Boundaries of Executive Power (3) - fait acompli Shakedown
“Our Trash for Your Cash”
By Michael Hudson
The financial press has been negligent in reporting how last week’s two top financial stories are linked: first, the testimony by Treasury Secretary Henry Paulson and his evasive Interim Assistant Secretary Neel Kashkari defending why they followed a completely different giveaway plan to the banks (their own Wall Street constituency) than what Congress authorized; and second, the G-20 standoff among the world’s leading finance ministers this weekend.
The dollar glut is one of the key factors that has aggravated the junk-mortgage problem in recent years. Looking forward, if foreign countries are no longer to invest their dollar inflows in Fannie Mae, Freddie Mac and toxic packaged mortgage derivatives, what are they to do with these dollars? The U.S. Government refuses to let foreign government funds acquire anything but financial junk such as the plunging Citibank shares that Arab oil sheikhs have bought.
Here’s the problem that faced global finance ministers this weekend: The U.S. payments deficit has been pumping excess dollars into foreign economies, whose recipients have turned them over to their central banks. These central banks have saved their currencies from rising (and thus losing foreign markets by making their exports more expensive) by buying Treasury bonds so as to support the dollar’s exchange rate by recycling their dollar inflows back to the United States – enough to finance most of our federal budget deficit, and indeed much of Fannie Mae’s mortgage lending as well.
Mr. Bush for his part would like to shape the global financial system so that foreign economies continue giving the United States a free lunch. U.S. officials control the International Monetary… …
… … …
…As matters have turned out, the banks have gone broke doing this. The Treasury has given them trillions of dollars of aid, and even more as special tax favoritism, loan and deposit insurance guarantees. This can only continue as long as banks can make the inevitable collapse of compound interest schemes appear to be unthinkable. That attempt is what doomed the G-20 meetings this weekend, and it will doom any future U.S. administration that tries to follow in its footsteps.
susan/catlady:
There are quite a few interesting links at Catherine Austin Fitts’ Solari site, including this one:
Inhofe: Cancel the ‘blank check’
“I have learned a long time ago. When they come up and say this has to be done and has to be done immediately, there is no other way of doing it, you have to sit back and take a deep breath and nine times out of 10 they are not telling the truth,” he said.
“And this is one of those nine times.”
19 November 2008, 11:17 amBuddhalovesPaine:
Well this almost answered one of my questions. Just a couple of months ago the dollar was worth about 66 cents in real money (Euros). Now it is worth about 76 cents. I would think that the dollar should have the same value as a Deutsch Mark by now. (Hey that is supposed to be a joke and I did not hear anyone laughing) OK it says in the article above that the US payments deficits are pumping dollars back in to foreign economies……..the dollars then end up in the central banks of other countries which stuff the dollars into a mattress and buying US treasury bonds so that their national currencies do not rise making their products more expensive therefore less marketable leading to unemployment.
20 November 2008, 5:20 amThe only thing is by holding dollars and financing the US government deficit the countries are not changing their value against other non dollar countries. Only the dollar is being supported. But the Europeans of the EU and the Chinese and the Russians and the Japanese and the Indians and the Indonesians and so on are not competing against the US they are competing against each other. So if the dollar is going up at a time that it seems obvious that the US economy is a giant theft machine I think that I must be missing something.
BuddhalovesPaine:
Another thing that is related to this but I am not sure exactly how is, the government of almost every country in the world runs budget deficits almost every year. I have not looked to see exactly how large these deficits are in other countries for at least 5 years but the last time that I looked some countries in western Europe were even more in debt per capita, and as a percentage of GDP, than the US was. (Germany was not as far in debt per capita as the U.S.) So I wonder what is larger the EU Central Banks holdings in Dollars or the dollar value debt of EU countries?
20 November 2008, 11:46 amThe dick, Cheney said that deficits do not matter. Could he actually be right? I saw Zeitgeist part II recently.
It said that the value of the dollar has dropped 96% since the Federal Reserve was established 94 years ago. My response to that was big fragging deal! And standards of living have gone up perhaps 95% in the same time period.
(OK I made up that 95% number but anyone one can see that 95% of the people alive today are better off than they were in 1913) Anyways the film did not prove to me that the fed is solely responsible for the inflation that has occurred since 1913. Furthermore at an annual average rate of 1% per year (according to Zeitgeist) the hidden tax of inflation is hardly something to get bent out of shape about anyways.
Now the interest payments that the US government makes is something that is more troubling. Again I have not looked in to this recently but in the early 90s and I suspect also now interest payments on the debt are a large part of the federal governments expenditures.
It is often reported that the US governments budget deficit is financed by foreigners, but if they are financing the US governments budget deficit, who is financing their budget deficits?
Rev. José M. Tirado:
Just a cautious word: to say that “95% of the people alive today are better off than they were in 1913″ is possibly correct on some fronts, dead wrong in others.
Since the time period mentioned (the 19teens) probably 700 (a conservative estimate) new chemicals have been put into the food system we partake of daily. A whole slew of cancers that were never seen are now today common. Intestinal disaeses too are increasing with added stresses those people did not endure. ADD and other cognitive disorders potentially linked to cognitive-depressing media and their formats (fast cuts, crammed out of context information, etc.) are on the rise. I regularly speak with people, even via advanced media susch as this, who can´t think well, don´t write well, can barely read, and have a limited understanding of events well within their scope to understand simply because they watch and have been watching 20-40 hours of television weekly for most of their lives.
People in 1913 were connected more to their communities, walked more, moved their bodies more, ate less processed foods, breathed cleaner air (on the whole) and didn´t take unnecessarily prescribed drugs for a variety of problems probably best understood as simply growing old, or plain old human suffering. So it depends on what you are comparing. Medical attention is better, yes, lives are longer, yes, and I am glad for the Internet, and other new means of acquiring information. But information, which was a prized commodity throughout most of history, does not make up for Meaning, and Meaning adds a quality to Life these other things we have now do not. And there are other factors we need to look at whenever we compare how things were to the way things are.
20 November 2008, 12:31 pmBuddhalovesPaine:
Rev. Jose M. Tirado´,
21 November 2008, 6:10 amYes it is very interesting how one can always reach a deeper level of understanding. Perhaps by 2013 we will be on the road to creating a civilization that provides the best of 1913 and 2012.
charles:
Letter signed by 387 economists: first proposal help state and local governments.
http://www.cepr.net/index.php/publications/reports/economists-letter-to-congress-in-support-of-a-new-economic-stimulus-package/
November 19, 2008
21 November 2008, 12:07 pmThe Honorable Henry Reid The Honorable Nancy Pelosi
Senate Majority Leader Speaker of the House
Washington, DC 20510 Washington, DC 20515
The Honorable Mitch McConnell The Honorable John Boehner
Senate Minority Leader House Minority Leader
Washington, DC 20510 Washington, DC 20515
Dear Sen. Reid, Sen. McConnell, Speaker Pelosi, and Rep. Boehner:
We, the undersigned economists, urge Congress to pass a new stimulus package as
quickly as possible. The need to deal with financial turmoil has directed attention away
from the “real” economy. But the latest data clearly show that the economy is entering a
serious recession, initiated by the collapse of homebuilding and intensified by the
paralysis of credit markets. Without a fast an effective response by government, the
economy could continue to spiral downward, leading to a large increase in
unemployment and a sharp decline in GDP.
The potential severity of the downturn suggests that a boost to demand on the order of
2.0-3.0 percent of GDP ($300-$400 billion) would be appropriate, with the goal being to
get this money spent quickly. The list of targets includes:
a) aid to state and local governments that are being forced to make emergency
cutbacks as revenues fall;
b) extending unemployment insurance and increasing other benefits targeted toward
low and moderate income households who are likely to spend quickly;
c) moving forward infrastructure projects that have already been planned and
scheduled; and
d) providing tax credits and other support for “green” projects that can be done
quickly, such as retrofitting homes and businesses for increased energy
efficiency.
