The Ruthless Truth blog

Gendercide: The worldwide war on baby girls

Technology, declining fertility and ancient prejudice are combining to unbalance societies

Biometric ID Card for Workers Is at Center of Immigration Plan

Lawmakers working to craft a new comprehensive immigration bill have settled on a way to prevent employers from hiring illegal immigrants: a national biometric identification card all American workers would eventually be required to obtain.

Today’s Obama Assault on Freedom– New Regulations Will Ban Sport Fishing

A sweeping oceans and Great Lakes management policy document proposed by the Obama Administration will have a significant impact on the sportfishing industry, America’s saltwater anglers and the nation’s coastal communities.

City police fight release of G-20 records

An Allegheny County judge on Monday heard more arguments about releasing documents related to police conduct during last year’s G-20 economic summit.

Brit Army of Spies Gets Police-style Powers

Hundreds more town hall staff and private security guards are to be handed police-style powers in a fresh Home Office drive to create an army of civilian "spies".

Program to pay homeowners to sell at a loss

In an effort to end the foreclosure crisis, the Obama administration has been trying to keep defaulting owners in their homes. Now it will take a new approach: paying some of them to leave.

Europe bars Wall Street banks from government bond sales

• Leading US banks blamed for triggering financial crisis
• Policymakers propose a rival European monetary fund

An Ominous Drilling Sign for the Truth

The year is 2010 and to anyone not in denial, the industrialized nations have entered the greatest calamity the world has ever known

The Singularity’s impact on Business leaders: a Scenario: how will technologically enhance Individuals collaborate with "normal" employees?

U.S.-Supported Afghan Chief Served Prison Time in Germany

Before retuning to Afghanistan, Zahir lived in Germany for more than a decade, during which he served four years in prison for attempted murder after stabbing his stepson.

First Commercial Brain-Operated Computer

Disabled people trapped within their bodies now can communicate with the outside world via the first commercially available brain-operated computer

Fat epidemic linked to chemicals run amok

Endocrine disruptors are suspected of playing a role in fertility problems, genital malformation, reduced male birth rates, precocious puberty, miscarriage, behavior problems, brain abnormalities, impaired immune function, various cancers, and cardiovascular disease.

Adam "Pearlman" Gadahn lived with ADL board member Grandpa when he converted to Islam

European Monetary Fund being considered by Brussels

The European Commission has confirmed that it may set up a version of the International Monetary Fund to bolster the eurozone’s financial stability.

Cyberwar declared as China hunts for the West’s intelligence secrets

It is estimated that in the past year the number of attacks on US government agencies rose to 1.6 billion per month. Systems in the EU are even more vulnerable

Organized crime: The ‘looting’ of $11 trillion from the U.S. economy

The New York Times is quoting a spokesman for George Soros as saying that the well-known hedge fund operator is guilty of no wrong-doing in connection with the financial upheaval currently affecting Greece and Europe as a whole.

Obama’s National Cybersecurity Initiative Puts NSA in the Driver’s Seat

While the total cost of CNCI is classified, rest assured it will be the American people who foot the bill for the destruction of our democratic rights.

The New Jim Crow: How the War on Drugs Gave Birth to a Permanent American Undercaste

Pentagon-Backed Venture Aims for "Google Underground"

The Department of Defense already has omnipresent eyes in the sky, underwater and, of course, on the ground. It’s only when you start going underground that the surveillance powers of the Pentagon begin to wane — at least until now.

Failed Banks May Get Pension-Fund Backing as FDIC Seeks Cash

The Federal Deposit Insurance Corp. is trying to encourage public retirement funds that control more than $2 trillion to buy all or part of failed lenders, taking a more direct role in propping up the banking system, said people briefed on the matter.

‘We will not offer Greece a cent’: German economy minister deals hammer blow to Athens as rioters attack police on the streets

Video: How Goldman Sachs runs the government!

