Elaine Meinel Supkis
An impatient White House served notice Tuesday on banks and other financial companies receiving billions of dollars in federal help to quit hoarding the money and start making more loans."What we're trying to do is get banks to do what they are supposed to do, which is support the system that we have in America. And banks exist to lend money," White House press secretary Dana Perino said.
Though there are limits on how much Washington can pressure banks, she noted that banks are regulated by the federal government.
Dana Perino was selected for the same reasons her clone, Palin, is promoted by the Republicans: she is an airhead. Being congenially silly, she plays a good bimbo. The previous one who died was a male bimbo clone of Dan Quayle.
First of all, banks do NOT exist to 'lend money.' They exist to make a profit! If lending money brings profits, they do this. But their chief original function was to HOLD money for others. The only people who could get loans were people who had big holdings in these early banks. Say, you were a merchant. You could cycle in and out of this lending/capital creation entity. A peasant couldn't go to the bank and ask for a loan!
This was true for many, many, many centuries. When poorer people wanted loans, they had to go to a loan shark. Even in my own lifetime as an adult, people who had no capital had to go to the Mafia for loans. If they didn't pay up, they had bad accidents. Like putting on shoes with cement and then falling into the East River at night.
The beginnings of lending to people with no capital, no property was very gradual. When someone wanted to buy a house, and I was very much one of these people back in 1970, you had to put at least 20% down to qualify for a loan. If you wanted to buy on a credit card, and I had one of these, you put some money in a bank account and American Express would then give you your own money back plus a small forward amount in emergencies [which cost extra!] for a fee. I paid no interest unless I tapped into the emergency fund. This card was used when traveling, especially overseas.
The first credit cards were very difficult to gain! You had to have a sponsor if you didn't have property. Like, mom and dad, for example. Then, the laws were changed. The government was lobbied very hard by the bankers to change the usury laws. Once this was done, they flooded the US economy with easy debt that was very hard to pay off. This was due to the increasingly high interest rates.
One of the many tricks they use to trigger these rates is, if you accidentally go over your limit, they don't stop the use of the card. Instead, they silently reset the interest rates due on the ENTIRE BALANCE from say, 9% to 33%. Then, the poor person goes into shock when they see the impossibility of paying off these debts.
This happened to someone dear to me. We bailed out this person for this is why families are far stronger than individuals. I am a hearty believer that families should stick together. The lessons were learned and frankly, I was quite enraged that Sears would sink so low as to play this sort of Mafioso game. Indeed, I boycotted Sears for years due to this ire.
The childish belief that banks exist to only produce loans is why our banking system is dying. Perino isn't the only airhead running things. She is typical, not exceptional. There are many ugly airheads around. I see them in the news every day.
The United States believed in saving money in my youth not because it was good but because the banks demanded this before they lent anything. The process of socialization was rather simple. When I was only a child, I couldn't wait until I could deposit my babysitting loot in my own bank account. I kept this account until the beginning of the banking collapse in 1970. Then, I went to Wells Fargo and had a big fight with them and withdrew all my money.
I didn't go into debt to go to the University. I worked from May to September in a local bar and this paid enough to live on all the year and pay for school fees! And go on vacation. And I didn't work five days a week, either. Life was good fun back then. Heh. And I learned a lot about banking and business chatting with my customers who were sex-starved gnomes and so, eager to have a young thing listen to their war stories.
The late 1960's was America's financial high tide. It was quite wonderful, actually. I was able to buy hundreds of classical records, dresses and my truck as well as other nice stuff just on babysitting money, working part time ON MINIMUM WAGES. In college, I worked only part time [much higher than minimum wage] and had plenty of leisure and came out of this with zero debt while living in my own two bedroom house which cost me $68 a month. My utility bills were about $12 a month. My pay was about $75 a week and sometimes a lot more due to tips. A dollar was worth something back then. Rent was supposed to be less than one week's wages, not the present 50% of income we see so often today.
Anyway, before you could buy a house, the bank wanted you to pay back some sort of loan. I was rather pissed about that requirement when I went to buy my first house. I always paid cash for things and saved! I asked the officer, what should I buy? He said, 'Buy a car.'
'I already have a 55 Chevy which I rebuilt, with cash,' I complained. Well, I had to go into debt to pay for my first child's doctor. Then, I qualified for a mortgage! This illustrates how parsimonious bankers were before Ronnie Reagan.
(Bloomberg) -- Wall Street's chief executives will hunker down and pay bonuses this year in the face of the worst financial crisis since the Great Depression, a taxpayer bailout and mounting political outcry, industry veterans say.Odds that Wall Street will forgo the payouts are ``slim to none,'' said John Gutfreund, 79, president of New York-based Gutfreund & Co. and the former chief executive officer of Salomon Brothers Inc. ``They're going to have to be a little bit sensitive because politicians, whether they like it or not, are part of their lives now.''
Gnomes are gnomes. Through and through. They aren't just cartoon characters I created. This is their fundamental nature. They are grasping and vicious. They consider the loss of a penny to be worse than dying. They will steal the silverware and eat you out of house and home before giving up a penny. With goddesses, they are foolishly, deliriously generous. But with the people rescuing them, ie, the US taxpayer, they are churlish and snap back.
'Hey! We own the politicians! Try and stop us from looting you schmucks!' snarl the gnome community as they stuff their sacks and rush home. It is very easy to make Wall Street 'forgo their payouts': arrest them all! Then fine them triple of what their payouts would have been. This would be a sharp lesson to these Mafia wannabes.
On November 22, we will be demonstrating in many cities, I hope, demonstrating our ire about the bank rescue and the Federal Private Banking Gnome Headquarters Reserves.
(Bloomberg) -- The U.S. government's $160 billion handout to banks from Niagara Falls to Beverly Hills is going mostly to lenders that need it least, putting weaker rivals at risk of being shut down or taken over, analysts say.``This has the unintended effect of making the strong stronger and the weak weaker,'' said Gray Medlin, founder of Carson Medlin Co., a Raleigh, North Carolina, investment bank focused on banking deals. ``Banks that are getting bad exams and are under intense pressure from regulators won't be successful in applying.''
I am not surprised by this news. At the Congressional hearings concerning the bank bail bill, officers from top investment banks sat on either side of me and talked with each other over me until one of them suddenly noticed I was writing down what they were saying. Then they clammed up.
They figured, no one would notice a $700 billion bank heist. When I arrived in DC, the firestorm over the proposed rescue plan was so great, all of Congress was seriously worried. Now, they are not so worried. This is bothersome. This being an election year, no one feeds the US political golden goose more goodies than Wall Street and in particular, the banking gnomes. So outrage is rather muted, to say the least.
Instead, we talk about that mythical and fake creature, Joe the sort-of-plumber who now wants to be a country western singer who, I presume, will croon about his sex life going down the drain due to lack of funds.
Unintended effect???? HAHAHAHA. When I was in the earlier hearings about the bail the gnomes out by buying them all yachts bill, everyone talked about all the things that are now going on. Everyone knew that the bill was going to allow a bunch of sex-crazed gnomes to raid the public till. There was talk about stopping this and having the bail out be strictly so that US people could pile more debt onto our homes and businesses.
Instead, it piled more loot into the bank vaults of a bunch of pirates. Was this unexpected? Well, back in September, I wrote about the funds given to both GOP and DNC members in Congress. It was a huge amount going to the regulators who have to please this army of well-heeled bribesters.
U.S. banks getting more than $163 billion from the Treasury Department for new lending are on pace to pay more than half of that sum to their shareholders, with government permission, over the next three years.*snip*
Critics, including economists and members of Congress, question why banks should get government money if they already have enough money to pay dividends -- or conversely, why banks that need government money are still spending so much on dividends.
The deal is, the rescuing entity will get dividends. See? So the government lends money at insanely low rates, not credit card rates, takes on ALL LOSSES and then, on top of this, guarantees all dividends of what are essentially bankrupt banks? HAHAHA. This is not a great way to get rich, incidentally. The dark arts of going bankrupt have, through history, been the only way to fix broken businesses or banks.
The tragedy of the Soviet State was, they couldn't let any businesses go bankrupt. So the entire nation went bankrupt. Not exactly a good outcome. I keep pointing out that the US is becoming the Soviet Union. These bail outs are obviously right in step with Soviet thinking. Torturing people,indefinite imprisonment,running gulags, limiting public protests, tasering peoplefor asking 'interesting questions,' throwing away the Constitution, concentrating power in the White House Kremlin clone, etc: we even are fighting a futile war with the very same Afghani groups that destroyed Soviet power!
And here is McCain and Palin claiming that Obama is a communist. HAHAHA. I wish he was a Chinese communist! They seem to know exactly what capitalism is! The present regime in DC is utterly clueless about what capitalism is or what banks are.
