Can living life in community help us draw closer to God? “Come and see,” says Karen Sloan, Presbyterian pastor and author of “Flirting with Monasticism,” a book in which she takes readers through her personal journey with ancient Christian traditions. If the Blessed Mother/monasticism and Presbyterian traditions don’t seem like typical bedfellows, consider Karen’s background. She grew up actively involved in a mega church, serving in campus ministries, with the primary teaching that there’s one way to grow spiritually: Read Your Bible and Pray. Karen’s not disputing the importance of “read your Bible and pray” but in her experience, there wasn’t much help in learning how to do that. You were left to figure it out on your own-a sort of personal piety-and it was isolating and guilt-producing. Karen stumbled into practices that help her draw near to God through ancient traditions and common life with others. She’s calling others to experience these traditions which offer resources for people on their spiritual journey-resources like mentors, practices in drawing near to God, and living in community where those around you call you to live holistically-spiritually, physically, and socially building sustainability. Karen’s community is called Formation House. It’s located in a Pittsburgh neighborhood sandwiched between affluence and need, and residents live together, serve together, play together, practice ancient traditions together with layers of mentors and staff to help along the way.

New monasticism is producing a grassroots ecumenism and a prophetic witness within the North American church which is diverse in form, but characterized by the following marks:

1. Relocation to the abandoned places of Empire.
2. Sharing economic resources with fellow community members and the needy among us.
3. Hospitality to the stranger
4. Lament for racial divisions within the church and our communities
   combined with the active pursuit of a just reconciliation.
5. Humble submission to Christ’s body, the church.
6. Intentional formation in the way of Christ and the rule of the
   community along the lines of the old novitiate.
7. Nurturing common life among members of intentional community.
8. Support for celibate singles alongside monogamous married couples and their children.
9. Geographical proximity to community members who share a common rule of life.
10. Care for the plot of God’s earth given to us along with support of our local economies.
11. Peacemaking in the midst of violence and conflict resolution within communities along the lines of Matthew 18.
12. Commitment to a disciplined contemplative life.

For more information on intentional Christian community:

• http://www.newmonasticism.org
• http://www.thesimpleway.org
• http://www.conspiremagazine.com
• http://www.formationhouse.org
• http://karensloan.net

Download Sample Trend Report >>

He believes we will see the greatest depression, banking holidays, declining residential and commercial real estate, victory gardens, conservation movement, small replacing big, preventative medicine and much more.  This is all very useful as we think about how to best prepare for the immediate future.

Click here for Part I and Part II or read below:

LEWISBURG, Tenn. — Five years ago, this small factory town was struggling to pay the interest on a bond for new sewers. Bob Phillips, Lewisburg’s part-time mayor and full-time pharmacist, was urged by the town’s financial adviser, an investment bank named Morgan Keegan & Company, to engage in a complex financial transaction to lower interest rates.

Mr. Philips was urged by an investment bank to engage in a complex financial transaction to lower interest rates…And when Lewisburg decided to go ahead with the transaction, who was there to make the deal? Morgan Keegan.

In January, local officials were shocked to discover that annual interest payments on the bond had quadrupled to $1 million.

The US Treasury, through the TARP bailout program, is the largest named potential shareholder of Regions Bank, which means that each American citizen is indirectly a shareholder. I looked at Regions Bank about a year ago. Their largest investor at that time was Deutsch Bank.

As described in its annual proxy, Regions next annual meeting of shareholders is in Birmingham on April 16th, the day after most of us file our taxes. Region’s slogans promote “going green” and community service.

Since this is all happening in the “bible belt,” I invite the pastors of all participants involved and everyone impacted by state and local financial support of Wall Street high finance, which includes most Christian congregations in Tennessee, to begin a discussion about why mortgage fraud, illegal drugs and marketing derivatives to municipalities are common in our state.

Step one may be for the municipalities in Tennessee to determine whether a proper application of disclosure laws and the theory of fraudulent inducement is a basis for successful abrogation of any and all swap contracts. Step two may be inviting Morgan Keegan and Regions Bank to leave. Step three may be cleansing state and local pension funds and reserves of providing fees and financing to Wall Street.

This Sunday we gather to celebrate our Lord’s crucifiction and resurrection. The resurrection is a reminder that anything is possible — even the miracle that we might integrate the commandment “love thy neighbor” with the practices we use to make and invest our money.

Your prayers are invited.

Part II

Morgan Keegan defended itself today against the NY Times report which we commented on yesterday, titled Liquidating Thy Neighbor – Part I.

I do agree with Morgan Keegan’s spokesman that this was a politically motivated attack. I can only guess what the particular motivation was in this case.

• For example, the New York brokerage firms and banks have a much worse record of financially raping local communities, including with derivatives. (Click here and here for JP Morgan and Morgan Stanley in Pennsylvania and here and here for JP Morgan and Morgan Keegan together in Alabama) Surely they would have a vested interest in watching a regional firm take the fall for the municipal woes overtaking our country. Firms like AIG and their law firms would certainly have access to the information they needed to package this story and hand it to the NY Times.

• As the industry consolidates, certainly competitors both global and local can benefit from the loss of market share by as institution as prominent as Regions, including subsidiary Morgan Keegan.

