As the Occupy Wall Street movement continues to throw light on the economic hardship of the 99%, the United States Federal Reserve continues to do its part to widen the economic gap between Wall Street and Main Street. The new plan is to purchase $545 billion worth (that's a b) of mortgage-backed securities from the biggest banks in the universe -- the ones who created the toxic debt in the first place. And that is on top of the $2.3 trillion (that's a t) already vacuumed up by the Federal Reserve's defaulting debt sucking machine.
So here we go again -- one more time. The Federal Reserve is giving away our billions to those who deserve it least: the institutional debt a.k.a. commercial banking bond holders that crashed and burned the banking system and continue to be the biggest beneficiaries of government aid. Fed Chair Ben Bernanke, otherwise known as Uncle Ben, has authorized another unstimulating stimulus on top of the other unstimulating stimulus programs since the fall of 2008.
Bloomberg reports that the Fed "will start another program next quarter, [serving] 16 of the 21 primary dealers of U.S. government securities that trade with the central bank."
So who are these primary dealers? Let's see... Merrill Lynch (now part of BofA), Goldman Sachs, Morgan Stanley, Citigroup, Credit Suisse, Nomura, Jeffries (highly exposed to MF Global), HSBC, BNP Paribas, Deutsche Bank, Barclays, JPM, UBS (a mess), RBS (didn't they go bankrupt?)! Yup -- the Fed is giving away another half trillion dollars worth of the fruits of the 99%'s labor to the same folks who did them in.
This means that on top of the $700bn TARP funds authorized by Congress in October 2008, the Federal Reserve has authorized WITHOUT Congressional approval the purchase of nearly three trillion of mortgage-backed securities that nobody else wants. These paper docs might even be worthless.
Well, it proves one thing -- crime does pay if you don't call it a crime. The real crime is the one-sided backdoor bailout that continues to flow from the autocratic playbook of the Federal Reserve. Where have our democratic principles gone? Where is government of the people and by the people? Who are these "people" making unilateral decisions for the American public who have never been elected to any office?
How is it possible in a democratic republic that the Federal Reserve spends trillions of our dollars without our permission, indebts us for generations to come without even a vote by Congress? Granted Congress is miserably inept, but at least there should be a public debate!
One of the primary reasons we got into this mess is lack of transparency in the institutional debt markets. Yet the Federal Reserve deliberately hid trillions of dollars worth of loans and payouts to the biggest U.S. financial institutions.
In fact, it took two years and the well-funded Bloomberg to sue the Federal Reserve to find out where the money went. This week, Bloomberg reported again on the absurd inequity of secret Federal Reserve policy.
Here some facts: The six "biggest" U.S. banks, JPM, Morgan Stanley, Goldman Sachs, Wells Fargo, Citi, and BofA "received $160 billion of TARP funds." And after all that loose change they "borrowed as much as $460 billion from the Fed' at near zero percent. Richard W. Fisher, president of the Federal Reserve Bank of Dallas calls this policy "Un-American."
Actually this shameless double standard in credit policy that has allowed the biggest most reckless financial institutions to benefit from clandestine taxpayer bailouts seems remarkably American. After all, greed really is "good" when you don't have to follow basic rules of fair play. If you are too-big-to-fail and have $29 million to spare to hire lobbyists to do your bidding, you are made in the shade in U.S. finance. That's capitalism American style: those with their hands in the pockets of the Fed pull the get out of jail card first.
The rest of us have quaint little customs to follow -- like fiscal responsibility. We have to pay our bills with our own money, often at rape and pillage interest rates or suffer severe consequences. If you are a big bank with bad credit no problem -- you can dip your hands into taxpayer coffers with abandon at little or no cost. And even better, with no shame or embarrassment to your good name -- because no one will even know about it! But if you are one of the 99% and struggling to make ends meet, overburdened with bills and debt, you follow different rules: the Ordinary American Public rules.