The government is in collusion with the people who destroyed not only our banking system but who conspired to turn traditional banking into a debt machine. A machine that has ground out endless red ink, red ink that is killing our nation and drowning the world with cheap dollars. Note how much I paid in rent for a two bedroom house, not apartment, with a yard and a place to park my truck!
The national “bank holiday” that ushered in the New Deal in 1933 locked up the public’s cash for four days. The crisis that hit last month at the Reserve Fund, the nation’s oldest money market fund, has frozen hundreds of thousands of customer accounts for more than six weeks — with no sure end in sight.At least 400,000 people, and perhaps as many as a million, can’t get access to their savings, a problem that has quietly persisted in spite of widely publicized federal efforts to restore confidence in money-fund investments.
*snip*
And the Reserve Fund had seemed the least likely candidate for trouble, given its long and stable history — its founder, the legendary Henry B. R. Brown, had invented money market funds.
Initially, the company simply announced that it would delay redemptions from the Primary Fund for up to seven days, as allowed by law. Customers were somewhat reassured, but anyone trying to get additional information was met with busy phone lines and unanswered e-mail.
First, let's go to the web page of this ponzi scheme operation and look at two press releases:
The Board of Trustees of The Reserve Fund, after reviewing the unprecedented market events of the past several days and their impact on The Primary Fund, a series of The Reserve Fund and taking into account recommendations made by Reserve Management Company, Inc., the investment manager of The Primary Fund, approved the following actions with respect to The Primary Fund only:The value of the debt securities issued by Lehman Brothers Holdings, Inc. (facevalue $785 million) and held by the Primary Fund has been valued at zero effective as of 4:00PM New York time today. As a result, the NAV of the Primary Fund, effective as of 4:00PM, is $0.97 per share. All redemption requests received prior to 3:00PMtoday will be redeemed at a net asset value of $1.00 per share.
Effective today and until further notice, the proceeds of redemptions from Primary Fund will not be transmitted to the redeeming investor for a period of up to seven calendar days after the redemption. The seven-day redemption delay will not apply to debit card transactions, ACH transactions or checks written against the assets of the Primary Fund provided that any such transaction from an investor, individually or in the aggregate, does not exceed $10,000.
The Primary Fund will continue to accept purchase orders.
Effective tomorrow, September 17, 2008, the NAV for the Primary Fund will be calculated once a day at 5:00PM, New York time.
Here is the death notice:
Many shareholders have contacted us regarding the status of their investments in Reserve funds. We hope the information below answers some of your questions.Suspended Purchases:
We are not accepting subscriptions in any of the Reserve Funds.
Suspended Redemptions and Liquidating Funds:
The U.S. Securities and Exchange Commission (SEC) has issued temporary orders permitting the suspension of all rights of redemption for the following funds:
PRIMARY FUND U.S. GOVERNMENT FUND of the Reserve Fund
*INTERSTATE TAX-EXEMPT FUND* CALIFORNIA MUNICIPAL MONEY-MARKET FUND
* CONNECTICUT MUNICIPAL MONEY-MARKET FUND* FLORIDA MUNICIPAL MONEY-MARKET FUND* MICHIGAN MUNICIPAL MONEY-MARKET FUND
* NEW JERSEY MUNICIPAL MONEY-MARKET FUND
* OHIO MUNICIPAL MONEY-MARKET FUND* PENNSYLVANIA MUNICIPAL MONEY-MARKET FUND
* VIRGINIA MUNICIPAL MONEY-MARKET FUND of the Reserve Municipal Money-Market Trust II
* NEW YORK MUNICIPAL MONEY-MARKET FUND of the Reserve New York Municipal Money-Market Trust
* ARIZONA MUNICIPAL MONEY-MARKET FUND* MINNESOTA MUNICIPAL MONEY-MARKET FUND of the Reserve Municipal Money-Market Trust
* RESERVE YIELD PLUS FUND of the Reserve Short-Term Investment Trust
The Boards of Trustees (the “Boards”) are working on plans to effect the orderly liquidation of the foregoing funds, subject to supervision by the SEC. The Boards seek to ensure that all investors are treated fairly and receive their money in the shortest time consistent with realizing the fair value of the securities. The Reserve intends to begin making payouts as soon as practicable.
In other words, the fund is bankrupt. Note how it was cleverly named to make it sound like these government funds were bonds held by the Federal Reserve. This is a common problem. Bankers would name their banks after government entities like 'The Bank of New York' but they are really dangerous private enterprises. Not that they are really that anymore, anyway. Now that the bankers have raided the Treasury to get their bonuses and dividends!
