Countrywide's Angelo Mozilo Indicted: And So It Begins…

Ok I'm bringing in Madoff at this point as he had decades to do the deed without a peep out of anyone. The government asleep on the job no doubt. Eyes closed while all this was taking place. They didn't see the train coming but I sure did. I was pissed when my small house that I could afford when I bought it more than doubled in price and I had to double the insurance and the taxes more than doubled as all the untilities kept going up along with food prices because of the outragious price of gas.

The real problem is that it is actually very difficult to rob a bank. Banks don't actually have any money of their own. They are basically a flow through mechanism whereby the government issues us money (based on an entirely unfair and subjective "credit" system). Banks and their shareholder (the beneficiaries) earn a annula premium on every dollar issued called interest. They don't put up anything, risk any real capital, they just act as a storefront, much like the post office.

Therefore, how can you rob them? There is a pretty compelling argument that interest is basically theft or fraud since it is a fee charged for doing nothing based on misrepresentation which we exchange for actual labor or goods of value - especially since the government could easily issue the money directly without the very expensive middleman - but as it stands the banks make the laws so it is "legal".

econo, I have read everything I can when it comes to economics101, I was over there on that CEO big $$$$ site where you and Tim and Rhys and another were debating for weeks and I was getting a great education from you. I spend 4 hours one night reading every blessed thing you all wrote. I am giving you all kinds of credit here oh wonderman of economics but................this surely isn't how it is? or might it be true?

but as it stands the banks make the laws so it is "legal".

but it should NOT be true, as our constitution says nothing about banks making the laws. I am shattered, depressed, and my faith is all but gone, where's my gun, oops, don't own one.

But just to debate you, robbing banks doesn't get you money from the banks in the end because insurance companies insure those losses.

Agreed Andy. I don't care what Mazilo did - I just want him to roll over on Dodd and Franks. I wonder how they're sleeping lately.

Didn't even think of that angle Greg...will Angelo flip for the feds, to try and save his own skin? Good Point!

Linda,

I wouldn't worry about insurance companies .... when you can "create" money why worry about losing a little??

It is a discussion about CEO compensation - I will add you as a friend and check my history - fell free to join in.

As to your question, I'm not sure their ever really was, especially in banking. The capital at risk in most banks is the shareholder equity. All other capital is either borrowed or held in trust. The big problem with banks and investment dealers is that their is so much misinformation about how they operate, and about what "money" actually is. However, before you can understand what is going on here, you need to understand banks and money and how they are related.

The model upon which all banks are based was an invention (like most of European soceity) of the Italian Renaissance. Merchants in Grain and other commodities began using "notes" to represent future deliveries to port. These notes began to carry "value" associated with the shipments. What enterprising merchants figured out was that since their "notes" had value, they could make as many of them as they wished, and as long as everyone didn't claim them all at once, they could produce "money" from nothing. However, what were they to do with "money" to promote the business - they lent it out at interest. This was the beginning of banking and money as we know it today. These notes were oringally secured by tangible assets, gold, commodities, etc. for which the "notes" could be exchanged upon demand.

The real issue comes up on how much "security" these notes should have. Technically, as long as you only issued the notes, and no on ever asked for the security you didn't need any. However, as soon as the "faith" in the bank was lost, there would be a "run" on the notes, and invariably the bank would be worthless.

The solution to this problem was to establish rules for "reserves" to back up the notes. Before we go any further, lets be clear on this, at this time government "money" was generally "specie" or a coin made of precious metals such as gold/silver. The value of the government money was in the value of the actual metal involved, not a promise by the government. These bank "notes" were an alternative to specie, and neither had anything to do with government, nor any guarentee of value beyond the "word" and reputation of the issuer. In effect, the banks were "creating" paper money based on absolutely no reserves, no assets, nothing of any value.

