Lo que significa para los socialistas el "caso Assange"
Alan Woods, Diciembre 27, 2010
Corriente Marxista Internacional
http://www.rebelion.org/noticia.php?id=119336
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ANTES UNA NOTA INTRODUCTORIA
En su 1er paragrafo Woods muestra la arrogancia y petulancia tipica de iluminados “marxistas” del norte que se creen con derecho a ensenarnos a “separar lo esencial de lo secundario y distinguir lo que es progresivo de lo que es reaccionario”. Despues de compendiar en forma repetitiva lo ya dicho hasta la saciedad en mas de 6 meses de debate sobre el caso Assange, Woods llega a la “sabia” conclusion de que el meollo del asunto es el derecho demo-burgues (mas burgues que democratico) de ser informados de la actuacion de los gobernantes que elegimos. Pero el problema de fondo, los efectos de los wikileaks en los patrones de comunicacion ya establecidos por el sistema mass-media, la relativa independencia del oyente respecto a los mensajes trasmitidos por el sistema y el como hacer que el oyente-observador saque el maximo provecho de los wikileaks en lo que concierne al desarrollo de la conciencia de clase y de nacion de los trabajadores y el como evitar los efectos-respuesta del sistema al nivel del internet y las censuras ya en marcha, todo esto queda intocado. La luminaria marxista no escribe una linea bien elaborada al respecto. Para Woods “la defensa de los derechos democráticos es parte importante de la lucha para resistir los intentos de la clase dominante para eliminar todas las conquistas logradas por la clase obrera en el pasado”, con esta frase magica cubre su ignorancia en el tema. Al margen de si la comunicacion libre fuese o no una conquista obrera, hasta aqui ambos, Assange y Woods estarian defendiendo lo mismo, el derecho demo-burgues a informar y ser informado, solo que Assange lo hace en la practica y poniendo en riesgo su vida y la de su familia, mientras que Woods solo assume esa defensa en un discurso engorroso ( sin calidad analitica y menos de synthesis). Lo patetico del caso es que Woods se pregunta si Assange es un rebelde peligroso como lo son los marxistas (no indica donde son hoy peligrosos?. Lo que yo se es que peligrosos solo son los hijos parias de Bin Laden inventados aqui y alla para facilitar el saqueo de las arcas del estado por el aparato military terrorista de estados imperiales y sus clientes). La respuesta que da a su pregunta es que NO: Assange no es un “terrorista” peligroso pues el no quiere derrocar la democracia burguesa como Woods si lo desea, pero no tiene agallas para luchar por ello. “Assange solo quiere que la democracia sea solo mas responsable y abierta, esto es, mas democratica. Este es us error”, indica Woods. Asume el que Assange no sabe que detras de esa democracia se oculta la dictadura de los bancos y los grandes monopolios. Si Woods hubiese leido los doct de Assange (antes de lanzar los wikileaks) su arrogancia no seria ridicula. El caso es que es Assange quien ha revelado los secretos de esa dictadura burguesa actual y no Woods. Woods acusa a Assange de ser un liberal y creer en la democracia. Woods tambien cree en la democ burguesa de la cual reclama derechos y en la que vive bien instalado adornandola con sus denuncias y discursos voluminosos que pocos leen, mientras Assange vive a salto de mata huyendo de la repression burguesa a la que si asesta serios golpes usando sus propias armas, los leaks que todo el mundo lee. La pregunta de Woods regresa como boomerang : Quien es el revoluc peligroso?. La respuesta es obvia. La montania -de papeles escritos- hizo tanto ruido para al final solo parir un raton: es deber de los trabajadores con conciencia de clase estudiar los wikileaks, nos dice Woods en otra “sabia” incoherencia final. Creo que en lugar de enviar los obreros a navegar en los wikileaks habria sido mas coherente con su version marxista si los hubiese enviado a estudiar de Orwell la novela “1984”, alli se describe el paradigma totalitario orweliano (inspirado en las rabietas anti-stalin de Trotsky) y pedirles que lo apliquen a los big brothers de America, los duenios del partido republicano y democrata de los EU. El objetivo inicial de Alan Woods fue ayudarnos a “distinguir lo que es progresivo de lo que es reaccionario” y creo que si lo consiguio. Julian Assange no es el reaccionario y dudo que Woods sea el “revolucionario peligroso”. Aun si Assange fuera reaccionario, sus leaks pueden generar dinamicas politico sociales independientes de lo que quizo su autor. Lease Luhmann al respecto: The reality of the Mass Media y Ecological communication.
En suma: para quienes seguimos de cerca el caso Assange en lo dicho por Woods no hay nada Nuevo.
--------------------------- Al final del texto que viene, ver mi comentario final.
Lo que significa para los socialistas el "caso Assange"
El caso de Julián Assange ha sido objeto de intensa especulación y controversia en los medios de comunicación y también entre los sectores de la izquierda. A fin de tener una posición correcta es necesario abrirse camino a través de la niebla de la propaganda y las mentiras, separar lo esencial de lo secundario y distinguir lo que es progresivo de lo que es reaccionario.
"La actividad imperialista del Presidente recibió otro nombre. Los republicanos ahora simplemente lo llaman ‘diplomacia del dólar’." (Beard,Historia básica de los Estados Unidos.)
"¿Cómo sabe usted que soy un diplomático?
"Por la habilidad con que esconde sus garras." (Edmond Rostand)
Los marxistas no se basan en la moralidad abstracta o principios que están fuera del tiempo y del espacio. Es moral lo que sirve para promover la causa del socialismo y elevar la conciencia de la clase obrera. Es inmoral y reaccionario lo que actúa para retrasarlo.
Alguien dijo alguna vez que la política del poder es el nombre diplomático que se da a la ley de la selva. Si hubo dudas alguna vez acerca de esto, las revelaciones de WikiLeaks han demostrado de una vez por todas el carácter cínico de la diplomacia occidental. Aquí se utiliza el lenguaje de San Francisco de Asís para ocultar los métodos de Al Capone.
Los métodos de los imperialistas tienen mucho en común con el gansterismo, no sólo en la forma sino también en el contenido. Para comprender el funcionamiento de la diplomacia imperialista no es necesario pasarse años en una universidad. Más bien hay que mirar la película de El Padrino.
Los objetivos determinan los métodos. El objetivo del imperialismo estadounidense es imponer la voluntad de los gánsteres más poderosos sobre todos los demás. Los métodos vienen directamente de Maquiavelo: la amenaza de violencia, respaldada con violencia real, con chantaje, soborno y corrupción como apéndices útiles. Mentiras, trampas, traiciones y engaño son la especialidad de la diplomacia imperialista. Esto se aplica tanto a los amigos de uno como a los enemigos, porque, como sabemos, las naciones no tienen amigos, sólo intereses.
La revelación hecha por WikiLeaks de los crímenes de los imperialistas ha prestado un gran servicio a la clase obrera mundial. Ha desgarrado el velo de la "respetabilidad" que oculta las actividades delictivas de la diplomacia oficial para revelar ante la opinión pública del mundo la realidad podrida, corrupta y despiadada que se camufla detrás de ella. Este es un desarrollo muy importante y merece un estudio muy cuidadoso de todos los trabajadores con conciencia de clase.
Crímenes del imperialismo
Cuando algún pacifista lloroso le dijo a Lenin que "la guerra es terrible", éste le respondió: "Sí, terriblemente rentable". Las guerras emprendidas por el imperialismo de EE.UU. son terribles para millones de pobres, pero terriblemente rentables para los grandes fabricantes de armas que engordan con los contratos provistos por el gran presupuesto militar de EE.UU. de igual manera que los vampiros se alimentan de la sangre de los animales y de los humanos.
Bajo un Presidente "amante de la paz" y “pacifista”, EE.UU. gasta 708.000 millones de dólares al año en armas. Contrariamente a sus promesas electorales, Obama no ha retirado el ejército norteamericano de Irak. Ha intensificado la agresión contra el pueblo de Afganistán y se ha involucrado en otros actos de agresión en Somalia y el Yemen. Y grandes empresas como Halliburton, cuyos tentáculos llegan a los niveles más altos del Estado y el gobierno de los EE.UU., están obteniendo lucrativos beneficios.
Un millón de personas han muerto en Irak desde la invasión, y el 90 por ciento de ellos eran civiles. Las fuerzas de ocupación (británicas y americanas) son culpables de los crímenes más abominables: el asesinato de hombres, mujeres y niños desarmados, la tortura sistemática de los detenidos, el asesinato de prisioneros, y todos los otros horrores que son necesarios para someter a todo un pueblo contra su voluntad. Incluso antes de la invasión, medio millón de niños iraquíes murieron como consecuencia de las vergonzosas sanciones impuestas por la ONU a instancias de los EE.UU. y Gran Bretaña. Este bloqueo, que negó acceso a agua limpia y medicamentos al pueblo iraquí, fijó su objetivo en las mujeres y los niños en violación de la Carta de derechos de las Naciones Unidas.
Estos hechos monstruosos han sido ocultados cuidadosamente al público en Gran Bretaña y los Estados Unidos: El mismo público que fue informado de que el propósito de la guerra en Irak era destruir las inexistentes armas de destrucción masiva. Cuando estas no aparecieron se transformó en una "guerra por la democracia".
El "crimen" de WikiLeaks fue el de levantar una esquina del espeso telón de mentiras y engaños que oculta la verdad al pueblo norteamericano y a los pueblos del mundo. Por esto son acosados, calumniados, perseguidos, les secuestran sus fondos y detienen a su figura principal.
Estas cosas no deben hacerse públicas. La gente cuyos impuestos se destinan a pagar a los multimillonarios de las empresas armamentistas nunca debe conocer el verdadero propósito de las guerras libradas en su nombre. En Gran Bretaña, la Ley Oficial de Secretos es una de las más draconianas en el mundo. La guerra de Irak mostró cómo la llamada prensa libre puede ser engañada o presionada a apoyar un acto criminal de agresión con el más débil de los pretextos. Toda la fuerza del Estado se movilizó para asegurarse de que las tropas británicas participaran en la invasión, a pesar de que la inmensa mayoría del pueblo británico se opuso.
En 2007 WikiLeaks publicó secuencias filmadas de un acto atroz de masacre perpetrado deliberadamente por un helicóptero de combate de EE.UU. contra la población civil en Irak. Este asesinato a sangre fría fue denunciado por un soldado de EE.UU. que trató de rescatar a los niños. Cuando protestó, la reacción de la tripulación del helicóptero de combate fue: "Es su culpa por traer a sus hijos a la batalla". Su oficial al mando, con un lenguaje obsceno, lo maldijo por haber ido a la ayuda de los niños, diciendo que esto se trataba de un "hecho cotidiano".
La persecución de Julián Assange
Un gran problema para los imperialistas es que hay signos de malestar en el vientre de la Bestia. Un número creciente de funcionarios y personal militar están indignados con lo que ven y oyen y se inclinan a filtrar información. Las filtraciones son cada vez más numerosas y esto es motivo de preocupación real y creciente para la institución militar y el servicio de inteligencia que están decididos a acabar con ellas. Pero esto es más fácil decirlo que hacerlo.
El primer paso es llevar a cabo un castigo ejemplar de los que son responsables.
Bradley E Manning, el joven soldado que filtró la información más reciente, no puede esperar ninguna piedad. Ha sido mantenido totalmente incomunicado en una prisión militar durante cuatro meses en condiciones que rayan con la tortura. Pero, desde el punto de vista del gobierno de EE.UU., él por lo menos es un ciudadano de los EE.UU. que puede (con razón o sin ella) ser acusado de deslealtad a su propio país. Julián Assange no es un ciudadano de los EE.UU., y no está ligado a las leyes de este país.
Tampoco puede esperarse que sea leal a un país al que, como extranjero, no debe ninguna lealtad. Pero desde el punto de vista del Imperio, estos son detalles legalistas insignificantes que no pueden interponerse en el camino de un derecho moral más alto: El Sagrado Derecho a la Venganza.
Hoy, Bush y Blair están disfrutando de un cómodo retiro en lugar de enfrentarse a un juicio como criminales de guerra, que tanto se merecen. Sin embargo, los valientes individuos que se han atrevido a desenmascarar la cruda realidad de la política de la Gran Potencia son perseguidos, acosados, arrestados e, incluso, denegados los derechos elementales que habitualmente se concede a los delincuentes comunes. Julián Assange ha sufrido amenazas a su vida y se enfrenta a la extradición a los EE.UU., donde se enfrentaría a cadena perpetua. Eso es lo que los imperialistas entienden por "justicia".
En EE.UU. algunos políticos están pidiendo que se asesine a Julián Assange –una hazaña que la CIA es capaz de organizar–. El 30 de noviembre, el profesor Tom Flanagan, que está cercano al Primer Ministro canadiense, Stephen Harper, llamó a asesinar a Julián Assange en la televisión nacional. Aconsejó a Obama que pagara a asesinos a sueldo o dejara caer una bomba o algo así”. Flanagan estaba expresando en público lo que se dice en privado en los pasillos del poder en Washington y en muchas otras capitales occidentales.
Un memorándum secreto del Ministerio de Defensa británico describe a los periodistas de investigación como "terroristas". Y los terroristas, como sabemos, puede ser asesinados. Sin embargo, antes de proceder a la destrucción física de una persona, es necesario preparar el terreno mediante la destrucción de su carácter en base a la difamación. Estas tácticas y objetivos de los imperialistas están claros en un documento secreto del Pentágono que ha sido hecho público por WikiLeaks. Ahora el Pentágono tiene la intención de desacreditar a WikiLeaks y ennegrecer su nombre.
El gobierno estadounidense no se detendrá ante nada para silenciar a WikiLeaks. La CIA y sus colaboradores han orquestado una campaña ruidosa de calumnias y acusaciones sin fundamento sobre la vida personal de su enemigo. Este es uno de los trucos más viejos en el arsenal de la CIA, que mantiene archivos detallados sobre una gran cantidad de políticos, periodistas y otras figuras públicas en caso de que necesite intimidarles y chantajearles en algún momento dado.
El largo brazo de Washington
WikiLeaks ha levantado el telón del turbio mundo de la diplomacia imperialista, la cual tiene como único propósito echar un tupido velo sobre la realidad brutal de la política de la Gran Potencia. Todas las bellas palabras sobre la "democracia", la "libertad", la "paz" y la "civilización occidental y sus valores" son sólo una niebla que oculta la cruda realidad de la intimidación, las amenazas, el soborno y la corrupción, la violencia, la tortura y el asesinato.
A los delincuentes les gusta operar al amparo de la oscuridad.
A ningún asesino le gusta tener un foco de luz brillando en su cara. La reacción ante estas revelaciones es lo que se podía esperar: la Bestia arremete con furia ciega, gruñendo y aullando. Y sus fieles siervos se apresuran a hacer lo que a los Maestros se les antoja. Ni un solo gobierno en el mundo occidental se atreve a enfrentarse a los bravucones de Washington. Cuando se trata de hacer frente al Gran Hermano transatlántico, todos los gobiernos del mundo occidental muestran la más despreciable cobardía.
John Pilger ha criticado con razón la conducta cobarde del gobierno australiano y la primera ministra, Julia Gillard: "La declaración de Gillard, diciendo que lo que WikiLeaks estaba haciendo con la divulgación de estos documentos es ilegal… no es ilegal en absoluto, en virtud de las leyes en Australia. Ese es el tipo de cosas por las que la mayoría de los australianos deberían estar preocupados", dice.
Sí, por supuesto. Toda persona que ame la democracia debería estar preocupada por este caso, y no sólo en Australia: preocupada por la forma en que el imperialismo estadounidense ejerce el poder sobre los gobiernos elegidos y les doblega a su voluntad; preocupada por la manipulación sistemática de los tribunales, los jueces, la prensa y la televisión; preocupada por el brutal castigo infligido a cualquiera que se atreva a hablar de estas abominaciones y denunciarlas.
Lo que es particularmente repugnante es el servilismo obsequioso de los gobiernos supuestamente soberanos que están dispuestos a rebajarse hasta el nivel más bajo en su complicidad con Washington. Este último no tiene más que gritar: "¡Salta!" y la respuesta es: "¿Cuán alto?" Los documentos filtrados muestran la relación real entre los EE.UU. y los líderes de Europa. Vamos a citar sólo un ejemplo.
La justicia española investiga el caso de un periodista español asesinado por las fuerzas de EE.UU. en Bagdad. La embajada de EE.UU. utiliza todos los medios a su alcance para evitar esto, y también para obstruir cualquier investigación sobre los vuelos ilegales de aviones estadounidenses sobre España para entregar a prisioneros a manos de torturadores. Esto constituye una injerencia flagrante en el sistema judicial español. Pero ¿y qué?
El embajador de EE.UU. informa al Gobierno español que "mi paciencia se está agotando". Este no es el lenguaje de un aliado hablando con un gobierno amigo. Es el de un procónsul imperial frente a un sátrapa. El largo brazo de Washington se extiende por todo el mundo, penetrando en los gabinetes y salas de redacción. Gobiernos enteros están bajo su tutela. Jueces y altos funcionarios están comprados o bajo su control. Uno puede estar tentado a pensar que semejantes métodos de "persuasión" se han aplicado más recientemente al sistema judicial sueco y británico.
El primero en saltar para cumplir con sus obligaciones con Washington fue Suecia –ese conocido bastión de la "democracia" y los "derechos humanos", a quien el Embajador de EE.UU. en Estocolmo describe como un socio "pragmático", "fuerte" y "fiable" en los correos filtrados–. Como resultado de las denuncias de "delitos sexuales" en Suecia, el fundador de WikiLeaks fue arrastrado ante un juez británico.
Naturalmente, la fiscal sueca, Marianne Ny, rechazó las sugerencias de una motivación política para las denuncias de violación. Los hipócritas suecos intentan disimular su traición con una fachada "progresista". Nos quieren hacer creer que la persecución de Assange no tiene nada que ver con sus actividades anti-americanas. ¡Oh, no! Tiene que ver con la defensa de los "derechos de la mujer".
¡Por supuestísimo! ¿Qué otros intereses podrían tener estos políticos suecos buenos, honestos, justos, liberales, neutrales, pacifistas, feministas y moralistas? Durante años la burguesía sueca ha cultivado una imagen de "El Bueno de la Película". Pero la hipocresía apestosa de la clase media escandinava fue hace mucho tiempo desenmascarada en las obras de Ibsen. El caso de Assange trae a la mente con fuerza su obra maestra: Un enemigo del pueblo.
Las damas y los caballeros tan "amables" en Estocolmo están tan implicados en las actividades delictivas de la CIA como sus homólogos de Alemania y Gran Bretaña. El gobierno de derechas en Estocolmo está ansioso por hacerse popular en los Estados Unidos. Aunque Suecia no es formalmente parte de la OTAN, colabora activamente con ella y ha enviado tropas a Kosovo y Afganistán, además de participar en maniobras de la OTAN con la excusa de la llamada “alianza por la paz”. Entre los documentos divulgados por WikiLeaks, leemos la siguiente valoración que EE.UU. hace del papel de Suecia:
"Dentro de la UE, Suecia toma a menudo posiciones que coinciden con las nuestras en cuestiones tan diversas como la Ronda de Doha, la ampliación de la UE y Turquía, los secretos bancarios y la relación de la UE con Cuba". (Ver07STOCKHOLM506).
En otras palabras, el gobierno de Suecia está en los bolsillos de los americanos.
Bastaría una llamada telefónica para obtener la participación más entusiasta de Estocolmo en esta caza de brujas repugnante. La única diferencia es que mientras que en Alemania, Angela Merkel podría esperar una llamada telefónica directa de la Casa Blanca, o en el caso de Londres, en estos días, sólo podrían aspirar a una llamada de alguien en el Pentágono, en lo que se refiere a Estocolmo, una palabra de un funcionario menor de la Embajada sería suficiente. No podemos saber el contenido exacto de esa llamada telefónica, pero es probable que terminara con: "Mi paciencia se está agotando".
Campaña de difamación
Assange fue acusado originalmente de cuatro delitos, entre ellos el de violación. La acusación de violación, después de haber aparecido por todas las portadas de la prensa sensacionalista, desapareció repentinamente. Había cumplido su propósito, que era el de ensuciar su nombre. Ahora los suecos argumentaron que él era culpable de "coacción ilegal" y de actuar "de una forma diseñada para violar la integridad sexual".
Las acusaciones no son nuevas. Se remontan a agosto, cuando Assange fue acusado de asalto sexual. Él respondió diciendo que se trataba de una difamación: "Las acusaciones carecen de fundamento y su aparición en este momento es muy preocupante". A la mañana siguiente, 21 de agosto, la fiscal principal, Eva Finne, anuló la decisión de la noche anterior y retiró las acusaciones diciendo: "No creo que haya motivos para sospechar que ha cometido una violación". John Pilger señaló que "La fiscal principal en Suecia abandonó este caso, lo tiró por la borda, no veía en él ningún valor".
Sin embargo, el 1 de septiembre, llegó una orden desde las cumbres más altas del gobierno sueco. La directora de la fiscalía del Ministerio Público, Marianne Ny, decidió reabrir el caso, alegando que se había recibido "nueva información". ¿Cuál fue el origen de esta "nueva información"? ¿Fue tal vez una llamada telefónica desde Washington? ¿O tal vez el embajador de EE.UU. informó a la Sra. Ny que su "paciencia se estaba acabando"? Ese es el tipo de "nueva información" que hace saltar a los altos cargos de la Administración Pública… y no sólo en Estocolmo.
Con una prisa vertiginosa, y habiendo ignorado todos los intentos de Assange para responder a cualquier pregunta voluntariamente en la embajada sueca en Londres, Suecia emitió una orden internacional de detención, alegando que no pudieron contactar con Assange para ser interrogado. Desde entonces, ha salido a la luz pública que las dos mujeres que llevaron adelante las acusaciones inicialmente no querían mantenerlas, sino sólo pedir a Assange que se sometiera a una prueba, porque un condón se había roto durante las relaciones sexuales consensuales.
No estamos en condiciones de juzgar la veracidad de estas acusaciones, pero lo que está claro es que están siendo utilizadas políticamente, y bajo estas circunstancias está descartada la celebración de un juicio justo. La pregunta que debe hacerse es: si Julián Assange no hubiera sido el fundador de WikiLeaks, sino un desconocido, ¿acaso hubiera habido una orden de detención internacional contra él? ¿Acaso hubiera habido un intento de lograr su extradición, aún en el caso de que fuera culpable de violación? ¿Acaso la directora de la fiscalía sueca hubiera tomado un gran interés en el caso? Creemos que estas cuestiones podrían dar lugar a una duda razonable.
En una carta al diario The Guardian, la organización Mujeres contra la Violación, que se especializa en el apoyo a las víctimas de violación, expresó sorpresa por la negativa del juez británico a conceder libertad bajo fianza, diciendo que la concesión de libertad bajo fianza en los casos de violación es habitual en el Reino Unido. También señalan: "Hay una larga tradición del uso de la violación y asalto sexual por motivos políticos que nada tienen que ver con la integridad de la mujer".
Este es el quid de la cuestión. Washington no está interesado en la vida sexual del Sr. Assange. Ellos están interesados en la venganza.
En preparación para el juicio y el encarcelamiento del hombre que ven como el enemigo público número uno, primero están predisponiendo a la opinión pública mediante la destrucción de su reputación moral. Alguien que no entienda de qué se trata todo esto, tiene que ser un poco más que estúpido. Lamentablemente, hay unos cuantos en la "izquierda" que no pueden ver más allá de sus narices (y algunos ni siquiera tan lejos).
¿Qué se puede decir acerca de los payasos patéticos de la "izquierda" que están dispuestos a defender las acciones criminales del gobierno sueco sobre la base de la supuesta "defensa de los derechos de las mujeres"? Se limitan a defender el "derecho a un juicio justo" de Assange. Esto es repugnante. ¿Cómo puede Julián Assange esperar obtener un juicio justo en estas circunstancias? Ya ha sido juzgado y declarado culpable por los medios de comunicación, como un subversivo peligroso, un espía, un violador. Toda la fuerza del Estado se ha movilizado para acabar con él.
Este tipo de cosas demuestra hasta qué punto algunos sectores de la izquierda se han esclavizado a los prejuicios de la pequeña burguesía "progresista" que no posee un átomo de conciencia de clase revolucionaria y cuyo único papel es el de confundir y desorientar a aquellos trabajadores y jóvenes que les prestan atención.
Farsa judicial
La farsa judicial de la "violación" fue sólo un burdo disfraz para encubrir el auténtico contenido del asunto. Este fue un claro caso de difamación organizada. Fue puesto en marcha por la CIA, utilizando los servicios de sus títeres en el gobierno sueco y el poder judicial. La maquinaria de propaganda bien engrasada de la CIA empezó a rodar. Los medios de comunicación del mundo de inmediato comenzaron a gritar acerca de "las acusaciones de violación". Los procedimientos de extradición se iniciaron de inmediato para enviarlo a Suecia para enfrentarse a la acusación de "violación".
Por supuesto, todo esto era sólo un pretexto para prepararse para la auténtica maniobra: fuentes diplomáticas han filtrado que ya se está hablando de planes para su extradición desde Suecia a EE.UU. La fiscalía sueca, por supuesto, lo niega, diciendo que sería imposible sin el consentimiento del gobierno del Reino Unido. Es decir, es imposible sin el consentimiento del aliado más leal de los Estados Unidos en Europa. Es un secreto a voces que funcionarios de EE.UU. están buscando formas de acusar a Assange de espionaje bajo las leyes estadounidenses. Si es juzgado y declarado culpable en un tribunal estadounidense, le encerrarán y tirarán la llave como una advertencia a los demás.
Assange fue detenido cuando apareció en una comisaría de policía de Londres después de que la Policía Metropolitana recibiera una orden de detención europea. Él compareció ante el juez, sólo para confirmar su nombre y fecha de nacimiento y decirle al tribunal: "No consiento a mi extradición". Igual que el poder de Poncio Pilatos, el gobierno británico se lavó las manos en público, mientras que lanzaba a su víctima indefensa a los lobos. La oficina del Primer Ministro dijo que el arresto de Assange era "un asunto para la policía" y que no había habido "ninguna participación ministerial".
Las palabras están cuidadosamente elegidas. "No hay participación ministerial" no significa que no hay participación de las autoridades británicas o MI5 [servicios secretos]. Si alguien cree que el gobierno de Londres no está actuando en connivencia con Washington y Estocolmo, se encuentra en necesidad urgente de las atenciones de un psiquiatra competente. No sólo el gobierno, sino el establecimiento legal británico habrán sido ampliamente informados y habrán ensayado su participación en esta farsa desagradable.
Esto se ve por los trámites legales hasta el momento. Assange, que ha negado constantemente las acusaciones de que él asaltó sexualmente a dos mujeres, pidió ser liberado bajo fianza. A pesar de que es una práctica habitual conceder la libertad bajo fianza en estos casos, ésta se le negó. Gemma Lindfield, en nombre de las autoridades suecas, le dijo al juez que había "un riesgo real" de que Assange se diera a la fuga si se le concedía la libertad bajo fianza. Lindfield dijo que había "razones fundadas" para creer que no se presentaría al juicio ni se entregaría a la policía en caso de que se concediera su extradición.
Examinemos el contenido de estas "razones fundadas" para oponerse a la libertad bajo fianza:
1. "Tenía acceso a fondos, a través de donaciones de PayPal a la página web WikiLeaks". Falso. Todo el mundo sabe que PayPal, junto con Visa y MasterCard, haciendo el trabajo sucio del gobierno de los EE.UU., han congelado el acceso a estas cuentas. Esto equivale a un robo legalizado. Como resultado, su fondo de defensa tuvo que ser congelado. Sólo la generosidad de amigos y gente que están indignados por este tratamiento le permitió recaudar el importe fijado por el juez para la libertad bajo fianza. Este era de £200.000, una cantidad exorbitante para tales acusaciones.
2. Tenía una "red de contactos internacionales". La posesión de contactos internacionales es un "delito" completamente desconocido para el código penal de cualquier país. Es otro invento de las autoridades suecas y sus compinches en la judicatura.
3. Lleva un estilo de vida "nómada". (Véase el punto 2)
4. Pasa el tiempo en la "clandestinidad". Falso. Se quedó en Suecia durante 40 días después de que se hicieran las denuncias para responder a las acusaciones y sólo abandonó el país tras haber recibido el permiso expreso de la fiscal sueca. Desde que llegó al Reino Unido siempre ha aceptado hablar con las autoridades suecas. El abogado de Assange ha invitado repetidamente a la Sra. Linfield a venir a Londres para discutir el caso con él y con su cliente, pero ella modestamente ha declinado la invitación.
5. "Ha mostrado una falta de voluntad para cooperar, negándose a ser fotografiado, a que se le tomen huellas dactilares o a dar una muestra de ADN tras su detención". Assange se entregó voluntariamente a la comisaría de policía de Kentish Town en Londres. Su negativa a ser fotografiado, a dar sus huellas dactilares o a dar una muestra de ADN fue por asesoramiento jurídico.
6. "No había ninguna constancia de su entrada en el Reino Unido". Cada entrada de extranjeros es rigurosamente controlada por las autoridades de inmigración británicas. Es impensable que la entrada de Assange no fuera conocida por ellas. Assange se entregó voluntariamente a la policía en Gran Bretaña y ha colaborado con las autoridades, pero a pesar de ello, fue inmediatamente detenido y tratado como un delincuente común. Además, sería reconocido al instante si tratara de salir del país, por lo que el riesgo de fuga es prácticamente inexistente.
Increíblemente, no se dio detalle alguno acerca de la solidez de las pruebas contra Assange. La Sra. Lindfield declaró que "no es relevante en relación a la libertad bajo fianza". Aún más increíble, también se opuso a la libertad bajo fianza por razones de seguridad personal de Assange, diciendo que si se le concedía "toda una serie de personas inestables podrían tomar la decisión de causarle un perjuicio grave". Los Tartufos suecos exigen que Assange sea mantenido en la cárcel (sin presentar ninguna evidencia de su culpabilidad) ¡por su compasiva preocupación de su seguridad! Aquí el arte de la hipocresía cínica es empujado hasta el límite y más allá.
John Jones, el abogado de Assange, dijo que el caso debe ser "despojado de toda la histeria política y mediática" asociada con WikiLeaks. Assange era de buen carácter, y no tenía antecedentes penales. Jones explicó: "Él se resiste a la extradición ya que es desproporcionado extraditar a una persona en estas circunstancias. Todo indica que el propósito de esta orden es para que vuelva a ser interrogado". Pero a pesar de los argumentos abrumadores a favor de Assange, los suecos se mantuvieron inflexibles, como vemos en las palabras de la Sra. Lindfield:
"Esta es una persona a la que, dicho simplemente, ninguna condición, incluso las condiciones más estrictas, garantizaría que se entregara a la jurisdicción de este tribunal". La motivación del gobierno sueco (es decir, del gobierno de los Estados Unidos) es transparente: asegurarse de que Assange va a la cárcel, en donde permanecerá por tiempo indefinido.
A pesar de que Jemima Khan, ex esposa de Imran Khan (capitán de cricket pakistaní), John Pilger, Ken Loach y otros se ofrecieran a pagar un total de £180.000 en concepto de fianza, el juez dijo que la "debilidad de los vínculos comunitarios" del australiano Assange con el Reino Unido y sus "medios y posibilidades" para darse a la fuga, representaban "razones suficientes" para denegar la libertad bajo fianza.
Otros que ofrecieron contribuir a la fianza fueron la profesora Patricia David, y el abogado Geoffrey Sheen, presidente de Union Solidarity International, quienes dijeron que aunque no conocían a Assange estaban preocupados por los derechos humanos. Un familiar no identificado de Assange ofreció £80.000.
Pero el juez Riddle dijo:
"La naturaleza y la fuerza de las pruebas no están presentes, esto es normal en esta etapa en el proceso. Lo que tenemos aquí son alegaciones posiblemente graves contra una persona con vínculos comunitarios relativamente débiles con este país. Él tiene los medios y la capacidad de huir si quiere y estoy satisfecho de que hay razones fundadas para creer que si yo le concediera la libertad bajo fianza no se entregaría".
Por lo tanto, el prisionero fue enviado nuevamente a disfrutar de la hospitalidad de Su Majestad Británica en el agradable entorno de la cárcel de Wandsworth, en régimen de aislamiento, sin acceso a libros, visitas, periódicos, televisión ni, por supuesto, a Internet. Un tratamiento tan duro en el caso de un hombre que no ha sido declarado culpable de nada es, por decir poco, inusual.
Parece evidente que el Juez Howard Riddle sintió cierta vergüenza al verse obligado a rechazar la solicitud de libertad bajo fianza. Públicamente elogió a Loach y a Khan por haber ayudado al acusado "por su preocupación por los derechos humanos" sin conocerlo personalmente. El Sr. Stevens dijo que el juez estaba "impresionado" por el número de personas dispuestas a "defender" a su cliente. "[Este apoyo] sólo es la punta del iceberg". "Esto va a dispararse. Mucha gente cree que el Sr. Assange es inocente, incluido yo mismo. Mucha gente cree que esta persecución tiene motivaciones políticas", dijo.
Después de la sentencia –delante de un grupo de seguidores ondeando hojas de papel que decían "Difamación" y "Protección de la Libertad de Expresión"– su notario, Mark Stephens, salió del juicio, explicando que la acusación tenía motivaciones políticas y prometió que WikiLeaks no sería intimidado. Anunció que apelaría la decisión. Pilger dijo fuera del tribunal: "Suecia debería estar avergonzada. Esto no es justicia, esto es indignante". Sólo después de que se ejerciese una presión importante sobre los tribunales, Assange fue finalmente puesto en libertad bajo fianza, pero en condiciones tan estrictas, que vienen a significar arresto domiciliario.
Los derechos democráticos bajo ataque
El editor de WikiLeaks ha recibido un amplio apoyo de todo el mundo, incluyendo a figuras de alto perfil, tales como el veterano periodista de investigación John Pilger y el director de cine de izquierdas, Ken Loach. John Pilger ha calificado el tratamiento de su compatriota de "indignante", que sin duda lo es. "Este caso se trata, en primer lugar, del derecho de la persona a la justicia, cuando son inocentes hasta que se demuestre su culpabilidad", Pilger dijo a ABC Sydney.
Se trata de mucho más que eso. La defensa de los derechos democráticos es una parte importante de la lucha para resistir los intentos de la clase dominante para eliminar todas las conquistas logradas por la clase obrera en el pasado y volver atrás cien años. Esto incluye un ataque general contra los salarios y las condiciones de vida, los recortes del gasto en sanidad, educación, vivienda y otros servicios públicos. Pero también incluye un intento sistemático para cercenar los derechos democráticos de la clase obrera, a fin de limitar su capacidad para resistir los ataques a los niveles de vida.
En la "democrática" Gran Bretaña, el derecho de huelga ha sido restringido tanto por la legislación antisindical que en muchos casos ha sido prácticamente anulado. Estas leyes anti-democráticas fueron aprobadas por el gobierno derechista de Margaret Thatcher en la década de 1980, y el gobierno laborista de Blair no las derogó. Los derechos legales de los ciudadanos británicos se han visto seriamente erosionados por las llamadas leyes "anti-terroristas", que dan a la policía amplios poderes para detener y cachear a la gente, y arrestarla y mantenerla en la cárcel durante 28 días sin que hayan sido condenados por un tribunal de justicia.
Más recientemente, ha habido un intento de restringir el derecho a protestar en las calles. En las recientes manifestaciones estudiantiles, la policía hizo uso de la táctica llamada "kettling" [embotellamiento], por la que los manifestantes quedan atrapados por un cordón policial durante horas a temperaturas bajo cero, y se les niega el acceso a alimentos, agua o al retrete. Esto es peor que el tratamiento que se daría a un delincuente en una celda de prisión. También es un caso claro de lo que los abogados llaman "detención ilegal", que se supone que está prohibido bajo la ley británica.
Mientras que la persecución judicial de Julián Assange continúa, en los EE.UU. aumenta la presión sobre las empresas y organizaciones con lazos con WikiLeaks. Joe Lieberman, presidente del comité del Senado de seguridad nacional, instó a las empresas a cortar sus lazos con la página web, y Visa suspendió el pago de las donaciones a la misma a través de su tarjeta de crédito.
La libertad en los EE.UU. (por llamarla de alguna manera) ahora se ve amenazada. Cuando se le preguntó sobre el papel del New York Times en la publicación de los correos filtrados, Lieberman dijo a Fox News que el periódico "ha cometido al menos un acto de mala ciudadanía. Si han cometido un delito, creo que el asunto exige una investigación muy intensa".
Michael Mukasey, un ex fiscal general de EE.UU., dijo que los abogados estadounidenses deberían tratar de extraditar a Assange a los EE.UU. por traicionar secretos del gobierno. "Si yo estuviera todavía a cargo, ya hubiera habido una investigación", dijo al programa Newsnight de la BBC. "Se trata de un delito de orden muy elevado. Julián Assange ha estado filtrando esta información. Él la obtuvo a sabiendas de que era perjudicial".
Mukasey, quien se retiró del cargo de fiscal general el año pasado, soltó la liebre cuando dio a entender que las acusaciones sexuales suecas podrían tratarse tan sólo de una acusación provisional para ganar tiempo. "Cuando uno está acusado de un delito muy grave", dijo, "es común que se le detenga por un delito menor… mientras que se montan las pruebas de un segundo delito".
Las limitaciones del liberalismo
¿Cuál es el propósito de todo esto? ¿Era, como reclama la derecha histérica en los medios de comunicación, un intento de subvertir y derrocar la democracia occidental y la civilización como la conocemos? ¿Es Assange un revolucionario peligroso, como se le retrata habitualmente? No, no lo es. Assange no es un revolucionario o un marxista, pero sin duda tiene agallas. Los mecanismos por los que Washington dirige los asuntos de Estados extranjeros supuestamente soberanos han sido expuestos al escrutinio público. Este, y sólo este, es el delito por el que Julián Assange está siendo perseguido.
El sitio web de denuncia de irregularidades declaró desafiante que no iba a estar amordazada por el encarcelamiento de su fundador. El propio Assange era igual de desafiante. Kristinn Hrafnsson, un portavoz de WikiLeaks, confirmó que continuará publicando los correos diplomáticos estadounidenses. En un comunicado dijo: "Esto no va a silenciar a WikiLeaks. La publicación de los correos diplomáticos estadounidenses –la mayor filtración en la historia– continuará. No vamos a estar amordazados, ya sea mediante una acción judicial o la censura corporativa".
Personal de WikiLeaks se ha trasladado a una oficina en Londres, después de haber pasado semanas viajando entre la capital y la casa de campo desde donde Assange ha estado coordinando la publicación de los correos filtrados. El personal se vio obligado a adoptar medidas elaboradas para garantizar que no se les siguiera la pista a la casa de Assange, siendo tajantemente prohibido el uso de teléfonos móviles para evitar la detección.
Estas acciones ganarán los aplausos de todos los progresistas, y en primer lugar de los marxistas. La lucha por los derechos democráticos es una parte integral de la lucha contra el capitalismo y el imperialismo. Ken Loach, director de Kesy Buscando a Eric entre muchas otras películas, dijo: "Creo que el trabajo que él [Assange] ha hecho ha sido un servicio público. Creo que tenemos derecho a conocer las actuaciones de nuestros gobernantes". Ese es el meollo del asunto.
[Critica seudo marxista de Alan Woods. subtitle added by Haz]
Julián Assange no quería derrocar a la democracia burguesa, porque cree en ella. Lo que quiere es que sea "más responsable", más abierta, más…democrática. Pero éste es su error. Él es un liberal, y cree en la democracia. Pero la democracia bajo el capitalismo siempre tiene un carácter unilateral, incompleto y distorsionado. En esencia, es democracia sólo en la forma, y detrás de los mecanismos puramente formales de la democracia se encuentra la cruda realidad de la dictadura de los bancos y grandes monopolios. En ninguna parte esa dictadura ha alcanzado proporciones tan monstruosas, y en ninguna parte ejerce un poder tan colosal, como en los EE.UU.
Es tan inútil aplicar las normas de la moralidad a la cloaca de la diplomacia imperialista, apelando a la honestidad, la justicia y el "derecho internacional" para decidir los conflictos entre las naciones, como lo sería pedir peras al olmo. Cualquier lucha consecuente para defender los derechos democráticos, necesariamente debe terminar en una lucha para derrocar la dictadura de los bancos y los grandes monopolios que ejercen más poder que cualquier gobierno electo en el mundo.
Son los intereses de estas empresas gigantes los que determinan la política exterior e interior de los EE.UU. y todos los demás gobiernos. Es el deber de todos los trabajadores con conciencia de clase estudiar los documentos filtrados a fin de obtener una comprensión del mundo de la diplomacia burguesa y los verdaderos intereses que están detrás de la política exterior de su propio gobierno. Y es el deber elemental de todos los socialistas defender a Julián Assange contra la monstruosa persecución a la que está siendo sometido por el "delito" de decir la verdad.
• ¡Libertad para Julián Assange!
• ¡Por la libertad de expresión!
• ¡Por la publicación de todos los documentos que revelan las actividades delictivas llevadas a cabo por los gobiernos y sus servicios secretos!
• ¡Abajo la diplomacia secreta!
• ¡El pueblo quiere la verdad, no mentiras!
Fuente: http://www.corrientemarxista.org/internacional/internacional/371-el-caso-assange--lo-que-significa-para-los-socialistas.html
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COMENTARIO FINAL
1. Desde el marxismo realmente existente -sea el estalinista o el trotkista- no existe ninguna base moral para discutir la calidad del trabajo de Assange. Desde la moral burguesa menos aun, el argumento de los suecos es un asmereir. La defensa de la mujer violada no es sino una cortina de humo para ocultar la vendimia de sus gobernantes al imperio de turno. Mientras el dollar siga siendo la moneda de la reserva nacional, quienes administran ese Estado seguiran siendo amigos de los que fabrican dollars a diestra y siniestra (corrupcion de por medio).
La violacion como argumento en el debate actual sobre su caso no tiene ningun valor, el proposito del Gbno de Suecia es entregarlo a los verdugos neo-nazis del imperio al que sirven. Estoy seguro -por el seguimiento legal del caso, por mis lecturas de los articulos que Assange publico y que transcribi en mi otra pagina http://nd-hugoadan.blogspot.com/y por las entrevistas a las que accedio- de que Assange ve el Estado sueco como el violador por exelencia de las mujeres al entrometerse en la vida privada de las parejas y exigir que se pongan condon para sus relaciones intimas. Por esa intromision del Estado en asuntos internos de la vida en pareja -el Estado sueco es el mas grande violador de los derechos de las mujeres al control de sus propio organismo y de sus relaciones intimas. Esto es inaceptable en cualquier codigo etico que no sea el de la santa inquisicion cristiana. Y es ademas prueba de la hipocresia de esa iglesia que asesino recien nacidos de las monjas violadas por la curia en el convento Santa Catalina de Arequipa, Peru.
2. En mis observaciones criticas a un art de Dieterich sobre Assange y wikileaks indicaba que "El fenomeno wikileaks tiene que ver directamente con la debacle o caos actual del modelo neoliberal. Las Fuerzas Productivas (la revolucion informatica) no cabe ni pueden ser controlada dentro de las relaciones sociales de apropiacion en la globalizacion neoliberal actual. La acumulacion desenfranda a costa de la humanidad entera ha llegado a un punto de inflexion que habla del final del actual modelo de acumulacion capitalista. Los wikileaks ayudan a entender la barbarie capitalista. Luego indicaba "Hemos ingresado a la batalla final por el control de las comunicaciones y las mentes, en esto el control del internet es decisivo y los wikileaks indican que dicho control tambien se les podria escapar a los duenios de la globalizacion neoliberal, si los socialistas hacemos el trabajo que corresponde. Por esto nos alegra que los wikileaks sigan circulando y sera asi aun cuando si se concreta la sentencia de muerte que esta detras de la persecucion contra Assange y el soldado americano Manning. Si los neo-nazis logran el control total de las comunicaciones y las mentes -recuerdese que la libertad de expresion y comunicacion son la esencia de cualquier democracia- ese seria el principio del fin para el imperio,la chispa que incendiaria la pradera y el final del modelo de acumulacion neoliberal basado en la especulacion y el genocidio guerrerista. A los duenios de la globalizacion actual solo le queda un camino: la nazificacion del pais y el de sus aliados (lo que supone mas guerras como la de Iran que se avecina y el colapso total del imperio pues es seguro que China y Rusia van a responder, China porque depende del petroleo de Iran y Rusia por razones geo-politicas)o una retirada honrosa como ocurrio con el imperio Britanico (lo que supone aislamineto mundial del imperio USAno -lo que ya esta en camino- y desmontaje de su poder militar, luego de la ruina final del dolar como meneda de reserva e intercambio mundial, lo que tambien ya esta en proceso). En otras palabras es la derrota final del imperio USA lo que viene en el corto o mediano plazo" Dic 7 del 2010. ver http://nd-hugoadan.blogspot.com/2010/12/wikiledaks-historia-de-crimenes-y.html . Es en esta perspectiva se ubica el afan imperial de controlar las comunicaciones, el internet y de las mentes. Vano intento. La experiencia Assange indica que eso no va a ser posible. Aun si lo asesinan, es seguro que vendran nuevas y mejores experimentos de comunicacion libre. Por lo pronto, Assange nos ha dado un ejemplo de valentia y etica revolucionaria que esta mas alla del uso de los viejos atavios marxistas y liberales. La denuncia concreta de un sistema de poder absoleto y usando las mismas armas del enemigo de clase es lo que esta haciendo Assange y por decencia no cabe a el ninguna critica -ni marxista ni liberal burguesa- sino solo el poner el hombro y continuar su lucha.
Hugo Adan, dic 27.
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lunes, 27 de diciembre de 2010
THE COLLAPSE OF THE US ECON IS CLOSE SAID MATTHIAS CHANG
FED + Global Too Big To Fail Banks + QE I & II = Global Ponzi Scheme + Inflation + Toilet Paper Money. QED -
By Matthias Chang
Sunday, 12 December 2010
http://futurefastforward.com/malaysia-updates/4663-by-matthias-chang
The US Government under Bush and now Obama has morphed into a fraudulent enterprise. QE I has now been exposed as the biggest fraudulent transfer of wealth by the Federal Reserve to the global banking elites. Will the global banksters get away with it or will the American people wise up and make them pay for their crimes?
On 5th December 2010, appearing on CBS’s 60 Minutes, Bernanke spun a financial yarn that betrays the depth of his intellectual bankruptcy and dishonesty.
This is what he said,
“One myth that’s out there – is that what we are doing is printing money. We are not printing money. The amount of currency in circulation is not changing. The money supply is not changing in any significant way”.
This statement has created some confusion among economists and financial pundits. But, I am not surprised. There are also the paid scribes who echo whatever is churned out by their financial paymasters. A well known author (Ms X) [1] shares Bernanke’s view that Quantitative Easing (QE) is not inflationary and is not “money printing”.
We need not refute each and every ground which Ms X and Bernanke rely in support of their misplaced confidence that “printing money” (digital book entries or otherwise) by the Fed will solve all the problems faced by the U. S. of A.
The central issue in this debate is whether a country can, by issuing more debts to repay previous debts, get out of the debt spiral. It is not whether a government should issue its own currency. [2]
With regard to the US, foreign creditors are the principal buyers of US treasury bonds and have become the largest creditors. The US has a massive deficit and will continue to have massive deficits at the minimum till 2020 [3]. A debt incurred must be repaid.
Following QE I and QE II, foreign creditors have been very cautious and have slowed down their purchase of US treasury bonds. The Fed has stepped in and taken up the slack. The Fed will soon eclipse China as the largest holder of US treasuries!
Hence the debate – what will be the consequences of this Fed Policy? The author, Ms X in a recent article asserts,
“The US does not have to rely on foreign investors even to buy its bonds. If the investors are not interested, the central bank can buy the bonds. This is, in fact what the Fed’s second round of quantitative easing is all about: issuing $600 billion for the purchase of long term government bonds”.
She went on to assert that,
“If the Fed were to follow the lead of Japan and hold federal debt equal to the country’s gross domestic product, the Fed would be holding $14.75 trillion in federal securities, enough to refinance the entire US Federal debt of $13.8 trillion virtually interest free.”
In essence, what Ms X is saying is that the Fed can literally “print” $14 trillion to pay off all US existing debts and be its sole creditor with no negative consequences to the economy or to the US dollar. The rationale behind this contention is,
“The US does not owe debts in a foreign currency over which it has no control. It can issue bonds payable in its own currency”. [4]
If only it was so simple. How do we expose this fallacy? Simple!
If the Fed can wipe out the debt by the mere printing of money, why bother with incremental “printing” of digital toilet papers – QE I and QE II?
Bernanke has already indicated that more QE will be forthcoming if QE II does not have the desired effect -
“It’s certainly possible. It depends on the efficacy of the program. It depends on inflation. And finally it depends on how the economy looks.”
Why has the Fed not declare once and for all, here and now, to the entire world that it is going to purchase $14 trillion worth of treasury bonds and hold them at its absolute discretion (dispensing with the need for fixed maturities i.e. 10 years, 30 years etc.) so that the US government can repay all its debts immediately and thereby saving hundreds of $billions in annual interest payments?
Why the façade of “printing money” incrementally by way of QE I, QE II and maybe QE III, QE IV etc.?
This approach contradicts one of the pillars of Ms X’s argument that since debt to the FED will not carry interest, the US government should borrow from the Fed instead and not from the foreign or other domestic creditors. If the justification is to avoid interest payments to creditors (especially foreign creditors), it follows that the sooner these growing debts are paid, there would be less interests to be paid by American taxpayers.
By way of an illustration: Assuming Ms X borrowed $10 million with interest at 5% per annum some years ago as a result of her greed and foolishly “invested” the whole lot in toxic waste products peddled by Goldman Sachs, Merrill Lynch, JP Morgan etc. As a result of the financial crisis, her so-called “investments” imploded and she is now holding a bunch of toilet papers (junk bonds or whatever) and has no means to repay the growing debt. A Good Samaritan comes along and smitten by her charm, offers to bail her out of the entire debt – the principal $10 million and all the accumulated interests immediately and that she can take her time to repay this very, very friendly loan with no interest charges and allegedly with no strings attached.
What would be your reaction as a bystander, if she responded to the Good Samaritan’s offer by asking the Good Samaritan to pay off her existing debts by a number of fixed installments over a period of years? Your reaction would most likely be,
Is she stupid or what?
What is her angle? Why would she want to pay more interests to the bank, when she could be debt free immediately and her recourse is to repay Sugar Daddy when she is able and willing and with no interest charges?
If Ms X truly believes in her warped thesis, she should be advocating that the Fed (having all the power and ability, with the connivance of the US Treasury) create the $14 trillion out of thin air and pay off the entire national debt, so that the US economy can jump start immediately and prosperity restored.
Ms X readily admits that,
Today that currency is issued by the Federal Reserve, which is privately owned by a consortium of banks…
But, prior to QE I and QE II, the Fed did not have in its books and or in its vaults $14 trillion! Prior to the financial crisis in 2007, the value of assets in its balance sheet was approximately $800 billion.
But, Ms X and Bernanke insist that there is no increase in the “money supply” and that no money was “created out of thin air”.
Last week, the Fed released documents on emergency measures it took between 2007 and 2010 to bail out major banks in the US and around the world, as a result of the Dodd-Frank Wall Street Reform Act.
Arising from more than 21,000 individual transactions, the Fed secretly doled out a staggering $12.3 trillion - $3.3 trillion in liquidity and $9 trillion in “other financial arrangements” (whatever that means). [5]
If QE I did not work, notwithstanding the massive flood of “digital money” in the trillions, why is there a need for QE II and as admitted by Bernanke, maybe more QE in the future? And why the secrecy?
Why bail out the Too Big To Fail Banks first and not the national debt?
If, as asserted by Ms X that the Fed can resolve legally by the wave of Bernanke’s financial magic wand to conjure $trillions, why did the Fed refuse to have its accounts audited until forced to do so?
This very fact demolishes Ms X’s simplistic argument that the Fed can just create $14 trillion out of thin air and refinance the entire US national debt by becoming its sole creditor!
To bury Ms X’s intellectual dishonesty for good, we need to ask a simple question. Can the Fed create money out of thin air in excess of the GDP?
The GDP of the US in 2009 is estimated to be $14.2 trillion. [6] For the Joe Six-Packs, this means that the total value of goods and services produced by the entire country is $14.2 trillion. It is through taxes and other levies that the federal government pays for its expenses and debts. If a family has no income, it will not be able to pay for its expenses and will have to borrow to survive.
The US government has been in deficit for years and has been borrowing to survive.
Even if the US government wants to “print” $14 trillion to pay off its debts immediately, it cannot be done because no country will accept dollars in payment for their exports, as it would be obvious to one and all that the dollars so created has no correlation with the economy (GDP).
We have to understand that even in a $14 trillion economy, the amount of currency in circulation (notes and coins in your wallet) is only about $800 billion. However, most payments for goods and services are effected through the banking system, principally by cheques (checks) and other means. [7]
This is why QE I was clouded in so much secrecy. And the global fraudsters almost got away with this scam because, other global banks and central banks which have high exposure to dollar liabilities conspired with the Fed and were themselves the beneficiaries of this scam. [8]
The issue is not whether a government can issue its own currency. Of course it can. All governments do that. Even under the Classical Gold Standard. In the gold standard system, the currency (the notes in your wallet) was backed by gold and was issued by the government. The currency’s value is backed by gold.
This is why a fiat currency has no intrinsic value - zero.
The US dollar became a fiat currency in 1971 when Nixon disallowed the redemption dollars for gold. For the first time in American history, the dollar was totally fiat!
Thus far, the US got away with the fiat money scam because it was able (by virtue of its military might) to impose its will and demanded that global trade be denominated in dollars. From that day onwards, whenever the US needed money, it just “printed” them (digitally or otherwise). But, it has now reached a stage where the dollar is considered “toilet paper money”. Even as late as the 1990s, no economist and or financial pundits would dare refer to the dollar as toilet paper. But today, it is accepted as fact. The dollar’s survival is now dependent on China and to a lesser degree on the Euro.
We will now address another fallacy promoted by Bernanke and Ms X – that QE I and QE II are not inflationary. Ms X arrogantly mocks and taunts her critics when she wrote,
“Back in October, the economic buzzword had become “money printing” and “debt monetisation” … The Fed was initiating their policy of QE II and you’d have been hard pressed to find someone in this country (and around the world for that matter) who wasn’t entirely convinced that the USA was about to send the dollar into some sort of death spiral. QE II was about to set off a round of inflation that would make Zimbabwe look like a cakewalk. And then something odd happened – the dollar rallied as QE II set sail and hasn’t looked back since”.
The last two sentences betray Ms X’s intellectual dishonesty. The reference to Zimbabwe is a red herring and totally irrelevant and she knows it. It is also clear that Ms X is deliberately confusing price inflation with monetary inflation, the former being the consequence of the latter. Monetary inflation is the increase in supply of “money”. Ms X’s contention can be easily refuted.
Let’s get down to basics.
1. Markets (stocks, currencies and commodities) are rigged, manipulated in favour of those who control the money supply. It is meaningless for Ms X to assert that “the dollar rallied as QE II set sail and hasn’t looked back”. On a previous occasion when ship owners displayed similar arrogance that their ship (the Titanic) was indestructible, it sank after colliding with an iceberg on its maiden voyage!
2. Ms X was dishonest and even devious when she failed to contextualize the alleged dollar’s rally – whether it was against other toilet paper fiat currency, commodities and or precious metals – gold and silver. In so far as commodities and precious metals, it is utter nonsense to talk about a dollar rally. Prices for commodities, such as copper, cotton, rubber, gold and silver have shot up beyond all expectations. And contrary to Bernanke’s assertion that QE will lower long term bond yields, Treasury’s 30-year bond has jumped 1% to 4.5% and 10-year notes has steepened to 3.25, an increase of 75 basis points. The dollar’s purchasing power has depreciated. This is the result of monetary inflation.
3. And any temporary strengthening of the dollar was the result of the massive propaganda and over exaggeration that the so-called debt crisis of Portugal, Ireland, Italy, Greece and Spain (PIIGS) would destroy the Euro, thereby causing a short term flight from Euro by some idiotic fund managers to the so-called “safety” of dollar and dollar assets. This is also caused by the market manipulation by the Fed. But overall, and notwithstanding this short term rally (if it can be called as such) the dollar’s purchasing power has been declining since 1971!
4. The Fed’s Combined Financial Statement for 2009 shows that it has $11,037 million of Gold Certificates. Payment for the gold certificates by the 12 Reserve Banks is made by crediting equivalent amounts in dollars into the account established for the Treasury. The gold certificates held by the Reserve Banks are required to be backed by the gold of the Treasury. The Treasury may re-acquire the gold certificates at any time and the Reserve Banks must deliver them to the Treasury. At such time, the Treasury's account is charged, and the Reserve Banks' gold certificate accounts are reduced. The value of gold for purposes of backing the gold certificates is set by law at $42 2/9 per fine troy ounce. The Board of Governors allocates the gold certificates among the Reserve Banks once a year based on the average Federal Reserve notes outstanding in each Reserve Bank. [9]
As at 9th December 2010 the price for Gold Bullion is $1,385 per oz and $1,427 per oz for Gold Maple Leaf. [10]
Therefore, Ms X, please tell us where is the dollar rally? The dollar purchasing power has plummeted! Stop playing Alice in Wonderland!
5. A fundamental principle regarding fiat money (toilet paper money) which Ms X fails and or refuses to acknowledge is that it is inherently inflationary. It is in simple terms, unsound money. And as observed by Voltaire,
Paper money eventually returns to its intrinsic value – zero!
Under QE I, the Fed doled out a staggering $12.3 trillion - $3.3 trillion in liquidity and $9 trillion in “other financial arrangements” (whatever that means). Out of the $3.3 trillion, a third went to bail out the British Banks ($1.5 trillion). Barclays got a whopping $863 billion, Royal Bank of Scotland received $446 billion, Bank of Scotland $181 billion, Abbey National $19 billion and HSBC, $10 billion. This is monetary inflation!
6. Fiat money is also the most convenient way to finance wars. The bulk of the US Federal debts are to finance the wars in Iraq and Afghanistan and to maintain the humongous Zionist Anglo-American Military-Industrial Complex. Hence, one of the hidden agenda of QE is to finance the US Empire’s military adventures. Nobel Laureate, Joseph Stiglitz has estimated that the Iraq war alone would costs $2-3 trillion and mounting. It would be naïve to expect Bernanke to confess to this state of affairs. The war in Afghanistan has dragged on for 9 years with no end in sight.
7. Ron Paul has warned that as of November 2010, total US public debt has reached an astonishing $13.7 trillion. This means that although Congress just raised the debt ceiling to $14.3 trillion in February 2010, the new Congress will face another debt ceiling vote in the next few months! Ron Paul observed,
“Surely, we are facing an emergency debt spiral, as evidenced by the Federal Reserve’s recent commitment to buy another round of treasury debt. It is now quite obvious that the US government plans to inflate its way out of debt, and the world is fleeing our dollar in response. Just seven years ago Congress raised the debt ceiling to $6.4 trillion which means the federal government had doubled its indebtedness in less than a decade. Annual deficits for 2011 and beyond are projected to be at least $1 trillion. So it is no exaggeration to state that federal debt is growing exponentially.”
Before proceeding to refute Ms X’s other incredulous assertions, it would serve us well to go down memory lane, as it was not the case that the global economy has always been flushed with fiat money.
But, we need not travel too far. There was, not too long ago, a period known as the “Golden Age” [11] whereby the Classical Gold Standard prevailed. The currency of each country was defined in relation to a certain weight of gold. The dollar was defined as 1/20 of a gold ounce. Therefore, the exchange rates of various currencies were fixed in relation to gold. It has been said that while the Classical Gold Standard was not perfect, it provided the best monetary order which kept business cycles getting out of hand. [12]
The Classical Gold Standard was destroyed by the warmongers.
To finance World War I, the printing press worked overtime to produce toilet paper money. There was just not enough gold to back these papers, so the governments who were embroiled in the war, went off the Gold Standard.
There were several attempts to remedy the problem, but they all failed miserably [13]. Post-World War II, bogged down by the Korean War and thereafter the Vietnam War, the US indulged in massive monetary inflation. Europe and Japan became restless as they were piling up dollars which were overvalued. I shall quote from Murray Rothbard regarding the crisis that evolved at the material time [14]:
“As the purchasing power and hence the value of the dollar fell, they became increasingly unwanted by foreign governments. But they were locked into a system that was more and more of a nightmare. The American reaction to the European complaints, headed by France and DeGaulle’s major monetary adviser, the classical gold-standard economist Jacque Rueff, was merely scorn and brusque dismissal. American politicians and economist simply declared that Europe was forced to use the dollar as its currency, that it could do nothing about its growing problems, and therefore the United States could keep blithely inflating while pursuing a policy of “benign neglect” towards the international monetary consequences of its own action.”
And as they say, the rest is history. The dollar since that time began its downward trajectory to its present status as toilet paper money!
Today we see the same arrogance. When China complained that the US is exporting inflation to emerging countries and distorting currency values, Bernanke retorted [15]:
“Keeping Chinese currency too low is bad for the American economy, because it hurts our trade. It is bad for other emerging market economies. If they fix their currency to the dollar, then they have to have the same monetary policy, essentially, that the United States has. China is growing very quickly. They are risking inflation by importing US monetary policy. That’s a problem for them.”
This is the perverse logic of Bernanke. He wants to have cheap imports from China (which by all measures has helped the US maintain low price inflation across a wide range of consumer products), to have China to continue to lend the US money to finance its wars but it is not willing to resolve her structural problems – an out of control debt-based economy and a moribund banking system.
Gary Dorsch of Global Money Trends has rightly pointed out that Bernanke’s QE Ponzi scheme has backfired.
There is no better indictment of Bernanke’s reckless monetary policies and Ms X’s intellectual dishonesty than to quote from their own mentor, Alan Greenspan:
“What we see is politicians cutting taxes with borrowed money, and spending on new programs, new projects with borrowed money. But the debt is increasing at a rate of over a trillion dollars a year. And because interest rates are low, being in a weak economy, it is very easy for the government to sell as many bonds as it wants. I think there’s complacency rising at this stage. Interest rates are down for a number of technical reasons. But assuredly they’re not going to stay here… We don’t know at this stage why or how the markets respond to this sort of – this type of massive budget deficit. And I think we’re taking a very high risk. This is not a trade off between good and bad. In fact, I sometimes put it between terrible and catastrophic.”
If Bernanke and the Maestro cannot even see eye to eye and they are the best of the best of the global financial elites, we better run for cover and prepare for the worst.
Protect your wealth, turn to Gold and Silver.
End Notes
[1] I will not mention her name, as I have do not want this debate to degenerate into a slugfest between personalities. However, there have been postings in the internet where various authors have identified the said author when refuting her thesis.
[2] This issue will be addressed later. All governments issue their own currency except members of EU (as they have a common currency via the ECB) and the US, where the Fed issues its own “Federal Reserve Notes”. The UK, in spite of being a member of the EU, issues its own currency via Bank of England.
[3] It may not even survive beyond 2015 in its present state, so I am a bit generous here.
[4] But the US is not the only country that can issue bonds payable in its own currency.
[5] David DeCraw, The Wall Street Pentagon Papers.
[6] CIA Factbook.
[7] The US is essentially a debt based economy. The fractional reserve system of banking also allows the banks to create money out of thin air via loans. This has also increased the “money” supply.
[8] Central Bank Liquidity Swaps: Because of the global nature of bank funding markets, the Federal Reserve has at times coordinated with other central banks to provide liquidity. During the financial crisis, the Federal Reserve entered into agreements to establish temporary reciprocal currency arrangements (central bank liquidity swap lines) with a number of foreign central banks. Two types of temporary swap lines were established: dollar liquidity lines and foreign-currency liquidity lines. These temporary arrangements expired on February 1, 2010. In May 2010, temporary dollar liquidity swap lines were re-established with some central banks, in response to the re-emergence of strains in short-term U.S. dollar funding markets. The Federal Reserve operates these swap lines under the authority of section 14 of the Federal Reserve Act and in compliance with authorizations, policies, and procedures established by the Federal Open Market Committee (FOMC).
Dollar Liquidity Swap Lines: In December 2007, the FOMC announced that it had authorized dollar liquidity swap lines with the European Central Bank and the Swiss National Bank to provide liquidity in U.S. dollars to overseas markets, and subsequently authorized dollar liquidity swap lines with additional central banks.
The FOMC authorized the arrangements between the Federal Reserve and each of the following central banks: the Reserve Bank of Australia, the Banco Central do Brasil, the Bank of Canada, Danmarks Nationalbank, the Bank of England, the European Central Bank, the Bank of Japan, the Bank of Korea, the Banco de Mexico, the Reserve Bank of New Zealand, Norges Bank, the Monetary Authority of Singapore, Sveriges Riksbank, and the Swiss National Bank. Those arrangements terminated on February 1, 2010. In May 2010, the FOMC announced that it had authorized dollar liquidity swap lines with the Bank of Canada, the Bank of England, the European Central Bank, the Bank of Japan, and the Swiss National Bank. In general, these swaps involve two transactions. When a foreign central bank draws on its swap line with the Federal Reserve, the foreign central bank sells a specified amount of its currency to the Federal Reserve in exchange for dollars at the prevailing market exchange rate.
The Federal Reserve holds the foreign currency in an account at the foreign central bank. The dollars that the Federal Reserve provides are deposited in an account that the foreign central bank maintains at the Federal Reserve Bank of New York. At the same time, the Federal Reserve and the foreign central bank enter into a binding agreement for a second transaction that obligates the foreign central bank to buy back its currency on a specified future date at the same exchange rate. The second transaction unwinds the first. At the conclusion of the second transaction, the foreign central bank pays interest, at a market-based rate, to the Federal Reserve.
Dollar liquidity swaps have maturities ranging from overnight to three months. When the foreign central bank loans the dollars it obtains by drawing on its swap line to institutions in its jurisdiction, the dollars are transferred from the foreign central bank's account at the Federal Reserve to the account of the bank that the borrowing institution uses to clear its dollar transactions. The foreign central bank remains obligated to return the dollars to the Federal Reserve under the terms of the agreement, and the Federal Reserve is not a counterparty to the loan extended by the foreign central bank. The foreign central bank bears the credit risk associated with the loans it makes to institutions in its jurisdiction.
The foreign currency that the Federal Reserve acquires is an asset on the Federal Reserve's balance sheet. Because the swap is unwound at the same exchange rate that is used in the initial draw, the dollar value of the asset is not affected by changes in the market exchange rate. The dollar funds deposited in the accounts that foreign central banks maintains at the Federal Reserve Bank of New York are a Federal Reserve liability.
Foreign-Currency Liquidity Swap Lines: In April 2009, the FOMC announced foreign-currency liquidity swap lines with the Bank of England, the European Central Bank, the Bank of Japan, and the Swiss National Bank. These lines, which mirrored the dollar liquidity swap lines, were designed to provide the Federal Reserve with the capacity to offer liquidity to U.S. institutions in foreign currency. The foreign-currency swap lines could have supported operations by the Federal Reserve to address financial strains by providing liquidity to U.S. institutions in sterling in amounts of up to £30 billion, in euro in amounts of up to €80 billion, in yen in amounts of up to ¥10 trillion, and in Swiss francs in amounts of up to CHF 40 billion. The FOMC authorized these liquidity swap lines with the Bank of England, the European Central Bank, the Bank of Japan, and the Swiss National Bank through February 1, 2010. The Federal Reserve did not draw on these swap lines.
[9] Source: http://www.federalreserve.gov/monetarypolicy/files/BSTcombinedfinstmt2009.pdf
[10] Source: www.monex.com
[11] From the early 19th century to early 20th century.
[12] Murray Rothbard, What Has Government Done to Our Money?
[13] The Gold Exchange Standard 1926-1931, Fluctuating Fiat Currencies, 1931-1945 and finally Bretton Woods and the New Gold Exchange Standard, 1945-1968.
[14] Murray Rothbard, What Has Government Done To Our Money, p109
[15] Interview with CBS’ 60 Minutes on 5th December 2010
By Matthias Chang
Sunday, 12 December 2010
http://futurefastforward.com/malaysia-updates/4663-by-matthias-chang
The US Government under Bush and now Obama has morphed into a fraudulent enterprise. QE I has now been exposed as the biggest fraudulent transfer of wealth by the Federal Reserve to the global banking elites. Will the global banksters get away with it or will the American people wise up and make them pay for their crimes?
On 5th December 2010, appearing on CBS’s 60 Minutes, Bernanke spun a financial yarn that betrays the depth of his intellectual bankruptcy and dishonesty.
This is what he said,
“One myth that’s out there – is that what we are doing is printing money. We are not printing money. The amount of currency in circulation is not changing. The money supply is not changing in any significant way”.
This statement has created some confusion among economists and financial pundits. But, I am not surprised. There are also the paid scribes who echo whatever is churned out by their financial paymasters. A well known author (Ms X) [1] shares Bernanke’s view that Quantitative Easing (QE) is not inflationary and is not “money printing”.
We need not refute each and every ground which Ms X and Bernanke rely in support of their misplaced confidence that “printing money” (digital book entries or otherwise) by the Fed will solve all the problems faced by the U. S. of A.
The central issue in this debate is whether a country can, by issuing more debts to repay previous debts, get out of the debt spiral. It is not whether a government should issue its own currency. [2]
With regard to the US, foreign creditors are the principal buyers of US treasury bonds and have become the largest creditors. The US has a massive deficit and will continue to have massive deficits at the minimum till 2020 [3]. A debt incurred must be repaid.
Following QE I and QE II, foreign creditors have been very cautious and have slowed down their purchase of US treasury bonds. The Fed has stepped in and taken up the slack. The Fed will soon eclipse China as the largest holder of US treasuries!
Hence the debate – what will be the consequences of this Fed Policy? The author, Ms X in a recent article asserts,
“The US does not have to rely on foreign investors even to buy its bonds. If the investors are not interested, the central bank can buy the bonds. This is, in fact what the Fed’s second round of quantitative easing is all about: issuing $600 billion for the purchase of long term government bonds”.
She went on to assert that,
“If the Fed were to follow the lead of Japan and hold federal debt equal to the country’s gross domestic product, the Fed would be holding $14.75 trillion in federal securities, enough to refinance the entire US Federal debt of $13.8 trillion virtually interest free.”
In essence, what Ms X is saying is that the Fed can literally “print” $14 trillion to pay off all US existing debts and be its sole creditor with no negative consequences to the economy or to the US dollar. The rationale behind this contention is,
“The US does not owe debts in a foreign currency over which it has no control. It can issue bonds payable in its own currency”. [4]
If only it was so simple. How do we expose this fallacy? Simple!
If the Fed can wipe out the debt by the mere printing of money, why bother with incremental “printing” of digital toilet papers – QE I and QE II?
Bernanke has already indicated that more QE will be forthcoming if QE II does not have the desired effect -
“It’s certainly possible. It depends on the efficacy of the program. It depends on inflation. And finally it depends on how the economy looks.”
Why has the Fed not declare once and for all, here and now, to the entire world that it is going to purchase $14 trillion worth of treasury bonds and hold them at its absolute discretion (dispensing with the need for fixed maturities i.e. 10 years, 30 years etc.) so that the US government can repay all its debts immediately and thereby saving hundreds of $billions in annual interest payments?
Why the façade of “printing money” incrementally by way of QE I, QE II and maybe QE III, QE IV etc.?
This approach contradicts one of the pillars of Ms X’s argument that since debt to the FED will not carry interest, the US government should borrow from the Fed instead and not from the foreign or other domestic creditors. If the justification is to avoid interest payments to creditors (especially foreign creditors), it follows that the sooner these growing debts are paid, there would be less interests to be paid by American taxpayers.
By way of an illustration: Assuming Ms X borrowed $10 million with interest at 5% per annum some years ago as a result of her greed and foolishly “invested” the whole lot in toxic waste products peddled by Goldman Sachs, Merrill Lynch, JP Morgan etc. As a result of the financial crisis, her so-called “investments” imploded and she is now holding a bunch of toilet papers (junk bonds or whatever) and has no means to repay the growing debt. A Good Samaritan comes along and smitten by her charm, offers to bail her out of the entire debt – the principal $10 million and all the accumulated interests immediately and that she can take her time to repay this very, very friendly loan with no interest charges and allegedly with no strings attached.
What would be your reaction as a bystander, if she responded to the Good Samaritan’s offer by asking the Good Samaritan to pay off her existing debts by a number of fixed installments over a period of years? Your reaction would most likely be,
Is she stupid or what?
What is her angle? Why would she want to pay more interests to the bank, when she could be debt free immediately and her recourse is to repay Sugar Daddy when she is able and willing and with no interest charges?
If Ms X truly believes in her warped thesis, she should be advocating that the Fed (having all the power and ability, with the connivance of the US Treasury) create the $14 trillion out of thin air and pay off the entire national debt, so that the US economy can jump start immediately and prosperity restored.
Ms X readily admits that,
Today that currency is issued by the Federal Reserve, which is privately owned by a consortium of banks…
But, prior to QE I and QE II, the Fed did not have in its books and or in its vaults $14 trillion! Prior to the financial crisis in 2007, the value of assets in its balance sheet was approximately $800 billion.
But, Ms X and Bernanke insist that there is no increase in the “money supply” and that no money was “created out of thin air”.
Last week, the Fed released documents on emergency measures it took between 2007 and 2010 to bail out major banks in the US and around the world, as a result of the Dodd-Frank Wall Street Reform Act.
Arising from more than 21,000 individual transactions, the Fed secretly doled out a staggering $12.3 trillion - $3.3 trillion in liquidity and $9 trillion in “other financial arrangements” (whatever that means). [5]
If QE I did not work, notwithstanding the massive flood of “digital money” in the trillions, why is there a need for QE II and as admitted by Bernanke, maybe more QE in the future? And why the secrecy?
Why bail out the Too Big To Fail Banks first and not the national debt?
If, as asserted by Ms X that the Fed can resolve legally by the wave of Bernanke’s financial magic wand to conjure $trillions, why did the Fed refuse to have its accounts audited until forced to do so?
This very fact demolishes Ms X’s simplistic argument that the Fed can just create $14 trillion out of thin air and refinance the entire US national debt by becoming its sole creditor!
To bury Ms X’s intellectual dishonesty for good, we need to ask a simple question. Can the Fed create money out of thin air in excess of the GDP?
The GDP of the US in 2009 is estimated to be $14.2 trillion. [6] For the Joe Six-Packs, this means that the total value of goods and services produced by the entire country is $14.2 trillion. It is through taxes and other levies that the federal government pays for its expenses and debts. If a family has no income, it will not be able to pay for its expenses and will have to borrow to survive.
The US government has been in deficit for years and has been borrowing to survive.
Even if the US government wants to “print” $14 trillion to pay off its debts immediately, it cannot be done because no country will accept dollars in payment for their exports, as it would be obvious to one and all that the dollars so created has no correlation with the economy (GDP).
We have to understand that even in a $14 trillion economy, the amount of currency in circulation (notes and coins in your wallet) is only about $800 billion. However, most payments for goods and services are effected through the banking system, principally by cheques (checks) and other means. [7]
This is why QE I was clouded in so much secrecy. And the global fraudsters almost got away with this scam because, other global banks and central banks which have high exposure to dollar liabilities conspired with the Fed and were themselves the beneficiaries of this scam. [8]
The issue is not whether a government can issue its own currency. Of course it can. All governments do that. Even under the Classical Gold Standard. In the gold standard system, the currency (the notes in your wallet) was backed by gold and was issued by the government. The currency’s value is backed by gold.
This is why a fiat currency has no intrinsic value - zero.
The US dollar became a fiat currency in 1971 when Nixon disallowed the redemption dollars for gold. For the first time in American history, the dollar was totally fiat!
Thus far, the US got away with the fiat money scam because it was able (by virtue of its military might) to impose its will and demanded that global trade be denominated in dollars. From that day onwards, whenever the US needed money, it just “printed” them (digitally or otherwise). But, it has now reached a stage where the dollar is considered “toilet paper money”. Even as late as the 1990s, no economist and or financial pundits would dare refer to the dollar as toilet paper. But today, it is accepted as fact. The dollar’s survival is now dependent on China and to a lesser degree on the Euro.
We will now address another fallacy promoted by Bernanke and Ms X – that QE I and QE II are not inflationary. Ms X arrogantly mocks and taunts her critics when she wrote,
“Back in October, the economic buzzword had become “money printing” and “debt monetisation” … The Fed was initiating their policy of QE II and you’d have been hard pressed to find someone in this country (and around the world for that matter) who wasn’t entirely convinced that the USA was about to send the dollar into some sort of death spiral. QE II was about to set off a round of inflation that would make Zimbabwe look like a cakewalk. And then something odd happened – the dollar rallied as QE II set sail and hasn’t looked back since”.
The last two sentences betray Ms X’s intellectual dishonesty. The reference to Zimbabwe is a red herring and totally irrelevant and she knows it. It is also clear that Ms X is deliberately confusing price inflation with monetary inflation, the former being the consequence of the latter. Monetary inflation is the increase in supply of “money”. Ms X’s contention can be easily refuted.
Let’s get down to basics.
1. Markets (stocks, currencies and commodities) are rigged, manipulated in favour of those who control the money supply. It is meaningless for Ms X to assert that “the dollar rallied as QE II set sail and hasn’t looked back”. On a previous occasion when ship owners displayed similar arrogance that their ship (the Titanic) was indestructible, it sank after colliding with an iceberg on its maiden voyage!
2. Ms X was dishonest and even devious when she failed to contextualize the alleged dollar’s rally – whether it was against other toilet paper fiat currency, commodities and or precious metals – gold and silver. In so far as commodities and precious metals, it is utter nonsense to talk about a dollar rally. Prices for commodities, such as copper, cotton, rubber, gold and silver have shot up beyond all expectations. And contrary to Bernanke’s assertion that QE will lower long term bond yields, Treasury’s 30-year bond has jumped 1% to 4.5% and 10-year notes has steepened to 3.25, an increase of 75 basis points. The dollar’s purchasing power has depreciated. This is the result of monetary inflation.
3. And any temporary strengthening of the dollar was the result of the massive propaganda and over exaggeration that the so-called debt crisis of Portugal, Ireland, Italy, Greece and Spain (PIIGS) would destroy the Euro, thereby causing a short term flight from Euro by some idiotic fund managers to the so-called “safety” of dollar and dollar assets. This is also caused by the market manipulation by the Fed. But overall, and notwithstanding this short term rally (if it can be called as such) the dollar’s purchasing power has been declining since 1971!
4. The Fed’s Combined Financial Statement for 2009 shows that it has $11,037 million of Gold Certificates. Payment for the gold certificates by the 12 Reserve Banks is made by crediting equivalent amounts in dollars into the account established for the Treasury. The gold certificates held by the Reserve Banks are required to be backed by the gold of the Treasury. The Treasury may re-acquire the gold certificates at any time and the Reserve Banks must deliver them to the Treasury. At such time, the Treasury's account is charged, and the Reserve Banks' gold certificate accounts are reduced. The value of gold for purposes of backing the gold certificates is set by law at $42 2/9 per fine troy ounce. The Board of Governors allocates the gold certificates among the Reserve Banks once a year based on the average Federal Reserve notes outstanding in each Reserve Bank. [9]
As at 9th December 2010 the price for Gold Bullion is $1,385 per oz and $1,427 per oz for Gold Maple Leaf. [10]
Therefore, Ms X, please tell us where is the dollar rally? The dollar purchasing power has plummeted! Stop playing Alice in Wonderland!
5. A fundamental principle regarding fiat money (toilet paper money) which Ms X fails and or refuses to acknowledge is that it is inherently inflationary. It is in simple terms, unsound money. And as observed by Voltaire,
Paper money eventually returns to its intrinsic value – zero!
Under QE I, the Fed doled out a staggering $12.3 trillion - $3.3 trillion in liquidity and $9 trillion in “other financial arrangements” (whatever that means). Out of the $3.3 trillion, a third went to bail out the British Banks ($1.5 trillion). Barclays got a whopping $863 billion, Royal Bank of Scotland received $446 billion, Bank of Scotland $181 billion, Abbey National $19 billion and HSBC, $10 billion. This is monetary inflation!
6. Fiat money is also the most convenient way to finance wars. The bulk of the US Federal debts are to finance the wars in Iraq and Afghanistan and to maintain the humongous Zionist Anglo-American Military-Industrial Complex. Hence, one of the hidden agenda of QE is to finance the US Empire’s military adventures. Nobel Laureate, Joseph Stiglitz has estimated that the Iraq war alone would costs $2-3 trillion and mounting. It would be naïve to expect Bernanke to confess to this state of affairs. The war in Afghanistan has dragged on for 9 years with no end in sight.
7. Ron Paul has warned that as of November 2010, total US public debt has reached an astonishing $13.7 trillion. This means that although Congress just raised the debt ceiling to $14.3 trillion in February 2010, the new Congress will face another debt ceiling vote in the next few months! Ron Paul observed,
“Surely, we are facing an emergency debt spiral, as evidenced by the Federal Reserve’s recent commitment to buy another round of treasury debt. It is now quite obvious that the US government plans to inflate its way out of debt, and the world is fleeing our dollar in response. Just seven years ago Congress raised the debt ceiling to $6.4 trillion which means the federal government had doubled its indebtedness in less than a decade. Annual deficits for 2011 and beyond are projected to be at least $1 trillion. So it is no exaggeration to state that federal debt is growing exponentially.”
Before proceeding to refute Ms X’s other incredulous assertions, it would serve us well to go down memory lane, as it was not the case that the global economy has always been flushed with fiat money.
But, we need not travel too far. There was, not too long ago, a period known as the “Golden Age” [11] whereby the Classical Gold Standard prevailed. The currency of each country was defined in relation to a certain weight of gold. The dollar was defined as 1/20 of a gold ounce. Therefore, the exchange rates of various currencies were fixed in relation to gold. It has been said that while the Classical Gold Standard was not perfect, it provided the best monetary order which kept business cycles getting out of hand. [12]
The Classical Gold Standard was destroyed by the warmongers.
To finance World War I, the printing press worked overtime to produce toilet paper money. There was just not enough gold to back these papers, so the governments who were embroiled in the war, went off the Gold Standard.
There were several attempts to remedy the problem, but they all failed miserably [13]. Post-World War II, bogged down by the Korean War and thereafter the Vietnam War, the US indulged in massive monetary inflation. Europe and Japan became restless as they were piling up dollars which were overvalued. I shall quote from Murray Rothbard regarding the crisis that evolved at the material time [14]:
“As the purchasing power and hence the value of the dollar fell, they became increasingly unwanted by foreign governments. But they were locked into a system that was more and more of a nightmare. The American reaction to the European complaints, headed by France and DeGaulle’s major monetary adviser, the classical gold-standard economist Jacque Rueff, was merely scorn and brusque dismissal. American politicians and economist simply declared that Europe was forced to use the dollar as its currency, that it could do nothing about its growing problems, and therefore the United States could keep blithely inflating while pursuing a policy of “benign neglect” towards the international monetary consequences of its own action.”
And as they say, the rest is history. The dollar since that time began its downward trajectory to its present status as toilet paper money!
Today we see the same arrogance. When China complained that the US is exporting inflation to emerging countries and distorting currency values, Bernanke retorted [15]:
“Keeping Chinese currency too low is bad for the American economy, because it hurts our trade. It is bad for other emerging market economies. If they fix their currency to the dollar, then they have to have the same monetary policy, essentially, that the United States has. China is growing very quickly. They are risking inflation by importing US monetary policy. That’s a problem for them.”
This is the perverse logic of Bernanke. He wants to have cheap imports from China (which by all measures has helped the US maintain low price inflation across a wide range of consumer products), to have China to continue to lend the US money to finance its wars but it is not willing to resolve her structural problems – an out of control debt-based economy and a moribund banking system.
Gary Dorsch of Global Money Trends has rightly pointed out that Bernanke’s QE Ponzi scheme has backfired.
There is no better indictment of Bernanke’s reckless monetary policies and Ms X’s intellectual dishonesty than to quote from their own mentor, Alan Greenspan:
“What we see is politicians cutting taxes with borrowed money, and spending on new programs, new projects with borrowed money. But the debt is increasing at a rate of over a trillion dollars a year. And because interest rates are low, being in a weak economy, it is very easy for the government to sell as many bonds as it wants. I think there’s complacency rising at this stage. Interest rates are down for a number of technical reasons. But assuredly they’re not going to stay here… We don’t know at this stage why or how the markets respond to this sort of – this type of massive budget deficit. And I think we’re taking a very high risk. This is not a trade off between good and bad. In fact, I sometimes put it between terrible and catastrophic.”
If Bernanke and the Maestro cannot even see eye to eye and they are the best of the best of the global financial elites, we better run for cover and prepare for the worst.
Protect your wealth, turn to Gold and Silver.
End Notes
[1] I will not mention her name, as I have do not want this debate to degenerate into a slugfest between personalities. However, there have been postings in the internet where various authors have identified the said author when refuting her thesis.
[2] This issue will be addressed later. All governments issue their own currency except members of EU (as they have a common currency via the ECB) and the US, where the Fed issues its own “Federal Reserve Notes”. The UK, in spite of being a member of the EU, issues its own currency via Bank of England.
[3] It may not even survive beyond 2015 in its present state, so I am a bit generous here.
[4] But the US is not the only country that can issue bonds payable in its own currency.
[5] David DeCraw, The Wall Street Pentagon Papers.
[6] CIA Factbook.
[7] The US is essentially a debt based economy. The fractional reserve system of banking also allows the banks to create money out of thin air via loans. This has also increased the “money” supply.
[8] Central Bank Liquidity Swaps: Because of the global nature of bank funding markets, the Federal Reserve has at times coordinated with other central banks to provide liquidity. During the financial crisis, the Federal Reserve entered into agreements to establish temporary reciprocal currency arrangements (central bank liquidity swap lines) with a number of foreign central banks. Two types of temporary swap lines were established: dollar liquidity lines and foreign-currency liquidity lines. These temporary arrangements expired on February 1, 2010. In May 2010, temporary dollar liquidity swap lines were re-established with some central banks, in response to the re-emergence of strains in short-term U.S. dollar funding markets. The Federal Reserve operates these swap lines under the authority of section 14 of the Federal Reserve Act and in compliance with authorizations, policies, and procedures established by the Federal Open Market Committee (FOMC).
Dollar Liquidity Swap Lines: In December 2007, the FOMC announced that it had authorized dollar liquidity swap lines with the European Central Bank and the Swiss National Bank to provide liquidity in U.S. dollars to overseas markets, and subsequently authorized dollar liquidity swap lines with additional central banks.
The FOMC authorized the arrangements between the Federal Reserve and each of the following central banks: the Reserve Bank of Australia, the Banco Central do Brasil, the Bank of Canada, Danmarks Nationalbank, the Bank of England, the European Central Bank, the Bank of Japan, the Bank of Korea, the Banco de Mexico, the Reserve Bank of New Zealand, Norges Bank, the Monetary Authority of Singapore, Sveriges Riksbank, and the Swiss National Bank. Those arrangements terminated on February 1, 2010. In May 2010, the FOMC announced that it had authorized dollar liquidity swap lines with the Bank of Canada, the Bank of England, the European Central Bank, the Bank of Japan, and the Swiss National Bank. In general, these swaps involve two transactions. When a foreign central bank draws on its swap line with the Federal Reserve, the foreign central bank sells a specified amount of its currency to the Federal Reserve in exchange for dollars at the prevailing market exchange rate.
The Federal Reserve holds the foreign currency in an account at the foreign central bank. The dollars that the Federal Reserve provides are deposited in an account that the foreign central bank maintains at the Federal Reserve Bank of New York. At the same time, the Federal Reserve and the foreign central bank enter into a binding agreement for a second transaction that obligates the foreign central bank to buy back its currency on a specified future date at the same exchange rate. The second transaction unwinds the first. At the conclusion of the second transaction, the foreign central bank pays interest, at a market-based rate, to the Federal Reserve.
Dollar liquidity swaps have maturities ranging from overnight to three months. When the foreign central bank loans the dollars it obtains by drawing on its swap line to institutions in its jurisdiction, the dollars are transferred from the foreign central bank's account at the Federal Reserve to the account of the bank that the borrowing institution uses to clear its dollar transactions. The foreign central bank remains obligated to return the dollars to the Federal Reserve under the terms of the agreement, and the Federal Reserve is not a counterparty to the loan extended by the foreign central bank. The foreign central bank bears the credit risk associated with the loans it makes to institutions in its jurisdiction.
The foreign currency that the Federal Reserve acquires is an asset on the Federal Reserve's balance sheet. Because the swap is unwound at the same exchange rate that is used in the initial draw, the dollar value of the asset is not affected by changes in the market exchange rate. The dollar funds deposited in the accounts that foreign central banks maintains at the Federal Reserve Bank of New York are a Federal Reserve liability.
Foreign-Currency Liquidity Swap Lines: In April 2009, the FOMC announced foreign-currency liquidity swap lines with the Bank of England, the European Central Bank, the Bank of Japan, and the Swiss National Bank. These lines, which mirrored the dollar liquidity swap lines, were designed to provide the Federal Reserve with the capacity to offer liquidity to U.S. institutions in foreign currency. The foreign-currency swap lines could have supported operations by the Federal Reserve to address financial strains by providing liquidity to U.S. institutions in sterling in amounts of up to £30 billion, in euro in amounts of up to €80 billion, in yen in amounts of up to ¥10 trillion, and in Swiss francs in amounts of up to CHF 40 billion. The FOMC authorized these liquidity swap lines with the Bank of England, the European Central Bank, the Bank of Japan, and the Swiss National Bank through February 1, 2010. The Federal Reserve did not draw on these swap lines.
[9] Source: http://www.federalreserve.gov/monetarypolicy/files/BSTcombinedfinstmt2009.pdf
[10] Source: www.monex.com
[11] From the early 19th century to early 20th century.
[12] Murray Rothbard, What Has Government Done to Our Money?
[13] The Gold Exchange Standard 1926-1931, Fluctuating Fiat Currencies, 1931-1945 and finally Bretton Woods and the New Gold Exchange Standard, 1945-1968.
[14] Murray Rothbard, What Has Government Done To Our Money, p109
[15] Interview with CBS’ 60 Minutes on 5th December 2010
domingo, 26 de diciembre de 2010
MERS, Mortgage n Foreclosures : Stealing Property rights. The biggest fraud in the US
MERS,Mortgage and Foreclosures = Stealing Property rights?. If so, it is the biggest fraud in the US history
Dude, Where's My Mortgage?
How an Obscure Outfit Called MERS Is Subverting Our Entire System of Property Rights
By Yasha Levine - AlterNet http://www.alternet.org/story/149189/
http://futurefastforward.com/images/stories/featurearticles/DudeWheresMyMortgage.pdf
"For the first time in the nation's history, there is no longer an authoritative, public record of who owns land in each county." -- University of Utah law professor Christopher Peterson
There is an unbelievable scandal in the making that threatens to subvert our four-century-old method for guaranteeing a fundamental building block of the American republic—property ownership. The biggest reason why you probably haven’t heard much about it is that it involves one of the most generic and boring company names imaginable: Mortgage Electronic Registration Systems, Inc., or MERS. It is a story of deception engineered at the highest level of power for short-term gain, and another epic failure of the private sector to uphold the laws and traditions of American society, even something as fundamental as property rights.
Created in 1995 by the country's biggest banks, MERS quietly took control of and privatized mortgage record-keeping across the country and, in the span of a few years, scrambled America's private property ownership records to the point where no one could figure out who owns what. This was no accident, and was done by design: MERS was a tool used by America's top financial institutions to pump up the real estate market. Mortgage-backed securities, robo-signers, lightning quick foreclosures, subprime mortgages and just about everything else that went into feeding the biggest real estate bubble in U.S. history could not function without help from MERS. But unlike many of the Wall Street scandals, this one could blow up in the banks’ faces, with the little guy laughing all the way back to his free McMansion, and local governments seeing their empty coffers fill back up with the billions of dollars in unpaid fees that MERS circumvented.
The story begins in mid-'90s with the founding of MERS, Inc. by the nation's most powerful banks, ostensibly with the aim of streamlining and modernizing the process of registering and tracking mortgages. Traditionally, there has been no centralized registry of real estate ownership information, with counties maintaining their own records for properties within their borders—a system that has remained virtually unchanged since colonial times.
The MERS database went live in the middle of the dot-com bubble, and was supposed take inefficient government bureaucracies kicking and screaming into the future by providing a centralized, national registry of mortgage ownership information. "MERS addresses a problem that was costing the industry a significant amount of money," Rick Amatucci, a Fannie Mae vice president and the agency's liaison with MERS, told Mortgage Banking magazine, just as the new registry went online in 1997. The database would give lenders across the country instant access to real-time mortgage information, diminish potential for fraud, and lower costs for servicers and borrowers, according to Mortgage Banking Association, which was tasked with overseeing the project.
But that kind of talk was just for the press release. The banking industry wasn't concerned with efficiency or transparency or the greater good. It was all about making money, as quickly and cheaply as possible. And that is what MERS was for. It was created to help the industry push its latest money-maker: mortgage-backed securities, a Wall Street financial scam that dressed up the most toxic, guaranteed-to-fail loans as Grade A investment vehicles that could be sold to suckers looking for an easy gain.
But before mortgage-backed securities could be unleashed on the residential housing market on a massive scale, bankers needed to get rid of America's long-standing real estate recording laws, which required lenders to file all mortgage transactions—the origination of a new loan, for instance, or the transfer or sale of a mortgage between banks—with the county in which the property is located. While this recording requirement was not a problem in the sleepy pre-securitization days of the home loan business, when mortgage transactions were kept to a minimum, it was going to be much more difficult—if not impossible—with widespread use of securitization, which jacked up the industry like high-grade meth. Mortgages would be changing hands dozens of times, going from loan originators to banks to Wall Street investment houses, which would collect them by the thousands and package them into complex debt instruments that would be chopped up into shares and sold off to multiple investors all over the world.
Bankers needed a quick, clean way of reassigning mortgages without having to go through the "cumbersome" process of recording them with county courts and recorder offices. But instead of working with municipalities to modernize title registration by a creating a national database that was aboveboard and that everyone could use, the banking industry did what it does best: hid the information with sly accounting tricks.
And it succeeded. In just a few short years, MERS took over the bulk of residential mortgage registration. There are about 80 million residential mortgages in America today, and MERS tracks 60 percent of them.
"[M]ortgage bankers formed a plan to create one shell company that would pretend to own all the mortgages in the country—that way, the mortgage bankers would never have to record assignments since the same company would always 'own' all the mortgages," wrote University of Utah law professor Christopher Peterson, who wrote a key paper on MERS and the mortgage industry.
Here is how the plaintiffs in a class action suit filed in Florida in July 2010 against MERS and a legal firm described the MERS registration system:
The whole purpose of MERS is to allow "servicers" to pretend as if they are someone else: the "owners" of the mortgage, or the real parties in interest. In fact they are not. … With the oversight of Defendant Merscorp and its unknown principals, the MERS artifice and enterprise evolved into an "ultra-fictitious" entity, which can also be understood as a "meta-corporation." To perpetuate the scheme, MERS was and is used in such a way that the average consumer, or even legal professional, can never determine who or what was or is ultimately receiving the benefits of any mortgage payments. The conspirators set about to confuse everyone as to who owned what. They created a truly effective smokescreen which has left the public and most of the judiciary operating "in the dark" through the present time.
The use of MERS as a generic placeholder for the real owner of a mortgage was a crucial component of the entire securitization machine."[T]he entire scheme was predicated upon the fraudulent designation of MERS as the 'beneficiary' under millions of deeds of trust," according to a class action suit filed in Nevada in 2009 against MERS and all the big, crooked banks we’ve learned to fear and hate. "Before MERS, it would not have been possible for mortgages with no market value . . . to be sold at a profit or collateralized and sold as mortgage-backed securities. Before MERS, it would not have been possible for the Defendant banks and AIG to conceal from government regulators the extent of risk of financial losses those entities faced from the predatory origination of residential loans and the fraudulent re-sale and securitization of those otherwise non-marketable loans."
How efficient was MERS at perpetuating trickery in the real estate market? Well, according to statistics published by the U.S. Treasury’s Financial Crime Enforcement Network, from 1997—the year MERS went online—to 2005, mortgage fraud reports increased by 1,411 percent.
The MERS hustle had another benefit: it saved the banking industry—and cost municipal governments—tens of billions of dollars by allowing lenders to avoid paying county filing fees, which cost an average of $30 a pop. According to the AP, if every mortgage tracked by MERS had been resold and re-recorded with a county just one time, the system would have saved the banking industry $2.4 billion in filing fees. In reality, most mortgages are sold and resold a dozen times—sometimes more, which means that MERS extracted at minimum around $30 billion from cash-strapped local governments. "Some counties also use recording fees to fund their court systems, legal aid organizations, low-income housing programs, or schools. In this respect, MERS's role in acting as a mortgagee of record in nominee capacity is simply a tax evasion tool," says Professor Peterson.
But there was one major downside to the scam: because MERS departed from established real estate recording requirements, there was no guarantee that its claim to ownership, if challenged, would be honored by the courts.
Transparent real property registration was one of the earliest—and most important—functions of the American government, a practice that has changed amazingly little since the colonial times. According to "Foreclosure, Subprime Mortgage Lending, and the Mortgage Registration System," American colonists began to enact laws requiring land sales, transfers and mortgages to be entered into the public record with a government agency going back almost 400 years. The Massachusetts Plymouth Bay Colony adopted its first such "recording law" in 1636, which stated that "all sales exchanges giftes mortgages leases or other Conveyances of howses and landes the sale to be acknowledged before the Governor or anyone of the Assistants and committed to publick Record."
By the time the Boston Tea Party rolled around, every English colony had passed laws that required lenders and landowners to enter their names and property and mortgage information into the public record. The reasons for the popularity of the laws are simple and utilitarian: transparent public records of property ownership prevented disputes over who owned what and allowed people to use land as collateral on loans. "The necessity and usefulness of these early public title records is attested to by their nearly universal and uninterrupted force in subsequent American law. Indeed, Pennsylvania's first recording act, first adopted in 1717, remains in force to this day," wrote Peterson. Banks that failed to register mortgage transactions risked losing their ability to enforce the contract. And that is exactly what is on the verge of happening with mortgages registered with MERS.
Dozens of lawsuits all across the country have been filed against MERS and its partners to put this very issue to the test. And while most of them are still ongoing, it's clear that MERS is fighting for its life.
The Wall Street Journal:
Now, critics and homeowners facing foreclosure are increasingly challenging, among other things, MERS' role and legal standing in home foreclosures where it acts as legal representative of the mortgage holder. MERS has fought and won legal challenges in the past. But the nationwide epidemic of foreclosures in the wake of the housing collapse will present it with a wave of challenges unlike any it has seen previously.
Trouble for MERS could add risk to banks by slowing down the securitization process, and creating uncertainty during a time when banks are struggling to reassure shareholders and customers. One hedge fund investor said Friday that questions around MERS are adding to his concerns about banks in the mortgage business and are keeping him from investing in the sector.
While MERS officials say they are confident about their business model, it has become clear that their scheme might very well be on the verge of toppling. On November 17, Congress quietly rammed through a sneaky, vaguely worded bill that would have legalized MERS’ dealings retroactively. And while the bill didn't pass, we can expect Wall Street's lackeys in Congress to continue their efforts. After all, if courts continue to rule against MERS's business model—and it looks like they will—many homes may become foreclosure proof. As Reuters put it: “If court rulings against MERS' authority to foreclose proliferate, many foreclosure cases may be halted indefinitely, and some homeowners in default may end up with clear title to their homes.” Owners will still owe money to banks, but their homes would no longer be counted as collateral on the loan. In short, banks would not be able to kick people out of their homes. And clearly, that is something that America's plutocracy just cannot abide.
So who or what is MERS? How was this little-known corporation able to change nearly 400 years of legal practice in the span of a decade, and do so much damage so quickly? And why did no one blow the whistle?
As a result of the lawsuits being filed against MERS, a lot of previously unknown information about the inner workings of MERS is coming to light.
The people who developed the concept of MERS were connected with Fannie Mae and Freddie Mac, as well as the most corrupt lending institutions in America. People like Brian Hershkowitz, former director of the Mortgage Bankers Association and founder of the association’s technology committee that oversaw the early development of MERS in the early '90s, according to a homeowner-turned-activist-blogger, who is involved in a class action lawsuit against MERS (In 1993, Mortgage Banking magazine referred to this new mortgage resignation system as “New Age Delivery.”)
Hershkowitz was an early tech-booster in the banking industry, heralding a new age where efficiency and profitability would reign supreme. In the early 90s he attributed the success of Countrywide Financial to the fact that it embraced emerging computer technology. "They use technology in ways that give them a competitive advantage and set them apart. They were operating with excess capacity, and now they are putting it to use," Hershkowitz, then-associate director of the Mortgage Bankers Association, told the New York Times in 1991. A few years later he went to work for Countrywide as an executive involved in "areas of strategic planning and executive management." From 1982 to 2003, Countrywide performed like a Ponzi scheme, with shareholders gleefully getting a 23,000.0 percent return on their investment, until the bank collapsed under the weight of its own fraud schemes in 2007.
It seems that MERS has operated along similar lines. According to sworn testimony by various MERS executives, the organization has cycled through four different corporate entities in its brief lifespan. MERS also has almost no paid employees and does not seem to keeps any records or minutes of corporate meetings. When pressed to explain the inner workings of the organization, its executives evaded questions, feigned ignorance and generally acted like provincial mafia bosses on trial—exactly the kind of professionalism one would expect for a company responsible for tracking the ownership information of 50 million mortgages. It was just a couple of guys sitting around, chatting, smoking…and making sure not to leave any evidence behind. No wonder county officials who blew the whistle on MERS early on were squashed.
Edward Romaine, a Republican recorder of deeds for New York's Suffolk County, was one of the few officials who tried to refuse to take filings from MERS. "He argued that not only would the county lose out on fees—$1 million in one year alone—but that MERS failed to even maintain a clear chain of title on a property. He got backing from New York's attorney general," reported the Associated Press. MERS sued Suffolk County and took the case all the way up to the state's highest court, where it won on appeal in 2007. The court forced the county to accept MERS filings because the county lacked the statutory authority. Put another way, the court forced a municipal government to do business with a criminal organization, despite objections from county officials.
MERS cost local governments billions of dollars in lost revenue, but there is a chance that the cash-strapped counties will be able to claw some of that money back. Lawsuits have been filed against MERS in California, Nevada, Tennessee and 14 other states that accuse the company of functioning as a tax evasion vehicle designed to help banks circumvent filing fee requirements. “In California, the suit against MERS could cost the company somewhere between $60 to $120 billion in damages and penalties. With so much money extracted from California's municipalities, no wonder the Golden State is facing a $25 billion budget gap,” reported the Association Press.
We're constantly being told that liberalization, deregulation and privatization automatically equal greater freedom and increased efficiency. But MERS provides us with a different narrative, one in which the government works perfectly well, when not corrupted by corporations who want to use it to loot public wealth.
Dude, Where's My Mortgage?
How an Obscure Outfit Called MERS Is Subverting Our Entire System of Property Rights
By Yasha Levine - AlterNet http://www.alternet.org/story/149189/
http://futurefastforward.com/images/stories/featurearticles/DudeWheresMyMortgage.pdf
"For the first time in the nation's history, there is no longer an authoritative, public record of who owns land in each county." -- University of Utah law professor Christopher Peterson
There is an unbelievable scandal in the making that threatens to subvert our four-century-old method for guaranteeing a fundamental building block of the American republic—property ownership. The biggest reason why you probably haven’t heard much about it is that it involves one of the most generic and boring company names imaginable: Mortgage Electronic Registration Systems, Inc., or MERS. It is a story of deception engineered at the highest level of power for short-term gain, and another epic failure of the private sector to uphold the laws and traditions of American society, even something as fundamental as property rights.
Created in 1995 by the country's biggest banks, MERS quietly took control of and privatized mortgage record-keeping across the country and, in the span of a few years, scrambled America's private property ownership records to the point where no one could figure out who owns what. This was no accident, and was done by design: MERS was a tool used by America's top financial institutions to pump up the real estate market. Mortgage-backed securities, robo-signers, lightning quick foreclosures, subprime mortgages and just about everything else that went into feeding the biggest real estate bubble in U.S. history could not function without help from MERS. But unlike many of the Wall Street scandals, this one could blow up in the banks’ faces, with the little guy laughing all the way back to his free McMansion, and local governments seeing their empty coffers fill back up with the billions of dollars in unpaid fees that MERS circumvented.
The story begins in mid-'90s with the founding of MERS, Inc. by the nation's most powerful banks, ostensibly with the aim of streamlining and modernizing the process of registering and tracking mortgages. Traditionally, there has been no centralized registry of real estate ownership information, with counties maintaining their own records for properties within their borders—a system that has remained virtually unchanged since colonial times.
The MERS database went live in the middle of the dot-com bubble, and was supposed take inefficient government bureaucracies kicking and screaming into the future by providing a centralized, national registry of mortgage ownership information. "MERS addresses a problem that was costing the industry a significant amount of money," Rick Amatucci, a Fannie Mae vice president and the agency's liaison with MERS, told Mortgage Banking magazine, just as the new registry went online in 1997. The database would give lenders across the country instant access to real-time mortgage information, diminish potential for fraud, and lower costs for servicers and borrowers, according to Mortgage Banking Association, which was tasked with overseeing the project.
But that kind of talk was just for the press release. The banking industry wasn't concerned with efficiency or transparency or the greater good. It was all about making money, as quickly and cheaply as possible. And that is what MERS was for. It was created to help the industry push its latest money-maker: mortgage-backed securities, a Wall Street financial scam that dressed up the most toxic, guaranteed-to-fail loans as Grade A investment vehicles that could be sold to suckers looking for an easy gain.
But before mortgage-backed securities could be unleashed on the residential housing market on a massive scale, bankers needed to get rid of America's long-standing real estate recording laws, which required lenders to file all mortgage transactions—the origination of a new loan, for instance, or the transfer or sale of a mortgage between banks—with the county in which the property is located. While this recording requirement was not a problem in the sleepy pre-securitization days of the home loan business, when mortgage transactions were kept to a minimum, it was going to be much more difficult—if not impossible—with widespread use of securitization, which jacked up the industry like high-grade meth. Mortgages would be changing hands dozens of times, going from loan originators to banks to Wall Street investment houses, which would collect them by the thousands and package them into complex debt instruments that would be chopped up into shares and sold off to multiple investors all over the world.
Bankers needed a quick, clean way of reassigning mortgages without having to go through the "cumbersome" process of recording them with county courts and recorder offices. But instead of working with municipalities to modernize title registration by a creating a national database that was aboveboard and that everyone could use, the banking industry did what it does best: hid the information with sly accounting tricks.
And it succeeded. In just a few short years, MERS took over the bulk of residential mortgage registration. There are about 80 million residential mortgages in America today, and MERS tracks 60 percent of them.
"[M]ortgage bankers formed a plan to create one shell company that would pretend to own all the mortgages in the country—that way, the mortgage bankers would never have to record assignments since the same company would always 'own' all the mortgages," wrote University of Utah law professor Christopher Peterson, who wrote a key paper on MERS and the mortgage industry.
Here is how the plaintiffs in a class action suit filed in Florida in July 2010 against MERS and a legal firm described the MERS registration system:
The whole purpose of MERS is to allow "servicers" to pretend as if they are someone else: the "owners" of the mortgage, or the real parties in interest. In fact they are not. … With the oversight of Defendant Merscorp and its unknown principals, the MERS artifice and enterprise evolved into an "ultra-fictitious" entity, which can also be understood as a "meta-corporation." To perpetuate the scheme, MERS was and is used in such a way that the average consumer, or even legal professional, can never determine who or what was or is ultimately receiving the benefits of any mortgage payments. The conspirators set about to confuse everyone as to who owned what. They created a truly effective smokescreen which has left the public and most of the judiciary operating "in the dark" through the present time.
The use of MERS as a generic placeholder for the real owner of a mortgage was a crucial component of the entire securitization machine."[T]he entire scheme was predicated upon the fraudulent designation of MERS as the 'beneficiary' under millions of deeds of trust," according to a class action suit filed in Nevada in 2009 against MERS and all the big, crooked banks we’ve learned to fear and hate. "Before MERS, it would not have been possible for mortgages with no market value . . . to be sold at a profit or collateralized and sold as mortgage-backed securities. Before MERS, it would not have been possible for the Defendant banks and AIG to conceal from government regulators the extent of risk of financial losses those entities faced from the predatory origination of residential loans and the fraudulent re-sale and securitization of those otherwise non-marketable loans."
How efficient was MERS at perpetuating trickery in the real estate market? Well, according to statistics published by the U.S. Treasury’s Financial Crime Enforcement Network, from 1997—the year MERS went online—to 2005, mortgage fraud reports increased by 1,411 percent.
The MERS hustle had another benefit: it saved the banking industry—and cost municipal governments—tens of billions of dollars by allowing lenders to avoid paying county filing fees, which cost an average of $30 a pop. According to the AP, if every mortgage tracked by MERS had been resold and re-recorded with a county just one time, the system would have saved the banking industry $2.4 billion in filing fees. In reality, most mortgages are sold and resold a dozen times—sometimes more, which means that MERS extracted at minimum around $30 billion from cash-strapped local governments. "Some counties also use recording fees to fund their court systems, legal aid organizations, low-income housing programs, or schools. In this respect, MERS's role in acting as a mortgagee of record in nominee capacity is simply a tax evasion tool," says Professor Peterson.
But there was one major downside to the scam: because MERS departed from established real estate recording requirements, there was no guarantee that its claim to ownership, if challenged, would be honored by the courts.
Transparent real property registration was one of the earliest—and most important—functions of the American government, a practice that has changed amazingly little since the colonial times. According to "Foreclosure, Subprime Mortgage Lending, and the Mortgage Registration System," American colonists began to enact laws requiring land sales, transfers and mortgages to be entered into the public record with a government agency going back almost 400 years. The Massachusetts Plymouth Bay Colony adopted its first such "recording law" in 1636, which stated that "all sales exchanges giftes mortgages leases or other Conveyances of howses and landes the sale to be acknowledged before the Governor or anyone of the Assistants and committed to publick Record."
By the time the Boston Tea Party rolled around, every English colony had passed laws that required lenders and landowners to enter their names and property and mortgage information into the public record. The reasons for the popularity of the laws are simple and utilitarian: transparent public records of property ownership prevented disputes over who owned what and allowed people to use land as collateral on loans. "The necessity and usefulness of these early public title records is attested to by their nearly universal and uninterrupted force in subsequent American law. Indeed, Pennsylvania's first recording act, first adopted in 1717, remains in force to this day," wrote Peterson. Banks that failed to register mortgage transactions risked losing their ability to enforce the contract. And that is exactly what is on the verge of happening with mortgages registered with MERS.
Dozens of lawsuits all across the country have been filed against MERS and its partners to put this very issue to the test. And while most of them are still ongoing, it's clear that MERS is fighting for its life.
The Wall Street Journal:
Now, critics and homeowners facing foreclosure are increasingly challenging, among other things, MERS' role and legal standing in home foreclosures where it acts as legal representative of the mortgage holder. MERS has fought and won legal challenges in the past. But the nationwide epidemic of foreclosures in the wake of the housing collapse will present it with a wave of challenges unlike any it has seen previously.
Trouble for MERS could add risk to banks by slowing down the securitization process, and creating uncertainty during a time when banks are struggling to reassure shareholders and customers. One hedge fund investor said Friday that questions around MERS are adding to his concerns about banks in the mortgage business and are keeping him from investing in the sector.
While MERS officials say they are confident about their business model, it has become clear that their scheme might very well be on the verge of toppling. On November 17, Congress quietly rammed through a sneaky, vaguely worded bill that would have legalized MERS’ dealings retroactively. And while the bill didn't pass, we can expect Wall Street's lackeys in Congress to continue their efforts. After all, if courts continue to rule against MERS's business model—and it looks like they will—many homes may become foreclosure proof. As Reuters put it: “If court rulings against MERS' authority to foreclose proliferate, many foreclosure cases may be halted indefinitely, and some homeowners in default may end up with clear title to their homes.” Owners will still owe money to banks, but their homes would no longer be counted as collateral on the loan. In short, banks would not be able to kick people out of their homes. And clearly, that is something that America's plutocracy just cannot abide.
So who or what is MERS? How was this little-known corporation able to change nearly 400 years of legal practice in the span of a decade, and do so much damage so quickly? And why did no one blow the whistle?
As a result of the lawsuits being filed against MERS, a lot of previously unknown information about the inner workings of MERS is coming to light.
The people who developed the concept of MERS were connected with Fannie Mae and Freddie Mac, as well as the most corrupt lending institutions in America. People like Brian Hershkowitz, former director of the Mortgage Bankers Association and founder of the association’s technology committee that oversaw the early development of MERS in the early '90s, according to a homeowner-turned-activist-blogger, who is involved in a class action lawsuit against MERS (In 1993, Mortgage Banking magazine referred to this new mortgage resignation system as “New Age Delivery.”)
Hershkowitz was an early tech-booster in the banking industry, heralding a new age where efficiency and profitability would reign supreme. In the early 90s he attributed the success of Countrywide Financial to the fact that it embraced emerging computer technology. "They use technology in ways that give them a competitive advantage and set them apart. They were operating with excess capacity, and now they are putting it to use," Hershkowitz, then-associate director of the Mortgage Bankers Association, told the New York Times in 1991. A few years later he went to work for Countrywide as an executive involved in "areas of strategic planning and executive management." From 1982 to 2003, Countrywide performed like a Ponzi scheme, with shareholders gleefully getting a 23,000.0 percent return on their investment, until the bank collapsed under the weight of its own fraud schemes in 2007.
It seems that MERS has operated along similar lines. According to sworn testimony by various MERS executives, the organization has cycled through four different corporate entities in its brief lifespan. MERS also has almost no paid employees and does not seem to keeps any records or minutes of corporate meetings. When pressed to explain the inner workings of the organization, its executives evaded questions, feigned ignorance and generally acted like provincial mafia bosses on trial—exactly the kind of professionalism one would expect for a company responsible for tracking the ownership information of 50 million mortgages. It was just a couple of guys sitting around, chatting, smoking…and making sure not to leave any evidence behind. No wonder county officials who blew the whistle on MERS early on were squashed.
Edward Romaine, a Republican recorder of deeds for New York's Suffolk County, was one of the few officials who tried to refuse to take filings from MERS. "He argued that not only would the county lose out on fees—$1 million in one year alone—but that MERS failed to even maintain a clear chain of title on a property. He got backing from New York's attorney general," reported the Associated Press. MERS sued Suffolk County and took the case all the way up to the state's highest court, where it won on appeal in 2007. The court forced the county to accept MERS filings because the county lacked the statutory authority. Put another way, the court forced a municipal government to do business with a criminal organization, despite objections from county officials.
MERS cost local governments billions of dollars in lost revenue, but there is a chance that the cash-strapped counties will be able to claw some of that money back. Lawsuits have been filed against MERS in California, Nevada, Tennessee and 14 other states that accuse the company of functioning as a tax evasion vehicle designed to help banks circumvent filing fee requirements. “In California, the suit against MERS could cost the company somewhere between $60 to $120 billion in damages and penalties. With so much money extracted from California's municipalities, no wonder the Golden State is facing a $25 billion budget gap,” reported the Association Press.
We're constantly being told that liberalization, deregulation and privatization automatically equal greater freedom and increased efficiency. But MERS provides us with a different narrative, one in which the government works perfectly well, when not corrupted by corporations who want to use it to loot public wealth.
From Bush to Obama America's Fiscal Collapse
From Bush to Obama America's Fiscal Collapse
BOOK PREVIEW: Excerpt from "The Global Economic Crisis: The Great Depression of the XXI Century."
By Michel Chossudovsky – Global Research
URL of this article: www.globalresearch.ca/index.php?context=va&aid=21969
http://futurefastforward.com/images/stories/featurearticles/FromBushToObama.pdf
The following is an excerpt from a chapter by Michel Chossudovsky in Global Research's new book entitled:
"The Global Economic Crisis: The Great Depression of the XXI Century." Michel Chossudovsky and Andrew Gavin Marshall, editors, Global Research, Montreal, 2010
What has been implemented under Obama is strong economic medicine with a “human face”. “Promise amid peril”. The stated priorities of the Obama economic package are health, education, renewable energy, investment in infrastructure and transportation. “Quality education” is at the forefront. Obama has also promised to “make health care more affordable and accessible” for every American.
At first sight, the budget proposal had all the appearances of an expansionary program, a demand-oriented “Second New Deal” geared towards creating employment, rebuilding shattered social programs and reviving the real economy.
The realities are otherwise. Obama’s promise is based on a mammoth austerity program. The entire fiscal structure is shattered, turned upside down. To reach these stated objectives, a significant hike in public spending on social programs (health, education, housing, social security) would be required, as well as the implementation of a large-scale public investment program. Major shifts in the composition of public expenditure would also be required, i.e. a move out of a war economy, requiring a shift out of military-related spending in favor of civilian programs.
In actuality, what we are dealing with is the most drastic curtailment in public spending in American history, leading to social havoc and the potential impoverishment of millions of people. The Obama promise largely serves the interests of Wall Street, the defense contractors, the oil conglomerates and Big Pharma. In turn, the Bush-Obama bank “bailouts” have led America into a spiraling public debt crisis. The economic and social dislocations are potentially devastating.
War and the Economic Crisis
The worldwide meltdown of financial markets occurs at the crossroads of a major military adventure. The global financial crisis is intimately related to the war. (For further analysis, see chapters 9-12). A spiraling defense budget backlashes on the civilian sectors of economic activity. The war economy has a direct bearing on fiscal and monetary policy. Defense appropriations are in excess of 700 billion dollars (for the 2010 fiscal year). An impending fiscal crisis is looming which threatens to undermine the entire structure of public spending.
“War is Good for Business”: the powerful financial groups which routinely manipulate stock markets, currency and commodity markets, are also promoting the continuation and escalation of the Middle East war. The financial crisis is related to the structure of U.S. public investment in the war economy versus the funding, through tax dollars, of civilian social programs. “More broadly, this also raises the issue of the role of the US Treasury and the US monetary system, in relentlessly financing the military industrial complex and the Middle East war at the expense of most sectors of civilian economic activity.”
