Articles by Ellen Brown
December 13, 2011
The campaign to “move your money” has gotten a groundswell of support. Having greater impact would be to “move our money” — move our local government revenues out of Wall Street banks into our own publicly-owned banks.
December 7, 2011
On November 27, Bloomberg News reported the results of its successful case to force the Fed to reveal the lending details of its 2008-09 bank bailout. In 29,000 pages of documents, the Fed revealed that by March 2009, it had committed $7.77 trillion in below-market loans and guarantees to rescuing the financial system; and that these nearly interest-free loans came without strings attached.
November 28, 2011
“To some people, the European Central Bank seems like a fire department that is letting the house burn down to teach the children not to play with matches.”
November 17, 2011
It is no great surprise that with only days to go, the congressional “super committee,” given the herculean task of carving an additional $1.2 trillion out of the federal budget, has failed to reach agreement. Why should six Republicans and six Democrats with diametrically opposed views agree in a few weeks, when Congress couldn’t shake hands on it after months of wrangling, despite the guillotine blade of a federal default hanging over their heads?
November 9, 2011
Henry Ford said, “It is well enough that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”
October 20, 2011
Among the demands of the Wall Street protesters is student debt forgiveness—a debt “jubilee.” Occupy Philly has a “Student Loan Jubilee Working Group,” and other groups are studying the issue. Commentators say debt forgiveness is impossible. Who would foot the bill? But there is one deep pocket that could pull it off—the Federal Reserve. In its first quantitative easing program (QE1), the Fed removed $1.3 trillion in toxic assets from the books of Wall Street banks. For QE4, it could remove $1 trillion in toxic debt from the backs of millions of students.
October 11, 2011
Publicly-owned banks were instrumental in funding Germany’s “economic miracle” after the devastation of World War II. Although the German public banks have been targeted in the last decade for takedown by their private competitors, the model remains a viable alternative to the private profiteering being protested on Wall Street today.
September 28, 2011
Why did gold and silver stocks just get hammered, at a time when commodities are considered a safe haven against widespread global uncertainty?
September 12, 2011
AB 750, California’s bill to study the feasibility of establishing a state-owned bank that would receive deposits of state funds, has passed both houses of the legislature and is now on the desk of Governor Jerry Brown awaiting his signature.
September 9, 2011
So went the anti-Vietnam War protest song popularized by Edwin Starr in 1970 and revived by Bruce Springsteen in the 1980s. After 9/11, it was placed on the list of post-9/11 inappropriate titles distributed by Clear Channel.
August 31st, 2011
North Dakota has had the nation’s lowest unemployment ever since the economy tanked. What’s its secret?
August 18th, 2011
It used to be that when the Fed Chairman spoke, the market listened; but the Chairman has lost his mystique. Now when the market speaks, politicians listen. Hopefully they heard what the market just said: government cutbacks are bad for business.
August 6th, 2011
It used to be that when the Fed Chairman spoke, the market listened; but the Chairman has lost his mystique. Now when the market speaks, politicians listen. Hopefully they heard what the market just said: government cutbacks are bad for business.
July 31st, 2011
The game of Russian roulette being played with the U.S. federal debt has been called a “grotesque political carnival” and political blackmail. The uproar stems from a statute that is unique to the United States and never did make much sense.
July 15th, 2011
Why aren’t banks lending to local businesses? The Fed’s decision to pay interest on $1.6 trillion in “excess” reserves is a chief suspect.
July 8th, 2011
The Fed’s second round of “quantitative easing” involved $600 billion created with a computer keystroke for the purchase of long-term government bonds.
June 27th, 2011
With the big banks speculating instead of lending to small businesses, states are looking for new ways to keep credit flowing.
June 20th, 2011
The military is the nation’s largest and most firmly entrenched entitlement program, one that takes half of every tax dollar.
June 6th, 2011
Countries everywhere are facing debt crises today, precipitated by the credit collapse of 2008. Public services are being slashed and public assets are being sold off, in a futile attempt to balance budgets that can’t be balanced because the money supply itself has shrunk. Governments usually get the blame for excessive spending, but governments did not initiate the crisis. The collapse was in the banking system, and in the credit that it is responsible for creating and sustaining.
May 24th, 2011
A game of Russian roulette is being played with the national debt ceiling. Fire the wrong chamber of the gun, and the result could be the second Great Depression.
May 17th, 2011
California is the eighth largest economy in the world, and it has a debt burden to match. It has outstanding general obligation bonds and revenue bonds of $158 billion, largely incurred for infrastructure. Of this tab, $70 billion is just for interest. Over $7 billion of California’s annual budget goes to pay interest on the state’s debt.
