Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Covid, Debt and Precious Metals - 3rd Jun 20
Gold-Silver Ratio And Correlation - 3rd Jun 20
The Corona Riots Begin, US Covid-19 Catastrophe Trend Analysis - 3rd Jun 20 -
Stock Market Short-term Top? - 3rd Jun 20
Deflation: Why the "Japanification" of the U.S. Looms Large - 3rd Jun 20
US Stock Market Sets Up Technical Patterns – Pay Attention - 3rd Jun 20
UK Corona Catastrophe Trend Analysis - 2nd Jun 20
US Real Estate Stats Show Big Wave Of Refinancing Is Coming - 2nd Jun 20
Let’s Make Sure This Crisis Doesn’t Go to Waste - 2nd Jun 20
Silver and Gold: Balancing More Than 100 Years Of Debt Abuse - 2nd Jun 20
The importance of effective website design in a business marketing strategy - 2nd Jun 20
AI Mega-trend Tech Stocks Buying Levels Q2 2020 - 1st Jun 20
M2 Velocity Collapses – Could A Bottom In Capital Velocity Be Setting Up? - 1st Jun 20
The Inflation–Deflation Conundrum - 1st Jun 20
AMD 3900XT, 3800XT, 3600XT Refresh Means Zen 3 4000 AMD CPU's Delayed for 5nm Until 2021? - 1st Jun 20
Why Multi-Asset Brokers Like TRADE.com are the Future of Trading - 1st Jun 20
Will Fed‘s Cap On Interest Rates Trigger Gold’s Rally? - 30th May
Is Stock Market Setting Up for a Blow-Off Top? - 29th May 20
Strong Signs In The Mobile Gaming Market - 29th May 20
Last Clap for NHS and Carers, Sheffield UK - 29th May 20
The AI Mega-trend Stocks Investing - When to Sell? - 28th May 20
Trump vs. Biden: What’s at Stake for Precious Metals Investors? - 28th May 20
Stocks: What to Make of the Day-Trading Frenzy - 28th May 20
Why You’ll Never Get Another Stimulus Check - 28th May 20
Implications for Gold – 2007-9 Great Recession vs. 2020 Coronavirus Crisis - 28th May 20
Ray Dalio Suggests USA Is Entering A Period Of Economic Decline And New World Order - 28th May 20
Europe’s Coronavirus Pandemic Dilemma - 28th May 20
I Can't Pay My Payday Loans What Will Happen - 28th May 20
Predictive Modeling Suggests US Stock Markets 12% Over Valued - 27th May 20
Why Stocks Bear Market Rallies Are So Tricky - 27th May 20
Precious Metals Hit Resistance - 27th May 20
Crude Oil Cuts Get Another Saudi Boost as Oil Demand Begins to Show Signs of Life - 27th May 20
Where the Markets are heading after COVID-19? - 27th May 20
Silver Springboards Higher – What’s Next? - 26th May 20
Stock Market Key Resistance Breakout Is Where the Rubber Meets the Road - 26th May 20
5 Ways To Amp Up Your CFD Trading Today - 26th May 20
The Anatomy of a Gold Stock Bull Market - 26th May 20
Stock Market Critical Price Level Could Soon Prompt A Big Move - 25th May 20
Will Powell Decouple Gold from the Stock Market? - 25th May 20
How Muslims Celebrated EID in Lockdown Britain 2020 - UK - 25th May 20
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

Learn from Geithner and Profit from the Next Big Financial Crisis

Stock-Markets / Credit Crisis 2015 May 14, 2015 - 09:41 PM GMT

By: ...

Stock-Markets

MoneyMorning.com Peter Krauth writes: Former Treasury Secretary Tim Geithner was as close as it gets to the epicenter of the 2008 U.S. financial crisis.

Together with Treasury chief Hank Paulson and Fed boss Ben Bernanke, he presided over the crisis at the Bush administration, which let the conflagration get out of control. He then led the Obama administration's response.


As such, Geithner allowed the country's big banks to become wards of the state (which they are to this day) that can suck up and spit out taxpayer money as they see fit. Banks can make massive bets and, if they lose, no problem – they're financed by the taxpayers.

Geithner "Fit the Shill"

Yes, Basel III and Dodd Frank and MiFID require more capital, but they're all run by regulators who will someday work for banks. Oh, speaking of which….

Geithner's policies set the lending standards that would eventually support the rapacious private equity barons who would hire him, Warburg Pincus, in a tedious example of the government-Wall Street revolving door.

But what is probably worse: he was instrumental in setting the stage for the next crisis which, in his own words, is going to happen.

You can prepare for it. But first a little background…

As a shill for the establishment, Geithner was ideal.

After being anointed an appropriately pedigreed Dartmouth grad, he was groomed by secretive consulting firm Kissinger Associates, then joined the Treasury's International Affairs Department in 1988. Later, he was an attaché at the U.S. Embassy in Tokyo, then after a couple of promotions, became undersecretary of the treasury for International Affairs under Rubin and Summers – the two men who had the most to do with the disastrous dismantling of financial regulation at the end of the Clinton years. Sadly, both of these men appear to have had considerable influence on him.

