NAOMI KLEIN: Well, there’s a few elements now that are being described as illegal that we’re finding out. First of all, the equity deals that were negotiated with the largest banks and also some smaller banks, representing $250 billion worth of the bailout money, this is the deal to inject equity into the banks in—to inject capital into the banks in exchange for equity. The idea was to address the so-called credit crunch to get banks lending again. The legislation that enabled this was quite explicit that it had to encourage lending. Barney Frank, who was one of the architects of that legislation, has said that it violates the act if the money is not going to that purpose and is instead going to bonuses, is instead going to dividends, going to salaries, going to mergers. He said that violates the acts, i.e. it’s illegal. But what we know is that it’s going precisely to those purposes. It is going to bonuses. It is going to shareholders. And it is not going to lending. The banks have been quite explicit about this. Citibank has talked about using the money to buy other banks.
I agree with Mike Ruppert that if you were able to obtain a list of the companies granted a reporting exemption by Negroponte and if you were able to obtain a list of the companies Paulson is doling out money to and you placed the lists side-by-side, I bet they'd line up quite nicely. -AR]
Nov. 12 (Bloomberg) — House Republican leader John Boehner (pictured right) called for the Federal Reserve to disclose the recipients of almost $2 trillion of emergency loans from American taxpayers and the troubled assets the central bank is accepting as collateral.
Boehner, in a prepared statement, also asked the Federal Reserve to comply with a Freedom of Information Act request seeking details about the loans.
The Fed “should comply with this Freedom of Information Act request, and in the interest of full and fair disclosure, they must begin providing lawmakers and taxpayers all information about how they are using federal tax dollars,” Boehner said.
Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency in a $700 billion bailout of the banking system. Two months later, as the Fed lends far more than that in separate rescue programs that didn’t require approval by Congress, there is little disclosure about how the programs are being implemented.
Bloomberg News requested details of the Fed lending under the U.S. Freedom of Information Act and filed a federal lawsuit Nov. 7 seeking to force disclosure.
For my two loyal readers out there, this is going to be my last post for a while. I need to read less news and focus more on happy things like cooking and planning next years garden. If you were reading this blog near June’s end you would have had a 3-month advanced notice of the crash so hopefully you were able to leverage that information. I suspect we’ll see the DJI bottom in the next 3-6 months landing somewhere between $3,000 to $6,000. Unemployment is going to go way up and crime with it. If you live in the city, this my be a nice time to think about moving to the country and starting a farm. Hyperinflation is on the way.
[Comment: Paul Hodes is one of the few voices in Congress working for the benefit of many. It is for this story and others we should work to see him re-elected on November 4, 2008 --AR]
Oct 16, 2008
Dear Fellow Granite Stater,
I want to give you a quick update on some of the things that I’ve been working on for you in the past few weeks.
Demanding Accountability from AIG
I was troubled by the recent reports of improper spending at American International Group. Just one week after the federal government rescued AIG, the company’s executives spent over $400,000 on a meeting at a luxury resort. This money was spent on meals and spa treatments and, on the day that the federal government announced it would provide billions more in support for AIG, the company said it would be holding another lavish event.
As taxpayers’ funds keep AIG in business, it is simply intolerable that the company would spend families’ hard-earned money in such a reckless fashion. Millions of Americans have had to forego a family vacation this year because of high gas prices and tough economic times. Why should Granite Staters foot the bill for AIG executives who spend taxpayer money on resorts and spas? I wrote to Treasury Secretary Paulson and Federal Reserve Chairman Bernanke demanding that the executives reimburse the federal government for the unnecessary expenses.
I also called for effective and comprehensive oversight for AIG and any firm receiving federal government assistance, including those that will receive assistance under the recent Emergency Economic Stabilization Act. Although I did not support the bailout, I’m going to work hard to ensure that taxpayers’ money is spent in a responsible manner. I will continue to fight for stricter regulation and oversight of the financial firms on Wall Street.
The press lauds Mr. Bernanke as “a student of the Great Depression.” If he were, he should know that what led to the 1929 collapse were harsh U.S. Government creditor policies toward its World War I Allied governments. This created a situation where the Federal Reserve had to provide easy credit to hold interest rates artificially low so as to encourage U.S. investors to lend to Britain and Germany, which would use these dollar inflows to pay their Inter-Ally arms and reparations debts. Mr. Bernanke’s predecessor, Alan Greenspan, promoted easy credit simply for ideological reasons, to enrich Wall Street by enabling it to sell more debt.
A student of the Great Depression would understand the conflicts of interest between retail commercial banking and wholesale investment banking and money management that led Congress to pass the Glass-Steagall Act in 1933 – conflicts unleashed once again when Pres. Clinton backed then-Fed Chairman Alan Greenspan and Republican leader (and McCain hero) Senator Phil Gramm in leading the repeal of this act, opening up the floodgates to today’s financial double-dealing that has cost the American economy so much.
If Mr. Bernanke does know this history, his behavior is simply that of an opportunistic student of the art of political self-advancement, toadying to Wall Street in campaigning for one last great rip-off before the Bush Administration goes out of business. The Fed has given Wall Street newly minted Treasury bonds, added to the national debt out of thin air. It has done this without feeling any need to rationalize it by drawing absurd public-relations pictures about how the government may “make a profit for taxpayers.”
Nuclear-armed Pakistan is bleeding foreign reserves at an alarming rate leading to fears that it could default on its loans.
There are mounting fears that Ukraine, Kazakhstan, and Argentina could all now slide into a downward spiral towards bankruptcy, while western banks exposed to property bubble across Eastern Europe have seen their share price crushed.
The markets are pricing an 80pc risk that Ukraine will default, based on five-year credit default swaps (CDS) – an insurance policy on a country being able to pay its debts.
