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Racketeering 102: Fed's Lacker Threatens With Mutually Assured Destruction If Fed Audited

Tyler Durden's picture





 

It was a four short months ago that the Clearing House Association, in a court filing, threatened with untold destruction if the Fed was ordered to submit to an audit that would expose all their dirty laundry in the form of undervalued assets used as collateral by the Federal Reserve. We recall the direct threat used back then:

If
the names of our member banks who borrow emergency funds are publicly
disclosed, the likelihood that a borrowing bank's customers,
counterparties and other market participants will draw a negative
inference is great. Public speculation that a financial institution is
experiencing liquidity shortfalls - which would be a natural inference
from having tapped emergency funds - has caused bank customers to
withdraw deposits, counterparties to make collateral calls and lenders
to accelerate loan repayment or refuse to make new loans. When an
institution's customers flee and its credit dries up the institution
may suffer severe capital and liquidity strains leaving it in a
weakened competitive position.

It is fitting that as attempts to expose the Fed's shady practices accelerate on all fronts, and include direct legal approaches as well as subpoena demands by various politicians, that a Fed President would once again come out today, and recap the good old Mutual Assured Destruction treatise that both Wall and Main Street have gotten used to since the beginning of the bailouts. Somehow financial M.A.D. makes an appearance every time the bankers demand something and have no other rational justifications. So why not just feed the stupid plebs something about the Apocalypse that is certain to transpire should the financial oligarchs not get their way. Today was no exception.

Enter Richmond Fed president Jeffrey Lacker. His words, from prepared tesimony to the Richmond Risk Management Association:

Some observers argue that the financial reform agenda should include
changes in the role and governance of the Federal Reserve. One proposal
would extend the GAO's authority to audit Fed operations to include
monetary policy decisions. Other proposals would alter our governance
structure by making Reserve Bank directors and/or presidents political
appointees. I know it might sound self serving for a Fed insider to
object to such changes, but I believe such moves would present very
serious risks to the effectiveness of monetary policy and ultimately to
economic growth and stability.
Looking across time and across
countries, there is abundant evidence that economic policy and
macroeconomic performance are generally better when the central bank's
monetary policy decisions are shielded from the political pressures of
the moment. For an illustrative case, one need only look to the 1970s
in the U.S., when political influence led to high and volatile
inflation that disrupted economic growth. The governance of the Federal
Reserve System balances accountability, with ultimate authority resting
in Washington, and independence, with the participation of
non-political leaders from throughout the country. While the
performance of our economy in the last two years has clearly been unsatisfactory, and policy mistakes may have contributed to our
problems, the Fed's balanced, hybrid governance structure has, I
believe, given us a good record over the better part of three decades.
Disrupting that balance would pose another long term challenge for our
economy.

While Mr. Lacker's testimony is indeed self-serving, it is also patently flawed. There is nothing in the proposed Fed Transparency law that would imperil the Fed with direct political intervention, and nothing that would impact its monetary policy decision-making appartus. Perhaps it is about time someone highlighted the actual truth behind the various Ron Paul et al proposals, which seek not contemporaneous information of decision-making to the GAO or otherwise, but a delayed, 6 month-lagged disclosure. How this impairs monetary policy independence is incomprehensible.

Furthermore, the claim that the Fed's "balanced, hybrid governance structure has given us a good record over the better part of three decades" is very much subject to a recount. If Mr. Lacker deems that Fed's actions over the past three decades, which culminated with the implosion of the biggest credit and housing bubbles this country has ever seen, courtesy of self-serving (that phrase again) monetary flaws, are indicative of a "good record" then we certainly agree. We also would recommend that the Fed president immediately seek a medical prescription for Geodon or, if that particular medicine will not be covered by the soon enacted "new and improved" nationalized healthcare system, any other over-the-counter antipsychotic medication that is freely available.

The biggest problem with the Fed is its continuous insistence that the kleptocratic oligarchy always knows not only what is in everyone's best interest, but is so much smarter than all, that stupid peasants getting advance knowledge of just how impaired the major TBTF institutions are, would immediately risk bank runs. Once again, it never dawns upon these enlightened gentlemen, that such rumor-based "bank runs" are merely a byproduct of never having the sufficient information to make informed decisions about these very companies in real time. And when the shit does hit the fan (as it always eventually does under the Fed's "aegis") the outpouring of panic is enough to bring the system down in a matter of hours as September 18, 2008 demonstrated.

Yet if American citizens are not allowed to get a glimpse into the true state of the banking system, which consists of publicly traded institutions for the most part, but also are the recipients of trillions of dollars of direct taxpayer cash and guarantees, then there never will be a right time to attain such information.

It is, and has always been, in everyone's best interest to have as much information about each and every financial institution, be it small regional banks, TBTF failures such as Citi, Fixed Income monopolists, or the nexus of all: the Federal Reserve. And until such information is freely available to all, not just provided to SIGTARPs and other investigatory queries, which all operate underneath the radar of full disclosure, the system will continue to be on edge, and constantly ready to collapse at a minute's notice, the second it becomes clear that the Fed, contrary to its desires, is unable to conduct the first ever successful experiment involving a planned and controlled economy.

 


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Fri, 01/15/2010 - 16:18 | Link to Comment deadhead
deadhead's picture

The Fed guys are simply whacky.

An audit has nothing to do with monetary policy and alleged "independence".  In fact, the Fed is not independent of the Congress (and Executive Branch) because they basically tell Congress what to do vs the other way around.

This is the same strategy that young kids have tried over the years: "i hold my breath til I die".  

Go ahead, kid, hold your breath. 

Fri, 01/15/2010 - 16:22 | Link to Comment faustian bargain
faustian bargain's picture

The 'independence' they seek is independence from responsibility and accountability.

Fri, 01/15/2010 - 19:53 | Link to Comment Cistercian
Cistercian's picture

 They want/demand licence to continue to loot and rob the people.

 Since their actions amount to the apocalypse in slow motion anyway I say we audit them.And withdraw all deposits from the scum they "helped".

 Their evil reign of terror MUST BE STOPPED!!!!!

Sat, 01/16/2010 - 02:23 | Link to Comment Assetman
Assetman's picture

+1

Sat, 01/16/2010 - 10:15 | Link to Comment MarketTruth
MarketTruth's picture

Precisely.

And BTW, the Fed's balance sheet looks worse than a broken hedge fund. Is this something you want to be invested in (per se?)

Wake up Neo.....

BANK RUN BITCHES!!!

BANK RUN BITCHES!!!

BANK RUN BITCHES!!!

