04-05-2009, 11:05 AM
THE ENEMY WITHIN
President Obama Must Dump Summers To Save His Presidency
Debra Hanania-Freeman
http://www.larouchepub.com/other/2009/36...mmers.html
During an international webcast on March 21, Lyndon LaRouche noted that the real problem in the Obama Administration's economic policy team is not Treasury Secretary Tim Geithner. Instead, LaRouche stressed, the man whose policies pose the gravest danger to both the nation and Barack Obama's Presidency is Larry Summers, the head of the President's National Economic Council. LaRouche called for Summers to be removed from his post.
LaRouche's Saturday warning, that Summers posed a significant threat to the Administration, was borne out very quickly. By Monday, as Geithner unveiled the latest phase of the biggest bailout swindle in history, it was announced that the President's popularity had plummeted from a high of 78%, which he enjoyed in the days following his inauguration, to just under 50%. In fact, during the course of that week alone, the President's approval rating dropped by more than 13%!
As the week progressed, it became increasingly apparent that there was a potentially cataclysmic split inside the Administration. While a hoodwinked President Obama was persuaded by Summers and his backers that the way to solve this worst financial and monetary crisis in modern history was to turn over the keys to the banking system—at taxpayers' expense—to a gang of hedge fund thieves, saner voices echoed the policies outlined by LaRouche. Prominent and accomplished economists, most notably Texas economics professor and noted author James Galbraith (the son of FDR's economic advisor John Kenneth Galbraith) and Nobel Laureate Paul Krugman, insisted that, not only would the latest (and worst) of the bailout schemes fail, but it would make things much worse. They argued instead for the solution employed by FDR; the same solution that Lyndon LaRouche put on the table almost two years ago: to save the U.S. banking system by reorganizing it under bankruptcy protection.
Volcker: Revive Glass-Steagall
Former Federal Reserve Chairman Paul Volcker, who heads the President's Economic Recovery Advisory Board, during a March 27 speech in New York City, was even more emphatic on a point he has addressed before: that the current system absolutely had to be reorganized, and reorganized in a Glass-Steagall framework.[1]
Apparently, Summers, a notorious egomaniacal blowhard, whose inability to work with anyone has cost him more than one job in the past, threw a hissy fit, and told the President that he wasn't going to continue to play in the same sandbox as Volcker. Unfortunately, Obama has been brainwashed into believing that, in order for him to begin to solve the disaster he inherited from the Bush-Cheney Administration, he needs the support of the very Wall Street thieves who are largely responsible for this latest phase of the collapse, and that Larry Summers is critical to winning him that support.
So, on March 25, Office of Management and Budget (OMB) director Peter Orszag announced that President Obama was putting Volcker in charge of a tax-code review aimed at closing loopholes, streamlining the law, and generating revenue. Orszag said the review, given a deadline of Dec. 4, was being ordered to make recommendations on steps to simplify the code, built over the last 96 years, in ways that would reduce tax evasion, and what he called "corporate welfare."
There was no mistaking what had occurred. Just after Volcker had disagreed with Summers over both the timing of regulatory reform, and the core question of the necessity of bringing back Glass-Steagall, which Summers personally worked to wreck in 1999, the former Fed chairman was being sent off to work on taxes for the rest of the year. Obama's personnel choice was not only wrong, but potentially fatal to his Presidency. Despite Volcker's many problems, he is one of the few serious economic thinkers in the U.S., and the only such person inside the Obama Administration, who has the stature to credibly oppose Summers' bullying economic insanity.
In the interest of freeing President Obama from the toxic threat that Summers poses to his Presidency and to the nation, it is time to take a close look at just what Larry Summers represents.
Summers' Perfidy
Long before Summers became Treasury Secretary during the last 18 months of Bill Clinton's second term, he distinguished himself as an ardent opponent of the American system of economics. After studying under Martin Feldstein at Harvard, Summers joined the staff of the Council of Economic Advisors under Ronald Reagan. In that post, he argued successfully for radical cuts in both corporate and capital gains taxes as the best incentive for economic growth. He also insisted that unemployment insurance and welfare payments are among the single greatest contributors to unemployment, and as such, should be scaled back.
In December 1991, when Summers served as chief economist for the World Bank, a memo that bore his signature was leaked to the press. The internal memo, which clearly was not intended for the public, argued that although free trade would not necessarily benefit the environment in developing sector countries, there was clear economic logic in dumping waste there. In an aside to the memo, leaked to the press, Summers cynically suggested that "I think the economic logic behind dumping a load of toxic waste in the lowest wage countries is impeccable and we should face up to that.... I've always thought that under-populated countries in Africa are also vastly underpolluted."
In 1993, Summers joined the Clinton Administration as Undersecretary for International Affairs. In that post, he promoted genocidal economic shock therapy against the Russians, demanded an expansion of the power of the IMF, and increased deregulation by the Japanese (in 1997); he brags about his role in forcing the Korean government to raise its interest rates and balance its budget in the midst of a horrible economic crisis, a policy sharply criticized at the time by Nobel Laureates Paul Krugman and Joseph Stiglitz.
At the same time, according to a book by Paul Blustein, Summers, along with Paul Wolfowitz, tried to convince the Clinton Administration to effect a regime change in Indonesia.
All of this paled in comparison to the pain and damage inflicted on this nation and its people once he became Treasury Secretary. During the California energy crisis of 2000, Secretary Summers teamed up with Federal Reserve chairman Alan Greenspan and Enron executive Kenneth Lay to work over California Gov. Gray Davis, lecturing him that the cause of the crisis was excessive government regulation. Summers bullied Davis into further deregulating California's utilities and relaxing California's environmental standards in order to "reassure the markets."
However, nothing did more damage to this nation or more to cause this current crisis than the wrecking operation Summers led against any and all forms of financial regulation. As Treasury Secretary, Summers played the decisive role in convincing Congress to do what had been attempted, but failed, more than 12 times in 25 years: repeal the Glass-Steagall Act, which had been enacted in 1933 after the Pecora Commission catalyzed popular support for stronger regulation by hauling bank officials in front of the Senate Banking and Currency Committee to answer for their role in the stock market crash.
Immediately after taking over as Treasury Secretary, when the Administration, and especially the President, were distracted by other matters, Summers mounted a relentless lobbying effort to pass the Gramm-Leach-Bliley Act, which repealed key portions of Glass-Steagall, and allowed commercial banks to get into the mortgage-backed securities and collateralized debt obligations game. The measure also created an oversight disaster, with supervision of banking conglomerates now split among a host of different government agencies—agencies that, more often than not, failed to let each other know what they were doing, and what they were uncovering.
Another dirty little secret about Summers' tenure as Treasury Secretary was the role he played in torpedoing any regulation of derivatives trading. Just prior to moving up to the top post at Treasury, Summers became a singular and strong advocate, inside the Clinton Administration, for what was nothing less than a time bomb: Sen. Phil Gramm's (R-Tex.) other measure that let these banking-conglomerates-in-the-making create and trade derivatives without regulation.
Promoting Derivatives
Indeed, during a 1998 Senate hearing, Summers testified against the regulation of the derivatives market on the grounds that we could trust Wall Street! "The parties to these kinds of contracts," he said, "are largely sophisticated financial institutions that would appear to be eminently capable of protecting themselves from fraud and counterparty insolvencies, and most of which are already subject to basic safety and soundness regulation under existing banking and securities laws." He continued to defend over-the-counter derivatives and block all moves to regulate them, up through 2000, calling them "an important component of the American capital markets, and a powerful symbol of the kind of innovation and technology that has made the American financial system as strong as it is today."
It would be hard to make assumptions that turned out to be more wrong. Larry Summers was either the most corrupt and sinister Treasury Secretary in our nation's history, or the most incompetent one. However, his high-level managing position for D.E. Shaw, one of the most secretive of hedge funds, upon leaving office, would tend to argue in favor of the former.