Usually in a collapse, the first funds to tank are those which appeared the safest. This is yet another typical example. This, the oldest of the Funds which are destroying global savings and wealth, was slain by the Derivatives Beast. He ate the whole thing. When he ate Lehman Brothers, nothing was left, barely any bones!
These funds were quite ordinary. And thus, not all that profitable. When inflation raged ahead of the value of these instruments, the desperate fund managers wanted it to grow, anyway, so they played those stupid, useless and destructive credit default swap games. And interest rate flux games. And monetary values market games. And lost their shirts! This sort of hyper-risky activity is due to the dollar dying! And what is killing the dollar?
Hyperlending. Especially to governments. And the wildest borrower is Congress and the President of the US. The same people putting another trillion plus debt on top of the ten trillion mountain of debt we already owe.
The average hedge fund has lost more than 18 percent this year, according to the HFRX Global Hedge Fund Index. Managers are selling assets to meet demands from lenders for more collateral and investors that want their funds returned.In other words, the gnomes have to return the loot to the investors who want to run away as fast as humanly possible. When I rented my house for $68 a month, there were zero hedge funds in the universe. When the average American had to cough up $3,000 a month to rent homes, we had thousands of these hedge funds. There is a direct connection here.
<p>
Investors forced to sell a record $2.3 billion of leveraged loans this month sent prices tumbling to a record low 66 cents on the dollar last week from 88.5 cents at the beginning of September, according to Standard & Poor's LCD, which earlier reported the Barclays loan sale. The sales were forced by clauses in funds' borrowing agreements that require them to raise money when prices drop below a set level.
Old banks were very parsimonious about lending for housing. The flood of debt that poured into all markets due to hedge funds funneling loans from 0% Bank of Japan to our markets has destroyed the value of the dollar. This is because the Japanese wanted to destroy the value of the yen so they could destroy our industrial base.
To keep the yen weak, the Bank of Japan had to make the carry trade flourish. Note how, when the yen got strong, the carry trade ended and LIQUIDITY VANISHED ACROSS THE PLANET! And all these funds have been caught in the wringer here. They are the funnel for these outrageous loans. The Bank of Japan didn't give a hoot how improvident the lending was, they lent to anyone.
It should occur to people that the Bank of Japan did this before! Like, a decade earlier. They cheerfully handed out loans all over the place and Japan's property and stock markets had a monumental bubble. Then, the Bank of Japan turned and did this to the entire planet. The US wasn't the only place that saw epic real estate and corporate debt hikes. The housing bubble was pretty much global.
Of course, the August indexes don't reflect the financial market meltdown that hit in September and severely restricted access to credit, according to Richard DeKaser, chief economist for National City Corp (NCC, Fortune 500). He believes the pace of price declines has picked up since then.Like the huge Japanese bubble, all these bubbles are going flat the same way and at the same rate. The US led the pack only because we were showered with the most red ink in the past. Attempts at restarting lending under these circumstances is impossible. But fixing this is even more impossible if the Bank of Japan isn't punished for what they did!"There are two explanations for these steeper declines," he said, "neither of which are encouraging. One is that the difficulty in obtaining credit has further constricted demand. The second is that home sellers are finally capitulating on prices. They've been holding out for months, refusing to sell except at their prices. Now they're throwing in the towel."
*snip*
Much of that statistical trend is being driven by data from hard-hit western states like California. The California Association of Realtors reported last week that home sales volume jumped a whopping 97% in September compared with the same period a year ago. But the median price of an existing home has fallen 41%.
PUNISHMENTS MATTER!!! For example, the other G7 could condemn the Bank of Japan and isolate it. Forbid all commerce with it until it is thoroughly reformed. This means, first shutting down all the pirate coves which were the places that took the carry trade loans and sent them to various countries to load up debts. The US public financed a great deal of our debts via inflating the value of our homes. So now, we are rapidly losing wealth. 0% loans on homes are not happening. Even as the Fed drops rates, house loans are going up, not down, the interest rate mountain. This is due to the simple fact that everyone sane expects future inflation from all the money creation.
Meanwhile, Libra resets her scales in a rather violent way. As we plainly see. The Derivatives Beast is doing an epic job of eating up credit. Unwittingly, the gnomes themselves birthed this monster. And they want us to slay it for them. And then resume the financial games they played with Japan.
