"We are seeing .. the collapse of the modern day banking system"

[autorank]

We've got a banking meltdown and few are ready to admit it.

The subprime market was much larger than estimated. How do we know?

-- The losses for major banks are listed below, $232 Billion dollars
-- Mortgage backed securities are selling and are worth NOTHING
-- The nation's top bond trader and authority says the banking system is collapsing.

Mission accomplished for The Money Party

" we are seeing .. the collapse of the modern day banking system"

Top Bond Trader Bill Gross

By Mike Whitney
Information Clearinghouse Apr 6, 2008

"In a recent interview with the New York Times, former Secretary of the Treasury Paul O' Neill, was asked how the problems with subprime mortgages could lead to a financial crisis of global proportions. O' Neill said,

"If you have 10 bottles of water, and one bottle has poison in it, and you don't know which one, you probably won’t drink out of any of the 10 bottles; that’s basically what we’ve got here."

"Bulls-eye. O' Neill's answer is the best yet for explaining a complex situation in simple terms. The term “subprime” is a red herring; it is used by the media to minimize what is really going on. The meltdown in financing extends across the entire range of mortgage-security products. No loan-type has been spared. The wholesale market for anything connected to mortgages is frozen and the details are being intentionally withheld from the public.

"Two years ago, more than 65 percent of all mortgages were converted into securities and sold off to Wall Street. No more. That scam unraveled in July when two Bear Stearns hedge funds blew up and there were no takers for billions of dollars of mortgage-backed junk. Since then, bankers and hedge fund managers have been scrambling to conceal the facts about what mortgage-backed securities (MBS) are really worth; nothing.

"The fear is that when the public finds out what is really going on, they'll draw the logical conclusion that the banking system is bankrupt, which it probably is. Just look at these eye-popping losses which appeared in Bloomberg News on April 1 The financial ship is listing, and the mainstream media is doing its best to keep the public in the dark.

Bank Losses Total $231 Billion – Subprime Loan Fiasco
Bloomberg
"All numbers are in billions of U.S. dollars, converted at today's exchange rate if reported
in another currency. They are net of financial hedges the firms used to mitigate losses."


"Leading bond authority and bond trader, Pimco's Bill Gross said, "What we are seeing is the collapse of the modern day banking system". American-style capitalism is in crisis-mode and the outcome is far from certain. The Fed's interventions show that the long held belief that markets are self-correcting has vanished. Laissez-faire is out; regulation is in."

[NightWatcher]

1. and my grandfather was 'crazy' because he buried his money in the yard

smartest man I ever knew

[autorank]

3. Keep the map;)

They don't want to admit the truth: if Bear Sterns going down can imperil the entire banking
system, then it's not a Bear Sterns problem - it's systemic and it's huge.

Hello to grandpa!

[FogerRox]

4. Oh yeah its systemic. KnR, I'm more scared about the economy then this shit about attacking Iran

The Admiral floats his new toy boat.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x3116674

[autorank]

22. Ahoy!

That's great stuff at the link. Thanks for the KR.

Batten down the hatches.

[whopis01]

44. Hopefully it was gold and not just paper bills.

Burying dollars in the yard doesn't protect you from much when the dollar devalues.

[mikelewis]

57. The problem isn't that we don't have any money... it's that the money we have is worthless.

Think Mexico in the 80's, when a U.S. dollar was worth 2400 pesos... think massive out of control inflation and crushing economic depression. The money you bury wouldn't be worth anything by the time you dug it up. When coffee is $94 a cup and gas is $228 a gallon, you can't bankroll enough to meet the collapsing value of your money... we're busted.

[AX10]

2. K & R!

[ColbertWatcher]

5. The GOP will use this to their benefit.

I don't know how, but I don't trust them to do what's best for the majority of Americans.

BTW, I've been reading Naomi Klein's http://search.barnesandnoble.com/Shock-Doctrine/Naomi-Klein/e/9780805079838/?itm=1">Shock Doctrine

[autorank]

13. I'm watching Colbert too, Klein...

...I admire her, just can't put myself through that. She's a very brave person.

