Ellen Brown

Are you ready for economic collapse? Americans are less prepared than the Soviets were

Posted on April 30, 2008 by Ellen Brown

The train has already derailed, but our media are barely reporting it. Dmitry Orlov lived through the collapse of the Soviet Union during the cold war. In his book “Reinventing Collapse” he compares the preparedness of the Soviets prior to the cold war to the preparedness of Americans today.
Below is a link to an excellent review of his book. A little knowledge and prep now will be priceless later . . . .

http://www.energybulletin.net/23259.html

Here are some interesting responses I got when I forwarded this by email:

Tore Dahlin wrote:

It is interesting that Orlov discussed this matter a year-and-a-half ago, as though he had a crystal ball into 2008.

I believe that all of our economic problems boil down to nothing but problems with macro organization and management. From a strictly technical point of view, all of our present problems are easily solved. The question only becomes, how do we get the needed consensus to enact the simple, but sweeping, solutions to almost instantly turn things around? It is like we are all sitting together in an old wreck of a car that is sputtering along and about to blow, when we could all just get out and get into a sleek new model. I guess as a society we get too attached to the old jalopy and think it’s the greatest thing to be driving even as we see the oil leaking out and the steam escaping the radiator. (Well, enough of that metaphor).

Patrick Hedemark wrote:

Thank you – both for this analsysis and again for the “antidote” to it – your book “Web of Debt”.

What I find so amazing now for me – after studying all of this for so long now is the fact that even the “predictions” of dire consequences by so many “experts” amount to a back handed acceptance of the “system” as reality – when in fact – it is really illusion.

The “notional value” ascribed to our money itself – as well as its by- products – the stock exchange and its myriad of “ponzi programs” as well as the housing and mortgage “industries” – are alll supported with the original “presumption”; that pretense is the equal of reality.

“Collapse” is tantamount to “disillusionment”. To be in illusion is unwanted, yet most people associate the term “disillusioned” with an uncomfortable and/or unwanted condition. Like the spouse that would rather suffer uncertainty as to the fidelity of their “other” rather than knowing he or she is in fact a scamp and that the only genuine solution to their ignorant condition is to know the truth, leave the bum and find “the real McCoy”.

Collapse is both inevitable and desirable. The destruction of all fictitious notional value is the very best thing that could happen to us all. Real Money – for Real Labor and Real resources – created by WE THE PEOPLE (THE GOVERNMENT) and delivered – IN SPITE OF THE SCREAMS OF THE PARASITES – will be the ACTUAL FULFILLMENT OF THE AMERCAN REVOLUTION!!

Filed under: Brainstorming | 5 Comments »

Conferences in April and May: The UnMoney Convergence and Building a New World Conference

Posted on April 24, 2008 by Ellen Brown

Last week I attended an excellent conference in Seattle called the UnMoney Convergence. I’ve been so busy that I don’t know that I can give it justice here, but I wanted to add a note. I’d estimate that about 50 people attended, although I didn’t count. It was largely a community currency group, so that was the main focus of the discussions. The structure was interesting: anyone who wanted to could speak or organize a group. The two full days of the conference were divided into 7 time slots, and the large hall (in the Seattle Town Hall) was divided into 5 meeting places with letter labels. That made 28 possibilities for groupings, one or more of which you could sign up to lead (giving name and topic on a large bulletin board). When it was your appointed time, you went to your corner and waited to see if anyone showed up. I signed up for two, at the end of each day, and on the first one, guess what — nobody showed up. At least not at first, but then a person I really wanted to talk to wandered over, and we had a very fruitful discussion. On the second day, my group was better attended and we had another very good discussion. Other group leaders attracted substantially better followings and were more formally prepared, with slide presentations and so forth. What was cool and unusual was that the conference organizers themselves were basically agenda-free, and the people who came with their own agendas (including me, though only for practice, being a duck among swans), often wound up losing interest in their own pet project in favor of some of the others. One drawback with the approach was that if you played the butterfly, flitting from group to group (one of the options we were encouraged to take, which I did), you were liable to miss important points and didn’t dare ask for a replay, which could have been lengthy. But overall it was a very congenial and supportive group, and a great opportunity for networking. I won’t try to discuss the particular talks, partly because I didn’t catch the whole gist of most of them; but if you’re interested in learning more you can go to the session notes at the UnMoney Convergence website, <a href=”http://unmoney.wik.is/Session_Notes”>http://unmoney.wik.is/Session_Notes</a>.

