Bangladesh: New York fed had ‘major lapse’ in $100M robbery

(Hat tip: KimR) - Bangladesh’s central bank has suggested the Federal Reserve Bank of New York had a “major lapse" in allowing hackers to transfer $101 million in transactions that it later flagged as suspicious, according to an internal document seen by Bloomberg. Read more at MSN.com Read More......

Paul in new push for 'Audit the Fed' bill

Sen. Rand Paul (R-Ky.) is fast-tracking his controversial "Audit the Fed" legislation as he pushes for a vote. --The Kentucky Republican, who is running for president, reintroduced the legislation this week, with the proposal being fast-tracked on the Senate floor Wednesday.

Read more at The Hill
(Hat tip: KimR) Read More......

Janet Yellen Just Got Some Pretty Bad News

Two days after the Federal Reserve released what was allegedly its most hawkish statement in months came a reminder that the path toward a rate hike won't be an easy one. One of the main economic factors for Fed officials when it comes to assessing the right time to start hiking rates is wage growth, tied with the consumer spending that is supposed to follow. There was bad news on both fronts in economic data released Friday morning. The big releases of the day were on personal income, which increased just 0.1% in September, missing even the meager consensus estimate of 0.2%, and the University of Michigan consumer confidence survey, which, at 90, whiffed as well with its second-lowest reading of the year.

Read more at CNBC
(Hat tip: KimR) Read More......

Buried in the Fed minutes is another downgrade to the U.S. economy

A goal of a 4% economy? That objective, mentioned frequently in the 2016 presidential race, is getting farther away, according to the latest projections from the staff of the Federal Reserve. --Minutes of the Fed’s Sept. 16-17 policy meeting disclose the Fed staff further trimmed its assumptions for the rates of productivity and potential growth over the medium term. The minutes did not specifically quantify the new forecast of the Fed’s in-house economists.

Read more at Marketwatch.com
(Hat tip: KimR) Read More......

Fed Chair: ‘Deficits Will Rise to Unsustainable Levels’

Federal Reserve Chairman Janet Yellen, referencing the Congressional Budget Office's long-term budget projections, told the Joint Economic Committee of Congress today that under current policies the federal government’s deficits “will rise to unsustainable levels.”

In the 10-year budget projections it released in April, the CBO estimated that the federal government will run $7.618 trillion in deficits from 2015 through 2024. At the same time, the CBO projected that the federal government’s debt held by the public would rise from $11.983 trillion at the end of fiscal 2013 to $20.947 trillion by the end of 2024.

Read more at CNS News Read More......

The Fed Is Not Printing Money, It's Doing Something Much Worse

The Federal Reserve’s seemingly endless program of quantitative easing (QE) begun under Ben Bernanke, and continuing at a slightly slower pace under Janet Yellen, has some of the punditry and much of the electorate up in arms. With good reason.  Implicit in quantitative easing is the horribly obtuse notion that central banks can produce real economic growth through their monetary machinations. If only life were so simple.

Read more at Forbes
(Hat tip: KimR) Read More......

Undisclosed stress test shows FHA could lose $115 billion

The WSJ reported today (Tuesday, June 4) that the FHA had conducted a previously undisclosed stress test which found FHA losses could hit $115 billion under Federal Reserve bank stress test. FHA chose to not disclose the test’s results or... Read more: AEI Blog

Now, don't go feeling sorry for FHA... it's your money they're losing. --bc Read More......

The Educated Socialism of Obama

We generally do not post advertisements but I am doing so now, not for any financial recommendation, but for the historical and analogous information regarding our economy.  On 2/16/2013, Steve Sjuggerud's DailyWealth, a free email subscription, contained an article by Porter Stansberry, who did an excellent job of describing the perils of the economy and social ills we have been experiencing and are experiencing even more so now under President Obama. --bc

In Wednesday's essay, I laid out the "great lie" that is bankrupting America. ✧ At the heart of this lie – told by so many of our political leaders and believed by so many of my fellow citizens – is a horrifying turn of events. As I mentioned, the drive for freedom and a better life through hard work, saving, and independence has been replaced by a craven need for the illusion of security. ✧ Rather than trying to leave our children in possession of a better world – with more financial security – political leaders around the world now bicker about how to change the rules so that still more debt can be stacked upon their grandchildren. ✧ For an idea on how things will turn out, a few lessons from history are instructive...

The Spanish Empire destroyed itself by "finding" money, rather than by building industries. And the key to its temporary wealth was a single mountain in Bolivia, "Cerro Rico" – the Mountain of Riches.

At least, that's what the Conquistadors named it. In Bolivia, they call it "the mountain that eats people." Thousands of slaves died trying to satisfy Spain's lust for treasure.

In Cerro Rico today, silver is still mined by people making a few dollars a day using pickaxes in dust-filled shafts with no ventilation, no light, and no safety features of any kind. The 10,000 miners who work there every day toil under the constant fear that the entire mountain could collapse on them. After 400 years of unregulated mining, it's like Swiss cheese.

Bolivia's politicians use these conditions to demand more power and implement more socialism. Of course, it's the poverty caused by decades of socialism that actually prevents modern mines from being built.

Last month, Bolivia's current socialist strongman, Evo Morales, published his Ten Commandments Against Capitalism. He starts out broadly with No. 10…

Economic development must not be oriented to the market, to capital and to profit; development must be comprehensive and be oriented to human happiness, harmony and equilibrium with Mother Earth.

Then he gets to the real point…

We must free ourselves from that colonial bond called the External Debt, which serves only to blackmail us, to oblige us to hand over our assets and privatize our natural resources, and to destroy the sovereignty of peoples and states.

The colonial External Debt is the mechanism of exaction and impoverishment that afflicts the developing countries and limits their access to development. We call for canceling this unjust External Debt. No more inequality. No more poverty. It is time to distribute the wealth.

 These aren't just empty words, either. In June 2011, Morales nationalized the Toronto-listed South American Silver exploration firm, promising only compensation "later." Six weeks later, Bolivia decided that the compensation paid to the Canadians would be zero. Nada, zilch, nothing. Apparently, it was time to seize their wealth.

The people of Bolivia cheered this madness. As their reward… Bolivians will continue to work in some of the most dangerous and least-efficient mines in the world. Their real wages will continue to fall. That's because without capital investment, without savings, without property rights… without the responsibilities of capitalism… there will be no increase in wealth.

Bolivia's socialist policies will have the same economic effect as similar activities in Venezuela and Argentina… The black market rate for dollars in Venezuela is three to four times higher than the official exchange rate. In Argentina, the "blue" dollar rate is 50% more than the official rate.

The looming crisis in these countries interests us in two ways… First, because so much of the world's raw materials (including food and hard commodities, like metals) come from countries like these, a return to socialism will undoubtedly cause shortages and price spikes around the world.

But on a more important and deeper level, ask yourself, what's the real difference between Evo Morales and our current American political leaders?

President Obama and his puppet at the central bank, Federal Reserve Chief Ben Bernanke, are also calling for us to cancel our external debt. They're just saying it in a smarter way, calling it "quantitative easing."

And what's the real difference between what Morales advocates in his Ten Commandments Against Capitalism and what's happened in the U.S. over the past decade? First, President Bush granted free medicine to every retired American. Then, Obama pushed through "free" health care for everyone. In his State of the Union address, he labeled these benefits, plus Social Security payments, "civil rights."

That's pure madness. Rights are something you're born with as a human being. They describe what people can't do to you or take from you.

The government cannot guarantee you any benefit or service without first taking it from someone else. That's why the promise of socialism is merely the promise of plunder. Whether it will benefit you depends on where you stand. However, the nation as a whole cannot become wealthy through the plunder of its own citizens. This one fact explains why Argentina – which was the fifth-wealthiest nation in the world 100 years ago – now ranks 50th.

That's where we're headed. Make no mistake. By 2020, the costs of Social Security and Medicare alone will reach $2.5 trillion a year. That's more than the U.S. federal government collects in all forms of tax ($2.4 trillion) today.

The only things funding these programs are lies and taxes. We've been paying for these programs out of current revenues all along – just like convicted hedge-fund scammer Bernie Madoff used new money to create the illusion of returns for existing clients. There is no way we can afford these obligations without making them far more redistributive and increasing payroll taxes enormously. Obama says "of course" we need more taxes. And he's going to do everything in his power to levy them.

It's time to distribute the wealth, all around the world.

AT THIS POINT THE ARTICLE TURNS INTO A FINANCIAL RECOMMENDATION BUT THE INFORMATION IS STILL WORTHWHILE READING. --bc

The true costs of the world's return to socialism will strike the mining industry first. That's because mining requires immense capital investments over long periods of time. These mines are sitting ducks for politicians, who can tax them or nationalize them easily… all while the public cheers them on…

TAKE NOTE THAT STANSBERRY WRITES, "...THE WORLD'S RETURN TO SOCIALISM WILL STRIKE THE MINING INDUSTRY FIRST." OTHER INDUSTRIES WILL FOLLOW. --bc

But that greatly reduces existing supply and makes new supplies incredibly difficult to procure. In short, you can print money, but you can't print metals. And this explains the price spike in gold and silver over the last four years.

