Mustang Ranch and $850 billion bail-out
Back in 1990, the Government seized the Mustang Ranch brothel in Nevada for tax evasion and, as required by law, tried to run it.
They failed and it closed. Now, we are trusting the economy of our country and 850+ Billion Dollars to a pack of nit-wits who couldn't make money running a whore house and selling booze.
Now if that don't make you nervous, what does??? "
Bailout Madoff!
By: Brady Willett, FallStreet.com
-- Posted Tuesday, 16 December 2008
With the financial markets already in a state of panic and the global recession expected to worsen in 2009, we can ill afford to allow the financial institutions, charities, and rich idiots that entrusted Bernard Madoff with their money to go bust. As for the widespread contention that since Mr. Madoff committed fraud he deserves to go to jail, do not think of Madoff as operating a ponzi scheme so much as a Strong Armed Perception Fund (SAP Fund), and don’t think of him as breaking the law so much breaking new ground in the arena of fictitious returns.
In short, there needs to be a new bailout effort entitled the Criminal Reprieve Assistance Program (CRAP) to provide ingenious criminals like Madoff the tools required to help kick start the faltering U.S. economy. By investing $100 billion with Madoff so that he can start-up a new and improved SAP Fund and make current clients whole, the CRAP would immediately help restore confidence in the marketplace. Concurrent with the Madoff bailout pieces of CRAP could also be used to expedite the release of jailed mortgage brokers so that they can help stabilize the collapsing U.S. housing market by doing what they do best - underwriting crappy mortgages.
What we have failed to learn time and time again is that the Madoffs’ of this world take risks that ordinary investors do not, and only when these criminals amass enough capital and clout does the average investor stand to benefit. If adopted the CRAP can effectively flush out the safety-crazed attitudes of investors now taking root and allow unlawful innovation and the temporary perception of wealth to flourish once again. It goes without saying that the only alternative if the CRAP sinks and Madoff doesn’t get bailed out is financial Armageddon, millions of jobs losses, and another Great Depression.
The Truth About Bailouts
By: Peter Schiff, Euro Pacific Capital, Inc.
-- Posted Friday, 21 November 2008 | Digg This ArticleDigg It! | Source: GoldSeek.com
As the Federal bailout bonanza prepares to spread beyond the mortgage and financial sectors to fill Detroit's depleted coffers, few economic or policy analysts have spared a thought for the destitution of the U.S. government itself. Put simply, our government doesn't have enough spare cash to bailout a lemonade stand let alone a bloated and failing industry that is losing tens of billions of dollars per month. Washington can only offer funds that it has borrowed from abroad or printed. Unfortunately, the nation is in the grips of a delusion that money derived from these sources has the power to heal. But history has clearly shown that borrowed or printed money only has the power to destroy.
The argument that energizes the pro-Detroit camp is that the government should extend the same courtesy to the rank and file auto workers that it lavished upon the fat cats of Wall Street. While two wrongs certainly do not make a right, the fact remains that the Wall Street firms are still floundering despite the bailouts. What's worse, the money spent was either printed or borrowed from abroad. Both options are destructive to America.
When it comes to bailouts, the real discussions are not centered in Washington but rather in Beijing, Tokyo, and Riyadh. With no money of our own, our ability to bailout our own citizens is completely dependent on the world's willingness to foot the bill. While I am sure that Bush and Paulson are doing their best to convince the world that open ended financing of the United States is in the global interest, my guess is that, unlike Congress, our foreign creditors will see through the self-serving nature of our plea.
Like any bailout, our foreign creditors should consider the moral hazard of rewarding bad behavior, and the old investment adage of not throwing good money after bad. By continuing to "lend" us money, the world is merely delaying the necessary rebalancing of our upside down economy. By continuing to subsidize our reckless and outsized consumption, the world merely delays the inevitable re-balancing and exacerbates the underlying problem at the root of the current global financial crisis.
If Washington bails out General Motors, the funds will never be recovered. GM will simply burn through the bailout money and then be back for more. Talk of designing a new fleet of "green" cars that will pave the way to profitability by spurring a new buying spree is simply delusional. Given the staggering "legacy" costs of health care and pensions for millions of current and former workers, Detroit cannot produce cars profitably. Unless these costs are seriously brought down, and there is very little chance that they will be, Detroit will remain a bottomless money pit.
