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Originally posted by Hx3_1963
reply to post by logician magician
Being as they are the only source of legal tender (charging fee/interest) we'll never get even...
having them print $1 costs us $1.01...now we own them $.01...how will we pay that $.01...right...they are the only source of money...you have to borrow more to cover that...
individuals can amass wealth (per say) but the total debt of all monetery supply can never pay off the debt as that first $.01 starts the whole train wreck...
[edit on 1/19/2009 by Hx3_1963]
During Fiscal Year 2008 the BEP delivered 7.7 billion notes at an average cost of 6.4 cents per note.
There are reasons to question whether full nationalization of the biggest banks is likely any time soon.
Nationalizing just one of JPMorgan Chase & Co, Bank of America Corp, or Citigroup, which together have about half the assets in the banking system, would double the Federal Reserve's balance sheet instantly.
Anglo Irish Bank to be nationalized
Loan scandal, deteriorating funding position lead government to step in
By Simon Kennedy, MarketWatch
Last update: 10:33 a.m. EST Jan. 16, 2009
LONDON (MarketWatch) -- In a surprise move the Irish government said it's nationalizing Anglo Irish Bank, the country's third-largest lender, following a loan scandal and further deterioration in the bank's funding position.
Jan 16 2009 4:20PM EST
More Arguments for Bank Nationalization
Why have shares in Barclays suddenly cratered? No one really knows, but it's surely not a complete coincidence that the short selling ban on UK financials expired today.
January 19, 2009
Where Would Bank Nationalization Stop?
Felix Salmon, who has been banging the drums for the U.S. government to start nationalizing banks, cites a piece by the economist William Buiter as supporting the argument that the U.S. should nationalize Citigroup and Bank of America. But it’s a bit more complicated than that.
Nationalization rumors slam Citigroup, Bank of America
11:09 AM, January 15, 2009
The hottest rumor on Wall Street today was that the government was planning to effectively nationalize Citigroup Inc. and Bank of America Corp., perhaps as early as this weekend.
That talk has devastated many financial stocks, and hammered the broader market for a second straight session -- although buyers have been returning in the last half-hour.
The nationalization rumors were put to Federal Deposit Insurance Corp. Chairwoman Sheila Bair at an appearance in New York today, and her non-denial answer wasn’t likely to make investors feel better.
Jan 19 2009 6:25PM EST
Insolvent Banks: Why a Debt-for-Equity Swap Won't Work
Henry Blodget has convinced himself that he's worked out "the right way" to fix banks. It's a big debt-for-equity cramdown, basically, which, he says, will "avoid another Lehman" and involve spending "no taxpayer money".
Jan 19 2009 11:05AM EST
More on Bank Nationalization
I'm not sure why I bothered writing my blog entry on nationalization last night, since Paul Krugman wrote essentially the exact same thing, only more concisely and with much greater elegance. Still, I did get some interesting comments, both on the blog and by email.
The case builds in U.S. for two-tier banking
Posted Jan 19th 2009 11:15AM by Joseph Lazzaro
Filed under: Forecasts, Politics, Financial Crisis
In the months, and perhaps quarters ahead, they'll be a great deal of talk about banking reform, in the context of financial services reform.
You'll hear much about the need 'to ban banks' or 'get control of commerce / economic activity out of banks hands' etc.
The fault, dear Brutus, is in ourselves
These well-intentioned arguments are missing the point. The problem is not banks per se, but the abuse of the FDIC provision and related insurance protections. In other words, what has to end is not banks, but 'heads the bank wins, tails the U.S. taxpayer loses (and pays).'
Thursday, January 15, 2009 at 5:47 pm
Posted by Justin Fox
The case for nationalizing Citigroup and Bank of America, and getting Robert Reich a fact checker
A couple of commenters have pointed me to Robert Reich's list of "Criteria for TARP II." Nos. 3-6 seem the most important:
3. Prohibit any bank that gets TARP II funds from issuing dividends, purchasing other companies, or paying off creditors.
4. Bar any bank that gets TARP II funds from paying its executives, traders, or directors more than 10 percent of what they received in 2007.
5. Require that any bank getting TARP II funds be reimbursed by its executives, traders, and directors 50 percent of whatever amounts they were compensated in 2005, 2006, 2007, and 2008. This compensation was, after all, based on false premises and fraudulant assertions, and on balance sheets that hid the true extent of these banks' risks and liabilities.
