Citicorp – The Burning Platform

IS THE U.S. BANKING SYSTEM SAFE? – 15 YEARS LATER

“We’ve got strong financial institutions…Our markets are the envy of the world. They’re resilient, they’re…innovative, they’re flexible. I think we move very quickly to address situations in this country, and, as I said, our financial institutions are strong.” – Henry Paulson – 3/16/08

“I have full confidence in banking regulators to take appropriate actions in response and noted that the banking system remains resilient and regulators have effective tools to address this type of event. Let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out . . . and the reforms that have been put in place means we are not going to do that again.” – Janet Yellen – 3/12/23

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With the recent implosion of Silicon Valley Bank and Signature Bank, the largest bank failures since 2008, I had an overwhelming feeling of deja vu. I wrote the article Is the U.S. Banking System Safe on August 3, 2008 for the Seeking Alpha website, one month before the collapse of the global financial system. It was this article, among others, that caught the attention of documentary filmmaker Steve Bannon and convinced him he needed my perspective on the financial crisis for his film Generation Zero. Of course he was pretty unknown in 2009 (not so much anymore) , and I continue to be unknown in 2023.

Continue reading “IS THE U.S. BANKING SYSTEM SAFE? – 15 YEARS LATER”

UNDERESTIMATING THEM & OVERESTIMATING US

“Do not underestimate the ‘power of underestimation’. They can’t stop you, if they don’t see you coming.” ― Izey Victoria Odiase

During the summer of 2008 I was writing articles a few times per week predicting an economic catastrophe and a banking crisis. When the biggest financial crisis since the Great Depression swept across the world, resulting in double digit unemployment, a 50% stock market crash in a matter of months, millions of home foreclosures, and the virtual insolvency of the criminal Wall Street banks, my predictions were vindicated. I was pretty smug and sure the start of this Fourth Turning would follow the path of the last Crisis, with a Greater Depression, economic disaster and war.

In the summer of 2008, the national debt stood at $9.4 trillion, which amounted to 65% of GDP. Total credit market debt peaked at $54 trillion. Consumer debt peaked at $2.7 trillion. Mortgage debt crested at $14.8 trillion. The Federal Reserve balance sheet had been static at or below $900 billion for years.

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THE DAY THE SPINELESS FASB ACCOUNTANT WEENIES AGREED TO ALLOW WALL STREET BANKS TO REPORT FRAUDULENT FINANCIAL STATEMENTS

The captured corporate MSM is celebrating the six year anniversary of when the stock market bottomed in March 2009. They will spin a false narrative of Bernanke, Obama and Geithner saving the world with TARP, QE, and the $800 billion Porkulus bill. What great heroes. Bernanke now gets $300,000 for a lunchtime speech at Bank of America gatherings. He is raking in north of $10 million per year now. He made $200,000 per year as the Fed Chairman. His wisdom must be on par with Jesus Christ to get $300,000 for a one hour speech. Bernanke’s Sermon on the Mount tour:

The millions he is getting paid by the Wall Street banks for speeches isn’t a payoff. Right?

Bernanke and Geithner stopped the market from falling in March 2009 by threatening the accounting geeks at the FASB and forcing them to allow fraudulent reporting by the insolvent Wall Street banks. The crisis ended – precisely – on March 16, 2009, when the Financial Accounting Standards Board abandoned FAS 157 “mark-to-market” accounting, in response to Congressional pressure from the House Committee on Financial Services and threats from Bernanke and Geithner on March 12, 2009. That change immediately removed the threat of widespread insolvency by making insolvency opaque. Mark to fantasy was born. Profits for everyone!!!

The fix was in. Every Wall Street bank was insolvent in March 2009. Citicorp and Bank of America were dead. There were hundreds of billions in worthless toxic mortgage securities, derivatives, auto loans, and credit card debt sitting on their books. FAS 157 required them to price those assets at what they could sell them for in the market. You remember free market capitalism? Something is worth whatever an independent party is willing to pay. The fat cats love free market capitalism when they are making billions. Not so much when they blow up the financial system and are faced with the consequences of THEIR actions.

