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28 Jan 2013 Top executives at three major companies that received
taxpayer-financed bailouts received excessively generous pay packages
last year, in an apparent violation of Treasury guidelines aimed at
restricting their compensation, a government watchdog asserted in a report
Monday. The Office of the Special Inspector General for the Trouble
Asset Relief Program — which keeps tabs on taxpayer bailouts — singled
out for blame “pay czar” Patricia Geoghegan, the Treasury official
tasked with reining in excessive pay increases for executives at
bailed-out companies. The SIGTARP report directly questioned Geoghegan’s
judgment in ignoring directives set by her predecessor as well as
recommendations from a previous report, saying she accepted companies’
own justifications for high executive pay.y.
Wednesday, January 30, 2013
The Disappearing Gold
During the Cold War, Germany moved much of its gold to New York in
case the USSR invaded Germany. It was assumed at that time that the US
would be a safer storage location, and of course, they could always ask
to have it returned if they wished.
But
German citizens have become increasingly worried about the security of
the 1,536 tonnes of German gold reputedly held at the Federal Reserve in
New York. This has resulted in the Bundesbank pursuing repatriation of
the gold, beginning with a request to view it in the basement of the
Federal Reserve Building, where it is claimed to reside.
Of course, the German government had received periodic assurances from the Fed that the gold is there; however, the issue began to get a bit sticky recently, when the Fed refused a request for inspection.
The world then raised a collective eyebrow, and, whilst not panicking over this development just yet, closer attention has come to bear, not only on the Fed, but on any institution that is entrusted with the storage of gold for other parties.
Concern spread to Austria, where a question arose in Parliament as to where Austria’s gold is stored. The answer provided was that 80% of it (224.4 tonnes) is in the UK. (It was claimed that the reason for this is that, if a crisis of some kind were to occur, it could be more easily traded from London than from Vienna.)
Seems reasonable enough, except that the return of the gold to Austria, if it were requested, may be a bit difficult, as the gold seems to have been leased out by the UK.
To many, a second eyebrow might go up at this point. Lease out the wealth of another nation? Isn’t this a bit… irresponsible?
The nicest thing about such an arrangement is that the lessor continues to claim it on his balance sheet as a line item: “gold and gold receivables.” After all, an asset that we have leased out is still an asset, even if it has now been sold by the lessee.
In effect, this means that, if you bought a gold bar today, it is possible that it is a bar that was shipped from the Bundesbank to the Federal Reserve decades ago and is presently listed by the Fed on its balance sheet as “gold and gold receivables.”
Both you and the Fed are claiming to possess the same gold bar. The fly in the ointment, of course, is that only one bar can be the actual bar. The other is a receivable and therefore is an asset on paper only. This, of course, means that there is less gold in the world than has been claimed. How much less? That’s anyone’s guess.
In the present market, there are any number of possible triggers that could cause the people of Germany, Austria, or a host of other nations to demand that their gold be returned home. Indeed, pressure is on the increase. The governments who have shipped out their gold for “safekeeping” would have a lot of explaining to do to their constituents, if the storage banks are not forthcoming.
So, is it time for the odiferous effluvium to hit the fan? Not quite yet. Before that occurs, there will still be some dancing around by the Fed and others.
The Fed has already stated, in so many words, “We’re sorry, but we can’t let you have all your gold at one time, but we’d be prepared to send it to you over a period of years.”
For many observers, the present situation should be well beyond the point of the raised eyebrow. It should be glaringly apparent that the amount of gold presently claimed to be in storage in the world’s banks is, to a greater or lesser extent, overstated.
If they were to take this perfectly logical step and the Fed refused, there could be a run on the banks, and, very possibly, within as short a period as twenty-four hours, a worldwide bank holiday might be declared with regard to gold.
However, this is not what will transpire. Neither logic nor sound banking practices are the object here. The object is to maintain the charade that exists within the banking community. The Bundesbank is just as fearful of a run as the Fed and will be only too willing to accept the Fed’s terms.
What must be borne in mind is the root cause of the request. It was not the Bundesbank itself that originally wanted the transfer to take place; it was the German people who, quite rightly, have become distrustful of the fact that their gold has been in New York for so long and want to see it repatriated. It is not the banks who wish to correct the situation. Not one bank wishes to expose the inappropriate practices of any other bank. Their loyalty is to each other and not to their depositors.
So, is that it? Have we heard the last of this issue? I think not. The cat is out of the bag at this point, and the depositors’ distrust and uncertainty will not be quelled by the counter-offer. Tension will continue to mount amongst depositors, and, at some point, the situation will reach an impasse.
All those who presently have gold in a banking institution would be prudent to keep an eye on the present situation. We might consider taking delivery of any gold we have in a bank, wherever it may be. Regardless of what form it is in, from ETFs to allocated gold, we would do well to assess the degree to which we feel our gold is at risk. In doing so, we may determine that a gold account is more at risk in, say, a New York or London bank than a Swiss bank. (Not all banks will be equal in terms of risk.)
If we do resolve to divest ourselves of bank-related precious metal holdings, it would be prudent to take action soon. (Clearly, those who attempt to remove their wealth the day after a run has occurred tend to do less well than those who attempt to remove their wealth the day before the run.)
We might also consider whether a possible run may become systemic, causing a bank holiday on all the bank’s activities, thus freezing any currency that we may have on deposit. We may conclude that it is prudent to only retain in our bank enough money to allow cheques to clear – an amount sufficient to cover a few months’ expenses.
In the near future, we may well find that a significant amount of gold that is claimed to exist in the world will “disappear.” Whilst we cannot control this eventuality, we may be able to save the gold that is being held in our names from disappearing.
But
German citizens have become increasingly worried about the security of
the 1,536 tonnes of German gold reputedly held at the Federal Reserve in
New York. This has resulted in the Bundesbank pursuing repatriation of
the gold, beginning with a request to view it in the basement of the
Federal Reserve Building, where it is claimed to reside.Of course, the German government had received periodic assurances from the Fed that the gold is there; however, the issue began to get a bit sticky recently, when the Fed refused a request for inspection.
The world then raised a collective eyebrow, and, whilst not panicking over this development just yet, closer attention has come to bear, not only on the Fed, but on any institution that is entrusted with the storage of gold for other parties.
Concern spread to Austria, where a question arose in Parliament as to where Austria’s gold is stored. The answer provided was that 80% of it (224.4 tonnes) is in the UK. (It was claimed that the reason for this is that, if a crisis of some kind were to occur, it could be more easily traded from London than from Vienna.)
Seems reasonable enough, except that the return of the gold to Austria, if it were requested, may be a bit difficult, as the gold seems to have been leased out by the UK.
To many, a second eyebrow might go up at this point. Lease out the wealth of another nation? Isn’t this a bit… irresponsible?
