Author Topic: Reality about the BAILOUT: Fraud, Treason, Manufacturing Depression by Bankers  (Read 26200 times)

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Offline bigron

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The Really Hard-to-Swallow Truth About the Bailout

We somehow came to believe Wall Street's success was ours too, and that the bills we owed were never going to come due. Well, they are now.

By Joe Bageant, CounterPunch
Posted on October 3, 2008, Printed on October 3, 2008

Myriad cultural historians have noted the American belief that success is a sign of God's favor. Over the past couple of decades, He has had a downright lovefest with the already-rich -- so much so that the richest 400 Americans now have more money stashed away than the combined bottom 150 million Americans. Some $1.6 trillion.

This was accomplished by selling off or shipping out every available asset, from jobs to seaports, smashing usury and anti-monopoly laws, raiding the public coffers and manipulating the medium of exchange and blackmailing the peasantry regarding common needs such as health care and energy to keep their asses warm, to name a few. The ultimate coup was to convince the entire nation that the well-being of the rich, meaning the well-being of Wall Street, was indeed the common man's well-being.

All went well for a while. People went into credit card hock up to their noses in order to provide 26 percent credit card interest to Wall Street, etc. And when that became untenable, flimsy mortgages were cranked out by the millions, ensuring that every American who could hold a crayon could sign to purchase a home. To facilitate this, all sorts of shaky "mortgage instruments" were created -- balloon (sign here Jeeter, you're gonna flip it in a year and make a hundred K on this house trailer), interest only, and finally, negative-balance mortgages where you only paid part of the interest and the rest was rolled back into the principal balance. And joy of joys, you could refinance a couple of times while the inflated value of these houses was on the way up. Life was good for everybody.

The bill was never gonna come due because God, in His wisdom, had deemed that capitalism would defy the second law of thermodynamics and expand forever. So every time a bank made a mortgage loan of say, $400,000, even though the debtor hadn't even made a payment yet, the loan was declared a bank asset and another $400,000 was loaned against it. Meanwhile, the Federal Reserve Bank yelled whoopee and printed another $800,000 in currency. Of course, at some point the country had to run out of customers, so the loans got easier and easier. No matter that debt is not wealth. Wink and call it that, and most folks won't even look up from their new big-screen high-resolution digital TVs.

The problem was that all the jobs to pay for this stuff were stampeding off toward places in China with names containing a lot Xs and Zs and praying for a vowel. It was becoming clear that the entire economy was running on fumes -- in fact, less than fumes. It was running on the odor of paper. Mountains of the stuff. Bundles of mortgages and very strange securities and derivatives of unknown origin and value. Paper that stated its own worth and signed by some mystic hand no one could quite identify though the blurry signatures looked to read Greenspan, Paulson and Bernanke.

But there was a rub. Things reached the point where there simply was not anything left to defraud the public out of, nothing left to steal from the nation's productive capability, no matter how much paper Jeeter and Maggie signed for that trailer house, no matter how secure Brian and Jennifer out there in Arlington, Va., and Davis, Calif., thought they were. So the only thing left to do was steal from future generations of Americans and accept an I.O.U., which the government would happily sign on behalf of the people and enforce. By the wildest coincidence, under the Bush administration this I.O.U. happened to tally up to about $700 billion.

Seeing the oncoming train of financial disaster, the financiers just about wet their pants and screamed, "We want it all now! And if we don't get it, the 'economy' will lock its brakes and crash. Remember, we control the medium of exchange. Nobody gets a paycheck if we don't. Remember that it's lines of credit from us that back every working man's and woman's paycheck in the country. So pay the hell up."

Folks, they've got us all by the nuts and nipples. McCain knows that. Obama knows that. In the end, regardless of the so-called dissenters in the House and the Senate, we will pay up. It's election season, and the dissent is for show. So it looks like we will get some "concession." For example, we will get shares in these "toxic assets" that are stinking up the joint. The rich need to dump them and dump them fast. In another magnanimous concession, the Federal Deposit Insurance Corporation will raise the insurance on "our savings" to $250,000. (How many readers have $250K in the bank?) But it will be redeemable in even more inflated currency amid an inflationary environment. And, in case you didn't know, the FDIC has up to 10 years to pay up on that insurance. So don't get any ideas about running off to Mexico, to which, by the way, we are a net debtor nation.

We will pay. We will pay because the European banks holding all that bad paper we wrote demand that we make good on it so even more of their banks will not fail. We will pay because the Chinese, the Japanese and everyone else will cut off the loan tap with which we pay the interest (not the principal) on our exploding supernova of national debt. We will pay because God loves the rich. We will pay because we will not be offered any other choice. We will pay because George Bush worked hard for all those Ds in school and became the first MBA president. We will pay because our media has internalized the capitalist system so thoroughly they can only talk in Wall Speak. We will pay because the only language we have to describe our world is that of our oppressors because we have been taught to think in Wall Speak. We will pay because we hitched our wagon to last-stage capitalism and even though the wagon has now two wheels over the cliff and roars forward, we don't know where the brake handle is located. And because we don't know any better or understand any possible resistance to the system because we have been kept like worms in a jar and fed horseshit.

And as we all know, worms do not rise up in revolt.

That takes a backbone.

Joe Bageant is author of the book Deer Hunting with Jesus: Dispatches From America's Class War, about working-class America. He is also a contributor to Red State Rebels: Tales of Grassroots Resistance in the Heartland (AK Press). A complete archive of his online work, along with the thoughts of many working Americans on the subject of class, may be found on ColdType and on Joe Bageant's Web site,

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Offline bigron

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"Grand Larceny" on a Monumental Scale: Does the Bailout Bill Mark the End of America as We Know It?

By Richard C Cook
Global Research, October 2, 2008

OCTOBER 1, 2008—Tonight the Senate passed the $700 billion Wall Street bailout bill by a vote of 74-25. This follows the rejection of the bill by the House on Monday. In an MSNBC poll, 62 percent of Americans oppose the giveaway, but the lobbyists are doing everything possible to assure the rejection is overturned. According to Bob Borosage, co-director of The Campaign for America’s Future, House leaders "are bringing in the small business lobby and the banking lobby to buy the twelve Republican votes they need."

The Senate took up the bill in order to pressure House members who voted against it to change their positions when it returns to a vote on the House floor on Friday. This procedure may be unconstitutional, because revenue bills must originate in the House, but there is no time or political will for anyone to mount a challenge on constitutional grounds. As another means of inducement—or blackmail—the bill includes the repeal of the wildly unjust alternative minimum tax.

Every reputable economist commenting on the bill opposes it, including NYU’s Nouriel Roubini, who says the plan is "totally flawed." He says the plan is:

"a disgrace: a bailout of reckless bankers, lenders, and investors that provides little direct debt relief to borrowers and financially stressed households and that will come at a very high cost to the US taxpayer."

My own view is that the plan is worse than that: a crime; grand larceny on a monumental scale.

Here’s why: We know that the debacle started with homeowner defaults on subprime mortgages and that it has now spread to other types of mortgages as foreclosures spread. We know that the unhealthy use of subprime mortgages started during the Clinton administration, as did the bundling and sale of these mortgages into mortgage-backed securities sold in the financial markets.

What has not been reported is that the Bush administration turned these acts of reckless lending into a national program of mortgage fraud. Soon after George W. Bush became president in 2001, meetings at the White House between Federal Reserve Chairman Alan Greenspan and administration officials became more frequent. According to mortgage industry insiders I have interviewed, direction soon began to come down from the banks to mortgage brokers to falsify borrower income information to allow them to qualify for loans that were otherwise out of reach.

The FBI has investigations underway to prosecute some of these cases of mortgage fraud. But they are not reaching above the brokers’ level. The FBI is not gaining access—or at least they have not reported it publicly—to information about collusion at the political level or at the level of the banks which provided the leveraged funding for mortgage money.

But at the time the housing bubble was inflating, no one was watching. Note that when Secretary of the Treasury Henry Paulson testified before the Senate Banking Committee last week, he said he was shocked to learn when assuming office in June 2006 that no federal agency regulated mortgage lending. Rather this was an area left to the states.

What Paulson did not say was that when the states attempted to intervene, they were blocked by the Treasury Department’s Office of the Comptroller of the Currency. In a February 14 article in the Washington Post written before he resigned, New York governor Eliot Spitzer wrote:

"In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules. But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation."

Why did the Bush administration do this? The only possible answer is that it had every intention of producing the housing bubble, one that had the effect of not only inflating the cost of homes and real estate but also pumping billions of dollars of borrowed cash into the economy through mortgage and home equity loans.

The bubble enriched huge numbers of executives, managers, and shareholders throughout the financial and real estate industries, and provided jobs to millions of people. The bubble also brought back foreign capital to U.S. markets that had been scared away by the bust of 2000-2001.

Everyone seemed to benefit, but it was those at the top who skimmed the greatest profits. And for an economy that had already given away millions of its best manufacturing jobs through NAFTA, Most-Favored-Nation trading policies with China, World Trade Organization agreements, etc., the bubble acted as a kind of substitute economic engine.

It also resulted in tax revenues that allowed the Bush administration to implement its 2001 and 2003 tax cuts for the rich and provide funding for the Afghanistan and Iraq wars. Of course these tax revenues were not enough, as the national debt soared to over $9 trillion during the Bush years as well.

Economist Dean Baker of the Center for Economic and Policy Research makes the point:

"The near hysterical discussion (count the times ‘Great Depression’ appears in news stories) of the bailout still largely fails to recognize the roots of the economy's current problems in the collapse of the housing bubble. Much of the discussion assumes that the problem is just bad subprime loans and that house prices will bounce back once the credit markets are working properly."

The point is critical, because what the Senate and House leaders are telling us, as are President George W. Bush, presidential candidates Barack Obama and John McCain, and Federal Reserve Chairman Ben Bernanke, is that the bailout is to get the American economy moving again. Credit, they say, is the lifeblood of the economy, and without credit no one can make a move.

But credit is the lifeblood of the economy only because people are broke. Purchasing power in the U.S. has collapsed, and it is getting worse as the recession which has now begun worsens.

People can’t get loans, not because the credit markets are stalled, but because they have no savings for down payments and can’t afford to repay what they wish to borrow. If they could repay their loans, plenty of credit would be available. But there is no money—and no savings—within the economy for it to get moving again. The only possible source is more federal borrowing to prime the pump Keynesian-style. That is what the politicians claim the bailout will do. But it won’t.

Then what is happening?

What is happening is that the Bush administration is engineering a massive raid on the Federal treasury to pay off the people within the financial industry who have been operating the housing scam because the politicians told them to do it. This is hush money.

The people in the financial institutions who are getting the money will be passing it on to the big banks that leveraged their criminal lending practices. The giant sucking sound you hear is almost a trillion dollars of future taxpayer earnings going into the vaults of the nations’s biggest banks, such as Citibank, Bank of American, and—the pet bank of the Rockefeller family—J.P. Morgan Chase. Much will also go into the vaults of foreign investors such as the Bank of China.

And these banks have no intention of recycling the money into productive U.S. investments. Despite the political posturing, where much of it will go at the second or third tier is into executive salaries and bonuses. The fat cats are "gittin’ out while the gittin’s good."

What happens next?

Well, it is already happening. In the post-bubble era there will be no more economic engines for the American economy. A long term recession and depression are inevitable, and they are expected by those in the know. In fact, there has been a plan in the works for a very long time to bring down the U.S. economy, and it will be happening over the coming months.

This is why the government is also preparing to implement martial law, or something close to it, in case public unrest breaks out. We will likely also see a clampdown on free speech, the right to protest, and use of the internet. Federal facilities are being prepared all around the country to backstop state prisons and local jails that are already bursting at the seams.

This is the plan, so people need to begin to take whatever measures they can to cut their cost of living, get out of debt, and protect themselves and their families.

Richard C. Cook is a former U.S. federal government analyst, whose career included service with the U.S. Civil Service Commission, the Food and Drug Administration, the Carter White House, NASA, and the U.S. Treasury Department. His articles on economics, politics, and space policy have appeared in numerous websites and print magazines. His book on monetary reform, entitled We Hold These Truths: The Hope of Monetary Reform, will soon be published. He is the author of Challenger Revealed: An Insider’s Account of How the Reagan Administration Caused the Greatest Tragedy of the Space Age, called by one reviewer, "the most important spaceflight book of the last twenty years." His website is Comments or requests to be added to his mailing list or to purchase his special report on the 2008 election may be sent to [email protected].

Offline bigron

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Stocks fall on US vote concerns

The Bank of Japan has injected money into the market over successive days [EPA]

World stocks have fallen to a three-year low amid concerns that Washington's $700bn bailout package might not be enough to prevent the US economy and the rest of the world from slowing down further.

The FTSEurofirst 300 index fell 0.3 per cent on Friday, while the MSCI main world equity index lost 0.4 per cent, hitting its weakest point since July 2005.

The slump came hours before the US House of Representatives is due to meet to vote on the bailout package, which cleared the US senate on Thursday.

Most Asian markets also fell sharply on Friday. Tokyo slipped two per cent at close, Hong Kong was down 2.1 per cent at noon and Sydney 1.4 per cent.

In an attempt to ease pressure on the Nikkei, the Bank of Japan injected 800 billion yen ($7.6bn) into the market, the 13th straight business day it has done so.

Seoul and Shanghai were shut for public holidays. Taipei clawed back earlier losses to post a 0.7 per cent gain.

Dealers took their cue from Wall Street, where the Dow Jones Industrial Average sank 3.22 per cent to a three-year low on Thursday.

European caution

Against this backdrop of continued market losses, world financial leaders cautioned that the rescue plan may not be enough to revive the global economy.

Jean-Claude Trichet, the European Central Bank chief, said the measure was no guaranteed panacea.

"In America ... as in Europe and the rest of the world, we have to face up to the major correction that is under way" on financial markets, he told a French radio station on Friday.

"So we cannot say that after such and such an action, it is all over."

Trichet declined to label France and the eurozone's economic slowdown a recession, despite forecasts to that effect.

"ECB experts tell us that we have slowing growth," he said.

"I will not use any word other than that - slowing growth with significant risks that growth may become even weaker."

But Trichet stressed that the US rescue bill must be passed.

Earlier Nicolas Sarkozy, the French president, announced that he was to hold a European financial summit to discuss the global crisis in Paris on Saturday.

Those attending will include Gordon Brown, the UK prime minister, Silvio Berlusconi, the Italian prime minister, and Trichet.

Democrats optimistic

US House Democratic leaders are optimistic that the revised bill passed by the senate will clear the House of Representatives.

George Bush, the US president launched an impassioned appeal to the House to approve the package, saying that "people's jobs are in jeopardy".

Asian markets remain nervous over whether a US bailout will be effective [AFP]

In his 14th appeal in a fortnight for congress members to back the proposal, Bush said: "This issue has gone way beyond New York and Wall Street. This is an issue that is affecting hard-working people."

Despite Bush's appeal, investors worry that recent data, yet to capture the full shock to the labour market and consumer confidence from September's series of bank failures and troubles, is already showing the economy is nearing recession.

Investors also chose to stay on the sidelines in advance of a closely watched US jobs report due later.

Aly-Khan Satchu, a market analyst, told Al Jazeera that the current crisis marked a new era in the global economy.

"I think the teutonic plates are shifting in such an incredible and accelerated fashion. I think the problem for the US is that it has been living on the kindness of strangers, in that it has relied on borrowed money to fuel an orgy of consumption," he said from Nairobi, Kenya.

The borrowed money was like the oxygen. Now the oxygen is out of the system we are seeing a gradual process of asphyxiation. I think the amount [of the bailout] is a drop in the ocean.

"The Dow has fallen precipitously in the last ten days and I think the market is going to call the bluff of the US at this time."

 Source: Al Jazeera and agencies 

Offline bigron

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From The Times
October 2, 2008

Middle Americans unite against the great bank rescue

Alexi Mostrous in Richfield, Minnesota and Matt Spence

Willie Benway, 45, a Bush-voting truck driver with a Harley-Davidson jacket and a faded blond goatee, has little in common politically with Sharon Valentine, 60, a retired English teacher and self-confessed “woolly liberal”. On the subject of the $700 billion bank bailout plan, however, both are on the same page.

“It's goddamn un-American,” Mr Benway said as he leant against his pickup outside the Thrift Store in Richfield, Minnesota. “We don't give money to companies. We're not France - yet.” For Ms Valentine, sitting in a nearby mall: “Congress was right to vote the Bill down. It doesn't tackle the root causes or help the people that need it.”

In Richfield, a typical middle-class surburb of Minneapolis in the heart of the Midwest, Americans from across the political spectrum found something to gripe about when it came to the bailout.

“I literally had thousands of e-mails asking me to vote no on this,” said Congressman Tim Walz of Minnesota, one of 95 Democrats who opposed the Bill on Monday. “I've never seen anything like it in my two years of Congress. Folks just didn't want it.”

Three of Minnesota's eight members of the House of Representatives voted against the Wall Street bailout Bill on Monday. Two were Democrats and one was a Republican. Michele Bachmann, the lone Minnesota Republican to oppose the Bill, issued a statement calling it “rushed, unworkable and short-sighted”.

During Monday's debate, the ultra-rightwinger read into the Congressional record a piece from Investor's Business Daily putting the blame for the mortgage crisis on a Clinton-era rule change. This, it was claimed, had pushed the mortgage giants Fannie Mae and Freddie Mac “to aggressively lend to minority communities” so that home ownership could “open the door for blacks and other minorities to enter the middle class”.

On the other side of the aisle, the Democrats Mr Walz and Collin Peterson gave different reasons for voting against the plan. Mr Walz, who is locked in a competitive race for re-election, struck a populist tone: “My job is to protect the American taxpayer and this plan doesn't go far enough in looking out for the middle class. It doesn't go far enough to hold Wall Street accountable.”

But there is also the risk of fallout should the warnings of impending economic catastrophe come true. According to a Washington Post poll released this week, 47 per cent of Americans opposed the Bill. Nevertheless, almost nine out of ten expressed concern that the bailout's failure could lead to a more severe economic decline.

“I keep hearing that if we don't put in all this money then people will lose their jobs,” Randi Hansen, 26, a waitress at Richfield's only bowling alley, said. “I'm really worried about it. My friend has already lost her house and I can't afford not to work now. I'm a single mother and I have $50 a month to live on.”

Tim Dyksman, 38, who was laid off from a warehouse business in nearby Edina six months ago, said: “It sucks that big bosses get bonuses while the little guy gets screwed.”

Many people yesterday afternoon were still absorbing the shockwaves coming out of Wall Street.

As ever in Richfield, some people were finding comfort in their faith. “It's interesting to see what's going to happen,” said Jean, an elderly lady who declined to give her second name. “But the Bible says that we'll get through the bad times by trusting in the Lord. That's what I'm going to do.”

Offline bigron

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October 3, 2008

The Bubble Boys

The Greenspan bubble benefited the banks, the real estate moguls, and, most of all, the war profiteers

by Justin Raimondo

The $700 billion bailout for the Wall Street poobahs looks ready to sail through the House of Representatives, which earlier – and uncharacteristically – listened to the popular will and voted a resounding "No!" heard ‘round the world. After going back to the drawing boards, and doing what they did with the war funding vote – packing plenty of pork into it – the Democratic-controlled Senate gave its assent, as expected.

