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RoboJelly diagram
A computer-aided model of Robojelly shows the vehicle’s two bell-like structures.

POWERED by HYDROGEN & OXYGEN
http://www.utdallas.edu/news/2012/3/22-16551_Jellyfish-Robot-Powered-by-Hydrogen-and-Nanotechno_article-wide.html
Undersea Vehicle Powered by Hydrogen and Oxygen

Researchers at The University of Texas at Dallas and Virginia Tech have created an undersea vehicle inspired by the common jellyfish that runs on renewable energy and could be used in ocean rescue and surveillance missions. In a study published this week in Smart Materials and Structures, scientists created a robotic jellyfish, dubbed Robojelly, that feeds off hydrogen and oxygen gases found in water. “We’ve created an underwater robot that doesn’t need batteries or electricity,” said Dr. Yonas Tadesse, assistant professor of mechanical engineering at UT Dallas and lead author of the study. “The only waste released as it travels is more water.”


Engineers and scientists have increasingly turned to nature for inspiration when creating new technologies. The simple yet powerful movement of the moon jellyfish made it an appealing animal to simulate. The Robojelly consists of two bell-like structures made of silicone that fold like an umbrella. Connecting the umbrella are muscles that contract to move. In this study, researchers upgraded the original, battery-powered Robojelly to be self-powered. They did that through a combination of high-tech materials, including artificial muscles that contract when heated. These muscles are made of a nickel-titanium alloy wrapped in carbon nanotubes, coated with platinum and housed in a pipe. As the mixture of hydrogen and oxygen encounters the platinum, heat and water vapor are created. That heat causes a contraction that moves the muscles of the device, pumping out the water and starting the cycle again. “It could stay underwater and refuel itself while it is performing surveillance,” Tadesse said. In addition to military surveillance, Tadesse said, the device could be used to detect pollutants in water. Tadesse said the next step would be refining the legs of the devices to move independently, allowing the Robojelly to travel in more than one direction.

{Dr. Ray Baughman, the Robert A. Welch Distinguished Chair in Chemistry and director of the Alan G. MacDiarmid NanoTech Institute at UT Dallas, was an author of the study. The research was a collaboration between researchers at the University of Texas at Dallas and Virginia Polytechnic Institute and State University, Virginia Tech, including Dr. Shashank Priya, the study’s senior author. The study was funded by the Office of Naval Research.}

RoboJelly
The Robojelly, shown here out of water, has an outer structure made out of silicone.

LIMITLESS FUEL SOURCE
http://io9.com/5895083/when-the-earth-is-uninhabited-this-robotic-jellyfish-will-still-be-roaming-the-seas
When the Earth is uninhabited, this robotic jellyfish will still be roaming the seas
by Esther Inglis-Arkell  /  March 21, 2012

Virginia Tech and the University of Texas at Dallas have claimed their place as the leading purveyor of robot-based nautical doom with robojelly, a robot that simulates the look and the move of a cnidarian. Anyone who has seen jellies knows that they move with a repetitive contraction of their bells, or their transparent outer shells. This movement requires two motions: a contraction and a snap back to the original position. For this carbon nanotubule jellyfish, the engineers used a commercially available, shape memory, titanium-and-nickel alloy to mimic the snap back. The contraction was harder to engineer. The Robojelly needed muscles, so researchers used platinum-covered carbon nanotubes to cover the shape memory sheets. When hydrogen and oxygen gases in the water made contact with the platinum — which is in the form of black powder — they create a reaction that gives off heat. This causes the nickel-titanium alloy to contract. And since hydrogen and oxygen are in seawater, these jellies could roam the oceans indefinitely, with possible future tinkering.

The deformation of the bell, powered by this reaction, was found to be a modest 13.5%. An electro-robojelly can manage 29% and a biological one can get an impressive 42%, but neither of the latter can power themselves until judgment day.

CONTACT
Yonas Tadesse
http://me.utdallas.edu/people/tadesse.html
email : yonas.tadesse [at] utdallas [dot] edu

ABSTRACT
http://iopscience.iop.org/0964-1726/21/4/045013

“Artificial muscles powered by a renewable energy source are desired for joint articulation in bio-inspired autonomous systems. In this study, a robotic underwater vehicle, inspired by jellyfish, was designed to be actuated by a chemical fuel source. The fuel-powered muscles presented in this work comprise nano-platinum catalyst-coated multi-wall carbon nanotube (MWCNT) sheets, wrapped on the surface of nickel–titanium (NiTi) shape memory alloy (SMA). As a mixture of oxygen and hydrogen gases makes contact with the platinum, the resulting exothermic reaction activates the nickel–titanium (NiTi)-based SMA. The MWCNT sheets serve as a support for the platinum particles and enhance the heat transfer due to the high thermal conductivity between the composite and the SMA. A hydrogen and oxygen fuel source could potentially provide higher power density than electrical sources. Several vehicle designs were considered and a peripheral SMA configuration under the robotic bell was chosen as the best arrangement. Constitutive equations combined with thermodynamic modeling were developed to understand the influence of system parameters that affect the overall actuation behavior of the fuel-powered SMA. The model is based on the changes in entropy of the hydrogen and oxygen fuel on the composite actuator within a channel. The specific heat capacity is the dominant factor controlling the width of the strain for various pulse widths of fuel delivery. Both theoretical and experimental strains for different diameter (100 and 150 µm) SMA/MWCNT/Pt fuel-powered muscles with dead weight attached at the end exhibited the highest magnitude under 450 ms of fuel delivery within 1.6 mm diameter conduit size. Fuel-powered bell deformation of 13.5% was found to be comparable to that of electrically powered (29%) and natural jellyfish (42%).”

SEE ALSO

AMOEBOID ROBOTS  NAVIGATE without BRAIN
http://www.technologyreview.com/blog/mimssbits/27638/
Japanese researcher draws inspiration from slime mold cognition
by Christopher Mims  / 03/09/2012

A new blob-like robot described in the journal Advanced Robotics uses springs, feet, “protoplasm” and a distributed nervous system to move in a manner inspired by the slime mold Physarum polycepharumWatch it ooze across a flat surface, The Blob style:

Skip to 1:00 if you just want to be creeped out by its life-like quivering. (And if anyone can explain why, aside from wanting to kill its creepiness, the researcher stabs it with a pen-knife at 1:40, let me know in the comments.) Researcher Takuya Umedachi of Hiroshima University has been perfecting his blob-bot for years, starting with early prototypes that used springs but lacked an air-filled bladder.

This model didn’t work nearly as well, demonstrating, I guess, the need for a fluid or air-filled sack when you’re going to project your soft-bodied self in a new direction. (Hydraulic pressure is, after all, how our tongues work.) Umedachi modeled his latest version on the “true” slime mold, which has been shown to achieve a “human-like” decision-making capacity through properties emerging from the interactions of its individual spores. Slime molds appear to have general computational abilities, and you’ve probably heard that they can solve mazes. Here’s what they look like in the wild.


Yellow slime mold (detail) by frankenstoen


Yellow slime mold by frankenstoen

Soft-bodied robots can do things their rigid, insectoid brethren can’t, like worm their way into tight spots and bounce back in the face of physical insult. Umedachi’s goal isn’t simply to create a new kind of locomotion, however. He’s exploring the way in which robots that lack a centralized command center — i.e. a brain — can accomplish things anyway. Slime molds are a perfect model for this sort of thing, because they don’t even have the primitive neural nets that characterize the coordinated swimming and feeding actions in jellyfish.

From the abstract:

A fully decentralized control using coupled oscillators with a completely local sensory feedback mechanism is realized by exploiting the global physical interaction between the body parts stemming from the fluid circuit. The experimental results show that this robot exhibits adaptive locomotion without relying on any hierarchical structure. The results obtained are expected to shed new light on the design scheme for autonomous decentralized control systems.

Simulations indicate that the robot should be highly adaptable to deformation — i.e., squeezing through tight spaces.


For a full account of the ways that Umedachi plans to reproduce the world’s most primitive form of cognition in robots, here’s a 2011 talk on the subject by the professor himself.

NOT a ‘REAL’ BANK
http://gawker.com/5840953/the-private-bank-of-denny-ray-hardin-wasnt-a-real-bank

After reading some books about banking, Denny Ray Hardin set up a website, created 2,000 fake promissory notes, and opened up “the Private Bank of Denny Ray Hardin” (not necessarily in that order) from his home in Kansas City. How entrepreneurial! And illegal. On his website—sorry, the Private Bank’s website—Hardin claimed that the notes, which he made on his home computer, were bonded and authorized by the U.S. Treasury Department. From September 2008 to September 2009 he sold more than $100 million of these things, reports the Kansas City Star.

In a March 2010 profile by the Kansas City alt-weekly The Pitch, Hardin comes off as a tragic and complicated character who has some altruistic motives but is also driven by extremist “don’t tread on me” ideology. Fittingly, the article introduces him by way of a his many life troubles, which seem to have begun when he and his girlfriend were in a car accident, she lost her ability to work, and he was laid off from his construction job. “The one good thing we had was Betsy,” he told The Pitch, referring to his beloved Corvette Stingray. But then a friend set him up in a small-time marijuana deal, and Hardin was arrested. The cops confiscated the Corvette, and Hardin was sentenced to jail time plus probation. Upon his release, he experienced this horror: “The next time Hardin saw Betsy, almost a year later, she had been painted up as an ad for the D.A.R.E. program.” Seriously, that’s tragic.

Besides seeing his old hot rod being used to promote snitching on your parents, Hardin faced other troubles. His woman left him. He began smoking crack. His life essentially fell apart. Then he went to rehab and read about various subjects, including banking. He applied his knowledge and opened the Private Bank of Denny Ray Hardin, under this theory that we don’t understand:

Hardin theorizes that it’s possible to file a document that renounces one’s U.S. citizenship and instead declares what he refers to as American citizenship. By doing this, the newly declared American citizen can take possession of an account that is supposedly set up by the feds on the occasion of every person’s birth. Next, the American citizen can file a financial statement with the U.S. Secretary of State and copyright his or her name. The Americans Republic Party explains that with these three simple steps, it’s possible to become a sovereign with the right to cash checks from one’s established-at-birth account.

Hardin didn’t really charge people much of a fee to his customers, whose mortgages he paid off using his special-issued Denny Ray bonds (for more on how this works, see this LA Timesarticle). Like an official bank, he gave his customers information packets describing “all the steps he had taken, what laws he had to abide by, the ordinances that must be followed.” And, as The Pitch notes, he was just one banker in a small yet diverse niche market; the Gadsden flag-flyingAmericans Republic Party, which has supported Hardin over the years, knows of other private banks operating right here in America.

On Wednesday, Hardin was found guilty in federal court on 11 counts of creating fictitious obligations and 10 counts of mail fraud, reports the Kansas City Business Journal; he now faces at least 20 years in prison. At the time of his indictment in May 2010, he was already incarcerated in state prison on a probation violation based on a 2006 incident in which he tried to arrest the lieutenant governor of Kansas for violating the Constitution. The government did not agree with Hardin about the lieutenant governor’ behavior. Hardin and the government are rarely in agreement on the issues, it seems.

It’s amazing that people would do business with a bank named after some random guy. Then again, people do business with all kinds of banks. At least this can be said about the now-shuttered Private Bank of Denny Ray Hardin: it was probably one of the only banks in Kansas City that was helping people to avoid foreclosure instead of making foreclosure more likely.

Among those who say Hardin is their savior (from left): Denelle Ginder-Brown; her husband, James Brown; and their daughter, Michelle Elam. - Michael McClure

NEVER ASKED for the MONEY BACK
http://www.pitch.com/gyrobase/denny-hardins-weapon-against-the-us-government-his-own-private-bank/Content?oid=2197865&showFullText=true

Denny Hardin’s weapon against the U.S. government: his own private bank
by Peter Rugg  /  March 11, 2010

It started over a cherry 1977 Corvette named Betsy. “Ever since they took that car, the fight’s been on,” Denny Hardin says. He’s talking to The Pitch by phone from the Moberly Correctional Center, where he’s serving the first months of a five-year sentence for a probation violation. By “they,” he means the United States of America. Hardin didn’t plan to wage a one-man war against the government. He was once a loyal citizen; he even served in the Navy in the 1980s. By 1991, he was in his late 20s, divorced from the wife he’d met in Tokyo, and back in his hometown of Kansas City. He began dating a hairdresser named Sherry Lee, who wanted to open her own salon. They found a space and started work on it, sleeping on the floor of the shop when they didn’t have enough money to also rent an apartment. But then they were in a car accident. The insurance company paid out $20,000 for medical bills and the cost of the car. They spent $7,780 on Betsy. Hardin found the car on the lot of a Raytown Chevrolet dealer. It was in such pristine condition that it was just a thousand dollars less than the original sticker price. A ’77 Stingray is one of the most popular Corvette models ever made, the type of car that bikini-wearing models still recline against on the covers of muscle-car magazines. The rest of the money went to medical bills, but Lee couldn’t work. Her hands, which she had relied on to style hair, now shook uncontrollably. “Then I got laid off from my construction job,” Hardin remembers. “The one good thing we had was Betsy.” For the next few months, money was scarce. One day, a friend of Hardin’s from grade school asked if Hardin could help him find some weed. His friend promised that Hardin would make a couple of bucks for setting up the deal. When they got to the dealer’s house, the friend feigned shyness, telling Hardin that because the dealer didn’t know him, it was better that he stay in the car while Hardin bought the dope. Hardin went in and bought a half-pound of pot. When he came back out, police arrested him. “It turned out, that friend had been busted by the cops earlier, and he set me up because he’d made a deal with them to deliver people,” Hardin says. He served 120 days and got five years’ probation. Even worse, the cops claimed that the Stingray had been bought with drug money, so they confiscated it. The next time Hardin saw Betsy, almost a year later, she had been painted up as an ad for the D.A.R.E. program.

Lee eventually left him. He knows that she’s in Iowa somewhere, working as a paralegal, but they haven’t spoken in years. “When they took Betsy away, that just about destroyed her. Betsy was repayment for almost dying,” he says. “I promised her I’d make up for what they did, and I still keep that promise.” He didn’t start right away. Hardin spent the next few years in a crack-smoking stupor, dropping down to 87 pounds before checking himself into a hospital for rehab. As he convalesced, he read history and law books. Eventually, the man who was still three credits short of his associate’s degree at Longview Community College was offering legal advice to friends and family. Before long, he learned how to make his own bank.

The Private Bank of Denny Hardin, responsible for writing more than $160 million in bonded promissory notes to borrowers all around the country, is a two-story house on the East Side of Kansas City. Taped to the door is a notice declaring that no foreign agents are allowed to search the premises. Inside, shelf after shelf is filled with accordion folders holding the names and addresses of the people for whom Hardin, with the help of his fiancée, Melinda Harrington, has written bonds. Hardin theorizes that it’s possible to file a document that renounces one’s U.S. citizenship and instead declares what he refers to as American citizenship. By doing this, the newly declared American citizen can take possession of an account that is supposedly set up by the feds on the occasion of every person’s birth. Next, the American citizen can file a financial statement with the U.S. Secretary of State and copyright his or her name. TheAmericans Republic Party explains that with these three simple steps, it’s possible to become a sovereign with the right to cash checks from one’s established-at-birth account.

