Banks Ask for TOTAL INSURANCE from FDIC

Elaine Meinel Supkis at EMSnews:

Bloomberg.com: Banks See Flaws in FDIC Program to Guarantee Debt

JPMorgan Chase & Co., Bank of America Corp. andGoldman Sachs Group Inc. are among banks that told the government its program to back their bonds is flawed because it doesn’t have a strong enough guarantee.

The Federal Deposit Insurance Corp. guarantee for repayments in default needs to be clearer, fees are too high and banks need more freedom on whether to opt in, according to a letter from law firm Sullivan & Cromwell LLP posted on the agency’s Web site on behalf of nine banks. The comment period on the interim rules for the FDIC’s Temporary Liquidity Guarantee Program ends today.

The comments shed light on why almost a month after the government placed its guarantee behind new bank bonds, no U.S. company has yet tested the market. By contrast, under a similar program in the U.K., banks have issued the equivalent of 13.9 billion pounds ($20.6 billion) of government-guaranteed bonds.

“A guarantee obligation that is anything less than an obligation to pay all amounts due could severely curtail the demand for these securities and might impair a bank’s access to guaranteed funding,” New York-based Sullivan & Cromwell said in the Oct. 31 letter.

First of all, this letter from the Sullivan & Cromwell lawyers came online at the very last possible minute. This was deliberate, I would guess. This way, the outrageous demands from the Goldman Sachs and JP Morgan gnomes and the various pirate outfits would not raise a huge ruckus before comments close. We can’t ‘fight’ this latest attempt at robbery. This banking heist is being foisted upon the US people. Who are already very suspicious and rightfully so.

This news was just too much. At every possible turn, our own Treasury officials are cooperating with the Federal Reserve and our gnome community to privatize the profits and nationalize all the risks inherent in banking. Then, and only then, will they loan to us!

Talk about cheeky! They need this guarantee because they know what lies in the dark shadows of the future: the bankruptcy of our government.

Bloomberg.com: banks want total insurance of even interest rate profits!

Without rules that “fully and irrevocably” guarantee repayment, the size of the program and the number of banks that participate will be “significantly below the expectations of the FDIC, the industry, and all interested parties in the health of the U.S. banking system,” wrote Fred Sherrill, managing director at Credit Suisse Securities USA LLC in New York….

Interim rules for the government program fall short of traditional bond guarantees because they leave the timing of principal and interest payments in the event of a bank default open to changes by bankruptcy courts, Sherrill wrote.

“We are optimistic that, with appropriate modifications, the program will be successful in helping to mitigate systemic fear in the interbank and capital markets,” he wrote.

Standard & Poor’s issued a report Nov. 10 supporting the banks’ position on the guarantee.

“We do not view the issue of timeliness as a mere technicality,” according to the report from the New York-based unit of McGraw-Hill Cos.

This whole mega-trillion dollar future obligations being ‘insured’ by the US government who stands in for you and me and all of us, the banking gnomes want this to NOT be in US courts! They want this ‘insurance’ set in CEMENT. This way, we cannot escape paying for THEIR loans THEY hand out to ANYONE ON THIS PLANET. Got that? Anyone and anywhere.

Way back in the Stone Age, around 1931, our gnomes wanted this. They didn’t get it. They all then went bankrupt. The US government then launched the FDIC. But they cautioned the gnomes that this was NOT going to be an open window so they could make infinite loans. For back in the Stone Age, back in the 1930’s, our elders knew perfectly well, the banking gnomes would go to infinity in an eye blink if they were allowed to make infinite loans.

The insurance limits of the FDIC were restrictions. Set up to prevent endless lending that is increasingly reckless. Gnomes are infamous for reckless lending. They can’t help it. This makes them richer. So of course, they would dearly love to be able to simply write up loans, nonstop. They had a great scheme going with foreign powers this last 10 years. They could unload any and all lending they wrote by selling it to the countries running up huge trade surpluses with the US.

This round-robin of lending to the US so we could buy foreign goods and commodities was a great game which has collapsed. Due to the US being too deep in debt. Now, we enter a New World Order: everyone overseas knows that our days are numbered. They are not ready for us to fail. They want this to continue until 2020. This is the Chinese 50 Year Plan which the Politburo wrote up back in the very early 1980’s. We are a tad ahead of schedule here.

