FedUpUSA

Archive for April 2nd, 2010

Decoding Tim Geithner’s Interview on NBC

 By Damon Vrabel 

Yesterday on NBC’s Today Show, Timothy Geithner said it’s “deeply unfair” that Wall Street is doing wonderfully while millions of Americans are still in economic misery.  Really?  Of course he’s 100% correct, but he doesn’t believe it himself.  He is the chief enforcer of the unfair policies.  Along with his predecessors, he was a key architect of the plan to transfer trillions in notional wealth from Americans and their future generations to the Wall Street elite (do you get it yet?  Democrats and Republicans don’t matter—we are run by Wall Street). 

So why did he say it?  To mellow out the masses who know they are getting screwed and make enough of them think the government cares.  It’s the classic tactic of telling people what they want to hear while doing the exact opposite.  Presidential candidates from both political parties regularly tell the voters things to connect emotionally during elections but then do the opposite in office.  In fact connecting Americans emotionally with Geithner was the purpose of the NBC stage show.  Lauer maintained his scripted, corporate façade designed to ooze tender love for Americans so through him they would connect with Geithner, who otherwise could not connect with anybody except the elite financiers he serves. 

He also said “People were paid for taking enormous risks. It was a crazy way to run a financial system…It’s the government’s job…to do a better job of restraining that kind of risk-taking.”  He should know.  He and fellow CFR members Robert Rubin, Larry Summers, and Hank Paulson WERE the government that allowed the “enormous risks” and ran things in the “crazy way” he claims he now wants to avoid.  He was in key positions at Treasury, the CFR, and the NY Fed, which is just the Wall Street cartel’s planning committee.  He knew exactly what was happening.  This is why he was in those positions in the first place.  He has been associated with global banking interests for a long time.  He’s “in the club.”  People who would truly serve the public—Elizabeth Warren, William Black, Eliot Spitzer, Janet Tavakoli, Harry Markopolis, Brooksley Born—do not get those positions. 

When Geithner says “people were paid for taking enormous risks” he is trying to reinforce the fiction that the crash of 2008 was a simple result of individual Wall Streeters taking too many risks.  But those are just the MBAs and street smart traders running the horse race in return for a paycheck.  Any time the collective actions of those people are in lockstep, the key is to look at the people paying the checks and governing the race, not the individuals who somehow randomly all did the same thing.  Geithner does not want you to focus on the strategic controllers, including himself, because they obviously wanted the bubble and subsequent crash to happen.  It was a strategic move in a massive chess game, and the government’s playbook to respond was planned before the crash itself and written by the Wall Street controllers who set it up.  They are squeezing the people, the states, small businesses and banks, and building up the key controlling institutions the empire needs to continue its global growth plans while maintaining control of the American population.  Blaming the horses running the race is a deflection. 

We do not live in a free market but rather a top-down empire

Most incredibly Geithner said it was necessary to save the banks in order to save the economy. This is powerful proof that we do not live in a free market but rather a top-down empire.  This is the “too big to fail” doctrine, which is nothing but a sophisticated ruse to justify stripping wealth from the population to prop up the empire’s controlling institutions.  If a handful of smart guys run everything in the largest economy in the world and have the power to transfer trillions from 308,000,000 citizens to debt lords and gamblers on Wall Street to “save the economy,” then we live in a financial dictatorship.  And if we believe they SHOULD have that power, then we have voluntarily surrendered the US to that dictatorship. Stop believing the freedom propaganda. 

Moreover, Geithner’s statement is either a demonstration of 1) academic fundamentalism as he is so deep in the false religion of neoclassical economics that he can’t see the truth, or 2) pure spin to hide the real intent behind the bailouts and the empire for which he works.  I have previously described the 10 key flaws of neoclassical economics, but the primary one is that we live in a monolithic, macroeconomic monopoly under the Federal Reserve.  We do not live in a free market.  The second one is that all of our money is nothing but debt.  It all comes from the bond market.  American citizens have zero money if we are collectively debt-free.  So the real way to save the economy would be to issue real money from the US Treasury rather than going deeper in debt to the Fed.

