Ali’s blog

Mostly quant stuff with occasional digressions

Hilarious piece in Dissident Voice

Posted by alifinmath on April 9, 2008

Found this today:

The term “subprime” is a red herring; it is used by the media to minimize what is really going on. The meltdown in financing extends across the entire range of mortgage-security products. No loan type has been spared. The wholesale market for anything connected to mortgages is frozen and the details are being intentionally withheld from the public. Two years ago, more than 65 percent of all mortgages were converted into securities and sold off to Wall Street. No more. That scam unraveled in July when two Bear Stearns hedge funds blew up and there were no takers for billions of dollars of mortgage-backed junk. Since then, bankers and hedge fund managers have been scrambling to conceal the facts about what mortgage-backed securities (MBS) are really worth: nothing. The fear is that when the public finds out what is really going on, they’ll draw the logical conclusion that the banking system is insolvent, which it probably is.

Does the Fed realize that it is effectively monetizing the debt by issuing loans that may not be repaid or is this just a clever way to trick foreign investors into believing that the Fed won’t print its way out of a crisis? The bottom line is, whether the nation is headed into a deflationary spiral or not, all of the Fed’s tools are inflationary. Rate cuts, auction facilities or covert monetization all weaken the currency and levee an unfair tax on savers and people on fixed incomes. Unfortunately, these people have no voice in government, so we can’t expect their interests to be fairly represented.

The American consumer is tapped out. What he needs is a raise, not another loan. Bush’s $500 per person Stimulus Package will do nothing to reverse the effects of 30 years of anti-labor legislation and class-oriented monetary policy.

Congress is being muscled out of financial market supervision by a troop of venal banksters and corporate picaroons who are threatening to finish off the already defanged SEC. That will put the Fed in the driver’s seat for good. Paulson wants to police the world’s most complex markets on the “honor system.” It’s crazy. His blueprint is an obvious attempt to consolidate market-related functions under a central authority that is accountable to private industry alone. That way, the Fed can bailout whomever it chooses without congressional approval. Paulson’s press conference was just a polite way of informing the American people that the seat of power has shifted from Washington to Wall Street. It’s a banker’s coup.

“Re-nationalized” . . . is that what it is? No one authorized the Fed or Paulson to re-nationalize anything. These over-leveraged banking behemoths need to fail. Let the market work. 28 million Americans are on food stamps, tent cities are sprouting up across the country, discretionary spending is down, food and energy prices are skyrocketing, and wages have been frozen for a generation. Where’s the bailout for the working man? Instead, the government’s largess is showered on a throng of unctuous fat-cat banksters so they can keep the larder on Martha’s Vineyard topped off with Godiva truffles and Cuban cigars. Paulson has to go. Bernanke too.

 

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

 
%d bloggers like this: