Obama's Socialist Forces March On

Today is Black Monday.

GM today becomes Government/UAW Motors. Obama will NOT be distributing the stock to the taxpayers who now own the majority of the shares of GM. You cannot go down to the local dealership and pick up your car, even though you may own it.

In further news, it appears that my predictions were right, and Citigroup will become government owned as a result of the "stress tests" imposed on banks by a takeover minded government. I'm sure government bureaucrats will apply their nimble and intelligent management to the bank and kill it.

If you have assets managed by Citigroup, bail out now.

If you have a loan or mortgage held by Citigroup, beware the change in your terms -- interest rate increases are on the way. It is easier than raising taxes!

Obama is following the Marxist revolutionary manual to the letter; the methodology he learned from his Marxist father.

One Fed President Has Keen Sense of the Obvious

Federal Reserve Bank of Philadelphia President Charles Plosser said inflation may rise at a rate much higher than the central bankers’ desired range. He notes that the Federal Reserve only has one tool in their control to fight inflation – increased interest rates.

“The economy may be at greater risk of inflation than the conventional wisdom indicates,” Plosser said May 21. However, Plosser cautioned that “the economy is probably not strong enough and not ready for increasing” interest rates.

Charles Plosser has indeed identified the Catch 22 in the liberal’s method to address a down economy by spending far more than budgets allow. Printing money we don’t have devalues the dollar, which means more dollars will be required to purchase the same item (inflation). Meanwhile, in a down economy with high unemployment, household disposable income drops, lowering a family’s standard of living as they have fewer dollars to spend on more expensive goods. As a result, the households tend to cut back on spending money on non-essentials, which worsens the economy as a whole. It becomes a death spiral such as we saw during the presidency of Jimmy Carter.

But Charles Plosser also knows that the Obama administration plans to continue to overspend as no two presidents combined have ever overspent before. This will be a further inflationary pressure. Add to this the economic disaster that would be the twin Statist plans of Obamacare and the Obama/Waxman/Markey Mandate, Cap, and Tax bill, and we have a perfect storm of negative economic actions.

There is no way to sugar-coat the economic results of the Obama plan. They are as foreseeable and predictable as the moon and the tides. As night follows day, economic disaster follows Obama’s Statism.

Obama’s Bank Grab is ON!

As predicted by this Blog, as a result of heretofore unheard of “stress tests” described as “asinine” by super-banker and Wells Fargo Chairman Richard Kovacevich and “unnecessary” by Obama-lover Warren Buffet, sources at the Federal Reserve have made it known that Bank of America, Citigroup, Wells Fargo, and GMAC (among others) will have about a month to develop plans to increase their capital reserves. BoA appears to have the highest hurdle to overcome, in the neighborhood of $34 Billion dollars.

What is part of a disturbing trend, as it became clear that the Federal Reserve “stress tests” back in April would reveal that the banks were actually recovering, liquid, solvent, and in reasonably good shape, the Fed moved the standard on the stress tests so more banks would face a takeover by the US Government. For instance, the tangible common equity target was raised by 33% to snare Morgan Stanley, among 4 other banks that initially passed the stress test.

And if the banks are forced to convert the government-held preferred shares into common stock, the US Government does not intend to be a passive “investor”.

On May 5, Fed Chairman Ben S. Bernanke said that it will take steps to oversee the “effective” management of banks. Later, White House mouthpiece Robert Gibbs said Obama would sack bank management just as he forced the resignation of GM Chairman Rick Wagoner.

God help these banks and their management. Hopefully there is enough sidelined private investment capital out there to keep the government out of an ownership position.

My prediction, when these banks reach out to foreign sovereign investment funds for a a non-FDIC guaranteed cash infusion, the Fed and Obama will object to the foreign takeover of US banks, and block the deal, thus insuring that the affected banks will be socialized.

