Plundering the Public Purse

I have found this great article on the bank crisis, you really must read it.

As the global financial crisis unfolds, one thing is certain: The major investment and commercial banks who have wrecked our economy and financial system are now successfully sucking unlimited amounts of money from the people’s Treasury to bail themselves out.

Drooling at the head of the line are Bear Stearns and JP Morgan Chase. There will be more. 

In simple terms, Bear Stearns, the fifth largest U.S. investment bank, got caught in a massive bank run……

……the Fed becomes the lender of last resort, and the Treasury guarantees payoff even in the case of default.

But, Bear Stearns is NOT a bank and NOT a member of the privately-owned Federal Reserve. And since the Fed can only lend cash directly to member banks, it channeled funds through surrogate JPMorgan Chase, to purchase Bear Stearns and guarantee its continued operation.

What a sweetheart deal for JPMorgan Chase: It literally stole the company for a mere $2 per share or a total of about $250 million. The Bear Stern headquarters building alone is worth at least a billion dollars. Its stock traded as high as $170 just over a year ago.

So, Bear Stearns gets bailed out at no risk to JPMorgan Chase, and JP Morgan Chase gets to add windfall assets to its own balance sheet. …….

…..Americans aren’t going to take this much longer.

Social mood is visibly turning just as certainly as a San Francisco cable car on its turntable at the end of the line.

A recent search on www.cnnfn.com for “Bear Stearns” produced these two sponsored ad links at the very top of the results page:

• “Bear Stearns Lawsuit: Lose Money in Bear Stearns Shares? Free Case Review”
• “Bear Stearns Employee? Did Company Violate Your Rights? Get into an ERISA Investigation”

This is just the tip of the iceberg. ……

Read the whole of this marvellous article here……

Are you mad yet?

You may find these days depressing — watching the value of your portfolio and possibly your home drain away, day after day, in this dismal market. But that’s really the wrong way to look at things. You shouldn’t be despondent. You should be furious.

Bear markets happen, but this bear market could have been easily prevented. We got here through rash speculation and atrocious judgment on the part of speculators, but guess who suffers? You. Your portfolio will take the hit, your savings will be ravaged by inflation, and your tax dollars will go toward cleaning up the mess.

Four groups are primarily responsible:

 Real estate speculators
Real estate speculators are the most obvious target, and they include everyone from “investors” to subprime borrowers who just wanted a home — basically, everyone who bought real estate but couldn’t truly afford it.

And speculation was truly out of control. In the first quarter of 2006, 26% of loans were of the interest-only or negative amortization variety. For a small group of knowledgeable borrowers, loans such as these made sense. But for more than a quarter of the market? No way.

You may argue that borrowers who couldn’t afford their payments should be absolved of blame, since they’re just victims of predatory lending. Yes, predatory lending definitely exists, but the bottom line is that it’s the borrower’s responsibility to understand the terms of the loan.

Mortgage originators
Of course, borrowers couldn’t have assumed ridiculous loans without the help of mortgage originators such as Countrywide Financial, H&R Block, and Merrill Lynch’s First Franklin unit.

The statistics are damning. In 2005 and 2006, 20% of all mortgages were subprime, and a further 12% to 13% were low-documentation Alt-A loans. What’s more, according to the National Association of Realtors, in 2005, the average first-time homebuyer made only a 2% down payment, a level that left no margin of safety for declining housing prices.

So a huge portion of the market consisted of high-risk loans. But why would conservative banks suddenly assume risks that they’d been avoiding up until then?

Ultimately, their necks weren’t on the line, because they wouldn’t keep the mortgages. Instead, they’d use investment banks such as Morgan Stanley and Lehman Brothers to securitize mortgages. In other words, they’d dump these junk loans on pension funds, hedge funds, and anyone else desperate for high yields. Sure, the buyers would end up owning questionable debt, but by then, the originators were on to the next deal. No skin off their noses.

Rating agencies
But mortgage securitizations couldn’t have gotten so out of hand without Moody’s  and other rating agencies giving asset-backed securities much higher ratings than they truly deserved and, thus, concealing the true risks.

Since 2006, hundreds of billions of dollars in securitizations have been downgraded to better describe the risks involved. For instance, in 2006, 76% of the Moody’s-rated dollar volume of securitizations that were backed by subprime closed-end second-lien loans were downgraded after “materially significant underperformance.”

Clearly, the original models the rating agencies used were horribly inaccurate. Though housing declines have been rare, at minimum the agencies should have considered this possibility before handing out AAA ratings. After all, when evaluating a company like Exxon Mobil  they wouldn’t assume that oil is certain to remain above $50 a barrel — even if it looks that way now.

 The Fed
At the end of the day, Alan Greenspan’s Federal Reserve holds a great deal of responsibility for this bust. All of the other players in this drama can claim, however feebly, that they were just trying to make money. The Fed, on the other hand, is nominally responsible for acting in the best interests of this country and guarding against anything that might destabilize the system. In reality the Fed is the most profit centric organisation of the lot!

However, Greenspan kept interest rates low for way too long. He didn’t recognize that the liquidity he pumped into the system was building a national housing bubble, even with prices up more than 70% in real terms over eight years. Or else he was working to his own agenda and not to that in America’s interest.

It’s baffling that the nation’s chief economist could look at facts like this graph, see housing equity at record lows, and not think that something was seriously wrong. But Greenspan is also the guy who said that there was “no evidence that home prices are going to collapse.”

Again, what agenda was he working towards? Certainly not towards the benefit of the millions of Americans who now face repossession and homelessness. Maximum profit for the Fed? I would say so…..

so are you mad yet? Mad enough to want to get out of the corrupt system that creates money from nothing and then asks you to repay it and more on top? You know you don’t want to support the unsupportable any longer. Join us and learn how to get out. 

Consumers feel the pain as mortgage rates continue to rise….

The credit crunch on Thursday forced three of the UK’s biggest lenders to tighten the supply of home loans and charge more for them in moves that are likely to put further pressure on the property market.

Millions of home loan borrowers now face higher interest rates as banks pass on higher wholesale funding costs as conditions worsen in money markets.

Home loans will also become harder to secure from Friday, even for those with unblemished credit records, as banks apply more stringent criteria to mortgage approvals and pull some competitive products to avoid being flooded by new applications.

More than 2.75m people will be hit when they come off any sort of mortgage deal this year – whether it is a tracker or fixed-rate deal.

Nationwide, the UK’s second largest mortgage lender, increased interest rates on one of its main products to deter new borrowers by making them less attractive. It will increase the cost of two-year mortgage tracker rates for new customers by 0.57 percentage points to 7.1 per cent and is increasing its fixed rate mortgages by 0.2 percentage points.

Cheltenham & Gloucester, part of LLoyds TSB, increased the prices of certain two-year tracker rates by about 30 basis points, as did IF, a subsidiary of HBOS.

The moves will be a blow to consumers who are due to refinance mortgages this year and face a sharp jump in monthly payments.

Jump ship from the titanic mortgage debacle, learn how you can break free from the banking system, cancel loans and create a real money income for yourself. Join us at the ultimate entrepreneur.

Are you in the right place for the right opportunity, right now?

You have the opportunity to be in the right place, at the right time!

Let me highlight why this is so important for you very quickly:

Never before has there been so much instability, uncertainty and chaos in the world. 

Look around, look at the change in the climate patterns.   Natural disasters are looming everywhere:  Stronger, more frequent hurricanes & tornadoes, flooding, droughts, people displacement, refugees and all the economic and political pressure that comes with that.

Political tensions are rife around the world.  Religious and racial tensions seem to be mounting.

Economic theories are being tested as markets dive and rumble while imbalances and extremes are stretching the limits of the systems trying to contain them and keep the repercussions restrained to a manageable level.   How long can it last?

Politically Big Brother is trying to convince the world that he has the answers, all you have to do is give up your rights and your property and you’ll be just fine !

You know enough about the wild world we live in.   I don’t have to belabor the point.

What does this have to do with  you or The Ultimate Entrepreneurs Club 

Everything.

The Ultimate Entrepreneur is a programme that was specifically created to help ordinary people like you and me learn some of the realities of this world, how it works and ultimately to use that knowledge and information to position yourself in such a way that you can be AN INDEPENDENT WORLD CITIZEN with the knowledge, the intellect, the professional resources, the financial resources and the economic wherewithal to be able to keep one step ahead of the next political, economic or financial disaster. 

And if it never comes, all the better !  You’ll be three steps ahead of ‘the crowd’ in any event. 

The Ultimate Entrepreneur is a doorway giving you access to new ways of doing business, of surviving economically and getting ahead financially and mostly associating with a circle of financial and lifestyle afficionados who are walking the walk and who can show you how to always be ‘in the right place at the right time, no matter what happens ! 

Stage 1 is an entry level program that anyone can do to at least get started on the path to personal independence.  It is a way to merely get started on the path and it will lead you to more things of interest and value as your progress. 

This is your chance to be at the right place at the right time…. Join us.