Nation Builder

The CFR's "controlled disintegration of the economy"

2008-10-14T10:29:00.000-07:00

The U.S. Import Bubble Is Bursting
January 19, 2001, Richard Freeman - Executive Intelligence Review

During the past few decades, but especially the past five years, the United States has attempted to disguise and compensate for a physical economy that is contracting at the rate of 1 to 2% per annum, and producing a falling living standard, by a simple expedient: using its overvalued dollar to import—suck in—goods from other countries. What the U.S. does not produce, and in many crucial instances, is no longer capable of producing, it imports from abroad. As a result, imports have soared far above exports, leading to record trade deficits, with each year's deficit successively dwarfing the previous year's. In turn, the rising trade deficit is the leading element that swells the current account deficit.

To cover the current account deficit, Wall Street and the City of London have rigged the world financial system so that large flows of foreign-held dollars are attracted back into investment in the United States. What the United States pays in dollars for its physical goods and other items that make up the current account deficit, and more, is brought back into the United States.

This entire system of foreign goods flowing out of other countries and into the United States is held aloft by the U.S. financial bubble. Foreigners will bring dollars across the Atlantic and Pacific Oceans into the United States, for investment in the U.S., only as long as the dollar is seen as a sound currency, and as long as dollar-denominated investment instruments—such as U.S. Treasury bonds, corporate bonds, stocks, derivatives—pay a relatively higher rate of return than the comparable instruments of other nations in the world. Thus, the bubble of the U.S. investment market has to be maintained, in order for the Anglo-American financier oligarchy to keep its grip on power.

This is not a healthy arrangement for any of the nations concerned. The United States is importing such a huge amount of physical goods, mostly, not because its economy is expanding, but because it has impaired or permanently destroyed the capacity to produce these goods by its own productive facilities. The exception is the increase of imports of luxury goods, in particular cars, by the upper 20% of the population by income rank, whose income has come in significant measure from the financial bubble.

De-Leveraging Is Imminent

This bubble's imminent explosion, in the worst breakdown crisis in 300 years, ends this system. The recent halving of the value of the Nasdaq stock index over the past 10 months, wiping out over $3 trillion in market capitalization, indicates the direction this will take. As the value of the bubble falls, various foreign investors, for safety reasons, will yank their money out of the United States, and act to get out of dollar-denominated investments altogether. This will send the dollar plummeting: A 40% fall in the value of the overvalued dollar—whose strength rests upon the "strength" of the bubble—is likely. At that point, the effect will spread to cause a lightning de-leveraging of the highly leveraged U.S. financial system. The dollar-centered financial system as a whole will shatter.

There will be a simultaneous pulverizing of physical economies, given the way world trade is presently constituted. Without the flow of foreign-held dollars into the United States, the U.S. will not be able to finance its current account deficit, which consists primarily of its trade deficit.

This will have consequences from two sides. On the side of the United States, from consumer goods, such as clothing and household appliances, to capital goods, such as machine tools and electrical equipment, this country imports between 20 and 75% of all the goods it consumes each year. The flow of a large portion of these goods will be cut off.

On the side of the rest of the world: Japan, Taiwan, the Philippines, Malaysia, Thailand, and Nigeria export between 25% and 40% of all their physical goods exports to the U.S.; China exports 41.9% of its physical goods exports to the U.S.; Ibero-America, not counting Mexico, exports 36.5% of all its physical goods exports to the U.S.; Ibero-America, when Mexico is included, exports 56.6% of its physical goods exports to the U.S. In the case of Mexico and Canada, more than 83% of their physical goods exports go to the United States.

The effect of the contraction of this trade will be non-linear. In the midst of the financial disintegration of the past decade, for many nations in Asia and Ibero-America, exports to the U.S. represent all that allows them to keep certain factories open. The removal of this trade will force shutdowns of large swathes of manufacturing in their economies, which will impact the non-export domestic economy.

As for the United States, only by stealing goods from the rest of the world, through the strong dollar, has it been able to keep certain industries open, albeit at reduced rates of production. Now, the sharp contraction of goods trade between the U.S. and the rest of the world will step up the production collapse. This will create a worldwide interacting downward spiral, also affecting Europe, which will see the markets for trade in Asia and the Americas drastically fall.

By selecting key representative sectors of the economy, we will see just how extensive America's import dependency is. The high degree of U.S. import dependency emerged from the implementation of the "post-industrial society" policy, a deliberate policy of shutting down manufacturing and agriculture.
History of the Crisis

Emerging from World War II, the U.S. was an exporting nation, which exported many capital goods to war-torn nations of Europe, and elsewhere around the world. This is what an industrial nation should be: a capital goods exporter, exporting machine tools, tractors, electrical generating equipment, etc., with an emphasis on the developing world. Based on that, for the most part, it will run a trade surplus. The United States continued in that manner, in modified form, up through the end of the 1960s. Even as late as 1975, the U.S. ran a physical (merchandise) goods trade surplus of $8.9 billion.

But during the 1960s, the City of London-Wall Street financier oligarchy imposed a post-industrial society policy. This policy closed down manufacturing, agriculture, and infrastructure, and built up non-productive services and a large speculative bubble. In 1971, this policy reached a catastrophic turning point, when President Richard Nixon took the U.S. dollar off the gold reserve standard. This divorced financial flows from productive flows, and set the basis for the build-up of the speculative Eurodollar market.

In October 1979, under the Administration of Jimmy Carter, then-Federal Reserve Board Chairman Paul Volcker instituted a policy that he explicitly called "the controlled disintegration of the economy," as an extreme variant of the post-industrial society. Volcker began forcing upward the prime interest rate charged by commercial banks, so that by November 1980, the prime rate had reached 21.5%. Interest rates were held at double-digit rates for five years, through the end of 1984. As a result, in the period 1980-84, this killed off a layer of the U.S. manufacturing base, causing companies to shut down partially or completely. A surge of imports began, in order to replace the manufacturing capacity America had lost. The machine-tool industry makes this case in a particularly dramatic way.

During the decade of the 1990s, the focus of the post-industrial society policy was to extend the process of "globalization," one of whose key features is that manufacturing is outsourced to some of the poorest countries. Goods are produced where workers—frequently children—are paid from 10¢, up to $2 per hour. The 1993 passage of the North American Free Trade Agreement (NAFTA), with its slave-labor maquiladora system, was carried out with this purpose in mind (see article, p. 24). During the 1990s decade, a second surge of imports was fostered.

Figure 1 shows that the level of physical goods imported into the U.S. rose dramatically during the period 1960-2000. In 1981, the United States imported $265.1 billion worth of physical goods; by 1990, this had risen to $498.3 billion, a near doubling, which is already a sizeable amount. But between 1991 and 2000, the level of U.S. physical goods imports surged from $491 billion to a projected $1.215 trillion, which is an explosive growth of 2.5 times. But even this understates the actual growth: The forced devaluation of many currencies against the U.S. dollar during the latter part of the decade of the 1990s, meant that the dollar could buy more physical goods. Thus, whereas $1,000 worth of imports may have commanded and represented 50 goods from Mexico in 1990, because of the devaluation of the Mexican peso, the same $1,000 worth of imports may have commanded and represented 100 goods from Mexico in 2000. EIR is investigating further this added volume of goods imports commanded by an overvalued dollar.

Figure 2 shows that the surge in imports pushed forward the U.S. trade deficit in physical goods. In 1995, the U.S. physical goods trade deficit had already reached a record $173.6 billion, but by 2000, it had skyrocketed to a projected $444.1 trillion, an increase of more than two and half times in only five years. (For the same reason that the dollar amount understates the size of the U.S. physical goods import level, it also understates the size of the U.S. physical goods trade deficit.)

Figure 3 presents the U.S. current account deficit, in which the trade deficit is the principal force. There are two main differences between the current account deficit and the physical goods trade deficit. First, the current account is comprised of three main elements. Two of the elements are the balance on investment income, and the balance on unilateral transfers. Second, while the third element of the current account deficit is the trade deficit, the current account utilizes the trade deficit on goods and services, whereas above, we concerned ourselves only with the physical goods trade deficit and excluded services. But, given its overwhelming size, the trade deficit in physical goods drives forward the deficit of the current account. (For a more detailed explanation of how the current account balance works, see "U.S. Current Account Deficit Could Rupture Economy," EIR, April 21, 2000).

