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Banks Are Evil

It's time to get painfully honest about this
Friday, March 17, 2017, 8:05 PM

I don't talk to my classmates from business school anymore, many of whom went to work in the financial industry.

Why?

Because, through the lens we use here at PeakProsperity.com to look at the world, I've increasingly come to see the financial industry -- with the big banks at its core -- as the root cause of injustice in today's society. I can no longer separate any personal affections I might have for my fellow alumni from the evil that their companies perpetrate.

And I'm choosing that word deliberately: Evil.

In my opinion, it's long past time we be brutally honest about the banks. Their influence and reach has metastasized to the point where we now live under a captive system. From our retirement accounts, to our homes, to the laws we live under -- the banks control it all. And they run the system for their benefit, not ours.

While the banks spent much of the past century consolidating their power, the repeal of the Glass-Steagall Act in 1999 emboldened them to accelerate their efforts. Since then, the key trends in the financial industry have been to dismantle regulation and defang those responsible for enforcing it, to manipulate market prices (an ambition tremendously helped by the rise of high-frequency trading algorithms), and to push downside risk onto "muppets" and taxpayers.

Oh, and of course, this hasn't hurt either: having the ability to print up trillions in thin-air money and then get first-at-the-trough access to it. Don't forget, the Federal Reserve is made up of and run by -- drum roll, please -- the banks.

How much 'thin air' money are we talking about? The Fed and the rest of the world's central banking cartel has printed over $12 Trillion since the Great Recession. Between the ECB and the DOJ, nearly $200 Billion of additional liquidity has been -- and continues to be -- injected into world markets each month(!) since the beginning of 2016:

CHART: central banks balance sheet expansion since 2008

With their first-in-line access to this money tsunami, as well as their stranglehold on the financial system that it all runs through, the banks are like a parasite feasting from a gusher on the mother-lode artery.

It should come as little surprise that, with all this advantage they've amassed, the banks have enriched themselves and their cronies spectacularly. They have made themselves too big to fail, and too big to jail. Remember that their reckless greed caused the 2008 financial crisis, and yet, in 2009, not only did bankers avoid criminal prosecutions, not only did the banks receive hundreds of billions in government bailouts, but they paid themselves record bonuses?

And the bonanza continues unabated today. By being able to borrow capital for essentially free today from the Fed, the banks simply lever that money up and buy Treasurys. Voila! Risk-free profits. That giveaway has been going on for years.

Couple that with the banks' ability to push market prices around using their wide arsenal of unfair tactics -- frontrunning, HFT spoofing and quote stuffing, stop-running, insider knowledge, collusion, etc -- the list is long. James Howard Kunstler is dead on: we don't have a free market anymore. Instead, we have rackets, run by racketeers. The rest of us are simply suckers to be fleeced.

Nobel Prize-winning economist Angus Deaton recently agreed:

Income inequality is not killing capitalism in the United States, but rent-seekers like the banking and the health-care sectors just might, said Nobel-winning economist Angus Deaton on Monday.

If an entrepreneur invents something on the order of another Facebook, Deaton said he has no problem with that person becoming wealthy.

“What is not OK is for rent-seekers to get rich,” Deaton said in a luncheon speech to the National Association for Business Economics.

Rent seekers lobby and persuade governments to give them special favors.

Bankers during the financial crisis, and much of the health-care system, are two prime examples, Deaton said.

Rent-seeking not only does not generate new product, it actually slows down economic growth, Deaton said.

“All that talent is devoted to stealing things, instead of making things,” he said.

(Source)

As further proof, let's look at this data recently obtained by Zero Hedge. In the past 4 years, JP Morgan's in-house trading group has had exactly 2 days of losses:

CHART: JP Morgan's trading losses

That's not trading. Trading involves uncertainty and risk. This situation has none. It's an extraction process -- siphoning value from the market day after day with ironclad dependability.

And it's not just a few dollars here and there. In 2016, JP Morgan's daily average trading revenues were $80 million. Per day! That's nearly $20 billion for the year.

So if not "trading", what should we call it when a bank can extract tens of billions of dollars a year from the markets, with no downside risk? "Sanctioned theft" sounds about right.

Because for every trade there is a buyer and a seller. If JP Morgan is the winner every day, who is losing? Turns out, it's the big pools of "dumb money" that don't have the cheat codes for the system the way the banks do. These are the pension funds, the index funds, the retirement accounts -- the aggregated money of all the 'little people' out there. Little people who don't have visibility into how they're being constantly fleeced; nor do they have agency to do anything about it even if they did.

So yeah, "theft" feels like a pretty accurate term.

And it has reached the point where the banks don't even care about hiding it anymore. If you had a nice inside racket going on, wouldn't you at least pretend to hide your advantage, to avoid drawing attention? Not the banks. They're either too proud or too obtuse to conceal it. Look at our string of perfect trading days! Look at our record bonuses!

These boasts fall on the ears of everyday Americans as the modern version of Let them eat cake!

And just like the out-of-touch French monarchs, the banks have positioned themselves as the enemy of the public. For as I claimed at the beginning of this article, a tremendous amount of the injustice in this country can be laid at the feet of the banks directly, or indirectly via the Federal Reserve.

Are you a senior who can't afford to retire because you can't live off your fixed-income savings? Thank the Fed's 0% interest rates for that.

Are you a millennial who can't afford to buy a home? Again, thank the Fed's policy of suppressing interest rates and thereby blowing another housing bubble.