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Bill Maher
The Huffington Post
Mon, 18 Jan 2010 00:32 EST

Hello, I’d like to take a moment to address the millions and millions of you all across America who are currently stuck in an abusive relationship.
Now I know what some of you are thinking: Who is Bill Maher to give me relationship advice?
But that doesn’t mean I don’t know a dysfunctional relationship when I see one. Especially when it’s staring me right in the face.
You know who you are. Those of you staying in a relationship long after it’s turned bad. Sticking around despite the abuse — even as it’s gotten worse and worse over the years. Sticking around only because it seems easier than breaking up — and besides, where else are you going to go?
That’s right, I’m talking to all of you that keep doing your banking at the giant, too big to fail, Wall Street banks that brought our economy to the brink of disaster, were rescued by trillions of dollars of our taxpayer money, then paid us back by using that money to hire lobbyists to convince our lawmakers in Washington to kill financial reform.
They took our money… but cut back on lending.
They took our money… and made record profits — and paid themselves record bonuses.
They took our money… then returned to the risky behavior that led to the worst financial crisis since the Great Depression, with record unemployment, bankruptcies, and foreclosures.
They took our money… but kept on with all the greedy, abusive, ruthless, and cold-blooded practices that have earned them untold billions of dollars a year — year after year after year. Things like charging you outrageous fees for anything and everything, jacking up your credit card interest rate to 30 percent for being late on one payment (it’s a good thing sodomy is legal!), and refusing to renegotiate your mortgage after the housing bubble they helped create burst.
These big banks, deemed "Too Big To Fail" by our Wall Street-friendly leaders in Washington, are convinced that they can get away with anything — because they always have.
But here’s the thing. You don’t have to put up with this nonsense. You don’t have to stay in a loveless, abusive relationship with your Big Bank.
In fact, it’s easy to get out — and into something much, much better.
My friend Arianna Huffington has started a campaign designed to convince people to move their money out of these big banks and put them into smaller, local, community banks and credit unions that are more likely to see you as a person, not as an account number… and also to reinvest in the community where they are.
It’s a pretty simple idea: If enough people who have money in one of the Big Six banks — that is, JP Morgan/Chase, Citi, Wells Fargo, Bank of America, Morgan Stanley, and Goldman Sachs — move it into a local community bank or credit union, then collectively we, the people, will have taken a big step toward fixing our broken financial system.
It’s easy, and painless, and will send a powerful message to Wall Street and to our leaders in Washington.
Face it: Real change is not going to come from Congress. It’s not going to come from the White House. And it’s certainly not going to come from the lobbyists Wall Street hires to make sure their special interests keep beating out the public interest.
We’ve got to do it ourselves. And moving your money is a great way to start.
This is not a conservative idea or a liberal idea. It’s not left or right. It’s populism at it’s best — and it’s already attracted people from all walks of life who are sick and tired of the Big Banks and are ready to do something about it.
So it’s time to go break up with your banker and get the hell out. Go to MoveYourMoney.info and see just how easy it is to end your abusive relationship and find true banking love. Or, at least hot, sweaty, monkey, banking sex.
MoveYourMoney.info. Tell ‘em Dr. Bill sent you…
To watch a video of Bill on Moving You Money, click here.

http://www.sott.net/articles/show/201246-Stop-the-Abuse-It-s-Time-to-Break-Up-With-Your-Big-Bank

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Barry Grey
World Socialist Web Site
Tue, 05 Jan 2010 09:40 EST

