The "Bailout" was the greatest scam in US history

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    Feb 22, 2010 10:08 AM GMT
    The funny thing about money, is that it defies gravity: it trickles up, not down. The global monetary system is a monumental ponzi scheme, in which money is sucked up, not redistributed and spread around. Now, that doesn't mean there isn't lots of money, there is, more than ever in history, but it all belongs to fewer people than ever before in history.

    Never in human history, have so few people controlled so much of the global wealth -- in land, in assets, in resources, in investments and personal wealth, while so many have access to so little of the most basic necessities.

    This is not an American problem, it's a global problem. The global political and economic policies which have created this global system of wealth distribution and social imbalances around the world, specifically in places like Africa, have come home to roost. What we do abroad, comes home at last. What we allow done in our name, is then done against us.

    Plato once wrote, "The price good men pay for indifference to public affairs is to be ruled by evil men."

    The cost of complacency... is Corporatocracy.

    The bailout bill was organized by the Bush administration's Treasury Department, Hank Paulson at the helm, the former CEO of Goldman Sachs.

    The bailout bill undertook the greatest redistribution of wealth in American, if not world, history. The problem... was that all the money that was distributed, was given to the very few, and charged to the many. It was the greatest financial scam in world history.

    In February of 2008, weeks before the collapse of Bear Stearns and outbreak of the "financial panic of '08", Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke, "both said they believe the nation will avoid falling into recession."
    http://money.cnn.com/2008/02/14/news/economy/bernanke_paulson/index.htm

    In September of 2008, they changed their tune. Both told Congress there will be "recession, layoffs and lost homes if Congress doesn’t quickly approve the Bush administration’s emergency $700 billion financial bailout plan."
    http://www.msnbc.msn.com/id/26850571/

    Following the Congress voting no the first time around, the Treasury Department began a mad dash to ram the bill through again.

    One Democratic Congressman said in a speech that Congress members were threatened with "martial law in America" if they did not pass the bill.



    They passed the bill the second time.

    In theory, the plan would be "to buy $700 billion in bad mortgage investments from U.S. financial companies." However, there was a lot of fine print, which Congress ignored: "The Treasury would also have discretion, after discussions with the Fed, to make non-U.S. financial institutions eligible under the program." In other words, the American people would be bailing out domestic AND foreign banks anywhere in the world (so long as the Federal Reserve and Treasury agreed on it).
    http://www.bloomberg.com/apps/news?pid=20601087&sid=aZ2aFDx8_idM&refer=home

    Politico reported: "foreign-based banks with big U.S. operations could qualify for the Treasury Department’s mortgage bailout." However, the fine-print stated:

    "Participating financial institutions must have significant operations in the U.S., unless the Secretary makes a determination, in consultation with the Chairman of the Federal Reserve, that broader eligibility is necessary to effectively stabilize financial markets."

    In other words, any bank, foreign or domestic, public or private, can be bailed out.
    http://www.politico.com/news/stories/0908/13690.html

    The bill also read:

    The Treasury Secretary can buy broadly defined assets, on any terms he wants, he can hire anyone he wants to do it and can appoint private sector companies as financial deputies of the US government. And he can write whatever regulation he thinks are needed.

    Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.


    In other words: the decisions of the Treasury Secretary, are to be kept secret, and are NOT, I repeat, NOT allowed to be viewed by Congress, nor any court in the nation, "or any administrative agency." It is totally and utterly unaccountable.
    http://www.huffingtonpost.com/larisa-alexandrovna/welcome-to-the-final-stag_b_127990.html
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    Feb 22, 2010 10:08 AM GMT
    So, how did the scam work?

    The mainstream perspective: "The Emergency Economic Stabilization Act of 2008, better known as the Troubled Asset Relief Program (TARP), authorized the use of $700 billion to stabilize the nation's failing financial systems."

    A Treasury spokeswoman told Forbes that the number, "$700 billion": "It's not based on any particular data point... We just wanted to choose a really large number."
    http://www.forbes.com/2008/09/23/bailout-paulson-congress-biz-beltway-cx_jz_bw_0923bailout.html

    The bill stated that: "The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time."

