U.S. Treasury Secretary Tim Geithner has unveiled his long-awaited plan to put the US banking system back in order. In doing so, he has refused to tell the ‘dirty little secret’ of the present financial crisis. By refusing to do so, he is trying to save de facto bankrupt US banks that threaten to bring the entire global system down in a new more devastating phase of wealth destruction.
The Geithner Plan, his so-called Public-Private Partnership Investment Program or PPPIP, as we have noted previously is designed not to restore a healthy lending system which would funnel credit to business and consumers. Rather it is yet another intricate scheme to pour even more hundreds of billions directly to the leading banks and Wall Street firms responsible for the current mess in world credit markets without demanding they change their business model. Yet, one might say, won’t this eventually help the problem by getting the banks back to health?
Not the way the Obama Administration is proceeding. In defending his plan on US TV recently, Geithner, a protégé of Henry Kissinger who previously was CEO of the New York Federal Reserve Bank, argued that his intent was ‘not to sustain weak banks at the expense of strong.’ Yet this is precisely what the PPPIP does. The weak banks are the five largest banks in the system.
A new century, and a new scapegoat for the world’s economic ills. Back in the 1930s, Adolph Hitler blamed the Jews for hoarding all of Germany’s money and causing economic turmoil. Now nearly a century later, the world has entered a new great recession, and the finger is pointing the other way.
Meeting with British Prime Minister Gordon Brown, Brazilian President Luiz Inacio da Silva blamed the world’s current mess on "white people with blue eyes."
"This crisis was caused by the irrational behavior of white people with blue eyes, who thought they knew everything and now show they know nothing," Lula da Silva said.
Brown officially shrugged da Silva’s comments off, saying they were for "domestic consumption," but the blogosphere leaped on da Silva with charges of "racism."
When challenged about his claims, Lula said: "I only record what I see in the press. I am not acquainted with a single black banker," according the Guardian newspaper.
First, we had the curious case of Bernie Madoff’s being accused of running the biggest Ponzi scheme in history when everyone knows–or should know–that it’s actually the U.S. government that’s been running the grandest Ponzi of all since 1935.
That would be Social Security, of course, which was elaborately designed so that everyone would be dead before receiving the $30 a month it promised upon retirement–everyone except rich people who were the only ones to live into their 60s. Poor working stiffs would routinely kick off in their 50s, or even in their 40s.
Now, we have the spectacle of the Federal Reserve’s printing money to buy paper Treasury bonds, which are a form of debt obligation by the government. The last time I checked, the practice of check kiting–writing a phony check to one bank and using those funds to pay a bill to another bank in an endless cycle–was illegal, but evidently not.
Uncle Sam can legally run Ponzi schemes and kite checks through the power of the printing press, backed by lots of hot air, obfuscation, and verbal cover-ups.
Russian President Dmitri Medvedev reportedly will travel to Turkey in the near future to follow up a recent four-day visit by his Turkish counterpart, Abdullah Gul, to Moscow. The Turks and the Russians certainly have much to discuss.
Russia is moving aggressively to extend its influence throughout the former Soviet empire, while Turkey is rousing itself from 90 years of post-Ottoman isolation. Both are clearly ascendant powers, and it would seem logical that the more the two bump up against one other, the more likely they will gird for yet another round in their centuries-old conflict. But while that may be true down the line, the two Eurasian powers have sufficient strategic incentives to work together for now.
The Obama administration is only one and a half months into the job, but between pressing “reset buttons” with the Russians, reaching out to the Europeans, talking about reconciling with the Taliban, extending invitations to the Iranians and rubbing elbows with the Syrians, this is already one of the most diplomatically active U.S. administrations in quite some time.
During the campaign, now-President Barack Obama made the controversial statement that he was prepared to speak to adversaries, including countries like Iran. This position was part of a general critique by Obama of the Bush administration, which Obama said enclosed itself diplomatically, refusing to engage either adversaries or allies critical of the United States. Now, Obama is sending emissaries across the globe to restart dialogue everywhere from Europe to the Middle East to South Asia to Russia. For Obama, these conversations are the prelude to significant movement in the international arena.
James Kwak over at The Baseline Scenario blog has a posting entitled "The Biggest Story of the Year," which is also the scariest story of the year, documenting the destruction of the nation’s retirement accounts. It’s must reading.
The truly scary part I found (in addition to the fact that my retirement account has now virtually vanished into the black hole of Wall Street) is Kwak’s use of the Vanguard Balanced Index Fund, which averages the returns on all funds in the nation. Chew on this: The index has an average annual rate of return of 0.9% over the last 10 years, and even since its inception in 1992, its annual return is only 6.0%.
I’d have to live as long as Mathuselah to remake the money I just lost in the Great Crash of 2008-2009 (2010-whenever?).
Welcome to the "Work Until You Die on the Job" club.
Rick Santelli is an idiot. For as long as I’ve been watching CNBC for financial and economic news, Santelli has always been the jerk extraordinaire, and this opinion of mine dates way back before his recent rant about the housing bailout. His whole schtick is to be the asshole in the crowd who disagrees, and now he’s gotten his 15 minutes of fame. Way to go, jerk.
Anyway, modern-day tea parties, which I guess he suggested or somehow got associated with his name, have been held in a few cities so far, but if anyone expects the mainstream media to give them any coverage, think again. The media sleeps with the Obama socialization/sovietization plan for America, and they’d be the last ones to give his opponents a shred of credibility.
Anyway, this freelance writer in New York, opining about the NYC tea party, seems to have it right–if you don’t do something destructive and risk retribution and jail time, then these tea parties are a joke. See below.
