This is pretty bad but serves as a reminder why Geithner and Bernanke should go:
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Now, how about the crime bosses from Goldman-Sachs?
Update: More sources on the matter
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Read the entire article at Financial TimesThe Federal Reserve has made a $14bn profit on loan programmes that have provided hundreds of billions of dollars in liquidity to the financial system since the start of the crisis two years ago, according to Fed officials.
The internal estimate is based on the difference between the fees and interest on the lending facilities and the interest the Fed would have earned had it invested the funds in three-month Treasury bills.
The central bank earned about $19bn in income from charging interest and fees to financial institutions and investors that tapped the new facilities to obtain much-needed funds during the turmoil. The interest the Fed would have earned by investing the same amount in T-bills was an estimated $5bn, leaving a $14bn gain since August 2007.
The Fed assessment underlines the possibility that other central banks could make a profit on their crisis-fighting measures – at least before adjusting for the risk they assumed.
The calculation by Fed staff, which has neither been audited, published or risk-adjusted, only deals with its liquidity facilities.
Those include discount window and Term Auction Facility loans to banks, currency swaps with other central banks, purchases of commercial paper and financing for investors in asset-backed securities.
The most profitable liquidity programmes were the commercial paper one, which is one of the riskier facilities for the Fed because participants do not post collateral, and the foreign exchange swap agreements, followed by the TAF, according to the New York Fed staff.
Treasury Secretary Timothy Geithner and Larry Summers announce their plan for a regulatory overhaul in Monday’s Washington Post, but for the details of what exactly they are planning you’re better off reading the summary in The Wall Street Journal. “At the center of the plan … is a move to remake powers of the Federal Reserve to oversee the biggest financial players, give the government the power to unwind and break up systemically important companies—much like the Federal Deposit Insurance Corp. does with failed banks—and create a new regulator for consumer-oriented financial products.” The plan will require congressional approval. Geithner will appear before both the House and Senate on Thursday.
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Conflict of interest, anyone? In addition to managing $1.3 trillion of its private clients’ funds, money manager BlackRock is a government adviser, helping with the rescues of Bear Stearns, Citigroup, and AIG, running a Federal Reserve program to reboot the housing market, and helping to evaluate Fannie Mae and Freddie Mac. “BlackRock has become so ubiquitous that some lawmakers, federal auditors and watchdog groups are now asking if the firm does too much, and if its roles as government adviser, giant federal contractor and private money manager will inevitably collide,” writes The New York Times. “The potential for a conflict of interest is great and it is just very difficult to police,” said Senator Chuck Grassley. Writes the Times, “Without naming BlackRock, federal auditors have warned that any private parties that purchase distressed assets on the government’s behalf could use generous federal subsidies to overpay, artificially pushing up the price of similar assets that they manage for their own portfolios.”
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WASHINGTON — The forecast Wednesday of a jaw-dropping $1.2 trillion one-year federal budget deficit will make it harder for President-elect Barack Obama to win broad support for a massive stimulus package that would add even more to the red ink.
With his party controlling both the House of Representatives and the Senate, Obama's still likely to get the OK for spending and tax cuts that cost $1 trillion or more over two years and are designed to jump-start the economy and create or save 3 million jobs.
However, while many economists, business groups and politicians agree on the need for something dramatic, Obama now concedes that he'll have to wait until February to get a bill to sign. He'll probably find conservative "blue dog" Democrats as well as Republicans balking at the idea of borrowing another $1 trillion on top of this new annual deficit.
They could deny Obama the kind of broad, bipartisan approval that he hopes will signal not only that he's changed the political culture of a divided Washington but also that he's put forward a plan that's widely popular. Such approval is crucial as he moves to rebuild trust in the government and the economy.
He plans to speak more about the need to rebuild confidence in a speech on the economy Thursday.
Yet even before he can point to a law meant to boost the economy or to post-stimulus efforts to rein in budget deficits, he has to deal with the fallout of the Congressional Budget Office's forecast that the current year's deficit will jump from last year's $455 billion to a record $1.2 trillion.
