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Wall Street crisis: Is this the death knell for derivatives
#1
http://www.guardian.co.uk/business/2008 ... wallstreet

Quote:On page 62 of last year's accounts, under the heading "off balance sheet arrangements" Lehman had derivative contracts with a face value of $738bn
Never invite a Yoda to a frog leg dinner.
Go ahead invite Yoda to a Frog leg dinner
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#2
AUG. 30, 2007

NEW YORK, Aug 30 (Reuters) - Lehman Brothers has hired Jeb Bush, brother of the President of the United States, as an advisor to its private equity business, a source familiar with the situation said.

Lehman hired another relative of U.S. President George W. Bush last year--George Walker, a second cousin, who heads up the bank's asset management business.

Jeb Bush is the former governor of Florida.

Lehman Brothers declined to comment.

(Reporting by Dan Wilchins)

http://www.reuters.com/article/fundsFun ... 2620070830
Never invite a Yoda to a frog leg dinner.
Go ahead invite Yoda to a Frog leg dinner
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#3
http://www.stargatezero.com/forum/index ... cseen.html


(08-10-2008, 10:12 AM)Summer Wine link Wrote:http://whatreallyhappened.com/WRHARTICL ... oodoo.html

The United States Is In Deep Doodoo!

United States Congressional Record - March 17, 1993 - Vol. #33, page H-1303 - Speaker- Rep. James Traficant, Jr. (Ohio) addressing the House:

"Mr. Speaker, we are here now in chapter 11. Members of Congress are official trustees presiding over the greatest reorganization of any Bankrupt entity in world history, the U.S. Government. We are setting forth hopefully, a blueprint for our future. There are some who say it is a coroner's report that will lead to our demise."

And by the way this Representative is in prison (for taking bribes, corruption, etc, you know common everyday business for our government representatives, but interesting story of Mr. Trafficant)
http://www.freetraficant.com/

And check out the date of this speech.

Now start connecting some dots.
Never invite a Yoda to a frog leg dinner.
Go ahead invite Yoda to a Frog leg dinner
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#4
http://www.newswithviews.com/Devvy/kidd392.htm

FREDDIE, FANNIE, FASCISM: WHERE WAS CONGRESS




By: Devvy
September 15, 2008

© 2008 - NewsWithViews.com



"I told all four that there were going to be some times where we don't agree with each other. But that's OK. If this were a dictatorship, it'd be a heck of a lot easier, just so long as I'm the dictator." Gov. George W. Bush (R-TX), President-elect, December 18, 2000

Fascism: A philosophy or system of government that is marked by stringent social and economic control, a strong centralized government usually headed by a dictator, and often a policy of belligerent nationalism; oppressive or dictatorial control.

A little over a week ago, these united States of America took another gigantic step towards Fascism when the U.S. Department of Treasury and the unconstitutional, privately owned "Federal" Reserve" bailed out two more private corporations ostensibly to calm fears in the market:

"Fannie Mae and Freddie Mac play a central role in our housing finance system and must continue to do so in their current form as shareholder-owned companies," Paulson said in a statement. "Their support for the housing market is particularly important as we work through the current housing correction."[1]

This would be accomplished in a plan Il Duce would applaud:

"First, as a liquidity backstop, the plan includes a temporary increase in the line of credit the GSEs have with Treasury. Treasury would determine the terms and conditions for accessing the line of credit and the amount to be drawn," Paulson said. "Second, to ensure the GSEs have access to sufficient capital to continue to serve their mission, the plan includes temporary authority for Treasury to purchase equity in either of the two GSEs if needed."[1]

Rounding out the stringent economic control is 'a strong centralized government' awash in agencies with powers never intended when the U.S. Constitution was ratified:

"The ousted chief executives of Fannie Mae and Freddie Mac have the potential to exit with golden parachutes, but the government could cut the strings. The new regulatory agency that seized control of the mortgage-funding giants and forced out their chief executives Sunday has broad but untested power to prohibit severance payments. Under federal law, it could do so on a variety of grounds, including if it found that the former executives were responsible for the companies' financial troubles.

"We are working through the compensation issues and have nothing to say at this time," Federal Housing Finance Agency spokeswoman Corinne Russell said by e-mail yesterday."[2]

Compensation for CEOs who ran their corporations into the ground will be rewarded by a massive injection from the sweat off your back despite the rhetoric:

"The severance packages could be worth as much as $14.9 million for Richard F. Syron, the former Freddie Mac chairman and chief executive, and as much as $9.8 million for Daniel H. Mudd, the former Fannie Mae chief executive, said David M. Schmidt, a senior consultant for the executive pay consultancy James F. Reda & Associates."[2]

Is this good for America? Not according to some of the finest minds in this country who truly understand the danger of what just happened:

"In the latest example of financial market madness, the recent government “bailout” of Freddie Mac and Fannie Mae has perversely resulted in a sharp rise in the value of the U.S. dollar. If the markets were functioning rationally, the transference of staggering new liabilities to the U.S. Treasury would have been immediately seen as catastrophic for the dollar. Instead the markets have ignored the obviously negative long-term implications and have remained fixated my worst fears, and increase the chances for a hyper-inflationary outcome....

"Had the government done the right thing and not guaranteed Freddie and Fannie debt, I believe we would now be experiencing an outright financial crisis. The dollar would be falling sharply along with real estate prices, the government has merely delayed the crisis. The borrowed time will cost us dearly, as the day of reckoning will now likely involve much steeper losses for our currency.

"The Freddie and Fannie takeover does nothing to address the underlying problems that forced the companies into bankruptcy in the first place. All of the bad mortgage debt still exists. In fact, based on this bailout, there will be trillions more in bad mortgages insured over the next few years. The only thing that has changed is how the losses will be distributed. Instead of falling solely on bond holders, who had chosen to invest in mortgage debt, they will now be dispersed among U.S. taxpayers and all holders of U.S. dollars, who made no such choices."[3]

The jackals feeding on the American people and the fruits of their labor do not care and neither does Congress. On September 28, 2004, I wrote yet another column warning Americans Congress would do nothing; many more were to follow. On March 17, 2005, Dr. Edwin Vieria, began writing his brilliant analysis on the coming financial meltdown and the only real solutions. And, still, Americans voted back in the same Congress to fix a problem they continue to ignore. Where was Congress ten days ago to stop this lunacy?

Why wasn't Nancy Pelosi standing on the House floor demanding her colleagues halt this latest bail out? Probably because her colleagues are holding paper from those two corporations and to deflect the blame from this House of Incompetents:

"According to the Center for Responsive Politics, 28 lawmakers had between $598,100 and $1.7 million of their own money invested in the two companies last year. Of them, 12 members of Congress owned between $60,800 and $246,700 of stock in the two companies, which is practically worthless now that the government has seized Fannie Mae and Freddie Mac to keep them afloat as more of their customers in 2007, worth between $537,400 and $1.5 million. (Lawmakers disclose their finances in ranges, annually, making it difficult to determine their assets' precise values.) Rep. Mary Bono (R-Calif.) held bonds in the companies worth between $126,050 and $365,000, making her investments in Freddie Mac and Fannie Mae more valuable than those of any other member of congress.

"Four members of either the House Financial Services Committee or the Senate Banking, Housing and Urban Affairs Committee were invested in these companies: Rep. Carolyn McCarthy (D-N.Y.),who held $32,216 in bonds; Sen. Mike Enzi (R-Wyo.), who held at least $2,002 in bonds; Sen. Charles Schumer (D-N.Y.), with at least $2,002 in stocks; and Rep. Ron Klein (D-Fla.), who held at least $1,001 in bonds.

"Republican presidential candidate John McCain, who called the federal bailout "outrageous" (but necessary), also reported having up to $10,000 invested in the two companies--up to $9,000 worth in bonds and up to $1,000 worth of stocks."[4]

Just like the 151 members of Congress who directly benefit financially from the war in Iraq; click here. For that matter, where was Barack Hussein Obama, aka Barry Soetoro, aka Barry Obama, aka Barack Dunham, and aka Barry Dunham or Juan McCain? Dr. Edwin Vieira comments:

"So far, whatever remedy the Administration, McCain, or Obama has proposed has presumed that the General Government in Washington and its pet banks in the Federal Reserve system must keep America's present hypertrophic financial bubble expanding indefinitely, or at least prevent it from significantly contracting in the near future. So they advocate such policies as "bail outs" of both private and public enterprises (Bear Stearns, Fannie Mae, and Freddie Mac being the most prominent so far) and pitiful "stimulus packages" of some "free" cash for average Americans, all effected through the injection of new "liquidity" into the markets in the form of Federal Reserve's endless inflation of the supplies of currency and credit..

"....That candidates for the highest office in the land - not to mention the incumbent - would be making reform of the Federal Reserve System the central issue in the presidential campaign and the most important task to how the Federal Reserve operates; why it endangers America's economic, political and social stability; and what steps must be taken gradually and safely to return this country permanently to a constitutional monetary system based upon gold and silver, which will prevent public officials and bankers thereafter from redistributing wealth from society to special interest groups through manipulations of currency and credit.
"Unfortunately, that these events are not taking place proves that most top-ranking public officials and politicians are neither patriotic nor competent."[5]

The nonsense being fed to the American people by Obama and McCain is little better than sawdust blowing in the wind. Obama is a Marxist who wants to strip you of every last penny in your wallet, and McCain, in his own words, knows nothing about the economy; see short video. Experts who deal in the markets are finally uttering the dreaded word:

"The end result of the global economic slowdown may be the U.S. announcing national bankruptcy as the government cannot afford the bailouts that it promised and the market will not bail out the government, Martin Hennecke, senior manager of private clients at Tyche, told CNBC on Thursday. "We expect a depression in the United States. We expect a depression, very possibly, also in Europe," Hennecke said on "Worldwide Exchange."[6]

This toxic path of bailing out private corporations took a foot hold back in 1983 with Chrysler and the camel's backside is now in the crowded tent. It's odd, however, that Congress and the Department of Treasury pick and choose which private corporations they wish to keep from the frying pan. Two major industries, automobile and mortgage lending, got the big jolt, so why didn't Congress and the FED jump to save ENRON, one of the biggest energy concerns in America at the time? Actually, the 7th largest corporation with a market capitalization of nearly $60 billion dollars. Didn't those ENRON employees who were sold "buy our stock, it's solid!" by Ken Lay, matter to Congress when they lost everything - many at retirement age left with nothing? (See links below) Why wasn't ENRON "back stopped"?

The layoffs will continue while Congress votes to bring in another 550,000 cheap foreign workers! The economy will continue to stagnate because as the American people are squeezed to meet just basics like food, clothing and a roof over their heads, the less disposable income they have to inject into the economy. The "Ho, ho, ho kiss under the mistletoe" retailers won't see many gifts under their tree this year. Increasing numbers of Americans have lost faith in the system; for tens of millions, their credit is like the Kalahari during a bad rain year. Also, traditionally (no pun intended), the pink slips usually roll out in December. As bankruptcies were already up 29% in a 12-month period by August, how much will those strapped Americans drop to give retailers that all important boost at the end of the year?

A thousand more "economic stimulus packages" will do nothing; it's akin the emptying the ocean with a teaspoon. This past wave of foreclosures will birth new ones and Americans will continue to sink into quicksand while Obama and McCain blather on with their gibberish. Congress will continue spending when the people's purse is overdrawn $9.6 TRILLION dollars.

For those of you who might have missed Carolyn Lochhead's September 12, 2004, column, Speeches Ignore Impending U.S. Debt Disaster, you will see nothing has changed this election cycle with the two front runners and their VP picks as they ignore the warnings from four years ago.

