Debt as Aid and Money

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“Without being radical or overly bold, I will tell you that the Third World War has already started – a silent war, not for that reason any the less sinister. This war is tearing down Brazil, Latin America and practically all the Third World. Instead of soldiers dying there are children, instead of millions of wounded there are millions of unemployed; instead of destruction of bridges there is the tearing down of factories, schools, hospitals, and entire economies . . . It is a war by the United States against the Latin American continent and the Third World. It is a war over the foreign debt, one which has as its main weapon interest, a weapon more deadly than the atom bomb, more shattering than a laser beam.”

Luis Ignacio Silva, at the Havana Debt Conference in August 1985, quoted by Susan George, A Fate Worse Than Death p 238.
Luis Ignacio Silva

Some people are able to see the evil of usury clearly, while others take it as play. It reminded of the following passages from the Qu’ran;

The likeness of those who disbelieve is that of someone who yells out to something which cannot hear – it is nothing but a cry and a call. Deaf – dumb – blind. They do not use their intellect. (Surat al-Baqara, 171)

We created many of the jinn and mankind for Hell. They have hearts they do not understand with. They have eyes they do not see with. They have ears they do not hear with. Such people are like cattle. No, they are even worse! They are the unaware. (Surat al-A’raf, 179)

Allah will admit those who believe to Gardens with rivers flowing under them.Those who disbelieve have their enjoyment, eating as cattle eat, but the Fire will be their final residence. (Surah Muhammad, 12)

John D. Rockefeller, at the age of 86, penned the following words to sum up his life:

“I was early taught to work as well as play,
My life has been one long, happy holiday;
Full of work and full of play-
I dropped the worry on the way-
And God was good to me everyday.”
John D. Rockefeller

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Mortgage crisis has Washington putting aside free-market ideology

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Mortgage crisis has Washington putting aside free-market ideology
By Nelson D. Schwartz, Sunday, September 7, 2008

Despite decades of free-market rhetoric from Republican and Democratic lawmakers, Washington has a long history of providing financial help to the private sector when the economic or political risk of a corporate collapse appeared too high.

The effort to save Fannie Mae and Freddie Mac is only the latest in a series of financial maneuvers by the government that stretch back to the rescue of the military contractor Lockheed Aircraft and the Penn Central Railroad under President Richard Nixon, the shoring up of Chrysler in the waning days of the Carter administration and the salvage of the U.S. savings and loan system in the late 1980s.

More recently, after airplanes were grounded because of the terrorist attacks of Sept. 11, 2001, Congress approved $15 billion in subsidies and loan guarantees to the faltering airlines.

Now, with the U.S. government preparing to save Fannie and Freddie only six months after the Federal Reserve Board orchestrated the rescue of Bear Stearns, it appears that the mortgage crisis has forced the government to once again shove ideology aside and get into the bailout business.

“If anybody thought we had a pure free-market financial system, they should think again,” said Robert Bruner, dean of the Darden School of Business at the University of Virginia.

The closest historical analogy to the Fannie-Freddie crisis is the rescue of the Farm Credit and savings and loan systems in the late 1980s, said Bert Ely, a banking consultant who has been a longtime critic of the mortgage finance companies.

The savings and loan bailout followed years of high interest rates and risky lending practices and ultimately cost taxpayers roughly $124 billion, with the banking industry kicking in another $30 billion, Ely said.

Even if the rescue of Fannie and Freddie ends up costing tens of billions of dollars, the savings and loan collapse is still likely to remain the costliest government bailout to date, said Lawrence White, a professor of economics at the Stern School of Business at New York University.

“The S.& L. debacle cost upwards of $100 billion, and the economy is more than twice the size today than it was in the late 1980s,” he said. “I don’t think this will turn out to be as serious as that, when over 2,000 banks and thrifts failed between the mid-1980s and mid-1990s.”

Most of those losses were caused by the shortfall between what the government paid depositors and what it received by selling the troubled real estate portfolios it acquired after taking over the failed thrifts.

In the Chrysler case, Carter and lawmakers in states with auto plants helped push through a package of $1.5 billion in loan guarantees for the troubled carmaker, while also demanding concessions from labor unions and lenders.