Even more damning, though, was an op-ed by Summers in the Nov. 19, 2005 New York Times. In that piece, written upon the death of radical libertarian economist Milton Friedman, Summers makes the startling revelation that Friedman was "his hero." In the piece, which he entitled "The Great Liberator," Summers argues that "any honest Democrat will admit that we are now all Friedmanites," writing that Friedman not only made enormous contributions to monetary policy, but even greater contributions "in convincing people of the importance of allowing free markets to operate unencumbered."
It is little wonder, then, that an increasing number of economists and Democrats believe that President Obama is, as Rep. Peter DeFazio (D-Ore.) has stated, "ill-advised by Larry Summers." In January 2009, as the Administration tried to pass its stimulus bill, DeFazio, along with economists, including James Galbraith, Paul Krugman, and Joseph Stiglitz, argued that more of the stimulus money should be spent on much-needed infrastructure projects. DeFazio stated that he wasn't surprised that Summers favored more tax cuts instead. "Larry Summers hates infrastructure," he said. "[He] was very much part of creating the problem; now they're going to solve the problem? And they don't like infrastructure. So they want to have a consumer-driven recovery. We need an investment and productivity driven recovery for this country—a long-term recovery. Instead of borrowing from future generations, we should invest in future generations, and Larry is pretty much on record as being anti-infrastructure...."
Yet, it is this man who right now has the ear of a President who campaigned on the need to overhaul and re-regulate the nation's financial and banking system, who wants to pass a sweeping social agenda, who says he wishes to be known as the President who initiated the construction of a continental high-speed, maglev transportation system, and who led the United States out of the greatest economic crisis in its history.
In order to save this nation and his own Presidency, it would do President Obama well to heed LaRouche's "Emergency Address to President Obama and the American People" of March 26.
--------------------------------------------------------------------------------
[1] The Glass-Steagall Act (a.k.a. the Banking Act of 1933) introduced the separation of commercial and investment banking, and founded the Federal Deposit Insurance Corporation (FDIC) for insuring bank deposits. It was repealed in 1999.
WANT TO DESTROY THE U.S.A.? THEN LET THE BAILOUTS CONTINUE
John Hoefle
http://www.larouchepub.com/other/2009/36...y_usa.html
The financial bailout scheme released by Treasury Secretary Tim Geithner this week is an unmitigated disaster, one which will bring down the Obama Administration—if not reversed. It is the financial equivalent of giving more crack to junkies, when what they really need is to be forced to go "cold turkey." The scheme is fundamentally a continuation—and a significant expansion—of the disastrous policies implemented by the Bush Administration and its Goldman Sachs Treasury Secretary Henry Paulson.
"There is no way the President could expect to survive, politically, from this policy, even in the relatively short term," Lyndon LaRouche said of the scheme in a statement released yesterday. "First of all, it is incompetent, it is un-Constitutional, and it will destroy the United States."
We have said it before, and we will say it again: The bailout scheme is the greatest financial swindle in history, a policy which is monstrously corrupt. In the name of saving a bankrupt international financial bubble, it is bankrupting the United States, economically, politically, and morally. This is a crime against humanity, and it must be stopped.
Fraudulent Arguments
The concept of the bailout itself is a fraud, based upon the false premise that the financial system is "fundamentally sound," suffering mainly from a "crisis of confidence," in the wake of the "subprime" debacle. Therefore, what we need to do, the experts insist, is to inject sufficient Federal funds into the markets to keep them functioning until everyone calms down, and everything returns to "normal."
The belief that the system is fundamentally sound and that our prosperity depends upon reviving it, is the heart of the fraud. Over the past four decades, we have seen the physical productivity of our nation destroyed, in favor of the biggest financial bubble of all time. We transformed our nation from one which produced its wealth by building things, into a nation which made its money by financial manipulation. In short, we abandoned the American System in favor of British-style financial parasitism. That British system, is what has failed.
Once you buy into the Big Lie of the bailout, all the rest falls neatly into place. Since we have to save the system, we have to bail out the banks, and if we have to bail out the banks, we will have to pay enormous salaries and bonuses to the bankers and derivatives traders who run the system. God forbid they would leave banking in favor of becoming greeters at Wal-Mart, or take similar lucrative positions!
