Written by Patrick Wood
October 6, 2008
By Patrick Wood, Editor
The August Review
When push came to shove, Humpty Dumpty discovered the shortest distance to the cobblestones below: straight down.
Being quite dead, Humpty's body is stinking up the whole neighborhood. The eyewitnesses call it murder. The coroner, bypassing the eyewitnesses, rules it an accident. The public clamors for taxpayer funds to clean up the mess. Congress passes a bill for superglue to be liberally applied to the broken pieces of shell. The courts finally rule that the eyewitnesses are guilty of hate-speech. Contractors who administrate the reconstruction project get rich.
And so goes the circle of life. Makes no sense, does it?
The global economy, including its stock markets and banking system, is a decaying, dead corpse in process of a massive credit deflation. Until it hits absolute bottom (wherever and whenever that is), no life-support system will help. No government bailout at taxpayer expense will help. No nationalization of body parts (e.g., Fannie, Freddie, AIG) will help.
Nevertheless, let's analyze the bailout mania that will most certainly one day be declared the largest and most brazen swindle in the history of the world.
In light of and in response to the rapidly decaying banking emergency, Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke went hand in hand to Congress to ask for $700 billion to repair the system. Paulson demanded that no strings be attached; no judicial oversight; no accountability. "Trust us," they said.
Their demand was to take rotted assets off the balance sheets of global banks, and sell them to the U.S. government. No problem raising our national debt by another 12%. No problem that the U.S. credit rating is at risk of being downgraded, costing taxpayers hundreds of billions extra in interest charges to service the existing national debt. No problem that foreign banks can line up at the trough alongside American banks. No problem that the toxic-waste assets don't even have to be backed by U.S. mortgages. No problem that these same global bankers are the ones who trashed the credit markets in the first place.
They loved the Privatization of massive profits and executive bonuses for two decades of excessive risk and creative accounting practices. They now love the socialization of their inevitable losses as their house of cards comes crashing down.
The Paulson/Bernanke proposition to Congress was simple: Pay up or the country will collapse.
Is anyone really for this bailout?
On September 29, just before the Senate and House passed similar bailout legislation, Rep. Brad Sherman (D-CA) made a passionate plea to the House to reject Paulson's and Bernanke's demands. Therein he presented a signed petition of no less than 400 economists, including three Nobel Laureates that stated, in part:
"We ask Congress not to rush, to hold appropriate hearings, and to carefully consider the right course of action."
Meanwhile, Senators and Representatives reported that enraged citizens were flooding email servers and switchboards with demands to vote "NO" on bailout legislation - up to 99 percent of them!
Yet, the Senate and the House passed the legislation anyway, behaving like herds of panicked wildebeests on the savanna in Africa.
If everyone other than our elected officials knows that Treasury Secretary Paulson and Fed Chairman Bernanke are brazenly plundering the United States citizenry, then why did they unanimously pass this bailout legislation?
We've been had, folks
German philosopher Georg Hegel wrote, "We learn from history that we do not learn from history."
Rep. Louis McFadden, who had served as Chairman of the Banking and Currency Committee for over 10 years, was hopping mad about the Federal Reserve and its shameless abuse of the U.S. government and its citizens.
In a speech to the House of Representatives, McFadden stated:
"Mr. Chairman, we have in this Country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve Banks, hereinafter called the Fed. The Fed has cheated the Government of these United States and the people of the United States out of enough money to pay the Nation's debt. The depredations and iniquities of the Fed have cost enough money to pay the National debt several times over.
"This evil institution has impoverished and ruined the people of these United States, has bankrupted itself, and has practically bankrupted our Government. It has done this through the defects of the law under which it operates, through the maladministration of that law by the Fed and through the corrupt practices of the moneyed vultures who control it.
"Some people who think that the Federal Reserve Banks are United States Government institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lender. In that dark crew of financial pirates there are those who would cut a man's throat to get a dollar out of his pocket; there are those who send money into states to buy votes to control our legislatures; there are those who maintain International propaganda for the purpose of deceiving us into granting of new concessions which will permit them to cover up their past misdeeds and set again in motion their gigantic train of crime." [Emphasis added.]
