Goldman Sachs is a conspiracy with the government?

Detective Krum

In plain English, a derivative in real estate means a value on real estate property that was decided upon various factors.  When the banks have a percentage of their portfolio in derivatives it means the banks have loans on real estate where the loan value is based upon various factors.  What are the various factors? Tranches are one example. A Tranche is a package of loans. The bottom line? Loans were made on real property not based on fair market appraisals but on how many loans are put into a package of loans (tranches) and a speculation of what the property value should or could be (derivative).  So why am I writing about this?

I read a very good article on World Net Daily. An interesting point I want to mention is quoted.

“According to the latest numbers from the Treasury Department, JPMorgan and Goldman Sachs are holding the bag on 60 percent of the world’s derivatives – an astonishing $120 trillion between them, Still reports.

But instead of being held responsible for the collapse of the world economy, they were rewarded during the debacle by being allowed to absorb their primary competitors.”

“JPMorgan was the biggest winner in the government bailouts, after receiving a $25 billion loan, it gobbled up Bear Stearns‘ assets for about two cents on the dollar and then the assets of Washington Mutual – the nation’s largest failed bank – for less than a penny on the dollar. Goldman Sachs received approximately $50 billion, but both firms have now repaid the government.”

“According to Treasury figures at the end of June, Morgan held a staggering $80 trillion in derivative exposure, 50 times more than its $1.6 trillion in assets. Goldman Sachs is in an even more precarious condition. It holds $40 trillion in derivatives backed by assets of only $120 billion – a leverage of 333-to-1.

“To put this into perspective,” said Still, “The Gross Domestic Product of the United States is a mere $14 trillion. Even the world GDP is only $65 trillion, and the best estimate of the worth of everything in the world is only $200 trillion. That’s how big these numbers are.”

“Mega-investor Wayne Rogers is certainly not shy about identifying the problem. On “Cashing In” on the Fox News Channel Saturday, he put it this way: “Goldman Sachs is a conspiracy with the government. They are a fascist organization. They are supplying the guy who is the secretary of the Treasury, then he goes back to Goldman Sachs. Meantime he owns 800,000 shares of Goldman Sachs and Goldman Sachs gets bailed out by the government. The whole thing is outrageous. Let them go down.”

Read the rest of the article from World Net Daily here and there is a short four minute video you might find interesting.

 

 

 

 

Make Poor Business Decision? Get a Bailout

Detective Krum

I read a question regarding the bank bailouts and thought it appropriate to use this opportunity as a teaching experience. The question is, “If the bank bailouts did not go through, who would have taken on the bad debt?”

When banks make loans to business (say auto dealers – they pay floor plan charges on each auto on their lot) If the car company went bankrupt, the bank would get pennies on the dollar in bankruptcy court. Same with banks making bad mortgage loans:
1. The bank knew better & did it anyway
2. The bank forecloses on the loan and if the homeowner filed bankruptcy, the bank gets pennies on the dollar
3. If the banks had too many bad loans, it shows the bank has poor business experience and they would file bankruptcy. Those they sold those “toxic” assets to would get pennies on the dollar.

Would you buy anything “toxic”? What does that say about your intelligence verses the bank’s intelligence?

S and T Bank May Be In Trouble

Detective Krum

S & T Bank, based in Indiana, Pennsylvania has been downgraded by analysts and recommended a sell according to Bloomberg. S & T Bank rating is a ( D+ ) but it appears analysts see the need to sell and watch this blog to see if the bank indeed, fails.  Consider SunTrust Bank, their rating is a ( D- ) considering SunTrust Bank received about $2.2 billion.Ten major bank holding companies received bank bailouts

Among the 10 bank holding companies, Bank of America Corp. was judged in May to need $33.9 billion in additional capital under regulators’ criteria, the largest gap. Wells Fargo & Co.’s shortfall was $13.7 billion, while Citigroup Inc.’s was $5.5 billion. The Fed told banks in May to shore up reserve capital by early this month. The Federal Reserve Bank index is here.

Fifth Third Bancorp’s capital need was $1.1 billion, KeyCorp’s was $1.8 billion, PNC Financial Services Group Inc.’s was $600 million, Regions Financial Corp.’s was $2.5 billion and SunTrust Banks Inc.’s was $2.2 billion. GMAC LLC needed $11.5 billion, while Morgan Stanley’s assessment was $1.8 billion.

The bank holding companies appeared to tighten lending policies instead of lending more to help stop foreclosures. In addition, bank holding companies upped interest rates to consumers while the bank was getting the money near zero percent interest from the fed and the banks cut credit limits.  The banks claim they have paid back the bailout money. How have banks paid back taxpayers? Banks claim they have dropped their interest rates and loosened credit. Have you looked at your credit card changes? Higher interest rates and cut limits don’t show the banks claims.

What can you do to voice your displeasure with bank mismanagement? Let’s learn from the auto bailout. Customers stopped buying GM and Chrysler and Ford was rewarded for not taking bailout money with increased sales.  Looking for a bank that did not participate in the bank bailouts is an avenue many are taking.

