WolframAlpha is a revolutionary new search engine that computes answers rather than pointing to websites.  The site was officially launched yesterday amid heated talk that it could challenge the might of Google.  The service can compute the distance between two cities, the population of a country, county or city at a specific date and the position of the Space Shuttle at any given moment. The user does not have to search through links provided by the engine; the answer comes immediately and, if appropriate, is accompanied by charts or graphs. What it does that Google, at the moment, cannot do is provide answers to questions that have not been answered already.

"WolframAlpha's long-term goal is to make all systematic knowledge immediately computable and accessible to everyone. We aim to collect and curate all objective data; implement every known model, method, and algorithm; and make it possible to compute whatever can be computed about anything. Our goal is to build on the achievements of science and other systematizations of knowledge to provide a single source that can be relied on by everyone for definitive answers to factual queries."

In a small southern town, the holiday season is in full swing.  It is raining so there is not too much business taking place. Everyone there is heavily in debt.

Luckily, a wealthy tourist arrives in the foyer of the small local hotel. He asks for a room and puts a $100 bill on the reception counter, takes a key and goes to inspect the room located up the stairs on the third floor.

• The hotel owner takes the $100 bill and rushes to his meat supplier to whom he owes $100.
• The butcher takes the money and races to his supplier to pay off his debt.
• The wholesaler rushes to the farmer to pay $100 for pigs he purchased some time ago.
• The farmer gives the $100 bill to a local prostitute who gave him her services on credit.
• The prostitute goes to the hotel where she owed $100 for her hotel room used to entertain clients.

At that moment, the rich tourist comes back down to the reception desk and informs the hotel owner that the room is unsatisfactory.  He takes his $100 bill back and departs.

There was no profit or income. But everyone is now out of debt and the small town’s people look optimistically towards their future.
 

The BAD BANK Bailout Scam

Here’s how the Fed’s latest plan will screw the taxpayers and make billions for banks like Citi, BOA, JPM et al...  (This is simplified on purpose so there's no mention of the investor pool, the FDIC's role or the 1:6 leverage, etc.)

Step 1: Citi creates a new Bad Bank subsidiary-- call it $hiti Bank.  This will be an off-balance-sheet company.

Step 2: Citi then uses $10 billion of TARP funds from the Fed to set up and capitalize $hiti.

Step 3: Citi instructs $hiti to bid on $250 billion dollars of bad assets currently held by Citi. These assets are not worth $250 billion; that is their face value. This means Citi paid $250 billion dollars to buy these assets (Mortgage Backed Securities for example) that turned toxic. The problem is the assets are now only worth $10 billion when marked to market. $hiti would not bid $250 billion dollars for these gems.  No, anyone could tell these ‘misunderstood’ and ‘undervalued’ assets must be worth at least $300 billion dollars when the market turns around.

So $hiti places a bid and ‘wins’ $10 billion worth of assets for $300 billion.

$hiti now needs to come up with $290 billion dollars (remember it only has $10 billion of TARP funds in the game right now) in order to buy Citi's bad assets. This is where the government comes in. Tax-Cheating’ Timmy Geithner's plan will lend the other $290 billion to complete the transaction between Citi and $hiti.

So now at Citi, I make $50 billion dollars of profit as I get $300 billion for assets that were originally worth $250 billion before they became non-performing.   

$hiti does not fair quite so well since the assets it bought are really worth no more than $10 billion dollars when marked to market. So over time the loan the government gave me through Geithner goes bad, and $hiti goes bankrupt. Unfortunately Citi loses its $10 billion ‘investment’ in $hiti.

So to recap. Citi gets to shift $250 billion dollars of turds that are now worth only $10 billion dollars, to you-- the tax payer for $300 billion. Citi gets a $50 billion dollar profit from the sale, and $hiti gives Citi a $10 billion dollar loss. As a result Citi makes $40 billion dollars.  And this will not be a one time scam since Citi doesn’t know which of it’s existing loans will default in the future.  

In reality Citi won't be so blatant as to buy their own assets. They will end up colluding with Bank of America and JP Morgan and other banks, with the help of Geithner, to buy each others' assets. This way it all appears to be legit, while the taxpayer is fleeced for vast sums of money.

Now it’s BONUS time! No wonder the DOW jumped 500 points yesterday when this policy was released…