Our World

Bankrun 2010

Read more about the Bankrun -- aka "Break the Bank Day" (FB-group page) aka "Anti-banking Solidarity Movement" -- planned for December 7th, 2010.

Banker's Song -- We Didn't See It Comin'

Over the last two years of the housing bubble, Wall Street bankers perpetrated one of the greatest episodes of self-dealing in financial history. -- ProPublica

Some Thoughts on the State of the US

If you are an American and do not wish to get depressed, I suggest you skip this part. However, if you are an American, this might be just the part for you to read.

Like in my previous letter I’m not going to talk in detail about what’s happening in the United States. What I’ve learned from previously letters is that, as many people before me have found out for themselves, the bearer of bad news is seldom liked. People, especially Americans, feel offended by the things I mention, thinking that my critique is somehow aimed at them; I guess by proxy of being American. Let me reiterate that my “critique,” if one is really to call it that, is intended as observations, and where applicable as warnings. I’m merely noticing things that I find significant and mention them.

If there is one recent incident that should send shivers down the spine of every American citizen then it is the G20 meeting that was held in Pittsburg in September. Unfortunately few Americans actually know what happened there, since the media did a very good job of under reporting the peripheral events occurring outside the meeting. The mainstream media did not reveal the truth of how ordinary citizens (i.e. non-protesters) were attacked, both physically and with military weapons, including rubber bullets, teargas and experimental sonic weapons. It is clear from this event that the mainstream media in America is actually suppressing news and that free press is a rarity these days. I serious advice people to stop following the pre-packaged news agencies like CNN and start listening to independent news agencies, such as Democracy Now: The War and News Report, or other similar news agencies. Or if you can speak another language, listen to American news as covered by non-American broadcasters. Germany, for one, seems to present clearer description of big newsworthy events (i.e., not Michael Jackson or Britney Spears) in the USA. I’ve also seen some good stuff on Russia Today.

Most Americans do not know this but much the anti-protest police used in Pittsburg during the G20 meeting was made up of foreign military forces, and police forces from outside of Pittsburg. This is terrifying in itself, but also makes good sense – you don’t want the militia you’re using to feel sentimental about the people they are oppressing, do you?

People were arrested for using Twitter, warning fellow citizens in Pittsburg to stay clear of certain areas. Twitter, if you don’t know, is an Internet based text-messaging system that allows one to send simultaneous messages to everyone that is registered to your account. Well, people used their Twitter-accounts to warn other people to avoid certain areas where this anti-riot police, or rather militia, was at. (And for good reason, the militia were harassing innocent civilians, beating them, shooting them with rubber bullets, or sonic devices, or teargas – I’d be quite thankful if someone forewarned me to avoid such danger zones.) For this, some of these Twitter-users were thrown in jail, and / or raided by the FBI, for, (get this!) interfering with police activities. What does this say about the future of freedom of speech in America?

The ironic thing is that the USA condemned Iran’s oppression of Twitter-users just a couple of months earlier when Iranian freedom of speech activists used Twitter as a networking tool. Now, in America users of Twitter are raided, treated as terrorists and thrown in jail.

During the Pittsburg event members of the press was detained, and the main news media broadcasters were quiet. Or if they covered the event it showed a skewed reality. Thank goodness that, for now, the Internet is still an open resource. Many students from the University of Pittsburg recorded some of the events on their cell phones and uploaded it onto YouTube. You can easily search for it. But how long will the Internet stay open? There are already movements towards muzzling it – think of the Cyber Bullying Act which is one step in the wrong direction, no matter how well intended.

Should I mention how children in some American schools are taught songs of praise to glorify the President? Really, this is seriously disconcerting. I don’t have anything personally against Mr. Obama, how could I? I’m not American. But this reconfirms a grave trend I’ve noticed even before his election – a type of worship similar to little North Korean children singing praises to the Great Leader. And while such Obama-worship is happening on the one side of the spectrum, a colleague told me that she heard how people are having bets on the date the First Lady of America will become a widow; and I also heard of a poll that was on Facebook asking whether or not the president should be assassinated. So while the Obama-mania is still sweeping one segment of America, there seems to be a counter-wave as well. And in between are the normal folk, who will become caught in the crossfire.

Did you know that a private company, with the convenient title of “American Police Force” is buying up prisons to be privately owned. With private companies having names such as “American Police Force,” and foreign militia running the streets pretending to be local police or military, how is one to know who is friend and who is foe, who is protector and who is predator? And I just recently heard that some of these privately owned jails bribed judges to get more prisoners. So much for a fare trial!

