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The 25 Billion Dollar Secret: The NY Fed, Goldman & The AIG Cover-Up (GS, AIG)
WOW! Everyday brings new revelations. We've been robbed!
excerpt: Now we know: Geithner and Friedman interceded on behalf of Goldman and Wall Street (Merrill received $6.2 billion, Societe General - a whopping $16.5 billion) to deliver a stealth bailout, one that wouldn't need Congressional approval, and even better wouldn't require the counterparties to pay any of it back NOR would it require that they issue shares, warrants or any other instrument to AIG (taxpayers) in return for more than $32 billion in free money.
In any other time, a sitting Treasury Secretary who interceded on behalf of Wall Street to screw taxpayers out of tens of billions, would not be sitting long. But Democrats control both the House and Senate, so there are no investiagtions (Issa's letter aside). Traditional media is content not to rock the boat for President Banks Obama lest they be shunned by their peers, and ultimately, 99% of TV and print journalists don't understand the issues well enough to complain with any conviciton, especially against the merry backdrop of the Dow rising and their deflated 401ks beginning to show life.
They fall prey to fear and weakly submit to duplicitous hyperbole (Paulson threatening martial law and blood in the streets), when they should instead be consulting with the objective, critical voices who foresaw the crisis and were prepared with alternative solutions when it finally came (Stiglitz said instead of TARP, create new banks).
A pox on Congress, President Banks Obama, Bush, Paulson, Friedman, Bernanke and Geithner (plus Greenspan and Rubin). You may have gotten away with it for now, but I would wager there are a few million of us, roughly, who do understand everything that went down last Fall, and we're not amused. We're not just going to let this one pass, and we will not stop filling the vast interweb with the truth (and our distaste and vitriol for your wretched souls) day after day, week after week, all over message boards and finance blogs, until justice is served.
321energy :: The Greatest Transfer of Wealth in History :: Bob Moriarty
Bob Moriarty from 321 Energy provides a brief explanation of the fundamentals - excerpt: I’ve made it clear for a year that I believe we have entered what will be the most serious depression in history. It also will involve the greatest transfer of wealth in history.
There are two basic classes of assets. There are paper assets and real assets. An ounce of gold is a real asset. A copper mine is a real asset. A house is a real asset. An oil field is a real asset.
Over the counter derivatives now total over $596 trillion dollars, (click here [pdf]) ten times the size of the world economy. Those are paper assets, their value is derived from some other asset. That derivative size is what is going to destroy the world’s financial system, it’s all fraud.
A mortgage is a paper asset. A T-Bill or T-Bond is a paper asset. A $100 bill is a paper asset. It’s pretty easy to see that a $500,000 mortgage on a house now worth $250,000 isn’t worth very much. Latest figures show 9.6 million homes in the US have negative equity. How many of those loans are going to be paid back?
According to an ex-Fed Director, both Fannie Mae and Freddie Mac are bankrupt. They were leveraged 65-1. For those comforted by the thought of the FDIC bailing you out should the banking system fail entirely, you need to realize the FDIC is leveraged at 130-1. We are told that the collapse of Washington Mutual alone could bankrupt the FDIC.
In a depression, no real assets appear or disappear. Paper assets, on the other hand, turn to vapor. But the ownership of real assets will change as the real assets move from weak hands into strong hands.
Fears of a New Bubble as Cash Pours In - WSJ.com
Those bastard banks have taken over $2 Trillion from the taxpayers, and are using this cash to invest in emerging markets instead of the USA. The Feds are providing interest free money to central banks, which then are used to invest in emerging economies. The bankers get the profits and USA taxpayers get stuck with the cost.
<br><br>There is no possible upside for USA taxpayers unless of course you agree with Obama that the USA standard of living and extraordinary economic prosperity must be lowered before global economic equality can be achieved. This isn't just about greedy bankers and self interested international corporations. Wealth redistribution is now the official policy of our government. And the Federal Reserve is carrying it out with unexpected zeal.
<br><br>The numbers are coming in. The facts are on the table. The USA is being gutted. The surprise here is that the redistribution of wealth is not from rich Americans to poor Americans. The transfer of wealth is from all Americans, including the yet to be born, to the emerging economies of the world.
<br><br>excerpt: Asian stock prices are shooting up, in part due to low interest rates in the U.S. Investors looking for higher yields are borrowing in U.S. dollars and then pouring that money "into countries that are growing more rapidly," said Stephen Cecchetti, chief economist at the Bank for International Settlements, the central banks' central bank, which warned early of the last asset bubble and is beginning to do so again. "That runs the risk of creating property and equity booms in those countries."<br><br>
\n\nAbout $53 billion has gone into emerging-market stock funds this year, according to data collector EPFR Global. Through Monday's trading, the broad MSCI Barra Emerging Markets Index this year was up 60.7%. Brazil was up 100%, and Indonesia had gains of 102.7%. Over the same period, the Dow Jones Industrial Average was up 11.5%.
If You Are Known by the Company You Keep, What do Obama’s Associates Say About Him? | Personal Liberty Digest
A compiled list briefly profiling Obama's most important associations. Most of whom are radical Marxists, racists and social revolutionaries hating Christians, Jews, and the ordered liberty guaranteed by our Constitution. The list includes William Ayers, Carol Browner, Frank Marshall Davis, Anita Dunn, Dr. Eziekiel Emanuel, Rahm Emanuel, Chai Feldblum, Patrick Gaspard, Eric Holder, John Holdren, Valerie Jarret, Kevin Jennings, Van Jones, Mark Lloyd, Cecelia Munoz, Cass Sunstein, and uber racist Jeremiah Wright. Good cheat sheet for future reference.
American Thinker: Sarah Palin's Declaration of Independence
A declaration of War on the status quo ..... Excellent point-by-point summary of what has to be done to restore American liberty and prosperity, and the important role Sarah Palin can play.
This article presents a conservative manifesto describing wha thas to be done to save America. The points are absolutely excellent.
Excerpt: Mrs. Palin, you are now free of the Republican Party. The Party needs you more than you need it. To say that the Republican Party, on its own, has a charismatic void is a vast understatement. You are now free to wage all out war on the status quo. More importantly you are free to fashion a Reagan-esque Conservative alliance on your terms.
At the risk of being presumptuous, I would suggest the following lines of attack for your war against the Democrats and the Obama/ Pelosi / Frank/ Dodd Economy. Free market capitalism must be emphasized as our only true hope for recovery -- not the crony capitalism of the Democrats.....
Points include Energy Policy, Term Limit Congress, Repeal of government over-regulation, Taxes, the Judiciary, Border Protection, Abortion, Foreign Policy, and Dick "the Churchillian" Cheney
Parsing the Health Reform Arguments - WSJ.com
An absolute must read By GEORGE NEWMAN. Simply precious! Every American should read this before buying into the load of bull crap pouring out of the socialists mouth.
Excerpt: The health-care debate continues. We have now heard from nearly all the politicians, experts and interested parties: doctors, drug makers, hospitals, insurance companies, even constitutional lawyers (though not, significantly, from trial lawyers, who know full well "change" is not coming to their practices). Here is how one humble economist sees some of the main arguments, which I have paraphrased below:
Financial Rescue Nears GDP as Pledges Top $12.8 Trillion (Update1) - Bloomberg.com
The U.S. government and the Federal Reserve have spent, lent or committed $12.8 trillion, an amount that approaches the value of everything produced in the country last year, to stem the longest recession since the 1930s.
this article features a complete break down of where the money went!!!!
New pledges from the Fed, the Treasury Department and the Federal Deposit Insurance Corp. include $1 trillion for the Public-Private Investment Program, designed to help investors buy distressed loans and other assets from U.S. banks. The money works out to $42,105 for every man, woman and child in the U.S. and 14 times the $899.8 billion of currency in circulation. The nation’s gross domestic product was $14.2 trillion in 2008.
Will The Dollar Standard Collapse?
The Dollar Crisis
Quick Synopsis:
* Abandoning the gold standard in 1971 has resulted in large global trade imbalances and a massive buildup of foreign currency reserves
* These trade imbalances and buildup of foreign reserves have resulted in frequent booms and busts since 1971
* The Japanese bust of 1989, the Asian economic crisis of 1997, and the current US credit market collapse have resulted from the post-1971 paper money monetary system
* Abandoning the gold standard has gradually resulted in a very overvalued US dollar, and that the dollar is headed for disaster
* “The dollar standard is inherently flawed and increasingly unstable. Its collapse will be the most important economic event of the 21st century.”
-
Before I begin, I’ll make a prediction, since I’m an investor and my job is to predict. I increasingly believe that the dollar will collapse, and its ramifications could be as violent as when the credit markets cracked in July 2007. Currency collapses are nothing new, just as the bursting of a credit market bubble was nothing new. A dollar collapse could very well lead to carnage in domestic asset markets, whether it be the stock market, bond market, etc. Also, US imports and the overvalued dollar are fueling many of the export-oriented economies abroad, so a dollar collapse could wreak havoc on foreign asset markets as well. And once it happens, we’re going to view the collapse of the dollar as an obvious event that we should have long seen coming. Just as we now view the subprime wreckage and bursting of the real estate bubble as an event we should have easily predicted.
The problem is timing. Does the dollar collapse in 2009, or 2015? And is it a slow depreciation, or a sudden 50% fall? Those are tougher questions. Richard Duncan predicted the dollar’s demise in 2002. His error of timing discredited an otherwise brilliant book. -
In a sentence, “The Dollar Crisis” is about how the world changed in 1971. That was when Richard Nixon dropped the gold standard (or its close cousin, the Bretton Woods international monetary system). Here’s the youtube video: Youtube Bretton Woods. The end of the gold standard ushered in a new era of large trade imbalances and the buildup of foreign currency reserves, and these trade imbalances and large foreign currency reserves have had significant impacts on the global economy that many people don’t realize. Huge trade imbalances and large foreign reserves didn’t really exist during the gold standard. During the gold standard, a country’s money supply was determined by the amount of gold it had. Banks’ reserves were either gold or indirectly tied to gold, and so the amount of money they could lend, and that the nation could print, was backed by the nation’s gold reserves. To see the implications of that sort of monetary system on trade imbalances, let’s take a hypothetical United States and China, where the US is buying lots of goods from China. The US gets goods; China gets dollars. China takes its excess dollars, gives them to the US, and gets gold in exchange. The US gold reserves would decline, causing credit contraction in the US. This would lead to recession; prices would adjust downwards; and falling prices would enhance the trade competitiveness of the US. The US would stop exporting so many goods from China as China’s costs of production begin rising relative to the United States’. The US would stop being a net importer; gold would flow back in; and equilibrium on the balance of payments would be re-established.
Under the gold standard, trade imbalances were unsustainable and self-correcting. - 1 more annotations...
Easy Credit and the Depression - Judge Posner @WSJ.com
What caused this recession? We still don't have a simple explanation. Such is the uncertainty sapping the country's confidence that in a recent Rasmussen Reports poll only 53% of Americans said they prefer capitalism to socialism; 27% were unsure and 20% preferred socialism.
Before seeking political asylum in free-market Hong Kong, consider reading a new book that critiques what went wrong with capitalism, written in order to save it. Judge Richard Posner's "A Failure of Capitalism: The Crisis of '08 and the Descent into Depression" is noteworthy. As a longtime University of Chicago professor and father of the free-market-based law-and-economics movement, Judge Posner makes an unlikely critic of capitalism. But as author of some 40 books and as the most frequently cited federal appeals court jurist, he is also one of our most original and clearheaded thinkers.
Who's to blame and who's responsible for the recession? Judge Posner, who calls it a depression, distinguishes between the roles played by government and the private sector. "Although financiers bear the primary responsibility for the depression," he writes, "I do not think they can be blamed for it -- implying moral censure -- any more than one can blame a lion for eating a zebra. Capitalism is Darwinian." A pragmatic explanation for behavior that looks irrational in retrospect shows that it was logical, based on incentives at the time. Blame lies elsewhere: "The responsibility for building the fences that prevent an economic collapse as a result of risky lending devolves on the government."
The Quiet Coup - The Atlantic (May 2009) Must read!
The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.
We are screwed! US Debt To GDP: The Numbers are stunning!
Government debt has remained at a relatively consistent percentage of GDP for the past 50 years, but the debt of companies, consumers, and financial businesses has soared. The problem now is that the value of the assets that serve as collateral for that debt (houses, stocks, cars, etc.) is plummeting. Thus, the percentage of debt to equity is increasing, and in many areas, the equity is being wiped out.
Is This the End of Capitalism? Hardly, but it's a great excuse for the antiglobalization crowd
Daniel Henninger Says Blaming Capitalism for the Crisis Overlooks the Housing Bubble - WSJ.com:
"Heads of state, perplexed finance ministers, inflated retinues and journalists from 20 nations arrived in London yesterday to address "the greatest financial crisis since the Depression." By 4 p.m. London time today they will hold a press conference and go home."
"Beware of real-estate salesmen.
The housing bubble that floated into view in 2007 is turning into the blob that ate the world. Real-estate mortgages and their derivative securities are a significant problem. That discrete problem, however, has been pumped up to an historic "crisis of capitalism."
Capitalism didn't tank the U.S. economy. Overbuilt housing did. Overbuilt housing tanked the economies of the U.K. and Ireland and Spain. If little else, we've learned that artificially cheap housing sets loose limitless moral hazard."
"In a normal environment, the problems revealed by the crisis in mortgage finance would produce fixes relevant to the problem, such as resetting the ratios of assets to capital for banks and hedge funds, or telling the gnomes of finance to rethink mark-to-market and the uptick rule. More energetic reformers might consider Gary Becker's suggestion that as financial institutions expand in size, their capital requirements tighten, so that compulsive eaters like Citigroup can fit inside their capital base."
<b>"Two signal events in history are shaping the politics of the current economic crisis: the Great Depression and the Reagan presidency (and in Europe, Thatcherism)."
"The Depression put in motion an historic tension between public and private sectors over who sets a nation's course. After 50 years of public dominance, Reagan's presidency tipped the scales back toward private enterprise. The economic life of the ensuing 35 years became "the American model." Every waking hour of this economically liberal era, the losing side has wanted to tip the balance back toward public-sector power. The opportunity to achieve that goal fin
George Soros, the man who broke the Bank, sees a global meltdown - Times Online
The UK Times has a lengthy interview with George Soros, the primary financier and backer of Obama. His hatred of American Capitalism is legendary, but no one really knows what Soros-Socialism is going to be like? Anyone looking for the Obama puppet master need look no further than Soros. The question now however is that of understanding his game plan. Soros' skill has been to predict moments of seismic change by identifying a disjunction between perception and reality.
RELATED LINKS
Soros hints that pound has hit the bottom
George Soros: Crunch will bite deeper in UK
George Soros
When everyone else was convinced that the markets would automatically correct themselves, the 78-year-old “old fogey”, as he calls himself, was one of the few warning of recession. He put all his chips on “the Barack guy” early on when all around him were still gunning for Hillary Clinton. It’s almost as if he has been waiting for the Great Recession for the past ten years. When we ask whether he prefers booms or busts, he replies: “I have to admit that actually I flourish, I’m more stimulated by the bust.”
This recession, he explains, is a “once-in-a-lifetime event”, particularly in Britain. “This is a crisis unlike any other. It’s a total collapse of the financial system with tremendous implications for everyday life. On previous occasions when you had a crisis that was threatening the system the authorities intervened and did whatever was necessary to protect the system. This time they failed.”
Bush Deficit vs. Obama Deficit in Pictures » The Heritage Foundry
President Barack Obama has repeatedly claimed that his budget would cut the deficit by half by the end of his term. But as Heritage analyst Brian Riedl has pointed out, given that Obama has already helped quadruple the deficit with his stimulus package, pledging to halve it by 2013 is hardly ambitious. The Washington Post has a great graphic which helps put President Obama’s budget deficits in context of President Bush’s.
What’s driving Obama’s unprecedented massive deficits? Spending. Riedl details:
Obama - Soros Bailout of PIMCO and the Big Banks
Interfluidity has some very "Dark musings" about Treasury Sec Geithner's plan to bailout the big banks with trillions of dollars of taxpayer funds. The plan is "enronic" in that it proposes to use taxpayer funds to <i>create a market</i> for the toxic assets threatening to take down the big banks. The banks need to dump these AAA Fannie-Freddie mortgage securities, but the market has factored in a reality roughly discounting the value by 60% to 70%; Housing values having plummeted across the nation. If the Banks were to take the hit, and sell this GSA crap at true market value, they would not only suffer enormous losses for their high risk gambling, bu they would also be taken out of the lending market. Banks regulations require strict ratios between assets and lending funds.<br><br>
So the idea is to have the taxpayers create a toxic asset market enabling banks to dump their crap at above market prices, with taxpayers takign the hit. This hit is masked by a tricky equation; Taxpayers will put up 97% of the funds for the overpriced purchase of crap, with private sector banks, hedge funds, and bond holders contributing 3%. Such a deal! <br><br>
Heads the banks and Hedge funds win; tails the taxpayer loses. And loses to the tune of over $10 Trillion. GSA wonderkinds Fannie and Freddie have put $5 Trillion of securitized mortgages into the secondary money markets. Leverage that out at 40 : 1, and you have a $200 Trillion problem. Hummm, $10 Trillion looks cheap.
<i>"....I am filled with despair, not because what we are doing cannot "work", but because it is too unjust. This is not my country.
The news of today is the Geithner plan. I think this plan might work very well in terms of repairing bank balance sheets...."</i>
Of course the whole notion of repairing bank balance sheet is a lie and misdirection. The balance sheets we should want to see repaired are household balance sheets. Banks have failed us profoundly. We want them reorganized, not repaired. A world in which the banks are all fixed but
Bailouts Of Bondholders Will Sock Taxpayers With $10-$14 Trillion Loss
The holders [of this debt] are not just banks, but insurance companies, pension funds, foreign lenders, and others. Even so, there is no way to prevent huge, ongoing losses, because the cash flows off of these assets are not sufficient to service the debt. The only question is whether the bondholders appropriately bear those losses, or whether the public bears them inappropriately. A continued policy of protecting all of these bondholders would eventually require U.S. citizens to be put on the hook for something on the order of $10-14 trillion. We are nowhere near the end of this process.
We simply cannot make these bad investments whole unless we are willing to hand the next 10-20 years of U.S. private savings over to the bondholders who financed reckless lending.
The Greatest Heist In History
The new Obama administration needs to understand that greatest heist in history is underway – at least $1 trillion is being transferred from taxpayers to debt holders of failed financial institutions – and take steps to stop it before taxpayers suffer further unnecessary losses.
Whitney Tilson explains the financial crisis and makes his recommendation. Rather than sticking it to the taxpayers, these insolvent banks should be put into conservatorship:
"..... So what’s a better solution? I’m not arguing that BofA (or Citi or WaMu or Fannie or Freddie or AIG or Bear) should have been allowed to go bankrupt – we all saw the chaos that ensued when Lehman went bankrupt. Rather, if a company blows up (and can’t find a buyer), the following things should happen:
1) The government seizes it and puts it into conservatorship (as Fannie, Freddie, IndyMac and AIG effectively were, to one degree or another);
2) Equity is wiped out (again, as with Fannie, Freddie, IndyMac and AIG);
3) However, unlike Fannie, Freddie, IndyMac and AIG (and certainly Citi and BofA), everything in the capital structure except maybe the senior debt is at risk and absorbs losses as they are realized; the government would only provide a backstop above a certain level. This is what happened in the RTC bailout;
4) Over time, in conservatorship, while the businesses continue to operate (no mass layoffs, distressed sales, etc.), the government disposes of the companies in a variety of ways (just as the RTC did via runoff, selling the entire company or piece-by-piece, etc.), depending on the circumstances (as it’s doing with AIG and IndyMac, for example – these are good examples, except that the debt holders were protected). ......"
The Dark Side of the Socialist Joker: "Don't Just Take Their Wealth, Destroy it!"
Business Insiders John Carney describes what happened at evil doer, AIG. In describing the black hole that is swallowing up endless volumes of taxpayer wealth, Carney points out that AIG is a channel for redistributing American wealth to International Bankers.
<i>".... In last summer’s blockbuster “The Dark Knight,” the Joker invites one of the top crime lords of Gotham City to the rundown warehouse where he has stashed his ill-gotten gains. The mobster stares in awe at the huge stack of money the arch-criminal has amassed. But a moment later, his awe turns to horror as the Joker sets the money aflame.
“This town deserves a better class of criminal,” he explains.
The exchange reveals the deep evil of the Joker. Unlike a common criminal, he doesn’t just want to steal money from others. He wants to destroy their wealth....... At the heart of AIG’s problems is a financial product called a credit default swap, which is really just an insurance contract on debt. If a borrower failed to pay off a loan fully, an investor protected by a credit default swap would be able to collect the outstanding amount from the insurance company. The idea was that credit default swaps would reduce the risk to any investor who bought bonds. In the best of worlds, they would reduce risk throughout the financial system by spreading out the costs of defaults. But that’s not how things worked out.
Instead, credit default swaps came to be used by banks in a way that no one anticipated—to avoid banking regulations. And AIG decided to get into the business of enabling this scheme...... "</i>
Of course he's a socialist! : American Thinker
Of course he's a socialist. The real question is, how does he feel about America? His favorite Sunday preacher for the last twenty years is simply obsessed with a frothing hatred for this country. His good buddies Bill and Bernardine have been expressing their rage loud and proud since the Sixties. As president, O is trying to put Chas Freeman in charge of the National Intelligence Estimates, a man who is neither competent, nor temperamentally suited, nor emotionally able to restrain his animosity against American Jews who love Israel just as they love America (... because, for one thing, they love democracy, and can recognize fascists even in drag.)
Newsweek tells us we're all socialists now. That's an obvious lie, because the Newsweek socialists like Evan Thomas suffer from regular nightmares that American conservatives will find another Ronald Reagan. But that raised the question of socialism. Obama danced away from it, of course, when a NYT reporter actually asked him. Whoooo me?
Socialism is internationalist, and that means a genuine dual loyalty for a president of the United States. Marxists are convinced there is an inevitable contradiction between love of country and love of humanity. That's why it's called the Socialist International, and why the anthem is the Internationale. They haven't made a secret of it. Internationalist fervor controls their actions, including very successful efforts to whip up black feelings against whites, women against men, and everybody against capitalism, no matter how many billions of people it has raised out of poverty. The whole point about the global warming scam is to empower the internationalist Ruling Class.
The Obama Rosetta Stone: Retribution against capitalist achievers - WSJ.com
Mayor Bloomberg should read the Obama budget chapter, "Inheriting a Legacy of Misplaced Priorities." The economy as most people understand it was a second-order concern of the stimulus strategy. The primary goal is a massive re-flowing of "wealth" from the top toward the bottom, to stop the moral failure they see in the budget's "Top One Percent of Earners" chart.
The White House says its goal is simple "fairness." That may be, as they understand fairness. But Figure 9 makes it clear that for the top earners, there will be blood. This presidency is going to be an act of retribution. In the words of the third book from Mr. Obama, "it is our duty to change it."
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