Articles by Ellen Brown
December 29th, 2008
BORROWING FROM PETER TO PAY PAUL:
THE WALL STREET PONZI SCHEME CALLED
FRACTIONAL RESERVE BANKING
Bernie Madoff showed us how it was done, but his Ponzi scheme was small compared to one that has been perpetrated for hundreds of years by the banking system itself. What distinguishes the legal scheme known as “fractional reserve” lending from the illegal schemes of Madoff and his ilk is that the bankers’ scheme is protected by government charter and backstopped with government funds. The sheer size of the bailout efforts today, however, indicates that the banking scheme has reached its mathematical limits and needs to be superseded by something more sustainable.
December 19th, 2008
GROUND ZERO ON WALL STREET:
FED FUNDS AND T-BILLS HIT 0% INTEREST
The federal funds rate and the interest on 3-month Treasury bills both just hit ZERO percent. This means banks and the government are borrowing money for free. Yet demand for the T-bills at auction was four times the available supply! Who is clamoring to buy the debt of the world's most insolvent debtor for no return at all, and why?
December 8th, 2008
SUSTAINABLE GOVERNMENT:
BANKING FOR A “NEW” NEW DEAL
As our 45th President prepares to enter the Oval Office, bank lending has seized up, some of the nation’s largest banks are on life support, and the big three automakers are bankrupt. Housing continues to crash, and so does the economy.
November 25th, 2008
“OOPS, WE MEANT $7 TRILLION!”
WHAT HANK AND BEN ARE UP TO AND HOW THEY PLAN TO PAY FOR IT ALL
The $700 billion that was arm-twisted from Congress in October was just the camel's nose under the tent. The Paulson/Bernanke team is now prepared to pay $7.76 trillion to rescue the financial system. Prepared to pay how? Congress has not raised its debt ceiling to that level, and the Fed doesn't have the funds on its books . . .
November 3rd, 2008
ALL IS WELL IN STEPFORDVILLE:
MORE ON THE PRE-ELECTION CHICANERY OF THE PLUNGE PROTECTION TEAM
It was another surreal week on Wall Street, with the Dow Jones Industrial Average rising a thousand points while the economy continued to sink into its worst financial crisis since the Great Depression . . .
October 25th, 2008
THE NOT-SO-INVISIBLE HAND:
HOW THE PLUNGE PROTECTION TEAM KILLED THE FREE MARKET
October 24 marks the 79th anniversary of the October 1929 stock market crash. Many feared a repeat of this disaster on Friday, October 24, 2008; but remarkably, disaster was averted. How? Suspicious observers saw the hand of the Plunge Protection Team pulling strings behind the scenes . . .
October 16th, 2008
THE COLLAPSE OF A 300 YEAR PONZI SCHEME: THE REAL DEBATE IS CRONY SOCIALISM OR FINANCIAL SOVEREIGNTY
Last night, the Presidential candidates had their last debate before the election. They talked of the baleful state of the economy and the stock market; but omitted from the discussion was what actually caused the credit freeze, and whether the banks should be nationalized as Treasury Secretary Hank Paulson is now proceeding to do. The omission was probably excusable, since the financial landscape has been changing so fast that it is hard to keep up.
October 7th, 2008
THE FED NOW OWNS THE WORLD’S LARGEST
INSURANCE COMPANY --
BUT WHO OWNS THE FED?
The Federal Reserve (or Fed) has assumed sweeping new powers in the last year. In an unprecedented move in March 2008, the New York Fed advanced the funds for JPMorgan Chase Bank to buy investment bank Bear Stearns for pennies on the dollar. The deal was particularly controversial because Jamie Dimon, CEO of JPMorgan, sits on the board of the New York Fed and participated in the secret weekend negotiations. In September 2008, the Federal Reserve did something even more unprecedented, when it bought the world’s largest insurance company.
October 2nd, 2008
BAILOUT BEDLAM:
ROBBING THE TAXPAYERS TO SAVE THE BANKS
The bank bailout bill that just passed the Senate and is being deliberated in the House would turn the banks’ worst assets into good U.S. dollars. How many dollars? The figure was $700 billion a few days ago and has already climbed to $800 billion after the pork was added in. That’s nearly the cost of two Iraq wars, but it still won’t be enough, because the covered instruments eligible for conversion include the black hole of derivatives. Derivatives held by U.S. banks are now estimated at $180 trillion. . .