And buy gold/silver.

Sat, 01/16/2010 - 10:13 | Link to Comment Anonymous
Sat, 01/16/2010 - 16:11 | Link to Comment Ned Zeppelin
Ned Zeppelin's picture

Bravo!

Fri, 01/15/2010 - 16:25 | Link to Comment Cursive
Cursive's picture

@dh

Exactly.  We know the banksters are trying, either purposefully or inadvertently through greed, to take this economy down anyway, so why not threaten us?  Most people don't have the will to make self-centered brats show their hand.

Fri, 01/15/2010 - 17:19 | Link to Comment Dr. Richard Head
Dr. Richard Head's picture

This economy will go down either way, whether or not they are trying to do so or are doing so by ignorance.  A system dependent upon debt will require continual debt increases to just survive.  This is the nature of fiat.  Call their bluff and stick it in their arse with strategic defaults. 

Hell, JP Morgan is the first to announce their bonus pool of $9.3B for investment bankers ahead of CITI, BofA, and others soon to follow.  How much did JP get during TARP and TALF?  $25B? 

When will the American people turn into Iceland revolutionaries?  Will there be that tipping point?  I am about to tell JP Morgan that can take their $4,360 and stick it in their ears.  0.0% revolving credit isn't good enough for me.  Where is my negative interest rate?  Where is my tax-funded bonus for 09?  F' these ad hoc pirates.

 

Fri, 01/15/2010 - 18:21 | Link to Comment Anonymous
Fri, 01/15/2010 - 18:55 | Link to Comment mnevins2
mnevins2's picture

"If you just want to complain, leave the people running government in place. If you are a JPM shareholder, you can also vote your proxy accordingly in a couple of months."

Translated: "leave us alone with the billions that we are now earning - due to the backstopping of our financial schemes and loose monetary policy!

We EARNED this money by working real, real hard to make lots of money for ourselves. So what if our efforts are destroying society, that the national deficit is around $2T and unemployment is around 17% - we EARNED this money and so STFU!!!

Now, peasant, pass the grey poupon!!!

Hungry? Out of bread? Well, there's always cake for you!!!"

Sorry, but society doesn't think that you guys "EARNED" anything and your waving at windmills with your smarmimess only makes "society" madder. The sooner you figure that out, the better off ALL OF US will be.

 

 

 

 

Fri, 01/15/2010 - 22:01 | Link to Comment Anonymous
Fri, 01/15/2010 - 23:58 | Link to Comment Marley
Marley's picture

Are you back with that Socialist thingy?

Sat, 01/16/2010 - 00:55 | Link to Comment Anonymous
Sat, 01/16/2010 - 19:07 | Link to Comment Marley
Marley's picture

 

Fascism is a political ideology that seeks to combine radical and authoritarian nationalism with a corporatist economic system, and which is usually considered to be on the far right of the traditional  left-right political spectrum. - wiki

Currently espousing traditional democratic traditions with respect to life, liberty, and the pursuit of happiness, is met with populous rhetoric to be called  "socialist."

 

I just say tax the rich and you go appy.

Sat, 01/16/2010 - 20:01 | Link to Comment Anonymous
Sun, 01/17/2010 - 16:23 | Link to Comment Marley
Marley's picture

I beleive we've played this game before, sources please on the tax burdens.  And clear this up please, are you saying that since Reagan, politics have become liberal?  And what impact did the Patriots Act have on everyone's life?

Sat, 01/16/2010 - 23:32 | Link to Comment KevinB
KevinB's picture

Currently espousing traditional democratic traditions with respect to life, liberty, and the pursuit of happiness, is met with populous rhetoric to be called  "socialist."

Let's see now.. I work 50 hours a week, 50 weeks a year, that's 2500 hours, or about 30% of the entire year. Put another way, that's 30% of my life. You're suggesting that the government tax 50% of my income? That's 15% of my life put to work for government. That's your idea of my right to my "life"? 

The government wants to tell me I must purchase health insurance. That's your idea of liberty?

The government (especially in NYC) wants to tell me where I can smoke, what I can eat, etc. That's your idea of the pursuit of happiness?

Keep smoking that bud, dude. Looks like you enjoy it.

Sun, 01/17/2010 - 16:33 | Link to Comment Marley
Marley's picture

I'll waste alittle more of my lunch time, I'm at work and yeah it's Sunday, responding to you.  Where did I suggest that the government tax 50% of your income?  I had to pay for my second child's birth out of pocket because the health insurance provider called it a prior existing condition.  I'm an ex-smoker, I know it's a bitch.

Mon, 01/18/2010 - 12:47 | Link to Comment Stevm30
Stevm30's picture

Fascism, as least as practiced by the NAZI's, is socialism...

There is no difference.

Sat, 01/16/2010 - 03:24 | Link to Comment estaog
estaog's picture

LOL you best be trolling. We can tell them to stop doing things. We can even threaten to vote them out of office. But who are they going to listen to: average people or the guys dishing out billions in campaign contributions. Do you seriously think average people have any capacity to influence the US government's policy?

Have you heard of lobbyists before?

"From 1998-2008, Wall Street investment firms, commercial banks, hedge funds, real estate companies and insurance conglomerates made political contributions totalling $1.725 billion and spent another $3.4 billion on lobbyists -- a financial juggernaut aimed at undercutting federal regulation."

http://www.albionmonitor.com/0902a/copyright/wallstderegulation.html

Sat, 01/16/2010 - 11:29 | Link to Comment Francis Dollarhyde
Francis Dollarhyde's picture

Tell the government to stop, eh? Just like that? And they'll listen to us instead of the 7th largest contributor to Barack Obama's campaign? You're funny when you pretend JPM and the government are two different entities.

Sat, 01/16/2010 - 12:11 | Link to Comment Anonymous
Sat, 01/16/2010 - 16:31 | Link to Comment MsCreant
MsCreant's picture

Why does the complaining bother you? This is a loaded question.

Sat, 01/16/2010 - 20:07 | Link to Comment Anonymous
Sun, 01/17/2010 - 12:46 | Link to Comment WaterWings
WaterWings's picture

Vote for a change in November.

Uh yeah. That's what they told us last time. And the time before that. Voting is consent to be governed. Don't consent - let the disobedient inner-child reign - it is our Duty.

Sun, 01/17/2010 - 21:04 | Link to Comment milbank
milbank's picture

The illusion almost all Americans have is that we have a choice, "a two party system."

You don't even get the chance to vote for anyone who is running for Federal office unless they have been vetted and chosen by the corporations/banks/"Powers That Be."  Despite all that has transpired over the last 20 years where both parties have controlled the White House and the Congress, Americans still can't wrap their brains around the idea that the "Two Party System" is a false choice.  Even if McCain won, do you think there would have been a different approach?  Obama was chosen to carry water for this term.  Do you Palin would have been chosen if McCain was supposed to win.  Remember, Palin wasn't McCain's choice, he was forced into it.  These guys running for President are merely stooges of those who actually run this country.   The difference in the parties regarding abortion and gay marriage etc. is great for the Powers That Be in that it gives the illusion that there are differences in the parties on something the PTB has no "skin in the game."  Where they do have "skin in the game," they own the game and the players they put out front for the electorate to vote for.  In terms of what really matters, it doesn't matter whether it's "ultra liberal" Barney Frank or "ultra conservative" Phil Gramm (former Senator who authored the bill that repealed Glass Steagall and now works for UBS), their owners and their goals are the same.

Fri, 01/15/2010 - 19:21 | Link to Comment Haywood Yablomi
Haywood Yablomi's picture

Anonymous 195386 has no idea what they're talking about.  at 40X leverage, what percentage of underlying asset depreciation wipes out shareholder equity?  huh?  huh?  I'm waiting....

How many trillion dollars in notional derivatives does JPM have?  huh? huh?  what percentage can sour before shareholder equity is wiped out?  Still waiting...

JPM didn't want that $25B?  Maybe true, cause that becomes a fucking rounding error when you're talking about a cesspool that large. 

Your suggestion that bonuses should be determined by BOD or shareholders is laughable.  Yeah, how hard is it to manipulate the voting results (seen some interesting stats about total number of votes vs. total number of shares outstanding).

In fact, why don't you get a real job and PRODUCE SOMETHING asshole? 

Fri, 01/15/2010 - 20:20 | Link to Comment El Hosel
El Hosel's picture

Haywood,

  Please explain if you will, I need help getting my arms around bank "earnings" reports.

 If JPM had mark to market all of their "assets "  what are we talking about as far as "earnings" ? How far above or below solvency is JPM and some of the other too bigs?

  Thanks

Fri, 01/15/2010 - 21:25 | Link to Comment Anonymous
Fri, 01/15/2010 - 22:33 | Link to Comment Anonymous
Sat, 01/16/2010 - 11:25 | Link to Comment jeff montanye
jeff montanye's picture

can you seriously call what has happened since the bear stearns' hedge funds went banko "capitalism"?  really?!  seems a lot more like fascism or socialism for the very rich to me.

Sat, 01/16/2010 - 12:16 | Link to Comment Anonymous
Sat, 01/16/2010 - 16:59 | Link to Comment MsCreant
MsCreant's picture

Anon, I have a screen name for you if you wanted to join us with an identity-- Cherry Picker.

Cherry Picker,

You did not address taxpayer backstopping keeping that Zombie alive. And any asset related to real estate is a total unknown right now in terms of what it is worth. JPM has none of those, right?

You can't address it because then you have to admit the company is technically insolvent (not that it is special in that regard). You want to blame the government exclusively. That's because corporations have no reponsibility for how they make their money, and who they hurt, right?

You cling to that story that "government forced them" pretty tight. JPM, poor underdog. Guess that is how you sleep at night. They had to take the money because the government was changing the rules regarding appropriate reserves. The TBTFs did not have enough reserves to meet the new requirements. I guess you could call that force. Someone else would call it tightening standards. Someone else would call that closing the barn door after the horses got out.

Sat, 01/16/2010 - 20:12 | Link to Comment Anonymous
Sun, 01/17/2010 - 01:28 | Link to Comment MsCreant
MsCreant's picture

I would like to see the anti-trust laws enforced and the corporations broken up. I want RICO brought to bear on all parties involved in the banking fraud that is our system. Did you know if you are an insolvent bank you are not supposed to accept deposits anymore? Examiners are supposed to shut them down? Failing to do this is punishable by law! You have me there, all that would be gov.

I think I am angry with the legislative branch, angry with the administration, etc. You know who I am angriest with, the most disappointed with? Our judicial branch, our cops, and our prosecutors. They need to put the fear of God into all these other characters and they won't. If we needed to clean house, that is where we would start. But so many of these officials are appointed.

Where have you gone Elliot Spitzer? A nation turns its lonely eyes to you...woo, woo, woo.

What's that you say, Mrs. Robinson, Jiltin' Spitzer has left and gone away
(Hey, hey, hey...hey, hey, hey)

_________________________________________

I have often wondered if, with the spying technology available, they can blackmail almost all of them? I particularly wondered this with Bush. Dad an ex-spook and all. Did not seem too farfetched. My husband is ex low level NSA. He rolls his eyes and says, "You can intercept anything."

Dear Anon, I ask you to consider the possibility that between the fact that politicians need campaign funding, that those with money have greater ability to lobby (even the clean kind) than those who don't, and this spying issue I brought up above, that it is possible that the government is genuinely captured, and the action that is needed is not voting.

For instance, in my state, there are NO PAPER BALLOTS. I complain everytime. The polling operaters tell me I am the only one who complains, everytime.

I don't trust the voting process.

I fear we are in a great deal of trouble.

I will continue to complain, talk, think, hope to God there is another option than the one I already know is necessary. When enough people reach the same conclusions I have, or if something happens politically that looks like it is really going to work, maybe change will happen. But moving alone is futile.

So I watch and wait, hope for the best, and plan for the worst. I think there are a growing number out here like me.

Sun, 01/17/2010 - 08:14 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

MsCreant,

He's telling you the system is broken, proceed to the next election and use the broken system to fix the system or shut up, no alternative views or processes allowed except that which the machine affords the population.

Not only is that a Catch 22 but it's Catch 22 thinking, the ultimate F**k You by you. This assumes the process, the structure, can be "fixed" from within using the structures systems and process. The only way to get inside to fix it is to be corrupted or dependent upon the system, thus rendering yourself incapable if fixing the system even if you still wanted to. The ultimate human BORG mentality.

As you have been talking about for months, the system can not be fixed from within. Until the majority come to the same conclusion, until they realize that there is not "The One" that can be (allowed by the system to be) elected to fix the system and then actually fix it, we are in store for more of the same ole same old.

Sun, 01/17/2010 - 17:44 | Link to Comment WaterWings
WaterWings's picture

Aaaaaaah, I have no words to describe the melting despair.

Sun, 01/17/2010 - 15:25 | Link to Comment Anonymous
Fri, 01/15/2010 - 20:17 | Link to Comment ghostfaceinvestah
ghostfaceinvestah's picture

Have they refinanced their TLGP debt with no-TLGP debt yet?

