Most economists don’t want it (see this and this).
Many congress people don’t want it (see here and here).
So who wants the bailout?
The only people who want it are the big money boys, the ultra elite, including the Wall Street fat cats and Fed who got us into this mess, and their counterparts abroad who would also be bailed out (see this and this).
It is literally America versus the financial elite.
Posted by George Washington
Monday, September 22, 2008
U.S. one dollar bills are displayed for a photograph in New York, April 15, 2008. Photographer: Daniel Acker/Bloomberg News
Sept. 22 (Bloomberg) — Treasury Secretary Henry Paulson‘s plan to end the rout in U.S. financial markets may derail the dollar’s three-month rally as investors weigh the costs of the rescue.
The combination of spending $700 billion on soured mortgage-related assets and providing $400 billion to guarantee money-market mutual funds will boost U.S. borrowing as much as $1 trillion, according to Barclays Capital interest-rate strategist Michael Pond in New York. While the rescue may restore investor confidence to battered financial markets, traders will again focus on the twin budget and current-account deficits and negative real U.S. interest rates.
``As we get to the other side of this, the dollar will get crushed,” said John Taylor, chairman of New York-based International Foreign Exchange Concepts Inc., the world’s biggest currency hedge-fund firm, which manages about $15 billion.
U.S. flags fly outside the headquarters of Goldman Sachs Group Inc., in New York, Sept. 16, 2008. Photographer: Gino Domenico/Bloomberg News
Sept. 22 (Bloomberg) — The Wall Street that shaped the financial world for two decades ended last night, when Goldman Sachs Group Inc. and Morgan Stanley concluded there is no future in remaining investment banks now that investors have determined the model is broken.
The Federal Reserve’s approval of their bid to become banks ends the ascendancy of the securities firms, 75 years after Congress separated them from deposit-taking lenders, and caps weeks of chaos that sent Lehman Brothers Holdings Inc. into bankruptcy and led to the rushed sale of Merrill Lynch & Co. to Bank of America Corp.
“The decision marks the end of Wall Street as we have known it,” said William Isaac, a former chairman of the Federal Deposit Insurance Corp. “It’s too bad.”
Goldman, whose alumni include Henry Paulson, the Treasury secretary presiding over a $700 billion bank bailout, and Morgan Stanley, a product of the 1933 Glass-Steagall Act that cleaved investment and commercial banks, insisted they didn’t need to change course, even as their shares plunged and their borrowing costs soared last week.
“The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time.”
That means that Paulson could buy a couple hundred billion worth of assets one day, sell them, and then the next day buy another couple hundred billion, and so on.
The maximum price tag?
There is no maximum. Paulson could literally spend unlimited taxpayer monies. And remember that Paulson has already broadened the proposal to include the purchase of non mortgage-related assets.
Sept. 21 (Bloomberg) — The Bush administration sought unchecked power from Congress to buy $700 billion in bad mortgage investments from financial companies in what would be an unprecedented government intrusion into the markets.
Through his plan, Treasury Secretary Henry Paulson aims to avert a credit freeze that would bring the financial system and the world’s largest economy to a standstill. The bill would prevent courts from reviewing actions taken under its authority.
“He’s asking for a huge amount of power,” said Nouriel Roubini, an economist at New York University. “He’s saying, `Trust me, I’m going to do it right if you give me absolute control.’ This is not a monarchy.”
Hard times: central banks have acted to avoid a repeat of 1929
So, here we are – the start of a new world order. After the tumultuous events of the last fortnight, the global economic landscape will never look the same again.
Power has tangibly shifted – away from the United States and the Western world generally, and towards the fast-growing giants of the East. That’s been happening for some years now.
But September 2008 marks the moment when the scale of our excesses, the extent of our debts and the moral bankruptcy of our financial regulatory system finally began to be truly exposed.
“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:
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?
SAN FRANCISCO (MarketWatch) — As U.S. Treasury officials made it clear the government will not bail out Lehman Bros., the Federal Reserve Bank of New York met Friday night with Wall Street executives in an effort to forestall the collapse of the investment firm and shore up rapidly weakening financial markets.
The New York Fed called the emergency meeting Friday evening with the heads of major financial institutions and the group reportedly plans to continue meeting throughout the weekend if necessary to come up with a plan to save the ailing Lehman Bros. (LEH:Last: 3.76, -0.46, -10.90%) and prevent further damage among financial companies.
