Phantom mortgages and Larry Summers’ kickbacks

Stacy Summary:  Corruption, corruption, corruption.  It’s quite clear that the whole system is rotten.  Part of the problem with government being so close to bankers and corporations is that the politicians feel like they should be getting kickbacks and be able to live the lifestyle that they themselves help create for said bankers with your tax money.  Also, by voting in these politicians we give this whole set up legitimacy.  What do you think?

44 comments on “Phantom mortgages and Larry Summers’ kickbacks
  1. Phil says:

    The Pravda article is correct IMO, but …
    … for a better insigt into the same , I suggest you read this link, courtesy of ZeroHedge

    Manipulation: How Markets Really Work
    http://baltimorechronicle.com/2009/052909Lendman.shtml

    Courtesy of :
    http://zerohedge.blogspot.com/2009/05/overallotment-may-29.html

    Catherine Austin-Fitts ( mentioned i the article ) is IMO one of the big truth-discoverers of today. Her IRTA 2008 video ( ca. 45 minutes ) is a MUST see .

  2. Phil says:

    Dollar Is Dirt, Treasuries Are Toast, AAA Is Gone: Mark Gilbert
    Bloomberg commentary
    http://www.bloomberg.com/apps/news?sid=aKOzWiTDseUE&pid=20601039

    ……….“All currencies are being debased dramatically by their central banks at extraordinary speeds and so in relative terms it appears there is no currency problem,” Lee Quaintance and Paul Brodsky of QB Asset Management said in a research note earlier this month. “In reality, however, paper money is highly vulnerable to a public catalyst that serves to acknowledge it is all merely vapor money.”……….

    Sounds like Max !
    ;-)

  3. Phil says:

    @Dollar Is Dirt, Treasuries Are Toast, AAA Is Gone: Mark Gilbert

    Astounding that he didn’t mention Gold once !

    One day, people will wake up and start looking at ALL currencies using Gold as the World’s Reserve Value !
    … not currency .. that’s a dirty word ;-)

  4. Max Power says:

    ===============================

    Why is it that no such website exists as:

    Painting The Tape dot Org or dot Com

    ===============================

    People should be on the streets demanding unlimited and perpetual back room market manipulation….

  5. Phil says:

    @Are Goldman’s computers painting the tape in the last twenty minutes of each day?

    IMO: Of course .. the normal WS P&D machine.

    I have the impression that many day-traders now stick to the penny stocks ( now including some big names of course ) simply because they are more predicatable than the Big Cap stocks, i.e. “under” the radar !
    ;-)

  6. Norway says:

    “US capitalism gone with a whimper” is one of the most pathetic rants I’ve ever read.

    If you call the US of today “marxist”, you should shut up and read a book or two. Also, leave the bloody gays alone. Got it?

  7. Mother Earth says:

    Reflecting on the question It seems to me it is the religious tendencies of people that lie at the core of the current situation.

    In the absence of churches others have taken on the natural role of priests in the collective conscienseness.. We need someone to devinate in our lives and deal with its complexities, we chose the financial class and it soon discovered we want to scarifice before their altar.

    If you can fool people into thinking there is more to know, and that the knowledge is sensitive and dangerous, you have all you need to start a priest class..

    They found we like our inquisition, because a predictable enemy brings comfort. Equal punishment by ‘the gods’ seems righteous. The separation of people from their priests is almost demanded to avoid the tormenting identity crisis (am I a leader or a follower ?).

    Lack of understanding or the will to grasp the crimes willfully perpetrated will continue as people find selfrespect in their loyalty, hardship and endurance as well joy in a life enriched with a belief and reverence in a higher force..

  8. Phil says:

    The Educational …. I mean FKN News

    Deek is a great artist IMO !

    FKN Newz live @ Alternative View 2 052909

    http://www.youtube.com/watch?v=xKr51Cg4sP0

  9. Matt Smyth says:

    How does a dopey geek like larry summers rise to the top ? The worst part is that he actually thinks that when he speaks, people listen.

  10. Hello, I would like to say excellent article about US capitalism gone with whimper. written from a russian perspective, it shows how wall street worked back then hand in hand with the marxists, and still does clearly. interesting those ties go so far back, makes you wonder what kind of ties are so strong to last through the centuries?

    I thought though that max and stacy supported the ideas of karl marx, multiculturalism and workers of the world unite, and such ideas.

    Just as the commenter phil tried to correct by linking viewers to a more pro marxist set of articles.

    just thought that was an interesting contradiction and wonder what max really thinks about communism

  11. actually in repsonse to user “norway”, the goals of marxism have been much more successfully impletented in the US than they ever were in russia, especially the ones about multiculturalism, and also the goal of centralized power.

    not sure what you think marxism is but perhaps its you who needs to read a few books.

    certainly the russians, of all people, dont need to hear what marxism really is. they know better than all others

  12. once again just an overall excellent article about US capitalism from russia, it covers many of the problems that plague america in a short and succinct style, and it was just a pleasure to read. and the final paragraph just brilliant to top it off.

    thanks for linking

  13. Youri Carma says:

    @Phil I agree with your hunch about painting the tape. After all, it’s very easy to write some software prog which intervenes automatically on the digital market. So, I wouldn’t be surprised if that came out.

    Financial vocabulary:
    - Dead cat bounce
    - Painting the tape
    - Look back trade
    - Kiekeboe accounting

    If somebody has some more of these financial expressions please post.

    Max! You should make a separate financial vocabulary page with a short explanation cause …. it’s fun.

  14. frances snoot says:

    Matt Rodina writes, “The world will only snicker.”

    Is “Matt Rodina” a pseudonym for Alan Stang? The vitriolic homophobic references to Barney Frank made me wonder why Stacy would include this piece on her blog. Mr. Rodina yearns for yesterday: a world of the patriarchy–church, god, and then man. He feeds on the ignorance of his readership, enabling a connection between the rule of supersticious cirrus abitration of law by a religious body and the appearance of moral rectitude.

    No, unfortunately, the downfall of America will not elicit only a ‘snicker’ from the world. The end of the dollar as reserve currency will have catastrophic geopolitical effects on the world. http://www.leap2020.eu/GEAB-N-35-is-available!-Global-systemic-crisis-June-2009-When-the-world-steps-out-of-a-sixty-year-old-referential_a3248.html

  15. c-ray says:

    latest hilarious videos from the UK ‘Everything is OK’ CCTV crew:

    http://www.youtube.com/watch?v=XgpLXDZqDEE
    http://www.youtube.com/watch?v=0OJ5lmz7AHA

  16. frances snoot says:

    @notsotypicalkwan:

    The system becoming rigid in the US has correlations to both Marxism and Fascism, but Communitarianism is a different beast altogether. The system obstinately resides in the ‘center’, not right or left on the political spectrum. The use of the Hegelian dialect as a thought force is crucial to the advancement of Communitarianism. I’m sure most Europeans are aware of this political predilection, as the law of the EU has a body of precedent based on Communitarian Law. Obama laughs when his is called Socialist: call him a Communitarian facilitator instead. The center wicks from the right and left: that is why the new system is being compared to both Fascism and Communism.

    All three systems derive their basis is the argument for the rights of the collective trumping the rights of the individual. I do not believe that Max nor Stacey have ever declared collective rights over individual rights.

  17. Vlado says:

    Hi everyone. This morning, I am reading a lot and my head is bulging :). I read all of the articles linked to the site, except the one about “phantom mortgage” MPs. I made just a cursory glance on that one. Too much stuff to read and not enough reading capacity in my mind. Kool text on the Manipulation: How Markets Really Work link, Phil. I am also trying to learn a little bit more about Friedrich August von Hayek, one of the Austrian economists, from Wikipedia web site. I came across an excellent business cycle definition corollary: “The instability of the market economy is the consequence of the exclusion of the most important regulator of the market mechanism, money, from itself being regulated by the market process.”
    My warm regards to all the commentators.

