Tuesday, October 27, 2009

Too big to fail but not for the chopping block, Barney Frank sharpens the cleaver

The USD continues to strengthen against the Euro for no apparent reason. News reports claimed this was from the report of the new Consumer Confidence Index being down unexpectedly. This just seems odd, somebody with a lot of muscle is pushing the market. China, that has a bin full of Dollars that would make Scrooge McDuck faint, has been saying that they would like to reduce their Dollar holdings but how much they actually hold is a closely guarded secret. Opinions vary but a trillion plus in Dollars is likely with that much or more in other currencies, mostly Euros with significant holdings of Sterling and Yen.

Meanwhile in the too big to fail department, Congressman Barney Frank is getting close to producing a new set of rules for seizing and craving up these too big to fail banks and non bank financial institutions like AIG. The Republicans will have fits about this but it really is no different than what the FDIC does to the Third National Bank down on the corner when it fails.

According to the reports, "the legislation will make it easier for government to seize control of troubled financial institutions, remove management, change terms and conditions of existing loans, and wipe out shareholders".

This would circumvent Bankruptcy Court and most importantly, bond holders would not be treated as a special class and be wiped out as well. This would hit the rich elite where they live.

Class warfare could be taking an entirely new turn or maybe not. The Federal Reserve seems to be deeply involved in this new proposal and that should send a chill up your spine. We’ll have to see what is in the final bill but even then we really won’t know what is going on until these broad new powers are actually used. Since all of the too big to fail institutions have all actually failed and the bailout really didn’t change that, we will find out soon enough. www.prairie2.com


Anonymous said...

Should be class warfare. If you live in the American version of an Indian slum you aren't going to make $200,000 as a Doctor, Lawyer or university professor and prison guards will not be getting over $100,000. The money will just not be there. If you sink the bottom rank most of the rest will have to sink too.

All those that have been so eager to tell American workers that produce or used to actually produce things that they need to compete against the other workers of the world are going to see that this sinking boat will drag them down too. I don't have a problem with a guy in India reading my X-rays when the guy here that is reading them likes buying his imported crap cheaper due to exporting jobs. More jobs to be exported coming up.

Unless things change (I seriously doubt real change) we will have a two or three percent at the top living in mansions, driving around with groups of guards and fearing death when they do leave their compounds and the rest of us living in a third world slum.

The controls are being held by people that are either part of that small percent or that are in the pay of them...that old saying we used to hear on Radio Peking..."The Running Dogs of the American Capitalists Roaders..."

I think that Communism failed for the same reasons that Capitalism is failing (how can any one doubt that is failing!), people are people and are are some that are more than willing to cheat, lie and steal for their gain and those people are running the US version of Capitalism...

Anonymous said...

over at washingtonsblog.com both Richard Trumka of AFL-CIO and do you believe! American Enterprise Institute agree the oversight bill is bad, bad, bad.