Bright Spark
Posts: 377 
March 18th, 2008, 11:49 PM
The markets rallied last Tuesday in response to the Fed's growing assistance to holders of mortgage-backed securities. Yet many onlookers are convinced that an aggressive cut in the federal funds rate at the upcoming March 18 meeting is still necessary to avoid a painful recession. In our view, further loosening at this time would be a mistake, and would also send an alarming signal regarding future monetary policy.
The Fed needs to quit chasing declining GDP growth and instead focus on curbing inflation and anchoring inflation expectations. Recent allusions to the stagflation of the 1970s are appropriate. Gold has been hitting all-time nominal highs, and oil prices have shattered the inflation-adjusted record set in 1980 during the Iranian hostage crisis. The dollar, meanwhile, is trading at all-time lows against the euro.
Consumer price inflation was 4.1% in 2007 (the highest in 17 years) while the producer price index rose 7.4%--the most since 1981. Amid these alarming trends on the inflation side, output has stalled. Real GDP grew at a meager rate of 0.6% in the last quarter of 2007, and the private sector shed 101,000 jobs in February. The beginnings of stagflation are upon us.
In response, the Fed has slashed its target rate 2.25 percentage points since September, and has engaged in all manner of novel auction schemes to bolster liquidity, particularly among those holding the bag on soured mortgages. Yet despite momentary blips upward, the stock market and the overall economy continue to slide. Even as the Fed's actions pushed many short-term interest rates below the inflation rate, fixed mortgage rates have begun rising. As inflation expectations gather steam, the Fed will find itself painted into an ever-shrinking corner.
The explanation for all of this is simple yet sobering.
The Fed has abandoned the one thing it can truly control--the long-run increase in price levels--in a self-defeating attempt to keep the economy growing. A good portion of the housing mess itself is the result of Fed policy: In response to the 2000-2001 recession, chairman Alan Greenspan brought the federal funds rate down to a shocking 1% by June 2003, then held it there for a full year. The rate was then steadily ratcheted back up, reaching 5.25% by June 2006.
These actions first helped inflate the home-price bubble and then helped burst it. Naturally, there are many factors--and perhaps even villains--that helped create the housing bubble, but excessively low interest rates were surely a necessary ingredient.
Regardless of past mistakes, the Fed must now make the best of a bad situation. It must stop chasing the financial markets, and even the broader economy. Creating more dollar bills will not add to the nation's wealth, or make workers more productive.
The alleged trade-off between inflation and unemployment--the Phillips Curve--is no guide for action. Yes, an unexpected injection of new money can temporarily boost real output. But once people come to expect the higher rates of price inflation, the Phillips Curve simply shifts; it takes greater and greater injections to achieve the same stimulus. That is how a country becomes trapped in a stagflation spiral.
The painful and costly recessions of the early 1980s were the result of the inflationary policies of the Fed during the 1970s. In contrast, Fed policies during the 1980s and 1990s focused on curbing inflation and maintaining price stability; this shift in focus produced both low inflation and strong, steady real growth. It would be a terrible mistake to throw out that costly victory in an effort to avoid a recession today--one that's already baked in the cake.
The Fed should commit to long-term price stability, and it needs to back up that commitment with action. Recessions will always be with us, but they will be shallow and short when the Fed keeps inflation low and evenly paced. If the Fed continues cutting rates, we will simply get the worst of both worlds: prolonged recession and excessive inflation.
Robert P. Murphy is a senior fellow in business and economic studies at the Pacific Research Institute. Lee Hoskins is a senior fellow at the Pacific Research Institute and a former Cleveland Federal Reserve president.
So is the Fed helping or hindering the U.S.? Is it intentional?
The markets rallied last Tuesday in response to the Fed's growing assistance to holders of mortgage-backed securities. Yet many onlookers are convinced that an aggressive cut in the federal funds rate at the upcoming March 18 meeting is still necessary to avoid a painful recession. In our view, further loosening at this time would be a mistake, and would also send an alarming signal regarding future monetary policy.
The Fed needs to quit chasing declining GDP growth and instead focus on curbing inflation and anchoring inflation expectations. Recent allusions to the stagflation of the 1970s are appropriate. Gold has been hitting all-time nominal highs, and oil prices have shattered the inflation-adjusted record set in 1980 during the Iranian hostage crisis. The dollar, meanwhile, is trading at all-time lows against the euro.