  18. Phil says:

    @Vlado … “Friedrich August von Hayek”

    Now you’re talking !

    Visit http://www.mises.org/ and I’m sure you’ll find lots of refernces to him there.

    I know I keep repeating myself ;-)… but do read “The Fable of the Bees” — > The Grumbing Hive by Mandeville.
    Von Hayek was inspired by the poem as far as I know.
    I was too … over 35 years ago !
    http://andromeda.rutgers.edu/~jlynch/Texts/hive.html

    What is also interesting is that I tried to find Web references over 10 years ago on Mandeville … very few hits.
    Today one gets 20,000 or more hits … a sign IMO that people are digging deeper , or maybe it’s just Google getting better ?

    PS: I know someone who actually met von Hayek when he lived in NY. The guy wrote to him while studying and asked for a meeting. v.Hayek actually invited him ’round for cakes and tea. He told me that von Hayek was an extremely nice person . Wow … was I envious. It’s like meeting the Einstein of Economics IMO !
    PS: I rate von Mises there as well.
    FWIW

  19. Phil says:

    U.S. Gold, Going or Completely Gone?

    http://www.financialsense.com/fsu/editorials/kirby/2009/0529.html

    Interesting article from a guy that studies precious metals.

    …. ” My primary field of research is focused on precious metals; namely, gold and silver, and I know that recent reports indicate that various countries are contemplating repatriating their sovereign gold reserves. Further, the U.S. Treasury and Federal Reserve have balked at GATA’s recent Freedom of Information [F.O.I] requests and demands for an independent, verifiable audit of the Sovereign U.S. Gold Reserve – thus a little bit of forensic investigation of U.S. gold exports was in order.

    I just needed to figure out how to access the relevant numbers. “….

  20. Mother Earth says:

    @honorable friend mr. snoot

    Ever wondered why it took so much talking to convey the marxist convictions? That is because it needs to provide the brainwashing as it lodges itself in the minds of people, just like the macrobiotic bs, christianity, islam etc. It is also necessary to provide an escapes from its own errors and allow ‘interpretation’ discussions (what ‘work’ really means is leisure!). Just like Marvin Minsky or Daniel Dennet talking about the mind. What it needed is a set of rules that people can understand and want to follow and that allows the largest amount of freedom and safety and prosperity for the lagest number of people. How about the law and good judges?

    Imho if someone starts using the words like ‘dialectic’ and -isms he is more interested in the rational coherence and elegance than the practical merit of his words.

    It is so easy to escape one pattern of behaviour only to be caught in another equally erroneous if that other pattern is waiting in the wings to provide coherence in a shapeshifting world.

    Instead of the regugitation of that almost a century old playbook, let’s give the advantage to the bright people whose frame of reference is reality, not theory..

    The trick is to grant them the power they need, like one would want to provide some primetime to Max and Stacey

    by the Way Glen beck hat both Schiff and Faber on the other night. He made a fool of himself mocking Fabers accent..

    http://www.youtube.com/watch?v=MUENyk_uHbM

  21. @ francis snoot

    I dont think the system is comparable to fascism as much as it is comparable to communism. i bash right wingers on a regular basis for comparing modern american government to various “fascist” governments of the past. as you pointed out, communism has some similarties, and i think communism is a much more accurate comparison then fascism.

    The american government is to the left actually, and “rigid” as you employed it is a very vague term. one of the trademarks of the left is to use as vague as terminology whenever possible, and certainly you live up to that.

    centralized power to a leftist government, not a center government is what we have.

    and i agree with you about socialism, i think its funny that the kwans are just now starting to chirp up against socialism in amerikwa, when this socialism has been going on for atleast 40 years now. my question is, where were all these chirpers 40 years ago?

    and to another point of yours, the world will snicker when america falls, because we beat our chest talking about how free we are, when all can see we are merely slaves. thats where the laugh comes in.