6. Insist that at least 90 percent of the TARP II money be used for new bank loans. If the banks cannot find suitable lenders, they should return the money.
The real truth behind Citigroup bailout
What neither Paulson nor anyone in Washington is willing to reveal is the real truth behind the Citigroup bailout. By his and the Republican Bush Administration's adamant earlier refusal to take an initial resolute action to immediately nationalize the nine or so largest troubled banks, he has created the present debacle. By refusing on ideological grounds to instead reorganize the banks' assets into some form of ‘good bank' and ‘bad bank,' similar to what the Government of Sweden did with what it called Securum, during its banking crisis in the early 1990's, Paulson and company have created a global financial structure on the brink.
A Securum or similar temporary nationalization would have allowed the healthy banks to continue lending to the real economy so the economy could continue operating, while the State merely sat on the undervalued real estate assets of the Swedish banks for some months until the recovering economy made the assets again marketable to the private sector. Instead, Paulson and his ‘crony capitalists' in Washington have turned a bad situation into a globally catastrophic one.
His apparent realization of the error of his initial refusal to nationalize came too late. When Paulson reversed policy on September 19 and presented the nine largest banks with an ultimatum to accept partial Government equity ownership, abandoning his original bizarre plan to merely buy up the toxic waste asset-backed securities of the banks with his $700 billion TARP taxpayer money, he never revealed why.
Under the original Paulson Plan, as Dimitri B. Papadimitriou and L. Randall Wray of the Jerome Levy Institute at Bard College in New York point out, Paulson sought to create a situation in which the US ‘Treasury would become an owner of troubled financial institutions in exchange for a capital injection—but without exercising any ownership rights, such as replacing the management that created the mess. The bailout would be used as an opportunity to consolidate control of the nation's financial system in the hands of a few large (Wall Street) banks, with government funds subsidizing purchases of troubled banks by “healthy” ones.'
Paulson soon realized the scale of crisis, largely triggered by his inept handling of the Lehman Brothers case, had created an impossible situation. Were Paulson to use the $700 billion to buy up toxic waste ABS assets from the select banks at today's market price, the $700 billion would be far too little to take an estimated $2 trillion ($2,000 billion) in Asset Backed Securities off the books of the banks.
The Levy Economics Institute economists state, ‘It is probable that many and perhaps most financial institutions are insolvent today -- with a black hole of negative net worth that would swallow Paulson's entire $700 billion in one gulp.'
That reality is the real reason Paulson was forced to abandon his original ‘crony bailout' TARP plan and opt to use some of his money to buy equity shares in the nine largest banks.
That scheme as well is ‘dead on arrival' as the latest Citigroup nationalization scheme underscores. The dilemma Paulson has created with his inept handling of the crisis is simple: If the US Government paid the true value for these nearly worthless assets, the banks would have to write down huge losses, and, as Levy economists put it, ‘announce to the world that they are insolvent.' On the other hand, if Paulson raised the toxic waste purchase price high enough to protect the banks from losses, $700 billion ‘will buy only a tiny fraction of the 'troubled' assets.' That is what the latest nationalization of Citigroup is about.
It is only the beginning. The 2009 year will be one of titanic shocks and changes to the global order of a scale perhaps not experienced in the past five centuries. This is why we should speak of the end of the American Century and its Dollar System.
How destructive that process will be to the citizens of the United States who are the prime victims of Paulson's crony capitalists, as well as to the rest of the world depends now on the urgency and resoluteness with which heads of national Governments in Germany , the EU, China , Russia and the rest of the non-US world react. It is no time for ideological sentimentality and nostalgia of the postwar old order. That collapsed this past September along with Lehman Brothers and the Republican Presidency. Waiting for a ‘miracle' from an Obama Presidency is no longer an option for the rest of the world.
By F. William Engdahl
COPYRIGHT © 2008 F. William Engdahl. ALL RIGHTS RESERVED
The case for nationalizing the banks
by Barry Grey
Monday Jan 19th, 2009 10:32 AM
Less than four months after Congress passed the Bush administration’s Troubled Asset Relief Program (TARP), authorizing the Treasury Department to spend $700 billion in taxpayer money to bail out the banks, the same banks that received the government handouts are reporting massive losses and the incoming Obama administration is preparing to funnel hundreds of billions in additional funds to Wall Street.