Posts Tagged ‘Paulson’

OMG, did the world go sane?

Sunday, August 30th, 2009

http://finance.yahoo.com/news/Rep-Frank-eyes-Fed-audit-rb-3402785272.html?x=0

This is certainly one of the signs of the end times – Barney Frank and I agree.    Did I turn into a mushy liberal from a bump to my head, or has Representative Frank finally realized how deep the hole is and that he’s the guy holding the football?

According to the story, the more important piece to me is that he wants to quickly “pull back” a lot of the emergency powers that were given to Tim Geithner (originally Henry Paulson) to deal with emergencies – things like waving your hand and declaring American Express to be a “bank” so you can have the entire country pay the costs of AMEX’s bad lending practices.

The other part is Representative Frank seems to be getting on board that the Federal Reserve needs a colonoscopy to see what the hell is going on.   Apparently, Ron Paul has critical mass now to force an unprecedented audit of the Federal Reserve and its processes.   I’m thinking that the Paulson / Geithner / Goldman-Sachs “connections” have finally been figured out (the stuff I’ve been screaming out loud as they were happening for close to a year) and how the U.S. Treasury has been plundered using the threat of an existential “emergency”.

Well, better late than never.    You can’t start fixing a problem until you recognize there is a problem.

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Posted in Politics, Timothy Geithner Watch | 1 Comment »

WSJ declares Tim Geithner honorable

Friday, August 21st, 2009

http://online.wsj.com/article/SB125088307063549883.html

So the Wall Street Journal interviewed Tim Geithner, and asked him if he acted honorably when he advised Henry Paulson to kill Lehman Brothers and save AIG to protect Goldman Sachs (the previous employer of Mr Paulson and Mr Geithner), and Mr Geithener says “Of Course I did”.

No story here, please move long.

In a totally unrelated story, Chicago based Walgreen’s (one of the country’s largest retailers of prescription drugs) has hired a new Treasurer, who currently works for Goldman Sachs.

http://www.forbes.com/feeds/ap/2009/08/21/business-specialized-consumer-services-us-walgreen-personnel_6803331.html

No story here, why don’t you conspiracy kooks just give this crap up and go back to watching American Idol!!!

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Posted in Politics, Timothy Geithner Watch | No Comments »

AIG “investment” going sour

Tuesday, February 24th, 2009

Story here

Remember when the US Government stepped in to “Save” AIG?  (even though AIG is an insurance company and not a bank).  At the time, various people in the government suggested that in the long run, the taxpayers would make a profit.

Now AIG says it is going to convert the Preferred shares we (the taxpayers) bought into common shares.  They can’t afford to pay the 10% interest that the preferred stock requires.  That was the whole point – that this would make the “investment” temporary and force AIG to quickly pay off the US Treasury by buying back the preferred stock.

That’s not what AIG is proposing.  Like CitiGroup, they want to take the US Treasury from the front of the line to get paid, and put them at the end of the line – so if/when AIG declares bankruptcy the US Treasury is holding only worthless common stock.

The bizarre part of this notion is that AIG thinks converting preferred stock to common stock is -their- decision.  That’s not how preferred stock works.  The owner of the stock decides when or if they wish to exercise their conversion option, usually based on the common stock getting above the conversion price by enough to justify letting go of the guaranteed interest income stream.

They’re talking like they have a friend inside the US Treasury (Geithner comes to mind) who is agreeable to this.  It’s time to say “NO” to AIG.

What is going on here is that most people do no realize their life insurance policies and annuities have no government “insurance” protection. 

Insurance company policies are typically guaranteed by a state run Guaranty Fund.  The fund has no assets of its own – the only tool it has to stand behind insurance policies is to impose an assessment on the other insurance companies that haven’t failed (making them more likely to fail, also).   Unfunded Insurance Guaranty funds are completely unprepared to deal with the largest insurance company in the world failing.  

When people realize their insurance policies and annuities are at risk, a “run” can begin on insurance companies as people withdraw the “cash value” of their whole life policies or demand an early termination of their annuity. 

This has happened before – in 1933, regulators declared an “insurance holiday” to stop runs on the insurance companies.  Here is the story in Time Magazine from April 1933.

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Posted in Financial Collapse, Politics | No Comments »

How to fix the economy in a week

Saturday, February 21st, 2009

Back at the beginning of this problem, the first thing Hank Paulson proposed (probably at the request of Tim Geithner) was to bump up the FDIC coverage limit to $250,000 per account.  George Bush and John McCain quickly jumped on board.  This was exactly the WRONG thing to do and was a horrible mistake.

The result was an immediate outflow of money from the stock market which led to its immediate freefall – and then to make things worse they started adding in FDIC insurance to non-bank accounts like mutual fund money market accounts.   This is like writing insurance policies after the hurricane has already destroyed New Orleans, and with the same outcome.

They believed we are all cowards, and maybe the new Attorney General has a point.

My proposed solution:

“90 days from today, your FDIC coverage will drop to $20,000 per person (not per account) and that is a lifetime limit.  Once your money has been “saved” by the FDIC, that amount is deducted from your remaining $20k.   Amounts in CDs with a maturity of 1 year or more remain at $100,000 per PERSON coverage.”

Right now, huge piles of money are sitting in short term deposits.  Because they could vanish at any minute, banks can’t do anything useful with the money.

This would force people to do one of the following:

  • move the money into tangible assets – real estate, gold, cars, inventories
  • put their money back into the stock market – which would likely go up 20% the first week, and group psychology would do the rest
  • move the money into longer term CDs – which would give the banks a comfort zone that they could start buying commercial paper, fund construction loans, etc… and “unlock” the credit market
  • Pay off debt
  • People will question how their bank is investing money, not chase the highest yields from the weakest banks
  • Reduce demand for short term Treasury notes, allowing interest rates to return to a more normal range

This entire mess happened because we encouraged most of the money in the economy to surge into the one place where it does no good – short term safe havens.  We need people betting on the future, not fearing it.

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Posted in Financial Collapse, Politics | No Comments »