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Greenspan Says Housing is Nowhere Near Bottom
It’s amazing how different it is when you’re the Chairman of the Federal Reserve, as opposed to being the retired Chairman of the Federal Reserve. Ben Bernanke, the current Chairman of the Fed, says of the economy, that there is “unusual uncertainty”. He’s not sure about anything, this guy. It’s funny because he was sure that the “sub-prime crisis” was a sub-prime crisis and that it would contained to the sub-prime sector… and none of that was correct. It was never a “sub-prime crisis,” and it certainly wasn’t contained to anything but planet earth.
June 20th, 2007 – Bernanke: The fallout from the housing markets will not affect the economy overall.” He was sure that it would not be appropriate for the Federal Reserve to bail out the banks: October 15th, 2007 – Bernanke: “It is not the responsibility of the Federal Reserve – nor would it be appropriate – to protect lenders and investors from the consequences of their financial decisions.” He said things about unemployment that have never been even close to correct, underestimating it for at least 11 months straight by six figures, or very close… I stopped counting after that. June 9th, 2008 – Bernanke: “Despite a recent spike in the nation’s unemployment rate, the danger that the economy has fallen into a “substantial downturn” appears to have waned.” And about Fannie and Freddie, he was sure the two mortgage giants were safe and sound, like a bug in a rug… as my grandmother used to say. July 16th, 2008 – Bernanke: Freddie and Fannie will make it through the storm
and are in no danger of failing; they are more than adequately capitalized” Now, however, with a snowcapped mountain of evidence of our deflationary collapse staring him in the face, all he sees is “uncertainty,” and he calls that “unusual?” See… that’s not funny, that’s just sad.
Alan Greenspan is the retired Fed Chief, and he sees things much more clearly now that he’s no longer directly responsible for what the markets do when he sneezes. “We’re still nowhere near the bottom of the home price thing,” Greenspan told CNBC in an interview today. Asked about Fannie and Freddie, the two failed mortgage messes that like to threaten homeowners over strategically defaulting, Greenspan said the government had no choice but to take them over but he added that the government will probably have to nationalize the two companies, calling them a “major accident waiting to happen.” Don’t you love that… Ooopsie! Lookie who had an accident. Asked about whether we’ll slip back into a recession, which is a stupid question since we’ve never slipped out of the recession that started a couple of years back, he said: “I think we’re probably likely to go there. We’re right on the brink. And I would be more surprised if we didn’t than if we did, given the financial state.” He also pointed out that recent signs of slowing in the rest of the global economy is also a source of concern. Genius, the man is a genius. It’s truly awe inspiring, the way he’s got his arms around the whole global thing. These guys are really clown-like. In my mind, I keep seeing them all getting out of one tiny car.
Yes… it’s a long slide down… but make no mistake… that’s where we’re headed. Stay tuned, because I may not be able to save the country, but I can certainly try my best to help you. Mandelman out. FAQs: Currency LEGAL TENDER STATUS I thought that United States currency was legal tender for all debts. Some businesses or governmental agencies say that they will only accept checks, money orders or credit cards as payment, and others will only accept currency notes in denominations of $20 or smaller. Isn't this illegal? What are Federal Reserve notes and how are they different from United States notes? What are United States Notes and how are they diferent from Federal Reserve notes? I thought that United States currency was legal tender for all debts. Some businesses or governmental agencies say that they will only accept checks, money orders or credit cards as payment, and others will only accept currency notes in denominations of $20 or smaller. Isn't this illegal? The pertinent portion of law that applies to your question is the Coinage Act of 1965, specifically Section 31 U.S.C. 5103, entitled "Legal tender," which states: "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues." This statute means that all United States money as identified above are a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise. For example, a bus line may prohibit payment of fares in pennies or dollar bills. In addition, movie theaters, convenience stores and gas stations may refuse to accept large denomination currency (usually notes above $20) as a matter of policy. What are Federal Reserve notes and how are they different from United States notes? Federal Reserve notes are legal tender currency notes. The twelve Federal Reserve Banks issue them into circulation pursuant to the Federal Reserve Act of 1913. A commercial bank belonging to the Federal Reserve System can obtain Federal Reserve notes from the Federal Reserve Bank in its district whenever it wishes. It must pay for them in full, dollar for dollar, by drawing down its account with its district Federal Reserve Bank. Federal Reserve Banks obtain the notes from our Bureau of Engraving and Printing (BEP). It pays the BEP for the cost of producing the notes, which then become liabilities of the Federal Reserve Banks, and obligations of the United States Government. Congress has specified that a Federal Reserve Bank must hold collateral equal in value to the Federal Reserve notes that the Bank receives. This collateral is chiefly gold certificates and United States securities. This provides backing for the note issue. The idea was that if the Congress dissolved the Federal Reserve System, the United States would take over the notes (liabilities). This would meet the requirements of Section 411, but the government would also take over the assets, which would be of equal value. Federal Reserve notes represent a first lien on all the assets of the Federal Reserve Banks, and on the collateral specifically held against them. Federal Reserve notes are not redeemable in gold, silver or any other commodity, and receive no backing by anything This has been the case since 1933. The notes have no value for themselves, but for what they will buy. In another sense, because they are legal tender, Federal Reserve notes are "backed" by all the goods and services in the economy. United States Notes (characterized by a red seal and serial number) were the first national currency, authorized by the Legal Tender Act of 1862 and began circulating during the Civil War. The Treasury Department issued these notes directly into circulation, and they are obligations of the United States Government. The issuance of United States Notes is subject to limitations established by Congress. It established a statutory limitation of $300 million on the amount of United States Notes authorized to be outstanding and in circulation. While this was a significant figure in Civil War days, it is now a very small fraction of the total currency in circulation in the United States. Both United States Notes and Federal Reserve Notes are parts of our national currency and both are legal tender. They circulate as money in the same way. However, the issuing authority for them comes from different statutes. United States Notes were redeemable in gold until 1933, when the United States abandoned the gold standard. Since then, both currencies have served essentially the same purpose, and have had the same value. Because United States Notes serve no function that is not already adequately served by Federal Reserve Notes, their issuance was discontinued, and none have been placed in to circulation since January 21, 1971. The Federal Reserve Act of 1913 authorized the production and circulation of Federal Reserve notes. Although the Bureau of Engraving and Printing (BEP) prints these notes, they move into circulation through the Federal Reserve System. They are obligations of both the Federal Reserve System and the United States Government. On Federal Reserve notes, the seals and serial numbers appear in green. United States notes serve no function that is not already adequately served by Federal Reserve notes. As a result, the Treasury Department stopped issuing United States notes, and none have been placed into circulation since January 21, 1971. Understanding the Financial Demise! From the desk of:Jim Sinclair Dear Comrades In Golden
Arms, Please read the following. I consider this one of the most important viewpoints given to you since this endeavour began seven years ago. I am totally disgusted that the world we live in welcomes, maybe even cherishes, lies when they benefit from those lies. It is possible that the number of broken banks in the USA and elsewhere are comparable to the number of broken banks in 1930. FASB capitulated to lobby pressure and legislative threats to cancel Fair Value Accounting. Read the following article. Lying and kicking the can down the road only turns a simple can to a nuclear device. The financial industry has been given the blessing of their regulators, FASB, to publish false and misleading balance sheets and income statement. God help us all. At least Sodom and Gomorra had some fun in their last days. Financial Sodom and Gomorra have been invited and are being blessed by those we have put our trust in to maintain ethics. Fabrication is economic sin and therefore cannot cure our problems but lead us into a form of damnation economically. If you, like yesterday, were thinking of throwing out your insurance because paper gold can be manipulated, do so, but do not break my chops. What you see below is as prevalent in major banks as it is in regional banks. How much is your bank overvaluing their assets by? Dear Jim, Last Friday, July 16, 2010, the FDIC announced six more bank failures, making the total 96 so far this year. These were relatively small banks. Collectively, they had assets of $2.03 billion and deposits of $1.78 billion. The FDIC's estimated cost of closing these six banks was 334.8 million, about 19% of deposits. All six were resolved with the FDIC entering into loss share agreements covering a high percentage of the assets taken over by the successor banks. In connection with these closings, the FDIC entered into new loss-share agreements covering an additional $1.5 billion in assets. That brings