Are you struggling to get out of poverty? Are you finding it hard to remain in the middle class? Whatever your income, are you having to work harder and harder to just stay in the same place? See here how the Fed's money printing, and the banks' first-position access to it, has created the most concentrated imbalance of wealth in our country's history:

Are you frustrated with how our lawmakers seem to serve corporations instead of the people? Listen to this mind-blowing podcast of how gobs of lobbyist money, much of it provided by Wall Street, dictates how our politicians legislate: 

This American Life

(Click here to launch podcast)

Whether it's social equity, the security of your job or retirement, your day-to-day existence, or the fairness of the laws we live under -- our fate is currently in the hands of the banks. And, of course, should their behavior trigger another meltdown of the global economy -- something we warn about often here at PeakProsperity.com -- we'll have them to thank for that, too.

Yes, the banks are going to keep writing the rules in their favor; and yes, there's little agency any of us has individually to do much about it. But as a society, we need to start addressing the dire situation we're in honestly and openly. By whatever path, we have granted the banks far too much control over our lives, and they are taking gross advantage of that. Exactly like a parasite, the banking system is siphoning off our wealth and limiting our freedoms and future prospects -- all for the benefit of an elite few. 

That's wrong. It's immoral. And it's Evil.

It's far beyond time to call a spade and spade. The path to change always begins with an accurate assessment of the problem. We need to start using accurate language  -- like "evil" -- when discussing the harm we're being subjected to. We need to make it clear to our elected officials and to our communities that we understand what the banks are doing and that we find it unacceptable. 

We need to make the criticism specific and personal. To JP Morgan CEO Jamie Dimon. To Fed Chair Janet Yellen. We need to turn up the heat on the perpetrating decision-makers, so that the borg-like structure of the banking system no longer serves as a deflective shield to scrutiny and criticism. These people need to feel the disapproving stares when speaking to the public. They need to hear the disdainful boos, and see their faces on the protest signs and nightly media reports.

And if you yourself work in the financial system, I'll be blunt. You're part of the problem. Just like my former classmates, I'm sure you're a very nice person in many ways -- but you're complicit in the banks' rapaciousness.

I know it's not pleasant to hear, or admit. I worked for an investment bank for a few years early on in my career. I was part of the problem, too.

But we have a choice, both as individuals and as a society, to align our actions with our values. It's not always easy. And likely not as profitable if you indeed end up leaving the financial industry (as I can tell you from personal experience). But it's the only way we'll ultimately gain back control of our destiny.

Look, the banks' dominion is going to end one day. Either due to collapsing under the weight of the stupendous amount of debt they've helped laden our economy with, or due to an uprising from the bottom 99% once it has become fully destitute. Neither path is appealing.

So our best choice here as individuals is to position ourselves where we can be least subjected to the game the banks want to force us to play. 

The 3-part series we've just concluded: The Mother Of All Financial Bubbles, The Coming Great Wealth Transfer, and When This All Blows Up offers our best guidance for preserving wealth from the predation of the bankers. If you haven't read them yet, make that your weekend reading assignment.

Finally, as a society, we need to wake up and make some hard, courageous choices. Obviously, the banks will not relinquish their control willingly. But if we start speaking truthfully and openly about the evil we're dealing with, we'll start fearing it less. It's time for us all to speak up.

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43 Comments

Time2help's picture
Time2help
Status: Diamond Member (Offline)
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Who Owns The Federal Reserve?

Who Owns The Federal Reserve? (GlobalResearch.ca)

Quote:
“Some people think that the Federal Reserve Banks are United States Government institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lenders.” – The Honorable Louis McFadden, Chairman of the House Banking and Currency Committee in the 1930s 
paulanders's picture
paulanders
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Even though you've had a

Even though you've had a change of heart, and are now against the banking industry, I'd be willing to bet the money that was once made by you in this industry still sits in your bank account...

Bankers Slave's picture
Bankers Slave
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In agreement.

Adam Taggart's picture
Adam Taggart
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And You'd Lose That Bet

paulanders wrote:

Even though you've had a change of heart, and are now against the banking industry, I'd be willing to bet the money that was once made by you in this industry still sits in your bank account...

Be careful what you assume.

It wasn't so much I had a "change of heart". I never was in love with banking, nor felt proud working in the industry.

When my plans to go to medical school changed during my senior year in college, I needed to find a job quickly and was recruited on campus into an i-bank analyst program. Once I arrived on Wall Street and learned how things operated, I developed a hatred for the banking cartel and used business school as a means of ejecting from it.

Not saying this doesn't absolve me from the culpability of my time spent working for the rapacious system. But I wasn't a cheerleader for it.

Also, back in the mid-1990s when I worked on Wall Street, a fresh-out-of-college analyst like me was low man on the totem pole. Not only did this mean I worked 80-100 hour weeks, but the pay (especially on an hourly basis) was pretty poor.

The money had yet to trickle down much below the Vice President level back in those days. That all changed once the Tech sector offered a path to earning good/great money with much less abuse -- but that revolution happened after my time. When I was there, it was a "There's the door if you want to leave. There's a long line of kids who'd kill to take your place" attitude towards the analysts and associates.

My first-year salary was $30k/year, which even back then left little money for other living expenses after you paid your Manhattan rent.

The money I was able to save paid less than half my loans for grad school.

Again, I'm not expecting any sympathy for my experience there nor think I deserve any. I'm just setting the record straight: I never drank the Kool-Aid, nor got rich from my time there.

