator Jim Jubak, it may just be "creative accounting" - the sort of accounting for which Wall Street is notorious, in which debts are swept off the books and turned into "assets." China is able to pull this off because it does not owe its debts to foreign creditors. The banks doing the funding are state-owned and the state can write off its own debts.

Jubak observes:

"China has a history of taking debt off its books and burying it, which should prompt us to poke and prod its numbers. If we go back to the last time China cooked the national books big time, during the Asian currency crisis of 1997, we can get an idea of where its debt might be hidden now."

The majority of bank loans, says Jubak, went to state-owned companies - about 70 percent of the total. The collapse of China's export trade following the crisis meant that its banks were suddenly sitting on billions in debts that were clearly never going to be paid. But that was when China's largest banks were trying to raise capital by selling stock in Hong Kong and New York and no bank could go public with that much bad debt on its books.

The creative solution? The Beijing government set up special-purpose asset management companies for the four largest state-owned banks, the equivalent of the "special purpose vehicles" designed by Wall Street to funnel real estate loans off US bank books. The Chinese entities ultimately bought $287 billion in bad loans from state-owned banks. To pay for the loans, they issued bonds to the banks, on which they paid interest. The state-owned banks thus got $287 billion in toxic debt off their books and turned the bad loans into an income stream from the bonds.

Sound familiar? Wall Street did the same thing in the 2008 bailout, with the US government underwriting the deal. The difference was that China's largest banks were owned by the government, so the government rather than a private banking cartel got the benefit of the arrangement. According to British economist Samah El-Shahat, writing in Al Jazeera in August 2009:

"China hasn't allowed its banking sector to become so powerful, so influential and so big that it can call the shots or highjack the bailout. In simple terms, the government preferred to answer to its people and put their interests first before that of any vested interest or group. And that is why Chinese banks are lending to the people and their businesses in record numbers."

In the US and UK, by contrast:

"[B]anks have captured all the money from the taxpayers and the cheap money from quantitative easing from central banks. They are using it to shore up and clean up their balance sheets rather than lend it to the people. The money has been hijacked by the banks and our governments are doing absolutely nothing about that. In fact, they have been complicit in allowing this to happen."

Today, Jubak continues, China's debt problem is the thousands of investment companies set up by local governments to borrow money from banks and lend it to local companies, a policy that has produced thousands of jobs, but has left an off-balance-sheet debt overhang. He cites economist Victor Shih, who says local-government investment companies had a total of $1.7 trillion in outstanding debt at the end of 2009, or about 35 percent of China's GDP. Banks have extended $1.9 trillion in credit lines to local investment companies on top of that. Collectively, the debt plus the credit lines come to $3.8 trillion. That is about 75 percent of China's GDP, which is proportionately quite a bit smaller than US GDP. None of this is included in the IMF's calculation of a gross-debt-to-GDP figure of 22 percent, says Shih. If it were, the number would be closer to 100 percent of GDP.

Let Truthout send our best stories to your inbox every day, for free.

Proportionately, then, China may be more heavily in debt than we are. Yet, it is still managing to invest heavily in infrastructure, local businesses and local jobs. Its creative accounting scheme seems to be working for the Chinese. It may be sleight of hand, but it was a necessary ploy to harmonize their economic realities with Western banking standards.

For China to join the World Trade Organization in 2001, it had to revise its accounting methods to conform to Western requirements; but before it joined, it did not consider grants to its state-owned enterprises to be "non-performing loans." They were what the IMF calls "contingent grants." If they paid off, great; if they didn't, they were written off. There were no creditors demanding payment from the state-owned banks. The creditor was the state; and the state, at least in theory, was the people. In any case, the state owned the banks. It was lending to itself and it could write off its loans at will. It was better to sweep the "NPLs" into "SPVs" than to cut back on services and impose heavier taxes on the people. The Chinese government did cut back on services and raise taxes, to the detriment of the struggling masses, but not to the extent that would otherwise have been necessary to balance their books by Western standards.

