*Keep filling out those form 1099As & 1099Cs to close out court cases and mortgages. Spread the word, we are the lender and they are the borrower! *
On Tue, Sep 30, 2008 at 1:03 PM, RFTech <[EMAIL PROTECTED]> wrote: > This should be interesting... > > > <[EMAIL PROTECTED]> > *Subject:* Re: US Treasury borrow $700B from Russia and China > > > > > Now, Lets see how much more that puts us in debt to Russia and > China??????? Are we sick or what?????Virginia > > The US Treasury to borrow the $700 billion from Russia and Peoples > Republic of China > > September 23, 2008 > > Has Deregulation Sired Fascism? > > By Paul Craig Roberts > > Remember the good old days when the economic threat was mere recession? The > Federal Reserve would encourage the economy with low interest rates until > the economy overheated. Prices would rise, and unions would strike for > higher benefits. Then the Fed would put on the brakes by raising interest > rates. Money supply growth would fall. Inventories would grow, and layoffs > would result. When the economy cooled down, the cycle would start over. > > The nice thing about 20th century recessions was that the jobs returned > when the Federal Reserve lowered interest rates and consumer demand > increased. In the 21st century, the jobs that have been moved offshore do > not come back. More than three million U.S. manufacturing jobs have been > lost while Bush was in the White House. Those jobs represent consumer income > and career opportunities that America will never see again. > > In the 21st century the US economy has produced net new jobs only in low > paid domestic services, such as waitresses, bartenders, hospital orderlies, > and retail clerks. The kind of jobs that provided ladders of upward mobility > into the middle class are being exported abroad or filled by foreigners > brought in on work visas. Today when you purchase an American name brand, > you are supporting economic growth and consumer incomes in China and > Indonesia, not in Detroit and Cincinnati. > > In the 20th century, economic growth resulted from improved technologies, > new investment, and increases in labor productivity, which raised consumers' > incomes and purchasing power. In contrast, in the 21st century, economic > growth has resulted from debt expansion. > > Most Americans have experienced little, if any, income growth in the 21st > century. Instead, consumers have kept the economy going by maxing out their > credit cards and refinancing their mortgages in order to consume the equity > in their homes. > > The income gains of the 21st century have gone to corporate chief > executives, shareholders of offshoring corporations, and financial > corporations. > > By replacing $20 an hour U.S. labor with $1 an hour Chinese labor, the > profits of U.S. offshoring corporations have boomed, thus driving up share > prices and "performance" bonuses for corporate CEOs. With Bush/ Cheney, the > Republicans have resurrected their policy of favoring the rich over the > poor. John McCain captured today's high income class with his quip that you > are middle class if you have an annual income less than $5 million. > > Financial companies have made enormous profits by securitizing income flows > from unknown risks and selling asset backed securities to pension funds and > investors at home and abroad. > > Today recession is only a small part of the threat that we face. Financial > deregulation, Alan Greenspan's low interest rates, and the belief that the > market was the best regulator of risks, have created a highly leveraged > pyramid of risk without adequate capital or collateral to back the risk. > Consequently, a wide variety of financial institutions are threatened with > insolvency, threatening a collapse comparable to the bank failures that > shrank the supply of money and credit and produced the Great Depression. > > Washington has been slow to recognize the current problem. A millstone > around the neck of every financial institution is the mark- to-market rule, > an ill-advised "reform" from a previous crisis that was blamed on fraudulent > accounting that over-valued assets on the books. As a result, today > institutions have to value their assets at current market value. > > In the current crisis the rule has turned out to be a curse. Asset backed > securities, such as collateralized mortgage obligations, faced their first > market pricing in panicked circumstances. The owner of a bond backed by > 1,000 mortgages doesn't know how many of the mortgages are good and how many > are bad. The uncertainty erodes the value of the bond. > > If significant amounts of such untested securities are on the balance > sheet, insolvency rears its ugly head. The bonds get dumped in order to > realize some part of their value. Merrill Lynch sold its asset backed > securities for twenty cents on the dollar, although it is unlikely that 80 > percent of the instruments were worthless. > > The mark to market rule, together with the suspect values of the asset > backed securities and collateral debt obligations