May 17th, 2011
“Ford to New York: Drop Dead,” said a famous headline in 1975. President Ford had declared flatly that he would veto any bill calling for “a federal bail-out of New York City.” What he proposed instead was legislation that would make it easier for the city to go bankrupt
May 10th, 2011
Debate continues to rage between the inflationists who say the money supply is increasing, dangerously devaluing the currency, and the deflationists who say we need more money in the economy to stimulate productivity. The debate is not just an academic one, since the Fed’s monetary policy turns on it and so does Congressional budget policy.
April 25th, 2011
“Deficit terrorists” are gutting governments and forcing the privatization of public assets, all in the name of “deficit reduction.” But deficits aren’t actually a bad thing. In today’s monetary scheme, in which most money comes from debt, debt and deficits are actually necessary to have a stable money supply. The public debt is the people’s money.
April 8th, 2011
If the Gaddafi government goes down, it will be interesting to watch whether the new central bank joins the BIS, whether the nationalized oil industry gets sold off to investors, and whether education and health care continue to be free.
March 29th, 2011
The Japanese government can afford its enormous debt because it owns the bank that is its principal creditor. But competitors are attempting to force the bank’s privatization. If they succeed, they could propel the country into debt servitude along with other credit-strapped nations.
March 26th, 2011
Cut spending, raise taxes, sell off public assets – these are the unsatisfactory solutions being debated across the nation; but the budget crises now being suffered by nearly all the states did not arise from too much spending or too little taxation. They arose from a credit freeze on Wall Street.
March 7th, 2011
As states struggle to meet their budgets, public pensions are on the chopping block, but they needn’t be. States can keep their pension funds intact while leveraging them into many times their worth in loans, just as Wall Street banks do. They can do this by forming their own public banks, following the lead of North Dakota—a state that currently has a budget surplus.
February 15th, 2011
Responding to an unfilled need for credit for local government, local businesses and consumers, three states in the last month have introduced bills for state-owned banks — Oregon, Washington and Maryland – joining Illinois, Virginia, Massachusetts and Hawaii to bring the total number of states with bills to seven.
February 2nd, 2011
Underlying the sudden, volatile uprising in Egypt and Tunisia is a growing global crisis sparked by soaring food prices. But what caused the recent jump in food prices remains a matter of debate . . .
January 24th, 2011
Bills were introduced on January 18 in both the House and Senate of the Washington State Legislature that add Washington to the growing number of states now actively moving to create public banking facilities.
January 12th, 2011
The Federal Reserve was set up by bankers for bankers, and it has served them well. Out of the blue, it came up with $12.3 trillion in nearly interest-free credit to bail the banks out of a credit crunch they created. That same credit crisis has plunged state and local governments into insolvency, but the Fed has now delivered its ultimatum: there will be no “quantitative easing” for municipal governments.
December 22nd, 2010
The Greek bailout was supposed to be an isolated case, a test of the EU’s ability to quarantine an infected member, preventing it from spreading “debt contagion.”
December 18th, 2010
We’ve seen behind the curtain, as the Fed waved its magic liquidity wand over Wall Street. Now it’s time to enlist this tool in the service of the people.
December 1st, 2010
Unlike Zimbabwe, the U.S. can easily get the currency it needs without being beholden to anyone. But wouldn’t that dilute the value of the currency? No.
November 19th, 2010
The deficit hawks are circling, hovering over QE2, calling it just another inflationary bank bailout. But unlike QE1, QE2 is not about saving the banks…
November 5th, 2010
For two years, politicians have danced around the nationalization issue, but ForeclosureGate may be the last straw.
October 28th, 2010
China may be as heavily in debt as we are. It just has a different way of keeping its books…
October 27th, 2010
By understanding that money is simply credit, we unleash it as a powerful tool for our communities.
October 15th, 2010
With risky behavior by big finance again threatening economic stability, how can we get things right this time?
October 7th, 2010
By most reports, it would appear that the voluntary suspension of foreclosures is underway to review simple, careless procedural errors. Errors which the conscientious banks are hastening to correct. Even Gretchen Morgenson in the New York Times characterizes the problem as “flawed paperwork.”
October 2nd, 2010
The hits are coming fast and furiously. Major Wall Street mortgage lenders could soon be falling like dominos – and looking again for handouts.
September 16th, 2010
While local banks are held in check by the new banking czars in Basel, Wall Street’s “shadow banking system” has hardly been curbed by regulators at all; and it is here that the 2008 credit crisis was actually precipitated. The banking system’s credit machine is systemically flawed and needs a radical overhaul.
