DRAIN THE SWAMP

Capital Distributions are restricted while in Conservatorship, according to 2008 HERA, where is set forth the regulation. The FHFA has repeated this several times, although referring to payments of claims, etc. But a dividend is also a Capital Distribution. It doesn't matter what is written in the SPSPA signed between the FHFA/US Treasury, because a contract doesn't supersede a law in force. Distributing dividend would go against Established Insolvency Principles and common sense. The companies need to increase capital and not decrease it, retaining earnings and not distributing it. The FHFA has allowed to distribute Capital only to one holder of Equity interest, the holder of Senior Preferred Stocks. Why is that? It turns out that distributing capital to the US Treasury both recapitalizes the enterprises (to be in a solvent condition) and pays off the obligations with the Treasury (to be in a sound condition), which is exactly the Conservator's Power: If you have...

I’m still in a state of shock after visiting the Money Museum, at the Bundesbank’s complex in Frankfurt. There are different exhibitions. A few of them are video displays, where a person, supposedly a Bundesbank's employee because they are in an office, explains basic concepts about different economic subjects, like the exchange rates or how money is created through “Book Money”. Book Money? I don’t know you but it’s the first time I read that term. In three different stages (each one you have to press a butto n ), they try to explain how money is created. I didn't tape it but I took a picture of the buttons:  1. BOOK MONEY AND LENDING : Basically they say money is created when the B ook M oney exits the bank through lending. 2. CREATING BOOK MONEY : This whole subject is simply to say that “the money the banks use for lending, unlike many people assume, doesn’t necessarily come from the deposits made by the customers”. So, it refutes the economic theory that sa...

The Great Depression of 1929 had struck America hard but it also affected Germany. 1931 was the turning point from an economic crisis to a currency crisis in Germany. According to the book “Made in Germany: the German currency crisis of July 1931”, it was not caused by a banking crisis, even though there had been a run in some banks before, and it was primarily domestic in origin, that is, in a period of turmoil, the politicians make things worse. Like so many other countries, the German government's budget went into deficit as the recession progressed. The financial community worried constantly about the creditworthiness of German bonds. Reserves of foreign currency is a measure of the creditworthiness of a country and its bonds. The accumulation of foreign reserves can be seen as collateral, which is being used for attracting foreign investment. Therefore, foreign exchange reserves add to financial security. There are three ways to accumulate foreign reserves: ...