It is better to be an outcast, a stranger in one’s own country, than an outcast from one’s self. It is better to see what is about to befall us and to resist than to retreat into the fantasies embraced by a nation of the blind.
Chris Hedges

Tuesday, March 31, 2009

Geithner Plan II - Why it won't work

Smart people have been saying all along that the banking crisis could be easily solved. All the United States needs to do is create and capitalize a bunch of new banks, with clean balance sheets. Six new banks, each with 100 billion dollars of taxpayer money could leverage these pristine assets at a ratio of 6:1 - meaning each of these banks could have 600 billion dollars to begin lending tomorrow.

Smartish people say nationalize the insolvent banks, clean out their balance sheets, recapitalize them, and sell them.

But Treasury Secretary Tim Geithner, chooses to do none of this, because to do so would necessitate the dissolution of management, stockholders, and Boards of Directors. His former employer, Goldman Sachs, paid $6 million dollars into Obama Campaign coffers... against today.
So, Geithner has concocted a way to keep these insolvent banks intact, at the expense of prudent banking practice. What Geithner's Plan II intends, it to launder these toxic assets through the taxpayer filter. This video explains how that will happen.

Bailouts to date

Column Archive SPECIAL REPORT Issue #1: America's Money Crisis

Economy rescue: Adding up the dollars

The government is engaged in an unprecedented - and expensive - effort to rescue the economy. Here are all the elements of the bailouts.

Date Bailout Allocated Spent
December 2007 Term Auction Facility
Lending program that allows commercial banks to unload hard-to-sell assets, including mortgage-backed securities: Fed takes assets as collateral and banks get cash.
$600 billion $468.6 billion
February 2008 Economic Stimulus Act of 2008
Tax rebates of up to $600 for individual filers and $1,200 for couples in effort to boost the economy. Businesses received more than $60 billion in tax breaks.
$168 billion $168 billion
March 2008 Bear Stearns bailout
Program to guarantee potential losses on Bear Stearns' portfolio; smoothed the way for JPMorgan Chase to buy the failed investment bank.
$29 billion $26.2 billion
March 2008 Term Securities Lending Facility
Federal Reserve facility that loans Treasurys to banks against hard-to-sell collateral like mortgage-backed securities.
$200 billion $88.6 billion
March 2008 Primary Dealer Credit Facility
Long-time lending facility for commercial banks that was opened to investment banks for first time in March 2008.
n/a $61.3 billion
May 2008 Student loan guarantees
Program to purchase federal student loans from private lenders. Aim is to provide financing to companies that provide student loans.
$130 billion $9 billion
September 2008 Fannie Mae and Freddie Mac bailout
Cost to the government of taking the mortgage finance companies into conservatorship.
$400 billion1 $59.8 billion
September 2008 Foreign exchange dollar swaps
Exchange of dollars to 13 foreign central banks for collateral. Aim is to provide liquidity to foreign financial institutions.
Unlimited $327.8 billion
October 2008 FHA housing rescue
Funding set aside for insurance of new 30-year fixed-rate mortgages for at-risk borrowers, tax credits for first-time home buyers and assistance to states and municipalities.
$320 billion $20 billion +2
October 2008 Auto industry energy efficiency loans
Low-interest loans to help speed the industry's transition to more fuel-efficient vehicles.
$25 billion $0
October 2008 Troubled Asset Relief Program
Financial rescue plan aimed at restoring liquidity to the financial markets. Funds thus far allocated for capital purchases in banks and emergency bailouts.
$700 billion $323.4 billion
October 2008
open list close list
Bank capital investments
$250 billion $198.6 billion
November 2008 Citigroup capital investment
Emergency funding to keep bank afloat; in addition to previous $25 billion capital investment.
$20 billion $20 billion
November 2008 Citigroup loan-loss backstop
Funds set aside to backstop potential losses to Treasury from Citigroup loans.
$5 billion $0
November 2008 TALF loss provisions
Funds set aside to backstop potential losses to Treasury from purchases of consumer loan-backed securities and mortgage-backed securities.
$100 billion $0
December 2008 Auto industry bailout
Program that will provide capital on a case-by-case basis to systemically significant institutions that are at substantial risk of failure.
$29.8 billion $24.8 billion
December 2008 General Motors
Government bailout of automaker to keep company afloat and help it achieve viability for the future. Last $4 billion subject to congressional approval
$13.4 billion $13.4 billion
December 2008 Chrysler
Government bailout of automaker to keep company afloat and help it achieve viability for the future. Last $4 billion subject to congressional approval
$4 billion $4 billion
December 2008 GMAC
Government bailout of auto finance company to which Federal Reserve granted bank holding company status. $5 billion went to GMAC directly and $1 billion to GM to make an investment in the company.
$5.9 billion $5.9 billion
January 2009 Chrysler Financial
Government bailout of auto finance company to which Federal Reserve granted bank holding company status.
$1.5 billion $1.5 billion
March 2009 Auto Supplier Support Program
Program to help stabilize auto suppliers by guaranteeing debt owed to them for shipped products, and providing financing to continue operations.
$5 billion $0

