Bernanke's Witness Protection Program

[Crewleader]

March 16, 2009

Welcome to the TALF

Bernanke's Witness Protection Program

By MIKE WHITNEY

Fed chief Ben Bernanke's new funding facility is a real doozy. In fact, if the Term Asset-Backed Loan Facility or TALF, which is set to launch on Thursday, doesn't convince the American people that it's time to take a wrecking ball to the Central Bank and start over, than nothing will. Bernanke and his co-conspirator at Treasury, Timothy Geithner, are planning to revive the shadow banking system by dumping $2 trillion into the same over-leveraged, derivatives-based garbage that blew up the financial system in the first place. All the blabbering about a "good bank-bad bank" remedy appears to have been a diversion. This is how Bloomberg sums it up:

"Geithner’s program has three main elements: Injecting fresh government capital into some of the country’s biggest financial institutions; establishing a public-private partnership to handle as much as $1 trillion of banks’ bad assets; and starting a credit facility with the Federal Reserve of as much as $1 trillion to promote lending to consumers and businesses.

The Treasury hopes to unfreeze credit markets by providing new incentives to banks and investors to resume trading in mortgage securities and other troubled assets. U.S. regulators are conducting a new series of examinations to make sure banks have enough capital to accept losses when selling these assets, while also planning to provide government financing to the investors who might buy them." (Bloomberg News)

That's right; $1 trillion for Bernanke's TALF and another trillion for Geithner's so called "Public-Private Partnership". That's $2 trillion down a derivatives sinkhole just to preserve the illusion that the banks are still solvent. Bernanke has decided to shrug off the advice of nearly every reputable economist in the country, most of whom are pushing for a government takeover of the failing banks (nationalization), just to toss his shifty banking buddies a lifeline. It doesn't bother him that the public till has already been looted and that his action will leave the next generation of Americans bobbing in a pool of red ink.

Last week, investors backed away from Bernanke's TALF, even though the Fed promised to provide up to 95 percent of the funding (through low interest loans) to investors willing to buy distressed assets backed by student loans, car loans and credit card debt. The potential investors "objected to the level of scrutiny that dealers would have over their books, arguing that the dealers' rules attached too many strings. Dealers were saying they take plenty of risk to facilitate the program and need to be protected in situations where the collateral or the client made mistakes or wound up ineligible." (Wall Street Journal")

http://www.counterpunch.org/whitney03162009.html

[pretzel4gore]

1. bush gets away...that's the important issue

time...bush needs time to escape from the public awareness. the pigmedia RARELY mention junyer, notice? they understand that if bush gets away, then they win...lol

[Double T]

2. Glad to see we are replacing a criminal financial and economic system with.......

a smoke and mirrors financial and economic system. Protect the GD banks and and leave the American worker and taxpayer twisting in the wind for eternity.

[truedelphi]

3. Two very scary thoughts about the Federal reserve

Point One:
By taking over private financial markets, the Fed is, in effect, covering its own mistakes (and those of the SEC and of the U.S. Treasury) for having allowed the building up of a shaky pyramid of asset-backed securities (ABS), not the least being the toxic mortgage-backed securities, and the gambling-prone credit default swaps (CDS), that has been crumbling to the ground.

It is my feeling that the Fed, by creating a bond bubble, at this time is only postponing the day of reckoning and is buying time. When the bond bubble bursts, and believe me, it will burst, as all bubbles do, this will push the U.S. economy further down. For instance, when this happens, many capitalized pension funds could fail and many retirees could be then pushed toward poverty.

Point two And More importantly:
By mid-October of 2008, financial tallies revealed that an economic tragedy was in the making.

Never before in the history of our nation had this happened:

As of OCt 23rd, new borrowed reserves and bank reserves equal nearly the same monetary base.

The Federal reserve now needs a reserve for the Reserve.

10/23 Bank reserves $ 328,597 million
Monetary Base $ 1,143,873 million
Non-borrowed Reserves (-362,550) million
TOTAL BORROWED AMOUNTS 611,147 million