David Stockman – “The Great Deformation”                                                          Accessed from ZeroHedge                                                                                     [Excerpts]

“The Wall Street meltdown of September 2008 accelerated the recessionary forces already in motion, causing a total job loss of 7.3 million between the December 2007 peak and the end of the recession in June 2009. That the Fed’s bubble finance had camouflaged the failing internals of the American economy then became starkly apparent. Nearly three-fourths of this reduction was accounted for by the above mentioned loss of 5.6 million breadwinner jobs; that is, nearly 8 percent of their pre-recession total.

That devastating hit left the nation with only 66.2 million prime jobs and set the clock back to the level of early 1998. This is an astonishing fact:  before any of the Greenspan-Bernanke maneuvers to coddle Wall Street and pump up the wealth effects elixir—that is, the 1998 LTCM bailout, the 2001–2003 rate-cutting panic, the August 2007 Bernanke Put, and the Fed’s post-Lehman tripling of its balance sheet – there were more breadwinner jobs than there are today. Since the BlackBerry Panic the Fed has relentlessly pumped freshly minted cash into the bank accounts of the twenty-one government bond dealers. Not surprisingly, therefore, there has been a jarringly divergent outcome between Wall Street and Main Street.

By September 2012, the S&P 500 was up by 115 percent from its recession lows and had recovered all of its losses from the peak of the second Greenspan bubble. By contrast, only 200,000 of the 5.6 million lost breadwinner jobs had been recovered by that same point in time. To be sure, the Fed’s Wall Street shills breathlessly reported the improved jobs “print” every month, picking and choosing starting and ending points and using continuously revised and seasonally maladjusted data to support that illusion. Yet the fundamentals with respect to breadwinner jobs could not be obfuscated.

On the eve of the 2012 election, for example, there were 18.3 million jobs in the goods-producing sectors: manufacturing, mining, and construction. These core sectors of the productive economy had taken a beating during the Great Recession, shedding 3.5 million jobs, or 15 percent. Yet after three and a half years of so-called recovery, the jobs count in the goods-producing sectors had not rebounded in the slightest; it had actually declined slightly from the 18.5 million jobs recorded at the end of the recession in June 2009.

Likewise, there were 7.8 million jobs in finance, insurance, and real estate, meaning virtually no gain from the 7.7 million jobs at the end of the recession.

In short, after forty months of “recovery” there was virtually no change in every category of breadwinner jobs that had been slammed by the Great Recession.

Thus, there had been 130.8 million total jobs in January 2000, and this figure had reached 138.0 million by the December 2007 peak. The Great Recession sent the jobs count tumbling all the way back to the starting point, actually dipping slightly lower to 130.6 million by June 2009. Then, after forty months of “recovery,” the BLS reported 133.5 million nonfarm payroll jobs for September 2012. The Bernanke bubble had thus “recreated” only 40 percent of the jobs that had been “created” by the Greenspan bubble the first time around.”

Full report – accessed from ZeroHedge

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The Leviticus 25 Plan initiates economic recovery at ‘ground level’ in America.  It provides direct credit extensions to American citizens for the express purpose of eliminating debt at the family level.

Big government central planning has been a dismal failure.

It is time for a fresh start – one that advances the cause of economic liberty in America.

The Leviticus 25 Plan.

Some of the very banks that received trillions of dollars in cash transfusions and loan guarantees from the Federal Reserve and U.S. government – at tax-payer expense, directly or indirectly – are now “manipulating benchmark foreign-exchange rates used to set the value of trillions of dollars of investments, according to a Bloomberg investigation.”

ZeroHedge 6-12-2013:                                                                                               Banks Rig $4.7 Trillion A Day Currency Markets To Profit Off Clients                        [Excerpts]

“Employees have been front-running client orders and rigging WM/Reuters rates by pushing through trades before and during the 60-second windows when the benchmarks are set, said five current and former traders, who requested anonymity because the practice is controversial.

Dealers colluded with counterparts to boost chances of moving the rates, said two of the people, who worked in the industry for a total of more than 20 years.

The behavior occurred daily in the spot foreign-exchange market and has been going on for at least a decade, affecting the value of funds and derivatives and all investments.

The Financial Conduct Authority, Britain’s markets supervisor, is considering opening a probe into potential manipulation of the rates, according to a person briefed on the matter.

Informed observers have long warned that the global $4.7-trillion-a-day foreign exchange market, the biggest in the financial system has all the hallmarks of a casino.

