Federal Debt Relief System is at the forefront in the battle to restore the America’s Constitution and liberty by arming millions with the sobering information and vital education designed to restore America’s freedom.
Federal Debt Relief System spotted this on the AP newswire recently:
That's the size of the new financial lifeline the U.S. government threw tottering insurance giant American International Group on Monday. The big question: Will it be enough to stabilize the firm?
Here are some questions and answers about the rescue plan.
Q: Didn't AIG already get a bailout from the government?
A: Yes. Back on Sept. 16, the Federal Reserve initially provided AIG with a $85 billion loan, in return for a nearly 80 percent ownership stake. On Oct. 8, the Fed followed up with another, $37.8 billion loan.
Then, on Oct. 31, AIG was allowed to access another $20.9 billion through the Fed's "commercial paper" program. That's where the Fed buys mounds of short-term debt from the companies, which often used the money for crucial day-to-day expenses, such as payroll and supplies.
Q: So, the original bailout plan didn't work?
A: Even with the original $85 billion lifeline, AIG continued to have problems as the country's overall financial and credit conditions worsened. The company was burning through cash and was saddled with risky mortgage-related securities that had fallen sharply in value and continued to deteriorate after the initial bailout.
AIG on Monday reported a massive third-quarter hit. It lost $24.47 billion, or $9.05 per share, after a profit of $3.09 billion, or $1.19 per share, a year ago. Revenue declined 97 percent to $898 million from $29.84 billion in the third quarter of 2007.
"This is the largest quarterly loss we've ever reported," Chief Financial Officer David Herzog told investors on a conference call.
Q: What's different about the new bailout?
A: All told, the new bailout is bigger — providing more than $150 billion to AIG. In a new twist, the Treasury Department is now stepping in with $40 billion, which is coming from the $700 billion financial bailout package enacted last month. It marked the first time any of that bailout money has gone to any company other than a bank.
Monday's restructuring also provides AIG with easier terms on the original Fed loan.
The new package reduces the interest rate AIG will pay and will extend the loan term to five years from two, reducing the need for AIG to sell off business lines and other assets at fire-sale prices to repay the government.
In addition, the new arrangement replaced the second $37.8 billion Federal Reserve’s loan to AIG with a $52.5 billion aid package. Under that part of the plan, the Fed will fund the purchase of both residential mortgage-backed securities from AIG's portfolio, and collateralized debt obligations, which are complex financial instruments that combine various slices of debt.
By removing these troubled assets from AIG's balance sheet, the bailout should take stress off the company, giving it more breathing room and helping to prevent future losses, Fed officials said. The Fed doesn't believe it will suffer losses because it is hopeful the market for such distressed investments will recover as the economy and financial markets eventually rebound.
Q: Why is it important to keep AIG afloat?
A: AIG is a global colossus, with operations in more than 130 countries. It is so interconnected with other financial firms that its problems have a jolting ripple effect both in the United States and abroad.
AIG was pushed to the brink of bankruptcy in September when its credit rating was downgraded and it could not post the collateral for which it was obligated under the "credit default swap" contracts it had issued. Credit default swaps are a type of corporate debt insurance.
The Fed raced to the rescue at that time to prevent AIG's failure, which could have triggered billions of dollars in losses at other banks and financial firms that bought these swaps from AIG — sending them into failure as well.
However, even after that initial rescue, AIG's troubles cast doubt on some of AIG's debt guarantees, leading to other problems. For instance, a Belgian bank threatened to immediately collect $43 million on a loan to the transit authority in Washington, D.C., in late October following the credit downgrade of AIG. Transit authorities in other cities feared the same fate.
Q: In exchange for the money, will the government place any restrictions on AIG?
A: Yes. Neel Kashkari, the Treasury Department official who is serving as the interim head of the $700 billion financial bailout program, said: "AIG must comply with stringent limitations on executive compensation for its top executives, golden parachutes, its bonus pool, corporate expenses and lobbying."
Q: Is this the end of the bailout money for AIG?
A: No one is saying for sure. However, government officials are hopeful the new package will be sufficient to stabilize the company.
Q: What company might be next in line for a government bailout?
A: U.S. auto companies — General Motors Corp., Ford Motor Co. and Chrysler LLC — have been pressing the government for more financial assistance. The money would be on top of the $25 billion in loans Congress passed in September to help retool auto plants to build more fuel-efficient vehicles.
Federal Debt Relief System believes it’s important that people know the truth so that they can make up their own minds.
Also See: Credit Revolt, financial disaster
Federal Debt Relief System is at the forefront in the battle to defend and restore America’s constitution by arming millions with this sobering information and vital education.
Should we be concerned over election fraud in the upcoming election? If history is any guide, then the emphatic answer is "yes!" There are numerous cases, just in the last decade or so, in which elections were stolen and races were decided by a handful of votes.
An investigation of 5,000 fraudulent absentee ballots in Miami in 1997 resulted in the election results being overturned. In addition to votes by fictitious individuals and persons using false addresses (persons who didn't actually live in Miami), votes were also bought. And vote buying is a federal crime that the Department of Justice has prosecuted repeatedly.
In 2003, the Indiana Supreme Court threw out the results of a mayoral election because of absentee ballot fraud. The results of a state senate race in Tennessee in 2005 decided by only 13 votes were declared invalid because of votes by felons, the dead, people who didn't live in the district, and individuals whose registered addresses were vacant lots. The photographs of those vacant lots, taken by an investigator, starkly illustrate the kind of voter fraud that unfortunately still goes on in our elections.
Today, there are investigations in more than a dozen states over tens of thousands of fraudulent voter registration forms submitted by ACORN. How many of those fraudulent registrations have not been caught by election officials? How many will result in fraudulent votes? If we have a very close election, fraudulent votes may well end up deciding the results, damaging our democratic government and our confidence in our election process.
