Corn, Quantitative Easing and the Coming Storm

By Numerian

Does Ben Bernanke make any connection between the asset bubble in a commodity like corn, and the economic pressures this creates for the middle class or poor people? Given their lofty and isolated position, and the fact that Fed officials talk only to businessmen and millionaires in Congress, one of the things most lacking in Fed policy debates, public or private, is any concern for the average person in the US. It’s as if these are the people of least concern to the Fed, or if they are of concern, it is only as economic factors in econometric models. You get the impression that the Fed has, for a long long time, forgotten about the real, and often immediate personal consequences its policies have for the average person. Numerian

ForclosureGate and Real Estate Armageddon

Michael Collins

I wrote the story below in response to an outrageous trick Congress just tried to play on the public.   As many of you know, the Senate passed HR 3808 The Interstate Recognition of Notarizations Act of 2010 unanimously on September 27.   The bill was a carefully crafted, stealth “silver bullet” for the big banks to deal with their increasing legal problems with foreclosures.   President Obama exercised a “pocket veto,” which means he let it die after Congress adjourned. (Image)

While my story  focused on the process and contempt shown to citizens by Congress in that process, I became aware of a much broader issue.   We may well  be on the verge of a real estate value meltdown as a result of very bad behavior, illegal in many cases, by the big banks combined with the legitimate push back of mortgage holders.

If banks can’t foreclose and people can do a strategic default and walk away (0r live free in their residence), what will happen to real estate values?

The larger question emerged in reviewing bank bad behavior.

If there are fundamental flaws in many, maybe most mortgage, flaws of a serious legal nature, what if a strategic default movement spreads beyond just those facing foreclosure?  That’s where Armageddon comes in

Lawless Nation – Congress

By Michael Collins
Part II of III (Part I)

WASHINGTON – Placed in office through legalized  bribery, supported by public funding for their every need, protected against the laws that we’re expected to obey, Congress represents the epitome of lawlessness; lawmakers who have no regard for the law.  (Image)

Members of Congress are different.  They get to retire at age 62 with lifetime pensions and health benefits.  To qualify, they need just five years of service.   They get free phone, mail, and other communications plus paid domestic and foreign travel.   Supposedly, they’re not allowed to take gifts but the list of exceptions offers plenty of room for luxurious appreciation.

The biggest gift of all – a six to seven figure job with a major corporation or lobbying firm right after retirement – is still fair game for any member.  The revolving door never stops. (more…)

The Devil’s in the Details – Foreclosure

By Numerian Posted by Michael Collins

It seems, therefore, that millions of foreclosures that have occurred in the past two years may be invalid. Investors who were part of the $8,000 tax credit program may not have valid mortgages and may not legally have the right to live in their home. Title insurance companies have stopped accepting mortgage titles from GMAC and other financial firms implicated in this situation. Numerian



The Money Party at Work

We keep doing the same things over and over again and expect different results.

Michael Collins
See also

Who are the officers guiding our ship of state, steering us through the troubled waters of a failed economy and two tragic and costly wars?

Do we have bold leaders ready to move us away from the failed policies that generated a free market kleptocracy for insiders and their masters, the ultra wealthy?

Are they brilliant tacticians who can think far enough outside of the box to get us out of calamitous foreign adventures that generate nothing but death, destruction, and ill will on the part of those we seek to “help”?

At the start of President Obama’s administration, it was clear that this would be a cabinet that spanned those few degrees of that mythical political spectrum called “the middle.”  The political middle, like the Hobbits’ “middle earth,” is a contrivance, although much less artful.  It’s where you’re supposed to be if you’re the president.  You stand for those who count; those with the vested interests in the economy.  You are that special gatekeeper at the intersection between avarice and the nation’s wealth.

Will anything truly change?

We can tell by the key players in domestic and foreign policy.

Chief economic adviser Larry Summers and Secretary of the Treasury Tim Geithner are the stewards of economic policy and programs.  They have a long public track record.  Summers was a key player in repealing the Glass Steagall Act in 1999.  In place since the Great Depression, that law prevented banks from wild, risky speculation.  Since it was repealed in 1999, banks have run free doing the very things that the act prevented.