The inherent conflict banks face between executing client orders and profiting from their own trades is exacerbated because most currency trading takes place away from exchanges.

“The price mechanism is the anchor of our entire economic system,” said Tom Kirchmaier, a fellow in the financial-markets group at the London School of Economics. “Any rigging of the price mechanism leads to a misallocation of capital and is extremely costly to society.”

……………..

The traders interviewed by Bloomberg News declined to identify which banks engaged in manipulative practices and didn’t specifically allege that any of the top four firms were involved. Spokesmen for Deutsche Bank, Citigroup, Barclays and UBS declined to comment.

It is becoming increasingly evident that many key financial markets are being rigged and manipulated by banks and central banks today. Some of the manipulation is overt, some is covert.

The world’s largest banks are fixing prices in many key markets and benchmarks which is affecting the value of money itself and will ultimately leading to the value of money in your pocket becoming worth much less.”   Full article

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And the key question remains… “If America chooses to continue transfusing billions-trillions of dollars to major banks (which continue ton engage in “overt” or “covert” criminal activity –  according to Bloomberg) – at the expense of U.S. taxpayers and others around the world, then shouldn’t honest American citizens also be granted the provision of direct credit extensions to resolve financial stresses at ‘ground level’ in America?

Answer:  Yes.

The Leviticus 25 Plan.

PEW Research, April 23, 2013:                                                      

A Rise in Wealth for the Wealthy; Declines for the Lower 93%  

[Excerpts]

“During the first two years of the nation’s economic recovery, the mean net worth of households in the upper 7% of the wealth distribution rose by an estimated 28%, while the mean net worth of households in the lower 93% dropped by 4%, according to a Pew Research Center analysis of newly released Census Bureau data.”

“From 2009 to 2011, the mean wealth of the 8 million households in the more affluent group rose to an estimated $3,173,895 from an estimated $2,476,244, while the mean wealth of the 111 million households in the less affluent group fell to an estimated $133,817 from an estimated $139,896.”

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The Leviticus 25 Plan broadens out economic benefits for all Americans.

Key benefits:

1. Provide direct liquidity infusions to all American citizens.

2. Optimize the allocation of health-care services and spending (including Medicare and Medicaid).

3. Improve the economic climate for U.S. small businesses.

4. Improve employment opportunities for all Americans.

5. Generate a long-term, healthy stream of tax revenue for government (federal, state, local).

6. Reduce the cost of government.

7. Stabilize the U.S. housing market.

8. Stabilize the U.S. banking system – and moderate risk dangers from certain derivatives and rehypothication stratagies.

9. Reduce the scope of social programs and their control over U.S. citizens.

The Leviticus 25 Plan will revitalize economic progress and incentives for all Americans.

One of the main underlying presumptions of The Leviticus 25 Plan is that U.S. citizens should be treated with the same deference that many of the ‘too big to fail’ banks have received (and continue to receive).

Take HSBC, for instance.  This major U.K. banking titan (formerly the Hong Kong Shanghai Banking Corp) and current Fed-approved Primary Dealer, had purchased massive levels of credit default swaps from AIG  by the fall of 2008 – evidently without checking on the creditworthiness (and reserve levels) of AIG.

The housing bubble popped that fall, and AIG went ‘toes up’ as their counterparties (HSBC and numerous others) sought to collect.

The U.S. government immediately stepped in to fully fund (100 cents on the dollar) a $90 billion payout (“collateral postings”) to the major AIG counterparties involved.  

HSBC Holdings received a pass-through payment, courtesy of U.S. taxpayers, of $3.5 billion.

And… it was recently revealed that HSBC has been running “the largest drug-and-terrorism money laundering case ever” uncovered by the Justice Department.  The penalty – a slap on the wrist.                                                                                        

The Leviticus 25 Plan proposes that U.S. citizens be accorded the same financial deference that banking conglomerates like HSBC have been receiving.

Source:  Zero Hedge 2/11/13:  “How The Fed Is Handing Over Billions In “Profits” To Foreign Banks Each Year”

Fed QE flows over the past 4 years, dating back to March 2009, show that foreign banks have been the primary recipients of “cash generated by Fed excess reserves.”

Small domestic banks and large domestic bank cash reserves have been flat to modestly higher (a ‘steady’ $800 billion) over the 4-year period, while “Foreign Banks” have nearly doubled their cash reserves during that same time – from the newly created reserves.

This was confirmed by the Fed itself, which in a paper from November 2012, admitted just this when it said that “the recent unprecedented build-up of cash balances by [foreign banks] was almost entirely composed of excess reserves.”

