Harvard Economist: Bankruptcy, Not Bailout

http://www.votenader.org/...
http://www.flickr.com/pho...

MICHAEL ,this is a good post but I am common man & told this weeks ago ...I didn't need a degree to figure this one ...This whole deal has to be planned failure....THANKS
weee

EXACTLY>> YOU NAILED IT...
THANK MICHAEL
weee

.

http://www.youtube.com/wa...

I'm new here and I don't know how to post this.
Somebody post this for me.

When the current banking crises began in June last year, even the gloomiest of analysts were quick to point out that if conditions did deteriorate, foreign investors would be only too happy to come to the rescue and seize the opportunity to purchase stakes in prestigious U.S. banks.

The analysts were right. As the banking crisis deepened and American banks went cap in hand to foreign investors for money, foreign governments jumped at the opportunity to purchase billion-dollar chunks of U.S. financial institutions: 10 percent of Morgan Stanley was bought by the Chinese government; 4.5 percent of Citigroup by the United Arab Emirates’ government; 10 percent of Merrill Lynch by Singapore’s government. Other foreign investors spent billions more, snapping up chunks of these firms and other U.S. financial institutions such as Bear Stearns.

But then something went wrong. American financial institutions quickly became poisoned chalices. U.S. banks weren’t nearly as healthy as they or the investment ratings agencies claimed, and as corporate balance sheets continued to deteriorate, share prices plummeted.

Now, international investors are paying for the folly of their impulsive investments. And as Merrill Lynch found out after its deal with the Korean Asset Management Corporation fell apart and it was forced into a takeover by Bank of America: When investors get burned, others become very cautious about making the same mistake.

That was one of the reasons—maybe the primary reason—the federal government seized Fannie Mae and Freddie Mac: America couldn’t afford to burn its foreign lenders again.

Foreign investors, including the governments of China, Japan, Russia and some Middle Eastern nations, had loaned Fannie and Freddie more than $1.3 trillion. China and Japan alone lent more than $600 billion to the mortgage twins.

These are the same lenders that provide the hundreds of billions of dollars the federal government needs to borrow each year to function. And as the Wall Street Journal pointed out, the Treasury Department received a flurry of calls from angry and worried Asian investors just before it decided to nationalize the two mortgage companies.

“I suspect this is the first case where foreign central banks exercised their leverage as creditors to push the U.S. government to make a policy decision that protected their interests,” Brad Setser, a geo-economics fellow at the Council on Foreign Relations, told the Washington Times (September 8).

“The United States must acknowledge that its deep indebtedness is especially dangerous in times of economic crisis,” wrote the New York Times. “The level and stability of American interest rates and of the dollar are now dependent on the willingness of foreign central banks and other overseas investors to continue lending to the United States” (September 9).

Did you get that? “The level and stability of American interest rates and of the dollar are now dependent on the willingness of foreign central banks and other overseas investors to continue lending to the United States” (emphasis mine throughout). That is a serious, serious statement.

Source: http://www.thetrumpet.com...

!!!Truth is treason in the EMPIRE OF LIES!!!

I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a moneyed aristocracy that has set the Government at defiance. The issuing power should be taken from the banks and restored to the people to whom it properly belongs. Thomas Jefferson

Lady4Liberty

We must not let our rulers load us with perpetual debt. We must make our election between economy and liberty or profusion and servitude. If we run into such debt, as that we must be taxed in our meat and in our drink, in our necessaries and our comforts, in our labors and our amusements, for our calling and our creeds...[we will] have no time to think, no means of calling our miss-managers to account but be glad to obtain subsistence by hiring ourselves to rivet their chains on the necks of our fellow-sufferers... And this is the tendency of all human governments. A departure from principle in one instance becomes a precedent for[ another]... till the bulk of society is reduced to be mere automatons of misery... And the fore-horse of this frightful team is public debt. Taxation follows that, and in its train wretchedness and oppression. Thomas Jefferson

Lady4Liberty

Single acts of tyranny may be ascribed to the accidental opinion of the day; but a series of oppressions, begun at a distinguished period, and pursued unalterably through every change of ministers (adminstrators) too plainly proves a deliberate, systematic plan of reducing us to slavery. Thomas Jefferson

Lady4Liberty

I want to see all of those responsible indicted, their assets frozen, both national and foreign, and sold to fund the bailout. Lets start with Paulson and Bernacke. All I hear from the talking heads is that they don't want to place blame....just rush the bill through! Seems to me the bill is putting the fox in charge of the hen house. This great country will survive! This bill is not about the money...it's about the power over your money!

Thank you for the links.

affirmation: President Paul 2008

Can someone with more computer skills than I have cut and paste this to MSM?

No legislation for another day!

President Bush shockingly refers to "reality" and "real prospect"...mass confusion as his staff attempts to find the source of the mistake...is he drinking again?!...Cheney is reportedly rushed to undisclosed location...the world looks on in horror!!!!
“The reality is we’re in an urgent situation and the consequences will get bigger each day we do not act. We are facing a choice between action and the real prospect of economic hardship for millions of Americans,”

Dow "unexpectedly" up 485 points!

World does not end! Extra! Extra!

We are apt to shut our eyes against a painful truth... For my part, I am willing to know the whole truth; to know the worst; and to provide for it. --Patrick Henry

Posted On: Tuesday, September 30, 2008, 1:37:00 PM EST

Hourly Action In Gold From Trader Dan

Author: Dan Norcini

Click chart to enlarge today’s 12 hour action in gold in PDF format as of 12:30 pm CDT with commentary from Trader Dan Norcini.

Posted On: Tuesday, September 30, 2008, 12:05:00 PM EST

The Madness Of The Crowd

Author: Jim Sinclair

Dear CIGAs,

WAKE UP.

In this crisis $250 billion is chump change. As a matter of fact, $750 billion is chump change.

The "Madness of the Crowd" does not recognize that the Fed lent $1.25 trillion last week. These loans were not to strong, but ailing financial entities.

Surprise, surprise, the $1.25 trillion in one week is much larger than $250 or $750 billion.

Stay the course and ignore the shorts, or if u can't stand the heat in the gold kitchen as Harry Truman kind of said, then please leave immediately!

"The ECB is no longer able to inject liquidity because the money is just coming back to them again. This is extremely serious. If monetary policy is no longer working, there is a risk that the whole system will blow up in days," he said.

Banking crash hits Europe as ECB loses traction
By Ambrose Evans-Pritchard
Last Updated: 10:37AM BST 30 Sep 2008

The Dutch-Belgian bank Fortis, Britain's Bradford and Bingley, and Iceland's Glitnir, were all partially or fully nationalized after failing to roll-over debts in the short-term money markets, while the French state pledged support for the Franco-Belgian lender Dexia after the share price collapsed on reports of a capital shortage.

"The European financial sector is on trial: we have to support our banks." said French President Nicolas Sarkozy. He has reportedly ordered the state investment arm Caisse Des Depots to shore up Dexia, even though the bank is based in Belgium.

Germany's Hypo Real Estate, a commercial property lender, was rescued with a €35bn lifeline from a consortium of local banks. The lender has $560bn in liabilities, almost as much as Lehman Brothers.

Hypo Real's share price crashed 74pc, setting off a masse exodus from financial stocks in Frankfurt. Commerzbank fell 23pc and Aareal Bank was off 43pc.

More…

I love all the comments from random internet joes (or janes) who think they know better than the Harvard economists.

Why did we have this banking crisis?
- Bec the failing banks lent too much to overprices housing and to people who cannot afford to pay.

Why did The bank do such a stupid thing?
- Bec the government through Freddie Mac and Fannie Mae said they would buy up all these paper mortgages, and Community Reinvestment Act that pressure banks into subprime lending.

Why did Freddie Mac and Fannie Mae promised such an irresponsible thing to the banks?
- Bec the Federal Reserve gave the financical institutions cheap money through low interests, and bec the government wants bank to lend subprime mortgages, and bec the government implicitly promised these institutions that it would make good on their debts, so Fannie and Freddie took on huge amounts of excessive risk.

Why did the Federal government wants to pressure banks to lend subprime mortgages?
- to fend off the recession after the dotcom bubble.

What would happen if these troubled banks go under?
- They would point their fingers at the Fed and the government.

Why would the treasury sec care about these failing banks?
- Bec he is a banker and got good friend in some of those failing banks. It is also opportunity to gain without working for it. If the banks go down, the Treasury secretary might be under fire for not doing his job or be exposed for being a fraud, by the banks themselves, and by a disfunctional congress of the people?

Why is congress working with Bernake, Paulson and the Banking cartel to bail out these failed banks?
- Bec most congressmen benefits from the system and/or ignorant of the real issues and their cause. Bernake and Paulson set the policies with the banks and the banks carried out the directive and they failed. So they need to work together to cover this things up or else who are they going to blame--oh our (dysfunctional) congress--for not passing the bailout.

What can we do?

Please feel free to correct my reasoning or perceptions.

that this piece is the second most e-mailed on CNN.com right now.

Bill Buckler's The Privateer #613 says this about SECTION 8 (9-28-08) - nary a word about this on the news, ever:

"In Section 8 - A Claim Beyond ALL Limits:

In Section 8 of the Treasurer's bailout proposal, there is a claim to unlimited powers. We quote it: "Decisions by the Secretary (of Treasury) 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." If the US Congress signs for this clause, it has abdicated its Constitutional responsibilities. It will also have placed the US Treasury beyond the reach of the courts. Congress will have done this by an act of legislation enacted by itself! That is abdication.

The US Treasurer, Mr. Paulson, will get an unlimited discretion. He could act as he pleases and would become a law unto himself, his decisions being "non-reviewable". So ends the rule of law in the USA."

THAT could be COMPETENT / INCOMPETENT.......LET,The markets decide that one....STAY OUT , NO NO NO ,thanks CONGRESS...
weee

THIS is the reason to let the FAT CATS work this out amoungst themselves ...
...WINNERS & LOOSERS, like the financials always work..
weee

From the Financial Post, via Lew Rockwell, commentary from Canada. The first publication in a major newspaper from the Austrian perspective, at least in this round of crises:

http://network.nationalpo...