The Heat Begins To Rise In The Kitchen

I'm so dizzy, my head is spinnin'...

Lawmakers, Investors Ask Fed for Lending Disclosure
Nov. 13 (Bloomberg) -- Members of Congress, taxpayers and investors urged the Federal Reserve to provide details of almost $2 trillion in emergency loans and the collateral it has accepted to protect against losses.

At least five Republican members of Congress yesterday called for the Fed to disclose which financial institutions are borrowing taxpayer money and what troubled assets the central bank is accepting as collateral. More than 300 more investors and taxpayers also pressed for more disclosure in e-mails and interviews with Bloomberg News.

``There cannot be accountability in government and in our financial institutions without transparency,'' Texas Senator John Cornyn said in a statement. ``Many of the financial problems we are facing today are the direct result of too much secrecy and too little accountability.''

European Central Bank President Jean-Claude Trichet today urged greater disclosure to help strengthen the global financial system.

``Despite all regulatory advances and progress in information technology, the financial system has been characterized by a lack of transparency about the ultimate allocation of risks,'' Trichet wrote in today's Financial Times. He cited as examples ``the sheer complexity of structured financial products, which even sophisticated investors are not able to assess properly, and the lack of regulation of certain financial institutions.''

Separately, lawmakers are also pressing Bernanke and Paulson to better explain how the Treasury is implementing the $700 billion emergency rescue. In a letter to the Fed chairman and Treasury secretary yesterday, Senator Charles Grassley demanded details about how Treasury has chosen which banks got about $250 billion in cash infusions, what they are doing with that money and any contracts the department has signed to help implement the law.

``I am a strong believer that sunlight is the best disinfectant and think it is important that the process of implementing the Act be as transparent as possible, especially when taxpayer money is being used,'' Grassley said in the letter.

``This constitutes exactly the scenario which landed these banks in their dilemma in the first place. The Fed is making sub- prime loans to these banks and taking their portfolio of subprime loans as collateral,'' said William Nein, an accountant from Woodland Park, Colorado, in an e-mail to Bloomberg. ``Where and when does this stop?''
Nein was among the readers who wrote to Bloomberg saying they want to know more about the Fed's loan programs.

``Our government officials never seem to be held accountable for their actions and the American taxpayers are always the ones to pay the price,'' said Kathy Cunningham, a legal secretary in San Angelo, Texas.

``It's pretty obvious the government has sold us out,'' said Jeff Pasko, a quality control engineer in Minneapolis.
http://www.bloomberg.com/apps/news?pid=20601103&sid=ayoT0_huyp5E&refer=us

YEAH BABY! Turn up the heat on these Rat Bastids! It's high time we "disinfect" the American financial system. Perhaps with luck, this will eventually lead to the US Federal Reserve being disbanded by Congress with the repeal of the "constitutionally illegal" Federal Reserve Act of 1913. We can only hope...

Jobless claims jump unexpectedly to 7-year high
WASHINGTON (AP) -- The number of newly laid-off individuals seeking unemployment benefits has jumped to a level not seen since just after the Sept. 11, 2001, terrorist attacks, as companies cut more jobs in the face of a slowing economy.

The Labor Department on Thursday reported that jobless claims last week increased by 32,000 to a seasonally adjusted 516,000. That nearly matched the 517,000 claims reported seven years ago, and is only the second time since 1992 that claims have topped 500,000.

The total also was much higher than analysts expected. Wall Street economists surveyed by Thomson Reuters expected claims to increase only slightly to 484,000. Initial claims from two weeks ago were revised upward Thursday by 3,000 to 484,000.

The increase puts jobless claims at levels similar to the recession of the early 1990s. The four-week average of claims, which smooths out fluctuations, increased to 491,000, the highest in more than 17 years.
http://biz.yahoo.com/ap/081113/jobless_claims.html

Unexpected? LOL! What a rediculous notion. I'll go out on a limb here and "expect" them to get a lot worse before they get better. Unexpected? LOOOOOOOOOOOL! Please, stop, you're killing me!

U.S. Shifts Focus in Credit Bailout to the Consumer
WASHINGTON — The Treasury Department on Wednesday officially abandoned the original strategy behind its $700 billion effort to rescue the financial system, as administration officials acknowledged that banks and financial institutions were as unwilling as ever to lend to consumers.

But with a little more than two months left before President Bush leaves office, Treasury Secretary Henry M. Paulson Jr. is hoping to put in place a major new lending program that would be run by the Federal Reserve and aimed at unlocking the frozen consumer credit market.

The program, still in the planning stages, would for the first time use bailout funds specifically to help consumers instead of banks, savings and loans and Wall Street firms.

Treasury officials said they hoped to invest about $50 billion from the bailout fund into the new loan facility, with the aim of helping companies that issue credit cards, make student loans and finance car purchases.
http://www.nytimes.com/2008/11/13/business/economy/13bailout.html?_r=1&bl&ex=1226725200&en=8493bad0556dcca4&ei=5087%0A&oref=slogin

DAMN! Hank Paulson is going to buy me a new car? Where's the line?