While the rest of the world suffers from an unrelenting credit crunch, today China's banks are on a lending binge. The rush to make new loans is a direct response to the government's economic stimulus policy, which emphasizes infrastructure and internal development. The Chinese government was able to get its banks to open their lending windows when US banks were being tight-fisted with their funds, because the government owns the banks. The Chinese banking system has been partially privatized, but the government is still the controlling shareholder of the Big Four commercial banks, which were split off from the People's Bank of China in the 1980s.

We might take a lesson from the Chinese and put our own banks to work for the people, rather than making the people work for the banks. We need to get our dollars out of Wall Street and back on Main Street and we can do that only by breaking up Wall Street's out-of-control private banking monopoly and returning control over money and credit to the people themselves.

We could also take a lesson from the Chinese and dispose of our debt with a little creative accounting: when the bonds come due, we could pay them with dollars issued by the Treasury, in the same way that the Federal Reserve has issued Federal Reserve Notes to save Wall Street with its "Quantitative Easing" program. The mechanics of that process were revealed in a remarkable segment on National Public Radio on August 26, 2010, describing how a team of Fed employees bought $1.25 trillion in mortgage bonds beginning in late 2008. According to NPR:

"The Fed was able to spend so much money so quickly because it has a unique power: It can create money out of thin air, whenever it decides to do so. So ... the mortgage team would decide to buy a bond, they'd push a button on the computer - 'and voila, money is created.'"

If the Fed can do it to save the banks, the Treasury can do it to save the taxpayers. In a paper presented at the American Monetary Institute in September 2010, Prof. Kaoru Yamaguchi showed with sophisticated mathematical models that if done right, paying off the federal debt with debt-free Treasury notes would have a beneficial stimulatory effect on the economy without inflating prices.

The CAGW ad is correct: we have turned our backs on the principles that made us great. But those principles are not rooted in "fiscal austerity." The abundance that made the American colonies great stemmed from a monetary system in which the government had the power to issue its own money - unlike today, when the only money the government issues are coins. Dollar bills are issued by the Federal Reserve, a privately owned central bank; and the government has to borrow them like everyone else. But as Thomas Edison famously said:

"If the Nation can issue a dollar bond it can issue a dollar bill. The element that makes the bond good makes the bill good also. The difference between the bond and the bill is that the bond lets the money broker collect twice the amount of the bond and an additional 20%.... It is a terrible situation when the Government, to insure the National Wealth, must go in debt and submit to ruinous interest charges at the hands of men who control the fictitious value of gold."

China's government can direct its banks to advance credit in the national currency as needed, because it owns the banks. Ironically, the Chinese evidently got that idea from us. Sun Yat-sen was a great admirer of Abraham Lincoln, who avoided a crippling national debt by issuing debt-free Treasury notes during the Civil War; and Lincoln was following the lead of the American colonists, our forebears. We need to reclaim our sovereign right to fund the common wealth without getting entangled in debt to foreign creditors, through the use of our own government-issued currency and publicly-owned banks.

domenica 31 ottobre 2010

Time for a New Theory of Money

Time for a New Theory of Money

The reason our financial system has routinely gotten into trouble, with periodic waves of depression like the one we’re battling now, may be due to a flawed perception not just of the roles of banking and credit but of the nature of money itself. In our economic adolescence, we have regarded money as a “thing” — something independent of the relationship it facilitates. But today there is no gold or silver backing our money. Instead, it’s created by banks when they make loans (that includes Federal Reserve Notes or dollar bills, which are created by the Federal Reserve, a privately-owned banking corporation, and lent into the economy). Virtually all money today originates as credit, or debt, which is simply a legal agreement to pay in the future.

Money as Relationship

In an illuminating dissertation called “Toward a General Theory of Credit and Money” in The Review of Austrian Economics (vol. 14:4, pages 267-317, 2001), Mostafa Moini, Professor of Economics at Oklahoma City University, argues that money has never actually been a “commodity” or “thing.” It has always been merely a “relation,” a legal agreement, a credit/debit arrangement, an acknowledgment of a debt owed and a promise to repay.

The concept of money-as-a-commodity can be traced back to the use of precious metal coins. Gold is widely claimed to be the oldest and most stable currency known, but this is not actually true. Money did not begin with gold coins and evolve into a sophisticated accounting system. It began as an accounting system and evolved into the use of precious metal coins. Money as a “unit of account” (a tally of sums paid and owed) predated money as a “store of value” (a “commodity” or “thing”) by two millennia; the Sumerian and Egyptian civilizations using these accounting-entry payment systems lasted not just hundreds of years (as with some civilizations using gold) but thousands of years. Their bank-like ancient payment systems were public systems — operated by the government the way that courts, libraries and post offices are operated as public services today.

In the payment system of ancient Sumeria, goods were given a value in terms of weight and were measured in these units against each other. The unit of weight was the “shekel,” something that was not originally a coin but a standardized measure. She was the word for barley, suggesting the original unit of measure was a weight of grain. This was valued against other commodities by weight: So many shekels of wheat equaled so many cows equaled so many shekels of silver, etc. Prices of major commodities were fixed by the government; Hammurabi, Babylonian king and lawmaker, has detailed tables of these. Interest was also fixed and invariable, making economic life very predictable.

Grain was stored in granaries, which served as a form of “bank.” But grain was perishable, so silver eventually became the standard tally representing sums owed. A farmer could go to market and exchange his perishable goods for a weight of silver, and come back at his leisure to redeem this market credit in other goods as needed. But it was still simply a tally of a debt owed and a right to make good on it later. Eventually, silver tallies became wooden tallies became paper tallies became electronic tallies.

The Credit Revolution

The problem with gold coins was that they could not expand to meet the needs of trade. The revolutionary advance of medieval bankers was that they succeeded in creating a flexible money supply, one that could keep pace with a vigorously expanding mercantile trade. They did this through the use of credit, something they created by allowing overdrafts in the accounts of their depositors. Under what came to be called “fractional reserve” banking, the bankers would issue paper receipts called banknotes for more gold than they actually had. Their shipping clients would sail away with their wares and return with silver or gold, settling accounts and allowing the bankers’ books to balance. The credit thus created was in high demand in the rapidly expanding economy; but because it was based on the presumption that money was a “thing” (gold), the bankers had to engage in a shell game that periodically got them into trouble. They were gambling that their customers would not all come for their gold at the same time; but when they miscalculated, or when people got suspicious for some reason, there would be a run on the banks, the financial system would collapse, and the economy would sink into depression.

Today, paper money is no longer redeemable in gold, but money is still perceived as a “thing” that has to “be there” before credit can be advanced. Banks still engage in money creation by advancing bank credit, which becomes a deposit in the borrower’s account, which becomes checkbook money. In order for their outgoing checks to clear, however, the banks have to borrow from a pool of money deposited by their customers. If they don’t have enough deposits, they have to borrow from the money market or other banks.

As British author Ann Pettifor observes:

[T]he banking system . . . has failed in its primary purpose: to act as a machine for lending into the real economy. Instead the banking system has been turned on its head, and become a borrowing machine.

The banks suck up cheap money and return it as more expensive money, if they return it at all. The banks control the money spigots and can deny credit to small players, who wind up defaulting on their loans, allowing the big players with access to cheap credit to buy up the underlying assets very cheaply.

That’s one systemic flaw in the current scheme. Another is that the borrowed money backing the bank’s loans usually comes from shorter-term loans. Like Jimmy Stewart’s beleaguered savings and loan in It’s a Wonderful Life, the banks are “borrowing short to lend long,” and if the money market suddenly dries up, the banks will be in trouble. That is what happened in September 2008: According to Rep. Paul Kanjorski, speaking on C-Span in February 2009, there was a $550 billion run on the money markets.

Securitization: “Monetizing” Loans Not With Gold But With Homes

The money markets are part of the “shadow banking system” where large institutional investors park their funds. The shadow banking system allows banks to get around the capital and reserve requirements now imposed on depository institutions by moving loans off their books. Large institutional investors use the shadow banking system because the conventional banking system guarantees deposits only up to $250,000, and large institutional investors have much more than that to move around on a daily basis. The money market is very liquid, and what protects it in place of FDIC insurance is that it is “securitized,” or backed by securities of some sort. Often, the collateral consists of mortgage-backed securities (MBS), the securitized units into which American real estate has been sliced and packaged, sausage-fashion.