The Money Party is already using this. Times of war and financial crisis are times of great wealth
transfer. Guess who is getting it, them, the top percentile of the top 1%, the uber rich.

They don't need more money, they need us to have less, it's a power equation. Maybe they think
we're pissed off or something. I'm not angry, most people I know aren't angry, but just about
everybody has seen the charade, the mechanical fist inside the velvet glove. Taking or threatening
to take someone's home will do that.

There needs to be a parallel economy and governance system developed. The people in charge are
turning this into a nation were there is literally no law for anyone, except the law that protects
the G-8 conferences, presidential visits, or other Money Party ceremonies where the riff raff - the
99.99% of citizens - who dare to exercise their right of free speech.

Turning off the TV, having a no shopping week every month, moving from money center to local banks...
thats the type of thing that would get some attention.

:toast: to Klein

[Kablooie]

34. The fallout will be blamed on the next, (Democratic) president.

because it's during his term that the effects will really hit us.

[ColbertWatcher]

37. Most definitely. n/t

[bdamomma]

39. as much as I hate the idea, but maybe a repig should inherit all this mess.

since they created it.

[SammyWinstonJack]

41. That's what a lot of people here were saying in '04 and IT GOT A LOT WORSE

:argh: We won't survive if we survive at all, another 4+years of repuglican rule.

[bdamomma]

43. yea, the country and us have to much to loose, we are loosing it now

and I feel this way about McCain, :puke: plus I would never ever vote for a repig.

[unblock]

6. a tad on the hyperbolic side. mbs securities are hardly worth "nothing"

even if EVERY homeowner were to default, there would still be recoveries from foreclosures, so the securities are worth SOMEthing.

in fact, the current pricing is already so ridiculously low that those with the liquidity to hold them for the long-term are making good money by doing so -- which is part of the market paralysis, of course.

if i had money to invest, i'd be buying up mbs securities like crazy. it's like a fire sale out there.

[Extend a Hand]

14. It think it depends on what kind of mbs

the way they were divided up, from what I've read, holders of the high-risk/high-yeild tranches of a pool will likely loose everything since they suffer the first losses when default rates go up.

[unblock]

21. cmo's can be carved up into 50-100 tranches

and yes, a few of them can be worthless, though this is balanced by others being worth a fortune even as the collateral declines in value. it all depends on the actual details.

but, this is a bit like pointing out that out-of-the-month puts expire worthless on a soaring stock. sure, some derivatives are worthless, but that, in and of itself, doesn't mean anything's wrong.

[Zynx]

29. I'm glad someone here knows what they're talking about.

That's refreshing. :-)

[unblock]

50. in my case, it depends on the topic...

this particular one happens to be my job, so....

[Warpy]

7. That's just the beginning, too

because once they start looking at what the derivatives market is really all about, it will get worse.

In the short term, expect monthly minimum payments and annual interest rates on those credit cards to shoot up. Expect the current credit drought in mortgages to continue as bankers become more desperate to shore up the assets side of their ledgers. Expect seed money for new industries to dry up since nobody wants to take a chance right now. Expect to see the dollar to continue to fall until Stupid is out of office and his tax cuts to billionaires are all repealed and his wars of corporate convenience ended.

Expect to see banks and brokerages bailed out or bought out.

[autorank]

15. Thanks. That's good to add. Can you explain this?

The $516 Trillion in over the counter derivatives is matched, I was told (can't find source) with about
$400 Trillion in private derivative deals. That's $1,000 Trillion.

he $516 Trillion is from the International Bank of Settlements for 2007 and is, as I read it, "face value." http://www.bis.org/press/p071219.htm

What's all this about? Is the money just vapor?

[ljm2002]

38. "Is the money just vapor?"

In a word, yes.

In fact it has been, since we went off any gold or silver standard, and then added to it, since financial regulations were gutted.

Right now, the value of the vaporous "money" winging its way around the ether in the form of bits and bytes, is several times the real monetary value of the actual stuff that we and others produce. In other words, it has no connection to, you know, reality.

