Ed Freeman
You're an 19 year old kid. You're critically wounded, and dying in the jungle in the Ia Drang Valley , 11-14-1965, LZ X-ray, Vietnam . Your infantry unit is outnumbered 8 - 1, and the enemy fire is so intense, from 100 or 200 yards away, that your own Infantry Commander has ordered the MediVac helicopters to stop coming in. You're lying there, listening to the enemy machine guns, and you know you're not getting out. Your family is 1/2 way around the world, 12,000 miles away, and you'll never see them again. As the world starts to fade in and out, you know this is the day.
Then, over the machine gun noise, you faintly hear that sound of a helicopter, and you look up to see an un-armed Huey, but it doesn't seem real, because no Medi-Vac markings are on it.
Ed Freeman is coming for you. He's not Medi-Vac, so it's not his job, but he's flying his Huey down into the machine gun fire, after the Medi-Vacs were ordered not to come.
He's coming anyway.
And he drops it in, and sits there in the machine gun fire, as they load 2 or 3 of you on board.
Then he flies you up and out through the gunfire, to the Doctors and Nurses.
And, he kept coming back.... 13 more times..... And took about 30 of you and your buddies out, who would never have gotten out.
Medal of Honor Recipient, Ed Freeman,died last Wednesday at the age of 80, in Boise, ID ......May God rest his soul.....
I bet you didn't hear about this hero's
passing, but we sure were told a whole
bunch about some Hip-Hop piece of SH**
beating the crap out of his "girlfriend"
Medal of Honor Winner
Ed Freeman!
Shame on the American Media
Monday, March 30, 2009
Monday, March 23, 2009
'Fusion Centers' Expand Criteria to Identify Militia Members
'Fusion Centers' Expand Criteria to Identify Militia Members
Do you like Ron Paul or oppose abortion? You may be a member of a militia, according to a new report by a government information collection agency.
By Joshua Rhett Miller
FOXNews.com
Monday, March 23, 2009
If you're an anti-abortion activist, or if you display political paraphernalia supporting a third-party candidate or a certain Republican member of Congress, if you possess subversive literature, you very well might be a member of a domestic paramilitary group.
That's according to "The Modern Militia Movement," a report by the Missouri Information Analysis Center (MIAC), a government collective that identifies the warning signs of potential domestic terrorists for law enforcement communities.
"Due to the current economical and political situation, a lush environment for militia activity has been created," the Feb. 20 report reads. "Unemployment rates are high, as well as costs of living expenses. Additionally, President Elect Barrack [sic] Obama is seen as tight on gun control and many extremists fear that he will enact firearms confiscations."
MIAC is one of 58 so-called "fusion centers" nationwide that were created by the Department of Homeland Security, in part, to collect local intelligence that authorities can use to combat terrorism and related criminal activities. More than $254 million from fiscal years 2004-2007 went to state and local governments to support the fusion centers, according to the DHS Web site.
During a press conference last week in Kansas City, Mo., DHS Secretary Janet Napolitano called fusion centers the "centerpiece of state, local, federal intelligence-sharing" in the future.
"Let us not forget the reason we are here, the reason we have the Department of Homeland Security and the reason we now have fusion centers, which is a relatively new concept, is because we did not have the capacity as a country to connect the dots on isolated bits of intelligence prior to 9/11," Napolitano said, according to a DHS transcript.
"That's why we started this.... Now we know that it's not just the 9/11-type incidents but many, many other types of incidents that we can benefit from having fusion centers that share information and product and analysis upwards and horizontally."
But some say the fusion centers are going too far in whom they identify as potential threats to American security.
People who supported former third-party presidential candidates like Texas Rep. Ron Paul, Chuck Baldwin and former Georgia Rep. Bob Barr are cited in the report, in addition to anti-abortion activists and conspiracy theorists who believe the United States, Mexico and Canada will someday form a North American Union.
"Militia members most commonly associate with 3rd party political groups," the report reads. "It is not uncommon for militia members to display Constitutional Party, Campaign for Liberty or Libertarian material."
Other potential signals of militia involvement, according to the report, are possession of the Gagsden "Don't Tread on Me" flag or the widely available anti-income tax film "America: Freedom to Fascism."
Barr, the 2008 Libertarian Party presidential nominee, told FOXNews.com that he's taking steps to get his name removed from the report, which he said could actually "dilute the effectiveness" of law enforcement agencies.
"It can subject people to unwarranted and inappropriate monitoring by the government," he said. "If I were the governor of Missouri, I'd be concerned that law enforcement agencies are wasting their time and effort on such nonsense."
Barr said his office has received "several dozen" complaints related to the report.
Mary Starrett, communications director for the Constitution Party, said Baldwin, the party's 2008 presidential candidate, was "outraged" that his name was included in the report.
"We were so astounded by it we couldn't believe it was real," Starrett told FOXNews.com. "It's painting such a large number of people with a broad brush in a dangerous light."
Michael German, national security policy counsel for the American Civil Liberties Union, said the report "crosses the line" and shows a disregard for civil liberties.
"It seems to implicate people who are engaging in First Amendment protected activities and suggest that something as innocuous as supporting a political candidate for office would mean that you're harboring some ill-intent," German told FOXNews.com. "It's completely inappropriate."
German, who claims the number of fusion centers nationwide is closer to 70, said the centers present several troubling concerns, including their excessive secrecy, ambiguous lines of authority, the use of data mining and military participation.
"No two are alike," German said. "And these things are expanding rapidly."
But MIAC officials defended their report, saying it's not a basis for officers to take enforcement action.
"These reports sometimes mention groups or individuals who are not the subject of the document, but may be relevant to describing tendencies or trends concerning the subject of the document," MIAC said in a statement.
"For example, a criminal group may use a particular wire service to transfer funds, but the mention of that wire service does not imply that it is part of that group, or a criminal enterprise. Nor does it imply that all individuals who use that service are engaged in criminal activity."
The statement continues, "We are concerned about the mischaracterizations of a document following its recent unauthorized release and we regret that any citizens were unintentionally offended by the content of the document."
Donny Ferguson, a spokesman for the Libertarian Party, said he was concerned by the report's "poor choice of words," among other things.
"Unfortunately it is so broadly worded it could be interpreted as saying millions of peaceful, law-abiding Americans are involved in dangerous activities. These mistakes happen and we hope Missouri officials will correct the report," Ferguson wrote in an e-mail. "The Libertarian Party promotes the common-sense policies of fiscal responsibility and social tolerance. We are the only party in America who makes opposition to initiating violence a condition of membership."
Bob McCarty, a St. Louis resident who blogged about the MIAC report, said he's afraid he may be targeted, since he's previously sold Ron Paul-related merchandise.
"[The report] described me, so maybe I need to get a gun and build a shack out in the woods," McCarty said facetiously. "It's certainly an attempt to stifle political thought, especially in Missouri. It definitely makes me pause, if nothing else. Maybe Missouri is just a test bed for squelching political thought."
ACLU officials blasted a Texas fusion center last month for distributing a "Prevention Awareness Bulletin" that called on law enforcement officers to report activities of local lobbying groups, Muslim civil rights organizations and anti-war protest groups.
Do you like Ron Paul or oppose abortion? You may be a member of a militia, according to a new report by a government information collection agency.
By Joshua Rhett Miller
FOXNews.com
Monday, March 23, 2009
If you're an anti-abortion activist, or if you display political paraphernalia supporting a third-party candidate or a certain Republican member of Congress, if you possess subversive literature, you very well might be a member of a domestic paramilitary group.
That's according to "The Modern Militia Movement," a report by the Missouri Information Analysis Center (MIAC), a government collective that identifies the warning signs of potential domestic terrorists for law enforcement communities.
"Due to the current economical and political situation, a lush environment for militia activity has been created," the Feb. 20 report reads. "Unemployment rates are high, as well as costs of living expenses. Additionally, President Elect Barrack [sic] Obama is seen as tight on gun control and many extremists fear that he will enact firearms confiscations."
MIAC is one of 58 so-called "fusion centers" nationwide that were created by the Department of Homeland Security, in part, to collect local intelligence that authorities can use to combat terrorism and related criminal activities. More than $254 million from fiscal years 2004-2007 went to state and local governments to support the fusion centers, according to the DHS Web site.
During a press conference last week in Kansas City, Mo., DHS Secretary Janet Napolitano called fusion centers the "centerpiece of state, local, federal intelligence-sharing" in the future.
"Let us not forget the reason we are here, the reason we have the Department of Homeland Security and the reason we now have fusion centers, which is a relatively new concept, is because we did not have the capacity as a country to connect the dots on isolated bits of intelligence prior to 9/11," Napolitano said, according to a DHS transcript.
"That's why we started this.... Now we know that it's not just the 9/11-type incidents but many, many other types of incidents that we can benefit from having fusion centers that share information and product and analysis upwards and horizontally."
But some say the fusion centers are going too far in whom they identify as potential threats to American security.
People who supported former third-party presidential candidates like Texas Rep. Ron Paul, Chuck Baldwin and former Georgia Rep. Bob Barr are cited in the report, in addition to anti-abortion activists and conspiracy theorists who believe the United States, Mexico and Canada will someday form a North American Union.
"Militia members most commonly associate with 3rd party political groups," the report reads. "It is not uncommon for militia members to display Constitutional Party, Campaign for Liberty or Libertarian material."
Other potential signals of militia involvement, according to the report, are possession of the Gagsden "Don't Tread on Me" flag or the widely available anti-income tax film "America: Freedom to Fascism."
Barr, the 2008 Libertarian Party presidential nominee, told FOXNews.com that he's taking steps to get his name removed from the report, which he said could actually "dilute the effectiveness" of law enforcement agencies.
"It can subject people to unwarranted and inappropriate monitoring by the government," he said. "If I were the governor of Missouri, I'd be concerned that law enforcement agencies are wasting their time and effort on such nonsense."
Barr said his office has received "several dozen" complaints related to the report.
Mary Starrett, communications director for the Constitution Party, said Baldwin, the party's 2008 presidential candidate, was "outraged" that his name was included in the report.
"We were so astounded by it we couldn't believe it was real," Starrett told FOXNews.com. "It's painting such a large number of people with a broad brush in a dangerous light."
Michael German, national security policy counsel for the American Civil Liberties Union, said the report "crosses the line" and shows a disregard for civil liberties.
"It seems to implicate people who are engaging in First Amendment protected activities and suggest that something as innocuous as supporting a political candidate for office would mean that you're harboring some ill-intent," German told FOXNews.com. "It's completely inappropriate."
German, who claims the number of fusion centers nationwide is closer to 70, said the centers present several troubling concerns, including their excessive secrecy, ambiguous lines of authority, the use of data mining and military participation.
"No two are alike," German said. "And these things are expanding rapidly."
But MIAC officials defended their report, saying it's not a basis for officers to take enforcement action.
"These reports sometimes mention groups or individuals who are not the subject of the document, but may be relevant to describing tendencies or trends concerning the subject of the document," MIAC said in a statement.
"For example, a criminal group may use a particular wire service to transfer funds, but the mention of that wire service does not imply that it is part of that group, or a criminal enterprise. Nor does it imply that all individuals who use that service are engaged in criminal activity."
The statement continues, "We are concerned about the mischaracterizations of a document following its recent unauthorized release and we regret that any citizens were unintentionally offended by the content of the document."
Donny Ferguson, a spokesman for the Libertarian Party, said he was concerned by the report's "poor choice of words," among other things.
"Unfortunately it is so broadly worded it could be interpreted as saying millions of peaceful, law-abiding Americans are involved in dangerous activities. These mistakes happen and we hope Missouri officials will correct the report," Ferguson wrote in an e-mail. "The Libertarian Party promotes the common-sense policies of fiscal responsibility and social tolerance. We are the only party in America who makes opposition to initiating violence a condition of membership."
Bob McCarty, a St. Louis resident who blogged about the MIAC report, said he's afraid he may be targeted, since he's previously sold Ron Paul-related merchandise.
"[The report] described me, so maybe I need to get a gun and build a shack out in the woods," McCarty said facetiously. "It's certainly an attempt to stifle political thought, especially in Missouri. It definitely makes me pause, if nothing else. Maybe Missouri is just a test bed for squelching political thought."
ACLU officials blasted a Texas fusion center last month for distributing a "Prevention Awareness Bulletin" that called on law enforcement officers to report activities of local lobbying groups, Muslim civil rights organizations and anti-war protest groups.
Sunday, March 22, 2009
The Big Takeover
The Big Takeover
The global economic crisis isn't about money - it's about power. How Wall Street insiders are using the bailout to stage a revolution
MATT TAIBBI Posted Mar 19, 2009 12:49 PM
It's over — we're officially, royally fucked. no empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline — a corporation that got rich insuring the concrete and steel of American industry in the country's heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.
The latest bailout came as AIG admitted to having just posted the largest quarterly loss in American corporate history — some $61.7 billion. In the final three months of last year, the company lost more than $27 million every hour. That's $465,000 a minute, a yearly income for a median American household every six seconds, roughly $7,750 a second. And all this happened at the end of eight straight years that America devoted to frantically chasing the shadow of a terrorist threat to no avail, eight years spent stopping every citizen at every airport to search every purse, bag, crotch and briefcase for juice boxes and explosive tubes of toothpaste. Yet in the end, our government had no mechanism for searching the balance sheets of companies that held life-or-death power over our society and was unable to spot holes in the national economy the size of Libya (whose entire GDP last year was smaller than AIG's 2008 losses).
So it's time to admit it: We're fools, protagonists in a kind of gruesome comedy about the marriage of greed and stupidity. And the worst part about it is that we're still in denial — we still think this is some kind of unfortunate accident, not something that was created by the group of psychopaths on Wall Street whom we allowed to gang-rape the American Dream. When Geithner announced the new $30 billion bailout, the party line was that poor AIG was just a victim of a lot of shitty luck — bad year for business, you know, what with the financial crisis and all. Edward Liddy, the company's CEO, actually compared it to catching a cold: "The marketplace is a pretty crummy place to be right now," he said. "When the world catches pneumonia, we get it too." In a pathetic attempt at name-dropping, he even whined that AIG was being "consumed by the same issues that are driving house prices down and 401K statements down and Warren Buffet's investment portfolio down."
Liddy made AIG sound like an orphan begging in a soup line, hungry and sick from being left out in someone else's financial weather. He conveniently forgot to mention that AIG had spent more than a decade systematically scheming to evade U.S. and international regulators, or that one of the causes of its "pneumonia" was making colossal, world-sinking $500 billion bets with money it didn't have, in a toxic and completely unregulated derivatives market.
Nor did anyone mention that when AIG finally got up from its seat at the Wall Street casino, broke and busted in the afterdawn light, it owed money all over town — and that a huge chunk of your taxpayer dollars in this particular bailout scam will be going to pay off the other high rollers at its table. Or that this was a casino unique among all casinos, one where middle-class taxpayers cover the bets of billionaires.
People are pissed off about this financial crisis, and about this bailout, but they're not pissed off enough. The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup d'état. They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of the government by a small class of connected insiders, who used money to control elections, buy influence and systematically weaken financial regulations.
The crisis was the coup de grâce: Given virtually free rein over the economy, these same insiders first wrecked the financial world, then cunningly granted themselves nearly unlimited emergency powers to clean up their own mess. And so the gambling-addict leaders of companies like AIG end up not penniless and in jail, but with an Alien-style death grip on the Treasury and the Federal Reserve — "our partners in the government," as Liddy put it with a shockingly casual matter-of-factness after the most recent bailout.
The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron — a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.
I. PATIENT ZERO
The best way to understand the financial crisis is to understand the meltdown at AIG. AIG is what happens when short, bald managers of otherwise boring financial bureaucracies start seeing Brad Pitt in the mirror. This is a company that built a giant fortune across more than a century by betting on safety-conscious policyholders — people who wear seat belts and build houses on high ground — and then blew it all in a year or two by turning their entire balance sheet over to a guy who acted like making huge bets with other people's money would make his dick bigger.
That guy — the Patient Zero of the global economic meltdown — was one Joseph Cassano, the head of a tiny, 400-person unit within the company called AIG Financial Products, or AIGFP. Cassano, a pudgy, balding Brooklyn College grad with beady eyes and way too much forehead, cut his teeth in the Eighties working for Mike Milken, the granddaddy of modern Wall Street debt alchemists. Milken, who pioneered the creative use of junk bonds, relied on messianic genius and a whole array of insider schemes to evade detection while wreaking financial disaster. Cassano, by contrast, was just a greedy little turd with a knack for selective accounting who ran his scam right out in the open, thanks to Washington's deregulation of the Wall Street casino. "It's all about the regulatory environment," says a government source involved with the AIG bailout. "These guys look for holes in the system, for ways they can do trades without government interference. Whatever is unregulated, all the action is going to pile into that."
The mess Cassano created had its roots in an investment boom fueled in part by a relatively new type of financial instrument called a collateralized-debt obligation. A CDO is like a box full of diced-up assets. They can be anything: mortgages, corporate loans, aircraft loans, credit-card loans, even other CDOs. So as X mortgage holder pays his bill, and Y corporate debtor pays his bill, and Z credit-card debtor pays his bill, money flows into the box.
The key idea behind a CDO is that there will always be at least some money in the box, regardless of how dicey the individual assets inside it are. No matter how you look at a single unemployed ex-con trying to pay the note on a six-bedroom house, he looks like a bad investment. But dump his loan in a box with a smorgasbord of auto loans, credit-card debt, corporate bonds and other crap, and you can be reasonably sure that somebody is going to pay up. Say $100 is supposed to come into the box every month. Even in an apocalypse, when $90 in payments might default, you'll still get $10. What the inventors of the CDO did is divide up the box into groups of investors and put that $10 into its own level, or "tranche." They then convinced ratings agencies like Moody's and S&P to give that top tranche the highest AAA rating — meaning it has close to zero credit risk.
