We can now add outright thievery to government ineptitude and cronyism as solid reasons to shun Wall Street and invest in gold and silver.

April 15, 2011 – We can now add outright thievery to government ineptitude and cronyism as solid reasons to shun Wall Street and invest in gold and silver.

Oh we’ve known all along that the Fed shoveled trillions into Wall Street banks, turning “companies facing bankruptcy into monstrous profit machines,” as Matt Taibbi said in Rolling Stone. But a recent Congressional order forcing the Fed to disclose at least a bit of its bailout dealings reveals how blatant the giveaway really was.

Here’s a sample from Mr. Taibbi’s article, “Why isn’t Wall Street in Jail?” ·

  • Money for nothing.

Many of the banks that were recipients of Fed largesse took the money from their near-zero interest loans and bought Treasuries – essentially lending it right back to the government at 3% interest. ·

  • Risk free investments.

The unique thing about TALF, the program to mop up Wall Street’s toxic loan mess, is the money got handed out in what are called ‘non-recourse’ loans. Hedge funds took out low-interest loans to buy up mountains of junk, which they turned over to the Fed as collateral. If the investments paid off, they got to keep every dime of profits. But if they failed? They just walk away, without recourse for the government – that is the taxpayers – who has to eat the losses. ·

  • Foreign boondoggles.

Congress is finally looking into such things as “massive purchases of securities in … BMW, Volkswagen, Mitsubishi, and Nissan.” Mitsubishi and Toyota also got almost $5 billion in cheap loans, “at the same time taxpayers were being asked to bail out Chrysler and GM” – free money for the competition. ·

  • Funding global competitors.

The Fed handed $9.6 billion over to Mexico’s central bank, and $2.2 billion to the Korea Development Bank “whose sole purpose is to promote development in South Korea.” ·

  • Giving aid and comfort to the enemy.

The Fed gave loans of $35 billion “at interest rates as low as one quarter of one point” to a Bahrain bank in which Qaddafi’s Libya holds majority interest. And the Treasury exempted the bank from having its assets frozen by economic sanctions. ·

  • Subsidizing tax dodgers.

“Hundreds of millions of Fed dollars were given out to hedge funds and other investors with addresses in the Cayman Islands.” That’s right, bailouts for investment companies registered offshore to evade US taxes.

Taibbi has just scratched the surface. More horror stories are sure to follow as the investigation digs deeper. But chances are that after bleeding the US dry the guilty will just laugh all the way to their offshore banks.

But they can’t touch the wealth secured by gold and silver investment.

Shannon King

Senior Staff Writer –

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