It doesn't matter if you lost your job, closed your business, had your income slashed, watched your home lose value, or are mired under mortgage or credit card debt, you are stuck. No one is going to lend you a hand. Ironically, least of all the lender or creditor who has one rule for you -- pay or suffer -- and another for themselves. This is what the government and politicians call "moral hazard." It creates a moral "hazard" if the Fed relieves American consumer or homeowner debt. But it is sound fiscal policy if the Fed absorbs big bank debts and liquidates them with middle class money. The same people who find themselves in court facing judgments and foreclosure by too-big-to-fail lenders are bankrolling their legal teams. To the majority of Americans this is beyond moral hazard: it's downright depraved.
So how does the Fed justify this outrageous policy? Fed spokesman, William English claims, "Our lending programs served to prevent a collapse of the financial system and to keep credit flowing to American families and businesses."
Really? Credit to American families, consumers and small-to-medium sized business is at record lows. The irony is that borrowers cannot relieve their debt due to high interest rates and poor credit histories that have left them rowing upstream without a paddle. The growing unrest among the nation's overburdened middle class reveals far more than inequity of wealth distribution. It lays bare a deepening inequity of democracy in 21st century America.
Early Americans fought a revolution over taxation without representation. Little more than two centuries later, we are burdened once again with "bailouts without representation." Moral hazard is real in post-crisis America. But you must have a moral framework to create hazard in the first place. The undemocratic Federal Reserve and continuing injustice of backdoor bailouts prove one thing: the American government no longer has a moral compass to stray from.
Read more of Monika Mitchell's views on the economic crisis in: "Conversations With Wall Street: The Inside Story on the Financial Armageddon and How to Prevent the Next One."
Follow Monika Mitchell on Twitter: www.twitter.com/monika_mitchell
"It's class warfare, my class is winning, but they shouldn't be."
Warren Buffett in a CNN Interview, May 25 2005, arguing the need to raise taxes on the rich.
Go Peoples' OWS Movement! Divided no more! E Pluribus Unum! Out of many, one!
Strike 1: The Great Depression
Under the surface of the governmental regulation of the securities market, the same forces that produced the riotous speculative excesses of the “wild bull market†of 1929 still give evidences of their existence and influence. Though repressed for the present, it cannot be doubted that, given a suitable opportunity, they would spring back to pernicious activity. Frequently we are told that this regulation is throttling the country’s prosperity. Bitterly hostile was Wall Street to the enactment of the regulatory legislation. It now looks forward to the day when it shall, as it hopes, resume the reins of its former power.
...After five short years, we may now need to be reminded what Wall Street was like before Uncle Sam stationed a policeman at its corner, lest, in time to come, some attempts be made to abolish that post. ..."
-Ferdinand Pecora
, NYC, 1939
from the preface of Wall Street Under Oath: The Story of Our Modern Money Changers
Strike 2: The S&L Crisis
"1980-1982 Statutory and regulatory changes give the S&L industry new powers in the hopes of their entering new areas of business and subsequently returning to profitability. For the first time, the government approves measures intended to increase S&L profits as opposed to promoting housing and homeownership."
http://www.fdic.gov/bank/historical/s&l/
Strike 3: Financial Imbroglio 2000 - present day
The Common Denominator is Banking & deregulation (=NO regulation)
http://www.youtube.com/user/BaitAndSwitchTV?feature=mhee#p/u/12/_M_Rh_fgKEQ
Also see: The Real Housewives of Tent City (A Hot New REALITY
Show---Global Depression Edition):
http://bit.ly/uCH1NY
And: this [short]: Neverminditol-The Great Recession Depression
Drug and then get up and JOIN those not against capitalism but
against rigged capitalism...
http://bit.ly/rSlTi5
Or at least see chitty Chitty Bank Bank:
http://bit.ly/cpptOf
Important to learn abt Leveraged Buyouyts --LBOs vs jobs --Wall St Banks and Private Equity firms that enacted a large scale Leveraged Buyout of America. See Lady Gaga Does LBOs [short]
http://bit.ly/dV2BjA
...Lady Gaga reveals Private Equity and Investment Banking's upcoming Financial Tsunami (caused by Mitt Romney's Bain Capital along with other PE firms like KKR and Goldman Sachs--and the pending LBO credit crash and its impact on the US economy.
