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Banking Video by Attorney Gary Fielder

Gary Fielder, a Denver attorney, has put together one of the best educational videos I have ever seen detailing the monetary history and the ongoing struggle for control of our nation.

Gary’s late 2008 video is crucial to gaining a full understanding of why we’re in the financial straits we’re in today and it is certain to hold spellbound both the neophyte and the veteran with regard to the intriguing subject matter at-hand.

Gary is a masterful presenter, for sure, and he action-packs a college-level education on this fascinating topic into about 83 minutes.

MOST INTERESTING!!! DO NOT MISS THIS VIDEO!!!

Watch here or watch in large format at the link below.

The Gig Is Up: Money, The Federal Reserve and You.

SPECIAL! A Private Video Conference With Marc Faber

Spend the time. See the future. Educate yourself with the wisdom of a master.

Marc Faber Video

Economics Professor Dr. Ravi Batra Accurately Explains The Historic “Social” Origins Leading Up To Today’s Economic Crisis

Here’s a link to an excellent interview of Dr. Ravi Batra by Matt Renner of www.truthout.org. Dr. Batra has been a keen observer of the American economic evolution during the decades that lead to our current situation.

He has written a number of interesting books over the years but this interview is a terrific summary of why we’re where we are today. As you’ll see here, Americans have been first drained, then “wrung-dry” by government policy.

Dr. Ravi Batra: New Thinking on the Economy

The True Origins Of The Global Credit Crisis Explained

The financial talking-heads and, therefore, the general public tend to believe that “sub-prime mortgages” are almost entirely to blame for the global financial crisis. To me, this is ridiculous on its face and is more of a cruel joke – bordering on class-sanctioned bigotry – than anything even remotely related to fact.

Depending upon how “sub-prime” is defined, there were a total of $1.5 trillion to $3 trillion in sub-prime mortgages in existence at the height of the bubble in 2007. Assuming that ALL mortgages are backed by real-estate, these mortgages ALL still have some tangible value to them – even after the “collateral” price re-adjustments of the ongoing housing melt-down are factored in. Furthermore, though you wouldn’t know it from the media, not all sub-prime mortgages are in default.

The last figures I saw were that roughly 20% were in default – though I’m not sure how accurate that figure is. If those mortgages were total write-offs (zero value in the underlying real estate), the total “hit” to the global economy would be a maximum of 20% of $3 trillion, which is $600 billion.

Obviously, IF THAT HAD BEEN THE TRUE PROBLEM, we could simply have written a check – albeit a rather large one – for this amount from the annual budget and solved the problem. Yet the problem has quickly revealed itself as a multi-headed hydra – something many orders of magnitude larger than simply sub-prime mortgages.

So, in order that we may be properly educated about the TRUE CAUSES of the global financial debacle, let’s look to the excellent work of Robert Weissman to do the job for us. Based upon what he’s written – and my own observations over many years – I think he’s covered all the bases in a concise manner.

12 Deregulatory Steps To Financial Meltdown

And one more thing, while you’re reading, don’t fall victim to the “anti-free markets” rhetoric that’s gaining so much traction around the world. What Weissman describes here is THE ORCHESTRATED HIJACKING OF PUBLIC REGULATORY SYSTEMS TO PREVENT THE NATURAL CORRECTIVE MECHANISMS OF FREE-MARKETS FROM INTERFERING WITH FRAUDULENT PRIVATE EXPLOITATION, CONVERSION, AND THEFT.

Don’t ever forget that – as natural forces of nature – markets work just fine, exactly as they are doing now. The market is “aggressively correcting” the collective misdeeds and “un-natural” excesses of the recent past, forcibly leveling the playing field that has been so radically perverted and slanted in favor of the greed-heads of the world. A sturdy rubber band will only stretch so far before it snaps back.

The market will “react” in equal or slightly greater degree than it was “destabilized” by the forces organized against it. Perhaps, with luck, the legal system will follow the lead of the markets and catch up.

To maintain a civil society, perpetrators of crimes must be punished when caught – and not simply by markets.

doj

The Corrosive Nature Of The Credit Default Swap (CDS)

Regular readers of my blog have seen me mention Karl Denninger and his work in previous posts and here is another of his articles that is definitely a MUST READ. Karl has an insightful mind and, in my opinion, is better-informed than most media-proclaimed “experts” in many areas of finance.

