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TBNTF: Too Big Not to Fail

Posted on August 7, 2014

by David Stockman

Practically since the day Lehman went down in September 2008, Washington has been conducting a monumental farce. It has been pretending to uncover the causes of the thundering financial crisis which struck that month and to enact measures insuring that it would never happen again. In fact, however, official policy has done just the opposite.

The Fed’s massive money printing campaign has perpetuated and drastically enlarged the Wall Street casino, making the pre-crisis gamblers in CDOs, CDS and other derivatives appear like pikers compared to the present momentum chasing madness.  In a nutshell, the Fed’s prolonged regime of ZIRP and wealth effects based “puts” under risk assets has destroyed two-way markets. The market’s natural mechanism of risk containment and stabilization—-short sellers—has been driven from the casino. Accordingly, carry-trade speculators engorged with free money funding have taken the market to lunatic heights, while leaving it vulnerable to a violent collapse upon an unexpected drop because the market’s natural braking mechanism—short sellers taking profits—- has been eviscerated.

At the same time, the giant regulatory diversion known as Dodd-Frank has actually permitted the TBTF banks to get even bigger and more dangerous. Indeed, JPM and BAC were taken to their present unmanageable size by regulators—ostensibly fighting the last outbreak of TBTF—who imposed or acquiesced to the shotgun mergers of late 2008.

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One thought on “TBNTF: Too Big Not to Fail

  1. CrustyOldGeezer says:

    100% of the 17 trillion dollar debt is printed money based on the value of the mortgaged properties.

    The money was created by private banks of the federal reserve system that have no actual, legal authority to assume the right to use the property as collateral because they never owned it in the first place and the 'power' to create money was declared Unconstitutional in the 1968 Credit River Decision.

    Since the People are on the hook for 100% of the 'national debt' which is collateral, then the people are the true holders of everu mortgage and credit card debt in the United States, the cure is simple but devastating.

    Declare EVERY mortgage and credit card debt funded by any financial institution backed by the federal reserve system "PAID IN FULL".

    Tell China and other holders of US 'debt' to discuss the repayment with the owners of the federal reserve banks because they printed the value from nothing and the 'investors' should have known the true value at the time of purchase.

    THAT one move will forever END the credit and the ability to borrow system currently in the US today.

    On the other hand, all that money that used to be demanded monthly can now go back to what is was formerly used for.
    Investing in the family future.
    Businesses will have more money to reinvest to create jobs and expand, which adds more people to the payroll.
    Families will have more money to spend on family needs, such as paying for the educational needs and wants of following generations.

    THAT throws the 'government funding' out of the education system and causes a drastic drop in the price of tuition, and all other associated expenses.

    The lists of improvements in the daily lives of Americans is endless.

    But mostly, it destroys the power of the federal government and brings it back to Constitutional restraints.