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Bloomberg broke the biggest story of the year this past week by revealing that the Federal Reserve secretly committed 7.77 trillion dollars to bailing out banks.

7.77 trillion is more than 11 times the cost of the TARP program. Yeah, this is big. And this number was only through March 2009.  

So I think it's worth taking a few minutes to break down the importance of this story and what it means.

 photo slot_machine_7s_zps4776f5a7.jpg

What does the $7.77 trillion secret program mean?

1. Any talk about being broke is bullshit.

Allen West:

I'm just not sold on this payroll tax extension, this unemployment extension. Because we're broke.
Bullshit.

Rush Limbaugh:

So what are your ideas, Candidate A? Which agencies are you gonna just wipe out? We can't go on as we are; we don't have the money.
Bullshit.

John Huntsman:

The fact of the matter is we're broke as a country, and we're going to have to look very, very carefully at foreign aid.
Bullshit.

John Boehner:

We're broke. And the American people know we're broke.
Bullshit, bullshit, bullshit, bullshit.  

We have plenty of money when it comes to bailing out banks. Anyone saying we're broke is saying this to try to justify their own agenda.

2. We have the resources.

We can:

  • Fund job creation programs
  • Rebuild our infrastructure
  • Put money into education
  • Continue social safety net programs (as is)
  • Invest in energy independence

All we need is the political will. Anyone who says we can't do these things means they don't want to do these things.

If the government can come up with a $7.77 trillion secret program for banks, quit telling me we can't help out actual people.

3. You are being asked to shoulder the cost.

That's right. Why the call to pull money from Medicare, defense, Social Security, education, pensions, pay, etc?

You didn't think the banks should have to pay for their failures, did you?

This is the strategy known as privatize the profits, socialize the risks. It is the strategy behind the "too big to fail" banks.

In a nutshell, the strategy goes like this: Banks make risky trades using your deposits and, if they fail, they know they will be covered by the government because these assets are insured by the FDIC (at least up to a certain point).

Covering bank bets costs lots of money. How do we cover these bets?

Guess what? You're going to have to make do with less.

4. Our government is willing to lie to us.

This story didn't just happen.

Bloomberg had to fight in court for 2 years to get the Federal Reserve to release these details.

Why wouldn't they release the details?

Could it be because they knew no one would have gone along with this if it had been known?

The other shock is the magnitude of the lie. This is a $7.7 trillion lie.

5. The mainstream media does little to expose these lies

Much of the media continues to "back page" this story.

Ask yourself, with the exception of Bloomberg, if you've seen this story on any front pages. I haven't.  

Doesn't this sound like a front page story? Federal Reserve spent $7.7 trillion to bailout banks? Without telling anyone?

Sure sounds like front-page news to me. Yet it's vastly under reported in the media.

Would anyone in America go along with this continuous bailout if they knew about it?

6. Occupy Wall Street is right.

Say what you want about Occupy Wall Street, but this doesn't change the fact that the biggest challenge still facing our nation is our broken financial system and our government which is in bed with this system.

It's clear that very little has changed since the financial crisis. Very few new rules have been put in place.

Opponents of the Dodd-Frank reforms are trying to "block appointments of new leadership to key oversight positions, cut funding, alter policies, use cost- benefit analysis as a roadblock to reform, and make other efforts to slow the pace or water down regulations."

7. You can't get a loan at 0.01% interest

Yes, that was the rate at which we lent money to some of these banks.

In other words, free.

Of course, at the same time, we had politicians screaming that we couldn't help out people who were foreclosed upon.

If you're a person, it's your "responsibility," if you're a bank, then you're "too big to fail".

Only banks could get loans at 0.01%.

We have a double standard in our country. One set of rules for average people, another set for those with the right lobbyists.

8. The problem is not fixed. It will happen again.

The banks are still engaging in risky derivatives trading. And they're even bigger than before when they were "too big to fail".

Almost nothing has been done in the way of regulation and lobbyists are already fighting the little that has been done.

There is no incentive for banks to do anything differently and, with the government backing their bets, no risk to them.

Under these conditions, it is only inevitable that this will happen again.

9. Why is this the biggest story of the year?

It exposes everything that is wrong with our current system:

  1. Secret government programs for banks.
  2. The "we're broke" lie - anyone who says "we're broke" is saying it to justify some other goal.
  3. One set of standards for banks, an entire different set for the rest of us.
  4. The failure of the media to "front page" these issues. I bet you know what's happening with the Kardashians though.

Most importantly, we have the resources to do what's right for our country.

We just need those in office to work for our country instead of for the largest corporate donors and lobbyists.

So what can you do?

  1. Tell anyone who will listen. It doesn't matter what political affiliation you are, this should make you angry.
  2. Write, call, or e-mail your Congressman and ask him or her what they are doing to investigate. They should be angry too.  
  3. Write your local paper or TV news affiliate and ask them how they're covering the story. Why isn't this news?
  4. Support groups who are bringing these types of stories to light. Bloomberg deserves a huge amount of credit for pressing the government to release these documents.
  5. Move your money. Banks have shown they are poor gamblers. Take away the deposits they're using to gamble.
  6. Do whatever you can. Convince your friends. Support limiting corporate influence on Washington. Join those protesting in the streets if you can.

If this sounds like the beating of a drum you've already heard, apologies. But it's a drum that badly needs beating or nothing is ever going to change.

4:11 PM PT: Post mortem: I'd like to call out a few comments Kossacks have posted as excellent in trying to understand this complex subject.

VClib points out that loans to banks and infrastructure funding is an apples to oranges comparison. Military funding would have been a better proof point. Is it still bullshit to say "we're broke"? Yes. Look at our military budget which is greater than the next 20 countries combined. Where we have the political will, we have plenty of money.  

HamdenRice points out that a huge chunk of the Fed money was in the form of overnight loans and this is likely why the Bloomberg number is so large. Money is borrowed and quickly paid back. I suspect this is true, but it would be nice to have this verified from the info Bloomberg obtained. Secrecy leads to questions. And there are still plenty of questions and, little has changed between how banks operated before and how they operate now. They're still too big to fail. Also, it's easy to pay loans back if the Federal Government has been buying them back at +1% as suggested by some. Would be nice to see these details as well.

HamdenRice points out that the interest rate of .01% is questionable. The current short-term funding rate is closer to 1%. Not .01%.

Funkygal points out that I should have mentioned Obama for stating that "government should have to tighten its belt as well." Excellent point. Bullshit, Obama.

None of this changes the premise that if we have the political will, we're not "broke". Or that the banks are still too big to fail. Or that we need better and more reporting by our media on Wall Street and their relationship with our government. Or that you are being asked to tighten your belts when the 1% aren't.

Thank you again for the comments which I encourage everyone to read!

As katiec noted, this is an incredibly complex subject so they are incredibly helpful in broadening everyone's knowledge.

4:15 PM PT: It's also been an incredibly long day and the "update diary" window is incredibly small making proof reading incredibly difficult so please forgive the overuse of some words.

Sun Dec 11, 2011 at  7:27 AM PT: Just wanted to post one more excellent article from doubleplusgood which summarizes much of the discussion from the comments.


Originally posted to akadjian on Mon Dec 05, 2011 at 03:31 AM PST.

Also republished by ClassWarfare Newsletter: WallStreet VS Working Class Global Occupy movement.

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Comment Preferences

  •  Tip Jar (182+ / 0-)
    Recommended by:
    kestrel9000, marina, shypuffadder, Lensy, PrometheusUnbound, techno, sunny skies, pioneer111, gmb, irate, hannah, coppercelt, targetdemographic, Cinnamon, Asinus Asinum Fricat, bostonjay, dance you monster, anodnhajo, missLotus, Oye Sancho, kharma, El Camino, grrr, MartyM, statsone, arlene, p gorden lippy, Floande, ChemBob, pickandshovel, Phoebe Loosinhouse, We Won, Kentucky Kid, No one gets out alive, Militarytracy, whoknu, Yogurt721, Ginger1, psnyder, dear occupant, blonde moment, Gooserock, Azazello, lostinamerica, snowshoeblue, Debs2, on the cusp, GeorgeXVIII, cloudbustingkid, angel d, Azubia, daveygodigaditch, Florene, mikeconwell, Kinak, jdmorg, OLinda, alizard, Hear Our Voices, zerelda, J M F, Byron from Denver, Shockwave, Onomastic, BlueInRedCincy, ocular sinister, dotsright, G2geek, SaraBeth, Habitat Vic, One Pissed Off Liberal, Supavash, NYFM, jguzman17, S F Hippie, Gustogirl, scorpiorising, Sylv, Statusquomustgo, terabytes, divineorder, Damnit Janet, Pescadero Bill, Sandino, Mrs M, FindingMyVoice, jennifree2bme, greenbastard, profh, hillpeople, cotterperson, dalfireplug, lemonsieur, looking and listening, Heart n Mind, SingerInTheChoir, mrsgoo, 4Freedom, Alfred E Newman, crystal eyes, sostos, Thinking Fella, Kristina40, NM Ray, ggwoman55, samanthab, hester, Sean X, Cronesense, jeanette0605, jediwashuu, rapala, dinazina, gatorcog, strangedemocracy, Pandoras Box, nervousnellie, Eddie L, MinistryOfTruth, kN3eLb4Z0d, DBunn, Ellinorianne, buckstop, BranDJ, Irons33, PAbluestater, melo, FinchJ, ColoTim, The Hindsight Times, democracy inaction, Punditus Maximus, cookseytalbott, Therapy, Ohiodem1, cai, Arrow, SpecialKinFlag, aerie star, 3goldens, Ed in Montana, elengul, petulans, tapestry, NoMoreLies, abs0628, DSWright, dagnome, Simplify, Regina in a Sears Kit House, kjoftherock, Mimikatz, Preston S, CA Nana, Babsnc, roystah, devis1, alisonc, BYw, diane101, cececville, flavor411, monkeybrainpolitics, cybersaur, Blueslide, Joieau, KenBee, ashowboat, JekyllnHyde, Possiamo, offgrid, SD Goat, NJpeach, cpresley, NBBooks, livingthedream, Caipirinha, Knarfc, cany, FrY10cK, mofembot, splashy
  •  NOW can heads roll on Wall Street? (36+ / 0-)

    I...I don't even know what else to say.  The magnitude of this lie to the American people is, well, to big for words.

