Business – Economics – News

I have just been made aware of this interesting case of a prominent lawyer, Richard Fine in Los Angeles County Jail being held without due process in horrible conditions because he is revealing some alleged major corruption in L.A. with the Judges Associations and the County.  From what I have read, it looks like there are payments being made to the judges based on cases against L.A. County that are in favor of the county.

From what I am reading, very few cases have gone against the county and that looks to be the core of the problem.  Because there is an incentive for them to rule in favor of L.A. county, this looks to be a huge conflict of interest.  As quoted “Fine was charged with “contempt of court” and “moral turpitude,” disbarred by California’s Supreme Court and jailed by Superior Court Judge David Yaffe “in retaliation for bringing the cases and exposing the unconstitutional payments,” ones later held to be unconstitutional.”

This sounds like some major corruption in the core of the L.A. legal system and need to be rooted out if true.  The fact that he is being treated in this manner and no one is paying attention tells me there is some truth here and compelled me to shed some light on his case.

Fine’s case is currently before the US Supreme Court. The California Bar waived its right to respond, meaning his appeal is unopposed. Also in his favor was a late 2009 decision in Sturgeon v. LA County (brought by Judicial Watch) deciding that county payments to judges are illegal.

Yet, with the help of California Supreme Court Chief Justice Ronald M. George, state-paid lobbyists got legislators to pass “a midnight bill” (SBX2-11) at the peak of last year’s budget crisis, changing the law to make the payments appear legally authorized to continue, besides giving everyone involved retroactive immunity from criminal prosecution.

Note: immunity is never given when no crime was committed.

The latest on SBX2-11 immunity is that it’s not in the “official Code” like the rest of the bill, Fine’s friends and associates asking, “Why are they hiding this pardon of over Ten Million Felonies from the public.” They further say the bill “is an ex post facto law. Its immunity provisions will ultimately be repealed,” so complicit judges aren’t off the hook.

As of mid-April, 2010, Fine remains in LA County Men’s Central Jail, the “worst jail in the United States,” according to an ACLU investigation and report (aclu.org/prisoners-rights/aclu-releases-report) calling it “nightmarish” because of severe overcrowding (with over 20,000 detainees), violence, and overall conditions causing serious mental illness.

Analysis: This is a political prisoner that is being used to send a message that this is what happens when you challenge power and the status quo.  Totally opposite to democracy and justice and I hope he wins big time and more corruptions is brought to light.   We can not allow this to happen in America or what do we really stand for?

Amabac, a monoline insurer that go into making guarantees of MBS (mortgage-backed securities) that were holding subprime assets that were highly over-valued on a risk basis.  Because of the amounts of payments they have been making against this insurance on bad assets, regulators have now stepped in and taken these assets off their books so the core municipal bond insurance business (hence the name monoline) is not affect.  If they could not provide that insurance, it would wreak havoc on the municipal bond market.

I wonder what the regulators and going to do with these greatly depreciated assets they are now holding that are worth over $64 billion dollars?!?!

The regulatory seizure of toxic guarantees that Ambac Financial Group sold through its insurance unit will trigger payments on credit default swap hedges banks and others had entered on the contracts, the International Swaps and Derivatives Association said on Friday.

Regulators in Wisconsin said on Thursday they were taking control of roughly $64 billion of the worst assets of Ambac Assurance Corp in a move that will preserve cash for municipal and other policy holders, while avoiding making full payments on the toxic portfolio.

Analysis: We may be seeing the next leg down in this Great Recession and it could turn into the Great Depression.  Sure, we can prop up the economy but until we can exit it is not a real recovery.

More rhetoric about the Yuan and trade imbalances.  I do not agree that currency valuations are not a major part of the problem.  If country A has an undervalued by 40% and country B has basically free trade, country A will have an advantage when trading with B.  Because A’s (Yuan) currency will be cheap, it will encourage business in B to do production in A because B’s (Dollars) will exchange for much more of A’s (Yuan) so they will go farther in A’s economy to purchase materials and labor.

Bottom line is that the United States population is addicted to cheap goods from foreign countries and China is the 800 pound gorilla in that area so they are a large target for this kind of rhetoric.  Until we realize that we will not be able to keep the standard of living we are used to in America without jobs that support an income of what we would define as a middle class standard.  We either need to support native production that would support jobs that are usually of a higher income level, OR we need to have extensive retraining programs so that when these production jobs go overseas , the displaced workers will be able to get the skills they need to find a job in another part of the economy.

China’s commerce minister warned the United States on Sunday against imposing trade sanctions over Beijing’s currency controls, and said his country was likely to report a trade deficit in March.

Washington and other trading partners are pressing China to ease controls that have kept its yuan currency steady against the dollar for 18 months to help its companies compete amid weak global demand. Some U.S. lawmakers have demanded to have China declared a currency manipulator in a U.S. Treasury Department report due out next month, which could precede possible trade sanctions.

Asked what measures China would adopt if the Treasury Department declared it a currency manipulator, Chinese Commerce Minister Chen Deming said China would not sit idly by and reiterated Premier Wen Jiabao’s statement a week ago denying that the yuan was undervalued.

“If (the Treasury Department’s) reply is accompanied by trade sanctions and trade measures, we will not ignore it,” Chen said. “If it is followed by any international legal lawsuit against China, we will take them on.”