The sharp falloff in demand resulting from the collapse of the housing bubble and the
destruction of financial wealth means that there is little reason to fear that enlarged
deficits will raise interest rates and deter private investment. It is far more likely that an
effective stimulus package will promote investment by improving prospects for higher
sales and profits.
With little downside risk and much potential gain, it is important that Congress move
quickly and decisively. Delay can only deepen and prolong the recession.
Sincerely,
Economists’ Letter to Congress
charles:
Cheney said that deficits do not matter. Could he actually be right?
^^^^
21 November 2008, 12:29 pmKeynesian,or social democratic, economic theory favors and advocates deficit spending fiscal policy.
BuddhalovesPaine:
Charles,
22 November 2008, 1:53 pmBut if i remember correctly Keynesian economists favor deficit spending when a country is in or near a recession.
Also if deficits work for the US why have they not worked for the 3rd world? I mean if deficits, or for that matter fractional reserve banking, can stimulate an (the US) economy why has this system not worked in Africa or Latin America?
charles:
Good questions ,BuddhalovesPaine
Ironically, or scarily, Cheney sounds like a Keynesian here. I’d have to hear the overall context. He’s probably advocating “military Keynesianism”: spend on the military and cut the social spending. Reagan doubled the national _debt_ as it had accumulated going all the way back to Washington, but increased military spending and cut taxes for the rich, initiated the idea of cutting welfare and social spending.
I’m not sure what has happened in Africa or Latin America with respect to deficit spending. “We” say forgive the Third World Debt !
The good thing about the basic and original Keynes approach is that it counsels social spending to put money into the hands of masses, that is to raise mass “effective demand” for “economic stimulus”. The more money people on welfare or unemployment have, the more they buy goods and services.
Thinking more narrowly about the US mainly, the rightwing uses the notion of balanced budget as an excuse to cut social programs in the US federal budget. Of course, they don’t cut the military budget to balance the overall budget.
What say you ?
23 November 2008, 2:52 pmBuddhalovesPaine:
I believe Cheney made his statement as a counter argument to the complaint that the Iraq war was expensive.
24 November 2008, 5:05 amAs to my own opinion about monetary and fiscal policy I do not have one at this moment. I have this feeling that some important piece of the puzzle (picture) is missing.
What I have no doubt about is that not only did the US government launch a very obvious war of aggression against Iraq in 2003 but that the US government has launched many other wars of aggression against emerging democracies since the end of the second world war. These clearly known facts make the US government the world’s largest continuing criminal enterprise.
Furthermore I am not certain but I strongly suspect that assassination of President Kennedy and the 9-11 attacks could have been stopped before they happened. I also strongly suspect that the current crisis in the banking industry could have been averted. I am also concerned that there are at least elements in the US military industrial complex that are trying to put the US in a position that the US could launch a nuclear first strike against any country on the planet.
I find it interesting that when some crazy person goes on a rampage and kills a dozen people or a serial killer gets caught after killing 2 dozen people the American people show some outrage yet when the power structure kills many multitudes of that it seems to be the governments perogative. Yet by my own admission if I could get someone to follow my orders it is possible that a lot of people would be killed.
(I have to finish this another time.)
BuddhalovesPaine:
Just a short note on something that was on the front page of the german paper today that I find very interesting.
24 November 2008, 5:08 am3 members of the German Bundesnachrichtendienst have been arrested in Kosovo for trying to bomb the the EU headquarters. I wonder if they were trying to follow my orders hahahahahahahaha!
BuddhalovesPaine:
OK to finish where I left off. In my opinion the idea that the use of violence is never justified as a political means to achieve political ends is not itself justified. Yet if some people come to the conclusion that violence is never justified as a political means they should certainly be supported. A goal of achieving a world without violence is certainly one worthy to strive for but it is one that has to be achieved together. If 90% of the people are pacifists and the other 10% are criminals those 10% will have a decisive advantage in political clout.
