The entire US government system is being turned into Goldman Sachs except for one very big difference: it performs all the identical functions of the giant international banks but doesn’t hand out immense bonuses. Heh. Actually, thanks to the Derivatives Beast, none of the international giant banks are capitalized. They all must raid every country’s treasuries to capitalize themselves so the Beast remains invisible. We have only seen one claw of it immense paws, so far. Imagine if a quazillion in derivatives bets had to be resolved all at the same time!
South County is one of at least 500 nonprofits that entered into the derivatives with Wall Street in an effort to cut costs, according to Moody’s Investors Service. Instead of being able to take advantage of the lowest interest rates since Dwight D. Eisenhower was president, tax-exempt groups are getting hit with a double whammy of rising borrowing costs and demands for collateral from financing tools they didn’t understand.
And pray tell, who told them to do derivatives, in the first place? We know who these people are, they are all the biggest financial houses on earth. What is happening is due to the way ZIRP works: it isn’t for hospitals or homeowners or people who need money to survive. It is for major powers so they can compete in world trade and finance.
While the federal government can borrow at near record low rates, the weekly Bond Buyer 20, which tracks yields on 20-year general obligation debt, rose to 5.03 percent as of March 12, from last year’s low of 4.52 percent in May and 4.03 percent in December 2006….
Governments can borrow with low interest because they are now capitalizing the international banks. So, to create a flood of funny money which can then be sent over to the major international bankers, governments overspend. This is why international bankers LOVE wars: these create immense public debts which then flow, as profits, into the pockets of the international bankers!
So-called collateral postings are a standard feature in contracts in the $400 trillion interest-rate swap market, Rosenberg said. Swaps are derivatives, or contracts whose value is tied to assets including stocks, bonds, commodities and currencies, or events such as changes in interest rates or the weather.
Just the interest rate swaps are incredible in size! Why is the entire world’s financial systems going into ‘ZIRP’ anyway? I am guessing that this is the only way to capitalize the Derivatives Beast. If rates rise, all the ‘bets’ of ‘counterparties’ will be triggered. So the need to lie about inflation is immense. We can’t raise rates except if inflation is obviously out of control. We already had a one year session of sudden onset of hyperinflation.
The amount of collateral depends on the value of the swap. When long-term market indexes fall, so does the value of fixed- rate swaps, which can trigger requirements to put up more cash, he said.
Obviously, the whole business of swaps so no one is hurt, is a total failure. It is obvious that the original parties who need protection are getting the exact opposite: Banks are getting the protection from the governments while institutions that actually do good things for real humans, are being hammered brutally by high rates.
Most swaps in the municipal market are pegged to the London interbank offered rate, or Libor. The 20-year index tied to Libor fell to a record low of 2.44 percent in December from 5.2 percent in June, according to Bloomberg data. Libor dropped as low as 1.08 percent on Jan. 14 and has since risen to 1.30 percent. Libor is used to calculate rates on $360 trillion of financial products worldwide, according to the Bank for International Settlements in Basel, Switzerland…
Nonprofits post more collateral than corporations because swaps in the municipal market stretch over 30 years while the agreements in the taxable market last fewer than 10, Rosenberg said. Cities and states that use swaps typically aren’t required to post collateral, he said.
Mortgages are for 30 years, too. And the betting parlor says, due to all the funny money being made out of nothingness, they anticipate brutal inflation over a thirty year time span.
Investors obviously believe that interest rates will be much, much higher during this 30 year time span. Since the interest rate on bonds is rising, this means we are entering a new inflation surge time frame. There are more reasons to think this. For we see that inflation in essentials continues. The depression in prices is in those things we don’t need. The immense energy spike of last summer was due to speculators all converging on energy markets in a last-ditch effort to outrun inflation. This, of course, killed all other systems.
When energy is cheap, we have little inflation. When energy is expensive, we have no inflation, too. But the period where energy is rising in cost is very, very inflationary. As all other systems seek to adjust to the rise in costs, they try to pass it on to other parties. After a while, inflation takes root until everyone has exhausted all their potential debt or capital and can’t pay higher prices. If a government is also running a war, then we get lots of money circulating that creates inflation, too. A war coupled with rising oil prices is utterly destructive.
Most of our previous bouts of inflation and recession at the same time were due to this dynamic. The price of oil is approaching $50 a barrel again. The run up to $150 a barrel was merely a symptom of excess dollars in the global markets. Since last summer, the Derivatives Beast has been steadily destroying any speculative money that dares to appear in markets. The drop in interest rates done by all the central bankers isn’t due to there being no inflation, oil has been rising for the last month and is probably going to rise higher in the next year. World trade has collapsed and lots of bidding on assets and equities has also vanished. But not the instruments of inflation.
