Goldman Sachs' posting of a $2,000,000,000 profit during the second quarter, even after repaying the the $10,000,000,000 TARP loans to the Treasury definitely raises the ire of the common folk. Even I, as rational as I try to be, immediately threw up the moniker "Goldman Sucks" after parsing the news. No matter how you slice it, it just doesn't smell right.
Why is Goldman now considered the strongest bank in the United States? Could it be that the former Treasury Secretary, Henry Paulson, Jr was previously the Chairman and CEO of Goldman Sachs? Wasn't it Paulson who designed the $700,000,0o0,000 TARP plan and urgently shoved it down Bush's and Congress' throat - Bail out the financial industry or the United States economy would collapse? Didn't AIG funnel Goldman some $12,000,000,000+ out of the $167,000,000,000 in bailout funds it received? I guess Goldman paid back the Taxpayers with Taxpayer dollars while we wait for AIG to repay those funds, if ever. How is that for financial engineering? Also, in this whole conflict of interest financial conflagration Goldman became a bank allowing it to borrow billions from the Federal Reserve at 0%. Has it repaid these funds? How much did it value its toxic assets with the suspension of the mark-to-market accounting rule? I guess I'll just value my house at $1,000,000 because I say it is. Oh look I am rich.
Certainly there must be positive elements in all of this manuevering but it will be a stretch to get me to acknowledge or accept them.
Showing posts with label Federal Reserve. Show all posts
Showing posts with label Federal Reserve. Show all posts
Tuesday, July 14, 2009
Monday, March 16, 2009
Bernanke's Rosy Colored Yawn
Fed Chairman, Ben Bernanke, appeared on 60 Minutes yesterday and assured the nation that the Recession should be over at the end of this year. Might his glasses be rose-colored? It appears that his confidence didn't quell the every-man and like Geithner before him, his intelligence and manner, landed like a thud. Of course I wouldn't be myself if I didn't mention the string of spit that stubbornly remained prominent in the closeups. Didn't the CBS cameraman notice this? Bernanke had dry lips and spittle, he needed to lick his lips and then follow-up with some lip balm. I probably should not have watched his mouth so intently but I literally was hanging onto every word he said. I wanted to fully understand the mechanisms of the Fed and its Bailout Programs. Alas, I wound up with more questions than answers.
For instance, the segment stated that the Fed loaned AIG that first $85,000,000,000. I thought that came out of the TARP funds authorized by Congress. So when we say that AIG has already received $160,000,000,000 in bailout funds, does this include the billions that came directly from the Fed? The Federal Reserve is not spending taxpayer $$ so how much is the taxpayer truly on the hook for with respect to AIG? Also, the segment did not make it clear that the Federal Reserve is a semi-private bank, it did not explain how the Federal Reserve raises the capital that it lends, and didn't explain how its authority to print money is regulated and lastly it did not fully eplain whether the Treasury has a say in all of this.
As far as I understood, the Treasury and the Federal Reserve had their own bailout programs separate and distinct from the TARP funds. Why would I expect 60 Minutes to clear that up for me? As it is not common practice for the sitting Fed Chairman to grant interviews, it was a noble act. Unfortunately, we are still going to continue to crash and burn as far as employment, housing unrest and financial stability are concerned. Some time in the next year, the death spiral is supposed to slow and then we will be on to the next task at hand, the hard road of recovery.
For instance, the segment stated that the Fed loaned AIG that first $85,000,000,000. I thought that came out of the TARP funds authorized by Congress. So when we say that AIG has already received $160,000,000,000 in bailout funds, does this include the billions that came directly from the Fed? The Federal Reserve is not spending taxpayer $$ so how much is the taxpayer truly on the hook for with respect to AIG? Also, the segment did not make it clear that the Federal Reserve is a semi-private bank, it did not explain how the Federal Reserve raises the capital that it lends, and didn't explain how its authority to print money is regulated and lastly it did not fully eplain whether the Treasury has a say in all of this.
As far as I understood, the Treasury and the Federal Reserve had their own bailout programs separate and distinct from the TARP funds. Why would I expect 60 Minutes to clear that up for me? As it is not common practice for the sitting Fed Chairman to grant interviews, it was a noble act. Unfortunately, we are still going to continue to crash and burn as far as employment, housing unrest and financial stability are concerned. Some time in the next year, the death spiral is supposed to slow and then we will be on to the next task at hand, the hard road of recovery.
