derivatives (2)


Greenspan, Bernanke
Meltdown Problems
The leaders of the United States Federal Reserve banking system have trotted out the enormous chutzpah required to actually sue the leading German bank for doing a tiny part of what our Federal Reserve allowed and even encouraged here in this country. Putting the matter into the simplest terms, the Fed would like Deutsche Bank to repay a few Billion dollars because they claim that the FED lost money when DB didn’t pay enough attention to whether people receiving home loans in Germany actually had jobs or not.
 We say “chutzpah” (what the British call “cheek”) in describing our Fed Banking because meanwhile, here in the United States the Fed completely ignored for over thirty years far worse banking practices which nearly brought about the complete collapse of the American financial system and that today threatens to give the country stagflation and eventually run-away inflation.  Fed Chief Alan “Don’t-you-dare-tie-me-to-the-meltdown” Greenspan even went so far as to lead the cheerleading for the tricky straw that broke the camel’s back: unregulated derivative investment. To be specific, the Federal Reserve under Alan Greenspan and Ben Bernanke has for years given a wink and a nod to and ignored the impact of . . . .
A)   The Jimmy Carter 1977 Community Reinvestment Act (CRA ’77) and five expansions of it (four by Clinton; one by Bush, Sr.) between 1992 and 1998 that created the sub-prime lending crisis by forcing banks and mortgage companies to knowingly make very ill-advised home loans.
B)   The activities of ACORN in browbeating and shaking down mortgage lenders and banks to accelerate the evils of CRA ’77 and the sub-prime lending crisis.
C)   The shift in mortgage banking from 1975 when one in every four hundred-four loans was “suspect” (administered at 3% down payment or less); to 1985 when one in every one hundred-ninety-six such loans was suspect; to 1995 when one in just seven loans was suspect; to 2005 when worse than one in three such loans (34%) was highly suspect, granted often without any down payment at all.
D) The final Clinton steroid version expansion of CRA legislation in 1998 which made it easier for ACORN to get unqualified loan-seekers into $450,000 homes in 1999 than it had been to get such people into $110,000 to $120,000 homes a decade earlier.
E)   The final ACORN assault on the nation’s home mortgage industry by abusing the CRA laws to get houses for people . . . .
1)     Without jobs
2)    Without good credit ratings
3)    Without rental histories
4)    With only food stamps to list as “income”
5)    Enrolled in other welfare programs
       6)    and even for Illegal aliens 
F. Fed Chief Alan Greenspan heartily approved the onslaught of derivative investments saying they “held the key to eliminating financial downturns in the future.” Of course, it was derivatives of lumped-together junk mortgages that proved to be the final nail in the financial melt-down coffin which collapsed so many large financial institutes . . . you’re a great man, Alan, a truly great man.
G.    Once retired from his post as Fed Chief, Greenspan worked as a special consultant to . . . wait for it . . . Deutsche Bank . . . that’s right . . . .
H.     In a speech in February, 2004, Greenspan suggested that more home-seekers should take out ARMs (Adjustable Rate Mortgages) after he’d deliberately held the nation’s interest rates artificially low for a decade . . . in effect, sabotaging the individual lenders almost as much as the CRA laws were sabotaging the nation
I.           According to Wikipedia,  in referring to the part Greenspan played in allowing the financial-meltdown, Matt Taibbi called Greenspan a vain "classic con man" and a undistinguished economist who, through political savvy, "flattered and bullshitted his way up the Matterhorn of American power and then, once he got to the top, feverishly jacked himself off to the attention of Wall Street for 20 consecutive years." Taibbi said Greenspan had "established himself as an infallible oracle, and a lot of it had to do with his ability to seduce key media figures, sometimes literally." Taibbi reported a Wall Street term called the "Greenspan put" which "meant that every time the banks blew up a speculative bubble, they could go back to the Fed and borrow money at zero or one or two percent, and then start the game all over", thereby making it "almost impossible" for the banks to lose money. The chapter Taibbi dedicated to Greenspan in his book Griftopia bore the title The Biggest A__hole in the Universe.
J.  Even now as the nation seeks to fight its way back to prosperity, present Fed Chief Ben Bernanke is inflating the currency and denying at every juncture that he’s doing so. The rising price of gas and food is 95% Bumbling Ben’s fault and only 5% due to other extraneous factors.
In fairness to Greenspan it must be said that for the first ten years of CRA ’77 legislation he was not the Fed Chief, Paul Volcker was. In fairness to Volcker, none-zero-nada-zip-not one of the five CRA ’77 expansions to come was law when Volcker was in office . . . and ACORN in those days was largely confined to Clinton’s Arkansas (It began life in 1977, as the “Arkansas Community Organizations for Reform Now”) so the percent of suspect loans in the entire country only doubled in the first decade vs. multiplying by 28-fold under Greenspan. Greenspan never once notified the nation of the immense danger from this cancerous assault upon the nation’s mortgage system or reminded progressive lawmakers of the harm they were doing. Ronald Reagan deserves huge censure for putting a man of such monumental incompetence into such a power seat.
Credit Default Swaps and other derivatives were praised on several occasions by Greenspan as valuable instruments that would make severe financial downturns impossible. In March, 1999, he said, “ . . . I am quite confident that market participants will continue to increase their reliance on derivatives to unbundle risks and thereby enhance the process of wealth creation.” In another speech he opined that “derivatives have increased the standard of living globally.” How could such an idiot get any job in the financial industry? Just about any asinine investment works in a wide-open bull market; the key to understanding dangers is to see what happens in a severe downturn when everybody wants to sell and get out all at once.
The ultimate Greenspan lunacy was uttered in 2004 when he summed up the value of derivatives for protecting the financial markets: “Not only have individual financial institutions become less vulnerable to shocks from underlying risk factors, but also the financial system as a whole has become more resilient.”
So now our FED has the ironic gall to criticize and bring suit against a German bank for a sin perhaps 1/10,000 the size of our own failings which brought the entire world to the brink of financial cataclysm. Good job, Bernanke, good job.
Ya’all live long, strong and ornery,
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Is “Judgment Day” tomorrow? The foolishness of our Federal Reserve Chairman, Ben Bernanke and the excesses of five “too big to fail banks” now places the entire future of America at risk . . . .