Oct. 13 (Bloomberg) — After a four-year spending spree, Icelanders are flooding the supermarkets one last time, stocking up on food as the collapse of the banking system threatens to cut the island off from imports.
“We have had crazy days for a week now,” said Johannes Smari Oluffsson, manager of the Bonus discount grocery store in Reykjavik’s main shopping center. “Sales have doubled.”
Bonus, a nationwide chain, has stock at its warehouse for about two weeks. After that, the shelves will start emptying unless it can get access to foreign currency, the 22-year-old manager said, standing in a walk-in fridge filled with meat products, among the few goods on sale produced locally.
Submitted by cpowell on Fri, 2008-10-10 01:31. Section: Daily Dispatches
9:15p ET Thursday, October 9, 2008
Dear Friend of GATA and Gold:
24hGold has added an interesting little feature — a mechanism that converts numercial values in U.S. dollars, euros, British pounds, Australian dollars, Japanese yen, Canadian dollars, and Swiss francs to either current values in gold and silver or to gold and silver values on past dates. The converter seems likely to have any number of uses. First it might help masochists calculate how much better off they would be if they had simply purchased coins or bullion and put them under their bed instead of purchasing mining shares. But over the next few weeks the converter also might help central banks figure out how high they would need gold and silver prices to be for their gold reserves to give the necessary backing to their sagging currencies. You can find 24hGold’s converter here:
This move, announced today, is absolute confirmation for me that this is an intentioned shut down of the economy. Each bank or financial institution that the Treasury buys into will give it (and Goldman Sachs) the power to shut each bank down and to decide when it shuts down. It couldn’t be more transparent. They’re going to turn out the lights in an orderly fashion and it’s obviously an attempt at a controlled fast crash. They’ve only got three months left in office. That would essentially make Barack Obama an economic janitor employed by the same firm. I can just hear Bush and Cheney cracking a joke about it.
MCR
c. 5 P.M. EST
UNDERSTANDING FRIDAY, Oct. 10th, 2008 — NO CAPITULATION AND WORRIES ABOUT THE ELECTION
[DISCLAIMER:
From here on out I will write under the assumption that those who read me are familiar with Rubicon, the FTW site and its archives, and my videotapes. I'll assume that you already know what GATA is and that you understand all of my/our previous work on gold, intelligence agencies and economics. The reason for that is that I am, and will always be, most loyal and responsive to the thousands --perhaps tens of thousands -- who have been with me and the FTW gang for years. I cannot and will not go back and rewrite what I spent years writing and waste the time or focus of those who just need/want to hear what my inisghts are today. We just don't have time to waste. For those willing to do a little homework, the FTW acrhives are there and available. The easiest thing to do is to go to the FTW search engine (not a great one) and, under Search Options select "Find exact phrase". Then enter whatever terms or subjects that we use here andyou will find a quick-study course to help bring you up to speed. --MCR]
Bear in mind that everything that happened today happened in absolute silence about Citigroup. The latest there is that there is supposed to be a court hearing next week about a suit Citi may bring against Wells and Wachovia. Meantime, Citigroup has waived all claims to acquiring any of Wachovia’s assets (cash deposits). My suspicion is that out of fear Citi is hanging back for any kind of discussion about its stability. Then again, they just might be waiting for the right moment to break the bad news to achieve the worst effect: capitulation. Citigroup is in a worse position than it was two weeks ago. It is still heavily weighed by bad mortgage debt and “bailout options” are becoming an endangered species, especially when Citigroup would be the biggest bailout ever — by a wide margin. The seemingly blessed AIGwas/is nowhere near as big, especially in terms of impact.
VOLATILITY –
I have never seen such a volatile market as I saw today. I saw (maybe there were more) no less than eight swings back and forth between positive and negative in the Dow. Five of them were in the last hour of trading. Up by a hundred then down 800. Then back up to even. Then back down again to -600. And then back and forth by 200-300 pts five times. A key moment, when the Dow was down by 600+ was a sudden drop in the price of gold by around $50 an ounce — out of nowehere. When that happened, the 600 point loss evaporated to 128 or so points. The continuing blatant manipulation in gold prices is so obvious as to be ludicrous. It is sucking the last bits of cash out there into the markets. GATA has been right all along and I have said so consistently for many years. The panicked sheep who have been”looking at” gold (late, but not too late) will hesitate and leave their money in stocks, blindly believing we have hit the bottom on Wall Street.
There is no bottom until there is CAPITULATION. Today’s volatility was anything but CAPITULATION. It looks to me like the violent, last-gasp throes before death which I have seen before in real life.
Capitulation is when the market hits a bottom and just stays there…for days and weeks. When there are no signs of struggle or life. No heartbeat. No thrashing.
When the Citigoup bomb is going to drop is anybody’s guess but I just don’t see how we can go through next week without major media starting to ask questions on the air and in print.
I repeat that the U.S. government is doing everything it can to step on the economy like a cockroach. Every move by the Executive or the Fed has not helped, but hurt share prices. This is deliberate.
Christ, I’m tired. We all must be. And now I must sound a warning about something else. I am worried about the election. I am not predicting anything but I am worried.
WASHINGTON — The Bush administration is considering taking ownership stakes in a number of U.S. banks as one option it might use to deal with a serious credit crisis, an administration official said Wednesday.
CHICAGO, Illinois (CNN) — An outraged sheriff in Illinois who refuses to evict “innocent” renters from foreclosed homes criticized mortgage companies Thursday and said the law should protect victims of the mortgage meltdown.
Sheriff Thomas J. Dart said earlier he is suspending foreclosure evictions in Cook County, which includes the city of Chicago.
The county had been on track to reach a record number of evictions, many because of mortgage foreclosures.
Many good tenants are suffering because building owners have fallen behind on their mortgage payments, he said Thursday on CNN’s “American Morning.”
