Citigroup – #2 recipient of Fed’s ‘secret liquidity lifelines’

Citigroup                                                                                                                    Following the repeal of the Glass-Steagall Act in 1998, Citigroup dove headlong into the derivatives market.  “By 2007 Citi was the largest issuer of CDOs [Credit Default Obligations] … $49 billion worth when the world’s total production was $442 billion.” (Source: Bailout Nation)

Citi later took advantage Structured Investment Vehicles (SIVs) to move high-risk investments off their balance sheets – into “Enron-like side pockets.”

When the housing market began staggering badly in 2007 under the weight of increasing loan delinquencies and foreclosures, “Citigroup’s SIVs were festooned with $87 billion of toxic assets, mortgage-related CDOs, and other long-term paper…. ”

Short-term financing dried up, and the SIVs worked their way back “in-house.”  And “by December 2007, Citi assumed $58 billion of debt to ‘rescue’ $49 billion in Assets.” (Bailout Nation)

The Federal Reserve then cranked open the “Secret Loan” fire hose to flood Citi (and scores of others) with massive liquidity injections (or, in the common parlance, ‘free money’).

Citigroup – #2 recipient of Fed Secret Loans (2008-10)                                                 Bloomberg – Nov 28, 2011

“Citigroup Inc., the third-largest U.S. bank by assets, received a $45 billion capital injection in 2008 from the U.S. Treasury. The New York-based lender got a bigger bailout from the Federal Reserve: $99.5 billion of emergency loans, about the cost of paying, clothing, housing, arming and transporting the U.S. Army for fiscal 2011. On Jan. 20, 2009, as the bank’s shares fell to $2.80, down almost 90 percent in a year, its Fed loans included $34.1 billion from the Term Securities Lending Facility, $25.1 billion from the Commercial Paper Funding Facility, $25 billion from the Term Auction Facility, $14 billion from the Primary Dealer Credit Facility and $1 billion from single-tranche open market operations.”

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The point of this little historical ‘look back’ is to simply restate the case that U.S. citizens deserve nothing less than equal access to credit extensions that was provided to Morgan Stanley, Citi, and the scores of other financial enterprises whose high risk investment profiles led to financial calamity and rescue action by the Federal Reserve.

It is time now for the Fed to extend credit to American families via a “U.S. Citizens Credit Facility.”

The Leviticus 25 Plan 2017 –  $75,000 per U.S. citizen                                                  The Leviticus 25 Plan 2017 (1398)

NY Times, March 26, 2016: Gaining traction: ground-level, citizen-targeted liquidity access

March 2016: Global economies are growing increasingly fragile and more heavily debt-logged, despite trillions of dollars of Central Bank liquidity infusions into the world’s banking system.

Interest is now picking up, at high levels, for a new liquidity dynamic: granting citizens the same direct access to liquidity that global banks and insurers  – the very financial institutions that led the world into the great 2007-2010 meltdown when their greed-driven, leveraged speculation, derivative-based gambling strategies received – during the great Wall Street financial sector bailout.

They are calling it a “helicopter money drop,” but if were to be done right, it would be something far different, and far better.

Here is one of the latest stories…

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NY Times – March 26, 2016:                                                                                                  BY THE ASSOCIATED PRESS                                                                                 “Raining Money to Spur the Economy? Not as Crazy as it Sounds” 

Excerpts:                                                                                                             FRANKFURT, Germany — Helicopters dropping money in the streets: it’s a vivid metaphor for a drastic form of central bank stimulus that is gaining attention as a possible way to help the global economy out of its malaise.

The idea of “helicopter money” is straightforward: central banks would create new cash and give it to people, like an air drop of supplies. As people spend or invest it, economic growth and inflation would rise.

[snip]

“Helicopter money may be the next big thing, as policymakers reach the limits of standard unconventional practices,” says Andrew Kenningham, senior global economist at Capital Economics in London.

European Central Bank head Mario Draghi was asked this month about the possibility of using “helicopter money” after the bank announced a further round of stimulus measures, including negative interest rates and more massive bond purchases aimed at pushing up inflation and growth.

“We haven’t really thought or talked about it,” he said. “It’s a very interesting concept that is now being discussed by academic economists and in various environments.”

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Note: “Helicopter money” implies a ‘let-it-fly’ type of money drop with weak internal controls, no legitimate ‘recapture’ mechanism, and little, if any, accountability required of citizen recipients.

The Leviticus 25 Plan does include accountability provisions. It includes a comprehensive recapture mechanism that begins paying for itself in ‘month one,’ and generates massive government surpluses each of the first five years, following implementation.

Total from Recapture Provisions:                                                                                  The Leviticus 25 Plan total recapture benefits over the first five years of the program: $8.904 trillion, for an average of $1.78 trillion per year.

The Leviticus 25 Plan will promote enormous debt-reduction benefits at the family level, thereby generating real, market-based, economic growth and vitality.

The Leviticus 25 Plan will restore economic liberty.

The Leviticus 25 Plan 2017 –  $75,000 per U.S. citizen                                                   The Leviticus 25 Plan 2017 (1393)

February 2016: Global economics – “imploding”

A brief summary…

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ZeroHedge 2/17/16                                                                                                                21 New Numbers That Show That The Global Economy Is Absolutely Imploding  Submitted by Michael Snyder via The Economic Collapse blog,  Excerpts:                                                                                                                             “…all the hard economic numbers that are coming in from around the world tell us that the global economy is coming apart at the seams.  This is especially true when you look at global trade numbers.

The amount of stuff that is being bought, sold and shipped around the planet is falling precipitously….  The truth is that we are in the early chapters of a brand new economic meltdown, and I believe that all of the signs indicate that it will continue to get worse in the months ahead…the global economy is absolutely imploding…

#1 Chinese exports fell by 11.2 percent year over year in January.

#2 Chinese imports were even worse in January.  On a year over year basis, they declined a whopping 18.8 percent.

#3 It may be hard to believe, but Chinese imports have now plunged for 15 months in a row.

#4 In India, exports were down 13.6 percent on a year over year basis in January.

#5 In Japan, exports declined 8 percent in December on a year over year basis, while imports plummeted 18 percent.

#6 For the sixth time in six years, Japanese GDP growth has gone negative.

#7 In the United States, exports were down 7 percent on a year over year basis in December.

#8 U.S. factory orders have fallen for 14 months in a row.

#9 The Restaurant Performance Index in the United States has dropped to the lowest level that we have seen since 2008.

#10 This month the Baltic Dry Index fell below 300 for the first time ever.

#11 It is now cheaper to rent a 1,100 foot merchant vessel than it is to rent a Ferrari.

#12 Orders for Class 8 trucks in the United States dropped by 48 percent on a year over year basis in January.

#13 Due to a lack of demand for trucks, Daimler just laid off 1,250 U.S. workers.

#14 Even though Saudi Arabia and Russia have agreed to freeze oil production at current levels, the price of U.S. oil has still fallen below 30 dollars a barrel.

#15 It is being reported that 35 percent of all oil and gas companies around the world are at risk of falling into bankruptcy.

#16 According to CNN, 67 oil and gas companies in the United States filed for bankruptcy during 2015.

#17 The number of job cuts in the United States skyrocketed 218 percent during the month of January according to Challenger, Gray & Christmas.

#18 All over America, retail stores are shutting down at a stunning pace.  The following list of store closures comes from one of my previous articles

-Wal-Mart is closing 269 stores, including 154 inside the United States.

-K-Mart is closing down more than two dozen stores over the next several months.

-J.C. Penney will be permanently shutting down 47 more stores after closing a total of 40 stores in 2015.

-Macy’s has decided that it needs to shutter 36 stores and lay off approximately 2,500 employees.

-The Gap is in the process of closing 175 stores in North America.

-Aeropostale is in the process of closing 84 stores all across America.

-Finish Line has announced that 150 stores will be shutting down over the next few years.

-Sears has shut down about 600 stores over the past year or so, but sales at the stores that remain open continue to fall precipitously.

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Global economies are starved for liquidity.

It all starts at ground level, and there is one plan that delivers:

The Leviticus 25 Plan 2017 –  $75,000 per U.S. citizen                                                   The Leviticus 25 Plan 2017 (1384)

Morgan Stanley – #1 recipient of Fed’s ‘secret liquidity lifelines’

A brief review…

As the banking crisis intensified in the Fall of 2008, with major banking institutions assuming, or on the verge of assuming, the classical ‘snorkel’ position (aka ‘underwater’ status), the Federal Reserve ran quickly to the rescue with ‘secret liquidity lifelines” (Bloomberg Uncovers the Fed’s Secret Liquidity Lifelines … 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: Bloomberg – November 2011

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.”

Peak amount of Debt on 9/29/2008: $107B
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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:           A U.S. Citizens Credit Facility.