Similarly any money that the world lends to America to finance more consumption will never be repaid. We will simply blow through it, and be back, hat in hand, begging for more. As we painfully learned in the housing bust, lending people money that they cannot pay back makes no sense. This applies equally to foreign central banks lending to America as it does to commercial banks lending to homeowners.
So for the same reasons that Washington should not bail out General Motors, the world should not bailout America. Like GM, our economy is in desperate need of a restructuring. Spending must be replaced with savings, and consumption with production. The service sector must shrink and manufacturing must expand to fill the void. The dollar must fall, wages in America must be brought down to a competitive level, and hopefully government spending and burdensome regulation can be reduced.
This transformation will not be fun, but it is necessary. Our standard of living must decline to reflect years of reckless consumption and the disintegration of our industrial base. Only by swallowing this tough medicine now will our sick economy ever recover. By accepting a lower standard of living today, we will eventually be rewarded with a higher one tomorrow.
American Express gets bank-holding company nod
By Lisa Twaronite, MarketWatch
Last update: 6:58 p.m. EST Nov. 10, 2008
SAN FRANCISCO (MarketWatch) -- American Express Co. got approval from the Federal Reserve Board to form a bank-holding company, the central bank said late Monday.
In becoming a holding company, the credit-card giant would get access to the Federal Reserve's emergency-lending facilities, but also will be subject to greater scrutiny by regulators.
The U.S. central bank said that both American Express and its affiliate American Express Travel Related Services are approved to form bank-holding companies, as the Amex group converts its Salt Lake City -based American Express Centurion Bank into a full bank.
The Fed waived the normal 30-day waiting period on the application.
"In light of the unusual and exigent circumstances affecting the financial markets and all other facts and circumstances, the board has determined that emergency conditions exist that justify expeditious action on this proposal in accordance with the provisions of the [Bank Holding Company] Act and the board's regulations," the Fed said.
"The record indicates that consummation of the proposal would create a stronger and more diversified financial-services organization and would provide the current and future customers of Amex, Amex Travel and Amex Thrift with expanded financial products and services," the Fed wrote in its approval. "[B]ased on all the facts of record, the board has concluded that consummation of the proposal can reasonably be expected to produce public benefits that would outweigh any likely adverse effects."
American Express said last month that it would cut 10% of its staff, suspending management salary increases and instituting a hiring freeze, as well as take a pretax restructuring charge of up to $440 million against fourth-quarter results to cover layoff expenses.
Earlier in October, the company said that quarterly net income fell 24% as it set aside more money to cover bad loans. Net income came in at $815 million, or 70 cents a share, compared with $1.07 billion or 90 cents a share a year earlier. Income from continuing operations was $861 million, or 74 cents a share, in the latest quarter, Amex reported.
In September, Wall Street was transformed when investment banks Morgan Stanley and Goldman Sachs Group received Fed approval to convert to bank-holding companies.
Lisa Twaronite reports for MarketWatch from San Francisco.
Yet Another GM Bailout
Daily Article by Briggs Armstrong | Posted on 11/10/2008
General Motors has once again approached the federal government with its hand out. It should not be forgotten that in September of 2008, Congress gave the "big three" automakers a loan totaling $25 billion. Now they are back. This time they say that with a mere $50 billion they can turn things around and become profitable in the future. The management of GM and Ford as well as the UAW have been meeting with Nancy Pelosi to arrange a deal. GM claims that if the government does not give them the money they demand it will spell doom for the company and thus the entire US economy.
Let's consider the impact of GM ceasing to exist — highly unlikely even if they declare bankruptcy. Hypothetically, GM would close its doors and all 266,000 workers would be unemployed, never to find work again, or so GM would have the public believe. GM maintains that it is really in the best interest of the country and economy to continue to support their failing business model. After all, in what kind of a world would the government allow a company that employs 266,000 workers to fail?
Descending into an abstract economics lesson about shifting resources to marginally more productive activities may be ineffective; therefore, I will approach this issue from a more philosophical angle.
The basis of GM's claim is essentially that they are too big or too important to fail due to their massive labor force. But how massive is their labor force relative to other American companies? It may be surprising that the following companies employ a larger number of workers than GM: Target, AT&T, GE, IBM, McDonalds, Citigroup, Kroger, Sears, and Wal-Mart. It is also worth noting that Home Depot, United Technologies, and Verizon all employ nearly as many workers as GM.
