The Trillion-Dollar Conspiracy (5 page)

No matter how clearly Dick Morris saw things, only a few in Congress seemed to be getting the message. Texas Republican representative Kay Granger got it. In an August 2009 letter to constituents, she wrote, “Something happened this week that has serious consequences for each and every one of us, but you probably didn’t even know it happened. On Tuesday [August 25, 2009], the Office of Management and Budget (OMB) released their Midsession Review…. The Midsession Review showed that our country is going to be $2 trillion deeper in debt than the White House originally told us at the beginning of this year. That’s nearly $6,700 more debt for every man, woman, and child in America. If this doesn’t show that the policy of spend, spend, spend isn’t working, I don’t know what does.”

The only answer that Washington seems to come up with to deal with all problems is to spend more money on central government programs. Is this merely ineptitude or is this proof of a hidden agenda, one designed to force the American republic into a tightly controlled socialist society?

DEBT SLAVES

E
CONOMICS IS THE LIFEBLOOD
of any nation. Many compared President Barack H. Obama’s $787 billion economic stimulus package in 2009 to giving blood to a corpse. They feared the stimulus was simply throwing good money after bad, especially in light of health and data-gathering provisions that seemed out of place in financial legislation.

As the U.S. economy deteriorated, President Obama expanded the Bush administration’s policies for bailing out banks and other financial institutions. President Obama explained that sending money directly to taxpayers might seem more appealing, but said it wouldn’t be as effective in stimulating the economy, saying that “A dollar of capital in a bank can actually result in eight or ten dollars of loans to families and businesses, a multiplier effect that can ultimately lead to a faster pace of economic growth.”

STIMULUS PACKAGE

O
BAMA DID NOT COMMENT
on criticism raised over the many improprieties connected to the economic crisis, nor did he comment on the argument that his “economic growth” actually was nothing other than an austerity budget based on war. Michel Chossudovsky, a professor of economics at the University of Ottawa and director of the Centre for Research on Globalization, noted that “[Obama’s] austerity measures hit all major federal spending programs with the exception of Defense and the Middle East War, the Wall Street bank bailout, [and] Interest payments on a staggering public debt.

“At first sight, the budget proposal has all the appearances of an expansionary program, a demand oriented ‘Second New Deal’ geared towards creating employment, rebuilding shattered social programs and reviving the real economy. The realities are otherwise. Obama’s promise is based on a
mammoth austerity program
[original emphasis]. The entire fiscal structure is shattered, turned upside down.” Understandably, Chossudovsky concluded that the Obama plan “largely serves the interests of Wall Street, the defense contractors and the oil conglomerates.” He warned that the Bush-Obama bank bailouts will lead America into a spiraling public debt crisis. “The economic and social dislocations are potentially devastating,” he added.

What this means is that the American taxpayer has been made the lender of last resort for the two government-sponsored private enterprises—the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), whose combined debt of $5.4 trillion has been effectively transferred to the nation’s balance sheet. In addition to personal debt, every American now has a financial responsibility for Fannie Mae and Freddie Mac, as well as other financial institutions.

What is even more maddening was the use of some bailout funds to create extravagant “golden parachute” retirement and severance payments to financial executives who would have to leave their failing companies. These garnered unfavorable publicity in late 2008, as did the revelations of shady dealings between Wall Street and its regulators. Take, for instance, Charles Millard, former director of the Pension Benefit Guaranty Corp. (PBGC), an independent federal corporation that protects the pension plans of nearly forty-four million American workers and retirees. In May 2009, Millard was called to testify before the Senate Aging Committee over charges that he had cozy and improper contacts with Wall Street firms. Millard, citing his constitutional right to avoid self-incrimination, declined to answer questions. The PBGC, which insures corporate pensions, announced in late May 2009 that it had suffered a $33.5 billion deficit for the first half of the fiscal year, up considerably from a $10.7 billion deficit in 2008.

According to hearing testimony by PBGC inspector general Rebecca Anne Batts, Millard directly participated in granting more than $100 million in PBGC contracts to the international investment firms of Black-Rock Inc., JP Morgan, and Goldman Sachs, against the advice of senior corporate management. Telephone and e-mail records showed Millard had contacts with his prospective bidders prior to hiring them to manage real estate and private equity investments. Millard’s experience illustrates both the incestuous relationship between persons in government who are supposed to be protecting the public and Wall Street. It is also noteworthy that Millard invoked the Fifth Amendment just like Mafia gangsters in the past. If there had been no wrongdoing, then why refuse to testify?

BEFORE THE CRASH

B
EFORE THE MARKET CRASH
in 2008, stress reached deep into certain strata of American life. Many retirees who once believed their money was safe saw principal losses of up to 80 or 90 percent of their investment.

Serious market slowdown began when investment banks across the globe refused to buy one another’s credit—an unusual move—and when mortgage-purchasing companies Freddie Mac and Fannie Mae decided they could make more money by buying subprime mortgages. It was all part of the Bush administration’s policy of conforming to the United Nations’ Millennium Development Goals, which were unveiled in 2000. These goals addressed such issues as the eradication of extreme poverty and hunger, universal primary education, gender equality, health improvement, and ensuring environmental sustainability. It was laudable goals such as these that led to government pressure on lending institutions to issue subprime mortgages. The result? Hundreds of thousands of unsold homes.

Although it’s well known that the economic mess began with the banks, mortgage lenders, and real estate companies, the current housing and mortgage mess actually was the result of maneuvering by both Democrats and Republican politicians, a fact that adds considerable weight to the argument that both major parties are controlled by the same globalists seeking to install a worldwide socialist system.

