Denninger says "Tea Party" Feb 1...I like it.

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MarkM's picture
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Denninger says "Tea Party" Feb 1...I like it.

I have e-mailed, phone called and faxed until I am weary.  I like the tea bag idea.

fombie's picture
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Denninger has the solution

Thanks Markm, great link!

Karl Denninger says that the government should force all banks to "write down the assets to "death's door" levels, determine how far down
the capital structure needs to be crammed to restore that institution
to a strong capital position with double the Tier Capital ratio required by law, and then forcibly reorganize the debt into equity."
This "will wipe out all of the existing shareholders, including those holding preferreds while converting the bondholders into new equity holders, pushing down the capital structure however far is necessary in order to return the firm to solvency."

It is the best plan to solve the financial crisis I have read so far. The only pity is that high finance will do everything they can to hold back this pseudobankruptancy, and they have an awful lot of power! It will require a massive effort from all other sectors of society to push this through. So please spread the word! At least this would allow us to move beyond the banking crisis and focus efforts on the other challenges that we are facing: upcoming energy, climate and demographic problems.






machinehead's picture
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Re: Denninger says "Tea Party" Feb 1...I like it.

Great article, MarkM. I, too, endorse Denninger's cram-down plan -- while stipulating that it doesn't go far enough.

I'm saying that the insolvent Federal Reserve capital structure needs
to be crammed down too, wiping out the equity of its bankster
stockholders and effectively nationalizing it.

Letting banksters
manage the economy for their own benefit, via a quasi-private
institution, has proven to be a bad idea. So has the Humphrey-Hawkins
Act, which mandates both full employment and price stability.

Humphrey-Hawkins, nationalize the Fed, and give it a single mandate of
price stability. FOMC meetings would be a lot shorter if they ditched
all the gibberish about GDP and employment, which is completely
irrelevant to managing the money supply.

Soon enough it would be
realized that the FOMC wise men could be replaced by a computer model.
I'll be glad to write it for them.

GDon's picture
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Re: Denninger says "Tea Party" Feb 1...I like it.

An interesting approach.

While it has equally about a snowball's chance in Hades, I like constitutional lawyer Dr. Edwin Vieira's plan even better:

It provides solid legal, Constitutional evidence to find cause for Congress or SCOTUS to declare the public portion of the Federal Reserve issuance of "Bills of Credit" (i.e., FRN's, or $USD's), , not as obligations of the United States Government, and without a standing of legal contractual "consideration" (i.e, they didn't have anything to "lend" in the debt contract...)

This would be lawful, and constitutional, based upon SCOTUS prior rulings (Schechter Poultry Corporation v. United States, 295 U.S. 495 (1935), and Craig v. Missouri, 29 U.S. (4 Peters) 410 (1830))

It would still allow for the private contracts with Federal Reserve Institutions to stand, but the taxpayer debt owed FED (a sizeable percentage) would be declared "null & void".

As he summarizes in Part 2:

"So, all that the courts—or Congress—have to do now is to declare unconstitutional ab initio the Federal Reserve System’s emission of Federal Reserve Notes with the special legal privileges that attach to them. (Without those privileges, Federal Reserve Notes would arguably be, not the General Government’s “bills of credit”, but merely private “bills of credit” which, to the extent they are emitted nonfraudulently, the Constitution allows.) At that point, the bubble of unpayable debt will shrink, the people (in their capacities as borrowers from the banks) will be saved from financial destruction, and the bankers and their intimate allies throughout the world of paper speculations (in their capacities as lenders) will suffer the consequences of having run their own illegal money-and-credit racket into the ground.

Patriotic Americans should desire this result, because someone must pay the piper for the present financial mess into which the bankers, the low lives in the world of high finance, and their “public servants” (for the latter are not common Americans’ “public servants”) have thrown this country. And if America has to choose between saving her people and salvaging the bankers—and perhaps suffering the imposition of a paramilitarized police state on this country in order to bail out the bankers and their friends—she must always choose her people and their freedom and prosperity above all other considerations...."


POTUS's picture
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Re: Denninger says "Tea Party" Feb 1...I like it.

Why limit the cram-down only to the banksters?

Why not cram-down everything and everyone that is insolvent?

Why not start with Social Security and Government employee pensions, including the military retirees and state workers?

Move on then to those corporations that have dodgy debt?

Next go after any insolvent JSP that can't pay their credit card bills, car payment and/or mortgage?

Doesn't that make sense? 










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