The Central Bank; Silent partner in the bloodletting
By Mike Whitney
12/07/07 "ICH" -- -- -A nation's economy is a reflection pool.
The face that looks back from the water; is the face of the
culture and the prevailing ethos. It's no different with
America. The stewards of the US economic system—Paulson and Bernanke—are inextricably linked to a political/military
establishment which has been thoroughly marinated in a culture
of violence and corruption. Paulson's “Marshall Plan” for
subprime homeowners is just the gloved hand of the despot. The
other hand is still busy gouging out eyes at Guantanamo, or
clubbing foreign nationals at CIA black sites, or dropping
incendiary bombs on schoolchildren in Falluja. It's all the
same. The culture of war and demagoguery has its roots in the
economic system. Its financial leaders are just as culpable as
any low-ranking GI at Abu Ghraib.
The Paulson plan has nothing to do with saving working class
people from the ravages of foreclosure. Oh, no. The Bush
administration is ideologically opposed to helping people in
need. We know that already. Just look at Katrina. The real
purpose of the proposed “bailout” is to allow enough people to
keep making minimal payments on their mortgages so the banking
system doesn't shatter into a million pieces. That's it. It
doesn't take a genius to see that desperation has set in at the
Federal Reserve. The last time the government orchestrated a
bailout of this magnitude was during the '30s. And, guess what?
George Bush is no F.D.R.
The truth is, the system is cratering and the Fed's panic-button
is “blinking red”. It's obvious. They are doing everything in
their power to keep the train on the tracks, but they're not
succeeding. They're slashing rates, accepting dodgy collateral
(like Commercial paper and shaky mortgage-backed securities) as
repos, and they've extended the length of the repos
indefinitely, which is the same as “monetizing” the debt.
Paulson has tried to set up a Super SIV to help the major
investment banks off-load their mortgage-backed junk on the wary
public, but that isn't working either. Nothing is working.
Meanwhile, the headwinds keep getting stronger, the waves keep
crashing over the bow, and ship-o-state keeps listing perilously
on its side. It's a mess.
The banks are the conduit for the paper-money scam run by the
Federal Reserve. It's a crooked business run by the same people
who send our kids to war while rewarding themselves with tax
cuts. It stinks. Now the system is in dire straights. Are we
supposed to feel bad?
Foreign central banks and investors are dumping their dollars
and dollar-backed assets, the Gulf States are threatening to
de-link petroleum from the dollar, and investors everywhere know
they've been ripped off by a shoddy mortgage-laundering swindle
that got the “green light” from US regulators. It's a bad scene
all around. And now the chickens are coming home to roost.
The meltdown in the real estate market continues to send tremors
through Wall Street. Trillions of dollars in complex bonds (CDOs
and MBSs) are being downgraded as foreclosures increase and
housing inventory soars. Banks, insurance companies, pension
funds, bond insurers, hedge funds; are all among the
living-dead. Many are already insolvent and many more will
follow. It's just a matter of time. The foundation of the
financial markets is crumbling. The scheme to transform the
liabilities of loan-applicants with bad credit into a reliable
source of fat profits has failed. Alchemy still doesn't work.
The subprime crisis and (subsequent) credit crunch originated at
the Federal Reserve. The Fed triggered a speculative frenzy by
lowering interest rates below the rate of inflation for over 31
months between 2002 and 2004. Trillions of dollars were fed into
the banking system creating the biggest equity bubble in
history. Now that the housing bubble is crashing to earth--and
trillions of dollars in shaky bonds are headed for the
landfill--the Fed is trying to distance itself from any
responsibility. But we know the truth. The plan was authored and
executed by the Fed and that's where the blame lies. Everyone
else is just a “bit player”.
What matters most, is that the system is collapsing. It is being
slowly crushed by the accumulated weight of its own corruption.
When the system crashes, the flag will be lowered over
Guantanamo Bay, the present oligarchy of racketeers will be
removed from office, and the troops will come home from Iraq.
Sometimes positive results derive from tragedy.
There could be anarchy or tyranny or martial law or detention
camps. Who really knows? It's understandable that the public is
worried about “what could happen” in the near future. But,
consider this: can we continue moving in the same direction that
we are now? Can we keep pouring the blood of innocent people all
over the planet while claiming to own the world and all of its
resources? Can we keep ignoring the species-threatening
challenges of global warming, peak oil and nuclear
Well, then, is there any chance that the media, the congress,
the courts, or the president will come to their senses; chart a
different course, restore civil liberties, stop the human rights
abuse, and withdrawal the troops?
So tell me, dear reader, what hope is there for change apart
from a full-system economic collapse?
Political systems do not have to be perfect to be acceptable.
I'm not naive. But---for many of us---there are basic moral
criteria that have to be observed to win our support. The Bush
administration has elevated killing, torture and kidnapping to a
level of state policy. This is unacceptable by any standard, and
yet, all the levers of power are controlled by people who
support the present doctrine.
Isn't that so?
The United States is not a beacon of hope or a light unto the
world. It is a menace and a growing threat to survival on earth.
America's political and military belligerence is just an
extension of a domineering economic system which serves the sole
interests of the rich and powerful. The Central Bank plays a
critical role in this paradigm. Nation's don't go to war without
the blessing of their main financial institutions. The “big
money” guys are the silent partners in the plunder and
The men who own and oversee the US financial system; created the
cancer which is presently devouring it from the inside. Now the
tumor has metastasized and spread through the entire organism.
The situation is irreversible. The economy is on its last legs
and headed for a fall. US political leaders will have to accept
a world in which America is just one of many states of equal
power and significance. Military funding will slow to a dribble.
The killing will stop. Finally.
Click on "comments" below to read or post comments
Be succinct, constructive and
relevant to the story.
We encourage engaging, diverse
and meaningful commentary. Do not include
personal information such as names, addresses,
phone numbers and emails. Comments falling
outside our guidelines – those including
personal attacks and profanity – are not
See our complete
use this link to notify us if you have concerns
about a comment.
We’ll promptly review and remove any
Send Page To a Friend
with Title 17 U.S.C. Section 107, this material
is distributed without profit to those who have
expressed a prior interest in receiving the
included information for research and educational
purposes. Information Clearing House has no
affiliation whatsoever with the originator of
this article nor is Information ClearingHouse
endorsed or sponsored by the originator.)