THE REAL DEAL WITH THE "BANK TAX"

Here’s one more way to look at the new bank tax, courtesy of the equity analysts at Oppenheimer & Co: it basically has the same effect on the banks hit by it as would a 15bp rise in the Fed funds rate. And much like an increase in Fed funds, it’ll simply end up getting passed through to customers in the form of higher loan rates. Which doesn’t mean that lending will fall — in fact, the Oppenheimer analysts reckon that any decrease in lending will be “barely measurable”, and will come about mainly in the form of lower demand for loans rather than less supply of credit from the banks.

Meanwhile, an anonymous “senior industry leader” from the murky depths of the financial-services industry emerges to inform Politico that lending could be hit to the tune of $1 trillion as a result of this fee. Don’t believe it. The reason that the source is anonymous is that he would never say something that bald-facedly ridiculous on the record. Banks already have excess cash on their balance sheets, and they won’t reduce lending by $1 trillion for every 15bp that their cost of funds increases. If that were true, then a 200bp rise in interest rates would reduce lending by roughly 100% of GDP.

It’s right and proper that too-big-to-fail banks should have a higher cost of funds than smaller community banks, given the extra systemic risk that they pose. Even after this tax, they probably won’t, thanks to the moral hazard play. But at least it’s a step in the right direction.

The Scandal that is rocking CANADA, sort of: BANKSTER-GATE

By: The Northwest Herald
complete account of AIG scandal can be seen in previous post below.

‘Sort of’, because, for the most part, the general public is unaware of the AIG Scandal involving high-powered AIG execs receiving millions in bonus’ instead of bailing out the people, one figure we saw, that all American mortgages could have been paid off in one fell swoop with the 700 billion but instead the gov’t backdoor bailout involving Timothy Giethner, saw the banks and financial institutions across the world not to mention the central bank receiving over 200 billion dollars. The scandal now reaches into the white house and… Canada? Thanks to the leaked E-mails being dubbed; Geithner-gate.

We knew that after the October 2008, hundreds and thousands of investment banks were bailed out of their dismal financial situation to the tune of 700 Billion. See list of banks here.

Timothy Geithner, former head of the NY Federal reserve, who now serves as Treasury Secretary to Obama. Told AIG to withhold the records of where the bailout money was going.  The coverage from Bloomberg News has all the gory details, including a non-denial denial that Treasury Secretary Timothy Geithner, who was then chairman of the New York Fed, had anything to do with the cover-up.

Why you ask?

Because if the people ever found out that the bailout money went to Timmy’s friends at AIG and numerous other counterparties, including Ben-“inglorious-bastard”-Bernanke, there would be a revolt.

How is Canada involved?

Take a look at the screen shot below.

This is a snapshot of the amount of money AIG gave to… get read for it.

BANK OF MONTREAL.

Over 900 million dollars went to the Bank of Montreal, and there is little information as to exactly who received it.

Here in Canada our stimulus pkg was in around 40 billion dollars.

On November 24, 2008, American Congressman Ron Paul wrote,

"In bailing out failing companies, they are confiscating money from productive members of the economy and giving it to failing ones. By sustaining companies with obsolete or unsustainable business models, the government prevents their resources from being liquidated and made available to other companies that can put them to better, more productive use. An essential element of a healthy free market, is that both success and failure must be permitted to happen when they are earned. But instead with a bailout, the rewards are reversed – the proceeds from successful entities are given to failing ones. How this is supposed to be good for our economy is beyond me.... It won’t work. It can’t work... It is obvious to most Americans that we need to reject corporate cronyism, and allow the natural regulations and incentives of the free market to pick the winners and losers in our economy, not the whims of bureaucrats and politicians."