Ron Paul: Currency Crisis Looming

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary

Editor’s Note: It’s human nature. Some messenger comes with information you don’t want to hear and you label him or her a crackpot. In this case, instead of me, the crackpot is Ron Paul, member of the House of Representatives (R. TX) and now head of the House financial services subcommittee that scrutinizes monetary policy. OK we all know he got that post because nobody in Congress actually knows what monetary policy is, much less how to regulate it. They figured they would give him a post that seemed to satisfy him, but where he could do no harm.

But Paul is the author of END THE FED, a surprising best seller. I’m not surprised. Public confidence in government institutions could not be lower. And somehow, despite the depths of mistrust by the public, it manages to get worse every day. I think it is the title that sold the book in such large numbers. People want to strike back and END THE FED because it is the only idea on the table that addresses their anger and frustration.

We now know that that the pillars of our financial institutions (HSBC, UBS, JP Morgan, Citi and the Bank of Medici (using the name of a centuries old family who controlled the finance of the western world) stand accused by the trustee of the Madoff mess of being directly responsible for $40 billion of the losses attributed to the Madoff Ponzi scheme. Nobody disputes that it WAS a Ponzi scheme, but everyone wanted to believe that it was a “single gunman,” who got lucky with a magic bullet fired from an impossible angle that struck thousands of people and financially killed them.The allegation is essentially that these institutions knew or should have known and the public knows not only did they know it was a scheme, but that they used the scheme to channel money into it and make “extra” fees in doing so.

What politicians and the media don’t seem to understand is that the public is far out in front of the their leaders and their revered sources of information in the media. People understand that it is impossible to fashion and maintain a $60 billion PONZI scheme spanning decades without active involvement of dozens of credible channels. Everyone on Wall Street knew that Madoff was reporting impossible returns and they all knew, for a fact, that nobody had EVER seen a single trade in a  single security from the Madoff enterprise.

Madoff understood a basic fact about Wall Street that we don’t like to talk about but we all know it true. Wall Street exists to create capital and move it around. It isn’t supposed to have a conscience and it doesn’t. It never did. Because of that it is supposed to be strictly regulated so they don’t wreck world governments, societies and the marketplace that they provide the financing, hedging of risk, and opportunities for speculators. Instead we put them in charge of the government, the referees left the field and the players were free to do any damn thing they wanted.

The presumption that the managers of these Wall Street firms would self regulate because banking is built on trust and reputation was false — because there was no risk whatsoever to the managers of these enterprises — that ended when Wall Street firms were permitted to sell their shares to the public. It’s the shareholders who have the risk. The managers objective is simple: make it look like you are making a ton of money for the shareholders and take as much of that for yourself as “compensation” as is humanly possible.

Now in the face of all that comes Ron Paul crying what other people are calling “wolf” when in fact he is completely correct in his warning. Government is attempting to catch up with the overindulgence in the issuing of proprietary currency that dwarfs government currency. Private issuance of currency now represents 1200% of all the money in the world that is circulating as “money.” Nobody has any confidence in any of this money (currency). So governments are going to the next level of using “government guarantees” as a shadow currency in attempt to re-assert themselves in the game of commerce. But nobody is buying that either.

So Paul concludes that we have no money or currency that can be sustained under current policy because as long as we let the megabanks control the information we get, control the laws we make, and control the regulation of their multinational organizations, everyone will know that people with no conscience, no loyalty to the system, and no sense of public duty are in charge. Paul understands that money and currency is nothing more than symbolic as a belief system. And he understands that no currency will survive without an active belief on the part of virtually everyone that the currency is “real.”

While there are several large flaws in his proposition of going on the gold standard, he might still be right, inasmuch it is about the only thing left that people believe and accept as a medium of exchange and a storage of value — but beware that even if we followed Paul’s prescription, the proliferation of gold certificates issued by private entities will lead to the same bubble.

Current policy is based upon the weakest of all premises — if we can just keep this PONZI scheme of mortgage bonds and the synthetic derivatives going for a while, we will reach some sort of equilibrium eventually. Our leaders are scared to death of what Paul and others are demanding: THE TRUTH. So they find it more expedient to perpetuate the lie because they really don’t know (nobody does) what happens when that $600 trillion in notional value of “cash equivalent” derivatives conflates, each being a private contract deriving its value from some other private contract, and each being either a bet or a hedge on a bet. Truthfully, I don’t know either.

But I DO know that everyone seems to know the game is up and so unless we come up with a currency that people can believe in, a crisis of unimaginable proportion will come, making the last GREAT RECESSION look like something that was manageable. People would do well to listen to Ron Paul because his politics and philosophy are about to go mainstream. Not all of it is right, agreeable or even feasible — and little of it is a catchy tune like Republicans like to play or Democrats like to invent. Paul may be giving us the last message we will ever hear before what we assume is society and government comes crashing in around us. Listen up.

LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL

US warned on currency crisis

By Tom Braithwaite in Washington, Financial Times

Published: December 13 2010 03:22 | Last updated: December 13 2010 03:22

Ron Paul, the newly empowered Federal Reserve watchdog in the House of Representatives, said the US was on the verge of a currency crisis brought about by monetary policy and pledged to introduce sweeping audits of the central bank.

The libertarian author of End the Fed, a polemical 2009 attack on the bank that became a surprise best-seller, Mr Paul was last week appointed by his fellow Republicans to head the House financial services subcommittee that scrutinises monetary policy.

“What I really fear is that when the Fed comes to an end it will not be by my planning but it will end with a catastrophic financial dollar crisis,” said Mr Paul. “This crisis when it comes, and I think we’re approaching it, affects everybody because it’s such an important currency. I think we’re moving into very, very dangerous times.”

The Texan congressman’s ambitions stop short of an abrupt end to the central bank. But he wants to reintroduce legislation to audit the Fed.

While Mr Paul may have once been dismissed by the establishment as a crank, he has recently garnered widespread support from left and right for his attempts to increase transparency.

US policymakers are proud of their aggressive response to the financial crisis and contend that the raft of liquidity programmes made possible by the Fed’s power have proven superior to the European response.

Amid widespread public suspicion, Ben Bernanke, Fed chairman, and other Fed governors have gone public in their defence of the $600bn monetary stimulus – or quantitative easing – plan the bank rolled out last month to bring down long-term interest rates.

Last week saw yields on US Treasury bonds increase sharply, in spite of the Fed’s move, making mortgages more expensive to refinance and obtain. Mr Paul sees the “American people waking up” to what he sees as the Fed’s dangerous policies.

“Nobody’s going to really understand it until you see the inflationary pressures – when interest rates go significantly higher and prices start to move along and I think they’ve already started in that direction,” he said.

Mr Paul, who is soft-spoken and has polite debates with Mr Bernanke in spite of his anti-Fed position, said there was not “much good” to be had from more “esoteric” back-and-forth with the Fed chairman at congressional hearings.

Instead, he wants members of the Austrian School of economics to debate Paul Krugman, the Nobel prize winner and standard bearer of liberals. “Let Paul Krugman argue ‘spend more, print more’ and have somebody else come out and give the correct answers,” he said.

14 Responses

  1. RON PAUL 2012!

  2. False Affidavits in Foreclosures: What the Robo-Signing Mess Means for Homeowners
    The robo-signing scandal is an opportunity for homeowners to challenge foreclosures in court, negotiate with lenders, and buy time.

    Recently the media and courts have slammed the mortgage lending industry for using false affidavits in thousands of foreclosure cases. Because of the “robo-signing” scandal, several large banks have temporarily frozen all pending foreclosures. For some homeowners, the robo-signing mess may create opportunities to challenge their foreclosures in court or negotiate with lenders to avoid foreclosure.

    Read on to learn about the massive robo-signing problem and what it means for homeowners.

    What Is Robo-Signing?
    As part of the foreclosure process in the 25 or so states that require judicial foreclosure (the lender must go to court), the lender must demonstrate that the homeowner has defaulted on a mortgage and that the lender owns the mortgage. (To learn more about the foreclosure process in judicial foreclosure states, see Nolo’s article How Foreclosure Works.)

