Wednesday, December 1, 2010

Words of Thomas Edison

It is absurd to say that our country
Can issue $30 million in bonds
And not $30 million in currency.
Both are promises to pay
But one fattens the usurers
And the other helps the people.”

Why should the Government pay interest to a private banking system for the use of its own money, that it could issue itself without interest? This is exactly what the Social Crediters of the “Michael” Journal demand, when they urge the Federal Government to take back its power to issue the money for our country. Two famous Americans, industrialist Henry Ford (pioneer of the U.S. car industry) and inventor Thomas A. Edison (who, despite having attended school for only three months, managed to patent more than 1,000 inventions), also agreed with that proposal. What helped Ford and Edison, two great friends, to reach this conclusion is that they reasoned like engineers, who consider only facts and the physical laws of nature, contrary to most economists, who deal with arbitrary notions that many times do not fit with facts.

Ford and Edison were inspecting in 1928 the Muscle Shoals water power plant, built on the Tennessee River. They were interviewed by The New York Times”, which reported these interviews in its issues of December 4 and 6, 1921. These interviews are reproduced in abbreviated form below, and the lessons they teach are just as valid today. (The information is taken from the May-June, 1998 issue of “The Social Crediter”, 16 Forth Street, Edinburgh, EH1 3LH, Scotland.)

Without the control of the Bankers, there would be no wars

“From the operation of this plant,” Ford said, “many great things are possible, greater power production than this country has yet known... The one big thing which I see in Muscle Shoals is an opportunity to eliminate war from the world.”

Mr. Ford was asked how this was possible.

“Just this way,” he replied. “It is very simple when you analyze it. The cause of all wars is gold. We shall demonstrate to the world through Muscle Shoals, first the practicability, second the desirability of displacing gold as the basis of currency and substituting in its place the world's imperishable natural wealth...

“The essential evil of gold, in its relation to war, is the fact that it can be controlled. Break the control and you stop war. The only way to break the control of these international bankers, the way to end their exploitation of humanity forever, is to smash gold as a basis for the currency of the world...”

“But what have you to substitute?” he was asked.

“That’s just where Muscle Shoals comes in,” said Mr. Ford: “see what a spectacle we have. Army engineers say it will take $40,000,000 to complete the big dam. But Congress is economical just now and not in a mood to raise the money by taxation. The customary alternative is thirty-year bonds at 4 per cent. The United States, the greatest Government in the world, wishing $40,000,000 to complete a great public benefit is forced to go to the money sellers to buy its own money. At the end of thirty years the Government not only gas to pay back the $40,000,000 but it has to pay 120 per cent interest, literally has to pay $88,000,000 for the use of $40,000,000 for thirty years... Think of it. Could anything be more childish, more unbusinesslike!

Government debt-free money

“Now, I see a way by which our Government can get this great work completed without paying a nickel to the money sellers. It is as sound as granite, and there is but one thing hard about it. It is so simple and easy that, maybe, home folks can’t see it.

“The Government needs $40,000,000. That is 2,000,000 twenty-dollar bills. Let the Government issue those bills and with them pay every expense connected with the completion of the dam. The dam completed we can set the whole works running, and in a shorter time than you would suppose, the entire $40,000,000 issued can be retired out of the earnings of the plant.”

“But suppose the contractor would be unwilling to accept that kind of currency in payment?” he was asked.

“There is not that kind of suppose in the situation at all,” said Mr. Ford, smiling. “He would take Government

“If the currency is issued by the nation, $30 million for financing Muscle Shoals, it will be the proper thing to do. Once the currency method is tried in raising money for public improvements, the country will never go back to the bond method...

“Now here is (Henry) Ford proposing to finance Muscle Shoals by an issue of currency (instead of bonds). Very well, let us suppose for a moment that Congress follows his proposal. Personally, I don't think that Congress has imagination enough to do it, but let us suppose that it does. The required sum is authorized — say $30 million. The bills (money) are issued directly by the Government, as all money ought to be.

“When the workmen are paid off, they receive these United States bills. Except that perhaps the bills may have the engraving of a water dam instead of a railroad train and a ship, as some of the Federal Reserve notes have, they will be the same as any other currency put out by the Government; that is, they will be money.

“They will be based on the public wealth already in Muscle Shoals; they will be retired by the earnings and power of the dam. That is, the people of the United States will have all that they put into Muscle Shoals and all that they can take out for centuries... the endless wealth-making power of the Tennessee River... with no tax and no increase in the national debt.”

— “But suppose Congress doesn't see it, what then?” Edison was asked.

“Then Congress must fall back on the old way of doing business. It must authorize an issue of bonds. That is, it must go out to the money brokers and borrow enough of our own national currency to complete great national resources, and we must pay interest to the money brokers for the use of our own money.

“That is to say, under the old way, any time we wish to add to the national wealth, we are compelled to add to the national debt.

“Now, that is what Henry Ford wants to prevent. He thinks it is stupid, and so do I, that for the loan of $30 million of their own money, the people of the United States should be compelled to pay $66 million — that is what it amounts to with interest. People who will not turn a shovel full of dirt nor contribute to a pound of material, will collect more money from the United States than will the people who supply the material and do the work.

“That is the terrible thing about interest. In all our great bond issues, the interest is always greater than the principal. All of our great public works cost more than twice the actual cost on that account. But here is the point.

“If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good, makes the bill good also. The difference between the bond and the bill is that the bond lets the money brokers collect twice the amount of the bond and an additional 20 percent, whereas the currency pays nobody but those who contribute directly to Muscle Shoals in some useful way...

“It is absurd to say that our country can issue $30 million in bonds and not $30 million in currency. Both are promises to pay, but one fattens the usurers and the other helps the people. If the currency issued by the Government was no good, then the bonds would be no good either. It is a terrible situation when the Government, to increase the national wealth, must go into debt and submit to ruinous interest charges at the hands of men who control the fictitious value of gold.”

Foreclosure scandal impact: Sales dry up

Big banks are having trouble restarting the foreclosure process after this fall's "robo-signing" scandal, and the once booming market for foreclosed homes has been hit hard as a result.

According to ForeclosureRadar, the number of properties coming to auction in hard-hit western states -- Arizona, California and Nevada -- has dropped more than 30%.

In San Diego, according to broker Scott Cheng of Cheng Realty, who puts investors together with foreclosed properties, the number of auctions scheduled has fallen from 500 a day, to 300. "That part of my business has dried up," Cheng said. "A lot of my investors have stopped looking."

Cheng used to be able to find about three or four suitable homes a month for investors looking for a bargain. Now, he hasn't done one of these deals since August.

