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Wednesday, September 17, 2008

Treasury to Bail out Fed: Dumb, Docile Taxpayers Don't Care

The Fed is fast running out of money… and knows it.

Time for the Treasury to bail out the Fed.


Increase that balance sheet! Rape those dumb, docile taxpayers. Rape em all! They don’t seem to care anyways…

Treasury to Sell Bills to Bolster Fed Balance Sheet (Update1): “The U.S. Treasury said it will sell bills to allow the Federal Reserve to expand its balance sheet, a day after the government agreed to take over American International Group Inc.

“The Treasury Department announced today the initiation of a temporary Supplementary Financing Program at the request of the Federal Reserve,” the department said in a statement today. “The program will consist of a series of Treasury bills, apart from Treasury's current borrowing program.”

Yesterday the Fed announced an $85 billion loan to AIG, in exchange for a 79.9 percent government stake in the largest U.S. insurer. The Fed also has set up several other emergency lending programs to provide Wall Street firms with ready access to funding.

The new bill program “will provide cash for use in the Federal Reserve initiatives,” the Treasury said.

The Treasury said it will sell the new bills using its existing auction procedures, giving “as much advance notification as possible.” The bills will not have a uniform fixed term, giving the Treasury the same duration flexibility that it has with cash-management bills.”

Gold has noticed. Pop! Largest gain in a long time.

18 comments:

Anonymous said...

hmmm. what if there aint no buyers?!

Ben Bittrolff said...

There is a tipping point... nobody knows where... but eventually there really won't be any buyers.

Tim Manni said...

Great post -- My concern here is that obviously this confirms the possibility of future bailouts, or at least the gov's preparation for future bailouts. I haven't had a chance to read the Bloomberg article yet, but what happens when there's no buyers and a "too big to fail" bailout needs to happen or else. Perhaps now we'll finally see the "or else."

Anonymous said...

if we buy money from the fed...? then we are buying the money then giving it back for the fed to use as it wishes...? ....is this the 'drop money from a helicopter' moment?

Ben Bittrolff said...

Come on? Just four comments?

I said, ya'll is dumb and docile.

Like a cow.

Too shelled shocked to fly into a rage?

Hmmm...

Fine, until I see pitchforks and torches in the streets, I'm staying short.

Anonymous said...

Mr. Bernake your helicopter is waiting at the launch pad!

Brian said...

Ben,

Do you know the actual time of that news release? I'm wondering if that's what kick started the super spike in gold that began around 9:40am EST. thanks

Anonymous said...

Ben, when are you going to update your really scary fed charts again?

michael said...

"Mr. Bernanke your helicopter is waiting at the launch pad!"

That hits it on the head.

Funny how helicopter Ben's theory shows not to be doable in reality. He now has the choice to destroy the dollar immediately with helicopter dumps or let the deflation continue and the dollar be destroyed by inflation starting in 9 to 24 months from now.

dougiefreshhh said...

one world currency baby...thats where we are headed. dollar will get merged into the euro when the saudis start wanting euros for oil..and we will be know as Euricans.

Ben - what will it take for SKF to hit 200 again?

Anonymous said...

Ben America is asleep...Unless we crash more than 8% in one day...America will keep sleeping...You will stay short for a long time.

Anonymous said...

I'll tell you what Im going to do.
I will have my wife quit her job so I can claim head of household and make her my dependent. We will then rent a cheap apartment. Id rather eat canned soup and crackers than pay the government all the tax money they will be extorting out of me come next year. HELL NO!!!
Does everyone realize that we are witnessing the greatest transfer ( or theft) of wealth EVER? That right. EVER.
Not anytime in the history of the world will you see a greater theft take place.
The country has already gave away their economic sovereignty.
Keep the fork ready, the USA as we know it is just about done.

Anonymous said...

And btw..
Its happening all over the world.
Look at Japan. They just re-zombified the already zombified financial system there by injecting to the tune of
1,500,000,000,000 yen.

Perplexo said...

Hey maybe it's just the money-for-nothing guys realizing that they in fact are the only ones left in the room...who wants to pay for the USA' s super-military? And why is the AIG bailout ok but not universal government sponsored health insurance?
And how is military spending not socialism too? Of a particularly wasteful sort? I cannot help but notice that the US is not talking about cutting its astronomical military budgets...why not?

Anonymous said...

I was pitchfork and torches angry the weekend of F+F. Last weekend with Lehman calmed me down a bit until I realized AIG was gonna join in on the circle-jerk. I moved past pitchfork and torches into (almost) depression. I'm not exaggerating, either -- I was like a zombie on Monday and Tuesday.

What can I do? Everyone is caught up in the "McCain is too scary to vote for" or "Obama is too scary to vote for" and lipstick . . . there's no way out.

3-month at 0.04% today was insane. Probably had to do with MM accounts buying after The Reserve broke bucky. Dollar's been hit pretty hard the past few days.

I'm not short anymore. "They" have too much wool and the proles are all too happy to have it pulled over their eyes.

-Mike J

kayxyz said...

I respect your column and the fact you're Canadian and tell it like it is.

On the MSNBC blog, now newsvine, I've called George W Bush and Elaine Chao, dimwit US Labor Secretary, two of the biggest liars in US history, for the past 7.5 years. The Bush tax cuts obviously do not work to create jobs in the US; the labor pool available in India and China are way to large. I've sent my bills to Elaine Chao, just to put them on her desk. I've written Elizabeth Dole (R-NC) about her and Richard Burr voting in favor of the banks, via the American Bankers Association lobby, for making bankruptcy more difficult to declare, during the same time period that North Carolina was hemorrhaging jobs. Elizabeth Dole's reply was that for credit card debt, they are going to change the font size and make the terms resemble what you read on a cereal box (I should post her letter on a web page).

I've written Carl Levin (D-MI) about credit card interest rates during the time frame when the US is losing jobs to offshoring. I think Carl actually was the first to pass my letters on to Elizabeth Dole. If you visit individual Congress members web sites, you will usually notice a warning that states the Members of Congress want to hear from only the people in their state or district, not from people outside their state.

My husband has 3 masters degrees, math, physics, electrical engineering. He has hot had so much as a telephone call for a job interview in the past 4 years. He grew up in England and his basic education is far superior than any offered in America. That's just a note to CEOs who state American education is subpar. There is nothing wrong with my husband's brain power. Oddly enough, he is NOT going to retrain in "health sciences," as suggested by Elaine Chao and Alan Greenspan under the term "labor specialization" (India gets all the IT jobs, China gets all the manufacturing jobs, etc.). He took comparative anatomy 4 times before finally passing with a D, so it's not necessarily an easy transition from top notch programmer to registered nurse.

When Bill Gates testified before Congress about raising the H-1B visa limits, I emailed him my husband's 4 page resume and 7.5 years of correspondence with Carl Levin, Elizabeth Dole, Elaine Chao. I stated that my 7.5 years of correspondence was what he was up against when he visits Congress. Obviously I didn't get a reply from Mr. Gates. If you look, you can see the powers that be at Google also trying to raise the cap on H-1B visas. What they're looking for is paying the lowest wages possible.

I am a registered Republican, but I sure as heck did not vote for George W Bush; I knew there was no way to Bush Tax Cuts could keep up with the labor pools available in India and China. I thank God, with more fervor than any evangelical or Christian Conservative will ever know that I didn't vote for Bush. I can sorta site back and laugh, and watch the Republican noise machine at work.

My family has a long history of the IT industry (Lou Gerstner, former IBM Chair, Andy Grove, CEO, Intel) laying people off to please Wall Street, especially at Christmas time, to improve 4th quarter results. So when people on Wall Street lose their jobs, I don't have much sympathy. I do want CEOs firmly under the eye of Congress and the IRS. If Obama gets elected and repeals the Bush tax cuts, IT CEOs especially should be forking over more dough to the IRS, if only to help buy foodstamps. Then we'll see about everyone retraining in health sciences.

I have written, voted against the Republicans, read and used my brain. I did retrain in health sciences, and can continue if I need to become a registered nurse. I'm sure as heck not going to pay usury interest rates on credit card debt. Let the banks collapse. Let the people who work at the banks find real jobs, in health sciences, of course. What other kind of protest or action is there to take?

Perplexo said...

For a long time now credit card ops accounted for about 50% (no one but the Banks know for sure - they do not break it out of the aggregate numbers they report) of any given Bank's profits.
It really is no wonder that they needed that new Bankruptcy Law, and no wonder credit card interest charges stay stratospheric.
Credit card issuance seems like a new-fashioned way to print "Bank Notes", like Banks used to print their own currency.
The issuance of "new money" rested in the hands of the Bankers and their credit card ops. The average joes it seems to me are going broke paying the Banks "seignourage" (spelling?) ...you know, like the sums the Mint is paid for coinage...a symptom of the "privatization" of the money supply?

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