“These poor people are seeing everything they own put out on the street. … They’ve paid their bills, paid them on time. Here we are with a battering ram at the front door going to throw them out. It’s gotten insane,” he said.
Submitted by cpowell on Wed, 2008-10-08 12:49. Section: Daily Dispatches
By Keith Weir and Daniel Trotta Reuters
Wednesday, October 8, 2008
Central banks around the world cut interest rates in unison on Wednesday in a joint response to the global financial crisis, giving a boost to battered stock markets.
The Fed said it was cutting its key federal funds rate by 50 basis points to 1.5 percent. China, the European Central Bank (ECB) and central banks in Britain, Canada, Sweden, and Switzerland also cut rates in the coordinated response which analysts had been demanding.
U.S. stock index futures leapt on the news and world stock markets trimmed their losses.
Before the rate cut, stock markets across the world had continued their downward spiral amid the worst financial crisis in nearly 80 years and fears of a global recession.
“The fact that we have got them coming across the board suggests that this is the end game,” said Peter Dixon, an economist at Commerzbank in London. “Will it help the markets? Questionable in the short term.”
NEW YORK (Reuters) - Wells Fargo & Co is likely to get about 75 to 80 percent of Wachovia Corp’s deposits, while Citigroup Inc would get the remainder, a person briefed on the matter said on Tuesday.
The situation is in flux and the outcome is still unclear, the person cautioned, adding Wells Fargo may end up with 100 percent of Wachovia’s deposits, and Citigroup with none.
Brazil and Argentina have launched a new payment system in their bilateral trade, doing away with the US dollar as a medium of exchange.
The two Latin American nations started the Payment System on Local Currency (SML) on Monday following a last month agreement inked by their presidents to use local currencies in a bid to end transaction in dollars.
On Thursday, Argentine Central Bank President Martin Redrado and his Brazilian counterpart Henrique de Campos Meirelles signed the enforcement of the agreement for the SML, under which exports and imports between the two countries will take place with the Brazilian real (BRL) and the Argentine peso (ARS).
Pakistan’s foreign exchange reserves are so low that the country can only afford one month of imports and faces possible bankruptcy.
Islamabad - Officially, the central bank holds $8.14 billion (£4.65 billion) of foreign currency, but if forward liabilities are included, the real reserves may be only $3 billion - enough to buy about 30 days of imports like oil and food.
Nine months ago, Pakistan had $16 bn in the coffers.
God knows what manner of deals went down this past weekend in the Hamptons wine cellars and below-decks among the Chesapeake Bay sailboat fleet. All these hidey-holes must have been dank and fetid with the sweat of mortal fear. Will the US Government declare itself a subsidiary of General Electric? Will Vlad Putin be roped in to save Goldman Sachs? Meanwhile, the whole noisome rat maze of international counter-party deals was taking on sewer water and rodents of every nationality were seen leaping for daylight all over the fusty old motherlands of Europe. A cascading collapse of international finance is underway. While many fixers may jump heroically into the tumbling wreckage hoping to rescue this-and-that, the outcome by Friday is liable to be an unrecognizable smoldering landscape of the G-7’s hopes and dreams.
Some big questions for the week: will the Euro survive as a currency? Will the rush into the US dollar continue even as the US financial system dematerializes in a Fibonacci fever of accelerating de-leveraged infinitude? Will the remaining Big Boyz, Goldman Sachs and JP Morgan succumb to the counter-party hemorrhagic fever? Will great rows of lesser banking dominoes now start clacking onto their faces? Will all fifty states follow the leads of California and Massachusetts and line up at the US Treasury’s hand-out window. Will the entity that calls itself the civilized world be left at week’s end with anything resembling money?
Your guess is as good as mine. We’ve entered the realm of phase change, where everything is slipping and nothing has settled. The final result, when the dust settles — and that may not be for weeks to come — will certainly be a poorer western world. Will it be so poor that it can no longer afford to import anything? Including oil from the land of the date palm? If so, we are really in for a rough ride, poised as we are at the edge of the heating season here in the temperate regions. Notice, by the way, that the $700 billion just approved by congress to bail out Wall Street is exactly the same sum of money that we send to the oil exporting nations this year.
Will millions stop receiving paychecks due to the turmoil in banking? It’s certainly possible, starting with the poor drones in Mr. Schwarzenegger’s motor vehicle bureau and eventually ranging to every payroll office in the land. Will Sarah Palin’s fellow Six-packers line up around the parking lagoons of the suburban banks trying desperately to withdraw the last seventy bucks in their checking accounts? (And will their thoughts in the event be: this economy is fundamentally sound….) Will the supermarket shelves of chipoltle-flavored crunchy snacks and power drinks go empty as truckers refuse to deliver their loads without up-front payment? And how long does it take a hungry public to turn mean?
We could see a parallel problem in the motor fuel supply sector. So far, gasoline shortages have only appeared in parts of the Southeast USA, due to interruptions caused by two hurricanes. If the oil tankers quit offloading now for lack of credible payment, then the whole nation will get an interesting lesson in the shortcomings of the suburban development pattern.
The candidates’ debate Tuesday night should be interesting. I don’t expect too much give-and-take on the subject of East Ossetia this time around.
Even at this point, the current crack-up in world finance makes the 1929 crash and the events of the 1930s look in comparison like an orderly small town auction of somebody’s grandmother’s effects. Back in that sepia day, America had plenty of everything except ready cash. We had, especially, plenty of our own oil, and — you’re not going to believe this but it’s true — the stuff was selling for as little as ten cents a barrel, it was so abundant. And yet still, America in the 1930s plunged into a dark depression of inactivity, loss of confidence, and impoverishment.
This time around, things could get more disorderly. Personally, I think we may be beyond the reach even of fascist authoritarianism, because unlike the programmed industrial masses of the 1930s, we are unused to regimentation, to lining up at the factory gates and the movie theaters. Back then, society was so regimented that everybody wore uniforms in-and-out of the military. Look at movies from the 1930s. Every man-jack wore either a necktie and hat or overalls. The industrial masses behaved like termites. Once unemployment hit, they were waiting to be told what to do, to line up for something. It worked fabulously for Hitler, who took every advantage of this mentality. Luckily, the US went for Roosevelt (both FDR and Hitler entered office the same winter of 1933, by the way). FDR was more like everybody’s kindly Uncle Frank, and his reassuring persona enabled Americans to suck up their bad luck and altered circumstances. Many of them retreated to the family farm (which still existed then) and waited things out — and, anyway, the melodrama of the Great Depression soon resolved in the Second World War when Hitler’s love of regimentation led him into military misadventure. He shouldn’t have picked a fight with someone who had so much petroleum — end-of-story.
Okay, what happens here and now? To this point (9:am Monday October 6, 2008) events have been proceeding under a veneer of still-just-barely-credible authority. We (as represented by congress) have allowed Mr. Paulson to advance and activate his remedies. As things unspool further, he will be out of credibility, perhaps in a few days, and it’s unlikely that his successor will have any either. Mr. Bernanke has simply gone AWOL. Notice, he has vanished from the media landscape. We may soon be hearing the declaration of various “emergency” measures involving the allocation of food and the rationing of oil products. The Big Bailout of last week may be partially rescinded as it becomes obvious that it has had no effect — I believe about half the $700 billion has already been allocated, which is to say: lost. I realize these things sound pretty extreme. But forces have been set in motion and momentum rules. One thing for sure: the American public is about to undergo a severe mood adjustment. There will be fewer American Idol fans and worshippers of Donald Trump by the close of business on Friday.
Interview with Naomi Wolf author of “Give Me Liberty: A Handbook for American Revolutionaries” given October 4, 2008 on Mind Over Matters, KEXP 90.3 FM Seattle.
In yesterday’s Senate bailout bill, also known as the ‘‘Emergency Economic Stabilization Act of 2008’’ is the following, seemingly innocent section.
Section 203 of the Financial Services Regulatory Relief Act of 2006 (12 U.S.C. 461 note) is amended by striking ‘‘October 1, 2011’’ and inserting ‘‘October 1, 2008’’.
So they moved the date of the Financial Services Regulatory Relief Act of 2006 up by 3 years. Big deal you say, and what the heck is the FSRRA of 2006? It was a series of amendments to 12 U.S.C. 461 of course! Well, okay, I don’t expect you to know what that is, so here it is (and the other related documents).
You may want to open those in new tabs, we’ll be bouncing around them a bit.
(Comment: The author continues with the conclusion up front)
The changes eliminated the requirement for banks to keep reserves of cash on hand to cover deposits, they abolished the Federal Reserve’s Earnings Participation Account, they granted the ability for the Fed to create their own rules for distributing their earnings, and they granted the ability to make payments to foreign banks.
These things were not scheduled to go into effect for 3 more years. Unclear is why they needed these changes at all, the other is why they need them now.
On Thursday’s edition of The Colbert Report, bestselling author Naomi Klein argued that the Bush Administration creates crises in order to “enrich themselves and their friends,“ drawing parallels between the torture of prisoners and the economic bailout being provided to Wall St. by US leaders.
Previously, Klein called out the sprawling economic crisis as just another example of the Bush ’shock doctrine,’ a key component to the ruling regime’s corporate agenda.
Paste the link below into your web browser to see the 5 minute video of The Colbert Report
In the face of last week, I’m not certain I have anything either intelligent or intelligible to say. The House finally passed the bailout bill, but only after the Senate had larded it with nearly $200 billion in tax breaks for the “friends of Congress”. In the end, the banks got what they wanted, a gigantic grave to shovel all their corpses into, & the assured silence of the cops (read: Yankee Government). Relax. Government by the banks, of the banks, and for the banks shall not perish from the earth. The corruption is complete, the constitution dead, but, gee-whillikers, we won’t have to face an awful deflationary depression. Nope, we’ll face a hyperinflationary depression instead.
Well, well, aren’t I jolly today?
To markets. The week beat everything to death, & unless you are blind & know nothing about the US Treasury’s slush fund (”Exchange Stabilisation Fund”) installed in the 1930s to manipulate the prices of gold, the dollar, & whatever else might be fun to play with, you perceived that the US Treasury & Fed manipulated the dollar’s value upward, in the face of the worst financial crisis in 70 years. Now the dollar index has again reached the long term downtrend line. Will it break out, or stall in a double top & fall back? I don’t know. Friday’s sell off in silver, gold, & stocks suggest the market proverb,”Buy the rumour, sell the news.” The stock market’s failure to rally on news of the bailout passing certainly looks bad for stocks. I simply do not believe that market demand drove the dollar up on Friday; twas the Nice Government Men “stabilising.”
Markets are so out of whack I don’t know what to say. In 28 years trading silver & gold professionally, I’ve never seen markets like this. The paper gold price closed Friday at 828.90, down 10.10, but if I want to buy gold to hold in my own hand, physical gold, I would have had to pay 879.07 an ounce (US$50 more) to get Mexican 50 pesos, US $923 to get American Eagles, and US$949.35 to get French or Swiss 20 francs.
Silver closed at 1127 cents, down 20.5 cents, but to buy US 90% silver coin and wait 2-8 weeks to get it I would have to pay 1518 cents per ounce, a 36% premium over the paper price. And silver American Eagles? Well, forget them. They cost 1681 cents, a 50% premium, & heaven only knows when I’ll get delivery.