In April 2009, the Office of Inspector General at the U.S. Department of the Treasury posted a fraud alert. In 2008, Treasury agents noticed that people were sending in notes and bonds to pay their taxes. “These scams have been directed towards banks, charities, individuals, and companies which seek payment on the fraudulent securities,” the Treasury warned. In most cases, perpetrators were writing bonds with a Treasury Bureau routing number in place of a bank’s and were writing their own Social Security numbers where the checking-account numbers would normally be listed. “Fraudulent seminars are being held throughout the United States, which teach attendees how to create the aforementioned fictitious documents and how to use federal routing numbers,” the Treasury warned.

Other than the part about putting on seminars, the warning was essentially a description of Hardin’s operation. Hardin says he has never charged his clients anything more than the administrative cost of filing his notes (typically no more than $100) and has never asked for repayment on a loan. If he’s telling the truth, that’s a lot of risk for little payoff. One of Hardin’s early customers was Bob Suppenbach, who had known him when the cops took Betsy but had lost track of him. (Those were the years when Hardin was addicted to crack, Suppenbach learned.) “I ran into a mutual friend, and he told us what had happened to him.” The mutual friend then told Hardin about running into Suppenbach. “Denny came out to see us two days later and he’s been coming to the house ever since.” Suppenbach wasn’t immediately sold on Hardin’s new calling. But as a man who had his own troubles with the government, he saw the appeal. In the late 1960s, state agents removed Suppenbach and his three brothers from their mother’s care. Suppenbach says his two brothers were later molested by people who were supposed to watch out for them, and both died in the 1980s after contracting HIV. Before Hardin was busted in a drug sting, Suppenbach served four months in the U.S. Penitentiary at Leavenworth for making cable descramblers for satellite dishes. “I’m the only man in the whole damn country who’s served time in a federal prison for stealing HBO,” Suppenbach says.

He had money troubles, too. “Seems like everything I went and got involved in, for one reason or another after two or three years, got obsolete. Got into TV repair, VCR repair, then computers. Then I thought I’d try construction. I got a company set up, got all my trailers, my tools, spent thousands of dollars getting set up in construction. Then the market fell out.” Suppenbach had a $60,000 mortgage hanging over him. Then in 2006, he joined the class of plaintiffs in a multistate lawsuit against the company that supposedly held his title, Ameriquest Mortgage. The nation’s largest subprime lender settled claims of predatory lending by agreeing to pay $295 million in restitution and changing its lending practices. A year later, Suppenbach got a collection notice for the same loan from Citibank, whose parent company, Citigroup, had acquired much of Ameriquest in 2007. During last year’s bank bailout, Citigroup’s arrangement with the government ensured that about $20 billion in federal dollars would be directly invested in the company, in addition to $306 billion to help back loans and securities. “They were selling them back and forth. It didn’t matter that they defrauded me and I won in court. They got rewarded for it.”

When it comes to not knowing exactly who owns his mortgage, Suppenbach has a lot of company. In many cases, even the banks aren’t sure. (Last year, researchers at the University of Iowa found that out of 1,733 foreclosures begun in 2006, 40 percent of the foreclosing creditors showed no proof of ownership on the note or security investment in the property.) If a bank has to contest a payment’s legitimacy — for example, if payment is presented in the form of a bonded promissory note from a self-proclaimed banker — then not being able to show proof of ownership could actually help the homeowner, or at least let the homeowner delay getting kicked into the street. After Hardin’s 2009 incarceration, the Americans Republic Party Web site posted a list of other private banks. As of February, the only links were to a man named Charles Elliot in Henderson, Arkansas (who did not return The Pitch‘s calls), and J.W. Patterson, president and founder of Shadow Mountain Bank in Ash Fork, Arizona. The latter is probably the only financial institution in the country whose Web site includes links to prove it’s a real bank, along with clip art of doves carrying roses in their teeth and a teddy bear that somersaults and dances over the P.O. Box number. Patterson says the Treasury Department is just catching up. “I’ve been doing this since the ’80s,” he says.

The Private Bank of Denny Hardin is the originator of more than $160 million - in bonded promissory notes to borrowers all around the country. - Sarah Rae

Patterson says he has written bonds for thousands of people, including members of the Montana Freemen — the group that spent 81 days in a standoff with the FBI in 1996, defending land they claimed was their own, separate from the United States. (They were also known for passing counterfeit checks and money orders.) Today, the group’s most famous former member is Scott Roeder, admitted killer of Kansas abortion provider George Tiller. Patterson won’t say how many clients request his help in a given day, just that Shadow Mountain has a budget of $500 a week for ink. In Kansas City, at least one family considers Hardin an angel. In March 2009, KCTV Channel 5 aired video of a 44-year-old named Denelle Ginder-Brown, who was near tears. All around the country, people had been losing their homes. Ginder-Brown, who worked as a cashier, lived in a house on East 93rd Street near Indiana Avenue with her husband, 63-year-old James Brown, and their two children. They had lived there for 15 years and had a deal with the owner: They would make the monthly mortgage payments and eventually the house would be theirs. In 2004, the owner died and willed the house to them. They kept writing checks to Capitol Federal and never missed a payment.

But within months of the owner’s death, Capitol Federal ordered that the remaining $10,000 balance on the mortgage be paid immediately or else it would foreclose on the house. The Browns didn’t have the money. A representative from the Neighborhood Assistance Corporation of America — a group that helps families facing foreclosure — looked at the case and discovered that Capitol Federal had continued accepting payments even though it knew that the Browns’ deal wasn’t a legal sale of the property. NACA’s local director tried to work out a payment plan, but Capitol Federal refused. In a suit brought against Ginder-Brown by Capitol Federal, a judge ruled that the bank owned the property because her name was never on the title. The family was given a week to find a new place to live. Channel 5 aired the story on Monday, March 2, 2009, and the property was scheduled for auction on Monday, March 9.

On the day of the auction, Channel 5 aired a new story. This time, Denelle Ginder-Brown was smiling. Capitol Federal had relented because, as it turned out, it was only servicing a loan that was owned by Freddie Mac, which had decided to work with her on a new loan. But there was even better news. An anonymous good Samaritan had seen the Browns on the previous week’s broadcast and offered to pay the loan completely. All Ginder-Brown had to do was wait for the bank to confirm that it had received the house payment in full, and then she could see her name on the title. The moral to the story: There are good people in the world. The family’s anonymous savior was Hardin. “We got down on our knees and we prayed for God to help us because we didn’t have anything else we could do,” says Brown, who is currently on disability. “We believe God makes a way out of no way, and he sent Denny Hardin.”

At first, the Browns were skeptical of Hardin’s claims that he was a private bank. Then he gave them a packet with all the steps he had taken, what laws he had to abide by, the ordinances that must be followed. They decided their prayers had been answered. Immediately after Hardin paid their mortgage, the couple says, they received a visit from FBI agents telling them that Hardin was paying off other people’s homes with fraudulent bonds. James Brown claims that the agents asked him to inform on Hardin. But it’s hard to convince people to roll on a man sent by God to save them. The Browns believe that the status of their house is still uncertain; they claim that they’re still fighting over the initial loan disagreement. Most of their belongings are in storage, and they’re ready to move on a moment’s notice. “We’re down to the barest of essentials in here,” Brown says. “Our house is almost naked because we don’t know the final outcome. But if it hadn’t been for Denny’s help, we’d have been steamrolled right over from the start.” Since he started his bank in September 2008, Hardin says, most of the $160 million in notes that he has written have been to pay off people’s bank loans and keep them from going into foreclosure. “As far as I can tell, nobody’s lost their house who he helped,” Brown says. “He put a new roof on our house, and he saved us from being on the street, and he never asked us for a dime.”

The thing about probation-violation hearings is that they’re supposed to be simple. There are no mitigating circumstances. There are no degrees of violation. Either you broke the terms of your probation or you didn’t. Denny Hardin has a gift for making simple things complicated. At this late-summer hearing in 2009, Hardin is accused of violating a probation order restricting him from appearing in court or filing papers on behalf of anyone other than himself. The probation stems from an incident in 2006, when he camped out on the steps of the Capitol in Jefferson City and tried to arrest Lt. Gov. Peter Kinder for violating the U.S. Constitution. Hardin appears unassuming for a man who wants to bring down the federal government — a “paper terrorist,” as some agents refer to him. He is slight, with long hair and a beard, wearing blue jeans and a T-shirt that reads “Americans Republic Party” and “Don’t Tread On Me.” Along with the slogans, the shirt bears the yellow Gadsden flag — a favorite symbol among Tea Partiers — with its symbol of a coiled snake ready to strike.

The snake also appears on the chests of 30 other men and women of the Americans Republic Party who have filled the right side of the courtroom. Each one holds a black, leather-bound copy of the Constitution. The Browns are there. So is Suppenbach. Several supporters are Hardin’s bank customers. Over the course of what becomes a two-hour hearing, Hardin objects to every possible authority that the court tries to exert over him, including its authority to make him sit down. On this point, Judge Stephen Nixon concedes, and Hardin spends the trial brandishing a copy of the Constitution over his head as if it were a Bible at an exorcism. Hardin’s argument against being forced to sit down is the only victory he has today. To list each overruled objection would take more pages than a pocket Constitution. Nixon overrules with a calm that seems uncaring to the members of the Americans Republic Party and generous to the two prosecuting attorneys.

Hardin’s most minor objections involve claims that he was forced to sign documents under duress. His most sweeping denounce the legitimacy of the judge, the court, the legal systems of the state of Missouri and the United States, and the bar-admitted lawyers who have sworn allegiance to British royalty. Hardin’s followers take copious notes, recording their leader’s argument every time Nixon denies a motion. When the hearing ends, Hardin has been sentenced to five years in prison. There’s a collective gasp from Hardin’s supporters. The prosecuting attorneys and the judge are unmoved. Sentencing is always followed by a gasp. Hardin takes off his choker necklace and gives it to Harrington. “I guess now I’ll be writing that letter to the president of the United States from the Jackson County Jail,” he says, before officers escort him away in handcuffs.

In the Moberly Correctional Center, Hardin’s days are scheduled around four strict appointments. At 7:15 a.m., 11 a.m., 4 p.m. and 7 p.m., he gets a phone call from Harrington. Hardin spends time in the law library. Being incarcerated hasn’t given him second thoughts about offering his services to his fellow inmates. “My theory is that if there’s no property damage and no injured party, there’s no crime,” he tells The Pitch. “Most of the guys in here never committed a crime. It’s just the system bringing them in so it can make money off of their incarceration.” He’s certain that if he files enough motions, if he cites the right laws, he can build a chain of arguments he can follow back to the world. In Kansas City, the Americans Republic Party is confident that, any day now, Hardin will be released. “We’re all working on it and doing what we can,” James Brown says. “I think he’ll be out in a couple weeks.” Patterson, in Arizona, is also trying to help. “Probably 90 percent of the people he was helping have come to me,” Patterson says. “I’m writing a bond to try and get him out right now. Of course, he didn’t set his bank up totally right — he missed a few things, but I can help him correct it all when he gets out.” The right paperwork is crucial, Hardin says. “I have to show them I’m right. We can’t be violent. We can’t tell people to go out and get guns. We have to win with the power of our reason. We have to show them they’re wrong and we’re right.”

SILENCE ENFORCEMENT DEVICE
http://www.extremetech.com/computing/120583-new-speech-jamming-gun-hints-at-dystopian-big-brother-future

Japanese researchers have created a hand-held gun that can jam the words of speakers who are more than 30 meters (100ft) away. The gun has two purposes, according to the researchers: At its most basic, this gun could be used in libraries and other quiet spaces to stop people from speaking — but its second application is a lot more chilling.

The researchers were looking for a way to stop “louder, stronger” voices from saying more than their fair share in conversation. The paper reads: “We have to establish and obey rules for proper turn-taking when speaking. However, some people tend to lengthen their turns or deliberately interrupt other people when it is their turn in order to establish their presence rather than achieve more fruitful discussions. Furthermore, some people tend to jeer at speakers to invalidate their speech.” In other words, this speech-jamming gun was built to enforce “proper” conversations.

The gun works by listening in with a directional microphone, and then, after a short delay of around 0.2 seconds, playing it back with a directional speaker. This triggers an effect that psychologists call Delayed Auditory Feedback (DAF), which has long been known to interrupt your speech (you might’ve experienced the same effect if you’ve ever heard your own voice echoing through Skype or another voice comms program). According to the researchers, DAF doesn’t cause physical discomfort, but the fact that you’re unable to talk is obviously quite stressful.

Suffice it to say, if you’re a firm believer in free speech, you should now be experiencing a deafening cacophony of alarm bells. Let me illustrate a few examples of how this speech-jamming gun could be used. At a political rally, an audience member could completely lock down Santorum, Romney, Paul, or Obama from speaking. On the flip side, a totalitarian state could point the speech jammers at the audienceto shut them up. Likewise, when a celebrity or public figure appears on a live TV show, his contract could read “the audience must be silenced with speech jammers.”

Then there’s Harrison Bergeron, one of my favorite short stories by Kurt Vonnegut. In the story’s dystopian universe, everyone wears “handicaps” to ensure perfect social equality. Strong people must lug around heavy weights, beautiful people must wear masks, and intelligent people must wear headphones that play a huge blast of sound every few seconds, interrupting your thoughts. The more intelligent you are, the more regular the blasts.

Back here in our universe, it’s not hard to imagine a future where we are outfitted with a variety of implanted electronics or full-blown bionic organs. Just last week we wrote about Google’s upcoming augmented-reality glasses, which will obviously have built-in earbuds. Late last year we covered bionic eyesthat can communicate directly with the brain, and bionic ears and noses can’t be far off.

In short, imagine if a runaway mega-corporation or government gains control of these earbuds. Not only could the intelligence-destroying blasts from Harrison Bergeron come to pass, but with Delayed Auditory Feedback it would be possible to render the entire population mute. Well, actually, that’s a lie: Apparently DAF doesn’t work with utterances like “ahhh!” or “boooo!” or other non-wordy constructs. So, basically, we’d all be reduced to communicating with grunts and gestures.

SPEECH-JAMMING
http://www.technologyreview.com/blog/arxiv/27620/
How to Build a Speech-Jamming Gun
Japanese researchers build a gun capable of stopping speakers in mid-sentence / 03/01/2012

The drone of speakers who won’t stop is an inevitable experience at conferences, meetings, cinemas, and public libraries. Today, Kazutaka Kurihara at the National Institute of Advanced Industrial Science and Technology in Tskuba and Koji Tsukada at Ochanomizu University, both in Japan, present a radical solution: a speech-jamming device that forces recalcitrant speakers into submission.

The idea is simple. Psychologists have known for some years that it is almost impossible to speak when your words are replayed to you with a delay of a fraction of a second. Kurihara and Tsukada have simply built a handheld device consisting of a microphone and a speaker that does just that: it records a person’s voice and replays it to them with a delay of about 0.2 seconds. The microphone and speaker are directional so the device can be aimed at a speaker from a distance, like a gun.

