Walker Evans Cherokee Parts March 1936 "Auto parts shop. Atlanta, Georgia"

The real story of the RMS Titanic that goes unmentioned in Western public schools is, of course, one of extreme wealth inequality, class warfare and, ultimately, the complete and utter disdain that the richest people had for the lives of the poorest people in a time of crisis. Just shy of one hundred years from the day the Titanic sunk (April 15, 1912), and we are all still stuck on that same dreadful voyage. The global economy has side-swiped an iceberg at full speed and is mathematically destined to go under, no matter what the Captain and crew decide to do.

Except, now, it’s not only the poorest two-thirds of the ship’s passengers that are being left to die, and there is no priority for “women and children”. It is true that the entire corporate establishment has benefited from systemic fraud, propaganda/manipulation and taxpayer-funded bailouts, but it is a very small percentage of people who are truly being guaranteed a lifeboat. These institutions and the people who run them are gifted vast sums of money over and over again, while the rest of us patiently, helplessly and hopelessly wait to be “rescued”.

Among the 1% of people who have been given every possible advantage to survive the systemic meltdown, we must include those in charge of defense industrial conglomerates. We are now in a state of perpetual, taxpayer-funded war that surpasses any notion of political ideology or appropriate response to “external” threats. However, that is an issue for another time and place. Right now, we will focus on the criminal banking class, which has been feasting on the public coffers for years while hundreds of millions of people struggle to keep their jobs, stay warm, find their next meal and/or avoid being victimized by an ever-growing police state.

Never before in history have such vast amounts of wealth been transferred so quickly from so many people to so few. The worldwide property bubbles of the last few decades, and specifically the last one, were made possible first and foremost by extensive fraud in the banking and real estate sectors of the global economy. Although government regulations and loose monetary policy certainly had their roles to play in the Western housing bubble, it was the private banks originating “liar’s loans”, slicing them up, securitizing different loan tranches and marketing them as top-grade investments that really fueled the credit explosion.

A whole plethora of debt-based “assets”, securities and derivative instruments were generated through the collateralization of residential and commercial property, which, in turn, created an entire industry of speculation, financial engineering, commissions and returns. The benefits of this industry accrued to fewer and fewer institutions as they pawned off the “assets” and derivative instruments to other institutional investors such as pension and hedge funds, and then dumped what remained directly onto taxpayers after the great bust of 2008.

This class warfare by the 1% no longer takes the form of some stealthy wealth extraction operation hidden behind cultural optics, clever marketing and flimsy regulations, but is happening out in the open for every neglected, second-rate passenger to see. It has gotten to the point that the U.S. federal government AND the major banks openly admit that extensive fraud occurred with the transfer of mortgage titles and subsequent foreclosure of property. Why else would there be an “investigation” and a settlement of $40 billion by the five largest banks?

Even a symbolic settlement such as this one can no longer be made without turning it into a complete travesty of the justice system. They got caught red-handed stealing our money and our homes, and now they have to pay us back a very tiny portion of the stolen wealth… with our money. The Financial Times reports that the settlement agreement contains a clause allowing the banks to count future loan modifications made under the $30 billion [taxpayer-funded] Home Affordable Modification Program (HAMP) as credits for the money owed under the agreement.

US Taxpayers to subsidize $40bn housing settlement

 

However, a clause in the provisional agreement – which has not been made public – allows the banks to count future loan modifications made under a 2009 foreclosure-prevention initiative towards their restructuring obligations for the new settlement, according to people familiar with the matter. The existing $30bn initiative, the Home Affordable Modification Programme (Hamp), provides taxpayer funds as an incentive to banks, third party investors and troubled borrowers to arrange loan modifications.

 

Neil Barofsky, a Democrat and the former special inspector-general of the troubled asset relief programme, described this clause as “scandalous”.

 

“It turns the notion that this is about justice and accountability on its head,” Mr Barofsky said.

