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Editor’s Notes:

The article below speaks plainly, although at some length about the role of money and the role of Wall Street, the need for regulation and where we should look for remedies for what ails our society.

While the author is entirely correct from a theoretical standpoint, the fact that corruption and abuse emanates from Wall Street is conveniently side-stepped. So I conclude that it is a planted article written by someone who understands too well what went wrong.

To begin with money is not merely a social construct with the sort of neutral value or nature that the author portrays. Money has become the dominant religion in America. In other countries the presence or absence of money is not nearly as important as the services and protection of government that the citizens expect. Here money has assumed a religious component in two respects — first, in order for it to exist and be useful, people must believe that the paper or numbers on their bank statement are real purchasing power and second, Americans have accepted a unique perspective on money extending far beyond the concept of respect for those who have made a lot of money. They are like gods above our laws and whose wrath is to be feared. 

The purchasing power of the dollar has been declining since the Wall Street scandal began. The can was kicked down the road a few times because the victims of Wall Street’s antics in Europe are reacting appropriately to the rug being pulled out from under them. So the dollar looked safer than the other currencies that are in chaos or transition now. But everyone knows that Wall Street caused this chaos, and they did it because our government pulled the referees off the playing field leaving only the bullies to make up their own rules. The religious fervor with which our policies are dominated by money and banking to the exclusion of services and protection of our citizens is appalling and precisely why the large banks must crash and be taken apart with pieces going to the real players in the banking system that do fit the description of banks in the article below.

Our failure to take responsibility for not regulating the banks and letting them into the rooms where the levers of power are pulled is precisely why the belief of everyone other than Americans who don’t trust the dollar or the U. S. will ultimately topple the dollar as the world’s reserve currency. And, when any credible alternative to the dollar emerges, everyone including rich Americans will flock to the new currency. It’s strictly business. The U.S. has so debased its currency, its economic foundation and its infrastructure for power, transportation and public safety that we don’t stand a chance.

Where other countries are wrangling with the problems of delivery of safety and opportunity to their citizens, the American government is still arguing about ” class warfare.” The discussion here is not on point and while Europe looks more chaotic now, they will look a great deal better later because they did deal with the real issues of people and the purpose of government.

Excusing Wall Street from lying, cheating, and corrupting our society and marketplace through the sorrowful and stern pronouncement that private banks have one goal which is to make money for their owners — begs the issue of the long term viability of any enterprise whose only goal is to make money. As the Citizens United case told us, corporations are fictions,  but they are legal fictions entitled to act like a legal person under the law. True enough. And people who commit wrongs are ordinarily held accountable for anti-social behavior. In America they are not held accountable and the victims are seen as bugs who should be squashed with every step.

Bullying, emanating from the power that we gave up when we started worshipping money, is how the regulations were removed, how the judicial system allowed millions of fake foreclosures to go through on the premise faked defaults, and why even the Massachusetts Supreme Court while admitting the wrongful behavior declined to apply it retroactively. Those who steal far less money are forced into making restitution to diminish the loss of their liberty. Here the loss of liberty is not on the table and restitution is thus left to innovative homeowners and attorneys who can outwit the new world order of money and property. 

The corruption of our title caused by MERS is a perfect example. The only valid way of handling  the situation is to void all MERS transactions. Instead we now have a hybrid of transactions laced with corrupted title and claims that are now sitting in the files of the county recorder’s office. So the choices we have are that we accept title as it is which rewards thieves, or we just convert our system to MERS and caveat emptor as to title. Either way we will never know the real status of our title or our mortgages. 

These things won’t happen in countries that see money as a vehicle or tool. And that fact is going to isolate the U.S. from the rest of the world. A marketplace where the certainty of transactions completed and the title is always subject to clouds or defects is a third world unstable country. Welcome to America, 2012 — unless we do something about it.