"There's a sticker shock problem," said Steven Schier, a political scientist at Carleton College in Minnesota and the author of a book on budget politics. "This is a new problem for Obama: How far out there are people willing to go?"
He noted that there are as many as 100 fiscally conservative Democrats in the House and 20 in the Senate who're probably stung by the deficit figure and reluctant to use the stimulus as an easy ride for new programs.
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In the minutes from its last meeting, the central bank said it expects GDP to decline in 2009 and unemployment to rise into 2010.
NEW YORK (CNNMoney.com) -- The U.S. economy is likely to deteriorate further this year and unemployment will rise into 2010, according to the latest forecasts from the staff of the Federal Reserve.
This bleak forecast was presented to Fed policymakers when they met last month and lowered interest rates to near zero. Low interest rates are one key tool the central bank uses to try to spur economic activity.
According to the minutes from that meeting, the central bank is now predicting that gross domestic product, the broadest measure of economic activity will fall in 2009.
"I think that the Fed is really very scared right now -- like everybody else -- and they want to pull out all the stops," said David Wyss, chief economist for Standard & Poor's. The Fed indicated that most members at its meeting expected a slow recovery to begin in the second half of the year, but that unemployment would still rise "significantly" into 2010.
Employers cut 1.9 million jobs over the first 11 months of 2008, which took the unemployment rate up to 6.7%. The December report will be released by the Labor Department Friday and economists surveyed by Briefing.com expect a loss of 475,000 jobs and that the unemployment rate will rise to 7%, which would mark a 15-year high.
The Fed cited a multitude of problems dragging down the economy besides rising unemployment, including stock market declines, low consumer confidence, weakened household balance sheets and tight credit conditions. It said business spending is also likely to fall due to weak retail sales and the credit crunch.In addition, some members of the Fed expressed concerns that the economy could worsen even more than currently expected.
The Federal Reserve refused a request by Bloomberg News to disclose the recipients of more than $2 trillion of emergency loans from U.S. taxpayers and the assets the central bank is accepting as collateral.Bloomberg filed suit Nov. 7 under the U.S. Freedom of Information Act requesting details about the terms of 11 Fed lending programs, most created during the deepest financial crisis since the Great Depression.
The Fed responded Dec. 8, saying it’s allowed to withhold internal memos as well as information about trade secrets and commercial information. The institution confirmed that a records search found 231 pages of documents pertaining to some of the requests.
“If they told us what they held, we would know the potential losses that the government may take and that’s what they don’t want us to know,” said Carlos Mendez, a senior managing director at New York-based ICP Capital LLC, which oversees $22 billion in assets.
The Fed stepped into a rescue role that was the original purpose of the Treasury’s $700 billion Troubled Asset Relief Program. The central bank loans don’t have the oversight safeguards that Congress imposed upon the TARP.
Total Fed lending exceeded $2 trillion for the first time Nov. 6. It rose by 138 percent, or $1.23 trillion, in the 12 weeks since Sept. 14, when central bank governors relaxed collateral standards to accept securities that weren’t rated AAA.
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WASHINGTON (AP) - The federal government registered a record budget deficit for the month of November, reflecting the impact of a recession on tax receipts and the mounting costs of the $700 billion financial rescue program.
The Treasury Department says the gap between the government's revenue collections and what it paid out last month totaled $164.4 billion, the largest deficit ever recorded for the month of November.
In just the first two months of this budget year, the deficit now totals more than $401 billion, putting the country on track to hit a record $1 trillion deficit for the entire year, more than double the previous all-time high.
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Tiny Iceland has seen its banks and currency collapse in just a few weeks while prices and unemployment soar — leaving a country regarded as a model of Scandinavian prosperity in a state of shock.
Luckily, Icelanders seem to be able to identify the perpetrators as the ruling government and the central banking establishment that has grown up around it-
Thousands of Icelanders marked the 90th anniversary of their nation’s sovereignty with angry protest Monday, and several hundred stormed the central bank to demand the ouster of bankers they blame for the country’s spectacular economic meltdown….
