Wall streetEven the mass media is starting to take notice of the longtime cozy relationship that both the U.S. Treasury Department and the Federal Reserve Bank have with Goldman Sachs, a major Wall Street bank holding company and Democratic Party donor.

billCapital lending firm-turned-bank holding company CIT has patched together another $3 billion private loan to avoid bankruptcy and try to complete the transition to bank holding company.

Federal Reserve Chairman Ben Bernanke is on a public relations offensive to persuade Americans that he has the economy well in hand, and that he has an “exit plan” for the Fed's inflationary monetary policies if consumer prices should start to rise precipitously. Bernanke does see a time when banks are lending more freely, and the fractional reserve system for banks would again put additional inflationary pressure on the economy.

Our politicians in Washington (especially the Obama administration) are following the economic policies of Federal Reserve Chairman Ben Bernanke, who made these economic predictions over the past four years (YouTube Video):

California state capitolOn July 14 California's bond ratings, already the lowest in the nation, took another hit. Moody's Investors Service downgraded $72 billion of the state's general obligation bonds by two steps, from A2 to Baa1. The new rating, just two steps above junk grade, will increase the costs of California's borrowing and deepen the state's financial distress. A few day earlier, Fitch Investors downgraded the state's general obligation bonds from A- to BBB, also two steps above junk grade in its rating system.