Rep. Jane Harman exchanged favors for power-aided Israeli lobbyists accused of espionage, top government investigator says that bank bailouts are open to fraud, Obama tells Cabinet to cut spending by 0.02%, U.S. Treasury estimates it has lost $900 million of taxpayer money from holding $301 billion in Citigroup junk assets, Russian tariffs take toll on U.S. companies, and could the U.S. be headed for a Russian-style economic collapse circa 1998?
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Recommended Reading: The Fed Has Surrendered To Inflation.
Congresswoman Exchanged Favors For Power, Aiding Lobbyists. Rep. Jane Harman (D-CA) was overhead by the National Security Agency (NSA) agreeing to seek lenient treatment from the Bush administration for two pro-Israel lobbyists who were under investigation for espionage. Rep. Harman is the ranking Democrat on the House Intelligence Committee. In her ambition to become chairwoman of the committee she agreed to intercede in exchange for help in persuading party leaders to give her the powerful post.
Bank Bailout Programs Open To Fraud, Says Top Government Investigator. In a report issued by Neil Barofsky, the special investigator general assigned to monitor the bailout program, he warned that the $700 billion Troubled Asset Relief Program (TARP) has evolved into a $3 trillion effort of “unprecedented scope, scale and complexity” and comes with too little oversight and too little information about what companies are doing with the money they are receiving. Barofsky was especially critical of the Obama administration’s plan to buy $100 billion of questionable assets from banks. The contentious plan calls for multiplying the total volume of questionable asset purchases to $1 trillion by allowing private investors to borrow money at low rates from the Federal Reserve.
Obama Tells Cabinet To Cut Federal Spending by $100 million. In a Cabinet meeting Monday morning President Obama called on his department chiefs to immediately cut $100 million from their budgets. This cut comes from a federal budget of $3.6 trillion, with a $1.2 trillion 2009 deficit. The Congressional Budget Office estimates Obama’s budget will bring $9.3 trillion in total deficits over the next decade, if adopted. Critics call this exercise a farce since it represents roughly 0.02% of the total budget.
U.S. Treasury Estimates $900 Million In Losses On Citigroup Assets, So Far. The U.S. Treasury estimated $900 million in losses as of the end of last year on $301 billion in Citigroup assets being guaranteed by the government.
Lessons From The Financial Crisis. This site has long praised financial expert and economist Peter Schiff for his ability to foresee the housing bubble, its collapse, and the resulting financial crisis. In Crash Proof: How to Profit From the Coming Economic Collapse, Schiff explains why the economy was thrown so far out of balance and what can be done to protect your portfolio going forward.
Watch this video showing how Schiff’s predictions have come true with astounding accuracy, but he says there is much more to come!
Russian Tariffs Hurt U.S. Companies, Heralds Trade War. Russian Prime Minister Vladimir Putin’s tariffs are taking a toll on U.S. companies. In particular, Deere & Co. and Caterpillar Inc. have experienced a decrease in exports of 25% to Russia, thus far. Putin is trying to boost Russian industries with tariffs on everything from drugs to farm equipment as declining oil revenues hurt the nation’s economy.
Could the U.S. Face A Russia-Style Meltdown?
Simon Johnson, MIT professor, says financial industry is “too big to exist,” and should be dismattled going forward. Banks should not be above the laws of Capitalism, in which bad business models fail.
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