“The government played roulette and the whole nation has lost,” writer Einar Mar Gudmundsson told a noisy but peaceful anti-government rally of several thousand people in downtown Reykjavik.
The Icelandic system, one built upon even greater leverage than that of America, has come to its current state of despair in the blink of an eye. Hopefully citizens of other nations will realize they could be next and pressure their officials to take the necessary precautions to provide for the most swift and orderly decline and ultimate recovery.
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Amazing, the German chancellor, Angela Merkel, talking about the Fed's funny money. Maybe she still remembers Weimar Republic and its hyperinflation.
Angela Merkel, the German chancellor, turned the tables on her international critics on Wednesday by accusing the US and other governments of making “cheap money” a central tool of their economic management, thus planting the seeds of a similar crisis in five years._______________________________________________________________“Excessively cheap money in the US was a driver of today’s crisis,” she told the German parliament. “I am deeply concerned about whether we are now reinforcing this trend through measures being adopted in the US and elsewhere and whether we could find ourselves in five years facing the exact same crisis.”
Ms Merkel’s comments came as the European Union proposed a €200bn economic stimulus plan aimed at avoiding a deeper recession through tax and infrastructure plans. There were immediate doubts as to whether member states would back the measures.
The proposals envisage the EU’s 27 states contributing about €170bn with the European Commission and the European Investment Bank providing the remaining €30bn, partly through accelerated spending programmes.
“Angela Merkel and other conservative leaders such as [Italian premier Silvio] Berlusconi may well water down the plan and refuse to make the necessary national investments,” said Poul Nyrup Rasmussen, the former Danish prime minister who heads the Socialist party in the European parliament.
THE October 2008 financial meltdown is not the result of a cyclical economic phenomenon. It is the deliberate result of US government policy instrumented through the Treasury and the US Federal Reserve Board._______________________________________________________________This is the most serious economic crisis in World history.
The "bailout" proposed by the US Treasury does not constitute a "solution" to the crisis. In fact quite the opposite: it is the cause of further collapse. It triggers an unprecedented concentration of wealth, which in turn contributes to widening economic and social inequalities both within and between nations.
[...]
In a bitter irony, the engineers of financial disaster are now being considered by President-Elect Barack Obama's Transition Team for the position Treasury Secretary:
Lawrence Summers played a key role in lobbying Congress for the repeal of the Glass Steagall Act. His timely appointment by President Clinton in 1999 as Treasury Secretary spearheaded the adoption of the Financial Services Modernization Act in November 1999. Upon completing his mandate at the helm of the US Treasury, he became president of Harvard University (2001- 2006).Paul Volker was chairman of the Federal Reserve Board in the l980s during the Reagan era. He played a central role in implementing the first stage of financial deregulation, which was conducive to mass bankruptcies, mergers and acquisitions, leading up to the 1987 financial crisis.Timothy Geithner is CEO of the Federal Reserve Bank of New York, which is the most powerful private financial institution in America. He was also a former Clinton administration Treasury official. He has worked for Kissinger Associates and has also held a senior position at the IMF. The FRBNY plays a behind the scenes role in shaping financial policy. Geithner acts on behalf of powerful financiers, who are behind the FRBNY. He is also a member of the Council on Foreign Relations (CFR)Jon Corzine is currently governor of New Jersey, former CEO of Goldman Sachs.Read the rest of the article
The Panic of 1907 was a financial crisis that occurred in the United States when its stock market fell close to 50 percent from its peak the previous year. Primary causes of the run included a retraction of market liquidity by a number of New York City banks, a loss of confidence among depositors, and the absence of a statutory lender of last resort. The crisis occurred after the failure of an attempt in October 1907 to corner the market on stock of the United Copper Company. When this bid failed, banks that had lent money to the cornering scheme suffered runs which later spread to affiliated banks and trusts, leading a week later to the downfall of the Knickerbocker Trust Company—New York City's third-largest trust. The collapse of the Knickerbocker spread fear throughout the city's trusts as regional banks withdrew reserves from New York City banks. The panic would have deepened if not for the intervention of financier J.P. Morgan, who pledged large sums of his own money, and convinced other New York bankers to do the same, to shore up the banking system. By November the contagion had largely ended. The following year, Senator Nelson W. Aldrich established and chaired a commission to investigate the crisis and propose future solutions, leading to the creation of the Federal Reserve System.