For those of you who may be prone to relying on some combination of “faith, hope, and positive thinking” to resolve the myriad problems that have been created on our behalf, here’s a strong dose of reality for you to mull over.

I wrote about CDS’s a few days ago and what Karl has subsequently written may make you want to take action and begin educating (many) others about the potential scope and scale of this problem.

CDS’s are acting like a strong acid eating holes in and potentially consuming the foundation of our entire economy. The only thing likely to stop this now is the wholesale nullification of these contracts on a GLOBAL BASIS. This is definitely not the first time I’ve said this. Karl seems to agree.

Karl’s article is short, go read it now.

The Market Ticker: More GE (Important)

Featured Photographer: David Svilar

This week I happened to receive a comment on one of my blog posts from an interested reader and in his email to me he included a link to his own website. Being an inquisitive person, I naturally clicked through to learn a little more about him and what I discovered was a delight.

It turns out that the reader, David Svilar, is a fine-art photographer with a skill level that made me open my eyes wide and do a double-take when I saw his work. Frankly, I was a bit stunned to see some of the awesome works that he’s created, not to mention the spectacular places he’s visited in his quest for a great shot.

Since photography is one of my favorite hobbies, I include a few shots of my own work on the header of this website for fun but I feel especially compelled to highlight David Svilar’s work here to share it with visitors to my blog. I believe that rare skill like David’s needs to be enjoyed by the widest possible audience.

Please take a few minutes to visit David’s website. It’s sure to be a relief after all the carnage we’re witnessing in other aspects of our lives. David’s work should serve as a welcome reminder that there’s much more to life than just news and finances if we’ll just open our eyes and see it. David surely does just that. News happens. Beauty endures.

Enjoy!

www.davidsvilar.com

The Great American Pump And Dump

Here is a useful definition straight from the Financial Industry Regulatory Authority (FINRA) web page which describes several different types of scams investors need to be wary of.

This scam, the “pump and dump”, has been around forever and anyone who’s ever been involved in investing has heard about it. What people may not have considered is how large such a scam could feasibly grow if enough “special interests” were to get involved in a coordinated fashion.

Here’s the FINRA definition:

Pump-and-Dump — in which a fraudster deliberately buys shares of a very low-priced stock of a small, thinly traded company and then spreads false information to drum up interest in the stock and increase its stock price. Believing they’re getting a good deal on a promising stock, investors create buying demand at increasingly higher prices. The fraudster then dumps his shares at the high price and vanishes, leaving many people caught with worthless shares of stock. Pump-and-dumps traditionally were carried out by cold callers operating out of boiler rooms, or through fax or online newsletters. Now, the most common vehicles are spam emails or text messages.

These fraudsters would, of course, not be expected to simply “dump their shares” but they would also likely build a massive “short” position to enable further profit from the wholly-predictable crash that inevitably follows such an operation.

Here’s my question: What do you call an operation where high-level financiers and government overseers maliciously “lock-on” to an entire country and orchestrate a similar strategy as the classic “pump-and-dump” described above, through a carefully controlled and coordinated manipulation of government policy, data, and information, the mass-media, tax laws, central-bank debt creation, free-market destruction and privatization (monopolization) driving the systematic dismantling, unbundling, and liquidation of the nation’s productive asset base – extending the “pump-up” phase of the operation through 7 presidential terms?

Isn’t this PRECISELY what’s been done to our country in the 1982 – 2007 period?

Now that you’re busy chewing on that one, what if the same operation were exponentially increased in scale to include most if not all of the world economy?

By their acts we shall know them.

Think about it and leave your comments. I’d be interested in learning how you feel – as would many others.

The Alan Greenspan Legacy: A Global Financial Mushroom Cloud

greenspanHere’s a “big picture” article that may even be able to grab the attention of the countless Polyannas and ostriches of the world.

Almost unbelievably, many of these types still seem to think that what we’re witnessing in the global economy somehow falls short of the scale of damage wrought by the Great Depression that began in the U.S. in 1929 – with a lasting impact on all of the 1930’s and most of the 1940’s.

This article does a great job of sorting out some critical facts that are observable, thus far, and I highly recommend it.

