The global economic crisis isn’t about money - it’s about power. How Wall Street insiders are using the bailout to stage a revolution

MATT TAIBBI - Mar 19, 2009

It’s over — we’re officially, royally fucked. no empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline — a corporation that got rich insuring the concrete and steel of American industry in the country’s heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.

The latest bailout came as AIG admitted to having just posted the largest quarterly loss in American corporate history — some $61.7 billion. In the final three months of last year, the company lost more than $27 million every hour. That’s $465,000 a minute, a yearly income for a median American household every six seconds, roughly $7,750 a second. And all this happened at the end of eight straight years that America devoted to frantically chasing the shadow of a terrorist threat to no avail, eight years spent stopping every citizen at every airport to search every purse, bag, crotch and briefcase for juice boxes and explosive tubes of toothpaste. Yet in the end, our government had no mechanism for searching the balance sheets of companies that held life-or-death power over our society and was unable to spot holes in the national economy the size of Libya (whose entire GDP last year was smaller than AIG’s 2008 losses).

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Victor Thorn - February 2009

Ponzi scheme financier Bernard Madoff should feel fortunate that he got nabbed when he did. Now under house arrest in his $7 million Manhattan penthouse, he could be lying in a pine box, six feet under if some of the people he crossed got their hands on him.

Former funds manager Harry Markopolos told a House Financial Services subcommittee on Feb. 4 that Madoff had cheated some extremely dangerous figures out of millions of dollars.

“Mr. Madoff was running such a large scheme of unimaginable size and complexity, and he had a lot of dirty money,” Markopolos testified. “Let me describe dirty money to you. When you’re that big and you’re that secretive, you’re going to attract a lot of organized crime money, which we now know came from the Russian mob and the Latin American drug cartel. When you’re zeroing out mobsters, you have a lot of fear. He could not afford to get caught, because once he got caught. . . .”

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Kurt Nimmo
Infowars
February 19, 2009

It is now a mantra in the corporate media — the only way to fix the banking system is to “nationalize” the banks. “A touchy word has entered the public debate about the future of America’s economy. It’s a word that would shock the nation in normal times, but as even Republicans begin to whisper it, temporary ‘nationalization’ of troubled banks is increasingly seen as our last best hope for fixing our financial system,” declares Thomas Kelley, writing for Yahoo News.

Republicans like Sen. Lindsey Graham of South Carolina defend and push bank “nationalization” because there is not a dime’s worth of difference between Republicans and Democrats — both are on the hook to the global elite and the bankers. Even supposed libertarians are lining up behind this scheme, including the Cato Institute. But then Cato’s directorship is rife with honchos from E-Trade Financial, FedEx, and other big corporations. Cato has hosted Greenspan and Bernanke at its functions.

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by Gary North

I have lived through three monumental historical events. I remember only two of them.

I do not remember the dropping of the two atomic bombs in August of 1945. As symbols of scientific world transformation, this constituted the most momentous event of the 20th century. This breakthrough, so far, has not led to nuclear war, even though on several occasions, it looked as though nuclear war was a distinct possibility. Nevertheless, the arrival of the nuclear age heralded a transformation of the modern world. We have not yet seen the end of that transformation.

Martin van Creveld, the great military historian in the State of Israel, has argued that the nuclear age ruined the plans of empire for large nations. They could no longer risk a war with each other. Yet spending on empire increased. Today, large states face resistance from non-State groups. The Soviet Union went down when the Afghans beat them by using Stinger missiles. The USSR was an empire, and an empire that loses to insurgents has lost its reason for existence.

We are about to experience a similar defeat in the same country.

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By F. William Engdahl, 15 December 2008

The Federal Reserve has bluntly refused a request by a major US financial news service to disclose the recipients of more than $2 trillion of emergency loans from US taxpayers and to reveal the assets the central bank is accepting as collateral. Their lawyers resorted to the bizarre argument that they did so to protect ‘trade secrets.’ Is the secret that the US financial system is de facto bankrupt? The latest Fed move is further indication of the degree of panic and lack of clear strategy within the highest ranks of the US financial institutions. Unprecedented Federal Reserve expansion of the Monetary Base in recent weeks sets the stage for a future Weimar-style hyperinflation perhaps before 2010.

On November 7 Bloomberg filed suit under the US Freedom of Information Act (FOIA) requesting details about the terms of eleven new Federal Reserve lending programs created during the deepening financial crisis.

