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The Madoff Sideshow

 January 07, 2009 12:09 PM
 


The Madoff Sideshow
By Greg Hunter 1/7/09

A friend of mine, who is a crack investigative producer, just got a gig with a major network. His new job will be to cover the Madoff story. There is no doubt this is a big story and in the press been called the "crime of the century." Madoff is a self proclaimed fraudster who puts a face on the Wall Street "banksters" as in gangsters with brief cases instead of Tommy Guns. But for most Americans this story will be nothing more than tragic theater. This story's outcome will not matter to those in or headed for financial ruin.

The real story is what's going on over at the Treasury, Federal Reserve and Congress. This trio has already spent, "loaned" or committed 8.5 trillion dollars to the economic problems plaguing our country.  It appears the carnival of money printing is nowhere near ending. Now, there is even talk of another government bailout for the people who were ripped off by Madoff. This plan proposes to recapitalize SIPC, the Securities Investor Protection Corporation, with 15 billion dollars to augment its paltry 1.5 billion dollar insurance pool to protect investors. I guess 1.5 billion does not go very far when the pool of cheated customers is 50 billion dollars deep. Where do all these bailouts stop? America, in my view, has gone from a capitalistic society to bailout nation in little more than a year.

[Related -Ford Motor Company (NYSE:F): This American Icon Has 50% Upside]

The Federal Reserve is in the process of bailing out the nation through a series of "lending facilities." The TAF, TSLF, MMIFF, TALF and PDCF are the acronyms that are funnelling money to everything from banks to brokers to money market funds and even select hedge funds. None of these "lending facilities" were around little more than a year ago. All of this bailout activity adds up to more than 2 trillion dollars and is being done in secret without the public knowing who gets money for what! The latest facility to be added to the bailout bucket is provided by the Treasury and is called the TIP or Targeted Investment Program.  This one is for "Citi-style" rescue programs. The government is clearly ready to bail out just about any business that issues a W-2.

[Related -General Motors Company (GM) Q4 Earnings Preview: EPS in Drive, Guidance in Reverse?]

Add all these "programs and lending facilities" together with the bailout of GM, Chrysler, AIG, the monetization of billions of mortgage debt from bankrupt Fannie Mae and Freddie Mac, along with the upcoming Obama stimulus package, and some people are getting worried about a little prosperity killer called inflation. In a few years, most people will not remember the Madoff story but will be living or surviving some pretty big price increases in just about everything they consume. In the end, it will all come down to a crisis in the dollar because just like Madoff it will no longer be trusted.

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