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May 22, 2013
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 New Crisis, Old IsmsPosted on Mar 21, 2008By David Sirota The Federal Reserve Bank’s decision last week to address the housing crisis by extending $200 billion of taxpayer-financed credit to Wall Street banks was met with a stunned reaction typical of surprising events. But really, the move was the expression of longstanding isms that routinely package corruption as sound public policy. Some background: During the housing boom, banks doled out home loans to financially strapped borrowers, often on predatory terms. On the creditor side, these same banks packaged many of the loans as complex securities and sold them off to unwitting investors, generating a handsome profit on the paper transactions. At the same time, Wall Street used campaign contributions to coerce Congress into blocking anti-predatory-lending bills and repealing a landmark law regulating how banks could buy and sell securities. Predictably, many borrowers are now defaulting on their loans, meaning losses for financial institutions that hold mortgages and mortgage-backed securities. The Fed responded with what author Naomi Klein calls disaster capitalism—the age-old practice of using a crisis to enrich corporate interests. In this case, the Fed is using the housing emergency to justify giving taxpayer cash to Wall Street in exchange for its worthless mortgages. “What the Fed really did was lend money to banks and accept the counterfeit currency as collateral, treating it just as though it were real money,” says Dean Baker, the co-director of the Center for Economic and Policy Research. But this is not only disaster capitalism, it is also Big Boy Bailout-ism—the kind we’ve become accustomed to since the savings and loan scandal of the 1980s. It is an ideology that rewards wealthy political donors for irresponsible behavior and ignores the real victims. Advertisement The Fed’s scheme also embraces Feed-the-Beast-ism—an ideology that prescribes pumping taxpayer money into a crisis, rather than demanding reforms. Confronting an energy and climate emergency, Republicans’ answer was not massive alternative energy investments, but a 2005 energy bill giving tax breaks to the carbon-belching fossil fuel companies that finance the GOP. In the face of a health care catastrophe, the Bush administration’s 2003 Medicare bill didn’t crack down on pharmaceutical industry profiteering, but instead created a system that effectively subsidizes drug industry campaign donors. The list of examples goes on, and now includes the housing crisis. The Fed’s action says the solution to the credit crunch is not to re-regulate the banking industry or force it to clean house, but to loan Wall Street your hard-earned taxpayer money, allowing the same destructive system to remain and permitting the same vultures to stay in their jobs—and, of course, to keep writing big campaign checks. But worst of all is the Trickle Down-ism. For three decades, our government has said economic challenges can be solved with tax cuts for the wealthy—the same people who, not coincidentally, underwrite political campaigns. Trickle Down-ism claims that the wealthy will spend the tax cuts and the benefits will “trickle down” to us commoners. It’s the same nonsense with housing today. The root of the financial crisis is mortgage defaults—brought on, in part, by Trickle Down-ism’s original failure to raise wages. Yet, rather than help borrowers pay or restructure their mortgages, the government is covering the banks’ losses, claiming that aid will eventually “trickle down” and benefit the rest of us. During the Great Depression, Eleanor Roosevelt said, “We need not fear any isms if our democracy is achieving the ends for which it was established.” It’s the “if” part that has become the problem. David Sirota is a bestselling author whose newest book, “The Uprising,” will be released in June. He is a fellow at the Campaign for America’s Future and a board member of the Progressive States Network—both nonpartisan organizations. His blog is at www.credoaction.com/sirota. © 2008 Creators Syndicate Inc.  TAGS:
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How America Became a Third World Country: 2013-2023
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By Cynthia, April 4, 2008 at 7:33 pm Link to this comment
(Unregistered commenter)
yes and that’s not even the half of it - check out a fascinating interview with Michael Greenberger, on Fresh Air (NPR, Terry Gross), April 3 - available online.
Report thisBy ITSCRAZY, March 23, 2008 at 2:39 pm Link to this comment
(Unregistered commenter)
Don’t forget the banks made their predatory lending undischarged through bankruptcy with 100 mil in campaign lobbying efforts. We pay off the loans and the rich get bailed.
Report thisBy Greg Bacon, March 23, 2008 at 8:00 am Link to this comment
It’s time to nationalize the nation’s money supply and regain what is rightfully ours in the first place.
By doing so, we could start saving nearly 400 BILLION dollars a year in interest payments that now go to the private banks of the federal reserve.
We’d save even more money by telling the Wall Street banks that the loans will be paid back at 10 cents on the dollar, which is fitting, since that’s the amount of reserves they’ve kept—at times—in this scheme known as fiat currency.
If some fail, tough tittie. Let them experience what the American public has been experiencing since the private bankers took over the nation’s money supply in 1913.
These shysters and con artists helped throw the nation into the Great Depression of 1929 and were behind the looting of the nation’s Savings and Loans in the 1980’s, and now, this mortgage crisis which they are going to drop in our laps while they rush off to their off shore bank accounts and enjoy living the life of luxury.
We would also remove a serious source of corruption in Congress, as it’s been shown that the banking industry donates BIG money to our Congress.
And, the risk of wars in far away places would be diminished, since the banks would no longer stand to make a profit off the stranglehold they have on the federal reserve, by loaning out money to war mongers
Report thisBy valupak, March 23, 2008 at 3:43 am Link to this comment
(Unregistered commenter)
Those banks fully knew that most of those predatory loans would have to eventually be foreclosed on. They were counting on a profit anyway, because even after the legal fees of foreclosure, the banks figured on the price of houses going up enough to still make themselves a profit after they had kicked the homeowners out in the street. Yeah, you can tell me that we had to bail out Bear Sterns because it’s good people’s money in there too, but really, what kind of ‘good people’ think that making money by conning people out of their homes is a fair & decent business practice? Would investing with a conscience be too much to expect of investors?
Report thisBy purplewolf, March 22, 2008 at 7:10 pm Link to this comment
Perhaps if these greedy fat cats had not worked so hard to take our jobs away and send them out of America, thus leaving the rest of the working people needy, they would not be in this situation in the first place. With the loss of jobs, there is a loss of money with which to purchase and pay for items like, food, clothing and shelter. Where do they think the people are going to find jobs when there are less every day and the pay is most cases is lower. Of course the rich don’t care what happens to us, however, they should as once the “litle people” can no longer buy needed items to survive,the rich loose money and they will come tumbling down along with the rest of us. You cannot build a stable institution at the top without securing the base first.
Report thisThese institutions should have realized back in the 1970’s that if you keep eliminating jobs and sending them to foreign countries and do not replace those jobs here with similar pay and benefits, that one day it would all collaspe in on itself. The new foreign workers do not make enough money to buy the products they manufacture and the new jobs here are few and far and pay much less and since the item prices went up rather than down in many instances, the working people cannot afford these over priced either.
By Stephen Smoliar, March 22, 2008 at 7:36 am Link to this comment
On the other hand one of the lessons of the Israeli KIBBUTZIM is that socialists like to share their poverty but keep their wealth!
Report thisBy Maani, March 22, 2008 at 6:45 am Link to this comment
For those who care, the Rockefellers - both those in government (e.g., Senator Jay Rockefeller, who is actualy campaigning for him) and those in private banking - are supporting Obama.
Kinda makes you wonder, huh?
Peace.
P.S. Senator Jay is a member of three major NWO orgs: Trilateral Commission, CFR and Bilderberg.
Report thisBy amunaor, March 21, 2008 at 10:37 pm Link to this comment
Capitalists always look to individualize their profits, but in failure, they wish to socialize their loses. They speak with forked tongue!
Peace, Best Wishes and Hope
Report thisBy amunaor, March 21, 2008 at 10:14 pm Link to this comment
House of Rothschild patriarch, Mayer Amschel Bauer stated, “give me the control of a nations money and I care not who makes its laws.”
Peace, Best Wishes and Hope
Report thisBy amunaor, March 21, 2008 at 10:09 pm Link to this comment
By PAUL CRAIG ROBERTS
...The fact of the matter is that the US is bankrupt. David M. Walker, Comptroller General of the US and head of the Government Accountability Office, in his December 17, 2007, report to the US Congress on the financial statements of the US government noted that “the federal government did not maintain effective internal control over financial reporting (including safeguarding assets) and compliance with significant laws and regulations as of September 30, 2007.” In everyday language, the US government cannot pass an audit.
Moreover, the GAO report pointed out that the accrued liabilities of the federal government “totaled approximately $53 trillion as of September 30, 2007.” No funds have been set aside against this mind boggling liability.
Just so the reader understands, $53 trillion is $53,000 billion.
Frustrated by speaking to deaf ears, Walker recently resigned as head of the Government Accountability Office….
Full Story:
http://www.counterpunch.org/roberts03182008.html
I’m afraid it’s a tad bit worse than that!
Peace, Best Wishes and Hope
Report thisBy jackpine savage, March 21, 2008 at 4:12 pm Link to this comment
Pretty sweet deal, no?
Oddly enough, you have Reagan to thank for that situation…
Report thisBy 1twenty1, March 21, 2008 at 3:56 pm Link to this comment
I have the solution to our economic woes. The U.S. Treasury merely needs to start printing Euros. Problem solved. We can always whip the EUs ass should they protest.