Summers was also a key player in the passage of the Commodity Services Modernization Act of 2000.  That act brought back derivatives which had been illegal since 1906.  These highly speculative market products were the very thing Glass-Steagall would have prevented.

Geithner served as one of the nation’s top bank regulators as Chairman of the Federal Reserve Bank of New York, the most powerful Fed by far.  He had his own stress test for banks in 2007 and thought everything was fine.  Most of those banks are so stressed two years later that they require welfare from the federal government just to stay afloat.

Summers is guiding government policy in the most spectacular welfare program of all – Wall Street welfare.  Banks have now received twice as much in welfare payments as they received under Bush and its just beginning.

As Treasury secretary, Geithner is making this happen. He’s also working to see that the Federal Reserve offered trillions more in credit guarantees for the failed banks and bankers.  Geithner also ratified what most experts called an illegal tax break for the nation’s largest banks written into code by a Bush Treasury staffer.  It’s a $140 billion giveaway that no one will even talk about.  By failing to repeal or even discuss it, it’s become Geithner’s giveaway.

Citizens aren’t doing so well.  The foreclosure relief bill failed despite Senator Richard Durbin’s (D-IL) exceptional effort.  That would have kept 1.7 million families in their homes.  No help on that one from Summers and Geithner.  The credit card bill of rights failed to cap interest rates on credit cards.  The 29% rates common at any bank’s whim, could have been capped at 15%, President Obama’s suggestion.

But there were no breaks for us.  Our so-called credit card bill of rights lacks the one right that would have helped — a ban on usurious fees from the failed banks.  We don’t get any special tax code changes from Treasury staffers but the banks get $140 billion that simply stays in place because no one in power seems to care.  This makes it clear to us who really counts.

Our foreign policy is changing in some ways.  We’re supposedly reducing our commitment to the war in Iraq but increasing it in Afghanistan.  Perennial diplomatic envoy Richard Holbrooke made his views clear when he signed on with Madeleine Albright and other notables to advocate a more aggressive military policy in the Middle East.

The media anointed peace maker is now the president’s special envoy to South Asia.  He showed his stuff during an April visit to Pakistan.  The diplomacy was so adept that the trip was described by a U.S. scholar as “the worst-ever visit” by an American team to South Asia in history.  It was a complete disaster.”

That diplomacy was complicated by the policies of General David Petraeus, Commander of the United States Central Command.  He’s responsible for the Predator drone (unmanned killer aircraft) attacks on Pakistan’s western region.  The drones do a good job of killing both Taliban rebels and innocent Pakistanis.  Pakistani’s are taking special exception to their fellow citizens being killed by outsiders, the Taliban or robot killer drones.

They’ll be seeing more of that in the near future, perhaps.  The new policy in neighboring Afghanistan will involve a lot of killing if past records indicate future performance.  General Petraeus appointed General Stanley McCrystal to lead the war in Afghanistan.  Former head of the top secret Joint Special Operations Command, McCrystal has a reputation for rough tactics that get the job done.  Seymour Hersh called the group “an executive assassination ring” that reported directly to Bush and Cheney in the past.

Summers and Geithner have been wrong for over a decade.  They supported from the massive deregulation of banks and the enabling of the complicated Ponzi scheme referred to as derivatives.  They’ve continued the flow of trillions from the U.S. Treasury to failed Wall Street financial instructions.  And there’s no record that they’ve done anything directly for the vast majority of citizens.

Holbrooke is a constant warrior in diplomat’s clothing.  He even implied a threat of another 9/11 with the absurd claim that 5,000 Taliban thugs were going to take over Pakistan’s nuclear weapons to scare the public into supporting a blank check in South Asia.

General Petraeus has filled in the details of that check despite the lack of public response to Holbrooke’s scare tactics.  It’s going to involve just the type of highly aggressive campaign in Afghanistan that has made us enemies throughout the Middle East.

Is this what we voted for?  We’ve got two Wall Street veterans presiding over the continued looting of the Treasury in behalf of failed banks and financiers.  While CEO’s keep their jobs at insolvent banks, citizens get nothing.  After seven years in war based on shameless lies and over a million dead, we’re about to move the action to Afghanistan.  We keep doing the same things over and over again and expect different results.