Consumer price inflation was 4.1% in 2007 (the highest in 17 years) while the producer price index rose 7.4%--the most since 1981. Amid these alarming trends on the inflation side, output has stalled. Real GDP grew at a meager rate of 0.6% in the last quarter of 2007, and the private sector shed 101,000 jobs in February. The beginnings of stagflation are upon us.
In response, the Fed has slashed its target rate 2.25 percentage points since September, and has engaged in all manner of novel auction schemes to bolster liquidity, particularly among those holding the bag on soured mortgages. Yet despite momentary blips upward, the stock market and the overall economy continue to slide. Even as the Fed's actions pushed many short-term interest rates below the inflation rate, fixed mortgage rates have begun rising. As inflation expectations gather steam, the Fed will find itself painted into an ever-shrinking corner.
The explanation for all of this is simple yet sobering.
The Fed has abandoned the one thing it can truly control--the long-run increase in price levels--in a self-defeating attempt to keep the economy growing. A good portion of the housing mess itself is the result of Fed policy: In response to the 2000-2001 recession, chairman Alan Greenspan brought the federal funds rate down to a shocking 1% by June 2003, then held it there for a full year. The rate was then steadily ratcheted back up, reaching 5.25% by June 2006.
These actions first helped inflate the home-price bubble and then helped burst it. Naturally, there are many factors--and perhaps even villains--that helped create the housing bubble, but excessively low interest rates were surely a necessary ingredient.
Regardless of past mistakes, the Fed must now make the best of a bad situation. It must stop chasing the financial markets, and even the broader economy. Creating more dollar bills will not add to the nation's wealth, or make workers more productive.
The alleged trade-off between inflation and unemployment--the Phillips Curve--is no guide for action. Yes, an unexpected injection of new money can temporarily boost real output. But once people come to expect the higher rates of price inflation, the Phillips Curve simply shifts; it takes greater and greater injections to achieve the same stimulus. That is how a country becomes trapped in a stagflation spiral.
The painful and costly recessions of the early 1980s were the result of the inflationary policies of the Fed during the 1970s. In contrast, Fed policies during the 1980s and 1990s focused on curbing inflation and maintaining price stability; this shift in focus produced both low inflation and strong, steady real growth. It would be a terrible mistake to throw out that costly victory in an effort to avoid a recession today--one that's already baked in the cake.
The Fed should commit to long-term price stability, and it needs to back up that commitment with action. Recessions will always be with us, but they will be shallow and short when the Fed keeps inflation low and evenly paced. If the Fed continues cutting rates, we will simply get the worst of both worlds: prolonged recession and excessive inflation.
Robert P. Murphy is a senior fellow in business and economic studies at the Pacific Research Institute. Lee Hoskins is a senior fellow at the Pacific Research Institute and a former Cleveland Federal Reserve president.
So is the Fed helping or hindering the U.S.? Is it intentional?
March 19th, 2008, 12:22 AM
Hard to say, smarter people than I make those policy decisions and write critical articles. I would certainly prefer slower steady growth over bubbles, but how can they be completely stopped? Money will go somewhere and the pack will follow, and the last in get the short end of the stick. The sub prime debacle is a storyline of greed. From investment banker, to mortgage company to borrower (and assorted crooks), there is enough blame to go around.
A couple of years ago I was saying to an investment buddy that the housing market seemed too Japan-1989-ish to me, when they introduced 99-year mortgages. Today you can do 40 year mortgages in Canada. I think if you can't make it work with a 25 year amortization you're paying too much, and you'll find out when the housing bubble bursts. If people could only amortize over 25 years the housing prices would adjust themselves accordingly to buyer affordability and create an environment of slower steady growth rather than what we have going on right now. CMHC should know better.
Hard to say, smarter people than I make those policy decisions and write critical articles. I would certainly prefer slower steady growth over bubbles, but how can they be completely stopped? Money will go somewhere and the pack will follow, and the last in get the short end of the stick. The sub prime debacle is a storyline of greed. From investment banker, to mortgage company to borrower (and assorted crooks), there is enough blame to go around.