People who disagree with this scheme are dismissed as "populists" who just don't understand how the system works. As with all the best lies, there is some truth in that argument. Not everyone who opposes the bailout does so for serious principled reasons; some do, and others are just angry that the "fat cats" are getting help, while they are not. But the fact that some people oppose it for less than lofty reasons, doesn't make the bailout any less crooked, and certainly won't make it any more successful.
The point is, we are now spending trillions of dollars to bail out derivatives and related financial bets that should never have been allowed in the first place. We were insane to allow the creation of a financial system based upon derivatives speculation, and we are even more insane to try to bail that system out, now that it has, inevitably, blown up.
Rather than compound our mistakes, we should correct them, by shutting down the derivatives market. Don't bail out derivatives deals—cancel them! Send the derivatives traders, and the executives and regulators who allowed them to operate, packing. We don't need you, we don't want you, and we're damn well not going to subsidize your bonuses.
Corruption
Cleaning up this mess is a necessity, and we have repeatedly laid out our views on how it should be done. The emergency steps—the passage of the Homeowners and Bank Protection Act, the return to a Constitution-based credit system, and a Four Powers (U.S., Russia, China, India) agreement to reorient the world along those principles—are absolutely necessary, but they alone are not enough. We must also address the corruption within the financial system, and within ourselves, which allowed this tragedy to occur.
The slime mold known as the British Empire, or more properly the Anglo-Dutch Liberal Empire, is the highest level of organized crime on the planet. The philosophy of this slime mold is that man is a beast, and that the oligarchs are the kings of beasts. To them, the world is a jungle, where they are free to kill and eat as they wish. The rest of mankind, in their view, is little more than prey. Thus the empire thinks nothing of stealing the raw materials of impoverished nations, of profiting from trading in slaves and illicit drugs, of treating the world as if it were a giant plantation run for their benefit. Neither does it hesitate to ruthlessly loot nations, when its imperial financial games blow up in its face.
For the empire to demand a bailout, to put us all in servitude as debt-slaves, to bankrupt and destroy the nation, is to be expected. It is, after all, what they do. The real question is: Why do we let them do it? What is wrong with us, as a nation, that we capitulate to such inhuman demands, instead of treating them with the contempt they so richly deserve?
The answer is that we ourselves have been corrupted. Con men say you can't cheat an honest man, and the empire knows that even better. The best marks, the con men know, are greedy people who want something for nothing, whose desire to con someone else makes them vulnerable to being conned themselves.
That is the secret of the derivatives market, where financial obligations are created out of thin air, and whose "values" are based upon the greed and gullibility of the fools who buy them. Take as an example, a mortgage-backed security. Its value, theoretically, is based upon the income streams of the mortgages in the pools upon which the securities are based, but those income streams are already spoken for, as the repayments of the mortgage loans themselves. The mortgage-backed security is really nothing more than a debt issued by a mortgage speculator, the value of which depends upon ever-increasing housing prices. And if the mortgage-backed security is a scam, what about all the other securities piled on top, such as the collateralized debt obligations? The further you get from the original mortgages—which are not without their own financial problems—the deeper you get into pure fantasy.
We, as a nation, shut down the mightiest industrial engine the world had ever seen, one which gave us the highest standard of living in history—and for what? This junk! Now it's blown up, and we're supposed to bail it out so it can blow us up again? That's insane!
Shut It Down
It is this junk, and bets that are even wilder, that the bailout schemes are designed to protect. Their goal is not really to save our banks, but to save the multi-trillion dollars of fictitious values being held by the banks, the insurance companies, the hedge funds, the private equity funds, and others. Our government, which has been captured by the financiers, is spending trillions of dollars and promising trillions upon trillions more, to keep this scam going, while insisting to us that it is for our own good.
Bull! If our government really cared about the people it supposedly serves, it would shut this atrocity down, put the financial system through bankruptcy reorganization, and turn its attention to rebuilding and upgrading the real economy. What we need is honesty, in our government and in ourselves. We need to admit we've been conned, and correct the weaknesses that made us vulnerable. First tell the truth, and then go fix the problem. No more lies, no more scams.
