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Time Bomb | Progressives’ Destruction of Private Sector Wealth and Control Of Capital and Property

The sudden and systemic collapse from every market booming to the Al Goresque hockey stick fall off into a precipice in the single month of December 2007 precipitated the Bush Recession.

It followed immediately after the stealth imposition of a directive from the foreign entity, the Bank of International Settlements in Basel, to impose mark to market accounting, FASB 157, approved by the Progressive Congressional leadership under pressure from Chris Dodd’s Senate Finance Committee and Barney Frank’s House Banking Committee, and then implemented November 9, 2007 by the Bush/Paulson SEC and supported by Obama. (see related article here)

 The FASB 157e Time Bomb and decent into financial conflagration

This resulted in the elimination of the regulatory basis for Private Sector Capitalism and a financial conflagration that ensued from December 2007 to September 2008, with the Senate reaffirming mark to market accounting October 2nd 2008, inaugurating the beginnings of State Capitalism. CNBC, CNN and Bloomberg openly call this a “Paradigm shift” and “Regime change” to a “New Normal” to culminate within 4 to 5 years of inception into the total transfer of ownership and control of capital, production and fruits of productivity, ingenuity, innovation and creativity inexorably to the government.

Bill Isaac, Newt Gingrich, Steve Forbes, bankers and businesses, and many others both in the US (and Europe, which imposed mark to market January 2008), have again and again asserted that the systemic collapse was due directly to the imposition of FASB 157 mark to market accounting.

Progressives, such as Chuck Schumer, Chris Dodd, Barney Frank, who instigated the Regime change regulation ending the regulatory basis for Capitalism, and their cohorts, i.e., predator, monopolistic and crony capitalists, whose proprietary funds took advantage of their insider knowledge of the pending regulatory change that collapsed the markets, say that mark to market accounting was justified and required because it exposed the festering of toxic assets infused with CRA subprime lending.

This crime was unscrupulously imposed on the banking system and Fannie Mae and Freddie Mac by the same government progressives and crony capitalists that colluded in the Progressives’ coup of the Private Sector wealth to achieve their despicable ends. 

Not coincidentally, the same nefarious financial institutions regaling in, benefiting from and demanding the retention of mark to market accounting, are many of same ilk that benefited in an earlier era and attempted coup, when Hoover also imposed mark to market accounting in 1929, ending the Roaring 20’s and launching into the Depression for the greatest shake out Private Sector ownership and control of wealth of that time to their own benefit. This continued until the Private Sector main stream banks and businesses were able to prevail on FDR to reinstate Private Sector hold to maturity accounting in 1938, resulting in the single biggest one day percentage gain in the stock market, the second biggest being the April 2nd FASB 157e temporary reprieve. 

That FASB 157 was the direct cause for the collapse that ensued immediately after its imposition, and that all markets would have continued to boom had the imposition of FASB 157 not been imposed on the Private Sector and that FASB 157 ended the regulatory basis for Capitalism is completely clear, when one has an understanding of the economics of the bank regulatory mechanism, i.e., the underlying financial mechanism of asset value formulas that are the basis for bank lending and leverage ratios that are the basis for asset allocation towards Private Sector lending or towards government lending. (See more articles in

Moreover, it will be clear that FASB 157e was only a temporary stay that (i) allowed banks to retain refinanced assets (proving the ruse of toxic assets) and write up their capital, while (ii) providing the Progressive government the time to (a) implement Obamacare, filled with stealth taxes, counter-productive bureaucratic burdens to the Private Sector, (b) Cap & Trade initiatives and (c) the imposition of the biggest tax hike on businesses and investors over $200,000 in income related to 70% of assets held by banks, which together with (d) the stimulus and (e) the Fed’s quantitative easing I&II would (iii) drive up and inflate costs to every sector of society, (iv) dramatically reducing mortgage and loan affordability, thereby (v) depleting bank capital and (vi) forcing banks to again shift lending into the waiting arms of government owned and controlled lenders established by (vii) the political intent inherent in the Dodd/Frank Financial Reform Bill.

The Dodd/Frank Financial Reform Bill was intended to establish government owned and controlled financial institutions into which failing banks could be absorbed or their assets acquired on the cheap, then shifted back into the government’s retained right to revalue all Private Sector assets on a hold to maturity accounting basis as the Federal Reserve did when it acquired around $1.6 Trillion in AAA MBS at 70% value and wrote up the gain as a tax free profit.