The history of this tactic is recent. When left-wing Democrats rebelled and threatened to vote against war funding, Pelosi festooned the "off-budget" appropriations bill with plenty of midnight basketball and similar bridges-to-nowhere: in Washington, a little bribery goes a long way. Same with the bailout bill: it went from 3 pages to novel-size and by the time it gets through the House it may be the legislative equivalent of Atlas Shrugged – although, I fear, our story will have a different ending. The pressure is now on House Republicans – who make up the majority of nay-sayerrs – to get with the program and vote "aye." One question, however, that is on everyone's mind is: where is all this money going to come from?

The answer is that it is going to be added to the U.S. government's already astronomical debt, which is being financed by foreign creditors – the Chinese, the Saudis, and various and sundry other governments flush with cash and looking to park it someplace. This has worked out, so far, although not without preliminary warnings aplenty of the gathering crisis. There is, however, a point where the credit rating of the U.S. Treasury reaches its limit – and it is about to do so. Past that point, foreigners will pull out their money, seeking safer havens than the increasingly hollow "guarantee" of our government's "good faith and credit."

Then what?

Then – real catastrophe, albeit not the one warned of by advocates of the bill, including the two "major" presidential candidates. To the solons of Washington, the downfall of the Bubble boyz – those who profited from Alan Greenspan's irrational exuberance as he stepped on the gas and let it rip – is the greatest tragedy ever told. No more private planes. No more high class whores – and, speaking of whores, no more corporate slush funds and fat campaign contributions to cooperative lawmakers. Oh, boo hoo hoo!

Yet this sentiment is limited to the precincts of the Imperial City. The meteoric rise and fall of the Bubble boyz is a morality tale that the man in the street can understand – and applaud! – with unabashedschadenfreude. The offspring of the Greenspan bubble are several grades lower on the evolutionary scale than the old WASP elite. They are certainly not imbued with either the traditional spirit of noblesse oblige or even ordinary common sense.

This is what Ayn Rand – Greenspan's old mentor – used to call "the aristocracy of pull," as she put it in one of her fascinating and audaciously self-referential essays. The housing boom – and bust – was made possible by U.S. government-guaranteed loans, given to individuals who failed to meet minimum credit standards. This "backed by the faith and credit of the U.S. government" label created a market that continued to overvalue these "assets," which were then bundled together into instruments of increasing complexity and sophistication. These "derivatives" and other exotic securities became progressively further and further removed from real market conditions.

The Greenspan bubble, pumped up to its limit, continued to expand – and quite naturally popped. Rand used to call him "the undertaker," because of his dark suits and darker demeanor. Little did she realize that her loyal disciple – Greenspan used to give lectures on "The Economics of a Free Society" at the old Nathaniel Branden Institute – would one day become the undertaker of the U.S. economy.

The policy of bank credit expansion – inflating the money supply – benefited certain groups and disadvantaged others: it privileged the already-rich at the expense of the aspiring, and those on limited incomes, because new money trickles downward, from the commanding heights to the lower echelons of the socio-economic pyramid. By the time it gets near the bottom, this cash has already lost a good deal of its value, although the illusion of widespread prosperity lingers for a time.

Socialism for the rich, capitalism for the poor – that's the first rule of state-capitalist societies everywhere. Aside from the financial whiz kids and the real estate moguls, however, it was the military-industrial complex, as Dwight Eisenhower called it, that was perhaps the single greatest beneficiary of the Greenspan bubble.

Our wars of ‘liberation" are financed by the age-old stratagem of inflating the money supply: this covert tax is no less keenly felt, yet our awareness of it is gradual, less shocking than a tax bill. Now, of course, we are feeling it, as even the most hawkish pro-war Republicans, such as Tom DeLay, admit. On MSNBC the other day, the "Hammer" was asked his opinion of what caused the fiscal crisis, and he somewhat sheepishly pointed to the costs of the Iraq war. By a conservative estimate, these costs will total some three trillion dollars, and today, as we approach our sixth year of war with no clear end in sight, even pro-war types such as DeLay, backed up against the wall by the fiscal crisis, concede war expenditures are the major obstacle in the path of "saving" the economy, bailout or no bailout.

There's an interesting short book, What We Could Have Done With the Money, that details what could have been accomplished with all that cash flushed down an Iraqi rat-hole. (Obama's plan is to increase the flow of tax dollars to the region, but instead divert it to an even deeper rat-hole: Afghanistan.) The war and the frantic arms build-up that have been the chief "accomplishments" of this administration leave behind a legacy of debt and misspent resources, and during the GOP primary campaign Ron Paul did a very effective riff on this theme.

Without the costs incurred by the war, the economy would be far stronger and able to resist, or ameliorate, the pressure that caused the bubble to burst so dramatically.

The main effect of the Greenspan bubble was that wealth was diverted away from its best and most efficient use, and toward the war profiteers. The War Party was personally enriched – lots of that freshly-minted cash went to the booming "homeland security" industry, and international military "contractors," aside from which they were handing out crates of cash in Iraq, as you'll recall. We bought our great "victory" in Anbar province, and thought we had bought the Afghan clans, or some of them. We're just beginning to learn that empire-building can be pricey, and that the Afghans don't stay bought for long. In the meantime, we're shipping cash overseas to virtually every nation outside the Axis of Evil (expanded version), while ordinary middle class Americans are being forced to bail out the rich on the home front.

Yet all these billions add up to very little, as advocates of "foreign aid" are fond of pointing out, relative to the total U.S. budget. While questioning the relevance of such a calculation, I would add that in comparison to the U.S. military budget alone, our foreign aid program is indeed a minor affair.

Our misnamed "defense" budget is more than the combined military expenditures of every other nation on earth. This is quite apart from the costs of the Iraq war, and the Afghan campaign, both of which are operating on "off-budget" "supplementary" appropriations, a method of accounting that would soon result in foreclosure and worse if applied to an ordinary American household. We don't even know how many multi-billions we're spending in covert operations around the world – and on the home front, as well, given the parameters of the PATRIOT Act and subsequent legislation. The bloated monster of the American state, and the doings of its officials and minions, is so skillfully wrapped in a thick veil of official secrecy that the costs are literally incalculable.

America has developed along a very narrow evolutionary path, like some species of animal that has developed a single attribute so specialized and out of proportion that it winds up in an evolutionary dead-end. That way lies extinction. There is, however, another path.

We could begin by making very large cuts in the "defense" budget: this would show the markets that we are serious., as Paul Craig Roberts suggests in the latest Counterpunch, about getting our economic act together. Ending the war would stop much of the heavy bleeding immediately, and give an anemic economy time to correct previous distortions generated by the Federal Reserve's easy money policy. Of course, only a gold-backed dollar can stop these boom-bust cycles, which are inherent in state-capitalist bank-centered systems such as ours – but that's a subject for another day, and, perhaps, another venue.

Just remember, all you left-wing foes of U.S. intervention, that it isn't just the banks that are getting bailed out. As you get behind Obama, and rationalize his backing of welfare for the well-connected, remember that the War Party, too, is getting bailed out.

The limitations imposed by finally facing the reality of bankruptcy, and doing something about it, would be fatal to the imperial project. Once we realize we're flat broke and act to turn things around, our government won't be sending tax dollars to, say, the former Soviet republic of Georgia, recent site of pilgrimages by Joe Biden and Cindy McCain. (Can Sarah Palin be far behind?)

Like lightning at midnight, what the economic crisis throws into stark relief is the corruption at the heart of our system. The Empire is like a towering tree hollow at its center, its core eaten out by termites and dry rot. It will surely make quite a crash when it falls, or is pushed over.

~ Justin Raimondo

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Offline bigron

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Weekend Edition
October 3 - 5, 2008

Bail Out the Homeowners!

Why Paulson's Plan is a Fraud


Is the Paulson bailout itself as big a fraud as the leveraged subprime mortgages?

Yesterday, here on CounterPunch,  I discussed the bailout as proposed and noted that the proposal cannot succeed if it impairs the US Treasury’s credit standing and/or the combination of mark-to-market and short-selling permits short-sellers to prosper by driving more financial institutions into bankruptcy.   

A reader’s comment and an article by Yale professors Jonathan Kopell and William Goetzmann  raise precisely this question of the fraudulence of the Paulson package.

As one reader put it,“We have debt at three different levels: personal household debt, financial sector debt and public debt.  The first has swamped the second and now the second is being made to swamp the third.  The attitude of our leaders is to do nothing about the first level of debt and to pretend that the third level of debt doesn't matter at all.”

The argument for the bailout is that the banks will be free of the troubled instruments and can resume lending and that the US Treasury will recover most of the bailout costs, because only a small percentage of the underlying mortgages are bad.  Let’s examine this argument.

In actual fact, the Paulson bailout does not address the core problem.  It only addresses the problem for the financial institutions that hold the troubled assets. Under the bailout plan, the troubled assets move from the banks’ books to the Treasury’s.  But the underlying problem--the continuing diminishment of mortgage and home values--remains and continues to worsen.

The origin of the crisis is at the homeowner level.  Homeowners are defaulting on mortgages.  Moving the financial instruments onto the Treasury’s books does not stop the rising default rate.

The bailout is focused on the wrong end of the problem.  The bailout should be focused on the origin of the problem, the defaulting homeowners.  The bailout should indemnify defaulting homeowners and pay off the delinquent mortgages.  As Koppell and Goetzmann point out,  the financial instruments are troubled because of mortgage defaults.  Stopping the problem at its origin would restore the value of the mortgage-based derivatives and put an end to the crisis.