and swaps, allowed short > sellers to make fortunes by driving down the share prices of the investment > banks, thus worsening the crisis. With their capitalization shrinking, the > investment banks could no longer borrow. The authorities took their time in > halting short-selling, and short-selling is set to resume on October 3 or > thereabout. > > If the mark to market rule had been suspended and short-selling prohibited, > the crisis would have been mitigated. Instead, the crisis intensified, > provoking the US Treasury to propose to take responsibility for $700 billion > more in troubled financial instruments in addition to the Fannie Mae, > Freddie Mac, and AIG bailouts. Treasury guarantees are also apparently being > extended to money market funds. > > All of this makes sense at a certain level. But what if the $700 billion > doesn't stem the tide and another $700 billion is needed? At what point does > the Treasury's assumption of liabilities erode its own credit standing? > > This crisis comes at the worst possible time. Gratuitous wars and military > spending in pursuit of US world hegemony have inflated the federal budget > deficit, which recession is further enlarging. Massive trade deficits, > magnified by the offshoring of goods and services, cannot be eliminated by > US export capability. > > These large deficits are financed by foreigners, and foreign unease has > resulted in a decline in the US dollar's value compared to other tradable > currencies, precious metals, and oil. > > The US Treasury does not have $700 billion on hand with which to buy the > troubled assets from the troubled institutions. The Treasury will have to > borrow the $700 billion from abroad. > > The dependency of Treasury Secretary Paulson's bailout scheme on foreign > willingness to absorb more Treasury paper in order that the Treasury has the > money to bail out the troubled institutions is heavy proof that the US is in > a financially dependent position that is inconsistent with that of America's > "superpower" status. > > The US is not a superpower. The US is a financially dependent country that > foreign lenders can close down at will. > > Washingtonn still hasn't learned this. American hubris can lead the > administration and Congress into a bailout solution that the rest of the > world, which has to finance it, might not accept. > > Currently, the fight between the administration and Congress over the > bailout is whether the bailout will include the Democrats' poor > constituencies as well as the Republicans' rich oness. The Republicans, for > the most part, and their media shills are doing their best to exclude the > ordinary American from the rescue plan. > > A less appreciated feature of Paulson's bailout plan is his demand for > freedom from accountability. Congress balked at Paulson's demand that the > executive branch's conduct of the bailout be non-reviewable by Congress or > the courts: "Decisions by the Secretary pursuant to the authority of this > Act are non-reviewable and committed to agency discretion." However, > Congress substituted for its own authority a "board" that possibly will > consist of the bailed-out parties, by which I mean Republican and Democratic > constituencies. The control over the financial system that the bailout would > give to the executive branch would mean, in effect, state capitalism or > fascism. > > If we add state capitalism to the Bush administration's success in eroding > both the US Constitution and the power of Congress, we may be witnessing the > final death of accountable constitutional government. > > The US might also be on the verge of a decision by foreign lenders to cease > financing a country that claims to be a hegemonic power with the right and > the virtue to impose its will on the rest of the world. The US is able to be > at war in Iraq and Afghanistan and is able to pick fights with Iran, > Pakistan and Russia, because the Chinese, the Japanese and the sovereign > wealth funds of the oil kingdoms finance America's wars and military > budgets. Aside from nuclear weapons, which are also in the hands of other > countries, the US has no assets of its own with which to pursue its control > over the world. > > The US cannot be a hegemonic power without foreign financing. All > indications are that the rest of the world is tiring of US arrogance. > > If the US Treasury's assumption of bailout responsibilities becomes > excessive, the US dollar will lose its reserve currency role. The minute > that occurs, foreign financing of America's twin deficits will cease, as > will the bailout. The US government would have to turn to the printing of > paper money as did Weimar Germany. > > For now this pending problem is hidden from view, because in times of > panic, the tradition is to flee into "safety", that is, into US Treasury > debt obligations. The safety of Treasuries will be revealed by the extent of > the bailout. > > Paul Craig Roberts was Assistant Secretary of the Treasury. > > http://www.vdare.com/roberts/080923_deregulation.htm > > > > >