Today, across the country, people will join together to protest the Federal Reserve system. Activists will demand an END to private banker control over the nation’s money supply and the return to a hard, commodity backed monetary system.
The expected protests in Atlanta, Baltimore, Birmingham, Boston, Buffalo, Cincinnati, Charlotte, Chicago, Cleveland, Dallas, Denver, Detroit, El Paso, Helena, Houston, Jacksonville, Kansas City, Little Rock, Los Angeles, Louisville, Memphis, Miami, Minneapolis, Philadelphia, Portland, Nashville, New Orleans, New York City, Oklahoma City, Omaha, Pittsburgh, Richmond, Salt Lake City, San Antonio, San Francisco, Seattle, St. Louis, and Washington, D.C.
More to follow.
***Update***
Growing Movement Strikes at Fed in Washington, DC
National “END THE FED” day of protest calls for sound monetary policy and an end to bailouts
On November 22nd, commemorating the secretive conception of the Federal Reserve System, a growing movement of citizens concerned with this country's fiscal policies will gather in 39 cities nationwide at each Federal Reserve location to demand an end to the Fed, return to sound monetary policy, and an end to corporate bailouts. In Washington, DC, they will gather across the street from the Board of Governors of the Fed at 20th and Constitution at 1pm. Denied a permit to protest on Federal Reserve grounds by the Fed's Public Affairs Office on the basis that it is private property, the rally with a stage and amplification system will be held across the street with a permit granted by the Parks Department. National coordination is being provided by Aaron Russo's Restore the Republic (restoretherepublic.net) and more information can be found at endthefed.us.
Speakers will include Gary Franchi of Restore the Republic to discuss his organizational plans for furthering this issue and the duty of all patriotic Americans to get involved. Kevin Zeese, former US Senate candidate, current Executive Director of Break the Bailout, (breakthebailout.com) will talk about building a broad coalition to stop further “theft from the taxpayers.” Tony Teolis, veteran of the First Gulf War, member of Veterans For Peace (veteransforpeace.org) will show how the Fed is the primary enabler of our destructive interventionist foreign policy. Rick Williams is a founder of BreakTheMatrix, (breakthematrix.com) and serves as Chairman and Chief Executive Officer of Basic Media, Inc. From the Center for Economic and Social Justice, (cesj.org) Norman G. Kurland, President of the Board of Directors, and former Congressman, the Hon. Rev. Walter E. Fauntroy will outline an alternative just economic system. Paul-Martin Foss, Legislative Assistant to Congressman Ron Paul, will explain pending legislation H.R. 2755 and what the movement can do to support it.
Organizer Debbie Krueger is a former Marine, and a mother of 5, living in Delaware. She was a real estate agent, when she witnessed the bottom dropping out of the housing markets across the country, and decided something needed to be done. Her research led her to the conclusion that the Federal Reserve System is at the heart of the crisis. “I am devoting my time to help shed light on the Federal Reserve, and to find solutions that will bring us back to financial policies that will benefit Americans the most."
Co-organizer and performer for the rally Jordan Page is a young poet, singer/songwriter, guitarist, political activist, and social commentator who has become an outspoken voice promoting freedom and liberty. The hyper-inflation of American currency, the funding of worldwide interventionist military policies, the unconstitutional income tax, the recent bailout, and the engineered economic depressions the Fed causes have all motivated Jordan's involvement in this most historic citizens' movement. “Please stand up for the Constitution on November 22nd and help us to support HR 2755 calling for the abolition of the Federal Reserve.”
Adam Kokesh will serve as master of ceremonies at the rally. He is from Santa Fe, NM and served in Fallujah, Iraq in 2004 and has been a vocal critic of the war since leaving the US Marines. He has continued to honor his oath to support and defend the Constitution by taking on those he sees as its domestic enemies, especially the Federal Reserve System. He has also advocated various forms of nonviolent resistance including not paying taxes. “As long as the Federal Reserver System has the power to create money from nothing, the individual income tax is nothing more than a means to oppress and enslave the American people. As with all forms of tyranny, Americans have a duty to resist this injustice.”
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Senator James Inhofe (R-Oklahoma) summarizes the bailout.
Just brilliant!
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... Mr. Obama needs to stop the next asset bubble from being inflated by imposing a commodity standard on the Fed. A commodity standard (such as a gold standard) imposes discipline on a central bank because it forces it to acquire commodity reserves in order to increase the money supply. Today the government can inflate asset bubbles without paying a cost for it because the currency isn't linked to the price of a commodity._______________________________________________________________With a commodity standard in place, the government would also have price signals that would alert it to the formation of a bubble. Why? Because the price of the commodity would be continuously traded in spot and futures markets. Excessive easing by the Fed would be signaled by rising prices for the commodity. In recent years, Fed officials have claimed that they cannot know when an asset bubble is developing. With a commodity standard in place, it would be clear to anyone watching spot markets whether a bubble is forming. What's more, if Fed officials ignored price signals, outflows of commodity reserves would force them to act against the bubble.
Article By GERALD P. O'DRISCOLL JR., The Wall Street Journal
Articles were mentioned about his Global Financial Summit. World leaders from the so-called Group of 20, which includes the United States, members of the European Union, China, Saudi Arabia and Brazil, are descending on Washington Friday to talk about what's needed to get the global economy back on track.
A lot of speculation it is made about this summit.Is this a first step towards a Bretton Woods II agreement? Maybe a decision about the next world reserve currency to replace the falling dollar? In any case this is not just a normal meeting of the G20.
Banking giant to raise rates on some of its credit cards.
From MSNBCCitigroup is cutting at least 10,000 jobs in its investment bank and other divisions throughout the world, the Wall Street Journal said, citing people familiar with the matter.
Citigroup Chief Executive Vikram Pandit and his deputies have instructed managers to slash their budgets for employee compensation by at least 25 percent, the paper said citing the people."We will continue to carefully manage our head count levels as we re-engineer the company in line with our stated goal and market realities," Citigroup spokeswoman Christina Pretto told the paper.
Meanwhile, Citigroup said it is raising rates for some of its U.S. credit card customers after losses in its global card division skyrocketed.A spokesman declined to say how many cardholders would be affected by the changes or if interest rates would be cut on some accounts. Citigroup had 182.7 million open card accounts during the third quarter.
The downturn in the economy has led to rising defaults on all types of loans this year, such as credit cards. Credit losses in Citigroup's global card division rose to $1.59 billion in the third quarter from $1.05 billion during the same quarter in 2007, as more customers missed payments. Credit losses include loans written off as not being repaid. Overall, the card division lost $902 million in its card division during the third quarter. It earned $1.44 billion in the unit during the third quarter in 2007.Customers will be able to opt out of the changes and instead use their cards until they expire. People who opt out can pay down balances under the old terms, the company said.
The company is dealing with broader problems in its operations amid the ongoing credit crisis. It has reported an overall loss each of the last four quarters, including a loss of $2.8 billion during the third quarter.
If anybody doubts the greatness of CSPAN in giving you the news you need, democracy in action how some would call it, time well spent in front of the TV as I consider it, just enjoy this hearing at the Oversight Subcommittee on Domestic Policy:
The rest of the hearing:
Taxpayer's $$ not go into failing banks
Paulson helping with foreclosures. Kucinich: He is? What country?
Taxpayer's pound of flesh
Hello? Are we in a different universe here?
Congress questions who YOU are working for! "Mr. Kash Man"
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