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Guest Post: Tim Geithner Is A Sniveling Scamster

Tyler Durden's picture


Via Mike Whitney of Market Oracle

Timothy Geithner is a Sniveling Scamster

Whew. That was fast. It didn't take long for Wall Street to figure out
how to game Obama's new mortgage modification program, did it? The plan
was hyped as help for "struggling homeowners", but it turns out, it's
just another stealth bailout for pudgy bank-execs. It's funny, the
program hasn't even kicked in yet and, already, bigtime speculators are
riffling through their filing cabinets looking any garbage paper they
can find to dump on Uncle Sam. Take a look at this on today's Bloomberg

"Subprime-mortgage securities are rising at an accelerating pace as the
U.S. begins to encourage reductions to homeowners’ balances, which may
lead to fewer foreclosures and a quicker end to the housing
slump....Senior-ranked bonds tied to borrowers with poor credit will
mostly benefit after the Treasury Department said for the first time it
would seek to cut the size of mortgages, reducing the likelihood that
loan modifications will fail, according to JPMorgan Chase & Co.,
Morgan Stanley and Barclays Plc. (Bloomberg)

What does it
mean? It means that Obama's mortgage modification extravaganza has
touched-off a gold rush in toxic paper. Subprime securitizations, which
had been worth next to nothing, are now the hottest trade on Wall
Street. It's a subprime bonanza! The investment sharpies are scarfing
up all the crummy MBS they can get their hands on, because they know
they can trade it in for Triple A FHA-backed loans when the program
get's going. It's another swindle cooked up by Treasury Secretary
Timothy Geithner to keep the brokerage clan in the clover. Here's how a
Wall Street veteran explained it to me:

"It looks like the investors in securitizations will be swapping
underwater real estate for govt-insured paper... I think the scam here
is just to provide some cover so the hedge funds and other high net
worth individuals can trade their low grade paper for Triple AAA
mortgages insured by the FHA at the taxpayer expense."

That's it, in a nutshell. The faux-foreclosure prevention program has
nothing to do with helping homeowners. That's just diversionary
gibberish to confuse the public. The real objective is to create a
government landfill (aka--FHA) where the banks and other financial
institutions can dump their toxic MBS-sludge and walk away with
gov-backed loans. Get a load of this:

(Bloomberg) -- The Federal Reserve’s completion this week of its
program to buy $1.25 trillion in mortgage bonds probably won’t mean
significantly higher U.S. home loan rates as investors return to the
market, replacing the Fed...

What we are seeing is an effective handoff occurring between the Fed
and industry buyers such as banks and pension funds,” said Christopher
Sebald, chief investment officer for Advantus Capital Management in St.
Paul, Minnesota...

Advantus is purchasing mortgage bonds after the Fed’s program drained supply in the $5.4 trillion market." (Bloomberg)

Of course, they're "purchasing mortgage bonds", because the government
is going to insure them. It's a "no brainer". And don't you love that
expression, "a handoff", because that's exactly what it is. The
government hasn't stopped pumping liquidity into the system; they've
just found another entry-point where they can push it in. Here's how it
works: The new program offers incentives to banks and other
deep-pocketed investors (in mortgage-backed securities) to slash the
principal on underwater mortgages which keeps people from strategic
default or foreclosure. Sounds good, right? But here's the catch: When
the mortgage is refinanced, it's converted into a FHA-backed loan which
provides an explicit gov-guarantee. So, for a slight loss on the
face-value of the MBS, the investors (ie--investment banks, hedgies,
etc) are able to resuscitate their moribund securitizations (MBS) and
reap hefty gains. It's like taking Fido's steaming pile on the front
lawn and turning it into the Hope Diamond. Abracadabra!

Geithner has figured out how to put together a bailout that will cost
taxpayers hundreds of billions of dollars without any money actually
exchanging hands. The value of the putrid mortgage-paper will soar
because of the gov-underwriting, and the ginormous losses won't be
realized until the mortgages start blowing up sometime in the future.
That's when FHA will be put-to-pasture along with fellow-homicide
victims, Fannie and Freddie. Pretty clever, eh?

So, the cutthroat speculators and bunko artists who fleeced us all with
their dogshit subprimes, have returned for another dip at the public
trough. That means taxpayers will get scalped on the same investments a
second time. Hey, it's a double-whammy!

This really takes the cake. You gotta hand it to that sniveling
scamster Geithner. He had his back to the wall and, presto, he extracts
another rabbit from his hat. What a guy. He knew he couldn't go begging
to congress for more money, or they'd kick him to the curb. So he
worked out a scam that picks up where the Fed's $1.25 trillion
quantitative easing bailout leaves off. It's a seamless transition from
one massive corporate giveaway to the next. Now the Fed has nearly $2
trillion worth of structured garbage on its balance sheet, (which it
will undoubtedly dump on Fannie or Freddie) the banks are loaded with
fresh reserves, and another trillion or so is earmarked for the shadow
bankers who provide funding to the regulated banking system. AND IT'S
ALL 100% FREE. Such a deal.

This bank/credit cabal is robbing us blind in broad daylight and no one
seems to give a hoot. Maybe Barack Obama will save us from all ruin?