    Typically, in a judicial foreclosure state, the lender proves the requisite facts by submitting documents and a written statement signed under oath (called an affidavit) by a person (usually a bank employee) who has reviewed the documents and who is supposed to have some personal basis for believing the facts to be true. The idea is to prevent foreclosures on homes where the foreclosing bank cannot prove that it actually owns the mortgage (which is more common than you might think) or where the homeowner is not actually in default to the degree asserted in the foreclosure papers.

    Recently, it has come to light that several large banks have routinely used affidavits signed by employees who have not personally reviewed the documents and have no basis for believing that the homeowner is in default or that the bank owns the loan. Employees for financial giants like Bank of America, JP Morgan Chase, Wells Fargo, and GMAC have all testified that they signed many thousands of affidavits a month, spending about 30 seconds on each affidavit, and that they didn’t have a clue regarding the veracity of the affidavit or the documents in question — hence the name “robo-signers.”

    What Effect Does a False Affidavit Have on the Foreclosure Process?
    Banks cannot legally foreclose on a house if the foreclosure paperwork is not in order. This means that if the affidavit a bank submits is false — as any affidavit completed by a robo-signer would be — the foreclosure should not go through. Of course, the reality is that banks have foreclosed on thousands of properties based on just such false affidavits. But now that the issue has come to light, business is not always as usual. Here’s what’s happening:

    In states where foreclosure must go through the court system, more and more judges are taking a closer look at the affidavits and paperwork and refusing to sign off on the foreclosure.
    In states where foreclosure does not go through court, some homeowners are bringing lawsuits to stop the foreclosure on the ground that false affidavits have been recorded as part of the non-judicial foreclosure process.
    Some banks are freezing foreclosures — but just until they sort out the robo-signing mess. For example, Wells Fargo has just announced it is lifting its freeze, refiling thousands of affidavits, and proceeding with foreclosures where appropriate.
    What Happens if the Lender Cannot Foreclose?
    For all practical purposes, the only way to enforce the terms of a mortgage is to foreclose on the property. Through foreclosure, the lender gains ownership of the property and the right to force the ex-homeowner to move out. If the lender is prevented from foreclosing, it could sue the homeowner for breach of contract if the homeowner falls behind on mortgage payments. However, except in rare circumstances, a lawsuit for breach of contract against the homeowner is not a viable remedy because:

    lawsuits are expensive
    the lender can get only a money judgment (not possession of the property), and the likelihood of collecting this judgment from the homeowner is small, and
    the homeowner can avoid personal liability for such a judgment by filing for bankruptcy.
    In addition, in California and a few other states, the lender is not permitted to sue for breach of contract on first mortgages (called “nonrecourse loans”).

    The bottom line: If the lender cannot foreclose on a property, it does not have a good method for getting mortgage payments, or their equivalent, from defaulting homeowners.

    New Options for Homeowners Facing Foreclosure?

    The proliferation of false affidavits, and the subsequent media attention, means that an ever-greater number of homeowners will be able to challenge foreclosures in court. In addition, the robo-signing fiasco provides more leverage for homeowners to negotiate with banks, and it may allow some homeowners to stay in their homes longer due to freezes or delays in processing paperwork.

    Challenging a Foreclosure Based on a Faulty Affidavit
    Because the robo-signing mess has called into question the integrity of lender paperwork, courts will be more likely to scrutinize bank foreclosure affidavits and documentation and be more willing to entertain homeowner claims that documentation is faulty or false. If you want to challenge the foreclosure of your home based on a faulty affidavit, the process depends on whether you live in a state where foreclosures go through court or not. A third option is to challenge the foreclosure in a Chapter 13 bankruptcy.

    Judicial foreclosure states. In about half the states, the foreclosures go through court — called “judicial foreclosures.” In these states, to challenge a foreclosure based on a fraudulent affidavit you simply raise the issue in court at the first opportunity — in a summary judgment proceeding or at the actual trial, if the more expeditious summary judgment procedure fails.

