ZOMBIE MONEY: How The World Keeps Cancerous Banks Alive


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EDITOR’S ANALYSIS: In 1983 the amount of derivatives based upon credit instruments was zero. Then it went past $600 Trillion in 2007, and it is suspected (these are mostly “private” contracts) that they might be over a quadrillion now. There is approximately $70 Trillion in total for the whole world in money issued by government, up $20 trillion in just 4 years because of quantitative easing (i.e., printing money). The twenty trillions dollar increase is zombie money.

There was a choice. Either issue the money and hope that the $600 trillion in derivatives would some how work itself out, or let the the $600 trillion collapse, cancelling itself out because it contains numerous bets going every which way but loose. The Banks, as we all know, won the game and managed to get governments to issue the $20 trillion and worse, they managed to get the money into their own hands rather the investors and others whose wealth had been destroyed.

The Zombie money is a way of kicking the can down the road and the result of doing it has yet to be determined. But it did kick the can down the road. The problem is that it isn’t working as well as had been hoped and countries are about to fall. The article below talks about the effects of zombie money not only on housing and banking but on all the commodities we need to live.

Zombie money is the money that seems, but only seems, to exist because of unrecognized losses. QE measures, for instance, basically serve to keep those losses unrecognized. That’s what they’re for. To make markets, and ordinary people, believe that banks are still solvent when in reality they’re not.

Funny thing is, even with all the accounting tricks that hide those losses, the entire system is still, and already, on the verge of collapse. And when it goes, the loser will be you, not the gamblers that lost fair and square. If dark inventory shows you anything, it’s that fair and square is a thing of some mythical fairy tale past. The reality for you and me is, and this is not the first time I put it like this: heads you lose, tails you die.

Zombie money pays for dark oil inventory; this is for instance why tar sands can look profitable, even as their EROEI is very low. If there’s sufficient difference between spot prices and forward prices for natural gas and oil, it makes sense to turn the former into the latter (which is all that tar sands are about). Nothing to do with energy efficiency, everything to do with market manipulation. The same goes for shale gas, and for oil shale. It will all soon give a whole new meaning to the term “unsustainable”. Promise.

Zombie money also allows, and causes, lenders, aided and abetted by governments all over, who want no part of a crashing real estate market, to keep millions of homes off the market, which in turn allows them to keep billions, if not trillions of dollars, in losses off their books. This results in hundreds of millions of people, throughout the western world, who think their homes are worth much more than they are. And then they wake up.

Dark inventory and shadow inventory keep us all from having a realistic picture of what is actually out there, what anything at all is worth. Prices are not set in any sort of “free” market; they are set in “shadow markets”, “dark markets”, in which – derivative – financial instruments rule, not the actual assets they are based on. Until they don’t.

Today’s prices are set by bets on expectations of tomorrow’s prices, and these expectations in turn are manipulated by parties that have a vested interest in making investors – and the general public – think a certain expectation is realistic; all it takes is to make that expectation sufficiently opaque, to make sure investors have access to far less information than the parties that deal and/or hold the derivative instruments.

That’s all it takes to create, out of thin air, a whole new generation of suckers and greater fools.

This creates a tremendous cognitive dissonance, a picture of the world that is entirely delusional. And that, of course, can and will not last. Even if a majority of people still wishes to think that it can. What do they know about what’s going on behind the curtain? Hardly anything at all.

And then they wake up.

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Read more: http://theautomaticearth.blogspot.com/2012/01/january-14-2012-housing-and-oil-dark.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+blogspot%2FlRTBR+%28The+Automatic+Earth%29#ixzz1jfOmARbR


27 Responses

  1. @neidemeyer – I’d think what you think – what a load of garbage!
    Are they trying to pretend that’s an original?

  2. And what is a synthetic swap?

  3. iwantmynpv, on January 17, 2012 at 10:06 am said:
    “…… hold on one sec, do you mean to tell me that are upstanding banks are trading insurance contracts (unregulated) (1)”and creating a market spread”, which is controlled by nothing other than S&P, Moody’s and Fitch ratings? I am a former ROP, and can tell you one thing whether (2) traded OTC or not, “None of them are securities instruments, they are all derivative contracts.” (I added the numbers)

    Would you mind explaining this in layman’s terms for dummies?
    Like a security is:
    a derivative is:
    a derivative contract is:
    a credit default swap is:
    an insurance contract is:
    an unregulated ins contract is:

    If not here, altho I think others would be interested, please email me at johnqgault@yahoo.com Thanks

  4. Colleen – you can send them to johnqgault@yahoo.com

  5. Plus, ( I forgot to say) that all HAD nothing to do with the note or deed of trust.
    That was seperate!

  6. Thanks John, and As to the 15 copies of checks at closing, that’s par for the course. You did a cash-out refie —

    No, we bought the home out-right. The checks (from the wired transfer and we put over 50 thousand as a down payment) added up to what the cost of the home was.
    The closing agent created a bank account that shows her signing
    for the pay-off to the sellers, their loan, the real estate agents, 3 of them, all the insurance and prepaid taxes- There was more, I just don’t remember. The point is WHAT A scam. And this was the same agent that was our title, closing, double witnesser, and notary.
    Yes, I have a scanner and just thinking of a way to get them to you.
    They also state our closing on the the 27, but we didn’t close till the 31. So, the dates don’t add up.
    If you could give me your email, that would help?
    Thanks for believing, as I know the shock value alone-for ALL of us
    makes you want to scream…

  7. johngault,

    Talking about going forward. May 2009 is date of the TILA Amendment. How will they deal with this going forward?? That is, conflict of state law with federal law? And, of course, TILA Amendment not a Statute of Repose, but, instead, Statute of Limitations applies, which is subject to equitable tolling.

    Need to get the law in there. Everything else, may then follow. And, there is much to follow.

  8. Colleen – I’d sure be interested in seeing those duplicate docs, including 2 trustees deeds. Can you scan them? A lot of what you said sounds like some stuff worth pursuing. As to the 15 copies of checks at closing, that’s par for the course. You did a cash-out refi, and those checks were made to credit card companies, car loan, what not, that you were paying off thru the refi, right? They’re cut early, maybe, but they are not sent out until the right of rescission is up on an owner-occupied refi. But, I’d sure like to see those other docs if possible.

  9. John, Really, I know the difference between a deed of trust and a warranty deed. These lawyers wrote it up as such.
    I can’t make it up! I know what a converted prom.note does, written on it pay to the order of and I have the lenders instructions givin to me this year from the title co Stating they will be given 2 certified copies of everything And NO money will transpire from this transation from them. I have a copy of the wired transfer-to which has nothing to do with the “lenders” on my closing papers, AND I was givin ALL the written checks(15 of them) that paid off all of the entities BEFORE we showed up to the closing. I have 10 different docs on public records starting after changing the trustee. I have 2 of everthing on there including 2 trustee deeds
    We had the epitime of the worst scammed sub-prime that’s been written about. So really, when you say “won’t”?-Remember who we’re dealing with.

  10. @abby – I only read the summation. But it’s noteworthy that the
    complaint calls those notes NON-negotiable instruments. Maybe Chase did what it’s accuse of. I just hope those guys (someone – finally) has more than speculation for the court that those loans which didn’t make it into trusts were re-packaged and sold to new investors, for instance. Sort of what I think happened on the subprime refi’s anonymous talks about, only in his deal, some of those loans did make it and had or may have had o/s obligations to the first set of suckers but were re-packaged and re-sold to a second set of suckers. I would love to see this case succeed because they all do it imo, at least as to dummying up ‘evidence’ of interest. Be very interesting to see if the suit dodges dismissal or SJ.

  11. @anonymous – do you think that ‘new’ information of the act and opinion must be given in a new NOD if a NOD and a Notice of trustee’s sale were issued, in say, 2009? The bankster, of course, will argue against.
    Now as to the general stale-ness of info in a NOD which did contain the mandatory information / disclosures, if a party did not foreclose for whatever reasons for, say, a year after the NOD, (and it may be necessary to separate the lender’s choice from inability to f/c as a result of borrower’s stay in bk or something else) does anyone think a NOD with non-stale figures should or must be provided? Or does anyone think the law will hold you got one and that’s all you’re getting in any scenario – “lender’s choice” or “bk-stay” or injunction?