The New Gold Shuffle
Not to worry, it’s done all the time. In fact, the practice has been endorsed by none other than Alan Greenspan, former Chairman of the Fed. The gold is leased to a bullion bank, which typically pays one percent interest to the Fed, with a promise to return it on a specified date. The bullion bank then sells the gold on the open market and uses the proceeds to buy Treasury bonds, which will net a three to four percent return.The nicest thing about such an arrangement is that the lessor continues to claim it on his balance sheet as a line item: “gold and gold receivables.” After all, an asset that we have leased out is still an asset, even if it has now been sold by the lessee.
In effect, this means that, if you bought a gold bar today, it is possible that it is a bar that was shipped from the Bundesbank to the Federal Reserve decades ago and is presently listed by the Fed on its balance sheet as “gold and gold receivables.”
Both you and the Fed are claiming to possess the same gold bar. The fly in the ointment, of course, is that only one bar can be the actual bar. The other is a receivable and therefore is an asset on paper only. This, of course, means that there is less gold in the world than has been claimed. How much less? That’s anyone’s guess.
The New Risks
But even if it became generally known that the Fed (and others) are holding paper, rather than physical gold, couldn’t we carry on as before? What could go wrong? Here are some immediate possibilities:- If there were a dramatic rise in the price of gold and the lessor were to call in the return of the gold by the bullion bank, the bullion bank could easily lose far more than the small two to three percent margin it had been enjoying.
- If there were a crash in the bond market and hyperinflation set in, the bonds that the bullion bank had purchased could become worthless.
- If the nations who shipped their gold to London and New York for safekeeping were to request their return, the storage banks could only deliver if they were to purchase gold at the current rate. If that rate were significantly above the rate at which the gold had been leased to the bullion banks, the storage banks would sustain a significant, possibly unsustainable, loss.
In the present market, there are any number of possible triggers that could cause the people of Germany, Austria, or a host of other nations to demand that their gold be returned home. Indeed, pressure is on the increase. The governments who have shipped out their gold for “safekeeping” would have a lot of explaining to do to their constituents, if the storage banks are not forthcoming.
So, is it time for the odiferous effluvium to hit the fan? Not quite yet. Before that occurs, there will still be some dancing around by the Fed and others.
The Fed has already stated, in so many words, “We’re sorry, but we can’t let you have all your gold at one time, but we’d be prepared to send it to you over a period of years.”
For many observers, the present situation should be well beyond the point of the raised eyebrow. It should be glaringly apparent that the amount of gold presently claimed to be in storage in the world’s banks is, to a greater or lesser extent, overstated.
Continuing the Charade
The Bundesbank should, of course, now say, “I’m afraid that’s not good enough. It’s our gold. We’ve advised you how much of it we want back now, and we must insist that you produce it immediately.”If they were to take this perfectly logical step and the Fed refused, there could be a run on the banks, and, very possibly, within as short a period as twenty-four hours, a worldwide bank holiday might be declared with regard to gold.
However, this is not what will transpire. Neither logic nor sound banking practices are the object here. The object is to maintain the charade that exists within the banking community. The Bundesbank is just as fearful of a run as the Fed and will be only too willing to accept the Fed’s terms.
What must be borne in mind is the root cause of the request. It was not the Bundesbank itself that originally wanted the transfer to take place; it was the German people who, quite rightly, have become distrustful of the fact that their gold has been in New York for so long and want to see it repatriated. It is not the banks who wish to correct the situation. Not one bank wishes to expose the inappropriate practices of any other bank. Their loyalty is to each other and not to their depositors.
So, is that it? Have we heard the last of this issue? I think not. The cat is out of the bag at this point, and the depositors’ distrust and uncertainty will not be quelled by the counter-offer. Tension will continue to mount amongst depositors, and, at some point, the situation will reach an impasse.
All those who presently have gold in a banking institution would be prudent to keep an eye on the present situation. We might consider taking delivery of any gold we have in a bank, wherever it may be. Regardless of what form it is in, from ETFs to allocated gold, we would do well to assess the degree to which we feel our gold is at risk. In doing so, we may determine that a gold account is more at risk in, say, a New York or London bank than a Swiss bank. (Not all banks will be equal in terms of risk.)
If we do resolve to divest ourselves of bank-related precious metal holdings, it would be prudent to take action soon. (Clearly, those who attempt to remove their wealth the day after a run has occurred tend to do less well than those who attempt to remove their wealth the day before the run.)
We might also consider whether a possible run may become systemic, causing a bank holiday on all the bank’s activities, thus freezing any currency that we may have on deposit. We may conclude that it is prudent to only retain in our bank enough money to allow cheques to clear – an amount sufficient to cover a few months’ expenses.
In the near future, we may well find that a significant amount of gold that is claimed to exist in the world will “disappear.” Whilst we cannot control this eventuality, we may be able to save the gold that is being held in our names from disappearing.
Chinese News Article: Crossborder Yuan Loans - "Before it becomes a Global RESERVE Currency."
It is the first time I am seeing the words from China that comes right out and says what the plans for the Yuan is.
The first batch of cross-border yuan loans agreements were signed on Monday after thecentral government approved the Qianhai area in Shenzhen to test a freer yuan before it becomes a global reserve currency.
As the loans come from Hong Kong, the move is a test offurther capital accounts opening by allowing offshore funds tobe transferred to the mainland.
Previously, offshore yuan could flow back to the mainland onlythrough yuan-denominated trade and renminbi qualified foreigninstitutional investors.He added that the yuan is marching gradually and steadily toward becoming a global currency,and he expects more breakthroughs on that front this year.
They have never said "Global Reserve Currency" before. They have said "Convertible currency" and other words.
China has actually imported more gold and silver than they admit to. They imported an estimated 1000 tons of gold over the last few years but experts believe it was much more than that. They have also been importing silver in major quantities that are not being revealed. I read a story the other day about someone in China trying to buy silver and gold bullion but the place was nuts with crowds all trying to buy the gold and silver the dealer had just gotten.
Kingworld News has an article about China being a gold backed currency.
Jim Willie did an interview last week and he mentioned that China was going to take it slow and not be totally overt in becoming the Global currency because they don't want the U.S. to start a war for some made up reason against china.
Mining.com has the rumor China plans on importing 5000 to 6000 tons of gold this year (article from 2012).
unconfirmed speculation" that China – the world's number one producer and second-placed consumer (at the moment) – is gearing up to buy up to at least 5,000 to 6,000 tonnes starting before the end of the year.
Silver is huge in China too. There has been a lot of talk in the "silver world" saying there is a major shortage. Besides the fact that the 2013 Eagles sales have been suspended due to over 5 million orders in the first few days of 2013. The majority of silver mined is used for industrial purposes and it seems there is a shortage happening.
