Judge Finds MERS Has No Right To Transfer Mortgages, Finds Entire MERS Process Illegal

Another excellent  Zero Hedge post (original story from Bloomberg).

U.S. Bankruptcy Judge Robert E. Grossman  ruled that Merscorp Inc., which runs the electronic-registration system responsible for about half of all U.S. home mortgages, has no right to transfer the mortgages.

This is HUGE news! The article came out on Monday, and so far there’s been virtually no coverage from the asleep-at-the-wheel-as-usual MSM.

Here’s a couple more posts from Zero Hedge that are must-reads:

“MERS Exits Stage Left, Tells Members Not To Foreclose In MERS’ Name“

“One Step Closer To The End: MERS Corporate Secretary Demoted“

Why Small Business Isn’t Hiring And Won’t Be Hiring

This is yet another excellent article by Charles Hugh Smith that he posted on his blog, and was picked up by Zero Hedge. I recommend reading the latter if you’re pressed for time, as Tyler has conveniently highlighted the salient points of the article for your viewing pleasure. Also, there’s a lot of good comments at the end as usual.

I read Zero Hedge every day. It is a good antidote to the b.s. “economic recovery” news stories in the mainstream media. Another good blog is The Automatic Earth.

BEST OF WEB: The American Empire Is Bankrupt

By Chris Hedges, Truthdig.

This week marks the end of the dollar’s reign as the world’s reserve currency. It marks the start of a terrible period of economic and political decline in the United States. And it signals the last gasp of the American imperium. That’s over. It is not coming back. And what is to come will be very, very painful.

Barack Obama, and the criminal class on Wall Street, aided by a corporate media that continues to peddle fatuous gossip and trash talk as news while we endure the greatest economic crisis in our history, may have fooled us, but the rest of the world knows we are bankrupt. And these nations are damned if they are going to continue to prop up an inflated dollar and sustain the massive federal budget deficits, swollen to over $2 trillion, which fund America’s imperial expansion in Eurasia and our system of casino capitalism. They have us by the throat. They are about to squeeze.

There are meetings being held Monday and Tuesday in Yekaterinburg, Russia, (formerly Sverdlovsk) among Chinese President Hu Jintao, Russian President Dmitry Medvedev and other top officials of the six-nation Shanghai Cooperation Organization. The United States, which asked to attend, was denied admittance. Watch what happens there carefully. The gathering is, in the words of economist Michael Hudson, “the most important meeting of the 21st century so far.”

It is the first formal step by our major trading partners to replace the dollar as the world’s reserve currency. If they succeed, the dollar will dramatically plummet in value, the cost of imports, including oil, will skyrocket, interest rates will climb and jobs will hemorrhage at a rate that will make the last few months look like boom times. State and federal services will be reduced or shut down for lack of funds. The United States will begin to resemble the Weimar Republic or Zimbabwe. Obama, endowed by many with the qualities of a savior, will suddenly look pitiful, inept and weak. And the rage that has kindled a handful of shootings and hate crimes in the past few weeks will engulf vast segments of a disenfranchised and bewildered working and middle class. The people of this class will demand vengeance, radical change, order and moral renewal, which an array of proto-fascists, from the Christian right to the goons who disseminate hate talk on Fox News, will assure the country they will impose.

I called Hudson, who has an article in Monday’s Financial Times called “The Yekaterinburg Turning Point: De-Dollarization and the Ending of America’s Financial-Military Hegemony.” “Yekaterinburg,” Hudson writes, “may become known not only as the death place of the czars but of the American empire as well.” His article is worth reading, along with John Lanchester’s disturbing exposé of the world’s banking system, titled “It’s Finished,” which appeared in the May 28 issue of the London Review of Books.

“This means the end of the dollar,” Hudson told me. “It means China, Russia, India, Pakistan, Iran are forming an official financial and military area to get America out of Eurasia. The balance-of-payments deficit is mainly military in nature. Half of America’s discretionary spending is military. The deficit ends up in the hands of foreign banks, central banks. They don’t have any choice but to recycle the money to buy U.S. government debt. The Asian countries have been financing their own military encirclement. They have been forced to accept dollars that have no chance of being repaid. They are paying for America’s military aggression against them. They want to get rid of this.”

China, as Hudson points out, has already struck bilateral trade deals with Brazil and Malaysia to denominate their trade in China’s yuan rather than the dollar, pound or euro. Russia promises to begin trading in the ruble and local currencies. The governor of China’s central bank has openly called for the abandonment of the dollar as reserve currency, suggesting in its place the use of the International Monetary Fund’s Special Drawing Rights. What the new system will be remains unclear, but the flight from the dollar has clearly begun. The goal, in the words of the Russian president, is to build a “multipolar world order” which will break the economic and, by extension, military domination by the United States. China is frantically spending its dollar reserves to buy factories and property around the globe so it can unload its U.S. currency. This is why Aluminum Corp. of China made so many major concessions in the failed attempt to salvage its $19.5 billion alliance with the Rio Tinto mining concern in Australia. It desperately needs to shed its dollars.

“China is trying to get rid of all the dollars they can in a trash-for-resource deal,” Hudson said. “They will give the dollars to countries willing to sell off their resources since America refuses to sell any of its high-tech industries, even Unocal, to the yellow peril. It realizes these dollars are going to be worthless pretty quickly.”

The architects of this new global exchange realize that if they break the dollar they also break America’s military domination. Our military spending cannot be sustained without this cycle of heavy borrowing. The official U.S. defense budget for fiscal year 2008 is $623 billion, before we add on things like nuclear research. The next closest national military budget is China’s, at $65 billion, according to the Central Intelligence Agency.

There are three categories of the balance-of-payment deficits. America imports more than it exports. This is trade. Wall Street and American corporations buy up foreign companies. This is capital movement. The third and most important balance-of-payment deficit for the past 50 years has been Pentagon spending abroad. It is primarily military spending that has been responsible for the balance-of-payments deficit for the last five decades. Look at table five in the Balance of Payments Report, published in the Survey of Current Business quarterly, and check under military spending. There you can see the deficit.

To fund our permanent war economy, we have been flooding the world with dollars. The foreign recipients turn the dollars over to their central banks for local currency. The central banks then have a problem. If a central bank does not spend the money in the United States then the exchange rate against the dollar will go up. This will penalize exporters. This has allowed America to print money without restraint to buy imports and foreign companies, fund our military expansion and ensure that foreign nations like China continue to buy our treasury bonds. This cycle appears now to be over. Once the dollar cannot flood central banks and no one buys our treasury bonds, our empire collapses. The profligate spending on the military, some $1 trillion when everything is counted, will be unsustainable.

“We will have to finance our own military spending,” Hudson warned, “and the only way to do this will be to sharply cut back wage rates. The class war is back in business. Wall Street understands that. This is why it had Bush and Obama give it $10 trillion in a huge rip-off so it can have enough money to survive.”

The desperate effort to borrow our way out of financial collapse has promoted a level of state intervention unseen since World War II. It has also led us into uncharted territory.

“We have in effect had to declare war to get us out of the hole created by our economic system,” Lanchester wrote in the London Review of Books. “There is no model or precedent for this, and no way to argue that it’s all right really, because under such-and-such a model of capitalism … there is no such model. It isn’t supposed to work like this, and there is no road-map for what’s happened.”

The cost of daily living, from buying food to getting medical care, will become difficult for all but a few as the dollar plunges. States and cities will see their pension funds drained and finally shut down. The government will be forced to sell off infrastructure, including roads and transport, to private corporations. We will be increasingly charged by privatized utilities – think Enron – for what was once regulated and subsidized. Commercial and private real estate will be worth less than half its current value. The negative equity that already plagues 25 percent of American homes will expand to include nearly all property owners. It will be difficult to borrow and impossible to sell real estate unless we accept massive losses. There will be block after block of empty stores and boarded-up houses. Foreclosures will be epidemic. There will be long lines at soup kitchens and many, many homeless. Our corporate-controlled media, already banal and trivial, will work overtime to anesthetize us with useless gossip, spectacles, sex, gratuitous violence, fear and tawdry junk politics. America will be composed of a large dispossessed underclass and a tiny empowered oligarchy that will run a ruthless and brutal system of neo-feudalism from secure compounds. Those who resist will be silenced, many by force. We will pay a terrible price, and we will pay this price soon, for the gross malfeasance of our power elite.

