Blog on the Run: Reloaded

Friday, November 20, 2009 9:33 pm

Odds and ends for 11/20

Huge win for the good guys, by which I mean taxpayers: House Finance Committee overwhelmingly and with true bipartisan support votes to audit the Fed. Barney Frank, previously a supporter, voted against. He’s going to need a damn good explanation.

Welcome to the 21st century, beehortches: Muslims want an anti-blasphemy law? Well, I want a jet pack and I ain’t getting that, either.

Come for the counsel, stay for the funny anecdotes (or vice versa): The NYT asks a shrink to tackle the fraught topic of holiday family get-togethers.

Transact this: Economist Dean Baker on the case for a financial-transaction tax. Short version: Yes, it would raise (microscopically) the cost of capital, but like booze and cigarette taxes, it would discourage something harmful: in this case, the kind of high-frequency, high-volume, low-value trading currently dominating the stock market. (Let’s face it, when the market can go up significantly on a day when more than a third of all trading involves the stock of just four companies — four basically insolvent companies — does the economy really benefit?)

Show some respect: A large majority of Americans, and 53% of Republicans, think it’s OK for the president of the United States to bow to the leader of a foreign country he’s visiting when it’s custom to bow in that country, according to a poll from that hotbed of pro-Obama liberalism, Fox News (question 18).

Shorter Amanda Hess, for the win: Why is sexism only a problem when it affects Sarah Palin?

Funding priorities: Can we please all agree that whatever else goes into health-care reform legislation, it ought not contain a dime for stuff that doesn’t work? Or has Teh Stoopid rendered even that common-sense position untenable?

Consumer advocacy: Elizabeth Warren sez, “We need a new model: If you can’t explain it, you can’t sell it.”

Once-a-century confluence?; or, Who are you and what have you done with the senator?: When Sen. James Inhofe and former New York Gov. Eliot Spitzer agree that it’s time SecTreas Tim Geithner resigned, maybe it really is time Tim Geithner resigned.

Tuesday, November 17, 2009 8:42 pm

Odds and ends, Nov. 17

  • Our eyes are on Afghanistan, but the prize is energy-rich Uzbekistan. So they boil political opponents alive. Big freakin’ deal.
  • The Special Inspector General of the fed bank bailout program says we need to audit the Fed already. Fine minds agree. So let’s audit the Fed already.
  • Tim Geithner’s pissing away of taxpayer money earlier this month, to the benefit of — surprise!! — Goldman Sachs and AIG —  would’ve been grounds for dismissal, if not execution, in any country that wasn’t already a banana republic. Unfortunately, we’re all now singing the Chiquita song:

This, Mr. Geithner, is what moral hazard is all about. Thanks to your actions you have doomed the U.S.’s formerly free and efficient equity markets to the biggest capital market bubble in history, which, like any ponzi, has only two outcomes: it either keeps growing in perpetuity as greater fools crawl out of the woodwork to keep it growing, albeit at ever slower marginal rates (note, this did not work out too well for Madoff), or it eventually pops. And the longer it takes to pop, the greater the ultimate loss of value: one day Madoff’s business was worth $50 billion, the next day it was $0. And that is precisely the same fate that American capital markets will have at some point in the upcoming months or years. When future historians look back at what specific action caused the biggest crash in U.S. capital markets history, Mr. Geithner’s cataclysmally botched negotiation of the AIG counterparty bailout will undoubtedly be at the very top of the list. In the meantime, just like in the Madoff case where the trustee is trying hard to trace where any stolen money may have been transferred to, to see the fund flows in our ongoing “ponzi in progress”, look no further than the bank accounts of Goldman bankers as they receive their biggest ever bonus this year …

 