Geithner may simply be ignorant of this because he is a leading neoclassical economist, which means his career depends upon narrowly looking at the world through a flawed, fraudulent lens.  But my hunch would be that he knows it.  Again, the reason he has the job in the first place is because the Wall Street powers know that he will NOT do this, the right thing for Americans and the country.  Instead he will take orders from those who are trying to expand the empire globally.  Who are they?  John Perkins labels them the corporatocracy.  More accurately, they are the few super-rich who are able to control the largest debt positions, and therefore have the most leverage over our debt-based monetary system.  These are the individuals reaping the biggest benefit from all the bailouts and related programs.  The Wall Street firms are just front organizations where the servants of these key people work.  Bailout money gets funneled through the firms so the public gets mad at them, and then it lands in the pockets of the debt owners who walk away unscathed. 

His words were entirely deceptive—straight out of Orwell’s 1984

So yesterday’s inteview with the Treasury Secretary was quite informative if you match it up with the actual money flows to see the Machiavellian power play.  His words were entirely deceptive—straight out of Orwell’s 1984.  A brilliant example can also be seen in The Godfather.  Michael Corleone’s ability to use duplicity to maintain power and keep people on his side is unmatched.  He vowed to renounce violence while his assassins were in the process of murdering all of his opponents.  He lovingly embraced his wife as he lied to her about killing his brother.  He told a congressional panel that he was a dutiful servant of the country.  Geithner copied this one perfectly several months ago during a CNBC townhall meeting.  He completely avoided a good question that pointed out the conflicts of interest among the Wall Street / Treasury crowd by claiming he and his buddy Paulson were just humble, meager public servants.  I’m shocked he didn’t crack up in the midst of that statement.  No doubt he and Hank had a good laugh later on the telephone.  But America will soon not be laughing as the next wave down in our debt deflation occurs and the government cracks down on the people who finally realize they have been lied to. 

How do we truly save the economy, as Geithner claims he is doing, and save the country from the financial mafia? Simple.  As mentioned above, the Treasury needs to issue real money, and then put endless pressure on politicians to hire the people I listed who would serve the public.  If we do not do that, then again Americans will have voluntarily surrendered to a financial dictatorship, which will mean David Rockefeller was right that we do not deserve self-government when he said “The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in past centuries.”  I am starting to accept that he may be right.

Health Care Price Controls Hit Massachusetts; Are Doctor Wage Controls Next?

Excuse me for asking but wasn’t Obamacare supposed to increase competition and lower health care prices?

In theory, everyone was forced to buy insurance, sick or not, whether they could afford it or not, on the grounds it would lower costs for those with preexisting conditions.

In practice, insurance companies continue to jack up rates, so much so that Massachusetts has effectively instituted insurance price controls, rejecting 235 of 274 proposed rate increases because they included “excessive increases and rates unreasonable relative to the benefits provided.”

Price Controls In Massachusetts

Inquiring minds waiting for Obamacare to deliver on promises might be interested in reading Mass. agency limits health premium increases.

Massachusetts regulators issued their first batch of health care price controls on Thursday, rejecting the vast majority of small business health premium increases sought this year by the state’s major insurers.

Insurance Commissioner Joseph Murphy said he had disapproved 235 of 274 proposed rate increases because they included “excessive increases and rates unreasonable relative to the benefits provided.”

The head of a group representing insurers, health care providers and an array of area businesses, termed the action “arbitrary and capricious” and said it would hurt insurance companies because they already have negotiated contracts with health care providers.

Michael Widmer, president of the Massachusetts Taxpayers Foundation, added: “The administration is seeking a quick fix, but this will only compound the problem.”

Murphy’s decision covered all 19 of the plan increases proposed by Blue Cross Blue Shield of Massachusetts, 63 of the 64 plan increases proposed by the Blue Cross HMO, all 47 proposed by Fallon Community Health Plan and all 36 proposed by Tufts Health Plan. The 33 plans offered by three out-of-state, for-profit insurers — Aetna, ConnectiCare and United HealthCare — all were approved. Each does relatively little business in Massachusetts.