"The ones who are really upset are the investors, who buy on the courthouse steps," said Kevin Berman, a broker with Bankers Realty Services in Fort Lauderdale, Fla. "There used to be sometimes 700 sales a day. Now there are like, seven."

In September, several banks -- including Ally, Bank of America, and JPMorgan Chase -- acknowledged problems with their foreclosure procedures. Employees had been signing as many as several hundred documents a day in which they sometimes attested to facts that they had no personal knowledge of, calling into question the legitimacy of the foreclosures.

The banks initiated foreclosure moratoriums, promised a full review of all cases, and to resume foreclosures quickly. But the review process has been slow-going.

Investors had been doing brisk business, buying distressed properties on the cheap, sprucing them up and flipping them. But now they are being far more cautious.

"Their concern is that homeowners will be more aggressive in fighting foreclosures even after the auction sale," said Sean O'Toole, CEO of ForeclosureRadar.

For vulture investors, speed is essential -- they do not want to tie up investments for months while attorneys argue.

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'Pressuring N.Korea' rhetoric is self-deceiving

South Korea rejected China's proposal for restarting Six-Party Talks. South Koreans are now being misguided by radical emotions. It's true that Six-Party Talks can ease Korean Peninsula tensions, but South Korea first needs to vent its anger.

South Koreans are demonstrating almost concordant toughness, which is not normal for the country. South Korea's Ministry of Foreign Affairs and Trade should have the wisdom and insight that is clearly absent among netizens.

With an overall national strength much stronger than the North's, and defense assistance from the US, South Korea should be worried less of security issues than the North. The probability of enduring a massive invasion from the North is almost zero.

China cannot help vent South Korea's anger, but is sincerely helping ease Peninsula tensions and wants to find ways of defusing the Korean crisis. The South Korean government showed its reluctance to support China by not agreeing to talks. Decision-makers in Seoul probably believe that acting against pragmatic solutions entails much smaller political risks in the short term.

Since the US declared its return to Asia, the frequency of clashes in Korea Peninsula has accelerated. Instead of reflecting upon this, South Korea became more obsessed with its military alliance with the US, which has proven faulty at best. Seoul and Washington are seeking to pull Beijing to their side. They think once China gets tough, North Korea will behave - but such logic is quite ludicrous among Chinese.

People from the South and the North are one people. South Koreans clearly know about the Korean temperament of sticking to independent choices and being reluctant to succumb to external dissuasion.

Isn't Pyongyang's decisiveness in front of orders by external powers also part of South Koreans' national character? Does South Korea really think the North would submit to pressure?

The illusion of forcing North Korea to yield has plagued Northeast Asia for years. It stops the region from taking advantage of moments of opportunity to solve the Korean deadlock.

There is no simple solution to the complex Korean issue. Saying that China should blockade North Korea to make Pyongyang succumb is not only self-deceiving, it is a humiliation to the entire Korean people.

As long as people in this region do not want another war and let blood-and-iron policies reshape Peninsula dynamics, the only pragmatic solution is still to sit down and trade mutual compromise for lasting peninsular peace.

« Jon Stewart Interviews Ron Paul: "The FED Has A Little Thing Called A Counterfeit Machine" (Daily Show Video) »

The Daily Show With Jon Stewart Mon - Thurs 11p / 10c
Ron Paul

Daily Show Full Episodes Political Humor Tea Party

Daily Show Video: Dr. Ron Paul with Jon Stewart

Try arguing with any of this. Ron Paul in 2012!

"My biggest concern is personal liberty, and uh, I’ve noticed over the years that both Republicans and Democrats have very little respect for personal liberty. Therefore, I have been fighting this and I want government to be small. If government is big you have less personal liberty. You have to find out how they finance big government. They tax us a lot, but that’s not enough to pay the bills. They borrow a lot, but that’s not enough.

Then there’s another method, and it has to do with the FED. They have this little thing called the counterfeit machine. They just print the money when they need it. You and I would go to jail if we did that. But the fed does that in secrecy and they get away with it and the government just keeps growing.

And then, on top of that, they use this to finance these wars that I think are so ridiculous. You know, undeclared wars, endless wars, good wars, long wars, all kinds of wars with no end in sight. So I put a lot of blame on the FED because they monetize this debt. They literally take a bill and print the money."


Watch Dr. Paul's appearance on the Daily Show during the '08 campagin:


« MUST SEE BUST: Mortgage Bankers Association 'Strategic Default' Exposed By Jon Stewart (Daily Show Video) »

The Daily Show With Jon Stewart Mon - Thurs 11p / 10c
Mortgage Bankers Association Strategic Default

Daily Show Full Episodes Political Humor Rally to Restore Sanity

Video: The Daily Show's Wyatt Cenac

The Mortgage Bankers Association strategically defaults, walks away from the commercial loan on their headquarters after shaming and ridiculing homeowners who do the same.

Excellent clip from last week. The hypocrisy from John Courson, MBA's CEO, oozes from the camera as he lectures homeowners for choosing to walk away instead of pay. The interview with the head of the Vegas MBA Chapter is the best part -- comes somewhere in the middle.

Get the background story:


« Dying Of Debt: A Road To Perdition (By James Quinn) »


by James Quinn


Christmas is a time when kids tell Santa what they want and adults pay for it. Deficits are when adults tell the government what they want - and their kids pay for it.

Decade after decade, Americans have voted for intellectually and morally bankrupt dullards that promise them more goodies under the tree. Every day is Christmas in Washington DC. Long-term means the next election cycle to these traitors of the Republic. I have written ad nauseum about the impending financial cataclysm that awaits our nation. I have spent countless hours documenting the unsustainable path of our politicians’ financial decisions and lack of courage in addressing the forthcoming tragedy that grows closer by the day. Our political system is so corrupt and dysfunctional that there is absolutely no chance that our path will be altered at the voting booth.

Government programs are fashioned, but never finished. The IRS tax code consists of 3.4 million words covering 7,500 pages of payoffs to business lobbyists. Simplicity is a virtue. The politicians who are bought and sold by corporate interests prefer complexity and obscuring the truth. Everyone knows that the government cannot fulfill the fiscal promises they have already made. Instead of dealing with this reality using intelligence, courage and conviction, the weak kneed politicians that slither the halls of Congress have chosen to add a brand new bloated entitlement program guaranteed to detonate in our faces. This is the existing reality. There is nothing I can do that will change this reality. Instead, I will propose a new model.

