American Conspiracies: Lies, Lies, and More Dirty Lies That the Government Tells Us (24 page)

Presiding over the money pit is “Gentle Ben” Bernanke, whom Obama reappointed to head the Federal Reserve. Even though they were a major contributor to the disaster that millions have suffered, we're now supposed to cheer their heroic attempt to clean up their own mess. Regional and smaller banks are still crumbling, while the Street gangs are on government life-support. Do you ever wonder where the Fed gets the money? Well, basically they print it out of thin air. Check out Article 1, Section 8 of the Constitution: Only Congress is granted the power “to coin money” and “regulate the value thereof.” No separate agency or concession like the Federal Reserve is given the power. But today, they aren't even required to send a budget to Congress. The Federal Reserve can enter into agreements with foreign banks and governments that we can't find out about. The dozen regional Federal Reserves around the country have bankers on their boards who tell them what they should be thinking about. And the Fed basically owns the economics profession. Their Board of Governors has 220 PhD economists on its payroll, not to mention scores more with the regional banks, plus all the research and support staff.
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Ron Paul, a congressman I admire, has introduced the Federal Reserve Transparency Act, calling for “more effective oversight and auditing of the Fed.” Paul points out that, since the Fed was created almost a hundred years ago, the dollar has lost more than 95 percent of its purchasing power. “Only big-spending politicians and politically favored bankers benefit from inflation,” Paul says.
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Bernanke has said that an audit would mean “a takeover of monetary policy by the Congress,” perish the thought. The reality is that the road we're currently on “leads to the corporate state—a fusion of private and public power, a privileged club that dominates everything else from the top down.”
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Mussolini once had a term for that: he called it fascism.

Almost 700 execs who participated in running our economy into the ground have received more than a million bucks apiece in bonuses.
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Goldman Sachs had a spectacularly profitable first half of 2009—due to less competition (go figure why), and a revenue surge from trading foreign currency and bonds. Goldman's 30,000 employees will each earn an average of $700,000 this year.
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Good old Warren Buffett, who thought smart and bought $5 billion in Goldman shares in January, had already scored a billion on that investment.
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Edward Liddy, the dollar-a-year guy who was installed by our government as AIG's new CEO, happens to still own a significant stake in Goldman, so I guess he's doing all right.
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The banking lobby in Congress “frankly own the place,” Illinois senator Dick Durbin has said.
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Over the last decade, the financial sector spent over $5 billion on lobbying and federal campaign contributions.
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Nearly half the members of the Senate Banking Committee (which happens to oversee the bailout bucks) had holdings in the same financial institutions that gained funds from the Troubled Asset Relief Program (TARP).
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“If TARP had been a credit card, it would have been called Carte Blanche.”
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In April 2009, the Treasury Department's Special Inspector General came out with a report describing TARP as mismanaged and ripe for fraud. There's no accountability. Hedge funds, which are still completely unregulated, have been brought into the program as key players.
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A few months before Neel Kashkari got appointed to run TARP, he'd told a group of bankers that “there is no problem here” with the subprime-mortgage crisis.
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A real forward-thinking fellow.

“There wasn't even anyone within the TARP office to keep track of the money as it was being disbursed. TARP gave that job—along with a $20 million fee—to a private contractor, Bank of New York Mellon, which also happened to be one of the Big 9. So here was a case of a beneficiary helping to oversee a process in which it was a direct participant.... There was enormous potential for conflicts of interest, and no procedure to deal with them.”
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Another example of a company that came in under the TARP, so to speak: GE Capital. We all think of General Electric in terms of light bulbs and home appliances (along with ownership of NBC), but its finance wing is GE Capital, which lends out money for real estate ventures and Wal-Mart credit cards and the like. They'd be the seventh largest bank in the U.S., if they were classified that way. But since GE Capital is an arm of an industrial corporation, they can put forth handsome finance arrangements for those who purchase their products. And when the bailout happened, they ended up somehow qualifying for a government-guaranteed program allowing them to raise almost $75 billion by the close of the first quarter in '09. The debt comes due when FDIC guarantees run out in 2012. In the banking realm, that's called “the cliff.”
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Seems like there's quite a few of those pinnacles to climb and fall down.

President Obama's largest private campaign donor was Goldman Sachs, whose employees coughed up $981,000 to him during the presidential campaign.
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I would have a hard time sleeping at night if I was running for public office and knew Goldman Sachs was my top contributor. But that's what makes me different from a Democrat or a Republican. To them, it's all about winning. Altogether, Obama got $9.9 million from Wall Street bankers and, investment and security firms.
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No matter how nice we think the president is, and what a brilliant speaker he is, he's still beholden to these power brokers. I don't hold out much hope for the new Financial Crisis Inquiry Commission to be any different than the Warren Commission or the 9/11 Commission when it comes to exposing the truth.