Paul_VT's picture
Paul_VT
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banks, lending, morality, and early religious practices

Your intentionally specific use of the word "evil" reminded me of this recent post on naked capitalism - I found it one of the most fascinating reads that I've chanced upon over the past few years:

http://www.nakedcapitalism.com/2017/02/michael-hudson-why-failing-to-solve-personal-debt-and-polarization-will-usher-in-a-new-dark-age.html

A very loose and imprecise summary is that the privatization of lending (the practice of entities holding debts as an asset) goes against the oldest foundational teachings of the world's major religions.  Christianity was not able to get any traction on its ascent into a major religion until it abandoned this position (which included favoring debt jubilees as moral imperatives) and in its place emphasized charity.

andeee's picture
andeee
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Misdirected energy?

I would suggest the bankers are not the problem. Bankers will do whatever the politicians and the judicial system allows them to. In fact it is their fiduciary duty to maximize profits. My beef is with the corrupt people on our payroll that are supposed to protect us from these predators. Why are they not in jail?

Adam Taggart's picture
Adam Taggart
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Because Of Money In Politics

Why are the predators protected by our politicians? Because of money in politics. Money supplied by -- you guessed it -- the banks.

I used the word "captive system" very intentionally in the article above. The banks support the candidates they want elected, who then write bank-friendly legislation (or water down bank-unfriendly regulation) once in office.

You should listen to the podcast I highlighted above. It's nauseatingly shocking how much time our elected officials dedicate to pandering for money as part of their daily schedules.

This is the world the banks have created. So that's where I lay the blame.

Time2help's picture
Time2help
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Not misdirected at all

VeganDB12's picture
VeganDB12
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analogy to medical industry

Adam

I admire you for putting yourself out there like you have.  Those of us who profit from the medical corpratocracy or have in the past have been at a similar crossroads.  As Jesse points out in his blog the credibility gap keeps many from telling the truth about the evil that leads to avarice and our possible (unintentioned many times) complicity in it. 

I don't want to derail the discussion but I fully support identifying evil for what it is, pure destruction and malice. And as a favorite PhD I follow states, the major evil affecting the USA is Avarice (greed of the highest order). 

Thank you for article and your candor.

D

gyurash's picture
gyurash
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Hi Adam, I think we are going

Hi Adam, I think we are going to need a stronger response than you propose... "These people need to feel the disapproving stares when speaking to the public. They need to hear the disdainful boos, and see their faces on the protest signs and nightly media reports." The trouble is, it has been pretty well shown that most people who rise to the top of these financial food chains are, at the least, sociopathic. Thus they will not care a wit for disapproving stares, they will ignore disdainful boos, and they will use their ill gotten gains to buy off or silence media reports and put down protests with corrupt law enforcement or self serving laws.

I don't know what the long term solution to this is in the matter of direct action, but in the short term, finding some way to distance ourselves from their economic ecosystem, to not feed their geed with our own, may be a good first step. Go local, reuse, barter. Transition to a different ecosystem. Their's is bound to eventually fail anyway, as it's structure is obviously built with positive feedback loops, which are ultimately self destructive.

smaturin's picture
smaturin
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The Banks

It's incredibly hard to opt out of the banking system. First of all, one would need work that paid in cash. Then, imagine paying one's rent, or taxes, using money orders!  Even then you are paying the money-order corporation for the privilege of paying a bill.  Since the 2008 debacle, people are slowly waking up to this rigged, rip-off system. Banks should be public utilities, not privately owned parasites. The solution is locally owned public banking. But more than that, we need a new ethic with some value to strive for other than profit. 

pgp's picture
pgp
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Its not just the banks ruining America.

It's not just banks. The US parliamentary system which attempts to micromanage everything from the senate is lobbied six ways from Sunday by corporate interests everywhere. The end result is that basic institutions like those that oversee the food industry, defense, the environment and infrastructure etc... are subject to the push and pull of self-interest groups who don't care about the country as a whole. Corruption and polarization under those circumstances is guaranteed especially during hard times.

Democracy fails if the people voted for have their hands tied by the lobby groups funding every candidate's campaign. Relying on corporations like banks to be intrinsically honest is to be ignorantly hopeful. Clearly some constitutional changes are needed to make the legislature work better, however first the arrogance of assuming its perfection needs to be overcome.

cmartenson's picture
cmartenson
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Here's my latest 'rant' on bankers

Part of my weekly update now incudes a "oh hey, you just happened to catch me.." as if the viewer had just somehow walked into a carefully staged filing.

So here it is:

Hotrod's picture
Hotrod
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Banking Fraud

This is Max Keiser and Stacy Herbert on banking fraud.  The second half is an interview with MISH.

A hedge fund buying up it's own assets.  Fraud in broad daylight.

Time2help's picture
Time2help
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Control the debt, control everything

The essence of the banking industry.

sand_puppy's picture
sand_puppy
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Coordination of control

Thanks for an awesome truthiness outburst here, Adam, and a wonderful explanation of the social effects of low interest rates and organized skimming on us human beings.

So, how is this corrupt system maintained?

It look to me like the social control structures form a web: 

  • bankers, (who fund and de-fund)
  • the "elected representatives," (who hire and fire the)
  • government appointed personnel (FDA Chairman, SEC Chairman, judges, etc.),
  • and the media who herd the sheeple and maintain the general ignorance of the masses. 

And it all seems to be coordinated with BIG MONEY.  

A tight knit group owns and operates this control web.  Call them the oligarchy, or the 0.0001% or "the elite."  They are a multinational group who owe allegiance to, and identify with, their social class primarily.  They attend the same universities, social clubs and intermarry. And though they squabble some, they are unwaveringly dedicated to the ascendance of their class and the system that keeps them in control.

Most of my neighbors and friends do not believe that:

  • -money can be printed out of thin air.
  • -that the Federal Reserve is not a part of the government (it is in Washington DC right down the street from the Supreme Court and the Capitol,  has a stately marble building face, honorable looking spokespeople, the chairperson is appointed by the president and is called "Federal").
  • -that the setting of interest rates creates a transfer of money from one part of the population to another.  That income inequality can be created as a mater of policy.  That interest rates and money supply manipulations affect all of society and its social arrangements.
  • -that trading in bonds and stocks can be front-run and manipulated by computer algorithms all with the blessings of the SEC.

I suspect that it is only through ownership of the media that this magnitude of ignorance can be maintained.  That and perpetual limbic-system-triggering distractions.  And that the public still trusts the media. 

The pain is not yet at 11, so we have no reason to deeply ponder the system itself. Yet.

davefairtex's picture
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where we are in the cycle

So just looking at the numbers, banks weren't always evil.  When Glass-Stegall was in operation, banks were much smaller, had much less influence on how government ran things, and took a much smaller skim from the overall economy.  If they were evil, then perhaps they were just impotent.

Glass-Stegall was officially removed in 2000 by Bill Clinton & crew.  Notice the big jump in profitability immediately following that event.

The Democrats of old had it right, I think; keep the players small, and they won't control government, government will control them.  And that's how it should be.

davefairtex's picture
davefairtex
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maybe it is just the debt

As the total debt/GDP rose, so did the profits of the financial companies.

Is one connected to the other?  You tell me.

Glass Stegall, or the debt supercycle?  Or both?

kaimu's picture
kaimu
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ANTI-TRUST

Aloha! Simply put the US Federal Reserve, though a creation of Congress via Federal Reserve Act, has no business having members who are the top banks policing banks. This is the same anti-trust that busted up the oil companies. The Federal Reserve needs to be dismantled.

The banking system, which I mainly mean is the swift/credit card sector, is another Standard Oil. If you really want to inspect this system down to its micro bits then you'd find that JP Morgan Chase controls the EBT system, which is the credit card that replaced food stamps. Every time a poor person swipes their EBT JP Morgan gets paid! The JP Morgan Treasury Dept is one of their fastest growing and most prized possessions. It pays to bribe Congress! JP Morgan makes more fees as more Americans succumb to financial debts. Like the legal profession JP Morgan gets paid whether Trump fails or succeeds! Also add in their ClimateCare division. That is where JP Morgan gets paid by guilt ridden Americans for carbon credits. Bank America also has a carbon credit division. That is how you know Global Warming is a farce. Started by a politician, legalized by politicians and administered by bankers. They laugh all the way to their ... bank ... literally! 

What is a monopoly?

I am pretty sure that the US Federal Reserve meets that definition. A monopoly approved by Congress but designed by and for the monopolistic banking industry. Try not using "major bank services" and see how far you get in this society conducting business or just paying your monthly bills! The US Federal Reserve regulates banking and consumer credit, all bank controlled. There is no accountability in the system! With no accountability you get unchecked corruption at the highest levels. This is the basis of our Kakocracy we are governed by.

Like North Korea setting off a EMP missle the banks have their own EMP they call SWIFT!

There needs to be a complete and total overhaul of the government and banking partnership! One that begins with anti-trust!

Mots's picture
Mots
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Thanks Adam

Adam:
VeganDB12 expressed a sentiment that I and (I am sure) many others feel, an appreciation for what you done and for your position.

I agree with Gyurash that we are past the point of "gee lets frown at the bankers and show our displeasure" passive actions such as writing a letter to the editor or voting or complaining to someone. 

It's over.  Bankers don't care if you protest or frown at them.  Furthermore they control the main stream media, the politicians and the entire apparatus of googlefacebookyahoo etc., which is dedicated to protect the bankers position from an angry populace.  Just look what they (federal police) do to facebook posters who protest too much in that medium, or how they simply altered postings of those supporting Ron Paul by trying to post a positive comment, when he was a threat to the banker's ownership of the political system (or now, using "fake news" as a cover to silence opposition).  It is game over for the political system and it is useless to resist via old mechanisms the the racketeers themselves control.

As Gerald Celente pointed out about a year ago, our situation is analogous to what happened at the commencement of the Dark Ages following the collapse of Rome.  As an alternative to "resistance," good intentioned reason-following thinkers had to drop out of the corrupt (in our case racketeering) society and form enclaves such as monesteries where the spirit of human freedom and culture could be kept alive.  We need to do this.  The PP group itself is very small and of like minded caring rational thinkers, which is a step in the right direction.  As they say in Asia, "a journey of a thousand (miles) begins with one step."  Each little  act such as meeting in Rowe,  growing even a little bit of food, making even some of your own electricity, fixing something yourself when broken instead of throwing out  etc. is a significant victory in this racketeered up world and is cause for celebration.  This PP site and more importantly the members and what they do within the conduit of PP, are invaluable for this reason.  This is the real significance of this blog site. 

I have had a number of conversations on this topic with would-be refugees  from the big city  who  would like to move to my small isolated community.............. and all terminate with the end/show stopper, conclusion that the person is caught in the "need to make money" in the city.  Our main goal should be to gradually, step by step replace the racketeering "need to make money" with resiliency.  We are working on this (our little steps) by providing farm land space, cooperation in preparing land/planting and a place to visit for like minded people  when they have a chance to get away from the racketeered up banker system "need to make money" life.  A big reason why the racketeers continue on is because of their lock on the legal and monetary systems, which are NOT based on reality but instead on confidence games, implemented on keyboards and computer programs.