Road to Perdition Scenario

“Government ‘help’ to business is just as disastrous as government persecution... the only way a government can be of service to national prosperity is by keeping its hands off.” Ayn Rand

Politicians do not care about budgets, inflation, or the value of the U.S. dollar. They care about power, personal enrichment and being re-elected. In fiscal 2000, the US government had $1.545 trillion of receipts and $1.458 trillion of expenses, resulting in a surplus of $87 billion that year. A mindless government bureaucrat doesn’t conclude that the surge in receipts was due to the internet bubble resulting in billions of one time capital gains revenues. They should have expected reduced revenues in future years. Nine years later government receipts were $1.51 trillion, while expenditures had reached $3.5 trillion. Total government outlays never go down. Obama’s FY10 budget projects $1.649 trillion of receipts and $3.042 trillion of expenditures, resulting in a deficit of $1.393 trillion. Deficits in the range of $1 trillion per year are projected for the next 10 years. Instead of addressing this budget gap that will absolutely lead to economic disintegration, politicians add new entitlements, expand our interventionist foreign wars, and dole out pork to their corporate backers.

Year On-Budget
Receipts Outlays Surplus or Deficit(−)
2000 $1,544,873 $1,458,451 $86,422
2001 $1,483,907 $1,516,352 -$32,445
2002 $1,338,074 $1,655,491 -$317,417
2003 $1,258,690 $1,797,108 -$538,418
2004 $1,345,534 $1,913,495 -$567,961
2005 $1,576,383 $2,069,994 -$493,611
2006 $1,798,872 $2,233,366 -$434,494
2007 $1,933,150 $2,275,303 -$342,153
2008 $1,866,280 $2,508,130 -$641,850
2009 estimate $1,501,784 $3,479,621 -$1,977,837
2010 estimate $1,649,422 $3,041,947 -$1,392,525

In the early 1980’s, before the three decade long debt induced frat party, the National Debt was between $900 billion and $1.6 trillion. Today, the National Debt is $12.3 trillion, up 1,250% in three decades. The US dollar was phenomenally strong in the early 1980’s versus against a trade weighted basket of foreign currencies, reaching 145 in 1985. Today it has sunk to 77, a 50% decrease in 24 years. Enormous deficits and a plunging currency are a precursor of the unavoidable breakdown of a onetime economic powerhouse. A courageous act by our leaders would be to dramatically decrease government spending and increase interest rates to encourage savings, which would result in a strong dollar. The short term pain would be intense, but it would put our country back on a sound fiscal path. Instead, we will throw our children and grandchildren under the bus with continued financial malfeasance. More spending, more debt, and a cheaper dollar are the drugs of choice.


Dying of Debt

“Deficits mean future tax increases, pure and simple. Deficit spending should be viewed as a tax on future generations, and politicians who create deficits should be exposed as tax hikers.” Ron Paul

As the U.S. National Debt has grown from $900 billion to $12.3 trillion since 1980, three month Treasury interest rates have declined from 16% in 1980 to .04% today. The U.S. Treasury has been taking advantage of these artificially low rates to rollover the National Debt and issue new debt on a short-term basis at very low rates. Even with these low rates, interest on the debt was $400 billion in 2009. The government has essentially been able to borrow from foreigners at an overall effective rate of 3.5%. Foreigners are making rational decisions to reduce purchases of long-term US Treasury bonds because they know it is the policy of the United States to inflate away our debt obligations. Buying U.S. Treasury bonds is a recipe for significant losses. The U.S. Treasury is playing Russian roulette at every debt auction. At some point, Timmy Geithner is going to pull the trigger and his pea brains will splatter all over the floor.

Based upon the projected budget deficits over the next ten years, the National Debt will reach $25 trillion by 2019. Interest on the National Debt at various interest rates would be:

Rate Interest Expense

3.5% $875 billion

5.0% $1.25 trillion

7.5% $1.87 trillion

10.0% $2.50 trillion

Total 2008 expenditures of the U.S. government were $2.5 trillion. The law of supply and demand will inevitably lead to much higher interest rates. The market will call the U.S. bluff. It will happen well before 2019. The result will be chaos, upheaval, and social unrest. This is based upon just our current spending. The unfunded commitments made by corrupt myopic politician’s decades into the future cannot be honored. These unfunded liabilities total $106.8 trillion according to the Social Security and Medicare Trustees. The bold faced lies by politicians and mainstream media morons about “bending the cost curve” downward are outrageous in their audacity.

The failure of politicians to address a crisis that has been predictable for decades is truly criminal. The demographic facts are undeniable. In 1950 there were 7 workers per retiree in the U.S. Today, there are 4.5 workers per retiree. By 2030, there will be less than 3 workers per retiree. In the next twenty years retiree benefit payouts will skyrocket as Baby Boomers retire en masse. The confluence of these entitlement payouts with soaring interest on the National Debt and peak oil will floor the U.S. economy. The only way to honor these commitments would be through huge tax increases. During the current healthcare debate, politicians have actually described these government programs as successful. I suppose the executives at GM, Fannie Mae, and Freddie Mac feel they have been running successful companies too. They are fitting in perfectly as government blood sucking entities.

No Political Will

“The moral and constitutional obligations of our representatives in Washington are to protect our liberty, not coddle the world, precipitating no-win wars, while bringing bankruptcy and economic turmoil to our people.” Ron Paul

As disaster draws near, the two crooked political parties that are controlled by corporate and banking interests spout their usual mantras. The Democratic solution is to tax the “rich” and spread the wealth around by squandering our tax dollars on stimulus programs, jobs programs, welfare programs, foreign wars and bailing out their banker masters. The Republican answer is to reduce taxes on the “rich”, boost defense spending, issue tax rebate checks, and frittering away our tax dollars on foreign wars, while bailing out their banker masters. The differences between the two parties are inconsequential. Neither party have ever reduced government spending and neither party will ever take on the military industrial complex or the entitlement system. These dishonest politicians have devastated the American dream. Sound fiscal, monetary and tax policy were discarded in 1913 with the creation of the Federal Reserve and the institution of the income tax. Politicians were given a green light to spend taxpayer money and borrowed money in order to get re-elected. The Federal Reserve has provided the liquidity by inflating away 97% of the value of the USD.

The chart below detailing the FY10 Federal budget clearly shows the dire circumstances were are in today. Mandatory spending on Social Security, Medicare, Medicaid, interest on the debt, and other social spending already exceed $2 trillion per year. These mandatory programs are sitting on the launch pad like the space shuttle ready to blast off into the stratosphere. When these costs blast off, with the mass retirement of Baby Boomers, we all know what happens next.

Military spending, and running all the other ineffectual government agencies total $1.5 trillion per year of “discretionary” spending. A rational reality based civil servant would look at this and honestly tell the American people that massive cuts in defense spending and social programs is absolutely necessary to save the country from bankruptcy and decline. If you are waiting for President Barack Obama to go on national TV and speak these words to the American public, you probably believe the new healthcare bill will reduce the National Debt, improve your healthcare, and reduce your premiums. Democrats and Republicans continue to live in their Washington DC fantasy world where increasing taxes will miraculously solve our problems according to Democrats and decreasing taxes to stimulate growth will solve our dilemmas according to Republicans. Both are delusional and dishonest.