Look who Obama named as his chief economic adviser: Lawrence Summers, the ex-Harvard president who made $5.2 million for a one-daya-week job with a hedge fund (D.E. Shaw) in 2008 and simultaneously earned $2.7 million in speaking fees from folks like Goldman and Citigroup.
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In a “past lifetime,” Summers joined with Rubin and Greenspan in the bankers' crusade to stop the government from regulating the same financial derivatives market that ended up causing the economic meltdown.
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Then there's Obama's treasury secretary, Timothy Geithner. He's the fellow who, while president of the New York Fed, suggested to Paulson and other economic bigwigs in June 2008 that the president should be given “broad power to guarantee all debt in the banking system.” Considered politically unfeasible at the time, as it potentially put taxpayers on the hook for trillions, the government has since come to largely embrace “his blue-sky prescription.”
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During his five years at the New York Fed, Geithner presided over “an era of unbridled and ultimately disastrous risktaking by the financial industry,” while wining-and-dining with all the titans. So are we surprised that Geithner's calendars show the top execs of Goldman Sachs, Citigroup, and JP Morgan being the select group he's always on the phone with? (At least 80 contacts during Geithner's first seven months.)
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At the treasury, Geithner's chief of staff is Mark Patterson, who a year earlier was a Goldman Sachs lobbyist fighting against a bill Senator Obama introduced to try and rein in compensation for execs. Patterson is now the main man administering the bailout dough.
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William Dudley, new president of the New York Fed, is another Goldman alum. Is it coincidental that, by being allowed to become a bank holding company, Goldman's main overseer is now the New York Fed? I doubt they'll be terribly concerned about things like the $54.7 million Goldman CEO Lloyd Blankenfein took home in compensation in '07.
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As for the health care debate: Insurance industry lobbyists are opposing reform at a record pace, having spent an astounding $32 million on TV ads as of October.
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Have you ever heard of the MLR? That stands for “Medical Loss Ratio”:“the fancy term used by health insurance companies for their slice, their take-out, their pound of flesh, their gross—very gross—profit. The ‘MLR' is the difference between what you pay an insurance company and what that insurer pays out to doctors, hospitals and pharmacists for your medical care.” The MLR is about to top a quarter trillion dollars a year. AIG has “kicked up their Loss Ratio by nearly 500 percent.”
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Are we that selfish a nation where health care can be such a divisive issue? Where is mainstream America today? To me, the doctor issue is a human right. I don't care if you're an illegal alien or whatever, if you're sick you should be able to have treatment. It amazes me that we've got people out there holding signs and making our president look like a Nazi, because he supports a change in the system. Here's another point: If government-run health care is so bad, does that mean we've been screwing over our veterans for close to a hundred years? My father would go nowhere else but to the Veterans Administration hospital. The one here in Minneapolis is state-of-the-art, brand-new, and completely government-run, and I don't see anyone protesting about that! If it's good enough for the veterans, shouldn't it be the same for all of us?

As I write this, unemployment stands at ten percent of our work force, foreclosures are still happening at around 10,000 a day, people defaulting on their credit cards has hit a record, and across the country the states are having to slice crucial services to the bone. As governor, when we had a budget that went over what we'd allocated, I gave checks back to the people. That was a true stimulus package. When people at home have more money in their pockets, they tend to spend it. Cutting taxes also stimulates the economy, as much as Democrats hate the sound of it. In this case, the taxes coming out of our pockets are just making the rich get richer. “Nine of the financial firms that were among the largest recipients of federal bailout money paid about 5,000 of their traders and bankers bonuses of more than $1 million apiece for 2008.”
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For the fiscal year that ended in October 2008, the IRS audited only about four out of every hundred Americans who showed income of $1 million and up. IRS data also showed that the income of the 400 wealthiest individuals in the country hit an average of $263 million in 2006. Within a decade, their share of our nation's wealth almost doubled—to more than 22 percent.
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Meantime, the offshore tax havens haven't gone away. Citigroup, for example, has 91 subsidiaries in Luxembourg and another 90 in the Cayman Islands (out of 427 units in 23 countries altogether).
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The Caymans are part of Great Britain, and more than 12,000 “companies” operate out of a single building there. The Caymans lay claim to being the fifth largest center of bank deposits in the world; while it's true that the shares, bonds, and cash are technically on the islands, they're actually headquartered back in New York. The $1.9 trillion in bank deposits, although it's invested in the U.S. and abroad, remains invisible to the IRS. If you ever wondered why Enron paid no taxes, that's because they created hundreds of these paper companies. Oh, and Dick Cheney's Halliburton subsidiary, KBR, pays at least 21,000 of its employees through subsidiaries in the Caymans.
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That's called globalization, I guess. Just like IBM sending its laid-off American workers overseas to countries like India “where your skills are in demand.”
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Fed Chairman Bernanke is also a board member of something called the Bank for International Settlements, based in Basel, Switzerland. The BIS encouraged all the speculative investment banking that led to our current debacle. Carroll Quigley, in
Tragedy and Hope
, wrote that the BIS was created as the apex of “a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole.” The goal being control “in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences.”

Based inside the BIS is a new agency called the Financial Stability Board. It's proposed to “strengthen” and “institutionalize” a mandate to “promote global financial stability.” Sounds good, but some see this as the “latest sinister development in a centuries-old consolidation of power by an international financial oligarchy.” Third World countries who can't pay off their debts would be required to sell off their national assets to private investors. The board has oversight over all “systematically important” financial institutions, instruments, and markets. (Like gold, oil, and food maybe?) Yet there's no treaty involved, merely a private committee looking out for national sovereignty. Seems like the fulfillment of what banker Mayer Rothschild said back in 1791: “Allow me to issue and control a nation's currency, and I care not who makes its laws.”
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Thomas Jefferson warned the country back in 1815: “The dominion which the banking institutions have obtained over the minds of our citizens ... must be broken, or it will break us.”
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Is it naïve to think about banking returning to the austere, staid practice of simply taking deposits and making conservative loans at low interest rates to qualified borrowers, under rigid regulations administered by moderately paid federal employees? Wouldn't that greatly reduce systemic risk? Here's what some smart economists think we need to do: