The man who trades freedom for security does not deserve nor will he ever receive either. – Benjamin Franklin
JERUSALEM (AFP) – Israel’s scandal-tainted Prime Minister Ehud Olmert resigned on Sunday, setting the stage for weeks of more political turmoil as the horse-trading begins to form a new government.
Olmert , who is battling a swathe of corruption allegations, handed a brief letter to President Shimon Peres announcing that “in line with his commitments, he is submitting his resignation,” the president’s office said.
Vice President Dick Cheney has argued that his office is not part of the executive branch of government.
Filippo Monteforte, AFP / Getty Images
WASHINGTON (Sept. 21) – A federal judge on Saturday ordered Dick Cheney to preserve a wide range of the records from his time as vice president.
The decision by U.S. District Judge Colleen Kollar-Kotelly is a setback for the Bush administration in its effort to promote a narrow definition of materials that must be safeguarded under by the Presidential Records Act.
The Bush administration’s legal position “heightens the court’s concern” that some records may not be preserved, said the judge.
A private group, Citizens for Responsibility and Ethics in Washington, is suing Cheney and the Executive Office of the President in an effort to ensure that no presidential records are destroyed or handled in a way that makes them unavailable to the public.
“I can calculate the movement of the stars, but not the madness of men.”
– Sir Isaac Newton, after losing a fortune in the South Sea bubble
Something extraordinary is going on with these government bailouts. In March 2008, the Federal Reserve extended a $55 billion loan to JPMorgan to “rescue” investment bank Bear Stearns from bankruptcy, a highly controversial move that tested the limits of the Federal Reserve Act. On September 7, 2008, the U.S. government seized private mortgage giants Fannie Mae and Freddie Mac and imposed a conservatorship, a form of bankruptcy; but rather than let the bankruptcy court sort out the assets among the claimants, the Treasury extended an unlimited credit line to the insolvent corporations and said it would exercise its authority to buy their stock, effectively nationalizing them. Now the Federal Reserve has announced that it is giving an $85 billion loan to American International Group (AIG), the world’s largest insurance company, in exchange for a nearly 80% stake in the insurer . . . .
The Fed is buying an insurance company? Where exactly is that covered in the Federal Reserve Act? The Associated Press calls it a “government takeover,” but this is not your ordinary “nationalization” like the purchase of Fannie/Freddie stock by the U.S. Treasury. The Federal Reserve has the power to print the national money supply, but it is not actually a part of the U.S. government. It is a private banking corporation owned by a consortium of private banks. The banking industry just bought the world’s largest insurance company, and they used federal money to do it. Yahoo Finance reported on September 17:
Read moreIT’S THE DERIVATIVES, STUPID! WHY FANNIE, FREDDIE AND AIG ALL HAD TO BE BAILED OUT
As a trader, I stopped getting disgusted at government manipulation of markets several years ago, didn’t pretend it wasn’t happening, just tried to find when it was coming. I decided to develop an indicator that would tell me when the probability was extremely high that the Master Planners would intervene. That approach has served us well, and that indicator is known as the Plunge Protection Team (PPT) Indicator. It flashed a new “buy” signal Monday, September 15th at the close, rising above positive + 20.00, warning that the decline from August 11th was terminal. The Industrials have risen 565 points since that buy signal. When this measure rises above positive + 20.00, it is usually early, but very right, an early warning indicator telling us to enjoy the decline for a few more trading days but get ready for a spike rally.
The current government market intervention (“manipulation” is probably a more appropriate word) that transpired the past two weeks, reaching crescendo Thursday on a rumor, and Friday on an announcement, is one of the most dramatic since the 1930’s. It really puts into question the notion of U.S. markets being under capitalism, not socialism. The government nationalized Fannie Mae and Freddie Mac last week, announced its intent to nationalize AIG, a component of the Dow 30, this week, and then pulled out all the stops with the Paulson manifesto Friday. Not sure why he didn’t nationalize Lehman Bros, unless it was personal, as he came from competitor Goldman Sachs, and enjoyed watching them declare bankruptcy. Okay, maybe I am a bit cynical — maybe.