Fat chance!

By Mike Whitney


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Fri, 04/02/2010 - 16:52 | Link to Comment bc0203
bc0203's picture

Re: The title... Now, now... Timmy is just doing his job, don't be so hard on him! 

I was going to say, at some point one has to ask, what's another few hundred billion of toxic assets on the Fed's balance sheet when it's becoming increasingly clear they intend to default anyway, but I'm going to hold off on that "few hundred billion" number until someone actually quantifies the amount of toxic paper out there.  I'm going to bet the actual number is well north of a trillion dollars.

Fri, 04/02/2010 - 18:05 | Link to Comment nope-1004
nope-1004's picture

Try tens of trillions!


Send the shifty geek to prison.

That's where he belongs.

Sat, 04/03/2010 - 01:58 | Link to Comment BlackBeard
BlackBeard's picture

oh...but then he won't be a virgin anymore....

Fri, 04/02/2010 - 18:51 | Link to Comment mikla
mikla's picture

I'm going to bet the actual number is well north of a trillion dollars.

Good guess.

The US housing market is some $22-$23T, and we've already experienced a 30% drop, for some $6T in total losses (but growing dramatically).  The Fed, of course, bought $1.5-2T in the last year.  Fannie & Freddie (and as of Dec-2009, the taxpayer) are on the hook for another $5T, and growing.  I expect to see another 20%-30% housing market drop from the current levels, for easily another few $T in market losses.  I'd be amazed if this program didn't add to taxpayer losses another $2T-$8T, with the only limit a "premature program termination" due to public auditing and outrage.

This scam program is only limited by the Treasury/Fed decision to say "Uncle" and stop buying.  If they don't stop buying, they can easily pick up another several $T, perhaps another $10T, now that we have a massive boom in the secondary market to buy up this toxic crap, for the SOLE purpose of selling it to the taxpayer.

Actually, if you work at it, the banks can profit two or three times from the same money (due to credits and other accounting tricks that let them both profit and write off losses on the exact same dollar). 

Sat, 04/03/2010 - 11:37 | Link to Comment afat993
afat993's picture

  Whomever that's clammering to get their hands on sub-prime loans to take advantage of this program is going to get their clocks' cleaned.  This is going to be another failure just like the original HAMP.  Here's why:   1. Won't start until Fall of 2010. 2. Pre-requisite for Borrowers to be current means Banks will be more unwilling to take the loss on an already performing loan and hence not participate. 3 4. Only $14B of TARP Funds used for the Forebearance process is a drop in the Pacific Ocean. 5. Max 115% CLTV means 2nd lien holders will more than likely not agree to the subordinations. 6. FHA Guidelines means max loan amounts of $729,750 plus newer, more restrictive underwriting which went into effect on January 1, 2010.  Plus FHA just increased their upfront MI coverage from 1.5% to 2.25% making FHA financing even more expensive. 7. Borrowers credit will be damaged after the modification while still being upside down on their home if they have a second mortgage. 8. Way too many moving parts including the 1st and 2nd lien holders coming to an agreement as to the correct appraisal value and loan amounts which must be written down by each side will make these modifications take six to eight months to complete.

. Voluntary, not mandatory, participation by the lenders means most will not do it so they avoid showing losses.

If this program had any chance of working it should been implemented when the Banks still owed TARP Money and Treasury could make the participation mandatory.  

Fri, 04/02/2010 - 17:02 | Link to Comment RSDallas
RSDallas's picture

"The new program offers incentives to banks and other deep-pocketed investors (in mortgage-backed securities) to slash the principal on underwater mortgages which keeps people from strategic default or foreclosure."

Somebody in the transaction has to take the loss from the principal reduction don't they?  Our financial institutions are not capitalized at a level to incur these losses.  I just don't see how the banksters pull it off on their end?

Sat, 04/03/2010 - 01:47 | Link to Comment defender
defender's picture

"Somebody in the transaction has to take the loss from the principal reduction don't they?"

This is true, but they already have a plan for that.  With several hundred banks on their way to to insolvency, all you have to do is sit back and wait to get your hands on discounted mortgages.  In fact, the FDIC will then give you money to cover any losses that you might have, thus setting you up to profit twice. 

I wonder if anyone is currently making their own "bad bank" to profit from this exact scheme.

Fri, 04/02/2010 - 17:04 | Link to Comment rich_maverick
rich_maverick's picture

It's official...  You have to be blind not to see it.  Whoever is the puppet-master in orchestrating the Fed game, State debt game, along with the mini debacle recently described in the Rolling Stone (ironic that the Rolling Stone is now considered one of the best sources for news), simply wants to see the US dollar/economy to blow up.  You cannot be that stupid, that totally naive, to believe that thing will improve Mainstreet's fortunes.  The few banksters/hedge funds will make a killing and the rest of us will become debt slaves to the "system"!  The government is busy closing up all the escape routes for capital (to ensure we all get taxed) and raising taxes.  I'm disgusted!

