What Does Senator Bunning Know, And, More Relevantly, What Does The Just Disclosed Fed Whistleblower Know?

First, watch the below video. Note Senator Bunning's agreement with Zero Hedge on who the proposed head of the Fed should be (i.e., John Taylor). But that's irrelevant. What is - at 5:40 Bunning says that "Geithner will be fired by the President for his inability to handle his job as Secretary of the Treasury." True. What is even more relevant, and hints at a potential smoking gun, begins at 8:00 "[Bernanke's] staff did not agree with him [on bailing out AIG]...I am talking about an email that he sent his staff, after his staff recommended that the Federal Reserve not touch AIG, just like Lehman Brothers."

Ok fine, so Bernanke steamrolled opposition: that's nothing new - whoever thought the Fed is any more democratic than the country it is supposed to serve, surely is naive. Here is HuffPo's Ryan Grim on the matter:

A Republican senator said Tuesday that documents showing Federal Reserve Board Chairman Ben Bernake covered up the fact that his staff recommended he not bailout AIG are being kept from the public. And a House Republican charged that a whistleblower had alerted Congress to specific documents provide "troubling details" of Bernanke's role in the AIG bailout.

Sen. Jim Bunning (R-Ky.), a Bernanke critic, said on CNBC that he has seen documents showing that Bernanke overruled such a recommendation. If that's the case, it raises questions about whether bailing out AIG was actually necessary, and what Bernanke's motives were.

And as we type, Harry Reid has noted that he wants to get a reconfirmation vote on Bernanke on Thursday - presumably before all the rot that will soon be uncovered about yet another Bernanke fiasco is made public. Hopefully the man who owns roughly $3 million in commercial real estate and is thus a direct beneficiary of a Bernanke reconfirmation, has done his math on senatorial support. A key question however is: shouldn't the debt ceiling issue be resolved first - after all the fact that our national debt "ceiling" is nothing but a joke these days, is a direct consequence of Fed policies to pile bail out upon bail out. It also leaves the question open of what additional information has to still be presented. Back to HuffPo:

Senators will be voting on Bernanke's confirmation for a second term in the coming days. But only senators on the Banking Committee have had access to documents that illuminate just what decisions he made and how he made them. And that access only came after Bunning publicly complained that Dodd and Sen. Richard Shelby (R-Ala.) were the only members of the committee could see them.

Darrell Issa identifies the specific documents that need to be disclosed (see below) and has requested from Edolphus Towns that these be made public, as the "Board's staff did not return calls" in an attempt to procure these documents directly.

The take home message: the Fed has finally produced a whistleblower. Could this be the catalytic event that brings the house of cards down.

One only wonders at this point how deep the rabbit hole runs: if one declassified document confirms that recent testimonies by various bankers and Head of Treasury Departments may have bordered on perjury, one can only imagine the impact of not only the 250,000 pages of AIG docs already in Commission possession are released for crowdsourced analysis, but also what would happen if there is finally disclosure around the second bailout of AIG in February of 2009, which as we have repeatedly noted, was an even closer call for AIG bankruptcy than before. Oddly, with Goldman having no more risk exposure to AIG whatsoever then, courtesy of ML III, the insurer was still not allowed to fail. The question remains - why?

Warning: Capt Bernanke's sinking U.S.S. Titanic Commentary: Cheap money's again blowing new 'icebergs'

ARROYO GRANDE, Calif. (MarketWatch) -- Let's call it "Titanic II," a classic remake. The Fed's the new Titanic. Bernanke, the egomaniacal captain.

His character reminds me of Bogart playing the paranoid, obsessive Captain Queeg in "The Caine Mutiny." Remember that threatened Navy captain who navigates into a fog, panics, nearly rams a battleship? That's "Capt. Ben" in "Titanic II." And given his handling of our banking system and the global economy, he'll sink the Titanic. Capt. Ben's a tragic figure.

Worse, Obama's giving ol' Capt. Ben a second chance to pilot into new icebergs dead ahead. The Economist calls them "asset bubbles." Problem? Capt. Ben can't see through his ideological Greenspan/Reaganomics goggles, clouded by his obsessive allegiance to Wall Street's "fat cat bankers."