"Laurence Kotlikoff, Economics Chairman at Boston University, who has written abundantly on this subject, offers up a shocking response on how to close a $51 trillion dollar fiscal gap: "To give you idea how big the problem is, you'd have to have an immediate and permanent 78 percent hike in the federal income tax." More than double the payroll tax, immediately and forever, from 15.3 percent of wages to nearly 32 percent; Raise income taxes by two thirds (roughly 78%), immediately and forever; Cut Social Security and Medicare benefits by 45 percent, immediately and forever;"[7]

I must repeat myself in hopes that new readers will grasp how dire the situation is: Every penny spent to bail out these private corporations has to be borrowed since there is no money in the treasury. How do you write a $100 million dollar check to Freddie and Fannie when your bank account is already overdrawn $9.6 TRILLION dollars? The hundreds of thousands of Americans who are the beneficiaries of these bail outs, mortgage freezing and other madness by Congress for votes, simply no longer care about the constitutional issues. They're desperate and want only to be saved.

What private corporation will be next? How about I start a corporation which sells diapers. I mean, the country can't do without them, just like we need automobiles and mortgage lenders. Officers of the Corporation follow my lead making stupid business decisions while paying ourselves a king's ranson in salary and over extending ourselves, until, uh, oh, we're in trouble. I call Helicopter Ben Bernanke and he bails out my company by stealing from you. See what I mean? At some point the whole thing blows just like a balloon with too much air.

Mega-billionaire, world government advocate, George Soros, is busy buying gold. Why? When he's not busy buying Democrats, his knowledge of financial markets is legendary; synopsis at bottom. If you are as concerned as you should be, I recommend you call Eric at El Dorado Gold and talk to him. Learn why gold is the only refuge as a hedge against the hyper inflation that can eat a country alive fast as a falling star. How safe is your 401(k)? Oh, yes, there are supposed to be safeguards in place. Are you sure? With all these corporations fudging their numbers until it's too late, Americans would do well to question now. What about pension plans? A very troubling post appeared on Le Metropole Cafe a few days ago:

"Bill - a friend of mines girlfriend works a N.Y. trading desk for Lehman - she tells my friend today that $8B has been evaporated from the employees pension fund and that the company has told office staff that an announcement will be forthcoming before the Asian markets open this Monday."[8]

I shudder to think this is true, but I suppose we'll find out soon enough. It appears others are also concerned about pension funds:

"Now we know. The giant black hole of derivatives at JPM is about to become the size of Jupiter. With the utter failure of Fannie and Freddie (a culmination of what I predicted 12 years ago) Fannie and Freddie’s massive derivatives portfolios can now be hidden from public scrutiny. These trillions of derivatives, which in likelihood have already failed, can now be whitewashed with the able assistance of the US taxpayer. Also the true values of their mortgage portfolios gets deep-sixed. This is no doubt the single largest financial failure in the history of the world. The Fed had every reason to previously discontinue M-3 reporting.

Can you imagine what is about to happen to the dollar supply once this catastrophe starts getting paid for? The derivatives may now become hidden from view, but the inflationary implications will become VERY evident. Another ominous problem facing FNM and FRE is a collapse in their pension plans and retirement funds. Retirees and current employees holding FNM/FRE stock will get wiped out, however a pension fund collapse would mean open revolt. This is another side-bailout I see coming."[9]



I encourage you to read the link one below (Warning) because the worst is yet to come and just like the top sand in the hour glass, it will come.

Footnotes:
Never invite a Yoda to a frog leg dinner.
Go ahead invite Yoda to a Frog leg dinner
Reply
#5
http://www.lewrockwell.com/rockwell/imp ... money.html

The Social Imperative of Sound Money

by Llewellyn H. Rockwell, Jr.

This past week, the government announced that it would take Freddie Mac and Fannie Mae, the mortgage giants, under conservatorship, which is a nice way of saying that they will be nationalized.

We don't use the word nationalize any more. We can try an experiment and read the new term "conservatorship" back into history. In fact, we might say that Stalin and Lenin put Russia's industries under a kind of conservatorship. Or we might say that Mao pushed a kind of land conservatorship, or that Hitler's policy was one of national conservatorship. Marx's little book could be re-titled: The Conservatorship Manifesto.

You see, the government keeps having to make up new names for these things because the old policies, which were not that different in content, failed so miserably. The old terms become discredited and new terms become necessary, in an effort to fool the public.

It's as if a restaurant served a shrimp dish that gave all the customers food poisoning, and so each night it decides to serve the same shrimp but name the dish something new: crangon cocktail, prawn pasta, scampi salad, or what have you. But no matter what they call it, it is still poison.

Such a restaurant would be out of business in a matter of days. People would not be fooled. But the government gets away with it mainly because we have no real choice about the matter, and because people are predisposed to believe the government far more than they should. It doesn't help that the media are willing to echo the government line on this, adopting every new phrase as if it were the gospel.

Hence the same is true of the word bailout, which you might consider unexceptionally descriptive of this move by the government to protect Freddie and Fannie from further losses. No, that word is not allowed either. President Bush told Fox the other day, ''I wouldn't call it a bailout. I'd call it a stabilization.''

We will soon put out a new edition of Mises's 1922 book Socialism. Maybe to keep up with the time we should call it Stabilizing Conservatorship.

What I also find striking is the way in which this move was announced. Let me read to you from the New York Times: "The Bush administration seized control of the nation’s two largest mortgage finance companies on Sunday…. It could become one of the most expensive financial bailouts in American history."

Even the most sophisticated observers of our present scene had to blink their eyes in reading such words. Without debate, without votes, without anything other than an executive fiat, the White House just decided, on its own, to seize the mortgage market. Harry Truman, who seized the steel industry, would be proud. Actually, this is an action to excuse dictators the world over, past, present, and future.

This sort of thing makes a mockery of the Constitution and the very idea of freedom and the free market, to say nothing of the idea that we have a limited government. What's more, if we can believe press reports, President Bush had very little to do with the decision. It was the work of Henry Paulson, the secretary of the Treasury and former head of Goldman Sachs, working on behalf of the nation's most well-connected financial elites. Nobody elected this guy. Most Americans don't even know his name.

And look at how he throws around trillions of our money. The New York Times says that this is expensive. That's one way to put it. It makes the S&L bailout look like the warm-up.

Freddie and Fannie carry about $5.3 trillion in mortgage commitments and another $2.4 trillion in financial exposure. The total cost of this operation is unknown; it could reach to $2 trillion, with untold amounts of future exposure.

These two New Deal institutions were founded to speed up the home ownership process for people that banks would otherwise consider unqualified. In time, under LBJ and Nixon, they were given legal permission to expand without limit, in the name of privatization, of all things.

The motive was a classic bipartisan effort: universal home ownership. The left favored the redistribution. The right favored the supposed moral virtue associated with the nuclear family and its suburban abode. Thus was born the greatest wealth transfer in American history outside Social Security and the warfare state.

In a free market with sound money, borrowing is connected with the ability to pay. At first, this is only available to the rich. As prosperity spreads, so does credit worthiness. Any government intervention designed to inject steroids in this process is going to end in what Rothbard called a cluster of errors.

It is completely disingenuous that so many people are today decrying the banking system's failure to discriminate between those who should and should not be carrying a mortgage. The banking system in a free market handles this just fine. Ferreting out the difference between those who can handle loans and those who cannot is a main job of the competitive system. The market precisely calibrates this. If one lender fails in its assessments of borrowers, another is there to correct the problem.

If you rush the process of prosperity, and insist that everyone who wants a loan should get one, you set up a situation in which there will be problems down the line. That is precisely what the regime has done. It created Freddie and Fannie to subsidize loans. It engaged in a phony privatization that secretly socialized losses. The legal status of these privately owned, publicly traded, and government-protected agencies was always unclear, but the markets had long assumed that they would be bailed out.

There was a moral hazard at the heart of this policy. But the real point is that the free market judgment about who should get what was being over-ridden. Surely, that is not a problem when it comes to promoting the alleged American dream! In fact, we are paying for this mistake a half century after the policy became a national priority. As the evangelical ministers like to say, the wheels of justice grind slowly, but they grind mighty fine.

There is only one problem with applying the principle to this case. There will be no justice. If justice prevailed, the losses would be borne directly by those responsible.

If we pursued a free-market policy from here on, the answer would not be complicated. The assets and liabilities of Freddie Mac and Fannie Mae would be auctioned today in the free market. It's true that many loans would be defaulted on.

What level of crisis would be precipitated by such a genuine privatization policy? It's true that the press would be screaming bloody murder, and the big players in finance would suffer. But in time, the markets would revalue the resources and an important lesson would be learned. Sound loans would be picked up by financially responsible firms and carried to term. Home values would fall and many people would have to move to cheaper homes. We would then be back on sound footing again.

From an administration that purports to favor free markets, this possible solution was not even considered. Instead, they proclaimed their regrets that they would have to spread the costs of this error over the entire population. Instead of fixing the problem, however, they only worsen it, underscoring the principle that America will not tolerate failure in business, and the bigger the failure, the more likely it is to be bailed out.

Note that this socialistic bailout and nationalization – to use two forbidden words – were enacted by a Republican administration. Isn't it ironic that when you look back at the big upticks in government intervention over the economy, you often find Republicans at the helm.

As for McCain and Palin, they wrote in the Wall Street Journal that this bailout is "sadly necessarily" even as they promise reforms that will "require the highest standards of accounting, reporting and transparency ever demanded in government." Well, here's the thing: no one demands higher standards than the market itself, but you have to turn these institutions over to the market in order to elicit such standards.

Congress's role has been and will be to yammer. Only Ron Paul of Texas will have anything sensible to say about this fiasco. In fact, it was more than five years ago that Ron said the following: "If Fannie and Freddie were not underwritten by the federal government, investors would demand Fannie and Freddie provide assurance that they follow accepted management and accounting practices…. By transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans."

It’s remarkable to observe that hardly anyone dares be against this policy. On the day following the nationalization, a day that will live in infamy, the Wall Street Journal editorialized against the Democrats and their reform efforts, but didn't actually oppose the bailout. The New York Times called it "a reasonable and reassuring move." The Los Angeles Times wrote that the bailout was "inevitable." Steve Forbes in his magazine wrote that "drastic action" had to be taken because a default would "have trigged the worst financial meltdown since the Great Depression."

It's interesting, isn't it, that all these people believe that waving the magic money wand can make reality just go away. That incredible superstition seems to be the official position of the entire US establishment. And we like to flatter ourselves into believing that we live in an age without illusions!

As for those who should know better, Greg Mankiw, author of the leading economics textbook, writes that because "it was likely to happen eventually" it is "better to get on with it." The supposedly free-market economics blog Marginal Revolution warns that without the bailout, "most of the U.S. banking system would be insolvent," failing to point out that a system that needs a bailout with fiat money is already insolvent. Econlog had lots of good thoughts, but didn't actually oppose the bailout.

The Cato Institute agrees that the Treasury had to bail out the mortgage industry because it "was forced to do so," and that Fannie and Freddie are indeed "too big to fail." The Heritage Foundation agrees that it was a "necessary step" and a "vital move toward reform."

Sure, these people have plenty of recommendations about what should have been done in the past, and lots of ideas about what should be done in the future. As for the present, they are ready to propagandize for the largest socialist operation in American history. In all of these latter cases, we are looking not at a problem of economic education but rather the courage to stand up to the state when it is needed most. They didn’t do so after 9/11. And now they have caved again.

