Financial Sense

US Taxpayers Violated

The Looting Operation Continues

by Dr. Chris Martenson | November 11, 2008

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I am trying to maintain a very level-headed approach to the changes that we are seeing. us taxpayers violatedHowever, from time to time the looting operation becomes just a bit too obvious, a bit too overt, and I find my level of cool slipping.

This is one of those times.

Here are the dots that I am connecting that have me concerned, if not angry.

Remember, even prior to its passage, I called the bailout the greatest looting operation of our time. I did so because the language of the Bailout Act, as originally proposed by the former CEO of Goldman Sachs, er, I mean the Treasury Secretary, requested three things: unitary power, no review, and no limits.

Frankly, it was the most plainly-worded document of theft that I had ever seen, and probably ever will see, in my life (because it was too blatant and such mistakes are rarely made again).
After that draft was defeated in the House, the Senate immediately attached a much denser 300+ page version of the bailout bill to an existing piece of legislation and passed it. The house caved after an intense week of lobbying by both banks and the people of the land, who were diametrically opposed on the issue. Naturally, they caved to the banking interests.

But We The People won some symbolic victories in that battle, including the explicit promise of complete transparency in the use of that money.

Now it turns out that We The Payers won nothing at all, and that we are not even being afforded the most basic right of being able to view how that money is being spent.

Fed Defies Transparency Aim in Refusal to Disclose

Nov. 10 (Bloomberg) -- The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral.

Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency in a $700 billion bailout of the banking system. Two months later, as the Fed lends far more than that in separate rescue programs that didn't require approval by Congress, Americans have no idea where their money is going or what securities the banks are pledging in return.

This is a complete outrage. Here we have been told that we cannot see how our money is being spent, and that we cannot have insight into whether this money is being used to enrich cronies of the system.

So far, the data is not encouraging. Failed institutions have been spared (at great expense), lies and prevarications have been our signposts along the way, and each new "program" has been an affront to common sense and decency.

The common element has always been 'telling the public the least amount possible.'
I wish there were a second currency in operation in this country, so that I could vote on this plan by dishoarding every single Federal Reserve Note and piling into a better-run currency.
And here’s your second lesson in “why larger bills with more pages are better for looting than small bills.” It turns out that the Treasury quietly slipped in a bit of language that handed a massive, unprecedented $140 billion tax give-away to major banks.

A quiet windfall for U.S. banks

The financial world was fixated on Capitol Hill as Congress battled over the Bush administration's request for a $700 billion bailout of the banking industry. In the midst of this late-September drama, the Treasury Department issued a five-sentence notice that attracted almost no public attention.

But corporate tax lawyers quickly realized the enormous implications of the document: Administration officials had just given American banks a windfall of as much as $140 billion.

The sweeping change to two decades of tax policy escaped the notice of lawmakers for several days, as they remained consumed with the controversial bailout bill. When they found out, some legislators were furious. Some congressional staff members have privately concluded that the notice was illegal. But they have worried that saying so publicly could unravel several recent bank mergers made possible by the change and send the economy into an even deeper tailspin.
I just want you to think of this when Congress agonizes over and finally determines that the nation “cannot afford” to undo the $85 billion in middle class AMT tax hikes later this year.
I want you to also think of the amount of time that Congress agonized over $14 billion in alternative energy tax credits before grudgingly passing them. Ten times that amount was handed to big banks without, to my knowledge, even a single open-floor comment or objection from a single congressperson.

Simply outrageous. We’ve been looted.

Next, as this article in The Nation makes clear, the “deals” that the Treasury department has been making on your behalf under the mandate to “protect the taxpayer” have been running roughly 100% over fair market value. In other words, a gigantic handout to the biggest banks at the worst possible price (for taxpayers), with practically no strings attached.

Paulson's Swindle Revealed

The swindle of American taxpayers is proceeding more or less in broad daylight, as the unwitting voters are preoccupied with the national election. Treasury Secretary Hank Paulson agreed to invest $125 billion in the nine largest banks, including $10 billion for Goldman Sachs, his old firm.
But, if you look more closely at Paulson's transaction, the taxpayers were taken for a ride--a very expensive ride. They paid $125 billion for bank stock that a private investor could purchase for $62.5 billion. That means half of the public's money was a straight-out gift to Wall Street, for which taxpayers got nothing in return.

But that’s okay – there’s a big G20 meeting coming up. Perhaps the world’s leaders will come up with a sensible plan for returning some of the power back to We The People?

UK's Brown: Now is the time to build global society

LONDON (Reuters) - The international financial crisis has given world leaders a unique opportunity to create a truly global society, Britain's Prime Minister Gordon Brown will say in a keynote foreign policy speech on Monday.

In his annual speech at the Lord Mayor's Banquet, Brown -- who has spearheaded calls for the reform of international financial institutions -- will say Britain, the United States and Europe are key to forging a new world order.

"The alliance between Britain and the U.S. -- and more broadly between Europe and the U.S. -- can and must provide leadership, not in order to make the rules ourselves, but to lead the global effort to build a stronger and more just international order," an excerpt from the speech says.

According to a summary of the speech released by his office, Brown will set out five great challenges the world faces.

These are: terrorism and extremism and the need to reassert faith in democracy; the global economy; climate change; conflict and mechanisms for rebuilding states after conflict; and meeting goals on tackling poverty and disease.

Brown will also identify five stages for tackling the economy, starting with recapitalizing banks so they can resume lending to families and businesses, and better international co-ordination of fiscal and monetary policy.

Whoa. Hold on there! Lots of warning signals are flashing for me here. First, rather than a new world order, I think we need to understand how we can return to the old world order – you know, where international trade is balanced, and people save, and debt growth matches economic growth. .

I definitely think it's way too early to be proclaiming that now is the right time to set off on a big building project.

From my vantage point, it rather looks like our McMansion has fallen to the ground in a jumble, and now the same architect is trying to sell us on a bigger design.

Second, I am deeply uncomfortable with the language and intent expressed by “the need to reassert faith in democracy.” What in the heck does that mean? Seriously. What exactly is he trying to imply?

I was not aware that democracy was in need of additional faith. I rather thought it ran on such things as laws, fairness, and its own merits.

This line smacks of demagoguery, and I am deeply cautious of the messenger who hails from the country with the most security cameras and intrusive domestic government spying policies of any “democracy” out there. If Gordon Brown is selling democracy, I am suddenly no longer buying.
Worse, it is the financial crisis that is being used to peddle this tripe. A crisis that has been used to advance the power and reach of the banks, using the most overt looting and legalized theft ever seen or envisaged.

Now I am more than a little concerned about what is coming next. The decisions emanating from this G20 meeting deserve more than a little scrutiny.

Oddly, Obama is not attending, only Bush (and by extension Cheney). All the more curious.

But one thing is for dead certain - if a new world order is being planned, I don't want Brown or Bush or Cheney anywhere near it.

Your faithful information scout,
Chris Martenson

Copyright © 2008 Dr. Chris Martenson
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