While Chrysler is remembered as a major bailout, White says it was minor compared with the savings and loan crisis or the current effort to shore up Fannie and Freddie.

The government did not have to give money directly to Chrysler, and it actually earned a profit on the deal because of stock warrants it received when the loan guarantees were provided. At the time, Chrysler had a work force of more than 100,000 people.

Still, Ely makes a distinction between the rescue of Fannie and Freddie and the thrifts versus the aid packages for Chrysler and other industrial companies. “They didn’t have a federal nexus,” he said. “They weren’t creatures of the federal government.”

This effort is also different from the others because of the potential fallout for the broader economy and especially the beleaguered housing sector if it does not succeed.

Unlike a particular auto company or even a major bank like Continental Illinois National Bank and Trust, which was bailed out in 1984, “we depend on Fannie and Freddie for funding almost half of our mortgage market,” said Thomas Stanton, an expert on the two companies who also teaches at Johns Hopkins University.

“The government,” he added, “has many less degrees of freedom in dealing with these companies than in the earlier bailouts.”

Visa planning largest IPO in U.S. history

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Visa planning largest IPO in U.S. history

By Eric Dash, Tuesday, February 26, 2008, IHT

Undaunted by recent turbulence in the financial markets, Visa, the biggest credit-card network in the United States, said Monday that it would forge ahead with what would be the largest initial public stock offering in the nation’s history.

Visa plans to sell as much as $17.1 billion of stock in late March, following in the footsteps of its smaller rival MasterCard, which went public in May 2006.

Visa and MasterCard are prospering as Americans increasingly flex plastic, rather than use cash, to pay for just about everything. The companies have not been hurt by the credit crunch, because they do not actually make credit-card loans. They merely processes transactions for banks that do.

If all goes as planned, Visa’s offering would generate a windfall for thousands of its so-called member banks, which own the company. The largest gains would go many of the nation’s biggest banks, which have been stung by losses stemming from mortgage-linked investments.

“Visa will be able to tell its story, even in an uncertain market, because its story is a good one,” said David Robertson, publisher of The Nilson Report, a payment industry newsletter. “If investors think MasterCard is a good story, Visa looks like the same thing on a bigger scale.”

Visa plans to sell 406 million Class A shares for $37 to $42 a share, with just over half going to the public and the rest to Visa’s member banks.

The first $3 billion will be placed into a special account to cover outstanding antitrust and unfair-pricing claims brought by merchants. Visa will use some of the new money to streamline its operations, expand in fast-growing emerging markets and invest in new technology like systems that enable people to make card payments using cellular phones. But the bulk of the capital will end up in the bank’s coffers, from repurchasing stock from them.

Visa’s member banks can use the extra cash.

If Visa’s shares are valued at a midpoint price of $39.50, JPMorgan Chase, the company’s largest shareholder, would receive an estimated $1.1 billion for its stake. Bank of America would get about $545 million; National City would get about $380 million; and Citigroup, U.S. Bancorp, and Wells Fargo can each expect around $240 million or more.

“The credit crunch is pretty cyclical; the prospects for Visa are very strong long-term,” said Marc Abbey, the managing partner of First Annapolis, a consulting firm that works with many banks and payments companies. “I am sure it is convenient for them to have extraordinary gains at the same time they have extraordinary losses.”

Since going public nearly two years ago, MasterCard have soared 408 percent, closing at $198.45 on Monday. It now has a market value of $26 billion.

MasterCard’s successful IPO prompted Visa to move forward with owns plans to go public. Since October 2006, Visa has reorganized its sprawling management structure, bringing together all of its global operations with the exception of those in Europe. It has also hired Joseph Saunders, the former head of Providian Financial Corporation, as its chairman and chief executive, giving him a pay package worth $11.1 million in cash for 2007. Upon completion of the IPO, he is expected to receive an additional $11.5 million in stock and options, according to Equilar, a compensation research firm.

Visa transactions accounted for roughly 66 percent of all credit and debit card purchases in the United States in 2006, compared to about 26 percent for MasterCard, according to The Nilson Report data.

Growth in card transactions, the foundation of the companies’ businesses , has historically held up well, even when the economy and consumer spending slows.

