Toxic Banking Bailout- The September Surprise!

The political system is once again, creating a new quandary for our nation due to its failure to build a transparent government. Without appropriate supervision of its operations, and a necessary level of regulation to make sure the system responds to its own best interests and practices, and not for a select few, our democracy cannot work effectively.

This is how the derailment occurred under the direction of Alan Greenspan, the former chairman of the Federal Reserve, our nation's central bank dating back to 1913. Along with a capitulating series of presidents, who followed the prescribed philosophy of unbridled and secretive capitalism under a trickle-down theory through a pyramid-style economic methodology. Alan Greenspan, Ben Bernanke, Hank Paulson, Phil Gramm, and many within the Republican and Democratic Parties have presented us with the unbelievable meltdown we are all witnessing.

The late John Kenneth Galbreith, claimed that the trickle-down theory was responsible for the Panic of 1896. It was called by the elites of the time "The Horse and Sparrow Theory", meaning that if you fed the horse enough oats, the horse would pass on its good fortune to the sparrows hanging out along the road. No Sh*t! There is absolutely no example of trickle-down theory working anywhere in the world, as far as I have found, that would justify continuing it, beyond this point in time. It is only an idealistic, pie-in-the-sky theory.

I am no economist, but only a lay person intrigued by the crime story that has surrounded the privileged elite controlling the credit markets starting with the most powerful on top and moving on down to those who wanted to buy a piece of the wealth-accumulating dessert. 

This 30-year run has led us to where we are today. 30 years ago this crime story began establishing its foothold, building its operations and soldiers creating a cyber-wealth empire, which has amounted to somewhere between $450-500 trillion in worldwide toxic derivatives now woven throughout the fabric of foreign central banks, financial institutions, private equity funds, hedge funds, pension funds and sovereign wealth funds. Now this cyber-wealth is on the verge of melting down exposing deceptive, secretive, greedy, and extremely under-capitalized practices. 

What has been uncovered is that President Reagan's free market, trickle-down economic express-train policy, driven by his senior engineer Alan Greenspan, has finally hit the inevitable wall. Its theory was to let those at the top of the pyramid acquire all the wealth they could, and through its basic fundamentals trickle-down as a stimulus to those "sparrows" hanging along the roads of Main and Side Street. We just saw that it failed. Those 10% at the top have acquired massive amounts of wealth, while the economy has failed leaving the middle class to suffer with foreclosures and the shrinking of real wages. What we also witnessed was the top of the pyramid collapse, and and the top-tier wealth accumulators seeing their lending financial institutions fall into conservership, insolvency or bankruptcy because of their trickle-down principles. These institutions have ended up holding toxic debt that was virtually worth-less requiring them to activate their distress calls to congress and the White House. "Help, help. Save our wealth."

Now the Treasury, Fed, and President have decided to create a new Pyramid Scheme but not molded out of private free market theory, but from a socialistic, unitary executive model, which would allow the Federal Reserve, a private entity, to use taxpayer funds to buy private corporations, as they consolidate power over the private economy. 

By infusing the largest failing financial institutions with the previous recipients of the Fed's 2% open window, we will witness over one trillion dollars of taxpayer-treasury funds being given out to the Bush "Haves and Have-Mores". In addition, the Fed has provided foreign sovereign wealth funds, and foreign central banks with taxpayer-treasury funds because they're angry over their losses resulting from the Pyramid Scheme, since they ended up buying leveraged-out, AIG insured (through credit default swaps that are worth-less), and collateralized debt obligations made mostly out of mortgage debt. YIKES! Those countries took a major wealth-loss hit and want the U.S. government to bail them out, too. They seem to have forgotten that such investments are NOT safe, nor guaranteed by the U.S.  government, but risky. This has been the Great Unwinding for those at the top, or close to the top of the Pyramid Scheme. If you were not such a big player, you ended up drowning. As with the Titanic, only the elite and privileged got to the lifeboats in time leaving those in steerage to meet their fate. Remember, they all were told that the Titanic was unsinkable. That was what Greenspan and the financial institutions told their trickle-down investors, as well. SOL, as they say.

The new trickle-down fundamental is to privatize the earnings and socialize the losses. This is what McCain means when he says the fundamentals are good. They are good for the wealthiest 10% of Americans, not the many who have seen a $300 per year loss in real wages.

So how will it all unwrap over the next month, three months, 12 months? If I knew, I would be a rich guy, too. I'd be on Letterman, Oprah, Leno, and Larry King. O'Reilly would be begging me to go on his show, but I would refuse and call him a jerk on the phone. I'd be on a big-time tour, with Bono, and Krugman, and Roubini, giving out advice and selling my book and Internet newsletter. I'd have a cottage by the lake, and a loft in the city. I'd be sitting pretty during the Great Unwinding. There would be groupies wanting me to analyze their investment portfolios. You know the schtick.

But based upon my gut intuition, the Bush Bailout Plan is unsustainable. The Bush Crime Family Conspiratorial Mothership has one goal in mind, and that is to retain power for their constituents at the top of the Pyramid. The only way to do this is to get McCon elected. If and once elected, the Bush/Cheney crime bosses will hop off the White House grand cruise ship and onto their exiting water craft for safer ground. McCon and McPalin will be left to drift in the dangerous economic waters for 4 years as they so desperately campaigned for.

What the McCons don't realize is that the U.S. does not have any money of its own left to spend, therefore, they must print more for the Grand Infusion. They rely on foreigners to supply us with funds to shore up and patch up a leaking dyke. Will there be a time they will curtail their generosity toward a nation who has squandered it for "more wars, my friends", or the Halliburton/Blackwater/etc war machine, or the huge spying enterprise, or the aggression and hostility directed toward others? There is a strong possibility of it ended up backfiring into their faces affecting their own self-interests. Can the dollar improve under this new socialized economy? Or will we see that these emperors, in fact, have no clothes, as the credit market fails to loosen up out fear as cash-strapped consumers put up the duct tape and plastic around their lives waiting for the economic fallout to pass further freezing up the economy. Does this sound like 1931?

Deflation is not to be disregarded. Nor is inflation, for that matter, as it impacts upon many life-sustaining essentials. A value-less dollar is a possibility. Can banks go under while holding on to their government/taxpayer-paid-for and issued treasury life preservers? Yes! How can the U.S. repair and rebuild Iraq and Afghanistan while we, too, crumble under the tribulations of war right here at home? I don't see much time left.

The top-tier banksta gangstas wanted a guarantee that no "economic insurgents" would fire upon their financial institution's value, which remains weak, rotten, and vulnerable. Plus, these CEO administrators want to make a ton more money by wagering on themselves without the threat of the big, bad "economic insurgents" betting against them. This is how neo-fascism works. The government protects its own and, in this case, it's the big political party supporters and holders of the oligarchy's wealth. It all comes at a price! The Republicon Party and those making up the Demo-Con sub-party capitulators, such as Lieberman, will see bigger and fatter contributions fill their purses unless congress stands up to the Paulson/Bernanke/Bush/Banksta criminals.

The Bush administration responded to those he refers to as "my base" who wanted to protect themselves form the "economic insurgents", who are also known as "short sellers". These are investor/traders who bet that the stock price would fall because the company's fundamentals are not strong. Short selling has now been declared illegal for 800 chosen stocks, including G.E., allowing the "haves" to bet on themselves without the fear of the "insurgents" coming after their unbridled speculation.

Bush once said, "we fight them there, so we don't have to fight them here." But the war is right here in America and most people don't realize it, although it has been very clear to many more of us this week. The war in Iraq and Afghanistan was partly created as a distraction from the economic war right here in America brought to us by the Wall-Street Gangstas, and their crime bosses. There is a war between Wall-Street, and those living on Main and Side Street. Protect Wall-Street first. They get the U.S. backed Protection Service. March forward and manipulate the heck out of the markets. Give protection money to foreign central banks and sovereign wealth funds to keep them from dumping their U.S. Treasury bills and bonds, or dollars on the open market. By showering them with bailout funds, Hank "The Paulie" Paulson, and "Bada Bing" Bernanke, along with the White House crime bosses, have encouraged those international bankers to continue to fund our debt, USING OUR GOVERNMENT ISSUED BAILOUT MONEY. WOW! What a deal!

I believe if the government wants to socialize these financial institutions, then take them over. Cut the investors out. Let them take their hits. Replace the greedy CEOs. Remove their golden parachutes, bonuses, salaries, stock options and send them home. Raise taxes on the top-tier wage earners. Carve up these mega-financial institutions into smaller, more controllable, transparent and regulated entities. These corporate thieves, foot soldiers and "benefactors" must feel the pain and not the middle class who were victimized by their rise and fall.

In addition, we need to realize our hegemonic failure in the Middle East and shut the wars down. Leave the bases and stop the human and economic losses. Orchestrate a massive industrial rebuilding movement that would focus on alternative energy and re-engineer an alternative energy grid. And finally, provide single-payer health care allowing workers to move between employers, or start their own businesses without the fear of losing coverage,  and remove the heavy health care burden experienced by businesses, which drains valuable capital needed for expansion. 

You have just read my views from only one set of eyes and one mind.

John McCain is a Con Artist!

John the Con and Sarah, the sidekick, are now talking Change, and I don't mean 75 cents worth. McCon, for the last 20 years, has embedded himself in the disaster that has encircled our nation, as it drifts upon the world's prevailing winds. He is telling gullible Americans that HE will Change what is it that HE and the GO-Plunderers have done. McCon loves to hang with out con men. Here is Rachel Maddow breaking the story. McCon Man.

Before I go into exactly what McCon has done to America, I want to post a link to Glen Greenwald's great video.  Bravenewpac films has made McCain's Distortions. Watch it and donate. Here is another one of Greenwald's Bravenewfilms takeing on McCain. I have previously posted this video, but it is worth watching again. Pass them on to your friends. 

Here is what McCon has brought America along with the GO-Plunderers. They, nor he, have been the agent of Change, as you will see just how far America has fallen.