Nothing new: He failed to see warnings of "icebergs" back in 2007. Yes, and he'll miss any new icebergs, sink the global economy and plunge the world into the eerie depths of the Great Depression 2.

Ideally the Senate will deny Capt. Ben's reconfirmation, Obama's "biggest domestic policy blunder." And last week we even heard Obama hint to possible changes when he announced the new "Volcker Rule," a de facto revival of Glass-Steagall separating commercial banking from the fat-cat, high-risk gambling with derivatives trading and investment banking.

Great PR move, but Wall Street lawyers, lobbyists and traders love their mega-bonuses. So they'll get around any new rules fast. Besides, fat cats really don't need any new Supreme Court cases (like last week's unrestricted political donations) to buy votes in the Senate. Glass-Steagall or not, the fat cats will just double up on their tools for lying, cheating, stealing and manipulating Main Street's 95 million investors.

So assuming the Senate fails to torpedo Capt. Ben, we're stuck with this weird "Captain Queeg." And it's only a matter of time before Capt. Ben runs the U.S.S. Titanic into a battleship, a new iceberg or another black swan.

Capt. Ben's "Titanic" was no unpredictable black swan

This "Titanic" sequel was exactly what Jeremy Grantham, founder of the $100 billion GMO money managers, had in mind a couple months ago in his letter to investors: "Lessons Not Learned: On Redesigning Our Current Financial System." Listen to his thriller plot:

"Imagine the company representatives on the Titanic II design committee repeatedly pointing out that the Titanic I tragedy was a black swan event: utterly unpredictable and completely, emphatically, not caused by any failures of the ship's construction, of the company's policy, or of the captain's competence. 'No one could have seen this coming' would have been their constant refrain.'"

Sound familiar? You bet. Capt. Ben's "Titanic II design committee" would include his ol' buddies, Alan Greenspan, Henry Paulson, Lawrence Summers and Tim Geithner. "Their response would have been to spend their time pushing for more and improved lifeboats," says Grantham. However, "by working to mitigate the pain of the next catastrophe, we allow ourselves to downplay the real causes of the disaster and thereby invite another one."

Grantham's not hopeful, but his dialogue rivals the best of James Cameron's "Avatar" and Paul Volcker's Glass-Steagall speeches: "After a crisis ... begin with an open and frank admission of failure. The Titanic, for example, was just too big and therefore too complicated for the affordable technology of its day. Given White Star Line's unwillingness to spend, she was underdesigned" so "the passengers bore the risk of unnecessary speed and overconfidence in 'too big to sink,' while the captain stood to be rewarded for breaking the speed record."

And thanks to Capt. Ben, that describes why fat-cat bankers like Lloyd Blankfein made $410 million the past three years during the meltdown, why his Goldman Sachs staff got average $500,000 bonuses last year, and why one of six Americans are unemployed. Capt. Ben is a lousy, dangerous pilot.

So, absent the Senate rejection or Capt. Ben's withdrawal, we see four huge plot points dead ahead for the "Titanic II," four icebergs still out there from the last fiasco he created to protect the fat-cat bankers using the discredited Greenspan "cheap money" ideology that piled on $23.7 trillion debt.

See the four mega-icebergs flashing: "Crash! Dead ahead!"

First iceberg: Global assets bubble warning

From The Economist: "Bubble Warning: Why Assets are Overvalued ... Markets are too dependent on unsustainable government stimulus. Something's got to give ... The effect of free money is remarkable. A year ago investors were panicking and there was talk of another Depression. Now the MSCI world index of global share prices is more than 70% higher than its low in March 2009. That's largely thanks to interest rates of 1% or less in America, Japan, Britain and the euro zone, which have persuaded investors to take their money out of cash and to buy risky assets ... cheap money is driving up asset prices."

Sounds as ominous as The Economist's warning back in June 2005, two years before the last meltdown: "The worldwide rise in house prices is the biggest bubble in history. ... Rising property prices helped to prop up the world economy after the stock market bubble burst in 2000." Values increased 75% worldwide in five short years. "Never before have real house prices risen so fast, for so long, in so many countries ... This is the biggest bubble in history." And Capt. Ben is just using Greenspan's discredited strategy.

