Israel to Attack Iran in the next month?
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The G-20’s Secret Debt Solution
11-13-08
by Larry Edelson
If
you think this weekend’s G-20 meetings in Washington are only about
designing short-term fixes to the financial system and regulatory
reforms for banks, hedge funds, brokers, mortgage companies and
investment banks … think again.
Behind the scenes, a far more
fundamental fix is being discussed — the possible revaluation of gold
and the birth of an entirely new monetary system.
I’ve been
studying this issue in great depth, all my life. And given the speed at
which the financial crisis is unfolding, I would be very surprised if
what I’m about to tell you now is not on the G-20 table this weekend.
Furthermore,
I believe the end result will make my $2,270 price target for gold look
conservative, to say the least. You’ll see why in a minute.
First, the G-20’s motive for a new monetary system: It’s driven by and based upon this very simple proposition …
“If we can’t print money fast enough to fend off another deflationary
Great Depression, then let’s change the value of the money.”
I call it …
The G-20 may propose devaluing all currencies, including the U.S. dollar and the euro.
“The G-20’s Secret Debt Solution”
It
would be a strategy designed to ease the burden of ALL debts — by
simultaneously devaluing ALL currencies … and re-inflating ALL asset
prices.
That’s what central banks and governments around the
world are going to start talking about this weekend — a new financial
order that includes new monetary units that helps to wipe clean the
world’s debt ledgers.
It won’t be an easy deal to broker, since
the U.S. is the world’s largest debtor. But remember: Debts are now
going bad all over the world. So everyone would benefit.
Fed
Chairman Ben Bernanke … Treasury Secretary Paulson … President Bush …
President-elect Obama … former Fed Chairman Paul Volcker … Warren
Buffett … and central bankers and politicians all over the world agree
a new monetary system is needed.
The G-20 may propose devaluing all currencies, including the U.S. dollar and the euro.
So they’ll start hashing out the details to get the new financial architecture deployed as quickly as possible.
If you think I’m crazy or propagating some kind of conspiracy theory, then consider the historical precedent …
To
end the Great Depression in 1933 Franklin Roosevelt devalued the dollar
via Executive Order #6102, confiscating gold and raising its price
69.3%, effectively kick starting asset reflation.
Only this
time, it won’t be just the U.S. that devalues its currency. The world
is too interconnected. Instead, the world’s leading countries will
propose a simultaneous and universal currency devaluation.
This time, they will NOT confiscate gold. There would be riots all over the globe if they even mentioned the “C” word.
But they don’t have to confiscate gold. Here’s one scenario …
They
cease all gold sales and instead, raise the current official central
bank price of gold from its booked value of $42.22 an ounce — to a
price that monetizes a large enough portion of the world’s outstanding
debts.
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That way, just like in 1933, the debts become a fraction of re-inflated asset prices (led higher by the gold price).
And
this time, instead of staying with the dollar as a reserve currency,
the G-20 issues three new monetary units of exchange, each with equal
reserve status.
The three currencies will essentially be a new
dollar, new euro, and a new pan-Asian currency. (The Chinese yuan may
survive as a fourth currency, but it will be linked to a basket of the
three new currencies.)
The new fiat monetary units would be
worth less than the old ones. For instance, it could take 10 new units
of money to buy 1 old dollar or euro.
New names would be given
to the new currencies to help rid the world of the ghost of a system
that failed. Additional regulations and programs would be designed and
implemented to ease the transition to a new monetary system.
The IMF would be at the center of the new monetary system.
The IMF would be at the center of the new monetary system.
The
International Monetary Fund (IMF) would implement the new financial
system in conjunction with central banks and governments around the
world.
Keep in mind that the IMF is already set up to handle the
transition, and has had contingency plans allowing for it since the
institution was formed in 1944.
Included in the design and transition to a new monetary system …
A.
A new fixed-rate currency regime. Immediately upon upping the price of
gold and introducing the new currencies, a new fixed exchange rate
system would be re-introduced. The floating exchange rate system would
be tossed into the dust bin along with the old currencies.
This would kill any speculation about further devaluations in the currency markets, and drastically reduce market volatility.
B.
To sell the program to savers and protect them from the currency
devaluation, compensatory measures would be enacted. For instance, a
one-time windfall tax-free deposit could be issued by governments
directly to citizens’ accounts, or, to employer-sponsored pensions, to
IRAs, or Social Security accounts.
Income taxes may subsequently
be raised to pay for the give-away, or a nominal global type of sales
tax could be enacted to help pay for the new system and the
compensatory measures.
C. Additional programs would be designed
to protect lenders and creditors. Lenders stand a much higher chance of
getting paid off under the new monetary system — but with a currency
whose purchasing power would now be a fraction of what it was when the
loans were originated.
So programs would have to be designed to
help lenders offset the inflationary costs of their devalued loans,
probably via the tax code.
Naturally, all this is a bit more
complicated than I’ve spelled out above. But that gives you a
big-picture outline of what the plan could look like. And I think major
changes like these are going to be set in motion at this weekend’s G-20
meetings in Washington.
Would they work?
Yes. They would
help avoid a repeat of the deflationary Great Depression. But don’t
expect even a new monetary system to put the U.S. or the global economy
back on track toward the high rates of real growth that we’ve seen over
the last several years. That’s simply not going to happen. Not for a
while.
Instead, I’m talking about a massive asset price
reflation, negative real economic growth in the U.S. and Europe — but
continued real GDP gains in Asia.
The Big Question: What gold price would be legislated to reflate the U.S. and global economy?
I can’t tell you what gold price the G-20 would ultimately agree to. But here’s what they will be looking at …
* To monetize 100% of the outstanding public and private sector debt in
the U.S., the official government price of gold would have to be raised
to about $53,000 per ounce.
* To monetize 50%, the price of gold would have to be raised to around $26,500 an ounce.
* To monetize 20% would require a gold price a hair over $10,600 an ounce.
* To monetize just 10%, gold would have to be priced just over $5,300 an ounce.
Those
figures are just based on the U.S. debt structure and do not factor in
global debts gone bad. But since the U.S. is the world’s largest debtor
and the epicenter of the crisis, the G-20 will likely base their final
decision mostly on the U.S. debt structure.
So how much debt do
I think would be monetized via an executive order that raises the
official price of gold? What kind of currency devaluation would I
expect as a result?
I would not be surprised to see the G-20 monetize at least 20% of the U.S. debt markets. THAT MEANS …
* Gold would be priced at over $10,000 an ounce.
* Currencies would be devalued by a factor of at least 12 to 1, meaning
it would take 12 new dollars or euros to equal 1 old dollar or euro.
The return of the Gold Standard?
“But
Larry,” you ask, “how could this be accomplished when we no longer have
a gold standard? Further, are you advocating a gold standard?” If the
G-20 monetizes at least 20% of the U.S. debt markets, gold could easily
hit $10,000 an ounce.
My answers:
First, you don’t need a gold standard to accomplish a devaluation of currencies and revaluation of the monetary system.
By
offering to pay over $10,000 an ounce for gold, central banks can
effectively accomplish the same end goal — monetizing and reducing the
burden of debts, via inflating asset prices in fiat money terms.
Naturally,
hoards of gold investors will cash in their gold. The central banks
will pile it up. At the same time, other hoards of investors will not
sell their gold, even at $10,000 an ounce. But the actual movement of
the gold will not matter. It is the psychological impact and the
devaluation of paper currencies that matters.
Second, I do NOT
advocate a fully convertible gold standard. Never have. There isn’t
enough gold in the world to make currencies convertible into gold. It
would end up backfiring, restricting the supply of money and credit.
What should you do to prepare for these possibilities?
It’s obvious: Make sure you own some core gold, as much as 25% of your investable funds.
Also,
as I’ve noted in past Money and Markets issues, you will want to own
key natural resource stocks, and even select blue-chip stocks that will
participate in the reflation scheme.
