Banking

The Shadow Banking System: A Third Of All The Wealth In The World Is Held In Offshore Banks

You and I live in a totally different world than the ultra-rich and the international banking elite do.  Many of them live in a world where they simply do not pay income taxes.  Today, it is estimated that a third of all the wealth in the world is held in offshore banks.  So why is so much of the wealth of the globe located in places such as Monaco, the Cayman Islands, Bermuda, the Bahamas, and the Isle of Man?  It isn’t because those are fun places to visit.  It is to avoid taxes.  The super wealthy and the international banking elite think that it is really funny that our paychecks are constantly being drained by federal taxes, state taxes and Social Security taxes while they literally pay nothing at all.  These incredibly rich elitists make a ton of money doing business in wealthy western nations and then they transfer virtually all of their profits offshore where they don’t have to contribute any of it in taxes.  It works out really great for them, but it sucks for the rest of us.

It is estimated that approximately $1.4 trillion is held in offshore banks in the Cayman Islands alone. According to an article in Forbes magazine, there is a total of approximately 15 trillion to 20 trillion dollars in offshore bank accounts, brokerage accounts and hedge fund portfolios.

A recent article in the Guardian stated that a third of all the wealth on the entire globe is held in offshore banks and that the vast majority of international banking transactions take place in these tax havens….

On a conservative estimate, a third of the world’s wealth is held offshore, with 80% of international banking transactions taking place there. More than half the capital in the world’s stock exchanges is “parked” offshore at some point.

All of the biggest banks in the world are involved in playing this game.  All of them have big branches in these various tax havens.  All of them work very hard to ensure that the tax burdens on their ultra-rich clients are as light as possible.

Nobody knows for sure how much money big governments around the globe are missing out on from all this tax avoidance, but everyone agrees the number is huge.  It is at least in the hundreds of billions of dollars every single year.

It is a shadow banking system that most Americans don’t know anything about. Most Americans don’t have the resources to be able to set up shell companies in half a dozen different countries so that they can “filter” their profits.  Most Americans don’t know a thing about complicated tax avoidance plans that tax lawyers use such as the “Double Irish” and the “Dutch Sandwich”.  Most Americans would have no idea how to eventually have most of the money that they make end up in Bermuda so that it can avoid taxes.

No, most Americans just go to work every week and have their hard earned paychecks raped by an oppressive taxation system.

To the ultra-wealthy and the international banking system we are all just a bunch of suckers.  In fact, a big portion of our taxes ends up going into their pockets to pay the interest on all of the government debt that they are holding.

When the global elite decide that they want to do some “social engineering” inside the big countries where they operate, they just set up tax-free “charitable trusts” that usually aren’t very “charity-oriented” at all.  Rather, many of these “charitable trusts” push the various radical political and social agendas that many of these elitists love to promote.

Examples of this include The Rockefeller Foundation and The Ford Foundation.  George Soros also loves to use entities like these to push his various agendas.

The wealthy know how to play the game.  For most of the rest of us, the game kicks our behinds.

So for those who are constantly screaming “tax the rich”, the cold, hard truth of the matter is that those who are truly ultra-rich know how to escape just about any oppressive tax regime you may set up.  They are light years ahead of the rest of us in knowing how to play the game.

What are you going to do?

Kick them out of the country?

Yeah, they will be really sad to spend even more time down in Bermuda or in the Cayman Islands.

Are you going to kick out any company that has any stock holders that have offshore bank accounts?

Well, you would have to kick out virtually every single major corporation in the United States.

This is just another example of how deeply flawed our system of income taxation really is.

Do you want to become a master of the tax code?

You might want to set aside some time for reading.

A lot of time.

The income tax code and its associated regulations contain well over 7 million words and are more than seven times longer than the Bible.

The IRS employs more than 90,000 people and it costs more than 11 billion dollars a year to operate.

Talk about a colossal waste of resources.

Meanwhile, the ultra-rich are just parking all of their money in Bermuda and the Caymans and are laughing at all the rest of us.

It would be hard to understate just how much influence and power all of this offshore money has.  The ultra-wealthy and the elite international bankers own many of our largest corporations, they exert influence over central banks, they control big media outlets and they “contribute money” (bribes) to political campaigns.

The elite are always two steps ahead of any new laws that get passed.  They are masters at moving money around.  They will quickly find a half dozen ways around any new law that you could possibly dream up.

Most of us never even get to meet any of these incredibly wealthy individuals.  They don’t attend the local church or go shopping down at the local shopping mall.

No, the global elite generally live in very exclusive gated estates or hang out at the most expensive private resorts.  They don’t spend a lot of time mixing with the rabble.

It turns out that life is pretty good when you have a ton of money coming in and you pay next to nothing in taxes.

So the next time you get your paycheck and you see that a half a dozen things have been taken out of it, take a few moments to think of the global elite that don’t pay any taxes at all and see how that makes you feel.

Hopefully when enough Americans get mad enough and start demanding change, the current income tax system will be scrapped for good and something much more equitable will be put in place instead.

The Federal Reserve Bans A Local Oklahoma Bank From Displaying Crosses, Bible Verses And Christmas Buttons

What in the world are they thinking over at the Federal Reserve?  The privately-owned central bank that runs the U.S. economy is now forcing local banks to remove every shred of Christian faith from their establishments.  When Federal Reserve examiners recently visited a local bank in Perkins, Oklahoma they demanded that the bank take down a “Bible verse of the day” and crosses that were displayed on the teller’s counter.  In addition, the agents from the Federal Reserve forced all bank personnel to remove buttons that said “Merry Christmas, God With Us”.  The bank was also ordered to remove a “Bible verse of the day” from the bank’s website.  According to Federal Reserve officials, all visible expressions of Christian faith by bank officials are now banned in all banks across the United States.

Now, before people start screaming “separation of church and state”, please keep in mind that the “state” is not involved here.  The local bank in Perkins is a privately-owned financial institution.  The owners of that bank should be able to express themselves however they want.

In addition, it is important to note that it was not an agency of the federal government or a federal court that ordered this private local bank to remove all traces of Christianity.

The truth is that the Federal Reserve is not part of the U.S. government.  In fact, the Federal Reserve is about as “federal” as Federal Express is.

You doubt this?

Well, perhaps you will believe what the Federal Reserve is publicly saying about itself.

In defending itself against a Bloomberg request for information under the Freedom of Information Act, the Federal Reserve objected by declaring that it was “not an agency” of the U.S. government and therefore it was not subject to the Freedom of Information Act.

In the video posted below, former Federal Reserve Chairman Alan Greenspan makes it very clear that the Federal Reserve is above the law and need not answer to anyone in the federal government….