Fri, 04/02/2010 - 17:27 | Link to Comment RSDallas
RSDallas's picture


Sounds like you should visit this site.|3605|75277&N=4040913&Mo=24&No=0&Nr=P_CatalogName:BC&cat=75277&Ns=P_Price|1||P_SignDesc1&lang=en-US&Sp=C

Seriously, I think main street has been shafted at the expense of a few institutions.  We are no different than Japan at this point.  I don't however think we are going to experience armageddon.  I'm disgusted to. 

We have allowed ourselves to become slaves of the state.  I don't give a shit what you say, the US is not Cuba , Venezuela or France for that matter.  We will beat these bastards when we decide to uniformly show up at the polls with an alternative answer to this crap coming out of Washington. 

Fri, 04/02/2010 - 17:46 | Link to Comment Edmon Plume
Edmon Plume's picture

(R) or (D)?  Which will it be?  Death, or death by unga-bunga?

I wish I was more hopeful, but all I see when I look down the road is a bunch of repubs who sat the last election out because mccain and obama were separated at birth, and now that obama has done precisely what his kampf said he would do, i.e., flush the US down the toilet in the name of ending hegemony, the repubs are playing their constituents like a fiddle.  "Hey, you chose the wrong turd!  You should have selected the turd(R) not turd(D)!"  It's all persuasion and fear, and it looks like we will end up with scared repubs voting for ABBA - Anyone But BArack.

What we need is a cleanout of everyone except a handful of reps who are actually pretty good.  But you and I both know our chances of doing anything but swinging the pendulum back to the other extreme are pretty darn bad.  Throw the bums out and replace them with new bums!  That's what always happens.  Our prosperity is a slave to idiot voters who care more about glistening pecs and boxers/briefs than questions of economic survival.

We don't need an alternative answer so much as we need a "right" answer.  Those types of people who truly care are few and far between.

Fri, 04/02/2010 - 18:20 | Link to Comment InsanePonziClown
InsanePonziClown's picture

i think we are similar to japan in what we are doing, different futures though, japan had 3 sources of income, cheap electronics, which they eventually became 2nd tier, machinery....still bread and butter, cars, which they are no longer dominant

us, we got creative destruction, natural resources, military, transportation and corporate farming

while the japan banks became zombies, we got banks who despise being zombies and will bob and weave and grind it out hopefully

which just leaves one big national debt, yet, i guess the good part is it's all in one place, lol


Fri, 04/02/2010 - 18:21 | Link to Comment SteveNYC
SteveNYC's picture

I would uncategorically back the French in overthrowing their government before America. I'd put my life savings on it.

Sat, 04/03/2010 - 03:02 | Link to Comment's picture

Sarkozy ? to small to fail  !

Fri, 04/02/2010 - 18:24 | Link to Comment Caviar Emptor
Caviar Emptor's picture

"I don't give a shit what you say, the US is not Cuba , Venezuela or France for that matter.  We will beat these bastards when we decide to uniformly show up at the polls with an alternative answer " RSDallas, we don't have to be Cuba or Venezuela to have our very own, home grown claque of robber barons to whom all must genuflect and pay a breathing tax. It shouldn't be so hard to believe. It's happened before.

Fat Boy has a monopolistic hold on the country's finances. Our poor, broke government. That's a pretty good reason to act like royalty. That in turn allows Fat Boy to have every level of government sewn up. If he wants something changed, he just picks up the phone. Can you do that? Too Fat To Fail! Our government would sooner sell New Jersey than allow JPM to fail. Oh perhaps a few little pesky citizens would protest. So what! We simply can't have the country run by every Tom Dick or Harry with so much money at stake.

You say you can "vote them out"? Hehe...that's a nice fantasy. But fantasies don't win elections. Not when a presidential election costs over $700 million and the average Representative needs $8 million. Money talks. Fat Boy picks and choses the winners that you and I elect. And yes they all claim they're for change and free markets. Hehe. 

A modest prediction: once they're done extracting money from FHA, Fannie/Freddie they'll move on. Medicare is next. It's a perfect setup for them since the government uses private corporations as "Insurers" on whom hospitals and most care facilities depend to remain solvent and operational. Hehe.

Fri, 04/02/2010 - 17:13 | Link to Comment doggis
doggis's picture

hey this program is funded with recycled TARP funds isn't it? which may explain why the tBTF banks paid these funds back so quickly. they knew it would return by removing toxic assets from their books - which is what the program was intended so to do. i am sick from the stink. i am beyond angry!!

my question is; when will the anger hit the streets? when will blood be spilled?

Fri, 04/02/2010 - 18:13 | Link to Comment Tethys
Tethys's picture

My answer, such as it is, would be another question:  who do you expect to rise up?

The present harmonic convergence has coalesced the power of one ideological group ('progressives' for lack of a better label) who now dominate:

(1) Government (White house, both houses of congress)

(2) the mainstream media (AP, NYT, NPR, etc. etc. and including much of the overseas media such as BBC)

(3) the unions (including most government workers)

(4) the trial lawyers and a good part of the judicial system

(5) the educational system (from kindergarten through universities)

(6) the entertainment industry (music, movies, plays, tv shows)

(7) a good portion of the financial system (treasury, fed, Goldman, etc.)

(8) large and increasing numbers of people who depend on the govt. for just about everything

And opposing this is what exactly?  The sheer force of resources and propaganda is staggering - it starts at the earliest ages, and has been building power for years now.  Rush Limbaugh,  Fox, etc. are no match - see how easily they were manipulated to switch from discussing 'health care reform' to trying to explain that, no, really, those who oppose it aren't violent or racists.  Organized religions which might be a threat are relegated to constantly defending against daily charges of child sexual abuse.  Businesses that even hint that the current agenda could be detrimental to the economy are summoned to testify before congress.

Then there are those who played by the rules, didn't take on a lot of debt, lived within their means.  Sure, they are pissed, but enough so to jeopardize what they have and those they love in a futile effort to oppose the system?  And why should they be the ones to sacrifice and 'fix' things so that those who made their bed do not have to sleep in it?  

Besides, anyone who is marginally aware of what is 'actually' (who really knows?) going on has learned it from sites like this on the internet.  And guess what?  This allows convenient databasing of who has been reading what and who is likely to be pissed.  More importantly, who is likely to be pissed in an organized way.

As I have mentioned before, a good friend of mine has taught me that there are times when it is critical to stop, stand quietly, and use all of your senses to observe what is going on around you.  This is one such time.

If history is of any relevance, the likely outcome is that those who have been perpetrating this clusterphuck will be on the first planes out, or protected by whatever system remains.  It will be down to the rest of us to fight each other for the final scraps.

Fri, 04/02/2010 - 17:18 | Link to Comment buzzsaw99
buzzsaw99's picture

The maggots steal. It's how they "get over". It is a sweet deal working the corner of Fraud St. and Bezzle Ave.

Fri, 04/02/2010 - 17:22 | Link to Comment SilverIsKing
SilverIsKing's picture

"It's like taking Fido's steaming pile on the front lawn and turning it into the Hope Diamond. Abracadabra!"

For sure!

Fri, 04/02/2010 - 17:24 | Link to Comment Thorny Xi
Thorny Xi's picture

There will be no slowdown in the $40 million-each private jet traffic in and out of Vail and Aspen. Thank goodness the FAA and taxpayers extended the Vail/Eagle runway, built new control towers and added top end ILS and radar at both cities - it remains so congested up here!

Thu, 04/22/2010 - 12:33 | Link to Comment velobabe
velobabe's picture


Fri, 04/02/2010 - 17:35 | Link to Comment jedwards
jedwards's picture

PLEASE PLEASE PLEASE let this poster be exaggerating things.  I REALLY REALLY REALLY hope this isn't true.  I already sickened by this situation, I don't think I can handle anything more like this.  This is disgusting.  How much more money can this government be dishing out to Wall Street?  Another covert bailout to strengthen their balance sheet?  Honestly it makes me just want to quit.


Does this mean we should be investing in Bank of America, since they will likely benefit from this greatly?

Fri, 04/02/2010 - 18:15 | Link to Comment Bob
Bob's picture

It really reveals just how crude the Russian oligarchs were, yes? 

Even Pravda is laughing at us. 

Fri, 04/02/2010 - 17:54 | Link to Comment InsanePonziClown
InsanePonziClown's picture

the more this crap goes on the more you know it is manufactured

imho, i think it all goes back to when they outlawed shorting of those 1000 stocks, hank is thus full of shit, he put on the brakes to engineer some type of game plan, he knew beforehand not exactly but about how it would go down and who would fail, the 3 month ban on shorts just gave them time to put there ducks in a row

after the short ban was taken off, they knew the only way to stop the shorting was a crash, and then something that would get the bears to go bullish, which was the backin of banks, tbtf, dumpin fasb

from that point on it's simple been working the right lever at the right time

i really thought after about 12 tricks by ben and tim they were done, obviously i was very wrong, like jmmy durante' ha cha cha cha, i got a million of em

imho, i think there is no doubt they simply entertain all idea's from big money how to get them to help them re-inflate, no matter how outlandish the idea is, as long as they can move things around some how, i think they are very interested

this is simply another one of dozens

imho, timmy and ben don't see it as fleecing or criminal, imho, in there mind it's, we need risk capital to re-inflate and what incentives do we need to provide to get them to buy buy buy, this guys are fully committed





Fri, 04/02/2010 - 18:12 | Link to Comment Fix It Again Timmy
Fix It Again Timmy's picture

I resemble that remark...

Fri, 04/02/2010 - 18:24 | Link to Comment SteveNYC
SteveNYC's picture

Well, if they are explicit guarantees, should they not simply add to the Treasury's outstanding debt? Or, are we going to consider these off-balance sheet?


The dam has to give at some point, we can't just keep issuing treasuries between 1% - 3.5% and act as a "low default risk" (yes, I mean inflation too) AND take all this shit onto our books and pretend it's all ok? Who the fuck would buy US paper if that were the case aside from Bubble Ben? And if Bubble Ben keeps buying, the dollar should collapse should it not?


Something doesn't smell right here, it can't possibly be this simple, too many balls in the air.....

Fri, 04/02/2010 - 19:14 | Link to Comment mikla
mikla's picture

Well, if they are explicit guarantees, should they not simply add to the Treasury's outstanding debt? Or, are we going to consider these off-balance sheet?

