Monday, September 29, 2008

S&P 500 Falls Most Since 1987, Commodities Plunge After Defeat of Bailout

Stocks, Oil Plunge After Congress Rejects Bailout; Bonds Rise

By Michael Patterson and Lynn Thomasson

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U.S. stocks and oil plunged and Treasury bonds rallied the most in two weeks after U.S. lawmakers rejected the Bush administration's $700 billion financial rescue.

The Standard & Poor's 500 Index fell as much as 7.2 percent, the most since Oct. 26, 1987, as 490 companies declined. The MSCI World Index of 23 developed markets sank 5.9 percent, the steepest decline in the measure's 38-year history. Trading on Brazil's Bovespa was halted after the main stock index plummeted 10 percent. The euro and the pound sank and bonds rose as governments raced to prop up banks infected by growing U.S. mortgage losses. Crude futures tumbled more than $11 a barrel.

‘‘This was sold as the last straw, the thing that was going to fix everything and it looked like it was going to pass,'' said Walter ‘‘Bucky'' Hellwig, who helps oversee $30 billion at Morgan Asset Management in Birmingham, Alabama. ‘‘There's disappointment that we have this continued stress in the financial sector.''

The MSCI World Index of 25 developed markets lost 73.86 points to 1,176.51, giving it the steepest intraday percentage retreat since its creation in 1970. The MSCI All-Country World Index of 48 nations lost up to 6 percent, the most in its 21-year history. The S&P 500 retreated 74.93 points to 1,138.08 at 2:29 p.m. in New York, and earlier touched a four-year low of 1,125.99. Europe's Dow Jones Stoxx 600 Index sank 5.5 percent to 251.43, the lowest since January 2005. The MSCI Asia Pacific Index fell 2.1 percent.

Ireland, India, Brazil

The Irish Overall Index slumped 13 percent, the most in its 25-year history. The U.K.'s FTSE 100 Index has lost 15 percent in September, the steepest monthly drop since the October 1987 stock-market crash. India's Sensitive index tumbled 3.8 percent, Russia's Micex Index fell 5.5 percent and Brazil's Bovespa slumped 7.1 percent.

The British pound dropped the most against the dollar in 15 years after European governments stepped in to save Bradford & Bingley Plc, Fortis and Hypo Real Estate Holding AG. The cost of borrowing in euros for three months soared to a record as banks hoarded cash.

Treasuries rallied as investors sought the relative safety of government debt. The yield on 10-year Treasury notes fell 0.27 percentage point to 3.59 percent. The cost of borrowing in euros for three months rose to a record after government-led bailouts of banks heightened concern that more in Europe will fail, prompting financial institutions to hoard cash. The London interbank offered rate, or Libor, that banks charge each other for such loans climbed to 5.22 percent, the British Bankers' Association said.

‘Extremely Serious'

The $700 billion package to shore up banks was hammered out by Treasury Secretary Henry Paulson and congressional leaders over the weekend. The crisis that began with bad home loans to subprime borrowers in the U.S. is threatening to push the global economy into a recession as consumers lose confidence and banks cut back on lending.

‘‘The banking system is moving very close to a complete state of gridlock,'' said Frederic Dickson, who helps oversee $25 billion as chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon. ‘‘It doesn't appear that Congress really appreciates how serious this situation really is. The market's telling us that it's extremely serious -- and it is.''

The MSCI All-Country World Index has retreated 13 percent in September, the biggest monthly loss since Russia defaulted on its debt in August 1998. This month, the U.S. seized the two largest mortgage-finance companies, Fannie Mae and Freddie Mac; Lehman Brothers Holdings Inc. filed for bankruptcy; Merrill Lynch & Co. agreed to sell itself to Bank of America Corp.; American International Group Inc. was taken over by the Treasury; and Washington Mutual Inc. was seized by regulators in the biggest U.S. bank failure in history.

Canada Best, China Worse

Canada's S&P/TSX Composite Index has fallen 16 percent in 2008, giving it the best performance among the 23 nations MSCI considers developed markets. Ireland's benchmark index has plunged 53 percent, the steepest loss. Among 25 emerging markets, the 2.1 percent gain in Morocco's Madex Free Float Index counts as the best performance, while the 58 percent drop in China's CSI 300 Index is the worst.

Financial institutions worldwide have reported more than $590 billion of credit losses and asset writedowns since the beginning of 2007, according to data compiled by Bloomberg.

Wachovia declined 80 percent to $2. Citigroup will absorb as much as $42 billion of losses on Wachovia's $312 billion pool of loans. The Federal Deposit Insurance Corp. will take on losses beyond that amount in exchange for $12 billion in preferred stock and warrants.

Citigroup, National City

Citigroup fell 3.7 percent to $19.41. The bank halved its dividend and said it will raise $10 billion in capital.

Financial shares in the S&P 500 retreated 10 percent. National City Corp. plunged as much as 66 percent to $1.25, the lowest intraday level since April 1982. Sovereign Bancorp Inc. fell as much as 68 percent to a 16-year low of $2.66.

Morgan Stanley slumped 14 percent to $21.35. It agreed to sell a 21 percent stake to Japan's Mitsubishi UFJ Financial Group Inc. for $9 billion, seeking to shore up investor confidence after borrowing costs climbed and its stock fell by half.

Goldman Sachs Group Inc. retreated 15 percent to $117.61.

European governments stepped in to rescue Fortis, Bradford & Bingley and Hypo Real Estate as tremors from the U.S. credit crisis were felt around the world. The U.K. Treasury seized Bradford & Bingley, Britain's biggest lender to landlords, while governments in Belgium, the Netherlands and Luxembourg threw an 11.2 billion-euro ($16.3 billion) lifeline to Fortis. Germany guaranteed a loan to Hypo.

Oil Plunges

Crude oil fell as much as 11 percent to $95.04 a barrel in New York. Copper and corn also helped lead commodities lower, sending the S&P Goldman Sachs Commodity Index to a 8.1 percent decline. Energy and materials shares in the MSCI All-Country World Index retreated more than 8 percent as a group.

The drop in commodity prices dragged the dollar-denominated RTS Index, a gauge of stock trading on the Russian Trading System, to a 7.1 percent loss. The index is heading for the worst monthly loss since the country's debt default in 1998 after a 27 percent plunge in September.

Apple Inc., the computer maker whose shares surpassed $200 last year, dropped the most in eight month after a Morgan Stanley analyst said price cuts will curb profit growth. Apple fell as much as 22 percent, the most since September 2000, to $100.59.

Sources: Gonzales claims Bush directed him to Ashcroft's hospital room

What Did Bush Tell Gonzales?

by Murray Waas

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Sources say Alberto Gonzales now claims that President Bush personally directed him to John Ashcroft's hospital room in the infamous wiretap renewal incident

In March 2004, White House Counsel Alberto Gonzales made a now-famous late-night visit to the hospital room of Attorney General John Ashcroft, seeking to get Ashcroft to sign a certification stating that the Bush administration's warrantless wiretapping program was legal. According to people familiar with statements recently made by Gonzales to federal investigators, Gonzales is now saying that George Bush personally directed him to make that hospital visit.

The hospital visit is already central to many contemporaneous historical accounts of the Bush presidency. At the time of the visit, Ashcroft had been in intensive care for six days, was heavily medicated, and was recovering from emergency surgery to remove his gall bladder. Deputy Attorney General James B. Comey has said that he believes that Gonzales and White House Chief of Staff Andrew Card, who accompanied Gonzales to Ashcroft's hospital room, were trying to take advantage of Ashcroft's grievously ill state—pressing him to sign the certification possibly without even comprehending what he was doing—and in the process authorize a government surveillance program which both Ashcroft and the Justice Department had concluded was of questionable legality.

Gonzales has also told Justice Department investigators that President Bush played a more central and active role than was previously known in devising a strategy to have Congress enable the continuation of the surveillance program when questions about its legality were raised by the Justice Department, as well as devising other ways to circumvent the Justice Department's legal concerns about the program, according to people who have read Gonzales's interviews with investigators. The White House declined to comment for this story. An attorney for Gonzales, George J. Terwilliger III, himself a former deputy attorney general, declined to comment as well.

Although this president is famously known for rarely becoming immersed in the details—even on the issues he cares the most about—Gonzales has painted a picture of Bush as being very much involved when it came to his administration's surveillance program.

In describing Bush as having pressed him to engage in some of the more controversial actions regarding the warrantless surveillance program, Gonzales and his legal team are apparently attempting to lessen his own legal jeopardy. The Justice Department's inspector general (IG) is investigating whether Gonzales lied to Congress when he was questioned under oath about the surveillance program. And the Justice Department's Office of Professional Responsibility (OPR) is separately investigating whether Gonzales and other Justice Department attorneys acted within the law in authorizing and overseeing the surveillance program. Neither the IG nor OPR can bring criminal charges, but if, during the course of their own investigations, they believe they have uncovered evidence of a possible crime, they can seek to make a criminal referral to those who can.

In portraying President Bush as directly involved in making some of the more controversial decisions about his administration's surveillance program, Gonzales may, intentionally or unintentionally, be drawing greater legal scrutiny to the actions of President Bush and other White House officials. And what began as investigations narrowly focused on Gonzales's conduct could easily morph into broader investigations leading into the White House, and possibly leading to the appointment of a special prosecutor.

Dan Richman, a former federal prosecutor in Manhattan and professor at Columbia Law School, told me that Gonzales appears to be attempting to walk the thin line of taking himself out of harm's way while at the same time protecting the president, a strategy that very well could work: "I think he is serving his own purposes and the White House's purposes," Richman says.

According to Richman, by invoking Bush's name and authority, Gonzales and his legal team are making it more difficult for investigators to seek a criminal investigation of his actions, or for other investigators to later bring criminal charges against him: "The clearer it is that Gonzales did what he did at the behest of the president of the United States, the safer that he [Gonzales] is legally," says Richman. At the same time, by saying that he is advising the president, Gonzales also makes it easier for those at the White House to claim executive privilege if they do indeed become embroiled in the probe.

Moreover, according to one senior Justice Department official, Gonzales, his legal team, and the White House also know that Justice's IG and OPR are unlikely to press senior White House officials, let alone the president, to answer their questions.

But this legal strategy could also backfire.

One scenario feared by the White House is that the IG or OPR could send a public report to Congress concluding that Gonzales or some other official may have committed a crime. At a minimum, that would make the conduct of Gonzales, or of any other official deemed to be under suspicion, the subject of a criminal investigation.

If the report also raised unanswered questions about possible misconduct by other senior administration officials, or even the president, that could lead to the appointment of a special prosecutor. Some consider this unlikely; Attorney General Mike Mukasey has said that he is not an advocate of special prosecutors, and his critics in Congress have said that Mukasey tends to use his position for the political benefit of the White House. But in the hands of congressional Democrats, a public report accusing Gonzales and other administration officials of misconduct could make it difficult for Mukasey to resist their calls for the appointment of a special prosecutor.

Inside the White House, this is what is called the "nightmare scenario." White House Counsel Fred Fielding, who served in the Nixon White House during Watergate and as a White House counsel during the Reagan administration, has told others in the White House that although he does not consider this a likelihood, it should not be ruled out, and Bush and his staff should be ready for such a contingency. In addition to the Justice Department's IG and OPR investigations regarding the surveillance program, Gonzales is also under investigation by the IG as to whether he lied to Congress about the politicized firings of nine U.S. attorneys. Fielding has told White House colleagues that there is an outside possibility that a special prosecutor could be appointed to conduct a broader investigation.

In the meantime, however, it will be increasingly difficult for the president to claim he was detached from the major decisions regarding his surveillance program. One fiction that has been set aside is that the regrettable incident in Ashcroft's hospital room was the work of overzealous or insensitive staff.

The narrative of a detached Bush delegating to his staff and to his vice president continues to be the predominant one. Gonzales and Vice President Cheney have been only too happy to serve as lightning rods for criticism of the administration, drawing fire away from many of President Bush's most controversial decisions on national-security policy.

Washington Post reporter Barton Gellman's recently published book on Cheney, The Angler, once again implies that it was Cheney who was running the show. An excerpt published in The Washington Post about the president's role in pressing for the surveillance program was headlined "Cheney Shielded Bush From Crisis." The article was also summarized as follows on the newspaper's Web site: "President was nowhere in the picture as Cheney fought to keep surveillance program on track."

But seemingly contrary to the book's broader conclusions was a story corroborating Gonzales's account to investigators that Bush ordered him and Card to go visit Ashcroft in the hospital. Indeed, if Gellman is correct, Gonzales and Card would never have been admitted to Ashcroft's hospital room without the president's intercession in the first place. Gellman wrote:

The phone started ringing in the makeshift command center next to John Ashcroft's hospital room. Janet Ashcroft had been at her husband's side for six days. He was in intensive care, sedated, recovering from emergency surgery to remove his gallbladder. Mrs. Ashcroft's orders were unequivocal: no calls, from anyone, for any reason. According to two people who saw the FBI's handwritten logs, the White House operator—on behalf of Gonzales or Card, it was unclear which—asked to be connected to the attorney general. The hospital switchboard, following orders, declined.

That evening, the FBI logged a call from the president of the United States. No one had the nerve to refuse him. The phone rang at Ashcroft's bedside. Bush told his ailing cabinet chief that Alberto Gonzales and Andy Card were on their way.

Tipped off by Ashcroft's chief of staff, Acting Attorney General Comey and other Justice Department officials raced to the hospital so they would be there when Gonzales and Card arrived. It will never be known whether Ashcroft would have been competent to understand what they were telling him and whether they would have persuaded him to sign.

Had he gone ahead and done so, he would be have been signing a document facilitating a program that he and his top aides had only recently concluded was of questionable legality.

As Gonzales and Ashcroft made their way to the George Washington University Medical Center, where Ashcroft was recovering from surgery, an upset Mrs. Ashcroft called her husband's chief of staff to tell him that Gonzales and Card were on their way to the hospital. He in turn called Comey.

Comey's account of what transpired next is now well known. Comey, FBI Director Robert Mueller, and Jack Goldsmith, head of the Justice Department's Office of Legal Counsel, whose office had recently written a legal opinion concluding that the surveillance program was of questionable legality, have all testified about what transpired just before and during the showdown in Aschcroft's hospital room. But it bears some repeating, if only to show what we now know President Bush set in motion.

Comey was on his way home the evening of March 10, 2004, when he received the call. He ordered his security detail to get him to the hospital immediately.

Comey later told the Senate Judiciary Committee: "I was concerned that, given how ill I knew the attorney general was, that there might be an effort to ask him to overrule me when he was in no condition to do that."

Careening down Constitution Avenue at high speed and with sirens blaring, Comey arrived only minutes before Gonzales and Card did. Similarly alerted, Goldsmith had also raced to the hospital and run up the steps to arrive, out of breath, at Ashcroft's bedside.

On the way, Comey had frantically called FBI Director Robert Mueller. Mueller was so concerned about what Gonzales and Card were attempting to do, according to Comey, that he instructed FBI agents who constituted Ashcroft's and Comey's security details that Comey was not "to be removed from the room under any circumstance."

Within minutes after Comey and Goldsmith reached Ashcroft's bedside, Gonzales and Card also arrived. Comey would later recall to Congress that Gonzales was "carrying an envelope" with him. The envelope contained the certification that President Bush so badly wanted him to sign.

"I was angry," Comey testified. "I thought I just witnessed an effort to take advantage of a very sick man, who did not have the powers of the attorney general because they had been transferred to me."

Gonzales, in an attempt to persuade Ashcroft to sign the certification, simply misled Ashcroft. Gonzales told Ashcroft he had met earlier that day with congressional leaders who, he claimed, supported the continuation of the program without Department of Justice approval, and were determined to find a legislative remedy that would address the legal concerns of Comey and others. Several of the legislative leaders who had been at that meeting with Gonzales and Vice President Cheney say that Gonzales's account of what transpired was simply not true.

In response to Gonzales's and Card's gambits, Ashcroft, according to Comey, "stunned me … lifted his head off the pillow," and then told Gonzales and Card, "I'm not the attorney general." Mustering all the energy he had left, he pointed toward Comey and resolutely said, "There is the attorney general."

Even in the face of Ashcroft's refusal to certify the program as being within the law, President Bush initially reauthorized the surveillance program on his own. In The Angler, Barton Gellman suggests that this move "may have been the nearest thing to a claim of unlimited power ever made by an American president, all the more radical for having been issued in secret. Not only would the will of Congress be flouted, but if the White House had its way, Congress would never know."

Learning of the reauthorization, Ashcroft, Comey, and more than a dozen officials at the highest levels of government became concerned that if the surveillance program was allowed to continue on as it had been, the government could be engaging in an illegal activity at the direction of the president, and they quietly spoke of resigning en masse.

The mass resignation of so many senior officials of the government would have been all but unprecedented in modern American political history.

One former Justice Department official personally involved in the events said that the only historical precedent would have been the Saturday Night Massacre, when Attorney General Elliot Richardson resigned rather than carry out an order from President Nixon to fire the Watergate special prosecutor, Archibald Cox. With Richardson out of the way, Nixon ordered the new acting attorney general, William Ruckelshaus, to fire Cox; Ruckelshaus also refused and resigned as well. The next in line for succession as acting attorney general was the solicitor general, Robert Bork, who finally fired Cox and ordered the FBI to seal and seize Cox's office.

The former Justice Department official says that the Saturday Night Massacre would have "been nothing compared to what almost came to be … I mean, it would have been poof! and the attorney general would have been gone. The deputy attorney general would have been gone. Goldsmith—he would have been gone. The FBI director would have resigned."

If all those men had resigned, top aides to each of them would have resigned as well. Ashcroft's chief of staff and two deputy chiefs of staff said they would go with their boss. Comey's top aides would have resigned with him. The general counsels of the CIA and FBI said they were going to resign as well.

Adding to this constitutional spectacle would have been the fact that the administration's warrantless surveillance program was considered one of the most closely held national-security secrets in government at the time. There would have been no immediate explanation of why a portion of the government just up and resigned at once.

Ultimately, confronted with the possible resignations of his own top aides, Bush backed down. The president agreed to address the concerns of the Justice Department and to make significant changes in the program so that it would be conducted within the law. But the president did not do so without first defiantly telling Comey, "I decide what the law is for the executive branch."

Bush's change of heart apparently had little to do with the rule of law, but rather more to do with political pragmatism and his fear that the entire affair might become public.

Before Gonzales and Card met with Ashcroft in the hospital, Gonzales and Cheney met with congressional leaders so as to enlist their possible aid in finding a legislative means for continuing the eavesdropping program if Comey and others continued to disagree about its legality. Bush personally instructed Gonzales to write notes of what was said at the meeting, according to a report released on September 2, 2008, by the Justice Department's inspector general. The disclosure came because the IG was investigating whether Gonzales had mishandled classified information while attorney general.

A single sentence in the report says: "Gonzales told the OIG [Office of Inspector General] that President Bush directed him to memorialize the March 10, 2004 meeting."

Among those present at the meeting besides Gonzales and Cheney, according to the IG report, were National Security Agency Director Michael Hayden, the speaker of the House of Representatives, the House minority leader, the Senate majority and minority leaders, and the chairmen and vice chairmen of the congressional intelligence committees.