For the past few years, the Inland Empire in Riverside County has been one of the fastest growing counties in the state - home to a major housing boom. But now the Inland Empire is pretty much the poster child for the foreclosure crisis. In the newer developments, house after house sits vacant - either up for auction, for sale by a bank or going for what’s called a “short sale” which is when the owner owes more than the house is worth.Several things are important here and seldom talked about. One is, the US consumer has grossly over-consumed. The video above is most infuriating. I have scavenged all of my life. Dumpster diving is great sport! Rich or poor, I could never resist dumpster diving. Watching them simply throw away perfectly good, often new, stuff, is amazing. They couldn't get anyone to come and get it!SoCal Connected tracked down some surreal sights associated with the crisis - a company that specializes in removing whatever people leave behind in their foreclosed homes. The process is called a “trashout” - a term the company came up with because it perfectly describes what happens. Everything that’s left is dumped in a trailer and taken to the landfill.
I am just aghast. The people living in mostly new houses here in this video went on massive decorating/buying sprees after going very deeply into debt, buying the house on easy credit. When they couldn't pay even TWO YEARS of this high-living, they hightailed out and leave nearly everything behind?
Another thing struck me: nearly all the stuff was new. This means, they probably had very little belongings when they moved. I have moved a number of times and each time, required a moving van after age 28 years old. The real estate boom of the Sub Prime years which were from 2004-2007 were not normal house buying years. This was the period whereby banks who forgot the real rules of banking, were anxious to hand out loans to total strangers who didn't have to prove income or even citizenship.
The Hispanic community of illegal aliens believed that if they owned big houses, they would be able to force the government to hand over citizenship even though they jumped the lines in, so to speak. They came illegally. Here is a New York Times graph that clearly shows how this worked:
Note first of all, both Black purchases of homes and general population purchases began a steep decline in 2004. And was NEGATIVE during the HEIGHT of the bubble! On the other hand, the flood of often illegal Hispanic buyers shot up that very same year! Everyone else was exiting the markets because housing was too expensive. Were Hispanics suddenly earning much more than the general population?
NO! But they happily took on epic levels of debt in the hopes of gaining citizenship. Whole real estate businesses were predicated on luring them into very expensive homes. Most sane people would take one look at the high future rates of the various lending tricks and shake their heads and hold onto their purses. But not illegal aliens seeking to prove they had roots!
In 2005, I published a story declaring the housing boom had peaked. And I was right except for this one sub-market of buyers. The very reckless buyers who interfaced with very reckless bankers who took cynical advantage of their weakness.
Right on Elain! When you go to the grocery store they don't
loan you a steak,they sell it to you,when you go to the bank
they don't loan money ,they sell it to you.
The commercial world is full of double talk
Posted by: roger | October 30, 2008 at 03:06 PM
The "stuff left behind" by people foreclosed upon is thanks to the bankruptcy laws, I heard on a radio program. People can't claim bankruptcy if they take anything beyond the clothes they're wearing. So, all this great, useful stuff is dumped. I haven't seen the video but I couldn't bear to watch perfectly good things get destroyed. It is wasteful beyond comprehension.
Posted by: Laura | October 30, 2008 at 08:49 PM
Your very correct when you say there is a world wide housing/asset bubble. I have worked in many countries on many continents and it is very obvious to people looking outside the institutional imperative. This really has just begun.
Posted by: Warner | October 31, 2008 at 08:49 AM
Great post! the post is indeed worth reading. "Banking is not lending" now i've got an idea. check this out. Click here
Posted by: dan (looking for Attorney?) Summers | June 13, 2009 at 09:47 PM
Banks exist to make money for themselves! They are a legal cheating!
Posted by: Clenbuterol | September 02, 2010 at 09:00 AM
Do you really want to know how to deal with bankers?
First of all don't go in their asking for a loan like they are doing you a favor. You are the revenue stream for banks. You are doing them a favor by even talking to them.
Check their numbers on the FDIC web site to see how solvent the bank is. Or take a look at their Texas Ratio. Make sure you have your lawyer read your contracts.
Banks have turned loan sharking into a legitimate business and you are the mark.
Posted by: scoremore | October 12, 2010 at 09:33 AM
Buying a new car can be an exciting time, until you try to get a car loan. There are so many fees, interest choices and time lengths that one can get discouraged and forgo the new vehicle all together.
Posted by: wisconsin payday loans | December 22, 2010 at 11:20 PM