The End of Free Market Capitalism

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The End of Free Market Capitalism

Postby mxsquid » 20 Sep 2008, 19:58


From the NY Times



Section 1. Short Title.

This Act may be cited as ____________________.

Sec. 2. Purchases of Mortgage-Related Assets.

(a) Authority to Purchase.--The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.

(b) Necessary Actions.--The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:

(1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties;

(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;

(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;

(4) establishing vehicles that are authorized, subject to supervision by the Secretary, to purchase mortgage-related assets and issue obligations; and

(5) issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities of this Act.

Sec. 3. Considerations.

In exercising the authorities granted in this Act, the Secretary shall take into consideration means for--

(1) providing stability or preventing disruption to the financial markets or banking system; and

(2) protecting the taxpayer.

Sec. 4. Reports to Congress.

Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.

Sec. 5. Rights; Management; Sale of Mortgage-Related Assets.

(a) Exercise of Rights.--The Secretary may, at any time, exercise any rights received in connection with mortgage-related assets purchased under this Act.

(b) Management of Mortgage-Related Assets.--The Secretary shall have authority to manage mortgage-related assets purchased under this Act, including revenues and portfolio risks therefrom.

(c) Sale of Mortgage-Related Assets.--The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act.

(d) Application of Sunset to Mortgage-Related Assets.--The authority of the Secretary to hold any mortgage-related asset purchased under this Act before the termination date in section 9, or to purchase or fund the purchase of a mortgage-related asset under a commitment entered into before the termination date in section 9, is not subject to the provisions of section 9.

Sec. 6. Maximum Amount of Authorized Purchases.

The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time

Sec. 7. Funding.

For the purpose of the authorities granted in this Act, and for the costs of administering those authorities, the Secretary may use the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under chapter 31 of title 31, United States Code, are extended to include actions authorized by this Act, including the payment of administrative expenses. Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure.

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Sec. 9. Termination of Authority.

The authorities under this Act, with the exception of authorities granted in sections 2(b)(5), 5 and 7, shall terminate two years from the date of enactment of this Act.

Sec. 10. Increase in Statutory Limit on the Public Debt.

Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof $11,315,000,000,000.

Sec. 11. Credit Reform.

The costs of purchases of mortgage-related assets made under section 2(a) of this Act shall be determined as provided under the Federal Credit Reform Act of 1990, as applicable.

Sec. 12. Definitions.

For purposes of this section, the following definitions shall apply:

(1) Mortgage-Related Assets.--The term “mortgage-related assets” means residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before September 17, 2008.

(2) Secretary.--The term “Secretary” means the Secretary of the Treasury.

(3) United States.--The term “United States” means the States, territories, and possessions of the United States and the District of Columbia.

This bill should never, ever allowed to become law starting with this provision:

"Sec. 8. Review: Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."

Take a moment to re-read that. This new LAW would make the Secretary of the Treasury ABOVE THE LAW.

So, this bill is being sold to us, the taxpayer, as a design to protect the American public. Ask yourself, if this new law is so helpful to the American taxpayer, why are we not allowed to review the decisions being made with OUR tax-money? Why aren't courts or oversight committees allowed to see what exactly it is he will be doing?

Here is what the bill doesn't do: It doesn't include anything to actually help those whose homes are in foreclosure, or about to be in foreclosure.

Now, this is what it DOES do:

1) Creates a NEW TAXPAYER FUNDED account, called the "RTC."

2) In this account, trillions in bad debt are funneled from companies who failed due to incredibly risky decisions

3) In this account, billions in bad loans will be dumped related to STRESSED COMMERCIAL real estate

4) In this account, financial institutions will compete for how little they will accept for their bad debts

5) With this law, the secretary will decide how much of your money he will pay for bad loans, regardless of the true market value.

To make this crystal clear: this account will be used to take YOUR money, and with that -- YOUR MONEY--PURCHASE the very liabilities that Wall Street can't sell to any other business or country. And why can't they sell them? It's simple: they are worthless!

We are told that this bill is the lesser of two evils. So, if this is the lesser, what is the greater? The greater "evil" is allowing free markets to work as designed!

In a free market, these companies would fail. They made risky bets that blew-up, and now they are weak. From the ashes, new stronger companies would emerge to fill the void. Yes, it would hurt for a while – but that is the nature of a free-market. This bill spits in the face of the very foundation on which our great country was built.

It is designed to bail-out bankrupt institutions that ruined the fiscal health of the country!

Furthermore, after these people – THE richest in the world – get our money, will they pay any additional personal tax to offset the massive burden they are placing on the system? Once again, the "lower classes" will be lining the pockets of the uber class.

What is maddening about this situation is that the U.S.A already had rules and regulations in place – rules created because of the Great Depression – to prevent this from happening again.

So why is this happening again? Because the people you elected turned a blind eye and chose not to enforce the law while everyone was making a killing. As a good example of this, you may have heard recently in the news, is how the SEC is "banning illegal naked short selling" in the market place. Well, here's a news flash – Naked Short Selling has always been ILLEGAL. Why are you placing a ban on something you are supposed to ARREST people for?

Clearly, these people are not representing your interests. I can practically hear you now, "Since when do they represent my interests?"

That's right. Since when.

