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McConnell says Let the States file bankruptcy for under funded Pension Plans
Well there is your answer to how The Governments make promises and then wash their hands of it when the system fails to deliver, it's just the beginning for the downhill slide of American's Status as a prosperous nation. The federal reserve can't bail out everybody without hyper inflation kicking in and they know it.
serf
https://www.msn.com/en-us/news/politics/mcconnell-says-he-favors-allowing-states-to-declare-bankruptcy/ar-BB1336bq
His statements set up a conflict with House Speaker Nancy Pelosi, who said on Bloomberg Television Wednesday a “major package” of aid for state and local government will be in the next stimulus legislation considered by Congress.
McConnell may also find himself in conflict with President Donald Trump. The president said Tuesday after meeting with New York Governor Andrew Cuomo that states will need assistance. “And I think most Republicans agree too, and Democrats,” Trump said. “And that’s part of phase four.”
McConnell, a Kentucky Republican, noted he blocked additional state and local aid in the latest relief package, which passed the Senate Tuesday and is set for a vote Thursday in the House.
Comments
https://www.reuters.com/article/us-aig/who-got-aigs-bailout-billions-idUSTRE52624P20090308
The U.S. Federal eserve has refused to publicize a list of AIG’s derivative counterparties and what they have been paid since the bailout, riling the U.S. Senate Banking Committee.
Federal Reserve Vice Chairman Donald Kohn testified before that committee on Thursday that revealing names risked jeopardizing AIG’s continuing business. Kohn said there were millions of counterparties around the globe, including pension funds and U.S. households.
Representative Paul Kanjorski told Reuters on Thursday that he had been informed that a large number of AIG’s counterparties were European.
“That’s why we could not allow AIG to fail as we allowed Lehman to fail, because that would have precipitated the failure of the European banking system,” said Kanjorski, a Democrat from Pennsylvania who chairs the House Insurance Subcommittee.
The Fed, the Casino, and Trillions on the Line
In total, the CARES Act that Congress passed offers about $2.2 trillion in government relief. As President Trump noted while signing the bill into law, however, total government coronavirus aid could, in the end, reach $6.2 trillion. That’s a staggering sum. Unfortunately, you won’t be surprised to learn that, given both the Trump administration and the Fed, the story hardly ends there.
More than $4 trillion of that estimate is predicated on using $454 billion of CARES Act money to back Federal Reserve-based corporate loans. The Fed has the magical power to leverage, or multiply, money it receives from the Treasury up to 10 times over. In the end, according to the president, that could mean $4.5 trillion in support for big banks and corporate entities versus something like $1.4 trillion for regular Americans, small businesses, hospitals, and local and state governments. That 3.5 to 1 ratio signals that, as in 2008, the Treasury and the Fed are focused on big banks and large corporations, not everyday Americans.
In addition to slashing interest rates to zero, the Fed announced a slew of initiatives to pump money ("liquidity") into the system. In total, its life-support programs are aimed primarily at banks, large companies, and markets, with some spillage into small businesses and municipalities.
Its arsenal consists of $1.5 trillion in short-term loans to banks and an alphabet soup of other perks and programs. On March 15th, for instance, the Fed announced that it would restart its quantitative easing, or QE, program. In this way, the U.S. central bank creates money electronically that it can use to buy bonds from banks. In an effort to keep Wall Street buzzing, its initial QE revamp will enable it to buy up to $500 billion in Treasury bonds and $200 billion in mortgage-backed securities -- and that was just a beginning.
Two days later, the Fed created a Commercial Paper Funding Facility through which it will provide yet more short-term loans for banks and corporations, while also dusting off its Term Asset-Backed Securities Loan Facility (TALF) to allow it to buy securities backed by student loans, auto loans, and credit-card loans. TALF will receive $10 billion in initial funding from the Treasury Department’s Emergency Stabilization Fund (ESF).