Because of internet-driven free technology, it is simply a matter of time before an independent resilient community can develop a trading/cottage industry (that reflects the unique attributes of the community) to produce value to the outside (other  communities) and provide the "jobs" needed for an individual to breakaway from the racketeered up bankerized "system."  PP has a nice communities section for initial contacts but I think that each community has its own go-to internet space because the issues are hands-on and most information  needed comes from a wide-deep search from thousands of sites (PP cannot be a "go to" site for every problem in making food: we did not find a solution to infection for our new goat from the deep archives of PP for example, or learn when to plant potatoes  locally).  On the other hand, independent resilient communities striving to develop their own industry DO need things such as dispute resolution, contract validation, validation of monetary value that can be provided at the blog/internet level at a single go to site such as PP. 

I dont see a good site for this kind of problem solving and note that the racketeers in fact rely on their monopolization of law and politics to achieve their ends and an alternative is needed.  Thus, along with a section of food resiliency, energy resiliency etc. we need dispute resolution and contract validation resiliency (such as a smoothly operating virtual currency).  Furthermore, these  last two  elements needed for  peak prosperity  in a resilient community can be easily satisfied  via internet (unlike food and energy production which require physical acts off of  the keyboard).  We need alternative resiliency paths as well that let us operate away from the rigged and corrupt legal system.  This is actually rather easy because the "acts" are mostly done by typing keys.  An example in this direction is Home Owner  Association law wherein the larger corrupt system recognizes local community created law via a deliberated writing. A similar thing can be done with commercial contracts and even intellectual property  wherein a group (and sets  of groups) can establish its own encouragement and protection of inventors and other  doers, outside of the existing corrupted system via a writing, which can be done  over the internet and managed via a website.  

This is my response to the problem of "its useless to resist the racketeers" and we all "need a job" from the  racketeers:  we CAN provide (in little steps  and via a website blog community) resiliency in these important areas as well.  The legal topics for resiliency are crucial  but missing and could add great value to PP.  I realize that the fear of litigation is a major racketeering tool used for control, but we can do a lot about this via website-organized keyboarding. 
 
best regards
Mots

paulanders's picture
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And I stand corrected. I

And I stand corrected. I appreciate your reply!

Uncletommy's picture
Uncletommy
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And do I repeat myself?

“In previous discussions, I have shown that, beyond a certain level of per capita GNP, the cost of social control must rise faster than total output and become the major institutional activity within an economy Ivan Illich

When the Borgia family came into their prominence, in the 15th century,  it was after the Church had found that institutionalizing religious thought and behavior followed quite naturally from the increase in commerce spawned by the Hanseatic League and the Mediterranean trade in slaves (energy). The foment of the Reformation threw a spanner in the works of the status quo for the following 150 years, ending in the Thirty Years war.

And to think that Martin Luther was nothing more than a snarly, old monk, needs to be reconsidered. I hope our age of enlightenment doesn't take that long to begin.

_mongo's picture
_mongo
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How Does It Work
From ZH's 3/17 post on Goldman's delinquent mortgage buying spree:
 
"So, how does it work?  Well, the first step is to buy up billions of dollars worth of non-performing loans (NPLs) at massive discounts of up to 50 cents on the dollar.  Then, you negotiate mortgage modifications with borrowers that reduces their principle balance, of course by less than Goldman's initial discount on the original purchase, and allows them to start making payments again.  That principle forgiveness then gets counted towards Goldman's $1.8 billion mortgage relief obligation even though it actually cost them absolutely nothing because they acquired the debt at an even larger discount.  Finally, and this is the real beauty of the scheme, when the loans are performing again they can be packaged up and resold as AAA paper once again...
 
Here's a quick example of how it might work on an individual mortgage:
 
Lets assume a borrower has a $200,000 mortgage outstanding but isn't making payments.  Goldman then comes along and buys that mortgage for $100,000 from Fannie Mae.  Goldman then goes to the borrower and offers to reduce his mortgage balance to $150,000 if, in return, he'll agree to start making payments again.  That $50,000 debt reduction then gets applied to Goldman's $1.8 billion settlement obligation. And the coup de gras, once the loan is performing again, Goldman can sell it for $150,000, thus pocketing a $50,000 cash profit plus settling $50,000 of their obligation to various government entities...
 
Goldman has paid between 50 and 90 cents on the dollar for the loans, according to Fannie Mae records."
Eannao's picture
Eannao
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GoldMoney

GoldMoney provides somewhat of an alternative to the banks. You keep your wealth as gold, you can be paid in gold, you can invoice in gold, you can pay in gold. It's like a personal gold standard, and the more people that use it, the more powerful it becomes. It's worth checking out.

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Eannao
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Roy Sebag as a guest?

Roy Sebag is the head of GoldMoney and could make a very interesting guest for interview

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Bankers Slave
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The Corbettreport consolidates this blog!

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badScooter
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Got Rope?

I believe in the principle of "reversion to the mean".  It is math.

When I think about lack of "moral hazard" intrinsic to today's structure, I also think the reversion principle applies.  The moral hazard has not gone missing, just pushed into a closet.  With springs.  I think it is going to pop out the first time the closet door's knob gets turned.  Then the moral hazard will return with a vengeance, with interest due (and penalty fees).  I think there is a critical mass of people who understand with who specifically the root cause has been...caused.  It will be a very bad time to be a banker or a pol.  I also think that people who don't really deserve it will get swept up in it, similar to the way the reformist aristocracy got monkeyhammered during the French Revolution for a period of years.

