Screw the Banks and Investment Firms

[can't sit still]

ygmir, it seems that you would have to change your bucks to loonies;
http://www.marketwatch.com/story/canada ... =afterbell
Here's an article on what GOV plans to do with your 401k
http://www.marketoracle.co.uk/Article16809.html

This is the article talking about a flight to cash;
http://www.runtogold.com/2010/01/one-month-treasuries/

[can't sit still]

"In the late 1990s, under Cassano, A.I.G. Financial Products ramped up its business of selling credit default swaps, which are insurance-like contracts for big investors with debt obligations—and which lie at the heart of its recent woes. Its main clients were European banks."

http://www.moneyteachers.org/Derivatives.htm
OK, so European banks bought derivatives. But, European banks also own the FED. So, when AIG and Mac 'n Mae, were going to default on derivatives, the FED [european banks] printed a big check with our names on it to protect european banks from losses. I really don't know if the banks in the FED are the same banks that bought the derivatives. The FED did this by buying mortgage backed securities. [MBS]. The FED claims that it will no longer buy MBS after March. It projects to buy $ 10 billion a week until then.

The confusing part is that one would think that the FED would like to protect the value of their currency, the FRN by not over-issuing it. Printing about $ 1.1 trillion to avoid internal? losses is definitely risky.
So, the FED is no longer going to buy toxic paper just when we go into a huge upswing in resets and presumably, defaults. Are they really going to carry through? Is this a move to protect the FRN,,, cut losses?
Either way, the banks will choke on all the bad loans. Is this a move to kill the American banks,,, replace them with European banks?
The banks can't possibly satisfy all the counterparty demands. If even a small portion of the $ 203 trillion in derivatives were to default, that would make the already insolvent banks just that much more insolvent. Just how long could they keep their doors open?

Well, as April Fools day approaches, we'll get more indications.

[can't sit still]

Did you hear the news???
No, I guess that you didn't. It wasn't announced. All the major central bankers are in Aussie for a meeting. The BIS is there to. I suppose that they're discussing the fate of the world. Why announce that?
http://www.news.com.au/business/secret- ... 5827289543

[cowboyangel]

Sorry gang, pressing matters have kept me away. Here's an interesting prediction/prognosis on China devaluing the renminbi: I think we are fucked.


Conventional wisdom holds that the Chinese are due (as in overdue) for a revaluation of their currency, the renminbi. For instance, a recent report from Goldman argues that China will raise the value of the RMB against the dollar by 5% this year. The argument is that the move is needed to slow down an overheating economy.

But to a large degree, whether you agree with that as a remedy depends on what one’s reading is not just of China’s notoriously misleading statistics, but of the underlying growth dynamics, which are well out of bounds of any previous pattern, and not in a good way, either.

We question whether a revaluation is the right answer for them, and more important, whether the Chinese themselves see a revaluation as a plus. The government has engineered an enormous increase in money and credit in the past year. In fact, it seems to be as great as 5 years’ growth in credit in the previous Chinese bubble. The increase in money and credit is so great and so abrupt that you tend to get a high inflation quite quickly even if there are under utilised resources. Add to this the fact that China simultaneously is providing massive fiscal stimulus.

This combination is the making of a very messy situation. If China seeks to sustain demand via fiscal policy, the result is likely to be a big inflation problem. With many Chinese students steeped in Chicago School monetary theory coming home and assuming positions of authority, they could push for an aggressive, Paul Volcker-style effort to stop inflation.

But, what if the they don’t? Inflation can take off and thereby begin to ERODE the competitiveness of Chinese exports. Nouriel Roubini pointed out this issue in 2007: if China didn’t revalue, inflation would do the trick regardless. A continued high rate of inflation relative to its trade partners would push up the price of goods in home currency terms, which in turn translates into higher export prices. This might be the real reason why China is so reticent to revalue its currency. The Americans might go crazy if the Chinese devalued, but if the inflation is high enough, they might have to do it, as it will severely erode their terms of trade and cause their tradeables sector to collapse.

Or the hard-line monetarists triumphing by fighting inflation and the result is riots as unemployment increases.

It could get very ugly.

This could be happening now in China, although this is the opposite of prevailing views. The consensus is that inflation is a couple per cent and even that is largely due to higher pork prices thanks to a lousy corn harvest.

However, economists such as those at Lombard Street in the UK, Jim Walker, Simon Hunt and the like try to figure out the changes quarter to quarter in Chinese nominal GDP which is reported only year on year. And they come up with giant double digit growth rates for the second half of last year.

Now this is complicated by the fact that the Chinese have revised up their GDP numbers and they put all the revisions into the final quarter of the year. But when these analysts try to adjust for that statistical screw up they still come up with giant nominal GDP increases. Lombard Street thinks it was twenty five per cent or so in the second half of last year. They think it was twenty per cent real and five per cent inflation.

Economies of any size never grow at a twenty per cent real rate. And Simon Hunt says if you look at proxies like power output and rail traffic you don’t get those kinds of numbers for real growth, which suggests that inflation must be higher than four or five per cent. In general, if a real GDP figure looks sus, the first figure you examine critically is the GDP deflator.

So some evidence suggests that China’s inflation could already be at a double digit level. It is hard to say. But if it is that high, then the resultant inflation will cause a real revaluation of the trade weighted exchange rate.

And more so if the dollar rallies. That could well crush the volume of exports and the profitability of the industrial tradeables sector. Exports are the only area where China makes any kind of money because they can sell these products for about 10 times what they obtain for a comparable product in the domestic economy (where profits are virtually nil). The export sector is a big contributor to overall super excessive fixed investment in China. Dollar appreaciation means foreign direct investment will go to zero net.

There will be strong forces for a reduction in fixed investment in this large sector. Hence, there is a good chance that even without monetary tightening by the Chinese authorities, the overall fixed investment boom in China will turn down.

Nobody is thinking about this scenario but it is a real possibility. And with fixed investment now at fifty per cent of GDP (which is unprecedented in any economy) and exports at more than thirty, we’re looking at ratios that have never been reached before on a combined basis. Before readers argue that China can support that level of investment, consider the views of Professor Yu Yongding, who some analysts believe is China’s best macroeconomist. As reported in the Sydney Morning Herald:

Yu, the recently retired director of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences, did not explicitly say I was barking mad. But his email continued: “When a country has an investment rate over 50 per cent [of] GDP and rising, you say this country is not suffering from overcapacity! … are you serious? â€

[can't sit still]

Cowboy, great info about china. China has been called Dubai times 1,000. There are some really risky numbers associated with China.

Y'all know my views about the coming crash. Y'all have probably heard that the SEC was warned years ago that derivatives were unregulated and dangerous. They refused to do anything. Warren Buffet called them "weapons of mass destruction"

This is from George Soros,,,, REAL smart and real rich;
"The situation is aggravated by the market in credit default swaps, which is biased in favour of those who speculate on failure. Being long CDS, the risk automatically declines if they are wrong. This is the opposite of selling short stocks, where being wrong the risk automatically increases."
http://www.rense.com/general89/predicted.htm

OK,,,,,,,,, This is a central part of the problem that you MUST understand.
The way many sectors of our financial markets are configured is; Some of the greatest rewards are to be found by betting on [thereby causing] failure,,, cannibalism and eating your young.
The system gives the greatest rewards to those who sniff blood first,,, and kill the fastest. Obviously, this system could only be created by bloodless financial wizards.

You say that you don't see any lights on the horizon. Well, I guess not !! Failure is profit,,, the bigger the better. George Soros made a cool $ billion in just one bet.
The reason for the "survival" thread is because the present system promotes disintegration. And just how long do you think it will take to : totally discredit the current system?... replace our worthless system? install a replacement system that isn't another auto-destruct ripoff?
Live long and prosper

[can't sit still]

This is a good paper talking about what banks are doing with depositors money;
http://www.fgmr.com/what-are-banks-doin ... money.html
"Bank loans have now declined $646 billion from their October 2008 peak, as illustrated in the following chart."
"Depositor money is not being used for productive purposes like building manufacturing plants and making other investments that will create jobs and grow the economy. It is being spent by the government, which consumes in the present and does not invest for the future."
So, GOV bailed out the banks with fresh money,,, $700 billion at first. Later, the handouts and guarantees expanded to $ 23 trillion. Now, banks are taking depositor's money and passing it to GOV. OK, so the money that you think that you have in the bank is actually in Geithner's pocket.
Your 401-K,, oops, actually, it's a 201-K is next on the chopping block. GOV held an emergency meeting to arrange so that you could buy GOV paper with your 201 -K. When Argentine crashed, this conversion was made mandatory. Japan has already spent all of it's citizen's savings.
So, what's next? GOV HAD been printing fresh money to pay it's bills. Now, they're sucking it up from the banks.

Is the fresh money supply coming to an end? This from Bernanke, who famously said that he could drop money from helicopters.
"Bernanke warned Congress on Wednesday that the United States could soon face a debt crisis like the one in Greece, and declared that the central bank will not help legislators by printing money"
http://www.washingtontimes.com/news/201 ... n-us-debt/
"We're not going to monetize the debt," Mr. Bernanke declared flatly,"
Shazzzammm. ,,, helicopter Ben is going to let nature take it's course?
And where does he think the BIG cuts should come from?? He does mention defense.

But, the big popular target seems to be social security and welfare.
"Since the beginning of the War on Poverty, government has spent $15.9 trillion (in inflation-adjusted 2008 dol­lars) on means-tested welfare."
"September 16, 2009
Obama to Spend $10.3 Trillion on Welfare: "
http://www.heritage.org/research/welfare/sr0067.cfm

Big Ben says that the FED won't buy any more Mac n Mae after this quarter. Obama gave Mac n Mae unlimited access to treasury as a Christmas present. So, obama plans? to do an end run around Ben? GSE debt will come right out of treasury. Will Big Ben refuse to buy treasury debt to avoid supporting the GSEs?

Is Ben publicly claiming that he won't buy so that when he covertly buys, others will maintain their confidence in U.S. bonds?
AIG needs $ 50 Billion more,,, Mac n Mae hold $5 trillion or so that is melting,,, HUD is collapsing BIG,,,, FDIC is looking at several hundred $ billion in losses. I suspect that Big Ben can't possibly print that much without it being noticed. Several authors have already pointed out that 2 buyer categories in bond purchases are obviously shills for the FED.
Ben says,,, NO PRINT. The banks,,, like in Argentina, have slid all YOUR money over to Geithner to make up the difference.

Mish says that the new short restrictions are an indicator of a pending crash;
http://globaleconomicanalysis.blogspot. ... great.html
I'll bet Big Ben wishes he were back in the quiet halls of Princeton

[cowboyangel]

Several authors have already pointed out that 2 buyer categories in bond purchases are obviously shills for the FED.

That's what the infamous plunge protection team has been doing. Buying treasuries in secret to keep the decrepit system afloat. If the airplane crash into Austin IRS is any indicator of things to come, then I say we start worrying now. Thanks Dan.

I hope future disgruntled ex-Viet Nam pilots can find Geithner, Bernanke, Paulson, Dimon, Greenspan and rest of the rotten bottom feeding scum of the financial class.

[can't sit still]

Well, the deflation / inflation argument is still raging. Here's a couple of articles;
http://www.thedailybell.com/860/Central ... eling.html
http://www.prudentbear.com/index.php/th ... t_id=10346
They make a pretty good case that deflation is in our future. The claim is that; you can print up money but, you can't make consumers borrow that money. Much of what we're going through is regarded as impossible by Keynesian textbooks. Keynes and Freidman were / are both full of shit.

Here's an article that is fascinating. It seems to prove that the more money that GOV injects into financial institutions, the LESS money is in circulation.
http://news.goldseek.com/MillenniumWave ... 369295.php

There are a lot of articles calling for inflation and hyper-inflation. I won't cite any of them, because none of them sound convincing. Most economists are living in the past. Decades ago, a person with an average job could only afford the basics in life. Now, with so much automation, more and more goods are sold with a tiny labor component and a very low price. Most of our spending is on luxuries, not bare necessities.

This means that consumers can cut WAY back and still survive very handily. The banks and the economists believed that consumers would snap up any credit that was offered. It's true, very little credit IS being offered. But, demand for credit is drastically lower.
So, GOV prints money and nobody wants it. The money-multiplier has gone negative,, something that was always considered impossible. GOV prints MORE money and there is LESS money circulating.
The inflationists are scratching their heads and scratching their asses too. It never occurred to the dumb shits that, you can't create demand.

Banks HATE deflation. Bernanke is talking about working harder to create inflation. Bald Ben just can't seem to catch on to the phrase "pushing on a string"
Reportedly, 78 % of the economy was consumer driven. The consumer has had enough of the BS. The homeowners are walking away by the thousands. Jumbo loans are crashing BAD. Next year 50 % of commercial properties are expected to be "underwater"
The banks are holding on to every penny,,, not loaning anything. There is some possibility that they could absorb the losses from commercial real estate BUT, there is NO possibility that they can absorb the multiplied losses from the CDOs on the same properties.
Unfortunately 3,000 small banks with CRE exposure are expected to fail. Bald Ben will save the big banks but, He'll keep the giants liquid so that they can buy up the failed banks for pennies.
The FDIC goes farther in the hole every day. Same with Mac n Mae,,, HUD, AIG,
They are ALL dependents of treasury. Big Bad Bald Ben says that he won't monetize the debt. Where is treasury going to get the money to bail out every institution in America. Don't even THINK about asking for a bailout of states?

B B B Ben says to cut loose the safety net. That pretty much starts at the state level. Sorry.

[cowboyangel]

ya cut lose the safety net. Greece will be telling us pretty soon how that will go. Americans are crazier than Greeks too.

Americans will spend more if the banks declare a mortgage holiday-for a few years, zero interest, or simply pay mortgages down themselves. What a concept! Free money! They ought to try it on a trial basis. I'm sure the effects will be healthy.

Thanks for the links Dan

[cowboyangel]

And there's Ellen Brown again. Ellen for President for Christ's sake:

IMF "Economic Medicine" Comes to America

by Ellen Brown


Global Research, March 2, 2010
Web of Debt - 2010-02-28


In addition to mandatory private health insurance premiums, we may soon be hit with a “mandatory savingsâ€

[can't sit still]

Cowboy, that is a great article. It DOES leave out a few things, though. It mentions non-negotiable treasury paper. Social Security ALREADY has $ 7.7 trillion of non-negotiable treasury paper. They are NOT counted as a deficit on the treasury balance sheet. They're just IOUs. The money is spent and it isn't coming back. Now, GOV wants new blood in the bank.
If GOV can burn through $ 7.7 trillion, $ 100 billion is chump change.

GOV may want to impose the classic IMF austerity program but, obama was a hard core marxist in his early days. Not so sure that he will implement austerity. The other thing that is misleading is the debt-service cost. I don't believe that interest is going to remain this low for much longer. The article only mentions the debt service.... interest payments to bond holders. What about the hundreds of $ billions that we pay the FED for the privilege of using the dollar?
The article also fails to mention the collapse of bond auctions. Brown says,,, "just roll it over" Bond holders won't roll anything longer than 90 days. The FED bought 80% of the treasury debt last year. Big Bad Bald Ben Bernanke says;NO MORE.

Brown also says "government can reverse this vicious syndrome, by spending money directly on projects that will create jobs, provide services, and stimulate productivity"
Maybe she should read up on Japan.

[can't sit still]

Well, the bankers have written the rules. As I mentioned in another post [somewhere], the rules favor the sharks. Those who smell blood first and kill first get the greatest rewards. BUT, is that any way to run an economy? Is it justifiable in a society?
The corporate raiders destroyed many companies with leveraged junk bonds. Is that part of a viable economy? OR, is it just one more step on the road to destruction?

Now, the bleeding victim is the Euro. Is the blood going to be sucked from the public purse or is the carcass going to be dismembered? Will the raiders destroy a society? Will that precipitate a war in the future?
Will that bring a twitch of guilt to the bank lobbyists who paid off the politicians? If more and more people take actions that are detrimental to society, just how much damage can that society absorb? As society crumbles, will that cause more destruction when people turn to self-interest to survive?
The raiders are looking for fresh blood;
http://www.rense.com/general90/euro.htm

[cowboyangel]

http://understandingdeeppolitics.org/

Hey Screw the Banks followers, come to Santa Cruz May 14-16 for the Deep Politics Conference. Ellen Brown will speak there! Mike Parenti, Barry Zwicker. This will be great. Cowboyangel will be there too.


Come on!

CBA

[Rabbi Dali Rick]

I see the greeks have started a run on their banks this morning. the rebbi

[can't sit still]

Yup, the Greeks are afraid that their wealth will drop down to the value of the paper it's printed on. GB may be next on the hit list. Some of the big players are betting against the Euro also. The U.S. is actually worse off than Greece. That may be why CITI has some new restrictions on withdrawing your money.
http://www.bestcashcow.com/personal_fin ... awal-rules

[cowboyangel]

The Dollar Rally Will Not Last

Every important factor we see is working against the dollar and we believe that trend is irreversible. That means the present dollar rally probably cannot endure and it could well be the time to short the USDX.



Most observers discuss Europe’s problems and the plight of the euro, pound, and the Danish and Swedish koronas. They believe these European currencies will plunge lower versus the dollar and that the dollar will maintain, even after a dollar rally from 74 to 81 on the USDX. As we have said before the euro was unnatural creation born of a desire to usher in a world currency. As we shall see in the future the euro will fail. In spite of that the dollar is certainly no bargain, because next year America will be totally bankrupt. As a result of the terrible conditions among currencies, gold makes great gains. Last year and so far this year gold is up 10% to 24% against many major currencies. This kind of action of course proves again that gold is the world’s strongest currency. We might add here that we believe that it is only a matter of time before the LBMA, or Comex, or the ETFs, GLDs and SLVs are enveloped in scandal. As so often has happened in history fiat currencies have collapsed. Thus, it will happen again. Those of you not in gold and silver related assets will lose most of what you have worked for your entire lives.



The collapse of currencies and nations won’t happen overnight, because their demise has been planned, and a subtle collapse is in process. Our guess is that next year is when the collapse will finally take place followed by one of the greatest deflationary depressions of all time. During the last 2-1/2 years all the toxic investments have been and will continue to be transferred from the Illuminist banks, brokerage houses, insurance companies and transnational conglomerates to the public. The Federal Reserve is the repository for this junk, which includes Treasuries and Agencies. That means the public foots the bill. Every government and bank in the world will be affected. This magical game of 3-card-Monte will never work and the Illuminists know it won’t work. That is why they have war on demand to distract the public and to escape punishment for the devastating thing they have brought upon mankind. What we are facing is as bad if not worse than the collapse of the Lombard system in Venice in 1348, the year of the plague and the collapse of the Hanseanic League in the 1600s, the creation of the Medici’s. For starters we already have 19 bankrupt or near bankrupt major countries and many others that will be pulled into the vortex of financial and economic calamity. In each country we see the Illuminists doing their evil work, legends in their own minds, in a system that they know cannot survive. They are waiting for orders to pull the plug in each and every country. These masters of the universe all know that prosperity cannot be created by printing money and issuing credit indefinitely. They know full well that such a system cannot survive.



Overall the issuance of bank credit declined $470 billion, or about 5% y-o-y. Loans to individuals and small to medium sized companies fell some 20%. We do not interpret this as deflationary, but it sure doesn’t reflect a growing economy. These small to medium sized companies are the ones that create 80% of the jobs. Fed mantra has been save the banks and NYC and then we’ll see what we can do for the 21-1/8% of unemployed. At the same time Fed holdings of MBS was $69 billion. Today it is $1.027 trillion. This was not done to save the public or their homes, but to bail out banks and allow the taxpayer to pay for it.



The sales of bonds are booming at record low interest rates. Buyers obviously think rates are going to stay low forever. Just last week investors bought $2.6 billion in global bond funds. This has been going on for more than a year. Buyers are left with slight gains and small yields, risks hardly worth taking. At the same time gold and silver and related shares rose more than 24%. What could they be thinking about? In the meantime debt prices have held in spite of the disruption in Europe over Greece and the euro. Then the international elitists oversubscribed Greece’s bond offering by three times. The yield was 6-3/8%, but Greece is bankrupt and has been for years.



All this considered inflation is still strongly in place at least for another year and perhaps beyond. A lot depends on how quickly, financial conditions deteriorate among the 19 nations, in the financial system. All indications are that liquidity is being removed. If this continues one year to 1-1/2 years down the line things will freeze up.



Presently the dollar carry trade moves relentlessly onward, but not at its previous pace. A higher dollar impedes such activity. This is why presently the 19 current basket cases can continue to float along. There is still plenty of liquidity out there.



Just to show you how far from the world of reality the Fed is, last week Fed of Richmond President Jeffrey Lacker told us the central bank was being made a scapegoat to satisfy anger over bailouts as Congress seeks to limit its consumer-protection and bank-supervision powers. This just doesn’t wash. There is no question that the Fed was at the center of the problem. It blatantly was to save the financial sector and screw the public.



We conclude that the Fed will continue to provide low interest rates and vast liquidity to the US and world financial systems. The Volcker Ruleâ€

[can't sit still]

Here's Alex Jones talking about the plans of the banks;

Reportedly, the banks have a plan for the West. It worked very nicely in the developing world.
They do a massive influx of worthless fiat money at very high interest. When there is a failure to repay, the banks demand all your tangibles.
It's a quite effective plan and it's moving along nicely. CURRENTLY, the banks are loaning tons of your deposits to GOV to keep it afloat. On schedule, GOV is falling into a debt-trap where they borrow to pay previous loans.
GOV [you and me] is writing unlimited checks.
CURRENTLY, GOV is being financed by big banks. When you see interest rates rise, GOV will no longer be able to service the debt. OK , next step is a default. When WE default, banks demand ALL the tangible resources. Why do you think that we don't pump our own oil?
Do you REALLY think that Goldman Sachs will allow Chinese bond holders to be satisfied before domestic [ GS ] bond holders are satisfied? Even though the FED is a conglomerate of European banks, they will wave the American flag when it comes to standing in line for default restitution.
The Japanese are even more screwed than the Chinese.

OK, so some time in the next 16 months, we default. We transfer all those public lands that FED GOV has been accumulating so rapidly lately to,,,,, you guessed it... Goldman Sachs. After all, they deserve it. They're doing God's work,,, according to them.

A few military officials in China are already talking about war in the future. YOU have NO idea of what kind of war it would be. It would be fought with precursor fields and scalar weapons. Read Tom Bearden to get an idea.

[can't sit still]

Here's a good Goldman video. It's pretty disgusting.

[cowboyangel]

On a positive note, here's a good one from Financial Diva Ellen Brown:

http://www.yesmagazine.org/new-economy/ ... wned-banks

[Apollonaris Zeus]

I've been pushing the public bank concept on my other boards! It is not just good enough to create a public bank but to stop the government's practice of giving out free money directly to corporations and in secrecy! We don't who is getting and why do these corporation get special loans with no public oversight!