This approach has the further advantage of stopping the slide in housing prices and ending the erosion of local tax bases that result from foreclosures and houses being dumped on the market. What about the moral hazard of bailing out homeowners who over-leveraged themselves?  Ask yourself: How does it differ from the moral hazard of bailing out the financial institutions that securitized questionable loans, insured them, and sold them as investment grade securities? Congress should focus the bailout on refinancing the troubled mortgages as the Home Owners’ Loan Corp. did in the 1930s, not on the troubled institutions holding the troubled instruments linked to the mortgages. Congress needs to back off, hold hearings, and talk with Koppell and Goetzmann.Congress must know the facts prior to taking action.  The last thing Congress needs to do is to be panicked again into agreeing to a disastrous course.

Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration. He was Associate Editor of the Wall Street Journal editorial page and Contributing Editor of National Review. He is coauthor of The Tyranny of Good Intentions. He can be reached at: [email protected] 

Offline bigron

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Real Financial Meltdown
On The Way - 100 Times Greater

By J.D. Foster
Even if Con-gress passes the $700 billion bailing out of the huckster banksters, it will be like putting a band-aid on a leak of Hoover Dam. What lies in the immediate future and coming home to roost, is something 100 times bigger and meaner. And no-one, and I mean no-one wants to talk about this in Washington, D.C.. This criminal financial nightmare is just going to get worse with every passing week. Social security and Medicare has everything beat. It will be explained to you below. - JPW
The United States faces not only a financial crisis but a fiscal crisis. The financial crisis washing over the broader economy is unfolding now, of course; the fiscal one is on the horizon.
The financial crisis stems from extraordinarily bad decisions from Main Street to Wall Street involving residential housing. Every homeowner who borrowed excessively, speculated through flipping homes or lied on a mortgage application shares the blame, as do the lenders -- on up to the Wall Street suits who played fast and loose in defiance of simple prudence.
The federal government also deserves blame. Years ago, it created a program that fostered a culture of imprudent mortgage lending to individuals who posed a high likelihood of foreclosure (minorities).
It created and nurtured financial behemoths in Fannie Mae and Freddie Mac, which have now become wards of the state. It maintained a regulatory system fit for an age of typewriters and slide rules. And regulators worldwide were caught flat-footed as the threats built up.
The Paulson plan was certainly no cure-all; it was intended to keep capital markets functioning so they can resolve their own problems.The plan's core was to make up to $700 billion of taxpayer funds available to purchase low-quality assets. We need additional steps, such as expanding the reach of deposit insurance at commercial banks. The problem began with housing, but it has now spread far beyond.Another homeowner bailout bill just won't make much difference.
We face two choices. We can vent on the Paulson plan, as House members who voted against it earlier today, have done. Or months from now we can vent at Congress for not passing the plan, as the ranks of the unemployed swell by a couple million or more. The issue is whether to act to reduce the depth and duration of the economic slowdown, not whether to prevent it.
The Paulson plan's sticker price of $700 billion is shocking, but in context, the consequences for the federal debt and deficit are relatively minor. The real fiscal crisis, which is just around the corner, is more than 100 times greater. That crisis involves the promises made through Medicare and Social Security. Compared with the excess costs in these central federal entitlement programs, the Paulson plan's size is just a warm-up.
J.D. Foster is the Norman B. Ture Senior Fellow in the Economics of Fiscal Policy at The Heritage Foundation (

Offline netizen_x

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Federal Reserve Engaged in Acts of Economic Warfare Against America

(NaturalNews) In 1942, German intelligence officers rounded up skilled Jewish prisoners and launched Operation Bernhardt, a clever scheme designed to counterfeit hundreds of millions of dollars worth of British Pounds and destroy the British economy by flooding it with counterfeit money. Located in the Sachsenhausen concentration camp, Operation Bernhardt was, even by modern standards, a runaway success that resulted in the creation of forged bank notes worth 132 million British Pounds.

This "economic warfare" operation resulted in a devastating economic effect on the British economy. You can read the true history of this operation here:

It is important to note that Operation Bernhardt was an act of war, specifically pursued for the purpose of destroying Britain's economy by creating so much new money that the value of the money already in circulation would plummet. This was considered a strategic attack, just as effective as carpet-bombing tank factories or mowing down soldiers on the field with German-made MG42 machine guns.

What does all this have to do with the Federal Reserve?

Today, the Federal Reserve is engaged in an eerily similar operation, counterfeiting trillions of dollars in U.S. bank notes and flooding the U.S. money supply with money created from nothing. The result, of course, is the same as was intended by Operation Bernhardt in 1942: The economic destruction of the target nation. Only this time, the target is the United States of America.

Hilariously, the Fed claims it's doing this to save the economy. Yet the laws of economics tell us that flooding the money supply with trillions of dollars in new money actually harms the economy. And the Fed has been hard at work causing this harm: $250+ billion two weeks ago, $600+ billion last week and $900 billion earlier this week! It's beginning to crank up the printing presses to the tune of a trillion dollars a week, and by doing so, it's contributing to the destruction of the U.S. economy at a pace the Third Reich could have barely imagined.

Has the Fed declared war on the working class?
If the actions pursued by the Federal Reserve were being masterminded by Al-Qaeda, they would be denounced as acts of war. In World War II, such actions were deliberate acts of war. Targeting the economy for destruction by flooding the money supply with counterfeit currency is, by any measure, a threat to any nation.

So why is the Federal Reserve engaged in actions that, if committed by other nations, would warrant a military response? This is not an idle question. I'm not asking this in a satirical way. I'm quite serious about this: Why is the Fed committing acts of economic warfare against the United States of America? (The Fed, by the way, is a private company. It is not, as you've been led to believe, part of the U.S. government.)

The answer is obvious. You've probably already figured it out: The Federal Reserve is at war with America. It's an economic war, of course, not a bombs-and-bullets war. The casualties, though, are just as real: Savings accounts, retirement funds, bank accounts, jobs, businesses, pensions and much more.

By counterfeiting trillions of dollars like a Sachsenhausen operation on steroids, the Fed is carpet-bombing the U.S. economy with an unprecedented flood of fiat currency, causing the exact same economic destruction intended by the Nazis in World War II (but on a much more devastating scale). And it's doing this as part of a new economic war.

Class warfare has begun
What war? The war between the wealthy elite and the working class. The Fed is working hard, of course, to protect the wealthy elite. Over a trillion dollars of taxpayer money has already been earmarked to bail out the rich, elite bankers who lost other people's money in a series of idiotic bets on fictitious financial instruments.

And what are these bankers doing with this taxpayer money? According to an Associated Press report published yesterday, executives of the failed insurance company AIG were sent on a $440,000 retreat "to a posh California resort" less than one week after the U.S. government bailed them out. At the spa, AIG executives enjoyed spa treatments, massages, organic food buffets and bodywork therapy, all while the American taxpayers footing the bill were slaving away in real jobs, doing real work.

That's how this new class warfare is taking shape: YOU (the working class) get all the debt, all the losses, and all the financial burden. THEY (the wealthy elite) get all the profits, all the luxury spa treatments, all the tax breaks and billions of dollars in free money from the Federal Reserve.

In the 1942 Operation Bernhardt, the Germans literally planned to load hundreds of millions of dollars in British Pound bank notes and air-drop them over London. The resulting chaos, it was believed, would shut down the British economy, halting the flow of money needed by Britain to fund its war effort. In the United States today, the Fed is taking a different approach: Air-dropping trillions of dollars into the laps and bank accounts of wealthy bankers and financial institution CEOs, concentrating the massive creation of fiat currency into the hands of less than 1% of the population.

And just to make sure the economic carpet-bombing is a complete success, the Federal Reserve and U.S. government are conspiring to create more than a trillion dollars in new money each week, then flood those funds into banks, businesses and insurance companies. This will, of course, devastate the value of the dollars being saved, held or earned by the wage slaves who labor their lives away under this economic regime. (That would be you and me.)

It's a brilliant plan... if you're interested in destroying a nation. This kind of attack would bring almost any nation to its knees. It's an act of war that requires no violence, no bombs and no destruction of real infrastructure. And yet it achieves what every war in history has ever sought to achieve: The transfer of power from the hands of the many to the hands of the few.

The Federal Reserve, in effect, has become a modern-day economic Third Reich, and it has set its sights on the U.S. economy.

Acts of economic terrorism?
Perhaps a more accurate metaphor here would be that the Fed's creation of trillions of dollars of new money is "an act of economic terrorism" against the United States. In fact, the terrorists who masterminded 9/11 are no doubt watching this whole thing with a great sense of satisfaction. The U.S. government is now doing to its own people what the terrorists could never have accomplished: The destruction of a large portion of its economy, its currency and the savings of its people.

The economic losses of 9/11 pale in comparison to the financial destruction that has been unleashed onto America by the Federal Reserve. Two days ago, the market reaction resulted in the wipeout of $2 trillion in retirement savings of the American people. Yesterday's market drop added another $2 trillion (or so) in losses. And this is possibly just the very beginning. There is no limit to the economic destruction that can now be unleashed upon America by the Fed's counterfeiting operation.

Yet, amazingly, it wasn't "terrorists" who put this plan into place. Who was it, exactly? Your Congressional representatives! In a grand, historical betrayal of the American people, members of your own U.S. House of Representatives and Senate voted to unleash this economic assault on America, violating the wishes of 99% of the American people (who are aligned against bailing out the rich on the backs of the poor).

Of course, to hear them explain it, their actions are meant to save the taxpayers. Yep, that's their plan: To save YOU, the taxpayer, by confiscating your money and handing it over to the wealthy elite. And whatever money can't be stolen from the taxpayers will be counterfeited by the Fed's money-creation machine.