We Need Shock and Awe Policies to Halt Depression

It’s no wonder that the Kondratieff Winter phase of the long-term cycle – which we’re well into now – is often where major wars and even world wars occur. There are several serious antagonisms and a few potential triggers mentioned in the article above. New antagonisms and escalations will surely occur as we move forward.

Stoked by economic self-interest and survivalist measures, nationalism and protectionism run rampant and tempers grow short. Countries with “ambitions” and “means” feel empowered to pursue opportunities that may present themselves only as rivals are weakened by circumstance and disarray.

If history repeats, we’ll see that the initial economic collapse is merely the spark that ignites a whole warehouse full of colorful fireworks. Kondratieff Winter is a time to expect the unexpected.

Stereophonics Dakota – Great Live Version!

The Stereophonics have some great music and some not-so-great music. The studio version of this song falls in the “great” category but this live version has a very special edginess to it. Song starts just past the quick interview.

Enjoy!

Credit Default Swaps: How Fleas Kill A Dog

I‘ve been on the lookout for an article with a concise description of the ongoing saga of the Credit Default Swaps (CDS) markets to pass along to readers and I have found a nice, simple one on the Guardian UK website. This article is written at a level any newbie can understand yet provides current news any veteran would appreciate. As a bonus, it conveys, once again, the scale of the debt bubble the world economy is trying to swallow which is now widely recognized as massive.

What’s particularly interesting to me about this short article is that it highlights a problem I liken to “fleas killing a dog”. Once a pregnant flea moves in and begins to reproduce, her offspring will, in time, overpower the immune system of the dog and will eventually kill him. The analogy couldn’t be closer to what’s being done now to the world financial system (the infested dog) by the opportunistic hedge funds (prolific and potentially lethal blood-sucking parasites).

One major flaw in my analogy a bright analyst might immediately recognize is that, IN THIS STRANGE CASE, EACH FLEA STARTS OUT EXACTLY THE SAME SIZE AS THE DOG! AND, EACH DOG HAS POTENTIALLY HUNDREDS OR EVEN THOUSANDS OF FLEAS! Obviously, the poor thing doesn’t stand a chance.

flea

Here’s an important excerpt from the original Guardian article:

“Banks in Europe and the US face a new wave of losses linked to contracts issued to insure against companies going bust and defaulting on their loans, City analysts have warned.

After the billions lost over the US sub-prime market and leveraged loans, investment banks such as Morgan Stanley, Deutsche Bank, Barclays, UBS and RBS face losses on credit default swaps (CDS) – contracts that allow an investor to be repaid if a company loan or a bond defaults.

CDS contracts became a favourite tool of speculators, mostly hedge funds, which bought the contracts without having any link to the original lending. They bought the contract to trade or in the expectation the company would in fact default, meaning they could claim back the full value of a loan they never made.

The CDS market exploded to be worth as much as $50tn, many times the size of the underlying assets. Each loan could have thousands of protection contracts, even if there were only a few lenders. Hedge funds accounted for about 60% of CDS trading, according to ratings agency Fitch.”

The entire article can be found here:

Banks Face New Wave of Losses on CDS Contracts, Analysts Warn

Notice the interesting problem we’re facing due to CDS’s. Hedge funds (rich “accredited” investors), as primary purchasers of CDS’s, have been able to convince the institutions – major commercial and investment banks – who should be the stewards, protectors, and guardians of the world’s capital that’s entrusted to them to “insure” the hedge funds against defaults on third-party debts that are not even owed to them with money these banks never even had.

The scale of this potential $50 trillion problem? Well, let’s put it in these terms. I recently heard that the total capital base of all the major U.S. banks had been in the range of $1.4 to $1.6 trillion, at least until the recent debacle struck.

Put another way, the OPEC nations brought in total net oil revenues of $671 billion in 2007. In 2008, they brought in closer to $1 trillion due to record-breaking oil prices during the first half of the year. This is big money but it looks embarrassingly puny when laid toe-to-toe with the $50 trillion of “insurance” that’s been sold on debts “covered” by CDS’s. And, bear in mind, CDS’s are just one aspect of the overall derivatives problem.

A December 2008 “Flow of Funds Report” from the Federal Reserve Board showed the total value of all owner-occupied U.S. residential real estate (including homes, non-rented 2nd homes, trailers, and vacant land) at $19.1 trillion. That same report showed total financial wealth in the U.S. at $45.3 trillion and total wealth at $71.1 trillion. A $50 trillion problem is a world-class problem.

By any measure, you can see that the $50 trillion “ransom” that can potentially be demanded by the hedge funds as a claim against a rotten wager agreed to by the leverage-crazed bankers – with money we entrusted to them – will cost “the system” dearly and, of course, the system is US. These claims should all be immediately nullified by world courts to relieve if not save the global financial system. But this isn’t being done!

Now, in case you’ve forgotten, let me remind you what a CDS is really like through a little story. Imagine that you own a home with a $200K mortgage on it that’s owed to Main Street Bank in your town. Now imagine that your neighbor down the street whom you’ve never met approaches a different bank – 1st CDS Bank – and tells them that he wishes to buy “insurance” against a possible default on your mortgage (insuring the whole amount you owe, though not a penny is owed to him) and, as consideration for this contract of pure speculation, he agrees to pay the 1st CDS Bank an annual “fee” or premium for this service. The banker at 1st CDS Bank looks around him, notices no one’s looking – and is confident he could “hide” the deal even if someone were looking – and says “Sure, why not? We’ve got a deal!” They shake hands and draw up the paperwork.

While times are good, your credit appears sound, and your payment history is respectable, 1st CDS Bank sees little risk, loves the agreement and rapidly expands their new-found “profit-center” operation, generously offering similar CDS contracts to several dozen of your sport-loving neighbors – who all eagerly jump on board.

Naturally, word quickly spreads about this spirited new source of instant bank-profits and soon other banks are joining in on the boisterous action, too. Before long hundreds, then thousands of people around your town, your state, and even across the nation OWN CONTRACTS ON THE POSSIBLE DEFAULT OF YOUR MORTGAGE – JUST ONE SINGLE MORTGAGE. Agreements totaling millions upon millions of real dollars must be paid out to the gamblers by the banks immediately upon the simple default of your lonely little $200k mortgage.

Sound impossible? Welcome to the world of the credit default swap.

Now, with all these people standing to gain from your incapacity or bankruptcy, I’d hate to even imagine the shady if not downright dirty and dangerous dealings it could spawn. You’d be living as a marked man with thousands of “contract holders” hoping you’d lose your job, become disabled, or worse. You’d have few friends but a lot of nosy “observers” and strange dark cars parking near your house day and night. Surely, they couldn’t all be well-intentioned and watching out for your best interests!

Now imagine your mortgage in the story above is actually the debt of a major corporation and your home is the corporation, like say, General Motors or Chrysler or maybe even a huge insurance company like AIG.

In the corporate world where trillions of dollars are at stake, my imagination literally springs to life with all the kinds of things that could be conjured up to opaquely engineer a massive corporate default, as I’m sure yours does, too. Just the thought is chilling. Such a financial demolition plan could begin with the careful over-leveraging of the company’s balance sheet and a market-popping buy-back of too much stock at too high a price, a few poor-performing product lines, a costly yet ineffective marketing campaign, a few well-placed rumors of internal weakness, all topped off with steadily increasing naked short-selling by “a few hedge fund buddies” – and the whole thing could snowball from there. Heck, some of the executives inside the company might even help out if they’re paid enough!

Think about it, what’s to stop or even detect this kind of vicious and insidious activity? Who’s to say it wasn’t done or isn’t being done in some of these companies? Surely, fiduciary duty doesn’t count for anything these days as we can plainly see.

That the courts would allow these simple paper contracts to exist solely to benefit gamblers let alone jeopardize much of the socioeconomic progress of the last 50+ years is beyond me. Where is the logic? Where is the reason? Where is the sanity? Historically dangerous contracts be damned! Why isn’t this proposal or some version of it front and center on the desk of every government official in the world?

Perhaps it’s time it got there. Perhaps it’s time we rid our beloved old dog of the fleas that are killing him. These fleas are a lethally large and thirsty new variety and we can clearly see that they won’t stop at dogs – or third world economies. Their sights are set on you and me. And they’re beginning to feed.