Still, all these precious metals do come from somewhere…

While we don't believe that mining companies are a good investment in the long run, they can be incredibly lucrative as short-term speculations. Politically driven market disruptions make mining stocks soar. That's why gold- and silver-mining companies have also long been thought of as crisis hedges – just like refined metal. And we're about to enter an extended – perhaps decades-long – period of unprecedented, politically caused market disruption.

That's why I'm encouraging my readers to buy precious metals like gold, silver, and platinum. Although these metals have appreciated in value over the past 12 years, they have much further to run.

Good investing,

Porter Stansberry

Further Reading: "The world's markets are beginning to go haywire," Porter wrote Wednesday. "You can see the signs everywhere… And the best way to protect yourself from catastrophe is to benefit from the same policies that are causing it." Get the details here: The Great Lie That Will Bankrupt America.

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Ron Paul on QE3

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June: US jobs data triggers share price slip

7/6/2012 - US shares have fallen after official data showed firms had created only 80,000 new jobs in June, leaving the jobless rate unchanged at 8.2%. ✧ Job creation remains below the 100,000 judged necessary by the Federal Reserve for a stable job market, according to the US Labor Department. ✧ President Barack Obama said the rise in employment was "a step in the right direction". Read more at BBCNews/Business... Read More......

VC: The Moral Hazard Effects of Current Economic Policy

Cassandra at VILLAINOUS COMPANY, 1/23/2012 - Robert Samuelson [Why the Fed Slept] explains how economic policies aimed at smoothing out the business cycle make the economy less stable in the long run:

Since the 1960s, the thrust of economic policy-making has been to smooth business cycles. Democracies crave prolonged prosperity, and economists have posed as technocrats with the tools to cure the boom-and-bust cycles of pre-World War II capitalism. It turns out that they exaggerated what they knew and could do.

There's a paradox to economic policy. The more it succeeds at prolonging short-term prosperity, the more it inspires long-run destabilizing behavior by businesses, banks, consumers, investors and government. If they think basic stability is assured, they will assume greater risks -- loosen credit standards, borrow more, engage in more speculation, relax wage and price behavior -- that ultimately make the economy less stable. Read more at Villanous Company...

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Audit of the Federal Reserve Reveals $16 Trillion in Secret Bailouts

This summer, I heard a brief newscast teaser stating that $16 Trillion was 'missing' with a reference to the Federal Reserve. I thought details would follow and expected a huge backlash but never heard more until Jean Nelson sent a link to the following article this evening. Jean wrote, "Ron Paul’s persistence has resulted in a tremendous expose of the Federal Reserve Bank." --bc

SILVER BEAR CAFE (via unelected.org), July 21, 2011 - The first ever GAO (Government Accountability Office) audit of the Federal Reserve was carried out in the past few months due to the Ron Paul, Alan Grayson Amendment to the Dodd-Frank bill, which passed last year. Jim DeMint, a Republican Senator, and Bernie Sanders, an independent Senator, led the charge for a Federal Reserve audit in the Senate, but watered down the original language of the house bill (HR1207), so that a complete audit would not be carried out. Ben Bernanke, Alan Greenspan, and various other bankers vehemently opposed the audit and lied to Congress about the effects an audit would have on markets. Nevertheless, the results of the first audit in the Federal Reserve’s nearly 100 year history were posted on Senator Sander’s webpage earlier this morning [July 21, 2011].

What was revealed in the audit was startling:

$16,000,000,000,000.00 had been secretly given out to US banks and corporations and foreign banks everywhere from France to Scotland. From the period between December 2007 and June 2010, the Federal Reserve had secretly bailed out many of the world’s banks, corporations, and governments. The Federal Reserve likes to refer to these secret bailouts as an all-inclusive loan program, but virtually none of the money has been returned and it was loaned out at 0% interest. Why the Federal Reserve had never been public about this or even informed the United States Congress about the $16 trillion dollar bailout is obvious - the American public would have been outraged to find out that the Federal Reserve bailed out foreign banks while Americans were struggling to find jobs.

To place $16 trillion into perspective, remember that GDP of the United States is only $14.12 trillion. The entire national debt of the United States government spanning its 200+ year history is "only" $14.5 trillion. The budget that is being debated so heavily in Congress and the Senate is "only" $3.5 trillion. Take all of the outrage and debate over the $1.5 trillion deficit into consideration, and swallow this Red pill: There was no debate about whether $16,000,000,000,000 would be given to failing banks and failing corporations around the world.

