Now this is a guaranteed rape job.

In a short conversation this noontime that CNBC apparently has omitted from their archives (Why’s that folks?) Rick Santelli was talking about a potential to effectively force money into the Treasury market.

Where would they get this?

From your 401k and IRA accounts!

From Businessweek:

The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry, who are spearheading the effort.

Let me tell you what this is – it is an attempt to prevent the collapse of the Treasury market!

Forcing people into Treasuries as an “annuity” is exactly what Social Security allegedly is. Except that Treasury stole the money that was collected in FICA taxes and spent it!

Guess what? They’ll do that here too – you’re going to “invest” in Treasuries which of course are effectively a CALL option on the future taxing ability of the government.

The problem is that with an aging population and the immigrant problem (illegal immigrants that is), along with offshoring, the aggregate wage base will drop and thus this is the most dangerous investment of all!

What’s even worse is that the government has intentionally suppressed Treasury yields during this crisis (and will keep doing so by various means, including manipulating the CPI – the “inflation index” – as they have for the last 30 years) so as to guarantee that you lose over time compared to actual purchasing power.

THIS HAS BEEN THE CASE SINCE THE 1980s AND IT WILL NOT CHANGE!

I have been talking about this for quite some time and recall writing a Ticker on it a year or more ago, although I can’t find the entry immediately.

Let me be clear:

I have no quarrel with the government mandating that you have a choice in your IRA or 401k account to buy short-duration Treasuries – much like the “G” fund that government and civil-service workers have.

But – “choices” have a funny way of turning into mandates, and this looks to me like a raw admission that Treasury knows it will not be able to sell its debt in the open market – so they will effectively tax you by forcing your “retirement” money to buy them!

This may be the only way for Treasury to hold down interest rates to something reasonable in the intermediate term, but doing so will instantaneously remove a major source of funding for the stock market – that is, the monthly and quarterly inflows from retirement accounts.

You can bet this won’t be good for you, the ordinary American.

You can also bet that once such an “option” is made available there is a very high probability of the government doing things that either promote or simply don’t stand in the way of another stock market crash as a means of “herding” your money into Treasuries – so they can blow it – all under the guise of being allegedly “safe”.

Of course this begs the question – what if the government can’t pay down the road when you retire, just as they can’t pay on a forward basis with Social Security and Medicare?

This “proposal” can only mean one thing – The Treasury smells smoke. Maybe you should pay attention to what they’re huffing!

And before you say “oh they’d never do that” I want you to read this:

Here is a warning to us all. The Argentine state is taking control of the country’s privately-managed pension funds in a drastic move to raise cash.

My fear is that governments in the US, Britain, and Europe will display similar reflexes. Indeed, they have already done so. The forced-feeding of banks with fresh capital – whether they want it or not – and the seizure of the Fannie/Freddie mortgage giants before they were in fact in trouble (in order to prevent a Chinese buying strike of US bonds and prevent a spike in US mortgage rates), shows that private property can be co-opted – or eliminated – with little due process if that is required to serve the collective welfare.

Any questions?

PS: If the video shows up I’ll update this ticker…. and if you’re wondering what hammered the dollar starting at about 9:00 today, this is probably it. Such a “move” would free the government to further abuse the issuance of Treasuries rather than take necessary austerity steps and places us even further down the road toward a political and economic collapse.

From a recent op-ed column written by J.P. Morgan CEO, Jamie Dimon:

Our company, J.P. Morgan Chase, employs more than 220,000 people, serves well over 100 million customers, lends hundreds of millions of dollars each day and has operations in nearly 100 countries. And if some unforeseen circumstance should put this firm at risk of collapse, I believe we should be allowed to fail. As Treasury Secretary Timothy Geithner recently put it, “No financial system can operate efficiently if financial institutions and investors assume that government will protect them from the consequences of failure.” The term “too big to fail” must be excised from our vocabulary.

But ending the era of “too big to fail” does not mean that we must somehow cap the size of financial-services firms. Scale can create value for shareholders; for consumers, who are beneficiaries of better products, delivered more quickly and at less cost; for the businesses that are our customers; and for the economy as a whole. Artificially limiting the size of an institution, regardless of the business implications, does not make sense. The goal should be a regulatory system that allows financial institutions to meet the needs of individual and institutional customers while ensuring that even the biggest bank can be allowed to fail in a way that does not put taxpayers or the broader economy at risk.

It never, ever ends, does it?

The solution is very simple, but you will notice that Jamie doesn’t bring it up. That’s because he finds it unacceptable.

What’s that solution?

Prohibit as a matter of Federal Law, and enforce it vigorously under pain of immediately dissolution, THE LENDING OF MONEY UNSECURED THAT EXCEEDS THE FIRM’S CAPITAL.

This is in fact the only way you can both end “too big to fail” and not constrain size or influence.

It is also the definition of sound lending.

It is also how lending was done prior to the banksters corrupting the government and literally usurping the sovereign credit of The United States.

As we have seen clearly over the last several years, financial institutions, including those not considered “too big,” can pose serious risks for our markets because of their interconnectivity. A cap on the size of an institution will not prevent that risk. Properly structured resolution authority, however, can help halt the spread of one company’s failure to another and to the broader economy.

A requirement that you hold one dollar of actual capital for each dollar of unsecured obligation you have, marked to market nightly, absolutely prevents this risk.

That actual excess capital can be lost but there can be no systemic bleed-through as your capital then backs your bets in each and every instance.

While the strategy of artificial limits may sound simple, it would undermine the goals of economic stability, job creation and consumer service that lawmakers are trying to promote. Let’s be clear: Banks should not be big for the sake of being big. Moreover, regardless of a company’s size, it must be well managed. As we’ve seen in many industries, companies that grow for the sake of growth or that expand into areas outside their core business strategy often stumble. On the other hand, companies that build scale for the benefit of their customers and shareholders more often succeed over time.

Then prove it by putting your own capital at risk in each and every unsecured lending transaction. For each loan you write where the collateral is worth less than the outstanding amount of the loan, at any point in time, hold one dollar of your own capital as security against that loan’s default and the bleed-through effects on the economy.

And it’s not just multinational corporations that rely on such a large scale. J.P. Morgan Chase and others supply capital to states and municipalities as well as to firms of all sizes. Smaller banks play a vital role in our nation’s economy, too — but a fragmented banking system cannot always provide the level of service, breadth of products and speed of execution that clients often need. Capping the size of American banks won’t eliminate the needs of big businesses; it will force them to turn to foreign banks that won’t face the same restrictions.

Yes, and JP Morgan/Chase will allegedly bribe states and municipalities (aka Jefferson County Alabama) to “obtain” that business and earn a 400% profit beyond the market rate too. Yes, I know, you didn’t admit guilt in the “settlement”, but you did pay $75 million and forfeit another half-billion+ in termination fees. Is it “usual and customary” for your company to pay nearly three quarters of a billion dollars in forfeits and fines when you did nothing wrong? Our states and municipalities would be far better off without your firm’s “services.”

Global economic growth requires the services of big financial firms. It also requires that big financial firms be allowed to fail.

ONE DOLLAR OF CAPITAL FOR EACH DOLLAR OF UNSECURED LENDING, MARKED TO MARKET NIGHTLY.

A one-sentence Bill that, were it to become law, would instantly end “too big to fail” and yet let you grow as large as you’d like – provided you are gambling with your own money and not the sovereign credit of The United States.

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