The US media has been virtually silent on the colossal year-end bonuses for 2009 that will shortly be handed out by major American banks and financial firms. This is doubtless a deliberate response by the corporate-controlled media to popular anger over the financial gains reaped by Wall Street executives, who have been bailed out at taxpayer expense while working people have been left to face depression levels of unemployment and mounting home foreclosures, hunger and poverty.
A brief article published on the inside pages of the business section of the January 1 New York Times ("With Bigger Bonuses, An Upside for Banks") notes in passing that the three top Wall Street banks will pay out an estimated $49.5 billion in cash bonuses and stock awards.
Those banks – Goldman Sachs, JPMorgan Chase and Morgan Stanley – received a combined $45 billion in cash under the $700 billion Troubled Asset Relief Program (TARP) passed by Congress in October of 2008. Along with the rest of the banks, they have benefitted from trillions of dollars in nearly interest-free loans, debt guarantees, securities purchases and other subsidies from the Treasury and the Federal Reserve Board.
The government has further underwritten bank profits and surging bonuses by keeping interest rates at near-zero and pumping trillions of dollars of cheap credit into the financial markets, while placing no restrictions on the ability of the banks to resume the speculative practices that precipitated the financial crash of 2008.
Meanwhile, the American people have lost $11 trillion in wealth, primarily through the collapse of home values. For their part, the banks have sharply curtailed lending over the past 15 months, draining more than $3 trillion of credit from the economy.
In the fall of 2008, the Bush administration, with the support of then-presidential candidate Barack Obama and congressional Democrats, sought to sell the bailout to the public on the grounds that it would enable the banks to resume lending. However, the TARP law imposed no strings on the bailed out banks, allowing them to do with the money what they wanted, without even requiring that they tell the government how they were using their cash windfalls.
The curtailment of lending by the banks has played a major role in deepening and prolonging the recession. Instead of increasing credit to businesses and consumers, the banks have made large – in some cases, record – profits through speculative trading in stocks, bonds, currencies and commodities.
The same article in the Times cites Robert Willens, an accounting and tax analyst in New York, who estimates that US banks will hand out $200 billion in total compensation, a figure that does not take into account the hedge fund industry.
To place this sum in perspective, it is roughly equal to the annual median salary of 4 million American workers.
All of the major banks have been allowed by the Obama administration to repay their TARP cash injections, thereby freeing them from minor restrictions on executive pay imposed on banks that continue to hold TARP money.
According to Willens, the banks will reap $80 billion in tax savings from the $200 billion in compensation, since most employee compensation is a tax deductible expense under existing tax laws. The biggest tax break will go to Goldman Sachs, which expects to award its employees a record $23 billion in bonuses. Goldman will save about $9 billion in federal income taxes on the bonuses it pays out for 2009.
Altogether, Goldman, JPMorgan Chase and Morgan Stanley will gain nearly $20 billion in tax breaks from their employee compensation this year.
Indicative of the year-end bonanza for bankers, the Times reported in a separate article on January 1 that Wells Fargo, the fourth largest US bank by assets, which received $25 billion in TARP cash, plans to pay its top four executives a combined $25 million in bonuses. These are to be paid entirely in stock options, rather than cash.
In awarding the bonuses in stock rather than cash, Wells Fargo is following the example of other big banks, including Goldman Sachs. Under prodding from the administration, banks are paying a greater portion of executive compensation in deferred stock, supposedly to tie pay awards to long-term growth rather than short-term gains. However, as the Times points out, "If banks… continue to rebound from the financial crisis, their shares – and the executive payouts – could surge."
Since the government has made clear that it will impose no genuine reforms or restrictions on the banking industry, and will spend unlimited sums to protect the wealth of the Wall Street elite, the bankers have every reason to believe that stock bonuses will prove more lucrative than cash.
The government’s undiminished commitment to rescuing Wall Street was underscored on Christmas eve, when the Treasury announced that it was removing a $400 billion cap on government aid to the mortgage finance giants Fannie Mae and Freddie Mac and approving cash pay packages of $6 million each to the CEOs of the government-controlled firms.
Surging bank profits and bonuses go hand in hand with a dizzying rally on the US stock market. In a year that saw the permanent destruction of millions of jobs, all three major US stock indexes recorded massive increases. The Dow Jones Industrial Average ended 2009 up 18.8 percent for the year. The broader Standard & Poor’s 500 stock index surged 23.5 percent, and the technology-heavy Nasdaq rose 43.9 percent.
From their lows in early March, the stock indexes recorded even more staggering gains in a "rally many investors had not seen in their lifetime," according to the January 1 Washington Post. The Dow rose 59 percent, the S&P 500 soared 65 percent and the Nasdaq was up 79 percent.
Financial stocks were up 15 percent for the year, including Bank of America, whose share price quadrupled from its March low. Ford stock increased 532 percent from its low point in March.
In all, the value of US stocks increased by $5.6 trillion from the market’s nadir, the resulting windfall going disproportionately to the wealthiest investors.
A major factor in the stunning rebound in the financial markets was the refusal of the government to impose any serious reforms in the wake of the worst financial crash since the Great Depression. As the Wall Street Journal noted in a year-end review on January 4: "But more than a year after Lehman Brothers, American International Group Inc., Fannie Mae, Freddie Mac and Washington Mutual collapsed or were saved by the government and financial markets swooned, it is striking how little on Wall Street has changed."
The scale and character of the government bailout was summed up aptly by Simon Johnson, the former chief economist at the International Monetary Fund, in a review of recent books on the financial crash. Writing in the December 27 Washington Post, Johnson said, "The Wall Street executives kept their jobs, their bonuses and their pensions; they benefitted from unprecedented rule changes and unlimited monetary and fiscal support; and their firms became even bigger and more dangerous to the economic health of society…
"The executives of our largest banks ran their firms into the ground, taking excessive risks that even now they fail to understand fully. But, as these individuals saw it, unless they personally were saved on incredibly generous terms, the world’s economy would grind to a halt."
The Obama administration and the Democrats, no less than Bush and the Republicans, agreed that their chief mission was to rescue the personal fortunes of these executives and the financial oligarchy they represent.