    They lied to us.  They lied to Congress.  The banks already had billions of our dollars at a tiny fraction of one point of interest when they took the tarp money.

    I feel like the sky just fell down.

  •  Ok...I can breathe again. (24+ / 0-)

    Wow.  I have not jumped on the "end the Fed" bandwagon.  I've heard both sides, from the calm rational points about what the Fed is, and what its power is, to the people who figuratively spit their outrage and disgust on the keyboard as they type out their visceral hatred of this thing we call "The Fed".

    This is unforgivable.  No way can this be let to stand.

    And what it really means is that we were much further down the rabbit hole than everyone was led to believe, even congress and the President, when the 2008 crash happened.

    Much MUCH further.

  •  Great Diary. I feel conflicted though. (8+ / 0-)

    Your work is great.  I just don't like the news.

  •  Bulls should be outraged (9+ / 0-)

    Because these politicians even give a bad name to bullshit. I second your "Bullshit(s)!" sir and submit my own:

    Bullshit!

    I am glad however to know that this means the "budget crisis" is , um, over?

    Slap happy is a platform.

    by averageyoungman on Mon Dec 05, 2011 at 04:19:33 AM PST

  •  How much of this money have they paid back? (3+ / 0-)
    Recommended by:
    ManhattanMan, Onomastic, divineorder

    The government needs to act to jump start the economy.  
    They need to do it by giving entrepreneurs job growth money.

    And by creating their own shovel ready projects.  

    Dammit.  We need that money circulating in the economy NOW.

  •  Can someone who understands economics (20+ / 0-)

    explain what it means to inject $7.7 trillion into the system after trillions of money on the books "evaporated" when the housing bubble burst?  I thought there were consequences to just printing large amounts of money in terms of inflation.

  •  we're never too broke to help out the rich. (22+ / 0-)

    I changed by not changing at all, small town predicts my fate, perhaps that's what no one wants to see. -6.38, -4.15

    by James Allen on Mon Dec 05, 2011 at 04:31:42 AM PST

  •  Actually, what it means is that money is (9+ / 0-)

    worthless, like the letters on this page are worthless in and of themselves.  Their value lies entirely in being used.  Dollars stuffed in the mattress are just as useless as those plastic letters in the bottom of the toy box.
    When did that happen to our "script"?  We can actually identify a date, August 15, 1971, when Richard Nixon unilaterally terminated the convertability of the dollar into gold. While the proponents of the "gold standard" argue for its return to avoid "inflation," the significant increase in the volume of money and its decrease (some people claim $40 trillion has been "lost" in the crash) in recent years would seem to prove definitively that the quantity of currency is irrelevant (just as how many people use the 26 letters of our alphabet to write innumerable words is irrelevant) and the only thing that really matters is when people don't have the tools to communicate and trade and exchange--not enough script.

    Oddly enough, another overlooked but very significant event happened in 1971--the 26th amendment expanded the electorate to include all adult citizens. In other words, 1971 was the year that upended the conservatives' dominance and ever since their major ambition has been to control the electorate and the currency, preferably by using the latter to inflict deprivation on the former.  Their success is reflected in the fact that the 99% are now poorer than they were in 1965.
    The good thing is that it's mostly wealth measured in dollars and dollars are worthless, unless we give them value.

    People to Wall Street: "LET OUR MONEY GO"

    by hannah on Mon Dec 05, 2011 at 04:32:29 AM PST

    •  How can you be "poorer" if money is worthless? (0+ / 0-)

      For that matter, why be so concerned about the "wealthy", when money has no worth?

      •  Well, to answer the second question (2+ / 0-)
        Recommended by:
        melo, NoMoreLies

        first, I'm not concerned about the "wealthy." I'm concerned that most everyone is being deprived of the tools that mediate trade and exchange and make our transactions more efficient. While using currency in immediate (familiar) transactions makes them inefficient, when time and distance are significant factors, money is extremely useful--like a screwdriver is better than your thumbnail in turning a screw.
        Money as a measure of relative value is also useful.  Indeed, it may be because money is a dual-use item (a token to mediate trade and a measure of relative importance) that has led to it being misused. People who like to count things have focused on accumulating something (like storing water behind a dam) that ought to be flowing freely to promote navigation down-stream.  A real dam has sluice gates which let the water flow after the empoundment has filled up while the flow was temporarily stopped.  Perhaps we should think of Wall Street as having become fixated on building dams without sluice gates.

        People to Wall Street: "LET OUR MONEY GO"

        by hannah on Mon Dec 05, 2011 at 05:47:06 AM PST

        [ Parent ]

        •  Our government too, not just WS. Nt (0+ / 0-)
          •  Some of our agents of government are (2+ / 0-)
            Recommended by:
            katiec, divineorder

            into deprivation.  Instead of managing our resources and assets to benefit the people, they are storing up goods for themselves and their friends.  That means they are bad stewards and need to be replaced.

            Luke 16:1-13.

            People to Wall Street: "LET OUR MONEY GO"

            by hannah on Mon Dec 05, 2011 at 06:19:59 AM PST

            [ Parent ]

            •  They're also storing up their.... (0+ / 0-)

              ability to press buttons on a computer.  That resource is utterly free, it takes no natural resources and very little time.

              •  Even using a keyboard requires (3+ / 0-)
                Recommended by:
                katiec, divineorder, NoMoreLies

                a certain amount of manual dexterity, although there are now voice recognition programs which translate speech into the written word.  But, writing is different from speaking.  And then reading what one has written adds another layer of review for the perceptive and aware person.
                That so many politicians seem incapable of writing their own speeches is, I think, telling.  I used to blame the Hollywood script-writers that Reagan brought to Washington with him.  But, it's possible that he could not function without them.  Who knows which came first?  Reagan's apparently contradictory positions as head of the actors' union and the terminator of the air controllers suggests that he was never much more than a mouthpiece whose voice was able to communicate messages he didn't mean.
                Was Reagan intentionally deceptive?  Is a parrot deceptive? Polly wants a cracker.  Reagan wanted to be a star.

                People to Wall Street: "LET OUR MONEY GO"

                by hannah on Mon Dec 05, 2011 at 06:58:35 AM PST

                [ Parent ]

      •  our currency only has value (0+ / 0-)

        when it creates debt.

        There is a crime here that goes beyond denunciation. There is a sorrow here that weeping cannot symbolize. There is a failure here that topples all our success. Grapes of Wrath, John Steinbeck

        by dear occupant on Mon Dec 05, 2011 at 06:14:09 AM PST

        [ Parent ]

  •  We don't have to pay for the bailouts, this.... (8+ / 0-)

    claim is also a lie.

    Is you had a money making machine in your kitchen, you press that button at any time you wanted to.  You wouldn't need someone else to pay you either before or after the fact.
    Neither the amount you have in the bank nor a future balance in any way prevents you from pressing buttons.

    The US is not broke because it has a money making machine, and can mark up any account it wants to at any time it wants to.  It needs neither taxes nor austerity in order to push buttons on a computer.  That's the cool thing about fiat money, or soft money creation.

    Free money creation is restricted only by inflation, not by taxes, austerity, or the possibility of going broke.

    Austerity is a hoax, fully driven by politics.

    •  California, Florida and Greece can .... (5+ / 0-)

      go broke because they are all currency USERS.

      The US federal government, and the UK are currency ISSUERS.  They can press a button on a computer any time they like.  Asking if they can run out of this ability is like asking if a bowling alley can run out of points.

      •  Re (0+ / 0-)

        They can create "money" all they want, but they cannot create economic productivity, which is what all of us are really after.

        Things that make you rich include access to food, health care, video games, iPads, toilet paper, haircuts, etc, e.g. goods and services produced by the private sector.

        The government is incapable of providing these things. It is true that they can "print money", but unless doing so gives you greater access to the things I mention above, it's useless. And since a lot of these items I mention are currently imported, printing currency is likely to decrease their availability.

        (-5.50,-6.67): Left Libertarian
        Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

        by Sparhawk on Mon Dec 05, 2011 at 09:22:48 AM PST

        [ Parent ]

        •  But they sure could invest.... (1+ / 0-)
          Recommended by:
          dear occupant

          in our real economy, in all sorts of ways.

          Are you saying that doing so would be an overall negative?

          •  What to invest in? (0+ / 0-)

            The Soviets tried that and failed miserably. Gluts and shortages of tons of things infested their economy in most sectors. The government can't really know what a good investment is.

            (-5.50,-6.67): Left Libertarian
            Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

            by Sparhawk on Mon Dec 05, 2011 at 10:01:05 AM PST

            [ Parent ]

            •  Yeah, who needs a highway system. (1+ / 0-)
              Recommended by:
              dear occupant
              •  We already have one (0+ / 0-)

                (-5.50,-6.67): Left Libertarian
                Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

                by Sparhawk on Mon Dec 05, 2011 at 10:45:12 AM PST

                [ Parent ]

                •  & just goes to show the gov doesn't know how... (1+ / 0-)
                  Recommended by:
                  dear occupant

                  to invest, doesn't it?

                  Private betting is so much better.

                  •  Like I said (0+ / 0-)

                    Go get a time machine and go back to Russia in 1975 if you want to live in a place with extensive government meddling and investment.

                    The government is (somewhat) good at large infrastructure projects, but we don't need many right now beyond what we already have. To ship what?

                    (-5.50,-6.67): Left Libertarian
                    Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

                    by Sparhawk on Mon Dec 05, 2011 at 11:33:39 AM PST

                    [ Parent ]

                    •  Investing, for instance, in green tech.... (0+ / 0-)

                      is a long way from being the scary soviet union.