Regarding the notes that Gonzales made about the meeting, the IG report went on to say:

Gonzales stated that he drafted notes about the meeting in a spiral notebook in his White House Counsel's Office within a few days of the meeting, probably on the weekend immediately following the meeting. Gonzales stated that he wrote the notes in a single sitting except for one line, which he told us he wrote within the next day.

A congressional source familiar with the meeting said in an interview that he believed it was significant that Bush personally directed Gonzales to write notes as to what occurred at the meeting. Ordinarily members of Congress don't take notes at briefings concerning such highly classified issues. Very likely, Gonzales's notes are the only ones that exist. [The Justice Department is investigating whether former Attorney General Alberto Gonzales created a set of fictitious notes so that President Bush would have a rationale for reauthorizing his warrantless eavesdropping program. For that story click here.]

The September 2 report by the IG narrowly focused on the question of whether Gonzales "mishandled classified documents" during his tenure as attorney general. The report concluded that Gonzales "violated Department security requirements and procedures" in handling 18 documents, classified as Top Secret or higher. Several were marked as SCI, or "sensitive compartmented information," a category for the most highly classified records in government.

Among the most sensitive of those documents mishandled were the notes that Gonzales made of his March 10, 2004, meeting with congressional leaders.

It is unclear, based on what Gonzales wrote in his notes, what exactly he was told by the congressional leaders during the White House's meeting with them.

But on July 24, 2007, when questioned before the Senate Judiciary Committee about the events of March 10, 2004, Gonzales testified that the members of Congress he met with that day had told him that "despite the recommendation of the deputy attorney general," the government should still "go forward with very important intelligence activities."

Several of the members of Congress who were at the March 10 meeting—House Minority Leader Nancy Pelosi and Senate Minority Leader Tom Daschle among them—have said they said no such thing.

Shortly before Gonzales resigned from office in August 2007, the Justice Department's inspector general, Glenn A. Fine, wrote to inform Congress that he was investigating whether statements made by Gonzales under oath during congressional testimony were "intentionally false, misleading, or inappropriate."

Among the statements that Fine is apparently investigating is one in which Gonzales claimed that the congressional leaders had wanted him to move forward with the program despite Comey's refusal to certify it as legal.

Gonzales is also in legal jeopardy for having earlier told the Senate Judiciary Committee that there had never been any "serious disagreement" about the legality of the administration's surveillance program: "There has not been any serious disagreement about the program the president has confirmed," he testified in February 2006.

At the time Gonzales made that statement, the public had no idea about his late-night hospital-room visit with John Ashcroft—and he apparently had no expectation that it would ever come to light.

In one additional instance, President Bush was the person responsible for a controversial decision regarding his surveillance program.

This involved an effort to prevent his very own Justice Department from investigating the surveillance program in the first place. During 2006 and 2007, I wrote a series of stories for National Journal about how the Justice Department's Office of Professional Responsibility wanted to investigate the administration's surveillance program, but was unable to because its investigators were being denied security clearances to do their work. (Those articles can be found here, here, and here.) Over time, it was revealed that Gonzales had denied those security clearances, and later that Bush himself had made the decision disallowing them.

The story that I wrote for the March 15, 2007, edition of NationalJournal began as follows:

Shortly before Attorney General Alberto Gonzales advised President Bush last year on whether to shut down a Justice Department inquiry regarding the administration's warrantless domestic eavesdropping program, Gonzales learned that his own conduct would likely be a focus of the investigation, according to government records and interviews.

Bush personally intervened to sideline the Justice Department probe in April 2006 by taking the unusual step of denying investigators the security clearances necessary for their work.

It is unclear whether the president knew at the time of his decision that the Justice inquiry—to be conducted by the department's internal ethics watchdog, the Office of Professional Responsibility—would almost certainly examine the conduct of his attorney general.

At the time the story was published, Gonzales was fighting for his political life. Republicans in Congress had joined Democrats in sharply criticizing Gonzales for his role in the firings of nine U.S. attorneys. A whole new controversy might make his resignation from office imminent.

Gonzales immediately fought back. On March 22, 2007, a senior Justice Department official wrote Congress on his behalf, saying not only that it was President Bush who had made the decision to deny security clearances to the OPR investigators, but also that Gonzales had advised the president that the investigation should be allowed to move forward, and that Bush had overruled that advice.

A senior Justice Department official told me that the letter was approved in advance by the White House: "It was decided that in this instance the attorney general could no longer take the heat for the president … This time the president was going to take responsibility and deflect criticism for [his attorney general] instead of the other way around."

At the time, it appeared that the president had halted the Justice Department's probe in order to protect his attorney general, whose conduct was going to be a central focus for investigators. But as more information continues to come to light, the president's denial of the security clearances raises an important question: Were the president's actions designed to protect his attorney general—or himself?

We won! Now take action to prevent any vote-changing!

We won! Now take action to prevent any vote-changing! No to backroom arm-twisting!

The vote has just come in and we won. BUT, the House leadership of the Republicans and Democrats is right now doing backroom arm-twisting to get your representatives to change their votes. If they can get 13 Representatives to change their vote, the bailout will pass. If we all take action right now to make phone calls and emails, we can stop this effort to hijack this significant victory for the people in Congress.

Click here to send your letter now. If you have sent one before, send again.

Tell your friends to send a letter right now.

You can call the Capitol Switchboard at 800-473-6711 or 202-224-3121 to ask to be transferred to the office of your elected official.

A.N.S.W.E.R. Coalition
http://www.answercoalition.org/
info@internationalanswer.org

National Office in Washington DC: 202-544-3389
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House votes down massive bailout measure

House votes down massive bailout measure

Debate prior to balloting showed deep reservations about $700 billion plan

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The House on Monday defeated a $700 billion emergency rescue package, ignoring urgent pleas from President Bush and bipartisan congressional leaders to quickly bail out the staggering financial industry.

Stocks plummeted on Wall Street even before the 228-205 vote to reject the bill was announced on the House floor.

When the critical vote was tallied, too few members of the House were willing to support the unpopular measure with elections just five weeks away. Ample no votes came from both the Democratic and Republican sides of the aisle.

Bush and a host of leading congressional figures had implored the lawmakers to pass the legislation despite howls of protest from their constituents back home.

The vote had been preceded by unusually aggressive White House lobbying, and spokesman Tony Fratto said that Bush had used a "call list" of people he wanted to persuade to vote yes as late as just a short time before the vote.

Lawmakers shouted news of the plummeting Dow Jones average as lawmakers crowded on the House floor during the drawn-out and tense call of the roll, which dragged on for roughly 40 minutes as leaders on both sides scrambled to corral enough of their rank-and-file members to support the deeply unpopular measure.

They found only two.

Bush and his economic advisers, as well as congressional leaders in both parties had argued the plan was vital to insulating ordinary Americans from the effects of Wall Street's bad bets. The version that was up for vote Monday was the product of marathon closed-door negotiations on Capitol Hill over the weekend.

"We're all worried about losing our jobs," Rep. Paul Ryan, R-Wis., declared in an impassioned speech in support of the bill before the vote. "Most of us say, 'I want this thing to pass, but I want you to vote for it — not me.' "

With their dire warnings of impending economic doom and their sweeping request for unprecedented sums of money and authority to bail out cash-starved financial firms, Bush and his economic chiefs have focused the attention of world markets on Congress, Ryan added.

"We're in this moment, and if we fail to do the right thing, Heaven help us," he said.

Even as the electronic roll call began, Democratic and Republican leaders were uncertain about having enough votes to pass the politically unpopular plan. It's the most sweeping government intervention in markets since the Great Depression.

The bailout would have put in place an unprecedented federal program to buy up rotten assets from cash-starved firms. The goal is to free up choked credit that was threatening to cause broader market turmoil.

"Many of us feel that the national interest requires us to do something which is, in many ways, unpopular," said Rep. Barney Frank, the Financial Services Committee chairman, before the vote. "It is hard to get political credit for avoiding something that has not yet happened."

The bill was the product of marathon bargaining over the weekend among various House and Senate representatives.

President Bush urged the bill's passage, saying in a White House appearance Monday morning that "every member of Congress and every American should keep in mind that a vote for this bill is a vote to prevent economic damage to you and your community."

"With this strong and decisive legislation," he said, "we will help restart the flow of credit so American families can meet their daily needs and American businesses can make purchases, ship goods and meet their payrolls."

As debate opened, Frank, D-Mass., called the measure "a tough vote," but a necessary one to stave off a financial meltdown. It lets the government buy sour assets — mostly mortgage-backed securities — from struggling financial institutions in a bid to clear out clogged avenues of credit for businesses and individuals alike.

At the White House, spokesman Tony Fratto confirmed vigorous efforts to get the bill through.

"We're going to keep working with them right up until the vote," he said.

Fratto also said that Bush, Vice President Dick Cheney, Treasury Secretary Paulson, White House chief of staff Josh Bolten and other top officials were contacting House members in an effort to rally support, and that the president himself had call list of "a couple dozen members."

Fratto said Bush was telling aides some of those he'd talked to were committed to voting for the bill while "others remained skeptical."

With their dire warnings of impending economic doom and their sweeping request for unprecedented sums of money and authority to bail out cash-starved financial firms, Bush and his economic chiefs have focused the attention of the world and the markets on Congress, said Ryan. Without the bill, Ryan added, "the worst is yet to come."

Two leading players also spoke early Monday, lobbying on morning television news shows for approval of a package deeply unpopular with a public angry that taxpayer money will save Wall Street firms from heavy risk-taking. Thousands of angry phone calls, e-mails and letters have poured into Capitol Hill from constituents. Supporters essentially acknowledged that it was a hold-your-nose-and-vote matter.

