I’m not usually into politics or economics, but the latest events have lead me to writing this post. Even if it’s a long one, it’s worth checking out, if you’re the least bit interested in the topic.
First of all, take a look at the chart below. It’s a one-month graph on the evolution of the stock values. Are all these penny mining stocks? Not really. These are some of the biggest banks (both commercial and investment banks) in the world. A couple of years ago, these banks were considered untouchable. Now, within a few days, some of these banks have lost between 30% and 99% of their value. How’s that for a change?
For those of you that can’t recognize the acronyms: MS – Morgan Stanley, GS – Goldman Sachs Group, Inc., C – Citigroup, Inc., LEHMQ - Lehman Brothers, and MER - Merrill Lynch & Co., Inc.
To have a company the size of Morgan Stanley lose 30% of their value in a single day with no notion of profits is amazing to anyone involved in this market. Liquidity concerns are driving all of this. Liquidity and of course confidence. Goldman Sachs, the biggest investment bank in the world even had to come out publicly to say they did not need any money from the FED. Just the fact that they felt they needed to do that is worrying, and so the stock dipped after the announcement.
Let’s also see part of the last economic week in the US:
MONDAY, September 15th
The weekend news that Lehman Brothers is filing the largest bankruptcy claim in U.S. history and Merrill Lynch’s sale to Bank of America left investors wondering which financial institution will fail next. The Dow Jones industrial average fell more than 500 points, its sharpest drop since the September 11, 2001, terrorist attacks.
TUESDAY, September 16th
The Federal Reserve resisted a cut in interest rates, then announced it would provide up to $85 billion in an emergency, two-year loan to rescue insurance giant American International Group Inc. In return, the government would get a 79.9 percent stake in AIG and the right to remove senior management. Wall Street rebounded slightly.
WEDNESDAY, September 17th
The Dow Jones industrial average lost another 450 points. About $700 billion in investments vanished, even as the price of gold, which rises in times of panic, spiked as much as $90.40 an ounce.
THURSDAY, September 18th
The heads of the Treasury and the Federal Reserve begin discussions with congressional leaders on what could become the biggest bailout in U.S. history. While details remain to be worked out, the plan is likely to authorize the government to buy distressed mortgages at deep discounts from banks and other institutions. The proposal could result in the most direct commitment of taxpayer funds so far in the financial crisis that the FED and Treasury officials say is the worst they have ever seen.
Now, I’m wondering: why is nobody looking to see who caused the financial mess in the first place? Because we have to look no further than… the Federal Reserve!
The thing is, the FED tries to control money in the United States by varying interest rates. It has had the country on a roller coaster for years. Raise the rates until they are in or near a recession, then lower rates until they are booming. You would think that after 75 years and computers, the Federal Reserve would have a model to stop the roller coaster, but… apparently they don’t. Why? Because, after all, it’s a government entity with private components. And private components mean private interests!
After all, the “Federal” Reserve has as much to do with the federal government as “Federal” Express (FedEx) does. The “Federal” name was actually IMPOSED by Nelson Aldrich in 1913, when the “Federal Reserve Act” was created, in order to fool the common people into believeng that the FED had something to do with the state, or even the federal government.
One important thing to notice is that the only american presidents that opposed the central bank system were:
Even more so, Lincoln and Kennedy were the only ones to release US-Government printed currency, at zero interest (the so-called Greenbacks, or interest-free money). Can anybody see a pattern here? 
Correction should start at the beginning, fix the cause, not the result!
One last thing. For those of you who are interested in finding out more about the “private components” behind the FED, about how the american dollar is worth less and is just a piece of paper, about the central bank, the debt and credit system, the chips that will control your freedom, the north american union, why 9/11 was staged and how this technique has been used before many times, the vietnam war, where the world is heading and many more, check out this 48-minutes fragment from Zeitgeist (I won’t comment on it, though, for several reasons, nor do I want people to get the idea that this is the source of all the info I’ve written above):
UPDATE: Sept. 22 (Bloomberg)
The Wall Street that shaped the financial world for two decades ended last night, when Goldman Sachs Group Inc. and Morgan Stanley concluded there is no future in remaining investment banks now that investors have determined the model is broken.
The Federal Reserve’s approval of their bid to become banks ends the ascendancy of the securities firms, 75 years after Congress separated them from deposit-taking lenders, and caps weeks of chaos that sent Lehman Brothers Holdings Inc. into bankruptcy and led to the rushed sale of Merrill Lynch & Co. to Bank of America Corp.
“The decision marks the end of Wall Street as we have known it,” said William Isaac, a former chairman of the Federal Deposit Insurance Corp. “It’s too bad.”
UPDATE 2: Sept. 23 (Forbes), a Treasury spokesman explaining to Forbes that the $700.000.000.000 the US administration is asking for is “not based on any particular data point.”
In fact, some of the most basic details, including the $700 billion figure Treasury would use to buy up bad debt, are fuzzy.
“It’s not based on any particular data point,” a Treasury spokeswoman told Forbes.com Tuesday. “We just wanted to choose a really large number.“
Source is here. What can I say, except… are you fucking kidding me?!?!