For more details and specific recommendations to follow, be sure to subscribe to my Real Wealth Report.
Best wishes,
Larry
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From: http://www.carolinajournal.com/exclusives/dems-target-private-retirement-accounts.html
Carolina Journal Exclusives
By Karen McMahan
November 04, 2008
RALEIGH — Democrats in the U.S.
House have been conducting hearings on proposals to confiscate workers’
personal retirement accounts — including 401(k)s and IRAs — and convert
them to accounts managed by the Social Security Administration.
Triggered by the financial crisis
the past two months, the hearings reportedly were meant to stem losses
incurred by many workers and retirees whose 401(k) and IRA balances
have been shrinking rapidly.
The testimony of Teresa
Ghilarducci, professor of economic policy analysis at the New School
for Social Research in New York, in hearings Oct. 7 drew the most
attention and criticism. Testifying for the House Committee on
Education and Labor, Ghilarducci proposed that the government eliminate
tax breaks for 401(k) and similar retirement accounts, such as IRAs,
and confiscate workers’ retirement plan accounts and convert them to
universal Guaranteed Retirement Accounts (GRAs) managed by the Social
Security Administration.
Rep. George Miller, D-Calif.,
chairman of the House Committee on Education and Labor, in prepared
remarks for the hearing on “The Impact of the Financial Crisis on
Workers’ Retirement Security,” blamed Wall Street for the financial
crisis and said his committee will “strengthen and protect Americans’
401(k)s, pensions, and other retirement plans” and the “Democratic
Congress will continue to conduct this much-needed oversight on behalf
of the American people.”
Currently, 401(k) plans allow
Americans to invest pretax money and their employers match up to a
defined percentage, which not only increases workers’ retirement
savings but also reduces their annual income tax. The balances are
fully inheritable, subject to income tax, meaning workers pass on their
wealth to their heirs, unlike Social Security. Even when they leave an
employer and go to one that doesn’t offer a 401(k) or pension, workers
can transfer their balances to a qualified IRA.
Mandating Equality
Ghilarducci’s plan first appeared
in a paper for the Economic Policy Institute: Agenda for Shared
Prosperity on Nov. 20, 2007, in which she said GRAs will rescue the
flawed American retirement income system
(www.sharedprosperity.org/bp204/bp204.pdf).
The current retirement system,
Ghilarducci said, “exacerbates income and wealth inequalities” because
tax breaks for voluntary retirement accounts are “skewed to the wealthy
because it is easier for them to save, and because they receive bigger
tax breaks when they do.”
Lauding GRAs as a way to
effectively increase retirement savings, Ghilarducci wrote that savings
incentives are unequal for rich and poor families because tax deferrals
“provide a much larger ‘carrot’ to wealthy families than to
middle-class families — and none whatsoever for families too poor to
owe taxes.”
GRAs would guarantee a fixed 3
percent annual rate of return, although later in her article
Ghilarducci explained that participants would not “earn a 3% real
return in perpetuity.” In place of tax breaks workers now receive for
contributions and thus a lower tax rate, workers would receive $600
annually from the government, inflation-adjusted. For low-income
workers whose annual contributions are less than $600, the government
would deposit whatever amount it would take to equal the minimum $600
for all participants.
In a radio interview with Kirby
Wilbur in Seattle on Oct. 27, 2008, Ghilarducci explained that her
proposal doesn’t eliminate the tax breaks, rather, “I’m just
rearranging the tax breaks that are available now for 401(k)s and
spreading — spreading the wealth.”
All workers would have 5 percent
of their annual pay deducted from their paychecks and deposited to the
GRA. They would still be paying Social Security and Medicare taxes, as
would the employers. The GRA contribution would be shared equally by
the worker and the employee. Employers no longer would be able to write
off their contributions. Any capital gains would be taxable
year-on-year.
Analysts point to another
disturbing part of the plan. With a GRA, workers could bequeath only
half of their account balances to their heirs, unlike full balances
from existing 401(k) and IRA accounts. For workers who die after
retiring, they could bequeath just their own contributions plus the
interest but minus any benefits received and minus the employer
contributions.
Another justification for
Ghilarducci’s plan is to eliminate investment risk. In her testimony,
Ghilarducci said, “humans often lack the foresight, discipline, and
investing skills required to sustain a savings plan.” She cited the
2004 HSBC global survey on the Future of Retirement, in which she
claimed that “a third of Americans wanted the government to force them
to save more for retirement.”
What the survey actually reported
was that 33 percent of Americans wanted the government to “enforce
additional private savings,” a vastly different meaning than mandatory
government-run savings. Of the four potential sources of retirement
support, which were government, employer, family, and self, the
majority of Americans said “self” was the most important contributor,
followed by “government.” When broken out by family income, low-income
U.S. households said the “government” was the most important retirement
support, whereas high-income families ranked “government” last and
“self” first (www.hsbc.com/retirement).
On Oct. 22, The Wall Street
Journal reported that the Argentinean government had seized all private
pension and retirement accounts to fund government programs and to
address a ballooning deficit. Fearing an economic collapse, foreign
investors quickly pulled out, forcing the Argentinean stock market to
shut down several times. More than 10 years ago, nationalization of
private savings sent Argentina’s economy into a long-term downward
spiral.
Income and Wealth Redistribution
The majority of witness testimony
during recent hearings before the House Committee on Education and
Labor showed that congressional Democrats intend to address income and
wealth inequality through redistribution.
On July 31, 2008, Robert
Greenstein, executive director of the Center on Budget and Policy
Priorities, testified before the subcommittee on workforce protections
that “from the standpoint of equal treatment of people with different
incomes, there is a fundamental flaw” in tax code incentives because
they are “provided in the form of deductions, exemptions, and
exclusions rather than in the form of refundable tax credits.”
Even people who don’t pay taxes
should get money from the government, paid for by higher-income
Americans, he said. “There is no obvious reason why lower-income
taxpayers or people who do not file income taxes should get smaller
incentives (or no tax incentives at all),” Greenstein said.
“Moving to refundable tax credits
for promoting socially worthwhile activities would be an important step
toward enhancing progressivity in the tax code in a way that would
improve economic efficiency and performance at the same time,”
Greenstein said, and “reducing barriers to labor organizing, preserving
the real value of the minimum wage, and the other workforce security
concerns . . . would contribute to an economy with less glaring and
sharply widening inequality.”
When asked whether committee
members seriously were considering Ghilarducci’s proposal for GSAs,
Aaron Albright, press secretary for the Committee on Education and
Labor, said Miller and other members were listening to all ideas.
Miller’s biggest priority has been
on legislation aimed at greater transparency in 401(k)s and other
retirement plan administration, specifically regarding fees, Albright
said, and he sent a link to a Fox News interview of Miller on Oct. 24,
2008, to show that the congressman had not made a decision.
After repeated questions asked by
Neil Cavuto of Fox News, Miller said he would not be in favor of
“killing the 401(k)” or of “killing the tax advantages for 401(k)s.”
Arguing against liberal
prescriptions, William Beach, director of the Center for Data Analysis
at the Heritage Foundation, testified on Oct. 24 that the “roots of the
current crisis are firmly planted in public policy mistakes” by the
Federal Reserve and Congress. He cautioned Congress against raising
taxes, increasing burdensome regulations, or withdrawing from
international product or capital markets. “Congress can ill afford to
repeat the awesome errors of its predecessor in the early days of the
Great Depression,” Beach said.
Instead, Beach said, Congress
could best address the financial crisis by making the tax reductions of
2001 and 2003 permanent, stopping dependence on demand-side stimulus,
lowering the corporate profits tax, and reducing or eliminating taxes
on capital gains and dividends.
Testifying before the same
committee in early October, Jerry Bramlett, president and CEO of
BenefitStreet, Inc., an independent 401(k) plan administrator, said one
of the best ways to ensure retirement security would be to have the
U.S. Department of Labor develop educational materials for workers so
they could make better investment decisions, not exchange equity
investments in retirement accounts for Treasury bills, as proposed in
the GSAs.
Should Sen. Barack Obama win the
presidency, congressional Democrats might have stronger support for
their “spreading the wealth” agenda. On Oct. 27, the American Thinker
posted a video of an interview with Obama on public radio station
WBEZ-FM from 2001.
In the interview, Obama said, “The
Supreme Court never ventured into the issues of redistribution of
wealth, and of more basic issues such as political and economic justice
in society.” The Constitution says only what “the states can’t do to
you. Says what the Federal government can’t do to you,” and Obama added
that the Warren Court wasn’t that radical.
Although in 2001 Obama said he was
not “optimistic about bringing major redistributive change through the
courts,” as president, he would likely have the opportunity to appoint
one or more Supreme Court justices.
“The real tragedy of the civil
rights movement was, um, because the civil rights movement became so
court focused that I think there was a tendency to lose track of the
political and community organizing and activities on the ground that
are able to put together the actual coalition of powers through which
you bring about redistributive change,” Obama said.
Karen McMahan is a contributing editor of Carolina Journal.
Dems Target Private Retirement Accounts
Democratic leaders in the U.S. House discuss confiscating 401(k)s, IRAs
by Dr. Ron Paul, U.S. Congressman
In the midst of highly unpopular bailouts of Wall Street, many justifications have been given about why Washington feels the need to act. Some claim that capitalism and the free market are to blame, but we have not had capitalism. If you compare our financial capital to our aggregate debt, this would be obvious. In the same way, we have not had a truly free market. The monetary manipulations of the Federal Reserve, a complex tax code, the many “oversight” agencies and their mountains of regulations show that we are far removed from a free market economy.
Another unsatisfying argument is that certain entities have to be bailed out because of their economic importance. Supposedly, some entities can be so big, so important, that no matter what they do, citizens must perpetually sustain them.
Even limited government has a basic duty to defend against force and fraud. Some argue that force is somehow permissible just because the entity engaging in it is "economically significant." But one could use this reasoning to prop up slavery. It could be deemed unfortunate but economically beneficial, and indeed these arguments have been used historically to deprive people of their liberty. But slavery should never be tolerated regardless of any economic benefit, just as systemic fraud should not be tolerated. Some banks on Wall Street should fail. Fannie and Freddie should fail. They are perpetrating fraud against the people. Yet, government insists on rewarding behavior which should instead be investigated, prosecuted, and punished.
There has been much evidence of fraud at Fannie and Freddie, but when one man, Franklin Raines, defrauded the organization out of millions of dollars through illegal accounting tricks, and ends up agreeing to pay back just a fraction, one could argue that it was well worth it to him. Fannie went on to only get more deeply involved in subprime mortgages after this investigation. Several organizations are suffering right now precisely because the free market is trying to work and punish mismanagement, if only the government would get out of the way and let it. Perhaps banks are not lending to each other because they know that complicated accounting standards, created in part to defend against confiscatory tax policy, enables false fiscal pictures to be presented, which erodes trust. But this is not a time for the government to step in with more burdensome and complicated regulations, or more foolish liquidity injections. This is a time for some banks to fail, and remaining banks to deal honestly and transparently once again. More regulations will only result in more lies.
Just as economies that turned away from slave labor had a transition period, our economy would transition as well, but in the end, if we turned to honest, sound money and a truly free market, we would end up with a more just society, founded on truthfulness and decency, not subject to the violence of force or the whims of fraudulent institutions. Unfortunately, it seems we are headed into a new era of slavery, however, where all taxpayers will be forced to render to the Fed and big banking interests the bulk of the fruits of their labor, possibly through higher taxes but definitely through the eroding force of inflation.
Found on the WRH Letters page.
What racism does - let's switch it up. What if things were switched around ?.....think about it. Would the country's collective point of view be different? This is what racism does. It covers up, rationalizes and minimizes positive qualities in one candidate and emphasizes negative qualities in another when there is a color difference:
Ponder the following:
What if the Obamas had paraded five children across the stage, including a three month old infant and an unwed, pregnant teenage daughter?
What if John McCain was a former president of the Harvard Law Review? What if Barack Obama finished fifth from the bottom of his graduating class?
What if McCain had only married once, and Obama was a divorcee?
What if Obama was the candidate who left his first wife after a severe disfiguring car accident?
What if Obama had met his second wife in a bar and had a long affair while he was still married?
What if Michelle Obama was the wife who not only became addicted to pain killers but also acquired them illegally through her charitable organization?
What if Cindy McCain graduated from Harvard?
What if Obama had been a member of the Keating Five? (The Keating Five were five United States Senators accused of corruption in 1989, igniting a major political scandal as part of the larger Savings and Loan crisis of the late 1980s and early 1990s.)
What if McCain was a charismatic, eloquent speaker?
What if Obama couldn't read from a teleprompter?
What if Obama was the one who had military experience that included discipline problems and a record of crashing five planes?
What if Obama was the one who was known to display publicly, on many occasions, a serious anger management problem?
What if Michelle Obama's family had made their money from beer distribution?
What if the Obamas had adopted a white child?
You could easily add to this list. If these questions reflected reality, do you really believe the election numbers would be as close as they are?
*Educational Background:
*Barack Obama:*
Columbia University - B.A. Political Science with a
Specialization in International Relations.
Harvard - Juris Doctor (J.D.) Magna Cum Laude
*Joseph Biden:*
University of Delaware - B.A. in History and B.A. in Political Science.
Syracuse University College of Law - Juris Doctor (J.D.)
*John McCain:*
United States Naval Academy - Class rank: 894 of 899
*Sarah Palin:*
Hawaii Pacific University - 1 semester
North Idaho College - 2 semesters - general study
University of Idaho - 2 semesters - journalism
Matanuska-Susitna College - 1 semester
University of Idaho - 3 semesters - B.A. in Journalism
Education isn't everything, but this is about the two highest offices in the land as well as our standing in the world. You make the call.
545
PEOPLE
By Charlie
Reese
Politicians are the only
people in the world who create problems and then campaign against
them.
Have you ever wondered why, if both the Democrats and the
Republicans are against deficits, WHY do we have deficits?
Have you ever
wondered why, if all the politicians are against inflation and high taxes, WHY
do we have inflation and high taxes?
You and I don't propose a federal
budget. The president does.
You and I don't have the Constitutional
authority to vote on appropriations. The House of Representatives
does.
You and I don't write the tax code, Congress does.
You and I
don't set fiscal policy, Congress does.
You and I don't control monetary
policy, the Federal Reserve Bank does.
One hundred senators, 435
congressmen, one president, and nine Supreme Court justices 545 human beings out
of the 300 million are directly, legally, morally, and individually responsible
for the domestic problems that plague this country.
I excluded the
members of the Federal Reserve Board because that problem was created by the
Congress. In 1913, Congress delegated its Constitutional duty to provide a sound
currency to a federally chartered, but private, central bank.
I excluded
all the special interests and lobbyists for a sound reason. They have no legal
authority. They have no ability to coerce a senator, a congressman, or a
president to do one cotton-picking thing. I don't care if they offer a
politician $1 million dollars in cash. The politician has the power to accept or
reject it. No matter what the lobbyist promises, it is the legislator's
responsibility to determine how he votes.
Those 545 human beings spend
much of their energy convincing you that what they did is not their fault. They
cooperate in this common con regardless of party.
What separates a
politician from a normal human being is an excessive amount of gall. No normal
human being would have the gall of a Speaker, who stood up and criticized the
President for creating deficits. The president can only propose a budget. He
cannot force the Congress to accept it.
The Constitution, which is the
supreme law of the land, gives sole responsibility to the House of
Representatives for originating and approving appropriations and taxes. Who is
the speaker of the House? She is the leader of the majority party. She and
fellow House members, not the president, can approve any budget they want. If
the president vetoes it, they can pass it over his veto if they agree
to.
It seems inconceivable to me that a nation of 300 million cannot
replace 545 people who stand convicted -- by present facts -- of incompetence
and irresponsibility. I can't think of a single domestic problem that is not
traceable directly to those 545 people. When you fully grasp the plain truth
that 545 people exercise the power of the federal government, then it must
follow that what exists is what they want to exist.
If the tax code is
unfair, it's because they want it unfair.
If the budget is in the red,
it's because they want it in the red.
If the Army & Marines are in
IRAQ, it's because they want them in IRAQ .
If they do not
receive social security but are on an elite retirement plan not available to the
people, it's because they want it that way.
They vote their own pay
raises for themselves because they want it that way.
There are no
unsolvable government problems.
Do not let these 545 people shift the
blame to bureaucrats, whom they hire and whose jobs they can abolish; to
lobbyists, whose gifts and advice they can reject; to regulators, to whom they
give the power to regulate and from whom they can take this power. Above all, do
not let them con you into the belief that there exists disembodied mystical
forces like 'the economy,' 'inflation,' or 'politics' that prevent them from
doing what they take an oath to do.
Those 545 people, and they alone, are
responsible.
They, and they alone, have the power.
They, and they
alone, should be held accountable by the people who are their bosses provided
the voters have the gumption to manage their own employees.
We should
vote all of them out of office and clean up their mess!
Six outhouses for 350 residents.
Moon of Alabama
September 23, 2008 This evolved over the various versions. The original Paulson proposal said:
All media reports and blogs I have read about this assume that the Treasury under this plan would only buy Mortgage Backed Securities, i.e. bonds backed my mortgage payments. But the above language also includes Credit Default Swaps. Insurance contracts or derivatives, that guarantee the recoverability of MBS and change their value in relation to an MBS' value. The language in the Treasury Fact Sheed on the proposal is even wider:
It seems like the fact sheed exceeds the breadth of the released proposal. Oh, you say, the Democrats in Congress will prevent the Treasury from morphing into a investment bank backed by $700 billion of taxpayer capital? Here is Senator Dodd's expanded proposal of the Paulson plan. The language is even worse than in the original:
The Dodd version gets lauded by Krugman, DeLong and other 'liberal' luminaries. This while the bailout language morphed from "mortgage related assets" to "any financial instrument." The Dodd version added some nice little extras for a homeowners in distress and some oversight provision. But it also extended the scope of the Paulson plan far beyond housing and mortgages towards an all encompassing bailout for any financial issue. Since 2003 Dodd collected
over $4 million in contributions from Securities and Investment
companies. His top five doners include Citibank, SAC Capital Partners
and Royal Bank of Scotland. That may well be the reason why he does not
want to keep the bill restricted to mortgage related assets but wants
to include any financial instrument. If this becomes law, Paulson and whoever replaces him in January will have the authority to buy Asset
Backed Securities from car loans and credit card loans. He will be able
to buy and sell derivatives based on ABS that have build in leverage
effects. The Treasury may even deal in synthetic Collateral Debt
Obligations and derivatives base on those. It can buy and sell shares
of public dealt companies, precious metals, future contracts on these
and it can speculate on interest moves of Russian government bonds. Are there any big long future positions on the Canadian dollar the U.S. president does not like? Just get the Treasury buy them up. Congress is giving it the right to do so. With a capital of $700 billion and the authority to buy and sell any highly leveraged financial instruments, the Treasury will become one gigantic hedge fund that can and may well act to move multi-trillions. If such an entity makes one wrong move, it can bankrupt its owners within a few hours. The Treasury is too knowledgeable to make such mistakes? So were two Nobel Price winners at LTCM. |
:: Article nr. 47444 sent on 23-sep-2008 19:39 ECT
www.uruknet.info?p=47444
Link: www.moonofalabama.org/2008/09/the-treasury-mo.html
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