The End of America As We Know It?

A Father Sounds An Alarm
By Ray Zwarich / The Rag Blog / October 3, 2008

Like many readers of the Rag Blog, I have been a leftist since the Tet Offensive set off a political awakening in a nice middle class college student’s mind. As we watch current events unfold, I hope that others share my disappointment that we, as leftists, are not better prepared for what may be about to befall us.

I have only been reading the Rag Blog for a few months, but when I do I feel a sense of ‘community’ with its writers, and with its other readers. Surely all of us belong to several, or many, such ‘communities’.

I am not a ‘chicken little’, but I know that I am surely not alone in such communities in the concerns, and even fears, I am feeling today. Surely all of us who read The Rag Blog, as leftists, are cognizant of the possible implications of current events, depending on how ‘things’ play out.

We have no way of knowing what decisions we may be called upon to make, possibly in the not so distant future. Whenever survival becomes a direct issue, people’s chances are greatly enhanced if they have the option of functioning collectively with people they trust. I trust that as we read each day’s new headlines, we realize that we may very well be called upon, possibly very soon, to turn to our ‘clans’ to enhance our chances for survival.

I hope that we all have clans of family and friends to turn to. But if our fears come to pass, we must quickly exploit the full potential of each and every ‘clan’ or ‘community’ of which we might be a part. It is a shame that we are not better prepared. We have squandered the opportunity to make preparations that might have proven valuable to us, (and we may yet have time to make such plans), but our recent history has perhaps taught us that people need to be more directly motivated than we have yet been before we will do what we need to do.

Perhaps the looming events we fear will not come to pass. Perhaps we will be granted more time. But if chaos soon visits us, I trust that we all realize that the time will be at hand when we need to make connections between the clans and communities that exist. If these events do not befall us in the near future, (as they very well may not), we might give more serious thought to using the reprieve we have been granted to re-think what we have or have NOT yet done to prepare for such events.

I am not an alarmist by nature, but there are times when any prudent person must consider sounding whatever alarm that she or he can. When is it time to ‘break the glass’? Each must decide for herself or himself. Copied below is an ‘alarm’ I have sent to my own family, (together with an excellent article from Richard Cook). This is not nearly yet a ‘breaking of the glass’, but I can feel my nose open, and hackles rising, when I watch and read the news. My eyes are at least on ‘the glass’ these days, even though I know that the time for breaking it is not yet here.

In light of current events, I hope others are making similar contacts with those they love and trust the most.

The End of ‘America’ As We know It?

I know that in the busy flow of our daily lives, some of us pay more attention to current events than others. But I would assume that we all understand that what is happening these days is very serious, and might potentially have immense impact on our own lives.

I read a lot of articles written by people who say ‘the sky is falling’, and I tend to dismiss most of them. I have lived through other lean times when many people were saying the same sorts of things, but the sky never did fall, and the economy straightened itself out instead. But what I am seeing and hearing now seems to be much more serious than anything I have seen or heard during my lifetime.

The credentials of the author of the article copied below are impressive. (They appear at the end). This writer , Richard Cook, is certainly not a ‘left wing’ nut. The allegations he makes are astoundingly and horrifically serious, (if they are true). They are every bit as serious as the conspiracy theory allegations that 9/11 was either an ‘inside job’, or was intentionally allowed to happen, (which I personally don’t ‘believe’, although I have read the evidence, which is very compelling, and I think that it is entirely possible that such allegations could be true) . This writer contends that the bubble that is now threatening to bring down our economy was created intentionally by those ‘super rich’ barons who effectively exert control over much of the world. (I have long known that these people are much more powerful that mere governments). Their alleged motive is a fascist takeover of the nation.

Assuming nothing dramatic happens, (as it very well may not), we may never know what is true or not, as far as what plots might be afoot, but many current facts are well established. Mass detention camps HAVE been built. For what purpose? For the time being, that is not ours to know. Just a few days ago a military division of the US Army was assigned a duty station within the borders of the United States itself, which is a violation of the Posse Comitatus Act, which was passed in 1878, and forbids the military from being used within US borders for law enforcement. These are very foreboding, (and well established), facts. The allegations made by Richard Cook in this article may or may not be true, but it certainly ‘feels’ to me that it is entirely possible that they could be true. (I don’t think that they ARE true. Just that they COULD be).

Whether or not such ‘conspiracy theories’ are true is secondary (at least for the moment) to the rather stark and obvious reality that our lives as we know them are teetering on the edge of substantial change, and possibly even ruin. We all hope that this ‘ruin’ does not come about, and it very well may not. But surely we recognize that there is a substantial risk that something very bad MAY happen. If the weather man tells us that there is a 30% chance of rain, most of us would probably bring an umbrella, or at least a hat, with us before going out. There is no way for us to know what our risk is in neat terms of a percent. This writer, Cook, however, thinks that monumental events are “inevitable”.

I told J***** recently that we are all lucky to have each other, and that whatever happens, we will be able to help each other survive. History has told a story many times over, in which people like us fell back on their family bonds in order to survive. We all hope that things will not come to that, but at this point it sure seems to me that circumstances merit that we should at least start thinking about contingencies, at least in the backs of our minds. It is WAY too soon to start making ‘plans’. The economy may yet pull through. But surely we all harbor our own fears that haunt us in quiet and private moments. It is at those times when we should remember that none of us is alone. We are a ‘clan’. We have each other, and in times when survival becomes an issue, people have a much better chance when they function collectively with their ‘clans’.

I am not an ‘alarmist’ guys. But I am certainly ‘alarmed’ these days. Here’s the article, (and once again, this writer’s substantial credentials are at the end).

Hope all are well this morning …… Papa

Grand Larceny” on a Monumental Scale: Does the Bailout Bill Mark the End of America as We Know It?
By Richard C. Cook / October 2, 2008

OCTOBER 1, 2008—Tonight the Senate passed the $700 billion Wall Street bailout bill by a vote of 74-25. This follows the rejection of the bill by the House on Monday. In an MSNBC poll, 62 percent of Americans oppose the giveaway, but the lobbyists are doing everything possible to assure the rejection is overturned. According to Bob Borosage, co-director of The Campaign for America’s Future, House leaders “are bringing in the small business lobby and the banking lobby to buy the twelve Republican votes they need.”

The Senate took up the bill in order to pressure House members who voted against it to change their positions when it returns to a vote on the House floor on Friday. This procedure may be unconstitutional, because revenue bills must originate in the House, but there is no time or political will for anyone to mount a challenge on constitutional grounds. As another means of inducement—or blackmail—the bill includes the repeal of the wildly unjust alternative minimum tax.

Every reputable economist commenting on the bill opposes it, including NYU’s Nouriel Roubini, who says the plan is “totally flawed.” He says the plan is:

“a disgrace: a bailout of reckless bankers, lenders, and investors that provides little direct debt relief to borrowers and financially stressed households and that will come at a very high cost to the US taxpayer.”

My own view is that the plan is worse than that: a crime; grand larceny on a monumental scale.

Here’s why: We know that the debacle started with homeowner defaults on subprime mortgages and that it has now spread to other types of mortgages as foreclosures spread. We know that the unhealthy use of subprime mortgages started during the Clinton administration, as did the bundling and sale of these mortgages into mortgage-backed securities sold in the financial markets.

What has not been reported is that the Bush administration turned these acts of reckless lending into a national program of mortgage fraud. Soon after George W. Bush became president in 2001, meetings at the White House between Federal Reserve Chairman Alan Greenspan and administration officials became more frequent. According to mortgage industry insiders I have interviewed, direction soon began to come down from the banks to mortgage brokers to falsify borrower income information to allow them to qualify for loans that were otherwise out of reach.

The FBI has investigations underway to prosecute some of these cases of mortgage fraud. But they are not reaching above the brokers’ level. The FBI is not gaining access—or at least they have not reported it publicly—to information about collusion at the political level or at the level of the banks which provided the leveraged funding for mortgage money.

But at the time the housing bubble was inflating, no one was watching. Note that when Secretary of the Treasury Henry Paulson testified before the Senate Banking Committee last week, he said he was shocked to learn when assuming office in June 2006 that no federal agency regulated mortgage lending. Rather this was an area left to the states.

What Paulson did not say was that when the states attempted to intervene, they were blocked by the Treasury Department’s Office of the Comptroller of the Currency. In a February 14 article in the Washington Post written before he resigned, New York governor Eliot Spitzer wrote:

“In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government’s actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules. But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.”

