Infinite Unknown

Russell Roberts is a professor of economics at George Mason University and former Director of the Center for Experiential Learning at Washington University in St. Louis.

Roberts is a regular commentator on business and economics for National Public Radio’s Morning Edition, and has written for the New York Times and the Wall Street Journal.

Professor Roberts focuses on communicating economics to non-economists, and to that end is the host of the award-winning podcast EconTalk and blogs at Cafe Hayek with Donald J. Boudreaux. Continue reading »

Tags: Bailout, Banks, Barack Obama, Bush administration, Economy, Fed, Federal Reserve, George Bush, Global News, Goldman Sachs, Government, Henry Paulson, JPMorgan, Obama administration, Politics, Timothy Geithner, Wall Street

Feb. 4 (Bloomberg) — Real estate, stocks, credit. China sure has its share of bubbles. Oddly, little attention is paid to the biggest one of all.

China’s currency reserves grew by more than the gross domestic product of Norway in 2009. Its $2.4 trillion of reserves is a bubble all its own, one growing before our eyes with nary a peep out of those searching for the next big one.

The reserve bubble is actually an Asia-wide phenomenon. And we should stop viewing this monetary arms race as a source of strength. Here are three reasons why it’s fast becoming a bigger liability than policy makers say publicly.

One, it’s a massive and growing pyramid scheme. The issue has reached new levels of absurdity with traders buzzing about crisis-plagued Greece seeking a Chinese bailout. After all, if economies were for sale, China could use the $453 billion of reserves it amassed last year to buy Greece and Vietnam and have enough left over for Mongolia.

Countries such as the U.S. used to woo the Bill Grosses of the world to buy their debt. Now they are wooing governments. Gross, who runs the world’s biggest mutual fund at Pacific Investment Management Co., is still plenty important to officials in Washington. He’s just not as vital as the continued patronage of state asset managers in places like Beijing.

Next Step

You have to wonder what folks at the International Monetary Fund are thinking these days. Their aid packages tend to come with messy requirements, such as “get your economy in order.” China’s are merely about scoring resources or geopolitical points. We have already seen China throw lifelines to Wall Street giants, including Morgan Stanley. Entire countries seem like the natural next step.

China’s huge arsenal of reserves is increasing its global influence. The trouble is, China is trapped in an arrangement of its own making. As China and other Asian nations buy more and more U.S. Treasuries, it becomes harder to unload them without causing huge capital losses. And so they keep adding to them.

“This is a titanically large foreign-exchange trade,” says David Simmonds, London-based analyst at Royal Bank of Scotland Group Plc. “It’s the biggest one history has ever seen and there’s nowhere for these reserves to go.” Continue reading »

Tags: Bailout, Bubble, China, Debt, Dollar, Economy, Politics, U.S.

Between 1997 & 2002 $4 Trillion Went Missing From US Government

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Tags: AIG, Bailout, Banks, Catherine Austin Fitts, Economy, Fed, Federal Reserve, Global News, Goldman Sachs, Government, Max Keiser, Politics, U.S., Wall Street

Obama is just another elite puppet President. The Fed and the US government are bankrupting America and destroying the US dollar.

This is the Greatest Depression.

- America’s Impending Master Class Dictatorship! (MUST-READ!)

Added: 30. Januar 2010

Continue reading »

Tags: Bailout, Banks, Barack Obama, Debt, Economy, Fed, Federal Reserve, Global News, Obama administration, Politics, Taxpayers, U.S., Unemployment, Wall Street

JPMorgan vs. Goldman Sachs: Why the Market Was Down for 7 Days in a Row

We are witnessing an epic battle between two banking giants, JPMorgan Chase (Paul Volcker) and Goldman Sachs (Geithner/Summers/Rubin). Left strewn on the battleground could be your pension fund and 401K.