President Obama Must Dump Summers To Save His Presidency
Debra Hanania-Freeman
http://www.larouchepub.com/other/2009/36...mmers.html
During an international webcast on March 21, Lyndon LaRouche noted that the real problem in the Obama Administration's economic policy team is not Treasury Secretary Tim Geithner. Instead, LaRouche stressed, the man whose policies pose the gravest danger to both the nation and Barack Obama's Presidency is Larry Summers, the head of the President's National Economic Council. LaRouche called for Summers to be removed from his post.
LaRouche's Saturday warning, that Summers posed a significant threat to the Administration, was borne out very quickly. By Monday, as Geithner unveiled the latest phase of the biggest bailout swindle in history, it was announced that the President's popularity had plummeted from a high of 78%, which he enjoyed in the days following his inauguration, to just under 50%. In fact, during the course of that week alone, the President's approval rating dropped by more than 13%!
As the week progressed, it became increasingly apparent that there was a potentially cataclysmic split inside the Administration. While a hoodwinked President Obama was persuaded by Summers and his backers that the way to solve this worst financial and monetary crisis in modern history was to turn over the keys to the banking system—at taxpayers' expense—to a gang of hedge fund thieves, saner voices echoed the policies outlined by LaRouche. Prominent and accomplished economists, most notably Texas economics professor and noted author James Galbraith (the son of FDR's economic advisor John Kenneth Galbraith) and Nobel Laureate Paul Krugman, insisted that, not only would the latest (and worst) of the bailout schemes fail, but it would make things much worse. They argued instead for the solution employed by FDR; the same solution that Lyndon LaRouche put on the table almost two years ago: to save the U.S. banking system by reorganizing it under bankruptcy protection.
Volcker: Revive Glass-Steagall
Former Federal Reserve Chairman Paul Volcker, who heads the President's Economic Recovery Advisory Board, during a March 27 speech in New York City, was even more emphatic on a point he has addressed before: that the current system absolutely had to be reorganized, and reorganized in a Glass-Steagall framework.[1]
Apparently, Summers, a notorious egomaniacal blowhard, whose inability to work with anyone has cost him more than one job in the past, threw a hissy fit, and told the President that he wasn't going to continue to play in the same sandbox as Volcker. Unfortunately, Obama has been brainwashed into believing that, in order for him to begin to solve the disaster he inherited from the Bush-Cheney Administration, he needs the support of the very Wall Street thieves who are largely responsible for this latest phase of the collapse, and that Larry Summers is critical to winning him that support.
So, on March 25, Office of Management and Budget (OMB) director Peter Orszag announced that President Obama was putting Volcker in charge of a tax-code review aimed at closing loopholes, streamlining the law, and generating revenue. Orszag said the review, given a deadline of Dec. 4, was being ordered to make recommendations on steps to simplify the code, built over the last 96 years, in ways that would reduce tax evasion, and what he called "corporate welfare."
There was no mistaking what had occurred. Just after Volcker had disagreed with Summers over both the timing of regulatory reform, and the core question of the necessity of bringing back Glass-Steagall, which Summers personally worked to wreck in 1999, the former Fed chairman was being sent off to work on taxes for the rest of the year. Obama's personnel choice was not only wrong, but potentially fatal to his Presidency. Despite Volcker's many problems, he is one of the few serious economic thinkers in the U.S., and the only such person inside the Obama Administration, who has the stature to credibly oppose Summers' bullying economic insanity.
In the interest of freeing President Obama from the toxic threat that Summers poses to his Presidency and to the nation, it is time to take a close look at just what Larry Summers represents.
Summers' Perfidy
Long before Summers became Treasury Secretary during the last 18 months of Bill Clinton's second term, he distinguished himself as an ardent opponent of the American system of economics. After studying under Martin Feldstein at Harvard, Summers joined the staff of the Council of Economic Advisors under Ronald Reagan. In that post, he argued successfully for radical cuts in both corporate and capital gains taxes as the best incentive for economic growth. He also insisted that unemployment insurance and welfare payments are among the single greatest contributors to unemployment, and as such, should be scaled back.
In December 1991, when Summers served as chief economist for the World Bank, a memo that bore his signature was leaked to the press. The internal memo, which clearly was not intended for the public, argued that although free trade would not necessarily benefit the environment in developing sector countries, there was clear economic logic in dumping waste there. In an aside to the memo, leaked to the press, Summers cynically suggested that "I think the economic logic behind dumping a load of toxic waste in the lowest wage countries is impeccable and we should face up to that.... I've always thought that under-populated countries in Africa are also vastly underpolluted."
In 1993, Summers joined the Clinton Administration as Undersecretary for International Affairs. In that post, he promoted genocidal economic shock therapy against the Russians, demanded an expansion of the power of the IMF, and increased deregulation by the Japanese (in 1997); he brags about his role in forcing the Korean government to raise its interest rates and balance its budget in the midst of a horrible economic crisis, a policy sharply criticized at the time by Nobel Laureates Paul Krugman and Joseph Stiglitz.
At the same time, according to a book by Paul Blustein, Summers, along with Paul Wolfowitz, tried to convince the Clinton Administration to effect a regime change in Indonesia.
All of this paled in comparison to the pain and damage inflicted on this nation and its people once he became Treasury Secretary. During the California energy crisis of 2000, Secretary Summers teamed up with Federal Reserve chairman Alan Greenspan and Enron executive Kenneth Lay to work over California Gov. Gray Davis, lecturing him that the cause of the crisis was excessive government regulation. Summers bullied Davis into further deregulating California's utilities and relaxing California's environmental standards in order to "reassure the markets."
However, nothing did more damage to this nation or more to cause this current crisis than the wrecking operation Summers led against any and all forms of financial regulation. As Treasury Secretary, Summers played the decisive role in convincing Congress to do what had been attempted, but failed, more than 12 times in 25 years: repeal the Glass-Steagall Act, which had been enacted in 1933 after the Pecora Commission catalyzed popular support for stronger regulation by hauling bank officials in front of the Senate Banking and Currency Committee to answer for their role in the stock market crash.
Immediately after taking over as Treasury Secretary, when the Administration, and especially the President, were distracted by other matters, Summers mounted a relentless lobbying effort to pass the Gramm-Leach-Bliley Act, which repealed key portions of Glass-Steagall, and allowed commercial banks to get into the mortgage-backed securities and collateralized debt obligations game. The measure also created an oversight disaster, with supervision of banking conglomerates now split among a host of different government agencies—agencies that, more often than not, failed to let each other know what they were doing, and what they were uncovering.
Another dirty little secret about Summers' tenure as Treasury Secretary was the role he played in torpedoing any regulation of derivatives trading. Just prior to moving up to the top post at Treasury, Summers became a singular and strong advocate, inside the Clinton Administration, for what was nothing less than a time bomb: Sen. Phil Gramm's (R-Tex.) other measure that let these banking-conglomerates-in-the-making create and trade derivatives without regulation.
Promoting Derivatives
Indeed, during a 1998 Senate hearing, Summers testified against the regulation of the derivatives market on the grounds that we could trust Wall Street! "The parties to these kinds of contracts," he said, "are largely sophisticated financial institutions that would appear to be eminently capable of protecting themselves from fraud and counterparty insolvencies, and most of which are already subject to basic safety and soundness regulation under existing banking and securities laws." He continued to defend over-the-counter derivatives and block all moves to regulate them, up through 2000, calling them "an important component of the American capital markets, and a powerful symbol of the kind of innovation and technology that has made the American financial system as strong as it is today."
It would be hard to make assumptions that turned out to be more wrong. Larry Summers was either the most corrupt and sinister Treasury Secretary in our nation's history, or the most incompetent one. However, his high-level managing position for D.E. Shaw, one of the most secretive of hedge funds, upon leaving office, would tend to argue in favor of the former.
