The creditors’ committee representing what’s left of Lehman Brothers asked bankruptcy Judge James Peck last week to force Timothy Geithner — currently Obama’s Treasury Secretary but President of the New York Fed at the time of the Lehman Brothers’ bankruptcy — to answer some questions. The original subpoena issued by the committee to Geithner to appear last August was ignored and so the committee appealed to Judge Peck.
Federal Reserve Chairman Ben Bernanke told lawmakers this week that the government’s borrowing was at “clearly unsustainable” levels, warning that its wild budget deficits increase the possibility of a sudden fiscal crisis which is creeping “ever closer.” The central bank chief also said Washington’s exploding debts would crowd out private-sector investment with damaging consequences for the economy.
The long-awaited announcement of another bout of money printing in England on this Thursday will prove once again that experience doesn’t modify behavior on the other side of the pond either. The initial round of money expansion, called Quantitative Easing (QE) in the States, of some $320 billion last year in the United Kingdom had little measurable effect.
“We need a larger firewall.” So declared Christine Lagarde, Managing Director of the International Monetary Fund (IMF) during a speech in Berlin on January 23, 2012, in which she called on taxpayers of the world to chip in $1 trillion to the IMF to stave off a global crisis. “We need to act quickly or else we could easily slide into a 1930s moment,” Lagarde warned, in an obvious reference to the Great Depression.
In the summary of its “Budget and Economic Outlook” published on Tuesday, the Congressional Budget Office (CBO) noted the supportability of deficit spending even under its “alternative” analysis. Noted the CBO: “Even if the fiscal policies specified by current law come to pass, budgetary challenges over the longer term remain — and the challenges will be much more acute if those policies do not remain in place.” It added:
Monday’s meeting of the European Union in Brussels resulted in agreement of 25 of the 27 member states to inflict upon themselves and their hapless and increasingly powerless citizenry the tools of international fiscal dictatorship.
In an effort to protect the property of citizens from the harmful effects of inflation created by the Federal Reserve, lawmakers in Washington State introduced a bill over the weekend to declare gold and silver legal tender within the state. Sound-money advocates across the nation immediately praised the effort.
Greece’s Finance Minister, Evangelos Venizelos, rejected the German idea of imposing a eurozone “overseer” as part of the agreement to keep bailout funds flowing to his country.
A combination of several factors, including a declining dollar and the Federal Reserve’s announcement that it would keep interest rates at virtually zero until late 2014, helped to send gold and silver prices soaring to multi-week highs. Analysts expect the upward trend to continue as paper currencies founder and gloomy news continues to dominate the economic headlines.
Imagine this scenario: Your neighbor comes to you asking for money. He confesses to having gone on a lottery-winner spending spree year after year, to buying his kids everything without making them work for anything, and to knowingly and profligately living well above his means for so long he can’t remember.