The Big Lie

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War is Peace.
Freedom is Slavery.
Ignorance is Strength.

George Orwell

National Debt Clock

Modern History Project

"The US financial system is a viper pit of interconnected collusion. The USFed, the Dept of Treasury, Wall Street firms, USGovt regulators, the debt rating agencies, the Securities & Exchange Commission, the Commodity Futures Trading Commission, and major financial networks are so tight, that when they speak, their buttocks squeak, since the nether region is where their words emanate from" ... Jim Willie "Hat Trick Letter"

http://www.321gold.com/editorials/willi ... 80708.html

Central Bank intervention in our monetary system...what's goosing the dollar?

http://goldmoney.com/en/commentary/2008-08-07.html

"With the monetary system we have now, the careful saving of a lifetime can be wiped out in an eyeblink"

Larry Parks - Executive Director FAME

http://www.fame.org/NotableQuotes.asp

Freddie loses $821 million on housing, credit crunch

Second-quarter results weaker than expected; company plans dividend cut

By Robert Schroeder, MarketWatch
Last update: 4:34 p.m. EDT Aug. 6, 2008

WASHINGTON (MarketWatch) -- Freddie Mac, the second-biggest U.S. buyer of mortgages, reported Wednesday a quarterly loss of $821 million, as the battered housing market and slumping credit conditions again pummeled the company's bottom line.

http://tinyurl.com/5qnz4q


Fannie Mae admits it may need fresh capital

Saturday, 9 August 2008

The possibility of a US government takeover of Fannie Mae, the mortgage finance giant, moved a step closer yesterday after the company said it may not have enough capital to make it through next year.

The company plunged to a larger-than-expected $2.3bn loss in the three months to the end of June, as American homeowners defaulted on their mortgages in record numbers.

http://tinyurl.com/5bjx2y

U.S. Taxpayers potentially on the hook for $10.6 trillion dollars.

SEC. 3083. 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 $10,615,000,000,000.

Paulson Says No Plans to Add Cash to Fannie, Freddie
By John Brinsley

Aug. 10 (Bloomberg) -- U.S. Treasury Secretary Henry Paulson said there are no plans to use his new authority to inject capital into mortgage companies Fannie Mae and Freddie Mac, which both posted worse-than-expected earnings last week.

http://www.bloomberg.com/apps/news?pid= ... refer=home

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.

- Alan Greenspan, 1966

"You can fool some of the people all of the time, and all of the people some of the time, and that's good enough"

Dr. Edwin Vieira, FAME Foundation

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Have we just ceded world-wide domination to the Rooskies of oil, gas, wheat, nickel, PGM metals (See the Norilsk Nickel connection mentioned briefly below) in return for propping up Freddie and Fannie?

Norilsk of Siberian slave labor Gulag fame controls ~60% of the world market for Nickel and Platinum Group Metals. PGM are extremely rare, strategic metals. These include platinum, palladium, rhodium and the lanthanide "rare earth metals". I still remember Norilsk stealing the U.S. based Stillwater Mining for $7.50/share in 2002.

Excerpt from Don Coxe (BMO Nesbitt analyst) Basic Points broadcast of Aug 9, 2008 on the Freddie & Fannie bailout and the politics of Russia investing $100 billion guaranteed by the full faith and credit of the U.S. Government:

To us, the most arresting statistic in all the media coverage of
the F&F bailout was that Russia was holding a cool $100 billion
of their dreamily dubious debt.

Why?

Remember that Russia was effectively broke as recently as 1998.
The real boom in oil and gas prices that swelled its national
treasury came quite recently.

F&F’s shaky legal and financial position was abundantly clear
after Greenspan’s public rebukes to F&F and to Wall Street
banks that were peddling their paper.

When The Second Most Powerful Person in Washington was
repeatedly issuing caveat emptor warnings to investors, the ambiguities
about the guaranteed nature of F&F products would
certainly have been enough to raise profound concerns in the
Kremlin.

A decision to invest such a huge portion of the Forex reserves
in non-Treasury debt issued by companies whose stockholders’
equity was falling almost as fast as Bush’s and Congress’s approval
ratings for a mere 35 basis points above Treasurys could
not, we believe, have been made by clerks on a Kremlin trading
desk.

Imagine if F&F had defaulted and their paper were selling at
90 cents or less on the dollar while the Administration and
Congress were fighting about the details of a rescue. If some
apparatchnik had bought that $100 billion based on discussions
with Wall Street salespeople, and had not cleared the purchases
all the way to the top what would their prospects be? The
gulag? Polonium in their porridge?

Such a gigantic bet on such controversial paper could only have
been made with Putin’s express approval. This is the leader who
said he was managing Russia based on "The dictatorship of
the law."

Last week, he told the management of Norilsk Nickel, which
owns the former Gulag nickel mine in Siberia, that their new
CEO was to be his nominee. The new boss has no experience
in the mining industry, but he certainly had connections with
the previous operators of the mine during his 11 years running
the KGB in Leningrad. Putin is also the man who, when asked
why he appointed so many ex-KGB agents to top positions, replied,
"There is no such thing as an ex-KGB Agent." Only last
week, he announced that the Kremlin would be seizing control
of Russia’s grain exports, and European leaders were immediately
alarmed that he might be planning to politicize food the
way he had politicized gas. He also collapsed the stock price
of a leading Russian steel company by unleashing a broadside
of investigations and threats that it was overcharging Russian
companies for its products.

Remember that Putin’s air force is now flying Backfire Bombers
equipped with nuclear weapons, and his fighter planes have
been buzzing US Navy ships. He is also said to be negotiating a
new deal with Castro which could involve advanced weaponry.
Putin’s purchases have more than repaid the US for Lend-Lease
and for all the subsidies Nixon gave the USSR in the Great
Grain Robbery.

So why was he spending so much of his nation’s treasure on
subsidizing these companies and the US housing market?
Who knows? And why isn’t anyone telling?

And why isn’t a Congressional committee holding hearings
about the circumstances surrounding the sale of the $100 billion
of F&F fodder?

Imagine Putin at the Crawford Ranch, telling his buddy Bush
how his minions were buying billions in F&F paper, and Bush
asking, "Why, Vladimir?"

"Well, we’ve been told you’ll back them with the full faith and
credit of America, and we can relate well to their management
structure: Their top people get their jobs because of government
connections, not because they know anything about running
a company. That’s the way I do it in Russia. The difference
is that they get named by Congress not you, whereas I name
the CEOs in Russia. But I think, George, those guys in Congress
may be tougher than you, and I like the way they play the
game."

What was on Secretary Paulson’s mind on the evening of July
13th as he proclaimed the panoply of rescue operations for the
duo from dreamland? He categorically ruled out any attacks
on the managements, and insisted there would be no search for
blame. Tens of billions of losses, negative net worths, years of
phony accounting and nobody deserves criticism?

Whom did he fear most?

Hu Jintao?
Or Putin?
Or, perhaps, Barney Frank and Chris Dodd?

Mr. Paulson needed legislative support from powerful Democrats
for this and, perhaps, future unprecedented (and apparently
illegal) rescue measures as he and fellow fireman Bernanke
rushed to pour cold liquidity on new financial fires. The surest
way to arouse fury from such heavyweights was to raise questions
about the competence or ethics of F&F management.

If the delay, default, deception and dreamy accounting that put
the nation’s basic balance sheet and its relations with major foreign
powers at risk are hostages to the very political process that
created this crisis, then why is the stock market so convinced
that the credit crisis is nearly over?

On July 13th, nearly a year after the financial crisis began, it
plumbed its greatest depths to date.

Ben Bernanke helped to justify his unprecedented level of interventions
by raising new warnings about the outlook for the
economy. In analyzing why a Republican Administration has
expanded the concept of a "social safety net" to include investors
in major financial organizations, George Will wrote:
Ben Bernanke’s statement last week that economic
conditions are ‘skewed to the downside’ was the most
muted assessment of a dismal situation since Emperor
Hirohito, in his surrender broadcast after Hiroshima
and Nagasaki, said, ‘The war situation has developed
not necessarily to Japan’s advantage.’

In explaining how Bernanke, Paulson, et al. may be helping Mr.
Obama, Will concluded, "McCain is losing recourse to conservatism’s
core message about the rationality of government
minimalism that allows markets to inflict their rigors."

Not long after Will published those words, another supposed
champion of free markets came up with yet another protective
device for managements of mismanaged financial institutions.
SEC Chairman Chris Cox, who had a brilliant career in Congress
as a principled conservative, announced bans on "naked"
short-selling of F&F and 17 other financial big names. Not surprisingly,
those stocks had sensational rallies.

Investors who were getting killed on their shorts of F&F and
other underfunded financials must have been wondering whether
the entire financial and governmental system was being arrayed
against them in the name of protecting financial markets.

This was the Treasury’s version of the Vietnam strategy: "We
had to destroy the village in order to save it."

From our perspective, we believe that capitalism as a fair, rational
doctrine for promoting human freedom and economic
progress has rarely suffered greater indignity or shame. The
people and organizations primarily in New York and Washington
who together inflated the housing bubble, profited indecently
through record-breaking bonuses and payoffs, caused
a financial recession and bear market, and put the global financial
system at risk, not only go unpunished: they have backed
their limousines up to the Treasury and can now replenish their
coffers by direct access to the taxpayers.

Basic Points (edit) Aug 2008.pdf

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"We are completely dependent on the commercial banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money, we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is. It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied soon." -- Robert H. Hemphill, Credit Manager Atlanta FED

Many financial authors explain that silver is simply a commodity and, as such, lacks monetary or investment demand. I like to remind such people that the word for silver and the word for money are identical in fifty-one countries. Just because Americans or Canadians do not think silver is money doesn’t mean the rest of the world thinks the same way. -- David Morgan

August 15, 2008: Huge one day drop (12% at one point) for spot silver in the face of chronic world-wide physical shortages.

Dave, if you and I were sitting having a conversation and I said Dave we have just reached the highest inflation rates in 17 years, the Russians just attacked Georgia and have gained control of a strategic pipeline that pumps nearly a million barrels of oil (per day) to the west. If I told you that FDIC has 90 banks on the troubled list, an independent party has verified it is probably closer to 700 banks, there is not enough money in FDIC and I was to tell you that gold and silver would sell off, you would probably think what are you drinking!!!

Interview with David Morgan starts at 3250 of 4290 below.



Editorial by David Morgan

http://www.financialsense.com/editorial ... /0815.html

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Jim Puplava calls it the "Confidence Game"



The Devils Tears and the Great Game.



Interview with Lutz Kleveman January 24, 2004 on the Great Game, predicting the military moves on Caspian oil.

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A friend who calls himself Otto Rock is a professional analyst of Latin American equities. As an Englishman based in Peru, he writes the Inca Kola blog. I believe he may have stumbled upon the reason for the dollar's rapid ascent in the last couple of weeks. He references Brad Setser who is an analyst for the CFR, a David Rockefeller Think Tank.

The question I've been mulling over this morning is "Is the current USD move from approx USD 72 to approx USD 77 backed up by the sound fundamentals I need?" (and if you're wondering, YES, this is the type of baloney a financial wonk thinks about while laying in bed late on a Sunday morning...sad, innit?).

Here's what I think: The dollar's move has been backed up by China's central bank buying into US treasuries in a direct way (i.e. via the New York Fed deposits mentioned in this post and looked at in far greater detail by the excellent Brad Setser in his blog). The U$29bn noted by Setser is a very large chunk of change, and by pumping it straight into treasuries the US gov't has successfully rallied the dollar. Once the ball gets rolling, more money jumps on and the rally snowballs. Here we are today. But is it a fundamentally sound position?

http://incakolanews.blogspot.com/2008/0 ... -cart.html

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Fannie Mae, Freddie Mac shares plummet
Wednesday August 20, 3:08 pm ET
By Stephen Bernard and Alan Zibel, AP Business Writers

Shares of Fannie Mae, Freddie Mac fall on accelerating bailout fears

NEW YORK -- Shares of Fannie Mae and Freddie Mac lost more than a quarter of their value on Wednesday as fears mounted that the mortgage financiers will soon need government support and any bailout would hang stockholders out to dry.

Since Monday, stock in the two companies -- which together hold or guarantee half the U.S. mortgage debt -- have plunged more than 45 percent and are now trading at lows not seen in nearly two decades.

"There's a big negative feedback loop and there's no way out of it," Friedman, Billings & Ramsey Co. analyst Paul Miller said in an interview. "As the stock falls more and more, it's more likely the government steps in and more likely equity holders get wiped out."

Fannie Mae's chief executive sought to reassure investors that no bailout is imminent.

"They haven't offered anything and we haven't asked for anything," Fannie Mae CEO Daniel Mudd said in a public radio interview Wednesday morning. "I don't anticipate that they will do that."

Mudd said the company's financial position "remains very strong," and that he intends to remain the CEO.

Executives with McLean, Va.-based Freddie Mac met with Treasury department officials on Wednesday morning, according to two sources familiar with the meeting who were not authorized to discuss its contents publicly. They described it as part of a regular series of meetings that have been occurring since last month when the Bush administration announced a plan to aid the two companies.

Armando Falcon, who served for six years as Fannie and Freddie's chief government regulator, expects a full-fledged government takeover before year-end. The companies' financial picture is far worse than they have acknowledged, he said, particularly for riskier loans they purchased as investments.

"They can't keep playing games with the accounting rules to avoid taking their losses," Falcon said.

The first intervention, he said, is likely to be government support for sales of the companies' debt. After that, he said, "everything quickly snowballs."

The two government-sponsored companies are the largest source of funding for home mortgages in the U.S. But they have struggled with soaring losses from mortgage defaults. Washington-based Fannie Mae and Freddie Mac, have lost a combined $3.1 billion between April and June, and investors fear the losses will continue to grow.

Fannie Mae's stock fell $1.61 to $4.40 in afternoon trading. Shares of Freddie Mac fell $1.05 cents to $3.12, after earlier hitting a low of $2.95.

Freddie Mac, in particular, has investors and analysts fearful. The company earlier this year promised to raise $5.5 billion -- more than double the company's $1.95 billion in market value Wednesday afternoon -- to shore up its finances.

Fannie's market capitalization was about $4.50 billion in afternoon trading.

The precipitous slide in Fannie and Freddie's stock prices are a sign investors assume the government is on the brink of taking control of the mortgage giants.

"It could be tomorrow, it could be six months from now," Miller said.

The Bush administration on July 13 unveiled a plan to provide unlimited government loans to the two mortgage giants and to purchase stock in the two companies if needed for a period covering the next 18 months. Congress ultimately adopted those proposals as part of a broader bill that also seeks to help keep 400,000 households from losing their homes to foreclosure.

Critics charged that the open-ended nature of the support for Fannie and Freddie would expose taxpayers to billions of dollars of potential losses.

Treasury Secretary Henry Paulson has insisted that the package needed to be structured in this way to boost financial markets' confidence as the companies deal with mounting losses from mortgages that have gone bad.

But investors started dumping shares of Fannie and Freddie this week after a Barron's article on Saturday -- citing an anonymous Bush administration source -- said the government is pressing the companies to raise more money to guard against losses but doesn't expect them to succeed.

The Barron's report said the government is likely to buy preferred stock in the companies, wiping out common shareholders. Paulson has declined to comment on whether a rescue is imminent.

Many observers say Paulson is not interested in shareholders and only in Fannie and Freddie's ability to provide support to the battered mortgage market. That means a government rescue might not occur until there is evidence the mortgage companies' are unable to roll over short-term debt -- an indication they would no longer be able to operate normally.