World banking systems run by governments from the IMF to Japan, the US and a host of other nations, have gotten the green light to create infinite funny money. The US leads the world in the funny money trifecta races. We are seeing massive government money making. Several trillion in the last 2 years. On top of this, Obama has chosen to pour more money into the most inflationary system of all: war. We are expanding our war fronts, fighting more people and talking about attacking Iran, a major oil country. A war in the Persian Gulf will utterly destroy the US. The Israeli Jews imagine they can do some sort of clean air strike that will destroy all of Iran’s defenses and prevent them from attacking Saudi and Gulf oil systems.
Aside from the danger of our navy being sunk or at least, badly damaged, the possibility that we might get NO oil from the Middle East for even a month, much less, forever, is a problem. Our society will collapse. Yet, instead of hesitating, we see our rulers edging for a chance at maybe doing this war, anyway. When I was young, I was puzzled about WWI. It made no sense at all. But it happened. Now, I can see how stupid rulers can be and see how they get pushed into insane wars.
The Federal Reserve’s program to revive the market for securities backed by consumer loans may start with just a handful of deals, according to participants in the preparations, delaying its prospects of easing the credit crunch.
Today, the Fed delayed by two days the March 17 deadline for submissions of proposed packages of debt that investors can buy with Fed financing. No agreements have been announced yet for proposed securities. Brokers and investors have had difficulty agreeing over contract terms for the Term Asset-Backed Securities Loan Facility, the people said…
They are scared of future inflation. The ZIRP system works only if the workers are crushed totally, like in Japan, and if the government has very powerful methods of keeping out competing industrial goods. ZIRP needs EXPORT PROFITS. Without that, it is a fiction. The US has ZIRP only because our bankers and government lies about inflation. For example, building houses has collapsed. Has the price of lumber collapsed?
No. It is still nearly as expensive as ever. All essential systems have simply lain in wait for the next inflation surge. Things we don’t need are declining in price. But not things we have to have or we die.
Treasury Secretary Timothy Geithner is counting on the so- called TALF, a joint program with the Fed, to expand to as much as $1 trillion to unfreeze credit markets. Any sign of failure of the effort may leave lenders less willing to boost lending for everything from car purchases to farming equipment.
70% of our economy is consumption. Not industrial output. Our government is now the lending system for our consumption. Turning our government into a credit agency is the last leg of the collapse of our economic systems.
The TALF’s $200 billion first phase would finance AAA rated securities containing loans for autos, education, credit cards and small businesses. Officials eventually plan to finance other assets, including commercial mortgage-backed securities.
The fact that our banking system suddenly vanished is not being examined by either Bernake or our own government. Their sole focus is to restart borrowing so we can continue being a consumer society, not a productive society. This is impossible, of course. Our government has only one major reserve: it is GOLD. Yes, gold! Incredibly.
Now, we have no idea how much gold the US actually has due to our government refusing to do an accounting. Ron Paul calls for this regularly. But one thing is certain: the government benefits from gold shooting up in price IF WE HAVE GOLD. We are still the biggest gold holders on earth…we think. We don’t know, of course. Uncertainty bedevils all systems which is why no one trusts anyone. Aside from the proliferation of criminal frauds like Madoff and Stanford, of course.
Investors have no confidence that US borrowers can pay future loans. They can see that we are entering not a ZIRP system but a hyperinflation cycle. This is due to too much money being created with no capital. Before this year, the international bankers used the ZIRP system of Japan to lend and lending shot upwards. Today, no one is carrying any sort of trade, Japanese or Icelandic, to anywhere. They are all sitting on the sidelines, waiting to see if inflation takes off. And betting, it will.
Treasury SecretaryTimothy Geithner told congressional leaders the U.S. will recoup executive bonuses paid by American International Group Inc. as outraged lawmakers raced to take back such payments from all companies getting federal bailouts.
Geithner, who has come under fire from Congress over the AIG payments, said in a letter to lawmakers last night the government will recover the money by requiring it be repaid from company operations and deducting the amount from the next $30 billion in aid being provided to the insurer. He also said the government will work to accelerate the “wind down” process of restructuring AIG.
The senior members of the Senate Finance Committee from both parties proposed taxes totaling 70 percent on bonuses at AIG and other companies getting federal money during the U.S. financial meltdown. House Speaker Nancy Pelosi directed committees there to draft several alternatives and said her chamber may consider a bill as early as this week. Other lawmakers introduced their own plans.
We don’t want this money repaid. We want the creatures who want these bonuses, punished. We need to punish them. It is good for us, collectively, and will cause other gnomes to hesitate when they play ridiculous, dangerous games. We are outraged about all of these bonuses. I am 100% for taxing all bonuses of all these guys at 70%. And I am for taxing the multimillionaires in Congress the same amount on their own incomes, too.
I am for taxing the rich because this is the ONLY WAY OUR GOVERNMENT CAN BE RECAPITALIZED. If the rich hate this, I suggest they drop the crummy ‘free trade’ garbage and get funding for our government via tariffs. And further, they can save our government money by cutting out all war spending and retracting our empire’s reach until it is only for our own nation. I am certain all other nations are quite capable of fighting for their own borders. Then, we start all over again and try to fix our own nation. How about it? Pure genius.
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