And if you just want someone to blame, try the Blame Game:
http://bit.ly/sQEwDD
But if you want to return our crap money to its source, try fast free online game "Take That: A Federal Reserve Crap$hoot Stress Relief Game":
http://bit.ly/gIHiYw
He also is the only one who understands the problem. Government is the problem. The smaller the size and power of government the less power there is for sale--the less there is for lobbyists to purchase. The laws and regulations are written under the guise of protecting us but they dueu the exact opposite. The laws and regulations are written by the very same people they are meant to regulate!
"Why does the private central bank corporation of the largest nation of the world, whose Boards of Directors are among the richest people in the world, with unbridled money-creation powers of the most sought after national currency of the world, fabricate and implement secret policies and programs to enrich the top one-percent or so of the world, making them even richer?"
OK, now I understand.
Because they CAN !
But also, a couple of things.
Under fractional-reserve banking, the only actions capable of being taken by the Fed are to put more reserves into the system, the theoretical 'high-powered" money of our supposedly two-tiered money system. So, we need to end fractional-reserve banking.
There is NOTHING the Fed can do to put money directly into the hands of the 'families and businesses' of America.
The only entity that can infuse money directly into the demand-creating M1 part of the money supply is the Treasury department. Therefore, we require a monetary-fiscal regime that allows the direct payment of monies to the people (families and businesses) that NEED the help.
Enabling such a regime still requires government intervention(legislation) in order for to happen on an economically-effective scale.
The way to do THAT is here:
http://www.monetary.org/wp-content/uploads/2011/10/HR-2990.pdf
Reform the money system if you want it to serve the 99 percent of us.
Thanks.
Milton Friedman was RIGHT ! ! !
Ben, Barney, Chris and Obama have stolen Christmans for the next 25 years.
Welcome to the New Normal.
I can't do your homework for you, but "The Creature From Jekyll Island" is a good starting point as is "Wall Street, Banks, and American Foreign Policy". Until folks get this history under their belts, cry me a river of rainbows. It won't make any difference. The most important thing to remember: The "system" is not broken, it was designed this way in 1913.
the time is now to change. Not hope, but change by designing an exit from the Federal reserve concept. We need to begin by reversing the 16th and 17 th amendments.
1970s* Banks were too small to create mega profits for themselves, economic problems, oil, etc.
1980s* Serious bank deregulation begins. This was in accordance to the ubiquitous ‘Trickledown’ Philosophy/Creed of the decade. These 'deregulation sprees' introduced the concept of ‘moral hazard’ to the lexicon thereby enabling the S&Ls to create mega profits (for themselves). (The Garn-St Germain Depository Institutions Act of 1982 & other deregs.) Criminal prosecutions resulted for the more flagrant abuses. In 1988 George Bush is elected President. S&L problems are not even a part of the election debate.
1989* President Bush unveils S&L bailout plan in February.
• S&L Crisis = Largest taxpayer bailout of banks ever (including being larger than the most recent bailout).
• The S&L crisis saw more than 1,000 S&Ls collapse, costing the U.S. government (we the people) more than $100 billion.
1990s* Even though deregulating banks was a prime factor in the S&L Crisis, the FIRE sector convinces (cons) everyone, including Democrats, Republicans & basically all American people into believing that even MORE deregulation was required. Various ‘making of offers no one seemed able to refuse.’
1999 The Gramm–Leach–Bliley Act (GLB), also known as the Financial Services Modernization Act of 1999 effectively repeals Glass Steagall (stems from investigation & analysis of GD)
2000* The Commodity Futures Modernization Act - the 'partner' law to GLB & releasing or excluding the derivatives market from ANY regulation. ( also, 'Enron Loophole')
It is certainly ironic that the historical “tea party†was protesting the privileged crony capitalism of the British, East India Company, that the modern “tea party†now defends as an American right.
It’s not capitalism that is the problem, but the ludicrous notion that the greatest good emerges if you run it without rules. The rest of us are expected to obey rules. Try sleeping in the park.