Bailout by Stealth

James Corbett
The Corbett Report
September 30, 2008

The media is falling all over itself to report on every minutiae of the so-called Wall Street “bailout bill” and its rejection by Congress yesterday (just a few of the thousands of examples can be seen here and here and here and here). And why not? The media’s breathless coverage of the bill has produced a furious backlash by the public and hysteria on Wall Street in a self-justifying feedback loop that makes the media attention seem merited.

The startling truth which the controlled corporate media is not reporting, however, is that a bailout is actually taking place right now, completely out of the public spotlight. This program has already pumped trillions of dollars into Wall Street (compared to the mere $700 billion proposed in the legislation that the media is focusing on) to help prop up the faltering investment banks and promises to pump in even more, every dime of it to the detriment of the taxpayer though the public will have no stake in its success. Why, then, is this program not being talked about in the media?

Slipping under the radar last week amidst the hullabaloo in Washington over the bailout bill was this story noting that in the past week alone, the Federal Reserve had pumped an astonishing $188 billion per day into the system in the form of emergency credit. This means that in just four days, the Fed injected as much money into the system as the entire $700 billion bailout proposal. After the proposal was rejected, the Fed responded by immediately announcing it would pour another $630 billion into the global financial system.

The Federal Reserve, of course, is America’s central bank and although the above story conjures the reassuring image of a national bank lending out some of its vast reserves to help Wall Street weather the storm, the fact is that the Federal Reserve is not Federal and has doubtful reserves. In fact, the trillions of dollars that have been lent to the banks in the last few weeks were created out of nothing by the privately-owned Federal Reserve. When the Federal Reserve “lends” money to a bank through repurchase agreements (repos), credit auction or other method, it is not actually lending out money from its vaults. It is simply creating the money it “lends” out as electronic credits created in the recipient banks account. It is literally money out of thin air.

That the general public is on the hook for this money created out of nothing is not an exaggeration. It is paid for in a dimly-understood mechanism often known as the “inflation tax.”

Inflation is nothing more than an indication that the ratio of money to products that can be purchased with that money has been increased. Since the overall number of dollars has gone up without any corresponding increase in economic production (as happens when the Federal Reserve creates money out of thin air), the value of each individual dollar goes down. That means that the value of the money in each individuals’ bank account (not to mention their pension and social security dividends) can be reduced simply by the flick of a pen of a Federal Reserve paper-pusher. (Unless of course that individual just happens to be a billionaire investment mogul or a Vice President who can divest themselves of U.S. dollars in time for this inflation not to affect them.) This is sometimes known as an inflation tax because its overall effect is the same as if the government came in and took that value out of the individuals’ bank account. Watch Ron Paul explain the inflation tax in the video below:

The most insidious part of this inflation tax is that the inflation does not begin until the new money begins to circulate in the system. In other words, the first person (or, more likely, giant corporate conglomerate) to use the money receives its full value, while those at the bottom of the pyramid retrieve the diminished returns of a devaluing dollar.

Why, then, is the public not furious about this stealth bailout, now taking place at the blistering pace of nearly $1 trillion a week, and all to the taxpayer’s detriment? The obvious answer is that the media is not whipping the public into a frenzy about it, instead focusing its attention on a $700 billion program and allowing the public to feel like they scored a blow against Wall Street when the program gets rejected. If so, it’s time the public got wise to how the system is really being run by and for the benefit of private bankers and at the expense of the average taxpayer. Otherwise, the fleecing of the public will continue unabated even as the public thinks they’ve won the battle.

Source

Ron Paul on the Failed Bailout Vote

House votes against $700 billion rescue package

Ruth Mantell & Steve Gelsi
MarketWatch
September 29, 2008

WASHINGTON — House lawmakers voted 205 to 228 Monday against approving the historic $700 billion financial rescue plan, a sharp blow to the administration and bipartisan rallying efforts from leaders in Congress who warn that the country is on the brink of an economic precipice.

With elections approaching, some lawmakers — both Democrats and Republicans — may feel nervous about voting for a plan that risks so much taxpayer money and can’t promise success. But the president has lobbied hard to approve the plan, and U.S. officials also have stressed the dire consequences of taking no action.

Critics say the plan does not adequately address problems such as job losses and a distressed housing market that underlie current economic weakness. U.S. officials had hoped the plan would ease the credit crunch and restore confidence in the markets, even as markets plunged around the world. Those in favor of the rescue plan may have been trying to treat the most manageable symptom — a frozen credit market — if not the actual disease.

A vote in the Senate was expected Wednesday, and the president would have followed with a speedy signature.

Earlier Monday, doubt emerged over whether enough representatives would vote in favor of the plan and House Speaker Nancy Pelosi appealed to colleagues in the early afternoon, stressing that representatives will continue to monitor financial issues and pursue additional strategies. She said it’s imperative that the measure on the floor receives bipartisan support.

“That is the only message that will send a message of confidence to the markets,” Pelosi said.
Colleagues applauded after appeals for bipartisan agreement on the rescue plan from Rep. John Boehner, House minority leader, and Rep. Barney Frank, chairman of the financial-services committee.

The risk of not acting is much higher than the risk of acting, according to Boehner.
“I didn’t come here to vote for bills like this. Let me tell you this: I believe Congress has to act and that means each and everyone of use,” he said.

FULL ARTICLE

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GRAND THEFT AMERICA

FINANCIAL CRIME OF THE CENTURY

by Stephen Lendman

The crime of the century. The greatest one ever. Author Danny Schechter calls it “Plunder.” The title of his important new book on the subprime and overall financial crisis. Economist Michael Hudson and others refer to a kleptocracy. A Ponzi scheme writ large. Maybe an out-of-control Andromeda Strain. An economic one. Deadly. Unrecallable. Science fiction now real life. Potentially catastrophic. World governments trying to contain it. Trying everything but not sure what can work. Maybe only able to paper it over for short-term relief. Buy time but in the end vindicate the maxim that things that can’t go on forever, won’t.

The world as we know it is changing. Industrial capitalism. The entire global economic system. Interconnected. What affects one nation touches others. If the troubled country is America it reaches everywhere, and if the crisis is great enough, the disease may be fatal and human wreckage catastrophic. Precisely the current dilemma that world leaders and financial experts are scrambling to figure out. Desperate to contain, and not sure what, if anything, can work. How did this happen and why?

The result of unfettered capitalism’s fatal flaw – unbridled greed in a rigged system that rewards the few at the expense of most others. First an explanation of how it works. Free-wheeling, “free market” Chicago School fundamentalism the way economist Milton Friedman championed it in his 1962 book “Capitalism and Freedom” and taught it to students for decades. He believed that government’s sole function is “to protect our freedom both from (outside) enemies….and from our fellow-citizens.” Preserve law and order. Enforce private contracts. Protect private property and “foster competitive (unregulated) markets.” Everything else in public hands is “socialism….blasphemy.” Not to be tolerated.

He said “free markets” work best. Unfettered by rules, regulations, onerous taxes or any at all, trade barriers, entrenched interests, and human interference. That anything government does, business does better, so let it. That the best government is one that governs least. That public wealth should be in private hands. The accumulation of profits unrestrained. Corporate taxes abolished. Social services also, and that “economic freedom is an end to itself….and an indispensable means toward (achieving) political freedom.”

He called most all government interference a restriction of freedom. Opposed foreign aid. Subsidies. Import quotas and tariffs, and illicit drug laws for being a subsidy to organized crime, but he found no fault with major banks laundering their profits. He believed business should be unrestrained in maximizing them, even the illegal kind apparently.