September 16th, 2010
The stock market shot up on September 13, after new banking regulations were announced called Basel III. Wall Street breathed a sigh of relief.
September 8th, 2010
The Fed is proposing another round of “quantitative easing,” although the first round failed to reverse deflation. It failed because the money went into the coffers of banks, which failed to lend it on. To reverse deflation, the money needs to be funneled directly to state and local economies.
August 18th, 2010
The financial juggling that helped cause the 2008 crisis may be coming back to haunt banks—and help homeowners.
August 4th, 2010
Virg Bernero, the mayor of Lansing, Michigan, just won the Democratic nomination for governor of his state, making a state-owned Bank of Michigan a real possibility. Bernero is one of at least a dozen candidates promoting that solution to the states’ economic woes.
July 22nd, 2010
Last week, a Chinese rating agency downgraded U.S. debt from triple A and number one globally, to “double A with a negative outlook” and only thirteenth worldwide. The downgrade renewed fears that the sovereign debt crisis that began in Greece will soon reach America.
July 12th, 2010
Ever since December 2008, the Federal Reserve has held short-term interest rates near zero. This was not only to try to stimulate the housing and credit markets but also to allow the federal government to increase its debt levels without increasing the interest tab picked up by the taxpayers.
June 28th, 2010
Wall Street banks have been saved from bankruptcy by governments that are now going bankrupt themselves; but the banks are not returning the favor. Instead, they are engaged in a class war…
June 17th, 2010
Last week, England’s new government said it would abandon the previous government’s stimulus program and introduce the austerity measures required to pay down its estimated $1 trillion in debts.
June 4th, 2010
While individuals, businesses and governments suffer from a credit crisis created on Wall Street, the banks responsible for the crisis are tapping into nearly-interest-free credit lines and using the money to speculate or to make commercial loans at much higher rates.
May 21st, 2010
California is in the anomalous position of being $26 billion in the red and plunging toward bankruptcy, while it has over $70 billion stashed away in an investment pool that it cannot touch.
May 13th, 2010
Several states are either studying the prospects of a state-owned bank or are considering legislation to make one possible.
May 7th, 2010
When Goldman does not get its way, it is in a position to throw a tantrum and crash the market. . . .
May 3rd, 2010
As if attacks from paparazzi and star-crazed fans weren’t enough, Hollywood stars may soon have a literal price put on their heads by investors in the Cantor Exchange, a real-money trading platform where people can bet on the gross profits of upcoming movies.
April 21st, 2010
While the SEC is busy investigating Goldman Sachs, it might want to look into another Goldman-dominated fraud: computerized front running using high-frequency trading programs.
March 31st, 2010
The government is now officially in the banking business. On March 30, 2010, President Obama signed the reconciliation “fix” to the health care reform bill passed by Congress last week. Slipped into it was student loan legislation the President calls “one of the most significant investments in higher education since the G.I. Bill.”
March 18th, 2010
As the states’ credit crisis deepens, four states have initiated bills for state-owned banks, and candidates in seven states have now included that solution in their platforms.
March 1st, 2010
In addition to mandatory private health insurance premiums, we may soon be hit with a “mandatory savings” tax and other belt-tightening measures urged by the President’s new budget task force. These radical austerity measures are not only unnecessary but will actually make matters worse. The push for “fiscal responsibility” is based on bad economics.
February 17th, 2010
The public bank concept is gaining ground on the state level, attracting proponents across the political spectrum.
February 5th, 2010
The onion is being peeled in the AIG bailout, which is being compared to the Watergate scandal.
January 29th, 2010
We are witnessing an epic battle between two banking giants, JPMorgan Chase (Paul Volcker) and Goldman Sachs (Rubin/Geithner). The bodies left on the battleground could include your pension fund and 401K.
January 21st, 2010
The story goes that Churchill offered a woman 5 million pounds to sleep with him. She hedged and said they would have to discuss terms. Then he offered her 5 pounds. “Sir!” she said. “What sort of woman do you think I am?” “Madam,” he replied, “We’ve already established that. Now we’re just haggling over the price.”
January 3rd, 2010
The recent proposal to vote with our feet by shifting our deposits from Wall Street to community banks is a great start. However, community banks are not suffering from a lack of deposits so much as from a lack of the capital they need to make new loans, and investment capital today is scarce. There is a way out of this dilemma, demonstrated for over 90 years by the innovative state of North Dakota — a partnership in which community banks are backed by the deep pockets of a state-owned bank.
December 21st, 2009
Rather than focusing on making health care affordable, the current debate is on how to force people either to buy health insurance if they don’t have it, or to pay more for it if they do.
[This article is a shortened version of “Let Them Eat Cake.”]
