Posted on 02/07/2008 9:59:07 AM PST by Halgr
Elites Float U.S. Bank Bailout Plans
The wretched scenario that I had reported on in the United Kingdom may be coming to America. If you even slightly care about this issue at all (and you should), you need to become politically involved. What the bankers are asking for is a bailout, and they will package it in the most populist way to get it passed. Or they will have it passed in any way possible, much like they did the Federal Reserve Act or the income tax amendment.
CTB readers know that I have already laid out the new public finance Ponzi scheme being proposed to reflate Britain and burden its subjects. You may want to familiarize yourself with that post before you continue further. I’ll give you a minute…..
The Anglo-American alliance has set the rules of global finance for close to 200 years. Okay, maybe in the early part of the 19th century, the American part was useless. British capital funded the expansion of American capitalism. The Anglo-American alliance also aided Britain’s attempts to return to the gold standard after World War I, and they planned the passing of the torch from the pound to the dollar as the world’s reserve currency after World War II. Many won’t believe the fact that although many countries participated in Bretton Woods, it was these two countries that laid out the architectural blueprint that everyone else had no choice but to accept in 1945. It should be no surprise that the actions being undertaken in Britain to deal with the subprime crisis is now going to get its hard sell here, as this nexus has usually planned the most important phases of the global financial system together.
The Establishment’s liberal mouthpiece has started the ball rolling as authored by Howard Milstein:
THE $145 billion economic stimulus package that President Bush is encouraging Congress to pass, with its tax refunds for individuals and tax cuts for business investments, may help relieve some of the symptoms of the country’s current financial trouble, but it does not address the most important economic problem we face. The health of the American — and indeed the global — economy depends on having a financial system that is able to extend credit to businesses and consumers.
The losses that have been incurred as a result of the excesses in subprime mortgage lending will take years to work their way through the worldwide financial system, as dozens of banks act to replenish their lost capital by issuing more common stock in the public markets and trading other equity securities to sovereign wealth funds. Until the banks rebuild their capital, they will not have the wherewithal to lend money and support economic growth. If banks of all sizes could regain their capital immediately and easily, it would be a tremendous benefit to the American economy.
The federal government could make this happen by entering into an arrangement with American banks that hold subprime mortgages, in which homeowners typically pay a low interest rate for two or three years then face much higher payments. Here’s how it would work: The government would guarantee the principal of the mortgages for 15 years. And in exchange the banks would agree to leave their “teaser” interest rates on those loans in effect for the entire 15 years.
This would instantly give the lending banks new capital. As these mortgages would be guaranteed by the Treasury, they would suddenly be assessed, on bank balance sheets, at their original value — and a significant amount of the banks’ lost capital would be restored. Plus, the banks would receive, from most of the homeowners with subprime mortgages, up to 15 years of teaser-rate payments.
By solving the bank capital crisis immediately, this strategy would ensure that fewer families would lose their homes, that fewer neighborhoods would deteriorate because of abandoned housing and that, as a consequence, there would be less downward pressure on local real estate prices and property tax revenues.
Milstein wants to socialize private risk by converting these subprime and non-conforming mortgage bonds into taxpayer-guaranteed bonds. You see, we already have the system Milstein proposes. It’s called Fannie Mae and Freddie Mac. Now, these scared and screwed financiers want to extend that to cover all their bad subprime and other non-conforming mortgage bets not already guaranteed by the government. Sure…. people should just perpetuate this credit bubble longer and carry life-time mortgages and become life-time debt slaves, so long as it saves the banks. If you didn’t a buy house, dudn’t matter because you’re paying taxes to guarantee principal on someone else’s house so that bond investors don’t get screwed.
Do you know what guaranteeing the principal of mortgages in this environment means? It means the government is effectively paying the mortgage principal because so many people will default anyway regardless of rate resets. The price of homes is falling and that is enough to induce people to quit their payments, saddling the U.S. taxpayer with an absurd amount of debt guaranteed by current and future generations of Americans. If you want to see an unintended dollar collapse, this would be it.
This is being sold as for the benefit of the banks and homeowners and the economy of course; in reality, it is simply the socialization of private risk. Global capital has manipulated every political and economic system to ensure that it either gets repaid by the original borrower or gets reimbursed by someone else. It once was that foreign capital bullied Third World countries through puppet institutions like the IMF and World Bank, but foreign capital has its bullseye squared right on the globe’s biggest debtor nation. The op-ed’s author implies that the situation could be dire if foreign capital were to stage a full-scale strike of U.S. debt, which would cripple the Wall Street-controlled global finance monster:
Under this arrangement, American banks would have an incentive to buy back the subprime debt now being held by foreign banks and other financial institutions. American banks could buy the securities at a discount to face value (reflecting the continued low teaser rates) and then, thanks to the government guarantee, hold them as capital assessed at their full value. That, in turn, would allow the other financial institutions to reinvest in other sectors of our economy.
The author’s true intent is to make sure foreign capital is protected, even above American banks. Why? I suspect its because the United States has no capital to begin with, and thus, the foreigners are holding the cards now and want to be reimbursed for being scammed. What Milstein wants to do is to prevent further massive writedowns by banks and foreign investors because such writedowns could annihilate many of them:
This would instantly give the lending banks new capital. As these mortgages would be guaranteed by the Treasury, they would suddenly be assessed, on bank balance sheets, at their original value — and a significant amount of the banks’ lost capital would be restored. Plus, the banks would receive, from most of the homeowners with subprime mortgages, up to 15 years of teaser-rate payments.
People, you need to get off your lazy butts and do something as these proposals are nothing short of class warfare. I don’t care if you write to the New York Times or picket your congressman’s office,* but you need to stop making excuses for doing nothing and just complaining about the status quo. Because you would then remind me of my sister, who couldn’t be bothered to change her registration because it was too inconvenient. These type of elitist actions demand full attention, more so than the UAE ports deal and the illegal immigration bill that infuriated so many Americans. Milstein’s solution makes us all debt slaves whether or not we bought a house, and it continues the culture of debt and credit growth that has undermined our society.
Some of you readers are staunch defenders of the New York Times. I had previously ridiculed the New York Times’s phoney concerns for homeowners, but some of my readers couldn’t bear to hear it. I have simply lost count of how many times the New York Times has published an op-ed piece advocating some type of bailout of the housing market. This part of the op-ed is insightful:
Howard P. Milstein is the chairman and chief executive of New York Private Bank and Trust, which owns a significant share of stock in The New York Times Company.
Who is Howard Milstein and the New York Private Bank and Trust? I’ve never heard of them, but here’s the scoop:
New York Private Bank and Trust, wants to do the basics: accept deposits, lend, provide advice, and act as a trustee. It will also offer concierge services, like if you need to be medevaced out of Chile. “There are some very solid things that any private bank can do for somebody with $5 million to $10 million that are mutually beneficial,” says president Bill Fuhs. But New York Private Bank is primarily seeking depositors with assets of more than $50 million.
The wealthy need not apply to Howard’s bank because he only takes the super-wealthy. Interestingly, that same article goes on to praise supply-side economics and the trickle-down effects of consumption by the super-wealthy (it employs housemaids and minimum wage retail clerks at Prada, you know).
Am I suggesting that Howard Milstein is a Master of the Universe? I doubt it. He is merely a surrogate who appears to have no conflict of interest, so he claims:
I propose this idea not because it would benefit our bank — we own none of this troubled debt and, in recent years, have had insignificant losses from real estate lending — but only out of concern for the health of the global financial system. This plan is a way to use our nation’s strength, and not current tax dollars, to keep people in their homes and give banks the ability to resume lending. It requires only that we believe in the future of the American economy and the value of American homes 15 years from now. I do, and this is a belief our government should share.
In that last two sentences, Howard sounds like a candidate running for office, doesn’t he? While Howard’s bank does not have any direct ownership of these mortgage-backed bonds, his clientele is the superwealthy who will certainly become less wealthy since they own the bulk of America’s securitized wealth (READ: debt). Hence, he has an indirect interest in helping to prop up America’s struggling homeowners by converting them into lifetime debt slaves; otherwise, his business and those of his clients suffer.
Here’s some basic information on Howard Milstein:
Howard Milstein New York Private Bank and Trust 6 East 43rd St New York, NY 10017
These are the limousine liberals who own or influence the New York Times and are suddenly finding that their hard-fought greed is at the precipice of collapse. They want to further burden America’s future productivity and the sweat labor of its children to protect their excess gains and the interests of foreign capital. And you know what? They might succeed. At this point, I hope you all see the American Financial Empire for what it is: a system that underpays people and nickle-and-dimes them with excess interest payments and taxes to support “securitized” Ponzi units that keep the ultra-rich pampered. It needs to end, and it needs to end soon despite the economic hardship that may lie ahead.
Days like these make me absolutely disgusted to be an American. I’m going outside now to burn a flag. I hope that lights a fire under your ass to do something about it. Now git!
* Perhaps the most influential lawmakers in these matters would be Sen. Chris Dodd (CT), Sen. Richard Shelby (AL), Rep. Barney Frank (MA), and Rep. Spencer Bachus (AL). Here’s the list of all the people sitting on the Senate Banking Committee and House Committee on Financial Services to direct your views if you so choose. This was written by Juan Carlos Arroyo Calderon. Posted on Thursday, February 7, 2008, at 7:32 am. Filed under Cutting The Bull. Bookmark the permalink. Follow comments here with the RSS feed. Post a comment or leave a trackback.
This will require a FReeper Response to appropriate congresscritters which are listed at the site.
Ping
(sigh)
(((((((((processing please hold)))))))))
I hear you....things have been tough lately.
Thanks for responding.
(((((((((processing please hold)))))))))
I hear you....things have been tough lately.
Thanks for responding.
(in eyores voice) You’re welcome. *forced smile*
The taxpayers do not have to bailout these banks. There is already a program in place to keep the financial markets afloat with liquidity. It’s called the free market. And who should be paying will be those who took on the most risk .... the shareholders first and then the senior bondholders ......
I will never vote for any politician who does bailouts.
Milstein wants to socialize private risk by converting these subprime and non-conforming mortgage bonds into taxpayer-guaranteed bonds. You see, we already have the system Milstein proposes. It’s called Fannie Mae and Freddie Mac. Now, these scared and screwed financiers want to extend that to cover all their bad subprime and other non-conforming mortgage bets not already guaranteed by the government. Sure…. people should just perpetuate this credit bubble longer and carry life-time mortgages and become life-time debt slaves, so long as it saves the banks. If you didn’t a buy house, dudn’t matter because you’re paying taxes to guarantee principal on someone else’s house so that bond investors don’t get screwed.
* * * People, you need to get off your lazy butts and do something as these proposals are nothing short of class warfare. I don’t care if you write to the New York Times or picket your congressman’s office,* . . . These type of elitist actions demand full attention, more so than the UAE ports deal and the illegal immigration bill that infuriated so many Americans. Milstein’s solution makes us all debt slaves whether or not we bought a house, and it continues the culture of debt and credit growth that has undermined our society.
oh, meant to ping you...see my excerpt also...post #8.
There is no way we are going to change that, IMO. The majority of American people don't intentionally change anything, for the good or the worse. They tend to go along as if it was a free ride.
If they did intentionally change anything, there wouldn't be illegals crawling all over this nation. Nor would there be a crowd in DC that thinks they own us all.
Psst. They do own us because we refuse to fight back.
Yeah...I know. And they do own us all really, because, as you noted, "we" don't fight back.
Yet another fight to be had with congress.
Well it just figures since the “free traders” have made an art out of sticking it to the American citizen for the costs of their dastardly agenda, why shouldn’t the investment bankers do it too?
The subprime lending fiasco started with the “free traders” making deals at Doha and Monterrey to give loans to illegal aliens to buy homes here as a way to facilitate the erasing the borders and our sovereignty.
Exactly right, on ALL points...each and every one.
Everythig’s fine...wonder why the bailout plan?
New tagline
lol....hmmmmmmmm
They just want some extra cushion. : )
haaaaaaaaaaaaaaaa
:)
Say, it might be advisable that I have that spray....how much will it cost me to don that? : )
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