Where is all that money the banks took? Hiding in Plain Sight

Posted on March 15, 2013 by Neil Garfield

You’ll probably never get to this point in litigation but if you do, you’ll be glad you read this. Obviously there is a lot of talk about where all the money went. Right off the top the banks took some 20%+ off of the money that investors gave them to invest in mortgages. That is $2.6 trillion alone off of the $13 trillion in “mortgages” that were mostly defective or fabricated. Then add their profit from insurance and credit default swaps which might amount to on a nominal basis several times the original $13 trillion invested and we get an idea of how much money is being withheld from world economies including the United States.

The answer is that they are hiding it in plain sight and in conjunction with legitimate investments from many other investors and entities. They are putting it in the stock market, mostly, causing it to rise without reason, and to a lesser extent they are putting it into bonds. If someday someone traces the first dollar in from investors all the way through the convoluted fabricated system of what the banks called securitization and the rest of us know was a PONZI scheme, you’ll find it right in front of you listed in the Wall Street Journal.

And if you Google it, you’ll see that BofA’s security analysts agree that the Dow Jones Average and other equity indexes are not reflecting true economic activity. They didn’t get the memo to shut up and sit down. That is what happens when you are too big to fail — you are also too big to manage, too big to jail and too big to regulate. The complicity of regulators, auditing firms and others in this mess has yet to be determined but it seems likely that there will be suits and prosecutions against the auditing firms for taking management’s word for the data rather than testing it the way any first course in auditing 101 would teach future CPA’s. I do know, because I taught auditing classes when I was getting my MBA.

Where is the money that the bankers siphoned out of our economy? Hiding in plain sight in the equity markets. With societies in chaos and economies in tailspins around the world, somehow the equity indexes are reaching record highs and profits are being recorded that are clearly not conforming to economic activity that in some countries is at a virtual standstill or even declining.

Yet the equity markets supposedly are a measure of future earnings which magically appear, justifying the increase in stock prices. If I stole a few trillion dollars and I needed a place to hide it, I would invest it relentlessly in the equity markets and to a lesser degree into debt instruments.

The increase in the DJIA represents trillions in wealth increase — or it represents a deposit of ill-gotten wealth generated by the Wall Street banks and their co-venturers. With GDP so fragile around the world my conclusion is that economic activity around the world is not reflecting any support for the increase in expectations and increase in stock prices.

The banks cornered the market on money and had to decide where they were going to hide ill-gotten profits that most people don’t understand, know about or care about. The obvious answer was, when they were holding trillions of dollars, where the dollar was in possible jeopardy, was to put the money in equities on a slowly increasing relentless purchase of stocks and bonds.

Stocks are measured in numbers of shares rather than strictly dollar denominated accounts. This allows the holders of equities to sell in any marketplace converting the investment into any currency of their choice, potentially avoiding the negative impact of a sudden devaluation of the type that made George Soros so rich.

Undoubtedly this logic has not escaped other legitimate investors and investment managers. Thus the bull market effects produced by the underlying floor of bankers’ purchases of equities is hidden under an increase in legitimate buying. It is a perfect plan as long as receivers are not appointed over the mega banks and dollars are traced to their origin and destination.

If things seem upside down when you turn on the news, now you know why. It is still hard for people to wrap their head around this proposition. All anecdotal evidence which is now so extensive that it almost qualifies as a scientific survey, points to at least 2/3 of all mortgages being fatally defective as perfected liens, unreported compensation on loans (that the banks say were charged against investors) is present in nearly all loans of every kind where a claim of securitization is present, and bank profits and capital have continued to rise even though as intermediaries, they should be making less money because there is less economic activity in a recession or stagnant economy.

That money in the mega banks is our money — taxpayers, shareholders of insurance companies, shareholders of guarantors and co-obligors, investors who advanced the money the homeowners who put up their homes as collateral on non-existent or defective transactions in which the loan and property were intentionally inflated in value. The extra money in those deals were funneled into off shore accounts and transactions that were never taxed by agreement with the jurisdiction in which the the transactions were cited as taking place even though it all happened in the good old USA. I have seen the document where Bermuda accepted the jurisdiction over the transaction and agreed not to tax it.