He opposed the minimum wage and right of unions to bargain collectively on equal terms with management. He believed high wages and benefits harm everyone. They raise prices, and in the end, hurt workers as well as management. He called Social Security “The Biggest Ponzi Scheme on Earth,” even though it’s been the most effective poverty reduction program ever for millions of seniors who’d be desperate without it. Especially today given a deepening economic crisis. The nation’s social safety net disappearing, and heading everyone toward managing on his or her own. Dependent on their ingenuity, resources, and good fortune. Milton Friedman’s ideal world. For those who can’t make it, it’s their own fault. It’s everyone for him or herself in his judgment, and let the devil take the hindmost.

As for today’s largest ever unraveling Ponzi scheme, it’s just the workings of the “free market.” Creative destruction. “Freedom to choose.” The best of all possible worlds, and unfettered capitalism will figure out the right solutions. Provided government gets out of the way and gives it free reign. Free money also to wreck world economies and human lives even more than what’s already done.

The Chickens Are Home to Roost

Are they ever, and here’s what we’ve got. A global asset bubble. A predictable crisis allowed to build and mushroom. Begun after Chicago School economics took hold under Ronald Reagan. Continued under GHW Bush. Became religion under Bill Clinton, and ultimately fundamentalism under GW Bush.

The result – a “slow motion train wreck” gaining speed. Banks and other financial institutions failing globally. On September 25, the largest bank failure in US history with Washington Mutual’s collapse. Earlier it was giant insurer AIG. Before that Fannie Mae and Freddie Mac, Lehman Brothers, Bear Stearns, and Merrill Lynch a forced liquidation to Bank of America.

Others are now teetering on the edge. Strapped by toxic debt. The result of out-of-control greed for easy profits. Massive fraud to get them. Thinking they’re the best and brightest, and only mere mortals mess up. Knowing Fed moral hazard will cushion them if they do. True for some. Not for others, and learning that the Federal Reserve (the world’s key central bank) failed in its primary job. To protect the country’s financial system from insolvency. By contributing to a financial crisis and one of confidence. By creating near-limitless amounts of capital. Fueling a housing bubble. Outsized consumer debt, and irresponsible investments free from government oversight. Fraudulent ones involving multi-trillions of dollars.

Partnering with government to make it easy. Risking a global economic meltdown as a result. Scrambling to find solutions. Unsure if there are any. The present crisis is unparalled. Maybe it can be fixed, and maybe not. The problem is multi-fold. A perfect storm involving:

— residential housing;

— commercial real estate;

— consumer over-indebtedness;

— unknown amounts of toxic debt (in the multi-trillions);

— affecting world finance and economies;

— causing bankruptcies;

— many more will follow;

— selected ones bailed out;

— the entire system endangered;

— consumer money market, bank accounts and private pension funds as well; government backing is needed to protect them; there’s not enough money to do it; and

— the contagion is spreading; threatening world economies and people everywhere.

This time is really different. A $700 billion bailout (called the Emergency Economic Stabilization Act of 2008 – EESA) is just a down payment. Trillions will be needed in the end. Other nations contributing to help. The problems are deeper and more intractable than anyone expected. Before this ends, unimaginable amounts of capital will be written off. Too much to even contemplate. Bad investments contaminating good ones. Threatening world financial structures with paralysis. Severe economic damage to their economies as a result.

Eroding industrial capitalism as we know it. At best managing a short-term fix and delaying a final denouement for a later time. Under new management with the current and past ones claiming no responsibility. And unmindful of millions of homeowners facing foreclosure and bankruptcy. One in ten currently behind in their payments. Others losing their jobs and way of life. They’re the most vulnerable. Least able to cope, and for some their ability to survive.

According to The New York Times, here’s how the Paulson scheme helps them: “it requires the government to use its new role as owner of distressed mortgage-backed securities to make ‘more aggressive’ efforts to prevent home foreclosures.” Weasel words. No specifics. No assurances, and nothing apparently for homeowners already in foreclosure.

On September 22, ahead of the announced agreement, American Research Group (ASG) published its latest public sentiment poll results, and they were stunning. At 19%, George Bush scored lowest ever for a US president, surpassing Harry Truman at the depth of the Korean War and Richard Nixon during Watergate. It came at a time ASG’s results showed 82% of Americans believe the economy is getting worse, and only 17% approve of how Bush is handling it. Among registered voters, the number is 18% at a time no one surveyed (zero percent) said the economy is improving and 68% say it’s in recession. True or false, it’s how they feel. How the crisis affects them, and that’s what counts most.

Yet on September 24, the president addressed the nation audaciously. Callously dismissing public pain and anger. Deceitfully stating outright lies. A typical performance. Demanded that Congress give the treasury secretary carte blanche authority over $700 billion to address “a serious financial crisis.” Asked taxpayers to pay for corporate fraud. Reward criminals and ignore their crimes. Said nothing about the root cause. The effect on ordinary people, or how Paulson’s scheme will help them. Ignored growing public opposition. Large numbers of credible observers believing the proposed solution is worse than the problem. The most honest of them saying it will enrich fraudsters and offer no help for homeowners.

Yet Bush concluded that “democratic capitalism (is the) best system the world has ever devised” in spite of clear evidence that it’s broken and corrupted. Exploits people for profit. Enriches the few at the expense of the many. Rewards criminals for their crimes. Protects the rich from beneficial social change.

Ahead of the president’s address on September 24, The New York Times showed a rare display of candor in a critical Timothy Egan opinion piece. About “nearly nationalizing the banking system and giving the treasury secretary more power than a king….whose decisions may not be reviewed by any court of law or any administrative agency.” He asked readers to remember “where the biggest heist took place, and how Wall Street dragged down the rest of the country once before,” referring to the Great Depression but leaving out everything in between.

He stressed, however, “how Wall Street brought down main street,” and things have now come full circle. Deregulation unleashed casino capitalism, and bankers made a killing. Now they’re in trouble and Bush demands “the biggest bailout in American history….or the world will crumble. He said the a similar thing in the run-up to war” so who can believe him now. Egan quotes a dirt farmer asking why not the same “concerns (for) average Americans.” Because “we the people” Bush speaks for are them, not us.

As for Paulson’s plan, here’s what the Financial Times writer Martin Wolf said on September 23. He called it “not a true solution to the crisis.” It doesn’t address the “fundamental problem.” It’s “neither a necessary nor an efficient solution. It is not necessary because the (Fed can) manage illiquidity through its many lender-of-last resort operations. It is not efficient because it can only deal with insolvency by buying bad assets (overpriced junk) at far above their true value, thereby guaranteeing big losses for taxpayers and providing an open-ended bail-out to the most irresponsible investors.”

Wolf also objects to Paulson getting unchecked powers. Providing little or no help to the poor and “ill-informed” (read duped) borrowers, and lists other operational suggestions “essential for the long-run health of any financial system” without needing “a penny of public money.” Among them, forcing creditors to take losses and not taxpayers.

Unmentioned in his article is the underlying fraud behind the crisis and a lack of regulatory oversight that made it easy. Also, omitted was what’s covered in the section below.

The 1937 Housing Act’s Empowering Section 8 Authority

One Section 8 sentence provided the basis for the treasury secretary’s empowerment. It reads:

“Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administration agency.”

In other words, unchallengeable czarist powers. In contrast to the 1930s Reconstruction Finance Corporation’s (RFC) closely supervised operations. That era’s Home Owners’ Loan Corporation (HOLC) that refinanced homes to prevent foreclosures. And the 1980s Resolution Trust Corporation (RTC) mandate to liquidate assets from failed S & Ls. Not dispense free money for bad investments unchecked. The above authorities subject to judicial review. Not governed by a financial boss to run as he pleased.