So where in the world does the Federal Reserve get the idea that they have the authority to tell a private bank that they cannot display a Bible verse of the day and that their employees cannot wear Christmas buttons?

No matter what you think about the faith of the owners of the local bank in Perkins, the truth is that we should all be concerned about the kind of precedent that this sets for free speech.

According to Federal Reserve officials, any visible expression of Christianity by a private bank may cause someone from another religion to be offended and feel as though they may be discriminated against by that bank.  Therefore any expression of Christianity is “an appearance of discrimination” and thus must be banned.

Okay, so if any expression of Christianity is “an appearance of discrimination”, will federal officials soon use all of the federal “anti-discrimination laws” already on the books to ban all expressions of Christianity in all private businesses throughout the United States?

Once again, it is absolutely crucial to note that the local bank in Perkins is not a government building.  Federal Reserve agents are telling private business owners how they can express themselves as they run their privately-owned business on private property.

The following is a local news report about this very disturbing incident….

Does anyone still believe that we have “freedom of speech” in the United States?

It is almost as if all forms of Christian expression are now regarded as something horribly dirty by our public officials.

Even if you are an atheist, this should deeply concern you as well.  When freedom of speech is taken from some of us, it is only a matter of time until it is taken from the rest of us as well.

And since when does the Federal Reserve have any authority to tell any private citizen what they can or cannot say?

This is just another example of how the Federal Reserve has gotten completely and totally out of control.  The Fed has become an unaccountable monster that is just running around doing just about anything that it wants to do.

It is for some very good reasons that many members of Congress are starting to publicly speak out against the Federal Reserve.  Just recently it came out that the Federal Reserve has been handing out gigantic piles of nearly interest-free cash to their friends at the largest banks, financial institutions and corporations all over the globe.  The American people have completely lost control over the financial system, and as long as the Federal Reserve remains in control that is going to continue to be the case.

But now, not only is the Federal Reserve at the core of the rapidly developing financial nightmare that is enveloping this nation, they are also attempting to tell private bank owners what they can and cannot say inside their own private businesses.

No matter what your faith is or even if you have no faith, you should be objecting to this.  If the Federal Reserve is allowed to get away with this, it will be just a matter of time before U.S. government agencies come along and start ordering all private businesses to remove all traces of Christianity because they are “discriminatory” and they might offend someone.

The freedoms and liberties that previous generations fought and died to defend are being stripped away from us.  If you plan to say something about it before they are all gone, now would be a good time to start.

Trillions In Secret Fed Bailouts For Global Corporations And Foreign Banks – Has The Federal Reserve Become A Completely Unaccountable Global Bailout Machine?

Has the Federal Reserve become the Central Bank of the World?  That is what some members of Congress are asking after the Federal Reserve revealed the details of 21,000 transactions stretching from December 2007 to July 2010 that totaled more than $3 trillion on Wednesday.  Most of these transactions involved giant loans that were nearly interest-free from the Federal Reserve to some of the largest banks, financial institutions and corporations all over the world.  In fact, it turns out that foreign banks and foreign corporations received a very large share of these bailouts.  So has the Federal Reserve now become a completely unaccountable global bailout machine?  Sadly, the truth is that we would have never learned the details of these bailouts if Congress had not forced this information out of the Fed.  So what other kinds of jaw-dropping details would be revealed by a full audit of the Federal Reserve?

It is important to try to understand exactly what went on here.  Banks and corporations from all over the globe were allowed to borrow gigantic piles of money essentially for free.  Yes, when you are getting interest rates such as 0.25 percent, the money is essentially free.  These loans were not available to everyone.  You or I could not have run over to the Federal Reserve and walked away with tens of billions of dollars in loans that were nearly interest-free.  Rather, it was only the megabanks and megacorporations that are friendly with the Federal Reserve that were able to take advantage of these bailouts.

In this way, the Federal Reserve is now essentially acting like some kind of financial god.  They decide who survives and who fails.  Dozens and dozens and dozens of small to mid-size U.S. banks are failing, but the Federal Reserve does not seem to have much compassion for them.  It is only when the “too big to fail” establishment banks are in trouble that the Federal Reserve starts handing out gigantic sacks of nearly interest-free cash.

Just think about it.  Which financial institution do you think is in a better competitive position – one that must survive on its own, or one that has a “safety net” of nearly unlimited free loans from the Federal Reserve?

Now that is oversimplifying the situation, certainly, but the truth is that the Federal Reserve had fundamentally altered the financial marketplace and is significantly influencing who wins and who loses.

But even more disturbing is what the Federal Reserve is turning into.  This is an institution that is “independent” of the U.S. government, that does not answer to the American people, that controls our money supply and that is just tossing tens of billions of dollars to foreign banks and to foreign corporations whenever it wants to.

In fact, if Congress had not forced the Fed to tell us what was going on with these bailouts we would have never even found out.

The truth is that the Fed is taking incredible risks with “our money” and yet they want to continue to exist in a cloak of almost total secrecy.

In a recent article in the Washington Post, Dallas Federal Reserve President Richard Fisher acknowledged that the Federal Reserve played fast and loose with trillions of dollars of our money….

“We took an enormous amount of risk with the people’s money.”

Are you deeply disturbed by that quote?

Well, if not, you should be.

The American people became so infuriated about the bailouts and stimulus packages passed by Congress, but it turns out that they were nothing compared to these Federal Reserve bailouts.

U.S. Senator Bernie Sanders is one of the members of Congress that is now expressing extreme outrage about what the Federal Reserve has done….

“The $700 billion Wall Street bailout turned out to be pocket change compared to trillions and trillions of dollars in near zero interest loans and other financial arrangements that the Federal Reserve doled out to every major financial institution.”

In fact, Senator Sanders was so disgusted by how much of the money went overseas that he was led to make the following remark….

“Has the Federal Reserve become the central bank of the world? I think that is a question that needs to be examined.”

Advocates for the Federal Reserve insist that if all of these foreign banks and foreign corporations were not bailed out the financial crisis would have been much worse.  In fact, they say we should be thankful that the Federal Reserve prevented a total financial collapse.

Well boo-hoo!

If our financial institutions are so fragile that a stiff wind will knock half of them over maybe they need to just fail.

You know what, life is tough.  Nobody is going to cry most of us a river of tears if we lose our jobs.  Most of us have learned to scratch and claw to survive with no safety net underneath us.

So maybe it is time for these big financial institutions to start playing by the same rules the rest of us are playing by.

No, when these “too big to fail” financial institutions get into a little trouble they start whining like a bunch of little babies.

“Give us some big sacks of cash!”

“Waaaaaaah!”

Well guess what?  Most of the rest of us are just not going to have too much sympathy for these big banks from now on.

The following is a list of just a few of the banks, financial institutions and global corporations that received nearly interest-free loans from the Federal Reserve during the financial crisis…..

Big U.S. Banks And Financial Institutions

Goldman Sachs
Citibank
JP Morgan Chase
Morgan Stanley
Merrill Lynch
Bank of America
Bear Stearns
Pacific Investment Management Co. (PIMCO)

Big Global Corporations

General Electric
Caterpillar
Harley-Davidson
Verizon
McDonald’s
BMW
Toyota

Canadian Banks

Royal Bank of Canada
Toronto-Dominion Bank
Scotiabank

European And Asian Banks

Barclays Capital
Bank of Scotland
Deutsche Bank
Credit Suisse
BNP Paribas
Societe Generale
UBS
Dexia
Bayerische Landesbank
Dresdner Bank
Commerzbank
The Korean Development Bank (South Korea)

But those defending the Federal Reserve will insist that the financial world as we know it would have ended if the Fed had done nothing.

That may well be true.

The entire financial system might have gone down in flames.

But that just proves the main point that this column has been trying to make for months.

An economic collapse is coming.

The Federal Reserve can desperately try to keep all of the balls in the air for as long as it can, but eventually it is inevitable that this entire thing is going to come crashing down.

The fact that the Federal Reserve had to resort to such extreme measures to “save” the financial system just shows how desperate things really are.

We really have reached a “tipping point” for the world financial system.  There is going to be crisis after crisis after crisis and even bigger bailouts are going to be required in the future.

The world financial system is a house of cards built on a foundation of sand.  The Federal Reserve can keep throwing around gigantic sacks of “our money” as much as it wants, but in the end there is nothing that can be done to prevent the inevitable collapse that is coming.

20 Statistics That Prove That Global Wealth Is Being Funneled Into The Hands Of The Elite – Leaving Most Of The Rest Of The World Wretchedly Poor

Today global wealth is more highly concentrated in the hands of the elite than it ever has been at any other point in modern history.  Once upon a time, the vast majority of the people in the world knew how to grow their own food, raise their own animals and take care of themselves.  There weren’t many that were fabulously wealthy, but there was a quiet dignity in having land you could call your own or in having a skill that you could turn into a business.  Sadly, over the past several decades an increasingly growing percentage of agricultural land has been gobbled up by big corporations and by corrupt governments.  Hundreds of millions of people have been pushed off their land and into highly concentrated urban areas.  Meanwhile, it has become increasingly difficult to start a business of your own as monolithic global corporations have come to dominate nearly every sector of the world economy.  So more people than ever around the world are forced to work for “the system” just to make a living.  At the same time, those at the very top of the food chain (the elite) have spent decades rigging the system to ensure that increasing amounts of wealth will continue to flow into their pockets.  So now in 2010 we have a global system where a few elitists at the top are insanely wealthy while about half the people living on earth are wretchedly poor.

There are very few nations around the world that have not been almost entirely plundered by the global elite.  When the elite speak of “investing” in poor countries, what they really mean is taking control of the land, water, oil and other natural resources.  In dozens of nations around the world today, big global corporations are stripping fabulous amounts of wealth out of the ground even as the vast majority of the citizens of those nations continue to live in abject poverty.  Meanwhile, the top politicians in those nations are given huge bribes to go along with the plundering.

So what we have in 2010 is a world that is dominated by a very small handful of ultra-wealthy elitists that own an almost unbelievable amount of real assets, a larger group of “middle managers” that run the system for the global elite (and are rewarded very handsomely for doing so), hundreds of millions of people who actually do the work required by the system, and several billion “useless eaters” that the global elite don’t really need and that they don’t really have much use for.

The system was not ever designed to lift up the poor.  Nor was it ever designed to promote “free enterprise” and “competition”.  Rather, the elite intend to funnel all wealth to themselves and to have the rest of us enslaved either to debt or to poverty.

The following are 20 statistics that prove that the wealth of the world is increasingly being funneled into the hands of the global elite, leaving most of the rest of the world wretchedly poor and miserable….

#1 According to the UN Conference on Trade and Development, the number of “least developed countries” has doubled over the past 40 years.

#2 “Least developed countries” spent 9 billion dollars on food imports in 2002.  By 2008, that number had risen to 23 billion dollars.

#3 Average income per person in the poorest countries on the continent of Africa has fallen by one-fourth over the past twenty years.

#4 Bill Gates has a net worth of somewhere in the neighborhood of 50 billion dollars.  That means that there are approximately 140 different nations that have a yearly GDP which is smaller than the amount of money Bill Gates has.

#5 A study by the World Institute for Development Economics Research discovered that the bottom half of the world population owns approximately 1 percent of all global wealth.

#6 Approximately 1 billion people throughout the world go to bed hungry each night.

#7 The wealthiest 2 percent own more than half of all global household assets.

#8 It is estimated that over 80 percent of the world’s population lives in countries where the income gap between the rich and the poor is widening.

#9 Every 3.6 seconds someone starves to death and three-quarters of them are children under the age of 5.

#10 According to Gallup, 33 percent of the people on the globe say that they do not have enough money for food.

#11 As you read this, there are 2.6 billion people around the world that lack basic sanitation.

#12 According to the most recent “Global Wealth Report” by Credit Suisse, the wealthiest 0.5% control over 35% of the wealth of the world.

#13 More than 3 billion people, close to half the world’s population, live on less than 2 dollar a day.

#14 CNN founder Ted Turner is the largest private landowner in the United States.  Today, Turner owns approximately two million acres.  That is an amount greater than the land masses of the states of Delaware and Rhode Island combined.  Turner also advocates restricting U.S. couples to 2 or fewer children to control population growth.

#15 There are 400 million children in the world today that have no access to safe water.

#16 Approximately 28 percent of all children in developing countries are considered to be underweight or have had their growth stunted as a result of malnutrition.

#17 It is estimated that the United States owns approximately 25 percent of the total wealth of the world.

#18 It is estimated that the entire continent of Africa owns approximately 1 percent of the total wealth of the world.

#19 In 2008, approximately 9 million children died before they reached their fifth birthdays.  Approximately a third of all of these deaths was due either directly or indirectly to lack of food.

#20 The most famous banking family in the world, the Rothschilds, has accumulated mountains of wealth while much of the rest of the world has been trapped in poverty.  The following is what Wikipedia has to say about Rothschild family wealth….

It has been argued that during the 19th century, the family possessed by far the largest private fortune in the world, and by far the largest fortune in modern history.

Nobody seems to know exactly how much the Rothschilds are worth today.  They dominate the banking establishments of England, France, Germany, Austria, Switzerland and many other nations.  It was estimated that they were worth billions back in the mid-1800s.  What the total wealth of the family is today is surely an amount that is almost unimaginable, but nobody knows for sure.

Meanwhile, billions of people around the globe are wondering where their next meal is going to come from.

At this point, many readers will want to start arguing about how horrible capitalism is and about how wonderful socialism and communism are.

But capitalism is not the problem and as we have seen countless times over the past several decades, government ownership of business is not the solution to anything.

What we have in the world today is not capitalism.  Rather, it more closely resembles “feudalism” than anything else.  The elite are “monopoly men” who use their unbelievable wealth and power to dominate the rest of us.  In fact, it was John D. Rockefeller who once said that “competition is sin”.

It would be great if we lived in a world where those living in poverty were encouraged to start owning land, to create businesses and to build better lives for themselves.

But instead, things are going the other way.  Wealth is becoming more concentrated in the hands of the elite, and the middle class is starting to be wiped out even in prosperous nations such as the United States.

It turns out that the global elite have decided that they don’t really need so many expensive American “worker bees” after all and they have been moving thousands of factories and millions of jobs overseas.  Meanwhile the American people are so distracted watching Dancing with the Stars, Lady Gaga and their favorite sports teams that they don’t even realize what is going on.

There is no guarantee that America will be prosperous forever.  Today, a record number of Americans are already living in poverty.  Today, a record number of Americans are on food stamps.  The median household income went down last year and it went down the year before that too.

So wake up.  America is being integrated into a world economic system that is dominated and controlled by the insanely wealthy elite.  They don’t care that you have to pay the mortgage or that you intend to send your kids to college.  Mostly what they care about is making as much money for themselves as they can.

Greed is running rampant around the globe, and the world is becoming a very cold place.  Unfortunately, unless something really dramatic happens, the rich are just going to continue to get richer and the poor are just going to continue to get poorer.

The Biggest Bank Robbery In History? More Quantitative Easing = Backdoor Bailouts For The Big Banks Without Having To Go Through Congress

The U.S. Federal Reserve is getting ready to conduct another gigantic bailout of the big banks, but this time virtually nobody in the mainstream media will use the term “bailout” and the American people are going to get a lot less upset about it.  You see, one lesson that was learned during the last round of bank bailouts was that the American people really, really do not like it when the U.S. Congress votes to give money to the big banks.  So this time, the financial “powers that be” have figured out a way around that.  Instead of going through the massive headache of dealing with the U.S. Congress, the Federal Reserve is simply going to print money and give it directly to the banks.  To be more precise, the Federal Reserve is going to use a procedure known as “quantitative easing” to print money out of thin air in order to purchase large quantities of “troubled assets” (such as mortgage-backed securities) from the biggest U.S. banks at well above market price.  Some are already openly wondering if this next round of quantitative easing is going to be the biggest bank robbery in history.  Most Americans won’t understand these “backdoor bailouts” well enough to get upset about them, but that doesn’t mean that they won’t be just as bad (or even worse) than the last round of bailouts.  In the end, all of the inflation that this new round of quantitative easing is going to cause is going to be a “hidden tax” on all of us.

These new backdoor bailouts are going to work something like this….

1) The big U.S. banks have massive quantities of junk mortgage-backed securities that are worth little to nothing that they desperately want to get rid of.

2) They convince the Federal Reserve (which the big banks are part-owners of) to buy up these “toxic assets” at way above market price.

3) The Federal Reserve creates massive amounts of money out of thin air to buy up all of these troubled assets.  The public is told that all of this “quantitative easing” is necessary to stimulate the U.S. economy.

4) The big banks are re-capitalized and have gotten massive amounts of bad mortgage securities off their hands, the Federal Reserve has found a way to pump hundreds of billions (if not trillions) of dollars into the economy, and most of the American people are none the wiser.

During a recent appearance on MSNBC, Matt Taibbi of Rolling Stone did a great job of explaining how this all works….

http://www.youtube.com/watch?v=uwhMVB0XzPU&feature=player_embedded

But this isn’t the only way that the Federal Reserve forks over massive amounts of cash to the big U.S. banks.  In a previous article, I described how the U.S. Federal Reserve lends huge quantities of nearly interest-free money to big U.S. banks which they turn around and invest in U.S. Treasuries which bring in a return of three percent or so.  In essence, it is a legalized way for the big U.S. banks to make mountains and mountains of free money.

The truth is that the Federal Reserve does whatever it can to ensure that the big U.S. banks stay fat and happy. 

So what about the small banks?  What happens to them?

Well, the vast majority of the small banks are considered “not big enough for bailouts” and they are allowed to die like dogs.

Don’t let anyone ever fool you into thinking that the U.S. banking system has a level playing field.

For weeks, Federal Reserve officials have been coming out and have been dropping hints about how important it is for them to take “action” and implement another round of quantitative easing in order to help stimulate the U.S. economy.

In fact, during his speech on Friday, you could almost hear Ben Bernanke salivating at the thought of printing more money.

But nobody ever really asks who is going to be the first to get their hands on all this money that the Fed is going to pump into the economy.

The answer, of course, is obvious.

It is going to be the big banks – the same banks that are part-owners of the Federal Reserve and that have tremendous influence over Fed policies.

But even though this is all more than a little shady, is it such a bad thing for the rest of us if the Federal Reserve bails out the big banks and brings some much needed stability back to the U.S. financial system?

After all, if “Foreclosure-Gate” could potentially cause a nightmarish financial meltdown, isn’t it better for the Federal Reserve to step in and soak up large amounts of these toxic assets?

Those are legitimate questions.

Certainly the Federal Reserve has the power to step in and smooth over all sorts of short-term problems by papering them with money, but in the end printing more money will just make our long-term problems even worse.

Whenever a new dollar is introduced into the system, every other dollar in existence loses a little bit of value.

When trillions of new dollars get introduced into the system, it has the potential to create an inflationary nightmare. 

Already, a number of top Fed officials are publicly saying that inflation is “too low” and that we need to purposely generate more inflation in order to “stimulate” the U.S. economy.

Yes, that is just as insane as it sounds, but that is what they are actually proposing.

Apparently many top Federal Reserve officials honestly believe that they can pump trillions into the economy, jack up inflation significantly, and little harm will be done.

But even before “QE2” has begun, we are already starting to see all kinds of little bubbles beginning to develop in the financial system.  For example, commodity prices are skyrocketing right now, and that will soon be affecting the price we pay for food at the supermarket.

We are already on the road to serious inflation and the Federal Reserve has not even fired up the money hoses yet.  So what is going to happen after they pump trillions more into the economy?

Printing more money and giving it to the banks is not going to solve our economic problems.  It is just going to make them worse.

But unfortunately, American voters get no say about any of this.  Our national monetary policy is in the hands of an unelected central bank that does pretty much whatever it wants.   

