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Thread: Barack Obamadoff's Ponzi Scheme

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    Banned Eric Stoner's Avatar
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    Default Barack Obamadoff's Ponzi Scheme

    I highly recommend Matt Taibbi's piece in the latest issue of ROLLING STONE , "The Big Takeover". Focusing on AIG, he unravels the current mess we are in and explains how and why we are all "royally fucked".

    His most important points include how the Federal Reserve has been converted into a Piggy Bank for the rich, powerful and well connected. More importantly, if you read his piece you can easily understand why AIG, Bear Stearns, Countrywide, Citicorp and others are NOT where they belong: In Bankruptcy.

    It is highly instructive to note that Lehman Brothers IS in Bankruptcy. The largest in U.S. history. Former CEO Dick Fuld is facing billions in lawsuits from former shareholders and customers for inter alia, non-disclosure. It's why he sold his $13 million dollar Florida house to his wife for $100. But what haven't we seen in the Lehman Bankruptcy ? Number 1- No taxpayer money has been poured into a dead company. Number 2 - No outrageous bonuses; "retention" payments; unpaid commissions or juicy severance packages have been paid out of the corpus of the Debtor. No Trustee or Bankruptcy Judge is crazy enough to approve any such thing. Number 3- No closed books. Bankruptcy filings are PUBLIC and the corporate books are opened , laid bare and revealed.

    The amount of taxpayer money being poured into AIG, Citicorp et al. ( hundreds of Billions) is dwarfed by what the Fed has been doing. ( This is the REALLY scary part folks.) Back in the "Good Old Days" the Fed would control the money supply "M-2" by buying or selling securities. Usually no more than $25 billion per week. To increase M-2 the Fed buys securities like T-bills, bonds and even Mortgage backed securities from member banks. The banks that sell same to the Fed thus have more money to lend and interest rates go down. To limit or control M-2 the Fed sells same = less money to lend= interest rates go up.

    Starting in the Summer of 2007 these Repurchase Agreements "Repos" jumped to $33 billion a week. By November 2007, $45 billion; late December 2007 , $65 billion; March 2008 , $77 billion and by May 1,2008 it was $115 billion. It went as high as $125 billion. But by January , 2009 it had dropped to ZERO ! The Fed did NOT stop pumping money into its member banks. Far from it. It simply switched
    to secretive, opaque devices like "Term Auction Facility"; "Term Securiities Lending Facility", "Primary Dealer Credit Facility" and "Maiden Lane I " followed by a "II" and then a "III" among several other programs. All totaling THREE TRILLION Dollars in loans to PRIVATE companies AND another $5.7 TRILLION in guarantees of private investments. None, repeat NONE, of this is being regulated or overseen by anyone other than the Fed itself.

    We hope.

    Now "Tax Cheat Tim" Geithner is proposing that the U.S. Treasury do the exact same thing with taxpayer money to the tune of AT LEAST another trillion. Time was, as the late Senator Everett Dirksen said : " A billion here and a billion there and soon you're talking about REAL money." Now it's TRILLIONS. Worse yet, the Fed will not reveal who is getting how much nor how, if at all, the assets being purchased by the Fed. are being valued. When Congressman Alan Grayson asked Fed Vice Chairman Donald Kohn in January, 2009 where the money went ( $1.2 trillion THEN; $3 trillion and counting, NOW ) he demurred saying that it would discourage banks from taking the money. Better yet, when Grayson asked if the purchased assets were "marked to market" Kohn answered : "The ones that have market value are marked to market." Obviously, the Fed is buying a lot of crap with no real actual current market value and it won't say from whom or for how much. It's enough to make you wonder how many bonds the Fed has bought (and that Geithner proposes to buy) that might as well be backed by tolls on the Brooklyn Bridge ?

    Why is this mess a "Ponzi Scheme" ? Because it is. Obama, Bernanke and Geithner are the Madoffs and we taxpayers are the "investors". We've been promised "returns" on taxpayer funded purchases of "assets" as happened under FDR and then again under Bush I with the Resolution Trust Corp. But what are these assets ? Primarily stock in B A N K R U P T companies like AIG. And bonds backed by mortgages owed by unemployed people. And God only knows what else. There's another word for this nonsense : K I T I N G ! Because that is what is really going on. Bernanke et. al. are so terrified of another bank failure that they just keep pumping money into bankrupt institutions while pretending to be "shocked" when it is made public that the same money just flies out the back door. How long do these financial geniuses seriously expect to be able to keep the financial kite aloft before it's inevitable crash ?