The
writing is on the wall. China plans on having a Gold backed Global
Reserve Currency. I have written about the agreements China has with
other countries and has already began trading in Yuan instead of
dollars. The BRICS began those trades last year. The only thing that
is keeping the dollar as the "reserve currency" right now is because it
is the "Petrol Dollar." Saudi Arabia is the reason the dollar is still
the oil trading currency. Is it any wonder that Obama bows to the King
of Saudi Arabia as the U.S. is obviously beholden to them otherwise it
would not still be the official reserve currency of the world. Once Saudi Arabia decides to go with the rest of the world and begins using other currencies for oil as India, Iran, Russia and China already do.... it will be game over for the dollar.
Obviously the day is getting closer since the article says "Global Reserve Currency" from China Daily. Again they have never used those words before from what I have seen. They have used "Global convertible currency." Remember China purchased the London Metals exchange last year, which began using the Yuan and the CME began added the Yuan as a trading currency last year too
China holds things very close to their chest in information and they don't put information out normally until deals are done. So with them allowing "Global Reserve Currency" words out, what deals have been done already and how fast will it all go down and the dollar with it?
Some of my favorite metals sites are: David Morgan of Silver-Investor always has great information about Silver and what is really going on. I go to Gata, Got Gold Report , and 24 hour Gold for the latest in gold information.
Few probably are aware of this, but long time subscribers to The Morgan Report (TMR) were notified that a meeting had taken place in South East Asia roughly a decade ago discussing -- you guessed it --A GOLD BACKED YUAN.
Most people in the West do not understand the Chinese mind set of
looking out several generations,
Edit to add: I found another article today on the same Chinese News site - Their frustration with the dollar titled "The Unloved Dollar"
But the dollar's role as international anchor is beginning to falter, as emerging markets everywhere grow increasingly frustrated by the Fed's near-zero interest-rate policy, which has caused a flood of "hot" capital inflows from the United States. That, in turn, has fueled sharp exchange-rate appreciation and a loss of international competitiveness - unless the affected central banks intervene to buy dollars.Wow - they have really put out information now as I have never seen before and the two articles being out on the same day...... says something is already happening, we just don't know the full extent yet. But I have a feeling since they have come right out and said "Reserve Currency" and "Unloved Dollar" whatever the changes of Currency will happen this year.
Update - 1/29/13 - David Morgan of Silver Investor allowed me to interview him today about this subject, the silver shortage and Germany and their gold.
Federal Reserve Money Printing Is The Real Reason Why The Stock Market Is Soaring
Michael Snyder, Contributor
Activist Post
You can thank the reckless money printing that the Federal Reserve has been doing for the incredible bull market that we have seen in recent months. When the Federal Reserve does more "quantitative easing", it is the financial markets that benefit the most. The Dow and the S&P 500 this month have both hit levels not seen since 2007, and many analysts are projecting that 2013 will be a banner year for stocks. But is a rising stock market really a sign that the overall economy is rapidly improving as many are suggesting?
Of course not. Just because the Federal Reserve has inflated another false stock market bubble with a bunch of funny money does not mean that the U.S. economy is in great shape. In fact, the truth is that things just keep getting worse for average Americans. The percentage of working age Americans with a job has fallen from 60.6% to 58.6% while Barack Obama has been president, 40 percent of all American workers are making $20,000 a year or less, median household income has declined for four years in a row, and poverty in the United States is absolutely exploding. So quantitative easing has definitely not made things better for the middle class.
But all of the money printing that the Fed has been doing has worked out wonderfully for Wall Street. Profits are soaring at Goldman Sachs and luxury estates in the Hamptons are selling briskly. Unfortunately, this is how things work in America these days. Our "leaders" seem far more concerned with the welfare of Wall Street than they do about the welfare of the American people. When things get rocky, their first priority always seems to be to do whatever it takes to pump up the financial markets.
When QE3 was announced, it was heralded as the grand solution to all of our economic problems. But the truth is that those running things knew exactly what it would do. Quantitative easing always pumps up the financial markets, and that overwhelmingly benefits those that are wealthy.
In fact, a while back a CNBC article discussed a very interesting study from the Bank of England which showed a clear correlation between quantitative easing and rising stock prices...
Of course not.
And who benefits from this?
The wealthy do. In fact, 82 percent of all individually held stocks are owned by the wealthiest 5 percent of all Americans.
Unfortunately, all of this reckless money printing has a very negative impact on the rest of us. When the Fed floods the financial system with money, that causes inflation. That means that the cost of living has gone up even though your paycheck may not have.
If you go to the supermarket frequently, you know exactly what I am talking about. The new "sale prices" are what the old "regular prices" used to be. They keep shrinking many of the package sizes in order to try to hide the inflation, but I don't think many people are fooled. Our food dollars are not stretching nearly as far as they used to, and we can blame the Federal Reserve for that.
For much more on rising prices in America, please see this article: "Somebody Should Start The ‘Stuff Costs Too Much’ Party".
Sadly, this is what the Federal Reserve does. The system was designed to create inflation. Before the Federal Reserve came into existence, the United States never had an ongoing problem with inflation. But since the Fed was created, the United States has endured constant inflation. In fact, we have come to accept it as "normal". Just check out the amazing chart in the video posted below...
The chart in that video kind of reminds me of a chart that I shared in a previous article...
Not that I expect the United States to enter a period of hyperinflation in the near future.
Actually, despite all of the reckless money printing that the Fed has been doing, I expect that at some point we are going to see another wave of panic hit the financial markets like we saw back in 2008.
The false stock market bubble will burst, major banks will fail and the financial system will implode. It could unfold something like this...
1 - A derivatives panic hits the "too big to fail" banks.
2 - Financial markets all over the globe crash.
3 - The credit markets freeze up.
4 - Economic activity in the United States starts to grind to a halt.
5 - Unemployment rises above 20 percent and mortgage defaults soar to unprecedented levels.
6 - Tax revenues fall dramatically and austerity measures are implemented by the federal government, state governments and local governments.
7 - The rest of the globe rapidly loses confidence in the U.S. financial system and begins to dump U.S. debt and U.S. dollars.
I write about derivatives a lot, because they are one of the greatest threats that the global financial system is facing. In fact, right now a derivatives scandal is threatening to take down the oldest bank in the world...
In response to the coming financial crisis, I believe that our "leaders" will eventually resort to money printing unlike anything we have ever seen before in a desperate attempt to resuscitate the system.
When that happens, I believe that we will see the kind of rampant inflation that so many people have been warning about.
So what do you think about all of this?
Do you believe that Federal Reserve money printing is the real reason why the stock market is soaring?
Please feel free to post a comment with your thoughts below...
This article first appeared here at the Economic Collapse Blog. Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here.