Misunderstanding Banking Is Bankrupting                 The Entire Society

Cullen Roche, Pragmatic Capitalism

Much has been written since the JP Morgan trading fiasco and the big Congressional hearing last week – some of it enlightening, but most of it confusing some of the basic elements about banking and money in general.  I was reading this piece yesterday on Bloomberg about the responsibilities and the “job” of banks.  It got me thinking about how badly people confuse the role of banks in our system.  So I thought I’d chime in.

Banks are, at their core, profit seeking establishments that serve as the lifeblood of a complex payments system in the monetary system.  Banks make a profit by having liabilities that are less expensive than their assets (well, it’s more complex than that, but let’s keep things simple here).   They compete for deposits and business by offering various products and services.  In the USA banks are almost exclusively owned by private shareholders (as in, not the government or public sector).   Like most other private profit seeking entities the goal of a bank is not just to service the smooth facilitation of this payments system, but to to make money for its owners.  Most of the time, these two functions do not conflict, but at times the risks banks take can indeed jeopardize the functioning of the system.  Despite all the bad press that banks receive the progress surrounding their various services have actually had a positive impact on the world (for the most part).  Bank accounts, credit cards, debit cards, investment services, business hedging services , etc are all elements that make the institution of money more useful and more convenient.  Seeing as money is a tool and a social construct it makes sense that banks have evolved products and services to help facilitate the ease of its usage (all in the name of competition and profit generation, of course).

But we have to ask ourselves the question again.  What is Wall Street’s job?  Wall Street’s job is simple.  It is to increase earnings for their shareholders.  It is not to provide jobs for the private sector.  It is not to make sure the US economy is running smoothly.  It is not to make sure you feel good about your day to day life.  It is to generate a profit for its owners.  This is the essence of private banking.  To generate a profit.  But banks play a unique role in our capitalist system.  I’ve explained before that banks are not the engine of capitalism.  They are simply the oil in the machine.  As the oil in our machine, banks must be functioning smoothly in order for the machine as a whole to be functioning smoothly.  So when big banks do bad things that threaten their well-being parts of the system begin to malfunction.  And sometimes when these mistakes are big enough the contagion leads to the entire machine malfunctioning and requiring a major repair (hello 2008!).

But make no mistake, your local bank is not your best friend or a public purpose serving charity.  For instance, when a bank extends a mortgage (a word literally meaning “death security pledge” from the latin root “mortuus” for death and germanic “security pledge”) they are not doing you some charitable service to help you buy your home.  They are rating your credit risk and evaluating you as a potential profit engine for their shareholders.  That might not be the most pleasant way to think about it, but it is what it is.  A bank is not a charity.  It does not really care if your mortgage results in jobs or happiness for you.  Of course, it would be great if this did because that might result in more future business, but the bank does not need these things from you in order to generate a profit.  It really just wants to manage its risks in a way that helps to generate a profit for their shareholders without excessive risk.  Obviously, the debtor finds the mortgage advantageous, but don’t confuse this service for charity work.  It’s just good old fashioned profit seeking and offering a service where one is needed (in this case, the debtor being able to obtain money they could not otherwise currently obtain).

The business of private banking is largely about risk management.  A good bank manages risk by understanding how the various business components threaten the stability of the overall bank and align with this goal of generating a profit.   And as we ripped down the regulations structuring the amount of risk these institutions can and cannot take (in addition to making the risk taking business more complex) we realized that banks just weren’t very good risk managers.  This is not surprising to anyone who has been around markets for a while.  Investors and people in general are irrational, inefficient and poorly suited to manage the risks associated with complex dynamical systems.  So, for some reason, we all seem shocked when these profit seeking entities take excessive risks and prove to be poor risk managers.  And since we would never blame ourselves (the home buyers for instance) we blame the banking institutions.  And we write silly things about how they’re not doing their “job” or how they’re all out to screw the whole world.  It’s just not that black and white.

From a social perspective, this is all an extraordinarily interesting discussion.  Money is a social construct and a simple tool that helps us achieve certain ends within our society.  But money is something that is to be earned within our society (or utilized by the government in a democratic manner that is in-line with our goals as a society).  So there’s an interesting reality at work within the banking system.  Banks, as loan originators, act as a way to obtain access to money for someone who has not yet earned money.  And in return, they are charged a fee for “borrowing” this money that is technically not yet theirs.  If there was no interest fee attached to loans the demand for this money would obviously be through the roof and it would render it worthless.  Likewise, if banks make credit standards too lax, fail to properly asses risks and make credit plentiful they can create an imbalance within the system (by lending to people who can’t service their debt) that threatens the viability of the monetary system through the risk of excessive debt, defaults and inevitable de-leveraging (as we’re seeing now).  In this world of “what have you done for me lately” and “get rich quick” (or more often, appear rich quick!) you have a messy concoction of borrowers who want their McMansion YESTERDAY and lenders who are willing to give you the money to obtain that McMansion TODAY so they can generate a bigger profit TOMORROW.

To me, none of this is a conflict though and does not mean the system, at its core is corrupted or failing.  Banks are private profit seeking entities who play an important role in our society, but are not public servants and should not be public servants (a government managed loan system would almost certainly be a disaster waiting to happen).  Obtaining money is a privilege, not a right.  And a private profit seeking banking system serves to regulate the ability to obtain money before one has necessarily earned it (though there are certainly instances, such as some forms of government spending, where money is rightly distributed by political choice).  But because banks deal in distributing the social construct that binds our society together we have a responsibility to oversee that money so as to bring the interests of these profit seekers in-line with the interests of society as a whole.  So to me, it is not the capitalist profit motive that is evil here.  Nor is it the greedy consumption driven actions of the borrowers that is evil.  These are crucial elements of a healthy functioning monetary system.

I think we need to recognize that money is a social construct that is to be protected by the society that creates it.  But we must also understand that, while private profit seeking banks are a superior alternative to a government managed loan system, these banks will inevitably be poor risk managers at points during the business cycle.  There is plenty of blame to go around for the current debacle that is the US economy.  Home owners were greedy in the run-up and the profit seeking banks were quick to turn that extra demand into higher earnings per share.  This production/consumption component is a healthy functioning part of the capitalist machine.   But when it involves the very oil that greases the engine we must understand that this is a component of the economy that requires great oversight and better regulation.  I fear we still do not have this despite the recent changes.  And the result is that this boom/bust cycle is likely to continue causing people to believe the very essence of capitalism is corrupted when in fact, it is the users and their misunderstandings who have abused the system.  In failing to properly oversee the institution of money we have allowed it to fail us.

In sum, it is the misunderstanding of the essence of money that is evil here, not the system itself.  We have misunderstood the essence of money as a tool and a social construct and how it relates to modern banking.  And in doing so, we have allowed both borrowers and lenders to abuse that social construct.  And with 8% unemployment and a floundering economy it is not just the banking system that appears bankrupt, but our society as a whole.  Better oversight of the institution of money might not be able to fix our current problems, but it can certainly ensure that future generations don’t have to suffer through these same events.


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Citizens United Threatens Independence of Judicial System — Tennessee Answer to Problem

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Editor’s Note: The New York Times editorial makes a good point. Many Judges are elcted and even those who are appointed are frequently appointed by elected officials. Having money pour into these campaigns from  banks and servicers, which is what is happening, will conform the worst fears of most citizens who are cocnerned about getting a fair hearing in court. It is difficult to be objective if the majority of your campaign money has come from the financial sector.