And let met not even begin talking about the Swine Flu and the recent declaration of a “national emergency.” Sweden was the first country to start swine flu vaccinations and it is also the first to report deaths related to the injection. The fact that a “national emergency” was declared, which basically give authorities the power to forcefully quarantine and vaccinate people against their will, seems not to make the headlines at all. The fact that there are carcinogens and mercury in some of the vaccinations doesn’t seem much of a media headline either – in fact, some of the media reports actually lie about the vaccine ingredients. I wonder how much the pharmaceutical companies have invested in these media broadcasters. The swine flu is not fake (although some do think it artificial), and I would not be surprised if it was engineered by these pharmaceutical companies who made millions selling vaccines to governments.

Want to hear more? How about the FBI’s application to renew three Patriot Act spying provisions, without them having to reveal their conduct (aka “gag power”). Melissa Goodman, the ACLU Staff Attorney explains that the “gag power has allowed the FBI to manipulate the debate, to suppress evidence of its misuse of the NSL power, and to deprive Congress and the public of important information it needs to inform whether these intrusive surveillance and gag powers should be reformed.” It was announced that the Supreme Court will review, at least parts of, the controversial Patriot Act, to ascertain it constitutionality – but one has to wonder about their “creative interpretations” sometimes.

The Dollar keeps dropping in value (which is no surprise as more money is continually printed—“stimulus”—without any physical backing like gold). Latin American countries have announced a new Latin American Currency to replace dependency on the Dollar. The BRIC countries (Brazil, Russia, India, and China) are in negotiations to find an alternative currency than the US Dollar to trade in.

And the United States is increasing its three foreign wars (Afghanistan, Iraq, and Pakistan), with the current Administration considered sending more and more young soldiers; many of them to die in wars based on lies: “Weapons of Mass Destruction.” Does the US Administration really think that it is making America a safer place by increasing its oppression of these countries? Rather, it is fuelling emotions of revenge which is bound to increase terrorists’ attacks and one would not be surprised to see more of that in the future.

Surely seeing such trends one must be concerned for the future of the country? And I am especially concerned for the future of all my American friends and acquaintances. I’m not sharing these things because I take pleasure out of pointing the issues in America; rather, I’m sharing it because I am seriously troubled by it.

Imagine if America took all those billions of dollars it is pumping into these wars, and instead of using it to destroy “and keep order,” the money is used to build up, provide food, schools, hospitals, homes…

There is a story in the Bible where Syria came to destroy Israel, but through miraculous events Israel got the upper hand. The king of Israel asked council from the prophet Elisha: “My father, shall I smite them?” Elisha gave a surprising answer: “Thou shalt not smite them: wouldest thou smite those whom thou hast taken captive with thy sword and with thy bow? Set bread and water before them, that they may eat and drink, and [let them] go to their master.” The king listened and “he prepared great provision for them: and when they had eaten and drunk, he sent them away, and they went to their master. So the bands of Syria came no more into the land of Israel.” (You can read the story in II Kings 6.) This is how you make peace with your enemy.

The principle in this story was mentioned before by the Sage-King Solomon: “If thine enemy be hungry, give him bread to eat; and if he be thirsty, give him water to drink…” (Proverbs 25:21). Centuries later the Messiah came to make this principle clearest, by saying “Love your enemies, bless them that curse you, do good to them that hate you, and pray for them which despitefully use you…” (Matthew 5:43).

If it was possible for the US government to take such an approach to their enemies they would make friends of them, and will then need little fear of terrorist attacks. Of course, this will not happen. The way of the Kingdom of God, i.e. the Way of Unconditional Love and Peace and “good will toward men,” is not the way of earthly governments—American or any other government; after all, Jesus did say that his “kingdom is not of this world.”

Making friends of its enemies is not the agenda of the USA. America’s culture of violence has it conditioned into believing that conquering is the way. It may be a way, but it is definitely not the way to long lasting peace. Instead it creates enemies intend on revenge. Do not be fooled; America’s wars are far from over and President Obama’s campaign promises were at best wishful thinking. While American tactics involve drone planes blasting away civilians, who can expect peace?

I said that I’d not go into detail concerning America. I didn’t. The few points I’ve mentioned I hardly discussed, and these were merely a blip of the things that happened over the last two months.