De-Dollarization: Dismantling America’s Financial-Military Empire

By Michael Hudson.

The city of Yakaterinburg, Russia’s largest east of the Urals, may become known not only as the death place of the tsars but of American hegemony too – and not only where US U-2 pilot Gary Powers was shot down in 1960, but where the US-centered international financial order was brought to ground.

Challenging America will be the prime focus of extended meetings in Yekaterinburg, Russia (formerly Sverdlovsk) today and tomorrow (June 15-16) for Chinese President Hu Jintao, Russian President Dmitry Medvedev and other top officials of the six-nation Shanghai Cooperation Organization (SCO). The alliance is comprised of Russia, China, Kazakhstan, Tajikistan, Kyrghyzstan and Uzbekistan, with observer status for Iran, India, Pakistan and Mongolia. It will be joined on Tuesday by Brazil for trade discussions among the BRIC nations (Brazil, Russia, India and China).

The attendees have assured American diplomats that dismantling the US financial and military empire is not their aim. They simply want to discuss mutual aid – but in a way that has no role for the United States, NATO or the US dollar as a vehicle for trade. US diplomats may well ask what this really means, if not a move to make US hegemony obsolete. That is what a multipolar world means, after all. For starters, in 2005 the SCO asked Washington to set a timeline to withdraw from its military bases in Central Asia. Two years later the SCO countries formally aligned themselves with the former CIS republics belonging to the Collective Security Treaty Organization (CSTO), established in 2002 as a counterweight to NATO.

Yet the meeting has elicited only a collective yawn from the US and even European press despite its agenda is to replace the global dollar standard with a new financial and military defense system. A Council on Foreign Relations spokesman has said he hardly can imagine that Russia and China can overcome their geopolitical rivalry,1 suggesting that America can use the divide-and-conquer that Britain used so deftly for many centuries in fragmenting foreign opposition to its own empire. But George W. Bush (“I’m a uniter, not a divider”) built on the Clinton administration’s legacy in driving Russia, China and their neighbors to find a common ground when it comes to finding an alternative to the dollar and hence to the US ability to run balance-of-payments deficits ad infinitum.

What may prove to be the last rites of American hegemony began already in April at the G-20 conference, and became even more explicit at the St. Petersburg International Economic Forum on June 5, when Mr. Medvedev called for China, Russia and India to “build an increasingly multipolar world order.” What this means in plain English is: We have reached our limit in subsidizing the United States’ military encirclement of Eurasia while also allowing the US to appropriate our exports, companies, stocks and real estate in exchange for paper money of questionable worth.

“The artificially maintained unipolar system,” Mr. Medvedev spelled out, is based on “one big centre of consumption, financed by a growing deficit, and thus growing debts, one formerly strong reserve currency, and one dominant system of assessing assets and risks.”2 At the root of the global financial crisis, he concluded, is that the United States makes too little and spends too much. Especially upsetting is its military spending, such as the stepped-up US military aid to Georgia announced just last week, the NATO missile shield in Eastern Europe and the US buildup in the oil-rich Middle East and Central Asia.

The sticking point with all these countries is the US ability to print unlimited amounts of dollars. Overspending by US consumers on imports in excess of exports, US buy-outs of foreign companies and real estate, and the dollars that the Pentagon spends abroad all end up in foreign central banks. These agencies then face a hard choice: either to recycle these dollars back to the United States by purchasing US Treasury bills, or to let the “free market” force up their currency relative to the dollar – thereby pricing their exports out of world markets and hence creating domestic unemployment and business insolvency.

When China and other countries recycle their dollar inflows by buying US Treasury bills to “invest” in the United States, this buildup is not really voluntary. It does not reflect faith in the U.S. economy enriching foreign central banks for their savings, or any calculated investment preference, but simply a lack of alternatives. “Free markets” US-style hook countries into a system that forces them to accept dollars without limit. Now they want out.

This means creating a new alternative. Rather than making merely “cosmetic changes as some countries and perhaps the international financial organisations themselves might want,” Mr. Medvedev ended his St. Petersburg speech, “what we need are financial institutions of a completely new type, where particular political issues and motives, and particular countries will not dominate.”

When foreign military spending forced the US balance of payments into deficit and drove the United States off gold in 1971, central banks were left without the traditional asset used to settle payments imbalances. The alternative by default was to invest their subsequent payments inflows in US Treasury bonds, as if these still were “as good as gold.” Central banks now hold $4 trillion of these bonds in their international reserves – land these loans have financed most of the US Government’s domestic budget deficits for over three decades now! Given the fact that about half of US Government discretionary spending is for military operations – including more than 750 foreign military bases and increasingly expensive operations in the oil-producing and transporting countries – the international financial system is organized in a way that finances the Pentagon, along with US buyouts of foreign assets expected to yield much more than the Treasury bonds that foreign central banks hold.

The main political issue confronting the world’s central banks is therefore how to avoid adding yet more dollars to their reserves and thereby financing yet further US deficit spending – including military spending on their borders?

For starters, the six SCO countries and BRIC countries intend to trade in their own currencies so as to get the benefit of mutual credit that the United States until now has monopolized for itself. Toward this end, China has struck bilateral deals with Argentina and Brazil to denominate their trade in renminbi rather than the dollar, sterling or euros,3 and two weeks ago China reached an agreement with Malaysia to denominate trade between the two countries in renminbi.[4] Former Prime Minister Tun Dr. Mahathir Mohamad explained to me in January that as a Muslim country, Malaysia wants to avoid doing anything that would facilitate US military action against Islamic countries, including Palestine. The nation has too many dollar assets as it is, his colleagues explained. Central bank governor Zhou Xiaochuan of the People’s Bank of China wrote an official statement on its website that the goal is now to create a reserve currency “that is disconnected from individual nations.”5 This is the aim of the discussions in Yekaterinburg.

In addition to avoiding financing the US buyout of their own industry and the US military encirclement of the globe, China, Russia and other countries no doubt would like to get the same kind of free ride that America has been getting. As matters stand, they see the United States as a lawless nation, financially as well as militarily. How else to characterize a nation that holds out a set of laws for others – on war, debt repayment and treatment of prisoners – but ignores them itself? The United States is now the world’s largest debtor yet has avoided the pain of “structural adjustments” imposed on other debtor economies. US interest-rate and tax reductions in the face of exploding trade and budget deficits are seen as the height of hypocrisy in view of the austerity programs that Washington forces on other countries via the IMF and other Washington vehicles.

The United States tells debtor economies to sell off their public utilities and natural resources, raise their interest rates and increase taxes while gutting their social safety nets to squeeze out money to pay creditors. And at home, Congress blocked China’s CNOOK from buying Unocal on grounds of national security, much as it blocked Dubai from buying US ports and other sovereign wealth funds from buying into key infrastructure. Foreigners are invited to emulate the Japanese purchase of white elephant trophies such as Rockefeller Center, on which investors quickly lost a billion dollars and ended up walking away.

In this respect the US has not really given China and other payments-surplus nations much alternative but to find a way to avoid further dollar buildups. To date, China’s attempts to diversify its dollar holdings beyond Treasury bonds have not proved very successful. For starters, Hank Paulson of Goldman Sachs steered its central bank into higher-yielding Fannie Mae and Freddie Mac securities, explaining that these were de facto public obligations. They collapsed in 2008, but at least the US Government took these two mortgage-lending agencies over, formally adding their $5.2 trillion in obligations onto the national debt. In fact, it was largely foreign official investment that prompted the bailout. Imposing a loss for foreign official agencies would have broken the Treasury-bill standard then and there, not only by utterly destroying US credibility but because there simply are too few Government bonds to absorb the dollars being flooded into the world economy by the soaring US balance-of-payments deficits.