December 7th, 2009
Europe’s small, debt-strapped countries could follow the lead of Argentina and simply walk away from their debts. That would shift the burden to the creditor countries, which could solve the problem merely by a change in accounting rules.
November 27th, 2009
Miners used to keep canaries in coal mines as an early warning device. If the air was so bad that it killed the canary, the miners would soon be next. Japan may be the canary for the out-of-control deficit spending policies now being pursued in the United States and the United Kingdom.
November 11th, 2009
Wall Street’s speculative traders have managed to trade in practically the only products left on the planet that are not subject to a sales tax. The fact that trades in “financial products” remain untaxed suggests a tidy way the public could recover some of its bailout money.
October 31st, 2009
Pouring money into the private banking system has only fixed the economy for bankers and the wealthy; it has not done much to address either the fundamental problem of unemployment or the debt trap so many Americans find themselves in.
October 11th, 2009
The credit crunch is getting worse on Main Street, despite a Wall Street bailout now in the trillions of dollars. The Fed may have played all its cards, but state and local governments still hold a few aces. Some local politicians are looking into the feasibility of opening their own publicly-owned banks, providing them with their own credit machines.
October 1st, 2009
“A year ago,” said law professor Ross Buckley on Australia’s ABC News last week, “nobody wanted to know the International Monetary Fund. Now it’s the organiser for the international stimulus package which has been sold as a stimulus package for poor countries.”
The IMF may have catapulted to a more exalted status than that. According to Jim Rickards, director of market intelligence for scientific consulting firm Omnis, the unannounced purpose of last week’s G20 Summit in Pittsburgh was that “the IMF is being anointed as the global central bank.”
September 19th, 2009
A landmark ruling in a recent Kansas Supreme Court case may have given millions of distressed homeowners the legal wedge they need to avoid foreclosure. In Landmark National Bank v. Kesler, 2009 Kan. LEXIS 834, the Kansas Supreme Court held that a nominee company called MERS has no right or standing to bring an action for foreclosure. MERS is an acronym for Mortgage Electronic Registration Systems, a private company that registers mortgages electronically and tracks changes in ownership. The significance of the holding is that if MERS has no standing to foreclose, then nobody has standing to foreclose – on 60 million mortgages…
September 7th, 2009
The disastrous collapse of Lehman Brothers on 9-11-08 was the catalyst that changed the rules of the game for the big Wall Street financial players. The banks would henceforth be bailed out by the taxpayers, no matter what the cost. Was the Lehman bankruptcy the result of “market forces” or was it engineered? If the bank was pushed over the brink by invisible hands, whose hands were they and what goal was being served?
August 30th, 2009
The government seems to be speaking out of both sides of its mouth, as the President preaches one thing and the FDA does another. If we are going to have “smarter medicine that really works,” we need to get politics, lobbies and cronyism out of science.
August 17th, 2009
While the U.S. spends trillions of dollars to bail out its banking system, leaving its economy to languish, China is being called a “miracle economy” that has decoupled from the rest of the world. As the rest of the world sinks into the worst recession since the 1930s, China has maintained a phenomenal 8% annual growth rate. Those are the reports, but commentators are dubious. They ask how that growth is possible, when other countries relying heavily on exports have suffered major downturns and remain in the doldrums.
August 5th, 2009
President Obama has repeated his call for a public option in health care, in order to create some competition for the insurance companies and keep them honest. We the people need to call for a public option in banking, in order to create some competition for the private banks and keep them honest.
July 22nd, 2009
California has over $17 billion on deposit in banks that have refused to honor its IOUs, forcing legislators to accept crippling budget cuts. These austerity measures are unnecessary. If the state were to deposit its money in its own state-owned bank, it could have enough credit to solve its budget crisis with funds to spare.
July 13th, 2009
Since Wall Street has failed to provide a functioning credit system, California would be totally justified in providing its own. The other choice is to accept debt peonage.
July 8th, 2009
“As goes California,” says the adage, “so goes the nation.” All eyes are therefore on the Golden State as it attempts to solve its $26 billion budget deficit. The world’s eighth largest economy is not going quietly into that pit of debt and devastation that has devoured Third World countries whole. The State’s voters have drawn a line in the sand against further tax hikes, while Democratic leaders have drawn a line at further cuts in services or selloff of public assets. State legislators are deadlocked, caught between the rock of tax ceilings and the hard place of debt limits.