A couple of years ago I was saying to an investment buddy that the housing market seemed too Japan-1989-ish to me, when they introduced 99-year mortgages. Today you can do 40 year mortgages in Canada. I think if you can't make it work with a 25 year amortization you're paying too much, and you'll find out when the housing bubble bursts. If people could only amortize over 25 years the housing prices would adjust themselves accordingly to buyer affordability and create an environment of slower steady growth rather than what we have going on right now. CMHC should know better.
Bright Spark
Posts: 316
Location: California
Location: California
March 19th, 2008, 09:52 AM
The Fed which tries very hard to portray itself as an independent wing of government is not independent at all. The way it was organized was intended to give it that flavor. The top level are all Presidentially appointed and while they do meet as a group it is hard for me to fathom why they are not supposed to exposed to input from the administration in office at the time. You can bet their recent rush to aid and help finance the buy out of Bear Stearns was hastened by the White House covertly to head off the Chinese intent to buy it up using some off the US currency they have in Beijing. China now has engaged a large firm in the US to ferret out any buys in the banking or mortgage industry while they are at bargain prices using the US currency they now have.
The Fed which tries very hard to portray itself as an independent wing of government is not independent at all. The way it was organized was intended to give it that flavor. The top level are all Presidentially appointed and while they do meet as a group it is hard for me to fathom why they are not supposed to exposed to input from the administration in office at the time. You can bet their recent rush to aid and help finance the buy out of Bear Stearns was hastened by the White House covertly to head off the Chinese intent to buy it up using some off the US currency they have in Beijing. China now has engaged a large firm in the US to ferret out any buys in the banking or mortgage industry while they are at bargain prices using the US currency they now have.
Bright Spark
Posts: 377
March 20th, 2008, 01:04 AM
Nouriel Roubini's Global EconoMonitor
Step 9 of the Financial Meltdown: "one or two large and systemically important broker dealers" will "go belly up"
Nouriel Roubini | Mar 14, 2008
In my February 5th piece on 12 Steps to a Financial Disaster I predicted - as Step 9 of the meltdown - that "one or two large and systemically important broker dealers" will "go belly up" and that other members of the "shadow financial system" - i.e. non-bank financial institutions that look like banks in terms of liquidity/rollover risk - will also go bankrupt. As I put it then:
Ninth, the “shadow banking system” (as defined by the PIMCO folks) or more precisely the “shadow financial system” (as it is composed by non-bank financial institutions) will soon get into serious trouble. This shadow financial system is composed of financial institutions that – like banks – borrow short and in liquid forms and lend or invest long in more illiquid assets. This system includes: SIVs, conduits, money market funds, monolines, investment banks, hedge funds and other non-bank financial institutions. All these institutions are subject to market risk, credit risk (given their risky investments) and especially liquidity/rollover risk as their short term liquid liabilities can be rolled off easily while their assets are more long term and illiquid. Unlike banks these non-bank financial institutions don’t have direct or indirect access to the central bank’s lender of last resort support as they are not depository institutions. Thus, in the case of financial distress and/or illiquidity they may go bankrupt because of both insolvency and/or lack of liquidity and inability to roll over or refinance their short term liabilities. Deepening problems in the economy and in the financial markets and poor risk managements will lead some of these institutions to go belly up: a few large hedge funds, a few money market funds, the entire SIV system and, possibly, one or two large and systemically important broker dealers. Dealing with the distress of this shadow financial system will be very problematic as this system – stressed by credit and liquidity problems - cannot be directly rescued by the central banks in the way that banks can. [bold added]
And today the first one of these large broker dealers - Bear Stearns - in on the verge of bankruptcy. Let us be clear: given its massive exposure to toxic MBS and ABS product Bear Stearns is insolvent; the decision by the NY Fed to try to bail out Bear Stearns would make sense if this firm was only illiquid; the trouble that it is insolvent and thus such attempted bailout is altogether inappropriate. It is true that Bear is a large broker dealer; but its systemic importance is much smaller than that of much larger institutions. The world and financial market can survive if Bear disappears.
So the only possible justification for such Fed action is to engineer an orderly rather than a disorderly shutdown of this institution. But unfortunately the Fed is behaving as if Bear Stearns is illiquid but solvent. That is delusional and the official sector support of an otherwise insolvent institution will end up - like many other recent Fed actions - being paid for by the US tax-payer.
