Economic meltdown Fall 2008: Fed and Treasury run “secret liquidity lifelines” to the big dogs of finance (Bloomberg)

As the banking crisis intensified in the Fall of 2008, with major banking institutions assuming (or on the verge of assuming) ‘underwater’ status, the Federal Reserve ran quickly to the rescue with secret liquidity lifelines” (Bloomberg 8-22-11).

The Fed substantially eased some important collateral rules for banks, “meaning that banks that could once borrow only against sound collateral, like Treasury bills or AAA-rated corporate bonds, could now borrow against pretty much anything – including some of the mortgage-backed sewage that got us into this mess in the first place….  ‘All of a sudden, banks were allowed to post absolute [expletive deleted] to the Fed’s balance sheet,’ [according to] the manager of the prominent hedge fund.” (Source: Bailout Hustle, Matt Taibbi).

The Federal Reserve invented various “facilities” to fire-hose liquidity out to the big banks and big brokerage firms, including these:                                                                            Primary Dealers’ Credit Facility                                                                                                Term Securities Lending Facility                                                                                   Temporary Liquidity Guarantee Program                                                                   Commercial Paper Funding Facility                                                                                       Term Auction Facility                                                                                                               Public Private Investment Program

And, here we go – from the top:

Top recipient – Morgan Stanley                                                                                       Morgan Stanley, facing a crisis of confidence after the fall of Lehman Brothers Holdings Inc., got a $9 billion injection from Japanese bank Mitsubishi UFJ Financial Group Inc. and agreed to take a $10 billion bailout from the U.S. Treasury to shore up capital. As hedge-fund customers pulled funds out of the New York-based firm, it plugged the hole with $107.3 billion of secret loans from the Federal Reserve’s Primary Dealer Credit Facility and Term Securities Lending Facility, set up earlier in the year to supply brokerage firms with emergency financing.”

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The Leviticus 25 Plan does not seek to ‘interrupt’ or reverse any of the special relationships that have developed in the Fed’s financial sphere.  It only seeks to level the playing field – by providing U.S. citizens the same access to direct liquidity flows that  the big banks enjoyed ‘in their time of need.’

The Leviticus 25 Plan proposes one additional upgrade to the Fed’s liquidity lines:   U.S. Citizens Credit Facility.

U.S. citizens should demand nothing less. We need it now.

 

 

 

 

Perpetual entitlement spending – and the day of reckoning

Both major political parties in the U.S., over the past 20-30 years, have cooperated in constructing and growing the welfare state into a colossal, out-of-control, unsustainable mess.  Nearly every program is riddled with fraud and waste.  And perhaps worst of all, these programs have thoroughly destroyed the incentive to work and take responsibility for making wise choices in managing one’s daily affairs.

There is no legitimate proposal on the table, by either party, for any type of ‘a way out.’

Means Tested Welfare spending currently stands at about $1 trillion per year.  It is projected to continue growing, unabated, for many years to come.

One political party favors plowing ahead with continued massive entitlement spending. This same party actually supports ‘recruitment’ and continued growth in the “welfare roles.”  They are enabling a permanent dependency class in America fed by higher taxes and wealth confiscation – for political gain.

The U.S. national debt / GDP ratio is over 100%, and the Net Present Value of unfunded liabilities (NPV) is “beyond containment.”  The U.S. is headed toward a major currency crisis in the coming years.  Continuing on with ‘status quo’ welfare policies will hasten our advance to that crisis time.

In the end, the poor will get hit the hardest – and there will be no answers left.

The other political party favors a certain level of ‘cold turkey’ cuts to entitlement programs like SNAP (food stamps). One recent proposal called for $40 billion in cuts over a 10 year period.  This food stamp trimming would amount to $4 billion per year – for 10 years.  In the face of $700-800 billion annual deficits, a $4 billion cut to food stamps would be practically meaningless.

That is not to say that the food stamp program doesn’t have it’s share of graft and abuse.  It certainly does: Food Stamps exchanged for drugs, weapons, contraband – Judicial Watch March 2012;  Food Stamp fraud – CAGW February 2012:

Cutting food stamps, any way you slice it, would be politically ‘messy.’  Very messy.  Inevitably, there would be families going hungry.  And that  would, over time, end up being a political ticking time bomb. It would be almost impossible to defend – when no one in Congress would lose so much as a single meal.

