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A Wealth of Hypocrisy by Paul Greenberg

Soapweed

Well-known member
A wealth of hypocrisy
By Paul Greenberg
Tribune Media Services
Published: September 6, 2007

John Edwards, the presidential candidate, has been outed by the Wall Street Journal as the kind of investor in subprime real estate that he's been blasting on the campaign trial.

It turns out that the hedge fund Edwards has a long and profitable connection with - Fortress Investment Group - invests in the kind of "shameful lending practices" that candidate Edwards denounced when he kicked off his presidential campaign in New Orleans' Ninth Ward last December.

The very model of the populist orator, Candidate Edwards took out after those nasty subprime lenders who've been foreclosing on poor folks in Katrina's wake. The candidate felt no need to go into detail - and mention that his hedge fund's lending unit was doing just that.

One of Fortress' subsidiaries was trying to hold a 67-year-old New Orleans resident in default on her mortgage just two months after she was flooded out of her home.

According to the Wall Street Journal, a total of 34 homeowners in New Orleans were facing foreclosure suits filed by Fortress' subprime lending operation.

Edwards earned almost $480,000 as a consultant to Fortress last year, has picked up about $150,000 in campaign donations from its employees and has invested $16 million of his own $30 million in assets in the company.

Fortress in turn has taken the precaution of incorporating its hedge funds in the Cayman Islands, which lightens its investors' U.S. tax load. Naturally enough, that's another practice Edwards has criticized.

Fortress' well-paid consultant claims he had no idea the investment firm was expanding its subprime lending even though its involvement in such loans was reported back in May.

Maybe he should start reading the papers.

And do you remember his fiery speech about "Two Americas," a grand oratorical performance in the spread-eagle tradition of William Jennings Bryan's populist classic, "Cross of Gold"? It turns out that Edwards belongs to the America he's been lambasting.

Quite an orator, that John Edwards. He delivered a rousing speech on the evils of poverty - a cri de coeur entitled "Poverty, the Great Moral Issue Facing America" - at the University of California-Davis for a mere $55,000. (His spokeswoman noted that part of his fee went to a booking agent and that Bill Clinton had charged $100,000 for his speech there, as if any of that mattered.)

Taking everything into consideration, some of us could better understand why it would be worth $55,000 not to hear Edwards deliver a speech about the moral challenge poverty presents. The poverty he's most successfully combated has been his own.

The contrast between Edwards' public stances and his private choices is enough to give mere sanctimonious hypocrisy a good name.

To quote the director of the Center for Congressional and Presidential Studies at American University in Washington, who goes by the wonderful name of James A. Thurber, on the subject of John Edwards:

"It is self-evident that he is saying one thing on the campaign trail and investing another way." Self-evident? Not to the poor suckers who swallow his act hook, line and Poor Boy image.

Candidate Edwards now says he'll divest himself of any part of his portfolio at Fortress that involves subprime loans - while keeping his $16 million investment in the fund. That's going to be an interesting challenge in accounting, not to mention simple moral consistency.

Speaking of consistency, the candidate also has made a big deal of how environmentally aware he is while, at last report, living in a 28,200-square-foot home, counting its two garages. It's the biggest and costliest house in Orange Country, N.C.

That 28,200 square feet includes an adjacent 15,600-square-foot recreation building complete with basketball court, squash court, two stages, swimming pool, four-story tower, lounge and other amenities. This guy's got a bigger environmental footprint than Godzilla.

None of this would be anybody else's business if John Edwards weren't a presidential candidate with a hankering to lecture the rest of us on the need to conserve energy.

This is the same candidate who, when he was running for vice president back in 2004, flew his hair stylist across the country (from Beverly Hills to Atlanta) to trim his 'do. Total cost: $1,250. And it does look mighty nice.

Hypocrisy, said La Rochefoucauld, is the tribute vice pays virtue, and let it be said John Edwards never stops paying tribute to virtue.