Report thisBy BlueEagle, March 21, 2008 at 3:54 pm Link to this comment
Now if these are the owners of the Fed:
Rothschild Banks of London and Berlin
Lazard Brothers Bank of Paris
Israel Moses Sieff Banks of Italy
Warburg Bank of Hamburg, Germany and Amsterdam
Kuhn Loeb Bank of New York
Lehman Brothers Bank of New York
Goldman Sachs Bank of New York
Chase Manhattan Bank of New York (Controlled By the Rockefeller Family Tree)
How will this all play out if you assume that these people want to enrich themselves?
Thomas Jefferson already answered the question…
“If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them (around the banks), will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered.”
Report thisBy 1twenty1, March 21, 2008 at 3:36 pm Link to this comment
The Dims took the slush-hush money too. That’s why.
Report thisThey know that the Repugs know that they took it. They should all be hosed off of Capitol Hill like so much slimy muck!!!
By KISS, March 21, 2008 at 1:43 pm Link to this comment
Created in 1913 and was the beginning of corporate control; think Carnegie, Rockefeller, Morgan and the the other good guys.Think sweat shops and crash of ‘29 and Hoover.
Report thisWell David, you laid it out again and the American suckers..er a voters take it in the shorts once more.
Gregorio: get off the sauce..repugs set this up and like McCain of the Keating five this will be the worse of the worse.
By Stephen Smoliar, March 21, 2008 at 12:42 pm Link to this comment
This gets at what Bernanke REALLY meant when he talked about softening the damage at the end of last week. We did not hear much talk about WHAT damage TO WHOM:
http://therehearsalstudio.blogspot.com/2008/03/softening-damage.html
Consequently, all damage to the victims of predatory lending is being ignored by the Fed because it is basically the business of the Fed to see to the damage done to the lending institutions!
Report thisBy Gregorio, March 21, 2008 at 12:07 pm Link to this comment
Privatize social security! Yes, if only Wall Street could get its hands on the Social Security Fund everything would be OK! There is just too much government regulation. Yes, I’m a libertarian, and the problem is big government and regulation of the banks which, after all, have our interests at heart above all else. Read Ayn Rand. She’ll clue you in. Greed is good because it drives off altruism and concern for the little guy, not the heroic elites who have made this country the great scam that keeps on giving. Selfishness is a virtue! Vote Republican today, and tomorrow, and the next day.
Report thisBy Eric L Prentis, March 21, 2008 at 11:02 am Link to this comment
(Unregistered commenter)
The definition of inflation is a decline in the dollars purchasing power which is too much money chasing too few goods and services. US fiscal and monetary policies are responsible for the inflation of gas, food and healthcare that have a disproportional, deleterious effect on lower income Americans. The national debt over the last seven years has increased 66 percent from $5.6 trillion dollars to approximately $9.3 trillion dollars, due mainly because of the Republican tax cuts for the rich. When the economy is doing well, huge deficit federal spending stimulates over consumption, contributing to increased imports, higher trade deficits, a lower valuation of the US dollar thus increasing the cost of imports such as oil now at approximately $100 dollars per barrel. Currently, the Federal Reserve is flooding the banking system with money to try to bail out their friends on Wall Street. US fiscal and monetary policies ensure that even more and more money, controlled by the rich, continues to drive up prices. There is no free lunch in economics, someone has to pay more as a percentage of their income and that someone is the poor. In the US, the rich get richer and the poor get poorer because of government policies that support the US plutocracy. Where are the politicians who want to make the system fairer and ultimately make the US perform better?
Report thisBy Purple Girl, March 21, 2008 at 10:44 am Link to this comment
Although I realized the crime- I could not have summed it up so neatly.Except one Glaring Omission which should be repeated Often. teh federal Reserve is a Group of Private Banking entities who were Hired by Our Gov’t in 1934 to regulate our economy- needless to say when you leave the Fox to guard the Hen house you end up with No Hens.
Report thisThis Independent Contractor is the Granddaddy of all Cons.What method of undermining a Democracy mentored such criminal enterprises as Halliburton, KBR, Blackwater.
America has moved past the woes of Capitalism and neck deep in Corporationism. These entities have no allegience to such quaint concepts as Free market and (it’s evil twin) Capitalism. They are well beyond such elementary stratedgies and Goals. We felt the repercussions of these Unethical and Immoral Business Practices Loud & Clear on 9/11. who were the targets- financial, Military and Policy The Military Industrial Complex (Truman was not paranoid nor a Conspiracy Freak- but did Kill Too many out of poor judgement).thus did they Not place our citizens in harms way to begin with? So responsible for the events at least in part?
This is a new Millenia, a great time to clean house and get our act in order. We have those who will follow to consider.
By carl baydala, March 21, 2008 at 10:29 am Link to this comment
(Unregistered commenter)
The whole tenor of the recent sub-prime debacle is to try and resolve the issue without attaching blame. They ( the Fed ) just want try and fix the problem in the least amount of time. The financial system is after all the corner stone of the American Empire. If it falters or breaks down, the Fed must do whatever it takes to make things right again. And, according to the Fed there are certain components of the financial system that are more important than others; the Fed has determined that these people will be helped before others will.
The homeowner is only a bit player in the whole scheme. A bit player in the sense that he has no power compared to the financial institutions and the other major players in the game. It does not surprise me to learn that the Fed is essentially bailing out its pals after they have run afoul as it were. But, you will notice that assigning blame is not at the centre piece of Fed action, even though they are only now politely referring to ’ bad lending practices ’ as a source of the problem at hand.
The Fed is detrmined to fix the problem at all or any cost. Through lowering rates or lending or whatever it takes to get the players up and running again. Up and running so they can return to the game of profit making. That is the essence of the system and I think the people will be much more contented when they come to realize this fact. For me the whole lesson just adds more meaning to the phrase ” Don’t fight the Fed “. I had always assumed that this meant something related to the lowering and raising of interest rates and that we were all governed and influenced by the people who manage and control such things. But, now it looks like the phrase has an added meaning as well. It means for me that the Fed will not only dictate what is in store as regards my economic health, but it also means that the Fed will protect its friends first before considering the needs of the general population. The Fed, as we are all coming to appreciate more and more, is not a public institution and never has been. Favouritism is at the heart of all Federal Reserve actions.
Report thisBy Eamon, March 21, 2008 at 9:24 am Link to this comment
(Unregistered commenter)
Great comment Jackpine. I read Naomi’s book and found it amazing that people don’t seem to have a clue. Guess that means they have good press.
Report thisBy blueshift, March 21, 2008 at 9:22 am Link to this comment
This bailout only delays the inevitable. The fed is now printing money around the clock. But every dollar they print ruduces the value of the overall pool of US dollars by…exactly one dollar. It will soon begin to look like the 70’s all over again. Only this time, they can’t sell Trickle Down Theology as the answer, like they did with Reagan.
Report thisBy Ivan Hentschel, March 21, 2008 at 9:09 am Link to this comment
(Unregistered commenter)
This is all just horrific bunk. An ism here, an ism there, another ism, everywhere! The article is corect, and the truth is morally disgusting.
Here we are, in 2008, facing an election that has every basic principal we ought to be worried about shrouded in race, gender, sex and religion, and the world’s bankers are burning Rome while we all fiddle. Capitalism made America what it is (or should be) and greed has killed it.
Report thisBy msgmi, March 21, 2008 at 9:00 am Link to this comment
(Unregistered commenter)
Where is the oversight/transparency over the Fed which is made up of sitting BigBank CEOS…it’s tax dollar money and they ,da banks, bail each other out with it while John Doe citizen is thrown under the bus in most cases.
Report thisBy DennisD, March 21, 2008 at 7:49 am Link to this comment
(Unregistered commenter)
The silence from the Dims in Congress is deafening. No one is looking out for the public(tax payer)interest in the latest Wall St./Fed/Government scam and yet Pelosi is calling for a Tibet investigation. WTF!
Some things never change, if you’re not a player, you’re being played.
Report thisBy Expat, March 21, 2008 at 4:50 am Link to this comment
^ taxes legally. If you reside outside of the U.S. for more than 330 days (not sure of the exact number) then you can make $85,700 per year without paying taxes. You cannot live in an American territory (Antarctica, Puerto Rico, Samoa, etc.). Think about it. In most Asian countries you can also work as an English teacher making a very comfortable wage.
Report thisBy jackpine savage, March 21, 2008 at 4:43 am Link to this comment
And remember that the big banks are shareholders in the Fed (you’re not, the banks are). So JP Morgan managed to get you to borrow $30B, give it to Bears and Stearn, and then JP Morgan bought Bears and Stearn.
The Fed is the same as the banks, so let’s reword the quote from Dean Baker:
What the Fed [banks] really did was lend [your] money to banks [themselves] and accept [pass off on to the US taxpayer] the counterfeit currency as collateral, treating it just as though it were real money,
Don’t worry, it’s your grandchildren’s problem.
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