Worse yet, at a recent conference in Shanghai, St. Louis Fed President James Bullard said America's interest rates will likely remain low for "quite some time." Yes, he loves blowing and busting bubbles. Unfortunately, with that outdated ideological mindset protecting the Fed's fat-cat members, we'll see a rapid buildup of asset bubbles across the globe, just as The Economist is warning. We can even predict that Capt. Ben will again ignore warning signs and push us blindly ahead into his fog.

Second iceberg: Gulf oil real estate bubble collapse

In "Burj Dubai: A Temple to Hubris," a Los Angeles Times critic wrote a brilliant critique of the total bankruptcy of the newest tallest building in the world, sitting in a desert metropolis: "Burj Dubai's real symbolic importance: It is mostly empty, and is likely to stay that way for the foreseeable future. Though most of its 900 apartments have been sold, nearly all were bought three years ago -- near the top of the market -- and primarily as investments, not as places to live. ... And there's virtually no demand in Dubai at the moment for office space, of which the Burj Dubai has 37 floors."

The Dubai tower "is a powerful, iconic presence in ways ... the latest, and biggest, in this string of monuments to ... easy credit, during the boom years and the sudden paralysis of the financial markets in the fall of 2008 have created an unprecedented supply of unwanted or underoccupied real estate around the world," dead monuments to "the broader notion ... that growth can operate as its own economic engine, feeding endlessly and ravenously on itself ... the tombstone -- for some ruined ideas."

Third iceberg: China's overheated real estate bubble

Worse, read "Mania on the Mainland: Think the U.S. real estate bubble was bad? China's could be worse" in Bloomberg/BusinessWeek. China's "real estate rush is fueling fears of a bubble that could burst later in 2010, devastating homeowners, banks, developers, stock markets and local governments." Then China's "economic growth will stop, warns Yi Xianrong, a researcher at the Chinese Academy of Social Sciences' Finance Research Center." Premier Jiabao even told the Xinhua news agency that "property prices have risen too quickly," pledging "a crackdown on speculators."

Fourth iceberg: Commercial real estate, a ticking time bomb

But worst of all, here at home we read in yet another Bloomberg/BusinessWeek article, "Why This Real Estate Bust Is Different," that "unrealistic assumptions, layers of investors, sky-high prices and possible fraud will make it hard to clean up the mess in commercial real estate." Yes, there's another homegrown mess far bigger than America's residential real estate. Imagine, a $1.7 trillion ticking time bomb sitting on our bankers' books, equal to "roughly 25% of the assets of the average institution." A very big iceberg.

What happened? "Overbuilding isn't the culprit in this bust. An oversupply of money is what pushed commercial real estate over the edge. It turns out the same excesses that drove the housing market's crazy rise and fall were present in commercial real estate, too -- but they have largely gone unnoticed until now.

Bankers, in their haste to make more and bigger loans, blindly accepted borrowers' wildest growth assumptions and readily overlooked other shortcomings on loan applications" to "easily sell their dubious loans to investors in the form of commercial mortgage-backed securities"

Bottom line: Avoid sinking the U.S.S. Titanic ... a Capt. Ben mutiny!

Capt. Ben can't be trusted. What'll Capt. Ben do if he's still around piloting the good ship U.S.S. Titanic? He'll hit more icebergs, or battleships, or black swans. Can't help himself, it's in his ideological DNA. Then he'll blame others, while secretly bailing out his Wall Street banker buddies, piling on trillions more debt, doing it with his usual arrogance, no transparency and no accountability.

Yes folks, if Capt. Ben's still at the helm, if Obama and the Senate keep him, you can bet our unaudited Fed will secretly ease the banks pain (again) shifting trillions more to taxpayers, the "suckers-of-last-resort." Yes, it's time for the "Bernanke Mutiny" in the Senate!