Some Hope in the (Financial) Crisis

I've been quite negative about the state of the world, but the following TED-Talk video by John Gerzema gives me a little hope. Don't get me wrong, I do not for a moment think that the financial crisis is over. In fact, I'm very much convinced that financially the worst is yet to come. Nevertheless, it would seem that the world may be a little bit better prepared for it.



Now while the financial crisis is something to be concerned about, it is not my main worry. What I'm really worried about is governments continued effort to confine, restrict, muzzle, and basically cattle their citizens increasingly more and more. Good luck with that.

Obama Banking Too Much On Banks

A very informative article by Nomi Prins, a former investment banker that became a journalist.

Obama Banking Too Much On Banks

On Monday—one year after the once-mighty Lehman Brothers collapsed in the nation’s biggest bankruptcy—President Obama addressed the state of the economy and again outlined his proposals for what he calls reform. The location—Federal Hall at 26 Wall Street, near the New York Stock Exchange and New York Federal Reserve Bank—was fitting. George Washington took his presidential oath there, a precursor for how intertwined Washington and Wall Street would become. And Obama’s speech indicates that he’s still making the grave error of mistaking the health of Wall Street for the health of the American economy.



Obama chose not to deliver his speech on, say, the streets of Bend, Oregon, or Fresno, California, which provide different indicators of our economic predicament. That’s because Washington’s approach to the crisis has been to focus on the banking system, throw a few crumbs to citizens, and hope everything else will magically work itself out.

The problem with concentrating on the banking system is that it allows the administration to present an overly optimistic assessment of its actions. "The storms of the past two years are beginning to break," Obama pronounced, attributing this to a government that "moved quickly on all fronts, initializing a financial stability plan to rescue the system from the crisis and restart lending for all those affected by the crisis." He continued: "By taking aggressive and innovative steps in credit markets, we spurred lending not just to banks, but to folks looking to buy homes or cars, take out student loans, or finance small businesses. Our home ownership plan has helped responsible homeowners refinance to stem the tide of lost homes and lost home values."

Those steps were certainly aggressive. Under both the Bush and Obama administrations, the government, from the Federal Reserve to the Treasury Department, has flushed the banking systems and other components of the financial markets with $17.5 trillion worth of loans, guarantees, and other forms of support. About another $1 trillion has been provided to citizens through the recovery package, first-time homeowner tax benefits, auto purchase credits, and approximately $800 billion to help guarantee the loans of certain lenders—which somewhat helps borrowers, but helps lenders more.

But these measures have hardly brought the economy back from the brink. They brought Wall Street back from capital starvation and prevented the possibility of more big banks going bankrupt—instead of the slew of smaller and mid-size ones that have since met the same fate as Lehman Brothers. Taking credit for stabilizing the financial system after feeding it with massive amounts of federal money is like a teacher bragging about turning around the academic performance of a failing student after handing them all the answers to the big tests.

Here’s how the economy is really faring (and how Washington is failing to take adequate steps to fix it):

* National unemployment is at 9.7 percent, higher than last year’s 5.8 percent, with double digit jobless rates in 139 metropolitan areas this July, compared to 14 last July.
* The number of foreclosures is greater than last year: nearly 2 million new foreclosure filings occurred in the first half of 2009, up 15 percent from the same period in 2008.
* While homes in some areas have begun to slowly sell again, they are doing so at deeply depressed prices, in many instances below their mortgage value.
* Wall Street bonuses are back to pre-crisis levels. For some firms, such as Goldman Sachs, they are even higher.
* Bank leverage, or excessive borrowing on the back of risky assets—a major cause of the meltdown—is rising again.
* Geithner recently reported that his program to enable private financial firms to buy up toxic assets with government help will wind up costing less than the $1 trillion he had first envisioned. However, he did not mention that there are less toxic assets available to buy partly because the Fed has allowed banks to use some toxic assets as collateral in return for cheap loans.
* Big banks are bigger than they were last year. Since the Fed blessed more mergers last fall, the nation’s three largest banks—Bank of America, JPMorgan Chase and Wells Fargo—hold the maximum percentage of legally permissable US deposits or more.
* Mid-size and smaller banks keep closing. This year, the Federal Deposit Insurance Corporation (FDIC) has closed 92 banks and depleted its deposit insurance money in the process.
* We still don’t have detailed information on the trillions of dollars of loans the Fed handed out to the banking sector or about the quality of the collateral banks provided in return.