September 28th, 2008
THANKS BUT NO THANKS:WHAT LINCOLN WOULD HAVE SAID TO PAULSON’S $700 BILLION RANSOM
“These capitalists generally act
harmoniously and in concert to fleece the people, and now that they have got
into a quarrel with themselves, we are called upon to appropriate the
people’s money to settle the quarrel.”
– Abraham Lincoln, speech to Illinois legislature, January 1837
September 18th, 2008
IT’S THE DERIVATIVES, STUPID!
WHY FANNIE, FREDDIE AND AIG ALL HAD TO BE BAILED OUT
Why the extraordinary bailout measures for Fannie, Freddie and AIG? The answer may have less to do with saving the insurance business, the housing market, or the Chinese investors clamoring for a bailout than with the greatest Ponzi scheme in history, one that is holding up the entire private global banking system. What had to be saved at all costs was not housing or the dollar but the financial derivatives industry; and the precipice from which it had to be saved was an "event of default" that could have collapsed a quadrillion dollar derivatives bubble, a collapse that could take the entire global banking system down with it.
September 5th, 2008
TAKE A LOAD OFF FANNIE:
BAILOUT OR NATIONALIZATION FOR THE MORTGAGE GIANTS?
“Take a load off Fanny, take
a load for free;
Take a load off Fanny, and (and) (and)
You put the load right on me.” – The Band, “The Weight,” 1968
The U.S. Treasury recently
sought and was granted an unlimited credit line for Fannie Mae and Freddie
Mac, along with the authority to buy their stock, effectively nationalizing
them; but this could mean $5 trillion more in liabilities for the federal
government, causing it to lose its own triple-A rating. What to do? There is
a solution that would salvage the mortgage giants and cost the taxpayers
nothing . . .
August 14th, 2008
WAG THE DOG:
HOW TO CONCEAL MASSIVE ECONOMIC COLLAPSE
Last week, Fannie Mae and Freddie Mac had just announced record losses, and so had most reporting corporations. Unemployment was mounting, the foreclosure crisis was deepening, state budgets were in shambles, and massive bailouts were everywhere. Investors had every reason to expect the dollar and the stock market to plummet, and gold and oil to shoot up. Strangely, the Dow Jones Industrial Average gained 300 points, the dollar strengthened, and gold and oil were crushed. What happened?
August 8th, 2008
FANNIE AND FREDDIE:
GIVING AWAY THE FARM
Last week, Congress passed a housing bill that gave the Treasury Department a blank check to inject billions of U.S. taxpayer dollars into mortgage giants Fannie Mae and Freddie Mac, snatching them from insolvency. To accommodate this blank check, Congress obligingly raised its debt ceiling by $800 billion. Ouch! That’s nearly a trillion dollars. Why was it necessary to incur this potentially crippling public debt to bail out two completely private, for-profit behemoths, which have run themselves into bankruptcy with their own risky investment schemes? Policymakers said it was essential to maintain the country’s creditworthiness with foreign lenders, which today hold about one-fifth of Fannie and Freddie securities. According to a July 21 report by Heather Timmons in The New York Times. . .
July 26th, 2008
PUTTING THE “FEDERAL”
BACK IN THE FEDERAL RESERVE
In a July 19 Wall Street Journal article titled “Why No Outrage?”, James Grant quoted Mary Lease, a 19th century Populist who urged farmers to “raise less corn and more hell.” Grant notes that financial behavior that would have been met with outrage in the 19th century is now met with near-silence from a too-tolerant populace. For decades after the Civil War, monetary reform was a chief political issue, one around which whole political parties formed. Why is it hardly mentioned today? Grant suggests that the lack of outrage may be because the old 19th century Populists actually won . . .
July 13th, 2008
LET THE LAWSUITS BEGIN:
BANKS BRACE FOR A STORM OF LITIGATION
In an article in The San Francisco Chronicle in December 2007, attorney Sean Olender suggested that the real reason for the subprime bailout schemes being proposed by the U.S. Treasury Department was not to keep strapped borrowers in their homes so much as to stave off a spate of lawsuits against the banks. The plan then on the table was an interest rate freeze on a limited number of subprime loans.