June 30th, 2009
On June 25, California Governor Arnold Schwarzenegger rejected a plan that would save the state $3 billion by cutting school spending, saying he would rather see the state issue IOUs than delay the funding problem with a piecemeal approach. The state’s total budget deficit is $24.3 billion. Meanwhile, other funding doors are slamming closed. The Obama administration has said it will not use federal stimulus money to prop up California; and Fitch Ratings, a bond rating agency, announced that it was downgrading the credit rating of the state, which already has the lowest in the nation. What to do? Perhaps California could take a lesson from the island state of Guernsey . . . .
June 22nd, 2009
Buried on page 83 of the 89-page Report on Financial Regulatory Reform issued by the U.S. Administration on June 17 is a recommendation that the new Financial Stability Board strengthen and institutionalize its mandate to promote global financial stability. Financial stability is a worthy goal, but the devil is in the details. The new global Big Brother is based in the Bank for International Settlements, a controversial institution that raises red flags among the wary . . . .
June 18th, 2009
While contrarians are screaming “hyperinflation!”, the money supply is actually shrinking. This is because most money today comes into existence as bank loans, and lending has shrunk substantially. That means the Fed needs to “monetize” debt just to fill the breach.
June 10th, 2009
Prophetically, GM named one of its now-extinct brands the Firebird. Like the fabled Firebird, GM could be reborn as something else. We now own a car company. To finance its transformation into something better, we just need to own a bank.
May 26th, 2009
Christmas comes early, Governor. You CAN print your own money. Fiscally solvent North Dakota is doing it . . . and so can California. Now!!! Here’s how . . . .
May 19th, 2009
Worried commentators are predicting a massive hyperinflation of the sort suffered by Weimar Germany in 1923, when a wheelbarrow full of paper money could barely buy a loaf of bread. But there is something puzzling in the data. The British government is already funding more of its budget by seigniorage than Weimar Germany did at the height of its massive hyperinflation. Yet the pound is still holding its own, under circumstances said to have driven the German mark to one-trillionth of its former value. Something else besides mere money-printing to meet the government’s budget must have been responsible for collapsing the German mark, but what? And are we threatened by the same risk today?
April 20th, 2009
Earlier this month, the G20 leaders agreed to inject $250 billion in SDRs or Special Drawing Rights into the economy. In an April 7 article titled “The G20 Moves the World a Step Closer to a Global Currency,” Ambrose Evans-Pritchard wrote that “In doing so, they are putting a de facto world currency into play. It is outside the control of any sovereign body. Conspiracy theorists will love it.” The article is subtitled, “The world is a step closer to a global currency, backed by a global central bank, running monetary policy for all humanity.” Which naturally raises the question, who or what will serve as this global central bank, cloaked with the power to issue the global currency and police monetary policy for all humanity? When the world’s central bankers met last September, the Bank for International Settlements was suggested . . . .
April 7th, 2009
Dear President Obama:
The world was transfixed on that remarkable day in January when, to poetry, song, and dance, you gazed upon Abraham Lincoln’s likeness at the Lincoln Memorial and searched for wisdom to navigate these difficult times. Indeed, you have so many things in common with that venerable President that one might imagine you were his reincarnation in different dress. You are both thin and wiry, brilliant speakers, appearing on the national stage at pivotal times. Fertile imaginations could envision you coming back dressed in that African heritage you freed, to help heal the great scar of slavery and prove once and for all the proposition that all men are created equal and can achieve great things if given a fighting chance. As Wordsworth said, however, our birth is but a sleep and a forgetting; and if that is true, you may have forgotten a more subtle form of slavery from which Lincoln tried less successfully to free his countrymen.
March 30th, 2009
Nervous pundits are predicting the end of American life as we know it, after Fed Chairman Ben Bernanke announced on March 18 that he would be dropping yet ANOTHER trillion dollars in helicopter money. The Fed now appears to be taking on the role of lender of last resort not just for its member banks but for consumers and businesses generally. Provisos and cautions aside, its new “quantitative easing” policy at least has the potential to be harnessed to serve the government and the people it represents; and that is a promising development . . . .
March 11th, 2009
Forty-six of fifty states are now reported to be so insolvent that they could be filing Chapter 9 bankruptcy proceedings within the next two years.1 Of the four that are not in that category, one is the isolated farming state of North Dakota. What does it have that other states don’t? The answer seems to be: its own bank. In fact, North Dakota has the only state-owned bank in the nation. It has avoided the credit freeze caused by the derivative schemes of the Wall Street bankers by creating its own credit, leading the nation in establishing state economic sovereignty. . . .
[Shortened version of March 2nd article on the same subject.]