Short answer:  Off-balance sheet.

Long answer:  The US Federal Government fundamentally does not have a balance sheet.  Rather, it performs "cash-flow" operations, where each month it lists "taxes collected + money borrowed" to equal "money spent".

A couple of issues:

  • Taxes don't matter.  Spending has nothing to do with taxes (tax revenue is small and getting smaller, spending is big and getting bigger).
  • More money can be borrowed every month.  This is the exact same thing as you getting new credit cards every month (unsecured credit lines) that you immediately max-out, never paying off your old credit cards.
  • The accounting of "what was spent" is fraudulent (they are based on "estimates" that have no relation to reality, and which are never corrected).

That's why some $100T in unfunded Medicare isn't on the balance sheet -- until it becomes a cashflow problem, it doesn't exist.  Any individual or business that did this would be in jail.

It gets interesting now because Social Security became a cashflow issue starting last year -- we write more checks each month than money paid into the program, so the Treasury must issue new bonds each month explicitly so it can pay Social Security beneifts.

So, these loans "transferred" to the FHA won't matter, until it becomes a cash-flow issue (i.e., the FHA asks for direct cash loans from the Treasury).  The FHA is broke now, so that could be any time, but theoretically they might be able to wait a year or two before they have this "cash-flow problem".

Of course, it's a self-reinforcing death-trap:  At some point, you can't issue that many bonds in a day.  That point has already come, but the Fed is quietly monetizing everything so nobody notices.

Sat, 04/03/2010 - 08:14 | Link to Comment Crime of the Century
Crime of the Century's picture

Ta Da!! Which is why CFTC allows multiple paper claims on each unit of real goods. It hides the hyperinflation...

Fri, 04/02/2010 - 18:26 | Link to Comment Rainman
Rainman's picture

There's more than one way to skim a TARP.

Gotta' give the whole crew an A+ for boldness, creativity and imagination.

I'm especially impressed that the con goes down under the political cover of rescuing the underwater morts.

Sat, 04/03/2010 - 08:45 | Link to Comment tip e. canoe
tip e. canoe's picture

a great con always targets people's innate desire to be compassionate, especially when they're lacking in that department.

I'm your mama
I'm your daddy
I'm that nigga in the alley
I'm your pusherman

Fri, 04/02/2010 - 18:34 | Link to Comment Problem Is
Problem Is's picture

Nice Job Mike...

Mike Whitney ought to be a regular guest poster... instead of the insufferable "Commander McBragg."

I have read a lot of good posts with accurate analysis from Mr. Whitney... like:

Carte Blanche for the Banksters

Geithner's Gotta Go

The Case Against Bernanke and Greenspan

The War on Toyota

Note to ZH: More factual analysis (like Mike)... less egocentric pontificating, please...

Fri, 04/02/2010 - 18:38 | Link to Comment GubmitWKR
GubmitWKR's picture

Wait, it gets better! TBTF makes even more money off of the toxic loans by a few simple steps.

1. Cut the principle amount owed on toxic loans to make the government look like its looking out for the citizens.

2. Citizens feel better because it looks like they owe less on their home and the economy looks likes its going to grow.

3. The result.. Interest Rates rise on home loans

4. Reset toxic loans to 30yr fixed, non-toxic, FHA backed, super liquid, paper with HIGHER INTEREST RATES!

5. Either the poor citizen pays more $ in int. on less prinicpal for 30+ years or they default and FHA (aka. taxpayer) picks up the tab.

6. The end result, make more money and account for less prinicpal which leads to lower capital requirements and congratulations your TBTF bank is now "well capitalized" and no longer needs further regulation. Business as usual....until....???


Sat, 04/03/2010 - 08:19 | Link to Comment Crime of the Century
Crime of the Century's picture

Citizens feel better because it looks like they owe less on their home

Not likely. The program is for Option ARM types, with underwater Conventionals excluded. No, the exact opposite has happened. "Citizens" are pissed that the stupid and greedy get their bailout alongside the pigmen.

Fri, 04/02/2010 - 18:41 | Link to Comment rawsienna
rawsienna's picture

It is not as described in the article but it is yet another transfer of risk from the private sector to the government.  As some of the borrowers whose mtgs are in subprime deals refi into fha loans, it puts a limit on loss severities AND transfers the risk of future default and/home price decline to government. It is a HUGE indirect subsidy to banks just to save a few borrowers from foreclosure. Maybe they can have a windfall profit tax on holkders of these bonds.

Fri, 04/02/2010 - 19:21 | Link to Comment Dicite justitiam
Dicite justitiam's picture

The fastest route from 0 to $2T

Banks: "Hey America, here's $2T, go forth and buy houses and plasma screens!"

Subprime America: "Seriously?  Thanks!  I'll hit 'choo back."  "Wait...sorry.  sike"

Banks: "Dammit.  Give me back those houses.  Keep the plasma." 

Subprime America: "Sure dude.  BTW thanks for ruining my life, but this plasma rocks!  Yeah I'm not so good at planning, so why did you give me so much money?!"


