Bank of England Bails out the Bad Boys

[Guest David Guyatt]

The Dirty Old Lady is set to exchange British government Treasury bonds for the failing portfolio of UK banks mortgage backed bonds.

This is an unprecedented and absolutely alarming move.

Hundreds of billions, (who knows maybe even a trillion or more?) of illiquid, non-performing and "crap" debt will be slipped, overnight, into the purse of the British taxpayer. In exchange, the taxpayer's hard-earned moolah is artfully lifted out of their purse and handed over to the slick banks.

The word "exchange" that is used by the government and the Old Lady in press releases to explain this deal is a designer misnomer. This is nothing other than a bank robbery in reverse -- except in this case the bullet-proof glass cashier shutters slide up for the banksters, rather than not slamming down as they do for the ordinary man and woman who might seek to exchange a counterfeit note for real coin of the realm.

Two decades of unrelenting and profligate greed that have gone unchecked by any meaningful banking regulation (there is none, the FSA is a purposeful charade) come home to roost and guess who pays?

Us.

If ever there was a blatant example of the true power of the banks, and the true nature of Gordon Brown, this is it.

***

http://www.telegraph.co.uk/money/main.jhtm.../bcnport116.xml

Bank of England to take on banks' loans to help mortgage market

By Andrew Porter, Political Editor in New York

Last Updated: 8:29am BST 17/04/2008

The Treasury is set to give the go-ahead for a Government-backed plan to help mortgage companies start lending again in the wake of the credit crunch.

The Bank would grant Government bonds in exchange for securities backed by UK mortgages

Alistair Darling, the Chancellor and the Bank of England have provisionally agreed to the Bank taking over mortgage loans sitting on lenders' balance sheets in order to increase the liquidity in the money markets.

The Bank would grant Government bonds in exchange for securities backed by UK mortgages.

It is the first time that the British government has acted so clearly to try to kick-start the markets. Gordon Brown will tomorrow meet Ben Bernanke, the chairman of the US Federal Reserve, in Washington to discuss what more can be done.

Today in New York he met a number of Wall Street bankers and urged them to be more open about the write downs and the true exposure of their losses.

Mervyn King, the Governor of the Bank of England, has been working for at least six weeks on the plan. He has consulted widely, including among senior financiers in America to gauge how the plan would work and its knock-on effects.

While the Bank has been keen to push ahead with the plan, the Treasury has voiced what one insider called "real concerns about the impact on the tax payer."

The issue is politically sensitive coming so soon after the Government was forced to nationalise Northern Rock. That deal exposes the tax payer to as much as £100bn in liabilities.

In that climate, Treasury officials are anxious that they are not seen to be squandering more public money and last night they were seeking final guarantees.

Earlier this week George Osborne seemed to have got wind of the deal. In a speech he said: "A broader collateral swap programme supported by the Treasury could help. This would allow banks to swap their illiquid mortgage-backed securities for liquid government bonds."

He accepted such a move would require "cast iron guarantees" for the taxpayer and insisted these be priced into the deal "not least to minimise moral hazard". He also said any intervention must not exacerbate inflationary pressures in the longer term.

Today he wrote again that this was the way to help the markets, and is now likely to claim that the Treasury has taken his advice. His intervention has undoubtedly led to a stepping up of the timetable for the plan, which has caused anger in Whitehall.

Mr Darling has called in mortgage lenders for a high level meeting next Tuesday to discuss what they can do to help get the markets moving again. He will urge them to pass on interest rate cuts to homeowners.

About 25 executives from Britain's high street lenders, investment banks, hedge funds and insurance companies attended a meeting on Tuesday with Mr Brown to offer suggestions on how to reopen the money markets.

Their principle request was that the Bank widen the collateral it will accept to include lesser quality mortgages and to make more longer-term funding available.

[John Simkin]

The Dirty Old Lady is set to exchange British government Treasury bonds for the failing portfolio of UK banks mortgage backed bonds.

This is an unprecedented and absolutely alarming move.

Hundreds of billions, (who knows maybe even a trillion or more?) of illiquid, non-performing and "crap" debt will be slipped, overnight, into the purse of the British taxpayer. In exchange, the taxpayer's hard-earned moolah is artfully lifted out of their purse and handed over to the slick banks.

The word "exchange" that is used by the government and the Old Lady in press releases to explain this deal is a designer misnomer. This is nothing other than a bank robbery in reverse -- except in this case the bullet-proof glass cashier shutters slide up for the banksters, rather than not slamming down as they do for the ordinary man and woman who might seek to exchange a counterfeit note for real coin of the realm.

Two decades of unrelenting and profligate greed that have gone unchecked by any meaningful banking regulation (there is none, the FSA is a purposeful charade) come home to roost and guess who pays?

Us.

If ever there was a blatant example of the true power of the banks, and the true nature of Gordon Brown, this is it.

***

http://www.telegraph.co.uk/money/main.jhtm.../bcnport116.xml

Bank of England to take on banks' loans to help mortgage market

By Andrew Porter, Political Editor in New York

Last Updated: 8:29am BST 17/04/2008

The Treasury is set to give the go-ahead for a Government-backed plan to help mortgage companies start lending again in the wake of the credit crunch.

The Bank would grant Government bonds in exchange for securities backed by UK mortgages

Alistair Darling, the Chancellor and the Bank of England have provisionally agreed to the Bank taking over mortgage loans sitting on lenders' balance sheets in order to increase the liquidity in the money markets.

The Bank would grant Government bonds in exchange for securities backed by UK mortgages.

It is the first time that the British government has acted so clearly to try to kick-start the markets. Gordon Brown will tomorrow meet Ben Bernanke, the chairman of the US Federal Reserve, in Washington to discuss what more can be done.

Today in New York he met a number of Wall Street bankers and urged them to be more open about the write downs and the true exposure of their losses.

Mervyn King, the Governor of the Bank of England, has been working for at least six weeks on the plan. He has consulted widely, including among senior financiers in America to gauge how the plan would work and its knock-on effects.

While the Bank has been keen to push ahead with the plan, the Treasury has voiced what one insider called "real concerns about the impact on the tax payer."

The issue is politically sensitive coming so soon after the Government was forced to nationalise Northern Rock. That deal exposes the tax payer to as much as £100bn in liabilities.

In that climate, Treasury officials are anxious that they are not seen to be squandering more public money and last night they were seeking final guarantees.

Earlier this week George Osborne seemed to have got wind of the deal. In a speech he said: "A broader collateral swap programme supported by the Treasury could help. This would allow banks to swap their illiquid mortgage-backed securities for liquid government bonds."

He accepted such a move would require "cast iron guarantees" for the taxpayer and insisted these be priced into the deal "not least to minimise moral hazard". He also said any intervention must not exacerbate inflationary pressures in the longer term.

Today he wrote again that this was the way to help the markets, and is now likely to claim that the Treasury has taken his advice. His intervention has undoubtedly led to a stepping up of the timetable for the plan, which has caused anger in Whitehall.

Mr Darling has called in mortgage lenders for a high level meeting next Tuesday to discuss what they can do to help get the markets moving again. He will urge them to pass on interest rate cuts to homeowners.

About 25 executives from Britain's high street lenders, investment banks, hedge funds and insurance companies attended a meeting on Tuesday with Mr Brown to offer suggestions on how to reopen the money markets.

Their principle request was that the Bank widen the collateral it will accept to include lesser quality mortgages and to make more longer-term funding available.

Brown has just guaranteed himself a very well-paid job with a leading bank after he is booted out of office. Brown's claim that he has done this to help people get a foot on the housing ladder. Why was it he did not invite one chief executive of a building society to his meeting? They are the people who arrange for most of the mortgages in the country.

[Maggie Hansen]

Brown has just guaranteed himself a very well-paid job with a leading bank after he is booted out of office. Brown's claim that he has done this to help people get a foot on the housing ladder. Why was it he did not invite one chief executive of a building society to his meeting? They are the people who arrange for most of the mortgages in the country.

What ever happened to public housing?

[Guest Stephen Turner]

Brown has just guaranteed himself a very well-paid job with a leading bank after he is booted out of office. Brown's claim that he has done this to help people get a foot on the housing ladder. Why was it he did not invite one chief executive of a building society to his meeting? They are the people who arrange for most of the mortgages in the country.

What ever happened to public housing?

Allowed to run down into a sink state. Council housing now equates to failure in the minds of many Brits, which was of course, as intended.

[Guest David Guyatt]

Brown has just guaranteed himself a very well-paid job with a leading bank after he is booted out of office. Brown's claim that he has done this to help people get a foot on the housing ladder. Why was it he did not invite one chief executive of a building society to his meeting? They are the people who arrange for most of the mortgages in the country.

What ever happened to public housing?

Allowed to run down into a sink state. Council housing now equates to failure in the minds of many Brits, which was of course, as intended.

One of Thatcher's many long-term blights was the selling off of council houses -- along with her crap and mayhem (and unbelievably evil) dogma that the "market will regulate itself" (deregulation on a grand scale...luvvely jubbely for the City and big corporations). Selling off council houses brought billions into the treasury coffers and, at the same time, turned millions more Brits into debt slaves, and, at the same time, made whoppee for the banks and financial sector via the immense surge in mortgages................ now come home to roost for, probably the next 100 years of trickle down misery for one and all -- well, not all, those of a wealthy inclination are not to be disadvantaged in this well thought out scenario.

It has been an absolutely disgrace of applied evil imo.

I think John is right and that Brown will join Bliar in an American bank. My money is on Goldman Sachs - an investment bank that has had a close connection to him for many years now.

[David G. Healy]

Brown has just guaranteed himself a very well-paid job with a leading bank after he is booted out of office. Brown's claim that he has done this to help people get a foot on the housing ladder. Why was it he did not invite one chief executive of a building society to his meeting? They are the people who arrange for most of the mortgages in the country.

What ever happened to public housing?

Allowed to run down into a sink state. Council housing now equates to failure in the minds of many Brits, which was of course, as intended.

One of Thatcher's many long-term blights was the selling off of council houses -- along with her crap and mayhem (and unbelievably evil) dogma that the "market will regulate itself" (deregulation on a grand scale...luvvely jubbely for the City and big corporations). Selling off council houses brought billions into the treasury coffers and, at the same time, turned millions more Brits into debt slaves, and, at the same time, made whoppee for the banks and financial sector via the immense surge in mortgages................ now come home to roost for, probably the next 100 years of trickle down misery for one and all -- well, not all, those of a wealthy inclination are not to be disadvantaged in this well thought out scenario.

It has been an absolutely disgrace of applied evil imo.

I think John is right and that Brown will join Bliar in an American bank. My money is on Goldman Sachs - an investment bank that has had a close connection to him for many years now.

where's Ronald "...what crises...." Reagan when you need him?

[Guest David Guyatt]

Jan, the Chicago School of economics is simply bloody appalling in its vision and scope in my opinion. I'm sure you've read Stiglitz etc., for an insiders view.

I have two conflicting thoughts about all this. On the one hand I have been expecting this current disaster for well over a decade now -- and wonder if the ultimate crash and burning is not designer driven. Chaos can be a useful instrument.

I keep harking back to the words of Carroll Quigley in his book Tragedy & Hope, and the bankers plan to take control of the world via monetary means and to that end they founded the BIS which became a Nazi tool early on. I then keep recalling the words of Schacht when he was tracked down in Djarkarta in the early 1950's where he was asked if the Himmler Circle still survived (Im dragging this up from memory so please forgive any factual errors that creep in but the general paters is accurate). schacht was nervous during the interview and let slip the thought that if it happened again (a new nazi surge) it would be through money and business.

On the other hand, I wonder if it is just the result of sheer madness and greed -- the naive cock-up explanation.

Then I think again of Carroll Quigley and Schacht (and others) and the hidden agenda Quigley speaks about. To me this smells right. Many other factors flow into this sort of explanation -- not least of which is that such a grand conspiracy is so bloody huge in its inception that no rational person could possibly believe it to be true.

