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Quote of the Day:
George Kaufman, a finance professor at Loyola University Chicago, is
skeptical. "The last refuge of a scoundrel regulator," he says, "is to
shout 'systemic risk.'" Usually, the alarm is false. He notes that
aside from inter-bank lending, the credit markets were functioning
tolerably well at the height of the crisis. Rates on 30-year mortgages
actually dropped last week.
-- from a column by Steve Chapman, September 25, 2008
Subject: Do you know who the "Primary Dealers" are?
There's a lot of evidence that we've been
scammed. Treasury Secretary Paulson and Federal Reserve Chairman
Bernanke told us they needed to spend $700 billion of your money to buy
supposedly toxic assets that were crippling major firms and for which
there was no immediate market. This was a lie even when they said it,
because . . .
Merrill Lynch was able to sell it's most troubled assets back in July.
If Merrill could do it, other firms could do it
too. They might not have liked the price they got, but it could have
been done. The Big Bailout was purposely designed to give favored firms
a better deal than they could have gotten in the market.
We've also been told, constantly, that credit
markets are frozen. We're still being told that today, constantly,
around the clock, on the cable business channels. It wasn't true
before, and it isn't true now. We could point you to many places for
the evidence, but here's one great graph from the blog Carpe Diem to give you the evidence in one pretty picture.
The hysteria mongers would tell you that even if
consumer credit is okay (and you would have to hammer them with the
evidence to get them to admit it), commercial credit is still in big
trouble. But that isn't true either. Here's a good summary from the great scholar Robert Higgs, at the Independent Institute . . .
"Looking at the data for the first four business
days of the past week, I find that firms sold from $179 billion to $205
billion of commercial paper per day; the number of separate issuances
per day ranged from 6,761 to 7,298. Both the total amount borrowed and
the number of issuances per day increased steadily throughout the week
(data for Friday have not yet been reported)."
Higgs goes on to compare the current numbers with past periods and finds NO CREDIT FREEZE!
But what about the stock market? Doesn't its fall
tell us there's a crisis? Perhaps, until you consider what's causing
stocks to fall.
The really big drops began when Paulson and
Bernanke began peddling their fear to Congress. And since then, nearly
every time some government official has opened his or her mouth, with
some new claim or some new plan, the stock market has taken another
nose dive. A good chunk of the decline appears to be driven by fear
mongering. Want more evidence?
This is the season when firms report their
earnings, and many companies are beating the estimates, but their stock
prices are still falling. This is about fear, not fundamentals.
Who is responsible for this scam? Who are the con artists?
One big culprit in every supposed crisis is the media. They always blow everything out of proportion. Doing so is good for business. CNBC's ratings are soaring.
Another culprit is the politicians, who gain
power from hysteria. In the last supposed crisis (terrorism) it was the
Republicans who primarily benefited. This time it will be the
Democrats, who have a decade of pent-up desires to re-engineer American
society. These dreams may now become reality in the wake of the current
fear mongering.
And last, but not least among the con artists,
are a group of businesses with an official government relationship that
earns them the designation of "Primary Dealers." Here's what Wikipedia
has to say about the Primary Dealers . . .
"A primary dealer is a bank or securities
broker-dealer that may trade directly with the Federal Reserve System
of the United States.[1] They are required to make bids or offers when
the Fed conducts open market operations, provide information to the
Fed's open market trading desk, and to participate actively in U.S.
Treasury securities auctions.[2] They consult with both the U.S.
Treasury and the Fed about funding the budget deficit and implementing
monetary policy. Many former employees of primary dealers work at the
Treasury, because of their expertise in the government debt markets,
though the Fed avoids a similar revolving door policy.[1][2] Between
them, these dealers purchase the vast majority of the U.S. Treasury
securities (T-bills, T-notes, and T-bonds) sold at auction, and resell
them to the public."
Who are the Primary Dealers? Look at this roster (which used to include Bear Stearns) . . .
* BNP Paribas Securities Corp.
* Bank of America Securities LLC
* Barclays Capital Inc.
* Cantor Fitzgerald & Co.
* Citigroup Global Markets Inc.
* Credit Suisse Securities (USA) LLC
* Daiwa Securities America Inc.
* Deutsche Bank Securities Inc.
* Dresdner Kleinwort Securities LLC.
* Goldman, Sachs & Co.
* HSBC Securities (USA) Inc.
* J. P. Morgan Securities Inc.
* Lehman Brothers Inc.
* Merrill Lynch Government Securities Inc.
* Mizuho Securities USA Inc.
* Morgan Stanley & Co. Incorporated
* UBS Securities LLC.
We should notice several things about this list . . .
* These are among the primary firms that collaborated with the government to create the housing bubble
* These are the primary firms that profit from the financing of the
national debt and who are benefiting from the current explosion in the
federal debt and the Federal Reserve's massive inflation of the money
supply
* These are probably the primary firms that will work with the Treasury Department to manage the auction of toxic assets
* These are also probably the primary firms that have toxic assets to
sell (they will be both sellers and brokers in the Big Bailout)
* And most of these firms have been made "too big to fail" through their business dealings with the government
These Primary Dealers are the primary players in
the Big Bailout con-game. And they are part of the crowd who are
looting the country.
You can sit back and accept the Big Bailout and
the on-going Big Interventions as an accomplished fact, or you can rage
and protest to Congress. If we fall silent then the con-artists will be
emboldened to do more and more. We must not fall silent. We must
protest constantly.
We've created a new generic campaign to oppose
all government bailouts. Please use this campaign to send Congress
another message. Ask them to reconsider the Big Bailout. Ask them to
roll-it-back. Use your personal comments to mention some of the facts
described in this article. You can send your message using our Educate the Powerful System.
You can also compete with the power of Primary
Dealers, the politicians, and the media, by taking steps to expand your
own political influence. Please take these additional steps . . .
* Get a Digg account and go to our blog to Digg this message.
* Spread this message by forwarding it to friends and by posting it on your blog.
* Make a contribution or start a monthly pledge so we can recruit more DC Downsizers. THIS IS VERY IMPORTANT.
Thank you for being a part of the growing Downsize DC army.
Jim Babka & Perry Willis
President & Communications Director
DownsizeDC.org, Inc.
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