So they all want to buy our debts some more. But they don’t want to do it with no guarantee of INTEREST RATE PROFITS. Namely, they want to keep ahead of inflation. And worse, when we go bankrupt, they want to NOT be in our court system. And even worse, they want to be AT THE HEAD OF THE LINE when we do go inevitably bankrupt! This is a legal matter.

This way, they get paid first, not last. The US retirees go down a few rungs on the ‘pay up’ ladder. We have dumped 100% of our Social Security surplus into our National Debt black hole. Remember the push during the 1970’s and 1980’s that egged voters into allowing SS withholding taxes to nearly double?

This supposedly was so we could pay for the baby boomers retiring. But all this loot was put in the government red ink sea and to recover the interest due on this gigantic sum, over $5 trillion, the retirees have to be first in line when the US gives up running on red ink in about 2020.

[. . .] [text of letter from attorneys to FDIC]

The entire letter is a coup being pulled against our own government. The US people cannot insure all dollars being generated by the banks. The entire planetary financial system is focused on making us eat all the dollars the Bank of Japan generated via the carry trade. All this easy money is going to be paid back in full or else, is the message.

The US will be denied further loans from our competitors if we don’t sign onto this series of demands from the gnomes who channel all that lending from Asia, the Caribbean and OPEC, into the US economic system.

The kicker here is this: these same entities will also NOT buy US government debt if we refuse to insure all our debts in such a way, they take over all our finances and ALL OUR FUTURE TAX REVENUES. Many an empire has fallen for this trick. Spain, in 1750, owed over 100 years of future taxes to creditors, for example. They went bankrupt and lost their entire empire very rapidly. Napoleon even invaded Spain.

Then there was France: 75 years of future taxes were promised by the Bourbons. The king and queen then got their heads guillotined. The revolutionaries simply denounced these bad loans and kicked the bankers to the curb. Or rather, that is where their heads rolled. When outside lenders complained, France said, ‘Non!’ and ignored them.

So surrounding kingdoms invaded. Thus arose Napoleon. He turned the tables and set a formerly bankrupt France into this amazing war machine. Took over nearly all of Europe. Like Hitler who rose to power exactly the same way after Germany said, ‘Nein’ to paying similar debts. Both Napoleon and Hitler then went on to do the same exact stupid thing: invade Russia in the summer, hoping to take Moscow before fall.

This takes me back to something very serious: the Goddess of History doesn’t do much of anything but strive to not laugh to death at human follies. The US is trotting down this exact same road. The Chinese know about history and maybe even read my blog at the very top. After all, they know me!

And they worry about us choosing the Hitler/Napoleon road of not paying our debts. And the more debts we take on, the more likely we will have to choose this particular, deadly road. For the desire to rule the earth is not gone at all. Indeed, the US is firm in this: we want to rule this planet and eat up 24% of earth’s resources! We desire this greatly. And we cannot pay our past debts and will probably not use our courts to skip out. Instead, we will take the other road.

Shareholders Pay Price as Barclays, UniCredit Raise Capital Like `Casinos’

Incidentally, this story is hilarious because of what the reporter got various people to say. So, the banks are now ‘casinos’? HAHAHA. Yup. This reminds me of a conversation I had with a Chinese official back in 1985. He ran off to Atlantic City to get rich, quick. Instead, he lost every penny.

So I explained how the games played in casinos are rigged. I introduced him to a card sharp I knew who was, like me, banned from entering any casino in Atlantic City. ’The bank ALWAYS wins,’ I told him. He was the first to say to me, ‘I be bank!’

The banking system has evolved into this great, big, cheating casino. The latest demands by the gnomes is clear: they always need to win or else. Or else, they won’t lent infinite funny money to us that they create out of thin air.

FEEL FREE TO EMAIL ME AT emeinel@fairpoint.net

JPMorgan Responsible for the Destruction of U.S. Financial System

or so says this post at marketoracle.co.uk. Quite interesting. Here's the end of it, less the sales pitch for the author's newsletter:

Oct 16, 2008 - 05:19 PM

By: Jim_Willie_CB

HIDDEN USGOVT COUP BY WALL STREET

The US Congress has been subverted by intimidation and ignorance, maybe bribery. Regulators and law enforcement bodies are mere accomplices. The entire US banking system has undergone an unprecedented grand nationalize initiative, including the financial system, when considering the mortgage and insurance giants. The total bailouts are huge when put into perspective. This is a hidden coup, complete with deep fraud, corruption, and ruin for both prosecutors and whistle blowers. The US Dollar is caught in the middle of a black hole scrambled with fraud. Paulson is the new Chancellor of US Inc, Bernanke the new Currency Lithography Manager, and Sheila Bair the Investment Banker (a la Goldman Suchs). Paulson assumes all powers over the financial state from the president, via the banking industry control.

The government bailout redemption of $trillion past fraud closes the loop. Bernanke manages all efforts to use printed money for the purpose of buying worthless counterfeited and fraud-laced bonds, buying commercial bonds and posted collateral among businesses, as well as making printed paper products available to foreign central banks in relief of past fraud. Bair will act as the director of slaughterhouse traffic for JPMorgan, which needs a steady supply of bank deposits to offset their destroyed balance sheet from continued credit derivative implosion, thereby betraying the chartered FDIC pledge to protect bank depositors and senior bank bond holders through liquidation procedures, with full recognition of expedience. Hail to the king, long live the king! The US public seems so dumbstruck that it cannot demand even full disclosure of the process, let alone private offshore bank accounts for the new leaders of the successful coup.

The coup formalizes a climax to a Ponzi Scheme. A pyramid scheme is a non-sustainable business model that involves the exchange of money primarily for enrolling other people into the scheme, without any product or service bearing true value delivered. With the ongoing steadfast support offered by Alan Greenspan, they were able to maintain an incredible Ponzi scheme. They sold financial toxic waste products in the form of Mortgage Backed Securities (MBS), Collateralized Debt Obligations (CDO), Structured Investment Vehicles (SIV), Unidentified Financial Objects (UFO), and Credit Default Swaps (CDS). My favorite remains the UFOs. The corruption of politicians in Congress enabled the process, with relaxed guidance by the Financial Accounting Standards Board (FASB). The two key ingredients for the Ponzi Scheme are a mythological ideology and a high priest to endorse the game from a credible pulpit. Alan Greenspan claimed legitimacy of the US banking system, blessed credit growth and fractional bank practices as beneficial, and praised risk pricing systems using credit derivatives as sophisticated. The high priest used to be Greenspan, but now a tag team has replaced him. Hank Paulson is the spearhead for the great coup of the US financial system. Usage of short restrictions rules has been key to both instilling instability at necessary times, and raiding hedge funds. US Fed. Chairman Bernanke swaps USTBonds for any piece of bonded garbage known to mankind. Mammoth placements of leveraged trades by Wall Street firms make for some of the most grotesque insider trading in US history.

DECEIT & INTIMIDATION

The lies, deceit, backroom pressure, and fleecing of the American public is deep. Take the Emergency Economic Stability Act. Most of the initial $250 billion outlay was not devoted to American bankers, but rather to foreign bankers, primarily in Europe and England, and to purchase preferred US bank stocks. The US public was not told about this redirection, which constitutes misallocation, misappropriation, and fraud. Tremendous backroom pressure was exerted at every step. The underlying assets involved in swaps do not even have to be US-based mortgage bonds. The formerly submitted Paulson Manifesto was revived in a power grab, complete with considerable infighting and squabbles, since Morgan Stanley was given favor. The usage of funds to buy investment stakes in the giant US banks is yet another direct Fascist Business Model tactic, assisting banks close to the power center, yet reeking with corruption. The sickening irony is that they have no more money to disseminate and distribute. They cannot reveal their lies until they formally request more Congressional funds. Much discussion has come that the USGovt should adopt the Swedish model in the resolution of the current crisis. Not in a New York minute!! That would require heavy stock and bond losses, and more transparency of scum. Interestingly, the market discounts words as worthless, while bailout actions fail to produce even a positive reaction for a full day, until Monday last week when the Dow Jones Industrial index rose over 900 points. That was clearly Wall Street engineering a profitable short cover rally. Check S&P futures positions beforehand, if you can. The credibility of the US Fed. is close to being destroyed. On October 15, the same Dow Jones index fell over 700 points, almost 8%. Even the global rate cut was rejected by stock markets, a major insult.

