California Water Wars: Another Form of Asset Stripping?

In California’s epic drought, wars over water rights continue, while innovative alternatives for increasing the available water supply go untapped.

Wars over California’s limited water supply have been going on for at least a century. Water wars have been the subject of some vintage movies, including the 1958 hit The Big Country starring Gregory Peck, Clint Eastwood’s 1985 Pale Rider, 1995’s Waterworld with Kevin Costner, and the 2005 film Batman Begins. Most acclaimed was the 1975 Academy Award winner Chinatown with Jack Nicholson and Faye Dunaway, involving a plot between a corrupt Los Angeles politician and land speculators to fabricate the 1937 drought in order to force farmers to sell their land at low prices. The plot was rooted in historical fact, reflecting battles between Owens Valley farmers and Los Angeles urbanites over water rights.

Today the water wars continue on a larger scale with new players. It’s no longer just the farmers against the ranchers or the urbanites. It’s the people against the new “water barons”  – Goldman Sachs, JPMorgan Chase, Monsanto, the Bush family, and their ilk – who are buying up water all over the world at an unprecedented pace. Continue reading

The ECB’s Noose Around Greece: How Central Banks Harness Governments

Remember when the infamous Goldman Sachs delivered a thinly-veiled threat to the Greek Parliament in December, warning them to elect a pro-austerity prime minister or risk having central bank liquidity cut off to their banks? (See January 6th post here.) It seems the European Central Bank (headed by Mario Draghi, former managing director of Goldman Sachs International) has now made good on the threat. Continue reading

PRN has a new website; and Ellen Brown interviews Paul Craig Roberts

Progessive Radio Network, where you can hear our radio show “It’s Our Money”, has a new and improved website that allows comments. First up on the new site is my interview of Paul Craig Roberts (great guest!). The link is here —

http://itsourmoney.podbean.com/e/the-whole-story-022515/

The second half of that interesting interview will be played this Wednesday at noon PST/3 pm EST.

Power Point, Economics of Happiness Conference, Portland, February 28, 2015

Banking on Colorado Conference, Denver, January 31, 2015

Swimming with the Sharks: Goldman Sachs, School Districts, and Capital Appreciation Bonds

The fliers touted new ballfields, science labs and modern classrooms. They didn’t mention the crushing debt or the investment bank that stood to make millions. 

                       — Melody Peterson, Orange County Register, February 15, 2013  

Remember when Goldman Sachs – dubbed by Matt Taibbi the Vampire Squidsold derivatives to Greece so the government could conceal its debt, then bet against that debt, driving it up? It seems that the ubiquitous investment bank has also put the squeeze on California and its school districts. Not that Goldman was alone in this; but the unscrupulous practices of the bank once called the undisputed king of the municipal bond business epitomize the culture of greed that has ensnared students and future generations in unrepayable debt. Continue reading

Why Public Banks Outperform Private Banks: Unfair Competition or a Better Mousetrap?

Public banks in North Dakota, Germany and Switzerland have been shown to outperform their private counterparts. Under the TPP and TTIP, however, publicly-owned banks on both sides of the oceans might wind up getting sued for unfair competition because they have advantages not available to private banks.

In November 2014, the Wall Street Journal reported that the Bank of North Dakota (BND), the nation’s only state-owned bank, “is more profitable than Goldman Sachs Group Inc., has a better credit rating than J.P. Morgan Chase & Co. and hasn’t seen profit growth drop since 2003.” The article credited the shale oil boom; but as discussed earlier here, North Dakota was already reporting record profits in the spring of 2009, when every other state was in the red and the oil boom had not yet hit. The later increase in state deposits cannot explain the bank’s stellar record either.

Then what does explain it? The BND turns a tidy profit year after year because it has substantially lower costs and risks then private commercial banks. It has no exorbitantly-paid executives; pays no bonuses, fees, or commissions; has no private shareholders; and has low borrowing costs. It does not need to advertise for depositors (it has a captive deposit base in the state itself) or for borrowers (it is a wholesome wholesale bank that partners with local banks that have located borrowers). The BND also has no losses from derivative trades gone wrong. It engages in old-fashioned conservative banking and does not speculate in derivatives.

Lest there be any doubt about the greater profitability of the public banking model, however, this conclusion was confirmed in January 2015 in a report by the Savings Banks Foundation for International Cooperation (SBFIC) (the Sparkassenstiftung für internationale Kooperation), a non-profit organization founded by the the Sparkassen Finance Group (Sparkassen-Finanzgruppe) in Germany. The SBFIC was formed in 1992 to make the experience of the German Sparkassen – municipally-owned savings banks – accessible in other countries. Continue reading

Upcoming Event: Challenge Capitalism – Santa Ana, CA, February 12, 2015

wolff & me 2-15

Tickets available here: http://drrickwolffinoc.brownpapertickets.com/.

Upcoming Event: Banking on Colorado: Bring Our Money Home — A Public Banking Conference — Denver, CO, January 31, 2015

Public Banking Conf Flyer

EU Showdown: Greece Takes on the Vampire Squid

Greece and the troika (the International Monetary Fund, the EU, and the European Central Bank) are in a dangerous game of chicken. The Greeks have been threatened with a Cyprus-Style prolonged bank holidayif they “vote wrong.” But they have been bullied for too long and are saying “no more.”

A return to the polls was triggered in December, when the Parliament rejected Prime Minister Antonis Samaras’ pro-austerity candidate for president. In a general election, now set for January 25th, the EU-skeptic, anti-austerity, leftist Syriza party is likely to prevail. Syriza captured a 3% lead in the polls following mass public discontent over the harsh austerity measures Athens was forced to accept in return for a €240 billion bailout.

Austerity has plunged the economy into conditions worse than in the Great Depression. As Professor Bill Black observes, the question is not why the Greek people are rising up to reject the barbarous measures but what took them so long.

Ireland was similarly forced into an EU bailout with painful austerity measures attached. A series of letters has recently come to light showing that the Irish government was effectively blackmailed into it, with the threat that the ECB would otherwise cut off liquidity funding to Ireland’s banks. The same sort of threat has been leveled at the Greeks, but this time they are not taking the bait. Continue reading

The Confiscation of Bank Deposits and The Derivative Debt: James Corbett interviews Ellen Brown on GRTV

Russian Roulette: Taxpayers Could Be on the Hook for Trillions in Oil Derivatives

The sudden dramatic collapse in the price of oil appears to be an act of geopolitical warfare against Russia. The result could be trillions of dollars in oil derivative losses; and depositors and taxpayers could be liable, following repeal of key portions of the Dodd-Frank Act signed into law on December 16th.

On December 11th, Senator Elizabeth Warren charged Citigroup with “holding government funding hostage to ram through its government bailout provision.” At issue was a section in the omnibus budget bill repealing the Lincoln Amendment to the Dodd-Frank Act, which protected depositor funds by requiring the largest banks to push out a portion of their derivatives business into non-FDIC-insured subsidiaries.

Warren and Representative Maxine Waters came close to killing the spending bill because of this provision. But the tide turned, according to Waters, when not only Jamie Dimon, CEO of JPMorgan Chase, but President Obama himself lobbied lawmakers to vote for the bill. Continue reading

The Global Bankers’ Coup: Bail-In and the Shadowy Financial Stability Board

fsb

On December 11, 2014, the US House passed a bill repealing the Dodd-Frank requirement that risky derivatives be pushed into big-bank subsidiaries, leaving our deposits and pensions exposed to massive derivatives losses. The bill was vigorously challenged by Senator Elizabeth Warren; but the tide turned when Jamie Dimon, CEO of JPMorganChase, stepped into the ring. Perhaps what prompted his intervention was the unanticipated $40 drop in the price of oil. As financial blogger Michael Snyder points out, that drop could trigger a derivatives payout that could bankrupt the biggest banks. And if the G20’s new “bail-in” rules are formalized, depositors and pensioners could be on the hook.

The new bail-in rules were discussed in my last post here. They are edicts of the Financial Stability Board (FSB), an unelected body of central bankers and finance ministers headquartered in the Bank for International Settlements in Basel, Switzerland. Where did the FSB get these sweeping powers, and is its mandate legally enforceable? Continue reading

USAWatchDog interview on new bail-in rules 12-9-14

New G20 Rules: Cyprus-style Bail-ins to Hit Depositors AND Pensioners

On the weekend of November 16th, the G20 leaders whisked into Brisbane, posed for their photo ops, approved some proposals, made a show of roundly disapproving of Russian President Vladimir Putin, and whisked out again. It was all so fast, they may not have known what they were endorsing when they rubber-stamped the Financial Stability Board’s “Adequacy of Loss-Absorbing Capacity of Global Systemically Important Banks in Resolution,” which completely changes the rules of banking. Continue reading

WSJ Reports: Bank of North Dakota Outperforms Wall Street

While 49 state treasuries were submerged in red ink after the 2008 financial crash, one state’s bank outperformed all others and actually launched an economy-shifting new industry.  So reports the Wall Street Journal this week, discussing the Bank of North Dakota (BND) and its striking success in the midst of a national financial collapse led by the major banks. Chester Dawson begins his November 16th article:

It is more profitable than Goldman Sachs Group Inc., has a better credit rating than J.P. Morgan Chase & Co. and hasn’t seen profit growth drop since 2003. Meet Bank of North Dakota, the U.S.’s lone state-owned bank, which has one branch, no automated teller machines and not a single investment banker.

Continue reading

Irish Green Party — “P​ublic Banking can become real ‘Third Force’ in Irish finance”

I just got back from a really good and productive week in Ireland. Haven’t gotten an article out but thought I would post these two articles that were in the local Irish press (online and print).  Two interviews are yet to be published, plus two video interviews (with the UK Guardian and Rabobank); so public banking got a lot of exposure.

P​ublic Banking can become real ‘Third Force’ in Irish finance

Friday 7th November 2014, Dublin.
Green Party Finance Spokesperson, Cllr Mark Dearey, has today spoken of the positive benefits that the introduction of public banking could have for the Irish financial market. The creation of a publicly-held banking network, acting as a competitor to the existing private commercial banks, would be a disruptive and much needed shot in the arm for the current arrangement. Cllr Dearey made his comments following a productive meeting with the founder and President of the Public Banking Institute, Dr Ellen Brown, who is in Ireland to participate in the Kilkenomics festival.
 Read more here.
Gavin McLoughlin, Irish Independent, 07/11/2014
Ellen Brown, a co-founder of the US-based Public Banking Institute, doesn’t mince her words. She’s among the speakers at the fifth Kilkenomics festival, which began yesterday.
“My purpose in being there and what I hope to introduce is that you can fix a lot of your economic problems by having some publicly owned banks.”
It’s not about nationalising the system, says Brown. Rather the idea is to have a number of banks that can return profits to the public rather than to shareholders.
“It’s a no-brainer once you get it,” she says.
Read more here.

Exploring the Sparkassen Model of Local Savings Banks in Ireland

I’m off to Ireland tomorrow to participate in the Kilkenny Festival and to help with the movement there for a network of publicly-owned banks. The Public Banking Forum of Ireland sent a quite promising report on developments that I thought I would post in the meantime, titled Exploring the Sparkassen Model of Local Savings Banks in Ireland with the Savings Bank Foundation for International Cooperation (SBFIC). It can be read here:

Sparkassen Model in Ireland Oct (1)

(I had a bit of trouble loading it; if it doesn’t come up, there is much similar information on the PBFI website.)

Why Do Banks Want Our Deposits? Hint: It’s Not to Make Loans.

Many authorities have said it: banks do not lend their deposits. They create the money they lend on their books.

Robert B. Anderson, Treasury Secretary under Eisenhower, said it in 1959:

When a bank makes a loan, it simply adds to the borrower’s deposit account in the bank by the amount of the loan. The money is not taken from anyone else’s deposits; it was not previously paid in to the bank by anyone. It’s new money, created by the bank for the use of the borrower.

The Bank of England said it in the spring of 2014, writing in its quarterly bulletin:

The reality of how money is created today differs from the description found in some economics textbooks: Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits.

. . . Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.

All of which leaves us to wonder: If banks do not lend their depositors’ money, why are they always scrambling to get it? Banks advertise to attract depositors, and they pay interest on the funds. What good are our deposits to the bank? Continue reading

“Public Banks for Public Works,” Philadelphia symposium power point

The Pennsylvania Project hosted the East Coast edition of the Public Banking Institute national conference in Philadelphia last Saturday. Thanks Pennsylvania team!

I thought I would post my power point presentation (the sixth I’ve done since July), since it has a more complete discussion of the pressing issue always on the minds of elected officials: “Where will we find the money to capitalize our new public bank?” The relevant slides are at 21-26, expanding on the plan suggested in my article of October 12th titled Building an Ark: How to Protect Public Revenues from the Next Meltdown. The power point is here:

Power point – Philadelphia – 10-18-14

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