Ok this is long but read it anyway.

[lonestarnot]

NEWS DISSECTOR September 22, 2008

The State Of Economic Emergency Is Here: Can The Paulson Panacea Work?

MY LATEST ARTICLE ON THE CRISIS


HAIL CEASAR: PAULSON IS THE POWER
JESSE JACKSON PLANS A FIGHT BACK
MANY TAKES ON THE FINANCIAL CRISIS

Is this what a State of Emergency feels like?

Make no mistake about: we have entered the era of a financial coup d'etat with the Treasury Department releasing a THREE PAGE document and then demanding $700 Billion dollars for a system "rescue" as a start and with unlimited and unchecked power. Welcome to another 9/11 with the Bush Administration in effect pre-empting the options of whoever becomes our next President with a measure likely to cost way over a $ trillion or more.

In fact, as Frank Rich reminded us in the NY Times, Johh McCain has asked for a "new 9//11 Commission to "get to the bottom" of 9/14, the day the illiquid Lehman went down. Never mind that the old 9/11 Commission did not get to the bottom of much about the original 9/11.

For months, we have been expecting an October Surprise, perhaps an attack on Iran. Instead what we are getting is a September surprise, and an attack on American taxpayers who are being told they/we will now bail out criminally irresponsible bankers, the folks that Franklin Delano Roosevelt once denounced as "BANKSTERS."

The only thing missing are troops in the streets and, believe me, as I reported last week, that is coming. Troops are being shipped back from Iraq to be on standby for CIVIL UNREST. (The "authorities" don't believe that the American people will take the strip mining of their lives without a fight. Surely more crime, and other dislocation is coming!)

Some are saying that because of this dire emergency, the election could be "postponed." That may be too unlikely and unnecesary, especially if it is fixed or if both candidates sign on to the PLAN, what ever it is. We don't even know the details yet but both McCain and Obama are aboard as you may have seen on 60 Minutes Sunday night.

This seems to follow the pattern layed out by Naomi Klein-create a shock and disorient the normal processes of government to impose emergency rules by fiat. It is shocking, but few in the media are even presenting the voices of critics who feel this way.

This measure is being sold as a way to help everyday Americans but the first time that members of Congress wanted the bailout to apply to distressed homeowners, Tresasury Secretary Paulson's predictable response was a big fat NO WAY.

Thanks a lot.

This power grab has a name-"the troubled assets relief program" or TARP. Gretchen Morgenson of the NY Times compares this tarp to others, "the kind of thing they spread over muddy fields so you don't spoil your Guccis." This is also a tarp they seem to be pulled over the eyes of the American people and its Congress as the fear weapon is used again as it was after the last 9/11.

Then, they needed vast amounts of money to make war, mostly on people who had nothing to do with The World Trade Center attack. Now they need money to make themselves whole at our expense.

WARNING OF A COMPLETE MELTDOWN

Last Thursday night, key members of Congress were told "that we're literally maybe days away from a complete meltdown of our financial system, with all the implications here at home and globally."

Following up on this threat of financial apocalypse, the Treasury Secretay said simply gimme gimme gimme, only I can sove this problem. There was no pretense of a bi-partisan solution. There's no time for that. Rush, Rush, Rush! Humpty Dumpty is about to fall.

Paulson has no idea of the value of the "illiquid" assets he wants to "stabilize" nor how they will be priced or resale or who can even do the reselling. His "plan" was not a plan but an idea and, like sheep, Congress and the media started signing on to it, even as New York Times analyst described it as a "Hail Mary Play."

Nevertheless, since there is nothing else on the table, Democratic leaders are once again being outsmarted, and going along with the play, hoping that it will work. They do want to add some measures to it including relief for homeowners who have been victimized by the crisis and who have so far not been helped. Fat chance!

The American Banker reported:

WASHINGTON - Democratic lawmakers are considering adding several provisions to a legislative proposal from the Treasury Department that would create a government entity to buy illiquid assets from banks.

How many changes they seek could affect whether the plan passes. If Democrats seek too much, bipartisan support could fall apart. Treasury officials were pressing lawmakers Friday to try and keep the bill as clean as possible, while they continued to draft specific legislative language.

Lawmakers are already pressed for time. They are hoping to start debate on a bill as early as Tuesday, with final passage next week before they adjourn until after the election.

It was unclear what Democratic leaders would ultimately decide to seek. The options include a provision that would let judges rework loans in bankruptcy proceedings - an idea the financial services industry vigorously opposes.

Democrats are also considering whether to require restrictions on companies that use the facility, such as giving the government an ownership stake in the companies or limiting executive compensation. Also in the mix were potential provisions to compel more servicers to make loan modifications and other ideas for stemming the tide of foreclosures.

Observers said some of these ideas will get thrown out as Congress works on the bill.

"There would be a tendency to want to load it up, but given what the circumstances are, I would bet they would get to a deal," said Oliver Ireland, a partner at Morrison & Foerster LLP and a former Federal Reserve Board official."

PAULSON JUST SAYS NO

Treasury Secretary Paulson responded to these idea on a TV show on Sunday with the firmness of the Monarch he has become. His mantra is derived from Nancy Reagan (or was it her astrologer?) "JUST SAY NO."

AP: Treasury Secretary Henry Paulson is resisting a Democratic push to add additional help for households to the $700 billion bailout bill.

Paulson said Sunday that because financial markets remain under severe stress there is an urgent need for Congress to act quickly without adding other measures that could slow down passage.

"We need this to be clean and to be quick," Paulson said in an interview on ABC's "This Week."

Paulson resisted suggestions being made by Democrats that the program be changed to include further relief for homeowners facing mortgage foreclosures and to include an additional $50 billion stimulus effort. Some Democrats have also suggested capping compensation of executives at firms who get the bailout help.

SUNDAY NIGHT-NEW DEVELOPMENT:

(AP) WASHINGTON - The Federal Reserve said Sunday it had granted a request by the country's last two major investment banks - Goldman Sachs and Morgan Stanley - to change their status to bank holding companies.

The Fed announced that it had approved the request of the two investment banks. The change in status will allow them to create commercial banks that will be able to take deposits, bolstering the resources of both institutions

DON'T ASSUME THIS BAILOUT WILL WORK

Many economists are skeptical.

THERE IS MORE TO BAIL OUT

We will soon be hearing from the airlines and the Auto companies but first, there is this little banking problem.

As we consider what everyone expects will cost more than a trillion before we are through-and by the way Foreign banks will get there's too in this- there are reports that there is not enough money to honor all the FDIC insurance claims expected to be needed as as many as one thousand banks fail.

Let me put this in Caps

ECONOMIST NOURIEL ROUBINI: FDIC DOES NOT HAVE ENOUGH MONEY-

THEY ONLY HAVE 50 BILLION AND WILL NEED A TRILLION DOLLARS IF ALL BANKS ARE TO HAVE INSURANCE FOR ACCOUNTS UP TO $100,000… HE SAYS: CONGRESS WILL HAVE TO ACT…HE SEES THIS AS URGENT. ALSO SAYS BAILOUT CAN"T WORK UNLESS THERE IS DEBT RELIEF IN THE FORM OF LOAN MODIFICATIONS..MAKE SURE THOSE WHO HAVE HOMES CAN STAY IN THEIR HOMES….EXPECTS UNEMPLOYMENT WILL GO UP TO 8%

Those are the headlines of the concerns of the NYU economist who has been on the money on this money crisis. I was on the air with him on Sunday on Reverend Jesse Jackson's national Keep Hope Alive radio show to talk about the issues and my book PLUNDER.

Jackson is getting a second wind after his, er, poorly chosen words about Barack Obama (I believe they have made up) and he now plans to organize more protests like the rally on Wall Street that I joined last year. At that time, on December 7th 2007 (Pearl Harbor Day) Jackson has an op-ed in the Wall Street Journal calling for a "Marshall Plan for Mortgages." Spefically, he proposed a Reconstruction Finance Corporation like the one Paulson has unveiled. He was ignored. That was ten months and two trillion dollars in losses ago! Had it been done then….

He says that if there are only ten people today. it is time to act. Of course, he has been sullied in the press by his own mistakes, but remains a nationally known leader with national respect in the communities he has spoken up for for a generation, whatever his very human flaws and worse. He is still a leader of great energy and there does seem to be a rather blatant absence of national leadership on this issue. Haven't you noticed?

PRESS CONFERENCE ON WALL STREET MONDAY AT l:30 PM

He will have an open-air press conference Monday at 1:30 on Wall Street, at Exchange and Broad to announce his plans and invites readers of this blog to attend.

I have been quoting Roubini for years now but I finally had a chance to talk with him. He is very impressive with lots of research backing up his statements.

He agreed that "It's time to bail out Main Street, not Wall Street and says there is a a system of corruption there…

He says we are now in the worst financial and housing crisis since the Depression because home prices have fallen 25% and he expects another 15% .,..He says 21 Million homes will be underwater with many homeowners walking away when they can't afford to pay. He says this is tearing up the social fabric, betraying the so-called "ownership society." He calls the crisis "severe"- the situation is one in which regulators allowed reckless lending, predatory lending and were asleep at the switch..He sees this bailout as fostering socialism for the Rich.

His key point and this is one I can endorse wholeheartedly-is NOT in The PAULSON PANACEA-debt relief for homeowners. "

"The legislation does not clearly state that there is a clear commitment to reduce the mortgages and provide debt relief…..He endorses restructuring mortgages, lowering interest rates, ending adjustable rates…..they key is loan modification."

I asked him if he agrees that crimes were committed:

Answer: absolutely -people were deceived-illegal activity -people not being told what these mortgages would cost…victims were homeowners and no money for borrowers,

Jesse's son John Jackson, the national spokesman for Rainbow noted an irony about the banks and their lobbying clout.

"Because they got what they wanted, it hurt then, That's an irony, They needed regulation. They live between Beverly Hills and Manhattan and don't really know whats happening.

Callers says they don't care about the American people. They have been playing games with us for years…. Somebody needs to go to jails for this…
-40% of houses

Jackson asked: What is the mechanism to clean this up? Many of the originators and mortgage companies are out of business….There is no one to clean up this problem

Julliete Malvaux, the president of Bennet College in the Bay Area spoke about students who can not afford to stay in school because their parents have lost their homes through foreclosures…..

RESPONSE BY FINANCIAL UNIONS IN EUROPE

There has to be a price tag on the huge amounts of taxpayers money being invested in salvaging the world's financial markets to force tough changes on the industry, said UNI global union today.

A meeting of finance trade unions from across Europe has called for tougher regulations and greater transparency - and curbs on aggressive sales targets imposed on staff, often as part of payment systems. They want governments, central banks and regulators to recognise that the current business model of the industry has failed and to ensure far-reaching changes

"Greed and recklessness is at the root of what has become a worldwide financial disaster," said UNI General Secretary Philip Jennings. "Politicians and central banks are bailing out the very people who wanted small government and whose unregulated excesses brought global instability that will cost of hundreds of thousands of jobs.

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More Voices On The Crisis: Is This The Final Phase Of A Coup We Never Knew?

Larisa Alexandrova: THE FINAL STAGES OF THE COUP

THE INDEPENDENT IN LONDON: A HISTORY OF THE FINANCIAL CRISIS

"The collapse of Lehman Brothers into administration and the folding of Merrill Lynch into Bank of America brought the number of banks and lenders that have fallen victim to the sub-prime crash to a staggering 284 worldwide.

Some 51 hedge funds managing more than 80 individual funds worth billions of pounds have also gone under, as the claws of the bear have sharpened."

KLEPTOCRACY

Michael Hudson: Financial Bailout: America's Own Kleptocracy
The largest transformation of America's financial system since the Great Depression

Nobody expected industrial capitalism to end up like this. Nobody even saw it evolving in this direction. I'm afraid this failing is not unusual among futurists: The natural tendency is to think about how economies can best grow and evolve, not how it can be untracked. But an unforeseen road always seems to appear, and there goes society goes off on a tangent.

What a two weeks!