  22. Phil says:

    @a few more ad-hoc links…

    Article: Are The Markets Being Propped Up?
    http://inthemoneystocks.com/n_rant_and_rave_blog_single.php?id=1122

    Pretty much the way it is …
    … except many of these articles always assume the FED does NOT know what it’s doing.
    I think that that is NOT the case.
    As Max says … it’s a controlled demolition IMO !

    Video: Roubini On The Failure To Predict Financial Crises
    http://zerohedge.blogspot.com/2009/05/roubini-on-failure-to-predict-financial.html

  23. frances snoot says:

    @MotherEarth:

    Faulkner describes personal identity through a journey of mirrors: of backward looking ghosts inhabiting the consciousness. In this regard I agree that rational speaking is preferable to centuries old ideas functioning through isms. I was only attempting to clarify the differences.

    We are all bound to operate through theory, whatever we might protest. Just to step out of bed in the morning we adhere to the theory of gravity. The arguments that seem new are really as old as the middle ages: and so we struggle, and so we live, and so we die. The time advances, and words will be considered a dangerous commodity.

  24. Don says:

    This Goldman situation is interesting. I have stocks in a uranium company that is listed on the ASX 2 years ago Goldman gave them $20 million. The funny thing is that it is the only uranium exploration company listed on the ASX that just increased in share value by %63.33! wtf? I am happy but something doesn’t smell right. Last month the ASX inquired of the company for their continued success while all others were diving. The company response was basically “I don’t know”

  25. Mother Earth says:

    @francis snoot

    I disagree, but I think I need to add poetic beauty to the possible merits of academic thought and theories. Not that I don’t grasp the use of a coherent discourse on some subject, and the definition of applicable laws.

    If some guy stands on a pedestal and tells me I’m a worker and I should be outraged and should join the movement I’d be unsure whther I’d not be moving out of the water and into the fire. The demonstrated level of organization would be my primary worry. It s better to create courageous individuals than courageous masses.

  26. Brandon says:

    The Russian article is on the money. Larry Summers and Tim Geithner are scum period! They killed the Glass-Steagall act why would anybody listen to these guys? Plus Geithner was a failure at the New York FED. Abolish the FED and all central banks! Gold should be the world’s reserve currency.

  27. frances snoot says:

    @MotherEarth:
    I agree completely! But no one ‘creates’ courageous individuals; the individual is a unique creation and the mass ideal collective is a human holograph. I love being called left-leaning when I am only a humble nominalist. Rhetoric is a camoflage for anything: as we must all realize daily.

    The fascist element of our society finds its expression through good ole Larry Summers, whom I decidely hope is called to task for his ‘women are genetically inferior’ comment someday. I agree with notsotypicalkwan that the communist size seems larger, but the real money sits in the pockets of the fascist operators.
    All working together to enslave us in idealized communities!

  28. @MotherEarth
    Great clip from Beck…

    @Phil
    Thx for the link to the “manipulation” story.
    But is Manipulation that bad?
    If it is applied with magnanimous intention
    of limiting ranges
    and following trends,
    it allows the passive investor some degree of safety.
    BUT, if it is done with selfish motives,
    You definitely have a Financial WMD
    Bad Cop, Good Thug???
    Prince John, Robin Hood???

    I’ve seen “painting the tape”
    on the Candlestick charts for the TMX stocks and Hang Seng.
    So this isn’t an issue in the USA alone.

    But I digress,
    I’ve never heard of the SLPs (Supplemental Liquidity Provider)
    so I did some digging

    http://www.nyse.com/pdfs/2009pricelist.pdf
    On page 4 and 5 you will find the fees for DMMs (Designated Market Maker) and SLPs

    Now what I found strange was that DMMs get a REBATE for adding liquidity…
    and SLPs get a CREDIT…
    Doesn’t credit imply debt?

