Obama Wants Fox to Guard Henhouse!

IN THE FED WE TRUST

Just when I thought I've seen it all, I see the story about how Obama wants the Fed to be the Economy's SUPERCOP!!! Super Cop Ben. Don't get me wrong, I thought it was great when the Banking lobbyists got rid of the Glass-Steagall Act allowing the banks to weave their way into every aspect of my life. I cheered when the banks lobbied to be able to leverage up from 10-1 to 30 or 40-1 on their loans to capital. We partied hard when they began packaging mortgages and were able to shuffle them out of their system so that they can continue to make bigger and bigger profits, much of it going into the pockets of a chosen few.

Stress Test Relief

I'm overjoyed now as I read a Wall Street Journal article Banks Win Concessions, showing again that Banks are still in total control - always were - always will be.

Seeing Tim Geitner, a former Federal Reserve Bank President now a federal regulator reminds me of the days when I worked at the Commodity Futures Trading Commission (CFTC). I most fondly remember how the CFTC Chairwoman, Wendy Graham, had the opportunity to regulate energy futures contracts, the kind that Enron was involved with. How surprising it was that after she declined to regulate these instruments, she wound up on Enron's Board of Directors. Funny how no one ever reviewed this connection, at least not that I've ever seen. And now, we have an ex-Federal Reserve banker in cahoots with his Fed buddy Ben Bernanke saving the world by giving the banks billions and billions of taxpayer dollars. And now, on top of giving the banks all of our money, our elected leader wants to give control over banks and investment houses to the Federal Reserve!

Fed a Privately Held Business

For those who don't know, the Fed is not a government organization. And while there is a lot we do know about the Fed, there is a lot more that we don't know about the Fed. Like who really owns the Fed? Who profits from all of the dollar bills the Fed puts in circulation at a cost? It's not us taxpayers. It's the richest of the rich who hide in the shadows. It is the richest of the rich who have for decades called the shots in our country. It is the richest of the rich who now are pulling all of the strings to give them ultimate power over all businesses in the US.

One Man's Battle


There is a 'cry in the wilderness' though, the voice of Congressman Ron Paul. You might remember Ron Paul as a candidate in the recent presidential elections. While he was not a major candidate, those who followed him were passionate about his cause. Out of all of the candidates from both major parties, it appeared that only Ron Paul understood and defended the US Constitution. Others in power have been making a mockery of it as our civil liberties continue to be eroded.

Federal Reserve Transparency Act of 2009

Representative Paul outlays the plan to enable the Comptroller General of the GAO (Government Accountability Office) to audit the Federal Reserve system before the end of 2010. Per the Federal Reserve, "Monetary policy is exempt from audit by the Government Accountability Office."

Back Where We Started From

Seems to me that we the government is again trying to pass the buck. It's obvious that self regulation has not been working. Even Former Federal Reserve Chairmain Alan Greenspan said that he never ever thought that banks would not act in the best interest of the shareholders. I think that Jim Rogers got it right by moving to Singapore and focusing on the Asian markets. China is getting wise to the game here. When will we?

Just Like Japan

Is Tim Geitner, US Treasury Secretary looking for a second chance? Not to say that Geitner had a hand in Japan's lost decade, the dead period in Japan's economy when they went through a banking crisis similar to that which we have today. Geitner, in fact, served as the Treasury attache' to Japan in the early from 1989 to 1991. Can he refine the strategy that failed in Japan?

Bank stocks rallied overnight after the release of the stress test but still, many believe that the parameters of the stress test were too lenient. Some even believe that the highest unemployment assumptions might be questioned even as early as this morning, in 30 minutes. Almost everyone expects the unemployment numbers to be moderating. But there are still a few holdouts who believe that we are on a hellbound train. Well recognized figures such as Nouriel Roubini and investor Jim Rogers fear that we are headed for a depression and government intervention is the absolute worst thing to do.

Only time will tell how tings play out. Certainly the government's strategy to print more and more money to save the economy has been the strategy that has gotten us into this mess in the first place. It happened after the Asian Financial Crisis and after the high tech bubble burst. Each time, the government created a new bubble and the bursting got worse and worse. Now Geitner and Bernanke are truly betting the house. They again created still another bubble in the Treasury securities. Certainly should this bubble collapse, the credit-worthiness of the US Government will be as good as many of the bankrupt homeowners who just like the government, took on much much more debt than they could service.

In the end, rising rates destroyed the hopes and dreams of many who bought their homes using Adjustable Mortgage Rates. When Fed Chairman Bernanke came on the scene, he quickly raised rates as high as 6%. This truly caused the stress that we have now. Many blame it on the banks, and for sure, their predatory practices and
fancy mortgage derivatives exacerbated the situation. But for many, the dramatic increases in rates and much higher mortgage payments caused the bubble to burst. Now we are again on the opposite extreme with interest rates close to 0%. This can only lead to great inflation and another super bubble, just as in the past.

Looks Like Japan