In tests, Kurihara and Tsukada say their speech jamming gun works well: “The system can disturb remote people’s speech without any physical discomfort.” Their tests also identify some curious phenomena. They say the gun is more effective when the delay varies in time and more effective against speech that involves reading aloud than against spontaneous monologue.

Kurihara and Tsukada make no claims about the commercial potential of their device but list various aplications. They say it could be used to maintain silence in public libraries and to “facilitate discussion” in group meetings. “We have to establish and obey rules for proper turn-taking when speaking,” they say. That has important implications. “There are still many cases in which the negative aspects of speech become a barrier to the peaceful resolution of conflicts, ” they point out.

CONTACT
Kazutaka Kurihara
http://sites.google.com/site/qurihara/top-english
email : k-kurihara [ at ] aist.go.jp

Koji Tsukada
http://mobiquitous.com/index-e.html
email : tsuka [at] mobiquitous [dot] com

ABSTRACT
http://arxiv.org/abs/1202.6106
SpeechJammer: A System Utilizing Artificial Speech Disturbance with Delayed Auditory Feedback
by Kazutaka Kurihara and Koji Tsukada / 28 Feb 2012

“In this paper we report on a system, “SpeechJammer”, which can be used to disturb people’s speech. In general, human speech is jammed by giving back to the speakers their own utterances at a delay of a few hundred milliseconds. This effect can disturb people without any physical discomfort, and disappears immediately by stop speaking. Furthermore, this effect does not involve anyone but the speaker. We utilize this phenomenon and implemented two prototype versions by combining a direction-sensitive microphone and a direction-sensitive speaker, enabling the speech of a specific person to be disturbed. We discuss practical application scenarios of the system, such as facilitating and controlling discussions. Finally, we argue what system parameters should be examined in detail in future formal studies based on the lessons learned from our preliminary study.”

SPEECHJAMMER
http://www.wired.com/underwire/2012/03/japanese-speech-jamming-gun/

Two Japanese researchers recently introduced a prototype for a device they call a SpeechJammer that can literally “jam” someone’s voice — effectively stopping them from talking. Now they’ve released a video of the device in action. “We have to establish and obey rules for proper turn-taking,” write Kazutaka Kurihara and Koji Tsukada in their article on the SpeechJammer (PDF). “However, some people tend to lengthen their turns or deliberately disrupt other people when it is their turn … rather than achieve more fruitful discussions.”

The researchers released the video after their paper went viral Thursday, to the authors’ apparent surprise. “Do you know why our project is suddenly becoming hot now?” asked Kurihara, a research scientist at the National Institute of Advanced Industrial Science and Technology in Tsukuba, in an e-mail exchange with Wired.com. (Kurihara’s partner Tsukada is an assistant professor at Ochanomizu University in Tokyo.)

The design of the SpeechJammer is deceptively simple. It consists of a direction-sensitive microphone and a direction-sensitive speaker, a motherboard, a distance sensor and some relatively straightforward code. The concept is simple, too — it operates on the well-studied principle of delayed auditory feedback. By playing someone’s voice back to them, at a slight delay (around 200 milliseconds), you can jam a person’s speech.

Sonic devices have popped up in pop culture in the past. In sci-fi author J.G. Ballard’s short story “The Sound-Sweep,” published in 1960, a vacuum cleaner called a “sonovac” sweeps up the debris of old sounds. The wily German composer Karlheinz Stockhausen had plans for a “sound swallower,” which would cancel unwanted sounds in the environment using the acoustic principle of destructive interference. And in 1984 German film Decoder, special yellow cassette tapes play “anti-Muzak” that destroys the lulling tones of Muzak, stimulating diners at a fast-food restaurant to throw up en masse and start rioting.

But instead of sci-fi, the Japanese researchers behind the SpeechJammer looked to medical devices used to help people with speech problems. Delayed auditory feedback, or DAF, devices have been used to help stutterers for decades. If a stutterer hears his own voice at a slight delay, stuttering often improves. But if a non-stutterer uses a DAF device designed to help stutterers, he can start stuttering — and the effect is more pronounced if the delay is longer, up to a certain point.

“We utilized DAF to develop a device that can jam remote physically unimpaired people’s speech whether they want it or not,” write the researchers. “[The] device possesses one characteristic that is different from the usual medical DAF device; namely, the microphone and speaker are located distant from the target.”

Being at a distance from the target means it’s possible to aim the device at people who are several feet away — sort of like a TV B-Gone, but for people. Bothered by what someone at a meeting is saying? Point the SpeechJammer at him. Can’t stand your nattering in-laws? Time for the SpeechJammer. In the wrong hands — criminals, for instance, or repressive governments — the device could have potentially sinister applications. For now, it remains a prototype.

INSPIRATION
http://www.wired.com/underwire/2012/03/speech-jamming-gun-inspiration/

“One day I just came by a science museum and enjoyed a demonstration about Delayed Auditory Feedback (DAF) at [the] cognitive science corner,” says Kurihara. “When I spoke to a microphone, my voice came back to me after a few hundred millisecond delay. Then, I could not continue to speak any more. That’s fun!”

Kurihara soon realized his adventures in the science museum could be applicable to other fields. He was already interested in developing a system that “controls appropriate turn-taking at discussions.” The science museum visit was his “aha!” moment. “Then I came up with the gun-type SpeechJammer idea utilizing DAF,” says Kurihara. “That’s the destiny.”

Kurihara enlisted the talents of Koji Tsukada, an assistant professor at Tokyo’s Ochanamizu University who he calls “the gadget master.” Tsukada has been involved in a number of strange and intriguing projects, including the LunchCommunicator, a “lunchbox-type device which supports communication between family members”; the SmartMakeupSystem, which “helps users find new makeup methods for use with their daily cosmetics”; and the EaTheremin, a “fork-type instrument that enables users to play various sounds by eating foods”.

Tsukada introduced Kurihara to a parametric speaker kit, which they could use to convey sound in a very direction-sensitive way. “After I explained him my idea, he soon agreed to join my project,” says Kurihara. “It was a marriage between science and gadgets!”

As for SpeechJammer’s potentially sinister uses? “We hope SpeechJammer is used for building the peaceful world,” says Kurihara. The world can only hope.

GREEKS to PAY to WORK?
http://www.theatlanticwire.com/global/2012/02/some-greeks-might-have-pay-their-jobs/49023/
by Alexander Abad-Santos  /  Feb 22, 2012

It’s being called the “negative salary”: Due to austerity measures in Greece, it’s being reported that up to 64,000 Greeks will go without pay this month, and some will have to pay for having a job. Numbers in austerity reports have usually reflected figures in the millions, since they reflect industry-wide cuts (i.e.  a 537-million euro cut to health and pension funds). And plans of cutting minimum wage by up to 32% is all but a given in the country. Today’s “negative salary” deal—which could have government employees returning funds— reveals the real human impact of the austerity measures.

As Zero Hedge and the Press Project report:

Salary cutbacks (called “unified payroll”) for contract workers at the public sector set to be finalized today. Cuts to be valid retroactively since november 2011. Expected result: Up to 64.000 people will work without salary this month, or even be asked to return money. Amongst them 21.000 teachers, 13.000 municipal employees and 30.000 civil servants.

‘NEGATIVE BAILOUT’
http://www.zerohedge.com/news/negative-salaries-negative-bailout-and-now-negative-gold-greece-just-became-banksters-paradise

While Iceland is now known as the country that is the closest earthly approximation to Banker Hell, it is safe to say that Greece is the terrestrial equivalent of banker heaven. Because as explained earlier today, the country’s population is about to get a worse deal than your average run of the mill slave – they may get whipped, but at least never have to pay for the privilege, unlike the Greeks. Hence Negative Salaries. As also explained, the European bailout of Greece, is now formally a Greek bailout of Europe, funded by the country’s already negative primary surplus, or better said – deficit (don’t try to make mathematical sense of that – a Scene Out Of Scanners is guaranteed). Hence,Negative Bailout. But the piece de resistance, and the reason why Greece is the in situ version of bankster heaven is the news from the NYT That Greece is also about to have negative gold.

Ms. Katseli, an economist who was labor minister in the government of George Papandreou until she left in a cabinet reshuffle last June, was also upset that Greece’s lenders will have the right to seize the gold reserves in the Bank of Greece under the terms of the new deal.

Well, they may be broke, and they may be bailing out Europe, but at least they’ll have no gold: sounds like a sweet deal – it makes perfect sense that Greeks are taking every incremental humiliation from a syndicate of few fat, bald types who have access to a digital money printer, with the supine determination of an Oliver Twist.

‘NEGATIVE GOLD’
http://www.zerohedge.com/news/projected-piigs-pillage-32335-tons-gold-be-confiscated-insolvent-european-banks
by Tyler Durden  / 02/23/2012

While hardly discussed broadly in the mainstream media, the top news of the past 24 hours without doubt is that in addition to losing its fiscal sovereignty, and numerous other things, the Greek population is About To Lose Its Gold in a perfectly legitimate fashion, following amendments to the country’s constitution by unelected banker technocrats, who will make it legal for Greek creditors – read insolvent European banks – to plunder the Greek gold which at last check amounts to 111.6 tonnes according to the WGC. And so we come full circle to what the ultimate goal of banker intervention in the European periphery is – nothing short of full gold confiscation. So just how much gold will be pillaged by the banker oligarchy (it is amusing how many websites believe said gold is sacrosanct by regional national banks, and thus the EUR is such a stronger currency as it has all this ‘gold backing’ – hint: it doesn’t, as all the gold is about to be transferred to non-extradition countries)? As the World Gold Council shows in its latest update, between all the PIIGS, who will with 100% certainty suffer the same fate as Greece (which has shown that unlike during World War 2, it is perfectly willing to turn over and do nothing) there is 3234 tonnes of gold to be plundered. And likely more as further constitutional amendments will likely make the confiscation of private gold the next big step. how much does this amount to? At today’s prices this is just shy of $185 billion. Of course by the time the market grasps what is going on the spot price of the yellow metal will be far, far higher. Or, potentially far, far lower and totally fixed as the open gold market is eventually done away with entirely in a reversion to FDR gold confiscation and price fixing days.

The chart below shows total gold holdings for the top 40 countries. Little Ireland is off the chart with just 6 tonnes of gold.


3 Month LIBOR – GOFO


Long-Term LIBOR – GOFO

LIBOR-GOFO
http://www.zerohedge.com/news/negative-gold-lease-rates-collapse-gold-sell-likely-coming-end

One of the more curious dynamics for those who follow the gold market closely, has been the relentless grind lower (or higher if looked at on an absolute value basis), of gold lease rates (defined as Libor – GOFO), which recently hit all time record lows (i.e., negative), for the 1 month version, although the more traditional 3 Month (as it is based on the benchmark 3M USD Libor) was also quite close to breaching historic low levels. And while we have discussed the nuances of Libor-GOFO, or the gold lease rate extensively before, a good summary was presented by Jesse’s Cafe Americain yesterday, who correctly suggested that record lease rates are a primary driver for the near historic sell off we experienced yesterday. In a nutshell, negative lease rates mean one has to pay for the “privilege” of lending out one’s gold as collateral – a prima facie collateral crunch. The lower the lease rate, the greater the use of gold as a source of liquidity – and since the indicator is public – it is all too easy for entities that do have liquidity to game the spread and force sell offs by those who are telegraphing they are in dire straits and will sell their gold at any price if forced, to prevent a liquidity collapse. Said otherwise: to force a firesale. Well, we are happy to announce that the selloff spring clip potential that is embedded in a near record negative lease rate has now been discharged courtesy of the $100 dump in the past two days, which may have happened for a plethora of reasons and nobody can tell why precisely, but one thing is now sure: the underlying tension in the supply and demand for gold as a source of liquidity has collapsed. That said, the next time we approach the previous thresholds we will advise readers as it will likely indicate another gold-derived liquidity rubberband “breach” is imminent.

‘FORWARD LEASE RATES’
http://www.zerohedge.com/news/morgan-stanley-deconstructs-funding-crisis-heart-recent-gold-sell-and-why-surge-can-resume
The Reasons To Own Both Silver And Gold Continue To Accelerate

A week ago, we touched upon the likelihood that the recent gold sell-off was driven primarily due to a quirk in liquidity provisioning in which gold plays a key role via its “forward lease rates”, or the Libor-GOFO differential. Specifically, in “As Negative Gold Lease Rates Collapse, The Gold Sell Off Is Likely Coming To An End” we said, “In a nutshell, negative lease rates mean one has to pay for the “privilege” of lending out one’s gold as collateral – a prima facie collateral crunch. The lower the lease rate, the greater the use of gold as a source of liquidity – and since the indicator is public – it is all too easy for entities that do have liquidity to game the spread and force sell offs by those who are telegraphing they are in dire straits and will sell their gold at any price if forced, to prevent a liquidity collapse.” Said otherwise, the lower lease rates drop, and they recently hit a record low for the 3M varietal, the likelier it is that gold may see substantial moves lower. Today, Morgan Stanley’s Peter Richardson recaps precisely what was said here, in a note titled “Recent fall in gold prices points to bank funding costs.” Granted, MS only looks at the first part of the equation – the dropping lease rates, and ignores the re-normalization in gold, aka the tightening in lease rates. Well, with the 3M forward lease rate now almost back to unchanged, it appears our speculation that the gold sell off, with spot at $1575 on the 15th, is over were correct, and gold is now $40 higher, and just below the critical 200 DMA that everyone saw as the catalyst of gold going to $0. So what does MS have to add to our analysis? Well, much more optimism for one, because not only does the bank think we are right that the collapse in negative lease rates (i,e., the flattening to practically unchanged) mean the sell off is over, but such a normalization of the gold lease market has “the makings of a renewed upward assault on the recent all-time high…. Our current gold price forecast for 2012 of US$2,200/oz remains in place under these circumstances.” Qed.

The key highlight of Morgan Stanley’s hypothesis of what negative gold lease rates imply for gold:

Firstly, we think negative lease rates are highlighting a sharp increase in the demand for gold as collateral for US dollar loans at a time of reduced liquidity in the traditional US dollar interbank funding market. The more negative the lease rates the higher the cost of funding using gold as security.

Secondly, access to this collateral on a scale indicated by the rise in GOFO can only emerge if the providers of liquidity to the leasing market are prepared to increase the stock of lent gold in circulation. This development points to the central banks, the largest custodians of above-ground stocks and the traditional providers of liquidity to the gold-leasing market. Aware of acute funding pressures in the traditional interbank market, it seems increasingly likely to us that central banks have increased the quantum of gold available for use in a non-traditional funding market, at least until the measures to alleviate bank-funding stress in the US dollar swaps market have been successful. The recent easing in the scale of negative gold lease rates, suggests that demand for this source of short-term funding might be easing, but has not disappeared, even after the raft of measures announced by the ECB and the earlier coordinated intervention by the six central banks.

Said otherwise: we likely have smooth sailing for now, as banks will not proceed to cannibalize each other for a bit. But keep a very close eye on on that LIBOR-GOFO spread: the second it collapses, it may be time to step away from the market…

‘NEGATIVE LEASE RATES’
http://www.metalaugmentor.com/analysis/charlatan-exposed-negative-gold-lease-rates.html
http://www.financialsense.com/contributors/metal-augmentor/2011/12/15/negative-lease-rates-and-the-ticking-gold-time-bomb

Much has been made recently about the “negative gold lease rates” derived from the London Bullion Market Association (LBMA) statistical gold and silver data, but reporting on the issue so far has generally lacked the background, substance and/or context required for many readers to even understand what information is being provided much less draw proper conclusions.

Here are some of the key points raised in our extensive analysis of the subject at Metal Augmentor:

(1) The combination of a falling gold price and rising forward rate is quite a bullish feature of the gold market that is lost in the reporting on negative gold lease rates. An increase in the gold forward rate indicates that owners selling gold will want it back once their immediate funding needs have abated. Therefore it is really the reluctance to sell gold outright that the market appears to be telegraphing via negative gold lease rates. This is a welcome change from a gold market recently dominated by weak-handed participants (Wall Street types like Paulson, Cramer, etc.) who primarily look to gold for its ability to generate speculative profits during periods of economic instability.

(2) The gold (or silver) lease rate does not necessarily represent the actual rate at which lease transactions are being done in the market. The published lease rate is simply an indicated value derived from two related variables, the gold forward rate and LIBOR. These rates can and do move in opposite directions for reasons unrelated to gold leasing activity.

(3) We believe the focus on negative lease rates misses the point of the current gold market structure and instead we should be looking at changes in the gold forward rate. The gold forward rate has increased during both the late September and current sell-offs in gold, which probably means that gold is being leased by central banks in order to provide liquidity for the banking system. Importantly, central bank gold is probably not being sold outright despite rumors to the contrary. The implication is that the current gold correction is similar to past events where gold has been used as a liquidity management tool. Its use for such purposes is hardly inappropriate — after all, gold is the ultimate money and what good is money if it doesn’t get used? In any case, the eventual reversal of gold funding activity should correspond with improved commercial bank liquidity and a return to gold’s dominant price uptrend.

(4) Important structural changes in the financial sector could soon mean that gold’s widespread use as collateral and eventually as money might actually not be that far off. If so, it would only be a natural progression for an asset with no counterparty risk in a post-credit-bubble world. Excessive leverage has transformed even the gold swap and leasing business, which by definition is supposed to involve physical metal, into a paper form a number of years ago. While the recent reports from Bloomberg, Financial Times and elsewhere offer shreds of truth about this condition amid all their misdirection, they fail to examine underlying developments in the gold market that may change the sorry state of affairs. Among the most intriguing is the possible development of clearing and collateral facilities for 100% physical backed gold, perhaps in the format of the LBMA unallocated bullion account.

We suspect that all this talk about “negative gold lease rates” may represent the initial glimmer of recognition that a major development is afoot in the gold market. Pieces of the puzzle are being put together without most people really knowing or understanding what the completed picture looks like. The general trend of the financial markets thanks to the information age has been to move away from intermediation and toward self-directed transaction. The tri-party arrangement redefines the role of the intermediary so that it is no longer the matchmaker between customers but rather acts as a clearing agent, administrator of collateral and a funding backstop. Importantly, in a tri-party arrangement one party posts the collateral that the other party desires. And that desire for specific collateral is where things could get interesting for the gold market with gold being the ultimate collateral. In essence the selective collateral nature of the tri-party format may force bullion banks to eventually declare their unallocated LBMA gold accounts as backed by 100% physical bullion. While there certainly will be gold appearing on the market from time to time in the form of gold leasing or similar funding arrangements, the 300 year history of archaic bullion banking may be coming to an end. If so, it could ironically be JP Morgan that modernizes the gold standard by establishing gold as the premier monetary asset with no counterparty risk and infinite mobility.

Implications
The gold time bomb takes the form of a possible panic out of paper gold into physical metal when counterparty risk reaches an extreme level whereas a new gold standard would complement modern financial markets by serving as the ultimate asset: gold with mobility and no counterparty risk. We believe such a radical development could take shape if the most popular paper gold product available today, the LBMA unallocated bullion account, is used increasingly as a source of secured funding between counterparties rather than as credit between a bullion bank and its customers. Indeed, if the gold market is left to its own devices, the shunning of credit risk will eventually lead counterparties to demand that gold be provided in the form of risk-free collateral. The LBMA and bullion banks would then have no choice but to establish and market 100% physical backed unallocated gold accounts similar to BullionVault and GoldMoney, except on a grand scale.

‘ASS BACKWARDATION’
http://ftalphaville.ft.com/blog/2010/07/21/287566/the-story-of-the-gold-curve-so-far/
http://ftalphaville.ft.com/blog/2011/09/14/677021/why-gold-forward-rate-inversion-is-important/
Why gold forward rate inversion is important
by Izabella Kaminska / Sep 14 14:20

Here’s a crazy situation to consider. The gold lease rate (which can also be understood as gold Libor, the gold interest rate or the cost of shorting gold) is becoming increasingly negative at the short end. This is the natural consequence of Gofo rates rising ever more greatly beyond Libor costs at the front end. Since the gold lease is derived from the calculation of Libor minus Gofo, any instance where Gofo is greater than Libor leads to a negative gold lease rate. This, for example, is the historic path of the three-month gold lease rate:

And here’s a closer look at the near-term action:

See, there’s been a collapse. Yet the irony is that there is still a cost to borrow the GLD exchange traded fund.Why should it cost you to borrow GLD at all, but earn you a return to borrow gold (Ed- surely administrative costs)? Weren’t the two supposed to be a like-for-like? What’s more there have been very interesting bursts of short-interest in GLD recently, according to Data Explorers.

But first back to gold lease rates. Gold lease rates first went negative (in this recent spell) in March 2009, and have remained almost consistently negative since about July of that year (with brief interim spells of positivity). But it’s only in the last week that the rate has become severely and almost illogically depressed. Interestingly — despite talk of funding pressure all round — this doesn’t tie with the scenario experienced during Lehman at all. At that time gold lease rates spiked, reaching historic highs. In fact, it was only with the onset of extraordinary liquidity in November that lease rates began to fall quickly. Before that happened, something extraordinary transpired. Gold forward rates flipped, ever so briefly, into backwardation. A situation which has hitherto only really been seen in the Japanese gold market (where gold is denominated in yen). Of course if you consider gold the soundest money carrying the lowest interest rate structure — the ultimate risk-free rate — it makes sense that gold lease rates should closely echo market interest rates, but always remain fractionally lower. So when Libor shot up during the crisis, gold lease rates understandably followed behind them — leading to a situation where if you had gold, you could lend it out for a very high return, since the risk lay with holding cash on reserve rather than gold and you had to be compensated. Gold was the ultimate collateral. Or in other words, the demand for gold rose alongside the expense of borrowing in the interbank market. Eventually the demand for gold became so great that the lease rate overshot Libor, leading to the backwardation discussed above. At that point gold became a bit of aGiffen good. It was — if you believe the goldbugs — a situation which possibly signified the death of paper-money. But even then, while gold itself became backwardated, the Gofo curve remained normal, as did the Libor curve.

What we have now, however, is quite the opposite. Gofo remains in contango — i.e. continues to avoid backwardation — while gold lease rates have fallen sharply into negative territory instead. Almost as a counterbalance. On the surface, the negative rate implies extremely low demand for gold compared to cash. Or you could say, there are currently more people prepared to lend gold at a terrible rate (because there’s so much of it around) than prepared to lend their cash for gold. (Contrary to anecdotal reports from the physical market which suggest a lack of gold sovereigns and such the like.) In this scenario, nevertheless, gold is seen as the risk. Gold has become a lousy monetary substitute, and is anything but optimum collateral. In fact, it is US Treasuries that are being over-bid, not gold. The lower the rate goes, the more it suggests an extreme rush to pawn gold in exchange for cash in the marketplace. Anything but gold, you might say. Meanwhile, the more gold that ends up at the pawn shop, the less favourable the rate received for pawning in the market. (The pawn shop doesn’t want to carry all that risk and has to cover that risk by offering less cash for gold.) Thus it’s not money that is dying, quite the opposite, it’s gold. But there is one important other factor to consider: Central bank intervention. Why on earth would anyone be prepared to lend gold at a negative rate for almost two years, when demand in the physical market was supposedly so huge? If you consider that these actions were what prevented gold from flipping into backwardation, perhaps it becomes a little clearer. As Reginald Howe at the Golden Sextant points out: 

At the LBMA, therefore, gold continues to avoid backwardation, but only because central banks continue to lend at historically very low lease rates. It is a strange situation. Gold for spot delivery and bullion funds with high credibility for physical possession of metal in the amounts claimed are selling at premiums over paper of lesser reliability. But where gold is arbitraged against currencies on the basis of relative interest rates, it remains in contango.

Now, if this is the result of some sort of central bank intervention, it’s clear that the central banks still have to find end demand for that lent gold (via the bullion bank intermediaries). The gold mining companies that used to be  counterparties, have closed their hedging books. They’re no longer willing takers of borrowed gold.

Who’s the only viable candidate left? Answer: Gold ETFs and gold exchanges. While the likes of GLD insist every share outstanding is matched by a gold bar — and this is almost definitely true — what they can’t claim is that there’s a way to differentiate gold with previous claims on it from gold without previous claims on it within its reserves (i.e. borrowed gold). It is consequently entirely possible that gold ETFs are sitting on mountains of borrowed central bank gold. GLD’s defence, of course, is that prior claims on its reserves are not their concern. They are the liablity of the party that delivered the gold to GLD (almost certainly a bullion bank). Thus it is the bullion bank that risks being squeezed on delivery in the physical market, not GLD. Of course, with a negative interest rate for borrowing gold, the bullion banks are being more than compensated for the risk of a squeeze. On top of everything they can always create new GLD shares ad infinitum, if needs be. (At least until all central bank gold stock has been lent into gold ETFs, arguably forcing central banks to replenish the gold lending pool via market purchases.)

In the above scenario — in which bullion banks are possibly recycling borrowed gold into GLD shares to sell into the market — these short sales will put pressure on GLD units themselves. As Howe noted earlier this year:

In recent months, while GLD has generally sold at a slight discount to net asset value, other bullion funds with more transparent and credible custodial and auditing procedures have commanded significant premiums. E.g., Central Fund of Canada (CEF), Central Gold Trust (GTU), Sprott Physical Gold Trust (PHYS). Anecdotal evidence also continues to surface of premiums for spot delivery of physical metal or cash settlement in lieu of physical.

Thus, if central banks are really using bullion banks as feeders of borrowed gold into gold ETFs (so as to suppress prices and keep gold lease rates negative, avoiding gold backwardation), you’d assume the strategy could easily unravel if and when people started liquidating large portions of GLD, i.e. forcing delivery of that gold.

Gold and the create-to-lend mechanism
Ordinarily when new shares are created in an ETF for shorting purposes, there is no respective spike in assets under management. That’s because shares are often created using the “create-to-lend” facility, which sees shares issued against borrowed stocks which are almost immediately sold into the market. Since there is no incremental demand for those shares, an oversupply of units hits the market place causing the ETF arbitrage mechanism to kick in. The very same shares are thus almost immediately redeemed, leaving assets under management unchanged but the short-interest ratio higher. This, by the way, is how we get to such large short-interest ratios in some popularly shorted ETFs. Of course in the bullion scenario, one could argue that the shorts are continuously lapped up by strong demand from GLD buyers. The shorts are thus disguised by continuing assets under management growth — a fact which leaves the short-interest ratio relatively stable, and has a slowing impact on AuM growth if anything. But if a large GLD share owner coincidentally liquidates a sizeable portion of GLD shares one day (in order to take delivery of real gold instead), this could theoretically destabilise the short-interest balance. A fact which may or may not have happened recently. As the short-interest data firm Data explorers noted at the end of August:

The amount of money invested in SSGA’s Gold Trust (GLD) is very close to the total assets in the instrument, which tracks the S&P 500 (SPY) at USD 71bn. GLD issues shares in exchange for deposits of gold. On August 10th, there was an unusually large rise in short selling by 250% to 18m shares. This position was then immediately covered as gold began its recent ascent to $1,917.9 on Monday of this week.

There has been little activity in this ETF’s other listings in Hong Kong, Singapore and Tokyo. Another large and physically backed (i.e. owns gold) ETF is the iShares Comex Gold Trust (IAU). This has sporadic spikes in short interest, and these spikes have increased in their frequency over this past quarter, showing some evidence that the need to hedge or short gold is more frequent than it was. If we look at the number of securities lending transactions, we see a 20% increase in the number of loans in GLD in the last week alone. The absolute rise in shares short might not be that cataclysmic, but more trades might well mean more positioning, which translates to nervousness that the gold price cannot sustain such lofty levels. The equivalent rise in trades in IAU is 84% since last Thursday – a huge change.

The fact that the short position was immediately covered suggests that whoever liquidated GLD sold the bullion back into the market. By doing so it allowed the short parties to cover their position, bringing the overall short-interest ratio back to equilibrium quickly. Whatever the case, one thing’s for sure. Volatility in the gold/GLD spread (blue line below) has increased since August 10, which was about the time of the Paulson GLD liquidation rumours:

So has the GLD liquidation possibly disturbed the short-ratio balance? Is this why gold lease rates have had to adjust radically downwards? Are bullion banks demanding increased compensated for supplying borrowed gold into gold ETFs because there’s suddenly been a genuinely large amount of gold thrown back into the gold system? Is this also why AuM has stagnated and GLD has become ineffective as a central bank policy tool? Who can say, but all these factors are definitely worth thinking about we would argue.

SEE ALSO

What do silver lease rates have to do with fund redemptions? 
- FT Alphaville
Gold Derivatives: GLD and Ass Backwardation
 – FT Alphaville
Cash for gold, financial market edition 
- FT Alphaville
The secured lending boom (through gold-tinted glasses) 
- FT Alphaville

‘GUEST STARS’
http://www.time.com/time/health/article/0,8599,2106904,00.html
by Michael D. Lemonick / Feb. 16, 2012

When the sun finally dies some 5 billion years from now, the end will come quietly, the conclusion of a long, uneventful life. Our star will, in a sense, go flabby, swelling first, releasing its outer layers into space and finally shrinking into the stellar corpse known as a white dwarf.

Things will play out quite differently for a supermassive star like Eta Carinae, which lies 7,500 light-years from Earth. Weighing at least a hundred times as much as our sun, it will go out more like an adolescent suicide bomber, blazing through its nuclear fuel in a mere couple of million years and exploding as a supernova, a blast so violent that its flash will briefly outshine the entire Milky Way. The corpse this kind of cosmic detonation leaves behind is a black hole. For Eta Carinae, that violent end might not be long in coming, according to a report in the latest Nature. “We know it’s close to the end of its life,” says astronomer Armin Rest of the Space Telescope Science Institute and the lead author of the paper. “It could explode in a thousand years, or it could happen tomorrow.” In astronomical terms, a thousand years might as well be tomorrow; as for a supernova blowing up literally tomorrow, well, that’s almost unheard of.