“If you look back at the last recession, card transactions did not drop ? they took a dip in growth, but they didn’t fall below prior year,” Robertson said.

“There is no reason to think that growth in the United States is going to sink Visa’s boat,” he said. “Whatever lackluster growth in the U.S. should certainly be matched and exceeded by what occurs outside the U.S.”

The prospectus for the sale lays out a convoluted capital structure, with four classes of shares, including three which go to the banks. But the deal, which is underwritten by JPMorgan and Goldman Sachs, also raises potential conflicts for the banks underwriting the shares.

Both institutions have strong ties to the financial services industry. But JPMorgan is Visa’s largest shareholder and largest customer. It is a member of the bank syndicate that agreed to lend $3 billion to the company. And it could reap more than 1.1 billion in proceeds from the IPO

Goldman, meanwhile, will serve as the “qualified independent underwriter” in setting the price of the offering, according to public filings. Its independence is not deemed in question even though Suzanne Nora Johnson, a Visa director, used to be a vice chairman of Goldman Sachs.

International Herald Tribune Copyright © 2008 The International Herald Tribune | http://www.iht.com

America’s Dirty Little Secret – We are Bankrupt!

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David Walker, the Comptroller General of the United States proclaims that our current standard of living is unsustainable unless drastic action is taken. He warns that funding shortfalls for the Medicare program is five times worse than Social Security, and it will take $8 TRILLION to pay for what is promised today to beneficiaries, of which we have ZERO!

This unrealistic “promise” is fiscally irresponsible and is mortgaging the futures of our children and grandchildren.

Watch as the federal government’s dirty little secret is revealed!

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The the United States Top Accountant, the person who monitors and US Budget and Spending. And he is the one raising the alarm bells!

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Even CNN, seems to be reporting part of the truth for a change – American has got nada – no mo money – bankrupt – in debt! Why does it take so much effort to wake up Americans from their slumber? Zombies would have an easier time understanding the facts.

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Learn who REALLY controls the U.S.Dollar and how these people are destroying America by design. The Federal Reserve Bank is neither Federal nor a Reserve nor a real Bank. Owned by a corrupt group of International Bankers, it is a privately owned monopoly, largely responsible for creating America’s National Debt. It is also a parasitic and unnecessary entity that literally creates American currency out of nothing and then collects interest on the backs of taxpayers for doing so.

Ever wondered why we keep trying to guess “Fed Speak”? Why are politicians elected to represent the people guessing and begging a private banker if he will or will not raise interest rates?

Read the full story, on Wikipedia;

Some believe the Federal Reserve System is shrouded in what its critics call excessive secrecy. Meetings of some components of the Fed are held behind closed doors, and the transcripts are released with a lag of five years.[69] Even expert policy analysts are unsure about the logic behind Fed decisions.[70] Critics argue that such opacity leads to greater market volatility, because the markets must guess, often with only limited information, about how the Fed is likely to change policy in the future. The jargon-laden fence-sitting opaque style of Fed communication, especially under the previous Fed Chairman Alan Greenspan, has often been called “Fed speak.”[70]

The $7 Billion Dollar Man – Harbinger of Impending World Financial Crisis

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They want us to believe that one man with a keyboard and trading desk can trade over $50 billion dollars worth of trades and nobody noticed? I don’t think so.

What this trader has shown is how corrupt and fragile the entire world financial system is. This disaster is not about one French trader who “acted alone“. Without the system to allow his trades he would never have been able to do anything. This financial scandal might have happened in France, but the real cause and underlying problem here is the entire interest based credit based world financial system.

Everyone should see this video on How Money Works – how money is made and used against us. The current financial crisis is about liquidity and credit. There is no more money left and the gold standard died decades ago. What is holding up the entire system is “credibility” and “confidence” in a few countries – England, USA, and Japan.

This house of cards is about to collapse and this might be the catalyst.

See Jerome Kerviel’s CV / Resume

US Slides Into Dangerous 1930s ‘Liquidity Trap’

The Dollar’s Reserve Currency Role is Drawing to an End 

Juicing the Stock Market

At the Edge of the Abyss

The Collapse Of The Modern Day Banking System

Learn more about Société Générale