And where does this “foreign bank” cash ‘park itself?’ 

Answer:  These foreign bank excess cash reserves are parked at “Reserve Banks” – currently about $954 billion, earning 0.25% interest (which the Fed decided to start paying out in December 2008).

The “Fed paid some $6 billion in interest to foreign banks, in the process subsidizing and keeping insolvent European and other foreign banks, in business and explicitly to the detriment of countless US-based banks who have to compete with Fed-funded foreign banks and who have to fire countless workers courtesy of this Fed subsidy to foreign workers.”

“From December 2008 through the last week of January [2013], the Fed has paid out some $6 billion in cash (red line) to European banks simply as interest on excess reserves:”

“But that’s just the beginning. If we are correct in assuming that QE3 will be a replica of QE2 when all the new reserves created ended up as cash on foreign bank balance sheets, it means that we can quite accurately forecast what the total foreign bank cash position will be on December 31, 2013 (as the Fed will certainly not end its open ended monetization of the US deficit before then, or likely, ever). The result: just under $2 trillion in cash held by foreign banks operating in the US, which also means that in calendar 2013, the Fed will fund and subsidize foreign banks a blended interest payment of $3.5 billion! This is entirely separate from the $2 trillion liquidity subsidy that Bernanke will also have handed out to keep these banks afloat, and is $3.5 billion that will flow right through the P&L and end up in the pockets of offshore shareholders who otherwise would very likely be wiped out had it not been for the Fed’s relentless efforts to bailout foreign banks.”

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If foreign banks are deserving of Federal Reserve-generated liquidity flows, then U.S. citizens are equally deserving.

It is time for U.S. citizens themselves to move to the head of the line – and receive their own credit extensions direct from the Federal Reserve.

The Leviticus 25 Plan.

(Bloomberg, Dec 19, 2012 – excerpts) –  “Bank of America Corp. has amassed $64 billion of mortgages that are at least six months delinquent and have yet to enter foreclosure, more than twice the amount held by its four largest competitors combined.”

“Bank of America’s stockpile of deteriorating debt is mostly from its 2008 acquisition of Countrywide Financial Corp., once the nation’s largest mortgage provider. Wells Fargo & Co. (WFC), the biggest U.S. servicer, has $15.3 billion of such unpaid loans.”

“Bank of America has about 930,000 loans that are at least 60 days delinquent, down from 1.5 million from the peak in January 2010, Chief Executive Officer Brian Moynihan, 53, said during a Dec. 14 event at the Brookings Institution in Washington.”

“The bank also has a large portion of delinquent Federal Housing Authority mortgages…”  Note:  taxpayers are ‘on the hook’ for these FHA guaranteed loans (and the FHA recently announced that its reserve fund is ‘dry’ and they are on the verge of defaulting).

Note:  Bank of America’s $64 billion in delinquent mortgage represents an amount greater than half of their current market cap.

Full article: Bloomberg 12-19-12

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Nationwide, November 2012: RealtyTrac reports that 1,547,825 homes are under a foreclosure filing in the U.S..

The Leviticus 25 Plan would provide a mechanism for American families to ‘clean up’ delinquent mortgages and engage in successful ‘work out’ plans to regain ownership of their homes.

This would stanch the banks’ balance sheet bleeding and stabilize the housing market.

The Leviticus 25 Plan would pay for itself over a 10-15 year period.

No other plan can make that claim.  And no other plan can deliver the power of economic liberty – and do so much to serve the interests of individual U.S. citizens.

More from The New York Times:

“In addition to the debt assistance, the administration has thrown its support behind a $4.8 billion loan being negotiated between Egypt and the International Monetary Fund. Last week, it dispatched the first of two delegations to work out details of the proposed debt assistance, as well as $375 million in financing and loan guarantees for American financiers who invest in Egypt and a $60 million investment fund for Egyptian businesses.

The assistance underscores the importance of shoring up Egypt at a time of turmoil and change across the Middle East, including the relatively peaceful uprisings in Egypt and Tunisia, the still-unfinished transition in Libya, the showdown over Iran’s nuclear program and the war in Syria.

Given Egypt’s influence in the Arab world, the officials said, its economic recovery and political stability could have a profound influence on other nations in transition and ease wariness in Israel about the tumultuous political changes under way.”

Note:  The U.S. government is a 17% stakeholder in the International Monetary Fund.  What does that mean?

