ITS REALY OVER: Accounting Tweak Could Save Fed From Losses!!?

Accounting Tweak Could Save Fed From Losses


Published: Friday, 21 Jan 2011 | 4:58 PM ET

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By: Reuters

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Concerns that the Federal Reserve could suffer losses on its massive bond holdings may have driven the central bank to adopt a little-noticed accounting change with huge implications: it makes insolvency much less likely.
United States Federal Reserve

The significant shift was tucked quietly into the Fed's weekly report on its balance sheet and phrased in such technical terms that it was not even reported by financial media when originally announced on Jan. 6.
But the new rules have slowly begun to catch the attention of market analysts. Many are at once surprised that the Fed can set its own guidelines, and also relieved that the remote but dangerous possibility that the world's most powerful central bank might need to ask the U.S. Treasury or its member banks for money is now more likely to be averted.
"Could the Fed go broke? The answer to this question was 'Yes,' but is now 'No,'" said Raymond Stone, managing director at Stone & McCarthy in Princeton, New Jersey. "An accounting methodology change at the central bank will allow the Fed to incur losses, even substantial losses, without eroding its capital."
The change essentially allows the Fed to denote losses by the various regional reserve banks that make up the Fed system as a liability to the Treasury rather than a hit to its capital. It would then simply direct future profits from Fed operations toward that liability.
This enhances transparency by providing clearer, more frequent, snapshots of the central bank's finances, analysts say. The bonus: the number can now turn negative without affecting the central bank's underlying financial condition.
"Any future losses the Fed may incur will now show up as a negative liability as opposed to a reduction in Fed capital, thereby making a negative capital situation technically impossible," said Brian Smedley, a rates strategist at Bank of America-Merrill Lynch and a former New York Fed staffer.
"The timing of the change is not coincidental, as politicians and market participants alike have expressed concerns since the announcement (of a second round of asset buys) about the possibility of Fed 'insolvency' in a scenario where interest rates rise significantly," Smedley and his colleague Priya Misra wrote in a research note.



READ THE COMMENTS YOU WILL NOT FIND ONE GOOD ONE

COMMENTS
Brophy | Jan 21, 2011 05:08 PM ET
Accounting tricks do not prevent insolvency.

1. The Fed is monetizing the US debt to keep interest low. Rising interest will hit the debt like a bomb.

2. The US debt is growing, not falling, at present interest of 0.

3. Taxes can never cover the US deficits, let alone the US debt.

4. This fiasco will not end well.

Report Abuse


ELTUT | Jan 21, 2011 05:10 PM ET
there is nothing more American than "creative accounting", anyone in the financial sector and remotely affiliated with gov't will testify to that fact.
the worst that the human race as to offer is in charge of the state, bank on it!
Report Abuse


RenderingPlant | Jan 21, 2011 05:28 PM ET
There is a solution to the problem that could be implemented. If the scenario occurs where the FED places dollars on the Treasury liability ledger, the Treasury will issue United States Notes with a RED SEAL into public circulation. The FED, abhoring competetion, can buy the RED SEAL notes back from the Traesury and have them destroyed. This keeps the FED honest because the U.S. Notes will be in circulation for all to see. The more U.S. Notes the more the FED owes!

Good idea, huh?
Report Abuse


TxChristopher | Jan 21, 2011 05:53 PM ET
Wish I could get my bank to mark negatives in my accounts as "negative liabilities". Can I get that for the next few years please?
Report Abuse


DJSMPS | Jan 21, 2011 05:56 PM ET
I just love the "new normal". I wish my tax bill could be a liability on my neighbor,
Report Abuse


oh-sheet | Jan 21, 2011 05:57 PM ET
Thats nothin.. you should see how many private citizens are gaming the system.. It's how we roll now.. "New Normal" lol it's the madoff effect!
Report Abuse


milehi-bones | Jan 21, 2011 06:11 PM ET
TICK TOCK!!! Why fear the post WWII axis of evil, or Saudi funded Bin Laden robots or the Chinese economic CANCER attacking North America and Western Europe; when we have our own home grown terrorist - Federal Reserve Mafia
Report Abuse


rugby11 | Jan 21, 2011 06:11 PM ET
The shocking thing is the FED actually disclosed it. Kind of reminds me of all the off balance sheet assets/liabilities the big banks hold. Nothing like a big recovery with no transparency!
Report Abuse


oh-sheet | Jan 21, 2011 06:14 PM ET
QE 3 starting to be sculpted and in the pipe line since the stimulus runs out in a few months.. GO FRIGGIN LONG! Now!
Report Abuse


sabra1 | Jan 21, 2011 06:16 PM ET
let's make the rules as we go along! this is all the proof you need, that they have lost all control of this great manipulated ponzi scheme!
Report Abuse

Well the Fed will bankrupt the country, so the country will go broke.

