Thursday, March 22, 2012

How Much Treasury Debt?

If this doesn't scare the shit out of you - and scare you out of paper dollars and into real assets like gold and silver - then you are either brain dead or you just don't care anymore.

Tim Geithner (along with Bernanke) was testifying before the House Committee on Government Oversight and Reform yesterday.  Congressman Trey Gowdy (R-SC) - in a display of forcing Geithner to answer a question directly that Ron Paul should take notes on - asked Geithner if he had only ONE more debt increase request that could possibly be made, how big would it be.

After trying to shuffle - very awkwardly, I might add - around answering the question, Geithner responded with, "It would be a lot - it would make you uncomfortable."  Here's the exchange, which I found spine-chilling:

Geithner: “That I’d have to get to you in writing, I can’t do it in my head though.” (note: in the background someone says "he can't put that in writing.")
Gowdy: “How about a round number?”
Geithner: “No idea….
Gowdy: “$20 trillion?”
Geithner: “I just can’t do it in my head.”
Gowdy: “$50 trillion?”
Geithner: “I don’t know..."
Gowdy: “A lot? Can we agree it would be a lot?”
Geithner: “It would be a lot. It would make you uncomfortable.”
Let that sink in for a moment.  Please note that Geithner did not try to dispute the $20/$50 trillion number that Congressman Gowdy threw out.  Here's the 3 minute video of the exchange, which I sourced from Ed Steer's Gold and Silver Daily:

Let me be very clear about one thing.  This is not a joke and this not some sort of absurd exaggeration.  This is where we are right now with the finances of our country.   The fact that the Government-reported economic numbers are fraudulent is finally getting acknowledgement in the mainstream media is one thing.  But you can't find any mention of the real spending and real debt numbers.  You have to dig for the Truth on that and it requires understanding - in general -  how Government accounting works and where the numbers are buried. 
The REAL direct Treasury/Taxpayer guaranteed debt number right now is at LEAST $25 trillion.  This includes the $16.2 Trillion current limit PLUS the $7 Trillion in FNM/FRE Goverment guaranteed debt PLUS the Treasury bonds sitting in the Social Security Trust ($2.5 trillion last time looked).  I have not included a lot of other small off-balance-sheet guarantees like GMAC (now called Ally) debt, Fed assets which are direct off-balance-sheet liabilities of the Treasury/Taxpayer and some other stuff.   I would bet real money that the REAL number is closer to $30 Trillion.
This does not include the GAAP accounting for the all of the future entitlement and welfare obligations.  The net present value of this - i.e. if the Government had to account for its numbers like a corporation does - is more like $100 Trillion.  That is not my estimate.  That is a number that comes from David Walker, the former chief of the Congressional Budget Office.  On a yearly GAAP accounting basis, the Government spending deficit is more like $5 trillion (see John Williams'   The $100 trillion is how a corporation would have to account on its balance sheet for its future obligations given what is known about future spending escalations and future estimated funding of that spending.  That would be the number on the balance sheet reported in a corporation's 10Q/10K.
This is reality people.  What is so completely horrifying about Geithner's statements - and complete kudos to Congressman Gowdy for pressing Geithner the way he did - is that Geithner, who is not known to be politically adept, was so flustered by the thought of getting caught in a lie that he really had no way to cover-up the truth.  The truth is not in what he said, the truth is in his lack of ability to refute the $20/$50 trillion number thrown at him by Gowdy.  The best he could come up with is that the number is so big "it would make you uncomfortable."  We know $16 trillion plus whatever is requested this fall is not big enough to make Congress or Obama "uncomfortable." 

This country is broke, it's insolvent and it's collapsing.  This is why the elitists - i.e. those who are in a position to steal everything not nailed down - are openly grabbing what they can.  THAT is what the MF Global felony was all about.  Obama knows a collapse is near.  This is why the war rhetoric is escalating, this is why Obama signed legislation authorizing the Government to seize all national resources for the purposes of military defense in the event of an "emergency."
Do not be scared off by the current correction going on in the precious metals.  By the time most of the people in this country understand why gold and silver are superior currencies to paper fiat dollars, the exchange price of dollars to bullion will make that exchange nearly impossible in any meaningful way for most.  The current correction is somewhat mild compared to the correction experienced in 2008.  At some point, probably sooner than most are willing to believe, the price of gold and silver will shoot up very quickly.  By then it will be too late for most people watching to afford the true flight safety of owning gold and silver rather than paper assets and money sitting in potentially Government controlled accounts.