Suddenly, thanks to this financial seal of approval, banks had a way to turn their shittiest mortgages and other financial waste into investment-grade paper and sell them to institutional investors like pensions and insurance companies, which were forced by regulators to keep their portfolios as safe as possible. Because CDOs offered higher rates of return than truly safe products like Treasury bills, it was a win-win: Banks made a fortune selling CDOs, and big investors made much more holding them.
The problem was, none of this was based on reality. "The banks knew they were selling crap," says a London-based trader from one of the bailed-out companies. To get AAA ratings, the CDOs relied not on their actual underlying assets but on crazy mathematical formulas that the banks cooked up to make the investments look safer than they really were. "They had some back room somewhere where a bunch of Indian guys who'd been doing nothing but math for God knows how many years would come up with some kind of model saying that this or that combination of debtors would only default once every 10,000 years," says one young trader who sold CDOs for a major investment bank. "It was nuts."
Now that even the crappiest mortgages could be sold to conservative investors, the CDOs spurred a massive explosion of irresponsible and predatory lending. In fact, there was such a crush to underwrite CDOs that it became hard to find enough subprime mortgages — read: enough unemployed meth dealers willing to buy million-dollar homes for no money down — to fill them all. As banks and investors of all kinds took on more and more in CDOs and similar instruments, they needed some way to hedge their massive bets — some kind of insurance policy, in case the housing bubble burst and all that debt went south at the same time. This was particularly true for investment banks, many of which got stuck holding or "warehousing" CDOs when they wrote more than they could sell. And that's were Joe Cassano came in.
Known for his boldness and arrogance, Cassano took over as chief of AIGFP in 2001. He was the favorite of Maurice "Hank" Greenberg, the head of AIG, who admired the younger man's hard-driving ways, even if neither he nor his successors fully understood exactly what it was that Cassano did. According to a source familiar with AIG's internal operations, Cassano basically told senior management, "You know insurance, I know investments, so you do what you do, and I'll do what I do — leave me alone." Given a free hand within the company, Cassano set out from his offices in London to sell a lucrative form of "insurance" to all those investors holding lots of CDOs. His tool of choice was another new financial instrument known as a credit-default swap, or CDS.
The CDS was popularized by J.P. Morgan, in particular by a group of young, creative bankers who would later become known as the "Morgan Mafia," as many of them would go on to assume influential positions in the finance world. In 1994, in between booze and games of tennis at a resort in Boca Raton, Florida, the Morgan gang plotted a way to help boost the bank's returns. One of their goals was to find a way to lend more money, while working around regulations that required them to keep a set amount of cash in reserve to back those loans. What they came up with was an early version of the credit-default swap.
In its simplest form, a CDS is just a bet on an outcome. Say Bank A writes a million-dollar mortgage to the Pope for a town house in the West Village. Bank A wants to hedge its mortgage risk in case the Pope can't make his monthly payments, so it buys CDS protection from Bank B, wherein it agrees to pay Bank B a premium of $1,000 a month for five years. In return, Bank B agrees to pay Bank A the full million-dollar value of the Pope's mortgage if he defaults. In theory, Bank A is covered if the Pope goes on a meth binge and loses his job.
When Morgan presented their plans for credit swaps to regulators in the late Nineties, they argued that if they bought CDS protection for enough of the investments in their portfolio, they had effectively moved the risk off their books. Therefore, they argued, they should be allowed to lend more, without keeping more cash in reserve. A whole host of regulators — from the Federal Reserve to the Office of the Comptroller of the Currency — accepted the argument, and Morgan was allowed to put more money on the street.
What Cassano did was to transform the credit swaps that Morgan popularized into the world's largest bet on the housing boom. In theory, at least, there's nothing wrong with buying a CDS to insure your investments. Investors paid a premium to AIGFP, and in return the company promised to pick up the tab if the mortgage-backed CDOs went bust. But as Cassano went on a selling spree, the deals he made differed from traditional insurance in several significant ways. First, the party selling CDS protection didn't have to post any money upfront. When a $100 corporate bond is sold, for example, someone has to show 100 actual dollars. But when you sell a $100 CDS guarantee, you don't have to show a dime. So Cassano could sell investment banks billions in guarantees without having any single asset to back it up.
Secondly, Cassano was selling so-called "naked" CDS deals. In a "naked" CDS, neither party actually holds the underlying loan. In other words, Bank B not only sells CDS protection to Bank A for its mortgage on the Pope — it turns around and sells protection to Bank C for the very same mortgage. This could go on ad nauseam: You could have Banks D through Z also betting on Bank A's mortgage. Unlike traditional insurance, Cassano was offering investors an opportunity to bet that someone else's house would burn down, or take out a term life policy on the guy with AIDS down the street. It was no different from gambling, the Wall Street version of a bunch of frat brothers betting on Jay Feely to make a field goal. Cassano was taking book for every bank that bet short on the housing market, but he didn't have the cash to pay off if the kick went wide.
In a span of only seven years, Cassano sold some $500 billion worth of CDS protection, with at least $64 billion of that tied to the subprime mortgage market. AIG didn't have even a fraction of that amount of cash on hand to cover its bets, but neither did it expect it would ever need any reserves. So long as defaults on the underlying securities remained a highly unlikely proposition, AIG was essentially collecting huge and steadily climbing premiums by selling insurance for the disaster it thought would never come.
Initially, at least, the revenues were enormous: AIGFP's returns went from $737 million in 1999 to $3.2 billion in 2005. Over the past seven years, the subsidiary's 400 employees were paid a total of $3.5 billion; Cassano himself pocketed at least $280 million in compensation. Everyone made their money — and then it all went to shit.
II. THE REGULATORS
Cassano's outrageous gamble wouldn't have been possible had he not had the good fortune to take over AIGFP just as Sen. Phil Gramm — a grinning, laissez-faire ideologue from Texas — had finished engineering the most dramatic deregulation of the financial industry since Emperor Hien Tsung invented paper money in 806 A.D. For years, Washington had kept a watchful eye on the nation's banks. Ever since the Great Depression, commercial banks — those that kept money on deposit for individuals and businesses — had not been allowed to double as investment banks, which raise money by issuing and selling securities. The Glass-Steagall Act, passed during the Depression, also prevented banks of any kind from getting into the insurance business.
But in the late Nineties, a few years before Cassano took over AIGFP, all that changed. The Democrats, tired of getting slaughtered in the fundraising arena by Republicans, decided to throw off their old reliance on unions and interest groups and become more "business-friendly." Wall Street responded by flooding Washington with money, buying allies in both parties. In the 10-year period beginning in 1998, financial companies spent $1.7 billion on federal campaign contributions and another $3.4 billion on lobbyists. They quickly got what they paid for. In 1999, Gramm co-sponsored a bill that repealed key aspects of the Glass-Steagall Act, smoothing the way for the creation of financial megafirms like Citigroup. The move did away with the built-in protections afforded by smaller banks. In the old days, a local banker knew the people whose loans were on his balance sheet: He wasn't going to give a million-dollar mortgage to a homeless meth addict, since he would have to keep that loan on his books. But a giant merged bank might write that loan and then sell it off to some fool in China, and who cared?
The very next year, Gramm compounded the problem by writing a sweeping new law called the Commodity Futures Modernization Act that made it impossible to regulate credit swaps as either gambling or securities. Commercial banks — which, thanks to Gramm, were now competing directly with investment banks for customers — were driven to buy credit swaps to loosen capital in search of higher yields. "By ruling that credit-default swaps were not gaming and not a security, the way was cleared for the growth of the market," said Eric Dinallo, head of the New York State Insurance Department.
The blanket exemption meant that Joe Cassano could now sell as many CDS contracts as he wanted, building up as huge a position as he wanted, without anyone in government saying a word. "You have to remember, investment banks aren't in the business of making huge directional bets," says the government source involved in the AIG bailout. When investment banks write CDS deals, they hedge them. But insurance companies don't have to hedge. And that's what AIG did. "They just bet massively long on the housing market," says the source. "Billions and billions."
In the biggest joke of all, Cassano's wheeling and dealing was regulated by the Office of Thrift Supervision, an agency that would prove to be defiantly uninterested in keeping watch over his operations. How a behemoth like AIG came to be regulated by the little-known and relatively small OTS is yet another triumph of the deregulatory instinct. Under another law passed in 1999, certain kinds of holding companies could choose the OTS as their regulator, provided they owned one or more thrifts (better known as savings-and-loans). Because the OTS was viewed as more compliant than the Fed or the Securities and Exchange Commission, companies rushed to reclassify themselves as thrifts. In 1999, AIG purchased a thrift in Delaware and managed to get approval for OTS regulation of its entire operation.
Making matters even more hilarious, AIGFP — a London-based subsidiary of an American insurance company — ought to have been regulated by one of Europe's more stringent regulators, like Britain's Financial Services Authority. But the OTS managed to convince the Europeans that it had the muscle to regulate these giant companies. By 2007, the EU had conferred legitimacy to OTS supervision of three mammoth firms — GE, AIG and Ameriprise.
That same year, as the subprime crisis was exploding, the Government Accountability Office criticized the OTS, noting a "disparity between the size of the agency and the diverse firms it oversees." Among other things, the GAO report noted that the entire OTS had only one insurance specialist on staff — and this despite the fact that it was the primary regulator for the world's largest insurer!
"There's this notion that the regulators couldn't do anything to stop AIG," says a government official who was present during the bailout. "That's bullshit. What you have to understand is that these regulators have ultimate power. They can send you a letter and say, 'You don't exist anymore,' and that's basically that. They don't even really need due process. The OTS could have said, 'We're going to pull your charter; we're going to pull your license; we're going to sue you.' And getting sued by your primary regulator is the kiss of death."
When AIG finally blew up, the OTS regulator ostensibly in charge of overseeing the insurance giant — a guy named C.K. Lee — basically admitted that he had blown it. His mistake, Lee said, was that he believed all those credit swaps in Cassano's portfolio were "fairly benign products." Why? Because the company told him so. "The judgment the company was making was that there was no big credit risk," he explained. (Lee now works as Midwest region director of the OTS; the agency declined to make him available for an interview.)
In early March, after the latest bailout of AIG, Treasury Secretary Timothy Geithner took what seemed to be a thinly veiled shot at the OTS, calling AIG a "huge, complex global insurance company attached to a very complicated investment bank/hedge fund that was allowed to build up without any adult supervision." But even without that "adult supervision," AIG might have been OK had it not been for a complete lack of internal controls. For six months before its meltdown, according to insiders, the company had been searching for a full-time chief financial officer and a chief risk-assessment officer, but never got around to hiring either. That meant that the 18th-largest company in the world had no one checking to make sure its balance sheet was safe and no one keeping track of how much cash and assets the firm had on hand. The situation was so bad that when outside consultants were called in a few weeks before the bailout, senior executives were unable to answer even the most basic questions about their company — like, for instance, how much exposure the firm had to the residential-mortgage market.
III. THE CRASH
Ironically, when reality finally caught up to Cassano, it wasn't because the housing market crapped but because of AIG itself. Before 2005, the company's debt was rated triple-A, meaning he didn't need to post much cash to sell CDS protection: The solid creditworthiness of AIG's name was guarantee enough. But the company's crummy accounting practices eventually caused its credit rating to be downgraded, triggering clauses in the CDS contracts that forced Cassano to post substantially more collateral to back his deals.
By the fall of 2007, it was evident that AIGFP's portfolio had turned poisonous, but like every good Wall Street huckster, Cassano schemed to keep his insane, Earth-swallowing gamble hidden from public view. That August, balls bulging, he announced to investors on a conference call that "it is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing $1 in any of those transactions." As he spoke, his CDS portfolio was racking up $352 million in losses. When the growing credit crunch prompted senior AIG executives to re-examine its liabilities, a company accountant named Joseph St. Denis became "gravely concerned" about the CDS deals and their potential for mass destruction. Cassano responded by personally forcing the poor sap out of the firm, telling him he was "deliberately excluded" from the financial review for fear that he might "pollute the process."
The following February, when AIG posted $11.5 billion in annual losses, it announced the resignation of Cassano as head of AIGFP, saying an auditor had found a "material weakness" in the CDS portfolio. But amazingly, the company not only allowed Cassano to keep $34 million in bonuses, it kept him on as a consultant for $1 million a month. In fact, Cassano remained on the payroll and kept collecting his monthly million through the end of September 2008, even after taxpayers had been forced to hand AIG $85 billion to patch up his fuck-ups. When asked in October why the company still retained Cassano at his $1 million-a-month rate despite his role in the probable downfall of Western civilization, CEO Martin Sullivan told Congress with a straight face that AIG wanted to "retain the 20-year knowledge that Mr. Cassano had." (Cassano, who is apparently hiding out in his lavish town house near Harrods in London, could not be reached for comment.)
What sank AIG in the end was another credit downgrade. Cassano had written so many CDS deals that when the company was facing another downgrade to its credit rating last September, from AA to A, it needed to post billions in collateral — not only more cash than it had on its balance sheet but more cash than it could raise even if it sold off every single one of its liquid assets. Even so, management dithered for days, not believing the company was in serious trouble. AIG was a dried-up prune, sapped of any real value, and its top executives didn't even know it.
On the weekend of September 13th, AIG's senior leaders were summoned to the offices of the New York Federal Reserve. Regulators from Dinallo's insurance office were there, as was Geithner, then chief of the New York Fed. Treasury Secretary Hank Paulson, who spent most of the weekend preoccupied with the collapse of Lehman Brothers, came in and out. Also present, for reasons that would emerge later, was Lloyd Blankfein, CEO of Goldman Sachs. The only relevant government office that wasn't represented was the regulator that should have been there all along: the OTS.
"We sat down with Paulson, Geithner and Dinallo," says a person present at the negotiations. "I didn't see the OTS even once."
On September 14th, according to another person present, Treasury officials presented Blankfein and other bankers in attendance with an absurd proposal: "They basically asked them to spend a day and check to see if they could raise the money privately." The laughably short time span to complete the mammoth task made the answer a foregone conclusion. At the end of the day, the bankers came back and told the government officials, gee, we checked, but we can't raise that much. And the bailout was on.
A short time later, it came out that AIG was planning to pay some $90 million in deferred compensation to former executives, and to accelerate the payout of $277 million in bonuses to others — a move the company insisted was necessary to "retain key employees." When Congress balked, AIG canceled the $90 million in payments.
Then, in January 2009, the company did it again. After all those years letting Cassano run wild, and after already getting caught paying out insane bonuses while on the public till, AIG decided to pay out another $450 million in bonuses. And to whom? To the 400 or so employees in Cassano's old unit, AIGFP, which is due to go out of business shortly! Yes, that's right, an average of $1.1 million in taxpayer-backed money apiece, to the very people who spent the past decade or so punching a hole in the fabric of the universe!
"We, uh, needed to keep these highly expert people in their seats," AIG spokeswoman Christina Pretto says to me in early February.
"But didn't these 'highly expert people' basically destroy your company?" I ask.
Pretto protests, says this isn't fair. The employees at AIGFP have already taken pay cuts, she says. Not retaining them would dilute the value of the company even further, make it harder to wrap up the unit's operations in an orderly fashion.
The bonuses are a nice comic touch highlighting one of the more outrageous tangents of the bailout age, namely the fact that, even with the planet in flames, some members of the Wall Street class can't even get used to the tragedy of having to fly coach. "These people need their trips to Baja, their spa treatments, their hand jobs," says an official involved in the AIG bailout, a serious look on his face, apparently not even half-kidding. "They don't function well without them."
IV. THE POWER GRAB
So that's the first step in wall street's power grab: making up things like credit-default swaps and collateralized-debt obligations, financial products so complex and inscrutable that ordinary American dumb people — to say nothing of federal regulators and even the CEOs of major corporations like AIG — are too intimidated to even try to understand them. That, combined with wise political investments, enabled the nation's top bankers to effectively scrap any meaningful oversight of the financial industry. In 1997 and 1998, the years leading up to the passage of Phil Gramm's fateful act that gutted Glass-Steagall, the banking, brokerage and insurance industries spent $350 million on political contributions and lobbying. Gramm alone — then the chairman of the Senate Banking Committee — collected $2.6 million in only five years. The law passed 90-8 in the Senate, with the support of 38 Democrats, including some names that might surprise you: Joe Biden, John Kerry, Tom Daschle, Dick Durbin, even John Edwards.
The act helped create the too-big-to-fail financial behemoths like Citigroup, AIG and Bank of America — and in turn helped those companies slowly crush their smaller competitors, leaving the major Wall Street firms with even more money and power to lobby for further deregulatory measures. "We're moving to an oligopolistic situation," Kenneth Guenther, a top executive with the Independent Community Bankers of America, lamented after the Gramm measure was passed.
The situation worsened in 2004, in an extraordinary move toward deregulation that never even got to a vote. At the time, the European Union was threatening to more strictly regulate the foreign operations of America's big investment banks if the U.S. didn't strengthen its own oversight. So the top five investment banks got together on April 28th of that year and — with the helpful assistance of then-Goldman Sachs chief and future Treasury Secretary Hank Paulson — made a pitch to George Bush's SEC chief at the time, William Donaldson, himself a former investment banker. The banks generously volunteered to submit to new rules restricting them from engaging in excessively risky activity. In exchange, they asked to be released from any lending restrictions. The discussion about the new rules lasted just 55 minutes, and there was not a single representative of a major media outlet there to record the fateful decision.
