Geithner’s Hog Wallow

Mike Whitney | Counterpunch

This time the banks are zeroing in on Geithner’s cash giveaway bonanza, the “Public Private Investment Partnership” (PPIP). As expected, Bank of America and Citigroup have angled their way to the front of the herd, thrusting their snouts into the public trough and extracting whatever morsels they can find amid a din of gurgling and sucking sounds. Here’s the story from the New York Post:

“As Treasury Secretary Tim Geithner orchestrated a plan to help the nation’s largest banks purge themselves of toxic mortgage assets, Citigroup and Bank of America have been aggressively scooping up those same securities in the secondary market, sources told The Post…

But the banks’ purchase of so-called AAA-rated mortgage-backed securities, including some that use alt-A and option ARM as collateral, is raising eyebrows among even the most seasoned traders. Alt-A and option ARM loans have widely been seen as the next mortgage type to see increases in defaults.

One Wall Street trader told The Post that what’s been most puzzling about the purchases is how aggressive both banks have been in their buying, sometimes paying higher prices than competing bidders are willing to pay.

Recently, securities rated AAA have changed hands for roughly 30 cents on the dollar, and most of the buyers have been hedge funds acting opportunistically on a bet that prices will rise over time. However, sources said Citi and BofA have trumped those bids.”(“Double Dippers; Citi and B of A buy laundered loans at lower rates”, Mark DeCambre, New York Post)

Thus begins the next taxpayer-subsidized feeding frenzy, featuring all the usual suspects. The race is on to vacuum up as much toxic mortgage paper as possible so it can be dumped on Uncle Sam at a hefty profit. These are the same miscreants the Obama administration is so dead-set on rescuing. Better to let them sink from their own bad bets.

How is it that industry rep Geithner couldn’t see that his latest round of corporate welfare would create incentives for the bank scoundrels to game the system again? Naturally, if the government goes into the business of buying crap-loans from teetering financial institutions, the speculators and snake oil salesmen will follow. And so they have. Citi and B of A are just the first to respond to Geithner’s pigwhistle. Next will be the hedgies and the Private Equity porkers, all nuzzling up to the Treasury’s feedbin.

Geithner’s plan is a disaster from the get-go. It jacks up the price of garbage assets, rewards the misallocation of capital, invites rampant fraud, and prolongs the recession. Worst of all, it transforms the FDIC into a hedge fund putting individual bank deposits at greater risk. Economist Jeffrey Sachs sums up Geithner’s “public-private” boondoggle in his article “Will Geithner and Summers suceed in raiding the FDIC and Fed?”:

“Geithner and Summers have now announced their plan to raid the Federal Deposit Insurance Corporation (FDIC) and Federal Reserve to subsidize investors to buy toxic assets from the banks at inflated prices. If carried out, the result will be a massive transfer of wealth — of perhaps hundreds of billions of dollars — to bank shareholders from the taxpayers (who will absorb losses at the FDIC and Fed)…

The FDIC is lending money at a low interest rate and on a non-recourse basis even though the FDIC is likely to experience a massive default on its loans to the investment funds….In essence, the FDIC is transferring hundreds of billions of dollars of taxpayer wealth to the banks…The public will not accept overpaying for the toxic assets at taxpayers’ expense. Thus, it is very likely that the Administration will attempt to avoid Congressional oversight of the plan, and to count on confusion and the evident “good news” of soaring stock market prices to justify their actions. ….

Other parts of the plan support subsidized loans from the Treasury and, even more, from the Fed. The Fed is already buying up hundreds of billions of dollars of toxic assets with little if any oversight or offsetting appropriations. Since the Federal Reserve profits and losses eventually show up on the budget, the Fed’s purchases of toxic assets also should fall under the Federal Credit Reform Act and should be explicitly budgeted. (“Will Geithner and Summers suceed in raiding the FDIC and Fed?”, Jeffrey Sachs, Huffington Post)

As Sachs points out, the Fed’s liabilities will eventually be shifted onto the taxpayer. But that hasn’t stopped Bernanke from writing checks on an account that is overdrawn by $11 trillion. Nor has it compelled Geithner to seek congressional authorization before he leverages the FDIC up to its eyeballs. These decisions are all being made by a small coterie of bank loyalists who operate independent of any oversight or government supervision. They do what’s best for their constituents and let the chips fall where they may.

Earlier this week, Geithner asked Congress for additional powers to take over insolvent non-bank financial institutions. The Washington Post:

“The Obama administration is considering asking Congress to give the Treasury secretary unprecedented powers to initiate the seizure of non-bank financial companies, such as large insurers, investment firms and hedge funds, whose collapse would damage the broader economy, according to an administration document.”

Geithner must think he’s a shoe-in for the new “systemic regulator” post because of the exemplary way he handled the AIG bonus scandal.

Of course, in the bizarro world of Washington–where failure typically catapults one to higher office–it’s only logical that Geithner would be elevated to Uber-Regulator, not only controlling the public purse, but using his own peerless grasp of the marketplace to decide which institutions pose a systemic risk and need to be sidelined, and which need stepped-up government support via limitless capital injections.

Prediction: If Geithner is granted these special powers by the braindead Congress, the country will undergo the greatest period of bank consolidation in its 230 year history. This is a blatant power grab by a shifty character who has risen to his present pay-grade by nosing his way up the political stepladder. Congress had better get its act together and put an end to this nonsense or the nation will continue its fast-paced metamorphosis into a feudal oligarchy run by the Bank Mafia and Wall Street racketeers. The first step, is to give Geithner, Summers and any other of the Rubin-clones a full-body bacon-rub followed by a few brisk dunks in the shark tank. Then, hose down Treasury and bring in a whole new team.

Nobel Prize winning economist Joseph Stiglitz summed up Geithner’s “public-private” fiasco like this:

“Quite frankly, this amounts to robbery of the American people. I don’t think it’s going to work because I think there’ll be a lot of anger about putting the losses so much on the shoulder of the American taxpayer.”

Attorney General Cuomo May Break Up Wall-Street/Fed Brothel

It looks like the Attorney General of New York will at least attempt to shut down the Wall-Street/Federal Reserve brothel, in which billions of U.S. tax dollars were stolen by high-level U.S. government and Federal Reserve crooks.

The loot was placed into the hands of large institutions such as Goldman Sachs, formerly headed by the Treasury Secretary Henry Paulson.

This was, of course, one of those action/reaction/synthesis aka problem/reaction/solution enterprises, where those in positions of authority create the problem, then wait for the public to react and demand a solution; then they provide the perceived “solution,” which only goes to further the agenda they had set out with initially.

Cuomo Widens His A.I.G. Investigation

Andrew Ross Sorkin | DealBook Blog

Attorney General Andrew M. Cuomo of New York said Thursday afternoon that he was widening his investigation of the American International Group to examine whether its trading counterparties improperly received billions of dollars in government money from the troubled insurer.

Those counterparties include Goldman Sachs, which received $12.9 billion, as well as Société Générale of France and Deutsche Bank of Germany, which each received nearly $12 billion.

“Our investigation into corporate bonuses has led us to an investigation of the credit default swap contracts at A.I.G.,” Mr. Cuomo said in a statement. “CDS contracts were at the heart of A.I.G.’s meltdown. The question is whether the contracts are being wound down properly and efficiently or whether they have become a vehicle for funneling billions in taxpayers dollars to capitalize banks all over the world.”

Other counterparties that received money from A.I.G. include Barclays of Britain ($8.5 billion), Merrill Lynch ($6.8 billion), Bank of America ($5.2 billion), UBS of Switzerland ($5 billion), Citigroup ($2.3 billion) and Wachovia ($1.5 billion).

The government injected about $180 billion in bailout money into A.I.G. to prevent its collapse after the company found itself on the wrong side of the credit default swaps that it sold. The swaps are insurance-like instruments that allow investors to hedge against bond defaults.

A.I.G.’s financial products division sold the credit default swaps, and it has faced a wall of public outrage after it paid out $165 million in retention bonuses. Earlier this week, Mr. Cuomo said A.I.G. employees had agreed to return $50 million of those bonuses.

We’re All Terrorists Now

Edgar J. Steele | NickelRant.com | March 25, 2009

MP3 Audio: Listen to the Entire Broadcast

“The history of liberty is a history of resistance. The history of liberty is a history of limitations of governmental power, not the increase of it.”
— Woodrow Wilson (Speech in New York, September 9, 1912)

“Every normal man must be tempted at times to spit upon his hands, hoist the black flag, and begin slitting throats.”
— H. L. Mencken (1880-1956)

We’ve come through the Looking Glass. On this side, however, is Wonderland with a decidedly Orwellian twist.

The Red Queen has morphed into a Marxist President (still red and still in charge, though).

The Mad Hatter is Little Timmy Geithner, wannabe Treasury Czar of the World, whose Tea Party is hosted on Wall Street while other “tea parties” are convened by patriots throughout America in response.

The maddening Cheshire Cat is our media, with that smile conveying nothing but misdirection and gibberish.

“Some are more equal than others,” said Orwell through his piggy little Animal Farm overseer. We know who are the “others.” Thee and me, of course. For extra points, guess who are the “some” of whom Orwell wrote.

Painting the Roses Red

“We’re painting the roses red,” sang the playing-card soldiers when asked by Alice why they were drenching all the white roses in the kingdom with bright red paint. All the minions of the new Administration are busy repainting roses throughout America.

However, as observed by Shakespeare, “What is in a name? A rose by any other name would smell as sweet.” Bush’s policies still are the same, regardless of the spin now being accorded them by the Obamatrons. We’re still in Iraq. Gitmo still is in business. America’s southern border still is wide open. The Bush bailouts continue unabated, but now are on steroids.

It’s enough to make your head spin, isn’t it?

Each week brings a fresh batch of outrageous events and news items that further marginalize an ever-growing percentage of Americans. Last week brought a bumper crop, headed by an incredible document leaked by someone in the Missouri police bureaucracy. Entitled “The Modern Militia Movement,” the Missouri Information Analysis Center (MIAC) document popped up on Alex Jones’ web site and promptly sent shock waves throughout the patriot community.

You’re a Terrorist Now

Have you ever supported in any way Republican Ron Paul of Texas? How about last year’s Libertarian Party Presidential candidate, Bob Barr? Or the Constitution Party’s Presidential candidate, Chuck Baldwin? According to MIAC, you are a “militia-influenced terrorist.” Yep, you heard me right. You are a terrorist. Look, I couldn’t just make up stuff as outlandish as is this sort of thing. Truth continues to be stranger than fiction. We’re painting the roses red.

Better go scrape that bumper sticker off your car, because MIAC specifically identifies it as evidence that you should be watched and approached with caution. MIAC is just one of 58 “fusion centers” funded throughout America by the federal Department of Homeland Security with over a quarter-billion dollars, tasked with identifying “potential trends or patterns of terrorist or criminal operations” (per the MIAC web site) in America.

Are you opposed to the coming North American Union (NAU), whereby America is subsumed within a new government encompassing all of North America? How about the New World Order (NWO), whereby America surrenders her Constitution altogether in favor of becoming just another cog in a world government? Speak out against either the NAU or the NWO in any way and you are a terrorist, says MIAC, courtesy of your tax dollars spent in its support. Continue reading We’re All Terrorists Now

Dialog Between Fmr. Fed Chair Volcker and Congressman Ron Paul

Here is an interesting discussion between Congressman Ron Paul and Paul Volcker in which Dr. Paul starts by describing the blow-up of the global fiat credit bubble; he later inquires to former Federal Reserve Chairman Paul Volcker’s ideas on the reform of the international monetary system.

Among his concerns were:

  • the creation of supra-national powers for international financial institutions
  • moving away from the free market
  • international negotiations for the replacement of the dollar system

It is interesting, that during this discussion the idea of the IMF having an increased role in the world economy was brushed off; while in recent days there is new talk of the world returning to a new standard of IMF-issued SDR’s.

Fed Planning 15-Fold Increase In US Monetary Base

Eric deCarbonnel | MarketSkeptics.com

The fed is planning moves that would more than double its balance-sheet assets by September to $4.5 trillion from $1.9 trillion. Whether expressing approval or concern over the fed’s intentions, most commentators fail to understand the real magnitude of the projected expansion of the US monetary base because they don’t take into account the amount of dollars circulating abroad.

At least 70 percent of all US currency is held outside the country, and this means the US monetary base is considerably smaller than the fed’s overall balance sheet. Take, for example, the true US domestic money supply at the beginning of September 2008, before the fed started its quantitative easing. From the Federal Reserve’s website, we know that currency in circulation was 833 Billion. This translates as 583 Billion dollars circulating abroad (70 percent), and 250 Billion dollars circulating domestically (30 percent). Since the bank reserve balances held with Federal Reserve Banks were 12 billion, that gives us a 262 Billion domestic monetary base as of September 2008. Now compare that to the projected US domestic monetary base for September 2009 which is 3,818 billion (4,500 billion – 583 billion (dollars circulating abroad) – 99 billion (other fed liabilities not part of the money supply)). The fed’s planned balance sheet expansion results in a 15-fold increase in the base money supply.

262 Billion = US monetary base as of September 2008 (minus dollars held abroad)
3,818 Billion = projected US monetary base in September 2009 (minus dollars held abroad)

3,818 Billion / 262 Billion = 15-Fold Increase in US monetary base
Continue reading Fed Planning 15-Fold Increase In US Monetary Base

On Liberty and Life

We must maintain our liberties. We must fight corruption wherever it lie. We must help others to realize that the Constitution of the united States of America must remain true to its original intent.

Our predecessors fought off the forces of the British crown, while our contemporaries kneel down and kiss their rings. They wrongly confiscate our monies through “income taxes” and “inflation,” then send it to the wall-street elite, who cannot produce anything of real value.

This America of today is overrun with minions, doing the bidding of the king. Grateful to him as they beg him to relinquish every liberty and every form of real wealth they hold dear. If there isn’t a real change, some day in the near future, we may find that all of our choices are made by the ruling government authorities; and we are not able to venture off on our own and live the way we choose.

We’re losing a little each day, of what made us a great people. The saddest part is the mind numbing complacency, as the people of today watch it all go away; seldom a word is said in condemnation.

The solution to this dilemma is quite simple, we needn’t fear nor hide. All we must do is uphold the Constitutional values of our founders, and realize that liberty lives in each of us; as we are the sole enforcers of the Constitutional law that forms the foundation of our people.

The meaning of the Constitution was never meant to be decided by an elite court, a president, or a body of politicians. The meaning is plain and clear, on the document itself. It defines the role of government and how we can best conduct our affairs, to ensure the protection of the individual, above all; not special groups or professions.

So, it is incumbent upon us all, to enforce the Constitution, by refusing to go along with corrupt practices, that violate these founding principles.

At one time men would die for liberty. Did it ever occur to us today, to gain an understanding, of why the preservation of liberty is so essential?

Give Me Liberty or Give Me Death

Listen to the Audio Version of this Speech

March 23, 1775
By Patrick Henry

No man thinks more highly than I do of the patriotism, as well as abilities, of the very worthy gentlemen who have just addressed the house. But different men often see the same subject in different lights; and, therefore, I hope it will not be thought disrespectful to those gentlemen if, entertaining as I do opinions of a character very opposite to theirs, I shall speak forth my sentiments freely and without reserve. This is no time for ceremony. The question before the house is one of awful moment to this country. For my own part, I consider it as nothing less than a question of freedom or slavery; and in proportion to the magnitude of the subject ought to be the freedom of the debate. It is only in this way that we can hope to arrive at the truth, and fulfill the great responsibility which we hold to God and our country. Should I keep back my opinions at such a time, through fear of giving offense, I should consider myself as guilty of treason towards my country, and of an act of disloyalty toward the Majesty of Heaven, which I revere above all earthly kings.

Mr. President, it is natural to man to indulge in the illusions of hope. We are apt to shut our eyes against a painful truth, and listen to the song of that siren till she transforms us into beasts. Is this the part of wise men, engaged in a great and arduous struggle for liberty? Are we disposed to be of the numbers of those who, having eyes, see not, and, having ears, hear not, the things which so nearly concern their temporal salvation? For my part, whatever anguish of spirit it may cost, I am willing to know the whole truth, to know the worst, and to provide for it. Continue reading On Liberty and Life

Regulators at FASB Turn Corporate America into a Brothel

Two of the most corrupt professions on the planet are at work here: banking and accounting. Its funny that they should even call it “accounting” anymore; as it is meant to provide for “accountability” and the “rule of law.” Instead we are stuck with “deceivability” and the “rule of men.”

As you will soon learn, if you haven’t already; there is no reason whatsoever to hold the securities of most of the corporations today. They simply don’t have to account for the value of their assets anymore. If there is no real accountability, then there will be no confidence. If there is no confidence, then there will be no speedy recovery.

This depression will languish for years. People are getting FED-UP with these kinds of cheap, inbred bankster shenanigans; they are starting to buy real hard assets to squirrel away what they are able, to whether the coming storm.

What? You thought the recovery is around the corner. Do you honestly believe what these people who have been repeatedly wrong are telling you once again, like a broken record? The recovery, as you may picture it, is not going to happen.

People are going to have to change their habits to adapt to the new paradigm. They are going to have to cut out the waste, become more sufficient unto themselves, manage their own money with sound economic principles. They must be guided by a understanding of just how perverted the whole economic system has become, over the past couple of decades.

Accounting Brothel Opens Doors for Banker Fiesta

Jonathan Weil | Bloomberg News

March 19 (Bloomberg) — The banks demanded that the accountants give them leeway in how they report losses to investors. The accountants responded by giving away their souls.

This week, the Financial Accounting Standards Board unveiled what may be the dumbest, most bankrupt proposal in its 36-year history. If it stands, the FASB ought to change its name to the Fraudulent Accounting Standards Board. It’s that bad.

Here’s what the board is floating. Starting this quarter, U.S. companies would be allowed to report net-income figures that ignore severe, long-term price declines in securities they own. Not just debt securities, mind you, but even common stocks and other equities, too.

All a company would need to do is say it doesn’t intend to sell them and that it probably won’t have to. In most cases, it wouldn’t matter how much the value was down, or for how long. In effect, a company would have to admit being on its deathbed before the rules would force it to take hits to earnings.

So, if these rules had been in place last year, a company that still owned shares of American International Group Inc. or Fannie Mae, for instance, could exclude those stocks’ price declines from net income entirely. It would make no difference that the companies were seized by the government last year, or that both are penny stocks. The loss would get buried away from the income statement, in a balance-sheet line called “accumulated other comprehensive income.” Continue reading Regulators at FASB Turn Corporate America into a Brothel

Santo Daime Church Wins Ayahuasca Court Ruling

Finally, true spritual freedom, at least for the Santo Daime.

For awhile there, I was thinking that we only had the freedom to have a “religion,” but not the spiritual aspect of it, if it happened to interfere with the prohibitions of the powers that be. Religion without spirituality is missing something essential, the real nectar, so it is essential that one be allowed to practice all aspects of their particular belief, including drinking of Ayahuasca tea if one is so inclined.

I am pleased to see that this is changing, though it remains to be seen if other spiritual practices will be removed from the prohibition list.

Federal Judge Owen Panner rules in favor of the Santo Daime Church!

“. . .I conclude that the Religious Freedom Restoration Act, 42 U.S.C.
§ §
2000bb to 2000bb-4, requires that plaintiffs be allowed to import and drink
Daime tea for their religious ceremonies, subject to reasonable
restrictions. I will enter a judgment and permanent injunction.
These are my findings of fact and conclusions of law after

the court trial. Fed. R. Civ. P. 52 (a). . .