In late 2008, the TARP Bailout bill was passed and loans of $800 billion were given to failing banks and companies. That was a blatant lie considering the fact that Goldman Sachs alone received 814 billion dollars. As is turns out, the Federal Reserve donated $2.5 trillion to Citigroup, while Morgan Stanley received $2.04 trillion. The Royal Bank of Scotland and Deutsche Bank, a German bank, split about a trillion and numerous other banks received hefty chunks of the $16 trillion.

"This is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else." - Bernie Sanders (I-VT)

When you have conservative Republican stalwarts like Jim DeMint (R-SC) and Ron Paul (R-TX) as well as self identified Democratic socialists like Bernie Sanders all fighting against the Federal Reserve, you know that it is no longer an issue of Right versus Left. When you have every single member of the Republican Party in Congress and progressive Congressmen like Dennis Kucinich sponsoring a bill to audit the Federal Reserve, you realize that the Federal Reserve is an entity onto itself, which has no oversight and no accountability.

Americans should be swelled with anger and outrage at the abysmal state of affairs when an unelected group of bankers can create money out of thin air and give it out to megabanks and supercorporations like Halloween candy. If the Federal Reserve and the bankers who control it believe that they can continue to devalue the savings of Americans and continue to destroy the US economy, they will have to face the realization that their trillion dollar printing presses will eventually plunder the world economy.

The list of institutions that received the most money from the Federal Reserve can be found on page 131 of the GAO Audit and are as follows...

• Citigroup: $2.5 trillion ($2,500,000,000,000)
  
• Morgan Stanley: $2.04 trillion ($2,040,000,000,000)
  
• Merrill Lynch: $1.949 trillion ($1,949,000,000,000)
  
• Bank of America: $1.344 trillion ($1,344,000,000,000)
  
• Barclays PLC (United Kingdom): $868 billion ($868,000,000,000)
  
• Bear Sterns: $853 billion ($853,000,000,000)
  
• Goldman Sachs: $814 billion ($814,000,000,000)
  
• Royal Bank of Scotland (UK): $541 billion ($541,000,000,000)
  
• JP Morgan Chase: $391 billion ($391,000,000,000)
  
• Deutsche Bank (Germany): $354 billion ($354,000,000,000)
  
• UBS (Switzerland): $287 billion ($287,000,000,000)
  
• Credit Suisse (Switzerland): $262 billion ($262,000,000,000)
  
• Lehman Brothers: $183 billion ($183,000,000,000)
  
• Bank of Scotland (United Kingdom): $181 billion ($181,000,000,000)
  
• BNP Paribas (France): $175 billion ($175,000,000,000)
  
• and many many more including banks in Belgium of all places

View the 266-page GAO audit of the Federal Reserve (July 21st, 2011): GAO-Fed-Investigation (on scribd.com)
Source: http://www.gao.gov/products/GAO-11-696
FULL PDF on GAO server: http://www.gao.gov/new.items/d11696.pdf
Senator Sander’s Article: http://sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e73-4be2-a753-62060dcbb3c3
Hat tip: SILVER BEAR CAFE (via www.unelected.org) Read More......

A hundred billion dollar printing error has Geithner's name on it

12/7/2010 - The $100bn blunder: Fed forced to 'quarantine' one billion $100 bills after printing error makes them worthless. Read more at the Daily Mail or at CNBC... Read More......

NRO: Palin to Bernanke: 'Cease and Desist'

NATIONAL REVIEW ONLINE 11/7/2010 by Robert Costa - Snippets from Sarah Palin's prepared remarks:

I’m deeply concerned about the Federal Reserve’s plans to buy up anywhere from $600 billion to as much as $1 trillion of government securities. The technical term for it is “quantitative easing.” It means our government is pumping money into the banking system by buying up treasury bonds. And where, you may ask, are we getting the money to pay for all this? We’re printing it out of thin air.

The Fed hopes doing this may buy us a little temporary economic growth by supplying banks with extra cash which they could then lend out to businesses. But it’s far from certain this will even work. After all, the problem isn’t that banks don’t have enough cash on hand – it’s that they don’t want to lend it out, because they don’t trust the current economic climate. Read more at NRO...

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Merkeley to vote against Bernanke confirmation

REUTERS, 12/17/2009 - WASHINGTON: Federal Reserve Chairman Ben Bernanke is likely to pass the first hurdle in winning Senate confirmation to serve another term on Thursday but will face unusually strong opposition as his nomination moves ahead. ∴ Bernanke and the Fed have become lightning rods for anger over financial excesses and government bailouts of Bear Stearns, American International Group, and support for the biggest U.S. banks during the worst crisis since the Great Depression. ∴ With unemployment rates in double digits for the first time in over a quarter century, public resentment over the taxpayer-funded rescue of the banking sector runs high.

