In an article recently, Joe Nocera the economic writer for the NYTimes, revealed what he calls "the dirty little secret of the banking industry"--namely, it has no intention of using the [government bailout] money to save small business. Its essential aim was to engineer a rapid consolidation of the American banking system by subsidizing a wave of takeovers of smaller financial firms by the most powerful banks." In other words, our money is being given to help the financial aristocracy consolidate their wealth and destroy our society.
Paulson, the former CEO of Goldman Sachs, wants to help his friends the speculative banks to acquire as many smaller, more stable savings banks as possible and is using his power to inject capital (our money) to force a new and hostile round of bank consolidation.
Nocera cites an employee-only conference call held October 17 by a top executive of JPMorgan Chase, the beneficiary of $25 billion in public funds. Nocera explains that he obtained the call-in number and was able to listen to a recording of the proceedings, unbeknownst to the executive, whom he declines to name.
Asked by one of the participants whether the $25 billion in federal funding will "change our strategic lending policy," the executive replies: "What we do think, it will help us to be a little bit more active on the acquisition side or opportunistic side for some banks who are still struggling."
Referring to JPMorgan's recent government-backed acquisition of two large competitors, the executive continues: "And I would not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some great opportunities for us to grow in this environment, and I think we have an opportunity to use that $25 billion in that way, and obviously depending on whether recession turns into depression or what happens in the future, you know, we have that as a backstop."
As Nocera notes: "Read that answer as many times as you want--you are not going to find a single word in there about making loans to help the American economy."
Later in the conference call the same executive states that they will tighten credit and actually SHRINK loaning which will drive up the rates for loans... and their profits.
Paulson and other Treasury officials have made public statements calling on the banks that receive public funds to use them to increase their lending activities. That, however, is pure propaganda. The bailout program imposes no lending requirements on the banks in return for government cash.
The wealth consolidation is already starting to appear, early this month, (in a nearly unnoticed move) Paulson put in place a new tax break worth billions of dollars to his friends, allowing the acquiring bank to immediately write-off any losses on the books of the banks they take over. This will in fact, encourage bank mergers.
We already know the credit crisis bailout has prompted the takeover of Bear Stearns and Washington Mutual by JPMorgan, Merrill Lynch by Bank of America, Wachovia by Wells Fargo but last Friday, National City Bank was aggressively acquired by PNC ( a Pittsburg-based financial giant)
The Wall Street Journal on Saturday called the acquisition of National City a "strong-arm sale", but also provides a taste of what is to come. Paulson and his Treasury Department sealed the fate of the Cleveland-based National City bank by denying them any government bailout. But then it then Pittsburgh-based PNC $7.7 billion from to help takeover National City. Now PNC can write off all the debt of National City with Paulson's new tax write-off on mergers.
All of the claims that were made to justify the bank bailout seem to be as truthful as the lies BushCo gave for invading Iraq. President Bush, Federal Reserve Chairman Ben Bernanke and Paulson told the Democratic congressional leadership and Barack Obama that the bailout had to be passed, and passed immediately, despite massive popular opposition. Those who opposed the plan were denounced for jeopardizing the well being of the American people.
Though this time, several Republican leaders, like Jim Sensenbrenner, held out for and additional $150B in earmarks—but more importantly, they now are on record as opposing the bill so when Americans finally realize this deception... these Congressmen will look like Russ Feingold did after the Patriot Act was exposed— as heroes of the people!
What a sham, what a clever move in a well- constructed plan to topple our rights and freedom.
In a nationally televised speech delivered September 24, in advance of the congressional vote on the bailout plan, Bush said it would "help American consumers and businessmen get credit to meet their daily needs and create jobs." If the bailout was not passed, he warned, "More banks could fail, including some in your community. The stock market would drop even more, which would reduce the value of your retirement account.... More businesses would close their doors, and millions of Americans could lose their jobs ... ultimately, our country could experience a long and painful recession."
One month after his bailout was enacted... and all of the dire developments he said the bailout would fix--banks and businesses disappearing, the stock market plunging, unemployment skyrocketing- are happening with accelerating speed.
While Obama talks about the need for all Americans to "come together" in a spirit of "shared sacrifice" what he doesn't want to say--is that this bailout is sucking any and all money he might have used for his social programs.--meaning drastic cuts in Medicare, Medicaid, Social Security in addition to not affording universal healthcare, better schools and infrastructure.
But so too, would McCain find this "crisis" will also make it impossible for him to give the wealthy tax cuts and bailout plans he's been touting.... The darker side being... his handlers may actually push the tax cuts through and accelerate the collapse of our nation.
As Naomi Klein theorized in her book "The Shock Doctrine, the "economic rescue" plan is a scheme to plunder society for the benefit of the financial aristocracy. The American ruling elite, utilizing its domination of the state and the two-party political system, is exploiting a crisis of its own making to carry through an economic agenda, long in preparation, that could not be imposed under normal conditions.
The result will be at least greater economic hardship for ordinary Americans but possibly herald the death of Democracy. The few newly consolidated mega-banks will have near absolute market control to set interest rates and provide credit to workers, students, families and small businesses. The government is organizing a restructuring of the financial system that will enable a handful of mega-banks to have ultimate power over society.
How is this not unlike the same aristocratic elite plotting the wealth consolidation and overthrow of our government in 1933 during the last economic collapse?
This time, it seems they may well have succeeded.
Thursday, October 30, 2008
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