In this way, the government has through FASB 157e, set the stage for a final financial conflagration to force the totality of Private Sector lending through only banks and financial institutions, such as the “too big to fail” those owned and controlled by the government and or Fed, where under the Dodd/Frank Financial Reform Bill, even the Fed’s regional banks will soon be dissolved into Washington direct control of the Fed, and government guarantee lending programs, which alone have the right to value assets on a hold to maturity accounting basis.

The economic mechanism for valuing the relationship between debt capital and equity capital is based on various affordability formulas for residential mortgages and consumer and business loans and commercial real estate mortgage loans. 

Under hold to maturity accounting that prevailed from 1938 to November 9, 2007, as long as loans performed, there would be no loss booked, and the Fed’s role was to intervene to lower rates in face of changes in loan affordability that would reduce the amount of money a bank could lend, so that, as banks would continue to lend at lower rates, the principal value of their loans would be retained.  This mechanism also providing sustained market pricing stability, because banks would continue to lend the same principal amount relative to the same net disposable income for home owners and net operating income for business and commercial borrowers.

This also meant that mortgages and loans could be securitized into mortgage backed securities and asset backed securities, where only the risk takers looking for higher yields buying the B and BB tranches below investment grade tranches were taking risk, i.e., the first loss tranches, typically representing 10% to 20% of a securitization, with the investment grade tranches going BBB to the pension funds, A to the insurance companies and AA to the banks in accordance with regulatory quality limitations, which also guaranteed their effective demand for their sale. Then, if there would be a major default of mortgages and loans within the securitization, only the risk takers that bought the B and BB tranches would take a hit, and they would come back into the market several months later requiring greater default percentages to a securitization and higher yields, similar to insurers that take losses returning to the market demanding greater deductibles and higher premiums until they fully recover and stabilize.

All this to say that under the Capitalist system, where the banks, not only the government and Fed, retained hold to maturity accounting for medium and long term loans contracted, despite the actions of predator, monopolistic, crony capitalists and government vying for State Capitalism by weakening the economic wealth of the Private Sector through taxes, borrowing and wasting of proceeds, it would have been impossible for the markets to collapse

Moreover the predominant market pricing based on this mechanism would have prevented market speculation, because such pricing dominance would have resulted in markets driving prices back up against short sellers, due to asset stability and short sellers taking speculation back down, thus preventing the wild unrestricted speculation that has prevailed since November 9, 2007. Such speculation was only enabled by the insider knowledge of pending mark to market accounting, which Goldman Sachs and others had via Treasury Secretary Paulson, to justify their establishment of proprietary funds working with oil interests to drive oil prices from $60/brl in May 2007 to $95/brl November 2007, thereby reducing mortgage and loan affordability, while shorting MBS, so that when the FASB 157 mark to market trigger would take effect, relative to the loan underwriting formulas and their debt service coverage rations ratios on the November 15, 2007 trigger date, the principal value of ALL Private Sector mortgages and loans collapse. This evidenced a “tipping point” that collapsed bank capital and lending liquidity.

Banks have 3 risk weight classifications oriented towards Private Sector lending, since November 9, 2007, valued under FASB 157 on a mark to market varying value basis, and one oriented towards lending to government and government or Fed guaranteed debt, which retains the sole right to value assets they own or control or guarantee under hold to maturity stable value basis. In the 3 Private Sector bank classification risk weights, you have respectively a minimum requirement of 8% capital to assets quality for all consumer, business and commercial loans, 4% capital for residential mortgages and Municipalities, 1.6% capital for AA rated securities and quasi government conditionally guaranteed debt.  Under FASB 115 hold to maturity accounting,  instead of “model” related losses, due to sudden changes in mortgage and loan affordability, being booked against bank capital loan loss reserves, losses were only booked against actual loans in default.  However under FASB 157 mark to market accounting, such “model” related losses have to be immediately deducted from bank capital, creating non-performance losses where there are none, making it appear that borrowers have defaulted when they haven’t.  