  1. Treasury debt seems its not important.

    What an easy religious experience. As I have said its not important what the London Trader says, its only important that after he says something gold tanks.

    And its the inept debate by the gold bugs at the beginning hedging their price of gold on future QE's.

    The bubble has burst and the 2008 experience isn't really different this time.

    The miners are well below now and it was so easy to break lower but so difficult to break higher. In future think about - if it is worth it. Even if you think the HUI and GDX consists of badly run miners - they will drag the others. Ontop of that its really like a lottery trying to get the ones that will fly.

    No M&A - isn't that a sign. All this rubbish the Embrys Turks etc speak. Even lately Turk comes out the moonshot imminently.

    Blah blah.

    And the complaining about paper and rubbish, its all the same, no one doing just talking, like the Europeans do.

    Continue in your dreamland. There isn't a support strong enough anymore.

    And what is telling that the effort to get it here isn't much at all.

    1. If you keep repeating yourself, I'm going to stop posting your comments. You have no data/evidence to back up your assertions. The truth is that mining stocks have a high beta vs. the stock market. Look at 2008. The HUI dropped from 480 to 150 and then ran to 640. You're an idiot. If you study history and the history of stock prices, you'll see that mining stocks outperform the SPX in times of real crisis. 1929, 1987, 2008.

      Offer some new insight and thinking otherwise I won't post your mindless ranting.

    2. Don't sweat it Dave. This guy is drinking the Kool-aid. His posts are simply incoherent. As sad as it is, many simply cannot be saved.

      Great post.

    3. Agree? Found this site a few months back and respect Dave's analysis and factual data. Keep up the great FREE content.

      Also in Denver

  2. So simple isn't - Silver once again on a breakdown and its so easy - absolutely no strength. So next all must realize that when silver goes up like it did to 37 it is meant to go up by the commercials. You all are being washed and rinsed repeatedly. There just isn't any core pressure and all this default crap is all just that crap.

    And if China was could be convinced out of the PAGE exchange then hoe easy is that.

    And by the way tomorrow is Friday. Now those days have lately been the worst of the week. See you Friday.

  3. I'm not convinced that Obama knows a collapse is near. While I not one of the people that think he's a puppet for whatever conspiracy, I do think things are out of his control and he doesn't know it. He probably thinks that if Congress and the "clingers" would just go happily along with his socialist polices things would be swell. Now the people around him, Timmy, Ben & crew, they do know it is all hanging over a cliff.

    1. He knows it. Make no mistake about that. That's why he's doing nothing other than extending the Totalitarian legislation and movement started by the Bush people. I can't believe people are willing to give Obama the benefit of doubt about who he really is and what he's doing.

      He was voted in on a massive wave of promising to defend and stand up for the middle class and those not rich enough to afford their own Congressman, Senator, Government official. The latter category is everyone with a liquid net worth less than $100 million.

    2. If Obama thought there really was hope and that he could the kind of difference he pledged to implement when he was prostituting himself for votes, then he would have made sure MF Global was properly investigated and prosecuted. He wouldn't have had people like Jeffrey Immelt or Geithner or Larry Summers in his cabinet. Hell it's now apparent that Biden is a crook as well. The only difference between Biden and Cheney is that Cheney has brain and thinks big.

      Obama knows. Make no mistake about that. That's why he signed legislation that extented and strengthened the Detainee Bill - which he originally promised to repeal. That's why he signed that resource confiscation Bill. He knows....

  4. even if they put a figure on it....doubtful they will. This country going forward (and in the last 5 years) is all about not allowing consequences. We all know it's effed but they try to mitigate the actual results by playing the game. Stack away my friends.

  5. Hope they plug this....

    How long will this game continue?

    More questions about the stability and probity of German banking this morning following on from the rumour of the €1 Trillion hole in German banks.