Voters OK Tax Hikes On Wealthy, Businesses

PORTLAND, Ore. -- Voters approved tax increases for wealthy Oregonians and businesses in a decision that will generate $727 million in revenue.With 85 percent of the expected votes counted Tuesday night, both measures had 54 percent approval. FOX 12 political analyst Tim Hibbitts confirmed that Measures 66 and 67 passed.Measure 66 raises taxes on household income at and above $250,000 and $125,000 for individual filers. It also reduces income taxes on unemployment benefits in 2009.Measure 67 raises business taxes.The Oregon Legislature approved both tax increases last year, and business groups sponsored a referendum campaign to put them to a statewide vote.The campaign pitted public employee unions warning of cuts in schools and social services against many, though not all, of the state's business groups, who said the taxes would cost a state with 11 percent unemployment even more jobs.The most recent reports had labor outspending business in one of the state's most expensive issue campaigns."We know now that Oregonians heard the message of what these measures were about -- supporting the most vulnerable," said Elana Guiney, a spokeswoman for the pro-tax group Vote Yes for Oregon.The revenue from the new taxes, $727 million, is expected to account for about 5.5 percent of the general fund in the next two-year budget. Passage of the measures gives the state Legislature a breather when it goes into a month-long session starting Monday.The returns reflected Oregon's political split, with Portland and Multnomah County, a liberal bastion, supplying a large vote in favor, while rural counties and especially those in Eastern Oregon voting against.The results could give legislators in other states hints about whether they can ask taxpayers for help in repairing ravaged budgets.Approval of the two tax increases also ran counter to the state's history of turning down tax increases.But Democrats who have commanding majorities in the Legislature said they were careful to target the upper 2 percent of individual taxpayers and the businesses with the biggest sales, many headquartered out of state.In Salem, Pat McCormick said he opposed the tax increases and was disappointed."A lot of Oregonians need to realize that the person who signs their check gets affected by this and (it) could affect them in a different way," McCormick said. "I think this is very damaging to Oregon’s struggling economy and very difficult for a lot of employers to manage the additional costs."

Oscar-winning US filmmaker Oliver Stone says Adolf Hitler was 'enabled by Western bankers'

BANGKOK, Thailand — Adolf Hitler was a psychopath and a monster but rose to power thanks to big business leaders and other supporters who appreciated his vow to destroy communism and control workers, Hollywood filmmaker Oliver Stone said Monday.

Stone, who is working on a 10-part documentary on the 20th century titled "The Secret History of the United States," said the German dictator was "enabled by Western bankers" and managed to "seduce" Germany's military industrial complex.

"Hitler is a monster. There is no question. I have no empathy for Hitler at all. He was a crazy psychopath," Stone told reporters in the Thai capital. "But like Frankenstein was a monster, there was a Dr. Frankenstein. He is product of his era."

Stone was in Bangkok to give a lecture to high school students on the role of film in peace-building as part of a visit organized by the Vienna-based International Peace Foundation.

He said the aim of his documentary, which two historians are helping him with, was to offer a fuller understanding of the 20th century and how some of those lessons may be relevant to President Barack Obama in 2010.

"What has America become? How can we in America not learn from Germany in the 1930s," the Oscar-winning director asked.

Earlier in the day, Stone told about 300 students that his 1991 movie "JFK," was his most controversial to date and that the United States remains in denial over the possibility that someone other than Lee Harvey Oswald could have assassinated John F. Kennedy.

Stone said exploring alternative theories over the JFK assassination remains too sensitive for those in the media or academia who "would be endangering their careers and their position."

"To this day, many key Americans in power are in total denial about this story," Stone said. "They don't even want to know about the possibility that he was killed by someone other than Lee Harvey Oswald. It is a national fairy tale."

"JFK" ridicules the Warren Commission's conclusion that Oswald acted alone and suggests a massive conspiracy.

Stone's film centred on a theory by New Orleans District Attorney Jim Garrison that a CIA-led mutiny killed the president and the plotters walked away unscathed. Garrison's theories went to court in 1967, but Clay Shaw, the alleged "evil genius" behind the assassination, was acquitted.

Stone said Monday he thought it was "a good thing" to revisit the JFK assassination. But he came under fire from the historians and film reviewers who contended Stone had fudged facts, invented characters and elevated speculation to truth to support his burning belief that the killing was a high-level government conspiracy.

"It's an amazing story and I did it," Stone said. "I thought I would be respected for it, and I was lambasted in the establishment press. I was called a myth-maker, a propagandist. I didn't see it coming. I thought the Kennedy murder was safe."

Stone is famous for several other movies, including the Vietnam War films "Born on the Fourth of July" and "Platoon," which won four Oscars, including best picture and best director.