The government stealth coup of Private sector wealth:

The result for government cohorts, predatory, monopolistic and crony capitalists, taking advantage of their foreknowledge of impending mark to market imposition on the Private Sector, to manipulate oil prices, short MBS and subsequently short Lehman’s and Bear Stearns and other unwanted commentators, while setting them up to drain their deposits and credit lines, was their reaping unrestricted profits that inaugurated the financial conflagration that ensued through September 2008 precipitating a loss of $14 Trillion in Private Sector wealth. At that time, Fannie Mae and Freddie Mac were still valued as quasi-Private Sector assets in the 20% risk weight, i.e., requiring 1.6% minimum capital, and, therefore, valued on a mark to market basis at less than 70% their assets book value with over 10% in defaults. With China and Sovereign Funds around the world threatening to bail out, Fannie and Freddie became the first to come under the direct guarantee of the government, in order to continue to maintain their hold to maturity value, now backed by the lamprey like government’s claimed right to the suck dry the work and productivity of Private Sector. AIG was taken over in order to maintain Trillions of Dollars of mortgages, swaps and derivatives in under the government’s hold to maturity valuation, because the mark to model/market losses would have collapsed the capital of most of the now “too big to fail banks” and insurers’ policies resulting race to zero of all wealth. Citibank and a few others were taken over for the same structural reasons. Meanwhile, TARP has been extended to over 700 banks ready to be taken over as soon as there is another collapse in mortgage and loan affordability.

The emergence of a tipping point – The sleaze in the bag:

This mark to market collapse of mortgage and loan values, based solely on sudden changes to mortgage and loan affordability models threatened both the inherent value of Private Sector equity and return of depositors’ cash, due to the creation of a “tipping point” in bank liquidity resulting for the discordance in revaluing of loans based on short term changes in affordability models based on medium and long term financial contracts, except – and this is the rat in the hole – when the loans pass through the government or Federal Reserve owned or controlled banks or guarantee programs. The potential for such tipping point to manifest under mark to market valuation of bank assets, made possible unmitigated speculative pressures leading up to its imposition on the Private Sector and after, forced banks to radically sell off their 3 categories of Private Sector mortgages, loans and related securities, with total assets limited to 25x leverage of bank Tier-1 capital, and shift all Private Sector lending into the 4th risk weight asset class of government guaranteed debt and US Treasuries and all assets, including State and foreign government debt, which together retain hold to maturity accounting valuations and had a zero % risk weighting, thereby sharply improving the risk adjusted basis of assets to capital and re-stabilizing the Principal value of Private Sector assets now owned and controlled by the government on a hold to maturity accounting valuation basis, thus, restoring bank capital.

Note, under pressure from the government, FASB is planning to force State and Municipal bonds to be revalued on a mark to market basis sometime next year, resulting in their yields getting higher, as bond and Sovereign funds start to unload them, e.g., Buffet and PIMCO, and coming implosion in value resulting in a collapse in State and Municipal access to credit, as also happened to the Private Sector after November 9, 2007 imposition of FASB 157 mark to market accounting.

The FASB 157e Time Bomb Trigger mechanism:

FASB 157e, as mentioned above, was a reprieve to allow banks to refinance loans, bearing out there were no toxic assets, and enabling them to write up their capital.  However, the adjustment to the rule was intended only as a reprieve, leaving over a Time Bomb that would collapse the Private Sector and finally establish a trigger mechanism built-in to the legal document of the Dodd/Frank Financial Reform Bill through which the government and the Federal Reserve could complete its transition of ownership and control of capital from the Private Sector to itself by cornering the Private Sector into borrowing from only the government, due to its sole right to retain such assets in a hold to maturity valuation basis.

Three Triggers, Called Levels 1, 2, and 3 Will Collapse Private Sector Assetts of Unmitigated Proportions

Built into FASB 157e regulatory refinancing reprieve is a mechanism for collapsing Private Sector assets based on what’s called Level 1, Level 2 and Level 3 revaluation trigger.  These 3 triggers are now in the process of being pulled, the result of which will be a Fed controlled collapse of unmitigated proportions, as follows:

Level 1

Level 1 : is when there is a growing predominance of foreclosed loans, currently selling in auctions for around 65% their mortgage value, where the weight of all foreclosed and loans in foreclosure triggers their summary devaluation, with provisions for performing loans relative to bank capital. 