How can this be explained? It appears incontrovertible that demand for silver & gold–real, physical, deliverable silver & gold–is so strong, so frantic, that the public is willing to pay huge premiums to buy it. That casts the validity of the paper price into doubt, & points to some government manipulation holding down the price, so the weakness of their rescue operation won’t be called into question by a gold price over $1,000.
For the future it says to me that silver & gold will go much, much higher, & that this period of suppressed prices is a gift, an opportunity, to load up on silver & gold at bargain prices. Stocks will fall further yet. Whether the US Dollar extends its rally or not, it won’t last long and in eight weeks or so will hit the skids again.
Many surprises are possible, but I cannot imagine how this bailout will fail to result in huge inflation, perhaps hyperinflation.Hold dollars at your own risk.
Many of y’all have kindly inquired about my wife, Susan’s health after her heart surgery 28 August. Yesterday I drove her to Nashville for her first post-op check-up & she got a very good report. She is off most of her medications, which had slowed down her heart leaving her fatigued & often nauseated, & only has a few more weeks on coumadin. The doctor allowed her to drive again, great for her but murder for me because I’m the one who has to keep restraining her from overdoing it. All in all it was a splendid report, & we thank God for his mercy.
Yesterday I learned a friend of mine died at age 87, Leslie Fleming. Years ago, in the early 1970s, I met Les when he & his wife were homesteading in northern Arkansas. He taught me how to think, how to search for the core of what things mean. In every facet of his integrity, he was what I call an “Old American,” that is, as they used to be before luxury & government education & the entitlement mentality corrupted them. Leslie Fleming was man too great for the age, unshakeable in his principles. Thank you for teaching me. Requiescat in pace.
Y’all enjoy your weekend!
Argentum et aurum comparenda sunt –
– Silver and gold must be bought.
Franklin Sanders, The Moneychanger
So where are the headlines? asks Peter Tatchell. Indeed. A quick search shows basically the opposite picture of Ahmadinejad has been promoted recently, as always.
Well, you can never trust a madman, can you? And you know he’s been misquoted before, right?
The Iranian president has said he would accept a two-state solution if the Palestinians agree
Iranian President, Mahmoud Ahmadinejad, has made a remarkable announcement. He’s admitted that Iran might agree to the existence of the state of Israel.
Ahmadinejad was asked: “If the Palestinian leaders agree to a two-state solution, could Iran live with an Israeli state?”
This was his astonishing reply:
If they [the Palestinians] want to keep the Zionists, they can stay … Whatever the people decide, we will respect it. I mean, it’s very much in correspondence with our proposal to allow Palestinian people to decide through free referendums.
Since most Palestinians are willing to accept a two-state solution, the Iranian president is, in effect, agreeing to Israel’s right to exist and opening the door to a peace deal that Iran will endorse.
Organized crime is now officially legal and combined with the stock and capital markets — all enforced by force and rigged profits. This is the economic infrastructure for fascism.” – Catherine Austin Fitts
June 14th 2006, 12:59pm [PST] – On three prior occasions in its eight and a half year history (2001, 2002, 2004) From The Wilderness has issued economic alerts to its subscribers. Two of those alerts (2001, 2002) proved to be astonishingly accurate.
Two days after our first alert was issued on September 9th, 2001, the “terror” attacks of 9/11 shut down Wall Street and allowed the government to open the US Treasury to flood massive amounts of taxpayer money directly into the hands of corporations that were on the brink of a major liquidity crisis. (FTW has never asserted that this was the primary motive for US government participation in the attacks. It was one of many motives as described in Crossing the Rubicon; chief of which was Peak Oil).
Just days after our second economic alert in 2002 a collapse of US financial markets began which saw the Dow drop by 1400 points and more than one trillion dollars in shareholder equity wiped out. We called that one perfectly.
And while the events predicted in our third December, 2004 economic alert did not transpire as predicted, I am perhaps most proud of having written and published this one. Because in it I wrote an almost clairvoyant description of the political, ecological, energy and economic worlds in which we live eighteen months later — today.
The reasons why the events predicted in the third alert did not take place have to do with what my dear friend and colleague Catherine Austin Fitts calls the Tapeworm Economy; the ability of financial and criminal elites to manipulate the rapidly-hollowing shell and façade of a financial system destined to collapse. They do this while keeping appearances (controlled by major media) as normal as possible so that the “suckers” (you) will keep trusting and spending your money in ways that hurt you and progressively wither your needed survival skills and resources.
This is the way that all parasites function until they kill their hosts and move on.
“Fast Crash or Slow Burn?” – Irrelevant!
This apparent longevity of a doomed system has led Fitts and me to agree to disagree about how things are likely to play out in the Empire’s final days or years. I believe that a fast-burn crash is likely (or at least must be prepared for). Fitts thinks it more likely that the elites, using technology like PROMIS software, their total control (ownership) of all branches of government, and a dozen other factors will be able to pull rabbit-after-shrinking rabbit out of the hat until the incremental “bust-out” liquidation of the American economy produces a final whimper in the last-remaining “I-still-believe” consumer. It doesn’t matter that each successive rabbit will be smaller and weaker. What does matter is the pathological willingness of most people to believe that – because a thimbleful of water is produced – a mighty conflagration might still be extinguished.
Fitts and I do agree that a fast burn (crash) would be much better than a slow burn. This is because a sudden slap in the face would leave individuals and families with more resources and tools available to adapt once they had relinquished their vision of a world that no longer exists.
The first thing that must be liberated in an emergency is the mind: so that it can see the emergency. Remember the old maxim about how easy it is to cook a frog by turning up the heat in tepid water slowly versus throwing a frog into boiling water. In the first case the frog just sits patiently and waits to be cooked. In the second case, recognizing the emergency, it jumps out immediately.
