http://www.oftwominds.com/blogjuly08/empire-debt7-08.html
http://www.freemarketnews.com/WorldNews.asp?nid=58634
http://news.bbc.co.uk/2/hi/business/7529277.stm
http://www.guardian.co.uk/global/2008/jul/29/merrilllynch.creditcrunch
http://www.msnbc.msn.com/id/25903217/
http://www.thenation.com/doc/20080804/vonhoffman
http://www.rense.com/general82/bank.htm
http://business.timesonline.co.uk/tol/business/industry_sectors/banki...
The Big Bailout: America as a Full-Spectrum Kleptocracy
by William Norman Grigg
by William Norman Grigg
DIGG THIS
Its name somewhat anachronistically means "assembly of old men."
George Washington famously โ and, it must now be admitted, with
excessive optimism โ characterized it as an institutional saucer
intended to cool legislation passed in the intemperate heat of the
moment. Its members demand, with entirely unwarranted self-approval,
to be called, collectively, the World's Greatest Deliberative Body.
Sober observers understand it to be the most corrupt legislative
assembly in human history. To those characterizations of the United
States Senate we must now add another, perhaps the final one:
Gravedigger of the republic.
With the Senate's passage of the Fannie Mae/Freddie Mac bailout last
Saturday (July 26), the United States of America has now become the
world's first full-service kleptocracy, a form of government described
earlier in this space as a government of, by, and for the robbers.
We are supposed to pretend to believe that the Senate, so great was
its anxiety over the nation's economically distressed homeowners, met
in a rare Saturday session for the sole purpose of administering the
balm of Gilead on hardworking families who confront the bleak prospect
of foreclosure.
There may be people who believe such a thing, or at least profess to
do so. They are pretty much the kind of people who believe that peace,
prosperity, and progress will magically ensue after next January 20,
when the Holy One, Barack Obama (peace be upon him) ascends to the
presidency, not astride a White Horse, but rather mounted upon a
flying unicorn that emits healing rainbows from its butt.
No, it's not the travails of the productive that would earn such
attention from the Senate. When the Senate sacrifices so much as a
minute of its down time, it does so not to relieve our burdens, but to
add to them in the interest of their fellow parasites.
When Congress created the Federal Reserve in 1913, it did so in a
lame-
duck session. The Fed's proponents described its handiwork as an
independent entity that would prevent "panics" and maintain the
integrity of our currency and financial system.
The Fed was presented to the public in pseudo-populist drag: It was
supposedly the bane of the big banking interests. This was, in every
particular, a conscious inversion of the truth. The Fed was, is, and
every shall be a product and protector of those interests. It has
practically destroyed the value of US currency, and engineered
numerous financial crises, including the one currently unfolding.
The measure passed last Saturday is being described to the public as a
"homeowner" bailout. It is nothing of the sort. It supposedly creates
an independent oversight mechanism to rein in the excesses of Fannie
and Freddie. This, too, is an unalloyed falsehood.
Let us disambiguate the key issue right now. This is a measure to
nationalize Fannie and Freddie, plundering the population at large โ
through direct taxation, the more insidious tax called inflation, or
both โ to bail out two fascist entities that have been used to enrich
the politically connected super-rich through the most corrupt means
imaginable.
Furthermore, this measure prefigures the eventual nationalization of
the entire financial system under the supervision of an executive
branch official with practically unlimited power to appropriate and
allocate funds without congressional action. OK, sure, he has to file
a report with Congress regarding his expenditures. But this takes
place after the fact, and Congress will be able to do nothing but
complain, if it can bestir itself even to that extent.
Congress has yielded its war powers to the executive branch. It has
now effectively surrendered the power of the purse, as well. What,
then, remains by way of the legislative branch's ability to check the
executive?
Nobody responsible for this is willing to admit that truth; they're
too busy taking refuge in contrived ambiguities.
The figure sent out to pollute headlines and palliate a nervous public
last week was that fixing Fannie and Freddie will cost "at least" $25
billion. That's a bit like saying there are "at least" 25 gallons of
water in Lake Michigan.
The Congressional Budget Office, in an artful display of tactical
equivocation, said that the bailout could cost anything from $100
billion down to "nothing." That latter estimate would be dismissed as
magic thinking were it not a transparent and cynical effort to
propagate such delusion among that part of the public paying attention
to the ongoing economic collapse.
As the Wall Street Journal summarized, the $25 billion figure was
arrived by following a time-honored government accounting algorithm:
Some accountant at the CBO threw a dart at the wall.