Based on the trend of Commerce Department data, the U.S. current account deficit for 2000, would be projected to a record $440 billion. But even that disguises the deficit's real magnitude, which, due to the reason cited above and other reasons, is, in fact, significantly larger.

Thus, the imposition of the post-industrial society policy fed the rising U.S. physical goods trade deficit, which in turn, swelled the current account deficit.
Rising Consumer Goods Imports

We now look at key sectors of the U.S. economy, to see how extensive America's dependency on imported physical goods has become. A large portion of everything we consume, from the clothing on our backs, to home appliances, to machine tools, is imported. To depict this point, EIR has selected representative sectors from the consumer goods market basket, the producer goods market basket, and intermediate goods.

In each case, we examine America's total consumption of a particular good, and what percentage is supplied strictly by imports. Start with consumer goods.

Figure 4 documents that in 1990, 26.1% of all the men's/boys' trousers that America consumed were imported. By 2000, 48.3% were imported. This near doubling indicates just how strong the policy of the overvalued dollar was during the decade of the 1990s, in flooding America with imports. (In many instances, consistent U.S. Commerce Department data only extend back to either 1989 or 1990, and therefore our graphs only go that far back. However, in instances where either Commerce Department or industry trade association data permitted a longer timeframe, EIR utilized those data.)

Figure 5 shows that between 1990 and 2000, the percentage of all shirts that America's men and boys consumed, which were imported, rose from 42.9% to 71.9%. Figure 6 shows that between 1990 and 2000, the import content of all the outerwear garments (that is, all clothing that is not underwear) which America's men and boys consumed, rose from 28.3% to 53.7%.

Figure 7 shows a similar story for women's/girls' blouses. Figure 8 documents that between 1990 and 2000, the import content of all the outerwear garments which America's women and girls consumed, rose from 31.5% to 51.1%.

Thus, between 1990 and 2000, the import content of all outerwear garments consumed by all Americans, rose from 29.9% to 52.5%. Today, half of all clothing that every man, woman, and child wears, is imported. But consideration of this arrangement, shows how America exists through looting. The imported clothing is produced in slave-labor conditions in countries such as Bangladesh, the Dominican Republic, and Thailand, where workers—often children—are paid as little as 10 to 25¢ per hour. A large retailer, like Wal-Mart or K-Mart, will buy a finished shirt, for example, for perhaps $3, and sell it for $8 in its store in America. Had the shirt been produced in America, with the garment worker paid a decent wage, it might cost $15 to $20 to make, and sell for $25. Inside the United States, as a result of the post-industrial society policy, real living standards are falling. But through this arrangement, the American family, whose living standard would not permit it to buy a $25 shirt, may be able to purchase it for $8. Thus, even with the imports, America's total level of reproductive economic activity is falling; but remove the imports, and the economy would be in a free-fall.

Figure 9 shows that in 1990, 21.1% of all household cooking equipment that Americans consumed, was imported. Today, the figure is 35.3%. Figure 10 shows that the same process is under way for housewares and fans.

Figure 11 documents that in 1972, 2.5% of all the motor vehicles that Americans purchased, were imported. Today, the figure is 34.2%. (EIR is investigating what percentage of parts that go into American motor vehicles, is imported.)

Intermediate Goods

But the dependency of America's economy on imported goods, even to function at a declining level, extends beyond the consumer goods sector to all other processes of the economy.

There is a whole range of intermediate goods that are necessary for the production process. Figure 12 shows that in 1972, 35.4% of all the ceramic tile that America consumed, came from imports. By 1997, 61.8% came from imports. Ceramic tiles are used on floors and walls in houses, for example.

In the cases of steel, and sawmill and planing products—different types of cut lumber—which are shown in Figures 13 and 14, respectively, the import dependency has grown.

Figure 15 shows that in 1972, 8% of all industrial fasteners which America consumed—consisting primarily of a basic product, screws—were imported. In 1999, 22.2% were imported.

Capital Goods

But most fascinating, is the way that imports have moved into a domain in which America had long been a leading force: capital goods.

This process is most clearly elucidated by the machine-tool industry, which forcefully makes a general point that applies to most industries throughout the United States: that the primary reason that America imports most goods, including machine tools, is that the corrosive post-industrial society policy had been implemented to destroy America's internal production capacity first. The flood of imports came only secondarily.

In October 1979, Jimmy Carter's Federal Reserve Board chairman, Paul Volcker, sent the prime interest rate into the stratosphere, so that it reached 21.5% by November 1980. He held the rate at double-digit levels through the end of 1984. This crushed all manufacturing, but is most exemplified by machine-tool production. Figure 16 shows that after an 18-month delay following the start of the policy, Volcker's policy caused a straight free-fall collapse in production. America's machine-tool production has never remotely recovered, either in units produced or in dollar volume of shipments, to the level that it had in the period prior to Volcker's action. The catastrophic effect of Volcker's policy is that it forced the permanent shutdown of America's capacity.

The Midwest and New England are America's two main regions for machine-tool production. Between 1977 and 1992, the number of operating machine-tool plants in the Midwest fell from 567 to 317, a reduction of 44.1%; the number of machine-tool plants in New England fell from 275 to 155, a reduction of 58.2%. Most of these closings occurred by 1984.

America compensated for the loss of productive capacity by importing; overwhelmingly, it was not the level of imports that caused the loss of production, but the other way around. Figure 17 shows that in 1970, 9.5% of all machine tools that America consumed, were imported. Even by 1979, the year that Volcker imposed his interest rate action, only 23.3% of all the machine tools that America consumed, were imported. However, by 1986, as a consequence of Volcker's action, the percentage of all machine tools consumed, which were imported, shot up to 49.8%. Today, 59.4% of all machine tools used in the U.S. are imported.

Figure 18 shows that import dependency has struck another U.S. capital goods industry, that of electrical equipment. This category includes such crucial machines as specialty transformers; steam, gas, and hydraulic turbines; and and turbine generator sets. In 1972, 3.2% of all electrical equipment in use in America was imported. By 1999, imports accounted for 25.1%.

The tremendous dependency, fostered by the post-industrial society policy of the United States, to loot physical goods imports from other countries, extends across the American economy, from consumer goods to intermediate and capital goods. On the opposite side, there are nations that send a large percentage of their exports to the United States. This relationship has become unsustainable, as the financial bubble that held this relationship together, is bursting. This will collapse the world financial system, and pulverize world trade.

The First Ever Ron Paul Internet Post from March 1985 was on "Bank runs etc."

2008-10-07T11:13:00.001-07:00

The First Ever Ron Paul Internet Post from March 1985 was on "Bank runs etc".
NationBuilder, 10/7/08

Why is it the FBI, SEC and the Federal Reserve cannot "connect the dots" mere months before the US financial collapse but Ron Paul could in 1981 during the Presidential Reagan's Gold Commission? The result of the Commission was Ron Paul's and Lewis Lehrman's legendary book "The Case for Gold" [free PDF].

And now the first ever Ron Paul Internet Post-

Date: Thu, 28 Mar 1985 17:21 EST
From: Dean Sutherland
Subject: Bank runs etc.

Those of you who have followed the Ohio Svaings and Loan closings may be interested in the following.

For an excellent history of banking in the United States (with examples from other countries) read "The Case For Gold" by Rep. Ron Paul and Lewis Lehrman. The book is the minority report of the US Gold commission of a few years ago. The authors purpose in writing the book was to convince the congress that the US should be on a hard money standard.

Although their arguments on that front are not entirely convincing (ie. they did not win me over to their position without reservation), their history of banking and monetary policy will take what you thought you knew and set it on its ear. Since what they had to say disagreed completely with what I learned in school, I did a fair amount of extra reading on the subject and discovered that their facts (and probably their interpretation) are entirely correct.

All in all a good read.

Dean F. Sutherland

------------------

ABC's Brian Ross needs to investigate the Federal Reserve-

The Second Ron Paul Internet Post from 1985

2008-10-07T11:06:00.000-07:00

The Second Ron Paul Internet Post from 1985
NationBuilder, 10/7/08

(NOTE: This is the second newsgroup posting of Ron Paul on the Internet but it's the first that quotes him via his newsletter. However, his newsletter, as confirmed below, was largely written by aides and the purpose of it was political fund raising. Here's the first Ron Paul post on the Internet.)

Newsgroups: net.invest
From: dave@cylixd.UUCP (Dave Kirby)
Date: Thu, 12-Sep-85 14:31:52 EDT
Local: Thurs, Sep 12 1985 11:31 am
Subject: More on the coming currency recall

(Note: My system doesn't allow posting only to USA; it's either the
world or nothing. So skip this if you're not interested, with my
apologies for the dinky system we're running.)

First, thanks to all who responded by mail to my posting on the
coming currency recall. I found the mail most informative. It has
turned out to be a lively subject.

I knew if I searched long enough that I would find a source (other than my doom-sayer junk mail) that would tell me what the big sinister reason is behind the currency exchange. Well, here it is, folks. Are you sitting down? (If you stand up while reading a CRT, you need more help than I can give you anyway.)

The July 29, 1985 issue of Barron's has an article about former Congressman Ron Paul, who left Congress to form his own doom-sayer newsletter. From the article, Ron Paul appears to be just another doom-sayer crackpot, but since he is a former Congressman and haspresumably had access to more reliable information than my other doomsayer sources, I read his comments with interest. Here's what he says:

"Dear friend, will you survive the 'new money?' You must be prepared, because within one year, the U.S. Treasury will impose a radically different currency on the American people. Government officials won't tell you the truth about this ominous development, and most of your neighbors will be caught napping."

I'm shaking in my boots already. Paul goes on to say that in his last term in Congress he got a glimpse of the "ugly new bills," which had, along with pink and blue tinting, holograms, diffraction gratings, and other unmentionable horrors such as metal threads and chemical alarms.

Professor Claude Martin, he says, was hired by the government to test consumer reaction to the bills; but, when he was pressed for details, he "sounded frightened and refused to talk." (Prof. Martin, when asked about this allegation, said, "He's a nut. I'm not afraid to talk to anybody." Paul later admitted he had not actually tried to talk with Martin personally; an aide had reported Martin's supposed reluctance to talk.)

But back to the conspiracy. Paul figures the real reason behind the currency swap is to force all sorts of people in the cash-only underground economy (which Paul supports vehemently) to surface for identification so the IRS can clamp down on them.

The underground economy, set up to avoid having to pay income taxes on wages, is clearly illegal, but Paul is still in favor of keeping it alive. It is a "very worthwhile thing" that is good for the country. With a government that debauches its currency, overregulates the economy, and ruins the money system, people who feel desperate for survival are forced into the underground economy. Now the bad old IRS is going to break in and spoil the party.

Dear friends of net.invest, are YOU ready for the coming currency recall? One year from now all those bills in your wallet are not going to be worth a single cent. The government is about to confiscate all the hard-earned money you depend on for your survival, to enslave you to the forces controlled by the big banks and the Communists.

Will you be among the survivors, or will you plunge into the economic abyss along with the uninformed public? Will you join now with other patriotic Americans who oppose the American government, the IRS, and our Communist economic system, and commit to fight these destructive policies which threaten the very backbone of this great country of ours?

Or will you just say "hogwash" with the other scoffers, and be caught by the great government robbery when it hits? Dear friends, the choice is up to you. Now is the time to act. Send me 10 dollars (in good old- fashioned American greenbacks) NOW before it is too late! Even better, call me and give me your credit card number, and I'll send you a receipt.

(Forgive the above. I'm practicing to start my own doom-sayer newsletter. There must be money in it, since so many people are putting them out, and a former Congressman is getting into it.)

-----------------------------------------------------------------
Dave Kirby "There is no great genius without
RCA Cylix Communications some touch of madness." - Seneca
Memphis, TN ...!ihnp4!akgub!cylixd!dave

(The views expressed herein do not necessarily reflect
those of RCA Cylix. They may not even reflect my own.)

Barney Frank's Boyfriend was Fannie Exec for 7 Years While Frank's Committee Oversaw Fannie

2008-10-04T19:52:00.000-07:00

Barney Frank's Boyfriend was Fannie Exec for 7 Years While Frank's Committee Oversaw Fannie

Lawmaker Accused of Fannie Mae Conflict of Interest
Friday, October 03, 2008
By Bill Sammon

WASHINGTON — Unqualified home buyers were not the only ones who benefitted from Massachusetts Rep. Barney Frank’s efforts to deregulate Fannie Mae throughout the 1990s.

So did Frank’s partner, a Fannie Mae executive at the forefront of the agency’s push to relax lending restrictions.

Now that Fannie Mae is at the epicenter of a financial meltdown that threatens the U.S. economy, some are raising new questions about Frank's relationship with Herb Moses, who was Fannie’s assistant director for product initiatives. Moses worked at the government-sponsored enterprise from 1991 to 1998, while Frank was on the House Banking Committee, which had jurisdiction over Fannie.

Both Frank and Moses assured the Wall Street Journal in 1992 that they took pains to avoid any conflicts of interest. Critics, however, remain skeptical.

"It’s absolutely a conflict," said Dan Gainor, vice president of the Business & Media Institute. "He was voting on Fannie Mae at a time when he was involved with a Fannie Mae executive. How is that not germane?

"If this had been his ex-wife and he was Republican, I would bet every penny I have - or at least what’s not in the stock market - that this would be considered germane," added Gainor, a T. Boone Pickens Fellow. "But everybody wants to avoid it because he’s gay. It’s the quintessential double standard."

A top GOP House aide agreed.

"C’mon, he writes housing and banking laws and his boyfriend is a top exec at a firm that stands to gain from those laws?" the aide told FOX News. "No media ever takes note? Imagine what would happen if Frank’s political affiliation was R instead of D? Imagine what the media would say if [GOP former] Chairman [Mike] Oxley’s wife or [GOP presidential nominee John] McCain’s wife was a top exec at Fannie for a decade while they wrote the nation’s housing and banking laws."

Frank’s office did not immediately respond to requests for comment.

Frank met Moses in 1987, the same year he became the first openly gay member of Congress.

"I am the only member of the congressional gay spouse caucus," Moses wrote in the Washington Post in 1991. "On Capitol Hill, Barney always introduces me as his lover."

The two lived together in a Washington home until they broke up in 1998, a few months after Moses ended his seven-year tenure at Fannie Mae, where he was the assistant director of product initiatives. According to National Mortgage News, Moses "helped develop many of Fannie Mae’s affordable housing and home improvement lending programs."

Critics say such programs led to the mortgage meltdown that prompted last month’s government takeover of Fannie Mae and its financial cousin, Freddie Mac. The giant firms are blamed for spreading bad mortgages throughout the private financial sector.

Although Frank now blames Republicans for the failure of Fannie and Freddie, he spent years blocking GOP lawmakers from imposing tougher regulations on the mortgage giants. In 1991, the year Moses was hired by Fannie, the Boston Globe reported that Frank pushed the agency to loosen regulations on mortgages for two- and three-family homes, even though they were defaulting at twice and five times the rate of single homes, respectively.

Three years later, President Clinton’s Department of Housing and Urban Development tried to impose a new regulation on Fannie, but was thwarted by Frank. Clinton now blames such Democrats for planting the seeds of today’s economic crisis.

"I think the responsibility that the Democrats have may rest more in resisting any efforts by Republicans in the Congress or by me when I was president, to put some standards and tighten up a little on Fannie Mae and Freddie Mac," Clinton said recently.

Bill Sammon is FOX News' Washington Deputy Managing Editor.

The Criminals in Congress

2008-10-03T10:45:00.000-07:00

The criminals who voted YES to the FED Bailout Bill.