    Non-judicial foreclosure states. In states where foreclosures are completed without going to court (called “non-judicial foreclosures”), the process is not as easy — the homeowner must file a lawsuit in court to stop the foreclosure. In a number of these non-judicial foreclosure states, a bank cannot foreclose without recording the appropriate documents accompanied by an affidavit attesting to their truth, so the ground for challenging the foreclosure would be similar to that used in judicial foreclosure states.

    To find out if there is an affidavit requirement for foreclosure in your state, check your state’s statute regarding the foreclosure process. (Look for a requirement that the lender must submit a statement under oath or an affidavit as part of the paperwork.) To learn how to research your state law, see Nolo’s Legal Research Center. Also, see Nolo’s Best Foreclosure Websites for a list of helpful foreclosure websites. A number of these sites summarize state foreclosure statutes.

    Chapter 13 bankruptcy. Homeowners may also challenge foreclosures in Chapter 13 bankruptcy. In Chapter 13 bankruptcy, creditors (including mortgage lenders) must file a claim in order to secure payments on their mortgage under the debtor’s Chapter 13 repayment plan. As with all other creditor claims, a homeowner in Chapter 13 may oppose the claim based on the lender’s inability to provide the correct documents establishing the debt and sworn testimony to their truth. (To learn more about what happens to your home in Chapter 13 bankruptcy, see Nolo’s article Your Home in Chapter 13 Bankruptcy.)

    Delays in Processing Foreclosures
    As mentioned above, the robo-signing mess has forced some banks to temporarily freeze all foreclosures. And even if the foreclosing bank hasn’t stopped foreclosures, or has resumed foreclosures, the process may be delayed. Banks are scrambling to gather the correct documentation, and going forward it will take longer to get a foreclosure affidavit signed if banks can no longer use robo-signers and, instead, must require bank officers to actually spend time reviewing the property file, loan papers, and other documents before signing the affidavit. And, despite what some banks have said, this is not a mere technicality. There are many instances of demonstrably false or legally faulty paperwork being submitted, and it may be that the banks will simply not be able to demonstrate the veracity of the necessary documents.

    Opportunities to Negotiate
    Because of the mounting evidence of robo-signing and sloppy bank paperwork, courts may be more inclined to believe that foreclosure paperwork in any given case is faulty. As a result, if a homeowner is able to cast uncertainty regarding the required foreclosure paperwork, banks may be more willing to go further than they have in negotiating some type of mortgage modification — such as reducing principal, interest rates, or payments — rather than risk having to prove the accuracy of their documents in court.

    Of course, if you can point out a defect in the paperwork, your leverage will increase. But even if you can’t find a defect, you may still get the lender to negotiate by raising the possibility of faulty paperwork. The lender may discover that its paperwork is less than stellar or that it would rather negotiate with you than prove the opposite in court.

    More Bad News for Mortgage Lenders: Class Actions and Criminal Prosecutions
    The robo-signing scandal may bring more bad news to the mortgage lending industry in the form of class action lawsuits and even criminal prosecutions. Attorneys general in all 50 states have launched investigations to see what laws, if any, have been broken. In addition, people whose home foreclosures were based on false affidavits may be able to get their homes back if those homes are still in the possession of the foreclosing bank.

  3. We have not seen the worse yet.

    Armagedon is on its way.

  4. BlackRock
    “The Federal Retirement Thrift Investment Board currently contracts BlackRock Institutional Trust Company, N.A. (BlackRock) to manage the F, C, S, and I Fund assets.

    The Board invests the assets of the F, C, S, and I Funds in commingled trust funds managed by BlackRock. These trust funds are comprised of investments by tax-exempt institutions like the TSP, such as pension plans and endowments. Investing collectively in this way can be advantageous because it reduces trading costs. The securities held in these commingled funds are held in trust and they are not assets of BlackRock, nor can they be used to meet the financial obligations of BlackRock.” https://www.tsp.gov/investmentfunds/fundsoverview/fundManagement.shtml

    Thrifts Savings Plan (TSP)
    “SUBCHAPTER III—THRIFT SAVINGS PLAN”
    “5 U.S.C. § 8438 Investment of Thrift Savings Fund”
    “5 U.S.C. § 8440a Justices and judges”
    “5 U.S.C. § 8440b Bankruptcy judges and magistrate judges” http://www.law.cornell.edu/uscode/5/usc_sup_01_5_10_III_20_G_30_84_40_III.html

    Pacific Investment Management Co. (PIMCO)
    Serves as a Financial Investment Advisor to the TSP

    And we all know (or would know if it was said more loudly and clearly) that the FED has a conflict of interest because, Hey they right regulations for TILA

  5. http://www.scribd.com/doc/45352441/National-Mortgage-News-Bank-of-America-in-Settlement-Talks-With-Large-MBS-Investors

    National Mortgage News – Bank of America in Settlement Talks With Large MBS Investors”,

    National-Mortgage-News-Bank-of-America-in-Settlement-Talks-With-Large-MBS-Investors?secret_password=25d19m9eoh9wvnfumca6″,”short_title”:”National Mortgage News –

    Bank of America in Settl…”,”description”:”Bank of America Corp. has begun potential settlement discussions with large institutional investors who bought MBS that later underperformed, causing losses at these entities, according to a report in The Wall Street Journal.\r\n\r\nThe newspaper, citing sources "familiar with the situation" identified the MBS investors as the Federal Reserve Bank of New York, Freddie Mac, Blackrock Inc., and PIMCO.\r\n\r\nThe investors also apparently are talking with Bank of New York. In October these investors began exploring the possibility of suing B of A over what they allege is the poor quality of "master servicing" on the MBS done by Countrywide Financial Corp. B of A bought CFC in August 2008, inheriting all its troubled "legacy assets" and related issues.”

  6. A Spike in Mortgage-Related Litigation
    PrintEmailReprintsFeedback
    Share |
    Wednesday, December 15, 2010
    Legal actions tied to mortgage lending jumped by more than 40% in the third quarter based on the Mortgage Litigation Index report published this week.

    Activity on more than 100 civil and criminal mortgage-related cases was tracked from July 1 through Sept. 30 by the report. The report was prepared together with Patton Boggs.

    Activity leapt from the second quarter’s 75 cases and was up similarly from the same period last year.

    Cases involving investor actions taken as a result of alleged violations to the Securities Exchange Act of 1934 outnumbered all other types, although activity was lower than in the second quarter. Coming in next were actions related to foreclosures.

    “In recent months, the focus of mortgage litigation has begun to transition from primarily consumer foreclosure disputes towards loan documentation and servicing issues,” said Patrick McManemin, a partner in Patton Boggs’ Dallas office.

    “Therefore, an increase in residential note repurchase litigation from investors in securitization trusts and banks that face indemnity claims from government-sponsored enterprises should be expected

  7. It is interesting to hear Mr. Deutsch standing and at the hearing at the same time, reading another article….

    http://www.c-spanvideo.org/program/ForeclosureC

    http://www.housingwire.com/2010/12/15/asf-director-defends-securitization-psas-to-house-committee

  8. Guys, this link shows exactly what Ron Paul was trying to warn us about:

    $12.3 Trillion in counterfeited bailouts to mostly foreign banks and foreign central banks. (who like Deutsche, are foreclosing our houses!)

    http://ampedstatus.com/the-wall-street-pentagon-papers-biggest-scam-in-world-history-exposed-are-the-federal-reserves-crimes-too-big-to-comprehend

    Compare that to Ben Bernanke’s perjury about this very subject, on this July 2009 video:

    http://www.youtube.com/watch?v=uGs_Qn5yEgs&amp

    You are right Neil…. “Paul may be giving us the last message we will ever hear before what we assume is society and government comes crashing in around us. Listen up.”

  9. someone @ the market-ticker lays it out simple enough..

    “Just don’t forget one thing. You don’t become a Senator (or just another run of the house congressman representative at that) by not playing along with the game. And even if you try to pull a fast one after you get elected by the gracious largesse of TPTB you will find yourself one day opening up a plain vanilla envelope with a photo/sound tape of you doing something you shouldn’t have been photographed or sound recorded doing.

    Please. They have Ron Paul exactly where he’s supposed to be. Else he wouldn’t even be there in the first place.

    Capiche?

    Good. Now go do something productive besides having faith, hope, and charity, that one congressperson on a certain committee setup by his peers is going to change the world for all the better. The system is corrupt. Therefore those running the system are also corrupt. He’s not going to change the system because he’s part of the system.

    Again, capiche?

    Am I cynical? Of course I am. After all the sheeit I’ve seen being done for over half a century in politics Who the Phuck Wouldn’t Be?

    Maybe Mother Teresa? (RIP)…. ”

    WELCOME the collapse & hope that its is rapid,
    so as to leave infrastructure intact as much as possible for those of us that will fight to rebuild,WE can & will!

  10. The entire issuance of currency of any kind needs total transparency and extreme regulation. I seem to have read or seen on TV that Wall Street knows that it needs regulation and asks for it, because they know they cannot stop the greed themselves.
    http://www.challengingforeclosure.com Sirak@challengingforeclosure.com

  11. “Wall Street exists to create capital..”

    That may be Why they existed in past times, but now they no more create any capital than my dead grandma. There is nothing they create that contributes to a productive society or GNP. They operate as casinos with an unlimited supply of zero interest currency from the Fed’s under a ponzi model. Then they create exotic currency games and play among themselves and spin this as creating a capital market.

    No, I think I will see it for what it is.

  12. Thoughtful readers of Ron Paul’s post may reflect that the actual issuance of Federal reserve “Notes” as dollars is not a cast-in-concrete requirement for the Secretary of the treasury. There is nothing at all to stop any Secretary from simply issuing “United States Dollars” directly from the Mint, thus bypassing the Federal reserve and their Notes system. In so doing, you also undercut the power of the Fed Directors to set interest rates and money supply – which in turn constricts the abilities to use fiscal policies to achieve national ends.

    I am not a fan of going back to the Gold Standard, as the money-supply needs far surpass the available world’s gold supply, which is quite fixed and grows very slowly – exactly the parameters that make it a solid foundation for currency support. You do need paper credit, but you do not need “Notes” issued by the Fed; you can do nicely, probably better, with the issuance of US Dollars. the difference is who controls the issuance, and who controls the interest rates.

  13. FROM AN OPTEUM FINANCIAL SERVICES LLC PROSPECTUS DONE IN LATE 2005. IN REGARDS TO MERS.

    THE RECORDING OF MORTGAGES IN THE NAME OF MERS MAY AFFECT THE YIELD ON THE
    CERTIFICATES

    The mortgages or assignments of mortgage for some of the mortgage
    loans have been or may be recorded in the name of Mortgage Electronic
    Registration Systems, Inc., or MERS, solely as nominee for the seller and its
    successors and assigns. Subsequent assignments of those mortgages are registered
    electronically through the MERS(R) System. However, if MERS discontinues the
    MERS(R) System and it becomes necessary to record an assignment of the mortgage
    to the trustee, then any related expenses shall be paid by the trust and will
    reduce the amount available to pay principal of and interest on the
    Certificates.

    The recording of mortgages in the name of MERS is a relatively new practice in the mortgage lending industry. Public recording officers and others in the mortgage industry may have limited, if any, experience with lenders seeking to foreclose mortgages, assignments of which are registered with MERS.
    Accordingly, delays and additional costs in commencing, prosecuting and completing foreclosure proceedings and conducting foreclosure sales of the mortgaged properties could result. Those delays and additional costs could in turn delay the distribution of liquidation proceeds to certificateholders and increase the amount of losses on the mortgage loans.

    For additional information regarding MERS and the MERS(R) System, see “The Mortgage Pool–Mortgage Loan Characteristics” and “Yield on the
    Certificates” in this prospectus supplement.

    PAGE S-19

    http://www.scribd.com/doc/45324086/SEC-Info-Opteum-Mortgage-Acceptance-CORP-424B5-Opteum-Mortgage-Acceptance-Corp-Asset-Backed-Pass-Through-Certificates-2005-5-On-11-29-05

  14. […] the original post: Ron Paul: Currency Crisis Looming   Tags: end the fed, securities fraud Posted in: […]

Leave a Reply

%d bloggers like this: