Busted: Bankers and The Global Economy

October 14, 2010

Banks invent money out of air

The financial system is a model of fraud, now out in the Austrian newspaper, Der Standard per Viennese economist Franz Hörmann. Franz Hörmann explains the fraudulent workings of the fractional reserve banking system in this  interview.

“If one creates money out of thin air and then passes what did not exist before on charging interest and using physical assets as collateral, then that is in reality a model for expropriation (acquiring property without making any payment).”

Hörmann explains in clear language how the money system works, why the financial system is a global fraud, how the use of  balance sheets contributes to this fraud and why a gigantic crash is now approaching. He says the whole financial system could well collapse in the next three years. Hörmann argues that the time has come for a paradigm shift in the economics studies as well as in society. This is because economic studies are built on false values.

Information on how the banking system works in reality that used to be available only on websites like Infowars and Global Economy (formerly Digital Economy) have long been classified as a conspiracy theory. This knowledge is now mainstream, established as fact.

The next step can only be to call into account the various bankers and politicians that know how this system operates. They have engineered the banking subprime crisis in order to have a pretext to take liquidity out of the money supply, crash the economy, buy up assets for a pittance, get trillions in tax payer money as “bailouts” in return for worthless thin air paper debts. They demand gigantic interest payments on the national debt that they and their politicians friends have created in an exact repeat of economic events in the 1930s preceding the rise of Adolf Hitler.

The whole point is to drain the wealth of economies while subjecting the labor pool to economic servitude and slavery. The system can destroy national economies and ignite hyperinflation. This world banking system is controlled by corporate brotherhood of central bankers, generally with globalist thinking on their mind.

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January 17, 2009

FDIC Tries to Force Consumer Lending

The federal government has been closing in on ways to entice or force bankers to loan money to consumers, especially in exchange for financial assistance. Previously, taxpayer money has been used to prop up the banking system without any conditions.

attempt to enforce bank lending

attempt to enforce bank lending

The FDIC board announced that it will soon propose rule changes to its Temporary Liquidity Guarantee Program to extend the maturity of guarantees from three to up to 10 years where the debt is supported by collateral and the issuance supports new consumer lending.

Interestingly, the FDIC created this program last November to strengthen confidence and encourage liquidity in the banking system by guaranteeing newly issued unsecured debt. This is an effort to use a carrot to encourage banks to renew efforts to make loans to consumers and then contractual obligations to enforce lending. ~ E. Manning

November 16, 2008

Big U.S. Bailout Secrets, No Supervision

bailout game show giveaway

bailout game show giveaway

The Troubled Asset Relief Program, originally a $700 billion bailout program mandated by Congress was to be conducted with transparency and oversight. That hasn’t happened and none of the oversight posts have been filled. To make matters worse, the Federal Reserve is now showing $2 trillion in additional loans, which apparently have gone to the central bankers bottom line.

Disclosure has been a joke in a solution that was declared to be sound and manageable. Instead, there has been no accountability and a desire to change plans in the middle of the bailout game by Henry Paulson and his team. Most of Congress seems unconcerned.

House Rep Barney Frank gave the thumbs up revealing, “I talked to Geithner, and he was pretty sure that they’re OK.” Who is okay? Certainly the Federal Reserve is very okay as they have nothing to lose and everything to gain. Who is Barney Frank talking about? Revealing the collateral for the $2 trillion in loans would give away banking secrets, so nobody is talking.

The reality is that the Federal Reserve is taking bad debt from the banking industry and giving itself huge sums of cash, since it still holds all the loot. It’s profit taking time in New York City. Perhaps this is the money to pay for all those Ameros that the U.S. just sent to China to pay for their earthquake rebuilding project, but that’s only conspiracy talk. ~ E. Manning

September 15, 2008

No Wall Street Government Bailout, Sort of

With steely resolve, Henry Paulson, former Goldman Sachs investment banker has declined to cave in to pressure. There will be no investment banking bailout by Big Government today. Henry Paulson is prepared to let Lehman Brothers die on the vine, a sacrificial warning to bankers.

national banking snuggy?

national banking snuggy?

However, the Federal Reserve and the U.S. Treasury have designed a way to take some pressure from Wall Street investment firms as we clearly answer the question to yesterday’s post. Wall Street is awash in debt that previously could not be used for collateral. Starting tomorrow, the Federal Reserve will accept “investment-grade debt securities” as collateral in the Term Securities Lending Facility (TSLF) auctions and has expanded securities for the Primary Credit Dealer Facility (PCDF) based on what national clearing banks have on hand.

In essence, the Federal Reserve is accepting less secure banking instruments that bankers have in ample supply. This is subject, of course, to various conditions to “promote safety and soundness,” all good through January 30 of next year. It is hoped that this move will prevent any panic in the markets as authorities continue to dumb the system down. The investment banking system has been in worse shape than authorities have been willing to previously acknowledge. Outsiders have often assumed otherwise.

Former Fed Chairman Alan Greenspan said the market is the worst he has ever witnessed and predicted another major bank would close soon. Meanwhile, inflation is rising, real wages are declining, and the problems in the housing market persist.