• What could be more politically useful as folks in Tennessee prepare their individual taxes in the face of a Washington-Wall Street engorgement of $12-14 trillion of bailouts, then their ire be turned on their neighbors?

I don’t agree with Morgan Keegan’s defense of its practices. As an investment banker who has closed more than $25 billion in transactions and advised both governments and corporations for decades, including on interest rates swaps (the transaction in question), what happened to Lewisburg, Tennessee should not have happened. But let’s set that aside. There is something much more deeply, seriously wrong here that needs to be addressed.

The important question is not why did Lewisburg use a interest rate swap deal in which it assumed the risk for a default or downgrade by the insurance provider in connection with taking on more debt. The important question is why in the world did Lewisburg take on more debt in the first place? Why did Lewisburg not shift more local capital out of Wall Street and into investment in Lewisburg?

Lewisburg, Tennessee borrowed money to fund water and sewer for economic development. Why were they borrowing for such purposes in the first place?

Typically, municipalities borrow because there is insufficient equity investment and income in the county in the first place.

The county makes a significant investment in educating and rearing young people. What happens to that investment? A few high performers head of to college on scholarships never to return. Many of the rest go to the military or, if entrapped instead into dealing drugs, to prison. The return on investment on their young? It goes to Wall Street and Washington, not to the families and community.

Despite the drain of human capital, numerous hard working members of the community build businesses and careers, live modestly and over a life time accumulate capital. Where is that capital? It is in state and local pension funds, 401k and IRA accounts, and various bank and brokerage accounts, all such as those marketed and managed by Morgan Keegan and Regions Bank.

So as Morgan Keegan and Regions Bank and their competitors attract all of this hard earned capital into their accounts, where is that investment channeled? It is channeled out of the community. It is invested through Wall Street in the stock of Citibank, JP Morgan Chase, Wal-Mart, the big defense contractors, the internet stocks, Enron and the telecoms, or, as the powers that be direct, into investments abroad.

How much of it is channeled back into equity investment in the community? Typically, none.

And so, as the human capital in the community is shipped out to Harvard, Iraq and the state penitentiary or the morgue while the equity capital in the community is shipped to Wall Street, the value of the local small business community is drained. Reinvestment into the local businesses slows to a trickle. They do not keep up with technology and globalization.

This means that the franchise businesses financed by Wall Street (including with the state and local equity) can then come in and take over the market, eating into the market share of the local businesses and putting them out of business. The local savers, turning over their capital to Wall Street through firms like Morgan Keegan, Regions and their national counterparts, are financing their own destruction. The theory, of course, is that doing so would make them money. As we have seen over the last year, that theory has not panned out particularly well.

So what happens next? Well some smart fellow from a firm like Morgan Keegan or Regions Bank comes along and proposes that to create new businesses the town should borrow money to do an industrial development park and create the water and sewer infrastructure to attract business.

Note they do not promote the idea that the town should set up an apprentice program for young people to encourage them to stay and build the local small business. They do not propose that the town should create an incubator or a local angel network to support the existing businesses and entrepreneurs. They do not propose a local venture fund with local capital that will allow consumers to enjoy the equity creation from their own purchases. They do not promote that local savings should circulate locally as equity investment. They do not promote any of those ideas. In fact, those who do promote such ideas, such as myself or Franklin Sanders find themselves under attack by the Department of Justice and unable to continue. Those who do not promote centralized control by Wall Street of the savings and capital in the community are driven out and treated like pariahs.

So the town borrows money. Now, what is the difference between equity and debt? Well, if Wall Street had invested equity in Lewisburg, Tennessee, then they would make money if Lewisburg’s projects succeeded and lose money if they failed. However, if they finance Lewisburg with debt, then they don’t need to worry about whether the project succeeds or not. They get paid either way. If Lewisburg’s economic development plans sour, the town will just have to dig deeper or raise taxes to pay the debt.

Debt bondage. Suck up their capital. Use it with rigged government deals to make you rich and hire away all their kids. Get them to borrow their own money back from you. While you are getting bailed out by the government, jack up their interest rate because something went wrong and Washington and Wall Street have no intention of fixing that derivative — just the ones that Goldman Sachs holds.

Is the problem that we need the banks to be able to lend so that we can borrow more money to get the economy going again, as President Obama says?

I think not. We need our equity and income to be rising and our debt to be falling – not vice-versa. Indeed, the time has come to speak seriously about how to shift our capital out of the same old Wall Street and Washington channels and into ways that build greater wealth for us, our children and our communities.

This is a very good 30 minute interview which talks about the financial ponzi scheme that is the financial services sector and how best to clean up the mess. This guy knows what he is talking about and he comes right out and calls things for what they are…deliberate fraud executed on a massive scale.

You can find the original video here: PBS

Summary of the Interview:

The financial industry brought the economy to its knees, but how did they get away with it? With the nation wondering how to hold the bankers accountable, Bill Moyers sits down with William K. Black, the former senior regulator who cracked down on banks during the savings and loan crisis of the 1980s. Black offers his analysis of what went wrong and his critique of the bailout.

BILL MOYERS: Welcome to the Journal.

For months now, revelations of the wholesale greed and blatant transgressions of Wall Street have reminded us that “The Best Way to Rob a Bank Is to Own One.” In fact, the man you’re about to meet wrote a book with just that title. It was based upon his experience as a tough regulator during one of the darkest chapters in our financial history: the savings and loan scandal in the late 1980s.

WILLIAM K. BLACK: These numbers as large as they are, vastly understate the problem of fraud.

BILL MOYERS: Bill Black was in New York this week for a conference at the John Jay College of Criminal Justice where scholars and journalists gathered to ask the question, “How do they get away with it?” Well, no one has asked that question more often than Bill Black.

The former Director of the Institute for Fraud Prevention now teaches Economics and Law at the University of Missouri, Kansas City. During the savings and loan crisis, it was Black who accused then-house speaker Jim Wright and five US Senators, including John Glenn and John McCain, of doing favors for the S&L’s in exchange for contributions and other perks. The senators got off with a slap on the wrist, but so enraged was one of those bankers, Charles Keating — after whom the senate’s so-called “Keating Five” were named — he sent a memo that read, in part, “get Black — kill him dead.” Metaphorically, of course. Of course.

Now Black is focused on an even greater scandal, and he spares no one — not even the President he worked hard to elect, Barack Obama. But his main targets are the Wall Street barons, heirs of an earlier generation whose scandalous rip-offs of wealth back in the 1930s earned them comparison to Al Capone and the mob, and the nickname “banksters.”

Bill Black, welcome to the Journal.

WILLIAM K. BLACK: Thank you.

BILL MOYERS: I was taken with your candor at the conference here in New York to hear you say that this crisis we’re going through, this economic and financial meltdown is driven by fraud. What’s your definition of fraud?

WILLIAM K. BLACK: Fraud is deceit. And the essence of fraud is, “I create trust in you, and then I betray that trust, and get you to give me something of value.” And as a result, there’s no more effective acid against trust than fraud, especially fraud by top elites, and that’s what we have.

BILL MOYERS: In your book, you make it clear that calculated dishonesty by people in charge is at the heart of most large corporate failures and scandals, including, of course, the S&L, but is that true? Is that what you’re saying here, that it was in the boardrooms and the CEO offices where this fraud began?

WILLIAM K. BLACK: Absolutely.

BILL MOYERS: How did they do it? What do you mean?

WILLIAM K. BLACK: Well, the way that you do it is to make really bad loans, because they pay better. Then you grow extremely rapidly, in other words, you’re a Ponzi-like scheme. And the third thing you do is we call it leverage. That just means borrowing a lot of money, and the combination creates a situation where you have guaranteed record profits in the early years. That makes you rich, through the bonuses that modern executive compensation has produced. It also makes it inevitable that there’s going to be a disaster down the road.

BILL MOYERS: So you’re suggesting, saying that CEOs of some of these banks and mortgage firms in order to increase their own personal income, deliberately set out to make bad loans?

WILLIAM K. BLACK: Yes.

BILL MOYERS: How do they get away with it? I mean, what about their own checks and balances in the company? What about their accounting divisions?

WILLIAM K. BLACK: All of those checks and balances report to the CEO, so if the CEO goes bad, all of the checks and balances are easily overcome. And the art form is not simply to defeat those internal controls, but to suborn them, to turn them into your greatest allies. And the bonus programs are exactly how you do that.

BILL MOYERS: If I wanted to go looking for the parties to this, with a good bird dog, where would you send me?

WILLIAM K. BLACK: Well, that’s exactly what hasn’t happened. We haven’t looked, all right? The Bush Administration essentially got rid of regulation, so if nobody was looking, you were able to do this with impunity and that’s exactly what happened. Where would you look? You’d look at the specialty lenders. The lenders that did almost all of their work in the sub-prime and what’s called Alt-A, liars’ loans.

BILL MOYERS: Yeah. Liars’ loans–

WILLIAM K. BLACK: Liars’ loans.

BILL MOYERS: Why did they call them liars’ loans?

WILLIAM K. BLACK: Because they were liars’ loans.

BILL MOYERS: And they knew it?

WILLIAM K. BLACK: They knew it. They knew that they were frauds.

WILLIAM K. BLACK: Liars’ loans mean that we don’t check. You tell us what your income is. You tell us what your job is. You tell us what your assets are, and we agree to believe you. We won’t check on any of those things. And by the way, you get a better deal if you inflate your income and your job history and your assets.

BILL MOYERS: You think they really said that to borrowers?

WILLIAM K. BLACK: We know that they said that to borrowers. In fact, they were also called, in the trade, ninja loans.

BILL MOYERS: Ninja?

WILLIAM K. BLACK: Yeah, because no income verification, no job verification, no asset verification.

BILL MOYERS: You’re talking about significant American companies.

WILLIAM K. BLACK: Huge! One company produced as many losses as the entire Savings and Loan debacle.

BILL MOYERS: Which company?

WILLIAM K. BLACK: IndyMac specialized in making liars’ loans. In 2006 alone, it sold $80 billion dollars of liars’ loans to other companies. $80 billion.

BILL MOYERS: And was this happening exclusively in this sub-prime mortgage business?

WILLIAM K. BLACK: No, and that’s a big part of the story as well. Even prime loans began to have non-verification. Even Ronald Reagan, you know, said, “Trust, but verify.” They just gutted the verification process. We know that will produce enormous fraud, under economic theory, criminology theory, and two thousand years of life experience.

BILL MOYERS: Is it possible that these complex instruments were deliberately created so swindlers could exploit them?

WILLIAM K. BLACK: Oh, absolutely. This stuff, the exotic stuff that you’re talking about was created out of things like liars’ loans, that were known to be extraordinarily bad. And now it was getting triple-A ratings. Now a triple-A rating is supposed to mean there is zero credit risk. So you take something that not only has significant, it has crushing risk. That’s why it’s toxic. And you create this fiction that it has zero risk. That itself, of course, is a fraudulent exercise. And again, there was nobody looking, during the Bush years. So finally, only a year ago, we started to have a Congressional investigation of some of these rating agencies, and it’s scandalous what came out. What we know now is that the rating agencies never looked at a single loan file. When they finally did look, after the markets had completely collapsed, they found, and I’m quoting Fitch, the smallest of the rating agencies, “the results were disconcerting, in that there was the appearance of fraud in nearly every file we examined.”

BILL MOYERS: So if your assumption is correct, your evidence is sound, the bank, the lending company, created a fraud. And the ratings agency that is supposed to test the value of these assets knowingly entered into the fraud. Both parties are committing fraud by intention.

WILLIAM K. BLACK: Right, and the investment banker that — we call it pooling — puts together these bad mortgages, these liars’ loans, and creates the toxic waste of these derivatives. All of them do that. And then they sell it to the world and the world just thinks because it has a triple-A rating it must actually be safe. Well, instead, there are 60 and 80 percent losses on these things, because of course they, in reality, are toxic waste.

BILL MOYERS: You’re describing what Bernie Madoff did to a limited number of people. But you’re saying it’s systemic, a systemic Ponzi scheme.

WILLIAM K. BLACK: Oh, Bernie was a piker. He doesn’t even get into the front ranks of a Ponzi scheme…

BILL MOYERS: But you’re saying our system became a Ponzi scheme.

WILLIAM K. BLACK: Our system…

BILL MOYERS: Our financial system…

WILLIAM K. BLACK: Became a Ponzi scheme. Everybody was buying a pig in the poke. But they were buying a pig in the poke with a pretty pink ribbon, and the pink ribbon said, “Triple-A.”

BILL MOYERS: Is there a law against liars’ loans?

WILLIAM K. BLACK: Not directly, but there, of course, many laws against fraud, and liars’ loans are fraudulent.

BILL MOYERS: Because…

WILLIAM K. BLACK: Because they’re not going to be repaid and because they had false representations. They involve deceit, which is the essence of fraud.

BILL MOYERS: Why is it so hard to prosecute? Why hasn’t anyone been brought to justice over this?

WILLIAM K. BLACK: Because they didn’t even begin to investigate the major lenders until the market had actually collapsed, which is completely contrary to what we did successfully in the Savings and Loan crisis, right? Even while the institutions were reporting they were the most profitable savings and loan in America, we knew they were frauds. And we were moving to close them down. Here, the Justice Department, even though it very appropriately warned, in 2004, that there was an epidemic…

BILL MOYERS: Who did?

WILLIAM K. BLACK: The FBI publicly warned, in September 2004 that there was an epidemic of mortgage fraud, that if it was allowed to continue it would produce a crisis at least as large as the Savings and Loan debacle. And that they were going to make sure that they didn’t let that happen. So what goes wrong? After 9/11, the attacks, the Justice Department transfers 500 white-collar specialists in the FBI to national terrorism. Well, we can all understand that. But then, the Bush administration refused to replace the missing 500 agents. So even today, again, as you say, this crisis is 1000 times worse, perhaps, certainly 100 times worse, than the Savings and Loan crisis. There are one-fifth as many FBI agents as worked the Savings and Loan crisis.

BILL MOYERS: You talk about the Bush administration. Of course, there’s that famous photograph of some of the regulators in 2003, who come to a press conference with a chainsaw suggesting that they’re going to slash, cut business loose from regulation, right?

WILLIAM K. BLACK: Well, they succeeded. And in that picture, by the way, the other — three of the other guys with pruning shears are the…

BILL MOYERS: That’s right.

WILLIAM K. BLACK: They’re the trade representatives. They’re the lobbyists for the bankers. And everybody’s grinning. The government’s working together with the industry to destroy regulation. Well, we now know what happens when you destroy regulation. You get the biggest financial calamity of anybody under the age of 80.

BILL MOYERS: But I can point you to statements by Larry Summers, who was then Bill Clinton’s Secretary of the Treasury, or the other Clinton Secretary of the Treasury, Rubin. I can point you to suspects in both parties, right?

WILLIAM K. BLACK: There were two really big things, under the Clinton administration. One, they got rid of the law that came out of the real-world disasters of the Great Depression. We learned a lot of things in the Great Depression. And one is we had to separate what’s called commercial banking from investment banking. That’s the Glass-Steagall law. But we thought we were much smarter, supposedly. So we got rid of that law, and that was bipartisan. And the other thing is we passed a law, because there was a very good regulator, Brooksley Born, that everybody should know about and probably doesn’t. She tried to do the right thing to regulate one of these exotic derivatives that you’re talking about. We call them C.D.F.S. And Summers, Rubin, and Phil Gramm came together to say not only will we block this particular regulation. We will pass a law that says you can’t regulate. And it’s this type of derivative that is most involved in the AIG scandal. AIG all by itself, cost the same as the entire Savings and Loan debacle.

BILL MOYERS: What did AIG contribute? What did they do wrong?

WILLIAM K. BLACK: They made bad loans. Their type of loan was to sell a guarantee, right? And they charged a lot of fees up front. So, they booked a lot of income. Paid enormous bonuses. The bonuses we’re thinking about now, they’re much smaller than these bonuses that were also the product of accounting fraud. And they got very, very rich. But, of course, then they had guaranteed this toxic waste. These liars’ loans. Well, we’ve just gone through why those toxic waste, those liars’ loans, are going to have enormous losses. And so, you have to pay the guarantee on those enormous losses. And you go bankrupt. Except that you don’t in the modern world, because you’ve come to the United States, and the taxpayers play the fool. Under Secretary Geithner and under Secretary Paulson before him… we took $5 billion dollars, for example, in U.S. taxpayer money. And sent it to a huge Swiss Bank called UBS. At the same time that that bank was defrauding the taxpayers of America. And we were bringing a criminal case against them. We eventually get them to pay a $780 million fine, but wait, we gave them $5 billion. So, the taxpayers of America paid the fine of a Swiss Bank. And why are we bailing out somebody who that is defrauding us?

BILL MOYERS: And why…

WILLIAM K. BLACK: How mad is this?

BILL MOYERS: What is your explanation for why the bankers who created this mess are still calling the shots?

WILLIAM K. BLACK: Well, that, especially after what’s just happened at G.M., that’s… it’s scandalous.

BILL MOYERS: Why are they firing the president of G.M. and not firing the head of all these banks that are involved?

WILLIAM K. BLACK: There are two reasons. One, they’re much closer to the bankers. These are people from the banking industry. And they have a lot more sympathy. In fact, they’re outright hostile to autoworkers, as you can see. They want to bash all of their contracts. But when they get to banking, they say, ‘contracts, sacred.’ But the other element of your question is we don’t want to change the bankers, because if we do, if we put honest people in, who didn’t cause the problem, their first job would be to find the scope of the problem. And that would destroy the cover up.

BILL MOYERS: The cover up?

WILLIAM K. BLACK: Sure. The cover up.

BILL MOYERS: That’s a serious charge.

WILLIAM K. BLACK: Of course.

BILL MOYERS: Who’s covering up?

WILLIAM K. BLACK: Geithner is charging, is covering up. Just like Paulson did before him. Geithner is publicly saying that it’s going to take $2 trillion — a trillion is a thousand billion — $2 trillion taxpayer dollars to deal with this problem. But they’re allowing all the banks to report that they’re not only solvent, but fully capitalized. Both statements can’t be true. It can’t be that they need $2 trillion, because they have masses losses, and that they’re fine.

These are all people who have failed. Paulson failed, Geithner failed. They were all promoted because they failed, not because…

BILL MOYERS: What do you mean?

WILLIAM K. BLACK: Well, Geithner has, was one of our nation’s top regulators, during the entire subprime scandal, that I just described. He took absolutely no effective action. He gave no warning. He did nothing in response to the FBI warning that there was an epidemic of fraud. All this pig in the poke stuff happened under him. So, in his phrase about legacy assets. Well he’s a failed legacy regulator.

BILL MOYERS: But he denies that he was a regulator. Let me show you some of his testimony before Congress. Take a look at this.

TIMOTHY GEITHNER:I’ve never been a regulator, for better or worse. And I think you’re right to say that we have to be very skeptical that regulation can solve all of these problems. We have parts of our system that are overwhelmed by regulation.

Overwhelmed by regulation! It wasn’t the absence of regulation that was the problem, it was despite the presence of regulation you’ve got huge risks that build up.

WILLIAM K. BLACK: Well, he may be right that he never regulated, but his job was to regulate. That was his mission statement.

BILL MOYERS: As?

WILLIAM K. BLACK: As president of the Federal Reserve Bank of New York, which is responsible for regulating most of the largest bank holding companies in America. And he’s completely wrong that we had too much regulation in some of these areas. I mean, he gives no details, obviously. But that’s just plain wrong.

BILL MOYERS: How is this happening? I mean why is it happening?

WILLIAM K. BLACK: Until you get the facts, it’s harder to blow all this up. And, of course, the entire strategy is to keep people from getting the facts.

BILL MOYERS: What facts?

WILLIAM K. BLACK: The facts about how bad the condition of the banks is. So, as long as I keep the old CEO who caused the problems, is he going to go vigorously around finding the problems? Finding the frauds?

BILL MOYERS: You–

WILLIAM K. BLACK: Taking away people’s bonuses?

BILL MOYERS: To hear you say this is unusual because you supported Barack Obama, during the campaign. But you’re seeming disillusioned now.

