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The American Empire Is Bankrupt (pg. 5)
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| Krypton |
| quote: | Originally posted by culorut
The latest on the honest Federal Reserve. They just keep getting better and better with their bull. |
What are they lying about? |
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| pkcRAISTLIN |
| quote: | Originally posted by culorut
The latest on the honest Federal Reserve. They just keep getting better and better with their bull.
Grilled on Merrill, Bernanke defends Fed 'Integrity'
Thursday June 25, 2009
Federal Reserve chief Ben Bernanke faced a grilling in Congress Wednesday over the rescue of investment giant Merrill Lynch but argued that the Fed acted "with the highest integrity" on the matter.
Bernanke was summoned to a House of Representatives hearing to explain the Fed's actions in the Bank of America purchase of the Wall Street group, a deal that nearly collapsed when the extent of Merrill's losses were revealed.
Some lawmakers have said the Fed kept other regulators in the dark about key issues, while others said the central bank and Treasury pressured Bank of America to finalize the deal after it wanted to walk away.
Bernanke told the panel that the Federal Reserve "acted with the highest integrity throughout its discussions with Bank of America regarding that company's acquisition of Merrill Lynch."
Bernanke acknowledged that the deal, announced last September, ran into trouble on December 17, when Bank of America learned of "significant losses" at Merrill Lynch for the fourth quarter and threatened to walk away, citing a "material adverse" clause or MAC.
Bernanke said he "expressed concern that invoking the MAC would entail significant risks, not only for the financial system as a whole but also for Bank of America itself."
In the face of a barrage of questions from lawmakers, Bernanke denied that he had threatened to oust Bank of America chief executive Kenneth Lewis and pressured the banking giant along with then-Treasury secretary Henry Paulson.
Representative Jim Jordan asked: "Do you see how a reasonable person could reach ... the conclusion that there, in fact, was this pattern of pressure from the government?"
Bernanke replied: "No, not if you're sufficiently informed. As I said, I did not tell Mr. Paulson to convey any threats."
Asked later about the Fed's aid of 20 billion dollars for the deal, Bernanke said, "I did not promise any specific amount of money."
He added that the amount of funds pledged "was the commitment of the government to work in good faith with Bank of America to develop a contingency plan that would assure the viability of the company in case of financial crisis."
As part of another exchange, Representative Dan Burton asked: "Why did you keep the SEC (Securities and Exchange Commission) in the dark?" on the Merrill problems.
The Fed "did not keep the SEC in the dark," Bernanke replied. "We were working carefully and closely with our other regulatory agencies."
But some lawmakers expressed concern about the way the matter way handled, particularly the last-minute deal for 20 billion dollars from the US government to help Bank of America absorb Merrill Lynch.
"In short, Bank of America's acquisition of Merrill Lynch began in September 2008 as a private business deal, and was completed in January 2009 with a 20 billion dollar taxpayer bailout," said House Oversight Committee chairman Edolphus Towns in his opening statement.
Representative Dennis Kucinich lamented that "the Fed's leadership orchestrated an aid package that attached no meaningful conditions to the money."
Kucinich added: "The Fed required no changes whatsoever in Bank of America's deficient corporate leadership. The Fed even gave Bank of America more money than Ken Lewis had originally asked for."
Kucinich said the case is important in view of the proposal by the Obama administration to boost the power of the Fed in helping avert failures of companies that pose a "systemic risk" to the financial system.
"The Fed's decision-making process in the Bank of America-Merrill merger makes the case for a significant increase in accountability at the Fed," he said.
"We can't afford to make the Fed a super-regulator, as some have proposed, without also increasing its transparency."
Congress opened the inquiry after documents released by New York state Attorney General Andrew Cuomo indicated that top US Treasury and Federal Reserve officials threatened to push out bank management and board members if the takeover were not completed.
The documents also showed regulators cautioned Lewis not to disclose the extent of Merrill's troubles because of fears of a "disaster in the financial markets."
http://rawstory.com/news/afp/Grille...s_06252009.html |
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NEW YORK (Reuters) - Stocks rallied on Thursday as investors were relieved Fed Chairman Ben Bernanke withstood a barrage of pointed questions from Congress on the Bank of America-Merrill Lynch deal relatively unscathed.
Retailers and home builders led stocks higher for much of the session, helped by a surprising profit increase from retailer Bed Bath & Beyond Inc(BBBY.O). Energy companies' shares also rose as oil prices climbed above $70 a barrel.
Stocks extended gains shortly before midday as investors took Bernanke's hearing in stride. Despite lawmakers' criticisms of Bernanke, the Fed chairman is well liked on Wall Street and most analysts anticipate he will be reappointed.
The U.S. House of Representatives Oversight and Government Reform Committee questioned Bernanke on the Fed's role in Bank of America's takeover of Merrill Lynch, and whether he pressured Bank of America's CEO Ken Lewis to go through with the deal after Lewis raised objections.