Part of the problem is the belief in the great myth propagated by Milton Friedman. As good as he was on many issues, he was not correct on his specialty of American monetary history. His view was that the Depression was caused by a Fed that failed to fully bail out the banking system. Ben Bernanke and many others are pleased to accept this view of history, and they are determined not to let it happen again. In fact, the Fed did attempt to bail out the banks, and was far too successful. This is the basis of the problem.

In the end, we are talking about a price system that has rendered a verdict on the housing market. Prices don't lie and there is nothing we can do to reverse them. Even the most powerful government in the world cannot do so. The attempt causes calamity. The Austrians understand this, whereas it seems as if hardly anyone else does.

Pretty much alone in both predicting the calamity and actually opposing the bailout are those who have learned from the Misesian tradition, who have said plainly and clearly that this is a dreadful error, one that makes the US more socialistic than China.

Let us address this claim that not bailing out the system, and not nationalizing the mortgage market, would lead to a financial meltdown on the level of the Great Depression. People talk as if the Depression were some sort of natural disaster that the government had to fight. In fact, it was the very fighting of the Depression that deepened it and caused it to last all the way through World War II. We have to understand that if we are to understand the real lesson of the Depression. Instead of letting prices fall and letting the bad investments wash out of the system, the government tried for years and years to keep prices high, employ people in make-work programs, and generally centrally plan the economy.

In 1920 through 1922, we had a financial meltdown just as bracing and systematic as the one in 1929. The difference was that the government didn't do anything to try to fix it. As a result, it solved itself and it is a forgotten event. Hoover and FDR, in contrast, attempted to use their power over the economy and monetary system to try to keep prices floating high and to keep liquidity in the banking system – precisely as everyone is attempting now. The result was to forestall the inevitable readjustment process.

They believed that the low prices were the cause and not the effect of the recession. Does that error sound familiar? In other words, the Great Depression only became the Great Depression because the government followed exactly the same policies that the Bush administration is following now with regard to the mortgage market.

It makes no sense to warn that we will repeat the past if we do the same things that actually made the past as bad as it was. To avoid another Depression-sized downturn, we need to avoid the mistakes of the past, among which were the policies that attempted to keep failing firms and industries afloat in difficult economic times.

What should have happened in 1929 is precisely what should happen now. The government should completely remove itself and let the market reevaluate resource values. That means bankruptcies, yes. That means bank closures, yes. But these are part of the capitalistic system. They are part of the free-market economy. What is regrettable is not the readjustment process, but that the process was ever made necessary by the preceding central bank and other interventions.

Let me state this very plainly: I do not believe for one second that if the government fails to nationalize Freddie and Fannie that the world as we know it will come to an end. Those who are saying that are trying to scare the population, the same as with every other major demand by the regime. It was the same with Nafta, the WTO, the war on terror, the war on bird flu, the nationalization of airport security, and everything else.

If the government did nothing but sell off the assets of the mortgage giants, we do not know for sure what would happen, but the market has a way of finding value and readjusting. I would expect about 18 months of difficulties. Banks would fail just as many businesses in the free market fail every day. Housing prices would fall more, just as all market prices are subject to change. But the process of readjustment would be smooth and rational. And we would all stop living a lie and believing an illusion.

Contrary to what the blogging heads say, there is nothing that makes this nationalization inevitable. If we had leaders who had courage, who understood economics, who could think about the long run, we would let the market handle the entire process, come what may. I guarantee that this solution is a better one than creating another trillion or so to bail out failing enterprises.

And yet this is not just another longing for courageous leaders. We can't hope for that. We need a guarantee. We need a system that would make it impossible for government to do these things even if it wants to. That system is called sound money. Think about the preconditions that made it possible for the Bush administration to decide one evening to dump a trillion plus to guarantee three-quarters of the home mortgages in this country. It is a system that is premised on the government's capacity to print unlimited amounts of money.

If it could not do that, no one would be talking about conservatorship. No one would be talking about guaranteeing the liabilities of the automotive industry either. War on Afghanistan, on Iraq, on Russia, and troops in another 100 plus countries, would be out of the question. These wouldn't be issues. If government had to tax people directly for all its spending priorities, we would see Washington's ambitions in every area scaled back dramatically. Every suggestion of a new program would be met with the demand as to how it would be funded.

Fiat money with central banking, on the other hand, tempts corrupt politicians and bureaucrats, and it also further corrupts them. It is the great occasion of sin of our public life. The tragedy is that their use of the printing press not only corrupts them; it imposes dreadful and intolerable costs on the rest of society, in the form of price inflation and business cycles.

We’ve seen the corruption grow worse over time. We are living now in the 37th year of fully fiat money with central banking. The politicians of the past were a bit reticent to use all the power they had. They are becoming ever more brazen. The sense of shame seems to be gone forever, their consciousness completely papered over by the ominous power they possess. The pundit class is following them, believing that there are no limits.

In truth, all these bills must be paid. To realize that is to realize the necessity of radical reform. It can be overwhelming to contemplate the glorious results of a full gold standard reform. Inflation would stop eating away our purchasing power. The business cycle would be tamed. International trade would not be disrupted by wild swings in currency values. But of all the benefits, this one is the greatest: it would stop arbitrary rule, dead in its tracks. It would force the government to curb its ways. It would shore up our freedoms.

For this reason, the policy of sound money is very much linked with morality. The Hebrew scriptures, in the nineteenth chapter of the book of Leviticus, warns "you shall have just balances, just weights…" The twenty-fifth chapter of Deuteronomy issues a similar warning: "You shall not have in your bag differing weights, a large and a small." Proverbs says the same: "A false balance is abomination to the LORD: but a just weight is his delight." Another passage says: "Diverse weights, and diverse measures, both of them are alike abomination to the LORD."

All of these relate in some degree to the need for sound money and condemn the act of fraud and monetary debasement. The consequences of monetary sin cannot be contained to the sinners only. They are spread out all over the whole of society, destroying its economic basis and corrupting the morals of society. They foster crazed illusions that we can magically generate wealth through the act of printing money, and the attempt to do so has catastrophic consequences. As Mises wrote: "Inflation is the fiscal complement of statism and arbitrary government. It is a cog in the complex of policies and institutions which gradually lead toward totalitarianism."

I find it sickening that there are so few voices outside the Austrian School that will stand up to this policy. And I fear that the consequences of this policy will be felt for many decades into the future. There is still time to reverse course. There is nothing inevitable about despotism. We are not being forced down this road. We can embrace freedom. If we understand that freedom is inseparable from sound money, we can embrace that too. Until then, we will continue to place our trust in the political establishment to do what is right. Call me a gold bug if you will, but I trust hard money far more than our rulers. And that, ultimately, is the choice we must make.

This talk was delivered on September 13, 2008, at the Vancouver Mises Circle.

September 15, 2008

Peace
Government is nothing more than the rationalization and exercise of violence. Everything done by government contains at least the implicit threat of lethal coercion. <br /><br />- William N. Grigg
Reply
#6
Congress's role has been and will be to yammer. Only Ron Paul of Texas will have anything sensible to say about this fiasco. In fact, it was more than five years ago that Ron said the following: "If Fannie and Freddie were not underwritten by the federal government, investors would demand Fannie and Freddie provide assurance that they follow accepted management and accounting practices…. By transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans."

<img src="{SMILIES_PATH}/smoke.gif" alt="Smoke" title="smoke" />
Never invite a Yoda to a frog leg dinner.
Go ahead invite Yoda to a Frog leg dinner
Reply
#7
this chain of events is remarcably similar (in a way) to the economic events of before 9/11.
&quot;The checks and balances of democratic governments were invented because human beings themselves realized how unfit they were to govern themselves&quot;
Reply
#8
DERIVATIVES AND DANGEROUS TIMES

Posted By: ASLAN
Date: Tuesday, 16 September 2008, 11:37 a.m.



-----I cannot remember the derivative issue being so out and in the open as it is right now. 'They' must be really scared or somthing because it seems like everyone is talking about it. How long would the derivative markets take to collapse if it started defaulting?-----

SNIP
The collapse of Lehman Brothers has triggered an enormous crisis in derivative markets. Prior to the firm's spectacularly swift demise, no major counterparty in the world's biggest financial market had ever gone under. A major counterparty failure threatens the delicate web of trading in securities that are gargantuan in dollar amounts but totally lacking in transparency to the public.

We're talking about big money. According to the International Swaps and Derivatives Association, the notional value of credit default swaps (CDS) totaled $62.2 trillion at the end of last year. These insurance contracts protect investors against default on debt instruments and they are a fulcrum of global financial markets. Since there is no clearinghouse to administer these transactions, in effect it is impossible to know who could be hurt the worst. A run on AIG, make no mistake, is dangerous to the underpinnings of the debt markets--more so than unwinding the web of trades at Lehman. Scary.

With Lehman gone, that would mean that any party that bought or sold protection to Lehman would be unprotected to the tune of billions the moment the firm filed for bankruptcy. For example, if Goldman Sachs (nyse: GS - news - people ) bought $50 million worth of protection on General Motors (nyse: GM - news - people ) securities, it no longer would have that protection. Another dealer, bank or financial institution must take over Lehman’s role. Imagine this replacement process on tens of billions of dollars of transactions.
END SNIP

http://www.forbes.com/business/2008/09/ ... s_inl.html
Never invite a Yoda to a frog leg dinner.
Go ahead invite Yoda to a Frog leg dinner
Reply
#9
http://itulip.com/forums/showthread.php ... #post47721

FIRE Economy D-Day: Greenspan's Black Swan

Here we are. The day we have been warning you about since we re-opened iTulip April 2006 at the "peak of complacency" has arrived.

The circuit breakers installed after the 1987 crash will prevent a repeat. Don't worry about that. Maybe the DOW goes down 300 to 600 points today but not lower than 800.

Yet the comfortable fiction that governments – represented by global central banks – control markets will be put to the test. In truth, governments merely influence markets. At times that influence is effectual and at others not.

Today, not.

A quick review of how we got here and where we're going.

Where we've been

Turbulence in markets unnerves Bank and Fed officials
June 13, 2006 (Times Online)

CONCERN is growing over the present instability of financial markets among senior officials at the Bank of England and the US Federal Reserve.

Giant Margin Call on Real Estate Begins
July 30, 2006 (iTulip)

What's the federal government going to give us this time? More tax cuts? More deficit spending? Seems like those bullets have been spent. What happens when you cut interest rates when oil is trading at $75 versus $20 as in 2001? Fasten your seat belts. It's going to be a weird ride.

A Financial Market Crash is a Process, Not an Event
Aug. 16, 2007 (iTulip)

A financial crash is not sudden, singular event. The way the Crash of 1929 is commonly misunderstood, the market crashed on Monday, October 31, 1929 and soup lines formed Tuesday. Not so. A financial crash is a process lasting as long as a year, punctuated by a few notable grip-and-grin market events that make it into the history books. Underlying the process is the dissolution of a fallacious belief system that developed over a period of many years. Fallacies floated on an ocean of cheap credit. As the credit dries up, facts are revealed under the harsh light of reality.

Collapsing Global Credit Bubble Churns up Financial "Whales"
Sept. 17, 2007 (iTulip)

As the Whales Hit the Beach, Don't Forget Where they Came From

Mortgage Market Off the Rails, Economy to Follow
Dec. 8, 2007 (iTulip)

Whip Asset Price Deflation Now?

Dehydrated Banks: Just Add Water
Feb, 22, 2008 (iTulip)

Can insolvent lenders be floated by the U.S. government? Should they?

The American Bond Crisis
March 10, 2008 (iTulip)

The credit crisis that started June 2007 with obscure financially engineered debt products such as CDOs has now evolved to include bonds presumably backed by the US government. Guess what’s next after Agency debt? You guessed it!

Debt Deflation, American Style: Yamaichi Securities Company 1997 vs Bear Stearns 2008
March 18, 2008 (iTulip)

In the summer 2007, nearly 20 years after Japan's post credit bubble collapse and debt deflation began, the US started its own journey down credit crunch and bankruptcy lane. The demise in 1997 of Yamaichi Securities Company, the fourth largest brokerage firm in Japan, and the intervention by the Bank of Japan (BoJ) has eerie parallels to the Bear Stearns collapse and Fed intervention more than ten years later. But the differences between the two events are even more telling.

Buy Financials! Catch a falling knife!
June 6, 2008 (iTulip)

Don't buy financial stocks.

That dreaded phrase: ''The system is fundamentally sound'
July 20, 2008 (iTulip)

The system is fundamentally unsound.

Where we're going

To put today's events in perspective we have to go all the way back to November 1998 when iTulip was first launched and we first made the case that we have stuck to consistently ever since, while always looking for evidence to contradict it:
The lesson of the 1920s may be that markets grow to outstrip the capacity of central banks and other institutions to manage them, that markets naturally evolve to operate outside the control of monetary authorities. As a result, these institutions are always fighting the last war.

Perhaps the crash of 1987 and the correction of 1998, which did not have a serious impact on the real economy thanks to quick Fed intervention, represent a phase in a longer term dynamic. Maybe these corrections and the subsequent post Fed bailouts set the stage for a bigger and less manageable market event in the future.

The second thesis relates to the medium term outcome of a crash should the Fed be not much better at mitigating the effects of the collapse of this bubble better than in the 1930s, or at least no better than the Japanese have been in the past ten years since their market bubble collapsed in 1989.

More than 40% of the sovereign debt of the US is held outside the US. History is completely consistent on this: in the event of a sustained drop in liquidity and economic growth of an indebted nation, foreigner borrowers demand to be repaid before other creditors. The dollar is likely to fall like a rock as foreign held US paper is sold. The domestic impact is inflationary. So unlike the US in the 1930s or Japan in the 1990s where deflation accompanied a period of economic contraction, the US is likely to experience a period of inflation in addition to recession.

- iTulip, Nov. 1998
Following this economic and financial market crisis, the cycle of global recession will not have the same impact on the US in 2008 as it did in the previous case in 1930. The US in 1930 was a net creditor but is today a net debtor, with its dual trade and fiscal deficits funded by massive daily capital flows from foreign private investors and central banks – mostly the latter.

Historical Precedent

The precedent is not US 1930 or Japan 1990. Both countries were net creditors with large pools of national savings and industrial capacity to tap to use to develop export trade to earn their way back out of an economic hole. A closer analogy is 1930 Germany.

The sequence of Germany's pre-WWII economic crisis is commonly misremembered as follows:
1. Hyperinflation
2. Depression
3. Hitler elected by angry masses
4. WWII

Not so. Here's what really happened.

1.

1921 to 1923: German hyperinflation

1924: Dawes Plan to restructure debt, Rentenmark replaces the Papiermark

1924: Rentenmark backed by land and industrial goods, hyperinflation ends

1924 to 1929: US and British financing pours into Germany, economy recovers

1925: Germany joins the League of Nations

1929: US market crash (FIRE Economy V1.0), US and British investment in Germany ends

1930: German economy collapses

Then:

2. Depression
3. Hitler
4. War

So far US creditors have held their ground, but as the US recession and financial crisis deepen and the US transmits demand destruction to its creditors, that ground may give way. After the crash of FIRE Economy V2.0 in 2008 China, Japan, and the BRIC lenders may have to cut off funds to the US just as the US and the UK cut off funding to Germany in 1930 following the crash of FIRE Economy V1.0.
China Cuts 1-Year Lending Rate; Reduces Lending Curb
Sept. 15, 2008 (Bloomberg)

China cut interest rates for the first time in six years and reduced the amount of cash that some banks are required to set aside after economic growth slowed and amid tumult on Wall Street.

The People's Bank of China cut the one-year lending rate to 7.20 percent from 7.47 percent, effective tomorrow, and lowered the reserve ratio by 1 percentage point at some banks. The changes were in a statement on the central bank's Web site today.
Watch for signs of recession among major US trade partners. When they are no longer able to ship their so-called "excess savings" to the US to fund America's twin deficits, the FIRE Economy will be no more, and the US will have to find a way to run its economy the old fashion way – by working, saving, and investing.

See also:
Fed Funds spread signals crash
Sept. 15, 2008 (iTulip)

The last time the Fed Funds target rate got this out of line with the effective rate was in 1987, and from a base of over 6% not 2%. On a percentage basis, at three times the target rate the spread is unprecedented. It happened today. more...

iTulip Select: The Investment Thesis for the Next Cycle™
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All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Nothing appearing on this website should be considered a recommendation to buy or to sell any security or related financial instrument. iTulip, Inc. is not liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. Full Disclaimer

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Last edited by FRED; Yesterday at 11:34 AM.


EJ
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Never invite a Yoda to a frog leg dinner.
Go ahead invite Yoda to a Frog leg dinner
Reply
#10
http://www.marketoracle.co.uk/Article6259.html

“Train-wreck” doesn't even begin to describe what is starting to happen to the U.S. today with the financial crisis, an onrushing depression, and the failure of George W. Bush's war policy as he is faced down by Iran and the Russian bear.

But in an even broader sense, the West, as a civilization, after a century of world war and the utter failure of global finance capitalism, may have reached its limits.
Never invite a Yoda to a frog leg dinner.
Go ahead invite Yoda to a Frog leg dinner
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#11
[Image: PowerPlunger.jpg]

http://www.globalresearch.ca/index.php? ... &aid=10207

As Lehman Faces Liquidation, Another One Bites The Dust

by Danny Schechter

Global Research, September 15, 2008
Mediachannel.org

Who Will Protect Us from Plunge Protection?

Congress and The Press Must Probe This Secret “Working Group”

I often think about the alphabet of the financial crisis---a lexicon of terms like plunder—I wrote a book taking off on that idea --- but, also related “P words, pricing, panic and plunge.

I think of this last one spelled this way: plungeeeeeee as in falling off a cliff. And the dictionary sort of backs me up:

plunge |pl?nj| verb 1 [ intrans. ] jump or dive quickly and energetically : our daughters whooped as they plunged into the sea. • fall suddenly and uncontrollably : a car swerved to avoid a bus and plunged into a ravine. • embark impetuously on a speech or course of action : overconfident researchers who plunge ahead. • suffer a rapid decrease in value : their fourth-quarter operating profit plunged 25%.

There are many experts who see this happening today as the markets plunge in value with banks going down and very little going up except prices, foreclosures and unemployment.

Did you know that your government has machinery in place to deal with plunges? It was founded during the heady days of mourning in America—the Reagan Administration.

It was back in l987 when the former movie star in chief signed on to this Executive Order drafted for him. The “Working Group” it set up was quickly labeled the PLUNGE PROTECTION TEAM (PPT).

As the government in effect takes over mortgage giants and wrestles over what to do about the collapse of huge investment banks like Lehman Brothers, with more to come, you know they are on alert 24/7 scrambling to put more fingers in the dyke. (Over the past weekend, the Fed and Treasury Secretary warned the banks to clean up Lehman’s mess or they could be next. As of Sunday, there was no deal and one of American’s oldest investment banks faces liquidation.)

There is a mechanism in place to avoid this type of crisis. In theory! Here are their overt marching orders; the covert mission is still shadowy.

Executive Order 12631--Working Group on Financial Markets

Section 1. Establishment. (a) There is hereby established a Working Group on Financial Markets (Working Group). The Working Group shall be composed of:

(1) the Secretary of the Treasury, or his designee;

(2) the Chairman of the Board of Governors of the Federal Reserve System, or his designee;

(3) the Chairman of the Securities and Exchange Commission, or his designee; and

(4) the Chairman of the Commodity Futures Trading Commission, or her designee. (b) The Secretary of the Treasury, or his designee, shall be the Chairman of the Working Group.

Sec. 2. Purposes and Functions.

(a) Recognizing the goals of enhancing the integrity, efficiency, orderliness, and competitiveness of our Nation's financial markets and maintaining investor confidence, the Working Group shall identify and consider:

(1) the major issues raised by the numerous studies on the events in the financial markets surrounding October 19, 1987, and any of those recommendations that have the potential to achieve the goals noted above; and

(2) the actions, including governmental actions under existing laws and regulations (such as policy coordination and contingency planning), that are appropriate to carry out these recommendations.

(b) The Working Group shall consult, as appropriate, with representatives of the various exchanges, clearinghouses, self-regulatory bodies, and with major market participants to determine private sector solutions wherever possible.

© The Working Group shall report to the President initially within 60 days (and periodically thereafter) on its progress and, if appropriate, its views on any recommended legislative changes.

Sec. 3. Administration.

(a) The heads of Executive departments, agencies, and independent instrumentalities shall, to the extent permitted by law, provide the Working Group such information as it may require for the purpose of carrying out this Order.?

(b) Members of the Working Group shall serve without additional compensation for their work on the Working Group.?

© To the extent permitted by law and subject to the availability of funds therefore, the Department of the Treasury shall provide the Working Group with such administrative and support services as may be necessary for the performance of its functions.”</blockquote>

In actual fact, this secret branch of government has a sophisticated war room using every state of the art technology to monitor markets worldwide. It has emergency powers. It doesn’t keep minutes. There is no freedom of information access to its deliberations. There are l47,000 entries in Google on this powerful body but I could only access l0.

The reports on it are sketchy including one from the Washington Post:

“These quiet meetings of the Working Group are the financial world's equivalent of the war room. The officials gather regularly to discuss options and review crisis scenarios because they know that the government's reaction to a crumbling stock market would have a critical impact on investor confidence around the world.” Remember this an administration that claims to worship an unregulated free market and yet here they are big footing the market.

Noted the Capital Observer, an investor’s blog,” Last week, in the article HYPERLINK "http://capitalobserver.blogspot.com/2008/09/stacked-deck.html"Stacked Deck, I alluded to the fact that the government might be intervening in the market privately as well as publicly.” It also reported on September llth that the Telegraph—a newspaper in London, natch not Washington, called it a “black arts unit.”

"On Friday, Mr Bush convened the so-called Plunge Protection Team for its first known meeting in the Oval Office. The black arts unit - officially the President's Working Group on Financial Markets - was created after the 1987 crash. It appears to have powers to support the markets in a crisis with a host of instruments, mostly by through buying futures contracts on the stock indexes (DOW, S&P 500, NASDAQ and Russell) and key credit levers. And it has the means to fry "short" traders in the hottest of oils."

As the economy continues its decline, as the markets are rocked by more failures and loss of confidence, as new scandals including a sex for oil Affair in the Interior Department surfaces, shouldn’t we know more about these plunge people (sounds like Pod People) who may be doing to the economy what other branches of our government did so incompetently to Iraq. (Actually, Administration political operative Jim Wilkinson who ran the War for Iraqi Freedom Doha Coalition Media Center in 2003 was for a time the key Bushevik commissar at the Working Group.)

It is time for a Congressional investigation and more media scrutiny. Let’s find out if this “Working Group” helped defuse the crisis or made it worse? Is it rigging markets? New York Magazine suggested there may be a conspiratorial explanation: ?“Of course, the squishy “consult” language has long had conspiracy theorists speculating that it’s just a backroom market-rigging cabal for the Establishment. Or, you could think of it as the Wall Street Superfriends, equipped with X-ray vision to see deep into our financial malaise, and magic lassos to jury-rig the markets back together.” We need to know who was lobbying “the team” and in whose interests they act?

So far, the “financial reforms” imposed since the crisis beganincluding 7 interest rate cuts, injections of capital and rule changes have had little impact. ‘ The NY Fed President Timothy Geithner, architect of The Bear Stearns bailout and the key player in recent high level meetings on Lehman Brothers came out of Kissinger Associates (as did war manager L. Paul Bremer.) In a new policy, the Fed has already agreed to make low interest loans to investment banks as well as commercial banks even though the Fed has no authority over these banks. Duh?

Is their goal to get taxpayers to pay off corporate failures or centralize power as former Treasury Department official Catherine Austin Fitts believes:

“If your goal is total centralized control, this is a great way to achieve it,” she argues. “Between Freddie, Fannie, Ginnie Mae, FHA, VA and the Federal Home Loan Bank Board, the federal government no longer regulates or provides credit to the residential mortgage market - it is the market.”

Before the economy goes down the toilet as some analysts who are predicting a depression now fear, before that final flush, we need to find out how to protect ourselves from the plunge protectors?

Mostly we need financial elites with a different orientation says Trevor Manuel, South Africa’s Finance Minister, and a key player at the International Monetary Fund, "We need elites that plough back, not elites that plunder.”

Danny Schechter, director of In Debt We Trus (indebtwetrust.org) is the author of the just published PLUNDER: Investigating Our Economic Calamity (Cosimo) now available at on-line bookstores.

Peace
Government is nothing more than the rationalization and exercise of violence. Everything done by government contains at least the implicit threat of lethal coercion. <br /><br />- William N. Grigg
Reply
#12
http://www.globalresearch.ca/index.php? ... &aid=10229

Subprime Mortgage Meltdown: Paulson's Quick Draw

by Peter Schiff

Global Research, September 15, 2008
Euro Pacific Capital

Treasury Secretary Henry Paulson, the man who said that subprime was contained and that the Bazooka in his pocket would never be used, now assures us that the bailout of Fannie Mae and Freddie Mac will be costless to taxpayers. Despite the near euphoria that the plan has sparked on Wall Street, the move will go down in history as the biggest policy blunder of all time, and will be credited as a pivotal point in the financial collapse of the American economy. The ultimate cost to Unites States citizens will be in the range of hundreds of billions of dollars, perhaps more.

The original idea that gave birth to Freddie and Fannie, which is to make housing more affordable to average Americans, should now be seen as farcical. Their new goal is to keep housing prices high. Absent Freddie and Fannie, housing prices would fall sharply and the mortgage market would stabilize. Americans would once again be able to buy affordable houses with mortgages they could actually repay - just like their grandparents did. Instead they will keep overpaying for houses, burdening themselves with excessive payments in the process, and ultimately sticking taxpayers with the bill when they default.

In contrast to Paulson's continuous misreading of the market, I have consistently predicted the failure of Freddie and Fannie. I did so in my book Crash Proof, and in numerous speeches, commentaries and television appearances. If you have not yet done so, click here to watch these eight YouTube clips of my presentation back in 2006 to a convention of mortgage bankers. I also was quick to point out that Paulson's Bazooka would not remain holstered for long.

There is absolutely no substance to Paulson's insistence that based on the government's first claim on the future profits of Fannie and Freddie, the plan offers protection for taxpayers. There will be no future profits, just more heavy losses. Americans will now have unlimited ability to continue to overpay for houses and commit to mortgages they can't afford. In fact, the plan ensures that eventual public sector losses will vastly exceed those that would have befallen the private sector in a free-market resolution.

Paulson claims that his goal is to stabilize the mortgage market. But the best way to do so would be to allow housing prices to fall to a market clearing level. As long as home prices remain artificially high, the risks of mortgage lending will keep credit tight, and the high costs of mortgage payments will keep potential buyers on the side-lines. With private lenders justly cautious, the government intends to hold open the lending spigots, without the pesky concerns over losses or financial risk. The hope is that the new lending will prevent home prices from falling further. It won't work. The government "solution" will simply delay the fall of artificially high home valuations and temporarily preserve the illusion of prosperity.

In order to preserve current home prices, the government will be forced to maintain the lax lending standards that got us into this mess in the first place. Since all the losses will now be borne by taxpayers, those lax standards will be much more problematic. The moral hazard that existed prior to this bailout has become that much more hazardous. Every mortgage now insured by Fannie and Freddie is the equivalent of a U.S. Treasury bond. This allows anyone to borrow on the full faith and credit of the U.S. government so long has the money is used to buy a house. In addition, mortgage lending will now be a government function, run with Post Office-like efficiency.

Of course the biggest collateral damage caused by Paulson's bazooka is the large hole ripped through the already tattered U.S. Constitution. If the government can do this, does anyone believe there is anything it can't do? In effect the Federal government now has absolute power to corrupt absolutely.

For a more in depth analysis of our financial problems and the inherent dangers they pose for the U.S. economy and U.S. dollar denominated investments, read my book "Crash Proof: How to Profit from the Coming Economic Collapse." Click here to buy a copy today.

Peace
Government is nothing more than the rationalization and exercise of violence. Everything done by government contains at least the implicit threat of lethal coercion. <br /><br />- William N. Grigg
Reply
#13
Time to stock up on [Image: 990081;Warehouse;Warehouse.jpg]

http://www.cbc.ca/money/story/2008/09/1 ... ilout.html

U.S. government announces AIG bailout plan
Last Updated: Tuesday, September 16, 2008 | 10:22 PM ET
The Associated Press

In a bid to save financial markets and the economy from further turmoil, the U.S. government agreed Tuesday to provide an $85 billion US emergency loan to rescue the huge insurer AIG.

The Federal Reserve said in a statement it determined that a disorderly failure of American International Group could hurt the already delicate financial markets and the economy.

It also could "lead to substantially higher borrowing costs, reduced household wealth and materially weaker economic performance," the Fed said.

"The President supports the agreement announced this evening by the Federal Reserve," said White House spokesman Tony Fratto.

"These steps are taken in the interest of promoting stability in financial markets and limiting damage to the broader economy."

Treasury Secretary Henry Paulson said the administration was working closely with the Fed, the Securities and Exchange Commission and other government regulators to "enhance the stability and orderliness of our financial markets and minimize the disruption to our economy."

"I support the steps taken by the Federal Reserve tonight to assist AIG in continuing to meet its obligations, mitigate broader disruptions and at the same time protect taxpayers," Paulson said in a statement.

The Fed said in return for the loan, the government will receive a 79.9 per cent equity stake in AIG.

Earlier, Fed chairman Bernanke and Paulson met with Sen. Christopher Dodd, D-Conn., Majority Leader Harry Reid, D-Nev., and House Republican leader John Boehner of Ohio, to brief them on the government's option.

"At the administration's request, I met this evening with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. They expressed the administration's views on the deepening economic turmoil and shared with us their latest proposals regarding AIG," Reid told reporters.

"The Treasury and the Fed have promised to provide more details in the near future, which I believe must address the broader, underlying structural issues in the financial markets."

On Tuesday, shares of the insurance company swung violently as rumors of potential deals involving the government or private parties emerged and were dashed. By late Tuesday, its shares had closed down 20 per cent — and another 45 per cent after hours. Still, no deal emerged.

The problems at AIG stemmed from its insurance of mortgage-backed securities and other risky debt against default. If AIG couldn't make good on its promise to pay back soured debt, investors feared the consequences would pose a greater threat to the U.S. financial system than this week's collapse of the investment bank Lehman Brothers.

The worries were triggered after Moody's Investor Service and Standard and Poor's lowered AIG's credit ratings, forcing AIG to seek more money for collateral against its insurance contracts.

Without that money, AIG would have defaulted on its obligations and the buyers of its insurance — such as banks and other financial companies — would have found themselves without protection against losses on the debt they hold.

"It might not just bring down other financial institutions in the U.S. It could bring down overseas financial institutions," said Timothy Canova, a professor of international economic law at Chapman University School of Law.

"If Lehman Brother's failure could help trigger AIG's going down, who knows who AIG's failure could trigger next."

New York-based AIG operates an insurance and financial services businesses ranging from property, casualty, auto and life insurance to annuity and investment services. Those traditional insurance operations are considered healthy, and the National Association of Insurance Commissioners said "they are solvent and have the capability to pay claims."
© The Canadian Press, 2008

Peace
Government is nothing more than the rationalization and exercise of violence. Everything done by government contains at least the implicit threat of lethal coercion. <br /><br />- William N. Grigg
Reply
#14
ky is right Hi

It was either act or stand aside and let things rip. Paulson, and especially Federal Reserve Board Chairman Ben Bernanke, who is a close student of the subject, know what happened in 1933 when everyone was frozen in place as first Wall Street and then every other street crashed and burned. Faced with only two choices, these Republican businessmen elected to nationalize AIG just as the same men had done a few days before with the government takeover of Fannie Mae and Freddie Mac, the huge home mortgage finance corporations.

From the point of view of AIG's stockholders, this is not a sweetheart deal. The interest AIG must pay on the $85 million loan it needs to stay afloat is 11.5 percent. Those are almost credit card rates. In addition, the government gets to own 79.9 percent of the stock and gets to fire the old CEO, name the new one and do anything else it wants.

The government now owns AIG for all intents and purposes, although reluctantly. The hope was that private-sector companies would come up with the money, but either they were too scared or they did not have that kind of capital. Everybody has taken such a beating that assembling such large chunks may be impossible at the moment.

The AIG rescue takes care of this week's crisis, but does not put an end to them. The AIG arrangement was no sooner announced than the talk began that Goldman Sachs and Morgan Stanley, the last two big brokerage houses, are next up on the chopping block. Either they will have to sell themselves to somebody or watch their stock sledge-hammered to the point of bankruptcy or so some think.

Goldman and Morgan are not the only candidates for extinction. The names of Wachovia, a big bank and financial wheeler-dealer, and Washington Mutual, the nation's largest savings and loan association, are on the death list. Fear and suspicion permeate the world of finance and money. Banks are even afraid to lend to each other.

Beyond Wall Street a tide of anger is growing as people see layoffs, swelling unemployment, home foreclosures, students struggling for college loans, retirement savings evaporating on one side and on the other sums too large to calculate seemingly being spent to bailout billionaires. Reports of larcenous CEOs walking away from shipwrecks of their own making with untold millions is setting poorly on many an upset stomach.

The administration, after having plunged the country into a new era of state capitalism, is unable to explain what it is doing to its people. The talking has been left to Paulson, an ex-Goldman Sachs CEO, whose estimated worth is close to three quarters of a billion; he is unable to communicate with anybody outside of finance and government.

Even if he could talk in language ordinary people could understand, he would have little to say. He is living a day-to-day life of exhaustion, coping with the crises as they zoom in on him. He has no plan of action, only the received market doctrine, which has failed him. Do not ask Henry Paulson how or when this terrible storm is going to abate.

Do not look to the presidential candidates, either. John McCain, the newly born re-regulator, has no idea what he is talking about. Barack Obama knows what he is talking about but it does not apply. Discussions about how the rules and regulations must be changed are of little moment. We do not know what there will be left to regulate by this time next year.

For now it is day to day, hour to hour, minute to minute. Hold on tight.
&quot;The impure can become pure through the process of elimination, <br />but error can never be transformed into truth.&quot; <br /> Schwaller De Lubicz
Reply
#15
Ky with sand in it
<img src="{SMILIES_PATH}/damned.gif" alt="Damned" title="damned" />

http://www.chicagotribune.com/business/ ... 3605.story

Quote:Economist recounts talk with Fed chairman
By Joshua Boak | Chicago Tribune reporter
September 17, 2008
NAPLES, Fla. — Several months ago, economist David Hale had a private meeting with Federal Reserve Chairman Ben Bernanke, who was trying to ward off a recession by lowering interest rates and increasing the money supply in the economy.

The problem with that approach is that the value of the dollar plunged against foreign currencies, causing crude oil prices to skyrocket because oil is pegged to the dollar. It affected food prices, gasoline and family budgets.

"Ben, you are playing a very unique role in world economic history," Hale recalled telling Bernanke, an expert in the Great Depression. "You are the first central bank governor of the United States to preside over a recession with no decline in commodity prices."

Bernanke could hypothetically limit inflation in commodities by raising interest rates, a policy that would restrict the flow of money but potentially lead to an avalanche of bank failures. At a financial conference in Florida on Tuesday, Hale, a Chicago-based economist for investment managers, hedge funds and multinational companies, paraphrased the Fed chairman's response.



"We have lost control," said Hale, quoting Bernanke. "We cannot stabilize the dollar. We cannot control commodity prices."


Never invite a Yoda to a frog leg dinner.
Go ahead invite Yoda to a Frog leg dinner
Reply
#16
PANIC GRIPS WORLD CREDIT MARKETS

Posted By: Theresa
Date: Wednesday, 17 September 2008, 7:39 p.m.



Panic grips credit markets
By Krishna Guha in Washington, Michael Mackenzie in New York and Gillian Tett in London

Published: September 17 2008 18:23 | Last updated: September 18 2008 00:01

The panic in world credit markets reached historic intensity on Wednesday, prompting a flight to safety of the kind not seen since the second world war.

Barometers of financial stress hit record peaks across the world. Yields on short-term US Treasuries hit their lowest level since the London Blitz, while gold had its biggest one-day gain ever in dollar terms. Lending between banks, in effect, stopped.

MORE:
http://www.ft.com/cms/s/0/8058d308-84d3 ... ck_check=1
Never invite a Yoda to a frog leg dinner.
Go ahead invite Yoda to a Frog leg dinner
Reply
#17
I have been meaning to ask RP about how the world bank and IMF fit in with the fed reserve. Somehow I don't think I would get an answer. <img src="{SMILIES_PATH}/hmm2.gif" alt="Hmm2" title="hmm2" />
To BELIEVE is to accept another's truth <br />To KNOW is your own CREATION. <br /><br />Vi Veri Veniversum Vivus Vici<br /><br />Yep, I am so far left or right depending on how you look at it that I am a Anarchist.
Reply
#18
Are any of the contender pretenders saying anything about the blatant and gross corruption throughout every system in this country? Anyone bringing up that "I" word? no? then it is all play acting and vicarious thrills... nothing to get sluiced or juiced up for-more of the insane same.
&quot;Confusion... first sign of a bad relationship-whether personal, societal or governmental&quot;
Reply
#19
Quote:I have been meaning to ask RP about how the world bank and IMF fit in with the fed reserve. Somehow I don't think I would get an answer. <img src="{SMILIES_PATH}/hmm2.gif" alt="Hmm2" title="hmm2" />


Ron Paul corners Fed chief on rates, Sri Lanka hit by rice prices ...Apr 19, 2008 ... RELATED STORIES. Ron Paul slams Federal Reserve as US money printing de-stabilize world 13 Apr · IMF warns commodity bubble may burst 07 Apr ...
www.lankabusinessonline.com/fullstory.php?nid=623130346 - 46k - Cached - Similar pages
Ron Paul enters top tier... McCain va... - Anti-Globalization ...Jul 6, 2007 ... Many of these countries are rejecting the World Bank and the IMF .... If Ron paul is elected, he has vowed to abolish the federal reserve, ...
tribes.tribe.net/anti-globalization/thread/b5551c95-e1b6-4d06-8e7e-ab24a488a556 - 67k - Cached - Similar pages
In Ron Paul Coins, Federal Agents Don't Trust | The Trail ...The sooner we unplug from the central banks, the IMF, the Bank of International Settlements ..... Break the Monopoly of the Federal Reserve! Elect Ron Paul. ...
blog.washingtonpost.com/the-trail/2007/11/16/post_203.html - Similar pages
IMF head: Dollar could collapse - Boing BoingOct 24, 2007 ... Your Federal Reserve is corrupt and owned by a cartel of bankers who own nearly every central bank in nearly all countries worldwide other ...
www.boingboing.net/2007/10/24/imf-head-dollar-coul.html - 82k - Cached - Similar pages
Ron Paul’s Campaign For Liberty » Blog Archive » Ron Paul at ...Congressman Ron Paul is the leading advocate for freedom in our nation's capital. ... The FED, IMF and World Bank do not want that to happen. ...
www.campaignforliberty.com/blog/?p=166 - 62k - Cached - Similar pages
Ron Paul corners Fed chief on rates, Sri Lanka hit by rice prices ...Apr 19, 2008 ... Ron Paul slams Federal Reserve as US money printing de-stabilize world 13 Apr · IMF warns commodity bubble may burst; will it affect Sri ...
www.lbo.lk/fullstory.php?nid=623130346 - 45k - Cached - Similar pages
Never invite a Yoda to a frog leg dinner.
Go ahead invite Yoda to a Frog leg dinner
Reply
#20
Ahhh grasshoper wook bud.

We can slam the fed reserve all day long and it is deserving. RP does not address the bigger picture though does he <img src="{SMILIES_PATH}/hmm2.gif" alt="Hmm2" title="hmm2" />
To BELIEVE is to accept another's truth <br />To KNOW is your own CREATION. <br /><br />Vi Veri Veniversum Vivus Vici<br /><br />Yep, I am so far left or right depending on how you look at it that I am a Anarchist.
Reply
#21
All of this world and country wide has been blatantly worked and contrived with the setting up from the Reagan daze. Glad to see everyone's playing the 'shocked and awed' roles in the media as they laugh all the way to their hidey holes and money laundering centers in the Caymans etc.

Was it this contrived in the '20s? damn. Twilite Zone.
&quot;Confusion... first sign of a bad relationship-whether personal, societal or governmental&quot;
Reply
#22
Washington Mutual is now on the sales block, or it will be under too. The dominoes keep falling. I just hope my bank isn't in the line. Of course, when it takes $10,000 to buy a loaf of bread, it won't matter anyway.
&quot;Facts do not cease to exist because they are ignored.&quot; --Aldous Huxley
Reply
#23
Here are two threads one should read I think to be fully aware that this is and was designed to happen at THIS TIME under THIS Administration...i.e.under the Moron Bush:

http://www.abovetopsecret.com/forum/thread391619/pg1

This is a Loooong thread that is essentially talking about this thread discussion in Google:

who this guy reinhardt PREDICTED would happen on the SPECIFIC DAY...Also on this next Google link there is A LOT OF Brutal Truth information on how the "Illuminati" factions have been manipulating society through human history this thread is only two pages long and the reinhardt fellow has been banned.

http://finance.google.com/group/google. ... b590f931bf

Now put that in your Poop Uhoh Peace
"The Light" - Jefferson Starship-Windows of Heaven Album
I'm an Earthling with a Martian Soul wanting to go Home.   
You have to turn your own lightbulb on. ©stevo25 & rhw007
Reply
#24
Wow, I am amazed at that, never have I seen a prediction specific to the day. In fact who has ever seen a prediction to the day?

Hmm, something is supposed to happen around Oct.6, I hope hes still around to say what.

This guy got it right so people now truely beleive him, I think he just started something...
Quote:No mountain is too tall if your first step is belief. -Anonymous
...Because even if there were no artifacts anywhere, not studying things of interest is an extreme disservice to science. -Tarius
Reply
#25
Quote:Here are two threads one should read I think to be fully aware that this is and was designed to happen at THIS TIME under THIS Administration...i.e.under the Moron Bush:

http://www.abovetopsecret.com/forum/thread391619/pg1

This is a Loooong thread that is essentially talking about this thread discussion in Google:

who this guy reinhardt PREDICTED would happen on the SPECIFIC DAY...Also on this next Google link there is A LOT OF Brutal Truth information on how the "Illuminati" factions have been manipulating society through human history this thread is only two pages long and the reinhardt fellow has been banned.

http://finance.google.com/group/google. ... b590f931bf

Now put that in your Poop Uhoh Peace

OK sweeties, settle down... due to my ever increasing experiences lately definitely shaping my 'opinions' what is REALLY going on right now--- is a HUGE TRANSITION OF ENERGIES. And this bullshit really does not involve us. It really is a radical distraction-not that it necessarily should be totally ignored but there are so many other things we will be working on that make it known to be as trivial as it really is in the grand scheme of all things.

ALL of this financial crap has been in the blatant undertakings for DECADES NOW-RIGHT? From about '84 onward -which is when, coincidentally Pluto entered Scorpio and those children born then are coming of age now- NOTHING-NO THING has been really the same-like mini dark ages set in upon us-over us.

One surreal episode politically and financially after another -from the mass immigration of blatant illegal foreigners-and Europe has had their own prefabbed deluge as well of foreigners with great entitlement issues granted their every wish, enabled with every opportunity at our expense.

Never has there been so much blatant corruption, malpractice, malfeasance that the mongers have totally gotten away with by a cast of characters in all fields that are truly cringe worthy presentations.

After the mini depression of the decade from '88 through '98 we were all rewarded with a 'catch your breath' before giving up entirely stage where all kinds of horrible drugs were introduced by the same players as those who only profit whereas we only pay regardless of whether it is which ever system, governmentally regulated, we participate in.

The many new jails and prisons built in the dark days are full to the brim in America-with a lot of pot SMOKERS in the insidious systems that are some counties in this country-maybe many counties in this country's-major sources of employment.

runaway abuses by authority players posing as civil servants- relaxed credit abilities to the tune of totally insane in their ridiculousness... truly insane housing markets where any warm body could purchase a half million dollar inflatable house to live off of like a cash cow-diverted the reality that wages were at the 80s level-between credit and cashing in on the false 'equity' of your property one could live almost a normal pre mid 80s lifestyle.

Throw in a few bogus rigged elections with the same family participating-corrupt courts-corrupted media... well-how did we get here?

so crazy that most things can't even really matter now-so many Americans literally disabled-insanely illegal invasions, manufactured bad guys, manufactured illegal invasions right in our faces-billions missing and unaccounted for...

who in their right minds would want to takeover such a hideous government? where would anyone even be able to start to figure out where to start with so many corrupted systems?

Our fiat currency has not had any real value since Nixon took it off the silver standard thirty five years ago-almost 40 years ago now.

why the outcry over our fiat field of energy exchange being somehow worth less than the zero it has always been 'worth'?

There are huge evolutionary energies coming to us right now-those that have nothing to do with money or banks or securities or the bald faced lying rip offs.

Can you catch the feelings? Can you feel them at all?

THIS IS A GRAND DELUSIONARY SCHEME TO DISTRACT AND DISTURB. TO CONSUME THE ENERGIES OF TOTAL NEGATIVITIES. ALL MANIFESTED BEFORE ALL OF OUR VERY EYES, BRAINS AND HEARTS FOR MOST OF OUR ENTIRE LIVES-TO CULMINATE IN WHAT? WHAT COULD COME OF THIS BESIDES THE SCARY STORYLINES THAT HAVE BEEN CONJURED UP BY SOME VERY LOW ENTITIES.

What are the right hands doing while the left hands are making their public moves? what is the real agendas besides the obvious manipulations we all get as they've been in the process for absolutely decades now?

:) STEP OUT SIDE THE OBVIOUS SHIT-FOCUS SOLELY ON YOUR OWN SELF AS MUCH AS YOU CAN AS TO YOUR HUMAN QUALITIES. WHAT DO THEY MEAN TO YOU? WHAT DOES IT ALL MEAN TO THE 'US'?

GET TOTALLY HUMAN RIGHT NOW AND LOL AT THE RIDICULOUS ANTICS OF THOSE WHO'VE DONE NOTHING BUT CAUSE INSANE HARM TO ALL OF HUMANITY.
&quot;Confusion... first sign of a bad relationship-whether personal, societal or governmental&quot;
Reply
#26
Hey Gard I hear you I AM trying to think like HUMAN and all I can see is manipulation like it has been since one caveman was bigger than another Muaha

This is a quick copy and paste of my post at AboveTopSecret:


Originally posted by smirkley
I read it in whole,..

and although quite compelling, one persistant thought irritated my mind.

The scope and context of the data and corrolated analysis.

Two words stuck in my head....

Banned.

And why?

The other word,..

Google.

And not from the outside.

Who else to compile that data, provide it externally, and present it internally, in a fashion that points elsewhere.

What is there to gain? But expansion.

[edit on 18-9-2008 by smirkley]



It truly may be a "Google" inside operation...don't think for a minute that either Google or Yahoo can't come under the influences...at the "TOP"...from a branch of the Illuminati.

Timed released asprin for "Disclosure" ?

Where has our King Georgie Jr the moron been since this whole economic collapse started becoming apparent last Friday the 12th?

I've said elsewhere that there might NOT be a 2008 election.

I REALLY REALLY hope I'm wrong. But with the USA policy that Pakistan's borders mean nothing to the military and both our current candidates agree with it...the CURRENT adminstration has plenty of time to do some SERIOUS damage to current lives and situation globably and economically.

I've called for this before to hopefully pray our Military leaders have better sense and would mutiny en-masse:

http://commonsensecentral.blogspot.com/ ... os-of.html

While the above should refer to the Uniform Code of Military Justice rather than JCOS...I still think it is the ONLY way to not see war expand, there are Russian bombers based in Venezuala, there is an VERY LARGE armada of 3 aircraft carriers and suport ships moving to blockade Iran as we speak and go through this economic meltdown.

Will we see another "False Flag" event?

Time to clear out your bank account except for needed bills and get cash...either Euros or should have bought Canadien when it was worth $1.06 in the US only a few months ago.

As far as "The Military/Industrial Complex" run by the Illuminati and the expanding wars...we can only hunker down or:



Quote:We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn that mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.

:uni:
http://www.commonsensecentral.net...
http://www.mycommonsensepolitics.com...
"The Light" - Jefferson Starship-Windows of Heaven Album
I'm an Earthling with a Martian Soul wanting to go Home.   
You have to turn your own lightbulb on. ©stevo25 & rhw007
Reply
#27
Quote:Never has there been so much blatant corruption, malpractice, malfeasance that the mongers have totally gotten away with by a cast of characters in all fields that are truly cringe worthy presentations.


Sure there has, it just hasn't been here. Up until now, at least in our lifetimes
our esteemed leaders and corporate hoodlums have confined their activities
to major third word drug production areas like Indo China, Columbia and Afghanistan.

On 6 December 2001 private pension funds were transformed into treasury bonds
or government backed loans to service debts incurred to the IMF by Argentina,
just like what happened today here with the AIG. Within 15 days marshal law
was declared and their entire banking system had failed. What's happening here
is a coup d'etat as surely as it has happened in other countries.

You ask, "what is the real agendas besides the obvious manipulations we all
get as they've been in the process for absolutely decades now?"

Same as it ever was, same as it ever was

Greg Palast relayed a conversation he had with Joseph Stiglitz,
former chief economist of the World Bank: "'...everywhere we go, every
country we end up meddling in, we destroy their economy and they
end up in flames,' said Stiglitz.

And he was saying that he questioned this and he got fired for it.
But he was saying that they even kind of plan in the riots.
They know that when they squeeze a country and destroy its economy,
you are going to get riots in the streets. And they say, 'well that's the "IMF riot."'
In other words, because you have riots, you lose. All the capital runs away
from your country, and that gives the opportunity for the IMF to then add more conditions."
And that's who takes over these fucked up, corrupt, bankrupt countries, the IMF.

In other countries they basically do this to remove the population so they
can harvest the buried wealth, we're seeing that set up now too..
Look towards Alaska, and the recent opening of offshore and Arctic drilling.

If you believe this won't affect you and affect you on a very profound level,
think again.. look at the timing of it all...this is hardball and we're playing with the
big kids, the real big bad kids and they're stealing the ball, it's not some energetic shift
it's thugs on the fucking corner. They'd like you to think it some woowoo energy
shift or a rapture or ufo's, so it's a sucker's game, as well.

There are up sides of course to this and things that people can do that completely
impede this process. What the IMF doesn't expect and certainly doesn't want,
is for people to take things into their own hands, for them to shift from
resistance to reconstruction, from the desperation and rage of rioting to the
joy of creating alternatives.

I've been reading about Argentina lately, cause I wanted to know what happens
next. It's a very good model to look towards, what was done there is being
done here with almost an identical timeline. We could learn much from the
Argentinian people now. As far as I've found in my reading none of them were
suggesting it was the end of the world nor the beginning of the end of the
Davinci code. They were actively taking to the streets, taking over the factories
and finding new ways to survive.

As the economic crisis tore into the social fabric of Argentina, pushing more
and more people to the edge, the tension between hope and despair became
a conducive and creative space for change. Between laughter and tears exists
the space of optimism, the space of radical social transformation.

As far as that guy reinhardt thing in google that was conveniently "found" and
sent viral today, I strongly suspect it's yet another after the fact shill propaganda
piece. If it wasn't it would have been found at or near the date of it's inception
and bandied about then.

And no, this is not some grand delusionary scheme to distract and disturb, it is real
and it is the collapse of the economy as we know it and we will go through it and it
will affect each and every one of us. Fear and negativity, as they always are, are entirely
optional should you choose to participate in this event on that level. And what could
come, will come, of this is still up to everyone's imagination, quite literally.

...and yeah gard I'm sure each and everyone one of us when we take our last breath
will agree with you that this is trivial. However until then we all will be very soon called
upon to rise to the very highest expression of what we can be as human beings
as we all collectively go through, what I'm sure will be a life changing event for us all, literally.

Not metaphorically, or subjectively but really and truly.

There is great promise in the future and there is always the far horizon.
&quot;The impure can become pure through the process of elimination, <br />but error can never be transformed into truth.&quot; <br /> Schwaller De Lubicz
Reply
#28
Confucius say: he who trust Stalinozionist in power and finance wake up with stinky finger and butt shafted!

Damned <img src="{SMILIES_PATH}/scream.gif" alt="Scream" title="scream" />
Reply
#29
rhw, after posting that I later thought about it like you said, that it was probably someone from the inside doing it. See I thought has name was a little "fancy", usually you got these people talking about this stuff and they have rather plain or common names(at least the ones I have seen) but this guy had a name that would go well with "someone the third " or "CEO somebody"
Then theres the fact that he got this info from somewhere, you dont get this type info from receipts and such.
Quote:No mountain is too tall if your first step is belief. -Anonymous
...Because even if there were no artifacts anywhere, not studying things of interest is an extreme disservice to science. -Tarius
Reply
#30
Quote:And no, this is not some grand delusionary scheme to distract and disturb, it is real
and it is the collapse of the economy as we know it and we will go through it and it
will affect each and every one of us. Fear and negativity, as they always are, are entirely
optional should you choose to participate in this event on that level. And what could
come, will come, of this is still up to everyone's imagination, quite literally.

...and yeah gard I'm sure each and everyone one of us when we take our last breath
will agree with you that this is trivial. However until then we all will be very soon called
upon to rise to the very highest expression of what we can be as human beings
as we all collectively go through, what I'm sure will be a life changing event for us all, literally.

I totally disagree with you-since this has been, step by step dismantling process of the system that has worked absolutely wonderful for those who've been a part of the Federal Reserve Act of President Wilson's days in office-just prior to WWI-

I believe that we are constantly being denied our evolutionary normalcies as a species purposely and what better way to divert and distract than by creating systems programmed to fail-enabled to fail as this era has witnessed our entire lives-used like tokens on a monopoly board-millions and millions of tokens.

On a level, imo, that is in overdrive even taking into consideration the potential that so many if not all in power (that they've usually stolen) have this beyond psychotic greed for power and temporal riches.

So moved and manipulated beyond any types of societal normalcies always with the LCD of being in a beaten down-fear of having no plannable future etc-no abilities to change anything-affect anything.

helpless tokens.

Fiat money is doomed to 'fail' the common masspeople-that's why the ones with the power to do so have done so. And let me rephrase-since so many either have absolutely no follow through memories of recent actions setting this entire rigged scheme up like dominoes to fall- most of the history of this country's or world's plots, plans and schemes were very hard to find one by one at bookstores and or groups.

Only since the internet ease to research, consider and compile have those of us who had interest in this history been putting together the pieces of the puzzles.

Mexico's hyperinflation and bail out of the peso and enactment of NAFTA and the allowances for tens of millions of citizens of their borders is highly comparable with the scenario they've set up for us here now too.

Who's going to be bailing us out? Replacing our fiat currency with another one? Enable us to mass migrate out through open borders?
&quot;Confusion... first sign of a bad relationship-whether personal, societal or governmental&quot;
Reply
#31
HAHAHAH FUNNY TITLE!

What You Saw Monday & Wednesday Was Not A Panic - That Was The Fat Lady Clearing Her Throat

Damned

yeah the 'games over' for the manipulative players-they'll just take all those billions of fiat exchange and... go home! off continent preferably.

hursday, September 18. 2008

Posted by Karl Denninger at 08:57


The Beginning Of The End

You'd think that with the ample proof that lying just leads to people shunning your debt and equity issues that global financial institutions would choose to come clean and tell the truth.

You'd be wrong. Grievously wrong.

Now there is a proposal out there that threatens to make a mockery of the foolishness already in the market and multiply it a few times over:

"The action by the four banking agencies provides more favorable accounting treatment of so-called good will, an intangible asset that reflects the difference between the market value and selling price of a bank. The move is similar to a step taken in the midst of the savings-and-loan crisis that helped many institutions in the short run.

Over the longer term, that decision increased the overall costs of the bailout after the government took away the good will benefits. Under the proposal issued this week, the regulators would permit buyers of banks and thrifts to count some of the good will toward meeting their regulatory capital requirements."

Let me decode this for you.

If I buy a bank for $30 billion but the "net" value is only $20 billion, then there is $10 billion of "Good will" on the balance sheet. That's the difference between what I paid and what "fair value" is for that particular transaction.

What this proposal - which will be adopted after only 30 days of comment - will do, is encourage banks to overpay for other banks in deals, because they will be able to count this "phantom" value toward regulatory capital requirements!

This is blatant, out-and-out fiction - another word for it would be "fraud".

Nor does it stop there. Unable to control the FedFunds trading rate or LIBOR, Ben Bernanke has now taken to literally showering the world with dollars - $180 billion worth last night.

In theory these sorts of swaps are inflation-neutral. In reality what often happens is that the "other end" plays "blatant print" to cover their end of the swap, which looks neutral to their economy (since the money immediately goes over to The United States) and effectively is exported here!

I doubt this will do anything of value and it may be tremendously destructive. LIBOR continued to move higher this morning even after this swap line increase was announced, saying quite clearly that the market isn't buying the effectiveness of this move. The danger here is that if The Fed fails to get LIBOR and the EFF under control then they will have truly lost the capability to manage anything in this environment. Add to that a rather explicit threat by China to put together a pan-Asian "new reserve currency" paradigm, plus the fact that agency spreads have blown out again and now are above where they were before Fannie and Freddie were nationalized, and you have all the ingredients for a true market panic.

Never mind that it appears that some "market participants" may be intentionally quoting false bids and asks on Agencies.

No, what you saw Monday and Wednesday was not a panic - that was the fat lady clearing her throat.

Watch the credit markets. They're where the real "tell" is.

I suspect you're going to see a few day bounce here - the selloff yesterday was totally unexpected by me, as I expected the AIG bailout would get thunderous applause and what it got instead was recognition that the house of cards had the Big Bad Wolf breathe on it.

That was a first during this credit crunch - the "short bus" (equity) traders figured it out fast that this wasn't "good news" at all.

But as the credit noose continues to tighten the upward fuel will wane, and we are very likely to see a "no bid" situation develop in some issues.

It if develops in the overnight lending markets or worse, in the Treasury market generally, the game is over.

Don't think it can't.

It can, and if the response to market conditions is to allow the lying to ratchet up instead of to force firms to face the truth it is simply a matter of time before it does.


Genesis

http://market-ticker.denninger.net/arch ... e-End.html
&quot;Confusion... first sign of a bad relationship-whether personal, societal or governmental&quot;
Reply
#32
Is the Amero/NAU dead? Will Canada become an EU member?

http://www.theglobeandmail.com/servlet/ ... y/National

Canada-EU trade proposal rivals scope of NAFTA
Plan to lift barriers for goods and labour to be discussed at summit after election

DOUG SAUNDERS

September 18, 2008 at 2:00 AM EDT

LONDON — Canadian and European officials say they plan to begin negotiating a massive agreement to integrate Canada's economy with the 27 nations of the European Union, with preliminary talks to be launched at an Oct. 17 summit in Montreal three days after the federal election.

Trade Minister Michael Fortier and his staff have been engaged for the past two months with EU Trade Commissioner Peter Mandelson and the representatives of European governments in an effort to begin what a senior EU official involved in the talks described in an interview yesterday as “deep economic integration negotiations.”

If successful, Canada would be the first developed nation to have open trade relations with the EU, which has completely open borders between its members but imposes steep trade and investment barriers on outsiders.

The proposed pact would far exceed the scope of older agreements such as NAFTA by encompassing not only unrestricted trade in goods, services and investment and the removal of tariffs, but also the free movement of skilled people and an open market in government services and procurement – which would require that Canadian governments allow European companies to bid as equals on government contracts for both goods and services and end the favouring of local or national providers of public-sector services.

Previous efforts to reach a trade pact with Europe have failed, most recently in 2005 with the collapse of the proposed Trade and Investment Enhancement Agreement.

But with the breakdown of World Trade Organization talks in July, European officials have become much more interested in opening a bilateral trade and economic integration deal with North America.

A pact with the United States would be politically impossible in Europe, senior European Commission officials said.

A newly completed study of the proposed deal, which European officials said Prime Minister Stephen Harper decided not to release until after the election, concludes that the pact would increase bilateral trade and investment by at least $40-billion a year, mainly in trade in services.

Ottawa officials say they have overcome what they see as their biggest hurdle: the resistance of provincial governments to an agreement that would force them to allow European corporations to provide their government services, if their bids are the lowest.

Although Ottawa's current list of foreign-policy priorities does not include European issues, European and Canadian officials say Mr. Harper has been heavily engaged with the proposed trade pact.

The two governments have completed a detailed study of the proposed agreement that will be unveiled shortly after the election, should the Conservatives win.

Both Ottawa and Brussels have had staff work on a draft text for a deal they had hoped would be introduced at a Canada-EU summit, to be attended by French President Nicolas Sarkozy, European Commission President Jose Manuel Barroso and Mr. Harper in Montreal on Oct. 17. France currently holds the rotating presidency of the EU, and Mr. Sarkozy has said that he hopes to make economic integration with Canada one of his accomplishments.

Last Wednesday, a top Ottawa trade official wrote to Mr. Mandelson to propose “the launch of comprehensive negotiations toward a closer economic partnership at the Canada-EU Leaders Summit, to be held on October 17,” and stressed that all 13 provincial and territorial governments had agreed to the proposed pact at a July 18 meeting in Quebec City.

Because of the election, Mr. Harper appears to have decided not to unveil a full text of the proposed agreement, but instead to use the summit to inaugurate the trade talks with the launch of a “scoping exercise” that will quickly set the goals of the pact and lead to formal “comprehensive trade and investment negotiations” to begin in “early 2009,” according to communications between senior Canadian and European officials examined by The Globe and Mail.

Proponents, including all of Canada's major business-lobby organizations, are in favour of the deal because it would open Canadian exporters to a market of 500 million people and allow the world's largest pool of investment capital into Canadian companies without restrictions.

Because Canada's fractious provinces have killed attempts at a trade pact in the past, Europe is demanding that Canada accept a more far-reaching agreement than Canada and Europe had attempted before, in an effort to win a stronger commitment, EU officials said.

Major “deal-breaker” conditions, officials said, include full agreement by all 10 provinces, especially on the issue of European companies providing government services, and what are known as “geographic indicators,” which forbid products such as champagne and feta cheese to be produced under those names outside their nations of origin. Controversially for Canada, this may soon be extended so only English producers can use the name cheddar on their cheese.

However, both sides agree that there is far more political will to negotiate a major deal, on both sides than there ever has been.

“I am far more optimistic this time than I've ever been in the past. … I feel very confident that we will be able to launch something on Oct. 17 that will give us a better chance than we've ever had before to get a full deal in place,” said Roy MacLaren, head of the Canada-Europe Round Table, a pro-trade business organization that has been heavily involved in the negotiations.

As a trade minister in the Jean Chrétien government and later as a diplomat, Mr. MacLaren was involved in several previous attempts at a Canada-EU pact.

Peace
Government is nothing more than the rationalization and exercise of violence. Everything done by government contains at least the implicit threat of lethal coercion. <br /><br />- William N. Grigg
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#33
I had to put this together to see if I can make sense of what was just said

Quote:OK sweeties, settle down... due to my ever increasing experiences lately definitely shaping my 'opinions' what is REALLY going on right now--- is a HUGE TRANSITION OF ENERGIES. And this bullshit really does not involve us. It really is a radical distraction-not that it necessarily should be totally ignored but there are so many other things we will be working on that make it known to be as trivial as it really is in the grand scheme of all things.

ALL of this financial crap has been in the blatant undertakings for DECADES NOW-RIGHT? From about '84 onward -which is when, coincidentally Pluto entered Scorpio and those children born then are coming of age now- NOTHING-NO THING has been really the same-like mini dark ages set in upon us-over us.

One surreal episode politically and financially after another -from the mass immigration of blatant illegal foreigners-and Europe has had their own prefabbed deluge as well of foreigners with great entitlement issues granted their every wish, enabled with every opportunity at our expense.

Never has there been so much blatant corruption, malpractice, malfeasance that the mongers have totally gotten away with by a cast of characters in all fields that are truly cringe worthy presentations....

....Can you catch the feelings? Can you feel them at all?

THIS IS A GRAND DELUSIONARY SCHEME TO DISTRACT AND DISTURB. TO CONSUME THE ENERGIES OF TOTAL NEGATIVITIES. ALL MANIFESTED BEFORE ALL OF OUR VERY EYES, BRAINS AND HEARTS FOR MOST OF OUR ENTIRE LIVES-TO CULMINATE IN WHAT? WHAT COULD COME OF THIS BESIDES THE SCARY STORYLINES THAT HAVE BEEN CONJURED UP BY SOME VERY LOW ENTITIES.
Quote:And no, this is not some grand delusionary scheme to distract and disturb, it is real
and it is the collapse of the economy as we know it and we will go through it and it
will affect each and every one of us. Fear and negativity, as they always are, are entirely
optional should you choose to participate in this event on that level. And what could
come, will come, of this is still up to everyone's imagination, quite literally.

...and yeah gard I'm sure each and everyone one of us when we take our last breath
will agree with you that this is trivial. However until then we all will be very soon called
upon to rise to the very highest expression of what we can be as human beings
as we all collectively go through, what I'm sure will be a life changing event for us all, literally.
Quote:I totally disagree with you-since this has been, step by step dismantling process of the system that has worked absolutely wonderful for those who've been a part of the Federal Reserve Act of President Wilson's days in office-just prior to WWI-

<img src="{SMILIES_PATH}/dunno.gif" alt="Dunno" title="dunno" /> Yeah that's what I said
Quote:"Same as it ever was, same as it ever was

Greg Palast relayed a conversation he had with Joseph Stiglitz,
former chief economist of the World Bank: "'...everywhere we go, every
country we end up meddling in, we destroy their economy and they
end up in flames,' said Stiglitz.

And he was saying that he questioned this and he got fired for it.
But he was saying that they even kind of plan in the riots.
They know that when they squeeze a country and destroy its economy,
you are going to get riots in the streets. And they say, 'well that's the "IMF riot."'
In other words, because you have riots, you lose. All the capital runs away
from your country, and that gives the opportunity for the IMF to then add more conditions."
And that's who takes over these fucked up, corrupt, bankrupt countries, the IMF.

In other countries they basically do this to remove the population so they
can harvest the buried wealth, we're seeing that set up now too..
Look towards Alaska, and the recent opening of offshore and Arctic drilling.

If you believe this won't affect you and affect you on a very profound level,
think again.. look at the timing of it all...this is hardball and we're playing with the
big kids, the real big bad kids and they're stealing the ball, it's not some energetic shift
it's thugs on the fucking corner. They'd like you to think it some woowoo energy
shift or a rapture or ufo's, so it's a sucker's game, as well."
I don't agree with this at all

Quote:OK sweeties, settle down... due to my ever increasing experiences lately definitely shaping my 'opinions' what is REALLY going on right now--- is a HUGE TRANSITION OF ENERGIES. And this bullshit really does not involve us. It really is a radical distraction-not that it necessarily should be totally ignored but there are so many other things we will be working on that make it known to be as trivial as it really is in the grand scheme of all things.


Hope that clarified things somewhat...
I think most of us "get" exactly what is happening
I believe this, as you called it, "bullshit" involves each
and everyone of us and further I don't personally believe
it's AT ALL trivial...

unless of course you're dead and not present in this body at this time
here in this little portion of the universe we call the USA

It seems in your last statement gard you seem to retract what you had
previously stated...I've been saying all along that the shell game
we've been playing with the QUEEN and our fake fiat dollar
had a definite end time.. I've been saying that since 9/11

Check out Citi Bank and the Tel Aviv stock exchange and see
who's the oversite committee for this world wide economic blunder
You'll find they hold all the government bonds for all the countries
and they're about to sell our bonds right down the river,
just like the junk they are..

and you say

"the foreigners with great entitlement issues were granted their every wish,
enabled with every opportunity at our expense."
At our expense?
and we don't have a little entitlement issue? Oh please

Truth is we've been living on the backs of the rest of the world
for quite awhile now, like lemmings with our McMansions and SUV's
and all our cheap, cute little shoes made by slave labor like we're
some slutty rendition of Imelda Marcos raping everything we can
get our hands, exploiting everyone for our cheap toys

We all are culpable

I really don't think we are in a position to squeal like the spOILt
children we are...

America is getting zee big haircut

I've been saying that for quite a long time as well
London bridge has burnt down and Humpty Dumpty
will never be the same...

"The low entities", at least at this stage of the game, have us PWNED
&quot;The impure can become pure through the process of elimination, <br />but error can never be transformed into truth.&quot; <br /> Schwaller De Lubicz
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