The Announced “Bailout” Deal – The Emergency Stabilization Act of 2008 (ESA)

According to The New York Times, EESA calls for “strict oversight of the program by a Congressional panel and conflict-of-interest rules for firms hired by the Treasury to help run the program.” Also “a change in the bankruptcy laws sought by some Democrats to give judges the authority to modify the terms of first mortgages.”

Given the bipartisan blame for today’s crisis. The post-9/11 willingness to give the administration near-carte blanche authority across the board. Eight years of indifference to social needs and public welfare. Who now believes that policy going forward will change and that the agreed-on scheme will protect people or curb the secretary’s authority. On his own initiative, George Bush usurped supreme power post-9/11 while few in Congress blanched. None in leadership positions. Little today has changed.

Disclaimers notwithstanding from both sides of the aisle, Wall Street is pleased. Paulson got what he wanted. The plan’s fine print will assure it. Public money. Far more, if needed, than $700 billion. The power to dispense it freely. With weak at best oversight and judicial review, and the ability to conceal fraud and malfeasance. In short, the between-the-lines meaning of Paulson saying: “We have made great progress toward a deal, which will work and be effective in the marketplace.”

The same one that fleeced the nation and betrayed the public trust. Now empowered to take more with the full faith and blessing of the government from both sides of the aisle. Belying George Bush’s insult that “The rescue effort….is not aimed at Wall Street; it is aimed at your street.” And Nancy Pelosi’s hypocrisy that: “All of this was done in a way to insulate Main Street and everyday Americans from the crisis on Wall Street….I want to congratulate all of the negotiators for the great work they have done.” Who in banker boardrooms would disagree.

Some Relevant Facts

Clearly the present crisis is unprecedented. As stated above, maybe it can be fixed and maybe not. No one is sure because no one understands it fully. Where all the problems lie. To what degree can they be contained. How great their fallout may be. Their full effect on world economies. How bad things may get before they stabilize and improve, and the way the world will look like when they do.

Whatever’s coming, industrial capitalism is eroding. A kleptocracy replaced it. If the system is saved, it will be temporary, and an even greater one will emerge. Why this article is called Grand Theft America. A criminal class runs it, and they’re rewarded for their crimes. Backed by the full faith and credit of the government with taxpayer money. A near-limitless amount created and borrowed. Who said crime doesn’t pay!

For over 30 years, an unimaginable wealth transfer to the rich has been ongoing. To the top 1% and corporate America from most others. It proves the failure of a system that rewards the few at the expense of the many. Licenses greed and creates this kind of global financial crisis so far uncontained. It begs the questions: what caused it and what’s the fallout:

— the ruinous effects of militarization; insane amounts of spending on it; “military Keynesianism;” believing capitalism thrives on foreign wars; “Global Wars on Terrorism” currently; their costs are unsustainable and are heading the nation toward bankruptcy;

— the drain on an already weakened economy;

— maxed out consumers now debt slaves;

— so is government from unrepayable obligations in the tens of trillions; not the fictitious “official” reported numbers;

— the possibility of future default; hyperinflation; national bankruptcy, and the demise of the republic;

— human default as well: mass bankruptcies; home foreclosures; rising unemployment; increased poverty; and growing numbers of families unable to survive;

— the subprime crisis is just part of it; seven million mortgages sold to the unwary; the idea was to criminally defraud them; offer two-year teaser rates; then reset them higher semi-annually based on an interest rate benchmark; payments soared as much as 30% and became unaffordable; the scheme was to cash in at the expense of mortgage holders, and five million risk losing their homes and life savings;

— an “economic Pearl Harbor” for Warren Buffett; for Senator Chris Dodd a “50-state Katrina;” a “house of cards (built on) reckless finance” for author Kevin Phillips; Frankenstein finance; casino capitalism; for most Americans, a human catastrophe;

— the demise of our manufacturing base; letting malls replace factories as the economy’s engine;

— permitting the financialization of the economy; speculative finance writ large; replacing productive investment; totally deregulated; run by fraudsters; free from government oversight; letting investment banks game the system at up to 40 to 1 leverage; until 2004, 12 to 1 was the maximum;

— a government – business conspiracy for global dominance and the single-minded pursuit of profit; unfettered amounts of it through cleverly manipulated schemes; transferring multi-trillions of dollars from workers to the most wealthy; doing it without people even noticing;

— creative destruction to let giant businesses grow larger by removing and devouring smaller ones; even large ones;

— permitting and/or ignoring massive fraud; involving multi-trillions of dollars; the largest ever Ponzi scheme; a calculated crime with media complicity through silence; not reporting a growing problem as it emerged; waiting until it mushroomed and still not explaining it accurately and honestly; and

— wondering won if the best and brightest can fix things or if no amount of money or ingenuity can do it.

The Plan’s Architect – Henry Paulson

From a Nixon administration staff assistant to the assistant secretary of defense. To assistant to key Watergate official John Erlichman. To Goldman Sachs in 1974. To a partnership in the firm in 1982. Then Chief Operation Officer (COO) in 1994 and CEO in 1998 by a palace coup against co-chairman and now New Jersey governor Jon Corzine, according to New York Times columnist Floyd Norris.

Even before the current crisis, Goldman was the preeminent Wall Street firm. A survivor. The largest, and along with Morgan Stanley, the remaining two Street giants left standing. But no longer as investment banks after the Federal Reserve’s September 21 announcement that both companies will become bank holding companies after a mandatory five-day waiting period, now over.

In theory, they’ll be under stricter Fed oversight but will get Fed help to complete their transition and thereafter. As a well-connected financial powerhouse, whatever Goldman wants, Goldman gets. Always in the past by recycling top executives into Democrat and Republican administrations, and now more than ever given Henry Paulson’s extraordinary financial czar powers.

Before his $700 billion giveaway plan, the 2008 Housing and Economic Recovery Act gave him authority to fleece taxpayers by rescuing Fannie Mae and Freddie Mac as well as raise the national debt by over $5 trillion dollars. He also orchestrated the demise of Bear Stearns, Lehman Brothers and Washington Mutual. The forced sale of Merrill Lynch, and arranged the government takeover of AIG.

He has near-open checkbook authority to reward close allies with loans and free money and let them acquire troubled assets on the cheap. This from a man with much responsibility for today’s crisis. A June 12, 2006 Business Week cover story titled “Mr. Risk Goes to Washington” called him “one of the key architects of a more daring Wall Street, where securities firms are taking greater and greater chances in their pursuit of profits.” Such as assuming huge amounts of debt and “placing big bets (with their own money) on all sorts of exotic derivatives and other securities.” Advising clients to do the same. Casino capitalism at up to 40 to one leverage. Hugely profitable in up markets. Disastrous in down ones.

Paulson earned millions and now has an estimated $700 million + net worth. For 2007 overall, according to Bloomberg.com, “Wall Street’s five biggest firms (paid out) a record $39 billion in bonuses (and did it in) a year when three of the companies suffered the worst quarterly losses in their history and shareholders lost more than $80 billion.”

Speculative finance pays well, even in down years, and it even raised Bloomberg’s ire in a Michael Lewis September 24 commentary titled “America Must Rescue the Bonuses at Goldman Sachs.” It reflected on a possible global financial collapse but sacrificing Goldman bonuses is another matter. If firm “employees (take) pay cut(s), it will be (tantamount to failure and) our country may never recover.” How will the company induce new talent to come aboard. Goldman is well-positioned to get maximum gain from its former CEO’s $700 billion handout.

