World Bank says don't take dollar's place for granted

World Bank says don't take dollar's place for granted

Sun Sep 27, 2:18 pm ET WASHINGTON (Reuters) – World Bank President Robert Zoellick said the United States should not take the dollar's status as the world's key reserve currency for granted because other options are emerging.

In excerpts released on Sunday from a speech that he is to deliver on Monday, Zoellick said global economic forces were shifting and it was time now to prepare for the fact that growth will come from multiple sources.

"The United States would be mistaken to take for granted the dollar's place as the world's predominant reserve currency," he said. "Looking forward, there will increasingly be other options."

Zoellick said that a meeting of Group of 20 rich and developing countries in Pittsburgh on Thursday and Friday had made "a good start" toward increased global cooperation but they will have accept global monitoring of their activities.

"Peer review will need to be peer pressure," he said.

Zoellick said that the G20, as the new chief forum for international economic cooperation, also must not forget the 160 countries left outside its structure and should try to open opportunity for them.

"We need a system of international political economy that reflects a new multi-polarity of growth," Zoellick said. It needs to integrate rising economic powers as 'responsible stakeholders' while recognizing that these countries are still home to hundreds of millions of poor and face staggering challenges of development.".

THE GREAT AMERICAN BUBBLE MACHINE - By MATT TAIBBI - Rolling Stone (Current Issue, July (9-23) 2009) - and two other articles by Matt Taibbi

THE GREAT AMERICAN BUBBLE MACHINE - By MATT TAIBBI - Rolling Stone (Current Issue, July (9-23) 2009) - and two other articles by Matt Taibbi.

"It's a gangster state, running on gangster economics, and even prices can't be trusted anymore; there are hidden taxes in every buck you pay"


THE GREAT AMERICAN BUBBLE MACHINE

From tech stocks to high gas prices, Goldman Sachs has engineered every major market manipulation since the Great Depression - and they're about to do it again


By MATT TAIBBI


The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. In fact, the history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled-dry American empire, reads like a Who's Who of Goldman Sachs graduates.

By now, most of us know the major players. As George Bush's last Treasury secretary, former Goldman CEO Henry Paulson was the architect of the bailout, a suspiciously self-serving plan to funnel trillions of Your Dollars to a handful of his old friends on Wall Street. Robert Rubin, Bill Clinton's former Treasury secretary, spent 26 years at Goldman before becoming chairman of Citigroup - which in turn got a $300 billion taxpayer bailout from Paulson. There's John Thain, the rear end in a top hat chief of Merrill Lynch who bought an $87,000 area rug for his office as his company was imploding; a former Goldman banker, Thain enjoyed a multibillion-dollar handout from Paulson, who used billions in taxpayer funds to help Bank of America rescue Thain's sorry company. And Robert Steel, the former Goldmanite head of Wachovia, scored himself and his fellow executives $225 million in golden parachute payments as his bank was self-destructing. There's Joshua Bolten, Bush's chief of staff during the bailout, and Mark Patterson, the current Treasury chief of staff, who was a Goldman lobbyist just a year ago, and Ed Liddy, the former Goldman director whom Paulson put in charge of bailed-out insurance giant AIG, which forked over $13 billion to Goldman after Liddy came on board. The heads of the Canadian and Italian national banks are Goldman alums, as is the head of the World Bank, the head of the New York Stock Exchange, the last two heads of the Federal Reserve Bank of New York - which, incidentally, is now in charge of overseeing Goldman - not to mention ...

But then, any attempt to construct a narrative around all the former Goldmanites in influential positions quickly becomes an absurd and pointless exercise, like trying to make a list of everything. What you need to know is the big picture: If America is circling the drain, Goldman Sachs has found a way to be that drain - an extremely unfortunate loophole in the system of Western democratic capitalism, which never foresaw that in a society governed passively by free markets and free elections, organized greed always defeats disorganized democracy.

The bank's unprecedented reach and power have enabled it to turn all of America into a giant pump-and-dump scam, manipulating whole economic sectors for years at a time, moving the dice game as this or that market collapses, and all the time gorging itself on the unseen costs that are breaking families everywhere - high gas prices, rising consumer-credit rates, half-eaten pension funds, mass layoffs, future taxes to pay off bailouts. All that money that you're losing, it's going somewhere, and in both a literal and a figurative sense, Goldman Sachs is where it's going: The bank is a huge, highly sophisticated engine for converting the useful, deployed wealth of society into the least useful, most wasteful and insoluble substance on Earth - pure profit for rich individuals.

They achieve this using the same playbook over and over again. The formula is relatively simple: Goldman positions itself in the middle of a speculative bubble, selling investments they know are crap. Then they hoover up vast sums from the middle and lower floors of society with the aid of a crippled and corrupt state that allows it to rewrite the rules in exchange for the relative pennies the bank throws at political patronage. Finally, when it all goes bust, leaving millions of ordinary citizens broke and starving, they begin the entire process over again, riding in to rescue us all by lending us back our own money at interest, selling themselves as men above greed, just a bunch of really smart guys keeping the wheels greased. They've been pulling this same stunt over and over since the 1920s - and now they're preparing to do it again, creating what may be the biggest and most audacious bubble yet. ...

IF AMERICA IS NOW CIRCLING THE DRAIN, GOLDMAN SACHS HAS FOUND A WAY TO BE THAT DRAIN..

BUBBLE #1 - THE GREAT DEPRESSION
Goldman wasn't always a too-big-to-fail Wall Street behemoth, the ruthless face of kill-or-be-killed capitalism on steroids - just almost always. The bank was actually founded in 1869 by a German immigrant named Marcus Goldman, who built it up with his son-in-law Samuel Sachs. They were pioneers in the use of commercial paper, which is just a fancy way of saying they made money lending out short-term IOUs to small-time vendors in downtown Manhattan.

You can probably guess the basic plotline of Goldman's first 100 years in business: plucky, immigrant-led investment bank beats the odds, pulls itself up by its bootstraps, makes shitloads of money. In that ancient history there's really only one episode that bears scrutiny now, in light of more recent events: Goldman's disastrous foray into the speculative mania of pre-crash Wall Street in the late 1920s.

This great Hindenburg of financial history has a few features that might sound familiar. Back then, the main financial tool used to bilk investors was called an "investment trust." Similar to modern mutual funds, the trusts took the cash of investors large and small and (theoretically, at least) invested it in a smorgasbord of Wall Street securities, though the securities and amounts were often kept hidden from the public. So a regular guy could invest $10 or $100 in a trust and feel like he was a big player. Much as in the 1990s, when new vehicles like day trading and e-trading attracted reams of new suckers from the sticks who wanted to feel like big shots, investment trusts roped a new generation of regular-guy investors into the speculation game.

