Zombie Banks – Economic tsunamis and gold at the bottom of the ocean

Despite all the surrounding fanfare, the stimulus package and housing plan introduced by Congress and poignantly trumpeted by President Obama on national television have arrived on the battlefield with a truckload of supplies long after the The battle has spread to the surrounding slopes. Thanks, but we needed these things a long time ago, we’re talking years ago. The number of victims that these bandages can help now is much less than the number of injuries to come.

Most importantly, the supplies in the truck do almost nothing to stop the real cause of all the bloodshed.

Congress has crafted this plan from mainstream party agendas (investment and tax cuts) guided by mainstream banking pundits who are very careful not to point out who has really been killing bystanders. The reason it won’t work is because it doesn’t address the rot at the foundation of the financial system.

Many different fingers have been pointing at the lack of regulation, or the micromanagement of interest rates, or the subprime debacle, or the hedge fund orgy, or the lack of a real free market. But the real cause is much more basic: fraud, systemic fraud on a massive scale.

Fraud exists far beyond the level of Bernie Madoff, everywhere. The system collapsing in front of us revolved around system-wide lies: fraudulent loans, fraudulent rating systems, fraudulent balance sheets, corrupt regulators, fraudulent investment vehicles, topped off by corrupt government guidance and supervision.

Fraud exists even in the vision, generated for public consumption, of what money is, what debt is, what banks do, what a deposit is, what credit is, the integrity of where the money goes, who receives and who does not. you and why

Insolvency, fraud and off-balance sheet gibberish

Despite Obama’s insistence in his speech to Congress, the central issue is not the need to reactivate lending. We are already drowning in unaffordable levels of debt. The very concept of “credit” and “debt” and the fraudulent terms by which they now exist must be completely redesigned.

The debt problem at the center of the mess is an outgrowth of the much more fundamental problem of fraud.

This is just one small example: Citigroup sent letters to clients(1) in California last March warning clients that their adjustable-rate mortgages were likely about to go up, so clients should secure a better deal now and buy a new fixed-rate mortgage. Meta Citigroup lied. The ARM rates of these particular customers were about to drop. The threat did not exist. This is fraud, people. Citigroup was taking advantage of people who didn’t have their mortgage numbers and an actuary close at hand.

That kind of misrepresentation is just one small example of the pervasive insincerity in the financial industry.

The first “bailout” essentially served as a massive giveaway doled out in bonuses to top executives or hoarded desperately. These banks never intended to lend taxpayers money to “save the economy.” I wouldn’t doubt that Paulson knew. He also wouldn’t doubt the banks refusing to tell anyone where the bailout money went because they aren’t anxious for the public to find out how much of the billions went straight into their pockets.

Even now, the nation’s largest banks are stashing their trillions in toxic “assets” off their balance sheets as they seek to extort the government for more taxpayer money.

Fraud at this level has been the way of financial business. As Mish Shedlock points out, it is never practical to tell the truth.


It is NEVER “practical” for the Fed, the SEC, the banks, CEOs in general, the FDIC, Congress, the Treasury Department, or the President to tell the truth. This is what it all boils down to: Somehow, it’s never “practical” to stop a credit-financed drunken orgy, but when the party is over, it’s never “practical” to discuss the consequences. In this case, the credit binge lasted so long, and there were so many players, that the most important truth right now that needs open and honest discussion is that the entire US banking system is insolvent.

Mish and others have been pointing out for months that many (probably most, possibly all but a handful) of high-profile banks are undead banks: zombie banks that are being defibrillated into life solely by expected injections of public money.

To deal with this monster of fraud, and Congress will soon be forced to do so, they will have to travel to govern unknown landthose unknown waters where pirates and sea monsters lurk.

To have any hope of reaching the far land of recovery, Congress, or a verifiably independent appointed body (or an unanticipated act of God), will need to root out fraud at the highest levels of banking, finance, and the regulatory industries. That exercise will undoubtedly lead to uncovering fraud within their own parties and their own supposed ideologies.

Here are dragons indeed.

Congress will venture into these waters only when compelled by the reality of the conventional plan’s futility, combined with the sheer insistence of the American people, along with, perhaps, the Force Majeure of the international disaster.

This stimulus plan, however, was a necessary step, if only to show that the standard playbook should be thrown out the window. Mish and Minyanville continues:


The government’s strategy is to play for time. it always is. Time allows you to slowly drain wealth from the poor/middle class and redistribute it to the rich who own the financial system. The Federal Reserve, the SEC and the Treasury Department are jumping through hoops trying to hide this fact, but their collective panic over bailing out the rich at the expense of the poor speaks the truth, even when they find it “impractical” to do so. . so.

Real Stimulus Idea: Replace Lies With Truth

Therefore, the people of the planet are being abused. That we have put up with financial abuse for so long speaks volumes about the patience of our souls. But we insist: no more. We are about to discard the system that only seeks to benefit from us and create one that really serves us.

The truth needs to replace the lies in every nook and cranny. Nothing less will work at this crossover. The conscience of the planet, of humanity, insists. I suspect Obama understands this, even as he needs to navigate murky and treacherous waters. His energy is calling in the right direction, although the necessary details are not yet in the plan.

giant ray of hope

As the transition to wholeness takes place, there is a great deal of anxiety and fear. The suffering is certainly real. I know as well as anyone that it is very difficult in today’s world to deal with a loss of money and have it not affect one’s sense of security, identity and ability.

Experiencing the loss of a home, and all the judgment, helplessness, and self-blame that can come with that event, can be devastating. The lifestyle we build around us can come to represent everything we stand for, everything we are. Being forced to give it up threatens our own sense of self.

But there is a great ray of hope here amid the crumbling pylons. Because at the bottom of the ocean, as the tide of money recedes, is where we can find the real gold.

The real gold is a sense of self that is truly independent of money.

For a long time, most people have strongly identified with money (or lack thereof) for their sense of security and self-worth (or lack thereof). This external yardstick is increasingly revealing itself to be not only a very poor measurement device, but also an unreliable security tool. Now we have the opportunity to choose a better one.

We have the opportunity to find the enduring gold within us: an inner connection to the intrinsic value of our humanity, our life force, our being.

We are seeing the truth that money, indeed anything external, is temporary. It is a poor and arbitrary measure of real value.

When a natural disaster strikes (the recent fires in Australia come to mind), those affected often tell interviewers that they are simply happy to be alive. The disaster has made them realize the greater value of their lives, rather than their possessions. Everyone collaborates, everyone helps each other.

Many are losing their homes and livelihoods now due to an economic tsunami. While the disaster is man-made, its magnitude is dragging many honorable people into the growing undertow. The broader truth here is certainly the same: there is far greater value in lives lived than in possessions lost.

It is wise to take definite steps to honor your life at this moment in time. Can you let go of the judgments and expectations of this moment and just get in touch with your sense of being alive and honor it? Can you extend this honor to others?

Each of us struggles from moment to moment to make this change to an internal measuring stick. Extend compassion, towards yourself and towards others. As we glimpse the gold within, we will see that each of us is, in fact, valuable beyond measure.

(1) See reference here

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