    Re: ZEROHEDGE’s articles on SLPs

    This post on Zero Hedge has a good breakdown of what SLPs are and what they are supposed to be…
    http://zerohedge.blogspot.com/2009/05/observations-on-nyse-program-trading.html

    It seems the SLPs are limited in the variety of stocks they are allowed to “manipulate” relative to the DMMs
    on top of that, they receive less “rebate” for their trades.

    I found an article by a Trading Psychologist
    Brett Steenbarger
    that has a good series of links
    (mostly from ZERO HEDGE)
    to more info about this subject…
    http://traderfeed.blogspot.com/2009/05/is-supplemental-liquidity-provider-slp.html

    ~~~~~~~~~~~~~~~~~~~~~~~~~~~~
    (from the link)

    A quick disclaimer: I am a psychologist who works with hedge fund portfolio managers, bank traders on proprietary desks, and proprietary trading firms;

    What I can tell you, as one who trades and works with active intraday traders … is that the late day trade has changed recently and those changes have directly affected active market participants. Those changes include increased herding behavior (a historically unusual number of days skewed toward buying or selling) and increased market volume and volatility during the last hour of trading.

    ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

    He seems to agree something is going on with these SLPs
    that is not in accord with the original plan of implementation.

    In other words,
    They are just making ridiculous profits…
    And they have the financial arsenal to move the market
    any way they desire.

    If anyone out there is passively investing,
    you might be getting NAILED
    once again,
    when these Super $’s
    with their ICEBERG ORDERS
    start busting out the Bull Repellent…
    Stay nimble…

  29. Max Power says:

    Link:
    “We’re in for a long, zombie summer”

    Should read:
    “We’re in for a long, zombie Summer”

    as Seasons, Planets, …. are always have initial capitalization.

    Sadly, English does not capitalize all nouns like German does — making the language harder to learn.

  30. Max Power says:

    Typo:
    “are always supposed to have initial capitalization”

  31. Gerry says:

    @notsotypicalkwan 10:03am

    To describe communism as fascism is to ignore the essential distinction between how (and how much) centralized power is acquired and maintained.

    Communism supposedly proceeds from a radical egalitarianism that allows all citizens equal material assets, and elects government on the basis of a planned economy according to this investment. Private property in effect is excluded.

    Fascism on the other hand, proceeds from an implicit elitism that allows that those with the most wealth and possessions deserve the greatest say in government (that government can hardly resist, as a principle of democracy, not to say good business). Private property in effect is all there is.

    Fascism derives its authority from inherited assets, including religion. Communism, from faith in the ideal of material equality that denies inheritance.

    Both see their position as constantly threatened by the prospect of the other and resort to extremes to’ defend’ themselves. So, both end up intensely repressive, flaunting their own laws in order to defend the same laws. And as we know, absolute power corrupts, absolutely. Neither system works for long.

    The Amerikan government is always right wing, its whole history is intensely imperialist, racist and hostile to rivals or options. It’s essentially insecure, because it’s built on a string of lies, theft and purchasing power. Its whole idea of competition or trade is built on manipulation, tyranny and threat. No wonder they’re such bad sports! No wonder they have to keep intoning how great Amerika is, beseeching God for blessing!

    With the collapse of the USSR, it has only reeled further that way, to the point of collapse, a bit like a tug-of-war team that defeats its opponent, only to reel backwards as its opponents surrender their grip. Suddenly it wins – but whoops! – absolute power…

    There is no distinction between a so-called ‘free’ economy and the system of government that profits by it. There is no enterprise without coercion and conspiracy. This is what business means. Stacy wonders about kickbacks between politicians and business but the favours are not always that crude. It’s all about being on the right team, making the tribe, one of the cool guys, you know? Many are cold but few are frozen. Take a good hard look at your leaders in finance and industry – never mind the puppets in government.