WSJ Sep 5, 2012:  “The IMF is akin to a global credit union. Members kick in money. The institution’s board lends it out.

Each member has a “quota”—that is, a financial stake in the IMF, expressed as a percentage—and contributes accordingly. The U.S. quota is 17.09%, followed by Japan at 6.12%, Germany at 5.98% and France and Britain at 4.94% each.

Does that mean that the U.S. is responsible for 17% of the IMF’s portion of the Greek package? Not exactly.

First, though all countries are theoretically responsible for investing in the IMF’s lending pool, not all of them have currencies that potential borrowers can use. (Think of Zimbabwean dollars or Venezuelan pesos.)

The IMF doesn’t say that outright. Instead, it uses the concept of “usable resources,” meaning it uses money from countries that are considered financially sound. About 21% of the quota contributions to the IMF were “non-usable,” according to the IMF, as of January 2010.

Because the U.S., Japan and big European countries are in the “usable” camp, they finance a larger percentage of IMF funding than their quota would suggest.”

………………………

The U.S. taxpayer is ‘standing behind’ a large share of the $4.8 billion IMF loan package to Egypt – well over $800 million.  Egypt also receives $1.3 billion per year as a military assistance package from the U.S..  And they just received a $1 billion loan write-off from the U.S. Government.

………………………….

There is no legitimate reason why, if the U.S. Government can extend funds to foreign countries (no collateral involved) and forgive loans to those same countries (with no collateral obligation required), that U.S. citizens should not also be granted the same equal access to direct credit extensions.

After all, it is our money.

The Leviticus 25 Plan would pay for itself – over a 10-year period.  And it is fully collateralized.

The Leviticus 25 Plan.

(In other words, government-based ‘Central Planning’ is not working.  And will not work in the future…)

The Morgan Stanley report goes on to conclude, “In short, it is impossible for governments to grow their way back to solvency.”  All they can do is shuffle debt around, ostensibly for the benefit of powerful, politically connected  constituencies.

And (brace yourselves…) the IMF advises that “Tightening” is the solution – even though “Tightening Hurts.”

The U.S. Government has provided trillions of dollars of funding (TARP, stimulus programs, bailouts) to major credit institutions and politically-connected constituency groups.

In addition, the Federal Reserve has purchased European debt – of all things.  They have provided trillions of dollars in credit extensions to many of the very domestic and foreign banks that triggered the banking crisis in the Fall of 2008.

One of the more ‘visible’ bailouts came courtesy of the  U.S. Government  on behalf of Goldman Sachs.  Goldman had purchased credit default swaps (CDS’) from AIG and didn’t happen to verify that AIG had adequate reserves to cover the CDS’ (derivatives).  They didn’t.  When the ‘you-know-what’ hit the fan, AIG turned their pockets inside out (no money).  And the U.S. Government (that is to say, ‘taxpayers’) stepped in to ‘cover’ the massive Goldman bet that went sour:

“…according to the terms of the bailout deal struck when AIG was taken over by the state in September 2008, Goldman was paid 100 cents on the dollar on an additional $12.9 billion it was owed by AIG”

Read more: http://www.rollingstone.com/politics/news/wall-streets-bailout-hustle-20100217#ixzz21kDwPRyY

And on to the Federal Reserve ‘rescue’ initiatives…

Federal Reserve – credit extensions – allowing two major investment banks (Goldman Sachs and Morgan Stanley) to quickly receive commercial bank charters, allowing them to qualify for near-zero interest rate loans, with which to purchase Treasuries – and earn ‘free money.’  Lots of it.

Federal Reserve – Primary Dealer Credit Facility (PDCF) allowing major banks to pledge sub-investment grade collateral to qualify for additional near-zero interest rate loans – with which to purchase Treasuries and earn more ‘free money.’

Federal Reserve – Temporary Liquidity Guarantee Program (TLGP) for the big money center banks… ‘worth trillions.’

Federal Reserve – Public Private Investment Program (PPIP) – allowing banks to ‘off-load’ worthless assets onto the Fed balance sheet.

Again – government-based ‘Central Planning’ is not working.  And will not work in the future…  America is sinking deeper into the debt hole.  Economic growth is stagnant.  And for all of the trillions of dollars the government has ‘thrown’ at the problem, the average American family has benefited very little, if at all.  In fact you could make a strong case that things are getting worse.

America doesn’t need the type of “Tightening” the IMF and Morgan Stanley are talking about.  America needs liquidity and debt relief at the Family level.