                      •  what green tech will work in the market? (0+ / 0-)

                        Hydrogen, batteries? Or why bother with green tech and just stop building suburbs instead of making better cars? Then you don't need the cars, a net win for everyone (except car makers).

                        The government is very bad at making these determinations: will Michigan senators vote for funding stuff that will obsolete cars? Never, and we'd never know anyway if it was the right thing or not.

                        The market has none of these drawbacks. It trundles on, finding more efficient solutions no matter what entrenched interests it overturns.

                        (-5.50,-6.67): Left Libertarian
                        Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

                        by Sparhawk on Mon Dec 05, 2011 at 11:53:56 AM PST

                        [ Parent ]

  •  The level of BS in this story (5+ / 0-)

    ...is underscored by the factoid that actual bank profit from this $7.7 trillion amounted to all of $10 billion.

    I.e., about 0.1%. Obviously, someone is exaggerating.

    It's really like teabagger agit-prop, against all government intervention in managing the economy.

    •  I don't recall "the government" being (1+ / 0-)
      Recommended by:
      katiec

      authorized to loan anyone 8 trillion dollars.

      A few people not elected by anyone committing $8 trillion of the taxpayers money to ANYTHING without Congressional or taxpayer approval or even knowledge is not "management" at all.

      It is a blinking-red, blaring, planet-sized sign that the American people have lost control of everything.

       

  •  Eliot Spitzer wrote a great piece in Slate (15+ / 0-)

    The Secret Scandal

    The value of the 99%'s existence is solely as blood donors for the vampire financiers who are protected by our President, both parties, and the Justice Department.

    After they're through with "austeritizing" us, our remains will hang from rafters in giant warehouses so that any residual change we managed to hang onto will fall from our pockets to be reclaimed.

    Our government is so riddled with corruption and cronyism that there is no foreseeable conclusion other than a complete collapse or becoming the repressive, 2-tiered fascist country we seem well on our way to becoming.

    To quote FDR:

    "The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is fascism - ownership of government by an individual, by a group, or by any other controlling private power. "

    “Human kindness has never weakened the stamina or softened the fiber of a free people. A nation does not have to be cruel to be tough.” FDR

    by Phoebe Loosinhouse on Mon Dec 05, 2011 at 05:36:17 AM PST

  •  Modern debt jubilee..... (5+ / 0-)

    Steve Keens, Michael Hudson, and others have proposed a modern day debt jubilee.

    Keen's proposal, though more complicated than this, would give money to every adult.  Those who are in debt would have to use the money to pay off/down their debt.  This would both help the average person and ease deflation, as well as increase aggregate demand.

    Would this ever happen?  Doubt it, but think it's important for people to understand the possibilities and demand that the bar not be set too low.  The bar of austerity is definitely too low, and has nothing to do with economic necessity.

    •  Deflation is not a bad thing (0+ / 0-)

      Deflation occurs all the time as more efficient means of production come online and decrease the cost of things.

      One proposed economic system (similar to what BitCoin does) is to have a monetary system that only ever contains $X dollars, and have dollars be essentially infinitely divisible. Deflation will continue to make things cheaper against a constant currency, so raises will be comparatively difficult to come by, but you'll be constantly getting a "raise" by reduced prices due to economic growth.

      The inflation model we are going by is a scam, because inflation benefits people with first access to money and credit, e.g. banks, rich people, and the government.

      (-5.50,-6.67): Left Libertarian
      Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

      by Sparhawk on Mon Dec 05, 2011 at 09:26:54 AM PST

      [ Parent ]

      •  Well, you don't want too much of one or.... (1+ / 0-)
        Recommended by:
        dear occupant

        the other too fast.

        A deflationary spiral is no better than hyper inflation.

        And the continuing deflation in the housing sector is killing individuals more than banks.

        •  Re (2+ / 0-)
          Recommended by:
          howd, soros
          And the continuing deflation in the housing sector is killing individuals more than banks.

          Owners, maybe. Us renters get a chance to own a dwelling without paying a ruinous mortgage to a bank. Sounds like a good deal to me.

          (-5.50,-6.67): Left Libertarian
          Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

          by Sparhawk on Mon Dec 05, 2011 at 09:55:02 AM PST

          [ Parent ]

  •  Heads on pikes (2+ / 0-)
    Recommended by:
    lostinamerica, scorpiorising

    I'll be glad to start with paper mache, just to send a message.

    Seriously, how do they think this will end?  We just get in the box cars quietly?

    Fuck that.  There's a price to be paid, and I'll collect the toll myself if that's what needs to be done.

    My children will NOT be slaves.

    The Fail will continue until actual torches and pitchforks are set in motion. - Pangolin@kunstler.com

    by No one gets out alive on Mon Dec 05, 2011 at 05:39:05 AM PST

  •  Other major aspect to story, perjury:.... (4+ / 0-)

    the banks lied to congress.

  •  dKoss needs to keep this story front page.... (4+ / 0-)

    and not follow the news cycle.

    This story logically brings the whole neoliberal agenda down, if people think it thru.

  •  Call to Arms: blog this story everywhere.... (3+ / 0-)

    it starts with awareness....

  •  Question... (0+ / 0-)

    ...when did the banks pay the Fed back?

    A quant and damned proud of it.

    by Cera on Mon Dec 05, 2011 at 06:16:55 AM PST

    •  Depends on the bank and the program (4+ / 0-)
      Recommended by:
      GenXWho, Fogiv, Cera, leftreborn

      First of all, most "commitments" were never actually used.

      Several of the biggest TARP recipients paid back almost immediately because they didn't want to be in the program in the first place.

      A huge, huge chunk of the Fed money was in the form of overnight loans.  Overnight loans are necessary because of the complex process of "settling" between banks (ie canceling out each other's checks and ATM withdrawals).  They were paid back in the morning.  The reason the numbers are so big, is that if a bank borrows $100 million over night for 10 nights that looks like $1 billion.

      The commercial paper program was for 30, 60 and 90 day paper, so these were paid back after 30, 60 or 90 days, but often rolled over for about 10 months.

      There is no one answer.  Some TARP money is still outstanding.

      •  Tarp was able to be paid back, in part,.... (1+ / 0-)
        Recommended by:
        dear occupant

        because of other resouces provided by the fed.

        The over night loans is not the same as what bloomberg is reporting.

        When you say "most" what is your source?

        Cuz, again, this is not what bloomberg is reporting.

        •  Did you read the Bloomberg article? (2+ / 0-)
          Recommended by:
          Fogiv, jeff in nyc

          Maybe the technical vocabulary is throwing you off?

          The article mentions the Term Auction Facility and Discount Window.

          The discount window traditionally has been for overnight loans, although it was extended to 30 and 90 days.

          That's why a sentence in the article like this is meaningless:

          New York-based Morgan Stanley (MS), took $107 billion in Fed loans in September 2008, enough to pay off one-tenth of the country’s delinquent mortgages.

          But from this, it's impossible to tell whether this was 30 over night loans of $3.3 billion or so each, or one gigantic $107 billion loan.

          That's what I mean when I say that the $7.7 trillion number and the diarest's interpretation are meaningless.

          Also the article states early on:

          While Fed officials say that almost all of the loans were repaid and there have been no losses,
          •  Right,...... (1+ / 0-)
            Recommended by:
            dear occupant

            AND gains were made.

            If I got a big shot of liquidity, could thus essentially restructure my debts, I too could make gains.

            And that's the larger point.

            Our government could, if it had the will, provide similar relief to you, me, etc....

          •  And aside what liquidity can do re. Gains,.... (0+ / 0-)

            there's no dought that the fed sold stuff and then bought back at a higher rate --thus giving an immediate profit.

            Heck, our whole system is set up to give private banks a profit.  There is no reason, under our new fiat system ( as opposed to our old gold backed system) to issue bonds and then borrow back before spending.

            Our gov could simply spend money into existence, rather than issuing debt money, if it wanted to.

          •  The problem is... (2+ / 0-)
            Recommended by:
            katiec, dear occupant

            that congress and the American people were lied to about the stability of the biggest banks in the country.  We were being told they were secure and too big to fail.  But had the amounts they were borrowing been public, things like the Dodd-Frank bill probably would have passed, breaking the banks up so they couldn't abuse this kind of system.   It would have changed the conversation on a national level.  Candidates running on banking and finance reform would be viewed as people looking out for Americans, and not crackpots.  And even Faux News wouldn't be able to deny it anymore.

      •  One nitpick... (0+ / 0-)

        ...it's misleading to lump the congressionally enacted, Treasury-managed, equity purchases under TARP with Fed loans.

        A quant and damned proud of it.

        by Cera on Mon Dec 05, 2011 at 01:31:56 PM PST

        [ Parent ]

  •  This diary got almost everything wrong (6+ / 0-)

    I don't know where to begin.

    First of all, the loan programs weren't secret.  I remember reading Fed documents specifying the amounts of these commitments as they were made back in the fall of 2008.  The only "secrecy" was that Bernie Sanders asked for the amounts provided to each borrower, and the Fed didn't want to reveal just how badly the economy had tanked by revealing the names of participants, but eventually caved, and the first wave of information about exact amounts and recipients came out in late 2010.

    Second, the $7.7 trillion figure is extremely misleading.  In fact, it's pretty difficult to explain or even conceptualize a "total."  This figure mixes a lot of different numbers -- commitments, amount lent, amounts rolled over, etc. -- to come up with a somewhat meaningless "total."

    A lot of this, for example, involved "commitments" or programs that actually never were spent or lent.  