Wednesday, January 28, 2009
Rose-Colored Glasses
Today I did not pay much attention to anything. Somehow, the market went up 200 points on the news that the Federal Reserve would keep pumping money into the financial markets because the several trillion dollars that they have already put in still has not eased the liquidity crisis and the house passed the newly proposed $819,000,000,000 stimulus plan; more money above and beyond the $700,000,000,000 plan passed last September and the additional trillions that have been injected by the Treasury Department under its own programs. So the answer still is to throw even more money at the problem.
Maybe the GOP is right, maybe this is too much debt to take on despite the state of the economy. It is ironic that the GOP presided over the run-up of federal debt during the last 8 years and now they are the ones crying that the debt is too high to spend any more dollars to help boost the economy. I don't know, it is all going in circles and no one is guilty; all the corruption was on the fence but was it all really illegal? Now the enriched have enough money to convince us that they should be allowed to keep the money, no matter how ill-gotten; as long as you have enough of it, money talks.
Speaking of money, I have now spent way too many hours, probably to the detriment of myself, trying to find a good deal on hotels for my trip next week. So far I am fairly satisfied with my flight plans and rental vehicle costs. I have reserved a hotel but I'm not 100% convinced; I am surprised that in this economy hotel rates are still so high and they charge for every additional amenity; in many cases after paying an exorbitant room rate, you still have to pay for internet, breakfast, parking, beach chairs and towels and other resort fees. Excuse me but aren't those fees included in that exorbitant room rate? Then again, the last time I went on vacation was years ago so I must not have kept up with the inflation.
Years ago you would call a travel agent and that would be that. Now, there are so many internet sites to check, it is impossible to feel comfortable with your choices. I checked all the sites, I'm sure I did not miss any: AAA, American Express, Hotels.com, Kayak, Orbitz, Expedia, Travelocity, Priceline (except I did not want to bid and end up with someplace I really didn't want), Trip Advisor for all the reviews, Yahoo Travel, Away.com and numerous others. I am compelled to check daily to see if there is a better deal.
Nevertheless, it does seem that there must be enough people going on vacation to justify these room rates and charges. Some people must still have some cash lying around somewhere. Or maybe we're all doing the same thing, escaping now before the real crash and burn.
Maybe the GOP is right, maybe this is too much debt to take on despite the state of the economy. It is ironic that the GOP presided over the run-up of federal debt during the last 8 years and now they are the ones crying that the debt is too high to spend any more dollars to help boost the economy. I don't know, it is all going in circles and no one is guilty; all the corruption was on the fence but was it all really illegal? Now the enriched have enough money to convince us that they should be allowed to keep the money, no matter how ill-gotten; as long as you have enough of it, money talks.
Speaking of money, I have now spent way too many hours, probably to the detriment of myself, trying to find a good deal on hotels for my trip next week. So far I am fairly satisfied with my flight plans and rental vehicle costs. I have reserved a hotel but I'm not 100% convinced; I am surprised that in this economy hotel rates are still so high and they charge for every additional amenity; in many cases after paying an exorbitant room rate, you still have to pay for internet, breakfast, parking, beach chairs and towels and other resort fees. Excuse me but aren't those fees included in that exorbitant room rate? Then again, the last time I went on vacation was years ago so I must not have kept up with the inflation.
Years ago you would call a travel agent and that would be that. Now, there are so many internet sites to check, it is impossible to feel comfortable with your choices. I checked all the sites, I'm sure I did not miss any: AAA, American Express, Hotels.com, Kayak, Orbitz, Expedia, Travelocity, Priceline (except I did not want to bid and end up with someplace I really didn't want), Trip Advisor for all the reviews, Yahoo Travel, Away.com and numerous others. I am compelled to check daily to see if there is a better deal.
Nevertheless, it does seem that there must be enough people going on vacation to justify these room rates and charges. Some people must still have some cash lying around somewhere. Or maybe we're all doing the same thing, escaping now before the real crash and burn.
Monday, December 1, 2008
"R" Word Comes Out of the Closet
Today, the National Bureau of Economic Research finally played the "R" Card. Not only is the U.S. economy in a Recession but it has been so since last December. What? The Think Tank of Think Tanks finally deigns to call a spade a spade almost a year into the card game. How long was it going to take before the experts recognized the Commerce Department's sleight of hand as it issued false positive GDP data all year long (only to revise the numbers long after the fact and when we stopped looking.) There was barely an eyebrow raising last week when they released their revised data.