    This from the 21st March Wall Street Journal,

    Deutsche Bank AG changed the legal structure of its huge U.S. subsidiary to shield it from new regulations that would have required the German bank to pump new capital into the U.S. arm.

    The subsidiary is called Taunus Corp. It is the 8th largest Bank holding company in the US. Being listed not just as a bank but a Bank Holding Corp. has a very special perk, it allows the Holding Company to borrow from the Fed in times of crisis. Which Deutsche did.

    Uh huh. And what sort of capital problem might there be? Nothing major -- other than near 50:1 leverage. As I've repeatedly noted just looking at the on-balance sheet numbers shows figures that are worse than the 30:1 levels at which Bear and Lehman blew up -- materially so. And this does not account for the off-balance sheet games which, if accounted for accurately, would make the picture look far more ugly than it first appears.

  6. Sounds like you have a message bot posting counter arguments to your commentaries...

    1. No not at all. I've posted and tolerated that poster's comments for quite some time. I have a message about saying the same god damn thing and not backing it up with any data or research. I fucking back up at least 90% of my assertions with real data and real links to the sources or real links to other commentary/articles that support my commentary. I get paid nothing to do this. I don't even ask for kudos or a simple "thank you." Zerohedge makes a ton of money off of its website. There's no advertising here or retarded "tip jar."

      All I asked that poster to do was to stop blaring the same message - bearish on the sector obviously - without backing up his assertions without proof or links to data. It's quite simple.

    2. In fact, and this is widely posted data for free everywhere, since 2001 there has not been ANY investment sector that has even come close to delivering the performance of the precious metals and mining stocks. NONE. NADA. NIENTE. We're in a nasty correction and that tends to bring the retards out in droves. This is nothing more than a nasty correction.

      In fact ALL of the basic fundamentals supporting an even bigger move in the next 12 months are in place. The fundamentals driving this sector are even stronger now than when I started doing this sector in the fall of 2001. That is a fact.

    3. People like him post such nonsensical information that it actually strengthens your fact-based articles. He is our Baghdad Bob. He provides the entertainment for the site and we should enjoy it. Let's see what else we writes when he returns from reading Joe Weisenthal.

    4. Are you friggin serious? THAT's not a bot? The response IS nonsensical and the poor sentence structure had me convinced! Anyhow I do appreciate the blog, saves me time to do my own news filtering and you do reference your work.

  7. Government accounting is indeed very confusing, compared to private sector accounting.
    The budget is basically determined on a cash basis.
    The deficit merely reflects cash income versus cash outgo - for the current year only.
    Future liabilities, such as for Social Security and Medicare (liabilities that exceed the current year) are not even considered liabilities according to the FASAB.
    The FASAB is the accounting advisor for the federal government. The reasoning is that Congress could completely cut off benefits beyond the current year, at any time.
    So, from a cash standpoint, cash outlays beyond a year, that can be changed, are not even liabilities.
    By not considering future SS and Medicare benefits as liabilities, could that have some relation to the trust fund being borrowed, principal and interest, to pay for current expenses?
    And, this borrowing was done even though the surplus FICA taxes and interest were invested in non-marketable Treasuries, to be used exclusively for SS and Medicare beneficiaries.
    If the Treasury principal and interest were indeed saved for SS and Medicare exclusively, the funds would simply be liquidated. Tapping the SS trust fund interest since 2010 to make up for the cash shortfall is the same dynamic used to pay for battleships: new general revenues must be used AS IF THE TRUST FUND DID NOT EXIST!
    Don Levit

    1. This is a silly argument to say that a cash basis is correct for the government because those obligations can be suddenly cut off. The same can be said for corporations that can suddenly go out of business in the current year, therefore corporations and governments can use the same accounting method regardless of which you choose. That the government uses a different method is intentional. With a cash basis it is easier to hide the problems even after they become cancerous.

  8. Dave, Thanks for the rebuttal of these jerks. Your blog is most helpful to me among all the one's that I read. After awhile one comes to know your thoughts and perspectives on the current situations. I also appreciate the composition and use of your language skills. Thank-you for "sit tight and be right" reinforcement backed with data and references. I wish I could save a few friends and family but have given up the ship due to ostracism.