Before getting into market performance and the forecast, let’s cover what we know about this historic redefining of the rules of the game that Paulson has placed on the table for Congress to consider next week:
Read moreThe Paulson Manifesto Will Fail Because It Fails American Households
Click image to enlarge.
The market was 500 trades away from Armageddon on Thursday, traders inside two large custodial banks tell The Post.
Had the Treasury and Fed not quickly stepped into the fray that morning with a quick $105 billion injection of liquidity, the Dow could have collapsed to the 8,300-level – a 22 percent decline! – while the clang of the opening bell was still echoing around the cavernous exchange floor.
According to traders, who spoke on the condition of anonymity, money market funds were inundated with $500 billion in sell orders prior to the opening. The total money-market capitalization was roughly $4 trillion that morning.
The panicked selling was directly linked to the seizing up of the credit markets – including a $52 billion constriction in commercial paper – and the rumors of additional money market funds “breaking the buck,” or dropping below $1 net asset value.
The Fed’s dramatic $105 billion liquidity injection on Thursday (pre-market) was just enough to keep key institutional accounts from following through on the sell orders and starting a stampede of cash that could have brought large tracts of the US economy to a halt.
Read moreALMOST ARMAGEDDON – MARKETS WERE 500 TRADES FROM A MELTDOWN
Financial-market wise guys, who had been seized with fear, are suddenly drunk with hope. They are rallying explosively because they think they have successfully stampeded Washington into accepting the Wall Street Journal solution to the crisis: dump it all on the taxpayers. That is the meaning of the massive bailout Treasury Secretary Henry Paulson has shopped around Congress. It would relieve the major banks and investment firms of their mountainous rotten assets and make the public swallow their losses–many hundreds of billions, maybe much more. What’s not to like if you are a financial titan threatened with extinction?
The giant Large Hadron Collider, the world’s largest and most expensive scientific experiment, will be shut down for at least two months, scientists at the European Center for Nuclear Research, or CERN, in Geneva said today.
The shutdown casts into doubt the hopes of CERN physicists to achieve high-energy collisions of protons in the machine before the end of the year. “It’s too early to say whether we’ll still be having collisions this year,” James Gillies, head of communications for CERN, said in an e-mail message. The laboratory shuts down to save money on electricity during the winter.
A gala inauguration party scheduled for Oct. 21 will still take place, Dr. Gillies said.
The collider is designed to accelerate the subatomic particles known as protons to energies of 7 trillion electron volts, far surpassing any other accelerator on Earth, and bang them together in search of new particles and forces.
Regulators close down Ameribank Inc., a West Virginia-based-bank with total assets of $115 million.
NEW YORK (CNNMoney.com) — Ameribank Inc. was shut down on Friday by the Office of the Thrift Supervision, making it the 12th bank this year to go under.
The Northfork, West Virginia bank had total assets of $115 million and total deposits of $102 million, according to a statement on the Federal Deposit Insurance Corporation Web site.
Flames poured from the Marriott Hotel in Islamabad on Saturday after a massive truck bombing.
ISLAMABAD, Pakistan – A huge truck bomb exploded at the entrance to the Marriott Hotel in Islamabad on Saturday evening, killing at least 40 people and wounding more than 150, the police said.
The blast, one of the worst acts of terrorism in Pakistan’s history, went off just a few hundred yards from the prime minister’s house, where all the leaders of government were dining after the president’s address to Parliament.
Read moreBomb Explodes at Hotel in Pakistan’s Capital, Killing at Least 40
Bailout proposal sent to Congress seeks authorization to spend as much as $700 billion to buy troubled mortgage-related assets.
NEW YORK (CNNMoney.com) — President Bush has asked Congress for the authority to spend as much as $700 billion to purchase troubled mortgage assets and contain the financial crisis.
The legislative proposal – the centerpiece of what would be the most sweeping economic intervention by the government since the Great Depression – was sent by the White House overnight to lawmakers.
