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What the Government and Big Banks Have Failed to Learn
Too big to fail -- do you ever wish you'd never heard that phrase. Put it up there with the global war on terror and the end of history. As president Obama addressed Wall Street and talked up modest regulatory reform, the giant elephant in the room was the fact that through this crisis those already too big banks have only gotten bigger.
This is what Nobel Prize winning economist Joseph Stiglitz said the other day. So don't take it from me. Speaking from France, Stiglitz also said that the problems are worse now than they were before the crisis.
But there is another side of the story -- the mouse that's not allowed into the room on Wall Street. Throughout this year of crisis small banks and community banks have fared much better. Why? Because they had a closer relationship with their clients. They weren't too big to care. And, in general, the 8,000 regional and community banks in the United States have remained healthy.
Take Natchez Mississippi for example. Local banking officials say that a more conservative approach on the part of community banks accounts for a much lower foreclosure rate than the national average.
"We underwrite our loans differently from the larger mortgage companies,” said the executive vice president of Delta Bank, which has a foreclosure rate of practically zero. “If they don't have the cash flow to sustain the loan, then we can't make it."
Fancy that.
“If they don't meet the criteria or we don't feel they have the ability to pay back the mortgage, we don't make the loan. That is not the way community banks do business.”
Good to know. But that’s precisely the way that the big banks—the ones that are too big to fail—have been doing business. And there’s no reason to believe that they’ll stop any of it. Especially now that they’ve morphed--and been helped to merge--into even larger institutions.
In Natchez it was the large banks and lending institutions that issued subprime loans. And they’re the ones being foreclosed on. Instead of bailing out the big banks, maybe Obama could give credit where credit is due. To small, local institutions that aren't underwater and that might actually be the place to turn for swimming lessons. Not the elephants.
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All the stars in our galaxy = 600 Billion
All the world's derivatives = 600 Trillion
by Robert Callaghan
It's been a surreal summer. The U.S. Federal Reserve (the bankers'banker) creates money out of literally nothing to buy U.S. government debt that will never be paid back. Bankers are like crack-dealers,they're addicted to money (debt). They say they'll give it up, but...
These are the same bankers that created a 600 TRILLION dollar debt derivatives market (more than 10 times all the money in all the world)and screwed it up taking too many unregulated risky side bets. And we all know from crime movies what happens when bookies don't get paid... the taxpayer has to lose an arm, or leg – or two.
At least two gigantic banks (Citi & Bank of America) plus two giant government agencies (Freddie Mac & Fanny Mae) were promised or practically given 12 TRILLION dollars to cover – I mean fix – it up.
While this is happening, Goldman Sachs invented a way to use computers as traders to make deals 1/1,000 of a second faster than anyone else. By getting first dibs this way these bankers can skim about 100 million dollars per day from the rest of the world's investors. It's as illegal as hell but nobody is going to do anything because we are all afraid of losing more to these guys than we already have.
All the while these banks have already moved on, like serial stalkers, to set up two other U.S. government agencies (Ginnie Mae & the U.S. Federal Housing Authority) to take the fall for even more bad debts.
By threatening to turn all U.S. debt into worthless paper the U.S. Federal Reserve threatens China's future. China recently called the American bluff by allowing their people to cancel any derivatives deal that is not to their liking. This is how complex societies start to break down.
This hot potato game is starting to heat up. China's ace up the sleeve is the fact that we already sent all our manufacturing jobs over there during the past 10 years. When the price of oil and food shoots up, our core inflation numbers will finally not mean a damn thing; and
after that everything we get from China (which is everything) will start to cost a lot more.
China is a lot closer to Middle East oil than we are and soon enough even slave labour won't cover the higher energy costs. We started this year with deflation where houses, cars and wages go down. In a few years this will be followed by massive inflation because there are more Yankee dollars than stars in our galaxy.