Intimidation of the US Congress has been huge and powerful, similar to when the Patriot Act was passed in 2002. The Congress was actually threatened by martial law in the cities of the United States if the big bailout package was not passed two weeks ago! This was not reported on CNN or CNBC, but C-Span did cover it. The mobilization of the US Army for civilian control is well known in the past couple weeks. See the Third Brigade back from combat duty in Iraq. This account came from Rep Brad Sherman of California. To achieve supposed financial stability, the nation succumbed to totalitarianism by Wall Street thieves, conmen, fraud kings, and criminals. Instead, the bailout only covered up $trillion fraud. My position has been very stable and consistent, that such tactics are typical characteristics of the Fascist Business Model. The state merges with the large corporations, who proceed to terrorize the citizenry after unspeakable protected corruption and theft. To object is to be labeled unpatriotic!

TOP DOWN SOLUTION FAVORS THE ELITE

The top-down approach used to date aids the wealthy bankers, while the homeowners are denied aid. That aid is promised but rarely arrives. The fundamental problem here is that billion$ are devoted to shore up insolvent banks, to redeem their worthless (or nearly worthless) bonds, and to give a giant pass to the executives. Trust has eroded throughout the system. Banks distrust each other's collateral. The result is that eventually the US Economy will enter not a recession, not a depression, but a DISINTEGRATION PHASE. Despite Bernanke's studious efforts, borrowing from revisionist history, his liquidity is nothing more than bailouts at the top for the perpetrators of the housing bubble and mortgage debacle. The bank system benefits little inside the US walls of finance. A bottom-up approach might have had a chance to succeed, but a top-down approach is a sham. To expect a top-down solution that actually relieves the housing inventory logjam is insane. That is like feeding a teenager with meals placed inside the human rectum, expecting nutrients to find their way to the rest of the body! The credit mechanisms do not travel upward within the pyramid, but rather in the downward direction, starting with a borrower, a good collateralized risk, and an underwritten loan, when plenty of lending capital is available. The US public has bought this stupid ‘Trickle Down' philosophy for years, learning nothing. The US Economy is on the verge of collapsing. Short-term credit is being denied at key supplier intermediary steps, soon to result in recognized disintegration.

The primary practical objective of this corrupt trio (JPM, GSax, FDIC) is to avoid Credit Default Swap fires, which would bring an end to their reign of terror. This US Economic failure is in progress and is unstoppable. The 1930 Depression resulted after monumental credit abuse from the bottom up, as hundreds of thousands of people leveraged investments 10:1 with stocks primarily. The 2000 Depression will come after monumental credit abuse from the top down, as hundreds of big financial firms leveraged investments by 7:1 and 20:1 with bonds primarily. The most absurd of all is the CDO-squared, leveraging upon leverage. Total seizures have crippled the banking system. Short-term credit has largely vanished, as letters of credit are routinely not honoured at ports in the United States. The panic will continue, especially when supplies dry up.

GOLD & SILVER AWAIT THEIR EXALTED STATUS

We are witnessing the disintegration cited in my recent forecasts. It is a systemic failure, marred by lost confidence and trust in the entire financial system. Expect foreigners soon to pull the rug from under the American syndicates in control. Several key meetings have already concluded, totally unreported in the US press, which occurred in Berlin Germany. Consider it the Anti-G7 Meeting. Implications are profound, and involved the Shanghai Coop Org tangentially, since its member nations possess so much new commodity supply. Consider it the Anti-NATO group. An important and powerful alternative financial system is soon to spring into action, including high-level bilateral barter. Those who expect the current US Regime to continue their financial terror are in for a big surprise.

Expect defaults in the COMEX with gold & silver, whose prices for paper vastly diverge from physical, to the anger of foreigners watching. They hold massive precious metals assets. Disparities now contribute to powerful forces, sure to break the current system. Grand systemic changes come. THE RESULT WILL BE A BREATH-TAKING DISCONTINUITY EVENT.

Ironically, the more inner anguish felt on the falling gold & silver prices, the closer we are to a new financial framework, with the US Dollar relegated to a Third World role. A REPLACEMENT GLOBAL RESERVE CURRENCY HAS ALREADY BEEN DECIDED UPON. Its launch awaits the proper moment. The Americans are last to know, as usual. The US leaders are under the illusion of being in control!