Abercrombie
Ackerman
Alexander
Allen
Andrews
Arcuri
Baca
Bachus
Baird
Baldwin
Barrett (SC)
Bean
Berkley
Berman
Berry
Biggert
Bishop (GA)
Bishop (NY)
Blunt
Boehner
Bonner
Bono Mack
Boozman
Boren
Boswell
Boucher
Boustany
Boyd (FL)
Brady (PA)
Brady (TX)
Braley (IA)
Brown (SC)
Brown, Corrine
Buchanan
Calvert
Camp (MI)
Campbell (CA)
Cannon
Cantor
Capps
Capuano
Cardoza
Carnahan
Carson
Castle
Clarke
Cleaver
Clyburn
Coble
Cohen
Cole (OK)
Conaway
Cooper
Costa
Cramer
Crenshaw
Crowley
Cubin
Cuellar
Cummings
Davis (AL)
Davis (CA)
Davis (IL)
Davis, Tom
DeGette
DeLauro
Dent
Dicks
Dingell
Donnelly
Doyle
Dreier
Edwards (MD)
Edwards (TX)
Ehlers
Ellison
Ellsworth
Emanuel
Emerson
Engel
Eshoo
Etheridge
Everett
Fallin
Farr
Fattah
Ferguson
Fossella
Foster
Frank (MA)
Frelinghuysen
Gerlach
Giffords
Gilchrest
Gonzalez
Gordon
Granger
Green, Al
Gutierrez
Hall (NY)
Hare
Harman
Hastings (FL)
Herger
Higgins
Hinojosa
Hirono
Hobson
Hoekstra
Holt
Honda
Hooley
Hoyer
Inglis (SC)
Israel
Jackson (IL)
Jackson-Lee (TX)
Johnson, E. B.
Kanjorski
Kennedy
Kildee
Kilpatrick
Kind
King (NY)
Kirk
Klein (FL)
Kline (MN)
Knollenberg
Kuhl (NY)
LaHood
Langevin
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (CA)
Lewis (GA)
Lewis (KY)
Loebsack
Lofgren, Zoe
Lowey
Lungren, Daniel E.
Mahoney (FL)
Maloney (NY)
Markey
Marshall
Matsui
McCarthy (NY)
McCollum (MN)
McCrery
McGovern
McHugh
McKeon
McNerney
McNulty
Meek (FL)
Meeks (NY)
Melancon
Miller (NC)
Miller, Gary
Miller, George
Mitchell
Mollohan
Moore (KS)
Moore (WI)
Moran (VA)
Murphy (CT)
Murphy, Patrick
Murtha
Myrick
Nadler
Neal (MA)
Oberstar
Obey
Olver
Ortiz
Pallone
Pascrell
Pelosi
Perlmutter
Peterson (PA)
Pickering
Pomeroy
Porter
Price (NC)
Pryce (OH)
Putnam
Radanovich
Rahall
Ramstad
Rangel
Regula
Reyes
Reynolds
Richardson
Rogers (AL)
Rogers (KY)
Ros-Lehtinen
Ross
Ruppersberger
Rush
Ryan (OH)
Ryan (WI)
Sarbanes
Saxton
Schakowsky
Schiff
Schmidt
Schwartz
Scott (GA)
Sessions
Sestak
Shadegg
Shays
Shuster
Simpson
Sires
Skelton
Slaughter
Smith (TX)
Smith (WA)
Snyder
Solis
Souder
Space
Speier
Spratt
Sullivan
Sutton
Tancredo
Tanner
Tauscher
Terry
Thompson (CA)
Thornberry
Tiberi
Tierney
Towns
Tsongas
Upton
Van Hollen
Velázquez
Walden (OR)
Walsh (NY)
Wamp
Wasserman Schultz
Waters
Watson
Watt
Waxman
Weiner
Welch (VT)
Weldon (FL)
Weller
Wexler
Wilson (NM)
Wilson (OH)
Wilson (SC)
Wolf
Woolsey
Wu
Yarmuth

Rep. Brad Sherman: Congress told that Martial Law would be Declared if They Don't Pass the Bailout Bill

2008-10-03T08:40:00.000-07:00

Rep. Brad Sherman: Congress told that Martial Law would be Declared if We Don't Pass the Bailout Bill
NationBuilder, 10/3/08

According to Rep. Sherman, Congress was threatened with a plausible reality of the Dow Jones losing 4000 points in 2-days and Martial Law being declared in America if they didn't vote to pass the FED Bailout Bill.

Barney Frank: Not my fault! We tried to stop the FED from subprime lending in 1994.

2008-10-03T08:08:00.000-07:00

Barney Frank: Not my fault! We tried to stop the FED from subprime lending in 1994.
NationBuilder, 10/3/08

In the video below, Bill O'Reilly goes off on Barney Frank over the financial crisis. This is the O'Reilly I used to like back in the late 90s. He is a bit over the line but he is absolutely right.

Even after O'Reilly played videotape and read the transcript of Barney Frank's previous statements on Fannie Mae and Freddie Mac, Rep. Frank denies suggesting that they were good investments.

However, Rep. Frank clearly says it is a solid investment going forward. And Rep. Frank's obvious lie that he didn't say "solid" shows you how dishonest our Congress has become. He clearly said "prospects going forward are very solid" and gave an overall impression that they were safe investments.

Obviously I think O'Reilly should go further and attack the FED itself. However, Barney Frank does reveal the true cause of the crisis saying:

The fact is it was in 1994 that we passed the bill to tell the FED to stop the subprime lending. We tried to get them to do it. The first time we were in power again in 2007 we passed a bill to regulate Fannie Mae and Freddie Mac.

Bill O'Reilly vs Barney Frank:

Edited right to the confrontation:

Back in July, Barney Frank showed his true colors in a short exchange with Ron Paul. At the 1:00 mark in the Don Harrold video below, Rep. Frank says:

We are talking about giving the Federal Reserve the power to not just get information but to deal with various things which could include capital requirements and other factors

I have to say when people say well they’ll have this or that question about whether the Federal Reserve should do it -- I invoke, as people have heard me do, the wisdom of a great 20th century philosopher, Henny Youngman.

And the maxim was, how’s your wife compared to what?

The Federal Reserve compared to what? I don’t see any alternative to the Federal Reserve.

At the 1:46 mark, the people's hero Ron Paul tries to enlighten Rep. Frank:

I would to take a minute to just challenge something he said during his questioning.

Because he made the flat statement that there was no alternative to the Federal Reserve system. Now I don’t want to take my time to explain the alternative but maybe later on Chairman Frank and I can talk and I can explain to him what an alternative might be.

Barney Frank's response was, "That’s not very likely." Keep in mind Rep. Frank and Rep. Paul serve on the same committees and have co-sponsored great legislation together such as the repeal of the unconstitutional Unlawful Internet Gaming Enforcement Act (UIGEA).

Andrew Jackson to the Banksters: "By the Eternal God I will rout you out!"

2008-10-02T07:14:00.000-07:00

Andrew Jackson to the Banksters: "By the Eternal God I will rout you out!"
NationBuilder, 10/2/08

Amazing how similar 174 years ago is to today. The reason is because the FED is the oldest criminal racket in the world. They've been waiting hundreds of years for this moment. And unless the House of Representatives stops the Bailout Bill, the criminal shareholders of the FED win and win big while the American people and the US Constitution are forever maligned and redefined.

Andrew Jackson, 1836, on closing the Second Bank of the US:

Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves . . . I intend to rout you out, and by the Eternal God I will rout you out!

France seeks €300bn rescue fund for Europe

2008-10-02T06:59:00.000-07:00

France seeks €300bn rescue fund for Europe
Times Online (UK), Patrick Hosking

France heaped pressure on Gordon Brown last night by floating an ambitious plan for a €300 billion (£237 billion) bailout fund to rescue crippled banks across Europe.

As the world held its breath on the fate of America’s $700 billion bank bailout plan, President Sarkozy was seeking the backing of European leaders for his own lifeboat.

Mr Brown also faced demands for action from British banks, furious that the Irish Republic’s unilateral guarantee of all bank savings on Tuesday was robbing them of precious deposits. The British Bankers’ Association, which represents high street banks, said that the move was anti-competitive and that it was raising the issue with Dublin. Some banks would like to see the UK respond with its own explicit guarantee.

The Prime Minister has begun to set up an emergency committee to take charge of Britain’s response to the crisis. The body will be similar to Cobra, which is composed of ministers and government officials and meets regularly during crises such as last summer’s floods. Its secretariat will be run from the Cabinet Office.

Mr Sarkozy, whose country holds the European presidency, is seeking Mr Brown’s support before an emergency summit, scheduled tentatively for Saturday, with Silvio Berlusconi, the Italian Prime Minister, and Angela Merkel, the German Chancellor. His proposal was greeted with scepticism in Britain and outright hostility in Germany. It appears to involve the creation of a Europe-wide emergency fund that would be used to prop up banks when national governments are unable to intervene.

Ms Merkel said that Germany could not and would not issue a blank cheque for all banks, “regardless of whether they behave in a responsible manner or not”.

Amid the confusion and bickering between governments, France denied at first that it had put forward a proposal for a fund at all and then, after admitting that it had done so, denied that it would cost ¤300 billion. Paris said that the figure had come from the Dutch Government. Officials in The Hague said that they had no idea what the French were talking about.

Mr Brown is expected to announce his new crisis committee today or tomorrow at the same time as his reshuffle to replace Ruth Kelly, the Transport Secretary, who has asked to step down. Ed Miliband, one of Mr Brown’s key lieutenants, could be promoted. There is still a question mark hanging over Alistair Darling’s future as Chancellor.

The Honest Senators who Voted Against the Federal Reserve Shareholders

2008-10-02T06:56:00.000-07:00

The Honest Senators who Voted Against the Federal Reserve Shareholders
NationBuilder, 10/2/08

Senators who voted No

Here's the quick list of the senators who voted NO on bailout/economic rescue.

Allard (R)
Barasso (R)
Brownback (R)
Bunning (R)
Cantwell (D)
Cochran (R)
Crapo (R)
DeMint (R)
Dole (R)
Dorgan (D)
Enzi (R)
Feingold (D)
Inhofe (R)
Johnson (D)
Landrieu (D)
Nelson (FL) (D)
Roberts (R)
Sanders (I)
Sessions (R)
Shelby (R)
Stabenow (D)
Tester (D)
Vitter (R)
Wicker (R)
Wyden (D)

[via Politico]

Thaddeus McCotter (R-MI) to the FED: "The Treasury to you, gentlemen, is closed."

2008-09-30T20:05:00.000-07:00

Thaddeus McCotter (R-MI) to the FED: "The Treasury to you, gentlemen, is closed."
NationBuilder, 9/30/08

The Congressional Uprising...

The Criminals who Voted for the Emergency Economic Stablization Act of 2008

2008-09-29T14:08:00.000-07:00

HR 3997 Emergency Economic Stablization Act of 2008
NationBuilder, 9/29/08

FINAL VOTE RESULTS FOR ROLL CALL 674
HR 3997 RECORDED VOTE 29-Sep-2008 2:07 PM

QUESTION: On Concurring in Senate Amendment With An Amendment

BILL TITLE: To amend the Internal Revenue Code of 1986 to provide earnings assistance and tax relief to members of the uniformed services, volunteer firefighters, and Peace Corps volunteers, and for other purposes

HR 3997 FAILS 228 NOES to 205 AYES!

The 205 Criminal Representatives who Voted Yes to the $700 Billion Bailout. If your Representatives voted Yes, contact them and tell them to investigate the Federal Reserve.

Ackerman
Allen
Andrews
Arcuri
Bachus
Baird
Baldwin
Bean
Berman
Berry
Bishop (GA)
Bishop (NY)
Blunt
Boehner
Bonner
Bono Mack
Boozman
Boren
Boswell
Boucher
Boyd (FL)
Brady (PA)
Brady (TX)
Brown (SC)
Brown, Corrine
Calvert
Camp (MI)
Campbell (CA)
Cannon
Cantor
Capps
Capuano
Cardoza
Carnahan
Castle
Clarke
Clyburn
Cohen
Cole (OK)
Cooper
Costa
Cramer
Crenshaw
Crowley
Cubin
Davis (AL)
Davis (CA)
Davis (IL)
Davis, Tom
DeGette
DeLauro
Dicks
Dingell
Donnelly
Doyle
Dreier
Edwards (TX)
Ehlers
Ellison
Ellsworth
Emanuel
Emerson
Engel
Eshoo
Etheridge
Everett
Farr
Fattah
Ferguson
Fossella
Foster
Frank (MA)
Gilchrest
Gonzalez
Gordon
Granger
Gutierrez
Hall (NY)
Hare
Harman
Hastings (FL)
Herger
Higgins
Hinojosa
Hobson
Holt
Honda
Hooley
Hoyer
Inglis (SC)
Israel
Johnson, E. B.
Kanjorski
Kennedy
Kildee
Kind
King (NY)
Kirk
Klein (FL)
Kline (MN)
LaHood
Langevin
Larsen (WA)
Larson (CT)
Levin
Lewis (CA)
Lewis (KY)
Loebsack
Lofgren, Zoe
Lowey
Lungren, Daniel E.
Mahoney (FL)
Maloney (NY)
Markey
Marshall
Matsui
McCarthy (NY)
McCollum (MN)
McCrery
McDermott
McGovern
McHugh
McKeon
McNerney
McNulty
Meek (FL)
Meeks (NY)
Melancon
Miller (NC)
Miller, Gary
Miller, George
Mollohan
Moore (KS)
Moore (WI)
Moran (VA)
Murphy (CT)
Murphy, Patrick
Murtha
Nadler
Neal (MA)
Oberstar
Obey
Olver
Pallone
Pelosi
Perlmutter
Peterson (PA)
Pickering
Pomeroy
Porter
Price (NC)
Pryce (OH)
Putnam
Radanovich
Rahall
Rangel
Regula
Reyes
Reynolds
Richardson
Rogers (AL)
Rogers (KY)
Ross
Ruppersberger
Ryan (OH)
Ryan (WI)
Sarbanes
Saxton
Schakowsky
Schwartz
Sessions
Sestak
Shays
Simpson
Sires
Skelton
Slaughter
Smith (TX)
Smith (WA)
Snyder
Souder
Space
Speier
Spratt
Tancredo
Tanner
Tauscher
Towns
Tsongas
Upton
Van Hollen
Velázquez
Walden (OR)
Walsh (NY)
Wasserman Schultz
Waters
Watt
Waxman
Weiner
Weldon (FL)
Wexler
Wilson (NM)
Wilson (OH)
Wilson (SC)
Wolf

Rep. Marcy Kaptur (D-OH): "These criminals have so much political power..."

2008-09-29T08:38:00.001-07:00

Rep Marcy Kaptur: "These criminals have so much political power..."
NationBuilder, 9/29/08

Rep. Kaptur is impressive as she repeatedly calls the Fed, JPMorgan, Goldman Sachs et al criminals. At the end, she even offers financial experts who have alternative ideas of how to fix the US financial collapse.

My message to the American people -- don’t let Congress seal this Wall Street deal. High financial crimes have been committed. Now Congress is being asked to bailout the culprits.

...

These criminals have so much political power they can shut down the normal legislative process of the highest lawmaking body in this land.

...

We are Constitutionally sworn to protect and defend this Republic against all enemies foreign and domestic. And my friends there are enemies.

...

The people pushing this deal are the very same ones who are responsible for the implosion on Wall Street. They were fraudulent then and they are fraudulent now. We should say NO to this deal.

More Rep. Kaptur in another unbelievable speech:

You have perpetrated the greatest financial crimes ever on this American Republic. You think you can get by with it because you are extraordinary wealthy and the largest contributors to both Presidential and Congressional campaigns in both major parties. But you are about to be brought under firm control.

I don't agree with all her solutions but her target of the FED as the true criminals is one of the bravest acts by any member of the US Congress in its history.

Rep. Kaptur has a bill to set up an independent commission "to investigate these well healed wrong doers."

Putting JPMorgan and the rest of the owners of the Federal Reserve under oath in front of people like Rep. Marcy Kaptur, Rep. Dennis Kucinich, Rep. Ron Paul and Rep. Virgil Goode is the first step in solving this economic crisis and exposing the criminal enterprise behind it.