An economic nightmare is coming, and you had better get ready.

The Real Horror Story: The U.S. Economic Meltdown

This October, millions of Americans are going to watch horror movies and read horror stories because they enjoy being frightened.  Well, if you really want to be scared, you should just check out the real horror story unfolding right before our eyes – the U.S. economic meltdown.  It seems like more bad news for the U.S. economy comes out almost every single day now.  Unfortunately, things are about to get a whole lot worse.  The mainstream media has been treating “Foreclosuregate” as if it is a minor nuisance, but the truth is that the lid is about to be publicly lifted on years and years of massive fraud in the U.S. mortgage industry, and this thing has the potential to cause economic chaos that is absolutely unprecedented.  Over the past several days, expert after expert has been coming forward and warning that this crisis could completely and totally paralyze the mortgage industry in the United States.  If that happens, it will be essentially like pulling the plug on the U.S. economic recovery. 

Not that there was going to be a recovery anyway.  The truth is that economic statistic after economic statistic has been pointing to incredible trouble for the U.S. economy.

For example, the U.S. government just announced that the U.S. trade deficit went up again in August.  According to the U.S. Census Bureau, the U.S. trade deficit was $46.3 billion during August, which was up significantly from $42.6 billion in July.

So how much coverage did this get in the mainstream media? 

Well, just about none.

We have gotten so used to horrific trade deficits that it isn’t even news anymore.

But these trade deficits are absolutely killing our economy.

How long do you think that the U.S. economy can keep shelling out 40 or 50 billion more dollars than we take in every single month?

If you look at the countries around the world that have become very wealthy, almost all of them have gotten that way by trading with the United States.

Meanwhile, many of our once great manufacturing cities are turning into open sewers.

Every single politician in the United States should be talking about the trade deficit.

But hardly any of them are.

Is it because Americans have all become so dumbed-down that we don’t understand these things anymore, or is it because we are so distracted by the various forms of entertainment that we are addicted to that we just don’t care? 

But the trade deficit is not the only economic statistic that is getting worse.

According to the Department of Labor, for the week ending October 9th the advance figure for seasonally adjusted initial jobless claims was 462,000, which represented an increase of 13,000 from the previous week.

We have an unemployment epidemic going on in this country, but what did the mainstream media do in response to this news?

They yawned.  Instead, many of the “financial experts” were busy talking about how wonderful it is that the Stock Market is going up, up, up.

Well, as one reader recently reminded me, if you want to evaluate an economy by how much the stock market is going up, then the economy of Zimbabwe has had an absolutely wonderful decade!

The truth is that the stock market is not a good barometer for what is actually going on.

What is really happening is that the U.S. economic system is literally coming apart at the seams. 

Yet another piece of really bad economic news that just came out is that the number of home repossessions by banks set a new all-time record during the month of September.  The record total of 102,134 bank repossessions was the first time ever that bank repossessions climbed over the 100,000 mark for a single month.

The good news is that bank repossessions are about to come to a screeching halt.

The bad news is that it is because the U.S. mortgage industry is about to become completely and totally paralyzed by this foreclosure fraud crisis.

The following are three basic points to remember about this foreclosure mess….

A) Massive Fraud Was Committed At Every Stage By The Mortgage Industry

In a previous article entitled “Foreclosure Fraud: 6 Things You Need To Know About The Crisis That Could Potentially Rip The U.S. Economy To Shreds“, I attempted to describe just how widespread the fraud in the mortgage industry has been….

The truth is that there was fraud going on in every segment of the mortgage industry over the past decade.  Predatory lending institutions were aggressively signing consumers up for mortgages that they knew they could never repay.  Many consumers were also committing fraud because a lot of them also knew that they could never possibly repay the mortgages.  These bad mortgages were fraudulently bundled up and securitized, and these securitized financial instruments were fraudulently marketed as solid investments.  Those who certified that these junk securities were “AAA rated” also committed fraud.  Then these securities were traded at lightning speed all over the globe and a ton of mortgage paperwork became “lost” or “missing”.

Finally, when it came time to foreclose on these bad mortgages, a whole lot more fraud was committed.  Thousands upon thousands of foreclosure documents were “robo-signed”, but the truth is that investigators are starting to discover a lot of things about these mortgages that are a lot worse than that. 

B) Nobody Really Knows Who Owns Or Who Has The Right To Foreclose On Millions Upon Millions Of Mortgages

The legal rights to millions of U.S. mortgages has been scrambled so badly that it might actually be impossible to fully sort this mess out.  In particular, MERS (Mortgage Electronic Registration Systems) has created a paperwork nightmare that may never be able to be completely remediated. 

On a previous article, a reader named William left a comment that did a great job of describing the very serious problem that we are now facing because of MERS….

MERS – potentially the most serious problem because it affects who really owns the loans. Securitization mandates that loans be transferred into REMIC trusts within a strict timeframe. Late transfers are not allowed. In spite of the supposed “ease” of transfer through MERS, it now appears that perhaps 60% of US loans were never properly transferred. Absent remedial legislation, it is impossible to do so now. And the former owners may be out of business or bankrupt. So how do we get these loans to the trust beneficiaries who were supposed to own them? This is no simple paperwork correction. The train has left the station, with no more to follow.

C) Unprecedented Chaos Is Going To Erupt As Faith In The Mortgage System Completely Dies

So what is going to happen as a result of all of this fraud and confusion in the mortgage industry?  Well, basically everybody is going to sue everybody.  It is going to be absolute mayhem. 

Charles Hugh Smith recently put it this way….

Real estate attorneys can rejoice: everyone will get sued, in every court in the land. Banks will get sued, title insurance companies will get sued, realtors will get sued, foreclosure mills will get sued, MERS will get sued, and so on. The attorneys general of the states will all sue the banks and mortgage mills, claiming billions in damages.

Meanwhile, virtually nobody will want to buy any house that has been foreclosed on in the past ten years or so until this mess is sorted out (which could take years and years). 

Meanwhile, title insurance companies are going to avoid foreclosures like the plague.

Meanwhile, all of the investors that have been propping up the housing market by buying foreclosures are going to be fleeing the market in droves.

Meanwhile, the financial world is going to be trying to figure out which U.S. lending institutions are still solvent.  The value of most mortgage-based assets is now totally up in the air.

Meanwhile, millions more homeowners across the United States will be emboldened to quit making payments on their mortgages as they realize that those holding their mortgages may not have the legal right to foreclose on them.

And that is where the true horror of this entire situation may lie.  What is going to happen if millions upon millions of Americans holding underwater mortgages look at this situation and decide that they really don’t have to be afraid of the threat of foreclosure any longer?

If a massive wave of homeowners suddenly decides to simply quit paying their mortgages, it would basically wipe out nearly the entire mortgage industry.