Due to banks being unable to lend into the Private Sector without booking a loss and banks having over 1 million in foreclosed loans, with less than 20% having been auctioned to prevent the sales from overwhelming and collapsing the local markets and the relative value of all bank assets. With another 25% of all home owners are in default and 50% value to loan under water, the banks and regulators have had no choice but to fabricate a condition or grab hold of any excuse, through which they could prevent the sale of any more assets that would trigger a Level 1 write down, but conversely causing a situation where more and more home owners will “strategically, default on their mortgages and wait for some resolution within the banking system, such as an early 1990’s RTC discounted loan buyback program resulting in an unmitigated disintegration.

In fact, the situation is on par with the Great Depression, where currently real unemployment between those looking for jobs on unemployment security, those entering the workforce, those giving up work, those going from full time to part time, taking stiff cuts in salaries is estimated to be closer to 18%, while 25% are receiving government debit cards for food stamps, the electronic equivalent of the 1930’s  bread lines, which unseen give Obama et al the audacity to constantly repeat their manta of hope as change is coming. The lulled public remains unaware that they have already been plundered by a coup of ponderous proportions by government Progressives and Private Sector cohorts and stand on the precipice of social, political, economic annihilation.

Meanwhile, Obamacare has included a 3.5% sales tax on the sale of all real estate property. One the one side, the idea is that such 3.5% sales tax and related bureaucratic closing costs in a sale will reduce sales, speculation and market pressures to sell, as established for decades in Europe and Asia, as part of their earlier asset based lending structure. However, with banks holding 1 million in foreclosed home mortgages and another 20% in default, such 3.5% sales tax will mean that not only will the banks take another 3.5%(+) hit on a sale price, but every buyer of a home will consider the percent profit to break even in a sale, due to the 3.5% tax loss carry. The result is that the absorption rate for purchases of homes in any market will diminish, and lacking of market demand drive property prices down.  In addition, because many homes sell for $200,000 or more, these onetime “wealthy” will be hit with the higher Obama tax hike January 1, 2011, the biggest in history, thereby reducing the value of all such homes in the same way that an increased real estate property tax (and for that matter a Fed interest rate hike) reduces the principal value of a property within the valuation mechanism of the mortgage lending formula.

Furthermore, because of the high level on properties in foreclosure around 20% of all mortgages on top of 1 million homes already repossessed, the shear logistics and potential for errors coupled with the downward pressure of property pricing, should a large volume of properties come onto the marker, where foreclosed property is selling for 65% it’s origination value, has resulted in Title insurance companies refusing to provide Title insurance, where they would be potentially liable for the value of a mortgage, thereby preventing sales from being executed.

On top of this, as happened in the early 1990’s RTC years, is the matter of “strategic non-performing loans,” where home owners, in anticipation of a collapse of the banks, withhold mortgage payment, saving the money, until someone comes to them a year or more later to refinance at a significantly lower mortgage principal, thereby not only saving their money and earning interest, but also getting their homes back at a reasonable or significant discount.

Finally, the potential for a tipping point in lending liquidity, as mark to market loan affordability reductions collapses bank capital, will result in the value of mortgages and loans falling to the percent cash in the capital markets, where such loan value collapse wipes out borrowers equity.

In short, the government strategies have set in motion a series of programs that will continue to reduce property value and expand properties coming under foreclosure, i.e., inevitable collapse.

Level 2

Level 2 trigger has to do with the “model” used by the banks. So, many sarcastically ridicule the “model.” But the “model” is set by banks regulators based on ratios of affordability related to the net disposable income of an individual relative to the percentage allocated towards the mortgage payment, which included the interest and principal of the mortgage, the property insurance and real estate taxes.

Under hold to maturity accounting only changes to the interest rates and property tax could cause a change in the principal value of a mortgage, while any changes in mortgage affordability adjusted gradually over a few years, market pricing remaining stable. But under mark to market accounting any change whatsoever in mortgage affordability, i.e., the net disposable income to a person, net operating income to a business, relative to the value of the original net disposable income, immediately and radically changes the principal value of a mortgage or loan, which is then imposed against bank capital resulting in a liquidity tipping point.