Policyholders who have already made a premium payment under the disapproved rates will receive a refund or credit.

The announcement had political overtones: Gov. Deval Patrick, a Democrat, is seeking re-election this fall against a field that includes Republican Charles Baker, the former president of Harvard Pilgrim Health Care.

Twenty-five of the 26 increases proposed by Harvard Pilgrim were rejected.

Three Questions To Ponder

• For Governor Deval Patrick: When do health care companies pull out of Massachusetts?
• For Challenger Charles Baker: Who are you beholden to?
• For everyone: What hath Obama wrought?

Two Certainties

• Plenty of health care mud will be flying in the mid-term elections.
• Wage and price controls never work.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
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The Federal Reserve’s Veil of Secrecy Is Being Taken Down, But Slowly

One of the first things that ‘put me off’ of Obama was the choice he made of key appointments to his Administration, selecting the two Robert Rubin acolytes Tim Geithner and Larry Summers to his team, marginalizing Paul Volcker, and then making no place for Robert Reich. Although I am sure that, like the rest of us, he puts his pants on one leg at a time, he has shown himself to be a remarkably intelligent and competent member of the Washington political world. I admire him.

Make no mistake, the Fed looks to have been abusing its secrecy and its position, and Bernanke and Geithner are culpable. Reich makes the points as well or better than I could so here is his recent piece on the subject. All the blog’s are picking it up.

As I recall, the Fed said they were only acquiring ‘investment grade’ instruments, which would be taken on its balance sheet in support of the US Dollar, in addition to the usual Treasury Debt. The recent exposures of the holdings of Maiden Lane show these to be more like junk bonds, and certainly not as represented.

The Fed must be audited, and it role as the ‘master regulator’ and as the place where the Office of Consumer Financial Protection would be located is a farce, a cruel joke. Chris Dodd must either be senile, entirely cynical, or believe the American people to be complete idiots. The only reason I could even imagine for considering it is that the Fed is a ‘cost plus’ agency, meaning that they are self funding out of the mechanism of creating money, taking all their costs out before they turn over the interest income from the public debt back to Treasury. This is also a source of their growth and power. The problem that public agencies often have is that the industries that are regulated by them use their donations and lobbyists to stifle approrpriations for the agencies that regulate them in order to hamper and stifle them.

How can you even think of putting an office of reform and consumer protection in the very institution that was at the epicenter of a historic fraud? And shows itself completely willing to mislead the public, and some even believe perjure itself to the Congress to protect its true owners, the big Banks?

There are more things to come. But the frauds yet to be revealed may very well shake this government to its foundations, and very few blogs and almost none of the mainstream media are yet pursuing those stories of market manipulation, secret dealings, insider trading and official protection of corruption.

From The Fed Is In Hot Water by Robert Reich

“First, only Congress is supposed to risk taxpayer dollars. The Fed is not part of the legislative branch. Its secret deals, announced almost two years after they were done, violate the democratic process, if not the Constitution itself. Thomas Jefferson put a stop to Alexander Hamilton’s idea of a powerful central bank out of fear it would be unaccountable to the public. The Fed has just proven Jefferson’s point.

Second, if the Fed can secretly bail out big banks, the problem of “moral hazard” – bankers taking irresponsible risks because they know they’ll be rescued – is far greater than anyone assumed after Congress and the Bush and Obama administrations bailed out the banks. Big banks will always be too big to fail because they know the Fed will secretly back them up if they get into trouble, even if Congress won’t do it openly.

Third, the announcement throws a monkey wrench into the financial reform bill now on Capitol Hill, which gives the Fed additional authority by, for example, creating a consumer protection bureau inside it. Only yesterday, Sen. Jim DeMint (R-S.C.) blasted the Dodd bill for expanding the Fed’s authority “even as it remains shrouded in secrecy.” (When Jim DeMint and I agree on something you know it has to be close to a universal truth. – Jesse lol)

The Fed has a big problem. It acts in secret. That makes it an odd duck in a democracy. As long as it’s merely setting interest rates, its secrecy and political independence can be justified. But once it departs from that role and begins putting billions of dollars of taxpayer money at risk — choosing winners and losers in the capitalist system — its legitimacy is questionable.