Copyright © 2010 The Canadian Press. All rights reserved.

Stimulus price tag soars as jobless rate rises

The economic stimulus bill's price tag has risen to $862 billion, the Congressional Budget Office said Tuesday — a $75 billion jump that's a result in part to the fact that, despite the spending, joblessness has risen and the government is paying out more than expected on unemployment benefits.

The CBO, in a new report, also said spending in fiscal 2010 will push the deficit to more than $1.3 trillion, or nearly the record $1.4 trillion deficit recorded in 2009.

The dire warnings fueled spending hysteria, which hit Washington in full force this week after Democrats' health care overhaul got shelved last week.

President Obama plans to call for a freeze on non-security spending in Wednesday's State of the Union address — but advisers said it wouldn't take effect until 2011.

"In 2010, we are focused on making sure we can get people back to work. In 2011, when we believe the economy will be back on stronger footing, we're going to be looking to make sure the footing we are putting them on is a more sustainable discretionary footing," said White House deputy budget director Rob Nabors.

Meanwhile, in Congress, lawmakers said the new numbers from Congress's official scorekeeping agency are a further wake-up call to control runaway debt and ballooning spending.

"It's hard to applaud a $1.3 trillion deficit," said Senate Minority Leader Mitch McConnell, Kentucky Republican, adding Democrats have spent with abandon. "This is completely and totally unacceptable. We're going to have to do something a lot more serious than this rather modest freeze suggestion that we're going to hear [Wednesday] night."

The 2010 budget picture is slightly better than last year, and CBO said it will slowly get better as the economy improves and tax revenues pick up. But the long-term challenges still remain, the budget analysts said.

Deficits will average $600 billion a year for the next decade, meaning another $6 trillion of debt will be added to the books. And entitlement programs such as Medicare, Medicaid and Social Security will continue to consume an ever-greater portion of the country's economy.

President Clinton turned over a government in surplus in 2001, but by 2004, under President George W. Bush and a Republican Congress the deficit reached a then-record $413 billion. That figure steadily dropped through 2007, but has risen sharply in the years since, to $459 billion in 2008 and $1.4 trillion in 2009.

With the Wall Street bailout package winding down, some lawmakers had hoped spending would decline slightly on its own this year.

But CBO said spending from the stimulus package Congress passed last February will increase to $404 billion in 2010, which will keep spending levels near record highs.

Overall, CBO said it now pegs the 10-year cost of the stimulus package at $862 billion, up from the $787 billion estimate it made last February when Mr. Obama signed it into law.

A good chunk of that increase comes because the unemployment rate has gone up, not down, and the government is spending more than it projected on benefits.

"Outlays for unemployment compensation in 2009 and 2010 are now estimated to be $21 billion higher than initially expected," CBO said.

The Obama administration had predicted that unemployment would not exceed 8 percent if the stimulus bill were passed. Instead, the rate has climbed into double-digits.

The government is also paying out more than expected on food-assistance programs and on federal payments to help states and localities pay interest on taxable government bonds they issued.

Republicans argue the high unemployment rate shows the stimulus package is a failure, and warned Democrats against trying to pass another jobs-creating spending bill.

"American families who are trying to stay financially afloat do not have time for any more stimulus stumbles. Instead of misnomers and rhetoric, they need tangible job-creation proposals," said Rep. Joe Wilson, South Carolina Republican.

But Democrats said the recovery package helped stave off a possible depression.

"You're going to see jobs created," Vice President Joseph R. Biden Jr. told Democratic National Committee members Tuesday. "We can't get the unemployment rate down to 6 percent after this great depression, recession, in two years, but you're going to see come the spring net increases in jobs."

The administration is trying to strike a careful balance between spending to boost a weak economy now, while promising eventual cuts.

Mr. Obama on Wednesday will propose freezing non-security discretionary spending for fiscal 2011, which begins Oct. 1, at 2010 levels. His advisers said that doesn't mean an across-the-board cut, but rather the administration will call for slashing some programs outright, while increasing spending for others. The specifics will be laid out when the president sends his budget to Congress next week.

During the 2008 presidential campaign, Mr. Obama had mocked his opponent, Sen. John McCain, for proposing deep spending cuts, saying a scalpel was the right tool.