The late Libertarian economist, Murray Rothbard, wrote that U.S. politics since 1900, when William Jennings Bryan narrowly lost the presidency, has been a struggle between two competing banking giants, the Morgans and the Rockefellers. The parties would sometimes change hands, but the puppeteers pulling the strings were always one of these two big-money players. No popular third party candidate had a real chance at winning, because the bankers had the exclusive power to create the national money supply and therefore held the winning cards.

In 2000, the Rockefellers and the Morgans joined forces, when JPMorgan and Chase Manhattan merged to become JPMorgan Chase Co. Today the battling banking titans are JPMorgan Chase and Goldman Sachs, an investment bank that gained notoriety for its speculative practices in the 1920s. In 1928, it launched the Goldman Sachs Trading Corp., a closed-end fund similar to a Ponzi scheme. The fund failed in the stock market crash of 1929, marring the firm’s reputation for years afterwards. Former Treasury Secretaries Henry Paulson, Robert Rubin, and Larry Summers all came from Goldman, and current Treasury Secretary Timothy Geithner rose through the ranks of government as a Summers/Rubin protégé. One commentator called the U.S. Treasury “Goldman Sachs South.”
Continue reading »

Tags: Bailout, Banks, Barack Obama, Bob Chapman, Derivatives, Derivatives market, Economy, Fed, Federal Reserve, Goldman Sachs, Government, Henry Paulson, High Frequency Trading, JPMorgan, Larry Summers, Max Keiser, Murray Rothbard, NYSE, Obama administration, Paul Volcker, Politics, Robert Rubin, Rockefeller, Stock Market, Timothy Geithner, U.S., Wall Street

Sure! That is called ‘his-story’ (Henry Paulson’s fairy tale).

See also:

- Paulson Says He Was Prepared to Guarantee Lehman (BusinessWeek):

Jan. 29 (Bloomberg) — Former U.S. Treasury Secretary Henry Paulson says in his memoir that he was prepared to support a government backstop to prevent the bankruptcy of Lehman Brothers Holdings Inc. until he learned the firm’s assets were so mis- marked it would have guaranteed a loss to taxpayers.‘

As of  ‘now’ the US taxpayer has already lost everything, because of bailouts, stimulus packages, quantitative easing etc., which only benefited the banksters and the elite. It is just that the people don’t know it yet.

The US government and the Fed are bankrupting America!

As a side note:

If you are an investor and your investment starts to look really bad and is about to lose a lot of money, then you better sell it straightaway.

China is also about to lose a lot of money from holding US Treasuries, and it has now become very difficult to sell them without tremendous consequences, but the bailout/stimulus bubble will finally blow up. This will be the end of the dollar and the US as we know it.

Just think about the big dilemma the Chinese are in now, because of the irresponsible economic policies of the US.

I am not saying that China ‘always’ acted responsible. This is a created crisis. This is the Greatest Depression and it has only just begun.

Henry Paulson, former U.S. treasury secretary, testifies at a House Oversight and Government Reform Committee hearing in Washington, D.C., on Jan. 27, 2010. (Bloomberg)

Jan. 29 (Bloomberg) — Russia urged China to dump its Fannie Mae and Freddie Mac bonds in 2008 in a bid to force a bailout of the largest U.S. mortgage-finance companies, former Treasury Secretary Henry Paulson said.

Paulson learned of the “disruptive scheme” while attending the Beijing Summer Olympics, according to his memoir, “On The Brink.”

The Russians made a “top-level approach” to the Chinese “that together they might sell big chunks of their GSE holdings to force the U.S. to use its emergency authorities to prop up these companies,” Paulson said, referring to the acronym for government sponsored entities. The Chinese declined, he said.

Russia’s five-day war with U.S. ally Georgia started on Aug. 8, the same day as the opening ceremonies of the Beijing Games. Prime Minister Vladimir Putin told U.S. President George W. Bush during those ceremonies that “war has started,” according to Dmitry Peskov, Putin’s spokesman.