In fact, the bailout measure places in the hands of Treasury Secretary
Henry Paulson the discretionary authority to pour as much money into
Fannie and Freddie as he deems necessary. He can extend an unlimited
credit line to either or both of those government-chartered companies;
he can use federal funds to buy shares in either, or both.
There is no limit to what can be spent on the bailout, or the extent
of government involvement it will entail. In his efforts to lobby
congressional Republicans on behalf of the bailout, Paulson reportedly
assured them that he has "no intention" of using those extraordinary
powers. This means, of course, that they will be used immediately. It
also means, inevitably, that Fannie and Freddie will be nationalized,
and that taxpayers will pay the full burden of the bailout.
Senate Republicans โ clap-torn whores, every one of them โ put up a
show of reluctance, perhaps because the White House likes a little
role-playing action of that sort. This meant that Treasury Secretary
Paulson had to convene several meetings with Republicans in order to
pretend to overcome their reluctance to support a measure that will
impecuniate their constituents in order to pay off the imponderably
huge bad debts assumed by politically protected thieves.
The Fannie/Freddie bailout is another example of the familiar equation
behind corporatism (or, to use the more loaded synonym, fascism): The
risks are subsidized, the losses are socialized, and the profits are
privatized.
There are former corporate executives who spend their days looking at
striped sunlight and showing with their backs to the wall for crimes
identical to those of former Fannie CEO Franklin D. Raines and his
comrades. But because Raines and his posse used a Government-Sponsored
Entity to commit their crimes, they're free to enjoy nearly all the
fruits of their fraud.
I find it remarkable that next to nothing has been said by way of
condemning Raines and his fellow corporatist thieves.
Doing so is nearly as unthinkable as permitting those two government-
sponsored companies to fail, as they should.
According to former Treasury Secretary Lawrence Summers, the bailout
wouldn't be necessary if people were willing to do their part by
throwing their money away without the government forcing them to do
so: "Emergency legislation was necessary because market participants
were unwilling to buy Fannie and Freddie's debt; investors doubted
that the government-sponsored enterprises were healthy enough to repay
it and did not draw sufficient reassurance from the implicit guarantee
of federal support." This is why, according to Summers, "Anyone who
cares about the health of the US economy should welcome the ... rescue
plan for Fannie Mae and Freddie Mac...."
Imagine an armed robber lecturing his victim that it wouldn't have
been "necessary" to threaten the victim's life, and the lives of his
family, if they had simply handed over their money on demand, and
you'll have a suitable moral parallel to the statement above.
Eventually โ and for that, read "pretty damn soon" โ the entire daisy-
chain of fraud we call our financial system will devolve into a scene
of violent chaos akin to the denouement of Reservoir Dogs, only
immeasurably bigger and unimaginably bloodier.
Already, the robber's pact holding the system together is starting to
fray, as fractional reserve banks start gagging on each other's IOUs.
Witness the fact that cashier's checks being issued by California's
newly federalized IndyMac bank aren't being honored by other banks:
Customers who cash out of IndyMac are finding that they won't be able
to access their funds for up to two months. It's not difficult to
imagine the impact this will have on households who expected to use
those funds to make mortgage or tax payments, or have other
irrepressible financial needs.
It took roughly a tithe of FDIC's deposit insurance fund to bail out
IndyMac. Last week's bank failures โ First National Bank of Nevada and
Arizona's First Heritage Bank โ involved combined assets of about $3.6
billion.
With Wachovia, Washington Mutual, and many other major banks primed to
blow, the day will soon come when โ in the words of James Kunstler โ
the FDIC will simply "choke and croak on this wad of losses.... When
American depositors get screwed out of their deposits" โ as they
already are; vide the observation above regarding IndyMac's dodgy
cashier's checks โ "the full force of the fiasco will drag the dollar
underwater like the legendary Kraken of old preying on a babe thrown
overboard. Then the forces of darkness will really be loosed."
Last week, Congress went on record regarding its priorities: With a
handful of noble exceptions (conspicuous among them the stalwart Rep.
Ron Paul of Texas), they demonstrated a willingness to ruin what
remains of the dollar and destroy the Middle Class in order to rescue
โ temporarily โ the รผber-rich Robber Class.
The people responsible for this betrayal will be campaigning in their
districts during the coming weeks. It would be instructive to them,
and may be heartening to their victims, to see at least a few of them
on the receiving end of timely and forceful rebukes, delivered in
language โ and other expressive conduct โ appropriate to the occasion,
and prevailing security environment.
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