They weren't thinking about you when they collected $100s of millions from lobbyists. They weren't thinking about you while Wall Street speculated with the money you placed in their bank accounts and spun it into trillions.
They weren't thinking about you when they paid JP Morgan $30 billion (of your money) to buy Bear Sterns, or another $85 billion (of YOUR money) to buy 80% of AIG They weren't thinking about you when, all this time, they told you that this problem was contained.

And so, I ask you today – what makes you think that they are thinking about you now?

How does that make you feel?

1) This new Law places Secretary Paulsen above the law; "Decisions… non-reviewable … agency discretion …may NOT be reviewed by ANY COURT OF LAW OR ANY ADMINISTRATIVE AGENCY"

2) Wall Street, where "Greed is Good", is getting YOUR money, to ensure they keep their mansions, private jets, multi-million dollar yachts, and bonuses: (Goldman Sachs, alone, paid bonuses of 20 billion in 2007 and 16 billion in 2006)

3) The U.S.A – the BASTION of "free market" capitalism – is utterly preventing, in any way it can, to allow the free market to actually WORK. If you think America is a free-market economy, stop that false belief right now. Even SOCIALIST GOVERNMENTS would not embark down this path of socialist "financialism" ... 221849237/

So, what can we do at this point?

First: Forward this email. No matter how embarrassed or worried you might feel about it, forward it to other Americans so they can at least be AWARE this is happening. If they get irritated with you, they are choosing to live in ignorance and hurt the country they live in.

Second: Call your representatives. They are the people who are supposed to do YOUR bidding. Call them, make them justify this new Law. Don't believe them if they tell you, "this is the best we can do." RAISE HELL.

This law is not good for you, it will not prevent a crash, it will not cause home value to suddenly turn around. It will cause a short term rally in the stock market, it will allow rich bankers to off-load bad debts, and it will allow Wall Street to recover catastrophic stock losses while the big money sells into the rally (while they work hard to convince you to leave your 401K invested).

I can assure you this: if this law passes, America will fundamentally turn its back on the very premise on which our country was founded: Free-Market Capitalism.

The markets will correct regardless of any action the government attempts to make. It is unavoidable. Nothing goes "up" forever, and we all recognize this. This will only delay the inevitable. That is, of course, the point, to delay the damage until a new administration has to deal with the fallout.

If this bill is allowed to pass, you can say goodbye to a capitalist free market. It will no longer exist. Oh, the Commercial and Investment banks get to keep their profits, but THE AMERICAN PUBLIC PAYS FOR THEIR LOSSES.
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Re: The End of Free Market Capitalism

Postby mxsquid » 21 Sep 2008, 08:32

This man has Florida swamp land he wants to sell you


Paulson says U.S. taxpayers at risk in bailout plan
Sun Sep 21, 2008 10:35am EDT

WASHINGTON (Reuters) - U.S. Treasury Secretary Henry Paulson acknowledged on Sunday an emergency rescue plan aimed at stabilizing a financial system in freefall will cost taxpayers money, but argued that costs will not be as high the $700 billion limit of the package.

"The taxpayer is at risk," he said on "Fox News Sunday" television program, but added, "It would be extraordinary circumstances, highly unlikely, that the cost will be anything like the amount you spend for the assets."


Gold Analyst Jim Sinclair Chimes In

We wish the rescue initiative good fortune, however the problem was last reported by the BIS as one quadrillion, one thousand one hundred forty four trillion - a tad larger than $700 billion. Notional value becomes full value in bankruptcy. That is a simple fact. ... _ARID=6693

Total Notional Value Of Derivatives Outstanding Surpasses One Quadrillion

Author: Jim Sinclair
June 9, 2008

The notional value of all outstanding derivatives now totals approximately $1.144 QUADRILLION.

This appears to be Bank of International Settlement Spin to announce the largest gain in derivatives outstanding since they started to report. As of the last report it appeared that both listed and OTC derivatives was under $600 trillion. Now listed credit derivatives alone stood at $548 Trillion. The OTC derivatives are shown as $596 trillion notional value, as of December 2007. One can only imagine what number they are at now.

Well we hit a QUADRILLION. We have more than $1000 trillion dollars in all derivatives outstanding. That is simply NUTS because notional value becomes real value when either counterparty to the OTC derivative goes bankrupt. $548 trillion plus $596 trillion means $1.144 quadrillion.

It would be an interesting piece of research to see what the breakdown is of listed derivatives according to exchange to see if it adds up to the reported number. Spin is now everywhere.

This means that no OTC derivative house can be allowed to go broke. This means that whatever funds are required to rescue failing international investment banks, banks and financial entities will be provided.

Keep this economic law in mind. Monetary inflation proceeds price inflation and is its primary cause in economic history from Rome to present.

Nothing can stop the juggernaut of price inflation heading towards every nation like a runaway freight train down a mountain. ... _ARID=6284
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Re: The End of Free Market Capitalism

Postby mxsquid » 21 Sep 2008, 09:10

Exchange Traded Derivatives Increased 30%, BIS Says (Update1)

By Liz Capo McCormick

June 9 (Bloomberg) -- Trading in derivatives, led by short- term interest-rate futures, climbed 30 percent to a record $692 trillion in the first quarter, signaling a possible easing of tensions in the money markets, the Bank for International Settlements said.

The value of short-term interest-rate futures traded on exchanges rose to $548 trillion during the three months ended March 31, a gain of 32 percent over the same period last year, the Basel, Switzerland-based BIS said today. The contracts are designed to speculate on, or hedge against, moves in borrowing rates. The figures are based on the notional amounts underlying the agreements.

The increased trading ``suggests that liquidity conditions in the term money markets might have recovered to some extent after the stressful 2007 year-end,'' analysts Naohiko Baba, Patrick McGuire and Goetz von Peter wrote in the BIS's quarterly review.

The gains were concentrated in derivatives denominated in U.S. dollars and euros, which had undergone a ``significant retreat'' in the prior quarter, they wrote. Banks were still pressed for cash, according to another part of the report.

A derivative is a financial obligation whose value is derived from interest rates, the outcome of specific events or the price of underlying assets such as debt, equities and commodities. Derivatives include futures, which are agreements to buy or sell assets at a set date and price, and options, which are the right but not the obligation to do so.

Eurodollar Deposits

Turnover in futures and options on three-month Eurodollar deposit rates ``picked up sharply'' in the period, extending a rise from the previous quarter, said the BIS, a global organization formed in 1930 that monitors financial markets and serves as a bank for central banks.

Eurodollar futures are priced at expiration to the three- month London interbank offered rate, or Libor, for U.S. dollars. Turnover in futures and options on the federal-funds rate fell in the quarter.

The increase in exchange-traded derivative trading in the first quarter erased a 21 percent slide in the previous period, the biggest drop in at least 14 years. Trading had declined as banks hesitated to lend to each other amid mounting losses on securities linked to U.S. subprime mortgages.

Even as conditions in the money market improved in the first quarter, early signs in the current quarter show that banks were still pressed for cash, BIS analysts Ingo Fender and Peter Hordahl wrote in a separate section of the report.

`Extreme Stress'

``Interbank money markets continued to show clear signs of extreme stress from March to May,'' they wrote. ``Spreads between Libor rates and corresponding overnight indexed swap (OIS) rates, due to counterparty credit risk as well as liquidity concerns, were generally at least as high at the end of May as three months earlier.''

This appears to imply there were expectations that interbank strains ``were likely to remain severe well into the future,'' Fender and Hordahl wrote.

The difference, or spread, between the three-month dollar London interbank offered rate and the overnight index swap rate, known as Libor-OIS, is 67 basis points today. The spread was 73 basis points on March 31 and peaked last year at 106 basis points in December. The spread averaged 11 basis points for the 10 years prior to August, when the global credit crunch began.

Dollar Swaps

Overnight indexed swaps are over-the-counter traded derivatives in which one party agrees to pay a fixed rate in exchange for the average of a floating central-bank rate over the life of the swap. For U.S. dollar swaps, the floating rate is the daily effective federal funds rate.

Trading in stock index futures and options fell 2.7 percent to $73 trillion in the fourth quarter, compared with $75 trillion in the prior quarter, according to BIS analysts Baba, McGuire and von Peter. Trading rose 22 percent versus the same period a year earlier. The Standard & Poor's 500 index declined 9.9 percent in the three months to March 31. The Dow Jones Stoxx 600 Index in Europe dropped 16 percent during the same period.

Foreign exchange futures and options volumes advanced in the first quarter, led by trading in the euro, yen and Swiss franc derivatives, the BIS said. These increases offset retreats in currencies that included the Canadian dollar and the U.K. pound.

Trading in currency futures and options rose to $6.7 trillion, a jump of 11.7 percent from fourth-quarter 2007 and a gain of 32 percent from the same period last year, the BIS said.

Currency Volatility

Volatility implied by options among the seven most-traded currencies increased 25 percent in the first quarter, matching the rise in the previous quarter, a JPMorgan Chase & Co. index shows.

Global trading in commodity derivatives grew by 52 percent to 489 million contracts in the first quarter from the year-ago period. The BIS said notional figures weren't available. Agricultural and energy products led the climb, it said. Commodity trading data is not included in the BIS's aggregate derivative figures.

Trading in derivatives not listed on exchanges increased during the second half of 2007, led by growth in the credit segment ``due possibly to heightened demand for hedging credit exposure,'' the BIS said.

The notional value of all outstanding over-the-counter derivatives rose 15 percent in the second half to $596 trillion, following a 24 percent gain in the first half of the year, the BIS said.

The gross market value of credit default swaps, which measures the cost of replacing all existing contracts, almost tripled to $2 trillion in the second half of 2007, compared with a rise of 53 percent in the first half, the BIS said.

Credit-default swaps, which make up the majority of credit derivatives, are financial instruments investors use to speculate on the ability of companies to repay debt or hedge against the risk they won't.

To contact the reporter on this story: Liz Capo McCormick in New York at
Last Updated: June 9, 2008 10:59 EDT ... refer=bond
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Re: The End of Free Market Capitalism

Postby mxsquid » 22 Sep 2008, 02:15

Not necessarily practicing what you used to preach …

Posted on Sunday, September 21st, 2008 by bsetser

Back in 1998, after Asia experienced a systemic banking crisis, the United States led a series of international working groups to develop best practices for handling future crises. One of the working group — the second working group — developed principles for managing a systemic banking crisis. The group’s recommendations included:

“Bank owners (holders of bank equity) should not be bailed out. They should lose their investments when banks are given public support, or their investment should be diluted through sales of equity (or some convertible instrument) to a government agency, which is then in a position to benefit and recover cots if the institution’s conditions improves.”

