March 24, 2008
Elaine Meinel Supkis
This article is all about the Derivative Beast, the screwed-up J.P. Morgan raid on Bear Stearns, international banking conspiracies and operatic dwarves and strumpets singing while laughing. I suggest the reason Goldman Sachs didn't lunge for Bear Stearn's throat is simple: the 'rescue' is ILLEGAL. And J.P. has to defend their thing in court now and take all the hazards and blows from this including losing. If this crooked take over is allowed, all hell is going to break lose. The biggest investment houses will complete their coup in our government and use it to take over ALL our banking systems and WE will be holding the tail of the Derivatives Beast, not THEM! See? So we better stop them. Arrest them all.
JPMorgan May Raise Bid for Bear Stearns, NYT Says
JPMorgan Chase & Co. may quintuple its takeover offer for Bear Stearns Cos. to more than $1 billion in an effort to win support from employees and shareholders opposed to the deal, the New York Times said.JPMorgan is in talks to raise its all-stock bid to $10 a share from $2, the Times said, citing unnamed people involved in the negotiations. The Federal Reserve, which helped engineer the takeover after customer withdrawals crippled the New York-based firm, is uncomfortable with any plan that might be perceived as an investor bailout, the report said.
The original bid, more than 90 percent lower than the securities firm's market value at the start of the month, drew opposition from shareholders led by U.K. billionaire Joseph Lewis. JPMorgan Chief Executive Officer Jamie Dimon met with Bear Stearns employees, who own a third of the company, to seek their support last week.
HAHAHA. I knew this would happen. The 'rescue' operation was really a pirate raid. It hit both our Treasury as well as Bear Stearns. The pirates hoped to sail off into the sunset with a pile of goodies, more power and no responsibilities. A perfect ending to a classic take-down. But too many people saw through this charade. Thanks to online chatter, the people who were first dismayed by this back-stabbing operation were able to counter-organize and stage a battle right on the decks of the burning Bear Stearns pirate ship! Cutlasses flash as cannons boom...the stream of online information and examination as well as the organizing skills of the internet has rallied the troops who man the Bear Stearns ship as well as the raging battle attracted a horde of sharks as well as many other pirate ships have come sailing into the fray!
The DOW is shooting upwards on these battles! Yo-ho-ho and walk the plank, Bernanke and Paulson! Both of these idiots got themselves stupidly involved in this piratical operation by J.Pirate Morgan. Now, they are stuck on Morgan's tub, praying no one notices their probably illegal raid on Bear Stearn's stern. Heh. I am so happy, we get to think of these guys as pirates. All we need now is for the Prince of Whales to come swimming past, looking to see if any of his mom's pirate coves are covered and won't fall in this epic battle.
JPMorgan may be required to guarantee Bear's trades even if shareholders vote down the takeover and seek another bidder, because of a sentence ``inadvertently included'' in the merger agreement, the Times said, citing a person briefed on the talks.Bear Stearns employees, directors and lawyers are prohibited from seeking an alternative transaction, according to the agreement, which was filed with regulators last week.
Shareholders means that man who lives on a pirate island in the Caribbean. He can and obviously is leading the battle. And he has the behind the scenes cooperation of all the Bears Stearns crew who know they will be thrown to the sharks if Mr. Lewis loses his battle. Frankly, the other investment houses are now very interested in this battle. They figure, either they are next in this war or they are being cut out of the goodies by the J.Pirate organization. So they are hoping for blood in the water and circle this battle hoping to pick someone's bones. Perhaps, even J.P. Morgan's bones.
As I have noted before, the biggest houses are now in danger, themselves. This is why Morgan had to cook a crooked deal with Bernanke and Paulson. These two men should have simply stepped in and taken over Bear Stearns but being the front men for pirates, they thought this was a most excellent opportunity for someone to expand their own treasures. This is why the deal will collapse: it is so obviously illegal and NOT in the public interest!
Far from strengthening these financial piratical organizations, the government should be DISMANTLING them! They are destroying America! They are wrecking the world's banking systems! They are responsible for the creation of and the growth of the Derivative Beast from Hell! First, let's look at the legal aspects:
Why is Bear Stearns Trading at $6 Instead of $2?
Bear Stearns is trading at $6 instead of $2 because unelected bureaucrats went beyond their legal mandates, delivered a windfall to a single private company at public expense, entered agreements that violate the the public trust, and created a situation where even if the bureaucratic malfeasance stands, the shareholders of Bear Stearns will either reject the deal or be deprived of their right to determine the fate of the company they own. Very simply, Bear Stearns is still in play. Still, when all is said and done, my own impression is that the ultimate value of the stock will not be $2, but exactly zero.In effect, the Federal Reserve decided last week to overstep its legal boundaries – going beyond providing liquidity to the banking system and attempting to ensure the solvency of a non-bank entity.