  • Relatedly, I’m a lot less bothered about Obama bowing to an Asian leader than I am about his bowing to Goldman Sachs.
  • Question of the day, from Michael Lind: Shouldn’t the government pledge allegiance to the people, rather than the other way around?
  • Nice punking of an anti-immigration crowd. Not-so-nice behavior of the cops on hand, who were shoving around nonviolent counterprotesters rather than the anti-immigration folks who started the fisticuffs.
  • Time to revoke David Broder’s membership in the Wise Old Mainstream Media Pundits’ Club: When you say it’s more important to do something, anything, now than to do the right thing, you’re reckless. When you say that about a decision over whether to start, or expand, a war of choice, you’re just batsh*t insane definitely not supporting the troops.
  • Faith may well complement competent psychiatric care, but it is no substitute, a fact that appears to have escaped the Department of Veterans Affairs. And this is just one facet, albeit a particularly annoying one, of the VA’s utter failure to cope competently with the mental-health problems of veterans of the fighting in Iraq and Afghanistan. My senior senator, Richard Burr, ranking Republican on the Senate Veterans Affairs Committee and a guy with a DSCC bulls-eye on his back this election year, could do himself a lot of political good, in addition to doing a lot of real-world good for a lot of deserving people, if he just rode this issue like a beast across the plains of Mongolia.
  • And speaking of Richard Burr, call the WAAAAmbulance. Apparently, Senate Republicans are concerned that TV commercials about them supporting government contractors who let their employees get gang-raped may engender bad feelings against … um, well, the 30 Senate Republicans who supported government contractors who let their employees get gang-raped. (Here’s the one on Burr:)

Thursday, November 12, 2009 6:26 am

Let’s get in on the ground floor

Filed under: We're so screwed — Lex @ 6:26 am
Tags: ,

If we can’t audit the Fed, Zero Hedge suggests, then it’s time for an initial public offering. Maybe THAT way we can find out what’s on its balance sheet.

Hey, nothing ELSE has worked.

Tuesday, October 27, 2009 8:11 pm

Dictionerrory

I’ve so strongly supported Rep. Alan Grayson lately that I feel I have an obligation to call him out when he’s wrong. And when he called lobbyist Linda Robertson “a K Street whore,” he was wrong.

Ms. Robertson is a john, not a whore. The congresscritters who take her money and do her bidding are the whores.

Grayson called Robertson the name in the context of her criticism of his effort to see that the Fed gets audited. Robertson used to lobby for Ben Bernanke, chairman of the Fed, which apparently trumps the obvious public good served by letting the public see how the Fed is handling trillions of dollars of public money.

She also used to be the chief lobbyist for Enron, which, in the eyes of most professional political observers, apparently makes her pure as the driven snow, whilst Grayson is in the wrong not for having falsely accused her of a crime but of having accused her of the wrong crime.

Grayson spokesman Todd Jurkowski delivered an appropriate smackdown:

She attacked the Congressman and his efforts to promote a Republican bill to audit the Federal Reserve. She actually questioned his understanding of the difference between fiscal and monetary policy. This is [a] person who used to be the chief lobbyist for Enron attacking the intelligence and motives of a Congressman who used to be an economist.

I’m sure all the California ratepayers that Enron screwed before it imploded will be really, really concerned that Alan Grayson called Linda Robertson a bad name. I know I am.

Tuesday, October 20, 2009 8:15 pm

Calling out Sen. Kay Hagan

I mentioned earlier that North Carolina’s junior senator, Democrat Kay Hagan, had not signed on to S. 604, the Senate companion to Rep. Ron Paul’s HR 1207 audit-the-Fed measure. Now we know why: She opposes it:

Under common usage of the term audit — an examination of accounts and records — there is already a 100 percent audit of the Federal Reserve.

And the records of these audits are publicly available where, exactly?

Furthermore, Congress already reviews semi-annual reports on monetary policy submitted by the Board of Governors as required under the Full Employment and Balanced Growth Act (PL 95-523).

Bully for Congress. What about the rest of us?

When Congress passed the Federal Banking Agency Audit Act in 1978, the legislation attempted to balance the need for public accountability of the Federal Reserve with the need to insulate the Reserve’s monetary policy function from political pressures. I believe this balance must be maintained going forward.

Because that’s worked out so well up ’til now.

There are political pressures and political pressures. Messing with the money supply or meddling in markets for partisan advantage is one thing, and a very bad thing at that. That said, the public needs to know how its economy and its fiat currency are being managed, so that the experts among the public can advocate for policy on the basis of the soundest possible information. That isn’t happening now, mainly because under current circumstances, it can’t.

The formulation of monetary policy is a decision-making process that involves information gathering from a host of foreign governments and central banks. The information provided from those exchanges is critical and extremely sensitive. The immediate and broad disclosure that S. 604 would require could disrupt the financial markets, and jeopardize our country’s international finance relationships.

