For two years, politicians have danced around the nationalization issue, but ForeclosureGate may be the last straw.

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22 Responses

  1. First, thanks for writing “Web of Debt”. With regard to nationalizing the banks over foreclosuregate. Replacing the “too big to fail” banks with State banks, as you’ve discussed before would be a more appealing solution. But until there is a change in the process of creating money, nationalization of retail banking seems unlikely. At this point, we can’t even restore the barrier between retail and investment banking.

    • True, it’s probably not a practical reality; just planting ideas.

      • A wise man once told me, “The world starts from the inside to out.” I took the “inside” to mean our inner space (our psychology).

        Your idea planting, for me personally, portends a flower of rare fragrance an positive potential,as opposed to the avaricious smell of
        the existing world of Finance that dominates

  2. It’s a shame that the anti-communist poison of the 1950s still prevents discussion of many viable options for our present situation. The dualism of capitalist/communist or free market/planned economy has no bearing on reality except to limit thought. If black and white photography really was actually just black and white, it would look very different than it does.

    It is even more of a shame that we never got to see the results of Salvador Allende’s use of socialism in democracy. That was a valid experiment that would have produced many illuminating lessons for all of us, if it hadn’t been thwarted by terrorist insurgents (the CIA).

  3. Precioius blood of the sweet baby Jesus the taxpayer is insuring the damn mortgages in the first place. The banks are taking off the top AND the bottom. BTW dpoes the mortgage insurance indemnify for the billed hours iin pro(per)secuting the bogus foreclosures? I am fixing to find out…..I gotta RICO case pending w/Carrington and Deutsche that would drag you out of retirement E.

  4. I remain pessimistic. I think nationalization (receivership) is inevitable, but I doubt it will be permanent. Instead, it will probably be just another kind of bailout. As with Sweden, the big banks will be returned to private ownership once they are cleaned up – whereon the banksters will resume their criminal ways.

    Indeed, more and more financial commentators insist that the Fed itself will soon have to be restructured, since the Fed’s stockholders are the big banks — but this does not mean we will get a genuinely public Fed. More likely we will have a new variant of the same privately owned vampire we have now. Taxpayers already own Fannie and Freddie, but have no control over Fannie and Freddie.

    This happens because most of the human race is in a trance regarding money. (China is an exception, as Ellen noted in a previous blog post.) Most people cannot imagine a system of banking and currency that is not based on private central banks with fractional reserve banking. If a major nation tries to institute fundamental changes, then the entire world might declare financial and / or military war on that nation – as it did when Nazi Germany introduced systems of money and credit that were not tied into the international banksters.

    Regarding foreclosuregate, the main question is the degree to which investors will succeed in “putting back” fraudulent securitized mortgages to the banks. The scammer banks have already assembled an army of lawyers to fight this, and the Bernanke of the Fed is spending $110 billion a month to buy toxic mortgage securities and turn them into Treasuries. (All of Bernanke’s claims that quantitative easing is to help the economy are LIES.) This is weakening the dollar, and is making imported goods more expensive for American consumers.

    Banks can try another trick like HR 3808, which Obama vetoed, but it won’t stop the investor lawsuits, because the MERS system has done away with promissory notes. No one knows who owns what. The MERS system violates the UCC and centuries of property law. It is completely illegal.

    Hence we face two alternatives. We cannot have both.

    [1] We can let the illegal MERS system stand, and let the banks continue to get away with institutionalized fraud and theft, and continue to cheat counties out of recording fees, and continue to let the mortgage market remain in a crippling limbo, or [2] We can invoke myriad laws (e.g. the UCC and state property laws), which will necessitate taking the criminal banks into receivership.

    JPMorgan Chase, B-of-A, US Bank, and Wells Fargo are already nearing 0.50 on the “Texas ratio,” meaning they are increasingly insolvent. As the ratio approaches 1.0, bank collapse becomes inevitable. No fraud or trick can alter this reality.

    Receivership will not be pretty. The FDIC has 829 banks on its “Problem Bank” list, and has shut down 283 small and medium sized banks since the beginning of 2009. Now the FDIC will have to start working its way up the food chain. However the FDIC is already $16 billion in the red, and expects to be at least $52 billion in the red by 2014. That is an initial and conservative estimate. One way or another, taxpayers will bail out the banksters via TARP II, III, IV, and so on — meaning permanent poverty for most Americans.

    Even if by some miracle we were to break up the big banks, and have a genuinely public Fed, we would still have a disastrous trade imbalance, plus exported jobs, and a government that is viciously anti-worker.

    So I remain pessimistic. The way I see it, this current Depression is only beginning.

