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In fiscal year 1999, the Department of Defense reported that it was missing $2.3 Trillion. In fiscal year 2000 the Department reported a missing $1.1 Trillion. Total: $3.4 Trillion "missing" taxpayer money. This happened under the watchful eye of the same William Lynn that now passes through the revolving door between the Department of Defense and the Defense industry.
Lynn was the Defense Department's chief financial officer and as such was responsible for all budgetary administration and reporting. He was also responsible for the publication of audited financial statements which he failed to do during his tenure and which have not been published since.
Lynn was nominated by Obama-Biden because "Lynn brings decades of experience and expertise in reforming government spending and making the tough choices necessary to ensure that American tax dollars are spent wisely."
The other appointee, as Undersecretary of Defense (Comptroller), Robert Hale, served as Assistant Secretary of the Air Force in the role of Financial Comptroller from 1994 to 2001. He was also responsible, along with Lynn, for the management of Defense Department funds. Hale is also a Certified Defense Financial Manager with acquisition specialty. This is his particular connection to the Military Industrial Complex.
Between these two appointees, they have lost enough taxpayer money to pay for Obama's Stimulus Plan 4 times over and are now again responsible for overseeing how the Department of Defense manages its appropriations. Obama's promise of fiscal responsibility within his administration can now be dumped in to the already overflowing trash can of broken promises.
Idiocy is usually described as "endlessly repeating the same process, hoping for a different result". Lawrence Summers, Timothy Geithner, Nancy Pelosi, Joe Biden et al are straining at the leash to get the Bailout Ball rolling once again. The stabilization of the financial sector, as elusive as it has been so far, has become the Holy Grail of Economic salvation. That makes $8.5 Trillion worth of trying and $0 of result. The Knights of the Oval Table are gathered to plan their mission as their beleaguered subjects are trying to batter down the castle gates. It's no small wonder that Geithner wants to get the money out the door as soon as the end of this week.
The most recent report from the Comptroller of the Currency seems to have gone unnoticed in Washington and the press. If banks are not lending because of increased capital requirements in the face of Credit Default Swaps, other derivatives and loan defaults then the report goes a long way in describing exactly why.
Credit Exposure to Capital ratio. Amounts in $Millions
Bank | Assets | Derivatives | Credit Exposure to Capital Ratio |
J.P. Morgan Chase | $1,768,657 | $87,688,008 | 400.2 |
Citi | $1,207,007 | $35,645,429 | 259.5 |
Bank Of America | $1,359,071 | $38,673,967 | 177.6 |
HSBC | $181,587 | $4,133,712 | 664.2 |
The assets comprise largely of Real estate, residential mortgage, student, car and credit card loans. With the rise in defaulting mortgages, delinquent credit card and other debt the problem can only get worse. To recapitalize the banks to the point where exposure is low enough to encourage lending would take trillions and that's before any more fallout from the collapsing economy. Lending also requires creditworthy borrowers, the number of which is in a nosedive. The $165 Trillion in notional derivatives and the associated credit risk related to $15 Trillion in Credit Default Swaps illustrated below is the poison apple that the taxpayer has been forced to bite into.
Bank | Total Credit Derivatives |
J.P. Morgan Chase | $9,177,731 |
Citi | $2,939,783 |
Bank Of America | $2,480,672 |
HSBC | $1,152,948 |
When the "credit crunch" began and Washington began the rush to solve the problem with taxpayer cash, no accounting of this derivative nightmare was ever brought to bear. In all the deliberations and press releases there was not a single mention of the fact that the primary cause of the bank collapse was due to these "instruments of mass destruction". It was widely discussed in the blogosphere but, like the real reasons for invading Iraq, never made it in to the mainstream media. As with Iraq, one would have to assume that the reason was to obfuscate the facts and cajole a shocked public in to accepting as a remedy whatever was proposed by Paulson, Bernanke and Bush. The latter had to be completely aware of the OCC data at the time and to assume that they did not is simply not credible. It would have been completely obvious that $700 Billion would do absolutely nothing to alleviate the crisis. As witnessed in the ensuing months since the TARP bill, how the money was used has been obfuscated and concealed.This was always a scam.
Even as the economic indicators broke one record after another, the recipients of the TARP funds were selling Credit Default Swaps to each other, betting on each other's downfall. They knew the game was up and wanted to profit on the way down as much as they had on the way up. All the major Banks on Wall St. are seeing mounting losses and the failure of one will increase the losses of the other. They are joined at the hip and will fall like a house of cards.