Furthermore, with deflationary winds still blowing strong in the U.S., liquidity is essential for the economy.  Welfare spending cuts would dampen economic growth and negatively impact tax revenues.

Neither political party has a plan to get America out of this mess.  Dark clouds are on the horizon.  A time of reckoning awaits us.

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The Leviticus 25 Plan is a non-political solution for America’s ongoing economic crisis.  It would deliver significant, real-time benefits to American families – and provide equal opportunities for all.  No one would need to go hungry.

It would advance the cause of economic liberty and reinvigorate the economy.  And it would pay for itself over a 10-15 year period.

The Leviticus 25 Plan.

Boomer retirement savings: “No possible scenario where this ends well.”

Baby boomer retirement savings are abysmally low…. pointing to a major liquidity squeeze in coming years.

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Jim Quinn of The Burning Platform blog, accessed from ZeroHedge 8-21-13:      “Luckily, the average American is so bad at math they can’t read this chart and understand the implications. They remain willfully ignorant of their plight. After a lifetime of working, the median Boomer household has managed to accumulate $12,000 of retirement savings.                 

That means that 50% have even less than $12,000 for their retirement. These 55 to 64 year olds are up [the] creek without a paddle. No wonder the percentage of over 55 people working is at an all-time high. Every age bracket has been living in a land of delusion.

The entire country has bought into the ”live for today” mantra.

We have trillions in unfunded Social Security obligations that won’t be paid. Cities and States have trillions in unfunded pension and health benefits that won’t be paid. The government and its citizens have lived above their means for decades and haven’t saved for a rainy day or their futures. Wait until the 40% stock market crash does a number on these figures in the next year.

There is no possible scenario where this ends well or can be solved by another government solution. It’s too late.”

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It is not too late for a fresh, bold, powerful ‘non-government program’ solution:            The Leviticus 25 Plan.

 

The big U.S. debt shadow

The Shutdown is A Sideshow.  Debt is the Threat                                                                                    By Nial Ferguson  WSJ 10-4-13                                                                                        Excerpts:

 A very striking feature of the latest CBO report is how much worse it is than last year’s. A year ago, the CBO’s extended baseline series for the federal debt in public hands projected a figure of 52% of GDP by 2038. That figure has very nearly doubled to 100%. A year ago the debt was supposed to glide down to zero by the 2070s. This year’s long-run projection for 2076 is above 200%. In this devastating reassessment, a crucial role is played here by the more realistic growth assumptions used this year.”
 
“Just how negative becomes clear when one considers the full range of scenarios offered by CBO for the period from now until 2038. Only in three of 13 scenarios—two of which imagine politically highly unlikely spending cuts or tax hikes—does the debt shrink from its current level of 73% of GDP. In all the others it increases to between 77% and 190% of GDP. It should be noted that this last figure can reasonably be considered among the more likely of the scenarios, since it combines the alternative fiscal scenario, in which politicians in Washington behave as they have done in the past, raising spending more than taxation.”
 
“Only a fantasist can seriously believe “this is not a crisis.” The fiscal arithmetic of excessive federal borrowing is nasty even when relatively optimistic assumptions are made about growth and interest rates. Currently, net interest payments on the federal debt are around 8% of revenues. But under the CBO’s extended baseline scenario, that share could rise to 20% by 2026, 30% by 2049, and 40% by 2072. By 2088, the last date for which the CBO now offers projections, interest payments would—absent any changes in current policy—absorb just under half of all tax revenues. That is another way of saying that policy is unsustainable.”
 
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America needs an economic plan that will reinvigorate economic growth. 
In order to do that the plan must provide direct liquidity infusions to U.S. citizens, eliminate debt at the family level, re-establish meaningful work incentives, reduce the scope of government, and restore economic liberty to the people.                            There is one plan that accomplishes these imperatives.
 
 America’s Economic Plan for the Future – The Leviticus 25 Plan
 
$64,000 per U.S. citizen – credit extension at 0% interest. 75% goes into a Family Account (FA) and 25% goes into a Medical Savings Account (MSA). As an example: A family of four would receive $256,000: $192,000 deposited into the Family Account, $64,000 into the family’s Medical Savings Account.
 
Recapture provision overview:  Participants agree to give up income tax refunds each year for 5 years. Participants also agree to give up Means Tested Welfare benefits, Income Security benefits, unemployment insurance benefits, SSI, and SSDI benefits for a 5 years period.
 