    They’re looking after their own, are you?

    To draw some fanciful line between a ‘centralised’ government and a central government is to bury your head in the sand. Amerikans can’t even distinguish communism from socialism – anything less than total privacy in property is deeply suspicious for them. They can scarcely tolerate the idea of trade unions, without this too becoming an arm of big business, a load of teamsters secretly in the pay of a business rival. And you think this is not Fascism? Even Gandhi joked about Amerika’s implicit fascism.

    You have no idea what a left wing government looks like because right-wing hysteria constantly reassures you that anything other than fascism is a reckless deviation from the centre. But your middle-of-the-road is measured only by the fears of bullies and tyrants, only by business plans for those not in the loop. Make that noose.

  32. T.P. says:

    Yes the voters are also to be blamed. Most politicians who are elected, it is obvious that they do the wrong thing. But most people don’t care, as long as they get their share of the loot (people who work for the state, pensioners, financial industry, …). What can you do when most people are idiots and assholes? Nothing.

  33. harry_w says:

    The Pravda article is tongue in cheek, actually written from a very American conception of Marxism as simply equating to totalitarian state control.

    Marxism and capitalism and other economic systems analysis all tend to revolve around the control and ownership of the means of production of wealth — essentially whether it’s in the hands of the workers who produce, or private capitalists who profit from ‘surplus value’ created by workers.

    In the Russian context, Lenin and Trotsky had their own ideas about how workers would be represented: Bolsheviks, as a self-appointed ‘vanguard’ of the working class, liquidated private ownership but seized it for the all-powerful party which operated a totalitarian state which terrorised the people.

    The Pravda piece is just the same as hundreds of American accusations since TARP that bailouts to bankers and private capital amount to ‘socialism’. It’s based on a misconception widely cultivated in their media which equates socialism with any state intervention in some ‘free’ market which is supposed to exist.

    The financial capitalist class — who gained most from the debt-bubble they created — were on the verge of being bankrupted when the bubble burst. All their leveraged speculation was on the wrong side of the market when it turned. So 95% of the ‘free’ market capitalist ideologues instantly abandoned ideals of ‘creative destruction’ taken from their idols like Schumpeter.

    Suddenly those who’d always argued for a ‘free’ market argued that it was up to the state to ensure that private investments in the debt-bubble would be tranferred to the state. The ownership, control and profits of these enterprises must remain private, but if they ever make serious losses it has to be paid off by future taxation on workers, and by debasing the value of workers’ wages/savings/pensions.

    That’s not capitalism, Marxism, or socialism — it’s corporatism. The state serves the interests of a capitalist oligarchy dominated by finance; managing the economy to ensure that workers generate a profit for their oligarch patrons in the good times, and pick up the bill for their losses in the bad times.

    “Fascism should more appropriately be called corporatism because it is the merger of state and corporate power.”
    Benito Mussolini

    State ownership is only tolerated for as long as the losses come in, once profits can be made, ownership must be returned to the oligarchs, and it will be. The rest of us just work, get taxed and get fleeced for them, to me that’s financial corporatism.

    Marx already explained derivatives as fictitious wealth on the back of asset price bubbles, and the inevitability of collapse at the turn of the business cycle. He even dealt with the insanity and injustice a central bank bailing out speculators:

