Posted by
rycK on Tuesday, September 01, 2009 11:17:04 AM
The New York Times
Wants More Control Over Private Equity Firms. More Fascism on Order
Abstract: The New York Times
advocates strict rules for private equity firms who would buy failed banks.
These ‘rules’ would require higher capital ratios and prevent selling off parts
of such banks for three years and restrict loans to certain groups. Such
restrictions would make the investments unwise as the rules prevent an arena of
level competition with other banks. The underlying basis of this is the
continuing trend toward a governmental blend of Fascism and socialism with
Marxist undertones whereby the government wishes to control the use of capital
even if they cannot confiscate it as they did with the banks. They await the moment to institute a 100%
inheritance tax so they can grab more loot. Our economy is busted and we are in
massive debt—too much to ever recover—so the government is looking to control
the banks that are going down by placing draconian rules for private equity
firms that might buy these zombie banks. Our deficits will force the national
debt to soar to 25 trillion soon not counting toxic assets still held by
banks. Hyperinflation is the only
solution out of this mess and the government is printing money as fast as it
can and will soon fulfill this prophecy.
The New York Times,
aka the Walter
Duranty Papers[2] is a
propaganda machine that has a single focus: to form public opinion to support
any far left-liberal legislation or policies that may arise from time to time
and to redact and reconstruct history to show that such programs in the past
have been successful and beneficial to our citizens. Much favor goes to the far
left such as Cuba and some obscure but poisonous African Marxist countries and,
currently, to curry the favors of Hugo Chavez and give every opportunity for
another Marxist, Manuel
Zelaya, to take over Honduras and reinstate the puppet. Working
against both the Honduran Legislature and the Honduran Supreme count, this
Marxist Manuel Zelaya
was attempting to circumvent the current four year term limit and become a
dictator like Hugo Chavez. President Obama, with probable desires in that
direction
and the New York Times immediately rushed to the far left side to support their
politics on the first day of his exile.
This newspaper
exhibits very narrow and primitive views of government in its analysis and
endorsements of all legislation and government policies. This paper is 100% behind socialized medicine
of the one-payer monolithic sort, 100% behind state sponsored abortion on demand,
and 100% behind the reduction in population growth in the US. They are 100% behind
legalization of dope, sloth, sodomy with children or animals and want to give
amnesty to illegal aliens [criminals] who steal Social Security numbers to get
jobs then fail to file tax forms. The costs of healthcare cannot be contained politically
without rationing and old white people are going to be the first to find out that
their healthcare services has been truncated since they cost the most of all
citizens as they reach the end of their lives.
The NYT also facilitates any new control
thrusts into the private workings of business and calls for massive government
control of private assets where possible. In today’s episode, we find the left calling
for more rules and regulations [read direct government control in the standard Fascist
manner] of private equity investors. They know that perhaps 1000 banks will
fail in the next few years and the left want to control who buys these banks
and control how they use the capital. This is Fascism at its finest.
The Times and the Quest for More
Capital
“When a bank fails, the preferred course of action by the
Federal Deposit Insurance Corporation is to sell it, quickly, to a healthy
bank. That protects the insurance fund and, by extension, taxpayers, because a
sale is considerably less costly than liquidation. But with several hundred banks poised for
failure in the months to come, there may not be enough ready buyers to clear
out the anticipated inventory.”—Editorial
New Rules for Private Equity NYT, Published: August
30, 2009 [Emphasis is mine in
all quotes.]
We can
all note that the reason that many banks have failed is based on the law that
they were forced to give out phony mortgages under the CRA [the
phony Community Communist Reinvestment Act] to unworthy buyers
or illegal aliens with little or nor credit and frequently with no jobs and
that this contributed to the collapse of the credit markets and precipitated
dozens of bank failures. The phony mortgages were bundled and sold as
‘investments.’ Fanny Mae was the toilet where bad loans could be flushed
and Franklin Del Ano Raines
made a cool $90,000,000
dollars off this scam. Oh, he is black and works for Obama [or did
during the campaign]? Oh, yes. This was all a grand vision of Greenlining.[9]How many
illegal aliens have subprime mortgages? 5 million?? Oh, yes and they can mostly all
vote. How nice. The government wants the taxpayers to pay for all of this as
usual. Now, they want to count these parasites in the census.