It hasn't been too long since he was urging his Democratic rivals for the presidency to return any money they'd received from press tycoon Rupert Murdoch, the publisher the left loves to hate, and to refuse to appear on Murdoch's Fox News network.

Edwards himself had appeared on Fox News 33 times at last count. And he's collected $800,000 for a book published by a subsidiary of a Murdoch corporation, HarperCollins. (The candidate says much of the money went to charities. One of them, College for Everyone, turns out to be one he founded.)

Presidential campaigns have a way of attracting gold-plated phonies and, before this one is over, no doubt the inconsistencies of other candidates will be laid bare, too.

But for now, when it comes to deciding who's the phoniest of them all, John Edwards leads the pack - and his lead might be unbeatable.

Paul Greenberg is the Pulitzer prize-winning editorial page editor of the Arkansas Democrat-Gazette. His e-mail address is [email protected]
 

MoGal

Well-known member
Yeah, lets avoid the real issue at hand ............. who really is to blame for this fiasco...............

The Rotten Federal Reserve
September 1st, 2007 · No Comments
http://dissidentnews.wordpress.com/2007/09/01/the-rotten-federal-reserve/

The Ultimate ‘Success Through Failure’ Manual

by Gary North
I have just written a success manual. Actually, it’s a book on the world’s oldest, best, yet least implemented success manual. I posted it on-line this week. It’s free – a bonus for my readers.

You can be a success, just not at zero price. The price is high. The manual’s price isn’t. It’s in the public domain. But the cost of implementation is personally much higher than most people are willing to pay.

It’s a lot easier to sell a success manual than a failure manual. To sell a manual based on a record of personal failure, you must first gain the reputation of being highly successful. That isn’t easy. But, as I shall show, it’s doable.

Begin with a slogan: “Nothing succeeds like failure.” You must believe this with all your heart.

Next, you need a verifiable track record of failure: a career-long series of failures which nevertheless gains you the reputation for being an extraordinary success. You need to be like the pointy-haired manager in “Dilbert.” He survives, no matter how much havoc he creates.

The Federal Reserve System surely qualifies. I can see the headline in a full-page ad.

Wake up the financial idiot inside you! How you can cash in big-time on your own failures.

Then there are the bullet teasers.

World’s leading experts reveal:

* You’ve heard the phrase, “a license to print money.” How to get one.

* How to plant your very own tree that everyone says money doesn’t grow on.

* How to get the reputation of being a brilliant rescue specialist when you actually caused the disasters, some of them catastrophic.

* How to get all the money you want and then decide how much to pay the government at the end of the year.

* How to silence your most dangerous potential critics by hiring them or else by buying them off with money that costs you nothing.

* How to get your few unbought critics labeled by the media as conspiracy nuts.

* How to bamboozle Congress in full public view at least four times a year, decade after decade.

IS THIS A JOKE?

When you read the ad, you think, “This is some kind of joke.” Indeed, it is: a practical joke – the most successful practical joke in modern history. It’s highly practical for central bankers. The joke’s on us!

The Bank of England pioneered this failure-guaranteed system in 1694. It was a privately owned bank that had the right to issue currency and buy the government’s debt. As its powers were expanded by Parliament over the years, its notes became legal tender. Creditors had to accept them in payment of debts.

It was only at the end of the 19th century that central banking became universal. It took until December 22 (House) and 23 (Senate), 1913, when most of Congress had gone home for the Christmas holidays, for the Federal Reserve System to be enacted into law. President Wilson signed the bill that same day. All the Democrats voted for it. The Democrats had traditionally opposed central banking. Republicans tended to oppose it, they who had always favored central banking.

William Jennings Bryan, who had been the Populist opponent of Eastern bankers and banking, was President Wilson’s agent for getting the Federal Reserve Act passed. As Secretary of State, he lobbied Congressmen to vote for the bill. Years later, he said this had been his greatest mistake. Too late.

It is always too late.

All it took was a name change. It is called the Federal Reserve System. The work “bank” is nowhere to be seen. It has 12 regional banks, so as to confuse the rubes. The New York FED was for decades the main decision-maker, not the Board of Governors. The New York FED is the only permanent regional bank with membership on the Federal Open Market Committee, which decides to buy or sell debt.

My point is simple: all it took was a name change and the creation of insignificant regional reserve banks to gull the rubes in 1913. Today, no one cares.

This is the central fact: no one cares.

Economists of all views (except the Austrian School, and even some of them do) accept the idea of central banking. Economists are employed by the hundreds by the system. The freshman college economics textbooks are all favorable. So are all the upper division textbooks on money and banking.

There is no other agency of government that has universal acceptance, yet all but the Board of Governors are not part of the government, as their websites’ addresses indicate. They are all “org.”

The FED is the most powerful privately owned monopoly in the United States and therefore the world. Yet anyone who points this out as a negative factor is dismissed as a crackpot or a conspiracy theorist or both.

No other organization in the United States is equally immune from criticism in the Establishment media.

When you find any idea or organization that is immune from criticism from the major institutions, you are inside the temple. This was the title of William Greider’s book on the FED, Secrets of the Temple: How the Federal Reserve Runs the Country (1987), which was unwilling to call for its abolition.

In a 1988 review in The Washington Monthly, a liberal magazine, the author made the point: nobody cares any more.

Ironically, the Federal Reserve had its philosophical roots in the populist uprisings of the late 1800s, when farmers and small businessmen rose up against the power of the big banks. But the bankers managed to frame the new institution in a way that gave them effective control. Reforms made in the 1930s diluted the power of the banks over the Fed but left intact an unusual, hybrid government institution with little direct accountability to the public. The president appointed Fed governors, but they held 14-year terms that assured their independence. The chairman held only a four-year term, but that term was set so that one president could saddle his successor with an uncongenial central banker.

The unusual arrangement went unnoticed by most people. As Greider points out, the “money question” was the subject of great debate during most of the nineteenth century, when William Jennings Bryan stirred thousands with his famous “cross of gold” speech, calling for an abandonment of the gold standard. But in the twentieth century, the Fed succeeded in convincing the public that monetary policy was an arcane undertaking that need not concern the average American. Never mind that the Fed had the power to bankrupt thousands of small businesses, to erode a lifetime’s savings, or to throw millions of people out of their jobs.

Maybe the most accurate book title on the FED is this: The Federal Reserve: An Intentional Mystery. It was published over two decades ago by Praeger, an Establishment publisher.

The plan worked. No one cares.

FED-MADE DISASTERS

The basic disaster is this: ever since 1914, the dollar has lost 95% of its purchasing power, according to government statistics. (Inflation Calculator, Bureau of Labor Statistics).

The secondary disasters have been the recessions, above all, the great depression of the 1930’s, which was a consequence of the FED’s monetary policies in the 1920’s. The best book on this is Murray Rothbard’s America’s Great Depression (1963). It’s free here.

Each time, the FED has escaped blame. The only exception was Milton Friedman’s attack on the FED for its policies in the 1930’s (A Monetary History of the United States, 1963), which he argued could have been solved with more FED-money creation. He did not blame the FED for the fiat-money funded boom of the 1920’s.

The FED is praised when the economy booms. The bubbles are an unfortunate side effect. What is a side effect? An effect we don’t like.

The FED is criticized when it fails to intervene with more fiat money in any liquidity crisis brought on by the FED’s slower rate of money creation in the post-bubble period. The critics say that the FED must take action to lower interest rates. The FED always does.

Then the praise resumes. Price inflation accelerates. Debt accelerates. Bubbles reappear. All this is blamed on speculators.

The FED has the reputation of being the man on the white horse: the rescuer of last resort.

