How Greece Could Take Down Wall Street

In an article titled “Still No End to ‘Too Big to Fail,’” William Greider wrote in The Nation on February 15th:

Financial market cynics have assumed all along that Dodd-Frank did not end “too big to fail” but instead created a charmed circle of protected banks labeled “systemically important” that will not be allowed to fail, no matter how badly they behave.

That may be, but there is one bit of bad behavior that Uncle Sam himself does not have the funds to underwrite: the $32 trillion market in credit default swaps (CDS).  Thirty-two trillion dollars is more than twice the U.S. GDP and more than twice the national debt. 

CDS are a form of derivative taken out by investors as insurance against default.  According to the Comptroller of the Currency, nearly 95% of the banking industry’s total exposure to derivatives contracts is held by the nation’s five largest banks: JPMorgan Chase, Citigroup, Bank of America, HSBC, and Goldman Sachs.  The CDS market is unregulated, and there is no requirement that the “insurer” actually have the funds to pay up.  CDS are more like bets, and a massive loss at the casino could bring the house down.

It could, at least, unless the casino is rigged.  Whether a “credit event” is a “default” triggering a payout is determined by the International Swaps and Derivatives Association (ISDA), and it seems that the ISDA is owned by the world’s largest banks and hedge funds.  That means the house determines whether the house has to pay. 

The Houses of Morgan, Goldman and the other Big Five are justifiably worried right now, because an “event of default” declared on European sovereign debt could jeopardize their $32 trillion derivatives scheme.  According to Rudy Avizius in an article on The Market Oracle (UK) on February 15th, that explains what happened at MF Global, and why the 50% Greek bond write-down was not declared an event of default. 

If you paid only 50% of your mortgage every month, these same banks would quickly declare you in default.  But the rules are quite different when the banks are the insurers underwriting the deal. 

MF Global: Canary in the Coal Mine?

MF Global was a major global financial derivatives broker until it met its unseemly demise on October 30, 2011, when it filed the eighth-largest U.S. bankruptcy after reporting a “material shortfall” of hundreds of millions of dollars in segregated customer funds.  The brokerage used a large number of complex and controversial repurchase agreements, or “repos,” for funding and for leveraging profit.  Among its losing bets was something described as a wrong-way $6.3 billion trade the brokerage made on its own behalf on bonds of some of Europe’s most indebted nations.

Avizius writes:

[A]n agreement was reached in Europe that investors would have to take a write-down of 50% on Greek Bond debt. Now MF Global was leveraged anywhere from 40 to 1, to 80 to 1 depending on whose figures you believe. Let’s assume that MF Global was leveraged 40 to 1, this means that they could not even absorb a small 3% loss, so when the “haircut” of 50% was agreed to, MF Global was finished. It tried to stem its losses by criminally dipping into segregated client accounts, and we all know how that ended with clients losing their money. . . . 

However, MF Global thought that they had risk-free speculation because they had bought these CDS from these big banks to protect themselves in case their bets on European Debt went bad. MF Global should have been protected by its CDS, but since the ISDA would not declare the Greek “credit event” to be a default, MF Global could not cover its losses, causing its collapse.

The house won because it was able to define what “ winning” was.  But what happens when Greece or another country simply walks away and refuses to pay?  That is hardly a “haircut.”  It is a decapitation.  The asset is in rigor mortis.  By no dictionary definition could it not qualify as a “default.”

That sort of definitive Greek default is thought by some analysts to be quite likely, and to be coming soon.  Dr. Irwin Stelzer, a senior fellow and director of Hudson Institute’s economic policy studies group, was quoted in Saturday’s Yorkshire Post (UK) as saying:

It’s only a matter of time before they go bankrupt. They are bankrupt now, it’s only a question of how you recognise it and what you call it.

Certainly they will default . . . maybe as early as March. If I were them I’d get out [of the euro].

