Interesting conversation with my pal Dan about the low low standards for collateral for the Fed’s TSLF, and for JPMorgan’s Bear Stearns purchase:
I suggested that the Fed grabbed the plaque at the Statue of Liberty, and moved it to the Federal Reserve. They took this inscription:
"Give me your tired, your poor, your huddled masses yearning to breathe free, the wretched refuse of your teeming shore."
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And turned it into this:
"Give me your tired paper, your poorly performing mortgages, your huddled derivatives yearning to trade free, the wretched refuse of your balance sheets."
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If you have a better explanation, I am all ears . . .
“Give me your tired risk models, your poor underwriting controls, your huddled mortgage payers yearning to be free, the wretched refuse of your unmitigated greed.”
An alternative–not meant to supplant your own creative representation which is wonderful.
Since the Fed started “fixing” things…
…I’ve copped a pair of the the Mint’s plates for “In God We Trust”
…and changed them to “In Gold We Trust”
Sure, the mortgages, paper, and derivatives are a bit disconcerting, but what really has me worried is the line of homeless guys outside the NY Fed looking to trade aluminum cans and deposit bottles for treasuries.
Benny, the need to relax collateral requirements I can understand, but turning the Fed into a pawn shop?
Well, it’s hard to blame the Fed for this decision – it was either accept MBS or accept dollars – and at least AAA MBS still has s-o-m-e value….
The original plaque is still there on the Statue of Liberty. No point in getting overwrought and extremist.
What about baseball cards? I’ve got a Ron Santo rookie card.
the mandate of the FED continues to evolve….. they have a free hand to do what ever they wish to do.
I hear Fed is installing key drops on the front doors of all the Federal Reserve district banks so people can leave the keys to their homes and autos for the Fed to take in as additional collateral.
Oh, finish the poem.
“Send all your hopeless market-tossed to me.
I lift my lamp beside the discount door.”
“Give me your old newspaper for recycling.”
The Green Federal Dollar Reserve
I like it!
Just one comment. The Fed, over leveraged corporations and the writer of that plaque had one thing in common; they lied. I often wonder what the native Americans who were considered top notch skyscraper construction workers in the sixties in New York City because they weren’t afraid of heights (I read about them in Life magazine) thought about that plaque. Anyway, I hope Bernake gets a physical newspaper in addition to the electronic web stuff. The way things are going, he may soon need a Hoover Blanket and some cardboard to make his Hoover shoe soles. What’s the difference between a Hoover Blanket and a Bush Blanket?
1930’s newspapers were bigger.
Give me what is worth less today than it was yesterday and I’ll give you what should be worth less tomorrow than it is today.
The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered.
Banking establishments are more dangerous than standing armies.
The accounts of the United States ought to be, and may be made, as simple as those of a common farmer, and capable of being understood by common farmers.
If we run into such debts as that we must be taxed in our meat and in our drink, in our necessaries and our comforts, in our labors and our amusements, for our callings and our creeds, as the people of England are, our people, like them, must come to labor sixteen hours in the twenty-four, and give the earnings of fifteen of these to the government for their debts and daily expenses; And the sixteen being insufficient to afford us bread, we must live, as they do now, on oatmeal and potatoes, have no time to think, no means of calling the mismanagers to account; But be glad to obtain subsistence by hiring ourselves to rivet their chains around the necks of our fellow sufferers; And this is the tendency of all human governments. A departure from principle in one instance becomes a precedent for a second, that second for a third, and so on ’til the bulk of society is reduced to mere automatons of misery, to have no sensibilities left but for sinning and suffering…and the forehorse of this frightful team is public debt. Taxation follows that, and in its train wretchedness and oppression.
…the Federal Judiciary; an irresponsible body (for impeachment is scarcely a scarecrow), working like gravity by night and by day, gaining a little today and a little tomorrow, and advancing its noiseless step like a thief, over the field of jurisdiction, until all shall be usurped from the States, and the government of all be consolidated into one. When all government… in little as in great things, shall be drawn to Washington as the centre of all power, it will render powerless the checks provided of one government on another and will become as venal and oppressive as the government from which we separated.
Does the government fear us? Or do we fear the government? When the people fear the government, tyranny has found victory. The federal government is our servant, not our master!
Unlike those nations whose rulers use their country’s resources to seek conquests, to carry on warring contests with one another, and consequently plunge their people into debt and devastation, free societies are organized for the happiness and prosperity of their people, and this is best pursued in a state of peace.
——– Thomas Jefferson ——-
They have the same post over on MoA today:
http://www.moonofalabama.org/2008/03/the-new-totalit.html#comments
Great statement, even if incorrect. You don’t have to give your crap to the Fed – they’ll buy it from you. At book value. Your book value
Is this a great country or what?
The Fed has now backstopped the entire banking system. Prior to August 2007, the US banking system maintained reserves of ~$42 billion, woefully inadequate, but never-the-less it was maintained. Beginning with the Fed’s new loaning measures, these reserves have plummeted to negative $61 billion as of the most recent H.3 release (http://www.federalreserve.gov/releases/h3/Current/). Then banking system is bankrupt without these Fed facilities and it is accelerating. We should expect the next announcement for the Fed to be an extension in both duration and magnitude for their Term Auction Facility. Do I hear $200 billion ($100 billion auctions). Look at the pattern for the growth of the TAF, a pyramid scheme of which Ponzi would be proud.
you sure they didn’t steal lou reed’s lyrics.
“give me your tired your hungry your poor and ill on piss on them”
“The refusal of King George III to allow the colonies to operate an honest money system, which freed the ordinary man from the clutches of the money manipulators was probably the prime cause of the revolution.”
-Benjamin Franklin
founding father of the United States of America
“I believe that banking institutions are more dangerous than standing armies… if the American people ever allow private banks to control the issue of currency… the banks and corporations that will grow up around them will deprave the people of their prosperity until their children wake up homeless on the continent their fathers conquered.”
-Thomas Jefferson
1743-1826
“I am the most unhappy man. I have unwittingly ruined my country. A great industrial nation is now controlled by its system of credit.
We are no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men.”
-Woodrow Wilson
1919