Ergo, it's true...

I don't buy the cock-up theory at all.

[John Simkin]

David - I've been researching this for months (before joining this forum) and my analysis is near identical to yours. As Mike Whitney has written: "this is a banker's coup".

However the underlying fundamentals (particularly credit card debt, falling property prices in the USA, UK, Ireland, Spain etc, national current account deficits, and counterparty default causing a derivative domino collapse) are so dire that imo this BoE con job merely buys the bankers a bit of time to carry on enriching themselves whilst dumping toxic debts onto taxpayers. It's simply postponing the day of reckoning.

My question is how to do you see this playing out?

To use a bit of shorthand, will TPTB attempt Kleinian "shock therapy" in the First World?

Marx predicted that capitalism would eventually destroy itself. The reason being that human greed would get the upper hand over long-term interests. This is what seems to have happened with the actions of the banks over the last couple of years.

What happens next depends on China and to a lesser extent Japan. They could pull the plug on the American economy. However, is this in its own long-term interests of China? Is it possible that a so-called communist state will save capitalism from self-destruction?

[Maggie Hansen]

Jan, the Chicago School of economics is simply bloody appalling in its vision and scope in my opinion. I'm sure you've read Stiglitz etc., for an insiders view.

I have two conflicting thoughts about all this. On the one hand I have been expecting this current disaster for well over a decade now -- and wonder if the ultimate crash and burning is not designer driven. Chaos can be a useful instrument.

I keep harking back to the words of Carroll Quigley in his book Tragedy & Hope, and the bankers plan to take control of the world via monetary means and to that end they founded the BIS which became a Nazi tool early on. I then keep recalling the words of Schacht when he was tracked down in Djarkarta in the early 1950's where he was asked if the Himmler Circle still survived (Im dragging this up from memory so please forgive any factual errors that creep in but the general paters is accurate). schacht was nervous during the interview and let slip the thought that if it happened again (a new nazi surge) it would be through money and business.

On the other hand, I wonder if it is just the result of sheer madness and greed -- the naive cock-up explanation.

Then I think again of Carroll Quigley and Schacht (and others) and the hidden agenda Quigley speaks about. To me this smells right. Many other factors flow into this sort of explanation -- not least of which is that such a grand conspiracy is so bloody huge in its inception that no rational person could possibly believe it to be true.

Ergo, it's true...

I don't buy the cock-up theory at all.

Who was it that said that if you tell a lie so monstrous the people will believe it?

[Guest David Guyatt]

Marx predicted that capitalism would eventually destroy itself. The reason being that human greed would get the upper hand over long-term interests. This is what seems to have happened with the actions of the banks over the last couple of years.

A sort of evil take on the concept of the Ouroboros in action, the serpent that consumes itself starting with its own tail.

The problem with Marx's "cock-up theory" viewpoint is the cloaked optimism it embraces plus the fuzziness about the eventual outcome of such a collapse.

It would require an immense leap in the human psyche to shift to the next stage of evolution and, frankly, I've seen nothing that would indicate this is happening. On the contrary, I see a reversion to the dark ages in progress. There are indications (to my way of thinking) that this is not merely the result of accident, but is part and parcel of an orchestrated, manipulating design.

Of course, rationalists (the extraverted thinking types) will never see some of these things that stand before the ends of their noses because they are prisoners of their own dominant psychological type (and I don't intend this as an insult) which has the peculiarity of writing off the other psychological types as being "irrational" and, therefore, of no consequence whatsoever.

What happens next depends on China and to a lesser extent Japan. They could pull the plug on the American economy. However, is this in its own long-term interests of China? Is it possible that a so-called communist state will save capitalism from self-destruction?

Forget communism, China is a capitalist society. Why should it not help the western banking system since it benefits so very much from it? As human nature goes, greedy men don't usually kill the golden goose. China keeps threatening to pull out of the dollar reserve system and cash in all it US dollars, but it hasn't yet. Personally I think it is posturing when t says this and I doubt it ever will pull out.

Japan is an integral part of the Trilateralists and are regarded as honorary white men. Why would they want to destroy the goose?