That it chose to reveal the truth about its activities during a week when Congress is out of town, when much of official Washington and the Washington media have gone on vacation, and only after several federal courts have held that the Fed must release documents related to its bailout of Bear Stearns, suggests it would rather remain secret than become transparent.

Much of what Ben Bernanke and Tim Geithner did (when Geithner was at the New York Fed) in 2008 was presumably necessary. But the public has no way of knowing. The public doesn’t even know who else the Fed has bailed out, or what entities it will bail out in the future. All we know is the Fed secretly bailed out Bear Stearns and AIG and thereby subjected taxpayers to risks that remain even today, without informing the public. That’s not a record on which to build public trust.”

Credit Cards the Opiate of the American Middle Class – The Withdrawal is in And the Wall Street Dealers are Raking in Trillions of Dollars. 2 Credit Cards for Every Man, Woman, and Child in the U.S.

Posted by mybudget360

If you want to know how reliant the middle class has become on credit cards all you need to know is that in circulation we have 631 million credit cards in the U.S.  For a nation with slightly above 300 million people this is roughly 2 credit cards for each man, woman, and child.  Credit cards and their subsequent “plastic free” variety of home equity lines of credit caused a massive boom that really put a veil over the underlying destruction of the middle class.  As Americans spent their way inching closer to the day of paying the Pied Piper, many thought they were getting wealthier when in reality, they were merely leasing a smoke and mirrors operation of transferring all their wealth to the banking sector of the economy.  It would be one thing if banks were lending their own money and putting their operations at risk.  When push came to shove, Americans get booted from their homes and have cars reposed while banks steal taxpayer bailout money to enrich themselves even further.  In addition, big operations funded by big money are now going out there buying properties at fire sale prices with government backed money.

The credit card as we have it in the U.S. is really a unique phenomenon:

Source:  Creditcards.com

Only a handful of banks dominate the credit card industry.  The credit card is really built on the premise that the gravy train can go on forever.  At the apex of the credit bubble, and let us face it housing wasn’t the only thing being financed with easy money, credit card companies were offering zero percent offers to lure customers into debt servitude.  Now that banks use the pretext that the “world has changed”, they can up those fees and interest rates and many Americans due to the weak economy are now no longer able to meet their obligations.  Credit card default rates are soaring:

Source: Calculated Risk

Those that can’t pay by definition will not pay and that is why we are seeing high levels of bankruptcy.  A credit card was never intended to be used as a secondary source of income but that is what it has become since wages have been stagnant for over a decade.  The vast majority do not pay their balance off each month.  This is same misguided premise on which option ARM loans were based on.  Given the option 90+ percent of the people went with the minimum payment causing an endgame that we are now dealing with.  Credit card loans outstanding have been contracting at a feverish pitch:

Yet wasn’t the premise of the banking bailouts to increase credit in the market?  Of course the banking system has largely captured the current lawmakers and the policy we are getting is friendly to their needs and desires while using the American taxpayer as their own form of credit card.  The lie that was perpetuated was that debt equals wealth and it absolutely does not.  So people in modest neighborhoods saw friends and family driving foreign cars and wondered how they were doing it with a $40,000 a year income.  They were doing it by extending themselves to the point of financial disaster.  So as the disaster hits, we operate in parallel universes.  The public that did over extend has to realize the marketplace reaction of cutting back, losing homes, or bankruptcy.  Banks on the other hand have actually come out ahead receiving trillions in dollars of taxpayer funded money.  Nothing easier than getting money in a hype of fear with politicians friendly to your cause.

Much of the easy lending environment was given the blessing by the Federal Reserve and U.S. Treasury:

The above is really the story of the housing bubble, credit bubble, and easy money world we had for over a decade.  That is now completely changed and I often wonder if people realize that we won’t be going back to how things were.  We can’t.  The underlying issue is the amount of debt being serviced now.  GDP includes this as a “positive” but we are now transferring this additional wealth to the banking sector on merely servicing preexisting debt.  This is like being happy that banks made billions of dollars in overdraft fees.  How is this good for the economy or most Americans?  The math is so distorted that many Americans are wondering how in a country where 20 percent are underemployed we can have a 73 percent stock market rally.