Critics on the left and right said Congress was being stampeded into hasty action on a plan that wouldn't make a dent in the nation's economic woes, which have at their root a subprime mortgage meltdown and the bursting of the housing bubble, followed by a wave of foreclosures.

The legislation does not require any federal action to prevent foreclosures, although it mandates that the government try renegotiating the bad mortgages it acquires with the aim of lowering borrowers' monthly payments so they can keep their homes.

"Like the Iraq war and the Patriot Act, this bill is fueled on fear and hinges on haste," said Democratic Rep. Lloyd Doggett, R-Texas.

Republican Jeb Hensarling of Texas, a leading conservative, said the bill puts the country "on the slippery slope to socialism. If you lose your ability to fail, soon you will lose your ability to succeed."

The Senate planned a vote as early as Wednesday.

Sen. Chris Dodd, D-Conn., said that failure to act would spread the contagion of frozen credit markets even further. "This is not just about Wall Street," said the Banking Committee chairman.

Sen. Judd Gregg, R-N.H., told The Associated Press: "It's one of those situations where if it passes and works, people will never know how close we were to the brink."

Still, both men said the necessity of such massive government action is a sad day for the nation. They were speaking not just to rank-and-file lawmakers who are under a spotlight in the contentious, dramatic congressional debate, but to U.S. and global markets which have displayed nervousness about Washington's determination to act.

Investors worldwide and in early trading in the United States continued to show doubt about whether the bill would go through, much less go a long way toward curing the systemic problems that have unnerved financial markets across the globe for weeks.

There was a further sign of general economic deterioration Monday as the Commerce Department reported that consumer spending was unchanged in August — even worse than the small 0.2 percent gain that economists had anticipated. It was the weakest showing since spending was also flat in February.

Federal Reserve Chairman Ben Bernanke said the bill "should help to restore the flow of credit to households and businesses that is essential for economic growth and job creation."

Bush said he "fully understands" the bailout bill was a difficult vote. He and Vice President Dick Cheney took to the phones to corral individual members of Congress.

Lawmakers wrote a number of restrictions into the pending legislation, including oversight over the operation of the program, curbs on "golden parachutes" for top executives of firms getting help, and assurances that taxpayers would ultimately be reimbursed by the companies for any losses. But the government would have broad discretion to decide how to implement the rescue.

The legislation also requires that the government take ownership stakes in companies that receive federal infusions, so it could share a piece of potential future profits.

Bush said the ultimate cost of the bailout will be much less than the $700 billion authorized.

Treasury Secretary Henry Paulson sought the unprecedented amount of money with little supervision.

Instead, the bill lets Congress block half the money and force the president to jump through some hoops before using it all. The government could get at $250 billion immediately, $100 billion more if the president certified it was necessary, and the last $350 billion with a separate certification — and subject to a congressional resolution of disapproval. Still, the resolution could be vetoed by the president, meaning it would take extra-large congressional majorities to stop it.

At the White House, spokesman Tony Fratto described vigorous efforts to get the bill through.

"We're going to keep working with them right up until the vote," he said.

Fratto also said that Bush, Vice President Dick Cheney, Treasury Secretary Paulson, White House chief of staff Josh Bolton and other top officials were contacting House members in an effort to rally support, and that the president himself had call list of "a couple dozen members."

Fratto said Bush was telling aides some of those he'd talked to were committed to voting for the bill while "others remained skeptical."

Urgent: Send a letter to Congress right now to Vote "No" to Bailout Rip-Off

Urgent: Send a letter to Congress right now to Vote "No" to Bailout Rip-Off

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If this Congress was carrying out the will of the people, today’s Grand Theft bankers bailout legislation would result in an overwhelming NO vote.

Take one minute and help the VoteNoBailout.org movement flood Congress with hundreds of thousands of NO votes right now.

The vast majority of the people oppose giving 1 trillion of their tax dollars to super-rich bankers who drove the economy into the ground. Will our elected representatives represent the will of the people or will they serve the thieves on Wall Street? Let’s make sure that they feel the heat of the people. Click this link to send your letter.

Henry Paulson is worth $700 million from his years as CEO of Goldman Sachs. The current CEO of Goldman made $67 million last year alone. The pay of corporate and banking executives today is 275 times greater than the average worker.

This Bailout Bill is the biggest rip-off of working families in US history.

The legislation does virtually nothing for the millions of hard-working people who have lost their homes or are now facing foreclosure. Instead of rewarding bankers' greed, a real bailout should start by re-setting or freezing mortgage interest payments to the banks so that homeowners can avoid foreclosure. That would keep families in their homes and stop the rash of foreclosures that is sweeping the country.

Spread the word in the next few hours. Tell everyone to flood Congress with letters saying VOTE NO! Click this link to send your letter.

Click this link to tell your friends about VoteNoBailout

A.N.S.W.E.R. Coalition
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Chicago: 773-463-0311

The Rich Are Staging a Coup This Morning ...a message from Michael Moore

The Rich Are Staging a Coup This Morning ...a message from Michael Moore

Go To Original

Friends,

Let me cut to the chase. The biggest robbery in the history of this country is taking place as you read this. Though no guns are being used, 300 million hostages are being taken. Make no mistake about it: After stealing a half trillion dollars to line the pockets of their war-profiteering backers for the past five years, after lining the pockets of their fellow oilmen to the tune of over a hundred billion dollars in just the last two years, Bush and his cronies -- who must soon vacate the White House -- are looting the U.S. Treasury of every dollar they can grab. They are swiping as much of the silverware as they can on their way out the door.

No matter what they say, no matter how many scare words they use, they are up to their old tricks of creating fear and confusion in order to make and keep themselves and the upper one percent filthy rich. Just read the first four paragraphs of the lead story in last Monday's New York Times and you can see what the real deal is:

"Even as policy makers worked on details of a $700 billion bailout of the financial industry, Wall Street began looking for ways to profit from it.

"Financial firms were lobbying to have all manner of troubled investments covered, not just those related to mortgages.

"At the same time, investment firms were jockeying to oversee all the assets that Treasury plans to take off the books of financial institutions, a role that could earn them hundreds of millions of dollars a year in fees.

"Nobody wants to be left out of Treasury's proposal to buy up bad assets of financial institutions."

Unbelievable. Wall Street and its backers created this mess and now they are going to clean up like bandits. Even Rudy Giuliani is lobbying for his firm to be hired (and paid) to "consult" in the bailout.

The problem is, nobody truly knows what this "collapse" is all about. Even Treasury Secretary Paulson admitted he doesn't know the exact amount that is needed (he just picked the $700 billion number out of his head!). The head of the congressional budget office said he can't figure it out nor can he explain it to anyone.

And yet, they are screeching about how the end is near! Panic! Recession! The Great Depression! Y2K! Bird flu! Killer bees! We must pass the bailout bill today!! The sky is falling! The sky is falling!

Falling for whom? NOTHING in this "bailout" package will lower the price of the gas you have to put in your car to get to work. NOTHING in this bill will protect you from losing your home. NOTHING in this bill will give you health insurance.

Health insurance? Mike, why are you bringing this up? What's this got to do with the Wall Street collapse?

It has everything to do with it. This so-called "collapse" was triggered by the massive defaulting and foreclosures going on with people's home mortgages. Do you know why so many Americans are losing their homes? To hear the Republicans describe it, it's because too many working class idiots were given mortgages that they really couldn't afford. Here's the truth: The number one cause of people declaring bankruptcy is because of medical bills. Let me state this simply: If we had had universal health coverage, this mortgage "crisis" may never have happened.

This bailout's mission is to protect the obscene amount of wealth that has been accumulated in the last eight years. It's to protect the top shareholders who own and control corporate America. It's to make sure their yachts and mansions and "way of life" go uninterrupted while the rest of America suffers and struggles to pay the bills. Let the rich suffer for once. Let them pay for the bailout. We are spending 400 million dollars a day on the war in Iraq. Let them end the war immediately and save us all another half-trillion dollars!

I have to stop writing this and you have to stop reading it. They are staging a financial coup this morning in our country. They are hoping Congress will act fast before they stop to think, before we have a chance to stop them ourselves. So stop reading this and do something -- NOW! Here's what you can do immediately:

1. Call or e-mail Senator Obama. Tell him he does not need to be sitting there trying to help prop up Bush and Cheney and the mess they've made. Tell him we know he has the smarts to slow this thing down and figure out what's the best route to take. Tell him the rich have to pay for whatever help is offered. Use the leverage we have now to insist on a moratorium on home foreclosures, to insist on a move to universal health coverage, and tell him that we the people need to be in charge of the economic decisions that affect our lives, not the barons of Wall Street.

2. Take to the streets. Participate in one of the hundreds of quickly-called demonstrations that are taking place all over the country (especially those near Wall Street and DC).

3. Call your Representative in Congress and your Senators. (click here to find their phone numbers). Tell them what you told Senator Obama.

When you screw up in life, there is hell to pay. Each and every one of you reading this knows that basic lesson and has paid the consequences of your actions at some point. In this great democracy, we cannot let there be one set of rules for the vast majority of hard-working citizens, and another set of rules for the elite, who, when they screw up, are handed one more gift on a silver platter. No more! Not again!

Yours,
Michael Moore
MMFlint@aol.com
MichaelMoore.com

P.S. Having read further the details of this bailout bill, you need to know you are being lied to. They talk about how they will prevent golden parachutes. It says NOTHING about what these executives and fat cats will make in SALARY. According to Rep. Brad Sherman of California, these top managers will continue to receive million-dollar-a-month paychecks under this new bill. There is no direct ownership given to the American people for the money being handed over. Foreign banks and investors will be allowed to receive billion-dollar handouts. A large chunk of this $700 billion is going to be given directly to Chinese and Middle Eastern banks. There is NO guarantee of ever seeing that money again.

P.P.S. From talking to people I know in DC, they say the reason so many Dems are behind this is because Wall Street this weekend put a gun to their heads and said either turn over the $700 billion or the first thing we'll start blowing up are the pension funds and 401(k)s of your middle class constituents. The Dems are scared they may make good on their threat. But this is not the time to back down or act like the typical Democrat we have witnessed for the last eight years. The Dems handed a stolen election over to Bush. The Dems gave Bush the votes he needed to invade a sovereign country. Once they took over Congress in 2007, they refused to pull the plug on the war. And now they have been cowered into being accomplices in the crime of the century. You have to call them now and say "NO!" If we let them do this, just imagine how hard it will be to get anything good done when President Obama is in the White House. THESE DEMOCRATS ARE ONLY AS STRONG AS THE BACKBONE WE GIVE THEM. CALL CONGRESS NOW.

Giuliani's law firm seeking bailout business

Giuliani's law firm seeking bailout business

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In the midst of the worst financial crisis since the Great Depression, former Mayor Rudy Giuliani has begun drumming up business, positioning his law firm to advise corporate clients on how to profit from the government's $700 billion bailout.

Bracewell & Giuliani LLP announced it has formed a corporate task force to advise "financial institutions, private investment funds, institutional investors and other market participants" on the costly package.

"Our team of former government officials and experienced attorneys in the fields of legislation, enforcement and finance are equipped to guide institutions in this quickly evolving and complex environment," Giuliani said.

A firm spokeswoman declined to provide any further details and referred to the announcement.

Bracewell isn't the only group poised to profit if a deal is reached for the federal government to bail out the struggling financial system by buying up billions in bad mortgages and other toxic assets.

Among those who could make money are hedge funds, private equity firms and bankers, not to mention legions of accountants, financial consultants and law firms such as Bracewell & Giuliani.

"Invest in lawyers, they're going to have a field day in the coming years," said Axel Merk, portfolio manager at Merk Funds.

Bracewell says it has the legal and government experience to help clients understand whatever legislation Congress eventually passes. One of the task force members is Marc Mukasey, a former federal prosecutor and son of U.S. Attorney General Michael Mukasey.

"Mr. Giuliani and his partners will not be the only persons to profit from this," said Anthony Sabino, professor of law and business at St. John's University. "He's entitled to seize the opportunity. Certainly this will be a bonanza for those that advise the business community."

Treasury Would Emerge With Vast New Power

Treasury Would Emerge With Vast New Power

FLOYD NORRIS

Go To Original

During its weeklong deliberations, Congress made many changes to the Bush administration’s original proposal to bail out the financial industry, but one overarching aspect of the initial plan that remains is the vast discretion it gives to the Treasury secretary.

The draft legislation, which will be put to a House vote on Monday, gives Treasury Secretary Henry M. Paulson Jr. and his successor extraordinary power to decide how the $700 billion bailout fund is spent. For example, if he thinks it wise, he may buy not only mortgages and mortgage-backed securities, but any other financial instrument.

To be sure, the Treasury secretary’s powers have been tempered since the original Bush administration proposal, which would have given Mr. Paulson nearly unfettered control over the program. There are now two separate oversight panels involved, one composed of legislators and the other including regulatory and administration officials.

Still, Mr. Paulson can choose to buy from any financial institution that does business in the United States, or from pension funds, with wide discretion over what he will buy and how much he will pay. Under most circumstances, banks owned by foreign governments are not eligible for the money, but under some conditions, the secretary can choose to bail out foreign central banks.

Under the bill, the Treasury is to buy the securities at prices he deems appropriate. Mr. Paulson may set prices through auctions but is not required to do so.

Rarely if ever has one man had such broad authority to spend government money as he sees fit, with no rules requiring him to seek out the lowest possible price for assets being purchased.

The secretary is supposed to do what he can to maximize the profit or minimize the eventual loss to the federal government as a result of its purchase of mortgages and other financial instruments. But in the case of mortgages controlled by the government, he is required to approve “reasonable requests for loss mitigation measures, including term extensions, rate reductions, principal write-downs” and other possible changes. Such requests could help homeowners at the expense of the government.

Congress forced the Bush administration to agree to a provision requiring financial institutions that sell securities to the program to give an equity or debt stake to the government. But Mr. Paulson will have wide latitude in deciding how large a stake is needed. His discretion in setting those limits could have a major impact on how many institutions choose to participate.

The limits on executive pay in the bill, also added in response to pressure from legislators, appear unlikely to be used very often. The secretary could take such steps if he bought substantial assets “from an individual financial institution where no bidding process or market prices are available.”

Presumably, if there is some kind of bidding process, those limitations, over which the secretary also has considerable discretion, will not apply. However, institutions that receive $300 million or more from the program would face limitations on executive pay.

One of the most important decisions the secretary will make is the price the government pays for securities. Here again, there is wide discretion. He is directed to “make such purchases at the lowest price” that is “consistent with the purposes of this act.”

Those purposes, however, are expansive and leave him room to pay well over the lowest price available if he wishes to do so. The act is designed to “restore liquidity and stability to the financial system of the United States” and protect homeownership, home values and economic growth. If he concludes that a higher price is needed to provide stability in the financial markets, that is evidently acceptable.

When the Bush administration submitted its original proposal, there was an uproar over the lack of oversight of the secretary’s actions. This bill requires frequent reports to Congressional committees, including a Congressional oversight panel; audits by the comptroller general; and appointment of an inspector general for the program.

The bill also sets up an oversight board, which is directed to “ensure that the policies implemented” by Mr. Paulson are proper. Mr. Paulson is to be one of the five members of the board watching over his actions, joined by the chairman of the Federal Reserve, the chairman of the Securities and Exchange Commission, the Housing Secretary and the director of the Federal Home Finance Agency.

If Mr. Paulson wishes to use his authority to buy financial assets not linked to mortgages, he can do so after consulting the Fed chairman. But he does not need the approval of the Fed chairman or the oversight board.

The bill does allow legal challenges, but attempts to assure they are quickly handled and that the most important decisions can be challenged only on constitutional grounds, not on the ground that they conflict with some other law.

While the bill does not drop the accounting rule that requires banks to report on the market value of their assets — a rule that some banks believe has forced them to report excessive losses — it gives the S.E.C. permission to suspend the rule for any individual company if it thinks that is in the public’s interest. That is likely to lead to intensive lobbying of the commission.

Fed Pumps Further $630 Billion Into Financial System to Provide Bank Funding

Fed Pumps Further $630 Billion Into Financial System

By Craig Torres and Scott Lanman

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The Federal Reserve will pump an additional $630 billion into the global financial system, flooding banks with cash to alleviate the worst banking crisis since the Great Depression.

The Fed increased its existing currency swaps with foreign central banks to $620 billion from $290 billion to make more dollars available worldwide. The Term Auction Facility, the Fed's emergency loan program, will expand to $450 billion from $150 billion. The European Central Bank, the Bank of England and the Bank of Japan are among the participating authorities.

The Fed's expansion of liquidity, the biggest since credit markets seized up last year, comes as Congress prepares to vote on a $700 billion bailout for the financial industry. The crisis is reverberating through the global economy, forcing European governments to rescue four banks over the past two days alone.

‘‘Today's blast of term liquidity will settle the funding markets down, and allow trust to slowly be restored between borrowers and lenders,'' said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. On the other hand, ‘‘the Fed's balance sheet is about to explode.''

Banks and brokers have slowed lending as they struggle to restore their capital after $554 billion in credit losses and writedowns since the mortgage crisis began a year ago. The bankruptcy of Lehman Brothers Holdings Inc. also sparked fears among banks they wouldn't be repaid by counterparties, driving up the cost of short-term loans between banks.

‘‘These steps are being undertaken to mitigate pressures evident in the term funding markets both in the United States and abroad,'' the Fed said in a statement released on the Board of Governors website.

‘‘By committing to provide a very large quantity of term funding, the Federal Reserve actions should reassure financial market participants that financing will be available against good collateral, lessening concerns about funding and rollover risk,'' the central bank said.

Grand Theft America. Financial Crime of the Century

Grand Theft America.

Financial Crime of the Century

By Stephen Lendman

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The crime of the century. The greatest one ever. Author Danny Schechter calls it "Plunder." The title of his important new book on the subprime and overall financial crisis. Economist Michael Hudson and others refer to a kleptocracy. A Ponzi scheme writ large. Maybe an out-of-control Andromeda Strain. An economic one. Deadly. Unrecallable. Science fiction now real life. Potentially catastrophic. World governments trying to contain it. Trying everything but not sure what can work. Maybe only able to paper it over for short-term relief. Buy time but in the end vindicate the maxim that things that can't go on forever, won't.

The world as we know it is changing. Industrial capitalism. The entire global economic system. Interconnected. What affects one nation touches others. If the troubled country is America it reaches everywhere, and if the crisis is great enough, the disease may be fatal and human wreckage catastrophic. Precisely the current dilemma that world leaders and financial experts are scrambling to figure out. Desperate to contain, and not sure what, if anything, can work. How did this happen and why?

The result of unfettered capitalism's fatal flaw - unbridled greed in a rigged system that rewards the few at the expense of most others. First an explanation of how it works. Free-wheeling, "free market" Chicago School fundamentalism the way economist Milton Friedman championed it in his 1962 book "Capitalism and Freedom" and taught it to students for decades. He believed that government's sole function is "to protect our freedom both from (outside) enemies....and from our fellow-citizens." Preserve law and order. Enforce private contracts. Protect private property and "foster competitive (unregulated) markets." Everything else in public hands is "socialism....blasphemy." Not to be tolerated.

