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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July 31, 2010

SEC Lets Citi Execs Go Free After $40 Billion Subprime Lie

The following news analysis was written by AlterNet.org’s economics editor Zach Carter.

What is the penalty for bankers who tell $40 billion lies? Somewhere between nothing and a rounding-error on your bonus.

The SEC just hit two Citigroup executives with fines for concealing $40 billion in subprime mortgage debt from investors back in 2007. The biggest fine is going to Citi CFO Gary Crittenden, who will pay $100,000 to settle allegations that he screwed over his own investors. The year of the alleged wrongdoing, Crittenden took home $19.4 million. That’s right. Crittenden will lose one-half of one percent of his income from the year he hid a quagmire of bailout-inducing insanity from his own investors. That’s it. No indictment. No prison time. Crittenden doesn’t even have to formally acknowledge any wrongdoing.

In 2007, as financial markets were freaking out about the subprime situation, Citi repeatedly told its investors that it owned just $13 billion in subprime mortgage debt. It was true – if you didn’t count an additional $40 billion in subprime debt that the company was also holding onto.

Citi’s CEO at the time, Chuck Prince, has not been charged with anything. As Yves Smith emphasizes, all of the top financial officers of every major corporation are responsible for the accuracy of their quarterly financial statements. Lying on those statements is a federal crime. This is the sort of thing that securities fraud cases are built around.

The SEC’s own statements about what went on at Citi are damning. If the agency can make this kind of information public, they ought to be pursuing criminal prosecutions. The SEC says that senior Citi management had been collecting information about the company’s subprime situation as early as April 2007, but repeatedly cited the $13 billion figure to investors over the next six months, waiting to acknowledge the additional $40 billion in subprime debt until November 2007. The SEC also says that Crittenden knew the “full extent” of Citi’s subprime situation by September at the latest, but the company continued to cite $13 billion in earnings reports through October.

Citi’s subprime shenanigans had consequences for taxpayers, pushing the company to the brink of total collapse and prompting one of the biggest bailouts of 2008.

Phil Angelides and the Financial Crisis Inquiry Commission deserve a lot of credit for highlighting the absurdity of Citi’s actions in a hearing on April 7 of this year (the key passage starts on page 368 of this pdf transcript). Angelides’ line of questioning revealed that even Citi’s board knew that the subprime exposure was much greater than what the company was claiming in public. Citi’s board at the time included Robert Rubin, former Treasury Secretary and architect of much of the deregulation that lead to the current crisis who took home $120 million for his work at Citi.

Either the SEC or the Justice Department could be pursuing criminal cases against Citi executives. What does it take to get the Justice Department’s attention on a financial fraud case? You have to launder $380 billion in drug money, and even then, DOJ lets you off with a slap on the wrist. The DOJ caught Wachovia doing just that, and the bank is getting off with a minor fine that won’t even make a dent in it’s second-quarter profits.

The Citi settlement is worse than a get-out-of-jail free card for Crittenden, Prince and their cohorts. The SEC actually fined Citi’s shareholders $75 million for the alleged wrongdoing of their executives. For some varieties of corporate misconduct, like Wachovia’s drug money laundering, hitting shareholders with the fine is appropriate. Wachovia’s money laundering operations directly enriched the company and its shareholders. This was not the case with Citi’s subprime scandal. Citi’s executives were hurting their own shareholders. Instead of meting out serious punishment to those executives, the SEC is fining Citi’s shareholders, the very people wronged in the incident.

This deference to the elites who wrecked the economy just keeps playing out. When Bank of America lied to its shareholders about billions of dollars in bonus payments it was about to make, the SEC decided to fine BofA shareholders and let the firm’s executives off the hook. The decision-makers at Wachovia, who allowed the firm to funnel drug money despite repeated warnings by whistleblowers, have not been indicted. Nobody at Washington Mutual has been indicted despite clear evidence of rampant mortgage fraud at the firm. Lehman Brothers’ repo 105 accounting scam is going unpunished, as are similar schemes at other banks including Bank of America. After much public relations flogging, the SEC let Goldman Sachs off easy.

More than 1,100 bankers went to jail in the aftermath of the savings and loan crisis. Massive financial crises simply do not occur without widespread fraud. The failure to prosecute that fraud poses systemic risks for the global economy. With too-big-to-fail behemoths dominating the financial landscape, the prospect of prison is the only serious check on executives interested in cannibalizing the economy for personal gain. If the SEC and the Department of Justice continue to let executives get away with outrageous acts without even taking the case to court, our financial system is doomed to repeat the same excesses and abuses we’ve seen over the past decade. If Crittenden did what the SEC claims he did, he screwed over his own investors and scored a huge bonus in the process. Everybody on Wall Street understands the implications: breaking the law is a great way to make a lot of money. When a class of elites can thumb its nose at the law with impunity, the result is not only a threat to the efficiency of our economy, but a threat to the basic functioning of our democracy.