The notable failure of many "banks" led to some rules which would become the fractional reserve banking system which is used today. The rules generally revolved around a ratio of 10 to 1. In short, banks could issue (create) 10 dollars for every 1 dollar which they held "in trust" as a deposit. That's right, the bank itself doesn't put up anything at all, it creates $10 based on a depositer who entrusts them with $1 for "safekeeping". As the depositors got wind of this they began to demand a peice of the action. In return for using their capital as "reserves" they would get "interest" or profit sharing as you will, on the deposits. This is the basic system of how banks operate even today.

The next important peice is the integration of government money through the "central bank" into the banking system. As banks grew, they began to finance nobles and kings as well as merchants. This posed a problem for the bankers. The King or high ranking nobles could often just outlaw the bank and end the debts. The solution was to convert the private bank notes into a public currency. The cost of doing this was to give the "government" access to "borrow" as much money as they wanted. The banks would get a national currency which they controlled at the branch level, and the backing of the legal system in collection opf debts. The government got the ability to create money backed by the banks.

The first of these central banks was the bank of England in 1690, and it was the model for all other banks. Going forward, the national currency was created and exchanged through the central bank. The government would "borrow" money through the bank and pay interest back to the "investors" who bought the debt. Banks would use the fractional reserve system as discussed above to create legal currency on demand, the legal system was refocused on debt and collection on behalf of the banks. This was a win - win - lose situation - the banks and government win, you lose.

This leads us to the modern banking system. OUr curtrent banking system began in 1913 with the 16th amendment (allowed unapportioned direct tax on wages) and the Federal Reserve Act. These two acts are linked by the new money system which would use government debt to "seed" the federal reserve and income tax as the annuity to repay the debts. The next major peices were the GD in the 30's were the Gold standard was dismantled and the gold sold off by the Fed and Bretton woods in the 40's where international clearing/payment rules led to the Global super banks at the centre of the current crisis.

To get to your question, the risk capital today in the banking system is the capital put up by the shareholders. Banks continue to operate on the system noted above with "reserves" which range from 3 - 10% of outstanding loans. There are two significant differances though. First, commercial banks create 95% of the "money" now in circulation at no cost or obligation to the Government or the Fed. The costs of this business are basically the general operating costs (land, wages, etc.) and interest paid on deposits. They no longer are required to hold any actual assets beyond that. Therefore, the modern bank has become little more than a flow through mechanism where by interest on debt from "created" money (which technically doesn't even exist since it is created by a bank, not the Fed) is paid to investors who bought shares. Secondly, unlike early banks whose reserves were in actual "specie" which had some intrinsic value, the banks reserves are just more of the same "phantom" money which they create.

Much of the risk of banking is by design. Banks create money to lend out. They make loans to people who they think are going to pay interest. All the money in circulation is based on a debt from someone to someone, on which interest is being paid. Once a debt is repaid to a bank, the money basically goes from whence it came - into nothing. What remains is the interest. Where does the interest come from? New loans which have not yet been paid! So we are faced with a system where the money supply is contantly increasing (to pay all the interest). Where banks create money and retire money at will. Where the only self control mechanism is people who cdon't repay their debts. That's right, failure to repay is part of the anti inflation control built into the system, where "bad debts" control the growth of the money supply and provide a moral lesson not to abuse the banks.

As such, the question comes up - how can we actually figure out what the banks are doing? how much money they have? how much money they have created? what stops them from just creating more when they need it? How do we ever get out of debt? How much are we paying in interest? Who controls the government? who controls the money supply? who caused the recession? etc .....

Who controls the government?

That one is easy as soon as you answer "Who controls the money supply?". They are one in the same.

How many banks do you have to rob and bankrupt before you go to jail in this country?

apparently more than mozilo did...

I know, I thought the same thing... a civil suit?

ohhhhhh,,, good thought,,, the People of the United States of America,,, v. greed inc, et. el.....

charges: malicious intent to defraud the Citizens for their own personal gain,,,,,,

recoup a few bucks,,,,,

Don't forget Phil Graham and a slew of republicans to go along with Dodd & Frank,,,,

They can't press charges because none of the stuff this bum did was technically illegal, remember the deregulation?

Civil suit is the best they can do. When Mozilo loses the case the SEC will freeze all his assets and bankrupt him with legal fees. Not the handcuffs many like me were hoping for, but it will do.