Beginning a pattern that would repeat itself over and over again, Goldman got into the investment-trust game late, then jumped in with both feet and went hog-wild. The first effort was the Goldman Sachs Trading Corporation; the bank issued a million shares at $100 apiece, bought all those shares with its own money and then sold 90 percent of them to the hungry public at $104. The trading corporation then relentlessly bought shares in itself, bidding the price up further and further. Eventually it dumped part of its holdings and sponsored a new trust, the Shenandoah Corporation, issuing millions more in shares in that fund - which in turn sponsored yet another trust called the Blue Ridge Corporation. In this way, each investment trust served as a front for an endless investment pyramid: Goldman hiding behind Goldman hiding behind Goldman. Of the 7,250,000 initial shares of Blue Ridge, 6,250,000 were actually owned by Shenandoah - which, of course, was in large part owned by Goldman Trading.

The end result (ask yourself if this sounds familiar) was a daisy chain of borrowed money, one exquisitely vulnerable to a decline in performance anywhere along the line ....

BUBBLE #2 - TECH STOCKS
Fast-Forward about 65 years. Goldman not only survived the crash that wiped out so many of the investors it duped, it went on to become the chief underwriter to the country's wealthiest and most powerful corporations. Thanks to Sidney Weinberg, who rose from the rank of janitor's assistant to head the firm, Goldman became the pioneer of the initial public offering, one of the principal and most lucrative means by which companies raise money. During the 1970s and 1980s, Goldman may not have been the planet-eating Death Star of political influence it is today, but it was a top-drawer firm that had a reputation for attracting the very smartest talent on the Street.

It also, oddly enough, had a reputation for relatively solid ethics and a patient approach to investment that shunned the fast buck; its executives were trained to adopt the firm's mantra, "long-term greedy." One former Goldman banker who left the firm in the early Nineties recalls seeing his superiors give up a very profitable deal on the grounds that it was a long-term loser. "We gave back money to 'grownup' corporate clients who had made bad deals with us," he says. "Everything we did was legal and fair - but 'long-term greedy' said we didn't want to make such a profit at the clients' collective expense that we spoiled the marketplace." ...

But then, something happened. It's hard to say what it was exactly; it might have been the fact that Goldman's co-chairman in the early Nineties, Robert Rubin, followed Bill Clinton to the White House, where he directed the National Economic Council and eventually became Treasury secretary. ...

Rubin was the prototypical Goldman banker. He was probably born in a $4,000 suit, he had a face that seemed permanently frozen just short of an apology for being so much smarter than you, and he exuded a Spock-like, emotion-neutral exterior; the only human feeling you could imagine him experiencing was a nightmare about being forced to fly coach. It became almost a national cliche that whatever Rubin thought was best for the economy - a phenomenon that reached its apex in 1999, when Rubin appeared on the cover of Time with his Treasury deputy, Larry Summers, and Fed chief Alan Greenspan under the headline THE COMMITTEE TO SAVE THE WORLD. And "what Rubin thought," mostly, was that the American economy, and in particular the financial markets, were over-regulated and needed to be set free. ...

The basic scam in the Internet Age is pretty easy even for the financially illiterate to grasp. Companies that weren't much more than pot-fueled ideas scrawled on napkins by up-too-late bong-smokers were taken public via IPOs, hyped in the media and sold to the public for megamillions. It was as if banks like Goldman were wrapping ribbons around watermelons, tossing them out 50-story windows and opening the phones for bids. In this game you were a winner only if you took your money out before the melon hit the pavement.

It sounds obvious now, but what the average investor didn't know at the time was that the banks had changed the rules of the game, making the deals look better than they actually were. They did this by setting up what was, in reality, a two-tiered investment system - one for the insiders who knew the real numbers, and another for the lay investor who was invited to chase soaring prices the banks themselves knew were irrational. While Goldman's later pattern would be to capitalize on changes in the regulatory environment, its key innovation in the Internet years was to abandon its own industry's standards of quality control.

"Since the Depression, there were strict underwriting guidelines that Wall Street adhered to when taking a company public," says one prominent hedge-fund manager. "The company had to be in business for a minimum of five years, and it had to show profitability for three consecutive years. But Wall Street took these guidelines and threw them in the trash." Goldman completed the snow job by pumping up the sham stocks: "Their analysts were out there saying Bullshit.com is worth $100 a share."

The problem was, nobody told investors that the rules had changed. "Everyone on the inside knew," the manager says. "Bob Rubin sure as hell knew what the underwriting standards were. They'd been intact since the 1930s." ...

Goldman has denied that it changed its underwriting standards during the Internet years, but its own statistics belie the claim. Just as it did with the investment trust in the 1920s, Goldman started slow and finished crazy in the Internet years. After it took a little-known company with weak financials called Yahoo! public in 1996, once the tech boom had already begun, Goldman quickly became the IPO king of the Internet era. Of the 24 companies it took public in 1997, a third were losing money at the time of the IPO. In 1999, at the height of the boom, it took 47 companies public, including stillborns like Webvan and eToys, investment offerings that were in many ways the modern equivalents of Blue Ridge and Shenandoah.. The following year, it underwrote 18 companies in the first four months, 14 of which were money losers at the time. As a leading underwriter of Internet stocks during the boom, Goldman provided profits far more volatile than those of its competitors: In 1999, the average Goldman IPO leapt 281 percent above its offering price, compared to the Wall Street average of 181 percent.

How did Goldman achieve such extraordinary results? One answer is that they used a practice called "laddering," which is just a fancy way of saying they manipulated the share price of new offerings. Here's how it works: Say you're Goldman Sachs, and Bullshit.com comes to you and asks you to take their company public. You agree on the usual terms: You'll price the stock, determine how many shares should be released and take the Bullshit.com CEO on a "road show" to schmooze investors, all in exchange for a substantial fee (typically six to seven percent of the amount raised). You then promise your best clients the right to buy big chunks of the IPO at the low offering price - let's say Bullshit.com's starting share price is $15 - in exchange for a promise that they will buy more shares later on the open market. That seemingly simple demand gives you inside knowledge of the IPO's future, knowledge that wasn't disclosed to the day-trader schmucks who only had the prospectus to go by: You know that certain of your clients who bought X amount of shares at $15 are also going to buy Y more shares at $20 or $25, virtually guaranteeing that the price is going to go to $25 and beyond. In this way, Goldman could artificially jack up the new company's price, which of course was to the bank's benefit - a six percent fee of a $500 million IPO is serious money.

Goldman was repeatedly sued by shareholders for engaging in laddering in a variety of Internet IPOs, including Webvan and NetZero. The deceptive practices also caught the attention of Nichol as Maier, the syndicate manager of Cramer & Co., the hedge fund run at the time by the now-famous chattering television rear end in a top hat Jim Cramer, himself a Goldman alum. ...

"Goldman, from what I witnessed, they were the worst perpetrator," Maier said. "They totally fueled the bubble. And it's specifically that kind of behavior that has caused the market crash. They built these stocks upon an illegal foundation - manipulated up - and ultimately, it really was the small person who ended up buying in." In 2005, Goldman agreed to pay $40 million for its laddering violations - a puny penalty relative to the enormous profits it made. (Goldman, which has denied wrongdoing in all of the cases it has settled, refused to respond to questions for this story.)

