TARP Two

[tw]

When the wealthy play money games, then economics takes revenge on everyone - especially the least wealthy. The wealthy and other cheats played money games to enrich themselves in Greece and Italy. But with a Euro, every Eurodollar nation must be punished four and ten years later. It was always how economics works.

So why would Greece or Italy withdraw from the Euro as so many wrote? They won't. Why would they want economics to inflict pain on them? By remaining on a Eurodollar, Germans, Dutch, Belgians, and Frenchmen must incur much of the pain.

Was the Euro at risk? Only among those who never learned well proven economics. Neither Germany nor France wants to go back to the Mark or Franc. For a long list of reasons including massive costs. The Euro was never at risk despite so many who only heard headlines based in fear.

However the Euro has a major problem. Bean counters in Europe were using the same American money games to enrich themselves. European banks (to a lesser amount) had invented assets using SIV, CDO, etc techniques. For each Eurodollar asset, these bean counters had invented maybe another four fictitious Eurodollars; paper assets. As economics took revenge, these finance houses had been selling bonds, selling assets, etc to meet principle requirements. Suddenly, reality took hold in Europe. Too many spread sheets did exactly what is encouraged in business schools. Too many spread sheets lie. Suddenly nobody will loan money because nobody can trust the spread sheets. The realization was sudden when doubts were asked about the Central European Bank.

Sound familiar?

America solved this problem with the only alternative. America pumped massive liquidity into finance markets to enable loans and to avert fear. Those who used ego rather than admit to being evil (ie Merrill Lynch, Lehman Bros) went bankrupt. That fear should have existed back in the early 2000 when extremists were advocating fraud in the name of deregulation. And when Harvey Pitts all but protected fraud. Fear covered up using spread sheet games.

We just saw major banks including the US Fed, Bank of Canada, Swiss National Bank, the Brits, etc - virtually everyone - do a massive TARP for Europe. Because some nations (Greece, Italy, etc) have openly lied in the name of money games.

Philadelphia Gas Works once did a same money game. PGW floated a 20 year bond issue to pay for vehicles with a 3 year life expectancy. Because finance people are so corrupt, Wall Street said that was good. These games also exist in nations such as Italy where fraud was openly encouraged by Berlusconi. As if anyone but the least educated Italians thought he was honest.

We know the Euro was never at risk. But the Euro's exchange value was at major risk. Everyone suddenly realized lying on other's spread sheets was as routine as the lies on their own. This latest TARP was the only way to solve a major cash flow problem created because finance people cannot be trusted; must be heavily regulated. Because these people are so corrupt as to foolishly think the purpose of a company is profits.

The Euro was only going to disappear in stories that ignored hard facts. But many did not see what happened. A worldwide TARP for Europe for the same reason TARP was necessary to avert another 1929 in America.

[classicman]

I see you got the December issue of the Economist.

[ZenGum]

Please don't say "Eurodollar". It's called the Euro.

Of course Greece and Italy (etc) want to hang on to the Euro, so as to get the Germans to cover their debts. The risk is either the PIIGS getting kicked off the Euro, or of Germany (and maybe France) walking away and returning to their own currency.

Monetary union without fiscal union could only work with very strict rules about debt and deficit. They had rules but they broke them.

I'm just at this stage, but if the US and Europe were to both have debt-crisis-spasms at the same time, things could get ugly.

[tw]

Originally Posted by classicman

I see you got the December issue of the Economist.

It comes on Saturday. Nobody needed the Economist to see the obvious.

I was blindsided by the united Central Bank action. I never expected it that quickly.

[Lamplighter]

TARP two - I thought tw would be writing about the $7.7 trillion
the Fed Reserve loaned to the banks at 0.01% interest.


Bloomberg News
Nov 28, 2011
U.S. Feds committed 7.7 trillion to rescue financial system

The Feds and the banks fought tooth and nail to prevent the release of the information.
After reading the article one can understand why.
The article is quite long and detailed and an eye opener.

John Stewart (The Daily Show) did a bit on it tonight... funny, but scary.

The universe is only 13.7 billion years old

[Lamplighter]

The headlines in the above link may appear to be at odds with the actual article below.
The former is the ($7.77 trillion) amount the Fed loaned to banks at 0.01 % interest.
The latter is the ($13 billion) profits the banks made using those funds
to buy US Treasury bonds at market rate of 3+ % interest.