Bert Ely, a banking consultant and longtime critic of the pair of mortgage companies said, "the rationale for government involvement is to maintain (Fannie and Freddie's) role in the marketplace, which comes through buying mortgages."

Recent debt sales by Freddie Mac indicate the sale of short-term debt is becoming more difficult and expensive.

A $3 billion offering of five-year notes by Freddie Mac was priced Tuesday at 1.13 percent above five-year U.S. Treasury notes. Freddie Mac's most recent sale of five-year notes, which took place in May, was priced at just 0.69 percent above Treasury notes of a similar length.

When companies issue debt, prices are often compared with those of similar-length Treasury bonds. Treasury yields are considered a benchmark because they are considered the safest investments since they are backed by the government. The wider the gap, or spread, between corporate debt and treasury yields, the riskier investors deem the corporate debt.

Two-, three- and 10-year notes issued by Freddie Mac since May all have had narrower spreads than Freddie Mac's most recent sale of five-year notes.

The current lack of action by both Fannie and Freddie to raise capital and the government's silence is freezing up liquidity in the mortgage market, Miller said. That lack of liquidity is trickling down to traditional retail banks that rely on Fannie and Freddie to purchase loans and provide cash to originate new mortgages.

Fannie and Freddie "cannot be active" in the current environment to provide the necessary liquidity for the mortgage market, Miller said. "Until they get funding, it hurts everyone," Miller added.

AP Business Writer Alan Zibel reported from Washington, and AP Business Writer Martin Crutsinger in Washington contributed to this report.

Capturing a moment in time

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Ike found this:

David Bond, Editor: Silver Valley Mining Journal
Wallace, Idaho

Wallace Street Journal:

"Let's be Hunts""........

One would think, as we postulated last Thursday, that the reason the prices for gold and silver were so low was that nobody wanted them. That would be the classic Keynsian explanation.

But instead we were told that the reason the prices were so low is that EVERYONE wanted silver and gold 1-ounce coins.

When the market starts talking such gibberish, it's time to start thinking about a Hunt. As in, Nelson Bunker and William Herbert Hunt. We remain amazed, 18 years later, that supposedly sophisticated investors regard the events of 1979 and 1980 as "that time when the Hunts tried to corner the silver market."

This is one of those monster myths that is so incredible and so false it must be believed by the unwashed masses. Regrettably, detritus of these masses grow up to be Presidents of the United Snakes, or of some branch of the Federal Reserve Bank. Makes them no less idiots, their Ivy League pedigrees notwithstanding.

In 1977, Bunky Hunt surveyed a battlefield much as the one that confronts us: there was paper silver a-plenty for sale, but not a physical ounce in sight. Hunt and his brother, reared in the resource-rich ethic of mid-Texas and Oklahoma, saw a gaping hole in the illusion that is American wealth: a bunch of paper selling a commodity that could not be bought.

These things occur from time to time in corn, soybean, and oil commodities, but only temporarily until the market quickly achieves contango – its balance. The only time a gaping imbalance between the paper and the physical market is allowed to persist, the only time the paper price is allowed to be lower, and lower for a long period of time, than the physical price of the commodity, is in the trading of silver and gold.

It is useful for a government like the one that has commandeered the United Snakes, such government and its banks, to permit such an imbalance to exist.

If the paper price of silver and gold are severely lower than their actual value, the paper money that the United Snakes and its banks issue is theoretically more valuable – relative to silver and gold – than it really is. Push down the metals, up goes the U$ Dollar. This is our current situation.

And it is profitable for the United Snakes government until some kill-joy comes along and wants delivery. The Brothers Hunt saw that the absurdly-priced silver contract of $3.50 an ounce was a bargain, that $3.50 silver existed nowhere in the real world except in the paper futures pits, but there it was, for sale, on the Comex.

My late friend, Paul Sarnoff, watched the thing unfold from his front-row seat at Paine Weber.

The Hunts were a client, as was a Catholic archdiocese and several Arabs, who were getting worried about the quality of the paper they were being paid for their oil.

Put yourself back in those times: gas prices were going through the roof; home mortgages, if you could get one and had perfect credit, were going for 18 percent APR; we had a weak President facing unpopular situations in Iran (where there were hostages) and Afghanistan (where the Russians were being adventurous). There was a run on the U.S. dollar in Europe.

And there was no silver. Not since the United Snakes had kicked silver out of the U.S. monetary system had silver been more scarce. Yet there it was, for sale on the Comex, for sale by the likes of the big central banks and bullion banks of the world. But such was no big deal. Between 97 and 99 percent of those 5,000-ounce silver contracts were settled in paper.

But the Hunts and their friends – this was in 1977 – began buying this paper over a period of years. By October 1979, the Hunts and their pals had bought up the bullion dealers' paper positions to the tune of 192 million ounces. Nelson Bunker Hunt owned 79 million ounces of silver – on paper; William Herbert Hunt, another 48 million ounces; their pals, including the Arabs, another 65 million ounces.

Is it too much to ask, if you buy a car from a guy, and you pay him the cash and he signs over the title, that you might get the car?

This, ladies and gentlemen, is all the Hunts ever asked. They did not ever "corner" the silver market. All they asked was for the bullion dealers to keep their promises, and deliver.

Chaos ensued. There was then – as there is now – no silver to be had. Not in London or New York warehouses nor in the ground. Not anywhere. And for the simple reason that the Hunts and their pals asked for the delivery of silver they were promised by contract, they were vilified. Driven to ruin. And they provoked their own ruin: Bunky said he'd issue silver certificates in lieu of paper dollars, if people wanted to play. When I was a child, silver certificates were the money of the land.

This writer carries no cross for the Hunts. They were forced to sell the brokerage, Bache, that had carried their contracts but bet against them. But they still have their race-horses in Paris, and I am sure they have not missed a meal.

But there is a monster short position in silver again. Presidential election years are always hard on metals and easy on mortgage rates, except this year, the mortgage market is done, so new paradigms are in the making. Metals may come back far sooner than is ordered by the Fed and the FDIC.

And remember, here is no Jimmy Carter to sell a billion ounces of silver into the market to quiet the Dollar worries. Carter's still around, but those 1 billion ounces are long gone.

(Now Ike is just curious here....does anyone remember that debacle...RIP OFF....?? Selling our Silver for around $2?)

The Hunts shook the lying bankers to their boots – to the point where intervention by the Fed, Treasury, and the Defense Department were warranted – merely by asking for delivery of the 192 million ounces of silver they'd been promised. This was not a "cornering" of a market; it was the attempt to enforce a contract, same as you've got with your landlord or bank.

So let's all of us be Hunts.

Ask delivery of $12.80 silver and $790 gold, today.

There are 300 million of us. A single ounce of physical silver for every man, woman and child in the United Snakes would squeeze these rat-bastards harder than the Hunts could ever do. There were two Hunt brothers in 1979.

There are 300 million of us in 2008. Even in this country, there aren't enough jail cells to hold us all.

David Bond Editorial

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John Mauldin writes about "Dead Men Walking"

In particular, he discusses FNM, FRE, LEH. Other Dead Men Walking include:

Zions Bancorp


• Equity has traded down from $75 to $25.
  
• Tried to issue a $200 million preferred stock offering at 9.5% but only was able to sell $47 million.
  
• Their debt trades in the open market approximately 1,000 basis points above Treasuries, IF you can sell them, or 13 14%.
  
• They are geographically in Utah, but spread out to Florida, Nevada and Arizona at the top of housing to take advantage of great opportunities.
  
• They say they need $200-300 million capital. Good luck.
  
• They maintained their common dividend.
  
  KeyCorp
  
  
• Common Stock has traded down from $40 to $11.
  
• Preferred Stock trades at 13%.
  
• Debt trades in the market at 10-11% dividend.
  
