Here’s the economic crisis in a (rather large) nutshell ,, from livinglies.wordpress.com .. http://livinglies.wordpress.com/2011/10/12/16-trillion-the-feds-dirty-big-secret/
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$16 TRILLION: The Fed’s Dirty Big Secret
Posted on October 12, 2011 by Neil Garfield
First my compliments to those who anticipated what I am writing about. They asked the same question of themselves that I did — where is all that money and what kind of transactions created that size of bailout? The answer, as I am sure many of you realize already is that the Federal Reserve accepted paper — funny money — from the banks in exchange for US dollars without strings or guarantees or even warranties.
Thus, the story goes, the Federal Reserve is the actual holder and owner of most of the mortgages in America. Maybe, maybe not. What the Federal Reserve really accepted was strictly derivative securities and exotic hedge products that were the equivalent of owning the derivatives (bogus mortgage bonds). SO the Federal Reserve has moved into the place of Banks who owned those securities, except that they didn’t own them for the most part. Once the Banks realized the Fed window was that far open they figured they could slip in almost anything, and they did.
The Mortgage Bonds were supposedly “backed” by obligations of millions of homeowners and a lien on their property. But we all know how that is turning out — the liens were unperfected and the obligations seem to have multiplied once the Fed became a buyer. So did the FED move into the position of investors? Apparently not, since the investors are screaming that they lost trillions. So the money for the bailout did not go to investors who had purchased those bonds and those investors apparently never signed anything selling the bonds to the Federal Reserve.
OK wait a minute. The FED was accepting mortgage bonds that were being printed as fast as possible while the window stayed open while the investors were left stiffed — hung out to dry. The Banks screwed the investors, then screwed the FED for even more money than the investors. Now they are screwing the homeowners claiming they are still owed money on a loss they never had, because they used investor money to fund the loans. The homeowners being taxpayers and citizens of this fine country are thus paying for the screwing.
I was down in the pits once upon a time on Wall Street and the language gets pretty salty. But this really puts a new meaning on the words “Go Screw Yourself!”
In summary, the Banks were at all times mere conduits but have pretended to be investors, pretended to be insurers, and pretended to be lenders. And now they are pretending to be landowners evicting hapless homeowners who have no conception how evil and convoluted the system became. They were none of those things and that fact is so hard to imagine as true that most people still can’t wrap their brains around it. That left the investors with no mortgage bonds that ever had any value — bonds that were sold by the investment banks without owning them (which the Federal reserve gladly accepted) and THAT leaves the Federal Reserve holding a hologram of an empty paper bag.
But wait there’s more! This is like an infomercial. Since you the public bought these crazy worthless bonds twice (once by letting your pension funds buy them and once by letting your Federal reserve buy them) you get to give us a whole new round of worthless paper which we stick back to you when the time comes for you to sell your homes. We’ll call them mortgages even though the lender was nowhere in sight and the real deal was the issuance of the bogus mortgage bonds in the first place. We’ll foreclose on property saying we are the holder of the note and that should get us rounding home plate unless a Judge is really wide awake. THEN after we have taken all the property we’ll sell it back to you and force you into financing that you can’t pay for and the property isn’t worth, just so we can start the whole process all over again. THERE! Don’t you feel better now?
That’s right. In the final analysis the money all went to the Banks. The Federal reserve has nothing but embarrassment. And the reason why the economy is starving for commerce is that the Banks are holding us all hostage claiming that if we do anything to them they will destroy everything. Here is the bulletin: Everything is already destroyed. Bring it on.
So in the end, the bank gets a percentage, the fed gets a percentage and the home owner gets screwed because he FAILED to uphold his end of the deal.
Who really get screwed is the taxpayer, because the Government, who now owns the land, just printed the money and forced the taxpayer to pay rent on the money to the Fed.
So the tax payer, pays for the land, and pays for the loan to buy the land, but does not get squat.
The real criminal is not the Bank, it is the Government, who intentionally collapsed the system to get their man in office and cash in on the peons homes.