Medicaid, Medicare, VA, Tricare, and FEBH healthcare benefits remain in place, but the deductible goes up to $2500 / person / year for 5 years.
 
The Recapture Provisions return over 50% during the first 5 years. Dynamic inertia and positive feedback generate sufficient ‘follow-on’ return to fully fund the plan over a 10-15 year period.
 
The Leviticus 25 Plan would restore economic liberty, reduce the scope of government, re-ignite real economic growth, generate real tax revenue growth (federal, state, local), and make a real difference in peoples’ lives.
 
The Leviticus 25 Plan is the only plan in America that would deliver meaningful real-time benefits –  and pay for itself over a 10-15 year period.
 
The Leviticus 25 Plan. 
The $64,000 Solution October 2013:
 
 

Firings and foreclosures…

These are not positive signs for the U.S. economy

Job Cuts (Excerpts from ZeroHedge 10-11-13):

Challenger Gray & Christmas provided 24/7 Wall   St. with all job cut announcements affecting at least 500 positions this year…. We only considered publicly traded, American companies, or divisions of publicly traded companies. Job cuts did not need to be entirely within the United   States.”

These are the 10 companies cutting the most jobs.

1. JPMorgan Chase & Co. > Job cuts: 19,000 > Number of employees: 254,063

2. J.C. Penney Company, Inc. > Job cuts: 15,020 > Number of employees: 116,000

3. International Business Machines Corp. > Job cuts: 9,400 > Number of employees: 434,246

4. Boeing Co. > Job cuts: 5,800 > Number of employees: 174,400

5. American Express Company > Job cuts: 5,400 > Number of employees: 63,500

6. Wells Fargo & Co. > Job cuts: 5,236 > Number of employees: 274,300

7. Cisco Systems, Inc. > Job cuts: 4,500 > Number of employees: 75,049

8. MetLife Inc. > Job cuts: 3,150 > Number of employees: 64,000

9. Blockbuster (Dish Network Corp.) > Job cuts: 3,000 > Number of employees: 35,000

10. United Technologies, Inc. > Job cuts: 3,000 > Number of employees: 218,000

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Foreclosure filings (Excerpts from RealtyTrac report 10-10-13)

”Foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 131,232 U.S. properties in September, a 2 percent increase from the previous month but a 27 percent decrease from a year ago.

There were a total of 376,931 U.S. properties with foreclosure filings in the third quarter of 2013, down 7 percent from the previous quarter and down 29 percent from the third quarter of 2012 — the biggest annual decrease since the second quarter of 2011. One in every 348 housing units had a foreclosure filing during the quarter.

Third quarter bank repossessions (REO) decreased 24 percent from a year ago but were up 7 percent from the previous quarter. A total of 119,485 U.S. properties were repossessed by lenders in the third quarter, putting the nation on pace for close to half a million total bank repossessions for the year.

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Note:  The U.S. is on track for 500,000 REOs this year.  And REOs (Real Estate Owned) are a subcategory of repossessions in which minimum bids are not generated at foreclosure auctions, and the banks take possession of the property.

America’s economy is still bleeding.  We need a real economic growth plan.  One that delivers real benefits to real people.

The Leviticus 25 Plan.

 

 

SSDI growth is threatening to ‘bust’ the Social Security System…

14 million Americans are presently rolled in the Social Security Disability Insurance program  –  each receiving an average of $1,111 per month.

Total cost of SSDI:  $15.554 billion per month, or $186.6 billion per year.

The Leviticus 25 Plan assumes 80% participation by U.S. citizens.  Participants would give up Means Tested Welfare, Income Security program benefits, SSI, SSDI, among other social program adjustments (see below).

The SSDI savings alone would result in ($186.6 billion X 80%,) $149.3 billion annually.

And this would amount to total ‘recapture’ savings of at least $746.4 billion (assuming no growth in recipient numbers or payouts) over the initial 5 year period.

Reports:                                                                                                                         Fox News Sep 2013 SSDI report                                                                                 Widespread Fraud reported in Soc Security Administration’s Disability Program – Oct 2013

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America’s Economic Plan for the Future – The Leviticus 25 Plan

$64,000 per U.S. citizen – credit extension at 0% interest. 75% goes into a Family Account (FA) and 25% goes into a Medical Savings Account (MSA). As an example: A family of four would receive $256,000: $192,000 deposited into the Family Account, $64,000 into the family’s Medical Savings Account.

Recapture provision overview:  Participants agree to give up income tax refunds each year for 5 years. Participants also agree to give up Means Tested Welfare benefits, Income Security benefits, unemployment insurance benefits, SSI, and SSDI benefits for a 5 years period.

Medicaid, Medicare, VA, Tricare, and FEBH healthcare benefits remain in place, but the deductible goes up to $2500 / person / year for 5 years.

The Recapture Provisions return over 50% during the first 5 years. Dynamic inertia and positive feedback generate sufficient ‘follow-on’ return to fully fund the plan over a 10-15 year period.

The Leviticus 25 Plan would restore economic liberty, reduce the scope of government, re-ignite genuine economic growth, generate legitimate tax revenue growth (federal, state, local), and make a real difference in peoples’ lives.

The Leviticus 25 Plan is the only plan in America that would deliver meaningful real-time benefits –  and pay for itself over a 10-15 year period.

The Leviticus 25 Plan. Full document – September 2013 revision

 

 

Big government central-planning and the strange case of REOs… And why America needs a new plan. The Leviticus 25 Plan.

Millions of home loans have fallen into “distressed status” over the past 5 years, as the economy began shriveling up and American families began losing income and falling behind on their mortgage payments.

At a certain point in time lenders (banks, government agencies / loan insurers) file  foreclosure notices on these distressed properties.  A significant number of days may then pass before the process moves on to the next step. The delinquent homeowner may request a short-sale – which the lender may or may not allow.  Or the lender may proceed on to a foreclosure auction.

The “foreclosing beneficiary” (the ‘lender) will set the opening bid for the amount owed on the loan (or the ‘outstanding loan amount’).  And if there are no interested parties willing to bid at that ‘set’ price, then the foreclosing beneficiary comes to legally repossess the property.

These lender-owned properties are known as Real Estate Owned (REO) properties, and are listed on their books as non-performing assets.

RealtyTrac forecasts 500,000 REOs for 2013.  That’s an average of over 1360 “lender repossessions” per day, for each and every day of the year.  That’s over 1360 families daily – losing their homes to banks and government agencies.

And now some big firms like the hedgefund, Blackstone, have been stepping in to buy up these ‘lender-owned’ properties, in mass, in certain markets like Phoenix and Tampa, with support from an “ongoing government-subsidized, GSE/FHFA endorsed REO-to-Rent initiative.”  (ZeroHedge 3-14-13)

Blackstone’s plan is to get the properties fixed up and rented out — with rent-paying tenants in place.

And then they plan to securitize these tranches – similar to the good old mortgage securitizations (MBSs) that were so popular during the housing bubble (the one that ‘popped’ in the Fall of 2008 and pushed the banks underwater and sent the U.S. economy into a tailspin).

So… here is a quick summary.  Homeowners in America (500,000 this year alone) will ‘exit’ their homes as those homes are legally repossessed by lenders (the ‘foreclosing beneficiary’) – banks and government agencies.  The U.S. government then enters the scene to subsidize (yes, SUBSIDIZE) the sale of these homes from the repossessing lender to a hedgefund to turn into rentals for eventual securitization and sale as an  income-producing investment vehicle.

This scheme is a “government-subsidized, GSE/FHFA endorsed REO-to-Rent initiative, through which large asset managers have been encouraged to take advantage of government funded, risk-free financing and purchase foreclosed properties in bulk, with the intention of converting them into rental properties. The REO-To-Rent has traditionally been open to the biggest of financial companies, or at least those who don’t have the stigma of legacy mortgage origination resulting in billions in litigation reserves, which means mostly hedge funds and PE firms.” (ZeroHedge 3-14-13)

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The Leviticus 25 Plan offers a preferred alternative.

Instead of the U.S. government again bailing out the banks by subsidizing the sale of these non-performing assets to investment companies, The Leviticus 25 Plan keeps American families in their homes, so the problem doesn’t develop in the first place.

It is unconscionable that the U.S. government offers no mechanism to provide liquidity to financially distressed American families, but it will provide liquidity to distressed banks to move distressed properties off their books – and into the hands of hedgefunds for ‘grooming’ as securitized investments.

There is only one plan in America that will re-ignite real economic growth, pay for itself over a 10-15 year period, and deliver substantial ‘ground-level’ benefits to Americans.

The Leviticus 25 Plan.