Tag Archives: Federal Reserve

Do You Believe that Obama Deficits were $10 Trillion? Wrong!

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Obama, The Federal Reserve, and Donald Trump

You have been led to believe that the Obama Presidency ran the National Debt to $19.5 Trillion Dollars.  Further, that Obama doubled the amount of US Debt of all of his predecessors combined.  What did you miss?

Remember Ben Bernanke at the Federal Reserve and his wonderful invention called “Quantitative Easing”?  What?  Well, QE is a shifty way of “increasing” the National Debt without it increasing the National Debt!  Really?  Yep!  What happens is, the Federal Reserve, which is its own government independent of the US Government and can “borrow” money, print money, buy US Treasury notes, Money Backed Securities (remember the crash of 2008 when Freddie and Fannie blew up the real estate markets by allowing the bundling of bad sub-prime loans), and indirectly purchase stocks on the stock market.  Well, Obama and his brilliant team had no idea how to stimulate the economy organically, via tax cuts and investment incentives, so they joined the Federal Reserve and came up with Quantitative Easing.  So, what does this have to do with the National Debt?

Well, the Fed “increased” its securities assets by $4 Trillion dollars over the Obama 8 years.  But, since the Fed and Obama did not want to flood the money supply by printing worthless currency, so they used Quantitative easing to increase the money supply by flooding financial institutions with capital in an effort to promote increased lending and liquidity!  The end result is the same!  Your dollars are worth $4 Trillion less and the Fed, and you the taxpayer, are on the hook for $4+ Trillion in debt that is not included in the National Debt!  

So, the real Obama National Debt is $24 Trillion!

Why does this matter to you? 

There is no free lunch!

So while the Fed and Obama were able to create a stock market bubble and drive up “preferred” stock prices for preferred companies, and absorb a lot of the residual Freddie and Fannie funny money debt, ($2 Trillion Dollars), they were postponing the need to payback this bubble once the economy got back on track!

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Enter Donald J. Trump and a US Economic Resurgence

So, in November 8th, 2016, Donald J. Trump was elected!  Immediately he reversed the Obama business choking regulations and by the end of his first year passed a historic Tax Cut.  The result, the economy immediately responded with new jobs, new business investment, repatriation of corporate money held overseas, and an optimism the country had not seen since Reagan.  Then, last week, the investor community woke up and suddenly remembered the $4+ Trillion dollar debt we have in the Fed Closet! In a few short days, the Dow dropped precipitously to December 2017 highs.

Why did panic set in?  Well, the markets are not necessarily logical and always are driven of EXPECTED future events!  What are the panic drivers?  FEAR of higher interest rates and their impact on the economy and consumer spending, FEAR of inflation as wages increase and more people enter the job market, and FEAR of FEAR!

  Are interest rate hikes and inflation increases fears realistic?  Probably to some degree.  The Janet Yellen Federal Reserve had been slowly increasing interest rates since Trump took office from the Obama zero interest rate era!  Last week, during Yellen’s last Fed meeting, she did not raise interest rates as expected and she should have and irresponsibly stated that the stock market was overvalued!  She was irresponsible because the Price/Earnings ratios of Dow and other markets have not grown unreasonably over the past year in spite of rising stock prices.  Earnings have risen pretty much with stock prices.  The Dow showed the highest gain in 2018 v 2017 with an increase to $25.98 from $20.31, the NASDAQ increased to $26.10 from $24.15 and the S&P 500 actually dropped to $21.71 from $24.18.  

Where will the Market Go and How do we Get Rid of Obama’s Extra $4+ Trillion in Fed Funny Money?

The economic fundamentals are sound.  Companies will continue to repatriate cash into the US, continue to expand manufacturing and other investments in the US, the labor participation rate will continue to add more citizens into the job force, and more jobs will be created.  Would an increase in interest rates kill the economy?  As long as interest rates stay around 5% and inflation stays around 3%, the world as we know it will not end!  Corporate borrowing will be almost nil for global entities due to the piles of cash they have had offshore that they will repatriate. The tax cuts will provide all companies with additional cash flow that will lower the demand for borrowing.  Consumers benefiting from higher wages will stay about where they are in terms of borrowing and interest rate increases will have minimal impact on already high credit card interest.  

If US GDP grows at 4-5%, and President can get his budget through in order to control costs, the Federal Government should generate sufficient tax revenues to start to reverse the National Debt.  As employment numbers continue to rise, payments into Social Security and Medicare will slow than stop the bleeding from these funds. The Federal Reserve has initiated a program whereby it will start to chip away at its $4+ Trillion dollars in quantitative easing debt at the rate of $10 Billion per month.  At this rate of principal reduction, no real impact on the overall economy should occur. 

So, the bad news is that Obama actually topped $24 Trillion in total national debt.  The good news is that Donald J. Trump is the current President of the US now!  If Clinton had been elected, the Obama economy that was based on a ballooning National Debt and a ballooning Federal Reserve debt on its balance sheet would have been perpetuated.  It would have been a matter of time before the US became a rival junk economy to Greece!

It is critical that Republicans hold the House of Representatives and pick up 9+ seats in the Senate during the 2018 mid-term elections.  President Trump will be able to then attack capital gains taxes and complete his revamping of the tax codes.  He will also be able to rebalance Social Security and Medicare funds and put them back on a solvent path.   Welfare reform via work programs will continue the cost reductions for the Federal and State governments.  There are a lot of systemic changes that still need to be made and President Trump needs a Congress that will support his policy changes…

RD Pierini

@RDPierini

 

 

 

Hat Tips

https://www.investopedia.com/terms/q/quantitative-easing.asp#ixzz56MKZJa00

 

http://wsj.com/mdc/public/page/2_3021-peyield.html

P/Es & Yields on Major Indexes

Dow Indexes

Monday, February 05, 2018

P/E RATIO
DIV YIELD
2/5/2018 Year ago Estimate^ 2/5/2018 Year ago
Dow Industrial 25.09 20.31 17.70 2.15 2.39
Dow Transportation 13.48 18.35 16.49 1.38 1.32
Dow Utility 26.56 26.71 17.21 3.53 3.47
P/E data based on as-reported earnings; estimate data based on operating earnings.
Sources: Birinyi Associates; WSJ Market Data Group
Other Indexes
Friday, February 02, 2018
P/E RATIO
DIV YIELD
2/2/2018 Year ago Estimate^ 2/2/2018 Year ago
Russell 2000 151.45 nil 25.65 1.30 1.42
Nasdaq 100 26.10 24.15 20.85 0.99 1.16
S&P 500 21.71 24.18 18.05 1.81 2.08
P/E data based on as-reported earnings; estimate data based on operating earnings.
Source: Birinyi Associates
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Eurozone-Too Big To Fail? Our Fate is Linked to Theirs!