See p. 43-44 of the pdf of the Report on Strengthening Financial Systems.

“The extension of guarantees should be strictly limited, possibly by class of institution, instrument and agent;

“Guarantees should always be given in ways to reduce moral hazard risk. i.e. providing an upside risk to the guarantor.”

p. 41 of the pdf of the Report on Strengthening Financial Systems.

I doubt the Treasury’s recent guarantee of money market funds fully meets this criteria; very large investors in money market funds now have more protection than many depositors in banks. The US doesn’t seem to have been fully prepared for the contingency that the bankruptcy of a large investment bank would lead to a huge rise in the banks’ cost of funds and a run on money market funds — a key source of financing for the shadow financial system.

Another recommendation, from the final G-22 report:

“The working group recognises the role of government in protecting smaller deposits in the banking system and the overall integrity of the financial and payments system. However, preserving the stability of the financial and payments system does not require protecting individual banks, their managers or their equity owners from the risk of failure.”

See p. 8 of the pdf the Report on International Financial Crises.

These are difficult — and, as Secretary Paulson noted, humbling — times for the United States. But that doesn’t mean that existing equity investors in the financial system necessarily have to see their investment protected when the government injects additional funds into the system.

Full disclosure: I was part of the secretariat that helped to draft the Report on International Financial Crises, a working group the United States chaired. It was my first significant job at the US Treasury.

Link to the Full Article by Brian Setser
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Re: The End of Free Market Capitalism

Postby mxsquid » 27 Sep 2008, 16:13

Proposed $700 Billion Bailout Is
Too Little, Too Late to End the Debt Crisis;
Too Much, Too Soon for the U.S. Bond Market

by Martin Weiss, PhD

Executive Summary

New data and analysis demonstrate that the proposal before Congress for a $700
billion financial industry bailout is too little, too late to end the massive U.S. debt
crisis; and, at the same time, too much, too soon for the U.S. Government bond
market where most of the funds would have to be raised.

I. Too Little, Too Late to End the Debt Crisis. Congress should

1. Disregard data based on the list of troubled banks maintained by the Federal
Deposit Insurance Corporation (FDIC)
. The FDIC’s list currently has 117
institutions with $78 billion in assets. However, based on a broader analysis of
recent FDIC call report data, we find that institutions at risk of failure include
1,479 FDIC member banks and 158 thrifts with total assets of $3.2 trillion, or
41 times the assets of banks on the FDIC’s list.

2. Think twice before providing a broad bailout for U.S. debts given the wide
diversity of mortgage holders and the great magnitude of the total debts
outstanding in the United States. Just-released Federal Reserve Flow of Funds
data show that, beyond mortgages, there are another $20.4 trillion in private sector
consumer and corporate debts, plus $2.7 trillion in municipal securities

3. Recognize that, among banks and thrifts with $5 billion or more in assets, there
are 61 banks and 25 thrifts that are heavily exposed to nonperforming

4. Get a better handle on the enormous build-up of derivatives held by U.S.
commercial banks.

5. Base any legislation on (a) realistic estimates of the loan amounts already
delinquent or in default, and (b) reasonable forecasts of how many more are
likely to go bad in a continuing recession.

6. Recognize the inadequacies in already-established safety nets, such as the
FDIC for bank depositors, Securities Investor Protection Corporation (SIPC)
for brokerage customers, and state guarantee associations for insurance

There should be no illusion that the $700 billion estimate proposed by the
Administration will be enough to end the debt crisis. It could very well be just a
drop in the bucket.

II. Too Much, Too Soon for the U.S. Bond Market. There should also be no
illusion that the market for U.S. government securities can absorb the additional burden of a $700 billion bailout without putting dramatic upward pressure on U.S. interest rates.

The Office of Management and Budget (OMB) projects the 2009 federal deficit
will rise to $482 billion. But adding the cost of announced and proposed bailouts,
now approximately $1 trillion, it is undeniable that the federal deficit could double
or triple in a short period of time, driving interest rates sharply higher and
aggravating the very debt crisis that the bailout plan seeks to alleviate.

III. Policy Recommendations to Congress

1. Congress should limit and reduce the funds allocated to any bailout as much as
possible, focusing primarily on our recommendation #4 below.

2. If Congress is determined to provide substantial sums to a new government
agency to buy up bad private-sector debts, we recommend that the new agency pay
strictly fair market value for those debts, including a substantial discount that
reflects their poor liquidity.

3. Congress should clearly disclose to the public that there are significant risks in
the financial system that the government is not able to address.

4. Rather than protecting imprudent institutions and speculators, Congress should
protect prudent individuals and savers by strengthening existing safety nets,
including the FDIC for bank deposits, SIPC for brokerage accounts and state
guarantee associations that cover insurance policies.