Banks: Now I've got all these friggin empty houses with welcome logs in the toilets.  Maybe I could turn them into shadow houses, and along with our shadow structures, we could create another dimension, a shadow dimension...we could lobby for dual citizenship and the Uncle Same could tax both.  Hell, why not expand the credit structure into ALL dimensions.  I'm going to have to get our best and brightest on that one.  In the meantime, I wonder if I could just ask the Fed for $2T.  Is that too brazen?

Banks: "Hey, we thought it would be cool if we gave America $2T to buy houses and stuff.  We had no idea they would stiff us [wink].  Can we have $2T?  Hit choo back."

Fed: "Yeah, we were just as shocked [wink].  Those damn irresponsible Americans.  I'm glad you asked about the $2T.  Now that you mention it, we can give it to you right now, and put a gun to America's head to ensure payment.  That will teach them to stiff you."

Banks: "But what about Congress?  Don't they have to approve that?"

Fed: "Isn't it a bit early to be in the bag?  You saw the sign outside, right?  The one that says US Federal Reserve?  That's what I thought.  Pleasure doing business with you, let's do it again soon."

Fri, 04/02/2010 - 19:37 | Link to Comment JR
JR's picture

It’s important to look past the politicians and past the regulators and past the officials of the executive branch such as the treasury secretary as to where the source of America’s trouble is to be found.  Americans need to understand, and more do every day, that the United States government is a bank-controlled government—its currency, foreign policy, domestic policy, and yes, debt.

National protests need to rise to crescendo against the corruption of the political party and voting system strong enough so politicians will be forced to deliver or be replaced.  The time is now at hand when men of good will are beginning to turn from their careers and life interests and families to direct their attention to the critical needs of their country; and as this wave rises to thousands and hundreds of thousands the American system, in my view, will respond.

The immediate demand of these protests should be transparency of the public’s business. Wrote Robert A. Heinlein (If This Goes On): “Secrecy is the keystone of all tyranny.  Not force, but secrecy…censorship.  When any government, or any church for that matter, undertakes to say to its subjects ‘this you may not read, this you may not see, this you are forbidden to know,’ the end result is tyranny and oppression, no matter how holy the motives.”

Zero Hedge and commenters here have become a major part of the alert system, reaching men and women who love their country... and liberty.  The obvious value of the free speech practiced on Zero Hedge is clear when one realizes that a tyrant’s first order of business is to silence the questioning and the opposition.

Sat, 04/03/2010 - 01:32 | Link to Comment Cursive
Cursive's picture

National protests need to rise to crescendo against the corruption of the political party and voting system strong enough so politicians will be forced to deliver or be replaced.


I just signed up for the Swarm (Nathan Martin).  Don't know much yet, but have you heard anything about it?

Sat, 04/03/2010 - 12:06 | Link to Comment JR
JR's picture


I’ve been keeping up with and reading Swarm since its inception.  Couldn’t be better!  I, too, intend to sign up, just didn’t know when I’d have time to comment.  I also found Damon Vrabel there—what a find that was. As for Nathan’s Economic Edge, I never miss it—not even the Sunday (political) Funnies.

We’re in good company, for making a difference, IMO. :-)

Sat, 04/03/2010 - 12:26 | Link to Comment Rick64
Rick64's picture

I agree. I wish more people would be willing to take these steps.

Sat, 04/03/2010 - 12:54 | Link to Comment Johnny Dangereaux
Johnny Dangereaux's picture

The time is now at hand when men of good will are beginning to turn from their careers and life interests and families to direct their attention to the critical needs of their country;

Here is somebody that might fit that description. If you or people you know live in the East half of Northern Wisconsin(Green Bay) please pass along. In the video at this link he explains PACs and that he will NOT take their money. Thank-you!

Fri, 04/02/2010 - 19:37 | Link to Comment Rick64
Rick64's picture

The con continues, bank stocks should skyrocket now. What else can we do for them? Is there any advantages they haven't gotten yet? The hypocrisy knows no limits.


Fri, 04/02/2010 - 21:26 | Link to Comment chindit13
chindit13's picture

Soon the taxpayers will have to give the banks toasters if a citizen opens a new account.

Sat, 04/03/2010 - 10:33 | Link to Comment mouser98
mouser98's picture

at Bank of America they charge you $6 to cash a check over $1000 written on their bank by one of their account holders.

Sat, 04/03/2010 - 10:56 | Link to Comment Rick64
Rick64's picture

This is a ridiculous policy which if I had an account there I would immediatly cancel it in protest. Also they charge $5 to cash a check if you don't have an account there even if the check is from an acc. holder at BOA.

Fri, 04/02/2010 - 20:01 | Link to Comment no cnbc cretin
no cnbc cretin's picture
Tim Geithner Is A Sniveling Scamster - DUH!

This whole country is now a joke. The only reason the collaspe has not happened yet, is because of the printing press. The sad thing is most Americans have NO CLUE! - at all! It maybe a couple of years yet, but a SUDDEN STOP is coming.

Fri, 04/02/2010 - 21:36 | Link to Comment fotokemist
fotokemist's picture

I have a number of blue collar relatives in western NC.  They are beginning to get a clue.

I may be the only white customer at a local barbershop owned by a local black guy in central NC.  He is getting a clue.  So are his other customers, so far as I can tell.

While none of these people are conversant on MBS's, CDO's, etc., they are intimately familiar with un- and underemployed relatives, friends and neighbors.  They seem to have a growing question about whether the CEO of a large bank is really worth their pay.  They are even beginning to figure out that low interest rates on the mother-in-laws CDs, used to fund her retirement expenses, coupled with high interest rates on their credit cards may not be to their advantage.

By and large, these folks are well-armed.  It is their children who make up our National Guard and other armed forces ...

Just sayin'

Sat, 04/03/2010 - 00:50 | Link to Comment Bob
Bob's picture


Fri, 04/02/2010 - 21:30 | Link to Comment Bearish News
Bearish News's picture

Indeed. This William K. Black quote on TG says it all (from an email interview I did):

#3) Me: "Do you feel that your outspoken views preclude you from future government appointments?"

Mr. Black: "My crucial CLGs (“career limiting gestures”) were being a serial whistleblower and helping to cause two presidential appointees (i.e., my bosses) to resign in disgrace.  I also played some role in Speaker Wright’s decision to resign in disgrace and the embarrassment of the Keating Five.  Pointing out that Geithner was selected because he was a perennial failure and moral cripple, not despite these defects, pales in comparison to those CLGs."

I love that guy.

Rest of interview:

Fri, 04/02/2010 - 21:53 | Link to Comment Hulk
Sat, 04/03/2010 - 14:59 | Link to Comment No More Bubbles
No More Bubbles's picture

Here is an excellent Bill Black lecture -

Dr. William Black, University of Missouri-Kansas City.
Thursday, Feb. 18th, 2010, 7:30-9:00 PM, at the Council Chamber.

Why Elite Frauds Cause Recurrent, Intensifying Economic, Political and Moral Crises.

Sat, 04/03/2010 - 01:36 | Link to Comment Cursive
Cursive's picture

Thanks for this Bearish News.  We need a lot more William Blacks.

Sat, 04/03/2010 - 10:39 | Link to Comment mouser98
mouser98's picture

"The odds of meaningful reform are substantially higher under President Obama than they were under President Bush or would have been under President McCain."

pfft.  really?  i suppose he considers 0.00000000000009% to be significantly higher than 0.00000000000003%

Sat, 04/03/2010 - 19:36 | Link to Comment Bearish News
Bearish News's picture

Hey, that's a 200% improvement!

Sat, 04/03/2010 - 10:59 | Link to Comment Rick64
Rick64's picture

Black is someone with integrity and isn't a puppet. A true patriot like Brooksley Born.

Sat, 04/03/2010 - 16:42 | Link to Comment Hulk
Hulk's picture

Black has been my frame of reference for a couple of years now.Without Black, I don't believe I would have a point of reference in which to gauge the manitude of fraud and corruption in the system

Fri, 04/02/2010 - 21:33 | Link to Comment chindit13
chindit13's picture

Isn't this also a way for the (semi-private) Fed to remove some of the $1.25 trillion in MBS crap it has bought and pass all of the risk even more directly on to the taxpayer?  Then later Bernanke will claim the Fed "made a profit".

And the FHA goes the way of FNM and FRE, which is to say you and me cover its losses while the banksters make trillions more.

Must be nice to be royalty, at least until even Marie Antoinette faced the unkindest cut of all.  If not now, when?  If not us, who?

Fri, 04/02/2010 - 22:42 | Link to Comment Dicite justitiam
Dicite justitiam's picture

I don't know about removing the MBS it has, as my impression is that the Fed is parking the radioactive waste to be forgotten, in a containment facility miles below the ground, while it rejuvenates the TBTF (and speculator) by swapping their nuclear waste (that is soon destined for a hole in the ground in Nevada) for taxpayer guaranteed loans.

In some ways, it's not a big deal, it's like the toxic stuff never even existed.  Except that it does, because the old nuclear waste is exactly what it's been replaced with--an asset that will be made whole with taxpayer money, one way or the other (either by bailout or by receiving the tax revenue used for FHA default liabilities).  Wow.  They got both.

But the sword hanging over the dollar is: can they reflate the housing bubble?  If they don't then the 3% seller-paid downpayment FHA garbage is just subprime v. 3.0, and the banks are back where they started with non-performing assets and a need to hit up the public trough.  I haven't been by Dr. HB in a while, but I imagine that the wave of subprime v. 2.0 (Alt-A) rate recasts forecast for 2011 will exert tremendous downward pressure on housing prices.

Hey guys, how can we create money without selling UST and without buying more MBS?  What's that?  Convert existing non-performing paper for USG paper?  Brilliant!

Sat, 04/03/2010 - 08:52 | Link to Comment tip e. canoe
tip e. canoe's picture

methinks you're onto something chindit.
the timing of everything is just a little too convenient.

Fri, 04/02/2010 - 22:11 | Link to Comment waterdog
waterdog's picture

Come on you guys, Geithner can't take a piss without peeing all over his hand. That is why he has to sit down to tinkle. Geithner did not think this up, the oligarchy did.