The rest of the world has started to drop U.S. dollars like hot rocks because they will soon be as worthless, in their trillions, as the sands on a beach. The world's balance sheet has reached a point where nothing on the left (liabilities) is right and nothing on the right (assets) is left. We have left the financial crisis, only to enter an economic and social crisis.
In the meantime, the only reason it hasn't hit the fan yet is because many U.S. states have extended unemployment benefits to an unheard of 72-92 weeks (two years). The TRILLION dollar stimulus over the last year will fake us out for a while longer, hopefully until the consumer festival known as Christmas.
Meanwhile,
back at the ranch...
In the face of all this, the Queen of England's top science advisor warns of a confluence of crisis by 2030 – a mere twenty years from now.
Sir John Beddington warned a sustainability conference in England last March about a "perfect storm" of food, water and energy shortages in 2030 – "a whole series of events come together":
• The world's population will rise from 6 to 8 billion to increase by 33%
• Demand for food will increase by 50%
• Demand for water will increase by 30%
• Demand for energy will increase by 50%
– each problem combining to create a "perfect storm" in which the whole is bigger, and more serious, than the sum of its parts.
Some scientists are predicting that the Arctic will be ice-free by 2030, which could accelerate global warming by reducing the amount of the sun's energy that is reflected back out of the atmosphere. "Whereas changes in Canada and Europe would be incremental, in Asia it's more likely to be abrupt. Whole regions are dependent on cycles of glacial melts and monsoons and if these start to shift there will be trouble."
Now, I may not be the sharpest tool in the shed, but when the Queen's top scientist speaks on science-like stuff... well, I tend to listen.
Clues:
www.zerohedge.com
www.ecoshock.org
What good does it do to have 8,000 solvent local banks when you have a handful of mega-banks that own the US Government (Senator Dick Durbin recently told us so)and have access to unlimited US taxpayer dollars (from the US Treasury and Federal Reserve)?
Other industries are jealous of the bankers. Drug companies are merging so they can be too big to fail. Insurance and drug companies are steering "health carre reform" into the biggest corporate welfare scam yet.
OK, here's another chance for me to say what I say every time this topic comes up. It's what I learned during my Yuppie Years when I worked at the world headquarters of one of the very institutions in deep doo doo right now: the large financial institutions are criminal conspiracies and the only reason the executive staff isn't in jail is that they have the politicians bought and paid for so the law books are cooked to keep them technically legal.
The bailout was classic suicide extortion: I need money and if I don't get it I'll have no choice but to self-destruct.
Where did the money go? What benefit did customers and consumers get from giving them this money? They'll say the benefit we got is the financial system didn't collapse. Would it have really? How are we ever to know?
Failed to learn suggests that both the Government and the larger banks got into this mess because of Mistakes made in the decision making process.
There were no mistakes. It was calculated and designed for. Those driving the process personally profited and tremendously so.
Wheter the economy at large suffers or the smaller shareholders suffer is immaterial to these people. Just as long as they PERSONALLY profit.
Thats the truth.
Exactly. It's been Shock Doctrine applied to the biggest prize of all - the US. I wonder if all the South American "experiments" were just training for the big prize?
Excellent article.
She is right in quoting Stiglitz, the problem is indeed worse now than before and this administration is fiddling while our economy burns.
Their selfishness rivals the Neocons.
First - I am a fan of Grit-TV. Thanks, Laura. When are you going to have Nader on? Also, how about exposing "The US School for Terrorists" at Fort Benning.
I don't think that the government failed to learn anything. Those who are our Rulers know what they are doing. If we, the little people, can see what is happening, they surely can. Take the Health Care reform - it is really just an Insurance Company Protection Bill (not my words).
Take the wars for another example. Does any one believe that we are dropping bombs to 'protect' the American people? The US will always find a way to justify war. If its not for oil, it would be for broccoli. Way back in the days of Gen Smedley Butler the wars were fought to enrich corporations. War is just an ingenious money laundering scheme to take money from the workers and transfer it to the wealthy and powerful.
