The Sovereign Wealth Fund Threat: Are Chinese Communists Behind Rush In Passing Bailout Bill?

Posted on October 3, 2008. Filed under: Blogroll, Books, Economics, Investments, Links, Music, People, Politics, Quotations, Rants, Raves, Regulations, Resources, Technology, Uncategorized, Video, War | Tags: , , , , , , , , , , , , , , , , , , , , , , , , |

What is going on?

The Elite Looting Americans


 

Rep. McCotter discusses Sovereign Wealth Funds

Ron Paul talks @ Sovereign Wealth Funds Hearing 9/10/8

Sovereign wealth funds explained – Newsnight video

Lee Kuan Yew on Singapore sovereign wealth fund

Sovereign Wealth Funds On The Rise

Sovereign wealth funds – what China will do next?

Sovereign Wealth Funds — Navarro’s China Effect

17th Annual Conference:Sovereign Wealth Fund Investment 7/10

17th AnnualConference:Sovereign Wealth Fund Investment 10/10

Paul Volcker on Sovereign Wealth Funds and the Economy


 

China’s threat to American economic stability: CNN

America’s Fate in the Coming Era of Chinese Hegemony

“…a parliament or government which becomes a charitable institution thereby becomes exposed to irresistable blackmail. And it soon ceases to be the ‘deserts’ but becomes exclusively the ‘political necessity’ which determines which groups are to be favoured at general expense.”

~Friedrick A. Hayek, The Political Order of a Free People, page 150.

“…once wide coercive powers are given to governmental agencies for particular purposes, such powers cannot be effectively controlled by democratic assemblies.”

~Friedrick A. Hayek, The Constitution of Liberty, page 116.

“It would scarcely be an exaggeration to say that the greatest danger to liberty today comes from the men who are most needed and most powerful in modern government, namely, the efficient expert administrators exclusively concerned with what they regard as the public good.”

~Friedrick A. Hayek, The Constitution of Liberty, page 262.

 

Why all the rush in passing the bailout bill?

Why were alternative courses of action ruled out?

Why does the Federal government need to purchase the assets of financial institutions instead providing liquidity in the form of loans or investment to these financial institutions?

Is this an October surprise to influence the US elections?

Why are President Bush, Senators McCain and Obama resorting to dire fear mongering and very similar phrases and stories to try to convince and scare the American people to supporting the quick passage of the United States Government bailout of financial institutions, the so-called Emergency Economic Stabilization Act of 2008?

George W. B ush statement on failure of wall street bail out 

McCain statement of failure of bailout bill

Obama Still Begging Taxpayers To Support Wall Street Bailout Bill

The fear campaign is not working.

Credit is not frozen.

The American people are calling their banks, credit unions, and car dealers–loans are being made.

Business as usual.

Just like it was business as usual in Congress.

The American elites are lying to the American people and the American people know it.

Some suspect that the Chinese Communists may have made it known to the US that China will not continued to hold US Treasury securities unless the US Federal government purchases from Chinese financial institutions those US mortgage-backed and related securities that are currently depressed in prices-so-called troubled assets.

In other words the US Treasury needs to bail out Chinese financial institutions that have purchased securities from US financial institutions, such as investment banks.

Why?

How much mortgage backed securities do Chinese financial institutions hold in their investment portfolios?

How much have these Chinese financial institutions  lost on holding this type of securities?

A lot of questions, but not many answers from the American elites.

Just hurry up and pass the bailout bill or else the US economy goes into a severe recession if not depression?

The American elites are not leveling with the American people. 

Charlie Rose – Economist Milton Friedman

What is going on?

First read the following from the Emergency Economic Stabilization Act of 2008 that the Senate passed:

Sec. 112. Coordination with foreign authorities and central banks.  

The Secretary shall coordinate, as appropriate, with foreign financial authorities and central banks to work toward the establishment of similar programs by such authorities and central banks. To the extent that such foreign financial authorities or banks hold troubled assets as a result of extending financing to financial institutions that have failed or defaulted on such financing, such troubled assets qualify for purchase under section 101. 

The Secretary shall coordinate, as appropriate, with foreign financial authorities and central banks to work toward the establishment of similar programs by such authorities and central banks. To the extent that such foreign financial authorities or banks hold troubled assets as a result of extending financing to financial institutions that have failed or defaulted on such financing, such troubled assets qualify for purchase under section 101. 

The Secretary shall coordinate, as appropriate, with foreign financial authorities and central banks to work toward the establishment of similar programs by such authorities and central banks. To the extent that such foreign financial authorities or banks hold troubled assets as a result of extending financing to financial institutions that have failed or defaulted on such financing, such troubled assets qualify for purchase under section 101. 

Note that the definition of what is a “troubled asset” under section 101 is quite broad:

TROUBLED ASSETS

—The term ‘‘troubled assets’’ means—

(A) residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before March 14, 2008, the purchase of which the Secretary determines promotes financial market stability; and

(B) any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress. 

 http://banking.senate.gov/public/_files/latestversionAYO08C32_xml.pdf  

Looks like the United States will be buying billions of dollars of troubled assets from foreign banks, including China.

The failure of Congress and specifically the Democratic Party to allow appropriate regulation and oversight of Fannie Mae and Freddie Mac will result in the bailout of China who bought upwards of $400 billion of mortgaged backed securities or agencies.

Now what is the source of all those campaign contributions to certain Presidential candidates coming from abroad in 2008? 

Secret, Foreign Money Floods Into Obama Campaign

By: Kenneth R. Timmerman 

“…And then there are the overseas donations — at least, the ones that we know about.

