A daily dose of realism from Inflation.us; China dumping American T-bills, the Fed’s predictions for slower recovery requiring more stimulus and more monetization of the debt, foreclosures, etc. Keep in mind that the entire stated purpose of the Federal Reserve System is to set monetary policy to ensure economic stability. The same formula as the United Nations’ Charter is to establish an end to war and genocide…and both organizations were brought to you by the same progressives.
After fending off most challenges to its independence and winning new powers to oversee big financial firms, the Federal Reserve has emerged from a bruising debate on the overhaul of U.S. financial rules as perhaps the pre-eminent regulator in the sector. But that could only bring it added blame if things go wrong again.
Instead, the new law gives the Fed more power and a better tool box to help prevent financial crises. It will become the primary regulator for large, complex financial firms of all kinds, such as American International Group, the insurer which built a massive derivatives portfolio that regulators didn’t see until it was too late.
This isn’t the first time Congress has expanded the Fed’s role. After the Great Depression, it passed the Employment Act in 1946, charging the Fed with averting the huge unemployment seen in the 1930s. After the double-digit inflation of the 1970s, the Fed was formally given a dual mandate of promoting both price stability and maximum sustainable employment. In the wake of the latest financial crisis, the Fed is effectively being told to add the maintenance of financial stability to its responsibilities.
China’s leading credit rating agency has stripped America, Britain, Germany and France of their AAA ratings, accusing Anglo-Saxon competitors of ideological bias in favour of the West.
Dagong Global Credit Rating Coused its first foray into sovereign debt to paint a revolutionary picture of creditworthiness around the world, giving much greater weight to “wealth creating capacity” and foreign reserves than Fitch, Standard & Poor’s, or Moody’s.
The US falls to AA, while Britain and France slither down to AA-. Belgium, Spain, Italy are ranked at A- along with Malaysia.
Meanwhile,China rises to AA+ with Germany, the Netherlands and Canada, reflecting its €2.4 trillion (£2 trillion) reserves and a blistering growth rate of 8pc to 10pc a year.
Dominique Strauss-Kahn, chief of the International Monetary Fund, agreed on Monday that the rising East is a transforming global force. “Asia’s time has come,” he said.
The IMF expects Asia to grow by 7.7pc in 2010, vastly outpacing the eurozone at 1pc and the US at 3.3pc. Emerging nations hold 75pc of the world’s $8.4 trillion (£5.6 trillion) of reserves.
For more about “Socialist Party of France” member, Dominique Stauss-Kahn, hit this link.
July 17 (Bloomberg) — The dollar fell the most against the euro in 14 months and dropped to the lowest level this year versus the yen as economic reports added to evidence that the U.S. recovery is losing momentum.
The greenback touched a level weaker than $1.30 versus the shared currency as minutes of the Federal Reserve meeting last month indicated policy makers trimmed their forecasts for growth. The euro rallied for a third straight week against the dollar before partial results of stress tests on the region’s banking system due on July 23.
“It’s really dollar weakness based on some evidence the economy is slowing,” said Vassili Serebriakov, a currency strategist at Wells Fargo & Co. in New York. “The economic indicators are pointing strongly toward slower growth in the second half of the year.”
Fed Minutes
Minutes of the Fed’s June meeting indicated that U.S. central bankers were concerned about lingering high unemployment and risks that inflation could decelerate further. If the outlook worsened, the Federal Open Market Committee would need to consider whether additional stimulus was appropriate, the minutes said.
For those that are interested in the Federal Open Market Committee (that’s a joke) Meeting minutes of June 22-23, 2010, go here.
Barry’s track record is looking pretty dismal with Dr. Paul’s victory and Specter’s adios, and those previously invisible, political coattails are now non-existent.
Rand Paul starts out this interview with the belief that a $2 Trillion Deficit is an extreme idea; NOT abolishing the Federal Reserve. He has a message for the national Democrats, “Bring It On” and asks very politely for pResident Obama to come down to Kentucky to campaign for Rand’s opponent. He goes on to speak about the Republican Party, the Tea Party and how he would like to help the Tea Party shape it’s future and it’s platform. Dr. Paul would like to run on the TP platform including term limits, balancing the budget by law, reading of bills, a waiting period before voting on bills, and all laws passed should apply to Congress in its entirety.
