THE FED IS NOT PRINTING MONEY

13 comments

Posted on 17th May 2013 by Administrator in Economy |Politics |Social Issues

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Jesse is on a roll this week. His contempt for the Fed and the toadies that use propaganda and lies to protect their interests is palpable. 

As a Reminder, the Fed Is NOT Printing Money

“So that the question is: Would there be any advantage, at this particular stage, in going back to the gold standard? And the answer is: I don’t think so, because we’re acting as though we were there.

 So I think central banking, I believe, has learned the dangers of fiat money, and I think, as a consequence of that, we’ve behaved as though there are, indeed, real reserves underneath the system.”

 Alan Greenspan, 20 July 2005

 

Yes that’s right.  The Fed is NOT printing money.

It is ‘retiring Treasuries’ and ’issuing Reserves.’
And everyone knows that Reserves are benign, if not almost meaningless accounting entities.
Banks just like to collect them.  Like Pokémon cards.
So implies the AngryBear amongst others.
And Mark Dow shows that there is zero correlation between the Fed printing money and the money supply.  And so ‘deal with it.’  Hey rube, you obviously don’t understand the difference between ‘liquidity’ and ‘credit.’
I thought it was cute that the study went back to 1986, long before the Fed had to resort to  Quantitative Easing, and expanding its Balance Sheet as they are doing today.
And they are doing it on a continuing basis, and not as an unusual action with regard to secular and isolated liquidity problems.  Unless you want to count chronic insolvency as a liquidity problem.
And the Fed purchases of Treasury debt at non-market prices is just dandy as long as it passes through the hot little hands of the likes of a friendly bank like JPM, who take their vig and then some.
And this chart shown below, printed courtesy of the St. Louis Fed, is just an illusion, so don’t look at it.  Seriously.  Don’t look at it. Knowledge is bad.  As a reminder, there are two scales on that chart, and the Adjusted Monetary Base uses the lesser scale.
As a reminder:

“In economics, the monetary base (also base money, money base, high-powered money, reserve money), is defined as the sum of currency circulating in the public and commercial banks‘ reserves with the central bank.”

Hey, the Monetary Base includes reserves that the Banks are keeping safe at the central bank.  And the monetary base is the foundation for that leveraged expansion of debt money that is characteristic of a fractional reserve banking system.   What’s up with that.  Does the Fed need to get out the liquid paper and correct that?

Here is a link to ‘Money Supply: A Primer.”

I recall that not long ago, Alan Blinder suggested that the Fed might alter the interest it pays on Reserves in order to stimulate more lending.  But he is just being a party pooper and doesn’t understand banking. Or the difference between liquidity and credit.

“The nation’s biggest banks have been nursed by the Federal Reserve way too long, former Federal Reserve Vice Chairman Alan S. Blinder said Thursday as he kicked off the tour for his new book, After The Music Stopped: The Financial Crisis, The Response and the Work Ahead.

The Federal Reserve, says Blinder, should stop paying interest to banks for their overnight deposits and should move to charge them for parking money. He says if the Fed set negative interest rates for overnight deposits – in effect charging a fee – banks would have to figure out better ways to make money and one obvious alternative would be to lend more to customers.”

Yes I understand these are not ‘excess’ reserves which is an ‘accounting designation’ created by the Fed.  It is the Fed that sets the level of reserve requirements, or the lack thereof, in its role of banking regulator.   And it has quite a bit to say about the quality of their collateral that be used as reserves.  Such as cash, aka liquidity to those ascending masters of finance.  And as I recall they used to set margin requirements on the equity markets.  But perhaps they no longer do that.

But this statement by Blinder somewhat ‘blows a big hole’ in the arguments of those who occasionally come out and lecture us that when the Fed ‘creates money’ (or liquidity if you prefer) and buys Treasury and Agency Debt from the Banks at non-market rates, it is not really creating money.  It is a benignly useless action.  It simply gives the banks ‘cheap liquidity’ that they can choose to use as they wish.  I wish they would buy some useless paper from me at non-market rates.  I accept all major forms of payment.

The Banks sit on this liquidity, and use it to prop up their zombie Balance Sheets.  I don’t think the virtual dollar sequentially numbered and marked.  So they may also use it to pay themselves bonuses. Or maybe leverage it to gamble in the markets with Other People’s Money.  Oh I forgot, Dodd-Frank changed that  Except for ‘hedging.’

The Fed is engaged in simple acts of charity for the poor and unwashed Bankers of Wall Street.  Uh huh.

Normally the Fed does not have to print money.  The Federal Reserve Banks do that for them under their charters with the consent and oversight of the Fed.  But when the real economy, as typified in the recent collapse and the continuing plunge of the velocity of money indicators, the Fed picks up the ball and prints money for the benefit of the economy.  They use this to ‘lower interest rates’ except in a liquidity trap wherein that is like pushing a rope.

I think what some of these helpful pundits are trying to say is that the Fed is not ‘printing money’ so that it is becoming an inflationary problem.  They are giving that ‘money’ to the Banks, and they hold it for safekeeping.  And for their gambling stash. And for credit cards and food stamp distributions and other fee generating activities.  And for loans to pay dividends, and fund share buybacks, and the occasional industrial activity.

That they are NOT getting that money to the real economy is another matter perhaps.  And among other things it involves the payments on excess reserves that they are paying to the Banks to sit on that money.  And the gaming of the financial markets to which they turn a blind eye.  And the enormous abuses in the financial system which have still not been reformed.
Click on the subject link ‘Excess Reserves’ below for more on these Tales from the Vienna Woods (the play, not the waltz) from our financial sophisticates, and sophists, who like to argue what the meaning of is, is.

Or just start by clicking here.

Posted by Jesse

I ADMIT IT!

16 comments

Posted on 13th December 2012 by Wyoming Mike in Economy

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I went to Yahoo to check the financial headlines. The place where all logic & brainpower goes to die. Found out some astounding information!

Who knew that “the U.S. recovery is among the soundest in the developed world since the Great Recession?!?” I bet you didn’t. I also found out that Ben Bernacke is the saviour, & we have under 2% inflation. I guess all those little charts on TBP are just BS. I even enjoy the fact that they found an “author” & I use the term loosely, who’s name is alllllllmost Rick Santelli. There is just so much good bullshit in here. Have another kool-aid & enjoy!

P.S. I also truly don’t understand something??? “Fed Chairman Ben Bernanke and his fellow policy makers met investors’ expectations by announcing a total of $85 billion in bond purchases per month.” I thought they were in the business of SELLING bonds sorta kindof??? Someone help a feller out.

Why the Fed Deserves Credit for the Economic Recovery
By The Daily Ticker By Michael Santoli

On 12-12-12, a day that already had numerologists buzzing, the Federal Reserve gave the markets a couple of new numbers to obsess over.

Fed Chairman Ben Bernanke and his fellow policy makers met investors’ expectations by announcing a total of $85 billion in bond purchases per month. But they also added an unforeseen wrinkle by pledging to maintain the Fed’s easy-money, zero-rate stance at least until the unemployment rate falls to 6.5% and expected inflation stays at or below 2.5%.

The setting of explicit targets has been discussed for some time and advocated by some within the Fed as a way to firmly anchor financial-market expectations and clearly convey central bank intentions.

Yet, these targets are mere guidelines, just the minimal prerequisites for the start of an eventual removal of the aggressive monetary stimulus the Fed has maintained. They are really just another way to convince investors and business decision makers that short-term rates will stay near zero and the Fed will stand ready to keep sluicing cash into the financial system until the labor market is unequivocally in better shape.

Indeed, the Fed’s statement explicitly said it “views these thresholds as consistent with its earlier date-based guidance,” which means the draining of liquidity from the system will not likely happen until mid-2015. In other words, until the reported unemployment rate falls by more than 1.2 percentage points from here, and the Fed’s one- to two-year inflation forecast gets over 2.5%, don’t even start to worry about rates rising from zero or the Fed shrinking its balance sheet.

The Fed’s latest policy moves are not without its critics. The plan to buy $40 billion in mortgage securities and $45 billion in longer-term Treasuries per month adds another $1 trillion a year to the Fed’s balance sheet, which already totals $3 trillion. For years, some analysts have been raising alarms that such voluminous money creation would surely uncork damaging inflation, which so far has not occurred. Others gripe that the Fed is essentially enabling the U.S. government’s heavy deficits by absorbing so much Treasury debt.