the FDIC's total losses for 2010 up to $18.11 billion. The total face value of assets now guaranteed under FDIC loss share agreements has grown to $178.66 billion. Each failure announcement allows us a peek into how extensively bank management have been exaggerating the value of their least liquid assets since the FASB's roll-back last year of fair value accounting requirements. The worst offenders from the past week were as follows: Main street Savings Bank, FSB, had stated assets of $97.4 million and deposits of $63.7 million. The FDIC estimated its closing cost $11.4 million. Based on that estimate, the bank's assets were really only worth $52.3 million, and had been overvalued by 86%. Turnberry Bank of Aventura, Florida, had stated assets of $263.9 million and deposits of $196.9 million. The FDIC estimated its closing cost $34.4 million. Based on that estimate, the bank's assets were really only worth $162.5 million, and had been overvalued by 62%. Woodlands Bank of Bluffton, South Carolina, had stated assets of $376.2 million and deposits of $355.3 million. The FDIC estimated its closing cost $115 million. Based on that estimate, the bank's assets were really only worth $240.3 million, and had been overvalued by 57%. Metro Bank of Dade County of Miami, Florida, had stated assets of $442.3 million and deposits of $391.3 million. The FDIC estimated its closing cost $67.6 million. Based on that estimate, the bank's assets were really only worth $323.7 million, and had been overvalued by 37%. Keep in mind that since the FDIC is resolving all these failures by way of granting loss share agreements, the assumed value of each failed bank's assets is being skewed to the upside. Were the assets being sold without any future obligation on the FDIC's part the prices realized would be much lower and the extent of overvaluation much higher. Respectfully yours, CIGA Richard B. Without Hoopla, Fair-Value Rule Is ReadiedAmong the ripple effects of the global credit crisis is the rewrite of the controversial fair-value accounting rule once known as FAS 157. The revised standard could be in place by the end of the year.Marie Leone - CFO.com | USJuly 20, 2010 The debate over one of the most controversial accounting standards in recent memory is coming to a somewhat anticlimactic end. The rule once known as FAS 157, which tells companies how to measure the fair value of assets and liabilities, has been rewritten and rechristened Topic 820. Now in final draft form, Topic 820 is open to comment until September 7. Since the onset of the financial crisis, banks and their lobbyists have gone head-to-head with the Financial Accounting Standards Board and the International Accounting Standards Board, arguing against any rule changes that would increase the volatility of asset values — or worse, depress the book value of financial assets while the market recovered. FAS 157, which went into effect in 2009, was caught up in the debate and frequently vilified as a major cause of bank liquidity problems. Yet in retrospect, the controversy seems misplaced. FAS 157 did not change what companies measured at fair value, or when they needed to apply fair-value accounting. Indeed, those mandates are part of other accounting standards (most notably the reworked rule on financial instruments). Instead, FAS 157 laid out a common methodology for measuring the market value of assets and liabilities. The revised rule will affect more than just banks and other financial institutions that routinely measure the fair value of financial instruments, says Greg Forsythe, a valuation specialist at Deloitte Financial Advisory Services. All companies with accounts required to be measured at their fair value are fair game for Topic 820 — although the depth of that impact is relative to how much of a company's accounting is centered on fair value. Nonfinancial companies involved in acquisitions, for example, will have to rework some calculations and disclosures related to goodwill-impairment testing if the rule is issued in its current form, notes Forsythe. Most experts agree that the measurement guidance contained in Topic 820 does little more than clarify existing rules. But the disclosure provisions will undergo one big change related to so-called Level 3 assets and liabilities, the most difficult kind to measure. (Unlike Level 1 holdings, which can be measured using quoted prices in active markets, and Level 2 holdings, which are valued based on "observable inputs" such as quoted prices in similar markets, Level 3 items are illiquid assets and liabilities that must be valued using internal models and "unobservable inputs.") Topic 820 requires more disclosures around the measurement of uncertainty with respect to Level 3 assets and liabilities, says David Larsen, a managing director at Duff & Phelps, a financial advisory firm. Specifically, if the fair value of an item changes significantly when a different — but just as "reasonable" — input is used in the calculation, then the alternative fair value and input must be disclosed in the financial statements. Such modeling is often used, for instance, when it makes sense to plug in different growth rates or discount rates in discounted cash-flow calculations. FASB recommends using a table format to display alternative inputs and changes in fair value. As the economy improves, markets will revive and there will be fewer Level 3 assets and liabilities, predicts Forsythe. "To a large extent, this whole concept of Level 3 didn't exist until the credit crisis hit, because there was always a market to mark to," he says. The Topic 820 draft also cleans up some language in FAS 157, but the tweaks should not have an impact on the actual measurement of assets, says Forsythe. For example, the draft now states more clearly that under certain circumstances, companies will be permitted to measure financial assets and liabilities that are managed together in a portfolio on a net basis, rather than measuring the fair value of each instrument on a gross basis. The net measurement tends to be common practice among banks, but its usage parameters are not spelled out in the current rule. Similarly, the language referring to an asset's "highest and best use" has been tidied up, making it clear that the phrase, which comes from the real estate industry, is "relevant only when measuring the fair value of nonfinancial assets." In addition, this time around, FASB is definitive about banning the use of "blockage discounts" to calculate the fair value of big chunks of stock. Instead, the draft rule clearly instructs companies to use the stated price of the stock at the time of the trade, multiplied by the number of shares, to determine the fair value. Meanwhile, the draft of a similar fair-value rule has been released by the IASB and is scheduled to be issued in its final form at about the same time FASB releases the definitive version of Topic 820 (no later than early 2011). The IASB is in the same boat FASB was in before it released FAS 157, since previously all references to fair-value calculations were contained in other international standards. Given that the U.S. and international proposed rules are so similar, they are particularly well suited for accounting convergence, notes Larsen. Watchdog: Small banks struggling despite bailoutsBailouts designed for Wall Street may be hurting small banks, stalling recovery, watchdog says, On Wednesday July 14, 2010, 12:04 am WASHINGTON (AP) -- To the list of economic woes squeezing small banks, add another one: government bailouts. The Treasury Department's bailout program was designed with Wall Street megabanks in mind, according to a new watchdog report. The "one-size-fits-all" program may actually be hurting small banks that are struggling to repay the money or even deliver quarterly dividend payments, the report says. The main bank bailout program anticipated banks springing back from the crisis and raising fresh funds to repay the government, the report says. That's exactly what happened to most of the big banks that took the most bailout money. Yet small banks continue to struggle, dragged down by souring loans for commercial real estate and high unemployment. Hundreds more small banks are expected to fail by the end of next year. The 690 small banks that took bailout money are even worse off, according to a report Wednesday from the Congressional Oversight Panel, which monitors the $700 billion financial bailout. Already, one in seven has failed to pay a quarterly dividend due to Treasury. They can't afford the payments, which will nearly double in 2013. That's troubling because small banks' crucial role in lending to small businesses and supporting economic recovery, said Elizabeth Warren, who chairs the panel. The program "was not intended as a bailout for Wall Street," said Warren, who also is a professor at Harvard Law School. "It was intended to support ... homeownership, retirement savings and banks across the country." Warren said the bailout bill, known as the Trouble Asset Relief Program, did stabilize the financial system. But she said that was only one of the program's goals. She said efforts to boost lending and support consumers have been less successful. "There is very little evidence to suggest that the (bailouts) led small banks to increase lending," the report says. In the end, that could mean that the biggest banks get even bigger, the report says. Dozens or hundreds of bailed-out banks could collapse or consolidate because they can't afford their obligations to taxpayers, it says. That would leave the handful of biggest banks with an even larger share of the banking system. "The result could be that 'too big to fail' banks grow even bigger," Warren said. Treasury spokesman Mark Paustenbach disputed the findings, saying in a statement that the bailouts helped many of the banks "weather the storm and continue to extend credit in the economy." The Congressional Oversight Panel was created by Congress to report on whether the bailouts are meeting their goals. The law also requires regular audits by the Government Accountability Office and creates a special inspector general to investigate fraud and other problems. We have the solution for these Banks! Our protocol BT40 will solve all their problems and allow them to fluorish, help us, help them by contacting them with this article, maybe they will see themselves and respond to BT45 which is on the "Third Party Info" link. The "Nelson Law Firm" Press release needs to be shared with every Bank on the planet!
