by Mike Whitney
Global Research, June 29, 2009
Why has the stock market been on a 3-month tear when the economy is undergoing the worst economic contraction since the Great Depression? The S&P 500 has shot up 40% from its low on March 9 and the Dow Jones Industrials have followed close behind. Is this a typical bear market rally or is the invisible hand of the Fed goosing the markets?
Everyone seems to agree that the Fed’s multi-trillion dollar quantitative easing (QE) is the jet-fuel that’s put stocks into orbit. But how is the money filtering into the market?
The first place to look is the Fed’s lending facilities which have provided trillions of dollars in loans and US Treasuries for dodgy mortgage-backed collateral. These loans are not collecting dust in company vaults, but are being used for speculation in the stock market. Unfortunately, Bernanke refuses to say which financial institutions have gotten the loans, or how much they have borrowed, or even what type of toxic garbage that’s been taken in exchange. It’s all very hush-hush. Bernanke’s even shrugged off the threats of legal action from Bloomberg News, which is demanding greater transparency in the Fed’s programs. What a joke. The Fed doesn’t have to comply with the law; it IS the law. Meanwhile Bernanke’s stealth monetizing operations have continued without pause, boosting market activity, driving up the price of commodities and inflating another equities bubble. It’s all just business as usual at the Fed.
by F. William Engdahl
Global Research, March 30, 2009
When the Solution to the Financial Crisis becomes the Cause
US Treasury Secretary Tim Geithner has unveiled his long-awaited plan to put the US banking system back in order. In doing so, he has refused to tell the ‘dirty little secret’ of the present financial crisis. By refusing to do so, he is trying to save de facto bankrupt US banks that threaten to bring the entire global system down in a new more devastating phase of wealth destruction.
The Geithner Plan, his so-called Public-Private Partnership Investment Program or PPPIP, as we have noted previously is designed not to restore a healthy lending system which would funnel credit to business and consumers. Rather it is yet another intricate scheme to pour even more hundreds of billions directly to the leading banks and Wall Street firms responsible for the current mess in world credit markets without demanding they change their business model. Yet, one might say, won’t this eventually help the problem by getting the banks back to health?
By Jerry Mazza
crossposted at Online Journal
March 31, 2009
The so-called Public Private Partnership Investment Program (PPPIP) introduced last Monday, by Treasury Secretary Timothy Geithner not only stands to bankrupt America but the global financial system as well. This is the worst yet of the bailouts, a swindle if ever there was one, which will cause President Obama’s approval rating to plummet. In fact, count me among those coming to the president’s aid. I really don’t think he understands what this means.
Consider Geithner as the face, the voice though not the brain, for this program which advocates turning over the keys to the banking system to a bunch of hedge fund sharks, and all at taxpayer’s expense. The cost could more likely end up being $6 trillion than the $1 trillion in starter money. In fact, it’s more likely that the dastardly plan was launched like a missile from jolly old London, which is in line to lose big if their offshore hedge fund empire is shut down.
by Mike Whitney
Global Research, March 28, 2009
There’s depressing news this week that the big banks are up to their old shenanigans again. This time they’ve zeroed in on Geithner’s cash giveaway bonanza, the “Public Private Investment Partnership” (PPIP). As expected, Bank of America and Citigroup have angled their way to the front of the herd, thrusting their pig-heads into the public trough and extracting whatever morsels they can find amid a din of gurgling and sucking sounds. Here’s the story from the New York Post:
“As Treasury Secretary Tim Geithner orchestrated a plan to help the nation’s largest banks purge themselves of toxic mortgage assets, Citigroup and Bank of America have been aggressively scooping up those same securities in the secondary market, sources told The Post…
But the banks’ purchase of so-called AAA-rated mortgage-backed securities, including some that use alt-A and option ARM as collateral, is raising eyebrows among even the most seasoned traders. Alt-A and option ARM loans have widely been seen as the next mortgage type to see increases in defaults.
One Wall Street trader told The Post that what’s been most puzzling about the purchases is how aggressive both banks have been in their buying, sometimes paying higher prices than competing bidders are willing to pay.
Recently, securities rated AAA have changed hands for roughly 30 cents on the dollar, and most of the buyers have been hedge funds acting opportunistically on a bet that prices will rise over time. However, sources said Citi and BofA have trumped those bids.”(“Double Dippers; Citi and B of A buy laundered loans at lower rates”, Mark DeCambre, New York Post)
President Obama’s destiny – more than his foreign policy decisions – will be sealed by how he deals with the US financial crisis, argues Pepe Escobar. The verdict of top economists on Treasury Secretary Tim Geithner’s new PPPIP has not been auspicious. Some speak of taxpayer rip-off while Nobel Prize winner Paul Krugman foresees a “lost decade of zombie banks”. The President has been trying to appease Wall Street while at the same time appeasing America’s anger directed at anything bank bailout-related. On a global level the Chinese have made it known their patience with America’s addiction to debt has limits. The upcoming G-20 meeting in London is bound to discuss more radical steps, while back in the US some already dream of a new saviour, post-Geithner.