Rep. Kucinich: It's time to "Free Ourselves from the manipulation by the Federal Reserve and the Banks."

2008-09-29T08:18:00.000-07:00

Rep. Kucinich: It's time to "Free Ourselves from the manipulation by the Federal Reserve and the Banks."
NationBuilder, 9/29/08

Kucinich's on fire, demanding fundamental change in our debt base monetary system and asking if this is the US Congress or the Board of Directors of Goldman Sachs.

He says, "Why aren't we asking Wall Street to clean up their own mess?"

The US is way passed socialism.

The merger of corporate interests with the state will result in a frightening reality of fascism mixed with neofeudalism. The complete control and ownership of the government by special interests and radical social theorists.

The most efficient way to run multiple governments is via supranational institutions. The Establishment considers Constitutional Republics, Natural Rights, Citizenship and Nationalism as road blocks to integration, Fabian-globalization and maximum corporate profits (i.e. legal cartels or monopolies of world markets).

Rep. Michael Burgess (R-TX): "We are under Martial Law” as Declared by Nancy Pelosi

2008-09-29T08:15:00.000-07:00

Rep. Michael Burgess (R-TX): "We are under Martial Law” as Declared by Nancy Pelosi

Neil Cavuto to Ron Paul: You're an Economic Genius!

2008-09-27T16:42:00.001-07:00

Neil Cavuto to Ron Paul: You're an Economic Genius!

War is Ultimately the Act of Destroying the Creditor

2008-09-26T07:53:00.000-07:00

US-Chinese Relations: War is Ultimately the Act of Destroying the Creditor
NationBuilder, 9/26/08

Asia Needs Deal to Prevent Panic Selling of U.S. Debt, Yu Says
By Kevin Hamlin

Sept. 25 (Bloomberg) -- Japan, China and other holders of U.S. government debt must quickly reach an agreement to prevent panic sales leading to a global financial collapse, said Yu Yongding, a former adviser to the Chinese central bank.

``We are in the same boat, we must cooperate,'' Yu said in an interview in Beijing on Sept. 23. ``If there's no selling in a panicked way, then China willingly can continue to provide our financial support by continuing to hold U.S. assets.''

An agreement is needed so that no nation rushes to sell, ``causing a collapse,'' Yu said. Japan is the biggest owner of U.S. Treasury bills, holding $593 billion, and China is second with $519 billion. Asian countries together hold half of the $2.67 trillion total held by foreign nations.

China, Japan, South Korea and others should meet soon to seal a deal, said Yu, a former academic member of the central bank's monetary policy committee. The talks should involve finance ministers, central bank governors and even national leaders, he said.

``Whether some kind of agreement between them to continue to hold Treasury bills is viable, I'm not sure,'' said James McCormack, head of sovereign ratings at Fitch Ratings Ltd in Hong Kong. ``It would be unusual. If it became apparent that sovereigns in Asia were selling Treasuries the market would take that quite badly, it's something to be avoided.''

The global credit crisis, triggered by a housing slump in the U.S., has saddled financial companies with more than $520 billion in writedowns and losses, collapsing Bear Stearns Cos. and Lehman Brothers Holdings Inc. in the process. Insurer American International Group Inc. and mortgage giants Fannie Mae and Freddie Mac also were rescued by the government.

`Grave Threats'

U.S. Treasury Secretary Henry Paulson is urging Congress to pass a $700 billion plan to remove devalued assets from the banking system. Federal Reserve Chairman Ben S. Bernanke said Sept. 24 that the U.S. is facing ``grave threats'' to its financial stability.

China's huge holdings of U.S. debt means it must bear a large proportion of the ``burden of sorting things out'' in the U.S., Yu said. China is not in a hurry to dump its U.S. holdings and communication between the two nations every ``couple of days'' is keeping Chinese leaders informed and helping to avoid a potential panic, he added.

``China is very worried about the safety of its assets,'' he said. ``If you want China to keep calm, you must ensure China that its assets are safe.''

Currency Manipulator

Yu said China is helping the U.S. ``in a very big way'' and added that it should get something in return. The U.S. should avoid labeling it an unfair trader and a currency manipulator and not politicize other issues, he said.

``It is not fair that we are doing this in good faith and are prepared to bear serious consequences and you are still labeling China this and that, accusing China of this and that,'' he said. ``China knows what to do. We don't need your intervention.''

The U.S. financial crisis had taught China a lesson and that was: ``Why are we piling up these IOUs if they may default?'' China's economic expansion strategy, which emphasizes export growth that has led to trade surpluses and the accumulation of $1.81 trillion in foreign-exchange reserves, is the main problem, said Yu.

``Our export-growth strategy has run its natural course,'' he said. ``We should change course.''

China should stop intervening in the foreign currency markets and thus allow rapid appreciation of the yuan, he said. While this would cause pain for exporters, China could ease the transition by using its strong fiscal position to aid those who lose their jobs. It also should stimulate domestic demand to offset lower income from overseas sales.

Without yuan appreciation, China will continue to accumulate foreign reserves, which means further accumulating ``IOUs from the U.S.,'' said Yu. ``This is paper and it may default and it will not increase China's national welfare.''

If China doesn't allow the yuan to appreciate and continues to promote export-led growth it will lead to confrontation with the U.S. and Europe, Yu said.

To contact the reporters on this story: Kevin Hamlin in Beijing at khamlin@bloomberg.net

Ron Paul on Neil Cavuto (FOXNews) 9/25/08

2008-09-26T07:28:00.000-07:00

Ron Paul on Neil Cavuto (FOXNews) 9/25/08

Neil Cavuto, quote of the year: "Rove in a moment, RON PAUL NOW"

If only President Bush had been smart enough to listen to Ron Paul instead of Karl Rove. W could really blame the last 8 years on his daddy's criminal friends. Sometimes W just seems like a really lackadaisical guy who was put up as the front man for a global criminal enterprise that he barely understands.

The real George W Bush (maybe):

Are you smarter than Ron Paul?

2008-09-26T07:24:00.000-07:00

Fox Business asks, "Who do you think will come out of this economic crisis looking smartest?"

Ben Bernanke
Henry Paulson
Warren Buffet
Ron Paul or
Bill Gross

?

The New Bush Doctrine: TransNational Socialism

2008-09-26T07:00:00.000-07:00

The New Bush Doctrine: TransNational Socialism
NationBuilder, 9/26/08

The root cause of the problem, to them, is actually the root cause of the solution. This speech is remarkable because it represents the culmination of the Bush Criminal Presidency. What Bush and the FED has done is remarkable -- unthinkable, and it is continually rationalizing the possibility that the US may be hit by a nuclear or biological attack before or on Election Day.

Why? Because at this point it is clear that Dick Cheney and the neocons will do anything, possibly even false flag ops to achieve their goals of centralizing power, advancing political control via integration & economic warfare -- all while stealing trillions of dollars from me and you.

With the failure of the Treaty of Lisbon, the fracturing of the European Monetary Union, the pending collapse of the US financial system, the inevitable crash of the Federal Reserve Note as the world's reserve currency and the end of the Bush Criminal Presidency, there is no greater time than now to have a massive terrorist attack that would finally achieve the dream of the Open Conspiracy -- a TransNational Socialist system based on collectivist policies crafted by the CFR.

A Fabian new world order where there is no war, no suffering and no nations.

Just think, who is going to get the $700 billion? Bush's criminal friends. If most people had the potential to steal that much money, they would do anything including engineering financial collapses and allowing or staging terrorist attacks.

The Federal Reserve is the ultimate racket, the ability to legally print money out of thin air. An infinite number of $100 bills for 7 to 9 cents each. If you ran such a racket and were a social thinker, you might also believe you can fix the world's problems by implementing your social and political ideology worldwide.