Why else would Warren Buffett bet $5 billion on the firm! For preferred shares paying an annual 10% dividend. Warrants as well to buy $5 billion in common stock at a $115 a share strike price. Well off its $251 peak and below the latest September 26 $138 a share.

Joseph Stiglitz on the Economy

Stiglitz was formerly part of the system he now criticizes. Free market fundamentalism in its most extreme form. For many months, he warned about a worsening global economy and growing financial crisis that’s as bad or worse than the Great Depression.

He sees similar problems now as then:

— outsized speculation through excessive leverage;

— pyramid schemes;

— multiple bubbles through so-called Wall Street innovations; and

— a lack of transparency and government oversight.

Combined they created a crisis “so great that no one knows exactly the magnitude of the risk they face. It is particularly bad because our financial institutions are based on trust. You put money in the bank and you trust that you can get (it) out, so trust is absolutely essential for the functioning of our financial markets and economy.”

The problem is exacerbated by those providing the news. The dominant media and frequent spokespeople. Industry representatives like Lehman Brothers CEO saying last April that “we turned the corner, and the economy is on the uptick.” Also from the president, treasury secretary and others in government as things keep worsening.

Stiglitz calls this a “top down crisis.” The “$3 trillion cost” of foreign wars a key. Creating huge deficits and consuming vital resources needed for growth. “This is the first war in American history that has been totally financed on the credit card. For the last five years….we have been a debt economy.” Not since the Revolutionary War have “we have had to turn to foreigners,” so now “40% of our national debt is financed by (them). Even as we went (to war) we had a big deficit, and yet the president called for tax cuts for upper middle class Americans.” Insane but we did it.

Another factor is other countries trusting that our economy is working well, and when the president says it is he’s believable. “This administration burned that trust….no wonder everybody around the world is losing confidence.” Even worse is that the administration isn’t dealing responsibly with these problems, mostly because they’re of our own making.

Stiglitz worries about the “real economy:” home prices dropping; owners forced into foreclosure; more financial firms in crisis; and a good many won’t survive. He sees a weakening financial system unable or unwilling “to provide credit (the lifeblood of the economy for) loans, mortgages,” and that means lower home prices, contracting businesses, rising unemployment, and a “downward vicious cycle. You have to be in fantasy land to say that everything is fine (or even) that we have turned the corner.” He sees at least another 18 months of pain. Maybe longer. Who can know or how much.

For sure, real economic stimulus is needed. Productive investment. Not the phony “bailout” kind proposed. Aiding state and local governments. Better unemployment insurance and more for infrastructure. Providing a basis for long-term growth. Not feeding markets and starving the hungry, as one writer put it. Not believing markets on their own will fix things.

Understanding that government must intervene. Responsibly. Facilitate job creation. End casino capitalism. Provide incentives for real economic growth. Let foreclosed and threatened homeowners stay in their homes. Work out an equitable way to do it. “We learned a painful lesson in the 1930s and today: The invisible hand often seems invisible because it’s not there.” It led to the kind of predicament now confronting the country. The solutions proposed will just compound it.

Ones that Can Fix It

Good ones not considered. From figures like Dean Baker of the Center for Economic and Policy Research. Others as well with solid advice to:

— make fraudsters eat the bulk of their losses;

— use public funds only “to sustain the orderly operation of the financial system;”

— minimize speculative finance; the root of the current problem;

— “minimize moral hazard” – the Paulson (and Bernanke) “put” picking up where Greenspan left off;

— let delinquent homeowners stay in their homes and pay rent;

— curtail executive compensation for companies getting government aid;

— make a key Fed responsibility the prevention of asset bubbles; reinstitute regulations to do it; Glass-Steagall for starters that prohibited commercial and investment banks and insurance companies from combining;

— impose a modest financial transactions tax to curb excesses and raise revenue;

— trade assets, like credit default swaps, openly on exchanges to establish fair value for them;

— impose strict limits on leverage;

— keep Fannie and Freddie public institutions; their status before being privatized in 1968; and

— restructure the Fed democratically; a far better solution is abolish it and let government control its own money; use it responsibly for all Americans, not just the privileged few.

Other recommendations recognize no quick or easy solutions to problems this great. Economist James Galbraith says borrowers need collateral. A new Home Owners Loan Corporation to rewrite mortgages. Manage rental conversions, and decide what degraded properties should be demolished. Which ones to save and refurbish. Set it up in communities under federal guidelines and do it quickly. Help state and local governments strapped for cash. Reestablish federal revenue sharing. A National Infrastructure Bank making capital available for infrastructure. Put people to work building it. Protect seniors and near-retirees from wealth loss. Extra Social Security, Medicare and Medicaid revenue will help. Get money in the hands of people who’ll spend it.

Address other crucial issues like energy conservation, reconstruction and renewable power. Infrastructure overall. Tuition help for students. Another GI bill. Credit card and mortgage interest rate caps. Rescind anti-consumist laws like the misnamed 2005 Bankruptcy Abuse Prevention and Consumer Protection Act. A boon for credit card companies and other businesses. Unfairly burdensome to the public.

A whole range of other projects and ideas to redirect the economy away from speculative finance and militarism and toward high-return public investment. Do it before it’s too late. Recognize that the present course is unsustainable. Imagine a government working for everyone and not just the privileged few. Imagine it not tolerating fraud and malfeasance.

Instead, Congress agreed to a “bailout” and passed a record $634 billion omnibus spending bill (to run the government through March 6, 2009) to include a record Pentagon budget; $25 billion in low-interest auto industry loans; maybe with no provision for repayment; lifting a quarter-century ban on Atlantic and Pacific off-shore drilling; billions more in earmarked pork; and likely more coming later for the airlines and other endangered companies. Taxpayers for Common Sense criticized the bill at the same time it noted that government “bailout” appropriations will reach about $1.2 trillion with the $700 billion Paulson scheme. Others put the total above $1.5 trillion, and many say it’s only for starters.

Paying “hold-to-maturity” prices compounds the fraud. For securitized assets worth a fraction of full value. Much of it pennies on the dollar, if anything. Trillions of dollars of toxic ones. All sorts of them. Newly invented ones. Structured finance and insurance. Asset-backed securities. Repackaged into marketable pools. Sold to investors. It’s been done for decades but only recently so out of hand. Greed and deregulation created an alphabet soup of levered-up, high-risk securitized assets. Financial alchemy. Largely outright fraud, including:

— collateralized debt obligations (CDOs), including auto loans, credit and corporate debt;

— collateralized (asset-backed home) mortgage obligations (CMOs);

— commercial mortgage-backed securities (CMBS);

— mortgage-backed securities (MBS) and levered loans;

— structured investment vehicles (SIVs);

— special purpose vehicles (SPVs);

— pass-through securities;

— credit and interest rate default swaps;

— commercial paper and more;

— repackaged arcane stuff most people don’t understand; even investors who bought them; like eating a stew with no idea what’s in it; a recipe with no list of ingredients; learning too late it’s toxic and you’re in trouble;

Credit card companies as well from growing amounts of unrepayable credit card debt. The auto industry already assured of a low-interest $25 billion loan (or maybe handout) for starters. Airlines coming next. Select homebuilders and troubled companies called too big to fail. If they’re too big to fail, says one observer, they’re too big to exist.

EESA will give the treasury secretary near-carte blanche powers to conceal fraud and help the fraudsters, including his former company, Goldman Sachs, now in trouble. Pick and choose among others. Which will survive, and what less favored ones will go on the block at fire sale prices or disappear. Today there are 9000 banks in the country. In a decade, half or more of them may be gone.