“. . .Plaintiffs have established their prima facie claim by more than a preponderance of the evidence.
Plaintiffs have established that they are sincere in their religious beliefs, and that the ceremonial use of the Daime tea is essential to their religion. It is obvious that prohibiting the use of Daime tea would substantially burden the exercise of plaintiffs’ religion. . .”

“. . .The government has failed to show that outright prohibition of the Daime tea is the least restrictive means of furthering its interests. . .”

And finally:

“. . .Plaintiffs are entitled to relief under RFRA. Judgment will be entered for plaintiffs in accordance with this opinion.”

IT IS SO ORDERED.

DATED this 18 day of March, 2009
Owen M.
Panner
US District Judge

More Earmarks Actually Means LESS Government

There is this popular idea, that earmark spending results in increased Federal Government spending; so it is thought that the government should be given the money to spend on whatever they please. As with most popular ideas, this one is wrong; it is likely propaganda from those who would be receiving the pork without accountability.

As Congressman Ron Paul describes, the amount of a particular budget is decided before any earmarks are put into place; so a particular earmark does not alter the amount of the overall budget. To remove earmarks would remove accountability and give them even more money in their slush funds; to do with as they please.

Earmarks Don’t Add Up

by Ron Paul | RonPaul.com

Earmarks seem to be the hot topic this week, and as a fiscal conservative I am dismayed so many people deliberately distort the earmarking process and grandstand to make political points. It is an easy thing to do with earmarks. It takes a little more time and patience to grasp the reality of what earmarks really are.

To be sure, if earmarks were the driving force behind explosive government spending as some have been led to believe, that would be a good reason for all the fuss. The misconception seems to be that members of Congress put together a bunch of requests for project funding, add them all together and come up with a budget. The truth is, it is not done that way. The total level of spending is determined by the Congressional leadership and the appropriators before any Member has a chance to offer any amendments. Members’ requests are simply recommendations to allocate parts of that spending for certain items in that members’ district or state. If funds are not designated, they revert to non-designated spending controlled by bureaucrats in the executive branch. In other words, when a designation request makes it into the budget, it subtracts funds out of what is available to the executive branch and bureaucrats in various departments, and targets it for projects that the people and their representatives request in their districts. If a congressman does not submit funding requests for his district the money is simply spent elsewhere. To eliminate all earmarks would be to further consolidate power in the already dominant executive branch and not save a penny.

Furthermore, designating how money is spent provides a level of transparency and accountability over taxpayer dollars that we don’t have with general funds. I argue that all spending should be decided by Congress so that we at least know where the money goes. This has been a major problem with TARP funding. The public and Congress are now trying to find out where all that money went.

The real issue is that the overall budget is too big, by far, which is why I always vote against it. But attacking the 1% that was earmarked solves nothing. The whole issue is a distraction from the real problems we face, which are that the Federal Government will absorb over 1/3 of our country’s GDP this year and taxpayers are forced to fork over more than half their income to fund government at all levels. On top of that, the national debt is $11 trillion, which is $36,000 per citizen. The recent increases in bailouts, government spending and money creation is going to hobble our economy for decades. We must curb the government’s appetite severely if this country is ever to thrive again. The noise over “earmarks” is a red herring and a distraction from the real issue of uncommitted spending.

It is time to attack the entirety of government spending. We especially need a full account of the activities of the Federal Reserve that spends and creates trillions of dollars with no meaningful oversight. This is a huge problem that needs immediate attention.

Why We Produce So Much Catastrophe

“We reproduce catastrophe because we ourselves are traumatized – both as a species and individually, beginning at birth. Because we are wounded, we have put up psychic defenses against reality and have become so cut off from direct participation in the multidimensional wilderness in which we are embedded that all we can do is to navigate our way cautiously through a humanly designed day-to-day substitute world of symbol— a world of dollars, minutes, numbers, images and words that are constantly being manipulated to wring the most possible profit from every conceivable circumstance. The body and spirit both rebel.”

~David Watson, The Pathology of Civilization