Obama did acknowledge that the picture isn’t entirely rosy. He also outlined his ideas for avoiding another catastrophe: reshuffle the decks of regulatory agencies, slap a few trading constraints on some derivatives, and create a Consumer Financial Protection Agency (CFPA). But while Obama's rhetoric was stern—"normalcy cannot lead to complacency," he vowed—the proposals themselves are hardly sweeping.

Obama’s plan calls for eliminating the Office of Thrift Supervision and providing greater oversight by the Fed of “systemically important” institutions. The Senate is trying to water that down, in part because some members of both parties in Congress remain skeptical about the power of the Fed itself. The Senate also wants to consolidate regulatory authority into fewer entities, but leave oversight to a council of regulators. Of course, consolidating regulatory oversight only works if regulators are doing their jobs and the banking system is transparent enough to allow them to do so.

The last leg of Obama’s proposal would be establishing the CFPA, which would monitor financial products in an effort to protect consumers from risky instruments such as subprime mortgages. Legislation to create such an agency is expected to be taken up this year by the House Financial Services Committee, chaired by Rep. Barney Frank (D-Mass).

A strong CFPA is a sensible plan. Right now there is no other body imbued with the power not just to protect consumers but also to foster the general economic stability that would be achieved by closely monitoring the integrity of financial products. This proposal has drawn the most ire from the banking community, so you know it’s good. The Chamber of Commerce launched a $2 million ad campaign to convince people that a CFPA would mean that local butcher couldn’t extend credit to his customers without government interference.

But Obama's reforms do not strike deeply enough. The banking crisis has been subdued, not fixed, because of enormous amounts of government assistance. Ignoring that fact, and failing to overhaul the sector, leaves us open to another crisis. And the next round will be worse, because there is now so much more federal money invested in the banks.

Simply funding the banking system without reforming it is an expensive and dangerous game. Obama is capable of truly fixing things—by dividing up the Wall Street mega-banks with a new Glass Steagall Act, thereby enabling the success of more extensive regulatory reforms. Or, he could introduce a set of cosmetic changes that allow banks to keep doing what they did before last year’s crisis and that put us on the path for the next one.

Anatomy of a Collapse

The graphic above is an interesting interpretation of the predicament. It was designed by Wall Stats. There is also another (more colourful) diagram on Flickr.

Day the Dollar Die

From the album Mystic Man (1979).

Critiquing America

Every month I write a lengthy letter that I send to family and friends. After my previous letter a very good (American) friend of mine emailed me, admitting that she took offence to my negative opinions of America and how the current government is addressing the economic problems.

Lest I offend any more people, I would like to say here publically, as I replied to my friend in private, that my comments on America are not critique, as much as it is vocalized observation. In other words, my purpose is not to criticize America in these letters. (For that I have this blog ;-) .) It is primarily to note the symptoms, ponder on the causes, and extrapolate possible future results.

Let me give you an example. When Zimbabwe started to feel an economic hardship they started to print extra money. This money was not based on anything real, like gold. Such printing of unsubstantiated money created inflation (i.e. you needed more money to pay for things), and the government tried to “solve” this problem by printing even more money. Again, since the money was not substantiated by something real its value decreased. A cursory look at Zimbabwe’s complete depreciation in currency is a glimpse into what will happen to the American Dollar if America continues to print more money. I’d like to mention two other observations that are underscoring the issue with this continued printing of unsubstantiated money in America. The first is the Chancellor of Germany’s critique of America’s economic plan. From experience, Germany knows all too well the type of reality where you need a wheelbarrow load of money to buy bread. The second is China, Russia, Brazil and India’s discussion of abandoning the US Dollar as the trade currency of choice. If these countries have lost faith in the American Dollar, it should say something – keeping in mind that these countries are some of the biggest exporters in the world.

My friend asked me a very serious and probably fair question: “What would YOU do instead of what is being done with the banks?” Firstly, let me not pretend to have the solutions to this problem. As I said in a previous letter, this problem is too big for any one person (i.e. Obama or any president and his cabinet) to fix. One thing I would not do is to continue to print valueless money. Printing unsubstantiated money is not solving the problem. It is merely prolonging the inevitable, and by doing so it is increasing the seriousness of the collapse when it occurs. Obama’s recent proposal to give the Federal Reserve Bank more power is another thing I would not do. The US’s Federal Reserve Bank is not “federal”, it is a private company. As I heard one guy say, the Federal Reserve Bank is as “federal” as Federal Express. Part of the mess the US is in, is because companies have gotten too much power over government. Increasing their power will increase the problem.

