A post from the very informative Zero Hedge blog summed up some of the more noteworthy comments from the Federal Reserve and the Treasury during this economic debacle:
April 20th, 2007 – Paulson: “I don’t see (subprime mortgage market troubles) imposing a serious problem. I think it’s going to be largely contained. All the signs I look at show the housing market is at or near the bottom.”
June 20th, 2007 – Bernanke: “(the subprime fallout) will not affect the economy overall.”
October 15th, 2007 – Bernanke: “It is not the responsibility of the Federal Reserve — nor would it be appropriate — to protect lenders and investors from the consequences of their financial decisions.”
May 16th, 2008 – Paulson: “In my judgment, we are closer to the end of the market turmoil than the beginning.”
June 9th, 2008 – Bernanke: “Despite a recent spike in the nation’s unemployment rate, the danger that the economy has fallen into a substantial downturn appears to have waned.”
July 20th, 2008 – Paulson: “It’s a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation.”
August 10th, 2008 – Paulson: “We have no plans to insert money into either of those two institutions.” (Fannie Mae and Freddie Mac)
February 29th, 2008 – Bernanke: “I expect there will be some failures. I don’t anticipate any serious problems of that sort among the large internationally active banks that make up a very substantial part of our banking system.”
September 19th, 2008 – Paulson: “We’re talking hundreds of billions of dollars – this needs to be big enough to make a real difference and get at the heart of the problem,” he said. “This is the way we stabilize the system.”
September 19th, 2008 – Bernanke: “most severe financial crisis” in the post-World War II era. Investment banks are seeing “tremendous runs on their cash,” Bernanke said. “Without action, they will fail soon.”
And now, the Obama team’s brilliant idea is to give the Federal Reserve sweeping new powers, in tandem with the Treasury, to regulate the banking system. The very ones who were purportedly clueless about what was unfolding, as well as being the ones who caused it (by artificially lowering interest rates to encourage mortgage lending, thereby bypassing the effects of the dot com bubble bursting), are now going to be in charge. After, of course, they engineered the transfer of wealth of the entire future generation to the bottom line of the richest banks. Bravo.
It’s like taking the executives from General Motors and then creating a regulatory agency for all motor vehicles and putting them at the helm. In short, it’s absolutely ridiculous. Let’s not forget also, that the Federal Reserve, the organization that controls our money supply, and will soon control the entire regulatory system, is a private corporation. Like “Federal” Express. If you aren’t aware of these factors, I suggest checking out this week’s episode of Freedom Watch, which is one of the very view shows on mainstream TV that talk about these issues.
But, since we all know the Federal Reserve has more cumulative power than the US president and his staff, dating back several decades from the point in which the US was arguably effectively bankrupt (though this fact was disguised) and real wealth – gold – was outlawed from public ownership and transferred to pay off international debts and the income tax was established to pay interest on our remaining debts… well, we all know this legislation will pass and the central banks won’t have to rule from the shadows any more. No one wants to be seen as undermining our magical new President’s will, therefore, it will pass.
In the words of Kurt Vonnegut: so it goes.
Today’s article of doom: political correctness is way out of hand when people are arrested to make up a “fair” quota of racial balance completely at odds with established crime statistics.
Soaring deficits, reduced income, over-burdened infrastructure, over-burdened health-care system, mountains of unfunded pension liabilities, a politically-correct atmosphere of entitlement (even among non-citizens), and a populace that wants no new taxes. All of these things define both the Federal Government of the United States and the State of California. There is one crucial difference, however, which assigns the image of green shoots to the former and tumbleweeds to the other. California doesn’t print its own money. Therefore, the state can only spend money it either has or borrows, and no one is stupid enough to lend them anything anymore. Absent this crucial difference, California is a microcosm of the USA. Unfortunately, this difference is unimportant in the long run for the Federal Government, because inflating the currency is not a solution; it’s a delay tactic.
So, what can be done for California? Well, cuts need to happen, taxes need to be raised, money needs to be borrowed (courtesy of the Federal Government guaranteeing the debt, like a parent co-signing on their delinquent teenager’s car loan), or the State needs a Federal bailout. In my opinion, each of the four options is equally likely, and probably a combination of all four will be the solution.
The cuts needed are mind-boggling, such as eliminating welfare, college funding, and state-funded medical insurance entirely. And closing state parks. And letting people out of prison early. And even eliminating textbooks. Some people are very, very upset. But hey, the populace just shot down an emergency increase in taxes, so what’s the state to do?
Obviously, politically pander and beg for handouts from the Federal Government, of course. With all the chains and conditions such funding will inevitably come with. In the meantime, as an angry citizen as you most surely are, you can play with the budget yourself and see how you’d plug the gap with this interactive tool. It’s educational at the very least. Who’d have thought money didn’t just fall out of the sky over Sacramento?
Almost certainly, some amount of money will get passed down from the Obama administration. But keep in mind this fact: the Federal Government is in far worse shape than California. In fact, if California’s debt to GDP ratio was the same as the Federal Government’s, its debt would be 230 billion instead of 25 billion!
Today’s article of doom: Idiotic mainstream media tries to link Nazi shooter with people who oppose the Federal Reserve, fiat money (rather than the Gold Standard), and unconstitutional Income Taxes by claiming the United States never existed without them.
If you are getting mocked by a majority of economists, journalists, and politicians, you must be doing something right. Cases in point: Ron Paul, Peter Schiff. Lately, Germany has been the butt-end of jokes due to their complete lack of support of “quantitative easing,” better known as “devaluing the money supply” as well as their disinclination to keep up with “stimulus packages,” or “throwing money down the drain” as it’s more commonly referred to.
In fact, it’s so strange to see one of the modern heads of state, who are presumably all puppets for corporate interest, to say anything against the holy relic of Keynesian economics, that it’s worth noting, especially when that person is head of the largest economy in Europe. With common sense like that, will Germany pull the Euro out of its slump, or leave the rest of Europe to its fate and return to the Deutschmark? Either way, it will likely pull away from the half-hearty, half-poisonous relationship it has with the sinking ship known as the USA, and draw closer to its half-hearty and half-poisonous relationship with Russia.
Not only has Germany decided to opt out of the West’s Zimbabwe solution, but it has also decided to reign in spending, and will likely make it something akin to a crime to run with deficits in the future. This makes way, way too much sense. How dare Germany be willing to undergo some severe immediate pain to improve its long-term economic outlook? How anti-consumerist; how anathema to the concept of instant gratification. Is the USA going to let this independent and responsible thinking go unpunished? If so, it would signal the fact the USA is no longer able to convince partners around the world to ruin their economies in a sort of lowest common denominator game of musical chairs. And that would be noteworthy indeed. As many countries, from Greece to Brazil will tell you, it’s not a good bet to take with the USA.
Today’s article of doom: There is something satisfying about watching a man rave about the economy while beating things with a stick.