Business groups say China’s currency controls keep the yuan undervalued by up to 40 percent, giving its exporters an unfair price advantage and swelling its multibillion-dollar trade surplus.

Analysis: We need to focus on a new doctrine of “Fair Trade” and get away from totally free trade in the U.S. or get used to falling wages and less middle classed jobs for some time until these low wages countries build up their standard of living to reduce the incentive for jobs to move from high to low wages areas.  Higher education is the key.

This is ludicrous, the fact that he would say that this would impose “costs” on the banking system by requiring them to at least hold some cash or treasuries on the books really shows where he stands.   Its with the banks #1 and not the American people which he should be serving along with having a healthy banking system.

Without reserves their would be no real accountability and would have to restraint in making loans which in fact would issue credit that is basically currency in the Federal Reserve System.  Why is it bad to impose a cost on the banking system?  Are they somehow better than us all and should be able to make money without any restraints and can basically decide who wins and loses in our market base economy by choosing who will get loans and who will not.  This is DANGEROUS.  I would say almost down right treasonous in its ability to subvert important control in our society.

Up until now, the United States has operated under a “fractional reserve” banking system.  Banks have always been required to keep a small fraction of the money deposited with them for a reserve, but were allowed to loan out the rest.  But now it turns out that Federal Reserve Chairman Ben Bernanke wants to completely eliminate minimum reserve requirements, which he says ”impose costs and distortions on the banking system”. At least that is what a footnote to his testimony before the U.S. House of Representatives Committee on Financial Services on February 10th says. So is Bernanke actually proposing that banks should be allowed to have no reserves at all?

That simply does not make any sense. But it is right there in black and white on the Federal Reserve’s own website….

The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system.

If there were no minimum reserve requirements, what kind of chaos would that lead to in our financial system?  Not that we are operating with sound money now, but is the solution to have no restrictions at all?  Of course not.

Analysis: Here are the true of our Federal Reserve System and where they want to take us.  If we let this happen, the republic will truly be dead and a form of corporate fascism will take hold with a financial oligarchy at the head of the pile.  No matter who you pray to or not, god help us.

Surprise surprise, just kidding.  You give bankers cheap or free money and they will find a way to make profits, you can trust in that.  We should not be surprise that is happened, bankers are great are making money when things go up and when they tumble down.  We should have all heard about Goldman Sachs and the risk control strategy of shorting the investments they were selling to their sophisticated investors.  According to Reuters, bonuses rose by an average of $123,00 last year, at the rate it will double in just over 5 years time.

Comptroller Thomas DiNapoli said on Tuesday profit for all of Wall Street could top $55 billion for 2009, nearly triple the previous record year. Last year, the U.S. economy began to stabilize as lenders raced to repay federal bailout money they had come to view as a stigma.

Average taxable bonuses on Wall Street rose to $123,850 in 2009, DiNapoli said in a statement. Compensation at Goldman Sachs Group Inc, JPMorgan Chase & Co and Morgan Stanley, three of New York’s biggest banks, rose 31 percent, he added.

The comptroller’s annual report on Wall Street pay is closely watched not only by Wall Street, but also by politicians eager to rein in runaway pay in a still-weakened economy where unemployment remains high and tax revenue remains depressed.

While bonuses are well below the level set in 2007 and are now more closely tied to company performance, DiNapoli acknowledged that many may consider them out-sized given the lingering problems in the economy.

Analysis: The “Too Big to Fail” doctrine was a failure in itself, sure we averted financial disaster but at what cost?  We should of taken the pain and let those banks go bust so the next generation of banks do have the expectation that Governments will stand ready to save your bank if you make bad decisions even if it was the profitable and most popular one at the time.  We have set ourselves up for this to happen again and it will be much sooner than later.

This is a very serious solution and a growing and very real problem.  Representative Mike Pitts has put a Bill (H. 4501) forth that would ban U.S. federal reserve notes (dollars) as legal tender in the state of South Carolina.  It may just be symbolic because of the massive deficit spending.

Since the federal reserve was established in 1913, the U.S. dollar has experienced a continued de-valuation by the issuance of more currency than has been required over the last 97 years.  This solution may be a little extreme but with the amount of spending and unfunded liabilities, it may be time to send a message that something needs to be done.

South Carolina Rep. Mike Pitts has introduced legislation that would mandate that gold and silver coins replace federal currency as legal tender in his state.

As the Palmetto Scoop first reported, Pitts, a Republican, introduced legislation this month banning “the unconstitutional substitution of Federal Reserve Notes for silver and gold coin” in South Carolina.

In an interview, Pitts told Hotsheet that he believes that “if the federal government continues to spend money at the rate it’s spending money, and if it continues to print money at the rate it’s printing money, our economic system is going to collapse.”

“The Germans felt their system wouldn’t collapse, but it took a wheelbarrow of money to buy a loaf of bread in the 1930s,” he said. “The Soviet Union didn’t think their system would collapse, but it did. Ours is capable of collapsing also.”

Analysis: The winds are changing about our dollar system and if we want to have no real constraint in the about of currency being issued and if we are okay with constant inflation no matter what and never allowing deflation or real corrections in the economy without some knee-jerk reaction from the congress.