The FEC has compiled a separate database of potentially questionable overseas donations that contains more than 11,500 contributions totaling $33.8 million. More than 520 listed their “state” as “IR,” often an abbreviation for Iran. Another 63 listed it as “UK,” the United Kingdom.

More than 1,400 of the overseas entries clearly were U.S. diplomats or military personnel, who gave an APO address overseas. Their total contributions came to just $201,680.

But others came from places as far afield as Abu Dhabi, Addis Ababa, Beijing, Fallujah, Florence, Italy, and a wide selection of towns and cities in France.

Until recently, the Obama Web site allowed a contributor to select the country where he resided from the entire membership of the United Nations, including such friendly places as North Korea and the Islamic Republic of Iran.

Unlike McCain’s or Sen. Hillary Clinton’s online donation pages, the Obama site did not ask for proof of citizenship until just recently. Clinton’s presidential campaign required U.S. citizens living abroad to actually fax a copy of their passport before a donation would be accepted.

With such lax vetting of foreign contributions, the Obama campaign may have indirectly contributed to questionable fundraising by foreigners. …”

http://www.newsmax.com/timmerman/Obama_fundraising_illegal/2008/09/29/135718.html?s=al&promo_code=6BD9-1  

Also consider that in the 1996 Presidential election significant campaign contributions were given to President Clinton from Chinese sources:

1996 United States campaign finance controversy

“The 1996 United States campaign finance controversy was an alleged effort by the People’s Republic of China to influence domestic American politics during the 1996 federal elections.

The issue first received public attention in early 1997, with news that a Justice Department investigation had uncovered evidence that agents of China sought to direct contributions to the Democratic National Committee (DNC) in violation of U.S. laws regarding foreign political contributions.[1] While the Chinese government denied all accusations, twenty-two people were eventually convicted for fraud or for funneling Asian funds into the United States elections. …”

“…According to the United States Senate report Investigation of Illegal or Improper Activities in Connection with 1996 Federal Election Campaigns, prior to 1995 China’s approach to promoting its interests in the United States was focused almost exclusively on diplomacy, including summits and meetings with high-level White House officials. In these meetings, Chinese officials often negotiated with the United States government by using the appeal of their huge commercial market.[2]

Around 1995, according to the Senate report, Chinese officials developed a new approach to promote their interests with the United States government and to improve China’s image with the American people. The proposals, dubbed the “China Plan”, were prompted by the United States Congress’s successful lobbying of the president to grant a visa to Taiwan President Lee Teng-Hui. United States Secretary of State Warren Christopher had previously assured his Chinese counterpart Qian Qichen that granting a visa would be “inconsistent with [the United States’] unofficial relationship [with Taiwan]”[3] and the Clinton Administration’s acquiescence to the Congressional resolutions led China to conclude that the influence of Congress over foreign policy was more significant than it had previously determined. When formulating the so-called plan, Chinese officials acknowledged that, compared to other countries, it had little knowledge of, or influence over, policy decisions made in Congress, which had a sizeable pro-Taiwan faction under the influence of a more established “China Lobby” run by the Kuomintang.[2]

The plan, according the Senate report, instructed Chinese officials in the U.S. to improve their knowledge about members of Congress and increase contacts with its members, the public, and the media. The plan also suggested ways to lobby United States officials.[2]

Over the years, China has repeatedly denied these lobbying efforts involved financial contributions of any kind:

[S]ome people and media in the United States speculated… about so-called participation by Chinese individuals in political donations during the U.S. elections. It is sheer fabrication and is intended to slander China. [China] has never, nor will we ever, use money to influence American politics — China’s Foreign Ministry spokesman, May 1998.[4] …”

http://en.wikipedia.org/wiki/1996_United_States_campaign_finance_controversy

Why all the rush now to bail out foreign countries whose financial institutions bought “troubled assets”?

Who is pulling the trigger on the financial crisis?

Why was the trigger pulled now?

Defeat the cram down bailout bill.

Only you can prevent socialism in America. 

“We are only beginning to understand on how subtle a communication system the functioning of an advanced industrial society is based–a communications system which we call the market and which turns out to be a more efficient mechanism for digesting dispersed information than any that man has deliberately designed.”

~Friedrick A. Hayek, ‘The Pretense of Knowledge’, New Studies, page 34.

 

“The effective limitation of power is the most important problem of social order.”

~Friedrick A. Hayek, The Political Order of a Free People, page 128.

What is going on? 

 

~Marvin Gaye “What’s Going On / What’s Happening Brother

 
 
 

 

 

 

Background Articles and Videos 

  

 

Sovereign wealth funds explained – Newsnight video

 

Corporate Advisory Insight: Sovereign Wealth Funds

http://www.youtube.com/watch?v=qFIyqhUejqc&feature=related

  
 
 

 

 
 

 

Lee Kuan Yew on Singapore sovereign wealth fund

 

Davos Annual Meeting 2008 – Sovereign Wealth Funds

  
 
 

 

 
 

 

LOL

Bird & Fortune: George Parr, Conservative MP

 
 
 

 

 

 

 

 
 
 

 

 

 
 
 

 

 
 

 

Sovereign wealth fund

“A sovereign wealth fund (SWF) is a state-owned investment fund composed of financial assets such as stocks, bonds, property, precious metals or other financial instruments. Sovereign wealth funds have gained world-wide exposure by investing in several Wall Street financial firms including Citigroup, Morgan Stanley, and Merrill Lynch. These firms needed a cash infusion due to losses resulting from the subprime mortgage crisis. 

Some sovereign wealth funds are held solely by central banks, who accumulate the funds in the course of their fiscal management of a nation’s banking system; this type of fund is usually of major economic and fiscal importance. Other sovereign wealth funds are simply the state savings which are invested by various entities for the purposes of investment return, and which may not have significant role in fiscal management.