During the 1990s, Bill Clinton’s Democratic administration was pressuring Fannie Mae, the nation’s largest underwriter of home mortgages, to expand mortgage loans to low- and moderate-income borrowers. After all, granting low-income families the chance for home ownership sounded good on paper.

“Fannie Mae has expanded home ownership for millions of families in the 1990s by reducing down payment requirements,” Franklin D. Raines, chairman and CEO of Fannie Mae, told the
New York Times
in 1999. The newspaper noted that at least one study seemed to indicate racial prejudice in this lending as it reported that 18 percent of such subprime loans went to black borrowers as compared to 5 percent for all other groups. With great prescience,
Times
writer Steven A. Holmes noted in 1999, “In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980s.”

While Fannie Mae was lowering loan qualifications its stockholders were pressuring for greater profits, creating a recipe for financial disaster. And, as usual, both the political and financial machinations involved crossed party lines but not the agenda of the globalists.

Larry Summers—a Treasury secretary under Clinton, Obama’s head of the National Economic Council, and a member of the Council on Foreign Relations—is an advocate of cutting both corporate and capital gains taxes and convinced Clinton to sign into law several Republican bills that allowed banks to expand their powers. One of these bills repealed the 1933 Glass-Steagall Act, which prevented the merger of commercial banks, insurance companies, and brokerage firms such as Goldman Sachs and Merrill Lynch. Additionally, Summers supported the Commodity Futures Modernization Act just before the 2000 election, which denied the governmental Commodity Futures Trading Corporation the ability to conduct oversight on the trading of financial derivatives. In the wake of Obama’s stimulus package in April 2009, Summers was criticized for collecting $2.7 million in speaking fees from Wall Street companies that had received government bailout money.

Summers was paving the way for the abuse of America’s financial system. Meanwhile, his protégé, Under Secretary for International Affairs Timothy Geithner, was making political gains. In 2002, during the first George W. Bush administration, Geithner left the Treasury Department to join the Council on Foreign Relations as a senior Fellow in the International Economics Department. Also a protégé of Henry Kissinger, Geithner had previously served as president of the New York Federal Reserve Bank. By 2009, Geithner was Obama’s Treasury secretary. Again, here we see two men (Summers and Geithner) connected to the same secretive globalist society—the Council on Foreign Relations (CFR)—freely moving between both Democratic and Republican administrations. The CFR is secretive because it does not publicly announce its agenda or decisions, nor does it allow anyone to join without an invitation, and then only after careful vetting of the candidate’s propensity to favor globalization.

Princeton-educated economics researcher F. William Engdahl wrote that Treasury Secretary Geithner’s “dirty little secret” was that during the credit crisis, he only tried to save the five largest banks—banks that held “96 percent of all US bank derivative positions in terms of nominal value, and an eye-popping 81 percent of the total net credit risk exposure in event of default.” A derivative is a financial instrument whose worth is derived from another resource, whether property, goods, or services, called the underlying asset. Derivatives have been used in complex financial dealings to hedge against loss by allowing speculators to sell or trade the derivative and to gamble on gaining great profit by acquiring derivatives in the hope that the underlying asset will maintain or increase its value. In declining order, the five banks that had the most derivatives are JP Morgan Chase, Bank of America, Citibank, Goldman Sachs, and the recently merged Wells Fargo–Wachovia. The leadership of these five banks is full of CFR members.

BANK STRESS TESTS

I
N EARLY
M
AY
2009, after months of foot-dragging, federal regulators finally released the results of their bank “stress tests,” which test whether or not a certain bank can repay its debts and survive harsh economies. From the five banks listed above, only JP Morgan Chase passed the test. This means it was not required to raise more capital to prevent further losses.

The Charlotte-based Bank of America tested the worst on the stress tests. Government regulators informed the bank that it needed almost $34 billion in additional capital, which accounted for almost half of its total deficit. This news worsened problems for the banking giant, already under criticism for receiving more than $45 billion in government aid and for acquiring the investment bank Merrill Lynch.

Bank of America wasn’t the only one with problems. Among others, Wells Fargo needed to raise $13.7 billion, GMAC Financial Services (formerly known as General Motors Acceptance Corporation) needed $11.5 billion, and Citigroup needed $5.5 billion. All told, the nation’s large banks needed $74.6 billion to build a capital cushion, according to federal regulators.

Federal Reserve chairman Ben Bernanke was publicly upbeat about the tests, describing them as a “fair and comprehensive effort.” “[Markets] can be reassured that banks will be strong and be able to lend even if the economy is worse than currently expected,” he told CNBC. However, banks that failed the government’s stress test would be required to quickly come up with a plan to raise additional resources. One such plan was for the federal government to convert preferred shares bought by the U.S. Treasury into common stock. Douglas Elliott, a former JP Morgan Chase investment banker now with the Brookings Institution, told the Associated Press, “Essentially what we’ll be doing is swapping a kind of loan for actual ownership of a part of the bank. So it increases the taxpayers’ risk but also increases the potential return.”

Increased taxpayer risk? This does not seem such a good idea in shaky financial times. “Continuing to pour taxpayer money into these five banks without changing their operating system is tantamount to treating an alcoholic with unlimited free booze,” said F. William Engdahl. “The government bailout of AIG, at more than $180 billion [as of April 2009], has primarily gone to pay off AIG’s credit default swap obligations to counterpart gamblers Goldman Sachs, Citibank, JP Morgan Chase and Bank of America, the banks who believe they are ‘too big to fail’. In effect, these institutions today believe they are so large that they can dictate the policy of the federal government. Some have called it a bankers’ coup d’etat. It is definitely not healthy.”