Weapons of Financial Mass Destruction
The tax payer bailout of AIG underscores a repetition of the Federal Reserve’s continued philosophy of rewarding greed when it is successful and burden tax payers when it is not. So far this year the demise of Bear Stearns, Fannie Mae, Freddie Mac, Lehman Brothers and AIG only highlight what is broken about this economy and the role of Central Banks and government.
The Sub-Prime Mortgage crisis has rocked the financial markets resulting in almost a 30% decline in the Dow since the peak in October 2007. At every step along the way, as ordinary investors were watching their investment portfolios evaporate, the US Treasury Secretary and Federal Reserve Chairman assured the American people they didn’t have anything to worry about. They manically pumped hundreds of billions of dollars of liquidity into the market, reversed a trend of raising interest rates and continued their state of denial with false assurances.
But the Economy is broken and the Federal Reserve holds ultimate responsibility for the crisis, just as they did in 1929, the Great Depression, the Savings and Loans Crisis, the Dot-Com Crash and now the Sub-Prime Mortgage Crisis. The Federal Reserve was supposedly created to prevent financial crisis in the US economy. But history will show that it not only is responsible for most if not all financial economic disasters since 1913, but also that the fed utilizes its position as a quasi-government private entity to create massive profits for its private banker partners.
The Federal Reserve controls the money supply and interest rates and bankers control the Fed and the politicians in Washington DC. The end result is policy that is accelerating the National Debt at staggering dimensions. It is exasperated by the fact that more than 90% of the American public doesn’t understand the relationship between Central Banks and the US government. How many Americans realized that the almost $300 Billion Economic Stimulus package was simply another loan that must be paid in future taxes? And did they understand that the majority of this loan would end up in large corporation’s pockets?
The Sub-Prime Mortgage crisis was created by the Fed, as they lowered interest rates and then based on Congressional regulation, or non-regulation of the mortgage industry, loaned money to Americans that had little chance of paying it back. This was a premeditated effort to create the crisis in the financial market that allowed JP Morgan Chase to purchase Bear Stearns for $.015 on the dollar, based on a peak stock price of $159 a share. Yes, that’s less than two cents on the dollar.
Based on irregular PUT activity before Bear Stearns collapse, it is obvious that insiders in JP Morgan, Bear Stearns and the SEC knew of the impending collapse weeks before it happened. So while mom and pop were watching their retirement funds disappear, traders were using highly leveraged PUT Options making illegal profits on the demise of a company.
And let’s examine the bailout of Fannie Mae and Freddie Mac, private corporations with ordinary shareholders. The Federal Government (tax payers) assumed the liabilities of these two private corporations. But what the press releases didn’t mention was that the tax payers assumed over $5 Trillion in debt, increasing the US Government’s debt obligations from $9.5 Trillion to over $14.5 Trillion. The additional $200 Billion in tax payer funds to bailout bad loans is only the tip of the iceberg if the financial crisis continues, which most financial experts believe is inevitable.
By making an $85 billion loan guarantee to AIG, the Federal Reserve now is taking on another private corporation with a negative balance sheet and potentially expose tax payers to over a $500 Billion in liabilities from risky Credit Default Swaps. And the near $1 Trillion bankruptcy of AIG is merely the eye of the storm of the almost $65 Trillion Credit Default Swap economy, which most economists agree, is merely a sophisticated financial gambling instrument.
Every time the Fed pumps liquidity into to market, so far almost $1Trillion in the last year, the tax payer is on the line if things go wrong. The Lehman Brothers collapse again evaporated shareholder value and then large competitors, who also happen to be Central Bankers, are allowed to buy assets from the bankruptcy court without assuming any liabilities, under the direction of the Federal Reserve, for pennies on the dollar.
Before the Central Banks there was no income tax in this country, a miniscule national debt relative to GDP and no World Wars. Allowing private bankers to control the US economy and the politicians in Washington has put this country on the Highway to Hell. The middle class is virtually non-existent and the Bush Republican mantra of small government is the furthest thing from the truth. The Income Tax law and Federal Reserve have created a money tree that guarantees Central Bank shareholders 6% a year profit forever. And that doesn’t include all the money the make when markets crash and they buy up their competitors. Or when they have their Presidential lap poodles start wars and they fund all sides of the conflict.
The only solution is a complete overhaul of the Treasury Department which includes abolishing the Federal Reserve, Central Banks and Income Tax. When examining the Pyramid Scheme nature of Social Security, Medicaid and Medicare, it’s clear that our government doesn’t work. Corporations and banks control this government and the economy. Democracy is about government for the people by the people. Its time for the United States to get back to the basics of that democracy. Republicans increase the national debt with war, and democrats increase it with social programs that have little real impact on those in need but are designed to generate massive profits for the corporations that administer and benefit from these programs.