Economist Michael Hudson calls EESA “cash for trash” and a “giveaway,” not a bailout. A “transfer of wealth to insiders.” A financial coup d’etat. The “largest and most inequitable (kind) since the (19th century) land giveaways to the railroad barons.”

In this case, socializing losses to let fraudsters “sell out all their bad bets.” Junk of all sorts: a stew of securitized assets, bad mortgages, car loans, credit card loans, student loans, anything for insiders stuck with too much of them.

A doomed scheme that will raise the debt level instead of lowering it. Enrich fraudsters with taxpayer funds. Stick the public with toxic junk. Maybe buy time before more people and markets catch on, but, in the end, cripple the economy and erode industrial capitalism with it.

Hudson is justifiably angry given the amount of fraud and deceit. The government-concocted scheme to whitewash it. Reward criminals. Harm most others, and wreck the country at the same time. He says a “kleptocratic class has taken over the economy to replace industrial capitalism….’banksers’ ” for FDR and earlier condemned by Jefferson with this stinging comment:

“I sincerely believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a money aristocracy that has set the government at defiance. The issuing power should be taken from the banks and restored to the people to whom it properly belongs.”

A half century later Lincoln said:

“I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country….corporations (including bankers) have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed.”

Lincoln refused to pay bankers usurious rates to finance the Civil War and got Congress to pass the 1862 Legal Tender Act. It empowered the US Treasury to issue “greenbacks” that were interest-free because government printed its own money. When Lincoln was assassinated in 1865, the “Greenback Law” was rescinded. A new national banking act was passed, and the government once again had to pay interest to bankers.

On June 4, 1963, President Kennedy issued executive order (EO) 11110 giving the president authority to issue currency. He ordered the treasury to begin printing “United States (Treasury) Notes” to replace “Federal Reserve Notes.” He began a process to let government control its own money and no longer private bankers under the guise of the Federal Reserve. Months later, Kennedy was assassinated. Once Lyndon Johnson took office, he rescinded EO 11110 and reestablished the current system. More on that below.

The Two Greatest Ever Financial Crimes – Today’s Fraud and the 1913 Federal Reserve Act’s Privatization of Money Creation

Most people think the Federal Reserve is a government agency, subject to its control. It’s sometimes mistakenly called a quasi-governmental decentralized central bank to disguise its real identity and purpose. Its Eccles building headquarters compounds the subterfuge. Below it’s stripped away.

The Federal Reserve is a private for-profit banking cartel. Owned and run by major banks and Wall Street in each of its 12 Districts. It was created and operates in violation of Article 1, Section 8 of the Constitution that states that Congress alone shall have the power to create money and regulate its value. In 1935, the Supreme Court ruled that Congress cannot constitutionally delegate this power to another authority, but, in fact it did.

On December 22, 1913, between 1:30 – 4:30 AM, the Federal Reserve Act was shepherded through a special Congressional Conference Committee. Then voted on and passed the next day. Two days before Christmas with many members gone and most others with no time to read or consider this momentous document.

By enacting this law, Congress and President Woodrow Wilson defrauded the public. Wilson later said (when it was too late to matter) he made a mistake and “unwittingly ruined my country.” This from a man who was an intellect. Trained in the law. A PhD in political science and president of Princeton University in his earlier years.

The Federal Reserve Act gives private bankers the most important of all powers. The one most of all that governments should never relinquish. The authority to print money. Control its supply. Its price through the Fed Funds rate and how it influences the whole yield curve. Loan it out for profit, and charge government interest on its own money. It’s later returned minus operating expenses and a guaranteed 6% profit. Taxpayers foot the bill. An early and continuing example of wealth transfer from the public to powerful bankers. Illegally sanctioned by Congress and the president.

The Fed literally creates money out of nothing. Expands or contracts its supply as it wishes – with no government oversight or control. Gold once backed it until Nixon closed the gold window in August 1971. Suspended dollar convertibility into the metal, and ended compliance with the Bretton Woods core provision. The US dollar became fiat currency. Mere paper. Backed by nothing except the faith of the issuing authority.

Given today’s crisis, that faith is fast eroding and is to blame for dollar weakness. Mostly because of profligate policies by private bankers running the country’s monetary policy for their own gain. The grandest of grand thefts along with today’s all-consuming fraud. Backed by the full faith and credit of the government, and up to now at least, with most people none the wiser.

A Growing Public Response to the Crisis

For how long is the question given growing public anger and people expressing it publicly. It has administration officials worried enough to order what Michel Chossudovsky wrote in his September 26 article titled “Pre-election Militarization of the North American Homeland.”

He cites an Army Times article saying that the 3rd Infantry’s 1st Brigade Combat Team is coming home (in October) from Iraq as (according to the Times) “an on-call federal response force for natural or manmade emergencies and disasters, including terrorist attacks.” Perhaps with a manufactured incident as pretext. To defend the homeland against ourselves. Be deployed against dissent. Erupting public anger. On city streets like in Denver and St. Paul. Displaying civil disobedience. Defiance against fraud, deceit, illegal foreign wars, and nearly eight intolerable years under George Bush and a complicit Congress. Capped by the current financial crisis touching everyone while government rewards crime and hangs its victims out to dry.

The 3rd Infantry’s 1st Brigade is for combat. It’s not the National Guard or local police. It’s trained for war. “Equipped to kill people” with potent weapons, and a last hurrah scheme may be planned to divert public attention from the financial crisis. A “terrorist” attack with “chemical, biological” or other dangerous weapons. A possible pretext for martial law at a time the administration and Congress are vulnerable. When people are angry about Washington protecting the privileged. Partnering with them in crime. Defrauding the public and stifling dissent. Moving one step closer to tyranny and away from silly notions about democracy. Proving crime indeed does pay and awfully well on Wall Street. “It’s the economy, stupid.” Theirs, not ours.

Source: Globalresearch.ca

A Dark Day For America…

Financial Dictatorship Coming to a

Government Near You

The ultimate outcome for a corruption driven lobbyist in Washington, D.C. is the complete severance of citizen control over their masters. The psychology that one person, or group, or branch of government in control can solve problems is the definition of dictatorship. After 40 years, I can still look my fellow revolutionaries in the eye and say once again, “You can’t change the system from within, it will only corrupt you.”

Giving the Executive branch the discretionary power over the fate of 100 million American home owners is a fundamental change in government. This is not just about bailing out Wall Street, or more government power over the private sector, it is about the Executive given more power to control Americans directly. Giving the government direct financial power over you eliminates the “separation of powers” between public and private financial institutions. Good if your party is in power, disastrous if not. Who will you vote for, someone who will foreclose on you or bail you out? Someone who will give you a lifeline of credit or cut you off?

Recently, congress passed a war act bill giving the president unbridled war powers, V.P. Dick Cheney challenged the balance of powers between the branches of government, the president marked up thousands of congressional bills to only enforce what the executive wanted to do, and now the treasury is given absolute power over who gets bailed out and who fails in the private sector.

The final outcome of a representative form of government that consolidates power in one city, paid for by corrupt special interests, using financial debt as a weapon of mass destruction against her own people is failure.

This is a dark day for America and the world.

Robert Artusy

Source

Bailout just another Rothschild Ruse

IS THE BAILOUT A ROTHSCHILD TRICK?
By Brother Nathanael Kapner, Copyright 2008

THERE IS NO SUCH THING AS MONEY that does not cost anything. Many are claiming that this is the cause of the current financial crisis. But this is just a cover for the real problem, or rather, a cover for the real culprits behind the crisis.

