Fed to markets: Let the bubble blow David Callaway – MarketWatch

Fed to markets: Let the bubble blow David Callaway – MarketWatch

Posted using ShareThis

A Taxing Tea Party

In response to Congress’ new Stimulus Package A site called taxdayteaparty.com/ has become the highly vocal spirit behind the movement to protest the taxation built into the new Congressional Stimulus Package. Fox News, as well, have begun running commentary ringing the theme “Take Back America”. A big position for a National News Service, to say the least.

It has been my opinion that there is a strong and steady building of sides that has cast a shadow on the Obama Administration. Probably not as potent as the separation of ideals that originally led to the breakaway states that ignited the Civil War in the 1800’s, but America has definitely come to a turning point in its History.

As Fox News has pointed out there is almost no coverage from many of the Major News Services in the US or abroad for that matter. It doesn’t seem PC to discuss it.

Michael Steel, RNC Chairman, had to respond publicly to rumors that he was asking to be counted in as a participant of the Tax Day Demonstrations. According to his response he had never considered himself involved in any way, nor had he suggested that to Tax Day Tea Party or its organizers.

In the past few months since Obama has taken office there have been a cacophony of voices cheering on one side of the isle, while another less casual voice from across the way that has begun chanting descent of the Liberal Pull that has swept through Congress.

But, lets not forget that the Republicans got the ball rolling with the TARP program request to Congress which gave $700 bil to financial institutes, who essentially put the US in dyer straights with reckless decisions, while ignoring the systemic risks involved, not to mention the bailout of Bear Stearns and AIG, Instigated by George Bush’s choice for Fed Chief, Ben Bernanke.

Some of America have become quite upset with the bailout and feel that the economy should have followed the natural course it had created for itself, which could have brought a huge number of major banks to ruin. It’s hard to say what’s really helping, but it is well known in economic circles, that the Government isn’t responsible for the health of the economy, or shouldn’t be. Hence the idea of Free Enterprise.

Its very hard to predict where this movement will take us, as it is equally difficult to predict whether or not the now Trillions of dollars being spent on these broken financials will ultimately do what it has been intended to do.

The good news is that people are talking about topics that were once considered taboos in America. Lets just hope it comes to wholesome and constructive ends!

Congress Averting another Catastophe: But this time a Revolution

Man, talk about a close call. The public uproar on the whole AIG bonus Scandal was quite a fervent scene to observe. Congress was so worried about it that they basically lynched anyone who was supposed to get any kind of bonus, that had anything to do with any financial agency that took Fed or Treasury funds.

The problem is that it reminds me of the day the Treasury announced the take-over of Freddie and Fannie. I really think it was the first wave of panic that started the horrible conditions we see today. The second shock was letting Lehman Bros. fail… but the biggest shock so far was when Congress’ Lame duck Republican leaning vote against the original TARP Funds. That was the shot heard round the World.

Within a few hours of the outcome, the LIBOR jumped more than 200 basis points and essentially shut down all loaning. This was the real Credit Crisis. Everything previously experienced was just a warm up. After that everything became a shock to everyone…

So, here we are. 2 years after the fall of the Real Estate Bubble and things were starting to look as though there might be a shift in the momentum, of what many are hoping would be the bottom of this deflationary period, and Congress sounds the Alarm!

I wonder how many people will show up for work tomorrow. At least the ones that are being held responcible for cleaning up the mess at AIG might not be interested in working for free… The one thing that’s certain is that we will find out whether or not Liddy was telling the truth, in his testimony to Congress. He said that without the people who are receiving the bonuses, it would leave about $1.6 Trillion of risk unmanaged, and that that would lead to the collapse of AIG. And… according to Ben Bernanke, a collapse of AIG would lead to a World Financial Systemic Collapse.

hmm… It should be an interesting week ahead.

Blogged with the Flock Browser

Short Selling out Americans

Last night the Daily Show ran a piece on a Wall Street habit refferred to as Short Selling. Short selling is essentially; borrowing someone elses stock and selling it at the current price, then buying the stock back at a lower price and returning it to the original owner. I’ve written about this in the recent past, but feel I need to bring this up again.

The biggest problem with Short Selling, short of selling someone elses 401k for your own profit, is that it is counterproductive to the goals of seemingly everyone else who has anything to lose in the business and financial world. I guess that would be the rest of us! While we (The US Treasury Dept. and the Fed) are pumping Trillions of dollars into the financial industry heavy investment is out there leading us further into a depressed state of the economy. I’m sorry, but WTF!

I don’t understand why this ISN’T illegal. Everything about it seems shady, if not dead wrong. If I want to bet on a stock going down, why shouldn’t I be required to use my own money and stocks to do so, say buying a “Put” rather than stealing someone elses profits from there stock portfolio. It’s funny and ironic that soon it will be too late to put an end to this illicit deceptive act of STEALING from the American Trust, and we the People are going to need a scape goat to hang in time square for letting our money be used to make us poor!

