Daily Archives: 5 September 2008

Banks borrow more from Fed; Wall Street takes pass

“WASHINGTON (AP) — Banks borrowed more over the past week from the Federal Reserve’s emergency lending program, while Wall Street firms took a pass for the fifth week in a row.

A Fed report released Thursday said commercial banks averaged $18.98 billion in daily borrowing over the past week. That compared with a daily average of $18.47 billion in the previous week.

For the week ending Sept. 3, Wall Street firms didn’t take out any loans, the fifth straight period of no action. Their borrowing, however, averaged as high as $38.1 billion a day over the course of a week in early April.

Investment houses in March were given similar loan privileges as commercial banks after a run on Bear Stearns pushed what was the nation’s fifth-largest investment bank to the brink of bankruptcy. The situation raised fears that other Wall Street firms might be in jeopardy.

Bear Stearns was eventually taken over by JPMorgan Chase & Co. in a deal that involved the Fed’s financial backing.

The identities of commercial banks and investment houses that borrow are not released. Commercial banks and investment companies now pay 2.25 percent in interest for the loans.

In the broadest use of the central bank’s lending power since the 1930s, the Fed in March scrambled to avert a market meltdown by giving investment houses a place to go for emergency overnight loans. The Fed has since extended those loan privileges into next year.” (Read more from biz.yahoo.com)

My favorite part is that we taxpayers don’t get to know the identities of the institutions propped up by our largess. Abolish the fed. If rich NY finance types act reckless, let them go out of business.

The Republican National Convention, Ron Paul & Fake Soldiers

-“Sept. 3, 2008 | MINNEAPOLIS — If you were in the Twin Cities on Tuesday, you could be forgiven for thinking that Republicans had to come to Minnesota to nominate Ron Paul instead of John McCain. At St. Paul’s Xcel Center, where the real Republican convention is being held, a substantial number of seats remained empty. Next door in Minneapolis, however, a wildly enthusiastic crowd came close to filling the Target Center, capacity 10,000, where the Paul-ist faithful had gathered for their own quasi-convention to pay tribute to the Texas congressman.” (Read more from Salon.com This article goes on to smear Ron Paul and his supporters (me). The associations and distortions are consistent with how the media mobilized to destroy his campaign earlier this year.)

-At RNC, secret-service-type people confiscate Ron Paul books, buttons & DVDs, shadow Ron Paul supporters, and threaten evicting them if they leave their seats. (Read more from dailynewscaster.com)

-Fake Soldiers Used In RNC Video. (Read more from cbsnews.com)

Ron Paul predicts Fannie Mae crash (five years ago!)

The words of the prophet, Ron Paul, in 2003:

“I hope this committee spends some time examining the special privileges provided to GSEs by the federal government. According to the Congressional Budget Office, the housing-related GSEs received $13.6 billion worth of indirect federal subsidies in fiscal year 2000 alone. Today, I will introduce the Free Housing Market Enhancement Act, which removes government subsidies from the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the National Home Loan Bank Board.

One of the major government privileges granted to GSEs is a line of credit with the United States Treasury. According to some estimates, the line of credit may be worth over $2 billion. This explicit promise by the Treasury to bail out GSEs in times of economic difficulty helps the GSEs attract investors who are willing to settle for lower yields than they would demand in the absence of the subsidy. Thus, the line of credit distorts the allocation of capital. More importantly, the line of credit is a promise on behalf of the government to engage in a huge unconstitutional and immoral income transfer from working Americans to holders of GSE debt.

. . . .

The connection between the GSEs and the government helps isolate the GSE management from market discipline. This isolation from market discipline is the root cause of the recent reports of mismanagement occurring at Fannie and Freddie. After all, if Fannie and Freddie were not underwritten by the federal government, investors would demand Fannie and Freddie provide assurance that they follow accepted management and accounting practices.

Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.” (Read more at blog.freeny.org)

Palin Refuses to Testify

Holy smokes! That was fast.

“It didn’t take long. We’ve already brought you news of the official investigation into Gov. Palin’s firing of Public Safety Commissioner Walt Monegan. Steve Branchflower, the lead investigator, began trying to arrange a deposition of the governor days before her veep selection. And despite claiming executive privilege to shield requested emails, up until that point Palin had promised full cooperation with the probe.” (Read more for talkingpointsmemo.com)