The question begs to be asked, and this is where the cynic in me dominates, what's the plan? When they do fall will the Government nationalize the last one standing for the good of the country and socialize even more of the losses? This would be the coup of the millennium and give birth to a new Governmental paradigm. To have this complete before the economy and society have completely broken down would be a good reason to declare a real National Emergency and declare Martial Law, the legislation, executive orders and infrastructure of which are already in place. How can one not be a cynic when we reflect on what has happened so far?
The numbers are in and the scam stands exposed to those who will look. Which way the story unfolds from here is anyone's guess. But I am ready to bet that Congress will not include the OCC data in the upcoming debate on the next round of cash for the Banks.
“The focus isn’t going to be on the needs of banks; it’s going to be on the needs of the economy for credit,” Lawrence Summers on Face the nation, 19th January. In the same segment, both he and David Axelrod agree that Paulson's use of the first $350 Billion of the TARP money was a failure..
"The point is to get credit flowing again to businesses and families across the country -- that hasn’t happened with the expenditure of the first $350 billion"
The proposal ? Set up an "aggregator" or " Bad" bank in to which Wall St. can pour it's toxic waste or keep it on their balance sheets while being guaranteed by the taxpayer. Looks like the focus is going to be on the banks after all. The fact that the banks would be unloading more than a trillion dollars in worthless junk, paid for by the taxpayer, does not seem to Summers and Axelrod as a particularly bad idea.
The emphasis on getting credit flowing again for car loans, consumer credit and mortgages ony serves to aggravate the basic problem that these pundits seem to be ignoring; Consumers are flat broke and overindebted as it is, they don't need more credit; they need more jobs. The Banks don't need any more free money; they need to be put in to bankruptcy to purge the system of the junk on which they have based their business model. The reason the banks refuse to lend is that they are holding on to the money to cover their accelerating losses. As each company fails, as each debtor loses their job the dominos are falling faster and are obliterating the banking sector.
When the original disastrous TARP was pushed by the Treasury the indispensable actions that were not taken were regulation, revelation of the Banks' balance sheets and oversight as to how the money was being used. Any rational investor would want to know what they were investing in but this minimum requirement was brushed aside in the rush to hand over taxpayer funds. As if this were not enough to start alarm bells ringing the refusal of the Fed and the financial sector recipients to open the books to public scrutiny puts the bailout on the same stage as Bernie Madoff. The latter engaged in fraud to rob his investors just as blatantly as the fraudelent bailout robbed the taxpayers. Now we are expected to believe that, without further ado, repeating the same failed policies is needed to cure the economic woes of the country.
Let's examine the results of similiar policies in Europe.
The U.K, Ireland, France and Germany are among the other victims of the same mistakes. Ireland and the U.K., after pumping billions in to the banking sector, have only succeeded in pushing themselves to the verge of bankruptcy and reduced the available capital to do anything actually constructive. Nicolas Sarkozy succeeded in getting Societe Generale to break even by injecting taxpayer cash . What kind of logic is it that says that this is a good thing ? Any unprofitable company can break even if it receives taxpayer money to blot out the red ink. The fact remains; it is an unprofitable enterprise and, by any interpretation of market rules, should fail to free up more profitable ones.
The formation of the "Bad Bank" will prove to be another miserable failure. The time to call a halt to the madness is long since past and more rational policies need to be coming from Washington before the country goes bankrupt.
"Somehow this madness must cease. We must stop now. I speak as a child of God and brother to the suffering poor of Vietnam.I speak for those whose land is being laid waste, whose homes are being destroyed, whose culture is being subverted. I speak for the poor in America who are paying the double price of smashed hopes at home and death and corruption in Vietnam. I speak as a citizen of the world, for the world as it stands aghast at the path we have taken. I speak as an American to the leaders of my own nation. The great initiative in this war is ours. The initiative to stop it must be ours."
This speech by Dr.Martin Luther King in 1967 is as poignant today as it was back then. The names change but the nightmare remains the same. Today's Iraq and Afghanistan replace yesterday's Vietnam. Today's increased level of poverty and imprisonment of a hugely disproportionate number of African Americans in the prison system, the slaughter of millions more of the world's poor and Dr. King's subsequent murder at the hands of his own government bear witness to exactly which initiative was taken.
President-Elect Barack Obama, in his speeches, expresses his desire to inculcate the ideals of Dr. King in to his decision making and his attitude to his fellow human beings. He "chokes up" repeating the words of this Man of Peace, but he'll "hold it together" on Inauguration day. He'll make America, in Dr. King's words "a land no longer torn asunder with racial hatred and ethnic strife, a land that measured itself by how it treats the least of these, a land in which strength is defined not simply by the capacity to wage war but by the determination to forge peace - a land in which all of God's children might come together in a spirit of brotherhood."