AIIZ

[can't sit still]

The public bank idea is great. I'm sure that you've all read how well it worked in Canada. It seems that people eventually forget what a screw-job a private bank is. The bankers keep chipping away until they bring back the screw-job after a few decades or so. MAYBE, there is a possibility of keeping the bankers away long-term.
It's possible that, as the general education level rises, more and more people will be aware enough to prevent central banks in the future.

[ygmir]

yeah, with some realistic expectations, planning, patience, and living within ones means.......banks would be almost unnecessary,.........of course, that is asking a lot.

[can't sit still]

http://www.commondreams.org/headline/20 ... nt-1455218
Published on Thursday, March 18, 2010 by YES! Magazine
The Growing Movement for Publicly Owned Banks
We the people have given away our sovereign money-creating power to private, for-profit lending institutions, which have used it to siphon wealth from the productive economy. Some states are moving to take that power back.

by Ellen Brown

"Hundreds of job-creating projects are still on hold because Michigan businesses and entrepreneurs cannot get bank financing. We can break the credit crunch and beat Wall Street at their own game by keeping our money right here in Michigan and investing it to retool our economy and create jobs."

--Lansing Mayor Virg Bernero in The Detroit News March 9, 2010

Michigan, which has an unemployment rate of 14 percent, has been particularly hard hit by the economic downturn. Virg Bernero, mayor of Lansing, the state's capital, and a leading Democratic candidate for governor, proposes to relieve the state's economic ills by opening a state-owned bank. He says the bank could protect consumers by making low-interest loans to those most in need, including students and small businesses; it could also help community banks by buying mortgages off their books and working with them to fund development projects.

Bernero joins a growing list of candidates proposing this sensible solution to their states' fiscal ills. Local economies have collapsed because of the Wall Street credit freeze. To reinvigorate local business, Main Street needs a heavy infusion of credit, and publicly-owned banks could fill that need.

In a recent article for YES! Magazine, I tracked candidates in five states running on a state bank platform and one state (Massachusetts) with a bill pending. Just one month later, there are now three more bills on the rolls--in Washington State, Illinois and Michigan--and two more candidates joining the list of proponents (joining Bernero is Gaelan Brown of Vermont). That brings the total to seven candidates in as many states (Florida, Oregon, Illinois, California, Washington State, Vermont, and Idaho) campaigning for state-owned banks, including three Democrats, two Greens, one Republican, and one Independent.

The Independent, Vermont's Gaelan Brown, says on his website, "Washington, D.C. has lost all moral authority over Vermont." He adds, "Vermont should explore creating a State-owned bank that would work with private VT-based banks, to insulate VT from Wall Street corruption, and to increase investment capital for VT businesses, modeled after the very successful state-owned Bank of North Dakota."

The Bank of North Dakota, currently the nation's only state-owned bank, is the model (with variations) for all the other proposals on the table. The Bank of North Dakota acts as a "bankers' bank," partnering with other banks in "participation loans," which allow them to compete with larger banks. In a participation loan, the community bank originates the loan and takes responsibility for it, while the participating bank contributes funds and shares in the risk and profits. The Bank of North Dakota also makes low-interest loans to students, farmers and businesses; underwrites municipal bonds; and provides liquidity for more than 100 banks around the state.
Three New Bills Pending for Publicly Owned Banks

Proposals for publicly owned banks in other states have now progressed beyond the campaign talk of political hopefuls to be drafted into several bills.

The Michigan Development Bank

The Michigan bill has gotten the most press. Introduced into the legislature earlier this month, it mirrors Bernero's state bank idea. According to a press release issued by Michigan Senate Democrats on March 9, the bill's aim is to "keep Michigan's money in Michigan" by putting tax dollars into a proposed "Michigan Development Bank." The bank would function like a traditional bank, but would focus on economic development rather than profit. The press release quoted Senator Gretchen Whitmer (D-East Lansing):

Investing in the state's economy is the greatest way to create jobs, and this proposal will provide small businesses and entrepreneurs the funding they need to invest and grow. Our economy has stagnated due in part to stale thinking in Lansing, and this is just the type of innovative idea we need to create real economic change, using our own money to rebuild the state.

Senate Democratic Leader Mike Prusi (D-Ishpeming) stated:

Michigan's economy has been suffering, and working families in the state have had difficulty keeping up with credit card bills, college tuition prices and mortgage payments. Establishing the Michigan Development Bank will keep our hard-earned dollars right here in the state to invest in small business, create good-paying jobs to get people back to work, and help protect the middle class.

Also quoted was Senator Hansen Clarke (D-Detroit):

With the current state of our economy, every dollar counts, yet we're depositing our money in other people's pockets by investing in big corporate banks without seeing much lending in return. It's time for the Mitten State to lend itself a helping hand and establish a bank that is willing to invest in our small businesses and offer the financial support necessary to see job growth.

For start-up capital, the Senate Democrats suggested that Michigan could sell voter-approved bonds. With an initial capitalization of $150 million, they estimated the bank could lend up to $1 billion to small businesses, students and farmers, and offer low-interest credit cards to consumers. For deposits, the bank could follow the model of the Bank of North Dakota and use state revenues. So says Gene Taliercio, a Republican candidate for the state Senate, who has also put his weight behind the Michigan Development Bank. In a video clip on the website of the local Oakland Press, he says, "We're talking about restructuring the whole tax system, in the sense that the way it's set up is that all taxes are going to go into this central bank ... Every dollar that the state of Michigan makes goes into this bank."

The State Bank of Washington

A similar bill, HB 3162, was introduced to the Washington State Legislature on February 1. The bill has generated so much interest that Steve Kirby, chair of the Financial Institutions and Insurance Committee, has scheduled a special work session on it. According to John Nichols in The Nation, the State Bank of Washington was formally proposed by House finance committee vice chair Bob Hasegawa, a Seattle Democrat. Nichols quotes Hasegawa:

Imagine financing student aid, infrastructure, industry and community development. Imagine providing access to capital for small businesses, or otherwise leveraging our resources instead of having to do it with tax incentives. Imagine keeping our resources local instead of exporting them as profits, never to be seen again--that's what this bank could do.

Leveraging, rather than taxing, is how private banks have been creating "credit" for centuries. States could do the same thing, cutting the middlemen out of the equation, saving significant sums in interest and fees and generating revenue for the state.

A nonpartisan analysis of the Washington bill prepared for the state legislature noted that the bank would be the depository for all state funds and the funds of state institutions, and that these deposits would be guaranteed by the state. The bank would be run by a board of 11 members and would be chaired by the State Treasurer. It would have the same rules and privileges as a private bank chartered in the state. Since current law prohibits the state from lending credit and investing in private firms, voters would have to approve the state Constitution to get the bank off the ground.

The Community Bank of Illinois

A third bill, introduced by Illinois Representative Mary Flowers, is on its way through the legislative process in Illinois. According to the Illinois General Assembly website, the Community Bank of Illinois Act would establish a state bank with the express purpose of boosting agriculture, commerce, and industry. State funds and money held by penal, educational, and industrial institutions owned by the state would be deposited in the bank and would serve as reserves for making loans. The bank could also serve as a clearinghouse for other banks, including handling domestic and foreign exchange; and it could buy property under eminent domain. All deposits would be guaranteed with the assets of the state. The Bank would be managed and controlled by the Department of Financial and Professional Regulation, with input from an advisory board representing private banking and public interests.

An amendment to the initial bill would enable the Community Bank of Illinois to make loans directly to the state's General Revenue Fund, helping the state cope with its current budget challenges.

A Massachusetts-owned Bank

On March 12, the Associated Press reported that a jobs bill sponsored by Massachusetts Senate President Therese Murray also includes a call to study a Massachusetts-owned bank. She told a business group that a state-owned bank has worked in North Dakota, helping to insulate that state from the worst of the recession while also keeping its foreclosure rate down; similarly, a state-owned bank could spur job creation and free up lending to Massachusetts businesses.
Grandfather of the Concept: The Bank of North Dakota

All of these proposals take their inspiration from the Bank of North Dakota, which was founded in 1919 to resolve a credit crisis like that facing other states today. Last year, North Dakota had the largest budget surplus it had ever had. It was the only state that was actually adding jobs when others were losing them. In March 2009, when 46 of 50 states were in fiscal crisis, the Council of State Governments noted that North Dakota was in the enviable position of discussing tax cuts and looking for ways to spend its surplus.