Money does cost something especially when it is created out of thin air by the Zionist Jews who own & run the Federal Reserve Bank. A simple book-entry is all that is needed when the Fed provides George Bush with an interest-bearing loan to pay for his wars. But it costs the tax payers’ hard earned dollars to pay off the debt PLUS the interest on the Fed’s created money.

The Rothschilds, who are Zionist Jews, are the principal owners of the Federal Reserve Bank. The Rothschild trick is that there is no real money in the system, no goods that they provide, only debts with compounded interest – chargeable to the ‘dumb goyim’ US taxpayers.

Yes. The US taxpayers are the ones IN DEBT due to the bankrupt US government’s spending. And the ‘dumb goyim’ are in debt to Zionist Jews. Which Zionist Jews in particular? The Rothschilds, the Jews on the Fed’s Board of Governors, and the rest of their synagogue buddies at Goldman Sachs (Lloyd Blankfein), Washington Mutual (Alan Fishman), and AIG (Martin Feldstein).

Some are blaming the mortgage lenders, legislators, and investment bankers for the current crisis. This is a Rothschild lie spun to perfection by the Jewish occupied press. But the ones behind the lie are the culprits — the Rothschilds, their stooge, Ben Shalom Bernanke, & their propaganda arm, the Jewish occupied mainstream press.

THE DEBTOR LENDS TO ANOTHER DEBTOR

“WE ARE HEADED FOR A FINANCIAL MELTDOWN,” said Senator Christopher Dodd, Chairman of the Senate Banking Committee, in an interview with Good Morning America on September 19 2008.

Yet Dodd deems it necessary to bail out the offenders, Goldman Sachs & Morgan Stanley, who are leading all the wealthy beggar-bankers. America is bankrupt. How then does a bankrupt entity pay off the debts of other bankrupt entities?

The Paulson-Bernanke Zionist bailout plan is nothing less than letting Jewish criminals go free while US taxpayers go deeper into debt. The Jews get the assets — the US taxpayers get higher inflation and more financial stress.

The shadow government operating behind the scenes of America is an elitist cabal of Jewish banksters headquartered in London. This shadow government, run by Jacob Rothschild and his son & heir, Nathaniel Rothschild, has no code of ethics, no moral compass, no Christian sensibilities, and certainly, no loyalties but to worldwide Jewry.

Ron Paul has got his finger right on the aorta of the problem. In his proposed bill, HR 2755, Congressman Ron Paul seeks to “abolish the Board of Governors [mostly Jews] of the Federal Reserve System.” This would have made Ron Paul subject to an assassination attempt had he been allowed by the Jewish occupied press to be a candidate for the US presidency.

We are now under economic martial law. Paulson & the Jew, Bernanke, want free reign without any oversight and controls on their bailout of the criminal Jewish bankers and their bosses, Jacob & Nathaniel Rothschild.

Do We Wish To Remain A Sovereign Nation
& Not Allow The Zionist Jewish Bankers To Rule Us?
Then The Federal Reserve Bank Must Be Abolished!

___________________________________


For More See: “How The Rothschild Dynasty Operates” Click Here

And: “Federal Reserve Jews Control America!” Click Here

And: “Will Jew-Owned Fed Reserve Bank Kill Ron Paul?” Click Here

And: “Federal Reserve: A Private Jew Bank Strangling America!” Click Here

And: “The Dollar Drops – The ‘Amero’ Cometh?” Click Here


CLICK: Brother Nathanael! Street Evangelist!
Please Help Support This Site! (Many Expenses)

Or Send Your Contribution To:
Brother Nathanael Kapner
PO Box 1242
Frisco CO 80443
Email: bronathanael@yahoo.com

UPDATE: U.S. Congress under MARTIAL LAW!

Rep. Michael Burgess from Texas has so stated that Martial Law was declared by the Speaker of the House as of last night. According to some on YouTube this is actually “congressional” martial law, however, I seriously doubt that it makes no difference since the troops arrive on American streets this coming Wednesday, Oct. 1.

Martial Law has been declared. Listen how the representative who represents 820,000 North Texans say how no one was allowed to review the bill and how it is under secrecy. As a result of the passing of this illegal bill to bailout Wallstreet, the United States will experience Hyper-inflation and the economy will collapse resulting in a transition currency and economic environment to a new one to save us. This transformation will require martial law to insure its survival, according to the bill.

Update:

From Daily Newscaster, here is the PDF of the Bailout Proposal Discussion Draft.

Infowars reports that Congress has been under Martial Law since last Saturday night, Sept. 27, 2008.

From a MySpace friend:

The following definition of Martial Law for Congress came from
http://www.cbpp.org/7-28-06bud-stmt.htm

This was another incident when Martial Law was invoked FOR Congress on July 28, 06, concerning other bills that were being considered.

We don’t have to expect to see troops patrolling the streets YET. THAT would come from the President, more than likely.

This is still bad, but not quite what we thought.

HOUSE LEADERSHIP INVOKES “MARTIAL LAW,” FORCING MEMBERS TO VOTE .. BILLS WITHOUT FULL KNOWLEDGE OF WHAT THEY ARE VOTING .. REPRESENTS EROSION OF THE DEMOCRATIC PROCESS

What is “Martial Law”?

The House leadership is using a parliamentary gambit to evade a longstanding House rule that is supposed to ensure that this kind of obfuscation does not occur. That House rule (Rule XIII(6)(a)) provides that a resolution (called a rule) reported by the Rules Committee cannot be considered by the House on the same legislative day that the rule is reported (except by a two-thirds vote of the House). This is supposed to ensure that Members of the House and the public have at least one day to examine and analyze what is in legislation before they have to debate and vote on it.

To maneuver around this House rule and rush the three proposals discussed above to a vote before they have been fully examined, the Rules Committee reported a rule late Thursday afternoon (H.Res. 958) that would waive the application of Rule XIII(6)(a). Instead, it would allow the Rules Committee to wait until the last minute and not to report the rules governing the consideration of these bills or to release the text of the bills themselves until immediately before debate and votes on the bills, and on the rules governing their consideration, commences.

This extraordinary procedure is known as a “martial law” rule because it suspends the normal procedures and safeguards and allows the House Leadership to operate in a more authoritarian fashion. It enables the Leadership to seek to ram a bill or conference report through before the Members have the opportunity to fully understand what they are voting on.

Legislation that has far-reaching implications for millions of Americans deserves to be considered under a more democratic process. Waiting until the last minute to reveal what is in these bills, and then “spinning” or potentially mischaracterizing changes in the bills without Members of the House or the public having an opportunity to obtain a more objective review of what the legislation does, is unfair to Members of the House. It also is unfair to the millions of Americans whose lives could be affected by this legislation. It represents a further step in reducing the degree of transparency and democracy in how this country is governed and how decisions are made. At a time when our leaders preach the goal of promoting democracy abroad, they should not be reducing it at home.

Many thanks to Peter J. Shepherd for God and Country, SafetyJoe ~ Voting 3rd Party, and BOBBY ELECTRIC(ANTI-NWO-HIPHOP)

http://blog.myspace.com/index.cfm?fuseaction=blog.view&friendID=103413920&blogID=436818895&Mytoken=31423316-6D12-477D-890F4A3589756D91278415483

Patrick Henry: “Give Me Liberty or Give Me Death”

Who was Patrick Henry? And why do we remember his words?

To understand the man and the event, let’s go back in time.

The date is Thursday, March 23, 1775. The place: St. John’s Church in Richmond Virginia. The event: A meeting of Virginia’s colonial leaders at the Second Virginia Convention.