It would be better for those "too big" banks to take the bullet now. Yes, there will be economic chaos. Breadlines. Riots. Military smackdown right in the USA. I think the 3rd Combat Battalion(or whatever it's called) is still available to fire upon US citizens. We'd be better off getting this thing going before winter, just to establish the lines and test whether our own soldiers would really take action. A tough winter would but a damper on the redneck militia types. Although many white power types have enlisted and trained, the fighting in Iraq may not have fully prepared them for house-to-house combat in cities to poor to plow the streets.
Oops. Daydreaming again.
What happens when stagflation and more layoffs hit... like it is now?
The facts are scary and I am used to it!
"What the Government and Big Banks Have Failed to Learn"
They have failed to learn that NOTHING is too big to fail, banks AND government.
Once civilization's greatest swindle will receive appropriate awareness amongst the masses, matters will change.
The monetary system, made possible by an incestuous relationship between corporate and political masters and key people in the financial world, is the true curse and cause of misery.
http://www.themoneymasters.com/synopsis.htm
A Bank in Maine is spending many thousands of dollars
brainwashing people so that they can aquire a French
Credit Union. The French are ignorant of the past.
The French, having 400,000 casualties including 200,000 deaths at the Battle of Verdun in 1916, were all too aware of the past in 1940. They knew victory in World War I was as bad as defeat, something the Germans did not learn until after WWII. I doubt you could find a people more attuned to the past than the French.
hey paranoid your damn right. been in the jungle too.
i hate to say it this way but i cannot see any other.
these people should be be tried for treason war crimes
rico freako and any other criminal charges known to
mankind! these monsters have destroyed this planet added
nothing positive and will continue this behavior unless
this happens. there are govt. official guilty of at least
the same and more too because its their responsibility
to guard the global hen house and they did nothing to do
so! these people should be publicly executed and it
should be aired throughout the world so any time
these monsters EVEN THINK about this they will have to think about the consequences of their actions! and this should be
policed on a global scale on a immediate and without malice
way! how many would cocky enough to risk their lives
if they knew this would be a unquestionable result!
btw i do not believe in the death penalty but their
actions have impacted the planet in a way that the planet will
unlikely ever recover from. no punishment is too large
for these monsters. wonder if naomi klein
would agree. i have a feeling that her personal revulsion
from the results of the truths that she has learned would
cause her to disagree! its not like executing human beings
because they exhibit not even any conscionable behavior.
henry gw north you are correct except they ARE the neocons.
who do you think sponsors all these kkk and wingnut orgs?
they keep these folks occupied so they fail to realize
the 1/90 equation.that being 1% own 90% of the planets
resources. and to the fellow who talked about domestic
deployment of us troops its out of ft. benning ga.
i doubt that soldiers would fire on their families
and maybe the officers what suffer the old friendly fire
routine if they ordered firing on citizens. most likely
a war would break out between units loyal to wall st
and the units loyal to the constitution.
it would be if the generals believed in one or the other.
not all modern gens. are a gen. betray us there are
some fine and ethical people there bush didn:t get
rid of all of them. we might as well get this over with
as the longer things fester the larger they get!
we cannot rely on washington to do whats right for
the world they have not so far and and things in motion stay that
way. how much can we take realistically?
Click on the video: "Too Soon For A Recovery" and others if you have the time.
http://www.economyincrisis.org/
They have learned NOTHING!
You mean to tell me that the government and Wall Street were actually supposed to learn something from this? Wow! You could have fooled me! Even the sheeple who were the ones who paid the ultimate price haven't learned anything. If the banksters have learned anything is how powerful they are, how much they can get away with, how they can blackmail the government and how they can rob, rape and ridicule an entire country - and the world - with impunity.
We must all remember what Jesus said, "The stench of the stinking corpses of Wall Street bankers dangling from lamp-posts is a sweet aroma in the nostrils of the LORD."