 

BofA, for instance, will be able to use future modifications made under Hamp towards the $7.6bn in borrower assistance it is committed to provide under the settlement. Under Hamp, the bank will receive payments for averting borrower default and reimbursement from taxpayers for principal written down.

 

…

 

But people familiar with the matter told the FT that state officials involved in the talks had had misgivings about allowing the banks to use taxpayer-financed loan restructurings as part of the settlement. State negotiators wanted the banks to modify mortgages using Hamp standards, which are seen as borrower-friendly, but did not want the banks to receive settlement credit when modifying Hamp loans. Federal officials pushed for it anyway, these people said.

This is just one striking and patently obvious example of how the major banks have been guaranteed a lifeboat off of the capsizing global economy by central governments and banks. There are, of course, many more – the Fed, BOJ and BOE’s quantitative easing programs, the ECB’s “trash for cash” LTRO operations or secondary market purchases of peripheral sovereign debt, the SNB’s fixed exchange rate policy, the IMF/EU bailouts that are used to meet interest payments and recapitalize banks, the quasi-nationalization of large financial institutions across the Western world, the outright theft of MF Global’s client funds by JP Morgan, etc., etc., the band plays on and on.

One of the most fundamental ways in which the banks have been kept afloat is the suspension of mark-to-market accounting rules in the U.S. and Europe. Yes, the banks still get to pretend that the ship isn’t even sinking while any and all burdensome debt-assets remain on their balance sheets. As the Wall Street Journal reports in a recent article, Goldman Sachs and Morgan Stanley have unilaterally decided that they will stop marking corporate loans, which are currently worth $100 billion, to market value in anticipation of the U.S. corporate sector rolling over.

Change In Loan-Tallying Method

 

Goldman Sachs Group Inc. and Morgan Stanley have reduced their use of "mark-to-market" accounting, shielding them from swings in the value of some loans made to companies. After several months of internal discussion, the two companies are making an accounting change affecting a portion of corporate loans that have a combined value of more than $100 billion.

 

The change will value that portion using so-called historical-cost accounting, according to financial filings and people familiar with the matter. Under that accounting method, assets generally are held at their original value or purchase price. Goldman and Morgan Stanley could set aside reserves against possible losses on the loans and hedge them in other ways.

 

The banks are making the change in part because, as a result of regulators' rules, securities firms using historical-cost accounting won't have to hold much-larger amounts of capital against the assets if their values go down. There also will be less fluctuation in Goldman and Morgan Stanley's earnings, because marking the loans to market creates immediate gains or losses for the companies as the values of the loans fluctuate.

Immediate losses for the banks, you say? Heavens no, we wouldn’t want that! Not until the banks have safely dumped all of their distressed assets onto the backs of 99% of the population and abandoned ship. That is why The Automatic Earth constantly stresses the importance of people constructing their own lifeboats in their homes and communities – because there are only a few available on deck and none of them have your name on it, or the names of your family or your friends or your neighbors. The corporate/banking elites and their corrupt public servants will make sure to get a good view of this titanic disaster from afar, but, then again, there is really nowhere left for them to go.

Marion Post Wolcott Negro song and dance May 19, 19392nd and 3rd grade children being made up for their Negro song and dance May Day-Health Day festivities , Ashwood Plantations, South Carolina.

Ilargi: 40 years after it assassinated a black man who was one of the bravest and most beautiful people ever to walk this earth, and 45 years after that same man spoke about a dream he had, America -and the entire world with it- has every reason to feel proud and elated: it has elected, as its next leader, a black man named Hussein. I may be a white man, and as blond as they come to boot, but I hope you don't mind if I feel pride too. Still, I have to add that the rejection of gay marriage in several states yesterday feels like a hammer came down on my skull once again. How can you elect to liberate African Americans from 500 years of shackles, and at the same time refuse to free the 10-15% of the population that has no more choice in who they love than your new president had in the color of his skin? Let's all hope that Obama has the strength to overrule these hateful papers, with the same conviction that has gotten him where he finds himself this morning. Congratulations, Mr. President, you have filled my eyes, too, with tears of joy. But please, as I do today, think about the bittersweetness that must run through the veins of all gay black people in California at this moment. Liberated, but still on the chain gang. Shoved into the far fringes of society for nothing they have ever chosen to do. That must hurt. And we still have to resort to dreams, even as Dr. King's dream is embodied in your reality.I want to talk about the economy, Mr. President. I've seen who your economic advisers are, and that fills me not with pride but with a frozen chill. You know, Albert Einstein said that "The significant problems we have cannot be solved at the same level of thinking with which we created them." That is a very wise observation. Albert was as good a thinker as he was a physicist.But then I see that your advisers include the likes of Robert Rubin, Larry Summers and Paul Volcker. These are all guys who created the problems. Which, if we follow Einstein, means they cannot solve them. Can we agree on that?The economic issues we face today are profound, deep-seated and potentially debilitating for the entire country. They can't be solved overnight, and they can't be overcome with just a bunch of new laws or initiatives. You will need a complete overhaul, a 180 degree turn, and a very intense and sweeping clean-up of finance, banking, and yes, government policies.Rubin under Clinton was one of the main architects of what has gone so awfully wrong today. Throw him out. Larry Summers is a doofus. Out with the bathwater. Paul Volcker’s primary claim to fame is that Alan Greenspan was far worse than him, but that doesn’t make him a valuable source of information. If you, and the nation that so courageously elected you to be their leader, are to have a fighting chance at eventually beating the depression that can not be avoided, you will have to turn to people for advice who are not part of the banking in-crowd. Picking Jamie Dimon as Treasury Secretary, for example, is about the worst thing you could do. These are people who will always seek solutions in shifting things a little bit to the left or right, inside the existing paradigm.It won't work, Mr President. Remember Einstein. Rubin and Summers are the kind of people who feel, like the whole Wall Street cabal, that they are indispensable, that the economy will grind to a halt if they are no longer allowed to do what they do. And what they do is betting, and has nothing to do with not solid finance. You will have to call a stop to Wall Street, and all of the nation's finance policies, being a casino. That is as succinct as I can put it, and I can but hope that you understand how bitter and grave it all has become. You will need to throw out everybody who has had any dealings with it, while at the same time they will tell you that they are the only ones who know what goes on.One reason why you need to distance yourself from them is that you’ll have to prosecute many of them. Bob Rubin will not drag his buddies before a court of law. Still, if that is not done, the economy will not regain the sense of decency and confidence that your election has brought to the country. There's no two ways about it. Crime either pays, or it does not.You need to force all casino paper out into the light of day, that is not some optional item. Yes, it will mean the end for scores of powerful players, many of whom have financed your campaign. Nothing easy about it. But if you don't do it, you condemn the American economy to years more of downfall. US Treasury bonds are under extreme pressure, and as long as Paulson et al are allowed to continue to cover up toilet paper with what rightfully belongs to the American people, faith in the market can and will not be restored.You need to withdraw all government support for Detroit, and let Ford and GM fail if they can't stand upright on their own. Same for all financial institutions. No more bail-outs, they just cut the trust level ever lower.You must call Nouriel Roubini, now, and form a group of people around him, like Robert Oppenheimer at Los Alamos, and let them be your main advisory team. There are many able Americans who are not too far inside the asses of Lower Manhattan. Talk to Peter Schiff, to Paul Kasriel, to Marc Faber, George Soros, Bill Fleckenstein and Meredith Whitney. Give Doug Noland and Bill Bonner a call. Sit down with Ron Paul. And of course you are always welcome to contact me. I am not American, and I have no economics degree, but then again, that by now is a strong point, not a liability. I have called all this correctly for a long time, and i know what needs to be done.You have proven yourself to be a very courageous man. There are equally brave Americans in the world of finance, just one phone call away. Please sir, believe me: You will need them. And you have not a second to lose. Your predecessor is handing out trillions of dollars and waves of pardons behind the wizard's curtain as we speak.