The Real Agenda: A Massive Transfer of Wealth
We are not watching an economic rescue, friends. We are watching an economic coup. Creating and dumping trillions of dollars into the money supply is an act of war. But it's a war with a specific purpose.

What's happening right now is that the United States is being taken over by King Henry and his accomplices. More than fifty percent of the housing and nearly twenty percent of the entire U.S. economy is now controlled by one person -- Henry Paulson -- and that person answers to no one. He isn't elected, he can't be removed from office, and he's subject to no law.

King Henry controls unlimited funds. He can print any amount of money, or confiscate any amount from the taxpayers (by spending taxpayer dollars to bail out his rich friends). If the Federal Reserve is the new Third Reich, King Henry is its Hitler.

The economic war has already been lost by the People. It was lost on September 30, 2008, when Congress surrendered the U.S. economy to King Henry. The People now own nothing but paper money and ephemeral digital account numbers, all of which could be turned into worthless digits overnight by a single decision from King Henry.

In this economic bailout and the Fed's unlimited creation of new money, America has suffered the greatest act of economic terrorism in our nation's history. Note carefully that it wasn't conducted by the Nazis, Saddam Hussain or Al Qaeda. It was, in fact, put into place by 172 Democrats and 91 Republicans in the House, and a similar majority in the U.S. Senate. (See the complete list below.)

So what can YOU do right now?
A system of exchange is not dependent on the dollar alone. Commerce will survive the collapse of one currency. Trade will go on after this economic chaos passes, and businesses will continue to be an important part of our economic future.

People will still need food, clothing, nutritional supplements, fuel, services, computers, tutoring, services, pet products, children's products, cars, MP3 players and much more. The end of the U.S. dollar is NOT the end of the world. It is simply the end of one empire...

In my view, the best way to financial survive this economic warfare being conducted by the Federal Reserve against the People is to create your own economic abundance by owning (or launching) your own independent income sources.

In fact, I've written an entire report on how to accomplish this. It's called How to Build Your Financial Safety Net. Due to this economic crisis, I've decided to release it at no charge, and it's available right now at:

Read it if you want to be empowered, informed and insulated from the demise of the dollar. Using the strategies you'll find in that report, you can drastically limit your losses in this economic carpet-bombing of the U.S. economy. In fact, I believe you can emerge with greater wealth than you had when it all started.

You probably won't be getting paid in dollars, however. Expect a new currency to be the future system of exchange in America. But building reliable income streams now is a smart way to survive the coming economic implosion that will put corporations, governments and non-profits out of business. (If you work for a paycheck, your paycheck may be in danger right now.)

What's Really Radical
By the way, do you think this article is radical? Some people have told me that my reporting on the economic situation is "radical." You know what I told them?

I said imagine two households. One household balances its budget, spends only what it brings home in income and has no debt. The other household spends twice as much as it earns. It owes $50,000 on credit cards and borrows money from loan sharks to meet the minimum payments on its credit cards.

Which household is "radical?"

Now consider this: The second household sneaks into the first household and steals money to pay its own debts. On top of that, it has a counterfeit cash printing machine in the basement, and it's cranking out thousands of dollars a week just to attempt to pay off its credit cards. It's immune to the law because it buys off the local police for criminal immunity.

Which household is headed towards financial disaster? Which household has a real future, and which one doesn't?

That second house, of course, is the United States government. My reporting on the U.S. financial situation is downright tame compared to what's really going on behind the scenes. I can't get radical enough to accurately describe the degree of deception and outright theft that's taking place in Washington right now.

History will show that not only were my warnings accurate, they were understated by a wide margin. Reporting the truth is a delicate thing. People can only stomach so much truth at any one time. Few people can handle the whole truth, which is why I usually refrain from reporting it. There are things stated in this article that only hint at much bigger stories that will someday be told by others.

Only the most open-minded, skeptical thinkers can even mentally consider the real truth of what's happening in our world today. Most people have been brainwashed into living in a fictional world, and they are unable to even consider truths that threaten their grip on reality. As Morpheus explained, "The mind has trouble letting go."

As a result, the public has to be led by the hand from one realization to the next, little by little, until they attain the ability to see the world as it really is rather than the illusion that has been constructed for them by the very people running this financial scam.

Below, I have a riddle for you. Here you'll find an anagram. If you can figure out what this means (and if these words mean something to you), then you're probably among the very few who are truly informed.

Advice Kid, Free Snef J., Jean Loxes

Video: How Money Creation Actually Works
Check out this video to see how the Fed (and the fractional-reserve banking system) creates money out of nothing:

How Congress Voted
Here is the list of those Congressional representatives who surrendered your economic future to King Henry. A "Y" means a "Yes" vote (in favor of the financial bailout legislation).

This is, in essence, a list of those who have betrayed the People by conspiring to instigate acts of economic warfare against We the People. ("N" means they voted No. "Y" means they voted Yes.")

Democrats - Cramer, Y; Davis, Y.
Republicans - Aderholt, N; Bachus, Y; Bonner, Y; Everett, Y; Rogers, Y.

Republicans - Young, N.

Democrats - Giffords, Y; Grijalva, N; Mitchell, Y; Pastor, Y.
Republicans - Flake, N; Franks, N; Renzi, N; Shadegg, Y.

Democrats - Berry, Y; Ross, Y; Snyder, Y.
Republicans - Boozman, Y.

Democrats - Baca, Y; Becerra, N; Berman, Y; Capps, Y; Cardoza, Y; Costa, Y; Davis, Y; Eshoo, Y; Farr, Y; Filner, N; Harman, Y; Honda, Y; Lee, Y; Lofgren, Zoe, Y; Matsui, Y; McNerney, Y; Miller, George, Y; Napolitano, N; Pelosi, Y; Richardson, Y; Roybal-Allard, N; Sanchez, Linda T., N; Sanchez, Loretta, N; Schiff, Y; Sherman, N; Solis, Y; Speier, Y; Stark, N; Tauscher, Y; Thompson, Y; Waters, Y; Watson, Y; Waxman, Y; Woolsey, Y.

Republicans - Bilbray, N; Bono Mack, Y; Calvert, Y; Campbell, Y; Doolittle, N; Dreier, Y; Gallegly, N; Herger, Y; Hunter, N; Issa, N; Lewis, Y; Lungren, Daniel E., Y; McCarthy, N; McKeon, Y; Miller, Gary, Y; Nunes, N; Radanovich, Y; Rohrabacher, N; Royce, N.

Democrats - DeGette, Y; Perlmutter, Y; Salazar, N; Udall, N.
Republicans - Lamborn, N; Musgrave, N; Tancredo, Y.

Democrats - Courtney, N; DeLauro, Y; Larson, Y; Murphy, Y.
Republicans - Shays, Y.

Republicans - Castle, Y.

Democrats - Boyd, Y; Brown, Corrine, Y; Castor, N; Hastings, Y; Klein, Y; Mahoney, Y; Meek, Y; Wasserman Schultz, Y; Wexler, Y.
Republicans - Bilirakis, N; Brown-Waite, Ginny, N; Buchanan, Y; Crenshaw, Y; Diaz-Balart, L., N; Diaz-Balart, M., N; Feeney, N; Keller, N; Mack, N; Mica, N; Miller, N; Putnam, Y; Ros-Lehtinen, Y; Stearns, N; Weldon, Y; Young, N.

Democrats - Barrow, N; Bishop, Y; Johnson, N; Lewis, Y; Marshall, Y; Scott, Y.
Republicans - Broun, N; Deal, N; Gingrey, N; Kingston, N; Linder, N; Price, N; Westmoreland, N.

Democrats - Abercrombie, Y; Hirono, Y.

Republicans - Sali, N; Simpson, Y.

Democrats - Bean, Y; Costello, N; Davis, Y; Emanuel, Y; Foster, Y; Gutierrez, Y; Hare, Y; Jackson, Y; Lipinski, N; Rush, Y; Schakowsky, Y.
Republicans - Biggert, Y; Johnson, N; Kirk, Y; LaHood, Y; Manzullo, N; Roskam, N; Shimkus, N; Weller, Y.

Democrats - Carson, Y; Donnelly, Y; Ellsworth, Y; Hill, N; Visclosky, N.
Republicans - Burton, N; Buyer, N; Pence, N; Souder, Y.

Democrats - Boswell, Y; Braley, Y; Loebsack, Y.
Republicans - King, N; Latham, N.

Democrats - Boyda, N; Moore, Y.
Republicans - Moran, N; Tiahrt, N.

Democrats - Chandler, N; Yarmuth, Y.
Republicans - Davis, N; Lewis, Y; Rogers, Y; Whitfield, N.

Democrats - Cazayoux, N; Jefferson, N; Melancon, Y.
Republicans - Alexander, Y; Boustany, Y; McCrery, Y; Scalise, N.

Democrats - Allen, Y; Michaud, N.

Democrats - Cummings, Y; Edwards, Y; Hoyer, Y; Ruppersberger, Y; Sarbanes, Y; Van Hollen, Y.
Republicans - Bartlett, N; Gilchrest, Y.

Democrats - Capuano, Y; Delahunt, N; Frank, Y; Lynch, N; Markey, Y; McGovern, Y; Neal, Y; Olver, Y; Tierney, Y; Tsongas, Y.

Democrats - Conyers, N; Dingell, Y; Kildee, Y; Kilpatrick, Y; Levin, Y; Stupak, N.
Republicans - Camp, Y; Ehlers, Y; Hoekstra, Y; Knollenberg, Y; McCotter, N; Miller, N; Rogers, N; Upton, Y; Walberg, N.

Democrats - Ellison, Y; McCollum, Y; Oberstar, Y; Peterson, N; Walz, N.
Republicans - Bachmann, N; Kline, Y; Ramstad, Y.