Donaldson OK'd the proposal, and the new rules were enough to get the EU to drop its threat to regulate the five firms. The only catch was, neither Donaldson nor his successor, Christopher Cox, actually did any regulating of the banks. They named a commission of seven people to oversee the five companies, whose combined assets came to total more than $4 trillion. But in the last year and a half of Cox's tenure, the group had no director and did not complete a single inspection. Great deal for the banks, which originally complained about being regulated by both Europe and the SEC, and ended up being regulated by no one.
Once the capital requirements were gone, those top five banks went hog-wild, jumping ass-first into the then-raging housing bubble. One of those was Bear Stearns, which used its freedom to drown itself in bad mortgage loans. In the short period between the 2004 change and Bear's collapse, the firm's debt-to-equity ratio soared from 12-1 to an insane 33-1. Another culprit was Goldman Sachs, which also had the good fortune, around then, to see its CEO, a bald-headed Frankensteinian goon named Hank Paulson (who received an estimated $200 million tax deferral by joining the government), ascend to Treasury secretary.
Freed from all capital restraints, sitting pretty with its man running the Treasury, Goldman jumped into the housing craze just like everyone else on Wall Street. Although it famously scored an $11 billion coup in 2007 when one of its trading units smartly shorted the housing market, the move didn't tell the whole story. In truth, Goldman still had a huge exposure come that fateful summer of 2008 — to none other than Joe Cassano.
Goldman Sachs, it turns out, was Cassano's biggest customer, with $20 billion of exposure in Cassano's CDS book. Which might explain why Goldman chief Lloyd Blankfein was in the room with ex-Goldmanite Hank Paulson that weekend of September 13th, when the federal government was supposedly bailing out AIG.
When asked why Blankfein was there, one of the government officials who was in the meeting shrugs. "One might say that it's because Goldman had so much exposure to AIGFP's portfolio," he says. "You'll never prove that, but one might suppose."
Market analyst Eric Salzman is more blunt. "If AIG went down," he says, "there was a good chance Goldman would not be able to collect." The AIG bailout, in effect, was Goldman bailing out Goldman.
Eventually, Paulson went a step further, elevating another ex-Goldmanite named Edward Liddy to run AIG — a company whose bailout money would be coming, in part, from the newly created TARP program, administered by another Goldman banker named Neel Kashkari.
V. REPO MEN
There are plenty of people who have noticed, in recent years, that when they lost their homes to foreclosure or were forced into bankruptcy because of crippling credit-card debt, no one in the government was there to rescue them. But when Goldman Sachs — a company whose average employee still made more than $350,000 last year, even in the midst of a depression — was suddenly faced with the possibility of losing money on the unregulated insurance deals it bought for its insane housing bets, the government was there in an instant to patch the hole. That's the essence of the bailout: rich bankers bailing out rich bankers, using the taxpayers' credit card.
The people who have spent their lives cloistered in this Wall Street community aren't much for sharing information with the great unwashed. Because all of this shit is complicated, because most of us mortals don't know what the hell LIBOR is or how a REIT works or how to use the word "zero coupon bond" in a sentence without sounding stupid — well, then, the people who do speak this idiotic language cannot under any circumstances be bothered to explain it to us and instead spend a lot of time rolling their eyes and asking us to trust them.
That roll of the eyes is a key part of the psychology of Paulsonism. The state is now being asked not just to call off its regulators or give tax breaks or funnel a few contracts to connected companies; it is intervening directly in the economy, for the sole purpose of preserving the influence of the megafirms. In essence, Paulson used the bailout to transform the government into a giant bureaucracy of entitled assholedom, one that would socialize "toxic" risks but keep both the profits and the management of the bailed-out firms in private hands. Moreover, this whole process would be done in secret, away from the prying eyes of NASCAR dads, broke-ass liberals who read translations of French novels, subprime mortgage holders and other such financial losers.
Some aspects of the bailout were secretive to the point of absurdity. In fact, if you look closely at just a few lines in the Federal Reserve's weekly public disclosures, you can literally see the moment where a big chunk of your money disappeared for good. The H4 report (called "Factors Affecting Reserve Balances") summarizes the activities of the Fed each week. You can find it online, and it's pretty much the only thing the Fed ever tells the world about what it does. For the week ending February 18th, the number under the heading "Repurchase Agreements" on the table is zero. It's a significant number.
Why? In the pre-crisis days, the Fed used to manage the money supply by periodically buying and selling securities on the open market through so-called Repurchase Agreements, or Repos. The Fed would typically dump $25 billion or so in cash onto the market every week, buying up Treasury bills, U.S. securities and even mortgage-backed securities from institutions like Goldman Sachs and J.P. Morgan, who would then "repurchase" them in a short period of time, usually one to seven days. This was the Fed's primary mechanism for controlling interest rates: Buying up securities gives banks more money to lend, which makes interest rates go down. Selling the securities back to the banks reduces the money available for lending, which makes interest rates go up.
If you look at the weekly H4 reports going back to the summer of 2007, you start to notice something alarming. At the start of the credit crunch, around August of that year, you see the Fed buying a few more Repos than usual — $33 billion or so. By November, as private-bank reserves were dwindling to alarmingly low levels, the Fed started injecting even more cash than usual into the economy: $48 billion. By late December, the number was up to $58 billion; by the following March, around the time of the Bear Stearns rescue, the Repo number had jumped to $77 billion. In the week of May 1st, 2008, the number was $115 billion — "out of control now," according to one congressional aide. For the rest of 2008, the numbers remained similarly in the stratosphere, the Fed pumping as much as $125 billion of these short-term loans into the economy — until suddenly, at the start of this year, the number drops to nothing. Zero.
The reason the number has dropped to nothing is that the Fed had simply stopped using relatively transparent devices like repurchase agreements to pump its money into the hands of private companies. By early 2009, a whole series of new government operations had been invented to inject cash into the economy, most all of them completely secretive and with names you've never heard of. There is the Term Auction Facility, the Term Securities Lending Facility, the Primary Dealer Credit Facility, the Commercial Paper Funding Facility and a monster called the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (boasting the chat-room horror-show acronym ABCPMMMFLF). For good measure, there's also something called a Money Market Investor Funding Facility, plus three facilities called Maiden Lane I, II and III to aid bailout recipients like Bear Stearns and AIG.
While the rest of America, and most of Congress, have been bugging out about the $700 billion bailout program called TARP, all of these newly created organisms in the Federal Reserve zoo have quietly been pumping not billions but trillions of dollars into the hands of private companies (at least $3 trillion so far in loans, with as much as $5.7 trillion more in guarantees of private investments). Although this technically isn't taxpayer money, it still affects taxpayers directly, because the activities of the Fed impact the economy as a whole. And this new, secretive activity by the Fed completely eclipses the TARP program in terms of its influence on the economy.
No one knows who's getting that money or exactly how much of it is disappearing through these new holes in the hull of America's credit rating. Moreover, no one can really be sure if these new institutions are even temporary at all — or whether they are being set up as permanent, state-aided crutches to Wall Street, designed to systematically suck bad investments off the ledgers of irresponsible lenders.
"They're supposed to be temporary," says Paul-Martin Foss, an aide to Rep. Ron Paul. "But we keep getting notices every six months or so that they're being renewed. They just sort of quietly announce it."
None other than disgraced senator Ted Stevens was the poor sap who made the unpleasant discovery that if Congress didn't like the Fed handing trillions of dollars to banks without any oversight, Congress could apparently go fuck itself — or so said the law. When Stevens asked the GAO about what authority Congress has to monitor the Fed, he got back a letter citing an obscure statute that nobody had ever heard of before: the Accounting and Auditing Act of 1950. The relevant section, 31 USC 714(b), dictated that congressional audits of the Federal Reserve may not include "deliberations, decisions and actions on monetary policy matters." The exemption, as Foss notes, "basically includes everything." According to the law, in other words, the Fed simply cannot be audited by Congress. Or by anyone else, for that matter.
VI. WINNERS AND LOSERS
Stevens isn't the only person in Congress to be given the finger by the Fed. In January, when Rep. Alan Grayson of Florida asked Federal Reserve vice chairman Donald Kohn where all the money went — only $1.2 trillion had vanished by then — Kohn gave Grayson a classic eye roll, saying he would be "very hesitant" to name names because it might discourage banks from taking the money.
"Has that ever happened?" Grayson asked. "Have people ever said, 'We will not take your $100 billion because people will find out about it?'"
"Well, we said we would not publish the names of the borrowers, so we have no test of that," Kohn answered, visibly annoyed with Grayson's meddling.
Grayson pressed on, demanding to know on what terms the Fed was lending the money. Presumably it was buying assets and making loans, but no one knew how it was pricing those assets — in other words, no one knew what kind of deal it was striking on behalf of taxpayers. So when Grayson asked if the purchased assets were "marked to market" — a methodology that assigns a concrete value to assets, based on the market rate on the day they are traded — Kohn answered, mysteriously, "The ones that have market values are marked to market." The implication was that the Fed was purchasing derivatives like credit swaps or other instruments that were basically impossible to value objectively — paying real money for God knows what.
"Well, how much of them don't have market values?" asked Grayson. "How much of them are worthless?"
"None are worthless," Kohn snapped.
"Then why don't you mark them to market?" Grayson demanded.
"Well," Kohn sighed, "we are marking the ones to market that have market values."
In essence, the Fed was telling Congress to lay off and let the experts handle things. "It's like buying a car in a used-car lot without opening the hood, and saying, 'I think it's fine,'" says Dan Fuss, an analyst with the investment firm Loomis Sayles. "The salesman says, 'Don't worry about it. Trust me.' It'll probably get us out of the lot, but how much farther? None of us knows."
When one considers the comparatively extensive system of congressional checks and balances that goes into the spending of every dollar in the budget via the normal appropriations process, what's happening in the Fed amounts to something truly revolutionary — a kind of shadow government with a budget many times the size of the normal federal outlay, administered dictatorially by one man, Fed chairman Ben Bernanke. "We spend hours and hours and hours arguing over $10 million amendments on the floor of the Senate, but there has been no discussion about who has been receiving this $3 trillion," says Sen. Bernie Sanders. "It is beyond comprehension."
Count Sanders among those who don't buy the argument that Wall Street firms shouldn't have to face being outed as recipients of public funds, that making this information public might cause investors to panic and dump their holdings in these firms. "I guess if we made that public, they'd go on strike or something," he muses.
And the Fed isn't the only arm of the bailout that has closed ranks. The Treasury, too, has maintained incredible secrecy surrounding its implementation even of the TARP program, which was mandated by Congress. To this date, no one knows exactly what criteria the Treasury Department used to determine which banks received bailout funds and which didn't — particularly the first $350 billion given out under Bush appointee Hank Paulson.
The situation with the first TARP payments grew so absurd that when the Congressional Oversight Panel, charged with monitoring the bailout money, sent a query to Paulson asking how he decided whom to give money to, Treasury responded — and this isn't a joke — by directing the panel to a copy of the TARP application form on its website. Elizabeth Warren, the chair of the Congressional Oversight Panel, was struck nearly speechless by the response.
"Do you believe that?" she says incredulously. "That's not what we had in mind."
Another member of Congress, who asked not to be named, offers his own theory about the TARP process. "I think basically if you knew Hank Paulson, you got the money," he says.
This cozy arrangement created yet another opportunity for big banks to devour market share at the expense of smaller regional lenders. While all the bigwigs at Citi and Goldman and Bank of America who had Paulson on speed-dial got bailed out right away — remember that TARP was originally passed because money had to be lent right now, that day, that minute, to stave off emergency — many small banks are still waiting for help. Five months into the TARP program, some not only haven't received any funds, they haven't even gotten a call back about their applications.
"There's definitely a feeling among community bankers that no one up there cares much if they make it or not," says Tanya Wheeless, president of the Arizona Bankers Association.
Which, of course, is exactly the opposite of what should be happening, since small, regional banks are far less guilty of the kinds of predatory lending that sank the economy. "They're not giving out subprime loans or easy credit," says Wheeless. "At the community level, it's much more bread-and-butter banking."
Nonetheless, the lion's share of the bailout money has gone to the larger, so-called "systemically important" banks. "It's like Treasury is picking winners and losers," says one state banking official who asked not to be identified.
This itself is a hugely important political development. In essence, the bailout accelerated the decline of regional community lenders by boosting the political power of their giant national competitors.
Which, when you think about it, is insane: What had brought us to the brink of collapse in the first place was this relentless instinct for building ever-larger megacompanies, passing deregulatory measures to gradually feed all the little fish in the sea to an ever-shrinking pool of Bigger Fish. To fix this problem, the government should have slowly liquidated these monster, too-big-to-fail firms and broken them down to smaller, more manageable companies. Instead, federal regulators closed ranks and used an almost completely secret bailout process to double down on the same faulty, merger-happy thinking that got us here in the first place, creating a constellation of megafirms under government control that are even bigger, more unwieldy and more crammed to the gills with systemic risk.
In essence, Paulson and his cronies turned the federal government into one gigantic, half-opaque holding company, one whose balance sheet includes the world's most appallingly large and risky hedge fund, a controlling stake in a dying insurance giant, huge investments in a group of teetering megabanks, and shares here and there in various auto-finance companies, student loans, and other failing businesses. Like AIG, this new federal holding company is a firm that has no mechanism for auditing itself and is run by leaders who have very little grasp of the daily operations of its disparate subsidiary operations.
In other words, it's AIG's rip-roaringly shitty business model writ almost inconceivably massive — to echo Geithner, a huge, complex global company attached to a very complicated investment bank/hedge fund that's been allowed to build up without adult supervision. How much of what kinds of crap is actually on our balance sheet, and what did we pay for it? When exactly will the rent come due, when will the money run out? Does anyone know what the hell is going on? And on the linear spectrum of capitalism to socialism, where exactly are we now? Is there a dictionary word that even describes what we are now? It would be funny, if it weren't such a nightmare.
VII. YOU DON'T GET IT
The real question from here is whether the Obama administration is going to move to bring the financial system back to a place where sanity is restored and the general public can have a say in things or whether the new financial bureaucracy will remain obscure, secretive and hopelessly complex. It might not bode well that Geithner, Obama's Treasury secretary, is one of the architects of the Paulson bailouts; as chief of the New York Fed, he helped orchestrate the Goldman-friendly AIG bailout and the secretive Maiden Lane facilities used to funnel funds to the dying company. Neither did it look good when Geithner — himself a protégé of notorious Goldman alum John Thain, the Merrill Lynch chief who paid out billions in bonuses after the state spent billions bailing out his firm — picked a former Goldman lobbyist named Mark Patterson to be his top aide.
In fact, most of Geithner's early moves reek strongly of Paulsonism. He has continually talked about partnering with private investors to create a so-called "bad bank" that would systemically relieve private lenders of bad assets — the kind of massive, opaque, quasi-private bureaucratic nightmare that Paulson specialized in. Geithner even refloated a Paulson proposal to use TALF, one of the Fed's new facilities, to essentially lend cheap money to hedge funds to invest in troubled banks while practically guaranteeing them enormous profits.
God knows exactly what this does for the taxpayer, but hedge-fund managers sure love the idea. "This is exactly what the financial system needs," said Andrew Feldstein, CEO of Blue Mountain Capital and one of the Morgan Mafia. Strangely, there aren't many people who don't run hedge funds who have expressed anything like that kind of enthusiasm for Geithner's ideas.
As complex as all the finances are, the politics aren't hard to follow. By creating an urgent crisis that can only be solved by those fluent in a language too complex for ordinary people to understand, the Wall Street crowd has turned the vast majority of Americans into non-participants in their own political future. There is a reason it used to be a crime in the Confederate states to teach a slave to read: Literacy is power. In the age of the CDS and CDO, most of us are financial illiterates. By making an already too-complex economy even more complex, Wall Street has used the crisis to effect a historic, revolutionary change in our political system — transforming a democracy into a two-tiered state, one with plugged-in financial bureaucrats above and clueless customers below.
The most galling thing about this financial crisis is that so many Wall Street types think they actually deserve not only their huge bonuses and lavish lifestyles but the awesome political power their own mistakes have left them in possession of. When challenged, they talk about how hard they work, the 90-hour weeks, the stress, the failed marriages, the hemorrhoids and gallstones they all get before they hit 40.
"But wait a minute," you say to them. "No one ever asked you to stay up all night eight days a week trying to get filthy rich shorting what's left of the American auto industry or selling $600 billion in toxic, irredeemable mortgages to ex-strippers on work release and Taco Bell clerks. Actually, come to think of it, why are we even giving taxpayer money to you people? Why are we not throwing your ass in jail instead?"
But before you even finish saying that, they're rolling their eyes, because You Don't Get It. These people were never about anything except turning money into money, in order to get more money; valueswise they're on par with crack addicts, or obsessive sexual deviants who burgle homes to steal panties. Yet these are the people in whose hands our entire political future now rests.
Good luck with that, America. And enjoy tax season.
The global economic crisis isn't about money - it's about power. How Wall Street insiders are using the bailout to stage a revolution
MATT TAIBBI Posted Mar 19, 2009 12:49 PM
It's over — we're officially, royally fucked. no empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline — a corporation that got rich insuring the concrete and steel of American industry in the country's heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.
The latest bailout came as AIG admitted to having just posted the largest quarterly loss in American corporate history — some $61.7 billion. In the final three months of last year, the company lost more than $27 million every hour. That's $465,000 a minute, a yearly income for a median American household every six seconds, roughly $7,750 a second. And all this happened at the end of eight straight years that America devoted to frantically chasing the shadow of a terrorist threat to no avail, eight years spent stopping every citizen at every airport to search every purse, bag, crotch and briefcase for juice boxes and explosive tubes of toothpaste. Yet in the end, our government had no mechanism for searching the balance sheets of companies that held life-or-death power over our society and was unable to spot holes in the national economy the size of Libya (whose entire GDP last year was smaller than AIG's 2008 losses).
So it's time to admit it: We're fools, protagonists in a kind of gruesome comedy about the marriage of greed and stupidity. And the worst part about it is that we're still in denial — we still think this is some kind of unfortunate accident, not something that was created by the group of psychopaths on Wall Street whom we allowed to gang-rape the American Dream. When Geithner announced the new $30 billion bailout, the party line was that poor AIG was just a victim of a lot of shitty luck — bad year for business, you know, what with the financial crisis and all. Edward Liddy, the company's CEO, actually compared it to catching a cold: "The marketplace is a pretty crummy place to be right now," he said. "When the world catches pneumonia, we get it too." In a pathetic attempt at name-dropping, he even whined that AIG was being "consumed by the same issues that are driving house prices down and 401K statements down and Warren Buffet's investment portfolio down."
Liddy made AIG sound like an orphan begging in a soup line, hungry and sick from being left out in someone else's financial weather. He conveniently forgot to mention that AIG had spent more than a decade systematically scheming to evade U.S. and international regulators, or that one of the causes of its "pneumonia" was making colossal, world-sinking $500 billion bets with money it didn't have, in a toxic and completely unregulated derivatives market.
Nor did anyone mention that when AIG finally got up from its seat at the Wall Street casino, broke and busted in the afterdawn light, it owed money all over town — and that a huge chunk of your taxpayer dollars in this particular bailout scam will be going to pay off the other high rollers at its table. Or that this was a casino unique among all casinos, one where middle-class taxpayers cover the bets of billionaires.
People are pissed off about this financial crisis, and about this bailout, but they're not pissed off enough. The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup d'état. They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of the government by a small class of connected insiders, who used money to control elections, buy influence and systematically weaken financial regulations.
The crisis was the coup de grâce: Given virtually free rein over the economy, these same insiders first wrecked the financial world, then cunningly granted themselves nearly unlimited emergency powers to clean up their own mess. And so the gambling-addict leaders of companies like AIG end up not penniless and in jail, but with an Alien-style death grip on the Treasury and the Federal Reserve — "our partners in the government," as Liddy put it with a shockingly casual matter-of-factness after the most recent bailout.
The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron — a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.
I. PATIENT ZERO
The best way to understand the financial crisis is to understand the meltdown at AIG. AIG is what happens when short, bald managers of otherwise boring financial bureaucracies start seeing Brad Pitt in the mirror. This is a company that built a giant fortune across more than a century by betting on safety-conscious policyholders — people who wear seat belts and build houses on high ground — and then blew it all in a year or two by turning their entire balance sheet over to a guy who acted like making huge bets with other people's money would make his dick bigger.
That guy — the Patient Zero of the global economic meltdown — was one Joseph Cassano, the head of a tiny, 400-person unit within the company called AIG Financial Products, or AIGFP. Cassano, a pudgy, balding Brooklyn College grad with beady eyes and way too much forehead, cut his teeth in the Eighties working for Mike Milken, the granddaddy of modern Wall Street debt alchemists. Milken, who pioneered the creative use of junk bonds, relied on messianic genius and a whole array of insider schemes to evade detection while wreaking financial disaster. Cassano, by contrast, was just a greedy little turd with a knack for selective accounting who ran his scam right out in the open, thanks to Washington's deregulation of the Wall Street casino. "It's all about the regulatory environment," says a government source involved with the AIG bailout. "These guys look for holes in the system, for ways they can do trades without government interference. Whatever is unregulated, all the action is going to pile into that."
The mess Cassano created had its roots in an investment boom fueled in part by a relatively new type of financial instrument called a collateralized-debt obligation. A CDO is like a box full of diced-up assets. They can be anything: mortgages, corporate loans, aircraft loans, credit-card loans, even other CDOs. So as X mortgage holder pays his bill, and Y corporate debtor pays his bill, and Z credit-card debtor pays his bill, money flows into the box.
The key idea behind a CDO is that there will always be at least some money in the box, regardless of how dicey the individual assets inside it are. No matter how you look at a single unemployed ex-con trying to pay the note on a six-bedroom house, he looks like a bad investment. But dump his loan in a box with a smorgasbord of auto loans, credit-card debt, corporate bonds and other crap, and you can be reasonably sure that somebody is going to pay up. Say $100 is supposed to come into the box every month. Even in an apocalypse, when $90 in payments might default, you'll still get $10. What the inventors of the CDO did is divide up the box into groups of investors and put that $10 into its own level, or "tranche." They then convinced ratings agencies like Moody's and S&P to give that top tranche the highest AAA rating — meaning it has close to zero credit risk.
Suddenly, thanks to this financial seal of approval, banks had a way to turn their shittiest mortgages and other financial waste into investment-grade paper and sell them to institutional investors like pensions and insurance companies, which were forced by regulators to keep their portfolios as safe as possible. Because CDOs offered higher rates of return than truly safe products like Treasury bills, it was a win-win: Banks made a fortune selling CDOs, and big investors made much more holding them.
The problem was, none of this was based on reality. "The banks knew they were selling crap," says a London-based trader from one of the bailed-out companies. To get AAA ratings, the CDOs relied not on their actual underlying assets but on crazy mathematical formulas that the banks cooked up to make the investments look safer than they really were. "They had some back room somewhere where a bunch of Indian guys who'd been doing nothing but math for God knows how many years would come up with some kind of model saying that this or that combination of debtors would only default once every 10,000 years," says one young trader who sold CDOs for a major investment bank. "It was nuts."
Now that even the crappiest mortgages could be sold to conservative investors, the CDOs spurred a massive explosion of irresponsible and predatory lending. In fact, there was such a crush to underwrite CDOs that it became hard to find enough subprime mortgages — read: enough unemployed meth dealers willing to buy million-dollar homes for no money down — to fill them all. As banks and investors of all kinds took on more and more in CDOs and similar instruments, they needed some way to hedge their massive bets — some kind of insurance policy, in case the housing bubble burst and all that debt went south at the same time. This was particularly true for investment banks, many of which got stuck holding or "warehousing" CDOs when they wrote more than they could sell. And that's were Joe Cassano came in.
Known for his boldness and arrogance, Cassano took over as chief of AIGFP in 2001. He was the favorite of Maurice "Hank" Greenberg, the head of AIG, who admired the younger man's hard-driving ways, even if neither he nor his successors fully understood exactly what it was that Cassano did. According to a source familiar with AIG's internal operations, Cassano basically told senior management, "You know insurance, I know investments, so you do what you do, and I'll do what I do — leave me alone." Given a free hand within the company, Cassano set out from his offices in London to sell a lucrative form of "insurance" to all those investors holding lots of CDOs. His tool of choice was another new financial instrument known as a credit-default swap, or CDS.
The CDS was popularized by J.P. Morgan, in particular by a group of young, creative bankers who would later become known as the "Morgan Mafia," as many of them would go on to assume influential positions in the finance world. In 1994, in between booze and games of tennis at a resort in Boca Raton, Florida, the Morgan gang plotted a way to help boost the bank's returns. One of their goals was to find a way to lend more money, while working around regulations that required them to keep a set amount of cash in reserve to back those loans. What they came up with was an early version of the credit-default swap.
In its simplest form, a CDS is just a bet on an outcome. Say Bank A writes a million-dollar mortgage to the Pope for a town house in the West Village. Bank A wants to hedge its mortgage risk in case the Pope can't make his monthly payments, so it buys CDS protection from Bank B, wherein it agrees to pay Bank B a premium of $1,000 a month for five years. In return, Bank B agrees to pay Bank A the full million-dollar value of the Pope's mortgage if he defaults. In theory, Bank A is covered if the Pope goes on a meth binge and loses his job.
When Morgan presented their plans for credit swaps to regulators in the late Nineties, they argued that if they bought CDS protection for enough of the investments in their portfolio, they had effectively moved the risk off their books. Therefore, they argued, they should be allowed to lend more, without keeping more cash in reserve. A whole host of regulators — from the Federal Reserve to the Office of the Comptroller of the Currency — accepted the argument, and Morgan was allowed to put more money on the street.
What Cassano did was to transform the credit swaps that Morgan popularized into the world's largest bet on the housing boom. In theory, at least, there's nothing wrong with buying a CDS to insure your investments. Investors paid a premium to AIGFP, and in return the company promised to pick up the tab if the mortgage-backed CDOs went bust. But as Cassano went on a selling spree, the deals he made differed from traditional insurance in several significant ways. First, the party selling CDS protection didn't have to post any money upfront. When a $100 corporate bond is sold, for example, someone has to show 100 actual dollars. But when you sell a $100 CDS guarantee, you don't have to show a dime. So Cassano could sell investment banks billions in guarantees without having any single asset to back it up.
Secondly, Cassano was selling so-called "naked" CDS deals. In a "naked" CDS, neither party actually holds the underlying loan. In other words, Bank B not only sells CDS protection to Bank A for its mortgage on the Pope — it turns around and sells protection to Bank C for the very same mortgage. This could go on ad nauseam: You could have Banks D through Z also betting on Bank A's mortgage. Unlike traditional insurance, Cassano was offering investors an opportunity to bet that someone else's house would burn down, or take out a term life policy on the guy with AIDS down the street. It was no different from gambling, the Wall Street version of a bunch of frat brothers betting on Jay Feely to make a field goal. Cassano was taking book for every bank that bet short on the housing market, but he didn't have the cash to pay off if the kick went wide.
In a span of only seven years, Cassano sold some $500 billion worth of CDS protection, with at least $64 billion of that tied to the subprime mortgage market. AIG didn't have even a fraction of that amount of cash on hand to cover its bets, but neither did it expect it would ever need any reserves. So long as defaults on the underlying securities remained a highly unlikely proposition, AIG was essentially collecting huge and steadily climbing premiums by selling insurance for the disaster it thought would never come.
Initially, at least, the revenues were enormous: AIGFP's returns went from $737 million in 1999 to $3.2 billion in 2005. Over the past seven years, the subsidiary's 400 employees were paid a total of $3.5 billion; Cassano himself pocketed at least $280 million in compensation. Everyone made their money — and then it all went to shit.
II. THE REGULATORS
Cassano's outrageous gamble wouldn't have been possible had he not had the good fortune to take over AIGFP just as Sen. Phil Gramm — a grinning, laissez-faire ideologue from Texas — had finished engineering the most dramatic deregulation of the financial industry since Emperor Hien Tsung invented paper money in 806 A.D. For years, Washington had kept a watchful eye on the nation's banks. Ever since the Great Depression, commercial banks — those that kept money on deposit for individuals and businesses — had not been allowed to double as investment banks, which raise money by issuing and selling securities. The Glass-Steagall Act, passed during the Depression, also prevented banks of any kind from getting into the insurance business.
But in the late Nineties, a few years before Cassano took over AIGFP, all that changed. The Democrats, tired of getting slaughtered in the fundraising arena by Republicans, decided to throw off their old reliance on unions and interest groups and become more "business-friendly." Wall Street responded by flooding Washington with money, buying allies in both parties. In the 10-year period beginning in 1998, financial companies spent $1.7 billion on federal campaign contributions and another $3.4 billion on lobbyists. They quickly got what they paid for. In 1999, Gramm co-sponsored a bill that repealed key aspects of the Glass-Steagall Act, smoothing the way for the creation of financial megafirms like Citigroup. The move did away with the built-in protections afforded by smaller banks. In the old days, a local banker knew the people whose loans were on his balance sheet: He wasn't going to give a million-dollar mortgage to a homeless meth addict, since he would have to keep that loan on his books. But a giant merged bank might write that loan and then sell it off to some fool in China, and who cared?
The very next year, Gramm compounded the problem by writing a sweeping new law called the Commodity Futures Modernization Act that made it impossible to regulate credit swaps as either gambling or securities. Commercial banks — which, thanks to Gramm, were now competing directly with investment banks for customers — were driven to buy credit swaps to loosen capital in search of higher yields. "By ruling that credit-default swaps were not gaming and not a security, the way was cleared for the growth of the market," said Eric Dinallo, head of the New York State Insurance Department.
The blanket exemption meant that Joe Cassano could now sell as many CDS contracts as he wanted, building up as huge a position as he wanted, without anyone in government saying a word. "You have to remember, investment banks aren't in the business of making huge directional bets," says the government source involved in the AIG bailout. When investment banks write CDS deals, they hedge them. But insurance companies don't have to hedge. And that's what AIG did. "They just bet massively long on the housing market," says the source. "Billions and billions."
In the biggest joke of all, Cassano's wheeling and dealing was regulated by the Office of Thrift Supervision, an agency that would prove to be defiantly uninterested in keeping watch over his operations. How a behemoth like AIG came to be regulated by the little-known and relatively small OTS is yet another triumph of the deregulatory instinct. Under another law passed in 1999, certain kinds of holding companies could choose the OTS as their regulator, provided they owned one or more thrifts (better known as savings-and-loans). Because the OTS was viewed as more compliant than the Fed or the Securities and Exchange Commission, companies rushed to reclassify themselves as thrifts. In 1999, AIG purchased a thrift in Delaware and managed to get approval for OTS regulation of its entire operation.
Making matters even more hilarious, AIGFP — a London-based subsidiary of an American insurance company — ought to have been regulated by one of Europe's more stringent regulators, like Britain's Financial Services Authority. But the OTS managed to convince the Europeans that it had the muscle to regulate these giant companies. By 2007, the EU had conferred legitimacy to OTS supervision of three mammoth firms — GE, AIG and Ameriprise.
That same year, as the subprime crisis was exploding, the Government Accountability Office criticized the OTS, noting a "disparity between the size of the agency and the diverse firms it oversees." Among other things, the GAO report noted that the entire OTS had only one insurance specialist on staff — and this despite the fact that it was the primary regulator for the world's largest insurer!
"There's this notion that the regulators couldn't do anything to stop AIG," says a government official who was present during the bailout. "That's bullshit. What you have to understand is that these regulators have ultimate power. They can send you a letter and say, 'You don't exist anymore,' and that's basically that. They don't even really need due process. The OTS could have said, 'We're going to pull your charter; we're going to pull your license; we're going to sue you.' And getting sued by your primary regulator is the kiss of death."
When AIG finally blew up, the OTS regulator ostensibly in charge of overseeing the insurance giant — a guy named C.K. Lee — basically admitted that he had blown it. His mistake, Lee said, was that he believed all those credit swaps in Cassano's portfolio were "fairly benign products." Why? Because the company told him so. "The judgment the company was making was that there was no big credit risk," he explained. (Lee now works as Midwest region director of the OTS; the agency declined to make him available for an interview.)
In early March, after the latest bailout of AIG, Treasury Secretary Timothy Geithner took what seemed to be a thinly veiled shot at the OTS, calling AIG a "huge, complex global insurance company attached to a very complicated investment bank/hedge fund that was allowed to build up without any adult supervision." But even without that "adult supervision," AIG might have been OK had it not been for a complete lack of internal controls. For six months before its meltdown, according to insiders, the company had been searching for a full-time chief financial officer and a chief risk-assessment officer, but never got around to hiring either. That meant that the 18th-largest company in the world had no one checking to make sure its balance sheet was safe and no one keeping track of how much cash and assets the firm had on hand. The situation was so bad that when outside consultants were called in a few weeks before the bailout, senior executives were unable to answer even the most basic questions about their company — like, for instance, how much exposure the firm had to the residential-mortgage market.
III. THE CRASH
Ironically, when reality finally caught up to Cassano, it wasn't because the housing market crapped but because of AIG itself. Before 2005, the company's debt was rated triple-A, meaning he didn't need to post much cash to sell CDS protection: The solid creditworthiness of AIG's name was guarantee enough. But the company's crummy accounting practices eventually caused its credit rating to be downgraded, triggering clauses in the CDS contracts that forced Cassano to post substantially more collateral to back his deals.
By the fall of 2007, it was evident that AIGFP's portfolio had turned poisonous, but like every good Wall Street huckster, Cassano schemed to keep his insane, Earth-swallowing gamble hidden from public view. That August, balls bulging, he announced to investors on a conference call that "it is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing $1 in any of those transactions." As he spoke, his CDS portfolio was racking up $352 million in losses. When the growing credit crunch prompted senior AIG executives to re-examine its liabilities, a company accountant named Joseph St. Denis became "gravely concerned" about the CDS deals and their potential for mass destruction. Cassano responded by personally forcing the poor sap out of the firm, telling him he was "deliberately excluded" from the financial review for fear that he might "pollute the process."
The following February, when AIG posted $11.5 billion in annual losses, it announced the resignation of Cassano as head of AIGFP, saying an auditor had found a "material weakness" in the CDS portfolio. But amazingly, the company not only allowed Cassano to keep $34 million in bonuses, it kept him on as a consultant for $1 million a month. In fact, Cassano remained on the payroll and kept collecting his monthly million through the end of September 2008, even after taxpayers had been forced to hand AIG $85 billion to patch up his fuck-ups. When asked in October why the company still retained Cassano at his $1 million-a-month rate despite his role in the probable downfall of Western civilization, CEO Martin Sullivan told Congress with a straight face that AIG wanted to "retain the 20-year knowledge that Mr. Cassano had." (Cassano, who is apparently hiding out in his lavish town house near Harrods in London, could not be reached for comment.)
What sank AIG in the end was another credit downgrade. Cassano had written so many CDS deals that when the company was facing another downgrade to its credit rating last September, from AA to A, it needed to post billions in collateral — not only more cash than it had on its balance sheet but more cash than it could raise even if it sold off every single one of its liquid assets. Even so, management dithered for days, not believing the company was in serious trouble. AIG was a dried-up prune, sapped of any real value, and its top executives didn't even know it.