Didn't think so.

Fri, 01/15/2010 - 22:35 | Link to Comment Anonymous
Sat, 01/16/2010 - 19:47 | Link to Comment Herd Redirectio...
Herd Redirection Committee's picture

Yes, because as soon as we tell them we will feel so much better,  and even if they don't listen,  hey atleast we tried, right?  What more could be expected from us?

Now, I understand some people sold their principles to the highest bidder a long time ago, but the rest of us retain some semblance of principles, and we know the Gov is corrupt and serving the Oligarchy.

Hence, complaining is just playing right into their hands, because by doing so we give credence to the quaint notion that it is those in government that are in control, and making the decisions!

Fri, 01/15/2010 - 20:18 | Link to Comment Waterfallsparkles
Waterfallsparkles's picture

What about the 25 Billion subsidy to buy Bear Stearns for less than the value of their Office Building?

Fri, 01/15/2010 - 22:41 | Link to Comment Anonymous
Sat, 01/16/2010 - 11:29 | Link to Comment jeff montanye
jeff montanye's picture

the government may be inept but they are not the source of the decision:  they are following the instructions from the people who are profiting from the decision.  if you think the people who made sure aig's counterparties were paid off at 100% are the government's functionaries you are willfully deluded.

Sat, 01/16/2010 - 12:26 | Link to Comment Anonymous
Sat, 01/16/2010 - 17:02 | Link to Comment MsCreant
MsCreant's picture

Let's all be quiet about it then.

Fri, 01/15/2010 - 20:19 | Link to Comment Stevm30
Stevm30's picture

Sorry, JPM DID take the money.  Why didn't Jamie Dimon walk out of that room with Paulson, Geithner, Bernanke, and Bush, saying: "not on my watch"?  Because he needed the money.  Or, because he was scared of the big, bad government, and is a coward.  Either way, he TOOK the money.  Now, I agree the Government shouldn't have been involved.  But nobody FORCES you to take money.  What would big bad Paulson have done if one or more of them said no?

We'll never know.

Fri, 01/15/2010 - 22:49 | Link to Comment Anonymous
Sat, 01/16/2010 - 00:00 | Link to Comment johnnyBoy
johnnyBoy's picture

the NY Fed gave the money to Chase and Jamie Dimon was (is) on the board of the NY Fed.   Nice deal he must have negotiated, eh!

Sat, 01/16/2010 - 12:28 | Link to Comment Anonymous
Sun, 01/17/2010 - 21:09 | Link to Comment greased up deaf guy
greased up deaf guy's picture

to the anonymous jpm apologist...

although it's easy to suggest the government is the cause of all the problems and the "don't hate the playa, hate the game" defense fits you (and jpm) like a glove, your "someone in government put him (jd) on the ny fed" statement is patently false. i suppose you don't mind a little fib when it sounds believable and supports your cause though, huh.

also, jpm spends millions on political donations and lobbyists in washington to block any potentially meaningful reform, but you not dare mention that. oh, right. that's the government's fault too, i suppose.

Sun, 01/17/2010 - 23:31 | Link to Comment dogbreath
dogbreath's picture

Fuck You. We know who our government is and it ain't the elected Stooges.

Fri, 01/15/2010 - 21:53 | Link to Comment Thomas
Thomas's picture

I agree whole heartedly; let the shareholders decide. The problem I have is that the democratization of the markets has created such an amorphous shareholder base that there is no adult supervision. Fund managers no longer give a damn what a company does with its profits, and individual shareholders have not yet accrued collective power. I am at a loss about how to get shareholder activism. Martin Hutchinson over at the Prudent Bear home page wrote an article about shareholder activism. I am not optimistic in the near term.

 

Damn-I keep blowing those silly math problems. I guess degrees in biology and chemistry don't buy you arithmetic.

Fri, 01/15/2010 - 23:39 | Link to Comment Anonymous
Fri, 01/15/2010 - 23:02 | Link to Comment David449420
David449420's picture

195386 - Clearly spoken by a loyal employee of JPM.

Fri, 01/15/2010 - 23:43 | Link to Comment Anonymous
Sat, 01/16/2010 - 14:35 | Link to Comment Anonymous
Sat, 01/16/2010 - 00:28 | Link to Comment Anonymous
Sat, 01/16/2010 - 08:17 | Link to Comment Rick64
Rick64's picture

How did the Government force them to take it? Because they were leveraged way beyond their capital?They paid it back, but are their toxic assets still backed by the Government or Fed?

Sat, 01/16/2010 - 12:32 | Link to Comment Anonymous
Sat, 01/16/2010 - 19:12 | Link to Comment Anonymous
Sat, 01/16/2010 - 19:33 | Link to Comment Rick64
Rick64's picture

If they didn't they would be insolvent. If they are insolvent is that the banks fault ? Of course. If it was in my power I would stop it and let them fail.

Sun, 01/17/2010 - 02:01 | Link to Comment TheGoodDoctor
TheGoodDoctor's picture

Hey Anonymous. That's only part of the story and you know it.

Sun, 01/17/2010 - 03:13 | Link to Comment nowhereman
nowhereman's picture

Bullshit, JPM didn't want the money.  They paid it back simply because the Fed gives them unlimited money at 0% which they in turn lend to you at 5%, or 29% if you have their credit card.  The banks are solvent only because they don't have to mark to market their toxic waste.  Gimme a break, go troll elsewhere, you truly have nothing to offer.  

Yeah, the government has blown it mightily.  And all our elected officials are shills for the oligarchy.  What the banks have managed to do with the explicit aide of the Fed and treasury, is expose for all to see the nature of the corruption,  and they are all trying to pull the curtain back over our eyes.  They just want it to go away.  This fiend can't stand the light of day.  And asshats like you only serve to obfuscate.

Sun, 01/17/2010 - 12:12 | Link to Comment Anonymous
Sun, 01/17/2010 - 18:00 | Link to Comment Kayman
Kayman's picture

Gawd Dang, I love it.

Head Office in New York is blaming the staff at the Washington Division for sending them some dang money, that they didn't need and didn't ask for.

Heck, next thing ya know, Head Office in New York will be rushing down to pay off all that dang unnecessary money sent to them by the Fed Division; the Fed Division boys, naturally, mistaking gold tin-foil on dog shit, for real gold bars.

Hey Anon #195386, thanks for clearing things up.

Fri, 01/15/2010 - 21:31 | Link to Comment Winston Smith 2009
Winston Smith 2009's picture

"When will the American people turn into Iceland revolutionaries?"