Another practice Goldman engaged in during the Internet boom was "spinning," better known as bribery. Here the investment bank would offer the executives of the newly public company shares at extra-low prices, in exchange for future underwriting business. Banks that engaged in spinning would then undervalue the initial offering price - ensuring that those "hot" opening price shares it had handed out to insiders would be more likely to rise quickly, supplying bigger first-day rewards for the chosen few. So instead of Bullshit.com opening at $20, the bank would approach the Bullshit.com CEO and offer him a million shares of his own company at $18 in exchange for future business - effectively robbing all of Bullshit's new shareholders by diverting cash that should have gone to the company's bottom line into the private bank account of the company's CEO. ...

Such practices conspired to turn the Internet bubble into one of the greatest financial disasters in world history: Some $5 trillion of wealth was wiped out on the NASDAQ alone. But the real problem wasn't the money that was lost by shareholders, it was the money gained by investment bankers, who received hefty bonuses for tampering with the market. Instead of teaching Wall Street a lesson that bubbles always deflate, the Internet years demonstrated to bankers that in the age of freely flowing capital and publicly owned financial companies, bubbles are incredibly easy to inflate, and individual bonuses are actually bigger when the mania and the irrationality are greater.

GOLDMAN SCAMMED HOUSING INVESTORS BY BETTING AGAINST ITS OWN CRAPPY MORTGAGES.

Nowhere was this truer than at Goldman. Between 1999 and 2002, the firm paid out $28.5 billion in compensation and benefits - an average of roughly $350,000 a year per employee. Those numbers are important because the key legacy of the Internet boom is that the economy is now driven in large part by the pursuit of the enormous salaries and bonuses that such bubbles make possible. Goldman's mantra of "long-term greedy" vanished into thin air as the game became about getting your check before the melon hit the pavement.

The market was no longer a rationally managed place to grow real, profitable businesses: It was a huge ocean of Someone Else's Money where bankers hauled in vast sums through whatever means necessary and tried to convert that money into bonuses and payouts as quickly as possible. If you laddered and spun 50 Internet IPOs that went bust within a year, so what? By the time the Securities and Exchange Commission got around to fining your firm $110 million, the yacht you bought with your IPO bonuses was already six years old. Besides, you were probably out of Goldman by then, running the U.S. Treasury or maybe the state of New Jersey. (One of the truly comic moments in the history of America's recent financial collapse came when Gov. Jon Corzine of New Jersey, who ran Goldman from 1994 to 1999 and left with $320 million in IPO-fattened stock, insisted in 2002 that "I've never even heard the term 'laddering' before.")

For a bank that paid out $7 billion a year in salaries, $110 million fines issued half a decade late were something far less than a deterrent - they were a joke. Once the Internet bubble burst, Goldman had no incentive to reassess its new, profit-driven strategy; it just searched around for another bubble to inflate. As it turns out, it had one ready, thanks in large part to Rubin.

BUBBLE #3 - THE HOUSING CRAZE
Goldman's role in the sweeping disaster that was the housing bubble is not hard to trace. Here again, the basic trick was a decline in underwriting standards, although in this case the standards weren't in IPOs but in mortgages. ...

None of that would have been possible without investment bankers like Goldman, who created vehicles to package those lovely mortgages and sell them en masse to unsuspecting insurance companies and pension funds. This created a mass market for toxic debt that would never have existed before; in the old days, no bank would have wanted to keep some addict ex-con's mortgage on its books, knowing how likely it was to fail. You can't write these mortgages, in other words, unless you can sell them to someone who doesn't know what they are..

Goldman used two methods to hide the mess they were selling. First, they bundled hundreds of different mortgages into instruments called Collateralized Debt Obligations. Then they sold investors on the idea that, because a bunch of those mortgages would turn out to be OK, there was no reason to worry so much about the lovely ones: The CDO, as a whole, was sound. Thus, junk-rated mortgages were turned into AAA-rated investments. Second, to hedge its own bets, Goldman got companies like AIG to provide insurance - known as credit-default swaps - on the CDOs. The swaps were essentially a racetrack bet between AIG and Goldman: Goldman is betting the ex-cons will default, AIG is betting they won't.

There was only one problem with the deals: All of the wheeling and dealing represented exactly the kind of dangerous speculation that federal regulators are supposed to rein in. Derivatives like CDOs and credit swaps had already caused a series of serious financial calamities: Procter & Gamble and Gibson Greetings both lost fortunes, and Orange County, California, was forced to default in 1994. A report that year by the Government Accountability Office recommended that such financial instruments be tightly regulated - and in 1998, the head of the Commodity Futures Trading Commission, a woman named Brooksley Born, agreed. That May, she circulated a letter to business leaders and the Clinton administration suggesting that banks be required to provide greater disclosure in derivatives trades, and maintain reserves to cushion against losses. ...

Clinton's reigning economic foursome - "especially Rubin," according to Greenberger - called Born in for a meeting and pleaded their case. She refused to back down, however, and continued to push for more regulation of the derivatives. Then, in June 1998, Rubin went public to denounce her move, eventually recommending that Congress strip the CFTC of its regulatory authority. In 2000, on its last day in session, Congress passed the now-notorious Commodity Futures Modernization Act, which had been inserted into an 1l,000-page spending bill at the last minute, with almost no debate on the floor of the Senate. Banks were now free to trade default swaps with impunity.

But the story didn't end there. AIG, a major purveyor of default swaps, approached the New York State Insurance Department in 2000 and asked whether default swaps would be regulated as insurance. At the time, the office was run by one Neil Levin, a former Goldman vice president, who decided against regulating the swaps. Now freed to underwrite as many housing-based securities and buy as much credit-default protection as it wanted, Goldman went berserk with lending lust. By the peak of the housing boom in 2006, Goldman was underwriting $76.5 billion worth of mortgage-backed securities - a third of which were subprime - much of it to institutional investors like pensions and insurance companies. And in these massive issues of real estate were vast swamps of crap.

Take one $494 million issue that year, GSAMP Trust 2006-S3. Many of the mortgages belonged to second-mortgage borrowers, and the average equity they had in their homes was 0.71 percent. Moreover, 58 percent of the loans included little or no documentation - no names of the borrowers, no addresses of the homes, just zip codes. Yet both of the major ratings agencies, Moody's and Standard & Poor's, rated 93 percent of the issue as investment grade. Moody's projected that less than 10 percent of the loans would default. In reality, 18 percent of the mortgages were in default within 18 months.