    In her blog post of 29 October, Ellen says we need a new theory of money. I agree. This is the only real solution to our problems. The issue goes beyond even the need for a public central bank. We must fundamentally change how we think about money. We must have banks that work for the people, rather than have the people work for the banks.

    Along these lines, I should write a science fiction novel describing an alternate earth that advanced in technology and living standards until the planet’s atmosphere was privatized (i.e. put under the control of a secret cadre of “air bankers”). At the point, social advancement stopped, as everyone started slaving for the “air bankers” if they wanted to breathe. Such an allegory would expose the horrendous absurdity of having air (i.e. money) under private central control. It would also illustrate how most people defend their slavery because they live in a trance. Baron de Montesquieu’s satiric “Persian Letters” (1721) exposed the absurdity of French society by viewing that society through the eyes of foreigners.

  5. If the dysfunctional system ceases to function, why not nationalize the Fed? It has already been endowed with the power of “systemic oversight” by the Dodd Frank legislation, so why not as the next move quietly incorporate it into the Treasury where this systemic oversight properly belongs in the first place?

    This is what Stephan Zarlenga has in mind, to nationalize the private system as the best means to serve the public interest.

    Do you believe, Ellen, that state-owned banks can be a substitute for nationalizing the Fed? Is the state bank idea your ultimate solution for monetary reform?

  6. I think the state bank idea was introduced because it would help (a little) and had a much better chance of happening than the AMI plan to nationalize money creation.

  7. This is off-topic, but check out this short (1 min 43 sec) but WAY COOL video from Taiwan about criminal US banks. Chinese with English subtitles. This year, US banksters will get about $144 billion in bonuses. The video shows them as actual robbers. It also shows banksters as pigs gorging themselves at a trough filled with money that the government steals from taxpayers. It also shows the banksters throwing money at politicians and judges. Hilariously true!

  8. It’s good people are looking into the Gosbank financial system alternative.

  9. No need to use the term “nationalization”. Just call it what it really is and the proper legal term applied to any bankrupt entity: receivership.

    Those who participated in fraud should be prosecuted, the equity holders and the bond holders should be wiped out, new senior management should be brought in and any “restructured bank” should have to abide by the old dictates of Glass-Steagall.

    • I’d go further than simply letting the “new” banks exist according the “old” rules. I’d return the money to the depositors (not the investors, but those with checking and savings accounts), then pay off the non-management employees – then sieze the assets to help pay the federal deficit. (I know, I know, congress could do that by creating money out of nothing, but still – I’d rather the assets server the public good than be used to hire lawyers to get the criminals off the hook)

  10. A bill has already been co-sponsored and introduced by Maria Cantwell and John McCain.

    It is the Cantwell-McCain Banking Integrity Act of 2009 to re-instate Glass Steagall. Unfortunately the bill is languishing do to lack of public interest. But feel free to call your reps and put a little fire under them. Anger can be a good motivator. It just needs to be channeled toward productive results.

  11. Oops…”due to lack of public interest.”


    • It has been reported by some that the (original) Banking Act of 1933 (Glass-Steagall) can be a bit hard to find, so I’d like to offer this link:

      Perhaps someday it might have a thread of its own here, but I don’t wish to load more work upon the already (to me) heroic Ms Brown.

      • I just read the short purpose statement of the act and I notice the following: “to prevent the undue diversion of funds into speculative operations”. No wonder the banking and finance industry had to get the act repealed!

  12. The modus operandi in this robbery is nationalizing those sick banks when it is inevitable. Few years later, when the tide has calm down, those banks will be privatized again to the same gang using different corporation names, & sold with a very low price.

    This always works. The sheeple will not resist.

  13. Good article Ellen, and Morris Shinderman is correct, there’s a difference between nationalization (like the Atlee Govt taking over the Bank of England) and receivership, which is essentially bankruptcy restructuring for banks. Even James Baker was in favor of that. When Obama took his administration on a more pro-Wall Street tack than even Baker wanted , that’s when I knew we were in trouble.

    I’d point out that among the new GOP freshman is North Dakota Sen. John Hoeven. Before his 10 years as governor, he spent 7 years as President of the Bank of North Dakota. Any changes towards ND style public banking, whether one federal bank or (more feasibly) 49 more state banks are going to be dependent on his support, since he certainly qualifies as the subject matter expert.

  14. I agree with Morris. Prosecute the fraud in the system, replace management and allow capitalism to work. Sure enough entrepreneurs will handle the rest. In my undereducated opinion banks are no different than any other bussiness. While one may fail another will surely take over as long as profit is obtainable.

  15. Let capitalism work, that’s pretty funny in the terminal throes of capitalist contradictions.

    Heres a different idea:

    Arise, ye prisoners of starvation!

    Class war? Like the man once said:

    “Bring it on”

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