No sh*t Sherlock the banks are as unwilling as ever to lend to consumers. Let's see now, you own a bank, some knuckle head in charge of your loan portfolio loans out millions, maybe billions, to people who could never pay it back. Do really think, after getting taken to the cleaners in a mountain of bad debt, that banks are going to just open their windows and loan money "again" to people who have no hope in hell of ever paying it back?

Great idea Hank. Let's "force" the banks to make bad loans. Yeah that's the ticket! That will fix EVERYTHING and jump start the economy. Brilliant! When can I pick up my new car? I'd like a new Mustang GT.

Haven't the geniuses of "high" finance figured it out yet? The "American Dream" was a scam, the greatest Ponzi Scheme of all time. American "wealth" was built on a stack of Wimpy Burgers: "I'll gladly pay you Tuesday, for a hamburger today." HANK, the buy now pay later days are OVER! Life as we knew it no longer exists. The live now pay later generation has hit a brick wall, and all your Monopoly Money isn't going to change that fact. Hank, unless you plan to just give people money, with NO STRINGS ATTACHED, there is not going to be a resurgence in the economy anytime soon. The banks are long past the time they should have stopped making bad loans. For that matter, why were banks ever making bad loans in the first place?

One thing Hank always fails to mention is that even if his plan to make money easy to borrow again was to work, it would detonate the inflation bomb that is now lurking behind all this deflation talk. Once all the money Hank and his pals have been "secretly" funneling to the banks reaches the street and is put to work, prices will begin to rise. And rise exponentially in relation to the amount of money that becomes available and spent. This is when the price of commodities AND Gold will explode. So in some sense, we'd like to see Hank succeed in coercing the banks to give his money away. But then again, the consequences...

Text of Paulson remarks on TARP
WASHINGTON (MarketWatch) - Here is the prepared text of remarks by Treasury Secretary Henry Paulson on Wednesday about the financial rescue package, as released by the Treasury Department.
http://www.marketwatch.com/news/story/Text-Paulson-remarks-TARP/story.aspx?guid=%7BDD8C97EA-2B69-4AE3-82C1-01D0FD83536C%7D

Goldman big winner in government's revised bailout of AIG
Banks in the U.S. and abroad are among the biggest winners in the federal government's revamped $150 billion bailout of American International Group Inc.

Many banks that previously bought protection from the insurer on securities backed by now-troubled mortgage assets stand to recoup the bulk of their investments under a plan by AIG and the Federal Reserve Bank of New York to buy around $70 billion of those securities via a new company. These securities are collateralized debt obligations backed by subprime-mortgage bonds, commercial-mortgage loans and other assets.

Banks in the U.S., Europe, and Canada bought credit-default swaps on these securities from AIG, which in turn promised to compensate them if the securities defaulted. Defaults haven't been a major problem, but the market values of these CDOs fell sharply over the past year or so.

That enabled the banks to pry roughly $35 billion in collateral from AIG as a result of those declines and downgrades in AIG's own credit ratings. The banks that have sought and received collateral from AIG include Goldman Sachs Group Inc., Merrill Lynch & Co., UBS AG, Deutsche Bank AG, and others.

Throughout its AIG rescue efforts during the past two months, the government has had the banks in its sights; it made its initial bailout of AIG in part to avoid potential bank losses that might have threatened the broader financial system.

Under the plan announced Monday, the banks will get to keep the collateral they received from AIG, much of which came when the government made funds available to AIG in September. The banks also will sell the CDOs to the new facility at market prices averaging 50 cents on the dollar. The banks that participate will be compensated for the securities' full, or par, value in exchange for allowing AIG to unwind the credit-default swaps it wrote.

"It's like a home run for some of the banks," says Carlos Mendez, a senior managing director at ICP Capital, a fixed-income investment firm in New York. "They bought insurance from a company that ran into trouble and still managed to get all, or most, of their money back."

The contract cancellations will free the insurer from additional collateral calls on those swaps, which also have been responsible for billions of dollars in write-downs that AIG has logged in recent quarters. The plan is analogous to an insurer buying a house it provided fire insurance on, negating the need for an insurance policy on the home.
http://gata.org/node/6864

( in a Church Lady voice): "Now isn't that special."

Note on today's markets: Take note that the general equities market reversal today came following President Bush's impassioned speech regarding this weekends big "financial summit". The American financial wizards are scared sh*itless that the rest of the world is going to show up loaded for bear with visions of excommunicating the US Dollar from the world financial order. President Bush is hoping that he can change their minds. Good luck Mr. President...

Wishful thinking has lead to too many failed market rallies the past several weeks. With the DOW up today, the Dollar got hammered and Gold prices rose. Follow thru in any of these rallies has been, to date, absent. The Dollar is very overbought, and the chart, for what it's worth, is quite bearish now with a double top forming up around 88 on the Dollar Index. Gold, Silver, and Oil...commodities in general, are all very oversold, and their charts, for what their worth, paint a very bullish scenario developing with double bottoms in these markets sprouting across the landscape. Follow thru in the general equities market will bring severe pressure to bear on the US Dollar. And absent pressure on the Dollar, Gold and Silver are going nowhere anytime soon. Breakout points in Gold remain at 776 Gold, and 10.50 Silver. Until these levels are breached, continue accumulating .