June 26th, 2008
THE SUBPRIME TRUMP CARD:
STANDING UP TO THE BANKS
“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”
– Thomas Jefferson, Letter to Treasury Secretary Albert Gallatin (1802)
June 14th, 2008
WHAT’S THE DIFFERENCE BETWEEN LEHMAN
BROTHERS AND BEAR STEARNS?
LEHMAN’S CEO SITS ON THE BOARD OF THE NY FED
An earlier article by this author (“The Secret Bailout of JP Morgan”) summarized evidence presented by John Olagues, an expert in options trading, suggesting that JPMorgan, far from “rescuing” Bear Stearns, was actually its nemesis. The faltering investment bank was brought down, not by “rumors,” but by insider trading based on a plan drawn up much earlier. The deal was a lucrative one for JPM, handing the Wall Street megabank $55 billion in loans from the Federal Reserve (meaning ultimately the U.S. taxpayer). So how did JPM get away with it? Olagues notes the highly suspicious fact that JPM’s CEO James Dimon sits on the Board of the New York Federal Reserve.
May 13th, 2008
THE SECRET BAILOUT OF JPMORGAN:
HOW INSIDER TRADING LOOTED BEAR STEARNS AND THE AMERICAN TAXPAYER
The mother of all insider trades was pulled off in 1815, when London financier Nathan Rothschild led British investors to believe that the Duke of Wellington had lost to Napoleon at the Battle of Waterloo. In a matter of hours, British government bond prices plummeted. Rothschild, who had advance information, then swiftly bought up the entire market in government bonds, acquiring a dominant holding in England’s debt for pennies on the pound.
April 28th, 2008
SPECULATING IN HUNGER:
ARE INVESTORS CONTRIBUTING TO THE GLOBAL FOOD CRISIS?
Investment newsletters are now featuring headlines like "How You Can Profit from the Global Food Crisis." The recommended investments include agribusiness stocks and exchange-traded funds (ETFs) that speculate in agricultural commodities. These investments will no doubt do very well in the global food crisis; but before you put your money down, you may want to explore whether you will be helping to alleviate the problem or contributing to it.
April 10th, 2008
CREDIT DEFAULT SWAPS:
DERIVATIVE DISASTER DU JOUR
When the smartest guys in the room designed their credit default swaps, they forgot to ask one thing – what if the parties on the other side of the bet don't have the money to pay up? Credit default swaps (CDS) are insurance-like contracts that are sold as protection against default on loans, but CDS are not ordinary insurance. Insurance companies are regulated by the government, with reserve requirements, statutory limits, and examiners routinely showing up to check the books to make sure the money is there to cover potential claims. CDS are private bets...
March 30th, 2008
APRIL FOOLS:
THE FOX TO GUARD THE BANKING HENHOUSE
The Federal Reserve, which has been credited with creating the current housing bubble and bust just as it created the credit bubble of the Roaring Twenties and the bust of 1929, is now to be given vast new powers to oversee regulation of the banking industry and promote "financial market stability."
March 23rd, 2008
On March 13, 2008, Erik Sirri, director of the SEC's division of trading and markets, told Congress that the credit crisis has spread to municipal bond auctions. "There is no question that the recent dislocations in the municipal bond markets have created unanticipated hardships for municipal issuers and in some cases dramatically increased their borrowing costs," Sirri said.
March 15th, 2008
TODAY WE'RE ALL IRISH:
DEBT SERFDOM COMES TO AMERICA
March 17 is St. Patrick's Day, when people of all national origins raise a glass and declare, "Today we're all a bit Irish!" This may be truer than we know. The Irish were driven to America by debt, and they are leading the Western world in household debt today.
January 9th, 2008
WHY IS IRAN STILL IN THE CROSS-HAIRS?