Seeking more of an equity position to protect the value of their dollar holdings as the Federal Reserve’s credit bubble drove interest rates down China’s sovereign wealth funds sought to diversify in late 2007. China bought stakes in the well-connected Blackstone equity fund and Morgan Stanley on Wall Street, Barclays in Britain South Africa’s Standard Bank (once affiliated with Chase Manhattan back in the apartheid 1960s) and in the soon-to-collapse Belgian financial conglomerate Fortis. But the US financial sector was collapsing under the weight of its debt pyramiding, and prices for shares plunged for banks and investment firms across the globe.

Foreigners see the IMF, World Bank and World Trade Organization as Washington surrogates in a financial system backed by American military bases and aircraft carriers encircling the globe. But this military domination is a vestige of an American empire no longer able to rule by economic strength. US military power is muscle-bound, based more on atomic weaponry and long-distance air strikes than on ground operations, which have become too politically unpopular to mount on any large scale.

On the economic front there is no foreseeable way in which the United States can work off the $4 trillion it owes foreign governments, their central banks and the sovereign wealth funds set up to dispose of the global dollar glut. America has become a deadbeat – and indeed, a militarily aggressive one as it seeks to hold onto the unique power it once earned by economic means. The problem is how to constrain its behavior. Yu Yongding, a former Chinese central bank advisor now with China’s Academy of Sciences, suggested that US Treasury Secretary Tim Geithner be advised that the United States should “save” first and foremost by cutting back its military budget. “U.S. tax revenue is not likely to increase in the short term because of low economic growth, inflexible expenditures and the cost of ‘fighting two wars.’”6

At present it is foreign savings, not those of Americans that are financing the US budget deficit by buying most Treasury bonds. The effect is taxation without representation for foreign voters as to how the US Government uses their forced savings. It therefore is necessary for financial diplomats to broaden the scope of their policy-making beyond the private-sector marketplace. Exchange rates are determined by many factors besides “consumers wielding credit cards,” the usual euphemism that the US media cite for America’s balance-of-payments deficit. Since the 13^th century, war has been a dominating factor in the balance of payments of leading nations – and of their national debts. Government bond financing consists mainly of war debts, as normal peacetime budgets tend to be balanced. This links the war budget directly to the balance of payments and exchange rates.

Foreign nations see themselves stuck with unpayable IOUs – under conditions where, if they move to stop the US free lunch, the dollar will plunge and their dollar holdings will fall in value relative to their own domestic currencies and other currencies. If China’s currency rises by 10% against the dollar, its central bank will show the equivalent of a $200 million loss on its $2 trillion of dollar holdings as denominated in yuan. This explains why, when bond ratings agencies talk of the US Treasury securities losing their AAA rating, they don’t mean that the government cannot simply print the paper dollars to “make good” on these bonds. They mean that dollars will depreciate in international value. And that is just what is now occurring. When Mr. Geithner put on his serious face and told an audience at Peking University in early June that he believed in a “strong dollar” and China’s US investments therefore were safe and sound, he was greeted with derisive laughter.7

Anticipation of a rise in China’s exchange rate provides an incentive for speculators to seek to borrow in dollars to buy renminbi and benefit from the appreciation. For China, the problem is that this speculative inflow would become a self-fulfilling prophecy by forcing up its currency. So the problem of international reserves is inherently linked to that of capital controls. Why should China see its profitable companies sold for yet more freely-created US dollars, which the central bank must use to buy low-yielding US Treasury bills or lose yet further money on Wall Street?

To avoid this quandary it is necessary to reverse the philosophy of open capital markets that the world has held ever since Bretton Woods in 1944. On the occasion of Mr. Geithner’s visit to China, “Zhou Xiaochuan, minister of the Peoples Bank of China, the country’s central bank, said pointedly that this was the first time since the semiannual talks began in 2006 that China needed to learn from American mistakes as well as its successes” when it came to deregulating capital markets and dismantling controls.8

An era therefore is coming to an end. In the face of continued US overspending, de-dollarization threatens to force countries to return to the kind of dual exchange rates common between World Wars I and II: one exchange rate for commodity trade, another for capital movements and investments, at least from dollar-area economies.

Even without capital controls, the nations meeting at Yekaterinburg are taking steps to avoid being the unwilling recipients of yet more dollars. Seeing that US global hegemony cannot continue without spending power that they themselves supply, governments are attempting to hasten what Chalmers Johnson has called “the sorrows of empire” in his book by that name – the bankruptcy of the US financial-military world order. If China, Russia and their non-aligned allies have their way, the United States will no longer live off the savings of others (in the form of its own recycled dollars) nor have the money for unlimited military expenditures and adventures.

US officials wanted to attend the Yekaterinburg meeting as observers. They were told No. It is a word that Americans will hear much more in the future.

Notes

1 Andrew Scheineson, “The Shanghai Cooperation Organization,” Council on Foreign Relations,

Updated: March 24, 2009: “While some experts say the organization has emerged as a powerful anti-U.S. bulwark in Central Asia, others believe frictions between its two largest members, Russia and China, effectively preclude a strong, unified SCO.”

2 Kremlin.ru, June 5, 2009, in Johnson’s Russia List, June 8, 2009, #8.

3 Jamil Anderlini and Javier Blas, “China reveals big rise in gold reserves,” Financial Times, April 24, 2009. See also “Chinese political advisors propose making yuan an int’l currency.” Beijing, March 7, 2009 (Xinhua). “The key to financial reform is to make the yuan an international currency, said [Peter Kwong Ching] Woo [chairman of the Hong Kong-based Wharf (Holdings) Limited] in a speech to the Second Session of the 11^th National Committee of the Chinese People’s Political Consultative Conference (CPPCC), the country’s top political advisory body. That means using the Chinese currency to settle international trade payments …”

4 Shai Oster, “Malaysia, China Consider Ending Trade in Dollars,” Wall Street Journal, June 4, 2009.

5 Jonathan Wheatley, “Brazil and China in plan to axe dollar,” Financial Times, May 19, 2009.

6 “Another Dollar Crisis inevitable unless U.S. starts Saving – China central bank adviser. Global Crisis ‘Inevitable’ Unless U.S. Starts Saving, Yu Says,” Bloomberg News, June 1, 2009. http://www.bloomberg.com/apps/news?pid=20601080&sid=aCV0pFcAFyZw&refer=asia

7 Kathrin Hille, “Lesson in friendship draws blushes,” Financial Times, June 2, 2009.

8 Steven R. Weisman, “U.S. Tells China Subprime Woes Are No Reason to Keep Markets Closed,” The New York Times, June 18, 2008.

Catherine Austin Fitts: Department of Defense “missing” trillions of dollars

Will Defense Run the “Real” Stimulus Package?

In fiscal 1999, the Department of Defense was “missing” $2.3 trillion dollars. To put that amount of money in perspective, it is approximately 3X what President-elect Obama is proposing to spend to revitalize America.

In fiscal 2000, the Department of Defense was “missing” $1.1 trillion, about 1.5X what President-elect Obama wants to invest in America.

So between October 1998 and September 2000, the Department of Defense was “missing” $3.3 trillion. Because the amount of money disappearing is so enormous, years ago we started a[n] archive of articles on the “missing money” to try to keep up with the trillions sliding out of the federal accounts.

From 1997 to March 2001, the Under Secretary of Defense (Comptroller) who served as the chief financial officer for the Department of Defense was William J. Lynn III. In that position, he was the chief financial officer for the Department of Defense and was the principal advisor to the Secretary and Deputy Secretary of Defense for all budgetary and fiscal matters. That means he was the person responsible to make sure no money went missing and that the Department of Defense published audited financial statements — which it failed to do in those years and every year since.

When Mr. Lynn left Defense in 2001, he joined DFI International and then in 2005 became the chief lobbyist for Raytheon. He was replaced at Defense by Dov Zakheim.

Today, President Elect Obama nominated William J. Lynn III as the Deputy Secretary of Defense. The press release said, “Lynn brings decades of experience and expertise in reforming government spending and making the tough choices necessary to ensure that American tax dollars are spent wisely.”

Obama also nominated Robert Hale to Lynn’s former position, Under Secretary of Defense (Comptroller). From 1994 to 2001, Mr. Hale served as the Assistant Secretary of the Air Force (Financial Management and Comptroller). That means that Hale, same as Lynn, was in charge of the money when all the money disappeared.

I guess the guys who got the last $3.3 trillion were pretty happy with Mr. Lynn and Mr. Hale and decided to bring them back.