"There was concern as to what might happen there. He seemed to give some pretty decent testimony; at least it didn't get out of hand," said Bucky Hellwig, senior vice president at Morgan Asset Management, in Birmingham, Alabama.... |
http://www.reuters.com/article/busi...E5501YF20090626
so much for cretinrot's latest attempts to understand what's actually happening in the world :stongue: |
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| atbell |
| quote: | Originally posted by DOOMBOT
I thought it was a good speech and wanted to share it for the good of the group. I also do not believe that our country will ever pay back its debts and the numbers that Fisher talks about, in regards to Social Security and Medicare for example, help put things into perspective. How our politicians think that they can ever repay their debts and also continue to try and pay for these types of programs here at home is just mind boggling.
To answer your second question, I like to read from many different sources. |
I'll see if I can get some time to read over the speach but I suspect it's similar to things I've read before. If I remember correctly Greenspan was warning on social security and medicare in 2004 along with education. It never stops amazing me how long it takes for simple facts to actually become accepted, not to mention how many different people have to bring it up.
I try to read different sources too, but don't find myself on the regional fed sites all that often.
I completely agree that the politicians are in trouble. Those that actually address the issue will consistently loose to those who claim that everything is good.
What I've been trying to figure out is what type of action would be required to actually reduce the debt significantly over the next 5 - 10 years. It doesn't look good from any angle I've aproached the problem. |
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| atbell |
| quote: | Originally posted by Krypton
Hmm, sounds pretty bullish. After all this is said and done, Bernanke will be solidified as probably the best Fed chairman ever. Give it 5-10 years. He'll be reappointed. Check this out.
http://en.wikipedia.org/wiki/Bernanke_Doctrine |
I'm not sure if he'll be called the best ever.
He's done a decent job, responded as he would have if he was in charge at the onset of the great depression, but I think he's far to lenient on inflation. I expect to see the dollar depreciate significantly in the next few years. The danger there is that it happens all at once.
Regardless, I'm not going to take any pay in US$ that's for sure. |
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| atbell |
| quote: | Originally posted by jerZ07002
you've said this numerous times, but i can't conjure a situation in which it would be more beneficial to the US to WILLFULLY default than it would be to print money to pay off the debts. Here are the consequences as I see them:
1) Paying off debt by printing money - causes inflation, causes increase in interest rates to compensate for loss of value due to inflation.
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Inflation is a tax on the retiered in one way. It destroy's savings and they can't be replentished with wages that increase with inflation. Not to mention wages don't move as quickly as prices. if inflation hits 10% then it is pretty certain that the public's standard of living will decrease FAST. Rapid decreases in living standards lead to political instability, extreme cases lead to extreme instability, riots and revolutions.
If the calculus of the administration is such that they feel the decrease in the standard of living will be large enough to risk political instability that will be detrimental to the country they will simply default and make due with higher intrest rates on debt in the future.
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2) willfully defaulting - causes increase in interest rate due to default risk (much harder to quantify than inflationary risk, and has a longer term impact); causes firesale of treasuries resulting in significant decrease in value, including those treasuries held by nations that are complaining about the inflationary risk (clearly this is a huge obstacle to overcome for your theory to hold true); firesale causes an increase in money supply as holders are monetizing their treasuries, and fed is purchasing treasuries to prop up the value in a feeble attempt to manage interest rates, and the US government is purchasing the treasuries to decrease its overall borrowing costs. The combination of interest rate increase and sale of treasuries will result in inflation in this situation, but the risks seem much greater.
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Yes a default would cause a run on the treasuries, but it should probably be termed a decrease in price, not value. I know that's a bit picky but it is one of the current problems we face. Value implies worth, wich is actually very difficult to access. Value is something that is determined by an individual. Price is the market rate, which is set by the agregate of individuals bidding on something based on thier value calculations. In a more applied way, it means that people should not look at something, stocks and currency in particular, and attempt to figure out what it is 'worth' as if there is some absolute. They need to figure out what it is 'worth' to them and then to buy or sell depending on where the value calculation result is relative to the price that is set by the market.
Getting back to currency, understanding what a US$ is 'worth' in absolute terms is just plain impossible. Clearly the US$ is 'worth' a lot more to people who expect that there will be something they can purchase with it in the future. Seeing as I am a Canadian, the US$ is clearly 'worth' less to ME than it is to someone who lives in the US; yet it is probably 'worth' more to me than to someone from North Korea or another nation that has little trade with the US. This shows the massive danger that is currently hangging over the US$, most of the reserves are held by people who don't need US$ to buy things (demand is inflated), if there isn't a shift in the demand outlook for the US$ in the future (ie. things to buy in the US) the dollar could fall of a cliff.
