Andrea Priest, spokeswoman for the
New York Federal Reserve gets my
quote-of-the-week award when she stated that the Fed had, "received
occasional anecdotal reports from Barclays of problems with LIBOR." To be clear, the ERROR value in the LIBOR
reporting scandal is likely to be in the vicinity of $900 billion each year placing
the LIBOR ERROR as the world's 19th largest economy - coming in just
ahead of Taiwan and just
and the Islamic Republic of Iran. Since
its inception, the current LIBOR oops that we know about allowed just over $4
trillion to change hands with no one watching.
Associated to the public sector involvement I pointed out in my last
blog post, this number has an uncanny resemblance to the value of wealth
transfers that were sponsored by government-backed interventions with banks,
insurers and other investors during the G-20's financial crisis response. So the timing of the Barclay's
"discovery" seems to be remarkable given the fact that Tim Geithner
seemed to at least know of the reporting risk as early as 2007. So we treat a $4 trillion heist as just an
'anecdotal' event until we've monetized the theft of global taxpayers and then
we decide to take it seriously??? SERIOUSLY????
In related news, one of the shareholders who has greatly benefited from the opaque wealth transfers of the last several years is now advocating for another business that, if enacted, will pick pensioners pockets again. Steve Gluckstern, chairman of
San Francisco based
Mortgage Resolution Partners is suggesting that one way to address the
country's real estate economic woes is to allow governments to use eminent
domain to seize real estate with underwater mortgages and have private
investors repurchase the properties for "fair value". Under an Obama-esque acronym CARES (which stands for Community Action to Restore Equity and Stability
- think the 2008 election slogan HOPE
which probably really stood for Helping Oligarchs Purloin an Empire), Mortgage Resolution Partners is proposing that
jurisdictions like San Bernardino County use their ability to seize property
and summarily revalue the same sticking the losses to every pension holder in
the U.S. thereby "assisting communities". For their service to the country the firm
would collect a fee on every loan modified. That's right, a private group of investors
would receive an incentive payment for a municipality 'legally' erasing
We live in interesting times. The audacity of the public-sector crimes enabled against the citizens of countries - all of them measured in billions or trillions of dollars of value - seem to live comfortably under the sleepy eye of the lethargic judicial system that can see anecdotal trillions of dollars go missing without leaping into action. During the same time we see politicians get in front of cameras across Capitol Hill and perjure themselves by stating that Bush-era tax cuts are necessary to grow employment and the economy. These statements are being made despite the fact that, since the Bush tax cuts, unemployment has nearly doubled and the permanently unemployed has nearly tripled. By keeping more money via the "tax cuts" and stealing money via government bailouts and LIBOR scandals (just to name a few), the employment scene has gotten more bleak and the global economy has become more fragile for the majority of people.
And all of this has another pillar of structural weakness that I've tried to illuminate for many years. As we see Kodak collapse and we see other stalwart employers slip into the annals of a history not to be repeated, the Pension Benefit Guaranty Corporation (PBGC), a member of the credit committee for the Kodak bankruptcy made the statement back in January that the Kodak pension was "reasonably well funded" with $4.9 billion in assets and a mere $5.6 billion in obligations. Now, on the surface, the fallacy of their statement is self-evident. A company in bankruptcy is going to magically come up with $700 million (assuming that the $4.9 billion is correct). When approached recently about whether they wanted independent corroboration on the value of Kodak's assets, the PBGC responded by saying that they "did not need" any additional help.
So let's see these stories all come together. LIBOR price-fixing has been undermining true notional value of credit instruments for 5 years or more. Private investors are seeking to use eminent domain to gut fixed income products (including investments held by and managed by PBGC). We've got prima facie evidence that our tax and bailout indebtedness has NOT been a stimulus. And the PBGC doesn't require additional visibility to understand its actuarial exposure. Get it? In a world where We the People fail to become informed and understand the interconnections between colluding parties, We the People place ourselves in the cross-hairs for being hijacked.
This past week, a few thousand of you cared enough to share the LIBOR blog post with your friends. Well done and many thanks. This week, your activism and awareness needs to spread more like a wildfire racing up a canyon driven by hot winds. We the People need to have hundreds of thousands or millions talking about this - not just a few thousand. This coming week, bidders will put a nail in the coffin of Kodak as they seek to scavenge the innovation carcass of what was one of
leading companies. This week, illiquid
municipalities will seriously consider confiscating property and turning
eminent domain into a financial arbitrage to transfer CMO value from pension
accounts for the private benefit of a small group of investors. And this week, if you read this and get
frustrated, nothing will happen. Dig
deeper. Put the puzzle together. And above all, get the word out that We the
People are not helpless against those who seek to pillage the masses. It can only get better if you and all those
you know become educated and involved.