Taking into account a multitude of factors such as: unpredictable collapses of large oil fields (e.g. Burgan in Kuwait); global warming and hurricanes; rapidly spreading geopolitical instability; the collapsing housing bubble; soaring bankruptcies; exploding military budgets; the continuing ascendancy of nations like Venezuela, Iran, Russia and China; earthquakes; volatile insurgencies in West Africa; declining global food production and many others, I see things that the elites cannot control. These are (to one degree or another) wildcards that could leap into the game at any time, triggering chaos, war and/or collapse. The elites can influence these factors but there’s a big difference between influence and control. History has demonstrated a perfect batting average when it comes to the inevitable fate of empires in decline and their inability to control events.
This fourth-ever economic alert will be different from the previous ones because rather than describing predicted events, it describes a state of affairs which is – in and of itself – so alarming that we no longer care about the “when.” What we are warning about now is the certainty of the “what” and the necessity of being prepared to manage successfully in the face of a “fast burn,” a “slow burn,” and the wildcards.
To sum it up, large highly centralized corporations and banks – particularly those dependent on US government finances – are no longer worthy of investment.
No one reads tea leaves perfectly and no sound byte encompasses all realities. But if I were to sum up how I think a slow burn is being engineered, I would say that the two biggest manmade factors controlling the crash of the American economy are the Chinese and US governments. I sense a quiet consensus among and within all the economic powers-that-be that as long as the Federal Reserve agrees to the slow strangulation of the economy by continuing to raise interest rates, the Chinese will incrementally respond by continuing, in small increments, to float the Yuan free from its dollar peg. This will allow a semi-orderly transfer (looting) of the most wealth (into gold, oil reserves, the Euro, the Ruble and the Yuan) while keeping suckers in the game.
More than any other two factors, the dollar and the Yuan are the ones which, if they get “sideways,” could cause a crash, collapse or chaos at any minute. But these are only the human-controlled variables.
As it was with Robert Rubin in the Clinton years, Goldman Sachs has again acquired the “franchise” to operate the Treasury under its new Secretary Hank Paulson. Paulson will continue Treasury’s role as a key member of the Plunge Protection Team to manipulate the markets, hide fatal maladies, manipulate investor confidence, and assure that the largest number of people continue to stay roped into the system until it is too late to avoid going down the drain in the largest organized crime bust-out in history.
To sum it up, the American economic system – as a result of recent developments – has become a parasitic Zombie that cannot and should no longer be trusted under any circumstances. It has become lethal, venal and – for lack of a better term – the enemy.
Editor’s note: Jeffrey A. Miron is senior lecturer in economics at Harvard University. A Libertarian, he was one of 166 academic economists who signed a letter to congressional leaders last week opposing the government bailout plan.
CAMBRIDGE, Massachusetts (CNN) — Congress has balked at the Bush administration’s proposed $700 billion bailout of Wall Street. Under this plan, the Treasury would have bought the “troubled assets” of financial institutions in an attempt to avoid economic meltdown.
This bailout was a terrible idea. Here’s why.
The current mess would never have occurred in the absence of ill-conceived federal policies. The federal government chartered Fannie Mae in 1938 and Freddie Mac in 1970; these two mortgage lending institutions are at the center of the crisis. The government implicitly promised these institutions that it would make good on their debts, so Fannie and Freddie took on huge amounts of excessive risk.
Worse, beginning in 1977 and even more in the 1990s and the early part of this century, Congress pushed mortgage lenders and Fannie/Freddie to expand subprime lending. The industry was happy to oblige, given the implicit promise of federal backing, and subprime lending soared.
This subprime lending was more than a minor relaxation of existing credit guidelines. This lending was a wholesale abandonment of reasonable lending practices in which borrowers with poor credit characteristics got mortgages they were ill-equipped to handle.
Once housing prices declined and economic conditions worsened, defaults and delinquencies soared, leaving the industry holding large amounts of severely depreciated mortgage assets.
The fact that government bears such a huge responsibility for the current mess means any response should eliminate the conditions that created this situation in the first place, not attempt to fix bad government with more government.
The obvious alternative to a bailout is letting troubled financial institutions declare bankruptcy. Bankruptcy means that shareholders typically get wiped out and the creditors own the company.
Bankruptcy does not mean the company disappears; it is just owned by someone new (as has occurred with several airlines). Bankruptcy punishes those who took excessive risks while preserving those aspects of a businesses that remain profitable.
There Must Be a Strict Supervision of All Banking and Credits and Investments. There Must Be an End to Speculation with Other People’s Money.”
We now move three-quarters of a century back in time to 1933. It was the middle of an era that our current moment is sometimes compared to: the Great Depression. When Franklin Delano Roosevelt took his oath of office in March of that year, over 10,000 banks had collapsed, following the stock market crash of 1929. One-quarter of American workers were unemployed, and people were fighting over scraps of food. We play an excerpt of FDR’s inaugural speech on March 4, 1933, and speak to Adam Cohen, author of the forthcoming book, Nothing to Fear: FDR’s Inner Circle and the Hundred Days that Created Modern America.
Protests took place on Wall St. to protest the bail out plan - and the mainstream news media didn’t even mention it
Hundreds of protestors demonstrated agains the proposed $700 Billion bail out plan for the finance and banking industry, yet the national news media in America didn’t even report it! Why not? It seems strange that this barely generated a gander from the big news outlets like ABC, CNN, CBS, NBC etc. all of whom have a presence in New York City. Despite having such a large protest event occurring in their backyard, the major news media chose not to tell the American people about it. I had to stumble upon this on the internet to find out about it. That’s really indicative of the pathetic state of affairs in the U.S. media today.
Anyway, in case you haven’t seen it, I have collected a bunch of video from the protests on Wall Street (Sept. 25) and posted them below. Have a look at what the news media DIDN’T show you! Warning: some of the protest videos contain profanity.
As you consider the distribution of $700 billion to the very banks and corporations that have gotten our country into the mess we’re in now, we ask you to pause for a moment and consider what that money could do for the people who build our country from the ground up… for our schools, healthcare system, our states, cities and towns, alternative energy development, the homeowners who were the pawns of the banking and mortgage industry. As the Board of Directors of Farm Aid, we want to alert you to what a mere $1 billion could do in the hands of the people who grow our food.
American family farmers are the backbone of our economy, the first rung on the economic ladder. For 23 years, we’ve worked to keep family farmers on the land. But it’s not enough just to save family farmers; we have to create new farmers. When farms fail, Main Street businesses fail. The opposite is true too: When farms thrive, Main Street businesses and local communities thrive. Far from Wall Street, family farmers are creating real wealth, producing real value, growing from seeds and sunlight a product that nourishes us both physically and economically. Supporting diverse decentralized family farming will do far more for the stability and vitality of our country than a handful of global agribusiness corporations could ever do.
The proposed $700 billion bailout asks taxpayers to foot the bill without giving them the opportunity to share in any gains. A $1 billion investment in family farm agriculture would enrich us all, because we are all shareholders of the family farm. The return on investment in the family farm includes thriving local economies, nutritious food for better health, a safer and more secure food supply, a cleaner environment and more renewable energy. Investing in local, sustainable and organic food would shorten the distance between eaters and farmers, conserve energy, create economic opportunities and new jobs through innovative processing and distribution systems, resulting in a better, greener, more efficient food and farm economy.
We’ll leave the economic details to the experts, but we know from traveling the highways and back roads of this country that trickle down economic policy has not created wealth for the vast majority of Americans. Let’s start from the ground up. When we invest in our family farmers, we invest in the revitalization of our country.
Willie Nelson, John Mellencamp, Neil Young and Dave Matthews
Farm Aid Board of Directors
Using the shock doctrine, Wall Street and Washington’s wrecking crew aim to get the most expensive free lunch in American history.
If a museum in the next superpower nation ever commemorates the decline of the last great superpower, it will make the two-and-a-half page bill introduced this week the center of the display.
Just as they do today at the National Archives’ Declaration of Independence exhibit, tourists in the future-perhaps in Beijing, perhaps somewhere else-will line up to see a framed draft of this week’s White House legislation demanding Congress surrender its power of the purse, and give an unelected appointee-in this case, Treasury Secretary Henry Paulson-the power to hand over $700 billion of taxpayer money to “any financial institution,” “without limitation…on such terms and conditions as determined by [him].” In a nation priding itself on separating powers between the branches of government, the bill explicitly states that decisions by Paulson may not even “be reviewed by any court of law or any administrative agency.”
Whether the bill passes or not, the drafting of it-even the mere thinking of it-is the single most clear sign that all of the major tenets of American democracy are on the auction block these days: from constitutional checks and balances, to legislative and judicial oversight to electoral accountability itself.
In the immediate aftermath of what could be the starting gun of a second Great Depression, the public this week will face a wave of propaganda from Washington. Using the same playbook that succeeded in passing the Patriot Act and the Iraq War authorization with almost no questions, politicians will inevitably invoke love of country, fear, loathing and red-alert emergency-all designed to ram this bill into law as fast as possible, with as little scrutiny as possible. Put in book terms, we will see Thomas Frank’s wrecking crew using Naomi Klein’s shock doctrine to justify a bigger free lunch than David Cay Johnston ever imagined.
Here are five key questions we should all be asking:
Hedge funds are expected to launch legal action against the Financial Services Authority, seeking compensation for what they claim will be multi-million-pound losses caused by the watchdog’s sudden decision to outlaw short-selling.
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A senior source close to the regulator said the FSA believed its decision was ‘well within its legal powers’. The ban will be reviewed in 30 days and the source said the FSA could decide to lift the block at any time if it was convinced stability had returned.
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Veteran stockbroker Andy Stewart, founder and chief executive of Cenkos Securities, was enraged by events. ‘It really is hilarious that the only way the banking sector can be propped up is by stopping people doing what they have always been legally authorised to do,’ he said.
SYDNEY — The Australian Securities and Investments Commission Sunday banned covered short selling of all listed shares following moves by other countries to ban short selling of financial stocks.
In a rapid escalation of the clampdown on short selling, ASIC said in a statement that it had decided to ban covered short selling from the start of trading Monday because a number of countries had banned covered short selling of financial stocks and there was a risk that if Australia didn’t follow with its own ban that there would be a risk of “unwarranted …
BANK of China said yesterday it will buy a 20 percent stake in La Compagnie Financiere Edmond de Rothschild for 236.3 million euros (US$340 million) and the two will develop private banking and asset-management services.
“This partnership forms part of Bank of China’s global development strategy,” Bank of China chairman Xiao Gang said in a statement. “We expect to further strengthen our asset management operations and product design capabilities in private banking business, and widen the product and service offerings to our clients.”
Beijing-based Bank of China said it sees a promising future for private banking and other services for China’s newly affluent amid rapid economic growth.
“With the rapidly growing global demand for wealth management services, private banking and asset management are becoming increasingly important parts of the Chinese financial services industry,” the statement said.
Bank of China said it hoped the deal would strengthen its presence in Europe. China’s top banks are among the world’s largest in financial terms but inexperienced at consumer services. They have formed ties with foreign partners to introduce credit cards and other products.
NEW YORK, Aug 30 (Reuters) - Lehman Brothers has hired Jeb Bush, brother of the President of the United States, as an advisor to its private equity business, a source familiar with the situation said.
Lehman hired another relative of U.S. President George W. Bush last year–George Walker, a second cousin, who heads up the bank’s asset management business.