    There are the key words: "at any one time." This means that:"$700 billion is NOT the cost of this dangerous legislation, it is only the amount that can be outstanding at any one time. After, say, $100 billion of bad mortgages are disposed of, another $100 billion can be bought. In short, these four little words assure that there is NO LIMIT to the potential size of this bailout. This means that $700 billion is a rolling amount, not a ceiling."
    http://www.chrismartenson.com/blog/what-latest-bailout-plan-means/5149

    It was a financial coup d'état in America. Not only did the American people literally hand the major banks a blank check, but they put them in charge of regulating the banks, managing the Treasury Department and the Fed, which they already own. Then, they took away the power of ANY oversight whatsoever. And now the American people are being forced to pay for it.

    Obama's administration came in, and with him, he brought the architects of decades of financial crisis. To lead his Economic Recovery Team, Obama brought in Paul Volcker, former Chairman of the Federal Reserve, who was responsible for causing the global debt crisis of the 1980s which plunged the 'Third World' into destitute poverty. As an economic adviser, Obama brought in Lawrence Summers, who as Clinton's deputy secretary of the Treasury, played a pivotal role in the dismantling of banking regulations (through the repeal of Glass-Steagle), and the expansion and growth of derivatives trade (both decisions leading directly to the current financial crisis). Finally, Obama made his Treasury Secretary Timothy Geithner, who was previously President of the Federal Reserve Bank of New York, the most private organization in the Federal Reserve System. As head of the NY Fed, Geithner oversaw the Fed bailout of AIG.

    Bloomberg ran an article titled: "Secret Banking Cabal Emerges From AIG Shadows", which reported that described the Federal Reserve Bank of New York as "a secretive group deploying billions of dollars to favored banks, operating with little oversight by the public or elected officials."

    "The New York Fed is in the hot seat for its decision in November 2008 to buy out, for about $30 billion, insurance contracts AIG sold on toxic debt securities to banks, including Goldman Sachs Group Inc., Merrill Lynch & Co., Societe Generale and Deutsche Bank AG, among others. That decision, critics say, amounted to a back-door bailout for the banks, which received 100 cents on the dollar for contracts that would have been worth far less had AIG been allowed to fail."

    The Congressional "hearing revealed some of the inner workings of the New York Fed and the outsized role it plays in banking. This insight is especially valuable given that the New York Fed is a quasi-governmental institution that isn’t subject to citizen intrusions [i.e., oversight and accountability] such as freedom of information requests."

    The NY Fed "is the preferred vehicle for many of the Fed’s bailout programs. It’s as though the New York Fed was a black-ops outfit for the nation’s central bank."

    One Representative at the hearing spoke to Geithner, "A lot of people think that the president of the New York Fed works for the U.S. government. But in fact you work for the private banks that elected you.”

    "And yet the New York Fed played an integral role in the government’s bailout of banks, often receiving surprisingly free rein to act as it saw fit."
    http://www.bloomberg.com/apps/news?pid=20601039&sid=aaIuE.W8RAuU

    By late March, the Federal Reserve and the US government had given away $12.8 trillion. The GDP of the US is $14 trillion.
    http://www.bloomberg.com/apps/news?pid=20601087&sid=armOzfkwtCA4

    By late July, it was reported that the bailout may reach $23.7 trillion.
    http://www.bloomberg.com/apps/news?pid=20601087&sid=aY0tX8UysIaM
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    Feb 22, 2010 10:09 AM GMT
    In April, one Congressman said that the banks "own" Congress: "And the banks -- hard to believe in a time when we're facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. And they frankly own the place."
    http://www.huffingtonpost.com/2009/04/29/dick-durbin-banks-frankly_n_193010.html

    Another Congressman said in June that, "The banks run the place".
    http://www.nytimes.com/2009/06/01/business/01lobby.html

    As the Australian reported in late June: "The only international body to correctly predict the financial crisis - the Bank for International Settlements (BIS) - has warned the biggest risk is that governments might be forced by world bond investors to abandon their stimulus packages, and instead slash spending while lifting taxes and interest rates."
    http://www.theaustralian.com.au/news/bank-for-international-settlements-warning-over-stimulus-benefits/story-0-1225743622643

    In other words, now that the wealth has been thoroughly gutted and looted, it's time to pay: through taxes, interest rate hikes, and social spending cuts.

