-=PCTechTalk=- The Big Bailout
- From: "Puter25" <Puter25@xxxxxxxxxxx>
- To: "~~Deane" <Puter25@xxxxxxxxxxx>
- Date: Wed, 30 Jul 2008 00:27:47 -0700
The Big Bailout: America as a Full-Spectrum Kleptocracy
by William Norman Grigg
Its name somewhat anachronistically means "assembly of old men." George
Washington famously - and, it must now be admitted, with excessive optimism -
characterized it as an institutional saucer intended to cool legislation passed
in the intemperate heat of the moment. Its members demand, with entirely
unwarranted self-approval, to be called, collectively, the World's Greatest
Deliberative Body.
Sober observers understand it to be the most corrupt legislative assembly in
human history. To those characterizations of the United States Senate we must
now add another, perhaps the final one: Gravedigger of the republic.
With the Senate's passage of the Fannie Mae/Freddie Mac bailout last Saturday
(July 26), the United States of America has now become the world's first
full-service kleptocracy, a form of government described earlier in this space
as a government of, by, and for the robbers.
We are supposed to pretend to believe that the Senate, so great was its anxiety
over the nation's economically distressed homeowners, met in a rare Saturday
session for the sole purpose of administering the balm of Gilead on hardworking
families who confront the bleak prospect of foreclosure.
There may be people who believe such a thing, or at least profess to do so.
They are pretty much the kind of people who believe that peace, prosperity, and
progress will magically ensue after next January 20, when the Holy One, Barack
Obama (peace be upon him) ascends to the presidency, not astride a White Horse,
but rather mounted upon a flying unicorn that emits healing rainbows from its
butt.
No, it's not the travails of the productive that would earn such attention from
the Senate. When the Senate sacrifices so much as a minute of its down time, it
does so not to relieve our burdens, but to add to them in the interest of their
fellow parasites.
When Congress created the Federal Reserve in 1913, it did so in a lame-duck
session. The Fed's proponents described its handiwork as an independent entity
that would prevent "panics" and maintain the integrity of our currency and
financial system.
The Fed was presented to the public in pseudo-populist drag: It was supposedly
the bane of the big banking interests. This was, in every particular, a
conscious inversion of the truth. The Fed was, is, and every shall be a product
and protector of those interests. It has practically destroyed the value of US
currency, and engineered numerous financial crises, including the one currently
unfolding.
The measure passed last Saturday is being described to the public as a
"homeowner" bailout. It is nothing of the sort. It supposedly creates an
independent oversight mechanism to rein in the excesses of Fannie and Freddie.
This, too, is an unalloyed falsehood.
Let us disambiguate the key issue right now. This is a measure to nationalize
Fannie and Freddie, plundering the population at large - through direct
taxation, the more insidious tax called inflation, or both - to bail out two
fascist entities that have been used to enrich the politically connected
super-rich through the most corrupt means imaginable.
Furthermore, this measure prefigures the eventual nationalization of the entire
financial system under the supervision of an executive branch official with
practically unlimited power to appropriate and allocate funds without
congressional action. OK, sure, he has to file a report with Congress regarding
his expenditures. But this takes place after the fact, and Congress will be
able to do nothing but complain, if it can bestir itself even to that extent.
Congress has yielded its war powers to the executive branch. It has now
effectively surrendered the power of the purse, as well. What, then, remains by
way of the legislative branch's ability to check the executive?
Nobody responsible for this is willing to admit that truth; they're too busy
taking refuge in contrived ambiguities.
The figure sent out to pollute headlines and palliate a nervous public last
week was that fixing Fannie and Freddie will cost "at least" $25 billion.
That's a bit like saying there are "at least" 25 gallons of water in Lake
Michigan.
The Congressional Budget Office, in an artful display of tactical equivocation,
said that the bailout could cost anything from $100 billion down to "nothing."
That latter estimate would be dismissed as magic thinking were it not a
transparent and cynical effort to propagate such delusion among that part of
the public paying attention to the ongoing economic collapse.
As the Wall Street Journal summarized, the $25 billion figure was arrived by
following a time-honored government accounting algorithm: Some accountant at
the CBO threw a dart at the wall.
In fact, the bailout measure places in the hands of Treasury Secretary Henry
Paulson the discretionary authority to pour as much money into Fannie and
Freddie as he deems necessary. He can extend an unlimited credit line to either
or both of those government-chartered companies; he can use federal funds to
buy shares in either, or both.
There is no limit to what can be spent on the bailout, or the extent of
government involvement it will entail. In his efforts to lobby congressional
Republicans on behalf of the bailout, Paulson reportedly assured them that he
has "no intention" of using those extraordinary powers. This means, of course,
that they will be used immediately. It also means, inevitably, that Fannie and
Freddie will be nationalized, and that taxpayers will pay the full burden of
the bailout.
Senate Republicans - clap-torn whores, every one of them - put up a show of
reluctance, perhaps because the White House likes a little role-playing action
of that sort. This meant that Treasury Secretary Paulson had to convene several
meetings with Republicans in order to pretend to overcome their reluctance to
support a measure that will impecuniate their constituents in order to pay off
the imponderably huge bad debts assumed by politically protected thieves.
The Fannie/Freddie bailout is another example of the familiar equation behind
corporatism (or, to use the more loaded synonym, fascism): The risks are
subsidized, the losses are socialized, and the profits are privatized.
There are former corporate executives who spend their days looking at striped
sunlight and showing with their backs to the wall for crimes identical to those
of former Fannie CEO Franklin D. Raines and his comrades. But because Raines
and his posse used a Government-Sponsored Entity to commit their crimes,
they're free to enjoy nearly all the fruits of their fraud.
I find it remarkable that next to nothing has been said by way of condemning
Raines and his fellow corporatist thieves.
Doing so is nearly as unthinkable as permitting those two government-sponsored
companies to fail, as they should.
According to former Treasury Secretary Lawrence Summers, the bailout wouldn't
be necessary if people were willing to do their part by throwing their money
away without the government forcing them to do so: "Emergency legislation was
necessary because market participants were unwilling to buy Fannie and
Freddie's debt; investors doubted that the government-sponsored enterprises
were healthy enough to repay it and did not draw sufficient reassurance from
the implicit guarantee of federal support." This is why, according to Summers,
"Anyone who cares about the health of the US economy should welcome the ...
rescue plan for Fannie Mae and Freddie Mac...."
Imagine an armed robber lecturing his victim that it wouldn't have been
"necessary" to threaten the victim's life, and the lives of his family, if they
had simply handed over their money on demand, and you'll have a suitable moral
parallel to the statement above. Eventually - and for that, read "pretty damn
soon" - the entire daisy-chain of fraud we call our financial system will
devolve into a scene of violent chaos akin to the denouement of Reservoir Dogs,
only immeasurably bigger and unimaginably bloodier.
Already, the robber's pact holding the system together is starting to fray, as
fractional reserve banks start gagging on each other's IOUs. Witness the fact
that cashier's checks being issued by California's newly federalized IndyMac
bank aren't being honored by other banks: Customers who cash out of IndyMac are
finding that they won't be able to access their funds for up to two months.
It's not difficult to imagine the impact this will have on households who
expected to use those funds to make mortgage or tax payments, or have other
irrepressible financial needs.
It took roughly a tithe of FDIC's deposit insurance fund to bail out IndyMac.
Last week's bank failures - First National Bank of Nevada and Arizona's First
Heritage Bank - involved combined assets of about $3.6 billion.
With Wachovia, Washington Mutual, and many other major banks primed to blow,
the day will soon come when - in the words of James Kunstler - the FDIC will
simply "choke and croak on this wad of losses.... When American depositors get
screwed out of their deposits" - as they already are; vide the observation
above regarding IndyMac's dodgy cashier's checks - "the full force of the
fiasco will drag the dollar underwater like the legendary Kraken of old preying
on a babe thrown overboard. Then the forces of darkness will really be loosed."
Last week, Congress went on record regarding its priorities: With a handful of
noble exceptions (conspicuous among them the stalwart Rep. Ron Paul of Texas),
they demonstrated a willingness to ruin what remains of the dollar and destroy
the Middle Class in order to rescue - temporarily - the über-rich Robber Class.
The people responsible for this betrayal will be campaigning in their districts
during the coming weeks. It would be instructive to them, and may be heartening
to their victims, to see at least a few of them on the receiving end of timely
and forceful rebukes, delivered in language - and other expressive conduct -
appropriate to the occasion, and prevailing security environment.
July 29, 2008
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