All of us little people have known the truth for as long as it has taken for the experts to parse the numbers. With major banks crashing, major industries crashing, 30 U.S. States deeply in the red, retailers going belly-up, the stock market at an all time low and Wall Street firms in disarray, the Treasury and the Federal Reserve having spent trillions trying to shore up the financial markets and so on, we needed to wait til December 1 to find out the truth. We have been drowning in so much negative data that we have plum forgotten the stimulus package we the people received last Spring, the first of many handouts that was supposed to save the economy.
Of course this "new" bad news sent the markets down nearly 700 points for no reason whatsoever. No surprise here, just another round of end of the world scenarios to get our knickers in a twist over. Tomorrow, the slightest smidgen of good news can provoke a rally in the other direction. Meaningless.
Yes, we have been in a Recession for quite some time. If this is news to you, then you must be too rich to notice and in that case, I want to be your friend.
All of us little people have known the truth for as long as it has taken for the experts to parse the numbers. With major banks crashing, major industries crashing, 30 U.S. States deeply in the red, retailers going belly-up, the stock market at an all time low and Wall Street firms in disarray, the Treasury and the Federal Reserve having spent trillions trying to shore up the financial markets and so on, we needed to wait til December 1 to find out the truth. We have been drowning in so much negative data that we have plum forgotten the stimulus package we the people received last Spring, the first of many handouts that was supposed to save the economy.
Of course this "new" bad news sent the markets down nearly 700 points for no reason whatsoever. No surprise here, just another round of end of the world scenarios to get our knickers in a twist over. Tomorrow, the slightest smidgen of good news can provoke a rally in the other direction. Meaningless.
Yes, we have been in a Recession for quite some time. If this is news to you, then you must be too rich to notice and in that case, I want to be your friend.
Tuesday, November 11, 2008
The Bernanke-Paulson Coincidenza
What do the Chairman of the Federal Reserve and the Treasury Secretary really have up their sleeves. The slow trickle of truth unfolds. The Federal Reserve waived the rules today to allow American Express to become a bank so that they can have easy access to Federal Reserve funds whenever they want to. Goldman Sachs became a bank. Morgan Stanley became a bankl We really didn't ask why because Bernanke and Paulson have convinced us that it had to be so; we had to save our financial institutions.
In addition, Treasury Secretary Paulson single-handedly changed tax law section 382 allowing companies to assume the debt of acquisitions thus off-setting their gains and significantly reducing their taxes. This loophole was closed in 1986 by Congress precisely to prevent companies from misusing this statute to circumvent their tax liability. Perhaps the treasury saw the benefit of giving good companies incentive to buy up losing companies but they don't have the authority to change tax law. Wells Fargo used this statute the very day it was unhinged to snap up Wachovia out of Citibank's grip successfully reducing its tax liability by $25,000,000,000.
Amidst off this, Paulson and Bernanke came begging congress for a $700,000,000,000 bailout package to rescue our financial institutions. Basically this gave them a multi-trillion dollar pot of funds to dole out to whomever they want to and now they don't want to give us all of the details for any of it. These Kings of the Universe have plundered the taxpayer, plundered the Federal Reserve and plundered the Treasury with virtually no oversight.
The two highest financial institutions in America have been hijacked by Bernanke and Paulson for in the process of saving our financial institutions, they have undone all of their own regulations. This can't be any accident. This doesn't look good.
In addition, Treasury Secretary Paulson single-handedly changed tax law section 382 allowing companies to assume the debt of acquisitions thus off-setting their gains and significantly reducing their taxes. This loophole was closed in 1986 by Congress precisely to prevent companies from misusing this statute to circumvent their tax liability. Perhaps the treasury saw the benefit of giving good companies incentive to buy up losing companies but they don't have the authority to change tax law. Wells Fargo used this statute the very day it was unhinged to snap up Wachovia out of Citibank's grip successfully reducing its tax liability by $25,000,000,000.
Amidst off this, Paulson and Bernanke came begging congress for a $700,000,000,000 bailout package to rescue our financial institutions. Basically this gave them a multi-trillion dollar pot of funds to dole out to whomever they want to and now they don't want to give us all of the details for any of it. These Kings of the Universe have plundered the taxpayer, plundered the Federal Reserve and plundered the Treasury with virtually no oversight.
The two highest financial institutions in America have been hijacked by Bernanke and Paulson for in the process of saving our financial institutions, they have undone all of their own regulations. This can't be any accident. This doesn't look good.
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