Got Rope?

Cheers

m

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badScooter
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Thanks T2H

Thanks, Time2Help, for that video clip.  Very cogent.  I had to look up the movie so I could rent it (available on the Amazon Squid).

For others like me that might be interested:  "The International", 2009

m

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Time2help
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Re: Control the Debt

Here's the companion piece. "Fear is justification. Fear is control. Fear is money."  

And today's money is debt.

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charleshughsmith
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the central state and banks are one

It's not just that banks buy politicos--the central state and the banks are in essence one system. neither can survive without the other in the current mode of production. The idea that the system can survive the banks' demise is illusory.  The state needs financial profits to fund itself, and financialization is the only source of "growth" and profits at this point. I address this dynamic in  my book "Resistance, Revolution, Liberation."  There is no way to liberate ourselves from the banks without also liberating ourselves from the central state. Analysts like Michael Hudson grasp the problem with the banks, but ignore the other side of the coin because of their worship of the central state as the "solution." Does anyone really think a state bank wouldn't be corrupted by the same forces as a private bank? Look at Fannie Mae, which is essentially a state bank. If we strip out financialization, where's the "growth" coming from? The house of cards collapses, and from the state's POV, that's to be avoided at all costs.

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Mots
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The Central State and the Banks are One

"worship of the central state as the "solution" is the problem itself.
Charles, thank you very much for making this point.

I suggest that we define "globalist" as one who "worship(s) the central state as the "solution."
This is an important distinction because such "globalist" is now the number one enemy of human progress.

Human civilization is fitfully evolving towards small resilient communities that organize and trade between themselves.  Even up until now, the most successful civilizations were organized this way: The Greek city states, Venetian cities in N. Italy in the Renaissance, Holland in its golden age, and America before it became a global power, come to mind. This advance contradicts the very notion of worship of a global government run by superior sociopaths (Chinese emperor, Saudi King, Rich Guys at Davos, unelected Euro-dictators etc.) that know better than us.  The two sides (real progress vs globalism) have entered a life and death struggle.  Much of the strife going forward can be understood based on this realization.

The resilient community based from-the-ground-up organization will eventually win for many reasons, (not enough time to detail those reasons in this short keyboarding).  However, I fear that a new Renaissance will only emerge after a prolonged dark ages, during which local communities refine their adaptations to their local environments and advantages and cannot be displaced by the globalist marauders who do not produce but only rely on banking/law to control, steal and plunder.  Any inter-community organization that may extend over large geographic distances will emerge from and be used by those small communities, and NOT by one or more sociopaths, or sociopath cliques as is the case now.

I conclude that how we deal with "worship of the central state as the solution" (i,e, globalism) will determine our fate.  It is very helpful to keep your idea in mind when trying to understand and survive the antics of these new age barbarians.

lol

best wishes

Mots

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gkcjrrt
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Command and Control Economy through Debt

Wow, I thought I was the only one on the verge of indignant breakdown. Bravo! I truly empathize.  8 years of continued excuses of good faith and "they're doing the best they can for all us"  by the bankers and system has driven me to almost apoplexy - the main reason being that no one else seems to want call a spade a spade and cross that threshold of impugning bad faith amongst these actors. Thank you.

The debt will be continuously created to maintain the "status quo" and then selectively written off when it goes bad - again keeping the system afloat, and enabling and rewarding the bad actors.  Moral Hazard, such a quaint term is institutionalized into our system - but it is no longer a hazard, it is now the only way.

In 1988, I bought a Ford F-150 XLT Lariat 4X4, the top of the line fully loaded model at the time. Cost: $14,400.   I went shopping for a truck today.  The similar model today, not top, but mid-high end vehicle was priced at $55k.  Now granted there is more technology embedded in the new vehicle, but this is almost a 300% increase over 30 years.  The $ is certainly losing value, but I think another reason is the unlimited availability of credit.  The subprime auto loan business is alive and well.

Fed lends money to Goldman (and other broker dealers at ~1%)

Goldman lends to GMAC (or other auto finance company at 3%)

GMAC lends to good credit customers at 5% and poor credit customers at 10%

Everyone who can fog a mirror gets a car loan and the auto business booms, and the financiers at every level make money... AND

When defaults begin to occur en masse, the Fed buys the bad back (essentially monetizing it) to maintain solvency of the chain of lenders.  In this way the system continues to perpetuate the creation of debt  which "stimulates the economy" by being used to finance new purchases - i.e., this a Ponzi scheme.  B/c the fed can print out of thin air, there is no limit to this unless and until a systemic event destroys confidence (or people understand what is happening - although actually I'm not sanguine about people wanting to change anything as long as it continues)

I believe this pattern exists in many areas (e.g. higher edu).  It is anathema to freedom and fairness; more importantly, it truly does enable a group a rent skimmers to control the system.

Keep Calm and Carry On ... meh

CHEERS!

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reflector
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db / black swan?

speaking of banks...

http://www.zerohedge.com/news/2017-03-19/deutsche-bank-prices-%E2%82%AC8...

Deutsche Bank Prices €8 Billion Stock Offering At 35% Discount

db is getting desperate for cash, something is going on behind the scenes.

anyone have info on what is prompting them to sell sharply discounted shares, and why they badly need cash right now?

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cmartenson
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Here's my surprised face

reflector wrote:

speaking of banks...

http://www.zerohedge.com/news/2017-03-19/deutsche-bank-prices-%E2%82%AC8...