~ E. Manning

June 27, 2008

Confidence, Mortgage Debacle & Fed Loans

Even though the Euro is on top of the world monetarily, European confidence is reported to be at the lowest level in 5 years. Whose confidence is being measured? There is no telling, but the guess would be the bankers, economists and investors. Because of the wonder of the mortgage securities debacle, the plight of many professionals globally in banking and investment circles is less money and fear of money trouble. Its all based on the outlook of growth, not only of collective economies, but of the financial system at large. Growth is a question mark on many fronts coupled with inflationary pressures.

Curiously, The Federal Reserve Bank of New York extended a $28.82 billion loan to JPMorgan Chase for the acquisition of Bear Stearns made in March. The Fed also released the minutes of two meetings on March 14 and March 16 that involve that loan. You would think that JPMorgan is prosperous enough to be able to cover that loan entirely after 90 days instead of having taxpayers float the loan for the credit, which is the reality of the situation. While JP Morgan is paying modest interest, the U.S. taxpayer is paying for interest put against the national debt. The Fed is collecting from both sides on money that they created from thin air.

The line of credit extended is based on collateral (more…)

February 25, 2008

FDIC and Careless Banking Risk

Filed under: banking, credit, government, investment, money, security — Tags: , , , , , , , , , , , — digitaleconomy @ 12:00 pm

A year ago, the global financial system was still highly liquid. Bank profits were at all-time highs. Downgrades of triple-A-rated CDOs were virtually unheard of. SIVs, mono-line insurers, municipal bond auctions, and mortgage-backed securities weren’t making the daily headlines that they are now. Everyone thought the world was “peachy keen”.

bair_sheila.jpgThe FDIC holds that the systematic breakdown in lending standards in a large segment of the U.S. mortgage market came from the bankers themselves. The FDIC considers the importance of new legislation and regulation to put a stop to abusive and irresponsible mortgage lending practices.” This statement today indicates that abusive and irresponsible mortgage practices are still in vogue. FDIC Chairman Sheila Bair stated, “We’ll need significant reforms to restore confidence in the integrity of financial markets.” First, she cited a “lack of transparency” in reference to structured finance. Bankers created new investment vehicles with unknown consequences that could not be easily resolved. In fact, the consequences of these back room deals could take years to unravel. Ms. Bair also cites “a pervasive, over-reliance on ratings and quantitative methods, as a substitute for good judgment and traditional credit discipline.”

Essentially, when bankers received a rating, they looked no further and were only concerned with the perceived profit from the transaction. Ms. Bair intimated that collateral in most of these transactions was a real issue.

If you want to analyze a rated corporate bond, for example, you can go to the SEC website and get financial statements and a wealth of reports about the borrowing corporation. If the bond is actively traded, you can check out the latest secondary market prices and volumes in the Wall Street Journal or on your Bloomberg. On the other hand, suppose you want to analyze a CDO. You might ask for a standard spreadsheet of loan-level data. But you would probably find this unavailable, even for a potential investor. And even a basic summary about the underlying collateral may not have been given due diligence or independent validation, and is unavailable to the general public.

This is the dark ages, foolish thinking that bankers bought into according to the FDIC. Information was not available on banking instruments and investors did not seek that information. They simply snapped up the investment based on the perceived ratings value and the perception of profit. Banks even assumed that they had no risk exposure because of the bond rating that the instrument had received.

The FDIC doesn’t have any hard solutions for the mess that bankers have created, suggesting that incentives are needed to make bankers follow the rules and supply collateral information rather than relying on ratings. U.S. banking regulatory agencies have agreed not to release any bank from responsibility until a complete study and review is done to provide a clean bill of health.

Sheila Bair says that this is progress. What do you think?

February 6, 2008

Islamic Banking Protected from Subprime

Filed under: banking, central bank, Islam, money — Tags: , , , , , , , , , , — digitaleconomy @ 12:00 am

Islamic banking, by its nature, is set apart from the traditional banking market. Islam invokes the principles of Sharia, the holy law set forth in the Qur’an. The Qur’an forbids the charging of interest in exchange for a loan or trading debt. Every step of a transaction is carefully reviewed by an Islamic scholar to test for compliance with the tenets of Islam.

islamicbanking.jpgBanks that operate under these principles shun collateral debt obligations linked to subprime (high risk) mortgages because the legal instruments do not comply with Muslim law. Rasheed al-Maraj, Bahrain central bank governor stated: “Islamic banks have been largely shielded from the U.S. mortgage crisis, which may even open doors for expansion beyond traditional strongholds in Arab and Asian markets. The lack of problems relating to traditional market and financing may serve to enhance the viability of the Islamic banking market and expansion into the U.S. market as prices for real estate continues to drop.

Events within the traditional banking industry and global finance provide an opportunity for growth in an alternative banking market for Islamic banking customers although there remains the risk of falling real estate values in a declining economic situation that currently exists in the U.S. Islamic banking is working on methods to reduce the risk of loss during declining market periods.

More on Islamic Banking

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