Democrats - Childers, N; Taylor, N; Thompson, N.
Republicans - Pickering, Y.

Democrats - Carnahan, Y; Clay, N; Cleaver, Y; Skelton, Y.
Republicans - Akin, N; Blunt, Y; Emerson, Y; Graves, N; Hulshof, N.

Republicans - Rehberg, N.

Republicans - Fortenberry, N; Smith, N; Terry, Y.

Democrats - Berkley, Y.
Republicans - Heller, N; Porter, Y.

Democrats - Hodes, N; Shea-Porter, N.

Democrats - Andrews, Y; Holt, Y; Pallone, Y; Pascrell, Y; Payne, N; Rothman, N; Sires, Y.
Republicans - Ferguson, Y; Frelinghuysen, Y; Garrett, N; LoBiondo, N; Saxton, Y; Smith, N.

Democrats - Udall, N.
Republicans - Pearce, N; Wilson, Y.

Democrats - Ackerman, Y; Arcuri, Y; Bishop, Y; Clarke, Y; Crowley, Y; Engel, Y; Gillibrand, N; Hall, Y; Higgins, Y; Hinchey, N; Israel, Y; Lowey, Y; Maloney, Y; McCarthy, Y; McNulty, Y; Meeks, Y; Nadler, Y; Rangel, Y; Serrano, N; Slaughter, Y; Towns, Y; Velazquez, Y; Weiner, Y.
Republicans - Fossella, Y; King, Y; Kuhl, Y; McHugh, Y; Reynolds, Y; Walsh, Y.

Democrats - Butterfield, N; Etheridge, Y; McIntyre, N; Miller, Y; Price, Y; Shuler, N; Watt, Y.
Republicans - Coble, Y; Foxx, N; Hayes, N; Jones, N; McHenry, N; Myrick, Y.

Democrats - Pomeroy, Y.

Democrats - Kaptur, N; Kucinich, N; Ryan, Y; Space, Y; Sutton, Y; Wilson, Y.
Republicans - Boehner, Y; Chabot, N; Hobson, Y; Jordan, N; LaTourette, N; Latta, N; Pryce, Y; Regula, Y; Schmidt, Y; Tiberi, Y; Turner, N.

Democrats - Boren, Y.
Republicans - Cole, Y; Fallin, Y; Lucas, N; Sullivan, Y.

Democrats - Blumenauer, N; DeFazio, N; Hooley, Y; Wu, Y.
Republicans - Walden, Y.

Democrats - Altmire, N; Brady, Y; Carney, N; Doyle, Y; Fattah, Y; Holden, N; Kanjorski, Y; Murphy, Patrick, Y; Murtha, Y; Schwartz, Y; Sestak, Y.
Republicans - Dent, Y; English, N; Gerlach, Y; Murphy, Tim, N; Peterson, Y; Pitts, N; Platts, N; Shuster, Y.

Democrats - Kennedy, Y; Langevin, Y.

Democrats - Clyburn, Y; Spratt, Y.
Republicans - Barrett, Y; Brown, Y; Inglis, Y; Wilson, Y.

Democrats - Herseth Sandlin, N.

Democrats - Cohen, Y; Cooper, Y; Davis, Lincoln, N; Gordon, Y; Tanner, Y.
Republicans - Blackburn, N; Davis, David, N; Duncan, N; Wamp, Y.

Democrats - Cuellar, Y; Doggett, N; Edwards, Y; Gonzalez, Y; Green, Al, Y; Green, Gene, N; Hinojosa, Y; Jackson-Lee, Y; Johnson, E. B., Y; Lampson, N; Ortiz, Y; Reyes, Y; Rodriguez, N.
Republicans - Barton, N; Brady, Y; Burgess, N; Carter, N; Conaway, Y; Culberson, N; Gohmert, N; Granger, Y; Hall, N; Hensarling, N; Johnson, Sam, N; Marchant, N; McCaul, N; Neugebauer, N; Paul, N; Poe, N; Sessions, Y; Smith, Y; Thornberry, Y.

Democrats - Matheson, N.
Republicans - Bishop, N; Cannon, Y.

Democrats - Welch, Y.

Democrats - Boucher, Y; Moran, Y; Scott, N.
Republicans - Cantor, Y; Davis, Tom, Y; Drake, N; Forbes, N; Goode, N; Goodlatte, N; Wittman, N; Wolf, Y.

Democrats - Baird, Y; Dicks, Y; Inslee, N; Larsen, Y; McDermott, N; Smith, Y.
Republicans - Hastings, N; McMorris Rodgers, N; Reichert, N.

Democrats - Mollohan, Y; Rahall, Y.
Republicans - Capito, N.

Democrats - Baldwin, Y; Kagen, N; Kind, Y; Moore, Y; Obey, Y.
Republicans - Petri, N; Ryan, Y; Sensenbrenner, N.

Republicans - Cubin, Y.
"Since corrupt people unite amongst themselves to constitute a force, then honest people must do the same" ~ Leo Tolstoy

Offline Nailer

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"They were getting their manicures, their pedicures, massages, their facials while the American people were paying their bills," thundered Rep. Elijah E. Cummings (D-Md.)"

comments by tube members.

take all the executive's money, take their homes, take everything from them.

they don't deserve anything from us

Y0UTUB3ADD1CT (31 minutes ago) Show Hide 0   Marked as spam Reply I thank you for your pity, our neighbor to the north.
I'm tired of being mad and feeling sorry for my country. =(

coffeefish (32 minutes ago) Show Hide 0   Marked as spam Reply I want them fired, and I want the money returned.

dayeliu (33 minutes ago) Show Hide 0   Marked as spam Reply That Eric Dinallo thing should be fired.
Comment(s) marked as spam Show

Comment(s) marked as spam Hide
sexanoe (1 hour ago) Show Hide 0   Marked as spam Reply Marked as spam i want to have sex with aig

Fonderplague (1 hour ago) Show Hide 0   Marked as spam Reply Burn all these f**kers houses to the ground that's what I say.

jmgarvin (1 hour ago) Show Hide 0   Marked as spam Reply Eric Dinallo, F*CK YOU! You F*CKING tool bag.

mtrolley (1 hour ago) Show Hide 0   Marked as spam Reply I feel really sorry for Americans 

shattersphere (1 hour ago) Show Hide 0   Marked as spam Reply Kill all of those executive bastards and sell all their belongings afterward.

CronoTrig (1 hour ago) Show Hide
I am a realist that is slightly conservative yet I have some republican demeanor that can turn democrat when I feel the urge to flip independant.
The truth shall set you free, if not a 45ACP round will do the trick.. HEHE

Offline ronpaulunited

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And yet nobama support this mess

just sad.
I'm not a fan of either party, I'm an American and a partiot and thank god ron paul gets my vote.

Offline ronpaulunited

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Lipstick on a Bailout

By Ron Paul

01/10/09 -"ICH"
-- - This time last week, the biggest bailout in the history of the world seemed to be a fait accompli.  Last weekend, the Fed Chairman and the Secretary of the Treasury had harsh words of doom and gloom for Congressional leaders, with the rest of the administration parroting along, and by last Monday it seemed both parties were about to fall in line and vote our Republic away by socializing the banking industry through this bailout. 


Foolish business behavior was about to be rewarded, and propped up a little longer, the bubble blown a little bigger, and our coming Depression made that much greater, but then something happened on the way to the House floor.


Citizens made their voices heard. 


The real story behind the story in Congress this week was the thousands of calls and emails sent to Representatives, clogging up inboxes and even slowing down the House internet system.  Slowly, like the Titanic turning around, sentiments on the Hill shifted, and we heard Congressmen capitulating and changing their tune a little, desperately trying to find ways to salvage the bailout without completely enraging their constituencies.


Now we hear about taxpayer protections, about golden parachutes, and about other nuances that hardly cover up the fact that we would be creating more money out of thin air and further devaluing the dollar!  The problem is not HOW the government is spending this money; it’s the fact that the government is spending this money.  We don’t have it.  We are already nearly $10 trillion in debt, not including unfunded liabilities.  We already spend about $1 trillion a year we don’t have on our overseas empire.  Now nearly $1 trillion more is somehow supposed to magically appear and solve all our problems!  No – creating more money might delay the inevitable for some well-connected banks on Wall Street, but in a few weeks we will find ourselves right back in this same position, but much poorer.


The unfortunate thing is that we’ve already spent at least $700 billion on other bailouts that did not solve the problem.  And while all this negotiation was taking place, the auto industry was quietly bailed out, with no controversy, no discussion, to the tune of $25 billion.


Inevitably, it appears Congress will call their constituents’ bluff and the bailout will pass, because that is the habit Wall Street and Washington have fallen into.  People are right to be concerned about our financial future.  I’ve been talking for 30 some years about reasons we need to be concerned and change our ways.  We find ourselves now in a position of no good options, and no silver bullets.  But the worst thing we can do is to compound our problems by intensifying the mistakes of the past.  We do have tough economic times ahead, no doubt, no matter what we do, even if we do nothing.  The question, is will we have the courage to take our medicine now and get it over with, or will we prolong the misery for many years to come?  I’m less and less optimistic about the answer to that question.

Dr. Ron Paul is a Republican member of Congress from Texas

Ron Paul speaks the truth here.
I'm not a fan of either party, I'm an American and a partiot and thank god ron paul gets my vote.


