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Hence, “free trade” in the U. S. means an open market for profit; and “free trade” in Japan means a closed market for market share resulting in Toyota being #1 as Ford, GM, and Chrysler struggle. To China “free trade” means that the U. S. continues its open market while China with authoritarian rule closes its market and controls its labor and currency, but fails to control its air and water so as to have the cheapest production in globalization. Thus, globalization is nothing more than a trade war with production looking for a country cheaper to produce. Today, “free trade” to Corporate America, Wall Street, and the big banks, means the U. S. should not compete in globalization. It means the United States should not trade. “Free trade” means Corporate America should continue, unfettered by Congress, offshoring its investment, research, technology, development, production, jobs – literally, the U. S. economy. Today, “free trade” means to Corporate America that it be permitted to continue offshoring our economy while it builds the economies of Mexico, China and India. In short, “free trade” means for Corporate America to ruin the economy of the United States as it begs for bailouts and bonuses from the taxpayers.
ROYAL BK SCOTL GR 11:03AM ET 28.50 3.40 13.55%
DEUTSCHE BANK N 11:06am ET 35.17 4.08 13.14%
(Credit Barry Ritholtz and Institutional Risk Analytics, the original source)
In fact, our investigation suggests that by the time AIG had entered the CDS fray in a serious way more than five years ago, the firm was already doomed. No longer able to prop up its earnings using reinsurance because of growing scrutiny from state insurance regulators and federal law enforcement agencies, AIG’s foray into CDS was really the grand finale. AIG was a Ponzi scheme plain and simple, yet the Obama Administration still thinks of AIG as a real company that simply took excessive risks. No, to us what the fraud Bernard Madoff is to individual investors, AIG is to the global financial community.
As with the phony reinsurance contracts that AIG and other insurers wrote for decades, when AIG wrote hundreds of billions of dollars in CDS contracts, neither AIG nor the counterparties believed that the CDS would ever be paid. Indeed, one source with personal knowledge of the matter suggests that there may be emails and actual side letters between AIG and its counterparties that could prove conclusively that AIG never intended to pay out on any of its CDS contracts.
Read that folks.
Then read it again.
Then read it AGAIN.
There are two basic problems with side letters. First, they are a criminal act, a fraud that usually carries the full weight of an “A” felony in many jurisdictions. Second, once the side letter is discovered by a persistent auditor or regulator examining the buyer of protection, the transaction becomes worthless. You paid $6 million to AIG to shift risk via the reinsurance, but the side letter makes clear that the transaction is a fraud and you lose any benefit that the apparent risk shifting might have provided.
And finally, the last nail in the coffin:
The key point is that neither the public, the Fed nor the Treasury seem to understand is that the CDS contracts written by AIG with these various non-insurers around the world were shams - with no correlation between “fees” paid and the risk assumed. These were not valid contracts as Fed Chairman Ben Bernanke, Treasury Secretary Geithner and Economic policy guru Larry Summers claim, but rather acts of criminal fraud meant to manipulate the capital positions and earnings of financial companies around the world.
Indeed, our sources as well as press reports suggest that the CDS contracts written by AIG may have included side letters, often in the form of emails rather than formal letters, that essentially violated the ISDA agreements and show that the true, economic reality of these contracts was fraud plain and simple. Unfortunately, by not moving to seize AIG immediately last year when the scandal broke, the Fed and Treasury may have given the AIG managers time to destroy much of the evidence of criminal wrongdoing.
Only when we understand how AIG came to be involved in CDS and the fact that this seemingly illegal activity was simply an extension of the reinsurance/side letter shell game scam that AIG, Gen Re and others conducted for many years before will we understand what needs to be done with AIG, namely liquidation. Seen in this context, the payments made to AIG by the Fed and Treasury, which were then passed-through to dealers such as Goldman Sachs (NYSE:GS), can only be viewed as an illegal taking that must be reversed once the US Trustee for the Federal Bankruptcy Court for the Southern District of New York is in control of AIG’s operations.
Thank you Timmy, thank you Ben Bernanke, thank you Henry Paulson, thank you George Bush and thank you President Obama.
If this is true every one of you needs to go to prison.
After those of you still in your positions are impeached.
Much more at Link...
G20 Communique statement
This is from the G20 website and should be what Gordon Brown announced at his press conference in London
London Summit - Leaders' Statement
2 April 2009
1. We, the Leaders of the Group of Twenty, met in London on 2 April 2009.
2. We face the greatest challenge to the world economy in modern times; a crisis which has deepened since we last met, which affects the lives of women, men, and children in every country, and which all countries must join together to resolve. A global crisis requires a global solution.
3. We start from the belief that prosperity is indivisible; that growth, to be sustained, has to be shared; and that our global plan for recovery must have at its heart the needs and jobs of hard-working families, not just in developed countries but in emerging markets and the poorest countries of the world too; and must reflect the interests, not just of today's population, but of future generations too. We believe that the only sure foundation for sustainable globalisation and rising prosperity for all is an open world economy based on market principles, effective regulation, and strong global institutions.