24 November 2008, 11:13 amI do not see military service in and of itself a crime. Unfortunately I think people in today’s US military confuse military service in a hypothetical country in a theoretical time on planet earth with service in the US military in the 21st Century. Even in earlier times service was not honorable but it was not as dishonorable.
In the 19th century war as a means of expansion was considered normal. In the 20th century there was a least a cover story that was good enough in my opinion to confuse the issues of the morality of service in the US military. In the 21st Century only bird brain could think that the US is any thing other than the new evil empire. (No apology to anyone with a bird on their uniform who might happen to see this. I give you my own bird, a cuckoo bird) If someone wants to serve honorably as a soldier let them join the Swiss or Finnish or Venezuelan military.
For people who might read this and are sure that they could never kill another human being I would like you to think creatively about what you can support. Preaching is of course the obvious route but even Jesus overturned the money tables that were in or near the house of worship. That was clearly an act of sabotage. He could of been killed himself by an angry businessman.
Preaching is important. Still, it is a very slow way of making changes. My spouse accuses those who would do more than preach, especially those who would use violence, of just being egotistical butt heads who just want to go down in history as another George Washington, or Vladimir Lenin, or Che Guevara. Perhaps, but I think the moral thing to do when faced with the question of how to deal with injustice is cost benefit risk analysis. It is true that our human analysis is very flawed. But we are forced by the fact that we are alive in a time and space dimension to do the best job that we can. God might be here watching us but it is not clear that she is directly controlling what goes on. Therefore that makes me the XO. Ok perhaps not the XO. That is my spouse. But I am at least the First Sergeant of at least my own small unit. First Sergeants do not tell XOs everything that they are up to.
Even if our risk benefit cost analysis goes horribly wrong we can never be sure that if we had followed another course of action things would not have turned out even worse. Therefore it would be possible for those who supported the Iraq invasion then to say that it was justified. Yes they could say it but the reason that the rest of us haves brains is to evaluate the likely hood of that claim. I say the supporters of the Iraq invasion are either liars or fools. Unfortunately we can never know for sure who is right.
Now I think someone may wish to question me on what factors or variables should be used in our risk benefits and costs analysis. But that is the subject of another book.
For now it is my opinion that the best course of action is counter recruiting and infiltrating political leftist who are willing to use violence in to the FBI, CIA, Secret Service, and military. Some of you may scoff at me as being an unrealistic dreamer but it has been done before. I am not a racist or a nationalist if other countries can have left wing military coups so can the US.
If that sounds undemocratic to you I say that any country who has citizens who can not control their military are citizens who do not deserve democracy. Any so called citizens who would stand in the way of arresting war criminals are accomplices and would become felons themselves if they attempted to hinder a left wing military coup. The historical record justifying such a course of action is overwhelming.
Love is an important word on this site. Some people that I have spoken to accuse me of spewing hatred. I prefer to look at it this way. If I can love my enemies how much more love can I have for their victims? I recognize that criminals, especially the rich and powerful ones are also victims. They are victims of being born into or acquiring positions of power in which they have trouble imagining being held accountable for their crimes. Because of that they have much more temptation to abuse their public trust. That is why I say an example has to be made out of them. One that generations of school children will talk about for 1000 years so that the temptation of future powerful politicos will be much much less than the temptation America’s rich and powerful faced, which was to much for them to handle.
BuddhalovesPaine:
Charles,
25 November 2008, 6:48 pmI have been waiting to hear from you. Maybe you have been busy and have not had a chance to read my answer to the question you asked me. Sometimes in the past I have asked people questions and I did not want to comment on what they wrote for one reason or another but I did write that I saw what they wrote. That way they, or in this case I,
will not think that they spent their time writing in vain.
with friendly greetings,
BLP