It will take more than this to make me lose faith in the entire country. I have definitely lost faith in bankers, but that happened decades ago for me.

A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain. - Mark Twain

What incompetence? They made trillions on a ponzi scheme, got the government to pay them trillions more, pushed the market up, repeatedly sold short without even an uptick rule, got out of the market when it was up, and now can buy it back without competition from the masses because the masses are unemployed.

Sounds to me like the plan worked perfectly. Just the way they told their representatives in government to work it.

Mandelman,

If they just fell into it, why does it occur on such a regular basis? No I think they know exactly what they are doing and how often they can pull it off without causing the general population from effectively ending it. The propaganda and conditioning throughout a lifetime is no accident. Look at how passionately average people defend this corrupt system that exploits them and destroys their lives. Even while it is destroying them.

Tim the genius of our credit/debt soceity is that it rewards those who are irresponsible and pits everyone against everyone else. Remember we are all still animals who are stockpiling "thing" for a rainy day like a squirrel. It is our instinct to collect things we might need, and it makes us feel good. It is also instinct that makes us selfish and comeptitve - there are lots of species who will gladly sacrifice themselves for the herd, not humans. We ant to have more, be smarter, be better than everyone else.

It is precisely these traits which allow the system we have to work. Why would we accept that the rich control so much and the poor so little? Why would we accept homelessness, poverty, abuse, exploitation and degradation if it didn't make us feel competitive. Jesus said there will be poor always - this is not because we don't have the eceonomic capaity to provide a reasonable life for everyone on Earth - we've had that for decades - its because human nature needs the rich and the poor, the strong and the weak, the exploiter and exploited - these themes are universal and ongoing.

It doesn't make any sense, yet, as you point out, it is the very people who would benefit most who are against change. Look at the people who support Palin/McCain - most are poor, uneducated, sick and unhappy. They dislike Michael Moore and Obama because they want to better than someone - they want to out compete the homeless, the insane, the criminals .... that's what we are fighting and the wealthy elite knows exactly ho to play those fears to keep them voting their way ....

Mandelman,

Here is a link to the discussion Econ was referring to. We have had many good discussions here. I hope you have a lot of time to read them, some get a little long.

What top-paid CEOs in the U.S. earn

Econ,

The ironic part is by pursueing the more, smarter, and better goals we are demonstrating our worst flaws as humans. More is unsustainable. The philosophy of more is self-destructive as we live in a finite universe and more importantly a finite planet with no effective way of exploiting nearby space bodies. Smarter would be to pursue a sustainable economy and to study the current system dispassionately to find what works and what needs improvement. That would require a shift to a philosophy of enough. It would, also require a shift to making sure everyone has enough to have a productive, fulfilling life. And to be better should mean to be more humane, compassionate, and just.

Actually that is a really good point. We have created a soceity based on "continuous improvement" mainly to provide cover for an ever expanding money supply. We expect that things will allways go up in value, productivity will always improve, education and standards will get tougher - the problems of this paradigm are pretty significant.

I remember in 2nd year economics the prof asked what the "rate of inflation was from 1 AD to 1690 - the answers were all over the place .... 1%, 10%, 5% .... the right answer was zero. In real terms the answer is still zero. The fair "value" of most things outside of arbitrage has actually changed very little in 2000 years, it is the "measurement" (ie Money) that has changed. A fine suit of clothes in Ancient Rome cost about an ounce of Gold, the price of an ounce of gold is about $800 which is the price of a suite today.

Therefore, this push to constant improvement is a human creation, manufactured to motivate, misrepresent and facilitate certain parts of the economy. The motivation peice is clear. Constant improvement is very good for the "capital" class. Productivity typically means greater profits (and lower net wages for the working class). Inflation also creates cover for interest costs (who would buy a house with an 8% mortgage if the house never went up in value??), and wage manipulation (real wages have been declining since the early 80's). It also allows for the capital class to deamand an ever increasing return on investment from all economic ventures. Concepts like "enhancing shareholder value" or improving ROI for investors are examples of this.