It is time now for a new initiative.

The Leviticus 25 Plan will provide American families with the same access to liquidity (credit extensions) that the Federal Reserve has been granting to the banks.

And The Leviticus 25 Plan will pay for itself over a 10-year period with the ‘recapture provisions.’  And the ‘ripple out’ effect will yield efficient benefits for government tax revenues, small business revenues, the labor market, housing… and even banks – in the long run.

No other plan will deliver such benefits and set America back on course for financial stability and economic liberty for American families.

Precisely.

And The Leviticus 25 Plan is the practical application of that concept.  It delivers direct credit extensions to the citizens of a given nation, thereby strengthening the base –   rather than continuing to extend credit to major financial centers, faltering from poor asset (loan portfolio) performance.

The Leviticus 25 Plan will provide for massive debt relief at the family level.  Economic acceleration.  Government cost savings and robust tax revenue growth – all with-out raising taxes.  This Plan will reincentivize work, industriousness, wise decision-making and productivity.

It will relight the fires of economic liberty for citizens.

…………………………………………

Keen continues: “I think the mistake [central banks] are going to make is to continue honoring debts that should never have been created in the first place. We really know that that the subprime lending was totally irresponsible lending.

When it comes to saying “who is responsible for bad debt?” you have to really blame the lender rather than the borrower, because lenders have far greater resources to work out whether or not the borrower can actually afford the debt they are putting out there.”

“They were creating debt just because it was a way of getting fees, short-term profit, and they then sold the debt onto unsuspecting members of the public as well and securitized their way out of trouble. They ended up giving the hot potato to the public. So, you should not be honoring that debt, you should be abolishing it. But of course they have actually packaged a lot of that debt and sold it to the public as well, you cannot just abolish it, because you then would penalize people who actually thought they were being responsible in saving and buying assets.”

“Therefore, I am talking in favor of what I call a modern debt jubilee or quantitative easing for the public, where the central banks would create ‘central bank money’ (we cannot destroy or abolish the debt, which would also destroy the incomes of the people who own the bonds the banks have sold). We have to create the state money and give it to the public, but on condition that if you have any debt you have to pay your debt down — no choice. Therefore, if you have debt, you can reduce the debt level, but if you do not have debt, you get a cash injection.”

Spiraling global debt and economic deceleration …

“Europe is imploding under its own volition and I think the Euro is probably going to collapse at some stage or contract to being a Northern Euro rather than the whole of Euro. We will probably see every government of Europe be overthrown and quite possibly have a return to fascist governments. It came very close to that in Greece with fascists getting five percent of the vote up from zero. So political turmoil in Europe and that seems to be Europe’s fate.”

“I can see England going into a credit crunch year, because if you think America’s debt is scary, you have not seen England’s level of debt. America has a maximum ratio of private debt to GDP adjusted over 300%; England’s is 450%. America’s financial sector debt was 120% of GDP, England’s is 250%. It is the hot money capital of the western world.”

“And now that we are finally seeing decelerating debt over there plus the government running on an austerity program at the same time, which means there are two factors pulling on demand out of that economy at once. I think there will be a credit crunch in England, so that is going to take place as well.”

“America is still caught in the deleveraging process. It tried to get out, it seemed to be working for a short while, and the government stimulus seemed to certainly help. Now, that they are going back to reducing that stimulus, they are pulling up the one thing that was keeping the demand up in the American economy and it is heading back down again. We are now seeing the assets market crashing once more. That should cause a return to decelerating debt — for a while you were accelerating very rapidly and that’s what gave you a boost in employment — so you are falling back down again.”

“Australia is running out of steam because it got through the financial crisis by literally kicking the can down the road by restarting the housing bubble with a policy I call the first-time vendors boost. Where they gave first time buyers a larger amount of money from the government and they handed over times five or ten to the people they bought the house off from the leverage they got from the banking sector. Therefore, that finally ran out for them.”

“China got through the crisis with an enormous stimulus package. I think in that case it is increasing the money supply by 28% in one year. That is setting off a huge property bubble, which from what I have heard from colleagues of mine is also ending.”

“Therefore, it is a particularly ugly year for the global economy and as you say, we are still trying to get business back to usual. We are trying to rescue the creditors and restart the world that is dominated by the creditors. We have to rescue the debtors instead before we are going to see the end of this process.”

Full report submitted by Chris Martenson – accessed from ZeroHedge: http://www.zerohedge.com/news/steve-keen-why-2012-shaping-be-particularly-ugly-year