http://www.rollingstone.com/politics...0110411?page=1America has two national budgets, one official, one unofficial. The official budget is public record and hotly debated: Money comes in as taxes and goes out as jet fighters, DEA agents, wheat subsidies and Medicare, plus pensions and bennies for that great untamed socialist menace called a unionized public-sector workforce that Republicans are always complaining about. According to popular legend, we're broke and in so much debt that 40 years from now our granddaughters will still be hooking on weekends to pay the medical bills of this year's retirees from the IRS, the SEC and the Department of Energy.
Most Americans know about that budget. What they don't know is that there is another budget of roughly equal heft, traditionally maintained in complete secrecy. After the financial crash of 2008, it grew to monstrous dimensions, as the government attempted to unfreeze the credit markets by handing out trillions to banks and hedge funds. And thanks to a whole galaxy of obscure, acronym-laden bailout programs, it eventually rivaled the "official" budget in size — a huge roaring river of cash flowing out of the Federal Reserve to destinations neither chosen by the president nor reviewed by Congress, but instead handed out by fiat by unelected Fed officials using a seemingly nonsensical and apparently unknowable methodology.
Now, following an act of Congress that has forced the Fed to open its books from the bailout era, this unofficial budget is for the first time becoming at least partially a matter of public record. Staffers in the Senate and the House, whose queries about Fed spending have been rebuffed for nearly a century, are now poring over 21,000 transactions and discovering a host of outrages and lunacies in the "other" budget. It is as though someone sat down and made a list of every individual on earth who actually did not need emergency financial assistance from the United States government, and then handed them the keys to the public treasure. The Fed sent billions in bailout aid to banks in places like Mexico, Bahrain and Bavaria, billions more to a spate of Japanese car companies, more than $2 trillion in loans each to Citigroup and Morgan Stanley, and billions more to a string of lesser millionaires and billionaires with Cayman Islands addresses. "Our jaws are literally dropping as we're reading this," says Warren Gunnels, an aide to Sen. Bernie Sanders of Vermont. "Every one of these transactions is outrageous."
But if you want to get a true sense of what the "shadow budget" is all about, all you have to do is look closely at the taxpayer money handed over to a single company that goes by a seemingly innocuous name: Waterfall TALF Opportunity. At first glance, Waterfall's haul doesn't seem all that huge — just nine loans totaling some $220 million, made through a Fed bailout program. That doesn't seem like a whole lot, considering that Goldman Sachs alone received roughly $800 billion in loans from the Fed. But upon closer inspection, Waterfall TALF Opportunity boasts a couple of interesting names among its chief investors: Christy Mack and Susan Karches.
Christy is the wife of John Mack, the chairman of Morgan Stanley. Susan is the widow of Peter Karches, a close friend of the Macks who served as president of Morgan Stanley's investment-banking division. Neither woman appears to have any serious history in business, apart from a few philanthropic experiences. Yet the Federal Reserve handed them both low-interest loans of nearly a quarter of a billion dollars through a complicated bailout program that virtually guaranteed them millions in risk-free income.
The technical name of the program that Mack and Karches took advantage of is TALF, short for Term Asset-Backed Securities Loan Facility. But the federal aid they received actually falls under a broader category of bailout initiatives, designed and perfected by Federal Reserve chief Ben Bernanke and Treasury Secretary Timothy Geithner, called "giving already stinking rich people gobs of money for no ing reason at all." If you want to learn how the shadow budget works, follow along. This is what welfare for the rich looks like.
It's unfortunate Ron Paul didn't get a congressional audience sooner. I'd think some of that nonsense never would have gone down had the Fed known their books would be opened.
What UCA needs is LESS regulation (of Wall St).
Like AIG-Greenberg/Wall St + dubya's DoJ took down Spitzer (the sheriff of Wall St), I figure MT will be taken down, too.
This is what welfare for the rich looks like.
Bloomberg and Bernie Sanders get most of the credit for the disclosure, but Ron Paul raised consciousness on this for sure.
The False Debate on the Debt
In the ever-so-smug company of the rich and powerful, it is a given that there is never to be any expression of remorse or other acknowledgment of the pain they have inflicted on the lesser mortals they so cavalierly plunder. It’s convenient for them that the media and the politicians, which they happen to own, rarely connect the dots between the scams that made the rich so rich and the alarming rise in the federal debt that is crushing this nation.
The result of this purchased public myopia is that we are left with an absurd debate over how deeply to cut teachers’ pensions and seniors’ medical benefits while preserving tax breaks for the superrich and their large corporations. At a time when 10 million American families will have lost their homes by year’s end, when $5.6 trillion in home equity has been wiped out, when most Americans face steep unemployment rates and stagnant wages, a Democratic president is likely to compromise with Republican ideologues who insist that further cuts in taxes for the rich is the way to bring back jobs.
the banks are not paying back the trillions of dollars in non-TARP governmental assistance that saved them from bankruptcy. “ … It hides the full story of the government’s financial crisis effort, of which TARP is but a minor part,”
The major part is the $1.1 trillion in toxic-mortgage-based securities that the Fed purchased
http://www.truthdig.com/report/print...debt_20110412/
Last edited by boutons_deux; 04-13-2011 at 09:46 PM.
This is where TALF fits into the bailout picture. Created just after Barack Obama's election in November 2008, the program's ostensible justification was to spur more consumer lending, which had dried up in the midst of the financial crisis. But instead of lending directly to car buyers and credit-card holders and students — that would have been socialism! — the Fed handed out a trillion dollars to banks and hedge funds, almost interest-free. In other words, the government lent taxpayer money to the same assholes who caused the crisis, so that they could then lend that money back out on the market virtually risk-free, at an enormous profit.
Cue your Billy Mays voice, because wait, there's more! A key aspect of TALF is that the Fed doles out the money through what are known as non-recourse loans. Essentially, this means that if you don't pay the Fed back, it's no big deal. The mechanism works like this: Hedge Fund Goon borrows, say, $100 million from the Fed to buy crappy loans, which are then transferred to the Fed as collateral. If Hedge Fund Goon decides not to repay that $100 million, the Fed simply keeps its pile of crappy securities and calls everything even.
This is the deal of a lifetime. Think about it: You borrow millions, buy a bunch of crap securities and stash them on the Fed's books. If the securities lose money, you leave them on the Fed's lap and the public eats the loss. But if they make money, you take them back, cash them in and repay the funds you borrowed from the Fed. "Remember that crazy guy in the commercials who ran around covered in dollar bills shouting, 'The government is giving out free money!' " says Black. "As crazy as he was, this is making it real."
"People talk about how these were loans that were paid back," says a congressional aide who has studied the transactions. "But when the state is lending money at zero percent and the banks are turning around and lending that money back to the state at three percent, how is that different from just handing rich people money?"
And then there are the bailout deals that make no sense at all. Republicans go mad over spending on health care and school for Mexican illegals. So why aren't they flipping out over the $9.6 billion in loans the Fed made to the Central Bank of Mexico?
How do we explain the $2.2 billion in loans that went to the Korea Development Bank, the biggest state bank of South Korea, whose sole purpose is to promote development in South Korea? And at a time when America is borrowing from the Middle East at interest rates of three percent, why did the Fed extend $35 billion in loans to the Arab Banking Corporation of Bahrain at interest rates as low as one quarter of one point?
Even more disturbing, the major stakeholder in the Bahrain bank is none other than the Central Bank of Libya, which owns 59 percent of the operation. In fact, the Bahrain bank just received a special exemption from the U.S. Treasury to prevent its assets from being frozen in accord with economic sanctions. That's right: Muammar Qaddafi received more than 70 loans from the Federal Reserve, along with the Real Housewives of Wall Street.
Perhaps the most irritating facet of all of these transactions is the fact that hundreds of millions of Fed dollars were given out to hedge funds and other investors with addresses in the Cayman Islands. Many of those addresses belong to companies with American affiliations — including prominent Wall Street names like Pimco, Blackstone and . . . Christy Mack. Yes, even Waterfall TALF Opportunity is an offshore company. It's one thing for the federal government to look the other way when Wall Street hotshots evade U.S. taxes by registering their investment companies in the Cayman Islands. But subsidizing tax evasion? Giving it a federal bailout? What the ?
Thanks for posting Wino.
Read the full article and can't believe more people aren't outraged at this.
To me, there isn't anything scarier than the Banksters/Fed/Treasury conspiring to all of us over for their own benefit.
Taibbi makes a good point when he says that pols could be attacking this issue to stop the bleeding while returning B's to necessary gov't programs.
Of course they don't, because the financial industry basically owns both parties.
Good ole' America, where the sheep continue to meander and graze while the house of cards burns all around them
I don't get it either. If posters aren't responding because they hate me, fine. Seems like the level of anger should be a lot higher. Are people really that oblivious? I dunno, maybe people already wasted too much outrage on petty bs that doesn't matter, got desensitized. Outrage fatigue is real.
Even with me. I'm still plenty pissed, but I don't have steam coming out of my ears like two and a half years ago. It's more of a slow burn now...
People should be running around with torches and pitchforks demanding heads on pikes. The stakes -- and the epochal swindle -- couldn't be more serious. The moment of cleansing clarity is way overdue on this.
Obama was this nation's best chance to get things corrected, but he ended up being Uncle Tom. He and the blue dogs have made me never want to vote Democrat again, and thus I doubt I'll vote in 2012 just like I didn't in 2010. Carlin was right when he called it meaningless.
The USA becoming an out and out handmaid to the biggest financial concerns isn't meaningless.
The USA becoming an oligarchy -- openly and unashamedly -- isn't meaningless.
The death of the rule of law isn't meaningless, nor is the death a republic of, by and for the people.
On the contrary, it's all very ing consequential, not least for you and me.
Becoming? The vote is completely meaningless when both sides are the PR firms for the banks. The Republic died 30 years ago.
Maybe so. I had hope it hadn't. I still hope it hasn't.
You've gotta admit, the last ten years have been a serious ing denouement.
Even if the republic was already dead ten years ago, it still bore a passing resemblance to the attenuated, liminal republic I grew up in.
Now I can hardly recognize it. By dint of fighting monsters nonstop, we've come to resemble them.
Hoenig, an Iowa native, says the provinces have not cornered the market on provincialism. He warns "end the Fed" advocates to be careful what they wish for. The Fed will not go away; under "reform," regional banks such as his might. This, he says, would make the New York-Washington financial axis more powerful relative to "this part of the country."
Would, he asks, America be better off if it were more like Canada, with most credit controlled by five major banks?
His answer is that America's innovative dynamism is related to the existence of thousands of community and regional banks attuned to local needs. He thinks the biggest threat to the economy is the existence of too-big-to-fail financial ins utions:
"In 1999, the five largest US banking organizations controlled $2.3 trillion in assets, or about 38 percent of all banking industry assets. Currently, Bank of America by itself . . . has the same level of assets -- $2.3 trillion . . . and the top five now have 52 percent of all banking industry assets. . . . Creditors and uninsured depositors at too-big-to-fail organizations believe that there is almost no chance that they will have to take a loss."
With all this, could we ever get back to capitalism? "Not," he says, "in my lifetime."
30?
As for the article, just remember that Ron Paul and Bernie Sanders are 'extremists' who, if they had their way, would have your children doing smack, speaking French, and burning the stars and stripes.
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