Henry was the delegate from Hanover County at the meeting to discuss the recent proceedings of America’s First Continental Congress. Peyton Randolph was President of the Convention attended by 120 delegates, including such notables as George Washington, Thomas Jefferson and Richard Henry Lee.

In fact, the meeting turned into a series of debates over whether or not to arm the colony of Virginia as a defense against possible incursions by the British army.

Henry’s reputation as a fiery and passionate orator preceded his appearance at the convention. A prominent lawyer, Henry twelve years earlier won renown in arguing the Parson’s Cause at the Hanover County Courthouse. During that case he described the King as “a tyrant who forfeits the allegiance of his subjects.” Two years later in 1765 his Virginia Stamp Act Resolutions before the House of Burgesses were met with angry cries of treason. Henry’s reply: “If this be treason, make the most of it.”

At the end of the four-day meeting in Virginia Patrick Henry rose to deliver his speech, facing his fellow delegates. He forcefully urged them to establish a defense of Virginia, arguing that the colony needed a “well regulated militia.” It was imperative, he declared, that Virginia be prepared to oppose King George III. He ended his impassioned speech for independence with the words:

“I know not what course others may take, but as for me, give me liberty or give me death.”

Many at the meeting were loathe to oppose the mother country, instead favoring conciliatory measures. But Henry’s stirring and persuasive call to arms won the day, and the delegates voted to support his resolutions.

Thomas Jefferson described Henry as the man who “set the ball of Revolution rolling” in Virginia. Patrick Henry’s immortal words have been described as “the most famous cry for freedom in the world.”

Patrick Henry was a lawyer, patriot, orator and a participant in every phase of America’s founding. But even more than that, Patrick Henry became a symbol of America’s struggle for liberty and self-government.

No man, Mr. President, thinks more highly than I do of the patriotism, as well as abilities, of the very worthy gentlemen who have just addressed the House. But different men often see the same subject in different lights; and, therefore, I hope it will not be thought disrespectful to those gentlemen if, entertaining as I do opinions of a character very opposite to theirs, I shall speak forth my sentiments freely and without reserve. This is no time for ceremony. The question before the House is one of awful moment to this country. For my own part, I consider it as nothing less than a question of freedom or slavery; and in proportion to the magnitude of the subject ought to be the freedom of the debate. It is only in this way that we can hope to arrive at truth, and fulfill the great responsibility which we hold to God and our country. Should I keep back my opinions at such a time, through fear of giving offense, I should consider myself as guilty of treason towards my country, and of an act of disloyalty toward the Majesty of Heaven, which I revere above all earthly kings.

Mr. President, it is natural to man to indulge in the illusions of hope. We are apt to shut our eyes against a painful truth, and listen to the song of that siren till she transforms us into beasts. Is this the part of wise men, engaged in a great and arduous struggle for liberty? Are we disposed to be of the number of those who, having eyes, see not, and, having ears, hear not, the things which so nearly concern their temporal salvation? For my part, whatever anguish of spirit it may cost, I am willing to know the whole truth; to know the worst, and to provide for it.

I have but one lamp by which my feet are guided, and that is the lamp of experience. I know of no way of judging of the future but by the past. And judging by the past, I wish to know what there has been in the conduct of the British ministry for the last ten years to justify those hopes with which gentlemen have been pleased to solace themselves and the House. Is it that insidious smile with which our petition has been lately received? Trust it not, sir; it will prove a snare to your feet. Suffer not yourselves to be betrayed with a kiss. Ask yourselves how this gracious reception of our petition comports with those warlike preparations which cover our waters and darken our land. Are fleets and armies necessary to a work of love and reconciliation? Have we shown ourselves so unwilling to be reconciled that force must be called in to win back our love? Let us not deceive ourselves, sir. These are the implements of war and subjugation; the last arguments to which kings resort. I ask gentlemen, sir, what means this martial array, if its purpose be not to force us to submission? Can gentlemen assign any other possible motive for it? Has Great Britain any enemy, in this quarter of the world, to call for all this accumulation of navies and armies? No, sir, she has none. They are meant for us: they can be meant for no other. They are sent over to bind and rivet upon us those chains which the British ministry have been so long forging.

And what have we to oppose to them? Shall we try argument? Sir, we have been trying that for the last ten years. Have we anything new to offer upon the subject? Nothing. We have held the subject up in every light of which it is capable; but it has been all in vain. Shall we resort to entreaty and humble supplication? What terms shall we find which have not been already exhausted? Let us not, I beseech you, sir, deceive ourselves. Sir, we have done everything that could be done to avert the storm which is now coming on. We have petitioned; we have remonstrated; we have supplicated; we have prostrated ourselves before the throne, and have implored its interposition to arrest the tyrannical hands of the ministry and Parliament. Our petitions have been slighted; our remonstrances have produced additional violence and insult; our supplications have been disregarded; and we have been spurned, with contempt, from the foot of the throne! In vain, after these things, may we indulge the fond hope of peace and reconciliation. There is no longer any room for hope. If we wish to be free — if we mean to preserve inviolate those inestimable privileges for which we have been so long contending — if we mean not basely to abandon the noble struggle in which we have been so long engaged, and which we have pledged ourselves never to abandon until the glorious object of our contest shall be obtained — we must fight! I repeat it, sir, we must fight! An appeal to arms and to the God of hosts is all that is left us!

They tell us, sir, that we are weak; unable to cope with so formidable an adversary. But when shall we be stronger? Will it be the next week, or the next year? Will it be when we are totally disarmed, and when a British guard shall be stationed in every house? Shall we gather strength by irresolution and inaction? Shall we acquire the means of effectual resistance by lying supinely on our backs and hugging the delusive phantom of hope, until our enemies shall have bound us hand and foot? Sir, we are not weak if we make a proper use of those means which the God of nature hath placed in our power. The millions of people, armed in the holy cause of liberty, and in such a country as that which we possess, are invincible by any force which our enemy can send against us. Besides, sir, we shall not fight our battles alone. There is a just God who presides over the destinies of nations, and who will raise up friends to fight our battles for us. The battle, sir, is not to the strong alone; it is to the vigilant, the active, the brave. Besides, sir, we have no election. If we were base enough to desire it, it is now too late to retire from the contest. There is no retreat but in submission and slavery! Our chains are forged! Their clanking may be heard on the plains of Boston! The war is inevitable — and let it come! I repeat it, sir, let it come.

It is in vain, sir, to extenuate the matter. Gentlemen may cry, Peace, Peace — but there is no peace. The war is actually begun! The next gale that sweeps from the north will bring to our ears the clash of resounding arms! Our brethren are already in the field! Why stand we here idle? What is it that gentlemen wish? What would they have? Is life so dear, or peace so sweet, as to be purchased at the price of chains and slavery? Forbid it, Almighty God! I know not what course others may take; but as for me, give me liberty or give me death!

Source

Lawmakers Reach Tentative Bailout Deal

WASHINGTON — Top U.S. policymakers emerged from hours of tense negotiations just after midnight with a tentative agreement on a deal to bail out U.S. financial markets and began working Sunday morning to commit the legislation to paper.

Treasury Secretary Henry Paulson, House Speaker Nancy Pelosi, (D., Calif.) and Senate Majority Leader Harry Reid (D. Nev.) were flanked by key negotiators in the Capitol as they announced that a $700 billion plan to have Treasury buy up toxic assets had been all but finalized after days of exhausting negotiations involving members, staff and representatives from the Bush administration.

[Lawmakers reach tentative bailout deal] Associated Press

House Speaker Nancy Pelosi, Treasury Secretary Henry Paulson, right, Senate Majority Leader Harry Reid, second left, and Sen. Judd Gregg, left, announce a tentative deal on legislation regarding the financial crisis just after midnight Sunday.

“I think we’re there,” an obviously tired Mr. Paulson said, a sentiment echoed in the statements of negotiators such as House Financial Services Chairman Barney Frank (D., Mass.) and Senate Banking Committee head Christopher Dodd (D., Conn.).

Those present said the bailout plan still needs to be drafted in its final form, a process staff members were expected to continue throughout the night in what one aide called a “marathon drafting session” in Speaker Pelosi’s office just off the rotunda in the Capitol building. A formal announcement is scheduled for some time Sunday, though an exact time and location was not immediately available.

A summary of the tentative agreement released by Sen. Pelosi’s office said the plan “gives taxpayers an ownership stake and profit-making opportunities with participating companies; puts taxpayers first in line to recover assets if a participating company fails; (and) guarantees taxpayers are repaid in full — if other protections have not actually produced a profit.”

The $700 billion would be available in phases. The first $250 billion will be “immediately available” to the Treasury Secretary, and $100 billion available “upon report to Congress,” and $350 billion “available only upon Congressional action,” according to a summary from the office of House Minority Whip Roy Blunt (R., Mo.), the No. 2 House Republican who was at negotiations.

A summary from Sen. Pelosi’s office said the final deal included “cutting in half the administration’s initial request for $700 billion and requiring Congressional review for any future commitment of taxpayers’ funds.”

The Pelosi summary also said the legislation will expand the range of firms that can sell troubled assets to the government to include pension plans, local governments and community banks serving “low- and middle-income families.” (See Ms. Pelosi’s summary.)

[Sen. Charles Schumer, left, Sen. Max Baucus and Sen. Jack Reed take a short break during ongoing negotiations on Capitol Hill on Saturday.] Associated Press

Sen. Charles Schumer, left, Sen. Max Baucus and Sen. Jack Reed take a short break during ongoing negotiations on Capitol Hill Saturday.

A House Democratic aide said the government would be able to receive warrants it could hold until maturity from financial firms on assets received either through auctions or through direct purchases.

The summary also said the legislation would institute new executive compensation requirements for participating companies, including “no multi-million dollar golden parachutes,” limits on compensation generally, and the ability to recover “bonuses paid based on promised gains that later turn out to be false or inaccurate.”

President George W. Bush spoke with Sen. Pelosi earlier in the evening about the discussions, and the White House welcomed news of the deal. “We’re very pleased with the progress tonight and appreciate the extraordinary bipartisan efforts being made to stabilize our financial markets and protect our economy,” White House spokesman Tony Fratto said.

The next step will involve selling the deal to rank-and-file lawmakers, who have been unhappy over signing on to a giant bailout package just weeks before the November elections. Rep. Blunt said that he planned to talk to colleagues and get reactions.

Lawmakers entered a new round of meetings shortly after 7:30 p.m. EDT, with pizzas headed to one office and a platter of cold cuts from sandwich chain Cosi being delivered into the House Speaker’s office. By roughly 11:30 p.m., what Reid described as a “breakthrough” came in the form of an idea from Pelosi that was enough to advance talks.

“She took over at the last minute,” a House staffer familiar with the talks said Sunday morning. “The last hour-and-a-half she really brought things together and made it possible to reach this point.”

Pelosi also apparently found middle ground on a plan to allow the federal government to recoup money for taxpayers if the asset-purchase program isn’t making money after a certain amount of time. A House leadership aide said early Sunday morning that details were not immediately available. But the general concept was to provide Congress with a mechanism that would be triggered perhaps within five years to allow lawmakers to offset some, if not all, of the bailout costs.

Offers and counteroffers were flowing back and forth all night. Among the offers extended by Democrats: an agreement to drop a proposal to devote 20% of potential profits to an affordable housing fund, according to a Senate staffer close to the talks.

A House staffer reached after the deal announcement was made confirmed that lawmakers did decide to drop the affordable housing fund proposals, which would have potentially directed billions to state and local governments to fund housing projects.

One of the biggest sticking points involved concerns that executives at troubled financial institutions would wind up benefiting with handsome pay packages as the government took on more risks. But Democrats emerging from the talks said a whole array of issues related to executive pay had been addressed, including issues involving “golden parachutes,” the big pay packages that are sometimes awarded to departing executives.

Sen. Dodd told reporters that protections against golden parachute awards had made it into the final deal, along with an insurance component sought by House Republicans as an option for the Treasury to use if necessary and requirements that Treasury seek to mitigate and reduce foreclosures where possible.

Overall, staff said they expanded Treasury’s original 2 1/2 page proposal. The agreement will include significant oversight of the asset purchase program, executive compensation restrictions, the potential for equity stakes in firms that participate in the asset-sale program, and other taxpayer protections.

As for foreclosure prevention measures, Pelosi’s office said the legislation would allow the Treasury to work with cash-strapped homeowners whose mortgages are purchased by the federal government to refinance into a more affordable mortgage.

Other foreclosure-prevention measures include an extension of the tax holiday for homeowners who face foreclosure, as well as a tax break for community banks that held shares of Fannie Mae and Freddie Mac. The rescue plan will allow affected banks to take an immediate tax deduction on losses from investments in the two firms, which were taken over by the federal government earlier this month.

It also includes a bipartisan oversight board appointed by members of both parties in Congress, an inspector general to monitor Treasury decisions, and regular audits from the Government Accountability Office. Treasury will also have to post publicly and online transactions made through the troubled asset program. Unlike the original Treasury proposal, which would have given the department legal immunity in the program, the tentative agreement reached Saturday allows for judicial review of Treasury decisions.

Candidates Issue Tentative Support

Both presidential nominees suggested on Sunday that they would support the deal. Speaking on separate Sunday morning TV talk shows, Sens. John McCain and Barack Obama said the revised package appeared to provide adequate protections for taxpayers, set appropriate limits on executive compensations and include oversight by an independent board.

“This is something that all of us will swallow hard and go forward with,” Sen. McCain (R., Ariz.) said on ABC News’s “This Week.” “The option of doing nothing is simply not an acceptable option.”

In a written statement on Sunday, Sen. Obama, (D., Ill.) said the tentative deal appeared to embrace various principles he had sought, but added that he was still looking forward “to reviewing the language of the legislation.” Appearing on the CBS program “Face the Nation,” Sen. Obama answered “no” when asked whether Sen. McCain deserved any credit for bringing lawmakers together to reach a deal.

“Here are the facts: For two weeks I was on the phone everyday with Secretary Paulson and the congressional leaders making sure that the principles that have been ultimately adopted were incorporated in the bill,” Sen. Obama said.

It’s still not clear how soon lawmakers will vote on the rescue package. The House is scheduled to convene Sunday, but the timing of a vote on the package had not been announced early Sunday.

Indeed, Rep. Eric Cantor (R., Va.), who led a House Republican working group that had proposed a competing bailout deal, said in an interview on Cable News Network on Sunday that “I’m not ready to say a deal is done.” He said he would have to see what the language is on a proposal to require financial companies contribute to a mandatory insurance plan that would be part of the legislation.

In a sign of how sensitive Congress is to market reaction, lawmakers stayed in touch with outside experts during the negotiations, including talking to billionaire investor Warren Buffett.

—The Associated Press contributed to this article.

Write to Michael R. Crittenden at michael.crittenden@dowjones.com, Siobhan Hughes at siobhan.hughes@dowjones.com and Stephen Power at stephen.power@wsj.com

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An American Warning!

What will you do when they come for you?