In 1843 Eta Carinae gave a hint that the end might be near when the hitherto nondescript body flared up to become the second brightest star in the sky, after Sirius. It stayed that way for 20 years or so, then faded and left behind a majestic, billowing cloud of gas known as the Homunculus Nebula. Eta Carinae lost some 10% of its substance in this event, which astronomers now call a “supernova impostor,” after which it has returned to relative quiet — or what passes for quiet in such an unstable object. Astronomers back in the day did the best they could to observe the 20-year flare, but without modern instruments, they couldn’t really learn much. That has frustrated investigators now just as it did then, since studying Eta Carinae in detail could tell them a lot about what caused the outburst and maybe even help them figure out when the inevitable supernova explosion is going to occur.

But as the Nature report makes clear, that understanding may now be at hand. Using a fiendishly clever new observing technique, Rest and his colleagues have been able to take readings of the original blast in real time. “We can look directly at the eruption,” says Princeton astrophysicist Jose Prieto, a co-author of the report, “as it’s never been seen before.” To understand how they did that, start with the basic fact that light from the outburst sped away from Eta Carinae in all directions. Some of it headed straight toward Earth to wow 19th century astronomers. But some of it took a detour, reflecting off dust clouds in interstellar space in what astronomers call a “light echo.” At least a bit of that echo was redirected toward Earth. The dust clouds were so far from the star that the long-delayed light is only now reaching us, and unlike in 1843, we now have the instruments to study it.

It gets even better. The 1843 flare-up played out over 20 years, which means the light-echo version will do the same. “We took observations nine months ago,” says Rest, “and we were looking at 1843. Now we’re looking at 1844. It’s like a movie. It’s really cool.” (Of course, the images are from 7,500 years before 1843 and ’44, since that’s when the stellar event occurred; it just took 7½ millennia for the light to reach us.) Better still, astronomers can see light echoes from a variety of dust clouds, at varying distances from the star. That creates detours of varying lengths, so they can see different phases of the eruption all at once.

“The big puzzle,” says Prieto, “is what caused the outburst. This star has been studied to death with all sorts of telescopes, but no one theory has ever been able to tell us what happened.” It might have been some sort of instability deep within the star itself, or the blast might have been triggered by matter dumped on Eta Carinae by a stellar companion. The good news is that the light-echo observations will give theorists a trove of information to work with — and in the next few years, says Rest, “we’ll be getting more observations, and they’ll keep getting better.”

If Eta Carinae is going to blow imminently, the obvious question is whether Earth is in mortal danger. Fortunately, the answer is no. At 7,500 light-years, the intense radiation from even a powerful supernova would lose its punch by the time it reaches us. All we’ll experience is the most spectacular light show in many centuries. The last confirmed supernova explosion in the Milky Way happened in 1604, a teasingly close five years before Galileo pointed his first, primitive telescope skyward. It is, in short, about time for another big blast, and even though the theorists haven’t weighed in, Rest has reason for hope. “There was one of these ‘supernova imposters’ in another galaxy,” he says — something similar to Eta Carinae’s 1843 outburst. “And then, a few years later … kaboom!”

SECOND SUN
http://io9.com/5738542/earth-may-soon-have-a-second-sun
Earth may soon have a second sun
by Alasdair Wilkens / Jan 20, 2011

The red supergiant star Betelgeuse is getting ready to go supernova, and when it does Earth will have a front-row seat. The explosion will be so bright that Earth will briefly seem to have two suns in the sky.

The star is located in the Orion constellation, about 640 light-years away from Earth. It’s one of the brightest and biggest stars in our galactic neighborhood – if you dropped it in our Solar System, it would extend all the way out to Jupiter, leaving Earth completely engulfed. In stellar terms, it’s predicted to explode in the very near future. Of course, the conversion from stellar to human terms is pretty extreme, as Betelgeuse is predicted to explode anytime in the next million years. But still, whether the explosion occurs in 2011 or 1002011 (give or take 640 years for the light to reach Earth), it’s going to make for one of the most unforgettable light shows in our planet’s history. For a few weeks, the supernova will be so bright that there will appear to be two stars in the sky, and night will be indistinguishable from day for much of that time. So don’t count on getting a lot of sleep when Betelgeuse explodes, because the only sensible thing for the world to do will be to throw a weeks-long global supernova party.

Physicist Brad Carter explains what Earth (and hopefully humanity) can look forward to:

“This is the final hurrah for the star. It goes bang, it explodes, it lights up – we’ll have incredible brightness for a brief period of time for a couple of weeks and then over the coming months it begins to fade and then eventually it will be very hard to see at all.”

Although there’ll be no missing the explosion, Carter points out that the vast majority of material shot out from the supernova will pass by Earth completely unnoticed:

“When a star goes bang, the first we will observe of it is a rain of tiny particles called neutrinos. They will flood through the Earth and bizarrely enough, even though the supernova we see visually will light up the night sky, 99 per cent of the energy in the supernova is released in these particles that will come through our bodies and through the Earth with absolutely no harm whatsoever.”

Indeed, just in case anyone is concerned, Betelgeuse is way too far away from Earth to do us any damage. There’s been some doomsday speculation of late around the eventual supernova – which might not happen for a million years, it bears repeating – but, as with pretty much all doomsday speculation, you can just ignore it. In any event, the Betelgeuse explosion will likely be the most dramatic supernova Earth ever witnesses – well, unless our Sun eventually explodes and destroys our planet, which would probably leave Betelgeuse the runner-up. Either way, it isn’t the first, as history has recorded the appearance of several so-called “guest stars.” Most of these just looked like short-lived stars in the night sky, but some were bright enough to be seen in the day.

The first supernova that history records is thought to have occurred in 185 CE, when a star 8,200 light-years away exploded. Chinese astronomers make explicit note of the sudden appearance of a star and its subsequent disappearance several months later, and the Romans may also have made more cryptic references to it. Astronomers have since located the remnants of the exploded star, confirming the accuracy of the ancient accounts.

The two most dramatic supernova explosions occurred in the 11th century. A supernova in 1006 – you can see its modern remnant above – is the brightest star ever recorded, appearing in the records of China, Egypt, Iraq, Italy, Japan, and Switzerland. There’s even some thought that a rock painting by the Hohokam, a Native American tribe in what is now Arizona, represents the first recorded sighting of a supernova in the Americas. Here’s the petroglyph in question, which might well record the presence of an unexpected bright light in the sky:

The various observations even allow us to pinpoint what specific type of supernova it was. In all likelihood, it was a Type Ia supernova, which for a few weeks burn as brightly as five billion suns. Astronomer Frank Winkler explains that we can work out from that supposition:

“By knowing this distance and the standard luminosity of Ia supernovae, we can calculate, in retrospect, just how bright the star must have appeared to 11th century observers. On the magnitude scale used by astronomers, it was about minus 7.5, which puts its brightness a little less than halfway between that of Venus and that of the full Moon. And all that light would have been concentrated in a single star, which must have been twinkling like crazy. There’s no doubt that it would have been a truly dazzling sight. In the spring of 1006, people could probably have read manuscripts at midnight by its light.”

The supernova of 1054 wasn’t quite as dramatic, and it seemed to go almost entirely unrecorded in Europe, although there’s some thought that records of the new star made by Irish monks got corrupted into allegorical accounts of the Antichrist. Still, the rest of the world saw it just fine, with records popping up in China, Japan, Korea, Persia, and the Americas. Astronomers of the time period wrote that it could be seen in daylight for over three weeks and remained visible in the night sky for nearly two years.

A pair of supernovas in 1572 and 1604 were extensively studied by two generations of legendary astronomers, Tycho Brahe and Johannes Kepler. Since then, the Milky Way hasn’t had any supernovas visible from Earth, and so our night sky has remained rather tediously ordinary.

There’s about sixteen known candidates in our galaxy for a future supernova explosion, and quite a few of them would have a dramatic effect on our skies. But Betelgeuse is by far one of the closest, and its huge size means its explosion will be particularly dramatic. This is one cosmic disaster that we actually want to see happen sooner than later, because there may never be a sight quite like this ever again.

COUNTIES use ‘LAND BANKS’ and EMINENT DOMAIN to FIGHT FORECLOSURE FRAUD
http://www.webofdebt.com/articles/north_dakota.php
http://www.webofdebt.com/articles/occupy.php
by Ellen Brown / January 12, 2012

An electronic database called MERS has created defects in the chain of title to over half the homes in America. Counties have been cheated out of millions of dollars in recording fees, and their title records are in hopeless disarray. Meanwhile, foreclosed and abandoned homes are blighting neighborhoods. Straightening out the records and restoring the homes to occupancy is clearly in the public interest, and the burden is on local government to do it. But how? New legal developments are presenting some innovative alternatives.

John O’Brien is Register of Deeds for Southern Essex County, Massachusetts. He calls his land registry a “crime scene.” A formal forensic audit of the properties for which he is responsible found that:

• Only 16% of the mortgage assignments were valid.
• 27% of the invalid assignments were fraudulent, 35% were “robo-signed,” and 10% violated the Massachusetts Mortgage Fraud Statute.
• The identity of financial institutions that are current owners of the mortgages could be determined for only 287 out of 473 (60%).
• There were 683 missing assignments for the 287 traced mortgages, representing approximately $180,000 in lost recording fees per 1,000 mortgages whose current ownership could be traced.

At the root of the problem is that title has been recorded in the name of a private entity called Mortgage Electronic Registration Systems (MERS). MERS is a mere place holder for the true owners, a faceless, changing pool of investors owning indeterminate portions of sliced and diced, securitized properties. Their identities have been so well hidden that their claims to title are now in doubt. According to the auditor: “What this means is that . . . the institutions, including many pension funds, that purchased these mortgages don’t actually own them”.

The March of the AGs
When Massachusetts Attorney General Martha Coakley went to court in December against MERS and five major banks—Bank of America Corp., JPMorgan Chase, Wells Fargo, Citigroup, and GMAC—John O’Brien said he was thrilled. Coakley says the banks have “undermined our public land record system through the use of MERS.” Other attorneys general are also bringing lawsuits. Delaware Attorney General Beau Biden is going after MERS in a suit seeking $10,000 per violation. “Since at least the 1600s,” he says, “real property rights have been a cornerstone of our society. MERS has raised serious questions about who owns what in America.”

Biden’s lawsuit alleges that MERS violated Delaware’s Deceptive Trade Practices Act by:
·         Hiding the true mortgage owner and removing that information from the public land records.
·         Creating a systemically important, yet inherently unreliable, mortgage database that created confusion and inappropriate assignments and foreclosures of mortgages.
·         Operating MERS through its members’ employees, whom MERS confusingly appoints as its corporate officers so that they may act on MERS’ behalf.
·         Failing to ensure the proper transfer of mortgage loan documentation to the securitization trusts, which may have resulted in the failure of securitizations to own the loans upon which they claimed to foreclose.

Legally, this last defect may be even more fatal than filing in the name of MERS in establishing a break in the chain of title to securitized properties. Mortgage-backed securities are sold to investors in packages representing interests in trusts called REMICs (Real Estate Mortgage Investment Conduits). REMICs are designed as tax shelters; but to qualify for that status, they must be “static.” Mortgages can’t be transferred in and out once the closing date has occurred. The REMIC Pooling and Servicing Agreement typically states that any transfer after the closing date is invalid. Yet few, if any, properties in foreclosure seem to have been assigned to these REMICs before the closing date, in blatant disregard of legal requirements. The whole business is quite complicated, but the bottom line is that title has been clouded not only by MERS but because the trusts purporting to foreclose do not own the properties by the terms of their own documents.

Courts Are Taking Notice
The title issues are so complicated that judges themselves have been slow to catch on, but they are increasingly waking up and taking notice. In some cases, the judge is not even waiting for the borrowers to raise lack of standing as a defense. In two cases decided in New York in December, the banks lost although their motions were either unopposed or the homeowner did not show up, and in one there was actually a default. No matter, said the court; the bank simply did not have standing to foreclose. Failure to comply with the terms of the loan documents can make an even stronger case for dismissal. InHorace vs. LaSalle, Circuit Court of Russell County, Alabama, 57-CV-2008-000362.00 (March 30, 2011), the court permanently enjoined the bank (now part of Bank of America) from foreclosing on the plaintiff’s home, stating:

[T]he court is surprised to the point of astonishment that the defendant trust (LaSalle Bank National Association) did not comply with New York Law in attempting to obtain assignment of plaintiff Horace’s note and mortgage. . . .

[P]laintiff’s motion for summary judgment is granted to the extent that defendant trust . . . is permanently enjoined from foreclosing on the property . . . .

Relief for Counties: Land Banks and Eminent Domain
The legal tide is turning against MERS and the banks, giving rise to some interesting possibilities for relief at the county level. Local governments have the power of eminent domain: they can seize real or personal property if (a) they can show that doing so is in the public interest, and (b) the owner is compensated at fair market value.

The public interest part is obvious enough. In a 20-page booklet titled “Revitalizing Foreclosed Properties with Land Banks,” the U.S. Department of Housing and Urban Development (HUD) observes: “The volume of foreclosures has become a significant problem, not only to local economies, but also to the aesthetics of neighborhoods and property values therein. At the same time, middle- to low income families continue to be priced out of the housing market while suitable housing units remain vacant.” The booklet goes on to describe an alternative being pursued by some communities: “To ameliorate the negative effects of foreclosures, some communities are creating public entities — known as land banks — to return these properties to productive reuse while simultaneously addressing the need for affordable housing.”

States named as adopting land bank legislation include Michigan, Ohio, Missouri, Georgia, Indiana, Texas, Kentucky, and Maryland. HUD notes that the federal government encourages and supports these efforts. But states can still face obstacles to acquiring and restoring the properties, including a lack of funds and difficulties clearing title. Both of these obstacles might be overcome by focusing on abandoned and foreclosed properties for which the chain of title has been broken, either by MERS or by failure to transfer the promissory note according to the terms of the trust indenture. These homes could be acquired by eminent domain both free of cost and free of adverse claims to title. The county would simply need to give notice in the local newspaper of an intent to exercise its right of eminent domain. The burden of proof would then transfer to the bank or trust claiming title. If the claimant could not prove title, the county would take the property, clear title, and either work out a fair settlement with the occupants or restore the home for rent or sale.

Even if the properties are acquired without charge, however, counties might lack the funds to restore them. Additional funds could be had by establishing a public bank that serves more functions than just those of a land bank. In a series titled “A Solution to the Foreclosure Crisis,” Michael Sauvante of the National Commonwealth Group suggests that properties obtained by eminent domain can be used as part of the capital base for a chartered, publicly-owned bank, on the model of the state-owned Bank of North Dakota. The county could deposit its revenues into this bank and use its capital and deposits to generate credit, as all chartered banks are empowered to do. This credit could then be used not just to finance property redevelopment but for other county needs, again on the model of the Bank of North Dakota. For a fuller discussion of publicly-owned banks, see http://PublicBankingInstitute.org.

Sauvante adds that the use of eminent domain is often viewed negatively by homeowners. To overcome this prejudice, the county could exercise eminent domain on the mortgage contract rather than on title to the property. (The power of eminent domain applies both to real and to personal property rights.) Title would then remain with the homeowner. The county would just have a secured interest in the property, putting it in the shoes of the bank. It could then renegotiate reasonable terms with the homeowner, something banks have been either unwilling or unable to do. They have to get all the investor-owners to agree, a difficult task; and they have little incentive to negotiate when they can make more money on fees and credit default swaps on contracts that go into default.

Settling with the Investors
What about the rights of the investors who bought the securities allegedly backed by the foreclosed homes? The banks selling these collateralized debt obligations represented that they were protected with credit default swaps. The investors’ remedy is against the counterparties to those bets—or against the banks that sold them a bill of goods. Foreclosure defense attorney Neil Garfield says the investors are unlikely to recover on abandoned and foreclosed properties in any case. Banks and servicers can earn more when the homes are bulldozed—something that is happening in some counties—than from a sale or workout at a loss. Not only is more earned on credit default swaps and fees, but bulldozed homes tell no tales. Garfield maintains that fully a third of the investors’ money has gone into middleman profits rather than into real estate purchases. “With a complete loss no one asks for an accounting.”

Not only homes and neighborhoods but 400 years of property law are being destroyed by banker and investor greed. As Barry Ritholtz observes, the ability of a property owner to confidently convey his property is a bedrock of our society. Bailing out reckless financiers and refusing to hold them accountable has led to a fundamental breakdown in the role of government and the court system. This can be righted only by holding the 1% to the same set of laws as are applied to the 99%. Those laws include that a contract for the sale of real estate must be in writing signed by seller and buyer; that an assignment must bear the signatures required by local law; and that forging signatures gives rise to an actionable claim for fraud.

The neoliberal model that says banks can govern themselves has failed. It is up to county governments to restore the rule of law and repair the economic distress wrought behind the smokescreen of MERS. New tools at the county’s disposal—including eminent domain, land banks, and publicly-owned banks—can facilitate this local rebirth.

Ellen Brown is an attorney and president of the Public Banking Institute, http://PublicBankingInstitute.org. In Web of Debt, her latest of eleven books, she shows how a private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her websites arehttp://WebofDebt.com and http://EllenBrown.com.

STATE PUBLIC BANKS
http://www.yesmagazine.org/new-economy/how-wisconsin-could-turn-austerity-into-prosperity-own-a-bank
http://www.yesmagazine.org/new-economy/a-choice-for-states-banks-not-budget-crises
http://www.yesmagazine.org/new-economy/the-growing-movement-for-publicly-owned-banks

NY STATE ENACTS ‘LAND BANK’ LAW
http://www.housingwire.com/2011/07/29/new-york-state-enacts-land-bank-law
New York state enacts land bank law
by Kerry Curry / July 29, 2011

New York became the latest state Friday to enact land bank legislation to deal with the burgeoning problem of vacant and blighted properties — one of the aftereffects from the nation’s foreclosure crisis. New York Gov. Andrew Cuomo signed the law Friday in what was described as a bipartisan effort. Land banks are entities that take control of problem properties and either rehabilitate the property or bulldoze it to redevelop the land. The strategy has met with success in some of the nation’s inner cities that have been ravaged by the foreclosure crisis, such as Detroit and Cleveland. Land banks have assembled parcels for green space, urban farming, side lots, community amenities, commercial development and affordable housing, among other uses.

New York’s law will allow cities and counties across the state the ability to develop land banks, which would be tasked with converting vacant, abandoned or tax-delinquent properties into productive use. The issue is of particular importance in Western New York, where the volume of abandoned housing stock is overwhelming. Center for Community Progress President Dan Kildee, who wrote a piece on land banks for HousingWire’s August magazine, worked closely with the lawmakers who crafted the bills, which are modeled on the example of Flint, Mich., a city ravaged by the downturn in the American auto industry. The Genesee County Land Bank, created there in 1999, has been the primary vehicle for redeveloping the city’s vacant housing.

Kildee, the creator of that land bank, says he believes land banking can yield similar results for New York. He told HousingWire that the Flint land bank has acquired nearly 10,000 vacant homes since its inception, demolishing more than 1,300 of those. Its projects have included redevelopment or repurposing of 2,500 properties. Kildee said the land bank has attracted more than $60 million in new investment to Flint. “Around the country, as communities face the fallout of a changing economy and the foreclosure crisis, land banking is giving local governments the chance to help re-set the real estate market and promote sound development plans for the future,” he said. Similar legislation is up for consideration in Pennsylvania and Tennessee, while Georgia legislators are debating an update of a land banking law already on the books there, according to the Center for Community Progress.

LOCAL SOLUTIONS
http://www.mainstreetmatters.us/publicbanking
http://www.mainstreetmatters.us/solvingforeclosures
A Solution to the Foreclosure Crisis / by Michael Sauvante

Summary
Not since the Great Depression have so many homes been seized in foreclosure proceedings. With no end in sight, our country and local communities are faced with the realization that neither Washington nor Wall Street is willing or able to solve the problem. National Commonwealth Group has developed a set of solutions that can be initiated at the local level independent of outside help. They begin with actions that just take some political will on the part of local county officials, which “political backbone” they might conveniently find with the help of local citizens action groups, the small business community and local newspapers, TV & radio.

We have defined a 6 step program that communities can put in motion. The first 4 steps represent largely mitigation efforts that can dramatically reduce the negative impact that foreclosures have on homeowners, their neighbors, the banks and the community as a whole. In some cases those steps will translate into stopping certain foreclosures outright. However, if a community wants to step them entirely, then steps 5 and 6 provide them with the means to do that. We have detailed those 6 steps in the following downloadable document entitled “Stopping Foreclosures: A Local Action Plan“. It is our understanding that not all states and counties in the country, due to local and state laws, would be able to apply these recommendations as is. Nonetheless, a sufficiently large enough segment of the states and their counties could follow these guidelines that they should start to have impact on a large number of communities impacted by the foreclosure problem. We are working with some experts in those states that have a different foundation for how foreclosures are administered to develop an alternate plan for them as well.

In the meantime, we recommend you read the “Stopping Foreclosures: A Local Action Plan” document first and then proceed to read the balance of this section, as it drills deeper into our recommendations contained in Steps 5 & 6. Steps 5 & 6 entail local governments, in particular counties and larger cities, using two sets of laws that will allow them to seize control of their local foreclosure problem and bring about a halt to the devastation they cause to the community and all participants. The first set of laws related to the eminent domain powers of government bodies and the second set of laws relate to banking. Here is a brief synopsis of those two solutions. It is followed by a more in-depth exploration of the whole topic, including a downloadable .pdf document that can be read offline.

Let us begin with the eminent domain powers of these entities. We recommend this solution be pursued primarily at the county level. Here’s why: Counties are the government entity most concerned with foreclosures in their jurisdiction, in that legal proceedings occur at the county court level and county sheriffs are the law enforcement agency tasked with carrying out evictions. The first step we recommend is that a county issues a moratorium on foreclosures within the county, along with ordering the sheriffs to discontinue any evictions (of homeowners facing foreclosure or those who move back in post foreclosure as currently promoted by Occupy Our Homes et al.). Counties can take such actions under their mandate to promote the public good.

Next, they can address the problem of MERS, the principal perpetrators of foreclosure actions against homeowners. MERS was established to bypass the normal title transfer process and costs, resulting in purported title holders unable to prove clear title. Few homeowners have the financial resources to fight foreclosures on this basis, but counties clearly have the financial muscle, ability and motivation to challenge MERS on title questions. If MERS (or any other purported title holder) cannot prove clear title, then it is in the interests of the county and the homeowner for the county to step in and seize the mortgage contract for the property under its eminent domain authority. (Note – as explained here, eminent domain can be used to not only seize real property, but personal property like contract rights and other intangible property, including mortgage contracts.) Post seizure (which costs the county virtually nothing), the county is in a position to work out new terms with the homeowner, allowing them to remain in the home and make mutually agreed upon payments. In the process, the county and all other local constituents avoid the negative impact a foreclosure has on the community and the homeowner gets to stay in the home.

The above solution could address about 50% of the pending foreclosures in the community, corresponding to the percentage of all mortgages held by MERS. If that happens in enough counties, the magnitude of the losses to MERS may well force a national solution to the title issue, but in the meantime, counties could use the process to begin to address their local foreclosure problem. That begs the question of what can be done about the mortgages held by legitimate titleholders, such as community banks, that did not resell their mortgages? A county could still exercise its eminent domain rights and seize those mortgage contracts to those properties as well. In those circumstances, eminent domain rules dictate that the county need only pay a “fair market” value for the mortgage, just as it does with any other normal eminent domain purchase. This would actually currently yield more income to the selling bank than it would see through a foreclosure auction, a plus for the bank.

{Download the full article that explores the eminent domain and county bank solution here: http://www.mainstreetmatters.us/docs/No-more-foreclosures.pdf}

Ending Foreclosures With Local Solutions
Wall Street abuses! Inaction in Washington! Regardless of where one points the finger, the foreclosure crisis continues to devastate the American economy. Community banks are particularly hard hit, through no fault of their own, and many have failed, seized by regulators or snatched up by larger banks seemingly immune to regulatory heavy handedness. Collapsing real estate markets have a domino effect on institutions that are dependent on healthy real estate values, in particular local governments that rely on property taxes. The problem is that the players who might have a solution to the crisis are pressured in ways that exacerbate it. For example, community banks would be penalized by the FDIC and other regulators if they tried to help homeowners by renegotiating their loan payment amounts, providing them payment holidays or simply writing down the value of the loans. The federal government would have to initiate a massive new program to cover the costs to the banks that would produce, or require regulators to radically alter their rules to allow banks to take such actions without a negative impact on their own status. Neither is politically feasible. And Wall Street banks have no motivation to step in and solve the crisis that they helped to create. But there is a way out. Local governments, primarily at the county level, can exercise certain of their legal rights, including the right of eminent domain. And they can go much further if they also make creative use of existing banking laws.

Counties and Foreclosure
Most of the legal procedures associated with foreclosures occur at the county level, including legal filings, court hearings and the too familiar process of sheriffs evicting homeowners after foreclosure. This allows counties to begin implementing a solution in three simple steps:

Step 1: Counties can declare a moratorium on foreclosures on the grounds that they are economically harmful to all residents of the county, not just individual homeowners and mortgage holders. The decline in overall property values following foreclosures impacts the revenue of the county and other government entities that depend on property tax revenues. Reducing or stopping foreclosures is clearly in the public interest and is the first step in solving the problem locally.

Step 2: The county can order its sheriffs not to evict any property owner as a result of already instituted foreclosure proceedings or other parties that have moved into foreclosed homes as part of the Occupy Our Homes movement and other similar activities. That would prevent homeowners being thrown out on the street and provide homes for those already evicted.

Step 3: The county can begin working with homeowners who are under threat of foreclosure to distinguish which homeowners have mortgages primarily with local institutions versus those that have been re-sold and currently held by MERS (Mortgage Electronic Registration Systems, Inc.) or other non-local institutions. MERS is a private mortgage registry that Fannie Mae and Freddie Mac formed along with major banks to bypass public registration of deeds and facilitate the creation of mortgage-backed securities. MERS holds about half of the mortgages in the country.

The Problem with MERS
MERS was created to simplify the bundling of large numbers of individual mortgages into other financial instruments, which resulted in the breakdown of the normal process of title transfer. One reason for that was a desire by the owners of MERS to avoid title transfer costs and thus increase their profits on securitizing those mortgages. The result is that many homeowners are paying on mortgages for which no clearly defined mortgage holder can be identified.

The majority of state attorneys general are in battles with Fannie and Freddie over their unresponsiveness to homeowners’ need to reduce their debt and the imposition of foreclosures even when proper title cannot be presented. (See “Kamala Harris, California Attorney General, To Fannie And Freddie Head: ‘Step Aside’ Over Mortgage Crisis” and “Beau Biden, Delaware Attorney General, Sues Big Banks’ Mortgage Registry”) Yet in order to perfect a foreclosure claim, a mortgage holder is supposed to have clear title to the property, giving them the right to seize the property for non-performance on the part of the mortgagee (homeowner). Where clear title cannot be evidenced, the law should be on the side of the homeowner. But courts, banks and law enforcement have often run roughshod over homeowners who, without the financial resources to fight foreclosure proceedings, are often powerless to stop the juggernaut. If the purported mortgage holder cannot prove clear title, then the law is clear that the homeowner should be able to retain possession and control of their property. Yet many homeowners have been foreclosed improperly and forced out of their homes. Some homeowners have successfully prevailed in court by demanding that the foreclosing entity prove title, which in many cases they could not. Of course, such a legal battle requires financial resources that are usually missing because the homeowner is already in financial difficulties, causing the foreclosure proceedings in the first place.

Counties, MERS & Eminent Domain
This is where counties can come to the rescue. If the financial institution (typically downstream from the originating bank and rarely a community bank) cannot demonstrate clear title, the county can invoke its power of eminent domain to resolve the issue. Eminent domain allows a government entity to seize not just physical property but intangible property such as contract rights, patents, trade secrets and copyrights, provided that doing so is in the public interest and the owner is compensated at fair market value. Counties simply need to provide adequate public notice that the property is subject to eminent domain seizure. If the lender cannot provide proof of title by the end of the notice period, the county can proceed with the seizure uncontested. Since there is no identifiable party to compensate, this procedure costs the county next to nothing. Regardless of the cloud over the title prior to the seizure, clear title is once again established afterward. We have a long history of counties re-establishing clear title, as in cases where property is seized (e.g., for failure to pay taxes) and sold in what are often called “sheriff’s sales.” The title industry considers such sales to wipe out all previous title history, and any future title searches only go back to that date. As the title cost the county essentially nothing, it can negotiate terms with the homeowner that will redefine what portion of the property the homeowner is allowed to retain and also allow the homeowner to remain in the home. That could include a temporary moratorium on any payments pending improvement on the homeowner’s financial condition. At a very minimum the county can then rent the home to the (former) homeowner. (See ““Right-to-Rent”: A Simple, Sensible Idea That Dysfunctional Washington Is More Than Happy to Let Die”)

The net result of this process is:

  • Foreclosures and their negative ripple effect on the local economy are reduced.
  • More homeowners remain in their homes, helping to preserve neighborhoods.
  • The county receives new revenues.

The Moral Argument
In addition to the economic benefits of stopping foreclosures, this process addresses the fact that the MERS system was designed to skirt legal procedures in pursuit of profit. The foreclosure crisis stands at the very center of our economic woes, and since the federal government appears incapable or unwilling to address this problem, this solution lies with local communities. The nature of free market capitalism is that you risk losing your investment. If, like the owners of MERS, you do so because you played fast and loose with the rules, then taxpayers especially should not be required to bail you out, as MERS owners might demand if their system starts to significantly unravel.

What About Legitimate Mortgages?
What can the county do when the titleholder is a financial institution, like a community bank, that normally does not re-sell its mortgages? The county can still exercise eminent domain and seize the property, paying fair market price. Actually, were the bank to be paid the current appraised value for the property, it would in most cases come out financially ahead of what it could realize from a foreclosure sale. How does the county finance the eminent domain purchase of a property at fair market value? Currently, that means borrowing the funds from other institutions and repaying them out of tax revenues and/or the revenues realized from payments by the homeowners. One could argue that the revenue from all of the properties seized (both the MERS properties and those bought for full market value) should be adequate to service the debt. But the county has another tool that allows it to go far beyond financing seized properties and into facilitating the larger credit needs of the county and its residents. That solution is called Public Banking. See the section entitled Public Banking to see what it is and how we can use the concept to get credit flowing in our communities again and to free us up from the tyranny of the Wall Street banks.

Start Now
At the very least county administrators should be petitioned to place a moratorium on local foreclosures and exercise the eminent domain seizure of those foreclosure candidate properties for which no clear titleholder can be established. That will require no new systems at the county level and will go a long ways to ending the devastation of foreclosure.

LAND BANKS
http://planphilly.com/rda-farming
http://www.thelandbank.org/aboutus.asp
http://www.mslandbank.com/aboutus.html
http://www.communityprogress.net/around-the-states-pages-5.php

WHAT is a LAND BANK?
http://www.umich.edu/~econdev/landbank/
Revitalizing Blighted Communities with Land Banks / by Jessica de Wit

A land bank is a public authority created to efficiently hold, manage and develop tax-foreclosed property.(1) Land banks act as a legal and financial mechanism to transform vacant, abandoned and tax-foreclosed property back to productive use. Generally, land banks are funded by local governments’ budgets or the management and disposition of tax-foreclosed property.(2) In addition, a land bank is a powerful locational incentive, which encourages redevelopment in older communities that generally have little available land and neighborhoods that have been blighted by an out-migration of residents and businesses.(3) While a land bank provides short-term fiscal benefits, it can also act as a tool for planning long-term community development. Successful land bank programs revitalize blighted neighborhoods and direct reinvestment back into these neighborhoods to support their long-term community vision.

Why have a land bank?
Land is one of the most important factors in local economic development today and must be managed well to improve existing land use practices, enhance livability of communities, and support local community development.(4) In recent surveys, the Brookings Institute found that on average 15% of the land in major American cities is vacant.(5) Vacant and abandoned land does not produce sufficient property tax revenue for cities, which generally is their main revenue source. This lack of funds impedes a city’s ability to sustain its operations, programs, and services. In addition, vacant and abandoned land discourages property ownership, depresses property values, attracts crime and creates health hazards.

To understand why it is important to have a land bank, it is necessary to assess the costly impact of vacant and abandoned land in communities. When there are vacant and abandoned properties in communities, neighboring property owners and the municipalities incur significant costs. The U.S. Fire Administration reports that over 12,000 vacant structure fires are reported each year in the U.S., which results in $73 million in property damage annually.(6) In addition, abandoned properties tend to attract crime. A 1993 study of 59 abandoned properties in Austin, Texas, found that 34 percent were used for illegal activities and of the 41 percent that were unsecured, 83 percent were used for illegal activities.(7) This crime drains police department resources and leaves residents feeling unsafe in their own neighborhoods.

When property owners neglect and abandon their properties, the local municipality must use its own resources to clean and maintain the properties as part of their nuisance abatement responsibilities to protect the public health, safety and welfare of its community. For example, from 1999 to 2004, St. Louis spent $15.5 million, which equates to nearly $100 per household, to demolish vacant buildings.(8) Detroit spends roughly $800,000 per year to clean vacant lots.(9) Abandoned and vacant properties drive down the surrounding property values, which lowers the property taxes that most municipalities rely on as a primary source of revenue.

Property abandonment can destabilize a neighborhood by causing an out-migration of property owners, who are worried about losing value on their properties due to surrounding vacant and abandoned land. A Temple University study suggests that, all things being equal, the presence of an abandoned house on a block reduces the value of all the other property by an average of $6,720.(10) According to Emory University Professor Frank Alexander’s research, “failure of cities to collect even 2 to 4 percent of property taxes because of delinquencies and abandonment translates into $3 billion to $6 billion in lost revenues to local governments and school districts annually.”(11) While it is difficult to quantify all of the costs associated with vacant and abandoned properties, it is clear that they place a tremendous cost burden on communities.

Land Bank Benefits
While abandoned and vacant properties depress property values, discourage property ownership, and attract criminal activities in the surrounding area, a land bank provides tools to quickly turn these tax-reverted properties back into usable parcels that reinvest in the community’s long-term vision for its neighborhoods. Land bank programs act as an economic and community development tool to revitalize blighted neighborhoods and business districts. Land banks can benefit urban schools, improve tax revenues, expand housing opportunities, remove public nuisances, assist in crime prevention and promote economic development.(12)


Source: 2004 Kirwan Institute for Study of Race & Ethnicity, Ohio State University.

By transferring vacant and abandoned properties to responsible land owners through a land bank program, local governments benefit because they avoid the significant cost burden of property maintenance, like mowing and snow removal, as part of their nuisance abatement responsibilities. In addition, local governments benefit from increased revenue because the new property owners pay taxes on the property. Also, the local schools benefit because they receive more funding when there is an increase in property owners in their school districts. Land bank programs can increase the variety of mixed-income housing offered and provide more opportunities for affordable housing. Also, land bank properties, which become owner-occupied, discourage criminal activity thereby benefiting public safety and decreasing the cost burden on the local police and fire departments. Finally, the more residents and businesses that occupy property in a neighborhood, the more services and amenities will be needed, which boosts local economic activity. Many cities, like Atlanta, GA; St. Louis, MO; Genesee County, MI; and Cleveland, OH; have established land bank programs to redevelop vacant and abandoned land as a productive use for their communities. These communities are using land banks as a tool to reuse their urban land and stimulate economic development and neighborhood revitalization.

Land Bank Challenges
While there are many benefits to establishing land banks in communities, there are also many challenges in operating and maintaining them. Several U.S. municipalities have had challenges with running their land banks. Atlanta’s land bank has a lack of sufficient acquisition funds for both Community Development Corporations (CDC) and the land bank authority (LBA).(13) In addition, they have a need for ongoing improvement coordination among community development departments of local governments, the LBA and the Tax Commissioner.(14)

Cleveland’s land bank challenges are the capitalization of projects, the CDC’s limited capacity to take and rehab land acquired from the land bank and the time consuming administrative procedures, including the legislative process and aldermanic approvals.(15) CDCs want the City to go beyond supporting primarily tax-delinquent vacant properties and take the lead on tax-delinquent properties that have existing structures and the possibility of environmental contamination.(16)

Genesee County’s land bank challenges are whether urban tax-reverted properties have enough value to be purchased, even with the latest Land Bank Fast Track legislation.(17) In addition, there are concerns whether there will be enough revenue generated by the sale of these properties to pay the costs associated with administering a Redevelopment Fast Track Authority.(18)

Case Study: Michigan’s Land Banking Enabling Legislation
To better understand how land bank programs work, it is helpful to review a case study. Following is a case study of Michigan’s Land Bank Enabling Legislation and Michigan’s Genesee County land bank program. It is important to first review a State’s particular Land Bank Enabling Legislation because these laws provide land bank programs with the legal and financial tools needed to operate and maintain a land bank. Prior to January 2004, Michigan’s tax foreclosure laws on abandoned properties were ineffective because local governments did not have the authority to effectively manage tax-reverted land and prevent blight. Now, Michigan has one of the most progressive land banking laws in the nation.(19)

In January 2004, Governor Granholm signed into law the Land Bank Fast Track Legislation, Public Act (PA) 258, to provide communities with better legal and financial tools to put vacant and abandoned properties back into productive use.(20) This law establishes a state land bank authority while also enabling the establishment of city and county land bank authorities.(21) In addition, the law permits these authorities to expedite quiet title on properties, which it possesses, and make them available at nominal prices for productive reuse in the community.(22) The quiet title process is a legal action that eliminates all liens and past claims on a property and clears the title so a new owner may purchase the property without worrying about any unresolved claims.

In conjunction with PA 258, the Governor also signed into law four other related Public Acts:

PA 259 amends the Michigan Brownfield Redevelopment Act to allow any land bank authority owned property to be defined as “blighted property”, which enables a tax increment financing board to provide assistance to a land bank authority with clearing or quieting a title, and disposing of property owned or held by a land bank authority.(23)

PA 261 creates the Property Tax Exemption Act, which exempts property, with titles held by land bank authority, from taxes and exempts property sold by a land bank authority from general property taxes for five years.(24)

PA 260 creates the Tax Reverted Clean Title Act to impose a specific tax, which would have the same rate of general property taxes for five years, on property sold by a land bank fast track authority. While one half of the revenue from this specific tax funds an authority’s title clearance and land disposition costs, the remaining half is earmarked for local and state collecting units on a pro-rata basis.(25)

PA 263 amends the General Property Tax Act to permit a foreclosing governmental unit to request a title product other than an unreliable title search to identify the owners of tax delinquent properties at the time of foreclosure and describe a reasonable process for identifying these owners and providing public notice to them.(26)

Michigan’s Genesee County Land Bank
In Michigan, Genesee County has been a leader in creating a successful land banking program. Under the Genesee County Land Bank Authority, tax foreclosed properties are held for a period of time before being returned to the market. This allows for the grouping of parcels together to provide a more attractive resale opportunity and the assessment of potential property owners to ensure that they will contribute to the long-term vision of the community.

The Genesee County Land Bank Authority has acquired title to more than 3400 land parcels, including nearly 6% in the City of Flint in the first three years of the program.(27) They have successfully transferred 130 foreclosed tenant occupied properties to non-profit housing agencies, whose goal is to stabilize neighborhoods and encourage home ownership.(28) In addition, the LBA has redeveloped a 30,000 sq. ft. mixed use building in downtown Flint, which has been empty since 1980, and they have assembled hundreds of empty lots for city development projects and local non-profit and community organization projects.(29)

Land Banks as a Smart Growth Planning Tool
While other cities’ land bank programs, like St. Louis, have been used primarily as a fiscal tool to stimulate growth in their communities, Genesee County’s land bank program has been used as a planning tool to align with their communities’ long-term redevelopment plans that provide the greatest benefit. When Michigan’s Governor Granholm signed the latest land bank legislation in 2004, she said, “Together these new laws will help local planning officials to look at an entire area or region when developing land use plans.”(30) In addition, the Governor said, “To make headway against urban sprawl, we must think regionally and use new tools.”(31) Land bank programs are one of these smart growth tools that counter sprawl and revitalize the inner core of Michigan’s cities. Based on Governor Granholm’s state-wide smart growth goals, it is imperative that Michigan communities focus on city and region-wide planning instead of just fiscal objectives when implementing land bank programs.

References and related links
1) 2005. Smart Growth Tactics. Michigan Society of Planning, January.
2) Brooks, Amy; Collins, Demetria; Eichmuller, Barbara; Tintocalis, Melissa; van Leeuwen, Simon. 2004. Harnessing Community Assets: A Detroit Land Bank Authority. Taubman College of Architecture & Urban Planning, University of Michigan, April.
3) Blakely, Edward and Bradshaw, Ted. 2002. Planning Local Economic Development. California: Sage Publications.
4) Ibid.
5) Pagano, M. & Bowman, A. 2000. Vacant Land in Cities: An Urban Resource, Survey Series. The Brookings Institute.
6) 2004. Vacant Properties and Smart Growth: Creating Opportunity from Abandonment. Funder’s Network For Smart Growth and Livable Communities, September.
7) Ibid.
8) Ibid.
9) Ibid.
10) Ibid.
11) Ibid.
12) 2004. The Multiple Benefits of Land Banking and Comprehensive Land Bank Planning for Detroit. Kirwin Institute for the Study of Race & Ethnicity, Ohio State University, April.
13) Local Initiatives Support Corporation. 2005. Atlanta Case Study: Model Practices in Tax Foreclosure and Property Disposition. Retrieved from http://www.lisc.org/resources/vacant_abandoned.shtml?Affordable+Housing.
14) Ibid.
15) Local Initiatives Support Corporation. 2005. Cleveland Case Study: Model Practices in Tax Foreclosure and Property Disposition. Retrieved from http://www.lisc.org/resources/vacant_abandoned.shtml?Affordable+Housing
16) Ibid.
17) Wyckoff, Mark. 2003. All Communities to Benefit from New Land Use Legislation. Planning & Zoning News, December.
18) Ibid.
19) 2005. Smart Growth Tactics. Michigan Society of Planning, January.
20) Brooks, Amy; Collins, Demetria; Eichmuller, Barbara; Tintocalis, Melissa; van Leeuwen, Simon. 2004. Harnessing Community Assets: A Detroit Land Bank Authority. Taubman College of Architecture & Urban Planning, University of Michigan, April.
21) Ibid.
22) Ibid.
23) 2005. Smart Growth Tactics. Michigan Society of Planning, January.
24) Brooks, Amy; Collins, Demetria; Eichmuller, Barbara; Tintocalis, Melissa; van Leeuwen, Simon. 2004. Harnessing Community Assets: A Detroit Land Bank Authority. Taubman College of Architecture & Urban Planning, University of Michigan, April.
25) Wyckoff, Mark. 2003. All Communities to Benefit from New Land Use Legislation. Planning & Zoning News, December.
26) Ibid.
27) 2005. Smart Growth Tactics. Michigan Society of Planning, January.
28) Ibid.
29) Ibid.
30) Crowell, Charlene. 2004. In Lansing, A Legislative Breakthrough. Michigan Land Use Institute. Retrieved from http://www.mlui.org/growthmanagement/fullarticle.asp?fileid=16609.
31) Ibid.


‘LAND VALUE TAX’
http://en.wikipedia.org/wiki/Land_value_tax#References
http://www.newstatesman.com/200409200008
A revolutionary who won over Victorian liberals
by Tristram Hunt / 20 September 2004

While land reform has been alive in British radical thinking since 1066, it was an American who managed to craft the first credible programme for change. Medieval critics of the “Norman Yoke”, the Diggers and Levellers of the English civil war, and the 18th-century opponents of land enclosure had all longed without success for the return of a golden age in which land would be equitably distributed according to need. But the campaigning California journalist Henry George transformed nostalgia into public policy with a tour through 1880s Britain, energising public opinion and making land reform the foundation stone of progressive politics.

Late 19th-century Britain enjoyed a wealth of radical debate. New ideas, new movements and new leaders were systematically unpicking the intellectual hegemony of mid-Victorian laissez-faire. In the town halls of Birmingham, Glasgow and London, the coming creed of municipal socialism was displaying the practical benefits of an activist council; the works of Marx and Engels were being translated and distributed; even John Stuart Mill, the high priest of negative liberty, was turning his attention in “Chapters on Socialism” towards a future ideal of communal harmony. Mill showed that forms of property ownership, rather than being the sacrosanct foundations of modern society, simply reflected the cultural ethos of each civilisation. Private property had no unimpeachable status.

At the same time, there was a growing awareness that the wealth wrought by the industrial revolution and empire was not being evenly spread. The 1880s downturn witnessed the rediscovery of poverty as the dark continents of outcast London, Manchester and Liverpool were traversed by growing numbers of journalists and social investigators. While W T Stead exposed in the Pall Mall Gazette the immoral underbelly of the capital, Charles Booth walked the streets of the East End to discover rates of poverty far higher than even the socialists had predicted. As Beatrice Webb put it, there was “a growing uneasiness . . . that the industrial organisation, which had yielded rent, interest, and profits on a stupendous scale, had failed to provide a decent livelihood and tolerable conditions for a majority of the inhabitants of Great Britain”.

Into this fertile intellectual terrain stepped Henry George to deliver a series of lectures on his book, Progress and Poverty (1879). Initially employed in Ireland as an American correspondent for Irish World, he soon immersed himself in Irish politics and caught the nationalists’ attention with his case for land reform. He was arrested for speaking out against the British – a political coup which made his eventual entry into British public life all the more anticipated. Thousands turned up to hear his lectures; tens of thousands read his book.

After 80 years of economic growth, George considered that “the association of poverty with progress [is] the great enigma of the day”. Moreover, it was in the most highly developed capitalist economies such as the United States and Great Britain that were found “the deepest poverty, the sharpest struggle for existence, the most enforced idleness”. An Atlanticist radical in the vein of Paine and Cobbett, George identified the problem as one of monopoly. (Lizzie Magie, the future inventor of the board game Monopoly, was a keen follower of George.) Where the “natural” means of production had been privately appropriated, rent absorbed all increases in the nation’s wealth. The monopoly of land caused fundamental inequality and poverty, because whenever there was an increase in efficiency the profits would go not to the workers – or even to the capitalists – but to the landlords. Such a grotesque monopoly of wealth was clearly in opposition to natural law. No man made the land, and by ancient right and custom it should not be permanently alienated from the nation at large. As a monopoly, held in trust for the people, land must be made to bear its fair obligations to the public weal.

George’s solution was a land-value tax, a “single tax” that would both confiscate the rent from land and remove all other forms of taxation. This would enable progress to alleviate poverty, as economic growth would be distributed more widely and a land tax would also allow for the subsidy of a vast network of public services, from utilities and housing to culture. The clarity of George’s proposals and the power of his rhetoric pushed land reform to the top of political debate. J A Hobson declared that George “exercised a more directly powerful, formative and educative influence over English radicalism of the last 15 years than any other man”. Both liberals and socialists were drawn to his ideas. In the Fabian pamphlet Capital and Land, Sydney Olivier proposed that the landlords’ “unearned increment” ought to be confiscated through taxation. Reform movements such as the Land Nationalisation Society and the English Land Restoration League sprang up around George’s public meetings, while the Marxists of the Social Democratic Federation were clearly attracted to the nationalisation argument.

Yet George was ambivalent about full-blooded socialism. The management of land through market mechanisms such as taxation, rather than government control, was his favoured option for reform. This explains why so many liberals were equally drawn to Progress and Poverty. Joseph Chamberlain declared himself “electrified” by the book and the ensuing Radical Programme reflected this pressing concern with the land question. The liberal Winston Churchill argued that the land monopoly was detrimental to the public interest, while Herbert Asquith supported Lloyd George’s proposal “to free the land that from this very hour is shackled with the chains of feudalism”.

GEORGISTS
http://en.wikipedia.org/wiki/Georgism#Influence
http://econjwatch.org/articles/geo-rent-a-plea-to-public-economists
http://renegadeecologist.blogspot.com/2012/01/if-you-want-vision-of-future-imagine.html
Views from a Georgist Ecologist

Land Value Tax, which is in my opinion the Holy Grail of legislative changes to protect wildlife, is the simplest expression of the Economic theories of Henry George. This theory goes that if we abolish all harmful taxes on our hard work and trade and instead charge a rent for the use of natural resources such as Land we will not waste them or allow private interests to exploit the rest of humanities access to them.
Such a tax would not only stimulate jobs and enterprise but put a value on all of our natural resources and force us to look after them. If it was implemented for agricultural land, where the lower value of perpetually designated wilderness or natural grazing land is reflected in its land value taxation, it would be the surest way to save the wildlife of the UK and for the least cost to the taxpayer”.

This would mean hard to farm areas, steep banks, riverbanks, rocky outcrops and areas landowners want to designate a nature reserves, which must be legally binding, could be set aside for wildlife and as such attract no taxation. The result of this would be that unproductive and marginal land would become wildlife havens and receive long term protection for future generation to enjoy.

the SINGLE TAX
http://www.henrygeorgefoundation.org/links/
http://www.nytimes.com/2011/10/16/opinion/sunday/heres-the-guy-who-invented-populism.html
by Jill Lepore / October 15, 2011

Henry George, the most popular American economic thinker of the 19th century, was a populist before populism had a name. His economic plan was known as the Single Tax. George was born in Philadelphia in 1839. He left school at 14 to sail to India and Australia on board a ship called the Hindoo. At the time, a lot of people were writing about India as a place of jewels and romance; George was struck by its poverty. Returning to Philadelphia, he became a printer’s apprentice. He went to New York where he saw, for the first time, “the shocking contrast between monstrous wealth and debasing want.” In 1858, he joined the crew of a ship sailing around the Cape Horn because it was the only way he could afford to get to California. In San Francisco, he edited a newspaper; it soon failed. He spent most of his life editing newspapers, and, as with every other industry in the 19th century, many of them failed. In 1865, George was reduced to begging in the streets.

The 19th century was the Age of Progress: the steam engine, the power loom, the railroad. (Awestruck wonder at progress animated that era the way the obsession with innovation animates American politics today.) George believed that the other side of progress was poverty. The railroad crossed the continent in 1869. From the West, George wrote an essay called “What the Railroad Will Bring Us.” His answer: the rich will get richer and the poor will get poorer. In a Fourth of July oration in 1877, George declared, “no nation can be freer than its most oppressed, richer than its poorest, wiser than its most ignorant.” In 1879, George finished a draft of his most important book. “Discovery upon discovery, and invention after invention, have neither lessened the toil of those who most need respite, nor brought plenty to the poor,” George wrote. He thought the solution was to abolish all taxes on labor and instead impose a single tax, on land. He sent the manuscript to New York. When no one would publish it, he set the type himself and begged publishers simply to ink his plates. The book, “Progress and Poverty,” sold three million copies.

George was neither a socialist nor a communist; he influenced Tolstoy but he disagreed with Marx. He saw himself as defending “the Republicanism of Jefferson and the Democracy of Jackson.” He had a bit of Melville in him (the sailor) and some of Thoreau (“We do not ride on the railroad,” Thoreau wrote from Walden. “It rides upon us.”) But, really, he was a Tocquevillian. Tocqueville believed that democracy in America was made possible by economic equality: people with equal estates will eventually fight for, and win, equal political rights. George agreed. But he thought that speculative, industrial capitalism was destroying democracy by making economic equality impossible. A land tax would solve all.

In 1886, George decided to run for mayor of New York. Democrats urged him not to, telling him he had no chance and would only raise hell. “You have relieved me of embarrassment,” George answered. “I do not want the responsibility and the work of the office of the Mayor of New York, but I do want to raise hell.” The Democrat, Abram Hewitt, won, but George got more votes than the Republican, Theodore Roosevelt.

In the 1880s, George campaigned for the single tax, free trade and ballot reform. The last succeeded. George is why, on Election Day, your polling place supplies you with a ballot that you mark in secret. This is known as an Australian ballot, and George brought it back from his voyage halfway around the world. George ran for mayor of New York again in 1897 but died in his bed four days before the election. His body lay in state at Grand Central. More than 100,000 mourners came to pay their respects. The New York Times said, “Not even Lincoln had a more glorious death.” And then: he was left behind. Even Clarence Darrow, who admired him, recanted. “The error I found in the philosophy of Henry George,” Darrow wrote, “was its cocksureness, its simplicity, and the small value that it placed on the selfish motives of men.”


This image (from a Henry George Cigar box) reflects George’s fame at the time of his run for the Mayoralty of New York in 1886 (and later in 1897). George outpolled a young Theodore Roosevelt, but lost to machine Democrat Abraham Hewitt. The rooster was George’s campaign icon, and his slogan was “The democracy of Thomas Jefferson. And although the cigars were advertised “for men”, George was in fact an outspoken advocate for women’s suffrage.

HENRY GEORGE
http://renegadeecologist.blogspot.com/search?updated-max=2011-05-23T12:37:00%2B01:00&max-results=7
by Agnes George de Mille  /  January, 1979

A hundred years ago a young unknown printer in San Francisco wrote a book he calledProgress and Poverty. He wrote after his daily working hours, in the only leisure open to him for writing. He had no real training in political economy. Indeed he had stopped schooling in the seventh grade in his native Philadelphia, and shipped before the mast as a cabin boy, making a complete voyage around the world. Three years later, he was halfway through a second voyage as able seaman when he left the ship in San Francisco and went to work as a journeyman printer. After that he took whatever honest job came to hand. All he knew of economics were the basic rules of Adam Smith, David Ricardo, and other economists, and the new philosophies of Herbert Spencer and John Stuart Mill, much of which he gleaned from reading in public libraries and from his own painstakingly amassed library. Marx was yet to be translated into English.

George was endowed for his job. He was curious and he was alertly attentive to all that went on around him. He had that rarest of all attributes in the scholar and historian that gift without which all education is useless. He had mother wit. He read what he needed to read, and he understood what he read. And he was fortunate; he lived and worked in a rapidly developing society. George had the unique opportunity of studying the formation of a civilization — the change of an encampment into a thriving metropolis. He saw a city of tents and mud change into a fine town of paved streets and decent housing, with tramways and buses. And as he saw the beginning of wealth, he noted the first appearance of pauperism. He saw degradation forming as he saw the advent of leisure and affluence, and he felt compelled to discover why they arose concurrently. The result of his inquiry,Progress and Poverty, is written simply, but so beautifully that it has been compared to the very greatest works of the English language. But George was totally unknown, and so no one would print his book. He and his friends, also printers, set the type themselves and ran off an author’s edition which eventually found its way into the hands of a New York publisher, D. Appleton & Co. An English edition soon followed which aroused enormous interest. Alfred Russel Wallace, the English scientist and writer, pronounced it “the most remarkable and important book of the present century.” It was not long before George was known internationally.

During his lifetime, he became the third most famous man in the United States, only surpassed in public acclaim by Thomas Edison and Mark Twain. George was translated into almost every language that knew print, and some of the greatest, most influential thinkers of his time paid tribute. Leo Tolstoy’s appreciation stressed the logic of George’s exposition: “The chief weapon against the teaching of Henry George was that which is always used against irrefutable and self-evident truths. This method, which is still being applied in relation to George, was that of hushing up …. People do not argue with the teaching of George, they simply do not know it.” John Dewey fervently stressed the originality of George’s work, stating that, “Henry George is one of a small number of definitely original social philosophers that the world has produced,” and “It would require less than the fingers of the two hands to enumerate those who, from Plato down, rank with Henry George among the world’s social philosophers.” And Bernard Shaw, in a letter to my mother, Anna George, years later wrote, “Your father found me a literary dilettante and militant rationalist in religion, and a barren rascal at that. By turning my mind to economics he made a man of me….”Inevitably he was reviled as well as idolized. The men who believed in what he advocated called themselves disciples, and they were in fact nothing less: working to the death, proclaiming, advocating, haranguing, and proselytizing the idea. But it was not implemented by blood, as was communism, and so was not forced on people’s attention. Shortly after George’s death, it dropped out of the political field. Once a badge of honor, the title, “Single Taxer,” came into general disuse. Except in Australia and New Zealand, Taiwan and Hong Kong and scattered cities around the world, his plan of social action has been neglected while those of Marx, Keynes, Galbraith and Friedman have won great attention, and Marx’s has been given partial implementation, for a time, at least, in large areas of the globe. But nothing that has been tried satisfies. We, the people, are locked in a death grapple and nothing our leaders offer, or are willing to offer, mitigates our troubles. George said, “The people must think because the people alone can act.” We have reached the deplorable circumstance where in large measure a very powerful few are in possession of the earth’s resources, the land and its riches and all the franchises and other privileges that yield a return. These positions are maintained virtually without taxation; they are immune to the demands made on others. The very poor, who have nothing, are the object of compulsory charity. And the rest — the workers, the middle-class, the backbone of the country — are made to support the lot by their labor.

We are taxed at every point of our lives, on everything we earn, on everything we save, on much that we inherit, on much that we buy at every stage of the manufacture and on the final purchase. The taxes are punishing, crippling, demoralizing. Also they are, to a great extent, unnecessary. But our system, in which state and federal taxes are interlocked, is deeply entrenched and hard to correct. Moreover, it survives because it is based on bewilderment; it is maintained in a manner so bizarre and intricate that it is impossible for the ordinary citizen to know what he owes his government except with highly paid help. We support a large section of our government (the Internal Revenue Service) to prove that we are breaking our own laws. And we support a large profession (tax lawyers) to protect us from our own employees. College courses are given to explain the tax forms which would otherwise be quite unintelligible. All this is galling and destructive, but it is still, in a measure, superficial. The great sinister fact, the one that we must live with, is that we are yielding up sovereignty. The nation is no longer comprised of the thirteen original states, nor of the thirty-seven younger sister states, but of the real powers: the cartels, the corporations. Owning the bulk of our productive resources, they are the issue of that concentration of ownership that George saw evolving, and warned against. These multinationals are not American any more. Transcending nations, they serve not their country’s interests, but their own. They manipulate our tax policies to help themselves. They determine our statecraft. They are autonomous. They do not need to coin money or raise armies. They use ours. And in opposition rise up the great labor unions. In the meantime, the bureaucracy, both federal and local, supported by the deadly opposing factions, legislate themselves mounting power never originally intended for our government and exert a ubiquitous influence which can be, and often is, corrupt.

I do not wish to be misunderstood as falling into the trap of the socialists and communists who condemn all privately owned business, all factories, all machinery and organizations for producing wealth. There is nothing wrong with private corporations owning the means of producing wealth. Georgists believe in private enterprise, and in its virtues and incentives to produce at maximum efficiency. It is the insidious linking together of special privilege, the unjust outright private ownership of natural or public resources, monopolies, franchises, that produce unfair domination and autocracy. The means of producing wealth differ at the root: some is thieved from the people and some is honestly earned. George differentiated; Marx did not. The consequences of our failure to discern lie at the heart of our trouble. This clown civilization is ours. We chose this of our own free will, in our own free democracy, with all the means to legislate intelligently readily at hand. We chose this because it suited a few people to have us do so. They counted on our mental indolence and we freely and obediently conformed. We chose not to think.

Henry George was a lucid voice, direct and bold, that pointed out basic truths, that cut through the confusion which developed like rot. Each age has known such diseases and each age has gone down for lack of understanding. It is not valid to say that our times are more complex than ages past and therefore the solution must be more complex. The problems are, on the whole, the same. The fact that we now have electricity and computers does not in any way controvert the fact that we can succumb to the injustices that toppled Rome.To avert such a calamity, to eliminate involuntary poverty and unemployment, and to enable each individual to attain his maximum potential, George wrote his extraordinary treatise a hundred years ago. His ideas stand: he who makes should have; he who saves should enjoy; what the community produces belongs to the community for communal uses; and God’s earth, all of it, is the right of the people who inhabit the earth. In the words of Thomas Jefferson, “The earth belongs in usufruct to the living.” This is simple and this is unanswerable. The ramifications may not be simple but they do not alter the fundamental logic. There never has been a time in our history when we have needed so sorely to hear good sense, to learn to define terms exactly, to draw reasonable conclusions. As George said, “The truth that I have tried to make clear will not find easy acceptance. If that could be, it would have been accepted long ago. If that could be, it would never have been obscured.” We are on the brink. It is possible to have another Dark Ages. But in George there is a voice of hope.

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