May 2012 – Tracking the financial crisis ‘bailout’ – and where are the benefits?

Following theFall 2008 housing market collapse and banking crisis, the U.S. government undertook extraordinary measures to re-liquify the banking industry, related financial institutions (including foreign institutions), automakers, and others.

The broad program categories for the trillions of dollars involved include:                    The Troubled Asset Relief Program (TARP)                                                            Federal Reserve Rescue Efforts                                                                              Federal Stimulus Programs                                                                                            AIG                                                                                                                               FDIC Bank Takeovers                                                                                                 Other Financial Initiatives                                                                                                 Other Housing Initiatives

SourceCNN’s Bailout Tracker

Note: The Public – Private Investment Program (PPIP) happens to be one of the programs funded under the TARP umbrella.  PIPP is a funneling mechanism for government (tax-payer) money to ‘reach’ Hedge funds –  to ‘encourage’ them to buy some of the non-investment grade (crap) mortgages out there, and get them off the books of the banks.

It was recently reported that the Federal Reserve also offers a special  “carry trade” for banks and primary dealers – to generate buying on the front end of the yield curve         (2-year and 3-year Treasurys) – using an “overnight repo” everyday at “zero.”  This amounts to another ‘free money’ program for the banks and PDs – courtesy of the U.S. taxpayer.

And these revolving overnight “repos” reportedly do not show up on the Fed Balance sheet.

So where does this all leave us, after more than 3 years?

The 2012 Projected Deficit: $1.33 trillion (www.whitehouse.gov/omb/overview ).

The “CBO says the public debt will climb this year to 72.5% of the economy from 40.3% in 2008. This isn’t as high as Italy or Greece, but it’s rising fast toward the 90% level that begins to debilitate an economy.”

And, “The other part of the fiscal story is that revenues have been in the tank for five years. In 2012 revenues will hit $2.52 trillion, down from $2.57 trillion in 2007. Revenues are still 16.3% of GDP, about two percentage points below the norm” (WSJ  2-1-12).

The interest on the National Debt reached an “all-time high of $454 billion in 2011 with an effective interest rate of about 3%.”   Much of this interest is paid to “foreign governments like China, Japan and OPEC nations. This is $1.2 billion per day of interest paid mostly to foreigners.”

The Federal government ‘central planning’ efforts have accomplished very little,  despite the trillions of dollars the government has ‘shuttled’ out to the dozens of well-favored domestic and foreign financial oligarchs.

It is now time for American families to be to receive their own round of direct credit extensions from the Federal Reserve.

The Leviticus 25 Plan is a comprehensive economic acceleration program, delivering direct credit extensions to American families – $50,000 per U.S. citizen.         The debt relief benefits and productivity incentives at the family level would re-ignite economic vitality in America.                                                                                     Government tax revenues (state, local, and federal) would regain a healthy growth pattern – without raising taxes.

And The Leviticus 25 Plan will literally pay for itself over a 10-year window.                  It will reverse America’s burgeoning debt load and provide long-term stability for the U.S. Dollar.

Government ‘misadventures’ and the current economic track…

The financial news wires report analyses every day which reveal the ‘cracks’ in the current economic track that our government has us on – and why continuing down this road is an exercise in futility.

One recent analysis sums things up well (and shows why we need an economic acceleration driver like The Leviticus 25 Plan’s direct credit extensions for American citizens):

Financial Blogger, Matt Taibbi (TAIBBLOG – May 8, 2012):

 1. Let banks inflate massive asset bubbles with the aid of cheap or even free government cash, and tons of leverage;

2. Before it all explodes, carve out gigantic sums for bonuses and compensation for the companies that inflated those bubbles;

3. After it explodes, get the various governments to bail those companies out;

4. Pay for it all by slashing services to what’s left of the middle class.

This is the model we used in America. We had a monster asset bubble based on phony mortgages, which Wall Street was allowed to inflate to spectacular dimensions with minimal reserve capital, huge amounts of leverage, and tons of fraud for good measure. When that bubble exploded, we first rescued the banks who inflated the thing in the first place…

Source: http://www.rollingstone.com/politics/blogs/taibblog/austerity-cant-be-a-one-way-street-20120508#ixzz1uZKHj700

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Meanwhile, massive debt continues to pile up in Europe.  Bloomberg recently reported on the heavy bond issuance coming next week in Europe – one of 2012’s heaviest:

* Monday May 14

    • Spain to sell 12- and 18-mo bills
    • Italy to sell up to EU3.5b 2.5% 2015 bonds
    • Italy to sell 4.25% 2020 bonds
    • Italy to sell 5% 2022 bonds
    • Italy to sell 5% 2025 bonds
    • Germany to sell EU4b 6-mo bills
    • France to sell up to EU4b 92-day bills
    • France to sell up to EU1.9b 168-day bills
    • France to sell up to EU1.5b 351-day bills
  • Tuesday May 15
    • Greece to sell bills
    • U.K. to sell GBP2.75b 5% 2025 bonds
    • EFSF to sell up to EU1b 2% notes due 2017
  • Wednesday May 16
    • France to sell 0.75% 2014 notes
    • France to sell 3.5% 2015 bonds
    • France to sell 3.25% 2016 bonds
    • France to sell 1.75% 2017 notes
    • Germany to sell additional EU5b in 10-yr notes
  • Thursday May 17
    • Spain to sell bonds
    • U.K. to sell GBP 1.5b 5% 2014 bonds

Source: Bloomberg

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The world needs liquidity.

The Leviticus 25 Plan would deliver for America.

Progress Report – May 2012

Progress Report:  The Google Analytics tool shows continues to show a steady, though yet fairly quiet, stream of ‘hits’ on the www.Leviticus25Plan.org website.  Over the past 2 weeks, the ‘hits’ have come from:  CA (Santa Cruz), NY, FL (Homestead, Ft. Myers),  MO (Independence), AZ (Phoenix), NC (Asheville), TN (Knoxville), TX, UT (Provo), VA (Alexandria), CO (Vail), WI (Green Bay) and SD (numerous)…. and other sites.

The 2012 launch continues with new notifications to key parties each week.

The Leviticus 25 Plan – dynamic benefits and a positive return

The Leviticus 25 Plan assumes that 80-90% of U.S. citizens would participate in the plan.  At a 90% participation rate, the Federal Reserve balance sheet would expand by $12 trillion. At 80% the Fed balance sheet would expand by approximately $11 trillion.

Certain ‘wealthy’ American citizens would voluntarily exclude themselves – due to anticipated loss of income tax refunds or a ‘lock in’ tax obligation over the succeeding 5 years.

And certain recipients of sufficiently large benefits from “means-tested welfare programs” and “income security programs” would also voluntarily exclude themselves from participation – since their current benefits status would be more advantageous than the plan’s one-time credit extension.

Under the ‘recapture provisions’ of the plan, the Federal Reserve would ‘recapture’ 8-10% per year – using a conservative ‘scoring’ system.  And this would generate a total ‘recapture’ of close to 50%, or $5-6 trillion, over a 5 year period.

The Leviticus 25 Plan’s dynamic financial benefits for American families are primarily related to long-term reductions in debt burden and a revitalized economy.  The plan assumes that with such benefits, there would not be an immediate, large-scale return to “means-tested welfare” and “income security” programs at the end of the 4-year period by the majority of the Americans who had been prior recipients.  Positive ‘recapture’ inertia would continue.

General tax revenue would substantially rise at the same time, due to economic growth, more Americans working and more people paying taxes and contributing payroll revenues to the Social Security and Medicare trust funds.

The U.S. government currently has no plan that would realistically generate any meaningful liquidity benefits to American families, reignite healthy, grass-roots driven economic growth, and reduce the risk exposure for long term currency debasement.

Instead, the U.S. government has the country on track to add an additional $8-10 trillion to the national debt by the year 2022.

The Leviticus 25 Plan, on the other hand, will deliver on all counts.