Definitely a recipe for disaster.

[MindMatter]

8. These guys created that money out of thin air

People don't understand that in our financial system -- in the worldwide financial system - "money" is a fictional thing. The little guy is taught to believe in fairy tales that the money supply is some kind of fixed thing that ultimately represents value. Nothing coule be further from the truth. Money only represents the amount of trust we have that somebody else will give us a good or service for that money instrument.

People also believe that the government has some control over the creation of money. Again, that is almost entirely false. Our government only has control over the printing of currency and minting of coins, and that is a tiny fraction of the money in teh eceonmy. The rest of is it under the control of the Federal Reserve system, which is not a government agency, not even a quasi-government institution. It is a completely private cartel of bankers, whose only accountability to the people is the requirement to have one of its favorite sons ratified from time to time to be the public spokesperson for this super-powerful organization.

Those banks created most of that "lost" money out of thin air. While that $231B may represent an accounting loss on their books, they will just turn around and create more money after this settles out. In the end, the banks never lose, because they can pass the bill to the American taxpayers, as was done with $29B in the case of Bear Stearns. Basically the game is that they can keep all the profits they churn out during an expanding economy. During a contracting economy, they can pass all the losses to the taxpayers. Sweet deal.

[autorank]

17. Thanks.

Wonder if these people can create some money?
Rural, farm communities hit hard by foreclosures

The companion to fictional money is the exquisite control the leaders exercise in behalf of
the owners. We have hear NO economic populism, none, from any national leader. Sweet add on deal.

[followthemoney]

20. The seignoral class would be just like us without their magic money.

They would be broke.

The financial aristocracy must be reinstated with a bailout from the Fed.

Abracadabra, make more money Fed man.

What would the little people do without royalty to be in awe of?

[JohnyCanuck]

52. It's explained in the video "Money As Debt"

Watch it at Google video here: http://video.google.com/videoplay?docid=5352106773770802849

Get it on DVD here: www.moneyasdebt.net

Quote from the Money As Debt Producer, Paul Grignon:

Money created as interest-bearing bank credit is a magic trick, a fraud - now 3 centuries old; one that very few people have seen through despite, or rather because of, its utter simplicity.

It is my intention to make this mysterious debt-money system comprehensible to everyone. It is also my intention to foster sufficient understanding of the problems with this money system that citizens will be motivated to join the monetary reform movement and/or create local alternatives to the global monetary system - a system in which most of the productive people of the world are collectively chained to an ever-increasing and perpetually unpayable debt.

This is a system designed for elite control of the people by those who have given themselves the privilege of creating money. It is also, I believe, a system that is designed for catastrophe. As the movie explains, there can be no sustainable civilization without a sustainable money system.

http://paulgrignon.netfirms.com/MoneyasDebt/ProducersComments.html

[MindMatter]

53. It is the ultimate case of hiding the secret in plain sight

Just as the Nazis knew, people will never question the obvious because they can't believe the answer can be that simple.

It is that simple. These guys simply make "money" out of thin air, and nobody ever questions it. We just huddle around when it is time for one of their proclamations to see if maybe they will reduce our interest rates, or maybe give us just a little more credit.

[BlooInBloo]

9. On the lighter side of all of this the-sky-is-falling-ism....

http://thinkprogress.org/2008/04/06/mortgage-bankers-association-finding-it-harder-to-pay-its-own-mortgage/

[autorank]

18. :)

Amazing. I visited their old offices way back in the previous century;), right across from the
PentaPost HQ in DC. It was a reasonable space, well located.

Not at all smart. Geez...

[PerfectSage]

10. I remember reading a book about the causes of the depression.

So I'm not surprised at all.

I saw a chart online last summer that showed total debt(personal+corporate+government) to gdp ratio was higher than in 1929.(over 200% vs over 300% now) The historical norm over the last 100 years is 120%-140%. It's been climbing from that normal range since 1987. I knew something ugly was starting last summer when the bear streans hedge funds were blowing up.