Not having had a chance to write up this interesting experience myself, I’ll post the review of Tom Palumbo and Ann Williams —

The first international conference of the World Prout Assembly, “Building a New World,”

World Prout Assembly: Religion Pt. 1 – AOL Video
Video Search Results – tag: prout – AOL Video

Building A New World
By Tom Palumbo and Ann Williams

As history has illustrated, the opulent green and sleepy mountains of the western part of Virginia have nurtured seeds of change. Again, in late May, the Virginia countryside heard cries of “Revolution!”. Not unlike the Colonie’s war cry against Imperial powers, people are standing up to a global crisis of immense proportions demanding immediate and ongoing solutions.

The event was a 4 day conference over Memorial Day Weekend entitled, “Building a New World”. Held on the Radford University campus, the gathering was the first summit of the World Prout Assembly.

Conference organizer, Garda Ghista, spoke of the need for “a great and immense movement…to sweep our nation; a positive force that through its sheer {energy} will have the capacity to…constitute hope and a new direction…”. The group brought together an eclectic think-tank of innovative people who study societal dynamics and influences on today’s culture.

Notable activists such as Cindy Sheehan ( A “Gold Star Mother for Peace”), Attorney Lynn Stuart, Robert Jensen, David Swanson, Kathy Kelly and many others led panel discussions geared towards a new global renaissance.

Several Hampton Roads residents were in attendance including Tench Phillips, co-owner of The Naro Expanded Cinema in Norfolk (www.narocinema.com). He called the events of the “Building a New World” conference “an unprecedented weekend… of organizers, authors, academics and film-makers coming together in a true grass-roots democratic movement to teach and learn from one another.”

Prominent critics of the war and neocon agenda aligned with Adam Kokesh and his colleagues of Iraq Veterans Against the War (www.ivaw.org), who recently testified in landmark Winter Soldier hearings. Iraqi-American physician Dahia Wasfi (www.liberatethis.com) presented a workshop on “The Sorrows of Race, Gender and Class.” Documentarian Danny Schecter presented “In Debt We Trust.”He and NYT Bestselling Authors Steve Alten (The Shell Game) and William Blum (Rogue Nation) each spoke on the urgency of Media Reform.

The vast array of topical challenges facing our nation and world today ranged from verified voting, economic quagmire, sustainable communities, environmental concerns and unanswered questions from the 9/11 attacks.

Advocates for change from Hampton Roads, included Chris Jaramillo, Joe Fillipowski, Dr. DC Amarasinghe, and members of PETA who participated in a full slate of workshops such as “Right to Healthcare,” “End of Empire,” “Prevent Unwanted Presidencies: Election Fraud,” “Civil Liberties and Constitutional Rights,” and “Taking Back the Media.”

Father Roy Bourgeois, co-founder and director of School of the Americas Watch, shared numerous struggles for non-violent change and victories towards the path to healing a broken world. His listeners were moved by his gently saying, “We know not what we have within us…” and we must recognize and celebrate the power of a “Solitary Witness”.

Pastor Rev. Pamela Anne Bro. of Living Waters Sanctuary, of Virginia Beach, offered an energetic presentation at the conference entitled “Spiritual Practices on the Path to Peace.”

There was an appeal for local activists to urgently challenge folks to wake up, pronto. Read. Research. Hone critical thinking skills. To do this they are peacefully armed with countless resources including websites ie; www.911Truth.org, books, DVD’s and infinite persistence. The unified hope is that the world can be a better and just place for everyone. You will likely recognize them as they engage people in line, at the movies, on the streets, at gas-stations, grocery stores or along the Boardwalk. They are the contemporary Town Criers of Hampton Roads.

The sense from most people participating was that in spite of ongoing global crisis, imminent change is happening. Our survival depends on how flexibly, creatively and effectively we respond to our challenges. The gathering has shaped a pro-active vision of fundamental change be it called a revolution, an awakening, a paradigm shift or a new American Renaissance.