I am writing this article not because it is a page turner but a topic that is critical to the economic survival of the West including the US.  The events unfolding in Europe will impact you directly regardless of the outcome.  The European nations combined are now a larger economy than the US.  If they fail, the ripple effect will make the Depression of 2008 seem tame…  You may wonder why the European Crisis is solved, then back again and again in the news.  Hopefully this article may provide some insight…We will also tie this in with US State issues…

————-

Following WWII, the Marshall Plan, and the ascendency of the United States, Europe sought to re-establish itself as a major world force both politically and economically.  As individual nations, each had its strengths and unique cultures and histories.  Many were historical enemies, allies or both at one time or another.  With the fall of the Soviet Union, the Eastern European countries became independent and sought to rapidly establish their place in the new world order.  The Big Three in Europe in the 60’s and 70’s were Great Britain, France and Germany.  The latter was further enhanced by the fall of the Soviet regime as Germany was able to reunite East and West Germany creating a manufacturing force to be reckoned with in the global economy. 

The forerunner to the current Eurozone was the European Economic Community/Common Market that came into existence in 1957.  During the past 54 years, the EEC has morphed into the current Eurozone/Euro Area/European Union economic and monetary union.  The trouble with trying to follow a lot of the news stories regarding the Eurozone is that it, and its component parts are referred to by a whole host of names.  For the purposes of this article, we shall refer primarily to the Eurozone (EZ) as the entity that includes Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.  All of these countries have adopted the Euro as their currency which is controlled by the European Central Bank (ECB). 

The total population of the 27 member European Union is 494 million people while the smaller EZ is slightly larger than the US at 317 million people (2006 Stats).  Using 2010 statistics, the European Union’s GDP topped $16 Trillion while the US topped $14 Trillion.  So, by combining the European nations, they were able to create an economically competitive entity with the United States.

The Underlying Problem:

When the EZ was being formed, the establishment of a common currency was the cornerstone of their economic goals.  To accomplish this task, the European Central Bank, much like our Federal Reserve, was created to monitor the Euro and the relative strength and weaknesses of the individual nations in the EZ.  One underlying weakness was the challenge to manage individual autonomous economies within the group.  Germany, for example, was a much stronger nation financially than Spain, Greece or other lesser members.  Their strength was from their lower debt load and strong GDP and employment growth. 

In addition to having to balance disparate economies, the group had no direct control over the individual nations’ public policy.  All of the European nations were trending towards socialism to a greater or lesser degree than the other during the formation phase of the EZ.  So, while trying to balance individual nation’s economies, their GDP:National Debt ratios, against a common currency, the EZ was trying to organize chaos!  The relative economic strength of each of its member would change over the 40 years to the point that at one time France was actually close to being in default of their EZ financial requirements. 

During this creation period, the EZ “Capital” in Brussels consolidated more and more public policy power over the member nations without actually having any real power to force compliance on its members.  Brussels’ encroachment on the individual sovereignty of its members became a real point of contention and in fact has kept Great Britain from entering the EZ.  To give a you an insight into the depth of encroachment by Brussels, they established a law that horses had to have passports with inoculation records maintained in a similar manner to humans.  The reason was that some of the members consume horse meat and they wanted to make sure that they knew the inoculation history of the animals they would consume. 

The underlying problems included the combining of several nations with disparate economies, high debt:GDP ratios, disparate social structures, and no central public, economic or social policy capabilities.  So, when the debt crisis threatened the default of Greece, Italy, Portugal, and Spain, there really was not a good way for the group to “fix” the problem.  The “fix” was then left up to Germany and France as the two most stable members.  But, in order to “fix” the problem, Germany and France could only negotiate the solution with the defaulting members. 

Source of the the Crisis:

The EZ members who are experiencing the highest levels of economic woes spent themself into oblivion.  (Sound familiar?)  Their labor productivity kept declining as more time off, pension age reductions, and other social programs took more and more productive hours out of their work force.  The higher the level of socialism, the higher the National Debt:GDP ratio.  There simply were not enough tax payers to pay for the non tax payers receiving benefits.  (Sound Familiar?)

When the EZ allowed more “affiliated” nations to join outside of the European Central Bank perview, nations such as Turkey and other less developed, lower labor cost nations, were given protected trade status under the EZ umbrella.  This led to the manufacturing and local trades within the EZ nations to be exported to the lower cost affiliates and reduced the GDP potential of the member nations.  There was a general failure by the EZ to recognize that labor and material procurement will always seek the lowest cost source, all else being equal.  Without the trade protection for member EZ nations, the new affiliates literally sucked the life blood out of many of the EZ member nations.  Hand crafts and labor intensive processes moved out of Greece, Italy, Portugal, and Spain to Turkey and many Eastern European affiliate nations.

The crisis then was caused by a lowering of the EZ members productivity; national debts that were growing faster than their GDP; and a loss of jobs and industries to lower cost affiliated members.  From a historical perspective, the demise was actually a continuation of what the powerful European nations attempted to do during the high point of the worldwide imperialistic expansion.  They tried to get nations they controlled to do their dirty work or perform the menial tasks and thus allow their citizens to live a more leisurely life free from toil.  Well, how did that go for them the first time around!  They failed then and they will fail now…

Default or What?

Since the Depression off 2008, we have all been sold a bill of goods under the umbrella of “TOO BIG TO FAIL”.  First of all, politicians create or allow the creation of very large private sector entities as it is easier to get donations out of one company rather than having to go to 300 smaller companies.  Government allowed the expansion of the US and European banks and key infrastructure companies such as communications companies, oil and gas companies, steel companies, and auto companies are all allowed to grow outside of what is healthy for competition and to protect against a catastrophic economic impact should one or more of the entities become bankrupt.  By allowing these entities to grow into behemoth proportions, also make them easier for the governments to take them over if they get into economic trouble…  (General Motors and Chrysler) 

Then, in the case of the US, we have allowed our States to incur such high levels of debt that there may have to be a special law written to allow for a State to file for bankruptcy protection.  In the EZ, the debt load of its weaker members has them at the brink of default/bankruptcy.  So, what is the next step? 

  • Allow States in the US, or members of the EZ, to default on their debt and seek bankruptcy protection
  • OR bail them out somehow? 
  • Or, in the case of the EZ, why not allow the troubled nations to exit the EZ and re-establish their own currencies?
  1. Allow Default/Bankruptcy:  The reason the politicians who are at the tip of the power structure do not like this option is that it takes control out of their hands!  If a State, like California, is allowed to go through bankruptcy, then the State will be FORCED to sit down with its creditors, suppliers, and employees and negotiate a mutually agreed upon plan to allow the State to survive and reorganize its debt and finances.  In the case of EZ members, the same is true.  Greece, not Germany and France, would be forced to sit down with their own creditors, (the European Central Bank is one), suppliers and employees and come up with a survival plan.  Without a State or an EZ member going through this process, there really is no long-term solution and one reason you keep seeing the “Crisis headlines” over and over again.
  2. Bail Out Troubled Nations/States:  This is the preferrable “solution” for the power brokers/politicians.  Why?  With every bailout Dollar or Euro the entity bailing out the State or member assumes more control over the State or member being bailed out.  In short, this process furthers centralization and further reduces local autonomy.  In the medium or long-term, this is not a solution as the underlying causes are not remedied…  The State’s or member’s debt, low productivity, or overspending are still on table and will rear their ugly heads in the future.
  3. EZ-Break Up the EZ:  The hard fact is that the members of EZ had hoped that the economies and thus the intra currency strengths between the northern EZ members, who are stronger, and the less stable southern EZ members, would equalize over time.  This has not happened and was a naive assumption at best.  Today, there is a 30%-40% intra EMU currency misalignment between North and South.  This is why you are seeing Germany (Merkel) and France (Sarkozy) meeting by themselves to come up with a bailout solution.  They represent the Northern Strength and are worried that if the Euro collapses, their nations will be adversely impacted.  What is somewhat odd to watch is that the Central Bank is actually tightening its monetary policies which help Germany and France to a degree but lessen the chances of Spain, Italy, Portugal, and Greece to dig their way out…  The bottom line is that the members who are in economic trouble, would have to devalue their own economy by 40% to come back to par with the northern member.  The inflation hit on their citizens would incite riots that would make those in Greece look like a warm up.  Allowing the troubled nations to back out of the EZ and re-establish their own currency and take back their own economic destiny may be the best long-term solution. 

