Natural-Law copyright by Anthony Hargis
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If a commander of a fortress, appointed to make defense against the approaches of an enemy, should breech about his guns and fire upon his own town, he would commence [to be a] tyrant and ought to be treated as an enemy to mankind. Silas Donner, A son of Liberty, 1768
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With passage of the so-called ‘Troubled Asset Relief Program’ of 2008 (TARP), Congress gave authority to the US Treasury to conduct a general plunder of American taxpayers (alive and yet-to-be born). Of course, to enact is one thing; to implement is quite another, as functionaries at the Treasury soon discovered. Over early months of 2009, such functionaries would give conclusive proof that governments are gathering places for idiots and thieves.
This was demonstrated by the struggle by Treasury bureaucrats and the Chosen Ones from too-big-to-fail banks to invent a procedure by which the plunder could be distributed in a sportsman-like, all-American manner.
PPIP/F is the acronym for an ineffable entity (“Public/Private Investment Program/Fund”) established by the US Treasury to purchase so-called “toxic assets” from banks, insurance companies, hedge funds and others. Such “toxic assets” are loans (or bundles of loans) that are secured by residential or commercial property, and, that are non-performing – mortgage-backed securities (MBS), that is.
Many articles and commentaries have been written about the PPIP/F. For background, I would suggest these:
A fairly gentle article from the Los Angeles Times,
A summary of the quarterly report submitted to Congress by the Special Inspector General for the Troubled Asset Relief Program Act of 2009,
My purpose here is not to duplicate the work of others, but to add observations that others have overlooked… so far.
First, what are we discussing?
Depending on whether we discuss the “Program” or the “Fund”; and, according to the plan worked out by college-degreed economists at the US Treasury (UST), the plan would create a “Fund” which would purchase “Troubled Assets” from complicit banks and have the Treasury provide financing for such purchases. Such financing would be either ninety-two point five (92.5) percent (for banks) or seventy-five (75) percent (for all others) of the money needed to purchase such “toxic assets”.
With these options, private investors would have enormous profit potential and very limited loss potential – especially with the former option. For example, if the “Fund” purchased a “toxic asset” for $500,000 that had a face value of one million dollars – and it eventually increased to face value, the private investor’s (the “Fund’s”) initial investment would be $37,500 and the private investor and the UST would each see a profit of $250,000 – not counting interest received. If the investment eventually lost fifteen percent or more, the private investor would lose only $37,500 – and taxpayers would lose beyond the decline of fifteen percent.
Point One, selection of “Fund Managers”
The first step in this operation is (was) for the UST to select “fund managers” to perform the day-to-day functions of the PPIP/F.
For this purpose, the UST drafted and issued an Application form (the link no longer works) for entities or individuals that wanted to apply as “fund managers”. Requirements for consideration are (were):
Demonstrated capacity to raise at least $500 million of private capital.
Demonstrated experience investing in Eligible Assets [that is, “Troubled Assets”], including thru performance track records.
A minimum of $10 billion (market value) of Eligible Assets under management.
Demonstrated operational capacity to manage the Funds in a manner consistent with Treasury’s stated investment Objective while also protecting [sic] taxpayers [brackets added].
Headquarters in the United States.
One item to notice here is the phrase “Eligible Assets”. These are the so-called toxic assets that necessitated the fiat creation of the PPIP/F. The Application form also uses the phrase “Legacy Assets” as equivalent to “Eligible Assets”.
“Legacy?” Webster defines, “a gift by will especially of money or other personal property; something received from an ancestor or predecessor or from the past”.
We are discussing garbage; who but an idiot would bequeath garbage? But I digress.
By limiting applicants to those who have “demonstrated experience” of managing $10 billion of “Eligible Assets”, the UST is limiting those who will profit by the PPIP/F to those who have contributed most to the crisis that now tears the world apart.
But not quite… an exception to this rule will be granted to entities that are veteran-, women- or minority-owned. The criteria for granting this exception, of course, is left unclear. This usually means the exception will be granted as such applicant makes UST bureaucrats smile; a criterion as old as governments; and such privileges will cease with their frowns.
Another aspect on this point: when a sentry turns his guns on his town, he commits treason; rational men do not reward his actions, they make him dance in the wind.
There are millions of American homes that have a value less than their loans; and each of these loans is a toxic asset. These loans turned “Legacy” for numerous reasons: “stated income”; misrepresented credit scores; unrealistic appraisals; ‘bait and switch’ interest rates; doctored bank statements; among other signals of danger. The process that booked each of these loans involved dozens, maybe scores, of people to complete; attorneys, appraisers, notaries, mortgage brokers, title insurance agents, and insiders at banks and mortgage originators. Then there were prosecutors, investigators, judges and regulators who took their bribes and babbled their approval. All it would have taken to stop such fraudulent or unwise loans was one person that participated in the process. It didn’t happen… in millions of cases. One man who tried (Eliot Spitzer) got “Johned” a few weeks later… so efficiently did the system work.
Let us state this clearly: for each “Legacy” asset, there were dozens, maybe scores, of people that made it possible. The failure was pandemic.
The fact that a company has “Demonstrated experience [managing or] investing in “Legacy Assets” ” is a demonstration that such company has failed to properly manage the dozens of people necessary to properly process loans. This failure is precisely what turns a loan into a “Legacy” asset. Such a company is a gatekeeper that failed.
Civilized men do not reward such a gatekeeper; they make him answer for what he has done.
But not here; these “gatekeepers” own Congress, the White House, the court system, the media… the list goes on.
So, based on the above requirements, the UST has announced that it will select five great bandits as “fund managers’ on or about May 1 (2009); and possibly more later.
Point Two, conflict of interest
One commentator (see suggestion two, above) has described a possible abuse we should expect from this PPIP/F. He estimates, for example, that great bandits will be appointed as the five “fund managers”. They will then buy each others’ garbage at face value when such garbage has a value of one half of face value.
This would be difficult; for Attachment I of the Application form contains this language,
Each Fund Manager may only purchase Eligible Assets from sellers that are not affiliates of such Fund Manager, any other Fund Manager or their respective affiliates or any private investor that has committed at least 10% of the aggregate private capital raised by such Fund Manager.
In other words, when we consider a pile of garbage relative to the qualification as a “fund Manager”, it is declared to be comprised of “Eligible Assets”; when we consider that same pile of garbage relative to what “Fund Managers” can purchase, it is declared to be “ineligible”.
Hence, the instant an applicant becomes a fund manager, its “Eligible Assets” become ineligible for purchase.
These banks and others have more than $10 billion (market value) of non-performing loans. They instruct Congress to pass legislation would enable them to shift their losses onto taxpayers. And then their poodle at Treasury drafts rules that locks them out of the booty?
Can they do that?
Oh dear… my head is beginning to hurt.
There must be an ulterior motive to this nonsense. When bandits are blocked by rules or laws, they only become more clever… especially when they make such rules and laws. After “Fund Managers” have been selected by UST, the rule will be changed, as arbitrarily as it was laid down.
It will, in the meantime, have served the purpose of excluding from public office those who have not participated in a general plunder of the earth.
It will continue rule by the guilty.
Now, that’s better… my head no longer hurts.
Point Three, protecting taxpayers
The Application form makes several references to the duty of Treasury and “Fund Managers” to protect interests of taxpayers. This is not a joke.
The purpose of the PPIP/F is to purchase toxic assets from banks and others. Suppose a bank has a package of “Legacy” assets with a face value of one million dollars, but a market value of half that.
If the “Fund” purchases this “Legacy” asset at market value, the bank will have to book a loss of half a million dollars.
What’s the point?
PPIP/F was created so banks and others would not have to book losses. If banks and others are not able to shift most of their losses onto taxpayers, no transactions will occur.
If, however, banks are able to unload losses onto taxpayers, such will be against the best interests of taxpayers – and the UST, and fund managers, will be forbidden, by UST rules, from completing such transactions.
Since only the most proficient bandits will be allowed to be fund managers, it is a certainty that losses will be shifted onto taxpayers… somehow.
Point Four, profits for taxpayers
Some people will attempt to justify the PPIP/F on the basis that eventually these “Legacy” assets will generate profits for taxpayers. They will claim that, when that happens, taxpayers will benefit with lower taxes or refunds.
Did you notice how grudgingly Congress allowed taxpayers to keep an extra eight or nine dollars per week with the Obama boondoogle? America is in the middle of the greatest catastrophe in a hundred years… and Congress promised to reduce its spoliation of taxpayers eight dollars a week?! But it was all a mirage: they took it away a few weeks before it even got to taxpayers by raising gasoline prices twenty cents a gallon.
(Yes, the price of oil is a little recognized instrument by which the bandit class manages monetary policy; or channels more benefits of inflation into their pockets. When Congress or the Federal Reserve add new money to the system, oil prices go up weeks or months before the new money hits the system. This soaks up most of the new purchasing power before it gets to the peasant class. And, it’s tax free since oil companies keep their profit centers off shore.)
No, if this PPIP/F ever shows a profit, it will be intercepted by the bandit class; and little, or none of t, will be seen by taxpayers.
What’s the bottom line? The PPIP/F is intended to demonstrate, to the world and the rest of time, that idiocy rules in America.
It was such a clear demonstration of idiocy by college-degreed economists, it was allowed to quietly evaporate unheralded.
Timely, and related, pages,
Turn Back the Clock. I’m 69 (in two months) but I have the health, vitality and body of a near-professional athlete, aged 25 to 35. I routinely have former pro and college baseball players tell me I would “do well” (a modest remark) if I played “men’s senior league”, a level of play equal to a major college. In other words, I’m living proof that people do not have to grow old; they can retain or recover the health and vitality of youth; they don’t have to suffer from arthritis, diabetes, kidney failure or any of hundreds of other ailments. Look what you’ll gain: more strength and a longer life to enjoy the adventures we all know are coming. You might even want to take part in them.
One in Ten Thousand. This relates how English rebels (1620-50) took down corrupt judges and tax-collectors, bishops and kings using procedures that would later guide American Founders. These examples represent some of the most dramatic and significant scenes in the long struggle from barbarism to civilized society – scenes that have almost been completely erased from current history and law books.
Will a Ron Paul Presidency be the Trigger for the Next Dark Age? I like most of the ideas Ron Paul promotes; but…
What Price Gold $7,000… $14,000… $60,000? How do 1) Mortgage-Backed Securities and 2) US Treasury securities held by central bank of Red China influence the price of gold?
Anatomy of a General Plunder, part 1. Beginning the first week of December, 2007, American bank reserves began to disappear on a system wide basis; within six weeks they had all disappeared. It was a modest beginning of a process that some have called, “beyond unprecedented”.
Anatomy… part 2. In prior centuries, paper money was issued into circulation in exchange for gold, which became the collateral for such issued currency. Today, collateral for issued currency is government debt securities. During the first week of December, 2007, some of the collateral behind the dollar went missing. This event was perfectly coordinated with the disappearance of American bank reserves, explained in Part 1. During following months, more such collateral went missing – leaving only 53% of the dollar collateralized. This is another “unprecedented” event relative to the financial crisis and never noticed by anyone else – according to my current knowledge.
Anatomy… part 3. About 2008 Sep 15, Secretary of Treasury Paulsen demanded $700 billion from Congress. Before the money could be delivered to Paulsen’s friends, it first had to appear in the Treasury’s checking account maintained at the Fed. At the time, only $5 billion was in this account. Where did the $700 billion come from? Answer: ‘It was a coordinated raid on the US Treasury by the combined effort of the Federal Reserve, nearly thirty foreign central banks, the US Treasury, Congress, the White House, and probably others’ – all documented by data published by the Federal Reserve… and seen by no one else.
Is the Mortgage Crisis the Mother of Opportunity? The mortgage crisis revealed that those banks too-big-to-fail produced 50 million mortgages with seriously clouded titles. It produced a situation where no one could provide lawful authority to collect or foreclose on such mortgages. In other words, property law 4,000 years old had been violated on a national scale. So far, solutions require that bank shareholders, bank depositors, and taxpayers suffer losses -while those who engineered the crisis waltz away each with millions in plunder. What can be done about it – without creating a new class of victims? Please see the full article.