Why Bank Bailouts Cannot Work

Detective Krum

Many readers asked why the bank bailouts do not work, simple, they can’t. The bank bailouts or TARP was put into motion, as Congress said, to stimulate lending by banks to customers.  When President Bush started the bank bailouts and President Obama continued and expanded them to include auto companies, AIG, and now trying to take over health care shows elected officials out of control while we have taxation without representation.  When Congress is cowardly to stand up for freedom and our Constitution we see the need for Americans to downsize a bloated centralized power structure that does as they please.

The reason the bank bailouts cannot work is simple. Let’s suppose you are a bank and a customer comes to you for a loan, you have risk in lending to the person or company. As a bank, you notice the federal reserve is keeping interest rates near zero. Would you rather lend with risk to a customer or business or borrow money from the federal reserve (central bank) at zero percent interest and invest your loan hedging the stock market where you can make millions for yourself and others?  Banks have chosen the latter – don’t loan too much but use the TARP money to drive up the stock market as you (bank)  make a fortune. How do the banks look at customers then? As you can see, they cut credit limits on credit cards and up their interest into the 20% interest plus range.  Is that fair and the right thing to do?

Banks will say they have paid the TARP funds back – where’s my dividend check? Where did the banks get the money to pay the TARP funds back? From new lending? Or investing taxpayer dollars into the stock market creating another bubble. If you think this sounds off – then you will enjoy the new book The Dollar Meltdown. Charles explains in plain English what is going on and in an interview, Charles thinks it is too late to stop the downward spiral but shows you how to prepare to protect your assets and family.

Four things you’ll learn from The Dollar Meltdown:

WHERE WE ARE TODAY

You’ll get the whole story on America’s debt, both visible and hidden. You’ll learn how bailout bills and stimulus spending have dug us in an even deeper hole and what it means for the future.

HOW WE GOT INTO THIS MESS

You’ll learn to see old familiar patterns in some of the newest economic developments. This will help you judge the future by the past. The Dollar Meltdown lays out the real fundamentals about money and shows you exactly how the monetary system in the United States today has been corrupted so that you can avoid being victimized by it.

WHAT HAPPENS NEXT

You’ll discover how the dollar meltdown happens, the most likely scenarios, and the role of foreign creditors like China. You’ll be prepared as the authorities react to economic problems of their own making, lurching from one “solution” to the next, deepening the crisis with their every move.  The dollar meltdown will change America and you’ll want to be ready for it when it comes.

WHAT YOU NEED TO DO

There is opportunity in every crisis and there are ways protect yourself and your family and to profit in the turbulent times ahead.

You see why the old rules don’t work anymore and you’ll get easy-to-understand investment advice for the new rules, specific investment recommendations that you can put to use right away to protect yourself and your family from the dollar meltdown.

Don’t wait until it’s too late! Order your copy of THE DOLLAR MELTDOWN HERE – Do it TODAY!

About Charles Goyette

Charles Goyette has long been known in Phoenix as “America’s Most Independent Talk Show Host!” With years of hands-on experience as an investment professional, he brings a welcome dimension of foresight and clarity to his political and economic commentary.  Goyette has been called on often to share his views with television audiences nationally on CNN, Fox News, MSNBC, and PBS, including on “The O’Reilly Factor,” the popular PBS program “NOW with Bill Moyers,” and as a frequent guest on “Lou Dobbs Tonight” on CNN, repeatedly warning before the current economic turmoil of the “economic calamity the Republicans and Democrats” were creating.

 

 

 

Alarion Bank Spoof

Detective Krum

There is an Alarion Bank spoof going on and our readers need to be warned of this spoof.  You may receive an email stating the following:

“Dear Alarion Bank Customer,

As part of our security measures, we regularly screen activity in the system.
We recently contacted you after noticing an issue on your account.
We requested information from you for the following reason:

- We have observed activity in this account that is unusual or potentially high risk.

Please download the form attached to this email and open it in a web browser.
Once opened, you will be provided with steps to restore your account access.
We appreciate your understanding as we work to ensure account safety.

Sincerely,

©2009 Alarion Bank. All rights reserved.”

Included in this email is a file for you to download the “form”. I suggest if you receive one of these emails you should contact Alarion Bank at   1.888.900.9785 and inform them of the email. There is a high probability, the “form” the email wants you to download will hijack your computer and could infect your computer with a virus, rootkit or key logger. Alarion Bank is aware of the problem and has issued a Fraud Alert, see below:

Fraud Alert
Alarion Bank has received reports of a fraudulent “phishing” scam involving fake e-mail messages delivered on or about 11/06/2009 that appear to come from Alarion Bank, often with the subject line “Official Notification” or “Notification ID.” DO NOT RESPOND TO OR CLICK ANY LINKS IN THESE MESSAGES. Simply delete them.

 

One other point – Alarion Bank is located in Ocala, Florida and has a (D+) bank rating.