Also, I don’t think bailing out the these “too big to fail” companies will solve the problem, and here is why: The premise is that by helping these companies the money pumped into them will tinkle down from top-to-bottom until the common man at grassroots level benefits. This is mostly not the case. The money dumped into these companies will mostly be used to pay off the debt (often abroad). In other words, the money will not somehow soak down to the average citizen that needs it the most; instead, the money will go out of America, or save the butts of the rich elite whom have their own savings, yachts, holiday houses in tropical countries and European sports cars.

What would I do instead? Personally I would distrust these major companies, and if need be let them fail.
What I would do with all these billions of dollars in bailout money is invest from the bottom up. I’d invest in emergency projects, encourage entrepreneurial businesses, improved education, build up the infrastructure and not cut infrastructural budgets (like that of the education system, police, etc.). The basic difference between what is being done, and what I think ought to be done can best be described by an analogy of a very sick person. Currently the sick person’s symptoms are being treated. I propose that the person’s immune system be boosted. If one continue to treat the symptoms the person might superficially seem to improve (and that is what the continual printing of money will achieve in the short run), but suddenly the sickness will flare up and the inevitable will happen. (The printing of money will only go so far, until Zimbabwean results occur.) On the other hand, if you focus not on the symptoms, but on boosting the immune system, the patient will be in serious pain and suffering at first, but there is a very good chance that the person will start to heal naturally if you make sure that the causes are not still in place. This healing will not be a superficial covering of the symptoms, but actual recovery. The focus should not be on improved comfort and relief, but on actual healing.

Of course, I do not pretend to know it all – I’m not a politician or economist. I’m merely an observer.

To come back to my criticism of Obama, let me be clear that I’m not criticizing him in particular. (Again, I’m not so much a critic as an observer.) I’ve been equally critical of Bush, even more so, but for different reasons. Bush moved America towards an Orwellian Big Brother state. Obama has done very little to counter that momentum. However, I must admit that I’ve lost my faith in Obama long ago. Any true perusing of the media will reveal that what Obama says often contradicts what his administration says. It would seem that his job is mostly PR.

I do not trust politicians. I didn’t trust Bush. I do not trust Obama.

Time Bombs

"The world is now pocked with cities that feel as if they are perched on top of bombs. The bombs have yet to explode, but the fuses have been lit, and there’s nothing anyone can do to extinguish them." Michael Lewis (2008)

The Grass is not Greener in Iceland

“When reading your blog, I’m wondering if it would not be better to move somewhere else,” writes a friend. He lives in South Africa. His motivation is in part also to protect his wife and children from the high crime rate in the country.

My suggestion to him was to consider Northern Europe: Very low crime rate; prosperous; high on freedom of speech and religion.

And then, this morning another friend sent me the link to a blogpost by someone in Iceland. And suddenly Northern Europe doesn’t seem like such a good suggestion anymore. The blogger writes: “It’s like we know the system is broken, we know it’s gone, but we can’t see it. We can’t tell what’s real, what’s still there, and what are just the ghosts of yesterday, when Iceland was one of the richest countries in the world. A pale reflection of the golden age in Icelandic economy which is now going up in flames. Where’s the smoke?”

I don’t know how to end off this post. What does one say before the brink of disaster? I cannot even say God have mercy, ‘cause that will insinuate that God is somehow to blame and that I don’t believe for a minute. We are to blame. We humans, and our greed and selfishness, are to blame.

The fishy state of North America

The US economy is in a crisis. In the meantime the governments of the USA, Canada and Mexico have been involved in trilateral agreements. The latter had been happening quite hush-hush. Most citizens are unaware of their governments' threesome-flirtations. For now the idea of a North American Union is still downplayed, and maybe even a farce, but a new North American currency, the Amero, is quite plausible. Imagine a total collapse of the US economy? Imagine the US Dollar suddenly losing all value… In such a case, only the combined forces of Canada, Mexico and the USA could save the North American economy from total disaster. (After all, both Canada and Mexico are siamesed to the USA, that if their big brother should collapse, they are sure to collapse with it.)

Such grandiose economic merging might be a Utopian ideal, and will surely save the US from utter depression, but at what cost? Something about the whole thing smells of aquatic vertebrates.

Surely it is all just silly conspiracy theories, isn't it?