With the deepening crisis, according to National Public Radio, by January 2010 only two states could still meet their budgets--North Dakota and Montana. On February 8, however, the Montana paper the Missoulian reported that the Montana State Legislature's chief revenue forecaster foresees a budget deficit by mid-2011, leaving North Dakota the only state still boasting a surplus.

North Dakota's riches have been attributed to oil, but many states with oil are floundering. The sole truly distinguishing feature of North Dakota seems to be that it has managed to avoid the Wall Street credit freeze by owning and operating its own bank. According to the North Dakota Department of Commerce, the BND turned a profit in 2009 of $58.1 million; this money goes into the state's General Fund. North Dakota's economy is ten times smaller than Michigan's, suggesting that Michigan could generate $500 million per year in this way; Washington State and Illinois present similarly inviting possibilities.

That defuses the objection raised in a March 15 editorial in The Detroit News, arguing that Michigan can ill afford the $150 million capital investment to start a bank. If operated like the BND, the Michigan Development Bank could soon be a net generator of state revenues. There are other possibilities, besides a bond issue, for providing the capital to start a bank, but that subject will be reserved for another article.

The BND's 90-year track record of prudent and profitable lending defuses another objection to state-owned banks: that a public agency cannot be trusted to act responsibly in managing public funds. The Detroit News' editorial concluded that Michigan should "leave banking to the bankers," but it is precisely because the bankers have destroyed the economy with their reckless lending practices that the public needs to step in. We need a "public option" in banking to set standards and keep private banks honest.
The True Potential of Publicly-owned Banks

North Dakota broke new ground nearly a century ago, but the true potential of publi
http://www.commondreams.org/headline/20 ... nt-1455218
Published on Thursday, March 18, 2010 by YES! Magazine
The Growing Movement for Publicly Owned Banks
We the people have given away our sovereign money-creating power to private, for-profit lending institutions, which have used it to siphon wealth from the productive economy. Some states are moving to take that power back.

by Ellen Brown

"Hundreds of job-creating projects are still on hold because Michigan businesses and entrepreneurs cannot get bank financing. We can break the credit crunch and beat Wall Street at their own game by keeping our money right here in Michigan and investing it to retool our economy and create jobs."

--Lansing Mayor Virg Bernero in The Detroit News March 9, 2010

Michigan, which has an unemployment rate of 14 percent, has been particularly hard hit by the economic downturn. Virg Bernero, mayor of Lansing, the state's capital, and a leading Democratic candidate for governor, proposes to relieve the state's economic ills by opening a state-owned bank. He says the bank could protect consumers by making low-interest loans to those most in need, including students and small businesses; it could also help community banks by buying mortgages off their books and working with them to fund development projects.

Bernero joins a growing list of candidates proposing this sensible solution to their states' fiscal ills. Local economies have collapsed because of the Wall Street credit freeze. To reinvigorate local business, Main Street needs a heavy infusion of credit, and publicly-owned banks could fill that need.

In a recent article for YES! Magazine, I tracked candidates in five states running on a state bank platform and one state (Massachusetts) with a bill pending. Just one month later, there are now three more bills on the rolls--in Washington State, Illinois and Michigan--and two more candidates joining the list of proponents (joining Bernero is Gaelan Brown of Vermont). That brings the total to seven candidates in as many states (Florida, Oregon, Illinois, California, Washington State, Vermont, and Idaho) campaigning for state-owned banks, including three Democrats, two Greens, one Republican, and one Independent.

The Independent, Vermont's Gaelan Brown, says on his website, "Washington, D.C. has lost all moral authority over Vermont." He adds, "Vermont should explore creating a State-owned bank that would work with private VT-based banks, to insulate VT from Wall Street corruption, and to increase investment capital for VT businesses, modeled after the very successful state-owned Bank of North Dakota."

The Bank of North Dakota, currently the nation's only state-owned bank, is the model (with variations) for all the other proposals on the table. The Bank of North Dakota acts as a "bankers' bank," partnering with other banks in "participation loans," which allow them to compete with larger banks. In a participation loan, the community bank originates the loan and takes responsibility for it, while the participating bank contributes funds and shares in the risk and profits. The Bank of North Dakota also makes low-interest loans to students, farmers and businesses; underwrites municipal bonds; and provides liquidity for more than 100 banks around the state.
Three New Bills Pending for Publicly Owned Banks

Proposals for publicly owned banks in other states have now progressed beyond the campaign talk of political hopefuls to be drafted into several bills.

The Michigan Development Bank

The Michigan bill has gotten the most press. Introduced into the legislature earlier this month, it mirrors Bernero's state bank idea. According to a press release issued by Michigan Senate Democrats on March 9, the bill's aim is to "keep Michigan's money in Michigan" by putting tax dollars into a proposed "Michigan Development Bank." The bank would function like a traditional bank, but would focus on economic development rather than profit. The press release quoted Senator Gretchen Whitmer (D-East Lansing):

Investing in the state's economy is the greatest way to create jobs, and this proposal will provide small businesses and entrepreneurs the funding they need to invest and grow. Our economy has stagnated due in part to stale thinking in Lansing, and this is just the type of innovative idea we need to create real economic change, using our own money to rebuild the state.

Senate Democratic Leader Mike Prusi (D-Ishpeming) stated:

Michigan's economy has been suffering, and working families in the state have had difficulty keeping up with credit card bills, college tuition prices and mortgage payments. Establishing the Michigan Development Bank will keep our hard-earned dollars right here in the state to invest in small business, create good-paying jobs to get people back to work, and help protect the middle class.

Also quoted was Senator Hansen Clarke (D-Detroit):

With the current state of our economy, every dollar counts, yet we're depositing our money in other people's pockets by investing in big corporate banks without seeing much lending in return. It's time for the Mitten State to lend itself a helping hand and establish a bank that is willing to invest in our small businesses and offer the financial support necessary to see job growth.

For start-up capital, the Senate Democrats suggested that Michigan could sell voter-approved bonds. With an initial capitalization of $150 million, they estimated the bank could lend up to $1 billion to small businesses, students and farmers, and offer low-interest credit cards to consumers. For deposits, the bank could follow the model of the Bank of North Dakota and use state revenues. So says Gene Taliercio, a Republican candidate for the state Senate, who has also put his weight behind the Michigan Development Bank. In a video clip on the website of the local Oakland Press, he says, "We're talking about restructuring the whole tax system, in the sense that the way it's set up is that all taxes are going to go into this central bank ... Every dollar that the state of Michigan makes goes into this bank."

The State Bank of Washington

A similar bill, HB 3162, was introduced to the Washington State Legislature on February 1. The bill has generated so much interest that Steve Kirby, chair of the Financial Institutions and Insurance Committee, has scheduled a special work session on it. According to John Nichols in The Nation, the State Bank of Washington was formally proposed by House finance committee vice chair Bob Hasegawa, a Seattle Democrat. Nichols quotes Hasegawa:

Imagine financing student aid, infrastructure, industry and community development. Imagine providing access to capital for small businesses, or otherwise leveraging our resources instead of having to do it with tax incentives. Imagine keeping our resources local instead of exporting them as profits, never to be seen again--that's what this bank could do.

Leveraging, rather than taxing, is how private banks have been creating "credit" for centuries. States could do the same thing, cutting the middlemen out of the equation, saving significant sums in interest and fees and generating revenue for the state.