I starting reading this guy's blog last fall.
http://www.wilmott.com/blogs/satyajitdas/index.cfm/Bank-Management

[leftofthedial]

11. the fucking repukes let them "regulate" themselves

and, like a crowd of drunken frat boys on spring break with daddy's credit card, ran through all their money.

it's who repukes are. It's what they do.

[lonestarnot]

12. Welp. I'll bet the people who already know how to do without fair much

better than the richies who don't have a clue how to live on nothing.

[shifting_sands]

16. problems

One thing for sure, these wanna be Masters of the Universe cannot fix the problem, they are the problem.

[autorank]

19. The rich are eathing themselves

They created this out of rapacious greed ...

One sign of decadence in a society is the reliance on financing schemes rather than creativity
and production of products and services to generate wealth. Theres no reason for us to keep on
that path.

More engineers!

[HCE SuiGeneris]

23. We are royally screwed by KIng Greorge and his Court

According to Bloomberg:


"Consumers fell behind on car, credit-card and home-equity loans at the highest level in 15 years, another sign the U.S. economy is slowing, according to the American Bankers Association's quarterly survey. Payments at least 30 days past due increased across all eight categories of loans tracked during the fourth quarter, the Washington-based group said today in a statement. Late loans in the quarter climbed 21 basis points to 2.65 percent of all accounts in a consumer-loan index created by the group.


The American consumer is tapped-out. What he needs is a raise, not another loan. Bush's $500 per person Stimulus Package will do nothing to reverse the effects of 30 years of anti-labor legislation and class-oriented monetary policy."


Damn! :scared:

[autorank]

24. Hey there

...but don't we get to go to "the window" and get a bial out too?

If Bear Sterns and investors can get a "loan", why not those in foreclosure?

Makes sense, no?

:hi:

[shifting_sands]

25. no way out

Autorank, doesn't it almost drive you crazy to keep writing about this when you know and can see that there is no way out. What do you think we can do about this? Anything? or do we just keep sliding down this slippery slope they have made for us with their greasy sleazy greed.

[autorank]

28. We have a way out, they don't.

It is very frustrating to see no opposition to this and no solutions offered.

If we get some bright people in charge, there should be a way to transition to a
value based economy rather than the one we've got now. We have the parallel crisis of
saving the species from global warming and the eco-catastrophes that are headed our way.
Now that's value based economic activity.

I don't have the solution but these are all high impact activities that would generate valuable
outcomes, extremely valuable; employ people; and serve as a foundation for wider economic growth:

- Switch out of fossil fuels, carbon, etc. or clean them 100%
- Clean up ecosystem to preserve water and other resources
- Educate people properly with basic skills including those the system has failed
- Make college/universities free for all
- Intense programs to promote innovation in business and beau coup entrepreneurs
- Open the internet entirely and treat it like a the old "common carriers" - allow all to use it
with out restriction
- Dump the 1100 bases overseas
- Re-regulate banks and other financial entities that create risks
--------------------------
All this can happen if we can get this:
--------------------------
- 100% citizen control of elections
- 0% outside contributions to campaigns (all public funding

Even with all the lies, the public has been right on just about everything when they get a little
information.

How do we get that? Keep educating, talking, pushing, raising uncomfortable questions... your's is a
great one. I'm looking at alternatives to the current mess. It's difficult to evaluate since whet
ever tskaes the place of the kleptocracy will be entirely new - even if it's just the same system
absent the graft.

I'm optimistic that there are solutions if we just look beyond our limited perspective and demand
performance out of our public "servants."

[FogerRox]

49. The economy will need shock therapy in 2009

1) Immediately raise the minimum wage to 12.00.
2) Raise the top marginal rates back to 70%-90% like they were.


Major jobs programs to build infrastructure, like solar and wind power, public transportation.

State universities need to offer free 2 yrs college to state residents, education & labor rights need to be restored

By creating more and better paying jobs, folks will have money to spend, maybe on their mortgages...?
By returning to a truly progressive tax system, we engage the working and middle classes in the economy, instead of taxing them out of the economy.