The Crash of 2008, which is now wiping out trillions of dollars of our people’s wealth, is, like the Crash of 1929, likely to mark the end of one era and the onset of another.
The new era will see a more sober and much diminished America. The “Omnipower” and “Indispensable Nation” we heard about in all the hubris and braggadocio following our Cold War victory is history.
Back in 2002, when his reputation as “The Man Who Saved the World” was at its peak, Alan Greenspan, former chairman of the Federal Reserve, came to Britain to pick up his knighthood. His biggest fan, Gordon Brown, now the UK prime minister, had ensured that the citation said it was being awarded for promoting “economic stability”.
During his trip, Mr Greenspan visited the Bank of England’s monetary policy committee. He told them the US financial system had been resilient amid the bursting of the internet bubble. Share prices had halved and there had been massive bond defaults, but no big bank collapses. Mr Greenspan lauded the fact that risk had been spread, using complex derivative instruments. One of the MPC members asked: how could this be? Someone must have lost all that money; who was it? A look of quiet satisfaction came across Mr Greenspan’s face as he answered: “European insurance companies.”
Six years later, AIG, the largest US insurance company, has in effect been nationalised to stop it blowing up the financial world. The US has nationalised the core of its mortgage industry and the government has become the arbiter of which financial companies should survive or die.
Paulson, Bernanke, and Congress are conspiring to make the US taxpayer the fall guy for financial stupidity by banks and brokers. Congress is now willing to ram through legislation at the last moment, even though Senate Majority Leader Reid Says “No One Knows What to Do”.
Please consider Paulson, Bernanke Push New Proposal to Cleanse Balance Sheets (at taxpayer expense).
U.S. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke proposed moving troubled assets from the balance sheets of American financial companies into a new institution.
Congressional leaders who met with Paulson and Bernanke late yesterday in Washington said they aim to pass legislation soon. The initiative, which may also insure money-market funds, is aimed at removing the devalued mortgage-linked assets at the root of the worst credit crisis since the Great Depression.
Part I of a three-part series looking at how so-called “credit default swap” derivatives could ignite a worldwide capital markets meltdown.
Are you shell-shocked? Are you wondering what’s really going on in the market? The truth is probably more frightening than even your worst fears. And yet, you won’t hear about it anywhere else because “they” can’t tell you. “They” are the U.S. Federal Reserve and the U.S. Treasury Department, and they can’t tell you what’s really going on because there’s nothing they can do about it, except what they’ve been trying to do – add liquidity.
At the exchange rate yesterday (Wednesday), 35 trillion British Pounds was equivalent to U.S. $62 trillion (hence, the 35 trillion Pound gorilla). According to the International Swaps and Derivatives Association, $62 trillion is the notional value of credit default swaps (CDS) out there, somewhere, in the market.
Read moreThe Real Reason for the Global Financial Crisis…the Story No One’s Talking About
Frustrated by the US government’s rescue of AIG, Fannie Mae and Freddie Mac, a group of 100 conservative congressmen today urged the Bush administration to stop keeping Wall Street afloat.
In a letter to the treasury secretary and Federal Reserve chairman, members of the conservative Republican Study Committee (RSC) lamented the abandonment of free-market principles.
Rescuing failing financial firms has “set a dangerous and unmistakable precedent for the federal government both to be looked to and relied upon to save private sector companies from the consequences of their poor economic decisions,” the RSC members wrote.
Read moreUS: Conservative congressmen urge Bush to cut off aid to Wall Street
In the space of just two momentous weeks, the landscape of global finance has been dramatically transformed. President George W. Bush’s administration has mounted a multi-billion-dollar rescue of the financial system at the cost of inflicting severe damage on the US model of free- market capitalism.
Heavy costs will be inflicted on the American taxpayer, who is now subsidising Wall Street – and indeed financial institutions around the world – in a bail-out of unprecedented size.
Read moreCapitalism in convulsion: Toxic assets head towards the public balance sheet
Kirby Daley of financial brokerage Newedge Group on emergency measures to help rescue banks from bad debt.
Hinzugefügt: 19. September 2008, Source: YouTube
The burden is shifted from the shareholders to the taxpayers.
This is socialism for the rich as Ron Paul and Jim Rogers said before.
Will the rescue plan work???
If not it is the financial system and the US who will fail.
I say the rescue plan will not work but it will destroy the middle class and it will concentrate
power and wealth in fewer and fewer hands.
CNN’s Andrew Stevens talks to financial investor Jim Rogers about what’s ahead for world stock markets.
Added Sept. 18, 2008
Source: YouTube
First have a look at the following two articles:
In effort to calm critical part of the broader financial system, Fed and Treasury take three-pronged measure to stabilize troubled funds.
NEW YORK (CNNMoney.com) — Coming to the rescue of a bedrock of American investing, the Treasury Department and the Federal Reserve took three big steps Friday to shore up the $3.3 trillion U.S. money-market fund industry.
Investors have been fleeing money-market funds after a week of chaos on Wall Street that included the bankruptcy of Lehman Brothers, an $85 billion government bailout of American International Group and a sweeping plan for the federal government to buy up financial companies’ troubled mortgage debt.
……………..
Experts: No need to cash out
Money-market experts say investors shouldn’t panic. They felt most funds were safe even before Friday’s government action, which will only add more confidence in the investments.
By Tami Luhby, CNNMoney.com senior writer
Last Updated: September 19, 2008: 1:13 PM EDT
Full article here: CNNMoney
Sept. 19 (Bloomberg) — The U.S. will insure money-market funds against losses for the next year as it seeks to prevent a run on $3.35 trillion of assets that average investors and institutions rely on as a safe alternative to bank deposits.
…………….
“They’re putting up a firewall,” said Paul McCulley, managing director at Pacific Investment Management Co., which oversees $830 billion including money funds. ``It’s the ultimate nightmare to have a run on the money markets — that is truly the Armageddon outcome — and they’re not going to allow that to happen.”
By Christopher Condon
Full article here: Bloomberg
Imagine what a run on the banks would do to the financial market.
Now you know why the government and ‘the experts’ panic that the investors might panic.
Watch this video to understand more about money and why a run on the banks would be so devastating.
Money As Debt
Source: Google Video
Read moreWhy the government rushes to ‘save’ money-market funds
“There are 5 giant multinational corporations who control all 14.000 radio stations in America, all 5.000 TV Stations, 80% of our newspapers, all of our billboards and most of the large internet content providers.”
Source: YouTube
Just days after General David McKiernan announced his “revised tactical order” designed to reduce the number of civilians killed in NATO raids, Australian special forces surrounded a house in the Afghan province of Oruzgan and opened fire, killing district governor Razi Khan and two of his bodyguards, and injuring two others.
Afghan President Hamid Karzai referred to the killings as a “misunderstanding,” and said Governor Khan had been a close associate of his. The incident occurred at the house of a friend of the governor, who believed his house had been surrounded by Taliban, not Australian troops.
Read moreAustralian Troops Kill Afghan Governor, Two Guards in Botched Raid
Sept. 19 (Bloomberg) — The Comex division of the New York Mercantile Exchange raised margin payments on gold and silver futures by as much as 47 percent after price swings accelerated.
The margin rate for Comex members advances to $5,500 a gold contract from today, from $3,750, the exchange said in an e- mailed statement late yesterday. The new rate for non-members is $7,425, from $5,063. One contract represents 100 ounces.
For silver futures, members will pay a margin rate of $6,000, compared with $5,000 previously. Non-members will pay $8,100, from $6,750. One silver contract represents 5,000 ounces.
The rates represent the cash traders must put aside when buying and selling the commodities. Gold surged the most in nine years on Sept. 17 while silver rose the most since 1979.
Read moreComex Raises Margin Rates on Gold Contracts by 47%, Silver 20%
