Meltdown – in the news March 27 2008

Credit Crunch Fallout: Germans Fear Meltdown of Financial System

Germany and other industrialized nations are desperately trying to brace themselves against the threat of a collapse of the global financial system. The crisis has now taken its toll on the German economy, where the weak dollar is putting jobs in jeopardy and the credit crunch is paralyzing many businesses.,1518,543588,00.html


Predatory Lenders’ Partner in Crime (by then N.Y. Governor Eliot Spitzer) February 13, 2008, Washington PostSeveral years ago, state attorneys general and others involved in consumer protection began to notice a marked increase in a range of predatory lending practices by mortgage lenders. Some were misrepresenting the terms of loans, making loans without regard to consumers’ ability to repay, making loans with deceptive “teaser” rates that later ballooned astronomically, packing loans with undisclosed charges and fees, or even paying illegal kickbacks. In addition, the widespread nature of these practices, if left unchecked, threatened our financial markets. Even though predatory lending was becoming a national problem, the Bush administration looked the other way and did nothing to protect American homeowners. In fact, the government chose instead to align itself with the banks that were victimizing consumers . . . .


Is an International Financial Conspiracy Driving World Events?   Richard Cook, March 27, 2008

Was Alan Greenspan really as dumb as he looks in creating the late housing bubble that threatens to bring the entire Western debt-based economy crashing down?

Was something as easy to foresee as this really the trigger for a meltdown that could destroy the world’s financial system? Or was it done, perhaps, “accidentally on purpose”?

And if so, why? . . .


Argentina, Brazil to Drop U.S. Dollar in Bilateral Transactions

How to Contest Your Own Foreclosure

The author quotes Jefferson on the threat posed by a private banking system to our national liberties, then notes that many if not most foreclosures may be illegal because the securitized trusts pursuing them don’t have recorded evidence that they own the loans. Yet most foreclosures go through by default because the homeowners don’t contest them. Raising this simple defense could be done without an expensive attorney, and it could allow homeowners to stay in their homes much longer or to settle on better terms. Moe asks what would happen if a massive wave of homeowners started fighting back and making banks prove they have the right to foreclose . . .

“Moe’s Views and Theories on the Mortgage and Banking Crisis” (March 25, 2008)

In the News the Week Ending March 23,2008

Tent cities have sprung up outside Los Angeles as people lose their homes in the mortgage crisis.  See this short BBC Production.

Richard Cook, “Whose Money Is It?”  (March 23, 2008)

Gretchen Morgensen, “Federal Reserve ‘rescues’ Sink Speculators”

The Bear acquisition: JP Morgan consolidates its holdings at the expense of teachers and other public employees

At a 1968 meeting of the secretive globalist group known as the Bilderbergers, a U.S. official named George Ball spoke of creating a “world company.” Ball was U.S. Undersecretary of State for Economic Affairs and a managing director of banking giants Lehman Brothers and Kuhn Loeb. The “world company” was to be a new form of colonialism, in which global assets would be acquired by economic rather than military coercion. The “company” would extend across national boundaries, aggressively engaging in mergers and acquisitions until the assets of the world were subsumed under one privately-owned corporation, with nation-states subservient to a private international central banking system.  This weekend, banking giant JP Morgan added to its share of the world company when it bought Bear Stearns at $2 per share, a 98% discount, aided by backup funding from the Federal Reserve.  Who bore the loss?  Teachers and other public employees.  See —        


Catherine Austin Fitts, “Morgan Bags the Bear” (March 16, 2008), 

She writes:

Well, Eliot Spitzer’s resignation was just in time. Can you imagine what he would have said about this?  As of December 31, 2007, the New York State Teacher’s Retirement System owned 493,007 shares of Bear Stearns stock at a cost basis of $24,736,363.42 or $50.1745 per share. The year end value was $43,507,867.75 or $88.25 per share.  As of March 31 2007, the New York State and Local Retirement System owned 453,385 shares of Bear Stearns stock at a cost of $34,443,043 or $75.97 and a valuation at that date of $68,850,650 or $145.24 per share.  JP Morgan has just announced that they are going to buy Bear Stearns at $2 per share. Bear Stearns stock closed at $30 per share on Friday and at $57 per share on Thursday. Which means JP Morgan is not paying a premium to market. Rather, they are paying a 93% discount to market.  This means that the New York teachers and public employees invested $59 million in Bear Stearns and their investment is now worth $1.9MM, a loss of $57 million. If you look at their opportunity cost, the New York pension plans could have sold in June 2007 before reality hit mortgage market valuations at $151 per share. From that point of view, they have lost $149 per share, or $141 million.

