[Failed] Corporate State USA - International Social/Political

Recall the immortal words of that man known to the entire world as a CHAMPION of DEMOCRACY, Abraham Lincoln, “..that government of the people, by the people, for the people, shall not perish from the earth.” People usually overlook the signifier “earth,” they unconsciously superimpose USA, which was unfortunately the first democratic nation to fall to Corporate interests.

Regardless of the monumental disasters the Corporate controlled Bush government has created, the inroads it has made on formerly unassailable State institutions/sectors is astounding and alarming! I refer to the appropriation via the innocuous term ‘outsourcing,’ of the US military -- today, the takeover of the Pentagon is almost complete.

The US military has been reduced to a state of dependence on the private sector for much of its essential daily operations. It is now clear the subversion of the State’s military apparatus occurred intentionally and was a high priority of the Corporate controlled neocon government of Cheney-Bush. History will no doubt regard Cheney, Bush and Rumsfeld, as the most reprehensible, destructive traitors the nation has ever known – and I do not exaggerate!

The defences of the formerly most powerful nation on earth have been compromised or stolen by private interests (see link). The wars of plunder currently raging and the billions of dollars swallowed by private interests are evidence of the fact!

But the clearest indicator to date of the first truly corporate state in the world -- notwithstanding the above red light indicator – is the behaviour of the government in relation to the CORPORATE CREATED financial crisis! Put simply and accurately the Taxpayer is now required to bear the responsibility of the incompetence and greed of the CORPORATE sector – and why not? After all, the public has ‘worn’ every injustice foisted on it to date so why not go the whole hog? We rip you off when we’re on a roll -- creating a future disaster -- then ask YOU, the honest working public, to bail us out and bear the ENTIRE responsibility for our failed scams and incompetence – how’s dem apples?

If you had doubts about your status as CHUMP and SLAVE then doubt no more! The TRUTH IS IN YOUR FACE. Need we remind you why the founding fathers made legal provision in the Constitution and Bill of Rights for the people to remove any government destructive of the national interest? Need I cite the most incompetent and destructive government the nation has ever known?

From grandmothers, teens, lumberjacks to white collar workers, in fact every red blooded American that is able to walk, YOU are required by YOUR NATION to MARCH ON THE CAPITAL AND REMOVE BY SHEER FORCE OF DEMAND the criminals and incompetents that occupy high office and other positions of responsibility in government.

Restore democracy, jail the rogues and restore the nation!

It remains to be seen whether or not the Corporate controlled military and State police would draw their weapons on the HONEST CITIZENS of this great nation!

It also remains to be seen whether or not consultants to the Corporations are correct in their assumptions and assessments of the public – they insist the public will remain passive, docile and amenable to their media control.

How much worse does it have to get? The indicators were evident from the start; this government is not only clueless it is extremely dangerous and destructive of the public interest. You cannot expect a criminal to be anything other than a criminal or an idiot to be any other than an idiot!

Coordinating a national event via the internet today is literally child’s play.

The democratic prerogative resides with the people only!

Peace.

either cut it loose [America] or go down with it -- you were warned!

by definition capitalism is wealth for the few --historical fact!

it should be a time for rejoicing; the criminally unfair system is in terminal mode -- good riddance!

patience ppl -- the world is about to drop into our laps like a ripe fruit. The people know exactly who is responsbile for their pain.

There will not be a lightpole without a politician/executive hanging from it!

Following another erratic day of trading on the stock market, Treasury Secretary Henry Paulson and Federal Reserve chairman Ben Bernanke convened an emergency meeting of the Senate Banking Committee and other congressional leaders to request fast-track authority for a sweeping plan to buy back illiquid assets and other complex securities from distressed and under-capitalized banks. The turbulence in the financial markets has intensified and there is every indication that the situation will get worse before it gets better.

There are a number of signs that the financial system is at the brink of collapse and that Wall Street is headed for a 1929-type crash. Depositors have begun to withdrawal their savings from money market funds alarmed by the gyrations in the market and the daily deluge of bad economic news. According to the Washington Post, funds dropped "by at least $79 billion, or about 2.6 per cent" on Wednesday alone. The withdrawals are the equivalent of a slow bank run just at the time when stressed commercial banks need access to cheap capital to finance daily operations and provide loans for a steadily weakening economy. There's also been a surge of panic-buying of US Treasurys which is considered the safest of investments. According to the Wall Street Journal, during Wednesday's market-rout, "investors were willing to pay more for one-month Treasurys than they could expect to get back when the bonds matured. Some investors, in essence, had decided that a small but known loss was better than the uncertainty connected to any other type of investment. That's never happened before." (Wall Street Journal) Also, the VIX, or "fear gauge", has soared to levels not seen since the crisis began in August just over a year ago.

On Tuesday, interbank lending rates spiked upwards causing banks to abruptly stop lending to each other. When banks stop lending to each other, they cannot perform their primary function of transmitting credit to consumers and businesses, and the economy shuts down. That is why the Fed and other members of the western banking cartel made a surprise announcement at 3 AM (EST) Wednesday morning.
From the Fed:

Grasping at Straws
by Mike Whitney via rialator - ICH Sunday, Sep 21 2008, 10:05am

On Friday morning, Senator Christopher Dodd, the head of the Senate Banking Committee, was interviewed on ABC's “Good Morning America.” Dodd revealed that just hours earlier at an emergency meeting convened by Secretary of the Treasury Henry Paulson and Federal Reserve chairman Ben Bernanke, lawmakers were told that "We’re literally maybe days away from a complete meltdown of our financial system.” Dodd added somberly, that in his three decades of serving in public office, he had "never heard language like this.”