Creating a New Model

"You never change the existing reality by fighting it. Instead, create a new model that makes the old one obsolete." R. Buckminster Fuller

There is zero chance that my proposed modifications to our financial system would ever be implemented by either one of the existing political parties. There is a long shot chance that a 3rd party, using this new model as their platform, could get elected and implement these necessary changes. This is highly unlikely given that 50% of the country pays no taxes and sucks off the teat of state. These proposed alterations would require shared sacrifice, a decline in our standard of living, a conclusion to the welfare state, and an end to our colonial empire. Since no one in this “me first” selfish society would willingly vote for such a transformation, the existing corrupt structure will need to give way first. At that point, reasonable people will have a chance to choose a rational sound economic model. We may not have to wait long for our chance.

Taxing Situation

“When the federal government spends more each year than it collects in tax revenues, it has three choices: It can raise taxes, print money, or borrow money. While these actions may benefit politicians, all three options are bad for average Americans.” Ron Paul

The Federal government has chosen all three. A family or business recognizes that it needs to spend less than its income in order to prosper over the long-term. The U.S. government is dependent upon individual income taxes to provide 64% of its receipts. The FY10 budgeted receipts are as follows:

Individual Income Tax $1.051 trillion

Corporate Income Tax $ 179 billion

Social Insurance $ 257 billion

Highway Taxes $ 38 billion

Tobacco & Alcohol Taxes $ 28 billion

Customs & Duties $ 24 billion

Estate Taxes $ 20 billion

Other Excise Taxes $ 52 billion

TOTAL RECEIPTS $1.649 trillion

The 7,500 page Internal Revenue Code has been written to benefit politicians and special interests that pay politicians. This is how politicians repay their financial backers with tax breaks or deductions. The tax code is purposely indecipherable so that the general public is unable to recognize the payoffs for what they are. If the current tax code was scrapped and made so simple a Treasury Secretary could do their tax return properly, influence would be stripped from Congress. They will never willingly consent to this. The truth is that the top 1% of income earners pays 40% of the taxes. The top 10% of income earners pay 71% of all taxes. The bottom 50% of income earners pays virtually no taxes. Still, the rich and powerful are able to hire highly paid tax attorneys to avoid billions in taxes through loopholes provided by their Congressional concubines.

My proposal to reconstitute our corrupt tax system is a flat tax of 10% on all earned income. There would be absolutely no deductions or credits. Interest, dividends, and capital gains would not be taxed. Savings and investment should not be discouraged. Corporate income taxes would be eliminated. Taxes on corporations are just passed through to customers in higher prices. The biggest change to our tax system would be the implementation of a 15% Value Added Tax on all consumption, excluding food and clothing. Overconsumption is what got us into this predicament. It can help get us out of it. The simplicity of my system would make politicians, tax accountants, and special interest groups foam at the mouth like rabid dogs. Based on figures supplied by the Bureau of Economic Analysis, government receipts would be:

Flat Tax Receipts ($6.3 trillion x 10%) $ 630 billion

Value Added Tax Receipts ($9 trillion x 15%) $1.350 trillion

Social Insurance & Excise Taxes $ 320 billion

TOTAL RECEIPTS $2.300 trillion

Politicians wield immense amounts of power through the use of tax goodies. There is absolutely no reason for this complex system other than to pay back constituents and lobbyists for their votes and contributions. Simplicity would destroy their power base and shift control back to the people.

Don’t Cut My Program

“All initiation of force is a violation of someone else's rights, whether initiated by an individual or the state, for the benefit of an individual or group of individuals, even if it's supposed to be for the benefit of another individual or group of individuals.” Ron Paul

The FY 2010 Federal Budget projects spending of $3.6 trillion. According to the sages that control the government purse strings, $1.4 trillion of this spending is discretionary, while $2.2 trillion is considered mandatory. In FY 2000 total government spending was under $1.9 trillion. Government expenditures have risen 89% in ten years. Over this same time frame receipts have risen 7%. That certainly sounds sustainable. Government spending needs to be slashed with a machete. If we can cut spending back to the levels of 2000, we can achieve a balanced budget. Once the initial slashing of the budget is complete, reinstitution of PAYGO rules would be essential. Politicians cannot be trusted to do what is right for the country. These rules would force them to cut other expenditures in order to institute new spending. The other absolute necessity would be the reinstitution of a sound money policy. A currency backed by a combination of limited metals such as gold, silver, platinum, and palladium would restrict politicians from reckless spending. The Federal Reserve has proven to be a political animal and has destroyed the value of the dollar. They cannot be trusted to act in the best interests of the people.

2005 2006 2007 2008 2009 estimate 2010 estimate
Total outlays 2,655,435 2,728,940 2,982,881 3,997,842 3,591,076 3,614,774
National defense 521,840 551,286 616,097 690,308 712,853 658,697

Payments for individuals 1,591,772 1,689,307 1,824,596 2,090,273 2,213,262 2,279,522
Direct payments 1,314,964 1,400,936 1,519,911 1,711,774 1,803,769 1,883,317
Grants to State and local governments 276,808 288,371 304,685 378,499 409,493 396,205
All other grants 157,289 155,426 156,631 189,324 242,708 223,248
Net Interest 226,603 237,109 252,757 142,738 135,862 254,488
All other 226,181 178,050 219,042 976,880 370,647 286,358
Undistributed offsetting receipts -68,250 -82,238 -86,242 -91,681 -84,256 -87,539
Total nondefense 2,133,595 2,177,654 2,366,784 3,307,534 2,878,223 2,956,077

As far as I’m concerned, the term Mandatory means nothing. Politicians promised people benefits they could never deliver in order to get elected. It is time for a reality check. You will not receive the Social Security, Medicare, and Medicaid benefits you were promised. Al Gore was lying to you. There is no lockbox. The immoral politicians who skulk about the halls of Congress have already spent the Social Security funds that were supposed to be in a lockbox. The sooner Americans learn the truth about these programs, the sooner we can get this country back on a sound fiscal course. The FY 2010 Budget shows that the $3.5 trillion is spread around like Obama stash. We only need to slash the budget by $1.2 trillion in order to balance the Federal books. Do you think a few special interests, neo-cons, socialists, senior citizens, do-gooders, and welfare beneficiaries will be upset?