A nonpartisan analysis of the Washington bill prepared for the state legislature noted that the bank would be the depository for all state funds and the funds of state institutions, and that these deposits would be guaranteed by the state. The bank would be run by a board of 11 members and would be chaired by the State Treasurer. It would have the same rules and privileges as a private bank chartered in the state. Since current law prohibits the state from lending credit and investing in private firms, voters would have to approve the state Constitution to get the bank off the ground.

The Community Bank of Illinois

A third bill, introduced by Illinois Representative Mary Flowers, is on its way through the legislative process in Illinois. According to the Illinois General Assembly website, the Community Bank of Illinois Act would establish a state bank with the express purpose of boosting agriculture, commerce, and industry. State funds and money held by penal, educational, and industrial institutions owned by the state would be deposited in the bank and would serve as reserves for making loans. The bank could also serve as a clearinghouse for other banks, including handling domestic and foreign exchange; and it could buy property under eminent domain. All deposits would be guaranteed with the assets of the state. The Bank would be managed and controlled by the Department of Financial and Professional Regulation, with input from an advisory board representing private banking and public interests.

An amendment to the initial bill would enable the Community Bank of Illinois to make loans directly to the state's General Revenue Fund, helping the state cope with its current budget challenges.

A Massachusetts-owned Bank

On March 12, the Associated Press reported that a jobs bill sponsored by Massachusetts Senate President Therese Murray also includes a call to study a Massachusetts-owned bank. She told a business group that a state-owned bank has worked in North Dakota, helping to insulate that state from the worst of the recession while also keeping its foreclosure rate down; similarly, a state-owned bank could spur job creation and free up lending to Massachusetts businesses.
Grandfather of the Concept: The Bank of North Dakota

All of these proposals take their inspiration from the Bank of North Dakota, which was founded in 1919 to resolve a credit crisis like that facing other states today. Last year, North Dakota had the largest budget surplus it had ever had. It was the only state that was actually adding jobs when others were losing them. In March 2009, when 46 of 50 states were in fiscal crisis, the Council of State Governments noted that North Dakota was in the enviable position of discussing tax cuts and looking for ways to spend its surplus.

With the deepening crisis, according to National Public Radio, by January 2010 only two states could still meet their budgets--North Dakota and Montana. On February 8, however, the Montana paper the Missoulian reported that the Montana State Legislature's chief revenue forecaster foresees a budget deficit by mid-2011, leaving North Dakota the only state still boasting a surplus.

North Dakota's riches have been attributed to oil, but many states with oil are floundering. The sole truly distinguishing feature of North Dakota seems to be that it has managed to avoid the Wall Street credit freeze by owning and operating its own bank. According to the North Dakota Department of Commerce, the BND turned a profit in 2009 of $58.1 million; this money goes into the state's General Fund. North Dakota's economy is ten times smaller than Michigan's, suggesting that Michigan could generate $500 million per year in this way; Washington State and Illinois present similarly inviting possibilities.

That defuses the objection raised in a March 15 editorial in The Detroit News, arguing that Michigan can ill afford the $150 million capital investment to start a bank. If operated like the BND, the Michigan Development Bank could soon be a net generator of state revenues. There are other possibilities, besides a bond issue, for providing the capital to start a bank, but that subject will be reserved for another article.

The BND's 90-year track record of prudent and profitable lending defuses another objection to state-owned banks: that a public agency cannot be trusted to act responsibly in managing public funds. The Detroit News' editorial concluded that Michigan should "leave banking to the bankers," but it is precisely because the bankers have destroyed the economy with their reckless lending practices that the public needs to step in. We need a "public option" in banking to set standards and keep private banks honest.
The True Potential of Publicly-owned Banks

North Dakota broke new ground nearly a century ago, but the true potential of publicly owned banks remains to be explored. Nearly all of our money today is created by banks when they extend loans. (See the Chicago Federal Reserve's "Modern Money Mechanics," which begins, "The actual process of money creation takes place primarily in banks.") We the people have given away our sovereign money--creating power to private, for-profit lending institutions, which have used it to siphon wealth from the productive economy. If we were to take that power back, we could generate the credit we need to underwrite a whole cornucopia of projects that we don't even consider because we think we lack the "money." We have the labor and we have the materials; we just lack the "liquidity" necessary to put them together to create products and services.

Money today is just a ticket, a receipt for work performed and goods delivered. We
http://www.commondreams.org/headline/20 ... nt-1455218
Published on Thursday, March 18, 2010 by YES! Magazine
The Growing Movement for Publicly Owned Banks
We the people have given away our sovereign money-creating power to private, for-profit lending institutions, which have used it to siphon wealth from the productive economy. Some states are moving to take that power back.

by Ellen Brown

"Hundreds of job-creating projects are still on hold because Michigan businesses and entrepreneurs cannot get bank financing. We can break the credit crunch and beat Wall Street at their own game by keeping our money right here in Michigan and investing it to retool our economy and create jobs."

--Lansing Mayor Virg Bernero in The Detroit News March 9, 2010

Michigan, which has an unemployment rate of 14 percent, has been particularly hard hit by the economic downturn. Virg Bernero, mayor of Lansing, the state's capital, and a leading Democratic candidate for governor, proposes to relieve the state's economic ills by opening a state-owned bank. He says the bank could protect consumers by making low-interest loans to those most in need, including students and small businesses; it could also help community banks by buying mortgages off their books and working with them to fund development projects.

Bernero joins a growing list of candidates proposing this sensible solution to their states' fiscal ills. Local economies have collapsed because of the Wall Street credit freeze. To reinvigorate local business, Main Street needs a heavy infusion of credit, and publicly-owned banks could fill that need.

In a recent article for YES! Magazine, I tracked candidates in five states running on a state bank platform and one state (Massachusetts) with a bill pending. Just one month later, there are now three more bills on the rolls--in Washington State, Illinois and Michigan--and two more candidates joining the list of proponents (joining Bernero is Gaelan Brown of Vermont). That brings the total to seven candidates in as many states (Florida, Oregon, Illinois, California, Washington State, Vermont, and Idaho) campaigning for state-owned banks, including three Democrats, two Greens, one Republican, and one Independent.

The Independent, Vermont's Gaelan Brown, says on his website, "Washington, D.C. has lost all moral authority over Vermont." He adds, "Vermont should explore creating a State-owned bank that would work with private VT-based banks, to insulate VT from Wall Street corruption, and to increase investment capital for VT businesses, modeled after the very successful state-owned Bank of North Dakota."

The Bank of North Dakota, currently the nation's only state-owned bank, is the model (with variations) for all the other proposals on the table. The Bank of North Dakota acts as a "bankers' bank," partnering with other banks in "participation loans," which allow them to compete with larger banks. In a participation loan, the community bank originates the loan and takes responsibility for it, while the participating bank contributes funds and shares in the risk and profits. The Bank of North Dakota also makes low-interest loans to students, farmers and businesses; underwrites municipal bonds; and provides liquidity for more than 100 banks around the state.
Three New Bills Pending for Publicly Owned Banks

Proposals for publicly owned banks in other states have now progressed beyond the campaign talk of political hopefuls to be drafted into several bills.

The Michigan Development Bank

The Michigan bill has gotten the most press. Introduced into the legislature earlier this month, it mirrors Bernero's state bank idea. According to a press release issued by Michigan Senate Democrats on March 9, the bill's aim is to "keep Michigan's money in Michigan" by putting tax dollars into a proposed "Michigan Development Bank." The bank would function like a traditional bank, but would focus on economic development rather than profit. The press release quoted Senator Gretchen Whitmer (D-East Lansing):

Investing in the state's economy is the greatest way to create jobs, and this proposal will provide small businesses and entrepreneurs the funding they need to invest and grow. Our economy has stagnated due in part to stale thinking in Lansing, and this is just the type of innovative idea we need to create real economic change, using our own money to rebuild the state.