  • Remember the judicial system doesn’t actually guarantee justice of a fair result as you would see it. It is there to guarantee a fair hearing. You may think they are the same thing, but if you think about it, they are not the same.
  • This is why presentation and procedure is so important and that from the start you establish credibility — which means objecting to proffers of facts not in evidence and making it clear that you do not concede that the debt still exists, you do not concede that the debt is in default and you do not concede the standing or interest of the party seeking to foreclose or even settle, mediate or modify the loan.
  • That is why it is so essential that you obtain the COMBO Title and Securitization report, and you most probably should have the Loan Level Accounting report that frequently shows that the forecloser on the one hand is declaring a default and on the other hand paying the creditor curing the default. Adding the Forensic Loan Analysis (TILA+) may well pave the ground for damages, recover of attorney fees at an early stage to finance the rest of litigation and attacking the validity (not the existence) of the mortgage lien.
  • The issue is not whether you are right or wrong — a conclusion that is reached at trial. The issue is whether you can get into the CONTESTED factual assertions made by each side and to achieve the result of getting into the discovery stage. discovery. Once, there, most cases settle when the banks and servicers must come up with actual full accounting, actual documents and proof of transactions that referred to on fabricated transfer papers.

I think it is appropriate to ask the Judge in as non-threatening way as possible whether the Judge has any conflicts. Perhaps the question can be phrased that your client is concerned about the amount of money that is flowing into campaigns and the pension money that has been used to purchase what now appear to be worthless mortgage bonds or what may be valid bonds but worth far less depending upon the outcome of the cases that attack either the security instrument or the debt or the note supposedly evidencing the debt.

That way you are introducing the basic issues and at the same time you are asking the Judge to commit himself on record as to whether he has any conflicts or whether there is any relationship or investment which could influence his decisions.

If you are going to do that — and I recommend you do — make sure your client is there or it will seem that you are just using tactics or strategy. Whatever the answer, instruct your client to remain calm and passive.

The very conservative Tennessee Supreme Court has already recognized the problem and issued an order for automatic recusal (self removal by the Judge) where the problem surfaces.

A more interesting proposition is where the prosecutors are elected or appointed in the same way. Prosecutorial discretion (whether to prosecute or not) could undermine the criminal process. Remember that despite the efforts of the  newly constituted investigatory and prosecution units, the politics is running heavily in the direction of the banks despite the public outcry.

Perhaps the answer to all of this is to have retired Judges hear the cases and where appropriate appoint special prosecutors from the private sector.

A Reform for Fair Courts

New York Times Editorial January 28, 2012.

With rising special-interest spending in state judicial elections, there is an urgent need to protect judicial integrity from the flood of campaign cash. Tennessee is leading the way with a new rule prohibiting judges from hearing cases when campaign spending by lawyers or litigants raises a reasonable question of their impartiality.

Adopted earlier this month by the Tennessee Supreme Court, the recusal rule applies to both direct contributions and independent expenditures favoring a judge’s election. It requires judges to step aside when the level of campaign support raises a reasonable concern about his or her ability to be fair. Judges who deny a recusal request will need to provide their reasons in writing, and the final word on recusal will not be left to the challenged judge. The litigants will have a chance to appeal recusal decisions to the court’s other judges.

The United States Supreme Court in a 2009 case recognized the potential threat to public trust in the justice system posed by outsized campaign spending in judicial elections. But few of the 38 states that elect their top judges have tried to combat the problem with more rigorous recusal rules. If special interests knew their campaign spending would be likely to trigger recusal, they might not try as hard to buy up judges.

Tennessee’s good model should help prod court leaders in other jurisdictions to follow suit. Campaign spending problems have plagued judicial races in states like Illinois, Alabama and Pennsylvania. A sensible rule on recusal would significantly increase public confidence in judicial integrity.

AP: Hundreds Protest Citizens United Ruling At US Courthouses

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EDITOR’S NOTE:  I think this is a great example of how there are people actually standing up for the change that we the people, all claim we want.  Here they are protesting the new unlimited spending law in federal elections.  

This is something that affects all of us… yet how many of us got up off our sofas or even signed an online petition? We owe a debt of gratitude to these people willing to brave the elements and the police and challenges we can only imagine who have chosen to put their thoughts into action and make a difference.  Power to the People!  At least THEY get it.  THEY get that they can make a difference.  THEY get that their actions will educate, will plant the seeds of conversation and awareness that We the People CAN make a difference, if we want.  Thank you to everyone of them for their courage and conviction and chutzpah willingness to make a difference for all of us.

The Citizens United ruling was not just wrong, it was pernicious. It is merely one-step away from granting Corporations the right to vote. The concept is that the “legal person” status given to corporations and other business entities to facilitate commerce can be used to claim other rights under this legal fiction. As a legal person, the corporation is now allowed to use its economic strength to affect political process in our elections. Even foreign corporations that control domestic companies will have the right to invade our process without any restrictions.

by Meghan Barr, Associated Press

NEW YORK — Facing freezing temperatures and snowy weather, several hundred protesters gathered at courthouses across the nation Friday and some clashed with police as they protested a landmark U.S. Supreme Court decision that removed most limits on corporate and labor spending in federal elections.

In Washington, D.C., 11 people who got into confrontations with police were arrested on the courthouse steps and on the plaza, while another person was arrested inside the courthouse for unlawful entry. A crowd of about 100 protesters gathered on the sidewalk outside the court’s 1,300-pound bronze doors, which were shut on account of the protest, chanting: “Whose steps? Our steps.”

Earlier, demonstrators wearing black robes and pretending to be Supreme Court justices sang songs mocking the Citizens United ruling on the Capitol lawn.

Occupy Wall Street activists joined forces with Move to Amend, a grassroots coalition that organized the event in more than 100 cities, though the turnout in many places was low. In some cities, fewer than a dozen protesters showed up. Protesters said they were kicking off petition drives in support of a constitutional amendment that would overturn a 2010 court ruling that allowed private groups to spend huge amounts on political campaigns with few restrictions.

In San Francisco, where a couple of hundred protesters gathered in the city’s financial district, at least 11 protesters were arrested after chaining themselves to the front doors of Wells Fargo’s corporate headquarters. Others linked arms to prevent people from entering a Bank of America branch.

Many protesters spilled into the streets as police in riot gear and private security guards tried chasing them off. Two cable cars came to a grinding halt as protesters took over an intersection, and traffic in some places had to be rerouted or came to a complete standstill.

In Boston, fife and drum music played as protesters rallied at the federal courthouse. Some protestors even dressed their dogs in pinstripes and red ties, saying that dogs should be able to vote if big businesses basically can.

A demonstration of about 100 people outside the federal courthouse in Minneapolis included chants and street theater. One skit included a judge who performed a marriage ceremony between a person and a corporation.

About 50 people braved blizzard-like conditions in Chicago, waving at passing cars and chanting, “Money out of politics.”

In Cleveland, about 40 to 50 protesters in hats, hoods and gloves held a morning vigil outside the Metzenbaum Federal Courthouse, followed by a march through downtown streets. During the march, paper $50 “bills” were taped over the mouths of ralliers.

About two dozen protesters drew occasional honks from passing drivers as they stood outside Baltimore’s federal courthouse with signs that read: “Corporations are not people, Money is not speech,” and “B-heard: Corporate money out of politics.”

In Albany, about 50 demonstrators carried placards and a cardboard coffin labeled “Democracy RIP.” And several dozen protesters in Denver went inside the Capitol to meet lawmakers after the protest.

But in St. Louis, just four people showed up for a planned gathering outside of City Hall. They hung around for several minutes before leaving without a rally. Those who did attend blamed the frigid weather — blustery winds and temperature in the low 20s — and an apparent lack of communication.

It was a far cry from Occupy protests in the fall, when hundreds gathered around the clock at a small downtown park near Busch Stadium.

“Back in October it was easy to find out what was going on,” said 51-year-old Don Higgins of St. Louis. “You just went down to Kiener Plaza and asked somebody.”

The turnout was similarly small in Indianapolis, where protester Ken Chestek, a professor at Indiana University’s McKinney School of Law in Indianapolis, lamented the fact that only 15 people showed up for a demonstration against Citizens United v. FEC.

“When I heard the Citizens decision announced on NPR two years ago, I started screaming, ‘This is the end of the republic,'” he said. “To give corporations political power, that’s the end of democracy.”

 

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