Around the Monopoly Board

It was reported last week, but not by any major news outlets that I know of, that Bloomberg News took the Federal Reserve to court and won. A Freedom of Information Act request put together by Bloomberg had allowed the hard numbers to finally be made available to the public about the loans the Fed gave out to keep financial firms afloat in the middle of the last economic near-collapse. The aristocracy of wealth was unofficially bailed out, at the tune of $1.2 trillion, while about 6 million homeowners currently owe about the same amount on delinquent and foreclosed properties. (See who made out, and with how much, by clicking here.)    

Obviously, despite the back-door bailout, it hasn't made getting a loan at your local bank, or refinancing with your mortgage lender, easier if even possible. So, what's the deal? If these banks are flush with our cash, which by the way include foreign banks and other non-U.S. lenders, why is liquidity stalled and our economy slipping toward a replay of a couple of years ago? Maybe financial intermediaries, i.e., banks, don't want to be the grease that keeps the economic engine of our commerce going any longer. Maybe it's just not profitable enough to loan to Main Street any more. Maybe the banks are lending it, but they're lending it to their elite clients, i.e., their hedge funds, who in turn leverage it from 10 to 100 times the value of the near zero interest loans that the Fed bequeathed them. And, maybe this is what's been artificially driving up stocks and bonds and commodities (gasoline and foodstuffs), and at the same time shorting the U.S. dollar. And, is this why the banks are signaling for a continuation of the recently dissolved quantitative easing ("QE2") and are hungry for QE3, then QE4, and so on and so on, because they know these unregulated and under-supervised funds are bleeding their reserves away as quickly as the Fed replenishes them? Or, are they just sitting on a mountain of money -- our money?     

Whatever is happening, one thing's for sure. The lending institutions are making out like bandits. While they're drawing interest on public funds given to them to stay alive, they're capitalizing into derivatives, commodities, precious metals, and god knows what else, while we're feeling the double-whammy of increased food prices, increased energy costs, and increased everything. It's like when we played Monopoly as kids, and one person had everything. Their stack of money just sat and didn't help anyone. All we could do was go around the board and hope to land on Community Chest (i.e., public assistance) or Free Parking (i.e., the lottery), but eventually we knew it was just a matter of time before we were sucked down the drain with the little money we had left. Our only other hope was going to jail. In our current real life scenario, that's not a pleasant thought. 

Maybe, starting on October 6th, that's what we should all do. H.D. Thoreau would be proud. Think about it, then join us.

Here's a report from RT, interviewing an economic analyst named Max Fraad Wolff, about this disclosure last week. There's really nothing extraordinarily revealing about what he says, but I have to admit, the guy's extremely smooth in his delivery and his demeanor. The discussion about the Fed loans begins at about 2:50 into the video.