    So when you criticize the notion of "redistributing the wealth", don't forget, the greatest redistribution of wealth on earth has taken place in the past year, and you didn't get any of it.
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    Feb 22, 2010 2:17 PM GMT
    WOW, MeOhMy...I'm so crushing on you right now.
    Well said...
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    Feb 22, 2010 2:57 PM GMT
    Remember back....we were given the bum's rush on this. The Bush Admin. was telling us that this had to be done within a week or the damage would be get catatrophically worse. What they meant was, if you have any time to think about this, you will see that we are askiing you to bail out the very people who caused the problem and save their asses.
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    Feb 22, 2010 11:17 PM GMT
    Caslon13000 saidRemember back....we were given the bum's rush on this. The Bush Admin. was telling us that this had to be done within a week or the damage would be get catatrophically worse. What they meant was, if you have any time to think about this, you will see that we are askiing you to bail out the very people who caused the problem and save their asses.


    Exactly. Not to say that economically, things weren't or aren't bad, but they used their fear mongering for a direct purpose: to install a financial high command in the United States.
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    Feb 23, 2010 1:53 AM GMT
    Another cost of the bailout (which was unnecessary and the banks should have been allowed to fail):

    http://www.nytimes.com/2010/02/21/business/economy/21unemployed.html?pagewanted=all
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    Feb 23, 2010 9:02 AM GMT
    The Bank for International Settlements (BIS), the central bank to the world's central banks, and the most prestigious financial institution in the world, (which accurately predicted the 2007 and 2008 economic crisis), warned in September of 2009:

    "The global market for derivatives rebounded to $426 trillion in the second quarter [of 2009] as risk appetite returned, but the system remains unstable and prone to crises."

    "derivatives rose 16pc, mostly due to a surge in futures and options contracts on three-month interest rates."

    "Stephen Cecchetti, the bank's chief economist, said over-the-counter markets for derivatives are still opaque and pose "major systemic risks" for the financial system. The danger is that regulators will again fail to see that big institutions have taken far more exposure than they can handle in shock conditions."

    "The use of derivatives by hedge funds and the like can create large, hidden exposures," he added, citing the discovery that firms in Brazil, Korea and Mexico held huge foreign exchange contracts in late-2008."
    http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6184496/Derivatives-still-pose-huge-risk-says-BIS.html

    What this means, is that the derivatives market, the market that was integral to the creation of the 2008 financial crisis, is posing the same risks to the system today as it was in the lead-up to the 2008 crisis.

    "Derivatives" are "complex financial instruments" which are essentially short-term contracts that act as "insurance policies" -- betting if a commodity (like oil), asset (like mortgages), or stock (like GM) --- will rise or fall in the near-term. Thus, you can make money if a stock or the price of a commodity goes down or up. But they weren't called "insurance" policies, because insurance needs to be regulated. So they called them "derivatives", and thus they didn't have to be regulated. The derivatives trade is run by organizations called Hedge Funds, which the major banks stand behind as the key players. The banks were the key players in the derivatives trade, totally unregulated, ultimately becoming a monstrous insurance fraud scam.

    On December 10, 2007, in the early days of the financial crisis:

    "Derivatives traded on exchanges surged 27 percent to a record $681 trillion in the third quarter, the biggest increase in three years."

    "Trading surged as investors bet on losses linked to record U.S. mortgage foreclosures and policy changes by the Federal Reserve and the European Central Bank to offset the credit slump."

    "The turbulence in financial markets led to the busiest trading on record."