This chart should speak for itself.

[HCE SuiGeneris]

26. The bank can have my home. I'm converting everything to liquid

assets. Canada? Costa Rica? I hear New Zealand is nice... ;-) :hi:

[HCE SuiGeneris]

27. The rest of that article and the comments are fascinating as well!

Hmm, fascinating may not be the best descriptor there...

[burrowowl]

30. From the Raygun up to and including the Clinton Administration

The laws enacted under FDR to prevent a repeat of the Depression were abrogated, made null and void.

[autorank]

33. Yep

http://tinyurl.com/ypu62v

[gulfcoastliberal]

31. So the "lame duck" *co admin will address the deregulation crisis by further deregulation?

And our fearless leaders are STILL asleep at the switch, eh? Keeping the powder dry? WTF?!

[autorank]

32. WTF is right. Check this great article out. They did what you said!

The war against the new deal has just won an astounding victory.
http://tinyurl.com/ypu62v Numerian @ The Agonist

[Kablooie]

35. The markets ARE self correcting. That's exactly what's happening.

Just like a famine is a self correcting feature of an overabundant population.
Only the strongest will survive, everyone else will die out. (some literally, I'm sure)

[autorank]

55. Phillips Curve

I was struggling to stay awake in my college econ class when the professor spoke of the
"Phillips Curve," (Wikipedia) "the lower the unemployment in an economy, the higher
the rate of change in wages paid to labor in that economy, in data from a number of countries
and historical periods." He went on to extol some ideal point where higher wages meant inflation.

I asked, "Does that mean unemployment at 4-5% is a good thing."

"Isn't that obvious" he responded, looking at me like I was a philistine (which I thought was
presumptuous since he didn't even know me).

"Not if your unemployed" I responded. End of story.

What a dummass system - planned suffering.

:sarcasm:
But "lets let the markets take care of it."

Such little imagination.

You are right, it's happening and there's logic to it but at what a cost, as you so well stated.

[stellanoir]

36. A house of cards is not terribly secure really.

[autorank]

56. So true

:hi:

[Me.]

40. Modern ?

Not sure about that, it's practically the same as it's always been and so last century. Could be a needed correction on the way things have always been done. There will be those who try to restructure the old, but perhaps what will eventually come is something which is actually modern.

[conspirator]

42. I have been telling you the MONETARY SYSTEM IS AND WAS ALWAYS A SCAM nt

[defendandprotect]

48. We should uninvent the dollar bill ---

It's very invention is a scam ---

and a way to use a dollar bill to create power to be used in other areas ---

[lonestarnot]

45. And how many airlines in a week? 3 or 4?

[Kurovski]

46. K&R. (nt)

[defendandprotect]

47. Good thing the FED was protecting us from all this, eh---?????

And years of Republicans undoing New Deal regulations --- !!!

Hold them accountable --- ??? How???

Somebody is walking away with this money . . .

Capitalism :: A ridiculous King-of-the-Hill-System

****************************************************

[Karenina]

58. . .

[cyberpj]

51. Anyone else think this was done on purpose to encourage THE AMERO ?

When all of this falls down, then Americans will be happy to latch onto the North American Union concept and a new currency called THE AMERO - especially based on the success of THE EURO.

I just don't believe W and Company are as dumb as we like to think. The never ending spending on the war, all of the tax cuts for the wealthy, the loose lending practices and our country's amazing debt, they had to know what it would all come to. And I really think it has something to do with smoothing the way to the North American Union.

Thoughts?

[wildbilln864]

54. The late Aaron Russo...

tried to warn us with his documentary. :patriot:

[cyberpj]

59. I've seen that documentary, it's truly astounding but not unbelievable. What I can't understand

is that there isn't a single law firm or lawyer who would take this on.

Do present members of congress even understand it? I'll bet not.

Thanks for posting it here - reminds me to spread it around again.

[wildbilln864]

60. I can't understand it either....

Kucinich and Paul understand it. not sure about others.