New York Fed: We Prevented The End Of The World
The alternative to threatening with global thermonuclear warfare, should the Fed not get its way, is, of course, the Fed congratulating itself for its heroic activities that, in some interpretation of the quantum "multiple worlds hypothesis" theory, prevented certain [un]told destruction. Only problem is, of course, what the Fed prevented is merely wiping out the equity and subordinated bondholders in the GSE and the big banks, the preservation of whose perpetual bid for US Treasuries is and has always been the number one purpose of the Fed, so that the US can continue funding it ever increasing budget deficit. Yet a reminder of just how stunted logical thought is at the Fed, here is the Fed's Thomas Baxter, pulling a terrific Colonel Jessup, telling all that by bailing out AIG, the Fed should receive humanitarian of the century award, and a purple heart on top, for all the heat that Fed SVP Sarah Dahlgren should and will receive in Congressional testimony relatively soon.
The actions taken by the Federal Reserve and its New York office to rescue American International Group Inc. (AIG) were necessary to avoid the "potentially catastrophic consequences" of a failure by the insurer, a top official plans to tell lawmakers Wednesday.
Thomas Baxter, the general counsel for the Federal Reserve Bank of New York, defended the actions by government officials to stem a major cash bleed at the insurer in November 2008 by reaching agreement with over a dozen banks to tear up $62 billion in insurance contracts.
In prepared remarks for a Wednesday hearing before the House Committee on Oversight and Government Reform, Baxter said officials had little time and leverage as they scrambled to prevent AIG from spiraling towards bankruptcy. After stepping in to rescue the insurer in September 2008, officials could not let the insurer collapse weeks later, Baxter contends.
And the kicker, from Dow Jones:
"This abrupt reversal of course would not only have triggered all of the adverse consequences for the U.S. and global economies that prompted the initial intervention, it would also have undermined the public's trust in the U.S. government's commitment to the broader range of extraordinary financial stability initiatives," Baxter said in testimony reviewed by Dow Jones Newswires.
Way to extrapolate there Baxter. In other words, the TBTF paradigm will never change - not only will equity prices be preserved in perpetuity to prevent the kleptocrats from seeing an impairment on the bonuses, but any impairment on fin sub debt is completely out of the question - surely antagonizing sub debt lenders, and particularly those of the GSEs, will result in the universe imploding into a Fed-sponsored ball of hyperinflationary bullshit.
Dear America - these are the megalomaniacs that will continue stealing all of your hard-earned money, long after Obama, and his promise of a tangible change, is long forgotten. Please enjoy.