Economists Warn Another Financial Crisis On the Way

march 2, 2010

ABC News

By Matthew Jaffe

Even as many Americans still struggle to recover from the country’s worst economic downturn since the Great Depression, another crisis – one that will be even worse than the current one – is looming, according to a new report from a group of leading economists, financiers, and former federal regulators.

In the report, the panel, which includes Rob Johnson of the United Nations Commission of Experts on Finance and bailout watchdog Elizabeth Warren, warns that financial regulatory reform measures proposed by the Obama administration and Congress must be beefed up to prevent banks from continuing to engage in high-risk investing that precipitated the near-collapse of the U.S. economy in 2008.

The report warns that the country is now immersed in a “doomsday cycle” wherein banks use borrowed money to take massive risks in an attempt to pay big dividends to shareholders and big bonuses to management – and when the risks go wrong, the banks receive taxpayer bailouts from the government.

“Risk-taking at banks,” the report cautions, “will soon be larger than ever.”

Without more stringent reforms, “another crisis – a bigger crisis that weakens both our financial sector and our larger economy – is more than predictable, it is inevitable,” Johnson says in the report, commissioned by the nonpartisan Roosevelt Institute.

The institute’s chief economist, Nobel Prize-winner Joseph Stiglitz, calls the report “an important point of departure for a debate on where we are on the road to regulatory reform.”

The report blasts some of Washington’s key players. Johnson writes, “Our government leaders have shown little capacity to fix the flaws in our market system.” Two other panelists, Simon Johnson, a professor at MIT, and Peter Boone of the Centre for Economic Performance, voiced similar criticisms.

Federal Reserve Chairman Ben Bernanke and Treasury Secretary Tim Geithner “oversaw policy as the bubble was inflating,” write Johnson and Boone, and “these same men are now designing our ‘rescue.’”

The study says that “In 2008-09, we came remarkably close to another Great Depression. Next time we may not be so ‘lucky.’ The threat of the doomsday cycle remains strong and growing,” they say. “What will happen when the next shock hits? We may be nearing the stage where the answer will be – just as it was in the Great Depression – a calamitous global collapse.”

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Global Transaction Tax to be Included in Final Copenhagen Text

December 18, 2009

Info Wars

By Paul Joseph Watson

The final Copenhagen draft agreement which was hammered out in the early hours of Friday morning includes provisions for a global tax on financial transactions that will be paid directly to the World Bank, as President Obama prepares to bypass Congress by approving a massive transfer of wealth from America into globalist hands.

As Lord Monckton, Alex Jones and others warned, the notion that the globalists would achieve nothing at Copenhagen has likely been a ruse all along. The elite look set to ram through the lion’s share of their agenda, which would include a massive global government tax at a cost of at least $3,000 a year for American families already laboring under a devastating recession, double digit unemployment and a reduction in living standards.

Hillary Clinton arrived yesterday to rally global leaders around a resolution and Barack Obama is set to be portrayed as the savior of the world by rescuing what was pitched all along as a conference doomed to fail.

“The summit “hangs in the balance,” said Obama this morning. “We are running out of time. The time for talk is over. It is better for us to act than to talk. The question is whether we move forward together or split apart.”

The final agreement may not force countries to meet CO2 emission targets, but it will grease the skids for the biggest tax hike in human history, a fact that establishment media outlets have completely failed to emphasize.

Monckton told the Alex Jones Show last week that the initial secretive draft version of the Copenhagen agreement represented a global government power grab on an “unimaginable scale,” and mandated the creation of 700 new bureaucracies as well as a colossal raft of new taxes including 2 percent levies on both GDP and every international financial transaction.

Monckton said that the new world government outlined in the treaty would be handed powers to, “Tax the American economy to the extent of 2 percent GDP, to impose a further tax of 2 percent on every financial transaction….and to close down effectively the economies of the west, transfer your jobs to third world countries.”

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Climate Plan to Tax $3,000 a Year

December 18, 2009

The Chronicle Herald

By Kevin Gaudet

Would you be upset if you knew your government was about to get duped in a con that would cost your family at least $3,000 a year in new taxes? That is exactly what is happening in Copenhagen right now.

The developing world has teamed up with global warming activists in Copenhagen at the world climate conference. Together they are planning the big con. Key to the con is to play on the eco-guilt of the developed world, using it to scam cash from “rich countries” and transferring it to the developing world, all in the name of “ending climate change.” The Copenhagen grifters are hoping to cash the cheques before the developing world wakes up to the con.

A leaked draft version of the agreement on the table at the Copenhagen climate conference reveals plans for a massive transfer of wealth out of Canada. This transfer will come in the form of new taxes and the establishment of a new world government body for climate change housed in the World Bank.