    It's looking more and more like those nutty, loopy "survivalists" had it right all along. Last week my N.Y.P.D. Home Pistol Permit FINALLY came through. None too soon. ( I lost my "carry" permit 10 years ago thanks to that scumbag Howard Safir.) Yesterday, I bought a gently used Browning .38 Automatic with four extra clips and 100 rounds of hollow point ammo. And the home security system is being upgraded. And I bought some more gold. Why ? Because when all this shit really hits the fan there will be a thunderous roar of "Aux barricades" and a populist rising that will make the Hoover Era "Bonus Army" look like a single Boy Scout Troop on a day trip.

    Kudos to Melonie. She's been writing about this stuff for years.
    Last edited by Eric Stoner; 03-27-2009 at 07:41 AM.

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    God/dess Paris's Avatar
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    Default Re: Barack Obamadoff's Ponzi Scheme

    I've said it before, and I'm saying it now: When all is said and done, our monetary system is going to be so completely different that no one in finance today will be able to get a job tomorrow.

    This situation is a game changer, just like the internet has revolutionized how business is done, how media is distributed and how we interact with one another, the finance world is going to go through an equally dramatic transformation.

    In 1985 no one predicted how the internet would put all Record and Tape stores out of business. I have a feeling that the internet has led to some of this financial debacle. Once using a stock broker was completely necessary to make investments, but now there are so many low cost options for investing, the Scott Trade, Share Builder and Schwab type of discount brokerages that only require an internet connection and a checking account that anyone can make a $15 or less trade from the comfort of their bedroom. This sent the brokers looking for another way to butter their bread when a trade doesnt' cost $150 anymore.

    Enter the invention of the derivatives market, credit default swaps and hedge funds. These vehicles were designed to make those out of work traders rich again after the dot com crash. The internet has changed the way the world does business, and banking is no exception. Just like the way we, as a society, consume music has been completely changed, the banking industry is going to be unrecognizable to anyone who was deep into finance in the pre-internet era.

    I'll go check out the article. Sounds like an interesting read.


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    Default Re: Barack Obamadoff's Ponzi Scheme

    I hope your gun and your gold and your alarm system make you feel better Eric. What ever gets you through the night...is allright.

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    Default Re: Barack Obamadoff's Ponzi Scheme

    Quote Originally Posted by Paris View Post
    I've said it before, and I'm saying it now: When all is said and done, our monetary system is going to be so completely different that no one in finance today will be able to get a job tomorrow.

    This situation is a game changer, just like the internet has revolutionized how business is done, how media is distributed and how we interact with one another, the finance world is going to go through an equally dramatic transformation.

    In 1985 no one predicted how the internet would put all Record and Tape stores out of business. I have a feeling that the internet has led to some of this financial debacle. Once using a stock broker was completely necessary to make investments, but now there are so many low cost options for investing, the Scott Trade, Share Builder and Schwab type of discount brokerages that only require an internet connection and a checking account that anyone can make a $15 or less trade from the comfort of their bedroom. This sent the brokers looking for another way to butter their bread when a trade doesnt' cost $150 anymore.

    Enter the invention of the derivatives market, credit default swaps and hedge funds. These vehicles were designed to make those out of work traders rich again after the dot com crash. The internet has changed the way the world does business, and banking is no exception. Just like the way we, as a society, consume music has been completely changed, the banking industry is going to be unrecognizable to anyone who was deep into finance in the pre-internet era.

    I'll go check out the article. Sounds like an interesting read.

    There is some truth to what you say but for the most part brokerage operations and financial services had NOTHING to do with credit default swaps; MBS's; CDO's etc. The average retail customer was NOT directly invested in any of that stuff. Most pension funds either shied away from it or only dabbled.

    What drove the car off the cliff was a "Perfect Storm" of too much foreign money coming in to the U.S. ; easy money from the Fed; loose lending by banks coupled with Fannie Mae and Freddie Mac; amendments to Glass- Steagall pushed by Bob Rubin; Phil Gramm's deregulation of derivatives; AIG 's domination of CDS's; underreserving and overleveraging; mark to market accounting ; elimination of the "uptick rule" and very lax if not non-existent regulation of all this and more. Again, none of it had to do with the automation of the NYSE and rise of the
    discount broker except maybe the disappearance of Specialists who used to "make the market" and could help control short-selling and the like.
    Last edited by Eric Stoner; 03-27-2009 at 07:42 AM.

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    Default Re: Barack Obamadoff's Ponzi Scheme

    Quote Originally Posted by hockeybobby View Post
    I hope your gun and your gold and your alarm system make you feel better Eric. What ever gets you through the night...is allright.
    I hope I never need ANY of it. But that's sort of how we got in this mess and how Canada avoided it. Isn't it ? The "smartest people in the room" never envisioned a collapsed housing market or any of the sequelae and weren't ready for it when it happened. Were they ?
    The Canadian banks wanted to join in on the fun but the "grown ups" in Canada would not let them play.