March 2nd, 2009
On February 19, 2009, California narrowly escaped bankruptcy, when Governor Arnold Schwarzenneger put on his Terminator hat and held the state senate in lockdown mode until they signed a very controversial budget. If the vote had failed, the state was going to be reduced to paying its employees in I.O.U.s. California avoided bankruptcy for the time being, but 46 of 50 states are insolvent and could be filing Chapter 9 bankruptcy proceedings in the next two years. . . .
February 22nd, 2009
Funding the government’s budget shortfall has usually been left to private lenders; but those loans are drying up, and servicing them is proving expensive. Both this interest burden and the need to continually attract new lenders could be avoided by tapping into the government’s credit line at its own central bank . . . .
January 22nd, 2009
The new Wackenhut operation is shrouded in mystery. It has been running its fleet of empty prison buses night and day, apparently logging miles on a Department of Homeland Security (DHS) contract. Multiple buses can be seen driving all over town and even on remote desert back roads. Oddly, except for the driver and one escort guard seated in front, these buses appear to be empty. . . .
January 11th, 2009
Last fall, Congress committed an unprecedented $700 billion in taxpayer money to reversing the credit crisis, and the Federal Reserve has already fanned that into $8.5 trillion in loans and commitments. But the bank bailout has proven to be no more than a boondoggle for a handful of lucky Wall Street banks, without getting credit flowing again. What went wrong and what WILL get credit flowing again? . . .
December 29th, 2008
Bernie Madoff showed us how it was done, but his Ponzi scheme was small compared to one that has been perpetrated for hundreds of years by the banking system itself. What distinguishes the legal scheme known as “fractional reserve” lending from the illegal schemes of Madoff and his ilk is that the bankers’ scheme is protected by government charter and backstopped with government funds. The sheer size of the bailout efforts today, however, indicates that the banking scheme has reached its mathematical limits and needs to be superseded by something more sustainable.
December 19th, 2008
The federal funds rate and the interest on 3-month Treasury bills both just hit ZERO percent. This means banks and the government are borrowing money for free. Yet demand for the T-bills at auction was four times the available supply! Who is clamoring to buy the debt of the world’s most insolvent debtor for no return at all, and why?
December 8th, 2008
As our 45th President prepares to enter the Oval Office, bank lending has seized up, some of the nation’s largest banks are on life support, and the big three automakers are bankrupt. Housing continues to crash, and so does the economy.
November 25th, 2008
The $700 billion that was arm-twisted from Congress in October was just the camel’s nose under the tent. The Paulson/Bernanke team is now prepared to pay $7.76 trillion to rescue the financial system. Prepared to pay how? Congress has not raised its debt ceiling to that level, and the Fed doesn’t have the funds on its books . . .
November 3rd, 2008
It was another surreal week on Wall Street, with the Dow Jones Industrial Average rising a thousand points while the economy continued to sink into its worst financial crisis since the Great Depression . . .
October 25th, 2008
October 24 marks the 79th anniversary of the October 1929 stock market crash. Many feared a repeat of this disaster on Friday, October 24, 2008; but remarkably, disaster was averted. How? Suspicious observers saw the hand of the Plunge Protection Team pulling strings behind the scenes . . .
October 16th, 2008
Last night, the Presidential candidates had their last debate before the election. They talked of the baleful state of the economy and the stock market; but omitted from the discussion was what actually caused the credit freeze, and whether the banks should be nationalized as Treasury Secretary Hank Paulson is now proceeding to do. The omission was probably excusable, since the financial landscape has been changing so fast that it is hard to keep up.
October 7th, 2008
The Federal Reserve (or Fed) has assumed sweeping new powers in the last year. In an unprecedented move in March 2008, the New York Fed advanced the funds for JPMorgan Chase Bank to buy investment bank Bear Stearns for pennies on the dollar. The deal was particularly controversial because Jamie Dimon, CEO of JPMorgan, sits on the board of the New York Fed and participated in the secret weekend negotiations. In September 2008, the Federal Reserve did something even more unprecedented, when it bought the world’s largest insurance company.
October 2nd, 2008
The bank bailout bill that just passed the Senate and is being deliberated in the House would turn the banks’ worst assets into good U.S. dollars. How many dollars? The figure was $700 billion a few days ago and has already climbed to $800 billion after the pork was added in. That’s nearly the cost of two Iraq wars, but it still won’t be enough, because the covered instruments eligible for conversion include the black hole of derivatives. Derivatives held by U.S. banks are now estimated at $180 trillion. . .
September 28th, 2008
“These capitalists generally act harmoniously and in concert to fleece the people, and now that they have got into a quarrel with themselves, we are called upon to appropriate the people’s money to settle the quarrel.”
