Welcome to a new feature I like to call: Translating English into English. Basically, how this works is: our politicians tell us something and I attempt to make sense out of it. For example the sentence, US Treasury Secretary Timothy Geithner spoke on financial regulation reform on Thursday would translate into "The dude in charge of making sure the government gets their cut from the banking cartel that is the Federal Reserve spewed some bullshit meant to cover up how the government and the Fed are stealing from the American people."
If this sucks, I'll stop doing it. You have my word.
Geithner's quotes are in bold. Mine are in real words that you can actually understand.
The suggestion for that leverage really was what the FDIC suggested, based on the … experience they have with their existing mechanism.
Geithner is talking about something called the leverage rate. The leverage rate is the relationship between how much an institution has loaned out versus the assets it collected. The FDIC (or Federal Deposit Insurance Corporation) is a fund designed to cover bank losses. Not for nothing, but the FDIC has roughly one dollar for every ten thousand or so they allegedly "insure" so their opinion of the leverage rate can and should be disregarded. "Existing mechanism" incidentally, is politico speak for "same old shit."
Now, it is substantially less leverage than banks run with today. … What we put forward was a framework we think leaves the taxpayer much better protected than the alternatives and we're trying again to stretch taxpayer resources prudently and use private investment effectively. ….
Timmy (I can call him Timmy—we're old YMCA sparring partners) is saying that we now live in a world where there is less borrowed money chasing investments, that banks can't have as much loaned capital out there as they used to. He is, of course, excluding all the money that the federal reserve printed out of nothing to give to the banks and to businesses. If he counted the federal reserve and the American government as a bank, he would have to acknowledge that there is more leverage than ever before. He wouldn't do that though because to admit to such is a) true and b) the right thing to do and therefore it is c) not in his best interest.
And that line about stretching taxpayer resources prudently and using private investment effectively is a bald face lie. Government, by its very nature, should not be able to "use" private investment. You see, government is public and individuals are private. Timmy's always had a rough time with English. Though to be fair it is his sixth language.
"We want to get the balance right. We're not suggesting it's perfect. Again, we want to free up credit flows."
This is what Timmy would say if he were being honest. "Ha ha ha ha ha ha! You actually think we're trying to help you? Read a history book, jackasses."
"What we're proposing to do is build on the model established for the FDIC for banks and thrifts. That model we have a lot of experience with. There's a whole range of important checks and balances that seem to limit discretion. So the existence of this does not increase moral hazard.
"We're basically suggesting a model which would substantially rely on the FDIC itself to run this new regime."
Timmy is basically saying, "We realize that people are wising up and starting to see that the Federal Reserve is an illegal banking cartel essentially stealing purchasing power from the American people so before you wise up an abolish the damn thing, we're gonna shift that power either to the treasury or the FDIC or really any organization that can make sure we can continue robbing you blind through taxes and inflation."
"Our hope is that we can work with Europeans on a global framework, a global infrastructure which has appropriate global oversight, so we don't have a balkanized system at the global level, like we had at the national level."
We want the scam that is our fiat money based economy to extend globally so that we're that much harder to usurp.
"Financial products and institutions should be regulated for the economic function they provide and the risks they present, not the legal form they take. We can't allow institutions to cherry pick among competing regulators and ship risk to where it faces the lowest standards and weakest constraints. And we need to recognize that risk does not respect national borders. Markets are global and high standards at home need to be complemented by strong international standards enforced more evenly and fairly. Building on these principles, we want to work with Congress to create a more stable system and stronger tools to prevent and manage future crises."
We want more power so we can expand the business of robbing the American people blind.
"I have been informed that AIG is now attempting to force many of its creditors that are U.S. banks to accept severe reductions of more than 70 percent on the total debt owed to them. This disparity in the treatment between foreign banks which … were paid dollar for dollar within hours of the bailout and U.S. banks … have yet to receive any payment and are being asked to accept 70 and 80 percent haircuts, this disparity in treatment between foreign banks and U.S. banks is very concerning to me. This morning I sent a letter to the chairman regarding this development, and hope a hearing will be scheduled … He has assured me that he will fully cooperate."