*snip*
The Fed did not act to save a bank, but to enrich one. Congress has the power to appropriate resources for such a deal by the representative will of the people – the Fed does not, even under Depression era banking laws. The “loan” falls outside of Section 13-3 of the Federal Reserve Act, because it is not in fact a loan to either Bear Stearns or J.P. Morgan. Bear Stearns is no longer a business entity under this agreement. And if the fiction that this is a “loan” to J.P. Morgan was true, J.P. Morgan would be obligated to pay it back, period. The only point at which the value of the “collateral” would become an issue would be in the event that J.P. Morgan itself was to fail. No, this is not a loan. It is a put option granted by the Fed to J.P. Morgan on a basket of toxic securities. And it is not legal.
Hussman, like myself, feels this is not following any proper legal path but is blazing a new trail. One that all other financial houses better fight like crazy. As it is, Goldman Sachs has a hammerlock on US politics. The favors they shower upon themselves are legendary. Starting with sweetheart tax cuts. They artfully use lower class unhappiness with severe taxes due to imperial overreach to cut their own taxes at twice the rate the cuts are made for the plebians and peasants. Why didn't Goldman Sachs want the Bear Stearns deal, anyway?
Perhaps, precisely because of the illegality of all this: they knew this would go to court. They knew this would entangle J.P. in a huge legal mess. As J.P. struggles to deal with this legal net cast over them in this raw attempt at taking over illegally, Bear Stearns, the Supreme Court could rule in ways that benefit Goldman Sachs and all this, on J.P.'s bill! What a hoot! Believe me, this smells not only of a nasty deal but also a potential TRAP. As J.P.'s name is blackened like Enron's name, Goldman Sachs can skate over all this, invisible! If I were working for J.P. and was told that Paulson wanted to give me a nifty but very unusual and NEVER BEFORE SEEN deal that involves extra-legal games, I would say, 'Thanks, but no thanks.'
Indeed, from the first, I wondered why GS wasn't going for this deal. Obviously, they saw hazards J.P. ignored. Now, Paulson will either resign or withdraw back into the shadows of his dark cave. Bernanke is going to ignore all this since no one can stop the Fed no matter how insane, stupid, craven or evil they are! Ask Ron Paul about trying to stop or even shame the Fed! IMPOSSIBLE!
Since I have had to tangle with games like this in the past, I know the warning signs. In general, when anyone proposes doing something that skates on very thin legal ice, I tend to say, 'Sorry. If it is such a great deal, why do you want ME to do it?' This prevents fraud so easily, by the way. Very easily.
If the market was “certain to crash” in the event that Bear Stearns failed, then the market is certain to crash anyway, because Bear Stearns wasn't the last shoe to drop – it was one of the first. Unfortunately, we're standing in a shoe store.
HAHAHA. I like that line. This is pure Imelda Marcos. Not only is this NOT a shoe store, it is a private collection of shoes that are ALL ALIKE. And none of them are for people who have no shoes. As for the market crashing, all past rescues did NOT fix anything at all. All of them made things WORSE. The charts show clearly that, as the US struggled to fix the problems that first began to plague us causing the Bretton Woods II devaluation of our dollar and onwards have all gotten worse and worse and worse. A $10 billion budget and trade deficit have ballooned to a $10 trillion trade and $44 trillion deficit/debt total! So we are swimming in red ink and even though all our top financial wizards can put on Dorothy's ruby slippers and click them and say, 'Take me HOME!' and thus, escape to England or France, we can't do this.
Fed's rescue halted a derivatives Chernobyl
When the Federal Reserve stepped in to save Bear Stearns, most people had no idea what was at stake, writes Ambrose Evans-PritchardWe may never know for sure whether the Federal Reserve's rescue of Bear Stearns averted a seizure of the $516 trillion derivatives system, the ultimate Chernobyl for global finance. "If the Fed had not stepped in, we would have had pandemonium," said James Melcher, president of the New York hedge fund Balestra Capital.
"There was the risk of a total meltdown at the beginning of last week. I don't think most people have any idea how bad this chain could have been, and I am still not sure the Fed can maintain the solvency of the US banking system."
All through early March the frontline players had watched in horror as Bear Stearns came under assault and then shrivelled into nothing as its $17bn reserve cushion vanished.