The most troubling problem is the conversion of a working economy to a so called "knowledge based" economy. The high productivity required by the bosses leads to fewer workers needed. shifts in the economy between blue collar and white collar take generations, and we have entered an era where we only need 10% of the population to actually run the economy efficiently - the other 90% are mostly just window dressing. The challenge is that we need virtually full employment for our economy to funcition since our entire monetary system is based on debt - therefore, we need to "create" jobs with less and less significance to the economy all the time to maintian the banking, legal and government sectors. These sectors are NOT important to the functioning of the actual economy and should be seen mainly as parasitic on the productive part of the economy.

Econ,

Nicely said.

Here's the short version - they don't think you can figure out that a 6% return is only 1% after 5% inflation (which is chronically under reported anyway) so you keep paying 9% on your loans ..... and that 4% wage increase is actually a 1% decrease .... All very complicated - better go watch "American Idol" that actually makes sense!

American Idol is perfect for today's society for the same reason I hate it, no brainpower needed whatsoever to watch or participate.

Stone,

Couldn't agree more - American Idol, Survivor, etc. are conditioning for telling us how our meritocracy works. We have hundreds of people lined up for a chance to perform in front of a panel of people with highly dubious credentials (beyond knowing the right people), and severely critiqued - and people actually line up to do this????

Those who "win" are the ones who "deserve" to win .....

Thats the entire point - I remember in October when W. came on the air talking about how the problems were caused by "complex" securities (read: only me and my Ivy league buddies could understand - that's why we get the big bucks!) which had gone "bad" ..... This is exactly like survivor. On this very site Ive read all kinds of discussions about derivatives, securitization, FICO, Fannie, Freddie, etc - some of this stuff was excellently written, well researched and a complete waste of time.

There is a very simple problem with our economy, and, frankly, our soceity. 500 years ago some very smart con men figured out that instead of stealing peoples' money with scams it was much safer (and profitable) to make money and lend it out. The key is in convincing people that money is worth something. Just like the white guys who traded the Indians for "Their Land", most of the time the victims had no idea what was going on.

Today our entire economy and soceity is based on trading things of value (work, land, resources, etc.) for something of no value money. Those who understand that they can create money out of nothing and exchange it for things of value are those who run things. The problem is pretty simple they need to keep up the scam but convincing us that money is actually worth something. This is particularly difficult when they play games like they did over the last 8 years where they tell us our house went from 200k to 600k, but everything else stayed the same???

The key to the scam has always been getting those in charge to sanction the money and support the money creation system with violence for those who don't play along. This is why we had a dollar issued by the Federal reserve, created by a commercial bank, supported by politicians, judges, cops and jails.

The ultimate irony is that banking is basically fraud. They are exchanging something of no value for something of value, and then charging you interest (interest is that key to banking, not the money lent out. It is the interest that generates revenue, since the principal must be retired to the nothingness from once it came as soon as you pay it off - the interest remains as your contribution). In Law when you provide absolutely nothing in return for something of value, its theft. When you do so through dishonesty, its fraud.

the problem is that these guys have infiltrated the entire economy. We "cannot" live without them any more - therefore, the politicos who know how this crooked system work are either owned by it, or forced to accept it to continue our soceity. As President Jackson put it, if we understood the way banks really operate, there would be a revolution by morning. This is a very true system. This is why we have all this nonsense about MBS, ABS, securtization, etc ..... it is imperative that people not understand that they are serfs owned by the banks, and sanctioned by politicians and courts!

The real irony of the guys who will go down here is that they are sacrificial lambs (just like the Enron guys) to a corrupt, criminal enterprise that runs things. This is not a conspiracy theory, this is how our economy actually operates. The bankers won't deny that they counterfeit money, that they provide nothing in return for the interest people pay - they will tell you the "scam" is the most efficient way to run the economy - "the ends justify the means" - therefore, its good for everyone.

Well said economics101 !!! So we shall ever remain between a rock and a hard space, in a catch-22, with no escape. Can I trade in the stick for a ultra heavy duty club to beat myself over the head? Oops, I have left my senses. Truth is such a hard pill to swallow.

Yes it is much safer and easier to steal if you can actually get the people to beieve it is in their interest to give you their money instead of taking it by force or obvious scam.

Wells Fargo hey, oh my, is the, as Tex would call it, is the shyte going to hit the fan or what?

I'll bet the city of Baltimore had it's eyes close through the good time while they raised and collected taxes because of the housing boom, but now they are deciding that because of foreclosures to step in and yell after the fact.

Haha, OMG, take it Mandelman and write to your heart is content. I can't wait to read what you write!!

I always knew Wells Fargo was one of the most corrupt disgusting financial corporations in this country. I banked with them briefly back when they were First Security. I even once had a car loan through them that they handled illegally. Evil, evil corporation. Just evil.......

Evil, evil corporation. Just evil...

anyone who reaD abd'S LINK can see for themselves....go get 'em, Martin...

CitiGroup is pretty damn evil too.

During the last election people were talking about the 'start of a class war'. Little do they know that war has been going on throughout human history and before. It can be seen in the animal kingdom from predator territories to mating behavior in deer and other herd animals. It was going on during the official feudal period to monarchies to the industrial revolution and robber barons through today with the latest financial sector collapse and the multi-national corporations that manipulate supply to increase costs (look at gasoline and sub-capacity operation of refineries to jack up the price).

Tim, I agree, the entire history of "civilized" humans is that of a class war - the only difference from the "status quo" of the rich attacking the poor was the fear that the poor would attack the rich. Thats what they mean by class war.

Econ,

I know what they mean, as you know. It is amazing to me how people refuse to acknowledge it and actively fight their own self interest because of a conscious effort to stay ignorant. It takes real courage to imagine a better world and to work toward it. It takes real confidence to evaluate those efforts periodically, admit what has failed, and make corrections as new information becomes known. In our political system it is called waffling or flip flopping and has a negative conotation. I just doubt understand this resistance to learn from our mistakes. Or this devotion to certainty in the face of the facts. It is the same tendency toward stagnation that is part and parcel with religion.

That's the rub, with deregulation and new-ish scams they technically didn't break the law. The few insider trading laws that were broken are hard to prosecute. Hitting these greedy bastards in the wallet is appropriate punishment. They love money and we take it.

It is definately fraud, but getting a criminal conviction of fraud is a lot tougher than getting a judgement in civil court.

In Criminal cases the burden of proof is to be beyond a reasonable doubt. In Civil cases it is a preponderance of the evidence.

I guess the wisdom is that it is better to get an easy judgement first then go for the criminal. It is a lot tougher to beat a criminal case if you freeze all their assests first with a criminal case.

Unfortunately you get all the justice you can afford, remember OJ? In murder case, OJ had a ton of money and beat evidence that would have put any regular citizen under the jail. In robbery case, OJ wasn't filthy rich anymore, got convicted.

Mandelman,

I had the same thought of using Wall St for use with firing squads after conviction in a court of law. First degree murder charges should be filed on any CEO or top exec that was running a company that was responsible for a death do to corporate culture as well as direct decision making. An example I have in mind is that peanut processor with the salmonella contamination. People died from the contamination. If the plant manager received a bonus for releasing this product, the top management is guilty of premeditated murder. If their bonus system rewards destuction of tainted batches, they walk away with commendations. The same goes with the financial sector. You promote schemes that result in people losing their haomes and dieing on the street, you are charged with premeditated murder as if you put a gun to the back of their heads and pulled the trigger.

Watch and see how fast these 'investment instruments' disappear.

You could, but I doubt it would work out. Unless your definition of working out is being bankrupt, having the IRS auditing you annually and being watched by several 3 letter gubmint agencies.

Mandelman,

That is all of the house and 1/3 of the Senate.

Econ,

See 2.10. We agree 99%. The question is how do we change it?

The 1% is the analogy of using the plumber to fix your electricity. I think a better analogy would be hiring a lawyer to sue a corporation that is on retainer to that corporation. They aren't unfamiliar with the problem, they are actively supporting it. look at the credit card legislation.

Tim,

The problem is how do you rebuild an economy. These problems are not new. Marx and Engles forsaw exactly the world we live in more than 100 years ago, so did Huxley, Rousseau, Jackson, Smith, Jefferson, Franklin, etc....

The real problem is that we have allowed this to become so entrenched in our soceity that it will take a revolution to unseat them. We have just seen how private wealth has downloaded investment losses onto their serfs - remember the ultimate goal of our banking system is not personal or corporate debt, but government debt. Rothschild understood that 200 years ago. People can stop paying their debts, corporations too - but what about countries? They just raise taxes. People in the USA argue every 2 and 4 years about taxes - they forget why we pay taxes..... To pay the banks on our debts.

There is only one solution. The government needs to print money and distribute it directly without any debt. The original American currency was designed as a currency without debt, but was quickly hijacked by the bankers. The key problem to a debt free currency is that the bankers refused to accept it. However, if the Feds printed their own money today, without borrowing it, why would anyone not accpet it?? Thomas Edison said: "If a government can issue a bond, why can't they issue a dollar." At the end of the day, our Fed Reserve Notes are wholly based on the ability of the government to repay to bonds that were issued to buy them - so why not issue the money?

Once thje government issued the money two things would happen: The debt would be retired, and the need for personal income taxes would be gone. Secondly, the government could control the money supply to stabilize the economy. Currently the single largest component of persoanl income tax is debt repayment/interest. Without a national debt the government could phase out personal incoem tax on "wages" and subsist on investment taxes, corporate taxes and duties. Tis would represent a massive stimulus to the economy.

The other important issue is that once the Fed was out of the money creation business, the banks would lose their ability to create money, and the government could directly influence the money supply to stabilze the economy. We understand that the expansion/contraction of the money supply is the single most important tool of control of the economy - why do we leave it up to private bankers???

There are 3 dangers to this shift: First, that politicians are about on par with bankers as far as their ability to manage things. Secondly, if monetary control was shifted from "profit" driven to "political" driven we could have the same problems. Finally, that the rest of the world would spurn our change and we would become a financial pariah (certainly egged on by the bankers)

The only point I would leave open for discussion is the use of tax to help control the money supply and inflation. If the economy is heating up to fast, raise income taxes slightly and decrease the rate of printing money, as needed. Economic slowdown, lower tax rates and print money.

I think the international ramifications are about to become a moot point. I think more and more countries are moving in this direction as we speak. I don't wee it being complete for a couple hundred years, but I do think the world is moving in that direction.

Several countries have tired to do this already - mostly 3rd world ones - what happens is the rest of the world decides that they won't accept their "fiat" currency and they will need to pay for things in "hard currency" (read USD) - they then get the IMF and the world bank to come in and "lend" them money (of course created the same way all money is created) to trade. The local government ends up printing money like crazy to keep up with the demand, and produce enough "stuff" to trade for hard currency to pay the debts to the international banks who are behind the IMF and World Banks. The country typically ends up bankrupt ..... Think of Zimbobwe, Brazil, etc.

The real question is what would happen if the USA, UK or France did this? The bankers would fight it, since government is their biggest customer, but would bank resistence really be able to wipe out the value of the the USD or the pound?? Who knows. In the 1830s and again right after the Civil war the government tried this and the banks caused massive depressions.

The key would be once the government controlled the money supply there would be no need for personal wage income tax, since the main reason for this is to pay interest on the national debt. Investment income, corporate income, and other taxes would fund the cost of government. Fluctuations in the money supply would be managed to stabalize growth, banks would be converted to a "full reserve" system where they would actually have the money they lent out.

The end result of this would be:

1. No government debt, no personal wage taxes, more competitive workforce.

2. Net reduction in debt and debt costs. Since the issuance of debt is no longer the only means to control the money supply, expansions need not be funded by increases in net debt, the overall debt load would decline. The cost of borrowing would not be driven by "economic" factors, but by the actual costs of borrowing in the free market. Prices would stabalize as collateralized assets no longer fluctuate with economic policy.