The Midas Touch Gone Bad

In an article in The Observer (UK) on February 11th  titled “The Mathematical Equation That Caused the Banks to Crash,” Ian Stewart wrote of the Black-Scholes equation that opened up the world of derivatives:

The financial sector called it the Midas Formula and saw it as a recipe for making everything turn to gold.  But the markets forgot how the story of King Midas ended.

As Aristotle told this ancient Greek tale, Midas died of hunger as a result of his vain prayer for the golden touch.  Today, the Greek people are going hungry to protect a rigged $32 trillion Wall Street casino.  Avizius writes:

The money made by selling these derivatives is directly responsible for the huge profits and bonuses we now see on Wall Street. The money masters have reaped obscene profits from this scheme, but now they live in fear that it will all unravel and the gravy train will end. What these banks have done is to leverage the system to such an extreme, that the entire house of cards is threatened by a small country of only 11 million people. Greece could bring the entire world economy down. If a default was declared, the resulting payouts would start a chain reaction that would cause widespread worldwide bank failures, making the Lehman collapse look small by comparison.

Some observers question whether a Greek default would be that bad.  According to a comment on Forbes on October 10, 2011:

[T]he gross notional value of Greek CDS contracts as of last week was €54.34 billion, according to the latest report from data repository Depository Trust & Clearing Corporation (DTCC). DTCC is able to undertake internal netting analysis due to having data on essentially all of the CDS market. And it reported that the net losses would be an order of magnitude lower, with the maximum amount of funds that would move from one bank to another in connection with the settlement of CDS claims in a default being just €2.68 billion, total.  If DTCC’s analysis is correct, the CDS market for Greek debt would not much magnify the consequences of a Greek default—unless it stimulated contagion that affected other European countries. 

It is the “contagion,” however, that seems to be the concern.  Players who have hedged their bets by betting both ways cannot collect on their winning bets; and that means they cannot afford to pay their losing bets, causing other players to also default on their bets.  The dominos go down in a cascade of cross-defaults that infects the whole banking industry and jeopardizes the global pyramid scheme.  The potential for this sort of nuclear reaction was what prompted billionaire investor Warren Buffett to call derivatives “weapons of financial mass destruction.”  It is also why the banking system cannot let a major derivatives player—such as Bear Stearns or Lehman Brothers—go down.  What is in jeopardy is the derivatives scheme itself.  According to an article in The Wall Street Journal on January 20th:

Hanging in the balance is the reputation of CDS as an instrument for hedgers and speculators—a $32.4 trillion market as of June last year; the value that may be assigned to sovereign debt, and $2.9 trillion of sovereign CDS, if the protection isn’t seen as reliable in eliciting payouts; as well as the impact a messy Greek default could have on the global banking system.

Players in the future may simply refuse to play.  When the house is so obviously rigged, the legitimacy of the whole CDS scheme is called into question.  As MF Global found out the hard way, there is no such thing as “risk-free speculation” protected with derivatives.    

__________________________________

Ellen Brown is an attorney and president of the Public Banking Institute, http://PublicBankingInstitute.org.  In Web of Debt, her latest of eleven books, she shows how a private cartel has usurped the power to create money from the people themselves, and how we the people can get it back.  Her websites are http://WebofDebt.com and http://EllenBrown.com.

58 Responses

  1. If DTCC’s analysis is correct, the CDS market for Greek debt would not much magnify the consequences of a Greek default—unless it stimulated **contagion** that affected other European countries.

    Isn’t *contagion* a synonym for leverage and counter party risk ?

    • I see it the same way. The rumor is worldwide we have over 1 quadrillion worth of debt into these CDS’s and so one is left with the idea that the planning of a manage decline was put into place prior to the vehicles themselves.

  2. Ellen,
    Surely you have heard of the megacoin, a $10 Trillion platinum coin minted by the Secretary of Treasury according to the US Code:

    Title 31, Subtitle IV, Chapter 51, Subchapter II §5112(k):
    “The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion may prescribe from time to time.”
    (Whoever wrote this section was probably anticipating days like this).

    The Secretary mints 100 such coins. 10 x 100 = 1000, hence
    $1Quadrillian or $1000 Trillion. (Ho hum).

