Posted on 09/20/2007 4:55:46 PM PDT by NYer
"According to some US experts, some US$ 20 trillion in worthless securities exist, putting US and European banks are at risk. Asia should avoid the worse. A new North American currency, the Amero, is making news.">
According to US financial analyst Mike Whitney[1], a mountain of unfunded, unregulated paper worth more than US$ 20 trillion might be out there [2]. Apparently, no one, neither the general public nor professionals on Wall Street, has yet to realise the extent of the hole, a hole of 20 trillion dollars with no market, nor value.
Even if the Federal Reserve were to ease bank reserve and capital requirements, the existing financial system would still be moving towards its worst crisis in 80 years because the problem is not liquidity, but solvency. The situation is such that banks are even scared to lend to one another uncertain about each other’s solvency. Even the London interbank market is not going beyond day to day lending.
Greenspan and speculative financing
The problem arose in the United States where, starting in 1987, the bank lobby—by means of US$ 300 million in contributions—got Congress to do away with the Glass-Steagall Act (officially the Banking Act of 1933) that had been adopted in the wake of the 1929 Wall Street Crisis. President Bill Clinton signed into law the Gramm-Leach-Bliley Act, which repealed the Glass-Steagall Act.
The original law had been introduced to avoid conflicts of interests between banks and companies that sell stocks and bonds.
Former Federal Reserve Chairman Alan Greenspan was the main proponent of financial liberalisation. Before his appointment to the post, he had served as a corporate director for J.P. Morgan, the first bank to take advantage of liberalisation.
Under his 18-year chairmanship he oversaw the greatest expansion of speculative financing in world history. But now the chicken are coming home to roost like a would-be train wreck that no one can stop, not even the Fed.
If Mike Whitney’s numbers are right, we are on the verge of a meltdown like that of 1929-1930, perhaps worse because of the world’s greater economic interconnectedness.
Lately, the big US financial and banking groups have tried to protect themselves by selling their junk bonds in Europe and Asia.
In Asia equity in most banking and financial institutions is in US securities and US dollar denominations. Most banks are ranked AA or even AAA by so-called independent agencies like Standard & Poors, Moody’s and Fitch. Securities with such ratings are, or perhaps we should say, were considered virtually risk-free.
Theoretically, US pension funds, insurance companies and big foundations are exposed to the uncontrolled offer of atypical securities of the past decades; so should the US financial and banking institutions which created them.
Yet we should not be surprised if those who hold the keys to the corporate are not, nor will ever be, held accountable for their wrongdoing.
Central banks, especially the Federal Reserve, are at the root of the problem because they have known about the overall situation for quite some time. But whomever is in charge of the Fed knows that a solution cannot be had from within.
Amero, North America’s new currency
With a bank crisis looming on the horizon, an odd piece of information is becoming news. As unlikely as it may seem, the United States along with Canada and Mexico, appears to be getting ready to launch a new single currency: the Amero.
With the monetary bubble on the verge of bursting, one solution would be getting rid of the dollar, replaced by a currency, the Amero, to serve a would-be North American Union.
In addition to the United States, Mexico should join such a union and in principle might be even in favour of it. Canada, too, might join, setting aside its aversion to losing its monetary sovereignty, out of concern that its equity in US dollars might simply lose its value.
When US President George W. Bush met then Mexican President Vicente Fox and then Canadian Prime Minister Paul Martin in Waco, Texas, in March 2005, they discussed a North American union.
The idea resurfaced the same year in a report released by the powerful US Council on Foreign Relations, a group that has influenced most US presidents, both Democrat and Republican, and a tri-national task force involving ministerial-level officials.
Wikipedia already sports a page dedicated to the Amero with the photos of prototypes.
A news report on the Amero broadcast on CNBC is also available on Youtube [3].
Similarly, 20 Amero coins can be seen on the Hal Turner Show webpage, with a small D visible, D as in ‘minted in Denver.’ Curiously, the Denver Mint is currently closed to the public, ostensibly for restoration work, till September 28 [4].
Whilst AsiaNews is unable to determine whether there is any basis to such claims, it does seem certain that a plan for a North American union is being developed [5].
Such an entity would have a population almost the size of the European Union, and could adequately respond to the current bank crisis that is bound to end up in a monetary crisis.
However, far from being a simple monetary union, the operation is likely to mean a de facto US annexation of the rest of North America.
For Asia the real point of interest would be economic rather than political since the Americas have been the United States’ backyard for a long time.
Firstly, the Amero would be definitely weaker than the US dollar because it would include the Mexican pesos, which was insolvent not so long ago.
A weaker North American common currency would quickly push the value of the currencies of China and the whole of Asia, which have hitherto been reluctant to do so.
Secondly, converting dollars used outside the United States would raise problems since in Asia as well as in many countries around the world payments in dollars are more common than one might think. In this case the impact of a North American union would also be very significant.
You appear to be an expert at mocking and derision not intelligent discussion. End of conversation.
Sorry, but if you are going to believe that such stuff is going on, I would expect you to be able to quote a credible source. There are not secret bankers meetings where these things are discussed. You should challenge this person to provide some proof for her claims, or at least a basis for her beliefs. Don’t believe her just because she works for a bank.
There is no discussion of this going on in the banking world. I read numerous banking periodicals, scan Bloomberg on a daily basis, attend industry conferences and correspond with investment bankers and community bankers all day long. The first I ever heard of the Amero was on this website. I believe these so-called conspiracy theories should be challenged, and if no proof is offered, I will occasionally resort to being a smart-ass. Probably not the best way to win an argument, but when you constantly are asked to prove a negative its sometimes all one can do.
Just edit the word friend by replacing it with CMO Trading coworker. Then the rest of the statements are clear of any nitpicks.
Bookmark
For a short time, then they have to pay the money back.
The problem is with your friends who after holding the worthless paper and trading it for cash, decide to deploy that cash in future worthless paper.
Banks are going to borrow from the discount window to buy more CMOs? That's funny.
Can someone smarter than I tell me what would happen to U.S. equities if the dollar collapsed? I mean, the companies would still have their underlying value - I presume their prices would inflate? What happened in Japan in the early 90s?
Oh I remember you, one of those that thinks they know it all but understand very little.
The CDO/CP bailout was just that, a bailout by the Fed. If you disagree then you can take your bleating argument to every hedge fund and trader on Wall St. because they know it was a bailout. The financial press has turned out abundant commentary to the fact that this was a bailout.
The banks that were involved may pay it back but not soon. The private equity groups caught holding bad paper will not be paying anything back because their worthless paper was put up as collateral, they were bailed out.
When you trade or invest, and you are allowed to turn your loss into federal reserve notes, you are going to exchange those notes for another trade or investment eventually, because your business is trading and investing.
The warning is not to trade or invest again in more speculative deals. How to stop that from happening? There is no ‘how’ other than to restrict the lending practices that preceded the bailout. And that is precisely what is happening with the closing of lending shops all across the spectrum.
But that won’t stop yet another set of ‘innovative’ risky financial practices from popping up again in the future, say in a few years. The cycle repeats. Wall St. and the Fed are joined at the hip.
These comments are for those reading and not for you. You have demonstrated in the past you value the chip on your shoulder more than rational discourse.
Because a 30 loan on a portion of your collateral is a bailout? LOL!
The banks that were involved may pay it back but not soon.
How long do you think the discount window loans are for?
The private equity groups caught holding bad paper will not be paying anything back because their worthless paper was put up as collateral, they were bailed out.
At the end of the term of the loan, the borrowers will get the paper back and pay back the loan. With interest.
When you trade or invest, and you are allowed to turn your loss into federal reserve notes
How did they do that?
you are going to exchange those notes for another trade or investment eventually, because your business is trading and investing.
That's a nice fantasy you're spinning.
These comments are for those reading and not for you.
Hopefully the people reading the thread can tell you don't know what you're talking about.
You have demonstrated in the past you value the chip on your shoulder more than rational discourse.
Sorry if I made you look silly in the past by refuting your BS. If only you'd stop posting it, I could stop embarrassing you.
That’s par for your posting. More facts strewn about without a brain behind them.
The paper is held for 30 days and then renewed at the Fed’s discretion. They have stated it won’t be forever but it will certainly be for as long as their member banks need it to be. The deal was ‘you get the cash but show you are closing down your subprime operations and then pay back as soon as you can which is whenever you can’.
Private equity groups will pay back nothing because they posted the worthless collateral and the Fed holds that paper. The Fed may stipulate the loan be repaid but it will never be repaid. If you think otherwise, then it demonstrates what is already known about you. I expect you to show your ignorance here as in all things you post about.
sorry, I don’t know anyone who does or has done repos with the fed.
I love the bailouts where you have to pay back the loan, with interest.
Private equity groups will pay back nothing because they posted the worthless collateral and the Fed holds that paper.
Private equity groups are not allowed to borrow at the discount window.
If you think otherwise, then it demonstrates what is already known about you. I expect you to show your ignorance here as in all things you post about.
See, you post errors about private equity groups borrowing at the discount window and then you claim I'm ignorant. You're funny! And wrong. Again.
too late.....I've been called that already because I don't believe everything that comes out of the governmental Propaganda Printing Press.
Yes, that, absolutely, too.
That's EXACTLY what it is.
Yeppers. It most soytently is.
So what are the investors going to do with their dollar investments in the Middle East?
Hello. I have an itch....(snicker)
*scratch scratch*
: )
Good to *see* you!
What a week! Monday started with “manipulated inelastic oil prices” and Friday ends with private equity groups borrowing at the discount window.
LOL!
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