Which brings me to the question I keep asking, “Where is the money and how do we get it back?“

Madoff’s Money Trail Leads to Washington

Found this on Allen L. Roland ‘s blog, with the following comments:

Pam Martens, who worked on Wall Street for 21 years, connects the dots on the Madoff scandal which continues to involve not only Wall Street but Washington lobbyists, payoffs, Congressman Ed Markey of Massachuetts and, of course, an oblivious SEC: Allen L Roland

Rivero’s Rule is that all organizations and countries will eventually reflect the moral character and integrity of its leaders. The 50 Billion dollar plus Bernie Madoff Ponzi scheme is a perfect example of Rivero’s rule in action ~ for the Bush/Cheney administration has been little less than an organized crime syndicate where money and power dwarfs all sense of moral integrity and character.

Marten’s electrifying article in Counterpunch on December 22nd is must reading for all those who are concerned about the depth and scale of the Madoff scandal as well as the moral breakdown of not only Wall Street but our whole financial system.

*******************************

http://www.counterpunch.org/martens12222008.html

The forces of the universe sent us a corruption triple play the week of December 8th. Just in case there were any slumbering souls still doubting the multi headed monster we need to slay to avoid becoming Rome, those benevolent forces assaulted our senses with a politician, a lawyer, and a Wall Street icon in a three-day sweep of unimaginable crime. Unimaginable, at least, to those of us bereft of adequate imaginations to keep up with the criminals.

The trifecta began on Monday, December 8, with Marc Dreier charged by Federal prosecutors in Manhattan with selling bogus promissory notes to steal what currently adds up to over $380 million. Mr. Dreier, a graduate of Harvard Law and Yale College, is the owner and founder of Dreier LLP, a prominent law firm employing over 250 lawyers.

On Tuesday, December 9, the Feds arrested Democratic Governor Rod Blagojevich of Illinois, revealing transcripts of taped phone calls where the governor was strategizing on how to sell the U.S. Senate seat of President-elect Barack Obama to the highest bidder or career enhancer and, separately, getting revenge on the editorial board of the Chicago Tribune whose writers were saying bad things about him (for some strange reason).

We had a day off to allow our psyches to mend and then Thursday, December 11 arrives.

We are told that Wall Street icon, Bernie Madoff, a key player in self regulation of Wall Street, has stolen $50 billion from investors in a Ponzi scheme stretching over what is now emerging as a three-decade crime spree, or longer. Despite our sprawling Homeland Security apparatus that regularly catches Democratic governors, law enforcement did not catch Madoff; his two sons turned him in after he confessed.

As of December 19, Blagojevich had been released and was in the Governor’s Mansion issuing pardons; Madoff was in his $7 million penthouse in Manhattan after being allowed to post, as collateral for his bond, the East Coast mansions he likely bought with Ponzi money stolen from an eclectic group of charities, Florida pensioners and a well-heeled country club set. Dreier was still in jail even though he stole less than 1 percent of the Madoff take. Apparently, Mr. Dreier lacks the right friends in high places.

The major beneficiary of the week was Citigroup. The leaky piggy bank disappeared from the news along with the investor lawsuit charging it with running its own Ponzi scheme on a scale to dwarf Madoff to piker status. Had it not been for the Madoff media frenzy, folks might have started connecting the dots to a $300 billion taxpayer bailout of a bank serially charged with global misdeeds, market maneuvers internally named “Dr. Evil” and “Black Hole,” and recent press reports that Citigroup had stashed over $1.2 trillion off its balance sheet.

I seldom have the urge to give a comforting pat on the back to people profiled in the Wall Street Journal. But that was my reaction when I read the 21-page whistleblower document about Madoff that was written by Harry Markopolos to the Securities and Exchange Commission (SEC) on November 7, 2005. The Journal still has the document on its web site and Markopolos provides a step by step plan for the SEC to follow to nail Madoff as a Ponzi fraudster. The letter followed a five-year effort by Markopolos, who supplied documentation and made repeated requests to the SEC to investigate Madoff.

Here’s how the SEC characterized the letter from Markopolos in a January 4, 2006 memo: “The staff received a complaint alleging that Bernard L. Madoff Investment Securities LLC, a registered broker-dealer in New York (“BLM”), operates an undisclosed multi-billion dollar investment advisory business, and that BLM operates this business as a Ponzi scheme. The complaint did not contain specific facts about the alleged Ponzi scheme…”

Here’s a tiny sampling of what Markopolos told the SEC in his 21-page November 7, 2005 letter. You decide if these are “specific facts.”

“I am a derivatives expert and have traded or assisted in the trading of several billion $US in options strategies for hedge funds and institutional clients…(Highly Likely) Madoff Securities is the world’s largest Ponzi Scheme…The [Madoff] family runs what is effectively the world’s largest hedge fund with estimated assets under management of at least $20 billion to perhaps $50 billion…The third parties organize the hedge funds and obtain investors but 100% of the money raised is actually managed by Madoff Investment Securities, LLC in a purported hedge fund strategy. The investors that pony up the money don’t know that BM [Bernie Madoff] is managing their money…Some prominent US based hedge fund, fund of funds, that “invest” in BM in this manner include: A. Fairfield Sentry Limited (Arden Asset Management) which had $5.2 billion invested in BM as of May 2005…Access International Advisors…which had $450 million invested with BM as of mid-2002…Tremont Capital Management, Inc…Tremont oversees on an advisory and fully discretionary basis over $10.5 billion in assets. Clients include institutional investors, public and private pension plans, ERISA plans, university endowments, foundations, and financial institutions, as well as high net worth individuals…Madoff does not allow outside performance audits. One London based hedge fund, fund of funds, representing Arab money, asked to send in a team of Big 4 accountants to conduct a performance audit during their planned due diligence. They were told ‘No, only Madoff’s brother-in-law who owns his own accounting firm is allowed to audit performance’…Only Madoff family members are privy to the investment strategy. Name one other prominent multi-billion dollar hedge fund that doesn’t have outside, non-family professionals involved in the investment process. You can’t because there aren’t any…There are too many red flags to ignore. REFCO, Wood River, the Manhattan Fun, Princeton Economics, and other hedge fund blow ups all had a lot fewer red flags than Madoff and look what happened at those places…”

Here is what the SEC’s memo of November 21, 2007 said following its investigation:

“The staff found no evidence of fraud…All files have been prepared for closing…Termination letters have been sent to Bernard L. Madoff Investment Securities LLC, Bernard L. Madoff, and Fairfield Greenwich Group. The staff has no objection to the eventual destruction of the files and has no knowledge of any impediment to such a disposition.”

Let me run that by you again. Mr. Markopolos, a private citizen, uses his personal time and energy over a seven year period to document a fraud occurring under the nose of the SEC that could impact the international reputation of the United States along with the financial well being of pensioners, university endowments, foundations and private investors. After losing track of the case for five years, the SEC finally gets around to investigating using taxpayers’ monies. They come up with nothing despite being given a perfect path to follow to the fraud. And their final suggestion for dealing with the investigation is to destroy the files! With regulators like these, who needs Ponzi artists?

In 1992, eight years before Mr. Markopolos started hounding the SEC to take action against Madoff, the SEC was settling an investigation against two Florida accountants, Frank Avellino and Michael Bienes. The pair had started raising money for Bernie Madoff to manage in 1962, just two years after he came to Wall Street. Avellino and Bienes has sold over $440 million in unregistered notes to thousands of people over yet another three-decade period when the SEC was napping. Mr. Madoff was not charged.

Representing Avellino and Bienes in that matter was Ira Lee Sorkin, the former head of the SEC region in New York City. Mr. Sorkin represents Bernie Madoff today. Put in charge as trustee of the Avellino and Bienes funds and records was Lee Richards. The SEC has put Mr. Richards in place as a receiver and document custodian in the current matter, overseeing the London black hole operation known as Madoff Securities International Ltd.

Marc Mukasey, the son of the U.S. Attorney General, Michael Mukasey, is representing Frank DiPascali, a key Madoff employee. This has resulted in the highest law enforcement officer in the nation recusing himself from the investigation of the largest Ponzi scheme in history.

Naturally, the Madoff money trail of special favors and exceptions leads straight to Washington. From 1998 through 2008, Bernard L. Madoff Investment Securities paid $590,000 lobbying Congress and the SEC, according to the Center for Responsive Politics. His lobby firm for most of those years was Lent, Scrivner & Roth, with Norman F. Lent III signing the disclosure documents in the House and Senate. One of Madoff’s hot button issues during those years according to the disclosure documents was getting a single regulator. That meant, for starters, merging those prying eyes over at the New York Stock Exchange into the clubby pool of self-regulators at the National Association of Securities Dealers where the Madoff family held numerous seats of power. That wish came true when NASD Regulation merged with the enforcement and arbitration units of the New York Stock Exchange in July 2007 to create the Financial Industry Regulatory Authority (FINRA). CEO of the consolidated body is Mary Schapiro, who formerly headed up NASD Regulation, one of the most conflicted bodies in the history of finance. Ms. Schapiro has just been nominated by President-Elect Barack Obama to be the new SEC Chair. Expect to hear more about killing off the SEC (instead of giving it some teeth) and giving Madoff and his fellow miscreants their ultimate dream of just one compromised regulator instead of three.

The Madoff family almost uniformly gives to the same candidates. Cumulatively, since 1993, they have given more than $400,000 to political candidates, committees and PACS.

The Madoff family is also a uniquely telepathic group. When one member had an idea, invariably they all had the same idea. For example, in May 1998, June 1999 and June 2004, a total of seven members of the Madoff family (all living in New York) decided to enrich the coffers of the Ed Markey Committee to the tune of $30,000. Mr. Markey does not represent New York. He is a Democrat who has represented the 7th Congressional District of Massachusetts for more than 30 years. What could have been the motivation?

On February 24, 1997 I flew on US Air flight 6431 from New York to DC along with producer Dean Irwin and a film crew from ABC’s 20/20. We were all heading to Ed Markey’s Congressional office to talk about one of Wall Street’s dirtiest secrets: their denial of an employee’s right to sue the Wall Street firm in an open courtroom, mandating instead, as a condition of employment, that the workers contractually agree to usher all claims (even whistleblower claims) into a crony system of arbitration run by Wall Street firms where case law and legal precedent are not followed and discovery is limited. The system draws a dark curtain around the misdeeds of Wall Street and is an enabling agent for ever greater crimes sealed in secrecy. A dream come true for a Ponzi operator.

Congressman Markey was a threat to Wall Street because he continued to introduce legislation known as the Civil Rights Procedures Protection Act that would have outlawed mandatory arbitration for certain employee claims and allowed those claims to proceed to an open courtroom.

The 20/20 crew spent a good portion of the afternoon filming Congressman Markey and myself talking about arbitration. When the program aired, Congressman Markey was gone from the film and just a brief statement was inserted. For decades now, that legislation, or similar legislation, has been introduced and then died a quiet death; much like the SEC investigations of Madoff.

*****************************

Pam Martens worked on Wall Street for 21 years; she has no security position, long or short, in any company mentioned in this article. She writes on public interest issues from New Hampshire. She can be reached at pamk741@aol.com

China makes Yuan an international currency

Source: Market Skeptics.

China makes yuan an international currency! This is a HUGE development which is VERY bearish for the dollar. Below are three articles on the subject.

(emphasis mine) [my comment]

Article from xinhuanet.com:

Commerce minister: China not to promote export through currency depreciation

BEIJING, Dec. 24 (Xinhua) — China will not hinge upon depreciation of its currency, renminbi, to expand exports, according to Commerce Minister Chen Deming. [very, very bad news for the dollar and the US.]

“Given shrinking demand from abroad, the effect of export stimulation through currency depreciation is rather limited,” Wednesday’s People’s Daily quoted Chen as saying.

“Recently, some countries depreciated their currencies but failed to reverse the downward trend of their foreign sales through such moves,” he told the paper. [He is talking about South Korea whose currency fell by a third against the dollar this year. South Korea's exports are down 18%.]

China hoped that all nations would make joint efforts and enhance coordination to keep international foreign exchange markets stable, Chen said. [He is implying here that something might happen to make the foreign exchange markets unstable (dollar collapse)]

BEIJING, Dec. 24 (Xinhua) — China will not hinge upon depreciation of its currency, renminbi, to expand exports, according to Commerce Minister Chen Deming. [very, very bad news for the dollar and the US.]

“Given shrinking demand from abroad, the effect of export stimulation through currency depreciation is rather limited,” Wednesday’s People’s Daily quoted Chen as saying.

“Recently, some countries depreciated their currencies but failed to reverse the downward trend of their foreign sales through such moves,” he told the paper. [He is talking about South Korea whose currency fell by a third against the dollar this year. South Korea's exports are down 18%.]

China hoped that all nations would make joint efforts and enhance coordination to keep international foreign exchange markets stable, Chen said. [He is implying here that something might happen to make the foreign exchange markets unstable (dollar collapse)]

article from AFP:

China to try using yuan as settlement currency in some foreign deals: report

BEIJING (AFP) — China will use the yuan in transactions with neighbouring economies on a trial basis, state media said Thursday, calling it a potential first step to making it an international currency.
…
The initiative emerged from a meeting Wednesday of the State Council, or cabinet, but no details were available on when it would be implemented, according to the paper.

“The move will… increase the yuan’s acceptance in Asia, which will help it become an international currency in the long run,” Zhao Xijun, a finance professor at the People’s University in Beijing, told the paper.

The vast majority of China’s foreign trade deals are currently settled either in euros or US dollars.
…
Central bank governor Zhou Xiaochuan warned earlier this month that settlements using the US dollar would be problematic if the dollar’s value fluctuated drastically.

There has been growing pressure over the past year within China to make the yuan an international currency, but the government has so far been cautious as it would require making it fully convertible, the paper said.

The yuan is not yet convertible on the capital account, meaning funds cannot freely enter the country for purposes such as investment in stock or real estate.

The Chinese government is concerned that liberalising this type of fund flow would make the economy more vulnerable during times of regional or global turmoil.

BEIJING (AFP) — China will use the yuan in transactions with neighbouring economies on a trial basis, state media said Thursday, calling it a potential first step to making it an international currency.
…
The initiative emerged from a meeting Wednesday of the State Council, or cabinet, but no details were available on when it would be implemented, according to the paper.

“The move will… increase the yuan’s acceptance in Asia, which will help it become an international currency in the long run,” Zhao Xijun, a finance professor at the People’s University in Beijing, told the paper.

The vast majority of China’s foreign trade deals are currently settled either in euros or US dollars.
…
Central bank governor Zhou Xiaochuan warned earlier this month that settlements using the US dollar would be problematic if the dollar’s value fluctuated drastically.

There has been growing pressure over the past year within China to make the yuan an international currency, but the government has so far been cautious as it would require making it fully convertible, the paper said.

The yuan is not yet convertible on the capital account, meaning funds cannot freely enter the country for purposes such as investment in stock or real estate.

The Chinese government is concerned that liberalising this type of fund flow would make the economy more vulnerable during times of regional or global turmoil.

Another article from xinhuanet.com:

Senior official: Renminbi likely to be used as currency for forex reserves

BEIJING, Dec. 25 (Xinhua) — China’s currency, Renminbi, is likely to join other international currencies to be used for forex reserves by other economies, according to Wu Xiaoling, former vice governor of the country’s central bank and now the deputy head of the financial and economic committee under the top legislature.

Wu made the remarks in her article carried by the latest annual issue of the leading business magazine Caijing.

Wu wrote that China should make preparations in its economic structure and its financial regime for its currency to be internationalized.

Prior to making the Renminbi, also called yuan, a currency used for forex reserves by other economies, it may be allowed to be used for trade settlements between China and some other countries and regions, according to Wu.

In China’s neighboring countries, there were calls for the yuan to be used to settle bilateral trade payments, she said. China has signed settlement agreements with eight neighboring countries, including Russia, Mongolia, Vietnam and Myanmar, assuming a voluntarily choice of settlement currency, she added.

Many were confident of the yuan and willing to settle trade payments in the Chinese currency, as it remained strong, Wu said.

“China should create conditions for the yuan to become an international settlement currency,” she stressed.
…

The Chinese Government has decided to allow the yuan to be used for settlement between Guangdong Province and the Yangtze River Delta and the special administrative regions of Hong Kong and Macao.

Meanwhile, Guangxi Zhuang Autonomous Region and Yunnan Province will be allowed to use Renminbi to settle trade payments with ASEAN (Association of Southeast Asian Nations) members, according to a government announcement on Wednesday evening.

But the Government did not give any details of how and when the pilot currency program would start.

“The move will mitigate the risk of exchange rate fluctuations for Chinese exporters and their trade partners,” Zhao Xijun, finance processor at Renmin University of China, was quoted as saying by Thursday’s China Daily.

Wu wrote that China should make preparations in its economic structure and its financial regime for its currency to be internationalized.

Prior to making the Renminbi, also called yuan, a currency used for forex reserves by other economies, it may be allowed to be used for trade settlements between China and some other countries and regions, according to Wu.

In China’s neighboring countries, there were calls for the yuan to be used to settle bilateral trade payments, she said. China has signed settlement agreements with eight neighboring countries, including Russia, Mongolia, Vietnam and Myanmar, assuming a voluntarily choice of settlement currency, she added.

Many were confident of the yuan and willing to settle trade payments in the Chinese currency, as it remained strong, Wu said.

“China should create conditions for the yuan to become an international settlement currency,” she stressed.
…

The Chinese Government has decided to allow the yuan to be used for settlement between Guangdong Province and the Yangtze River Delta and the special administrative regions of Hong Kong and Macao.

Meanwhile, Guangxi Zhuang Autonomous Region and Yunnan Province will be allowed to use Renminbi to settle trade payments with ASEAN (Association of Southeast Asian Nations) members, according to a government announcement on Wednesday evening.

But the Government did not give any details of how and when the pilot currency program would start.

“The move will mitigate the risk of exchange rate fluctuations for Chinese exporters and their trade partners,” Zhao Xijun, finance processor at Renmin University of China, was quoted as saying by Thursday’s China Daily.

My reaction: Wow.

First, the big news items:

1) China has announced its intentions to make the yuan an international currency.

2) China not to promote export through currency depreciation.

3) China has signed settlement agreements with eight neighboring countries, including Russia, Mongolia, Vietnam and Myanmar, assuming a voluntarily choice of settlement currency.

4) Foreign central likely to soon be able to use the yuan as currency for forex reserves.

5) China is worried about a possible dollar devaluation

My comments on the story:

1) These announcement was made on Charismas to avoid tanking the dollar.

2) If yuan becomes an international currency, there will a massive migration by central banks from dollar reserves into yuans, because the China’s fundamentals are so strong compared to the US.

3) China’s announcement that they will not ” promote export through currency depreciation” means Chinese financing of our trade deficit is about to come to a very nasty end.

4) From the articles I have read, it is apparent that Chinese exporters are screaming at their government to internationallize its currency so they can bill in yuan instead foreign currencies. Their desire is completely understandable. After all, how would you like to be paid in monopoly money (US dollar)?

5) If the yuan is allowed to compete freely with the dollar, our currency will get crushed.

Again, wow. I have been predicting that China would drop its dollar peg, but now it is actually happening…

Sorry for the dour news. Try to ignore the impending destruction of our currency, and enjoy the holiday.

Merry Chrismas!

The GOP winter blunderland

Source: The Smirking Chimp.

You have to hand it to the Republicans. Seriously. You have to. If not, they’ll beat and belittle you, take whatever you have, anyway, and then insist you never had it in the first place.

The nicest thing I can say about the current crop of GOP (Grinches On Parade) ideologues is that they’re consistent. With America currently in the shape of an ER patient on a crash cart, Republican politicos still spew their psychotic Bizarro World views; sort of a fragmented funhouse mirror reflection of their already distorted priorities. Up is down. Right is wrong. And if you feel life has you by the short hairs, you’re not seeing life the way they do – so it’s all your fault.

Take the current collapse of Detroit’s auto making industry. In the Republican view, it’s not the companies that caused the crisis, it’s the greedy union workers who wanted to, damn them to Hell, earn a living wage!

A group of Southern Senators put the kibosh on a vital influx of cash to the automakers because the deal didn’t require union workers to trim their salaries to equal those of non-union workers who toil at foreign auto plants in…the South. The Senators, led by Foghorn Leghorn flimflammers extraordinaire Richard Shelby of Alabama and David Vitter of Louisiana, used very quaint language to try to disguise their union-busting bid.

Declared Vitter, “Negotiations on a real restructuring plan failed for one reason only: The union and the Democratic leadership wouldn’t agree to any wage concessions by a date certain. None.”

Vitter, a Family Values kinda Senator who has, in the past, had trouble keeping his little Vitter critter in his pants whilst around hookers, concluded with a somber, “It’s a shame.”

Morgan Johnson, president of the UAW in Louisiana, took a less phantasmagorical approach to Vitter’s problem with the unionized auto industry. “He’d rather pay a prostitute than pay auto workers.”

Now, all of this wage-cutting rumbling could be chalked up to non-political, altruistic reasoning on the Republicans’ part. They want to save the country millions of lost jobs, right?

Uh, not really.

MSNBC got hold of a memo entitled “Action Alert – Auto Bailout” sent out to all Senate Republicans by party leaders pretty much summing up the reason for putting the damper on any auto maker deal. It read, in part, “This is the democrats first opportunity to payoff organized labor after the election. This is a precursor to card check and other items. Republicans should stand firm and take their first shot against organized labor, instead of taking their first blow from it.”

These guys really miss the old days, when organized labor meant you got to hire your own slave boss.

So, let’s review. The Republicans are watching the entire country collapse on a myriad of levels because of Republican-spawned policies. Therefore, they’re bracing to make it as hard as possible for the incoming Democratic president to make any headway. That’s realistic, isn’t it? They actually don’t get the fact that the American people finally realize the GOP broke the whole friggin’ nation. What’s next, trying to convince us all that everything that’s happened over the last eight years was actually brilliant? Nobody in their right mind would try to re-write history like that.

Except Republicans.

On what can only be called, “The White House White-Out Tour,” Bush and his Bush Leaguers are taking to the airwaves to let us know that down is up and up is down. If we think differently, once again, we’re wrong.

Dick Cheney, doing his best impression of “The Penguin,” appeared on Fox News, stating with his Pottersville smile, “I feel very good about a lot of the things we’ve done in this administration. I think that they will be viewed in a favorable light when it’s time to write the history of this era.”

If it’s written by squirrels.

When informed that Joe Biden referred to him as being the most dangerous vice-president in American history, Dick demurred: “If he wants to diminish the office of vice president, that’s obviously his call.”

For the record, I don’t think it’s possible to diminish the vice-president’s office after Cheney.

As for Bush/Cheney trampling the Constitution, oh contraire. They were little patriotic angels compared to other rascals. “If you think about what Abraham Lincoln did during the Civil War, what FDR did during World War II, they went far beyond anything we’ve done in the global war on terror.”

New Deal? Meet Bad Deal.

Cheney also expressed some interesting views of the power of the Presidency, saying anything that the President does in a time of war is legal. “He could launch a kind of devastating attack the world’s never seen. He doesn’t have to check with anybody. He doesn’t have to call the Congress. He doesn’t have to check with the courts. He has that authority because of the nature of the world we live in.”

As for the War Powers Act, that little law giving Congress the power to declare war, Cheney sniffed: “No president has ever signed off on the proposition that the War Powers Act is constitutional. I would argue that it is, in fact, a violation of the Constitution, that it’s an infringement on the president’s authority as the commander in chief.”

In other words, laws don’t apply if Dick thinks they’re not laws. Welcome to the United States of Cheney’s head.

Earlier in the week, Cheney told ABC that waterboarding isn’t torture, he approved of it and the Iraq war was “worth it” because Saddam Hussein was “a bad actor.”

Lord knows what Cheney would do to Pauley Shore.

Not to be outdone in terms of Grim Fairy Tales, Condi Rice made her twentieth appearance on “Meet the Press” this week, where she, basically, gave the same interview she’d given nineteen times before. It was fascinating stuff, in a “bug trapped in amber” sort of way.

Among her greatest hits: “I certainly think the United States views the — that the world views the United States as a place to be respected. All over the world, David, our values are respected; who we are, a place that you can come and come from modest circumstances to great things, that’s respected. What we’ve done hasn’t always been liked or popular.

“But if you look at some of the most populous places in the world -China, India — the United States is not only respected but, in fact, popular.

“So, yes, there are some places that have had real quarrels with our policies, but I think the United States is very well-respected worldwide.”

If that world is DisneyWorld and the spokespeople are Goofy and Dopey.

She somehow equated America’s lack of timely response to genocide in Darfur and Rwanda with our “success” in Iraq. “…I will say that we’ve also been engaged in activities that have protected innocent people. Look at Saddam Hussein’s record of, really, genocide inside of Iraq, what he did to Shia populations, to Kurdish populations, actually using weapons of mass destruction.”

As opposed to BushCo., which only uses cluster bombs and depleted uranium on all of the above.

Condi also offered amazing insight as to the intricacies of foreign policy. “Multilateral diplomacy is hard.”

Some people predict that Rice may give classical piano concerts in the future. That’s hard stuff. Me? I’m thinking a hurdy-gurdy and a monkey would better reflect the stellar artistry with which Rice has handled her job.

Both Rice and Cheney, by the by, believe that, if Obama is smart, he’ll follow Bush’s lead in foreign policy. As we all know, repeating the same mistake endlessly is a sign of true geniusoty.

Which leads us, of course, to the Genius-In-Chief who, in the last two weeks has distorted his factual presidential record enough to make Picasso cross-eyed. In other words, same old same old.

While he uses his final weeks in office to merrily whittle away at worker safety, trucker safety, fair wages, health care recipients’ rights, the Endangered Species Act, environmental safety, pollution rules and auctions off a zippy 110,000 acres of Utah, Bush has made a series of public appearances that portray his years in office as an enlightened time – not the 15 Watter we’ve witnessed.

On Fox, he declared: “I didn’t compromise my soul to be a popular guy.” Yeah, the devil took care of that years ago, and he feels like he got screwed.

At one appearance, he was asked what he would miss. ” I’ll miss the petty name-calling — I mean, I won’t miss it. I have been disappointed at times about the politics of personal destruction. It’s not the first time it’s ever happened in our history, but I was just — I came with the idea of changing the tone in Washington, and frankly didn’t do a very good job of it.”

This is like Jack the Ripper complaining about his laundry detergent not removing all the stains on his jacket.

As for his penchant for wire-tapping and torture, Bush pooh-poohed that for Fox. “You know, I know there’s a lot of urban myths about certain decisions I had made. But when the truth comes out and people will say, ‘Oh, I see what he did.’”

And Wes Craven will direct the film version.

Bush, who has repeatedly stated that his efforts in the War on Terror has kept America safe from any mythical attacks following 9/11, told CNN that his memoirs will tell all. “”I would like to share my experiences, and I think it’s going to be important for people to remember what the actual history of my presidency was all about. History tends to shift very rapidly; people forget what the environment in which the decisions were made.”

He capped it all with: “You’ve got to say I’m a little wiser. My knowledge of the world is more profound.”

He now thinks it’s only kind of flat.

As usual, Bush denied culpability for anything, um, less than stellar occurring in the country today, including the current financial collapse. He told ABC: “You know, I’m the President during this period of time, but I think when the history of this period is written, people will realize a lot of the decisions that were made on Wall Street took place over a decade or so, before I arrived in President, during I arrived in President.”

Um, so that would put place those decisions as part of Bush’s father’s presidency? You know, before Dubya during arrived in President. Nice.

When asked how high unemployment would go during this recession, he deduced: “Too high. I mean, anybody unemployed is too much. And I — I’m not a very good economic forecaster. I do know that we are taking steps to make sure — see, the most difficult thing about this is that a lot of people out there in Main Street wonder why the government is having to act because Wall Street went on a binge. And I’m one, frankly — at first. I was the guy that inartfully said, ‘Wall Street got drunk, and we got a hangover.’

“And on the other hand, though, when you’re the President and somebody says, we better move big, Mr. President, otherwise we could have a depression greater than the Great — we’re moving big. And it is hard for the average citizen to understand how frozen the system became and how over-leveraged the system became. And so what we’re watching is the de-leveraging of our financial markets, which is obviously affecting the growth of the economy.”

I couldn’t have phrased that better myself…unless I was suffering from blunt blow trauma.

Bush, who in the same interview declared loftily, “I keep recognizing we’re in a war against ideological thugs and keeping America safe,” and said that everybody in the world believed the faulty intelligence that led to the occupation of Iraq, summed up his eight year tenure thusly:

“As I said, some times are happy, some not happy. I don’t want people to misconstrue. It’s not — I don’t feel joyful when somebody loses their life, nor do I feel joyful from somebody loses a job. That concerns me. And the President ends up carrying a lot of people’s grief in his soul during a presidency. One of the things about the presidency is you deal with a lot of tragedy — whether it be hurricanes, or tornadoes, or fires, or death — and you spend time being the Comforter-in-Chief. But the idea of being able to serve a nation you love is — has been joyful. In other words, my spirits have never been down. I have been sad, but the spirits are up.”

Since Bush is depending on historians to further sanctify his record, I hope he finds a group that has Pulitzers in fiction, a tolerance for gobbledygook and is paid by the word.

Now, to be fair, Bush loyalists are doing their darnedest to spin his time in office into a glowing historical period, totally ignoring the old “silk purse/sow’s ear” rule of thumb.

And Congressional Republicans are also practicing their pirouettes, trying to convince us all that everything that’s been mishandled is not their fault, that it was Democrats past, present and future who ripped our society asunder.

What they’re not betting on is the fact that, at long last, the American populace is up to passing the all-important “shit from Shinola” test.

This puts the usually non-culpable GOP at a big disadvantage.

A lesson for 2009, GOPers.

If the shoe fits – duck!

Karl Denninger: Gov’t must prosecute criminal bankers now, or mainstream society will lose all confidence in its credibility

I say, let it lose all confidence. It’s time people wake the fuck up.

http://market-ticker.denninger.net/archives/697-guid.html

Yesterday I wrote a letter to a number of House and Senate Committees, well-aware that the Congress is in recess. The impetus was learning that Congress intends to hold committee hearings on derivatives (gee, nice to have a hearing about closing the door after all the horses are gone!)

One of the key themes of that communication was that The American People are losing faith in government as a protector and arbiter of fair play and enforcement of the law – and that down this road lay severe, perhaps even critical danger for our republic.

I had absolutely no idea at the time I penned and sent that letter that the events I had feared would occur the same day. I thought we had weeks or months before the proverbial dark matter would impact the airmoving device.

But then yesterday afternoon, I read the following:

A senior federal banking regulator has been removed from his job after government investigators concluded that he knowingly permitted IndyMac Bancorp to present a misleading picture of its financial health in a federal filing only months before the California thrift was seized by regulators.

The Office of Thrift Supervision removed Darrel Dochow as director of its western region, where he was responsible for regulating several of the largest banks that failed or were sold in the past year, including Washington Mutual, Countrywide Financial, IndyMac and Downey Savings and Loan.

Dochow allowed IndyMac to count money it got in May in a report describing its financial condition at the end of March, according to an investigation by the Treasury Department’s inspector general, Eric Thorson, which was described in a letter from Thorson.

…..

In the late 1980s, Dochow had been the chief career supervisor of the savings-and-loan industry, and federal investigators later concluded he played a key role in the collapse of Charles Keating’s Lincoln Savings and Loan by delaying and impeding proper oversight of that thrift’s operations.

Dochow was shunted aside in the aftermath and eventually sent to the agency’s Seattle office. Several of his former colleagues and superiors have said that he gradually reestablished himself as a credible regulator and again rose in the organization.

Let’s be totally clear about what is being alleged.

The allegation is that Mr. Dochow was partially responsible for the collapse of the Lincoln Savings and Loan during the S&L crisis, and not only was he not fired from his position within the government but 20 year later he is alleged to have been involved in a conspiracy to falsely state IndyMac’s capital position which could reasonably have been expected to have kept the OTS from seizing the thrift at that time.