    Next the Secretary directs the coins be taken to the Federal Reserve bank and deposited in a Treasury Account there. The Federal Reserve is asked to credit the account with $1 Quadrillion Federal Reserve dollars. The Fed does this because it too has magical powers to create money out of thin air as needed. (I don’t know what
    happens to the coins at this point. Got any ideas?)

    The Secretary next directs that the approximately $1.6 Trillion of the national debt to the Fed be paid in Federal Reserve dollars from the account. The debt vanishes POOF. There is no inflation created by this because the $1.6 Trillion has vanished in thin air, and the rest of the dollars in the Treasury account are just sitting there, not in circulation. They have to be spent into circulation.

    Next he directs that Federal Reserve dollars be taken from this account and used to Redeem the IOU’s at the Social Security Trust Fund. This will not be inflationary because the dollars there will sit
    for a long time and only dribble out later on if they need to supplement what is not acquired in SS payroll taxes. The economy will be able to
    absorb them, other things being equal, especially if we keep importing from China. All of this should be legal, because the dollars in the
    Trust Fund were originally authorized by Congress, which created a debt to the Fund in the form of IOU’s by raiding the Fund. The Treasury must pay the debts of the United States.

    Now, the question is, should we use these trillions of dollars to bail out the banks from all these evil losses due to derivatives and default swaps? We’d be foolish to do so. We should let the greedy bankers fail and be tossed aside. Fool me once,maybe, but fool me twice?

    Immediately our government should order the FDIC to nationalize all failed banks and require them to function as commercial or savings and loan banks. Investment banks can be allowed to fail and be
    replaced by new ones. We can use the Treasury account to provide
    reserves, if necessary.

    Congress should reimplement Glass-Steagall preventing commercial banks from having anything to do with investment banks.

    You know, if the Greeks do this in the next couple of days, the anal-retentive Germans and Dutch should realize that they brought this on themselves. It will be a stimulus to the EU to either federalize with a sovereign central government devoted not to keeping prices constant, but the general welfare of Europe–or disband. A sovereign central government, democratically elected, will be able to issue money and set the value thereof. It will be concerned with aiding the economies of its states, the former nations of Europe, with targets like full employment rather than fixed prices.

    • In view of the Fed’s collosal failure to perform its intended function, I think the People’s Treasury is justified in keeping its platinum, nationalizing the Fed, defaulting on Wall Street’s broker/dealers, and circulating a newly-coined Treasury Blue-Back (?) with a fixed-value asset backing to be determined by Congress. If it works here, the world would be sure to follow. We’d lose our empire but wouldn’t it be nice to be a free and independent nation again. Irresponsible corporate banking doesn’t work. Corporate centralization of banking and monopolistic institutions of any sort don’t work because of the Peter Principle. We know that now. Why not give Capitalism a second chance by de-sanctioning the entire concept of fiat money and corporate personhood. Money is the the property of the People who earned it and it is their right alone that should determine how it is created and spent into circulation; not secret societies of global banking executives. We’re on to their shell game and the insolvency of corporatism is becoming more obvious every day. Why not re-structure the legal foundation now, by Constitutional Amendment, before we have to re-build the whole economic infrastructure? It’s already starting to look like Greece around here.

      • Dear William,

        Oh, contrare, the Federal Reserve Bank has achieved its intended function. See http://www.truedemocracy.net/td13/19.html

        Moreover, why nationalize it? Abolish it as President Kennedy wanted to do. Read EO 11110 or access it in my third edition which is at http://www.truedemocracy.net/td3/index.html The congress committed treason when it passed the legislation to establish the Federal Reserve Bank which is not federal and has no reserves. Then President Woodrow Wilson committed treason when he signed it into law too. But he was under blackmail threat, so he had to sign it. He actually said, “I have unwittingly destroyed my country.”

        • Arlene,
          I agree with everything you’ve written except for the notion of just abolishing the Fed. What will replace the Fed after it’s simply abolished? Most certainly more private corporate banks, foreign or domestic, will fill the vacuum with their usual racket of fractional reserve lending at interest. Ron Paul’s idea of abolishing the Fed and replacing it with gold back currency and competing commodity backed currencies entertains the same illusions; the same financial oligarchs that horde all the commodities today will do the same with a gold standard (or a platinum standard) — regardless of whether the Fed exists or not. Economic power still resides with them and not the people.

          A gold standard just resets the ponzi scheme game after it has run its disastrous course. Nationalizing the Fed takes you out of the game altogether.

          • I agree, pm. We’re going to need a central banking function; but the idea of placing it in the hands of a private corporation hasn’t worked out any better than placing it in the hands of a public corporation did. We obviously need a more de-centralized system with more main street representation on a much broader-based board of directors; with the authority of, and responsibility to, the entire electorate. We just need a better way to keep them honest. People will always be people; it’s the institutions we construct and the rules we play by that gives ambitious people the power to corrupt. Local participation; complete transparency. Listen to Ellen. She knows.

            • I said nothing about centralized banking. That’s what i oppose when i say the Fed should be nationalized.

              A national bank is a government institution, eg., the Dept of the Treasury, and inherently decentralized by virtue of the fact that it would issue debt (interest) free fiat currency. Such a currency would be a ubiquitous and easy to obtain medium of exchange that cannot be manipulated by private interests exploiting scarcity.

              • pm: I was talkng about centralizing the FUNCTION while de-centralizing the AUTHORITY. It’s complicated; but I don’t trust either the federal bureaucracy or the Wall Street cartels to regulate currency and think a powerful “Economic Congress” sort of thing, composed of representatives of regional banks, working democratically, might be a safer system in regard to the tempations of power to corrupt. Is that better? I’ll go on if you think it needs more clarification. Has anyone ever suggested a separate and distinct branch of elected financial reps to govern the banking system? Maybe the Sec of Treasury needs to be democratically elected. I don’t know – just throwing ideas out there. Comments?

                • Thanks for clarifying your position. I understand it now and see that we are not in disagreement.

                • Well, I don’t buy the idea that centralized power is necessarily corrupt. Look at how central government subordinated banking in countries like Japan and China works — basically for the people, for the economy as a whole.(See http://majorityrights.com/weblog/comments/the_japanese_economic_model_as_a_refutation_of_neoliberalism/ and In the Jaws of the Dragon by Fingleton.) No matter that it isn’t democratic, the important thing is that it be what I like to call “demotelic” — with the people as an end (Greek telos = end). Like the BND functions with a mandate to serve the people of ND. The Chinese economy allows private profit, that is not the goal or the agenda, but rather to keep people employed and increase the wealth of the nation.

                  • Power does corrupt. Absolute power………………….

                    • Oh, is that in the Bible? I don’t buy it as categorically true. It’s cynical. Not having power can corrupt. Democracy can corrupt if the people are stupid, passive. How ’bout that for contrariness?

                    • I should have known I couldn’t get away with cliches here. It is over-simplification, but the tendency is real, and over time corrupt leaders have probably done more damage than corrupt followers; but your point is well taken and I appreciate being called cynical for a change. I’ll try to add more qualifiers and weasle words next time. I think stupid people can be corrupted by powerful corporations if democratically elected leaders can be fooled into believing in fictitious persons. Therefore I revise my statement thusly: Democracy corrupts; stupidity corrupts absolutely. Better?

                    • Ya, I guess that’s better. How about “alienation corrupts”? Groups of people, like criminals, who conceive themselves to be separate from society, outcast or superior, feel free to act against society.

                    • That’s the trouble with having lesser societies within the greater society; there’s bound to be a conflict of interest wherein the society with the most money will have the power to usurp the other. That kind of power can’t help but lead to the corruption of both. I think the legal structure has to ensure that the peoples’ representatives be held to a higher standart than normal folks and business (especially big incorporated entities) should be as separated from government as religion is. The revolving door thing is so blatantly corrupt it makes my stomach churn.

                    • Yep, rule of law. And to get back to the subject, banking as a public utility, otherwise the economy is not fair.

                    • I agree wholeheartedly ! Time for a 28th Amendment revoking personhood and a return to Treasury (or a democratized version of it) monetary control.

  3. Out of curiousity, are the purchasers of the CDS contracts not given any definition in their contract as to what constitutes “default”? Most contracts I’ve signed spell things out pretty plainly.

    • Aha ! The sanctity of contract law has been violated. Together with Corzine (MF Global) raiding customers accounts and continue to trade in an attempt to trade out of their losses I would say are two major game changers. isda.org

  4. Surely, if diminutive Iceland could renounce a fraudulently induced debt from a criminal banking system, then Greece could do the same? The Greek people had better hurry and usurp their puppet govt before the IMF establishes their de riguer mercenary police state aparatus.

    • I almost forgot to plug the only canidate for the office of the president that will initiate a collapse of the global ponzi scheme in the U.S.A: Bill Still. Still2012.com

      Gary Johnson believes the bankers should not be prosecuted because they (repeatedly over decades) have only made mistakes. http://still2012.com/not-so-fast-mr-johnson/

      Ron Paul is supported by Bilderburger hedge fund manager Peter Thiel, cut life sustaining entitlementst to pay off the banker debts and wants to impliment a gold standard. Can anyone say deflationary depression and controlled opposition?

      • can anyone say king midas paul?

    • Iceland is not on the euro unlike Greece which is. That’s why it didn’t matter when Iceland defaulted. See http://geography.about.com/od/lists/a/euro.htm for confirmation as to which countries are on the euro.

      • It mattered to Iceland. They stood alone against the global elite, took to the streets, crashed their parliment and demanded what no other country or continent dared: their sovereign right not to be made slaves by a debt they did not make.

        Ideas, especially when given expressing in revoltion, should be the most contagious models of action of all. Greece and europe should be embolded by their example, but perhaps they are stupid animals after all. We shall see.

  5. SOMEBODY needs to take down wall Street with EXTREME PREJUDICE.

  6. I highly recommend everyone take a look at the attached article before giving the DTCC counter any weight at all.

    I find the article’s’ premise highly plausible and in fact the Overstock CEO fought this battle for a bit and then faded.

    http://ming.tv/flemming2.php/__show_article/_a000010-000923.htm

    Vivek

    • But then unlike stocks, CDS are Over The Counter (OTC) and unregulated.

  7. [...] Ellen Brown: How Greece could take down Wall Street http://webofdebt.wordpress.com/2012/02/20/how-greece-could-take-down-wall-street/ [...]

  8. reminding me of trhe childhood game,”steal the gold”….

  9. [...] How Greece Could Take Down Wall Street (webofdebt.wordpress.com) [...]

  10. [...] { googletag.display('div-gpt-ad-1322710633957-1'); }); How Greece Could Take Down Wall Street WEB OF DEBT BLOG "there is one bit of bad behavior that Uncle Sam himself does not have the funds to [...]

  11. Great comments.
    (auresdemulo)
    “Now, the question is, should we use these trillions of dollars to bail out the banks from all these evil losses due to derivatives and default swaps? We’d be foolish to do so. We should let the greedy bankers fail and be tossed aside. Fool me once,maybe, but fool me twice? “,
    Foolish,yes, but only because we would allow our quest for vengengence cause our own economic demise.
    — Ludwig von Mises,”There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of the voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.” — Ludwig von Mises

    ?NO MEANS?, I would disagree. We need only to correct how and where we went wrong,then take all the time necessary to punish and to insure against it happening again.

    The evil that was done was allowing the financial institutions to print (issue) our currency (Fractional reserve banking ).This combined with allowing them to charge interest (“compounding, the most powerful force in the universe”) together MUST BE TAKEN AWAY from them.

    SOLUTION:LENDTHEM $1 QUADRILLION, if needed
    with the conditions that they may no longer be allowed fractional reserve banking.They must be at 100% reserve and they can borrow from “We The People” to be at 100% reserve.
    “We the People” will then use “the most powerful force” (compound interest ) to raise revenues instead of taxes.

    By Michael Hudson
    “…. The Mathematics of Compound Interest
    A syndicate of less than one hundred American capitalists, if allowed to collect interest on their capital at a low rate and re-invest for 150 years or less, would at the end of that time own the earth and all real and personal property thereon. This is a simple mathematical proposition, capable of exact demonstration, and any one who doubts the truth of this statement may set all doubts at rest by computing compound interest on one and one-half billions of dollars for one hundred and fifty years, at five per cent per annum.

    Please read: “Economic Solution 2012. ZERO Income Taxes”
    http://www.justaluckyfool.wordpress.com

    RIP IT APART,CORRECT IT, MAKE IT HAPPEN.

  12. The Jews on Wall Street will ruin us all.

    • And “The City of London.”

  13. What is physically perfectly possible is going to continue to be made financially impossible for as long as humans fail to rid themselves of the suicidal idea to allow overpay-underpay. Fairpay justice – everyone aiming to take out of the pool of wealth just what they contribute by their own work, no more and no less – is the only thing sustainable and just. EVERYTHING else is straining gnats whilst swallowing camels as we blunder through our final days before the injustice sets off the global bombs. The non-negotiable price of survival is justice, Fairpay Justice. Humanity is out of choices and must STOP trying to deal with a few of the millions of CONSEQUENCES of allowing overpay-underpay overpower-underpower tyranny-slavery. We either outlaw overpay-underpay or it’s history on repeat on steroids kaboom. The Stelliferous era is a terrible thing to waste on continuously erecting wealthpower giants then begging our right to live from them. Stop it, Humanity. You owe posterity better than to take their chance to have a future away. A friend is one who warns you.

  14. This article was great, and the comments very insightful.

    I was a Greek major in college, and although I’ve been following Ellen Brown’s articles for some time now, derivatives, credit default swaps, the MERS debacle, and financial jargon in general are Greek to me. I get the universals, the underlying ideas, but the particulars I shall leave to you with expertise in the laws and language of finance and banking.

    I was attracted to the Midas reference, and it seems to me that if the Wall Street Banks are like the ancient King Midas, then are we not already part of the Greek tragedy? The appetites of selfish and greedy bankers, in their insatiable addiction to take more and more, are draining the life, sustenance, and energy not only of Greece, but many countries around the world, including this country.

    If we look at Europe, the Middle East, and Africa, the shortage of money that is being held back by the bankers can be seen as a causative factor in creating some of the conditions that have lead to the shortage of such essentials as food, fuel, and the basic commodities that make life possible. People in many countries today are starving. Food and gas prices are rising. Many have lost their homes and jobs. Are we all going to be devoured because the greedy are unable to control themselves and cannot be satisfied?

    How could Midas die of hunger when he thought he had everything? Well, because you can’t eat gold or CDS derivatives, and all those billions sitting in bank vaults feed no one. The lessons are there, and we have repeated the same mistakes by not radically reforming the banking system. The “Wall Street” banks, like King Midas, are really an example of the nature of avarice, which is a desperate, blind hunger for more than it can consume, and without a thought of stealing from the people whom they are annihilating.

    Ellen has been sounding the alarm bells, and they are getting louder. Her ideas for reforming the banking system are critical to our economy, critical to its survival, and that of the world.

  15. Why doesn’t the Greek central bank just relax credit and issue the funds to pay off the debt? Their money isn’t backed.

    Oh that’s right! We need daily reports of euro drama complete with burning cars and “austerity.”

    EVERY country is bankrupt because that is the system they have put in place. Just print the fake money and make the fake debts go away.

    After this payoff event we could still burn cars and cry for austerity…we just wouldn’t need to anymore.

  16. [...] Big American banks may be too big to fail no matter how badly they behave, but Ellen Brown from Webofdebt.com thinks some U.S. banks may, also, have too much exposure to save.  In her latest post, Brown lays out the case that a Greek default could take down Wall Street.  Brown said, “. . .there is one bit of bad behavior that Uncle Sam himself does not have the funds to underwrite: the $32 trillion market in credit default swaps (CDS).  Thirty-two trillion dollars is more than twice the U.S. GDP and more than twice the national debt.”  (Click here for the complete post from Webofdebt.com.)  [...]

