Thursday, September 10, 2009

The Oligarchs

I've Dropped Charles Johnson's Little Green Footballs as a site of interest after he came out in favor of crap like this:
Fox News Network LLC on Wednesday appealed a U.S. judge's decision not to force the U.S. Federal Reserve to reveal the names of participants in its emergency lending programs.
The Fed argued in both cases that disclosure could cause "competitive and reputational harm" to participants, potentially triggering bank runs and hurting the economy if information or rumors were allowed to spread.

The taxpayers don't have an interest in why they are being saddled with hundreds of billions of dollars of debt? The Fed's total backstops are actually up over a trillion dollars and by some counts several multiples of that, but we don't know since the Fed won't say. Their reasoning is that too much information will cause runs on the financial institutions they're helping out; of course the whole reason there would be a run is because these institutions are BROKE, so the logic actually goes something like this:

  • Under the table the Fed has backstopped some mystery parties. Who it is and why they found special grace in the Fed's favor is unknown. It could be entirely on the up and up, or it could be because Ben Bernanke went to school with the CEOs. Mr. Johnson believes that our trust should be put entirely into Mr. Bernanke, a man who has done nothing to earn anyone's trust, especially with saddling the taxpayers with untold hundreds of billions in order to back up the poor decision making of his buddies. The only problem is...
  • If the institutions are backstopped by the Fed, then why worry about a run since they're protected? The horrible truth is that the Fed can't afford to be called on those backstops. It's one thing to say that you'll back FOB's (Friend Of Ben's) 300 billion in bad mortgage securities, it's quite another to actually do it. That's why there's a move in Congress to audit the Fed BEFORE these liabilities come to light. Tools like Charles Johnson would rather find out AFTER the fact that the Fed star chamber single handily bankrupted the country by making sure that their friends didn't have to go without their yacht.

Charles Johnson and others like him claim to be defending our economic system, but if our whole economic system is based on shadows and lies there's really nothing there to defend.

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