Fri, 04/02/2010 - 23:49 | Link to Comment Cookie
Cookie's picture


Fri, 04/02/2010 - 23:59 | Link to Comment colonial
colonial's picture

Fantastic post.  Thanks Tyler

Sat, 04/03/2010 - 00:17 | Link to Comment doggis
doggis's picture

ZH 1.0 is a movement. ZH 2.0 will be an organized movement with punch. Goal #1 & 2. bring down and remove tim geithner as Treasury Secretary. goal #3 make the audit of the federal reserve happen. goal #4 spearhead the 'anti-trust' movement that will break up the 5 big banks.

i am ready for the fight. lets do it!

Sat, 04/03/2010 - 01:20 | Link to Comment Bukkake The Fed
Bukkake The Fed's picture

+1 It's either that or move to China.

Sat, 04/03/2010 - 02:16 | Link to Comment BlackBeard
BlackBeard's picture

Well, as much this sucks, it's obvious that it can't last for too much longer and will inevitably end in years.  When it does, it's gonna be like a breath of fresh air.

Sat, 04/03/2010 - 04:21 | Link to Comment Frederic Bastiat
Frederic Bastiat's picture

So here's my question, obviously it sucks that the fed is bailing everyone out, but can't all this just magically disappear?  If the fed starts loosing money on it's MBS, can't it just devalue the currency to offset?

Sun, 04/04/2010 - 01:37 | Link to Comment Dicite justitiam
Dicite justitiam's picture

If the Fed gave you $300T, and you bought the galaxy with it, but couldn't make the payments, and defaulted on the loan, and the Fed bought the loan back, would anyone care?

Sun, 04/04/2010 - 01:40 | Link to Comment Dicite justitiam
Dicite justitiam's picture

But if a commercial bank gave you $3Goog to buy a galactic cluster, and you couldn't make payments, and the bank was stuck with an accounting entry that prevented them from selling loans to other galactic purchasers, and was reimbursed by the Fed with gunpoint-guaranteed money, would anyone care?

Yes, you the taxpayer would.

Sat, 04/03/2010 - 08:54 | Link to Comment wyosteven
wyosteven's picture

Why would a borrower not in trouble continue to pay their mortgage??

To Congress: End the Fed or I'm stopping my payments.

This is absolutely nuts.

Sat, 04/03/2010 - 09:41 | Link to Comment albion402
albion402's picture

Wow...pretty clever that fellow Timmy G.

Sat, 04/03/2010 - 10:40 | Link to Comment Madcow
Madcow's picture

Put yourself in G's shoes. What would you do?

a) continue to suggest that its all going to be okay and agitate for more power and control and basically double down.

b) admit that its all been a mirage and was doomed at inception and honestly describe what awaits us all as credit-money vaporizes.

Option B is immediate game-over. Option A at least affords a delusion that things can go on a bit longer. Option B puts many of your closest friends in prison. Option A lets their wives renovate their house in Martha's Vineyard.  Option A placates global capital's expectations of 'normal' future. Option B could end in a trial for high treason. 

Strong hands know what is going to happen eventually, and are getting in position for the previously unimaginable. There's no way to hide disappearing income, vaporizing credit-money, and vanishing receipts to the UST. When a car runs out of gas, the engine can't function.

Sat, 04/03/2010 - 14:05 | Link to Comment loup garou
loup garou's picture

Timothy Geithner is the kindest, bravest, warmest, most wonderful human being I've ever known in my life.

Sun, 04/04/2010 - 14:27 | Link to Comment merehuman
merehuman's picture

loup, you need to get out more.

Because of things Geithner has done or allowed to be done many people are hungry, now and many tommorrows.

Jobs , loss of income causes loss of selfesteem and that translates into fights at home. Some are dying because of his policies and his failures and lies. My neighbors soninlaw laid  himself on the tracks before a train. Recently married , lost his job and composure.

My mechanics mother shot her self in the chest to assure she would not be returned to the hospital after much pain insurance would not cover.

We are losing our homes , our families and futures.

I am sure Hitler was a nice fellow too to those who loved him.

Sat, 04/03/2010 - 15:23 | Link to Comment wang
wang's picture

I know it's been said before but this qualifies as one of the ten best lines ever:


"It's like taking Fido's steaming pile on the front lawn and turning it into the Hope Diamond. Abracadabra!"

Sun, 04/04/2010 - 19:13 | Link to Comment excellent
excellent's picture

When I realized what was happening to my future in this country I literally stood up from my seat, rushed to the toilet and vomited.


I was never relieved of that moment, nor shall I ever be.

Sun, 04/04/2010 - 22:44 | Link to Comment metastar
metastar's picture

Mortgage modification is an outrage!

A friend of mine thanked our president, Mr. Barry Soetoro (aka Obama), for the loan modifications he received on mortgages on his TWO homes. I'm thinking WTF? I have lived responsibly in a modest house well within my budget while he has lived a much larger and irresponsible lifestyle, yet my money goes to bail him out??? WTF??!!

Good for him. The moral hazard here occurs when people such as myself start thinking that it is much more profitable to game the system any way possible rather than living responsibly and being punished for it.

I have been robbed and I am angry. You have been robbed too. Are you angry? You should be!


Mon, 04/12/2010 - 04:27 | Link to Comment mark456
mark456's picture

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