AND HERE IS PART OF THE TRUTH! The vile, hideous Derivatives Beast lurks in the murk. Let's go back to ancient religions to see who this creature is. Wagner, in his amazing 'Ring Der Nibelungen' cycle nails this on the head. Fafner was the giant who built, along with his brother, Valhalla for Wotan. Wotan wanted to do this based on an ARM loan. Like, 'arm and leg' loan. The giants wanted to be paid. So Wotan had to steal some oil or gold. He went to a pirate named Albrecht. This dwarf stole the magic gold from the lithesome and lovely Rhine maidens who were the elemental force of sex for money, i.e. strumpets and whores.
He basically raided their brothel and took the Rheingold and using his dwarf slaves, turned it into a vast hoard of gold which Wotan stole using tricks. The dwarf cursed him. Wotan wanted to keep control of this money hoard when he gave it to the giants who were stupid but not as stupid as that. They demanded they control this Sovereign Wealth Fund! So Wotan had to give control of the interest rates to the Chinese who turned into a dragon and hauled the loot to a cave. Where the dragon waits for a Siegfried, a total fool, to come along. Then the money can pass into the hands of humans again who waste it, of course, in fighting each other, killing each other, stabbing each other in the back and then everyone dies as the world is destroyed in Götterdämmerung! Whoopee!
The Derivatives Beast is the dragon, Fafner. It is very much connected to global SWF and China's vast army of workers. And it was created by our own Wotans who conjured up this dragon in the hopes it would protect their Valhallas. According to their own mythology, they will never lose money or power if they feed this Beast. It will grow bigger and bigger and sit on their wealth and no economic downturn in the realm of either dwarves or strumpet Rheinmaidens will threaten their celestial palaces! HAHAHA. When I was a child, I fell in love with these operas, by the way. I particularly liked how the Rheinmaidens and the dwarves were prone to singing 'HAHAHA' all the time. None of the humans or gods did that. Only them. So my heart warmed to these characters. Every variation on laughter is used by them. From gay to bitter, even sarcastic laughter when discussing economics and politics with Wotan who can't laugh even when Loge teases him. But I digress, as usual.
Bear Steans collapse may rouse the Derivatives Beast into Götterämmerunging us to death:
To understand why it has torn up the rule book, take a look at the latest Security and Exchange Commission filing by Bear Stearns. It contains a short table listing the broker's holding of derivatives contracts as of November 30 2007.Bear Stearns had total positions of $13.4 trillion. This is greater than the US national income, or equal to a quarter of world GDP - at least in "notional" terms. The contracts were described as "swaps", "swaptions", "caps", "collars" and "floors". This heady edifice of new-fangled instruments was built on an asset base of $80bn at best.
On the other side of these contracts are banks, brokers, and hedge funds, linked in destiny by a nexus of interlocking claims. This is counterparty spaghetti. To make matters worse, Lehman Brothers, UBS, and Citigroup were all wobbling on the back foot as the hurricane hit.
"Twenty years ago the Fed would have let Bear Stearns go bust," said Willem Sels, a credit specialist at Dresdner Kleinwort. "Now it is too interlinked to fail."
Arrest the executives of Bear Stearns! Arrest anyone who dares to create a derivative base that is greater than all the wealth of the United States, of all the planet earth! They are CRIMINALS. And if they threaten our entire banking system, they are CRIMINALS. If they fall and destroy all of us, they are TRAITORS. The government let them do this and this makes our government COMPLICIT. Arrest anyone involved! Put them all on trial, we did this to Germany and Japan after they tried to destroy the world! We can throw in war crimes to make it even-steven. There is no excuse for this. Everyone who knew about derivatives could see how they were being created at a mad rate that was totally unsustainable.
This had to be stopped, not enabled. The bail out of Bear Stearns enables this process. But even with the government putting the US taxpayer in jeopardy in order to protect these 'inerlinked' Mafiosa-style criminal pirates, I have to suggest, this is ILLEGAL. And should be stopped. If Congress wants to NATIONALIZE all these organizations, then fine: we have the government take over and we can be proper communists. We can import the Chinese rulers and have them rule us, too. Might as well at this point.
Gads. What is the matter here? Is this the miserable end of capitalism in America, once the heartland of capitalism? HAHAHA. As the dwarves and watery strumpets in opera sing.
Fed May Buy Mortgages Next, Treasury Investors Bet
Forget lower interest rates. For the Federal Reserve to keep the financial markets from imploding it needs to buy troubled mortgage bonds from banks and securities firms, say the world's biggest Treasury investors.Even after cutting rates by 3 percentage points since September, expanding the range of securities it accepts as collateral for loans and giving dealers access to its discount window, the Fed has been unable to promote confidence. The difference between what the government and banks pay for three- month loans doubled in the past month to 1.95 percentage points.