    1. I am proud that you publish idiotic comments. Like you, I am a free speech guy. I let all comments stand but I am not above a counter assault.

      I have also noted the absence of ads and one of those retarded tip jars. I like to think great minds think alike. I read you every day and I enjoy it. I miss ya on the weekends but hell, that's when they are making me work...

    2. LOL. Thanks Brian. I won't stop publishing the moronic comments. I just want different flavors of moronic. That guy keeps writing the same thing over and over. It helps even more if these guys would include data to back up what they say.

  9. Got to laugh...

    WeLCoMe To ZeRo FeDeRaL ReSeRVe SCHooL...

    The FED is the source of fake bliss
    They keep credit flowing
    So debt keeps on growing
    They've led us into the abyss

    Dr von Limerick King

    Ben is conditioned to tell
    When everything's going to hell
    Although it seems funny
    When Kleptos need money
    He prints at the sound of a bell

    Dr von Limerick King

  10. Anonymous (trollish 1st) poster, the US dollar, the Euro and all those fiat currencies are really just "debt-backed" paper money now. The gold and silver prices are not a function of their true value currently, but of "paper gold" and "paper silver" contracts that have no relation to the actual physical metal, its rareness, and the effort that went into it to find the ors, mine and purify it. Low price = perfect buying opportunity, at least as far as I'm concerned. Time will tell who's on the right side of this. Good luck to you, and all of us!
    Thanks Dave, great article and link!

  11. Hello Dave

    just want to thank you for your efforts, long time reader......a pleasure to read

    many thanks

  12. Long time reader here who values your insight & frank perspective.

    There's alot of disgruntled and even dis-info folk out there, with more to come no doubt as conditions degenerate.

    Again... thank you Dave (and don't let the trolls get you down).

  13. Dave in Denver for Prez!

  14. LOL. Thanks for the feedback everyone. I do appreciate it. Just like the 3 or 4 previous nasty corrections in this sector, this one too shall pass. It's still well within the average timeframe for a correction to run its course. It usually takes 12-18 months before it bottoms and then gets back to the price where gold/silver were before the correction started. Once that happens, the next 6-12 month move higher will be breathtaking.

    The downside is that living conditions in this country will be even worse.

  15. Ya know, correct me if I'm wrong but wasn't there some assclown on here predicting that gold was going to get it's ass kicked on Friday?

    How's that working out for ya so far today?

  16. On Miner performance, Dave:

    Since 2000 it's knocked out the light and that's with the biggest miners in HUI (NEM/ABX) hedging for the first 7-8 years of that time frame. Had they not hedged..............

  17. This kind of explains why Bill Black has been black listed from MSM...

    Bill Black on the MF Global Financial Collapse and Aftermath

    There were a number of disturbing things in Gary Gensler testimony to the Congress about the role of the CFTC in this. Some of these things are discussed here.

    I doubt very much that justice will be done at MF Global. The Banks have been getting away with everything they have done so far, up to and including the blatant stealing of funds from customers that were being held on account, and not even subject to trade.

    He can try to pass the buck on this, and make excuses, and there is plenty of company in this on both sides of the aisle. But the ultimate responsibility for the handling of this falls on Barack Obama and his Administration. It happened on his watch, and it was their job to make it right.

    And now every time I see and hear him speak, what I see are the people, the farmers and ranchers, whose money was stolen by his friends and contributors on Wall Street.

  18. “We shall have World Government, whether or not we like it. The only question is whether World Government will be achieved by conquest or consent.” –James Paul Warburg, whose family co-founded the Federal Reserve – while speaking before the United States Senate, February 17, 1950

    The ECB swallowed the market

    And so it is in debt as well. In even quite large quantities debt can be fairly harmless. But beyond a certain accumulated mass it changes. There is now, I think, enough debt in the Fed, the Bank of Japan and the ECB that each of them is in the process of becoming a debt black hole. That is, the debt in them is so massive that it is gravitational, sucking at any and all of the debt and finance around it pulling more and more in to itself.

    The problem is this. The Central banks have chosen to lend to insolvent private banks and to the nations that already bankrupted themselves trying to bail out their unbailable banks. In an attempt to make their lunacy seem sensible, the central banks assured everyone that they would only accept as collateral for the money they were lending out, the best assets the banks possessed. So the best of the insolvent banks’ assets were sucked in and cheap central bank loans flooded out.

