Federal Reserve Chairman Ben S. Bernanke and then-New York Fed President Timothy Geithner told senators on April 3, 2008, that the tens of billions of dollars in “assets” the government agreed to purchase in the rescue of Bear Stearns Cos. were “investment-grade.” They didn’t share everything the Fed knew about the money.
The so-called assets included collateralized debt obligations and mortgage-backed bonds with names like HG-Coll Ltd. 2007-1A that were so distressed, more than $40 million already had been reduced to less than investment-grade by the time the central bankers testified. The government also became the owner of $16 billion of credit-default swaps, and taxpayers wound up guaranteeing high-yield, high-risk junk bonds.
By using its balance sheet to protect an investment bank against failure, the Fed took on the most credit risk in its 96- year history and increased the chance that Americans would be on the hook for billions of dollars as the central bank began insuring Wall Street firms against collapse. The Fed’s secrecy spurred legislation that will require government audits of the Fed bailouts and force the central bank to reveal recipients of emergency credit.
“Either the Fed did not understand the distressed state of some of the assets that it was purchasing from banks and is only now discovering their true value, or it understood that it was buying weak assets and attempted to obscure that fact,” Senator Sherrod Brown, an Ohio Democrat and member of the Senate Banking Committee, said in an e-mail when informed about the credit quality of holdings in the Maiden Lane LLC portfolio. The committee held the April 3 hearing.
As I sat here this evening reading this article (and looking at the beach), I thought of how often in the last several years I do not recognize the country I am in any more. I have run out of metaphors: living on Mars, Alice in Wonderland, inside Orwell’s 1984, etc. etc.
I wonder if others of you feel the same way….
Because so many of our leaders are liars, we don’t know what is reality.
In related news, Ron Paul’s “Audit the Fed bill,” was voted down by congress today. The bill would have allowed the GAO to fully audit the Federal Reserve books for the first time in its history.
As long as the wealthy don’t have to pay for their deceiving everybody else. They are the ones who get bailed out, who escaped. The pensioners get to pay.
I’m not surprised that we miss the class dimension.
#1…I must have missed previous public expressions of your perspective. I assume you have reacted to other unique situations in previous posts. The situations I refer to might be such things as, the devaluation of the dollar, hyper-inflation, suspension of habeous corpus by executive order, martial law, policy making by the judiciary, the erosion of the first amendment, censorship of the internet, etc… . Do you speak of these or similar things within the vestry? Do you hear similar topics discussed at coffee hour after church? Is there any substantive communication at the parish level regarding the apparent disintegration of our society? Do you believe broaching such broad based subjects un-necessarily creates additional anxiety and could be considered capriciously negative and pessimistic? Is it common, if such matters are brought forward, they are done so only within the male population of the church say, at a men’s breakfast, or if not, why not? Do you believe it is every man for himself? The number 144,000 is looking more and more highly select. May the Lord have mercy on us all.
[blockquote]A federal program designed to help impoverished families heat and cool their homes wasted more than $100 million paying the electric bills of thousands of applicants who were dead, in prison or living in million-dollar mansions, according to a government investigation.[/blockquote]
http://www.newsmax.com/InsideCover/US-Electric-Bill-Fraud/2010/07/01/id/363610
Yeah, Government spending will make it all better.
John – I agree that people who do wrong should be penalized. However the approach you seem to be suggesting would penanlize a whole group of people for the stereotype of what a few have done. In other contexts – say race – this would be considered quite wrong
I saw this yesterday; interesting reading;
http://www.strom.clemson.edu/teams/ced/esr/ESR_2010_06.pdf
There is mention of a book titled “This Time is Different” by Reinhart and Rogoff, which makes the case that this time is actually not different at all, just part of the economic cycle of this counrty since at least 1878, and that the problem is that when times are good, we want to believe that we have moved beyond severe economic recessions. This attitude almost gaurantees another turn down.
And of course austerity and living within your means is never right. In bad times you can’t afford it and in good times you don’t need to. The result is that the spending goes onward and upward until the economy collapses.
Kendall,
I don’t want to detract from the seriousness of today’s situation, but I suspect your forbears were saying the same thing in 1810 – as Federalist resentment rose and the War of 1812 loomed – and in 1910 – as the Taft administration staggered toward the denoument of 1912 and Slavic nationalism simmered in the Balkans.
Politician are like diapers. They need to be changed frequently and for the same reason. [can’t recall to whom this should be attributed].
10, how about 1860? That little blip only cost 620,000 casualties.
Br. Michael,
I picked the years exactly one century and two centuries behind us as illustrative. As I said, I’m not discounting the severity of today’s situation, merely that “we’ve never had it so bad” is simply the obverse of the Golden Age syndrome.
And the “little blip” language is yours not mine.