FINANCIAL TERRORISTS & FALSE PATRIOTS ARE THE REAL ENEMY?

If you want to understand how we're getting cheated out of hundreds of billions of dollars in tax revenue by our very own financial terrorists, the following is a primer. While I understand this may be conceptually difficult for the Country First, false patriot Tea Baggers, they need to pay attention to this one ...

******************************

It looks like Wall Street and other financial titans who have been playing in our financial mud pit are going to pay 2011 bonuses in late 2010. Their rationale? They want to help their executives avoid paying out more taxes anticipated because of changes to tax laws. In the case of Credit Suisse Group in London, they want to compensate their executives for the tax hit they took in 2009.

Got that? Companies that drove our economy into the ground, and who should have been forced into bankruptcy, believe that their incompetence deserves to be rewarded. Instead, after happily accepting the benefits of a U.S. government orchestrated bailout, which allowed them to guarantee profits and complete big payouts, the biggest financial institutions are thanking governments by turning their backs on them precisely when budget shortfalls demand a little help from all corners.

This is one of the reasons why I called for nationalizing our failing institutions (here, here, and here). I didn't want the same people who ran our economy into the ground recovering only to socialize the losses and then, later, privatize the profits.

Too late. It's now a done deal. Our financial terrorists have socialized the losses, and seem content to ride the American taxpayer into the ground for their own financial benefit.

The end result is that you and I are paying for the bailout - in the form of increased budget deficits, lost jobs, fewer legal rights, chopped salaries, greater uncertainty, etc. - while Wall Street and their Washington friends continue to find new ways to stick it to Main Street. Check out these evolving stories ...

* OFFSHORE THEFT: Goldman Sachs, which received government debt guarantees and $10 billion in taxpayer funded bailout money, saw it's effective tax rate drop to 1%. Why? Because it moved some of its money off shore to avoid paying taxes.

* LEGAL COVER: In order to get taxpayer funded bailout money, which propped up their company and the profits of other institutions, AIG gave up it's right to sue companies who misled them. This helped keep regulators and law enforcement officials away from the mess created by Wall Street.

* HUSH MONEY: After securing trillions in guarantees and loans during the bailout Wall Street's financial institutions began paying out million dollar fines for misleading investors, selling "made-to-fail" instruments, and "misstating" anticipated losses. In laymen terms, they paid fines for fraudulent behavior.

* SIMPLE COLLUSION: Goldman Sachs and Bank of America colluded with firms that sent school district (infrastructure) money their way. Once the money was secured these firms then paid out bribes, all of which cheated cities and towns of much needed funds. Making matters worse, those involved in directing money to Goldman and BofA then deliberately withheld information about higher paying financial programs from municipalities and other governments.

* OUTSOURCING WHITE COLLAR JOBS (but here in America): Banks who received the biggest rescue packages requested visas for more than 21,800 foreign workers, to do white collar jobs! The average annual salary for those jobs was $90,721. During the last three months of 2008 - when the market meltdown was at it's height - the largest banks that received taxpayer loans announced more than 100,000 layoffs (where's organized labor here?).

Can anyone say with a straight face that the real terrorists we need to worry about are right here in our country?

Think about it ... Wall Street's stupidity and greed collapses the economy ... Wall Street uses a taxpayer funded bailout to subsidize undeserved bonuses ... Wall Street shifts money offshore to avoid taxes ... Wall Street bribed convinced Washington to restrict the legal right to sue corporate incompetence ... Wall Street paid what amounts to hush money to avoid court cases ... Wall Street firms colluded to steal funds from local schools and cities ... Wall Street outsourced jobs by bringing foreign workers to America (at the same time they had their hand out to the American taxpayer) ...

Is putting America further in debt what Country First is all about? Where's the Tea Bag outrage over Wall Street's theft of American tax funds here? Why wasn't Mr. Tea Bag, Glenn Beck, discussing how all of this makes a travesty of patriotism at his white self-pity rally on Saturday?

At the end of the day, our financial terrorists are causing more problems for America than the terror babies the Glenn Becks of our world like to whine about. When the false patriot, Tea Bag Bunch, begins to figure this out (and adds a little color to their mob) maybe it will be time to take them seriously.

Until then, they're just perpetuating a debt-drenched, corporate welfare, system that increasingly makes us dependent on China. And, if I'm using my Glenn Beck-logic tin foil hat, that makes them all traitors.

- Mark

Note: Photo added after original post.

FINANCIAL TERRORISTS, PREPARING THE NEXT FINANCIAL 9/11?

Wow. Check this out. Banks around the world will have to roll over (refinance) debt amounts between $5 trillion and $15 trillion over the next two years. That's a chunk of change. The primary problem is that banks could find it harder and harder to find the money to roll over debt as asset prices continue to slide downward. The banks will need some real magic. This is where friends from my youth, Rocky & Bullwinkle, come in.



The real trick comes in the form of some real regulatory stupidity (courtesy of the Financial Accounting Standards Board, or FASB) that allows America’s financial institutions to revalue the price of their toxic assets. I’ll leave it to market sociopaths to explain "the market" rationale, which you can find here. The end result is to create a world where Alice in Wonderland math governs our market environment, but how it works is really pretty simple.

Regulating Market Prices Out of the Market
Imagine you own a home before 2008. You likely watched a slow bleed process as it's market price tumbled over the past two years. Your $500,000 home is now worth $250,000 (or something like that). Because you have powerful neighbors who don't want to see their homes lose value if you walk away and leave an empty house (called a strategic default) they get the banks to legally allow you to reinflate the value of your home on their books.

The best part of getting another shot at reassessing the value of your home is that you can maintain previous debt levels, or borrow against the home, as if little happened to your houses market price. To be sure, it's really not that simple. But the concept applies (I've written in greater detail about the process here, here, and here). The end result, though, is that we effectively regulate market prices right out of the market. Same hat trick, different result.



The problem with this regulatory maneuver is that this is not being done for your home. You don't get to use the regulatory tools that the banks have access to. Like handicap parking it’s only available to a certain class of banks. In this case it's (FASB, Statement 157) only available to the incompetent sociopaths who run America’s biggest financial institutions.

Taking the Market Prices Out of the Market
By allowing America's financial institutions to re-price their toxic assets two things happen. Both will help solve our bankster's trillion dollar problem above.

ASSETS ROLLED OVER/GAME CONTINUES: It allows banks and governments, who had to rollover loans in 2009, to pretend the assets they underwrote are worth more than they actually are.

FINANCIAL AND LEGAL BAILOUT: It shields private equity firms in our shadow banking system (private investors) who “invested“ in toxic assets. They escape culpability and investor lawsuits. 

On one level this explains why the recovery we're experiencing is superficial, at best. First we got $1.5 trillion in bailout money from the Bush and Obama administrations to save our nation's financial institutions and their incredibly self-absorbed executives. Then we got trillions more for America’s financial institutions in the form of government guarantees and credits.

And, just like that, our nation’s financial institutions are able to go to the Federal Reserve and Treasury Department and say, "Let us use these repriced (toxic) assets as collateral for a new loan. You can go ahead and keep the asset if I stop paying (wink, wink)."

Flush with bailout cash, new credits, new guarantees, and government approved unicorn methods to revalue their assets, and it should come as no surprise that America's financial institutions have continued to live in a make believe world drenched in irresponsibility and never ending

How Banksters Will Stick Us With the Bill
In 2008 only 2.7% of BofA’s failing loans were backstopped by the American taxpayer. In 2009 that number jumped 20.5%! Take a look at the numbers. But wait, it gets worse. These bad assets - which the Federal Reserve and the financial industry like to call "legacy assets" - are being dumped on the American taxpayer. This is how it's being done.

In order to put America's toxic, or legacy, assets on life-support (while putting more money into the banking system) we created something called a Term Asset-Backed Securities Loan Facility (TALF). In real simple terms TALFs are government-backed loans. They can be accessed by those who hold financial crap, or non-performing securities. To better understand the concept let's use our home example from above.

If TALFs were available to America's home owners they would be able to use their homes to get a loan from the bank, even if they're upside down on the loan. Unfortunately, TALF loans are only made available to America's largest and most powerful financial players through the Federal Reserve of New York (and, no, President Obama's Making Home Affordable Program doesn't even come close to TALF).

Here's the real good part.

The big financial players don't need to put up any good collateral for the loans they get. They can use their poorly performing toxic assets as collateral. Best of all, they can revalue these assets upward, courtesy of the federal government. If the collateral doesn't pay off you and I are stuck with the bill.

How much will this add up to? We don't know just yet. But we do know that the Federal Reserve has made at least $1 trillion available for these TALF products, and another $1.45 trillion for non-performing assets in the housing market.

Put another way, don’t worry about the banks. They’ll get their money to rollover their loans. The American taxpayer, however, will be stuck with the toxic assets and the affects of an austerity program that’s just beginning to take shape.
 
- Mark

FINANCIAL TERRORISTS REQUEST NATIONAL SECURITY PROTECTIONS?

During the height of the market crisis in 2008 the Federal Reserve demanded unusual security procedures before sharing or supplying critical A.I.G. bailout related documents. The Securities and Exchange Commission (SEC) said that if it agreed to go along with the request it would store the information it received where national security related files are kept.

Imagine ... demanding national security status in exchange for information needed to secure public funds, to save a private firm no less. Incredible. While it's not novel to tie economics into national security, this request provides an entirely new twist to the national security state (it actually makes a joke of it). But it appears we now know why the request was made.

According to this New York Times article, A.I.G. effectively gave up it's right to sue Wall Street firms once it took bailout money. Wall Street titans like Goldman Sachs, and their financial partners in crime, effectively got a blanket waiver from lawsuits from A.I.G. Why did this happen? Because Wall Street's biggest firms were really trying to cover their butts, and we're using their buddies in Washington to help them do so.

One way for Wall Street's biggest firms to cover their butts and avoid lawsuits (and even jail time) was to get A.I.G. - the insurer of their toxic crap - to give up their right to sue on behalf of shareholders. So Wall Street's friends at the Federal Reserve and the Treasury Department made A.I.G. an offer they couldn't refuse: Waive your right to sue and take our money with full payouts, or go under.

As I've pointed out before (many times), I think it's time we start thinking about invoking the Racketeer Influenced and Corrupt Organizations Act of 1970 (RICO) to get some answers. Think about it. The only reason you would want to have your market information classified along national security lines AFTER the fact is because you've got something incriminating to hide (proprietary information, after all, doesn't need national security status). Any good prosecutor will tell you that a request to secure security status for documents suggests two things. Somebody has something to hide, and panic. Panic is good, if you're a good prosecutor.

To get a RICO case going on a Wall Street firm (which has been done before) the SEC would have to show a "pattern of racketeering activity" that was committed by an "ongoing criminal organization." What's more criminal than duping investors with toxic assets and then stealing taxpayer money?

- Mark