For example, let’s say the net disposable income is 100, and the percentage the bank allows to lend under its affordability formula is 30%, then the original mortgage loan is 30.  Let’s say the property tax and insurance are 4 and 1 respectively, then the income allocated towards the mortgage is 25. If there are sudden cost increases, such as (i) Obamacare, (b) Cap & Trade, (iii) end of 10 years Bush Tax cuts on those earning over $200,000, representing 70% of bank assets, (iii) bureaucratic costs undermining productivity, e.g., notifying government on every $600 purchase/sale, (iv) any major terrorist attack stalling business travel and hospitality (v) the result is a sharp reduction in mortgage and loan affordability. Moreover, (vi) the Fed’s quantitative easing [“QE”] to monetize the interest payments on the $13.5 Trillion debt, (a) eliminates foreign buyers, because (b) proportionate devaluation of the USD to %QE causes (c) an automatic reverse reciprocality in oil and other commodities prices relative to the value of the Dollar, i.e., (d) increasing oil and commodities prices, thus (e) reducing mortgage and loan affordability. If such reduction would be 10% of net disposable income from 100 to 90, then the 30% mortgage value is 27, less 5 for real estate tax and property insurance, leaves 22. The 22 new mortgage allocation relative to the 25 original value represents a loss of 12% in principal value.

Previously, when the economy was based on the Capitalist hold to maturity accounting system, interest rate targets would have been maintained at a higher level, allowing for the Fed to lower interest rates fractionally relative to the 25-30 years amortization of the mortgage, thereby propping up the principal value of mortgages relative to bank capital, while interest rates would decline and people refinance at lower rates, reestablishing the principal value of bank assets. But under mark to market accounting, the “model” trigger reduction of principal value, e.g., 12%, while interest rates are at virtual zero, when banks have already shifted radically from Private Sector mark to market lending to government and Fed hold to maturity lending, means that whatever remaining Private Sector assets a bank has are reduced by 12%.

In this example, such 12% loss to Private Sector related bank assets is immediately reduced from bank capital, triggering a financial conflagration for the US and any countries that, unlike China and the Philippines, have adapted mark to market accounting. 

Progressives’ political intent: However, it is clear that the political intention behind the Progressives’ motivation to find every and every means to burden the Private Sector (a) by taxes, (b) by competing for Private Sector credit, with the People’s own credit, (c) bureaucratic burdens, (d) price inflation, (e) terrorist risk, is (f) to trigger the FASB 157e Time Bomb.

Level 3

Level 3: Such collapse in the Level 1 comparative market pricing and/or the Level 2 “model,” easy enough to calculate, will trigger a “Level 3” requirement to immediately apply the preponderance  of calculated losses against the bank’s capital, while government penalizes banks for making any loans directly to the 3 Private Sector risk weights.

This Time Bomb will trigger the emergence the Dodd/Frank Financial Reform Bill requirement obstensively to prevent the collapse of loan and equity values, where government and by extension the Fed implement ownership and/or control of the banking and financial institutions through which to apply guarantee programs that shift all approved Private Sector credits into the government’s zero risk weight restoring their hold to maturity valuations, while completing the Progressives’ “Regime change” to “New Normal,” where the total ownership and control of capital, property, production, fruits of productivity, creativity, ingenuity and innovation will have been transferred from the Private Sector to the government, in a coup without a shot being fired, leaving the people no more than fodder for the State.

Tipping point – to a real liquidity trap:

Real inflation (1): As the percent government bureaucrats, whose work is counter-productive of the Private Sector, the unemployed, those on food stamps and others supported by the US government increases, i.e., the non-productive and counter-productive, relative to the percent productive people, who create the value behind money, the value of money erodes, until a tipping point is reached and the drain of the value of money accelerates the cost of living relative to production and productivity.

Due to the Fed’s wasted spending of printed cash, the real GDP has only expanded from Ron Paul: “$1.29 trillion.  Today it is $14.6 trillion, nominally.  But adjusted for all the inflating the Fed has been doing, it is only $2.73 trillion, which constitutes only a 1% real increase per year!”

Real inflation (2): Obama wants all nations to inflate their currency, but the US is inflating more, with stimulus used for non-productive ends. If thgte US continues to inflate currency at a rate that reduces the value of the productivity behind the USD, a tipping point will be breached where, 1/ bond Funds and Central Banks will stop investing, 2/ requiring quantitative easing to cover the interest on the $13.5 Trillion debt, while 3/ of Obama $878 billion stimulus $423 billion remains unspent as an interest guarantee, same as the EU did setting aside 550 billion Euros. 4/ As a result of the decline in the USD, investors will shift out of the USD, as a global currency and 5/ the US Dollar will collapse.

