While Jefferson coined the phrase, “But it does me no injury for my neighbor to say there are twenty gods or no God. It neither picks my pocket nor breaks my leg;” in reference to religion, I have often applied this pearl to systems of economics. Getting a man to change his house in economics is on par with changing his god(s). I watch with bemusement at both, because no can really affect me, but someone must keep notes on their effects.
I have watched this looting long enough. I knew it was looting before George A. Akerlof, co-winner of the Nobel Prize in economic sciences, said, “What we have here is a form of looting.”
I knew the last loot to go down was suppose to be regional banks and credit unions. Their backs broken to a point the large multinationals could just gobble them right up. With a trifecta of zero savings rates, subprime and contractor loans coupled with a bursting of the real estate bubble.
Just take a gander at last years propaganda, here’s Bernanke, show his baboon arse per usual:
Bernanke expects bank failures
Friday, February 29, 2008
http://www.washingtontimes.com…
Mr. Bernanke expressed confidence there would be no bank failures as recently as last week, so his change of tune yesterday suggests that he recently became aware of banks whose solvency is threatened by what he characterized as a widening credit “crisis.”
“There probably will be some bank failures,” he said, though they are likely to be among smaller regional banks that are particularly exposed to falling property markets.
Wall Street markets, which swooned on Mr. Bernanke’s remarks about banks yesterday, have focused on the health of the biggest banks and investment houses, such as Citicorp, J.P. Morgan, Bank of America and Merrill Lynch, which cumulatively have reported more than $150 billion in losses. Despite their monumental troubles, Mr. Bernanke said he thinks the large banks have enough reserves and capital to avoid failure.
“I don’t anticipate any serious problems of that sort among the large, internationally active banks that make up a very substantial part of our banking system,” he said.
I love that Bernanke still has a job. He could not have been more wrong. But that is what was suppose to happen, until a horrible truth was discovered. By the very ideals of capitalism, the regional banks were worth more, and actually had advantage over the large, internationally active banks.
See, regional banks had these things called “assets” that weren’t invented and based on fantasy land values. Sure, the multinationals had a lot of commercial paper that said they were billionaires, but that paper was intrinsically worthless. The only reason it had value was because the multinational banks said they did, and no one is taking them seriously anymore.
Regional banks at least had local deposits, even the safe deposit boxes held more value than firms like Bears & Sterns. Because all they and people like Goldman Sachs did was put a pretty letterhead on a bucket.
It’s not like this hasn’t happened before, it use to be felony actually.
Book Shops
http://en.wikipedia.org/wiki/B…
Bucket shop is a brokerage firm that “books” (i.e., takes the opposite side of) retail customer orders without actually having them executed on an exchange.[1] These brokerages are also often called boiler rooms. The term is a defined term under the criminal law of many states in the United States which make it a crime to operate a bucket shop. [2]
Typically the criminal law definition refers to an operation in which the customer is sold what is supposed to be a derivative interest in a security or commodity future, but there is no transaction made on any exchange. The transaction goes ‘in the bucket’ and is never executed. Without an actual underlying transaction, the customer is betting against the bucket shop operator, not participating in the market.
Operating a bucket shop would also likely involve violations of several provisions of US federal securities or commodity futures laws[3].
This all changed when Clinton unsigned the Glass-Steagall Act of 1933 on a golf course in 1999.
This amazing was legal again, and the tricks of the bucket shops, under the letterhead of the finest financial institutions in the world, these ruses where hidden in legality of commercial paper, and sold to suckers across the world. At no time were these derivatives of derivatives based on a real security or commodity, none of this was fair market value.
Did you know there were derivatives based on whether another derivative would make money based on if a loan was paid off or not? That’s not a security, that’s a bet.
And guess what certain firms did when they realized the loan would not be paid back? That’s right, they sold their own derivatives short. All of this was suppose to create enough “wealth” to gobble up the regional banks, like the hungry hungry hippos that multinationals are.
But it didn’t happen, and now everyone is acting shocked that these big international banks are not easing up the short-term credit system! Of course they aren’t, this is their last chance to cripple regional banks. With the Federal Reserve and the multinationals withholding cash, choosing to reinvest in themselves and unable expand to the regional level, the system will never correct itself.
Lord only knows where that bailout money really went, to bad we can’t put a stop payment on the check.
And for the sake that is all good and proper, do not Nationalize the banks, as I seen proposed more recently. America can’t just change her house economically overnight, because the last thing I want is the Federal Reserve closer to the mint controls. What needs to happen is a natural correction based on movements of the free market.
The big internationals must be allowed to fail, especially those who do not have a commercial bank people actually have money with. Them fools, them owner of bucketshops, them bums.
Kick them to the street.
Do not make them Caesar.