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18 September 2009 Thought for the Week:

China....money....mining....power: The world is changing, but thanks to the meaningless din created by right and left wing pundits, no one's seeing it. Some cold reality about what's happening to the balance of power in the world (is needed). While right wing and left wing pundits in the US bray on and on about trivia, there's been a major shift in world power with China putting the rest of the world in a headlock - and barely anyone has noticed. According to a recent New York Times article, China now currently produces 93% of all the world's so-called rare earth elements and more than 99% of the output for two of these elements.

What are rare minerals used for?
Oh, nothing terribly important. Just missiles and green energy technology and other fringe stuff like that. China has declared they're going to continuously cut down their exports of these vital raw materials and compel the manufacturers that need them to set up their facilities in China if they want access to them. Not only that, but China appears to be the only country left on earth with cash so they're in a perfect position to pick up the mineral resources of countries like Australia, the US and Canada at fire sale prices.

Ever heard the phrase "game over?" But don't worry, the US will continue to grind down its forces and finances in one pointless military engagement after another. Great strategy. And right wing "free market" economists will continue to reassure us that not only can afford the wars, but also that by getting big screen TVs cheap from China, we're getting the better part of the deal. Treasonous idiocy. Interestingly, I was only able to find one relevant Youtube video with the keywords "china mining." Talk about off the radar. This one's a clip about China's ability to call the tune and make Australia dance.
- - Video: https://www.brasschecktv.com/page/700.html

“How to take over a nation without firing a shot! War by other means! The absurd result of a system of faulty finance.”
- - Wallace Klinck, Canada


THE MAD, CRIMINAL, HATTER 'S TEA PARTY

by Betty Luks

“It is blatantly obvious that our economic system lacks homeostasis, that debt has a positive feed-back leading to devaluation and social disaster, and that what is required is a negative feed-back of counter-debt to establish an equilibrium. In so far as we live in a world in which values are determined by debt-money, not only money but all other values on which it has an impact are also being devalued, not excluding our religion, as we are experiencing in our society today.”

- - Geoffrey Dobbs The Local World Part XII.

If you think carefully about Geoffrey Dobbs’ observation in the above statement, you will realise that the Labor government did, in fact, seek to provide some equilibrium to the teetering debt-money-system. They injected extra money into the system the wrong way, by saddling future generations with the repayment of that debt, but their actions have revealed that they also understand that the consuming public do not have the equivalent to the debt in purchasing power. Hence the ‘bailout’ in a desperate attempt to keep the financial system from imploding altogether.

We encourage our readers to view – and promote - the videos “The Black Magic of the Money Cult” and “Financial Credit Versus Real Credit” on the League website. You can watch and learn at your leisure the truth about the money system – and how it can be righted! As an afterthought, I wonder how the leaders of the Anglican Church of Australia would feel at the thought (should they read the following article) that their $100 million loss on the stock market might have resulted from their financial advisers’ bad gambling habits?

The financial stress in Australia’s homes:
According to Dun & Bradstreet chief executive, Christine Christian, (The Australian 7/8/09), the rising risk of loan defaults underlined the potential for the global financial crisis to become a personal credit crisis in many Australian homes.

The Labor bailout of the fraudulent financial system has saddled Australians with so much extra debt, that 33% of Australian postcodes are now within the “high-risk” category of financial distress. This figure is up 30% on the same time last year, according to a Dun & Bradstreet study. Since increasing the first home-owners’ grant, a sharp rise in credit obligations has been observed, revealed the Dun & Bradstreet study.

The research found that 29 of the 50 most financially stressed suburbs, are in the first home-owners’ belt, which includes outer Melbourne suburbs of Chirnside Park, Cranbourne and Carrum Downs and Sydney’s western suburbs Mount Druitt and Auburn.

It is important that the people wake up to the massively fraudulent financial/banking system that is controlling us* – and the criminal nature of those controlling the system. For that reason we republish the rather lengthy material from the American Casino movie trailer from Leslie and Andrew Cockburn on Vimeo.


AMERICAN CASINO

“'American Casino': How Our Nation's Financial Sector Became a Massive and Unregulated Gambling Operation” Source: https://www.alternet.org/story/142267/

“The producers of the new documentary, “American Casino,” don't tell you about the causes of the economic meltdown that's caused so much pain around the world. They don't tell you how Wall Street, having lobbied furiously to free itself from public-interest regulation, created a furious demand for mortgage-backed junk, which they had laundered into supposedly solid investments with an assist from friendly -- read "bought off" -- ratings agencies. They don't discuss how unscrupulous lenders hawked an array of gimmicky mortgage products to people who weren't qualified to take them out in order to skim off a fat stream of fees.

Let those who lived it tell the story -- from the "creative" financiers who built the house of cards, to the brokers who pushed their products, and finally, to the people living on "Main Street" USA, whose dreams of homeownership were effectively turned into weapons of mass destruction and detonated in the centres of the global economy.
And by opting to not tell a story -- by leaving behind the narrator's voice that's so common to the documentary form -- the story that gets told is incredibly powerful.

AlterNet recently caught up with producers Andrew (AC) and Leslie Cockburn (LC) to discuss how our nation's financial sector became a massive and unregulated gambling operation and how its ultimate return to reality is causing so many such pain.

Joshua Holland (JH): First, I want to know what inspired the film in terms of your understanding of what was lacking in the mainstream coverage of the housing meltdown? I mean, something made you decide to go out and make this documentary.
Leslie Cockburn (LC): Well, we started shooting this documentary in January 2008. So there wasn't a lot of coverage of the crisis, so to speak. There was some coverage over here of foreclosures going on in different states, and a little coverage of the kind of problems that had been happening on Wall Street, starting with a little crash that happened in August of 2007. And then the market was going up and down -- in these wild swings.
And what struck us was, we looked at it and decided that it was not a crisis that was going to be over in three months or four months, but that it was going to be severe.
We made a judgment about that and decided to kind of just jump into a film. We'd been looking at some very sort of obscure stuff like bond insurers, who were re-insuring with companies that were broke.
There were signs that there was no money backing up a lot of what was going on, on Wall Street. There were enormous amounts of leverage that were borrowed. You know, just incredible amounts of leverage in these investment banks. So we decided that it could be a very serious collapse, and that's why we did it.

(JH): So you did this when ... I guess there were people like Robert Shiller, Karl Case and Dean Baker and a few others saying that this was a very serious collapse, but a lot of economists were writing books and monographs about why the housing market would continue to rise.
Andrew Cockburn (AC): Well, that's right. I mean, Ben Bernanke was saying the subprime problem could be contained. That was the mantra that the people who were long on the market were telling each other. You know, we also were talking to people on Wall Street, smart people -- of which there are not a lot -- who were thinking and actually talking in rather apocalyptic terms. So that was one of the things that influenced us.

JH: Now you call the film American Casino, and it starts where the crisis begins -- with then-Sen. Phil Gramm, R-Texas, leading the charge for financial deregulation. Tell me about this idea of the American casino, of Wall Street being a gambling emporium as much as a staid haven for the investor class. We use that term a lot figuratively, but what you're saying is it's quite literal.
AC: It is. I mean, it really struck us when we started frequenting Wall Street financial houses, how people talk routinely -- and not with any apparent irony -- about bets. You know, about the fact that Morgan Stanley had bet on this and the Citadel Hedge Fund had bet on that, or their bet had gone wrong. And the more we understood, the more we realized that much of it is a bet.
And I'll give you a literal example, which is the Commodity Futures Modernization Act of December 2000 that you referred to. It involved the legalization, basically, of Credit Default swaps. Which are a form of gambling.
And the reason that the Act specifically protected them from state and local regulation is that otherwise, they would be regulated as a form of gambling. I mean, there are gambling laws in states and localities. And under those, these financial instruments would be illegal. They were made illegal at the time of the Depression because they were literally gambling.

JH: So the Nevada Gaming Commission could theoretically have regulated these like a poker game, almost?
AC: Well, when we showed the film at the Tribeca Film Festival, a guy stood up and said, "I work in Las Vegas, in a casino." And he said, "There, you know, we regulate it. It's regulated." And the difference between Vegas and Wall Street is that here it's unregulated.