The too big to fail banks are also at the center of the credit card word:

U.S. general purpose credit card market share in 2008 based on outstandings
(Note: 2007 ranking in parentheses)
1. JPMorgan Chase – 21.22% (17.74%)
2. Bank of America – 19.25% (19.36%)
3. Citi – 12.35% (13.03%)
4. American Express – 10.19% (11.40%)
5. Capital One – 6.95% (6.95%)
6. Discover – 5.75% (5.65%)
7. Wells Fargo – 4.21% (3.07%)
8. HSBC – 3.47% (3.65%)
9. U.S. Bank – 2.14% (1.84%)
10. USAA Savings – 2.02% (2.01%)

Source:  Creditcards.com

It is no accident that they are now putting the vice on average Americans while sucking in trillions of dollars in bailouts.  And what is the big reform?  They now provide a sheet that shows you a breakdown of how you are getting screwed in different formats!  This is the idea of reform right now from the corporatacracy.  Until we get solid reform credit cards will continue to operate in a loan shark environment ripping off the middle class until one day Americans will wake up and realize that there is no longer a middle class.

A picturei s worth a thousand words.

Pay Garnishments Rise as Debtors Fall Behind

Leann Weaver faced the loss of a quarter of her wages.

By JOHN COLLINS RUDOLF

PHOENIX — When the bank sued Leann Weaver for not paying her credit card balance, her reaction was typical for someone in that situation. Personal and financial setbacks weighed her down, and she knew she owed the $2,470. So she never went to court to defend herself.

She was startled by what happened next. When she swiped her debit card at the grocery store, it was declined. It turned out Capital One Bank had taken $224.25 from her paycheck, a quarter of her wages for two weeks of work at a retail chain, and her bank account was overdrawn.

“They’re kicking somebody who’s already in the dirt,” she said.

One of the worst economic downturns of modern history has produced a big increase in the number of delinquent borrowers, and creditors are suing them by the millions. Concern is mounting in government and among consumer advocates that the debtors are not always getting a fair shake in these cases.

Most consumers never offer a defense, and creditors win their lawsuits without having to offer proof of the debts, much less justify to a judge the huge interest charges and penalties they often tack on.

After winning, creditors can secure a court order to seize part of the debtor’s paycheck or the funds in a bank account, a procedure called garnishment. No national statistics are kept, but the pay seizures are rising fast in some areas — up 121 percent in the Phoenix area since 2005, and 55 percent in the Atlanta area since 2004. In Cleveland, garnishments jumped 30 percent between 2008 and 2009 alone.

Debt collectors say they are being forced into the action by combative debtors who dodge attempts to settle. “I think there’s a lack of accountability among debtors, and a lack of interest in reaching out to their creditors to resolve things amicably,” said Fred N. Blitt, president of the National Association of Retail Collection Attorneys.

Bankruptcy can clear away most debts. Yet sweeping changes to federal law in 2005 — pushed by the banking lobby — complicated that process and more than doubled the average cost of filing, to more than $2,000. Many low-income debtors must save for months before they can afford to go broke.

In some states, courts allow creditors to charge high interest rates for years after a lawsuit is decided in their favor. In others, creditors can win lawsuits by default and seize wages and bank accounts without a case ever appearing before a judge.

Lack of participation is the most fundamental problem. Some consumers do not even know they are being sued; the people who are supposed to serve them with formal notice have sometimes been caught skipping that step and doctoring the paperwork.

In far more cases, consumers are served but still do not offer a defense. Few can afford lawyers; others are intimidated or confused. In their absence, judges can offer little relief.

In the rare event that a consumer battles back, creditors frequently lack the documentation to prove their claim, and cases are dropped. That is because many past-due debts are owned not by the banks that issued them, but by debt collectors who bought, for cents on the dollar, a list of names and amounts due.

