« Columnists/Analysts openly accuse Israel of sponsoring piracy off Somali waters with aim to “transform Red Sea into a Jewish lake”The Power Elite Playbook, Corporate Generals, Part 18 »

Paulson shoots another arrow into the heart of the Economy

December 6th, 2008

Andy Hughes

Paulson shoots another arrow into the heart of the Economy
The announcement in the last few days of a deal reached between the U.S. Treasury and the moribund insurance giant, A.I.G. provides a very lucid insight in to the nefarious and destructive world of the Troubled Asset Relief Program, otherwise known as T.A.R.P..Not only have A.I.G. received $152 billion to date and subsequently reported a third quarter loss of $25 billion, now they are to be cleared of their obligation on $53 billion worth of toxic credit default swaps. U.S. taxpayers are now on the hook for $205 billion courtesy of an institution which played in the Wall St. casino that passes for a "Financial Sector" and lost. Under the "Free market" system, so expounded upon by Government and Wall St. alike, A.I.G should be in chapter 11. Bailing out A.I.G and other failing institutions does absolutely nothing to address the fundamental issues at hand.

The economy is in crisis because unemployment and overarching debt levels pushed thousands of families in to the untenable situation where they did not earn enough to cover their debts. This burst the real estate bubble inflated by Alan Greenspan, crashed real estate prices, consumer spending and manufacturing. What we are seeing now is the inevitable result of lack of Financial regulation, lax monetary policy and a symbiosis between Government and the Financial industry. The mortgages taken out by buyers had been bundled into complex financial instruments; Mortgage backed securities. The latter along with Credit default swaps and derivatives set the stage for a global financial meltdown. The Glass-Steagal act of 1933 had been conceived to prevent the Banking sector from indulging in high risk investments to protect the depositors of these institutions. This was repealed at the end of the Clinton Administration through the Gramm-Leach-Bliley Act of 1999 which opened the gates to financial destruction. With the stroke of a pen, the financial services sector was given the power to literally bring down an economy .

The most urgent matter for Treasury to address is the toxic derivatives market. The notional amount of outstanding derivatives, as noted by the Bank of International settlements, comes close to $512 trillion. This represents a figure that is impossible to settle and is the real Armageddon which Banks are preparing for by hoarding the cash that they have received through the T.A.R.P..Unless this time bomb is defused by bringing the undeclared positions on the table, the duration and gravity of this crisis can only increase. As the underlying assets of these instruments crumble the Banks' exposure to counterparty risk increases and will lead to the inevitable collapse of even more banks and reduce the availability of investment credit even more. The underlying assets include interest rates, mortgages, foreign exchange rates, credit ratings on companies and even creditworthiness of entire countries. This is the level of insanity that has passed for "Leveraged Investment"

With over $3 trillion of taxpayer money injected in to Banks, insurance companies, commercial paper, Fannie and Freddie what has come back to benefit the dying economy ? A reduction in lending, increased interest rates on credit card payments and further losses for these same institutions. No big surprise as the real economy has never stopped it's nosedive. Does the Treasury really not realise that there is no point in investing in companies that have no chance of redemption ? By handing over Americans' hard earned tax dollars and indebting future generations, the Treasury has been engaging in the biggest transfer of wealth in Human history. The U.S. is now the biggest debtor on the planet and the rest of the world has noticed. China, Japan and the Oil kingdoms that buy U.S. debt are losing faith and it's only a matter of time until they turn off the tap.

-###-

By Andy Hughes 'Paulson shoots another arrow into the heart of the Economy' http://meltdown101.livejournal.com/19411.html

No feedback yet

Voices  Share this page

Voices

  • Katherine Watt [07/23/23] Orientation for new readers As I read and write more about pre- and post-1959 Catholic teaching as they relate to current geopolitical events, I want to emphasize that I’m on a learning curve, and my views are developing as my…
  • Katherine Watt [07/29/23] Orientation for new readers Excellent new post by Sasha Latypova on Dec. 10, 1974 National Security Study Memorandum 200 ■ July 26, 2023 - Population Control Policy. Why would my government want to kill me? Don't they…
  • PressTV The Israeli genocide against Palestinians in Gaza is funded by the United States according to Joe Iosbaker, an American political analyst and a leader of the Anti-War Committee – Chicago. 💬 “The US government leads the world in many…
  • Dr. Halvor Næss [06/17/23] It is now more than three years since the covid-19 pandemic started, and two almost self-evident statements summarize the most important lessons learned. 1. Without the draconian handling of the authorities, the pandemic would…
  • Dr Vernon Coleman If you want to know the truth about vaccines and vaccinations please read my book Anyone who tells you vaccines are safe and effective is lying: Here’s the truth. You can find it for sale on Amazon. 1. The UK is now sending long range…
  • Cesare Sacchetti When Donald Trump in 2016 walked down the mobile stairs of his New York residence, the Trump Tower, many prominent members of the deep state were anguished by a feeling of both panic and fear. Panic because for the first time after the…
  • Jeff Thomas The decline from democracy to tyranny is both a natural and inevitable one. That’s not a pleasant thought to have to consider, but it’s a fact, nonetheless. In every case, a democracy will deteriorate as the result of the electorate…
  • Walter Gelles Legal trickery would silence Dr. Charles Hoffe Prominent Canadian physician Dr. Charles Hoffe has spoken out courageously to warn people of the very serious dangers of the Covid mRNA genetic "vaccines". He now faces trial from the Canadian…
  • Stephen Lendman [04/05/23][Stephen died on May 9th, 2023, about a month after he wrote this article.] Illegitimately installed Biden regime criminals run the empire of lies and forever wars. A previous article discussed Trump’s politicized indictment,…
  • Linh Dinh [Pakse, Laos on 6/5/23] Sherwood Anderson, “For a time he was lonely and wrote to Alice almost every day. Then he was caught up by the life of the city; he began to make friends and found new interests in life.” Why quote a rather plain…
March 2024
Sun Mon Tue Wed Thu Fri Sat
 << <   > >>
          1 2
3 4 5 6 7 8 9
10 11 12 13 14 15 16
17 18 19 20 21 22 23
24 25 26 27 28 29 30
31            

  XML Feeds

b2
FAIR USE NOTICE: This site contains copyrighted articles and information about environmental, political, human rights, economic, democratic, scientific, and social justice issues, etc. This news and information is displayed without profit for educational purposes, in accordance with, Title 17 U.S.C. Section 107 of the US Copyright Law. Thepeoplesvoice.org is a non-advocacy internet web site, edited by non-affiliated U.S. citizens. editor
ozlu Sozler GereksizGercek Hava Durumu Firma Rehberi Hava Durumu Firma Rehberi E-okul Veli Firma Rehberi