Engdahl Thinks Financial Crisis May Have Been Planned

He thinks the Germans might have a good strategy - the Italians not so good.

www.321gold.com via Elaine Supkis:

Behind the panic:
Financial Warfare over future of global bank power

F. William Engdahl
www.engdahl.oilgeopolitics.net/
Oct 10, 2008

What's clear from the behavior of European financial markets over the past two weeks is that the dramatic stories of financial meltdown and panic are deliberately being used by certain influential factions in and outside the EU to shape the future face of global banking in the wake of the US sub-prime and Asset-Backed Security (ABS) debacle. The most interesting development in recent days has been the unified and strong position of the German Chancellor, Finance Minister, Bundesbank and coalition Government, all opposing an American-style EU Superfund bank bailout. Meanwhile Treasury Secretary Henry Paulson pursues his Crony Capitalism to the detriment of the nation and benefit of his cronies in the financial world. It's an explosive cocktail that need not have been.

Stock market falls of 7 to 10% a day make for dramatic news headlines and serve to foster a broad sense of unease bordering on panic among ordinary citizens. The events of the last two weeks among EU banks since the dramatic state rescues of Hypo Real Estate, Dexia and Fortis banks, and the announcement by UK Chancellor of the Exchequer, Alistair Darling of a radical shift in policy in dealing with troubled UK banks, have begun to reveal the outline of a distinctly different European response to what in effect is a crisis 'Made in USA.'

There is serious ground to believe that US Goldman Sachs ex CEO Henry Paulson, as Treasury Secretary, is not stupid. There is also serious ground to believe that he is actually moving according to a well-thought-out long-term strategy. Events as they are now unfolding in the EU tend to confirm that. As one senior European banker put it to me in a private discussion, 'There is an all-out war going on between the United States and the EU to define the future face of European banking.'

In this banker's view, the ongoing attempt of Italian Prime Minister Silvio Berlusconi and France's Nicolas Sarkozy to get an EU common 'fund', with perhaps upwards of $300 billion to rescue troubled banks, would de facto play directly into Paulson and the US establishment's long-term strategy, by in effect weakening the banks and repaying US-originated Asset Backed Securities held by EU banks.

Using panic to centralize power

As I document in my forthcoming book, Power of Money: The Rise and Decline of the American Century, in every major US financial panic since at least the Panic of 1835, the titans of Wall Street - most especially until 1929, the House of JP Morgan - have deliberately triggered bank panics behind the scenes in order to consolidate their grip on US banking. The private banks used the panics to control Washington policy including the exact definition of the private ownership of the new Federal Reserve in 1913, and to consolidate their control over industry such as US Steel, Caterpillar, Westinghouse and the like. They are, in short, old hands at such financial warfare to increase their power.

Now they must do something similar on a global scale to be able to continue to dominate global finance, the heart of the power of the American Century.

That process of using panics to centralize their private power created an extremely powerful, concentration of financial and economic power in a few private hands, the same hands which created the influential US foreign policy think-tank, the New York Council on Foreign Relations in 1919 to guide the ascent of the American Century, as Time founder Henry Luce called it in a pivotal 1941 essay.

It's becoming increasingly obvious that people like Henry Paulson, who by the way was one of the most aggressive practitioners of the ABS revolution on Wall Street before becoming Treasury Secretary, are operating on motives beyond their over-proportional sense of greed. Paulson's own background is interesting in that context. Back in the early 1970's Paulson started his career working for a rather notorious man named John Erlichman, Nixon's ruthless adviser who created the Plumbers' Unit during the Watergate era to silence opponents of the President, and was left by Nixon to 'twist in the wind' for it in prison.

Paulson seems to have learned from his White House mentor. As co-chairman of Goldman Sachs according to a New York Times account, in 1998 he forced out his co-chairman, Jon Corzine 'in what amounted to a coup' according to the Times.

Paulson, and his friends at Citigroup and JP Morgan Chase, had a strategy it is becoming clear, as did the Godfather of Asset Backed Securitization and deregulated banking, former Fed Chairman Alan Greenspan, as I have detailed in my earlier series here, Financial Tsunami, Parts I-V.

Knowing that at a certain juncture the pyramid of trillions of dollars of dubious sub-prime and other high risk home mortgage-based securities would come falling down, they apparently determined to spread the so-called 'toxic waste' ABS securities as globally as possible, in order to seduce the big global banks of the world, most especially of the EU, into their honey trap.

They had help. In recent testimony under oath by Eric Dinallo, the Superintendent of the New York Insurance Department at the AIG Bailout Oversight Hearing, into the AIG rescue by Paulson, Dinallo testified that funding cutbacks in recent years directed by the Bush-Cheney Administration had reduced the responsible department that should regulate or watch over the $80 trillions in Asset Backed Securities (ABS), which included the toxic sub-prime and Alt-A mortgage securities and much more. The Bush Administration took the staff from more than one hundred people down to one---yes that was not a typo. One as in 'uno.'

[. . .]

Catherine Austin Fitts votes to execute Goldmann Sachs

a post and a couple of clarifying comments—

An E-Mail to a Member of the Research Team at Goldman Sachs

Catherine and Daily Musings,

October 7, 2008 at 1:10 am

Solari.com:

Harry:

Thank you for the opportunity to be on your e-mail list. I appreciate your generosity and hard work.

I am writing to ask you to unsubscribe me from your list. I value your research reports. However, it would be hypocritical of me to accept them.

I believe in death penalties for private corporations and partnerships. My vote for one of the first to be executed is Goldman Sachs.

You and your colleagues have helped to build and manage a machinery that has committed treason and genocide on a breathtaking scale. The history of Goldman Sachs over the last two decades is living proof that it is possible to kill with a financial system and a pen.

The fact that you don’t understand what you and your colleagues are doing is breathtaking. It raises more than a few questions about whether you understand what is really behind the flow of funds you track and publish.

The question before us is who will pay the price of the mess that you and your colleagues have had such a significant hand in creating:

Who will lose their business and who will keep it?
Who will lose their job and who will keep it?
Who will lose their home and who will keep it?
Who will lose their reputation and who will not?
Who will lose their family and who will not?
Who will lose their health and who will not?
Who will lose their future and who will not?
Who will lose their life and who will not?
Who will lose their freedom and who will not?

My plan for bailing out the country would include asserting common law offsets against the assets of the NY Fed member banks and all of their partners and employees who benefited up to an amount sufficient to repay $4 trillion missing from the US government, to fund losses caused by the manipulation of the precious metals markets and to fund claims of fraudulent inducement and fraud on mortgages and mortgage securities. To fund the offsets, I would propose to seize the offshore and onshore assets of those who created the mortgage bubble and derivatives mess in the first place.

Frankly, I see no reason why millions of poor people around the world should pay a global tax through the dollar and US treasury and agency securities for which the American people are liable, so you and your colleagues can continue to live in comfort and luxury without concern that you will be held accountable to the same standards of enforcement applied to the people who live in the communities wrecked by the mortgage, money laundering and financial fraud that made you and your clients so powerful.

It seems to me if anyone should lose their business, jobs and home, it is you and your colleagues.

Sincerely Yours,

Catherine Austin Fitts

______________________________________________________________

Carolyn

Oct 7th, 2008 at 4:19 pm

Re: common law right of offset. A right at “common law” is one that comes about through court precedent rather than a statute. Many, if not most, common law rights came into being before we had statutes, i.e., from England. Sometimes common law rights exist side-by-side with similar, or even the same, constitutional or statutory rights that are in “code” form. An attorney would argue in court for the common law right either when there is no statute or when the statute is more limited than the broader common law right.

A right of offset is just the right of one who holds the property of another (e.g., a bank) to seize that property to satisfy a debt or liability incurred by the owner of the property. So, for example, the IRS has the right to set off your tax refund against taxes otherwise due and unpaid. Similarly, if you have a savings account at a bank as well as a credit card with the same bank and you don’t pay the amount due on your credit card, the bank can apply (or “set off”) the amount in your savings account against the debt. Catherine is applying this concept in the case of member banks of the NY Fed on the theory that because the Federal Reserve Bank of New York is the depository for the US government, its members are responsible, or liable, for the “lost” $4 trillion of government money. As I understand her statement, she is suggesting that the federal government should seize, by means of an accounting offset, funds owed to the member banks by the US Government as a reimbursement to the American people for their loss. In that case, the banks whose money was seized would then have to sue the government and prove that they did not owe that money to the government in order to recover the amounts seized.