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Meltdown – in the news March 27 2008

Posted on March 28, 2008 by Ellen Brown

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.

http://www.spiegel.de/international/business/0,1518,543588,00.html

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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 . . . .

http://www.washingtonpost.com/wp-dyn/content/article/2008/02/13/AR2008021302783.html

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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? . . .

http://www.globalresearch.ca/index.php?context=va&aid=8450

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

http://news.xinhuanet.com/english/2008-03/16/content_7800121.htm

Filed under: In the News | 1 Comment »

How to Contest Your Own Foreclosure

Posted on March 27, 2008 by Ellen Brown

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)

http://www.loansafe.org/forum/moes-views-theories-mortgage-housing-crisis/521-i-believe-banking-institutions-more-dangerous-our-liberties-than-standing-armies.html

Filed under: In the News | 6 Comments »

In the News the Week Ending March 23,2008

Posted on March 25, 2008 by Ellen Brown

Tent cities have sprung up outside Los Angeles as people lose their homes in the mortgage crisis. See this short BBC Production. http://www.youtube.com/watch?v=CnnOOo6tRs8

Richard Cook, “Whose Money Is It?” (March 23, 2008) http://www.globalresearch.ca/index.php?context=va&aid=8424

Gretchen Morgensen, “Federal Reserve ‘rescues’ Sink Speculators” http://www.iht.com/articles/2008/03/23/business/morg.php

Filed under: In the News | Leave a comment »

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

Posted on March 17, 2008 by Ellen Brown

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), www.solari.com/blog/

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.

Filed under: In the News | 2 Comments »

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

Posted on March 16, 2008 by Ellen Brown

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)

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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)

Independent.co.uk

http://www.independent.co.uk/news/business/news/wall-street-fears-for-next-great-depression-796428.html

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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)

http://www.gregpalast.com/elliot-spitzer-gets-nailed/#more-1979

Filed under: In the News | 1 Comment »

Systemic failure

Posted on March 8, 2008 by Ellen Brown

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

http://tinyurl.com/2zhpl4

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Works of art are never finished . . .

Posted on March 2, 2008 by Ellen Brown

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.

Filed under: Ellen Brown Articles/Commentary | 7 Comments »

Posted on February 29, 2008 by Ellen Brown

Pennsylvania Student Loans Halted on Auction Failures

By Adam L. Cataldo

Feb. 27 (Bloomberg) — The Pennsylvania Higher Education Assistance Agency, the second-largest seller of auction-rate debt for the past seven years, will stop making student loans next month after paying $24 million in extra interest.

The agency services and buys existing obligations and makes about $500 million in new loans annually, chief financial officer Tim Guenther said. Officials, who made 140,000 student loans in the 12 months through June 30, said they will halt making new ones on March 7.

Filed under: In the News | Leave a comment »

Posted on February 28, 2008 by Ellen Brown

Richard Cook’s tale of the national dividend is explored in this look into the future.

Finally: Economic Sanity Returns to America

by Richard C. Cook / February 28th, 2008

It started with the crash and depression of 2008-2009. Consumers had finally lost the ability to float global business with their credit cards and home equity loans.Finally even the politicians had to face the facts. Ever since the 1980s, when the economy was handed over for plundering to the banks and the Wall Street plutocrats, ordinary people had struggled just to survive.

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Looking into the Abyss — Feb 24, 2008

Posted on February 24, 2008 by Ellen Brown

The Three Trillion Dollar War
Feb 23, 2008

The endless borrowing at endless interest for a seemingly endless number of years works as long as there is an endless amount of available credit; but can it continue? Here is an estimate by Joseph Stiglitz and Linda Blimes of the London Times as to the real extent of the financial cost.

From the unhealthy brew of emergency funding, multiple sets of books, and chronic underestimates of the resources required to prosecute the war, we have attempted to identify how much we have been spending – and how much we will, in the end, likely have to spend. The figure we arrive at is more than $3 trillion. Our calculations are based on conservative assumptions. They are conceptually simple, even if occasionally technically complicated. A $3 trillion figure for the total cost strikes us as judicious, and probably errs on the low side….
The price in treasure has, in a sense, been financed entirely by borrowing. Taxes have not been raised to pay for it – in fact, taxes on the rich have actually fallen. Deficit spending gives the illusion that the laws of economics can be repealed, that we can have both guns and butter. But of course the laws are not repealed. The costs of the war are real even if they have been deferred, possibly to another generation.

http://tinyurl.com/2ygcgo

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German State-Owned Banks on Verge of Collapse
Feb 20, 2008

Der Spiegal Online details how Germany is being sucked into the imploding derivatives bubble, as the Ponzi implodes internationally. Note how the position and credit situation of this bank was made desperate at the insistence of authorities in Brussels (EU), setting them on a high risk course. There should be some interesting back story there.