Obama and the Fed are quick to point out the stock conversion will be a quick way out of the stress test. What they have not said is precisely how the government will get OUT of the ownership position. That is because they NEVER want the government out of the bank ownership business. Ownership is control, ownership is power, and governments NEVER give up power without a fight.

UPDATE: I have paid off my Bank of America - issued credit card and asked them to lower my spending limit. Every little bit will help BoA. I'm trying to do my part.

Government Moving to Socialize Banks Now

The U. S. Federal government is now in it's final efforts to nationalize up to ten of the nation's largest banks, including Citigroup and Bank of America. This comes as a result of unprecedented “regulatory oversight” of the bank results arising from the Obama Administration’s highly theoretical stress testing.

This theoretical stress testing involved no testing at all, but in fact is a “what if” scenario applied against a heretofore unrecognized equity ratio never before used to take over an ongoing financial institution.

The stress test scenario is as follows: if the bank ceased operations today, what would the shareholders have left in a company if the company were liquidated. The new Federal standard for what the Feds are terming “tangible common equity” is a value of 4% of the institution’s assets, and such assets are arbitrarily assigned a lower value associated with the Fed’s expectation of risk of the asset.

Without saying so, the Feds want to take ownership interests in the banks by saying the preferred shares issued by the banks to the government as a result of TARP funds are held as liabilities, which weigh down the value of a bank’s assets. If the bank would merely convert these preferred shares into voting common shares, it will convert the TARP loans from a debt liability into shareholder equity, raising the asset value of the bank on the books, but not actually improving the bank’s operating position by even $1, since no actual new money is flowing into the bank either via loan or investment.

It is said that certain of the 20-odd banks suffering this unprecedented Federal scrutiny will not be permitted to increase the value of their assets in the normal ways, such as selling shares to private investors or issuing bonds or other debentures, but MUST convert the government preferred shares into common stock.

The Federal government, over this weekend, during the slow news cycle, is trying to socialize these banks by negotiation with weak willed bank officers. These idiots are finding out what happens to the unwary that lie down in the bed of vipers that is the Federal government.

The socialization of the capitalist system is well underway. The government is using as an excuse a what if, worse case scenario that is purely theoretical -- it is not responding to an actual bank failure.

Let’s see if the American public has been zombiefied enough to take it.

Obama Finally Admits What I've Been Saying All Along

I have written that Obama is a sociopathic narcissist who believes he was put in the White House to transform the nation. That starts with destroying the existing national order and remaking the nation in his own Statist, socialist image.

Tonight, in what is becoming his twice-monthly habit of interrupting prime time television viewing with another round of sycophantic coverage, B. Hussein Obama said:

"We've begun the work of remaking America.
We are off to a good start. But it is just a start."

B. Hussein Obama is now so power drunk, he claims the power to direct bank business and design cars. He aims to save the American car company Chrysler LLC by selling it to Italy's Fiat.

Just wait until he issues wage and price controls, socializes health care, and starts ruling by decree. You read it here first.

Obama, America did not and does not need to be remade. By the time you are done, it will likely need a divorce attorney.

The Feds Begin Their Move to Socialize US Banks

Bloomberg news services is reporting that not less than six of the twenty largest U.S. banks require additional capital as indicated by the Treasury Department's fictitious stress tests. As predicted in my post yesterday, both Citi and BoA are in the group requiring "additional capital."

This information is attributed to persons who have been briefed on the matter.

The Treasury Department intentionally set up the stress test to favor the conversion of preferred shares to common voting shares of stock so that it can move to take a controlling interest in these large banks. What makes the matter laughable is that the conversion of the shares provides not one additional dollar to the banks. How this conversion provides "additional" capital in any real sense of the word requires a sincere act of faith in the US messiah President.

In short, converting the preferred shares to common voting stock is an objective, not a solution.

A church might call this a mystery, but I call it Socialism. President Barak Hussein Obama is a committed Socialist, and he is seeking to destroy the capitalist system in the United States.