The major expenditures in the FY 2010 budget are as follows:

National Defense Related $822 billion

Social Security $696 billion

Medicare $458 billion

Medicaid $290 billion

Welfare Payments $153 billion

Social Tax Credits $141 billion

Federal Retirement Benefits $128 billion

Education $105 billion

Transportation $104 billion

Unemployment $ 89 billion

Health $ 67 billion

Housing $ 58 billion

International Affairs $ 53 billion

Justice $ 52 billion

Other $399 billion

TOTAL EXPENDITURES $3.615 trillion

In order to balance the budget, America’s far flung empire must be reined in. Overreach has previously bankrupted the Roman Empire and the British Empire. We need to recall the troops from Germany, Japan and every other outpost on the planet. We need to declare victory in Iraq and Afghanistan and withdraw our troops. The military industrial complex must be dismantled. We have enough bombs, fighter jets, bombers, submarines and aircraft carriers to blow up the earth three times over. The military will need to pick the essentials, as their budgets are slashed. Efficiency will be a blessing. These changes would cut $300 billion from the budget and put Defense spending all the way back to 2002 levels.

Social Security was created so that widows and orphans would not starve to death during the Great Depression. It morphed into an entitlement over the decades. The government cannot payout the amount it has committed. Either the tax rate needs to be increased from 6.2% to 8.2% or benefits need to be slashed. My choice is to slash benefits. Immediate means testing based on net worth should be implemented. Anyone over a reasonable threshold would not receive Social Security. The minimum age to receive benefits should be increased to 70 years old and increasing over time. Anyone less than 50 years old would have half their contributions go into their own self managed investment account. They would receive reduced benefits at retirement. New employees into the workforce would not receive any benefits at retirement. Their investment account would be their sole government pension. These changes would immediately save $250 billion per year and save trillions in the future.

Both Democrats and Republicans have harped on the fraud in waste in the Medicare and Medicaid programs. For once, they are right. Fraud, waste, defensive medicine, malpractice lawsuits, and lack of competition combine to cost $400 billion per year in unnecessary expenditures. Instead of adding a new healthcare entitlement to an already bankrupt system, we need to fix the existing system. Medicare needs to be completely reconstituted. It also needs to be means tested. If you can afford your own insurance, you don’t go on Medicare. The insurance portion should only be for catastrophic illness. Each Medicare recipient should receive a fixed amount of funds in a health savings account to use for their basic medical needs. All doctors and hospitals would be required to publish their rates for service, tests, and procedures. Laser eye surgery has not been covered by medical insurance and doctors have had to compete on price and quality. Prices have come down dramatically over time. By limiting malpractice awards, allowing competition across state lines, actually stopping fraud and introducing price competition, we can ring $400 billion out of these costs. Instead, the government will criminalize not having medical insurance.

“The only power any government has is the power to crack down on criminals. Well, when there aren't enough criminals, one makes them. One declares so many things to be a crime that it becomes impossible for men to live without breaking laws.” Ayn Rand

The various tax credits would be eliminated with the new simple tax system. This would eliminate $141 billion of expenditures. The remaining $1.2 trillion of expenditures would need to be cut by 10% in order to save another $120 billion. The cumulative savings would be $1.2 trillion and the Federal Budget would be in balance. Virtually no one in this country would vote for anyone proposing such drastic changes. The implementation of these cuts would surely result in a deep recession. It would be a chosen path back to reality. It would be a courageous and noble act of adults taking the bitter medicine today so that our children and grandchildren will have a tomorrow. I have no hope that anyone in government today would be willing to tell the American public the bitter truth about our economic future and propose anything close to what I have proposed. This leads me to the logical conclusion that we will continue on the current path until our empire collapses under the weight of debt, political corruption and grand illusions.

Another Brick in the Wall

“Throughout the centuries there were men who took first steps, down new roads, armed with nothing but their own vision.” Ayn Rand

I’ve noticed that since the term “liberal” has been discredited liberals call themselves “progressives”. I get it – progress. Any fresh unpaid for entitlement, new social program, environmental tax, stimulus package, or union bailout is considered progress to these visionary do-gooders. Now that “neo-con” has been discredited by the disastrous actions of Bush and Cheney, I anticipate these warmongers to adopt the new Orwellian name “peace through war and invasion guys”. Today, when I hear the degeneratives, I mean progressives, describe the financial crisis as a failure of free market capitalism, I have to laugh.

Capitalism should not be condemned, since we haven't had capitalism.” Ron Paul

We haven’t had true capitalism since 1913. We live in a corporate fascist state dominated by the military industrial complex, the financial banking complex, and now the healthcare industry complex. It is fascinating that the health industry has spent $396 billion in 2009 on lobbying and the financial industry $334 billion while Congressmen debate the future of both industries. These industries surprisingly have received a windfall in the legislation that has been put forth by Congress. The system is so corrupt and rotting from within that elections will never result in necessary reform. Corporations are spending $3 billion per year to bribe (lobby) your elected officials. Whose interest do you think Congress is looking out for?

2009 Lobby
Sector Spending
Health $396,240,855
Misc Business $362,259,396
Finance, Insurance & Real Estate $334,341,984
Energy & Natural Resources $300,512,509
Communications/Electronics $266,103,829
Transportation $184,606,661
Other $182,632,267
Ideological/Single-Issue $112,914,979
Agribusiness $103,924,231
Defense $96,174,660
Construction $40,387,356
Labor $32,015,440
Lawyers & Lobbyists $24,617,969

Source: Open Secrets

The Defense industry doesn’t need to splurge as much on lobbying because our never ending wars of choice keep the orders flowing in. Our liberal left wing President is spending more on defense than our last neo-con President. There are no plans to scale back our interference in world affairs. The military planners work around the clock preparing for war in Iran and Yemen. The planned domination of the Middle East is the untold truth, as our ruling elite know that Peak Oil is a fact and our sprawling suburban existence depends upon cheap oil. Once it becomes clear that peak oil has set in, panic will result and armed conflict for the remaining supplies will breakout. Instead of planning for this event by preparing the country by shifting our economy to natural gas, nuclear, coal, geothermal, wind, solar, and ocean based sources, we will invest in our military machine to seize the nectar of American life. This will be a tragic choice.

The United States owes foreign countries $3.5 trillion today. Our obligation to foreigners has risen by $500 billion in the last 12 months. The Obama spending plans will require the issuance of $2.2 trillion of new debt this year. We will need foreigners to buy close to $1 trillion of our debt in 2010. The Chinese already own 25% of our outstanding debt, with Japan at 23% and OPEC at 6%. They know our budgets project $13 trillion in deficits over the next 10 years. They know Ben (ameba spine) Bernanke is trying to inflate away this debt through inflation and a lower dollar. They know they are guaranteed to lose billions if they buy Treasuries paying 3%. They are not fools. They will eventually choke on this debt and vomit it back in our face. With mammoth debts, gargantuan unfunded liabilities, massive unemployment, a far flung military empire, multiple wars, and an overconfident, clueless, lethargic population, the surge in interest rates and hyperinflation will topple this bloated crumbling kingdom.