A related complaint, offered here on Yahoo! by John Tamny of RealClear Markets, is that the production of all these reserves is hampering the economy by sapping the strength and reliability of the U.S. dollar.

Yet in the absence of immediate or even early indications of an upwelling of inflation, the Fed is clearly determined to focus maximum effort on the other leg of its “dual mandate,” i.e. fostering full employment. So far, at least, the dollar has not collapsed and prices of everyday goods haven’t soared. Even gold, which has doubled in price since the financial crisis, has not managed to hang near its 2011 highs even with such fears of dollar debasement being aired loudly.

Economists at Barclays call the latest moves a continuation of the Fed’s “bold shift” which “further strengthen the Fed’s commitment to generate a stronger recovery and substantially improve conditions in the labor market.” Another objective is to join other central banks in working to “successfully contain large negative tail risks,” or major market panic attacks.

It’s pretty easy to snipe that the Fed’s zero-rate policy and trillions in bond-buying pledges have done little to speed up the pace of this recovery and lower the stubbornly high unemployment rate.

Yet the U.S. recovery is among the soundest in the developed world since the Great Recession. Michael Darda, chief strategist at MKM Partners, points out that the Fed’s policies “have been exactly enough to keep nominal GDP growing at a steady 4% rate” even with governments acting as a drag on growth in the past year or so.

That 4% nominal rate, which shakes out to a bit more than 2% real growth and just under 2% inflation, might not seem impressive by historical standards. But if it is sustained well into 2013, it would qualify as a victory for Fed policy makers and something of a surprise to financial markets still quick to spy a slowdown or worse around every corner.

HOW TO CREATE A FAKE HOUSING RECOVERY WITH YOUR MONEY

15 comments

Posted on 8th December 2012 by Administrator in Economy |Politics |Social Issues

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Make no mistake about it, Ben Bernanke, Timmy Geithner, Obama and their Wall Street cronies have attempted to engineer a ponzi scheme housing recovery with your money. They have used the FHA to dole out mortgage loans to subprime borrowers requiring only a 3.5% downpayment. When has this ever caused problems? The FHA backed a miniscule percentage of mortgages prior to 2008. Obama has used this agency to prop up the housing market, just like he has artificially kept the unemployment rate lower by doling out your tax dollars to morons going to the University of Phoenix, and using his government run auto finance company – Ally Financial – to dole out loans for Cadillac Escalades to deadbeats in West Philly.

fha share of market

Now we know that FHA backed loans going bad are skyrocketing. The FHA is broke. Guess who will bailout the FHA because they gave loans to deadbeats? YOU!!!! The FHA will lose at least $16 billion of your tax dollars next year.

FHA bailout

Ben Bernanke is buying up all the fraudulent mortgage debt from his buddies on Wall Street and transferring that bad debt to you. His balance sheet is leveraged 60 to 1 and is filled with toxic worthless shit mortgages. You are on the hook for that bad debt, while he pays you 0% interest on your savings.

Charles Hugh Smith describes the fraud in clear concise terms. Even a CNBC anchor could understand it, if they weren’t being paid to lie about it.

Real Estate: Is the Bottom In, or Is This a Head-Fake?

The housing recovery is no sure bet
by Charles Hugh Smith
Thursday, December 6, 2012, 10:32 AM

Everyone interested in real estate is asking the same question: Is the bottom in, or is this just another “green shoots” recovery that will soon wilt?

Let’s start by reviewing the fundamental forces currently affecting real estate valuations.

Expanding the pool of potential buyers has reached the upper limit

There are two ways to expand the pool of qualified home buyers, and they both rely on expanding leverage:  A) lower the down payment from 20% cash to 3%, and B) lower the mortgage rate to 3.5%.

Lowering the down payment increases the leverage from 4-to-1 to 33-to-1, a massive leap.

Increasing leverage increases risk. Over 90% of all mortgages are guaranteed or backed by Federal agencies such as FHA. This “socialization” of the mortgage industry means that losses ultimately flow through to the taxpayers, who are subsidizing the housing industry via these agencies.

Lowering the mortgage rate increases the leverage of income.  It now takes much less income to qualify for greatly reduced monthly payments.

With mortgage rates barely above the prime rate and Treasury bond yields negative in terms of inflation, there is simply no room left for lower rates or down payments.  The “increase home sales by expanding the pool of buyers” game plan has been run to the absolute limit.

The pool of buyers cannot be expanded any further; that boost to sales is done.

The unintended consequence of enticing marginal buyers to buy homes is that defaults are rising: 1 out of 6 FHA-insured loans are delinquent. This is the “blowback” of qualifying everyone with an income above the poverty line as a homebuyer.

The mortgage industry has escaped any consequences of “robo-signing” mortgage fraud

If the rule of law existed in more than name, this is what should have happened:

  1. MERS, the mortgage industry’s placeholder of fictitious mortgage notes, would have been summarily shut down.
  2. All mortgages and derivatives based on mortgages would have been marked-to-market.
  3. All losses would be booked immediately, and any institution that was deemed insolvent would have been shuttered and its assets auctioned off in an orderly fashion.
  4. Regardless of the cost to owners of mortgages, every deed, lien, and note would be painstakingly reconstructed on every mortgage in the U.S., and the deed and note properly filed in each county as per U.S. law.

That none of this has happened is proof that the rule of law is “optional” for financial institutions in America.

The $25 billion mortgage fraud settlement turned a blind eye to the fraud, and now the banks are applying losses they have already booked to the $25 billion, mooting the supposed “benefit” of the settlement to consumers.

The Federal Reserve’s purchase of mortgages – over $1.1 trillion in 2009-10 and now another $40 billion a month – is essentially a money-laundering operation in which the Fed exchanges cash for dodgy mortgages.

Analyst Catherine Austin Fitts (QE3 – Pay Attention If You Are in the Real Estate Market) summarized what this means:

“The Fed is now where mortgages go to die.”

“Thousands of mortgages on homes that do not exist or on homes that have more than one ‘first’ mortgage are now going to the Fed to disappear. Thousands of multifamily and commercial mortgages will be bought up as well. With documents shredded, criminal liabilities extinguished and financial institutions made whole, funds can return without fear of seizure.

QE3 proves beyond any shadow of a doubt that the extent of the fraud was as bad as I said it was. You can count up the bailouts and QE1, QE2, QE3 the numbers speak for themselves. The fraud was indeed in the many trillions of dollars.”

In other words, the financial sector has gotten away with murder, and the “overhang” of systemic fraud has been erased with Fed connivance.

Banks are restricting inventory

The banks are withholding distressed properties to restrict the inventory of homes for sale.

If supply overwhelms demand, prices decline.  That would be a bad thing for banks sitting on millions of defaulted mortgages and distressed properties.  Millions of impaired properties are being held off the market so supply is lower than demand.

The strategy has costs. Thousands of defaulted homeowners have been living mortgage-free for years. But the gains have been impressive. With supply dwindling, beaten-down markets have seen gains of 20+% this year as strong investor demand has pushed prices higher.

Since the strategy has paid such handsome returns, why change it?

ZIRP has attracted investment

The Fed’s ZIRP (zero interest rate policy) has pushed investors into a “search for safe yield” that has led many to buy corporate bonds, dividend stocks and everyone’s favorite “safe” fixed asset, real estate.

In many markets, one-third or more of all sales have been to investors.

Some are buying distressed properties to “flip” in strong-demand markets, but many are buying the homes as rentals with the plan being to hold them for a few years as prices rise and then sell to reap appreciation.

Anecdotally, every investor class is getting into the act, from Mom and Pop to big players such as insurance companies and Wall Street funds.  One of my contacts in the insurance industry told me that his firm was buying large multi-unit apartment complexes, as these rentals generated a yield of 6% to 7%, far above the 1.7% yield of ten-year Treasury bonds.

In a non-ZIRP world, Treasuries and other asset classes would offer similar yields but without the risks and costs of managing rentals. But in a ZIRP world of near-zero yields for low-risk financial assets, rental real estate is a compelling investment: decent yields, relatively low risk, and strong appreciation potential if housing has indeed bottomed.

“The bottom is in” – isn’t it?

Once potential buyers see prices rise and they conclude that “the bottom is in,” they jump in and buy, pushing prices higher in a positive feedback loop. The higher prices rise, the more evidence there is that the bottom is in, and the greater the incentives to jump in before prices once again rise out of reach.

Favorable rent/buy ratio

With mortgage rates well below 4%, the rent-buy ratio is favorable in many areas. It may indeed be cheaper to buy than to rent in some locales.

“Hot money” flowing into real-estate

As economies in Europe and Asia falter, “hot money” is flowing into perceived “safe havens” such as the U.S. and Canada. Some of this “hot money” ($225-$300 billion a year is leaving China alone) is flowing into real estate, a well-known phenomenon in markets such as Vancouver, B.C., Miami, and Los Angeles.

Conclusion

What can we conclude from this overview of fundamentals?

  • The mortgage industry escaped any real consequence from its systemic fraud
  • The Status Quo plan to reflate the housing market with super-low mortgage rates and down payments has worked to some degree
  • The financial sector’s plan to boost home prices by limiting supply has also worked
  • ZIRP has created a “crowded trade” in low-risk investments with attractive yields such as corporate bonds, dividend stocks, and real estate, which is being fueled by a self-reinforcing perception that “the bottom is in”

The question now is will these forces continue pushing prices higher? If so, the bottom may well be in. If these forces deteriorate or lose their effectiveness, then the “green shoots” of investor interest may wither as the U.S. economy joins Europe and Japan by re-entering recession.

In Part II: Forecasting the Future of Rental Housing and Home Valuations, we will examine what forces could change “the bottom is in!” to “this is just another head-fake” – with the real bottom still ahead.

Click here to read Part II of this report (free executive summary; enrollment required for full access).

How the Department of Labor Lies, Cheats and Steals…

1 comment

Posted on 31st July 2012 by MuckAbout in Economy |Politics

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Oh, this one is a good one!  Yet another huge example of how your trustworthy Federal Government just craps all over everybody to conceal what is really going on.  This time, even the labor unions should get pissed off!

I mean they are lying, hiding and distorting information, misleading the public and generally acting overtly like the Mafia in trying to cover up their screw ups.

How long can this keep going on?  How long before the whole rotten, stinking mess erupts puss all over everything?  It can’t be much longer.

Joan McCullough lays it on the line and there can be no doubt of her meaning and facts.  It’s enough to make you gag..

Muck.

 

Hat tip to John Mauldin.. Outside the Box..

*******************************************************************************

Commentary by :
Joan McCullough, East Shore Partners, 1-212-226-1223
Trading: 1-800-222-8723 joanmccullough@eastshorepartners.com

7/31/2012

… “Such supplementary interventions [by the State], which are justified by urgent reasons touching the common good, must be as brief as possible, so as to avoid removing permanently from society and business systems the functions which are properly theirs, and so as to avoid enlarging excessively the sphere of State intervention to the detriment of both economic and civil freedom. “ …. [Walter Bagehot]

When that was first posted in this space last week, I referenced it against the FED’s never-ending ZIRP. Because once the State inserts itself too long or too hard, they take over functions that are not their responsibility and thus expropriate a measure of our economic freedom. Which stinks.

Given the fact that we are now about the business of waiting for Draghi to show his hand (ahead of an upcoming FOMC meeting no less), perhaps it’s time to apply that papal pearl of wisdom to the LTRO and see how it shapes up.

I’m doin’ this off the top of my head and simplifying, so don’t nitpick; you know who you are. Market history buffs will recognize this immediately; we’ll catch up with you guys tomorrow. :-) The rest of the class, keep readin’:

The time frame is the mid 1850s/60s. Right around the time of the US Civil War. But we are in London. At a firm called Overend, Gurney & Co. Got that? Good.

This was a hot, steamin’ bank. They had a big business buyin’ bills of exchange at a discount. They don’t use ‘em anymore. But in their day, bills of exchange were the way the commercial markets got business done.

For the Newbies only: I am in France. You are in England. I sell you a cargo of X. You write a bill of exchange ( a draft) payable to me on January 10, 1860 drawn on the Bank of Oo-la-la. But I would rather not wait until the 10th of January. Because I have other fish to fry/business to push thru. So I endorse this bill of exchange over (sell) to Overend, Gurney & Co who purchases it from me at a discount. They then sit on it and collect full face value from my French Bank, Oo-la-la, come the 10th of the new year.