“If the consumers were armed with more education about how to defend against these debts, they’d be successful,” said Jeffrey Lipman, a civil magistrate in Des Moines.

The case of Sidney Jones shows how punishing the system can be. In January 2001, Mr. Jones, 45, a maintenance worker from California Crossroads, Va., took out a $4,097 personal loan from Beneficial Virginia, a subprime lender now owned by HSBC, the big bank.

He fell behind, and Beneficial sued. Mr. Jones did not appear in court. “I just thought they were going to take what I owed,” he said.

By default, Beneficial won a judgment of $4,750, plus $900 in lawyers’ fees, with the debt accruing interest at 27.55 percent until paid in full. The bank started garnishing his wages in March 2003.

Over the next six years, the bank deducted more than $10,000 from Mr. Jones’s paychecks, but he made little headway on his debt. According to a court order secured by Beneficial’s lawyers last spring, he still owed the company $3,965, a sum nearly equal to the original loan amount.

Mr. Jones, who did not graduate from high school, was baffled. “Where did all this money go that I paid them?” he said.

Dale Pittman, a consumer law lawyer in Petersburg, Va. , took Mr. Jones’s case without charge, and found that all but $134 of his payments had gone toward interest, fees and court costs. “It’s a perfectly legal result under Virginia law,” Mr. Pittman said.

HSBC said it ceased collection shortly after Mr. Pittman took the case, but declined further comment. “We are confident we are treating our customers fairly and with integrity,” Kate Durham, a spokeswoman for HSBC North America, said in an e-mail message.

The rare debtors who press their claims, and catch a sympathetic judge, have a shot at a result more to their liking.

Ruth M. Owens, a disabled Cleveland woman, was sued by Discover Bank in 2004 for an unpaid credit card. Ms. Owens offered a defense, sending a handwritten note to the court.

“After paying my monthly utilities, there is no money left except a little food money and sometimes it isn’t enough,” she wrote.

Robert Triozzi, a judge at the time, heard the case. He found that over a period of several years, Ms. Owens had paid nearly $3,500 on an original balance of $1,900. But Discover was suing her for $5,564, mostly for late fees, compound interest, penalties and other charges. He called Discover’s actions “unconscionable” and threw the case out.

Discover defended its actions. “This account was placed with an attorney only after all other efforts to reach the card member were exhausted,” Matthew Towson, a bank spokesman, said in an e-mail message.

Going to court is no guarantee of victory, of course. Consumers who do go are sometimes intercepted by collection lawyers, who press them to sign papers settling without a trial. These settlements may be against the interests of debtors, but they sign anyway.

“We’re signing off on a lot of settlement agreements where we shake our heads and ask, ‘Why is this person settling to this?’ ” Judge Lipman said.

For the working poor, losing a lawsuit can mean disaster. A 1968 federal law exempts 75 percent of a worker’s wages, or 30 times the minimum wage per week, from being taken in garnishment — whichever is less. But increases in the minimum wage have failed to keep up with inflation. As federal law stands now, just $217.50 a week is exempt from seizure. (A few states set higher cutoffs.)

The working poor “have difficulties maintaining payments on life’s necessities with their full paycheck,” said Angela Riccetti, a lawyer with Atlanta Legal Aid who represents indigent clients whose wages are being garnished. “You lose 25 percent of it and everything folds.”

For Leann Weaver, the woman at the grocery store, Capital One’s lawsuit made a bad situation worse. After being evicted from her apartment, she moved in with her grandparents. Without them, she might have ended up on the street or in a shelter, she said.

Capital One declined to comment on Ms. Weaver’s case. “We encourage anyone facing difficulties meeting their financial obligations to contact us right away,” Tatiana Stead, a bank spokeswoman, said in an e-mail message.

Ms. Weaver said she repeatedly asked Capital One for more time to pay her $2,470 debt, but last year the bank filed suit. She failed to show up in court, and a judgment was entered against her, swollen by $1,800 in interest and lawyers’ fees. Then the garnishment began, almost $500 a month, or a quarter of her pay.

“I can’t even look at my paychecks any more,” she said.