Federal Debt Relief System believes it’s important that people know the truth so that they can make up their own minds.
Also See: Credit Revolt, financial disaster
Federal Debt Relief System is at the forefront in the battle to defend the constitution
Federal Debt Relief System wants to address those chanting the disturbing chorus of "voter fraud," or “ACORN!” elections are being influenced and sometimes determined by people ineligible to cast a ballot impersonating eligible voters. by arming millions of Americans with this sobering information and vital education.
To be sure, the Americans see disenfranchising, disturbing instances of "voter fraud" every election cycle. However, the "fraud" we witness is different. We know of deceptive practices, misinformation and lies that are used to keep registered, legitimate voters away from the polls. Sadly, we also still find ourselves fighting attempts by unscrupulous election officials to disenfranchise the people in communities we represent.
It is our experience that "voter impersonation" is actually quite rare. Nationwide, between 2002 and 2006, when a crackdown on voter fraud was one of the U.S. Justice Department's top priorities, more than 400 million votes were cast, but an average of only 30 federal cases per year were prosecuted.
Regardless of the questionable prevalence of this type of election fraud, several states have passed discriminatory photo ID laws. Sadly, rather than addressing real voter fraud, the true effect of these laws is to disenfranchise the estimated 20 million Americans who have not purchased IDs. Disproportionately these people are minorities, elderly and low-income Americans.
Yet, malicious voter fraud continues. In Virginia, registered voters received robotic calls stating that they could vote by telephone by pressing a number for the candidate of their choice. The call ended by stating that they had now voted and didn't need to go to the polls.
In 2006 in Orange County, Calif., 14,000 Latino voters got letters in Spanish saying it was a crime for immigrants to vote in a federal election. It didn't say that immigrants who are citizens have the right to vote.
The NAACP has also seen a dramatic increase in erroneous purging of voting rolls, as well as eligible voters mistakenly not added. These are voters believing or having been told that they have done everything correctly, only to be turned away from the voting booth on Election Day.
We know from Florida in 2000 and Ohio in 2004 that erroneous purging of the rolls, underestimating the number of needed functioning voting machines and ballots, the inadequate number and under-trained poll workers, intimidation of voters and the misuse of photo ID requirements, especially in neighborhoods with heavy concentrations of racial and ethnic minorities, along with blocked access to polling sites and intentional deception and voter intimidation, lead to disenfranchisement of eligible voters. These problems are more than just "voter fraud." These problems are a national travesty.
See Also Bailout, Credit Reform Now
Federal Debt Relief System is at the forefront in the battle to defend and restore America’s constitution by arming millions with this sobering information and vital education.
Federal Debt Relief System spotted this at CNN Money recently:
Production at the nation's factories fell into a virtual tailspin in September, declining by the largest amount in nearly 34 years, according to a report released by the Federal Reserve on Thursday.
The report said the enormous decline was in most part due to hurricanes Gustav and Ike's disastrous effects on the Gulf Coast industry. Mining output took a 7.8% nosedive due to the storms, and oil and gas-related production fell as well.
Recession worries
Industrial production is one of the four factors that the National Bureau of Economic Research considers to determine if the current economy problems has fallen into a recession. The other three factors are employment, personal income and retail and wholesale sales of manufactured goods.
Though industrial production has been volatile over the past year and a half, registering up-and-down growth since January 2007, it has only recently shown the kind of huge drop off that is typical in a recession. After slight rises in manufacturing in June and July, production tanked a whopping 1.1% in August on a sizeable drop auto manufacturing.
Production fell for 12 straight months during the 2001 recession. The Fed said for the third quarter, production fell 6%, nearly doubling the 3.1% decline of the second quarter.
"Industrial production is a key input into the overall output of the U.S. economy," Silvia said. "For all practical applications, there is a one-to-one correspondence between production and how the economy is growing."
"GDP is gross domestic product, and this is a measure of production," he added.
In other troubling news, The Philadelphia Federal Reserve reported that its regional manufacturing index decreased by 41.3 points, to minus 37.5 from positive 3.8 in October. It was the largest one-month decline in the history of the index. Economists polled by Briefing.com expected a decline of just 5 points.
Sign of weakness to come
The report also showed that industrial capacity utilization - a measure that tracks the percentage of factories in use - posted a seasonally adjusted decrease of 4.6% to 76.4%. Economists had expected a decrease of just 0.7% to 78%.
Manufacturing output decreased 2.6% in September, and the factory operating rate fell to 74.5%, which is more than five percentage points below the average from 35-year average from 1972-2007.
"Over the last six months we have seen utilization declines in manufacturing and mining," Silvia said. "Historically, lower capacity utilization rates have been consistent with weaker corporate profits."
The Federal Debt Relief System is dedicated to sounding the alarm while there is still time to do something about it.
Learn more at Federal Debt Relief System now.
Read more about Job Losses, Public Debt Reform
Federal Debt Relief System is at the forefront in the battle to defend and restore constitutional rights to all Americans by arming millions with this sobering information and vital education.
Federal Debt Relief System spotted this at CNN Money recently:
While there were some encouraging signs that the credit crisis is not having as devastating an impact as some fear, the slowing economy looms large.
"We're not seeing anything besides the normal tightening of credit you usually get at the end of an expansion," said Bill Dunkelberg, chief economist for the National Association of Independent Businesses.
Alan Tonelson, a research fellow at the U.S. Business and Industry Council, which represents smaller and mid-size manufacturers, said that most manufacturers are conservatively managed and have fairly low levels of debt. Tonelson is urging caution on any government bailout, saying banks should not be encouraged to resume their free-lending ways to consumers already overburdened with debt.
