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Archive for the ‘Federal Reserve’ Category

Government Without Law

Posted by msrb on January 3, 2009

December 26, 2008

Government Without Law
By Ralph Nader

Over thirty years ago, a book came out titled “How the Government Breaks the Law, by Jethro K. Lieberman.” Even then it was old news and the examples cited seemed small compared to today’s chronic law-breakers in the White House and at many federal departments and agencies. Many recent books have been written on the expansive outlaw behavior of George W. Bush and Dick Cheney.

Less attention has been devoted to the explosion of unauthorized actions by the Executive in recent years. What should be the most frequent question by reporters to government officials — namely, “By what authority are you acting?” – is the rarest of inquiries.

A two part series on Treasury Secretary Henry M. Paulson Jr. in the Washington Post by David Cho in late November brought this point out in a stunningly frank admission by the Corporate bailout czar himself.

Speaking of the takeover of Fannie Mae and Freddie Mac, as well as other megaseizures of failing Wall Street firms, Mr. Paulson expressed these anarchic words: “Even if you don’t have the authorities – and frankly I didn’t have the authorities for anything – if you take charge, people will follow.”

Whew! There you have it! He becomes the law and the law is what he says it is because no one – neither a rubber-stamping President, nor a supine Congress, nor any citizen, deprived of any standing to sue, is going or can do anything about it.

Reporter Cho goes on to write: “Senior government officials said Paulson helped craft rescue programs for financial firms, though he was not sure he had an unquestionable legal basis for the initiatives including the bailouts of the failing investment bank Bear Stearns in March and the wounded insurance giant American International Group (AIG) in September.”

Mr. Paulson went further. Playing Congress, he backed the Federal Reserve – already a government within a government funded by banks– to unprecedented unilateral expansion of its powers and its self-made assets. The Post reported that officials from the Treasury and the Fed “never knew whether they had the legal authority to interfere with the market for such derivatives but did so anyway because the opaque trading threatened the wider financial system.”

Unauthorized Executive Branch actions tend to be contagious. Noticing that the crisis left Wall Street on its knees and willing to unilaterally assume over $8 trillion in a variety of loan, subsidy and capital obligations, the Bush regime kept making more of its powers all by itself. Why not, they may have been thinking? Look what they’ve gotten away with in the areas of military and foreign policy actions.

Weekend gigantic corporate bailouts – a more recent one being the $300 billion plus assumption of Citigroup’s financial risks – engineered by Citigroup co-boss, Robert Rubin–were very secret affairs.

The more public grab of power was the $700 billion goliath to rescue the casino capitalists on Wall Street which was submitted in only 3 ½ pages of proposed legislation to Congress by Paulson and Ben Bernake, the Fed’s chairman in September.

This was too much for the ideologies of House Republicans who beat it on the first round. Even the spineless Democrats thought the requested authority was too much of a blank check. So what happened? Bush told Paulson to give various members of Congress “sweeteners” such as pork and tax breaks for favored lobbyists to get the required votes. Consequently, Paulson was granted staggering discretion to spend the $700 billion when, where and to whom he wanted under whatever conditions or no conditions at all. All in the name of socialism saving capitalism from massive collapse. Ironic.

Mr. Paulson came away from Capitol Hill with Congress in his hip pocket – not exactly what the framers of our Constitution had in mind in 1787.

Thus embolden, Paulson initiated a unilateral, administrative repeal of a Congressional enactment in the tax code – section 382 – to give the banks a huge windfall of about $140 billion. George K. Yin, former chief of staff of the Congressional Joint Committee on Taxation, rejected the legality of the Treasury Department’s decision. He told the Post: “I think almost every tax expert would agree that the answer is no. They basically repealed a 22-year-old law that Congress passed [and Reagan signed] as a backdoor way of providing aid to banks.”

Section 382 of the Tax code “sharply restricts a company from using the tax losses of a company it acquires to reduce its own tax liability,” according to the respected Citizens for Tax Justice.

The Treasury’s two-page notice generated a brief specialized display of outrage from members of the Tax writing committees in Congress and a hundred national, state and local organizations signed a joint letter to Congress demanding the legislators reverse the Treasury’ unauthorized edict.

So what did the House of Representatives do? It passed, later rejected by the Senate a provision in the auto bailout bill, a provision that would have extended the unauthorized Treasury ruling to the automobile industry!

What is going on here is a revolutionary coup d-etat of our legal system by executive branch diktats.

Is the organized legal profession through their bar associations in challenge mode? Are law professors churning over this mockery of the legislature and executive branch administrative law? Are conservative groups – always upset about judicial activism – going into high gear against the new monarchy in and around the White House in downtown Washington, D.C.? Are all those futurists worried enough about the trillions of debt dollars being piled on our children and grandchildren to protest and act? Not really.