WILLIAM K. BLACK: Well, certainly in the financial sphere, I am. I think, first, the policies are substantively bad. Second, I think they completely lack integrity. Third, they violate the rule of law. This is being done just like Secretary Paulson did it. In violation of the law. We adopted a law after the Savings and Loan crisis, called the Prompt Corrective Action Law. And it requires them to close these institutions. And they’re refusing to obey the law.

BILL MOYERS: In other words, they could have closed these banks without nationalizing them?

WILLIAM K. BLACK: Well, you do a receivership. No one — Ronald Reagan did receiverships. Nobody called it nationalization.

BILL MOYERS: And that’s a law?

WILLIAM K. BLACK: That’s the law.

BILL MOYERS: So, Paulson could have done this? Geithner could do this?

WILLIAM K. BLACK: Not could. Was mandated–

BILL MOYERS: By the law.

WILLIAM K. BLACK: By the law.

BILL MOYERS: This law, you’re talking about.

WILLIAM K. BLACK: Yes.

BILL MOYERS: What the reason they give for not doing it?

WILLIAM K. BLACK: They ignore it. And nobody calls them on it.

BILL MOYERS: Well, where’s Congress? Where’s the press? Where–

WILLIAM K. BLACK: Well, where’s the Pecora investigation?

BILL MOYERS: The what?

WILLIAM K. BLACK: The Pecora investigation. The Great Depression, we said, “Hey, we have to learn the facts. What caused this disaster, so that we can take steps, like pass the Glass-Steagall law, that will prevent future disasters?” Where’s our investigation?

What would happen if after a plane crashes, we said, “Oh, we don’t want to look in the past. We want to be forward looking. Many people might have been, you know, we don’t want to pass blame. No. We have a nonpartisan, skilled inquiry. We spend lots of money on, get really bright people. And we find out, to the best of our ability, what caused every single major plane crash in America. And because of that, aviation has an extraordinarily good safety record. We ought to follow the same policies in the financial sphere. We have to find out what caused the disasters, or we will keep reliving them. And here, we’ve got a double tragedy. It isn’t just that we are failing to learn from the mistakes of the past. We’re failing to learn from the successes of the past.

BILL MOYERS: What do you mean?

WILLIAM K. BLACK: In the Savings and Loan debacle, we developed excellent ways for dealing with the frauds, and for dealing with the failed institutions. And for 15 years after the Savings and Loan crisis, didn’t matter which party was in power, the U.S. Treasury Secretary would fly over to Tokyo and tell the Japanese, “You ought to do things the way we did in the Savings and Loan crisis, because it worked really well. Instead you’re covering up the bank losses, because you know, you say you need confidence. And so, we have to lie to the people to create confidence. And it doesn’t work. You will cause your recession to continue and continue.” And the Japanese call it the lost decade. That was the result. So, now we get in trouble, and what do we do? We adopt the Japanese approach of lying about the assets. And you know what? It’s working just as well as it did in Japan.

BILL MOYERS: Yeah. Are you saying that Timothy Geithner, the Secretary of the Treasury, and others in the administration, with the banks, are engaged in a cover up to keep us from knowing what went wrong?

WILLIAM K. BLACK: Absolutely.

BILL MOYERS: You are.

WILLIAM K. BLACK: Absolutely, because they are scared to death. All right? They’re scared to death of a collapse. They’re afraid that if they admit the truth, that many of the large banks are insolvent. They think Americans are a bunch of cowards, and that we’ll run screaming to the exits. And we won’t rely on deposit insurance. And, by the way, you can rely on deposit insurance. And it’s foolishness. All right? Now, it may be worse than that. You can impute more cynical motives. But I think they are sincerely just panicked about, “We just can’t let the big banks fail.” That’s wrong.

BILL MOYERS: But what might happen, at this point, if in fact they keep from us the true health of the banks?

WILLIAM K. BLACK: Well, then the banks will, as they did in Japan, either stay enormously weak, or Treasury will be forced to increasingly absurd giveaways of taxpayer money. We’ve seen how horrific AIG — and remember, they kept secrets from everyone.

BILL MOYERS: A.I.G. did?

WILLIAM K. BLACK: What we’re doing with — no, Treasury and both administrations. The Bush administration and now the Obama administration kept secret from us what was being done with AIG. AIG was being used secretly to bail out favored banks like UBS and like Goldman Sachs. Secretary Paulson’s firm, that he had come from being CEO. It got the largest amount of money. $12.9 billion. And they didn’t want us to know that. And it was only Congressional pressure, and not Congressional pressure, by the way, on Geithner, but Congressional pressure on AIG.

Where Congress said, “We will not give you a single penny more unless we know who received the money.” And, you know, when he was Treasury Secretary, Paulson created a recommendation group to tell Treasury what they ought to do with AIG. And he put Goldman Sachs on it.

BILL MOYERS: Even though Goldman Sachs had a big vested stake.

WILLIAM K. BLACK: Massive stake. And even though he had just been CEO of Goldman Sachs before becoming Treasury Secretary. Now, in most stages in American history, that would be a scandal of such proportions that he wouldn’t be allowed in civilized society.

BILL MOYERS: Yeah, like a conflict of interest, it seems.

WILLIAM K. BLACK: Massive conflict of interests.

BILL MOYERS: So, how did he get away with it?

WILLIAM K. BLACK: I don’t know whether we’ve lost our capability of outrage. Or whether the cover up has been so successful that people just don’t have the facts to react to it.

BILL MOYERS: Who’s going to get the facts?

WILLIAM K. BLACK: We need some chairmen or chairwomen–

BILL MOYERS: In Congress.

WILLIAM K. BLACK: –in Congress, to hold the necessary hearings. And we can blast this out. But if you leave the failed CEOs in place, it isn’t just that they’re terrible business people, though they are. It isn’t just that they lack integrity, though they do. Because they were engaged in these frauds. But they’re not going to disclose the truth about the assets.

BILL MOYERS: And we have to know that, in order to know what?

WILLIAM K. BLACK: To know everything. To know who committed the frauds. Whose bonuses we should recover. How much the assets are worth. How much they should be sold for. Is the bank insolvent, such that we should resolve it in this way? It’s the predicate, right? You need to know the facts to make intelligent decisions. And they’re deliberately leaving in place the people that caused the problem, because they don’t want the facts. And this is not new. The Reagan Administration’s central priority, at all times, during the Savings and Loan crisis, was covering up the losses.

BILL MOYERS: So, you’re saying that people in power, political power, and financial power, act in concert when their own behinds are in the ringer, right?

WILLIAM K. BLACK: That’s right. And it’s particularly a crisis that brings this out, because then the class of the banker says, “You’ve got to keep the information away from the public or everything will collapse. If they understand how bad it is, they’ll run for the exits.”

BILL MOYERS: Yeah, and this week in New York, at this conference, you described this as more than a financial crisis. You called it a moral crisis.

WILLIAM K. BLACK: Yes.

BILL MOYERS: Why?

WILLIAM K. BLACK: Because it is a fundamental lack of integrity. But also because, if you look back at crises, an economist who is also a presidential appointee, as a regulator in the Savings and Loan industry, right here in New York, Larry White, wrote a book about the Savings and Loan crisis. And he said, you know, one of the most interesting questions is why so few people engaged in fraud? Because objectively, you could have gotten away with it. But only about ten percent of the CEOs, engaged in fraud. So, 90 percent of them were restrained by ethics and integrity. So, far more than law or by F.B.I. agents, it’s our integrity that often prevents the greatest abuses. And what we had in this crisis, instead of the Savings and Loan, is the most elite institutions in America engaging or facilitating fraud.

BILL MOYERS: This wound that you say has been inflicted on American life. The loss of worker’s income. And security and pensions and future happened, because of the misconduct of a relatively few, very well-heeled people, in very well-decorated corporate suites, right?

WILLIAM K. BLACK: Right.

BILL MOYERS: It was relatively a handful of people.

WILLIAM K. BLACK: And their ideologies, which swept away regulation. So, in the example, regulation means that cheaters don’t prosper. So, instead of being bad for capitalism, it’s what saves capitalism. “Honest purveyors prosper” is what we want. And you need regulation and law enforcement to be able to do this. The tragedy of this crisis is it didn’t need to happen at all.

BILL MOYERS: When you wake in the middle of the night, thinking about your work, what do you make of that? What do you tell yourself?

WILLIAM K. BLACK: There’s a saying that we took great comfort in. It’s actually by the Dutch, who were fighting this impossible war for independence against what was then the most powerful nation in the world, Spain. And their motto was, “It is not necessary to hope in order to persevere.”

Now, going forward, get rid of the people that have caused the problems. That’s a pretty straightforward thing, as well. Why would we keep CEOs and CFOs and other senior officers, that caused the problems? That’s facially nuts. That’s our current system.

So stop that current system. We’re hiding the losses, instead of trying to find out the real losses. Stop that, because you need good information to make good decisions, right? Follow what works instead of what’s failed. Start appointing people who have records of success, instead of records of failure. That would be another nice place to start. There are lots of things we can do. Even today, as late as it is. Even though they’ve had a terrible start to the administration. They could change, and they could change within weeks. And by the way, the folks who are the better regulators, they paid their taxes. So, you can get them through the vetting process a lot quicker.

BILL MOYERS: William Black, thank you very much for being with me on the Journal.

WILLIAM K. BLACK: Thank you so much.

Dr. Chuck Missler has a lot to say regarding the future of the United States. I’ll post a presentation that lays out what he sees coming for the United States and a piece off his website regarding the matter below the videos.

Please not the section at the very bottom of this post regarding the life cycles of nations. I believe his application of 2 Chronicles 7:14 is very important for us to respond to.

If my people, who are called by My name, will humble themselves, and pray, and seek my face, and turn from their wicked ways, then will I hear from heaven, forgive their sin, and heal their land.
- 2 Chronicles 7:14

Introduction

“It was the best of times and it was the worst of times.”
-Charles Dickens, A Tale of Two Cities

The Best of Times?

By many reckonings, it appears to be the best of times in America: We enjoy a robust economy, reinforced by continually advancing technologies. At least one computer in every home, and a personal telephone on almost everyone’s belt. People are buying their 3rd and 4th cars. Our military is the most feared throughout the world. Indeed, in many ways, it seems like the best of times.

Judgment on the Horizon?

However, let’s assess the State of the Union in the mirror of God’s Word. Homosexuality is accepted as simply “an alternative lifestyle.” We murder babies that are socially inconvenient. We change marriage partners like a fashion statement. We have abandoned the sanctity of commitments in our families and in our businesses. Immorality and deceit have come to characterize the highest offices in our land; our politics have condoned and covered up more murders than we dare list. Our public enterprises have been prostituted to the convenience of the elite. Our mainline media takes pride in forming public opinion rather than informing it, which had been its sacred role in a representative republic. Our culture has disconnected character from destiny. Our entertainments celebrate adultery, fornication, violence, aberrant sexual practices and every imaginable form of evil. We have become the primary exporters of everything that God abhors.

One of the major theological mysteries is why hasn’t God judged America? The parallels in Bible (Cf. Hosea 4-14; Isaiah 5; et al) would suggest that it is long overdue. The only ostensible answer is God’s commitment in Genesis 12:2-3, in which He promises Abraham that He “will bless them that bless thee, and curse them that curseth thee.” It may well be that America has been spared-so far-due to its support of the nation of Israel. But that, too, may be short lived…

Conspicuous by Its Absence?

One of the mysteries in the Biblical prophetic scenario, is where does America appear?

The final battle-the Battle of Armageddon-is a four-power conflict: triggered by the “Kings of the South” (Egypt?), responded to by the “Kings of the North” (Syria? Russia? …various opinions), and dominated by a Western Confederacy (The Antichrist, et al) until the “Kings of the East” are drawn in.

Where is the United States? There are many conjectures among scholars. Some assume that we will ultimately be somehow associated with the Western Confederacy. The continuing erosion of our constitutional republic, plus the increasing move toward a police state to “fight terrorism,” seems consistent with the growing tide toward a global government.

Others assume that America simply will not be a major player at that time. As variations of this second view, some suggest that America will have become economically and militarily less relevant by then. Others (disturbed by the hint in Ezekiel 39:6), fear that we may have been the subject of a major nuclear exchange over the growing tensions in the Middle East.

Life Cycle of Nations

As we study the rise and fall of nations, there is a disturbing sequence throughout history. The sequence of nations, as observed by Alexander Tyler, 1750, follows a predictable pattern “from bondage to spiritual faith; from spiritual faith to great courage; from courage to liberty; from liberty to abundance; from abundance to complacency; from complacency to apathy; from apathy to dependency; from dependence back again into bondage.” It is hard to deny that we may well be at the zenith of that sequence. If you ask the average American what is the biggest problem facing our nation, Is it ignorance or apathy? He will likely answer, “I don’t know and I don’t care!”

It remains to be seen whether the wake-up call of September 11, 2001, will prove to be more effective than simply a brief spasm of patriotism, or whether it may lead to a more serious revival and return to our heritage. In any case, we each need to prepare and to rise to the opportunities that present themselves for a spiritual revival and we must begin with ourselves. God has declared an immutable principle:

If my people, who are called by My name, will humble themselves, and pray, and seek my face, and turn from their wicked ways, then will I hear from heaven, forgive their sin, and heal their land.
- 2 Chronicles 7:14

Notice that this isn’t addressed to the Congress, or the Administration, or to the pagan left. It is addressed to His people, who are called by His name. It is the members of the Body of Christ that are standing in the way of what God would prefer to do in our land. A revival needs to begin with us.

Peak Oil is the concept that we have reached the peak of our daily production rate and that demand has begun to exceed supply. We have a lot of oil in the ground but the rate we pull it out of the ground is declining.

Matt Simmons is the leading expert in the field and he predicts real problems for us five years down the road as oil production falls quickly to half the current rate. Expect $500/barrel which will probably be $10/gallon for gas. That’s if you can get it.

He says we will need to learn to live and work locally as travel will be much more expensive.

So the G20 met last week and now it is becoming more clear what happened there…a strong move toward world government described by Gordon Brown here as “the New World Order”. This is basically the same old order of European domination but just more of it. They are pitching global governance as the solution to the world’s economic problems. Unfortunately, the authors of this solution are the same people that engineered the current crises which raises some serious red flags.

Basically, the US economy along with others will now report to a non-accountable, non-elected international group of bankers. Guess what? Global currency also got its start as well.

Her presentation covers the global movement of government and corporations like Monsanto to monopolize seeds, agriculture and the distribution of food.

For more details regarding current legislation proposed in the US Congress, click here.

Jeff has a solid Biblical perspective on business. He states that the purpose of business should be to serve the good of the community using profits as the means to accomplish this purpose.

We live in a world where many businesses oppress, destroy, cheat, lie, steal, murder, etc. all in the name of profit.  A few benefit from harm caused to the many.  How can this be changed…how can business be used for the benefit of many as it was intended?

How Business Contributes to Human Flourishing (January 5, 2009)

Jeff Van Duzer, is Dean of the Seattle Pacific University School of Business and Economics. Time: 35:42

Download this talk here