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Offline Biggs

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other than the fact we have now seen no net stock market growth since 1996 I cannot see what is wrong with the picture

the tech and property bubbles have now been erased

Offline Amd304912

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  • Ietsism (Dutch “ietsisme” - "Somethingism")
    • Israel-centered-neoconservative-death-cult-of-evangelican-born-again-Xtians-Are-you-one?                                      Im Not.
faith basers make me as sick as free basers Surah 75 سورة القيامة - محمد [ ] An Almond for a Parrot
€∀§M_ ³ حتى الآلهة الحمار الاحتفاظ زنجي الخراء تمشيا   أنت كافر نكاح تفرز من الشيطان الاكبر يا  ح

Offline bigron

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U.S. Intel Chief's Shocking Warning: Wall Street's Disaster Has Spawned Our Greatest Terrorist Threat

The Director of National Intelligence argued that Wall Street, rather than Islamic jihad, has produced our most dangerous terrorists.

By Chris Hedges, Truthdig
Posted on February 17, 2009, Printed on February 17, 2009

We have a remarkable ability to create our own monsters. A few decades of meddling in the Middle East with our Israeli doppelgnger and we get Hezbollah, Hamas, al-Qaida, the Iraqi resistance movement and a resurgent Taliban. Now we trash the world economy and destroy the ecosystem and sit back to watch our handiwork. Hints of our brave new world seeped out Thursday when Washington's new director of national intelligence, retired Adm. Dennis Blair, testified before the Senate Intelligence Committee. He warned that the deepening economic crisis posed perhaps our gravest threat to stability and national security. It could trigger, he said, a return to the "violent extremism" of the 1920s and 1930s.

It turns out that Wall Street, rather than Islamic jihad, has produced our most dangerous terrorists. We will see accelerated plant and retail closures, inflation, an epidemic of bankruptcies, new rounds of foreclosures, bread lines, unemployment surpassing the levels of the Great Depression and, as Blair fears, social upheaval.

The United Nations' International Labor Organization estimates that some 50 million workers will lose their jobs worldwide this year. The collapse has already seen 3.6 million lost jobs in the United States. The International Monetary Fund's prediction for global economic growth in 2009 is 0.5 percent--the worst since World War II. There are 2.3 million properties in the United States that received a default notice or were repossessed last year. And this number is set to rise in 2009, especially as vacant commercial real estate begins to be foreclosed. About 20,000 major global banks collapsed, were sold or were nationalized in 2008. There are an estimated 62,000 U.S. companies expected to shut down this year. Unemployment, when you add people no longer looking for jobs and part-time workers who cannot find full-time employment, is close to 14 percent.

And we have few tools left to dig our way out. The manufacturing sector in the United States has been destroyed by globalization. Consumers, thanks to credit card companies and easy lines of credit, are $14 trillion in debt. The government has pledged trillions toward the crisis, most of it borrowed or printed in the form of new money. It is borrowing trillions more to fund our wars in Afghanistan and Iraq. And no one states the obvious: We will never be able to pay these loans back. We are supposed to somehow spend our way out of the crisis and maintain our imperial project on credit. Let our kids worry about it. There is no coherent and realistic plan, one built around our severe limitations, to stanch the bleeding or ameliorate the mounting deprivations we will suffer as citizens. Contrast this with the national security state's strategies to crush potential civil unrest and you get a glimpse of the future. It doesn't look good.

"The primary near-term security concern of the United States is the global economic crisis and its geopolitical implications," Blair told the Senate. "The crisis has been ongoing for over a year, and economists are divided over whether and when we could hit bottom. Some even fear that the recession could further deepen and reach the level of the Great Depression. Of course, all of us recall the dramatic political consequences wrought by the economic turmoil of the 1920s and 1930s in Europe, the instability, and high levels of violent extremism."

The specter of social unrest was raised at the U.S. Army War College in November in a monograph [click on Policypointers' pdf link to see the report] titled "Known Unknowns: Unconventional 'Strategic Shocks' in Defense Strategy Development." The military must be prepared, the document warned, for a "violent, strategic dislocation inside the United States," which could be provoked by "unforeseen economic collapse," "purposeful domestic resistance," "pervasive public health emergencies" or "loss of functioning political and legal order." The "widespread civil violence," the document said, "would force the defense establishment to reorient priorities in extremis to defend basic domestic order and human security."

"An American government and defense establishment lulled into complacency by a long-secure domestic order would be forced to rapidly divest some or most external security commitments in order to address rapidly expanding human insecurity at home," it went on.

"Under the most extreme circumstances, this might include use of military force against hostile groups inside the United States. Further, DoD [the Department of Defense] would be, by necessity, an essential enabling hub for the continuity of political authority in a multi-state or nationwide civil conflict or disturbance," the document read.

In plain English, something bureaucrats and the military seem incapable of employing, this translates into the imposition of martial law and a de facto government being run out of the Department of Defense. They are considering it. So should you.

Adm. Blair warned the Senate that "roughly a quarter of the countries in the world have already experienced low-level instability such as government changes because of the current slowdown." He noted that the "bulk of anti-state demonstrations" internationally have been seen in Europe and the former Soviet Union, but this did not mean they could not spread to the United States. He told the senators that the collapse of the global financial system is "likely to produce a wave of economic crises in emerging market nations over the next year." He added that "much of Latin America, former Soviet Union states and sub-Saharan Africa lack sufficient cash reserves, access to international aid or credit, or other coping mechanism."

"When those growth rates go down, my gut tells me that there are going to be problems coming out of that, and we're looking for that," he said. He referred to "statistical modeling" showing that "economic crises increase the risk of regime-threatening instability if they persist over a one to two year period."

Blair articulated the newest narrative of fear. As the economic unraveling accelerates we will be told it is not the bearded Islamic extremists, although those in power will drag them out of the Halloween closet when they need to give us an exotic shock, but instead the domestic riffraff, environmentalists, anarchists, unions and enraged members of our dispossessed working class who threaten us. Crime, as it always does in times of turmoil, will grow. Those who oppose the iron fist of the state security apparatus will be lumped together in slick, corporate news reports with the growing criminal underclass.

The committee's Republican vice chairman, Sen. Christopher Bond of Missouri, not quite knowing what to make of Blair's testimony, said he was concerned that Blair was making the "conditions in the country" and the global economic crisis "the primary focus of the intelligence community."

The economic collapse has exposed the stupidity of our collective faith in a free market and the absurdity of an economy based on the goals of endless growth, consumption, borrowing and expansion. The ideology of unlimited growth failed to take into account the massive depletion of the world's resources, from fossil fuels to clean water to fish stocks to erosion, as well as overpopulation, global warming and climate change. The huge international flows of unregulated capital have wrecked the global financial system. An overvalued dollar (which will soon deflate), wild tech, stock and housing financial bubbles, unchecked greed, the decimation of our manufacturing sector, the empowerment of an oligarchic class, the corruption of our political elite, the impoverishment of workers, a bloated military and defense budget and unrestrained credit binges have conspired to bring us down. The financial crisis will soon become a currency crisis. This second shock will threaten our financial viability. We let the market rule. Now we are paying for it.

The corporate thieves, those who insisted they be paid tens of millions of dollars because they were the best and the brightest, have been exposed as con artists. Our elected officials, along with the press, have been exposed as corrupt and spineless corporate lackeys. Our business schools and intellectual elite have been exposed as frauds. The age of the West has ended. Look to China. Laissez-faire capitalism has destroyed itself. It is time to dust off your copies of Marx.

Chris Hedges, a Pulitzer prize-winning reporter, is a Senior Fellow at the Nation Institute. His latest book is Collateral Damage: America's War Against Iraqi Civilians.

© 2009 Truthdig All rights reserved.
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Offline Daniel Luther

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Alex Jones and Ron Paul seem to attack the Federal Reserve a lot, but they never mention that the biggest Illuminati banking family, the Rothschilds, work for the Vatican.  In fact Ron Paul wrote love letters praising Pope John Paul II. Strange for a Protestant...

[Researcher Eustace Mullins writes that the Rothschilds took over all the financial operations of the worldwide Catholic Church in 1823.  Today the large banking and financial business of the Catholic Church is an extensive system interlocked with the Rothschilds and the rest of the International Banking system.”  (Top 13 Illuminati Bloodlines, p.154)]

Get FREE mp3 interviews by Greg Szymanski at where the truth behind the NWO can still be found:

Download the Eric Phelps interviews starting in 2006!!!

Offline PainInDaBrain

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Alex Jones and Ron Paul seem to attack the Federal Reserve a lot, but they never mention that the biggest Illuminati banking family, the Rothschilds, work for the Vatican.  In fact Ron Paul wrote love letters praising Pope John Paul II. Strange for a Protestant...

[Researcher Eustace Mullins writes that the Rothschilds took over all the financial operations of the worldwide Catholic Church in 1823.  Today the large banking and financial business of the Catholic Church is an extensive system interlocked with the Rothschilds and the rest of the International Banking system.”  (Top 13 Illuminati Bloodlines, p.154)]

Get FREE mp3 interviews by Greg Szymanski at where the truth behind the NWO can still be found:

Download the Eric Phelps interviews starting in 2006!!!


Offline Daniel Luther

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The nice part is you can find out for yourself.  It is dangerous to believe that everything that might disagree with Alex "Captain America" Jones is enemy disinfo before you investigate.  You might be surprised where the disinfo is really coming from.

Refusing to question a leader means you belong to a cult. Bill Cooper said never to simply follow a leader. He exposed the extreme oath of the Jesuits in his book.  Maybe that's why he was murdered.  We're on the same side, friend, just looking for the truth.

Offline chrsswtzr

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Alex Jones and Ron Paul seem to attack the Federal Reserve a lot, but they never mention that the biggest Illuminati banking family, the Rothschilds, work for the Vatican.  In fact Ron Paul wrote love letters praising Pope John Paul II. Strange for a Protestant...