Obviously, all this is a developing story. Stay tuned, unless you are willing to be turned out.

Posted in Congress, Federal Reserve, Henry M. Paulson, Wall Street | Tagged: , , , , | Leave a Comment »

Who’s Responsible For All Of U.S. Woes?

Posted by msrb on October 24, 2008

Submitted by a reader:

The 545 People Responsible For All Of U.S. Woes

BY Charley Reese
[First published: date Unknown]

Politicians are the only people in the world who create problems and then campaign against them.

Have you ever wondered why, if both the Democrats and the Republicans are against deficits, we have deficits? Have you ever wondered why, if all the politicians are against inflation and high taxes, we have inflation and high taxes?

You and I don’t propose a federal budget. The president does. You and I don’t have the Constitutional authority to vote on appropriations. The House of Representatives does. You and I don’t write the tax code. Congress does. You and I don’t set fiscal policy. Congress does. You and I don’t control monetary policy. The Federal Reserve Bank does.

One hundred senators, 435 congressmen, one president and nine Supreme Court justices – 545 human beings out of the 235 million – are directly, legally, morally and individually responsible for the domestic problems that plague this country.

I excluded the members of the Federal Reserve Board because that problem was created by the Congress. In 1913, Congress delegated its Constitutional duty to provide a sound currency to a federally chartered but private central bank.

I excluded all but the special interests and lobbyists for a sound reason. They have no legal authority. They have no ability to coerce a senator, a congressman or a president to do one cotton-picking thing. I don’t care if they offer a politician $1 million dollars in cash. The politician has the power to accept or reject it.

No matter what the lobbyist promises, it is the legislation’s responsibility to determine how he votes.


Don’t you see how the con game that is played on the people by the politicians? Those 545 human beings spend much of their energy convincing you that what they did is not their fault. They cooperate in this common con regardless of party.

What separates a politician from a normal human being is an excessive amount of gall. No normal human being would have the gall of Tip O’Neill, who stood up and criticized Ronald Reagan for creating deficits.

The president can only propose a budget. He cannot force the Congress to accept it. The Constitution, which is the supreme law of the land, gives sole responsibility to the House of Representatives for originating appropriations and taxes.

O’neill is the speaker of the House. He is the leader of the majority party. He and his fellow Democrats, not the president, can approve any budget they want. If the president vetos it, they can pass it over his veto.


It seems inconceivable to me that a nation of 235 million cannot replace 545 people who stand convicted — by present facts – of incompetence and irresponsibility.

I can’t think of a single domestic problem, from an unfair tax code to defense overruns, that is not traceable directly to those 545 people.

When you fully grasp the plain truth that 545 people exercise power of the federal government, then it must follow that what exists is what they want to exist.

If the tax code is unfair, it’s because they want it unfair. If the budget is in the red, it’s because they want it in the red. If the Marines are in Lebanon, it’s because they want them in Lebanon.

There are no insoluble government problems. Do not let these 545 people shift the blame to bureaucrats, whom they hire and whose jobs they can abolish; to lobbyists, whose gifts and advice they can reject; to regulators, to whom they give the power to regulate and from whom they can take it.

Above all, do not let them con you into the belief that there exist disembodied mystical forces like “the economy,” “inflation” or “politics” that prevent them from doing what they take an oath to do.

Those 545 people and they alone are responsible. They and they alone have the power. They and they alone should be held accountable by the people who are their bosses – provided they have the gumption to manage their own employees.

This article was taken from the Orlando Sentinel Star newspaper. (Source). Copyright author/newspaper.

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Posted in Federal Reserve, fiscal policy, foreign policy, monetary policy, National Security | Tagged: , , , , | 1 Comment »

Taxpayers Taken to the Cleaners BIG TIME!

Posted by msrb on October 4, 2008

submitted by a reader

Some More of Other People’s Money [OPM]

As expected, the House sells out to Wall Street

The house signed bailout plan, and so did Mr Bush, probably in record time—just in case someone changed their mind!

In scenes reminiscent of selling the Iraqi invasion to find the illusive WMD, the House readily approved the bailout plan to search and destroy the “Weapons of Monetary Discomfort.”  It took less than 90 minutes for Pelosi to sign and enroll the bill, and for Bush to sign it into law!

Hail to Thee

House Speaker Nancy Pelosi (center) holds aloft the $700 billion financial bailout bill after signing it. Reuters/Jonathan Ernst. Image may be subject to copyright.

Hailing Democratic and Republican leaders alike, President [sic] Bush said: “We have shown the world that the United States of America will stabilize our financial markets and maintain a leading role in the global economy.” As to why the market found itself in a mess in the first place, he had nothing to say.