He said "free markets" work best. Unfettered by rules, regulations, onerous taxes or any at all, trade barriers, entrenched interests, and human interference. That anything government does, business does better, so let it. That the best government is one that governs least. That public wealth should be in private hands. The accumulation of profits unrestrained. Corporate taxes abolished. Social services also, and that "economic freedom is an end to itself....and an indispensable means toward (achieving) political freedom."

He called most all government interference a restriction of freedom. Opposed foreign aid. Subsidies. Import quotas and tariffs, and illicit drug laws for being a subsidy to organized crime, but he found no fault with major banks laundering their profits. He believed business should be unrestrained in maximizing them, even the illegal kind apparently.

He opposed the minimum wage and right of unions to bargain collectively on equal terms with management. He believed high wages and benefits harm everyone. They raise prices, and in the end, hurt workers as well as management. He called Social Security "The Biggest Ponzi Scheme on Earth," even though it's been the most effective poverty reduction program ever for millions of seniors who'd be desperate without it. Especially today given a deepening economic crisis. The nation's social safety net disappearing, and heading everyone toward managing on his or her own. Dependent on their ingenuity, resources, and good fortune. Milton Friedman's ideal world. For those who can't make it, it's their own fault. It's everyone for him or herself in his judgment, and let the devil take the hindmost.

As for today's largest ever unraveling Ponzi scheme, it's just the workings of the "free market." Creative destruction. "Freedom to choose." The best of all possible worlds, and unfettered capitalism will figure out the right solutions. Provided government gets out of the way and gives it free reign. Free money also to wreck world economies and human lives even more than what's already done.

The Chickens Are Home to Roost

Are they ever, and here's what we've got. A global asset bubble. A predictable crisis allowed to build and mushroom. Begun after Chicago School economics took hold under Ronald Reagan. Continued under GHW Bush. Became religion under Bill Clinton, and ultimately fundamentalism under GW Bush.

The result - a "slow motion train wreck" gaining speed. Banks and other financial institutions failing globally. On September 25, the largest bank failure in US history with Washington Mutual's collapse. Earlier it was giant insurer AIG. Before that Fannie Mae and Freddie Mac, Lehman Brothers, Bear Stearns, and Merrill Lynch a forced liquidation to Bank of America.

Others are now teetering on the edge. Strapped by toxic debt. The result of out-of-control greed for easy profits. Massive fraud to get them. Thinking they're the best and brightest, and only mere mortals mess up. Knowing Fed moral hazard will cushion them if they do. True for some. Not for others, and learning that the Federal Reserve (the world's key central bank) failed in its primary job. To protect the country's financial system from insolvency. By contributing to a financial crisis and one of confidence. By creating near-limitless amounts of capital. Fueling a housing bubble. Outsized consumer debt, and irresponsible investments free from government oversight. Fraudulent ones involving multi-trillions of dollars.

Partnering with government to make it easy. Risking a global economic meltdown as a result. Scrambling to find solutions. Unsure if there are any. The present crisis is unparalled. Maybe it can be fixed, and maybe not. The problem is multi-fold. A perfect storm involving:

-- residential housing;

-- commercial real estate;

-- consumer over-indebtedness;

-- unknown amounts of toxic debt (in the multi-trillions);

-- affecting world finance and economies;

-- causing bankruptcies;

-- many more will follow;

-- selected ones bailed out;

-- the entire system endangered;

-- consumer money market, bank accounts and private pension funds as well; government backing is needed to protect them; there's not enough money to do it; and

-- the contagion is spreading; threatening world economies and people everywhere.

This time is really different. A $700 billion bailout (called the Emergency Economic Stabilization Act of 2008 - EESA) is just a down payment. Trillions will be needed in the end. Other nations contributing to help. The problems are deeper and more intractable than anyone expected. Before this ends, unimaginable amounts of capital will be written off. Too much to even contemplate. Bad investments contaminating good ones. Threatening world financial structures with paralysis. Severe economic damage to their economies as a result.

Eroding industrial capitalism as we know it. At best managing a short-term fix and delaying a final denouement for a later time. Under new management with the current and past ones claiming no responsibility. And unmindful of millions of homeowners facing foreclosure and bankruptcy. One in ten currently behind in their payments. Others losing their jobs and way of life. They're the most vulnerable. Least able to cope, and for some their ability to survive.

According to The New York Times, here's how the Paulson scheme helps them: "it requires the government to use its new role as owner of distressed mortgage-backed securities to make 'more aggressive' efforts to prevent home foreclosures." Weasel words. No specifics. No assurances, and nothing apparently for homeowners already in foreclosure.

On September 22, ahead of the announced agreement, American Research Group (ASG) published its latest public sentiment poll results, and they were stunning. At 19%, George Bush scored lowest ever for a US president, surpassing Harry Truman at the depth of the Korean War and Richard Nixon during Watergate. It came at a time ASG's results showed 82% of Americans believe the economy is getting worse, and only 17% approve of how Bush is handling it. Among registered voters, the number is 18% at a time no one surveyed (zero percent) said the economy is improving and 68% say it's in recession. True or false, it's how they feel. How the crisis affects them, and that's what counts most.

Yet on September 24, the president addressed the nation audaciously. Callously dismissing public pain and anger. Deceitfully stating outright lies. A typical performance. Demanded that Congress give the treasury secretary carte blanche authority over $700 billion to address "a serious financial crisis." Asked taxpayers to pay for corporate fraud. Reward criminals and ignore their crimes. Said nothing about the root cause. The effect on ordinary people, or how Paulson's scheme will help them. Ignored growing public opposition. Large numbers of credible observers believing the proposed solution is worse than the problem. The most honest of them saying it will enrich fraudsters and offer no help for homeowners.

Yet Bush concluded that "democratic capitalism (is the) best system the world has ever devised" in spite of clear evidence that it's broken and corrupted. Exploits people for profit. Enriches the few at the expense of the many. Rewards criminals for their crimes. Protects the rich from beneficial social change.

Ahead of the president's address on September 24, The New York Times showed a rare display of candor in a critical Timothy Egan opinion piece. About "nearly nationalizing the banking system and giving the treasury secretary more power than a king....whose decisions may not be reviewed by any court of law or any administrative agency." He asked readers to remember "where the biggest heist took place, and how Wall Street dragged down the rest of the country once before," referring to the Great Depression but leaving out everything in between.

He stressed, however, "how Wall Street brought down main street," and things have now come full circle. Deregulation unleashed casino capitalism, and bankers made a killing. Now they're in trouble and Bush demands "the biggest bailout in American history....or the world will crumble. He said the a similar thing in the run-up to war" so who can believe him now. Egan quotes a dirt farmer asking why not the same "concerns (for) average Americans." Because "we the people" Bush speaks for are them, not us.

As for Paulson's plan, here's what the Financial Times writer Martin Wolf said on September 23. He called it "not a true solution to the crisis." It doesn't address the "fundamental problem." It's "neither a necessary nor an efficient solution. It is not necessary because the (Fed can) manage illiquidity through its many lender-of-last resort operations. It is not efficient because it can only deal with insolvency by buying bad assets (overpriced junk) at far above their true value, thereby guaranteeing big losses for taxpayers and providing an open-ended bail-out to the most irresponsible investors."

Wolf also objects to Paulson getting unchecked powers. Providing little or no help to the poor and "ill-informed" (read duped) borrowers, and lists other operational suggestions "essential for the long-run health of any financial system" without needing "a penny of public money." Among them, forcing creditors to take losses and not taxpayers.

Unmentioned in his article is the underlying fraud behind the crisis and a lack of regulatory oversight that made it easy. Also, omitted was what's covered in the section below.

The 1937 Housing Act's Empowering Section 8 Authority

One Section 8 sentence provided the basis for the treasury secretary's empowerment. It reads:

"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 administration agency."

In other words, unchallengeable czarist powers. In contrast to the 1930s Reconstruction Finance Corporation's (RFC) closely supervised operations. That era's Home Owners' Loan Corporation (HOLC) that refinanced homes to prevent foreclosures. And the 1980s Resolution Trust Corporation (RTC) mandate to liquidate assets from failed S & Ls. Not dispense free money for bad investments unchecked. The above authorities subject to judicial review. Not governed by a financial boss to run as he pleased.

The Announced "Bailout" Deal - The Emergency Stabilization Act of 2008 (ESA)

According to The New York Times, EESA calls for "strict oversight of the program by a Congressional panel and conflict-of-interest rules for firms hired by the Treasury to help run the program." Also "a change in the bankruptcy laws sought by some Democrats to give judges the authority to modify the terms of first mortgages."

Given the bipartisan blame for today's crisis. The post-9/11 willingness to give the administration near-carte blanche authority across the board. Eight years of indifference to social needs and public welfare. Who now believes that policy going forward will change and that the agreed-on scheme will protect people or curb the secretary's authority. On his own initiative, George Bush usurped supreme power post-9/11 while few in Congress blanched. None in leadership positions. Little today has changed.

Disclaimers notwithstanding from both sides of the aisle, Wall Street is pleased. Paulson got what he wanted. The plan's fine print will assure it. Public money. Far more, if needed, than $700 billion. The power to dispense it freely. With weak at best oversight and judicial review, and the ability to conceal fraud and malfeasance. In short, the between-the-lines meaning of Paulson saying: "We have made great progress toward a deal, which will work and be effective in the marketplace."