Only _after_ they experience the same level of economic collapse as the Icelanders.  In the mean time, they'll sit passively on their sofas as they always have.

Fri, 01/15/2010 - 17:21 | Link to Comment johnnyBoy
johnnyBoy's picture

Me thinks the Fed protests too much.

Question: If the Fed is ended what do we get in its' place?

Fri, 01/15/2010 - 18:08 | Link to Comment faustian bargain
faustian bargain's picture

If we're lucky, nothing.

Fri, 01/15/2010 - 20:13 | Link to Comment DaveyJones
DaveyJones's picture

less is more, more or less

Fri, 01/15/2010 - 20:50 | Link to Comment Missing_Link
Missing_Link's picture

Freedom, bitches.

Fri, 01/15/2010 - 22:58 | Link to Comment dark pools of soros
dark pools of soros's picture

the Yuan

Fri, 01/15/2010 - 19:07 | Link to Comment ghostfaceinvestah
ghostfaceinvestah's picture

This has been the central banker's M.O. since the beginning of time.  the only thing that will break the Fed is a strong President.  If you haven't alreay, I encourage you to read the history of Andrew Jackson's fight against Biddle at the Second Bank Of The United States.  Biddle deliberately crashed the economy after Jackson pulled all government deposits out of the bank, and Jackson had a lot of pressure to back off, but he didn't.  They even tried to kill him, but amazingly the gun misfired.

Of course most revisionist history books will claim Jackson was ignorant and his moves hurt the country.  What is that saying about history books written by the victors?

Central bankers will take extreme measures to cement their tyranical control over the citizens.

 

Fri, 01/15/2010 - 23:01 | Link to Comment dark pools of soros
dark pools of soros's picture

and thats why Britain forced another war to force jackson to go back in debt..  also the games britain's banks played with the interest rates to suck money out of america was also a an act of war

Sat, 01/16/2010 - 05:39 | Link to Comment aus_punter
aus_punter's picture

"So why not just feed the stupid plebs "

and therein dear readers lies the root of the problem

Sat, 01/16/2010 - 12:43 | Link to Comment Anonymous
Fri, 01/15/2010 - 16:18 | Link to Comment Anonymous
Fri, 01/15/2010 - 16:20 | Link to Comment Mongo
Mongo's picture

Well, criminals think like this.

 

"If somebody found out what we were doing.. "

Fri, 01/15/2010 - 16:27 | Link to Comment Anonymous
Fri, 01/15/2010 - 16:43 | Link to Comment Mongo
Mongo's picture

Well, at least kids need to know that meat doesn't grow on trees. Perhaps in 20 years after Monsanto perfected its schemes.

Sat, 01/16/2010 - 10:28 | Link to Comment mikla
mikla's picture

Well, at least kids need to know that meat doesn't grow on trees.

I hear monkeys grow on trees, and while I've not tried them, I hear they are delicious.  ;-)

Perhaps in 20 years after Monsanto perfected its schemes.

Don't forget the four-legged, six-winged KFC chicken mutant in progress.  ;-)

Fri, 01/15/2010 - 19:06 | Link to Comment Marley
Marley's picture

That's not meat their eating.  More like a congealed fat and blood substance.

Fri, 01/15/2010 - 16:21 | Link to Comment pros
pros's picture

The hypothesis that under present structure the Fed is shielded from political pressure is false.

 

The entire argument fails a basic logic test-it is based on a false premise.

 

 

Fri, 01/15/2010 - 16:23 | Link to Comment faustian bargain
faustian bargain's picture

No, under the present structure the Fed is political pressure. Auditing threatens to take that away.

Fri, 01/15/2010 - 17:26 | Link to Comment BoeingSpaceliner797
BoeingSpaceliner797's picture

No, under the present structure the Fed is political pressure.

Well put.  MA Rothschild would be proud.

Sat, 01/16/2010 - 05:20 | Link to Comment Miles Kendig
Miles Kendig's picture

yes indeed

Fri, 01/15/2010 - 18:27 | Link to Comment Anonymous
Fri, 01/15/2010 - 16:24 | Link to Comment Anonymous
Fri, 01/15/2010 - 18:33 | Link to Comment Anonymous
Fri, 01/15/2010 - 20:58 | Link to Comment Missing_Link
Missing_Link's picture

No, this comment was most likely posted by Janet Napolitano personally in order to increase the quantity of vaguely threatening comments on ZH, so that she can order the media to smear this website and its denizens as "dangerous" and then use it to shut down Zero Hedge.

Best to delete such lunatic comments entirely.

Fri, 01/15/2010 - 23:47 | Link to Comment Anonymous
Sat, 01/16/2010 - 11:36 | Link to Comment jeff montanye
jeff montanye's picture

i agree.  one other thing that would help would be unique names.  keeping track of these legions of anonymous posters is far too confusing for my small brain.

Sun, 01/17/2010 - 16:22 | Link to Comment Anonymous
Fri, 01/15/2010 - 16:25 | Link to Comment Anonymous
Fri, 01/15/2010 - 16:25 | Link to Comment Anonymous
Fri, 01/15/2010 - 16:57 | Link to Comment Anonymous
Sun, 01/17/2010 - 22:21 | Link to Comment Anonymous
Fri, 01/15/2010 - 16:26 | Link to Comment Ripped Chunk
Ripped Chunk's picture

Lacker should resign Monday if he knows what's good for himself.

Fri, 01/15/2010 - 16:31 | Link to Comment pros
pros's picture

Secrecy?

 

The AIG-GS CDS transactions were fraud ab initio, because AIG entered into a contract it could not execute (lacked "good faith" element), and GS knew it. In fact, even today those contracts are void as a fraudulent conveyence and can be placed in a constructive trust and the transactions reversed with losses put back onto GS and taken away from taxpayers.

 

The fraud could not have been consummated without the secrecy this guy wants to preserve.

 

 

Fri, 01/15/2010 - 16:49 | Link to Comment Anonymouse
Anonymouse's picture

Weren't many of these contracts written before the mortgage and CDO crisis hit?  Then they were not fraudulent. If any were written afterward, there might be an argument.

But there is nothing fundamentally wrong with CDS and CDOs.  They were overused, giving too much leverage, making credit too cheap, some deals were fraudulent, and risk management was poor in many cases.  But fundamentally, CDOs divide risk among those who (presumably) can bear it.  Credit Default Swaps can be a great hedging tool, but too many participants ignored the inherent leverage and the counterparty risk in the instruments.