The only tool left may be for the Fed to help facilitate a Resolution Trust Corp.-type agency that would buy bonds backed by home loans, said Bill Gross, manager of the world's biggest bond fund at Pacific Investment Management Co. While purchasing some of the $6 trillion mortgage securities outstanding would take problem debt off the balance sheets of banks and alleviate the cause of the credit crunch, it would put taxpayers at risk.
``An RTC-type structure is interesting, and it may not be that much of a burden on taxpayers in the long run,'' said Barr Segal, a managing director at Los Angeles-based TCW Group Inc. who helps oversee $80 billion in fixed-income assets. The government should purchase the mortgages and reissue ``debt that's backed by the U.S. government and there you go, you've unclogged the drain,'' he said.
OK: a poll. Who do you want to own all houses in America? The government or banks? When do we take all our pennies and melt them down to make into statues of Saddam and Lenin? Make them as big as the Statue of Liberty. Put them on the White House lawn.
The seeds of today's disaster were sown in the 1980s, when financial services began a pattern of growth that may only now have come to an end. In a recent study Martin Barnes of BCA Research, a Canadian economic-research firm, traces the rise of the American financial-services industry's share of total corporate profits, from 10% in the early 1980s to 40% at its peak last year (see chart 1). Its share of stockmarket value grew from 6% to 19%. These proportions look all the more striking—even unsustainable—when you note that financial services account for only 15% of corporate America's gross value added and a mere 5% of private-sector jobs.At first this growth was built on the solid foundations of rising asset prices. The 18 years to 2000 witnessed an unparalleled bull market for shares and bonds. As the world's central banks tamed inflation, interest rates fell and asset prices rose (see chart 2). Corporate restructuring, wage competition and a revolution in information technology boosted profits. A typical portfolio of shares, bonds and cash gave real annual yields of over 14%, calculates Mr Barnes, almost four times the norm of earlier decades. Financial-service firms made hay. The number of equity mutual funds in America rose more than fourfold.
The US financial industry grew up in the wake of our first bankruptcy in 1974 when we began to run everything in the red. The more we did this, the more we needed the bankers. And since we threw away the concept of sovereignty and balancing the books, we needed more and more powerful bankers to bankroll our reckless spending. And this led to the bankers needing to make more and more reckless loans. And this whole system was then 'insured' by creating the Derivative Beast who lives in the hellish cave where death rules our fates! And this was our 'fix' for ridiculous, outsized Cold War and Hot War spending! And are we spending less and less on the military or more and more?
This process has turned investment banks into debt machines that trade heavily on their own accounts. Goldman Sachs is using about $40 billion of equity as the foundation for $1.1 trillion of assets. At Merrill Lynch, the most leveraged, $1 trillion of assets is teetering on around $30 billion of equity. In rising markets, gearing like that creates stellar returns on equity. When markets are in peril, a small fall in asset values can wipe shareholders out.
The banks' course was made possible by cheap money, facilitated in turn by low consumer-price inflation. In more regulated times, credit controls or the gold standard restricted the creation of credit. But recently central banks have in effect conspired with the banks' urge to earn fees and use leverage. The resulting glut of liquidity and financial firms' thirst for yield led eventually to the ill-starred boom in American subprime mortgages.
And who made this 'money'? Who killed inflation even as we spent money so drunkenly, to the tune of $44 trillion? The answer lies in the Dragon's cave. The Dragon speaks Chinese. The Dragon and Miz Japan both told the US to ignore the need for fundamentals in banking. Lending would be cheap and easy so long as the yen and the yuan are cheaper than the dollar. So long as the flood of goods from the workers of Asia flows, the loans will be OK. But now, the US is struggling with internal collapse and is cutting back on the flows of everything and this is causing the whole thing to collapse. The Western asset markets are controlled by the Asian manufacturing markets pouring goods into the West and collecting fees for this. There are still some industries left in the West. Asia is patient. They hope to suck out the very last industries or better still, own all the industries in the West, then they will change things.
In the news are many stories of these nations buying our industries! Russia, this week, as we shriek at Putin, is buying up some of the last of our steel industries, for example! Isn't that FUNNY AS HELL??? HAHAHA, as the dwarves like to sing.
Goldman, Lehman outlooks cut to "negative" by S&P
Goldman Sachs Group Inc's and Lehman Brothers Holdings Inc's credit rating outlooks were cut on Friday by Standard & Poor's, which said volatile markets could result in lower profit and revenue.S&P revised its outlook to "negative" from "stable" on Goldman's "AA-minus" and Lehman's "A-plus" long-term credit ratings, suggesting a possible downgrade in one to two years.
