Tag Archive | "bear stearns"

Plundering the Public Purse

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By Patrick Wood, Editor

As the global finan­cial crisis unfolds, one thing is cer­tain: The major invest­ment and com­mer­cial banks who have wrecked our economy and finan­cial system are now suc­cess­fully sucking unlim­ited amounts of money from the people’s Trea­sury to bail them­selves out.

Drooling at the head of the line are Bear Stearns and JP Morgan Chase. There will be more.

In simple terms, Bear Stearns, the fifth largest U.S. invest­ment bank, got caught in a mas­sive bank run. Vir­tu­ally overnight, those who extended credit on a reg­ular basis, dis­ap­peared. It’s not that they didn’t deserve insol­vency, because Bear Stearns was a pio­neer in the secu­ri­ti­za­tion of now-toxic sub-prime mortgages.

Had Bear Stearns been allowed to col­lapse, it would have set off a domino effect that could have taken down major com­mer­cial banks as well as other invest­ment banks and brokerages.

Fed Chairman Bernanke and Trea­sury Sec­re­tary Paulson quickly set into motion a plan to pre­vent dis­aster. (Um, hold on to your wallet!)

Invoking a rarely used 1932 Amend­ment to the Fed­eral Reserve Act, The Fed­eral Reserve set up a spe­cial fund with $200 bil­lion that can be used by major banks to shore up their cap­ital posi­tion so that a) they won’t fail alto­gether and b) they can con­tinue to loan mul­ti­plied bil­lions to clients world-wide. The lan­guage of the Amend­ment gives the Fed such authority when “unusual and exi­gent cir­cum­stances exist and the bor­rower is unable to secure ade­quate credit accom­mo­da­tions from other sources.”

In essence, the Fed becomes the lender of last resort, and the Trea­sury guar­an­tees payoff even in the case of default.

But, Bear Stearns is NOT a bank and NOT a member of the privately-owned Fed­eral Reserve. And since the Fed can only lend cash directly to member banks, it chan­neled funds through sur­ro­gate JPMorgan Chase, to pur­chase Bear Stearns and guar­antee its con­tinued operation.

What a sweet­heart deal for JPMorgan Chase: It lit­er­ally stole the com­pany for a mere $2 per share or a total of about $250 mil­lion. The Bear Stern head­quar­ters building alone is worth at least a bil­lion dol­lars. Its stock traded as high as $170 just over a year ago.

So, Bear Stearns gets bailed out at no risk to JPMorgan Chase, and JP Morgan Chase gets to add wind­fall assets to its own bal­ance sheet.

Don’t be shocked to remember that the Chase in JPMorgan Chase is derived from the old Chase Man­hattan Bank that was the dynasty of David Rock­e­feller, which merged into banking giant JP Morgan some years ago. Rock­e­feller was the co-founder of the elite Tri­lat­eral Com­mis­sion in 1973, whose spe­cific goal was to create a “New Inter­na­tional Eco­nomic Order.”

In a sep­a­rate move, the Fed announced it will begin to loan Trea­sury secu­ri­ties (not cash) directly to the large invest­ment banks in return for col­lat­eral based on “more risky invest­ments,” e.g. worth­less sub-prime paper. By infu­sion of “better cap­ital” onto their bal­ance sheets, the hope is that other lenders will be more likely to con­tinue to do busi­ness with them. If  the bor­rower goes defunct, its cred­i­tors seize the Trea­sury secu­ri­ties, and the Trea­sury is left holding the worth­less secu­ri­ties. Of course, tax­payers will con­tinue to pay interest on these secu­ri­ties for years into the future.

Amer­i­cans aren’t going to take this much longer.

Social mood is vis­ibly turning just as cer­tainly as a San Fran­cisco cable car on its turntable at the end of the line.

A recent search on www.cnnfn.com for “Bear Stearns” pro­duced these two spon­sored ad links at the very top of the results page:

  • “Bear Stearns Law­suit: Lose Money in Bear Stearns Shares? Free Case Review”
  • “Bear Stearns Employee? Did Com­pany Vio­late Your Rights? Get into an ERISA Investigation”

This is just the tip of the iceberg.

The FBI announced in Jan­uary that it is cur­rently probing 14 major mort­gage lenders for fraud, including Coun­try­wide Finan­cial. It is very likely that Bear Stearns is among this list. Sev­eral Fed­eral and state agen­cies are already inves­ti­gating crim­inal wrong­doing from the Bear’s two failed hedge funds that went under in 2007.

