Friday, February 13, 2009

Re: [PDI] [Fwd: Obama: The Market Is Issuing You A WARNING

One of the cable channels was doing an "in-depth report" on the economic meltdown.  Greenspan was blaming 9/11.

Go figure.


-----Original Message-----
From: Eugene Costa <>
To: Bob Mueller <>
Sent: Fri, 13 Feb 2009 3:23 am
Subject: Re: [PDI] [Fwd: Obama: The Market Is Issuing You A WARNING]

That's about the size of it, but actually it is worse.
For one thing, I seriously doubt Obama has even a rudimentary economic education
r the slightest idea of how the US financial structure functions.
His father was a Kenyan economist, to be sure, but he knew him only until two
ears old.
Perhaps his father should have been elected.
Last summer the US total debt of record was 53 trillion.
I have got no recent figures but it is my guess it may be 30 trillion more by
ow.  I know that sounds like science fiction but it is entirely possible in
erms of "old" USD.
At this rate catastrophe is unavoidable.
The Fascists around and behind Obama are terminally incompetent and think that
t all can be handled by "PR" and mass psychology.
I am still not ready to write off Obama completely.  There may be other factors
n the mix.
But only time will tell.

L'observation consiste simplement
n l'intérêt jubilant montré par l'enfant
la vue de sa propre image dans un miroir....

-- On Thu, 2/12/09, Geraldine Perry <> wrote:
rom: Geraldine Perry <>
: [PDI] [Fwd: Obama: The Market Is Issuing You A WARNING]
o: "Gene Costa" <>
ate: Thursday, February 12, 2009, 6:49 PM
Hi all,
In case you did not get the article below I am forwarding. It is long but well
orth the read.
You might also want to read my article which parallels but adds to the one
elow (and note, I will be revising the first paragraph to make it more readable
efore posting elsewhere):

------- Original Message --------

Tuesday, February 10. 2009
Posted by Karl Denninger> at 06:56>

Obama: The Market Is Issuing You A WARNING>
Put the kids away - this is not going to be pleasant.
I'm done Mr. President.
You stood in front of the American Public *and lied through your damn teeth.
You claim that America faces a "catastrophe" if we don't pass
your bill* - but its not *YOUR BILL*, its Pelosi's and Reid's bill - a
ill full of PORK and BS.
I'm tired of the lies, America is tired of the lies, *and we the people are
ot going to sit still for it any longer.*
You promised us change. This is what we got for "change":
Your Treasury Secretary, Geithner, cheated on his taxes. He was caught. He then
ailed to pay *the other two years* of tax for the same thing he got caught
oing, until you told him you wanted=2
0him to be the tax *collector*. But
hat's not the worst of it. No, the worst part is that when Bear Stearns
ot in trouble *he, as the head of the NY Fed, knew full well that The Federal
eserve intended to open the discount window to investment banks THE VERY NEXT
AY and yet this fact was NOT disclosed to Bear Stearns, forcing them into a
erger they would not have otherwise consummated,-And-More-Bear-Stearns.html>.
ACT. Here is the quote> from the
Y Times:*
"But the night that Bear signed the original bid, *the Fed opened
what's known as the discount window to companies like Goldman Sachs
and Lehman Brothers - oh, yes, and to Bear, too. Except that the Fed
didn't tell Bear that it planned to open the window when it was
signing its deal with JPMorgan. *
Had Bear known it might have access to the discount window - a
crucial source of liquidity - it might have been able to hold out
for a couple more days or at least had enough leverage to seek a
higher bid. But the Fed clearly preferred the original bid."
You *WISH* The Internet wasn't around to hold your butt over the pot of hot
il and dunk you on this one. Sorry Mr. President, *_NO DICE_*.
We dealt with George W. Bush playing "disaster capitalism" with us
or more than *_eighteen months_*. Now you're doing it. Nice try, no
onut. I have been writing for close to *_two years_* in /The Market Ticker/
bout the *_fact_* that The Fed, Treasury and the former administration were
directly responsible* for this mess through various machinations such as
23A Exemption Letters", Paulson's entreaties to remove leverage
imits and the OCC's move (including asserting federal preemption in court!)
o preempt state regulation of subprime and ALT-A mortgages. You've put
orward plans to address *exactly none* of these frauds and yet they are *the
oot of the problem*.
Further, you can't claim to "not know" because as a Senator your
ffice got copies of my petitions, faxes, and other communications. Your
onstituents from Illinois asked me to send *_thousands_* of petition signatures
ver those two years, and you *did* get them. Don't run a grand line of BS
n America that this all "came out of nowhere" and "it was all
ush's fault." That's nice political theatre but it is also a
rand lie.
America has a *confidence problem* with the Capital Markets. So does the rest
f the world. That problem exists because of the *outright fraud* and *idiocy
that has been undertaken and *permitted* by all levels of our government,
ncluding the Executive. These frauds included knowingly using bad model data
o "rate" securities, shopping ratings, shorting securities you're
elling to=2
0your own customers in the next room (without telling them you think
hey're overvalued, of course) and getting "23A Exemptions" so you
an lever up your exposure to *failing parts of your business, thereby creating
ystemic risk where it did not already exist*. Go have a look Mr. Obama - there
re literally *dozens* of "23A Exemption" letters now on file with The
ed. *Virtually all of these institutions, if not all, have either failed or
eceived public support, yet exemption from safety and soundness banking
egulation has made their plight worse and their drain on the taxpayer more
nerous.* You have done *_exactly nothing_* to address this outrage nor is
here any reason to believe you will.
These "exotic financing products" were not* bought* Mr. President -
they were sold by so-called "professionals" who knew full well that
he borrower could _never_ complete the original term as contracted. * Yet the
irms who packaged up these securities and sold them *knowing this fact* remain
n business, their executives remain in the corner office and they siphoned off
$70 billion in bonuses from the first half of the TARP. *You have done
exactly nothing* to disgorge those funds nor have you directed the FBI to bring
ndictments or brought pressure to remove these individuals from their
ositions. You have not revoked one banking charter from any of these firms
espite the fact that these practices are *the precise reason we are here*.
These same firms have literal *trillions* in off-balance-sheet securitizations
hat remai
n undisclosed and opaque. You have taken *no step* to force their
onsolidation back onto the balance sheet, nor have you announced any intention
o do so. These conduits and SIVs are *_literal_* ticking financial nuclear
eapons and they *_will explode_* as defaults continue to increase.
You continue to pretend that these firms "need some help" and
need a backstop." Increasingly it is becoming clear to market
bservers such as Nouriel Roubini, FT's Wolf,C,RBS,LYG,BCS,FAZ,SKF>,
yself and others that the fact is that *these firms are and have been bankrupt
nd you are conspiring with others to intentionally deceive the public by
efusing to demand that regulators and examiners to go in, do their jobs, and
eport the _true_ capital levels of these companies - an act that would result
n their _immediate_ seizure by the FDIC.*
You believe you can pull the wool over Americans' eyes with your new
TARP II" and "TALF" programs. *_The truth_* is that you
ntend to use Treasury and Fed credit to allow *hedge funds* to make obscene
rofits while *essentially all risk of loss is born by the taxpayer, shifting
ff these bankrupt firm's liabilities _TO US_ while the executives and firms
ontinue to operate!*
This is yet *another outrage and is nothing more than an attempt to shift the
iabilities of _BANKRUPT_ institutions that have become insolvent _by their own
and and acts_ to The American Taxpayer. *
Now le
t me explain what is almost certain to happen *_if_* you are foolish
nough to let Taxcheat Timmy pull this garbage.
See, these assets really are trash. Yeah, right now they are kicking off cash
low. For now. But they're impaired and while their coupon will pay for a
hile they will ultimately default on their face value and recovery is pennies
and in the case of synthetics, zero) when they do.
So what happens here is that you provide 95% non-recourse financing. Sir Hedge
und buys a buttload of this garbage having only 5-10% of the face at risk, and
hat's all they need to put up as well, since the government is going to
rovide the financing - as a "no recourse" loan (presumably very
heaply.) They get a 6-7% coupon which means that in one year they're
overed, and in two they're making money like a madman, up 200% or more on
heir original risk capital.
But what happens when these instruments default?
Treasury is sitting on several *trillion* in backstops and financing of loans
o cover "assets" that are in fact worth zero. It winds up *_eating_*
he entire face value, while the Hedge Funds have made off with *_all_* of the
oupon money in the meantime!
he risk here is that Treasury is backed into a corner due to ramping yields
nd perhaps even inability to roll over this debt at all and we find ourselves