    "A derivative is a financial obligation whose value is derived from interest rates, the outcome of specific events or the price of underlying assets such as debt, equities and commodities. Companies and investors use them to hedge against, or speculate on, price changes."
    http://www.bloomberg.com/apps/news?pid=newsarchive&sid=afLIzOHdJLqI

    It is speculation that is one of the largest risks to the entire system. Since the onset of the financial crisis, nothing has been done to even attempt to regulate the banks or the derivatives trade or stem or stop speculation. Speculation allows for a situation in which banks can profit incredibly in times of crisis.

    Speculation destroyed the Mexican peso in 1994, collapsed the economies of East Asia in 1997, plundered Russia in 1998, and assaulted Argentina in 2000/01. All the while, the money flowed from those regions and nations, and into the coffers of western banks. Then the IMF and World Bank would step in, and "restructure" their economies, give them loans, which would then be used to pay those nations' debts to the western banks.

    What this comes down to, is the fact that since nothing has actually been done to reform and regulate the system, the big banks that were said to be "too big to fail" are now much much bigger. They ate up smaller banks and underwent a massive consolidation.

    The government then gave them a blank check, and by July of 2009, the banks had devoured up to $23.7 trillion dollars.

    Now, as a global debt crisis is beginning to unfold, the banks look to make an incredible profit. Using the still-unregulated derivatives market, the still-unregulated banks, (which have control over the Treasury and Federal Reserve), will be able to "hedge bets" and speculate against nations and economies as they succumb to a debt crisis. Thus, as economies, currencies, and nations fall to pieces (i.e., Iceland, Greece, Portugal, Spain, Ireland, et. al. ), all the way to America... the banks will grow and profit along the way.

    This is the "solution" to the financial crisis that world leaders have chosen.
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    Feb 23, 2010 10:29 AM GMT
    Even Alan Greenspan admits unregulated markets were a HUGE mistake.

    At least Greenspan admitted it. It's more than we can say for Fox / GOP news, and its illiterate cult.

    Janice Boylan at the USDA was screaming about unregulated derivatives way back in 1999, but, about ran out of town until several major banks were upside down.

    In 1987 5% of the folks controlled 90% of the wealth. In 2007, 1% of the folks controlled 95% of the wealth. Unregulated capitalism doesn't work except for those who already have money.
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    Feb 24, 2010 5:31 AM GMT
    chuckystud saidEven Alan Greenspan admits unregulated markets were a HUGE mistake.

    At least Greenspan admitted it. It's more than we can say for Fox / GOP news, and its illiterate cult.


    True. But, you're missing the point.

    Alan Greenspan was a major architect of deregulation and derivatives. He actively and purposely dismantled regulations and worked directly for the big banks as head of the Federal Reserve (which is owned by the major banks, not the US government).

    So he admits he made a "mistake", so what? All the same mistakes are continuing to be made, nothing about the system or structure has changed. And Alan Greenspan can't play "idiot" on this one, as in 1963, he wrote an essay in an Ayn Rand compilation, "Capitalism: The Unknown Ideal" in which he analyzed how the Federal Reserve had created the Great Depression through similar methods of bank deregulations and speculation.

    And it's not a partisan issue, as you seem to frame it in regards to Fox News. Anyone who uses Fox News as a news source is lost to reality. But the other major networks, no matter what they are, aren't that much better by any degree. Fox is just a little more obvious that it is biased, but the reality is that all the major news networks are proven liars and disinformation outfits.

    The economic crisis is NOT a partisan issue. It wasn't the "Republicans" or the "Democrats" that caused it, just as it wasn't the "Republicans" or "Democrats" who pursue the path of empire and military domination, war, etc. These are bipartisan consensus issues. Democrats and Republicans can bicker and fight about domestic issues which by and large serve as a great distraction for the public consumption of information, but they are aligned in whose interest they serve when it comes to foreign and economic policies.

    The economic crisis is a result of the economic system, not the puppets held in front of it. We need to stop focusing on the politicians who do nothing and are relevant only so much as they have authority to sign pieces of paper, and focus instead on the key strategists who fill their administrations, and the vital economic interests they work for on Wall Street and the City of London.

    All parties, several administrations, and countless individuals and organizations are responsible for the creation of the economic crisis. But proper attention must be paid to analyzing what, who, how, why, and when, in order to determine the true causes in order to create a true solution.

    Focusing on partisan party politics is a waste of time. Party politics is a show for public consumption. Blaming one party for a war or for the economic crisis is not only inaccurate and misleading, but dangerous. It's not the party, it's the system that caused the crisis. Therefore, changing parties won't change the problem. You must change the system.

    We need to stop re-arranging deck chairs on the Titanic and find a way to get people into the lifeboats safely. At this point, it's going down, but we could better prepare people to be able to manage their way through it.
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    Feb 24, 2010 10:21 PM GMT
    I agree. Capitalism is running amok, and it's not working.
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    Feb 24, 2010 11:34 PM GMT
    MeOhMy saidIn other words, now that the wealth has been thoroughly gutted and looted, it's time to pay: through taxes, interest rate hikes, and social spending cuts.

    So when you criticize the notion of "redistributing the wealth", don't forget, the greatest redistribution of wealth on earth has taken place in the past year, and you didn't get any of it.


    I loved reading this. It reminded me of some recent news articles I've been seeing on banks suing homeowners involved in foreclosures and short-sales. It almost seems like these articles are becoming more common and intended to instill a bit of guilt in those considering a walk away from their homes. I wouldn't be surprised if the banks are arranging those news stories because they are terrified of the coming deluge of walkaways, especially in non-recourse states where state law prevents the banks from any legal remedy to collect the homeowner's other assets.

    The first time I saw an article like this was before all the bailouts had started but real estate prices were tumbling. This article discussed how people were buying a second home at a significant discount only to walk away from their primary residence. They ruin their credit but get to live in a nice house at a significant discount. The article discussed how banks were planning to work with legislators to put a stop to this fraudulent practice. What's funny is how when banks and corporations walk away from bad investments, "it's just business" but when the average Joe does it, he's a criminal.
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    Feb 25, 2010 1:49 AM GMT
    FloridaCarFan said
    MeOhMy saidIn other words, now that the wealth has been thoroughly gutted and looted, it's time to pay: through taxes, interest rate hikes, and social spending cuts.

    So when you criticize the notion of "redistributing the wealth", don't forget, the greatest redistribution of wealth on earth has taken place in the past year, and you didn't get any of it.


    I loved reading this. It reminded me of some recent news articles I've been seeing on banks suing homeowners involved in foreclosures and short-sales. It almost seems like these articles are becoming more common and intended to instill a bit of guilt in those considering a walk away from their homes. I wouldn't be surprised if the banks are arranging those news stories because they are terrified of the coming deluge of walkaways, especially in non-recourse states where state law prevents the banks from any legal remedy to collect the homeowner's other assets.

    The first time I saw an article like this was before all the bailouts had started but real estate prices were tumbling. This article discussed how people were buying a second home at a significant discount only to walk away from their primary residence. They ruin their credit but get to live in a nice house at a significant discount. The article discussed how banks were planning to work with legislators to put a stop to this fraudulent practice. What's funny is how when banks and corporations walk away from bad investments, "it's just business" but when the average Joe does it, he's a criminal.


    Well said.

    That's because an economic crisis is in reality, a war. In foreign nations, in continents like Africa, an economic crisis is a form of economic imperialism: through crisis, foreign corporations and banks take over an economy, the people of the nation pay for it in poverty, and the government becomes subservient to foreign economic interests.

    In the western world, the economic crisis has taken the form of a war against the middle class. Already the middle class is essentially only existing in theory; we are a class built on debt and delusion.

    This economic crisis, and the one unfolding in the form of the sovereign debt crisis, will be the nails in the coffin on the middle class. It will, essentially, vanish.