PODCAST-TRANSCRIPT-WEEKLY-UPDATE-2009-APRIL-03 (FRANCONOMICS.COM)
April 1st Financial Fools Day (Goldman pockets $13 billion as the highest recipient of the $200 billion bailout of AIG), Larry Summers pocketed $135,000 from Goldman Sachs for one speech, etc.
Hello, I am Sam Mishra, the chief podcaster at franconomics.com with the weekly update on the global macro-economy, for the business week ending April 3, 2009.
This was the week of the G-20 summit in London, with Obama and his secretaries Clinton and Geithner going to London to attend the festivities. However, we at Franconomics.com consider this week pivotal for all the data we received this week. You know, we are calling April 1st April Fools Day as Financial Fools Day, because taxpayers nationwide, an world-wide, are being fooled by the Wall-Street bankers. We will discuss in our next weekly podcast the meaning of what we heard as intermediaries through which the treasury will now funnel money to the Wll Street banks, thus avoiding congress oversight. What in the hell happened to all the transparency Obama was talking about???
Anyway, the Financial fools thought of the day on Franconomcs.com suggests how AIG received close to 200 billion in TARP – Troubled Assets Relief Program bailout, and how Goldman pocketed 13 billion from that? Data were disclosed about Summer’s speaking engagements and fees there-from. The current Director of National Economic Council, and Obama’s key economic adviser from his campaign days, as in Larry Summers, the nephew of the venerable Paul Samuelson, had been visiting all the Wall-Street firms, and pocketing handsome handouts for speaking. In fact Goldman paid him $135,000 for just one visit or one speech. That is how some of my Ph.D. friends in Silicon Valley make in one year.
Amazing, don’t you think. When you think about Obama, what do you see? An honest man who will do good to this country? Well, if Geithner and Summers go unchecked --- well, let me not even complete this sentence…
In our prior podcasts, we have already pointed out that Goldman received $12.8 billion from AIG’s close to 200 billion dollars of bailout money… and while the world focused on paltry $165 million in AIG bonus, there has absolutely been no disclosures on which goldman executive pocketed how many millions from the TARP derivative of $12.8 billion as bonus. What happened to the transparency that Obama promised? And oh yes, when Geithner talks about firing CEOs of banks who took too much, I can becha that they are not talking about these big-wigs, like Goldman and Bank of America, for these banks have not taken any bailout money. Hey, they just took the bailout derivative? AIG got the bailout, and we got the derivative. How much was that again? Well, close to $13 billion…
But wait a minute. Did you know that Geithner’s Chief of Staff was a former Goldman lobbyist? Whatever happened to Obama’s pledge that lobbyists couldn’t get in? Failed promises, failed promises… Now that we are talking about Goldman and its choke-hold on the Obama Administration, let’s talk about Neel Kashkari, a former Goldman employee and now a senior Treasury official on what he had to say about perpetuating the Wall-Street Scam under the TALF. You all know that after the $700 billion TARP money, more have been provisioned under the TALF program, right? TALF, as in troubled Assets Loan Facility…This is best described in MIT professor Simon Johnson’s article in the Atlantic: QUOTE Neel Kashkari, a senior Treasury official under both Henry Paulson and Tim Geithner (and a Goldman alum --- ) told Congress in March, “We had received inbound unsolicited proposals from people in the private sector saying, ‘We have capital on the sidelines; we want to go after [distressed bank] assets.’” And the plan lets them do just that: “By marrying government capital—taxpayer capital—with private-sector capital and providing financing, you can enable those investors to then go after those assets at a price that makes sense for the investors and at a price that makes sense for the banks.” Kashkari didn’t mention anything about what makes sense for the third group involved: the taxpayers.UNQUOTE
Now, let’s turn the radar on Dr. Summers. Having extensively listened to his speeches all over you tube, I am convinced he is at his peak when it comes to speaking…In one of my prior jobs, my friends used to joke: When Sam speaks, People Listen. Contrast that with Mr. Summers. When Larry Summers speaks, Wall Street Pays. Being the Milton Freidman disciple that he is, it is no surprise that he is against regulation of any kind. After all, he, along with Rubin, and senator Phill Gramm had thrown out the Provisions within the Glass-Steagall act that prohibit a bank holding company from owning other financial companies. These provisions were repealed on November 12, 1999, by the Gramm-Leach-Bliley Act. During this time, Mr. Summers was the treasury secretary to Bill Clinton. This paved the way for Citi etc. to become what they are today --- too big to fail. And as taxpayers, we have given $50 billion so far to Citi…
Also, he was apparently instrumental in throwing out regulation oversseing financial derivatives, which are at the root of the current crisis. What else would you except from a Milton Friedman disciple? Let’s take a timeout to listen to this critique of Milton “Mr. Greed” Friedman, by Larry Summers’ buddy Paul Krugman QUOTE: In the aftermath of the Great Depression, there were many people saying that markets can never work. Friedman had the intellectual courage to say that markets can too work, and his showman's flair combined with his ability to marshal evidence made him the best spokesman for the virtues of free markets since Adam Smith. But he slipped all too easily into claiming both that markets always work and that only markets work. It's extremely hard to find cases in which Friedman acknowledged the possibility that markets could go wrong, or that government intervention could serve a useful purpose.” Hmmm…
His one-day a week ex-employer DE Shaw trades those derivatives as a hedge fund. Also, it seems everyone, or the key Wall Street executives colluded to rate derivatives made from bad loans, yes, as in Alt-A and sub-prime, derivatives made from bad loans into AAA which in Wall-Street lingo means zero risk, AAA+ bonds, which could be sold, resold, bonus pocketed, etc. And now these toxic waste that the American taxpayer is bailing out is called legacy asset? The only cpntext I had heard legacy used in before was as in “legacy” data. To learn more about fraudulent over-rating of junk loans as AAA , you can go to Franconomics.com and check the Featured Video link, where Professor Black exposes this corruption in great detail in the Bill Moyers journal on PBS.
Now, let’s talk about stocks, bonds, and commodities, for this G-20 summit week.
On the week, the Dow gained 3.1% to close at 8018,, the S&P 500 rose 3.2% and the Nasdaq climbed 5%. The Dow has gained in four straight weeks for the largest four-week gain since 1933. However …
The U.S. economy shed 663,000 jobs in March, marking the fifth month in a row that job losses have been more than half-a-million. The unemployment rate rose four-tenths to 8.5%. Still, this major decline in employment data was not able to create enough negative sentiment to support gold prices, as the commodity kept going down on Friday, and closed down at around 890 dollars per week.
Fed Chairman Bernanke said at the Richmond Fed's Credit Market Symposium: "Longer-term securities do pose some interest-rate risk. However, because the Federal Reserve finances its purchases with short-term liabilities, on average and over time, that risk is mitigated by the normal upward slope of the yield curve,"
On the week, U.S. two-year yields rose 5 basis points to 0.95%, five-year yields gained 7 basis points to 1.87%, 10-year yields climbed 14 basis points to 2.9%, and 30-year yields were higher by 8 basis points to close at 3.7%.
Let’s leave you with this thought: We all know Citi is too big to fail. But for Obama , has Larry Summers grown too big to let go? In other words, Can Obama jerk off the Wall Street hands that currently choke his financial throat? On your answers will depend whether our extra-ordinary President will get a second term or not… I am Sam Mishra from Franconomics.com, and I thank you for listening to our weekly podcast. You have a great week ahead, and stay well. Thank you.
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