The Fed responded on December 8 claiming it’s allowed to withhold internal memos as well as information about ‘trade secrets’ and ‘commercial information.’ The central bank did confirm that a records search found 231 pages of documents pertaining to the requests.

The Bernanke Fed in recent weeks has stepped in to take a role that was the original purpose of the Treasury’s $700 billion Troubled Asset Relief Program (TARP). The difference between a Fed bailout of troubled financial institutions and a Treasury bailout is that central bank loans do not have the oversight safeguards that Congress imposed upon the TARP. Perhaps those are the ‘trade secrets the hapless Fed Chairman,Ben Bernanke, is so jealously guarding from the public.

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Larry Buttrose - November 20, 2008

AS an exhausted world rides the downs and ups of the beast dubbed the global financial crisis, US President George W. Bush insists it does not represent the fundamental failure of the free market system.

“It would a terrible mistake to allow a few months of crisis to undermine 60 years of success,” he said before last weekend’s G20 meeting. “The crisis was not a failure of the free market system and the answer is not to try to reinvent that system.”

But if the crisis has not been caused by the failure of the system, what has caused it? Bush may have suggested “unsustainable lending practices”, but they are part and parcel of the system. He may have muttered “lack of proper regulatory oversight”, but he and his neo-con fellow travellers have pooh-poohed that since they were in their ideological nappies back at Skull and Bones, the elite secret society at Yale University. In their end-of-meeting communique, the G20 leaders did nominate causes, noting “market participants sought higher yields without an adequate appreciation of the risks and failed to exercise proper due diligence … weak underwriting standards, unsound risk management practices … Policymakers, regulators and supervisors, in some advanced countries, did not adequately appreciate and address the risks.”

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This is a set of clips of Peter Schiff from 2006 and 2007. I added labels and 2008 predictions to the first video.

Jacqueline Thorpe - November 13, 2008

The Group of 20 summit in Washington this weekend has nostalgically been dubbed Bretton Woods II in a nod to the historic 1944 gathering in New Hampshire that laid the groundwork for the postwar economic order.

While the G20 is keen on hammering out a new financial order for the 21st-century global economy, one of the key elements of the original Bretton Woods Agreement is unlikely to get more than a passing glance — currencies.

The cornerstone of Bretton Woods was a fixed exchange rate system designed to prevent the “beggar-thy-neighbour” currency devaluations that wreaked havoc on the global economy in the 1930s. The system broke down in the 1970s, and currencies have been the Achilles heel of the global economy ever since.

Today is no exception. While presidents and prime ministers get set to tinker with new global regulations and promise to pour more stimulus into a beaten-down global economy, the 10,000-pound dragon in the summit room will surely be China’s insistence on maintaining a weak currency to boost export growth, and the bulging war chest of foreign exchange reserves around the world.

China, its BRIC brothers — Brazil, Russia, India — and other emerging powers may have won a seat at the summit table but the global economy has still not figured how to absorb their growing might without major disruption.

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Stephen Foley - 12 November 2008

For the Prime Minister, Gordon Brown, it is a “new Bretton Woods”, as important as the 1944 convention that established the modern financial world order. For Nicolas Sarkozy, President of France, it is a once-in-a-lifetime chance to remake the global financial architecture and usher in an era of “regulated capitalism”. But beware the headlines that these leaders try to manufacture when they assemble for their credit crisis summit in Washington this weekend.

What we have is a summit without an agenda, on a crisis without an agreed cause, in a country without a functioning government. The US – whose outgoing President agreed to hold the meeting under French pressure, and whose President-elect, keen to stress that the US has “only one president at a time”, won’t even be there – has already bristled at European talk of a creating new supra-national regulators and international rules.

So little wonder everyone else is scrambling to downplay expectations for what might emerge, and to lengthen the timetable for achieving results. As one person from the UK delegation put it, “Bretton Woods took two years”.

Bretton Woods created the International Monetary Fund, which endures as the one international body powerful enough to prop up governments and economies that run into trouble. It also created a system of fixed exchange rates that failed to endure into the Seventies. Today, despite a financial crisis that is agreed to be the worst since the Great Depression, little yet under academic discussion rises to the level of ambition on display in the New Hampshire mountains in 1944. Certainly, nothing likely to be on the table on Friday and Saturday rises to that level.

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Christopher J. Petherick - American Free Press

International bankers and speculators are calling for a global gathering of the world’s top moneymen and policymakers along the lines of the meeting in Bretton Woods, N.H., in 1944, which spawned three powerful global financial organizations, the International Monetary Fund, the International Trade Organization and the World Bank.