Everyone knows money is debt.

This is exactly what George Soros wants.

Load your guns and barricade your house....cause when the shit hits the fan...believe your gonna be covered in it.


Good luck everyone. Let's hope I see you on the other side....fuck 2012 cause I doubt this country makes it that far. Stock pile money...it makes good fire starter.

you know how there are stories everywhere about 2012



what if the soros types use this already expected calamity whether percieved or not and use it as the best time to unload the upheaval required to create a new world order, what better time than when it is proficided to happen

they know if we cant feed our kids we will do anythin they say to put food in thier mouths

picture it 50 years from now hundreds of advanced preditor type drones over every town and city in every nation in the world making sure the new world order laws are being followed.

corruption will be soon to follow, and more control worldwide

you could literally end up with a World Dictator eventually the likes of Saddam or caligula by creating fear and mistrust through spies and counter spies, static high tech survailance everywhere on a world wide stage like they control north korea and its people. whos to say that kind of lock down couldnt happen but with the whole world and all its peole inside the cage this time,


if we have several different nations like we do now, complete earth control can never happen,


so why would they want to change this dynamic of nations that makes complete human enslavment across the whole earth impossible?




thats the $4 question cuz the answer is so obvious, the question answers itself


COMPLETE WORLD DOMINATION

watch out it's george soros hiding in your closet!!!!



i'm gonna end this circle jerk right now.

george soros has nothing to do with the fed. repeat. george soros has nothing to do with the fed.

and one more thing: other banks do this on a regular basis. Generally Accepted Accounting Principles only go so far. only b/c the FED did it, it has to become some sort of apocalyptic event.... give me a break....

the first few posts of this thread are pretty funny tho...

redivider said:

watch out it's george soros hiding in your closet!!!!



i'm gonna end this circle jerk right now.

george soros has nothing to do with the fed. repeat. george soros has nothing to do with the fed.

and one more thing: other banks do this on a regular basis. Generally Accepted Accounting Principles only go so far. only b/c the FED did it, it has to become some sort of apocalyptic event.... give me a break....

the first few posts of this thread are pretty funny tho...

Click to expand...

lol dude you have no clue what you are talking about if any private bank or you or I as a company tried to do what the fed just did they would put us prison and throw away the key.


what they did is illigal for any private citizen to do because it blatant fraud. its like what ENRON did


man you are wacked out,

I prefer not to argue with Big P...I end up having to read a 40 page long rebuttal. You've been warned.

ZOMG!!!1!!!!!one!!!eleven!!11!!!!!

we're all gonna die!

IXOYE said:

Well the Fed will bankrupt the country, so the country will go broke.

Click to expand...

So Glad I live off the grid.

Check this one out, no mice should be given this power because they will abuse it:


January 24, 2011 10:12 AM
Renewed Push to Give Obama an Internet "Kill Switch"



Posted by Declan McCullagh 52 comments Sen. Joseph Lieberman, I-Conn., right, Republican Sen. Susan Collins, R-Maine,

(Credit: AP Photo/Alex Brandon)

A controversial bill handing President Obama power over privately owned computer systems during a "national cyberemergency," and prohibiting any review by the court system, will return this year.

Internet companies should not be alarmed by the legislation, first introduced last summer by Sens. Joseph Lieberman (I-Conn.) and Susan Collins (R-Maine), a Senate aide said last week. Lieberman, an independent who caucuses with Democrats, is chairman of the Senate Homeland Security and Governmental Affairs Committee.
"We're not trying to mandate any requirements for the entire Internet, the entire Internet backbone," said Brandon Milhorn, Republican staff director and counsel for the committee.

