nicmarlo
Since Oct 22, 2001
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nicmarlo
Since Oct 22, 2001
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Yep; I'm out of here, where telling the truth about things economic, things Bush, things political, things immigration, things religion are........unwelcome. I try to keep my website updated periodically, it's a much better place to do so than here in Alice in Wonderland.
Long-Term Treasury Bond Market Paradox
Jim Willie | Jul 10, 2008
....We are witnessing the destruction of the US financial foundation to its very core, with most of its appendages wrecked as well. The bankers cannot offer any solutions except for the public till to rescue them before they become abject paupers. They have become beggars on the political steps, offering no wisdom, only blueprints for rescuing their own hides. Amazingly like today, Bernanke and Paulson each were on the receiving end of bootlicking by Congressmen, when they should have been vilified. They propose taking more control of the system, when they have destroyed the system. They act as authorities still, when they should be defendants in grand larceny and grand fraud cases before the world court. When the Wall Street human wrecking crews come before the US Congress to propose solutions, they might better spend their time to explain how their financial engineering failed and why they should not be banned from all government and regulatory posts. The public cannot bail them out as taxpayers. The bills will continue to be paid by foreign investors via credit supply. What they refuse to pay, the US will rely on the ultimate quicksand to print counterfeit money, which will deliver the next severe blow to the US Dollar The foreign wealth centers have begun to shun the US Dollar and US Treasury, except for the Arabs, who harbor some last drop of pity for their military master keepers, all part of a vast protection racket.....
Treasury Agrees to Absorb any Losses to the Fed from Bear StearnsTranscript of video:
Video from CNBC (hat tip idoc)CNBC's Steve Liesman reports on a letter from Treasury Secretary Paulson to New York Fed President Tim Geithner (PDF). In the letter, Treasury agrees that the Fed can bill Treasury for any losses from the Bear Stearns deal.
"You know Jamie Dimon and Ben Bernanke both kinda made out like our financial system was fixing to collapse into a big smoldering pile of nuclear waste if J P Morgan didn't come in and rescue lowly little Bear Stearns, but at 2:30 in the afternoon, a rather interesting exchange took place. Let me read it to you:
Senator Richard Shelby: "Mr. Dimon, for some time, J P Morgan Chase has acted as the clearing house for Bear Stearns. I believe J P Morgan Chase also has extensive OTC derivative contracts with Bear Stearns. What was the extent, sir, of J P Morgan Chase's interconnectedness to Bear Stearns prior to the Bear's announcement of their intention to file for bankruptcy, and what would have been the impact on your company's balance sheet if Bear Stearns had been liquidated? Were these considerations that went through your mind because you were connected. You were the banker, basically, the commercial banker for an investment bank?"You know what Mr. Shelby, I believe, was trying to probe at here was did Bear Stearns try to hedge off their risk by buying their counter party? And, Jamie Dimon, however, threw back a rather interesting reply, he says:
Jamie Dimon: Yeah "we were one of their bankers and one of their main clearing houses, so we obviously had extensive relationships and exposures but the answer to your question, our direct exposure on that day was approximately"...wait for it...guys....."zero. So if you say and where we did have exposure it was fully and totally collaterized, our real exposure would have been, if Bear Stearns went bankrupt, the impact it would have had on the financial system, we would have probably lost money, but we still would have been in".....wait for it again...."fine shape. So it really did not...it was not one of the reasons we went ahead and did this transaction."Systemic risk? I thought the entire financial system was about to collapse. I thought we had a ticking nuclear bomb sitting on the world's balance sheet that the Feds successfully difused. Maybe that wasn't quite true.....
We didn't hear Mr. Shelby follow up with the question that, had I been in that room I would have asked, and that would have been something like this:
Everyone has been told, Mr. Dimon, that this transaction was undertaken because the entire financial system was at imminent risk of a full on collapse. But you just testified that you would have been in "fine shape" had "Bear Stearns filed bankruptcy." That doesn't sound like financial armageddeon to me. I hate to be impolite, Mr. Dimon, but your answer compels me to ask: as a member of the Board of the New York Federal Reserve and Chairman of J P Morgan, who's claimed intimate knowledge of Bear's exposure as their clearing firm, did Mr. Bernanke commit perjury when he claimed the justification for this merger was systemic risk, or did you just perjure yourself? Because, see, from where I sit and what I just heard, one of you must have been less than honest with this committee.You know, you didn't hear that from our fine senators yesterday, did you? Maybe you ought to pick up the phone today and ask them why not. Twenty nine billion dollars of taxpayer funds are now committed to backstop a private firm's acquisition of another....a firm in acquisition that Mr. Dimon also testified J P Morgan would not have taken without that $30 billion backstop.So, again, I ask, exactly why was $30 billion of taxpayer funds committed to this transaction if, in Mr. Dimon's esteemed opinion, and let's face it, if anybody should have known, it was him....they weren't in trouble if Bear Stearns went down, and yet, as their clearing firm, and as a counterparty to many of their OTC derivatives, they were, if not one of the largest institutions at risk, possibly the largest institution at risk. One wonders....
But, you know what, yesterday, We the People did not get the answer to that question in those hearings because our senators didn't ask.
It's time to pick up the phone folks. You have been played with, lied to, bamboozled and, generally, ripped off, systematically, for years.
I don't know whether or not J P Morgan told the truth. I don't know whether or not Ben Bernanke told the truth. All I can note is that one of them had to have been less than forthcoming in their testimony because if J P Morgan faced no systemic risk, why exactly, again, was it that Bear Stearns was bailed out? Why were they acquired? And why was $29 billion of taxpayer money committed to the transaction? I still don't have an answer to that question but what we do know is that the proffered reason from Mr. Bernanke has been debunked by the CEO of the firm that claims the most intimate knowledge of the acquired company's balance sheet.
Come on, Ben. Come on, Congress. We deserve better. It's our money, not yours."