The
immediate response to the fact that mortgage loans were in default was to soak
the taxpayer and ‘adjust’ the principle and interest payments [31% of income] downward
to keep dead beats, dopers and many others in their ‘homes.’ This was
egalitarian. This is a psychosis. The
base theory here is that when markets rise the government receives tax monies
and subsidizes housing for the ‘poor.’ When markets decline the government is
expected to make up the difference for those who can not or will not make
mortgage payments by taxation or printing money. This is free housing—if you
are ‘poor’ or an illegal alien you don’t have to make mortgage payments.
This is also Bolshevism and we can
look to the past for systems like this:
"....But
my hatred of Bolshevism and Bolsheviks is not founded on their silly system of economics, or their absurd doctrine of an impossible equality. It arises from the
bloody and devastating terrorism which they practise
in every land into which they have broken, and my which alone their criminal regime can be maintained...."— Text of Winston Churchill's July 8th, 1920, British House
of Commons, Amritsar Massacre Speech By Winston Churchill given July 8th, 1920 [Emphasis is mine in all quotes.]
This form
of equality is both a farce and an
excuse to grab power.
So it
goes but now the continuation of the collapse of our economy [and the world’s]
from massive debt is proceeding at a swift pace.
Thus, the frenetic scramble is on for loot and just where do you get money to
fund what is now some strange blend of Marxism, Socialism and State Capitalism,
formerly known as Fascism? Why, it is spread out in the banks and 401(k)s!
These banks have depositors, but the actual money is secured in bank deposits.
Why would the lefties want more ‘rules’ for the banks—particularly the ones
that are going down? According to the fluff, we read:
The Ominous Warning! The
Capitalists are Here!
“This is the crunch moment for which private equity firms
have been waiting. The firms
have long styled themselves as saviors, able and
willing to spend billions of dollars to buy failed banks. The problem is, they are not banks and their partners don’t act or think like
traditional bankers; they have thin track records running banks, and they do not want to
be regulated as banks.
They are private firms, whose
partners and investors have thrived on high-flying and highly leveraged deal-making. Many have amassed great wealth, but too often, they have
reaped big gains while saddling their acquisitions with debilitating debt.
Normally, private equity firms would not be anyone’s first choice to run a
bank. But they
have a lot of money and the government is going
to have a lot of banks to sell.”-- Editorial New Rules for Private Equity NYT
The
capitalist vultures are circling the rotting carcasses of the banks. They do
have a lot of money. The government wants to control this money. These two
paragraphs are loaded with spite, fear mongering, propaganda and more and even some
useful information. First, we must review for the readers the long love affair
between the New York Times and the Communist Manifesto as they are married in
spirit and song. In particular we need to look at this section of the
Manifesto:
“Modern bourgeois society, with its
relations of production[read capita ed], of exchange
and of property, a society that has conjured up such gigantic means of
production and of exchange, is like the sorcerer who is no longer able to control the powers of the
nether world whom he has called up by his spells. For many a decade
past, the history of industry and commerce is but the history of the revolt of
modern productive forces against modern conditions of production, against the property
relations that are the conditions for the existence of the bourgeois and of its
rule.”—Communist Manifesto 1848.
And, to take a peek into State
Capitalism or Fascism we need to read this:
“The Nazis [read State Capitalists and what
Obama is thinking about] viewed private
property rights as conditional upon the mode of use. If the
property was not being used to further Nazi goals, it could be nationalized.
Government takeovers and threats of takeovers were used to encourage
complance[sic] with government production plans, even if following these plans
cost profits for companies.”
How much of this fits in the New
York Times Prattle of the Day?
Where is
the basis for assuming that private equity groups are mean, nasty and out to
rip people off? This churlish attitude comes from those who built the gulags
and reeducation camps of the communist empires. The tone of the language here
is like the tone used in the Manifesto when they discuss bourgeois society with their and… gigantic means of production and of exchange. Capitalism now has its
‘crunch moment??’
Clearly,
the projection here is that those people with capital will buy up things and
we all know that the banks are failing and that our government has stuck them
with massive loses from phony mortgage deals and other social spending that
sank them in toxic assets. Obama also sought
to cut off primary debt bondholders from their investments in GM and Chrysler
too. This is the first time in US bankruptcy history that bond holders did not get their
primary obligations paid off before the unions and some Italian auto maker. That grab
was Fascist! Ignore the laws and take the money and support your political
allies [unions].
The idea
that banks are for sale and that private equity groups are not to buy them begs
the question of who should buy them?? No answer for that one from the NYT.
But here is what the Times likes:
“Last week, the F.D.I.C. ably navigated that
problem with new
rules that seek to safeguard the insurance fund — and taxpayers —
while inviting
in fresh capital. Under the
rules, private-equity-run banks would be required to maintain substantially larger capital
cushions than traditional banks, and would be barred from selling an acquired
bank for three years. That helps to compensate for private equity’s scant
banking track record and to ensure that buying a bank is not just another
get-rich-quick proposition. The rules bar the acquired bank from lending to companies
affiliated with the new owner.”
This set
of ‘rules’ does what to investors? This is an invitation? Well, while the
government is hungry for ‘fresh capital’ it wants to put these investors in a definite
bind and put them at a disadvantage with other banks not yet bankrupt. Larger tier-1 capital requirements mean that
capital is tied up thus the efficiency of capital utilization is lower. Thus, such buyers would be at a competitive
disadvantage in the banking business. We can wonder if the government idiots at
F.D.I.C. understand this. Since they are mostly college rejects, as are almost
all government employees as Ronald Reagan advised us, they probably don’t and
are content to sit in a fog and collect their pay and bennies. If these new
purchased banks then fail and the stockholders are wiped out does the extra
capital become government property?
There is
a three year hold rule and that locks useful capital into some time vault. Again, this is inefficient and trappy.
The Times now gives us a test to
prove their point:
“Private equity firms should view the requirements as an opportunity to show that they can be responsible bankers. If they don’t bid
for failed banks because the rules don’t suit them, the F.D.I.C. must not take that as a sign to loosen the rules
further. Rather, it would signal that
private equity firms are indeed unsuited for
banking — a business that has a public purpose
and regulatory obligations, along with the potential for profits.”
Note the
Fascism here. The public
purpose condition here from the
left matches perfectly with the Nazi “private property rights as conditional upon the mode of use.” Thus this purchase of a business and property
comes under the purview and surveillance of government and gives government the
power to stop the sale. We can only wonder what the word ‘responsible’ means in
the Marxism lexicon of the NYT.
The
government has tried to peddle the toxic assets before with some unknown, but
failed plan by Tim Geithner [tax cheat]. Here is what he was talking about:
Timmy Geithner mumbles about:
"… a process
of providing a market for the real estate-related assets that are at the center of this
crisis. Our objective is to use private capital and private asset managers to help provide a market mechanism for
valuing the assets.”-- Except from Geithner Feb. 10, 2009.
There is
currently no way to assess toxic assets and thus reset the banks balance sheets
to some semblance of reality. The banks cannot sell their toxic assets as this
will tip their balance sheets into the red. The
banks that will fail are known as zombie banks. We are mired in debt along with
the banks and only an auction of such ‘assets’ would reveal their true worth.
The government is printing money and driving down our currency value and there
is no limit to their spending in sight.
Inflation is the next big step in government planning.
According to Warren Buffet massive inflationis the only recourse.
From a previous blog:
We
still don’t know how large this zombie toxic asset pool might be valued. Since
they dumped the Mark to Market Accounting the
banks do not have to declare the very low value of their holdings [if they are
low or very low] and can, in some instances, maintain their asset levels at the
level that mortgages and other loans were originally issued. There is no way to
determine what these are worth until banks put them up for auction and we watch
the sales price. There is no such market
now. If they go for 95 cents on the dollar then fine, but what if
they auction off at only 5 or 10 cents on the dollars? Down go the banks
again as they are insolvent. The number of bank failures is rising rapidly.
Some think 1000 more banks will fail in the next two years.
Your
government, now trending toward Fascism, has decided that it cannot entice
private equity to buy up toxic assetsat
public auction [or is afraid to do so] so it now wants certain ‘rules’ to be
put in place as perhaps a thousand banks go down in the next 1-2 years.
Business people are not that stupid unless they are certain types of Methodists
or have peculiarly profitable businesses in California. Your government is so hungry for your cash
that I wonder if they want to use healthcare reform to curtail care for the old
folks and then take their wealth [and their lives] with a 100% inheritance tax,
the dream of Ted Kennedy:” The estate tax is the most progressive of all federal taxes.—T.K.”] and then utilize ‘managed’ health care run by the government
where they can withhold care [e.g., Death Panels] from the wealthy oldies, let them croak and then seize their
assets. They can grab at about 300 billion dollars annually if this
becomes law. This notion and theory comes directly from the Communist Manifesto: 3. Abolition of all rights of
inheritance. And, we know what reverence the New
York Times has for Marxism, Walter Duranty, and Castro, Chavez, Ortega and
others of the far left.
Private
equity firms must reject these ‘rules’ and fulfill the threat that their
refusal to buy into this mess taunted by the NYT. The
far left government of the US is
now mixing and blending Marxism with socialism and Fascism. They
have all this power and also the power to print money which they are doing in
high style. But, the mountains of private capital are still coveted by our
government and they need to impose the Fascist notion of private property rights as conditional upon the mode of use. The 401(k)s of the old folks are
the next target. That is the essence of the propaganda message from the editors
from the Times says today.
Conclusion:
There are two major problems for private equity firms in
buying into zombie banks: [1] the government is hostile and forces the buyers
to accept draconian rules and [2] the actual value of the toxic assets in these
banks [the reason for them going down] is unknown because there is no market to
sell them. If equity firms buy banks and sell off these toxic assets the
government will howl and seek revenge. The only thing to do is to prepare for
massive inflation and let the government print more money and buy up the zombie
banks.
rycK
Comments
to: ryckki@gmail.com
“Bear
Stearns made the first public securitization of Community
Reinvestment Act (CRA) loans started in
1997.[6] Editorialists in some American
newspapers[7][8] and US Congressman Ron Paul[9] say the CRA loans were lent to
otherwise un-credit-worthy consumers in the name of ending discrimination,
although an analysis of actual lending patterns does not generally support this
conclusion.[10][11][12]
On June 22, 2007,
Bear Stearns pledged a collateralized loan of up to $3.2 billion to "bail
out" one of its funds, the Bear Stearns High-Grade Structured Credit Fund,
while negotiating with other banks to loan money against collateral to another
fund, the Bear Stearns High-Grade Structured Credit Enhanced Leveraged Fund.[13] The funds were invested in thinly
traded collateralized
debt obligations (CDOs)
found to be worth less than their mark-to-market value. Merrill Lynch seized $850 million worth of the
underlying collateral but only was able to auction $100 million of them. The
incident sparked concern of contagion as Bear Stearns might be forced to
liquidate its CDOs, prompting a mark-down of similar assets in other
portfolios.[14][15] Richard
A. Marin, a senior executive at Bear Stearns Asset Management
responsible for the two hedge funds, was replaced on June 29 by Jeffrey
B. Lane, a former Vice Chairman of rival investment bank, Lehman Brothers.[16]
During the
week of July 16, 2007,
Bear Stearns disclosed that the two subprime hedge funds had lost nearly all of
their value amid a rapid decline in the market for subprime mortgages.
And from the Sage of Omaha:
“A country that continuously expands its debt as a percentage of GDP and raises much of the money
abroad to finance that, at some point, it’s going to inflate its way out of the burden of that debt,” Buffett said….
“Every country that has denominated its debt in its own currency and has
found itself with uncomfortable amounts of debt relative to the rest of the world,
in the end they inflate,” Buffett explains. That becomes a tax on everybody that has fixed dollar investments.”--Buffett Sees Massive Inflation to Handle Staggering Debt. Monday,
May 4, 2009
By Dan Weil [Emphasis is mine in all quotes]