  17. [...] Ellen Brown: How Greece could take down Wall Street http://webofdebt.wordpress.com/2012/02/20/how-greece-could-take-down-wall-street/ [...]

  18. [...] way, there is no such thing as “risk-free speculation” protected with derivatives.Ellen Brown Web of Debt  About Ellen BrownEllen Brown is an attorney, president of the Public Banking Institute, and the [...]

  19. [...] Big American banks may be too big to fail no matter how badly they behave, but Ellen Brown from Webofdebt.com thinks some U.S. banks may, also, have too much exposure to save.  In her latest post, Brown lays out the case that a Greek default could take down Wall Street.  Brown said, “. . .there is one bit of bad behavior that Uncle Sam himself does not have the funds to underwrite: the $32 trillion market in credit default swaps (CDS).  Thirty-two trillion dollars is more than twice the U.S. GDP and more than twice the national debt.”  (Click here for the complete post from Webofdebt.com.)  [...]

  20. Nothing last forever (except the whole universe).

    Debt-based banking is among humanity’s most unstable and dangerous inventions.

    The 2010 Constitution of the United States of America addresses this political-financial hoax as well as many others we’re all facing in today’s world.

    http://Treasurynet.US

    Treasurynet.Org

  21. Ellen Brown,”That may be, but there is one bit of bad behavior that Uncle Sam himself does not have the funds to underwrite: the $32 trillion market in credit default swaps (CDS). Thirty-two trillion dollars is more than twice the U.S. GDP and more than twice the national debt.”
    Please correct or defend that statement.
    Fact:Bank of America has $80 trillion worth of deviratives.Where did they get they “currency” for that asset?
    Banks can be Fractional Reserve Banking simply “print” to money.
    It would then only be a question as who would be willing to accept it.
    BUT THIS COULD CAUSE A MASSIVE “crash-crack boom” that as MISES says, “cause total currency collaspe”. The holders would accept the $80 trillion and buy anything at any price to hold as protection.
    BUT
    WHAT IF: The US Treasury were to LEND, yes LEND the $32 trillion to the CDS holders thereby making them whole and instead of being at 30X or 40X , being at 100% margin there would be no risk at non payment.
    AND: Since this is a loan, it is simply a transfer of assets.NO CHANGE IN FEDERAL DEBT !
    AND: The loan would have terms and conditions of 2% for 36 years.
    THIS WOULD CREATE A TAXPAYER INCOME OF $64 trillion, that’s $1.7 trillion a year !
    AMERICA THE BEAUTIFUL
    WHAT A NATION
    COLLECTING INTEREST ON ITS OWN MONEY INSTEAD OF TAXES.

    PLEASE RESPOND
    PLEASE CHALLENGE
    http://www.justaluckyfool.wordpress.com, “ZERO INCOME TAXES”

  22. [...] are in a hurry. They cannot allow member states to default, because it would destroy Wall Street. Wall Street’s biggest banks are the counter parties in the Credit Default Swaps insuring financial…. Wall Street would have to pay up and they don’t have the necessary [...]

  23. [...] But the rules are quite different when the banks are the insurers underwriting the deal.”   See Ellen Brown Post ~The credit default swap or CDS has become the cornerstone product of the credit derivatives market [...]

  24. [...] jih narediti za odvisnice.Ellen Brown, predsednica ameriškega inštituta za javno bančništvo, pa opozarja, da so dejanski problem izvedeni finančni instrumenti CDS (zamenjave kreditnega tveganja), ki jih [...]

  25. [...] Brown, predsednica ameriškega inštituta za javno bančništvo, pa opozarja, da so dejanski problem izvedeni finančni instrumenti CDS (zamenjave kreditnega tveganja), ki jih [...]