Deutsche Bank Prices €8 Billion Stock Offering At 35% Discount

db is getting desperate for cash, something is going on behind the scenes.

anyone have info on what is prompting them to sell sharply discounted shares, and why they badly need cash right now?

This is amazing.  If you were a DB long, the correct move would have been to sell on Friday and then buy some of these new shares at a whopping -35% discount today.

What "should" happen in a  normal market is that the shares would be pummeled by this news, perhaps by the entire 35%.  

But that's not how these ""markets"" work anymore.  They are so tightly controlled now that nothing appropriate ever happens anymore.

Case in point, here's DB in the pre-market (er...pre-""market"") just seconds ago:

Not even down -2.5%(!!)

And try to act surprised when it somehow doesn't budge all day, wobbles slightly, and then vaults into the final minutes of the close to 'they' can come out with a set of headlines about how "investors" were cheered by the move, etc.

But make no mistake, in any normal world this is a really awful moment for existing DB longs.  We don't inhabit that world anymore....

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Quercus bicolor
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Posts: 424
Do only current shareholders have rights to buy the new shares?

Even so, this doesn't change things very much:

  1. Sell your shares on Friday as quickly as you can because the price is about to drop 35%, right?
  2. Well it only dropped 2.5%, so you were good even if you were slow.
  3. Buy the rights to the new shares anytime in the next couple of weeks.  Their going to be traded on an exchange!  You take on a bit of risk that the price will go up before you buy (working against you), or down (working in your favor), but you have a 35% tailwind!

Question:  What shenanigans prevented that 35% price drop?

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Time2help
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What is the most dangerous thing you know?

What is the most dangerous thing you know? (Tor Matson - Quora)

Good article, would only change one sentence.

Quote:
There’s no reason that it has to be this way. We fought against a central bank for a hundred years, and then in 1913 we finally got one. We promptly had the crisis that the bank was supposedly there to avert. In the intervening time, our money has lost 97% of its value. We’re mired in enormous debt, and there are no provisions for periodic forgiveness like a Jubilee year, a Biblical tradition oddly forgotten by many otherwise-religious folks. So this debt is forever, a crushing multi-generational burden. Many Americans are suffering in real poverty, while a few individuals and corporations get grotesquely rich. Why are we allowing this? And why did it happen in the first place?

The answer is simple and ugly: Because those at the top of the system are not pursuing rational, benevolent, or wise courses of action. They are not representing the interests of the people, nor the environment. Their policies serve simply to enrich and protect those who are able to buy access to politicians. It’s corruption-as-institution. It’s not necessarily that they’re personally evil people (oh, but they are - emphasis mine), but the effects of the system on the environment and the majority of humans are pretty evil, so it’s an evil system, formally.

The situation is ridiculous, just absurd. Money is the most important thing on earth for most people, because most people lack the money to get what they need, let alone what they want. Meanwhile, a select few get to create their own money, and use it to buy anything and everything. I guess it’s just too large for most people to notice. But it’s eaten us all, it’s consuming the planet and everyone on it, and we really need to see why this is happening.

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Stabu
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Posts: 75
Company I work for Is Owned by Privat Equity

I ended up selling one of the companies I work for on behalf of the owners to a private equity firm. What improved after the sale was that the balance sheet began making some sense, since money was no-longer spent on all sorts of seemingly pointless activities. Additionally, the atmosphere became more professional or, should I say, "corporate" or "predictable" and the people on top (including me) were able to get better compensation plans with their base increasing by as much as 25% and their bonus potential going up from about 5% of total comp up to 50% of total comp.

However, some things became a lot worse. The work environment became cut-throat, my team has been downsized every year (lowest paid positions going first) and is now 15% smaller than before the acquisition. The lowest paid people can't get meaningful raises and are practically capped at COLA. Most operations are outsourced god knows where and hence I can no-longer get reliable support. The private equity firm runs the company with surgical precision and with the requirement that our profit margins increase by 3 percentage points (not 3%) every year or else more people will be laid off - and this is a company whose profit margins are already above 50%!

So it's not only the banks who are evil, but most financial entities. Despite having practically doubled my salary from before the acquisition, I now feel worse off, since I have to let someone go every year whom I've worked with for years and the support that I took for granted is no-longer there. To top it all off, the stringent performance requirements are practically eating all my free time. I've finally realized that the reason the past company was enduring balance sheet abnormalities and sub-10% margins was because the company had other goals than pure profitability such as a pleasant work environment, job security, salary increases for everyone and general decency. I never thought I'd say it, but I do miss the old days.

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Matt Holbert
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The sociopath test

Stabu- Reading your comment reminded me of my wife's description of a timber company takeover that she experienced in Canada in the mid-late 80's. She and all of the employees of the company that was being taken over were required to take a test. Essentially the test enabled the buyers to determine who was sociopathic. Those identified as sociopathic were kept on and those that were not were dismissed. I'm happy to say that my wife was dismissed.

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sand_puppy
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Posts: 1391
The Neocons Beg for MORE and BIGGER WARS

Just when you thought it might be safe to go outside again, the resilient Neocon Kagan family has reappeared to urge ever greater ME wars.  Robert Perry at ConsortiumNews.com reports on the latest re-emergence of the first family of global warfare, the Kagans.

Giving war makers a soapbox and megaphone, the Washington Post publishes a long Op-Ed by Robert Kagan, founder of the Project for the New American Century, calling for boots on the ground invasion of Syria.

Most creative is the brilliant rending of truth and twisting of reality into a shape where killing a few hundred thousand more human beings in the Middle East is reasonable, necessary and right.

Let me digress for a moment and lay out my understanding of what happened.

Insiders at the DNC and the Clinton Foundation, probably Bernie supporters, leaked two big batches of emails to WikiLeaks (possibly Seth Rich was the leaker of the John Podesta emails).  Craig Murray reports that he picked them up at a park in Washington DC and delivered them by hand to WikiLeaks.  They revealed that the DNC was committed to HRC getting the democratic nomination and ensuring that Bernie Sanders did not, and that insiders used dirty tricks to ensure this outcome.  They also revealed the depth and breadth of the system of bribery in play with the Clinton Foundation system called "pay for play."  (One example, is the removal of Algeria from the US terror watchlist by Secretary of State Hillary Clinton the week after Algeria donated 25 million dollars to the Clinton Foundation.)  The result was that the DNC candidate lost the election to a man with an 81% disapproval rating and little to no political skills or experience.

The DNC was embarrassed by this leak, BUT NEVER DISPUTED THAT THE EMAILS WERE TRUE.  It was not "fake news."  It was "true news" of corruption in a process that pretends to be democratic, but is not.

However, the Neocons seem to have recovered from the defeat of their champion and now the Kagans are Back.  And being very intelligent and creative, and allied with the network that owns the news media, decided to spin the story around a familiar anchor point:  the evil Russians and how they attacked us. 

  • Russia leaked the DNC emails to WikiLeaks. ....
  • Russian tried to interfere with the US election. ....
  • Russian "hacked" the US election.  ....
  • This is a mater of national sovereignty. ....
  • Not just sovereignty, but national security, as this is cyberwarfare.
  • Cyberwarfare is just as real an attack as those by warships, tanks or bombers.
  • We must defend ourselves.
  • We must defend ourselves from this grievous national security assault from Russia by invading Syria and recruiting MORE proxy fighters to overthrow Assad.

Robert Kagan in WaPo:

“The most important question concerns Russia’s ability to manipulate U.S. elections. That is not a political issue. It is a national security issue. If the Russian government did interfere in the United States’ electoral processes last year, then it has the capacity to do so in every election going forward. This is a powerful and dangerous weapon, more than warships or tanks or bombers.

Frederick and Kimberly Kagen in the WSJ:

On Wednesday in The Wall Street Journal, Robert Kagan’s brother Frederick and his wife Kimberly dropped the other shoe, laying out the neocons’ long-held dream of a full-scale U.S. invasion of Syria...

But the neocons have long lusted for “regime change” in Syria and were not satisfied with Obama’s arming of anti-government rebels and the limited infiltration of U.S. Special Forces into northern Syria to assist in the retaking of the Islamic State’s “capital” of Raqqa.

In the Journal op-ed, Frederick and Kimberly Kagan call for opening a new military front in southeastern Syria...

I have found by polling my co-workers, that an unsubstantiated assertion, and even a fraudulent assertion, if repeated often enough by enough different "trusted commentators" will come to be accepted  as true.  Such is the power of the human need to snuggle ourselves into the group consensus.

----------------------

Neoconservative goals and aims in the ME cannot be understood unless we see that they are a militant Zionist faction.  However, most Jewish people are not Neocons.  But the Neocons are an American political force that grows out of the RED/BLUE militant vision of Zionism.  It is not about a religion.  It is a military and economic domination project that takes its origins in a tightly-identified ethnic group.  (And, my GREEN Meme friends, it is OK to talk about it.  This is not "religious intolerance.")

The destruction of the Middle East has been a long term Zionist goal.  See the Oded Yinon plan or the origins of the Iraq Invasion coming out of the long-term militant vision of Greater Israel.

Peace through military domination is never stable.  Most of us, of all religions, actually know this.

cmartenson's picture
cmartenson
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Posts: 5017
On Deustche Bank (and my surprised face)

Well, true to form, DB went nowhere today, basically just wobbling along very flat finishing with a very modest loss that is notable for being correct if only the decimal point were slid over one spot.

The ability of the authorities to hold these ""markets"" in line is really astonishing right now.  While DB couldn't sell the necessary shares at the true market price, somehow that same market price didn't budge.

Very weird.

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dryam2000
Status: Gold Member (Offline)
Joined: Sep 6 2009
Posts: 253
Power, money, etc.

Controlling the flow of money is power.   Things have gotten very lopsided in terms of who has the wealth & power.  The 99% are pissed, especially the folks at the lower end of the spectrum.  People are much more aware of the inequities in the system these days.  So, what are TPTB to do?   The common people have power in numbers.  Together they are very strong, but apart they are very weak.  This is why the TPTB will continue to play the divide & conquer card particularly on social issues....race baiting, transgender bathroom debates, etc. 

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Tom Prouty
Status: Member (Offline)
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Posts: 1
Writing

I am a writer. I would like to submit one of my political/economic writings to you. Can you give me some guidance on how to do so?

Thank you,

Tom Prouty

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Matt Holbert
Status: Bronze Member (Offline)
Joined: Oct 3 2008
Posts: 47
It's even easier for the non-religious to know...

Most of us, of all religions, actually know this.

It's even easier for the non-religious to know. For an extremely compelling story of the non-religious of 2000 plus years ago and the nastiness of religion 600 years or so ago, I highly recommend The Swerve by Stephen Greenblatt. Although it was written by a Harvard professor it is not on any of the University library shelves here in the Pacific Northwest. Hmmm...

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