By Patrick Wood, Editor

When push came to shove, Humpty Dumpty dis­cov­ered the shortest dis­tance to the cob­ble­stones below: straight down.

Being quite dead, Humpty’s body is stinking up the whole neigh­bor­hood. The eye­wit­nesses call it murder. The coroner, bypassing the eye­wit­nesses, rules it an acci­dent. The public clamors for tax­payer funds to clean up the mess. Con­gress passes a bill for super­glue to be lib­er­ally applied to the broken pieces of shell. The courts finally rule that the eye­wit­nesses are guilty of hate-speech. Con­trac­tors who admin­is­trate the recon­struc­tion project get rich.

And so goes the circle of life. Makes no sense, does it?

The global economy, including its stock mar­kets and banking system, is a decaying, dead corpse in process of a mas­sive credit defla­tion. Until it hits absolute bottom (wher­ever and when­ever that is), no life-support system will help. No gov­ern­ment bailout at tax­payer expense will help. No nation­al­iza­tion of body parts (e.g., Fannie, Freddie, AIG) will help.

Nev­er­the­less, let’s ana­lyze the bailout mania that will most cer­tainly one day be declared the largest and most brazen swindle in the his­tory of the world.

In light of and in response to the rapidly decaying banking emer­gency, Trea­sury Sec­re­tary Henry Paulson and Fed Chairman Ben Bernanke went hand in hand to Con­gress to ask for $700 bil­lion to repair the system. Paulson demanded that no strings be attached; no judi­cial over­sight; no account­ability. “Trust us,” they said.

Their demand was to take rotted assets off the bal­ance sheets of global banks, and sell them to the U.S. gov­ern­ment. No problem raising our national debt by another 12%. No problem that the U.S. credit rating is at risk of being down­graded, costing tax­payers hun­dreds of bil­lions extra in interest charges to ser­vice the existing national debt. No problem that for­eign banks can line up at the trough along­side Amer­ican banks. No problem that the toxic-waste assets don’t even have to be backed by U.S. mort­gages. No problem that these same global bankers are the ones who trashed the credit mar­kets in the first place.

They loved the pri­va­ti­za­tion of mas­sive profits and exec­u­tive bonuses for two decades of exces­sive risk and cre­ative accounting prac­tices. They now love the social­iza­tion of their inevitable losses as their house of cards comes crashing down.

The Paulson/Bernanke propo­si­tion to Con­gress was simple: Pay up or the country will collapse.

Is anyone really for this bailout?

On Sep­tember 29, just before the Senate and House passed sim­ilar bailout leg­is­la­tion, Rep. Brad Sherman (D-CA) made a pas­sionate plea to the House to reject Paulson’s and Bernanke’s demands. Therein he pre­sented a signed peti­tion of no less than 400 econ­o­mists, including three Nobel Lau­re­ates that stated, in part:

“We ask Con­gress not to rush, to hold appro­priate hear­ings, and to care­fully con­sider the right course of action.”

Mean­while, Sen­a­tors and Rep­re­sen­ta­tives reported that enraged cit­i­zens were flooding email servers and switch­boards with demands to vote “NO” on bailout leg­is­la­tion – up to 99 per­cent of them!

Yet, the Senate and the House passed the leg­is­la­tion anyway, behaving like herds of pan­icked wilde­beests on the savanna in Africa.

If everyone other than our elected offi­cials knows that Trea­sury Sec­re­tary Paulson and Fed Chairman Bernanke are brazenly plun­dering the United States cit­i­zenry, then why did they unan­i­mously pass this bailout legislation?

We’ve been had, folks

German philoso­pher Georg Hegel wrote, “We learn from his­tory that we do not learn from history.”

Rep. Louis McFadden, who had served as Chairman of the Banking and Cur­rency Com­mittee for over 10 years, was hop­ping mad about the Fed­eral Reserve and its shame­less abuse of the U.S. gov­ern­ment and its citizens.

In a speech to the House of Rep­re­sen­ta­tives, McFadden stated:

“Mr. Chairman, we have in this Country one of the most cor­rupt insti­tu­tions the world has ever known. I refer to the Fed­eral Reserve Board and the Fed­eral Reserve Banks, here­inafter called the Fed. The Fed has cheated the Gov­ern­ment of these United States and the people of the United States out of enough money to pay the Nation’s debt. The depre­da­tions and iniq­ui­ties of the Fed have cost enough money to pay the National debt sev­eral times over.

“This evil insti­tu­tion has impov­er­ished and ruined the people of these United States, has bank­rupted itself, and has prac­ti­cally bank­rupted our Gov­ern­ment. It has done this through the defects of the law under which it oper­ates, through the mal­ad­min­is­tra­tion of that law by the Fed and through the cor­rupt prac­tices of the mon­eyed vul­tures who con­trol it.

“Some people who think that the Fed­eral Reserve Banks are United States Gov­ern­ment insti­tu­tions. They are pri­vate monop­o­lies which prey upon the people of these United States for the ben­efit of them­selves and their for­eign cus­tomers; for­eign and domestic spec­u­la­tors and swindlers; and rich and preda­tory money lender. In that dark crew of finan­cial pirates there are those who would cut a man’s throat to get a dollar out of his pocket; there are those who send money into states to buy votes to con­trol our leg­is­la­tures; there are those who main­tain Inter­na­tional pro­pa­ganda for the pur­pose of deceiving us into granting of new con­ces­sions which will permit them to cover up their past mis­deeds and set again in motion their gigantic train of crime.“ [Emphasis added.]

Ouch.

Would you be sur­prised to learn that McFadden’s blis­tering tirade was not deliv­ered in 2008 but rather in 1934 during the darkest days of the Great Depression?

You see, this isn’t the first time in our nation’s his­tory that we have been attacked by the “mon­eyed vul­tures” who seek to swindle the tax­payer to cover up their own misdeeds.

Read care­fully as McFadden continues,

“The United States has been ran­sacked and pil­laged. Our struc­tures have been gutted and only the walls are left standing. While being per­pe­trated, every­thing the world would rake up to sell us was brought in here at our expense by the Fed until our mar­kets were swamped with unneeded and unwanted imported goods priced far above their value and make to equal the dollar volume of our honest exports, and to kill or reduce our favorite bal­ance of trade. As Agents of the for­eign cen­tral banks the Fed try by every means in their power to reduce our favor­able bal­ance of trade. They act for their for­eign prin­cipal and they accept fees from for­eigners for acting against the best inter­ests of these United States. Nat­u­rally there has been great com­pe­ti­tion among for­eigners for the favors of the Fed.

“What we need to do is to send the reserves of our National Banks home to the people who earned and pro­duced them and who still own them and to the banks which were com­pelled to sur­render them to preda­tory interests.

“Mr. Chairman, there is nothing like the Fed pool of con­fis­cated bank deposits in the world. It is a public trough of Amer­ican wealth in which the for­eigners claim rights, equal to or greater than Amer­i­cans. The Fed are the agents of the for­eign cen­tral banks. They use our bank depos­i­tors’ money for the ben­efit of their for­eign prin­ci­pals. They barter the public credit of the United States Gov­ern­ment and hire it out to for­eigners at a profit to themselves.

“All this is done at the expense of the United States Gov­ern­ment, and at a sick­ening loss to the Amer­ican people. Only our great wealth enabled us to stand the drain of it as long as we did.

“We need to destroy the Fed wherein our national reserves are impounded for the ben­efit of the for­eigners. We need to save America for Americans.”

In fact, McFadden did actu­ally bring formal charges against the Board of Gov­er­nors of the Fed­eral Reserve Bank system, The Comp­troller of the Cur­rency and the Sec­re­tary of United States Trea­sury for numerous crim­inal acts, including con­spiracy, fraud, unlawful con­ver­sion and treason.  Unfor­tu­nately, the charges were ulti­mately ignored, allowing the per­pe­tra­tors to con­tinue for another season.

[NOTE: To his great dis­credit, McFadden was openly anti-Semitic and an early sup­porter of Adolf Hitler during the 1930’s because of his poli­cies toward Jews. McFadden blamed Jews, wrongly so, for the finan­cial chi­canery he oth­er­wise clearly observed.

For many decades there­after, experts, including Nobel Prize-winning econ­o­mist Milton Friedman, have sug­gested that the Fed­eral Reserve was directly respon­sible for the 1929 stock market crash and the sub­se­quent Great Depression.

In 2002, Ben Bernanke (then merely a Fed gov­ernor) deliv­ered a speech on the occa­sion of Friedman’s 90th birthday at the Uni­ver­sity of Chicago, and addressed Friedman’s work on the cause of the Great Depres­sion. Bernanke con­cluded by stating, “You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.”

All promises aside, guess what? They’re baaack!

FBI opens investigation

On Sep­tember 24, 2008, right before Henry Paulson demanded bailout funds from Con­gress, the FBI had an announce­ment of its own. Namely, that it is inves­ti­gating Lehman Brothers, AIG, Fannie Mae and Freddie Mac for fraud, improper accounting prac­tices, con­spiracy, etc.

These four com­pa­nies are the remaining and prin­cipal insti­ga­tors of the sub­prime credit fiasco. In the case of Fannie and Freddie, there have been accu­sa­tions of fraud and cor­rup­tion for as long as they have existed.