George Soros Seeks America’s Ruin

to Advance His New World Order

In the narrative that follows, two important men (George Soros and Ben Bernanke) are discussed. In fairness to Soros, he appears to be an utter scumbag who has already, via his connections to the Clintons and ACORN, helped set up America’s recent financial meltdown and potentially the upcoming one as well. That’s as fair as Rajjpuut can be. In fairness to Bernanke, he probably sees his ongoing decision as avoiding “death by saber” in preference to death by a million paper cuts. Rajjpuut would remind him that no company and no bank is literally “too big to fail” and if he were strong enough to allow five big banks to fail, that’ll probably be the best thing for the American people and the nation they love . . . let us now return to scumbag George . . . .

Billionaire currency speculator George Soros (a self-claimed ‘philanthropist’ sometimes called ‘the man who broke the bank of England’) has been quoted thusly from time to time, “Sometimes I do feel more than a little bit like God . . . it is very important for the USA to find its proper place in the New World Order . . . as things stand, the main obstacle to world stability is the United States.”

When George Soros was a 13-year old boy in Budapest, Hungary, he was a capo, a Jew set up by the Nazis to help them control other Jews. His specific job was to deliver notifications at first to Jewish farmers and businessmen and lawyers and then later to just ordinary citizens saying, they were to report to the Nazis at such and such a place, at such and such a time (to be deported to a concentration camp). George, who calls himself an atheist these days, says he feels no guilt from his collaboration but just did what he had to do to survive.

Besides making a fortune on the collapse of the British pound-sterling in 1992, George is famous as well for bringing down currencies in Slovakia, Georgia (the former Soviet SSR) and Malaysia and reportedly a few other countries where his connections are a little bit “iffy” to prove. His modus Operandi has been by using radical personalities to form a “shadow government” within the nations he targets. In our case, that Shadow Government is the ultra-progressive left of the Democratic Party.

Thanks to conspiring with Bill Clinton, ACORN, Barack Obama, and progressive American politicians everywhere, Soros seems poised to win another huge currency bet and in the case of the United States, he hopes to collect twice . . . winning tens of billions of dollars when the dollar collapses and then the ruin of the United States would bring about a giant leap forward for Soros’ New World Order led in America’s absence from the top rungs by the Chinese government’s state-capitalist/communists. Hmmmm.