Lord Christopher Monckton is reported to have obtained a working copy of the draft agreement. He warns that the secretive draft version of the Copen-hagen climate change treaty represents a global government power grab on an “unimaginable scale,” and mandates the creation of 700 new bureaucracies as well as a colossal raft of new taxes including two per cent levies on GDP and a two per cent tax on every international financial transaction.

The draft agreement also reportedly contains a provision for a “uniform global levy of $2 per tonne of CO2 for all fossil fuel emissions,” as well as an additional tax on every commercial plane journey, except ones that go in or out of poorer countries.

Of course, in addition to these various taxes, the draft agreement, reportedly pushed by President Barack Obama, the U.K. and Denmark, would require auctioning of allowances to emit carbon dioxide — a cap-and-tax scheme. Failing to purchase permits would be met with financial penalties or outright prohibitions against such emissions.

The two per cent tax on GDP alone would cost Canada some $26 billion. The $2-a-tonne tax would add up to $500 million per year. And the tax on international financial transactions would soak untold billions. This total tax grab is at least $26.5 billion, or over $3,000 a year for every Canadian family — not including the tax on financial transactions or plane trips.

This idea would be bad enough even if the cash was meant to stay in Canada. But it is not. The scheme is designed to send this cash to 49 developing nations for them to reduce their CO2 emissions and to create so-called green projects. These 49 countries include the likes of Uganda, Burundi and Sudan.

There is a perception that taxing CO2 will only hurt Canada’s West. However, CO2 emission data from Environment Canada for 2008 reveals that Alberta won’t be alone to feel the pain. While Alberta would bear 42 per cent of this burden, Ontario would have to pay for 26 per cent, due mainly to its substantial reliance on coal for electricity. Moreover, while the energy may be produced in Alberta, a large percentage of Alberta’s oil and gas is consumed in Eastern Canada and many of those taxes will be passed along.

Further, imposing a tax on international financial transactions will place new pressures on Canada’s banks, which, so far, have survived sub-prime mortgage challenges and have weathered the global economic storm.

Canadian families work too hard to see thousands of their tax dollars go from their pockets to some “green” project in Sudan. The Harper government should save Canadians from this international massive tax grab.

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Geither Wants TARP Extension Until October

December 9, 2009

Bloomberg

By Robert Schmidt and Rebecca Christie

Treasury Secretary Timothy Geithner plans to tell Congress that the Obama administration will extend the $700 billion financial-rescue program until next October, according to people familiar with the matter.

While the Troubled Asset Relief Program expires on Dec. 31, Geithner can extend it by notifying Congress. A letter notifying Congress of the extension could come as soon as today, said the people, who declined to be identified. Andrew Williams, a Treasury Department spokesman, declined to comment.

The TARP, passed in October 2008 to prevent a collapse of the financial system, has drawn criticism from Congressional opponents of taxpayer-funded bailouts of banks including Citigroup Inc. The Obama administration, preparing the ground for an extension, has emphasized that the program may also be used to aid homeowners and small companies.

“There has rarely been a less loved or more necessary emergency program than TARP,” President Barack Obama said yesterday in a speech in Washington. “I’m asking my Treasury secretary to continue mobilizing the remaining TARP funds to facilitate lending to small businesses.”

In public comments about the program over the past several weeks, Geithner has cautioned that shutting it down too soon could hurt the economic recovery.

Unemployment Rate

Unemployment at 10 percent has sapped Obama’s approval ratings and threatens to cut into the Democratic Party’s majorities in Congress.

A year into Obama’s presidency, only 32 percent of poll respondents believe the country is headed in the right direction, down from 40 percent who said so in September, according to a Bloomberg National Poll.

The poll of 1,000 U.S. adults was conducted Dec. 3-7 by Selzer & Co., a Des Moines, Iowa-based firm. The margin of error is plus or minus 3.1 percentage points.

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Obama’s Sellout to Wall Street Creates ‘Permanent Bailout’

December 4, 2009

The Raw Story

By David Edwards and Daniel Tencer

If passed as it is, the financial reform bill winding its way through Congress will create a “permanent bailout mechanism,” and will give complete control over future bailouts to the White House, says columnist Matt Taibbi.

In a video preview of an upcoming Rolling Stone article, Taibbi explained how the Obama administration started selling out to Wall Street interests almost as soon as the 2008 election was over.

“The really big thing that’s in these bills that’s really, really scary is that it kind of outlines a permanent bailout mechanism,” Taibbi said. “If it survives in the way that it was originally conceived, it’s basically going to formalize an arrangement whereby the government is expected to bail out the top 20 to 25 largest financial companies. … It will be entirely up to the White House to determine whether or not these companies are in trouble in the future, so there won’t be any congressional role in deciding when and when not to give a bailout.”