Not that Goldman was personally at any risk. The bank might be taking all these hideous, completely irresponsible mortgages from beneath-gangster-status firms like Countrywide and selling them off to municipalities and pensioners - old people, for God's sake - pretending the whole time that it wasn't grade-D horseshit. But even as it was doing so, it was taking short positions in the same market, in essence betting against the same crap it was selling. Even worse, Goldman bragged about it in public. "The mortgage sector continues to be challenged," David Viniar, the bank's chief financial officer, boasted in 2007. "As a result, we took significant markdowns on our long inventory positions .... However, our risk bias in that market was to be short, and that net short position was profitable." In other words, the mortgages it was selling were for chumps. The real money was in betting against those same mortgages.

"That's how audacious these assholes are," says one hedge-fund manager. "At least with other banks, you could say that they were just dumb - they believed what they were selling, and it blew them up. Goldman knew what it was doing." I ask the manager how it could be that selling something to customers that you're actually betting against - particularly when you know more about the weaknesses of those products than the customer - doesn't amount to securities fraud.

"It's exactly securities fraud," he says. "It's the heart of securities fraud."

Eventually, lots of aggrieved investors agreed. In a virtual repeat of the Internet IPO craze, Goldman was hit with a wave of lawsuits after the collapse of the housing bubble, many of which accused the bank of withholding pertinent information about the quality of the mortgages it issued. .... But once again, Goldman got off virtually scot-free, staving off prosecution by agreeing to pay a paltry $60 million - about what the bank's CDO division made in a day and a half during the real estate boom.

The effects of the housing bubble are well known - it led more or less directly to the collapse of Bear Stearns, Lehman Brothers and AIG, whose toxic portfolio of credit swaps was in significant part composed of the insurance that banks like Goldman bought against their own housing portfolios. In fact, at least $13 billion of the taxpayer money given to AIG in the bailout ultimately went to Goldman, meaning that the bank made out on the housing bubble twice: It hosed the investors who bought their horseshit CDOs by betting against its own crappy product, then it turned around and hosed the taxpayer by making him payoff those same bets.

And once again, while the world was crashing down all around the bank, Goldman made sure it was doing just fine in the compensation department. In 2006, the firm's payroll jumped to $16.5 billion - an average of $622,000 per employee. As a Goldman spokesman explained, "We work very hard here."

But the best was yet to come. While the collapse of the housing bubble sent most of the financial world fleeing for the exits, or to jail, Goldman boldly doubled down - and almost single-handedly created yet another bubble, one the world still barely knows the firm had anything to do with.

BUBBLE #4 - $4 A GALLON
By the beginning of 2008, the financial world was in turmoil. Wall Street had spent the past two and a half decades producing one scandal after another, which didn't leave much to sell that wasn't tainted. The terms junk bond, IPO, subprime mortgage and other once-hot financial fare were now firmly associated in the public's mind with scams; the terms credit swaps and CDOs were about to join them. The credit markets were in crisis, and the mantra that had sustained the fantasy economy throughout the Bush years - the notion that housing prices never go down - was now a fully exploded myth, leaving the Street clamoring for a new bullshit paradigm to sling.

Where to go? With the public reluctant to put money in anything that felt like a paper investment, the Street quietly moved the casino to the physical-commodities market - stuff you could touch: corn, coffee, cocoa, wheat and, above all, energy commodities, especially oil. In conjunction with a decline in the dollar, the credit crunch and the housing crash caused a "flight to commodities." Oil futures in particular skyrocketed, as the price of a single barrel went from around $60 in the middle of 2007 to a high of $147 in the summer of 2008.

That summer, as the presidential campaign heated up, the accepted explanation for why gasoline had hit $4.11 a gallon was that there was a problem with the world oil supply. In a classic example of how Republicans and Democrats respond to crises by engaging in fierce exchanges of moronic irrelevancies, John McCain insisted that ending the moratorium on offshore drilling would be "very helpful in the short term," while Barack Obama in typical liberal-arts yuppie style argued that federal investment in hybrid cars was the way out.

GOLDMAN TURNED A SLEEPY OIL MARKET INTO A GIANT BETTING PARLOR - SPIKING PRICES AT THE PUMP.

But it was all a lie. While the global supply of oil will eventually dry up, the short-term flow has actually been increasing. In the six months before prices spiked, according to the U.S. Energy Information Administration, the world oil supply rose from 85.24 million barrels a day to 85.72 million. Over the same period, world oil demand dropped from 86.82 million barrels a day to 86.07 million. Not only was the short-term supply of oil rising, the demand for it was falling - which, in classic economic terms, should have brought prices at the pump down.

So what caused the huge spike in oil prices? Take a wild guess. Obviously Goldman had help - there were other players in the physical-commodities market - but the root cause had almost everything to do with the behavior of a few powerful actors determined to turn the once-solid market into a speculative casino. Goldman did it by persuading pension funds and other large institutional investors to invest in oil futures - agreeing to buy oil at a certain price on a fixed date. The push transformed oil from a physical commodity, rigidly subject to supply and demand, into something to bet on, like a stock. Between 2003 and 2008, the amount of speculative money in commodities grew from $13 billion to $317 billion, an increase of 2,300 percent. By 2008, a barrel of oil was traded 27 times, on average, before it was actually delivered and consumed.

As is so often the case, there had been a Depression-era law in place designed specifically to prevent this sort of thing. ... In 1936, Congress recognized that there should never be more speculators in the market than real producers and consumers. If that happened, prices would be affected by something other than supply and demand, and price manipulations would ensue. A new law empowered the Commodity Futures Trading Commission - the very same body that would later try and fail to regulate credit swaps - to place limits on speculative trades in commodities. As a result of the CFTC's oversight, peace and harmony reigned in the commodities markets for more than 50 years.

All that changed in 1991 when, unbeknownst to almost everyone in the world, a Goldman-owned commodities-trading subsidiary called J. Aron wrote to the CFTC and made an unusual argument. Farmers with big stores of corn, Goldman argued, weren't the only ones who needed to hedge their risk against future price drops - Wall Street dealers who made big bets on oil prices also needed to hedge their risk, because, well, they stood to lose a lot too.

This was complete and utter crap - the 1936 law, remember, was specifically designed to maintain distinctions between people who were buying and selling real tangible stuff and people who were trading in paper alone. But the CFTC, amazingly, bought Goldman's argument. It issued the bank a free pass, called the "Bona Fide Hedging" exemption, allowing Goldman's subsidiary to call itself a physical hedger and escape virtually all limits placed on speculators. In the years that followed, the commission would quietly issue 14 similar exemptions to other companies.

Now Goldman and other banks were free to drive more investors into the commodities markets, enabling speculators to place increasingly big bets. That 1991 letter from Goldman more or less directly led to the oil bubble in 2008, when the number of speculators in the market - driven there by fear of the falling dollar and the housing crash - finally overwhelmed the real physical suppliers and consumers. By 2008, at least three quarters of the activity on the commodity exchanges was speculative, according to a congressional staffer who studied the numbers - and that's likely a conservative estimate. By the middle of last summer, despite rising supply and a drop in demand, we were paying $4 a gallon every time we pulled up to the pump.