Even if businesses aren't yet impacted by the economy collapse, they are certainly planning for slowing sales as credit to consumers dries up. That could mean fewer orders for goods - and fewer people needed to manufacture, ship, stock and sell those goods.
"It's reasonable to expect not only job losses, but wage losses as well," said Tonelson.
Said Daniel Penrod, an industry analyst with the California Credit Union League, a trade association for credit unions: "We haven't really seen small businesses getting hurt because of access to money, but rather just because of the slowdown."
With the holiday shopping season just around the corner, the next sector ripe for a hit is retail, said John Challenger, chief executive of global outplacement firm Challenger, Gray & Christmas. A survey by Challenger released Wednesday said that the number of job cuts in September rose 7.2% to 95,094.
"Consumers are tapped, it's going to be a tough year," said Challenger. "Unemployment is going up by leaps and bounds."
Federal Debt Relief System believes it’s important that people know the truth so that they can make up their own minds.
Also See: Credit Revolt, financial disaster
Federal Debt Relief System is at the forefront in the battle to defend and restore America’s constitution by arming millions with this sobering information and vital education.
In his book, The Money Men , H.W. Brands wrote of the first major test the Federal Reserve faced after its creation in 1913. In its role as arbiter of the nation's money supply the Fed made its first policy blunder in making cheap money overly plentiful in the early 1920s, which encouraged a speculative bubble in the stock market. By 1928, the Fed recognized its error and instead of gradually slowing down the money creation, did something that has been part of their modus operandi ever since. In true reactionary fashion the Fed slammed on the monetary brakes and started raising interest rates, paving the way for the great 1929 stock market crash.
Making matters worse and adding fuel to the fire, the Fed continued its tight money policy while the U.S. government actually raised taxes and thereby greatly exaggerated the Great Depression of the 1930s. Was this a case of ignorance born of inexperience or was a sinister motive at work here? One could almost excuse their mistakes of the late 1920s and early ‘30s due to the Fed's lack of experience. Yet such latitude can't be so easily granted them today with more than 90 years of experience behind them.
Long-time Fed watcher Bert Dohmen of the Wellington Letter offers the following insight, “Who controls the liquidity necessary to buy stocks? It's the Federal Reserve through its monetary policy.” Dohmen goes on to observe, “Invariably bear markets occur when the central bank tightens money. This sudden change in the availability of money causes investors to sell stocks in order to raise cash. Suddenly the buyers turn into sellers and the markets plunge….It's a shift in the demand-supply relationship.”
One astute economist wrote in 1966 concerning the 1929 stock market crash, “The excess credit which the Fed pumped into the economy (in the late 1920's, in order to lower interest rates) spilled over into the stock market – triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in breaking the boom. But it was too late: By 1929 the speculative excesses had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed….The world economies plunged into the Great Depression of the 1930's.”
This economist was none other than Alan Greenspan. In the above statement he admits that whenever the Fed sees speculative excess (as they certainly did in the 2003-2004 period) it will cause them to tighten money. It has been ever thus since the Fed's inception in 1913.
Will the Fed's latest efforts at reflating the financial market succeed? If history is any guide then it should eventually stabilize the stock market and allow the newly formed 6-year up cycle along with the peaking 10-year cycle to work its magic in 2009 for one final cyclical bull market before the “hard down” phase of the Kress 40-year and 60-year cycles commences in 2010.
Federal Debt Relief System believes it’s important that people know the truth so that they can make up their own minds.
Also See: Credit Revolt, financial disaster
Production at the nation's factories fell into a virtual tailspin in September, declining by the largest amount in nearly 34 years, according to a report released by the Federal Reserve on Thursday.
"This is consistent with a recession, there's no doubt about it," said John Silvia, chief economist for Wachovia.
The report said the enormous decline was in most part due to hurricanes Gustav and Ike's disastrous effects on the Gulf Coast industry. Mining output took a 7.8% nosedive due to the storms, and oil and gas-related production fell as well.
Recession worries
Industrial production is one of the four factors that the National Bureau of Economic Research considers to determine if the current economy problems has fallen into a recession. The other three factors are employment, personal income and retail and wholesale sales of manufactured goods.
Though industrial production has been volatile over the past year and a half, registering up-and-down growth since January 2007, it has only recently shown the kind of huge drop off that is typical in a recession. After slight rises in manufacturing in June and July, production tanked a whopping 1.1% in August on a sizeable drop auto manufacturing.
Production fell for 12 straight months during the 2001 recession. The Fed said for the third quarter, production fell 6%, nearly doubling the 3.1% decline of the second quarter.
"Industrial production is a key input into the overall output of the U.S. economy," Silvia said. "For all practical applications, there is a one-to-one correspondence between production and how the economy is growing."
"GDP is gross domestic product, and this is a measure of production," he added.
In other troubling news, The Philadelphia Federal Reserve reported that its regional manufacturing index decreased by 41.3 points, to minus 37.5 from positive 3.8 in October. It was the largest one-month decline in the history of the index. Economists polled by Briefing.com expected a decline of just 5 points.
Sign of weakness to come
The report also showed that industrial capacity utilization - a measure that tracks the percentage of factories in use - posted a seasonally adjusted decrease of 4.6% to 76.4%. Economists had expected a decrease of just 0.7% to 78%.
Manufacturing output decreased 2.6% in September, and the factory operating rate fell to 74.5%, which is more than five percentage points below the average from 35-year average from 1972-2007.
"Over the last six months we have seen utilization declines in manufacturing and mining," Silvia said. "Historically, lower capacity utilization rates have been consistent with weaker corporate profits."
The Federal Debt Relief System is dedicated to sounding the alarm while there is still time to do something about it.
Learn more at Federal Debt Relief System now.
Read more about Job Losses, Public Debt Reform
Federal Debt Relief System is at the forefront in the battle to restore the Constitution and liberty by arming millions with the sobering information and vital education designed to restore America’s freedom which today is sadly and urgently under attack and duress from all sides.
Federal Debt Relief System knows this is the worst financial crisis since the Great Depression, a $700 billion taxpayer bailout, public outcry over excessive pay and the demise of three of the biggest securities firms won't deter Wall Street from offering year-end rewards to employees on top of their salaries, compensation experts say.
From Bloomberg:
Morgan Stanley and Goldman Sachs, both still on track for profitable years, have set aside about $13 billion for bonuses after three quarters, down 28 percent from a year ago. Even some employees at Lehman Brothers Holdings Inc., which declared the biggest bankruptcy in U.S. history last month, will get the same bonus they received a year ago.
Goldman, the biggest and most profitable Wall Street firm until it opted to become a bank holding company last month, has set aside about $6.85 billion for bonuses, or an average of $210,300 for each employee, down 32 percent from $339,400 a year ago. Morgan Stanley, the second-biggest securities firm until it also converted to a bank, has $6.44 billion for bonuses, or $138,700 per person, down 20 percent from last year. Both firms accrue a fixed percentage of their revenue for compensation, so the decline in bonus pools matches the drop in revenue.
Merrill's Compensation
The money Merrill has set aside for bonuses equates to an average $110,000 for each of its 60,900 people, up from $108,000 a year ago because more than 3,000 jobs have been cut.
The bonus figures are based on estimates that about 60 percent of the compensation and benefits expenses reported by the companies will be paid in year-end bonuses, as occurred in past years. Average bonuses aren't an indication of how much any employee will receive, since payments range widely from assistants to top traders. Bonuses aren't paid until the end of the fiscal year, so firms could choose to reallocate the funds.
``We are in the process of determining appropriate levels of year-end compensation, and no decisions have been made,'' said, a spokesman at Morgan Stanley. A spokesman for Goldman in New York, declined to comment.
``There should be a moratorium on bonuses,'' Barney Frank, chairman of the House Financial Services Committee, told reporters last week. ``If nobody gave them, there wouldn't be a competitive aspect.''
A worldwide economy collapse, caused in part by the financial industry's losses, and a U.S. Treasury plan to spend $250 billion of taxpayer money buying stakes in banks, have made pay a political issue this year.
``I'm just flabbergasted that the financial community has failed to show any sense of leadership on this issue and doesn't seem to understand how angry people are at them,'' said the editor of Corporate Library, a Portland, Maine-based corporate-governance research firm. ``They are just a bonus away from having the villagers come after them with torches.''
Amen to that. I’ll bring the….
Federal Debt Relief System believes it’s important that people know the truth so that they can make up their own minds.
See Also Bailout, America’s Debt Revolt
Federal Debt Relief System spotted this at CNN Money recently:
Job losses have been mounting, and the slowing economy and credit crunch is likely to take an even greater toll in the coming months.
Analysts on average forecast that the monthly employment report expected Friday will reveal that the economy shed 105,000 jobs in September - the largest monthly loss in five years. The economy already has lost 605,000 jobs this year.
Unemployment is expected to remain at a relatively high 6.1%.
What's more troubling is that hiring trends have deteriorated even further in recent weeks - and that won't be reflected in government statistics until later this year.
Failing mortgages and struggling banks have made it difficult for businesses and consumers alike to borrow money. If businesses can't borrow money, the thinking goes, they can't expand stores or hire more people.
"A complete lockup of the credit markets will reverberate throughout the economy in a very severe fashion," said Martin Regalia, chief economist at the U.S. Chamber of Commerce, a business lobby group. "If the economy problems continue further, we'll see truly dramatic unemployment."
Regalia expects unemployment to reach 6.5% by the end of the first quarter next year, and 7% if nothing is done by the government to free up the capital markets. While the economy may stop shedding jobs at that point, he said those stubbornly high rates of unemployment could persist until the end of 2009.
Actual job losses are more difficult to predict. Regalia said 150,000 to 175,000 a month could be likely, significantly higher than today's levels but far below the rate of 250,000 to 300,000 lost during the last recession in 2002.
The government is still negotiating a package that would enable the purchase of distressed assets from banks in the hopes of getting them to lend again. The $700 billion bailout was rejected in the House of Representatives on Monday, and the Senate is set to vote on a revised version on Wednesday night.
"If we don't have measures to correct the situation, we will see more [job] losses," said Joyce Bastoli, a vice president at Ajilon Finance Solutions, part of the staffing company Adecco. "If companies don't have access to capital, we will see it trickle down."
The Federal Debt Relief System is dedicated to sounding the alarm while there is still time to do something about it.
Learn more at Federal Debt Relief System now.
Also See: Credit Revolt, financial disaster
Former Federal Reserve Bank Chairman Alan Greenspan said a ``once-in-a-century credit tsunami'' has engulfed financial markets and conceded his free-market ideology shunning regulation was flawed.
``Yes, I found a flaw,'' Greenspan said in response to grilling from the House Committee on Oversight and Government Reform. ``I was shocked because I'd been going for 40 years or more with very considerable evidence that it was working exceptionally well.'' Greenspan added he was ``partially'' wrong for opposing the regulation of derivatives.
Greenspan's contrition came after lawmakers and Fed watchers increasingly blamed the former Fed chairman for helping cause the crisis with lax oversight of the housing boom and derivatives markets. Normally afforded deference by Congress, he endured almost four hours of questions from lawmakers less than two weeks before a national election.
