Skip to comments.Fraudulent "Credit Crisis" Paves Way for Economic Disaster
Posted on 12/16/2008 8:31:25 AM PST by EternalVigilance
Doing the kind of investigative reporting we should expect from the major media, a financial research and consulting firm has released a major analysis of the credit crisis that concludes that the claims made by Treasury Department Secretary Henry Paulson and Federal Reserve chairman Ben Bernanke to justify a socialist takeover of the financial industry were demonstrably false.
The analysis, Flawed Assumptions about the Credit Crisis: A Critical Examination of US Policymakers, concludes that the result of the unjustified massive federal intervention in the economy could be similar to the economic crisis in the Weimar Republic of 1922, where disastrous hyperinflation made the currency worthless and threatened the nations political system and stability.
The analysis was released by Celent, a Boston-based firm that provides independent information and advice to financial services companies. The 30-page report, made available to Accuracy in Media, does not accuse Paulson and Bernanke of lying about the credit crisis. But it does say that It is startling that many of Chairman Bernankes and Secretary Paulsons remarks are not supported or are flatly contradicted by the data provided by the very organizations they lead.
Using charts and graphs of data from the Federal Reserve and other agencies, the Celent study says that statements from Paulson and Bernanke about a credit crisis affecting businesses, real estate, banks, and state and local governments were just not true.
The report says there is a contradiction between what Paulson and Bernanke have said and the reality of the situation, as demonstrated in the official data. It calls these discrepancies and says that some of their remarks are puzzling.
(Excerpt) Read more at aim.org ...
And not just the excerpt.
Knowing the backround of those involved, we have suspected this all along.
Banks no longer lending money to people and businesses that can not pay the loans back is good business, not a credit crisis.
Yeah. Sometimes you just have to trust your gut. And I know some really experienced and knowledgeable people whose guts have been telling them that this whole thing was phony.
The ramifications are staggering in scope.
If I read this report right, lending was still going on as usual. Most businesses were fine.
Down is up and up is down these days...where have you been?
It looks like Bush got “bad intel” once again. Hmm, do two points make a line?
I’m sure the MSM will just be all over this reeeeeel soon!
They won't, but I will.
Henry Paulson and Ben Bernanke are liars, frauds and Socialists.
There. Any questions?
We just had a crisis and our government chose to go another way. Which means they do not value free individuals or free markets.
You are a serf. The folks up in the castle have sent down a message: work harder.
The over extension of credit is much of the problem. Too many people were unable to pay their bills.
But Probably a major factor that caused delinquencys in repayments is that the price of oil and gasoline spiked. People spent their extra disposable income on basics like gasoline. Higher oil prices created inflation in everything from food to packaging to transportation.
Absolutely no economist has mentioned high oil prices as a major cause of people defaulting on their easily obtained credit. Much of the oil money was sucked right out of our economy and went to rich Arab oil monopolies.
Government needed a crisis. Democrats manufactured one. Perfect timing in an election year.
In other words...they lied. [gee, what a shock]
Throw the SOBs in federal prison for committing a fraud upon America and for treason. Oh wait. Obama will probably reward them with nice cushy positions, golden retirement umbrellas and an office in the capitol with a view.
Particularly when conversion of investment banks to banks, as well as acquisitions, requires deleveraging. Newly raised capital will go to bolster balance sheets, not to lending. Of course the Fed knew that.
Even if they had enough cash flow, many businesses assumed that they could always get credit to make payroll or short term purchases and do more long term things with their cash. That worked fine as long as they could get short term credit. No short term credit because the bankers are panicking over their other mistakes means the entire house of cards falls.
I did the same thing too by taking out a home equity loan to pay off my regular mortgage because the interest rate was cheaper. I then paid down my equity line and had essentially no cash in savings and checking because I could always get it back out of equity easily. During normal times that made sense because paying down a 6% mortgage, even temporarily, was a better use of the cash than making 0.5% in checking or savings. However, the bank doesn't have a legal obligation to continue to extend that line and I would have been in a world of hurt if they cancelled new lending from it. I have since corrected that problem.
The ramifications are staggering in scope.
There you are correct! The death spiral from this manufactured crisis will be astronomical. Those that thought a ‘little’ panic could be controlled, thought wrong. Business are ‘preparing for the worst’, as Obama put it. Recently in the WSJ, those in my business, transportation, are ‘preparing for economic nuclear winter’.
I’m not afraid. I’m angry! The ‘progressives’ declare that they will not ‘let a good crisis go to waste’ are going to be in for a rude awakening. We don’t plan on helping them destroy America by ‘working harder’.
An engineered “crisis” in order to increase the government’s control over our lives....hmmmmmm.
Who would’a thunk it!
Absolutely. The American people should be up in arms.
Your stomach is going to turn even more when stage 2 of this ridiculous exercise hits.
Stage 2 of the nationalization of American industry will begin taking place when investors begin to shun companies who have accepted federal money because of the political risk. (ie government uses controlling investment to wipe out equity holders) This shunning leads to dramatic de-valuations of companies the government has been investing in/bailing out.
In addition to loss of investment, consumers begin to shun government owned enterprises due to inefficiency and poorer product offering.
In response to the decline in the value of the government investment, more stringent fiscal and regulatory restraints are placed on “non-participating” institutions and companies. With the government “approved” institutions gaining an advantage, consumers begin to abandon the remaining independent companies.
Eventually, government owns industry in its entirety.
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