Wow – 2010 could be an even bigger year than Newt and Karl think…
There shall be no filming of federal buildings from public property including the Federal Reserve without permission. According to the rent-a-cop in front of the Fed in D.C., if one wants to film a government building, you must contact the public affairs office of that particular building, make an appointment, and get permission to photograph or film that particular building. Please don’t tell me that filming a government building that we have paid for should be considered an act of a terrorist or criminal. The Fed appears to be acting like there is something else inside their dark halls besides air. (Maybe there is?)
There is also a segment at the beginning of the video of Aaron Dykes trying to film the Kansas Federal Reserve building from Liberty Park (owned by the city – Dept. of Parks and Education) when he was approached by Fed rent-a-cops who stated that he had done nothing wrong but because he was not cooperating by telling them his last name, he and his associates (“guilty by association”) were being asked to leave the park.
I urge you to watch the entire video so you are aware of the extent of the loss of freedom continuing to occur in our country. You might also think of gathering groups of people in front of your local Fed building to take film and photographs en masse.
“We at the board in 1998 were obviously aware of the nature of the problems. Remember the Federal Reserve is a rule making, is not an enforcement agency.” – Alan Greenspan
Alan appears to have known exactly what was happening with Fannie, Freddie, and the subprime mortgages. Just ask Brooksley Born.
As head of the Commodity Futures Trading Commission [CFTC], Brooksley Born became alarmed by the lack of oversight of the secretive, multitrillion-dollar over-the-counter derivatives market. Her attempts to regulate derivatives ran into fierce resistance from then-Fed Chairman Alan Greenspan, then-Treasury Secretary Robert Rubin and then-Deputy Treasury Secretary Larry Summers, who prevailed upon Congress to stop Born and limit future regulation. This is the edited transcript of an interview conducted on Aug. 28, 2009.
Brooksley Born may have just gotten one of Washington’s greatest opportunities to say “I told you so.”
Born was the head of the Commodity Futures Trading Commission under President Bill Clinton in the late 1990s when she began to explore ways to regulate the derivatives market. She had grown concerned that derivatives represented a hidden dark side to the U.S. economy and that few people fully understood the risks involved. But her effort was quashed by then-Fed chief Alan Greenspan and then-Treasury Secretary Robert Rubin.
In wake of the crash of 2008, the vast, complicated and little-understood derivatives market has been widely blamed for undermining the American financial system — just as Born worried it could back in 1997.
But on Wednesday, House Speaker Nancy Pelosi (D-Calif.) announced that she’s appointing Born to the new 10-member Financial Crisis Inquiry Commission, a body established by Congress to serve as a sort of 9-11 Commission for the financial crisis.
In a news release announcing the appointment, Pelosi said the new commission will provide “a full explanation of why so many people lost their homes, their life’s savings and their hard-earned pensions.”
Pelosi said: “To avoid a financial crisis of this magnitude in the future, the commission will conduct a thorough, systematic and nonpartisan examination of the failures in both government and financial markets.”
The commission is to submit its report to Congress by Dec. 15, 2010.
Pelosi and Senate Majority Leader Harry Reid (D-Nev.) appointed former California State Treasurer Phil Angelides as chairman of the commission, along with four other members.
On the Republican side, House Minority Leader John Boehner (R-Ohio) and Senate Minority Leader Mitch McConnell (R-Ky.) appointed former House Ways and Means Committee Chairman Bill Thomas as vice chairman of the commission and three other members, including Doug Holtz-Eakin, the former economic policy director for Sen. John McCain’s 2008 presidential campaign.
Are you freakin’ kidding me? While the District of Criminals has us laser focused on the healthcare takeover and illegal alien amnesty, Ben Bernanke would like to eliminate the minimum reserve requirements because they are a profit drag. Was there or WAS THERE NOT a stress test last year to see if banks had enough reserves to fend off the commercial real estate bubble (my theory for the test)?
Just one more reason that the Federal Reserve Banking Cartel and their mafia boss, Bernanke, have got to go!
In the footnotes of a speech U.S. Federal Reserve Bank Chairman Ben Bernanke would have given to the House Financial Services Committee on Feb. 10, lies a unique and startling disclosure.