You can read Mr. Carter’s news analysis in context here: blogs.alternet.org/speakeasy/2010/07/30/where-are-the-prosecutions-sec-lets-citi-execs-go-free-after-40-billion-subprime-lie/ Mr. Carter is a fellow at Campaign for America’s Future, and a frequent contributed to The Nation magazine.

November 7, 2009

Wall Street Justice Obama Style

corrupt bankers prisonOver and over again, Americans see the same debacle unroll before their eyes, that is, if they are paying any attention. Earlier this year, billions in bonuses were paid to Merrill Lynch executives as the firm was failing. An agreement was made that Bank of America would pick up the pieces of Merrill Lynch with the support of the American taxpayer and later, BofA was bailed out as well. After a dance with the SEC, no wrongdoing was admitted.

After an investigation by the Securities and Exchange Commission, Banking wunderkind JPMorgan agreed to a $722 million settlement. Why? It all rises from a risky derivatives deal that drove Alabama politics to the brink of bankruptcy. As part of the settlement, JPMorgan neither admitted nor denied wrongdoing despite overwhelming evidence that the financial group did actually engage in acute wrongdoing.

What passes for justice on Wall Street? Regulators give a banking institution that they back a fine that taps the corporate bottom line for wrongdoing. The banks are eager to quickly forget the whole thing by paying a modest fine and getting on with business as usual. There is no admission to wrongdoing and business continues. The government gets a fine to pad their already overbloated budgets that the American taxpayer is already floating. We must be stupid because we keep doing the same thing over and over.

No one admits to corruption, much less to making a mistake. Meanwhile, nobody pays back the taxpayer, much less actually pays off a debt of any kind.  Reality is a round robin of funny money, usury and blatant dishonesty. Where is the outrage? Nowhere, because we are too wrapped in our small lives and/or afraid of reprisals or perhaps the boogeyman. Perhaps by our collective refusal to stand up against politicians and bankers, we are admitting that any American would do exactly the same thing; that not one American is any better. What do you say? Probably very little.

June 10, 2009

Economy: Good Prospects Beyond White Collar Jobs

Voices of reason have long proclaimed that the only key to a decent future is a college education as we trumpet excess, luxury and credit for all. The halls of academia do not suit every temperament, nor can the world operate only through the league of white collar employment and office jobs. Who will take care of the national infrastructure, manufacturing and all those green jobs that the nation has been promised? A sedentary, artery-clogging, boss-centered lifestyle is not a requirement to exist in America. Yet, hundreds of thousands of American youth have been or continue to buy into massive college loans if credit is available. Nearly half of students who start college will drop out before graduating. Our country has been facing major workforce shortages for years, which have been taken up by illegals in many cases. They are the latest attempt by big business and government to create a new subclass of American worker in which to found a new nation.

white-collar-crimeWithout question, the nation has been suffering where jobs are concerned, brought about by nothing less than white collar crime. You can’t really talk about careers since corporates nip millions of so-called careers in the bud every year due to their own self-interest. That reality existed before the recession stripped the nation of what millions of Americans see as their only self-respect: the job.

America has been convinced working a corporate job is the only way to live. The white collar job has been sold as the American stock and trade. The federal government has been very happy with this campaign as corporations and big business are highly complicit with federal law and the collection of taxes. As a result of this nearsighted approach, the American labor force has been selling itself short and has allowed itself to be deluded about the future and personal potential for the future.

We are being told that only by following rules and leadership of big business, the corporate and the academic world, can Americans possibly prosper. Has this proclaimed fact proved to be true? Are you truly being prospered now? Has the nation prospered? Think for yourself. You are your own best friend and are fully capable of supporting yourself if you are willing to think outside the box that the government, big business and corporates have made for you. There is hope. Great personal success can exist outside the cubicle. You are not a slave…at least not per the founding documents of America. ~ E. Manning

March 4, 2009

U.S. Mortgage Panic Ensues

tsunami-financeA mortgage panic is setting in. More than 8.3 million U.S. residential mortgage holders owed more on their loans in the fourth quarter than their property was worth as the recession cut home values by $2.4 trillion last year. An additional 2.2 million borrowers will be underwater if home prices decline another 5 percent. Do you have one of these mortgages? Probably not if you have been in your home more than 5 years and made sensible choices with financing. 10 million homes is small potatoes compared to number of residential mortgages out there in the United States. However, the crooked system of weights and balances that bankers designed are now a house of cards ready to crash as more Americans appear to be losing their homes.

The banking and finance system has plowed virtually every mortgage into a profit making system of toxic securities. The system of high finance is beginning to panic as it realizes that it must comply with trimming and modifying home loans to keep their customers viable as they lose their bottom line. Why are the system of bankers and high finance trembling in their boots? Confidence continues to dwindle and stock prices fall. Trading value is the bread and butter of publicly-traded companies. Banking and high finance are trembling due to the toxic securities that they built to underscore and enhance their profits. With toxic mortgage-based securities failing, this puts banks, investors and insurers like AIG in the position of holding the bag of spoiled goods that were originally designed to spur runaway profits and build a system of financial prosperity.

mortgage-tsunamiWe are witness to what has happened. Bankers and high finance have designed their own self-destruction that has been left squarely in the hands of government and citizens to miraculously rectify. The fallout from all the speculation and rampant leveraging has been an enhanced recession which is likely to lead to a depression. No man lives on an island. The world of finance is no exception. Sooner or later, greed and fraud bite back. The only problem for the nation is that the taxpayer is covering the systemic failure with their own blood, sweat and tears. ~ E. Manning

February 18, 2009

More Fraud for Global Economy

sir-allen-stanford1Most people that have considered the recent plight and cause of the downturn in the global economy have realized that Bernard Madoff is just another tip of the iceberg where fraud is concerned. Now U.S. officials have added philanthropist Sir Allen Stanford of the Stanford Group to their short list of finance fraudsters.

Stanford is accused of “massive fraud,” although this writer cannot see how Stanford’s fraud is any worse than the Madoff fraud or for that matter, banking fraud by financial institutions and bankers that started the global economic downturn and housing collapse to begin with.

I suppose the idea that Stanford’s fraud is “massive” is supposed to make us feel better in that justice is being done. Bunk. We have a long way to go baby until the criminals that belong behind bars, the perpetrators of global financial ruin are removed from their posts. Most offenders of gross financial illiteracy are still operating with impunity as the U.S. government casts there eyes in the distance in the hope of looking for other scapegoats.

sir-allen-stanford-and-moneyStanford is one of those convenient scapegoats ripe for the picking. Until this writer sees action against the current bevy of offending bankers, people in high places that sanctioned criminal activity and financial ruin while supposing to know better, the U.S. government has little credibility in tracking offenders or really cleaning up the banking and finance mess that plagues the nation or the world. ~ E. Manning

January 5, 2009

The SEC, Madoff and Investment

investment-ponzi-madoffU.S. authorities allege that Bernie Madoff delivered consistently strong returns to clients by secretly using the principal investment from new investors for payments to previous investors, in what is known as a ‘pyramid fraud.’ The Securities and Exchange Commission has known about irregularities for nearly a decade and declined to do anything beyond ignoring the likelihood of fraud.

Laura Cohn of Kiplinger’s, in typical elitist style, asks the question that bears asking. In light of Bernard Madoff’s alleged Ponzi scheme, are you taking steps to ensure that your financial adviser is on the up and up?

The good news is that if you are asking that question, you are still financially solvent (probably) and have still have money concerns like investing. That is good, especially for you. However, all this drama must have you asking the question about why you need to trust all these high-powered frauds with your hard-earned cash rather than gaining investing knowledge yourself. That would be bad for the industry because you wouldn’t need them. Ultimately, that is the economic solution for the fraudsters that put this economy where it is today coupled with the plight of government regulators that couldn’t find their way out of a paper shopping bag.  Do it yourself.

bush-and-sec-coxTo be certain, hundreds of blogs have already been consumed with the utter stupidity of government entities that need to be eradicated entirely because they don’t have a real purpose beyond squandering taxpayer dollars.  Perhaps we can look to President Obama to take some meaningful swipes toward ineffective and largely useless government agencies. The fascinating preponderance of economic, investment and banking fraud that has come to a head should have your head spinning. The fact that these overeducated opportunists and complacent politicians have brought this nation to its’ knees bears repeating.

For years we have been gleefully taught that we can trust others with our money: our blood, sweat and tears. Could we have been duped?  Whom do you trust? You’d better think twice bright eyes. The new President of the United States will be setting the tone for cleaning up the fraud on all fronts. What tone Barack Obama chooses has great importance for anyone that cares about this nation. ~ E. Manning

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