Although this is my opinion for general information purposes, I feel comfortable sharing it with the public  because I have enough facts from current events and enough experience from my own past experience on Wall Street to be confident that the above rendition is true. Once again I remind readers that the legal consequence of these practices might vary from state to state and even between judges in the same district. Federal and State courts are likely to treat these presentations differently as well.

And just because you are right, doesn’t mean you can prove it or win. So it is imperative that you consult with an attorney who knows all the facts of your case, is familiar with securitization and is licensed in the jurisdiction in which your property or domicile is located.

Premarkets: Dow defies gravity, S&P nears record
http://money.cnn.com/2013/03/15/investing/premarkets/

Senate “Whale” Report Reveals JP Morgan as a Lying, Scheming Rogue Trader (Quelle Surprise!)
http://www.nakedcapitalism.com/2013/03/senate-whale-report-reveals-jp-morgan-as-a-lying-scheming-rogue-trader-quelle-surprise.html

Goldman partner Barg moves to New York from Asia in new role
http://www.reuters.com/article/2013/03/15/us-goldman-barg-idUSBRE92E0CS20130315

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: , , , , , , , , , | 37 Comments »

Fixing the Housing Market So It’s Safe to Buy or Hold

Posted on August 27, 2012 by Neil Garfield
Reality in Iceland: prosecution and letting the chips fall to the table
August 27, 2012. Neil F Garfield. Mainstream media and in particular Krugman and Ritholz have echoes what Simon Johnson and I have been saying for years. It’s not a question of theory or ideology. It’s a question of reality.
Citizens of Iceland were not in the least bit interested whether the “conservatives” or the “liberals” had compelling ideological arguments. They wanted jobs, economic stability, and decent prospects and opportunities. Citizens of Iceland were not interested in the concept of change or even change in government.
They wanted their society fixed, after being used and thrown under the bus by Wall Street using Icelandic banks as a conduit for international exchange of derivatives that turned out to be worthless. The Banks tried throwing Iceland under the bus, but Icelanders defied the power and wealth of the world’s largest banks and executed simple policies that followed the advanced thinking and analysts all over the world, past, present and future.
Bill Clinton was asked by many how he managed to take an ailing economy and turn it into a booming source of innovation with giant government surpluses. His answer was “arithmetic.” When I was a security analyst and investment banker on Wall Street the primary theme was that before investment, underwriting, or performing any act or making any decisions we had to start at the beginning — the fundamentals. Money may be hard to define but it is easy to measure.
At the end of the day if you taken more real money than you have spent, then you have more money at the end of the month. If some thief steals from you, your wealth drops. If someone claims to own your property and doesn’t own it, your wealth remains unchanged — but Wall Street, bucking the obvious proof in Iceland, says otherwise.
Wall Street says they can “borrow” the identity of homeowners and use it to create the equivalent of bank notes that can be accepted as cash equivalents as long as they dress it up with triple A ratings, and insurance companies that cannot pay for the loss and wouldn’t even if they could because the offer to buy the credit default swap, the insurance and other hedge products were based upon blatantly false premises.
Iceland simply did arithmetic and they continue to do arithmetic. They are reducing household debt, letting creditors suffer the risk of loss that was part of their contracts but now they don’t like their contracts. In Iceland too, the Banks demanded bailout money to save the financial system. But Icelanders rejected that on both legal and moral grounds.
They were not going to reward the perpetrators of fraud tooth further detriment of their victims, they would prosecute them and punish them for breaking the key laws and premises of a stable society — accountability to and for the truth.
They were not going to further burden the victims of the crimes with taxes to reward the perpetrators and their counterparts, they were going to provide as much restitution of wealth as possible and necessary to stabilize an economy that was crashing.
The financial system did not crash and burn as Wall Street had sternly predicted to the Bush and Obama administrations in the U.S. With more than 7,000 smaller banks ready and waiting pick up the pieces. They did not debase their currency and their prospects by saddling future generations with the mistakes of remote greedy bankers. They took the money that existed and disregarded the fake money, the ” cash equivalents” created all over the world allowing the shadow banning system to collapse under it’s own worthless weight. Nothing bad happened.
What did happen is that Iceland now enjoys normal economic growth, sharply declining unemployment and underemployment and does not consider trading paper whose value is based upon false transactions to be part of a their GDP. Produce real goods and services while in the U.S. And other “advanced ” superpowers they have turned themselves into paper tigers. While financial services went from 16% of U.S. GDP before this mess, it now counts for half. Arithmetic: if those shadow banking transactions are worthless then our real GDP is 34% less than what we are reporting.
In Europe where they have their heads partially in our sand, they are trying to sit on two chairs with one ass. They too understand that nothing trumps reality but the people who run government here and abroad are simply making far too much money pretending that shadow money is real money. The real value of our stock indexes is around 7500 for DJIA.
The facts are that housing is still in the dumps even if some reports show “signs of life.” to allow Foreclosures to proceed when the creditor had an undocumented c,aim without any real mortgage lien is absurd, bit it is done everyday. It isn’t a matter of defective documents, it is a matter of no documents, while the banks stole the identities of the pensions funds and homeowners for their own personal Profit,  and buried the losses until they were done trading worthless paper. THEN they gave the “ownership” of the worthless paper and the loss to the investment funds that thought they had purchased them years ago under rules that were never followed by Wall Street.
The foreclosures must end because they are illegally based upon a chain of paper without any money transactions (consideration). The “completed” Foreclosures should be disallowed because the transactions on which they were based were void for lack of consideration wherein the signature of the homeowner was procured by fraudulent premises and promises.
The real money transactions should be documented and the real loan status should be disclosed so that homeowners and investors can come to reasonable settlements and modifications without regard to the consequences to Banks whose continuing fraud is causing the U. S. And Europe without applying basic emergency procedures to stop the bleeding.
The loans are not secured by perfected liens and the principal loan origination was outright theft from investor-lenders and homeowners. But they could be secured and people could pay for the real market value of the deal they were tricked into, if we simply go back and do the arithmetic — and play fair.