IV. Recommendations to Savers and Investors

Regardless of what Congress decides, savers and investors should continue to
invest and save prudently, seeking the safest havens for their money, such as
banks with a financial strength rating of B+ or better, U.S. Treasury bills, and
money market funds that invest almost exclusively in short-term U.S. Treasury
securities or equivalent. ... -Paper.pdf
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Re: The End of Free Market Capitalism

Postby mxsquid » 11 Oct 2008, 14:20

Stratfor Red Alert

Underlying this political pressure is a sense that the financial class, people who run global financial institutions, have failed to behave responsibly and effectively, and have therefore lost their legitimacy. The expectation, reasonable or not, is that the political system will now supplant these managers and impose at least a temporary solution. The finance ministers therefore have a political mandate, almost global in scope, to act decisively. The question is what they will do?

That question then divides further into two parts. The first is whether they will try to craft a single, global, integrated solution. The second is the degree to which they will take control of the financial system — and inter-financial institution lending in particular. (A primary reason for the credit crunch is that banks are currently afraid to lend — even to each other.) Thus far, attempts at solutions on the whole have been national rather than international. In addition, they have been built around incentivizing certain action and increasing the available money in the system.

So far, this hasn’t worked. "This is a Crash"

The Dow Jones Industrial Average fell as low as 7,882.51 and rose as high as 8,901.28 before closing down 1.5 per cent at 8,451.19. For the week, its 18.2 per cent fall was the worst ever.

Policymakers from the Group of Seven nations said they would take “urgent and exceptional action” to stem the financial crisis, though stopped short of adopting a specific and uniform set of policies that would individually bind all its member countries.

This was a market crash (see video too)
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Re: The End of Free Market Capitalism

Postby mxsquid » 31 Oct 2008, 18:59



by Larry Levin

The GDP report was horrible - Yeeeeeee Haw, was the response on Wall Street. Although it was very bad, it could have been worse, they said.

The GDP report showed a -.3% decline in economic activity from last quarter's fictitious 2.8% reading. The massive reversal, however, was read as good news because some economists had predicted a -.5% reading. Asked about the 4th-quarter, economists believe GDP will contract at a -2.8% rate. Therefore, if it comes in at say, -2.5%, we should expect a nice rally. (Sarcasm)

Here are some specifics of the report:

1) Final sales to domestic purchasers fell 1.8%, the largest decline in 17 years.

2) Consumer spending dropped 3.1%, the first decline in 17 years and the biggest drop in 28 years.

3) Business investment fell 1%.

4) Investments in homes fell for the 11th straight quarter.

5) Spending on nondurable goods fell 6.4%, the largest decline in 58 years. Non-durables? Yikes, that's some real retrenchment in spending.

6) Inflation-adjusted after-tax incomes fell 8.7%, the largest quarterly decline since the record-keeping began in 1947! However, incomes fell more during the Great Depression, so we got that goin' for us.

7) Government spending increased 5.8%, adding 1.2% points to growth. Of course, this was done with borrowed money.

8) Federal spending jumped 13.8%, including an 18.1% rise in defense spending, the biggest growth in five years. Of course, this was done with borrowed money.

9) Spending by state and local governments rose 1.4%. Of course, this was done with borrowed money.

As you can plainly see, this data is horrifyingly bad. There is no way a sane person can read this and come to the conclusion that it's not so bad. Unfortunately, it has only just begun; it will get worse from here.

As I have been saying for some time now, the government's money pumping will do nothing and this is proof positive. Much like the old saying - You can lead a horse to water but you can't make him drink - you can give money to a bank but you can't force it to lend. Moreover, you cannot force a consumer to borrow money.

The consumer is broke. The country is broke. We need time to work off the debt, and nothing the government does will fix it any sooner than what would happen over its natural course of time.

But that won't stop the morons in Washington and in the Federal Reserve from trying - oh no. The FDIC wants a new homeowner bailout of $600-billion! That's right, the prior several TRILLION wasn't good enough, so they want to piss away another $600-billion. The entire debt bubble was intentional since we refuse to save. One could argue that the government felt compelled to encourage the debt to keep the economy moving along. Now that said bubble has been pricked, however, we're getting screwed as taxpayers in an insipid and outrageous attempt to keep those who wrote all this bad paper from having to eat it.

But it doesn't stop there either. The Fed is lending more money out to more foreign governments; Brazil , Singapore , South Korea , and Mexico . Each will receive $30-billion. Ain't that nice?

The list of participants dependent on the Fed increases every day - literally. The Fed is not the lender of last resort in the USA , but is now the lender of only resort to Brazil , Mexico , South Korea , and Singapore - perhaps the world. When those loans are used up, what's next? More loans? Bigger loans? When will it end?
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Re: The End of Free Market Capitalism

Postby mxsquid » 03 Nov 2008, 08:00

A final looting of U.S. public wealth ahead of the January Inaugural (from the UK Guardian newspaper) ... my-banking
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Re: The End of Free Market Capitalism

Postby mxsquid » 10 Nov 2008, 02:17

Bloomberg Sues Fed to Force Disclosure of Collateral (Update1)

By Mark Pittman

Nov. 7 (Bloomberg) -- Bloomberg News asked a U.S. court today to force the Federal Reserve to disclose securities the central bank is accepting on behalf of American taxpayers as collateral for $1.5 trillion of loans to banks.

The lawsuit is based on the U.S. Freedom of Information Act, which requires federal agencies to make government documents available to the press and the public, according to the complaint. The suit, filed in New York, doesn't seek money damages.