I think we should start with “The Banker Friends” to begin with. It was Bernenke that signed the agreement with AIG about paying the bonus to their various departments, which we all know meant paying the villains in this movie! It is and was the SEC that allowed all these horrible business practices that got us to here…

So, here we are looking back down the hallway of choices that brought us to where we are and nothing will ever change that. It has happened and is happening, and no one can see past their thin vail of politics or their wigs of financial wealth to reason with the need to do things honestly. What a shame!

So Proud We all are!

——————————————————–

More:

This is the kind of thing that really frustrates me about our country… This is meant to be a Representative Government! We place individuals in positions of trust in the hope they will do their jobs and keep the public interests at the forefront of their doings, and no matter how much we would like to think it, these individuals are influenced by money and power and finally turn on their handlers, namely the Public Trust!

I can write all I want about it, but nothing I say will ever give back the Trillions of Dollars stolen or lost by the very people we Trust to be the Good Stewards of our Faith in our ethics as a Nation; as an Ideal!

60 Minutes with Ben Bernanke

When he was asked “why” are you appearing for an interview, Ben (may I call you Ben?) responded… “These are unusual times!”. Ferderal Reserve Chiefs never give interviews, so Yes, it is an extraordinary time.

He also said it gave him the chance to speak directly to the American People. I, on the other hand, have to blog in order to gain such hope, that anyone wants to really hear anything I have to say. So, you go Ben…

Oh, hey since I’ve got you on the show, do you mind if I ask you an unrehearsed question? “Why are you still ignoring the Mortgage Securities issue. The fact that all these banks are still hiding the amount and real values of all these, “what does wall street call them?”, oh yeah! Toxic Assets. If my memory serves me, you did the same thing in the beginning as the foreclosures began in late 07, and had these results. Weird, so…

Now you go on 60 minutes and tell the AMerican People that the probl;em with the financial system is the financial system, sell us on further bailout “political will”, while you continue to ignore what still seems to have no answer. Nice…

Well here’s my opinion, and you can put this on 60 Minutes!).. Take the paper from the banks as collateral, let them value it as they like and we’ll loan’em the dough. Then! We take all this paper and assemble a crack team of trackers and those ladies that do all those puzzles in the kitchen, and find the missing real estate. Put all those rotten piece of collateral into nice easy to manage mortgages. Then return the assessed value in real estate back to the bank. Once the debts are reassembled, as mortgages, they will have a very clear value and other banks will know for a fact that there books are clean.

Or, come up with something else that doesn’t involve giving the banks more money without a plan to resolve the real issue! It’s the paper that got us here… Come on, Ben!

AIG and the Mad Money Method

I am Appalled! Is anybody watching this AIG Scandal as it enfolds. Now the Company we just bailed out of bankruptcy is grooving on business as usual, while we scratch our head confused an angry… WTF!

Today, as I’m sure you’ve seen by now, AIG announced it will be paying 165 Mil, of our money, in bonuses, to the department that was largely responsible for AIG’s collapse. “Look you lost control of the ship and crashed, sorry about your bonuses”, but this isn’t what was said at all!

Lets just take a minute and consider a few things. First of all, what are we paying for when we talk about bailing out AIG. The Fed and the Treasury Dept. said that AIG’s collapse could lead to a systemic break down. The thing you’ve got to keep in mind is that they are talking about the existing financial system and I don’t have a problem with that. This one is so corrupt that it is willing to lie cheat and steal, “business as usual”, right through are hard earned tax money. Expecting it!

Look you CAN NOT give money you didn’t have! Especially not to pay for these Leaders of Anti-Trust’s luxury yachts, while Mr. and Mrs. Jones are getting hurled out on the street, after being unemployed by the same company, just after loosing their entire 401k in the Great Crash of 08. This entire financial crisis was brought to you by greed, arrogance, and manipulation. Weighing in on your future!

The fact is that entire system is build on a solid foundation of people (consumers) buying products and services on a constant basis! It needs to be deflated, but I’ll go one more step and announce that it as well needs to redefine itself on the natural progressions of human evolution, or acclimation depending on how you look at it. Frankly most of us are tired of something and mostly each other.

So, let me get this straight, AIG insured the Subprime Mortgage Securities. The securities went bad, due to poor risk assessment and you want us to bail you out now. Didn’t we cover your clients, for you, already with something like $2 trillion in bailout and stimulus packages, and now you want to give some of the money were providing for your salvation to the driver of the wrecked vehicle. Fuck That, lets just step outside and settle this right now!

The US Financial Crisis: Confidence or the Lack of

There’s an old saying that goes, “If it ain’t broke, don’t fix it”. The irony of this statement, in today’s broken financial system,

Bernanke and Paulson testify before Congress

is the concept that what is broken here is the system, when in fact what is broken is confidence in that system.

