Commercial Paper Funding Facility (CPFF) – WTF?
Allison Bricker
“Would you like fries with that unsecured loan?” This may not be too far off from reality now that the Federal Reserve has stepped in and decided to become the preferred drive-up ATM of multinational corporations. The Federal Reserve has done such, due to Wall Street investment banks and global central banks utterly refusing to extend anymore of these loans, a.k.a Credit Crunch.
Yes, fellow readers, the Federal Reserve, under Section 13: Sub-Section 3 of the Federal Reserve Act (1913/Amended)1, has decided to set up the Commercial Paper Funding Facility. The what you ask? Well let us see what the Federal Reserve says in its press release dated October 7th, 2008.2
* Green text denotes my attempt to decipher the double-speak legalese that follows.)
By eliminating much of the risk (i.e. bypassing the free market) that eligible issuers (private investment banks) will not be able to repay investors (your 401k) by rolling over (extending credit limit, delaying repayment) their maturing commercial paper obligations, this facility (the FED) should encourage investors to once again engage in term lending (more credit, more debt, more credit) in the commercial paper market. Added investor demand should lower commercial paper rates (interest rates) from their current elevated levels (free-market check/balance forcing interest rates high meant to stop businesses reliance on the endless cycle of debt to pay bills) and foster issuance of longer-term commercial paper.(bunches of more credit not due until a future generation and hey who cares we’ll all be dead) An improved commercial paper market will enhance the ability of financial intermediaries to accommodate the credit needs of businesses and households (perpetuating the addiction to debt and living beyond one’s means).
If this makes your head spin, let us just sum it up this way. “Commercial Paper” is an I.O.U written by Multi-National Corporation A, sold to Wall Street investment bank/global central banks for large sums of money so Multi-National Corporation A can pay its bills and employees. All this money is loaned from Wall Street investment bank/global central banks solely based on a promise to repay; backed up by no real asset, i.e. a factory, a cement truck, etcetera. Most of the time however, instead of demanding repayment of the loan, the investment bank merely rolls over the debt to be repaid at a later time with a higher rate of return and then stuffs them into their clients mutual funds and other crafty Wall Street “security instruments”. Therefore in no time at all, a promise to repay $100 million becomes $150 million to $250 million and so on and so on.
So now that we know what “Commercial Paper” is, let us look at how the Federal Reserve will “fix” this problem. With the purchasing of Commercial Paper paper being refused by the banks, the Federal Reserve has put on its super hero cape (made from the finest Chinese silk, funded by the taxpayer of course) and has offered to buy up these I.O.U’s for companies the Fed decide “worthy”. This effectively puts the Federal Reserve in a god-like position to determine which businesses survive while other businesses fail.
Don’t you just love the smell of a predatory market shell game in the morning? We shall see the set up for mid to large sized Main Street/regional businesses to be absorbed into multi-national conglomerates or deemed a possible upstart competitor and thus allowed to fail.
Fellow readers, the international banking cartel cares not about Main Street. The Plutocrats who reside as the Secretary of the Treasury and Federal Reserve’s 7 member Board of Governors (appointed by President of the United States, confirmed by Senate) are solely concerned with amassing and consuming as much for themselves, the rest of us be damned. We must realize they look at us with scorn as parasites to be used up like any other commodity, you know, “human resources”.
Fellow readers, please do this very sleepy blogger a favor and do not misconstrue the aforementioned as Capitalism nor any semblance of a Free Market. It is the power brokers practicing their brand of Greediocracy. Let us do all we can to speak clearly, loudly, and in stark opposition to allowing these criminals to bypass the Constitution and amass any more power on their insidious march towards Feudalism 2.0
Source(s):1http://www.federalreserve.gov/aboutthefed/section13.htm •
2http://www.federalreserve.gov/newsevents/press/monetary/20081007c.htm