• Cut dividend in half in July, still yields 6.5% even while they lose money.
  
  Fifth Third Bank
  
  
• Equity has traded down from $60 to $14.
  
• There are no preferred issues outstanding.
  
• Debt trades in 10-11% range if you can sell it.
  
• Cut dividend by 75%.
  
  Washington Mutual
  
  
• Equity has traded from $40 to $3.
  
• No preferred outstanding except convertible preferred.
  
• Debt trades in the 20-25% range.
  
• Cut the dividend to $0.01 per share in April.
  
• Has admitted they will lose money for the next several years.
  
  National City
  
  
• Equity has traded from $40 to $5.
  
• Preferred stock trades at 13-15%.
  
• Sold a huge amount of shares at $5 per share in April.
  
• Cut dividend to $0.01 per share in April.
  
  Regions Financial
  
  
• Equity down from $40 to $8.
  
• Preferred Stock Trading at 10%.
  
• Debt trades in the 10-11% range, if you can sell it.
  
• Cut dividend by 75% in June.
  
• Needs to raise $2 billion, according to Sanford Bernstein.
  
  General Motor/GMAC
  
  
• Equity has traded from $80 to $10.
  
• Preferred stock trades in 18% area.
  
• Short-term debt trades in 25-30% range.
  
• Long-term debt trades in 17% range.
  
• Eliminated common dividend in July.
  
  Ford/Ford Motor Credit Co
  
  
• Equity has traded from $60 to $4.
  
• Preferred stock trades in 16-17% range.
  
• Long term debt trades in the 18-20% range.
  
• Eliminated common dividend in September.
  
  Wachovia
  
  
• Equity has traded from $60 to $14.
  
• Issued a $3.5 billion "hybrid security" in February that now trades at 11%.
  
• S&P has stated they cannot issue any more hybrids.
  
• Sold 92,000,000 shars of a preferred stock in December at 8% that now trades $18 or 11%.
  
• Cut common dividend twice since February to $.05 a share or 90%.
  
• Debt trades at 9.5-10.5%.
  
  CitiGroup
  
  
• Equity has traded from 60 to 9.
  
• Preferred Stock trades in 12% range.
  
• Outstanding debt trades in 12-14% range.
  
• Cut common dividend by 66%.
  
• Sold 91,000,000 shares of common at $11 in April 2008.
  
  Who are in the "Limping but Not Dead Man Walking Crowd"?
  
  These companies would include those that may be 'too big to fail', have enough quality assets to sell, a franchise that is worth something to an acquirer or could just be broken up into pieces. They include:
  
  
• Citi
  
• Merrill Lynch
  
• Morgan Stanley
  
• Suntrust
  
• Legg Mason
  
• Capital One
  
• AIG
  
• MetLife
  
• Prudential

Summary - This is NOT Shaping Up to be a Pretty Couple of Years

http://www.safehaven.com/article-11073.htm

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Feds take over Fannie Mae, Freddie Mac


Federal regulators on Sunday took over the failing Fannie Mae and Freddie Mac mortgage companies, quasi-government entities that got into trouble with subprime lending.

Officials with the Treasury Department, the Federal Reserve and the Federal Housing Finance Agency seized control of embattled mortgage giants in hopes of stabilizing the housing and financial markets.

"We have closely monitored financial market and business conditions and have analyzed in great detail the current financial condition of the GSEs - including the ability of the GSEs to weather a variety of market conditions going forward," said Treasury Secretary Henry Paulson "As a result of this work, we have determined that it is necessary to take action."
.
.
.
The government pledged to inject taxpayer dollars into the companies to prevent insolvency -- up to $100 billion total for each company. It also will also start buying mortgage-backed securities from the companies.

http://www.bizjournals.com/phoenix/stor ... aily9.html

Welcome to the Socialist Republic of the United States


``We no longer have a free market in the United States, we have a government controlled free market,'' Bunning said in an interview. Paulson, a former chief executive officer of Goldman Sachs Group Inc., ``is acting like the minister of finance in China.''

Bunning, 76, criticized Paulson's successful effort in July to obtain congressional authority to pump unlimited amounts of money into Fannie and Freddie to keep them afloat.

``When I picked up my newspaper yesterday, I thought I woke up in France. But no, it turned out it was socialism here in the United States,'' he told Paulson at a July 15 Senate Banking Committee hearing.

Following Paulson's Sept. 7 announcement of the takeover of Fannie and Freddie, Bunning said he now feels like a citizen of China.

``No company fails in communist China, because they're all partly owned by the government,'' said the former pitcher for the Philadelphia Phillies.

Bunning accused Paulson of deception when he told Congress in July that the Treasury's plan would instill such confidence among investors that it would never have to be used.

Paulson ``saw and knew what was happening, and didn't tell the truth to the banking committee,'' Bunning said yesterday.

http://www.bloomberg.com/apps/news?pid= ... refer=home

Nationalization of Fannie, Freddie triggers defaults for derivatives
By Aline van Duyn
Financial Times, London
Monday, September 8, 2008

One of the largest defaults in the history of the $62,000 billion ($62 trillion) credit derivatives market has been triggered by the US government's seizure of Fannie Mae and Freddie Mac, raising questions about how dealers will unwind billions of dollars worth of contracts.

Although the $1,600 billion of debt issued by the troubled mortgage groups is regarded as safe after the US government's move to take control of the companies, their move into "conservatorship" counts as the equivalent of a bankruptcy in the credit derivatives market.

This triggers a default on credit default swaps -- instruments that provide a form of insurance on fixed-income assets. Dealers in the market are now working to settle these contracts.

The exact amount of CDS on Fannie Mae and Freddie Mac are not known, reflecting the private nature of the market, but they are part of widely traded indices and the amounts are likely to be significant. Analysts at Lehman Brothers said: "There is likely to be a considerable amount of notional protection outstanding."

The industry body, International Swaps and Derivatives Association, said on Monday it would launch a protocol to facilitate settlement of credit derivative trades involving Fannie Mae and Freddie Mac and would publish further details in due course.

The uncertainty surrounding the Fannie Mae and Freddie Mac CDS contacts highlights the need for improved settlement and trading procedures. Already, regulators have put pressure on CDS dealers, including all the large financial institutions, to reduce settlement and trading risks.

The near-collapse of Bear Stearns in March highlighted the extent to which many large financial institutions were linked together through the CDS market, and the Federal Reserve and other regulators want to reduce such systemic financial risks.

The growth of the CDS market over the past decade has outpaced development of settlement systems and trading infrastructure. One worry is the lack of standard procedures in contracts for dealers to agree ways to settle defaulted credit derivatives.

The actual payments on credit default swaps on Fannie Mae and Freddie Mac are expected to be limited because the value of the mortgage agencies' debt remains high after the US government stepped in to back it.

That means that meeting any claims on CDS may not be that costly, although the details are still being worked out and the impact is unknown.

Analysts at Creditsights said regulators could "use the bailout as another lever" to enhance the CDS market's efficiency.

http://gata.org/node/6567

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JPMorgan Gave Lehman $138 Billion After Bankruptcy

Sept. 16 (Bloomberg) -- JPMorgan Chase & Co. gave $138 billion this week in Federal Reserve-backed advances to the broker dealer unit of Lehman Brothers Holdings Inc. to settle Lehman trades and keep financial markets stable amid the biggest bankruptcy in history, according to a court filing.

One advance of $87 billion was made on Sept. 15 after the pre-dawn bankruptcy filing, and another of $51 billion was made today, Lehman said in court documents. Both advances were made to settle securities transactions with customers of Lehman and its clearance parties, according to the filing.

The advances were necessary ``to avoid a disruption of the financial markets,'' Lehman said in the filing.

The first advance was repaid by the Federal Reserve Bank of New York on the night of Sept. 15, Lehman said. JPMorgan said in a statement that the $51 billion advance was also repaid and the process will zero out the advances at the end of each day.

http://www.bloomberg.com/apps/news?pid= ... refer=home

Ron Kirby weighs in:

Since the Federal Reserve reimbursed J.P. Morgan, presumably and ostensibly, with public monies [that taxpayers will be on the hook for] – doesn’t the public have the right to know what that 138 billion was spent on?

Investment banks are dropping like flies, owing to their involvement in credit derivatives – this is a fact.

J. P. Morgan is – HANDS DOWN – the largest derivatives player in the world with a book of 90 Trillion in notional value at March 31, 2008 – with 9% of the book composed of Credit Derivatives. That amounts to a cool 8.1 Trillion worth of Credit Derivatives.





http://www.financialsense.com/fsu/edito ... /0918.html

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Solving Debt Problems by Creating MORE Debt

U.S. government's debt limit would be raised to $11.315 trillion from $10.615 trillion.

Money Market Guarantees

The U.S. Treasury Department today announced the establishment of a temporary guaranty program for the U.S. money market mutual fund industry. For the next year, the U.S. Treasury will insure the holdings of any publicly offered eligible money market mutual fund both retail and institutional that pays a fee to participate in the program. President George W. Bush approved the use of existing authorities by Secretary Henry M. Paulson, Jr. to make available as necessary the assets of the Exchange Stabilization Fund for up to $50 billion to guarantee the payment...Bush approved the use of existing authorities by Secretary Henry M. Paulson, Jr. to make available as necessary the assets of the Exchange Stabilization Fund for up to $50 billion

http://www.reuters.com/article/topNews/ ... 4720080919

Buffett's Time Bomb Goes Off and the Market Cheers

...credit default swaps are turning a bad situation into a catastrophe...

"This was supposedly a way to hedge risk," says Ellen Brown, the author of the book "Web of Debt."

"I'm sure their predictive models were right as far as the risk of the things they were insuring against. But what they didn't factor in was the risk that the sellers of this protection wouldn't pay ... That's what we're seeing now."

Brown is hardly alone in her criticism of the derivatives. Five years ago, billionaire investor Warren Buffett called them a "time bomb" and "financial weapons of mass destruction" and directed the insurance arm of his Berkshire Hathaway Inc (BRKa.N: Quote, Profile, Research, Stock Buzz) to exit the business.

http://www.reuters.com/article/newsOne/ ... 4020080918


Congress gets $700 billion financial bailout plan

The plan to move toxic mortgage-related debt off the balance sheets of U.S. banks and other institutions, and into a massive government portfolio, represents an all-out attack on the worst financial crisis since the Great Depression.

Under authority sought by the U.S. Treasury Department, the government could purchase as much as $700 billion in mortgage-related assets from U.S.-headquartered institutions.

Decisions by the treasury secretary related to the buyback program could not be reviewed by any court, according to a copy of the department's draft legislation obtained by Reuters.

In a related move, the U.S. government's debt limit would be raised to $11.315 trillion from $10.615 trillion.

http://www.reuters.com/article/newsOne/ ... 9820080920

Yet the very means for a small investor to protect him/her self through shorting this financial malfeasance is halted

This time 800 financial stocks are protected.

http://www.startribune.com/business/286 ... anchO7DiUr

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Representative Marcy Kaptur of Ohio has this to say

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Credit Default Swaps 101



CDS Wiki

Daniel Amerman Website & Writings

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Jim Willie: Bataan Death March editorial

Pardon the jumpy style, not burdened by depth, preferring breadth instead. The events of the last few days continue to be remarkable, alarming, chaotic, surreal, and desperate. The globe is slowly realizing that the United States is careening toward a probable financial death experience. Nothing has worked to date, and nothing will work in the present, not bailouts, not liquidations, not nationalizations, not papered over fraud, and surely rate cuts. The stark reality contains a blur of a massive locomotive derailed, having run over the mountain ledge, heading downward in a freefall, subjected to the force of gravity, and ripping through a gigantic erected paper net designed to halt its crash. CLOWNS IN CHARGE DO NOT REALIZE THE SYSTEM IS FLAWED AND BROKEN, AS EFFORTS TO REDOUBLE THE DEVICES ARE ALL DRAWN FROM THE SAME DEFECTIVE TOOLBAG. MAJOR BANK FAILURES, BANKRUPTCIES OF MAJOR FINANCIAL FIRMS (LIKE INSURANCE), AND INDIVIDUAL MARKET DEFAULTS COME VERY SOON. Incredible events are occurring behind the scenes, the details of which would shock most people, even those who deal with the underworld. Recall Wall Street propaganda this summer? That the US will be first to emerge from the carnage? Such lunatic promotional nonsense should be recalled when it becomes clear that the Untied States cannot emerge from its broken condition. The game is over, and only the enlightened realize it! What lies ahead is the tragedy of distintegration!!! That includes the nation and its very governmental structure.

http://www.gold-eagle.com/editorials_08 ... 00908.html

Gold Prices May Spike on a Comex Futures Paper Market Default

Within the gold complex, there is a disparity between the paper market and the physical market, notes Jurg Kiener, CEO of Swiss Asia Capital. He tells CNBC's Maura Fogarty & Rebecca Meehan that if the paper market collapses, gold prices may double very quickly.

See CNBC Video Here

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Markets hold breath as $360bn Lehman swaps unwind

The $54trillion credit derivatives market faces a delicate test ....

The collapse of Lehman Brothers, is expected to trigger credit default swap (CDS) protection pay-outs of about $400bn but because the contracts were sold many times through different counterparties it is not yet known who will be liable.

One commentator said: “This will be the greatest illustration of the follies of Wall Street and how unnecessarily complicated the wild off-track betting became in the past few years.”

“This will arguably be the biggest cash-exchange day and somebody will fail,” one analyst warned last week.




Lehman Failure and the 10/22/08 CDS Settlement

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Paulson and Ponzi Finance

What is the impact on the economy at large of this autumn’s unprecedented creation and giveaway of financial wealth to the wealthiest layer of the population? How long can the Treasury’s bailout of Wall Street (but not the rest of the economy!) sustain a debt overhead that is growing exponentially? Is there any limit to the amount of U.S. Treasury debt that the government can create and turn over to its major political campaign contributors? And is it too much to say that we are seeing the end of economic democracy and the emergence of a financial oligarchy – a self-serving class whose actions threaten to polarize society and, in the process, stifle economic growth and lead to the very bankruptcy that the bailout was supposed to prevent?

Editorial by Michael Hudson

Paulson's Giveaway of Taxpayer Wealth

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Jim Sinclair Interview with Chris Waltzek at Goldseek.com

Quantitative easing, last event ahead of hyperinflation? "Everything gets rescued"



"...I don't think there is a solvent financial institution in the United States"



On quantitative easing, an article from FT Alphaville.

http://ftalphaville.ft.com/blog/2008/11 ... -happened/

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Barry Ritholtz discusses Big Bailouts, Bigger Bucks
.
.

Whenever I discussed the current bailout situation with people, I find they have a hard time comprehending the actual numbers involved. That became a problem while doing the research for the Bailout Nation book. I needed some way to put this into proper historical perspective.

If we add in the Citi bailout, the total cost now exceeds $4.6165 trillion dollars. People have a hard time conceptualizing very large numbers, so let’s give this some context. The current Credit Crisis bailout is now the largest outlay In American history.