He stands silent as his country aids in the genocide of the Palestinians. He will forge peace by sending 30,000 American troops to Afghanistan to intensify the massacre that has left nearly 6,500 of his civilian brothers and sisters dead. He stands silent on the more than 98,000 of his brothers and sisters who have been murdered in Iraq. He threatens War against Iran, Syria and already destroyed Lebanon. He remains silent on the murder of his brother Oscar Grant III by police officer Johannes Mehserle in California. He perpetuates what Dr. King called "a nation that continues year after year to spend more money on military defense than on programs of social uplift".
"Many of the ugly pages of American history have been obscured and forgotten....America owes a debt of justice which it has only begun to pay. If it loses the will to finish or slackens in its determination, history will recall its crimes and the country that would be great will lack the most indispensable element of greatness--justice" Martin Luther King, 1967.
The President-Elect refuses to bring George Bush, Dick Cheney, Donald Rumsfeld, Henry Kissinger and the rest of the War criminals to justice as he looks forward from the mountain top and points the way to spiritual death.
Would Dr. King, if he actually held public office, have voted for invading Iraq, invading Afghanistan, sending arms and money to Israel and remained silent as his poverty stricken brothers and sisters were slaughtered?
The words of Martin Luther King have been hijacked by those would would use his message to further their narcissistic goals. His peaceful supplication has been betrayed by lies and a sickening adulation of meaningless oratory. His greatest statements of love and humanity have been relegated to sound bites for mass consumption by a deceived public who have put their faith in a man who represents all that Dr. King was fighting peacefully against.
Small business owners have stood up and discredited the tax incentives that were meant to convince them to ignore market reality and open the door to new employees. The measures that supposedly address the enormous foreclosure problem seem to change from day to day and only work to the advantage of the banks. Obama and Bush have just signed off on an additional $20 Billion in cash and $118 Billion in asset guarantees for Bank of America which already received $25 Billion last year and is now choking on Merrill Lynch's losses. The President Elect and his new Stimulus Czars are not paying attention and are proceeding to continue the same destructive formula adopted by Paulson.
The media bombardment is in overdrive to convince the public that herein lies the path to salvation. First we had the guarantee that three million jobs would be created out of thin air only to be bumped up to four million. These are nice round media friendly numbers which have no basis in reality. With each passing day the sands are shifting on exactly how the money will be spent. Ben Bernancke' s speech at the London School of Economics on Tuesday confirmed that the emphasis has now shifted to bailing out the banks one more time by buying more toxic assets to clean up their collapsing balance sheets. After seeing $8.2 Trillion vanish in to Insurance, Banking and a moribund auto industry with absolutely no concrete result except for the tightening of credit, the increasing losses of Big Banking and the GM chairman having to queue for his airline ticket, the Fed, backed by Obama, continues to beat the dead horse.
The scariest aspect of this is the speed at which this 18 wheeler disaster is being driven toward the rabbits in the headlights. We haven't yet seen any senators or reps being threatened with the imposition of martial law, but we have seen Obama threaten to veto his own fellow democrats if they do not rubber stamp the proposals he has been instructed to deliver. Nobody has even taken a vote yet and already the gloves are off. Bailout Bill One and the Patriot Act were pushed just as hard. The only legislation that gets the hard sell seems to involve either stealing the taxpayer's money or their rights.
Looking at the mainstream reporting from Gaza right now, one has to leave one's conscience at the door and don the hat of an ignorant dolt to lap up the mendacious palaver that passes for impartial reporting these days. Would anyone seriously want to murder a child ? Well, looking at the various commentaries around the print and internet media, one would have to assume that it's perfectly OK. If it was not OK then the evident crime would be pointed out and outrage would ensue. But, alas, no.
We have been informed by the almighty ones that.."Well, if someone was firing rockets at my family, then I would retaliate". What would they say if their family had been treated like beasts for generations, had seen their mothers, fathers, sisters, brothers, friends, sons and daughters ripped apart limb from limb with no accountability, with no punishment, with the act been supported by a conspiratorial alliance that is secretly beholden to the murderer ? The human reaction would be to strike back and to seek justice. Blaming the victim has been the justification since time immemorial. The Romans used it; the Catholic church used it; The Crusaders used it; the U.S.cavalry used it; the Zionists use it.
Enough already! The solution to the problems in the near East is very simple. Stop trying to steal their land. Stop treating them like sub-humans.There is no middle ground; there is no "ceasefire agreement". there is no "peace process". There is only Truth. There is only Justice. The slaughter will continue after these messages.