Comparing the charges and penalty of Drexel and Milken to Goldman Sachs:

In 1989, FIRREA was passed preventing banks from owning junk bonds they did not originate as part of a securitization themselves.  At the same time on flimsy charges Drexel was closed and Michael Milken fined $550 million and sent to prison for 2 years on a 10 year sentence the Judge reduced saying she found no crime and that the sentence was due to political pressure, essentially conjuring a crime to rope in what government deemed to be Milken’s shadow banking system.

Goldman Sachs (“GS”) directed proprietary Funds to drive up oil prices to trigger a collapse in mortgage affordability, while shorting vast MBS positions, based on insider knowledge from Paulson of  the pending November 9, 2007 change in Private Sector asset valuations from hold to maturity to mark to market, thereby, guaranteeing profits from (a) a collapse in MBS, as part of the radical shift in bank credit allocations from the 3 categories of Private Sector assets to the government zero risk weight hold to maturity value assets and (b) a collapse in $14 Trillion in Private Sector equity. Once GS was found out, instead of  being  closed with all the senior executives of GS, JPM, Citibank, etal, being thrown in prison and their firms sold  into the  general public, they were fined $550 million or an effective 2% deduction from the combined bail outs of $5 billion from Buffet, $10 billion from TARP and $13.5billion from the payout of CDRs made possible from the $85 billion AIG bailout, while CEO Blankfein visits Obama in the White House to get a clap on the back for a job well done in GS’s leadership role in precipitating the stealth coup of the wealth of the Private Sector to the government. Note: GS as other investment banks are now bank holding companies coming under the regulatory control of the Federal Reserve and Treasury and, like AIG and Freddie and Fannie already, destined under the Dodd/Frank Financial Reform Act to be approved entities for granting essentially zero risk weighted loans to be valued on a hold to maturity accounting basis regarding all banks and failed bank assets they can acquire at cut throat prices, as a wolf in sheep’s clothing, completing a stealth coup of the Private Sector.

Scenario: How the FASB 157e Time Bomb will trigger a property & share equities collapse

The stock market has been rising on low volume.  Around 50% to 70% of this volume is from big trades posted into the market to buy shares on any pretext through high speed computer programming giving the indication that the shares are going up.  This triggers smaller buyers to come into the market, just as the computer driven trade is removed. As mark to market accounting has removed pricing stability and therefore bottoms to the markets, when bank liquidity begins to collapse triggering a tipping point in liquidity, due to the preponderance of Level 1, Level 2, devaluation in bank assets, these computer trades will vanish. This happened just a month ago resulting in a 1,000 point drop within minutes.

The current stock market expansion is based on this kind of trend fabrication, while these players are taking record short positions and options betting the market will collapse, and as under mark to market accounting there is no bottom, i.e., predominant market pricing based on held to maturity financial contracts, when the bank liquidity collapses due to the FASB 157e trigger, and markets start to move down there will be no long positions targeting a predominant market price, because such predominant market pricing was regulated out of existence through FASB 157.

Geithner and Bernanke, as they did in the September 2008 collapse will come in and require that, just as with Fannie Mae and Freddie Mac, in order to prevent Private sector assets from collapsing in value, all banks must come under the guarantee of the Federal Government and Federal Reserve, shifting all assets into zero % risk weight AND back to hold to maturity accounting valuation.

Immediately after FASB will nail the coffin shut on Private Sector ownership and control of capital and access to Private Sector credit, unless through a government owned or controlled financial institution, by fully imposing mark to market accounting, FASB 157, on all banks and Private Sector companies.

This will complete the coup by the government and financial cohorts of the entire Private sector wealth. This could happen probably over the Lame Duck session of Congress, shortly after the November election, because if Congress does go Republican, and they understand the implications and potential within the economics of the bank regulatory mechanism, the small government elected may immediately (i) reinstate hold to maturity accounting in the Private Sector, (ii) cut taxes to 11% flat tax over $50,000 to dramatically restore mortgage and loan affordability, (iii) cut the government budget by 50%, (iv) defund 50% of the bureaucracy by cutting wages to comparable levels in the Private Sector, (v) repeal Obamacare and the Dodd/Frank Financial Reform Bill, (vi) fire all outside entities writing regulations, (v) go against the role of all predator, monopolistic, crony capitalists and proponents of State Capitalism within government and from foreign entities.