According to Secretary of Treasury Henry Paulson and Federal Reserve Chief Ben Bernanke the banking system needs more liquidity in order to restart the banks ability to loan to each other. The belief is that they are not lending due to earlier commitments called Drawdowns, prearranged loan agreements to businesses.

The fact is that banks are not loaning to each other for two entirely different reasons. One, the possible write downs from their Subprime Mortgage Security positions, and two, the possibility that anyone of these banks could collapse at anytime. Hense the lack of confidence.

What really needs to be solved in this situation are the things that are truly broken. The biggest break I can see is the continuing collapse of homeowners. Something like 2 million Americans are at risk of loosing their homes this year, either through variable rate mortgages they were sold, or unemployment. This is the foundation of the bigger problem that has led the US to this position and crisis, and it is no longer exclusive to the US. Fannie Mae today announced 29 Billion Dollars in 3Q losses due to foreclosures or delinquencies.

Giving the banks more money to shore up the loses from their overwhelming risk taking won’t solve the problem, as Japan found out after 14 years of recession. What needs to happen is transparency. Banks need to write-OFF all these Subprime Securities and the SEC needs to force them to do it. There is no way they will volunteer to do it on their own for fear of stock holder sentiment being lost, but which is the bigger threat.

Th US Government also needs to do it’s part in a real way, instead of buying shares and Nationalizing companies, or buying up all the bad paper. This kind of give away of American Tax Payers money is reckless and ignorant. This direction is Paulson’s, who actually led the way to giant risk taking out of greed and now he wants to fill the empty coffers of the guilty. read more

The double edged sword of Bailouts sends the message that there is something gravely wrong. It may solve the immediate need for the banks, which by the way are hording this money, but creates it’s own monster. That being loss of confidence. In fact it may be motivating banks to do nothing to solve their own mistakes in order to get their cut. Greenspan may have been guilty of bad decisions, but he was never guilty of bad PR when it came to sending out news.

According to Adam Smith, the father of theoretical economics based on Free Enterprise, nothing in this economic system is really broken. Economics is similar to Natural Selection. If economic systems become outdated, something will rise out of the collapse to take it’s place. He called it supply and demand, that if were left alone it would naturally define itself. What is not in demand, in this instance, is the heavy risk taking that led to this crisis. You can see this in the Libor to Over Night Spread.

So, should we seek to stabilize it and prolong it’s lack of usefulness, by stimulating it like a heart patient who has flatlined, or let it collapse and allow Natural Selection to have it’s day. Personally I believe that America and the World for that matter have the resilient strength to arise from the challenges to be stronger, wiser and better than the past it was created out of.

Risky Business: Playing the Blame Game

It really seems like Congress is spending more time worrying about how to avoid any direct responsibility for the Subprime Mortgage Scandal as they work out the details of a Mortgage Bailout Bill, then taking the time to look at lawmakers shortcomings in what has always been a highly regulated industry.

When Senators, like McCain, sight the fault in the pitfalls of housing prices as the irresponsibilities of buyers, when it was the Mortgage industries themselves who were required to investigate the details of the contracts, for indiscretions in the facts like income and assets, it leaves us all feeling a little cheated.

Now Congress is going to put the ‘Keepers of Mortgages’ at risk in order to NOT use tax payers money to solve the problem, requiring Freddie Mac and Fannie Mae to flip the bill for the Bailout.

This will put a something like $7 Trillion safety net at risk for the tune of $280 billion worth of trouble, while the Fed freely loans the banks an unlimited amount of money just to keep them alive and loaning, regardless of their risky loaning practices.

This entire outcome could have been avoided had the Fed put their initial efforts into nipping the entire thing in the bud by shelling out the 200 Billion, they force fed the banks, directly to the families and individuals who got caught up in the Subprime loaning frenzy. It would have halted the collapse and allowed the banks to recover on their own and kept the lid on inflation by slowing down spending as the banks sought to recover liquidity.

Instead Bernanke denied any risk (from the fallout) to the economy until it hit the front pages of the Media, making the Fed look like a nervous investor holding penny stocks instead of the reigns of the economy.

The problem with delay in the Fed’s actions is that the limited tools available to them have put inflation at a roar and the Dollar in the drain, sending investors into Oil, Gold, and Food Commodities which are spiraling out of control and stoking inflation like a billow, while the Labor Department feeds us huge lies like the price of Gas actually fell in May by 0.2 percent after it was “adjusted for demand”. WTF…

Everything these geniuses are doing now are insane if you ask me, like they want to help create the biggest collapse ever just to make the history books. The only problem is that there wont be any paper left by the time its over if we stay the course on this, let alone a printer…

The Risks of Rescuing Borrowers
Limits Weighed for Commodities Investors