Like with the gold that was lent many times over in the 17th century, the same home may be pledged as “security” for several different investor groups at the same time. This is all done behind an electronic curtain called MERS (an acronym for Mortgage Electronic Registration Systems, Inc.), which has allowed houses to be shuffled around among multiple, rapidly changing owners while circumventing local recording laws.

As in the 17th century, however, the scheme has run into trouble when more than one investor group has tried to foreclose at the same time. And the securitization model has now crashed against the hard rock of hundreds of years of state real estate law, which has certain requirements that the banks have not met—and cannot meet, if they are to comply with the tax laws for mortgage-backed securities. (For more on this, see here.)

The bankers have engaged in what amounts to a massive fraud, not necessarily because they started out with criminal intent (although that cannot be ruled out), but because they have been required to in order to come up with the commodities (in this case real estate) to back their loans. It is the way our system is set up: The banks are not really creating credit and advancing it to us, counting on our future productivity to pay it off, the way they once did under the deceptive but functional façade of fractional reserve lending. Instead, they are vacuuming up our money and lending it back to us at higher rates. In the shadow banking system, they are sucking up our real estate and lending it back to our pension funds and mutual funds at compound interest. The result is a mathematically impossible pyramid scheme, which is inherently prone to systemic failure.

The Public Credit Solution

The flaws in the current scheme are now being exposed in the major media, and it may well be coming down. The question then is what to replace it with. What is the next logical phase in our economic evolution?

Credit needs to come first. We as a community can create our own credit, without having to engage in the sort of impossible pyramid scheme in which we’re always borrowing from Peter to pay Paul at compound interest. We can avoid the pitfalls of privately-issued credit with a public credit system, a system banking on the future productivity of its members, guaranteed not by “things” shuffled around furtively in a shell game vulnerable to exposure, but by the community itself.

The simplest public credit model is the electronic community currency system. Consider, for example, one called “Friendly Favors.” The participating Internet community does not have to begin with a fund of capital or reserves, as is now required of private banking institutions. Nor do members borrow from a pool of pre-existing money on which they pay interest to the pool’s owners. They create their own credit, simply by debiting their own accounts and crediting someone else’s. If Jane bakes cookies for Sue, Sue credits Jane’s account with 5 “Favors” and debits her own with 5. They have “created” money in the same way that banks do, but the result is not inflationary. Jane’s plus-5 is balanced against Sue’s minus-5, and when Sue pays her debt by doing something for someone else, it all nets out. It is a zero-sum game.

Community currency systems can be very functional on a small scale, but because they do not trade in the national currency, they tend to be too limited for large-scale businesses and projects. If they were to grow substantially larger, they could run up against the sort of exchange rate problems afflicting small countries. They are basically barter systems, not really designed for advancing credit on a major scale.

The functional equivalent of a community currency system can be achieved using the national currency, by forming a publicly owned bank. By turning banking into a public utility operated for the benefit of the community, the virtues of the expandable credit system of the medieval bankers can be retained, while avoiding the parasitic exploitation to which private banking schemes are prone. Profits generated by the community can be returned to the community.

A public bank that generates credit in the national currency could be established by a community or group of any size, but as long as we have capital and reserve requirements and other stringent banking laws, a state is the most feasible option. It can easily meet those requirements without jeopardizing the solvency of its collective owners.

For capital, a state bank could use some of the money stashed in a variety of public funds. This money need not be spent. It can just be shifted from the Wall Street investments where it is parked now into the state’s own bank. There is precedent establishing that a state-owned bank can be both a very sound and a very lucrative investment. The Bank of North Dakota, currently the nation’s only state-owned bank, is rated AA and recently returned a 26 percent profit to the state. A decentralized movement has been growing in the United States to explore and implement this option. [For more information, see here.]

We have emerged from the financial crisis with new clarity: Money today is simply credit. When the credit is advanced by a bank, when the bank is owned by the community, and when the profits return to the community, the result can be a functional, efficient, and sustainable system of finance.