To hear Donald Coxe tell it, the commodity selloff ripping through Canada’s stock market is no accident. It is the result of a deliberate, brilliantly executed plan hatched at the highest levels of the U.S. Federal Reserve and Treasury.
Mr. Coxe is no paranoid conspiracy theorist. As the chairman and chief strategist of Harris Investment Management in Chicago, he is one of the most respected investment authorities in North America. He also happens to have lost about 10 per cent of his personal wealth in the commodity rout, which came at the worst possible time for his Coxe Commodity Strategy Fund that started trading in June.
“This has done more damage to my personal wealth than anything in the last 20 years,” he said in an interview yesterday. But he has too much respect for how the U.S. authorities engineered the collapse in commodities – a move he said was necessary to shore up the global financial system – to be bitter.
“My attitude is, goddamn it, they’re good … it was brilliant.”
NOMI PRINS: What started all of this was a complete lack of transparency and regulation in the banking system. If we go back to a history where we had a similar situation on Wall Street, which was 1929, when we had a stock market crash followed by a Great Depression, in 1932, when FDR was elected and Herbert Hoover was ousted, right after that, we put together—he put together—
AMY GOODMAN: But interestingly, FDR didn’t come in on a plank of changing everything the way he did. It happened—didn’t it?—after he became president with—
NOMI PRINS: He had to take a look at the banking system, which was undermining the general economy, which had undermined the general economy, and say, “You know what? We do not understand what’s going on here. We have two types of banks. We have speculating investment banks, and we have commercial banks that deal with the public, take deposits, take savings, make mortgage loans, understand what’s going on. We’ll back those. The government will back those commercial institutions that deal with the public. It will not back speculative investment banks. And, by the way, those two things have to split. You pick a side. You want to be an investment bank? You be an investment bank. You want to be a commercial bank? We’ll back you. The Fed will back you. We will be there. We’ll create an insurance company, the FDIC, to back deposits for the public. We’ll have your back.” There was no—there was no agreement to have the back of the speculative investment banks.
Over the years, these things have merged and merged and merged. And in late 1999, Glass-Steagall, that act, was repealed, killed, died in Congress. And now you have a situation where everything that went wrong up until the creation of that act is happening now with a lot more capital and a lot more international interplay and a lot more money on the federal government to have to bail out when things go wrong. So, we have gone backwards in banking history, and having Merrill be a part of Bank of America is a tremendously big accident waiting to happen. Bear Stearns’s assets part of JPMorgan—they’re all part of recombining speculation and commercial.
Sept. 15 (Bloomberg) — Now can we get some subpoenas flying?
What happened this weekend at Lehman Brothers Holdings Inc. is nothing short of remarkable, and I’m not just talking about its death. Sunday night, one by one, stunned Lehman employees were filmed by TV news crews leaving Lehman’s offices carrying away boxes and duffel bags full of heaven knows what.
Is there anybody left in the government with a pulse? Where’s the yellow police tape? How about a cease-and-desist order to prevent document destruction? Are we supposed to believe that everything carted out of Lehman this weekend was a personal effect?
Can anyone give me a good reason why Lehman offices shouldn’t be treated as a crime scene now? Or why there has been no sign of any investigation by the Securities and Exchange Commission into any aspect of Lehman’s accounting or disclosure practices? Where is the Justice Department? Where is New York Attorney General Andrew Cuomo? How about the Financial Industry Regulatory Authority?
Not only is Lehman dead. Fannie Mae and Freddie Mac, which cooked their books in broad daylight, are taxpayer-owned zombies. American International Group Inc. and Washington Mutual Inc., whose accounting practices also stink, are on the brink. And while it’s true that AIG is the subject of SEC and Justice Department probes, there’s no sign that anyone in the government is looking into whether executives at these other places violated the law.
Never has it been more evident that the SEC and other government agencies think their job is to protect financial companies and financial executives, rather than the investors they rip off.
Chasing Shorts
Just two months ago, the SEC was firing subpoenas all over hedge-fund land trying to find a short seller to burn for spreading false rumors about Lehman. (They’re still looking.) And yet there’s no sign it ever occurred to anyone at the SEC to check if Lehman’s books were cooked, or if Lehman’s executives ever misled the public about the company’s prospects.
There’s no sign the SEC has done anything to inquire about the impossibly optimistic asset values on Lehman’s balance sheet. There’s no reason to believe the government has asked about Lehman’s Enronesque dealings this year with an off-balance-sheet hedge fund run by former Lehman executives called R3 Capital.
There’s been no signal that anyone in the government has expressed even a curiosity about whether Lehman executives believed the rosy falsehoods they spread this year about their company’s financial health. All the SEC has been able to muster in the wake of Lehman’s collapse so far are some boilerplate assurances that Lehman customers’ assets will be protected.
Only Choice
After bailing out Bear Stearns Cos., as well as Fannie and Freddie, letting Lehman fail was the only acceptable option for the Treasury and the Federal Reserve. And it’s a good start toward giving investors a reason to have confidence again someday that the capital markets are not a completely rigged game.
Merely letting companies fail isn’t enough, though. For a free-market economy to work, investors must feel confident that they can trust the financial reports public companies produce. And to make that leap of faith, they must have confidence that the government will enforce the law when it’s broken.
A big reason Lehman failed is that investors rightfully concluded that Lehman’s financial reports and happy-talk assurances couldn’t possibly be true. Yet there also was the sense that as long as Lehman remained alive, nobody in the government would do anything about it.
Before we get out of this banking crisis, we’re going to need some scalps. There should be plenty for the government to find. Messes like the one we’re in don’t happen without a large number of highly paid people doing something very wrong.
CHICAGO, Illinois (CNN) — An outraged sheriff in Illinois who refuses to evict “innocent” renters from foreclosed homes criticized mortgage companies Thursday and said the law should protect victims of the mortgage meltdown.