JH: Now we go from this idea of a casino ... and you know, it's too bad that David K. Johnston had already taken the name “Perfectly Legal” for his book, because once we get past the casino, we start talking about the way that they laundered risk, and they re-laundered risk. And in a sense, once we get past that point in the film, it starts to become more and more clear that we're looking at a crime scene as much as a gambling facility, aren't we?
LC: Well, what's shocking is when you really take it on board that we are all living in this casino. I mean, it's a bit like The Matrix. You suddenly think, "Oh my God, I am inside that computer screen. My mortgage is on that computer screen. I, and everyone I know, and everyone in this country, is ... we're chips. We're chips in the casino." And that realization is a very big one. And talking about the crime ... We were told that the people who were taking out these loans were greedy. It's really their fault, or it's all of our ... the crisis is all of our fault. But in fact, it isn't all of our fault. We came across that by really investigating this story at the community level, in cities like Baltimore.
First of all, people at lower income levels -- they believe in their broker. The broker, to them, is like a dentist or a doctor. There is an assumption that what a broker does or a banker does is regulated. That there are some laws that ... you know, this can't be a scam.
If they say to you, "Hey, you can afford this. Your income level is just fine, and you can refinance," you say: "Terrific, that's great. I'm so glad that I can do this." You don't expect that in fact what they're doing ... and we have brokers in American Casino who explain how this is done ... is that you say that your income is $2,500 a month. They write down $2,500 a week, or whatever fits into their computer program. And then that is buried in paperwork, and when you go to the closing, you don't even know what's in all those pages that are as thick as a phone book.
These closings were often scheduled at the end of the day so that you'd have to pick up your kids at day care, as one community lawyer in Baltimore points out.
This is a crime. This is people being lied to, people being squeezed, people being scammed. It really is shocking when you realize that really good people have been duped, and that they then default.
And the people who have given them this mortgage don't care, because they passed it on. It's this whole game of hot potato. You pass it on to the next guy, and then to the next guy. As this incredible banker in the film points out, "There is no skin in the game. Get your fees up front, make a lot of money, pass it on to the next guy."
So the only person who is destroyed is the person who was naive enough to believe in the system. The ones who believed that the broker or banker was actually a decent human being doing a job as a professional and giving them good advice. It's a shocking story.

JH: Now help us connect these securities based on bad loans -- what economic bloggers have called "the s##t pile" -- and how they were sliced and diced into these pieces that basically make them AAA-rated ... connect that to this lust for selling mortgages that people couldn't afford to service.
AC: Well, you know, the idea of mortgage-backed bonds has been around for a while. What really happened in the 2000s was they discovered that instead of diversifying and having bonds that were partly backed by mortgages and backed by other things like aircraft leasing and so on and so forth, that it was much better, much more profitable, there was an extra few basis points in concentrating on subprime. Basically loan-shark loans.
So, we have a banker explaining all this in very candid, and I think ... very clear terms, because we just let him explain it. You take all these mortgages and you put them together in a bond.
Then you slice it up -- you sell slices of that bond, and you get an obliging rating agency, which you are paying and which wants your business as an investment bank. They say, oh 80 percent of these are AAA. And there were only about eight or nine corporations in the United States that were considered AAA at the time -- General Electric, Exxon. So suddenly you had thousands of these mortgage bonds being rated AAA, or parts of them.
Then you take little bits of those bits that are BBBs, BB, BBB and B. You take those lower-down bits, which are considered more risky. You take those tranches out, you pour them into another instrument called a collateralized debt obligation. You rate the top 80 percent of that AAA.
So what was B is now A, magically! (CDO – The initials stand for the words "collateralized debt obligations." …ed)
Then you could do it all again. You take the B bits out of that, and put it in another one. A CDO-squared, as they called it. And what our banker makes very clear is you were taking garbage and spray-painting it with a can of gold paint, and then calling it gold.

JH: Now, one of the people you interview calls this "the civil rights issue of the 2000s." Tell me, what is "reverse red-lining"? What does that mean?
AC: Well, originally, whole areas of the population, specifically African Americans and other minorities, were "red-lined." There would literally be a red line around areas on realtors' maps. And you don't make a loan to people living inside those lines. Because they weren't part of the credit system.
So when they started hawking these subprime loans, there were these markets ... I mean, people in inner-city Baltimore or other American cities, or minority areas around the country ... they were hungry for credit. They had never had access to loans.
So suddenly they were being offered these loans, they were being sold loans. But not prime loans like, you know, white people got. But subprime loans, i.e. loans that had predatory rates of interest or balloon payments. And that's what John Rellman, who is a very great civil rights lawyer, discusses in the film; he describes this as reverse red-lining. And as you say, says it's the civil rights issue of the 2000s.
LC: It's a civil rights issue because, as he says, "You know, with the Jim Crow laws in the old days, they would say ... 'you can't live here.' Now with this," as he puts it, "you suck the equity out of an area."
Minorities in Baltimore, for example, you had areas that were really being spruced up, they were being fixed up. These are inner-city areas, and there were people doing nice things with houses and money coming in. All that money is now gone because of the massive defaults, because of all the subprime loans. There's no money there anymore. These areas have been completely ravaged because these guys have come in with these predatory loans.
You know, there's some shocking figures in this film, which point out what happened with minorities. You know, four times as many people of colour were given subprime loans. And that isn't because they were poor or anything. They were exactly like their white counterparts.
It looks really bad when you look at those figures, and there were a lot of middle-class African Americans who were put into subprime loans, and they certainly could have qualified for prime. And the reason why all this needs investigating is because you could make a strong case that it was fraud.
AC: As you can see in the film, we talk about a lawsuit in the city of Baltimore. They are claiming that the Wells Fargo Bank targeted minorities, targeted African Americans in Baltimore for these subprime loans, and now the state of Illinois has just filed suit against Wells Fargo, claiming the same thing.
I think they're not the only bank alleged to have done this, but whatever the federal government does or does not do, a lot of states and a lot of local administrations really are very incensed about this and are taking action.

JH: And the worse a person's credit, the higher the fees, and as you show in the film, 61 percent of those minorities who got a subprime loan in 2006 would have qualified for prime loans. You also show very beautifully in the film, I think, the impact that this has not only on people who had those mortgages, but on the people who live around them, the communities -- the unbelievable blight and decimation that comes to these communities that have had high rates of foreclosure within them. Tell me a little bit about what that was like when you were seeing these things.
LC: Well, we saw it in a number of communities. In Riverside, Calif., for example, we were going around with a mosquito vector-control team. And they were concerned about these neighborhoods where you have every other house in foreclosure.
These houses had been built very recently. This is land that had been farm-land, dairy farms, big dairy farms five years before. And they built these houses badly, and then they built small swimming pools behind a lot of the houses, and the swimming pools of course are now black and full of hundreds of thousands of mosquitoes.
Communities completely torn apart: These houses are also being used widely as ‘meth’ labs, as ‘grow houses’. The community is just completely torn apart. It's very post-apocalyptic, the feel of it. When you see the film, you will really understand how bad it is.
And not only should you see the film to see that, but people should go out and look at some of these communities. I mean, it's real devastation.
And in these communities, you know, you have one default, and then that drags down the value of house of the person next door who is paying their prime 30-year mortgage. It's kind of this terrible snowball that destroys the entire community. More and more people end up in foreclosure.
And that has not unwound yet. For people to talk about "green shoots" right now is bizarre -- you know, every 13 seconds, there's a foreclosure in this country.

JH: Now, the film isn't preachy, per se, but obviously you hope to have some sort of impact with it. Tell me what are you hoping that audiences take away when they walk out of the film.
AC: Well, we let people talk. You can hear what they say. And to hear people who have gotten into mortgage trouble describing what happened and what they're trying to do about it, you know, these are not greedy people who were sort of eagerly trying to make a bet that went wrong.
And the other idea you hear about is that we're all guilty. We're all living in a bubble. You know, as a society we're all sort of chasing this almost-impossible dream. Well, that's not the case. And again, you get that from the film. The American Casino makes the case very clearly that this was a top-down crime, really.
Yes, there were mortgage companies that were lying about people's income and involving people in these sort of situations, but it came from the banks. It was the banks pushing the whole thing to get these loans in so they could then package them, securitize them into these bonds and sell them on.
Don't take my word for it. You can hear the banker say in the film that they were encouraged to make more and more aggressive loans. Aggressive loans means basically entangling somebody who really can't afford it in a mortgage. You don't tell them they can't afford it, you tell them they can afford it. But you know they're going to get into trouble, terrible trouble. But that gives you something to securitize and sell on to some Korean bank or whatever.
LC: Yes, he goes on to say this was done to feed the CDOs. They needed more and more. There came a point where most Americans who wanted mortgages had them or had already refinanced.
So you had to find new people, more and more people to get loans to feed the beast, to package into these CDOs so that you could make a ton of money selling them off to whomever you could dupe with this stuff.
This banker, we said to him, "Well, who would buy these CDOs-squared?" And his one-word reply is, "Idiots." And you understand finally that the people on Wall Street knew what was happening, and they continued to do it, because the money was so good.

JH: That was one of the most powerful moments of the film, by the way. That one-word answer. Let me ask you to step back from the concrete for one moment. You show snippets of George W. Bush talking about the homeownership gap. This is a very long-standing element of our political culture. This idea of homeownership as a road to wealth.
To what degree were they capitalizing on these kinds of themes within the American creed?
AC: Well, they were. I mean, actually, homeownership as the dream is comparatively novel. It's really come up since the 1930s, when the American government started to subsidize homeownership. Or subsidize money lending for homeownership, with FHA loans and Fannie Mae and then later on, Freddie Mac. And tax relief, and you know ... basically the primary industry of this country became homeownership. Became selling houses or financing homeownership.
Lending money for homeownership became an obsession that has now reached this sort of ghastly end that you see in American Casino.
LC: But also, people were being really basically tricked into buying these houses that weren't worth the amount they paid. And you could have avoided that by having strict rules for appraisers, strict rules for inspectors for houses. Just putting in more regulation so that you didn't have these ridiculous prices that of course people can't really pay.
I think one of the good things about this extreme crisis will be that house prices will come down in the end. That they won't continue to go up. There are a lot of people on Wall Street who would like to create another bubble ...

JH: And in Washington ...
LC: Yes. They sort of have amnesia about what's happened here. But then you're going to end up with the same terrible disastrous result.

JH: OK, I finish all interviews with the same question: What should I have asked you that I did not, if anything?
AC: Well, my final thought is that people should take away from this film ... a sense that you know, how huge this is. I mean, this is not just a sort of run-of-the-mill crisis. This is a fundamental turning point in American history. And I think our film, it gives people the opportunity to understand that. (emphasis added throughout…ed)

Further reading:
“This Age of Conflict” by Ivor Benson. Price: $6.00 plus postage
“The Story of the Commonwealth Bank” by D.J. Amos. Price: $6.50 plus postage
“The Money Trick” from the Institute of Economic Democracy.
Price: $10.00 plus postage (new edition)
"Charles Ferguson: Herald of Social Credit” by Michael Lane. Price $11.50 plus postage.
“Human Ecology and Social Credit” by Michael Lane. Price $9.50 plus postage.


POINT OF VIEW: NO GAOL FOR 'MANSLAUGHTER

by Ian Wilson LL. B.
In a court case in Adelaide (The Advertiser 12/8/09 p.5), a woman who stabbed her partner to death with a kitchen knife did not receive a gaol sentence because of years of domestic violence. There have been other cases like this: in 2004 in South Australia a woman killed her husband with a samurai sword and received a suspended three year term. She endured 19 years of abuse.

In the more recent case the woman was being repeatedly choked at the time. It was held that she used “excessive force”, but the domestic violence mitigated her actions. She received her five year gaol term suspended on condition of a three year, $500 bond. The woman pleaded guilty to one count of manslaughter.

It seems to me that this is a case where it should have been argued that the woman is innocent having acted in self defence. Her partner was of violent character and police had been to their home ten times in three years, using capsicum spray to subdue him. At the time of the choking there would have been a reasonable fear of harm. The use of a knife by a woman against an aggressive male, does not seem to be “excessive force” to me.

I am disturbed by these domestic violence cases, where abuse over years is taken to substantially mitigate conduct. As a student I recall one case where a woman was abused, and retaliated by killing her husband with an axe while he slept.

It is a tough question, but I don’t think that this is justified, unlike the stabbing case where it is quite reasonable to suppose that a woman in fear and being choked would lash out with a weapon in self -defence.
The axe case always struck me as having a pre-meditated aspect to it, quite unlike these recent cases. I wonder – well, no, I don’t really – what would be the decision if a man was in the victim’s role?

© Published by the Australian League of Rights, P.O. Box 27 Happy Valley, SA 5159