Speaking on behalf of probably a lot of Reps., Sue Myrick (R-N.C.), who like many voted for the bill after initially opposing it said: “I may lose my race over this, but that’s OK. Because I believe in my heart I’m doing the right thing.”

Rep. Zach Wamp (R-Tenn.), referring to “blue dog” fiscal conservatives said: “On Monday I cast a blue dog vote. Today I am casting a red, white and blue vote for this country.” Reiterating his approval for the bailout package, Wamp urged colleagues to “hold your vote over the heart and vote yes.” He then quoted Warren Buffet why the bailout was necessary for the nation: “We don’t have any choice [because] small businesses can’t meet their payrolls. Pension funds are upside down.” However, he didn’t say what the lawmakers should do in the next “meltdown.”

Selling Out Americans to Save America

Rep. Jim Marshall (D-Ga.), scared out of hits wits for selling out his voters,  has already begun a TV ad campaign in his district proclaiming, “I don’t like this rescue plan any more than you do.” He didn’t say why he disliked the plan, of course, was it some minor tremor, or a major fault line?

Traders pause to watch the House vote on television on the floor of the New York Stock Exchange today in New York City. The U.S. House of Representatives approved a $700-billion bailout of the U.S. financial system. Spencer Platt/Getty Images. Image may be subject to copyright.

The general excuse for voting is pretty much the same across the board. The elected Reps are telling the electorate that they, the electorate, have no idea what’s good for them. And although they, the Reps themselves, don’t like the plan either, they have to agree to it. “I’m not going to stand by and let this crisis undermine our economy and damage the financial future of everyone in America.” Marshall declared.

Hold on a moment, Jim Marshall, if we the electorate don’t like the idea because we believe it’s bad for the economy, and you as our Rep agree that it’s a bad idea, too, then why must you act against our wish and vote for it?

Democratic Suicide on Behalf of America

Rep. Howard Coble (R-N.C.), one of the “hero’s” of the day, who also supported the bill after first opposing it, said “the sky may fall tomorrow, but it will fall upon my head. It won’t fall upon anyone else.”

This is truly the politics of self sacrifice, when the Reps become “democracy suiciders,” by destroying both their political future and the voice of their electorate to, in the words of Jim Marshall, save the “financial future of everyone in America [sic.]”

“Do I still have concerns about how this will affect the free market system? Yes, but  we have to act and we have to act now [because] if we don’t solve these problems [then] America will fail.” Said Rep. Gresham Barrett (R-S.C.).

Stealing money from Mr. and Mrs. Jones on Main Street and  giving it to Mr and Mrs Smith on Wall Street

Pelosi, hammering the final nail, said, “While the focus has been on Dow Jones and Wall Street, we are addressing the real pain felt by Mr. and Mrs. Jones on Main Street.” [And the only possible way to help Mr. and Mrs. Jones on Main Street, of course, is by stealing their wallet and purse and  giving it to Mr and Mrs Smith on Wall Street.]

California Gov. Arnold Schwarzenegger, in a letter read by Rep. Lofgren (D-San Jose), warned: “The credit market has already frozen up to the point that it chills even the state of California’s ability to meets its short-term cash flow needs.”  [And we need lots of money for the 2009 wildfires, I must tell you in advance!]

The Miracles of Capitalism

Rep. Devin Nunes (R-Visalia), a critic of the bailout extravaganza, warned against Paulson having the power to buy toxic mortgages. “If the secretary wants to run a hedge fund, he should go back to Wall Street,” he said.

Rep. Dennis Kucinich (D-Ohio), referring to the case of Addie Polk, 90, who shot herself Wednesday as deputies tried to evict her, said: “This bill does nothing for the Addie Polks of the world [because it] fails to address the fact that millions of homeowners are facing foreclosure.”

“[The bill] will take care of Wall Street,” Kucinich said, “but democracy is going down here.”

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Posted in Democracy Suicider, Democratic Suicider, Dennis Kucinich, Federal Reserve, Kucinich, OPM, Other People's Money, WMD | Tagged: , , , , | 3 Comments »

House Nixes Bailout Plan [for now!]

Posted by msrb on September 30, 2008

The US House of Representatives Rejects the $800 billion Wall Street Robbery Reward Package [for Now!]

Image of the Day: I have a sinking feeling …

[Benny, I have a sinking feeling some of them might be on to us!]

U.S. Treasury Secretary Henry Paulson (L) and Chairman of the Federal Reserve Ben Bernanke (R) testify before the House Financial Services Committee about credit market turmoil and the government economic bailout on Capitol Hill in Washington September 24, 2008. REUTERS/Kevin Lamarque (UNITED STATES). Image may be subject to copyright!

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Posted in bailout plan, Ben Bernanke, Federal Reserve, GW Bush, Henry Paulson | Tagged: , , , , | 3 Comments »