Systemic failure – in the news the week ending March 16, 2008

Paul Krugman in the New York Times:

I used to think that the major issues facing the next president would be how to get out of Iraq and what to do about health care. At this point, however, I suspect that the biggest problem for the next administration will be figuring out which parts of the financial system to bail out, how to pay the cleanup bills and how to explain what it’s doing to an angry public.

Paul Krugman “Betting the Bank”(March 14, 2008)


From the Independent UK:

One UK economist warned that the world is now close to a 1930s-like Great Depression, while New York traders said they had never experienced such fear. The Fed’s emergency funding procedure was first used in the Depression and has rarely been used since. A Goldman Sachs trader in New York said: “Everyone is in a total state of shock, aghast at what is happening. No one wants to talk, let alone deal; we’re just standing by waiting. Everyone is nervous about what is going to emerge when trading starts tomorrow.”

Margaret Pagano, “Wall Street fears for next Great Depression” (March 16, 2008)


In other news:

Greg Palast links exposé of Governor Eliot Spitzer to his exposé of the banks –

Greg Palast, “Eliot’s Mess” (March 14, 2008)

Systemic failure

The financial crisis goes deeper than a declining housing market —
“Wall Street banks face ‘systemic margin call,’ Morgan warns,”
by Walden Siew, Reuters, March 8, 2008
See also
“Carlyle fund faces liquidation after missed margin calls,”
by Sean Farrell, 8 March 2008
Martin Weiss, “The Credit Collapse of 2008,”
March 10, 2008
And what the conspiracy theorists are saying about all this (good fodder for a novel anyway) —
“U.S. Prepares for ‘Doomsday’ Rule as British Forces Arrive in America,”
by Sorcha Faal

Works of art are never finished . . .

  • I just received a nice query that prompted such a long response that I’ve decided to post both here: 
  • Anne Says:
    March 2, 2008 at 5:06 pm   Ellen: I’m still reading the first edition of your book (and I am so grateful for the clarity of it all; what a welcome education). Are you able to quickly summarize what topics are in the new version that are not in the original? Any hint on the topic of your new book? Many thanks for all this work…what a service.
  •          Ellen Says:                                                                            Thanks Anne! I’m still revising actually; my current book was published by print on demand through Lightning Source and Amazon, but I’m doing a real print run that will be available hopefully in about a month, which will have a long postscript bringing the book up to date since the market crashed in the summer of 2007. Besides bringing the book current, I’ve tried to weed out those errors that are critic-bait. I had to rush to print in the summer when I wasn’t completely satisfied with it, because the market was about to tip and I wanted to join in the fray with the commentators. Works of art are never finished, but we writers sometimes hide behind that and never get anything in print! Dickens set the standard; he was desperately poor and had mouths to feed, and he published a lot. “Publish or perish” was literal for him. I won’t perish but my country might — my country which I love despite all its current travails. That was what inspired me actually. My relatives are from Pennsylvania, and in my youth I loved to read about Benjamin Franklin and Abraham Lincoln and our stirring roots. Then I lost faith during the ’60s and ’70s, with the charges of “Ugly American” and the harm we had wrought on the Third World. Then when I learned that it wasn’t “us” and that it could be fixed — that the Founding Fathers were right and we just hadn’t tried it yet — I got excited again, and had to write it up. I’m itching to be done with this revision so I can get back to writing articles. You can write an article in a week and get it out and be in the fray and get feedback; I love that. The Internet has changed everything. On my new book . . . which one were you thinking of? I’m doing new editions of some earlier books on health and the politics of medicine. One called “Forbidden Medicine” with a new Foreword should be out in about 2 weeks. My concern is that we’re rushing headlong into paying for Modern Medicine for All without examining whether we really want it imposed on us. The oil/banking monopoly and the medical/drug cartel have the same roots. I’d also like to write a sequel to “Web of Debt” titled “Compound Interest: Weapon of Financial Mass Destruction.” I started one with a Mary Poppins theme but may not be able to sustain it for a whole book; it may have to be an article. (The Banks family, you know; “tuppence in the bank” or “feed the birds”? ) I’d also like to do a short 100-page summary of, or sequel to, “Web of Debt” called “Bankrupt in the Emerald City: How the Wizards of Finance Stole the American Dream and How We Can Get It Back.” That was actually my original title, and a friend did some really nice artwork for it; it just needs some new text!  Soon I’ll summarize the changes in my revised updated “Web of Debt” and post them on a page to the right on this blog.