Thus, you have the motivation of the youngest-ever director of the CFR, its former Chairman and now Honorary Chairman, David Rockefeller writing on page 405 of his book Memoirs:

For more than a century ideological extremists at either end of the political spectrum have seized upon well-publicized incidents such as my encounter with Castro to attack the Rockefeller family for the inordinate influence they claim we wield over American political and economic institutions. Some even believe we are part of a secret cabal working against the best interests of the United States, characterizing my family and me as "internationalists" and of conspiring with others around the world to build a more integrated global political and economic structure - one world, if you will. If that's the charge, I stand guilty, and I am proud of it.

David Rockefeller wrote his 1936 Harvard Senior Thesis on Fabian Socialism, which is a gradual transition to socialism rather than a revolutionary or violent one. This is the philosophy of the foreign policy Establishment known as the CFR. (Note: The CFR's Think Tank is called the David Rockefeller Studies Program.)

However, the result of the CFR-defined Bush Doctrine is a world where there will be less civil rights, less privacy and a lower standard of living for the American citizen. Until the point that America, like Mexico, begs to be in a North American political union for economic benefit.

And then the policies of Fabian-based TransNational Socialism will be fully engaged and the Natural Rights of the Sovereign Individual will be oppressed until an uprising the magnitude of the Revolution of Revolutions occurs.

JPMorgan Owns Part of the Federal Reserve and Created this Crisis for Profit and Power

2008-09-26T06:56:00.000-07:00

JPMorgan Owns Part of the Federal Reserve and Created this Crisis for Profit and Power
NationBuilder, 9/26/08

WaMu is largest U.S. bank failure
Thursday September 25, 10:20 pm ET
By Elinor Comlay and Jonathan Stempel

NEW YORK/WASHINGTON (Reuters) - Washington Mutual Inc (NYSE:WM - News) was closed by the U.S. government in by far the largest failure of a U.S. bank, and its banking assets were sold to JPMorgan Chase & Co (NYSE:JPM - News) for $1.9 billion.

The rescue marks a historic step to clean up a U.S. financial system littered with toxic mortgage debt.

Washington Mutual, the largest U.S. savings and loan, was closed by the federal Office of Thrift Supervision, and the Federal Deposit Insurance Corp was named receiver. Customers should expect business as usual on Friday, the FDIC said.

The bailout came after the thrift suffered deposit outflows of $16.7 billion since September 15, the OTS said.

"With insufficient liquidity to meet its obligations, WaMu was in an unsafe and unsound condition to transact business," the OTS said.

Seattle-based Washington Mutual has about $307 billion of assets and $188 billion of deposits, regulators said. The nation's largest previous banking failure was Continental Illinois National Bank & Trust, which had $40 billion of assets when it collapsed in 1984.

The transaction gives JPMorgan roughly 5,400 branches, and fulfills JPMorgan Chief Executive Jamie Dimon's long-held goal of becoming a retail bank force in the western United States.

It comes four months after JPMorgan acquired the failing investment bank Bear Stearns Cos at a fire-sale price.

"Jamie Dimon is clearly feeling that he has an opportunity to grab market share, and get it at fire-sale prices," said Matt McCormick, a portfolio manager at Bahl & Gaynor Investment Counsel in Cincinnati. "He's becoming an acquisition machine."

On a conference call, JPMorgan said the transaction will add to earnings immediately, and result in $1.5 billion of annual cost savings, including from the closure of less than 10 percent of the combined company's branches. He also said JPMorgan plans to issue $8 billion of stock.

The acquisition does not cover Washington Mutual's equity, senior debt and subordinated debt holders, the FDIC. The FDIC said the transaction will not affect its roughly $45.2 billion deposit insurance fund.

The transaction also comes as Washington wrangles over the fate of a $700 billion bailout of the financial services industry, which has been battered by mortgage defaults and tight credit conditions, and evaporating investor confidence.

"It removes an uncertainty from the market," said Shane Oliver, head of investment strategy at AMP Capital in Sydney. "The problem is that markets are in a jittery stage. Washington Mutual provides another reminder how tenuous things are."

Washington Mutual's collapse is the latest of a series of takeovers and outright failures that have transformed the American financial landscape and wiped out hundreds of billions of dollars of shareholder wealth.

These include the disappearance of Bear, government takeovers of mortgage companies Fannie Mae (Pacific:FNM - News) and Freddie Mac (Pacific:FRE - News) and the insurer American International Group Inc (NYSE:AIG - News), the bankruptcy filing of Lehman Brothers Holdings Inc (Other OTC:LEHMQ.PK - News), and Bank of America Corp's (NYSE:BAC - News) planned purchase of Merrill Lynch & Co (NYSE:MER - News).

JPMorgan, based in New York, ended June with $1.78 trillion of assets, $722.9 billion of deposits and 3,157 branches. Washington Mutual had 2,239 branches and 43,198 employees.

Shares of Washington Mutual plunged $1.24 to 45 cents in after-hours trading after news of a JPMorgan transaction surfaced. JPMorgan shares rose $1.04 to $44.50 after hours.

119-YEAR HISTORY

The transaction ends exactly 119 years of independence for Washington Mutual, whose predecessor was incorporated on September 25, 1889, "to offer its stockholders a safe and profitable vehicle for investing and lending," according to the thrift's website. This helped Seattle residents rebuild after a fire torched the city's downtown.

It also follows more than a week of sale talks in which Washington Mutual attracted interest from several suitors.

These included Banco Santander SA (MCE:SAN.MC - News), Citigroup Inc (NYSE:C - News), HSBC Holdings Plc (LSE:HSBA.L - News), Toronto-Dominion Bank (Toronto:TD.TO - News) and Wells Fargo & Co (NYSE:WFC - News), as well as private equity firms Blackstone Group LP (NYSE:BX - News) and Carlyle Group (CYL.UL), people familiar with the situation said.

Less than three weeks ago, Washington Mutual ousted Chief Executive Kerry Killinger, who drove the thrift's growth as well as its expansion in subprime and other risky mortgages, and replaced him with Alan Fishman, the former chief executive of Brooklyn, New York's Independence Community Bank Corp.

The transaction also appears to be a costly defeat for David Bonderman and his private equity firm TPG Inc (TPG.UL), the lead investor in a $7 billion capital raise by the thrift in April. TPG was unavailable for comment.

Washington Mutual's roughly $227 billion book of real estate loans put the thrift at the top of the critical list of U.S. lenders, analysts said. More than half of this portfolio was in home equity loans and in adjustable-rate mortgages and subprime mortgages that are now considered risky.

Thursday's transaction makes JPMorgan close in size to Citigroup, now the largest U.S. bank by assets.

JPMorgan has surpassed Bank of America in size. That bank would become the largest U.S. bank once it completes its planned purchase of Merrill Lynch, expected in the first quarter of 2009.

DIMON POUNCES

The deal is the latest ambitious move by Dimon.

Once a golden child at Citigroup before his mentor Sanford "Sandy" Weill engineered his ouster in 1998, Dimon has carved for himself something of a role as a Wall Street savior.

Dimon joined JPMorgan in 2004 after selling his Bank One Corp to the bank for $56.9 billion, and became chief executive at the end of 2005. While results have been hurt by the credit crisis, JPMorgan has suffered less than many rivals.

Some historians see parallels between him and the legendary financier John Pierpont Morgan, who ran J.P. Morgan & Co and was credited with intervening to end a banking panic in 1907.

Bank of America Chief Executive Kenneth Lewis has also been credited with helping reduce damage on Wall Street with his acquisitions this year of Merrill Lynch and Countrywide Financial Corp, the nation's largest mortgage lender.

Washington Mutual has a major presence in California and Florida, two of the states hardest hit by the housing crisis. It also has a big presence in the New York City area.

The thrift amassed $6.3 billion of losses in the nine months ended June 30. It had also projected $19 billion of mortgage losses through 2011, but analysts said credit losses could reach as high as $30 billion.

"It is surprising that it has hung on for as long as it has," said Nancy Bush, an analyst at NAB Research LLC.

(Additional reporting by Paritosh Bansal, Christian Plumb and Dan Wilchins; Jessica Hall in Philadelphia; John Poirier in Washington, D.C. and Kevin Lim in Singapore; Editing by Gary Hill)

Ron Paul's Answer to the President

2008-09-26T06:32:00.000-07:00

Ron Paul's Answer to the President
NationBuider, 9/26/08

Dear Friends:

The financial meltdown the economists of the Austrian School predicted has arrived.