Release of information can be delayed just long enough to keep it from being able to move markets.

Ultimately, it would be taxpayers who would bear the brunt of any losses resulting from policies caused by untimely disclosure of sensitive information. Because of this, I do not believe the benefits of legislation like the Federal Reserve Sunshine Act outweigh the costs.

Like we haven’t been bearing the brunt of losses already.

As Zero Hedge points out, we need answers to other questions, among them:

Under what circumstances, and under what authority, did the Federal Reserve step in and become the lender of last resort to the entire world?

Given what has happened in the past year, why is it such a good idea to have the Fed (which is to say, us) remain on the hook for $6.5 trillion in other countries’ potential problems?

Why have we not mitigated the international conditions that made it necessary for the Fed to bail out these other countries, so that we’re at just as much risk now as we were before the collapse of Lehman Bros. a year ago?

To what extent do we recognize, and to what extent are we addressing, the dangers created by the weakening dollar? (Yeah, I realize a weak dollar should help exports, but with capacity down in the 60s and not likely to budge soon, it ain’t helping much.)

Why is the Fed’s discount window allowing banks to offer stock in bankrupt companies as collateral? And if the banks can do it, why can’t I?

Cuz here’s the thing:

… the Fed’s liquidity swaps are now back to almost zero. This means that foreign Central Banks believe they have the [foreign-exchange] swap and dollar maturity situation under control. They thought the same before Lehman blew up. And they were wrong. As the [dollar] continues tumbling ever lower [against the yen] to fresh 2009 lows, the trade de jour is once again the dollar funding one, although unlike before when the Yen was the carry currency of choice, this time it is the dollar itself, positioning banks for the double whammy of not just a dollar funding shock, but one coupled with a potential massive and historic short squeeze. If and when an exogenous event occurs, not even $6.5 trillion in Fed swap lines will be sufficient to bail out the world economy.

In plain English, if something else bad happens, we’re going to go through the same thing we went through a year ago. Only worse.

And then there are the categories of information Rep. Alan Grayson has asked for — and still not gotten:

  • Information that Bloomberg reporter Mark Pittman has requested via a Freedom of Information Act Request on the Bear Stearns rescue and that the Federal Reserve is contesting in the courts,[i] and which Manhattan Chief U.S. District Judge Loretta Preska has ordered by turned over by the Federal Resrve.
  • Information that Rep. Grayson requested in February at a hearing and by follow-up letter on which institutions received the $1.2 trillion added to the Federal Reserve’s balance sheet, how much reach institution received, and what was promised in return.
  • All Federal Reserve documents that went to Attorney General Andrew Cuomo’s office relating to the Bank of America/Merrill Lynch merger in which potentially illegal and coercive activity might have occurred, as well all Federal Reserve documents relating to the lawsuit pursued by Merrill Lynch shareholders in the US District court for the Southern District of New York.
  • Transcripts of all Open Market Meeting Minutes up to and including that of June, 2009, transcripts which are normally withheld from the public for five years.
  • Full disclosure of all terms and conditions of all off-balance sheet Fed transactions in the past three years.

In light of all of this, someone needs to explain to me again why Ben Bernanke should be re-confirmed. Because I’m thinking Sen. Hagan needs to vote a big, fat, resounding “Nay!” on that one.

Elsewhere, Zero Hedge writes:

We hope that the over 300 members of Congress who already support Ron Paul’s “Audit the Fed” Initiative consider the implications of what the Lehman fiasco has taught us, and how this unique look into the Fed’s balance sheet should be a very critical reminder of just how much risk the Fed is willing to take on with taxpayer capital when bailing out a financial system that, absent ongoing accounting gimmickry and endless Reserve Banking System subsidies, is still rotten to its core.

If they support Paul’s measure or its Senate companion measure, it’s probably because they’ve already considered those implications.

Sen. Hagan would be wise to do the same.

UPDATE: Kay, here’s a clue: Whatever Jon Kyl wants to do, both you and Americans in general are probably better off doing the opposite.

Wednesday, September 16, 2009 11:11 pm

A win for the good guys

Filed under: You're doing WHAT with my money?? — Lex @ 11:11 pm
Tags: ,

I’ve posted a couple of times about HR 1207, the Ron Paul-sponsored bill to audit the Fed. Good news, and, no, I’m not being snarky: HR 1207 now has 290 votes in the House — a two-thirds majority. That means the House, at least, will pass the bill even over an Obama veto.

The companion Senate bill, Bernie Sanders’ S 604, is still pending in the Banking, Housing and Urban Affairs committee. It has 25 co-sponsors, two more than when last I checked. N.C.’s Richard Burr is one of the 25; our other senator, Kay Hagan, is not.

Why not, Kay?

Thursday, August 27, 2009 8:15 pm

Nice economy you got there. Be a shame if anything happened to it. (cont.)

Filed under: You're doing WHAT with my money?? — Lex @ 8:15 pm
Tags: ,

That’s basically what the banks that have gotten taxpayer bailout money are saying about Bloomberg’s FOIA lawsuit and bills pending in Congress to audit the Federal Reserve:

In a declaration filed in the Bloomberg Case (08-CV-9595, Southern District of New York), the banks demonstrate no shame in attempting to perpetuate the status quo with regard to the Federal Reserve and demand that the wool over the eyes of the general population remain firmly planted in perpetuity.

The [group of tax-receiving banks] submits this declaration because the Court’s Order threatens to impair the ability of our members to access emergency funds through the New York Fed’s Discount Window without suffering the severe competitive harm that public disclosure of their identity will cause.

Our members have accessed the New York Fed’s Discount Window with the understanding that the Fed will not publicly disclose information about their borrowing, especially their identity. Industry experience, including very recent and searing experience, has shown that negative rumors about a bank’s financial condition – even completely unfounded rumors – have caused competitive harm, including bank runs and failures.

Surely transparency would facilitate rumor-mongering to an unprecedented degree. After all rumors spread much easier when everyone knows the true financial condition of banks.

And here, in plain written Times New Roman, you see what racketeering by a major bank consortium looks like:

If the names of our member banks who borrow emergency funds are publicly disclosed, the likelihood that a borrowing bank’s customers, counterparties and other market participants will draw a negative inference is great. Public speculation that a financial institution is experiencing liquidity shortfalls – which would be a natural inference from having tapped emergency funds – has caused bank customers to withdraw deposits, counterparties to make collateral calls and lenders to accelerate loan repayment or refuse to make new loans. When an institution’s customers flee and its credit dries up the institution may suffer severe capital and liquidity strains leaving it in a weakened competitive position.

Pardon me if I am a broken record here, but would rumors not spread much less if there was more transparency, if investors and other financial intermediaries were fully aware of the conditions of their counterparties, if banks did not have to cover their billions in reserve losses by pretending they are viable and essentially being constant wards of the state?

I say again: rigged game. Here’s hoping the judge has the good sense to laugh this out of court. And thanks to ZH for keeping this issue in front of us.

UPDATE: In the House, Barney Frank calls their bluff, saying HR 1207 will pass in October, with delays on release of data added so that the info won’t be “market-sensitive” in the way the banks claim to fear. Senate prospects less clear.

Monday, July 27, 2009 8:51 pm

The recession is ending. Right? … Uh, right?

Filed under: We're so screwed — Lex @ 8:51 pm

Wrong, Oh, so wrong. Not now and not for years. Supply of, well, just about everything except gasoline is well outstripping demand, and demand will take years, plural, to catch up.

‘Til then? Maybe we can ponder alternatives to what we’ve been living with for the past 75 years or so — a bubble-driven economy that’s the spawn of a rigged system. First step? Audit the Fed. (Don’t be thrown by the fact that the sponsor is Ron Paul. This is a really good idea, I don’t care how crazy you think he is otherwise.)

Thursday, May 28, 2009 8:54 pm

Let the sun shine in

Filed under: I want my money back. — Lex @ 8:54 pm
Tags: , ,

The Federal Reserve has been refusing to tell us how the taxpayers’ money being used to bail out banks is being spent. In fact, that agency’s inspector general has told Congress she doesn’t even know. Now, Rep. Alan Grayson, D-Fla., is calling for the Government Accountability Office, the nonpartisan investigative arm of Congress, to audit the Fed (H.R. 1207). You can go here to sign on in support of that measure.

It’s our money. We ought to know where it went.

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