3. Government spending would become stable as revenues and expenditures are matched up. Social spending becomes a priority, while debt servicing and defense expenditures decline.

4. The gap in wealth between the rich and poor shrinks. The real value of capital is rewarded at "cost", as is the real value of labor. We see real improvements in the standard of living for the first time in 45 years.

5. Freed from the contraints of debt, financing of projects with significnat human potential can proceed unhindered. return on investment, proifit will become less important.

The downside dangers are:

1. Short term upheaval - this is a paradigm shift. People have been brainwashed by 100 years of pro bank propaganda that this is the only way to operate. We hear people screaming about government debt and the government printing to much money without them ever asking why something that prints the money can be in debt???

2. MIsmanagment of the money supply by politicians. The main reason for the current system is a distrust of politicians and bureaucrats to manage the money supply. The government needed to issue debt and "borrow" the money from the banks because no one wanted the money that the government issued directly!! Today that issue is irrelevent, but there is a very real concern that the politicians would undertake a campaing just like the bankers did for the last 8 years - artificially low interest rates, printing presses on at full bore ..... however, on balance, what's the differance between bankers and politicians? at least there is some monocom of responsibility from politicians - bankers, not so much. The other issue is that the benefits of this behavior are not private shareholders but everyone.

This "war" has been going on behind the scenes for hundreds of years. We know bankers have caused virtually every major depression / recession in the last 300 years, cused most of the wars, assasinated numerous leaders, opponents, etc. The real question is how we unwind this group?? I don't see an answer at present. I would add this comment - "The reason rich people have more than you is not that they are smarter, better, more careful than you, its that they want it more."

I'd point out that in either Korea or Vietnam the population doesn't use banks, they mistrust them, home safes are in every house, least that is what a friend told me after he visited the country. If that is truly the case upheaval could be at a minimum except from the bankers. They so own the world it is amazing what a difference the world would be without the dragging down of everyone in the world because of the banks from the scenario you paint.

Those politicians mismanage whatever they touch so either way we know they are not going to do the right thing with money.

Linda, the problem is not where we keep the money though. In Japan (I assume Korea is very similar) people hate debt - they save 15% of their incomes. They don't trust banks, don't have mortgages or credit cards the way we do. However, the key to the banking industry is that people are just the icing on the cake. The real customers of our private banks are government and corporations.

Now let me be very clear here - when a government or corporation borrows money they are borrowing based on "our" ability to repay the debt. This is a 2nd party debt, where the real debtor is you and I, the end user. The scam pulled by the bankers here was exactly that - they converted personal debts which they extended knowing the people were overextended, into government debt. Instead of a few insolvent individuals owing money, we all owe money!

I hear from people on Newsvine all the time: "I don't owe any money to anyone" "Ive been careful with my money, and banks love me" - this is nonsense. Banks have always seen government as their most important customer, simply because they have the power to tax. The whole intorduction of income tax was implemented in most countries as a direct result of bank debt.

The problem is this. Governments are authorized by the people to create money. Money is good because it is a universal medium of exchange, and if in paper form, the supply can be increased and decreased as needed for commerce. The problem is that 95% of the worlds money is not produced by the governments, but borrowed from private banks. So why do governments borrow money from banks at interest (which requires incoem tax to pay) when they can print the money without debt, without interest or any obligation?? Remember all money is derived from government debt. All the rest of the money supply is then derived from debt based on reserves created out of the governments debt - if you are confused, its OK - the basis of the entire debt system is banks creating money out of thin air to lend to governments who gave them the authority to create money out of thin air!! Its like the government selling you some land, giving you the money to buy the land for free, and then renting the land from you - this is how our banking system works. The scary parts is the vast majority of the population actually thinks that this is a "business".

In conclusion, we cannot fix the issue of money at the grass roots level. It has nothing to do with persoanl money managment, savings, or even where we keep money. Government has to get out of bed with bankers in scamming the public.