``Greenspan is finally taking some responsibility for his actions,'' said the director of economic research at Northern Trust Co. in Chicago and a former Fed official. ``The damage has been done. His reputation has definitely been tarnished.''
Greenspan, responding to questions, said only ``onerous'' regulation would have prevented the economic collapse. Stifling rules would have suppressed growth and hurt Americans' standards of living, he said.
Part of the problem was that the Fed's ability to forecast the economy's trajectory is an inexact science, he said.
``If we are right 60 percent of the time in forecasting, we are doing exceptionally well; that means we are wrong 40 percent of the time,'' Greenspan said. ``Forecasting never gets to the point where it is 100 percent accurate.''
The admission that free markets have their faults was a shift for the former Fed chairman who declared in a May 2005 speech that ``private regulation generally has proved far better at constraining excessive risk-taking than has government regulation.''
Did you see that? He said ‘better at constraining excessive risk taking”? You gotta be kidding me. The problem is that the joke is on all of us.
Federal Debt Relief System believes it’s important that people know the truth so that they can make up their own minds.
See Also Bailout, America’s Debt Revolt
The big three credit rating firms, Moody's Corporation, Standard & Poor's and Fitch Ratings' profits in recent years have been among the fattest on Wall Street. One firm, Moody's, rang up profit margins three to four times those of Exxon Mobil Corp. while assuring investors that complex mortgage-backed investments were safer bets than they really were, according to Bloomberg News.
In recent financial filings noted by the investor web blog Footnoted.org, however, Moody's confirmed it had "errors in the model" it used to rate some investments, and is "cooperating with . . investigations and inquiries" by "states attorneys general and other governmental authorities," including the Securities and Exchange Commission.
Two former rating company employees who took issue with their firms' practices are also slated to testify Wednesday, according to the panel.
A former managing director at Standard & Poor's who left in 2005, after he says he refused to go along with several clear and questionable acts of corporate corruption.
"They thought they had discovered a machine for making money that would spread the risks so far nobody would ever get hurt," the executive told a Bloomberg reporter last month..
The other former executive to testify, Jerome Fons, has become an advocate for reforming the rating industry since leaving Moody's Corp. last year. Fons has pointed out the glaring conflict of interest on which the rating firms are based – they are paid by the firms who will profit if their investment product gets a stellar rating – and has even suggested the lucrative industry should be replaced entirely.
A Securities and Exchange Commission investigation in June found the companies faced conflicts of interest, stemming from the fact that the investment banks trying to sell the mortgage-backed securities were the ones paying the firms to rate their products. Emails uncovered by investigators showed analysts were concerned that negative ratings would hurt their firms' income.
Federal Debt Relief System believes it’s important that people know the truth so that they can make up their own minds.
See Also Bailout, America’s Debt Revolt
Federal Debt Relief System believes it’s important that people know the truth so that they can make up their own minds. The top dogs of the big three credit rating companies made $80 million in compensation while their firms gave bogus high ratings to trillions in dubious mortgage-related investments which led to the world's current financial crisis- and a hearing before bitter lawmakers on Capitol Hill Wednesday morning.
The top executives – Moody's Corporation CEO Raymond W. McDaniel, Standard & Poor's president Deven Sharma, and Fitch Ratings' president and CEO Stephen Joynt – are expected to say the economic collapse was "unanticipated" and "unprecedented."
But confidential documents obtained by Waxman's investigators show that the firms' executives anticipated much of what has happened, and were aware that their ratings were quite possibly shaky, according to the chairman.
The story of the credit rating agencies is a sad story of the complete collapse of corporate governance on Wall Street." Said one prominent Congressman on the House Oversight and Government Reform Committee will tell the men when they appear before his committee this morning, according to a draft of his prepared comments. "The result is that our entire financial system is now at risk."
"It could be structured by cows and we would rate it," one Standard & Poor's employee wrote in a company email cited by Waxman. "Let's hope we are all wealthy and retired by the time this house of cards falters," wrote another in an email obtained by Waxman's committee.
As Moody's CEO McDaniel explained in an October 2007 presentation obtained by Waxman's staff, shaky ratings came because few of the players – investors, banks or the firms which issued the securities – truly want an accurate assessment of an investment, if it isn't going to be good news.
"Ratings quality has surprisingly few friends," he observed.
Federal Debt Relief System is a powerful tool on your side in the war against credit debt.
Federal Debt Relief System knows a credit card may seem like the perfect partner to anyone with an empty wallet staring longingly at a pair of shoes with just the right fit or the newest Xbox videogame. But beware; if you're someone without a budget--or self-control--jumping blindly into a relationship with this piece of plastic can leave you badly burned.
If you don't understand what you're getting yourself into, you're not ready.
So what is it about credit cards? They seem like the perfect solution for those of us practically living paycheck to paycheck, right? How many times have you wanted to book that flight to Europe but just didn't have the funds right now? This is the beauty of charging; immediate gratification. But there is a downside to having the ability to buy whatever you want, whenever you want.
Just as compound interest is your best friend when you're saving money, it's your worst enemy when you owe money. If you can't afford to pay your credit card bill, little fees for things like late payments and going over your credit limit--not to mention interest itself--will cause your balance to balloon. Not only will your sweet plastic love affair turn sour, you could carry the load of credit card debt the rest of your life.
Let's say you're about to spend $2,500 on a shiny, new flat panel HDTV with a credit card that carries an annual percentage rate (APR) of 20%. If you're like many people, you may choose to pay the minimum on your card, which is generally about 3% of the balance, $2,500 in this case. If you pay the minimum $75 each month on that $2,500 you will end up paying total interest of $1,180, and it will take more than four years to pay off.
