New World Authority: The Fed’s Automatic Bailout Bill

Congress intends to grant the Federal Reserve even more powers to control the economy of the United States with HR 3996. This gives the Fed complete power on top of  dollar creation worldwide, excess credit, and low interests rates to cause financial bubbles and control corporate financial power. This power allows for full-scale abuse and manipulation of the system while profiting from transactions and time spent a/k/a administrative expenses. This gives authority of global banking system to run the economy of the United States at their own comfort. The bill secures automatic bailouts for the banks and powerful corporations through the power of the Federal Reserve, which is part of a global consortium of bankers (what I call the International Society of Central Bankers).

“Upon the written approval of the Board of Governors of the Federal Reserve System… and the Board of Directors of the Corporation … and with the written consent of the Secretary of the Treasury, the Corporation may extend credit to or guarantee obligations of solvent insured depository institutions or other solvent companies that are predominantly engaged in activities that are financial in nature, if necessary to prevent financial instability during times of severe economic distress. There shall be available to the Corporation to carry out this section amounts in the Treasury not otherwise appropriated, including for the payment of reasonable administrative expenses.” (pages 43-44/253)

HR 3996 gives power to the Federal Reserve to force companies to obey financial orders from the Federal Reserve, making them an authority of power in their own right. (The nation has already been moving in this direction.) The Fed has the power to take over companies that Fed deems a threat to their own “safety and soundness” or to the “financial stability of the United States.”

Section 1105 gives the Federal Reserve the power to force financial holding companies into bankruptcy: “an involuntary case may be commenced by the Board of Governors of the Federal Reserve System against an identified financial holding company.” (page 38/253)

Section 1701 gives the Federal Reserve the power “in unusual and exigent circumstances” to authorize immediate bailouts and assistance to any “individual, partnership, or corporation.” (page 253/253) Section 1701 enables the Federal Reserve the authority to bypass Congress when the next fiscal crisis occurs.

You can now see the danger that the Federal Reserve and global bankers pose to the national security and the solvency of all Americans if HR 3996 passes.

America and Sub-Optimal Solutions

Some economists and talking heads are finally figuring out that a national political paralysis is not a good thing. For generations the U.S. political system has been closely connected with money and a well-funded lobby. Gerrymandering on the part of politicians picks only the pockets of America. Americans have lost almost all control and China is cleaning the clocks of America. They own the U.S. national government through huge loans and in turn, the capital and power of the American people.

Now columnist Thomas Friedman is worried that America is producing “sub-optimal solutions” to big problems like an education system in decline and a weak economy. He also thinks cable news television distorts the truth and that the internet can be a terrible thing for the nation’s politics. He claims that American businesses have left the country, participating in America only when it suits their needs. Why? The corporate oligarchy is looking only after themselves. National concerns are not truly relevant to them.

Friedman talks about a crisis in self-governance but leaves out influence of the people. Strangely, Friedman doesn’t seem very concerned about the well-being of the American people or freedom of expression. He sees open viewpoints as a vehicle for extremists. He is concerned only with corporatism and how this is linked with government with the means of controlling the current power structure.

Why Job Cheerleading Won’t Save the Economy

Unemployment is at a “26-year high” with 17.5 percent of formerly employed Americans that are no longer looking for work or underemployed.  The unemployment rate for workers aged 16 to 24 is at 19 percent. The unemployment rate for young African-Americans at 30 percent. The average length of unemployment is at a record high as the ratio of job seekers to open positions is currently 6 to 1. This is dismal news for Americans. As their “patriotic duty” many firms are now telling their employees that hours must be cut in order to save jobs. No less than 60 million American households are living at or below the poverty level. The nation is not seeing real ideas or action that even remotely resemble the urgency and aggressive action when banks and investment firms needed saving.

Behind the scenes, political powerhouses and their talking heads hope that cheerleading will do the trick. Surely the talent of the American people will save us says the court jester of economics, Warren Buffett. I cite the CNBC party show that is sure to insult your intelligence. The economy and the American people don’t need upbeat civic cheerleading about greatness. The nation needs serious action outside of more wars overseas. We need to realize that we have war going on right here.

The nation can expect weak recovery of consumption and economic growth coupled with larger budget deficits. The nation can expect greater delinquencies in real estate and the continued fall in real estate prices. The nation can expect greater losses for banks and financial institutions across the board in all sectors and a corresponding rate of bank failures.