http://www.sott.net/articles/show/200416-Three-top-Wall-Street-banks-to-award-49-5-billion-in-year-end-bonuses

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Nomi Prins
The Daily Beast
Fri, 04 Dec 2009 16:33 EST

Wall Street’s big banks are playing dangerous new accounting games – and this time taxpayers are on the hook for hundreds of billions. Nomi Prins uncovers a scandal in the making.
Enron was the financial scandal that kicked off the decade: a giant energy trading company that appeared to be doing brilliantly – until we finally noticed that it wasn’t. It’s largely been forgotten given the wreckage that followed, and that’s too bad: we may be repeating those mistakes, on a far larger scale.
Specifically, as the largest Wall Street banks return to profitability – in some cases, breaking records – they say everything is rosy. They’re lining up to pay back their TARP money and asking Washington to back off. But why are they doing so well? Remember that Enron got away with their illegalities so long because their financials were so complicated that not even the analysts paid to monitor the Houston-based trading giant could cogently explain how they were making so much money.
After two weeks sifting through over one thousand pages of SEC filings for the largest banks, I have the same concerns. While Washington ponders what to do, or not do, about reforming Wall Street, the nation’s biggest banks, plumped up on government capital and risk-infused trading profits, have been moving stuff around their balance sheets like a multi-billion dollar musical chairs game.
I was trying to answer the simple question that you’d think regulators should want to know: how much of each bank’s revenue is derived from trading (taking risk) vs. other businesses? And how can you compare it across the industry – so you can contain all that systemic risk? Only, there’s no uniformity across books. And, given the complexity of these mega-merged firms, those questions aren’t easy to answer.
Goldman Sachs and Morgan Stanley, for example, altered their year-end reporting dates, orphaning the month of December, thus making comparison to past quarterly statements more difficult. In the cases of Bank of America, Citigroup and Wells Fargo, the preferred tactic is re-classification and opaqueness. These moves make it virtually impossible to get an accurate, or consistent picture of banks ‘real money’ (from commercial or customer services) vs. their ‘play money’ (used for trading purposes, and most risky to the overall financial system, particularly since much of the required trading capital was federally subsidized).
Trading profitability, albeit inconsistent and volatile, is the quickest way back to the illusion of financial health, as these banks continue to take hits from their consumer-oriented businesses. But, appearance doesn’t equal stability, or necessarily, reality. Here’s how BofA, Citi and Wells Fargo play the game:
Bank of America: The firm reclassified its filing categories upon acquiring Merrill Lynch, but it doesn’t break down the trading vs. investment banking revenues of Merrill. This either means the firm doesn’t truly know what’s going on inside its new problem child, or doesn’t want to tell. (No wonder no one’s jumping for the upcoming CEO vacancy.) That said, despite the obvious information clouding, new acquisitions generally don’t have their activities broken out, which makes it a lot harder for regulators, shareholders, or we, taxpaying subsidizers, to know whether the merger was a success or not.
According to Scott Silvestri, Bank of America’s spokesman, "On our second quarter’s earnings release, there was a note explaining why we changed reporting structure. But, with every quarter that passes, it’s harder to unscramble the egg. It’s been a merged entity since January 1, 2009."
He added that "we have an earnings supplement. Every quarter, we put out a standalone Merrill 10-Q that shows its profitability." True, but what’s the point of issuing a separate Merrill report, without delineating Merrill’s contribution in its main books so that you can clearly see how specific parts of Merrill’s business impact similar ones in the merged entity? Furthermore, we can’t even figure this out ourselves – the Merrill results in the 10-Q don’t map directly to those of BofA’s books. This all just creates more complexities for a bank that still floats on $63.1 billion in various government subsidies.
When it wants to, it appears that BofA can merge and then break out Merrill’s numbers. Under the "Global Wealth & Investment Management " classification, we discover that Merrill contributed three-quarters of the $12 billion BofA took in over the first nine months of 2009. According to Silvestri, "The numbers of the old Merrill are there because the brand name was kept, vestiges of the old Merrill Lynch exist."
