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Article By Shahien Nasiripour

NEW YORK — On Wednesday, the Treasury Department celebrated the fact that its $250 billion investment in the nation’s banking system has officially made money. What’s more, the entirety of the federal government’s efforts to rescue a financial system that sowed the seeds of its own demise will also eventually do the same, according to new Treasury projections.

Treasury did not, however, commemorate the hundreds of billions of dollars in taxpayer aid left to be repaid; the billions the Troubled Asset Relief Program will ultimately cost taxpayers; the extraordinary actions of the Federal Reserve and Federal Deposit Insurance Corporation that made Treasury’s bank profits possible; or the fact that the entire enterprise of pumping taxpayer cash into a financial system rife with unrecognized losses will likely be remembered as a “dismal failure,” in at least one Nobel Prize-winning economist’s estimation.

In other words: not so fast.

The worst financial crisis since the Great Depression spurred an alphabet soup of federal programs designed to calm markets and allow banks to rely on taxpayers as credit froze and investors fled. One of those programs, TARP, became the face of the government’s unprecedented involvement in the financial sector.

In the fall of 2008, Congress authorized then-Treasury Secretary Henry Paulson to spend $700 billion to rescue the rapidly-failing financial system. At the time, stock markets around the world were tanking, borrowing costs were skyrocketing and the prices of all but government-guaranteed financial instruments were plummeting as confidence sank. Investors and policymakers feared Armageddon.

Paulson used the money to invest in banks, auto companies and the insurance giant AIG. His Obama-nominated successor, Timothy Geithner, continued that policy, and added a few more programs to spur lending and rescue homeowners.

Only looking at dollars and cents, the bank investment has been the most successful. Treasury obligated $250 billion to support banks like Citigroup, JPMorgan Chase and Bank of America. The agency has now recouped those funds and then some, thanks to fees and dividends. It’s officially in the black.

“Today is an important milestone in our efforts to recover taxpayer dollars as we continue winding down TARP,” Geithner said in a statement Wednesday.

But that profit figure doesn’t acknowledge that of the $475 billion in TARP funds promised to auto companies, insurers and borrowers, about $187 billion remains outstanding, according to Treasury data through Tuesday. In the end, the Congressional Budget Office forecasts that TARP will cost taxpayers about $19 billion.

It also masks the extraordinary lengths the U.S. government took to ensure that its biggest banks did not fail, beginning with the Federal Reserve.

The Fed lowered the main interest rate to nearly zero percent, lowering borrowing costs for banks and other financial companies.

The cheap funds allowed banks to continue lending to creditworthy borrowers at normal rates — if not higher, given the uncertain economy — and book easy profits.

Last year, for the first time since 1962, banks paid less than 1 percent for their funds. In 2007, their borrowing costs were about three times higher, at 2.76 percent, FDIC data show.

Banks have been able to weather losses from sour loans thanks to rock-bottom interest rates. In effect, the Fed allowed banks to earn their way out of the crisis with taxpayer money.

The Fed also flooded the financial system with trillions of dollars in guarantees, short-term loans and asset purchases.

It purchased more than $1 trillion in government-backed mortgage securities, allowing banks easy profits off lending fees without having to shoulder any of the risk by simply transferring it to the taxpayer. More than nine out of 10 new home loans are guaranteed by taxpayers.

In addition, the central bank lent banks cheap money at a time when no one else would, allowing them to weather a volatile market, and allowed banks to pledge junk-rated collateral in return.

The FDIC also played a part in the banking industry’s comeback, at one point guaranteeing nearly $350 billion in bank debt as investors shunned a weakened industry, according to the agency. If the banks couldn’t make their payments, taxpayers would have stepped in.

The taxpayer guarantee gave banks access to cheap funds, lowering their borrowing costs and signaling to investors that many of them simply would not be allowed to fail.

About $267 billion of that debt remains unpaid, according to FDIC data through Dec. 31. The nation’s biggest banks, like Citigroup, Goldman Sachs and JPMorgan Chase, are among the biggest beneficiaries.

The FDIC also guaranteed a wider range of deposits, allowing banks to benefit from even more cheap cash as depositors flooded the firms with money.

The average deposit account yielded 0.79 percent at the end of last year, according to Market Rates Insight, a data provider. In 2007, the average rate stood at 4.15 percent. Retail deposits now make up 80 percent of all bank liabilities, up from 72 percent in 2007, according to the firm.

But Treasury didn’t acknowledge the factors that enabled it to book a profit from its bank investments. Instead, officials celebrated the extraordinary actions the department took to rescue a teetering financial system.

Those programs will generate a $23.6 billion profit, according to Treasury projections released Wednesday. It’ll take another decade to get to that point, the projections show, as taxpayer aid for government-controlled mortgage giants Fannie Mae and Freddie Mac winds down. Meanwhile, trillions of dollars in taxpayer aid and asset guarantees remain outstanding.

