After eight years of Bush, his deficits, 9/11, two wars, a
several trillion dollar price-tag, his USAPATRIOT Act, suspension of habeas
corpus, plus trillions in tax cuts for the rich, NSA spying, CIA torture,
Justice Department manipulation to legalize the latter, Supreme Court
interference in the first election; after all that, Katrina, the Department of
Homeland Insecurity, and even more than I can bore you to tears with, we have
Obama and Change -- except there�s no change but the faces.
Bush�s last gift to us was his Treasury Secretary Paulson
(who morphed into Ex NY-Fed President Geithner) who helped deliver a $700
billion ransom note that the economy would collapse if we didn�t show Paulson
the money pronto! We showed him the money and the lion�s share went to the
banks. And now, several bailouts later, 14.7 million are jobless, the highest
number since 1948, according to economist Martin D. Weiss, Ph. D. in his
Great Lie of 2009; recovery is not around the corner, he points out; in
fact, there may even be another round of pointless bailouts in the offing,
since the Dow is 500 points off of its June high and descending.
According to Claus Vogt, another MoneyAndMarkets economist, Unemployment, Not the
Stock Market, Distinguishes a Recession From a Depression. Compare the
tables Vogt provides comparing the rise from 1929�s Unemployment Rate from 3.2
percent to 1936�s 16.9 percent rate, nearly the same as the Bureau of Labor
Statistics� 16.5 percent rate, which factors in the broader measures of all
forms of job market slack. Yes, �one in six Americans is unemployed or
underemployed right now . . . And it won�t go away soon.� Are we having fun
yet? Perhaps some of us are.
Times Are Good for Goldman, David Henry writes in the July 6 Business Week,
�With the economic outlook improving and bank stocks surging, the markets have
bounced back a bit. If one company exemplifies the improving fortunes, it�s
Goldman Sachs. Shares of the giant bank have almost doubled since March, adding
$35 billion in market value.� Now what�s this all about?
� . . . Goldman is in a position to collect the fattest
profits if the recovery is slow and federal programs to shore up the banks
falter -- just the scenario many economists are predicting. The bank is �well
positioned to capitalize on this new world� that�s emerged since the collapse
of Lehman Brothers, says David J. Winters, manager of the Wintergreen fund and
a Goldman shareholder.�
But �Goldman also caught a break. Last September, in the
heat of the market panic, investors and regulators began questioning whether
Goldman (and rival Morgan Stanley) could survive. They thought Goldman would be
safer as a commercial bank collecting deposits than as a freewheeling
investment bank betting on the markets.
�With its stock plunging, Goldman converted itself from an
investment bank under the purview of the Securities & Exchange Commission
to a bank holding company under the Federal Reserve. Investors assumed Goldman
would buy a big consumer bank to get deposits. They also assumed the Fed�s
tougher oversight would stop Goldman�s traders from taking big risks. The firm�s
battered stock soon turned around.
�And then nothing changed. By spring the panic had eased
thanks to all the government money pouring into the markets. And Goldman found
it could pretty much stick to its old ways. As revenues jumped in the first
quarter, so did compensation -- raising speculation that Goldman may pay out record
bonuses this year. It still hasn�t bought a consumer bank, and has no plans to
do so. Why should it? The torpor has lifted so much that Goldman in April was
able to sell $5.8 billion of stock and $2.1 billion of debt, proving it doesn�t
need to turn into an ordinary bank.�
So change as promised never happened. It�s business as
usual, Goldman risking even more of its capital in techniques �more akin to
gambling than to a new prudent style of trading . . . Yet while Goldman was
taking more risks behind the scenes, it was making public moves to restore the
confidence of investors and regulators . . . In short, the bank has steered
skillfully through the storm thus far, adding risk here, dialing it back there
-- and collecting big profits.� Thanks to Goldman Sachs CEO, Lloyd Blankfein.
So now �Goldman stands to benefit from a slow recovery . . .
For that reason it�s better for Goldman
if the U.S. rescue programs don�t work and rivals remain hampered by bad
assets . . . After all, zombie banks aren�t much of a threat.� Talk about
Voodoo Economics! These folks are on their own planet, Planet Wall Street,
somewhere in the outer galaxy, the parallel universe of financial finagling,
with a mountainous iceberg of derivates lurking in their midst as the economy sails
On the other end of the corporate spectrum, we have AIG�s
massive collapse, including selling off its signature NYC home office building
and a second property. AIG�s crash came as a result of its Financial Products
Division after it fell into the hands of Joseph Cassano, who lacked the
intelligence and mathematical skills of his predecessors and managed to insure
95 percent of the major investment banks� subprime debt paper, which amounted
to some $1.6 trillion in 2007, plus another $1.2 trillion in Alt-A loans,
nearly $3 trillion in all. Ouch.