The accumulated funds may have their origin in, or may represent foreign currency deposits, gold, SDRs and IMF reserve positions held by central banks and monetary authorities, along with other national assets such as pension investments, oil funds, or other industrial and financial holdings. These are assets of the sovereign nations which are typically held in domestic and different reserve currencies such as the dollar, euro and yen. Such investment management entities may be set up as official investment companies, state pension funds, or sovereign oil funds, among others.

There have been attempts to distinguish funds held by sovereign entities from foreign exchange reserves held by central banks. The former can be characterized as maximizing long term return, with the latter serving short term currency stabilization and liquidity management. Many central banks in recent years possess reserves massively in excess of needs for liquidity or foreign exchange management. Moreover it is widely believed most have diversified hugely into assets other than short term, highly liquid monetary ones, though almost no data is available to back up this assertion. Some central banks have even begun buying equities, or derivatives of differing ilk (even if fairly safe ones, like Overnight Interest rate swaps).[citation needed] …”

http://en.wikipedia.org/wiki/Sovereign_wealth_fund 

  
 
 

 

 
 

 

 

Sovereign Wealth Funds Threat to United States Economy 

“…However, there is mounting concern–fed by the lack of transparency–that these government-owned investment funds could be used to advance a political as well as economic agenda. If sovereign investors manage assets to promote more than a healthy return on investment, asset prices in countries receiving sov­ereign capital may not reflect market fundamentals, and resources will not be allocated efficiently– exacting a real cost on the economies involved.[4]

Moreover, some fear that rather than use these funds as a means to hold a diversified asset portfolio and earn a solid return on investment, countries might instead use these funds to destabilize finan­cial markets, protect industries and companies, or even expropriate technology.

With little public information available on most sovereign investors’ financial objectives, countries– including the U.S.–are increasingly uncertain about the real benefits of receiving investment from these funds and worry that they instead represent a grow­ing threat to their economic and national security. France and Germany have already declared their intention to block state-owned funds from investing in their economies.[5]

However, it is important to remember that such funds have been in operation for some time and that there is little evidence indicating that nations use their sovereign wealth funds to intentionally cause harm to the countries and firms in which they invest. Furthermore, open and competitive markets are quick to punish any investor, sovereign or otherwise, that would mismanage their holdings. Few governments–even those with highly question­able free-market credentials–intentionally allocate scarce resources to gain control of an asset for the sole purpose of destroying the value of that asset and reducing their own wealth. …” 

http://www.heritage.org/RESEARCH/TRADEANDFOREIGNAID/hl1063.cfm

 

 China Investment Corporation  

“The China Investment Corporation (CIC) is responsible for managing part of the People’s Republic of China’s foreign exchange reserves with $200 billion United States dollars of assets under management, which makes it the fourth largest Sovereign Wealth Fund.[1][2] This sovereign wealth fund officially began operations on Saturday, September 29, 2007. It bought a US $3 billion stake of Blackstone Group in June[3] and a 9.9% stake of Morgan Stanley worth US$ 5 billion on December 19, 2007.[4][5][6] 

The People’s Republic of China has US $1.7 trillion in currency reserves. The China Investment Corporation was established with the intent of utilizing these reserves for the benefit of the state, modeled according to Singapore’s Temasek Holdings. The state-owned Central Huijin Investment Corporation was merged into the new company as a wholly-owned subsidiary company.[5]

“…The Corporation aims to invest in around fifty large-sized enterprises across the world. Special treasury bonds were issued to create the capital that the CIC needed. 1,550.35 billion yuan ($207.91 billion) was issued in this bond sale. The bond process was completed in December 2007.[7] According to Lou Jiwei, the CIC needs to make a profit of 300 million Yuan every day just to pay the interest on the bonds and operation costs. The CIC paid its first interest on the bonds in February 2008 where it paid 12.9 billion yuan.[8] …”

http://en.wikipedia.org/wiki/China_Investment_Corporation  

 

Sovereign Wealth Funds and U.S. National Security

by Daniella Markheim  

“…In the 1990 decade, and early 2000 decade, hedge funds flexed their muscles, demonstrated their power, and earned both respect and animosity. Hedge funds have been blamed for several effects, like pushing up crude oil prices via speculation, even aiding and abetting the mortgage finance bubble. They grew in size to 9000 funds controlling $1.6 trillion in total. They stand first in line for carnage, having taken huge losses in the mortgage bond and Collateralized Debt Obligation (CDO) bond debacle. Most have suffered losses, while the great minority of smarter ones have profited on the opposite side of trades. In the process, hedge funds generally have lost a great deal of collective power, in a tarnished image. Meanwhile, the SWF funds have taken over as the prominent funds in the news, making their presence felt. In their arena, being entities connected and funded by major governments, they are huge in size. The SWF funds are the sharks operating in the ocean of liquidity, much fewer in number than the thousands of hedge fund minnows. Many hedge funds are over $1 billion in size though.

ONE COULD CONCLUDE THAT FOREIGN INSTITUTIONS HAVE BEGUN TO SHUN US$-BASED BONDS. CENTRAL BANKS ARE INCREASINGLY TURNING TO SOVEREIGN WEALTH FUNDS AS PROFITABLE INVESTMENT VEHICLES. SWF FUNDS ENABLE A CHANGE IN COURSE, ONE WHICH THREATENS US BANKERS TO THE EXTREME. UK BONDS ARE IN THE SAME SEWER PIPE AS THE US BONDS. AFTER SWF FUNDS BUY UP BIG SLICES OF US BANKS, THEY CAN PURCHASE GOLD FREELY AND PULL THE DOG CHOKER ON US BANKERS IF NEED BE, RESTRAINING THEM. …”

http://www.marketoracle.co.uk/Article3388.html 

What to do about big, foreign funds that are buying up the West? 