    Capital Vol. III Part V
    Chapter 30. Money-Capital and Real Capital. I.
    “In a system of production, where the entire continuity of the reproduction process rests upon credit, a crisis must obviously occur — a tremendous rush for means of payment — when credit suddenly ceases and only cash payments have validity. At first glance, therefore, the whole crisis seems to be merely a credit and money crisis. … the same time, an enormous quantity of these bills of exchange represents plain swindle, which now reaches the light of day and collapses; furthermore, unsuccessful speculation with the capital of other people; finally, commodity-capital which has depreciated or is completely unsaleable, or returns that can never more be realised again. The entire artificial system of forced expansion of the reproduction process cannot, of course, be remedied by having some bank, like the Bank of England, give to all the swindlers the deficient capital by means of its paper and having it buy up all the depreciated commodities at their old nominal values. Incidentally, everything here appears distorted, since in this paper world, the real price and its real basis appear nowhere, but only bullion, metal coin, notes, bills of exchange, securities. Particularly in centres where the entire money business of the country is concentrated, like London, does this distortion become apparent; the entire process becomes incomprehensible; it is less so in centres of production.”
    —————————
    Little wonder that the cultivated misconception of socialism and especially Marxism is perpetuated in the US mass media and education: He was so right about the debt-bubble we’ve experienced, how it arose in the transfer of wealth from worker to finance capitalists, and after the collapse the political reaction to bailout the speculators. [He even dealt with the Schiff myth of de-coupling as it would effect both net importers/debtors and exporters/creditors.]

  34. Gordo says:

    @Gerry

    Thanks for that great explanation. The only thing that I would add is that the current administration in completely terrified of seeming socialist or on the left. This fear is preventing them from doing the right thing with the banks (declaring them bankrupt), thus they risk every thing in the process, by continuing on this path.

  35. harry_w says:

    David Brooks at the New York Times welcomed corporatism for the financial elite under TARP:

    The New York Times:
    The Establishment Lives!
    By DAVID BROOKS
    Published: September 22, 2008
    “…Over the next few years, the U.S. will have to climb out from under mountainous piles of debt. Many predict a long, gray recession. The country will not turn to free-market supply-siders. Nor will it turn to left-wing populists. It will turn to the safe heads from the investment banks. For Republicans, people like Paulson. For Democrats, the guiding lights will be those establishment figures who advised Barack Obama last week — including Volcker, Robert Rubin and Warren Buffett. …

    “The government will be much more active in economic management (pleasing a certain sort of establishment Democrat). Government activism will provide support to corporations, banks and business and will be used to shore up the stable conditions they need to thrive (pleasing a certain sort of establishment Republican). Tax revenues from business activities will pay for progressive but business-friendly causes — investments in green technology, health care reform, infrastructure spending, education reform and scientific research.

    “If you wanted to devise a name for this approach, you might pick the phrase economist Arnold Kling has used: Progressive Corporatism. We’re not entering a phase in which government stands back and lets the chips fall. We’re not entering an era when the government pounds the powerful on behalf of the people. We’re entering an era of the educated establishment, in which government acts to create a stable — and often oligarchic — framework for capitalist endeavor. …”
    ——————————–
    Brooks then railed against elected representatives who didn’t bow down to their leaders and the wisdom of the Treasury/Fed to grant a mandate for corporatism and restore the authority of financial markets:

    Revolt of the Nihilists
    By DAVID BROOKS
    Published: September 29, 2008
    “…And let us recognize above all the 228 who voted no — the authors of this revolt of the nihilists. They showed the world how much they detest their own leaders and the collected expertise of the Treasury and Fed. …

    “…The Congressional plan was nobody’s darling, but it was an effort to assert some authority. It was an effort to alter the psychology of the markets. People don’t trust the banks; the bankers don’t trust each other. It was an effort to address the crisis of authority in Washington. …

    “But the 228 House members who voted no have exacerbated the global psychological free fall, and now we have a crisis of political authority on top of the crisis of financial authority.

    The only thing now is to try again — to rescue the rescue. There’s no time to find a brand-new package, so the Congressional plan should go up for another vote on Thursday, this time with additions that would change its political prospects. Leaders need to add provisions that would shore up housing prices and directly help mortgage holders. …
    —————————————
    He was right, a few scraps for the state to fix the ‘market’ in housing and grant some state aid to mortgage debtors allowed fully fledged financial corporatism to pass in Congress.