Would you be surprised to learn that McFadden's blistering tirade was not delivered in 2008 but rather in 1934 during the darkest days of the Great Depression?
You see, this isn't the first time in our nation's history that we have been attacked by the "moneyed vultures" who seek to swindle the taxpayer to cover up their own misdeeds.
Read carefully as McFadden continues,
"The United States has been ransacked and pillaged. Our structures have been gutted and only the walls are left standing. While being perpetrated, everything the world would rake up to sell us was brought in here at our expense by the Fed until our markets were swamped with unneeded and unwanted imported goods priced far above their value and make to equal the dollar volume of our honest exports, and to kill or reduce our favorite balance of trade. As Agents of the foreign central banks the Fed try by every means in their power to reduce our favorable balance of trade. They act for their foreign principal and they accept fees from foreigners for acting against the best interests of these United States. Naturally there has been great competition among foreigners for the favors of the Fed.
"What we need to do is to send the reserves of our National Banks home to the people who earned and produced them and who still own them and to the banks which were compelled to surrender them to predatory interests.
"Mr. Chairman, there is nothing like the Fed pool of confiscated bank deposits in the world. It is a public trough of American wealth in which the foreigners claim rights, equal to or greater than Americans. The Fed are the agents of the foreign central banks. They use our bank depositors' money for the benefit of their foreign principals. They barter the public credit of the United States Government and hire it out to foreigners at a profit to themselves.
"All this is done at the expense of the United States Government, and at a sickening loss to the American people. Only our great wealth enabled us to stand the drain of it as long as we did.
"We need to destroy the Fed wherein our national reserves are impounded for the benefit of the foreigners. We need to save America for Americans."
In fact, McFadden did actually bring formal charges against the Board of Governors of the Federal Reserve Bank system, The Comptroller of the Currency and the Secretary of United States Treasury for numerous criminal acts, including conspiracy, fraud, unlawful conversion and treason. Unfortunately, the charges were ultimately ignored, allowing the perpetrators to continue for another season.
[NOTE: To his great discredit, McFadden was openly anti-Semitic and an early supporter of Adolf Hitler during the 1930's because of his policies toward Jews. McFadden blamed Jews, wrongly so, for the financial chicanery he otherwise clearly observed.]
For many decades thereafter, experts, including Nobel Prize-winning economist Milton Friedman, have suggested that the Federal Reserve was directly responsible for the 1929 stock market crash and the subsequent Great Depression.
In 2002, Ben Bernanke (then merely a Fed governor) delivered a speech on the occasion of Friedman's 90th birthday at the University of Chicago, and addressed Friedman's work on the cause of the Great Depression. Bernanke concluded by stating, "You're right, we did it. We're very sorry. But thanks to you, we won't do it again."
All promises aside, guess what? They're baaack!
FBI opens investigation
On September 24, 2008, right before Henry Paulson demanded bailout funds from Congress, the FBI had an announcement of its own. Namely, that it is investigating Lehman Brothers, AIG, Fannie Mae and Freddie Mac for fraud, improper accounting practices, conspiracy, etc.
These four companies are the remaining and principal instigators of the subprime credit fiasco. In the case of Fannie and Freddie, there have been accusations of fraud and corruption for as long as they have existed.
But, Paulson and the Treasury had already nationalized them, and shrewdly so: When wrongdoing is ultimately proven, it will be hard to hold anyone accountable or to punish the companies since the U.S. Treasury owns them.
Don't be fooled into thinking that it's just about money: It's also about power.
The Secretary of the Treasury now has near-dictatorial power over this newly formed socialist financial empire.
Of course, this is consistent with the incredible power consolidation of the Executive Branch of our government under president George Bush during the last 8 years. During this centralization, Congress and the Judiciary have been methodically weakened to the point that some political analysts believe that the President could, if he wished, declare martial law and dictatorship at the same time with little recourse from the other branches of the government.
Robert Pastor (father of the North American Community) said last year that "having a crisis would force decisions that otherwise might not get made."
He was absolutely right. In normal times, the combined Congress would have laughed Paulson and Bernanke right out of town. The current financial crisis has provided cover and every opportunity for the financial cartel to take what little we have left.
Indeed, those who do not learn from history are doomed to repeat it.
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