“…The biggest sovereign wealth funds “are owned by West Asian oil-producing countries, other oil producers such as Norway, and big Asian exporters such as China and Singapore….[O]il-rich West Asian nations and Russia as also large exporters such as China have been deploying part of their huge foreign-exchange reserves in sovereign [wealth] funds as investment vehicles that have grown significantly in size.” However, with all that cash moving around the global marketplace, some “rich nations, including Germany and the U.S., have…expressed uneasiness [since their governments believe that] these funds may be investing in their economies for political purposes.” Such governments are shocked – shocked! – by the notion that money might ever be used to influence the tone or direction of their policies. …” 

“…We are starting to get wind of who the winners and losers are in the government seizure of Fannie Mae and Freddie Mac.  It is not a pretty picture.  Holders of mortgage-backed debt of the two companies, so called agency debt, and holder of subordinated debt are the big winners.  Why? Government cash investments will be paid behind the payments to the mortgage-backed and even subordinated debt.  Any threat of a default and the government will make the payments on the debt.  Who holds this stuff.  The largest holders of agency debt are 1) foreign countries through state owned banks and through sovereign wealth funds and 2) a worldwide network of private banks and 3) United States pension funds.  The largest foreign holdings of agency debt are China ($400 billion) and Japan (($230 billion).   We are bailing out China and Japan, the world’s investment banks, and our pension funds.  Who is hurt??  Shareholders.  The government gets paid back before any preferred shareholders and common shareholders get any dividends.  Some shareholders are also holders of agency debt and do not mind; their gains on the debt side will swamp their loses on the stock side.  Some American investment banks and many pension funds are in this category.  But there are some banks that hold predominately preferred stock, most of them are regional banks or commercial banks, and they are big losers.  Shares are held in the public markets and usually in diversified portfolios.

Shareholders should lose (they are the residual claimants and they elect the board) but so should the debt-holders, particularly the subordinated debt holders (they took a risk of buying an instrument very similar to preferred stock).  Many debt holders have written down the value of their debt and now, suddenly, it is worth 100 cents on the dollar.  Why bailout foreign governments and why now — both companies had reserves — thin ones — and could have run on their own for another year or so?

The answer is political, regrettably.  Treasury did not want a blowup with China and Japan before the election and it wanted to create another method of subsidizing the economy (through Frannie and Freddie) that would take effect before the election. China threatened to sell not only agency debt but Treasuries and it would roil our debt markets; tight debt markets hurt GDP.  This threat is one we need to stand up to (emergency tariffs on Chinese goods are WTO legal). …” 

http://www.sfgate.com/cgi-bin/blogs/sfgate/detail?blogid=15&entry_id=30088  

 

Chinese Government is Top Foreign Holder of Fannie Mae, Freddie Mac Bonds

$376 Billion in Chinese Agency Bond Holdings Subject to Taxpayer Bailout Proposals According to FreedomWorks Analysts

“…The top five foreign holders of Freddie and Fannie long-term debt are China, Japan, the Cayman Islands, Luxembourg, and Belgium. In total foreign investors hold over $1.3 trillion in these agency bonds, according to the U.S. Treasury’s most recent “Report on Foreign Portfolio Holdings of U.S. Securities.”

FreedomWorks President Matt Kibbe commented, “The prospectus for every GSE bond clearly states that it is not backed by the United States government. That’s why investors holding agency bonds already receive a significant risk premium over Treasuries.”

“A bailout at this stage would be the worst possible outcome for American taxpayers and mortgage holders, who have been paying a risk premium to these foreign investors. It would change the rules of the game retroactively and would directly subsidize the risks taken by sophisticated foreign investors.”

“A bailout of GSE bondholders would be perhaps the greatest taxpayer rip-off in American history. It is bad economics and you can be sure it is terrible politics.”

http://www.marketwatch.com/news/story/chinese-government-top-foreign-holder/story.aspx?guid=%7B347DF7BF-F0B7-48C9-A418-5A0B903D9F72%7D&dist=hppr 

 

Mike Pence Opposes Bailout 9/29/08

 

 
We Are Under Martial Law! As Declared By The Speaker Last Night! Rep Burgess

  
 
 

 

 
 

 

Michael Savage Argues About Financial Bail Outs Crooks on Wall Street – (9/29/08)

 
 
 

 

 

 

 

The Senate votes: Crap Sandwich 2.0 with sugar on top passes 74-25 

By Michelle Malkin  

“…There were 25 bailout busters (15 Republicans, 10 Democrats). …”

 http://michellemalkin.com/2008/10/01/the-senate-votes-crap-sandwich-20/

Who’s afraid of sovereign wealth funds?

By Tim Weber 

“…Sovereign wealth funds – government-controlled investment funds – are one of the hottest topics at the World Economic Forum in Davos. But are they really dangerous?

 
 
 

 

Richard Fuld, Lehman Brothers chief executive

Richard Fuld says the funds could soon control up to $20 trillion

 

 

Picture this: You are finance minister and several very large banks in your country are in trouble. An investment fund steps into the breach and provides the much-needed cash – say $10bn (£5bn) or thereabouts. It helps to avoid a financial meltdown.

So far so good. But what if this fund is controlled by a foreign government with unclear intentions? What if such a fund also wants to buy your nation’s most important ports?

And what if the fund takes a large stake in a business that is a rival to its country’s national champion?