Jim Sinclair says that: Whatever OTC
derivatives do not do to the investment banks, litigation will. Litigation is both civil and criminal. No civil
suit based on derivatives can ever go to judgment by jury because it will be a stone cold loser. Even a bench trial
would present significant risk to the defendant. May 27 (Bloomberg) -- Lehman Brothers Holdings Inc. sued JPMorgan Chase & Co. to recover tens of billions of dollars in “lost value,” accusing the bank of precipitating its downfall and preventing it from winding down in an orderly fashion. JPMorgan, which was Lehman’s main short-term lender before its September 2008 bankruptcy, helped cause the failure by demanding $8.6 billion of collateral as credit markets tightened during the financial crisis, Lehman said in a complaint filed yesterday in U.S. Bankruptcy Court in New York. “On the brink of LBHI’s bankruptcy, JPMorgan leveraged its life and death power as the brokerage firm’s primary clearing bank to force LBHI into a series of one-sided agreements and to siphon billions of dollars in critically needed assets,” Lehman said in the complaint. Lehman, once the fourth-biggest investment bank, has said it may spend another five years selling assets to pay unsecured creditors as little as 14.7 cents on the dollar. Any money recovered through lawsuits may increase the payout. “The lawsuit is ill conceived, and the costly litigation will cause a further drain on the limited resources available to the Lehman bankruptcy estate,” said Joe Evangelisti, a JPMorgan spokesman. The lawsuit follows a report by Lehman examiner Anton Valukas, who said in March that Lehman might have grounds for suing JPMorgan and other banks. Lehman said JPMorgan’s top managers took advantage of privileged information they gained as Lehman’s primary clearing bank to “capitalize” on a Lehman bankruptcy. Dimon Meetings JPMorgan Chairman Jamie Dimon knew from meetings in Washington with Federal Reserve Chairman Ben Bernanke and former U.S. Treasury Secretary Henry Paulson that the U.S. wouldn’t rescue Lehman and decided to “accelerate” the bank’s efforts to gain more collateral from Lehman, according to the complaint. JPMorgan gained extra collateral from Lehman in part by threatening to stop providing clearing services that were the “lifeblood” of the Lehman brokerage and other affiliates, according to the lawsuit. Lehman said JPMorgan put a “financial gun” to its head and gave the already insolvent investment bank nothing in return for the collateral. Lehman said in the complaint that from Sept. 9 to Sept. 11 in 2008 it posted $3.57 billion in cash and money-market funds as collateral. On the night of Sept. 11, JP Morgan demanded an additional $5 billion, which Lehman delivered the next night. Total Collateral The total $8.6 billion in collateral “rightfully” belongs to defunct Lehman and its creditors, Lehman said. In addition, it seeks unspecified damages, according to the complaint. “As the examiner’s report makes clear, it was the ill- advised decisions of Lehman itself and its principals to take on perilous leverage and to double down on subprime mortgages and overpriced commercial real estate, and not any conduct by JPMorgan, that led to Lehman’s demise and the enormous losses to its various constituents,” Evangelisti said. Lehman also has sued Barclays Plc, which bought its bankrupt brokerage, alleging the British bank made an $11 billion “windfall” on the deal. A trial of that suit is due to continue next month in bankruptcy court. Lehman filed the biggest bankruptcy in U.S. history with assets of $639 billion. It has paid its lawyers and managers $794 million in 19 months, according to a regulatory filing. Creditors include Goldman Sachs Group Inc., UBS AG, the New York Giants and Abu Dhabi Investment Authority as well as individuals who hold Lehman bonds. The case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan). To contact the reporters on this story: Linda Sandler in New York at lsandler@bloomberg.net; David McLaughlin in New York at dmclaughlin9@bloomberg.net. Last Updated: May 27, 2010 00:01 EDT Banks vulnerable as 'rotten' foundations crumble! From CNN's Richard Quest (CNN)-- From pubs in London to bars in New York, everyone is asking the same question: Why is this financial crisis different? The answer is simple albeit not sexy. The rot has set in! Traders will continue to feel the strain until the world's investment banks can restore the loss of confidence. The world's investment banks are basically houses built on pillars of money. Sometimes those pillars are cash, often revenue sharing obligations; these days pillars are made up of derivatives, swaps, options and other frighteningly complex instruments. But these pillars are the strength that supports not only the bank itself, but also its debts and liabilities. Under technical rules the pillars have to be transparent and of a certain quality, so that investors know just how well propped up the bank is. In layman's terms -- everyone can tell "the bank is safe!" If the pillars remain strong -- the bank stays standing. What has happened is that the rot has got into the pillars and no-one noticed. If they were wooden it would be worms. The very financial instruments that make up the core of the banks are questionable. No-one can say for certain how much these instruments are worth, if anything. No-one knows if counter parties to deals are financially secure and will be around tomorrow. The very structure upon which banks like Lehman depended became doubtful. If this was happening to just one or two banks then it would be a "nasty business." But it is happening to all the banks -- at once. The major names have all been taking on these dodgy instruments and are all now seeking better quality investments and cash. And of course those with the cash want to keep it to themselves, in case they need it -- hence the term credit crunch. Often during a period of financial turmoil there are clearly definable events -- oil crises, war, acts of terror -- which cause a loss of confidence which leads to a slowdown and possibly a recession. But the infrastructure of the banks remains by-and-large solid. The pillars remain standing. Here the exact opposite is happening. Every event merely puts dodgy pillars under more strain and eventually they give way. This is what links today's crises with those of the past: 1929 Wall Street Crash; 1970's Oil Crises; Black Monday, 1987; the Dot Com bubble bursting in 1998. In all cases it wasn't just a turn of the economic cycle gone wrong, it was a problem at the very core of the financial system which in size and scale meant everyone was affected and from which no-one escaped. How will this play out? Badly! Until the financial pillars can be rebuilt then there is little anyone can do but watch some banks get rescued, while others collapse completely. End quote Forclosure Alley CA = unbelievable!12 minute video please watch!http://www.kcet.org/socal/2008/09/foreclosure-alley.html Unbelievable amount of foreclosures in California and what people leave behind that goes to the landfill!! SOLUTIONS ARE AVAILABLE... NOW! From the above report one might conclude that the financial pillars cannot be “patched up”… Rather, they must be rebuilt. Efforts over the last few days by governments are laudable, but (in effect) printing more money to throw into the situation might create an even greater risk. That is, if the new pile of “paper” doesn’t smother the flames, it may ignite and carry the firestorm right back up-line to burn down the “printing press”! At best, even if visible flames are smothered, smoldering should be expected to continue until a new outbreak takes place. The problem is that, for world currencies to function properly, they were detached from real-world back in 1971 when President Nixon took the USD off the “gold standard”. As long as monetary transactions continued to be played out primarily in commercial markets, that was a good thing – commerce provided the base, finance was a means of interchange. But, once financial markets began to far overshadow commerce, inflated values of money, revenue sharing obligations, and stocks should not have been expected to carry the weight when real world crises show up. Here is the real crisis! Saturday, April 03, 2010 So, we are where we are and where can we go from here? Please read and watch the "Story of Stuff" as it will give you the complete problem we are facing worldwide! Yes we have solutions for every aspect of this linear system so come join with us and start your re-education in the "New Economic Model" NOW!
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