The individual nations in Europe have very diverse histories and cultures and will probably never truly assimilate into a cohesive union as has been envisioned since 1957.  In the case of the United States, we were able to grow into our Republic, starting with 13 States and growing gradually into the 50 States.  The EZ attempted to assimilate nations that had actually been at war with one other less than 40 years prior!  It is tough enough to for the US and its States to adjudicate its differences.  The differences within the EZ are deep and the economies do not lend themselves to integration.

It may be time to stop moving towards too big to fail and go back to small enough to manage!

 

 

The bigger we allow governments, companies, financial institutions, and other core entities to grow to autocratic or monopolistic size, the less freedom we will have personally and as a nation.  The politicians tell us we have to bailout this or that entity or country or the world will collapse.  Or, that the we have to raise our debt ceiling or the world will collapse.  None of these catostropic events will occur but our loss of freedom will most certainly occur if we do not take back our own governments and stop this madness.  You will continue to read about the European crisis as they do not have either bankruptcy/default or the transitioning of one or more of the EZ members out of the EZ as options to fix their problems.  They only have bailout/centralization on the table.  The ultimate goal of the Progressives is to centralize as much power as possible and enslave more and more free people economically which will lead to a total loss in freedom due to the confiscation of private property. 

Watch Europe and you will see our fate…

RD Pierini

Hat Tips:

Breitbart:

http://www.breitbart.com/article.php?id=CNG.da3f6e58764d826ac0b9ee28d0e73a75.3c1&show_article=1

http://www.breitbart.com/article.php?id=CNG.da3f6e58764d826ac0b9ee28d0e73a75.511&show_article=1

Telegraph:

http://www.telegraph.co.uk/finance/comment/liamhalligan/8857518/Why-the-latest-eurozone-bail-out-is-destined-to-fail-within-weeks.html

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8858604/The-two-halves-of-the-eurozone-are-locked-in-a-broken-marriage.html

Wikipedia

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8858604/The-two-halves-of-the-eurozone-are-locked-in-a-broken-marriage.html

http://en.wikipedia.org/wiki/Eurozone

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)

Moneynews:

http://www.moneynews.com/StreetTalk/economy-week-europe-u-s-/2011/10/30/id/416206

What is Wrong with the US–Case Study: The Buffet-Obama Odyssey

     Americans as a whole are intelligent, industrious, and honest people who probably trust too much.  It is not in their nature to automatically question their elected officials as they believe that these officials share the same core values of honesty that Average Americans possess.

Wrong!

     More and more Americans are turning to the Tea Parties and other forms of assembly and away from watching and believing in what they are hearing from their leaders or listening to a biased media.  Members of the Democrat, Republican, Libertarian parties and independent voters are becoming more and more alienated by their own government officials.  They vote, and nothing changes.  They vote, and the nation goes further into debt.  They vote, and their roads and highways deteriorate more and more each year.  They vote, and none of the US poverty programs work.  They vote, and their tax dollars just seem to disappear into an abyss of bureaucracy and debt service that consumes their tax dollars…

Where did we go wrong?

     Unfortunately, we have delegated the power over our freedom to our elected offices who have in turn relegated our freedoms to a place of insignificance behind their own ambitions and self-aggrandizement.  Americans are now wondering what went wrong?  They work hard; raise their families as best they can; live by the rules; and try to treat their neighbors as they would like to be treated.  So what went wrong?  Let’s look at one situation that is driving Americans to a level of cynicism and malaise that we have not seen or felt in decades.  This is just one example of how corrupt our system has become and why the average person can’t stand government, local, state or federal…

Warren Buffet and Barack Obama:

     Warren Buffet is best known as one of the richest men on this earth and is the Chairman and CEO of Berkshire Hathaway, the 8th largest company in the world and it is described as a conglomerate holding company.  A holding company does not produce any good or service directly but merely owns stock or other equity positions in other companies that do produce either goods or services.  In short, they are money people who invest in existing or new companies.   Holding companies of all sizes lobby to make sure that they can control political events to protect their investments:

POLITICAL CONNECTIONS AND THE CONTROL OF KEY VOTES AND POLICY THAT MAKE OR BREAK SPECIFIC BUSINESSES IN THE US ARE VITAL TO MAINTAINING A HOLDING COMPANYS’ PROFITS.  POLITICAL RISKS HAVE TO BE MITIGATED BY MANIPULATING THE OUTCOME, I.E., MANIPULATING THE VOTES OR THE REGULATIONS. 

     Warren Buffet courted Obama during Obama’s Presidential campaign in 2007-2008 and has been rewarded by becoming one of Obama’s key advisors and confidants.  Buffet and Obama are often pictured in the news to give Obama an air of authenticity by having a successful businessman by his side.  Buffet learned a long time ago that in order to protect his own self-interest and that of the companys’ he has invested in, playing politics is the third leg on a three-legged stool.  The other two legs include a business that has stock growth potential and the other is a business that generates cash with generous float capabilities, such as the insurance companies he owns (GEICO is one).  He uses the latter to fund the cash flows needed to finance acquisitions in order to avoid debt. 

     So, we have a multi-billionaire who manages a multi-billion dollar empire and cozys up to the Washington Power Brokers and makes sure that they follow his yellow brick road!  So, what is our case study?

Case Study:  Buffet-Obama-Bank of America:

     We saw from 2008-2011, the outcry from the government and the financial institutions over the imminent total collapse of our economy and even the entire global economy.  This was the setup to the Troubled Asset Relief Program (TARP) and other more covert programs set up in secrecy by the Federal Reserve.  Taxpayers were lined up against the wall awaiting the financial firing squad of Trillions in bailout programs for banks and Wall Street.  Bank of American was at the front of the pig trough with their hands in our pockets.  In 2008, B of A received $25 Billion from TARP; then again in 2009, B of A received $20 Billion from TARP and another $118 Billion in guarantees to protect B of A from potential losses! Also, in 2009, B of A was handed another $5.2 Billion from AIG!!  AIG got the money they gave B of A from guess who, you the taxpayer via TARP!!  If you are not ready to barf yet, how about the Federal Reserve giving B of A’s Morgan Stanley $1.9 Trillion and B of A itself received $1.2 Trillion in loans.  So, B of A raked in a total of $3.1 Trillion in almost zero interest loans from the Fed (you) and another $50 Billion via TARP and the Treasury. This was the same time that B of A was refusing to renegotiate mortgages, refusing loans to small business, and crushing you with new credit card interest and fees! 