Activist Post
You can thank the reckless money printing that the Federal Reserve has been doing for the incredible bull market that we have seen in recent months. When the Federal Reserve does more "quantitative easing", it is the financial markets that benefit the most. The Dow and the S&P 500 this month have both hit levels not seen since 2007, and many analysts are projecting that 2013 will be a banner year for stocks. But is a rising stock market really a sign that the overall economy is rapidly improving as many are suggesting?
Of course not. Just because the Federal Reserve has inflated another false stock market bubble with a bunch of funny money does not mean that the U.S. economy is in great shape. In fact, the truth is that things just keep getting worse for average Americans. The percentage of working age Americans with a job has fallen from 60.6% to 58.6% while Barack Obama has been president, 40 percent of all American workers are making $20,000 a year or less, median household income has declined for four years in a row, and poverty in the United States is absolutely exploding. So quantitative easing has definitely not made things better for the middle class.
But all of the money printing that the Fed has been doing has worked out wonderfully for Wall Street. Profits are soaring at Goldman Sachs and luxury estates in the Hamptons are selling briskly. Unfortunately, this is how things work in America these days. Our "leaders" seem far more concerned with the welfare of Wall Street than they do about the welfare of the American people. When things get rocky, their first priority always seems to be to do whatever it takes to pump up the financial markets.
When QE3 was announced, it was heralded as the grand solution to all of our economic problems. But the truth is that those running things knew exactly what it would do. Quantitative easing always pumps up the financial markets, and that overwhelmingly benefits those that are wealthy.
In fact, a while back a CNBC article discussed a very interesting study from the Bank of England which showed a clear correlation between quantitative easing and rising stock prices...
It said that the Bank of England’s policies of quantitative easing – similar to the Fed’s – had benefited mainly the wealthy.
Specifically, it said that its QE program had boosted the value of stocks and bonds by 26 percent, or about $970 billion. It said that about 40 percent of those gains went to the richest 5 percent of British households.
Many said the BOE's easing added to social anger and unrest. Dhaval Joshi, of BCA Research wrote that “QE cash ends up overwhelmingly in profits, thereby exacerbating already extreme income inequality and the consequent social tensions that arise from it."So should we be surprised that stocks are now the highest that they have been in more than 5 years?
Of course not.
And who benefits from this?
The wealthy do. In fact, 82 percent of all individually held stocks are owned by the wealthiest 5 percent of all Americans.
Unfortunately, all of this reckless money printing has a very negative impact on the rest of us. When the Fed floods the financial system with money, that causes inflation. That means that the cost of living has gone up even though your paycheck may not have.
If you go to the supermarket frequently, you know exactly what I am talking about. The new "sale prices" are what the old "regular prices" used to be. They keep shrinking many of the package sizes in order to try to hide the inflation, but I don't think many people are fooled. Our food dollars are not stretching nearly as far as they used to, and we can blame the Federal Reserve for that.
For much more on rising prices in America, please see this article: "Somebody Should Start The ‘Stuff Costs Too Much’ Party".
Sadly, this is what the Federal Reserve does. The system was designed to create inflation. Before the Federal Reserve came into existence, the United States never had an ongoing problem with inflation. But since the Fed was created, the United States has endured constant inflation. In fact, we have come to accept it as "normal". Just check out the amazing chart in the video posted below...
The chart in that video kind of reminds me of a chart that I shared in a previous article...
Not that I expect the United States to enter a period of hyperinflation in the near future.
Actually, despite all of the reckless money printing that the Fed has been doing, I expect that at some point we are going to see another wave of panic hit the financial markets like we saw back in 2008.
The false stock market bubble will burst, major banks will fail and the financial system will implode. It could unfold something like this...
1 - A derivatives panic hits the "too big to fail" banks.
2 - Financial markets all over the globe crash.
3 - The credit markets freeze up.
4 - Economic activity in the United States starts to grind to a halt.
5 - Unemployment rises above 20 percent and mortgage defaults soar to unprecedented levels.
6 - Tax revenues fall dramatically and austerity measures are implemented by the federal government, state governments and local governments.
7 - The rest of the globe rapidly loses confidence in the U.S. financial system and begins to dump U.S. debt and U.S. dollars.
I write about derivatives a lot, because they are one of the greatest threats that the global financial system is facing. In fact, right now a derivatives scandal is threatening to take down the oldest bank in the world...
Banca Monte dei Paschi di Siena, the world’s oldest bank, was making loans when Michelangelo and Leonardo da Vinci were young men and before Columbus sailed to the New World. The bank survived the Italian War, which saw Siena’s surrender to Spain in 1555, the Napoleonic campaign, the Second World War and assorted bouts of plague and poverty.
But MPS may not survive the twin threats of a gruesomely expensive takeover gone bad and a derivatives scandal that may result in legal action against the bank’s former executives. After five centuries of independence, MPS may have to be nationalized as its losses soar and its value sinks.So when you hear the word "derivatives" in the news, pay close attention. The bankers have turned our financial system into a giant casino, and at some point the entire house of cards is going to come crashing down.
In response to the coming financial crisis, I believe that our "leaders" will eventually resort to money printing unlike anything we have ever seen before in a desperate attempt to resuscitate the system.
When that happens, I believe that we will see the kind of rampant inflation that so many people have been warning about.
So what do you think about all of this?
Do you believe that Federal Reserve money printing is the real reason why the stock market is soaring?
Please feel free to post a comment with your thoughts below...
This article first appeared here at the Economic Collapse Blog. Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here.
The Disappearing Gold
International Man – by Jeff Thomas During the Cold War, Germany moved much of its gold to New York in case the USSR invaded Germany. It was assumed at that time that the US would be a safer storage location, and of course, they could always ask to have it returned if they wished.
But German citizens have become increasingly worried about the security of the 1,536 tonnes of German gold reputedly held at the Federal Reserve in New York. This has resulted in the Bundesbank pursuing repatriation of the gold, beginning with a request to view it in the basement of the Federal Reserve Building, where it is claimed to reside.
Of course, the German government had received periodic assurances from the Fed that the gold is there; however, the issue began to get a bit sticky recently, when the Fed refused a request for inspection.
The world then raised a collective eyebrow, and, whilst not panicking over this development just yet, closer attention has come to bear, not only on the Fed, but on any institution that is entrusted with the storage of gold for other parties.
Concern spread to Austria, where a question arose in Parliament as to where Austria’s gold is stored. The answer provided was that 80% of it (224.4 tonnes) is in the UK. (It was claimed that the reason for this is that, if a crisis of some kind were to occur, it could be more easily traded from London than from Vienna.)
Seems reasonable enough, except that the return of the gold to Austria, if it were requested, may be a bit difficult, as the gold seems to have been leased out by the UK.
To many, a second eyebrow might go up at this point. Lease out the wealth of another nation? Isn’t this a bit… irresponsible?
The New Gold Shuffle
Not to worry, it’s done all the time. In fact, the practice has been endorsed by none other than Alan Greenspan, former Chairman of the Fed. The gold is leased to a bullion bank, which typically pays one percent interest to the Fed, with a promise to return it on a specified date. The bullion bank then sells the gold on the open market and uses the proceeds to buy Treasury bonds, which will net a three to four percent return.The nicest thing about such an arrangement is that the lessor continues to claim it on his balance sheet as a line item: “gold and gold receivables.” After all, an asset that we have leased out is still an asset, even if it has now been sold by the lessee.
In effect, this means that, if you bought a gold bar today, it is possible that it is a bar that was shipped from the Bundesbank to the Federal Reserve decades ago and is presently listed by the Fed on its balance sheet as “gold and gold receivables.”
Both you and the Fed are claiming to possess the same gold bar. The fly in the ointment, of course, is that only one bar can be the actual bar. The other is a receivable and therefore is an asset on paper only. This, of course, means that there is less gold in the world than has been claimed. How much less? That’s anyone’s guess.
The New Risks
But even if it became generally known that the Fed (and others) are holding paper, rather than physical gold, couldn’t we carry on as before? What could go wrong? Here are some immediate possibilities:- If there were a dramatic rise in the price of gold and the lessor were to call in the return of the gold by the bullion bank, the bullion bank could easily lose far more than the small two to three percent margin it had been enjoying.
- If there were a crash in the bond market and hyperinflation set in, the bonds that the bullion bank had purchased could become worthless.
- If the nations who shipped their gold to London and New York for safekeeping were to request their return, the storage banks could only deliver if they were to purchase gold at the current rate. If that rate were significantly above the rate at which the gold had been leased to the bullion banks, the storage banks would sustain a significant, possibly unsustainable, loss.
In the present market, there are any number of possible triggers that could cause the people of Germany, Austria, or a host of other nations to demand that their gold be returned home. Indeed, pressure is on the increase. The governments who have shipped out their gold for “safekeeping” would have a lot of explaining to do to their constituents, if the storage banks are not forthcoming.
So, is it time for the odiferous effluvium to hit the fan? Not quite yet. Before that occurs, there will still be some dancing around by the Fed and others.
The Fed has already stated, in so many words, “We’re sorry, but we can’t let you have all your gold at one time, but we’d be prepared to send it to you over a period of years.”
For many observers, the present situation should be well beyond the point of the raised eyebrow. It should be glaringly apparent that the amount of gold presently claimed to be in storage in the world’s banks is, to a greater or lesser extent, overstated.
Continuing the Charade
The Bundesbank should, of course, now say, “I’m afraid that’s not good enough. It’s our gold. We’ve advised you how much of it we want back now, and we must insist that you produce it immediately.”If they were to take this perfectly logical step and the Fed refused, there could be a run on the banks, and, very possibly, within as short a period as twenty-four hours, a worldwide bank holiday might be declared with regard to gold.
However, this is not what will transpire. Neither logic nor sound banking practices are the object here. The object is to maintain the charade that exists within the banking community. The Bundesbank is just as fearful of a run as the Fed and will be only too willing to accept the Fed’s terms.
What must be borne in mind is the root cause of the request. It was not the Bundesbank itself that originally wanted the transfer to take place; it was the German people who, quite rightly, have become distrustful of the fact that their gold has been in New York for so long and want to see it repatriated. It is not the banks who wish to correct the situation. Not one bank wishes to expose the inappropriate practices of any other bank. Their loyalty is to each other and not to their depositors.
So, is that it? Have we heard the last of this issue? I think not. The cat is out of the bag at this point, and the depositors’ distrust and uncertainty will not be quelled by the counter-offer. Tension will continue to mount amongst depositors, and, at some point, the situation will reach an impasse.
All those who presently have gold in a banking institution would be prudent to keep an eye on the present situation. We might consider taking delivery of any gold we have in a bank, wherever it may be. Regardless of what form it is in, from ETFs to allocated gold, we would do well to assess the degree to which we feel our gold is at risk. In doing so, we may determine that a gold account is more at risk in, say, a New York or London bank than a Swiss bank. (Not all banks will be equal in terms of risk.)
If we do resolve to divest ourselves of bank-related precious metal holdings, it would be prudent to take action soon. (Clearly, those who attempt to remove their wealth the dayafter a run has occurred tend to do less well than those who attempt to remove their wealth the day before the run.)
We might also consider whether a possible run may become systemic, causing a bank holiday on all the bank’s activities, thus freezing any currency that we may have on deposit. We may conclude that it is prudent to only retain in our bank enough money to allow cheques to clear – an amount sufficient to cover a few months’ expenses.
In the near future, we may well find that a significant amount of gold that is claimed to exist in the world will “disappear.” Whilst we cannot control this eventuality, we may be able to save the gold that is being held in our names from disappearing.
http://www.internationalman.com/global-perspectives/the-disappearing-gold
German Gold Repatriation Is Victory For Transparency And GATA
Today’s AM fix was USD 1,660.50, EUR 1,235.12, and GBP 1,057.17 per ounce.
Yesterday’s AM fix was USD 1,656.75, EUR 1,232.43, and GBP 1,052.77 per ounce.
Silver is trading at $31.09/oz, €23.23/oz and £19.84/oz. Platinum is trading at $1,675.50/oz, palladium at $737.00/oz and rhodium at $1,200/oz.
Cross Currency Table – (Bloomberg)
Gold fell $4.00 or 0.24% in New York yesterday and closed at $1,654.90/oz. Silver climbed to $31.30 in Asia before it eased off to $30.73 and finished with a loss of 1.09%.
Gold in USD, 1 Year – (Bloomberg)
Gold inched up on Tuesday as some investors judged the recent sell off overdone. Recent positive U.S. economic data is stirring misguided optimism of an economic recovery and may have led less aware investors to recently reduce allocations to gold.
Fitch’s rating agency said it is scaling back the chance of removing the U.S.’s AAA rating status, based on the recent deal reached on the debt limit. They cite this exercise in kicking the can down the road again as a reason to avoid the cut however they warned of continuing danger due to the appalling U.S. fiscal position.
Fitch said that the U.S. is not completely in the clear – which is putting it mildly.
XAU/GBP, 1 Year – (Bloomberg)
England’s risk of a credit downgrade is said to have led to the sterling’s dive into a 13 month low against the euro and a 5 month low versus the greenback.
It also led to sterling falling 2.2% against gold in 2012 and those losses have accelerated in 2013 with sterling already down 2.4% in January alone.
The U.S. Federal Open Market Committee meets today and tomorrow they will announce their policy statement but most economists expect their loose monetary stance to be unchanged which will support gold.
