Busted: Bankers and The Global Economy

August 1, 2010

Digital Privacy Once Again in the Air

Did you know that a proposed amendment to U.S. surveillance law leaves even lawmakers guessing on privacy implications for internet users? Now why would this be? Invasion of privacy in the United States has been ongoing since Bush and 911. With this amendment, many fear the unlimited reach of the FBI where email and internet surfing are concerned. The royal question is being credited against the Obama administration over the responsibility of the lawmakers in the Senate and House. Last I heard, the Senate and House had little to do with the President. Since the Senate and House have more to say with the construction and final wording of this amendment, clearly a visit to your local lawmakers is in order if you care about such things.

Anyone that has been keeping track of digital privacy and security knows that A.T.&T. is already working in collaboration with the federal government to store and rake through all the data that comes into and leaves the States. Suddenly, fear is rampant about the FBI having free access to all that data without a court order, judge approval or oversight. Suspicion or wrongdoing doesn’t enter the picture, just being relevant to an intelligence or terrorism investigation. This amounts to a free season on personal information, as well as all that spam that you get in your email daily. In effect, little has changed in technical terms.

The FBI has already engaged in widespread and serious misuse of its privilege so far. They illegally collect data from both  Americans and foreigners, based on a report by the Justice Department’s inspector general that was concluded in 2007. FBI officials issued 192,499 national security letter requests from 2003 to 2006.

The FBI and other internal agencies like the NSA, have come to rely on free access to your personal email and the like. They have free access to information from telephone providers, banks, credit bureau and business, already holding wide powers where personal information is concerned.

The law already requires Internet service providers to produce the records. The want the power to get whatever details they need from internet sources without litigation or preview by judges. A few lawmakers like Patrick Leahy of Vermont have suddenly become concerned about privacy issues and civil liberties, as if these have not already been violated. It’s all about having the necessary tools to “keep Americans safe.”

If you are wondering why anyone should be concerned, all you to do is to examine the vagueness that “law” is written with. The interpretation is often left to the user or implementing agency to decide. Proponents of this amendment say that it is merely clarifying what Congress intended back in 1993. Oh really?

Since a 2008 justice department opinion, some providers have refused access to internet records and web surfing histories. What do you think? If you aren’t watching what you say in your emails and where you browse, you might think twice.

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March 18, 2009

The Corollary of Banking Greed

greed-is-good-2“Greed is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit.” Michael Douglas was privileged to echo those memorable words in a timeless Hollywood movie that resounds the philosophy of much of the financial world without apology. Those words now cut into the souls of mainstream Americans.

The corollary of banking greed dictates that financial greed is opportunity and entitlement magnified by lack of authority. Wall Street has reveled in this truth for decades and the results of this unpleasant law have come to roost. AIG, once held to be the bastion of risk management, has proved the effect of this corollary as they continue to mandate runaway bonuses for what amounts to the summary destruction of everything that America holds dear where money is concerned. Americans are taking their authority back.

Government is apparently into the payoff. We now have a mystery amendment in the recent stimulus package. Senate Banking Committee Chairman Chris Dodd added a compensation restriction to the bill. The Dodd Amendment provides an exception for contractually obligated bonuses agreed on before Feb. 11, 2009.

The Senate Chairman has egg on his face. He claims that the original amendment did not include that exemption and he denied inserting the provision. “I can’t point a finger at someone who was responsible for putting those dates in. I can tell you this much, when my language left the senate, it did not include it. When it came back, it did.” One of AIG’s key offices resides in Connecticut. Connecticut Senator Dodd was AIG’s largest single recipient of campaign donations during the 2008 election year totaling more than $100K.  Heck, it’s just more convoluted behind-the-scenes favoritism and payola in the highest ranks of federal government.

The good news is that this writer does not need to rail about the entitlement attitude of AIG, Wall Street or Senator Dodd. The good people of America have this issue firmly in hand. The uproar of the public has brought threat of injury and permanent demise to what used to be seen as harmless financial types. America isn’t waiting on Senators and Representatives to utter their glib proclamations about how they are preparing to tax the bonuses to get your money back. How is that for ‘in the box’ thinking? We are now taxing our own money back?

Heck, America isn’t waiting on government reaction or platitudes. Americans are ready to take this matter into their own hands. A few choice folks are willing to go into AIG gun’s-a-blazing to stop the abuse of trust in a company that is now 80 per cent owned by the American taxpayer, while millions sit idled at home with recent job losses. AIG employees now fear to go to work. Extra guards are posted at the door. Chaos is in the ranks as the corrupt corporation structure reels at the public reaction. Americans are prepared to take matters into their own hands. The federal government isn’t prepared for a lynching. Congress is exploring the possibilities in hearings. ~ E. Manning

January 28, 2009

Congress: We are not the Experts (The Real Truth about the U.S. Economy)

kanjorski-banking-economyIn a CSPAN interview, Democrat Representative Paul Kanjorski, the Capitol Markets Subcommittee Chairman, made some revealing confessions about the expertise of the U.S. House and Senate, the facts behind the scenes during the EESA Stimulus plan last year and the real plight of the U.S. economy.

the actions of the Secretary of Treasury and EESA bailout

“Things were done that were misunderstood. We did not give the $700 million for the purpose of lending money. It was never in the program (TARP, EESA) It was misconstrued initially and put together with the suggestion by the Secretary of Treasury that we would be buying what we called dirty assets, defective mortgages and securities in these banks and that the government would find a way to create a market, buy them in, take them off the balance sheets so that the banks could continue to function normally…I supported that. But another part of the bill, we gave jurisdiction and authority to the Secretary of the Treasury to make investments in banks. He had very wide authority because, quite frankly, we (Congress) are not the experts on the Hill as how to solve this problem and the problem is multifaceted, so we gave great flexibility to Secretary of Treasury to act.”

The near collapse of the economy and U.S. government

“I was there when the Secretary and the Chairman of Federal Reserve came those days and talked with members of Congress about what was going on. It was about September 15th. Here’s the facts: we don’t even talk about these things. On Thursday, at about 11 o’clock in the morning, the Federal Reserve noticed a tremendous drawdown of Money Market Accounts in the United States to the tune of $550 billion. It was being drawn within the space of an hour or two. The Treasury opened up it’s window to help. They pumped $105 billion into the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks. The decided to close down the operation, close down the money accounts and announce a guarantee of $250,000 per account so that there wouldn’t be further panic out there. That is what actually happened. What if they had not done that? Their estimation was that by 2 o’clock that afternoon $5.5 trillion would have been drawn out of the money market system of the United States, would have collapsed the entire economy of the United States and would have, in 24 hours, the world economy would have collapsed. We talked about, at that time, what would have happened, if that had happened. It would have been the end of our economic system and our political system as we know it.”

“That’s why, when they made the point, we’ve got to act and do things quickly, we did. Now, Secretary Paulson said, Let’s buy out these subprime mortgages. Give us latitude and large authority to do many things as we decide necessary and give us $700 billion to do that. Shortly after we enacted our bill with those very broad powers, the UK came out and said ‘No, we don’t have enough money to buy toxic assets. Instead, we are going to put our money into banks so that their equity grows and they’re not bankrupt. The UK started that process. That’s true, it was much cheaper to put more money in banks as equity investments than to start buying their bad assets. It was early determined that we would have to spend 3 to 4 billion dollars of taxpayer money to buy these bad assets. We didn’t have it. We only had $700 billion.”

“So Paulson made a complete switch, went in and started putting money in and buying securities and investing in banks in the United States. Why? Because if you don’t have a banking system, you don’t have an economy. Although we did that, we didn’t have enough money and as fast as we did that, the economy has been falling. We are really no better off than we were off today than we were three months ago because we have had an decrease in the equity positions of banks. Other assets are going sour by the moment.”

the real truth of the matter according to Paul Kanjorski

“Now, we’ve got to make some decisions. Do we pour more money in to the extent that the money goes in…I, myself, think that we ought to take the time, analyze where we are, have the people (American public) understand…We need to really inform (the public) as to the facts and get input (from them). Perhaps (the public) has better ideas. We aren’t any geniuses in economics or finance. We are representatives of the people. We ought to take our time, but let the people know that this is a very difficult struggle. Somebody threw us out in the middle of the Atlantic Ocean without a life raft and we are trying to determine the closest shore and whether there is any chance in the world to swim that far. WE…DON’T…KNOW.”

Remember who actually threw the economy into “the middle of the Atlantic Ocean without a life raft.” We can offer that credit to greedy unscrupulous bankers, a corrupt banking community, unattentive government regulators and politicians that gloried in the temporary economic bubble that the moral bankruptcy created. Never forget that America! ~ E. Manning

U.S. stimulus trivia: the latest stimulus provision provides enough spending to give every man, woman, and child in America $2,700.
President Obama has said that his proposed “stimulus legislation” will create or save 3 million jobs. This means that this legislation will spend at least $275,000 per job. The average household income in the U.S. is $42,000 a year. The way that the stimulus is currently written will probably save mostly state and federal government jobs. The current stimulus is not designed principally for economic stimulus for Main Street.

October 16, 2008

Financial Crime of the Century

Today at the Senate Banking and Housing Committee meeting “Turmoil in the Credit Markets”, Senator Chris Dodd, now the “Congressional champion” for the American consumer against foreclosures along with others, aptly pointed out a fact that most of us have overlooked or conveniently forgotten. President Clinton assigned the Federal Reserve the full duty as regulatory policeman over the nation. The Federal Reserve, in the words of Dodd, ignored the assignment by doing nothing for years. Senators are seeking reelection this year and U.S. citizens would do well to remember that Senators are now trying to cover their lack of action and regulatory oversight for the last eight years. Now, hearings are in order to find the right degree of blame and then an effort made so that another economic tsunami never happens again.

Dodd’s words were perhaps among the most pointed opening comments of a recent hearing. He simply stated that bankers shifted risk through exploitation. You can hear the politics and excuses too. A mandate of Congress doesn’t mean anything with regulation. That has been the flaw behind the entire federal government for the last decade at a minimum. Interestingly, Dodd sees himself as doing a “post-mortem” examination on the U.S. economy. By that definition, the economy is dead. That is not a good comparison unless he knows something most Americans don’t. ~ E. Manning

Senator Dodd’s opening remarks

October 4, 2008

Pork Helps the U.S. Bailout Medicine

The first bailout was largely unpalatable to Congress, largely because of the reaction of taxpayers. Their rejection of the first bailout also makes lawmakers appear responsible, careful and in control. Don’t kid yourself. A healthy chunk of pork-barrel spending makes almost any Washington legislation go down much easier.

Yesterday, the Senate tacked an additional 341 pages onto the original House bill in the form of various renewable fuel and energy tax incentives, a number of additional tax provisions, and the Wellstone-Domenici Mental Health Parity Act.

The 2008 Emergency Economic Stabilization Act contains stronger oversight protections than the three-page bill Treasury Secretary Henry Paulson offered a few days ago. That isn’t saying much though. Checks and balances are truly in question. Section 101of the bailout directs the U.S. Secretary to “prevent unjust enrichment of financial institutions…by preventing the sale of a troubled asset at a higher price than what the seller paid to purchase the asset.” Suspending accounting rules does nothing to change the value of the junk assets, allowing institutions to value their assets based on whatever scenario they like. Hmmm.

Section 104 allows for oversight by the same folks that allowed the regulatory debacle to begin with including the U.S. Treasury Secretary and the Federal Reserve. The oversight is window dressing with no direction to make the reports public or to report corruption or abuse.

The legislation in Section 107 allows the Treasury Secretary to waive “specific provisions” if he determines that “urgent and compelling circumstances make compliance with such provisions contrary to the public interest.” Nice.

What about foreclosure prevention? “…the Secretary may use loan guarantees and credit enhancements to facilitate loan modifications to prevent avoidable foreclosures.” There is very little material to govern this process. There is plenty of wiggle room for problems here and very little action for taxpayers here. Government can continue to rubber stamp the actions they are making now which is pretty much nothing at all. This is not a taxpayer or foreclosure bailout by any stretch.