So what Overend & Gurney were doing was accommodating international trade thru short-term financing. That is the key. Short-term financing. They kept things humming along nicely. This was a function belonging to the free market system. And it worked very nicely until O & G got stupid.
Right. I gotta’ go with the idea that at some point they got a tad over-creative with their financing biz as the tide of the day was changing in that segment. Meanwhile, they had some nice profits, so they decided to invest them in long-term projects. Oh boy. They were short-term financing experts. Now they decide to go long-term investor? Uh-oh.
Well, this tack turned out to be a nightmare. So in order to raise cash, they went public (became a limited liability company which hid certain liabilities) by offering their shares at a big premium. Which got them liquid again.

But before a year was out, wouldn’t you know it, but the financial system was under a lot of duress in London. I’ll try to make this snappy as it could get quite long.

This is about limited liability companies. Laws were passed in the early 1860s in England to accommodate these entities. All they had to do was scare up 7 or more members and register as a firm. And bingo, they were relieved of a lot of the usual responsibilities such as disclosure. As you can guess, this was abused forthwith by some. In the financing sector in particular. Kinda’ like subprime: some of these newly-registered, limited liability entities were willing to lend vs. crappy collateral … and at much higher rates. So there was liquidity but at the end of the day, as always, no stability and that’s what eventually brought the house down. A bank run by any other name … is still a bank run!

So, eventually, London got its own “Black Friday” which involved the collapse of stocks such as railroad names in which there had been great speculation. (Think of O &G’s “long-term investments”!) Thus began the “Panic of 1866”, the catalyst for which was the declaration a day beforehand that Overend & Gurney, WHO HAD RECEIVED A NOTHIN’ DONE FROM THE BANK OF ENGLAND IN RESPONSE TO A REQUEST FOR AID… could not meet their obligations. (Remember that long-term investment portfolio? Right. Sayonara.)
Needless to say, Overend & Gurney went down the tubes which was bad enough. But the really bad part was that they took a boatload of other companies … including financials … down the rathole as well.
Aside: Gurney eventually got on its feet. And became part of Barclay’s. I just spit my tea out my nose. How funny is that, eh? It survived to go on another 150 years to make headlines in the LIBOR mess.
As the buffs know, O & G was located on Lombard Street.
Enter Walter Bagehot. Who wrote “Lombard Street: A description of the money market” back in 1873.

From his writings, developed what is known as the Bagehot rule. Which goes something like this: In time of crisis, the central bank must nip any panic in the bud. By making abundant loans … but against proper collateral and charging a premium.

This jibes with our opening quote which offers that the State can indeed step into any weak spot in order to facilitate the market if this action is for the common good. But they must not overstay lest they impose on our economic and civic freedom.

So if you ask me, both the FED and the ECB have tread where needed, but both have way overstayed. To the point where they have now become almost a permanent function in the market. And they have also violated Bagehot’s rule in that they have encouraged moral hazard to the extreme. The FED with ZIRP and the ECB with crap collateral and 1%, 3-year loans to deadbeats. Repeatedly. And look poised to continue with the same m.o. NO GOOD ON ANY LEVEL.

Let’s stick with raggin’ on the ECB, shall we? They have inserted themselves so profoundly into the financial mix that they are really no longer behaving like a central bank as they are no longer fostering stability. Rather by taking huge risk on their books like any other run-of-the-mill commercial bank, they are putting the system in jeopardy. Think in any terms you wish; the easiest way to get there is to wonder aloud how they exit this hellhole they have dug even deeper.