Credit cards are sneaky little guys who deceive, entice and then entrap it’s victims in an endless banking scam. Unlike the fixed interest associated with savings accounts, credit card interest is variable and can change--mostly higher--at any time. On some cards, if you miss a payment your APR may go up substantially. In addition, that attractively low APR a credit card promises when you sign up will probably at least double after the introductory period is over. Credit cards also hit you with fees if your balance goes above your credit limit.
Credit cards can be a great companion and offer many benefits. But be smart about what you can afford to charge, and stay on top of your payments. You don't want to find yourself head-over-heels in a relationship that holds you back for the rest of your life.
Federal Debt Relief System is a powerful tool on your side in the war against credit debt.
Federal Debt Relief System is at the forefront in the battle to restore the Constitution by arming millions with the sobering information and vital education designed to restore America’s freedom which today are sadly and urgently under attack and duress from all sides.
I found this one at Federal Debt Relief System. Like many of you, all of the point-counterpoint on the current economic collapse has me searching for the answers.
Here’s the straight talk on what’s wrong with the newly passed so-called “bailout” plan. The Treasury plan was originally predicated on buying $700 billion of collateralized residential mortgage-backed securities that banks could not unload.
The idea was that the banks would get the money, which they could then turn around and lend to keep the credit markets open and credit flowing throughout the economy. In the meantime, the Treasury Department would sit on the securities until it is able to sell them, hopefully at a profit.
The idea, from a theoretical standpoint, isn’t stupid. It is, however, impossible to implement to any degree that will result in the desired economic recovery.
Here’s why:
- There are more than $1 trillion worth of subprime collateralized mortgage-backed securities out there – and that’s just one type of problematic derivative security. The bottom line: $700 billion isn’t enough. Period.
- Treasury is going to hire banking-industry managers to manage the process. Those managers are going to serve themselves – just as they served themselves to get us into the crisis.
- The purchase plan is not limited to just residential mortgage-backed securities. Surprise! What else will Treasury buy? Experts predict that toxic credit card debt will require another multi-billion dollar “bailout” in the coming weeks as well.
- This government deception is even more under-funded than people realize, for it doesn’t authorize the full $700 billion: Indeed, it starts with only $350 billion, leaving an even greater shortfall. Did we mention that $700 billion wasn’t enough?
- Since Treasury can’t buy all the problem securities, if it prices what it’s going to buy too low, all remaining holders will have to mark down their holdings and take more writedowns and losses. How will that create confidence and facilitate “liquidity”?
- However, if the Treasury Department prices the securities too high, several problems quickly emerge: Hedge funds will rush to sell their current holdings, and may very well speculate by buying up more securities to sell them at a higher price (profit) to Treasury, meaning that the Treasury Department plan won’t necessarily be helping banks directly. What’s more, if those securities are priced too high, and the market for them continues to fall, taxpayers will eat the losses – a reality that likely will lead to an end to further program funding.
- There is no defined mechanism to determine what price the Treasury Department will pay for what it buys. For argument’s sake, even if Treasury were to only buy the problem securities its leadership speaks of in public – residential mortgage-backed securities – there are problems if it prices them too low: If that happens, some holders won’t sell them, taking the chance that if they hold them long enough they will be worth more than Treasury is willing to pay. How will those financial institutions regain liquidity if they won’t sell the securities needed to make this happen?
- Who’s going to fight off the lobbying groups out to influence the managers that the Treasury Department hires to direct money to their masters? Did we mention that $700 billion wasn’t enough?
The Federal Debt Relief System is dedicated to sounding the alarm while there is still time to do something about it.
Learn more at Federal Debt Relief System now.
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Federal Debt Relief System is at the forefront in the battle to restore the Constitution by arming millions with the sobering information and vital education designed to the multi million debt slaves all over this nation.
Federal Debt Relief System wants to know how are the Treasury Department and the U.S. Federal Reserve going to be able to conduct objective, responsible policy regarding fiscal matters and interest rate decisions when they will have to simultaneously “manage” the government’s portfolio of securities?
There will be conflicts and there will be fallout for the U.S. dollar and fallout with regard to American interests vs. the rest of the world, with whom we trade and partner with in all manner of ways, not the least of which involves our own national security.
While the idea that taxpayers should get warrants and ownership in the entities that we buy securities from is theoretically a good idea, there are some issues. Let’s take a look at some of the biggest potential pitfalls:
- Foreign banks aren’t going to be thrilled about that; yes, they are included in the list of whom the Treasury will buy from.
- Are taxpayers going to be limited partners in hedge funds? What if those hedge funds implode?
- Who is going to decide when to sell any of government’s ownership interests, should they turn out to be profitable? Will we own these businesses forever?
- Is government going to control private enterprise? Is this a ruse? Are we heading into an era under the stewardship of a socialist government?
- The U.S. Treasury Department could end up in control of our banking system. Considering how well they run the government’s fiscal house, is that what we want?
- There is no direct support for homeowners in the plan and no support mechanism for falling home prices. And yet, these twin evils are the root causes of what has happened.
After the House rejected the initial bill – and U.S. stock prices plummeted – the Senate rushed through its modified plan, which the House subsequently passed and the president signed. But that was just another hose from the same firefighting gang that can’t shoot straight; which will further douse the prospect of a directed approach.
Here are some of the additions that were made to the plan that the House originally rejected – meaning they are part of the plan that was signed into law. Ask yourself this question: What do they do to actually address the credit crisis?
- Extend unemployment benefits: That’s super – so when we’re all out of our houses, we’ll have enough unemployment to stay at a hotel for a day or two.
- A $1,000 tax deduction for homeowners who don’t itemize. Great, I can buy a cheap inflatable raft to float away on the red ink that flows out of my house.
- A reduction on the tax on dividends repatriated from foreign earnings. What?
- Economic stimulus measures – such as spending on transportation projects. That will actually help; if they build canals around my house, when I float away on my red-ink raft, at least I won’t end up in uncharted waters.
- Increase Federal Deposit Insurance Corp. (FDIC) deposit-insurance-coverage per bank account from $100,000 to $250,000. That will definitely calm nervous bank depositors, especially all those who have more than $100,000 in their many accounts. Personally, I wish I had that worry. Do you?
What is the common denominator to all these add-ons? They are meant to be added up so that Congress can say: “This is how much we’re going spend to help fix the problem that will benefit you, not just the $700 billion going to Wall Street.” Don’t buy into this.
However, my very favorite proposal is the push to do entirely away with fair-value – mark-to-market – accounting. This is being pushed by none other than the American Bankers Association and – guess whom else – the Securities and Exchange Commission (SEC).
That’s the same SEC that presided over the demise of The Bear Stearns Cos. (now part of JP Morgan Chase & Co., Lehman Brothers Holdings Inc., and American International Group. It’s the same SEC that eliminated the uptick rule. And it’s the same SEC that handed over to the exchanges the authority to decide who should be on the “do-not-short” list.
The truth that needs to be front-page news it that if there wasn’t Fair Value, mark-to-market accounting we would never have seen this crisis coming. Doing away with mark-to-market accounting does not change the value of problem securities. Period. Doing away with mark-to-market will only bury the bodies under the rubble. The stench will eventually suffocate us all…to death.
The Federal Debt Relief System is dedicated to sounding the alarm while there is still time to do something about it.
Learn more at Federal Debt Relief System now.
Federal Debt Relief System is at the forefront in the battle to restore the Constitution by arming millions with the sobering information and vital education designed to wake Americans up.
Federal Debt Relief System knows credit-card losses are already taking an enormous bite out of lenders' balance sheets. Bank of America, the nation's second-largest issuer behind JPMorgan, revealed on Oct. 6 that roughly $3 billion of its $184 billion credit-card portfolio has soured, a 50% increase from a year ago. At the same time the bank, which is also dealing with the broader economic crisis, said it would have to cut its dividend by 50% and raise $10 billion in fresh capital.
The stock stumbled more than 25% the next day when investors largely scoffed at the new shares BofA was offering. "The good news for us is that we have the strength to get through this, but the bad news is that the earnings recovery does take a while," says BofA spokesman Bob Stickler. "We are prudently adjusting our underwriting standards to adapt to changing economic conditions."
The industry's practices during the lending boom are coming back to haunt many credit-card lenders now. Cate Colombo, a former call center staffer at MBNA, the big issuer bought by Bank of America in 2005, says her job was to develop a rapport with credit-card customers and advise them to use more of their available credit.
Colleagues would often gather around her chair when she was on the phone with a consumer and chant: "Sell, sell." "It was like Boiler Room," says Colombo, referring to the 2000 movie about unscrupulous stock brokers. "I knew that they would probably be in debt slavery for the rest of their lives." Unless, of course they default. Responds BofA spokeswoman Betty Riess: "The allegations do not reflect our practices. The bank has nothing to gain by extending credit to people who do not have the ability to pay us back."
Likewise, American Express (AXP), which caters to wealthier borrowers, upped its provisions for credit-card losses from $810 million to $1.5 billion in the latest quarter, a sign that even upscale consumers are having trouble. "We have enhanced our models and continue to prudently manage our risk by scaling back some card acquisition efforts and reducing credit lines where appropriate," says an AmEx spokeswoman.
Now regulators and politicians are trying to curb some of the industry's abusive practices by limiting interest rate hikes, abolishing certain fees, and cracking down on questionable billing practices. Under rules proposed by the Federal Reserve Bank, a borrower would have a 21-day grace period before being hit with a late fee, instead of the few days offered by some firms now.
A similar plan working its way through Congress would allow banks to increase rates only on consumers' future purchases—not existing balances. And under both proposals, credit-card companies would have to allocate account holders' payments equally to balances with different interest rates. Currently, firms first apply payments to the debt with the lowest rate, which means it takes longer and makes it costlier for consumers to pay off their debt.
To get ahead of rules that would hamper their ability to reprice accounts, for example, many firms are jacking up interest rates. A survey of major issuers by consumer advocacy group Consumer Action found that 37% of firms have raised rates across the board, even for borrowers with relatively pristine credit records. "In anticipation of a federal crackdown, card companies are scouring their portfolios and tightening credit," says Tower Group's Moroney.
Not everyone will be able to pay down their debts and that could make for a vicious cycle: As credit-card companies raise rates, more consumers fall behind on their payments; ,which then hurts the issuers. Says Innovest's Larkin: "We are going to see the banks massively hit."
The Federal Debt Relief System is dedicated to sounding the alarm while there is still time to do something about it.
Learn more at Federal Debt Relief System now.
Everyone knows Americans everywhere are falling behind on their payments. Defaults rising. Investors getting burned. But forget the now-familiar tales of mortgages gone bad. The next Katrina on America’s economic horizon for beaten-down financial firms is the $950 billion worth of outstanding credit-card debt—much of it toxic.
That's bad news for players like JPMorgan Chase (JPM) and Bank of America (BAC) that have largely side stepped—and even benefited from—the housing bust but have major credit-card operations. They're hardly alone. The consumer debt bomb is already beginning to spray shrapnel throughout the financial markets, further weakening the U.S. economy.
But some banks and credit-card companies may be exacerbating their problems. To boost profits and get ahead of coming regulation, they're hiking interest rates. But that's making it harder for consumers to keep up. That'll only make tomorrow's pain worse. Innovest estimates that credit-card issuers will take a $41 billion hit from rotten debt this year and a $96 billion blow in 2009.