Soros’ unwitting (we think?) benefactor in all this is Federal Reserve Chairman Ben Bernanke. Ben’s policy of “Quantitative Easing” (monetizing the U.S. debt by having his Federal Reserve Bank buy up treasury issues) is designed to keep interests rates as low as they’ve been in a generation . . . or even take them lower. But, but, isn’t that (combined with Bernanke’s earlier multiplying of circulating currency in the country to 15 times the September, 2008, levels) a recipe for runaway inflation and perhaps even hyper-inflation? What’s going on? Interest rates are the lowest they’ve been in 30+ years supposedly controlled by Bernanke to maintain the housing market’s fluidity and spur business investments.

The two years this policy of near-zero interest rates have been in effect; plus the nation’s massive home-buyers’ tax credit . . . business has stayed very flat and at best, housing prices have almost stabilized. Is Bernanke even less competent economically than Obama? Or could he have an ulterior motive?

Looking at business we’re not seeing capital expenditure increases or increased hiring of employees . . . just ain’t happening. Instead businesses are buying back their own stock. Why? Because the mortgage industry and the business world are both on the same page . . . the page where it reads: “This is a phony recovery.”

Compared to the spring of 2008, revenues at S&P 500 companies are 12% lower today. Expansion would be foolish under those circumstances. Businesses don’t often buy back their own stock except when a) they think the share prices are too depressed or b) they’ve got nothing better to do with the money or c) both a) and b) above are true . . . but since corporate insiders are dumping their own personal shares like rats leaving sinking rowboats . . . (insider selling/insider buying ratio during October, 2010, ranged from 210/1 up to 2000/1) implies that they believe their companies’ stock shares are way over-valued and not a bargain purchase at all, is it possible that conditions a) and c) above don’t apply here and now? And, therefore, the corporations don’t have anything better to do with their money (condition b)?

That means that Bernanke’s stated purposes are presumably a genuine crock of B.S. Why does he wish to keep interest rates so abnormally low? We return to the never-never land of derivatives and too damn big to fail. The five banks** that Bernanke and Obama have been shoring up since January, 2009 are in deep, deep, deep doo-doo. We are NOT talking chump change here . . . nominally . . .

J.P. Morgan holds derivative exposure of $73 TRillion.

Bank of America holds derivative exposure of $47.5 TRillion

Citibank holds derivative exposure of $44 TRillion

Goldman Sachs holds derivative exposure of $41 TRillion

HSBC holds derivative exposure of $2.6 TRillion

Overall, of their total derivative exposure, $188 TRillion in interest- rate derivatives is held by these five banks. Bernanke is allowing them to profit for exposing themselves to those derivatives without any risk of failure because if they fail . . . America comes close to total implosion. The recklessness of these five banks especially the first four named is absolutely intolerable. The Federal Reserve Bank’s actions have aided and abetted the worst financial malfeasance in world history. Their interest rate derivative exposure is the equivalent of allowing a terrorist to buy a lottery ticket for the opportunity to destroy the entire banking system of the world . . . yeah, you’re probably not going to lose and you get to keep his buck, but, what happens if he rolls a natural?

Banks are NOT supposed to gamble with depositors’’ money! That $188 TRillion is 13.5 times the United States’ gross domestic product and 4.2 times the GDP of the entire world. Bernanke is not protecting you; not protecting the country; definitely not protecting the dollar; and not protecting the world economy. He is protecting profit and preventing ruin for the Goldman Sachs etc. of the world who are “too big to fail” . . . in doing so, he is making tens of billions of dollars for George Soros to collect when runaway inflation hits the country and the dollar stops being the world’s reserve currency.

Is “Judgment Day” tomorrow? The foolishness of our Federal Reserve Chairman, Ben Bernanke and the excesses of five “too big to fail banks” now places the entire future of America at risk. George Soros, who is guilty of helping the progressive wing of the Democratic Party bring about the financial meltdown, is now exploiting the foolishness of Bernanke and perhaps giving a little tweak here and there by selling dollars short on the currency exchanges . . . and the big loser: you and the American Dream.

Ya’all live long, strong and ornery,


**According to the Office of the Comptroller of the Currency’s Quarterly Report on Bank Trading and Derivatives Activities for the Second Quarter 2010 (our most recent), the notional value of derivatives held by U.S. commercial banks is around $223.4 TRILLION. The five banks mentioned above account for 94% of those holdings.

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