On the weekend of September 13th, AIG's senior leaders were summoned to the offices of the New York Federal Reserve. Regulators from Dinallo's insurance office were there, as was Geithner, then chief of the New York Fed. Treasury Secretary Hank Paulson, who spent most of the weekend preoccupied with the collapse of Lehman Brothers, came in and out. Also present, for reasons that would emerge later, was Lloyd Blankfein, CEO of Goldman Sachs. The only relevant government office that wasn't represented was the regulator that should have been there all along: the OTS.
"We sat down with Paulson, Geithner and Dinallo," says a person present at the negotiations. "I didn't see the OTS even once."
On September 14th, according to another person present, Treasury officials presented Blankfein and other bankers in attendance with an absurd proposal: "They basically asked them to spend a day and check to see if they could raise the money privately." The laughably short time span to complete the mammoth task made the answer a foregone conclusion. At the end of the day, the bankers came back and told the government officials, gee, we checked, but we can't raise that much. And the bailout was on.
A short time later, it came out that AIG was planning to pay some $90 million in deferred compensation to former executives, and to accelerate the payout of $277 million in bonuses to others — a move the company insisted was necessary to "retain key employees." When Congress balked, AIG canceled the $90 million in payments.
Then, in January 2009, the company did it again. After all those years letting Cassano run wild, and after already getting caught paying out insane bonuses while on the public till, AIG decided to pay out another $450 million in bonuses. And to whom? To the 400 or so employees in Cassano's old unit, AIGFP, which is due to go out of business shortly! Yes, that's right, an average of $1.1 million in taxpayer-backed money apiece, to the very people who spent the past decade or so punching a hole in the fabric of the universe!
"We, uh, needed to keep these highly expert people in their seats," AIG spokeswoman Christina Pretto says to me in early February.
"But didn't these 'highly expert people' basically destroy your company?" I ask.
Pretto protests, says this isn't fair. The employees at AIGFP have already taken pay cuts, she says. Not retaining them would dilute the value of the company even further, make it harder to wrap up the unit's operations in an orderly fashion.
The bonuses are a nice comic touch highlighting one of the more outrageous tangents of the bailout age, namely the fact that, even with the planet in flames, some members of the Wall Street class can't even get used to the tragedy of having to fly coach. "These people need their trips to Baja, their spa treatments, their hand jobs," says an official involved in the AIG bailout, a serious look on his face, apparently not even half-kidding. "They don't function well without them."
IV. THE POWER GRAB
So that's the first step in wall street's power grab: making up things like credit-default swaps and collateralized-debt obligations, financial products so complex and inscrutable that ordinary American dumb people — to say nothing of federal regulators and even the CEOs of major corporations like AIG — are too intimidated to even try to understand them. That, combined with wise political investments, enabled the nation's top bankers to effectively scrap any meaningful oversight of the financial industry. In 1997 and 1998, the years leading up to the passage of Phil Gramm's fateful act that gutted Glass-Steagall, the banking, brokerage and insurance industries spent $350 million on political contributions and lobbying. Gramm alone — then the chairman of the Senate Banking Committee — collected $2.6 million in only five years. The law passed 90-8 in the Senate, with the support of 38 Democrats, including some names that might surprise you: Joe Biden, John Kerry, Tom Daschle, Dick Durbin, even John Edwards.
The act helped create the too-big-to-fail financial behemoths like Citigroup, AIG and Bank of America — and in turn helped those companies slowly crush their smaller competitors, leaving the major Wall Street firms with even more money and power to lobby for further deregulatory measures. "We're moving to an oligopolistic situation," Kenneth Guenther, a top executive with the Independent Community Bankers of America, lamented after the Gramm measure was passed.
The situation worsened in 2004, in an extraordinary move toward deregulation that never even got to a vote. At the time, the European Union was threatening to more strictly regulate the foreign operations of America's big investment banks if the U.S. didn't strengthen its own oversight. So the top five investment banks got together on April 28th of that year and — with the helpful assistance of then-Goldman Sachs chief and future Treasury Secretary Hank Paulson — made a pitch to George Bush's SEC chief at the time, William Donaldson, himself a former investment banker. The banks generously volunteered to submit to new rules restricting them from engaging in excessively risky activity. In exchange, they asked to be released from any lending restrictions. The discussion about the new rules lasted just 55 minutes, and there was not a single representative of a major media outlet there to record the fateful decision.
Donaldson OK'd the proposal, and the new rules were enough to get the EU to drop its threat to regulate the five firms. The only catch was, neither Donaldson nor his successor, Christopher Cox, actually did any regulating of the banks. They named a commission of seven people to oversee the five companies, whose combined assets came to total more than $4 trillion. But in the last year and a half of Cox's tenure, the group had no director and did not complete a single inspection. Great deal for the banks, which originally complained about being regulated by both Europe and the SEC, and ended up being regulated by no one.
Once the capital requirements were gone, those top five banks went hog-wild, jumping ass-first into the then-raging housing bubble. One of those was Bear Stearns, which used its freedom to drown itself in bad mortgage loans. In the short period between the 2004 change and Bear's collapse, the firm's debt-to-equity ratio soared from 12-1 to an insane 33-1. Another culprit was Goldman Sachs, which also had the good fortune, around then, to see its CEO, a bald-headed Frankensteinian goon named Hank Paulson (who received an estimated $200 million tax deferral by joining the government), ascend to Treasury secretary.
Freed from all capital restraints, sitting pretty with its man running the Treasury, Goldman jumped into the housing craze just like everyone else on Wall Street. Although it famously scored an $11 billion coup in 2007 when one of its trading units smartly shorted the housing market, the move didn't tell the whole story. In truth, Goldman still had a huge exposure come that fateful summer of 2008 — to none other than Joe Cassano.
Goldman Sachs, it turns out, was Cassano's biggest customer, with $20 billion of exposure in Cassano's CDS book. Which might explain why Goldman chief Lloyd Blankfein was in the room with ex-Goldmanite Hank Paulson that weekend of September 13th, when the federal government was supposedly bailing out AIG.
When asked why Blankfein was there, one of the government officials who was in the meeting shrugs. "One might say that it's because Goldman had so much exposure to AIGFP's portfolio," he says. "You'll never prove that, but one might suppose."
Market analyst Eric Salzman is more blunt. "If AIG went down," he says, "there was a good chance Goldman would not be able to collect." The AIG bailout, in effect, was Goldman bailing out Goldman.
Eventually, Paulson went a step further, elevating another ex-Goldmanite named Edward Liddy to run AIG — a company whose bailout money would be coming, in part, from the newly created TARP program, administered by another Goldman banker named Neel Kashkari.
V. REPO MEN
There are plenty of people who have noticed, in recent years, that when they lost their homes to foreclosure or were forced into bankruptcy because of crippling credit-card debt, no one in the government was there to rescue them. But when Goldman Sachs — a company whose average employee still made more than $350,000 last year, even in the midst of a depression — was suddenly faced with the possibility of losing money on the unregulated insurance deals it bought for its insane housing bets, the government was there in an instant to patch the hole. That's the essence of the bailout: rich bankers bailing out rich bankers, using the taxpayers' credit card.
The people who have spent their lives cloistered in this Wall Street community aren't much for sharing information with the great unwashed. Because all of this shit is complicated, because most of us mortals don't know what the hell LIBOR is or how a REIT works or how to use the word "zero coupon bond" in a sentence without sounding stupid — well, then, the people who do speak this idiotic language cannot under any circumstances be bothered to explain it to us and instead spend a lot of time rolling their eyes and asking us to trust them.
That roll of the eyes is a key part of the psychology of Paulsonism. The state is now being asked not just to call off its regulators or give tax breaks or funnel a few contracts to connected companies; it is intervening directly in the economy, for the sole purpose of preserving the influence of the megafirms. In essence, Paulson used the bailout to transform the government into a giant bureaucracy of entitled assholedom, one that would socialize "toxic" risks but keep both the profits and the management of the bailed-out firms in private hands. Moreover, this whole process would be done in secret, away from the prying eyes of NASCAR dads, broke-ass liberals who read translations of French novels, subprime mortgage holders and other such financial losers.
Some aspects of the bailout were secretive to the point of absurdity. In fact, if you look closely at just a few lines in the Federal Reserve's weekly public disclosures, you can literally see the moment where a big chunk of your money disappeared for good. The H4 report (called "Factors Affecting Reserve Balances") summarizes the activities of the Fed each week. You can find it online, and it's pretty much the only thing the Fed ever tells the world about what it does. For the week ending February 18th, the number under the heading "Repurchase Agreements" on the table is zero. It's a significant number.
Why? In the pre-crisis days, the Fed used to manage the money supply by periodically buying and selling securities on the open market through so-called Repurchase Agreements, or Repos. The Fed would typically dump $25 billion or so in cash onto the market every week, buying up Treasury bills, U.S. securities and even mortgage-backed securities from institutions like Goldman Sachs and J.P. Morgan, who would then "repurchase" them in a short period of time, usually one to seven days. This was the Fed's primary mechanism for controlling interest rates: Buying up securities gives banks more money to lend, which makes interest rates go down. Selling the securities back to the banks reduces the money available for lending, which makes interest rates go up.
If you look at the weekly H4 reports going back to the summer of 2007, you start to notice something alarming. At the start of the credit crunch, around August of that year, you see the Fed buying a few more Repos than usual — $33 billion or so. By November, as private-bank reserves were dwindling to alarmingly low levels, the Fed started injecting even more cash than usual into the economy: $48 billion. By late December, the number was up to $58 billion; by the following March, around the time of the Bear Stearns rescue, the Repo number had jumped to $77 billion. In the week of May 1st, 2008, the number was $115 billion — "out of control now," according to one congressional aide. For the rest of 2008, the numbers remained similarly in the stratosphere, the Fed pumping as much as $125 billion of these short-term loans into the economy — until suddenly, at the start of this year, the number drops to nothing. Zero.
The reason the number has dropped to nothing is that the Fed had simply stopped using relatively transparent devices like repurchase agreements to pump its money into the hands of private companies. By early 2009, a whole series of new government operations had been invented to inject cash into the economy, most all of them completely secretive and with names you've never heard of. There is the Term Auction Facility, the Term Securities Lending Facility, the Primary Dealer Credit Facility, the Commercial Paper Funding Facility and a monster called the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (boasting the chat-room horror-show acronym ABCPMMMFLF). For good measure, there's also something called a Money Market Investor Funding Facility, plus three facilities called Maiden Lane I, II and III to aid bailout recipients like Bear Stearns and AIG.
While the rest of America, and most of Congress, have been bugging out about the $700 billion bailout program called TARP, all of these newly created organisms in the Federal Reserve zoo have quietly been pumping not billions but trillions of dollars into the hands of private companies (at least $3 trillion so far in loans, with as much as $5.7 trillion more in guarantees of private investments). Although this technically isn't taxpayer money, it still affects taxpayers directly, because the activities of the Fed impact the economy as a whole. And this new, secretive activity by the Fed completely eclipses the TARP program in terms of its influence on the economy.
No one knows who's getting that money or exactly how much of it is disappearing through these new holes in the hull of America's credit rating. Moreover, no one can really be sure if these new institutions are even temporary at all — or whether they are being set up as permanent, state-aided crutches to Wall Street, designed to systematically suck bad investments off the ledgers of irresponsible lenders.
"They're supposed to be temporary," says Paul-Martin Foss, an aide to Rep. Ron Paul. "But we keep getting notices every six months or so that they're being renewed. They just sort of quietly announce it."
None other than disgraced senator Ted Stevens was the poor sap who made the unpleasant discovery that if Congress didn't like the Fed handing trillions of dollars to banks without any oversight, Congress could apparently go fuck itself — or so said the law. When Stevens asked the GAO about what authority Congress has to monitor the Fed, he got back a letter citing an obscure statute that nobody had ever heard of before: the Accounting and Auditing Act of 1950. The relevant section, 31 USC 714(b), dictated that congressional audits of the Federal Reserve may not include "deliberations, decisions and actions on monetary policy matters." The exemption, as Foss notes, "basically includes everything." According to the law, in other words, the Fed simply cannot be audited by Congress. Or by anyone else, for that matter.
VI. WINNERS AND LOSERS
Stevens isn't the only person in Congress to be given the finger by the Fed. In January, when Rep. Alan Grayson of Florida asked Federal Reserve vice chairman Donald Kohn where all the money went — only $1.2 trillion had vanished by then — Kohn gave Grayson a classic eye roll, saying he would be "very hesitant" to name names because it might discourage banks from taking the money.
"Has that ever happened?" Grayson asked. "Have people ever said, 'We will not take your $100 billion because people will find out about it?'"
"Well, we said we would not publish the names of the borrowers, so we have no test of that," Kohn answered, visibly annoyed with Grayson's meddling.
Grayson pressed on, demanding to know on what terms the Fed was lending the money. Presumably it was buying assets and making loans, but no one knew how it was pricing those assets — in other words, no one knew what kind of deal it was striking on behalf of taxpayers. So when Grayson asked if the purchased assets were "marked to market" — a methodology that assigns a concrete value to assets, based on the market rate on the day they are traded — Kohn answered, mysteriously, "The ones that have market values are marked to market." The implication was that the Fed was purchasing derivatives like credit swaps or other instruments that were basically impossible to value objectively — paying real money for God knows what.
"Well, how much of them don't have market values?" asked Grayson. "How much of them are worthless?"
"None are worthless," Kohn snapped.
"Then why don't you mark them to market?" Grayson demanded.
"Well," Kohn sighed, "we are marking the ones to market that have market values."
In essence, the Fed was telling Congress to lay off and let the experts handle things. "It's like buying a car in a used-car lot without opening the hood, and saying, 'I think it's fine,'" says Dan Fuss, an analyst with the investment firm Loomis Sayles. "The salesman says, 'Don't worry about it. Trust me.' It'll probably get us out of the lot, but how much farther? None of us knows."
When one considers the comparatively extensive system of congressional checks and balances that goes into the spending of every dollar in the budget via the normal appropriations process, what's happening in the Fed amounts to something truly revolutionary — a kind of shadow government with a budget many times the size of the normal federal outlay, administered dictatorially by one man, Fed chairman Ben Bernanke. "We spend hours and hours and hours arguing over $10 million amendments on the floor of the Senate, but there has been no discussion about who has been receiving this $3 trillion," says Sen. Bernie Sanders. "It is beyond comprehension."
Count Sanders among those who don't buy the argument that Wall Street firms shouldn't have to face being outed as recipients of public funds, that making this information public might cause investors to panic and dump their holdings in these firms. "I guess if we made that public, they'd go on strike or something," he muses.
And the Fed isn't the only arm of the bailout that has closed ranks. The Treasury, too, has maintained incredible secrecy surrounding its implementation even of the TARP program, which was mandated by Congress. To this date, no one knows exactly what criteria the Treasury Department used to determine which banks received bailout funds and which didn't — particularly the first $350 billion given out under Bush appointee Hank Paulson.
The situation with the first TARP payments grew so absurd that when the Congressional Oversight Panel, charged with monitoring the bailout money, sent a query to Paulson asking how he decided whom to give money to, Treasury responded — and this isn't a joke — by directing the panel to a copy of the TARP application form on its website. Elizabeth Warren, the chair of the Congressional Oversight Panel, was struck nearly speechless by the response.
"Do you believe that?" she says incredulously. "That's not what we had in mind."
Another member of Congress, who asked not to be named, offers his own theory about the TARP process. "I think basically if you knew Hank Paulson, you got the money," he says.
This cozy arrangement created yet another opportunity for big banks to devour market share at the expense of smaller regional lenders. While all the bigwigs at Citi and Goldman and Bank of America who had Paulson on speed-dial got bailed out right away — remember that TARP was originally passed because money had to be lent right now, that day, that minute, to stave off emergency — many small banks are still waiting for help. Five months into the TARP program, some not only haven't received any funds, they haven't even gotten a call back about their applications.
"There's definitely a feeling among community bankers that no one up there cares much if they make it or not," says Tanya Wheeless, president of the Arizona Bankers Association.
Which, of course, is exactly the opposite of what should be happening, since small, regional banks are far less guilty of the kinds of predatory lending that sank the economy. "They're not giving out subprime loans or easy credit," says Wheeless. "At the community level, it's much more bread-and-butter banking."
Nonetheless, the lion's share of the bailout money has gone to the larger, so-called "systemically important" banks. "It's like Treasury is picking winners and losers," says one state banking official who asked not to be identified.
This itself is a hugely important political development. In essence, the bailout accelerated the decline of regional community lenders by boosting the political power of their giant national competitors.
Which, when you think about it, is insane: What had brought us to the brink of collapse in the first place was this relentless instinct for building ever-larger megacompanies, passing deregulatory measures to gradually feed all the little fish in the sea to an ever-shrinking pool of Bigger Fish. To fix this problem, the government should have slowly liquidated these monster, too-big-to-fail firms and broken them down to smaller, more manageable companies. Instead, federal regulators closed ranks and used an almost completely secret bailout process to double down on the same faulty, merger-happy thinking that got us here in the first place, creating a constellation of megafirms under government control that are even bigger, more unwieldy and more crammed to the gills with systemic risk.
In essence, Paulson and his cronies turned the federal government into one gigantic, half-opaque holding company, one whose balance sheet includes the world's most appallingly large and risky hedge fund, a controlling stake in a dying insurance giant, huge investments in a group of teetering megabanks, and shares here and there in various auto-finance companies, student loans, and other failing businesses. Like AIG, this new federal holding company is a firm that has no mechanism for auditing itself and is run by leaders who have very little grasp of the daily operations of its disparate subsidiary operations.