The Leviticus 25 Plan 2017 –  $75,000 per U.S. citizen                                                   The Leviticus 25 Plan 2017 (1383)

March 2016: Greenspan notes outlook is grim…

“We’re In Trouble”: Alan Greenspan Delivers Stark Warning  – ZeroHedge 3/1/16

As far as the US economy is concerned, Greenspan isn’t optimistic. “We’re in trouble basically because productivity is dead in the water…Real capital investment is way below average. Why? Because business people are very uncertain about the future.”

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And finally, here’s the punchline. Asked whether he’s optimistic going forward, Greenspan said this: “No. I haven’t been for quite a while. And I won’t be until we can resolve the entitlement programs. Nobody wants to touch it. And that is gradually crowding out capital investment, and that’s crowding out productivity, and it’s crowding out the standards of living where do you want me to go from there.”

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Productivity is “dead in the water” due to the fact that the U.S. government penalizes work and industriousness … while at the same time rewarding non-work and stagnation.

Furthermore, the establishment class in Washington has no clue whatsoever on how to “resolve the entitlement programs” in a way that will lift Americans up out of poverty.

There is one economic acceleration plan that would reverse our lagging productivity quagmire and free millions of Americans from the social welfare / entitlement program ‘dead end treadmill’ – and put an end to government-managed serfdom in America:

The Leviticus 25 Plan 2017 –  $75,000 per U.S. citizen                                              The Leviticus 25 Plan 2017 (1379)

Unleashing powerful economic dynamics for America – 2016: The Leviticus 25 Plan

America needs economic growth. Real, free-market-based economic growth, not the fake, debt-driven, short-term QE growth orchestrated by big government central planners and Treasury Department with their TARP bailouts and ineffectual economic stimulus packages.

Trillions of dollars in liquidity infusions were pumped out through the government’s ‘big pipe’ to Wall Street banks, insurers, and other politically-connected business entities during the financial crisis years.

And here’s what we have to show for it: Wall Street’s financial sector recovered well; Main Street America did not.

We have had a debt-driven ‘economic recovery’  with anemic growth, $19 trillion in national debt, 94 million working-age Americans not participating in the labor force.  Main Street USA is underpinned by financially distressed American families with high debt loads.

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The Atlanta Fed’s GDP Now forecast:

Latest forecast: 1.9 percent — March 16, 2016

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2016 is 1.9 percent on March 16, unchanged from March 15. The forecast for first-quarter real consumer spending growth fell from 2.7 percent to 2.5 percent after this morning’s Consumer Price Index (CPI) and industrial production (IP) releases from the U.S. Bureau of Labor Statistics and the Federal Reserve, respectively….

Another signal of economic weakness – declining growth rate of income and employment taxes withheld:

America needs real, market-based economic growth.

It all starts by unleashing the power of economic liberty and debt elimination at ground level:

The Leviticus 25 Plan is a dynamic economic initiative providing direct liquidity benefits for American families, while at the same time scaling back the role of government in managing and controlling the affairs of citizens.  It is a comprehensive plan with long-term economic and social benefits for citizens and government.

The inspiration for this plan is based upon Biblical principles set forth in the Book of Leviticus, principles tendering direct economic liberties to the people.

The Leviticus 25 Plan 2017 –  $75,000 per U.S. citizen                                                  The Leviticus 25 Plan 2017 (1374)

 

The big Wall Street financial sector bailout and historical foreclosure activity (2008-2012)

Wall Street’s financial sector, in its quest for ever greater ‘yields,’ locked itself into high octane leveraged speculation strategies during the years leading up to the great housing bubble.

The rating agencies gave the underlying assets their ‘Triple-A grade’ kiss of approval (on what proved out to be sewage-grade quality mortgage assets).

Finally, Wall Street’s hedging strategies evaporated when AIG revealed that it did not have the reserves to cover the credit default swaps it had written.

Massive default waves hit the housing market, and the banking sector quickly found itself with gaping capital holes in balance sheets.

Enter the Federal Reserve and U.S. Treasury to re-liquify banks and insurers with trillions of dollars, courtesy of U.S. tax-paying citizens, to rescue the financial system.

In the meantime, the very banks which were ‘rescued’ by taxpayers, turned around and foreclosed on millions of homes.

11.75 million foreclosures during the 2008-2012 period.

Historical Foreclosure Activity

Also in the meantime, the U.S. Homeownership Rate has slumped all the way back down to a level not seen since 1996.

And according to RealtyTrac’s most recent Market Summary, “There are currently 912,073 properties in U.S. that are in some stage of foreclosure (default, auction or bank owned)…

It is time now to restore the financial health of American families with the same direct access to liquidity that was provided to Wall Street during the financial crisis.