We are in this crisis because of an excess of artificially created credit at the hands of the Federal Reserve System. The solution being proposed? More artificial credit by the Federal Reserve. No liquidation of bad debt and malinvestment is to be allowed. By doing more of the same, we will only continue and intensify the distortions in our economy - all the capital misallocation, all the malinvestment - and prevent the market's attempt to re-establish rational pricing of houses and other assets.

Last night the president addressed the nation about the financial crisis. There is no point in going through his remarks line by line, since I'd only be repeating what I've been saying over and over - not just for the past several days, but for years and even decades.

Still, at least a few observations are necessary.

The president assures us that his administration "is working with Congress to address the root cause behind much of the instability in our markets." Care to take a guess at whether the Federal Reserve and its money creation spree were even mentioned?

We are told that "low interest rates" led to excessive borrowing, but we are not told how these low interest rates came about. They were a deliberate policy of the Federal Reserve. As always, artificially low interest rates distort the market. Entrepreneurs engage in malinvestments - investments that do not make sense in light of current resource availability, that occur in more temporally remote stages of the capital structure than the pattern of consumer demand can support, and that would not have been made at all if the interest rate had been permitted to tell the truth instead of being toyed with by the Fed.

Not a word about any of that, of course, because Americans might then discover how the great wise men in Washington caused this great debacle. Better to keep scapegoating the mortgage industry or "wildcat capitalism" (as if we actually have a pure free market!).

Speaking about Fannie Mae and Freddie Mac, the president said: "Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk."

Doesn't that prove the foolishness of chartering Fannie and Freddie in the first place? Doesn't that suggest that maybe, just maybe, government may have contributed to this mess? And of course, by bailing out Fannie and Freddie, hasn't the federal government shown that the "many" who "believed they were guaranteed by the federal government" were in fact correct?

Then come the scare tactics. If we don't give dictatorial powers to the Treasury Secretary "the stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet." Left unsaid, naturally, is that with the bailout and all the money and credit that must be produced out of thin air to fund it, the value of your retirement account will drop anyway, because the value of the dollar will suffer a precipitous decline. As for home prices, they are obviously much too high, and supply and demand cannot equilibrate if government insists on propping them up.

It's the same destructive strategy that government tried during the Great Depression: prop up prices at all costs. The Depression went on for over a decade. On the other hand, when liquidation was allowed to occur in the equally devastating downturn of 1921, the economy recovered within less than a year.

The president also tells us that Senators McCain and Obama will join him at the White House today in order to figure out how to get the bipartisan bailout passed. The two senators would do their country much more good if they stayed on the campaign trail debating who the bigger celebrity is, or whatever it is that occupies their attention these days.

F.A. Hayek won the Nobel Prize for showing how central banks' manipulation of interest rates creates the boom-bust cycle with which we are sadly familiar. In 1932, in the depths of the Great Depression, he described the foolish policies being pursued in his day - and which are being proposed, just as destructively, in our own:

Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion.

To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection - a procedure that can only lead to a much more severe crisis as soon as the credit expansion comes to an end... It is probably to this experiment, together with the attempts to prevent liquidation once the crisis had come, that we owe the exceptional severity and duration of the depression.

The only thing we learn from history, I am afraid, is that we do not learn from history.

The very people who have spent the past several years assuring us that the economy is fundamentally sound, and who themselves foolishly cheered the extension of all these novel kinds of mortgages, are the ones who now claim to be the experts who will restore prosperity! Just how spectacularly wrong, how utterly without a clue, does someone have to be before his expert status is called into question?

Oh, and did you notice that the bailout is now being called a "rescue plan"? I guess "bailout" wasn't sitting too well with the American people.

The very people who with somber faces tell us of their deep concern for the spread of democracy around the world are the ones most insistent on forcing a bill through Congress that the American people overwhelmingly oppose. The very fact that some of you seem to think you're supposed to have a voice in all this actually seems to annoy them.

I continue to urge you to contact your representatives and give them a piece of your mind. I myself am doing everything I can to promote the correct point of view on the crisis. Be sure also to educate yourselves on these subjects - the Campaign for Liberty blog is an excellent place to start. Read the posts, ask questions in the comment section, and learn.

H.G. Wells once said that civilization was in a race between education and catastrophe. Let us learn the truth and spread it as far and wide as our circumstances allow. For the truth is the greatest weapon we have.

In liberty,

Ron Paul

Ron Paul: Abolish the FED

2008-09-25T07:39:00.000-07:00

Ron Paul: Abolish the FED
The Right Perspective, 9/25/08

Constitutional Conservative Ron Paul has introduced H.R. 2755, the “Federal Reserve Board Abolition Act”, which will repeal the Federal Reserve Act and abolish the US Federal Reserve at the end of 1 year after its passing into law.

The 1 year time frame will be a “winding down” period, overseen by the Chairman of the Board of Governors of the Federal Reserve System, who will continue to pay employees and operate day-to day dealings.

The OMB Director will begin liquidating the Fed’s assets, which will put into the General Fund of the Treasury. The Secretary of the Treasury and the Director of the Office of Management and Budget will report back to Congress at the end of 18 months.

The Texas Congressman has been a long time critic of the US Federal Reserve, ran a grassroots campaign for the Republican Party nomination of President of the United States. Paul was derided by many within his own party for his stance on the Iraq War. Despite poor showings in polls, Rep. Paul used his presidential campaign as a bully pulpit for small government and a strict interpretation of the US Constitution, which has since found an increasing acceptance by conservatives, including political commentators Glenn Beck and Chuck Norris.

The Greatest Opportunity for America: Now is the Time to Repeal the Federal Reserve Act

2008-09-25T06:40:00.000-07:00

The Greatest Opportunity for America:
Now is the Time to Repeal the Federal Reserve Act
NationBuilder, 9/25/08

The $700 billion to $5 trillion bailout plan is the wrong answer. It is Henry Paulson, Ben Bernanke and George Bush's policies based on Keynes that is the cause of the financial crisis. Creating more money out of thin air and destroying the US dollar will only make it worse -- much worse.

Please contact your Senators and Representatives and urge them to vote against any bailout plan. Instead, ask them to create a committee to study inflation and price stability in relation to the policies of the Federal Reserve Corporation.

The committee should then address four key questions:

Has the Federal Reserve's monetary policies advanced the CFR's definition of Economic Integration?
Did the Congress violate the Constitution when it passed the Federal Reserve Act and Internal Revenue Act on December 23, 1913?
Of the total federal income tax paid by year, how much of it was applied to the National Debt held by the private Federal Reserve Corporation?
Once the sixth step of Bela Balassa's Theory of Economic Integration is applied to the United States, will our nation transition from a Constitutional Republic that protects the Natural Rights of Sovereign Individuals to a Supranational State the removes Citizenship, Inalienable Rights and the US Constitution in place of a North American citzenship, granted privileges and a North American Constitution?

There is no room for the US Constitution in Dr. Robert Pastor's concept of Economic Integration. As the CFR Director for Integration, Dr. Pastor has redefined Sovereignty as "security" and thus the more "safe" you are the more "sovereign" you are in his proposed "North American country".

This concept is preposterous and treasonous. Following the committee's investigation of the Federal Reserve, IRS and CFR, the Congress should repeal the FED and IRS Acts while indicting the executives of the CFR and related institutions for treason -- disloyalty to one's nation, the Constitutional Republic of the United States of America.

Below Jack Cafferty says that he wants to hear what McCain and Obama "have to say about what they're going to do about the problem that the country has". However, the problem is neither McCain nor Obama will mention the Federal Reserve or the CFR's Establishment policies.

Cafferty is right -- a debate is exactly what we need right now and some institution such as CNN should create a Federal Reserve/Keynesianism-themed debate and invite McCain, Obama, McKinney, Nader and Baldwin with Congressman Ron Paul as the moderator.

If McCain or Obama refuse to show up, CNN (or whoever) should air the debate live without them and once and for all show America the true causes and true criminals behind our current financial collapse.