Talk about semantics. Why not also break out the area where revenues tripled and trading account profits jumped significantly (from a $6 billion loss in 2008 to an almost $14 billion gain in 2009)? Something is clearly going on there: the best measure of trading risk, VaR ("value at risk" or a firm’s daily trading variation) doubled between 2008 and 2009. If I was the CEO, I’d want to see this critical comparison on my merged company filing.
Elsewhere, the sum of Bank of America’s quarterly figures doesn’t quite add up to the nine months totals. (A few hundred million of discrepancies between friends.) Another item "all other" is off by nearly a quarter of a billion dollars. And so on. The firm also declared, that it "may periodically reclassify business segment results based on modifications to its management reporting methodologies and changes in organizational alignment." In other words, whenever it feels like it. Comforting, isn’t it?
Citigroup: Another balance-sheet renovation, this time because of a sale (Smith Barney, which it offloaded to Morgan Stanley) rather than a purchase, and another trading miracle. Citigroup’s main trading arm, housed in what it calls the Institutional Clients Group (ICG), made $31.5 billion in net revenue for 2009, compared with a $7.8 billion loss in 2008. Its average daily value at risk jumped too, though "only" by 15 percent or so.
That’s a huge and extremely fast trading rebound for the main recipient of government subsidies (at $373.7 billion). But, there is no overall breakdown present in the summaries of Citigroup’s latest filings. And the sum of the trading totals doesn’t equal the parts, because the firm also noted that certain numbers deemed an "integral part of profitability" weren’t included in those computations, without giving any apparent reason. (After adding the missing number, it still didn’t add up.)
Again, it’s "just" a couple billion of discrepancies, but with books this massive at banks this big and risky, accuracy matters. Plus, such nuances make it extremely difficult to understand its books for regulators or the public.
Citigroup’s Danielle Romero-Apsilos said that they periodically change reporting. "ICG existed, but after Smith Barney’s joint venture with Morgan Stanley, we moved the private bank into the securities and banking reporting line in the ICG."
That describes the chain of events, but doesn’t get closer to determining trading related revenue. Romero-Apsilos said, "We don’t break up the financials specifically for those businesses. Over the years, we may have broken out different things."
Wells Fargo: Yet more innovative accounting maneuvers. For example, the innocuous sounding category, "wholesale banking" which provides traditional lending, finance and asset management services, was expanded (following the Wachovia acquisition that completed on December 31, 2008) to include more speculative activities like fixed-income and equity trading. But, those activities aren’t broken down in the firm’s SEC filing, making it difficult to determine which portion comes from trading vs. commercial or investment banking.
Wells Fargo spokesperson, Mary Eshet (who still has a Wachovia email address) confirmed there is no separate Wachovia 10-Q (like there is for Merrill Lynch), but that it wasn’t the case that "Wells Fargo broke out trading related revenue previously either."
In fact, Wells just provides totals for their four main business segments, each of which increased sharply. Community banking rose from $33 billion in 2008 to an annualized $59 billion in 2009. Wholesale banking shot up from $8.2 billion in 2008 to $20 billion in annualized 2009. And, wealth, brokerage and retirement quadrupled from $2.7 billion in 2008 to $11.6 annualized for 2009. (The fourth segment is called ‘other.’) Yet, all these rosy numbers come with no specific breakdowns for their various trading business areas.
Separately, Wells states in its filing that its management accounting process is "dynamic" and, not "necessarily comparable with similar information for other financial services companies." This statement should give lawmakers pause: if banks are so complex as to constantly fluctuate their own reporting, deciphering figures just before a crisis won’t exactly be a walk in the park.
With taxpayers now on the hook, we need an objective, consistent evaluation of bank balance sheets complete with probing questions about trading and speculative revenues, allowing for comparisons across the banking industry. This lack of transparency leaves room to misrepresent risk and trading revenue.
The long-term solution is bringing back Glass-Steagall. Being big doesn’t just risk bringing down a financial system – it means you can also more easily hide things. Remember the lesson from the Enron saga: when things look too good to be true, they usually are.
Nomi Prins is author of It Takes a Pillage: Behind the Bonuses, Bailouts, and Backroom Deals from Washington to Wall Street (Wiley, September, 2009). Before becoming a journalist, she worked on Wall Street as a managing director at Goldman Sachs, and running the international analytics group at Bear Stearns in London.

http://www.sott.net/articles/show/198385-Worse-Than-Enron-

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The State could walk away & create its own credit machine

by Ellen Brown

Global Research, July 14, 2009

webofdebt.com

Four Wall Street banks, which received $15-25 billion each from the taxpayers, have rejected California’s IOUs because the State is supposedly a bad credit risk. The bailed out banks would seem to have a duty to lend a helping hand, but they say they don’t want to delay an agreement on further austerity measures. State legislators are not bowing quickly to the pressure, but what is the alternative?

In the latest twist to the California budget saga, Citigroup, Wells Fargo, and JPMorgan Chase (which each got $25 billion in bailout money from the taxpayers) and Bank of America (which got $15 billion) have refused California’s request for a loan to tide it over until October. Until the State can get things sorted out, it has started paying its creditors in IOUs (“I Owe You’s” or promises to pay bearing interest, technically called registered warrants). Its Wall Street creditors, however, have refused to take them. Why? The pot says the kettle is a poor credit risk!

California expects to need to issue only about $13 billion in IOUs through September, and all its Governor has asked for in the way of a loan from the federal government is a guarantee for $6 billion. Total loans, commitments and guarantees to rescue the financial sector and stem the credit crisis have been estimated at $12.8 trillion. But California has not been invited to the banquet. The total sum California needs to balance its budget is $26.3 billion. That is about the same sum given to Citigroup, Wells Fargo and JPMorgan in bailout money; and it is only about one-tenth the sum given to AIG, a mere insurance company. Corporations evidently trump States and their citizens in the eyes of the powers controlling the purse strings. California has a gross domestic product of $1.7 trillion annually and has been rated the world’s eighth largest economy. Its 38.3 million people are one-eighth of the nation’s population and a key catalyst for U.S. retail sales. When the California consumer base falters, businesses are shaken nationwide. If AIG and the other Wall Street welfare recipients are too big to fail, California is way too big to fail.