The same one that fleeced the nation and betrayed the public trust. Now empowered to take more with the full faith and blessing of the government from both sides of the aisle. Belying George Bush's insult that "The rescue effort....is not aimed at Wall Street; it is aimed at your street." And Nancy Pelosi's hypocrisy that: "All of this was done in a way to insulate Main Street and everyday Americans from the crisis on Wall Street....I want to congratulate all of the negotiators for the great work they have done." Who in banker boardrooms would disagree.

Some Relevant Facts

Clearly the present crisis is unprecedented. As stated above, maybe it can be fixed and maybe not. No one is sure because no one understands it fully. Where all the problems lie. To what degree can they be contained. How great their fallout may be. Their full effect on world economies. How bad things may get before they stabilize and improve, and the way the world will look like when they do.

Whatever's coming, industrial capitalism is eroding. A kleptocracy replaced it. If the system is saved, it will be temporary, and an even greater one will emerge. Why this article is called Grand Theft America. A criminal class runs it, and they're rewarded for their crimes. Backed by the full faith and credit of the government with taxpayer money. A near-limitless amount created and borrowed. Who said crime doesn't pay!

For over 30 years, an unimaginable wealth transfer to the rich has been ongoing. To the top 1% and corporate America from most others. It proves the failure of a system that rewards the few at the expense of the many. Licenses greed and creates this kind of global financial crisis so far uncontained. It begs the questions: what caused it and what's the fallout:

-- the ruinous effects of militarization; insane amounts of spending on it; "military Keynesianism;" believing capitalism thrives on foreign wars; "Global Wars on Terrorism" currently; their costs are unsustainable and are heading the nation toward bankruptcy;

-- the drain on an already weakened economy;

-- maxed out consumers now debt slaves;

-- so is government from unrepayable obligations in the tens of trillions; not the fictitious "official" reported numbers;

-- the possibility of future default; hyperinflation; national bankruptcy, and the demise of the republic;

-- human default as well: mass bankruptcies; home foreclosures; rising unemployment; increased poverty; and growing numbers of families unable to survive;

-- the subprime crisis is just part of it; seven million mortgages sold to the unwary; the idea was to criminally defraud them; offer two-year teaser rates; then reset them higher semi-annually based on an interest rate benchmark; payments soared as much as 30% and became unaffordable; the scheme was to cash in at the expense of mortgage holders, and five million risk losing their homes and life savings;

-- an "economic Pearl Harbor" for Warren Buffett; for Senator Chris Dodd a "50-state Katrina;" a "house of cards (built on) reckless finance" for author Kevin Phillips; Frankenstein finance; casino capitalism; for most Americans, a human catastrophe;

-- the demise of our manufacturing base; letting malls replace factories as the economy's engine;

-- permitting the financialization of the economy; speculative finance writ large; replacing productive investment; totally deregulated; run by fraudsters; free from government oversight; letting investment banks game the system at up to 40 to 1 leverage; until 2004, 12 to 1 was the maximum;

-- a government - business conspiracy for global dominance and the single-minded pursuit of profit; unfettered amounts of it through cleverly manipulated schemes; transferring multi-trillions of dollars from workers to the most wealthy; doing it without people even noticing;

-- creative destruction to let giant businesses grow larger by removing and devouring smaller ones; even large ones;

-- permitting and/or ignoring massive fraud; involving multi-trillions of dollars; the largest ever Ponzi scheme; a calculated crime with media complicity through silence; not reporting a growing problem as it emerged; waiting until it mushroomed and still not explaining it accurately and honestly; and

-- wondering won if the best and brightest can fix things or if no amount of money or ingenuity can do it.

The Plan's Architect - Henry Paulson

From a Nixon administration staff assistant to the assistant secretary of defense. To assistant to key Watergate official John Erlichman. To Goldman Sachs in 1974. To a partnership in the firm in 1982. Then Chief Operation Officer (COO) in 1994 and CEO in 1998 by a palace coup against co-chairman and now New Jersey governor Jon Corzine, according to New York Times columnist Floyd Norris.

Even before the current crisis, Goldman was the preeminent Wall Street firm. A survivor. The largest, and along with Morgan Stanley, the remaining two Street giants left standing. But no longer as investment banks after the Federal Reserve's September 21 announcement that both companies will become bank holding companies after a mandatory five-day waiting period, now over.

In theory, they'll be under stricter Fed oversight but will get Fed help to complete their transition and thereafter. As a well-connected financial powerhouse, whatever Goldman wants, Goldman gets. Always in the past by recycling top executives into Democrat and Republican administrations, and now more than ever given Henry Paulson's extraordinary financial czar powers.

Before his $700 billion giveaway plan, the 2008 Housing and Economic Recovery Act gave him authority to fleece taxpayers by rescuing Fannie Mae and Freddie Mac as well as raise the national debt by over $5 trillion dollars. He also orchestrated the demise of Bear Stearns, Lehman Brothers and Washington Mutual. The forced sale of Merrill Lynch, and arranged the government takeover of AIG.

He has near-open checkbook authority to reward close allies with loans and free money and let them acquire troubled assets on the cheap. This from a man with much responsibility for today's crisis. A June 12, 2006 Business Week cover story titled "Mr. Risk Goes to Washington" called him "one of the key architects of a more daring Wall Street, where securities firms are taking greater and greater chances in their pursuit of profits." Such as assuming huge amounts of debt and "placing big bets (with their own money) on all sorts of exotic derivatives and other securities." Advising clients to do the same. Casino capitalism at up to 40 to one leverage. Hugely profitable in up markets. Disastrous in down ones.

Paulson earned millions and now has an estimated $700 million + net worth. For 2007 overall, according to Bloomberg.com, "Wall Street's five biggest firms (paid out) a record $39 billion in bonuses (and did it in) a year when three of the companies suffered the worst quarterly losses in their history and shareholders lost more than $80 billion."

Speculative finance pays well, even in down years, and it even raised Bloomberg's ire in a Michael Lewis September 24 commentary titled "America Must Rescue the Bonuses at Goldman Sachs." It reflected on a possible global financial collapse but sacrificing Goldman bonuses is another matter. If firm "employees (take) pay cut(s), it will be (tantamount to failure and) our country may never recover." How will the company induce new talent to come aboard. Goldman is well-positioned to get maximum gain from its former CEO's $700 billion handout.

Why else would Warren Buffett bet $5 billion on the firm! For preferred shares paying an annual 10% dividend. Warrants as well to buy $5 billion in common stock at a $115 a share strike price. Well off its $251 peak and below the latest September 26 $138 a share.

Joseph Stiglitz on the Economy

Stiglitz was formerly part of the system he now criticizes. Free market fundamentalism in its most extreme form. For many months, he warned about a worsening global economy and growing financial crisis that's as bad or worse than the Great Depression.

He sees similar problems now as then:

-- outsized speculation through excessive leverage;

-- pyramid schemes;

-- multiple bubbles through so-called Wall Street innovations; and

-- a lack of transparency and government oversight.

Combined they created a crisis "so great that no one knows exactly the magnitude of the risk they face. It is particularly bad because our financial institutions are based on trust. You put money in the bank and you trust that you can get (it) out, so trust is absolutely essential for the functioning of our financial markets and economy."

The problem is exacerbated by those providing the news. The dominant media and frequent spokespeople. Industry representatives like Lehman Brothers CEO saying last April that "we turned the corner, and the economy is on the uptick." Also from the president, treasury secretary and others in government as things keep worsening.

Stiglitz calls this a "top down crisis." The "$3 trillion cost" of foreign wars a key. Creating huge deficits and consuming vital resources needed for growth. "This is the first war in American history that has been totally financed on the credit card. For the last five years....we have been a debt economy." Not since the Revolutionary War have "we have had to turn to foreigners," so now "40% of our national debt is financed by (them). Even as we went (to war) we had a big deficit, and yet the president called for tax cuts for upper middle class Americans." Insane but we did it.

Another factor is other countries trusting that our economy is working well, and when the president says it is he's believable. "This administration burned that trust....no wonder everybody around the world is losing confidence." Even worse is that the administration isn't dealing responsibly with these problems, mostly because they're of our own making.

Stiglitz worries about the "real economy:" home prices dropping; owners forced into foreclosure; more financial firms in crisis; and a good many won't survive. He sees a weakening financial system unable or unwilling "to provide credit (the lifeblood of the economy for) loans, mortgages," and that means lower home prices, contracting businesses, rising unemployment, and a "downward vicious cycle. You have to be in fantasy land to say that everything is fine (or even) that we have turned the corner." He sees at least another 18 months of pain. Maybe longer. Who can know or how much.

For sure, real economic stimulus is needed. Productive investment. Not the phony "bailout" kind proposed. Aiding state and local governments. Better unemployment insurance and more for infrastructure. Providing a basis for long-term growth. Not feeding markets and starving the hungry, as one writer put it. Not believing markets on their own will fix things.

Understanding that government must intervene. Responsibly. Facilitate job creation. End casino capitalism. Provide incentives for real economic growth. Let foreclosed and threatened homeowners stay in their homes. Work out an equitable way to do it. "We learned a painful lesson in the 1930s and today: The invisible hand often seems invisible because it's not there." It led to the kind of predicament now confronting the country. The solutions proposed will just compound it.

Ones that Can Fix It

Good ones not considered. From figures like Dean Baker of the Center for Economic and Policy Research. Others as well with solid advice to:

-- make fraudsters eat the bulk of their losses;

-- use public funds only "to sustain the orderly operation of the financial system;"

-- minimize speculative finance; the root of the current problem;

-- "minimize moral hazard" - the Paulson (and Bernanke) "put" picking up where Greenspan left off;

-- let delinquent homeowners stay in their homes and pay rent;

-- curtail executive compensation for companies getting government aid;

-- make a key Fed responsibility the prevention of asset bubbles; reinstitute regulations to do it; Glass-Steagall for starters that prohibited commercial and investment banks and insurance companies from combining;

-- impose a modest financial transactions tax to curb excesses and raise revenue;

-- trade assets, like credit default swaps, openly on exchanges to establish fair value for them;

-- impose strict limits on leverage;

-- keep Fannie and Freddie public institutions; their status before being privatized in 1968; and

-- restructure the Fed democratically; a far better solution is abolish it and let government control its own money; use it responsibly for all Americans, not just the privileged few.