Why did the Bush administration do this? The only possible answer is that it had every intention of producing the housing bubble, one that had the effect of not only inflating the cost of homes and real estate but also pumping billions of dollars of borrowed cash into the economy through mortgage and home equity loans.

The bubble enriched huge numbers of executives, managers, and shareholders throughout the financial and real estate industries, and provided jobs to millions of people. The bubble also brought back foreign capital to U.S. markets that had been scared away by the dot.com bust of 2000-2001.

Everyone seemed to benefit, but it was those at the top who skimmed the greatest profits. And for an economy that had already given away millions of its best manufacturing jobs through NAFTA, Most-Favored-Nation trading policies with China, World Trade Organization agreements, etc., the bubble acted as a kind of substitute economic engine.

It also resulted in tax revenues that allowed the Bush administration to implement its 2001 and 2003 tax cuts for the rich and provide funding for the Afghanistan and Iraq wars. Of course these tax revenues were not enough, as the national debt soared to over $9 trillion during the Bush years as well.

Economist Dean Baker of the Center for Economic and Policy Research makes the point:

“The near hysterical discussion (count the times ‘Great Depression’ appears in news stories) of the bailout still largely fails to recognize the roots of the economy’s current problems in the collapse of the housing bubble. Much of the discussion assumes that the problem is just bad subprime loans and that house prices will bounce back once the credit markets are working properly.”

The point is critical, because what the Senate and House leaders are telling us, as are President George W. Bush, presidential candidates Barack Obama and John McCain, and Federal Reserve Chairman Ben Bernanke, is that the bailout is to get the American economy moving again. Credit, they say, is the lifeblood of the economy, and without credit no one can make a move.

But credit is the lifeblood of the economy only because people are broke. Purchasing power in the U.S. has collapsed, and it is getting worse as the recession which has now begun worsens.

People can’t get loans, not because the credit markets are stalled, but because they have no savings for down payments and can’t afford to repay what they wish to borrow. If they could repay their loans, plenty of credit would be available. But there is no money—and no savings—within the economy for it to get moving again. The only possible source is more federal borrowing to prime the pump Keynesian-style. That is what the politicians claim the bailout will do. But it won’t.

Then what is happening?

What is happening is that the Bush administration is engineering a massive raid on the Federal treasury to pay off the people within the financial industry who have been operating the housing scam because the politicians told them to do it. This is hush money.

The people in the financial institutions who are getting the money will be passing it on to the big banks that leveraged their criminal lending practices. The giant sucking sound you hear is almost a trillion dollars of future taxpayer earnings going into the vaults of the nations’s biggest banks, such as Citibank, Bank of American, and—the pet bank of the Rockefeller family—J.P. Morgan Chase. Much will also go into the vaults of foreign investors such as the Bank of China.

And these banks have no intention of recycling the money into productive U.S. investments. Despite the political posturing, where much of it will go at the second or third tier is into executive salaries and bonuses. The fat cats are “gittin’ out while the gittin’s good.”

What happens next?

Well, it is already happening. In the post-bubble era there will be no more economic engines for the American economy. A long term recession and depression are inevitable, and they are expected by those in the know. In fact, there has been a plan in the works for a very long time to bring down the U.S. economy, and it will be happening over the coming months.

This is why the government is also preparing to implement martial law, or something close to it, in case public unrest breaks out. We will likely also see a clampdown on free speech, the right to protest, and use of the internet. Federal facilities are being prepared all around the country to backstop state prisons and local jails that are already bursting at the seams.

This is the plan, so people need to begin to take whatever measures they can to cut their cost of living, get out of debt, and protect themselves and their families.

Richard C. Cook is a former U.S. federal government analyst, whose career included service with the U.S. Civil Service Commission, the Food and Drug Administration, the Carter White House, NASA, and the U.S. Treasury Department. His articles on economics, politics, and space policy have appeared in numerous websites and print magazines. His book on monetary reform, entitled We Hold These Truths: The Hope of Monetary Reform, will soon be published. He is the author of Challenger Revealed: An Insider’s Account of How the Reagan Administration Caused the Greatest Tragedy of the Space Age, called by one reviewer, “the most important spaceflight book of the last twenty years.” His website is www.richardccook.com. Comments or requests to be added to his mailing list or to purchase his special report on the 2008 election may be sent to EconomicSanity@gmail.com.com.

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