Those that got burned should take their loss.  Those that committed fraud should be nailed.  But the instruments are no more fraudulent than alcohol is a killer.  The danger is in the misuse.

Fri, 01/15/2010 - 17:03 | Link to Comment pros
pros's picture

GS and AIG entered into these transactions at a time when the extent of the carnage was fairly obvious...it certainly fits the definition of fraudulent conveyance---void for lack of consideration. (if you pay $100 to a guy selling soda at a turnpike rest stop to insure your new benz you can't go to the NJ Ins. Comm. and collect when he defaults!!!)

 

The management of AIG, owned by the U.S., certainly can file a suit against former AIG management and GS for recovery of losses from the contracts and fraud damages.

 

There is no evidence that anyone from the U.S. government has taken any action to protect the taxpayers' interests. It seems they haven't even questioned Cassano at AIG!!!!---they just charged the taxpayers and transferred the billions to GS, no questions asked. Now the coverup and whitewash attempt proceeds apace.

 

 

 

 

Sat, 01/16/2010 - 08:24 | Link to Comment Rick64
Rick64's picture

How about the ratings AA,AAA was that fraudulent? The Rating agencies were working hand in hand with the institutions bundling this garbage. Did the agencies know? of course. Did the institutions bundling the garbage ? Of course.

Sat, 01/16/2010 - 14:17 | Link to Comment cdskiller
cdskiller's picture

Oh, man, where to start? The assertion that, because a contract was written before the crisis hit, it therefore cannot be fraudulent is nonsensical.

Secondly, the ability to transfer the risk inherent in ALL mortgages, led to reckless lending and borrowing. Many mortgage providers are, in fact, facing charges of fraud for their practices. Banks wanted product, the riskier the better. The rating system that gave investment-grade AAA ratings to the reckless mortgages was corrupted by a conflict of interest-banks paid for the ratings. Fannie and Freddie and the banks then irresponsibly bundled the mortgages, mixing the good with the bad, applied ostensibly fraudulent risk models to assign price to the tranches and paid AGAIN to have the bundles rated. Tranches of the AAA bundles did not have to be rated if they were derived from AAA rated MBS sold by AAA rated companies. The synthetic collateralized debt obligations created using CDS contracts are fraudulent, deformed, deceptive Frankensteins of the highest order. And the complexity of the innovations has barely been examined. There were derivatives of derivatives of derivatives, with exotic options and side bets attached. Believe me. It got extremely gnarly and wild.

Ignoring leverage and counterparty risk pretty much defines the CDS fiasco at AIG. A loophole in the law allowed them to offer hundreds of billions in insurance without having to maintain capital reserves to pay off the contracts. Their leverage, in a sense, was unlimited. That is what we call systemic insurance fraud. The banks purchasing the CDS contracts knew that. They also knew no one was paying attention. Every single piece of this house had within it fraudulent behavior. That's why there is collusion between participants and the government to cover the whole mess up. The failure was too deep.

Risk management being poor, in this case, IS and should be fraudulent. If independant investigators were allowed to examine in detail the toxic assets created by this system, I guarantee you that securities fraud charges would result. That's why talk of nationalization was so terrifying to the banks. All hell would have broken loose in a very short time.

Nationalization of just one major bank that played in this game is the holy grail. Reform the credit rating system and it's game over. That's why neither of those things are happening.

The other holy grail is an audit of the Fed. They know that. They are threatening global apocalypse, because transparency is the real enemy. 

Sun, 01/17/2010 - 13:06 | Link to Comment Anonymous
Fri, 01/15/2010 - 17:26 | Link to Comment Orly
Orly's picture

I think that that is exactly what they are trying to hide.  If it came out that only certain people knew how bad it was- people including the Fed- then all those credit derivatives could be null and void or the put-back option could be executed against Goldman.

The meltdown would be instantaneous and most of these boys and girls would end up behind bars for fraud and racketeering.

RICO.

Fri, 01/15/2010 - 19:03 | Link to Comment buzzsaw99
buzzsaw99's picture

RICO doesn't apply to the fed or GS, only to small criminals.

Fri, 01/15/2010 - 21:01 | Link to Comment WaterWings
WaterWings's picture

Yup - the poor banksters are just clueless - they would never do anything wrong.

http://www.nytimes.com/2010/01/15/opinion/15krugman.html?em

Fri, 01/15/2010 - 21:50 | Link to Comment mnevins2
mnevins2's picture

Now I'm both scared and speechless - for the first time in my life....I support what Krugman has written.

I suppose that this provides some sort of a clue as to just how, hmm, upset (not strong enough?) that a lot of people are regarding the disastrous destruction by our financial super-genuises? For which, thank you very much, they earned BILLIONS!

Were they educated at the Alfred E. Neuman/Helen Keller Academy?

Sat, 01/16/2010 - 20:44 | Link to Comment Anonymous
Sat, 01/16/2010 - 00:25 | Link to Comment Miles Kendig
Miles Kendig's picture

RICO applies to whomever a federal prosecutor and judge says it does....

Fri, 01/15/2010 - 19:58 | Link to Comment Waterfallsparkles
Waterfallsparkles's picture

I have read that the Credit Default Swaps in circulation are in excess of the Total World Economy.  That is Frightening.

Fri, 01/15/2010 - 22:47 | Link to Comment Crisismode
Crisismode's picture

The total remaining amount on your home mortage is greater than your annual income.

 

Does that frighten you?

Sat, 01/16/2010 - 00:24 | Link to Comment Miles Kendig
Miles Kendig's picture

You post more than the sum total of the letters in  your name.. Does this make you smarter?

Sat, 01/16/2010 - 10:58 | Link to Comment Miyagi_san
Miyagi_san's picture

money supply is dwarfed by CDS thats why the printing goes 24/7

Sat, 01/16/2010 - 11:33 | Link to Comment Madcow
Madcow's picture

Bingo. That's right Orly. 

Its leads to a massive 'defective + dangerous product recall.'  

There will be more than plenty of evidence to prove the banks, ratings agencies, and even the quant-jocks who built these products knew what was going to happen once interest rates hit the zero bound and the overall credit pie was no longer able to expand.

Call it intellectual dishonesty. Call it wishful thinking. Call it pure straight up criminal activity.  

But you're right - either its "RICO" - and decades and decades of lawsuits and congressional hearings - or its "In light of new facts, we've come to realize that fractional reserve banking, fiat currency, and the Federal Reserve itself is an untenable proposition."

Either way, it is game over for Wall Street.