That is, it is alleged that he got away with an act that, had a private party undertaken it, would have likely been a felony under US law (bank fraud, obstruction, etc) and not only didn’t lose his job was then given supervisory authority (20 years later) in a second case where he is alleged to have done essentially the same thing by conspiring (with IndyMac!) to falsify their capital position – that is, falsifying an official document bearing on the condition of a federally-insured bank!

Now of course these are allegations at this point in time – but they are extraordinarily serious allegations. They join the list of dozens of other, similarly-serious allegations that have been raised over the last year and a half – and yet where are the official investigations, grand juries, and indictments?

Then last evening a topic was posted on my forum linking to one Hal Turner’s blog, in which he said (this is not my speech – it is on the linked site – and yeah – its shocking):

WARNING TO BANKING EXECUTIVES: If you do not return the bonuses, stock options and country club memberships bought with taxpayer bailout money, YOUR NAME AND ADDRESS will be made public in a manner designed to “incite” a reaction by the public. (Special emphasis on the word “incite!)

You have until Friday, December 26, 2008 to return the money. There will be no negotiating, no obeying of court orders of protection, no way to prevent being dealt with harshly.

I don’t care about your employment contracts, I don’t care about your civil rights and I sure as **** don’t care about the law or the courts.

You guys have ****ed this country for the last time. It’s time for you to be paid back and I intend to see that you receive your payback.

I don’t like this one bit, it is way beyond “polite discourse” (and IMHO quite possibly into a realm that one should not cross) but it is entirely predictable, and unfortunately, is unlikely to be an isolated incident.

Why?

Because an increasing number of people no longer have any belief that the government exists to prosecute crimes and convict crooks.

In fact, there is a rapidly-growing belief among the population that the government and its agents have turned into the felons.

There is an uneasy “chatter” in this general vein showing up, widely dispersed among the population, but I hear it both in online and offline conversations almost as a “backhanded” comment now – much like occurred when Nixon was caught doctoring the Watergate tapes.

The difference is that this time the people know their wallets are being robbed instead of a political party’s documents ensconced in a file cabinet.

This had better not spread into a widely and strongly-held opinion, and there is in fact only one way for the government to stop that from occurring.

We must see indictments of the bankers and government insiders who were involved in creating this mess.

It needs to start happening right now.

TODAY.

We need a dozen Fitzgeralds’ (the Federal prosecutor going after Illinois’ Governor), we need them today, and they must include in their investigations referrals to grand juries and indictments aimed at the people inside these regulatory agencies where appropriate – that is, everyone who was involved in any form of fraud related to this mess.

I don’t care if they’re a banker, a broker, a Treasury Secretary, an OTS or OCC official, an SEC employee or a Congressperson. Each and every one of the people involved need to be investigated, if appropriate indicted, arrested and see the Rule of Law imposed upon them, right here, right now.

Why?

Because if this doesn’t start happening very soon there is a very real risk that the meme that is now starting to take hold – that our government is in fact the felon in chief – will spread and reach critical mass within the population.

We cannot – and must not – have that happen, for once it does the societal consequences that flow from that belief cannot be stopped.

There is only one way to stop the progression of this belief through society and that is for the government to prove to the citizenry that it will enforce the law even when the people who have to be arrested, charged and jailed are government employees and “favored” powerful individuals who have been robbing the public for over a decade.

We are running out of time and what I want for Christmas is for our government to show the citizens of this great nation that it is not the felon and the people who are the felons will be indicted, arrested and prosecuted to the fullest extent of the law – no matter who they are.

If our government does not do this, and do it fast, then may God have mercy, because I am absolutely certain we will need it.

Jim Kunstler: Legitimacy Dwindles

From his blog, Clusterfuck Nation. Pretty humorous, although I disagree that any kind of revolution is on the horizon.

Zounds! Public sentiment toward the accelerating economic fiasco has shifted, seemingly overnight, from a mood of nauseated amazement to one of panicked grievance as the United States moves closer to an apparent comprehensive collapse — and so ill-timed, wouldn’t you know it, to coincide with the annual rigors of Santa Claus. The tipping point seems to be the Bernie Madoff $50 billion Ponzi scandal, which represents the grossest failure of authority and hence legitimacy in finance to date in as much as Mr. Madoff was a former chairman of the NASDAQ, for godsake. It’s like discovering that Ben Bernanke is running a meth lab inside the Federal Reserve. And out in the heartland, of course, there is the spectacle of Illinois governor Rod Blagojevich trying to desperately dodge a racketeering rap behind an implausible hairdo.

What seems to spook people now is the possibility that everybody in charge of everything is a fraud or a crook. Legitimacy has left the system. Not even the the legions of Obama are immune as his reliance on Wall Street capos Robert Rubin, Tim Geithner, and Larry Summers seem tainted by the same reckless thinking that brought on the fiasco. His pick last week for chief of the SEC, Mary Shapiro, is already being dissed as a shill for the Big Bank status quo. In a few days we’ll discover what kind of bonuses are being ladled out by the remaining Wall Street banks with TARP money and a new chorus of howls will ring out.

This is very dangerous territory. In dollar terms, the numbers being applied to the various problems are so colossal — trillions! — that the death of our currency seems assured. And in defiance of congress’s express intentions, none of the TARP “money” has been applied to its targeted purpose of buying up “toxic” (i.e. fraudulent) securities hidden in the vaults of banks, pension funds, and municipal portfolios.

George W, Bush’s personal bailout of General Motors and Chrysler is designed solely to postpone their bankruptcy and mass job layoffs until after the holidays. Otherwise, the $17.4 billion will probably be used by the companies to underwrite the extensive legal work required for the moment they must declare bankruptcy — when Mr. Obama is in the White House. Meanwhile, the President-elect has ramped up his job-creation target overnight from two to three million, and some observers are catching a whiff of Soviet-style economic engineering (“…we pretend to work and they pretend to pay us….”).

The years since Jimmy Carter have produced an astoundingly flaccid public, sunk in various addictions and distractions, but this is about to change. The darkling mood of political protest and violent activism that saturated my own young adult years is scudding up again on the horizon. Mr. Obama’s pick for attorney general, the mild-looking Eric Holder, may be the key figure in the early months of the new government. If he doesn’t commence some aggressive investigations and prosecutions — beginning with Henry Paulson for insider trading when he was in charge of Goldman Sachs and shorting his own company’s mortgage-backed securities — then the whole Obama enterprise could fall under suspicion of illegitimacy. The bums who ran the US banking sector into a ditch have to account for their turpitudes. They can’t be allowed to hide under a TARP.

Unfortunately, the legal system, and probably the legislative system, will be so buried in procedural bullshit from the unwind of countless enterprises and institutions, and the sorting out of the remnants, that it remains to be seen whether this generation of people-in-charge can even embark on a fresh start of anything connected to real everyday life in America. All this is starting to alarm the tattered residue of the middle classes, and from here it’s a very short path to them being really pissed off.

When legitimacy erodes, anything goes. Nothing is respected including rules and personalities. The center doesn’t hold and the new vacuum there is a tumultuous place. The same crisis of authority and legitimacy is spreading from nation to nation now. Soon, China will contend with a discontented army of the unemployed. Greece has been in an uproar for two weeks. Belgium’s government just collapsed. Trade barriers are going up. Exports are falling away. The world’s energy markets are not immune to these disorders. I would expect problems with the currently seamless supply lines that bring America two-thirds of the oil we use. Even a mild disruption of oil supplies could attach an anvil to the ankle of an economy already falling off a cliff.

Right now, the overwhelming sentiment is to get this country back to where we were, say, ten years ago, when everything was humming nicely: Clinton nostalgia. We’re definitely not gong back there, though. It’s an idle wish. And any set of policies designed to lead in that direction will prove very disappointing. Our destination is a land of much smaller-scaled local economies. We could retain our federal ties if the federal government can scale back appropriately from the bloated, feckless enterprise it has become. Otherwise, it might only get in the way and make matters worse, and the public in one region or another of North America might reach a decision that they are better off without it. That would be what’s called a revolution.