The German government has had to bail out state-owned banks with taxpayers’ money after their managements recklessly gambled away billions on subprime investments. But if a state-owned bank were to go under, the consequences could be disastrous for the whole economy . . . . Hard up for funds, many of the public-sector banks began speculating with high-risk securities. According to a former bank executive, many “literally stocked up on these investments” shortly before the cut-off date. Others even continued to do so after the cut-off date. Lacking a functioning business model, they turned to what was essentially gambling — and lost.

http://tinyurl.com/2q7f9x

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U.S. to turn up heat on tax protesters
Feb. 20, 2008

The current crisis creates a tax hungry IRS, and it looks like it is not the high rollers who will get the heat so much as the tax protestor or rather Tax Denier participants. To understand the position of many of the targeted non-filers more fully than this article explains, look up online Aaron Russo’s film of last year, “America: From Freedom to Fascism”; there is a great airing of the situation there.
Although someone like Snipes is high profile and wealthy, the target here is a lot of rather median-to-small earners. That begs the question of whether the IRS and Justice Department are trying to head off an exodus by the suddenly-poor from the tax collecting system, just as many are now walking away from their “upside down” mortgages. Are they expecting to have to head off a growing sense of rebellion in our financial system, as the air goes out of the Ponzi scheme?

The Justice Department, on the heels of a split verdict in its tax evasion prosecution of actor Wesley Snipes, is planning a crackdown on the so-called tax protester movement . . . . Officials say the movement costs government many millions.

By Robert Schmidt, Bloomberg News
http://tinyurl.com/2lruhq

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Wall Street Bank Run
Thursday, February 21, 2008

This commentary, by David Ignatius of the Washington Post, describes the banks’ run upon themselves, as credit contracts and contracts; and further points out just WHO is bringing money back into the country to keep things pumped up, and to whom America will owe an enormous debt.
It doesn’t look like an old-fashioned bank run because it involves the biggest financial institutions, trading paper assets so complicated that even top executives don’t fully understand the transactions. But that’s what it is — a spreading fear among financial institutions that their brethren can’t be trusted to honor their obligations.
Frightened financiers are pulling back from credit markets — going on strike, if you will — to escape the unraveling daisy chain of securitized assets and promissory notes that binds the global financial system. As each financier tries to protect against the next one’s mistakes, the whole system begins to sag. That’s what we’re seeing now, as credit market troubles spread from bundles of subprime residential mortgages to bundles of other kinds of debt — from student loans to retailers’ receivables to municipal bonds.
The hubris in this system was Wall Street’s confidence that it could value paper securities that had been sliced and diced so many times that they no longer had solid connections to their underlying assets. The nation’s leading financier, Warren Buffett, had warned years before that “derivatives,” whose value was balanced loosely on the real assets underneath, were the equivalent of “financial weapons of mass destruction.” But in the rush for profits, nobody listened.
And who is bailing out America’s biggest banks and financial institutions from the consequences of their folly? It’s the sovereign wealth funds, owned by such nations as China and the Persian Gulf oil producers. The new titans are coming to the rescue, if that’s the right word for their mortgage on America’s future.
http://tinyurl.com/2u37sl

Filed under: Uncategorized | 1 Comment »

More bad news – and how to fix it

Posted on February 23, 2008 by Ellen Brown

AMERICA’S ECONOMY RISKS THE MOTHER OF ALL MELT DOWNS…

     The Financial Times delivers the lowdown on the actual potential magnitude of America’s financial decline, based upon the formerly controversial (now operational) 12 step path to recession and melt down, as forecast in 2006 by Nouriel Roubini of the New York School of Business.

“Recently, Professor Roubini’s scenarios have been dire enough to make the flesh creep. But his thinking deserves to be taken seriously. He first predicted a US recession in July 2006*. At that time, his view was extremely controversial. It is so no longer. Now he states that there is “a rising probability of a ‘catastrophic’ financial and economic outcome”**. The characteristics of this scenario are, he argues: “A vicious circle where a deep recession makes the financial losses more severe and where, in turn, large and growing financial losses and a financial meltdown make the recession even more severe.”

http://tinyurl.com/29aq6z

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TREATING DEATH AS A COMMODITY…

Not sure exactly how this works, but it shows how speculators will take virtually anything and try to convert it into a quick investment profit.   It is a tendency that has come to haunt us in the subprime world.

http://tinyurl.com/2m82cd

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THE SUBPRIME MESS GRAPHICALLY (AND COMICALLY) EXPLAINED….