All aboard the Ship of Fools.


Annotated references

Images:  Geithner, Summers, Petraeus, Holbrooke

Permission to reproduce in whole or in part with attribution of authorship, a link to this article, and acknowledgment of image credits.

Bailout Blackmail – Just Say No! The Money Party (7)

The Money Party (7):

Bailout Blackmail

Image cc

Just Say No

Michael Collins

(Wash. DC)  We’re being blackmailed into accepting the responsibility and debt for the worst managed financial institutions in the history of this country.  The starting price, our debt, is $700 billion dollars.

What’s really about to happen is that the failed financial institutions will be rewarded for their bad behavior.  As a result, they and others will be encouraged to do it again.  It’s just a matter of time.

We’re under the gun and told that we have just days to make a decision to bailout these mismanaged entities.  The last thing they want is an open hearing on the problem.  Deliberation is deadly for them.

We’re told that our world will collapse; there will be a systemic breakdown if the president’s bailout legislation is not passed.  Without it, we’ll all be eating stale beans and rice for the rest of our lives.

How do you argue with a premise like that – vote yes and you get a chance to live.  Vote no and you’ll be soon living in a cold house or damp shelter, if you’re lucky enough to be off the street.

This is the same type of argument that was used to pass the Patriot Act after 9/11.  It had to be passed right away.  The vulnerability to attack was blamed on the Constitution.  We were asked to forget the president’s disregard for the many warnings of just such an attack.  The people paid for that egregious error through the loss of constitutional rights.

Now we’re told that to avoid economic ruin and all that portends, we must give up common sense, evaluation, and deliberation and allow more debt to be piled on our backs.

The largest financial institutions have made very bad decisions.  They bought into schemes that were senseless.  Subprime loans sold as premium securities and the looming credit derivatives melt down50 times larger than the subprime problem — are obvious losers just on the face of it.

How can grouping subprime loans create a stock that’s anything other than subprime?  What kind of institutional investor would bet your retirement on a subprime investment?

Why would anyone other than a very experienced financial expert get into anything as complex as credit derivatives?  Because the commissions on sales were huge.  For buyers, the short cut to profits was too good to resist.

So what are we supposed to do?  Give $700 billion to these companies to keep them afloat.  While those who marketed these flawed products bear some responsibility, the responsibility and blame grow as you move up the management chain to the top.  They all knew what was going on.  They ignored the certain risk and failure of these schemes for their personal benefit.

The culprit financial products, subprimes securities and derivatives, were bought and sold by many in the financial industry, including the firm formerly headed up by the Secretary of the Treasury.  Why should we trust any of them to decide who gets bailout money or how the firms receiving it are managed?

The debate in Congress is shaping up to be one over style rather than substance.  Both Republicans and Democrats agree that some sort of bailout bill needs to happen.  But the Democrats want oversight and monitoring, as if that will change a single thing.  The Republicans want centralized control by one person, the Secretary of the Treasury, with no review of who gets how much corporate welfare.

Here’s a message for the grossly irresponsible politicians, regulators, and financial firms.

Don’t tell us you’re going to do it right this time when you’re the people who got us into this mess.

Don’t tell us you that your interests are the same as ours.  You haven’t been able to have just one vote to eliminate the loophole that allows oil speculation responsible for high gas and home heating oil prices.  Why should we trust you now?

Don’t tell us that we can’t survive without these decadent financial entities.

This bailout makes no sense.  Listen to people with alternatives to financial blackmail.  Find solutions that impose a minimum of harm to the innocent and that create opportunities for all citizens.  Talk to some smart small business owners, union people, and a variety of citizens.  Deliberate in the open with all assumptions on the table.

Who will stand up for the people and say, let the failed firms bail themselves out or let them do what every citizen does in this situation, declare bankruptcy.

Why is it that the greater your failure, the greater your chances are for a debt canceling rescue?  The vast majority of citizens aren’t getting that option.

This is the first of many bailouts to come.  The time to say no is right now.  No bailouts.  No socialism for the rich with survival of the fittest for the rest of us.  And stop pretending you’re doing something by arguing about details when you’re doing nothing more than rewarding failure while you set us up for the next take down.


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Previously in The Money Party Series