But, Paulson and the Trea­sury had already nation­al­ized them, and shrewdly so: When wrong­doing is ulti­mately proven, it will be hard to hold anyone account­able or to punish the com­pa­nies since the U.S. Trea­sury owns them.

Conclusion

Don’t be fooled into thinking that it’s just about money: It’s also about power.

The Sec­re­tary of the Trea­sury now has near-dictatorial power over this newly formed socialist finan­cial empire.

Of course, this is con­sis­tent with the incred­ible power con­sol­i­da­tion of the Exec­u­tive Branch of our gov­ern­ment under pres­i­dent George Bush during the last 8 years. During this cen­tral­iza­tion, Con­gress and the Judi­ciary have been method­i­cally weak­ened to the point that some polit­ical ana­lysts believe that the Pres­i­dent could, if he wished, declare mar­tial law and dic­ta­tor­ship at the same time with little recourse from the other branches of the government.

Robert Pastor (father of the North Amer­ican Com­mu­nity) said last year that “having a crisis would force deci­sions that oth­er­wise might not get made.”

He was absolutely right. In normal times, the com­bined Con­gress would have laughed Paulson and Bernanke right out of town. The cur­rent finan­cial crisis has pro­vided cover and every oppor­tu­nity for the finan­cial cartel to take what little we have left.

Indeed, those who do not learn from his­tory are doomed to repeat it.

There’s going to be no end of con­tro­versy over the bailout of Fannie Mae and Freddie Mac.

On Sep­tember 9, 2008, CNBC’s pop­ular finan­cial show “Squawk Box Europe” inter­viewed Jim Rogers (CEO of Rogers Holding) on his view of the gov­ern­ment takeover of Fannie and Freddie:

“You can see that this is wel­fare for the rich. This is socialism for the rich. It’s bailing out the financiers, the banks, the Wall Streeters… This is out­ra­geous. Who are these people who are taking our money and doing this and ruining America?”

Who, indeed!

On March 21, 2008, The August Review wrote,

“As the global finan­cial crisis unfolds, one thing is cer­tain: The major invest­ment and com­mer­cial banks who have wrecked our economy and finan­cial system are now suc­cess­fully sucking unlim­ited amounts of money from the people’s Trea­sury to bail them­selves out.”

The August Review has demon­strated repeat­edly that the net effect of the New Inter­na­tional Eco­nomic Order (term coined by the Tri­lat­eral Com­mis­sion in 1973) was to devise new and more effec­tive ways to divert money from the public sector into cer­tain pri­vate hands.

With their right hand, elite bankers, investors and bro­kers can well afford to take on all the risk they desire, knowing that their left hand can get into the U.S. trea­sury to bail them­selves out when they hit the finan­cial brick wall.

And with the gov­ern­ment takeover of Fanny Mae and Freddie Mac, they have simply out­done them­selves: The mag­ni­tude of this bailout is on an order higher than any­thing ever recorded in our plan­e­tary history.

Of course, everyone in the finan­cial elite are feigning shock and dismay at the tragic turn of events. Saving these com­pa­nies, they say, will sup­pos­edly save our finan­cial system from utter destruc­tion. It’s an ulti­matum: Pay up or collapse.

Is it all a smoke­screen for yet another planned plun­dering of our Treasury?

In November 2005, Dr. Lau­rence J. Kot­likoff wrote a 23 page report titled, “Is the U.S. Bank­rupt?” It was issued by the Fed­eral Reserve Bank of St. Louis and qui­etly posted on their web­site – and it was totally ignored by the U.S. press.

With irrefutable logic and sta­tis­tical data, he con­cluded that

“Coun­tries can and do go bank­rupt. The United States, with its $65 tril­lion fiscal gap, seems clearly headed down that path.”

Being that the U.S. gov­ern­ment is the only and exclu­sive banking client of the Fed­eral Reserve, it is incon­ceiv­able that the Fed did not fully under­stand what Kot­likoff was saying.

It is also incon­ceiv­able that the Fed would not take action to pro­tect itself, its money, its pri­vate stock­holders, and hence, to appoint a conservator.

A Man for all seasons?

In May of 2006, former Trea­sury Sec­re­tary John Snow was sacked by the Bush admin­is­tra­tion and was simul­ta­ne­ously replaced by the chairman of Goldman Sachs, Henry “Ham­merin’ Hank” Paulson.

Goldman Sachs is one of a dozen or so global insti­tu­tions that are allowed to pur­chase Bills, Bonds and Notes directly from the Trea­sury, and is among the top five invest­ment banks in the world.

Con­flict of interest, you say? Appar­ently, it is not to the Bush admin­is­tra­tion or to the Senate who unan­i­mously con­firmed his appointment.

Fur­ther­more, Pres­i­dent Bush appar­ently didn’t want anyone to know about this shuffle until it was a done deal.

On May 25, 2006, when Bush and U.K. Prime Min­ister Tony Blair appeared together on the White House lawn for a press con­fer­ence, Bush was directly asked by a reporter about rumors that John Snow was on his way out. Said Bush, “No, he has not talked to me about res­ig­na­tion. I think he’s doing a fine job.”

Yet, on May 30th, Admin­is­tra­tion Press Sec­re­tary Tony Snow (no rela­tion to John Snow) said in a White House press con­fer­ence that “the two of them (John Snow and Bush) met on the 20th of May and there was a con­ver­sa­tion. And Hank Paulson accepted the job a day later. That was sub­ject to clear­ance. It does take time, espe­cially for a Senate con­firmable posi­tion, to com­plete those. So it did take time to get some of those clear­ances wrapped up.”

So, Bush point­edly lied in front of national tele­vi­sion, on May 25th about Snow’s res­ig­na­tion and the appoint­ment of Paulson that had occurred five days earlier.

Why? After Tony Snow was jumped repeat­edly by a reporter, he finally stated “with all due respect, I think there was some con­cern again about how some­thing like that affects the markets.”

Thus, their con­cerns became quite clear, and any public debate that might have dis­turbed the mar­kets, was avoided.

Ham­merin’ Hank’s Conservatorship?

If you follow finan­cial news, you will have noticed that Paulson and Fed Chairman Ben Bernanke are appearing together in public on a con­tinual basis these days– joint tes­ti­mony before the Con­gress, joint press con­fer­ences, meet­ings at the White House, etc.

Head­lines like these have been hot and heavy: “Paulson, Bernanke call on Con­gress to act”, “Bernanke, Paulson Push for New Reg­u­la­tory Pow­ers”, “Paulson, Bernanke Say Housing Woes May Last”, and “Paulson Meets with Bernanke, Fannie, Freddie Chiefs”.

Inter­esting. It never used to be this way.

On March 31, 2008, Paulson qui­etly released a 200 page doc­u­ment titled, “Blue­print for a Mod­ern­ized Reg­u­la­tory Struc­ture,” that he and Bernanke are now actively pushing Con­gress to adopt. It basi­cally calls for the com­plete restruc­turing of U.S. mar­kets and their reg­u­la­tory struc­tures to meet new “global stan­dards”.  After all, our reg­u­la­tory bodies have been cre­ated over the last 75 years and are not com­pat­ible with today’s finan­cial challenges.

In addi­tion, the Blue­print calls for much more self-regulation by the banking/securities industry itself. The very people who brought us this finan­cial chaos in the first place, want us to let them do what­ever is in their self-perceived best interest to pro­tect and increase their profits.

Mean­while, Paulson recently demanded and received from Con­gress a blank check for the bailout of Fannie and Freddie.  The alter­na­tive, he boldly claimed, was the fur­ther melt­down of the U.S. housing market and likely destruc­tion of the economy.

Does this appear like a bank­ruptcy proceeding?

• The banker and the CFO (Paulson) make auto­cratic decisions
• The bank­rupt com­pany gets reorganized
• New cap­ital or financing is secured to pay off creditors

If this is even remotely close to the mark, then we can expect to see more bold ulti­ma­tums and actions by both Bernanke and Paulson. We can also expect that those who are get­ting pro­tec­tion for their invest­ments are the global banks and invest­ment houses, not the Amer­ican people.

The Impli­ca­tions

U.S. cit­i­zens are get­ting hosed while banks, bro­ker­ages, hedge funds, sov­er­eign wealth funds, wealthy investors, etc., are saved from tril­lions of dol­lars in well-deserved losses.

By assuming the debts of Fannie and Freddie, the national debt vir­tu­ally dou­bles overnight. Even worse, the gov­ern­ment risks a down­grade to our existing debt, poten­tially pushing bor­rowing costs up by hun­dreds of bil­lions of dol­lars per year.

Amer­i­cans can and should demand that Con­gress let Fannie Mae and Freddie Mac fail like any other grossly mis­man­aged com­pany. And in the process, they ought to inves­ti­gate their senior man­age­ment for malfea­sance and cooking the books to cover it up.

Let the free market pro­vide new lenders who per­haps won’t be so greedy and ill-principled.

If a few more com­mer­cial or invest­ment banks suc­cumb in the process because of such action, let it serve as a warning to those sur­vivors that they had better shape up or risk losing everything.

If there are any more ulti­ma­tums deliv­ered, it should be us telling them to “Get out!” “Hit the road!” “Don’t come back!”

Allowing Bernanke and Paulson to admin­is­trate our finan­cial crisis is like giving an ax and frying pan to the foxes who were left in charge of the hen house.