Thereafter, in order for anyone to qualify for loans and mortgages, they will need to be approved and licensed by the any agencies and entities of the government, the licensing fees and bureaucratic burdens being such that only the biggest companies, and those receiving political favors in return for patronage, will be able to survive with all others required to come under the ownership and control of the bigger firms. These bigger firms will agree to this, because, in effect, it allows them to expand and take market share, while the competition has the door slammed from entering the market. Under FDR, their idea was to blame the collapse on entrepreneurial competition.  So, they raised taxes on small business, as Obama is also trying to achieve by preventing the continuance of the Bush tax cuts for small business, but using the licensing to create a regulatory barrier to squeeze out entrepreneurs, even if the Bush tax cut is continued.

The Sustainability of Capitalism:

You hear over and over that the failure of Capitalism caused the US and global systemic collapse that has kept the Private Sector on the ropes since December 2007, with private people saving in record amounts and investors hoarding cash, all sucked up by the government, as the banks, penalized for investing in the 3 categories of Private Sector lending invest all deposits and cash from maturing Private Sector loans into US Treasuries. However, when you have understood from reading the above and understanding the economics of the bank regulatory mechanism that Progressives have used to undermine and then eliminate the key regulation required for Capitalism, i.e., the Private Sector’s ownership and control of capital versus the State, then you fully grasp that what is not sustainable is the constant attack from within the USA and from foreign influences by predator, monopolistic and crony capitalists, seeking to achieve a coup of the entire Private Sector wealth and ownership and control of capital through instilling the regulatory basis for State Capitalism, with a final lock out of the Private Sector when FASB 157 is fully implemented on the banks, States and Municipalities in the next few years.

American Capitalism has always been sustainable, and once FASB 157 is reversed to FASB 115, AND then the principals revealed in the economics of the bank regulatory mechanism adhered to to improve the affordability of mortgages and loans, then America will finally break off the shackles of the progressives and enter a True Golden Age of widespread opportunity and prosperity.


By understanding the economics of the bank regulatory mechanism, it’s clear that to restore the economy that the actions of the Progressives over the years must be systematically reversed starting with the reinstatement of regulatory basis for American Capitalism, FASB 115 hold to maturity accounting in the Private Sector, the elimination forever of any vestige of imposition of mark to market accounting, as tantamount to Treason, reorient government to become referee and combat predatory, monopolistic and crony capitalism and capitalists that together with Progressive State Capitalists in government attempted a coup of the Private Sector. Then adhering to the principals of the economics of the bank regulatory mechanism where the objective is to improve the affordability of the monthly mortgage and loan payment to foster productivity and economic expansion by

(i) driving down taxes to maximize revenues,

(ii) eliminating all counter-productive and behavioral control bureaucracy,

(iii) cut government spending in half,

(iv) eliminate government borrowing,

(v) quantitative easing to (a) buy back the national debt and (b) engage in “real” / sustainably productive infrastructure development, where the result is purchased, leased or licensed by the Private Sector, (vi) have the SSS and Medicare Trusts outsourced to Private Sector asset management companies, with the minimum return guaranteed by the government, structured as an insurance annuity, thereby converting non-productive capital into investment capital supporting productivity, and

(vii) politically to (a) restore government to its roll of referee opposing predator, monopolistic and crony capitalism, (b) to seek all means to foster a meritous society with (c) charity reoriented via tax credits to churches and foundations.


It’s clear from the above that the imposition of mark to market accounting wasn’t the revealer of toxic assets but the direct cause for the undermining of these assets, the subsequent collapse in bank liquidity causing the collapse, and that had FASB 115, hold to maturity in the Private Sector remained unchanged, the economy would have continued to boom. Exposing the economics of the bank regulatory mechanism and the stealth regulatory tools used by Progressives, such as mark to market accounting imposed and limited to the Private Sector, may be the only positive benefit to the crisis that followed November 9, 2007 stealth imposition of FASB 157 on the Private Sector, while the government, and by extension the Fed and government owned and controlled entities and guarantee programs, retains the exclusive right to value and write up Private Sector assets it refinances and acquires on a hold to maturity basis. This had the political intent to shift control and ownership of capital to the government, and to end Freedom and Prosperity for all but the elite and their chosen.  For detail, see articles in


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