Federal overseers, like the departing Special Inspector General for TARP, Neil Barofsky, argue that the cost of that rescue shouldn’t merely be measured in dollars and cents. Rather, the cost will manifest itself in other ways, as the nation’s largest financial firms will likely continue to make risky bets because they expect taxpayers to bail them out in times of crisis.

“The good financial news should not distract from the careful and necessary assessment of TARP’s considerable, non-financial costs that, while more difficult to measure, may be even more significant,” Barofsky told a Congressional panel Wednesday. “Those costs include what is essentially at the heart of this hearing, the increased moral hazard and potentially disastrous consequences associated with the continued existence of financial institutions that are ‘too big to fail.’”

Earlier this month, Nobel Prize-winning economist Joseph Stiglitz told another bailout watchdog that TARP has been a “dismal failure.”

“It was hoped that it would play a pivotal role in dealing with the flood of mortgage foreclosures and the collapse of the real estate market that led to the financial crisis,” Stiglitz said March 4 during testimony before the Congressional Oversight Panel.

“TARP and the recovery of troubled assets were not ends in themselves, but means to an end, namely the recovery of the economy,” the Columbia University professor said. “In that ultimate objective, TARP has not only been a dismal failure — four years after the bursting of the real estate bubble and three years after the onset of recession, unemployment remains unacceptably high and our economy is running far below its potential, a waste of resources in the trillions of dollars — but the way the program was managed has, I believe, contributed to the economy’s problems.”

The ongoing moral hazard, Barofsky argued, is “precisely the sort of behavior that could trigger the next financial crisis, thus perpetuating a doomsday cycle of booms, busts and bailouts.”

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Isn’t if funny how the Supreme Court deemed Corporations as people too but gosh darnett somehow they have the wherewithal to not have to pay taxes like you and I do?  (Full Story Below) But yet after the collapse of the economy WE the tax payers are asked to sacrifice our money, our jobs and our way of life by forcefully and without permission to write a check for a trillion of ‘OUR TAX DOLLARS” to bail out some of these corporations who are giving nothing back to our country in the form of taxes?  Something is very wrong here.

If we live in a “Global Economy” where these corporations are benefactors of billions of dollars of overseas money why was only “The U.S.” (Taxpayers) handed the bill to bail them out?

Did you see how fast both Bush & Obama quickly wrote a check for (supposedly) too big to fail?

The very people that make the laws, remembering that these are the same people that give themselves raises every year, gave themselves a nice pension plan after a few years of service and never have to worry about their healthcare or cutbacks are the same people that were supposed to be the watchdogs of our nation.  The body of people who failed to see the oversight of the oversight going on at the Security Exchange Commission ran by the federal government.

Who would have ever thought that the very body of government, the body that is supposed to protect us would basically steal from us in the form of bailing out a corporation (s)?

Well friends the time has come to move, not literally but figuratively. Even after we’ve bailed them out, even while our country is still at 7 to 8% unemployment, even while people are still losing their homes, even while American job opportunities “overseas” have never been higher the war on our country is already underway in the form of opportunistic people who now believe that we should completely remove “Unions” from our country.

The same basic body of people who took our money to bail out big corporations for their mistakes continues to tear down our nation by using this opportunity to remove employee rights to earn a decent living. And they haven’t even started on the Police & Fire Departments yet.

As George W. Bush said so eloquently “when the going gets tough we have to make some tough decisions”. Well the same must be said for the American people as well.  Without our money there would be nothing to squander. So it’s time to fire a warning shot to the people that make our laws and run our country that it’s “WE THE PEOPLE” who are the ones THEY must answer to.

So in order to get their attention the only way outside of anarchy or a revolution is to take away the “power of money” till such a time there is real change in the form of

*Tax Reform

*Fiscal Responsibility

*Financial Reform

*Campaign Finance Reform

*“Completely Outlaw” the elimination of collective bargaining

*Elimination of 90% of lobbyists in congress.

As it stands today WE (You & I) along with our future Grand Children are the only one’s paying the debt for our nations mistakes.  No one else is.

I DON’T KNOW ABOUT YOU BUT I’M FED UP WITH PAYING THE BILL FOR EVERYONE ELSE!  WANT TO SEND A STRONG MESSAGE TO CONGRESS?

BOYCOTT THE IRS IN 2012 BY REFUSING TO PAY YOUR TAXES COMPLETELY TILL SUCH A TIME CONGRESS CAN FULLFILL IT’S PLEDGE TO GET BACK TO THE PEOPLES BUSINESS & PUT IN PLACE “REAL COMPREHENSIVE REFORM” TO LEVEL THE PLAYING FIELD AGAIN.

BOYCOTTING TAXES MEANS THIS: GO AHEAD AND PREPARE YOUR TAXES AND HAVE YOUR MONEY READY BUT DON’T FILE IT.   WHEN “WE THE PEOPLE” START TO SEE THE LAWS BEING CHANGED THEN WE’LL ALL COME UP WITH A DATE TO SEND IN OUR TAXES.  TILL THEN, THEIR CUT OFF COMPLETELY.