– Abraham Lincoln, speech to Illinois legislature, January 1837
September 18th, 2008
Why the extraordinary bailout measures for Fannie, Freddie and AIG? The answer may have less to do with saving the insurance business, the housing market, or the Chinese investors clamoring for a bailout than with the greatest Ponzi scheme in history, one that is holding up the entire private global banking system. What had to be saved at all costs was not housing or the dollar but the financial derivatives industry; and the precipice from which it had to be saved was an “event of default” that could have collapsed a quadrillion dollar derivatives bubble, a collapse that could take the entire global banking system down with it.
September 5th, 2008
“Take a load off Fanny, take a load for free;
Take a load off Fanny, and (and) (and)
You put the load right on me.” – The Band, “The Weight,” 1968
The U.S. Treasury recently sought and was granted an unlimited credit line for Fannie Mae and Freddie Mac, along with the authority to buy their stock, effectively nationalizing them; but this could mean $5 trillion more in liabilities for the federal government, causing it to lose its own triple-A rating. What to do? There is a solution that would salvage the mortgage giants and cost the taxpayers nothing . . .
August 14th, 2008
Last week, Fannie Mae and Freddie Mac had just announced record losses, and so had most reporting corporations. Unemployment was mounting, the foreclosure crisis was deepening, state budgets were in shambles, and massive bailouts were everywhere. Investors had every reason to expect the dollar and the stock market to plummet, and gold and oil to shoot up. Strangely, the Dow Jones Industrial Average gained 300 points, the dollar strengthened, and gold and oil were crushed. What happened?
August 8th, 2008
Last week, Congress passed a housing bill that gave the Treasury Department a blank check to inject billions of U.S. taxpayer dollars into mortgage giants Fannie Mae and Freddie Mac, snatching them from insolvency. To accommodate this blank check, Congress obligingly raised its debt ceiling by $800 billion. Ouch! That’s nearly a trillion dollars. Why was it necessary to incur this potentially crippling public debt to bail out two completely private, for-profit behemoths, which have run themselves into bankruptcy with their own risky investment schemes? Policymakers said it was essential to maintain the country’s creditworthiness with foreign lenders, which today hold about one-fifth of Fannie and Freddie securities. According to a July 21 report by Heather Timmons in The New York Times. . .
July 26th, 2008
In a July 19 Wall Street Journal article titled “Why No Outrage?”, James Grant quoted Mary Lease, a 19th century Populist who urged farmers to “raise less corn and more hell.” Grant notes that financial behavior that would have been met with outrage in the 19th century is now met with near-silence from a too-tolerant populace. For decades after the Civil War, monetary reform was a chief political issue, one around which whole political parties formed. Why is it hardly mentioned today? Grant suggests that the lack of outrage may be because the old 19th century Populists actually won . . .
July 13th, 2008
In an article in The San Francisco Chronicle in December 2007, attorney Sean Olender suggested that the real reason for the subprime bailout schemes being proposed by the U.S. Treasury Department was not to keep strapped borrowers in their homes so much as to stave off a spate of lawsuits against the banks. The plan then on the table was an interest rate freeze on a limited number of subprime loans.
June 26th, 2008
“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”
– Thomas Jefferson, Letter to Treasury Secretary Albert Gallatin (1802)
June 14th, 2008
An earlier article by this author (“The Secret Bailout of JP Morgan”) summarized evidence presented by John Olagues, an expert in options trading, suggesting that JPMorgan, far from “rescuing” Bear Stearns, was actually its nemesis. The faltering investment bank was brought down, not by “rumors,” but by insider trading based on a plan drawn up much earlier. The deal was a lucrative one for JPM, handing the Wall Street megabank $55 billion in loans from the Federal Reserve (meaning ultimately the U.S. taxpayer). So how did JPM get away with it? Olagues notes the highly suspicious fact that JPM’s CEO James Dimon sits on the Board of the New York Federal Reserve.
May 13th, 2008
The mother of all insider trades was pulled off in 1815, when London financier Nathan Rothschild led British investors to believe that the Duke of Wellington had lost to Napoleon at the Battle of Waterloo. In a matter of hours, British government bond prices plummeted. Rothschild, who had advance information, then swiftly bought up the entire market in government bonds, acquiring a dominant holding in England’s debt for pennies on the pound.
April 28th, 2008
Investment newsletters are now featuring headlines like “How You Can Profit from the Global Food Crisis.” The recommended investments include agribusiness stocks and exchange-traded funds (ETFs) that speculate in agricultural commodities. These investments will no doubt do very well in the global food crisis; but before you put your money down, you may want to explore whether you will be helping to alleviate the problem or contributing to it.