    The central banks said that ‘now the banks were stabilized’ they hoped the banks would lend to the market and to each other thus allowing the broader economy and the banks themselves to be funded ‘by the market’. Neither happened. Why? Well the banks continued not to trust the quality of the assets they were offering each other as collateral. Not entirely surprising since the banks had already pledged the best of them to the central banks. Without trust-able assets as collateral – no loans.
    When I say washed what I mean is the national bank in Spain or Greece or Ireland may accept some asset which is thoroughly sub-prime in return for a sovereign bond. That bond is then acceptable to the ECB as collateral because it is a Sovereign bond, which as we all know are AAA rated, for sure, for sure never going to default. However the more sub-prime, stinky, slimy paper the national banks are stuffed with, the more the sovereign debt is backed by a national bank which resembles a sewer of rotting rubbish, a nation in the grip of austerity and a contracting economy. Whatever pretty prime-time fictions you get hosed with each evening, this is the reality that dare not be reported. And we all know it. Ireland is in recession, Spain’s economy is contracting and so is Portugal’s. That is why ‘the market’ keeps hiking the interest it insists upon for lending to National banks.

    ..they got everyone on their knees....bowing.

  19. Traders Drop Price of Silver by Exploiting NASDAQ Vulnerability

    Those in the stock exchange business are highly aware that when it comes to trading every millisecond counts. Experts have long argued that the flaws present in trading systems today can be leveraged to manipulate prices and basically perform fraudulent operations, but a recent incident demonstrated these vulnerabilities.

    “On March 20, 2012 at 13:22:33, the quote rate in the ETF symbol SLV sustained a rate exceeding 75,000/sec (75/ms) for 25 milliseconds. Nasdaq quotes lagged other exchanges by about 50 milliseconds. Nasdaq quotes even lagged their own trades -- a condition we have jokingly referred to as fantaseconds,” Nanex reported.

    So what does this actually mean? In simple words, it means that some traders flooded the system which, due to the security holes that exist, caused silver prices to drop considerably.

    High frequency traders took advantage of the flaws and exploited the NASDAQ silver ETF, Alexander Higgins explains.
    It’s not an easy thing to get your head wrapped around if you’re not in the business, but the incident clearly demonstrates that flaws in the market exchange system can be leveraged to manipulate prices.

    The 50 millisecond lag recorded by NASDAQ may not seem much for the average Joe, but for a profit driven crook it can worth gold. ones upset by this but look at that 100 share mistake in aapl?

  20. This hurts...

    Corzine Gave 'Direct Instructions' To Transfer $200 Million From Customers to JPM London

    MF Global’s Corzine Ordered Funds Moved to JPMorgan, Memo Says
    By Phil Mattingly and Silla Brush
    Mar 23, 2012 4:04 PM ET

    Jon S. Corzine, MF Global Holding Ltd. (MFGLQ)’s chief executive officer, gave “direct instructions” to transfer $200 million from a customer fund account to meet an overdraft in one of the brokerage’s JPMorgan Chase & Co. (JPM) accounts in London, according to an e-mail sent by a firm executive.

    Edith O’Brien, a treasurer for the firm, said in an e-mail sent the afternoon of Oct. 28, three days before the company collapsed, that the transfer of the funds was “Per JC’s direct instructions,” according to a copy of a memo drafted by congressional investigators and obtained by Bloomberg News.

    O’Brien’s internal e-mail came as the New York-based broker found intraday credit lines limited by JPMorgan, the firm’s clearing bank as well as one of its custodian banks for segregated customer funds, according to the memo, which was prepared for a March 28 House Financial Services subcommittee hearing on the firm’s collapse. O’Brien is scheduled to testify after being subpoenaed this week.

    kermit sings hurt

  21. ...government accounting explained-its ENRON accounting! Enron's Accountants needed a job after the crooked E went under and the government was hiring so.......

  22. Company owner pleads guilty to tomato price-fixing

    A former California food company owner pleaded guilty Thursday to racketeering in a national tomato price-fixing plot.

    Frederick Scott Salyer, 56, was charged with bribing purchasing managers to buy tomato products from his company, Monterey-based SK Foods. Prosecutors say he fixed prices and rigged bids for the sale of tomato products to McCain Foods USA Inc., ConAgra Foods Inc. and Kraft Foods Inc.

    Salyer pleaded guilty in federal court in Sacramento to two charges: racketeering and price fixing. The charges carry maximum 20-year prison sentences, although Salyer is expected to face four to seven years behind bars at his sentencing scheduled for July 10. He remains free on $6 million bail.,0,2467359.story?

    ....manipulation could never, ever happen in the metals....just saying...:)

  23. interesting post. You might like this quote on truth.

  24. Until physical gold and silver reign supreme over paper-electronically traded-algostyle-gold and silver...all bets are still ON. Take advantage of this unique opportunity !!!!

    When all the bets are finally off -that's it. The windows will be closed and many an eye will droop in sorrow.

    Don't be a put it off till tomorrow kind of person.

    This is a one day too late kinda situation !

    Get stackin' !!

  25. Gretchen Morgenson: Wall Street Really Does Enjoy A Different Set of Rules Than The Rest of Us

    Gretchen Morgenson has earned a Pulitzer-winning career from exposing abuse and conflicts of interest on Wall Street. In this interview, she confirms that there is indeed a second set of rules that our elite financial institutions enjoy, largely unfettered by the constraints that apply to the rest of us.

    Consequences for failure and fraud are very different under this second set of rules - in fact, they're practically rewarded.
    Accountability, by all prudent measures, has become non-existent. The extraordinary measures the country deployed to deal with the great contraction in 2008 only served to exacerbate these imbalances.

    What's sorely needed now is a national dialogue on whether we're willing to allow this to continue. What benefits are we receiving by enabling these elite to enjoy such different standards? What type of system and rules might work better for our interests?

  26. “Swift” Kick To The US Dollar

    "If a country doesn’t prove it’s making the necessary reductions by the end of June, any institution in that nation that settles petroleum trades through Iran’s central bank will be cut off from the U.S. banking system."

    This is terribly ill advised and poorly timed. It smells like a threat of selective lockout via the Swift system.

    At a time when the US dollar is sundering as the major international settlement mechanism this is the last thing that dollar managers should consider. Whoever came up with this idea has no appreciation of two points – the weakness of the Western financial system and whatever weapon of war will be used in kind.

    The major financial weakness in the US is the level of the US dollar due to sundering use in international contract settlement, the clear and present trend of substituting both the Yuan and Euro as international settlement currencies, and the lack of true economic buyers in the US long bond market.

    Asia’s golden future
    Her targeted growth-markets are other rapidly developing economies, as well as the whole Asian continent, and no longer the US and Europe. One of her key strategies through the Shanghai Cooperation Organisation is to build a pan-Asian security and trade bloc in partnership with Russia, and the last element of this 10-year old plan is to settle cross-border trade without using the West’s financial system. China expects to play a major part with her currency, which explains why she is adding to her gold reserves. The relevance of gold is that China will have to show to the people of Asia that her currency has better long-term prospects than the dollar, which goes some way to explaining why so many of the countries associated with the SCO are now also accumulating the metal. This analysis is confirmed by a leaked cable from the US Embassy in Beijing as long ago as April 2009 that can be seen in GATA’s database. As Iran and India also have SCO Observer status they are part of China’s grand strategy, and they have also been buying gold.

  27. Interesting observation...

    Who Is Gaming to Keep Bullish Articles “Most Popular” ?
    Which makes me ask the question: Why?

    Its not a bad article — in fact, its pretty good. But 31 days later still in the top 5? Bloomberg publishes 1000s of pieces a day — i have never seen any of their columns stay most popular for 1/10 as long.

    I suspect someone is gaming the Most Popular list — Its costs next to nothing to have a script keep loading that story, artificially keeping its traffic number up at the top of the list.

    I bet if Bloomberg;’s IT folk do a server log review, they will see lots of questionable traffic, including lots of page reloads, rand0om and fake URLs from .RU and elsewhere.

  28. Dave has it right. The numbers speak for themselves. Not sure how any sane person could argue with them. Sure, they can continue to kick the can down the road as long as it is in the BRIC's interest to play game. When they decide to stop playing it is game over and the end of the American Empire.