Can an industry as cor­rupt and self-serving as this escape unscathed under the gaze of a hoard of hungry lawyers, attor­neys gen­eral, state and fed­eral agen­cies and more? Not.

This writer pre­dicts that at least some of these top exec­u­tives (and per­haps some gov­ern­ment col­lab­o­ra­tors) will ulti­mately be carted off in hand­cuffs, much like Jef­fery Skilling and Ken­neth Lay after the col­lapse of Enron in 2001.

Mean­while, ABC News reports that Bear Stearns has called in grief coun­selors “to help workers handle the news that their plans and per­haps their dreams have abruptly and dra­mat­i­cally changed.” How thoughtful.

Appar­ently, the overnight loss of 99% of their retire­ment funds plus the prospect of losing their jobs is pro­ducing symp­toms like depres­sion, with­drawal, sleep­less­ness, loss of appetite and anx­iety and irritability.

Under­stand­able, but many of us have been suf­fering the same things over the sellout and melt­down of our entire country, and for a lot longer than they have!

Who will hire grief coun­selors for us?

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What is Globalization?

It is the col­lective effect of pur­poseful and amoral manip­u­la­tion that seeks to cen­tralize eco­nomic, polit­ical, tech­no­log­ical and soci­etal forces in order to accrue max­imum profit and polit­ical power to global banks, global cor­po­ra­tions and the elit­ists who run them. It is rapidly moving toward an full and final imple­men­ta­tion of Technocracy.

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What is the Tri­lat­eral Commission?

Founded in 1973 by David Rock­e­feller and Zbig­niew Brzezinski, the Com­mis­sion set out to create a “New Inter­na­tional Eco­nomic Order”, namely, Tech­noc­racy. The orig­inal mem­ber­ship con­sisted of elit­ists (bankers, politi­cians, aca­d­e­mics, indus­tri­al­ists) from Japan, North America and Europe. Col­lec­tively, they have dom­i­nated and con­trolled trade and eco­nomic policy in their respec­tive coun­tries since at least 1974.

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What is Technocracy?

Tech­noc­racy is a move­ment started in the 1930’s by engi­neers, sci­en­tists and tech­ni­cians that pro­posed the replace­ment of cap­i­talism with an energy-based economy. Orig­i­nally envi­sioned for North America only, it is now being applied on a global basis. Authors Aldous Huxley and George Orwell believed that Tech­noc­racy would result in a Sci­en­tific Dic­ta­tor­ship, as reflected in their books, “Brave New World” and “1984″.

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What is Smart Grid?

Smart Grid is the national and global imple­men­ta­tion of dig­ital and Wi-fi enabled power meters that enable com­mu­ni­ca­tion between the appli­ances in your home or busi­ness, with the power provider. This pro­vides con­trol over your appli­ances and your usage of elec­tricity, gas and water.

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Who is M. King Hubbert?

Hub­bert was a geo-physicist who co-founded Tech­noc­racy, Inc. in 1932 and authored its Tech­noc­racy Study Course. In 1954, he became the cre­ator of the “Peak Oil Theory”, or “Hubbert’s Peak” which the­o­rized that the world was rapidly run­ning out of carbon-based fuels. Hub­bert is widely con­sid­ered as a “founding father” of the global warming and green movements.

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Who is R. Buck­min­ster Fuller?

A pio­neer in global eco­log­ical theory, Fuller (1895 – 1984) was the first to sug­gest the devel­op­ment of a Global Energy Grid that is today known as the Global Smart Grid. Fuller is widely con­sid­ered to be a “founding father” of the global green move­ment, including global warming, Sus­tain­able Devel­op­ment, Agenda 21, etc.

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Is the Venus Project like Technocracy?

The Venus Project, founded by Jacque Fresco, is a utopian, modern-day iter­a­tion of Tech­noc­racy. Like Tech­noc­racy, it scraps cap­i­talism and pro­poses that “a resource-based economy all of the world’s resources are held as the common her­itage of all of Earth’s people, thus even­tu­ally out­growing the need for the arti­fi­cial bound­aries that sep­a­rate people.” The appli­ca­tion of tech­nology is the answer to all of the world’s prob­lems, including war, famine and poverty.

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