orced into immediate cash accounting as a nation. This in turn causes the
nstantaneous cessation *of Social Security and Medicare payments*, as that is
he only bucket bi
g enough to cover the shortfall.
Do you *_really_* want to go down that road Mr. President, because that is
precisely* what's at the end of it, and it may be only a year or two out!
If you think nobody beyond your vaunted administration has figured it out *_YOU
f you think Americans will pay taxes to an institution that intends to
nowingly allow Hedge Funds to make hundreds of billions of dollars in profit
hile sticking the taxpayer with upwards of $2 trillion in losses and destroying
ll entitlements in a few years' time I suggest you have a mental
xamination and get your lithium dose adjusted.
Your approval rating and in fact American's tolerance of this blatant
raud, theft and chicanery is about to go straight down the toilet.
If you have an interest in having a successful Presidency (not to mention any
hance of a second term or even a stable, sound America to be President *of*)
ou must immediately do all of the following:
* Revoke *_ALL_* of the so-called "23A Exemptions." Bernanke
them, you need to direct him to revoke them. *Safety and
soundness of the banking system must come before any one firm or
group of firms. *There are literally hundreds of banks that are
perfectly sound. There are also a bunch of big campaign
contributing banks that are *_bankrupt_* and have been for the
last eighteen months. *Americans know this - the secret is out and
its time to quit LYING*.
* Send in t
he examiners. Yeah, I know, you're talking about
tests". Uh huh. Let's have those examinations now and
forevermore in the future be *public information*. If a bank
wants to operate under our laws and have the *privilege* of
fractional reserve banking, they can open their books and
examinations *at all times* to the public. Period.
* No more conduits, no more SIVs, no more games. If your "assets"
are worth 20 cents on the dollar today *that is their price*. If
that makes you insolvent *then you are* - period. We have an FDIC
and we have the authority to "cram down" failed institutions
a reason*. Use it.
* Send in *the cops*. The actions of major institutions up and down
the line since this crisis began in mid 2007 and in the years
leading up to it is at best grossly negligent and at worst
felonious. We the people are *_done_* with being the patsies of a
handful of thieves and frauds enabled by the 535 crooks in our
Capitol. *_STOP IT NOW_* and start jailing the crooks or be
judged as *_one of the felons_*. Your choice.
We are approaching *_yet another_ market implosion just like the one in
eptember and October*.
While it may come today or tomorrow, I wouldn't take that bet. In fact I
xpect that people will "rejoice" that you didn't wipe every
ommon stockholder's equity stake in firms like Citibank, Bank A
merica and
oldman Sachs - even though you should. Because I expected you to do the
_wrong_* thing, I actually bought some Citibank stock a short while ago. Were
ou to do the right thing my position would be worthless. It should be
orthless. I'll bet its not - at least not immediately (and that I'll
ake a profit as a consequence of your idiocy.)
When and if this dislocation comes, however, it will *destroy* what is left of
he American Banking System, it will expose that Bernanke has *over one trillion
ollars of garbage on The Fed's Balance Sheet*, and that in turn will
estroy the international market for United States Treasury Debt.
In the best case we wind up like Japan and have a bunch of zombies sucking up
apital and doing nothing of value for our economy. In the worst case we get
uch higher yields in the bond market and the near-immediate bankruptcy of
_hundreds_* of midsize and larger firms, including *virtually all financial
irms in the S&P 500 and DOW, along with all major multinationals that have
captive financing function.*
The Government *_cannot_* backstop it all. If you try the government fails
utright. The market is bigger than you, it is bigger than The Fed, it is
igger than Treasury. You are subservient to The Market, not the other way
round. Go ask Bill Clinton about The Bond Market when he tried to ramrod his
illarycare plan through and what the reaction was. That's 1/100th of what
ou're about to experience.
If Bernanke tries to "cap" yields into s
uch a dislocation (he has
hreatened to) he will cause *everyone *who owns Treasury debt to tender it to
im with the consequence that he will be forced to print *_five trillion
ollars_* in "new money". This will result in an *eighty percent
evaluation of the dollar almost instantaneously; *gasoline will go to
10/gallon, Milk to $15/gallon, a loaf of bread to $10 and a hamburger at
cDonalds will likewise be $10. Due to global wage arbitrage *wages will not
ncrease*; this will as a consequence immediately render 50% or more of
mericans homeless, hungry and jobless. *What do you think happens next Mr.
The disease in our financial system is lying, too much leverage, outright fraud
nd hidden bankruptcy - all of it perpetrated through and with the *_explicit_*
ermission of government agencies including Congress, The Executive and The Fed.
We have lived beyond our means through fraud for nearly 20 years *and this is
o longer possible*. As a direct consequence trust has been destroyed and
rivate capital has fled our credit markets *and will not return* so long as
hese diseases remain in the system.
Hiding the facts cannot cure the disease*; the excessive debt must be
defaulted*; you cannot fix it by transferring where the leverage goes, such as
o Treasury or The Fed. The liars and frauds must be *exposed, charged and
ocked up*, not protected and bailed out. Standards of living *will contract*
nd people must learn to live within their ability to earn, *including the
overnment*, irrespective=2
0of politicians that think they can promise to borrow
ver-increasing sums forever.
President Obama, this next crash in the markets, if it occurs, *is your sole
esponsibility. *
*It will come as a consequence of _your policies_ where you intend to try to
hift the BANKRUPT institutions' losses to The Taxpayer - a debt that
merica _cannot finance_ and which _foreign governments and investors WILL NOT_
I'm well-aware of the Washington DC policy called "kick the can"
ut the can is now full of cement and if you think you'll get through your
erm before this all comes home to roost you are, to be polite, nuts.
You must stop the stupidity and you must stop it *_NOW_*.
The game of obfuscation and literally violating investors both foreign and
omestic as a consequence of fraud countenanced by our government is *_over_*/.

Both Americans and foreigners *know *about the lying and fraud; it is pointless
o continue to dissemble and obfuscate as you are merely making a fool of
If you do not understand this and are being led by your "advisers",
any of whom are the very people who advocated the changes in policy over the
ast 20 years that brought us here, you need new advisers, and you need them
By tomorrow it may not matter, and it will *_certainly_* be your fault.
/Stephanie S. Jasky, /Founder, Director -
/"/*/"If the American people ever allow private banks to control the
ssue of their money, first by inflation and then by deflation, the banks and
orporations that will20grow up around them, will deprive the people of their
roperty until their children will wake up homeless on the continent their
athers conquered." /*-- Thomas Jefferson, Letter 1802 to Secretary of the
reasury, Albert Gallatin
*Sick of the Lies?** Do Something NOW**! (click logo below):** *

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