“The report was deeply troubling — heavy selling could create a sudden loss of confidence in the GSEs and shake the capital markets,” Paulson wrote. “I waited till I was back home and in a secure environment to inform the president.”

Russia never approached China about dumping U.S. bonds, Peskov said today. “This is not the case,” he said by phone.

Russia sold all of its Fannie and Freddie debt in 2008, after holding $65.6 billion of the notes at the start of that year, according to central bank data. Fannie and Freddie were seized by regulators on Sept. 6, 2008, amid the worst U.S. housing slump since the Great Depression. Continue reading »

Tags: Bailout, Bonds, China, Debt, Dmitry Medvedev, Economy, Fannie Mae, Freddie Mac, George Bush, Global News, Government, Henry Paulson, Politics, Russia, Taxpayers, U.S., Vladimir Putin

Jan. 29 (Bloomberg) — The idea of secret banking cabals that control the country and global economy are a given among conspiracy theorists who stockpile ammo, bottled water and peanut butter. After this week’s congressional hearing into the bailout of American International Group Inc., you have to wonder if those folks are crazy after all.

Wednesday’s hearing described a secretive group deploying billions of dollars to favored banks, operating with little oversight by the public or elected officials.

We’re talking about the Federal Reserve Bank of New York, whose role as the most influential part of the federal-reserve system — apart from the matter of AIG’s bailout — deserves further congressional scrutiny.

The New York Fed is in the hot seat for its decision in November 2008 to buy out, for about $30 billion, insurance contracts AIG sold on toxic debt securities to banks, including Goldman Sachs Group Inc., Merrill Lynch & Co., Societe Generale and Deutsche Bank AG, among others. That decision, critics say, amounted to a back-door bailout for the banks, which received 100 cents on the dollar for contracts that would have been worth far less had AIG been allowed to fail.

That move came a few weeks after the Federal Reserve and Treasury Department propped up AIG in the wake of Lehman Brothers Holdings Inc.’s own mid-September bankruptcy filing.

Saving the System Continue reading »

Tags: AIG, Bailout, Banks, Deutsche Bank, Economy, Fed, Federal Reserve, Global News, Goldman Sachs, Lehman Brothers, Merrill Lynch, Politics, Societe Generale, Timothy Geithner

Germany has triggered a near-panic flight from southern European debt markets by warning that there will be no EU bail-outs, even though it fears the region’s economic crisis has turned dangerous and could prove “fatal” for the entire eurozone.

Funds flee Greece as Germany warns of “fatal” eurozone crisis

The yield on 10-year Greek bonds blasted upwards by over 40 basis points to 7.15pc in a day of wild trading. Spreads over German Bunds reached almost four percentage points, by far the highest since Greece joined the euro, and close to levels that risk a self-feeding spiral. Contagion hit Portuguese, Spanish, Irish, and Italian bonds.

George Papandreou, the Greek premier, said in Davos that his country had been singled out as the weak link in a “attack on the eurozone” by speculators and political foes. “We are being targeted, particularly by those with an ulterior motive.”

Marc Ostwald, from Monument Securities, said the botched bond issue of €8bn (£6.9bn) of Greek debt earlier this week has made matters worse. Many of the investors were “hot money” funds that bought on rumours that China was emerging as a buyer, offering them a chance for quick profit. When the China story was denied by Beijing and Athens, these funds rushed for the exit.

However, a key trigger yesterday was testimony in Germany’s parliament by economy minister Rainer Brüderle, who said there would be “no bail-outs” for struggling debtors and no move to a “European economic government”.

“A few European nations are exhibiting dangerous weaknesses. That could have fatal consequences for all countries in the eurozone,” he said. Despite the warning, he said each country must solve its own problems.