What is even more amazing is that the letter to Goldman, along with most of the other trading exemptions, was handed out more or less in secret. "I was the head of the division of trading and markets, and Brooksley Born was the chair of the CFTC," says Greenberger, "and neither of us knew this letter was out there." In fact, the letters only came to light by accident. Last year, a staffer for the House Energy and Commerce Committee just happened to be at a briefing when officials from the CFTC made an offhand reference to the exemptions.

"1 had been invited to a briefing the commission was holding on energy," the staffer recounts. "And suddenly in the middle of it, they start saying, 'Yeah, we've been issuing these letters for years now.' I raised my hand and said, 'Really? You issued a letter? Can I see it?' And they were like, 'Duh, duh.' So we went back and forth, and finally they said, 'We have to clear it with Goldman Sachs.' I'm like, 'What do you mean, you have to clear it with Goldman Sachs?'" ... [I]n a classic example of how complete Goldman's capture of government is, the CFTC waited until it got clearance from the bank before it turned the letter over.

Armed with the semi-secret government exemption, Goldman had become the chief designer of a giant commodities betting parlor. Its Goldman Sachs Commodities Index - which tracks the prices of 24 major commodities but is overwhelmingly weighted toward oil - became the place where pension funds and insurance companies and other institutional investors could make massive long-term bets on commodity prices. Which was all well and good, except for a couple of things. One was that index speculators are mostly "long only" bettors, who seldom if ever take short positions - meaning they only bet on prices to rise. While this kind of behavior is good for a stock market, it's terrible for commodities, because it continually forces prices upward. "If index speculators took short positions as well as long ones, you'd see them pushing prices both up and down," says Michael Masters, a hedge-fund manager who has helped expose the role of investment banks in the manipulation of oil prices. "But they only push prices in one direction: up."

Complicating matters even further was the fact that Goldman itself was cheerleading with all its might for an increase in oil prices. In the beginning of 2008, Arjun Murti, a Goldman analyst, hailed as an "oracle of oil" by The New York Times, predicted a "super spike" in oil prices, forecasting a rise to $200 a barrel. At the time Goldman was heavily invested in oil through its commodities-trading subsidiary, J. Aron; it also owned a stake in a major oil refinery in Kansas, where it warehoused the crude it bought and sold. Even though the supply of oil was keeping pace with demand, Murti continually warned of disruptions to the world oil supply, going so far as to broadcast the fact that he owned two hybrid cars. High prices, the bank insisted, were somehow the fault of the piggish American consumer; in 2005, Goldman analysts insisted that we wouldn't know when oil prices would fall until we knew "when American consumers will stop buying gas-guzzling sport utility vehicles and instead seek fuel-efficient alternatives."

But it wasn't the consumption of real oil that was driving up prices - it was the trade in paper oil. By the summer of2008, in fact, commodities speculators had bought and stockpiled enough oil futures to fill 1.1 billion barrels of crude, which meant that speculators owned more future oil on paper than there was real, physical oil stored in all of the country's commercial storage tanks and the Strategic Petroleum Reserve combined. It was a repeat of both the Internet craze and the housing bubble, when Wall Street jacked up present-day profits by selling suckers shares of a fictional fantasy future of endlessly rising prices.

In what was by now a painfully familiar pattern, the oil-commodities melon hit the pavement hard in the summer of 2008, causing a massive loss of wealth; crude prices plunged from $147 to $33. Once again the big losers were ordinary people. The pensioners whose funds invested in this crap got massacred: CalPERS, the California Public Employees' Retirement System, had $1.1 billion in commodities when the crash came.. And the damage didn't just come from oil. Soaring food prices driven by the commodities bubble led to catastrophes across the planet, forcing an estimated 100 million people into hunger and sparking food riots throughout the Third World. ...

BUBBLE #5 - RIGGING THE BAILOUT
After the oil bubble collapsed last fall, there was no new bubble to keep things humming - this time, the money seems to be really gone, like worldwide-depression gone. So the financial safari has moved elsewhere, and the big game in the hunt has become the only remaining pool of dumb, unguarded capital left to feed upon: taxpayer money. Here, in the biggest bailout in history, is where Goldman Sachs really started to flex its muscle.

It began in September of last year, when then-Treasury secretary Paulson made a momentous series of decisions. Although he had already engineered a rescue of Bear Stearns a few months before and helped bail out quasi-private lenders Fannie Mae and Freddie Mac, Paulson elected to let Lehman Brothers - one of Goldman's last real competitors - collapse without intervention. ("Goldman's superhero status was left intact," says market analyst Eric Salzman, "and an investment-banking competitor, Lehman, goes away.") The very next day, Paulson greenlighted a massive, $85 billion bailout of AIG, which promptly turned around and repaid $13 billion it owed to Goldman. Thanks to the rescue effort, the bank ended up getting paid in full for its bad bets: By contrast, retired auto workers awaiting the Chrysler bailout will be lucky to receive 50 cents for every dollar they are owed.

Immediately after the AIG bailout, Paulson announced his federal bailout for the financial industry, a $700 billion plan called the Troubled Asset Relief Program, and put a heretofore unknown 35-year-old Goldman banker named Neel Kashkari in charge of administering the funds. In order to qualify for bailout monies, Goldman announced that it would convert from an investment bank to a bankholding company, a move that allows it access not only to $10 billion in TARP funds, but to a whole galaxy of less conspicuous, publicly backed funding - most notably, lending from the discount window of the Federal Reserve. By the end of March, the Fed will have lent or guaranteed at least $8.7 trillion under a series of new bailout programs - and thanks to an obscure law allowing the Fed to block most congressional audits, both the amounts and the recipients of the monies remain almost entirely secret.

Converting to a bank-holding company has other benefits as well: Goldman's primary supervisor is now the New York Fed, whose chairman at the time of its announcement was Stephen Friedman, a former co-chairman of Goldman Sachs. Friedman was technically in violation of Federal Reserve policy by remaining on the board of Goldman even as he was supposedly regulating the bank; in order to rectify the problem, he applied for, and got, a conflict-of-interest waiver from the government. Friedman was also supposed to divest himself of his Goldman stock after Goldman became a bank-holding company, but thanks to the waiver, he was allowed to go out and buy 52,000 additional shares in his old bank, leaving him $3 million richer. Friedman stepped down in May, but the man now in charge of supervising Goldman - New York Fed president William Dudley - is yet another former Goldmanite.

The collective message of all this - the AIG bailout, the swift approval for its bank-holding conversion, the TARP funds - is that when it comes to Goldman Sachs, there isn't a free market at all. The government might let other players on the market die, but it simply will not allow Goldman to fail under any circumstances. Its edge in the market has suddenly become an open declaration of supreme privilege. "In the past it was an implicit advantage," says Simon Johnson, an economics professor at MIT and former official at the International Monetary Fund, who compares the bailout to the crony capitalism he has seen in Third World countries. "Now it's more of an explicit advantage." ...

And here's the real punch line. After playing an intimate role in four historic bubble catastrophes, after helping $5 trillion in wealth disappear from the NASDAQ, after pawning off thousands of toxic mortgages on pensioners and cities, after helping to drive the price of gas up to $4 a gallon and to push 100 million people around the world into hunger, after securing tens of billions of taxpayer dollars through a series of bailouts overseen by its former CEO, what did Goldman Sachs give back to the people of the United States in 2008?

Fourteen million dollars.

That is what the firm paid in taxes in 2008, an effective tax rate of exactly one, read it, one percent. The bank paid out $10 billion in compensation and benefits that same year and made a profit of more than $2 billion - yet it paid the Treasury less than a third of what it forked over to CEO Lloyd Blankfein, who made $42.9 million last year.

How is this possible? According to Goldman's annual report, the low taxes are due in large part to changes in the bank's "geographic earnings mix." In other words, the bank moved its money around so that most of its earnings took place in foreign countries with low tax rates. Thanks to our completely hosed corporate tax system, companies like Goldman can ship their revenues offshore and defer taxes on those revenues indefinitely, even while they claim deductions upfront on that same untaxed income. This is why any corporation with an at least occasionally sober accountant can usually find a way to zero out its taxes. A GAO report, in fact, found that between 1998 and 2005, roughly two-thirds of all corporations operating in the U.S. paid no taxes at all.

This should be a pitchfork-level outrage - but somehow, when Goldman released its post-bailout tax profile, hardly anyone said a word. One of the few to remark on the obscenity was Rep. Lloyd Doggett, a Democrat from Texas who serves on the House Ways and Means Committee. "With the right hand out begging for bailout money," he said, "the left is hiding it offshore."

BUBBLE #6 - GLOBAL WARMING
Fast-Forward to today. It's early June in Washington, D.C. Barack Obama, a popular young politician whose leading private campaign donor was an investment bank called Goldman Sachs - its employees paid some $981,000 to his campaign - sits in the White House. Having seamlessly navigated the political minefield of the bailout era, Goldman is once again back to its old business, scouting out loopholes in a new government-created market with the aid of a new set of alumni occupying key government jobs.

AS ENVISIONED BY GOLDMAN, THE FIGHT TO STOP GLOBAL WARMING WILL BECOME A "CARBON MARKET" WORTH $1 TRILLION A YEAR.

Gone are Hank Paulson and Neel Kashkari; in their place are Treasury chief of staff Mark Patterson and CFTC chief Gary Gensler, both former Goldmanites. (Gensler was the firm's co-head of finance) And instead of credit derivatives or oil futures or mortgage-backed CDOs, the new game in town, the next bubble, is in carbon credits - a booming trillion-dollar market that barely even exists yet, but will if the Democratic Party that it gave $4,452,585 to in the last election manages to push into existence a groundbreaking new commodities bubble, disguised as an "environmental plan," called cap-and-trade.

The new carbon-credit market is a virtual repeat of the commodities-market casino that's been kind to Goldman, except it has one delicious new wrinkle: If the plan goes forward as expected, the rise in prices will be government-mandated. Goldman won't even have to rig the game. It will be rigged in advance.

Here's how it works: If the bill passes; there will be limits for coal plants, utilities, natural-gas distributors and numerous other industries on the amount of carbon emissions (a.k.a. greenhouse gases) they can produce per year. If the companies go over their allotment, they will be able to buy "allocations" or credits from other companies that have managed to produce fewer emissions. President Obama conservatively estimates that about $646 billions worth of carbon credits will be auctioned in the first seven years; one of his top economic aides speculates that the real number might be twice or even three times that amount.

The feature of this plan that has special appeal to speculators is that the "cap" on carbon will be continually lowered by the government, which means that carbon credits will become more and more scarce with each passing year. Which means that this is a brand-new commodities market where the main commodity to be traded is guaranteed to rise in price over time. The volume of this new market will be upwards of a trillion dollars annually; for comparison's sake, the annual combined revenues of an electricity suppliers in the U.S. total $320 billion.

Goldman wants this bill. The plan is (1) to get in on the ground floor of paradigm-shifting legislation, (2) make sure that they're the profit-making slice of that paradigm and (3) make sure the slice is a big slice. Goldman started pushing hard for cap-and-trade long ago, but things really ramped up last year when the firm spent $3.5 million to lobby climate issues. (One of their lobbyists at the time was none other than Patterson, now Treasury chief of staff.) Back in 2005, when Hank Paulson was chief of Goldman, he personally helped author the bank's environmental policy, a document that contains some surprising elements for a firm that in all other areas has been consistently opposed to any sort of government regulation. Paulson's report argued that "voluntary action alone cannot solve the climate-change problem." A few years later, the bank's carbon chief, Ken Newcombe, insisted that cap-and-trade alone won't be enough to fix the climate problem and called for further public investments in research and development. Which is convenient, considering that 'Goldman made early investments in wind power (it bought a subsidiary called Horizon Wind Energy), renewable diesel (it is an investor in a firm called Changing World Technologies) and solar power (it partnered with BP Solar), exactly the kind of deals that will prosper if the government forces energy producers to use cleaner energy. As Paulson said at the time, "We're not making those investments to lose money."

The bank owns a 10 percent stake in the Chicago Climate Exchange, where the carbon credits will be traded. Moreover, Goldman owns a minority stake in Blue Source LLC, a Utah-based firm that sells carbon credits of the type that will be in great demand if the bill passes. Nobel Prize winner Al Gore, who is intimately involved with the planning of cap-and-trade, started up a company called Generation Investment Management with three former bigwigs from Goldman Sachs Asset Management, David Blood, Mark Ferguson and Peter Harris. Their business? Investing in carbon offsets. There's also a $500 million Green Growth Fund set up by a Goldmanite to invest in green-tech ... the list goes on and on. Goldman is ahead of the headlines again, just waiting for someone to make it rain in the right spot. Will this market be bigger than the energy-futures market?

"Oh, it'll dwarf it," says a former staffer on the House energy committee. ....

"If it's going to be a tax, I would prefer that Washington set the tax and collect it," says Michael Masters, the hedge fund director who spoke out against oil-futures speculation. "But we're saying that Wall Street can set the tax, and Wall Street can collect the tax. That's the last thing in the world I want. It's just asinine."

Cap-and-trade is going to happen. Or, if it doesn't, something like it will. The moral is the same as for all the other bubbles that Goldman helped create, from 1929 to 2009. In almost every case, the very same bank that behaved recklessly for years, weighing down the system with toxic loans and predatory debt, and accomplishing nothing but massive bonuses for a few bosses, has been rewarded with mountains of virtually free money and government guarantees - while the actual victims in this mess, ordinary taxpayers, are the ones paying for it.