CLUES FROM THE PROJECT FOR A NEW AMERICAN CENTURY
Despite a recent National Intelligence Estimate (NIE) finding that Iran is not engaged in a nuclear weapons program, the push for war continues. Before President George W. Bush left for a Middle East visit on January 8, he told the Israeli newspaper Yediot Ahronot, "Part of the reason I'm going to the Middle East is to make it abundantly clear to nations in that part of the world that we view Iran as a threat, and that the NIE in no way lessens that threat."
November 13th, 2007
BEHIND THE DRUMS OF WAR WITH IRAN:
NUCLEAR WEAPONS OR COMPOUND INTEREST?
On October 25, 2007, the United States announced harsh new penalties on the Iranian military and its state-owned banking systems. Sanctions, bellicose rhetoric and the implicit threat of military action are goads for another war, one that critics fear is more likely to ignite a nuclear holocaust than prevent one...
November 5th, 2007
SUSTAINABLE ENERGY DEVELOPMENT:
HOW COSTS CAN BE CUT IN HALF
Ban Ki-moon, Secretary General of the United Nations, stated in an October 15, 2007 address, "Climate change is a defining issue of our time. The science is clear. . . . We know what we have to do. We have affordable measures and technologies to do it."...
September 20th, 2007
BANK RUN OR STEALTH BAILOUT?
BETWEEN NORTHERN ROCK AND A HARD PLACE
In July 2007, the global credit crisis hit Wall Street. In September 2007, it hit Main Street, in what has been called the worst bank run since the 1970s. Northern Rock, Britain's fifth-largest mortgage lender, was besieged at branches across the country, as thousands of worried customers queued for hours in hopes of getting their money out before the doors closed. Bank officials feared that as much as half the bank's deposit base could be withdrawn before the run was over...
September 3rd, 2007
MARKET MELTDOWN:
THE END OF A 300 YEAR PONZI SCHEME
Panic struck on Wall Street, as the Dow Jones Industrial Average plunged a thousand points between July and August, and commentators warned of a 1929-style crash. To prevent that dire result, the U.S. Federal Reserve, along with the central banks of Europe, Canada, Australia and Japan, stepped up to the plate and extended a 315 billion dollar lifeline to troubled banks and investment firms. The hemorrhage stopped, the markets turned around, and investors breathed a sigh of relief. All was well again in Stepfordville. Or was it? And if it was, at what cost?...
August 9th, 2007
THINKING OUTSIDE THE BOX:
HOW A BANKRUPT GERMANY SOLVED ITS
INFRASTRUCTURE PROBLEMS
Guernsey wasn't the only government to solve its infrastructure problems by issuing its own money. (See E. Brown, "Waking Up on a Minnesota Bridge," www.webofdebt.com/articles, August 4, 2007.) A more notorious model is found in post-World War I Germany. When Hitler came to power, the country was completely, hopelessly broke. The Treaty of Versailles had imposed crushing reparations payments on the German people, who were expected to reimburse the costs of the war for all participants — costs totaling three times the value of all the property in the country...
August 4th, 2007
Only five confirmed deaths have so far resulted from the dramatic collapse of the I-35 bridge in Minnesota on August 1, but in some ways the disaster was more of a shock and a wakeup call than the collapse of the New Orleans levees that took many more lives. After all, most of us will never be faced with a category 5 hurricane...
July 3rd, 2007
DOLLAR DECEPTION:
HOW BANKS SECRETLY CREATE MONEY
It has been called "the most astounding piece of sleight of hand ever invented." The creation of money has been privatized, usurped from Congress by a private banking cartel. Most people think money is issued by fiat by the government, but that is not the case. Except for coins, which compose only about one one-thousandth of the total U.S. money supply, all of our money is now created by banks. Federal Reserve Notes (dollar bills) are issued by the Federal Reserve, a private banking corporation, and lent to the government.1 Moreover, Federal Reserve Notes and coins together compose less than 3 percent of the money supply. The other 97 percent is created by commercial banks as loans.2...
June 21st, 2007
THE QUICK FIX:
A NON-INFLATIONARY SOLUTION TO THE
FEDERAL DEBT CRISIS
The U.S. federal debt has reached crisis proportions, approaching $9 trillion in 2007. U.S. Comptroller General David M. Walker has warned that just the interest on the debt will soon be more than the taxpayers can afford to pay...