Sept. 9 (Bloomberg) — When the history is written on the collapse of Fannie Mae and Freddie Mac, it will go down in the annals of corporate scandals as one of the greatest accounting scams committed in broad daylight.
All anyone had to do to know the government-guaranteed mortgage financiers were insolvent was read their financial statements. You didn’t need a trained professional eye to discern this open secret, only a skeptical one.
Just last month, Fannie and Freddie said their regulatory capital was $47 billion and $37.1 billion, respectively, as of June 30. The Treasury Department now says it may have to inject as much as $200 billion of capital into the two companies. Nothing much changed at the companies in that span. They just couldn’t get the government to keep up the ruse any longer.
With yesterday’s announcement of the most massive federal bailout of all time, it’s now official: Fannie Mae and Freddie Mac, the two largest mortgage lenders on Earth, are bankrupt.
Some Washington bigwigs and bureaucrats will inevitably try to spin it. They’ll avoid the “b” word with vengeance. They’ll push the “c” word (conservatorship) with passion. And in the newspeak of 21st century bailouts, they’ll tell you “it all depends on what the definition of solvency is.”
The truth: Without their accounting smoke and mirrors, Fannie and Freddie have no capital. The government is seizing control of their operations. Their chief executives are getting fired. Common shareholders will be virtually wiped out. Preferred shareholders will get pennies. If that’s not wholesale bankruptcy, what is?
The nationalization of Fannie Mae and Freddie Mac shows that the U.S. is “more communist than China right now” but its brand of socialism is meant only for the rich, investor Jim Rogers, CEO of Rogers Holdings, told CNBC Europe on Monday.
“America is more communist than China is right now. You can see that this is welfare of the rich, it is socialism for the rich… it’s just bailing out financial institutions,” Rogers said.
Stock markets jumped after the U.S. government’s decision to launch what could be its biggest federal bailout ever, in a bid to support the housing market and ward off more global financial market turbulence.
But Rogers said in the long term the move spelled trouble.
“This is madness, this is insanity, they have more than doubled the American national debt in one weekend for a bunch of crooks and incompetents. I’m not quite sure why I or anybody else should be paying for this,” Rogers told “Squawk Box Europe.”
European stocks soared on Monday, led by banks. UBS was up 11 percent, BNP Paribas up 8 percent, Credit Agricole up 11.1 percent and HBOS up 13.8 percent.
“You certainly gonna see a huge jump in any financial institutions which owned a lot of Fannie [FNM 0.75 -6.29 (-89.35%) ] or Freddie [FRE 0.75 -4.35 (-85.29%) ] … because they don’t have to worry about going bankrupt all of a sudden,” Rogers said.
“Bank stocks around the world are going through the roof, that’s ’cause they’ve all been bailed out. You don’t see the homeowners in Kansas going through the roof ’cause they’re not being bailed out,” he added.
THE US TREASURY will today announce a rescue of Fannie Mae and Freddie Mac, two giant American mortgage banks, in what is likely to be the biggest financial bail-out of recent history.
The move may trigger a bounce in global stock markets tomorrow. However, analysts warn that some of the uncertainties that plagued the markets last week, including worries over the duration of the credit crunch, will persist.
For years, the data contained in the weekly Commitment of Traders Report (COT), issued by the CFTC, have indicated that several large COMEX traders have manipulated the price of silver and gold. For an equal number of years, the CFTC has reluctantly responded to public pressure over this issue with blanket denials of any wrongdoing. Many analysts have agreed with the CFTC’s position, conjuring up various ways to explain why a massive short position held by a handful of traders is not manipulative.
The recent widespread shortage of silver for retail purchase coupled with a price collapse appears to have shaken these analysts’ confidence that the COMEX silver market is operating ‘fair and square.’ Well it should, since there is no rational explanation for a significant price decline going hand in hand with product shortages other than collusive manipulation.
For any remaining doubters that COMEX silver and gold pricing is manipulated, the following CFTC data should be considered. This data is taken from a monthly report issued by the CFTC, called the Bank Participation Report. Here’s the link for the report:
Aug. 22 (Bloomberg) — A failure of U.S. mortgage finance companies Fannie Mae and Freddie Mac could be a catastrophe for the global financial system, said Yu Yongding, a former adviser to China’s central bank.
“If the U.S. government allows Fannie and Freddie to fail and international investors are not compensated adequately, the consequences will be catastrophic,” Yu said in e-mailed answers to questions yesterday. “If it is not the end of the world, it is the end of the current international financial system.”
Freddie and Fannie shares touched 20-year lows yesterday on speculation that a government bailout will leave the stocks worthless. Treasury Secretary Henry Paulson won approval from the U.S. Congress last month to pump unlimited amounts of capital into the companies in an emergency.
Aug. 22 (Bloomberg) — Fannie Mae and Freddie Mac, the two largest mortgage finance companies, “don’t have any net worth,” billionaire investor Warren Buffett said.
“The game is over” as independent companies said Buffett, the 77-year-old chairman of Berkshire Hathaway Inc., in an interview on CNBC today. “They were able to borrow without any of the normal restraints. They had a blank check from the federal government.”
The plan for an economic takedown, the results of rampant market speculations, insiders picking up assets for pennies on the dollar, the coming hyperinflation, the credit crunch, collapse of the dollar carry trade, suppression of metals prices, American meddling in Georgia
VANCOUVER, B.C.– The U.S. financial crisis has cut so deep – and the government has taken on so much debt in misguided attempts to bail out such companies as Fannie Mae (FNM) and Freddie Mac (FRE) – that even larger financial shocks are still to come, global investing guru Jim Rogers said in an exclusive interview with Money Morning.
Indeed, the U.S. financial debacle is now so ingrained – and a so-called “Super Crash” so likely – that most Americans alive today won’t be around by the time the last of this credit-market mess is finally cleared away – if it ever is, Rogers said.
NEW YORK, Aug 3 (Reuters) – The United States is in the second inning of a recession that will last for at least 18 months and help kill off hundreds of banks, influential economist and New York University Professor Nouriel Roubini told Barron’s in Sunday’s edition.
Taxpayers will pay a big price for helping bail out the rest of the financial services industry as well, Roubini said — at least $1 trillion and more likely $2 trillion.
The banks will become insolvent because of mounting losses as a result of the housing bust and because they have only written down their subprime loans so far, he said. Still in front of them are their consumer-credit losses, for which they lack the reserves, Barron’s reported.
He also said there are hundreds of millions of dollars outstanding in home-equity loans that could be worth zero, too.
July 30 (Bloomberg) — With goodwill like Washington Mutual Inc.’s, it’s no wonder investors are getting such bad feelings about the company’s finances. Shares of the Seattle-based savings and loan have fallen 89 percent the past year to $4.43, leaving the company with a $7.6 billion stock-market value. The stock’s plunge must be a horrible mistake if we are to believe the values WaMu attributes to the assets on its balance sheet.
And because of this Wall Street is celebrating today, but not for long.
Before: Fed: No more bailouts, except Fannie Mae and Freddie Mac
And now the Fed wants to bailout Wall Street?
The taxpayer will pay for it all.
__________________________________________________________________________________
WASHINGTON (AP) – The Federal Reserve said Wednesday it is extending its emergency borrowing program to Wall Street firms and is taking other steps to ease a severe credit crunch that has hobbled the national economy.
Its name somewhat anachronistically means “assembly of old men.” George Washington famously – and, it must now be admitted, with excessive optimism – characterized it as an institutional saucer intended to cool legislation passed in the intemperate heat of the moment. Its members demand, with entirely unwarranted self-approval, to be called, collectively, the World’s Greatest Deliberative Body.
July 23 (Bloomberg) — Fannie Mae, the largest U.S. mortgage finance company, couldn’t find a buyer who would pay $6,900 for the three-bedroom house at 1916 Prospect St. in Flint, Michigan. So broker Raymond Megie, who is handling the foreclosure sale, advised cutting the price to $5,000.
Megie still couldn’t sell it. “There’s oversupply,” he said. The home sold in 2005 for $110,000.
And the taxpayer will have to pay for all of this and…
“If we’re lucky enough to help 400,000 households,” said Jared Bernstein, a senior economist at the Economic Policy Institute, “I’m afraid it’s a drop in the bucket.” ______________________________________________________________________________________
Bush pledges to sign legislation to help Fannie, Freddie
Congress completed work Saturday on the government’s most sweeping response yet to the nation’s housing crisis, sending to President Bush a bill designed to help homeowners avoid foreclosure, spur home buying and prop up struggling mortgage giants Fannie Mae and Freddie Mac.
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