More famously and more recently, Geithner served as president of the New York Fed and vice chair of the FOMC, working to reduce the capital that banks were required to hold. He had a hand in the rescue and eventual sale of Bear Sterns, and supported Treasury Secretary Hank Paulson when he decided to bail out AIG after allowing Lehman to fail just two days earlier.

During his hearings, Geithner proved unable to pay his taxes, despite using the $50 Quicken program upon which he relied. Nonetheless, despite this clear evidence that he was unfit to oversee the Treasury and the IRS, Geithner was named Treasury Secretary under Obama, succeeding Paulson.

Today, his legacy is littered with financial roadkill.

Geithner oversaw disbursement of $350 billion of the original $700 billion of TARP bank bailout funds Congress passed. Especially controversial were bonuses paid to AIG executives after the company received over $170 billion in bailout money from the federal government.

Worse yet, banks that had AIG insurance contracts against losses were fully paid out even though the market value of those contracts was considerably lower at the time.

During Geithner's confirmation hearings, he claimed the new Obama administration saw China as a currency "manipulator," which of course is not unlike the pot calling the kettle black.

Geithner was outspoken in his opposition to extending the Bush tax cuts for wealthy Americans, thinking that they would sock away rather than spend the savings. Also, Geithner fought hard regarding the fiscal cliff to increase the 2013 debt limit, playing chicken with Republicans over their unwillingness to increase taxes on the wealthy.

But perhaps most frightening of all is what Geithner is saying lately…

Here's Your Safe-Haven Investment

CNBC recently interviewed Geithner. If you haven't seen it, it's worth the watch, if only for an accurate representation of hubris.

The way I see it, Geithner did get one thing right by saying "There's been a tremendous loss of confidence in public institutions and in government." What he fails to acknowledge is that he and his comrades were instrumental in that. He even admits that in the next crisis, the next Treasury Secretary will go back to Congress asking for several hundred billion dollars to bail out the banks.

Seven years after Geithner, Bernanke, and Co. "saved" the global financial system, worldwide debt has exploded from $142 trillion to $200 trillion.

New banking laws were supposed to protect us from "too big to fail" financial institutions, yet banks have merged to become larger than ever. And the nuclear risk of the derivatives bubble has gone essentially unchecked.

Last July, Fed Chief Janet Yellen told IMF head Christine Lagarde that regulating the shadow banking system – hedge funds, private equity, and derivatives – is "…something that is an enormous challenge." "We simply have to expect that when we draw regulatory boundaries, and supervise intensely within them, that there is the prospect that activities will move outside those boundaries and we won't be able to detect them, and if we can, we won't have adequate regulatory tools," Ms. Yellen said. "That is a huge challenge to which I don't have a great answer."

Isn't that reassuring?

In fact, risks to the global financial system have become both more numerous and more intense.

So what will the government do the next time? Will you be better prepared than the last?

Consider that the next crisis could well mean a total crash in faith in fiat money as we know it.

It's frightening to contemplate that our children and grandchildren will read and reflect on the last and the next financial crises with disdain and disgust. They'll wonder how the central planners could have allowed and even encouraged such massive bubbles to inflate, and how we allowed them free rein.

But more importantly, they'll look at the asset classes that will survive those crises, and either thank you for owning them, or wonder why you didn't. And sociopaths like Geithner will be largely to blame.

Gold remains the single best holding to provide such protection. It's the only asset that's spanned millennia to be accepted as money, without simultaneously being someone else's obligation. And for American investors, there's a way to achieve gold exposure offering instant geopolitical diversification with a single purchase. The Sprott Physical Gold Trust (NYSE: PHYS) holds gold bullion that is fully allocated and stored at a secure third-party location in Canada, subject to periodic inspection and audits.

Right now, PHYS shares trade at a -0.35% discount to net asset value. But there are other compelling reasons why PHYS is better than other gold ETFs.

  • No Middle Man: Unlike most gold ETFs, no levered financial institution stands between investors and the physical gold. This means no risk of financial loss in the event of bankruptcy or nationalization of the financial institution.
  • Lower Taxes: U.S. investors who hold shares for at least a year pay capital gains tax at a rate of only 15% versus the 28% rate for most precious metals ETFs and physical gold coins.
  • Ability to Trade in Shares for Physical Gold: Investors who hold a required minimum amount can redeem units for physical gold bullion on a monthly basis. Gold bars can be delivered by the custodian almost anywhere in the world via secure armored transport.

According to Geithner, the next financial crisis won't be like 2008. In that he's also right. It's going to be much worse.

But remember, this isn't rocket science. When the next crisis hits, gold's going to explode higher. It's simply the most solid insurance you could possibly hold. Just ask yourself if you honestly own enough of it before you, your children, and your grandchildren only wish you had.

Source :http://moneymorning.com/2015/05/14/learn-from-geithner-and-profit-from-the-next-big-financial-crisis/

Money Morning/The Money Map Report

©2015 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules