Finance Fraud: Buying Back our Future

How the Fed and Wall Street Are Conspiring to Defraud You of Your Wealth Potential

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CARES Act

On March 27, Congress passed the $2 trillion Coronavirus Aid, Relief, and Economic Security Act, which cleverly abbreviates to the CARES Act — the largest economic stimulus bill in modern history, more than double the $831 billion American Recovery and Reinvestment Act of 2009, passed during the Global Financial Crisis (GFC). But, as you will see later one, it might as well have been called the “Who CARES Act.”

The CARES Act appears to spend more on individuals and small businesses than corporations. Still, as this article reveals, Wall Street, corporations and bond traders are set to benefit from $4.5 trillion through a secret hedge fund managed by the Fed and the U.S. Treasury.

Share Buybacks

The airlines are a perfect example of Wall Street excess. The big four U.S. airlines, American, Delta, Southwest and United, have spent $44 billion on share buybacks since 2012. Now they are getting a bailout of $58 billion, paid for by you and me. 😠

  1. Since CEO compensation almost always includes some type of stock deal, higher stock prices mean bigger bonuses.
Boeing Chairman & CEO James McNerney’s compensation after Boeing began its stock buyback program.
Apple’s nearly $240 billion in stock buybacks is just part of a $6 trillion rush by U.S. companies to manipulate their share price.

Bailing Out Wall Street Part 1: TARP

Of course, in many instances, buying shares with company cash was simply not enough for greedy CEOs. That’s when the triumvirate of Fed Chairmen, Ben Bernanke, Janet Yellen and Jerome Powell came in handy. In 2008, the Fed under Bernanke pumped $700 billion to relieve banks of their toxic assets under TARP, the Troubled Asset Relief Program.

BBB bonds, popularly known as “junk” bonds, issued by U.S. corporations, have exploded since the Fed adopted artificially low interest rates.
When one in six public companies is unable to generate a profit due to corporate debt, you know you have a global debt problem.

The Fed CARES, NOT!

The saddest part is that the coronavirus crisis will only re-inflate this market bubble. That’s because the Fed plans to inject trillions more of crack cocaine into the veins of corporations, hedge funds and Wall Street bond traders hoping to backstop their ridiculously greedy behavior.

SEC. 4009. TEMPORARY GOVERNMENT IN THE SUNSHINE ACT RELIEF. (a) IN GENERAL.—Except as provided in subsection 8 (b), notwithstanding any other provision of law, if the Chairman of the Board of Governors of the Federal Reserve System determines, in writing, that unusual and exigent circumstances exist, the Board may conduct meetings without regard to the requirements of section 552b of title 5, United States Code, during the period beginning on the date of enactment of this Act and ending on the earlier of— (1) the date on which the national emergency concerning the novel coronavirus disease (COVID–19) outbreak declared by the President on March 13, 2020 under the National Emergencies Act (50 20 U.S.C. 1601 et seq.) terminates; or (2) December 31, 2020.

Debt: The Everything Bubble

Yet all this liquidity or funds may, or may not, be enough to offset the risk of a global crash, which is leveraged roughly 3-to-1, according to CFO.com. Yes, the global debt-to-GDP ratio hit a new, all-time high of 322% in the third quarter of 2019, with total global debt reaching a staggering $253 trillion. People, I want you to know that all central banks in the world combined do not have sufficient liquidity to backstop that house of cards.

Innovation speaker, futurist, adj. professor at USF, founder of four start-ups, author of “Ubertrends — How Trends And Innovation Are Transforming Our Future.”

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