Noriel Roubini’s Global Economonitor says: “we can expect that job losses will continue until the end of 2010 at the earliest. In other words, if you are unemployed and looking for work and just waiting for the economy to turn the corner, you had better hunker down. All the economic numbers suggest this will take a while. The jobs just are not coming back.”

Mr. Roubini says “that the unemployment rate will peak close to 11% and will remain at a very high level for two years or more.” This will put the real unemployment rate soundly past 18%. Last year, I predicted a real unemployment rate of 25%. Either way, the nation has some suffering to go through since the political powers that be firmly refuse to bail out the American people. The land of politics continues to bail out the world with free handouts and political programs. We can bankroll and void toxic debt for freewheeling investment bankers and financial geniuses that abused the system, but we can’t risk lowering the debt or responsibility of the American people without making them homeless. Clearly, the American people are simply too talented. Politics still needs slaves to grist the mill. We need martyrs for the cause. The nation has them while China gains mastery over the national economy. What will politics sell next?

You can now appreciate why the world of U.S. politics doesn’t want to end the wars in the Middle East. With all the men and women in the armed forces coming home, we really would be a nation without work.

 

Wall Street Justice Obama Style

Over and over again, Americans see the same debacle unroll before their eyes, that is, if they are paying any attention. Earlier this year, billions in bonuses were paid to Merrill Lynch executives as the firm was failing. An agreement was made that Bank of America would pick up the pieces of Merrill Lynch with the support of the American taxpayer and later, BofA was bailed out as well. After a dance with the SEC, no wrongdoing was admitted.

After an investigation by the Securities and Exchange Commission, Banking wunderkind JPMorgan agreed to a $722 million settlement. Why? It all rises from a risky derivatives deal that drove Alabama politics to the brink of bankruptcy. As part of the settlement, JPMorgan neither admitted nor denied wrongdoing despite overwhelming evidence that the financial group did actually engage in acute wrongdoing.

What passes for justice on Wall Street? Regulators give a banking institution that they back a fine that taps the corporate bottom line for wrongdoing. The banks are eager to quickly forget the whole thing by paying a modest fine and getting on with business as usual. There is no admission to wrongdoing and business continues. The government gets a fine to pad their already overbloated budgets that the American taxpayer is already floating. We must be stupid because we keep doing the same thing over and over.

No one admits to corruption, much less to making a mistake. Meanwhile, nobody pays back the taxpayer, much less actually pays off a debt of any kind.  Reality is a round robin of funny money, usury and blatant dishonesty. Where is the outrage? Nowhere, because we are too wrapped in our small lives and/or afraid of reprisals or perhaps the boogeyman. Perhaps by our collective refusal to stand up against politicians and bankers, we are admitting that any American would do exactly the same thing; that not one American is any better. What do you say? Probably very little.

U.S. Employment Statistics: Job Losses Slow

These are “official” labor department statistics. This does not reflect disenfranchised workers or those that have lost unemployment benefits. Actual unemployment is much worse.

Too Big To Fail Means Big Growth

See the article at the Washington Post.

Double Dip Recession or Recovery?

Global industrial production now shows clear signs of recovering at least when comparing the current ‘recession’ with the Great Depression. During that time, a decline in industrial production continued for a full three years. The question remains regarding final demand for this increased production. Will renewed demand actually materialize or did the U.S. government create a small bubble with $2 billion “Cash for Clunkers” program? Will consumer spending, especially in the US, remain weak, causing the increase in production to go into inventories? If production simply falls into inventories, this will result in sharp cut backs and result in a return to recession. The labor market combined with ailing business credit and finance in the U.S. does not hold out much promise for an end to the recession. Will the Obama administration jigger with credit markets to somehow expand credit markets?

Global stock markets and investment banking and profiteering have mounted a sharp recovery since the beginning of the year. Still, the decline in stock market wealth remains even greater than at a comparable stage of the Great Depression. The downward spiral in global trade volumes has abated. This may be due to the return of the old ways of doing business that President Obama has decried publicly in the last few days. Data exists for June that shows a modest uptick in trade, but  the collapse of global trade remains dramatic by the standards of the Great Depression.