     This PowerPoint link will save you reading whole chapters of “Web of Debt” . . . and give you some much needed laughs.

http://tinyurl.com/2sgevc

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U.S. CREDIT MARKETS COLLAPSING…

From Martin D. Weiss, Ph.D., in Money and Markets newsletter —

“The U.S. credit markets, the giant growth engine that powers the American economy, are collapsing … with few credit sectors spared from damage, few investors escaping losses, and little hope of federal action that’s quick or strong enough to make a major difference…….. Without the triple-A rating, their whole reason to exist falls by the wayside: They cannot enhance the credit of bond issuers. They cannot do more business. They may as well close their doors and go home.”

http://preview.tinyurl.com/2om3hn

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U.S. COMPTROLLER GENERAL RESIGNS

One of the last few officials working hard to get out the truth about budgets and astronomical looming entitlements has walked away from it all.   David M. Walker of the Government Accountability Office resigned Feb. 15th.

http://tinyurl.com/33wvj3

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BERNANKE: “YOU’RE ALL DEAD DUCKS”…     He did not really say that, but Mike Whitney’s characterization of Bernanke’s recent testimony says he might as well have:

“Even veteran Fed-watchers were caught off-guard by Chairman Bernanke’s performance before the Senate Banking Committee on Thursday. Bernanke was expected to make routine comments on the state of the economy but, instead, delivered a 45 minute sermon detailing the afflictions of the foundering financial system. The Senate chamber was stone-silent throughout. The gravity of the situation is finally beginning to sink in.”

http://tinyurl.com/3ba39n

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PAULSON’S WILD RIDE ON THE HINDENBURG: “THE WORST HAS JUST BEGUN”

Mike Whitney again,  watching the spin unravel into more of a confessional, as the Treasury Secretary unveils “Project Lifeline”, a rather thin safety net to buy the foreclosed some time, and revealingly answers some hard questions from reporters.    For example:

Reporter: “Sir, is the worst over, yet? Will 2008 have fewer foreclosures?”

Secretary of the Treasury Paulson: “In terms of sub-prime and the resets, the worst isn’t over. The worst is just beginning…. There’s close to 2 million adjustable rate mortgages where the rate is going to be reset over the next couple of years.”

http://tinyurl.com/2howfd

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Fortunately, there is another alternative. It’s all in the revised, updated “Web of Debt” — available now! http://tinyurl.com/yqbjth

Filed under: In the News | 1 Comment »

How to Start Your Own Bank

Posted on February 23, 2008 by Ellen Brown

How to start your own bank:

http://www.financialsense.com/fsu/editorials/schoon/2007/0514.html

http://money.howstuffworks.com/bank5.htm

Idea: we get 6 investors with $100,000 each to become the directors. Their $600,000 is the 10% needed to get started; we raise the other 90% by issuing stock. That gives us capital of $6 million, enough to charter a bank. Then we’re allowed to create and lend . . . $200 million! (See first article above.) Today you only need 3% reserves if you’re a small bank. The BIS (Bank for International Settlements) capital requirements are a bit higher — 8% — but even at 8%, our $6 million lets us lend $50 million. We lend interest-free to various worthy causes that will generate a profit if they don’t have the burden of interest, such as alternative energy projects, low-cost housing, Permaculture farming projects and the like. Rather than charging interest, we take a modest share of the profits, on the model of Islamic banking or investment banking; but our real purpose is to set up a working model of what community-oriented banking could be. We use the principles developed over 300 years by the private banking system and turn them to public ends.

Filed under: Brainstorming | 14 Comments »

Northern Rock Nationalized

Posted on February 17, 2008 by Ellen Brown

In England, the government does not bail out bankrupt banks without some quid pro quo; it takes their stock . . .

LONDON – Britain’s treasury chief Alistair Darling said today that struggling bank Northern Rock PLC will be nationalized.

That after the government rejected two takeover bids.

Northern Rock ran into trouble in September because it relied too heavily on short-term money markets instead of deposits for funding.
http://ca.news.finance.yahoo.com/s/17022008/2/biz-finance-britain-nationalize-troubled-mortgage-lender-northern-rock.html

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View from the Titanic — in the news the week of 1-21-08

Posted on January 25, 2008 by Ellen Brown

Chalmers Johnson, “How To Sink America”

http://www.rense.com/general80/sink.htm

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Bill Engdahl, “The Financial Tsunami Part III: Greenspan’s Grand Design”

http://www.financialsense.com/editorials/engdahl/2008/0123.html

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“Housing prices to free fall in 2008”

http://money.cnn.com/2008/01/23/real_estate/merrill_forecast/index.htm?

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“A tipping point? ‘Foreclose me … I’ll save money’”

http://latimesblogs.latimes.com/laland/2008/01/a-tipping-point.html

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George Soros, “The worst market crisis in 60 years”

http://www.ft.com/cms/s/0/24f73610-c91e-11dc-9807-000077b07658.html

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Rick Ackerman, “PPT emerges from the shadows”

http://news.goldseek.com/RickAckerman/1201071660.php

Filed under: In the News | 2 Comments »

More banking woes: the lawsuits begin

Posted on January 14, 2008 by Ellen Brown

CLEVELAND SUES 21 BANKS OVER SUBPRIME MESS

by Henry J. Gomez and Thomas Ott, January 11, 2008

Mayor Frank Jackson took aim at Wall Street on Thursday with a lawsuit against 21 major investment banks that he said have enabled the subprime lending and foreclosure crisis here.

The one-of-a-kind suit, filed in Cuyahoga County Common Pleas Court, accuses venerable institutions such as Deutsche Bank, Goldman Sachs, Merrill Lynch and Wells Fargo of creating a public nuisance.

Jackson contends the companies irresponsibly bought and sold high-interest home loans. The result: widespread defaults that depleted the city’s tax base and left entire neighborhoods in ruins.

. . . “To me, this is no different than organized crime or drugs,” Jackson said in an interview with Plain Dealer reporters and editors.

“It has the same effect as drug activity in neighborhoods. It’s a form of organized crime that happens to be legal in many respects.”

. . . Cleveland is the second major U.S. city this week to sue over the ills of subprime loans.

On Tuesday, Baltimore sued Wells Fargo, alleging the bank intentionally sold high-interest mortgages more to blacks than to whites – a violation of federal law.

The Baltimore and Cleveland efforts are believed to be the first attempts by large cities to recover losses blamed on the foreclosure epidemic, which has particularly plagued Ohio. . . .

http://www.cleveland.com/news/plaindealer/index.ssf?/base/cuyahoga/1200044068184570.xml&coll=2

Filed under: In the News | 4 Comments »

After the collapse – a short story

Posted on December 27, 2007 by Ellen Brown

An entry below titled “Up to $6.5 trillion in mortgage-backed securities may be in jeopardy. Subprime borrowers may have an escape hatch — no paperwork providing standing to sue!”, got this response from short story writer Philip Zack:

The situation inspired me to write a short story called “As Is” about life after the collapse. It starts like this…

Ryan Svorlin stood in front of the big house, gaping. The keys hung loosely in his shaking hand, clattering against one another in rhythmic reflection of the waves of shock coursing through his troubled mind. “It… it’s… mine,” he stammered, unable to comprehend what had just happened.

“Well, sure,” the real estate lady told him. “You did sign the papers, didn’t you?”

He slowly turned to look at her. Paper-thin skin stretched across unnaturally prominent cheekbones. Overdone make-up. Probably over seventy, he guessed. “Of course. But I never expected to —.”

“To be selected? Well, someone had to be. They couldn’t afford to let these places go vacant, after all.”

Less than a year had passed since the first cannonade in the financial meltdown destroyed the façade of normalcy masquerading as prosperity in the United States. Some faceless blogger had instigated a mortgage strike, an incautious response to the revelation that the reason the government was so determined to protect the masses from being dispossessed in their forced insolvency was the dirtiest little secret at the heart of the country’s high-flying economy – that nobody really owned all those high-risk loans, and therefore the houses could not be foreclosed. No one could have predicted what happened next.

Read the whole thing here:
http://klurgsheld.wordpress.com/2007/12/18/short-story-as-is/

Filed under: Brainstorming | 16 Comments »

The “Real Bills” Doctrine: A Modern Application?