And there’s more. The Fed has selected asset-management goliath BlackRock to manage its buying programs (for a fee, of course), including its commercial mortgage and two corporate bond-buying ones (each of which is to get $10 billion in seed money from the Treasury Department’s ESF). BlackRock will also be able to purchase corporate bonds through various Exchange Traded Funds, of which that company just happens to be the biggest provider.
Surpassing measures used in the 2008 crisis, on March 23rd, the Fed said it would continue buying Treasury securities and mortgage-backed securities "in the amounts needed to support smooth market functioning.” In other words, unlimited quantitative easing. As its chairman, Jerome Powell, told the Today Show, “When it comes to this lending, we’re not going to run out of ammunition, that doesn’t happen.” In other words, the Fed will be dishing out money like it’s going out of style -- but not to real people.
By March 25th, the Fed’s balance sheet had already surged to $5.25 trillion, larger than at its height -- $4.5 trillion -- in the aftermath of the global financial crisis and it won't stop there. In other words, the 2008 playbook is unfolding again, just more quickly and on an even larger scale, distributing a disproportionate amount of money to the top tiers of the business world and using government funds to make that money stretch even further.
Then what comes along but the employees want the same wages as the private sector and keep the same benefits. When I was on our town Finance Committee, the committee argued that if the employees wanted private sector wages they should have private sector retirement i.e SS and 401K. The employees were outraged they were going to strike, bring a lawsuit etc.
Well the town select board caved and the employees got the private sector wages and keep the public sector benefits. Now those employees are retired getting 80% of their three highest years of increased wages for longer. No system can sustain that type of payout.
So an employeee who made $50,000 gets $40,000 or 3,333 per month, many are paid way over this 50K illustration.
A SS beneficiary retiring at age 70 with the max paid in over 35 years of SS will get $3,790 per month.
I would certainly like to get $3,333 per month even at age 70 let along starting at age 45 or 50.
So I think it is going to be inevitable that some state and local employees are going to have to get a haircut or the systems are going to collapse completely with the lack of contributions by the participants and the govt over the years, along with the amount and longevity of the payouts.
States HAVE the ability to pay:
Raise taxes. I know you and I don't like the answer but the d-rats do and will be another excuse for them to tax rape the country.
Heard the mayor of * Newark say basically his city will revolt if the extra checks don't keep coming.
d-rat extortion 101.
"feeds me or we riot"
Oh before I forget, my 401K still has a whole lot more than I ever put in it even after 2 major corrections, ie. mini crashes.
Going further, if all central banks issued digital currency directly to households and businesses, it would also be possible for major central banks to intermediate global payments in multiple currencies, without the need for correspondent banks. Such a central bank network is already to some extent in existence, since FX conversion among the world’s reserve currencies can already be seamlessly handled using the currency swap lines established in 2008 to ensure that the world’s premier central banks could provide unlimited dollar liquidity to their country’s commercial banks in the financial crisis.These swap lines were made permanent in 2013.
Is the Federal Reserve exposed to foreign exchange or private bank risk in extending these lines?
No. Dollars provided through the U.S. dollar liquidity swaps are provided by the Federal Reserve to foreign central banks, not to the institutions obtaining the funding in these operations. The foreign central bank receiving U.S. dollars determines the terms on which it will lend these dollars onward to institutions in its jurisdiction, including how the foreign central bank will allocate dollar funds to financial institutions, which institutions are eligible to borrow, and what types of collateral they may borrow against. The terms governing these loans of dollars are in all cases released to the public by the foreign central banks. As the Federal Reserve's contractual relationship is exclusively with the foreign central bank and not with the institutions obtaining dollar funding in these operations, the Federal Reserve does not assume the credit risk associated with lending to financial institutions based in these foreign jurisdictions. The provision of dollars and receipt of foreign currency, and the receipt of dollars and return of foreign currency at the swap's maturity date, both occur at the same foreign exchange rate so that the Federal Reserve is not exposed to movements in foreign exchange rates.
Shumer actually got it right when he said, it was the blue states that have this problem. Illinois, NJ and NY have the highest taxes and people fleeing as a result. DEMOCRATs have a long history of killing taxing the goose that lays golden eggs.