 

Sat, 01/16/2010 - 12:46 | Link to Comment Anonymous
Fri, 01/15/2010 - 16:32 | Link to Comment Anonymous
Fri, 01/15/2010 - 16:34 | Link to Comment junkyard dog
junkyard dog's picture

I believe the cat puke's biggest problem is that once we find out who really got the money that was not deserved and the legal implications of the distribution, several of his best buddies will shot themselves in the head.

 

Fri, 01/15/2010 - 16:39 | Link to Comment Hondo
Hondo's picture

Now for sure we need them audited.  There is corruption there and I'm not just talking about the bank bailouts.  We need to go over everthing with a fine tooth comb..........and when we're finished the people will want to close down this corrupt agency.  Beside the Fed gave up all pretense of independence when they bailed out AIG and AIG's counterparties.  When they didn't say NO but said yes sir and how much.......game over.

Fri, 01/15/2010 - 16:34 | Link to Comment Anonymous
Fri, 01/15/2010 - 18:43 | Link to Comment Anonymous
Sat, 01/16/2010 - 07:45 | Link to Comment bokapita
bokapita's picture

"The immediate response is not "Why do the bankers make so much money?" but "We need to vote out our elected representatives (who are in charge of the goverment) in November." If you don't do that, you really have no interest in solving the primary problem and changing things."

This point is fallacious and self serving, because it relies on the premise that "it is justifiable and quite OK to do any dreadful corrupt unfair and damaging thing because  currently there is a government too supine and feeble to stop it, and until and unless you change this government for a better one you have no standing or justification for criticising the aforementioned behaviour".

Please explain why you consider this premise to be a justifiable way of proceding in human affairs?

Sat, 01/16/2010 - 13:17 | Link to Comment Anonymous
Sat, 01/16/2010 - 15:24 | Link to Comment bokapita
bokapita's picture

Perhaps I misunderstood your stance, because it seems that you do believe "The 'do the right thing' behaviour has always come not from government, but from our culture." I was attempting to ask whether NOT doing the right thing was a justifiable way of conducting one's affairs just because it is not specifically prohibited by statute.

I completely agree that "And adding more corrupt, inept, power-hungry government is not the answer." But it seems to me that an attitude that seeks to excuse an individual from the exercise of personal judgement about the correctness of his or her conduct on the basis of (to paraphrase) "we have all become too lazy, venal, stupid or self serving to take responsibility" is not the answer, and is not a suitable basis for the continuance confidence in "why the US is great and free" either. Perhaps a government that would stop the insider trading, and let these people who live by the sword of leverage die by it, might help - as in less government not more.

p.s. As to the unfairness of the wealthy west's lifestyle versus the third world, that is uncontrovertable, and indeed we are all, in the west, to a degree hypocritical, or at the very least uncharitable, in that we let such inequality continue. That truth is something everyone in the west must either avoid or contemplate, and also consider how they would explain their inaction to their conscience.

 

Sat, 01/16/2010 - 18:43 | Link to Comment WaterWings
WaterWings's picture

and also consider how they would explain their inaction to their conscience.

What's the difference between a hippie and a true political activist?

Nothing. They both get the skulls crushed if they don't do what they're told by big brother:

And the Feds keep getting all these new toys! They can burst your eardrum from a block away - how cool!

http://www.youtube.com/watch?v=DAwmX5O-FAE

Sat, 01/16/2010 - 23:32 | Link to Comment sethstorm
sethstorm's picture

p.s. As to the unfairness of the wealthy west's lifestyle versus the third world, that is uncontrovertable, and indeed we are all, in the west, to a degree hypocritical, or at the very least uncharitable, in that we let such inequality continue. That truth is something everyone in the west must either avoid or contemplate, and also consider how they would explain their inaction to their conscience.

That does not mean you wreck the First World to make it converge with the Third.  No hypocrisy or uncharitable nature exists for your "apples-to-oranges" comparison; it exists in the people like yourself that wish to tear down the West and its people.

 

Sun, 01/17/2010 - 04:47 | Link to Comment bokapita
bokapita's picture

"That does not mean you wreck the First World to make it converge with the Third.  No hypocrisy or uncharitable nature exists for your "apples-to-oranges" comparison; it exists in the people like yourself that wish to tear down the West and its people."

You completely misunderstand me. I have no wish to wreck the First World, neither to tear it down or harm its people. I merely point out the facts. Do you really think it is beyond the west to raise the others, IF, big IF, we were to devote the same energy, enterprise and innovation to the task as we devote to many others?

Just sayin'

Sun, 01/17/2010 - 16:58 | Link to Comment Anonymous
Fri, 01/15/2010 - 16:35 | Link to Comment Anonymous
Fri, 01/15/2010 - 16:36 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

If they are threatening Mutual Assured Destruction, I promise you if the pressure mounts and it appears a real audit the Fed bill with teeth is about to be passed, the Fed will engineer a near death experience. Period. End of story. When the lion roars when I approach, do I assume he wants to play patty cake or eat me for lunch?

I see people all the time saying things like "Don't fight the Fed" or "Go with the flow, it's too difficult to buck the Fed trend". There is no doubt the Fed has great power and can move markets if they wish to do so. Faced with what the Fed would consider a life threatening passage of a bill, why would we think they would not create a Mutual Assured Destruction event? Assume they are telling the truth, protect yourself and pass the bill. We know it's going to hurt like hell when we remove the band aid.

Congress needs to grow some balls. I will do what I need to do to protect myself either way.

Fri, 01/15/2010 - 17:31 | Link to Comment WaterWings
WaterWings's picture

We know it's going to hurt like hell when we remove the band aid.

Yup. The only growth in the economy is gangrene. True to psychopathic form they will kill the host - it's too late for amputation.

Fri, 01/15/2010 - 16:42 | Link to Comment Hondo
Hondo's picture

I agree 100%........

Fri, 01/15/2010 - 17:09 | Link to Comment Anonymous
Fri, 01/15/2010 - 18:33 | Link to Comment Problem Is
Problem Is's picture

"Does anyone remember Kelly's Heroes? What better time is there to rob and steal than just prior to a total collapse."

And the enemies were friends making a bank deal...

Nazis and US hand in hand looting some one's gold from a bank. Remember the way the Nazi officer's eyes lit up when the gold bar was reflecting on his face? That could have been Hank "Dickhead" Greenberg on an OSS job...

Great analogy, anony...

Sat, 01/16/2010 - 10:33 | Link to Comment mikla
mikla's picture

"Does anyone remember Kelly's Heroes? What better time is there to rob and steal than just prior to a total collapse."

Great analogy, anony...

Great movie too.