  13. @colleen – Not sure what you mean. A mtg broker’s name wouldn’t be on a warranty deed – that’s your deed from the seller. Didn’t we pay what? The note? No, I’d say we didn’t. Doesn’t mean someone else didn’t though (mtg insurance on your loan,pool insurance, cdw’s, what not) Sorry – I don’t get the part about the alonge and something showing the note paid.

    I just realized the doc (I see now it was called a “letter” ) allegedly provided by the “lender” in that NV case in lieu of information in the NOD couldn’t be one of those monthly statements because those don’t provide or give notice of any dates / deadlines (at a minimum) as required. So if your NOD does not contain the mandatory info and you know the alleged lender didn’t give it to you (and how would that have been?), your NOD may well be fatally defective. And of course I don’t know how other courts will rule on anyone other than the trustee providing that info in the dot. We need to look at that lousy word at para 22 in the MERS dot. WHO is the “lender”? The trust? WHO?
    Not the servicer. The servicer could prob get away with having given it to you IF the servicer could demonstrate either poa or an agency with the lender. Well, that’s not gonna happen imo because there isn’t any such thing with those people. But that is sure as heck what they would try, if they try at all. Or they will say it’s part of their servicing ‘duty’. But if anyone other than a trustee in the NOD can provide the mandatory information, including cure dates,
    the dot and non-j f/c has become a mockery of its intended privilege. I still think everyone should examine their NOD’s very carefully (and compare to your dot). I mean, does yours say MERS is owed the debt obligation, like one I saw? The trustee? Missing mandatory info? This might be where we find some concrete paths to sustaining wrongful f/c actions. That is, until courts recognize the
    entirely fraudulent nature of all these foreclosures.

  14. John Gault. I like where you are going with this NOD,
    Yes, I agree. Great research JOHN!!
    I recently learned of # 23 when chas 404 said, Let’s look further into the mortgage contract itself!- ALSO GREAT idea
    I recently learned of # 23, the one right next to it saying, Release-
    Upon payment of all sums secured by this security agreement, the lender shall provide a release of this security agreement instrument to borrrower or borowers agent in accordance to applicable law.

    Well, didn’t we “pay” it?-On my warranty deed it shows the mortgage brokers name with “pay to the order of” on it as the notes
    “allonge” also states-stamped pay to the order of- It WAS paid. They never gave us our release back-Breach of fiduciary duty! For offensive messures-too. What do you think?

  15. I said the assignments needn’t be recorded until there is action, essentially. Recorders offices, states, (I forget!) don’t agree and I wouldn’t argue with them. Their premise is that those are transfers to which some agency or arm of gov. has a right to a fee / taxation.

  16. @anonymous – I have been putting reading the tila amendment as well as the opinion off. At least I don’t think i read them yet!
    What I am really working on today, for one, is if a NOD (MERS related- no disclosure of anyone just the usual successors and assigns) were issued a long time ago without foreclosure and foreclosure is now coming up, under what if any conditions must a new NOD go out?
    If the (alleged) creditor has changed? The figures disclosed in the old NOD are so stale as to render them not a disclosure? Must any changes to law since the old NOD was issued be in play, and require a compliant new NOD to be generated?

    Just briefly – years ago only mortgages were used and they required judicial foreclosure. Lenders didn’t like this, found it cumbersome, so they lobbied for the dot (non-j f/c) with the trustee (who was sold to the legislators as a neutral party, if not a neutral party with a fiduciary to the ben and the borrower). The idea sold to get non-j f/c was that someone would be looking out for the borrower when judicial foreclosure was now being avoided by way of the new instrument, the dot, and that party was the trustee. The dot grants either equitable or legal title to the trust to be held for the beneficiary til the loan is paid off. It gives the trustee the right to foreclose upon default after some conditions are met. A dot is a title transfer and those must be in writing pursuant to the statute of frauds. That’s why I say all assignments must be done even if not concurrently recorded, and I think that’s the reason the legislation had one form or another pass in a dot – so that the s of f will control and require written assignments of beneficial interests in real property. MERS might be able (had their dot been written correctly which it wasn’t) to be a pubic record placeholder for its members only, but no action or enforcement of an assigned dot may take place prior to the recordation of that assignment. What I’m saying is the assignment needn’t be recorded UNTIL there is reliance on the assignment for foreclosure or for the assignee to otherwise assert its rights. There must be Notice of that interest to the borrower and the public (which is a purpose of recordation).
    Okay, so now we’ve got a dot with a trustee to act and carry out the provisions of a dot and this requires the trustee, the neutral third party, to do certain things. One of those things is a proper NOD.

    Now, relying on the language at paragraph 22 in the dot, the court I cited yesterday said the “lender” in lieu of the trustee could provide mandatory information to the borrower, information which heretofore must be provided by the trustee in the NOD. You know those monthly statements everyone gets upon alleged default, probably from the servicer? Is it that which was the information the court said stood in place of its recitation in the NOD? (I couldnt’ see what was provided) That’s what the dot’s now say – the “lender” must provide this info. Where did that language come from – how did it make its way into a dot? Is it only in “MERS” dots? That wouldnt’ surprise me.
    What’s going on here is that the group which lobbied hard for the dot and thus the privilege of non-j f/c is eroding the intent and the legitimacy of non-j foreclosure – they are cutting out the trustee. First of all, today’s trustees are acting as the minions of who-knows-who.
    The trustee, a third party, is supposed to verify the default and significantly, this includes the figures of the (alleged) default. The trustee must ascertain that he acts for the proper party. None of that is going on. If a lender may provide “default” figures itself with no oversight, there is no longer a deed of trust. There is non-j foreclosure without the protections for the borrower the lenders warranted would be in place to the legislation to get the deed of trust for non-j foreclosure. If anything else had been the intent of the legislation, there would be no trustee and no deed of trust. They would have just said “okay, we’ll skip judicial foreclosure and you lenders have at it when there’s default.” But that is not what was said and agreed.
    I don’t know how to combat this horrifying erosion other than to remind the judiciary of the inequity of going around the safeguards which were to be a part of and the intent of the use of non – j foreclosure. First of all, they’d have to bone-up on the legislative history of the dot. I think it’s going to take a change in the law back to that legislative intent and in the meantime, try to “encourage” courts to act on the legislative intent.
    At any rate, our NOD’s still warrant our review to see what mandatory information is missing, making them fatal until and unless shown otherwise.

  17. “Money and Power: How Goldman Sachs Came to Rule the World” written by William Cohan http://presstv.com/Program/221516.html
    Does it discuss that the all banking is owned by the Rothshchilds

  18. John Gault. I like where you are going with this NOD and who the heck the true creditor is.

    I am just homeowner but WF/FNMA refuse to answer that after being sent QWR and threatened under useless Dodd/Frank new TILA disclosure reg.

    I was thinking along the same lines that they are in breach of mortgage contract under paragraph 22 bec it lists old defunct originator’s address.

    The servicer should at the very least show that they have the authority via FNMA of the true creditor. They refuse.

    I think this sets them up for a failed NOD and allows my lawyer to say to the judge look my client has not been able to negotiate or mitigate losses with the true creditor under terms of the mortg contract.

    Need to ask him.

    I am on board with securitization revelations but as a real estate developer and businessman I think the way to beat/stall banks is via the mortgage contract and contract law. I think Judges will understand issues like these. Who the heck are the parties in this mortgage contract, Judge? You can’t begin to enforce a contract when you have Joe Homeowner (me) in same address listed in paragraph 22 and the ‘bank’ with defunct NYC address that my certified mail came back unanswered and a WF servicer that takes 6 months to answer 3 QWRs and says you can contact FNMA but neither of us will tell you who the creditor is ie “go pound sand”. Need 2 parties to a contract. Need to prove damage to one party. I understand standing and beneficial interest just using layman’s terms to get my head around something simple.

    By not providing address in paragraph 22 and/or having a responsive servicer I feel they are in breach of contract and/or can’t move onto NOD.

    I hope I am setting them up by having certified mail QWRs asking for communication.

    Let’s look further into the mortgage contract itself! Great post.


  19. @ anonymous, hold on one sec, do you mean to tell me that are upstanding banks are trading insurance contracts (unregulated) and creating a market spread, which is controlled by nothing other than S&P, Moody’s and Fitch ratings? I am a former ROP, and can tell you one thing whether traded OTC or not, None of them are securities instruments, they are all derivative contracts. It is kinda like betting on the “Come”.