Even more damning, though, was an op-ed by Summers in the Nov. 19, 2005 New York Times. In that piece, written upon the death of radical libertarian economist Milton Friedman, Summers makes the startling revelation that Friedman was "his hero." In the piece, which he entitled "The Great Liberator," Summers argues that "any honest Democrat will admit that we are now all Friedmanites," writing that Friedman not only made enormous contributions to monetary policy, but even greater contributions "in convincing people of the importance of allowing free markets to operate unencumbered."
It is little wonder, then, that an increasing number of economists and Democrats believe that President Obama is, as Rep. Peter DeFazio (D-Ore.) has stated, "ill-advised by Larry Summers." In January 2009, as the Administration tried to pass its stimulus bill, DeFazio, along with economists, including James Galbraith, Paul Krugman, and Joseph Stiglitz, argued that more of the stimulus money should be spent on much-needed infrastructure projects. DeFazio stated that he wasn't surprised that Summers favored more tax cuts instead. "Larry Summers hates infrastructure," he said. "[He] was very much part of creating the problem; now they're going to solve the problem? And they don't like infrastructure. So they want to have a consumer-driven recovery. We need an investment and productivity driven recovery for this country—a long-term recovery. Instead of borrowing from future generations, we should invest in future generations, and Larry is pretty much on record as being anti-infrastructure...."
Yet, it is this man who right now has the ear of a President who campaigned on the need to overhaul and re-regulate the nation's financial and banking system, who wants to pass a sweeping social agenda, who says he wishes to be known as the President who initiated the construction of a continental high-speed, maglev transportation system, and who led the United States out of the greatest economic crisis in its history.
In order to save this nation and his own Presidency, it would do President Obama well to heed LaRouche's "Emergency Address to President Obama and the American People" of March 26.
--------------------------------------------------------------------------------
[1] The Glass-Steagall Act (a.k.a. the Banking Act of 1933) introduced the separation of commercial and investment banking, and founded the Federal Deposit Insurance Corporation (FDIC) for insuring bank deposits. It was repealed in 1999.
WANT TO DESTROY THE U.S.A.? THEN LET THE BAILOUTS CONTINUE
John Hoefle
http://www.larouchepub.com/other/2009/36...y_usa.html
The financial bailout scheme released by Treasury Secretary Tim Geithner this week is an unmitigated disaster, one which will bring down the Obama Administration—if not reversed. It is the financial equivalent of giving more crack to junkies, when what they really need is to be forced to go "cold turkey." The scheme is fundamentally a continuation—and a significant expansion—of the disastrous policies implemented by the Bush Administration and its Goldman Sachs Treasury Secretary Henry Paulson.
"There is no way the President could expect to survive, politically, from this policy, even in the relatively short term," Lyndon LaRouche said of the scheme in a statement released yesterday. "First of all, it is incompetent, it is un-Constitutional, and it will destroy the United States."
We have said it before, and we will say it again: The bailout scheme is the greatest financial swindle in history, a policy which is monstrously corrupt. In the name of saving a bankrupt international financial bubble, it is bankrupting the United States, economically, politically, and morally. This is a crime against humanity, and it must be stopped.
Fraudulent Arguments
The concept of the bailout itself is a fraud, based upon the false premise that the financial system is "fundamentally sound," suffering mainly from a "crisis of confidence," in the wake of the "subprime" debacle. Therefore, what we need to do, the experts insist, is to inject sufficient Federal funds into the markets to keep them functioning until everyone calms down, and everything returns to "normal."
The belief that the system is fundamentally sound and that our prosperity depends upon reviving it, is the heart of the fraud. Over the past four decades, we have seen the physical productivity of our nation destroyed, in favor of the biggest financial bubble of all time. We transformed our nation from one which produced its wealth by building things, into a nation which made its money by financial manipulation. In short, we abandoned the American System in favor of British-style financial parasitism. That British system, is what has failed.
Once you buy into the Big Lie of the bailout, all the rest falls neatly into place. Since we have to save the system, we have to bail out the banks, and if we have to bail out the banks, we will have to pay enormous salaries and bonuses to the bankers and derivatives traders who run the system. God forbid they would leave banking in favor of becoming greeters at Wal-Mart, or take similar lucrative positions!