Across the Western world, politicians are grumbling, and economists and business leaders are pricking their ears. …”

http://news.bbc.co.uk/2/hi/business/7207715.stm 

 

Economists on the Bailout

 

US Economy: Even Hank Paulson’s bail-out plan cannot detox global banking

“…Around the world, investors were dumping assets they regarded as risky. World stocks were down sharply, while gold and U.S. Treasuries surged in the rush to safety.

The world’s central banks, led by the U.S. Federal Reserve, announced a $330 billion expansion of currency swap arrangements, which allows them to increase the amount of money they can provide in their home markets, effectively throwing more money at the crisis.

Earlier, the governments of Belgium, the Netherlands and Luxembourg moved to partly nationalize Belgian-Dutch group Fortis NV with an injection of more than $16 billion, and German lender Hypo Real Estate Holding AG secured a credit line from the German government and banks of up to 35 billion euros.

British mortgage lender Bradford & Bingley Plc was brought under the government’s wing, shares of French bank Dexia tumbled on a report that it might need emergency capital, and bank rescue deals also emerged in Iceland, Russia and Denmark.

“The contagion is spreading to mainland Europe and everyone’s asking, ‘Who’s next?'” said Mark Sartori, head of European sales trading at Fox-Pitt, Kelton in London.

The Wachovia deal is the latest in a series of events that has transformed the American financial landscape and wiped out hundreds of billions of dollars of shareholder wealth.

The changes include the government takeover of mortgage finance companies Fannie Mae and Freddie Mac, the bankruptcy of Lehman Brothers Holdings Inc, the failure of giant savings and loan Washington Mutual, and Bank of America Corp’s purchase of Merrill Lynch & Co Inc. …”

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3088685/US-Economy-Even-Hank-Paulsons-bail-out-plan-cannot-detox-global-banking.html

 
 
 

 

 

  

Largest sovereign wealth funds

 

Country  ↓ Abbreviation  ↓ Fund  ↓ Assets $Billion  ↓ Inception  ↓ Origin  ↓ Approx wealth per citizen ($)  ↓
Flag of Abu Dhabi United Arab Emirates (Abu Dhabi Emirate) ADIA Abu Dhabi Investment Authority 875 [9] 1976 Oil 1,000,000
 Norway GPF Government Pension Fund of Norway 391 [10] 1990 Oil 81,500
 Singapore GIC Government of Singapore Investment Corporation 330 [9] 1981 Non-commodity 100,000
 Kuwait KIA Kuwait Investment Authority 264.4 [11] 1953 Oil 80,000
 China CIC China Investment Corporation 200 [12] 2007.09.28 Non-commodity 151
 Singapore   Temasek Holdings1 159.2 [9] 1974 Non-commodity 35,400
 Australia FFMA Australian Government Future Fund 81.3 [13] 2004 Non-commodity 3,900
 Qatar QIA Qatar Investment Authority 60 [14] 2005 Oil 250,000
 United States (Alaska) APFC Alaska Permanent Fund 40.1 1976 Oil 61,000
 Libya   Libyan Investment Authority 50 2007 Oil 7,200
 Russia RNWF Russian National Wealth Fund 31.92 [15] 2008 Oil n/a
 Brunei BIA Brunei Investment Agency 30 1983 Oil 90,100
 South Korea KIC Korea Investment Corporation 30 2005 Non-commodity 417
 Malaysia KN Khazanah Nasional 18.3 1993 Non-commodity 658
 Kazakhstan KNF Kazakhstan National Fund 23.0 2000 Oil 1170
 China SAFE State Administration of Foreign Exchange n/a n/a Non-commodity n/a
 Taiwan NSF National Stabilisation Fund 15 2000 Non-commodity 652
 Canada (Alberta) AHF Alberta Heritage Fund 16.6 1976 Oil & Gas 5000
 Iran OSF Oil Stabilisation Fund 12.9 1999 Oil 174
Flag of Dubai United Arab Emirates (Dubai Emirate) DB Dubai World 100 2006 Oil n/a
 Saudi Arabia   Saudi Arabia Sovereign Wealth Fund 5.2 [16] 2008 Oil n/a

 

 

Defeat the Cram Down Bullshit Bailout Bill: Emergency Economic Stabilization Act of 2008

Bailout Bill vs. Rescue Economy American People (REAP) Law

The American People Want A Full Meal Buffett Deal–Not A Bailout!

Stop The Bailout: The American Elites’ Bum Rush of The American People–No Sale!

Obama Bombs Bailout Meeting–Whitehouse Still Standing–McCain Saved By House Republicans

Obama–ACORN–CRA–Congress–Democratic Party–Fannie Mae–Freddie Mac–Bailout–Socialism– Just Say No!

ACORN–Association of Community Organizations for Reform Now–Obama’s Red Shirts 

 

 

 
 
 

 

 

 

 

 

 

 

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Stop The Bailout: The American Elites’ Bum Rush of The American People–No Sale!

Posted on September 25, 2008. Filed under: Blogroll, Economics, Investments, Life, Links, People, Politics, Rants, Raves, Regulations, Resources, Taxes, Video, War | Tags: , , , , , , , , , , , , , , , , , , |

“…deficits don’t matter…”

~Vice-President Dick Cheney

 

President Reagan – Government is the problem

 

President Bush Addresses Nation on Economic Crisis

 

Michael Bloomberg – Origins of the Economic Crisis

 

Milton Friedman: The Purpose of the Federal Reserve

 

Milton Friedman – Greed

 

Milton Friedman – Regulation – The Government Industrial Complex

 

 

The rush by the American elites of both political parties in the Federal Government and Congress to have the American people or taxpayers bailout financial institutions to avoid a financial crisis and in turn an economic recession should be stopped.

The case for the bailout simply has not been made.