"We need to have leadership that understands the goal is not Wall Street profits," Oregon Democratic Senator Jeff Merkley told Reuters on Wednesday. "The focus should be on how do you enable families to thrive and prosper." Merkley said he will vote against Bernanke, the first majority-party Democrat on the 23-member panel to express outright opposition to him. Read more at Reuters...

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The Mystery Fuel That Drives the Market Higher

WEALTH DAILY, 11/19/2009 "U.S. Dollar Carry Trade: When Bad News is Good News" by Steve Christ [Advertisement but worth reading] - For the logically inclined, the action in the stock markets these days must be a riddle, wrapped in a mystery, inside an enigma. ∴ That's how backwards things must appear as the unemployment rate goes higher and the markets jump right along with it. It makes no logical sense. ∴ In fact if you compared the rise in the unemployment rate with the rise in the DOW. . . you would be hard-pressed to either explain it or believe it. ∴ Yet as Rick Santelli pointed out last week, the correlation between the two is nearly 1:1. Amazingly, even as the unemployment rate hit 10.2% earlier this month, the Dow closed above 10,200. The strange part: the same thing also happened at 8% and 9% unemployment. ∴ And while this seems like nothing more than an odd coincidence. . . you have to admit it is something of a head-scratcher. Mr. Christ explains 'why' at Wealth Daily... Read More......

Why There Was No Depression

WASHINGTON POST, 10/5/2009 by Robert J. Samuelson (Hat tip: John Detweiler) - How close did we come to the Great Depression 2.0? That question will spawn a cottage industry of books, studies and conferences. But Christina Romer, the head of President Obama's Council of Economic Advisers, already has an answer: pretty darn close. Her conclusion deserves attention because Romer, in her previous academic career, was a scholar of the Great Depression. Read more at the Washington Post...

Care to comment? Read More......

Catching up with financials

• The Obama administration admitted that their estimated 10-year budget deficit was off by $2 trillion.
• The budget czar is Peter Orszag.
• President Obama reappoints Bernanke as Fed Chair.
• The 2009 budget deficit balloons to $1.6 trillion (3 times the 2008 deficit).
• We're drowning in a sea of red ink according to one national magazine.

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Green Shoots or Scorched Earth?

INFORMATION CLEARING HOUSE, 8/14/2009, Bulletins From Clunkerville by Mike Whitney - Is the economy really recovering or is it all just hype? ∴ Here's what we know. The Fed doesn't drop rates to zero unless its facing a 5 alarm fire and needs to pull out all the stops. The idea is to flood the markets with liquidity in order to avoid a complete financial meltdown. It's a last-ditch maneuver and the Fed does not take it lightly. ∴ The Fed initiated its zero interest rate policy, ZIRP, eight months ago (December 16 2008) and hasn't raised rates since. In the meantime, Fed chair Ben Bernanke has pumped huge amounts of money into the financial system using thoroughly-untested and unconventional means. No one knows whether Bernanke can roll up his multi-trillion dollar lending facilities or not (and avoid Zimbabwe-like hyperinflation) because no one has ever created similar programs. It's all "make-it-up-as-you-go" policymaking. What we do know, however, is that the Fed intends to keep rates at rock-bottom for the foreseeable future, which means that the lights are all still blinking red. Read more at ICH... Read More......

A Force of One: The Federal Reserve

HUMAN EVENTS, 7/14/2009 by Chuck Norris - I agree with Judge Andrew Napolitano, who said last week, "We know more about the CIA than we do about the Federal Reserve." ∴ The Federal Reserve is the Freemasonry of government agencies. It is a virtual secret society unto itself -- a group of unelected brokers who hold the value of our dollar in the palms of their hands. This one agency, with its power to raise and lower interest rates, has exercised more control over the economy than any other government body. ∴ So with that type of single-handed power, why should we be surprised that the U.S. Senate blocked a bill last week to audit the Federal Reserve? 'Tis true! Rep. Ron Paul and more than half of his colleagues in the House co-sponsored the Federal Reserve Transparency Act, HR 1207, which they hope to have hearings on soon. On the Senate side, Sens. Jim DeMint, Mike Crapo and David Vitter co-sponsored S 604, companion legislation introduced by Bernie Sanders. But it was stopped cold before even being introduced on the floor on "procedural grounds." Read more at Human Events... Read More......