In other words, it's AIG's rip-roaringly shitty business model writ almost inconceivably massive — to echo Geithner, a huge, complex global company attached to a very complicated investment bank/hedge fund that's been allowed to build up without adult supervision. How much of what kinds of crap is actually on our balance sheet, and what did we pay for it? When exactly will the rent come due, when will the money run out? Does anyone know what the hell is going on? And on the linear spectrum of capitalism to socialism, where exactly are we now? Is there a dictionary word that even describes what we are now? It would be funny, if it weren't such a nightmare.
VII. YOU DON'T GET IT
The real question from here is whether the Obama administration is going to move to bring the financial system back to a place where sanity is restored and the general public can have a say in things or whether the new financial bureaucracy will remain obscure, secretive and hopelessly complex. It might not bode well that Geithner, Obama's Treasury secretary, is one of the architects of the Paulson bailouts; as chief of the New York Fed, he helped orchestrate the Goldman-friendly AIG bailout and the secretive Maiden Lane facilities used to funnel funds to the dying company. Neither did it look good when Geithner — himself a protégé of notorious Goldman alum John Thain, the Merrill Lynch chief who paid out billions in bonuses after the state spent billions bailing out his firm — picked a former Goldman lobbyist named Mark Patterson to be his top aide.
In fact, most of Geithner's early moves reek strongly of Paulsonism. He has continually talked about partnering with private investors to create a so-called "bad bank" that would systemically relieve private lenders of bad assets — the kind of massive, opaque, quasi-private bureaucratic nightmare that Paulson specialized in. Geithner even refloated a Paulson proposal to use TALF, one of the Fed's new facilities, to essentially lend cheap money to hedge funds to invest in troubled banks while practically guaranteeing them enormous profits.
God knows exactly what this does for the taxpayer, but hedge-fund managers sure love the idea. "This is exactly what the financial system needs," said Andrew Feldstein, CEO of Blue Mountain Capital and one of the Morgan Mafia. Strangely, there aren't many people who don't run hedge funds who have expressed anything like that kind of enthusiasm for Geithner's ideas.
As complex as all the finances are, the politics aren't hard to follow. By creating an urgent crisis that can only be solved by those fluent in a language too complex for ordinary people to understand, the Wall Street crowd has turned the vast majority of Americans into non-participants in their own political future. There is a reason it used to be a crime in the Confederate states to teach a slave to read: Literacy is power. In the age of the CDS and CDO, most of us are financial illiterates. By making an already too-complex economy even more complex, Wall Street has used the crisis to effect a historic, revolutionary change in our political system — transforming a democracy into a two-tiered state, one with plugged-in financial bureaucrats above and clueless customers below.
The most galling thing about this financial crisis is that so many Wall Street types think they actually deserve not only their huge bonuses and lavish lifestyles but the awesome political power their own mistakes have left them in possession of. When challenged, they talk about how hard they work, the 90-hour weeks, the stress, the failed marriages, the hemorrhoids and gallstones they all get before they hit 40.
"But wait a minute," you say to them. "No one ever asked you to stay up all night eight days a week trying to get filthy rich shorting what's left of the American auto industry or selling $600 billion in toxic, irredeemable mortgages to ex-strippers on work release and Taco Bell clerks. Actually, come to think of it, why are we even giving taxpayer money to you people? Why are we not throwing your ass in jail instead?"
But before you even finish saying that, they're rolling their eyes, because You Don't Get It. These people were never about anything except turning money into money, in order to get more money; valueswise they're on par with crack addicts, or obsessive sexual deviants who burgle homes to steal panties. Yet these are the people in whose hands our entire political future now rests.
Good luck with that, America. And enjoy tax season.
Saturday, March 21, 2009
Mandatory National Service
House Passes Mandatory National Service Bill
03-19--2009
House Passes Mandatory National Service Bill
The House passed a bill yesterday which includes disturbing language
indicating young people will be forced to undertake mandatory national
service programs as fears about President Barack Obama's promised "civilian
national security force" intensify.
The Generations Invigorating Volunteerism and Education Act
, known as the
GIVE Act, was passed yesterday by a 321-105 margin and now goes to the
Senate.
Under section 6104 of the bill, entitled "Duties," in subsection B6, the
legislation states that a commission will be set up to investigate, "Whether
a workable, fair, and reasonable mandatory service requirement for all able
young people could be developed, and how such a requirement could be
implemented in a manner that would strengthen the social fabric of the
Nation and overcome civic challenges by bringing together people from
diverse economic, ethnic, and educational backgrounds."
Section 120 of the bill also discusses the "Youth Engagement Zone Program"
and states that "service learning" will be "a mandatory part of the
curriculum in all of the secondary schools served by the local educational
agency."
"The legislation, slated to cost $6 billion over five years, would create
175,000 "new service opportunities" under AmeriCorps, bringing the number of
participants in the national volunteer program to 250,000. It would also
create additional "corps" to expand the reach of volunteerism into new
sectors, including a Clean Energy Corps, Education Corps, Healthy Futures
Corps and Veterans Service Corps, and it expands the National Civilian
Community Corps to focus on additional areas like disaster relief and energy
conservation," reports Fox News
LINK.
The Senate is also considering a similar piece of legislation known as the
"Serve America Act," which also includes language about "Youth Engagement Zones".
Fears about Obama's plans to create involuntary servitude were first stoked
in July 2008, when Obama told a rally in Colorado Springs, "We cannot
continue to rely on our military in order to achieve the national security
objectives we've set. We've got to have a civilian national security force
that is just as powerful, just as strong, just as well funded."
Despite denials that Obama plans to institute a mandatory program of
national service, his original change.gov website stated
that Americans would be "required" to complete "50 hours of
community service in middle school and high school and 100 hours of
community service in college every year". The text was only later changed to
state that Americans would be "encouraged" to undertake such programs.
In addition, Obama's Chief of Staff, Rahm Emanuel, publicly stated his
intention to help create
"universal civil defense training" in 2006.
"The bill's opponents - and there are only a few in Congress - say it could
cram ideology down the throats of young "volunteers," many of whom could be
forced into service since the bill creates a "Congressional Commission on
Civic Service," reports Fox.
"We contribute our time and money under no government coercion on a scale
the rest of the world doesn't emulate and probably can't imagine," said Luke
Sheahan, contributing editor for the Family Security Foundation. "The idea
that government should order its people to perform acts of charity is
contrary to the idea of charity and it removes the responsibility for
charity from the people to the government, destroying private initiative."
Lee Cary of the conservative American Thinker warns that Obama's agenda is
to, "tap into the already active volunteerism of millions of Americans and
recruit them to become cogs in a gigantic government machine grinding out
his social re-engineering agenda."
CFR luminary Gary Hart hit back at critics, claiming in a Huffington Post
piece that, "Resistance to expanded public service programs can be expected
from the ideologically sclerotic, those who occupy the negative ground
between government as the problem and government as our enemy."
The frightening prospect of Obama's mandatory government servitude is
covered in-depth in Alex Jones' new documentary blockbuster, The Obama
Deception. Subscribe to prison
planet.tv now to watch the film in high-quality, watch
it for free here or
buy the DVD, make
copies and spread the word.
Research related links
1. Obama
"mandatory" community service
2. Democrats
Introduce Public National Service Bills
3. Obama
4. National
5. House Passes
Takeover Bill
6. With
Defense Bill
7. WND
8. Starbucks:
9. Valuable,
10. Senate
Passes $819 Billion Economic Stimulus Bill
11. The
Bill Nobody Noticed: National DNA Databank
12. Google
03-19--2009
House Passes Mandatory National Service Bill
The House passed a bill yesterday which includes disturbing language
indicating young people will be forced to undertake mandatory national
service programs as fears about President Barack Obama's promised "civilian
national security force" intensify.
The Generations Invigorating Volunteerism and Education Act
, known as the
GIVE Act, was passed yesterday by a 321-105 margin and now goes to the
Senate.
Under section 6104 of the bill, entitled "Duties," in subsection B6, the
legislation states that a commission will be set up to investigate, "Whether
a workable, fair, and reasonable mandatory service requirement for all able
young people could be developed, and how such a requirement could be
implemented in a manner that would strengthen the social fabric of the
Nation and overcome civic challenges by bringing together people from
diverse economic, ethnic, and educational backgrounds."
Section 120 of the bill also discusses the "Youth Engagement Zone Program"
and states that "service learning" will be "a mandatory part of the
curriculum in all of the secondary schools served by the local educational
agency."
"The legislation, slated to cost $6 billion over five years, would create
175,000 "new service opportunities" under AmeriCorps, bringing the number of
participants in the national volunteer program to 250,000. It would also
create additional "corps" to expand the reach of volunteerism into new
sectors, including a Clean Energy Corps, Education Corps, Healthy Futures
Corps and Veterans Service Corps, and it expands the National Civilian
Community Corps to focus on additional areas like disaster relief and energy
conservation," reports Fox News
LINK.
The Senate is also considering a similar piece of legislation known as the
"Serve America Act," which also includes language about "Youth Engagement Zones".
Fears about Obama's plans to create involuntary servitude were first stoked
in July 2008, when Obama told a rally in Colorado Springs, "We cannot
continue to rely on our military in order to achieve the national security
objectives we've set. We've got to have a civilian national security force
that is just as powerful, just as strong, just as well funded."
Despite denials that Obama plans to institute a mandatory program of
national service, his original change.gov website stated
that Americans would be "required" to complete "50 hours of
community service in middle school and high school and 100 hours of
community service in college every year". The text was only later changed to
state that Americans would be "encouraged" to undertake such programs.
In addition, Obama's Chief of Staff, Rahm Emanuel, publicly stated his
intention to help create
"universal civil defense training" in 2006.
"The bill's opponents - and there are only a few in Congress - say it could
cram ideology down the throats of young "volunteers," many of whom could be
forced into service since the bill creates a "Congressional Commission on
Civic Service," reports Fox.
"We contribute our time and money under no government coercion on a scale
the rest of the world doesn't emulate and probably can't imagine," said Luke
Sheahan, contributing editor for the Family Security Foundation. "The idea
that government should order its people to perform acts of charity is
contrary to the idea of charity and it removes the responsibility for
charity from the people to the government, destroying private initiative."
Lee Cary of the conservative American Thinker warns that Obama's agenda is
to, "tap into the already active volunteerism of millions of Americans and
recruit them to become cogs in a gigantic government machine grinding out
his social re-engineering agenda."
CFR luminary Gary Hart hit back at critics, claiming in a Huffington Post
piece that, "Resistance to expanded public service programs can be expected
from the ideologically sclerotic, those who occupy the negative ground
between government as the problem and government as our enemy."
The frightening prospect of Obama's mandatory government servitude is
covered in-depth in Alex Jones' new documentary blockbuster, The Obama
Deception. Subscribe to prison
planet.tv now to watch the film in high-quality, watch
it for free here or
buy the DVD, make
copies and spread the word.
Research related links
1. Obama
"mandatory" community service
2. Democrats
Introduce Public National Service Bills
3. Obama
4. National
5. House Passes
Takeover Bill
6. With
Defense Bill
7. WND
8. Starbucks:
9. Valuable,
10. Senate
Passes $819 Billion Economic Stimulus Bill
11. The
Bill Nobody Noticed: National DNA Databank
12. Google
Atlas Blocked
ATLAS BLOCKED: TRUTH IS THE NEW HATE SPEECH
UPDATE: GOVERNMENT BAN TOO
Who is the tiny pencil neck schmeckle behind the curtain making these decisions?
Atlas reader Max wrote,
Frank too, wrote , that I was banned - and HE WORKS AT A GOVERNMENT JOB
Posted by Pamela Geller on Friday, March 20, 2009 at 10:17 PM
UPDATE: GOVERNMENT BAN TOO
Who is the tiny pencil neck schmeckle behind the curtain making these decisions?
Atlas reader Max wrote,
Dear Pamela,
I love your site. I usually scan through the Conservative news fist thing in the morning when I get to work. Today, while having a cup of coffee, I tried to load your site I got:
I found other conservative sites were also blocked. Of course Moveon.org & DailyKos were not blocked.
What was most disturbing was the reason your site was blocked. The notice said Hate/Discrimination.
I thought you should know about this even though I'm not sure what can be done about it.
Frank too, wrote , that I was banned - and HE WORKS AT A GOVERNMENT JOB
Hey Pam,
Not that you should care (PLEASE don't go changing!), but I tried to access your web site during my 15 minutes of allowed web surfing at my govt job today, and you site came back as "blocked" reason given was "Hate Speech"
Is this new? I thought I had been able to access at work earlier this week (when researching "someone's" birth certificate)
Thought you should know,
Frank
Posted by Pamela Geller on Friday, March 20, 2009 at 10:17 PM
Man Critical Of Judge Visited By Marshals
Man critical of Obama case judge visited by marshals
'I told your Gestapo goons we had nothing to talk about'
--------------------------------------------------------------------------------
Posted: March 21, 2009
12:15 am Eastern
By Bob Unruh
© 2009 WorldNetDaily
A Washington, D.C., man who believes Barack Obama probably isn't eligible to be president – and colorfully stated as much to a federal judge who dismissed a case challenging Obama's residency in the White House – says he got a visit from U.S. marshals for his exercise of free speech.
James Robertson
Jesse Merrell told WND he was reacting to Judge James Robertson's decision to throw out a case challenging Obama's eligibility because the issue had been thoroughly "twittered."
Merrell sarcastically gave the judge a "good-for-you."
"How dare people use a flimsy thing like the Constitution to darken your sanctimonious door!" he wrote to the judge. "The insane idea that a blue-gum baboon slashing our Constitution has to prove U.S. citizenship – as our silly old Constitution demands – is too absurd to consider in the sacred chambers of the tiny tin gods of the Potomac, adorning the royal purple and sipping Jim Jones Kool-Aid.
"Thanks to smug, slimy shysters like you, Obama gets a free ride – snootily stomping on our foolish Constitution, which supercilious idiots like you have long ago shredded for their own stupid opinions!" Merrell continued in the letter, a copy of which he provided to WND.
He finished with his speculation on what "ought" to happen to the judge, a physical act not appropriate for a family-oriented report.
A short time later, he said he found two U.S. marshals on his doorstep.
"After reading your story about Federal Judge James Robertson dismissing a suit challenging Obama's natural born citizenship, and suggesting sanctions, I wrote him a very critical letter," Merrell told WND. "Two U.S. marshals came to visit me, making threats to silence me.
"I told them unless the First Amendment had been repealed, or they had a warrant for my arrest, we had nothing to discuss," he continued. "But they insisted on coming in, and making further threats.
"I responded with another letter, with firm language, but nothing I haven't used for 30 years, and quoting Thomas Jefferson's warning to bind judges with the 'chains of the Constitution' to prevent mischief."
WND called the U.S. marshals service for comment, but there was no comment on the specific case. A WND message left for one of the officers involved also was not returned.
A media office spokeswoman who took the message did confirm that "anyone who may write a letter referencing a judge or put something in a letter causing the marshals to be concerned about the well-being of a judge, they would look into it."
Merrell told WND his particular dislike of "government tyranny" has existed "since my fourth-great-grandfather, Captain Benjamin Merrell, was hanged – hanged, drawn and quartered – by the British Royal Governor of North Carolina in 1771 for protesting high and unjust taxes."
Where's the proof Barack Obama was born in the U.S. or that he fulfills the "natural-born American" clause in the Constitution? If you still want to see it, join more than 335,000 others and sign up now!
In his followup letter to the judge, Merrell's language was a little more salty.
"I told your Gestapo goons, of course, that unless the First Amendment had been repealed, or they were there to arrest me, that we had nothing to talk about.," Merrell's letter said ."One of your Brown-Shirt Nazi bullies, however, could not resist threatening me with some obscure law – one he didn't know where it was, or when it was created – which he said made it a crime to say something that caused a federal judge 'emotional distress.'
"Emotional distress? What unbelievably unadulterated horses---!" Merrell wrote. "What about the repulsive, stomach-turning 'emotional distress' you black-robed baboons speciously dish out to the American people daily – haughtily spitting on our precious Constitution with your nauseating, decency-stomping, judicial-jack--- slobber!
"If it is illegal for a Constitution-loving citizen to chastise a Constitution-scorning judge, who has spitefully spat on America's consecrated moral bedrock, then the slimy, steel-laden tentacles of unspeakable tyranny are already wrapped tightly around helpless citizens – awaiting the final hideous strangulation.
"But not as long as one end of my red-blooded tongue is loose!" Merrell's letter said.
He put the challenge directly to the judge:
"The Constitution clearly states, with no possible ambiguity – in Article 2, Section 1 – that 'No person except a natural born Citizen, or a Citizen of the United States, at the time of the Adoption of this Constitution, shall be eligible to the Office of President,'" he wrote.
"America is going down the drain – economically and Constitutionally, with terrorists and illegal aliens pouring across our borders like invading armies practically unopposed – but our insufferable, over-bloated, dictatorial government, while turning a blind eye to all that, has time and money to send two high-paid federal marshals – probably $130,000.00 each – to harass a citizen daring to exercise his precious First Amendment rights, which you want to destroy," he wrote.
"When you solemnly swear to uphold and defend the Constitution – then loathsomely lacerate and despicably desecrate that hallowed document – perhaps you should fear for your safety, for you have stopped being a dutiful servant of the people, and started arrogating unto yourself the venomous trappings of their tyrannical slave-master," he wrote.
"Oh, and my ancestor, Captain Benjamin Merrell, wasn't just hanged – but hanged, drawn and quartered: which means he was hanged, but taken down while yet alive, his abdomen violently sliced open and his entrails cruelly cut out and brutally thrown in his face and set afire...and then his body barbarically slashed into four quarters," Merrell wrote. "So, naturally, I'm more than a little suspicious of dictatorial power such as you brandish. And I'm not alone."
WND reported a challenge to the judge from the lawyer handling the case. Robertson threatened attorney John D. Hemenway with sanctions for representing client Gregory S. Hollister. Hollister is a retired military officer subject to being recalled who is demanding to know Obama's eligibility to discern whether any orders from the president would be legal.
Robertson dismissed the case, ridiculing questions of eligibility as having already been "blogged, texted, twittered and otherwise massaged."
Hollister is represented by Philadelphia lawyer Philip Berg, who has brought several motions on the eligibility dispute to the U.S. Supreme Court that have been ignored. Hemenway acted as local counsel in filing the action on behalf of Hollister.
Robertson wrote: "The plaintiff says that he is a retired Air Force colonel who continues to owe fealty to his Commander-in-Chief (because he might possibly be recalled to duty) and who is tortured by uncertainty as to whether he would have to obey orders from Barack Obama because it has not been proven – to the colonel's satisfaction – that Mr. Obama is a native-born American citizen, qualified under the Constitution to be president.
"The issue of the president's citizenship was raised, vetted, blogged, texted, twittered, and otherwise massaged by America's vigilant citizenry during Mr. Obama's two-year-campaign for the presidency, but this plaintiff wants it resolved by a court," Robertson wrote.
Hemenway has responded with a suggestion that if the judge wants to pursue sanctions, the attorney then would seek a discovery hearing to demand the president's original birth certificate as court procedures would allow.
The clients concerns also are valid, he wrote.
"These are not frivolous matters, as the learned Judge Robertson has suggested. Possible illegal orders are a matter of great concern to officers in the armed forces. … The legality of orders in and out of combat is of paramount importance," he wrote.
The lawyer also criticized the judge for citing hearsay in his court opinion.
"It is not helpful for a United States district judge to endorse obfuscation when a constitutional issue is involved. Under these circumstances, to threaten sanctions against an attorney who, in good faith assisted in the filing of a lawsuit involving issues none of the many judges and attorneys from coast to coast have found 'frivolous' is to employ the Rule 11 as a device to deprive the undersigned attorney of his civil rights and the right to due process. Without even a hearing or access to discovery being granted to defend against the charges, such a sanction would be a veritable lynching," Hemenway challenged.
"If the court persists in pressing Rule 11 procedures against Hemenway, then Hemenway should be allowed all of the discovery pertinent to the procedures as court precedents have permitted in the past," he said.
"The court has referred to a number of facts outside of the record of this particular case and, therefore, the undersigned is particularly entitled to a hearing to get the truth of those matters into the record. This may require the court to authorize some discovery," Hemenway said.
WND has reported on dozens of legal challenges to Obama's status as a "natural born citizen." The Constitution, Article 2, Section 1, states, "No Person except a natural born Citizen, or a Citizen of the United States, at the time of the Adoption of this Constitution, shall be eligible to the Office of President."
Some of the lawsuits question whether Obama was actually born in Hawaii, as he insists. If he was born out of the country, Obama's American mother, the suits contend, was too young at the time of his birth to confer American citizenship to her son under the law at the time.
Other challenges have focused on Obama's citizenship through his father, a Kenyan subject to the jurisdiction of the United Kingdom at the time of his birth, thus making him a dual citizen. The cases contend the framers of the Constitution excluded dual citizens from qualifying as natural born. Further complicating the issue are the reports he was adopted by an Indonesia man during his childhood and moved to Indonesia and attended school there. There also are questions on what nation's passport he traveled to Pakistan.
Lawyers and plaintiffs in a multitude of lawsuits also have asked why, if a birth certificate actually reflects that Obama was born in Hawaii, has he spent sums estimated by observers of up to $1 million hiring various law firms to keep concealed his birth certificate, his college records and other documentation.
John Eidsmoe, an expert on the U.S. Constitution now working with the Foundation on Moral Law, told WND a demand for verification of Obama's eligibility appears to be legitimate.
Eidsmoe said it's clear that Obama has something in the documentation of his history, including his birth certificate, college records and other documents that "he does not want the public to know."
Although Obama officials have told WND all such allegations are "garbage," here is a partial listing and status update for some of the cases over Obama's eligibility:
'I told your Gestapo goons we had nothing to talk about'
--------------------------------------------------------------------------------
Posted: March 21, 2009
12:15 am Eastern
By Bob Unruh
© 2009 WorldNetDaily
A Washington, D.C., man who believes Barack Obama probably isn't eligible to be president – and colorfully stated as much to a federal judge who dismissed a case challenging Obama's residency in the White House – says he got a visit from U.S. marshals for his exercise of free speech.
James Robertson
Jesse Merrell told WND he was reacting to Judge James Robertson's decision to throw out a case challenging Obama's eligibility because the issue had been thoroughly "twittered."
Merrell sarcastically gave the judge a "good-for-you."
"How dare people use a flimsy thing like the Constitution to darken your sanctimonious door!" he wrote to the judge. "The insane idea that a blue-gum baboon slashing our Constitution has to prove U.S. citizenship – as our silly old Constitution demands – is too absurd to consider in the sacred chambers of the tiny tin gods of the Potomac, adorning the royal purple and sipping Jim Jones Kool-Aid.
"Thanks to smug, slimy shysters like you, Obama gets a free ride – snootily stomping on our foolish Constitution, which supercilious idiots like you have long ago shredded for their own stupid opinions!" Merrell continued in the letter, a copy of which he provided to WND.
He finished with his speculation on what "ought" to happen to the judge, a physical act not appropriate for a family-oriented report.
A short time later, he said he found two U.S. marshals on his doorstep.
"After reading your story about Federal Judge James Robertson dismissing a suit challenging Obama's natural born citizenship, and suggesting sanctions, I wrote him a very critical letter," Merrell told WND. "Two U.S. marshals came to visit me, making threats to silence me.
"I told them unless the First Amendment had been repealed, or they had a warrant for my arrest, we had nothing to discuss," he continued. "But they insisted on coming in, and making further threats.
"I responded with another letter, with firm language, but nothing I haven't used for 30 years, and quoting Thomas Jefferson's warning to bind judges with the 'chains of the Constitution' to prevent mischief."
WND called the U.S. marshals service for comment, but there was no comment on the specific case. A WND message left for one of the officers involved also was not returned.
A media office spokeswoman who took the message did confirm that "anyone who may write a letter referencing a judge or put something in a letter causing the marshals to be concerned about the well-being of a judge, they would look into it."
Merrell told WND his particular dislike of "government tyranny" has existed "since my fourth-great-grandfather, Captain Benjamin Merrell, was hanged – hanged, drawn and quartered – by the British Royal Governor of North Carolina in 1771 for protesting high and unjust taxes."
Where's the proof Barack Obama was born in the U.S. or that he fulfills the "natural-born American" clause in the Constitution? If you still want to see it, join more than 335,000 others and sign up now!
In his followup letter to the judge, Merrell's language was a little more salty.
"I told your Gestapo goons, of course, that unless the First Amendment had been repealed, or they were there to arrest me, that we had nothing to talk about.," Merrell's letter said ."One of your Brown-Shirt Nazi bullies, however, could not resist threatening me with some obscure law – one he didn't know where it was, or when it was created – which he said made it a crime to say something that caused a federal judge 'emotional distress.'
"Emotional distress? What unbelievably unadulterated horses---!" Merrell wrote. "What about the repulsive, stomach-turning 'emotional distress' you black-robed baboons speciously dish out to the American people daily – haughtily spitting on our precious Constitution with your nauseating, decency-stomping, judicial-jack--- slobber!
"If it is illegal for a Constitution-loving citizen to chastise a Constitution-scorning judge, who has spitefully spat on America's consecrated moral bedrock, then the slimy, steel-laden tentacles of unspeakable tyranny are already wrapped tightly around helpless citizens – awaiting the final hideous strangulation.
"But not as long as one end of my red-blooded tongue is loose!" Merrell's letter said.
He put the challenge directly to the judge:
"The Constitution clearly states, with no possible ambiguity – in Article 2, Section 1 – that 'No person except a natural born Citizen, or a Citizen of the United States, at the time of the Adoption of this Constitution, shall be eligible to the Office of President,'" he wrote.
"America is going down the drain – economically and Constitutionally, with terrorists and illegal aliens pouring across our borders like invading armies practically unopposed – but our insufferable, over-bloated, dictatorial government, while turning a blind eye to all that, has time and money to send two high-paid federal marshals – probably $130,000.00 each – to harass a citizen daring to exercise his precious First Amendment rights, which you want to destroy," he wrote.
"When you solemnly swear to uphold and defend the Constitution – then loathsomely lacerate and despicably desecrate that hallowed document – perhaps you should fear for your safety, for you have stopped being a dutiful servant of the people, and started arrogating unto yourself the venomous trappings of their tyrannical slave-master," he wrote.
"Oh, and my ancestor, Captain Benjamin Merrell, wasn't just hanged – but hanged, drawn and quartered: which means he was hanged, but taken down while yet alive, his abdomen violently sliced open and his entrails cruelly cut out and brutally thrown in his face and set afire...and then his body barbarically slashed into four quarters," Merrell wrote. "So, naturally, I'm more than a little suspicious of dictatorial power such as you brandish. And I'm not alone."
WND reported a challenge to the judge from the lawyer handling the case. Robertson threatened attorney John D. Hemenway with sanctions for representing client Gregory S. Hollister. Hollister is a retired military officer subject to being recalled who is demanding to know Obama's eligibility to discern whether any orders from the president would be legal.
Robertson dismissed the case, ridiculing questions of eligibility as having already been "blogged, texted, twittered and otherwise massaged."
Hollister is represented by Philadelphia lawyer Philip Berg, who has brought several motions on the eligibility dispute to the U.S. Supreme Court that have been ignored. Hemenway acted as local counsel in filing the action on behalf of Hollister.
Robertson wrote: "The plaintiff says that he is a retired Air Force colonel who continues to owe fealty to his Commander-in-Chief (because he might possibly be recalled to duty) and who is tortured by uncertainty as to whether he would have to obey orders from Barack Obama because it has not been proven – to the colonel's satisfaction – that Mr. Obama is a native-born American citizen, qualified under the Constitution to be president.
"The issue of the president's citizenship was raised, vetted, blogged, texted, twittered, and otherwise massaged by America's vigilant citizenry during Mr. Obama's two-year-campaign for the presidency, but this plaintiff wants it resolved by a court," Robertson wrote.
Hemenway has responded with a suggestion that if the judge wants to pursue sanctions, the attorney then would seek a discovery hearing to demand the president's original birth certificate as court procedures would allow.
The clients concerns also are valid, he wrote.
"These are not frivolous matters, as the learned Judge Robertson has suggested. Possible illegal orders are a matter of great concern to officers in the armed forces. … The legality of orders in and out of combat is of paramount importance," he wrote.
The lawyer also criticized the judge for citing hearsay in his court opinion.
"It is not helpful for a United States district judge to endorse obfuscation when a constitutional issue is involved. Under these circumstances, to threaten sanctions against an attorney who, in good faith assisted in the filing of a lawsuit involving issues none of the many judges and attorneys from coast to coast have found 'frivolous' is to employ the Rule 11 as a device to deprive the undersigned attorney of his civil rights and the right to due process. Without even a hearing or access to discovery being granted to defend against the charges, such a sanction would be a veritable lynching," Hemenway challenged.
"If the court persists in pressing Rule 11 procedures against Hemenway, then Hemenway should be allowed all of the discovery pertinent to the procedures as court precedents have permitted in the past," he said.
"The court has referred to a number of facts outside of the record of this particular case and, therefore, the undersigned is particularly entitled to a hearing to get the truth of those matters into the record. This may require the court to authorize some discovery," Hemenway said.
WND has reported on dozens of legal challenges to Obama's status as a "natural born citizen." The Constitution, Article 2, Section 1, states, "No Person except a natural born Citizen, or a Citizen of the United States, at the time of the Adoption of this Constitution, shall be eligible to the Office of President."
Some of the lawsuits question whether Obama was actually born in Hawaii, as he insists. If he was born out of the country, Obama's American mother, the suits contend, was too young at the time of his birth to confer American citizenship to her son under the law at the time.
Other challenges have focused on Obama's citizenship through his father, a Kenyan subject to the jurisdiction of the United Kingdom at the time of his birth, thus making him a dual citizen. The cases contend the framers of the Constitution excluded dual citizens from qualifying as natural born. Further complicating the issue are the reports he was adopted by an Indonesia man during his childhood and moved to Indonesia and attended school there. There also are questions on what nation's passport he traveled to Pakistan.
Lawyers and plaintiffs in a multitude of lawsuits also have asked why, if a birth certificate actually reflects that Obama was born in Hawaii, has he spent sums estimated by observers of up to $1 million hiring various law firms to keep concealed his birth certificate, his college records and other documentation.
John Eidsmoe, an expert on the U.S. Constitution now working with the Foundation on Moral Law, told WND a demand for verification of Obama's eligibility appears to be legitimate.
Eidsmoe said it's clear that Obama has something in the documentation of his history, including his birth certificate, college records and other documents that "he does not want the public to know."
Although Obama officials have told WND all such allegations are "garbage," here is a partial listing and status update for some of the cases over Obama's eligibility:
- New Jersey attorney Mario Apuzzo has filed a case on behalf of Charles Kerchner and others alleging Congress didn't properly ascertain that Obama is qualified to hold the office of president.
- Pennsylvania Democrat Philip Berg has three cases pending, including Berg vs. Obama in the 3rd U.S. Circuit Court of Appeals, a separate Berg vs. Obama which is under seal at the U.S. District Court level and Hollister vs. Soetoro a/k/a Obama, (now dismissed) brought on behalf of a retired military member who could be facing recall to active duty by Obama.
- Leo Donofrio of New Jersey filed a lawsuit claiming Obama's dual citizenship disqualified him from serving as president. His case was considered in conference by the U.S. Supreme Court but denied a full hearing.
- Cort Wrotnowski filed suit against Connecticut's secretary of state, making a similar argument to Donofrio. His case was considered in conference by the U.S. Supreme Court, but was denied a full hearing.
- Former presidential candidate Alan Keyes headlines a list of people filing a suit in California, in a case handled by the United States Justice Foundation, that asks the secretary of state to refuse to allow the state's 55 Electoral College votes to be cast in the 2008 presidential election until Obama verifies his eligibility to hold the office. The case is pending, and lawyers are seeking the public's support.
- Chicago attorney Andy Martin sought legal action requiring Hawaii Gov. Linda Lingle to release Obama's vital statistics record. The case was dismissed by Hawaii Circuit Court Judge Bert Ayabe.
- Lt. Col. Donald Sullivan sought a temporary restraining order to stop the Electoral College vote in North Carolina until Barack Obama's eligibility could be confirmed, alleging doubt about Obama's citizenship. His case was denied.
- In Ohio, David M. Neal sued to force the secretary of state to request documents from the Federal Elections Commission, the Democratic National Committee, the Ohio Democratic Party and Obama to show the presidential candidate was born in Hawaii. The case was denied.
- Also in Ohio, there was the Greenberg v. Brunner case which ended when the judge threatened to assess all case costs against the plaintiff.
- In Washington state, Steven Marquis sued the secretary of state seeking a determination on Obama's citizenship. The case was denied.
- In Georgia, Rev. Tom Terry asked the state Supreme Court to authenticate Obama's birth certificate. His request for an injunction against Georgia's secretary of state was denied by Georgia Superior Court Judge Jerry W. Baxter.
- California attorney Orly Taitz has brought a case, Lightfoot vs. Bowen, on behalf of Gail Lightfoot, the vice presidential candidate on the ballot with Ron Paul, four electors and two registered voters.
Thursday, March 19, 2009
You Could Be A Potential Terrorist ...
March 18, 2009
Missouri police given chilling instructions
Timothy Birdnow
Police in Missouri apparently are being instructed to keep on eye on conservatives.
According to this AP article the government of the state of Missouri has issued a report "informing" state police that people with third party bumper stickers on their cars or who believe the NAFTA superhighway is an attempt create a North American Union are subversive members of paramilitary militias and potential terrorists.
The Missouri Information Analysis Center (a division of the state police) has compiled an enemies list of warning signs for state police officers, signs that are supposed to help them determine potential terrorists. Such signs include Ron Paul bumper stickers, or "Right to Carry" handgun stickers (I have to wonder: does it include Support Your Local Police stickers, too?) and our friendly state troopers are warned to proceed with extreme caution against such radicals.
Don`t believe me? See for yourself. (pdf-sorry.)
Who is being targeted in this report? The state police are warned that Christians, "sovereign citizens", those opposed to abortion, tax revisionists, and anti-illegal immigrant advocates are potential would-be terrorists.
Oh, and you better not fly your flag upside down; that was given as another example of something a terrorist would do.
Were this an isolated incident, it would be easy to dismiss. But couple this with some other politically motivated incidents, such as Barack Obama`s "truth squad" in which he encouraged the prosecution of people who protested him too aggressively (bear in mind he had St. Louis Prosecuting attorney Jennifer Joyce and St. Louis County`s Bob McCullugh on the squad, as well as a number of Democrats holding high positions in law enforcement statewide), along with Obama`s proposal for a national militia trained and funded like one of the branches of the military, and you have a very disturbing trend here.
Does anyone remember the Democrats using Judge Evelyn Baker to keep the polls open late in St. Louis (a notorious Democrat stronghold) during the election of 2000? (Lacy Clay, then state senator, had promised days before the election to do just that.) It seems that there are some in this state who have no problem using the force of law to repress their enemies.
How long before we see this nationwide?
Where is the ACLU?
Missouri police given chilling instructions
Timothy Birdnow
Police in Missouri apparently are being instructed to keep on eye on conservatives.