[Researcher Eustace Mullins writes that the Rothschilds took over all the financial operations of the worldwide Catholic Church in 1823.  Today the large banking and financial business of the Catholic Church is an extensive system interlocked with the Rothschilds and the rest of the International Banking system.”  (Top 13 Illuminati Bloodlines, p.154)]

Get FREE mp3 interviews by Greg Szymanski at where the truth behind the NWO can still be found:

Download the Eric Phelps interviews starting in 2006!!!

I have one question for you, friend. Do you think that Alex Jones is a Jesuit?

Offline bigron

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Bloated Empire and the financial crash 

15/05/2009 11:00:00 AM GMT

The U.S. Empire helped cause the meltdown. Get rid of the overseas empire because we can no longer afford it.

By Ivan Eland

A few — and only a few — prescient commentators have questioned whether the U.S. can sustain its informal global empire in the wake of the most severe economic crisis since World War II. And the simultaneous quagmires in Iraq and Afghanistan are leading more and more opinion leaders and taxpayers to this question.

But the U.S. Empire helped cause the meltdown in the first place.

War has a history of causing financial and economic calamities. It does so directly by almost always causing inflation — that is, too much money chasing too few goods.

During wartime, governments usually commandeer resources from the private sector into the government realm to fund the fighting. This action leaves shortages of resources to make consumer goods and their components, therefore pushing prices up.

Making things worse, governments often times print money to fund the war, thus adding to the amount of money chasing the smaller number of consumer goods. Such “make-believe” wealth has funded many U.S. wars.

For example, the War of 1812 had two negative effects on the U.S. financial system. First, in 1814, the federal government allowed state-chartered banks to suspend payment in gold and silver to their depositors.

In other words, according Tom J. DiLorenzo in Hamilton’s Curse, the banks did not have to hold sufficient gold and silver reserves to cover their loans. This policy allowed the banks to loan the federal government more money to fight the war. The result was an annual inflation rate of 55 percent in some U.S. cities.

The government took this route of expanding credit during wartime because no U.S. central bank existed at the time. Congress, correctly questioning The Bank of the United States’ constitutionality, had not renewed its charter upon expiration in 1811.

But the financial turmoil caused by the war led to a second pernicious effect on the financial system — the resurrection of the bank in 1817 in the form of the Second Bank of the United States. Like the first bank and all other government central banks in the future, the second bank flooded the market with new credit.

In 1818, this led to excessive real estate speculation and a consequent bubble. The bubble burst during the Panic of 1819, which was the first recession in the nation’s history. Sound familiar?

Although President Andrew Jackson got rid of the second bank in the 1830s and the U.S. economy generally flourished with a freer banking system until 1913, at that time yet another central bank — this time the Federal Reserve System — rose from the ashes.

We have seen that war ultimately causes the creation of both economic problems and nefarious government financial institutions that cause those difficulties. And of course, the modern-day U.S. Empire also creates such economic maladies and wars that allow those institutions to wreak havoc on the economy.

The Fed caused the current collapse in the real estate credit market, which has led to a more general global financial and economic meltdown, by earlier flooding the market with excess credit. That money went into real estate, thus creating an artificial bubble that eventually came crashing down in 2008.

But what caused the Fed to vastly expand credit?

To prevent a potential economic calamity after 9/11 and soothe jitters surrounding the risky and unneeded U.S. invasion of Iraq, Fed Chairman Alan Greenspan began a series of interest rate cuts that vastly increased the money supply.

According to Thomas E. Woods, Jr. in Meltdown, the interest rate cuts culminated in the extraordinary policy of lowering the federal funds rate (the rate at which banks lend to one another overnight, which usually determines other interest rates) to only one percent for an entire year (from June 2003 to June 2004).

Woods notes that more money was created between 2000 and 2007 than in the rest of U.S. history.

Much of this excess money ended up creating the real estate bubble that eventually caused the meltdown. Ben Bernanke, then a Fed governor, was an ardent advocate of this easy money policy, which as Fed Chairman he has continued as his solution to an economic crisis he helped create using the same measures.

Of course, according to Osama bin Laden, the primary reasons for the 9/11 attacks were U.S. occupation of Muslim lands and U.S. propping up of corrupt dictators there.

And the invasion of Iraq was totally unnecessary because there was never any connection between al Qaeda or the 9/11 attacks and Saddam Hussein, and even if Saddam had had biological, chemical, or even nuclear weapons, the massive U.S. nuclear arsenal would have likely deterred him from using them on the United States.

So the causal arrow goes from these imperial behaviors — and blowback there from — to increases in the money supply to prevent related economic slowdown, which in turn caused even worse eventual financial and economic calamities.

These may be indirect effects of empire, but they cannot be ignored. Get rid of the overseas empire because we can no longer afford it, especially when it is partly responsible for the economic distress that is making us poorer.

-- Ivan Eland is Director of the Center on Peace & Liberty at The Independent Institute. Dr. Eland has spent 15 years working for Congress on national security issues, including stints as an investigator for the House Foreign Affairs Committee and Principal Defense Analyst at the Congressional Budget Office. His books include The Empire Has No Clothes: US Foreign Policy Exposed, and Putting “Defense” Back into US Defense Policy.


-- Middle East Online


Offline bigron

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A Lot of Our Money Is Buried in the Cayman Islands -- Let's Get It Back

Obama and Congress must get tougher on offshore tax cheats -- prosecute them as criminals and require full payment.

By David Cay Johnston, The Nation
Posted on May 16, 2009, Printed on May 16, 2009

The Cayman Islands are well known to those seeking sun, sand and sea--and for their hospitality to US corporations seeking to escape taxes, launder money and use other discreet financial services. The islands' tax dodgers help multinational corporations move jobs offshore; they also give aid and comfort to terrorists, drug dealers and divorcing spouses trying to hide money. Honest taxpayers have to make up for the revenues lost through this offshore cheating in three ways: we pay more in taxes, we get fewer government services and we incur rising government debt. Interest on that debt, which doubled under the Bush administration, now equals all the individual income taxes paid from New Year's to around June 10. And that cost means less government investment in research, education and the infrastructure on which commerce depends. Untaxed money hiding in the Caymans and other tax havens means the rest of us pay a higher price for less civilization.

In short, the Caymans, and other tax havens, are parasites that weaken the United States and other developed nations.

President Obama proposed on May 4 to crack down on offshore tax cheating; that proposal does not go nearly far enough. Instead of settling for a dime on the dollar, as Obama's plan would do, let's get serious about offshore tax cheating, both legalized and criminal. Let's do what we did to halt the imagined threats of communists in Grenada, depose a drug-dealing president in Panama and find those imaginary weapons of mass destruction in Iraq. Let's invade the Caymans!

The islands, which belong to Britain, have no military and just 300 or so police. An invasion force composed of tax lawyers, forensic auditors and a handful of computer technicians could execute a hostile takeover without firing a shot.

The Caymans are not really a country; they are a law firm posing as one. More than 12,000 "companies" operate out of a single building known as Ugland House, home to the law firm Maples & Calder. As Obama put it, "Either this is the largest building in the world or the largest tax scam." Under Caymans law these companies are barred from doing any business in the Caymans except hiding assets and profits. That means shares of stock, bonds and cash may technically be owned in the Caymans--which claims to be the world's fifth-largest center of bank deposits--but are really housed in New York, Greenwich, Houston, San Francisco. There is $1.9 trillion in bank deposits in the Caymans--money actually invested in the United States and other countries but invisible to the IRS.

The Clinton administration enabled this through a rule known as "check the box," which helped companies funnel profits into untaxed havens. US tax rules, liberally expanded by the Bush administration, enabled frauds like Enron to create hundreds of paper companies in the Caymans and other tax havens like Liechtenstein, Turks and Caicos, and the Isle of Man. Enron, as I revealed in a New York Times story in January 2002, paid no taxes because it had created hundreds of paper companies in these places. A subsequent investigation by the Congressional Joint Committee on Taxation uncovered internal documents describing Enron's tax department as a "profit center." Dick Cheney's Halliburton subsidiary, KBR--the old Kellogg Brown & Root construction company--has at least 21,000 employees paid via Caymans subsidiaries to escape taxes. KBR hired executives through these paper companies, enabling them to evade Social Security and Medicare taxes on their salaries and bonuses, much of which the taxpayers provided through Pentagon contracts.

President Obama estimates that his proposals for ending tax haven abuses will raise $101 billion over a decade. The Senate Permanent Investigations subcommittee puts the annual tax loss at $100 billion; Treasury sets the figure at $123 billion. Collecting those lost billions could mean that Americans could pay no withholding tax from November 15 to December 31; it could pay for healthcare for about 20 million of the roughly 50 million Americans without health insurance.

Because we are civilized, we should make the Caymans invasion the last resort in an escalating series of steps designed to persuade the islands to stop undermining US national security. For starters, as I proposed in Tax Notes magazine, Congress should pass a law funding pursuit of every major tax cheat, just as we pursue every killer, rapist and drug dealer. Using offshore accounts to cheat the government out of $50,000 or more for two or more years should be made a felony per se. Then let's provide an escape hatch, which would spare prosecution of anyone who fesses up and fully pays taxes, penalties and interest. The same law should make public the name and details of every person or company that skips the opportunity to make things right.

Next, Congress should require that the Caymans and fellow tax resorts end their secrecy retroactively. To encourage cooperation it could ban US financial transactions and bar Americans from going there on vacation--measures we have imposed on Cuba for almost fifty years.

Congress is likely to do much less. The multinationals with tax havens have much more sway than John or Jane Q. Citizen. The reliably corporate-leaning journalists are openly expressing doubt that our senators and representatives will go after even a dime on the dollar from rich tax cheats to ease our burdens. Reform begins with your demanding it.

© 2009 The Nation All rights reserved.
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