On Sunday, September 7, the Treasury took on the $5.3 trillion mortgage exposure of Fannie Mae and Freddie Mac, whose heads already had been removed for accounting fraud.

On Monday, September 15, Lehman Brothers went bankrupt, when prospective Wall Street buyers couldn't gain any sense of reality from its financial books. On Wednesday the Federal Reserve agreed to make good for at least $85 billion in the just-pretend "insured" winnings owed to financial gamblers who bet on computer-driven trades in junk mortgages and bought counter-party coverage from the A.I.G. (the American International Group, whose head Maurice Greenberg already had been removed a few years back for accounting fraud).

But it is Friday, September 19, that will go down as a turning point in American history. The White House committed at least half a trillion dollars more to re-inflate real estate prices in an attempt to support the market value junk mortgages - mortgages issued far beyond the ability of debtors to pay and far above the going market price of the collateral being pledged.

These billions of dollars were devoted to keeping a dream alive - the accounting fictions written down by companies that had entered an unreal world based on false accounting that nearly everyone in the financial sector knew to be fake. But they played along with buying and selling packaged mortgage junk because that was where the money was. As Charles Prince of Citibank put it, "As long as they're playing music, you have to get up and dance." Even after markets collapsed, fund managers who steered clear were blamed for not playing the game while it was going. I have friends on Wall Street who were fired for not matching the returns that their compatriots were making. And the biggest returns were to be made in trading in the economy's largest financial asset - mortgage debt. The mortgages packaged, owned or guaranteed by Fannie and Freddie alone exceeded the entire U.S. national debt - the cumulative deficits run up by the American Government since the nation won the Revolutionary War!

This gives an idea of just how large the bailout has been - and where the government's (or at least the Republicans') priorities lie! Instead of waking up the economy to reality, the government has thrown all its resources to promote the unreal dream that debts can be paid - if not by the debtors themselves, then by the government - "taxpayers," as the euphemism goes.

Overnight, the U.S. Treasury and Federal Reserve have radically changed the character of American capitalism. It is nothing less than a coup d'Etat for the class that FDR called "banksters." What has happened in the past two weeks threatens to change the coming century - irreversibly, if they can get away with it. This is the largest and most inequitable transfer of wealth since the land giveaways to the railroad barons during the Civil War era.

Even so, there seems little sign that it even may end the free-market patter talk by financial insiders who have managed to avert public oversight by appointing non-regulators to the major regulatory agencies - and thus created the mess that Treasury Secretary Henry Paulson now says threatens the bank deposits and jobs of all Americans. What he really means, of course, are simply the largest Republican campaign contributors (and to be fair, also the largest contributors to Democratic candidates on key financial committees).

A kleptocratic class has taken over the economy to replace industrial capitalism. Franklin Roosevelt's term "banksters" says it all in a nutshell. The economy has been captured - by an alien power, but not the usual suspects. Not socialism, workers or "big government," nor by industrial monopolists or even by the great banking families. Certainly not by Freemasons and Illuminati. (It would be wonderful if there were indeed some group operating with centuries of wisdom behind them, so at least someone at least had a plan.) Rather, the banksters have made a compact with an alien power -not Communists, Russians, Asians or Arabs. Not humans at all. The group's cadre is a new breed of machine. It may sound like the Terminator movies, but computerized Machines have indeed taken over the world - at least, the White House's world.


Grasping at Straws By Mike Whitney

If Paulson is not removed and his rescue plan scrapped altogether; the dollar will lose its position as the world's reserve currency and the US government will face a historic funding crisis as foreign sources of capital dry up. That will thrust the country into a hyper-inflationary depression.


Paulson Bailout Plan a Historic Swindle
By William Greider

Financial-market wise guys, who had been seized with fear, are suddenly drunk with hope. They are rallying explosively because they think they have successfully stampeded Washington into accepting the Wall Street Journal solution to the crisis: dump it all on the taxpayers.

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A History of Neocons, A Letter From The Arctic, An Appeal for Help

SOME OTHER NEWS

A New and Revealing Study of the Influence of the Neocons

http://www.counterpunch.org/christison09202008.html

Not a few honest political analysts have long recognized the tight relationship between the Israel-U.S. partnership and the disastrous Bush administration adventures throughout the Middle East, including its backing for Israel's systematic oppression of the Palestinians. Stephen Sniegoski has had the persistence to ferret out mountains of impossible-to-challenge evidence that this Israel-U.S. connection is the driving force behind virtually all Middle East decisionmaking over the last eight years, as well as the political courage to write a book about it.

Sniegoski's new book demonstrates clearly how U.S. and Israeli policies and actions with respect to Iraq, Iran, Afghanistan, Syria, Lebanon, Saudi Arabia, Kuwait, the other Gulf states, and even most recently Georgia are all tied together in a bundle of interrelated linkages, each of which affects all the others. The right wing of Israeli politics, the neoconservatives in the U.S. who strongly support Israel, and the aging Israel lobby in the United States all have worked together, and are still doing so, to bring about more wars, regime changes, and instability, specifically the fragmentation of any Middle Eastern states that might ever conceivably threaten Israel.

STEPPING DOWN: OLMERT IN ISRAEL, MBEKI IN SOUTH AFRICA-will have more on this tomorrow

ALSO ANOTHER STORM THREATENS A DEVASTATED HAITI;

SAN JUAN, Puerto Rico (AP) - A cluster of wind and rain nearing the Dominican Republic was forecast to become a tropical depression late Sunday, threatening to batter neighboring storm-devastated Haiti and the rest of the waterlogged region with more punishing rains.

YOUR LETTERS

Floyd Rudmin writes from The End Of the Earth:

Good afternoon,

I write from Arctic Norway where I teach psychology in the local university. Your essay has reached the ends of the Earth, or one of them.

Yesterday, Angela Merkel said that she as chair of the G8 in 2007 was pushing collective action to make the international banking system safer and accountable. But the US and the UK blocked those attempts. In other words, the US and the UK have banking crises because their governments were either too corrupt, or too incompetent, or too ideological to take effective actions to prevent the crises that others could see coming:

AGENCE FRANCE-PRESSE
Deutsche Welle -WORLD.DE

In the midst of this financial crisis, there needs to be some finger pointing at the government authorities that blocked efforts to prevent this crisis.

Bruce asks is this The end of Capitalism?

"If financial behemoths like AIG are too large and/or too interconnected to fail but not too smart to get themselves into situations where they need to be bailed out, then what is the case for letting private firms engage in such kinds of activities in the first place?"

VIDEO CHALLENGES PAULSON: DENOUNCES RESCUE AS A FRAUD

Geo Geller has another suggestion:

You should do something - with indebt we trust - even think about putting a prologue and epilog to in debt we trust -

so the question we have to really ask ourselves since we have had oil, food, housing, banking, wall street crisis all within 6 months of election - which is transparent - plus these are the same guys who a few years ago made it hard for personal bankrupcy - all this is in debt we trust scope -

I suggest start a facebook group and twitter group too - and talk to ted leonsis from snag films about getting behind advertising the film on snag and you have dvd sales and read the post I sent you yesterday too - about rbert greenwald approach to promoting films

danny up to you to catch this wave -

and don't worry about them suing you - it could be best case xposure for you too - they aint gonna sue you

HELP WANTED

Folks, I hope you recognize that this blog has been among the only ones in this corner of the net on top of what has, as predicted, become the number one GLOBAL crisis. Even as I write blog after blog and article after article, I am facing two crises myself. One, Mediachannel is running out of money and I may not be here past October 15th unless enough readers respond to our appeal for support.

Second, I can't do everything I am doing alone. I need a small team, at least some help. I need some volunteers, interns or trainees here in New York who can commit some time to help with our vital outreach efforts. I need committed and talented people with some web skills, passion and interest in the issues I am covering, writing and making films about. You know who you are. Smile.

I would like to think this is an opportunity-I learned my media skills with the help of mentors-but this "job" is not for the flakey. There's no money, but it is a chance to do some good at a time when a lot of bad is going down. Students can probably get credit.

If this opening appeals, contact me: [e-mail]

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[aquart]

1. Banksters.

[lonestarnot]

2. Banksters indeed!