Taibbi’s words echoed the concerns of some in Congress that, far from ensuring that America’s financial system will be healthy, the financial reform being proposed will make Wall Street more dependent on taxpayers than it is already.

US House Rep. Spencer Bachus, the ranking Republican on the House Financial Services Committee, said in October that the financial reform plan would create a “permanent bailout authority.” And Paul Volcker, the Jimmy Carter-appointed former head of the Federal Reserve who is widely credited with successfully fighting off inflation in the 1980s, said the Obama administration’s proposed financial reform would maintain the “too-big-to-fail” mentality and could lead to further bailouts.

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Goldman Sachs Bankers Buy Guns To Protect Themselves

December 2, 2009

Bloomberg

By Alice Schroeder

“I just wrote my first reference for a gun permit,” said a friend, who told me of swearing to the good character of a Goldman Sachs Group Inc. banker who applied to the local police for a permit to buy a pistol. The banker had told this friend of mine that senior Goldman people have loaded up on firearms and are now equipped to defend themselves if there is a populist uprising against the bank.

I called Goldman Sachs spokesman Lucas van Praag to ask whether it’s true that Goldman partners feel they need handguns to protect themselves from the angry proletariat. He didn’t call me back. The New York Police Department has told me that “as a preliminary matter” it believes some of the bankers I inquired about do have pistol permits. The NYPD also said it will be a while before it can name names.

While we wait, Goldman has wrapped itself in the flag of Warren Buffett, with whom it will jointly donate $500 million, part of an effort to burnish its image — and gain new Goldman clients. Goldman Sachs Chief Executive Officer Lloyd Blankfein also reversed himself after having previously called Goldman’s greed “God’s work” and apologized earlier this month for having participated in things that were “clearly wrong.”

Has it really come to this? Imagine what emotions must be billowing through the halls of Goldman Sachs to provoke the firm into an apology. Talk that Goldman bankers might have armed themselves in self-defense would sound ludicrous, were it not so apt a metaphor for the way that the most successful people on Wall Street have become a target for public rage.

Pistol Ready

Common sense tells you a handgun is probably not even all that useful. Suppose an intruder sneaks past the doorman or jumps the security fence at night. By the time you pull the pistol out of your wife’s jewelry safe, find the ammunition, and load your weapon, Fifi the Pomeranian has already been taken hostage and the gun won’t do you any good. As for carrying a loaded pistol when you venture outside, dream on. Concealed gun permits are almost impossible for ordinary citizens to obtain in New York or nearby states.

In other words, a little humility and contrition are probably the better route.

Until a couple of weeks ago, that was obvious to everyone but Goldman, a firm famous for both prescience and arrogance. In a display of both, Blankfein began to raise his personal- security threat level early in the financial crisis. He keeps a summer home near the Hamptons, where unrestricted public access would put him at risk if the angry mobs rose up and marched to the East.

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Bilderberg Member is New EU President

November 20, 2009

No World Systems.com

Herman Van Rompuy (Bilderberg member) has been selected to be the first president of the European Union. A man who has been given everything by the oligarchical elite of Europe such as the seat of Prime Minister of Belgium has now been chosen to take one of the top jobs in Europe. The selection was made during a dinner meeting in Brussels by the leaders of the 27 EU member states.

The new positions include; President of the European Council and Foreign Affairs Chief and comes into effects on December 1, 2009. Van Rompuy will take his post as the first president of Europe on January 1, 2010.

The permanent EU president seat was created by the Lisbon Treaty that was finally ratified by the member states, including Ireland that was passed in early October, Ireland first refused to give away its sovereignty to the EU in the first referendum, but the Irish voters overwhelmingly supported the second referendum due to the promise of jobs.

It no longer seems like a coincidence that Bilderberg meetings are the place where candidates are positioned in high-places of government. According to ‘De Tijd‘, Van Rompuy attended a Bilderberg dinner in Brussels just days before he was selected as EU president.

At the meeting Van Rompuy gave a speech about the implementation of new taxes on shopping items (value added tax), airline travel (aviation tax) and petrol stations (fuel duty tax) that will go directly to Brussels as an “EU tax”. He said: “The possibilities of financial levies at European level must be seriously examined and for the first time the large countries in the union are open to that,”, credit

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Government Wants Tax To Help Cover Cost for Bribing Taliban

November 20, 2009

Prison Planet.com

By Paul Joseph Watson

Not content with savaging American taxpayers with two huge new financial burdens during an economic recession, in the form of health care reform and cap and trade, close allies of Barack Obama have proposed a new war surtax that will force Americans to foot the bill for the cost of protecting opium fields in Afghanistan, paying off drug lords, and bribing the Taliban.

Warning that the cost of occupying Afghanistan is a threat to the Democrats’ plan to overhaul health care, lawmakers have announced their plan to make Americans pay an additional war tax that will be taken directly from their income, never mind the fact that around 36 per cent of federal taxes already go to paying for national defense.