It's not always easy to accept the reality of what we now routinely allow these people to get away with; there's a kind of collective denial that kicks in when a country goes through what America has gone through lately, when a people lose as much prestige and status as we have in the past few years. You can't really register the fact that you're no longer a citizen of a thriving first-world democracy, that you're no longer above getting robbed in broad daylight, because like an amputee, you can still sort of feel things that are no longer there.

But this is it. This is the world we live in now. And in this world, some of us have to play by the rules, while others get a note from the principal excusing them from homework till the end of time, plus 10 billion free dollars in a paper bag to buy lunch. It's a gangster state, running on gangster economics, and even prices can't be trusted anymore; there are hidden taxes in every buck you pay. And maybe we can't stop it, but we should at least know where it's all going.



The Big Takeover
The global economic crisis isn't about money - it's about power. How Wall Street insiders are using the bailout to stage a revolution

It's over — we're officially, royally fucked. No empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline — a corporation that got rich insuring the concrete and steel of American industry in the country's heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.

The latest bailout came as AIG admitted to having just posted the largest quarterly loss in American corporate history — some $61.7 billion. In the final three months of last year, the company lost more than $27 million every hour. That's $465,000 a minute, a yearly income for a median American household every six seconds, roughly $7,750 a second. And all this happened at the end of eight straight years that America devoted to frantically chasing the shadow of a terrorist threat to no avail, eight years spent stopping every citizen at every airport to search every purse, bag, crotch and briefcase for juice boxes and explosive tubes of toothpaste. Yet in the end, our government had no mechanism for searching the balance sheets of companies that held life-or-death power over our society and was unable to spot holes in the national economy the size of Libya (whose entire GDP last year was smaller than AIG's 2008 losses).

So it's time to admit it: We're fools, protagonists in a kind of gruesome comedy about the marriage of greed and stupidity. And the worst part about it is that we're still in denial — we still think this is some kind of unfortunate accident, not something that was created by the group of psychopaths on Wall Street whom we allowed to gang-rape the American Dream. When Geithner announced the new $30 billion bailout, the party line was that poor AIG was just a victim of a lot of shitty luck — bad year for business, you know, what with the financial crisis and all. Edward Liddy, the company's CEO, actually compared it to catching a cold: "The marketplace is a pretty crummy place to be right now," he said. "When the world catches pneumonia, we get it too." In a pathetic attempt at name-dropping, he even whined that AIG was being "consumed by the same issues that are driving house prices down and 401K statements down and Warren Buffet's investment portfolio down."

Liddy made AIG sound like an orphan begging in a soup line, hungry and sick from being left out in someone else's financial weather. He conveniently forgot to mention that AIG had spent more than a decade systematically scheming to evade U.S. and international regulators, or that one of the causes of its "pneumonia" was making colossal, world-sinking $500 billion bets with money it didn't have, in a toxic and completely unregulated derivatives market.

Nor did anyone mention that when AIG finally got up from its seat at the Wall Street casino, broke and busted in the afterdawn light, it owed money all over town — and that a huge chunk of your taxpayer dollars in this particular bailout scam will be going to pay off the other high rollers at its table. Or that this was a casino unique among all casinos, one where middle-class taxpayers cover the bets of billionaires.

People are pissed off about this financial crisis, and about this bailout, but they're not pissed off enough. The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup d'état. They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of the government by a small class of connected insiders, who used money to control elections, buy influence and systematically weaken financial regulations.

The crisis was the coup de grâce: Given virtually free rein over the economy, these same insiders first wrecked the financial world, then cunningly granted themselves nearly unlimited emergency powers to clean up their own mess. And so the gambling-addict leaders of companies like AIG end up not penniless and in jail, but with an Alien-style death grip on the Treasury and the Federal Reserve — "our partners in the government," as Liddy put it with a shockingly casual matter-of-factness after the most recent bailout.

The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron — a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.




Candidates for Sale
What do Obama and McCain have in common? The same big donors, who will expect to have their way no matter who wins

MATT TAIBBI

Posted Aug 21, 2008 9:42 AM

Remember the total, hideous, inexcusable absence of oversight that has been the great hallmark of George Bush's America for almost eight years now? Well, now we're getting to see that same regulatory malfeasance applied to yet another cornerstone of our political system. The Federal Election Commission — the body that supposedly enforces campaign-finance laws in this country — has been out of business for more than six months. That's because Congress was dragging its feet over confirmation hearings for new FEC commissioners, leaving the agency without a quorum. The commission just started work again for the first time on July 10th under its new chairman, Donald McGahn, a classic Republican Party yahoo whose chief qualifications include representing Tom DeLay, the corrupt ex-speaker of the House, in matters of campaign finance.

Apart from the obvious absurdity of not having a functioning election-policing mechanism in an election year in the world's richest democracy, the late start by the FEC makes it almost impossible for the agency to do its job. The commission has a long-standing reluctance to take action in the last months before a vote, a policy designed to help prevent federal regulators from influencing election outcomes. Normally, the FEC tries to root out infractions and loopholes — fining campaigns for incomplete reporting, or for taking shortcuts around spending limits — in the early months of a campaign season. But that ship sailed way too long ago to take the stink off the 2008 race.

"The time for setting the ground rules was earlier," says Craig Holman, a lobbyist with the watchdog group Public Citizen. "There isn't time to do much now."

That's especially true given the magnitude of what we're dealing with here: the biggest pile of political contributions in the history of free elections, nearly a billion dollars given to presidential candidates in this season alone. Because the FEC has been dead in the water for so long, it's likely that we'll still be in the dark about a large chunk of this record manure pile of campaign contributions when we go to vote in November.

But that doesn't mean that a little sifting through campaign records doesn't tell us quite a lot about who's backing whom in these races. The truth is that the campaigns of both Barack Obama and John McCain are being inundated with cash from more or less exactly the same gorgons of the corporate scene. From Wall Street to the Big Oil powerhouses to the military-industrial complex, America's fat-cat business leaders know that the Animal House-style party of the last eight years that made almost all of them rich with bonuses, government contracts and bubble profits is about to come to an end, and someone is going to have to pay to clean up the mess. They want that someone to be you, not them, and they've spared no expense to make sure both presidential candidates will be there to bail them out next year.

They're succeeding. Both would-be presidents have already sold us out. They've taken the money and run — completing the cyclical transformation of the American political narrative from one of monopolistic Republican iniquity to an even more depressing tale about the overweening power of corporate money and the essentially fictitious nature of our two-party system.

In layman's terms, we've gone from being screwed to being fucked. Who knows — maybe Barack Obama will surprise us if he wins the election. But if you look at the money, it doesn't look good.

Thanks in part to the dormant FEC, corporate America has had even easier access to the candidates than usual in its effort to buy off the next government before the crash. In fact, this election has seen some excellent new innovations in the area of campaign-fundraising atrocities. Chief among them is the rise of so-called "joint committees."