"I think the president understands now how serious this problem is, and it requires hatchets and scalpels," Mr. McCain said Tuesday.

Mr. Nabors, the deputy budget director, said he's as certain of getting their spending cuts through as he is they'll get a health care bill done.

"The president once said something to me that has always stuck with me, which is, when we sat down to start talking about whether or not the House and the Senate could pass health care bills, people reacted very negatively," Mr. Nabors told reporters.

"The president said, don't ever bet against me. And what ended up happening was that both the House and the Senate were able to produce health care bills, which we're very confident will go through a conference process, and will soon make its way to the president's desk."

UK economy lies 'on bed of nitroglycerine' – top financier

Bill Gross deals blow to government with warning to his investors that Britain's debt makes it a 'must to avoid'

The government's hopes of claiming credit for reviving the British economy suffered a severe blow today when the world's biggest buyers of bonds warned that the UK was a "must to avoid" for his investors as its debt was "resting on a bed of nitroglycerine".

The intervention by Bill Gross, co-founder of California-based fund managers Pimco, came on the day official figures confirmed that Britain had emerged from the deepest recession since the 1930s – but only by the narrowest of margins.

The economy grew by 0.1% in the final three months of last year, much weaker than even the most cautious expectations in Westminster and the City. The unexpectedly sluggish performance prompted Alastair Darling to warn that Britain could yet fall back into recession, telling the Guardian "there will be hiccups along the way".

The chancellor insisted, however, that he would not be required to revise his forecast growth of 1-1.5% over 2010."You cannot come through a recession of this magnitude, dust yourself down and walk off as if nothing happened," he said. "Things will be steadily improving, but we have got to negotiate some bumps in the road."

But the remarks by Gross, whose pronouncements on bond markets are regarded as highly influential, added to the sense that the economy remained in a dangerously parlous state. "The UK is a must to avoid. Its gilts are resting on a bed of nitroglycerine," he said."High debt with the potential to devalue its currency present high risks for bond investors."

His views are particularly painful for the government as the head of Pimco's European team is Andrew Balls, the brother of cabinet minister Ed Balls. Gross described the UK as posing risks for investors because it has "the highest debt levels and a finance-oriented economy – exposed like London to the cold dark winter nights of deleveraging". He warned that the UK was in Pimco's "ring of fire" where a country's public debt could exceed 90% of GDP in a few years' time. Darling's current projections are for the debt to GDP ratio to peak at 77% in 2014.

Pimco has been trying to attract new clients by sounding the alarm about the UK for some time, most recently earlier this month when it unsettled markets by saying it was cutting back on its bond investments in the UK and the US.

• The headline to this article was amended on Wednesday 27 January 2010. The co-founder of Pimco is Bill, not Bob, Gross. This has been corrected.

Vatican Bank Top 10 Money Laundering Destination

According to one global source, the Vatican is the main destination for over $55 billion in illegal Italian money laundering and the number 8 destination worldwide for laundered money, ranked well ahead of such offshore havens as the Bahamas, Switzerland, and Liechtenstein.

In a recent report by the London Telegraph and the Inside Fraud Bulletin, the Vatican was named as a top "cut out" country along with the offshore banking centers of Nauru, Macao, and Mauritius. A "cut out" country is one whose banking secrecy makes it is all but impossible to trace laundered funds back to their source.

The Vatican Bank is desperately resisting a legal action for an accounting of stolen World War II assets in a San Francisco Federal court (Alperin v. Vatican Bank) filed by Serb and Jewish Holocaust survivors. Contrary to the above reports, a declaration filed under penalty of perjury by the Vatican Bank's attorney, Franzo Grande Stevens, states in part that the Vatican Bank's "fundamental purpose is to promote pious acts" and that its depositors "are essentially limited to Vatican state employees, members of the Holy See, religious orders, and persons who deposit money destined, at least in part, for works of piety." Stevens also declared to the court that the Pope controls the Vatican Bank and that bank records are not retained after ten years.

It seems that the Vatican Bank, a major illegal money laundering operation, is hiding behind the benign image of John Paul II. Given the Vatican Bank's alleged involvement with Nazi loot and current links to organized crime, a reckoning cannot be far off. The accumulating evidence points to a more piratical than pietical Vatican Bank