Full, complete and fair disclosure of all the risks and rewards of the bailout needs to clearly stated  and analyzed.

Alternatives need to be explored and discussed in depth. This includes both alternative courses of action and alternative scenarios.  One course of action based on one scenario recommended by the Treasury Secretary is not only unacceptable, but dangerous.

Remember it is was government internvention in the mortage market requiring lenders to make loans to people that would normally never qualify that is the root cause of the problem.

The government is the problem and is certainly not the solution. 

The rush to socialism in the form of a massive government intervention in the financial markets should be defeated not encouraged.

Let the discipline of the market place penalize those who were financially irresponsible.

No believer in free enterprise would propose or for that matter even consider President Bush’s bailout or rescue plan.

The same American elites of both political parties that tried to cram down comprehensive immigration reform with amnesty and open borders are now trying to cram down a comprehensive financial bailout of financial institutions.

Only you can prevent socialism in America.

 

Goodbye America, We’ll Miss You!

 

Background Articles and Videos 

Ron Paul and Peter Schiff – America Financial Meltdow

 

Lobbying for a bailout – Lou Dobbs

 

 

CNN McCain bailout fate

 

Senator Jim Bunning Comments on Federal Bailout

 

Hannity Colmes Newt Oppose This BailOut CALL Capitol

 

Shocking!—Democrats Trying to Give Bailout Money to Obama’s Owner ACORN

 

Newt Lays It Out – Part 1 of 3 – Former Speaker of the House Newt Gingrich says the bailout plan is a disaster.

 

Newt Lays It Out – Part 2 of 3 – Former Speaker of the House Newt Gingrich says the bailout plan is a disaster.

 

Newt Lays It Out – Part 3 of 3 – Former Speaker of the House Newt Gingrich says the bailout plan is a disaster.

 

Wall Street “Socialism”, the new moral hazard

 

Charlie Rose – Fannie Mae & Freddie Mac

 

Barack Obama & Friends Caused U.S. Economic Crisis

 

Bill Moyers Housing Market Meltdown 1 of 2

 

Bill Moyers Housing Market Meltdown 2 of 2

 

Ron Paul on the Global Financial Crisis

 

Ron Paul talks about Bernanke’s testimony

 

 

Majority of Americans oppose $700 billion bailout, poll finds

http://www.newsday.com/business/ny-libzreax0925,0,1707264.story 

 

To the Speaker of the House of Representatives and the President pro tempore of the Senate:
 
As economists, we want to express to Congress our great concern for the plan proposed by Treasury Secretary Paulson to deal with the financial crisis. We are well aware of the difficulty of the current financial situation and we agree with the need for bold action to ensure that the financial system continues to function. We see three fatal pitfalls in the currently proposed plan:
 
1) Its fairness. The plan is a subsidy to investors at taxpayers’ expense. Investors who took risks to earn profits must also bear the losses.  Not every business failure carries systemic risk. The government can ensure a well-functioning financial industry, able to make new loans to creditworthy borrowers, without bailing out particular investors and institutions whose choices proved unwise.
 
2) Its ambiguity. Neither the mission of the new agency nor its oversight are clear. If  taxpayers are to buy illiquid and opaque assets from troubled sellers, the terms, occasions, and methods of such purchases must be crystal clear ahead of time and carefully monitored afterwards.
 
3) Its long-term effects.  If the plan is enacted, its effects will be with us for a generation. For all their recent troubles, America’s dynamic and innovative private capital markets have brought the nation unparalleled prosperity.  Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted.
 
For these reasons we ask Congress not to rush, to hold appropriate hearings, and to carefully consider the right course of action, and to wisely determine the future of the financial industry and the U.S. economy for years to come. 
 

Signed (updated at 9/25/2008 8:30AM CT) …”

 

http://faculty.chicagogsb.edu/john.cochrane/research/Papers/mortgage_protest.htm

 

Bailout: Opposition to Bush proposal among GOP lawmakers

“…Alabama Sen. Richard Shelby, the top Republican on the Senate Banking Committee, told NPR this morning that he wouldn’t vote for the proposal as it stands.

“I believe it will be reconfigured,” he says. One of Shelby’s biggest concerns is the lack of specifics about the plan’s overall cost. He says doing “nothing’s always an alternative.”

“I think they might pass something, but I don’t think we should just pass a three-page proposal and give this kind of power, unfettered power, to the secretary of the treasury — and with more to come probably,” Shelby says.

Sen. Jim DeMint, R-S.C., an outspoken critic of the bailout, says he plans to slow down the bill.

“There’s no question we’ve got a big mess here. But I’ll tell you the one sure thing is this mess was caused by the government. They broke it. I don’t trust them to fix it at this point,” he tells Fox News. “I see this as a trillion dollar band-aid that’s designed to get people past the next election, but it is not going to solve our problem. I think it’s going to make it worse by expanding our national debt, lowering the value of our dollar.” …”

http://blogs.usatoday.com/ondeadline/2008/09/bailout-opposit.html

 

Kill the bailout: Newt Gingrich gets on board

By Michelle Malkin 

“I said it yesterday.

Newt Gingrich said it today.

Hans Bader sums it up succinctly: The Bush/Paulson bailout is “Inflationary, Unnecessary, and Unconstitutional.”

Yes, it’s time for ideological purity.

Kill it. …” 

http://michellemalkin.com/2008/09/23/kill-the-bailout-newt-gingrich-gets-on-board/

 

A Political “Solution”: Part II

by Thomas Sowell  

“…But bailing out people who made ill-advised mortgages makes no more sense that bailing out people who lost their life savings in Las Vegas casinos. It makes political sense only to people like Senator Dodd, who are among the reasons for the financial mess in the first place.