As for the sale of treasuries / firesale of, that will definately cause inflation. Rising interest rates lowers inflation though. The theory behind that is that demand for a currency who's interest rate is high relatvie to other interest rates increases because the returns on holding that currency are higher, therefore more people want to cash in on the higher returns.
It's important to remember that the US has defaulted in the past, when the Germans refused to roll over thier debts and wanted to collect the amount of gold that the US$ was pegged to at the time, the US government simply removed the peg, letting the currency inflate, effectively defaulting on thier past obligation. I *think* this has happened twice but I don't remember the other time although if it is true than I read it in the same place as I read the first note.
At the end of the day, the best way to figure out if a default will happen is to look at other countries who have defaulted and to see why they did it. The case I know best is that of Argentina and the fact that the macroeconomic characteristics are so similar is what has me on a very negative bent. I beleive that problems will not be as bad as I sometimes feel, but I still think there are real problems that are waiting to unwind that are not being adequately considered by the Federal Reserve, investors, the markets, politicians, and the general public.
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I'm not sure whether you have ever studied with chinese students, but 1) the stereotype about asians is not true (i.e., they aren't any smarter than any other demographic, in fact, FOB asian students at my school were actually nowhere near the top), and 2) even the best chinese student had a meager grasp of english (or if geitner was speaking chinese, i'm sure his chinese had a significant potential to be confused in translation). |
I'm not implying that the students are any smarter than anyone else, the ridicule should be taken at face value. Students, of any type, are less likely to fully stand behind an ideology or analysis because they have less vested interest in it. Chinese students are even less interested in maintaining the machinations of capitalisim then US students would be.
I think the big realization is that there have been (are) major mistakes in some of the fundamental economic reasoning on which the US (Western? Anglo?) capitalist system has been built. Until these are confronted and exposed as flaws nothing is going to get better.
Serriously, if Americans, in the broadest terms, had such a solid understanding of thier system, why did they sell out to the Chinese? Doesn't the fact that one country could destroy the economic system of the US by issuing a single public statement show exactly how ignorant the 'public' has been to the functioning of thier own system?
Could it have been avoided: Y E S !!!
Restrictions on the amount of reserves a single country can hold would have reduced the risk. Even if other countries had used alternate means of avoiding showing thier full holdings it would have been more difficult to aquire such massive holdings. In practice the US politicians would have had to willingly practice restraint which would have imposed restraint on US businesses and consumers. Yeah, like people would have liked that! |
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| culorut |
| quote: | Originally posted by Krypton
What are they lying about? |
:stongue: :stongue: :stongue: :stongue: :stongue: :stongue:
My god. They basically helped push through a shady 20 Billion dollar TAX payout (which your stupid ass is going to pay for) and Congress is telling the ******s there will be more transparency.
Do you understand what accountability is retard? They are priming the FED for the transparency act because way too much money is being thrown away or missing (actually stolen) and the PUBLIC has to pay for it.
It's about ing time they are put under the microscope. |
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| culorut |
Look everyone, retard #2 has spoken. Because stocks re-bounded does not mean the deal was not shady.
They gave them more money then they asked for and the people have to pay for it in taxes.
Mean while the FED made another 20 Billion in T-bonds because the broke ass government could not afford it in the first place. |
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| Krypton |
| quote: | Originally posted by culorut
:stongue: :stongue: :stongue: :stongue: :stongue: :stongue:
My god. They basically helped push through a shady 20 Billion dollar TAX payout (which your stupid ass is going to pay for) and Congress is telling the ******s there will be more transparency.
Do you understand what accountability is retard? They are priming the FED for the transparency act because way too much money is being thrown away or missing (actually stolen) and the PUBLIC has to pay for it.
It's about ing time they are put under the microscope. |
Wow, you are one arrogant piece of ...:rolleyes:
Don't give me a bunch of bull. Name the crime. It's simple. |
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| culorut |
| quote: | Originally posted by Krypton
Wow, you are one arrogant piece of ...:rolleyes:
Don't give me a bunch of bull. Name the crime. It's simple. |
ok
:stongue: :stongue: :stongue: :stongue: :stongue: |
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| Krypton |
| quote: | Originally posted by culorut
ok
:stongue: :stongue: :stongue: :stongue: :stongue: |
Grow up..;) |
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| culorut |
| quote: | Originally posted by Krypton
Grow up..;) |
I am, just playing the same card you and your dumb friends do every time you cannot answer a straight forward question.
Don't like it?
TOO IN BAD. |
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| Krypton |
| quote: | Originally posted by culorut
I am, just playing the same card you and your dumb friends do every time you cannot answer a straight forward question.
Don't like it?
TOO IN BAD. |
Yes, we are all dumb, and you, you'r an intellectual powerhouse...:rolleyes: :haha: |
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