Autographed Letter Signed

A Mostly Center-Right Place For Those With Irritable Obama Syndrome and Diversity Fatigue

Fly On The TARP Wall February 8, 2010

I wanted to alert my readers to a great excerpt printed in the Wall Street Journal from Henry Paulson’s new book entitled  On the Brink: Inside the Race to Stop the Collapse of the Global Financial System .

Paulson, is the former United States Treasury Secretary  and at one time was the CEO of Goldman Sachs.  The book excerpt in the WSJ concerns the now infamous McCain 2008 presidential campaign suspension meeting which lead to TARP.    The event made for  one of the most memorable and intense campaign debacles in modern history.  John McCain and Barack Obama were about to meet for their first presidential debate and then the economic crisis hit the fan.   McCain appeared flustered and suffering from knee jerk-itis  while Obama was calm, cool and unaffected ( We would later find that this is Obama’s normal demeanor with everything from paper cuts to oh say overly endowed Muslim Nigerian citizens with snakes on airplanes—pretty much everything).

The dick measuring contest centered around who could handle the financial meltdown the quickest while appearing the most presidential.

From this excerpt in the Wall Street Journal

FEBRUARY 6, 2010

When Mr. McCain Came to Washington

Inside the White House meeting where Obama called McCain’s bluff: ‘I could see Obama chuckling’

By HENRY M. PAULSON JR.

…When the hearing recessed, I went into [Democratic Massachusetts Rep.] Barney Frank’s office and called [White House Chief of Staff] Josh Bolten to tell him in no uncertain terms that I thought it was dangerous for McCain to return. Josh said the White House was equally frustrated. McCain wanted a meeting at the White House, and the president felt he had no choice but to accommodate him.

I called Obama right away. He said that he would try to be as constructive as possible but that the Democrats were doing their part and I had better keep in touch with McCain. The president was scheduled to give a major speech that evening making the case for TARP, but news of McCain’s decision to suspend his campaign dominated the rest of the afternoon.

We’d devised TARP to save the financial system. Now it had become all about politics—presidential politics. I wondered what McCain could have been thinking. Calling a meeting like this when we didn’t have a deal was playing with dynamite.

At 2:25 the following afternoon. I spoke with John McCain, who had just returned to Washington. The call did nothing to ease my mind. “We have to protect the American taxpayers,” he told me, pointing out that nothing would get done in Congress without the House Republicans. They didn’t like our proposal and I needed to listen more carefully to them, he said.

“John, our system is on the edge,” I told him. “WaMu barely got bailed out today. Several other institutions are on the brink. If we don’t get something done soon, this economy is going to collapse.”

I was so concerned that McCain would do or say something rash that I resorted to a veiled threat: “I’m not a politician, but if you or anyone else does something that causesthis system to collapse, it is not going to just be on me. I am going to go and say what I think to the American people.”

I will let you  be the judge, all I can say is:


Autographed Letter Signed,

AFROCITY


 

Obama and the Stock Market are Free, Free Fallin’ January 23, 2010

"Who's Your Daddy" Cartoon by Stilton Jarlsberg at Hope N' Change Cartoons.com

He’s a good liberal boy, loves only himself Obama
Helps the union thugs and ACORN too
He’s a good liberal boy, free choice for a woman’s pelvis
Loves organic and taxing people too

So why is he free,  free fallin’?

Yeah he’s  free,  he’s free fallin’


Anger over bailouts cause stocks to fall yesterday.


 

Sonic Ninja Kitty has Savvy Money Advice for the Girls December 28, 2009

Filed under: Economic Crisis — afrocity @ 11:30 AM

Please join me in welcoming Sonic Ninja Kitty as an ALS guest poster.  For the past year “SNK”  has delivered snarky and insightful comments at my blog for which I am thankful for. I was wondering if many of you know that she holds kitty court at a great blag of her own- “Sonic Ninja Kitty” where she dispenses notes from the “Animal House”.   The following reading is a fantastic manifesto in true SNK form.  I wanted to share this with my readers and it is of course  is cross posted at my dear friend’s  Sonic Ninja Kitty’s blog…Enjoy and do comment–Afrocity

Sonic Ninja Kitty

”girls” as in girlfriends, of course.  I’m so happy you’re here!  Please pull up a comfy chair.  Get yourself some tea, diet soda, or a nice glass of red wine, depending on the time of day.  Now make sure it’s the appropriate drink for the time of day—heh heh, you are SO bad ;) That must be why I like you so much.

Ahh….  Seriously, I want to talk with you about our central bank, the Federal Reserve.  Maybe the mere mention of that name makes your eyes start to glaze over.  That’s what it used to do to mine, but there is way more to it than meets the (glazed) eye.  I want to discuss the human element in all of this.  (Yes, there really is one.)  If we get to the heart of the issue, that’s the part that will start clicking in you.  I know it because after a year of researching this subject, that’s the part that’s clicking in me.  Clicking like heck and un-turn-offable.  But I tell you, it has been so worth the trade-off in annoyance because it has allowed me to see current events clearly and without illusion.

I want to try and give you a broad overview that makes sense.  I figure if I can help even a handful of you understand this topic, we can affect some change, because our awareness will then multiply.  I know who brings home the bacon and fries it up in a pan, baby!  You guys are the foundations of your families:  the rocks, the havens, and the ‘safe’ ones.  I also know you can be tremendous catalysts.  You guys can make it all happen, and that’s why this post is dedicated to you.

Primers and prereqs:

Many of you really don’t need these primer sections.  It’s already your ‘thing’, so scoot!  Get outta here and meet the rest of us further down the post.  (And if you sneak yourself an extra beverage, the rest of us will pretend not to notice, LOL.)

So, it never ends, does it–the educating?  Technical information about the economy is out there—all over the place.  Sometimes the problem is there are so many people spouting off and yelling about the economy and money.  In all honesty, I cannot add anything brand new or unique to the mountain loads of information already out there on the Federal Reserve (aka the Fed).  Perhaps the only thing different I can offer is my perspective.  And peace—ha ha.  Yeah, I rarely yell, virtually or otherwise.  And like you I don’t belittle, and I try not to assume.  So it’s one step at a time and there are no dumb questions.  I know each of you has such amazing depths of expertise in different areas worthy of great respect.  This is just a new subject, is all.

I used to think banking was fairly simple:  you put money in, take it out or borrow some, and the bankers charge fees or interest for these services.  That would all be fair enough, but nooo–it turns out there are a few other things going on.  It’s something other people are doing to your money that changes its value.  These people change your money’s very value, and I’ll give you one wild guess as to which direction that value goes.  And every dollar that is siphoned off of your earnings in this manner—from the labor that you and your family members have put forward in good and honest faith–is a dollar that is not coming back to you, ever.  Kiss it goodbye, sweetheart.

So you see, it’s about injustice.  That is the human angle I was referring to earlier.  The Federal Reserve is a bastion of injustice.

Down ‘n dirty:  a central bank primer (two wacky fun facts included)

Basically, the ‘central bank’ of the USA is an institution that issues, manages, and preserves the value of our currency.  It also supervises other banks and serves as a lender of last resort.

“Lender of last resort”:  OK, you may be pondering what that phrase means, precisely. You’ve stumbled upon the first wacky fun fact about central banking.  It’s a joke, really, I mean, think about it for a second:  our central bank can both issue currency and be a “lender of last resort”?  Personally, it makes me envision some battered scruffy guy standing on a hill overlooking an old west battleground with everybody else lying all around, moaning and bleeding…to death.  Come to think of it, our central bank is actually very similar to that guy. It’s always the last man standing when it comes to lending money because its owns the printing presses.  Fed Man is the only guy who can make as many ‘bullets’ as he wants.  He distributes them as he sees fit in exchange for things he deems valuable, like securities and Treasury notes.  No wonder he’s the last one standing.  It’s not really a fair fight.

Now would be a good time to tell you (special alert—wacky fun fact number two coming up) that the central bank of the USA, the Federal Reserve, is a consortium of private companies (banks). That’s right—although it has that official sounding word “Federal” in its name, it is actually a bunch of privately owned business.  Its only connections to our government are the handful of appointees the president gets to name.  But they all come from within the Fed system, of course.  Plus there is supposed to be congressional oversight of the Fed, but how effective is that, really?  (It’s something we’ll get to in a minute.)  Yes, our government allows a private entity complete control over our currency.

I hear you—you’re saying, “Hey, I’m a private entity, too  Me, me!  Where’s my printing press?  I’ve got plenty of space next to the couch, here.”  Girlfriend:  me–freaking–too.  I know I’d be an amazing lender if I could set up a printing press in my living room and churn out the currency at will.  Seriously.

Sidebar on inflation

Now beside the obvious injustice of it all, another big problem with printing money like it’s water is inflation. Increasing the money supply–creating money out of thin air—is the  technical definition of inflation.  Inflation is what, of course, can eventually causes price increases in all the goods and services we buy.  Booyah, ladies—now you know something many people, including some in the economics and finance industries, don’t really get straight:  that inflation is the increase in the money supply while price increases are caused by inflation.  Just thought you’d enjoy that little tidbit.  Maybe it’ll help you on a game show someday, like ‘Are You Smarter Than a Keynesian’ (LOL—inside joke for the geekouts in our midst, sorry).  You never know.

When the Federal Reserve prints money, it can be a little hard to predict when price increases will hit.  This is because of the different places money can sit.  When it sits in bankers’ vaults, it does not begin to affect prices.  By the time it trickles down into the hands of you and me, via business and personal loans, prices get affected.  This is because of simple math.  In a super simplified example, let’s say there are 50 of a given product–hmm, let’s say, sets of noise isolating ear plugs (ha ha–I like those)–and 100 dollars in an economy.   That would work out to each set costing 2 dollars (100/50=2).  If Fed Man goes on a binge and prints another 50 dollars (making the total number of dollars 150) and distributes them, sellers of these ear plugs would eventually figure out there are more dollars floating around out there and start charging people more for them.  The price would eventually end up at 3 dollars per set (150/50=3).  This is a rounded number, because of course you have to figure in the fee Fed Man probably adds this for wonderful service he’s done–hard stuff like turning the printing press handle or pushing computer keys and such.  Naturally.

In the last year, our Federal Reserve (remember—that group of private companies) has just come off the most massive currency printing bender in the history of humankind.  I am not kidding.  Have a lookie at this:

They give it a cool sounding name:  “quantitative easing” (or QE).  Makes it sound like that part of a pedicure where you soak your feet in warm water, doesn’t it?  Yes—very easing on the digits.  (mmm–I can’t wait ‘till spring.)

This chart makes me picture a scene.  (I’d be lost without mnemonics.)  It’s like we’re at the bottom of a ravine and there’s a giant boulder balanced precariously on the towering peak above us.  The boulder is the money supply, which has been created—made ginormous—by the Fed printing currency like a Kinkos on steroids.  The journey this boulder is poised to take is price inflation of goods and services.  A monumental boulder has the potential to produce monumental changes in our pricing landscape.

Now the Fed can supposedly chip away at this boulder, discarding it piece by piece and making it less of a threat to us, the tiny Whos down in Whoville below.  Technically, this is referred to as “quantitative tightening” (or QT).  But you can imagine how that is going to go.  Trying to take money away from a banker is probably much like trying to take candy away from a toddler:  difficult at minimum, requiring magician-like skill at max.   Certainly some prices will be affected when odd pieces of this ‘boulder’ are released or just plain get loose.  But can the Fed really dismantle and discard this rock before it rolls away from them?  They think so, but IMHO, Fed Man is looking mighty small compared to that boulder these days.

Quantitative tightening also has the potential to weaken the economy.  How much is one of those questions people like to argue about.  It sorta depends on how much of that wet-inky money has moved downstream towards you and me.  It’s almost like trying to suck poison out of someone’s bloodstream:  the deeper it has already circulated, the more stress its withdrawal is going to cause.  In general, QT should only be done in a robust environment.  So if that money that’s sitting in the Fed’s vault today were to become distributed–which is the very thing they say they’re trying to encourage—well, the dilemma is obvious.  They’ve painted us into a corner with green ink.

There’s some discussion these days amongst eggheads and posers as to whether this boulder is a solid threat  that will eventually roll over us or whether it is going to remain out of our way and might easily crumble when the Fed starts removing chunks and discarding them.  Personally, I tend to side with the people in the first camp—the ones who think price increases are an enormous looming threat, because these are the very same people who accurately predicted and explained the mechanics of our last economic crisis.  Meanwhile the other people were pretty much panicking like chickens with their heads cut off.  I recognize ineptitude when I see it.

“But wait—there’s more!”

So you’d think it would be enough to worry about this quantitative easing (QE) stuff and it’s threat to prices, right?  There’s actually another problem down the road.  It’s a dastardly practice cloaked in an elegant moniker:  fractional reserve lending.  It’s a practice that further increases the money supply.  Crazy, right?

I really wanted to focus on central banking with you today and this is a general banking practice, so I’m just going to offer a side note on it that you can read now or come back to later. The important thing to understand, though, is that when our central bank prints money, the inflation and it’s accompanying threat to prices doesn’t stop there.  The threat increases exponentially due of the practice of fractional reserve lending.  Your honor—a sidebar conference, please:

The clearest primer I’ve come across on FRL so far is from a post from dailybail.com by S. Gompers entitled A History of Stimulus, Funny Money, & Central Banking:

Fractional banking or fractional lending is the ability to create money from nothing, lend it to the government or someone else and charge interest to boot.  The practice evolved before banks existed.  Goldsmiths rented out space in their vaults to individuals and merchants for storage of their gold or silver.  The goldsmiths gave these “depositors” certificates that showed the amount of gold stored.  These certificates were then used to conduct business.

In time the goldsmiths noticed that the gold in their vaults was rarely withdrawn.  Small amounts would move in and out but the large majority never moved.  Sensing a profit opportunity, the goldsmiths issued double receipts for the gold, in effect creating money (certificates) from nothing and then lending those certificates (creating debt) to depositors and charging them interest as well.

Since the certificates represented more gold than actually existed, the certificates were “fractionally” backed by gold.  Eventually some of these vault operations were transformed into banks and the practice of fractional banking began.

Another author who nails it is Jake Towne, candidate for the 15th congressional (“greater Lehigh Vally”) district of Pennsylvania, in a piece entitled Fractional Reserve Banking in Pictures

It’s yet another reason to be vigilant about the central bank increasing the money supply.

Back to the down ‘n dirty central bank primer

So what makes the people who run the Fed—a consortium of private banks–so different from you and me?  What indeed.  It’s nothing more than the company they keep.  They have different friends–friends who can allot them the powers to legally do these things they do while making it illegal for you and me to do the same:  politicians.  So whenever anyone claims the Fed needs to maintain independence from political pressures, you know to look in the back pocket of said person, know what I mean?  “Fed independence” is a sick joke.  The Fed people have never been independent from political processes and they never will be.  They pretend to worry about one or the other political party ‘influencing’ them, but in reality they don’t care what flavor the politician comes in.  It’s a ruse they hide behind.  They have chums in both parties.

As for us, we don’t really know these people who run the Federal Reserve, do we?  Yet it is assumed we will trust wholly and respectfully in their goodness, intelligence, and honorableness.  Time to slam on the brakes, here.  Look–we were not born yesterday.  Trust is not something we just toss out to anyone.  It’s a far too valuable thing.  It should be dispensed sagaciously.  We just can’t go around trusting everyone for everything.  Geeze–I don’t even trust my own husband to pick up his own socks.  (No offense, honey—that was entirely rhetorical.)

Honestly, I’d not even trust myself to issue and manage currency on behalf of the nation in the healthiest manner possible.  After all of ten minutes of slogging through the abject thanklessness of the modern workplace, I’d be thinking, “Hmm—effort…or print, effort…or print?”  Why put forth effort to earn money when you can just print it all?  Duh!  Who among us wouldn’t succumb to the mesmerizing siren song of the printing press?

Well, girlfriends, this all begs the obvious question:  why oh why do we trust the protection of our currency to a bunch of strangers?

Wacky fun facts continued

OK, so we’ve done one and two so far, but wacky fun facts three and four are even better…errrr, wackier.

Three:  decisions the Fed makes do NOT have to be ratified by the President or anyone else in the executive or legislative branch of government.  That is from their own website Q & A.  Hah!  Basically they are saying they don’t need any silly babysitter.  Not Fed Man.  He answers to no one, baby!


Four:  the Fed generates profit for its shareholders.  Well-what private company doesn’t?  “Free market”, dudes!  Long may it rule—especially when you are the ones who get special treatment (even though that means it’s not a free market anymore).  They do this via a beautifully orchestrated dance between the banks and taxpayers:  a virtual banker’s ballet of smooth moves, only we the taxpayers are the ones getting stepped on all the time.  You can read the nitty gritty on how they do it here.

And audits—who needs audits?  Audits are supposedly performed, but they are so watered down as to be virtually meaningless.  Here’s a list of things the Fed gets to do that are not subject to auditing, in both legalese and plainspeak (a Sonic translation):

1) anything to do with foreign banks or foreign public institutions;

2) anything to do with monetary policy (printing, distributing, ‘n interest rate setting);

3) transactions made under the Fed’s Open Market Committee (which deals with the aforementioned government chums); or

4) any communications related to 1, 2 & 3

Welp–that’s pretty much everything.  It is obvious to me that the rubes who perform the official “audit” have quite possibly the cushiest job in the entire world.  They probably require several months, eat lots of meals out on an expense account, and write some stupid fluff for some un-present congressional committee to throw away–I mean–read.  Awesome job, indeedy.

Do me a favor, please:  whenever you hear or read someone whining “But the Fed is already subject to an audit—whhaaaaaaa!”, scream at them “No they are NOT, you uninformed loon!”  (Yep–that’s the one time I’ll break my no yelling rule.)  Thanks, guys.

So let’s review, here:  1)  the Fed is private, 2)  the Fed prints money, 3)  the Fed is does not have to consult with anyone when making a decision,  4)  the Fed makes a profit for its shareholders (itself).  Sweet deal.  Couldn’t get any sweeter, in fact.

Coming up for some air

You know, I am loving this little dish we’re having!  Seriously—it’s so fun to chat like this.

I’m starting to think, though, of two other things I’d like to explain that are kinda tangential to this particular post.  Tangential yet vitally important.   You know,  I’m finding that talking about banking is very much like teaching a 15 ½ year old how to drive a car.  You think it’s going to be fairly easy because, hey—you could do this stuff with your eyes closed by now–but when you get in that passenger seat and are forced to consider the best way to launch that shiny fresh driver off down the road, you realize exactly how much you need to say…before the dang car crashes, preferably.  It’s a truck load.  Seriously.

Next time we chat we can go over these—if you like, that is.  The first thing is a little info about interest rate setting.  Well, actually, it’s not a little—it’s a lot.  A monstrosity, in fact.  It’s one of the main causes of our huge housing crash.

Another thing is the question that’s probably ready to explode from your head right about now, which is why do we need a central bank, anyway? Mmm, mmm.  That is one loaded question.  Briefly and IM(very)HO, there is only one reason for the existence in any given country of a central bank.  The term has a certain lovely aesthetic to it, but underneath—when you really understand it—it turns into a beast.  That term is flexible money.   Oh yeah, I’m thinking that would be a great topic, guaranteed!  You see, it starts to involve politics, so it gets all dreamy and hopey.  It also brings in stuff like ‘fiat money’,  ‘sound money’, the gold standard,  and foreign countries’ currency valuations, so, oh yeah, it’s big.  Oh geeze, please remind me to do that sometime!

It’s their party.  They don’t have to impress.

So where do we fit into all of this, really?  You and me—the regular Jane Does/aka non-banker types.  If you ask me, it should be in the Grand Caymans, being fabulous and a tax haven and all.  Or at least Bermuda–I’ve always wanted to disappear for awhile.  (I’m sure you empathize.  It can work, with some minimal planning, don’t ‘cha think?)

Barring that fantasy, what are we really getting in exchange for all this?  For giving away control over our currency to private interests, for braving the threat of price increases in the products we need due to the actions of some complete strangers, and for relinquishing control over our banking system’s interest rates [as per the unwritten companion piece to this post]?  We are supposed to get two things:  price stability and maximum employment.

Here are the official stated ‘duties’ of the Federal Reserve, as swiped from its website:

1) conducting the nation’s monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates

2) supervising and regulating banking institutions to ensure the safety and soundness of the nation’s banking and financial system and to protect the credit rights of consumers

3) maintaining the stability of the financial system and containing systemic risk that may arise in financial markets

4) providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation’s payments system

I’m just showing this so you guys can have a great laugh.  I mean, think about all the stuff we went over above, and remember the Fed is a private company, then you tell me how well each goal is being achieved.  Howzabout:

1) sure—printy printy printy; override market forces in interest rate setting [again with the unwritten companion piece]; employment—ask all my friends getting laid off; and “stable” prices—see below*

2) WOW!—Can anyone say “Lehman, Goldman, Washington Mutual, Citbank”?  Can anyone say “Over 140 banks have failed so far since September 2008”?  And another 1000 are at risk to fail in the next 3 to 5 years?  If that is their idea of “soundness” I’d really hate to see their idea of fragility!

3) BWAAAHAHAHAHA!!!!  Ahhh–that is too much!

4) yeah, big deal ‘lender of last resort’; feeding our vociferous congress through the Treasury department; and super secret behind closed doors meetings with other nations’ central banks–who knows what kind of national security concerns are flying around there?

*  “stable” prices?  To put it mildly, on this one the Federal Reserve is a MEGAFLOP:

‘From 1776 to 1912 (136 years), the value of the dollar, relative to the Consumer Price Index, INCREASED by 11%. A dollar could buy 11% more goods in 1912 than in 1776.  The Fed was created in 1913.  From 1913 to 2008 (95 years), the value of the dollar, relative to the Consumer Price Index, DECREASED by 95%. A dollar could buy 95% fewer goods in 2008 than in 1913.’

The reality is that the Federal Reserve creates inflation.  Wow!  Not satisfied with being merely unimpressive–those clowns at the Federal Reserve TOTALLY SUCK at their jobs!!!

The Federal Reserve—transparent as a brick wall

So welcome to the part where I completely flip out.  (LOL–no, that stuff before did not count!)  Feel free to join me anytime.  Misery loves company and all.

Journey with me into the heart of darkness–the den of iniquity that is your typical congressional hearing on the Federal Reserve.  Below is a clip and transcript of Elizabeth Coleman, Inspector General for the Federal Reserve, testifying at a meeting of the House Financial Services Committee in May of ’09.   In a mere 5 minutes and 24 seconds, this little clip exemplifies the egregious lack of justice, transparency, and accountability we have always gotten from the Fed.

Coleman’s job as Inspector General (IG) is—unsurprisingly–to generally inspect everything the Fed’s board of directors does–which would include all major undertakings of the Fed.  But noooo–she pretty much deflects every question asked—doesn’t answer them at all, in fact.  She looks uncomfortable, too.  It made me squirm just to watch her, and I’m obviously not a Fed cheerleader to begin with.  But, the questions she’s asked are completely legitimate and justified and it’s beyond belief she wouldn’t know the answers.

Representative Alan Grayson (D-FL) was the one questioning Coleman here.  Now I know some of you don’t like Grayson much.  There was some ugly little name calling incident a few months back.  It was undiplomatic of him, at bare minimum.  A lapse in maturity and super dopey, that’s for sure.  But that incident is neither here nor there.  Please set aside any residual ick factor that may still be sticking while you listen to this clip or read the transcript.  Judge only the content of what is being asked and answered:


Whoa there!!  Let’s back it up now:

Part 1:  Dearth of justice, from beginning of clip:

Grayson:  Have you done any investigations concerning the Federal Reserve’s role in deciding not to save Lehman Brothers which led shockwaves that went through the entire financial system?

Coleman:  In that particular area, you know, I don’t generally comment on specific investigations, but we do not currently have an investigation in that particular area.

OK—Yo!  Hold up a second.

This is a very good place for another side bar.  It’s a slimy, convoluted story, but I’ll throw the gist of it out here for you:  Lehman Brothers went under.  It filed for bankruptcy on September 15, 2008.  AIG was in trouble the very same week yet got a bailout from the government.  Why, you ask?  “Why” indeed.  The Treasury secretary at the time, Henry Paulson, is a former CEO of Goldman.  The government spent billions bailing out AIG, paying 100 cents on the dollar for securities.  In other words, full price was paid for paper you wouldn’t use to line a bird cage.  And mind you, these were ALL deals negotiated behind closed doors.  AIG then turned around and paid off its counterparties to its CDOs (some of its financial instruments).  Who was one of the biggies?  Goldman Sachs–to the tune of $12.5 billion.  (That is one deafening tune.)  Secretary Paulson got to help out a lot of good ole’ buddies in that deal.

Clearly Inspector General Coleman should have investigated this obvious—er, um–potential conflict of interest.  It was glaring…and conspicuous…and—hand me a thesaurus, here—and blatant.  It was a HUGE failure on her part, indisputably.  Why is the Federal Reserve—a private organization that accounts to no one but itself—its own complete and supreme arbiter of justice in the banking industry?

Disgusting.

Next!

Part 2:  Where’s the transparency? from 0:30:

Grayson:  Alright, what about the one trillion dollars plus in expansion of the Federal Reserve’s balance sheet since last September, have you conducted any investigations regarding that?

Coleman:  We, right now we have a, it’s called, we call it a review, and, so that the term investigation may have different connotations. So we actually conducting a fairly high level review of the various lending facilities collectively which would include, you know, the TALF, a variety of the different programs that are in process, so we are looking at them at fairly high level to identify risk.

Grayson:  Well, I understand that, but we’re talking about events that started unfolding 8 months ago, have you reached any conclusions about the Fed expanding it’s balance sheet by over a trillion dollars since last September?

Coleman:  We have not yet reached any conclusions.

Grayson:  Do you know who received that money?

Coleman:  For the, we are in the process now in doing our review, and

Grayson:  Right, but you are the Inspector General, my question for you specifically, is do YOU know who received that one trillion dollars plus that the Fed extended and put on it’s balance sheets since last September, do you know the identity of the recipients?

Coleman:  I do not know, we have not looked at that specific area, at this particular point, on those reviews.

STOP the tape!

At this juncture I’d like to bring up what we talked about in the section on quantitative easing.  (Remember that and the latent threat of inflation that accompanies it?  And the compounding effect of eventual fractional reserve lending?)  Well, that’s what we’ve got here.  Sometimes this term, ‘expanding’ (also ‘extending’) the balance sheet is used instead, but it’s all the same—expanding the balance sheet, quantitative easing, printing the buckeroonies out behind the shed.  By one trillion dollars.   Seems significant to me!

What IG Coleman is not telling congress–and by extension, the American people—here, is exactly how much, to which particular banks, and in exchange for what this money was distributed.  Or, heck, even if any had gotten distributed at that point.  One can’t tell.  She doesn’t reveal anything, does she?  Why is the Federal Reserve—a private organization that accounts to no one but itself—allowed to get away with the transparency of a brick wall when it comes to our currency?

Logic of Most In The Federal Reserve.

STUNNING.

Next!

Part 3:  Complete absence of accountability, from 1:53:

Grayson:  What about Bloomberg’s report that there are trillions of dollars in off balance sheets transactions that the Federal Reserve has entered into since last September, are you familiar with those off balance sheets transactions?

Coleman:  You know, I think it may be important, at this point, too, just to bring up a certain aspect related to our jurisdiction, and just to clarify, perhaps, some of my earlier comments. We are the Inspector General for the Board of Governors, and we have direct oversight over Board programs and operations, and are also able to look at Board delegated function to the reserve banks, as well as, it’s, the Boards oversight and supervision of the reserve banks. We do not have jurisdiction to directly go out and audit reserve bank activities specifically. Never the less, in our lending facilities project, for example, we are looking at the Board’s oversight over the program, and, to the extent that, it extends out to the Federal Reserve Bank of New York.

Grayson:  Well, I have a copy of the Inspector General Act , here in front of me, and it says, among other things, that it is your responsibility to conduct and supervise audits and investigations relating to the programs and operations of your agency.

Coleman:  That’s correct.

Grayson:  So I’m asking you if your agency has, in fact, according to Bloomberg, extended nine trillion dollars in credit, which, by the way, works out to thirty thousand dollars for every single man, woman, and child in this country, I’d like to know, if YOU’RE not responsible for investigating that, who is?

Coleman:  No, we actually, we have responsibility for, the Federal Reserve’s programs and operations, audits, to conduct audits and investigations in that area. In terms of who’s responsible for investigating, would you mind repeating the question one more time?

Grayson:  What have you done to investigate the off balance sheet transactions, conducted by the Federal Reserve, which according to Bloomberg, now total nine trillion dollars in the last eight months?

Coleman:  I, I’ll have to look specifically at that Bloomberg article, I, I’m not, I don’t know if I have actually seen that particular one.

[Yoohoo!  Here is the Bloomberg article, Ms. Coleman.]

Grayson:  That’s not the point. The question is, have you done any investigation or auditing of off balance sheet transactions conducted by the Federal Reserve?

Coleman:  At this point, we’re at the very, we’re conducting our lending facility project at a fairly high level and have not gotten to a specific level of detail to really be in a position to respond to your question.

OK–wait.  Basically what she’s saying is “aaahh…NOPE”.  Gawd, I hate tools!  (The human kind.)  This is almost like a joke.

Let’s get this out of the way first:  here is the link to the Office of the Inspector General’s home page, and following is a partial description from there of the IG’s duties:

The Office of Inspector General (OIG) conducts independent and objective audits, inspections, evaluations, investigations, and other reviews related to programs and operations of the Board of Governors of the Federal Reserve System (Board). OIG efforts promote integrity, economy, efficiency, and effectiveness; help prevent and detect fraud, waste, and abuse; and strengthen accountability to the Congress and the public. The OIG’s work assists the Board in managing risk and in achieving its overall mission to foster the stability, integrity, and efficiency of the nation’s monetary, financial, and payment systems so as to promote optimal macroeconomic performance.

Please note that even in this summary, every word of this job description corroborates the opinion that the IG should know about every bailout action, all balance sheet expansions, and all significant off balance sheet transactions.  Personally, I’d categorize NINE TRILLION as ‘significant’.

Now, regardless of what the Bloomberg article says (OK, so you’re curious:  “The Federal Reserve, Treasury Department and Federal Deposit Insurance Corporation have lent or spent almost $3 trillion over the past two years and pledged up to $5.7 trillion more.”), IG Coleman should know what the Federal Reserve is spending or pledging.  It’s her job to know.  That Bloomberg reporter was not listing those numbers just to get a few laughs.

As a citizen, I have one simple question for Coleman:  If nearly NINE TRILLION DOLLARS in off balance sheet transactions is not enough money to warrant your attention as Inspector General to the Federal Reserve…um…er…HOW MUCH WOULD BE?!?!? What, exactly, are you so busy with that you could ever, possibly, in a hundred years, consider nearly NINE TRILLION DOLLARS to be unworthy of your attention?  IG Coleman, you are scaring me!  Why is the Federal Reserve—a private organization that accounts to no one but itself—unable to account for NINE TRILLION DOLLARS?

Staggering.

Next!

Part 4:  And a little cherry on top. OK, by now, you’d think congressman Grayson would be speechless.  I would be.  No, wait–I’d be loosing it.  Anyway, Grayson’s gonna take one more stab at it, from 4:26:

Grayson:  Have you conducted ANY investigation or auditing of the losses that the Federal Reserve has experienced on it’s lending since last September?

Coleman:  We’re still in the process of conducting that review, until we actually, you know, go out and gather the information, I’m not in a position to really respond to the specific question.

Grayson:  So are you telling me that NOBODY at the Federal Reserve is keeping track, on a regular basis, of the losses that it occurs that is now a two trillion dollar portfolio?

Coleman:  I don’t know if, you’re telling me that there, you’re mentioning that there’s losses, I’m just saying that we’re not, until we actually look at the program and have the information, we’re not in a position to say whether they’re losses or to respond in any other way to that, to that particular…

Grayson:  Mr. Chairman, my time is up, but I have to tell you, honestly, I am shocked to find out that NOBODY at the Federal Reserve, including the Inspector General, is keeping track of this.

AaaauuwwwCLUNK.  This is what we should be hearing:  the sound of three hundred million jaws collectively dropping helplessly to the floor.

Basically Inspector General Coleman is telling us she does not ‘know’ what the Federal Reserve has been doing for the previous eight months.  I don’t know if I should put ‘know’ in single thingies or double “know” thingies, here—you know?  She didn’t “look at the program” and doesn’t “have the information”?  Why?  Just why?  This assertion completely lacks credibility.  It’s astonishing.

A.  Ston.  Ish.  Ing.

Debriefing

So this is it.  These are the kinds of charades the Federal Reserve foists on the American people who seek justice, transparency, and accountability.  Each time I view this clip I have one of two reactions.  It’s kind of a crap shoot as to which one will present on any given day:

Version 1:  “Hmm.  As a normally self-possessed and non-temperamental person, I am at an intense loss as to how to express my dismay, here.  I have matured past the tendency to freak out at most things and am regrettably not surprised at this illustration of the black hole that is our nation’s central bank.”

Version 2:  “AAARRRRGHH!!!!!! I feel like I just got off the phone with [kindly insert relative/friend of choice]!  This obvious and colossal train wreck is clearly impending, and I want to grab her and scream in her face!!!

Either way, these injustices perpetrated by the Federal Reserve cannot stand.

So what do we do about it?  Well, to begin with, hmm, let’s see…well, ahhh…how shall I put this?  Try not to panic.  I say this in all sincerity and really more for my own benefit, as the enormity of this problem tends to en-crazen me.  (As in requiring deep breathing.  And occasionally dark chocolate—the good kind:  expensive and bitter.)  It’s big, yes, but then again it has been decades in the making, and I figure the sun will rise in the east again tomorrow morning, so we can probably take this a day at a time.

Plan B

I call this part “Plan B” because someone else has already done Plan A and—duh!–it hasn’t really worked for us.  It’s sucked, in fact.  The halfwits who’ve been mucking around in our economy in the past have screwed it up even more, so it’s time for us to get in there and have our voices heard.  Are you with me, guys?  I know I can count on you.

I need  to tell you a little story right about here.  Ya know, my Dad is a guy who rarely parses words.  Years ago, when I was complaining to him about some job I was in (a thankless, unjust, no light at the end of the tunnel type thing—you know—a typical job), he just sat back, looked me in the eye and calmly said  “Darlin’, you are absolutely right.  It’s not fair.  But–know what?  That’s life, sweetheart!

Well, that shut me up—because of the light bulb, I mean.  I don’ think he’d intentionally tried to halt anything.  It was just me finally putting it together.  How many situations must he have been in during his life that were like mine or worse?  He’s no Tim Gunn, but it was a real lesson in style–inner style.  Complaining had never been his modus operandi.  Neither was worrying about stuff—not by a long shot.  He just moved himself forward.  It woke me up.  I adopted a different mindset.  My situation didn’t really change much, but I moved myself forward through it, and that was what mattered.

Maybe we need to do this favor for ourselves more often.  …?…

Now on to the less abstract:

First, learn more. Here’s some reading material I thought you might like.  I’m sure you’ll find your own mix, but these may prove good jumping off points:

Audit the Fed (dot com) has all the up to date information on current efforts to fully audit the Federal Reserve, including links to the 2 page HR 1207 (317 co-sponsors) and S 604 (31 co-sponsors), the ‘Audit the Fed’ bills presented to congress’ house and senate.

The Creature from Jekyll Island by G. Edward Griffin.  It’s about the Fed’s inception.  Truth be told, I haven’t read this one yet, but I know the story well.  Apparently it reads like a mystery/thriller, so I thought you might enjoy that angle of it.

End the Fed by Ron Paul.  A great book and quick read.  Dr. Paul is a lifeboat of reason in a sea of confusion.  He knows his Fed and he isn’t letting up.  (And try Campaign for Liberty (dot com)–home of Ron Paul supporters.)

The Daily Bail (dot com) has the very best of bailout news, opinion & analysis, persistently exposing all current monetary and fiscal shenanigans.  (Click here for an article that gives Fed chairman Ben Bernanke a real shiner–ha ha!)

Mises Institute (dot com) has the best overall (and accurate) economics articles.  Sometimes heavy, but just as often you’ll run across an article there that is clear as crystal and refreshing to read.

A lot has happened in the last 15 months–bailouts, stimulus legislation, Treasury Dept and Federal Reserve actions–so if you are just starting out, don’t expect to catch up immediately on all the news.  It’s a morass.  (As in every day there are more asses to read about.  Get it?  LOL!)  Even I have some trouble keeping up—and I’ve been reading up for a year, now.  (Really—I dropped fiction for this stuff.  And I loved fiction!)  But as they say—the truth is stranger than fiction.  Just keep reading and after awhile things will start to connect.

Next, shout it out. I don’t harbor any illusions when it comes to creating change on this issue of the Federal Reserve.  It will continue to be a difficult and tedious marathon—of that I’m certain. Well, sisters, look around.  Some of us here have written books on “difficult” and “tedious”.  Yeah–with footnotes and references.  We will do it again, and we will get there.  And the more friends we can get to run this baby with us, the better it will go.

So go ahead–communicate your demands to your government reps. Rallies and tea parties are all very well, but sometimes they are vulnerable to subversion.  And the media will not represent your beliefs and opinions.  This is it, guys.  This is what we get–it’s the direct line.  Here’s the set up:

1) Click here for a link to all your government representatives. Everyone has a total of three in congress.  Find your two senators and one house representative, locate the links for each of their home websites, click on them, and…

2) Bookmark these three sites onto a dedicated tag in a prominent position on your browser’s home page.  This will take you less than two minutes.  (Go ahead.  I’ll wait.)

3) Deploy your gift of charm and your powers of persuasion.  Come on—I’ve seen some of you sell water to a fish!  Use it or loose it :)

Most congressional reps make it very easy to send them an email message through a link on their websites.  You don’t have to write an epic poem unless you want to—a few sentences will suffice for most communiqués.

My congresscreatures have me on their mailing lists.  This makes it even easier.  They know me!  (because I’m a royal pain in their butts)  They like me!  (because I have a pulse and can pull a voting booth lever)  They email me!  (OK, so it’s a form letter)  And when they say something I don’t like, I get right back on that worn out old keyboard and give them another piece of my mind!  (I still have a few to spare.)  I realize I’m just a lone drop in a big bucket of water, but dadburnit, at least I’m making a splash!  If a lot of us drops get together, that blasted bucket will surely tip over one of these days.

For this problem we have just discussed, let them know you are a well informed citizen and demand they support a full and complete audit of the Federal Reserve. Let them know you will NOT vote to re-elect them unless they support this.  (That always gets their attention.)

If you’re feeling plucky enough go into detail with your representatives, tell them you know about the Federal Reserve’s refusal to answer straightforward questions about its dealings with AIG, its TRILLION dollar balance sheet expansion, and its NINE TRILLION dollars worth of off balance sheet transactions.  Tell them you understand what impact the Fed’s actions have on you and your money, and tell them these gaping breaches of justice, transparency, and accountability are not acceptable to you.  Nuh-uh!

Check their homepages on a regular basis and maintain communication with them.  Equally importantly:

Share your knowledge. Share what you are learning with your family, friends, and colleagues.  Show them how to bookmark their congressional reps so they can email them, too.  Pass along any articles, books, or information you have found helpful–someone else will appreciate the tips.  You can reprint or link this post as well, if you like.

Be a busybody with candidates during campaigns.  It’s what I think everyone should be.  I’m not going to lecture you on politics, here–you can think for yourselves.  I simply want to make one point we can all agree on:  that, whomever they are, we should probably be asking WAY tougher questions of our candidates.  See if they know anything about the Federal Reserve, for example.  Quiz them about the Fed’s transparency and accountability.  And on a personal note, I gotta say I no longer buy into the ‘good party/bad party’ contrivance.  You shouldn’t either.  Sometimes the independent minded candidate you may like will spring from an unexpected source.  Don’t get pigeon-holed.

Last and most importantly, be BOLD! Armed (with knowledge) and dangerous (to swindlers, thieves, sycophants, and phonies), be relentless. Don’t fade into the background or be bullied into submission on this one, girlfriends–it is so not in your genes.  Seriously, that was a learned behavior–one of the useless ones!  Unlearn it.

I believe this issue is not intuitive for many people.  If you are in this camp then thank your lucky stars, because deception and thievery should not be intuitive to anyone.  It’s an ugly maze, and takes some time to learn.  Just keep at it, and keep demanding the justice, transparency, and accountability we so sincerely deserve.  Do it for yourself; do it for your spouses; do it for your fathers, brothers, and sons.  Do it for your mothers, sisters, and daughters.  Let’s do it for each other.

Epilogue

Thanks for spending time here.  Apologies for the length of this rant, butchayaknow–no one can stop a crazy chick on a mission.  I appreciate your listening.  Please comment below with what you think.  I would be thrilled to read your thoughts.

Cheers, girlfriends, and to end I hereby bequeath you the following, because—well and truly—you OWN it now:

Autographed Letter Signed,

Sonic Ninja Kitty

 

Obama Supporter Couples Therapy Lesson #1:How To Fake An Economic Recovery Orgasm September 8, 2009

obama too bigGood Morning and welcome to Dr. Afrocity’s couples therapy session for Obama supporters. I see you are alone today which is unfortunate because couples therapy always works better when both parties are emotionally invested in the relationship.

What was that?

You say your partner cannot attend couples therapy sessions with you because he is far too busy with his job as President of the United States?

My, my, my what a big job your partner has. I know that you are supportive of his position, after all YOU did elect him for it.

You thought he was the right man for the job and there was no chance of persuading you to think otherwise but let’s not obsess over the minor details of things we cannot CHANGE (wink).

Well, you know what they say, there is no sense in crying  racism over spilled Kool Aid. The reality of your situation is that you are here today alone in Obama supporters couples therapy and your partner is MIA so let’s focus on you and your happiness.

(Dr. Afrocity takes out writing pad)

As clearly as possible tell me what exactly is troubling you about your relationship with President Barack Oabma? Oh,  honey don’t cry your glitter eyeliner is running down your face.

(hands patient a box of Kleenex)

Here lie down on the sofa. You are shaking like a leaf. Are you cold?

(Patient nods head)

Well so much for global warming huh? Let me get you this nice warm red blanket….We will just put this around your shoulders. Oh dear your back is covered with donkey hoof prints…Did he do this to you honey? what is wrong with him?

From Contra Obama.Com

From Contra Obama.Com

(Patient puts head down)

Hmmm, it is obvious that you have been stepped on by a jackass. You know that right?

(Patient nods)

Are you sure that you want to continue with this relationship.

(Patient nods)

You say this crisis gives the two of you the opportunity to grow as a couple? (Dr. Afrocity rolls eyes) Okay, princess it’s your money your time. Tell me what’s wrong…

(Dr. Afrocity poised to write notes on pad) …He  promised to stimulate you economically but lately he has not kept his promise to you and you have resorted to economically stimulating yourself?

(Patient nods)

That is a serious problem my dear… He showed you his big recovery package, it impressed you at first. It was big, the biggest you had ever seen…You tingled at the thought of unraveling its mysteries…But turns out it was a big impotent nothing and now you are economically unstimulated and you are faking it…Going through the motions of a fake economic recovery orgasm is never easy.

(Patient blowing nose in Kleenex, crying uncontrollably)

(Dr. Afrocity puts on H1N1 protective mask)

You are so lucky to have found me (smiles). You have certainly come to the right place. First, lets take a look at the right way to fake an economic recovery orgasm. I found this great article that may be of help, it even bashes a Republican so as an Obama supporter I am sure you will love it:

From Mother Jones Magazine:

Michael Steele, Here’s a Newspaper Article You Should Read

— By David Corn | Fri September 4, 2009 12:06 PM PST

On slow news days—that is, when Dick Cheney or Sarah Palin haven’t said anything—there’s always GOP chairman Michael Steele.

He made website headlines earlier this week when he chastised a 23-year-old woman after she had interrupted him at a Howard University meeting to say that everyone in the country deserved access to good health care, citing the case of her own mother who recently died of cancer because she couldn’t afford chemo medications. Then on Friday, Steele looked particularly out of it within a Washington Post story on the stimulus and the economy.

The front-page article reported that “economists generally agree that the package has played a significant part in stabilizing the economy. They are less certain about the size of the impact.” The piece quoted a former assistant Treasury secretary from the Bush-Cheney administration, Phillip Swagel, who said President Obama’s stimulus package is “starting to play a role, helping us to have slightly positive rather than slightly negative GDP growth.” It cited IHS Global Insight, an economic consulting firm, which estimated the stimulus has added 1 percent to gross domestic product this year. Mark Zandi, chief economist of Economy.com and a former John McCain supporter, told the newspaper, “I don’t think it’s any accident that the economy has gone out of recession and into recovery at the same time stimulus is providing its maximum economic impact.”

So there’s a consensus: the stimulus package has produced results. Enter Steele. The article reported,
On Thursday, Republican National Committee Chairman Michael S. Steele discounted the impact of the stimulus plan. “Vice President Biden has been trying for 200 days to convince the American people the president’s economic stimulus experiment is working, but just like their government-run health-care scheme, no one is buying it,” he said.


Obviously, Steele had not consulted with Zandi, Swagel, IHS Global Insight, or most economists. There are indeed questions an administration foe can raise about the stimulus. Has it been quick enough? Big enough? Targeted correctly? Is the bang worth the bucks? Only a hack with no regard for reality would insist that it has absolutely not worked and that no one believes it has had an impact. Yet that’s what Steele said, proving once again that he is a guy who’s hard to take seriously.

Now wasn’t that article liberally refreshing? If you are not feeling economically stimulated, you just fake it by refuting the evidence with counter evidence from liberally biased economist that are in your corner. In times of trouble you must take appropriate actions by calling for a backup of emotional support. Who cares if what they are saying to comfort you is right or wrong as long as it makes you feel good about your support for Barack Obama, right? Also if you slander a few Republicans along the way like Sarah Palin or Michael Steele that’s even better, now isn’t my jackass loving darling???

Image from radioactiveliberty.com

Image from radioactiveliberty.com

(Patient begins to beam)

There now, that’s the Obamabot we all know and love. I knew there was a smile beneath all of that doubt. Now go home, watch two hours of MSNBC and call me in the morning.

Autographed Letter Signed,
AFROCITY

 

Another Economic Saab Story: Chrysler Files for Chapter 11 April 30, 2009

adau12b

Happy one hundred and one days in office President Obama.Can’t you just hear the footsteps of the revolution now?

Wall Street Journal
By JOSH MITCHELL and HENRY J. PULIZZI
April 30, 2009

Chrysler LLC filed for Chapter 11 bankruptcy protection in New York Thursday, kicking off what the Obama administration predicts will be a 30- to 60-day restructuring of the third-largest U.S. auto maker.

At the same time, Chrysler entered into a partnership with Italian auto maker Fiat SpA, Mr. Obama said in a noon address. Mr. Obama said the partnership would not only let Chrysler survive “but to thrive.”

The U.S. government will provide up to an additional $8 billion in aid, including up to $3.5 billion in so-called debtor-in-possession financing, to ensure Chrysler survives the historic reorganization process. The administration had hoped to keep the car maker out of court but decided it was the only option after a deal to cut the company’s debt was rejected late Wednesday by several of the company’s lenders, a senior administration official said.

So again President Government steps in and gives more money- $8 billion. That is $8 Billion of our tax payer dollars paid as a dowry to Fiat- an international company. Wouldn’t this lead to increased competition for the US auto industry? Was I just hearing things last night or didn’t Obama say during his historic 100 day anniversary press conference that he did not enjoy interfering in affairs outside of Washington? He doesn’t want to be running American businesses. I heard it. Did anyone else?

381b-advertising-chrysler1

Obama said he wanted “to disabuse people of this notion that somehow we enjoy, you know, meddling in the private sector.”

“If you could tell me right now that when I walked into this office that the banks were humming, that autos were selling, and that all you had to worry about was Iraq, Afghanistan, North Korea, getting health care passed, figuring out how to deal with energy independence, deal with Iran, and a pandemic flu, I would take that deal,” Obama said.

Now compare Obama’s quote from Wednesday with the WSJ story:

In exchange for the aid, the U.S. government will take a “small equity” stake in the new company, which will be partly owned by Fiat. According to a White House fact sheet, the U.S. Treasury will hold 8% of the reorganized company, while Fiat would hold 20% and the governments of Canada and Ontario would receive 2%. The U.S. government would have the power to appoint board members at the new company but would not get involved in day-to-day operations, the administration official said.

Nah, that doesn’t sound like an administration that wants to meddle in the private sector. I suppose President Obama also taught courses in bankruptcy law along with his con law courses. Watch out America next Obama will force us to purchase their cars. Every model comes with a cup holder for your Kool Aid.

lemans-2

In my opinion, Chrysler and the other auto giants should have been untouched by the federal government and allowed to fail. Yes that is very cruel and conservative minded of me. That is what capitalism is. Businesses start, they fail, shit happens.  Chrysler should have filed for bankruptcy months ago. Because of government intervention or for lack of a better term “meddling”. We have wasted billions, perhaps trillions of taxpayer TARP money on auto companies that are still unsuccessful despite the bailouts. Great, just great.

Autographed Letter Signed,

AFROCITY

 

 
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