Already, critics have come out against the proposed “BrettonWoods II,” saying it will do little to help working-class Americans, who have seen their life savings vanish as a result of the collapse of financial markets.

Most Americans recognize that the economic crisis in the United States is largely due to unbridled capitalist greed on Wall Street. The world’s leading financial institutions, seeking to maximize profits, exploited loose fiscal and regulatory policies in the United States to create a complicated system of investment vehicles.

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Simon Duke - 30th October 2008

Goldman Sachs is on course to pay its top City bankers multimillion-pound bonuses - despite asking the U.S. government for an emergency bail-out.

The struggling Wall Street bank has set aside £7billion for salaries and 2008 year-end bonuses, it emerged yesterday.

Each of the firm’s 443 partners is on course to pocket an average Christmas bonus of more than £3million.

The size of the pay pool comfortably dwarfs the £6.1billion lifeline which the U.S. government is throwing to Goldman as part of its £430billion bail-out.

As Washington pours money into the bank, the cash will immediately be channelled to Goldman’s already well-heeled employees.

News of the firm’s largesse will revive the anger over the ‘rewards for failure’ culture endemic in the world of high finance.

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Irwin Stelzer - October 19, 2008

Politics may make strange bedfellows, but economic crises make even stranger ones. Gordon Brown, a free trader, now finds that Nicolas Sarkozy, an arch-protectionist, has virtues he had not previously noticed. It seems that they are united by three things. First, they believe, or at least are pretending that they believe, that the current ills originated in the United States. You might remember: these are the same United States whose entrepreneurship Chancellor Brown lauded to all who would listen, before becoming prime minister and slipping easily into the anti-American mode that now dominates his public and private discourse.

Second, Brown and Sarkozy, along with their EU partners, believe that now is the time to put the former hegemon in its place. America, they believe, is paralysed by the lame-duck status of its president. It will, they reason, be forced to go along with any European proposals for what is variously called a “new financial architecture” and a “new world order”. The joy on the faces of EU leaders as they gather for their conferences can be seen in news photos. Never mind that the banking systems of their countries are on the verge of collapse, or that they are headed for a recession deeper and longer than the one the United States will suffer. Now is their chance to do things that the Americans might not like, but can’t stop.

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Becky Akers - October 21, 2008
After the orgy of nationalizing the economy, freedom’s foes ought to be snoring it off somewhere, glutted and stupefied. But there’s no rest for the wicked, so they’re corporatizing airports instead. They don’t call it that, of course, lest we imagine little grey bureaucrats filling der Führer’s orders for more poison gas and barbed wire. No, they’re “privatizing” airports. Chicago Midway is their first conquest. Others will follow.

Far from selling property government has no business owning to entrepreneurs who then do with it as they judge best, privatizing is just another gimmick to boost the State’s power. It tries to harness the trust, friendliness and efficiency of the free market for Leviathan’s benefit by leasing, not selling, airports and other assets. The beast retains its stranglehold, decreeing that the property must remain what it was (an airport cannot become a housing development or amusement park, for example), regulating its operations, and subsidizing it with bonds, taxes, and other thieveries. Tragically, businessmen who owe their fortunes to the market cooperate with this fraud, while snakes in the grass – excuse me, think-tanks ballyhoo it as “free market.”

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J.D. Seagraves - Oct 20, 2008

On October 13, British Prime Minister Gordon Brown called for a new-world financial order. “We must create a new international financial architecture for the global age,” Brown said. “We must have a new Bretton Woods.”

Brown’s statement echoed the sentiments of French and EU president Nicolas Sarkozy, who on September 26 said, “We must rethink the financial system from scratch, as at Bretton Woods.”

So is a new “Bretton Woods” a good idea? Before we can answer that question, we need to take a look at the original Bretton Woods System, which was the world’s first fully negotiated international monetary order. What inspired global leaders to create it, and what ultimately led to its demise?

The Monetary Role of Gold

By 1900, most Western European nations had evolved from centrally planned monarchies to pseudo-capitalist republics. This resulted in the heyday of the International Gold Standard, in which market economies of the West engaged in relatively free trade, facilitated by the ultimate global currency of gold.

Gold, according to Austrian economist Carl Menger, emerged as money millennia ago. In fact, gold’s monetary nature predates the existence of the nation-state. It is “real money” in the sense that no one has to be forced to accept it: they do so willingly. And thus, gold presents a problem for nation-state governments—they can’t manipulate it as easily as paper money.

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