Economic data reporting today in the U.S. is the Case-Shiller 20-city Index (1400 GMT) and Consumer Confidence (1500 GMT). ADP Employment, GDP, and a FOMC Rate Decision on tomorrow, Initial Jobless Claims, Personal Income and Spending, Core PCE Prices, the Employment Cost Index, and Chicago PMI on Thursday, and January’s jobs data, Michigan Sentiment, the ISM Index, and Construction Spending on Friday.
The Financial Times has said that the Bundesbank’s move to repatriate 674 tonnes of the German gold reserves from Paris and New York to Frankfurt is a victory for openness, transparency and for those who have campaigned for transparency in the gold market for years.
The FT said that the move is important -
“not for what it says about Germany’s faith in French or American vaults; nor for the cost of shifting 674 tonnes of gold; but because it is a major victory for transparency in the gold market.”
The move by the Bundesbank to be more transparent about the location of gold reserves was welcomed by the FT and the FT’s commodities correspondent Jack Farchy noted that while central banks should not have to reveal their trading strategies to the world, there is a world of difference between this and –
“disclosing simple facts about your reserves – such as their quantity, where they are held, whether they have been lent or swapped, and so forth – with a delay if need be.”
XAU/EUR, 1 Year – (Bloomberg)
The article concluded:
“That the Bundesbank has been nudged into this new-found transparency must be chalked up as a victory for the groups of investors – most prominent among them, the Gold Anti-Trust Action Committee, or GATA – that have for years been asking central banks to reveal their activities in the gold market.”
“If central banks wish to refute suggestions from such groups that their gold does not exist, or that they are scheming to manipulate prices, they could do worse than to follow the Bundesbank’s lead.”
Those who have dismissed the Gold Anti-Trust Action Committee or GATA as “conspiracy theorists” may now wish to apologise and acknowledge the documentation and evidence that GATA have amassed over the years.
GATA have long made a strong case that certain banks may have been manipulating gold and silver prices lower. In the same way that banks conspired to rig LIBOR and interest rates.
The CFTC in the U.S. has been investigating the allegations for some years but have yet to come to a conclusion or adjudicate, leading to concerns that their extensive and lengthy investigations will come to nought.
The FT article is an important development and may help bring about a free market in gold and silver prices. This should lead to a revaluation of precious metal prices to the higher levels that have been expected by more astute analysts for some time and which are merited due to the very strong fundamentals.
The inflation adjusted highs for gold and silver of $2,400/oz and $140/oz remain likely medium term price targets.
Yesterday’s AM fix was USD 1,656.75, EUR 1,232.43, and GBP 1,052.77 per ounce.
Silver is trading at $31.09/oz, €23.23/oz and £19.84/oz. Platinum is trading at $1,675.50/oz, palladium at $737.00/oz and rhodium at $1,200/oz.
Cross Currency Table – (Bloomberg)
Gold fell $4.00 or 0.24% in New York yesterday and closed at $1,654.90/oz. Silver climbed to $31.30 in Asia before it eased off to $30.73 and finished with a loss of 1.09%.
Gold in USD, 1 Year – (Bloomberg)
Gold inched up on Tuesday as some investors judged the recent sell off overdone. Recent positive U.S. economic data is stirring misguided optimism of an economic recovery and may have led less aware investors to recently reduce allocations to gold.
Fitch’s rating agency said it is scaling back the chance of removing the U.S.’s AAA rating status, based on the recent deal reached on the debt limit. They cite this exercise in kicking the can down the road again as a reason to avoid the cut however they warned of continuing danger due to the appalling U.S. fiscal position.
Fitch said that the U.S. is not completely in the clear – which is putting it mildly.
XAU/GBP, 1 Year – (Bloomberg)
England’s risk of a credit downgrade is said to have led to the sterling’s dive into a 13 month low against the euro and a 5 month low versus the greenback.
It also led to sterling falling 2.2% against gold in 2012 and those losses have accelerated in 2013 with sterling already down 2.4% in January alone.
The U.S. Federal Open Market Committee meets today and tomorrow they will announce their policy statement but most economists expect their loose monetary stance to be unchanged which will support gold.
Economic data reporting today in the U.S. is the Case-Shiller 20-city Index (1400 GMT) and Consumer Confidence (1500 GMT). ADP Employment, GDP, and a FOMC Rate Decision on tomorrow, Initial Jobless Claims, Personal Income and Spending, Core PCE Prices, the Employment Cost Index, and Chicago PMI on Thursday, and January’s jobs data, Michigan Sentiment, the ISM Index, and Construction Spending on Friday.
The Financial Times has said that the Bundesbank’s move to repatriate 674 tonnes of the German gold reserves from Paris and New York to Frankfurt is a victory for openness, transparency and for those who have campaigned for transparency in the gold market for years.
The FT said that the move is important -
“not for what it says about Germany’s faith in French or American vaults; nor for the cost of shifting 674 tonnes of gold; but because it is a major victory for transparency in the gold market.”
The move by the Bundesbank to be more transparent about the location of gold reserves was welcomed by the FT and the FT’s commodities correspondent Jack Farchy noted that while central banks should not have to reveal their trading strategies to the world, there is a world of difference between this and –
“disclosing simple facts about your reserves – such as their quantity, where they are held, whether they have been lent or swapped, and so forth – with a delay if need be.”
XAU/EUR, 1 Year – (Bloomberg)
The article concluded:
“That the Bundesbank has been nudged into this new-found transparency must be chalked up as a victory for the groups of investors – most prominent among them, the Gold Anti-Trust Action Committee, or GATA – that have for years been asking central banks to reveal their activities in the gold market.”
“If central banks wish to refute suggestions from such groups that their gold does not exist, or that they are scheming to manipulate prices, they could do worse than to follow the Bundesbank’s lead.”
Those who have dismissed the Gold Anti-Trust Action Committee or GATA as “conspiracy theorists” may now wish to apologise and acknowledge the documentation and evidence that GATA have amassed over the years.
GATA have long made a strong case that certain banks may have been manipulating gold and silver prices lower. In the same way that banks conspired to rig LIBOR and interest rates.
The CFTC in the U.S. has been investigating the allegations for some years but have yet to come to a conclusion or adjudicate, leading to concerns that their extensive and lengthy investigations will come to nought.
The FT article is an important development and may help bring about a free market in gold and silver prices. This should lead to a revaluation of precious metal prices to the higher levels that have been expected by more astute analysts for some time and which are merited due to the very strong fundamentals.
The inflation adjusted highs for gold and silver of $2,400/oz and $140/oz remain likely medium term price targets.
CFPB Head Richard Cordray Explains New Mortgage Rules
PBS Newshour on new rules for banks.
