I came across an Article on the Dow Jones ‘MarketWatch’ website, ‘Bernanke's quiet skipper makes waves’, about the New York Fed President, Timothy Geithner. The man behind the scenes of the Bear-Stearns bailout.
He has been involved in most of the financial crisis’s that have hit Wall St since the Mexican Peso crisis. He is obviously a very intelligent and capable man. However, his one domestic solution seems to be using taxpayer’s money to bail out the banks.
The interesting aspect to the Article was the comments made. Essentially, we have heard that ‘Main Street is sick of bailing out Wall St’, but now the comments to the Article clearly show that the average man on the street is cottoning on, and the stench of corruption and greed is turning his stomach. The banks were put in chains after the 1930’s financial debacle. Then, two generations later a lazy and fat society allowed them to be taken off (another Greenspan legacy). Guys, the chains were there for a reason! We can now clearly see what that reason was: corruption in its broadest sense.
Having the Fed oversee the banks was like appointing a wolf to ensure fair play for Little Red Riding Hood. Munch, munch, munch.
The following are extracts taken from the comments to the Article. They clearly speak for themselves:
Can't this action by the fed be distilled down to two simple thoughts
1. Privatise profit.
2. Socialize loss
Some of us have been prudently pinching pennies for years and dealing with our losses in the global labor(sic) arbitrage game with great energy and flexibility. We lived within our means, paid our bills on time and did not make foolish investments. Then we see Bear Stearns execs running off with tens of millions in compensation and the taxpayers are going to foot the bill for this mess.
Since when did the little guy get a break? This tax rebate is just another way to get more money back to the banks.
Isn't sad that the most creative and productive way to "Stimulate" our economy is to give consumers money. Which if it is spent, will stimulate the economy of China since our manufacturing jobs have all moved overseas.
Let's see, the FED, owned by the banks, i.e. the Bildergergs, makes available $200 billion of our inflated dollars just before the "V" IPO where the owners of "V", also the banks, are allowed to unload billions of dollars worth of "V" which is a pipeline for debt between the retailers and the banks and all just in time for morgan/chase to buy up BS at fire sale prices and all their risky paper is backed by inflation of the dollars of the working class, and give themselves 28 days to short all the bad deals and cover their a**** leaving the middle class' IRA's and 401k's holding the bag. That's not a bad deal if you can get it. Can anyone say 'Depression' or 'Revolution'? Maybe I'm just a dumb ol' country boy from Tx but if you keep on taking the dogs bone he's gonna bite you.
I have been through numerous bank failures (remember the S%26Ls), and they all worked with a bang like this. The regulators want a strong bank to immediately step up and do the transactions expected by the insolvents customers. The stockholders are usually totally blown away. Many employees may retain a job. Can you imagine if the FED just padlocked the doors and gave all the customers a claim form.
"The Fed cannot monitor or control all the risks that have arisen, Geithner told his audience, nor can it "act preemptively to diffuse" stresses in the system. The best the Fed can hope for, he concluded, is to beef up the "the shock absorbers."
Let's break up that quote into its two parts and interpret what it actually means for the Fed's actions:
1. "The Fed cannot monitor or control all the risks that have arisen" translates into:
The Fed stands by while Wall Street fleeces pension funds and other investors by selling them worthless securities (asset backed securities backed by subprime mortgages in current crisis, worthless dot-com company stock in the previous financial crisis that Wall Street created.)
2. "The best the Fed can hope for , he concluded, is to beef up the "shock absorbers."" translates into:
When the excesses become so great that Wall Street gets itself into trouble, the Fed comes to the rescue with billions of dollars in special loans for Wall Street's big banks and brokers.
Q - Should Americans refuse to pay the taxes? I think they should. These scums are wasting our money. IMHO
A - Right. Going to jail for tax evasion is the way to go.
One of the things that I have not heard much about is the FACT that the low end options on BSC went nuts, in terms of volume, well ahead, of the "run."
It seems to me that the unusual movement in that area, back when Bear was "liquid," as per the CEO... 2-3 days ahead of the melt down, points to the idea that there was an orchestrated BEAR RAID on Bear Stearns.
It is tragic that it takes a monumental crisis to wake up the American public. Finally, the average person is getting educated about the Fed and no longer holds it in awe as a beneficent monolithic government institution which is there to protect the "public". In fact, what I am reading in these commentaries is not only the anger, and frustration of real people, but in some cases a call to revolution. These are all echo's of the 1930's. When the situation gets bad enough, the American public must take control of the nation's finances away from the Fed and give it to the US Treasury as per the Constitution. And then we will have to start over.
There is no dilution factor here for blame. Step one in fixing a dysfunctional and unfair system is to put the blame where it belongs. The real sociopaths that caused this debacle are not going to get away with blaming this one on 'We all.' There is no 'We' on this one.
Robert Rubin's comments were calculated and meant for public consumption to generate an adrenalin rush amongst tax payers. Given the choice, Americans would welcome Saudi funds instead of being taxed to fund a bailout. This is how you get the American public to accept foreign ownership of its banking system, threaten to tax them. Don't think the Saudi's would want to do this. Why would they want to throw good dollars into the American banking sinkhole? Because they have no choice and that is what Cheney is explaining to them. Cheney will let them know that holding their massive reserve of dollars will be financial suicide. This is because the Federal Reserve stands ready to print dollars in sufficient quantity needed to bailout the banks, and cause a huge drop in the value of their dollars. So Cheney is explaining, to the Saudis, one of the capital systems tenets. Capital should flow where capital is needed.
Jeez, I just saw an interview on the ABC Web-Site that was headed, 'Economic crisis worse since WWII, Greenspan says’.
He caused it !!! (helped a little by the greed of the banks and people who were prepared to borrow such preposterous amounts of money to speculate on the real estate market. We used to just call it buying our home.)
Now, Greenspan advises a large hedge fund. Conflict of interest? If he is talking the market down, and he advises a hedge fund, is it time to go long?
However, I find Greenspan’s grubby paws all over it. Not only did he create too much liquidity and miss-price it, worst of all, he let the banks off the leash.
From the article ……
'Derivatives have barely any regulation on them. For years, Congress tried and Greenspan stood in the way'
'What Could Go Wrong? This is just what Long Term Capital (LTC) did back in the late 90’s. Remember them? So along came Alan Greenspan on his white horse to the rescue.'
'As Alan Greenspan told Congress months later in explaining why the Fed bailed out a private hedge fund, he told Congress that if he hadn’t, the entire financial structure of the US would have been in jeopardy.'
Now, as the article explains, the Fed is gunna protect is own first and the average taxpayer is going to pick up the tab.
I wonder if Greenspan knows something about this derivates mess that we don't know .............. yet. That makes it a short bet, not a long one.
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