Government is lying to you

In his comment yesterday on ‘Economic Cycle has Turned’, nanute wrote:

“My biggest complaint with the current approach by the US Fed, and by extension, the Obama Administration is that there is not enough of a regulatory component to the "bail out." Furthermore, propping up institutions that are too big to fail, only perpetuates the too big to fail entities. As part of the "lending" of taxpayer dollars to the likes of BOA, City and others, these entities should have been required to separate the various subsidiaries that are not traditional banking institutions. Compounding this problem was, in my opinion, the suspension of the rules of mark to market. It astounds me that financial institutions are recording profits, while at the same time booking risky assets at cost.  Wishing that at some point in the future something would be worth what you paid for it is not consistent with GAAP, and flies in the face transparency.  The current "profits" being reported are illusory and any investor that continues to put his or her money in these stocks needs to have their head examined. The public is in no mood to see a continuation of subsidizing people that pretend to believe in the principles of risk and investing without extracting a pound of flesh. No one is being held accountable and if the Fed, the administration and congress doesn't take some serious action soon, the risk of total economic/market collapse is not far off.”

Its reply:
Nanute yr above comment shows that you have a very good understanding and insight by putting the logics together. Apparently Governments fail such people like you. It’s in the first place an old boys network in the financial industry Geithner, Paulson and more. I wrote an article recently about that aspect. They cover up the system and its clowns. Obama doesn't master economic knowledge and swept Paul Volcker out, the only one who could have given him the right advice. Of course when providing the banks with taxpayers' money they should have required stricter new regulations applied as you suggest and indeed splitting up the bank entities that were the cause of the financial crisis.

Banks should value their assets in accordance to market price, and that is not happening. I wrote an essay about the Spanish banks that carry their mortgages and real estate participations to 2007 values. If they should value to today's prices they are broke! The bonuses are another hot issue. It is unbelievable that as such can happen and is tolerated by the authorities. Proving my conclusion that it is an old boy network. People that caused the financial crisis should have been sacked. No, this government let them continue and keep pouring taxpayers' money. Irresponsible, in business you wouldn't get away with such.


In continuation I found the following statement form Damien Hoffman of Wall Street Cheat Sheet who reports:

“The Treasury Department said that any review of [patently misleading and false] announcements last year “must be considered in light of the unprecedented circumstances in which they were made.”

If you need a translation of what that means, Damien Hoffman gives the answer straight:
“When our elected representatives and their appointed officials believe we need to be manipulated, they rationalize their lies based on whether they think we need them at the time.”

“The White House is lying to you. If you believe the calming words of Tim Geithner, Ben Bernanke, Sheila Bair, Larry Summers, or Barack Obama, you are being fattened up before the winter slaughter.”

Conclusion: Since the bailout extravaganza began last fall, a heroic deception campaign has been spoon fed to you by your “leaders.”

And this from the New York Times:
“A Treasury official made incorrect statements about the health of the nation’s biggest banks even as the government was doling out billions of dollars in aid, according to a report on the Troubled Asset Relief Program to be released on Monday by the special inspector general, Neil M. Barofsky.”

The worst part of Barofsky’s report is how directly Hank Paulson deceived you last fall.
“Former Treasury Secretary Henry M. Paulson Jr., for instance, said on Oct. 14 that the banks were “healthy,” and that they accepted the money for “the good of the U.S. economy.” The banks, he said, would be better able to increase their lending to consumers and businesses.”

“The truth, regulators were concerned about the health of several banks that received that first bailout,” the inspector general writes.

“Hank Paulson looked into the eyes of a nation and lied.” But what really is blood boiling, is that this type of deceit is government policy.
“Hold on to your investments”, they said. “Buy American”, they said. They even had everyone’s favorite financial grandpa, Warren Buffett, go on the TV and assure you that things were fine and dandy.

But after that, what happened?
From its resting point in November, the markets plunged to historic lows. All the while, investors bled. Dividends disappeared. Retirements evaporated. And your life savings evaporated. So if the government’s lies don’t anger you, the plunging of your net worth certainly should.

Next time when any of your elected officials say anything to you, please take it with a grain of salt. Or at least think about the kind of hidden lies buried in the statements.

The problem now is that one cannot believe a damn thing the administration is telling us right now. If they lied to us when things were bad, what makes you think they aren’t lying to you right now?

Things aren’t any better. Banks are failing, unemployment is rising, and deflation is taking over. If this history is any example, the government is certainly NOT your friend.