Are you a C-SPAN addict? Me neither. It is the truly desperate soul who pauses during a channel surfing session on a C-SPAN channel of some boring Congressional proceeding. Who wants to watch a bunch of arrogant stuffed-shirt elitists argue with one another in a series of one boring speech after another?
Ah, but every now and then something of significance actually happens – and when such a once-in-blue-moon event occurs – C-SPAN is there to capture the action.
Such a moment occured when Florida Republican Rep. Alan Grayson questioned Barack Obama’s arse-smooching Federal Reserve Chairman Ben Bernanke.
This is by no means an official transcript, but it does reflect the sense of part of the exchange. Every American should watch it to learn just how screwed up our “experts” have made our system:
Grayson: I would like to direct your attention to page 26 of the report you handed out this morning which consists of your balance sheet. And one of the entries on your balance sheet under assets is central bank liquidity swaps which shows an increase from the end of 2007 from $24 billion to $553 billion and change at the end of 2008. What’s that?
Bernake: Those are swaps done with foreign central banks. Many foreign central banks are short dollars, and so they come into our markets looking for dollars and drive up interest rates and create volatility in our markets. What we’ve done is create a swap: we buy their currency and they buy ours. That lowers interest rates across the globe. They take the dollars, lend it out to the banks in their jurisdiction, and that helps bring down interest rates in the global market for dollars and meanwhile we’re not lending to those banks, we’re lending to the central banks; the central bank is responsible for repaying us.
Grayson:So who got the money?
Bernake: Financial institutions in Europe and other countries.
Grayson: Which ones?
Bernake: I don’t know.
Grayson: Half a trillion dollars and you don’t know who got the money?
Bernake: Uh, the loans went to the, the loans go to the central banks and they, uh, they put them out to their, uh, to their institutions to try to bring down short term interest rates in financial markets around the world.
Grayson: Well let’s start with which central banks got the money.
Bernake: They’re 14 of them which are listed, um, in our, i’m sure they’re listed in here somewhere.
Grayson: Who actually made that decision to hand out half a trillion dollars that way?
Bernanke: The Federal Open Market Committee.
More…
Grayson: All right. We actually looked at one of the arrangements and one of the arrangements is 9 billion dollars for New Zealand. That works out to $3000 for every single person who lives in New Zealand. Seriously, wouldn’t it have been better to extend that kind of credit to Americans than New Zealanders?
Bernake: It’s not costing Americans anything, we’re getting interest back and it comes back, not at the cost of any Amercian credit. We are extending credit to Americans, too.
Grayson: Well, wouldn’t it necessarily affect the credit markets if you extend half a trillon dollars in credit to anybody?
Bernake: We are lending to all US financial institutions in exactly the same way.
Alan Grayson: Well, look at the next page, the very next page has the US dollar nominal exchange rate which shows a 20% increase in the US nominal exchange rate at exactly the same time that you were handing out a half a trillion dollars. You think that’s a coincidence?
Bernake: Yes.
Alan Grayson (Breaks out laughing at the sheer absurdity of Bernanke’s calculated refusal to acknoweldge the obvious no matter how obvious it is…).
Watch the video and pass it along:
The purpose of this is not merely to slam Democrats. George Bush wanted to do the most massive financial bailout in history – and while Democrats provided the MOST support for the $700 billion Bush-Paulson TARP bailouts – Republicans supported it too. Enraged House Republicans voted down the measure after Nancy Pelosi used the opportunity to politically demagogue them, but enough of them ended up supporting the bailout plan. Ultimately two-thirds of Democrats and one-third of Republicans voted to pass the measure. John McCain supported it as a presidential candidate right along with Barack Obama. And we have been throwing billions and even trillions of dollars around ever since.
Republicans were wrong. Democrats were far more wrong, of course, because they are always far more wrong. But Republicans should have put their foot down to prevent the financial-whiz-kid takeover of our entire political and economic system.
Something is incredibly sick with our system, because somehow that $700 billion TARP bailout has morphed into a $23.7 TRILLION TARP bailout, as the special inspector general for the Treasury’s Troubled Asset Relief Program, Neil Barofsky, recently made public.
And Barack Obama’s and Turbo-Tax Tim Geithner’s Treasury Department – caught red-handed spending and loaning FAR more than they ever should have been allowed to spend and loan – managed to turn the issue into a quibbling over just how much money we could theoretically lose at one time. When the bigger question was, “Just how does an authorization of $700 billion become an authorization for $23.7 trillion?”
The difference between Democrats and Republicans at this point is that Republicans – who now openly admit they spent too much when they were in power – have wised up. Meanwhile, Democrats who attacked “dangerous” and “irrepsonsible” federal spending under Bush have taken “dangerous” and “irresponsible” to levels never before even dreamt of. Democrats are utterly determined to keep up the insane spending spree until we are utterly imploded with debts even our children’s children’s children’s children’s children will never be able to hope to repay.
Since TARP, Obama has passed a $3.27 trillion stimulus that didn’t stimulate, a 9,000 earmark-laden $410 billion omnibus bill, and a $3.55 trillion federal budget that adds more to the debt than all previous US presidents from George Washington to George W. Bush – combined. And even as we play aound with $2 trillion more for health care “reform” and throw billions of dollars more into “Cash for Clunkers,” there’s no sign that we are on any kind of slowdown as we race toward the economic cliff ahead.
We are experiencing a sickness that might well be epitomized by Vice President Joe Biden’s statement: “We have to spend money to keep from going bankrupt.” They are the words of a fool – and yet fools are now in total charge of our country as they pursue their fools’ agenda.
They want to play their political power games, rewarding their political allies and punishing their political opponents. They want to stay in power forever. They want to sit in their offices with their staffs and their benefits and their various fiefdoms. They don’t want to protect the United States from calamity. They somehow think that America is eternal and can never be defeated or destroyed. They’re going to be in for a great wake-up call – and the nation right along with them – when it all goes to hell due to their insane lack of responsibility.
Tags: $23.7 trillion, $24 billion, $3.27 trillion, $410 billion, $553 billion, 20% increase in the US nominal exchange rate, bailout, Bernanke, C-SPAN, central bank, coincidence, Democrats, federal budget, Federal Reserve Chairman, George Bush, Grayson, half a trillion dollars, liquidity swaps, Nancy Pelosi, Omnibus, Republicans, short term interest rates, So who got the money?, stimulus, TARP
Start Thinking Right 
August 5, 2009 at 2:29 pm
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In my Tract The Age of Turbulence: Plea for a New Economic Order, I explain the nature and causes of economic depressions.
In fluid dynamics, turbulence or turbulent flow is a fluid regime characterized by chaotic, stochastic property changes. This includes low momentum diffusion, high momentum convection, and rapid variation of pressure and velocity in space and time.
A Turbulence is a Chaotic, Discontinuous State of a Liquid. It Owns Most of the Proprieties of Keynes’ Liquidity Trap.
It proves that after the inflation of the Mother of all Asset Price Bubbles the ominous fate of this economy is Keynes’ Liquidity Trap.
Its consequences are a new, bigger Crash causing, this time, a Real Great Depression II.
That bipolarity of the Market is the problem: any irrationally exuberant person, as any psychiatrist would tell, is unable to understand that he is irrational and that he will necessarily fall in a deep depression. He just doesn’t want to hear the warning no matter how many times he had the experience.
What do we do Before The Crash?
My Strategy: Preparing for the Crash, The Age of Turbulence. answers that question.
Using the yield curve as a predictor that strategy covers Treasuries, Corporate Bonds, Minerals (Oil, Precious Metals and Base Metals.) and Stocks.
Its aim is to profit from both the Asset Price Bubble and Irrational Exuberance and The Crash and Economic Depression that will necessarily ensue.
It tries, and for the time being very profitably, to accomplish Alan Greenspan Mission Impossible:
“That is mission impossible. Indeed, the international financial community has made numerous efforts in recent years to establish such oversight, but none prevented or ameliorated the crisis that began last summer.
Much as we might wish otherwise, policy makers cannot reliably anticipate financial or economic shocks or the consequences of economic imbalances.
Financial crises are characterised by discontinuous breaks in market pricing the timing of which by definition must be unanticipated – if people see them coming, then the markets arbitrage them away.”
….
The clear evidence of underpricing of risk did not prod private sector risk management to tighten the reins.
In retrospect, it appears that the most market-savvy managers, although conscious that they were taking extraordinary risks, succumbed to the concern that unless they continued to “get up and dance”, as ex-Citigroup CEO Chuck Prince memorably put it, they would irretrievably lose market share.
Instead, they gambled that they could keep adding to their risky positions and still sell them out before the deluge. Most were wrong.”
Alan Greenspan
The Age of Turbulence: Adventures in a New World [Economic Order?].
That Strategy Will not Any More be Available to the General Public as of September 1st, 2009. However the Members of My Networks Will Still Have Access to It & Will be Regularly Updated. Join My Networks Now!
The Yield Curve – Plea for a New Economic Order.
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But what do we do After The Crash?
I propose a plausible alternative solution to the Depression: I designed a System that will allow us, when The Crash will come, to get out of Credit Based Free Market Economy, Capitalism, and transfer to my Adjusted Credit Free, Free Market Economy and Abolish the FED:
To participate in our New Economic Order you need to Enter Your €5 in the Public Cra$h R€gi$t€r Before The Crash – It is Fr€€!..
I.10.82
“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.
It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice.
But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.
I.10.83
A regulation which obliges all those of the same trade in a particular town to enter their names and places of abode in a public register, facilitates such assemblies. It connects individuals who might never otherwise be known to one another, and gives every man of the trade a direction where to find every other man of it.
I.10.84
A regulation which enables those of the same trade to tax themselves in order to provide for their poor, their sick, their widows and orphans, by giving them a common interest to manage, renders such assemblies necessary.”
Adam Smith
June 5th, 1723 – July 17tn, 1790
An Inquiry Into the Nature and Causes of the Wealth of Nations.
Inequalities Occasioned by the Policy of Europe.
March 9th, 1776
The Tract Will be Published on September 17tn, 2009. It Will be Withdrawn from the Internet on September 1st, 2009. Buy The Tract Now!
You will certainly enjoy my popular articles:
Ron Paul vs. Bernanke.
Ben “Systemic” Bernanke.
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August 7, 2009 at 9:37 pm
Quite interesting, theyields.
I have to admit that prior to the election of Barack Obama, I viewed Ron Paul as kind of a nut. Part of that was his appearance and his high screeching voice; part of it was the fact that his ideas – even though they had a substantial ring of truth to them – seemed like far-fetched impracticable delusions. The cork was out of the bottle, and it seemed impossible to force the genie back in.
As we face the sheer extent of the fiscal nightmare that is coming, the idea of returning to a gold standard, and of returning to a truly founding-fathers-understood constitutionally-bound country, makes more sense than any other alternative.