Instead, Milhorn said at a conference in Washington, D.C., the point of the proposal is to assert governmental control only over those "crucial components that form our nation's critical infrastructure."

Portions of the Lieberman-Collins bill, which was not uniformly well-received when it became public in June 2010, became even more restrictive when a Senate committee approved a modified version on December 15. The full Senate did not act on the measure.

The revised version includes new language saying that the federal government's designation of vital Internet or other computer systems "shall not be subject to judicial review." Another addition expanded the definition of critical infrastructure to include "provider of information technology," and a third authorized the submission of "classified" reports on security vulnerabilities.

The idea of creating what some critics have called an Internet "kill switch" that the president could flip in an emergency is not exactly new.

A draft Senate proposal that CNET obtained in August 2009 authorized the White House to "declare a cybersecurity emergency," and another from Sens. Jay

Rockefeller (D-W.V.) and Olympia Snowe (R-Maine) would have explicitly given the government the power to "order the disconnection" of certain networks or Web sites. House Democrats have taken a similar approach in their own proposals.

Lieberman, who recently announced he would not seek re-election in 2012, said last year that enactment of his bill needed to be a top congressional priority. "For all of its 'user-friendly' allure, the Internet can also be a dangerous place with electronic pipelines that run directly into everything from our personal bank accounts to key infrastructure to government and industrial secrets," he said.

Civil libertarians and some industry representatives have repeatedly raised concerns about the various proposals to give the executive branch such broad emergency power. On the other hand, as Lieberman and Collins have highlighted before, some companies, including Microsoft, Verizon, and EMC Corporation, have said positive things about the initial version of the bill.

But last month's rewrite that bans courts from reviewing executive branch decrees has given companies new reason to worry. "Judicial review is our main concern," said Steve DelBianco, director of the NetChoice coalition, which includes eBay, Oracle, Verisign, and Yahoo as members. "A designation of critical information infrastructure brings with it huge obligations for upgrades and compliance."

In some cases, DelBianco said, a company may have a "good-faith disagreement" with the government's ruling and would want to seek court review. "The country we're seeking to protect is a country that respects the right of any individual to have their day in court," he said. "Yet this bill would deny that day in court to the owner of infrastructure."

Other industry representatives say it's not clear that lawyers and policy analysts who will inhabit Homeland Security's 4.5 million square-foot headquarters in the southeast corner of the District of Columbia have the expertise to improve the security of servers and networks operated by companies like AT&T, Verizon, Microsoft, and Google. American companies already spend billions of dollars on computer security a year.

"Declaration of National Cyber Emergency"

The revised Lieberman-Collins bill, dubbed the Protecting Cyberspace as a National Asset Act, works this way: Homeland Security will "establish and maintain a list of systems or assets that constitute covered critical infrastructure" and that will be subject to emergency decrees. (The term "kill switch" does not appear in the legislation.)

Under the revised legislation, the definition of critical infrastructure has been tightened. DHS is only supposed to place a computer system (including a server, Web site, router, and so on) on the list if it meets three requirements. First, the disruption of the system could cause "severe economic consequences" or worse. Second, that the system "is a component of the national information infrastructure." Third, that the "national information infrastructure is essential to the reliable operation of the system."

At last week's event, Milhorn, the Senate aide, used the example of computers at a nuclear power plant or the Hoover Dam but acknowledged that "the legislation does not foreclose additional requirements, or additional additions to the list."

A company that objects to being subject to the emergency regulations is permitted to appeal to DHS secretary Janet Napolitano. But her decision is final and courts are explicitly prohibited from reviewing it.
President Obama would then have the power to "issue a declaration of a national cyberemergency." What that entails is a little unclear, including whether DHS could pry user information out of Internet companies that it would not normally be entitled to obtain without a court order. One section says they can disclose certain types of noncommunications data if "specifically authorized by law," but a presidential decree may suffice.

"No amount of tightening of what constitutes 'critical infrastructure' will prevent abuse without meaningful judicial review," says Berin Szoka, an analyst at the free-market TechFreedom think tank and editor of The Next Digital Decade book. "Blocking judicial review of this key question essentially says that the rule of law goes out the window if and when a major crisis occurs."