Continue reading »

Tags: Bailout, Debt, EU, Germany, Global News, Government, Greece, Politics

Added: 27. Januar 2010

- SEC Mulled National Security Status For AIG Bailout Details (Reuters)

- America’s Impending Master Class Dictatorship! (Kitco)

- Ron Paul on FOX NEWS: Wall Street Bailout FRAUD

- The No.1 Trend Forecaster Gerald Celente: Financial Mafia Controlling US and Wall Street (RT)

- Senator Jim Bunning: SEC Should Probe NY Fed Staff Over AIG (Bloomberg)

- SEC hides AIG bailout documents until 2018; Federal Reserve Seeks to Protect US Bailout Secrets (Bloomberg/Reuters)

- Timothy Geithner’s Fed Told AIG to Limit Swaps Disclosure (Bloomberg)

- Famous Investor Jim Rogers: Incompetence In Washington, Abolish The Fed And The Treasury (CNBC):

“Mr. Geithner has been wrong about everything for the last 15 years.”

- Congressman Michael Burgess To Timothy Geithner: ‘You Should Have Never Been Hired’ (FOX NEWS)

- Prof. William Black: Timothy Geithner ‘Burned Billions,’ Shafted Taxpayers on CIT Loan (Yahoo Finance)

- New York Fed’s Secret Choice to Pay for AIG Swaps Squandered Billions of Taxpayer Money (Bloomberg)

- Rep. Brad Sherman: Geithner rejects $1 trillion limit on bailout power (Section 1204 is unlimited in dollar amount!) (The Hill)

- Treasury Secretary Geithner’s Closest Aides Reaped Millions Working for Banks, Hedge Funds (Bloomberg)

- The Federal Reserve buys Fannie Mae bonds; Timothy Geithner is a liar (CNBC)

Tags: AIG, Bailout, Fed, Federal Reserve, Government, Politics, Timothy Geithner, U.S.

NEW YORK (Reuters) - U.S. securities regulators originally treated the New York Federal Reserve’s bid to keep secret many of the details of the American International Group bailout like a request to protect matters of national security, according to emails obtained by Reuters.

Crisis in Credit

The request to keep the details secret were made by the New York Federal Reserve — a regulator that helped orchestrate the bailout — and by the giant insurer itself, according to the emails.

The emails from early last year reveal that officials at the New York Fed were only comfortable with AIG submitting a critical bailout-related document to the U.S. Securities and Exchange Commission after getting assurances from the regulatory agency that “special security procedures” would be used to handle the document.

The SEC, according to an email sent by a New York Fed lawyer on January 13, 2009, agreed to limit the number of SEC employees who would review the document to just two and keep the document locked in a safe while the SEC considered AIG’s confidentiality request.

The SEC had also agreed that if it determined the document should not be made public, it would be stored “in a special area where national security related files are kept,” the lawyer wrote.

In another email, a New York Fed official said the SEC suggested in late December 2008, that AIG file the document under seal and then apply to the regulatory agency for so-called confidential treatment, if central bankers wanted to stop the information from becoming public.

The emails were included in the mountain of documents the New York Fed turned over last week to the House Committee on Oversight and Government Reform, which will hold a hearing Wednesday into the AIG bailout and the New York Fed’s role in trying keep the specific terms of that Fed-engineered rescue in November 2008, from being made public.

More than a year later, the Fed’s bailout of AIG remains controversial because it funneled nearly $70 billion to 16 big U.S. and European banks that had bought credit default swaps from AIG. Banks like Goldman Sachs Group Inc, Societe Generale and Deutsche Bank had bought those insurance-like derivatives to guard against defaults on hundreds of securities backed by subprime mortgages.

‘BACKDOOR BAILOUT’

Lawmakers on Capitol Hill have labeled the AIG bailout, in which the New York Fed created a special entity to purchase those securities from the banks at essentially their face value, a “backdoor bailout” for the 16 financial institutions. Continue reading »

Tags: AIG, Bailout, Fed, Federal Reserve, Government, Politics, SEC, Timothy Geithner, U.S.