Fitch Rating Agency has downgraded California’s municipal bonds to junk bond status,triple B. Why? AIG and Lehman Brothers had A ratings right up until they declared bankruptcy. California has never defaulted on its bonds, and it cannot arbitrarily decide to default; the State Constitution mandates that debt principal and interest must be paid as promised. California bonds lost their triple A rating only when the municipal bond insurers (Ambac and MBIA) lost theirs. It was these insurers, not the State of California, that got into hot water gambling in derivatives. The State Attorney General has opined that California’s IOUs are valid and binding obligations of the State. In rejecting them, however, Wall Street may have ulterior motives. A lower credit rating can justify investors in demanding higher interest rates. The interest offered on the IOUs is substantially lower than the interest banks can get on triple B rated municipal bonds.
There may be deeper motives than that. Considering the enormous importance of the California economy to the country, and the relatively small sum it needs in loans, the refusal to support the State financially seems highly suspicious, especially when much more has been given to less creditworthy private institutions. The banks say they want to keep the pressure on California legislators to work it out among themselves, but what does that mean? The options are even higher taxes, even more cuts in services, or even more fire sales of public assets; in short, the sort of austerity measures expected of supplicants reduced to Third World debtor status. State legislators are understandably reluctant to crawl into that debt pit. Governor Schwarzenegger has refused to approve higher taxes, while Democratic leaders say further cuts in services could leave some Californians starving in the streets.
Solution 
There is an alternative to that dark future, and perhaps it is to keep the public from waking up to it that arms are being twisted to accept the new burdens quickly. If Wall Street and the Feds won’t extend credit to California on reasonable terms, the State could simply walk away and create its own credit machine. California could put its revenues in its own state-owned bank and fan these “reserves” into many times their face value in loans, using the same “fractional reserve” system that private banks use. Many authorities have attested that banks simply create the money they lend on their books. Congressman Jerry Voorhis, writing in 1973, explained it like this:

“[F]or every $1 or $1.50 which people, or the government, deposit in a bank, the banking system can create out of thin air and by the stroke of a pen some $10 of checkbook money or demand deposits. It can lend all that $10 into circulation at interest just so long as it has the $1 or a little more in reserve to back it up.”

President Obama himself has acknowledged this “multiplier effect.” In a speech at Georgetown University on April 14, 2009, he said:

“[A]lthough there are a lot of Americans who understandably think that government money would be better spent going directly to families and businesses instead of banks; where’s our bailout?,’ they ask, the truth is that a dollar of capital in a bank can actually result in eight or ten dollars of loans to families and businesses, a multiplier effect that can ultimately lead to a faster pace of economic growth.”

If private banks can leverage deposits into multiple amounts of “credit” on their books, a state-owned bank could do the same thing, and return the profits to the public purse. One State already does this. North Dakota boasts the only state-owned bank in the nation. It is also one of only two states (along with Montana) that are currently able to meet their budgets. The Bank of North Dakota was established by the legislature in 1919 to free farmers and small businessmen from the clutches of out-of-state bankers and railroad men. By law, the State must deposit all its funds in the bank, and the State guarantees its deposits. The bank’s surplus profits are returned to the State’s coffers. The bank operates as a bankers’ bank, partnering with private banks to lend money to farmers, real estate developers, schools and small businesses. It makes 1% loans to startup farms, has a thriving student loan business, and purchases municipal bonds from public institutions.

North Dakota is not suffering from unemployment or feeling the pinch of the economic downturn. Rather, it sports the largest surplus it has ever had. If this isolated farming State can escape Wall Street’s credit crisis, the world’s eighth largest economy can do it too!

To sign a petition that will go electronically to Governor Schwarzenegger and to elected officials in your State, click here. You could also try faxing this article or a letter to Governor Schwarzenegger at 916-558-3160. See http://gov.ca.gov/interact#contact.

Ellen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and “the money trust.” She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her earlier books focused on the pharmaceutical cartel that gets its power from “the money trust.” Her eleven books include Forbidden Medicine, Nature’s Pharmacy (co-authored with Dr. Lynne Walker), and The Key to Ultimate Health (co-authored with Dr. Richard Hansen). Her websites are www.webofdebt.com and www.ellenbrown.com.

Ellen Brown is a frequent contributor to Global Research. Global Research Articles by Ellen Brown

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