  26. All state’s elected officials must pass blills to create state banks in their states that are modelled after The State Bank of North Dakota, google, finnics7.blogspot.com/

  27. Is there a flaw in the State Banking Solution?
    Since each state is not Monetary Sovereign, they would be the same as the PIIGS in the EU. Dependent upon the issuance of the currency
    by the United States whenever more currency is needed.
    State banks can only work with currency they already have, unless
    they would be allowed Fractional Reserve Banking (print currency)
    and use ” the most powerful force in the universe, compounding”
    of interest to make a profit.Simply doing what a Sovereign Nation should do. Yet even with that,the unintended consequence could be , which state would seek “total domination”. This is a process that unabated could have that result.(If 100 banks of 1 State were to lend
    $100 billion @ 5% for 145 years,they would own all of the currency and assets of the world). The truth is in the math.
    Perhaps the solution would be …State banks as branches of the one real national bank of the sovereign nation.
    “Great News,Zero Income Taxes Solves Worldwide Economic Crisis”
    by justaluckyfool.wordpress.com

    • I think Ellen Brown’s premise is for the various State banks to collaborate with the national Treasury Dept. bank to co-ordinate monetary policy; is that true, …………………….anyone?

      • I believe, perhaps, Ellen’s Answer would be “NO”, simply because
        …..
        Ellen Brown’s premise is for the various State banks to collaborate with the national Treasury Dept. bank to co-ordinate monetary policy; is that true, …………………….anyone?……

        There is no “national Treasury Dept Bank”
        If by chance you are referring to the Federal Reserve Bank,that is a private bank owned by JPM Chase,B of A and enen some FOREIGN banks. It should be a crime to claim to be “Federal Reserve” or “Federal” anything that is privately owned. It’s name is fraudulent
        and deceitful.

        • I didn’t know what else to call an institution that doesn’t exist; but I was referring to a federalized version of the Fed, only under the control of Congress or maybe, (preferably?) a 4th branch of government could be created that would be subject to election with limited terms, as Congress does. Basically I’m looking for a way to democratize the nation’s monetary policy while retaining the function of a sovereign treasury. If (big IF) the state-run banks were tasked to elect central bankers that might work too. At this point, almost any banking system would be an improvement over what we have now.

  28. We love Ellen Brown’s Web Of Debt Blog and comments immediately following it. WordPress is a great blog host site. Yet we were a bit hurt when one of our blogs vanished in Jan. 2012, when typing in a search engine, a short term, finnics7. Its title was, ‘Zionists Run Federal Reserve, Kill USA’, or it may have been, ‘Rothschilds Clan, The Uber-Thieves, The Uber-People Rulers, The Ruler Rules The Rulers’. We noticed clicking exposer2 yields finnics7 with no blog content. So we give our other blog which you can type in Url address bar if clicking it here does not open site, http://catholicwealth.wordpress.com/. or http://catholicwealth.blogspot.com/2012/01/catholic-church-wealth-huge.html.

    Incidentally, The State Bank of North Dakota services superbly well North Dakota citizens–and interest goes back into state’s general fund, and not out of state to the uber-rich, top echelon leaches at Goldman Sachs Bank Holding Corp., Bank of America. J.P. Morgan Chase, etc; and the family clan, Rothschilds.

  29. William Falberg and Ellen Brown
    Justathought:
    What if 50 State Banks were to borrow $1 trillion each from
    a newly formed “National Bank” at a rate of 2% for 36 years.Use 50% of that money for their constituants “general welfare”.
    Use the other half for job creation and commercial loans in order to increase productivity, wouldn’t that solve the debt question and end income taxes???
    They states would be mailing to the US Treasury close to $3 trillion per annum!
    Mat “the invisible hand ” continue to bless America.
    http://www.justaluckyfool.wordpress.com

    P.S. this would not go against the “debt ceiling” because it would be a transfer of assets.

  30. [...] are in a hurry. They cannot allow member states to default, because it would destroy Wall Street. Wall Street’s biggest banks are the counter parties in the Credit Default Swaps insuring financial…. Wall Street would have to pay up and they don’t have the necessary [...]

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