That would likely mean more government bailouts, more government control, much higher mortgage rates and eventually a serious crash in housing prices.

This crisis is incredibly complicated and it has a ton of moving parts, so it is extremely difficult to describe accurately.  But the reality is that this mess has the potential to hurt the U.S. real estate market much more than “subprime mortgages” ever did.

Hopefully this crisis will not be “the straw that broke the camel’s back” for the U.S. economy, but with each passing day this thing looks even more horrifying. 

One way or another, real estate law in the United State is going to be changed forever as a result of this crisis.  It is going to be extremely interesting to see how all of this plays out.

Foreclosure Fraud: 6 Things You Need To Know About The Crisis That Could Potentially Rip The U.S. Economy To Shreds

The foreclosure fraud crisis seems to escalate with each passing now.  It is being reported that all 50 U.S. states have launched a joint investigation into alleged fraud in the mortgage industry.  This is a huge story that is not going to go away any time soon.  The truth is that it would be hard to understate the amount of fraud that has gone on in the U.S. mortgage industry, and we are watching events unfold that could potentially rip the U.S. economy to shreds.  Many are now referring to this crisis as “Foreclosure-Gate“, and already it is shaping up to be the worst thing that has ever happened to the U.S. mortgage industry.  At this point, it seems inevitable that some financial institutions will go under as a result of this mess.  In fact, by the end of this thing we might see a whole bunch of lending institutions crash and burn.  This crisis is very hard to describe because it is just so darn complicated, but it is worth it to try to dig into this thing and understand what is going on because it has the potential to absolutely decimate the entire U.S. mortgage industry.

The truth is that there was fraud going on in every segment of the mortgage industry over the past decade.  Predatory lending institutions were aggressively signing consumers up for mortgages that they knew they could never repay.  Many consumers were also committing fraud because a lot of them also knew that they could never possibly repay the mortgages.  These bad mortgages were fraudulently bundled up and securitized, and these securitized financial instruments were fraudulently marketed as solid investments.  Those who certified that these junk securities were “AAA rated” also committed fraud.  Then these securities were traded at lightning speed all over the globe and a ton of mortgage paperwork became “lost” or “missing”. 

Then, when it came time to foreclose on these bad mortgages, a whole bunch more fraud started being committed.  The reality is that the “robo-signing” scandal is just the tip of the iceberg.  The following are six things that you should know about how deep this foreclosure fraud crisis really goes….   

#1 According to the Associated Press, financial institutions were hiring just about whoever they could find, including hair stylists and Wal-Mart employees, as “foreclosure experts” to help them rush through the massive backlog of foreclosures that were rapidly piling up.

Apparently many of these “foreclosure experts” barely even knew what a “mortgage” was according to the AP….

In depositions released Tuesday, many of those workers testified that they barely knew what a mortgage was. Some couldn’t define the word “affidavit.” Others didn’t know what a complaint was, or even what was meant by personal property. Most troubling, several said they knew they were lying when they signed the foreclosure affidavits and that they agreed with the defense lawyers’ accusations about document fraud.

#2 There is soon going to be a colossal legal scramble to figure out who actually owns millions of U.S. mortgages.

In his recent article entitled “Invasion Of The Robot Home Snatchers“, Robert Scheer described the complete and total mess that the U.S. mortgage industry has created….

How do you foreclose on a home when you can’t figure out who owns it because the original mortgage is part of a derivatives package that has been sliced and diced so many ways that its legal ownership is often unrecognizable? You cannot get much help from those who signed off on the process because they turn out to be robot signers acting on automatic pilot. Fully 65 million homes in question are tied to a computerized program, the national Mortgage Electronic Registration Systems (MERS), that is often identified in foreclosure proceedings as the owner of record.

Meanwhile, more organizations are stepping forward to help homeowners fight foreclosures.  National People’s Action, PICO National Network, Industrial Areas Foundation, Alliance of Californians for Community Empowerment and the Northwest Federation of Community Organizations have all partnered with the SEIU to launch the “Where’s The Note” campaign which is going to encourage homeowners to demand to see the note before submitting to a foreclosure.  Campaigns such as this are going to make foreclosures much more costly for banks.

#3 Legal battles over foreclosure documents could soon spawn thousands upon thousands of lawsuits across the United States.

Adam Levitin, a Georgetown University Law professor who specializes in mortgage finance and financial regulatory issues was recently quoted in an article on CNBC as saying the following about the situation we are currently in….

The mortgage is still owed, but there’s going to be a problem figuring out who actually holds the mortgage, and they would be the ones bringing the foreclosure. You have a trust that has been getting payments from borrowers for years that it has no right to receive. So you might see borrowers suing the trusts saying give me my money back, you’re stealing my money. You’re going to then have trusts that don’t have any assets that have been issuing securities that say they’re backed by a whole bunch of assets, and you’re going to have investors suing the trustees for failing to inspect the collateral files, which the trustees say they’re going to do, and you’re going to have trustees suing the securitization sponsors for violating their representations and warrantees about what they were transferring.

#4 The problems with foreclosure paperwork may be more widespread than anyone would have dared to imagine.

Attorney Richard Kessler recently conducted a study in which he found “serious errors” in approximately 75 percent of the court filings related to home repossessions that he examined.  Now he says that the foreclosure crisis could haunt the U.S. mortgage industry for the next ten years….

“Defective documentation has created millions of blighted titles that will plague the nation for the next decade.”

#5 If some banks discover that they are missing the paperwork for large numbers of mortgages (as is currently being alleged), those banks could be forced to significantly revalue those assets (as in “close to zero”) on their balance sheets. 

John Carney of CNBC recently described it this way….

The most damaging thing that could happen to banks would be the discovery that they simply cannot prove they hold a mortgage on a house. In that case, the loan would probably have to be written down to near zero. Even for current loans, the regulatory reserve requirements would double as the loan would no longer be a functional mortgage but an ordinary consumer loan. Depending on the size of the “no docs” portion of the loan portfolio, this might be a minor blip or require a bank to raise new capital to fill the hole in the balance sheet.

#6 Renowned investor Jim Sinclair is actually warning that the collapse of securitized mortgage debt could be the “final shot” that will wipe out many financial institutions across the United States. 

The recent warning that Sinclair posted on his blog is more than a little sobering…. 

I am asking for your attention again because of the depth of the fraud and now the size of the securitized mortgage debt OTC derivative pile of garbage that is in the trillions. This entire mountain of weapons of mass financial and social destruction is now in question. I have been telling you this for more than 2 years since the manufacturers and distributors of this crap were called by the NY Fed due to the loss of control over the paperwork.