    If we have a currency collapse and/or runaway inflation; I'll be prepared.
    If we plunge into Depression and the have-nots come around looking to take from the haves, I'll be ready.
    If the police go on strike because NYC doesn't have the money to pay them, I'll be able to look after myself.

    I hope I am wrong. I want to be wrong.
    Last edited by Eric Stoner; 03-26-2009 at 10:46 AM.

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    Default Re: Barack Obamadoff's Ponzi Scheme

    http://historymatters.gmu.edu/d/5057/

    I am certain that my fellow Americans expect that on my induction into the Presidency I will address them with a candor and a decision which the present situation of our people impel. This is preeminently the time to speak the truth, the whole truth, frankly and boldly. Nor need we shrink from honestly facing conditions in our country today. This great Nation will endure as it has endured, will revive and will prosper. So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance. In every dark hour of our national life a leadership of frankness and vigor has met with that understanding and support of the people themselves which is essential to victory. I am convinced that you will again give that support to leadership in these critical days.

    FDR

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    Default Re: Barack Obamadoff's Ponzi Scheme

    Quote Originally Posted by hockeybobby View Post
    http://historymatters.gmu.edu/d/5057/

    I am certain that my fellow Americans expect that on my induction into the Presidency I will address them with a candor and a decision which the present situation of our people impel. This is preeminently the time to speak the truth, the whole truth, frankly and boldly. Nor need we shrink from honestly facing conditions in our country today. This great Nation will endure as it has endured, will revive and will prosper. So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance. In every dark hour of our national life a leadership of frankness and vigor has met with that understanding and support of the people themselves which is essential to victory. I am convinced that you will again give that support to leadership in these critical days.

    FDR
    Number 1- FDR prolonged the Depression. Some say he even caused it by rejecting Hoover's request that they jointly come up with a plan to save the banks in early 1933.

    Number 2- Wishful thinking got us into this mess and won't help get us out.

    Number 3- All I'm doing is preparing for the worst case scenarios.

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    Default Re: Barack Obamadoff's Ponzi Scheme

    Quote Originally Posted by Paris View Post
    Enter the invention of

    the derivatives market, In one form, they were there in the Middle Ages. In the modern form, from 1848 when the Chicago Board of Trade opened. From the 1970's, financial derivatives entered the scene. I remember reading about a German group that suffered one of the first worst losses in the mid-70's.It still ranks with the worst losses of today.

    credit default swaps 1997

    and hedge funds. 1949
    It's funny how Dubya gets blamed for CDS, but it was Clinton who signed the bill that exempted them from SEC and CFTC regulations in 2000.

    Quote Originally Posted by Eric Stoner View Post
    Number 1- FDR prolonged the Depression. Some say he even caused it by rejecting Hoover's request that they jointly come up with a plan to save the banks in early 1933.

    Number 2- Wishful thinking got us into this mess and won't help get us out.

    Number 3- All I'm doing is preparing for the worst case scenarios.
    AMEN!!
    Quote Originally Posted by The Snark View Post
    But then I suppose the sort of people who write this kind of crap generally don't allow their opinions to be tainted by things like "facts" and "reality".
    Distortion becomes somehow pure in its wildness
    The note that began all can also destroy

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    Default Re: Barack Obamadoff's Ponzi Scheme

    ^^^ agreed that 'selective memory' regarding FDR, Carter, Clinton etc. is a major impediment to truly understanding the roots of the financial mess America is already in ... and the deeper economic problems America is headed towards ! However, it's difficult to fault average Americans on this count since the US public school system and most US mainstream media promote 'selective memory' via 'selective reporting' !

    Also Eric, don't forget the last of the THREE G's of worst case scenario preparations ... gold, guns and GROCERIES !

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    Default Re: Barack Obamadoff's Ponzi Scheme

    Quote Originally Posted by Melonie View Post
    ^^^ agreed that 'selective memory' regarding FDR, Carter, Clinton etc. is a major impediment to truly understanding the roots of the financial mess America is already in ... and the deeper economic problems America is headed towards ! However, it's difficult to fault average Americans on this count since the US public school system and most US mainstream media promote 'selective memory' via 'selective reporting' !

    Also Eric, don't forget the last of the THREE G's of worst case scenario preparations ... gold, guns and GROCERIES !
    Funny you say that. I spent half the weekend preparing my vegetable garden for planting.

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