As discussed months ago in this column non-banks institutions don't have access - based on the Federal Reserve Act - to the lender of last resort support of the Fed unless a very special and unusual procedure and vote is taken. So for the first time in decades - possibly since the Great Depression - the Fed had to rely on this exceptional rule to bail out a non-bank financial institution. So what is next? Bailing out hedge funds, bailing out money market funds, bailing out SIVs? When is enough enough? This when the Fed has already committed this week to swap 60% ($ 400 bn) of its balance sheet of Treasuries for mortgage backed securities of dubious quality and value.
And Bear is only the first broker dealer to go belly up. Rumors had been circulating in the market for days that the exposure of Lehman to toxic ABS/MBS securities is as bad as that of Bear: according to Fitch at the beginning of the turmoil Bear Stearns had the highest toxic waste ("residual balance") exposure as percent of adjusted equity on balance sheet; the exposure of Bear was 54.5% while that of Lehman was only marginally smaller at 53.3%; that of Goldman Sachs was only 21%. And guess what? Today Lehman received a $2 billion unsecured credit line from 40 lenders. Here is another massively leveraged broker dealer that mismanaged its liquidity risk, had massive amount of toxic waste on its books and is now in trouble. Again here we have not only a situation of illiquidity but serious credit problems and losses given the reckless exposure of this second broker dealer to toxic investments.
We will leave aside for today the fact that a growing number of members of the "shadow financial system" have gone belly up in the last month alone: the entire SIV scheme is being wound down and brought back on balance sheet; a few hedge funds are now closing shops (for details see the web site The Hedge Fund Impode-O-Meter) ); a few money market funds that had exposure to toxic MBS have experienced runs and had to be bailed out; a highly leveraged private equity bond fund has gone belly up; a major near prime mortgage lender is bankrupt. In all these cases a poisonous combination of liquidity risk and credit risk was exacerbated by reckless leverage.
So the question is: if Bear Stearns screwed up big time - as it did - with huge leverage, reckless investments, lousy risk management and massive underestimation of liquidity risk why should the US taxpayer bail out this firm and its shareholders? First fully wipe out those shareholders, then fire all the senior management and have the government take over such a bankrupt institution before a penny of public money is wasted in bailing it out. Instead now the use of public money to bail out financial institutions is spreading from banking ones to non banking ones. The Fed should at least give a clear and public explanation of why such extremely exceptional - and almost never used - intervention was justified.
Unless public money is used on a very temporary basis to achieve an orderly wind-down or merger of Bear Stearns this is another case where profits are privatized and losses are socialized. By having thrown down the drain the decades old doctrine and rule that the Fed should not lend or bail out non-bank financial institutions the Fed has created an extremely dangerous precedent that seriously aggravates the moral hazard of its lender of last resort support role. If the Fed starts on the slippery slope of providing massive liquidity support to non-bank financial institutions that have recklessly managed their risks it enters into uncharted territory that radically changes its mandate and formal role. Breaking decades-old rules and practices is a radical action that seriously requires a clear public explanation and justification.
And what did they get out of this....a one day rally. Markets again today fell.
And just as in the last depression....that's right depression, now that everyone is finally using the word recession, I'm going to start using the word depression, it's not far around the corner.....JP Morgan has again come out on top again, using their private intitution (The Federal Reserve) to once again profit from the American people.