I had dinner with my former partner, then lead director of and CEO of Bear Stearns. I could not contain myself so I asked him why he did so much business in OTC derivatives which were certain to bankrupt them. The answer I got was it was more than 50% of their profit. The right answer should have been it was more than 80% of their earnings.

Securitized mortgage debt is going to be the final shot that kills all kinds of financial entities in the Western world. The biggest holder of this putrid junk is pension funds.

Meanwhile, the stock market continues to go up, up, up as if everything is right in the world and as if a juicy new bull market is now upon us.

Well, let’s all join hands and sing happy songs around the campfire.

Perhaps if we all close our eyes and wish real hard all of this foreclosure fraud will just go away.

Then again, maybe not.

11 Long-Term Trends That Are Absolutely Destroying The U.S. Economy

The U.S. economy is being slowly but surely destroyed and many Americans have no idea that it is happening.  That is at least partially due to the fact that most financial news is entirely focused on the short-term.  Whenever a key economic statistic goes up the financial markets surge and analysts rejoice.  Whenever a key economic statistic goes down the financial markets decline and analysts speak of the potential for a “double-dip” recession.  You could literally get whiplash as you watch the financial ping pong ball bounce back and forth between good news and bad news.  But focusing on short-term statistics is not the correct way to analyze the U.S. economy.  It is the long-term trends that reveal the truth.  The reality is that there are certain underlying foundational problems that are destroying the U.S. economy a little bit more every single day.

11 of those foundational problems are discussed below.  They are undeniable and they are constantly getting worse.  If they are not corrected (and there is no indication that they will be) they will destroy not only our economy but also our entire way of life.  The sad truth is that it would be hard to understate just how desperate the situation is for the U.S. economy. 

Long-Term Trend #1: The Deindustrialization Of America

The United States is being deindustrialized at a pace that is almost impossible to believe.  But now that millions upon millions of people have lost their jobs, more Americans than ever are starting to wake up and believe it.

A recent NBC News/Wall Street Journal poll found that 69 percent of Americans now believe that free trade agreements have cost America jobs.  Ten years ago the majority of Americans had great faith in the new “global economy” that we were all being merged into, but now the tide has turned.

So why have Americans lost faith in “free trade”?

Well, it turns out that the current system is neither “free trade” nor “fair trade”.  Many other nations impose extremely high tariffs on U.S. goods and put up ridiculous barriers to American products and yet the United States has generally let everyone else openly manipulate currency rates and flood our shores with whatever cheap products they want.

The results have been disastrous.  Jobs and factories have been leaving the United States at a blinding pace.

The United States has lost approximately 42,400 factories since 2001.  An economy without a manufacturing base does not have a bright long-term future.  Yet our politicians have allowed our manufacturing base to be systematically dismantled.

As of the end of 2009, less than 12 million Americans worked in manufacturing.  The last time that less than 12 million Americans were employed in manufacturing was in 1941.

How is the United States supposed to have a bright economic future if it consumes everything in sight and yet makes very little?

Something needs to be done.

In 1959, manufacturing represented 28 percent of all U.S. economic output.  In 2008, it represented only 11.5 percent and it continues to fall.

Needless to say, millions of blue collar workers now find themselves unable to find jobs.  Today, 28% of all U.S. households have at least one person that is looking for a full-time job and there is no sign that things are going to improve much any time soon.

Long-Term Trend #2: The Exploding U.S. Trade Deficit

Each month, tens of billions more dollars go out of the United States than come into it.  In other words, every single month the United States gets poorer.

Recently, the U.S. trade deficit has been coming in at around 40 to 50 billion dollars a month.  About half of that is with communist China.

Between 2000 and 2009, America’s trade deficit with China increased nearly 300 percent.

Sadly, things are getting even worse.

As of the end of July, the U.S. trade deficit with China had risen 18 percent compared to the same time period a year ago.

There is a reason why China has been able to loan the U.S. government nearly a trillion dollars.  They have literally been bleeding us dry.

The United States spends approximately $3.90 on Chinese goods for every $1 that the Chinese spend on goods from the United States.

Does that sound like “fair trade” to you?

According to a new study conducted by the Economic Policy Institute, if the U.S. trade deficit with China continues to increase at its current rate, the U.S. economy will lose over half a million jobs this year alone.

Half a million jobs in just one year?

And that doesn’t even take into account the trade deficit that we have with all the other nations around the world.

We have literally built China into a superpower.

One prominent economist is now projecting that the Chinese economy will be three times larger than the U.S. economy by the year 2040.

But it isn’t just China that is a problem.

Since the implementation of NAFTA in 1994, 300,000 U.S. farms have gone out of business.

Globalism has forced U.S. workers to directly compete with the cheapest labor in the world for jobs.  That is not good for American workers and it is not good for America.

Long-Term Trend #3: The Shrinking Middle Class

As jobs continue to flee the United States and as wages continue to be depressed, America’s middle class is shrinking at an alarming rate.

According to a poll taken in 2009, 61 percent of Americans “always or usually” live paycheck to paycheck.  That was up substantially from 49 percent in 2008 and 43 percent in 2007.

Unfortunately, a growing number of Americans have found it impossible to make it from month to month without direct financial assistance from the federal government.

41 million Americans are now on food stamps.  One out of every six Americans is now enrolled in at least one anti-poverty program run by the federal government.  Economic pain is everywhere.

Tens of millions of Americans now live in poverty.  The U.S. Census Bureau says that 43.6 million Americans are now living in poverty and according to them that is the highest number of poor Americans that they have ever recorded in 51 years of record-keeping.

Long-Term Trend #4: The Growing Size Of The U.S. Government

No matter whether it is a Republican or a Democrat in the White House, the size of the U.S. government has continued to grow by leaps and bounds in recent years.

This is a tremendous drain on the U.S. economy.  The government produces very little value for the economy and yet costs a colossal amount to maintain.

In addition, multiplying government regulations have caused the United States to be a very difficult environment to operate a business in. 

The Federal Register is the main source of regulations for U.S. government agencies.  In 1936, the number of pages in the Federal Register was about 2,600.  Today, the Federal Register is over 80,000 pages long.

Long-Term Trend #5: The Constantly Growing U.S. National Debt

The United States has accumulated the biggest mountain of debt in the history of the world and every single month it gets worse.

According to an official U.S. Treasury Department report to Congress, the U.S. national debt will top $13.6 trillion this year and will climb to an estimated $19.6 trillion by 2015.

Do we really want to pass on a 20 trillion dollar debt to our children and grandchildren?

But the truth is that the situation is actually a lot worse than that.

If the U.S. government was forced to use GAAP accounting principles (like all publicly-traded corporations must), the U.S. government budget deficit would be somewhere in the neighborhood of $4 trillion to $5 trillion each and every year.

Needless to say, that is not anywhere close to sustainable.  We are literally destroying our economic future with all of this debt.

Long-Term Trend #6: The Ongoing Devaluation Of The U.S. Dollar

The Federal Reserve constantly destroys the value of the U.S. dollar.  Since the Federal Reserve was created in 1913, the U.S. dollar has lost over 95 percent of its purchasing power.

An item that cost $20.00 in 1970 would cost you $112.35 today.  An item that cost $20.00 in 1913 would cost you $440.33 today.

Inflation is like a hidden tax.  The value of the dollars you are holding right now will decline a little bit more each and every month. 

And now that the Federal Reserve is threatening to unleash another round of quantitative easing, it appears that the value of our dollars will soon be declining even more rapidly.

Long-Term Trend #7: The Derivatives Bubble

The one thing that the “Wall Street reform bill” should have done was that it should have done something about the horrific abuses in the derivatives markets.  Instead, the Wall Street reform bill did next to nothing about derivatives and instead imposed hundreds of other useless regulations on Wall Street.

Most Americans don’t even know what derivatives are.  Basically, they are side bets.  They have no underlying value of their own.  But today derivatives have taken center stage on Wall Street.  Our financial markets have become a gigantic casino.

The total value of all derivatives worldwide is estimated to be somewhere between 600 trillion and 1.5 quadrillion dollars.  And thanks to the U.S. Congress, the derivatives bubble is still growing.

It would be hard to understate the danger that the derivatives bubble represents.  The danger from derivatives is so great that Warren Buffet once called them “financial weapons of mass destruction”.  

When the derivatives bubble finally pops, there will not be enough money in the entire world to fix it.

Long-Term Trend #8: The Health Care Industry

The United States health care system is completely and totally broken.  It has become a gigantic money making machine for health insurance companies, pharmaceutical corporations and greedy lawyers.

Americans pay more for health care than anyone else in the world and yet they get shockingly little in return.

Health care expenses are the number one reason why people file for personal bankrupty in the United States.  Surprisingly, most of those who get bankrupted by health care expenses actually have health insurance.

The health insurance system in the United States is a complete and total mess.  Health insurance premiums are busting the budgets of tens of millions of American families and yet they are getting ready to go up yet once again. 

Already, large numbers of health insurance companies across the United States have announced that they plan to increase health insurance premiums in response to the new health care law.

But do health insurance companies actually need more money?  Even as the rest of the U.S. economy deeply struggles, America’s health insurance companies increased their profits by 56 percent in 2009.

At least someone is doing well in this economy.

The truth is that the U.S. health care system needs to be totally and completely reinvented.  The system we had before did not work.  Barack Obama’s new health care system will be far worse.  Meanwhile, the health care industry is literally choking the life out of the U.S. economy.

Long-Term Trend #9: Financial Power Is Becoming Concentrated In Fewer And Fewer Hands

Once upon a time, the United States had a very diverse financial system.  But today financial power is becoming concentrated in fewer and fewer hands with each passing year.

More U.S. banks fail every single week.  In fact, the number of bank failures is on pace to far surpass the total of 140 U.S. banks that failed last year.

There are now nearly 900 banks (well over 10 percent of all U.S. banks) on the FDIC list of problem banks.

Meanwhile, the “too big to fail” banks continue to pick up market share.  The “big four” U.S. banks (Citigroup, JPMorgan Chase, Bank of America and Wells Fargo) had approximately 22 percent of all deposits in FDIC-insured institutions back in 2000.  As of June 30th of last year that figure was up to 39 percent.

Putting an increasing amount of financial power into the hands of just a few elite banks is a recipe for disaster any way you want to cut it.

Long-Term Trend #10: Rampant Corruption On Wall Street

Our financial system has become an absolute cesspool of corruption.  In the past I have written extensively about all of the corruption that Goldman Sachs has been involved in, but they are far from alone.

In fact, it seems like new stories of financial corruption emerge almost daily now.

For example, just recently Bank of America, JPMorgan Chase and GMAC Mortgage have all suspended foreclosures in many U.S. states due to serious concerns about foreclosure procedures.

But there is a lot of corruption that is a lot worse than that.  The rampant manipulation of the gold and silver markets was completely blown open by an industry insider earlier this year, but the U.S. government had to be publicly shamed before they would even agree to look into it. 

The truth is that corruption on Wall Street has become so common that it is almost impossible to keep up with it all.  It seems like no matter what stone you turn over on Wall Street these days you find yet more corruption.

But if the core of our financial system is so incredibly corrupt, how long will it be before it collapses in on itself?

Long-Term Trend #11: The Growing Retirement Crisis That Threatens To Bankrupt America

The Baby Boomers may end up bankrupting America after all.  A retirement tsunami is coming that threatens to drown our nation in a sea of red ink.

The truth is that Americans have not been preparing for retirement on their own.  One shocking new study indicates that Americans are $6.6 trillion short of what they need to retire comfortably.

In fact, approximately half of all workers in the United States have less than $2000 saved up for retirement.

So what about corporate pension plans?

Are they in good shape?

No.

One recent study found that America’s 100 largest corporate pension plans were underfunded by $217 billion as of the end of 2008.

But sadly, the pension plans run by U.S. state governments are in even worse shape.

Robert Novy-Marx of the University of Chicago and Joshua D. Rauh of Northwestern’s Kellogg School of Management recently calculated the combined pension liability of all 50 U.S. states.  What they found was that the 50 states are collectively facing $5.17 trillion in pension obligations, but they only have $1.94 trillion set aside in state pension funds.  That means that collectively, the 50 U.S. state governments are 3.2 trillion dollars short of what they need to meet their pension obligations.

But the biggest mess of all may be the U.S. Social Security system.

The sad reality is that anyone that has studied it closely knows that it is nothing more than a Ponzi scheme, and the scam has just about run its course.

According to the Congressional Budget Office, the Social Security system will pay out more in benefits than it receives in payroll taxes in 2010.  That was not supposed to happen until at least 2016.

Oops.

But things get really hairy when you start looking down the road.

The present value of projected scheduled benefits surpasses earmarked revenues for entitlement programs such as Social Security and Medicare by about 46 trillion dollars over the next 75 years.

Ouch.

It is time to face facts people.

We are in deep, deep, deep trouble.

An increasing number of Americans are starting to realize this.  They may not always know the specifics of what is going wrong, but more people than ever realize that something is broken.  According to one recent survey, 63 percent of Americans believe that the United States is on the wrong track.

And we are very much on the wrong track.  We have squandered the great wealth that our parents and grandparents left us and we are wrecking the greatest economic machine that the world has ever seen.

If we do not get our act together, someday people will look back and will curse this generation for how incredibly stupid we were.

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