Senate Democratic Leader Mike Prusi (D-Ishpeming) stated:

Michigan's economy has been suffering, and working families in the state have had difficulty keeping up with credit card bills, college tuition prices and mortgage payments. Establishing the Michigan Development Bank will keep our hard-earned dollars right here in the state to invest in small business, create good-paying jobs to get people back to work, and help protect the middle class.

Also quoted was Senator Hansen Clarke (D-Detroit):

With the current state of our economy, every dollar counts, yet we're depositing our money in other people's pockets by investing in big corporate banks without seeing much lending in return. It's time for the Mitten State to lend itself a helping hand and establish a bank that is willing to invest in our small businesses and offer the financial support necessary to see job growth.

For start-up capital, the Senate Democrats suggested that Michigan could sell voter-approved bonds. With an initial capitalization of $150 million, they estimated the bank could lend up to $1 billion to small businesses, students and farmers, and offer low-interest credit cards to consumers. For deposits, the bank could follow the model of the Bank of North Dakota and use state revenues. So says Gene Taliercio, a Republican candidate for the state Senate, who has also put his weight behind the Michigan Development Bank. In a video clip on the website of the local Oakland Press, he says, "We're talking about restructuring the whole tax system, in the sense that the way it's set up is that all taxes are going to go into this central bank ... Every dollar that the state of Michigan makes goes into this bank."

The State Bank of Washington

A similar bill, HB 3162, was introduced to the Washington State Legislature on February 1. The bill has generated so much interest that Steve Kirby, chair of the Financial Institutions and Insurance Committee, has scheduled a special work session on it. According to John Nichols in The Nation, the State Bank of Washington was formally proposed by House finance committee vice chair Bob Hasegawa, a Seattle Democrat. Nichols quotes Hasegawa:

Imagine financing student aid, infrastructure, industry and community development. Imagine providing access to capital for small businesses, or otherwise leveraging our resources instead of having to do it with tax incentives. Imagine keeping our resources local instead of exporting them as profits, never to be seen again--that's what this bank could do.

Leveraging, rather than taxing, is how private banks have been creating "credit" for centuries. States could do the same thing, cutting the middlemen out of the equation, saving significant sums in interest and fees and generating revenue for the state.

A nonpartisan analysis of the Washington bill prepared for the state legislature noted that the bank would be the depository for all state funds and the funds of state institutions, and that these deposits would be guaranteed by the state. The bank would be run by a board of 11 members and would be chaired by the State Treasurer. It would have the same rules and privileges as a private bank chartered in the state. Since current law prohibits the state from lending credit and investing in private firms, voters would have to approve the state Constitution to get the bank off the ground.

The Community Bank of Illinois

A third bill, introduced by Illinois Representative Mary Flowers, is on its way through the legislative process in Illinois. According to the Illinois General Assembly website, the Community Bank of Illinois Act would establish a state bank with the express purpose of boosting agriculture, commerce, and industry. State funds and money held by penal, educational, and industrial institutions owned by the state would be deposited in the bank and would serve as reserves for making loans. The bank could also serve as a clearinghouse for other banks, including handling domestic and foreign exchange; and it could buy property under eminent domain. All deposits would be guaranteed with the assets of the state. The Bank would be managed and controlled by the Department of Financial and Professional Regulation, with input from an advisory board representing private banking and public interests.

An amendment to the initial bill would enable the Community Bank of Illinois to make loans directly to the state's General Revenue Fund, helping the state cope with its current budget challenges.

A Massachusetts-owned Bank

On March 12, the Associated Press reported that a jobs bill sponsored by Massachusetts Senate President Therese Murray also includes a call to study a Massachusetts-owned bank. She told a business group that a state-owned bank has worked in North Dakota, helping to insulate that state from the worst of the recession while also keeping its foreclosure rate down; similarly, a state-owned bank could spur job creation and free up lending to Massachusetts businesses.
Grandfather of the Concept: The Bank of North Dakota

All of these proposals take their inspiration from the Bank of North Dakota, which was founded in 1919 to resolve a credit crisis like that facing other states today. Last year, North Dakota had the largest budget surplus it had ever had. It was the only state that was actually adding jobs when others were losing them. In March 2009, when 46 of 50 states were in fiscal crisis, the Council of State Governments noted that North Dakota was in the enviable position of discussing tax cuts and looking for ways to spend its surplus.

With the deepening crisis, according to National Public Radio, by January 2010 only two states could still meet their budgets--North Dakota and Montana. On February 8, however, the Montana paper the Missoulian reported that the Montana State Legislature's chief revenue forecaster foresees a budget deficit by mid-2011, leaving North Dakota the only state still boasting a surplus.

North Dakota's riches have been attributed to oil, but many states with oil are floundering. The sole truly distinguishing feature of North Dakota seems to be that it has managed to avoid the Wall Street credit freeze by owning and operating its own bank. According to the North Dakota Department of Commerce, the BND turned a profit in 2009 of $58.1 million; this money goes into the state's General Fund. North Dakota's economy is ten times smaller than Michigan's, suggesting that Michigan could generate $500 million per year in this way; Washington State and Illinois present similarly inviting possibilities.

That defuses the objection raised in a March 15 editorial in The Detroit News, arguing that Michigan can ill afford the $150 million capital investment to start a bank. If operated like the BND, the Michigan Development Bank could soon be a net generator of state revenues. There are other possibilities, besides a bond issue, for providing the capital to start a bank, but that subject will be reserved for another article.

The BND's 90-year track record of prudent and profitable lending defuses another objection to state-owned banks: that a public agency cannot be trusted to act responsibly in managing public funds. The Detroit News' editorial concluded that Michigan should "leave banking to the bankers," but it is precisely because the bankers have destroyed the economy with their reckless lending practices that the public needs to step in. We need a "public option" in banking to set standards and keep private banks honest.
The True Potential of Publicly-owned Banks

North Dakota broke new ground nearly a century ago, but the true potential of publicly owned banks remains to be explored. Nearly all of our money today is created by banks when they extend loans. (See the Chicago Federal Reserve's "Modern Money Mechanics," which begins, "The actual process of money creation takes place primarily in banks.") We the people have given away our sovereign money--creating power to private, for-profit lending institutions, which have used it to siphon wealth from the productive economy. If we were to take that power back, we could generate the credit we need to underwrite a whole cornucopia of projects that we don't even consider because we think we lack the "money." We have the labor and we have the materials; we just lack the "liquidity" necessary to put them together to create products and services.

Money today is just a ticket, a receipt for work performed and goods delivered. We can fund the work we need done by creating our own credit. The real promise of publicly-owned banks is not that they can bail out subprime borrowers but that they can jumpstart the economy by creating real wealth. They can provide the liquidity to put labor and materials together, allowing the economy to build and grow. Our private, profit-driven banking sector has been bleeding wealth from the rest of the economy. Public-interest banks can transfuse the economy with the credit it needs to flourish and be productive once again.

Ellen Brown wrote this article for YES! Magazine, a national, nonprofit media organization that fuses powerful ideas with practical actions. Ellen developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest of eleven books, she turns those skills to an analysis of the Federal Reserve and "the money trust." Her websites are webofdebt.com, ellenbrown.com, and public-banking.com.


This work is licensed under a Creative Commons License

can fund the work we need done by creating our own credit. The real promise of publicly-owned banks is not that they can bail out subprime borrowers but that they can jumpstart the economy by creating real wealth. They can provide the liquidity to put labor and materials together, allowing the economy to build and grow. Our private, profit-driven banking sector has been bleeding wealth from the rest of the economy. Public-interest banks can transfuse the economy with the credit it needs to flourish and be productive once again.

Ellen Brown wrote this article for YES! Magazine, a national, nonprofit media organization that fuses powerful ideas with practical actions. Ellen developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest of eleven books, she turns those skills to an analysis of the Federal Reserve and "the money trust." Her websites are webofdebt.com, ellenbrown.com, and public-banking.com.


