http://online.wsj.com/article/SB10001424052748704805204575594833095922308.html?mod=WSJ_business_EconomyNewsBucket
And where does the FED get this money from to lend to the US Treasury?
Why out of thin air, but they still make interest on it.
Does that make sense to you?
Why doesn't congress just make up money out of thin air and cut out the FED as the middleman.
Just think of how much money "WE" could save when it comes time to refinance it.
It's not only time to cut back kids, it's time to cut out.
If "WE" just let the bankers go to prison for the various levels of fraud that they've committed in the mortgage industry, "WE" wouldn't even need QE2, since the only people it will actually help is the Bankers.
It creates no jobs what so ever and the taxpayers have to pay it back.
The Central Bank makes big bucks off the government's fiscal misfortunes, due to it's inability to cut back it's spending.
The Federal Reserve will print money to buy nearly as much U.S. Treasury debt in the next eight months as the U.S. government will issue.
.The Fed's decision this week to buy $600 billion more of U.S. Treasury debt is setting off a debate about the risks of a central bank entwining its policies so tightly with the government's fiscal fortunes. The Fed is essentially lending enough money to the government to fund its operations for several months, something called "monetizing the debt."
In normal times, this is one of the great taboos of central banking because it is seen as a step toward spiraling inflation
Showing posts with label U.S. Treasury debt. Show all posts
Showing posts with label U.S. Treasury debt. Show all posts
Thursday, November 4, 2010
Monday, July 12, 2010
The Financial Con Of The Decade Explained So Simply Even A Congressman Will Get It
http://www.zerohedge.com/article/financial-con-decade-explained-so-simply-even-congressman-will-get-it
It's time to flood Congress with this explanation on how we know we were conned.
America said NO to the bailout
And then we were sold out by
Con-gress
Sometimes, when chasing the bouncing ball of fraud and corruption on a daily basis, it is easy to lose sight of the forest for the millions of trees (all of which have a 150% LTV fourth-lien on them, underwritten by Goldman Sachs, which is short the shrubbery tranche). Luckily, Charles Hugh Smith, of oftwominds.com has taken the time to put it all into such simple and compelling terms, even corrupt North Carolina congressmen will not have the chance to plead stupidity after reading this.
Of course, to those familiar with the work of Austrian economists, none of this will come as a surprise.
1. Enable trillions of dollars in mortgages guaranteed to default by packaging unlimited quantities of them into mortgage-backed securities (MBS), creating umlimited demand for fraudulently originated loans.
2. Sell these MBS as "safe" to credulous investors, institutions, town councils in Norway, etc., i.e. "the bezzle" on a global scale.
3. Make huge "side bets" against these doomed mortgages so when they default then the short-side bets generate billions in profits.
4. Leverage each $1 of actual capital into $100 of high-risk bets.
5. Hide the utterly fraudulent bets offshore and/or off-balance sheet (not that the regulators you had muzzled would have noticed anyway).
6. When the longside bets go bad, transfer hundreds of billions of dollars in Federal guarantees, bailouts and backstops into the private hands which made the risky bets, either via direct payments or via proxies like AIG. Enable these private Power Elites to borrow hundreds of billions more from the Treasury/Fed at zero interest.
7. Deposit these funds at the Federal Reserve, where they earn 3-4%. Reap billions in guaranteed income by borrowing Federal money for free and getting paid interest by the Fed.
8. As profits pile up, start buying boatloads of short-term U.S. Treasuries. Now the taxpayers who absorbed the trillions in private losses and who transferred trillions in subsidies, backstops, guarantees, bailouts and loans to private banks and corporations, are now paying interest on the Treasuries their own money purchased for the banks/corporations.
9. Slowly acquire trillions of dollars in Treasuries--not difficult to do as the Federal government is borrowing $1.5 trillion a year.
10. Stop buying Treasuries and dump a boatload onto the market, forcing interest rates to rise as supply of new T-Bills exceeds demand (at least temporarily). Repeat as necessary to double and then triple interest rates paid on Treasuries.
11. Buy hundreds of billions in long-term Treasuries at high rates of interest. As interest rates rise, interest payments dwarf all other Federal spending, forcing extreme cuts in all other government spending.
12. Enjoy the hundreds of billions of dollars in interest payments being paid by taxpayers on Treasuries that were purchased with their money but which are safely in private hands.
Charles' conclusion does not need further commentary as it is absolutely spot on:
Since the Federal government could potentially inflate away these trillions in Treasuries, buy enough elected officials to force austerity so inflation remains tame. In essence, these private banks and corporations now own the revenue stream of the Federal government and its taxpayers. Neat con, and the marks will never understand how "saving our financial system" led to their servitude to the very interests they bailed out.
It's time to flood Congress with this explanation on how we know we were conned.
America said NO to the bailout
And then we were sold out by
Con-gress
Sometimes, when chasing the bouncing ball of fraud and corruption on a daily basis, it is easy to lose sight of the forest for the millions of trees (all of which have a 150% LTV fourth-lien on them, underwritten by Goldman Sachs, which is short the shrubbery tranche). Luckily, Charles Hugh Smith, of oftwominds.com has taken the time to put it all into such simple and compelling terms, even corrupt North Carolina congressmen will not have the chance to plead stupidity after reading this.
Of course, to those familiar with the work of Austrian economists, none of this will come as a surprise.
1. Enable trillions of dollars in mortgages guaranteed to default by packaging unlimited quantities of them into mortgage-backed securities (MBS), creating umlimited demand for fraudulently originated loans.
2. Sell these MBS as "safe" to credulous investors, institutions, town councils in Norway, etc., i.e. "the bezzle" on a global scale.
3. Make huge "side bets" against these doomed mortgages so when they default then the short-side bets generate billions in profits.
4. Leverage each $1 of actual capital into $100 of high-risk bets.
5. Hide the utterly fraudulent bets offshore and/or off-balance sheet (not that the regulators you had muzzled would have noticed anyway).
6. When the longside bets go bad, transfer hundreds of billions of dollars in Federal guarantees, bailouts and backstops into the private hands which made the risky bets, either via direct payments or via proxies like AIG. Enable these private Power Elites to borrow hundreds of billions more from the Treasury/Fed at zero interest.
7. Deposit these funds at the Federal Reserve, where they earn 3-4%. Reap billions in guaranteed income by borrowing Federal money for free and getting paid interest by the Fed.
8. As profits pile up, start buying boatloads of short-term U.S. Treasuries. Now the taxpayers who absorbed the trillions in private losses and who transferred trillions in subsidies, backstops, guarantees, bailouts and loans to private banks and corporations, are now paying interest on the Treasuries their own money purchased for the banks/corporations.
9. Slowly acquire trillions of dollars in Treasuries--not difficult to do as the Federal government is borrowing $1.5 trillion a year.
10. Stop buying Treasuries and dump a boatload onto the market, forcing interest rates to rise as supply of new T-Bills exceeds demand (at least temporarily). Repeat as necessary to double and then triple interest rates paid on Treasuries.
11. Buy hundreds of billions in long-term Treasuries at high rates of interest. As interest rates rise, interest payments dwarf all other Federal spending, forcing extreme cuts in all other government spending.
12. Enjoy the hundreds of billions of dollars in interest payments being paid by taxpayers on Treasuries that were purchased with their money but which are safely in private hands.
Charles' conclusion does not need further commentary as it is absolutely spot on:
Since the Federal government could potentially inflate away these trillions in Treasuries, buy enough elected officials to force austerity so inflation remains tame. In essence, these private banks and corporations now own the revenue stream of the Federal government and its taxpayers. Neat con, and the marks will never understand how "saving our financial system" led to their servitude to the very interests they bailed out.
Thursday, April 15, 2010
China trims holdings of US Treasurys by 1.3 pct.
http://finance.yahoo.com/news/China-trims-holdings-of-US-apf-2137019335.html?x=0&sec=topStories&pos=7&asset=&ccode=
So did they or didn't they? Only time will tell.
This kind of spin will make you dizzy.
China trimmed its holdings of U.S. Treasury debt 1.3 percent in February, the fourth consecutive decline. Those reductions are raising concerns that the U.S. government could face higher interest rates to finance its soaring budget deficits.
The Treasury Department said Thursday that China's holdings dropped $11.5 billion to $877.5 billion. That still left China as the largest foreign holder of U.S. Treasury debt. Japan retained the No. 2 spot with $768.5 billion, a drop of 0.4 percent from the January level.
Net foreign purchases of long-term securities, a category that includes both government and corporate debt, totaled $47.1 billion in February. That compared with an increase of $15 billion in January.
By contrast to the declines in holdings of Treasury securities by China and Japan, holdings by Britain jumped 12.2 percent to $321.7 billion. Hong Kong also recorded a large increase of 4 percent to $152.4 billion.
Treasury analysts said that one explanation for the changes may be that Chinese investors are buying their securities through Britain and Hong Kong. Once a year, the government does an adjustment of the data to sort out ownership of the securities by nationality rather than the country where the purchases were made.
The latest adjustment released in February showed that China had retained its top ranking as the largest foreign holder of U.S. Treasury securities. The adjustment revised data released just 10 days earlier which showed China had cut its holdings so sharply that it had dropped from the No. 1 spot.
So did they or didn't they? Only time will tell.
This kind of spin will make you dizzy.
China trimmed its holdings of U.S. Treasury debt 1.3 percent in February, the fourth consecutive decline. Those reductions are raising concerns that the U.S. government could face higher interest rates to finance its soaring budget deficits.
The Treasury Department said Thursday that China's holdings dropped $11.5 billion to $877.5 billion. That still left China as the largest foreign holder of U.S. Treasury debt. Japan retained the No. 2 spot with $768.5 billion, a drop of 0.4 percent from the January level.
Net foreign purchases of long-term securities, a category that includes both government and corporate debt, totaled $47.1 billion in February. That compared with an increase of $15 billion in January.
By contrast to the declines in holdings of Treasury securities by China and Japan, holdings by Britain jumped 12.2 percent to $321.7 billion. Hong Kong also recorded a large increase of 4 percent to $152.4 billion.
Treasury analysts said that one explanation for the changes may be that Chinese investors are buying their securities through Britain and Hong Kong. Once a year, the government does an adjustment of the data to sort out ownership of the securities by nationality rather than the country where the purchases were made.
The latest adjustment released in February showed that China had retained its top ranking as the largest foreign holder of U.S. Treasury securities. The adjustment revised data released just 10 days earlier which showed China had cut its holdings so sharply that it had dropped from the No. 1 spot.
Subscribe to:
Posts (Atom)