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The Leviticus 25 Plan is a dynamic economic initiative providing direct liquidity benefits for American families, while at the same time scaling back the role of government in managing and controlling the affairs of citizens.  It is a comprehensive plan with long-term economic and social benefits for citizens and government.

The inspiration for this plan is based upon Biblical principles set forth in the Book of Leviticus, principles tendering direct economic liberties to the people.

The Leviticus 25 Plan 2017 –  $75,000 per U.S. citizen                                                  The Leviticus 25 Plan 2017 (1369)

 

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Canada province the latest to pilot “universal basic income” program

The Canada province of Ontario will soon be joining Switzerland and Finland in plans to grant it’s citizens direct access to liquidity, thereby allowing citizens the opportunity to allocate resources on an individual basis, as best meets their needs and wishes, rather than running all social spending through the government ‘big pipe.’

This is a major step forward in restoring economic liberty.

F.A. Hayek noted well that when government dominates the allocation of resources, for example with the nationalization of industries and control over social welfare spending, government then control the people – and basic freedoms are lost.

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The Independent                                                                                                                   March 2016: Canada province Ontario plans to trial universal basic income

Ontario has announced it could soon be sending a monthly cheque to its residents as it plans to launch an experiment testing the basic income concept.

 While officials in the Canadian province are yet to release any specific details of the project – including how much will be given to residents who participate – the finance ministry has published a report confirming the government’s intention to roll out the experiment.

The general concept of basic income involves a government handing out a flat-rate income to every single citizen within a country, either by replacing existing benefits or to top them up.

Proponents of the idea say it would save on welfare administration costs, reduce the poverty traps of traditional welfare states, be fair to people who have jobs, and give people more autonomy in general.

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Canada, Finland and the Swiss are on the right track, but by far the greatest gains in restoring economic liberty and reigniting economic growth would come from a plan which eliminates enormous swaths of debt at ground level, a plan which reestablishes free market dynamics and generates massive tax revenue growth and balanced budgets at all levels of government.

There is such a plan, and it is the most powerful economic acceleration plan in the world:

The Leviticus 25 Plan 2017 –  $75,000 per U.S. citizen                                                   The Leviticus 25 Plan 2017 (1367)

Central planning ‘U.S. style’ – and the legacy of perverse outcomes..

March 2016 – It is hard to imagine how such well-intentioned ‘central planners,’ at the highest levels of the U.S. government and Federal Reserve, could have orchestrated such desolate results for the citizenry:

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Chart accessed from ZeroHedge 3-2-16:                                                                           Can Americans handle four more years of this?

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It is time for a powerful new ‘decentralized’ plan – that grants U.S. citizens the same direct access to liquidity that was provided to Wall Street’s financial sector during the great Wall Street bailout of 2008-2012:

The Leviticus 25 Plan 2017 –  $75,000 per U.S. citizen                                                  The Leviticus 25 Plan 2017 (1366)

 

European Central Bank (ECB) ‘guns’ the liquidity accelerator, but misfires on target selection…..

The ECB Governing Council ‘bombed’ the markets today, announcing a massive new liquidity infusion program – ramping up their on-going QE fiat-money-printing (also known as their asset purchase programme) to a hefty €80 billion starting in April.

The ECB will now add purchases of investment grade (IG) non-financial bonds  (corporate bonds) to their previously financial asset and sovereign debt purchases.

ZeroHedge 3-10-16:                                                                                                        Draghi Delivers The Bazooka: ECB Announces Surprise Refi, Marginal Rate Cuts; Boosts QE To €80BN, Adds IG Bonds

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The ECB is doubling down on what has so far proven to be a feckless response to a liquidity-starved economic environment, pumping money out to institutions.

The ECB should be targeting citizens of their respective nations, granting citizens with the same direct access to liquidity that they are so generously providing to banks, governmental entities, and now non-financial corporations.

There is a better way:

The Leviticus 25 Plan is a dynamic economic initiative providing direct liquidity benefits for American families, while at the same time scaling back the role of government in managing and controlling the affairs of citizens.  It is a comprehensive plan with long-term economic and social benefits for citizens and government.

The inspiration for this plan is based upon Biblical principles set forth in the Book of Leviticus, principles tendering direct economic liberties to the people.

The Leviticus 25 Plan 2017 –  $75,000 per U.S. citizen                                                   The Leviticus 25 Plan 2017 (1365)