It is so cool that AIG has agreed to look like the bad guy here so that everyone will yell and scream at them and we can appear to come down on them, when in reality, we're just fucking everybody two ways from fondue Friday on this one. Seriously, once you give the media a gold coin, they will quit looking for the treasure. Gotta love that media.
"But I think this [FDIC like resolution authority for nonbank and financial firms] authority needs to be really carefully structured to avoid a lot of unintended consequences. … We could really end up doing a heck of a lot more harm than good."
The dudes who run the hedge funds and complex financial securities are way smarter than us and every time we give them a new legislation, we essentially hand them a map for how to get around it and therefore, how to prop up another bubble.
"These failures have caused a great loss of confidence in the basic fabric of our financial system, a system that over time has been a tremendous asset for the American economy. To address this will require comprehensive reform. Not modest repairs at the margin, but new rules of the game. The new rules must be simpler and more effectively enforced and produce a more stable system, that protects consumers and investors, that rewards innovation and that is able to adapt and evolve with changes in the financial market."
"I am completely full of shit. Seriously, my name is Timmy Geithner and I get paid quite a lot to be completely full of shit. It's a sweet gig."
"The key elements of our plan to address systemic risk are:
First, we need to establish a single entity with responsibility for systemic stability over the major institutions and critical payment and settlement systems and activities.
"First, we need to consolidate the power so that we can be in charge of purchasing power for every American citizen."
Second, we need to establish and enforce substantially more conservative capital requirements for institutions that pose potential risk to the stability of the financial system, that are designed to dampen rather than amplify financial cycles.
"We don't know how to do this though because we don't know what poses risk until we prop it up with regulation. And we won't do this because it would make sense. So you can pretty much tell that I'm lying again. Like I said, sweet gig."
Third, we should require that leveraged private investment funds with assets under management over a certain threshold register with the SEC to provide greater capacity for protecting investors and market integrity.
Because registering with the SEC is the key to solving all problems? Dude, every goddamn organization selling Credit Default Swaps was registered with the SEC. YOU ARE MAKING ME MAD, TIMMY! THAT SHIT IS CONDESCENDING EVEN FOR YOU!
Fourth, we should establish a comprehensive framework of oversight, protections and disclosure for the OTC derivatives market, moving the standardized parts of those markets to central clearinghouse, and encouraging further use of exchange-traded instruments.
Basically, we keep everything the way it was except we consolidate oversight so that trading is easier for all involved (actually, this isn't a bad idea assuming that the people running the clearinghouse are employed privately, which they wouldn't be under Timmy's plan but whatever).
Fifth, the SEC should develop strong requirements for money market funds to reduce the risk of rapid withdrawals of funds that could pose greater risks to market functioning.
This would mean that the SEC would have to require banks to have more money for every dollar that they have loaned out. I thought we were putting the FDIC in charge of that? Whatever, it won't happen.
And sixth, we need to establish a stronger resolution mechanism that gives the government tools to protect the financial system and the broader economy from the potential failure of large complex financial institutions."
"I am Timmy Geithner and if you give me and my corrupt asshole buddies all of the power we will certainly make sure that no harm comes to you because the American rulers have nothing but the best interest of the American people and we love you and…
"Fuck, I can't do it.
"The truth is, people. We don't give a fuck about you. All of this schmaltz is just a fancy way of saying that we want to keep ripping you off. You dumb assholes are too stupid to study monetary history, too ignorant to understand the basics of a fiat money society and too dependent on us to supply you with products and services that you could have attained with the money we've been stealing from you for the past 96 years. You think we're gonna look out for you, America. You're like a gullible little Gomer Pyle.
"And for that, I love you.
"Jackasses."