  29. A Bailout by Another Name

    But what the proponents of principal reductions at Fannie and Freddie don’t talk about is what a transfer of wealth from taxpayers (again) to large banks such a program would represent. The fact is, principal reductions by Fannie and Freddie are not the panacea that they may seem.

    As of last September, only 2.5 percent of Fannie and Freddie mortgages were seriously delinquent, versus 7.2 percent for banks’ mortgages.

    Still, the crowd clamors for widespread Fannie and Freddie write-downs, even though they would constitute a direct and sizable gift from taxpayers to the largest banks.

    Here’s how: Many banks hold second liens on the same properties for which Fannie and Freddie either own the first mortgage or have guaranteed. If principal amounts on these first mortgages are reduced while leaving the second liens intact, those seconds become much more likely to be paid off over time. With no principal reduction, the banks would have to write off many of those second liens.

    As such, principal write-downs are another backdoor bailout for the banks that brought you the mortgage crisis.

  30. An Annotated Paul Brodsky Responds To Bernanke's Latest Attempt To Discredit Gold

    After professionally watching Fed chairmen cajole, threaten, persuade and manage sentiment in the markets since 1982, we argue this latest permutation is understandable, predictable and, for those willing to bet on the Fed’s ultimate success in saving the banking system (as we are), quite exciting.... Gold is no longer being ignored and gold holders are no longer being laughed at. “The Powers That Be” seem to have begun a campaign to discredit gold."

    From QBAMCO

    BB Gun

    “First they ignore you, then they laugh at you, then they fight you, then you win.”
    - Mohandas Karamchand Gandhi

  31. Dave, You are dead-on regarding Obama's understanding of the situation. The recently promulgated presidential decree on "National Defense Resources Preparedness aligns perfectly with the National Defense Authorization Act. See


  32. Anger at Goldman Still Simmers

    When asked whether Goldman had borrowed the shares, Michael DuVally, a Goldman spokesman, said: “Mr. Cohodes is wrong. We met our obligations under applicable law.” He added that Copper River’s problems were the result of the extreme stress in the financial markets at the time.

    Goldman has sought to seal the transcript of Mr. Cohodes’s deposition, which is part of a case brought by, an Internet retailer, against two of the biggest Wall Street firms. Overstock contends that the firms — Goldman Sachs and Merrill Lynch — failed to borrow company shares that they or their clients sold short, a practice known as naked shorting. Overstock says that the firms essentially evaded rules intended to prevent stock manipulations, and that its stock came under outsize selling pressure as a result.

    Along with a handful of traders at smallish firms, Goldman’s securities lending unit has been cited by regulators for lapses. In 2010, the S.E.C. sued Goldman on accusations that it “willfully” had failed to preborrow shares as required for its short-selling clients in January 2009, shortly after Copper River went out of business. The improprieties involved 385 short sales in which the firm had not located shares for its brokerage clients to borrow.

    Goldman paid $450,000 to settle the case without admitting or denying the accusations.

    Failing to borrow shares on behalf of customers is illegal because of concerns about market manipulation. But it can also leave a brokerage firm’s client who is short a stock dangerously exposed to an escalating price in the shares. If a stock shorted by an investor began to trade higher and the shares were not borrowed, closing out the transaction would require the fund to buy them in the open market. That could propel the already rising price of the shares even higher, adding to the costs of the trade.
    Instead, he said, he suspected that Goldman had never borrowed the shares for Copper River’s short positions and was trying to close out the trades to eliminate the problematic naked short positions. Because Goldman had a duty to borrow the shares, it could have risked regulatory questions about compliance, under Mr. Cohodes’s account.

  33. like the site, but there's a lot of hyperbole being thrown around here with the resource grab fear mongering. It's off putting, to say the least. This particular bill/order has been around for ages and from my quick research is nothing new.

  34. What was the price of the last ticket out of the weimar? As more people woke up, the higher the ticke price went. Now the vehicle isn't a plane or passenger ship to a safer country but gold and silver in the trip through the brave new future. when the last ticket is scalped, that is it for getting out.
    Got yours?