Hosted on the Federal Reserve’s own servers, the written testimony of the bank’s chairman explains in plain text what expanding the Fed’s powers will do.
“The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system,” footnote number nine, at the bottom of the page, explains without additional qualification.
9. The authority to pay interest on reserves is likely to be an important component of the future operating framework for monetary policy. For example, one approach is for the Federal Reserve to bracket its target for the federal funds rate with the discount rate above and the interest rate on excess reserves below. Under this so-called corridor system, the ability of banks to borrow at the discount rate would tend to limit upward spikes in the federal funds rate, and the ability of banks to earn interest at the excess reserves rate would tend to contain downward movements. Other approaches are also possible. Given the very high level of reserve balances currently in the banking system, the Federal Reserve has ample time to consider the best long-run framework for policy implementation. The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system. (emphasis mine)
Senator Menendez (D-NJ), in a letter to The Fed, urged the approval of a bank sale where the chief officers were major campaign donors. I know, nothing new to see here, just move along. They are all bloodsucking parasites that need to be kicked to the curb, and soon.
Sen. Daniel K. Inouye’s staff contacted federal regulators last fall to ask about the bailout application of an ailing Hawaii bank that he had helped to establish and where he has invested the bulk of his personal wealth.
The bank, Central Pacific Financial, was an unlikely candidate for a program designed by the Treasury Department to bolster healthy banks. The firm’s losses were depleting its capital reserves. Its primary regulator, the Federal Deposit Insurance Corp., already had decided that it didn’t meet the criteria for receiving a favorable recommendation and had forwarded the application to a council that reviewed marginal cases, according to agency documents.
Two weeks after the inquiry from Inouye’s office, Central Pacific announced that the Treasury would inject $135 million.
Back to the Robert Menendez, “oops” show. You know nothing is going to come of this, just as nothing is going to come of the Timothy Geithner, Hank Paulson, AIG show. Have you heard anything about that lately?
WASHINGTON—Sen. Robert Menendez of New Jersey urged the Federal Reserve last July to approve an acquisition to save a struggling bank in his state. He didn’t mention that the bank’s chairman and vice chairman were big contributors to his political campaign.
If the acquisition had been approved, it would have prevented the two executives from losing what was left of their investments in the bank.
In his letter to the Fed July 21, Mr. Menendez said there was a strong likelihood that First BankAmericano, of Elizabeth, N.J., would fail in three days, which would “send yet another negative message to consumers and investors and further impact our fragile economy.” The one-page letter, obtained by The Wall Street Journal under the Freedom of Information Act, urged Fed Chairman Ben Bernanke to approve a sale of the bank to JJR Bank Holding Co. of Brick, N.J.
The Fed didn’t act on the request from Mr. Menendez, a Democrat, and First BankAmericano, which was closely held, failed July 31.
While lawmakers routinely forward requests from constituents to government agencies, it is rare for them to make specific requests along the lines of this letter asking specific actions, bank attorneys and congressional aides said. One reason is to avoid any appearance of trying to influence the regulatory process for political ends.
The chairman of First BankAmericano at the time of the letter, Joseph Ginarte, is a high-profile attorney with offices in New York and New Jersey. He has given a total of about $30,000 to Mr. Menendez and his political-action committee since 1999, according to federal records.
The vice chairman of the bank was Raymond Lesniak, a New Jersey state senator and local political heavyweight. He also has given generously to Mr. Menendez’s campaign coffers. In 2006, Mr. Lesniak held a fund-raiser at his home for the senator featuring former President Bill Clinton, according to news reports at the time.
When the bank failed, the shareholders, many of them board members, lost their investments. Had the acquisition been approved, Messrs. Ginarte and Lesniak still would have lost a large chunk of their investment but not all, according to First BankAmericano’s former chief executive, Holly Bakke. The size and value of their investments couldn’t be learned.
Mr. Menendez’s statement is a matter of semantics:
In a written statement, Mr. Menendez said helping the community bank, which mostly served Hispanics, was the right thing to do. “If any New Jersey constituent—regardless if it is a family or a local community bank—comes to me seeking assistance with a legitimate federal matter, not only is it important to help, I was elected to help,” he said. “Telling them ‘no’ would be abdicating my responsibility.”
An aide to the senator said the political contributions didn’t influence the decision to write the letter. The aide called its language a mistake, saying it should have stopped short of asking the Fed to take specific action.
The recession is over and the American economy is recovering. Hey, unemployment is down to 9.7%. Rainbows, lollipops, and pink freakin’ unicorns for everybody! I suppose if that were true, the world’s bankers would not be flocking to Sydney this week for a meeting that was scheduled last year.
THE world’s top central bankers began arriving in Australia for high-level talks as renewed fears about the strength of the global economic recovery gripped world share markets.
Representatives from 24 central banks and monetary authorities, including the US Federal Reserve and European Central Bank, landed in Sydney to meet tomorrow at an undisclosed location.
Organised by the Bank for International Settlements last year, the two-day talks are shrouded in secrecy with extensive security believed to have been invoked by law enforcement agencies.
Speculation that the chairman of the US Federal Reserve, Ben Bernanke, would make an appearance could not be confirmed last night.
The event will be dominated by Asian delegations and is expected to include governors of the People’s Bank of China, the Bank of Japan and the Reserve Bank of India.
The arrival of the high-powered gathering coincided with a fresh meltdown on world share markets, sparked by renewed concerns about global growth and sovereign debt.
Fears that countries including Greece, Portugal, Spain and Dubai could default on debt repayments combined with disappointing US jobs data to spook investors.
Australia’s ASX 200 slumped 2.4 per cent to its lowest close since November 5, echoing a sharp fall on Wall Street.
Asian share markets were also pummelled, with Japan’s Nikkei 225 down almost 3 per cent and Hong Kong’s Hang Seng off 3.3 per cent.
The damage was also being felt by European markets last night with London’s FTSE 100 down 1 per cent in early trade.
Sovereign debt fears rippled through to the Australian dollar, which was hammered to a four-month low of US86.43 and was trading close to that level last night.
“This does feel like ’08 and ’07 all over again whereby we had these sorts of little fires pop up and they are supposedly contained but in reality they are not quite contained,” said H3 Global Advisers chief executive Andrew Kaleel.
“Dubai should have been an isolated incident and now we are seeing issues with Greece, Portugal and Spain.”
But it wasn’t all bad news with the RBA upping its Australian growth forecasts and flagging more interest rate rises this year.
The central bank estimates the economy grew 2 per cent in 2009, and will expand by 3.25 per cent in 2010, and by 3.5 per cent in 2011.
The outlook for global growth is likely to be a key theme of the high-level central bank talks.
The gathering also comes at an important time for the BIS as it initiates an overhaul of the global banking system, which will include new capital rules applying to banks and more stringent standards regulating executive pay.
A key part of the two-day talkfest will be a special meeting of Asian central bankers chaired by the governor of the Central Bank of Malaysia, Zeti Akhtar Aziz.
Influential BIS general manager Jaime Caruana is also expected to take a prominent role in the talks.
Federal Treasurer Wayne Swan will address the central bank officials at a dinner on Monday night.
File the information in this article away because I will be posting something I have been researching for quite some time now that has direct relevance to this meeting.
How many more pots is The Fed going to dip their fingers into? Are you as worried as I am about all the mortgages that are going to reset in the next three years? Recovery? What Recovery? We are sliding farther into the abyss while Barry, Harry, and Nancy congratulate themselves on Obamacare. And what about Fannie and Freddie? How are they going to be affected in the next 3 years?
Despite extensive government intervention in the housing market, some policy makers at the Federal Reserve are worried that even more might need to be done.
The minutes of the Federal Open Market Committee’s mid-December meeting, released on Wednesday, reflected a lingering wariness about the strength of the recovery in light of high unemployment and substantial slack in the economy.
At the same time, unease is growing that a tentative comeback in the housing market could fall apart as a tax credit for home buyers expires and the Fed’s program to hold down mortgage rates comes to a close.
Concern over housing deepened Wednesday with the release of new data showing that long-term interest rates were rising rapidly from their historic lows, while mortgage applications to purchase houses were falling. Applications are now at their lowest level in 12 years.
Lowest level in 12 years…because no one is willing to take the risk and/or they cannot qualify because they have no money and/no job.
Meanwhile, this is what you should be paying attention to because it is the forecast of the future. From 3.30.2009.
Now that all those sub-prime loans have defaulted and folks who couldn’t afford their houses have been evicted, the foreclosure crisis is over, right?
Wrong.
Why?
Because subprime loans aren’t the only loans that began with a couple of years of fantastic teaser rates that made houses seem affordable. And over the next few years, all of those other loans will reset.
Now that interest rates are low, the folks who still have jobs and equity in their houses will refinance. Others, however, will be stuck paying higher rates–or they’ll walk away from their houses.
This reset profile is of great concern, because the majority of resets are still ahead. Moreover, the mortgages to which these resets will apply are primarily those originated late in the housing bubble, at the highest prices, and therefore having the largest probable loss. Though many of these mortgages are tied to LIBOR, and therefore benefit from low LIBOR rates, the interest rates on the mortgages are typically reset to a significant spread above LIBOR, and this spread remains constant as interest rates change. Undoubtedly, some Alt-A and option-ARM foreclosures have already occurred, but the likelihood is that major additional foreclosures and mortgage losses lie ahead. If we fail to address foreclosure abatement during the current window of opportunity (early to mid-2009), there may not be time for legislative efforts to contain the resulting fallout.
I started reading the first draft of the financial regulatory reform legislation back at the end of October when it was 253 pages but it kept changing; first to 379 pages and now 1,279 pages. The latest draft was put out on the house floor a few days ago and guess what, they are voting on it today. Not very many people have been paying attention to the complete takeover of the financial sector by progressive democrats because everybody has been talking about the Senate health care bill. One needs to remember that whoever controls the purse strings, controls the world.
Michele Bachmann has called for Americans to melt the phone lines of their representatives in Washington over this sneaky legislation that gives control of the private sector to the White House. (202-224-3121). This legislation also has the Waters amendment that gives community organizations (like ACORN) a seat at the table. Barney and his cronies will tout this as a great bill because it contains the auditing of the Federal Reserve in it. Go here to watch live streaming coverage of the vote on amendments and this bill.
A very small excerpt concerning an oversight council:
H.R.4173 The Wall Street Reform and Consumer Protection Act of 2009 (Introduced in House)
SEC. 1001. FINANCIAL SERVICES OVERSIGHT COUNCIL ESTABLISHED.
(a) Establishment- Immediately upon enactment of this title, there is established a Financial Services Oversight Council.
(b) Membership- The Council shall consist of the following:
(1) VOTING MEMBERS- Voting members, who shall each have one vote on the Council, as follows:
(A) The Secretary of the Treasury, who shall serve as the Chairman of the Council.
(B) The Chairman of the Board of Governors of the Federal Reserve System.
(C) The Comptroller of the Currency.
(D) The Director of the Office of Thrift Supervision, until the functions of the Director of the Office of Thrift Supervision are transferred to pursuant to subtitle C.
(E) The Chairman of the Securities and Exchange Commission.
(F) The Chairman of the Commodity Futures Trading Commission.
(G) The Chairperson of the Federal Deposit Insurance Corporation.
(H) The Director of the Federal Housing Finance Agency.
(I) The Chairman of the National Credit Union Administration.
(2) NONVOTING MEMBERS- Nonvoting members, who shall serve in an advisory capacity:
(A) A State insurance commissioner, to be designated by a selection process determined by the State insurance commissioners, provided that the term for which a State insurance commissioner may serve shall last no more than the 2-year period beginning on the date that the commissioner is selected.
(B) A State banking supervisor, to be designated by a selection process determined by the State bank supervisors, provided that the term for which a State banking supervisor may serve shall last no more than the 2-year period beginning on the date that the supervisor is selected.
(c) Duties- The Council shall have the following duties:
(1) To advise the Congress on financial domestic and international regulatory developments, including insurance and accounting developments, and make recommendations that will enhance the integrity, efficiency, orderliness, competitiveness, and stability of the United States financial markets.
(2) To monitor the financial services marketplace to identify potential threats to the stability of the United States financial system.
(3) To identify potential threats to the stability of the United States financial system that do not arise out of the financial services marketplace.
(4) To develop plans (and conduct exercises in furtherance of those plans) to prepare for potential threats identified under paragraphs (2) and (3).
(5) To subject financial companies and financial activities to stricter prudential standards in order to promote financial stability and mitigate systemic risk in accordance with subtitle B.
