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The Big Bailout: America as a Full-Spectrum Kleptocracy
Blog - Pro Libertate ^ | 7/27/2008 | William Grigg

Posted on 07/31/2008 12:03:58 PM PDT by nicola_tesla

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.

Thieves in suits, the private sector version....

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.

Thieves in more expensive suits, the public sector version: The Senate Democratic leadership. The Republicans, of course, are just as bad, if not worse.

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.

The Great Poker Face, he ain't: Paulson looks on in visible alarm as his dimwitted boss pontificates on the supposed health of the US economy.

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...."

Quick quiz: What's the difference between a common armed robber (such as this convenience store bandit), and the Federal Reserve? The first steals money from the cash register; the second steals the value of the money in the cash register.

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 uber-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.


TOPICS: Business/Economy; Government; Politics; Society
KEYWORDS: bailout; congress; fanniemae; federalreserve; freddiemac; govwatch; johnbirchsociety
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Go talk to your campaigning politicians from the CONgress with the 9% approval rating and give them a piece of your mind.
1 posted on 07/31/2008 12:03:59 PM PDT by nicola_tesla
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To: nicola_tesla
He reminds me of Pat Paulson there in that picture, I only wish it was Pat Paulson, I really liked his ideas.

Was he on the Smothers Brothers?

2 posted on 07/31/2008 12:07:30 PM PDT by norraad ("What light!">Blues Brothers)
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To: norraad

Was he (Pat Paulson) on the Smothers Brothers?

________

Yeah. You know the Smothers Brothers are commies, and so was Pat Paulson.


3 posted on 07/31/2008 12:12:16 PM PDT by FFranco
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To: nicola_tesla
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.

That might have been more true when senators were selected by state legislatures -- they were more insulated from the ebb and flow of public opinion then.

4 posted on 07/31/2008 12:13:36 PM PDT by Constitutionalist Conservative (Global Warming Heretic -- http://agw-heretic.blogspot.com)
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To: 3D-JOY; abner; Abundy; AGreatPer; Albion Wilde; AliVeritas; alisasny; ALlRightAllTheTime; ...

PING!


5 posted on 07/31/2008 12:36:06 PM PDT by Tolerance Sucks Rocks (Drill Here! Drill Now! Pay Less! Sign the petition at http://www.americansolutions.com/)
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To: nicola_tesla

I prefer pornocracy: government of whores.


6 posted on 07/31/2008 12:42:22 PM PDT by lesser_satan (Cthulu '08! Why vote for the lesser evil?)
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To: nicola_tesla
The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money.

Alexis de Tocqueville

7 posted on 07/31/2008 12:44:36 PM PDT by mewzilla (In politics the middle way is none at all. John Adams)
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To: Constitutionalist Conservative

Selected not elected.


8 posted on 07/31/2008 12:48:50 PM PDT by ichabod1 (If it moves, tax it. If it keeps moving, regulate it, and if it stops moving, subsidize it.)
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To: traviskicks

.


9 posted on 07/31/2008 1:04:09 PM PDT by KoRn (CTHULHU '08 - I won't settle for a lesser evil any longer!)
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To: lesser_satan

That’s really good, I’ll have to use that somewhere.


10 posted on 07/31/2008 1:38:04 PM PDT by nicola_tesla ("Life is Tough... It's Worse When You're Stupid".... John Wayne)
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To: KoRn; Abathar; Abcdefg; Abram; Abundy; akatel; albertp; AlexandriaDuke; Alexander Rubin; ...


Libertarian ping! To be added or removed freepmail me or post a message here.
11 posted on 07/31/2008 4:04:48 PM PDT by traviskicks (http://www.neoperspectives.com/Ron_Paul_2008.htm)
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To: nicola_tesla

Socialism is destroying this country. What’s going to happen when our dollar is so devalued and our debt so crushing that the system just comes down? We won’t be able to pay for anything as citizens. Welfare, SS, medicare, etc. will no longer be able to function (not that they should anyway). The government won’t be able to fund our defense and the military will be in a world of trouble. Especially the guys over seas. It’s a horrible image to imagine, but it’s entirely possible....


12 posted on 07/31/2008 4:25:29 PM PDT by djsherin
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To: lesser_satan; nicola_tesla
On that note, if you haven't read P.J. O'Rourke's Parliament of Whores, I recommend it highly for a straightforward review of how our gov't *really* works. It has been a while since I read it, but I imagine it has held up pretty well. If anything, perhaps too optimistic.
13 posted on 07/31/2008 8:00:28 PM PDT by FreedomPoster (Obama: Carter's only chance to avoid going down in history as the worst U.S. president ever.)
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To: nicola_tesla
Sober observers understand it to be the most corrupt legislative assembly in human history.

Even though I agree that the bailout is ill-conceived, I almost stopped reading at this point. Spicing up your rhetoric with a little hyperbole is ok when done tongue in cheek, but this is a little ridiculous.

14 posted on 07/31/2008 11:31:20 PM PDT by amchugh (large and largely disgruntled)
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To: nicola_tesla
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 usually doesn't prevent panics, but it does tend to negatively amplify and prolong their effects.

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 regional Fed banks are private banks run by their members. What else did we expect? Handing over control of the currency was like letting the fox into the henhouse.

15 posted on 07/31/2008 11:34:46 PM PDT by rabscuttle385 ("When you can't make them see the light, make them feel the heat." Ronald Reagan)
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To: amchugh

Ill-conceived ?

So you’re OK with taking tax dollars to pay out to GSE bondholders who bought the bonds knowing that on the prospectus it said “not backed by US Govt” and were paid a premium over Treasury rates as a consequence ? That our government is trying to artificially prop up housing prices with our tax dollars (actually borrowed) instead of letting them resort to the historical mean so they can be affordable ?

You like the creation of rigged markets ? You like paying higher taxes so banks won’t lose so much money on loans made from bad judgment ?


16 posted on 08/01/2008 8:12:31 AM PDT by nicola_tesla ("Life is Tough... It's Worse When You're Stupid".... John Wayne)
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To: nicola_tesla
It makes me sick that conservatives are willing to endure this Keynsian socialism. Paulson is a Wall Street hack looking out for his investment bank buddies. The Republicans are just plain clueless and so out of touch with the people and reality it reminds me of Romanov Russia. Except at least the Romanovs were actually beginning to achieve significant reforms.
17 posted on 08/01/2008 12:31:47 PM PDT by Sam Gamgee (May God have mercy upon my enemies, because I won't. - Patton)
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To: mewzilla

I love that quote. The man was genius. Moore on Glenn Beck last night brought up how a progressive tax system was our undoing. When 50% of taxpayers have no stake (don’t pay taxes) what do they care who the governments bail out?


18 posted on 08/01/2008 12:32:44 PM PDT by Sam Gamgee (May God have mercy upon my enemies, because I won't. - Patton)
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To: FreedomPoster

I second that. Great book.


19 posted on 08/01/2008 12:33:22 PM PDT by Sam Gamgee (May God have mercy upon my enemies, because I won't. - Patton)
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To: nicola_tesla
Man alive, someone that gets it! You are right. Ever rising home prices is not in the best interest of the nation and are not indicative of the rising wealth of a nation. If I hear someone on Fox News repeat some Keynsian Demand Side nonsense about how we need consumers spending I'm going to go berserk.

It seems I hear more and more conservative voices claiming the alternative is worse. That is ALWAYS the lame argument for creating moral hazard.

20 posted on 08/01/2008 12:36:16 PM PDT by Sam Gamgee (May God have mercy upon my enemies, because I won't. - Patton)
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