Fri, 01/15/2010 - 17:17 | Link to Comment Sancho Ponzi
Sancho Ponzi's picture

If you worked for Congress or a regulatory agency and knew damn well things were about to go totally sideways, why would you be concerned with such things as statutes, regulations and your constituency? Does anyone remember Kelly's Heroes? There's no better  to rob and steal than just before a complete collapse. 

It's like these guys are getting away with murder because they KNOW they can.

Fri, 01/15/2010 - 23:51 | Link to Comment Wondering
Wondering's picture

I agree with that CD.

I do think that if there was ever a time to let them threaten MAD its now....their options are limited...and we are too close anyway.

In addition as oligarchs get close to the end they eat their weakest members in a whirlwind. While the oligarchy will lie their asses off in a spiral....they also have to periodically throw someone to the mob. On that score they missed so many small fry early...now they have to throw out some real red meat to buy time

In the musical chairs of a death spiral between the politicians, the bankers and the Fed...the Fed goes first.

I would not be surprised if the Dems in Congress pass health care and then to cover their flanks from the charge they are spendthrifts...they sacrifice Bernake

A lot will depend on the unemployment numbers/jobless claims of the next few weeks, the anger over the bonuses and the number of stray things (bombings in Iraq, cyber attacks, Greece, etc, etc)  that might tip Congress into thinking too much is going wrong not to demonstrate to the folks back home that their representatives are not Ok with the status quo.

Obama defended Geithner...I am not sure he can defend Geithner and Bernake  and the Fed with unemployment continuing to go up. At some point in the spiral, that looks like the equivalent of saying Obama is happy about these conditions and not willing to do much about it. Defending the Fed from audit is starting to look like defending corruption  and fat cat profiteers (not on ZH...Zh was there long ago...but to the majority of the country)

Wonder if someone is going to ask Volcker what he thinks ...and what he would say?

Sat, 01/16/2010 - 05:19 | Link to Comment Miles Kendig
Miles Kendig's picture

Congress & balls?   heh  The only way that this will really have the proper effect is if the fed and government continue along this pathway.  After all, having your political leadership come off like Oliver Twist begging his masters for seconds is a much bigger recruiting poster than follow the fed or else....

Sun, 01/17/2010 - 09:10 | Link to Comment Stevm30
Stevm30's picture

"Faced with what the Fed would consider a life threatening passage of a bill, why would we think they would not create a Mutual Assured Destruction event?"

Fact is, the FED's predecessor did just that... Nicholas Biddle in 1833 - after calling Jackson's bluff before his re-election, by applying to extend the charter of the second bank of the United States (he wasn't bluffing and Jackson vetoed the bill and won the re-election anyway - oops!).  So what does Biddle do? Sharply contracted the money supply - throwing the country into a recession.  The wrath of the public was sharp and just, and eventually the bank was euthanized...

My point is - Bernanke will fight, like the desperate half-wit that he is, with all the tools available to him to stay in power... and he has a lot.  So literally billions of people are dependant on the whims of this one spineless man - a situation which should never be allowed to exist in a "free" country.

Fri, 01/15/2010 - 16:39 | Link to Comment Anonymous
Fri, 01/15/2010 - 18:40 | Link to Comment Anonymous
Sat, 01/16/2010 - 17:27 | Link to Comment WaterWings
WaterWings's picture

Second of all, "nays paw"? Really?

Probably from watching too much Haiti coverage - "ness pah" is more like it.

And let it rot? No way! It's already in a perfect location to the be Memorial of the Second Revolution (of power back to the People from the bankers). We need a reminder to keep the bankers in check. I can't think of a more fitting and ironic location, right there on Constitution Ave.

http://maps.google.com/maps?oe=utf-8&rls=org.mozilla:en-US:official&clie...

Fri, 01/15/2010 - 16:41 | Link to Comment Anonymous
Fri, 01/15/2010 - 16:43 | Link to Comment Anonymouse
Anonymouse's picture

If "ultimate authority resides in Washington" then they need to be accountable to the government, else that statement is untrue.  That also would indicate they should be subject to audits and FOIA.  How are they accountable?

If they are "independent", then why are they working hand in hand with the administration?

It can't be both.

I would agree there is risk in giving Congress a greater hand in the management of the money supply.  I'd hate to see the economy boosted just in time for elections.

But at least Congress is accountable to voters (in theory, ignoring franking privileges, 2 party system, McCain Feingold, gerrymandering, etc).  And there is that pesky issue of the Constitution vesting power over the coining of money in Congress

Mon, 01/18/2010 - 10:40 | Link to Comment THE DORK OF CORK
THE DORK OF CORK's picture

"If they are "independent", then why are they working hand in hand with the administration?

It can't be both."

Exactly - there has been a strange aversion of Anglo Saxon countries to directly own utilities. In a modern economy these institutions are necessary so to get over this problem America creates these strange hybrid creatures who are guaranteed by the state but their profits are privatised - this is the worst of all outcomes , it is either a state institution or it ain't.

The Fannie debacle is funny except for the fact that it is so serious - remember the  senior bond holders have not lost a cent on their "risk" capital. This strange belief has become so prevalent that even their countries armed forces are becoming dog soldiers.Power companies can control electricity prices through their monopoly postion and do not reinvest their capital but just run down their infrastructure,commercial banks of course do the same thing, trading houses have their deposits guaranteed by the taxpayer and of course you have the Fed above it all.

If a person in the states calls for the power companies to be nationalised he is called a socialist but in this brave new world of ours "capitalists" are the socialists.Yet America is listening to the siren song of Libertarians who will destroy the remaining utilities and merely create a  bigger power vacuum that will be occupied by malevolent institutions.I don't know wether to laugh or cry.

There is a big role for the state in controlling natural monopolies,if it does not they will control the state. 

Fri, 01/15/2010 - 16:44 | Link to Comment drbill
drbill's picture

The ghost of Nicholas Biddle has possessed the Fed board!!

Where's Andrew Jackson to perform an exorcism?

Fri, 01/15/2010 - 16:56 | Link to Comment Anonymous
Fri, 01/15/2010 - 23:13 | Link to Comment Crisismode
Crisismode's picture

And the Haitans struck a deal with Satan to free themselves from the French.

 

Tin-foil Hat time everybody, don yours now!

Fri, 01/15/2010 - 16:45 | Link to Comment Snuph
Snuph's picture

The Fed must not allow the public to understand that they have just engineered the largest treasury heist in the history of the world.

Besides being unconstitutional to begin with, the Fed is nothing more than big banks taking care of big banks.

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