1. The likely disappearance of $2 trillion of household wealth that was converted into debt, which can no longer be transformed into consumer spending.
2. 29% of all households that purchased homes within the last 5 years owe more than the house is worth.
3. 40% of Americans are spending more than they earn because their wages lag around 2% behind the government's stated rate of inflation, which is officially nearing 8%, yet according to Shadow Govt Statistics inflation is at 12.5%.
4. The average American household holds $9,840.00 in credit card debt, at an interest rate of 19%, because they can no longer use their homes as ATM cards and credit cards are their last efforts to get cash to pay bills.
5. Personal consumption fell to 15% in 2Q08, and could very likely turn negative in the coming quarters.
6. Current credit card debt exceeds $880 billion.
7. There are 1.3 million foreclosures, while in 2005 there were 600,000.
8. There is an excess of 3.5 million homes in the U.S.
9. This 20 year credit expansion, brought to us by Alan Greenspan and the GO-Plunderers, as well as John the Con, created such a mortgage spending frenzy that if you took that growth out of the GDP, between 2001-2007, we would have shown less than 1% GDP because Greenspan only believed in debt wealth creation and not industrial productivity.
10. There now is somewhere between $450-516 trillion in toxic derivatives and credit default swaps throughout the world, which originated from the home mortgage debt frenzy.
11. The world is a $48 trillion economy and the U.S. is $13 trillion of it, yet what will happen when the consumer stops spending? In addition, we have a $10 trillion national debt. The economy and the debt are nearly equal.
12. 84,000 payroll jobs were lost in August; 60,000 lost in July; 101,000 private sector jobs lost in August, August unemployment rate was up to 6.1%, yet if discouraged job seekers were factored in the rate would have been closer to 8%.
13. 3Q08 GDP figures will likely be under 2%.
14. THe U.S. had $10.6 trillion in outstanding home loans, as of March 2008.
15. Existing home sales fell to a 10 year low.
16. Bank willingness to loan to consumers was at a 28 year low.
17. We are only 21% of the world's GDP, but spend 47% of the world's total military expenditures.
18. There are 537 elected congressional officials, but there are 35,000 lobbyists buying influence. McCain's campaign is ruled by 159 of those lobbyists. 
19. 8000 construction jobs disappeared in August, as well as 20,000 retail jobs and 1600 financial jobs raising the red flag in regards to future growth.
20. The July trade deficit reached $68.2 billion; up from $58.8 billion in June.
21. Since 2001, the annual trade deficit increased more than $300 billion.
22. Since 2001, 3.8 million manufacturing jobs have been lost.
23. Americans borrowed from foreigners around $50 billion each month impacting upon our trade deficit.
24. There is around $37 billion in FDIC, yet Fannie and Freddie hold $8 trillion in mortgage debt, and $4 trillion is FDIC insured.
25. The nation's biggest banks and investment companies are either going under, or getting taxpayers to bail them out. They cannot survive without taxpayer dollars.
26. Over 45 million Americans are uninsured, 40 million are under-insured, but the same GO-Plunderers bailout the richest CEO's in the nation, without any sort of penalty or jail time, will not consider a single-payer health care system of working America. Socialism only for the free-marketeers, but not for working people.
27. The Bush wars are costing over $12 billion per month.
28. The total cost of war will likely reach over $2 trillion.
29. Hank Paulson will be throwing $20 billion per month at these financial institutions holding bad mortgage-backed security debt in order to keep them solvent.
30. Fannie and Freddie were bailed out not because they were drowning but because the foreign sovereign wealth funds (central banks of other countries) told them to bail out the bad mortgage debt they bought from these American institutions, otherwise there will be blood on the tracks.
31. 1.4 million Americans are working at part-times jobs out of necessity and not by choice.
32. Median salaries ranging from those with only high school diploma to a master's level degree fell between 3-4%, when adjusted for inflation, therefore, the cost of college may not ever pay for itself with a boost in income.
33. Inflation-adjusted median household income has declined by $1175.00 since 2000.
34. Vacancies at community malls hit a 13 year high of 8.2% in 2Q08, while vacancy at regional malls hit 6-year high of 6.3%.
35. July and August retail sales have dropped by 0.5 -0.7% respectively. 
36. Part of McCain's legacy while in the congress is that over the last 10 years, the economy is about $1.5 trillion smaller. This comes to $10,000 per worker according to Peter Morici, professor at the U. of Maryland School of Business.
37. During the 23 years McCain sat in the congress, the U.S. has increased petroleum consumption by about 5 million barrels per day. Now, the 2007 Energy Act could reduce consumption by 4 million barrels per day by 2030, according to Morici.
38. U.S. imports from China exceed exports by nearly 5 to 1. 
39. China holds $447 billion, or one-fifth of their currency reserves, in Fannie and Freddie's debt, and will now halt their buying our the dollar in favor of other currencies. That will force the Fed to raise interest rates to attract foreign funds to once again buy the dollar. This could tank the economy in further. McCain and his GO-Plundering Pals, like Phil Gramm, have created this mess by erasing regulation from the financial markets.
40. Under McCain/Bush/GOPers, we have a $700 billion current accounts deficit, which had been financed by foreigners buy up our financial funny money securities.
41. The Phil Gramm, John McCain, the the 23 years of GOPer deregulation of the financial markets has been nothing but a full blown failure of monumental proportions.
42. The national debt is costing every taxpayer $66,666.00.
43. Soldier suicides, just this year, could surpass the record rate of last year.

Retired Andrew Bacevich, who now teaches at Boston University, has said that expansionism fostering greater power and abundance, and facilitating the pursuit of freedom has become undone. Efforts to pursue expansion in every which way, even including the war on terror, has squandered American power, wasted our wealth as a nation, and compromised our freedoms.

This has all occurred on John McCain's watch even while purporting that he was a maverick, though such a rebellious badge of honor had been made out of thin air.

Here is a very interesting Youtube video about the current issues around gold. It is in three parts totaling 30 minutes.

Part 1                                                         Part 2                                            Part 3

Here is a Youtube video of Sarah Palin speaking at her church. It is worth watching! Sarah is NOT vice-presidential material. Here is why.

Here is a Youtube video about the Freddie and Fannie bailout, Watch it.

Thanks for reading, Jerry

Postscript:   A must read from the Regressive Antidote called First Country.

It is about McCain and is GOP convention. It is a classic read!