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by Joan Veon from Rense Website
Americans are confronted with what appears to be the worse economic situation since the Great Depression.
What will history say about the U.S. credit crisis turned global financial crisis?
At every turn investors are faced with new
problems, new crises, and less than desirable solutions which include debt,
deflation and a transfer of wealth.
On top of the $29B for Bear Stearns, Fannie and Freddie's debt of $5.4T has been effectively transferred to the balance sheet of the USA.
This is equal to the entire publicly traded debt
of the U.S. which is also the same as the total of America's
mortgage-related assets. In addition to personal debt, every American now
has a financial responsibility for Bear Stearns and Fannie and Freddie.
While large financial institutions such as JP Morgan, which owns $1.2B of Freddie and Fannie stock, said a complete loss would only erase one or two months of profits, contrast this to smaller banks such as the Central Virginia Bank in Richmond which has $20M in shares of Freddie and Fannie.
That type of loss will put them in the same kind
of trouble as Lehman Brothers, not enough capitalization. There are 15 other
banks that hold 10% or more of their capital in shares of Freddie and
Fannie.
These rules which were only to pertain to
international banks are now being applied to national banks.
The decision to not buy mortgage paper includes
the sub-prime loans made to home buyers that had no down payment. To relate,
I recently met a young Latino who is worried about her home. Five years ago
she bought a $370,000 townhouse with $14,000 down. Her interest rate varies
causing her monthly payment to jump from $2700 per month to $3500. She
cleans houses for a living.
Perhaps we should ask where the desire to put
poor people into homes came from? It was part of the Bush
Administration's policy to conform to the United Nations' Millennium
Development Goals unveiled in the year 2000.
Basically the economy is now in deflation.
When people stop spending, it moves from
deflation to stagflation-no matter how cheap an item becomes, people can't
afford to buy. All this without knowing what the real fall out will be from
the bailout of Freddie and Fannie.
They create and destroy the business cycle by various means: raising and lowering interest rates. The government of the United States is in bondage to a group of individuals who own the Federal Reserve. The reason why the American people cannot forgive themselves the interest on our debt is because we do not owe it to ourselves we owe it to the Federal Reserve!
Every single time since then that the Federal
Reserve Act was amended, over 195 times, the Federal Reserve gathered more
power over various aspects of our economy. However, they are in the final
throes of stripping America of any remaining vestiges of sovereignty as has
been laid out in the Treasury "Blueprint for a Modernized Financial
Regulatory System."
Long time investment sage Marty Whitman commented on his actions,
The Blueprint calls for key components of our financial system, not currently under Federal Reserve control, to be transferred to them. In order to do this, a number of changes will be necessary which Congress will have to approve.
First, it recommends changing the banking charter to include all financial institutions, thus effectively transferring control over "national banks, federal savings associations, and federal [and state] credit union charters."
For your information, Washington Mutual is a savings and loan while Lehman Brothers is and Bear Stearns was an international bank. The Fed is to be given authority over the U.S. Payment and Settlement System thereby controlling the settlement process for securities. It will be given the role of Market Stability Regulator and it will have total control over the market.
The Blueprint provides for the entire mortgage system of the U.S. to be federalized and to be under the control of the Mortgage Origination Commission. The Federal Reserve will be part of the Commission. Additionally the Federal Reserve will be given a say in the insurance industry which will be federalized and a new Office of Insurance Oversight will oversee its activities.
The Federal Reserve will have a place on the
Insurance Oversight commission.
So far, we have the bailout of Freddie and Fannie by giving Treasury a blank check to act; the Federal Reserve worked all weekend to find a buyer to Lehman, another international bank, their next project might be to rescue Washington Mutual, a savings and loan, and the Fed has been given initial powers to act as the Market Stability Regulator.
The only component that is missing is the demise
of an insurance company, AIG anyone?
About $7T vanished from the balance sheets of investors.
But we did not have to worry, as a result of 9/11, the Federal Reserve started to reduce interest rates to 45 year lows to get Americans to support the economy by buying the dream home. We bit the bait. It was the Roaring 20s all over again. At one point in the housing boom, one out of four jobs was created by the housing industry.
No one asked if they could afford the debt, they only asked if they could afford the payment: a big difference.
They did not ask the right questions about their
mortgage because the mortgage industry was not required to disclose to them,
when it should have. At one time the mortgage industry was run on honesty
and integrity, but that changed too and people have been caught in a
terrible snare.
Interestingly enough it took place 13 months after the beginning of the credit crunch. Lastly, I have maintained since the beginning of the credit crunch last August that it was planned and managed destruction in order to accomplish the final transfer of America's financial sovereignty.
All of the above only confirms my original suspicion.
Sadly, only the strong will survive, only those
who did not use their house as a checking account will survive in the midst
of the Great 2008 Transfer of Wealth.
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