    For example, lets look at the commitment of a different agency, the FDIC back in September 2008.  There was a run on the money markets which scared the Fed and Treasury shitless.  Because money market funds declined (they're not supposed to ever "break the buck") there was a collective withdrawal of about $500 billion in a few hours and the one day total was expected to be $5 trillion, which would basically destroy the economy.  So the FDIC shut the money markets and said it would guarantee all money market deposits under $250,000.  That was a commitment of trillions of dollars.  But that also ended the run and the FDIC never had to pay out any additional guarantees.  So how much was that bailout?  trillions or zero?  Was the commitment worth it if it cost nothing and ended a catastrophic run on the banks?

    One of the Fed's biggest commitments and the one that has sparked the latest wave of outrage and panic was the commercial paper program.  The Fed announced a $1.4 trillion commercial paper program back in October 2008, which is a sort of short term 30 day loan in which the Fed purchased companies' commercial paper because the money markets had ceased doing so.  The most they ever used of the $1.4 trillion was about $500 billion.  But these were "rolled over" every 30 days for about 10 months until the program ended.  So was the total $500 billion (the most outstanding at any time), $1.4 trillion (the total commitment) or $5 trillion (ie $500 billion rolled over ten times)?  

    The $7.7 trillion or other multi-trillion numbers mix up all these numbers in an incomprehensible, useless "total."

    Also the interest rate was not .01% .  This is a bit of misinformation that has become unquestioned urban legend.

    The interest rate on commercial paper was about 3.5%, but the Fed imposed an additional fee of .01% on all borrowers who used the program.  Because commercial paper doesn't bear an interest rate on its face -- it is discounted when it is initially sold yielding an imputed interest rate of 3% to 3.5% -- a really ignorant financial journalist reported the fee to be the interest rate.  The rest is history.  The myth of free money was born and will never die.

    The biggest part of the Fed's total program was actually dollar commitments to other central banks -- European Central Bank, Bank of Japan and Bank of England -- which simply consisted of agreeing to swap dollars for euros, yen and pounds as necessary.  I don't understand how swapping $100 billion for $100 billion worth of euros is considered some sort of nefarious plot or giveaway, especially during a global financial panic.

    Lastly, I'm amazed at the cognitive dissonance people went through when the recipients of the commercial paper program were revealed.  For years, the teabaggers and left conspiracy theorists have been complaining that the Fed bailed out Wall St and not main street.

    Then the list of commercial paper participants was revealed and some of the top participants were McDonalds and Harley Davidson.  Other real economy participants were rural electrical companies and Verizon.

    Even Mother Jones magazine reported that the $1.4 trillion commercial paper program was intended to help real economy companies meet payroll obligations.  

    The McDonald's commercial paper participation in particular, which I've studied and am going to write a diary about, basically went to pay low paid burger flippers and french fry workers across the country.

    How horrible!!!  Let it fail!!!  We're freemarket leftwing Ron Paul non-interventionist Austrian School gold standard Fed abolitionists!!!!

    We hate franken food anyway!!!!  Let them turn off the phone system!!!!  Rural electrification is causing carbon emissions!!!!!!

    So what did the teabaggers and conspiracy theorist scream when they learned that the commercial paper loans went to McDonalds franchises and Harley Davidson?  Why was the Fed bailing out Harley Davidson and McDonalds ??? !!!

    I mean, you can't have it both ways.

    Oh wait.  On the internets you can.

    •  I'm not going to... (6+ / 0-)

      hit most of your points, some of which I agree with, some of which I don't.

      But let's grant you're 100 percent accurate.

      There's still the matter that creative things could happen to directly help the average person, like a modern day debt jubilee.  And I agree that keeping liquidity in the banking system is necessary as deleveraging occurs in order to avoid a deflationary collapse, this does not mean that you must let personal debtors collapse.  Keen's debt jubilee would actually help banks as well as private debtors as funds given to individuals with debt would have to use those funds to pay off their debts.

      I think that exposing the power of fiat currency to help banks also exposes the power of fiat currency to help individuals, and that not exercising that power when it comes to individuals, but only banks, corporations and, at least in few cases, merely well connected individuals, is a political choice having nothing to do with the necessities of propping up our ailing economy.

      •  Agree and disagree (2+ / 0-)
        Recommended by:
        leftreborn, Fogiv

        One form of help for the average person is refinancing or financing -- mortgages, mortgage modifications, student loans, car loans, etc.

        In 2007 almost all these forms of loans were private sector generated and sold as securitizations.  The amount of asset backed paper sold privately was around $700 billion.

        That market died and is still dead.  The NY Times has reported several times that about 95% of all mortgages, student loans, and car loans are now being provided (indirectly) by the Fed or Treasury -- and the federal government has basically completely nationalized (socialized) the student loan system dramatically improving terms.

        Students at OWS with new student loans yelling loudly that the Obama administration and Fed bailed out Wall St and not main street have exactly the same level of incoherent contradiction as elderly tea baggers in 2009 riding Medicare funded scooters to rallies yelling, "keep the government's hands off my Medicare!"

        As for secrecy, I agree that the Fed's info should be public.  But I also agree with Bernanke that changing the system to full disclosure during a financial panic would have been catastrophic.

        The time to switch to an open disclosure system is now, now that the panic has ended.

        •  Debt jubilee is far more.... (0+ / 0-)

          individually targeted.  

          Skipping so rapidly to other stuff obscures the point.

        •  A debt that cannot be paid, won't be paid. (1+ / 0-)
          Recommended by:
          dear occupant

          while this axiom has been accepted in regard to the finical sector, it has not been accepted in regard to individual debt.

          And the same help via our really great fiat money system that we're providing the financial sector, we are depriving the individual -- no matter how you want to slice it.

          And then we pretend that austerity is necessary to bail out the financial sector because it was necessary for the fed government to bail them out --- using fiat money, ie, strokes on a computer screen.

          That is the point.

        •  Third way bullshit spin (0+ / 0-)
          incoherent contradiction as elderly tea baggers in 2009 riding Medicare funded scooters to rallies yelling, "keep the government's hands off my Medicare!"

          Turns out they were prescient.

          Obama and 60 Dems in Congress have  since said  willing to cut Medicare benefits and up the age in the name of austerity.  

        •  let me make sure i'm understanding you. (0+ / 0-)

          you say:

          That market died and is still dead.  The NY Times has reported several times that about 95% of all mortgages, student loans, and car loans are now being provided (indirectly) by the Fed or Treasury -- and the federal government has basically completely nationalized (socialized) the student loan system dramatically improving terms

          just because these loans are being provided directly or indirectly by the federal government now, does not mean that individuals are experiencing "Debt Forgiveness" or debt relief, which, i think is the point that keens and others are trying to make.

          people need debt relief and that relief would contribute to the economic recovery.

          how has this fact

          dramatically reduced terms

          as you say?

          There is a crime here that goes beyond denunciation. There is a sorrow here that weeping cannot symbolize. There is a failure here that topples all our success. Grapes of Wrath, John Steinbeck

          by dear occupant on Mon Dec 05, 2011 at 08:16:23 AM PST

          [ Parent ]

          •  Under Obama's socialist student loan program (1+ / 0-)
            Recommended by:
            Fogiv

            Repayment will depend on the student's income and ability to pay.

            But what else would you expect from a secret Muslim Kenyan anti colonialist socialist?

            Student lending had become basically predatory lending.  It isn't any more.

            •  hr, my understanding is those terms are for loans (0+ / 0-)

              going forward and does not include existing student loans.

              am i understanding that correctly?

              There is a crime here that goes beyond denunciation. There is a sorrow here that weeping cannot symbolize. There is a failure here that topples all our success. Grapes of Wrath, John Steinbeck

              by dear occupant on Mon Dec 05, 2011 at 08:57:15 AM PST

              [ Parent ]

              •  Iirc, that's correct (1+ / 0-)
                Recommended by:
                Fogiv

                but there is already a big legislative fight brewing about whether the administration will be allowed to create a program to let students refinance existing predatory loans with these better loans.

                •  that's a fight we need to win. have a link (0+ / 0-)

                  because i havn't seen that reported anywhere.

                  There is a crime here that goes beyond denunciation. There is a sorrow here that weeping cannot symbolize. There is a failure here that topples all our success. Grapes of Wrath, John Steinbeck

                  by dear occupant on Mon Dec 05, 2011 at 09:19:37 AM PST

                  [ Parent ]

      •  i've been reading keens' Debt Forgivness" (1+ / 0-)
        Recommended by:
        J M F

        theory too and i happen to agree with him.

        one could argue, as he does, that if individuals were given a certain amount of money that specified that it would only be used to pay down that persons debt, that our recovery would be much more robust than it is and far fewer people would be out of work.

        he also states that our economy is in a protracted state of de-leveraging. this means people and businesses are using their own resources to pay down debt, which takes excess money out of the real economy and is responsible for the lack of demand.

        his analysis states that our debt to gdp ratio in 2008 was 300% and it is now, 3 years later, only 250% to gdp. he goes on to state, that a comfortable ratio historically, that would enable the economy to grow and add jobs, is about 50% of debt to gdp. we're not even half way there. unfortunately, he concludes that we have many years ahead of weak growth, lack of demand and high unemployment. pretty depressing.

        that's why i think this "Debt Forgivness" plan needs to be looked at seriously and not just as some, liberal, pie in the sky, big government program. will it be taken seriously? probably not but it could be if we pushed it.

        There is a crime here that goes beyond denunciation. There is a sorrow here that weeping cannot symbolize. There is a failure here that topples all our success. Grapes of Wrath, John Steinbeck

        by dear occupant on Mon Dec 05, 2011 at 07:54:37 AM PST

        [ Parent ]

        •  And for people with no debt.... (1+ / 0-)
          Recommended by:
          dear occupant

          they can use it to invest in the real economy as well.

          Keen is primarily concerned with private debt to GDP ratios, not to be confused with government debt, which he recognizes can be at a much higher ratio, and ought to be in periods of private de-leveraging.  The debt jubilee would increase government debt, but sense the US is sovereign over it's currency, all this means is that the US would owe itself money.....   This is far different than you or I owing money to another person, obviously.

          Keen also would like to see an increase in wages.

          •  thanx katiec. you, i, keens and others can see (0+ / 0-)

            the economic and social benefits to these ideas but of course, in todays political climate, it will be viewed as heresy.

            increase the minimum wage? of course that should happen. but what politician would be brave enough to propose it?

            There is a crime here that goes beyond denunciation. There is a sorrow here that weeping cannot symbolize. There is a failure here that topples all our success. Grapes of Wrath, John Steinbeck

            by dear occupant on Mon Dec 05, 2011 at 08:33:30 AM PST

            [ Parent ]

    •  Also, Congressional oversight of the fed.... (0+ / 0-)

      seems more in line with our Constitution than does the fed's claim of independence equals secrecy, yes, even if such secrecy is only regarding the recipients of the discount window, etc.

    •  And the privatize the profits, socialize .... (1+ / 0-)
      Recommended by:
      dear occupant

      the losses, gist is accurate.

      Also, at least some of the fed moves did result in bank profits.  No?

    •  "rolling over".... (0+ / 0-)

      the concept of roll overs makes little sense in most cases under a fiat currency regime.  Pushing a button on a computer screen does not demand pay backs in order to push the button.

      Thus, whatever the actual amount provided by the fed should be viewed as a continous amount.

      The fed does not roll over, they push buttons.

    •  You question the details rather than the argument (3+ / 0-)
      Recommended by:
      janosnation, katiec, dear occupant

      You seem to question the details in the hopes of invalidating the entire argument.

      Let's assume everything that you've said is correct. It doesn't change any of the fundamental arguments.

      1. Secrecy

      Would the American public have gone along with this program if it weren't secret?

      "Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy."

      Would Congress have supported the TARP program?

      2. The lack of solid journalistic reporting on the subject.

      Your details could be just as inaccurate as mine. After all, you don't list any sources.

      How do you know the $1.4 trillion reported by Mother Jones was part of the $7.7 trillion reported by Bloomberg as loaned to the banks?

      Where are you getting your information about what makes up the $7.77 trillion figure?

      It seems like you're just citing another statistic. And hoping no one questions it. Listing your sources would lend some credit to your arguments.

      I'm not saying I agree or disagree, but the numbers I've listed were sourced.

      But that aside ... If there were solid reporting on the subject from the major media outlets, we wouldn't even be having this conversation.

      I'd be happy to let the media settle these types of arguments around details. If only they would.

      3. Two sets of rules

      It also still leaves the issue of 2 sets of rules. One for banks, one for people.

      4. Too big to fail banks still too big to fail

      5. Saying "we're broke" is bullshit.

      If we can come up with programs like this for banks, we can come up with programs like this for other things. We're not broke.

      6. We have plenty of resources to devote to issues when there is the political will.

      I see nothing in anything that you've said that changes these fundamental arguments.

       

    •  HamdenRice, yeah right. So why did Bloomberg (1+ / 0-)
      Recommended by:
      katiec

      spend so much money and time in court getting the info?

      Fail.

      •  Because it's a news organization, maybe? (1+ / 0-)
        Recommended by:
        Fogiv

        And it wanted to know who received the money and how much, just as Bernie Sanders did.

        The problem is that bloggers have no idea what to do with the information.  They can't really interpret a number that the investigation produced.

        For example, the diarist obviously can't even understand the difference between a loan/investment and an expenditure.

        If you have, say, $1,000 in the bank you could do two things with it:

        -you could lend it to your brother in law, and get it all back with interest; or

        -you could pay it to your brother in law to paint a room or give it to him as a gift.

        Your financial situation will be different at the end of those two transactions.

        The Fed authorized a huge program of LOANS which were almost ALL PAID BACK.  The diarist seems to think that this means that we could SPEND $7.7 trillion federally and be in the same fiscal situation.

        Clue: We wouldn't.

        •  The larger point.... (2+ / 0-)
          Recommended by:
          dear occupant, divineorder

          is the relief given, no matter if it is paid back or not.

          And at least some gains were made.

          Hope that if you dispute this, you'll provide links.

          I've been reading stuff from federal reserve experts, while I cannot regurgitate what I've read, I have not seen anything that claims that no gains were made by the banks.

        •  Does this change any of the arguments? (2+ / 0-)
          Recommended by:
          dear occupant, divineorder

          Why have a loan program just for the banks?

          Why the secrecy?

          What are the details around the loans? Duration? Interest rate? Etc.

          Why don't we have Federal programs for homeowners which don't take a profit off the top?

          Where's the reporting in the mainstream media?

          Why do people keep saying "we're broke" when clearly we have resources available to help people?

          Why do you want to attack "the diarist", HamdenRice?

          I think you might have some good points in your comments, but these are lost in the attacks.

          I'm trying to understand the issue and am most angry because there is not much reporting around this.  

          Can't we have a discussion around this w/o the attacks?

          •  Answers (3+ / 1-)
            Recommended by:
            leftreborn, Fogiv, jeff in nyc
            Hidden by:
            divineorder
            Why have a loan program just for the banks?

            That's kind of like asking why have a legal drug delivery system just for pharmacies.  The Fed's job is to engage in regulating wholesale banking.

            That said, 95% of student loans, mortgages and car loans are now being funded by the Fed, so it's not just for banks anymore because the old banking system is essentially dead.  The Fed is now Citibank.

            Why the secrecy?

            What are the details around the loans? Duration? Interest rate? Etc.

            What you mean is, why don't I have the research skills to find out this information.  It was and is all publicly available.  What wasn't available was the exact details of the loans to particular banks, which the Fed didn't want to release because of the panic.

            Now it has.

            Why don't we have Federal programs for homeowners which don't take a profit off the top?

            We do.  What you mean is, "why don't I have the research skills to know about this?  and can I universalize my ignorance to the internets?"

            Where's the reporting in the mainstream media?

            It has been widely reported in the mainstream media.  You just haven't been reading it.  You should read the NY Times business section.

            Why do people keep saying "we're broke" when clearly we have resources available to help people?

            Because a loan that is paid back is different from an expenditure.  That said, I don't think the US needs austerity at all.  In fact, the worse things get everywhere else, the more the world is dumping cheap dollars in the US which the US government can use to fund a recovery.  The problem is the Republicans.  Oh, I forgot, true progressives never blame Republicans.

            Why do you want to attack "the diarist", HamdenRice?

            Because the diarist's diary is preposterously wrong to the point of being counter factual nonsense.  Some people might actually want factual information.  This is what happens on internet discussion boards -- people correct nonsense.  Usually the spouters of nonsense take offense and call it an attack.

            •  hey Hampden, i think you're crossing a line with (2+ / 0-)
              Recommended by:
              divineorder, akadjian

              this comment.. the diarist is trying decipher a very difficult issue as are the rest of us here.

              you have been asked repeatedly for links to your statements and as of yet, i haven't seen any.

              now your'e insulting the diarist with personal attacks.

              it's not cool and not helpful to the discussion.

              There is a crime here that goes beyond denunciation. There is a sorrow here that weeping cannot symbolize. There is a failure here that topples all our success. Grapes of Wrath, John Steinbeck

              by dear occupant on Mon Dec 05, 2011 at 09:12:57 AM PST

              [ Parent ]

              •  To me, HamdenRice looks like a saint (1+ / 0-)
                Recommended by:
                Fogiv

                Before continuing the discussion, it would be a good idea to review some educational materials.  I think we can all agree that there's one overarching theme in our current public discourse.  Business versus Government.  The rightwing will say and do anything to discredit the Fed.  It's part of the big government they want to shrink and drown in a bathtub.

                Basic elementary education about the Fed can be found here.
                A good place to start is the "News and Multimedia" tab which takes you to an introductory video, "What is the Fed?"

                The Fed has its own website of course where there's a wealth of information.  The resource pages devoted to the current controversy can be found here.

                To balance what the Fed says about itself, you can review the pages dedicated to Bernie Sanders' Fed Audit located at the US Senate's own website.

                At the last link, read carefully.  What I understood from Sanders' material points back to Business as the culprit.  The concern isn't the Fed itself.  It's that Business has infiltrated and sits in key positions where it could potentially influence policy in its own favor.  This is the same problem we have in the legislative branch.

                How to reform is the question.

                "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

                by leftreborn on Mon Dec 05, 2011 at 10:03:24 AM PST

                [ Parent ]

            •  And here is where you are wrong.... (0+ / 0-)

              Your basic assumptions regarding how our monetary system actually works....

              Like assuming roll overs are necessary.

              And this fallacy obscures larger points.

              •  The problem is REPUBLICANS (3+ / 0-)
                Recommended by:
                leftreborn, J M F, Fogiv

                I think I've answered most questions except the one you keep raising -- which has to do with what's possible in a fiat currency system.

                If I understand you, you're saying the budget problem can be solved by creating money.

                To a certain extent, I agree.  That's what Krugman has been saying.

                There's just one huge problem with this -- REPUBLICANS.

                What I mean is, we need a giant stimulus, right?  Green jobs, infrastructure, bridges, schools, whatever.

                We can pay for it by borrowing or by creating money.  

                So far the debate is limited to paying for it by borrowing, and if I understand you, you're saying we can pay for it by creating money.

                The problem is that whether it's paid for by borrowing or by creating money, it still has to be appropriated by Congress.

                The Republicans aren't going to do so.  They want the economy in a state of collapse for the 2012 elections, and maybe just out of evil meanness.

                So the Fed creating money solves nothing if the Republicans won't agree to appropriating it, and the Fed can create all the money it wants, but unless the rest of the federal government spends it, it means nothing.

                •  And that is the issue,,,, and it's both deems and (0+ / 0-)

                  repubs.  Though certainly more repubs.

                •  Hamden, this issue goes WAY beyond whether (0+ / 0-)

                  republicans will appropriate funds. they won't. that's a given.

                  the diarist has been trying to point out and bloomberg reported that the fed handed out $7+ trillion dollars , APPARENTLY, without congressional approval or knowledge.

                  that is the issue. that is at the heart of the anger that so many people are expressing.

                  There is a crime here that goes beyond denunciation. There is a sorrow here that weeping cannot symbolize. There is a failure here that topples all our success. Grapes of Wrath, John Steinbeck

                  by dear occupant on Mon Dec 05, 2011 at 09:47:07 AM PST

                  [ Parent ]

                  •  That's not what the article says (2+ / 0-)
                    Recommended by:
                    leftreborn, Fogiv

                    and that's the problem.  The diarist cannot read and understand financial reporting, and neither, unfortunately can most DKers.

                    You just wrote that the Fed "handed out" $7 trillion.  That's not what happened.  Here's just a small example:

                    Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system,

                    Do you understand this sentence?  

                    The Fed (and Treasury and FDIC) said, "if worse comes to worse, we're willing to guarantee or shell out $7.7 trillion."  It did not "hand out" $7.7 trillion, and nothing even remotely close.

                    The author of the Bloomberg article understands this, but most DKers, including the diarist, doesn't.

                    If a bank comes to the Discount Window for $1 billion over night funds every night for a 30 nights, is that $1 billion or $30 billion?  That's the order of magnitude by which the diarist and you are misunderstanding the article.

                    You are "angry" about basically standard Kenyesian operating procedure of the banking system.

                    •  Hamden, you can quibble with the term (1+ / 0-)
                      Recommended by:
                      katiec

                      "handed out" if you want. the fact remains that the fed
                      did this action without congressional oversight or approval. and yes, i do understand that the fed has those powers of authority.

                      this action came on the heals of congress passing TARP and TARP was supposed to give the banks the liquidity they needed, or so we were told. this action, which is essentially a fed backstop for the banks, indicates that the banks were in WAY worse shape than we were told.
                      members of congress were surprised at this $7trillion number too because they understood, like the rest of us that TARP was supposed to be enough to cover the banks' losses.

                      here is an excerpt from an article by bill black, professor at kansas city univ on the stress tests. he and others like yves smith, have argued that the stress tests are all a sham.

                      Geithner and Bernanke ignored the lesson of the crisis and created stress tests that were as fictional as the industry’s failed stress tests. The U.S. stress tests, designed by Fed economists (and that is frightening given their role in causing the crisis) were largely conducted by the largest banks. To everyone’s surprise, they found that the banks were overwhelmingly sound and well-capitalized. The stress tests, however, largely excluded the banks’ losses on liar’s loans and CDOs.

                      here's the link.
                      http://www.nakedcapitalism.com/...

                      There is a crime here that goes beyond denunciation. There is a sorrow here that weeping cannot symbolize. There is a failure here that topples all our success. Grapes of Wrath, John Steinbeck

                      by dear occupant on Mon Dec 05, 2011 at 10:44:27 AM PST

                      [ Parent ]

                      •  Actually, it is contested.... (1+ / 0-)
                        Recommended by:
                        dear occupant

                        whether the fed has the authority to do some of the things it did without oversight.

                        The constitutional standing of the fed seems to be an open question re congressional oversight and what that oversight entails.

                        •  you're right katiec. hee's a snippet from (1+ / 0-)
                          Recommended by:
                          katiec

                          Simon Johnson, MIT:

                          On transparency: If banks are allowed to maintain secret information shared only with the regulator and the regulator is captured, we have the opposite of transparency. None of the stress tests are worth anything. Ultimately, a central problem is the lack of transparency in the Fed itself. We need central banking with transparency and accountability. We do not have either right now.

                          this is also one of the points the diarist was trying to point out and i agree with him. it's a huge issue now in light of the information we are discussing.

                          here's another snippet from the same article:

                          On who got bailed out: People who socialized with Tim Geithner.

                          here's the link.
                          http://www.capitalismwithoutfailure.com/...

                          There is a crime here that goes beyond denunciation. There is a sorrow here that weeping cannot symbolize. There is a failure here that topples all our success. Grapes of Wrath, John Steinbeck

                          by dear occupant on Mon Dec 05, 2011 at 11:07:34 AM PST

                          [ Parent ]

                    •  And you are obscuring ..... (0+ / 0-)

                      what a fiat monetary system is.  Whether the fed loaned out a total of 7 trillion all at once or over time isn't all that important.

                      What is more important is the fact that it COULD loan it out all at once if it came to that.

                      And this is important cuz we are being fed the lie that we are broke, and thus austerity measures are required.

                      The realization that the fed can loan out huge amounts of money while at the same time crying "broke" ia the issue.

                      Cuz it's a lie.

            •  Have a donut for repeated personal attacks and (1+ / 0-)
              Recommended by:
              dear occupant

              crapping in the diary with what kos calls  dickish comments while providing no links as asked for as backup for your assertions.

              •  HR abuse (3+ / 0-)
                Recommended by:
                leftreborn, Fogiv, jeff in nyc

                but hey, as you say, you're to the left of Lenin.  So truthful responses that don't follow the party line are I guess HRable.

                •  Provide some links and apologize (0+ / 0-)

                  for the personal attack on the diarist and I will remove the hr.  Or just keep on righting dickish comments in a diary you disagree with.

                  •  Links to what? (3+ / 0-)
                    Recommended by:
                    Fogiv, jeff in nyc, leftreborn

                    the nature of reality?  To "google federal reserve"?  

                    To the comments by another poster toward the end of the thread saying exactly the same thing -- that the diarist is lumping together loans that were rolled over many times?  How about links to the article the diarist himself cited, which said the loans were repaid and were from the Discount Window?  Or are you saying that someone who writes a diary about the Discount Window isn't himself or herself responsible for knowing what it actually is?

                    •  Roll Over --WRONG. Period. (0+ / 0-)

                      that is a misleading characterization.  And that is reality.

                      And, to the extent you seem to understand our fiat system, you understand this, so why keep repeating it?

                      •  I think you misunderstand the terminology (1+ / 0-)
                        Recommended by:
                        Fogiv

                        Your comments aren't making sense.

                        It's not the Fed that rolls over commercial paper.

                        It's the borrower who rolls over its own commercial paper by issuing new paper when old paper comes due.

                        Since borrowers don't have the ability to create money, it's impossible to figure out what you're objecting to.

                        •  You seem to be saying... (0+ / 0-)

                          that the fed didn't loan 7 trillion, instead it loaned some smaller amount, got paid back, then loaned that same amount again, thus it loaned some smaller amount over and over -- and not a total of 7 trillion.

                          My point is that this obscures the fact that the fed made 7 trillion in loans available, however, and in whatever time frame.

                          And recognizing the fact that the fed does not rely on some savings account, and thus pay backs, in order to push buttons, gets rid of the argument that some lesser amount of money was originally loaned, payed back, then loaned again.

                          Cuz that is not how it works.

                •  I just think if you'd start with recognizing .... (1+ / 0-)
                  Recommended by:
                  dear occupant

                  that the banks got helped out, in whatever way you think they did, and recognizing that average folks have not been helped out in like manner, even if they have been helped out some, would help.

                  The banks have made a profit, even the fed's ordinary dealings with the banks insure the banks a profit.

                  Think recognizing these two things while at the sane time making your critiques would be helpful.

          •  Here's some useful information. (2+ / 0-)
            Recommended by:
            akadjian, HamdenRice

            http://www.federalreserveeducation.org/

            http://www.federalreserve.gov/...

            A word about "the press."  Soon after the 2008 economic crisis, business began spinning an alibi to counter the stories of their own misdeeds.  Business preferred assigning blame to the public sector rather than take responsibility themselves.   Fannie Mae, Freddie Mac, and the Fed were identified by rightwing propagandists as the villains that caused the crash.  It is my opinion that Bloomberg is helping Wall Street disseminate disinformation by publishing misleading articles about the Fed.

            "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

            by leftreborn on Mon Dec 05, 2011 at 09:22:14 AM PST

            [ Parent ]

    •  HamdenRice - you get a medal for courage (3+ / 0-)
      Recommended by:
      Fogiv, J M F, jeff in nyc

      A similar diary appeared on DK a week ago following a similar article in Bloomberg.  I wouldn't be surprised if they keep publishing more articles mischaracterizing the Fed's actions.  It gives me heartburn to think of all the people who are being misinformed and the inevitable sniper fire when I speak up about it.  I'm impressed you have access to facts.  There was a money market that broke the buck in mid-September '08.  The Reserve Fund.  No it's not a joke.  It has nothing to do with the Federal Reserve.  It's the name of a fund company that offered a variety of money markets until LehmanBros went under.  LehmanBros wasn't rescued. It was allowed to fail and in my mind it's the illustrative example of what happens without a bailout.  Lehman’s collapse quickly spread to ordinary consumers who never did business with them.   The Reserve Fund held an abundance of LehmanBros paper.  When it went worthless, the fund broke the buck.  Since the Reserve Fund was offered by some of the well known stockbrokerage firms, with consumer goodies like debit cards and checkwriting, it became a conduit for spreading the disaster at Lehman into the general population. Debit cards no longer worked.  Checkwriting didn't either.  Many people had their "cash equivalent " money market funds frozen for more than a year.  Too bad the public doesn't know that this is why we have bailouts.

      "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

      by leftreborn on Mon Dec 05, 2011 at 08:42:59 AM PST

      [ Parent ]

      •  I agree 100% (3+ / 0-)
        Recommended by:
        leftreborn, Fogiv, J M F

        I wrote about that in a few diaries, few read it.

        http://www.dailykos.com/...

        http://www.dailykos.com/...

        Not only the things you mention, no check cashing, no ATMs -- but ships, trucks and trains were parked because of no shipping finance and there was no money for planting the winter wheat crop.  

        None of that penetrates the narrative now.

        What I've learned about economic discussions is that people believe what they want to believe.  No amount of factual discussion or citations to sources will change their minds.

        Right now, the left has created a Ron Paulist narrative about economic intervention and the evils of the Fed.  DK on economics is now far to the right of the entire Republican presidential candidate field, except maybe for Ron Paul.

        •  I agree that supporting the banks ... (0+ / 0-)

          was necessary.

          But I don't see people saying it wasn't.

          It's the fairness issue that is being questioned.

        •  It's surreal. Knowledge and info is rejected. (2+ / 0-)
          Recommended by:
          HamdenRice, Fogiv

          People can start learning right at the Fed's website. Part of the problem is Americans lack the context where the Fed belongs.  It helps to know it was part of the Reform movement in the early 20th Century along with Child Labor Laws, Food and Drug Safety, workplace safety, etc.  We all know who wants to roll back all progress of the last 150 years.  With that context, maybe people would understand they're falling for FoxNews propaganda.  Ugh.  I started writing a "Fed for Dummies" diary but I notice a herd mentality that made me change my mind.  

          "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

          by leftreborn on Mon Dec 05, 2011 at 10:35:27 AM PST

          [ Parent ]

          •  Might want to check out Alan gray son's ... (0+ / 0-)

            diary on the rec list --

            Then talk about who is refusing simple knowledge.

            •  Where he mentions partnering with Ron Paul? (0+ / 0-)
              I think it’s fair to say that Congressman Ron Paul and I are the parents of the GAO’s audit of the Federal Reserve.

              That's supposed to convince me of something?  

              I think Grayson is a decent person (who couldn't win re election) but by considering himself an ally of Ron Paul he proves he's an absolute loon on economics, as well as many other issues, like civil rights.

              •  That has nothing to do with page citations. (0+ / 0-)

                I thought you were a reasonably intelligent guy, but ad hom. Attacks are beneath intelligence.

                Why not attack the substance of what he says?  Including the page citations he provides.

        •  Ron Paul? I'm not suggesting getting rid ... (0+ / 0-)

          ... of the Fed. But some oversight might not be a bad idea.

          When details are hidden, there are going to be questions. When the public doesn't know, there is a lack of trust. And I think a lack of trust in our government right now is healthy when it comes to dealing with the financial sector.

          Just look at how little regulation has been put into place. Look at how little has changed since 2008. Look at how the same people are in charge who got us into this mess.

          You said that the Fed's job was to regulate wholesale banking. Sure looks to me like they've fallen down in some critical areas.  

          FTR, I was for TARP. But I thought there would be some conditions put in place as well to change things. I thought Glass-Steagall would be put back in place. I thought more and better regulations would be put in place to separate commercial banking from investment banking. Steps were made with Dodd-Frank, but even these watered down steps are being fought at every turn.

          I also think more should have been done to help people suffering from the crisis. The refinance programs put in place are pitiful. They would help people if only people could get them. But banks like BofA are requiring most lenders to have a 20% equity stake for a refinance. Do you know how hard that is to get when your house has dropped 30% in value?

          So yes, you've got me on some of the details. But a Ron Paulist narrative?

          Please.  

          Perhaps more people would read your articles if you spent more time helping people understand and less time making comparisons to Ron Paul.  

          I could just as easily say you're creating a Newt Gingrich narrative by defending a "blank check" Fed. This gets neither of us anywhere.

    •  Alan Greyson has... (0+ / 0-)

      clarified things in his post.

      You might find it interesting.

  •  and as if (3+ / 0-)

    this weren't enough to worry about

    8. The problem is not fixed. It will happen again.

    The banks are still engaging in risky derivatives trading. And they're even bigger than before when they were "too big to fail".

    while talks to "save" the eurozone are ongoing, Goldman et al are wheeling and dealing and betting both for and against the outcome.

    The trouble with quotes on the internet is that it is difficult to determine whether or not they are genuine. -- Abraham Lincoln

    by Mnemosyne on Mon Dec 05, 2011 at 07:10:40 AM PST

  •  Business writing. numbers, bullet points (1+ / 0-)
    Recommended by:
    janosnation

    the loss of ability to write in paragraphs is saddening

    "I'm sculpting now. Landscapes mostly." ~ Yogi Bear

    by eXtina on Mon Dec 05, 2011 at 07:18:16 AM PST

  •  Solyndra, Solyndra!!!!! nt (1+ / 0-)
    Recommended by:
    strangedemocracy

    "I'm sculpting now. Landscapes mostly." ~ Yogi Bear

    by eXtina on Mon Dec 05, 2011 at 07:18:42 AM PST

  •  this link to the interest rate doesn't (0+ / 0-)

    actually say anything about the interest rate

    Only banks could get loans at 0.01%.

    "I'm sculpting now. Landscapes mostly." ~ Yogi Bear

    by eXtina on Mon Dec 05, 2011 at 07:25:57 AM PST

  •  Here's your choice of reservations: (0+ / 0-)

    http://travel.travelocity.com/...

    Come for a visit so you can see where we're headed:

     http://es.wikipedia.org/...

    Stop spending your money in the U.S. Spend it here where it will actually help someone survive. When you buy a bottle of fruit juice at the supermarket, you help some corporation. When you buy a sack of oranges in Nicaragua (fifty oranges for $2.46 U.S.) you are helping a campesino who ten years ago planted eight citrus trees on his manzana of property to feed his family.

  •  Diary is wrong on facts and almost Bachmannian (4+ / 0-)
    Recommended by:
    HamdenRice, jeff in nyc, Fogiv, MKinTN

    in it's attack on Federal government in the form of the Federal Reserve. The loans to banks are part of what the Fed does every day. The loans are short term, all were and are paid back quickly as the diarists source article points out.

    While Fed officials say that almost all of the loans were repaid and there have been no losses
    .

    Yes if one keeps adding up the loans/paybacks/loans/payback cycle of regular Fed operations one can come up with big but very misleading numbers.

    This kind of misleading Fed bashing is what we see engaged in by the Bachmanniacs and other right wingers who want to get rid of the Feds oversight of the banks completely.

    The diary makes DKOS look bad because it exaggerates and misleads and echos a right wing anti-government theme.

    I thought the diarist was actually adding up military spending which is $1.3T per year total to defend the US against Russia and China who spend $300B combined.  Considering countries US is "defending", Europe, Korea,Taiwan, Japan spend as much on military as Russia and China, US defense spending is what is bankrupting the US.

    Ike pointed this out how military spending is money we don't spend on teachers and schools, clinics and doctors and nurses, roads, trains, science, environment.

    •  Please ... can we not have the name calling? (1+ / 0-)
      Recommended by:
      3goldens

      There are no calls here to eliminate the Fed.

      If anything, I'm an advocate for more government oversight, transparency, and accountability.

      If you'd like to argue points, let's argue. But linking this to Michele Bachmann in an attempt to discredit the arguments is a low blow.

      The quote you used above, for example, to justify the loans being paid back starts with "While Fed officials say ..."

      I'm not so sure I trust what Fed officials are saying. After all, they stonewalled Bloomberg for 2 years.

      How do we know? Where's the verification? Do we blindly trust what Fed officials say?
       

    •  The fed provided x amount of money ... (0+ / 0-)

      available.

      A fiat currency regime does not rely on incoming funds, or dollars sitting in a vault, in order to create money.

      Pushing a button on a computer to mark up an account in no way relies upon a previous loan to be paid back, thus no roll over is required.

      Thinking in terms of roll overs in a fiat system isn't the best logic.

      Just as austerity to pay back strokes on a computer screen doesn't make sense.

      It's helpful to think in terms of our actual monetary system, a fiat system, rather than an assumption of a commodity money system, which we haven't had since 1971.

      If you had a money making machine in your kitchen, would you need money from me before you pushed a button?

      Of course not, one has nothing to do with the other.

      The Fed does not roll over, cuz it doesn't have to.  

      It just pushes buttons.

    •  See alan grayson's diary above...n/t (0+ / 0-)
    •  hilarious (1+ / 0-)
      Recommended by:
      divineorder
      if one keeps adding up the loans/paybacks/loans/payback cycle of regular Fed operations one can come up with big but very misleading numbers.

      This reminds me of what Paul Krugman said a few days ago:

      ... $1.1 trillion here, $1.1 trillion there, and soon you’re talking about real money.

      Yes, people, move along, nothing to see here, its just a few unelected federal reserve people committing trillions of taxpayers dollars - without the approval or knowledge of Congress or the taxpayers - to borrowers who also happen to be the most wreckless and corrupt managers of money the world has ever seen. This is how we have always done things, m'kay?

      No, not okay. I don't care what Michele Bachman says, even a broken clock is right twice a day, etc.  There is a lot going on here that needs to be fixed.

       

  •  Another thing to do - sue the bastards (0+ / 0-)

    Where are the legions of trial lawyers, victims, DA's, and AG's? Demand "law and order" in the courts. State and federal courts should be overwhelmed with small and large suits and joint actions, overflowing, with dramatic serial reports in the dailies, including public  filings against the AGs & DOJ for obstructing justice, not investigating, or at least not stopping the harm while they conduct the apparently comatose investigations. The public could easily organize around one or more very special, independent prosecutors forcing Congress and the DOJ to come clean...Occupy the Courts.

    For a fresh start there needs to either be justice...or a full accounting of what "new order" the gov't(s) are now up to.

     

    Eliminate the Bush tax cuts Eliminate Afghan and Iraq wars Do these things first before considering any cuts

    by kck on Mon Dec 05, 2011 at 08:25:12 AM PST

  •  The bastards keep using the same nasty playbook (3+ / 0-)
    Many farmers and ranchers are waiting to learn how much money they've lost in the collapse of commodities trading firm MF Global Inc.

    The firm is being investigated over what federal regulators say is an estimated $1.2 billion that may be missing from customer accounts. Many farmers use the futures markets to lock in prices and reduce their risks, so they can plan ahead knowing what their costs will be.

    The number of people harmed and the extent of their losses isn't clear. Officials have said those affected should get back at least two-thirds of their money. But there's no word on when any of that might be returned.

    Like Yogi sez..."It's deja vu all over again".

    If cats could blog, they wouldn't

    by crystal eyes on Mon Dec 05, 2011 at 08:38:12 AM PST

    •  john corzine, as head of mf global, took money (2+ / 0-)
      Recommended by:
      crystal eyes, divineorder

      from customers accounts, without authorization to prop up huge bets on europes' debt crisis. john corzine was once an officer at goldman sachs.

      john corzine is being summoned before congress. this should be interesting.

      There is a crime here that goes beyond denunciation. There is a sorrow here that weeping cannot symbolize. There is a failure here that topples all our success. Grapes of Wrath, John Steinbeck

      by dear occupant on Mon Dec 05, 2011 at 09:58:57 AM PST

      [ Parent ]

  •  Oustanding diary, T&R, tweeted, facebooked (3+ / 0-)

    and kudos!

    Tool and I are on a bus from NYC to DC right now. Your call should go out to everyone

    #OccupyWallStreet ~ I will protest when and where I damn well please. I have the constitution in my pocket. That is my permit.

    by MinistryOfTruth on Mon Dec 05, 2011 at 09:49:05 AM PST

  •  Look forward, not back, (0+ / 0-)

    and this is excellent news for John McCain.

    The two things Teabaggers hate most are: being called racists; and black people.

    "It takes balls to execute an innocent man." -- anonymous GOP focus group member on Rick Perry

    by Punditus Maximus on Mon Dec 05, 2011 at 10:26:35 AM PST

  •  And... You Think Congress Didn't Know (1+ / 0-)
    Recommended by:
    Blueslide

    about this theft of "our" Treasury?

    I suppose only repuglicans signed on for this obvious massive transfer/guarantee of wealth?

    GIMME A BREAK.

    Again, this proves what I've been saying here for years: Government largesse (money) is granted almost exclusively to wealthy white men.

    "I don't feel the change yet". Velma Hart

    by Superpole on Mon Dec 05, 2011 at 10:43:44 AM PST

  •  Outstanding diary. (4+ / 0-)

    It's work like this that gives me so much hope for our future.  Our current media does not cover things like this---but because of people on the net, stepping up to dig out the facts and present them in a coherent, cohesive manner, at least SOME of us are getting incredibly important information like this and we, in turn, can spread it.   The scope of the duplicity of those who have created, enabled, and operate our present financial system is stunning and these people need to be stopped by we, the people, or they will make a permanent underclass of us.  That anyone would defend the gross malfeasance of those who have been running our financial system for the past several years is indefensible.  And to those who defend the indefensible by saying that "it wasn't illegal", that is akin to saying that "if one can get away with something clearly immoral and unjust, it's OK!".  NO, it isn't OK.  That kind of attitude makes a mockery of what should be the crown jewel of this country, i.e. it's belief in the primacy of the rule of law because either the law means something (and some things should now need a law---a decent person KNOWS when what they're doing is harmful to oneself or other members of society) or we have nothing but a dog-eat-dog society.  We're better than that kind of low bar!  Excellent job, akadjian!

    We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can't have both. Louis D. Brandeis

    by 3goldens on Mon Dec 05, 2011 at 10:58:53 AM PST

  •  How can we get this information to the common (2+ / 0-)
    Recommended by:
    katiec, dear occupant

    person?  We don't have a functioning Fourth Estate, so how do we tell the 300 million that the system is rigged?  This is our biggest problem.  

    Republicans...What a nice club that is. A club of liars, cheaters, adulterers, exaggerators, hypocrites and ignoramuses. Der Spiegel

    by CanyonWren on Mon Dec 05, 2011 at 11:33:52 AM PST

  •  Fed loans to foreign banks.... (1+ / 0-)
    Recommended by:
    dear occupant

    someone posted that this is standard pro refute foe the fed.  Maybe it has been , but this practice was never known by congress.  Also, it seems to be new practice.

    Further, to the extent that such loan agreements are or are like a treaty, making treaties does not seem to be anywhere allowed by the fed.

    •  to put the $7+trillion dollar amount, that was (1+ / 0-)
      Recommended by:
      katiec

      made available to the banks, in context: that amount equals approx. 1/2 the gdp of the entire country in 2008, which was $15 trillion. this action was not an everyday occurance. that is part of the reason this was so shocking, especially to those in congress who thought they had fixed the liquidity problem with TARP.

      add to that, money was also made available to foreign banks, which many economists and scholars agree is beyond the Feds' mandate. all of this leads many to believe that there needs to be more transparency and oversight, of the Fed.

      i posted this upthread but here it is again. this simon johnson from MIT:

      On transparency: If banks are allowed to maintain secret information shared only with the regulator and the regulator is captured, we have the opposite of transparency. None of the stress tests are worth anything. Ultimately, a central problem is the lack of transparency in the Fed itself. We need central banking with transparency and accountability. We do not have either right now.

      There is a crime here that goes beyond denunciation. There is a sorrow here that weeping cannot symbolize. There is a failure here that topples all our success. Grapes of Wrath, John Steinbeck

      by dear occupant on Mon Dec 05, 2011 at 12:27:50 PM PST

      [ Parent ]

      •  Good thing you helped out... (0+ / 0-)

        my garbely hook :)

        •  no problem katiec. please read alan graysons' (2+ / 0-)
          Recommended by:
          katiec, divineorder

          diary which is in the rec. list. the audit of the Fed supports much of what some of us were trying to say and much, much more.

          here's a few bullet points. it's a must read.
          http://www.dailykos.com/...

          (1) In the case of TARP, at least The People’s representatives got a vote. In the case of the Fed’s bailouts, which were roughly 20 times as substantial, there was never any vote. Unelected functionaries, with all sorts of ties to Wall Street, handed out trillions of dollars to Wall Street. That’s now how a democracy should function, or even can function.
          (3) In the same way that American troops cannot act as police officers for the world, our central bank cannot act as piggy bank for the world. If the European Central Bank wants to bail out UBS, fine. But there is no reason why our money should be involved in that.
          (5) The main, if not the sole, qualification for getting help from the Fed was to have lost huge amounts of money. The Fed bailouts rewarded failure, and penalized success. (If you don’t believe me, ask Jamie Dimon at JP Morgan.) The Fed helped the losers to squander and destroy even more capital.

          There is a crime here that goes beyond denunciation. There is a sorrow here that weeping cannot symbolize. There is a failure here that topples all our success. Grapes of Wrath, John Steinbeck

          by dear occupant on Mon Dec 05, 2011 at 12:58:24 PM PST

          [ Parent ]

  •  Sorry, you need to call out President Obama (4+ / 0-)

    too. He was the one who gave credibility to the Republican blather on deficits.

    http://krugman.blogs.nytimes.com/...

    Otherwise a good diary.

    "The word bipartisan means some larger-than-usual deception is being carried out”. - George Carlin

    by Funkygal on Mon Dec 05, 2011 at 12:10:36 PM PST

    •  Great point (0+ / 0-)

      The Obama quote: “government should have to tighten its belt as well. We need to do it in an intelligent way. We need to make sure we do things smarter, rather than just lopping something off arbitrarily without having thought it through.”

      Bullshit.

  •  Broke (1+ / 0-)
    Recommended by:
    divineorder

    Of course the US is broke. Do the math. It is not hard.

    BUT (big BUT), neither side is offering anything credible as a solution.

    Just giving payroll tax cuts and waiting for things to get better will not work (guaranteed). It will just make the debt situation worse.

    Just cutting spending will not work (guaranteed). It will just tank the economy.

    What is needed is fundamental (as in REAL) economic and political reform.

    There are plenty of things that can be done (and many do not cost that much) to get back on the right track.

    1. Tax the rich more.
    2. Higher interest rates.
    3. Single payer health care
    4. Slash the military in 1/2.
    5. Up gasoline taxes (to cut the trade deficit)
    6. Value added tax (like the rest of the world), with rebates for the poor and exemptions for uncooked food.
    7. End deductions like mortgage interest.
    8. Cut farm subsidies.
    etc etc etc.

    There are ways to fix the mess. It is not hopeless. What is hopeless is doing the sames things over and over expecting to get a different result.

    Those who make peaceful revolution impossible will make violent revolution inevitable. - JFK

    by taonow on Mon Dec 05, 2011 at 02:26:59 PM PST

  •  Excellent and very illuminating diary. (1+ / 0-)
    Recommended by:
    akadjian

    I hope there is another angle to this comment, however, of John Boehner: "We're broke. And the American people know we're broke."

    Perhaps he is inadvertently referring to the Congressional GOP caucus, as being "broke", and of the American people "knowing" this. In any case, it's another way to interpret his comment.

    H'mm. I'm not terribly into this, anymore.

    by Knarfc on Mon Dec 05, 2011 at 07:35:57 PM PST

  •  Goldman-Sachs as reported on Letterman? (1+ / 0-)
    Recommended by:
    akadjian

    Comenting on the banks in last night's monolog David Letterman joked about G-S setting aside $10,000,000,000.00, right TEN BILLION dollars for Bonuses.  I had to hear this on Letterman?  Where the fuck was CBS,NBC, ABC, FOX, MSNBC, CNN, CNBC on this?
    Time to Occupy G-S Headquarters and all their major offices in cities across America.

  •  James Hamilton calls BS (0+ / 0-)

    "But please know that anyone who tells you that the Federal Reserve secretly loaned $7.77 trillion to banks is spreading a lie."

    http://www.econbrowser.com/...

    •  Was Bernanke "lying" ... (0+ / 0-)

      when he characterized banks as sound financial institutions when they weren't?

      That said, thanks for posting this article. This, in more detail, and without as much venom (except for the comment about "lying"), explains what several others mentioned in the comments.

      It's an excellent point which should have been called out in the article. I posted an update to reflect these comments and will add your link as well.

      Do I still believe there's a need for more information about our government and its relationship to the banking industry? Yes.

      I also still believe that we are not "broke" as so many state. Where there is political will, we have or find the means.  

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