The system is at breaking point, and despite Wall Street's elation from the proposed $1 trillion dollar bailout to remove toxic mortgage-backed debt from banks balance sheets, the market is still correcting in what has become a vicious downward cycle. This cycle will persist until the bad debts are accounted for and written off for or until the exhausted dollar-system collapses altogether. Either way, the volatility and violent dislocations will continue for the foreseeable future.

Most people don't understand what happened on Thursday, but the build-up of bad news on the Lehman default and the $85 billion government takeover of AIG, triggered a run on the money markets and a freeze in interbank lending. The overnight LIBOR rate (London Interbank Offered Rate) more than doubled to 6.44%! Bank of America reported overnight borrowing rates in excess of 6%. Longer-term LIBOR rates also rose sharply. On Wednesday, jittery investors removed their money from money markets and flooded short-term US Treasurys for the assurance of a government guarantee on their savings even though interest rates had turned negative which means that their balance would actually shrink at the date of maturity. This is unprecedented, but it does help to illustrate how raw fear can drive the market.

The TED spread (the TED Spread measures market stress by revealing the reluctance of banks to lend to each other) widened and the credit markets froze in place. Borrowing three-month dollars on the interbank market and the U.S. Treasury's three-month borrowing costs widened five full percentage points. That's huge. The banking system shut down.

What does it mean? It means the Federal Reserve has lost control of the system. The market is driving interest rates now, and the market is terrified. End of story.

When the Fed announced its emergency program to dump $180 billion into the global banking system, short term Libor retreated slightly but long-term rates have remained stubbornly high. The noose continues to tighten. These rates are pinned to 6 million US mortgages which will be resetting in the next few years. That's more bad news for the housing industry.

The entire system is de-leveraging with the ferocity of a Force-5 gale touching down in the Gulf, and yet, Henry Paulson has decided that the prudent thing to do is build levies around the system with toilet paper dollars. Naturally, many people who understand the power of market-corrections are skeptical. It won't work. Libor is pushing rates upwards--that's the "true" cost of money. The Fed Funds rate (2 percent) is supported by infusions of paper dollars into the banking system to keep interest rates artificially low. Now the extreme pace of deleveraging has the Fed on the ropes. Trillions of dollars of credit is being sucked into a black hole which is raising the price of money. It's out of Bernanke's control. He needs to step out of the way and let prices fall or the dollar system will vanish in a deflationary vacuum.

The problems cannot be resolved by shifting the debts of the banks onto the taxpayer. That's an illusion. By adding another $1 or $2 trillion dollars to the National Debt, Paulson is just ensuring that interest rates will go up, real estate will crash, unemployment will soar, and foreign central banks will abandon the dollar. In truth, there is no fix for a deleveraging market anymore than there is a fix for gravity. The belief that massive debts and insolvency can be erased by increasing liquidity just shows a fundamental misunderstanding of economics. That's why Henry Paulson is the worst possible person to be orchestrating the so called rescue project. Paulson comes from a business culture that rewards deception, personal acquisitiveness, and extreme risk-taking. Paulson is to finance capitalism what Rumsfeld is to military strategy. His leadership, and the congress' pathetic abdication of responsibility, assures disaster. Besides, why should the taxpayers be happy that the stocks of Morgan Stanley, Washington Mutual and Goldman Sachs surged on the news that there would be a government bailout yesterday? These banks are essentially bankrupt and their business models are broken. Keeping insolvent banks on life support is not a rescue plan; it's insanity.

No one has any idea of the magnitude of the de-leveraging ahead or the size of the debts that will have to be written down. That's because 30 years of deregulation has allowed a parallel financial system to arise in which over $500 trillion dollars in derivatives are traded without any government supervision or accounting. These counterparty transactions are interwoven throughout the entire "regulated" system in a way that poses a clear and present danger to the broader economy. It's a mess. For example, there are an estimated $62 trillion of Credit Default Swaps (CDS) alone, which are basically insurance policies for defaulting bonds. AIG was as heavily involved in CDS as they were in regulated insurance products. So why would AIG sell CDS rather than conventional insurance?

Because, just like the banks, AIG could maximize its profits by minimizing its capital cushion. In other words, it didn't really have the capital to pay off claims when its CDS contracts began to blow up. If it had been properly regulated, then government regulators would have made sure that it was sufficiently capitalized with adequate reserves to pay off claims in a down-market. Now taxpayers will pay for the lawless system which men like "industry rep" Henry Paulson put in place. That's deregulation in a nutshell; a system that allows Wall Street banksters to create credit out of thin air and then run weeping to Congress when their swindles backfire.

Inflating the currency, printing more money, and increasing the deficits won't help. The bad debts have to be accounted for and liquidated. The Paulson strategy is to create another ocean of red ink while refusing to face the underlying problem head-on. This just further exacerbates the consumer-led recession which economists know is already setting in everywhere across the country. Demand is down and consumer spending is off due to falling home equity, job losses, and tighter lending standards at the banks. The broader economy does not need the added downward pressure from higher taxes, bigger deficits, or inflation. Paulson's plan is a band-aid approach to a sucking chest wound. The debts are enormous and the pain will be substantial, but the problem cannot be resolved by crushing the middle class or destroying the currency.

The malfunctioning of the markets and the freeze-over in the banking system are the outcome of a massive credit unwind instigated by trillions of dollars of low interest credit from the Federal Reserve which was magnified many times over via complex derivatives contracts and extreme leveraging by speculative investment bankers. This has generated the biggest equity bubble in history. That bubble is now set for a "hard-landing" which is the predictable result of an unsupervised marketplace where individual players are allowed to create as much credit as they choose.

If Paulson is not removed and his 'rescue plan' scrapped altogether; the dollar will lose its position as the world's reserve currency and the US government will face a historic funding crisis as foreign sources of capital dry up. That will thrust the country into a hyper-inflationary depression.

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