Here is the program: (1) Create a problem. (2) Solve the problem. (3) Get praise for having solved the problem. (4) Make sure the solution leads to the next problem. Repeat forever.

A LICENSE TO PRINT MONEY

Actually, it’s much better than this. It’s a license to print digital money – so much digital money that nobody except illegal immigrants use printed money exclusively. They send it to relatives back home. So, there can never be a run on the banks. Any money withdrawn from one bank winds up in another bank. Digital money can’t go in your pocket. Nobody who speaks English and who has a bank account uses paper money to make most of his transactions.

This has been the fulfillment of bankers’ dreams for five centuries: no more bank runs by the public. No more lines in front of banks.

The problem today is all those hedge fund managers and mortgage brokers, who packaged mortgages and other collateralized debt obligations (CDO’s), and who are now facing default by the borrowers. There is no guaranteed market for these new, creative, and untested forms of debt.

In mid-August, 2007, the markets for billions of dollars worth of these supposedly marketable securities simply disappeared at anything like a retail price. Henry Liu comments.

In a financial crisis, there may simply not be enough credit-worthy borrowers at any interest rate level and the number of sellers stay stubbornly larger than the number of buyers because sellers need to sell precisely because they do not have credit worthiness to borrow even at low interest rates and buyers stay on the sideline waiting for even lower prices.

This is the problem facing the FED and other central bankers. The outfits that have run up the debts to the banks are no longer credit-worthy. They now face bankruptcy. They cannot unload their assets at anything like book value. The commercial banks lent hundreds of billions of dollars to them, and in a panic meltdown, these assets fall in value. The FED can pump in money, but in a panic, banks will buy T-bills, not the assets that are threatened.

This is why the FED has announced that it will accept subprime mortgages as collateral. But this still means mass inflation if it has to buy all of them. The FED must create monetary base money to buy this junk, and then commercial banks expand their loans to take advantage of the FED’s increased reserves. They will not loan to struggling hedge funds and similar sinking ships.

When the Fed adds liquidity directly into the banking system through the discount window, it injects high-power money into banks by making interest rate for overnight interbank banks loans within its set target. The theory is that banks will in turn be able to make loans at interest rates deemed appropriate by the Fed, thus relaying the added liquidity to the market in multiple amounts because of the mathematics of partial reserve.

This will inflate the economy. It will not provide solvency for highly leveraged hedge funds.

With deregulated global financial markets, central bank capacity for adding liquidity to the banking system is constrained by its need to protect the exchange value of its currency. For the US, which depends on foreign central banks to fund its twin deficits, any drastic fall of the dollar will itself create a liquidity crisis from foreign central banks shifting out of dollar in their foreign exchange reserves.

If the dollar falls in relation to other currencies, the Treasury will have to raise interest rates to attract replacement money. That money may come from newly liquified American banks, but that does no good for the liquidity squeeze of the private capital markets. Here is what the FED is facing:

The current challenge is one of returning an abnormal economy of excess liquidity to an economy of normal liquidity without extinguishing the flame of liquidity entirely. The period of stress will be the time it will take to work off the excess liquidity, to turn the liquidity boom back to a fundamental boom. It is not possible to preserve abnormal market prices of assets driven up by a liquidity boom if normal liquidity is to be restored. All the soothing talk about the fundamentals of the economy being strong notwithstanding the debt bubble is insulting to the thinking mind.

Bernanke’s FED tried from February, 2006 to mid-August, 2007, to move the economy from excess liquidity to “normal” liquidity. But that is what the FED has tried to do ever since 1920. It never sticks to the program because of the resulting liquidity crisis and recession.

Will the stock market hold up, once it is clear that the FED’s money is insufficient to re-liquify credit-unworthy borrowers? Will the economy remain positive? Liu does not think so.