Nouriel Roubini's Global EconoMonitor
Step 9 of the Financial Meltdown: "one or two large and systemically important broker dealers" will "go belly up"
Nouriel Roubini | Mar 14, 2008
In my February 5th piece on 12 Steps to a Financial Disaster I predicted - as Step 9 of the meltdown - that "one or two large and systemically important broker dealers" will "go belly up" and that other members of the "shadow financial system" - i.e. non-bank financial institutions that look like banks in terms of liquidity/rollover risk - will also go bankrupt. As I put it then:
Ninth, the “shadow banking system” (as defined by the PIMCO folks) or more precisely the “shadow financial system” (as it is composed by non-bank financial institutions) will soon get into serious trouble. This shadow financial system is composed of financial institutions that – like banks – borrow short and in liquid forms and lend or invest long in more illiquid assets. This system includes: SIVs, conduits, money market funds, monolines, investment banks, hedge funds and other non-bank financial institutions. All these institutions are subject to market risk, credit risk (given their risky investments) and especially liquidity/rollover risk as their short term liquid liabilities can be rolled off easily while their assets are more long term and illiquid. Unlike banks these non-bank financial institutions don’t have direct or indirect access to the central bank’s lender of last resort support as they are not depository institutions. Thus, in the case of financial distress and/or illiquidity they may go bankrupt because of both insolvency and/or lack of liquidity and inability to roll over or refinance their short term liabilities. Deepening problems in the economy and in the financial markets and poor risk managements will lead some of these institutions to go belly up: a few large hedge funds, a few money market funds, the entire SIV system and, possibly, one or two large and systemically important broker dealers. Dealing with the distress of this shadow financial system will be very problematic as this system – stressed by credit and liquidity problems - cannot be directly rescued by the central banks in the way that banks can. [bold added]
And today the first one of these large broker dealers - Bear Stearns - in on the verge of bankruptcy. Let us be clear: given its massive exposure to toxic MBS and ABS product Bear Stearns is insolvent; the decision by the NY Fed to try to bail out Bear Stearns would make sense if this firm was only illiquid; the trouble that it is insolvent and thus such attempted bailout is altogether inappropriate. It is true that Bear is a large broker dealer; but its systemic importance is much smaller than that of much larger institutions. The world and financial market can survive if Bear disappears.
So the only possible justification for such Fed action is to engineer an orderly rather than a disorderly shutdown of this institution. But unfortunately the Fed is behaving as if Bear Stearns is illiquid but solvent. That is delusional and the official sector support of an otherwise insolvent institution will end up - like many other recent Fed actions - being paid for by the US tax-payer.
As discussed months ago in this column non-banks institutions don't have access - based on the Federal Reserve Act - to the lender of last resort support of the Fed unless a very special and unusual procedure and vote is taken. So for the first time in decades - possibly since the Great Depression - the Fed had to rely on this exceptional rule to bail out a non-bank financial institution. So what is next? Bailing out hedge funds, bailing out money market funds, bailing out SIVs? When is enough enough? This when the Fed has already committed this week to swap 60% ($ 400 bn) of its balance sheet of Treasuries for mortgage backed securities of dubious quality and value.
And Bear is only the first broker dealer to go belly up. Rumors had been circulating in the market for days that the exposure of Lehman to toxic ABS/MBS securities is as bad as that of Bear: according to Fitch at the beginning of the turmoil Bear Stearns had the highest toxic waste ("residual balance") exposure as percent of adjusted equity on balance sheet; the exposure of Bear was 54.5% while that of Lehman was only marginally smaller at 53.3%; that of Goldman Sachs was only 21%. And guess what? Today Lehman received a $2 billion unsecured credit line from 40 lenders. Here is another massively leveraged broker dealer that mismanaged its liquidity risk, had massive amount of toxic waste on its books and is now in trouble. Again here we have not only a situation of illiquidity but serious credit problems and losses given the reckless exposure of this second broker dealer to toxic investments.
We will leave aside for today the fact that a growing number of members of the "shadow financial system" have gone belly up in the last month alone: the entire SIV scheme is being wound down and brought back on balance sheet; a few hedge funds are now closing shops (for details see the web site The Hedge Fund Impode-O-Meter) ); a few money market funds that had exposure to toxic MBS have experienced runs and had to be bailed out; a highly leveraged private equity bond fund has gone belly up; a major near prime mortgage lender is bankrupt. In all these cases a poisonous combination of liquidity risk and credit risk was exacerbated by reckless leverage.
So the question is: if Bear Stearns screwed up big time - as it did - with huge leverage, reckless investments, lousy risk management and massive underestimation of liquidity risk why should the US taxpayer bail out this firm and its shareholders? First fully wipe out those shareholders, then fire all the senior management and have the government take over such a bankrupt institution before a penny of public money is wasted in bailing it out. Instead now the use of public money to bail out financial institutions is spreading from banking ones to non banking ones. The Fed should at least give a clear and public explanation of why such extremely exceptional - and almost never used - intervention was justified.
Unless public money is used on a very temporary basis to achieve an orderly wind-down or merger of Bear Stearns this is another case where profits are privatized and losses are socialized. By having thrown down the drain the decades old doctrine and rule that the Fed should not lend or bail out non-bank financial institutions the Fed has created an extremely dangerous precedent that seriously aggravates the moral hazard of its lender of last resort support role. If the Fed starts on the slippery slope of providing massive liquidity support to non-bank financial institutions that have recklessly managed their risks it enters into uncharted territory that radically changes its mandate and formal role. Breaking decades-old rules and practices is a radical action that seriously requires a clear public explanation and justification.
And what did they get out of this....a one day rally. Markets again today fell.
And just as in the last depression....that's right depression, now that everyone is finally using the word recession, I'm going to start using the word depression, it's not far around the corner.....JP Morgan has again come out on top again, using their private intitution (The Federal Reserve) to once again profit from the American people.
Bright Spark
Posts: 377
March 20th, 2008, 01:19 AM
We need to get rid of the banksters......period.
Bear Stearns, J.P.Morgan Chase, Connecting the Dots
It has been a very busy day for Bear Stearns Companies, Inc. Most of the time when an institution of this size is sold, it takes at the very least, 28 days. Not so in this case. One has to ask then, why all the hurry? What is so special in this case and what don’t they want us to know?
Well, you know me, I just start digging. One page leads to another, leads to another, one name after another, I just follow the links to see where things will take me.
In this case I started with Wikipedia on Bear Stearns Companies, Inc. Then opened a Wikipedia on J.P.Morgan Chase, Co. , which led me to the Central Banks page and from there a link to the Bank for International Settlements. Hmmmmmmmmmm, that was interesting. Besides one name in J.P.Morgan Chase, Co., I hadn’t found a single name recently. Until the Bank for International Settlements. Now that was interesting! Here they are!
The Rockefellers have a long history of working towards a One World Government. For the past 40 years, give or take a few, this has been a major goal for them and many of the other super rich families in the world. A few days ago when Bear Stearns and Companies was simply in trouble I mentioned that it would be interesting to see who bought them out and whether they were an independent banking industry or not.
One extremely interesting fact to note is that Wikipedia is already current with the sell news of J.P.Morgan Chase Co. They have all the figures, etc. See here:
We’ll start with the Great Depression. According to Wikipedia, (I love them for fast fact finding), the causes of the Great Depression are still much under speculation. We’ve been told that it was due to the stock market crash. Here:
today’s housing market doing the same. It seems to me that the Federal Reserve wants more in the way of REAL property than they currently have. That’s not quite 80 years. Just my two cents……..
Now, from CNN Money.com we have this:
I also can’t help but notice that this is another Bush cronnie we have here in Ben Bernanke. If Bush can’t run his presidency, why should we think anyone he nominates can do any better job where they are? After all, haven’t we already seen results through Alberto Gonzales? It seems to me Congress should have seen this one coming a mile away. Others have.
The graph shows the continual downward turn of the dollar for the past 6 years. Click on the graph to make it bigger. How bush managed this one is beyond me. But since he has such good business sense, I’d say there was a clue there. He has got to go before he does catastrophic damage to this society. How many more clues and fingers do we need to point before someone in Congress gets it?
Now, if the domino effect happens, Bear Stearns and Companies is only the first of many to go belly up. There will be many others, possibly JPMorgan Chase, Goldman Sachs Group, Merrill Lynch, Lehman Brothers, Morgan Stanley and others. Bush and his recession be damned, we are in trouble.
We need to get rid of the banksters......period.
Bear Stearns, J.P.Morgan Chase, Connecting the Dots
It has been a very busy day for Bear Stearns Companies, Inc. Most of the time when an institution of this size is sold, it takes at the very least, 28 days. Not so in this case. One has to ask then, why all the hurry? What is so special in this case and what don’t they want us to know?
Well, you know me, I just start digging. One page leads to another, leads to another, one name after another, I just follow the links to see where things will take me.
In this case I started with Wikipedia on Bear Stearns Companies, Inc. Then opened a Wikipedia on J.P.Morgan Chase, Co. , which led me to the Central Banks page and from there a link to the Bank for International Settlements. Hmmmmmmmmmm, that was interesting. Besides one name in J.P.Morgan Chase, Co., I hadn’t found a single name recently. Until the Bank for International Settlements. Now that was interesting! Here they are!
Board of DirectorsNow I know I’ve heard Ben Bernanke’s name mentioned in conjunction with Bushs. So I did a google search on that. Guess what? Bush nominated Bernanke to his current position. Wow, how convenient. And with J.P.Morgan Chase Co. comes, yup!, David Rockefeller! What a small world huh?
* Jean-Pierre Roth, Zürich (Chairman of the Board of Directors)
* Hans Tietmeyer, Frankfurt am Main (Vice-Chairman)
* Nout H E M Wellink, Amsterdam
* Axel Weber, Frankfurt am Main
* Mario Draghi, Rome
* Fabrizio Saccomanni, Rome
* David Dodge, Ottawa
* Toshihiko Fukui, Tokyo
* Timothy F Geithner, Federal Reserve Bank of New York
* Ben Bernanke, Federal Reserve Chairman, Washington DC
* Lord George, London
* Jean-Pierre Landau, Paris
* Christian Noyer, Paris
* Stefan Ingves, Stockholm
* Mervyn King, London
* Guy Quaden, Brussels
* Alfons Vicomte Verplaetse, Brussels
* Guillermo Ortiz Martínez, Mexico City
* Zhou Xiaochuan, Beijing
* Jean-Claude Trichet, Frankfurt am Main
Management
* General Manager: Malcolm D. Knight ([1]) (1 April 2003 -). Andrew Crockett (- 1 April 2003).
The Rockefellers have a long history of working towards a One World Government. For the past 40 years, give or take a few, this has been a major goal for them and many of the other super rich families in the world. A few days ago when Bear Stearns and Companies was simply in trouble I mentioned that it would be interesting to see who bought them out and whether they were an independent banking industry or not.
One extremely interesting fact to note is that Wikipedia is already current with the sell news of J.P.Morgan Chase Co. They have all the figures, etc. See here:
The Bear Stearns Companies, Inc. (NYSE: BSC) is the parent company of Bear, Stearns & Co. Inc., which is one of the largest global investment banks and securities trading and brokerage firms in the world. The firm’s main businesses include capital markets (equities and fixed income), investment banking, wealth management, and prime brokerage clearing services.Now, I found this interesting in an article from CNN Money:
Following a March 14, 2008 announcement that the firm required emergency financing from the Federal Reserve Bank of New York and JPMorgan Chase in order to avoid insolvency, Bear Stearns suffered a precipitous decline in value with its market capitalization dropping by 47%. On March 16, the firm agreed to be acquired by JPMorgan Chase for $236 million (approximately $2 per share, down from Friday, March 14 close of $30 a share).[2] Among Bear Stearns’ assets most desired by JPMorgan are its prime brokerage unit and the firm’s midtown Manhattan office tower.[3]
THE VIEW FROM WALL STREET: JPMorgan’s stock was up $3.51 to over $40. Conversely, Bear Stearns’ stock fell another $25.19 to $4.81 following Friday’s initial free-fall. Elsewhere among the the big Wall Street investment houses, Lehman Brothers Holdings lost about 20% to $31.10, following a decline of 15% Friday; Merrill Lynch and Morgan Stanley fell about 10% and Goldman Sachs Group slid about 8%. Citigroup shares fell about 6%. Investors are weighing both the value of financial stocks after Bear sold for only $2 a share - and whether the problems which brought down Bear can spread.You see all these companies were heavy investors in our Candidates Campaigns. Oh, how the plot thickens! Money, money everywhere! Could this be a sign of just how displeased PEOPLE are with the way this country is? Could the economy have anything to do with this? Of course! Let’s connect the dots…..
We’ll start with the Great Depression. According to Wikipedia, (I love them for fast fact finding), the causes of the Great Depression are still much under speculation. We’ve been told that it was due to the stock market crash. Here:
Causes of the Great DepressionNow why would Ben Bernanke admit this now? Very interesting don’t you think? And now, again, we have a situation where there has been a devaluation in interest, Real Estate has hit rock bottom, and the ripple effect has hit Bear Stearns and Companies, Inc. We are definitely NOT in a recession, but a depression.
From Wikipedia, the free encyclopedia
Jump to: navigation, search
Causes of the Great Depression are still a matter of active debate among economists. The specific economic events that took place during the Great Depression have been studied thoroughly: a deflationary spiral forced dramatic falls in asset and commodity prices, dramatic drops in demand and credit, and disruption of trade, ultimately resulting in widespread poverty and unemployment. However, historians lack consensus in describing the causal relationship between various events and the role of government economic policy in causing or ameliorating the Depression. One popular theory is that the Depression was caused by the vast economic boom in the 1920’s, and that by the time the boom reached it’s peak in 1929, investors became fearful of their stock shares as markets expanded some focus to Europe, which still had nations that were economically damaged from World War I[1].
Monetarist explanations
In their 1963 book “A Monetary History of the United States, 1867-1960″, Milton Friedman and Anna Schwartz laid out their case for a different explanation of the Great Depression. After the Depression, the primary explanations of it tended to ignore the importance of money. However, in the monetarist view, the Depression was “in fact a tragic testimonial to the importance of monetary forces.”[7] In his view, the failure of the Federal Reserve to deal with the Depression was not a sign that monetary policy was impotent, but that the Federal Reserve exercised the wrong policies. They did not claim the Fed caused the depression, only that it failed to use policies that might have stopped a recession from turning into a depression.
Ben Bernanke, the now current Chairman of the Federal Reserve, later acknowledged that Friedman was right to blame the Federal Reserve for the Great Depression, saying on Nov. 8, 2002:
“Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.” [8]
Economists dispute how much weight to give the stock market crash of October 1929. According to Milton Friedman, “the stock market in 1929 played a role in the initial depression.” It clearly changed sentiment about and expectations of the future, shifting the outlook from very positive to negative, with a dampening effect on investment and entrepreneurship, but some feel that an increase in interest rates by the Federal government could have also caused the slow steps into the downturn towards the Great Depression.Our comparisons lie between the market hitting rock bottom in 1929 and (200
today’s housing market doing the same. It seems to me that the Federal Reserve wants more in the way of REAL property than they currently have. That’s not quite 80 years. Just my two cents……..Now, from CNN Money.com we have this:
BEAR’S DEMISE: JPMorgan Sunday night announced it would purchase Bear for an astounding $2 a share or about $236 million. The investment giant had a stock market value of $20 billion in January 2007. The purchase also was only made after Federal Reserve agreed to accept as collateral up to $30 billion in Bear Stearns market positions.So, once again jobs are being lost, and while it looks good having the interest rates cut, we already know that is bad for the economy. The dollar is at a record low in the markets! Notice that the banks are OK, but PEOPLE are not! It is the PEOPLE that will suffer, not those with money.
THE FED STEPS IN: Almost simultaneously with the JPMorgan purchase, the Federal Reserve sought to increase liquidity to the credit-crunch seized financial markets.
The Fed lowered its discount rate by 25 basis points to 3.25%. It also opened up the discount rate to primary dealers and expanded the length of such loans to 90 days from 30 days. The Fed also significantly broadening the kind of securities it will accept as collateral.
TALK OF LAYOFFS: JPMorgan Chase & Co.’s takeover plans for Bear Stearns Cos. include cutting more than half of Bear’s 14,000-member staff, CNBC’s Charlie Gasparino reported Monday, citing sources at JPMorgan.
The layoffs are anticipated over the “next couple months,” Gasparino said.
I also can’t help but notice that this is another Bush cronnie we have here in Ben Bernanke. If Bush can’t run his presidency, why should we think anyone he nominates can do any better job where they are? After all, haven’t we already seen results through Alberto Gonzales? It seems to me Congress should have seen this one coming a mile away. Others have.
The graph shows the continual downward turn of the dollar for the past 6 years. Click on the graph to make it bigger. How bush managed this one is beyond me. But since he has such good business sense, I’d say there was a clue there. He has got to go before he does catastrophic damage to this society. How many more clues and fingers do we need to point before someone in Congress gets it?
Now, if the domino effect happens, Bear Stearns and Companies is only the first of many to go belly up. There will be many others, possibly JPMorgan Chase, Goldman Sachs Group, Merrill Lynch, Lehman Brothers, Morgan Stanley and others. Bush and his recession be damned, we are in trouble.
Bright Spark
Posts: 316
Location: California
Location: California
April 19th, 2008, 10:04 PM
Now Citibank, Morgan Stanley and Wachovia are all feeling the heat. I'll bet one of them falls shortly and again there will be another "Miraculous" save by the Fed. If these "Miracles" keep happening we'll all be in real cash flow problems. This is getting worse, not better as was promised.
Now Citibank, Morgan Stanley and Wachovia are all feeling the heat. I'll bet one of them falls shortly and again there will be another "Miraculous" save by the Fed. If these "Miracles" keep happening we'll all be in real cash flow problems. This is getting worse, not better as was promised.