New Mortgage Regulations Require Proof of Ability to Repay - CFPB Press Release
Margaret Warner talks to Richard Cordray, director of the Consumer Financial Protection Bureau, about a new set of federal guidelines to prevent risky mortgage lending practices.
Further reading:
The Essence Of Banking...
'When you control the debt of war, the players are mere pawns.'
"No, this is not about making profit from weapon sales. The IBBC is a bank. Their objective isn't to control the conflict, it's to control the debt that the conflict produces. You see, the real value of a conflict - the true value - is in the debt that it creates. You control the debt, you control everything. You find this upsetting, yes? But this is the very essence of the banking industry, to make us all, whether we be nations or individuals, slaves to debt."
Video from the 2009 film The International inspired by the BCCI scandal.
DOJ Calls It A Hit Piece: Frontline – The Untouchables
FRONTLINE investigates why Wall Street’s leaders have escaped prosecution for any fraud related to the sale of bad mortgages.
Watch The Untouchables on PBS. See more from FRONTLINE.
Facebook Gets $500 Million Investment From Goldman
NEW YORK—Leading online social networking website Facebook Inc. has
received a $500 million investment from investment bank Goldman Sachs
Group Inc. and a Russian investor.
The capital infusion assumes a valuation of $50 billion for Facebook, the social networking site with 500 million users worldwide, which last month became the most-visited website in the United States.
Goldman, the New York-based bank, invested $450 million, while Russia’s Digital Sky Technologies contributed $50 million in cash, according to a report by the New York Times' Dealbook.
With $50 billion in assumed valuation, Facebook—only six years in existence—now surpasses other Internet giants such as eBay Inc. and Yahoo Inc. The deal also gives the company increased capital to grow its business, launch marketing and advertising platforms, and hire employees away from rivals such as Yahoo and Google. Inc.While public pressure has increased on Facebook for an initial public offering (IPO) of stock, CEO Mark Zuckerberg indicated last year that it may not happen until 2012.
The investment comes on the heels of recent scrutiny by the Securities and Exchange Commission (SEC) on the private market for shares of non-publicly listed companies such as Facebook, Twitter, and LinkedIn.
Experts say that the investment may grant Goldman the inside track on becoming the lead underwriter for Facebook’s IPO in the future, which could generate hundreds of millions in proceeds for the bank.
The capital infusion assumes a valuation of $50 billion for Facebook, the social networking site with 500 million users worldwide, which last month became the most-visited website in the United States.
Goldman, the New York-based bank, invested $450 million, while Russia’s Digital Sky Technologies contributed $50 million in cash, according to a report by the New York Times' Dealbook.
With $50 billion in assumed valuation, Facebook—only six years in existence—now surpasses other Internet giants such as eBay Inc. and Yahoo Inc. The deal also gives the company increased capital to grow its business, launch marketing and advertising platforms, and hire employees away from rivals such as Yahoo and Google. Inc.While public pressure has increased on Facebook for an initial public offering (IPO) of stock, CEO Mark Zuckerberg indicated last year that it may not happen until 2012.
The investment comes on the heels of recent scrutiny by the Securities and Exchange Commission (SEC) on the private market for shares of non-publicly listed companies such as Facebook, Twitter, and LinkedIn.
Experts say that the investment may grant Goldman the inside track on becoming the lead underwriter for Facebook’s IPO in the future, which could generate hundreds of millions in proceeds for the bank.
Dimon Stirs Up Trouble In Davos: 'Stop Blaming The Banks!'
Dimon's Davos complaint. Wall Street and whine.
'Our business is far too complex for you to understand. We are like an aircraft engine manufacturer. Just shut up and pay us.'
Jan. 23, 2013. Runs 2 minutes.
Video details at CNBC...
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Thoughts from Davos:
Jamie Dimon, Mario Monti, John Chambers of Cisco and IMF head Christine LaGarde.
Runs 1 minute.
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Dimon tells Obama: Stop the 'scapegoating and finger pointing at Wall Street.'
Jamie complains about negative press.
Runs 2 minutes.
Photo by William Banzai7...
This Bankster is holding a knife
The bombs that he builds causes strife
Your car and your house
Your health and your spouse
He'll steal before taking your life
The Limerick King
Read more here:
J.P. Morgan's Food Stamp Monopoly
Bernanke Reads Financial Blogs
Matt O'Brien, business and economics editor at the Atlantic put this message out yesterday on Twitter while watching Bernanke's speech at the University of Michigan, where readers were encouraged to submit questions for the Bernank via Twitter using the hashtag #FordSchoolBernanke.
Here's another question for the Bernank from Fake Blythe Masters.
Check out the hilarious tweets and questions for Bernanke here.
Photo from Univ. of Michigan.
Photos by William Banzai7...
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And here's a couple just for you, Bernanke, in case you're reading.
Historic Move By The US Has Just Guaranteed Hyperinflation
Today
James Turk spoke with King World News about a historic event which has
just taken place in the United States. Turk states that this situation
is not being accurately reported in the mainstream media. He also
believes that because of this unfolding drama, “It is all but certain
now that the dollar is headed for hyperinflation.” Here is what Turk
had to say: “The huge bases in gold and
silver are getting bigger, which is very positive, Eric. The only thing
the drop in price over the last few days has done is set up a retest of
this significant and growing support.”
James Turk continues:
“We are seeing just another
example of how the central planners intervene in the precious metal
markets by selling paper to drive the price down during month-end option
expiry. This maneuver maximizes the profit for their agents - those
bullion banks facilitating the gold price suppression scheme – so that
the calls they've sold to investors and financial institutions expire
out of the money. It also ensures that as many call buyers as possible
lose money, which helps the central planners foster a negative sentiment
for the precious metals.
We have seen this time and
again, Eric. Contributing to the manipulation is the FOMC meeting this
week, during which the central planners like to put a lid on gold and
silver prices while they announce their new money printing schemes. And
then watch out for Friday when the unemployment report is released,
usually a time of wide price swings aimed to trigger stops. None of
this is new. But there is something new and important happening in
Washington DC....
“The politicians have finally done it,
Eric. The House passed a debt ceiling bill that throws away the last
semblance of any discipline on federal spending. It is now all but
certain now that the dollar is headed for hyperinflation, assuming the
Senate and then the President go along with the measure passed by the
House a few days ago, and the indications are that they will.
Because the federal
government is running an operating deficit, it needs to borrow dollars.
So the federal government needs the debt ceiling to be raised
periodically to enable it to keep borrowing. The federal government
reached the current $16.4 trillion debt ceiling a few weeks ago.
The mainstream media
reported that the House has now extended the debt ceiling to May 19th.
But that is not accurate. What the House actually did is suspend it.
Bloomberg accurately reported that the House acted to “temporarily
suspend” the debt ceiling.