This is a debt economy fed by a liquidity boom. When the liquidity boom turns to bust, all the strong fundamental indicators such as corporate earnings will wilt from a debt crisis. Asset value cannot be held up by simply adding excess liquidity forever without creating hyperinflation. Also, some liquidity problems, such as those caused by a loss of market confidence, cannot be solved by merely injecting money into the financial system which in fact will only add to the problem. Restoring market confidence requires a rational restructuring of the economy to absorb excess liquidity.

So, having solved the age-old problem of bank runs by depositors, the commercial bankers are now facing massive default by their borrowers. If it’s not one thing, it’s another.

The stock market faces a problem. So does the corporate bond market. “When debts are not repaid, financial value is destroyed which will be expressed in falling asset prices. This loss of value will need to be reckoned in the economy.”

The FED loaned $2 billion to the four largest U.S. banks on August 22. This was through the discount “window.” Why lend to banks? Why not lend directly to faltering hedge funds? Liu has an explanation.

However, the Fed’s actions reflected a shift of the focus of concern from hedge funds towards banks who loaned the hedge funds money to trade with leverage. Banks are also exposed to the problem of having committed credit lines to financial institutions with subprime exposure, such as mortgage lenders or specialist investment vehicles. Banks have also arranged loans to risky firms such as buy-out groups, which they had planned to sell into a debt market that had evaporated overnight. An estimated $300 billion of unsold loans are sitting on bank balance sheets, gobbling up funds pushing up reserve requirements.

If he is correct about $300 billion of unsold loans, then the FED faces a true disaster.

I think Bernanke’s attempt to wring liquidity out of the system was successful. The FED is now running like mad to reverse this policy.

CONCLUSION

The FED keeps intervening to make things better, and the result seems to be systemic vulnerability. This is the fate of government intervention generally. It produces the opposite of what the planners promised.

If nothing succeeds like failure, then the FED may soon be able to add a spectacular chapter to its success manual.
 

Soapweed

Well-known member
It is said that one should "fight fire with fire." So is the message to my message, "fight cut-and-paste with cut-and-paste"? :???: :?
 

MoGal

Well-known member
lol Soap that's cute.

I hate that the real issue is not being addressed........ the Federal Reserve is owned by CENTRAL BANKERS, not the federal government....... the only thing we the people get is the debt and the federal reserve has committed CRIMINAL fraud.

------------------------------------------

Feeding our ignorance on the origins of this rollercoaster, which some fear could lead to other bubbles bursting and a global recession, or something worse, is a media that mythologizes markets and presents them as neutral self-correcting mechanisms that fairly regulate supply and demand and deserve confidence. There is nary a word on how they can be dominated, monopolized and ologopolized. (Is that a word?) Last week we were warned about “contagion.” This week, the calming buzzword is “correction.”

Left out in all this is any discussion of the shadowy forces that we don’t see who are calling the shots and the many ways in which the game is damaging our society and is even self-destructive to business. (Remember Lenin’s warning: “sell them enough rope and capitalists will hang themselves.”) Who is investigating the profiteers and the tactics they use? What politicians are speaking out? Isn’t the handwriting on the wall?

Steven Lendman writes, “Some astute financial observers now believe current excesses and resulting turmoil were caused by the intentional engineering of the US housing bubble with the Fed in on the scheme.” The Federal Reserve Bank) by the way, contrary to appearances, is NOT a government agency but a private body run by big banks.

“Insiders made loads of easy money in the process and now stand to cash in big troubled assets for a fraction of their value the way they always do in the wake of market meltdowns. It’s called “vulture” investing with shrewd buyers profiting hugely in good and bad times that are all good for them.”

He concludes, “The problem is deep, structural and aided by stripped away regulatory protections giving predatory lenders and Wall Street schemers free reign to target unsuspecting victims.” In other words, see who benefits.

Enough of all the uncritical market hyping in the media! Lets get at truths that are obscured with vague references to faith-based market “psychology” which has actually been described as motivated by “animal spirits” as if that’s a good thing. They make it sound like fun time-when it’s a crime.
 

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