Iceland Did It Right … And Everyone Else Is Doing It Wrong
http://www.ritholtz.com/blog/2012/08/iceland-did-it-right-and-everyone-else-is-doing-it-wrong/

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Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: , , , , , , , , , , | 14 Comments »

The Long-Term Cost of the Mortgage Fraud Meltdown — The Real Legacy of Wall Street

Posted on November 12, 2009 by Neil Garfield

Editor’s Note: Why do I do this? Because we are delivering a message to future generations about how the world works contrary to our constitution and contrary to American values and ideals. Conservatives conserve nothing except the wealth of the fantastic few while the liberals liberate nobody from the yoke of economic slavery. Maybe it’s all a game. I won’t play and if you care about this country and wish to avoid a societal collapse, you should stop playing too.

History has shown us with grim clarity what happens to any country or empire when the power and the wealth gets so concentrated in just a few people while the rest of the population can’t keep a roof over their head and can’t eat food and can’t get medical care, all hell breaks loose. Galbraith, IMF economists, World Bank economists, all know what is going to happen do to our failure to police our own, our failure to make it right and our failure to make amends to our allies or would-be allies.

Children are learning an important lesson: in their world, Mom and Dad are powerless to prevent the worst things from happening and there is nobody else they can depend upon. A whole generation is growing up with the notion that the American Dream is an unknown, unknowable fantasy. Every time the far right asserts personal responsibility in the face of a wretched fraud committed on most of the country, they close the gate a little more, waiting for the final slaughter. Every time the far left wimps out on their own paltform, the one the people elected them on for CHANGE NOW, they deceive and abandon our citizens.

And so we are a Prozac nation because everyone is depressed. We are a Xanax nation because everyone is so stressed out we can’t think straight. And those of us who are entering our twilight years see a future where our children and grandchildren and their children will lead bleak lives of quiet desperation in a country which proclaims free speech and assembly but has surrendered that basic right to about 100 institutions that control the lobbyists who control the flow of money in Washington and state houses.

In April, 2007 stocks were up, confidence was high and everyone had been convinced that all was well without questioning anything. Meanwhile in the inner recesses of the Federal Reserve and halls of power of the executive branch and the U.S. Department of Treasury in particular, they knew the collapse was coming and the only reason they did nothing was political — they didn’t want to admit that the free market was not working, that it wasn’t free, that it was controlled by monopoly and oligopoly, and that the government wasn’t working either because we the people had allowed people to get re-elected despite their sell-out of our countries and our lives.

In I did some very simple calculations and determined that the DJIA was not actually worth 14,000, it was worth 8,000. As it came down, more stumps revealed themselves as the high water receded. The equities market is overpriced by about 25%-30%. Housing is still inflated by 15%-20%. Nobody wants to hear this. The dollar is in a swan dive because everyone in the world knows the reality except the citizens of the United States of America where we have a “free press” that would rather entertain us than actually tell us the news.

I’m doing my part. What are you doing to end this catastrophe?

Job Woes Exacting a Toll on Family Life

THE WOODLANDS, Tex. — Paul Bachmuth’s 9-year-old daughter, Rebecca, began pulling out strands of her hair over the summer. His older child, Hannah, 12, has become noticeably angrier, more prone to throwing tantrums.

Initially, Mr. Bachmuth, 45, did not think his children were terribly affected when he lost his job nearly a year ago. But now he cannot ignore the mounting evidence.

“I’m starting to think it’s all my fault,” Mr. Bachmuth said.

As the months have worn on, his job search travails have consumed the family, even though the Bachmuths were outwardly holding up on unemployment benefits, their savings and the income from the part-time job held by Mr. Bachmuth’s wife, Amanda. But beneath the surface, they have been a family on the brink. They have watched their children struggle with behavioral issues and a stress-induced disorder. He finally got a job offer last week, but not before the couple began seeing a therapist to save their marriage.

For many families across the country, the greatest damage inflicted by this recession has not necessarily been financial, but emotional and psychological. Children, especially, have become hidden casualties, often absorbing more than their parents are fully aware of. Several academic studies have linked parental job loss — especially that of fathers — to adverse impacts in areas like school performance and self-esteem.

“I’ve heard a lot of people who are out of work say it’s kind of been a blessing, that you have more time to spend with your family,” Mr. Bachmuth said. “I love my family and my family comes first, and my family means more than anything to me, but it hasn’t been that way for me.”

A recent study at the University of California, Davis, found that children in families where the head of the household had lost a job were 15 percent more likely to repeat a grade. Ariel Kalil, a University of Chicago professor of public policy, and Kathleen M. Ziol-Guest, of the Institute for Children and Poverty in New York, found in an earlier study that adolescent children of low-income single mothers who endured unemployment had an increased chance of dropping out of school and showed declines in emotional well-being.

In the long term, children whose parents were laid off have been found to have lower annual earnings as adults than those whose parents remained employed, a phenomenon Peter R. Orszag, director of the White House Office of Management and Budget, mentioned in a speech last week at New York University.

A variety of studies have tied drops in family income to negative effects on children’s development. But Dr. Kalil, a developmental psychologist and director of the university’s Center for Human Potential and Public Policy, said the more important factor, especially in middle-class households, appeared to be changes in family dynamics from job loss.

“The extent that job losers are stressed and emotionally disengaged or withdrawn, this really matters for kids,” she said. “The other thing that matters is parental conflict. That has been shown repeatedly in psychological studies to be a bad family dynamic.”

Dr. Kalil said her research indicated that the repercussions were more pronounced in children when fathers experience unemployment, rather than mothers.

She theorized that the reasons have to do with the importance of working to the male self-image, or the extra time that unemployed female breadwinners seem to spend with their children, mitigating the impact on them.

Certainly, some of the more than a dozen families interviewed that were dealing with long-term unemployment said the period had been helpful in certain ways for their families.