Japan's utter panic was summed up by Akio Mikuni, President of the ratings company Mikuni & Co. when he suggested that "Japan should write-off its holdings of Treasuries because the U.S. government will struggle to finance increasing debt levels needed to dig the economy out of recession". For good measure.."The dollar may lose as much as 40 percent of its value to 50 yen or 60 yen from the current spot rate of 90.40 today in Tokyo unless Japan takes drastic measures to help bail out the U.S. economy"
China's Central bank governor Zhou Xiaochuan announced that it will allow the yuan to be used for settlement between Guangdong Province and the Yangtze River Delta and exporters in the Guangxi Zhuang Autonomous Region and Yunnan Province in southwestern China will be allowed to use the yuan to settle trade payments with members of the Association of Southeast Asian Nations. His tongue in cheek explanation?
"The US dollar is unlikely to be stable next year and later. And the likelihood of the United States issuing more money in the near future adds to the depreciation risk in US-dollar-denominated assets and trade settlements." Source
A previous report describing China's proposed 7 fold increase in Gold reserves is also indicative of its gradual pullback from the doomed dollar.Gold has been slowly rising as investors, previously struck rigid with fear, are now taking a breath and looking at real value. The old adage of Gold being a safe haven is coming back in to play and no amount of gold price manipulation on the exchange is going to change that. With China's announcement of its intention to build up it's reserves to 4000 Tons, we can expect other Treasury Note holders to be thinking along the same lines. This can only lead to a bullish gold market and a collapsing market for Treasuries. Treasury Note doomsayers are a growing community amongst which we can count former Bank of England policymaker, Willem Buiter, who summed up his position thus
"Even the most hard-nosed, Guantanomo Bay-indifferent potential foreign investor in the US must recognise that its financial system has collapsed"
And Barrons is announcing a coming Treasury Bubble Pop..
"Treasuries offer little or no margin of safety if the economy unexpectedly strengthens in 2009, or the dollar weakens significantly, or inflation shows signs of reaccelerating."
Forbes is predicting China's future diversification of it's reserves as Treasury Bills become more of a liability..
"Washington's issuance of mountains of debt to bail out the U.S. economy will only make T-bills less rewarding, putting the dollar's future strength in question. Various economists are saying it will be in China's interest to diversify in the near future."
We can discount the unexpected strengthening of the economy in 2009, but inflation has to rise once those trillions are in the playing field and the dollar will be toast. Bonds, yielding next to nothing, don't exactly present an attractive investment opportunity. The only reason Treasuries have been so attractive up to now was that they were presumed to be a safer harbor than equities, commodities or cash. No amount of "stimulus" plans can fool all the people all the time. After the initial massacre, investors are taking a moment of reflection and taking a more long term approach. We are now in an era of survival and protectionism rules the day.
Maan News Agency
Reported 5th November 2008
Gaza – Ma’an – The death toll in the Gaza Strip rose to six on Wednesday morning after another Al-Qassam Brigades fighter died of wounds sustained in an Israeli airstrike near Khan Younis.
Five Hamas Al-Qassam Brigades activists were killed earlier on Tuesday evening by Israeli fire in the Al-Qarara area of Khan Younis and at Juhr Ad-Dik, in central Gaza.
An Al-Qassam Brigades leader, Mazin Sa’da, who is also a police officer, was killed and four civilians were injured including a woman as Israeli forces invaded Juhr Ad-Dik and clashed with Palestinian fighters, according to Muawiya Hassanein, director of ambulance and emergency service in the Palestinian health ministry.
Separately, an Israeli drone launched a missile at a group of Al-Qassam activists in Al-Qarara, killing four of them. Mu’awiya Hassanein identified the victims as Muhammad Ba’lusha, Omar Al-Alami, Muhammad Awad and Wajdi Muharib.
Israeli sources announced that one soldier was slightly injured in Deir Al-Balah.
Hamas’ military wing, the Al-Qassam Brigades, said in a statement that it launched eight mortar shells at Israeli forces in the central Gaza Strip near the military post of Kissufim. They affirmed they would block any Israeli attempt to invade the Gaza Strip regardless of the ceasefire, which would not prevent them from defending the Palestinian people. The statement warned of a tough retaliation to any invasion attempt.
Witnesses told Ma’an that they saw large numbers of Israeli tanks near the abandoned Israeli settlement of Dugit near Beit Hanoun in the northern Gaza Strip, as well as helicopters overhead.
An Israeli military spokesperson claimed that the incursion in the central Gaza Strip came after Israeli intelligence received reports about Hamas plans to abduct an Israeli soldier using a tunnel under the border.
“The Palestinians detonated the tunnel after Israeli forces besieged the building,” he claimed.
With regard to the ceasefire, the spokesperson said the Israeli incursion intended to protect ceasefire.
The de facto government in the Gaza Strip held the Israeli government responsible for all the consequences of their "aggression," describing it as the most serious violation of the Egyptian-brokered ceasefire since it went into effect in June.