___________________________________________________________

Richard

Oct 7th, 2008 at 4:35 pm

My dear Ms Fitts: You go girl…I have only one legal point concerning your continuous desire to recoup “the $4 trilion missing from the US government” ( I assume the Defense Dept. budget ). And that is: How would you deliver as discovery the accounting books of the Pentagon to corroberate the numbers? Furhermore, how would you also include the names of the actual banks to which the moneys were transfered? I am in complete favor of the recoupment of the vast ceo and executive officers abundant bonuses and pay to repay this admitted loss. Love your work. I’m falling asleep listening to you on coast to coast ( 2 am EST ), as I wake at 5 am…. be well and stay well, Richard

––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

catherine

Oct 7th, 2008 at 11:45 pm

Richard:

The NY Fed as depository for the US government is responsible for federal government bank accounts. According to US reports, US government agencies have over $4 trillion of undocumentable adjustments. Those are transactions that can not be proved to be authorized by the Congress, pursuant to the constitution. If you follow the common law rights of offset asserted in the Hamilton Securities case (see http://www.dunwalke.com/gideon), I would argue that the NY Fed banks are responsible for effecting unauthorized transactions. In theory, we do not have to prove where the money went or have the detail. We can assert our right to to that amount and proceed with offsets.

Such offsets could take the form of extinguishing outstanding debts, even taxes due. So you don’t get cash back from the parties involved. You simply extinguish what you owe.

If you combined such offsets with local tax escrows and local currencies, a lot could shift.

Business Week introduces Secretary Paulson to the US

an unbelievably ironic blast from the past... courtesy of a comment from a truthout story:
Business Week, June 12, 2006:

Mr. Risk Goes To Washington
Hank Paulson's profound understanding of risk and reward makes him the perfect pick for the Treasury

What does a Treasury Secretary do? Good question. It's much easier to tick off the things a Treasury Secretary can't do. He can't control the money supply, even though the Treasury Dept. includes the Bureau of Engraving & Printing, which prints the paper currency, and the U.S. Mint, which makes the coins (7.7 billion pennies last year). He can't set tax policy, even though he supervises the Internal Revenue Service. While he controls the Bureau of the Public Debt, he can't expand or shrink the budget deficit. One might say the Treasury Secretary, especially in the Bush Administration, gets all of the scut work and none of the fun.

That's why many people were surprised when Henry M. Paulson Jr., CEO of Goldman Sachs Group (GS ) -- a power position if ever there was one -- accepted President George W. Bush's request to become the new Treasury chief. Treasury has been so minimized in recent years that most news outlets have been conditioned to downplay it. Most of their accounts of the Paulson nomination were heavy on fluff and devoid of specifics. Paulson was repeatedly lauded for the "credibility" he would bestow on the Administration's economic policy in the eyes of the financial markets. Some commentators opined, hopefully, that he would be a voice for "fiscal responsibility" who would have a "seat at the table" when economic policy was made. Others saw Paulson as a "heavyweight" who could more effectively deliver the Bush Administration's message of economic growth before the November elections.

But all of that chatter misses the true significance of Paulson's appointment. What he'll bring to Treasury, and to Washington, is a more sophisticated understanding of risk and return than his two immediate predecessors had. As Treasury Secretary, he'll be perfectly positioned to explain to Senators and citizens alike the true consequences of various policy choices in such vital areas as free trade, where avoiding risk means falling further behind.

PROFIT MACHINE
Think of Paulson as Mr. Risk. He's one of the key architects of a more daring Wall Street, where securities firms are taking greater and greater chances in their pursuit of profits. By some key measures, the securities industry is more leveraged now than it was at the height of the 1990s boom. It has also extended its global supremacy since then.

Goldman, under Paulson's leadership, became one of the greatest and most profitable risk-taking machines ever built. Since 1999, when he took over as sole CEO, Goldman has competed with bigger rivals such as Citigroup (C ) and JPMorgan Chase & Co. by being aggressive, making smart gambles, and putting the company's own money into deals. Paulson stresses Goldman's willingness to take risks along with clients in the latest annual report: "Investment banks are expected to commit more of their own capital when executing transactions."

The subject has become an obsession at Goldman: how to find profitable risks, how to control and monitor them, and how to avoid the catastrophic missteps that can bring down whole companies. That means taking on more debt: $100 billion in long-term debt in 2005, compared with about $20 billion in 1999. It means placing big bets on all sorts of exotic derivatives and other securities. And it means holding almost $50 billion in the piggy bank, enough cash and liquid securities to keep the firm going in the event of a financial crisis.

By contrast, Robert E. Rubin, head of the National Economic Council and later Treasury Secretary under President Bill Clinton, was Mr. Prudent. Rubin also came out of Goldman Sachs, but it was a much smaller firm back then, and because Goldman was a private partnership, it had limited access to the public capital markets. That made Rubin far more attuned to the need to preserve and protect capital. Perhaps that's one reason why he pushed for frugality from the very moment he entered government.

The appointment of Paulson, Mr. Risk, as Treasury Secretary is at once ironic and completely appropriate. According to conventional economic wisdom, the single biggest problem the U.S. faces is a massive accumulation of debt. Both liberal and conservative economists warn that the bulging trade deficit, now roughly 6% of gross domestic product, poses a danger of sending the dollar plunging and causing a financial meltdown. The federal budget deficit for 2006 will hit at least $300 billion. And current projections call for Social Security and Medicare to run up enormous deficits in the long run.

Yet Goldman actually has leveraged up faster than the U.S. government in recent years. In 1999, Goldman had about $1.60 in long-term debt for every dollar in net revenue. In the same year, the federal government had $3.10 in debt, mostly long-term, for every dollar in revenue. Today the government has about $3.70; Goldman, around $4.

Clearly, Paulson isn't scared by debt and risk-taking. That might make him the ideal person to grapple with the U.S. economic and fiscal situation, which is more similar to Goldman's than most economists will admit. Facing intense competition from around the world, the only way the American economy can thrive is through risk-taking. Indeed, some economists have characterized the U.S. as a giant venture capital fund that sucks in money from overseas and invests it in high-risk, high-return projects.

OLD ECONOMY THINKING
The two previous heads of Treasury, Paul O'Neill and John W. Snow, came out of the old industrial economy. Before moving to Treasury, O'Neill was head of Alcoa Inc. (AA ), the aluminum giant, and Snow led the railroad giant CSX Corp. (CSX ) -- two industries where growth is slow and borrowing is to be avoided. Paulson comes out of the part of the economy where the U.S. still has a preeminent global position, growth is strong, and borrowing to take advantage of opportunities makes sense.

It's hard to know whether Bush and his staff understood the difference between Paulson and his predecessors when he was first approached several weeks ago. At the time, Paulson said he wasn't interested. He didn't change his mind until he met with Bush on May 20. According to an individual close to Paulson, the President told the Goldman chief he wanted a "very senior person" from Wall Street. He also said he wanted Paulson to play a broader role in his Administration than had previous Treasury secretaries, taking on the role of Bush's "principal adviser" on economic matters and driving economic policy.

Heady stuff. Yet it seems hard to imagine that Paulson will have more than a marginal influence on tax policy, especially if the Democrats make political inroads in November, as seems likely. And the dollar will be affected far more by economic events, such as the course of inflation and growth, than by anything the Treasury Secretary can do.

Instead, what Paulson brings to the Treasury Dept., the Bush Administration, and, in fact, all of Washington, in addition to his understanding of risk, is an ability to communicate its upside and downside.

The importance of risk shows up in virtually every economic issue of the day. Take free trade, a subject that falls under the purview of the Treasury Secretary. Keeping the U.S. open to foreign goods and services is essential for growth, both in this country and abroad. Yet free trade creates risks for Americans. If Paulson can communicate the pros and cons of trade to voters and politicians, he'll do the country a service.

Or consider tax cuts, a subject dear to the President's heart. Whether or not you believe lowering taxes is a good idea, the logic seems clear: Cutting taxes accepts the certainty of a bigger budget deficit today in exchange for a less certain boost to economic growth in the future. A Treasury Secretary who can get that idea across could be highly influential in Washington. Paulson is already on the record as favoring the risk-reward proposition. "I still prefer the situation we're in to a situation without a deficit but with no growth," he told German news magazine Der Spiegel last November.

Within Goldman, Paulson is known as an exceedingly effective communicator. If he can translate Wall Street's language of speculation into something the public and politicians understand, the President's gamble in appointing him will pay off for everyone.