Those losses, in turn, will wend their way through the $365 billion market for securities backed by credit-card debt. As with mortgages, banks bundle groups of so-called credit-card receivables, essentially consumers' outstanding balances, and sell them to big investors such as hedge funds and pension funds . Big issuers offload roughly 70% of their credit-card debt.
Right now, the stock market is - 700 at least after gaining over 900 just 2 days ago. Check out this excerpt from the latest government proposal. It states:
"Designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them."
Federal Debt Relief System summed it up best : "This is the de facto nationalization of the entire banking, insurance and related financial system..That's right - every bank and other financial institution in the United States has just become a de-facto organ of the corrupt government. Paulson thinks they should be, and he may order them to do virtually anything that he claims is in furtherance of this act.....The bill gives Paulson the ability to nationalize unlimited amount of private debt and force you and your children to pay for it."
The claim is that this is intended to 'promote confidence and stability' in the financial markets, but the reality is that it will do no such thing. It will instead strike terror into the hearts of investors worldwide who hold any sort of paper, whether it be preferred stock, common stock or debt, in any financial entity that happens to be domiciled in the United States, never mind the potential impact on Treasury yields and the United States sovereign credit rating.
Market Ticker predicts that if this passes it will “precipitate the mother and father of all financial panics."
Amen. The transformation from a free market to a centralized, Soviet-style economy run by men whose judgment and credibility is already greatly in doubt; does not auger well for the markets or the country.
Anyone with a lick of sense would cash in their chips first thing Monday and look for capital's Elysium Fields overseas or as far as possible from the circus sideshow now run by G-Sax ringleader, Colonel Klink.
Paulson's Chicken Little routine might have soiled a few senatorial undergarments, but let's hope the American people are made of sterner stuff and will reject this charade. The conversation should be shifted from conceding more authority to hucksters in pin-stripes to indictments for securities fraud.
Paulson's plan to revive the banking system by buying up hundreds of billions of dollars of illiquid mortgage-backed securities (MBS) and other equally poisonous debt-instruments; ignores the fact these complex bonds have already been "marked to market" in the recent firesale by Merrill Lynch.
Just weeks ago, Merrill sold $31 billion of these CDOs for roughly $.20 on the dollar and provided 75 percent of the financing, which means that the CDOs were really worth approximately $.06 on the dollar. If this is the settlement that Paulson has in mind, than the taxpayer will be well served.
But this will not recapitalize the banks balance sheets or mop up the ocean of red ink which is flooding the financial system. No, Paulson intends to hand out lavish treats to his banker buddies, while interest rates soar, pension funds collapse, the housing market crashes, and the dollar does a last, looping swan-dive into a pool of molten lava. Thanks, Hank.
The Federal Debt Relief System is dedicated to sounding the alarm while there is still time to do something about it.
Go to Federal Debt Relief System now.
"The Bush family network sought unchecked power from Congress to buy $700 billion in bad mortgage investments from financial companies in what would be an unprecedented government intrusion into the markets. Through his plan, Treasury Secretary Henry Paulson aims to avert a credit freeze that would bring the financial system and the world's largest economy to a standstill. The bill would prevent courts from reviewing actions taken under its authority.
"He's asking for a huge amount of power,'' said Nouriel Roubini an economist at New York University. ``He's saying, `Trust me, I'm going to do it right if you give me absolute control.' This is not a monarchy."
The bankers conspiracy own this country, always have; only now they've decided to strip away the curtain and reveal the ghoulish visage of the puppet-master. It ain't pretty.
Paulson decided that the financial markets needed an emergency trillion dollar face-lift just weeks before his former business partners at G-Sax were dragged off to the chopping block. Was that the reason? Everyone on Wall Street knew that the bulls-eye had already been ripped from Lehman's bloody back and was about to be fastened on Goldman's. Now, it looks like they will escape their day of reckoning due to Paulson's eleventh-hour reprieve. Nice touch, eh?
The Federal Debt Relief System is dedicated to sounding the alarm while there is still time to do something about it.
Go to Federal Debt Relief System now.
Federal Debt Relief System knows these are dark times. While you were sleeping the cockroaches were busy about their work, rummaging through the US Constitution, and putting the finishing touches on a scheme to assert absolute power over the nation's financial markets and the country's economic future.
Banking industry representative Henry Paulson has submitted legislation to congress that will finally end the pretense that Bush controls anything more than reading the lines from a 4' by 6' teleprompter situated just inches from his lifeless pupils.
Paulson is in charge now, he rose to power in a stealthily-executed Bankster's Coup in which he, and his coterie of dodgy friends, declared martial law on the US economy while elevating himself to supreme leader.
Section 8 of the proposed legislation says it all:
"Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency. Congress, of course, is more than eager to abdicate whatever little authority they have left. They're infinitely grateful for their purely ceremonial role, the equivalent of Caligula's horse, albeit, with considerably less dignity. Has even one senator spoken out against this madness, which--according to informal internet polls--is resoundingly rejected by the voters?
Does it concern the members of congress at all, that the present financial crisis was brought on by the proliferation and sale of trillions of dollars of mortgage-banked garbage which were fraudulently represented as Triple A rated bonds by the very same people who now claim to need unprecedented and dictatorial powers to fix the problem?
Or are they more worried that the steady torrent of contributions which flows from Wall Street to congressional campaign coffers will be inconveniently disrupted if they fail to ratify this latest assault on democratic governance?
The House of Representatives is one big steaming dungheap that should be leveled and turned into an amusement park instead of a taxpayer-funded knocking shop. What a pathetic collection of cowards and scumbags.
Federal Debt Relief System is ready to defend and restore your family’s financial freedom.
Federal Debt Relief System is ready to help.
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