SPREAD THE WORD.

Edward Burnett

p.s. most likely I face the probability of being audited over this.

Frankly I don’t care, bring it on baby…it will only prove my point.

 

 

 

Corporations That Don’t Pay Taxes

*As reported Friday, General Electric concluded 2010 with $14.2 billion in profit, for which the Internal Revenue Service is paying them a tax benefit of $3.2 billion, thanks to a shrewd use of U.S. tax loopholes, aggressive lobbying and favorable international tax provisions. They’re far from alone.

*Last year, Google reduced its tax burden by $3.1 billion by altering its tax practices. Boeing hasn’t paid any federal    corporate income taxes in the last three years, despite earning $10 billion in domestic pre-tax profit.

*Pharmaceutical companies Pfizer, Eli Lilly, and Forest Laboratories habitually avoid paying U.S. income taxes by recording profits in a country a world away from where the sales occur.

“Companies don’t even have to be creative,” says Robert Willens, a taxation professor at Columbia Business School. “All they have to do is attribute or ascribe as much income as possible to foreign subsidiaries.” Companies register their intangible assets—intellectual property, for example—and income outside of the U.S. and register their liabilities and expenses in the U.S. to effectually reduce their taxable domestic income. Ireland and the Caribbean Islands are common tax havens.  “It doesn’t matter where your corporate headquarters is. If you’re Google, your income is I.P.… the patents aren’t registered in the U.S. For drug companies, the income is earned to their Irish subsidiary,” says Gleckman. “When you say that a company is in the U.S., I don’t exactly know what that means.”

Critics argue that the avoidance of corporate income tax hurts the economy and hampers domestic investment and job creation, but defenders of the practices argue it’s the only way their companies can stay competitive on a global scale as the American corporate tax rate of 35 percent is one of the highest in the world. (The average effective corporate tax rate is closer to 25 percent.)

Of course, the irony is that GE Chief Executive Jeffrey Immelt is the same person Barack Obama appointed to head the panel of external economic advisers created in 2009 to help steer the U.S. out of the economic crisis. Says Willens, “When [Immelt] was appointed to that position, people who had familiarity with GE’s tax practices had a good laugh, which are rare for tax professionals.”

I’m attempting to average up the tremors and feel confident that the next one will take place in the same area (if not the Arcadia area) by or before January 28th. It too will be a Mag of 2.8 to 3.1 The last  few swarms have been forming a bit of a pattern.   It seems that they hit every 4 days (once) then there’s a 9 to 10 day wait for the next one.   The most recent one is coming off that wait period so therefore I’m making my predicted based on the 4 day pattern.

We shall wait and see  :)

Sunday, January 24, 2010 at 01:14:51 AM at epicenter/3.7 Mag/Harrah-Jones Area

Friday, January 15, 2010 at 09:27:02 AM local time at epicenter /3.7 Mag/Harrah-Jones Area

Friday, January 15, 2010 at 09:18:25 AM at epicenter/3.8 Mag/Centered in Harrah-Jones Area, felt in Oklahoma City and surrounding areas

Thursday, January 14, 2010 at 04:05:34 AM local time at epicenter /3.3 Mag/Harrah-Jones Area

Sunday, January 10, 2010 at 11:15:59 PM local time at epicenter /2,8 Mag/ Choctaw-Harrah-Jones Area

Friday, January 01, 2010 at 12:45:51 PM local time at epicenter/2.8 Mag / Harrah-Jones Area

I have to laugh, with all the recent activity that everyone is calling natural occurrences, mysteriously have disappeared during the Holidays.

So here is my prediction.   There will be 2 to 3 earthquakes before the end of the week on Friday January 1st 2010.

(UPDATE Jan 24th, 2010)

Well I missed my predicted return of the swarms by a day.  As you’ll see from the more recent post, the next one occurred on January 1st, then started popping again after that.   It may have had something to do with the extreme cold weather conditions following the Christmas holiday that added to the delay.  We had the great Blizzard of 2010 that occurred during this time.

12/20/09 3.0 Earthquake

JONES, Okla. — Residents in Jones, Okla., were woken by another earthquake late Saturday night.  The quake, which measured 3.0 on the Richter scale, was the third for the small town near Oklahoma City since Thursday.  Sunday, residents said they just want to know what is causing the quakes.

Geologist in Oklahoma are working to determine why so many quakes have hit the area in the last nine months.

http://www.koco.com/news/22021737/detail.html

12/18/09 Earthquake

This one unreported by news but did happen today. Same vacinity  2.8 Mag 12/18/09

  • 3 km (2 miles) SE (144°) from Jones, OK
  • 7 km (4 miles) N (357°) from Choctaw, OK
  • 8 km (5 miles) NE (43°) from Nicoma Park, OK
  • 25 km (15 miles) ENE (74°) from Oklahoma City, OK
  • 308 km (192 miles) N (352°) from Dallas, TX
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