April 10th, 2008
When the smartest guys in the room designed their credit default swaps, they forgot to ask one thing – what if the parties on the other side of the bet don’t have the money to pay up? Credit default swaps (CDS) are insurance-like contracts that are sold as protection against default on loans, but CDS are not ordinary insurance. Insurance companies are regulated by the government, with reserve requirements, statutory limits, and examiners routinely showing up to check the books to make sure the money is there to cover potential claims. CDS are private bets…
March 30th, 2008
The Federal Reserve, which has been credited with creating the current housing bubble and bust just as it created the credit bubble of the Roaring Twenties and the bust of 1929, is now to be given vast new powers to oversee regulation of the banking industry and promote “financial market stability.”
March 23rd, 2008
On March 13, 2008, Erik Sirri, director of the SEC’s division of trading and markets, told Congress that the credit crisis has spread to municipal bond auctions. “There is no question that the recent dislocations in the municipal bond markets have created unanticipated hardships for municipal issuers and in some cases dramatically increased their borrowing costs,” Sirri said.
March 15th, 2008
March 17 is St. Patrick’s Day, when people of all national origins raise a glass and declare, “Today we’re all a bit Irish!” This may be truer than we know. The Irish were driven to America by debt, and they are leading the Western world in household debt today.
January 9th, 2008
Despite a recent National Intelligence Estimate (NIE) finding that Iran is not engaged in a nuclear weapons program, the push for war continues. Before President George W. Bush left for a Middle East visit on January 8, he told the Israeli newspaper Yediot Ahronot, “Part of the reason I’m going to the Middle East is to make it abundantly clear to nations in that part of the world that we view Iran as a threat, and that the NIE in no way lessens that threat.”
November 13th, 2007
On October 25, 2007, the United States announced harsh new penalties on the Iranian military and its state-owned banking systems. Sanctions, bellicose rhetoric and the implicit threat of military action are goads for another war, one that critics fear is more likely to ignite a nuclear holocaust than prevent one…
November 5th, 2007
Ban Ki-moon, Secretary General of the United Nations, stated in an October 15, 2007 address, “Climate change is a defining issue of our time. The science is clear. . . . We know what we have to do. We have affordable measures and technologies to do it.”…
September 20th, 2007
In July 2007, the global credit crisis hit Wall Street. In September 2007, it hit Main Street, in what has been called the worst bank run since the 1970s. Northern Rock, Britain’s fifth-largest mortgage lender, was besieged at branches across the country, as thousands of worried customers queued for hours in hopes of getting their money out before the doors closed. Bank officials feared that as much as half the bank’s deposit base could be withdrawn before the run was over…
September 3rd, 2007
Panic struck on Wall Street, as the Dow Jones Industrial Average plunged a thousand points between July and August, and commentators warned of a 1929-style crash. To prevent that dire result, the U.S. Federal Reserve, along with the central banks of Europe, Canada, Australia and Japan, stepped up to the plate and extended a 315 billion dollar lifeline to troubled banks and investment firms. The hemorrhage stopped, the markets turned around, and investors breathed a sigh of relief. All was well again in Stepfordville. Or was it? And if it was, at what cost?…
August 9th, 2007
Guernsey wasn’t the only government to solve its infrastructure problems by issuing its own money. (See E. Brown, “Waking Up on a Minnesota Bridge,” www.webofdebt.com/articles, August 4, 2007.) A more notorious model is found in post-World War I Germany. When Hitler came to power, the country was completely, hopelessly broke. The Treaty of Versailles had imposed crushing reparations payments on the German people, who were expected to reimburse the costs of the war for all participants — costs totaling three times the value of all the property in the country…
August 4th, 2007
Only five confirmed deaths have so far resulted from the dramatic collapse of the I-35 bridge in Minnesota on August 1, but in some ways the disaster was more of a shock and a wakeup call than the collapse of the New Orleans levees that took many more lives. After all, most of us will never be faced with a category 5 hurricane…
July 3rd, 2007
It has been called “the most astounding piece of sleight of hand ever invented.” The creation of money has been privatized, usurped from Congress by a private banking cartel. Most people think money is issued by fiat by the government, but that is not the case. Except for coins, which compose only about one one-thousandth of the total U.S. money supply, all of our money is now created by banks. Federal Reserve Notes (dollar bills) are issued by the Federal Reserve, a private banking corporation, and lent to the government.1 Moreover, Federal Reserve Notes and coins together compose less than 3 percent of the money supply. The other 97 percent is created by commercial banks as loans.2…
June 21st, 2007
The U.S. federal debt has reached crisis proportions, approaching $9 trillion in 2007. U.S. Comptroller General David M. Walker has warned that just the interest on the debt will soon be more than the taxpayers can afford to pay…