“Regardless of whether one favors the war or not, if it is to be fought, it ought to be paid for,” the lawmakers, all prominent Democratic allies of Obama, said in a joint statement on the “Share The Sacrifice Act of 2010 ( PDF),” reports AFP.

The move is being led by the appropriately named House Appropriations Committee Chairman Dave Obey, Representative John Murtha, who chairs that panel’s defense subcommittee; and House Financial Services Committee Chairman Barney Frank.

The tax would apply to anyone earning as little as $22,600 per year in 2011.

The proposal is described as “heavily symbolic” with little chance of passing, but it once again illustrates the hypocrisy of an administration that swept to power on the promise of “change” to the Neo-Con imperial agenda and a resolve to reduce U.S. military involvement overseas. In reality, there are more troops in Iraq and Afghanistan now under Obama that at any time during the Bush administration.

At the height of the Bush administration’s 2007 “surge” in Iraq, there were 26,000 US troops in Afghanistan and 160,000 in Iraq, a total of 186,000.

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Many Behind on TARP Payments

November 16, 2009

Washington Post

By Tomoeh Murakami Tse

A year ago, the financial system was tottering and government officials arranged a $2.3 billion emergency cash infusion into CIT Group, a troubled lender to small businesses.

Today, CIT is in bankruptcy court, and the taxpayers’ investment is on the brink of being wiped out. It would be the largest loss so far from the government’s massive rescue of the financial system, but it isn’t likely to be the last.

Officials poured about $700 billion into investments in scores of companies, from giants such as the automaker General Motors and the insurer American International Group to smaller regional banks. Of them, 46 had missed required dividend payments to the government as of the end of September, according to the inspector general overseeing the program.

On Nov. 6, United Commercial Bank of San Francisco failed, becoming the first recipient of the Troubled Assets Relief Program, or TARP, to collapse. The cost to taxpayers: $299 million.

Analysts expect more bailed-out firms to fail in the months ahead. Others may survive but will struggle to repay the government. Steven Rattner, the former head of the government’s efforts to bail out the auto industry, said recently that the full public investment in GM is unlikely to be repaid. Meanwhile, AIG is dismantling itself, selling healthy subsidiaries at what critics say are bargain prices in an all-out effort to get cash to repay the government.

About $400 billion of federal investments remain in the corporate sector, much of it channeled through TARP. Critics of the program say losses were inevitable, in many cases.

Bankers, lawmakers, state banking regulators and oversight committees have faulted federal officials for providing funds to firms that were so sick that they couldn’t recover and for failing to be open about how recipients were chosen. Some critics have also attacked the government for the types of investments they made.

Many investments were in the form of preferred shares, which pay a high dividend but get wiped out in bankruptcy, even reorganizations in which the firms survive. That’s what’s happening with CIT.

The government provided assistance to CIT only after the Fed determined that the company would be “well capitalized” by regulatory standards by the time it became a bank holding company. But that didn’t mean that it had enough money to ride out its snowballing losses, even with federal help. And while the Treasury Department’s stated goal was to help CIT keep making loans, in practice lending all but evaporated afterwards.

“It was very obvious as of a year and a half ago that it was in dire need of a substantial amount of more capital,” said Sean Egan, co-founder of the independent credit rating firm Egan-Jones, who had questioned the move at the time. “The $2.3 billion was wasted. They didn’t save CIT, and they didn’t save the taxpayers’ money.”

Bert Ely, an Alexandria banking analyst, said CIT should have been reorganized under bankruptcy in December because its business model — borrowing money cheaply and lending it out again to others — was “basically broken.” With the company’s credit ratings tumbling, its cost of borrowing had reached a point where CIT could no longer be profitable, he said.

“The problems of CIT would have been confronted earlier,” Ely said. “There wouldn’t have been a lot of the turmoil in CIT and among CIT customers that we’ve seen. But in the meantime, it’s kind of rotted on the vine. . . . CIT is one particular TARP investment for which there ought to be a lot of questions asked.”

Signs of trouble at CIT Group were apparent early in the financial crisis, after the subprime mortgage market began teetering. Anxious investors retreated from the credit markets, cutting off CIT. The company had depended almost solely on these investors to raise money. Borrowing costs rose, loans soured, and CIT, which had expanded into subprime mortgages and student lending, began reporting losses in mid-2007. At the end of that year, the company had $477 million in problem loans.

By early 2008, the company was drawing on $7.3 billion of emergency bank credit. CIT quickly blew through those funds. Analysts questioned the 101-year-old firm’s ability to remain solvent. It sold off assets to stay afloat. The volume of problem loans spiked to $1.4 billion by the end of last year.

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