People usually stop making ill-advised decisions when they are forced to face the consequences of those decisions, not when politicians come to their rescue and make the taxpayers pay for decisions that the taxpayers had nothing to do with.

The Wall Street Journal, which has for years been sounding the alarm about the riskiness of Fannie Mae and Freddie Mac, recently cited Senator Christopher Dodd along with Senator Charles Schumer and Congressman Barney Frank among those on Capitol Hill who have been “shilling” for these financial institutions, downplaying the risks and opposing attempts to restrict their free-wheeling role in the mortgage market.

As recently as July of this year, Senator Dodd declared Fannie Mae and Freddie “fundamentally strong” and said there is no need for “panicking” about them. But now that the chickens have come home to roost, Senator Dodd wants to be sure to get some goodies from the rescue legislation to pass out to people likely to vote for him. …”

http://townhall.com/Columnists/ThomasSowell/2008/09/24/a_political_solution_part_ii

 

Laugh Line of The Day

By Michelle Malkin 

“…From Bush’s address to the nation tonight, urging taxpayers to fork over a trillion dollars to Treasury Secretary Hank Paulson to distribute to whichever failing banks he chooses, at home or abroad, in order to rescue them from their bottomless pit of toxic debt:

“I’m a strong believer in free enterprise.”  …” 

http://michellemalkin.com/2008/09/24/laugh-line-of-the-day/

 

Why Bailouts Scare Stocks

by Alan Reynolds

“…Owners of common stock are supposed to be last in line during an actual bankruptcy, getting leftover scraps after creditors pick a firm’s assets to the bone. But in anything short of that, patient stockholders stand a decent chance of eventually seeing some recovery in the share price, if and when the firm gets back on its feet.

And in the recent crises, bankruptcy was involved only in the case of Lehman – the one time the feds kept their hands off.

From Treasury Secretary Hank Paulson and Fed chief Ben Bernanke on down, top officials have shown too little confidence in markets and too much confidence in themselves. As a result, anyone who’s still holding stock in a financial firm now faces a big new risk premium – because these companies are now subject to compulsory mergers on unfavorable terms (as with Bear Stearns, where the feds initially tried to force stockholders to take just $2 a share) or quasi-nationalization.

This new risk of forced mergers or a government takeover artificially depresses the stock prices of vulnerable firms. And Standard and Poors incorporates equity prices into its credit ratings – so the risk can also bring a downgraded credit rating. And a credit-rating drop triggers regulations that oblige the company to increase its capital – while simultaneously making it nearly impossible to raise capital.

Heavy-handed federal bailouts started this mutually reinforcing spiral rolling downhill by scaring anyone still holding stock in similar firms. And other regulations make it more likely to end badly. …”

http://www.cato.org/pub_display.php?pub_id=9650 

 

‘Wall Street’ No Longer Exists

by Alan Reynolds

“…Since the 1933 regulatory wall has collapsed as definitively as the Berlin Wall, all the giant financial conglomerates now face oversight and regulation by the Federal Reserve, the Securities and Exchange Commission, the Comptroller of the Currency and the Federal Deposit Insurance Corp. Innocents who seek security in regulation need to recall, however, that not one of those august agencies exhibited timely foresight or concern about the default risk among even prime mortgages in some locations, or about any lack of transparency with respect to bundling mortgages into securities. People do not become wiser, more selfless or more omniscient simply because they work for government agencies.

Wall Street was always a metaphor, of course, but so are words like “bailout” and “toxic” debt. Nationalization of Fannie Mae and Freddie Mac was a bailout for creditors (who received windfall gains), not for stockholders or executives. The federally enforced shotgun marriage between J.P. Morgan and Bear Stearns at the initially ridiculous price of $2 a share was no bailout for Bear. The 11.3% federal loan to AIG, contingent on the potential expropriation of 80% of shareholder value, is no bailout either.

By contrast, what was done to stop a run on the money-market funds is a real bailout which could encourage them to hold risky paper and also make it tougher for commercial banks to attract deposits. The proposal to buy up mortgage-backed securities is a bailout too, though the beneficiaries are not just the tattered remains of Wall Street. The bailout consists of shifting the risk of loss to taxpayers. Actual losses could not reach $700 billion unless the securities were literally worthless, which would mean the value of the underlying real estate fell to zero.

What was “toxic” for investment banks is not equally toxic for the Treasury Department because the government does not even bother to keep a balance sheet, much less abide by mark-to-market accounting rules. A powerful motive for converting investment banks into commercial banks is to get around those onerous balance-sheet rules that required fire-sale pricing of securities that were virtually unmarketable during a panicky scramble for liquidity. Strict adherence to those rules made patience a vice and a “buy and hold” approach impossible. This confirms what many of us have long been saying about the foolishness of letting arbitrary bookkeeping rules dominate economic reality.

Turning Wall Street into a bunch of commercial banks is a solution of sorts to a problem aggravated by foolish mark-to-market regulations, not by the inevitable demise of the 1933 wall between investment banks and commercial banks. Something good may yet come out of all this, because that wall never made much sense in the first place. …”

http://www.cato.org/pub_display.php?pub_id=9660

 

The Financial Bailout (and the New Resolution Trust Corp.) Must Restore the Markets and Protect the Taxpayer

by David C. John

“…The House and Senate must have two objectives when putting together their versions of the financial bailout proposal made by the Treasury and Federal Reserve: They must (1) restore the markets and (2) protect the taxpayers. Congress should act clearly and decisively to address the turmoil in the financial markets and not burden this legislation with other issues, problems, or projects.