Other recommendations recognize no quick or easy solutions to problems this great. Economist James Galbraith says borrowers need collateral. A new Home Owners Loan Corporation to rewrite mortgages. Manage rental conversions, and decide what degraded properties should be demolished. Which ones to save and refurbish. Set it up in communities under federal guidelines and do it quickly. Help state and local governments strapped for cash. Reestablish federal revenue sharing. A National Infrastructure Bank making capital available for infrastructure. Put people to work building it. Protect seniors and near-retirees from wealth loss. Extra Social Security, Medicare and Medicaid revenue will help. Get money in the hands of people who'll spend it.

Address other crucial issues like energy conservation, reconstruction and renewable power. Infrastructure overall. Tuition help for students. Another GI bill. Credit card and mortgage interest rate caps. Rescind anti-consumist laws like the misnamed 2005 Bankruptcy Abuse Prevention and Consumer Protection Act. A boon for credit card companies and other businesses. Unfairly burdensome to the public.

A whole range of other projects and ideas to redirect the economy away from speculative finance and militarism and toward high-return public investment. Do it before it's too late. Recognize that the present course is unsustainable. Imagine a government working for everyone and not just the privileged few. Imagine it not tolerating fraud and malfeasance.

Instead, Congress agreed to a "bailout" and passed a record $634 billion omnibus spending bill (to run the government through March 6, 2009) to include a record Pentagon budget; $25 billion in low-interest auto industry loans; maybe with no provision for repayment; lifting a quarter-century ban on Atlantic and Pacific off-shore drilling; billions more in earmarked pork; and likely more coming later for the airlines and other endangered companies. Taxpayers for Common Sense criticized the bill at the same time it noted that government "bailout" appropriations will reach about $1.2 trillion with the $700 billion Paulson scheme. Others put the total above $1.5 trillion, and many say it's only for starters.

Paying "hold-to-maturity" prices compounds the fraud. For securitized assets worth a fraction of full value. Much of it pennies on the dollar, if anything. Trillions of dollars of toxic ones. All sorts of them. Newly invented ones. Structured finance and insurance. Asset-backed securities. Repackaged into marketable pools. Sold to investors. It's been done for decades but only recently so out of hand. Greed and deregulation created an alphabet soup of levered-up, high-risk securitized assets. Financial alchemy. Largely outright fraud, including:

-- collateralized debt obligations (CDOs), including auto loans, credit and corporate debt;

-- collateralized (asset-backed home) mortgage obligations (CMOs);

-- commercial mortgage-backed securities (CMBS);

-- mortgage-backed securities (MBS) and levered loans;

-- structured investment vehicles (SIVs);

-- special purpose vehicles (SPVs);

-- pass-through securities;

-- credit and interest rate default swaps;

-- commercial paper and more;

-- repackaged arcane stuff most people don't understand; even investors who bought them; like eating a stew with no idea what's in it; a recipe with no list of ingredients; learning too late it's toxic and you're in trouble;

Credit card companies as well from growing amounts of unrepayable credit card debt. The auto industry already assured of a low-interest $25 billion loan (or maybe handout) for starters. Airlines coming next. Select homebuilders and troubled companies called too big to fail. If they're too big to fail, says one observer, they're too big to exist.

EESA will give the treasury secretary near-carte blanche powers to conceal fraud and help the fraudsters, including his former company, Goldman Sachs, now in trouble. Pick and choose among others. Which will survive, and what less favored ones will go on the block at fire sale prices or disappear. Today there are 9000 banks in the country. In a decade, half or more of them may be gone.

Economist Michael Hudson calls EESA "cash for trash" and a "giveaway," not a bailout. A "transfer of wealth to insiders." A financial coup d'etat. The "largest and most inequitable (kind) since the (19th century) land giveaways to the railroad barons."

In this case, socializing losses to let fraudsters "sell out all their bad bets." Junk of all sorts: a stew of securitized assets, bad mortgages, car loans, credit card loans, student loans, anything for insiders stuck with too much of them.

A doomed scheme that will raise the debt level instead of lowering it. Enrich fraudsters with taxpayer funds. Stick the public with toxic junk. Maybe buy time before more people and markets catch on, but, in the end, cripple the economy and erode industrial capitalism with it.

Hudson is justifiably angry given the amount of fraud and deceit. The government-concocted scheme to whitewash it. Reward criminals. Harm most others, and wreck the country at the same time. He says a "kleptocratic class has taken over the economy to replace industrial capitalism....'banksers' " for FDR and earlier condemned by Jefferson with this stinging comment:

"I sincerely believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a money aristocracy that has set the government at defiance. The issuing power should be taken from the banks and restored to the people to whom it properly belongs."

A half century later Lincoln said:

"I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country....corporations (including bankers) have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed."

Lincoln refused to pay bankers usurious rates to finance the Civil War and got Congress to pass the 1862 Legal Tender Act. It empowered the US Treasury to issue "greenbacks" that were interest-free because government printed its own money. When Lincoln was assassinated in 1865, the "Greenback Law" was rescinded. A new national banking act was passed, and the government once again had to pay interest to bankers.

On June 4, 1963, President Kennedy issued executive order (EO) 11110 giving the president authority to issue currency. He ordered the treasury to begin printing "United States (Treasury) Notes" to replace "Federal Reserve Notes." He began a process to let government control its own money and no longer private bankers under the guise of the Federal Reserve. Months later, Kennedy was assassinated. Once Lyndon Johnson took office, he rescinded EO 11110 and reestablished the current system. More on that below.

The Two Greatest Ever Financial Crimes - Today's Fraud and the 1913 Federal Reserve Act's Privatization of Money Creation

Most people think the Federal Reserve is a government agency, subject to its control. It's sometimes mistakenly called a quasi-governmental decentralized central bank to disguise its real identity and purpose. Its Eccles building headquarters compounds the subterfuge. Below it's stripped away.

The Federal Reserve is a private for-profit banking cartel. Owned and run by major banks and Wall Street in each of its 12 Districts. It was created and operates in violation of Article 1, Section 8 of the Constitution that states that Congress alone shall have the power to create money and regulate its value. In 1935, the Supreme Court ruled that Congress cannot constitutionally delegate this power to another authority, but, in fact it did.

On December 22, 1913, between 1:30 - 4:30 AM, the Federal Reserve Act was shepherded through a special Congressional Conference Committee. Then voted on and passed the next day. Two days before Christmas with many members gone and most others with no time to read or consider this momentous document.

By enacting this law, Congress and President Woodrow Wilson defrauded the public. Wilson later said (when it was too late to matter) he made a mistake and "unwittingly ruined my country." This from a man who was an intellect. Trained in the law. A PhD in political science and president of Princeton University in his earlier years.

The Federal Reserve Act gives private bankers the most important of all powers. The one most of all that governments should never relinquish. The authority to print money. Control its supply. Its price through the Fed Funds rate and how it influences the whole yield curve. Loan it out for profit, and charge government interest on its own money. It's later returned minus operating expenses and a guaranteed 6% profit. Taxpayers foot the bill. An early and continuing example of wealth transfer from the public to powerful bankers. Illegally sanctioned by Congress and the president.

The Fed literally creates money out of nothing. Expands or contracts its supply as it wishes - with no government oversight or control. Gold once backed it until Nixon closed the gold window in August 1971. Suspended dollar convertibility into the metal, and ended compliance with the Bretton Woods core provision. The US dollar became fiat currency. Mere paper. Backed by nothing except the faith of the issuing authority.

Given today's crisis, that faith is fast eroding and is to blame for dollar weakness. Mostly because of profligate policies by private bankers running the country's monetary policy for their own gain. The grandest of grand thefts along with today's all-consuming fraud. Backed by the full faith and credit of the government, and up to now at least, with most people none the wiser.

A Growing Public Response to the Crisis

For how long is the question given growing public anger and people expressing it publicly. It has administration officials worried enough to order what Michel Chossudovsky wrote in his September 26 article titled "Pre-election Militarization of the North American Homeland."

He cites an Army Times article saying that the 3rd Infantry's 1st Brigade Combat Team is coming home (in October) from Iraq as (according to the Times) "an on-call federal response force for natural or manmade emergencies and disasters, including terrorist attacks." Perhaps with a manufactured incident as pretext. To defend the homeland against ourselves. Be deployed against dissent. Erupting public anger. On city streets like in Denver and St. Paul. Displaying civil disobedience. Defiance against fraud, deceit, illegal foreign wars, and nearly eight intolerable years under George Bush and a complicit Congress. Capped by the current financial crisis touching everyone while government rewards crime and hangs its victims out to dry.

The 3rd Infantry's 1st Brigade is for combat. It's not the National Guard or local police. It's trained for war. "Equipped to kill people" with potent weapons, and a last hurrah scheme may be planned to divert public attention from the financial crisis. A "terrorist" attack with "chemical, biological" or other dangerous weapons. A possible pretext for martial law at a time the administration and Congress are vulnerable. When people are angry about Washington protecting the privileged. Partnering with them in crime. Defrauding the public and stifling dissent. Moving one step closer to tyranny and away from silly notions about democracy. Proving crime indeed does pay and awfully well on Wall Street. "It's the economy, stupid." Theirs, not ours.