``The American taxpayer is entitled to know the risks, costs and methodology associated with the unprecedented government bailout of the U.S. financial industry,'' said Matthew Winkler, the editor-in-chief of Bloomberg News, a unit of New York-based Bloomberg LP, in an e-mail.

The Fed has lent $1.5 trillion to banks, including Citigroup Inc. and Goldman Sachs Group Inc., through programs such as its discount window, the Primary Dealer Credit Facility and the Term Securities Lending Facility. Collateral is an asset pledged to a lender in the event that a loan payment isn't made.

The Fed made the loans under 11 programs in response to the biggest financial crisis since the Great Depression. The total doesn't include an additional $700 billion approved by Congress in a bailout package.

Fed's Position

Bloomberg News on May 21 asked the Fed to provide data on the collateral posted between April 4 and May 20. The central bank said on June 19 that it needed until July 3 to search out the documents and determine whether it would make them public. Bloomberg never received a formal response that would enable it to file an appeal. On Oct. 25, Bloomberg filed another request and has yet to receive a reply.

The Fed staff planned to recommend that Bloomberg's request be denied under an exemption protecting ``confidential commercial information,'' according to Alison Thro, the Fed's FOIA Service Center senior counsel. The Fed in Washington has about 30 pages pertaining to the request, Thro said today before the filing of the suit. The bulk of the documents Bloomberg sought are at the Federal Reserve Bank of New York, which she said isn't subject to the freedom of information law.

``This type of information is considered highly sensitive, and it would remain so for some time in the future,'' Thro said.

The Fed didn't give Bloomberg a formal response because ``it got caught in the vortex of the things going on here,'' said Michael O'Rourke, another member of the Fed's FOIA staff.

Thro declined to comment on the lawsuit.

The case is Bloomberg LP v. Federal Reserve, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Mark Pittman in New York at
Last Updated: November 7, 2008 12:39 EST ... r.oY2YKc2g

Fed Defies Transparency Aim in Refusal to Disclose (Update2)

``As a taxpayer, it is absolutely important that we know how they're lending money and who they're lending it to,'' said Lucy Dalglish, executive director of the Arlington, Virginia- based Reporters Committee for Freedom of the Press.

Ratings Cuts

Ultimately, the Fed will have to remove some securities held as collateral from some programs because the central bank's rules call for instruments rated below investment grade to be taken back by the borrower and marked down in value. Losses on those assets could then be written off, partly through the capital recently injected into those banks by the Treasury.

Moody's Investors Service alone has cut its ratings on 926 mortgage-backed securities worth $42 billion to junk from investment grade since Sept. 14, making them ineligible for collateral on some Fed loans.

The Fed's collateral ``absolutely should be made public,'' said Mark Cuban, an activist investor, the owner of the Dallas Mavericks professional basketball team and the creator of the Web site, which focuses on the secrecy shrouding the Fed's moves. ... =worldwide
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Re: The End of Free Market Capitalism

Postby mxsquid » 11 Dec 2008, 09:32

Some podcasts from von Mises including "Who Killed the Constitution"
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Re: The End of Free Market Capitalism

Postby mxsquid » 11 Dec 2008, 19:18

"An expert is a person who has made all the mistakes that can be made in a very narrow field." Niels Bohr

Capitalist Fools

Behind the debate over remaking U.S. financial policy will be a debate over who’s to blame. It’s crucial to get the history right, writes a Nobel-laureate economist, identifying five key mistakes—under Reagan, Clinton, and Bush II—and one national delusion.

by Joseph E. Stiglitz January 2009


Great Vanity Fair article by Joseph Stiglitz

Thoughts of a Nobel Prize Winner in Atomic Physics, Niels Bohr

Niels Henrik David Bohr, a beautiful mind
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Re: The End of Free Market Capitalism

Postby mxsquid » 24 Apr 2009, 00:45

JPMorgan Chase, Goldman Sachs, Citibank, Wells Fargo and More Than 1,800 Other Institutions Believed to Be at Risk of Failure Based on Fourth Quarter 2008 Data

Several of the nation`s largest banks, including JPMorgan Chase, Goldman Sachs,
Citibank, Wells Fargo, Sun Trust Bank, HSBC Bank USA, plus more than 1,800
regional and smaller institutions are at risk of failure despite government
bailouts, according to Martin D. Weiss, Ph.D., president of Weiss Research,
Inc., an independent research firm.

The analysis is based on Fourth Quarter 2008 data from TheStreet.Com and the
Comptroller of the Currency (OCC). Several large institutions received
significant ratings downgrades from the prior quarter, including Citibank,
downgraded from C- to D; Wells Fargo, downgraded from C- to D+; and SunTrust
Bank, downgraded from C- to D+.

The debt crisis is much greater than the government has reported, according to
the white paper. The FDIC`s "Problem List" of troubled banks includes 252
institutions with assets of $159 billion. The updated review by Weiss Research,
however, shows that 1,816 banks and thrifts are at risk of failure, with total
assets of $4.67 trillion, compared to 1,568 institutions, with $2.32 trillion in
total assets in prior quarter.

Five large U.S. banks have credit exposure related to their derivatives trading
that exceeds their capital, with four in particular - JPMorgan Chase, Goldman
Sachs, HSBC Bank America and Citibank - taking especially large risks.

At year end 2008, Bank of America`s total credit exposure to derivatives was 179
percent of its risk-based capital; Citibank`s was 278 percent; JPMorgan Chase`s,
382 percent; and HSBC America`s, 550 percent, according to the Comptroller of
the Currency (OCC). In addition, in the fourth quarter, Goldman Sachs began
reporting as a commercial bank, revealing an alarming total credit exposure of
1,056 percent, or more than ten times its capital. Although the banking
authorities have not defined how much exposure is considered excessive, Weiss
believes that, as a rule, bank exposure to any single risk category should be
limited to 25 percent of capital. Goldman Sachs has exceeded that limit by a
factor of 42 to 1.

"Equally alarming," writes Dr. Weiss, "is the fourth quarter OCC data
demonstrating that record bank losses are spreading to interest-rate
derivatives. Until now, bank derivatives losses have been limited almost
exclusively to credit defaults swaps (CDS), which represent only 7.8 percent of
the notional value U.S. derivatives held by all U.S. banks. In the fourth
quarter, although the CDS losses continued at a near-record pace, we also
witnessed record losses in the interest-rate sector, which represents 82 percent
of the derivatives market: The nation`s banks lost $3.4 billion in interest-rate
derivatives, or more than seven times their worst previous quarterly loss in
this category."

Dr. Weiss continues, "In the face of such enormous risks and losses it`s
entirely unreasonable to expect the U.S. Government to offset them without
unacceptable damage to its own credit, credibility and borrowing power."

Dr. Weiss points to early signs that the credit of the U.S. Treasury may already
be suffering some damage in the wake of government bailout programs such as the
$700 billion Troubled Asset Relief Program (TARP), the Federal Reserve`s recent
$1.15 trillion commitment to purchase bonds, and the $1 trillion Private-Public
Investment Program (PPIP). For example, the cost of credit default swaps traded
by international investors to insure against a future default by the U.S.
Treasury recently surged to 14 times its 2007 level; while, more recently, the
price of the 30-year Treasury bonds has fallen by 24 points.

"The `too-big-to-fail` doctrine has failed," concludes Weiss. In its place, he
recommends the following steps to build a firmer foundation for a future

* Abandon the unrealistic goal of saving all failing financial institutions,
focusing instead on the goal of rebuilding the economy`s foundation in
preparation for an eventual recovery.
* Pro-actively downsize or shut down the weakest institutions no matter how
large they may be; provide opportunities for borderline institutions to
rehabilitate themselves under a strict regulatory regime; and give
well-capitalized, liquid and prudently-managed institutions better opportunities
to gain market share.
* Seriously consider breaking up the weak megabanks, following the model of the
Ma Bell breakup in 1984.
* Build confidence in the banking system with better disclosure and
transparency, including the public release of the confidential official ratings
on all banks called CAMELS (Capital adequacy, Asset quality, Management,
Earnings, Liquidity and Sensitivity to market risk).
* Switch priorities from the battles we can`t win to the war we can`t afford to
lose, such as emergency assistance for the millions most severely victimized by
a depression.

Due to the nation`s solid infrastructure and knowledge base, Weiss is optimistic
the U.S. can survive a broader banking crisis and even a second great
depression, with good prospects for an eventual recovery, provided we make the
right choices. Toward that goal, immediately following the audio press briefing
tomorrow, Dr. Weiss will launch a national grassroots campaign with an online
video webinar for over 50,000 investors that have registered for the event. The
webinar takes place at 12 noon Eastern Time and the press is also invited to
attend by registering at ... BW20090406

More by Martin Weiss

Martin Weiss Speech on Unintended Consequences
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Re: The End of Free Market Capitalism

Postby mxsquid » 08 May 2009, 02:02


Huge multi million dollar Goldman Sachs stock gains on thousands of shares owned by the President of the NY Fed. This is a clear case of conflict of interest. Where is the SEC on this? How is it justifiable for a regulator of Goldman Sachs to be trading its stock. Friedman, in his role as PRESIDENT must have known detailed information on Goldman Sachs prospects. He clearly acted on insider information. No morals or ethics whatsoever!

While the Fed was deciding whether or not to grant Friedman a waiver, he bought 37,300 Goldman shares on December 17, for an average price of $80.78, according to regulatory filings.

On January 22, he bought 15,300 more shares for average prices of $66.19 and $67.12, according to filings with the U.S. Securities and Exchange Commission. The January purchase brought his total holdings to 98,600 shares.

Goldman shares closed on Thursday at $133.73, meaning Friedman has profited handsomely, earning more than $3 million in total on the two purchases. ... d_friedman
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Re: The End of Free Market Capitalism

Postby mxsquid » 15 May 2009, 17:51

5/6/2009, SEC going after insider trading of Credit Default Swaps (CDS) ... abdc0.html


2 SEC enforcement lawyers accused of insider trading activities May 15, 2009 ... abdc0.html
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Re: The End of Free Market Capitalism

Postby mxsquid » 29 May 2009, 00:24

China Warns Federal Reserve Over Printing Money

Dill Weed
on May 28, 2009
at 06:02 PM

My fellow Americans,

It is WORSE than you think.

Take a heart pill and watch these videos in the order below. SOMETHING WICKED THIS WAY COMES.

Money As Debt ... 3790090544

The Money Masters: How International Bankers Gained Control of America ... 0256183936

1932, A True History of the United States ... re=channel

Zeitgeist II Central Banking Exposed ... re=related

The Gig Is Up- Money, the Federal Reserve and You.flv ... 3428&hl=en
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Re: The End of Free Market Capitalism

Postby mxsquid » 12 Jul 2009, 07:08

July 12, 2009, the story remains the same

Great, comprehensive set of video presentations from "Friends of Another" FOFOA
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Re: The End of Free Market Capitalism

Postby mxsquid » 17 Jul 2009, 01:55

Observations on the Goldman Sachs SquidWeb

The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. In fact, the history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled dry American empire, reads like a Who's Who of Goldman Sachs graduates...Matt Taibbi, Rolling Stone Magazine

Hmmmm, a more respectful look at my namesake, the Vampire Squid from Hell

Click the Vampire Squid below for the Goldman Sachs interconnected web of influence


And finally,

Giant squid have migrated from deep waters to take residence in San Diego.
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Re: The End of Free Market Capitalism

Postby mxsquid » 20 Jul 2009, 03:38

Max Keiser takes offense to Goldman Sachs oligarchy

Max Keiser takes offense to Goldman Sachs oligarchy Part 2

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Re: The End of Free Market Capitalism

Postby mxsquid » 29 Jul 2009, 12:46

Kucinich: the Federal Reserve is paying banks NOT to make loans to struggling Americans!

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Re: The End of Free Market Capitalism

Postby mxsquid » 07 Dec 2009, 20:29

Dollar Bubble

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Re: The End of Free Market Capitalism

Postby mxsquid » 27 Dec 2009, 12:20

Gerald Celente predicts top trends for 2010 on Financial Sense Newshour


A 20 minute interview with Jim Puplava on 12/19/2009

    1. Terrorism reemerges in 2010
    2. Market crash
    3. Upscale and glamour like in the 1930's depression era
    4. Neo survivalism
    5. Trade protectionism, outsiders (illegals) no longer welcome
    6. TB (Too big to fail, too big - fat to get a job) means people shape up
    7. High tech innovation to continue
    8. Buy local (part of neighbor self help and survival)
    9. New forms of news dissemination not your old TV stations.
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Re: The End of Free Market Capitalism

Postby mxsquid » 07 Mar 2010, 10:15

G Edward Griffin

Creature From Jekyll Island A Second Look at the Federal Reserve

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Re: The End of Free Market Capitalism

Postby mxsquid » 13 Aug 2010, 19:51

Why did President Nixon take the US Dollar off the Gold Standard?

It's a common myth promulgated by the propaganda ministry that the "dollar bill" (Federal Reserve Note) was "backed" by gold.

The law says something entirely different.

TITLE 12,UNITED STATES CODE, CHAPTER 3,SUBCHAPTER XII,sec. 411. Issuance to reserve banks; nature of obligation; redemption

" Federal reserve notes, to be issued at the discretion of the Board of Governors of the Federal Reserve System for the purpose of making advances to Federal reserve banks through the Federal reserve agents as hereinafter set forth and for no other purpose, are authorized. The said notes shall be OBLIGATIONS of the United States and shall be receivable by all national and member banks and Federal reserve banks and for all taxes, customs, and other public dues. They shall be redeemed in LAWFUL MONEY on demand at the Treasury Department of the United States, in the city of Washington, District of Columbia, or at any Federal Reserve bank."

FRNs are obligations of the U.S. government to pay lawful money on demand.

LAWFUL MONEY - "The terms 'lawful money' and 'lawful money of the United States' shall be construed to mean gold or silver coin of the United States..."

Title 12 United States Code, Sec. 152.

Federal Reserve Notes are issued under the authority of Art 1 Sec 8 power to borrow on the credit of the United States.

Article 1, Section 8. U.S. Constitution.
The Congress shall have Power
...To borrow Money on the credit of the United States;

But the notes were repudiated in House Joint Resolution 192, (June 1933). Congress will no longer guarantee the 'exchange rate' of the dollar (for each FRN). But the law still defines the national debt (in excess of 10 trillion dollars) in terms of gold. That computes to a sum of 500 billion ounces gold. Which is 100 times as much gold as is estimated to exist, above ground, in the world. Fort Knox depository has roughly 147.3 million ounces of gold bullion.

And Congress cannot question the public debt because of the 14th amendment, even when it is insane.

Amendment 14, Section 4. The validity of the public debt of the United States, authorized by law, ..., shall not be questioned.

Since 1933, the U.S.A. has been under a perpetual "temporary" State of Emergency, first declared by FDR, and renewed by each sitting president, partisanship notwithstanding. The cause was bankruptcy to usurers (Federal Reserve Corporation). Since usury is mathematically impossible to pay in a finite money token system, one would hope that Congress would get up on its hind legs and repeal the Federal Reserve Act of 1913, amend / repeal the 14th amendment, and eradicate the public debt based on the fraud. Maybe even the president would end the State of Emergency, too!

Don't hold your breath waiting for it to happen.

The real power behind the president was and is the Secretary of Treasury, who is the paid employee of the World Bank and IMF. No president will ever oppose the wishes of the Bank, because we all know who protects the president - the Secret Service. And what branch do they work for?

The Treasury, whose secretary shall not be paid by the U.S. government, Title 22 USC Sec. 286a.

Read more:

jetgraphics post at
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