Continue reading “THE DAY THE SPINELESS FASB ACCOUNTANT WEENIES AGREED TO ALLOW WALL STREET BANKS TO REPORT FRAUDULENT FINANCIAL STATEMENTS”

FOURTH TURNING – THE SHADOW OF CRISIS HAS NOT PASSED – PART TWO

In Part One of this article I laid the groundwork of the Fourth Turning generational theory. I refuted President Obama’s claim that the shadow of crisis has passed. The shadow grows ever larger and will engulf the world in darkness in the coming years. The Crisis will be fueled by the worsening debt, civic decay and global disorder. I will address these issues in this article.

Debt, Civic Decay & Global Disorder

The core elements propelling this Crisis – debt, civic decay, and global disorder – were obvious over a decade before the financial meltdown catalyst sparked this ongoing two decade long Crisis. With the following issues unresolved, the shadow of this crisis has only grown larger and more ominous:

Debt

The national debt has risen by $7 trillion (64%) to $18.1 trillion since 2009 and continues to accelerate by $2.3 billion per day, on track to surpass $20 trillion before Obama leaves office and $25 trillion by 2019.

The national debt as a percentage of GDP is currently 103% (it would be 106% if the BEA hadn’t decided to positively “adjust” GDP up by $500 billion last year). It is on course to reach 120% by 2019. Rogoff and Reinhart have documented the fact countries that surpass 90% experience economic turmoil, decline, and ultimately currency collapse and debt default.
Despite the housing collapse and hundreds of billions in mortgage, credit card, auto, and corporate debt being written off, dumped on the backs of taxpayers and hidden on the Federal Reserve balance sheet, total credit market debt has reached a new high of $58 trillion.

Harvard professor Laurence Kotlikoff has been a lone voice telling the truth about the true level of unfunded promises hidden in the CBO numbers. The unfunded social welfare liabilities in excess of $200 trillion for Social Security, Medicare, Medicaid, and Obamacare are nothing but a massive future tax increase on younger and unborn generations. Kotlikoff explains what would be required to pay these obligations:

“To honor these obligations we could (a) raise all federal taxes, immediately and permanently, by 57%, (b) cut all federal spending, apart from interest on the debt, by 37%, immediately and permanently, or (c) do some combination of (a) and (b).”

The level of taxation and/or Federal Reserve created inflation necessary to honor these politician promises is too large to be considered feasible. Therefore, these promises, made to get corrupt political hacks elected to public office, will be defaulted upon.

Continue reading “FOURTH TURNING – THE SHADOW OF CRISIS HAS NOT PASSED – PART TWO”

THE SUBPRIME FINAL SOLUTION

The MSM did their usual spin job on the consumer credit data released earlier this week. They reported a 5.4% increase in consumer debt outstanding to an ALL-TIME high of $3.051 trillion. In the Orwellian doublethink world we currently inhabit, the consumer taking on more debt is seen as a constructive sign. Consumer debt has grown by 5.8% over the first nine months of 2013, after growing by 6.1% in 2012 and 4.1% in 2011. The storyline being sold by the corporate MSM propaganda machine, serving the establishment, is that consumers’ taking on debt is a sure sign of economic recovery. They must be confident about the future and rolling in dough from their new part-time jobs as Pizza Hut delivery men. Plus, they are now eligible for free healthcare, compliments of Obama, once they can log-on.

Of course, buried at the bottom of the Federal Reserve press release and never mentioned on CNBC or the other dying legacy media outlets is the facts and details behind the all-time high in consumer credit. They count on the high probability the average math challenged American has no clue regarding the distinction between revolving and non-revolving credit or who controls the distribution of such credit. It is fascinating examining the historical data on the Federal Reserve website and realizing how far we’ve fallen as a society in the last 45 years.

http://www.federalreserve.gov/releases/g19/HIST/cc_hist_sa_levels.html

Revolving credit is a fancy term for credit card debt. Imagine our society today without credit cards. That sounds outrageous to the debt addicted populace inhabiting our suburban wasteland and urban badlands. What is truly outrageous is the fact we have allowed ourselves to be duped into $846 billion of revolving credit card debt charging an average interest rate of 13% by Wall Street bankers who have used the American Dream of a better life as the bait to lure a dumbed down easily manipulated populace into believing that material possessions purchased with high interest debt represented advancement rather than servitude. Debt accumulation is seen as a badge of honor. Keeping up with the Joneses is all that matters. Our shallow culture has no notion about the concept of deferred gratification or saving to pay for your wants.

A shocking fact (to historically challenged government educated drones) revealed by the Federal Reserve data is that credit card debt did not exist prior to 1968. How could people live their lives without credit cards? It must have been a nightmare. You mean to tell me when people wanted new clothes, jewelry, a TV, or to eat out at a restaurant, they actually had to save up the cash to do so? What kind of barbaric system would make you live within your means? The Depression era adults had somehow survived for over two decades after WWII without buying cheap foreign crap they didn’t need with money they didn’t have using a piece of plastic with a Wall Street bank logo emblazoned on the front.

1968 marked a turning point for America. LBJ’s welfare/warfare state had begun the downward spiral of a once rational country. We chose guns and butter, with the bill being charged to the national credit card. It was fitting that Wall Street introduced the credit card in 1968.

There were 200 million Americans in 1968 and $2 billion of credit card debt outstanding, or $10 per person.
By 1980 there were 227 million Americans and $54 billion of credit card debt outstanding, or $238 per person.
By 1990 there were 249 million Americans and $230 billion of credit card debt outstanding, or $924 per person.
By 2000 there were 281 million Americans and $650 billion of credit card debt outstanding, $2,313 per person.
By July of 2008 credit card debt outstanding peaked at $1.022 trillion and the population was 304 million, with credit card debt per person topping out at $3,361 per person.

Over the course of 40 years, the population of this country grew by 52%. Credit card debt grew by 51,000%. Credit card debt per person grew by 33,600%. This was a case of credit induced mass hysteria and it continues today. Have the American people benefitted from this enslavement in chains of debt? I’d venture to answer no. Who benefitted? The corporate fascist oligarchy of Wall Street banks, mega-corporations sourcing their crap from Chinese slave labor factories, and politicians in the back pockets of the bankers and corporate CEOs benefitted.

The evil oligarch scum grew too greedy and blew up the worldwide financial system in 2008. Since July 2008 credit card debt has declined by $175 billion, with the majority of the decrease from banks writing off bad debt and passing it along to the American taxpayer through their TARP bailout and 0% money from their puppet Bernanke. It bottomed out at $834 billion in April 2011 and has only grown by a miniscule $13 billion in the last 29 months, and only $1.7 billion in the last twelve months. The muppets have refused to cooperate by running up those credit cards. Not having jobs, paying 40% more for health insurance due to Obamacare, and real inflation exceeding 5% on the things they need to live, have caused some hesitation among the delusional masses. Even a government educated, math challenged, iGadget addicted moron realizes their credit card is the only thing standing between them and living in a cardboard box on a street corner.

Your owners have been forced to implement Plan B. The monster they have created is like a shark. The debt must keep growing or the monster will die. In 2008, the oligarchs were staring into the abyss. Their wealth, power and control were in grave jeopardy. Rather than accept the consequences of their actions like men and allowing the economy to return to normalcy, these weasels have doubled down by accelerating the debt production and dropping it from helicopters to subprime borrowers across the land, like unemployed construction workers named Gus getting a degree in liberal arts from the University of Phoenix while sitting in their basement in boxer shorts. The Federal Reserve Black Hawks are hovering over the inner cities dropping Bennie Bucks on the very same people they put in McMansions with no doc negative amortization subprime mortgages in 2005, so they can occupy Cadillac Escalades for a couple years before defaulting again. The appearance of normalcy is crucial to the evil oligarchs as they attempt to pillage the remaining loot in this country.

Before the credit card was rolled out in 1968, there was non-revolving debt strictly related to auto loans made by banks and credit unions. The Federal government was nowhere to be found in the mix as banks and consumers made economic decisions based upon risk and reward. There were $110 billion of loans outstanding to a population of 200 million, or $550 per person. The Federal government stuck their nose into the free market with the creation of Sallie Mae in the 1970’s. But they were still a miniscule portion of total consumer debt at $115 billion in 2008, or only 11% of total consumer debt outstanding. The chart below from Zero Hedge reveals what has happened since the oligarchs crashed the financial system with their vampire squid blood sucking tentacles syphoning the lifeblood from the American middle class. Non-revolving debt has increased from $1.65 trillion in July 2008 to $2.2 trillion today, solely due to Obama and his minions doling out subprime auto and student loan debt to anyone that can scratch an X on a loan document.