People who disagree with this scheme are dismissed as "populists" who just don't understand how the system works. As with all the best lies, there is some truth in that argument. Not everyone who opposes the bailout does so for serious principled reasons; some do, and others are just angry that the "fat cats" are getting help, while they are not. But the fact that some people oppose it for less than lofty reasons, doesn't make the bailout any less crooked, and certainly won't make it any more successful.
The point is, we are now spending trillions of dollars to bail out derivatives and related financial bets that should never have been allowed in the first place. We were insane to allow the creation of a financial system based upon derivatives speculation, and we are even more insane to try to bail that system out, now that it has, inevitably, blown up.
Rather than compound our mistakes, we should correct them, by shutting down the derivatives market. Don't bail out derivatives deals—cancel them! Send the derivatives traders, and the executives and regulators who allowed them to operate, packing. We don't need you, we don't want you, and we're damn well not going to subsidize your bonuses.
Corruption
Cleaning up this mess is a necessity, and we have repeatedly laid out our views on how it should be done. The emergency steps—the passage of the Homeowners and Bank Protection Act, the return to a Constitution-based credit system, and a Four Powers (U.S., Russia, China, India) agreement to reorient the world along those principles—are absolutely necessary, but they alone are not enough. We must also address the corruption within the financial system, and within ourselves, which allowed this tragedy to occur.
The slime mold known as the British Empire, or more properly the Anglo-Dutch Liberal Empire, is the highest level of organized crime on the planet. The philosophy of this slime mold is that man is a beast, and that the oligarchs are the kings of beasts. To them, the world is a jungle, where they are free to kill and eat as they wish. The rest of mankind, in their view, is little more than prey. Thus the empire thinks nothing of stealing the raw materials of impoverished nations, of profiting from trading in slaves and illicit drugs, of treating the world as if it were a giant plantation run for their benefit. Neither does it hesitate to ruthlessly loot nations, when its imperial financial games blow up in its face.
For the empire to demand a bailout, to put us all in servitude as debt-slaves, to bankrupt and destroy the nation, is to be expected. It is, after all, what they do. The real question is: Why do we let them do it? What is wrong with us, as a nation, that we capitulate to such inhuman demands, instead of treating them with the contempt they so richly deserve?
The answer is that we ourselves have been corrupted. Con men say you can't cheat an honest man, and the empire knows that even better. The best marks, the con men know, are greedy people who want something for nothing, whose desire to con someone else makes them vulnerable to being conned themselves.
That is the secret of the derivatives market, where financial obligations are created out of thin air, and whose "values" are based upon the greed and gullibility of the fools who buy them. Take as an example, a mortgage-backed security. Its value, theoretically, is based upon the income streams of the mortgages in the pools upon which the securities are based, but those income streams are already spoken for, as the repayments of the mortgage loans themselves. The mortgage-backed security is really nothing more than a debt issued by a mortgage speculator, the value of which depends upon ever-increasing housing prices. And if the mortgage-backed security is a scam, what about all the other securities piled on top, such as the collateralized debt obligations? The further you get from the original mortgages—which are not without their own financial problems—the deeper you get into pure fantasy.
We, as a nation, shut down the mightiest industrial engine the world had ever seen, one which gave us the highest standard of living in history—and for what? This junk! Now it's blown up, and we're supposed to bail it out so it can blow us up again? That's insane!
Shut It Down
It is this junk, and bets that are even wilder, that the bailout schemes are designed to protect. Their goal is not really to save our banks, but to save the multi-trillion dollars of fictitious values being held by the banks, the insurance companies, the hedge funds, the private equity funds, and others. Our government, which has been captured by the financiers, is spending trillions of dollars and promising trillions upon trillions more, to keep this scam going, while insisting to us that it is for our own good.
Bull! If our government really cared about the people it supposedly serves, it would shut this atrocity down, put the financial system through bankruptcy reorganization, and turn its attention to rebuilding and upgrading the real economy. What we need is honesty, in our government and in ourselves. We need to admit we've been conned, and correct the weaknesses that made us vulnerable. First tell the truth, and then go fix the problem. No more lies, no more scams.