Liquidity Swaps - Another Way Democrats Rip You Off

Watch this video and you'll understand why President Obama is so popular in Europe. You'll also understand why Democrat Congressman Alan Grayson of Florida is OffHisMed's new hero. Watch him as he laughs at one of his own: http://www.youtube.com/watch?v=00ECLxK2YTs.

Regarding the transaction Grayson discusses with the Dark Prince, Democrat Ben Bernanke, a couple month's back the Fed loaned European banks $500 billion in dollars and took Euros in return. European banks used the greenbacks to improve their own balance sheets, then used them to snap up U.S. stocks at bargain basement prices, or loan them to those who would. Meanwhile, $500 billion of Euros molder in our vaults, useless for any purpose, and eventually to be returned to the Europeans banks after they have paid an infinitesimally small interest payment to the Fed, but only after the world economy had been restored to health.

In essence, a group of very bad actors (the Fed) in collusion with the Democrat Party gave your tax dollars to a bunch of Euro Bankers and got nothing in return, so those same Europeans could feast on your recently devalued 401K. And this is but one transfer of wealth to foreigners, the others being hundreds of billions of TARP funds (mostly unaccounted for), the wholesale printing of Trillions of greenbacks, Trillions more in bonds sold to foreign governments and banks, and let us not forget: Cash For Clunkers, which overwhelmingly benefitted Japanese and Korean auto manufacturers.

Not coincidentally, only a few month's after the orgy of giveaways began, Europe declared itself out of the recession, their banks and investment community flush with U.S. cash and U.S. assets. The U.S., meanwhile, remains crippled.

There was an all-too-real example of this malfeasance in the paper yesterday. Guaranty Bank in Texas went bust on Friday, and the FDIC immediately sold them to a Spanish Bank, BBVA. What was interesting were the terms:

- BBVA bought only $12 billion of the $13 billion in loans, which of course means that the U.S. taxpayer gets the $1 billion worth of loans sure to default.

- They took over $11.5 Billion in deposits, meaning they had almost a dollar-for-dollar cash reserve to back the loans on the books.

- Of the remaining $12 billion in loans, the FDIC will cover 80% of all loan losses on the first $2.3 billion, and 95% of the losses on the other $9.7 billion. Essentially, BBVA is on the hook for less than $1 billion of the portfolio.

- Per the FDIC, total losses by taxpayers are estimated at $3 Billion.

So in other words, not only is the Obama Administration loaning tax dollars to foreigners to buy our assets, they're subsidizing virtually all of their losses on their investments until the entire portfolio of loans are paid off and the bank is completely stabilized.

Is there no end to the insanity of Democrats? The net of all of this is that a government-caused recession has been used to destroy thousands of American-owned banks and businesses. The US government responded by giving interest free loans to the rest of the world to get themselves right AND buy America's remaining factories, land, mortgages and whatever other assets remain on the cheap, all courtesy of future generations of American taxpayers.

That said, I am torn as to which is worse, these giveaways to a bunch of foreigners or the giveaway of GM and Chrysler to the U.A.W.

One final note: The original stockholders in the bank were wiped out with this seizure. Why is it, do you suppose, that our government couldn't have offered this sweet deal to them instead of a foreign bank?

But then, that's a rhetorical question. As was proven with the government takeover of the auto companies, American stockholders are not only not a constituency of the Democrat Party, they are the enemy.