The war is profit-driven, financed through the massive worldwide expansion of dollar denominated debt. War and globalization go hand in hand. Wall Street, the oil companies and the defense contractors have concurrent and overlapping interests. The oil companies were behind the 2008 speculative surge in crude oil prices on the London energy market, which preceded the collapse of the stock market in September-October of 2008. In turn, resulting from the military agenda, the U.S. civilian economy is in crisis as the nation’s resources, including tax dollars, are diverted into funding a multibillion dollar Middle East war.
Defense Outlays for the Wars in Iraq and Afghanistan
This is a “war budget”. The austerity measures hit all major federal spending programs with the exception of defense and the Middle East Central Asian War, the Wall Street bank bailout and interest payments on a staggering public debt. The nation’s budget diverts tax revenues into financing the wars in Iraq and Afghanistan, not to mention the set-up of new military bases in Colombia. It legitimizes the fraudulent transfers of tax dollars to the financial elites under the bank bailouts.
The pattern of deficit spending is not expansionary. We are not dealing with a Keynesian-style deficit which stimulates investment and consumer demand, leading to an expansion of production and employment. The bank bailouts (involving several initiatives financed by tax dollars) constitute a component of government expenditure. Both the Bush and Obama bank bailouts were handouts to major financial institutions. They did not result in a positive spending injection into the real economy. In fact, the opposite is true. The bailouts have contributed to financing the restructuring of the banking system, leading to a massive concentration of wealth and centralization of banking power.
A large part of the bailout money granted by the U.S. government has already been transferred electronically to various affiliated accounts including the hedge funds. The largest banks in the U.S. are also using this windfall cash to buy out their weaker competitors, thereby consolidating their position. The tendency, therefore, is towards a new wave of corporate buyouts, mergers and acquisitions in the financial services industry.
In turn, the financial elites will use these large amounts of liquid assets (paper wealth), together with the hundreds of billions acquired through speculative trade, to buy out real economy corporations (airlines, the automobile industry, telecoms, media, etc.), whose quoted value on the stock markets has tumbled. In essence, a budget deficit (combined with massive cuts in social programs) was required to fund the handouts to the banks, as well as finance defense spending and the military surge in both Iraq and Afghanistan.
Obama’s 2010 Budget
Obama’s budget for the 2010 fiscal year was of the order of 3.94 trillion dollars, an increase of 32 percent. Total government revenues for the 2010 fiscal year, according to estimates by the Bureau of Budget, were quoted at 2.381 trillion dollars. This puts the predicted budget deficit at 1.75 trillion dollars, equaling almost twelve percent of the U.S. Gross Domestic Product.
1. Defense spending of 534 billion dollars for 2010, a supplemental 130 billion dollars appropriation for fiscal 2010 for the wars in Afghanistan and Iraq, and a supplemental 75.5 billion dollars emergency war funding for the rest of the 2009 fiscal year. Defense spending and the Middle East war, with various supplemental budgets, was (officially) of the order of 739.5 billion dollars. Some estimates placed aggregate defense and military related spending at over one trillion dollars.
2. A bank bailout of 750 billion dollars announced by Obama, which was added on to the 700 billion dollars in bailout money already allocated by the outgoing Bush administration under the Troubled Assets Relief Program (TARP). The total of both programs is a staggering 1.45 trillion dollars, to be financed by the Treasury. (See Table 1.3 next page). It should be understood that the actual amount of cash financial “aid” to the banks is significantly larger than 1.45 trillion dollars.
3. Net interest on the outstanding public debt was estimated by the Bureau of the Budget at 164 billion dollars in 2010.
The magnitude of these allocations is staggering. Under a “balanced budget” criterion – which has been a priority of government economic policy since the Reagan era – almost all the revenues of the federal government amounting to 2.381 trillion dollars would be used to finance the bank bailout (1.45 trillion), the war (739.5 billion) and interest payments on the public debt (164 billion). In other words, no money would be left over for other categories of public expenditure.
The Budget Deficit
Three categories of expenditure, namely defense, the bank bailout and interest on the public debt, had virtually swallowed up the entire 2010 federal government revenue of 2381.0 billion dollars.
Moreover, as a basis of comparison, all the revenue accruing from individual federal income taxes (1.061 trillion dollars in fiscal 2010), that is, all the money households across America paid annually in the form of federal taxes, did not suffice to finance the handouts to the banks, which officially amounted to 1.45 trillion dollars. This amount includes the 700 billion dollars granted during fiscal year 2009 under the TARP, program plus the proposed 750 billion dollars granted by the Obama administration.
Bush’s Troubled Assets Relief Program and Obama’s 750 billion dollar bank bailout – although disbursed over more than one fiscal year – nonetheless represented almost half of total government expenditure (half of Obama’s 3.94 trillion dollar budget for fiscal 2010), which was financed by regular sources of revenue (2381 billion dollars), plus a staggering 1.75 trillion dollar budget deficit, which ultimately required the issuing of Treasury Bills and government bonds. The feasibility of a large short-term expansion of the public debt at a time of crisis was yet another matter, particularly with interest rates at abysmally low levels.
The budget deficit was 1.58 trillion dollars according to official sources. Obama acknowledged a 1.3 trillion dollar budget deficit, inherited from the Bush administration. In actuality, the budget deficit was much larger. The official figures tended to underestimate the seriousness of the budgetary predicament. The 1.58 trillion dollar budget deficit figure was questionable because the various amounts disbursed under TARP and other related bank bailouts including Obama’s 750 billion dollar aid program to financial institutions were not acknowledged in the government’s expenditure accounts.
The aid hasn’t been requested formally, but appears in a line item “for potential additional financial stabilization efforts,” according to the budget overview. The budget office calculated a $250 billion net cost to taxpayers this year, because it anticipates it would eventually recoup some, though not all, of the money expended to help financial companies.
The funds would come on top of the $700 billion rescue package approved last October by Congress. The White House budgets no money for fiscal 2010 and beyond for such aid.
Fiscal Collapse
A major crisis of the federal fiscal structure was in the making. The multibillion dollar allocations to the war budget and to the Wall Street bank bailout program backlash on all other categories of public expenditure. In November 2008, the
federal government’s bank rescue program was estimated at a staggering 8.5 trillion dollars, an amount equivalent to more than sixty percent of the U.S. public debt estimated at fourteen trillion dollars (2007). Meanwhile, under the Obama budget proposal, 634 billion dollars were allocated to a reserve fund to finance universal health care.
At first glance, it appears to be a large amount. But it is to be spent over a ten year period, i.e. a modest annual commitment of 63.4 billion. Thus public spending will be slashed with a view to curtailing a spiraling budget deficit. Health and education programs will not only remain heavily underfunded, they will be cut, revamped and privatized.
The likely outcome is the outright privatization of public services and the sale of state assets, including public infrastructure, urban services, highways and national parks. Fiscal collapse leads to the privatization of the state. The fiscal crisis is further exacerbated by the compression of tax revenues resulting from decline of the real economy. Unemployed workers do not pay taxes, nor do bankrupt firms. The process is cumulative. The solution to the fiscal crisis becomes the cause of further collapse.
The Structure of the Public Debt
This large-scale appropriation of liquid money assets under the bank bailouts by a handful of financial institutions serves to increase the public debt overnight. When the U.S. Treasury under the Bush administration allocates 700 billion dollars to the Troubled Assets Relief Program, it constitutes a budgetary outlay which inevitably must be financed from within the structure of government revenues and expenditures.
A similar reasoning applies to the bank bailouts under the Obama presidency.
Unless all other categories of public expenditure including health, education and social services are slashed, the various outlays under the bank bailouts will require running a massive budget deficit, which in turn will increase the U.S. public debt. Bear in mind, this budget deficit is not expansionary (in the Keynesian context). It does revive investment and consumer spending. It has no direct bearing on the real economy. It is a money transfer from U.S. tax payers into the coffers of a handful of financial institutions.
America is the most indebted country on earth. The United States (federal government) gross public debt is currently of the order of fourteen trillion dollars. This does not include mounting public debts at the state and municipal levels.
This U.S. dollar denominated (federal) debt is composed of outstanding treasury bills and government bonds. The public debt, also called “the national debt” is the amount of money owed by the federal government to holders of U.S. debt instru-ments. These are held by American residents (as part of their savings portfolios), companies and financial institutions, U.S. government agencies, foreign governments and individuals in foreign countries, but does not include intergovernmental debt obligations or debt held in the Social Security Trust Fund. Types of securities held by the public include, but are not limited to, Treasury Bills, Notes, Bonds, TIPS, United States Savings Bonds, and State and Local Government Series securities.
The proposed solution becomes the cause of the crisis. The 700 billion dollar bailout under the Troubled Asset Relief Program, combined with Obama’s 750 billion dollar aid package to the financial services industry, is but the tip of the iceberg. A panoply of bailout allocations in addition to the 700 billion dollars have been decided upon. Moreover, an additional budgetary overrun was implemented under Obama’s stimulus package of 787 billion dollars launched in February 2009 under The American Recovery and Reinvestment Act of 2009. The stimulus package, as distinct from Obama’s bank bailout program, is in part directed towards the real economy.
Spiraling Public Debt Crisis
Is the Treasury in a position to finance this mounting budget deficit officially tagged at 1.58 trillion dollars through the emission of Treasury bills and government bonds? The actual budget deficit is much higher.
We are facing the largest ever budget deficit coupled with the lowest interest rates in U.S. history. With the Fed’s “near zero” percent discount rate, the markets for U.S. dollar denominated government bonds and Treasury bills are in a straightjacket. Moreover, the essential functions of savings (which are central to the functioning of a national economy) are in crisis.
Who wants to invest in U.S. government debt? What is the demand for Treasury bills at exceedingly low interest rates? The market for U.S. dollar denominated debt instruments is potentially at a standstill, which means that the Treasury lacks the ability to finance its mammoth budget deficit through public debt operations, leading the entire budgetary process into a quandary. The question is whether China and Japan will continue to purchase U.S. dollar denominated debt instruments. Washington is running a public relations campaign to lure Asian investors into buying T-bills and U.S. government bonds.
With the markets for U.S. dollar denominated debt (both domestically and internationally) in crisis, further pressure will be exerted on the Treasury to slash (civilian) public expenditure to the bone, exact user fees for public services and sell off public assets, including state infrastructure and institutions. In all like-lihood, this crisis is leading us to the privatization of the state, where activities hitherto under government jurisdiction will be transferred into private hands. Who will be buying state assets at rock bottom prices? The financial elites, who are also the recipients of the bank bailout.
Consolidation of the Banks
A massive amount of liquidity has been injected into the financial system, from the bailouts but also from pension funds, individual savings, etc. The stated objective of the bank bailout programs is to alleviate the banks’ burden of bad debts and non-performing loans. In actuality what is happening is that these massive amounts of money are being used by a handful of institutions to consolidate their position in global banking. The exposure of the banks, largely the result of derivative trade, is estimated in the tens of trillions of dollars, to the extent that the amounts and guarantees granted by the Treasury and the Fed will not resolve the crisis. Nor are they intended to resolve the crisis.
The mainstream media suggests that the banks are being nationalized as a result of TARP. In fact, it is exactly the opposite: the state is being taken over by the banks, the state is being privatized. The establishment of a worldwide unipolar financial system is part of the broader project of the Wall Street financial elites to establish the contours of a world government.
In a bitter irony, the recipients of the bailout under TARP and Obama’s proposed 750 billion dollar aid to financial institutions are the creditors of the federal government. The Wall Street banks are the brokers and underwriters of the U.S. public debt. Although they hold only a portion of the debt, they transact and trade in U.S. dollar denominated public debt instruments worldwide. They act as creditors of the U.S. State; they evaluate the creditworthiness of the U.S. government; they rank the public debt through Moody’s and Standard and Poor; they control the U.S. Treasury, the Federal Reserve Board and the U.S. Congress; they oversee and dictate fiscal and monetary policy, ensuring that the state acts in their interest. The government hands money to assist the banks under the bank bailout. As a result, its credit rating established by Wall Street is affected.
The U.S. Government Finances its Own Indebtedness: Circular and Contradictory Relationship
Since the Reagan era, Wall Street dominates most areas of economic and social policy. It sets the budgetary agenda, ensuring the curtailment of social expenditures. Wall Street preaches balanced budgets but the practice has been to lobby for the elimination of corporate taxes, grant handouts to corporations and tax write-offs in mergers and acquisitions, all of which lead to a spiraling public debt. It oversees the U.S. public debt and the banks are involved in the sale of treasury bills and government bonds on financial markets in the U.S. and around the world. They also hold part of the public debt and are the creditors of the U.S. government.
In a bitter irony, the massive increase in the public debt (2009-2010) required to “rescue the banks” was financed and brokered by the financial institutions which were the direct beneficiaries of the Bush and Obama bank bailouts.
The Federal Reserve System is a privately owned central bank. While the Federal Reserve Board is a government body, the process of money creation is controlled by the twelve Federal Reserve banks, which are privately owned. The shareholders of the Federal Reserve banks (with the New York Federal Reserve Bank playing a dominant role) are among America’s most powerful financial institutions.
The increase in the U.S. public debt in 2009-2010 was a direct result of the bailout monies transferred to the banks. To finance the bank bailouts, the Treasury was obliged to run up a massive budget deficit. While the Federal Reserve creates money out of thin air, the multibillion dollar outlays of the Treasury (including the Bush and Obama bank bailouts) required a massive emission of public debt in the form of Treasury Bills and government bonds. Only part of these T-Bills are held by the Fed.
We are dealing with a pernicious circular relationship. When the banks pressured the Treasury to assist them in the form of a major bank rescue operation, it was understood from the outset in September 2008 that the banks as creditors would in turn “assist” the Treasury in coping with a skyrocketing public debt.
Public opinion had been misled. A diabolical circular process had been set in motion. The U.S. government is in a sense financing its own indebtedness: the money granted to the banks is in part financed by borrowing from the banks. To finance the 1.45 trillion dollar bailout, the government needs to borrow, through the emission of public debt. Where does the government go? To the banks. In other words, with the money the banks lend to the government, the Treasury finances the bailout in favor of the banks.
In turn, the banks impose conditionalities on the management of the U.S. public debt. They dictate how the money should be spent. After having cashed in on their bailout money, they impose “fiscal responsibility” on the U.S. Treasury; they demand massive cuts in public spending, which eventually results in the collapse and/or privatization of public services; they impose the privatization of urban infrastructure, roads, sewer and water systems, public recreational areas – everything is up for privatization.
This public debt crisis triggered by Wall Street is all the more serious because the U.S. federal government does not control monetary policy. All public debt operations go through the Federal Reserve, which is in charge of monetary policy, acting on behalf of private financial interests. The government as such has no authority over money creation. This means that public debt operations essentially serve the interests of the banks.
Where is the Money Going?
The Obama economic stimulus program constitutes a continuation of the Bush administration’s bank bailout packages. The proposed policy solution to the crisis becomes the cause, ultimately resulting in further real economy bankruptcies and a corresponding collapse of the standard of living of Americans. Both the Bush and Obama bank bailouts are intended to come to the rescue of troubled financial institutions, to ensure the payment of “inter-bank” debt operations. In practice, large amounts of money transit through the banking system, from the banks to the hedge funds, to offshore banking havens and back to the banks.
The government and the media tend to focus on the ambiguous notion of “inter-bank debts”. The identity of the ultimate creditors is rarely mentioned. The legitimacy of the creditors is never questioned. Multibillion dollar transfers are conducted electronically from one financial entity to another. Where is the money going? Who is collecting these multibillion debts, which are in large part the consequence of financial manipulation and derivative trade?
There are indications that the financial institutions are transferring billions of dollars into their affiliated financial entities and hedge funds. From these hedge funds, money is also being used to acquire real economy assets. Through what circuitous financial mechanisms were these debts created? Where is the bailout money going? Who is cashing in on the multibillion dollar government bailout money? This process is contributing to an unprecedented concentration of private wealth.
Financial manipulation is an integral part of the New World Order. It constitutes a powerful means to accumulate wealth. It has contributed to destabilizing the U.S. fiscal structure. Under the present political arrangement, those responsible for monetary policy are quite deliberately serving the interests of the financiers, to the detriment of working people, leading to economic dislocation, unemployment and mass poverty.
More generally, this restructuring of global financial markets and institutions (alongside the pillage of national economies) has enabled the accumulation of vast amounts of private wealth, a large portion of which has been amassed as a result of strictly speculative transactions. This critical drain of billions of dollars of household savings and state tax revenues paralyzes the functions of government spending and spurs the accumulation of a public debt, which can no longer be financed through the emission of U.S. dollar denominated debt instruments.
What we are dealing with is the fraudulent confiscation of lifelong savings and pension funds and the appropriation of tax revenues to finance the bank bailouts. To understand what has happened, follow the money trail of electronic transfers with a view to establishing where the money has gone. What is at stake is the outright criminalization of the financial system, financial theft on an unprecedented scale.
The monetary system, which is integrated into the state budgetary process, has been destabilized. The fundamental relationship between the monetary system and the real economy is in crisis. The creation of money “out of thin air” threatens the value of the U.S. dollar as an international currency. Similarly, the financing of a mammoth U.S. budget deficit through dollar denominated debt instruments is impaired as a result of exceedingly low interest rates. Moreover, the process of household savings is undermined with interest rates close to zero.
What we have dealt with in this chapter is one central aspect of an evolving process of global financial collapse. While the financial apparatus has not collapsed, the Great Depression of the 21st century is by no means over. We can expect a renewed wave of bank failures, mergers and acquisitions in the years to come.
Financial Disarmament
The complexity of this crisis is overwhelming. While specific ad hoc measures including the freeze of speculative trade can be envisaged, there are no ready solutions under the prevailing global financial architecture. What is at stake is the power configuration behind these measures. Economic policy quite deliberately serves the interests of the financial elites, who in turn control the political process. Meaningful policies cannot be achieved without radically reforming the workings of the international banking system.
What is required is an overhaul of the monetary system including the functions and ownership of the central bank, the arrest and prosecution of those involved in financial fraud both in the financial system and in governmental agencies, the freeze of all accounts where fraudulent transfers have been deposited and the cancellation of debts resulting from fraudulent trade and/or market manipulation.
People across the land, nationally and internationally, must mobilize. This struggle to democratize the financial and fiscal apparatus must be broad-based and democratic, encompassing all sectors of society at all levels, in all countries.
What is ultimately required is to disarm the financial establishment:
– confiscate those assets which were obtained through fraud and financial manipulation
– restore the savings of households through reverse transfers
– restore home ownership to those who lost their homes through the process of foreclosures
– return the bailout money to the Treasury
– freeze the activities of the hedge funds
– freeze the gamut of speculative transactions including short-selling and derivative trade
BOOK PREVIEW: Excerpt from "The Global Economic Crisis: The Great Depression of the XXI Century."
By Michel Chossudovsky – Global Research
URL of this article: www.globalresearch.ca/index.php?context=va&aid=21969
http://futurefastforward.com/images/stories/featurearticles/FromBushToObama.pdf
The following is an excerpt from a chapter by Michel Chossudovsky in Global Research's new book entitled:
"The Global Economic Crisis: The Great Depression of the XXI Century." Michel Chossudovsky and Andrew Gavin Marshall, editors, Global Research, Montreal, 2010
What has been implemented under Obama is strong economic medicine with a “human face”. “Promise amid peril”. The stated priorities of the Obama economic package are health, education, renewable energy, investment in infrastructure and transportation. “Quality education” is at the forefront. Obama has also promised to “make health care more affordable and accessible” for every American.
At first sight, the budget proposal had all the appearances of an expansionary program, a demand-oriented “Second New Deal” geared towards creating employment, rebuilding shattered social programs and reviving the real economy.
The realities are otherwise. Obama’s promise is based on a mammoth austerity program. The entire fiscal structure is shattered, turned upside down. To reach these stated objectives, a significant hike in public spending on social programs (health, education, housing, social security) would be required, as well as the implementation of a large-scale public investment program. Major shifts in the composition of public expenditure would also be required, i.e. a move out of a war economy, requiring a shift out of military-related spending in favor of civilian programs.
In actuality, what we are dealing with is the most drastic curtailment in public spending in American history, leading to social havoc and the potential impoverishment of millions of people. The Obama promise largely serves the interests of Wall Street, the defense contractors, the oil conglomerates and Big Pharma. In turn, the Bush-Obama bank “bailouts” have led America into a spiraling public debt crisis. The economic and social dislocations are potentially devastating.
War and the Economic Crisis
The worldwide meltdown of financial markets occurs at the crossroads of a major military adventure. The global financial crisis is intimately related to the war. (For further analysis, see chapters 9-12). A spiraling defense budget backlashes on the civilian sectors of economic activity. The war economy has a direct bearing on fiscal and monetary policy. Defense appropriations are in excess of 700 billion dollars (for the 2010 fiscal year). An impending fiscal crisis is looming which threatens to undermine the entire structure of public spending.
“War is Good for Business”: the powerful financial groups which routinely manipulate stock markets, currency and commodity markets, are also promoting the continuation and escalation of the Middle East war. The financial crisis is related to the structure of U.S. public investment in the war economy versus the funding, through tax dollars, of civilian social programs. “More broadly, this also raises the issue of the role of the US Treasury and the US monetary system, in relentlessly financing the military industrial complex and the Middle East war at the expense of most sectors of civilian economic activity.”
The war is profit-driven, financed through the massive worldwide expansion of dollar denominated debt. War and globalization go hand in hand. Wall Street, the oil companies and the defense contractors have concurrent and overlapping interests. The oil companies were behind the 2008 speculative surge in crude oil prices on the London energy market, which preceded the collapse of the stock market in September-October of 2008. In turn, resulting from the military agenda, the U.S. civilian economy is in crisis as the nation’s resources, including tax dollars, are diverted into funding a multibillion dollar Middle East war.
Defense Outlays for the Wars in Iraq and Afghanistan
This is a “war budget”. The austerity measures hit all major federal spending programs with the exception of defense and the Middle East Central Asian War, the Wall Street bank bailout and interest payments on a staggering public debt. The nation’s budget diverts tax revenues into financing the wars in Iraq and Afghanistan, not to mention the set-up of new military bases in Colombia. It legitimizes the fraudulent transfers of tax dollars to the financial elites under the bank bailouts.
The pattern of deficit spending is not expansionary. We are not dealing with a Keynesian-style deficit which stimulates investment and consumer demand, leading to an expansion of production and employment. The bank bailouts (involving several initiatives financed by tax dollars) constitute a component of government expenditure. Both the Bush and Obama bank bailouts were handouts to major financial institutions. They did not result in a positive spending injection into the real economy. In fact, the opposite is true. The bailouts have contributed to financing the restructuring of the banking system, leading to a massive concentration of wealth and centralization of banking power.
A large part of the bailout money granted by the U.S. government has already been transferred electronically to various affiliated accounts including the hedge funds. The largest banks in the U.S. are also using this windfall cash to buy out their weaker competitors, thereby consolidating their position. The tendency, therefore, is towards a new wave of corporate buyouts, mergers and acquisitions in the financial services industry.
In turn, the financial elites will use these large amounts of liquid assets (paper wealth), together with the hundreds of billions acquired through speculative trade, to buy out real economy corporations (airlines, the automobile industry, telecoms, media, etc.), whose quoted value on the stock markets has tumbled. In essence, a budget deficit (combined with massive cuts in social programs) was required to fund the handouts to the banks, as well as finance defense spending and the military surge in both Iraq and Afghanistan.
Obama’s 2010 Budget
Obama’s budget for the 2010 fiscal year was of the order of 3.94 trillion dollars, an increase of 32 percent. Total government revenues for the 2010 fiscal year, according to estimates by the Bureau of Budget, were quoted at 2.381 trillion dollars. This puts the predicted budget deficit at 1.75 trillion dollars, equaling almost twelve percent of the U.S. Gross Domestic Product.
1. Defense spending of 534 billion dollars for 2010, a supplemental 130 billion dollars appropriation for fiscal 2010 for the wars in Afghanistan and Iraq, and a supplemental 75.5 billion dollars emergency war funding for the rest of the 2009 fiscal year. Defense spending and the Middle East war, with various supplemental budgets, was (officially) of the order of 739.5 billion dollars. Some estimates placed aggregate defense and military related spending at over one trillion dollars.
2. A bank bailout of 750 billion dollars announced by Obama, which was added on to the 700 billion dollars in bailout money already allocated by the outgoing Bush administration under the Troubled Assets Relief Program (TARP). The total of both programs is a staggering 1.45 trillion dollars, to be financed by the Treasury. (See Table 1.3 next page). It should be understood that the actual amount of cash financial “aid” to the banks is significantly larger than 1.45 trillion dollars.
3. Net interest on the outstanding public debt was estimated by the Bureau of the Budget at 164 billion dollars in 2010.
The magnitude of these allocations is staggering. Under a “balanced budget” criterion – which has been a priority of government economic policy since the Reagan era – almost all the revenues of the federal government amounting to 2.381 trillion dollars would be used to finance the bank bailout (1.45 trillion), the war (739.5 billion) and interest payments on the public debt (164 billion). In other words, no money would be left over for other categories of public expenditure.
The Budget Deficit
Three categories of expenditure, namely defense, the bank bailout and interest on the public debt, had virtually swallowed up the entire 2010 federal government revenue of 2381.0 billion dollars.
Moreover, as a basis of comparison, all the revenue accruing from individual federal income taxes (1.061 trillion dollars in fiscal 2010), that is, all the money households across America paid annually in the form of federal taxes, did not suffice to finance the handouts to the banks, which officially amounted to 1.45 trillion dollars. This amount includes the 700 billion dollars granted during fiscal year 2009 under the TARP, program plus the proposed 750 billion dollars granted by the Obama administration.
Bush’s Troubled Assets Relief Program and Obama’s 750 billion dollar bank bailout – although disbursed over more than one fiscal year – nonetheless represented almost half of total government expenditure (half of Obama’s 3.94 trillion dollar budget for fiscal 2010), which was financed by regular sources of revenue (2381 billion dollars), plus a staggering 1.75 trillion dollar budget deficit, which ultimately required the issuing of Treasury Bills and government bonds. The feasibility of a large short-term expansion of the public debt at a time of crisis was yet another matter, particularly with interest rates at abysmally low levels.
The budget deficit was 1.58 trillion dollars according to official sources. Obama acknowledged a 1.3 trillion dollar budget deficit, inherited from the Bush administration. In actuality, the budget deficit was much larger. The official figures tended to underestimate the seriousness of the budgetary predicament. The 1.58 trillion dollar budget deficit figure was questionable because the various amounts disbursed under TARP and other related bank bailouts including Obama’s 750 billion dollar aid program to financial institutions were not acknowledged in the government’s expenditure accounts.
The aid hasn’t been requested formally, but appears in a line item “for potential additional financial stabilization efforts,” according to the budget overview. The budget office calculated a $250 billion net cost to taxpayers this year, because it anticipates it would eventually recoup some, though not all, of the money expended to help financial companies.
The funds would come on top of the $700 billion rescue package approved last October by Congress. The White House budgets no money for fiscal 2010 and beyond for such aid.
Fiscal Collapse
A major crisis of the federal fiscal structure was in the making. The multibillion dollar allocations to the war budget and to the Wall Street bank bailout program backlash on all other categories of public expenditure. In November 2008, the
federal government’s bank rescue program was estimated at a staggering 8.5 trillion dollars, an amount equivalent to more than sixty percent of the U.S. public debt estimated at fourteen trillion dollars (2007). Meanwhile, under the Obama budget proposal, 634 billion dollars were allocated to a reserve fund to finance universal health care.
At first glance, it appears to be a large amount. But it is to be spent over a ten year period, i.e. a modest annual commitment of 63.4 billion. Thus public spending will be slashed with a view to curtailing a spiraling budget deficit. Health and education programs will not only remain heavily underfunded, they will be cut, revamped and privatized.
The likely outcome is the outright privatization of public services and the sale of state assets, including public infrastructure, urban services, highways and national parks. Fiscal collapse leads to the privatization of the state. The fiscal crisis is further exacerbated by the compression of tax revenues resulting from decline of the real economy. Unemployed workers do not pay taxes, nor do bankrupt firms. The process is cumulative. The solution to the fiscal crisis becomes the cause of further collapse.
The Structure of the Public Debt
This large-scale appropriation of liquid money assets under the bank bailouts by a handful of financial institutions serves to increase the public debt overnight. When the U.S. Treasury under the Bush administration allocates 700 billion dollars to the Troubled Assets Relief Program, it constitutes a budgetary outlay which inevitably must be financed from within the structure of government revenues and expenditures.
A similar reasoning applies to the bank bailouts under the Obama presidency.
Unless all other categories of public expenditure including health, education and social services are slashed, the various outlays under the bank bailouts will require running a massive budget deficit, which in turn will increase the U.S. public debt. Bear in mind, this budget deficit is not expansionary (in the Keynesian context). It does revive investment and consumer spending. It has no direct bearing on the real economy. It is a money transfer from U.S. tax payers into the coffers of a handful of financial institutions.
America is the most indebted country on earth. The United States (federal government) gross public debt is currently of the order of fourteen trillion dollars. This does not include mounting public debts at the state and municipal levels.
This U.S. dollar denominated (federal) debt is composed of outstanding treasury bills and government bonds. The public debt, also called “the national debt” is the amount of money owed by the federal government to holders of U.S. debt instru-ments. These are held by American residents (as part of their savings portfolios), companies and financial institutions, U.S. government agencies, foreign governments and individuals in foreign countries, but does not include intergovernmental debt obligations or debt held in the Social Security Trust Fund. Types of securities held by the public include, but are not limited to, Treasury Bills, Notes, Bonds, TIPS, United States Savings Bonds, and State and Local Government Series securities.
The proposed solution becomes the cause of the crisis. The 700 billion dollar bailout under the Troubled Asset Relief Program, combined with Obama’s 750 billion dollar aid package to the financial services industry, is but the tip of the iceberg. A panoply of bailout allocations in addition to the 700 billion dollars have been decided upon. Moreover, an additional budgetary overrun was implemented under Obama’s stimulus package of 787 billion dollars launched in February 2009 under The American Recovery and Reinvestment Act of 2009. The stimulus package, as distinct from Obama’s bank bailout program, is in part directed towards the real economy.
Spiraling Public Debt Crisis
Is the Treasury in a position to finance this mounting budget deficit officially tagged at 1.58 trillion dollars through the emission of Treasury bills and government bonds? The actual budget deficit is much higher.
We are facing the largest ever budget deficit coupled with the lowest interest rates in U.S. history. With the Fed’s “near zero” percent discount rate, the markets for U.S. dollar denominated government bonds and Treasury bills are in a straightjacket. Moreover, the essential functions of savings (which are central to the functioning of a national economy) are in crisis.
Who wants to invest in U.S. government debt? What is the demand for Treasury bills at exceedingly low interest rates? The market for U.S. dollar denominated debt instruments is potentially at a standstill, which means that the Treasury lacks the ability to finance its mammoth budget deficit through public debt operations, leading the entire budgetary process into a quandary. The question is whether China and Japan will continue to purchase U.S. dollar denominated debt instruments. Washington is running a public relations campaign to lure Asian investors into buying T-bills and U.S. government bonds.
With the markets for U.S. dollar denominated debt (both domestically and internationally) in crisis, further pressure will be exerted on the Treasury to slash (civilian) public expenditure to the bone, exact user fees for public services and sell off public assets, including state infrastructure and institutions. In all like-lihood, this crisis is leading us to the privatization of the state, where activities hitherto under government jurisdiction will be transferred into private hands. Who will be buying state assets at rock bottom prices? The financial elites, who are also the recipients of the bank bailout.
Consolidation of the Banks
A massive amount of liquidity has been injected into the financial system, from the bailouts but also from pension funds, individual savings, etc. The stated objective of the bank bailout programs is to alleviate the banks’ burden of bad debts and non-performing loans. In actuality what is happening is that these massive amounts of money are being used by a handful of institutions to consolidate their position in global banking. The exposure of the banks, largely the result of derivative trade, is estimated in the tens of trillions of dollars, to the extent that the amounts and guarantees granted by the Treasury and the Fed will not resolve the crisis. Nor are they intended to resolve the crisis.
The mainstream media suggests that the banks are being nationalized as a result of TARP. In fact, it is exactly the opposite: the state is being taken over by the banks, the state is being privatized. The establishment of a worldwide unipolar financial system is part of the broader project of the Wall Street financial elites to establish the contours of a world government.
In a bitter irony, the recipients of the bailout under TARP and Obama’s proposed 750 billion dollar aid to financial institutions are the creditors of the federal government. The Wall Street banks are the brokers and underwriters of the U.S. public debt. Although they hold only a portion of the debt, they transact and trade in U.S. dollar denominated public debt instruments worldwide. They act as creditors of the U.S. State; they evaluate the creditworthiness of the U.S. government; they rank the public debt through Moody’s and Standard and Poor; they control the U.S. Treasury, the Federal Reserve Board and the U.S. Congress; they oversee and dictate fiscal and monetary policy, ensuring that the state acts in their interest. The government hands money to assist the banks under the bank bailout. As a result, its credit rating established by Wall Street is affected.
The U.S. Government Finances its Own Indebtedness: Circular and Contradictory Relationship
Since the Reagan era, Wall Street dominates most areas of economic and social policy. It sets the budgetary agenda, ensuring the curtailment of social expenditures. Wall Street preaches balanced budgets but the practice has been to lobby for the elimination of corporate taxes, grant handouts to corporations and tax write-offs in mergers and acquisitions, all of which lead to a spiraling public debt. It oversees the U.S. public debt and the banks are involved in the sale of treasury bills and government bonds on financial markets in the U.S. and around the world. They also hold part of the public debt and are the creditors of the U.S. government.
In a bitter irony, the massive increase in the public debt (2009-2010) required to “rescue the banks” was financed and brokered by the financial institutions which were the direct beneficiaries of the Bush and Obama bank bailouts.
The Federal Reserve System is a privately owned central bank. While the Federal Reserve Board is a government body, the process of money creation is controlled by the twelve Federal Reserve banks, which are privately owned. The shareholders of the Federal Reserve banks (with the New York Federal Reserve Bank playing a dominant role) are among America’s most powerful financial institutions.
The increase in the U.S. public debt in 2009-2010 was a direct result of the bailout monies transferred to the banks. To finance the bank bailouts, the Treasury was obliged to run up a massive budget deficit. While the Federal Reserve creates money out of thin air, the multibillion dollar outlays of the Treasury (including the Bush and Obama bank bailouts) required a massive emission of public debt in the form of Treasury Bills and government bonds. Only part of these T-Bills are held by the Fed.
We are dealing with a pernicious circular relationship. When the banks pressured the Treasury to assist them in the form of a major bank rescue operation, it was understood from the outset in September 2008 that the banks as creditors would in turn “assist” the Treasury in coping with a skyrocketing public debt.
Public opinion had been misled. A diabolical circular process had been set in motion. The U.S. government is in a sense financing its own indebtedness: the money granted to the banks is in part financed by borrowing from the banks. To finance the 1.45 trillion dollar bailout, the government needs to borrow, through the emission of public debt. Where does the government go? To the banks. In other words, with the money the banks lend to the government, the Treasury finances the bailout in favor of the banks.
In turn, the banks impose conditionalities on the management of the U.S. public debt. They dictate how the money should be spent. After having cashed in on their bailout money, they impose “fiscal responsibility” on the U.S. Treasury; they demand massive cuts in public spending, which eventually results in the collapse and/or privatization of public services; they impose the privatization of urban infrastructure, roads, sewer and water systems, public recreational areas – everything is up for privatization.
This public debt crisis triggered by Wall Street is all the more serious because the U.S. federal government does not control monetary policy. All public debt operations go through the Federal Reserve, which is in charge of monetary policy, acting on behalf of private financial interests. The government as such has no authority over money creation. This means that public debt operations essentially serve the interests of the banks.
Where is the Money Going?
The Obama economic stimulus program constitutes a continuation of the Bush administration’s bank bailout packages. The proposed policy solution to the crisis becomes the cause, ultimately resulting in further real economy bankruptcies and a corresponding collapse of the standard of living of Americans. Both the Bush and Obama bank bailouts are intended to come to the rescue of troubled financial institutions, to ensure the payment of “inter-bank” debt operations. In practice, large amounts of money transit through the banking system, from the banks to the hedge funds, to offshore banking havens and back to the banks.
The government and the media tend to focus on the ambiguous notion of “inter-bank debts”. The identity of the ultimate creditors is rarely mentioned. The legitimacy of the creditors is never questioned. Multibillion dollar transfers are conducted electronically from one financial entity to another. Where is the money going? Who is collecting these multibillion debts, which are in large part the consequence of financial manipulation and derivative trade?
There are indications that the financial institutions are transferring billions of dollars into their affiliated financial entities and hedge funds. From these hedge funds, money is also being used to acquire real economy assets. Through what circuitous financial mechanisms were these debts created? Where is the bailout money going? Who is cashing in on the multibillion dollar government bailout money? This process is contributing to an unprecedented concentration of private wealth.
Financial manipulation is an integral part of the New World Order. It constitutes a powerful means to accumulate wealth. It has contributed to destabilizing the U.S. fiscal structure. Under the present political arrangement, those responsible for monetary policy are quite deliberately serving the interests of the financiers, to the detriment of working people, leading to economic dislocation, unemployment and mass poverty.
More generally, this restructuring of global financial markets and institutions (alongside the pillage of national economies) has enabled the accumulation of vast amounts of private wealth, a large portion of which has been amassed as a result of strictly speculative transactions. This critical drain of billions of dollars of household savings and state tax revenues paralyzes the functions of government spending and spurs the accumulation of a public debt, which can no longer be financed through the emission of U.S. dollar denominated debt instruments.
What we are dealing with is the fraudulent confiscation of lifelong savings and pension funds and the appropriation of tax revenues to finance the bank bailouts. To understand what has happened, follow the money trail of electronic transfers with a view to establishing where the money has gone. What is at stake is the outright criminalization of the financial system, financial theft on an unprecedented scale.
The monetary system, which is integrated into the state budgetary process, has been destabilized. The fundamental relationship between the monetary system and the real economy is in crisis. The creation of money “out of thin air” threatens the value of the U.S. dollar as an international currency. Similarly, the financing of a mammoth U.S. budget deficit through dollar denominated debt instruments is impaired as a result of exceedingly low interest rates. Moreover, the process of household savings is undermined with interest rates close to zero.
What we have dealt with in this chapter is one central aspect of an evolving process of global financial collapse. While the financial apparatus has not collapsed, the Great Depression of the 21st century is by no means over. We can expect a renewed wave of bank failures, mergers and acquisitions in the years to come.
Financial Disarmament
The complexity of this crisis is overwhelming. While specific ad hoc measures including the freeze of speculative trade can be envisaged, there are no ready solutions under the prevailing global financial architecture. What is at stake is the power configuration behind these measures. Economic policy quite deliberately serves the interests of the financial elites, who in turn control the political process. Meaningful policies cannot be achieved without radically reforming the workings of the international banking system.
What is required is an overhaul of the monetary system including the functions and ownership of the central bank, the arrest and prosecution of those involved in financial fraud both in the financial system and in governmental agencies, the freeze of all accounts where fraudulent transfers have been deposited and the cancellation of debts resulting from fraudulent trade and/or market manipulation.
People across the land, nationally and internationally, must mobilize. This struggle to democratize the financial and fiscal apparatus must be broad-based and democratic, encompassing all sectors of society at all levels, in all countries.
What is ultimately required is to disarm the financial establishment:
– confiscate those assets which were obtained through fraud and financial manipulation
– restore the savings of households through reverse transfers
– restore home ownership to those who lost their homes through the process of foreclosures
– return the bailout money to the Treasury
– freeze the activities of the hedge funds
– freeze the gamut of speculative transactions including short-selling and derivative trade
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