January 2009 Bank of America capital investment
Emergency funding to aid Merrill Lynch transaction; in addition to previous $25 billion capital investment.
$20 billion $20 billion
February 2009 Foreclosure prevention
$50 billion4 $0
February 2009 Public-private investment fund
Taxpayer funds used in partnership with private investment that will buy up at least $500 billion of toxic assets from financial institutions.
$100 billion $0
March 2009 AIG common stock investment
Money to help troubled insurer pay off now defunct lending facility set up by Fed in the initial version of the company's bailout.
$40 billion $40 billion
March 2009 TALF investment $20 billion $20 billion
March 2009 AIG preferred capital investment $30 billion $0
March 2009 Small business loan-backed securities purchasesFunds to purchase securities backed by SBA loans in effort to unlock credit for small businesses $15 billion $0
n/a Funds left unallocated
$20.2 billion n/a

October 2008 Money market guarantees
Four programs to help money market funds by insuring against losses; financing bank purchases of debt from funds; buying funds’ debt; and lending to funds directly.
$659 billion $15 billion
October 2008 Commercial Paper Funding Facility
Purchases of short-term corporate debt aimed at boosting the struggling market and providing critical three-month financing to businesses.
$1.4 trillion $241.3 billion
November 2008 Unemployment benefit extensions
Funds to help states expand unemployment benefits.
$8 billion $8 billion
November 2008 Citigroup loan-loss backstop
Funds set aside to insure against losses from bank’s mortgage-backed securities investments.
$245 billion $0
November 2008 Term Asset-Backed Securities Loan Facility
Program to buy consumer loan-backed securities. Aim is to revive the securitization market for consumer loans like credit cards and auto loans.
$1 trillion $4.7 billion
November 2008 GSE mortgage-backed securities purchases
Program to buy mortgage-backed securities held by Fannie Mae and Freddie Mac. Aim is to reduce rates on home loans.
$1.25 trillion $236.2 billion
November 2008 GSE debt purchases
Program to buy debt issued by Fannie Mae and Freddie Mac. Aim is to reduce rates on home loans.
$100 billion $50.4 billion
November 2008 FDIC Temporary Liquidity Guarantee Program
Guarantees on newly issued bank bonds with maturities of more than three months. Aim is to restore liquidity to the corporate bond market and provide long-term financing to banks.
$1.5 trillion $297.1 billion
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FDIC bank takeovers
Cost to FDIC fund that insures losses depositors suffer when a bank fails.
n/a $18.5 billion
January 2009 Bank of America loan-loss backstop
Funds set aside to insure against losses from bank’s Merrill Lynch merger.
$97 billion $0
January 2009 Credit Union deposit insurance guarantees
$80 billion $0
January 2009 U.S. Central Federal Credit Union capital injection
$1 billion $1 billion
February 2009
open list close list
American Recovery and Reinvestment Act
Infrastructure spending, funding for states, help for the needy and tax cuts for individuals and businesses to stimulate the economy.
$787.2 billion n/a3
February 2009 Tax cuts for individuals and businesses $212 billion n/a
February 2009 Direct spending $267 billion n/a
February 2009 Appropriations spending $308.3 billion n/a

February 2009 Foreclosure prevention $25 billion4 $0
March 2009
open list close list
Multifaceted bailout to help insurer through restructuring, minimize the need to post collateral and get rid of toxic assets from its balance sheet.
$182 billion5 $129.3 billion5
November 2008 Bridge loan
Financing to help company through its restructuring process as it spins off non-core businesses.
$60 billion6 $43.2 billion
November 2008 Collateralized debt obligation purchases
Facility to buy private investors' loans on which AIG sold insurance. As the value of loans plummeted, AIG was forced to post more collateral to back up the insurance contracts, known as credit default swap agreements.
$30 billion $27.6 billion
November 2008 Mortgage-backed securities purchases
Facility to buy company’s securities backed by residential loans.
$22.5 billion $18.4 billion
March 2009 Treasury preferred capital investment
Loan to help pay off a now defunct lending facility set up by the Fed in the initial version of the company’s bailout.
$30 billion $0
March 2009 Investment in ALICO and AIA life insurance units $26 billion $0
March 2009 Purchases of life insurance-backed securities $8.5 billion $0
March 2009 Treasury common stock investment $40 billion $40 billion

March 2009 U.S. government bond purchases
Federal Reserve will buy up to $300 billion of U.S. debt to support Treasury market and help keep interest rates down for consumer loans.
$300 billion $15 billion
open list close list
FDIC bank takeovers
Cost to FDIC fund that insures losses depositors suffer when a bank fails.
n/a $2.3 billion

Total: $10.5 trillion $2.6 trillion
1$200 billion set aside in September 2008; $200 billion additional in February 2009
2At least $20 billion
3Estimated budget impact for 2009 is $120 billion
4Making Home Affordable foreclosure prevention program will get $50 billion from Treasury, $20 billion from GSEs and $5 billion from HUD.
5Includes $70 billion from TARP
6Bridge loan allocation to be reduced to not less than $25 billion once government takes stakes in life insurance units

Sources: Federal Reserve, Treasury, FDIC, CBO
Note: Figures as of March 30, 2009

Saturday, March 14, 2009

The Kennedy Speech that got him killed.

It has been less than 50 years, but this speech given by J.F.K. challenged the shadow bankers. There is evidence Kennedy saw this secret society as the United States Federal Reserve.


In 1963, President John Kennedy wanted an end to the Federal Reserve System, which had a strangle-hold on the United States and virtually the world. By a simple stroke of the pen, President Kennedy dismissed the Federal Resene System and ordered the U.S. governmcnt to restore its Constitutional-mandate of controlling the money. President Kennedy was dead three weeks later. When President Lyndon Johnson took office, he immediately rescinded Kennedy's order and the Federal Resene won another round.

Representative Charles A. Lindberg, Sr., the father of the famous aviator, was a member of thc Banking and Currency Committee. He opposed the Federal Reserve Act and gave a speech on January 20, 1915. "The system is private, conducted for the sole purpose of obtaining the greatest possible profits from the use of other people's money, and in the interest of the stockholders and those allied with them." Representative Louis T. McFadden, chairman of the Housing Banking and Currency Committee, stated on June 10,1932, "Some people think the Federal Reserve Banks are United States Government institutions. They are not Government institutions. They are privatc credit monopolies that prey upon the people of the United States for the benefit of themselves and their foreign and domestic swindlers; and rich and predatory money lenders."


More that half the shareholdings in the Federal Reserve Bank arc controlled by large New York City banks, including National City Bank, National Bank of Commerce, First National Bank, Chase National Bank, and Marine National Bank. When Rockefeller's National City Bank merged with J.P. Morgan's First National Bank in 1955, the Rockefeller group owned 22 percent of the shares of the Federal Reserve Bank of New York, which in turn holds the majority of shares in the Federal Reserve System - 53 percent. But who really owns what? Here arc the top controllers of the Federal Reserve Bank

1. Rothchild banks of London and Berlin.

2. Lazard Brothers Banks of Paris.

3. Israel Moses Seif Banks of Italy.

4. Warburg Bank of Hamburg and Amsterdam.

5. Lehman Brothers Bank of New York.

6. Kuhn, Loeb bank of New York.

7. Chase Manhattan Bank of New York, which controls all of the other 11 Federal Rwerve Banks.

8. Goldman, Sachs Bank of New York.

This ownership combination has been challenged by the Federal Reserve Bank, but a study of Standards and Poors will verify the ownerships. This means that the controlling interest of our national monetary system is foreign. In 1797, John Adams wrote to Thomas Jefferson, "All the perplexities, confusion and distress in America arise, not from defects of the Constitution or Confederation; not from any want of honor or virtue, as much as downright ignorance of the nature of coin, credit and circulation." In simple terms, the United States Government borrows money from the Federal Reserve Bank with interest. Here is how it works: The Government wants $1 billion. The Federal Reserve prints $1 billion - based upon no hard asset - and lends it to the Government at a high interest rate. The bank did not have the original money, it created it and made a bookkeeping entry - like you writing yourself a check without funds and cashing it. The Federal Reserve controls the flow of money, making it tight and creating unemployment or printing more than actually exists and creates inflation. It is, in wessence, a paper corporation, which controls the entire economic well-being of the nation.


No Congress, no President has been strong enough to stand up to the foreign-controlled Federal Reserve Bank. Yet there is a catch - one that President Kennedy recognized before he was slain - the original deal in 1913 creating the Federal Reserve Bank had a simple backout clause. The investors loaned the United States Government $1 billion. And the backout clause allows the United States to buy out the system for that $1 billion. If the Federal Reserve Bank were demolished and the Congress of the United States took control of the currency, as required in the Constitution, the National Debt would virtually end overnight, and the need for more taxes and even the income tax, itself. Thomas Jefferson was concise in his early warning to the American nation, "If the American people ever allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered."

In his farewell address to the nation, President Dwight Eisenhower warned of the danger.

Tuesday, March 10, 2009

AIG - The Kingpin

The latest buzzword in finance is no longer "too big to fail": it's "systemic risk". The same could be said about holding a gun to someone else s head. AIG, already the recipient of $130 billion taxpayer dollars, leaked this document to ABC News (a favourite of the dems) just four days before asking Treasury for another $30 billion dollars.

Aig Systemic 090309

Tuesday, March 03, 2009

If you are not a Keynesian - then you're for Uncle Milton

Economist Milton F. Friedman talks with Phil Donahue about the necessity for capitalism and greed in society.

Monday, March 02, 2009

Paul Harvey Dies - aged 90

As a kid growing up we listened to the radio a lot. Sure, we had TV, but some stories were best told on the radio. There was a guy called Paul Harvey who told stories. They were always interesting because at the last would be some trick ending. He always prompted the punch line with the words: "and now for the rest of the story..." With a deep voice and an ingenious use of pauses - during which the radio would hum while we hung on the edge of our seats, he provided what I later came to recognise as art.