In the meanwhile, what is their contribution to solving the problems the Euro system is facing? Right. This morning we touched on this point briefly with this: … “The only lender to the banks was the ECB. The only lenders to the sovereigns were the banks. The more the sovereigns borrowed, the more the banks loaned them. The more the debt racked up by the sovereigns, the more they are pressed to implement austerity. The more austerity that is enacted, the slower the growth. The slower the growth, the closer to default they creep. Take the visual of a long line of collapsing dominoes. That’s about right.” …

Do you copy how bollixed up this is? The efforts of the ECB can only have short-term, temporary impact. What they are doing is propping these skanks in the short-term which does nothing in terms of reducing the overall debt. As a matter of fact, it worsens the debt picture. Because I am thinking along these lines, the lines of extend and pretend. This variety: a bank gets dough at the LTRO. Pays down some current obligations and makes the next sovereign auction look good because of their heavy participation. These loans from LTRO are 3 years now, don’t forget. So let’s say that after some time passes, this bank has an upcoming obligation. Now what? Where do they get the money to pay that down? Right. They have to sell some of the sovereign debt. To whom? To the very entity who lent them the money to buy it in the first place. And if the timing is anything less than optimum, you can bet your boots that they are selling this stuff at a loss. Noting that the ECB has taken a boatload of the same paper in as collateral. And there appears no end in sight to the madness. Including the lowest blow of all, which puts the ECB right in the same category with the FED: what they are doing has zip to do with the economy. Like the FED, they have forgotten John Q. a long time ago and are acting solely as agents to keep the banks, the sovereigns and by extension, themselves, afloat.

Which brings us around to the final straw, referenced above. The austerity. I can’t figure out what the thinking is here, can you? I mean, which side are we supposed to be rootin’ for?

A. this country does not meet its austerity targets, gets no aid and the economy collapses. Or B. this country meets its austerity targets, gets aid, but it’s too late because the austerity has already pushed it over the economic cliff.

I believe that Draghi will come with a bazooka; he’s in for a nickel already; you know what comes next. But as we know, no matter what he does and I’m sure the effort will be a gangbuster … there is no permanent fix here unless we get fundamental change.

Do the math, Sunshine. Fundamental change can only come about in the event that there is a massive restructuring of all this un-payable debt. In the meantime, they are touchin’ themselves if they think this short-term meddling is gonna’ “stick”.

Parting words, thanks to BG who alerted me to the 7/30/12 memo which was posted on the DOL’s (ETA division) website. http://wdr.doleta.gov/directives/attach/TEGL/TEGL_3a_12_acc.pdf
You should really take a good, hard look at this posting.

The background. On January 2, 2013, if we don’t get the budget mess sorted out, sequestration will be implemented. Which will hit the defense industry right between the eyes. Knowing this, certain Defense Industry honchos have “threatened” the government with filing WARN (layoff notices) informing employees of possible firing owing to the sequestration of funds away from the industry.
The law specifies “60 day notice”. That would put the filing right in front of the 2012 presidential election.

Just to underscore that these bums are lower than low, the DOL has decided that WARN notice filings in anticipation of sequestration would be INAPPROPRIATE. They so stink, I could freakin’ scream.

… “Questions have recently been raised as to whether the WARN Act requires Federal contractors—including, in particular, contractors of the Department of Defense (DOD)—whose contracts may be terminated or reduced in the event of sequestration on January 2, 2013, to provide WARN Act notices 60 days before that date to their workers employed under government contracts funded from sequestrable accounts. The answer to this question is “no.” …
In addition, the preamble states that “it is not appropriate for an employer to provide blanket notice to workers.” Id. at 16058. Thus, in cases where it may be difficult to identify the worker who will actually lose his/her job because of the elimination of a particular position, the regulations provide that notice must be given to the worker who holds that position at the time notice is provided. 20 CFR 639.6(b).” …
The DOL is so full of crap, it’s not funny anymore. Usually, they are all over companies, urging them to file so that they can be prepared to help anyone displaced. Unless of course, it might mean a few votes lost by the Administration. I frankly cannot believe my eyes.
As for the denial of the “blanket notice”, the DOL is just plain lyin’. Here’s a couple of “blanket” examples I grabbed from Pennsylvania in my fury:

West Penn Hat & Cap Corp. 
1000 Treadway 
Creighton PA 15030 

COUNTY: Allegheny 
AFFECTED: Not Provided 
MASS LAYOFF 
EFFECTIVE DATE: Not Provided 
WARN NOTICE
That’s real specific, ain’t it?
Canberra Industries, Inc. 
Warrington, PA 

COUNTY: Bucks 
# AFFECTED: N/A 
PLANT CLOSING 
EFFECTIVE DATE: 05/02/02 
WARN NOTICE
Number affected? N/A. Another one, eh?
The SUBJECT of this memo is: “Guidance on the Applicability of the … WARN Act” ….
Guidance?

Go here: http://www.doleta.gov/programs/factsht/warn.htm
and read the last sentence. Okay, I’ll do it for you: “The Department of Labor, since it has no administrative or enforcement responsibility under WARN, cannot provide specific advice or guidance with respect to individual situations”.

Except when an election is at stake? This is so over the top, I could spit. Because there is NO CALL FOR THE FEDERAL GOVERNMENT TO MEDDLE IN THIS. What they say in the disclaimer is true. They have no administrative or enforcement responsibility here. SO WHY THE HELL DON’T THEY KEEP A LID ON IT? OMAB.

If a company is gonna’ have a big layoff or a plant closure, they first notify the feds. But the real deal is the next step whereby they notify the State. That is where the action is. That is who liaises with the federal government to get training and grants and all the other baloney that goes with this crap. And of course, they notify the local municipality where the layoff is going to happen.
I gotta’ sign off. I am about to blow a gasket.
Hasta manana. If I make it.
:-)

FED KNEW ABOUT LIBOR FIXING & DID NOTHING

11 comments

Posted on 13th July 2012 by Administrator in Economy |Politics |Social Issues

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You can’t make this shit up. Trust no one. Get your money out of the financial markets before they vaporize it.

 

Before I confess bank price fixing…let me say, I love your accent

July 13, 2012, 12:41 PM
The transcript of an April 2008 phone call between officials at Barclays and the New York Fed is a pretty damning insider account of price fixing. But make no mistake: it’s also comedy gold.

The exchange takes place between a Barclays /quotes/zigman/301787 UK:BARC -0.83%official who isn’t named and Fabiola Ravazzolo of the New York Fed. Despite her Italian background — as detailed in a recent celebration of Italian entrepreneurs worldwide — Ravazzolo has a British accent, one the Barclays official very much appreciated.

“I’m glad you haven’t picked up an American accent yet,” he said.

“No, never,” she replied. She regaled how she’s still using British vocabulary, “like apartment, not flat.”

Ravazzolo, it should be said, wasn’t familiar with the intricacies of Libor, asking whether it was the borrowing or lending rate. This probably led to the extraordinary exchange, which starts on page five but really heats up on page six.

The Barclays official was noting when a Financial Times article showed the elevated rates Libor, the stock price at the U.K. bank dropped. So, the bank changed its attitude, as seen in this transcript.

The “:” is the unidentified official; FR is our New York Fed hero.

“: And so we just fit in with the rest of the crowd, if you like.
FR: Okay.
: So, we know that we’re not posting um, an honest LIBOR.
FR: Okay.
: And yet and yet we are doing it, because, um, if we didn’t do it
FR: Mm hmm.
: It draws, um, unwanted attention on ourselves.”

The official makes clear, it wasn’t just Barclays that was cheating.

“:And in fact, wha-what we’ve noticed is almost like um, a um, um perverse thing
where people that we know that are paying for money actually put in the lowest LIBOR
rates.
FR: Okay.
: So it, it’s almost to um, you know the ones that need cash the most put in the lowest,
lowest rates.
FR: Mm hmm.”

Ravazzolo  didn’t exactly rush to the Department of Justice with the information. (The New York Fed says she did alert her superiors, who did tell other agencies of the U.S. government within a month.)

“FR: It’s that you are penalized just because you are honest the way somebody else that is dishonest, eh, you know that’s an advantage so that’s why I was thinking in that direction
but
: Yeah, yeah.
FR: I understand. No, no and I completely understand the, the point is that ah you know, you, you, you always try to, to try and help for everybody you know, and this is so bizarre what is going on in the market
: It is bizarre. Yeah
FR: Because this is creating
: We felt very un-, very
FR: Uncertainties.
: I mean we, it- it’s true words to
FR: Um.
: Say we feel very
FR: Yeah.
: Very uncomfortable with it.
FR: I understand now.
: But, the-the position we find ourselves in, is one where we can’t really fight it.
FR: I know, I know.”

– Steve Goldstein

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