Thinking only that he was making AIGFP several billion a
year, Cassano never understood or chose to believe that home values could fall
en masse and fast. That is until massive numbers of home buyers who were
allowed to borrow beyond their means went into default on their mortgages,
especially given the housing bubble�s inflated home prices. The massive tide of
foreclosures brought a call for repayment from the investment banks to AIG --
cash and assets AIG did not have. And so, more bailouts. Read of Cassano�s
crash and how it took our financial system down with it. in Michael Lewis�s The Man Who
Crashed the World. This truth reads better than fiction.
By the way, Cassano is in hiding (most likely in his London
Town House), not in jail.
What this all says is that we haven�t corrected the economy,
because it�s ruined, uncorrectable as is, thanks to a combination of cheating
investment banks, a complicit Fed and a fellow-traveling administration.
Comparisons to 1929, the Crash, and subsequent Welcome to Hard Times come to
mind. But there is no Roosevelt on the horizon
to institute the needed controls, no Ferdinand Pecora
Commission in sight to confront these crooks and excoriate them one by
The closest we come to a real fix is what Lyndon LaRouche
proposed on August 22, 2007, a
Homeowners and Bank Protection Act, to protect Americans from being tossed
from their homes. Here are the three essential features of the Homeowners and
Bank Protection Act of 2007:
�1. Congress must establish a Federal agency to place the
Federal and state chartered banks under protection, freezing all existing home
mortgages for a period of how ever many months or years are required to adjust
the values to fair prices, restructure existing mortgages at appropriate
interest rates, and write off all of the cancerous speculative debt obligations
of mortgage-backed securities, derivatives and other forms of Ponzi Schemes
that have brought the banking system to the point of bankruptcy.
�2. During this transitional period, all foreclosures shall
be frozen, allowing American families to retain their homes. Monthly payments,
the effective equivalent of rental payments, shall be made to designated banks,
which can then use the funds as collateral for normal lending practices, thus
recapitalizing the banking system. Ultimately, these affordable monthly
payments will be factored into new mortgages, reflecting the deflating of the
housing bubble, and the establishment of appropriate property valuations, and
reduced fixed mortgage interest rates. It is to be expected that this process
of shakeout of the housing market will take several years to achieve. In this
interim period, no homeowner shall be evicted from his or her property, and the
Federal and state chartered banks shall be protected, so they can resume the
traditional functions, serving local communities, and facilitating credit for
investment in productive industries, agriculture, infrastructure, etc.
�3. State governors shall assume the administrative
responsibilities for implementing the program, including the �rental�
assessments to designated banks, with the Federal government providing the
necessary credits and guarantees to assure the successful transition.�
Second, in LaRouche�s most recent webcast, Firewall: In Defense of the
Nation State, he provides a historical perspective of the development of
the destructive World Corporation, beginning with the economic crippling of a
prosperous Germany pre and post WW I, leading to a state of fascist
hyperinflation with the help of Britain, France, Russia and elements of the US.
He compares and traces the devaluation and inflation of Germany�s currency, and how these same forces,
including the US, bankrupted
which helped �the allies� elites� bring Adolph Hitler to power.
LaRouche follows the players, primarily Great Britain in its
imperial thrust to create similar conditions for fascism in the post WW II US,
creating political chaos through assassinations; slowly bankrupting our
economy, creating hyperinflation utilizing junk bonds and derivatives. LaRouche
is aware that Imperial Britain has never fully been able to forgive the one
colony that kicked its butt and created a democratic paradigm followed by
fledgling democracies all over the world.
This is as fascinating and informative an analysis of our
economy as you will ever find. Most of all, it contains a real plan to take
back America, which centers on creating a government currency that avoids a
fluctuating fiat currency administered in debt by a private Fed; a currency
that is fixed and pegged to gold and cannot be manipulated to trap its citizens
into debt slavery.
This would be a US government that could provide services
like health care cheaper and more effectively because it is not-for profit, not
privatized; a government that could prevent a casino market from stealing our
wealth, our industry, our jobs, our standard of living again; in short, not
able to steal our freedom for life, liberty and the pursuit of happiness.
It is a US government to educate our people, create
consciousness and stimulate the imagination to produce great products and
services as well as outstanding art and science and make us once again the
world�s paragon not the world�s pauper to ruthless banksters. Yes, it can be
done -- and it is neither socialism nor communism.
Jerry Mazza is a freelance writer living in New York
City. Reach him at firstname.lastname@example.org. His new book, �State Of
Shock: Poems from 9/11 on� is available at
www.jerrymazza.com, Amazon or Barnesandnoble.com.