The ratings are S&P's fourth- and fifth-highest investment grades, respectively. Lower credit ratings can result in higher borrowing costs.
Goldman is the largest Wall Street investment bank by market value, and Lehman is the fourth-largest.
Goldman Sachs prays that J.P. wins its court cases. But if they lose, GS will pick up the pieces unless they, too, are destroyed by the Derivatives Beast. The Beast plans to eat GS, of course. As soon as it can. Time for magic rings that makes one invisible! I suppose this is the next step; to make the big guys invisible while directing the Dragon's baleful eye towards easier targets like workers and peasants in the world.
The Scandal of the Dollar
New York Sun Editorial
Just when it looked like the financial crisis couldn't get worse, Congressman Henry Waxman, among others, is threatening to mount an investigation into the collapse of Bear Stearns. He is alarmed over the Fed's role in facilitating the liquidation of the investment banking house and delivering its remains to J.P. Morgan Chase. To which we can only say that if Congress wants to find a scandal, the one to look at is the collapse not of Bear Stearns but of the dollar, which in the past seven years has plummeted to less than a 900th of an ounce of gold from the 265th of an ounce it was worth at the start of President Bush's first term.To discover who needs to be held accountable for this collapse, Congress need only look in the mirror. America's founders were perfectly clear, as they set forth in one of the Constitution's most unambiguous clauses, that it is Congress that has the power "to coin money, regulate the value thereof, and of foreign coin." Maybe Mr. Waxman can subpoena Spiderman to remind him that with great power comes great responsibility. Congress had responsibility to take care of the instrument that is relied on by banks, their customers, foreign governments, merchants, laborers and everyone else to transmit price signals.
Note that this article blames Congress for the mess created by the RULING CLASS. Congress, as we can obviously see, is now so weak, it can't defend the Constitution nor the American people. They are the rubber stamps of the ruling elites. They are like the Soviets: that is the name of Russia's former Congress. Congress gave up on controlling both the budget and the coinage long, long ago. And we won't ever see it again. The people who are making money off of all this will never allow it. This is why they focus so much on the Presidency: billions are spent on gaining the Imperial Crown and to make emperors who obey the rich, not the peons. The peons get their entertainments and bread.
If not, then they get tasered.
Bank of England Seeks to Ease `Strains' in Markets
The Bank of England said it's in discussions with other central banks about how to ``ease the strains'' in financial markets, although it's not considering requiring taxpayers to assume credit risks.Britain's central bank said it is ``not among'' those that the Financial Times reported earlier today were contemplating the purchase of mortgage-backed securities to smooth lending to consumers after a worldwide surge in borrowing costs. The Federal Reserve also denied it's in discussions to buy such debt.
``We have been examining a number of other options, but it is too early to go into any detail,'' the London-based Bank of England said in a statement. ``The bank is not among those reported today to be proposing schemes that would require the taxpayer rather than banks to assume the credit risk.''
This whole article shows clearly where we are headed. England claims they won't go down our road even though they built this road and are rolling merrily down it. The collapse of the British empire is not done yet, not at all.
Fed Denies Report It's Involved in Talks on Buying Mortgages
A Federal Reserve official denied a newspaper report that the Fed is in talks with foreign central banks about the feasibility of using taxpayer money to buy mortgage-backed securities.The Financial Times reported today that the discussions among officials at the Fed, the Bank of England and the European Central Bank are part of broader talks about how to ease turmoil in global financial markets. The newspaper didn't say where it got the information.
*snip*
``The Federal Reserve is in close consultation with foreign central bank counterparts concerning liquidity conditions in markets,'' the Fed said March 7.
And why are we sitting here while our central bank openly CONSPIRES with foreign bankers? And who is protecting America? What are the goals of these foreign bankers? Are they interested in stopping the dynamics that are destroying our industrial base? Are they interested in fixing our trade deficits? Are they going to demand we stop our wars and stop our mad military spending?
NO! They want us to continue! They want us to do MORE of this! They want the STATUS QUO back! And we should be fighting all of them, tooth and nail. And Europe better pay attention: THEY ARE NEXT. The same dynamics destroying us will destroy them. And the Revenger of the Dragon will finally come. For we are the ones who destroyed the power, wealth and culture of Asia. Now, it is their turn. And they can unleash the Derivative Dragon any time they want. All they have to do is loosen its leash.
So cute! I already like you on FB and also get your posts on Google Reader. :)
Posted by: red bottom sole | October 03, 2011 at 06:01 PM