Posted on December 24, 2007 by Ellen Brown

A blogger named Syzygy just wrote this comment to the entry called “Why Not Gold?” below. The query was about the “real bills” doctrine, but I’ll quote the whole thing, as it was nice! —

“Am one-third through your book now. Of the hundreds of non-fiction books I’ve read, yours easily deserves a place in the top ten. Astonishingly well done and important.

“As for this Fekete/Hultberg stuff, I don’t understand a word of it. Will you please post your understanding of it on your site?

“I confess I’m pretty skeptical of gold/silver standards; what’s to stop foreign creditors from simply sucking out all the specie? If the Saudis, Chinese, and Japanese could exchange their declining US dollars for gold and silver bullion, wouldn’t they do that in an instant?”

— Syzygy

Thanks Syzygy. I agree that gold would just be vacuumed out by dollar-holding foreigners. That’s exactly what happened before 1971, when Nixon finally closed the “gold window” to preserve what little gold was left at Fort Knox. Fekete and Hultberg propose fixing the gold system by supplementing gold with “Real Bills” as was done in the 19th century. (See Hultberg, “The Future of Gold as Money,” Gold-Eagle.com, February 1, 2005.) I’m currently doing a book revision (to be available hopefully in early January) that contains a brief discussion of the Real Bills Doctrine, which I’ll post it here:

The “Real Bills” Doctrine

If using gold as a currency is plagued with so many problems, why did it work reasonably well right up to World War I? Nelson Hultberg and Antal Fekete argue that gold was able to function as a currency because it was supplemented with a private money system called “real bills” – short-term bills of exchange that traded among merchants as if they were money. Real bills were invoices for goods and services that were passed from hand to hand until they came due, serving as a secondary form of money that was independent of the banks and allowed the money supply to expand without losing its value.8

The “real bills” doctrine was postulated by Adam Smith in The Wealth of Nations in 1776. It held that so long as money is issued only for assets of equal value, the money will maintain its value no matter how much is issued. If the issuer takes in $100 worth of silver and issues $100 worth of paper money in exchange, the money will hold its value since it can be cashed in for the silver. Likewise, if the issuer takes I.O.U.s for $100 worth of corn in the future and issues $100 worth of paper money in exchange, the money will hold its value, since the issuer can sell the corn in the market and get its money back. Or if the issuer takes a mortgage on a gambler’s house in exchange for issuing $100 and lending it to the gambler, the money will hold its value even if the gambler loses the money in the market, since the issuer can sell the house and get its money back.

Professor Fekete observes that the real bills system works to preserve monetary value only when there is gold to be collected at the end of the exchange, but other commodities would obviously work as well. One alternative that has been proposed is the “Kilowatt Card,” a privately-issued paper currency that can be traded as money or cashed in for units of electricity.10 The nineteenth century Greenbackers relied on the “real bills” doctrine when they contended that the money supply would retain its value if the government issued paper dollars in exchange for labor that produced an equivalent value in goods and services. The real bills doctrine was rejected by twentieth century economists in favor of the quantity theory of money, but it is actually the basis on which the Federal Reserve advances credit today: it takes mortgage-backed loans as collateral, then “monetizes” them by advancing an equivalent sum in accounting-entry dollars to the borrowing bank.9

——-

That was what I had written, but in response to Syzygy’s question, I too don’t understand how adding “real bills” would allow a modern-day gold standard to work any better than it did in the 19th century, when it precipitated periodic serious depressions. Why not just use the “real bills” and skip the gold? Roosevelt took the dollar off the gold standard domestically for the same reason Nixon took it off internationally: people were cashing in their dollars for gold, draining gold reserves and collapsing the supply of paper dollars, which in 1933 were backed by 40 percent gold reserves. That meant that whenever two paper dollars were cashed in for gold, three other paper dollars issued as loans had to be called in as well. If Roosevelt had let it go on, the money supply could eventually have collapsed completely.

What I like about the real bills doctrine, though, is that it defines the difference between money created out of nothing just to pay off loans to banks (the sort of loans being madly extended right now by central banks in an effort to bail out commercial banks) and Greenback-style money issued as receipts for real goods and services (as Lincoln and the Guernsey Islanders did it). The latter was “backed” by something; supply balanced demand, so no inflation resulted. The Fed/central bank version is HIGHLY inflationary, because it pumps ever more “demand” into the system without creating anything productive to balance it in the way of “supply.”

Filed under: Brainstorming | 9 Comments »