Jim Bianco of Bianco Research crunched the inflation adjusted numbers. The bailout has cost more than all of these big budget government expenditures – combined:

• Marshall Plan: Cost: $12.7 billion, Inflation Adjusted Cost: $115.3 billion
• Louisiana Purchase: Cost: $15 million, Inflation Adjusted Cost: $217 billion
• Race to the Moon: Cost: $36.4 billion, Inflation Adjusted Cost: $237 billion
• S&L Crisis: Cost: $153 billion, Inflation Adjusted Cost: $256 billion
• Korean War: Cost: $54 billion, Inflation Adjusted Cost: $454 billion
• The New Deal: Cost: $32 billion (Est), Inflation Adjusted Cost: $500 billion (Est)
• Invasion of Iraq: Cost: $551b, Inflation Adjusted Cost: $597 billion
• Vietnam War: Cost: $111 billion, Inflation Adjusted Cost: $698 billion
• NASA: Cost: $416.7 billion, Inflation Adjusted Cost: $851.2 billion

TOTAL: $3.92 trillion

______________________________________________________________________

data courtesy of Bianco Research


That is $686 billion less than the cost of the credit crisis thus far.

The only single American event in history that even comes close to matching the cost of the credit crisis is World War II: Original Cost: $288 billion, Inflation Adjusted Cost: $3.6 trillion

The $4.6165 trillion dollars committed so far is about a trillion dollars ($979 billion dollars) greater than the entire cost of World War II borne by the United States: $3.6 trillion, adjusted for inflation (original cost was $288 billion).

Go figure: WWII was a relative bargain.

http://www.ritholtz.com/blog/2008/11/bi ... ger-bucks/

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Jim Rogers calls most big U.S. banks "bankrupt"
Thu Dec 11, 2008 1:53pm EST

By Jonathan Stempel

NEW YORK (Reuters) - Jim Rogers, one of the world's most prominent international investors, on Thursday called most of the largest U.S. banks "totally bankrupt," and said government efforts to fix the sector are wrongheaded.

Speaking by teleconference at the Reuters Investment Outlook 2009 Summit, the co-founder with George Soros of the Quantum Fund, said the government's $700 billion rescue package for the sector doesn't address how banks manage their balance sheets, and instead rewards weaker lenders with new capital.

Dozens of banks have won infusions from the Troubled Asset Relief Program created in early October, just after the Sept 15 bankruptcy filing by Lehman Brothers Holdings Inc (LEHMQ.PK: Quote, Profile, Research, Stock Buzz). Some of the funds are being used for acquisitions.

"Without giving specific names, most of the significant American banks, the larger banks, are bankrupt, totally bankrupt," said Rogers, who is now a private investor.

"What is outrageous economically and is outrageous morally is that normally in times like this, people who are competent and who saw it coming and who kept their powder dry go and take over the assets from the incompetent," he said. "What's happening this time is that the government is taking the assets from the competent people and giving them to the incompetent people and saying, now you can compete with the competent people. It is horrible economics."

http://www.reuters.com/article/newsOne/ ... CO20081211

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The End of the Financial World as We Know It

By MICHAEL LEWIS and DAVID EINHORN
Published: January 3, 2009

AMERICANS enter the New Year in a strange new role: financial lunatics. We’ve been viewed by the wider world with mistrust and suspicion on other matters, but on the subject of money even our harshest critics have been inclined to believe that we knew what we were doing. They watched our investment bankers and emulated them: for a long time now half the planet’s college graduates seemed to want nothing more out of life than a job on Wall Street.

This is one reason the collapse of our financial system has inspired not merely a national but a global crisis of confidence. Good God, the world seems to be saying, if they don’t know what they are doing with money, who does?

http://www.nytimes.com/2009/01/04/opini ... =1&_r=1&hp

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On the Edge of the Abyss

by Karl Denninger, Friday, January 30. 2009



Excerpts:

1. Bernanke bluffed and the bond market called it. He cannot monetize several trillion in new issue plus the entirety of the 10 and 30 year bonds out there to stop a bond market sell-off. In addition, the market no longer believes him, as evidenced by today's price action. A serious bond-market sell-off will ramp the cost of all credit, including mortgages and commercial loans. If he tries to monetize the result will be current bondholders tendering into his buying, forcing him to essentially "consume" the entire float. That stunt will cause the dollar to implode and we wind up exactly like Iceland. Overnight. Ben knows this; ergo, he is screaming like a petulant child while the market laughs at him just like the market forced Paulson to do what he said he wouldn't with Fannie and Freddie. Bernanke had better shut the hell up before he precipitates a bond market dislocation; traders can and will try to force him to make good on the threat.

2. This caution goes double for Congress which seems to think it can blow money like crazy. Never mind Schumer talking about a $4 trillion tab for the "bad bank." We don't have $4 trillion and we can't raise it. That's simply off the table due to inability and thinly-veiled threats to attempt such a foolish action risk causing the very market crash that everyone says they don't want.

3. Yesterday Steve Liesman from CNBC "reported" that the Administration had a "bad bank" plan that was momentarily going to be rolled out. Tonight we learn that just as with the original "Super-SIV" from 2007 (which was essentially the same thing), the un-resolvable problem is that the banks will not sell for the mark-to-market price (or anything near it). The unspoken reason is if they were to take the market price they'd be rendered instantaneously bankrupt. (This, by the way, is an admission that they are intentionally mis-marking these "assets" on their book now, or they'd have already been seized!) The government will not buy at "par" or anything near it because to do so will cause the taxpayer to suffer a trillion dollar loss; Goldman (and Schumer) both said this is a potential $4 trillion problem. Ergo, its a Mexican Standoff and there is no solution. This means that nationalization is still on the table. It also means that we're back to the days of AMBAC and MBIA - whenever the market was selling off hard on their "rumored" bankruptcy, Charlie Gasparino was trotted out by CNBC to claim that some sort of deal was imminent - and the market would instantly rally. These rumors all were false, by the way, and nobody took responsibility for that, nor will they this time.

4. The "dirty secret" behind a lot of these "assets" is that they are literal zeros. A lot of the debt issued in the last few years was in fact fully synthetic - that is, it was not backed by an actual mortgage or other actual debt instrument - it was created out of swaps and other derivatives that "acted like" the real thing. The problem with this sort of model is that it relies on the ability of the counterparty who wrote the swap to pay - if they can't pay then what you have is a worthless piece of paper since you can't even foreclose on the underlying property and seize the collateral! With no meaningful margin supervision a lot of these so-called "counterparties" in fact can't pay. This means these "synthetic" instruments are in fact worth nothing.

5. The pattern of our government since August of 2007 is to "dare" the market by making outlandish and unsupportable claims (such as Paulson's famous "Bazooka" threat) and effectively stare it down. The market calls all such bluffs with an "all-in" raise. It always has, and it always will. This is simply a function of how markets work; that we have people in positions of regulatory oversight over the Capital Markets that don't understand this fact given the hundreds of years of history on the matter is a mark of incredible arrogance. I had hoped that Obama would reverse this insane course of action and stop "bluffing"; the last two days have made clear that no such "change" came to power in Washington on January 20th.

We desperately need a real solution to this banking issue. In my opinion there simply is no "market friendly" answer. There are only solutions that respect the market, and then there are those that attempt to transfer the bad debt - of which there is a lot, to the taxpayer.

The latter cannot be done. Schumer (and Goldman) have it about right in terms of the capital required to pull that off, and the impossibility of funding such an exercise.

Therefore, the only rational answer to this mess is to:

1. Defang the CDS monster. This must be done now. CDS provide a limited-risk and near-unlimited reward for shorting a firm's credit; this is exactly backwards from the equity markets where shorting is limited-reward but unlimited risk. Short-selling is essential to a balanced market but allowing CDS to be abused to invert the long/short risk profile is outrageous and must be stopped. The proper approach to doing this is to:

1. Force capital adequacy to be proved for all outstanding contracts. If you can't prove the ability to cover the contract, it is declared void.

2. Bar the writing of new CDS on any TARP recipient. The government has said it will not allow these firms to fail. The bets have been made; existing ones that can be covered by the writer are ok, but no new positions can be opened until the government's interest is extinguished in that name.

3. Require that all new CDS be written against a public exchange and direct the ISDA to produce, immediately and nightly until that has taken place, bid/ask/OI on an accessible public interface.

4. Consider barring all CDS that are written "naked" - that is, not against a deliverable bond. There are already-existing means to short a firm you believe is in trouble in the equity, options and futures markets. The inversion of the risk:reward profile in the CDS market is a big part of the problem and we must consider putting a stop to it.

5. Do this all right here, right now. Give market participants a very short term (two weeks, maybe four) to get their act together or face having their contracts rendered noncollectable.

2. Send in the bank auditors and examiners, suspending all bank share trading for two weeks. Mark everything to the market. Anyone who is insolvent under Tier Capital rules gets crammed down ala-The Genesis Plan. All firms that are crammed down have their boards and management removed; the new equity holders (former bondholders) get to elect new management to run the firms they own without prejudice (if they want the old management back, they're welcome to have 'em, but there is no ability to manipulate the vote by entrenched management!) All firms then re-open for trading at the same time - but existing shareholders (including preferreds) of the "crammed down" are wiped out.

3. For those firms that cannot survive even when crammed down they are instead seized by the FDIC and RTC'd. This works exactly as it did in the RTC days; the FDIC gets the assets in exchange for guaranteeing deposits, and disposes of them in its self-funded "bad bank." That is a "bad bank" model that can and will work and has no "asset valuation" issues.

4. Be prepared to use the second half of the TARP funds to either internally capitalize new banks which will then be spun off to the public or add capitalization to existing good banks. The cramdown and receivership of the bad banks will undoubtedly lead to lots of guaranteed deposits and good assets needing a home. There are hundreds of perfectly solid existing banks that should be permitted to grow their asset and deposit base by feasting on the carrion of the deposed.

5. Start investigating the fraud, and be vigorous about it. The public is not going to sit for their 401ks being destroyed as they have already (and will be as this plays out) without blood. There are lots of bad actors out there, starting with the officers and boards of failed institutions. These were not just "bad bets" that caused our banking system and economic problems - I'm willing to wager that it can be proven that they were knowingly-unsound bets and the mismarking of "asset values" was not accidental either. Down this road should lie plenty of securities fraud charges and maybe more than a bit of Racketeering. Go for disgorgement of the ill-gotten gains to at least provide the people with something to refill the treasury and assuage the anger, along with prison sentences.

http://market-ticker.denninger.net/arch ... Abyss.html

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One guy with a few friends and helpers discovered this thing nearly a decade ago. He led you to this pile of dung that this Bernie Madoff was and stuck your nose in it and you couldn't figure it out. You couldn't find your backside with two hands with the lights on. You have totally and thoroughly failed in your mission"Gary Ackerman, Democratic Representative from New York

Investigating the SEC on its role in the Madoff case.



We thought the enemy was Mr. Madoff. I think its you

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Jim Rogers on Tim Geithner and his views re: bailout



Can you trust Geithner?

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The Fed is the Culprit

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Geithner: ‘He’s Not Change’

David Kotok, chief investment officer at Cumberland Advisors Inc., says Geithner’s insider status -- he selected former Goldman Sachs Group Inc. lobbyist Mark Patterson as his chief of staff --is a liability. Geithner was at the helm of the New York Fed when Wall Street ran amok, and he had a seat at the table when Federal Reserve Chairman Ben S. Bernanke and former Treasury Secretary Henry Paulson came up with remedial measures that haven’t worked.

“He’s not change, as Obama promised, but just the same old stuff,” says Kotok, who manages $1 billion in Vineland, New Jersey. Geithner declined to comment for this article.

As New York Fed chief during one of Wall Street’s greatest bull markets ever, Geithner shared authority over some of the country’s biggest commercial banks with the Comptroller of the Currency. While the banks loaded up on mortgage-backed securities and derivatives, Geithner failed to use his power to force the firms to build adequate capital cushions and risk controls, says Allan Meltzer, a professor at Carnegie Mellon University in Pittsburgh who monitors the Federal Reserve. Citigroup Inc. led the buying frenzy on Wall Street, holding $544 billion in securities and derivatives by 2007 before unraveling under their weight.

Lax Oversight

“The oversight of Citi was shamefully lax,” says Janet Tavakoli, founder of Chicago-based advisory firm Tavakoli Structured Finance and author of books on financial risk. “If they didn’t see the problems beforehand, we don’t have the right people. If they did see them but didn’t care to do anything, then again we have the wrong people.”

By 2008, the New York Fed president was forced to face the consequences of slack regulation. As Bear Stearns Cos. neared bankruptcy, he worked closely with Paulson and Bernanke on a bailout in March, and, after Lehman Brothers Holdings Inc. died six months later, the trio came up with TARP -- the $700 billion Troubled Asset Relief Program. Geithner told Congress in February that he took responsibility for not doing enough to prevent the financial crisis.

Obama Must Fire Geithner and Summers

Secret Goldman Sachs Meeting re: Geithner

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We're not bailing out AIG, we're bailing out the entire financial system.

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A Primer On Fractional Reserve Banking
First published in the British humour magazine "Punch" on April 3, 1957:
As related by Bob Hoye


Q: What are banks for?
A: To make money.

Q: For the customers?
A: For the banks.

Q: Why doesn't bank advertising mention this?
A: It would not be in good taste. But it is mentioned by implication in references to reserves of $249,000,000,000 or thereabouts. That is the money they have made.

Q: Out of the customers?
A: I suppose so.

Q: They also mention Assets of $500,000,000,000 or thereabouts. Have they made that too?
A: Not exactly. That is the money they use to make money.

Q: I see. And they keep it in a safe somewhere?
A: Not at all. They lend it to customers.

Q: Then they haven't got it?
A: No.

Q: Then how is it Assets?
A: They maintain that it would be if they got it back.

Q: But they must have some money in a safe somewhere?
A: Yes, usually $500,000,000,000 or thereabouts. This is called Liabilities.

Q: But if they've got it, how can they be liable for it?
A: Because it isn't theirs.

Q: Then why do they have it?
A: It has been lent to them by customers.

Q: You mean customers lend banks money?
A: In effect. They put money into their accounts, so it is really lent to the banks.

Q: And what do the banks do with it?
A: Lend it to other customers.

Q: But you said that money they lent to other people was Assets?
A: Yes.

Q: Then Assets and Liabilities must be the same thing?
A: You can't really say that.

Q: But you've just said it! If I put $100 into my account the bank is liable to have to pay it back, so it's Liabilities. But they go and lend it to someone else, and he is liable to have to pay it back, so it's Assets. It's the same $100 isn't it?
A: Yes, but....

Q: Then it cancels out. It means, doesn't it, that banks haven't really any money at all?
A: Theoretically......

Q: Never mind theoretically! And if they haven't any money, where do they get their Reserves of $249,000,000,000 or thereabouts??
A: I told you. That is the money they have made.

Q: How?
A: Well, when they lend your $100 to someone they charge him interest.

Q: How much?
A: It depends on the Bank Rate. Say five and a-half percent. That's their profit.

Q: Why isn't it my profit? Isn't it my money?
A: It's the theory of banking practice that.........

Q: When I lend them my $100 why don't I charge them interest?
A: You do.

Q: You don't say. How much?
A: It depends on the Bank Rate. Say a half percent.

Q: Grasping of me, rather?
A: But that's only if you're not going to draw the money out again.

Q: But of course I'm going to draw the money out again! If I hadn't wanted to draw it out again I could have buried it in the garden!
A: They wouldn't like you to draw it out again.

Q: Why not? If I keep it there you say it's a Liability. Wouldn't they be glad if I reduced their Liabilities by removing it?
A: No. Because if you remove it they can't lend it to anyone else.

Q: But if I wanted to remove it they'd have to let me?
A: Certainly.

Q: But suppose they've already lent it to another customer?
A: Then they'll let you have some other customers money.

Q: But suppose he wants his too....and they've already let me have it?
A: You're being purposely obtuse.

Q: I think I'm being acute. What if everyone wanted their money all at once?
A: It's the theory of banking practice that they never would.

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"Perp Walks Instead of Bonuses": Veteran Journalist Robert Scheer on AIG Bonuses, the "Backdoor Bailout" and Why Obama Should Fire Geithner, Summers

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Max Keiser: Bankers are financial terrorists and should be decapitated for impoverishing the State

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Fed and Treasury - Putting off Hard Choices with Easy Money (and Probable Chaos)

John P. Hussman, Ph.D.

Brief remark - from early reports regarding the toxic assets plan, it appears that the Treasury envisions allowing private investors to bid for toxic mortgage securities, but only to put up about 7% of the purchase price, with the TARP matching that amount - the remainder being "non-recourse" financing from the Fed and FDIC. This essentially implies that the government would grant bidders a put option against 86% of whatever price is bid. This is not only an invitation for rampant moral hazard, as it would allow the financing of largely speculative and inefficiently priced bids with the public bearing the cost of losses, but of much greater concern, it is a likely recipe for the insolvency of the Federal Deposit Insurance Corporation, and represents a major end-run around Congress by unelected bureaucrats.

Make no mistake - we are selling off our future and the future of our children to prevent the bondholders of U.S. financial corporations from taking losses. We are using public funds to protect the bondholders of some of the most mismanaged companies in the history of capitalism, instead of allowing them to take losses that should have been their own. All our policy makers have done to date has been to squander public funds to protect the full interests of corporate bondholders. Even Bear Stearns' bondholders can expect to get 100% of their money back, thanks to the generosity of Bernanke, Geithner and other bureaucrats eager to hand out the money of ordinary Americans.

http://www.hussmanfunds.com/wmc/wmc090323.htm

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Government Immorality

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The Goldman Conspiracy




10 reasons why Wall Street has absolute power over America's democracy

"Six short months ago Hank (The Hammer Paulson) led an assault on Congress. The scene parallels one in "24:" Sangala War Lord Juma's brazen attack inside the White House. But no AK-47s necessary. The Hammer assaulted Congress with just a two-and-a-half page memo in hand. Like a crack special-ops warrior, he took down the enemy, demanding $750 billion, absolute control, total secrecy, no accountability and emergency powers to act immediately ... warning that inaction was not an option, that collapse of America's banking system was imminent, would bring down the global monetary system, pushing world's economies into a "Great Depression II." Congress surrendered."


Scene 1. American government is now run by the 'Goldman Conspiracy'

Scene 2. Huge conflicts motivating Wall Street's 'Trojan Horse'

Scene 3. Wall Street's 'quiet coup' also runs world's banking system

Scene 4. Wall Street used the meltdown to take over America's government

Scene 5. How Obama is keeping alive Bush's 'disaster capitalism'

Scene 6. Wall Street's CEOs rule like dictators in a banana republic

Scene 7. Wall Street makes an un-American bet on 'disaster capitalism'

Scene 8. Banks recycle TARP money, pump earnings, cheat America

Scene 9. Wall Street's already set the stage for new disaster

Scene 10. Obama turned 'The Goldman Conspiracy' into a superpower


Jack Bauer and the Goldman Conspiracy

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Phil Grande and the Phil's Gang Radio Show

April 21, 2009



http://www.philsgang.com (Scroll Down to Free Radio Archive)

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Bill Moyers Journal

Treasury Secretary Timothy Geithner is publicly saying that it's going to take $2 trillion — a trillion is a thousand billion — $2 trillion taxpayer dollars to deal with this problem. But they're allowing all the banks to report that they're not only solvent, but fully capitalized. Both statements can't be true. It can't be that they need $2 trillion, because they have massive losses, and that they're fine… William Black, former S&L Regulator

http://www.pbs.org/moyers/journal/blog/ ... ip_ch.html

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Jim Willie speech here:

http://www.thefinancialtube.com/video/3 ... Treasuries

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The American Dream

You have to be asleep to believe it. George Carlin

From a January, 2006 album release: "Life is Worth Losing"

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Mad Max Keiser and the Toilet Paper Economy

In English with Spanish subtitles

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Richard Nixon abrogating the Bretton Woods Treaty for gold backing the dollar and blaming "international speculators" for U.S. runaway inflation

Wikipedia article about canceling gold convertibility in 1971 aka "Nixon Shock" and "Death of Money"



Click here if Nixon video doesn't load

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Federal Reserve Lack of Accountability with no Oversight

Elizabeth A. Coleman was appointed Inspector General for the Board effective May 6, 2007. In this role, Ms. Coleman leads a staff responsible for promoting economy, efficiency,and effectiveness within Board programs and operations. The Office of Inspector General (OIG) is also responsible for preventing and detecting waste, fraud, and abuse at the Board, among other duties. The OIG achieves its legislative mandate through audits, evaluations, investigations, legislative reviews, and by keeping the Chairman of the Board and Congress fully informed.

Congressman Alan Grayson asking Elizabeth Coleman to account for the ballooning Federal Reserve Balance Sheet

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Selective Memory Loss

Representative Dan Burton questions Bernanke about his role in the B of A, Merrill Lynch merger.

Burton: "Now you know, one of the things I was chairman of this committee for 6 years (Congressional Oversight) and we did a lot of investigating. One of the things that I learned was in order to keep people from perjuring themselves they couldn't remember anything. Are you sure you can't remember?"

Bernanke: "I'm sure I can't remember."

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Max Keiser: Where's Obama?

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Marcy Kaptur biting interrogation of Ben Bernanke

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Alan Grayson questioning Federal Reserve Chairman Ben Bernanke on $550B of loans to foreigners (or 'central liquidity swaps' in Federal Reserve-ese').

Which financial institutions received this money? Bernanke's answer: I don't know.

As the Fed was lending this money, the dollar increased by 30% in value. Grayson asks, was this a coincidence? Bernanke's answer: yes.




23.7 Trillion Looted

From Politico

“The potential financial commitment the American taxpayers could be responsible for is of a size and scope that isn’t even imaginable,” said Rep. Darrell Issa (R-Calif.), the ranking member of the House Oversight Committee. “If you spent a million dollars a day going back to the birth of Christ, that wouldn’t even come close to just one trillion dollars – $23.7 trillion is a staggering figure.”


http://www.politico.com/news/stories/0709/25164.html

From AboveTopSecret

New Federal Holiday Proposed - http://t.atsmix.com/t485564

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From Arbeit Macht Frei to Codex Alimentarius

http://farmwars.info/?p=1578

Narrated by Ian R. Crane, Devon England, October 2007.

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Sheila Bair of the FDIC.

Can you see the body language screaming "I'm lying"?

by Daedal
on Fri, 10/23/2009 - 18:18
ZeroHedge Blog

At around 24 seconds into her speech, she says "I want to take this opportunity to reassure consumers that their insured deposits are absolutely safe."

Note the body language: As she is saying the above quote, she is shaking her head from side to side, indicating that she does not believe what she's saying.

Interpreting Human Body Language, the Head Shake

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LEGAL TENDER AND LAWFUL MONEY.; THE DIFFERENCE AS SHOWN BY AN ENGLISH FINANCIER--LETTER OF A BANK OF ENGLAND DIRECTOR.

From the Nation, Oct. 7.

October 8, 1875, Wednesday

Page 5, 2009 words

The following is a snippet from an 1875 letter from Mr. Latham, a Director, and from 1859 to 1863 Deputy Governor and Governor of the Bank of England, addressed to Mr. Collet, another Director of the B of E.

Mr. Chase was lawyer enough to know that to declare a piece of paper to be "lawful money" in such sense to vest it with the power of discharging debts previously contracted in gold and silver (against the will of the creditor) was rather a despotic act.

Entirety here:

http://query.nytimes.com/gst/abstract.h ... 838E669FDE