Enter Warren Buffet and his wallet known as Berkshire Hathaway: 

     The favoritism the government has displayed, both Bush and Obama, for the benefit of the banks and Wall Street, started when the taxpayers had to pony up almost $800 Billion to bailout big banks and Wall Street firms to fix a problem they and the politicians created!  At that point, Bank of America was in the front of the financial soup line with their hand in your pocket.  Buffet, KNOWING through his relationships with Henry Paulsen, Tim Geithner, Ben Bernanke and Barak Obama (the candidate then the President) that B of A and the other banks and financials institutions would be “protected” as too big to fail by the Government (you), open up his checkbook!   Since the Sub-Prime Crash in 2007, Buffet has purchased and sold 9.1 million shares of B of A, owns 12.6% of American Express, owns 19% of Wells Fargo, invested $3.5 Billion in Goldman Sachs, and owns 12.5% of Moodys, (the rating agency who rates the very financial institution Buffet owns).  The cherry on the top of his investments was a sweetheart deal he just concluded with B of A.  This deal followed the following events that occurred in less than two days.

  • Obama and Buffet have a friendly phone chat while Obama is basking up the sun in August on Marth’s Vineyard.  Ostensibly Buffet was counseling Obama in job growth and the health of the financial sector leading up to Obama’s post Labor Day speech.
  • Buffet agrees to “host” a fundraiser for Obama at a cost of around $10-$35K per ticket!
  • Buffet has an epiphany that B of A might be a good investment.
  • Buffet gives B of A $5 Billion in return for preferred shares with guaranteed 6% dividends and a 5% guaranteed profit if the bank buys back the shares.  B of A’s shares had declined 50% in the preceding year.

     Do you really believe that the phone call, the fundraiser, and the investments in B of A were isolated events?  Do you really think that Buffet did not know about the $3.1 Trillion in loans from the Fed or the $50 Billion in bailout funds from the Treasury would be forthcoming when he bought 9.1 million shares in B of A in 2007-2009?  Do you really believe that Buffet did not get assurances from Obama that the Treasury, the Fed and his administration would prop up the financial institutions in case they got into trouble again?  (actually they are still in trouble and would be gone without government intervention)  Buffet is a genius when it comes to “investing” in businesses especially when he controls the outcomes!  His political machinations are superb and he targets his favors where they can be used to manipulate outcomes.

     So, when the average American is facing increasing levels of negative equity in their homes; the loss in one or more jobs in their household; the loss of lines of credit or loans for their small businesses; or increasing tax liabilities due to having to cash out retirement funds to live on; Buffet and the ruling class continue to stack the deck in their favor.  This is what is wrong in American and the Average American gets it.  They understand political favoritism and “crony capitalism” which is NOT capitalism, it is manipulated socialism.  Americans are sick of the ruling class and business as usual in Washington.  They are sick of being made the patsies of crony capitalism and thought to be an idiot for acquiescing!  The next few months leading up to the 2012 election will be increasingly confrontational.  Average Americans are ready to stand against further cronyism and further corruption within the ruling class.  They are even more ready for a CHANGE than they were in the 2010 mid-term elections…

Buffet better get his money out before the people take back their government. 

RD Pierini

 

Read more:

http://www.nypost.com/p/pagesix/buffett_obama_pigout_rCcS4YvtrzA10ytZBUDUoM#ixzz1W9srCXZI

http://www.bloomberg.com/news/2011-08-22/obama-spoke-with-berkshire-s-buffett-about-economy-aide-says.html

http://ipsnews.net/news.asp?idnews=104913

http://dealbook.nytimes.com/2011/08/25/buffett-to-invest-5-billion-in-bank-of-america/?nl=afternoonupdate&emc=aua2

http://www.americanthinker.com/2011/08/warren_buffet_isnt_serious_about_taxing_the_rich_and_neither_is_obama.html

 

Boomer’s Retirement Blamed for Stock Market Downfall–No Dummy, We are being Fired!

WOW!  What a headline this was!  Earth to Wall Street and the Government: 

    Your idiotic, criminal, Sub Prime Scheme caused the 2008 Depression that is forcing more and more seniors to try to find work and others have been laid off as a result of your greed.  Further, our Government’s failure to address Social Security and Medicare funding issues are the cause of the drain on these systems and not the Baby Boomer’s Retirement.  It was no secret that the Baby Boomer’s Retirement Time was coming and no one in government in the last 30 years has had the guts to deal with it.  Instead, they just kept expanding the programs and extending services to non retirees in the hopes of snagging a few more votes.  Well, Wall Street, we are sorry of you little markets are not doing so well.  Our 401Ks have been decimated by your Sub-Prime larceny and we did not get bailouts by the Government and the Fed like you have.

You have:

  • Eliminated the Equity in our Homes.!

  • Eliminated much of our 401K Retirement Funds!

  • Caused inflation by being a co-conspirator with the Federal Reserve with their “Quantitative Easing” Grand Larceny!

  • Eliminated 2 years of COLA adjustments for Seniors!

  • Drove Gas Prices up from $1.61 in January of 2009 to over $3.75 today!

You want to blame someone for a bad stock market, LOOK IN THE MIRROR!

Wimps!

RD Pierini

Read more on Newsmax.com: Boomer Retirement Could Slow US Recovery -Fed Paper

Tweet to Bernanke and the Federal Reserve–Stay Out of the Markets and Let them Settle

Here we go again.  As if Washington, including the President, Congress, the Treasury Department, and the Federal Reserve have not done enough to ruin our once robust economy, the Fed will be meeting tomorrow to see what it can do to STIMULATE the economy!!!  PLEASE DO NOT TOUCH THIS ECONOMY AGAIN.  All the Fed has done so far is print trillions of dollars, setting up an eventual inflationary spiral and low dollar value downturn; then created a false stock market bubble by investing some of their monopoly money in the stock market.  Now that their little bubble is bursting in the stock market, they are thinking about doing it again!  Talk about Idiotic! 

I cannot believe that no one at the Fed has not read Albert Einstein’s often quoted definition of Insanity:

“Insanity: doing the same thing over and over again and expecting different results. “

Bernanke is a one trick pony and one that we simply cannot afford.  He needs to sit this one out and let the markets seek their own level.  Today in the Financial Times, Robin Harding reported:

“Sharply weaker economic data in recent weeks, a new peak in the eurozone debt crisis, and a downgrade to the triple A credit rating of the US have shaken confidence in a way that could spiral towards a new recession. The Fed will be forced to consider fresh stimulus in response.” (my emphasis) 

The only real hope we may have to get the Fed to sit this one out for a few days is the split within the Federal Reserve group of Governors.  The meeting tomorrow may be a replay of last years contentious meeting where Bernanke prevailed but the consensus was week to say the least.  You even had the past Fed Chairman who presided over the Fed during the creation, maturation, and collapse of the entire Sub-Prime Loan Crash that led to the 2008 Depression, Alan Greenspan, advocating the Printing of More Money as the solution.