    This is how the plight of those now trapped in debt after the bubble burst can be used to the advantage of the financial oligarchy which only profits from their misery. Zombie bankers have an army of zombie debt slaves to call upon when they want to exercise political influence.

    Yet, Brooks then argues that those outside of finance must not be protected, they have to be exposed to the ravages of ‘creative destruction’ and live in a ‘dynamic’ economy (Schumpeter used as an idol):

    Bailout to Nowhere
    By DAVID BROOKS
    Published: November 18, 2008
    “… This is a different sort of endeavor than the $750 billion bailout of Wall Street. That money was used to save the financial system itself. It was used to save the capital markets on which the process of creative destruction depends.

    “Granting immortality to Detroit’s Big Three does not enhance creative destruction. It retards it. … It is not about saving a system; there will still be cars made and sold in America. It is about saving politically powerful corporations. …

    “But the larger principle is over the nature of America’s political system. Is this country going to slide into progressive corporatism, a merger of corporate and federal power that will inevitably stifle competition, empower corporate and federal bureaucrats and protect entrenched interests? Or is the U.S. going to stick with its historic model: Helping workers weather the storms of a dynamic economy, but preserving the dynamism that is the core of the country’s success. ”
    ————————————
    Or, actually helping the financial elite not workers, and preserving an stagnant oligarchy in control of the core of the country’s economy and politics.

    The internal contradictions within both the Soviet and US systems resulted in their collapse, first when the Berlin Wall collapsed in 1989, then when the US openly embraced corporatism in the financial crash of 2008.

    They increasingly resemble one another, not because they’re tainted by either free market capitalism or socialism, but because of they’ve both adopted financial corporatism to serve their oligarchic elites; those who dominate their finance, politics, media, and economies.

  36. Mark W Anderson says:

    In the May 29th issue of the New York Times Nobel prize winning economist and columnist Paul Krugman (Who recently was christened the “Loyal Opposition” to the Obama administration by Newsweek magazine) wrote that in the US inflation worries are a distraction and that the real threat is deflation and the collapse of the debt based system ala, the great Depression. I wonder if Max could address this issue which, to me, is somewhat perplexing. I mean is Krugman daffy or what?

  37. Don says:

    @Stacy

    I believe that if 90% of the tax payers were aware of the situation as apposed to 1%- 10%, then, the system and all of it’s corrupt little piggies would be off to the slaughter house. For example, if the troops that were sent to Iraq all knew that their own gov. sold them out on a bogus cause they would turn their guns on their bosses.

    If the American people figured out the connection between the end of prohibition of alcohol (1933) the law passe don Americans making it illegal to own gold (1933) and the introduction of a “temporary” income tax to bring an end to the great depression (1933), then I think that the vast majority would riot their asses all the way to D.C.

    The gov. on behalf of the Federal Reserve stole our gold, issued taxes and gave us booze to easy the pain and make us forget.

  38. Don says:

    Typo:

    “The law passed on Americans…”

  39. Don says:

    In addition to my earlier rant:

    Hitler also took power of Germany in 1933. Looks like 1933 was the best year ever for fascism.

  40. Gerry says:

    @ harry_w

    Totally agree with all of your above.

  41. stacyherbert says:

    @Don – ignorance is bliss for American oligarchy; by the way, you should see the UK! It’s like Gin Lane. People are severely inebriated almost every night from 5 or 6 pm in any town center. Especially once Tony Blair’s housing bubble (which he missed) took off. Every year from about 1999/2000 they got drunker, and every year they woke up hung over and with one less civil liberty.

    @Youri – thanks for that Denninger piece. He is good at explaining the mechanics of what happened.

    @littlehorn – 40mb is smallish for a one hour podcast; I compressed it to 96k rather than the usual 128 which makes the file 54mb; If you go to the Archive.org link, however, they offer smaller versions of the file if 40mb is too big

  42. harry_w says:

    Thx Gerry. I hope you mean everything except my awful grammar. :)

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