This work is licensed under a Creative Commons License

cly owned banks remains to be explored. Nearly all of our money today is created by banks when they extend loans. (See the Chicago Federal Reserve's "Modern Money Mechanics," which begins, "The actual process of money creation takes place primarily in banks.") We the people have given away our sovereign money--creating power to private, for-profit lending institutions, which have used it to siphon wealth from the productive economy. If we were to take that power back, we could generate the credit we need to underwrite a whole cornucopia of projects that we don't even consider because we think we lack the "money." We have the labor and we have the materials; we just lack the "liquidity" necessary to put them together to create products and services.

Money today is just a ticket, a receipt for work performed and goods delivered. We can fund the work we need done by creating our own credit. The real promise of publicly-owned banks is not that they can bail out subprime borrowers but that they can jumpstart the economy by creating real wealth. They can provide the liquidity to put labor and materials together, allowing the economy to build and grow. Our private, profit-driven banking sector has been bleeding wealth from the rest of the economy. Public-interest banks can transfuse the economy with the credit it needs to flourish and be productive once again.

Ellen Brown wrote this article for YES! Magazine, a national, nonprofit media organization that fuses powerful ideas with practical actions. Ellen developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest of eleven books, she turns those skills to an analysis of the Federal Reserve and "the money trust." Her websites are webofdebt.com, ellenbrown.com, and public-banking.com.


This work is licensed under a Creative Commons License

[cowboyangel]

Ellen is magnificent. I'm gonna meet her at the Deep Politics Conference in May. Wowee!

[can't sit still]

As y'all know, big investment banks have been failing regularly. The cure, so far has been for taxpayers to guarantee the bank's paper so that the bondholders and stockholders would not take a loss.
In Iceland, this remedy went to a referendum. The voters said "FUCK THE BANKERS"
OK, so lets assume that the general public escapes the loss and it falls on the bond and stock holders. How does that change the spread of the losses? I don't know.

The chief of the IMF is proposing that the financial industry create an "entity" that will address these losses and impose them on the stock and bond holders;
http://www.guardian.co.uk/business/2010 ... ling-banks

I suspect that the banks would try to screw their own investors and escape unscathed.
The IMF has always followed the path of "austerity" plans to drag a country out of bankruptcy. It's possible that the IMF sees such major damage that they want to see the banks pick up a big part of the loss.

It's arguable that since many of the investors are "pools" of money from people of modest means, the losses would still hit middle class people.
It's also entirely possible that the IMF sees a danger to fiat currencies as a group.

Aristotle said that "money" had to be something that was a store of value. The dollar is just a debt instrument. It has no value. It's always been very risky using a debt instrument as "money".
It's often argued that the dollar could NOT lose it's status as the "reserve" currency. It's also argued that just because there is NO substitute for the dollar,,,, doesn't mean that it couldn't just collapse.
Some argue that the unfolding collapse of ALT-A , prime, and commercial will blow up much of the remaining $654 trillion [more or less] of derivatives. There is no possibility of bankers or anyone else absorbing this much loss.
It's well known that Spain will shortly follow Greece.

The IMF probably sees the situation as unsalvageable. if a "fire brigade" were formed to cope with the loses, it might be able to cancel-out much of the derivatives without counterparty losses,,, just a LOT of mutual cancellations.


The IMF doesn't do anything out of the generosity of their hearts. If they're trying to get the bankers off the backs of the taxpayers, they probably have very good reason.

[can't sit still]

Some interesting headlines. I haven't checked them out;
"Bernanke Says Bank Bailouts Are Unconscionable "
http://www.investors.com/NewsAndAnalysi ... e=Newsfeed

"Court orders Fed to release bailout records"
http://www.financialpost.com/news-secto ... id=2703453

"Greenspan says U.S. regulators failed during financial crisis"
He was the head regulator, why the hell didn't he include himself?
http://www.financialpost.com/news-secto ... id=2702759

"Bernanke says banks need much tougher oversight"
http://www.washingtonpost.com/wp-dyn/co ... 01108.html
Sure, as long as there's no oversight of the FED

[can't sit still]

This came in mail. It makes a good comparison to the S&L crash;

While there were a couple thousand indictments and over a thousand money changers jailed over the S&L crisis, nary a one has been even indicted on Wall Street this time. They own the system.


On Mon, Mar 22, 2010 at 3:25 AM, david soori <sooriuk> wrote:
Just as the Asean financial crisis was orchesterated, this was too, so too will be the Euro crisis.
David

Watch this. Excellent Real News interview on finance in the U.S

Part 1 http://therealnews.com/t2/index.php?opt ... view&id=31

Part 2 http://therealnews.com/t2/index.php?opt ... view&id=31

Bill Black, the interviewee, is a serious individual. You get a true impression of the scale of the political-financial revolution that has taken place with the bailout. It really is Last Days of the Roman Empire stuff.
==============

[can't sit still]

The banks can't seem to unload their worthless mortgages. Obummer came up with the idea of ordering the banks to seriously diminish or forgo the mortgage payment. He also talks about having the FHA absorb these loans.
The FDIC is falling into a giant hole,,, same with Mac n Mae. Why not throw FHA into the same hole.
http://www.rense.com/general90/obme.htm

[can't sit still]

I guess that I have to repeat myself here. I already mentioned that 50 % of the cost of the average item is for finance. 19 % for trash collection,,, 78 % for public housing. The average is 50 %. OK so, GOV spends 36 % + of the GDP so, one could figure that taxes account for, say 15 % of cost.
So, the cost of a widget is 50 % finance and 15 % tax. That leaves 35 % for energy, materials, shipping, markup and labor.
OK, so the West has been priced out of manufacturing. Who's fault is that? MUCH of manufacturing is done by machine with a very small labor content. Everything that we make has a 100 % markup for finance,,, 50 % added on top.

OK, so, all of a sudden Western banking sees that the West is losing market share. Do they lower their effective finance rates. Not bloody likely. China has lower interest. The West has a for-shit business model. The answer, of course, is for China to raise their interest rates. Western banks are complaining that Chinese interest rates are 'unfair competition"
"130 Republicans and Democrats are calling on the U.S. Treasury to label China as a “currency manipulatorâ€

[can't sit still]

I found this at Bob Chapman's site;
"As we have said previously the only way to handle the problem is for nations to meet, have a multilateral official devaluation and debt default settlement. That will be followed by a deflationary depression, which will be accompanied by another worldwide war."
"Another worldwide war" Hey, no problem,,, WW III
http://theinternationalforecaster.com/I ... _From_Over

In other news, the US has to borrow $ 1.6 trillion and roll over $ 2 trillion. The problem is that bond holders are cashing out,,, not rolling over.
The US was hoping to inflate away the debt. It's not working. They hired millions and doubled GOV salaries to try to inject freshly printed money into the economy,,,, and get substantial inflation. The original losses were so great that all the additional money printed barely had any effect.
GOV seriously needed to get inflation on a roll before interest rates went up. Inflation isn't really happening AND interest rates on GOV debt are rising.

The bankers who run GOV are refusing to push the Magic Button. They could just send every American $ 1 million . That would get inflation on a roll. Time is running out. If GOV can't release the inflation Genie out of the bottle, Debt-interest will eat it alive.

States and cities need 1--2 $ trillion. Muni bonds just aren't selling. That will crash the states that much faster. When the states and cities are flat broke, they can't get "matching funds" from the FEDS. A $ 1 million shortfall can wipe out a $ 3 million expenditure. One more turn in the downward spiral. Ca. is going to do big layoffs in April.

As more and more RE crashes, the banks need more and more capital to maintain the appearance of solvency. Less money for loans. The FDIC will be working overtime and grabbing $ 100s of billions more.

Afghanistanbananistan. does anybody remember where that word came form? NO google now,, be fair. let's see if you can access old files,, in the noggin.