If middle class consumers were unwilling to borrow and spend, the oligarchs were going to use their control over the government to dole out billions to subprime borrowers in a final, ultimately futile, attempt to keep this Ponzi scheme going for a while longer. The subprime game worked wonders in the final phase of the housing bubble. And now the losses will fall solely on the 50% of Americans who actually pay taxes. It wasn’t a mistake the Federal government took complete control of the student loan market in 2009. It isn’t a mistake the only TARP recipient the Feds have not attempted to disengage from happens to be the largest issuer of subprime auto loans in the world – Ally Financial (aka GMAC, Ditech, ResCap).

In 2008 there was $730 billion of student loan debt outstanding, of which the Federal government was responsible for $120 billion. Five short years later there is $1.2 trillion of student loan debt outstanding and the Federal government (aka YOU the taxpayer) is responsible for $716 billion. Using my top notch math skills, I’ve determined that student loan debt has risen by $470 billion, while Federal government issuance of student loan debt has expanded by $600 billion. The rational risk adverse lenders have reduced their exposure to the most subprime borrowers on earth, undergrads at the University of Phoenix and thousands of other “for profit” educational black holes across the country. Only an organization who didn’t care about getting repaid would lend billions to borrowers without a job, hope of a job, or intellectual ability to hold a job. A critical thinking person might wonder why student loan debt would rise by almost $500 billion in 5 years when college enrollment has grown by only 2 million. That comes to $250,000 per additional student.

The Federal government couldn’t possibly have distributed $500 billion to anyone with a pulse as a way to manipulate the national unemployment rate lower, because anyone in school is not considered unemployed. Do you think the $500 billion was spent on tuition and books? Or do you think those “students” used it to buy iGadgets, HDTVs, weed and Twitter stock? With default rates already at all-time highs and accelerating skyward and $146 billion of loans already in default, you don’t need a PhD from the University of Phoenix (where default rates exceed 30%) like Shaq to realize the American taxpayer is going to get it good and hard once again.

My personal observations during my daily trek through the slums of West Philly would befuddle someone who didn’t understand the oligarch scheme to create an artificial auto recovery by distributing auto loans to deadbeats, the SNAP army, and hip hop nitwits. As I maneuver quickly through the West Philly badlands in my four year old paid off compact car praying I don’t get caught in gang crossfire, I see an inordinate number of brand new BMWs, Mercedes, Lexus, Cadillacs, and Jaguars parked in front of $20,000 dilapidated fleapits that tend to collapse during heavy rain storms. The real unemployment rate in these garbage strewn, disintegrating neighborhoods exceeds 50%. The median household income is less than $20,000. Over 40% of the adult population hasn’t graduated high school and 63% of the population lives below the poverty level. These people put the “sub” in subprime. How can anyone in this American version of third world Baghdad afford to drive a $40,000 vehicle? The answer is they can’t. But you the taxpayer, out of the goodness of your heart and without your knowledge, have loaned them the money so they can cruise around West Philly in Jay Z or Kanye style.

Bernanke’s ZIRP creates the environment for mal-investment and reckless lending. With the Federal government owned Ally Financial leading the charge, the miraculous auto sales recovery is nothing but a bad loan driven illusion. With the Federal government pushing subprime loans like a West Philly drug dealer, the Too Big To Trust Wall Street cabal have followed suit providing financing to deadbeats with FICO scores of 500, no job, but a nice smile. When you can borrow from the Fed at 0% and loan money to SNAP nation at 18%, with a Bernanke unspoken promise to bail them out when the inevitable defaults come as a complete shock, this is why you see thousands of luxury automobiles parked in the urban kill zones across America.

Zero Hedge documented the new subprime bubble in a story earlier this week. As auto dealers allow losers with sub-500 FICO scores to drive off their lots with new cars, ZH summarized the next taxpayer bailout:

“No Car, no FICO score, no problem. The NINJAs have once again taken over the subprime asylum.”

Someone with a 500 FICO score has defaulted on multiple debt obligations in the recent past. The issuance of hundreds of billions of subprime debt can give the appearance of economic growth for a short period of time, just like it did from 2004 through 2007. Then it all collapsed in a heap because the debt eventually must be repaid. Cash flow is required to service debt. Maybe the West Philly subprime Mercedes drivers can trade their SNAP cards for cash to make their car loan payments, since they don’t have jobs. Even the captured MSM is being forced to admit the truth.