In other words, the House
is proposing to eliminate the debt ceiling, meaning that there will be
no limit on what the federal government can spend until May 19th when
the debt ceiling must again be considered.
But here's the really
important point: These two words used by Bloomberg in reporting this
event - temporarily suspend - are chilling, Eric. These are the exact
same two words that Nixon used in his August 15, 1971 speech announcing
that he was breaking the dollar's link to gold.
His temporary suspension
has now lasted 42 years, which is the key point I am making here. This
suspension of the debt ceiling is not going to be temporary. Each time
it comes up for consideration, the politicians will just keep extending
the suspension again and again. They will always take the soft
political option.
When Nixon broke the
dollar's formal link to gold, he removed the constitutional check on the
power of the government to inflate the dollar, sending the US
government over the fiscal cliff. Nixon’s action in 1971 has directly
led to the financial mess the US is now in. However, the debt ceiling
still provided some constraint.
The debt ceiling wasn't
much of a limit though because it has been raised dozens of times over
the years, but at least it brought to everyone's attention the dire
financial condition of the federal government each time the ceiling was
hit. You will recall that the last time it was reached, the US lost its
triple-A credit rating.
The debt ceiling has been
the remaining roadblock to unlimited federal government spending, and
out of control spending by a government is always the cause of
hyperinflation. But now the House is saying that even this small
roadblock imposed by the debt ceiling should be removed.
In effect, if this measure
becomes law, Congress and the President have given themselves a blank
check. And to inflate asset prices, Bernanke is prepared to print
whatever amount of dollars is written on that blank check. So when May
19th comes, there is no doubt in my mind that the politicians will
simply find a convenient excuse to keep suspending the debt ceiling
limit so that they can keep writing checks. It is the soft political
option, and any suspension of the debt ceiling will prove no more
temporary than what Nixon did to the dollar's convertibility into gold.
We all know that every
check-and-balance is critically important to representative government.
But now the debt ceiling, which is last check to prevent unbridled
money creation, is about to be eliminated. When it is, there will be no
doubt that the dollar is heading for a hyperinflationary outcome because
federal government spending will spiral out of control. So,
hyperinflation here we come.
Maybe that is why at the
confab in Davos the head of China's sovereign wealth fund warned the US
on Friday that its money “printing machine will have to slow down” or
the world would lose confidence in the dollar. He is right, but he was
wrong when going on to say, “There will be no winners in currency
wars.” The winners of course will be everyone who owns physical gold
and silver. They will be the beneficiaries of the greatest wealth
transfer in history.”
Immigration reform could add millions of people under Obama health law
The Hill – by Elise ViebeckComprehensive immigration reform could make millions of people suddenly eligible for assistance under President Obama’s healthcare law, assuming a final deal paves the way for undocumented immigrants to receive papers.
Illegal aliens are now prohibited from purchasing coverage through the Affordable Care Act’s insurance exchanges, which will launch next year.
They are also ineligible for Medicaid under most circumstances, making the law’s expansion of the program fruitless for people without documents.
Even young illegal immigrants with “deferred action” status, known as “DREAMers,” cannot access the law’s benefits.
But the picture could change completely if Hispanic lawmakers get their wish — an overhaul of U.S. immigration policy that includes a path to legalization.
“We have to figure out a way in which [undocumented immigrants] incorporate themselves into the larger workforce, and into our society in general, and not be a burden,” said Rep. Luis Gutierrez (D-Ill.), a leader in the immigration debate.
“Do we want them to go to the exchanges? Absolutely we do — if and when they don’t have healthcare through their employer,” he said.
Immigration is expected to be a major issue for President Obama’s second term, and advocates like Gutierrez are pushing hard to make reform a reality.
Recent polls show the public is increasingly on board. According to a CNN/ORC poll from Jan. 21, 53 percent want a path to legalization for illegal immigrants — a major shift from 2011, when most wanted Washington focused on deportations.
The consequences for Obama’s signature healthcare law, as well as healthcare providers, could be huge.
Rep. Raul Grijalva (D-Ariz.), a member of the Congressional Hispanic Caucus, said the legalization of undocumented people would benefit hospitals now burdened by uncompensated care.
If nothing changes, undocumented immigrants will be a major share of the uninsured, second only to those who are eligible but do not apply for coverage under the healthcare law in 2014, according to the Urban Institute.
Federal reimbursement for uncompensated care was also slashed under the Affordable Care Act, raising the stakes for hospitals that serve low-income populations.
“I think hospitals and healthcare providers would see it as a huge plus,” Grijalva said, referring to an immigration policy that legalizes undocumented people and makes them eligible for federal benefits.
“The bottom line is, these people would be contributing toward their own healthcare and not being dependent. They’d be paying taxes. I’d see that as a plus rather than a negative,” he said.
The idea of providing “ObamaCare” benefits to immigrants has long inflamed partisan rancor.
Most famously, it prompted Rep. Joe Wilson (R-S.C.) to shout “You lie!” during Obama’s 2009 healthcare address on the House floor, when the president pledged that healthcare reform would not cover undocumented aliens.
Looking ahead, it is possible that immigration changes could upend the law’s cost picture, which is already of major concern to critics.
Sarah Hale, director of healthcare policy at the American Action Forum, cautioned that it is far too early to predict whether a new immigration policy would raise the health law’s tab.
“There are three or four moving parts that could push the cost one way or the other, like state choices on the Medicaid expansion,” she said.
“But if there are a huge swath of people who are newly eligible for an insurance subsidy or for Medicaid, then naturally that is going to impact the budget number.”
Grijalva argued that the status quo is unsustainable, no matter what the immigration debate yields.
Most undocumented workers seek care in emergency rooms or storefront clinics, which may not accept credit or insurance, he said.
“All of th
Tim Geithner's Last Day In Office
Four Years Of Tim Geithner - By The Numbers
Cook reports on Tim Geithner's last day in office. First, Bernanke actually has to leave. He has told friends he won't seek a third term in 2014, but consider us skeptical until we see the door hit him in the ass. Second, Larry Summers really wants the job. Third, don't forget former Goldman Sachs director William Dudley.
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Tomorrow is your last chance to donate to Treasury before Timmaah leaves for good.
Treasury Direct - Tim Geithner wants your spare cash
Tim Geithner in 2016...
Cook reports on Tim Geithner's last day in office. First, Bernanke actually has to leave. He has told friends he won't seek a third term in 2014, but consider us skeptical until we see the door hit him in the ass. Second, Larry Summers really wants the job. Third, don't forget former Goldman Sachs director William Dudley.
---
Tomorrow is your last chance to donate to Treasury before Timmaah leaves for good.
Treasury Direct - Tim Geithner wants your spare cash
Tim Geithner in 2016...
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