If you care anything about what went on at the end of 2008 with
Treasury Secretary Paulson, the buy-outs of the banks, and the
role of Congress in all this, do read this article

Bloomberg
Bob Ivry, Bradley Keoun and Phil Kuntz
Nov 27, 2011

Secret Fed Loans Gave Banks $13 Billion Undisclosed to Congress
The size of the bailout came to light after Bloomberg LP, the parent of Bloomberg News,
won a court case against the Fed and a group of the biggest U.S. banks
called Clearing House Association LLC to force lending details into the open.

The Fed didn’t tell anyone which banks were in trouble so deep
they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day.
Bankers didn’t mention that they took tens of billions of dollars in emergency loans
at the same time they were assuring investors their firms were healthy.
And no one calculated until now that banks reaped an estimated $13 billion of
income by taking advantage of the Fed’s below-market rates,
Bloomberg Markets magazine reports in its January issue.

While Fed officials say that almost all of the loans were repaid and there have been no losses,
details suggest taxpayers paid a price beyond dollars as the secret funding
helped preserve a broken status quo and enabled the biggest banks to grow even bigger.

[classicman]

I've been reading about that as well. I wonder why it isn't debated as much as Cain's alledged exploits on the liberal stations?
No, I'm not seeing the outcry anymore. I guess some are too worried about losing what little they still have to do or say anything.

Its similar to the Fast & Furious whistle blowers. They all have been blackballed.
Some have even lost not only their careers, but also their homes and families.

[classicman]

Originally Posted by ZenGum

but if the US and Europe were to both have debt-crisis-spasms at the same time, things could get ugly.

When the US and Europe both have debt-crisis-spasms at the same time, things will get ugly.

[tw]

Originally Posted by Lamplighter

I thought tw would be writing about the $7.7 trillion the Fed Reserve loaned to the banks at 0.01% interest.

This type recession intentionally created by banks and other financial institutions is the worst type. It takes years to resolve. And more years of unemployment. Unemployment created by fiscal mismanagement on and before 2007 may be finally starting to diminish. Recessions intentionally created by government and their ‘welfare enriched’ cronies take that long to resolve.

To avert 40% unemployment, only solution was to dump liquidity into systems that created this recession. That lesson was well learned from 1929. Unfortunately, it is not fair to put money into the hands of the nation's crooks. But if not done, then 40% unemployment would exist in 2012. By making that mistake in 1929, then unemployment was that massive in 1933. We don't have that massive unemployment due to TARP.

Next should be criminal prosecution of glorified tellers who think they deserve more than $500,000 annually. These bean counters, their education, political lies, and their egos created this recession. We had no choice but to dump massive liquidity on them. Now is when prosecution of these people should be happening. They are nothing more than upscale bank tellers. But they are also well connected to wacko extremists in government who created this recession. And thanks to the Supreme Court, can now spend as much as they want to buy politicians.

We had no choice but to give these devils more money. Now that we should have weeded out the devils, our wacko extremists, well, how many people went to jail because they intentionally created the California energy crisis to enrich themselves? Why did the state of Oklahoma have to embarrass Harvey Pitts by filing suit against Enron? Unfortunately too many Bernie Madoffs are protected by wacko extremists because the Supreme Court now says you can spend as much as you want to buy politicians.

Why did First Energy almost create another Three Mile Island? Because they arraigned a $600,000 campaign fund raiser for Bush/Cheney.

Well, another TARP has apparently averted another potential 1929; this time in Europe. A massive recession created by the most corrupt trained in an obvious lie: the purpose of a business is only profits.

TARPs, ironically, are criticized by wacko extremists who hope we all forget who created this economic mess. TARP was a necessary evil due to ‘economic stimulus’ created mostly after 2000. If extremists where driven from government, then these most corrupt would be on trial in mass numbers. But Congress is even still withholding funds from the SEC. Wacko extremists know who butters their bread.

TARP is what was unfortunately necessary to avert 40% unemployment. Euro countries were threatened by the same problem.

[classicman]

The General Accounting Government Accountability Office this week issued a report criticizing the Treasury Department for incomplete and misleading press releases designed to make the results of the TARP program look better than reality warrants. In particular, “GAO’s analysis of Treasury press releases about specific programs indicate that information about estimated lifetime costs and income are included only when programs are expected to result in lifetime income”; “however, press releases for investments in AIG, a program that is anticipated to result in a lifetime cost to Treasury, did not include program-specific cost information.” In other words, Treasury loudly touts in its Press Releases when it makes money from TARP, but excludes the losses.

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