FOR ONCE, CAN ONE OF THESE EGGHEADS JUST COME OUT AND

SAY THEY REALLY DO NOT HAVE A CLUE

WHAT TO DO AND THEN DO NOTHING!

Keep an eye on the Fed.  You do not vote for them nor do you or Congress have any control over them.  Every time the Fed prints a single dollar, they are stealing value from every dollar you have.  There are already calls from the international community to drop the United States Dollar as the international currency.  If this happens, our currency will be subject to the whims of the world currency market and your dollar will be worth even less…  You have a big stake in what is happening, keep your eyes open and watch Bernanke very carefully…

RD Pierini

http://www.ft.com/intl/cms/s/0/4857b65a-c1dd-11e0-bc71-00144feabdc0.html#axzz1UUDkHFWr

Tim Geightner Out, Jon Corzine In–Please say it isn’t so!

Neil Cavuto yesterday (August 7th, 1011) asked several of his guests who were chairpersons or CEOs of the major exchanges and rating agencies, whether they though Jon Corzine would be a good replacement for Tim Geithner.  He would be a perfect replacement if you wanted to continue the failed policies of this administration and drive this country into an even greater Depression! 

Corzine is the ex-CEO of Goldman Sachs and is a true Wall Street Insider.  Just what we need is to have an individual brought in to fix economic problems that were partially created by Wall Street, and Goldman Sachs specifically, during Corzine’s and his wonderful successor, Henry Paulson (Sec of the Treasury under G.W. Bush),  tenures at Goldman Sachs.  Goldman Sachs and their Wall Street counterparts helped to create the Sub-Prime Mortgage Crisis that led to the 2008 Depression. 

It is bad enough to have the tax evader Geithner, a former New York Fed Chairman, who was responsible for overseeing and regulating such notable successes as Citigroup and AIG, as the Secretary of the Treasury; now we are going to have the CEO of a Company who was selling worthless mortgage bundle securities out of one door to unsuspecting investors while selling those same investments SHORT out the other door.  TALK ABOUT THE WRONG STUFF!  Maybe Corzine was not the CEO of Goldman at the time this double-dealing took place but he was certainly in bed with James Johnson at Fannie Mae while Johnson ramped up the buying and repackaging of worthless mortgages into investment securities.  This people should the subject of serious investigations and not be considered to become the Secretary of the Treasury of the greatest nation on earth.

To add to Corzine’s lack of fiscal credibility is his wonderful tenure as the Governor of New Jersey.  He pretty much presided over the bankrupting of New Jersey as it Governor. 

Cavuto and other should stop promoting the idea that Corzine is or should be considered to replace Geithner.  While someone like Corzine would be the obvious choice for Obama, it would be the obvious bad choice for America and indeed the global economy.

RD Pierini

Good News! Federal Reserve Is Helpless to “Help” on Debt Crisis

Fed Officials: “Not Much We Can Do About Debt-Limit Crisis”

MoneyNews.com reported this morning that:  The Federal Reserve has pretty much done all it can for the economy and can do little to steer it from a failure to raise the debt ceiling that could throw the country into default, say two Federal Reserve governors”.  This report was the result of interviews by CNBC of James B. Bullard, president of the Federal Reserve Bank of St. Louis and Dennis P. Lockhart, president of the Federal Reserve bank of Atlanta.  Bullard also said that We can’t do anything directly to fix this.” (the debt Ceiling).

The Federal Reserve has dumped Trillions of Dollars onto the open market in their lame attempt to add liquidity to the capital markets in order to stimulate borrowing by businesses and thus increase business growth!  That is like pouring gasoline on a dead man!  Earth to Federal Reserve, “Stay on the Sidelines, you are not able to help this economy with your idiotic “Quantitative Easing Schemes”.  You are too late to help.  You, President Clinton, Robert Rubin, George W. Bush, Secretary Hank Paulson, President Obama, Secretary Geithner, and your old leader Alan Greenspan, rushed into save the “Too big Too Fail” but left the small businesses bleeding on the sidelines.  You helped to create the 2008 Depression by your collusion with Freddie Mac, Fannie Mae, the Treasury Department, Wall Street, by supporting the corrupt practices of banks in promoting Sub-Prime mortgage lending.  Oh, lets add in the rating agencies like S&P, Moody’s, and others as they grossly over-rated Freddie and Fannie and such upstanding mortgage lenders like Angelo Mozilo’s Countryside, and NovaStar, Fremont Corp, right up to days before their collapse.

You have already proven your brilliance in “helping our economy” so do us all a favor and stay on the sidelines.  Once we dig our way out of this Depression and the incomprehensible debt crisis that our fearless leaders in Washington DC have foisted on we taxpayers, we will be back to deal with you!

RD Pierini

 

http://www.moneynews.com/StreetTalk/Fed-debt-Crisis-default/2011/07/29/id/405361

Moodys, S&P, Fitch Ratings Agencies-In Bed with Wall Street-Don’t Believe them in the Debt Limt

Moody’s, S&P, and Fitch are not even close to being independent observers of the credit markets! 

They make money rating all kinds of financial instruments ranging from the Toxic Assets we bailed out with TARP to the securities sold by the federal government to finance our debt!  They make money every time they rate the financing instruments of private and public entities so they have a vested interest to make sure these entities look good to the public so there will be more business down the road! 

So why are you listening to these agencies when they say the not raising the Debt Limit will cause the US Credit Rating to be downgraded? 

Remember the Sub-Prime Mortgage Crash of 2008?  Guess what the “Big Three” Ratings agencies were telling the world.  Yes, you are right.  They were saying that Freddie Mac and Fannie Mae were no problem at all and the mortgage industry, supported by these to Government Sponsored Enterprises was all hunky-dory!  How could this be?  Well, these fine credit rating agencies also have another side business that was an absolute, direct, conflict of interest to supplying market ratings for companies like Freddie, Fannie, Countrywide and others involved in the Sub-Prime fiasco.  These rating agencies are contracted by Freddie, Fannie, Countrywide and others to grade their “Collateralized Debt Obligations, CDOs”.  This was an enormously profitable business for the credit agencies.

Basically, this is the same as putting the Fox in charge of the Hen House.  But, in this case, the hen-house was worth billions of dollars.  The credit rating agencies would do everything they could to keep their clients happy, including Freddie, Fannie and Countrywide, including over-rating those companies credit worthiness!  In 2004, Moody’s generated $553M grading CDOs and this was increased to $900M in 2006!  This was big business and these agencies got in bed with the devil to insure continuation of the real estate bubble.  They were still giving Fannie Mae glowing ratings just days before the FHFA put Fannie Mae and Freddie Mac in conservatorship in September, 2008.

The criteria to test the credit worthiness of any nation is not the debt ceiling but that nation’s ability to pay off its credit obligations relating to principal and interest payments on its debts.  Today, those payments amount to anywhere from 6-12% of our total monthly revenues taken in.  So, there is ample money to make sure we do not default on our debt in the near term.  The real criteria should have been the GDP to National Debt ratio.  As the national debt increases as a percent of the GDP, there is less and less ability in the private sector to grow as the government has to keep increasing its revenues, TAXES, to cover the debt payments.  The three credit rating agencies do not care about that.  They NEED the Federal Government to raise its debt ceiling so the credit agencies can continue to get paid to assess the bond offerings!  That is where their money is!  They don’t care about you.  They are in bed with Obama, Geithner and Bernanke to make sure we acquiesce and keep them all in cash!  The Debt Ceiling is only important if we can get our debt under control first. 

If the government was worried about the Debt Ceiling, why did they spend $3.5 Trillion Dollars in each of the last two years and are poised to spend the same this year thus driving us to the brink of breaching the current debt limit of over $14.5 Trillion Dollars!!! 

They got us here, Do you Trust them to Fix their own Addiction?

So, focus on the debt and spending reductions.  That is where the real credit worthiness will be improved.  We have to take some of the “purse power” away from Congress and the President.  Support the CUT-CAP-BALANCE efforts underway to reign in this out of control government.  Go to this link to join the effort to take back our country and get it out of the strangle-hold of Wall Street, the Federal Reserve, Big banks, and these credit rating agencies!http://www.cutcapandbalanceact.com/

Take the pledge, it is free!

  1. Cut– Substantial cuts in spending that will reduce the deficit next year and thereafter.
  2. Cap– Enforceable spending caps that will put federal spending on a path to a balanced budget.
  3. Balance – Congressional passage of a Balanced Budget Amendment to the U.S. Constitution — but only if it includes both a spending limitation and a super-majority for raising taxes, in addition to balancing revenues and expenses.

Don’t wait until it is too late!

RD Pierini

http://www.cutcapandbalanceact.com/

http://www.reuters.com/article/2011/07/17/us-usa-debt-ratingsagencies-idUSTRE76G1H220110717

http://www.reuters.com/article/2008/05/06/fanniemae-rating-moodys-idUSN0650289520080506

http://en.wikipedia.org/wiki/Federal_takeover_of_Fannie_Mae_and_Freddie_Mac

Déjà vu–Government Is Creating Another Housing Bubble!! How Dumb are These People? OR US?

Most experts agree that the Sub-Prime mortgage crisis was the primary cause of the economic crash of 2008 that brought down Wall Street firms, major, regional and smaller banks, and has devastated individuals and families whether those individuals or families had received a Sub-Prime loan or not.  This crisis also allowed the Government to spend trillions of dollars bailing out those who caused the crisis, the Wall Street firms, Banks, and those in charge of Freddie Mac,  Fannie Mae, and other government and quasi-governmental agencies, but has left individuals and families homeless and in some cases has wiped out life savings and investments.  Now, the President, some in Congress, some advocacy groups, and certainly Wall Street, Banks, and the government and quasi-government agencies who thrive when the Mortgage Industry churns out trillions in new mortgages, are trying once again to revive the Sub-Prime market.  This is beyond insanity as the 2008 crash is still crushing our economy with no end in site.  The next wave could permanently damage this economy beyond recovery.

So what is our Government considering to “Help” the housing market?  The same failed practices that brought us the 2008 Crisis.  Some of the ideas include:

  • Having taxpayer-owned Fannie Mae and Freddie Mac relax their rules for loans to investors thus creating another round of loan bubbles.  In short, dumping bad loans to investors so the banks can make more bad loans…
  • Putting more pressure on banks to loan again to low and middle-income neighborhoods with Sub-Prime packages.  HELLO!

Every time Washington gets involved and tries to help, they make things worse…  Just go back to tried and true lending practices AND ENFORCE REGULATIONS, ESPECIALLY ON GOVERNMENT SPONSORED ENTITIES…  If you want to subsidize low and middle-income home buying, do it out in the open with a program taxpayers can see rather than bury it inside of housing bubbles that blow up in our faces.

In order to understand how we got to where we are, lets take a simple look at recent history

What caused the 2008 Crash?:

Much has been written about this topic but most of what has been written is difficult to understand and for the most part this has been intentional.  To make matters worse, those who we expect to control our economy, such as our Federal Reserve Chairmen and Secretaries of the Treasury, give speeches that are intentionally vague and muddied with economic terms that are meaningless.  The bottom line is that the 2008 Crash was caused by Greed.  Surprised?  Probably not.

Old Mortgage Process:  When a bank loans someone money to buy a home, that bank no longer has to hold onto that mortgage over the life of the loan in order to make a profit on that loan.  In the past, a bank had to make the loan, then the loan fees and the interest collected was the source of their gross profit.  Bank regulations required that for every dollar loaned out, the bank had to have cash reserves of a specified percentage in case one or more of those loans went bad.  The bank still had the house as collateral that it could sell in foreclosure but the house would probably not fetch top dollar in those instances.

Modern Mortgage Process:  During the depression of the 1930’s, the housing market was decimated and banks had little or no cash to loan for home purchases and foreclosures were almost as high as they are today.  Roosevelt got the Congress to pass the National Housing Act of 1934 that created the Federal Housing Administration (HUD) and the  Federal Savings and Loan Insurance Corporation, (FSLIC).  This law was again amended to expand the government’s role in “stabilizing” the mortgage industry and to ensure good housing conditions for a much broader range of people.  In 1938, a Government Sponsored Enterprise, basically a company that was a “private” company but “backed” by the full faith and credit of the US Government, called Fannie Mae (Federal National Mortgage Association) was formed to add a way for banks to off load their mortgages from their books and thus free up their money to make new mortgage loans.  They use a fancy term “securitizing mortgages”, basically selling your loan, by creating (another fancy term) Mortgage-backed Securities (MBS).  Freddie Mac was created in 1970 to add an additional outlet for mortgages and thus increase the amount of money available to banks to offload their new mortgages so they could make more mortgages.

What this means can be boiled down to this.  Assume a bank makes 10 mortgage loans to 10 families in Fresno, California.  Those mortgages equal all of the cash reserves the bank has to make loans so basically the bank could not make any more loans until these mortgages are paid off in 10, 20 or 30 years.  Banks don’t like this idea.  So, the bank, takes the 10 loans, puts them into an envelope (hypothetically) called a Mortgage Back Security and sells the MBS (first one sold in 1981) to someone in the “secondary” mortgage market (not the direct lender), such as Fannie Mae.  Fannie Mae charges a fee for this service.  Then, the bank is free to take their new cash and lend it to someone else.  The secondary mortgage market companies, like Fannie Mae.  But, those 10 mortgages do not stop there…

Fannie Mae, or some other secondary mortgage company, takes those 10 mortgages from the Fresno bank, and add other mortgages from all over the country and creates a really big envelope of mortgages and creates a larger form of a mortgage-backed security and sells the larger envelope of loans to investors.  This is where Wall Street comes in.  Wall Street has access to the widest range of investors so Freddie, Fannie, and other secondary mortgage companies formed relationships with Wall Street so Wall Street could sell their big envelopes of loans to “investors”.  This cycle is repeated by Wall Street by repackaging many big envelopes into larger envelopes or loan pools that are sold off.  It is absolutely a very large “Ponzi” scheme (Remember Bernie Madoff?) that can only work as long as not too many of the original 10 Fresno home buyers do not default on their loan, OOPS!

Let’s Review:  So, we now see that banks make mortgage loans;  the banks sell those loans to a secondary lender like Fannie Mae for a fee; Fannie Mae sells those loans to Wall Street for a large fee; Wall Street bundles those loans with other secondary lender loans and sells those to investors for very large fees.  This cycle repeats itself over and over.

Now, where does the OOPS come in?  Remembering that this whole Ponzi scheme relies on the borrower making the payments on the mortgage and so the SOUNDNESS OF THE ORIGINAL LOAN IS KEY TO THE SUCCESS OF THIS SCHEME.  In the old days, pre 1990, mortgages were subject to strict lending criteria such as your loan could not exceed 80% of the property value; your mortgage could only be up to a certain percentage of your total disposable income and so on.  In short, if you got a mortgage, there were reasonable assurances that you could repay the loan or that the property, even if foreclosed on, could repay the original loan. 

Enter the Sub-Prime Mortgage:  Politicians have always postured “affordable housing” as the American Dream and have created all sorts of programs and gimmicks in the form of Laws to try to make this happen.  The more constituents in homes, the happier the constituents are and the more votes I get.  Couple this with bank, secondary lender, and Wall Street greed and you have a recipe for disaster!  The only thing standing in the way of creating the “American Dream” are those loan regulations and the pesky loan criteria to qualify as a Prime Loan.  No worries, we just reduce the amount of loan regulation, or in this case, politically kill them, and relax the loan criteria so more people can qualify.  After all, home prices always go up so the property collateral is sufficient!  WRONG…

What is a Sub-Prime Loan?  The term has nothing to do with the prime interest rate.  A Prime loan is like a top cut of beef.  The loan meets strict loan to value ratios; the borrower’s income to loan payment ratio is high; the house is in a nice neighborhood; and the region’s economic forecast is solid (meaning long-term employment is a probability).  Sub-Prime loans not Prime Loans, period.  They can be anything from loans where there is no down payment and thus a 1:1 loan to value ratio (or even worse); the borrower has marginal income so the income to loan payment ratio is very low; the house is in a weak neighborhood; or the region’s economic outlook is bleak, or all of the above.  The Sub-Prime loans made in the 1990s and 2000s would never had been made if the industry and the government had maintained good lending practices and criteria.  In short, the government took a political gamble that the PRIME LOAN MARKET WOULD SUBSIDIZE AND STABILIZE THE SUB-PRIME MARKET to the extent that everything would be fine!  But, when politicians sided with Freddie and Fannie and told the Federal Regulators such as Office of Federal Housing Enterprise Oversight (OFHEO), to back off, the die was cast that would end in the 2008 Crash.

Factors leading up to the 2008 Crash:  There were a whole series of events that created the ultimate market failure.  A full discussion of these failures would require a couple of hundred pages so lets just focus on a few key factors:

  1. 1977 Community Reinvestment Act:  This law was intended to eliminate the “redlining” of low-income neighborhoods and “encourage” banks to help meet the needs of borrowers in all segments of their communities, including low and moderate income neighborhoods.  This was the start of the creation of Sub-Prime Lending.
  2. 1992-President George H.W. Bush signed the Housing and Community Development Act of 1992.  This bill put into place Congress’s housing goal: “to have an affirmative obligation to facilitate the financing of affordable housing for low-income and moderate-income families.”  GSEs were required to meet “affordable housing goals” set annually by the Department of Housing and Urban Development (HUD) and approved by Congress.  The initial goal for low-income and moderate-income mortgage purchases for each GSE was 30% of the total number of housing units financed by mortgage purchases.  This increased to 55% by 2007.  In short, in 15 years, . the mortgage market was dominated by Sub-prime loans.
  3. 1991-James Johnson took over as the CEO of Fannie Mae.  Johnson was a ruthless, driven individual that deservedly is credited with creating the underpinnings that led to the Crash in 2008.  He made Fannie Mae into a heavy-handed lobbying machine that colluded with banks and mortgage companies to drive Fannie’s profits and EXECUTIVE BONUSES to levels never before imagined.  He bullied Wall Street and intimidated major banks the size of Wells Fargo.  He worked with questionable organizations such as Countrywide, Fremont Investment and Loan, and NovaStar just to name a few.  His lobbying practices were legendary and he was able to kill bill after bill, audit after audit, that would have curtailed his out of control churning of the secondary market and his fostering of the Sub-Prime loans.  He ushered in accounting practices that were created only to insure executive bonuses and hide the true insolvent position of Fannie Mae and its assets.
  4. 1999-Fannie Mae came under pressure from President Clinton to expand mortgage loans to low and moderate income borrowers by increasing the ratios of their loan portfolios in distressed inner city areas designated in the Community Reinvestment Act of 1977
  5. 1999-Franklin Raines succeeded James Johnson at Fannie Mae and Raines continued the practices of his mentor Johnson. 
  6. 2000s-Bush and Congress failed to reign in the Sub-Prime market and the GSEs.
    1. Federal Regulators of Fannie and Freddie were intimidated or ignored. 
    2. Fannie Mae and Freddie Mac gave contributions to lawmakers sitting on committees that primarily regulate their industry.
    3. In short, the fix was in and there was no stopping Freddie, Fannie, corrupt bankers, compromised politicians, and of course, Wall Street Greed.

Good Intentions:  What started out to be an altruistic goal of providing affordable housing to low and moderate income households, quickly ballooned into a giant Ponzi scheme with everyone involved enjoying the ride, except those on the receiving end of those mortgages.  Many of the new mortgagee had little or no experience in dealing with property purchases or loan documents.  In California it is not unusual for a loan package and real estate forms to consist of 50-100 pages or more.  Even sophisticated borrowers can become overwhelmed with the sheer volume of the paperwork.  Someone who had never dealt with this complexity, was at the mercy of the person on the phone making them the loan.  In the 1990s and 2000s, many of the mortgage lenders employed less than scrupulous sales people and encouraged predatory lending policies.  These institutions jacked up fees and interest rates not caring if the borrower defaulted or not as they would have sold the load to Freddie or Fannie before that happened. 

Unfortunately, in 2008, the first wave of defaults hit those with the Sub-Prime loans.  These communities were devastated and left in ruin and disrepair.  Those that the politicians sought to help were left much worse off than before they got the American Dream.  The American Dream became a bankruptcy nightmare and one which these individuals may never recover from.

Then, by 2009, the Sub-Prime crisis began hitting Prime borrowers as well.  Property values were plummeting erasing the equity in loans with 20%, 30% and even 40% down payments.  The downturn caused in the economy as a whole, many of the Prime Loan borrowers lost one or more of the jobs in the family or their small business was hit hard.  Also, as the banks failed that originally made the mortgages such as Washington Mutual, IndyMac Bank, Colonial Bank and others, the borrowers were left in a state of limbo until the bank was acquired or the FDIC found other ways to transfer the banks loans which could take months or even years.  During this time, the borrower could not refinance while the market was in a free fall.  By the time these banks or their loans were re-assigned, many prime borrowers, especially those with non conforming loans, were devastated financially or at best left holding a mortgage they could no longer afford.

—————–

So, when politicians start talking about fixing a problem by creating more bubbles, we have to rise up and say “NO MORE”.  We are still in what will be looked at historically as the Depression of 2008 with no real end in sight.  The government took care of their campaign benefactors, the big Banks and Wall Street, with their “Too Big To Fail” bailouts with TARP and other rip-offs and continue to do so.  While touting too big to fail, the government created “Too Bigger To Fail” by giving large banks TARP funds to buy Banks that the FDIC closed, thus making the Too Big Bank, Bigger!  How smart is that? 

The gifts from our government to these remaining banks and financial institutions are amazing.  FDIC “sold” the failed banks to other banks for, in many cases, 5 cents on the dollar THEN GAVE THEM TARP DOLLARS TO PAY FOR IT!  Many paid for the failed banks with their stock!  Such a deal.  Meanwhile, you are stuck with a loan that is underwater by 40-60% and paying 5-8% interest while the banks are paying 1% or less.  Just as an example of how sweet these bank to bank buyouts were, here is just one example. 

Bank A was taken over by the FDIC in 2008.  At the time of the banks failure, the bank’s assets were valued at $310B.  Bank B was allowed to buy Bank A as follows:

Bank A Total Assets:  $310 Billion

Bank A Total Home Loans:  $176 Billion

Bank A did NOT get TARP Loans.

Bank B did get TARP Loans:  $25 Billion

Bank B Paid Bank A:  $1.7 Billion or .5% of the total asset value  (this is a half of one percent)

Bank B Wrote off On their Taxes:  Approximately $30 Billion which shelters profits from Bank B’s operation (ie free money)

Bank B Gets 2,200 Branch Offices from Bank A.

Stockholders of Bank A:  Wiped Out… (Many were employees who had much of their 401K invested in their own bank)

So, if you were the borrower of Bank A, and your loan was for $100,000, Bank B paid $548 for your loan.  Think they will let you pay off your $100,000 with a $548 payment?  Probably not…

So when you hear that the Government wants to HELP YOU, RUN! 

Unless you are Too Big To Fail!

RD Pierini

 

http://online.wsj.com/article/SB10001424052702304584404576440033488980192.html?utm_source=Newsletter&utm_medium=Email&utm_campaign=Morning%2BBell#articleTabs%3Darticle

http://www.businessweek.com/bwdaily/dnflash/content/sep2008/db20080925_760466.htm

http://en.wikipedia.org/wiki/Freddie_Mac

http://en.wikipedia.org/wiki/Fannie_Mae

http://en.wikipedia.org/wiki/Community_Reinvestment_Act

Obama, Geithner, Bernanke & the Media, The Four Horsemen of the Apocalypse

The Bible, in the Book of Revelations, describes the Four Horsemen of the Apocalypse as symbolizing Conquest, War,  Famine, and Death.  Today in Washington, we have the 2011 version of the Four Horsemen made up of President Obama, Secretary of the Treasury Tim Geithner, the Federal Reserve Chairman Ben Bernanke, (aka OGBM) and our wonderful Mainstream Media.   The Bible’s vision is that the four horsemen are to create a divine apocalypse upon the world as precursors of the Last Judgment.  OGBM vision is to create their own version of a not so divine apocalypse upon the world stage as well as here at home, and have their own vision of what their Last Judgement will be.

Conquest:

  • Their Conquest will take the form of eliminating Western Civilization as a major force around the world. 
  • A major leg of their Conquest will take the form of bankrupting the US, Europe, Japan and its allies.  All of these nations have taken on more and more debt until they all are now are approaching a national debt that is equal to 100% of their GDP.  At the same time, they are bolstering our historical enemies by promoting their economies and actually subsidising their development.
  • A second leg of the Conquest will be to set up turmoil around the world, especially in the Middle East where the world-wide oil supply will be imperilled.
  • Finally, they will eliminate God in all aspects of Western Civilization by secularization all facets of our lives.

War:

  • War will be used to destabilize the world and set one nation against another; one people against another; and one religion against another.
  • They will tweak internal insurrections around the world until these conflicts become armed conflicts.  They will then drag out the conclusions of these conflicts until the nations’ resources are depleted and their economies decimated. 
  • They will allow the traditional enemies of the West to become as strong and powerful as the West militarily. 
  • They will promote cooperation between China, Russia, Radical Middle Eastern Nations, and Radical South American Nations to counterbalance the strength of the West.

Famine:

  • They will promote the use of farm output as fuels and other non food use in order to eliminate any stockpiles of grains and other foodstuffs that are a hedge against global food shortages.
  • They will divert water and other natural resources from agriculture to other non-essential use so crop output is minimized.
  • By driving up the debt in the US and other Western Nations, and having our Federal Reserve print more and more money, they will create intense inflationary pressure on commodities including food products.

Death:

  • As a result of their Conquest, Wars, and Famine, they will cause the death of the world as we have known it. 
  • Some of the death will be less subtle.  The Progressive Agenda includes the elimination of populations that do not meet their priorities.
  • Once they have total control over Healthcare, they will literally have Life and Death control over US Citizens.
  • The UN is working to create similar control over third world countries.
  • Europe, Canada, Australia and Japan already have their own versions of Obamacare.  Population control is already in place to an advanced degree in these regions.

Obama is the Maestro of the Four Horsemen who orchestrating the demise of the US.  He is using Geithner to control the purse strings and make sure resources are diverted to targeted organizations who support the Four Horsemen.  These include SEIU, UAW, AFSCME, NEA and other Unions, AARP, Wall Street, the big 6 Banks, and ACORN like organizations.  He is letting Bernanke loose to drive up World Wide inflation, destabilize our currency, and insure that the US Dollar is eventually dropped as the World Currency.  The Media, is at Obama’s beck and call to propagandize all of his goals and objectives.  They never question his motives, his policies, or the outcomes of his policies. 

The Four Horsemen are way ahead of their scheduled agenda primarily due to a total takeover by the Progressives in both houses of Congress and the Presidency.  They have done in 29 months what they thought would take 4-8 years.  Now they are emboldened and not constrained whatsoever by the US Constitution.  They are ruling this country without restraint.

The current Debt and Budget Crisis is the final turning point for this country and the final battle against the Four Horsemen. 

Stand behind those who are trying to force a Balanced Budget Amendment and to hold the line on the debt ceiling. 

If Obama adds another 3 Trillion Dollars to our debt in the next 19 months or so, and Bernanke goes unchecked and adds 2-4 Trillion Dollars to the total dollars in circulation, it will be too late to reverse within a single generation if at all.

Stand behind Principled Congressmen and Women and stop the Four Horsemen now! 

Force Obama to Live Within the Current Debt Limit, It is our Only Chance…

RD Pierini

http://www.cnbc.com/id/43739458

http://www.cnbc.com/id/43732448/

http://www.humanevents.com/article.php?id=44791

http://www.humanevents.com/article.php?id=44834