4. We have today therefore pledged to do whatever is necessary to:
restore confidence, growth, and jobs;
repair the financial system to restore lending;
strengthen financial regulation to rebuild trust;
fund and reform our international financial institutions to overcome this crisis and prevent future ones;
promote global trade and investment and reject protectionism, to underpin prosperity; and
build an inclusive, green, and sustainable recovery.
By acting together to fulfil these pledges we will bring the world economy out of recession and prevent a crisis like this from recurring in the future.
5. The agreements we have reached today, to treble resources available to the IMF to $750 billion, to support a new SDR allocation of $250 billion, to support at least $100 billion of additional lending by the MDBs, to ensure $250 billion of support for trade finance, and to use the additional resources from agreed IMF gold sales for concessional finance for the poorest countries, constitute an additional $1.1 trillion programme of support to restore credit, growth and jobs in the world economy. Together with the measures we have each taken nationally, this constitutes a global plan for recovery on an unprecedented scale.
Restoring growth and jobs
6. We are undertaking an unprecedented and concerted fiscal expansion, which will save or create millions of jobs which would otherwise have been destroyed, and that will, by the end of next year, amount to $5 trillion, raise output by 4 per cent, and accelerate the transition to a green economy. We are committed to deliver the scale of sustained fiscal effort necessary to restore growth.
7. Our central banks have also taken exceptional action. Interest rates have been cut aggressively in most countries, and our central banks have pledged to maintain expansionary policies for as long as needed and to use the full range of monetary policy instruments, including unconventional instruments, consistent with price stability.
8. Our actions to restore growth cannot be effective until we restore domestic lending and international capital flows. We have provided significant and comprehensive support to our banking systems to provide liquidity, recapitalise financial institutions, and address decisively the problem of impaired assets. We are committed to take all necessary actions to restore the normal flow of credit through the financial system and ensure the soundness of systemically important institutions, implementing our policies in line with the agreed G20 framework for restoring lending and repairing the financial sector.
9. Taken together, these actions will constitute the largest fiscal and monetary stimulus and the most comprehensive support programme for the financial sector in modern times. Acting together strengthens the impact and the exceptional policy actions announced so far must be implemented without delay. Today, we have further agreed over $1 trillion of additional resources for the world economy through our international financial institutions and trade finance.
10. Last month the IMF estimated that world growth in real terms would resume and rise to over 2 percent by the end of 2010. We are confident that the actions we have agreed today, and our unshakeable commitment to work together to restore growth and jobs, while preserving long-term fiscal sustainability, will accelerate the return to trend growth. We commit today to taking whatever action is necessary to secure that outcome, and we call on the IMF to assess regularly the actions taken and the global actions required.
11. We are resolved to ensure long-term fiscal sustainability and price stability and will put in place credible exit strategies from the measures that need to be taken now to support the financial sector and restore global demand. We are convinced that by implementing our agreed policies we will limit the longer-term costs to
our economies, thereby reducing the scale of the fiscal consolidation necessary over the longer term.
12. We will conduct all our economic policies cooperatively and responsibly with regard to the impact on other countries and will refrain from competitive devaluation of our currencies and promote a stable and well-functioning international monetary system. We will support, now and in the future, to candid, even-handed, and independent IMF surveillance of our economies and financial sectors, of the impact of our policies on others, and of risks facing the global economy.
Originally posted by Vitchilo
ROYAL BK SCOTL GR 11:03AM ET 28.50 3.40 13.55%
DEUTSCHE BANK N 11:06am ET 35.17 4.08 13.14%
Are they trying to go back at 900$ a share?
[edit on 2-4-2009 by Vitchilo]
*DRESDNER KLEINWORT TO DROP FROM RANKS OF FED'S PRIMARY DEALERS
*FEDERAL RESERVE'S PRIMARY DEALER NETWORK TO SHRINK TO 15 FIRMS
*FED'S PRIMARY DEALER NETWORK WILL BE SMALLEST ON RECORD
No link, off wires.
The Fed continued to buy the long end today, all on-the-run securities, nearly all 5 year. A massive $26 billion were submitted against $7.5 taken, strongly implying that Ben is (obviously) intentionally overpaying in his attempt to drive rates lower.
Unfortunately its not working, as the following chart shows on the TNX, with most of the damage coming right after the auction announcement:
(see link for chart that should be here)
Now granted, this is the 10 year and Ben bought 5s. But if the intent was to depress the curve generally, well, you tell me how well he did?
The IRX, the 13 week T-bill, didn't move to any material degree.
At this rate it will not be long before The Fed owns enough of the long end of the curve to effectively by the "whip hand", at which point external financing for the government is all in the short end.
And that, my friends, is when a simple decision to run down those short-term bills leads to the inability of the government to finance itself.
The government (and Fed) will thus by forced to dramatically raise offered coupon (interest rates) right into the maw of this economic and banking mess, exactly as happened during The Depression.
Get ready Ben - here it comes!