Denise Stoll, 39, and her husband, Larry, 47, both lost their positions at a bank in San Antonio in October 2008 when it changed hands. Mrs. Stoll, a vice president who managed a technology group, earned significantly more than her husband, who worked as a district loan origination manager.

Nevertheless, Mr. Stoll took unemployment much harder than she did and struggled to keep his spirits up, before he landed a new job within several months in the Kansas City area, where the family had moved to be closer to relatives. He had to take a sizable pay cut but was grateful to be working again.

Mrs. Stoll is still looking but has also tried to make the most of the additional time with the couple’s 5-year-old triplets, seeking to instill new lessons on the importance of thrift.

“Being a corporate mom, you work a lot of hours, you feed them dinner — maybe,” she said. “This morning, we baked cookies together. I have time to help them with homework. I’m attending church. The house is managed by me. Just a lot more homemaker-type stuff, which I think is more nurturing to them.”

Other families, however, reported unmistakable ill effects.

Robert Syck, 42, of Fishers, Ind., lost his job as a call-center manager in March. He has been around his 11-year-old stepson, Kody, more than ever before. Lately, however, their relationship has become increasingly strained, Mr. Syck said, with even little incidents setting off blowups. His stepson’s grades have slipped and the boy has been talking back to his parents more.

“It’s only been particularly in the last few months that it’s gotten really bad, to where we’re verbally chewing each other out,” said Mr. Syck, who admitted he had been more irritable around the house. “A lot of that is due to the pressures of unemployment.”

When Mr. Bachmuth was first laid off in December from his $120,000 job at an energy consulting firm, he could not even bring himself to tell his family. For several days, he got dressed in the morning and left the house as usual at 6 a.m., but spent the day in coffee shops, the library or just walking around.

Mr. Bachmuth had started the job, working on finance and business development for electric utilities, eight months earlier, moving his family from Austin. They bought something of a dream home, complete with a backyard pool and spa.

Although she knew the economy was ultimately to blame, Mrs. Bachmuth could not help feeling angry at her husband, both said later in interviews.

“She kind of had something in the back of her mind that it was partly my fault I was laid off,” Mr. Bachmuth said. “Maybe you’re not a good enough worker.”

Counseling improved matters significantly, but Mrs. Bachmuth still occasionally dissolved into tears at home.

Besides quarrels over money, the reversal in the couple’s roles also produced friction. Mrs. Bachmuth took on a part-time job at a preschool to earn extra money. But she still did most, if not all, of the cooking, cleaning and laundry.

Dr. Kalil, of the University of Chicago, said a recent study of how people spend their time showed unemployed fathers devote significantly less time to household chores than even mothers who are employed full-time, and do not work as hard in caring for children.

Mr. Bachmuth’s time with his girls, however, did increase. He was the one dropping off Rebecca at school and usually the one who picked her up. He began helping her more with homework. He and Hannah played soccer and chatted more.

But the additional time brought more opportunities for squabbling. The rest of the family had to get used to Mr. Bachmuth being around, sometimes focused on his search for a job, but other times lounging around depressed, watching television or surfing soccer sites on the Internet.

“My dad’s around a lot more, so it’s a little strange because he gets frustrated he’s not at work, and he’s not being challenged,” Hannah said. “So I think me and my dad are a lot closer now because we can spend a lot more time together, but we fight a lot more maybe because he’s around 24-7.”

When Rebecca began pulling her hair out in late summer in what was diagnosed as a stress-induced disorder, she insisted it was because she was bored. But her parents and her therapist — the same one seeing her parents — believed it was clearly related to the job situation.

The hair pulling has since stopped, but she continues to fidget with her brown locks.

The other day, she suddenly asked her mother whether she thought she would be able to find a “good job” when she grew up.

Hannah said her father’s unemployment had made it harder for her to focus on schoolwork. She also conceded she had been more easily annoyed with her parents and her sister.

At night, she said, she has taken to stowing her worries away in an imaginary box.

“I take all the stress and bad things that happen over the day, and I lock them in a box,” she said.

Then, she tries to sleep.

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: , , , , , , | 16 Comments »

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