According to this AP article the government of the state of Missouri has issued a report "informing" state police that people with third party bumper stickers on their cars or who believe the NAFTA superhighway is an attempt create a North American Union are subversive members of paramilitary militias and potential terrorists.
The Missouri Information Analysis Center (a division of the state police) has compiled an enemies list of warning signs for state police officers, signs that are supposed to help them determine potential terrorists. Such signs include Ron Paul bumper stickers, or "Right to Carry" handgun stickers (I have to wonder: does it include Support Your Local Police stickers, too?) and our friendly state troopers are warned to proceed with extreme caution against such radicals.
Don`t believe me? See for yourself. (pdf-sorry.)
Who is being targeted in this report? The state police are warned that Christians, "sovereign citizens", those opposed to abortion, tax revisionists, and anti-illegal immigrant advocates are potential would-be terrorists.
Oh, and you better not fly your flag upside down; that was given as another example of something a terrorist would do.
Were this an isolated incident, it would be easy to dismiss. But couple this with some other politically motivated incidents, such as Barack Obama`s "truth squad" in which he encouraged the prosecution of people who protested him too aggressively (bear in mind he had St. Louis Prosecuting attorney Jennifer Joyce and St. Louis County`s Bob McCullugh on the squad, as well as a number of Democrats holding high positions in law enforcement statewide), along with Obama`s proposal for a national militia trained and funded like one of the branches of the military, and you have a very disturbing trend here.
Does anyone remember the Democrats using Judge Evelyn Baker to keep the polls open late in St. Louis (a notorious Democrat stronghold) during the election of 2000? (Lacy Clay, then state senator, had promised days before the election to do just that.) It seems that there are some in this state who have no problem using the force of law to repress their enemies.
How long before we see this nationwide?
Where is the ACLU?
Tuesday, March 17, 2009
U.N. To Criminalize 'Defamation Of Islam'
Proposal at U.N. to criminalize 'defamation of Islam'
"Geneva, March 11, 2009 -- A new U.N. resolution circulated today by Islamic states would define any questioning of Islamic dogma as a human rights violation, intimidate dissenting voices, and encourage the forced imposition of Sharia law. (See full U.N. text below.)"
"UN Watch obtained a copy of the Pakistani-authored proposal after it was distributed today among Geneva diplomats attending the current session of the UN Human Rights Council. Entitled "Combating defamation of religions," it mentions only Islam."
"While non-binding, the resolution constitutes a dangerous threat to free speech everywhere. It would ban any perceived offense to Islamic sensitivities as a "serious affront to human dignity" and a violation of religious freedom, and would pressure U.N. member states -- at the "local, national, regional and international levels" -- to erode free speech guarantees in their "legal and constitutional systems.""
"It's an Orwellian text that distorts the meaning of human rights, free speech, and religious freedom, and marks a giant step backwards for liberty and democracy worldwide."
"The first to suffer will be moderate Muslims in the countries that are behind this resolution, like Iran, Saudi Arabia, Egypt, and Pakistan, who seek international legitimacy for state-sanctioned blasphemy laws that stifle religious freedom and outlaw conversions from Islam to other faiths."
"Next to suffer from this U.N.-sanctioned McCarthyism will be writers and journalists in the democratic West, with the resolution targeting the media for the "deliberate stereotyping of religions, their adherents and sacred persons.""
"Ultimately, it is the very notion of individual human rights at stake, because the sponsors of this resolution seek not to protect individuals from harm, but rather to shield a specific set of beliefs from any question, debate, or critical inquiry."
"The resolution's core premise -- that "defamation of religion" exists as legal concept -- is a distortion. The law on defamation protects the reputations of individuals, not beliefs. It also requires an examination of the truth or falsity of the challenged remarks -- a determination that no one, especially not the UN, is capable of undertaking concerning any religion."
"Tragically, given that Islamic states completely dominate the Human Rights Council, with the support of non-democratic members like Russia, China, and Cuba, adoption of the regressive resolution is a forgone conclusion. E.U. diplomats hope at best to win over a handful of wavering Latin American states to the dissenting side."
___________________________________
"Following is a copy of the draft U.N. Human Rights Council resolution obtained by UN Watch. Prepared by Pakistan on behalf of the Islamic group, the text was circulated today to Geneva diplomats in advance of a council vote scheduled for the end of March. Emphasis added."
Click here to read the full text of the resolution.
"Geneva, March 11, 2009 -- A new U.N. resolution circulated today by Islamic states would define any questioning of Islamic dogma as a human rights violation, intimidate dissenting voices, and encourage the forced imposition of Sharia law. (See full U.N. text below.)"
"UN Watch obtained a copy of the Pakistani-authored proposal after it was distributed today among Geneva diplomats attending the current session of the UN Human Rights Council. Entitled "Combating defamation of religions," it mentions only Islam."
"While non-binding, the resolution constitutes a dangerous threat to free speech everywhere. It would ban any perceived offense to Islamic sensitivities as a "serious affront to human dignity" and a violation of religious freedom, and would pressure U.N. member states -- at the "local, national, regional and international levels" -- to erode free speech guarantees in their "legal and constitutional systems.""
"It's an Orwellian text that distorts the meaning of human rights, free speech, and religious freedom, and marks a giant step backwards for liberty and democracy worldwide."
"The first to suffer will be moderate Muslims in the countries that are behind this resolution, like Iran, Saudi Arabia, Egypt, and Pakistan, who seek international legitimacy for state-sanctioned blasphemy laws that stifle religious freedom and outlaw conversions from Islam to other faiths."
"Next to suffer from this U.N.-sanctioned McCarthyism will be writers and journalists in the democratic West, with the resolution targeting the media for the "deliberate stereotyping of religions, their adherents and sacred persons.""
"Ultimately, it is the very notion of individual human rights at stake, because the sponsors of this resolution seek not to protect individuals from harm, but rather to shield a specific set of beliefs from any question, debate, or critical inquiry."
"The resolution's core premise -- that "defamation of religion" exists as legal concept -- is a distortion. The law on defamation protects the reputations of individuals, not beliefs. It also requires an examination of the truth or falsity of the challenged remarks -- a determination that no one, especially not the UN, is capable of undertaking concerning any religion."
"Tragically, given that Islamic states completely dominate the Human Rights Council, with the support of non-democratic members like Russia, China, and Cuba, adoption of the regressive resolution is a forgone conclusion. E.U. diplomats hope at best to win over a handful of wavering Latin American states to the dissenting side."
___________________________________
"Following is a copy of the draft U.N. Human Rights Council resolution obtained by UN Watch. Prepared by Pakistan on behalf of the Islamic group, the text was circulated today to Geneva diplomats in advance of a council vote scheduled for the end of March. Emphasis added."
Click here to read the full text of the resolution.
U.S. Taxpayers Funding Terrorism
Monday, March 16, 2009
I didn’t know I was funding terrorism
I bet you didn’t know you are too!
By Allan Erickson
3.10.09
Al-Waleed bin Talal * , net worth $20B, the man who helped Barack Obama get into Harvard Law School, it is alleged. He is the second largest shareholder in Citigroup, right behind the U.S. Government.
Forbes: “Last year (2006) he and a partner also closed a $3.9 billion deal to buy Fairmont Hotel & Resorts and more recently he announced that, with Bill Gates, he would take Four Seasons Hotels private for $3.8 billion, including debt.”
————————————
Imagine my surprise learning today I’m funding terrorism. And guess what, if you are an American taxpayer, you are funding terrorism too.
“Surprise” is a soft word, eh? “Horrified” is more appropriate.
Is this true? How can this be? Please let me explain.
Not too long ago we were forced to refinance thanks to a business ‘partner’ who stole a significant sum, destroying a business venture, leaving us without income for six months while we started over. Part of that refinance package included a Citi second mortgage a high rate of interest, with a balloon.
We have dutifully made our mortgage payments.
When we had a new baby girl a while ago, before the meltdown and bailouts, we decided we needed more life insurance, so we purchased a policy from AIG, and paid up front.
Now I learn from Frank Gaffney and Daniel Greenfield and others our mortgage payments and insurance premium are being managed by Islamic scholars to fund terrorism and finance the destruction of western civilization. No BS.
Since the U.S. government now owns controlling interest in both Citigroup and AIG, guess what? Your tax dollars are going to Muslims who do not have your best interests at heart.
“The U.S. taxpayer now owns most of AIG and Citigroup, two companies massively engaged in Shariah-compliant transactions, at odds with our constitutional separation of church and state,” writes Gaffney in a column published yesterday.
Source: http://townhall.com/columnists/FrankJGaffneyJr/2009/03/09/farewell_to_britain
What is Shariah-complaint finance?
Greenfield: “Islamic Banking uses a Sharia board to vet permissible investments. That Sharia board is much the same for Citigroup and AIG. It consists of Saudi or Saudi affiliated ‘religious scholars’ who have to give their okay on financial products that can be sold by a bank. This has obvious political implications.”
[Imagine the potential for boycotts, a favorite Muslim tactic, Greenfield rightly points out.]
Gaffney: “ . . . promoters of this industry, like ‘Shariah advisor’ and al-Jazeera host Sheikh Yusuf al-Qaradawi, have described SCF as ‘financial jihad’ and al Qaeda has publicly embraced its practice. . . (and British Prime Minister) Brown has declared he wants Britain to be the world capital of Shariah finance. The British government has refused to take punitive action against British-based Islamic “charities” that provide money to terrorist organizations. The latest is Interpal, a Palestinian organization that even the BBC was able to figure out provides support to Hamas."
Greenfield: " . . . the terrorist connections aren’t hard to find either. Citi Islamic Investment Bank is overseen by ‘eminent’ Sharia scholars. For example Nazih Hammad, President of Citi Islamic Investment Bank’s Sharia board. Nazih Hammad is a board member of the North American Fiqh Council. The North American Fiqh Council is another one of the Saudi front groups operating in America, one of whose trustees was Alamoudi, an Al Qaeda fundraiser. The North American Fiqh Council’s former President, Taha Jaber Al-Alawani, was an unindicted co-conspirator in the case of Islamic Jihad leader, Sami Al Arian. And there was board member Sheikh Muhammad al-Hanooti, who had extensive Hamas ties.’
Greenfield has more detail:
http://canadafreepress.com/index.php/article/9073
Note some highlights:
The second largest shareholder in Citi behind the U.S. Government is Saudi Prince Alaweed Bin Talal. (This is the same Saudi prince who blamed America for 9/11 and intervened to help Obama get into Harvard Law School.)*
Citigroup pioneered the big bank embrace of Sharia finance back in the 90’s
Citigroup’s Islamic Banking operation represents the world’s leading of Islamic loans and Sukuk bonds
Currently American taxpayers are in hock for 45 billion dollars to bailout Citigroup, while the Treasury, the FDIC and the Federal Reserve cover 90 percent of Citi’s 335 billion dollar losses
The American taxpayer is maintaining the number one Sharia finance bank in the world and that means the US government now officially owns a third of the largest Sharia finance arranger in the world, together with the Saudi royal family: Wahhabism’s quest for global Islamic domination and the US government come together.
AIG is also big into Sharia finance, even fielding Sharia finance offerings domestically.
The Obama connection: Citigroup provided half a million dollars to ACORN, essentially money directed for the Obama campaign’s ‘Get Out the Vote’ fraud program. Citigroup partnered with Acorn Housing Works to provide a specialized mortgage program for ACORN, the exact sort of program that caused the economic disaster in the first place.
ALL COINCIDENCE? ALL HAPPENSTANCE? Or orchestrated to destroy our country, using our own money, and our own leaders? The Mother of all Conspiracy Theories, or haphazard dotted lines?
Greenfield is certain:
“The US government hasn’t just bailed out Wall Street fat cats, but the centers of Islamic finance, rescuing the sizable investments of Saudi Arabia and the Abu Dhabi Investment Authority. And American taxpayers are now in the position of funding the world’s largest Sharia arranger, as well as the importation of Sharia finance to the United States through AIG. Lenin used to talk about the capitalists selling him the rope with which he would hang them. He had no clue that we would actually be buying the noose of Sharia Finance with which we’re being hung, and paying through the nose for the privilege.”
So, is my money going to prop up Saudi princes and, through channels, to kill Americans in Iraq and Afghanistan and elsewhere?
Not any more it isn’t.
I didn’t know I was funding terrorism
I bet you didn’t know you are too!
By Allan Erickson
3.10.09
Al-Waleed bin Talal * , net worth $20B, the man who helped Barack Obama get into Harvard Law School, it is alleged. He is the second largest shareholder in Citigroup, right behind the U.S. Government.
Forbes: “Last year (2006) he and a partner also closed a $3.9 billion deal to buy Fairmont Hotel & Resorts and more recently he announced that, with Bill Gates, he would take Four Seasons Hotels private for $3.8 billion, including debt.”
————————————
Imagine my surprise learning today I’m funding terrorism. And guess what, if you are an American taxpayer, you are funding terrorism too.
“Surprise” is a soft word, eh? “Horrified” is more appropriate.
Is this true? How can this be? Please let me explain.
Not too long ago we were forced to refinance thanks to a business ‘partner’ who stole a significant sum, destroying a business venture, leaving us without income for six months while we started over. Part of that refinance package included a Citi second mortgage a high rate of interest, with a balloon.
We have dutifully made our mortgage payments.
When we had a new baby girl a while ago, before the meltdown and bailouts, we decided we needed more life insurance, so we purchased a policy from AIG, and paid up front.
Now I learn from Frank Gaffney and Daniel Greenfield and others our mortgage payments and insurance premium are being managed by Islamic scholars to fund terrorism and finance the destruction of western civilization. No BS.
Since the U.S. government now owns controlling interest in both Citigroup and AIG, guess what? Your tax dollars are going to Muslims who do not have your best interests at heart.
“The U.S. taxpayer now owns most of AIG and Citigroup, two companies massively engaged in Shariah-compliant transactions, at odds with our constitutional separation of church and state,” writes Gaffney in a column published yesterday.
Source: http://townhall.com/columnists/FrankJGaffneyJr/2009/03/09/farewell_to_britain
What is Shariah-complaint finance?
Greenfield: “Islamic Banking uses a Sharia board to vet permissible investments. That Sharia board is much the same for Citigroup and AIG. It consists of Saudi or Saudi affiliated ‘religious scholars’ who have to give their okay on financial products that can be sold by a bank. This has obvious political implications.”
[Imagine the potential for boycotts, a favorite Muslim tactic, Greenfield rightly points out.]
Gaffney: “ . . . promoters of this industry, like ‘Shariah advisor’ and al-Jazeera host Sheikh Yusuf al-Qaradawi, have described SCF as ‘financial jihad’ and al Qaeda has publicly embraced its practice. . . (and British Prime Minister) Brown has declared he wants Britain to be the world capital of Shariah finance. The British government has refused to take punitive action against British-based Islamic “charities” that provide money to terrorist organizations. The latest is Interpal, a Palestinian organization that even the BBC was able to figure out provides support to Hamas."
Greenfield: " . . . the terrorist connections aren’t hard to find either. Citi Islamic Investment Bank is overseen by ‘eminent’ Sharia scholars. For example Nazih Hammad, President of Citi Islamic Investment Bank’s Sharia board. Nazih Hammad is a board member of the North American Fiqh Council. The North American Fiqh Council is another one of the Saudi front groups operating in America, one of whose trustees was Alamoudi, an Al Qaeda fundraiser. The North American Fiqh Council’s former President, Taha Jaber Al-Alawani, was an unindicted co-conspirator in the case of Islamic Jihad leader, Sami Al Arian. And there was board member Sheikh Muhammad al-Hanooti, who had extensive Hamas ties.’
Greenfield has more detail:
http://canadafreepress.com/index.php/article/9073
Note some highlights:
The second largest shareholder in Citi behind the U.S. Government is Saudi Prince Alaweed Bin Talal. (This is the same Saudi prince who blamed America for 9/11 and intervened to help Obama get into Harvard Law School.)*
Citigroup pioneered the big bank embrace of Sharia finance back in the 90’s
Citigroup’s Islamic Banking operation represents the world’s leading of Islamic loans and Sukuk bonds
Currently American taxpayers are in hock for 45 billion dollars to bailout Citigroup, while the Treasury, the FDIC and the Federal Reserve cover 90 percent of Citi’s 335 billion dollar losses
The American taxpayer is maintaining the number one Sharia finance bank in the world and that means the US government now officially owns a third of the largest Sharia finance arranger in the world, together with the Saudi royal family: Wahhabism’s quest for global Islamic domination and the US government come together.
AIG is also big into Sharia finance, even fielding Sharia finance offerings domestically.
The Obama connection: Citigroup provided half a million dollars to ACORN, essentially money directed for the Obama campaign’s ‘Get Out the Vote’ fraud program. Citigroup partnered with Acorn Housing Works to provide a specialized mortgage program for ACORN, the exact sort of program that caused the economic disaster in the first place.
ALL COINCIDENCE? ALL HAPPENSTANCE? Or orchestrated to destroy our country, using our own money, and our own leaders? The Mother of all Conspiracy Theories, or haphazard dotted lines?
Greenfield is certain:
“The US government hasn’t just bailed out Wall Street fat cats, but the centers of Islamic finance, rescuing the sizable investments of Saudi Arabia and the Abu Dhabi Investment Authority. And American taxpayers are now in the position of funding the world’s largest Sharia arranger, as well as the importation of Sharia finance to the United States through AIG. Lenin used to talk about the capitalists selling him the rope with which he would hang them. He had no clue that we would actually be buying the noose of Sharia Finance with which we’re being hung, and paying through the nose for the privilege.”
So, is my money going to prop up Saudi princes and, through channels, to kill Americans in Iraq and Afghanistan and elsewhere?
Not any more it isn’t.
Subscribe to:
Posts (Atom)