For their part, Lieberman and Collins say the president already has "nearly unchecked authority" to control Internet companies. A 1934 law (PDF) creating the Federal Communications Commission says that in wartime, or if a "state of public peril or disaster or other national emergency" exists, the president may "authorize the use or control of any...station or device."

In congressional testimony (PDF) last year, DHS Deputy Undersecretary Philip Reitinger stopped short of endorsing the Lieberman-Collins bill. The 1934 law already addresses "presidential emergency authorities, and Congress and the administration should work together to identify any needed adjustments to the act," he said, "as opposed to developing overlapping legislation."
This article was originally posted on CNET










we are dim Wits, Laughing stocks


Chinese Pianist Played Anti-American Propaganda Tune at White House?


WASHINGTON -- Chinese-born pianist Lang Lang gave a musical shout out to America-hating patriots in his homeland when he played at the White House state dinner last week.

During his performance, Lang tinkled the ivories with the famous anti-American propaganda tune "My Motherland" -- the theme song from the Chinese-made Korean War movie "Battle on Shangangling Mountain."

Chinese President Hu Jintao, the guest of honor at the dinner, surely recognized the melody. The song has been a favorite anti-American propaganda tool for decades.
Lang apparently knew exactly what he was playing.

A White House spokesman declined to comment on the song selection, instead directing questions about Lang's performance to the National Security Council staff, which was not available to comment.

The 1956 film "Battle on Shangangling Mountain" depicts Chinese troops pinned down under enemy fire on the mountain. Then reinforcements arrive and the troops attack the US soldiers, whom the Chinese refer to as "jackals."

The song Lang played in front of Hu and President Obama includes the verse: "When friends are here, there is fine wine/But if the jackal comes/What greets it is the hunting rifle."
Lang said in a TV interview that he played the song to reflect Chinese pride.

"I think playing the tune at the White House banquet can help us, as Chinese people, feel extremely proud of ourselves and express our feelings through the song," he told the Chinese network Phoenix TV.

"I think it's especially good. Also, I like the tune in and of itself. Every time I hear it, I feel extremely moved."

Lang, who performed for the state-dinner music program that the White House billed as "quintessentially American," was more blunt in a blog.

"Playing this song praising China to heads of state from around the world seems to tell them that our China is formidable, that our Chinese people are united; I feel deeply honored and proud," Lang wrote, according to a report by Epoch Times.

The anti-US musical interlude at the White House touched off some patriotic chest-thumping on Chinese blogs.

"Those American folks very much enjoyed it and were totally infatuated with the melody!!! The US is truly stupid!!" wrote one blogger.





check this link out i cant tall if hes dissin obama or what, is he dissing him?

DrudgeReport.com claimin hes mocking obama

Packer mocks Obama...


[youtube]CqRgzzkTo8M[/youtube]

Big P said:

Check this one out, no mice should be given this power because they will abuse it:


January 24, 2011 10:12 AM
Renewed Push to Give Obama an Internet "Kill Switch"





Posted by Declan McCullagh 52 comments

Sen. Joseph Lieberman, I-Conn., right, Republican Sen. Susan Collins, R-Maine,

(Credit: AP Photo/Alex Brandon)

A controversial bill handing President Obama power over privately owned computer systems during a "national cyberemergency," and prohibiting any review by the court system, will return this year.

Internet companies should not be alarmed by the legislation, first introduced last summer by Sens. Joseph Lieberman (I-Conn.) and Susan Collins (R-Maine), a Senate aide said last week. Lieberman, an independent who caucuses with Democrats, is chairman of the Senate Homeland Security and Governmental Affairs Committee.
"We're not trying to mandate any requirements for the entire Internet, the entire Internet backbone," said Brandon Milhorn, Republican staff director and counsel for the committee.

Instead, Milhorn said at a conference in Washington, D.C., the point of the proposal is to assert governmental control only over those "crucial components that form our nation's critical infrastructure."

Portions of the Lieberman-Collins bill, which was not uniformly well-received when it became public in June 2010, became even more restrictive when a Senate committee approved a modified version on December 15. The full Senate did not act on the measure.