The question must be posed: Should the government bail out all 12 of these companies and, if so, at what cost? I doubt that if Wal-Mart, with their 2.1 million employees, went to the government or the American people and demanded a bailout that they would receive much sympathy, let alone money. But if we are going to base worthiness of bailout on number of employees alone, then Wal-Mart is almost 7 times more worthy than GM.
(I have largely neglected Ford, whose executives are also demanding a bailout. I believe that it is enough to simply state that Abercrombie & Fitch employs almost 7,000 more workers than does Ford. Would the failure of Abercrombie & Fitch's threaten the economy? I think not.)
It is unethical to force taxpayers to pay billions of dollars in order to bail out a company with a failing business model. After all, they cannot even claim, as banks did, that it is an industry-wide problem. Because if it were industry-wide, Toyota, Hyundai, Honda, Volkswagen, etc. would all be joining their American counterparts on Capitol Hill with their collective hands out.
For years GM and Ford have produced a product that consumers do not value as much as the product provided by their competitors. Rather than changing their products or business model, they instead spent small fortunes on lobbyists. If the government does bail out GM, rest assured that this will not be the last time. But even if the government gives GM a check every week, there will come a time when no amount of government money will be enough to save them.
What is the best solution? In a word, bankruptcy. By filing for bankruptcy protection, GM can escape the death grip the UAW has on the business. Bankruptcy would allow for restructuring on an unprecedented scale. There is a good chance that a highly competitive company could rise from the ashes of what we today call GM. Even if GM itself was unable to survive bankruptcy, the resources freed from its grasp could be hugely beneficial to other automotive companies that make products that American consumers value more. As taxpayers, we have a right to object to this misuse of our money.
Briggs Armstrong is a student at Auburn University majoring in accounting and minoring in finance.
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Fed, Treasury revamp AIG support
New package unveiled as insurance giant posts $24.5 billion quarterly loss
By Sam Mamudi & Rex Nutting, MarketWatch
Last update: 10:20 a.m. EST Nov. 10, 2008
New York (MarketWatch) -- The Federal Reserve and the U.S. Treasury have brought new powers to bear as they restructure government support for American International Group, the insurance giant taken over on Sept. 16.
The new plan unveiled Monday calls for the Treasury to invest $40 billion in preferred shares of New York-based AIG and for the Fed to create two new lending facilities to help AIG remove toxic assets from its balance sheet.
The government's announcement signals a shift away from the original plan -- an $85 billion loan to AIG, the amount of which was later increased to $123 billion. The new plan also contains a $60 billion loan.
Senior Fed officials said that the new plan is possible because of broader powers granted the government -- to buy shares in companies and purchase toxic assets -- as part of October's sweeping bailout package. - full story
| National Debt Clock |
Dear Friends,
There is no hope for the future as long as we have to listen to what we have experienced in the last two days. If the Fed pays “Hold to Maturity” prices in the bailout they are accepting onto their balance sheet all the lies that existed and still exists on and off the balance sheets of the banking and investment industry.
Fabrication has taken the US financial system over the cliff. The bailout of the near and dear fabricated to a spiritual level sets in cement the generational nature of this breakdown, the coming dollar collapse, and the reign of gold.
To categorize this bailout of OTC derivative manufacturers as an asset purchase is so wrong it strains the limits of criminality.
DO NOT LET YOUR GUARD DOWN.
THE BAILOUT ONLY BUYS YOU A LITTLE MORE TIME TO PROTECT YOURSELVES.
You need to distance yourself from your financial agents by:
I am told where the retirement shares are concerned that Charles Schwab performs this service. Many others likely do as well.
The only way to be sure you really have a true custodial account is to have your attorney review the agreement between you and the institution.
I have personally used the services of Jay Marcus for this of:
Marcus Law Offices
2094 185th Street
Suite 15
Fairfield, Iowa 52556
641-472-5945
Gold is the ultimate answer as to what currency to own. The only way gold functions as insurance is if you hold it in your own hands. ETFs do not do it. Gold shares with the real stuff properly priced will do part, but not all of it. Gold at some coin dealers, segregated or as a certificate, does not do it.
If you have gold at any coin dealer or non-government mint and you want to remain that way please request their certified balance sheet. If a guarantee by some other party is there then get a copy of that guarantee for your attorney to read. The only business, as I have told you often, you should do with any coin dealer is to buy coins.
Do not use margin on anything GOLD. That totally defeats the insurance principle.
Respectfully yours,
Jim
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