While surging light-vehicle sales have been one of the bright spots in the U.S. economy, it’s increasingly being fueled by borrowers with imperfect credit. Such car buyers account for more than 27 percent of loans for new vehicles, the highest proportion since Experian Automotive started tracking the data in 2007. That compares with 25 percent last year and 18 percent in 2009, as lenders pulled back during the recession. Issuance of bonds linked to subprime auto loans soared to $17.2 billion this year, more than double the amount sold during the same period in 2010, according to Harris Trifon, a debt analyst at Deutsche Bank AG. The market for such debt, which peaked at about $20 billion in 2005, was dwarfed by the record $1.2 trillion in mortgage bonds sold that year.

When has packaging subprime loans, getting them rated AAA by a trustworthy ratings agency, and selling them to little old ladies and pension funds, ever caused a problem before? With subprime auto loan issuance accounting for 50% of all car loans and an average loan to value ratio of 114.5%, what could possibly go wrong? Think about that for one minute. The government and Wall Street banks are loaning deadbeats $33,000 of your money to buy a $30,000 car, despite the fact the high school dropout borrower doesn’t have a job and has a history of defaulting on their obligations.

Can you really blame the borrowers? For the second time in the last decade the rich folk have generously offered to let them experience the good life, with debt that is never expected to be repaid. The people in West Philly live in rat infested, rundown, leaky shacks waiting for the 1st of the month to get their EBT card recharged. They have nothing, so they have nothing to lose. When the MAN offered to loan them $300,000 in 2005 so they could buy their very own McMansion, what did they have to lose? They got to live in a fancy house for a few years until they were booted out by the bank and left in exactly the same spot they were before the MAN came along. These people don’t even know what a FICO score means.

Now the MAN has knocked on their hovel door again and offered to put them in a brand spanking new Cadillac Escalade with no money down, requiring no proof of employment, and no prospects of repaying the loan. Hallelujah, there is a God!!! They get to tool around West Philly for a year or two impressing their fellow SNAP recipients until the repo man shows up and absconds with their wheels. They will be left right where they were, hoofing it with their $200 Air Jordans. Anyone with an ounce of brains (eliminates Cramer & Bartiromo) can see this will end exactly as all easy money, Federal Reserve propagated, and government sanctioned scams end.

“Perhaps more than any other factor, easing credit has been the key to the U.S. auto recovery,” Adam Jonas, a New York-based analyst with Morgan Stanley, wrote in a note to investors last month. The rise of subprime lending back to record levels, the lengthening of loan terms and increasing credit losses are some of factors that lead Jonas to say there are “serious warning signs” for automaker’s ability to maintain pricing discipline.

In the last year 99% of all consumer debt issued was doled out by government drones, with no interest in getting repaid, to subprime deadbeats, with no interest in repaying. It’s a match made in subprime heaven with your tax dollars. As an Ivy League educated Wall Street banker CEO once said:

“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.”

Chuck “Doing the Boogie Woogie” Prince – FORMER CEO of Citicorp – July 2007

You see it is always about liquidity, also known as Bernanke Bucks or QEternity. Without Bernanke and his Federal Reserve sycophants printing $2.8 billion of new money every single day, shoveling it into the grubby hands of his Wall Street bank bosses and a corrupt fetid festering pustule of a government running trillion dollar deficits and showering your money on loafers and welfare queens, this subprime final solution would not be possible. This is an exact replay of the subprime mortgage debacle, except the oligarchs have cut out the middleman. Holding the American people hostage for the $700 billion TARP bailout proved to be messy, with 90% of Americans against the “Save a Corrupt Criminal Banker” scheme. This time, there will not be a vote in Congress when the hundreds of billions in subprime student loans and subprime auto loans go bad and become the responsibility of the few remaining American taxpayers. What’s another few hundred billion among friends when our annual deficits soar past $1 trillion, our national debt approaches $20 trillion, and our unfunded entitlement liabilities exceed $200 trillion?

When the music stopped in 2008, Chuck Prince bopped away with a $40 million severance package and you were left to sweep the confetti off the floors, pick up the empty champagne bottles and caviar plates, scrub the vomitorium, and pay for all the damages that occurred during the sordid subprime orgy of greed, lust, gluttony, envy and sloth. Somehow the distracted, techno-narcissistic, easily duped zombies have been lured into the subprime web of deceit again. We have only ourselves to blame as the corporate fascist oligarchs implement their final solution for the American middle class and our once proud nation – a bullet to the back of the head.

WHO DESTROYED THE MIDDLE CLASS – PART 2

In Part 1 of this three part series I addressed where and how the net worth of the middle class was stolen. In Part 2, I will tackle who stole your net worth and in Part 3, why they stole your net worth. Now let’s zero in on the culprits of this crime.

Dude, Who Stole My Net Worth?

“Thus far, both political parties have been remarkably clever and effective in concealing this new reality. In fact, the two parties have formed an innovative kind of cartel—an arrangement I have termed America’s political duopoly. Both parties lie about the fact that they have each sold out to the financial sector and the wealthy. So far both have largely gotten away with the lie, helped in part by the enormous amount of money now spent on deceptive, manipulative political advertising.” – Charles Ferguson – Predator Nation

When you dig into the charts and data supplied by the Federal Reserve generated report, the data which goes back to 2001 tells a story not addressed by the deceptive, manipulative, political propaganda that passes for investigative reporting by the captured mainstream media. The chart below compares the median versus mean income growth from the last three Fed consumer surveys. Overall, it reveals a lost decade of negative income growth for the average middle class family. In the early part of the decade the average middle class family made some progress as jobs were relatively plentiful and the internet crash mostly impacted the rich, who own most of the stocks in the country. This is why the median income rose while the average income fell. The wealthy have a large impact on the average because they own the vast majority of assets in this country. The stock market debacle was unacceptable to the oligarchs and their money printing puppet Greenspan.

Both the liberal and conservative wings of the ruling oligarchy were in complete agreement. A new bubble needed to be blown in order to refill the coffers of the ruling class. Paul Krugman spoke for the liberal wing:

“To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.”

Greenspan and his handpicked successor Bernanke represented the conservative wing by reducing interest rates to ridiculously low levels, failing to carry out their regulatory obligations, encouraging recklessness, and purposefully failing to acknowledge and deflate the greatest housing bubble in world history:

“American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage.” – Alan Greenspan – February 2004

“House prices have risen by nearly 25 percent over the past two years. Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals.” – Ben Bernanke – October 2005

“With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly.” – Ben Bernanke – November 2005

The master plan worked like a charm from 2004 through 2007 as you can see by the tremendous surge in average income. The stock market rocketed by 75% between 2003 and 2007 and national home prices shot up by 50%. Wall Street creatively invented no doc, negative amortization, interest only, subprime mortgages and generated a frenzy of demand from anyone that could scratch an X on a loan document, just as Greenspan had demanded. Being “sophisticated” financial institutions, they were able to assemble thousands of shit loans that were certain to default into one big derivative package of shit and their captured lackeys at the “sophisticated” rating agencies stamped a AAA rating on the smelly pile of feces. Always looking out for the best interests of their clients (aka muppets), the upstanding Wall Street firms sold the derivative piles of shit to them as can’t miss investments. Wall Street profits went off the charts. Billions in bonuses flowed to the rich and powerful Wall Street titans. Mega-corporations generated record profits as consumers utilized the Fed induced tsunami of easy debt to buy BMWs, 72 inch HDTVs, home theaters, stainless steel appliances, granite counter-tops, Caribbean cruises, Jimmy Choo shoes, and Rolex watches in a mad frenzy of consumer delusion.

What you might also notice in the chart above is that median household income somehow declined during this decadent orgy of corporate fascist pleasure. How could this be? Table 2 from the Fed report makes it clear. The vast majority of households in this country generate 75% to 81% of their income from wages. Virtually none of the income generated in 85 million households (the bottom 75%) comes from interest, dividends or capital gains. You need money to make money. The top 10% only generated 46% of their income from wages. The report does not provide details on the top 1%, but wages most certainly account for less than 20% of their income. Interest, dividends and capital gains represented 22.2% of the income for the top 10%, while it represented less than 1% of income for the bottom 75%. This data is the smoking gun that proves that Federal Reserve policy and control fraud on a grand scale by the titans of Wall Street was designed and executed to benefit only the wealthy elite billionaire class and their co-conspirators. All the income gains during this time accrued to the psychopathic amoral financial oligarchy. The average family saw their real wages decline and anyone lured into the housing market during this time frame by the “sophisticated” financial experts at Citicorp, Bank of America, Wells Fargo, Merrill Lynch, Countrywide, Washington Mutual, Wachovia, Bear Stearns, Goldman Sachs, Lehman Brothers, and the other members of the Too Big To Fail criminal syndicate was set up for epic loses.

As expected, the psychopathic banker class could not be satisfied with the results of their looting. Their gluttonous voracious greed culminated in a historic collapse of the worldwide financial system resulting in a housing implosion, stock market crash and 8 million middle class Americans losing their jobs. The Fed report does show that average household income declined more than median household income after this historic financial oligarchy created collapse. One look at Table 6 from the Fed report will explain why. Only 15% of families own stocks and only 50% have retirement accounts. Approximately 50 million households in the country have virtually no stocks and less than 30% have retirement accounts. The top 10% wealthiest households, with a median household net worth of $1.2 million, proportionately own 3 times as much stock as the average family and 90% have retirement accounts. Therefore, the 57% crash in stocks impacted the top 10% to a greater extent, while the average family was most impacted by the 28% drop in home prices.

Despite the fact that the median net worth of the top 10% actual rose from $1.17 million in 2007 to $1.19 million in 2010 (while the bottom 80% saw their net worth decline by 36%) the losses in the stock market were intolerable to the banker predators and their captured government parasite politicians. All the “solutions” to the Wall Street induced financial debacle have been designed to benefit those who committed the crime and should have done the time. The singular design of those pulling the strings was to replenish the treasure chests on Wall Street, engineer a stock market rally to pump up the net worth and capital gain income for the 1%, and protect the vested interests of the financial elite. All the obscene criminally generated profits created during the boom were privatized into the grubby hands of the financial predators, while the subsequent gargantuan losses were socialized onto the backs of the American middle class taxpayers and future unborn generations.

TARP was rammed through the captured Congress by the oligarchs despite a 300 to 1 opposition from the public in order to protect obscenely wealthy bankers, stockholders and bondholders. The $800 billion of debt financed political pork, disguised as stimulus, was doled out to corporate contributors, union thugs, and a myriad of other special interests. Zero interest rates are specifically geared to generate billions of risk free profits for Wall Street and to force retirees to gamble their dwindling retirement funds in the rigged stock market. Bernanke and Paulson threatened the limp wristed pocket protector CPAs at the FASB into allowing Wall Street banks to make up the value of their loan portfolios in order to mislead the public regarding their insolvency. The tripling of the Federal Reserve balance sheet from $950 billion in September 2008 to $2.9 trillion today was done to remove the toxic assets from the balance sheets of the Too Big To Fail Wall Street cabal at 100 cents on the dollar. QE1, QE2, and Operation Twist have had the sole purpose of providing the “sophisticated” financial elite with the funds to pump into the stock market using their high frequency trading super computers.

The subsequent Federal Reserve contrived 100% increase in the S&P 500 has repaired the damaged balance sheets of the moneyed interests, while the average middle class family has sunk further into debt and despair. The powerful entrenched sociopathic marauder class cares not for the average middle class American. They can barely conceal their contempt and disgust for the masses as they blatantly flaunt their hegemony and supremacy over our decrepit decaying corrupted economic system. M. Ramsey King described the disgusting display last week:

“Jamie Dimon’s appearance before the Senate Banking Committee was a sickening display that clearly demonstrated that Congress has been thoroughly corrupted by Wall Street. Instead of grilling Dimon, Senators acted like overly affectionate puppies fighting each other for an opening to smooch their master.”

The destruction of the middle class has been methodical and systematic. The top 10% of earners had a median net worth of $1.19 million, or 192 times as much as the median wealth of $6,200 of those in the bottom 20% in 2010. In 2007, the top 10% had 138 times as much wealth as the bottom 20%. In 2001, it was 106 times as much. With the continued rise in the stock market, declining real wages for the middle class, and further home price declines, the gap between the top 10% and the bottom 20% has continued to widen. The level of pain being experienced by the middle class has reached an unprecedented extreme. A few data points from David Rosenberg make that clear:

Forty-six million Americans (one in seven) are on food stamps.
One in seven is unemployed or underemployed.
The percentage of those out of work defined as long-term unemployed is the highest (42%) since the Great Depression.
54% of college graduates younger than 25 are unemployed or underemployed.
47% of Americans receive some form of government assistance.
Employment-to-population ratio for 25- to 54-year-olds is now 75.7%, lower than when the recession “ended” in June 2009.
There are 7.7 million fewer full-time workers now than before the recession, and 3.3 million more part-time workers.
Eight million people have left the labor force since the recession “ended” — adding those back in would put the unemployment rate at 12% instead of 8.2%.
The number of unemployed looking for work for at least 27 weeks jumped 310,000 in May, the sharpest increase in a year.

I would add a few more data points to David’s list of woe:

Over 7.5 million homes have been foreclosed upon by the Wall Street bankers since 2008.
The National Debt has increased by $5.7 trillion (57% increase) since September 2008, while real GDP has risen by $305 billion (2.3% increase) since the 3^rd quarter of 2008.
Interest income paid to senior citizens and savers has declined by $400 billion (29% decline) since September of 2008 due to Ben Bernanke’s ZIRP.
Government transfer payments have risen by $500 billion (32% increase) since September 2008, while private industry wages have risen by $200 billion (4.7% increase).
The price of a gallon of gas has risen from $1.70 in December 2008 to $3.53 today.
Food prices have risen by 7% to 10% since late 2008, even using the falsified BLS data. A true assessment by anyone who actually goes to a grocery store (not Bernanke – his maid does the shopping) would be a 10% to 20% increase.

The middle class has a gut feeling they are being screwed by somebody, they just can’t figure out who to blame. The ultra-wealthy elite keep up an endless cacophony of propaganda and misinformation designed to confuse an increasingly uneducated and willfully ignorant public while blurring the facts for those educated few capable of understanding the truth. They have been able to keep the masses dumbed down through government run education; distracted by sports, reality TV, Facebook, internet porn, and igadgets; lured by mass media messages of materialism; and shackled with the chains of debt used to acquire the goods sold by mega-corporations. We’ve become a society oppressed by a small faction of ultra-wealthy masters served by millions of impoverished, uneducated, sedated slaves. But the slaves are getting restless and angry. The illegally generated wealth disparity chasm is growing so large that even the ideologue talking head representatives of the elite are having difficulty spinning it. Even uneducated rubes understand when they are getting pissed on.

“Senator, don’t piss down my back and tell me it’s raining” – Fletcher – Outlaw Josey Wales

The situation is growing increasingly unstable and has left the country susceptible to an extreme outcome when this teetering tower of debt topples.

The moneyed interests have brilliantly pitted the middle class against the lower classes through their control of the media, academia, and the political system. They have cleverly blamed the victims for their own plight. They have convinced the general public that millions have lost their homes to foreclosure because they were careless, greedy and stupid. They blame the Community Reinvestment Act. They blame others for taking on too much debt when they were the issuers of the debt. The Wall Street moneyed interests created the fraud inducing mortgage products, employed the thousands of sleazy mortgage brokers, bullied appraisers into fraudulent appraisals, paid off rating agencies, bribed the regulators, bet against the derivatives they had sold to their clients, threatened to burn down the financial system unless Congress handed them $700 billion, and paid themselves billions in bonuses for a job well done. But, according to these greedy immoral bastards, the real problem in this country is the lazy good for nothing parasites on food stamps and collecting unemployment, who need to stop complaining and pick themselves up by their bootstraps and get a damn job. It’s a storyline used against Occupy Wall Street and anyone who questions their right to plunder what is left on the carcass of America. The vilest fraud in the history of man was perpetrated by these evil men and not one executive of these firms has been prosecuted. Obama, the champion of the little people, has proven to be nothing but a figurehead for the powers that be. Proof that the Wall Street syndicate is winning the war couldn’t be any clearer than the fact that the top six criminal banks now have 40% more of the nation’s assets in their vaults than they did before they burned down the economy.

The demonization of the victims continues, while the perpetrators prosper. The sociopaths appear to be winning; just as they seemed to be winning in the later stages of the Roman Empire.

“And we often fall into this bias on the prompting of con men and sociopaths of the predator class who use it to justify their own criminal actions and personal injustice. They are not burdened with empathy for their victims, and even delight in their misfortune. But they must find ways to make their actions more acceptable to society as a whole that normally does have such concerns for equity and justice.” – Jesse

“Are we like late Rome, infatuated with past glories, ruled by a complacent, greedy elite, and hopelessly powerless to respond to changing conditions?” – Camille Paglia

I think you know the answer to this question.

If you missed the first part of this series, CLICK HERE to read it.