These objectives should be resolved in the regular order of business. This legislation must not become a Christmas tree. If it does, it will likely backfire, and the intentions of either or both objectives will fail. Sadly, the Senate’s version is already on the wrong track, and the House’s is likely to follow suit. …”

http://www.heritage.org/Research/Economy/wm2072.cfm

 

No bailout necessary

Earl Thompson 

“…Our country’s leading financial officials (the heads of our Department of Treasury and Federal Reserve Bank) have proposed to bail out an enormous array of overpaid wall street phonies in order to become a foreclosing creditor for 700 billion dollars worth of real estate debt — even though they know nothing whatever about collecting or foreclosing on non-performing real estate debt. They cannot possibly do their traditional jobs, which they have normally done quite respectably, under such an administrative burden. The mess would continue, perhaps even worsen.
All the Fed Chairman has to do is do is spend half that amount of fresh Federal Reserve Notes on U.S. Government Bonds and stop making a fool of himself by begging Congress for a favor that would just create a nightmare for him, and ergo the rest of us. What that simple inflationary monetary shock would do is immediately increase the U.S. price-level by just about 20%. The dollar would sink that much in the world’s money markets and this would (1) stimulate our economy out of its current recessionary threat; (2) raise the value of real estate by 20% and immediately end the wave of current real estate foreclosures; and (3) immediately restore liquidity and financial flexibility to our banks and financial institutions so as to end our current financial woes on the spot. …”

More on the diversity racket and the home loan debacle

By Michelle Malkin  

 

“…Referencing my column yesterday on illegal immigration and the mortgage mess, Hans Bader at Open Market shares his experience. I’ve been getting a lot of e-mails with similar stories. Tip of the iceberg:

When I and my wife, a legal alien, bought our house, the mortgage company told me that if my wife were an illegal alien, rather than legal, we would have qualified for certain loan programs with big banks. But because she was a legal alien waiting for her green-card (which she had recently applied for), we didn’t qualify.

Mark Krikorian, an activist against illegal immigration, argues that “we’re in this mess, ultimately, because our political elites thought it was good social policy to encourage banks to give mortgages to uncreditworthy people, resulting in what Sailer months ago called the “Diversity Recession” (if this doesn’t work, make that the Diversity Depression). In other words, if poor people in general, or blacks or Hispanics in particular, were less likely to be approved for a mortgage, the only possible reason was racism or classism or whatever. Thus ‘creditworthiness’ was an illegitimate, dead-white-male concept, like middleclassness. Because, after all, isn’t everyone entitled to credit?” …”

A Bailout We Don’t Need

By James K. Galbraith

“…Is this bailout still necessary?

The point of the bailout is to buy assets that are illiquid but not worthless. But regular banks hold assets like that all the time. They’re called “loans.”

With banks, runs occur only when depositors panic, because they fear the loan book is bad. Deposit insurance takes care of that. So why not eliminate the pointless $100,000 cap on federal deposit insurance and go take inventory? If a bank is solvent, money market funds would flow in, eliminating the need to insure those separately. If it isn’t, the FDIC has the bridge bank facility to take care of that.

Next, put half a trillion dollars into the Federal Deposit Insurance Corp. fund — a cosmetic gesture — and as much money into that agency and the FBI as is needed for examiners, auditors and investigators. Keep $200 billion or more in reserve, so the Treasury can recapitalize banks by buying preferred shares if necessary — as Warren Buffett did this week with Goldman Sachs. Review the situation in three months, when Congress comes back. Hedge funds should be left on their own. You can’t save everyone, and those investors aren’t poor. …”

Glenn Beck Explains Fannie & Freddie & Racism & Extortion

 

Kudlow & Company, September 22, 2008

 

Bernie Sanders “You’re a socialist, Larry [Kudlow]” w Allard

 

Dodd and Kyle on the Bailout Package (part 1)

 

Dodd and Kyle on the Bailout Package (part 2)

 

Bernanke Warns Congress of Possible Recession

 

Dick Armey Discusses the Dodd/Frank Bailout Bill

 

Deconstructing the Subprime Crisis

 

Richard Herring on Mortgage-backed Securities

 

Joseph Gyourko on Fannie, Freddie, and the Housing Bust

 

Franklin Allen on Past Crises

 

Franklin Allen on Lessons from the Subprime Crisis

 

Jeremy Siegel on the Resilience of American Finance

 

Susan Wachter on Securitizations and Deregulation

 

See I.O.U.S.A. themovie, visit the YouTube site

 

IOUSA Live – Panel Discusses our Fiscal Crisis

 

Buffett on Fannie / Freddie and Oil

 

Wall Street’s Day of Reckoning: The Fannie & Freddie Bailout

 

Housing Bailout For Deadbeats Gamblers Liars Thieves

 

 

Part 1 – Exposing Fannie Mae and Freddie Mac: Origins

New York Investing meetup organizer Daryl Montgomery discusses the origins of Fannie Mae and Freddie Mac in the first episode of a multi-part series. The New York Investing meetup is an organization of 1800 independent traders and investors that provides unbiased stock market education and analysis. We also have a blog,”The Helicopter Economics Investing Guide” which can be found at:

http://nyinvestingmeetup.blogspot.com

 

Part 2 – Exposing Fannie Mae and Freddie Mac: Origins

 

Part 3 – Exposing Fannie Mae and Freddie Mac: Origins

 

Part 4 – Exposing Fannie Mae and Freddie Mac: Origins

 

Part 5 – Exposing Fannie Mae and Freddie Mac: Origins

 

The Big Lie – The U.S. GDP Figures

 

Ron Paul vs. Ben Bernanke

 

Constitution Rally4Republic

 

LOL

Democrats responsible for Economic Disaster…

 

Solution to Our Economic Problems…

 

We’ve been lied to AGAIN…

 

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