The Secretary must “make available to the public, in electronic form,” a description of assets including cost. Hopefully, an average person will be able to understand the information. No such provision is made. Other oversight provisions made seem to be to good effect. At least they have been thinking. Legislators have also been thinking about copious amounts of pork. A few examples are below:

Sec. 201. Deduction for state and local sales taxes.
Sec. 201. Inclusion of cellulosic biofuel in bonus depreciation for biomass ethanol plant property.
Sec. 211. Transportation fringe benefit to bicycle commuters.
Sec. 301. Extension and modification of research credit.
Sec. 308. Increase in limit on cover over of rum excise tax to Puerto Rico and the Virgin Islands.
Sec. 309. Extension of economic development credit for American Samoa.
Sec. 317. Seven-year cost recovery period for motorsports racing track facility.
Sec. 323. Enhanced charitable deductions for contributions of food inventory.
Sec. 324. Extension of enhanced charitable deduction for contributions of book inventory.
Sec. 325. Extension and modification of duty suspension on wool products; wool research fund; wool duty refunds.
Sec 502. Provisions related to film and television productions.
Sec. 503. Exemption from excise tax for certain wooden arrows designed for use by children.
Sec. 504. Income averaging for amounts received in connection with the Exxon Valdez litigation.
Sec. 601. Secure rural schools and community self-determination program.
Sec. 602. Transfer interest earned to abandoned mine reclamation fund.
~ E. Manning

October 2, 2008

Bailout: And Now the Rest of the Story

And now the rest of the story. The U.S. Senate and House have approved and passed the latest U.S. bailout miracle. How will the nation benefit? The rest of the story is there will be very little difference except that the current power structure will remain in place. That, America is exactly what all the hubbub at the top of the U.S. government is all about. The long-term details are of little importance to politicians, bankers and especially not to the central bankers.

Within a month or two, Hank Paulson will buy $250 billion in junk assets using mainly guesswork since there is little transparency in evaluating the quality of what he is buying. Because of the false pride in U.S. government and under the pretense of fairness (can you believe that?), Paulson and his buddies will spend more than market value, even though the junk value is pretty much zero. If the nation is smart, they will elect a president that will promptly dump Henry Paulson onto the job market heap of life. He will spend up that precious $700 billion in credit before he leaves office. If by some miracle Paulson retains his job, he will come with his hand out to Congress for another hefty chunk with little to show for his efforts.

Confidence will improve modestly, mostly due to investment from global central banks as they need somewhere to invest all that devalued cash. Other foreign investors will watch cautiously, but begin to bet on safer risks for the short-haul. Banks will continue to stand on capital and credit markets will stay tight. The economy will continue to shrink and the market liquidity will continue to logjam.

Joe Citizen will continue to cut back because of inflationary pressures and shrinking income. Credit costs will rise and the cost of capital goods will stall. Pressures on foreign markets will continue to put the squeeze on the business world, especially big business and multinationals. Generally, the poor will get poorer and poverty will spike across the globe.

The global economy will continue to weaken focusing initially in Europe, followed by Asia and the emerging markets that business has come to rely on. This is in process now.

Hopes for a speedy recovery by politicians and lapdog economists will wane as the seeds of what Washington has sown come to full fruit. The unpleasant combination of high inflation and economic stagnation will come to bear on the land of the free, followed by the Europe and the rest of the world.
Continued meddling by the U.S. government, foreign governments and central bankers will continue to reinforce inflation. This meddling, like the bailout before it, will merely prolong the economic pain instead allowing the cycle to work naturally. Economic suffering will be great.

The U.S. government will vainly attempt a fiscal stimulus for taxpayers for give a shot in the arm to the economy. An expansion of the bailout will be too little, too late and with little understanding of the real issues because of a lack of understanding of the real issues. Economic recovery is a long-term prognosis.

The United States will be tempted to default on the national debt. Politicians won’t need to worry much. Central bankers have what they want: control of governments and populations, the economic gross national product to fund their quiet rush to superpower status and a new global currency built under the guise of peace and security. It is a dark scenario that must be walked through except for those central bankers that control the gold.~ E. Manning

September 23, 2008

Global Liquidity Crisis: On the Brink

crisis solution

crisis solution

Turn on the TV, read the paper or peruse the latest internet news. You’ll be told that we’re on the brink of imminent crisis, a lock down of liquidity that must be remedied immediately. The Fifth Avenue Rush is on. The only solution is bipartisan unity in Congress to turn over vast power to the Bush administration and the U.S. Treasury without accountability. The Republican feel-good legislation is in place to save the home of the brave. We can do it if we can do it together. We will save the world for democracy.

The American taxpayer must trust that Henry Paulsen will use $700 billion wisely to snatch up worthless securitized bonds. Sound familiar? In the same way that the Federal Reserve Bank is totally unaccountable and is never subject to audit, the current proposal contains this proviso:

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

Henry Paulson, because of the massive liquidity freeze, is about to receive kingly authority to solve the current liquidity crisis. Even after the nation spends an initial sum of $700 billion, there is no guarantee of success beyond maintaining the current business, investor climate and monetary markets, shaky though they may be. The entire proposal is designed to bailout the collapsing U.S. financial system and save the world so that the current power structure can continue unchanged, further supporting control over the failing system. In the words of the administration, the fate of every American’s retirement and savings hangs in the balance. That makes many Americans nervous, at least for those that have managed to prosper, save and invest.

bailout money grab

bailout money grab

In one more segment of authority, the executive branch of the Bush administration wants to perform another magnanimous service while exempting itself from any chance of responsibility or review for the pending results.

While the media and Congress are fussing about the lack of oversight on the project or who Henry Paulson uses to assist him in the huge money grab, the Federal Reserve Bank and the International Society of Bankers sit quietly by watching the drama like ripe fruit ready for picking. A few have pointed out that the lack of oversight is a grand opportunity for abuse or profitaking.

This current idea proposed is bold and transparent in simplicity. Have the Federal Reserve wave its monetary wand, giving buddies in the former investment banking industry piles of cash for rooting out the bad bonds and making a huge chunk of debt go away as the Federal Reserve apportions more American gold to send quietly to Swiss vaults while clueless Americans aren’t watching. No rush about the physical location of gold. International Bankers will count it anyway as their personal profit and add it to the national debt. Never mind that the Fed is already holding all the nation’s gold. Fort Knox is an illusion.

fort knox gold

fort knox gold

The funding credits will never actually need to leave the Fed. The entire process can be done electronically without a trace. The craft is in the paperwork that the U.S. Treasury will alter, permanently erasing a mountain of fraudulent debt that only the banking community and authorities can see. The scheme is perfect because the scheme is all about semantics anyway.

Never has such a bailout been proposed with such secrecy. Even the federal bailouts during the Great Depression and during the Savings and Loan collapse of the 80s never suspended judicial review. Enter an emboldened U.S. Congress led by a Democrat majority that seeks oversight and taxpayer protections. Congress claims to be keenly interested in recouping any possibility of future income derived from currently worthless securitized bonds as the Bush Administration claims. Yet, the American taxpayer will never see a penny from these worthless pieces of paper.

homeowner bailout

homeowner bailout

Democrats want to be certain that going forward, any institutions that benefit from financial insurance also bear the cost of that insurance. Congress is also interested in bailing out beleaguered homeowners that face losing their homes. On “The View,” Whoopi Goldberg and Bill Clinton agreed that enraged Americans need the same bailout consideration that Wall Street and the financial system is getting. Unlike Congress, Whoopi and Bill weren’t talking about new bankruptcy laws that Barney Frank thinks will do the trick. Americans want cold hard cash that they can retire on, like the bankers that robbed the nation.

While all of these opportunities can be justified and even supported, the possibility of pork barrel spending is likely to escalate as Senators and Representatives see the opportunity to bolster their interests. That is the part and parcel of shameless American politics in this age.

credit addiction

credit addiction

Meanwhile, a desperate executive administration and U.S. Treasury Secretary are prepared to do most anything to get legislation through Congress. Reputations are now on the line.

Paulson and President Bush have argued that the alternative is that credit markets will remain frozen. Businesses will fail because they can’t get the loans they need to operate. The economy will grind to a halt because consumers that account for two-thirds of U.S. economic activity, won’t be able to get the credit they need to keep spending. Just think, it all started with broadening the profits of bankers by using compound interest instead of simple interest. We’ve come a long way baby.

national security

national security

Unbridled credit is the insanity that this nation has been built on in the last four decades. Unbridled credit is what has enabled this nation to rise prices without raising wages. Unbridled credit is what has allowed the American consumer to sell himself into slavery to financial interests. Unbridled credit is what has built the power that politicians and business have come to depend on. Unbridled credit is why even Big Business seeks cheap Federal Reserve funding. The Federal Reserve and the International Bankers hold the key to that credit through the auspices of the federal government. The spectacle is all about power and the fear of change. This is the nation’s new national security issue. ~ E. Manning

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