The revised version includes new language saying that the federal government's designation of vital Internet or other computer systems "shall not be subject to judicial review." Another addition expanded the definition of critical infrastructure to include "provider of information technology," and a third authorized the submission of "classified" reports on security vulnerabilities.

The idea of creating what some critics have called an Internet "kill switch" that the president could flip in an emergency is not exactly new.

A draft Senate proposal that CNET obtained in August 2009 authorized the White House to "declare a cybersecurity emergency," and another from Sens. Jay

Rockefeller (D-W.V.) and Olympia Snowe (R-Maine) would have explicitly given the government the power to "order the disconnection" of certain networks or Web sites. House Democrats have taken a similar approach in their own proposals.

Lieberman, who recently announced he would not seek re-election in 2012, said last year that enactment of his bill needed to be a top congressional priority. "For all of its 'user-friendly' allure, the Internet can also be a dangerous place with electronic pipelines that run directly into everything from our personal bank accounts to key infrastructure to government and industrial secrets," he said.

Civil libertarians and some industry representatives have repeatedly raised concerns about the various proposals to give the executive branch such broad emergency power. On the other hand, as Lieberman and Collins have highlighted before, some companies, including Microsoft, Verizon, and EMC Corporation, have said positive things about the initial version of the bill.

But last month's rewrite that bans courts from reviewing executive branch decrees has given companies new reason to worry. "Judicial review is our main concern," said Steve DelBianco, director of the NetChoice coalition, which includes eBay, Oracle, Verisign, and Yahoo as members. "A designation of critical information infrastructure brings with it huge obligations for upgrades and compliance."

In some cases, DelBianco said, a company may have a "good-faith disagreement" with the government's ruling and would want to seek court review. "The country we're seeking to protect is a country that respects the right of any individual to have their day in court," he said. "Yet this bill would deny that day in court to the owner of infrastructure."

Other industry representatives say it's not clear that lawyers and policy analysts who will inhabit Homeland Security's 4.5 million square-foot headquarters in the southeast corner of the District of Columbia have the expertise to improve the security of servers and networks operated by companies like AT&T, Verizon, Microsoft, and Google. American companies already spend billions of dollars on computer security a year.

"Declaration of National Cyber Emergency"

The revised Lieberman-Collins bill, dubbed the Protecting Cyberspace as a National Asset Act, works this way: Homeland Security will "establish and maintain a list of systems or assets that constitute covered critical infrastructure" and that will be subject to emergency decrees. (The term "kill switch" does not appear in the legislation.)

Under the revised legislation, the definition of critical infrastructure has been tightened. DHS is only supposed to place a computer system (including a server, Web site, router, and so on) on the list if it meets three requirements. First, the disruption of the system could cause "severe economic consequences" or worse. Second, that the system "is a component of the national information infrastructure." Third, that the "national information infrastructure is essential to the reliable operation of the system."

At last week's event, Milhorn, the Senate aide, used the example of computers at a nuclear power plant or the Hoover Dam but acknowledged that "the legislation does not foreclose additional requirements, or additional additions to the list."

A company that objects to being subject to the emergency regulations is permitted to appeal to DHS secretary Janet Napolitano. But her decision is final and courts are explicitly prohibited from reviewing it.
President Obama would then have the power to "issue a declaration of a national cyberemergency." What that entails is a little unclear, including whether DHS could pry user information out of Internet companies that it would not normally be entitled to obtain without a court order. One section says they can disclose certain types of noncommunications data if "specifically authorized by law," but a presidential decree may suffice.

"No amount of tightening of what constitutes 'critical infrastructure' will prevent abuse without meaningful judicial review," says Berin Szoka, an analyst at the free-market TechFreedom think tank and editor of The Next Digital Decade book. "Blocking judicial review of this key question essentially says that the rule of law goes out the window if and when a major crisis occurs."

For their part, Lieberman and Collins say the president already has "nearly unchecked authority" to control Internet companies. A 1934 law (PDF) creating the Federal Communications Commission says that in wartime, or if a "state of public peril or disaster or other national emergency" exists, the president may "authorize the use or control of any...station or device."

In congressional testimony (PDF) last year, DHS Deputy Undersecretary Philip Reitinger stopped short of endorsing the Lieberman-Collins bill. The 1934 law already addresses "presidential emergency authorities, and Congress and the administration should work together to identify any needed adjustments to the act," he said, "as opposed to developing overlapping legislation."
This article was originally posted on CNET










we are dim Wits, Laughing stocks


Chinese Pianist Played Anti-American Propaganda Tune at White House?


WASHINGTON -- Chinese-born pianist Lang Lang gave a musical shout out to America-hating patriots in his homeland when he played at the White House state dinner last week.

During his performance, Lang tinkled the ivories with the famous anti-American propaganda tune "My Motherland" -- the theme song from the Chinese-made Korean War movie "Battle on Shangangling Mountain."

Chinese President Hu Jintao, the guest of honor at the dinner, surely recognized the melody. The song has been a favorite anti-American propaganda tool for decades.
Lang apparently knew exactly what he was playing.

A White House spokesman declined to comment on the song selection, instead directing questions about Lang's performance to the National Security Council staff, which was not available to comment.

The 1956 film "Battle on Shangangling Mountain" depicts Chinese troops pinned down under enemy fire on the mountain. Then reinforcements arrive and the troops attack the US soldiers, whom the Chinese refer to as "jackals."

The song Lang played in front of Hu and President Obama includes the verse: "When friends are here, there is fine wine/But if the jackal comes/What greets it is the hunting rifle."
Lang said in a TV interview that he played the song to reflect Chinese pride.

"I think playing the tune at the White House banquet can help us, as Chinese people, feel extremely proud of ourselves and express our feelings through the song," he told the Chinese network Phoenix TV.

"I think it's especially good. Also, I like the tune in and of itself. Every time I hear it, I feel extremely moved."

Lang, who performed for the state-dinner music program that the White House billed as "quintessentially American," was more blunt in a blog.

"Playing this song praising China to heads of state from around the world seems to tell them that our China is formidable, that our Chinese people are united; I feel deeply honored and proud," Lang wrote, according to a report by Epoch Times.

The anti-US musical interlude at the White House touched off some patriotic chest-thumping on Chinese blogs.

"Those American folks very much enjoyed it and were totally infatuated with the melody!!! The US is truly stupid!!" wrote one blogger.





check this link out i cant tall if hes dissin obama or what, is he dissing him?

DrudgeReport.com claimin hes mocking obama

Packer mocks Obama...


[youtube]CqRgzzkTo8M[/youtube]

Click to expand...

an independent and a republican are pushing a bill.... let's make that clear. it's not democrats. it's an INDEPENDENT AND A REPUBLICAN.

it's possible to appreciate art without trying to make it into an international incident. it's a kid playing a tune that happens to be very dear to the chinese culture. he's playing the piano, not killing americans, it's not the same thing and stop trying to make it the same thing....

i think you should use that brain, or lack there of, to pay attention to real issues. Russia was just 'terrorized'. maybe they'll take up the war on terror and give us a chance to rebuild our own country.....

I dont care who is pushing the bill my friend the bill sucks



art is one thing, me walking into a nice jewish familiy's house for a meal in my honour, then me playing an old nazi tune on thier stereo is called disrespect. if You let people disrespect you, you become thier bitch.


you have a lot to learn son.

Big P said:

I dont care who is pushing the bill my friend the bill sucks



art is one thing, me walking into a nice jewish familiy's house for a meal in my honour, then me playing an old nazi tune on thier stereo is called disrespect. if You let people disrespect you, you become thier bitch.


you have a lot to learn son.

Click to expand...

it's not the same thing. the chinese have never rounded up americans and exterminated them....

it's art, it comes from different places in the world and means different things to different people. maybe that tune which you swear is a battle anthem wishing death on americans is really a modern take on an ancient piece of cherished chinese heritage.... it really shouldn't matter to people like you and me, i'll let scholars and specialists in humanities and anthropology argue about that in published journals....

its not always about geo-political implications. and sometimes, there aren't any....

the geo-political implications of a chinese music student playing piano in the white house shouldn't even be a talking point. there is no geo-political implication, it's just alarmists blowing shit out of proportion for the sake of lunacy.

i have nothing to learn, because what you have to teach and what you are ultimately full of is what i will respectfully call BULLSHIT.

and i am not your son... wayy to smart for that...