  20. 007

    Been smelling the coffee for a long time. Coffee is so old — it really stinks, but it stills keeps brewing.

    iwantmynpv, — synthetic swaps are not securities either.

    johngault — yes, this has been held for quite some time. But, since subprime “loans” were already in default before the subprime refinance, servicers were debt collectors from the onset. Just not telling you this.

    As to the NOD, federal law preempts state law when there is a conflict. Does the NOD include creditor contact information as required by the TILA Amendment and the Federal Reserve Opinion, now Rule, as to creditor definition?

  21. @ Anonymous, it is not the swap itself, it is the synthetic swap they all want to avoid. Sorta like reinsurance.

  22. @johngalt ,

    What would you think of a NOD where the plaintiff came into court with a photoshop so bad that they accidentally did a “mirror image” on the borrowers name and address info. 🙂 I’m fighting one of those…

  23. off topic, but

    @anonymous – Under Montgomery v Huntington Bank , ‘a creditor,
    a mtg servicing company, and an assignee of a debt’ are subject to the fdcpa if the debt were in default when assigned. Thought it might interest you……? This case was cited in a fall, 2011 DC decision, so I would think it is still good.

    I found it researching deficient Notices of Default. This is from NV:

    ” b. Improper Foreclosure Under the DOT

    i. Paragraph 22 of the Deed of Trust

    The question remains whether foreclosure was improper under the
    terms of the DOT. Paragraph 22 requires (in all bold print) that
    prior to acceleration of the loan following default, the lender
    must notify the borrower of default, action required to cure, a
    date at least thirty days thereafter by which to cure, and that
    failure to timely cure may result in acceleration…..
    The NOD instructs Plaintiff: “NOTICE. You may have the right to cure the default. . . . To determine if reinstatement is possible and the amount, if any, to cure the default, contact: [ASC’s address and telephone number],” (id. 2). This is not sufficient to satisfy the requirement in paragraph 22 of the DOT that such information be directly provided to the borrower. Under the plain language of the DOT, the lender bears the burden of providing certain notices concerning default and cure to the borrower. The borrower does not bear the burden of seeking out the information.”

    Everyone should look at their NOD’s to see what’s missing.

    Failure to provide this info to a borrower is fatal to a NOD (although this judge said the lender could have provided it directly – bah!) and I would think consequently to a foreclosure. This judge agrees because he wrote this under “(b) Improper Foreclosure” as to the missing info in the NOD.

    The reason I was looking at this stuff is that I came accross two NOD’s (MERS-related) wherein the substitute trustee claimed the DEBT was owed to MERS: (everyone should look at their’s)

    “Joe Smith executed a dot dated blah blah to secure certain obligations in favor of MERS…….Said obligation including ONE NOTE FOR THE ORIGINAL SUM OF blah blah $$$$.
    These guys are crooks. I found one two weeks ago where it says the obligation is owed to the trustee! None of these three NOD’s meet the requirements as set out above. Your’s might not, either.

  24. “That’s all it takes to create, out of thin air, a whole new generation of suckers and greater fools.”

    Money is what’s being created from thin air.

    “History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance.”
    -James Madison

    “Banks lend by creating credit. They create the means of payment out of nothing. ” Ralph M Hawtry, former Secretary to the Treasury.
    “… our whole monetary system is dishonest, as it is debt-based… We did not vote for it. It grew upon us gradually but markedly since 1971 when the commodity-based system was abandoned.” The Earl of Caithness, in a speech to the House of Lords, 1997.

    “It is well enough that people of the nation do not understand our banking and money system, for if they did, I believe there would be a revolution before tomorrow morning.” Henry Ford, founder of the Ford Motor Company.

    “The modern banking system manufactures money out of nothing. The process is, perhaps, the most astounding piece of sleight of hand that was ever invented. Banks can in fact inflate, mint and un-mint the modern ledger-entry currency.” Major L L B Angus.

  25. anonymous wake up and smell the coffee

  26. Derivatives are not securities. They are contracts. We are discussing “investor’ contracts — not securities.

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