“We are fast approaching the stage of the ultimate inversion: the stage where the government is free to do anything it pleases, while the citizens may act only by permission; which is the stage of the darkest periods of human history, the stage of rule by brute force.” Ayn Rand

When the current economic scheme breaks down and the country dissolves in disarray because there is no courage, truthfulness or morality left in Washington DC, anything is possible. When governments are confronted with intractable domestic problems, they seek a foreign threat to distract the public. Our economic malfeasance and oil shortages will likely spark a World War III scenario with the Muslim world at odds with the Christian world. With nukes in the possession of many countries, terrifying outcomes are easy to imagine. The people of America will have a choice to make. They can put another brick in the wall, or they can try to break free. They can choose to take back their freedom and liberty or relinquish their last vestiges of humanity to a fascist dictatorship. Together we stand, divided we fall.


« Sarkozy & Merkel Promise To Bailout The Entire European Continent Until The End Of Time & Fiat Currency »


Angela Merkel in eurozone permanent bail-out vow - BBC

Germany's Chancellor Angela Merkel has vowed to implement a permanent bail-out facility amid speculation over a break up of the 16-nation eurozone.

A joint statement with French President Nicolas Sarkozy said the two would propose replacing the existing fund that expires in 2013.

Meanwhile the head of Germany's central bank said the existing fund could be increased if needed.

And the fund's head has dismissed the risk of a eurozone break-up.

Klaus Regling of the European Financial Stability Facility (EFSF) said it was "inconceivable that the euro fails".

There has been speculation that some countries may be forced to give up the euro in light of the Irish debt crisis.
Fund upsize

In their joint statement, the French and German leaders said that they were working "under high pressure on a joint proposal for a crisis mechanism that is to replace the current one beyond 2013".

The EFSF was set up over the summer as a general rescue fund for eurozone governments, in a failed attempt to prevent the Greek debt crisis spreading to other countries.

The two leaders also said they wanted a bail-out of the Irish Republic by the EU and IMF to be finalised as soon as possible.

Continue reading at the BBC...


The absolute truth about European bailouts...

Brilliant satire. Clarke & Dawe on the European debt-guarantee circle jerk...


« F#@K YOU GEITHNER - Treasury Announces Plan To Sell Taxpayers' GM Stake With 'No Concern For Profit' »

Scroll down for VIDEO...


Remain calm as you read this story from Bloomberg.

Pay particular attention to this passage:

Taxpayers, however, haven’t broken even on GM. The government needed to sell its entire stake for about $44 a share for that to happen. The U.S. would need to sell its remaining 37 percent ownership of GM at $53 a share for taxpayers to be made whole.

Miller and Massad said they aren’t waiting for the stock to reach that level.

“We’re not a private equity fund,” Massad said. “We believe that promoting financial stability means we should exit as soon as we can.”


So the Bush-Obama regime bails out GM against the wishes of the American people, and then later, when the investment finally looks like a win for taxpayers, the United States Treasury announces publicly that it has no interest in breaking even, let alone making a profit.

Under what conception of reality does it promote financial stability for Treasury to sell its remaining position 'as soon as we can?' How does dumping tens of millions of shares, prematurely, promote anything but the lack of intelligence of those doing the selling. So we wait 20 months to see the IPO, and now taxpayer fund manager Massad, can't wait to blow his GM load all over the Street.

Where the hell are Barofsky and Kaufman...


And why isn't this guy in charge of the SEC...

This is brilliant, trust me. Give him 30 seconds or so to get going.

WalStreetPro says "Tim Geithner is a worthless piece of maggot shit..."


« Brady To Geithner: "For The Good Of The Country, Will You Resign Mr. Secretary?" (VIDEO) »

Video - The money quotes comes right at the 1-minute mark...

  • "Remind me Mr. Secretary, what post were you holding when President Bush left office."

Runs 2 minutes. Worth watching the whole exchange.

The rest of the clip is here...


Next Debt Crisis May Start in Washington: Bair

The US needs to take urgent action to cut its debt in order to prevent the next financial crisis, which may start in Washington, Sheila Bair, chair of the Federal Deposits Insurance Corp. (FDIC) wrote in an editorial in the Washington Post.

The federal debt has doubled over the past seven years, to almost $14 trillion, and the growth is a result of both the financial crisis and the government's "unwillingness over many years to make the hard choices necessary to rein in our long-term structural deficit," Bair wrote.

Retiring baby boomers will impact government spending heavily and this year, combined spending on Social Security, Medicare and Medicaid are expected to make up 45 percent of primary federal spending, compared with 27 percent in 1975, she explained.

"Defense spending is similarly unsustainable, and our tax code is riddled with special-interest provisions that have little to do with our broader economic prosperity," Bair wrote. "Overly generous tax subsidies for housing and health care have contributed to rising costs and misallocation of resources."

If no action is taken, US federal debt held by the public could rise from 62 percent of gross domestic product this year to 185 percent in 2035, she warned.

"Eventually, this relentless federal borrowing will directly threaten our financial stability by undermining the confidence that investors have in U.S. government obligations," Bair said.

"With more than 70 percent of US Treasury obligations held by private investors scheduled to mature in the next five years, an erosion of investor confidence would lead to sharp increases in government and private borrowing costs," she added.

There needs to be "a bipartisan national commitment" for an austerity package of both spending cuts and tax increases over many years in order to solve the problem, according to Bair.

"Most of the needed changes will be unpopular, and they are likely to affect every interest group in some way," she said.

Nationwide home prices still inflated by 30 percent based on 50 years of household data.

The typical American family is facing the biggest economic uncertainty since the Great Depression and must feel like their lives are in a washer spin cycle. Many unemployed Americans are now entering a stage where unemployment insurance is being cut off which will send tens of thousands of people into the street. The mainstream media won’t cover this because they rather gossip about the next tan face to drink themselves into a gutter at a nightclub. 43 million Americans are receiving some kind of food assistance yet this is some kind of recovery? Many are wondering how banks can produce such large profits without actually producing anything real or of substance in the economy. Yet banks are largely casinos that now operate to siphon off real wealth from the economy through bailouts, frauds, and other activities that harm the overall economy. In a decade where banks were unleashed to do what they may with limited regulation and a cozy Fed, we are now left with an economy in tatters but a banking sector that is still healthy based on oversized bonuses. I wanted to gather data over the last 60 years and measure how most Americans are now fairing. The data shows a largely underwater nation.

Let us look at the data carefully:
us household data

Back in 1950 the median home price cost a little above 2 times the annual median household income:

1950: $7354 / $3,319 =2.2

In 1960 the ratio remained roughly the same:

1960: $11,900 / $5,620 = 2.1

In fact, over this ten year period the typical household gained buying power when it came to housing. Even in 1970 the ratio became more favorable to US households:

1970: $17,000 / $9,867 =1.7

This was the lowest point at the start of any decade in modern history. After this point, with all the push for deregulation and allowing Wall Street to run rampant prices remained fairly stable only because of the two income household (that is until we hit 2000):

1980: $47,200 / $21,023 = 2.2

1990: $79,100 / $35,353 = 2.2

2000: $119,600 / $50,732 = 2.3

This was sustained via the two income household:

After this point, things went haywire. Incomes went stagnant or dropped yet home prices sky rocketed. Even today after the severe correction the ratio is still out of sync with 50 years of data:

2010: $170,500 / $50,221 = 3.3

In fact, given the current income levels the median nationwide home price should be down to $119,000 (a 30% drop from current levels). Some will argue that we should factor in for inflation. This would only be the case if we also saw wage growth. For the first time in modern history did we see wages stagnant for an entire decade. So the average American family is still looking at inflated assets and that is why we have millions of people sitting in underwater homes:

negative equity

Just think of what negative equity represents. It represents a household that has over paid for a home. I don’t think the desire to own a home has dramatically gone up or down in the last fifty years. Homeownership has always been a big part of the American Dream. But what happened over the last ten years is that banks were able to get their grubby hands on mortgages and convert them into another commodity where they could place large bets and ultimately push losses to taxpayers. People that over paid are paying via foreclosure. What is the penalty that banks are paying? That is why now that banks have raided and had their way with housing, they are looking for other markets to gamble in (with taxpayer money). The above chart shows the millions of homeowners who hold mortgages that are worth more than the homes they are in. Any thinking person realizes that the only way home prices are justified at current levels would be if incomes shot up to make the ratio closer to 2.2. Over half a century of data and never did we have a housing bubble on a nationwide level. All of a sudden Glass-Steagall is repealed in 1999 and a housing bubble takes off with banks leading the way because the line between investment and commercial banking was blurred. Only those who want to deceive themselves would place blame elsewhere.

The average American is going to struggle throughout the next decade. It is hard to see how wages will go up so it is likely that home prices will adjust lower given the magnitude of foreclosures in the pipeline. People might be jumping up and down about the recent job growth but they are occurring in lower paying sectors. So this does nothing to justify current prices. Low mortgage rates are merely a gimmick so banks can use cheap money to speculate on a global scale. Even with mortgage rates at levels we’ve never seen the housing market remains stalled like an old car. Why? Because the actual sticker price is still inflated based on income levels.

We need to reform the banking system, break up investment and commercial banks, and finally restore sanity in the market. There is a reason the metrics are all off but nothing has been done to change this so we are only a short ways away from another crisis. Ireland for example can be likened to a homeowner that took on too much debt with too little income. So the international banking sector idea of a solution is to extend them a credit line? What they should do is tell the IMF and Euro to shove it, default, and start from scratch and learn from their mistake. Otherwise, they’ll be in the same position as Americans who bailed out their corrupt banking sector.

20 Statistics That Prove That Global Wealth Is Being Funneled Into The Hands Of The Elite – Leaving Most Of The Rest Of The World Wretchedly Poor

Today global wealth is more highly concentrated in the hands of the elite than it ever has been at any other point in modern history. Once upon a time, the vast majority of the people in the world knew how to grow their own food, raise their own animals and take care of themselves. There weren't many that were fabulously wealthy, but there was a quiet dignity in having land you could call your own or in having a skill that you could turn into a business. Sadly, over the past several decades an increasingly growing percentage of agricultural land has been gobbled up by big corporations and by corrupt governments. Hundreds of millions of people have been pushed off their land and into highly concentrated urban areas. Meanwhile, it has become increasingly difficult to start a business of your own as monolithic global corporations have come to dominate nearly every sector of the world economy. So more people than ever around the world are forced to work for "the system" just to make a living. At the same time, those at the very top of the food chain (the elite) have spent decades rigging the system to ensure that increasing amounts of wealth will continue to flow into their pockets. So now in 2010 we have a global system where a few elitists at the top are insanely wealthy while about half the people living on earth are wretchedly poor.

There are very few nations around the world that have not been almost entirely plundered by the global elite. When the elite speak of "investing" in poor countries, what they really mean is taking control of the land, water, oil and other natural resources. In dozens of nations around the world today, big global corporations are stripping fabulous amounts of wealth out of the ground even as the vast majority of the citizens of those nations continue to live in abject poverty. Meanwhile, the top politicians in those nations are given huge bribes to go along with the plundering.

So what we have in 2010 is a world that is dominated by a very small handful of ultra-wealthy elitists that own an almost unbelievable amount of real assets, a larger group of "middle managers" that run the system for the global elite (and are rewarded very handsomely for doing so), hundreds of millions of people who actually do the work required by the system, and several billion "useless eaters" that the global elite don't really need and that they don't really have much use for.

The system was not ever designed to lift up the poor. Nor was it ever designed to promote "free enterprise" and "competition". Rather, the elite intend to funnel all wealth to themselves and to have the rest of us enslaved either to debt or to poverty.

The following are 20 statistics that prove that the wealth of the world is increasingly being funneled into the hands of the global elite, leaving most of the rest of the world wretchedly poor and miserable....

#1 According to the UN Conference on Trade and Development, the number of "least developed countries" has doubled over the past 40 years.

#2 "Least developed countries" spent 9 billion dollars on food imports in 2002. By 2008, that number had risen to 23 billion dollars.

#3 Average income per person in the poorest countries on the continent of Africa has fallen by one-fourth over the past twenty years.

#4 Bill Gates has a net worth of somewhere in the neighborhood of 50 billion dollars. That means that there are approximately 140 different nations that have a yearly GDP which is smaller than the amount of money Bill Gates has.

#5 A study by the World Institute for Development Economics Research discovered that the bottom half of the world population owns approximately 1 percent of all global wealth.

#6 Approximately 1 billion people throughout the world go to bed hungry each night.

#7 The wealthiest 2 percent own more than half of all global household assets.

#8 It is estimated that over 80 percent of the world's population lives in countries where the income gap between the rich and the poor is widening.

#9 Every 3.6 seconds someone starves to death and three-quarters of them are children under the age of 5.

#10 According to Gallup, 33 percent of the people on the globe say that they do not have enough money for food.

#11 As you read this, there are 2.6 billion people around the world that lack basic sanitation.

#12 According to the most recent "Global Wealth Report" by Credit Suisse, the wealthiest 0.5% control over 35% of the wealth of the world.

#13 More than 3 billion people, close to half the world's population, live on less than 2 dollar a day.

#14 CNN founder Ted Turner is the largest private landowner in the United States. Today, Turner owns approximately two million acres. That is an amount greater than the land masses of the states of Delaware and Rhode Island combined. Turner also advocates restricting U.S. couples to 2 or fewer children to control population growth.

#15 There are 400 million children in the world today that have no access to safe water.

#16 Approximately 28 percent of all children in developing countries are considered to be underweight or have had their growth stunted as a result of malnutrition.

#17 It is estimated that the United States owns approximately 25 percent of the total wealth of the world.

#18 It is estimated that the entire continent of Africa owns approximately 1 percent of the total wealth of the world.

#19 In 2008, approximately 9 million children died before they reached their fifth birthdays. Approximately a third of all of these deaths was due either directly or indirectly to lack of food.

#20 The most famous banking family in the world, the Rothschilds, has accumulated mountains of wealth while much of the rest of the world has been trapped in poverty. The following is what Wikipedia has to say about Rothschild family wealth....

It has been argued that during the 19th century, the family possessed by far the largest private fortune in the world, and by far the largest fortune in modern history.

Nobody seems to know exactly how much the Rothschilds are worth today. They dominate the banking establishments of England, France, Germany, Austria, Switzerland and many other nations. It was estimated that they were worth billions back in the mid-1800s. What the total wealth of the family is today is surely an amount that is almost unimaginable, but nobody knows for sure.

Meanwhile, billions of people around the globe are wondering where their next meal is going to come from.

At this point, many readers will want to start arguing about how horrible capitalism is and about how wonderful socialism and communism are.

But capitalism is not the problem and as we have seen countless times over the past several decades, government ownership of business is not the solution to anything.

What we have in the world today is not capitalism. Rather, it more closely resembles "feudalism" than anything else. The elite are "monopoly men" who use their unbelievable wealth and power to dominate the rest of us. In fact, it was John D. Rockefeller who once said that "competition is sin".

It would be great if we lived in a world where those living in poverty were encouraged to start owning land, to create businesses and to build better lives for themselves.

But instead, things are going the other way. Wealth is becoming more concentrated in the hands of the elite, and the middle class is starting to be wiped out even in prosperous nations such as the United States.

It turns out that the global elite have decided that they don't really need so many expensive American "worker bees" after all and they have been moving thousands of factories and millions of jobs overseas. Meanwhile the American people are so distracted watching Dancing with the Stars, Lady Gaga and their favorite sports teams that they don't even realize what is going on.

There is no guarantee that America will be prosperous forever. Today, a record number of Americans are already living in poverty. Today, a record number of Americans are on food stamps. The median household income went down last year and it went down the year before that too.

So wake up. America is being integrated into a world economic system that is dominated and controlled by the insanely wealthy elite. They don't care that you have to pay the mortgage or that you intend to send your kids to college. Mostly what they care about is making as much money for themselves as they can.

Greed is running rampant around the globe, and the world is becoming a very cold place. Unfortunately, unless something really dramatic happens, the rich are just going to continue to get richer and the poor are just going to continue to get poorer.

« WaMu Lost 100,000 U.S. Mortgage Files In Mexico »

Video - Max Keiser & Stacy Herbert - Hasta La Vista WaMu

Washington Mutual lost more than 100,000 mortgage files and all the associated personal information of the borrowers - names, addresses, DOBs, SS#s, bank accounts, etc. - during a warehouse move to Juarez, Mexico.

Time Magazine is the source, but the story is currently only available in the print and iPad editions for December. However, I was able to track down a Houston Chronicle mention from 2008:

But we've learned where the files are being sent may not be the biggest concern.

"On the day the facility was shut down and empty, could Washington Mutual account for every single loan file that was sent to Mexico?" Arnold asked.

"No," our source answered.

Our sources say Washington Mutual lost track of more than 100,000 loan files. Files our sources said were still missing the day the Houston warehouse was shut down.

Poe has concerns about the whole process.

"Somebody else has access to that besides the people that ought to be looking at it," Poe said. "That's very disturbing."

Washington Mutual would not answer Local 2's question as to whether it tracked down all the files. Instead we received this written statement:

"For many years WaMu has worked with vendors based in the U.S. who perform some services in other countries. We don't publicly discuss details of our confidential vendor relationships. The protection of customer information is a top priority for WaMu and our dedicated internal Quality Control organization implements ongoing evaluations of our vendor relationships to ensure that controls are being implemented, both in the transportation of customer information and the management of the information," wrote Missy Latham, Washington Mutual vice president and manager, Southwest Bureau National Public Relations.


TIME reporter locates mortgage documents in 4 HOURS that Bank Of America called 'lost and unrecoverable.'

Foreclosure Foul-up: Tracking Down Those 'Lost' Mortgages - Time

Just how bad is the problem? TIME dug into the mortgage of one troubled borrower. What we found suggests that many promissory notes are not lost. In an effort to rush homeowners to foreclosure, and hide damaging information, bankers' have needlessly created a huge legal mess that once again questions the financial industry's credibility and ethics. "They [banks] don't comply with the law when they're taking people's homes," says Michael Olenick, who owns Legalprise, a legal research firm.

Douglas' mortgage broker got him a loan from subprime lender Fremont General, which before it went bankrupt in 2008, was based in Brea, California. In mid-2005, Fremont sold the loan to New York-based Goldman Sachs, which packaged it up with other loans and sold it off to investors. In June, Iris Owens, an official in the servicing arm of Bank of Amerca, signed an affidavit attesting that after a "diligent search," Douglas' original note could not be recovered.

But even without the bank's internal record it took me about four hours to find Douglas' loan.

Where is it? About five miles east of downtown Minneapolis, in a warehouse owned by Wells Fargo. A simple search of public documents on the Securities and Exchange Commissions website was able to produce the address and telephone number of the building it was in. Bank of America now concedes it made a mistake. Instead of calling Wells Fargo, an associate in Bank of America's mortgage-servicing division requested Douglas' note from Deutsche Bank, which runs the mortgage trust Douglas' loan is in, but is not the document custodian. Wells, as the SEC documents say, has that job. What's less clear is why Deutsche didn't tell the associate to call Wells or why someone at Bank of America didn't look up the same SEC filing I did. Instead, Owens, based on the information from her associate and doing no checking of her own, signed the lost-note affidavit. Douglas' loan had officially disappeared.

Continue reading at Time...