It used to be that campaigns could raise a maximum of $2,300 from each individual.. Now, both candidates — but especially McCain, who far outstrips Obama in this area — routinely hold fundraisers in which individuals can give far more to a joint committee. Technically, the candidate still pockets only $2,300 in contributions. The bulk of the money raised — in McCain's case, a whopping $70,100, or 30 times the previous limit — goes to the state and national arms of the candidate's party, which can then spend the unprecedented haul on behalf of the candidate. "This allows CEOs to walk in the door and drop $70,100," says Holman. "It basically allows campaigns to exceed the spending limits."

McCain has raised more than $63 million via these joint committees, thanks to more than 1,000 "megadonors" who have each given at least $25,000 to his campaign effort. Obama, by contrast, has some 471 megadonors — and a close examination of their backgrounds underscores some of the differences in corporate America's attitudes toward the two candidates.

One of McCain's chief sources of corporate money is the private-equity firm Kohlberg Kravis Roberts, memorialized for its takeover of RJR Nabisco in the movie Barbarians at the Gate. Through the pretext of joint committees, 10 KKR executives have given McCain $285,000, and it's not hard to figure out why. Two of McCain's key campaign proposals — lowering the corporate tax rate to 25 percent and making purchases of industrial equipment fully deductible — would save a single KKR subsidiary, Energy Future Holdings, $49 million.

"Just in his tax policies alone, McCain is saving corporate America $175 billion a year," says James Kvaal, who analyzed McCain's tax policy for the nonprofit Center for American Progress.

McCain has also raked in big contributions from two other giants of the buyout world: the Carlyle Group (famous for its close ties to the Bush administration) and the Blackstone Group (whose co-founder, Pete Peterson, wrote a $28,500 check to McCain after he took home almost $1.8 billion from a public offering last year). McCain has also received monstrous sums from hedge-fund managers, attracted by his pledge to keep the tax rate on their earnings at only 15 percent.. Executives and family members in a single hedge fund, Knott Partners, have contributed some $225,700 to McCain's campaign.

Then there's the predictable influx of cash from would-be military contractors. John Lehman, a former secretary of the Navy whose firm builds the Superferry transport vessel, not only donated $28,500 of his own money, but bundled at least $250,000 for McCain from other donors. Donald Bollinger, who is a contractor on the controversial Littoral Combat Ship, gave $27,300 and bundled a whopping $500,000. Anyone want to bet on a decrease in Naval appropriations in a McCain presidency?

McCain has also received big money from telecommunications magnates. The senator has always been a friend to the industry: Back in 2003, just four days after AT&T sent him a check for $10,500, he sponsored a bill to ban state and local taxes on Internet service. Since 2007, McCain has taken in some $1.3 million from the communications industry. Just four members of the McCaw family, which owns the telecommunications firm Eagle River, have kicked in $123,200. McCain's campaign manager, Rick Davis, was a former lobbyist for BellSouth, Verizon and SBC Communications. His deputy campaign manager, Christian Ferry, was a partner to Davis at Verizon. One of his chief advisers, Charlie Black, is the head of the lobbying firm BKSH and Associates, which represents AT&T. His Senate chief of staff, Mark Buse, worked for AT&T Wireless. All told, of 66 current and former lobbyists working for McCain, some 23 come from the telecommunications industry.

Given McCain's telecom backing, it's not surprising that the senator has had one of his characteristic changes of heart. As recently as last November, McCain was staunchly opposed to retroactive immunity for telecommunication companies that took part in Bush's illegal spying on American consumers, saying their actions "undermine our respect for the law." Now, jammed to the gills with telecom cash, McCain calls himself an "unqualified" supporter of immunity, praising the telecom industry's warrantless wiretapping as "constitutional and appropriate."

All the same, plenty of other evidence suggests that much of Wall Street is betting on an Obama win. In fact, some observers believe that KKR announced a multibillion-dollar public offering this summer because it expects McCain to lose. "They're doing the public offering now so that the compensation can be taxed at the lower rate while Bush is still in office," says a strategist for a major labor union. "They're betting Obama is going to win, and they're getting their money while they can."

Other companies are getting in on the ground floor with the new chief by stuffing money in his ears. Overall, Obama is flat-out kicking McCain's ass when it comes to Wall Street contributions, raking in nearly $9 million from securities and investment executives, compared to $6.2 million for McCain. Obama has received more contributions from Goldman Sachs than from any other employer — more than $627,000 at this writing — not to mention $398,021 from JP Morgan Chase, $353,922 from Lehman Brothers and $291,388 from Morgan Stanley. Even among hedge-fund executives, who have an unequivocal interest in electing McCain, Obama is whipping the Republican, collecting $500,000 more than McCain. All of which begs the question: Why would corporate giants like these throw so much weight behind a man who promises to strip them of billions in tax breaks?

Sadly, the answer to that question increasingly appears to be that Obama is, well, full of shit. He has made no bones about his plans to raise income by soaking the rich, promising to roll back the Bush tax cuts for people making over $250,000, increase the top tax rate on capital gains to 25 percent and raise the top rate on qualified dividends. He has also pledged to deliver a real stomach punch to hedge-fund managers, raising the tax rate on most of their income from 15 percent to 35 percent.

These populist pledges sound good, but many business moguls appear to be betting that the tax policies, like Obama himself, are only that: something that sounds good. "I think we don't want to make too much of his promises on taxes," says Robert Pollin, professor of economics at the University of Massachusetts. "Not all of these things will happen." Noting the overwhelming amount of Wall Street money pouring into Obama's campaign, even elitist fuckwad David Brooks was recently moved to write, "Once the Republicans are vanquished, I wouldn't hold your breath waiting for that capital-gains tax hike."

Those worried that Obama might be all talk when it comes to needed reform had a real scare in July, when the senator failed to show up to vote for the Stop Excessive Speculation Act, a bill designed to curb rampant oil speculation. Oil speculators provide the perfect microcosm of what happened to the economy under Bush. Back in 2001, investment banks like Goldman Sachs and JP Morgan got together and created an online exchange called the ICE for trading energy commodities. The ICE ended up buying the British-regulated International Petroleum Exchange; it then opened trading windows in the U.S., allowing Wall Street investment banks to make oil-futures trades on American soil, on their very own commodities exchange, without any federal regulation whatsoever.

"In financial terms, they were playing blackjack at tables where they themselves were the dealers, in casinos they themselves owned," says Warren Gunnels, a senior policy adviser to Sen. Bernie Sanders. "It was crazy." Trading on the ICE had a massive impact on U.S. gasoline prices, and more than one legislator wondered if energy speculators were manipulating the market, as energy traders like Enron had been before. The speculation bill was designed to regulate the ICE and place limits on trades. But on the day before Obama returned from his eight-day, eight-country, megadazzling international photo op, Democrats failed by a vote of 50-43 to force a vote on the bill, as heavy lobbying by investment banks like Goldman Sachs torpedoed the effort.

Not only did Obama not show up to vote, he appeared at a public forum three days later flanked by Jon Corzine and Robert Rubin, two former Goldman executives, to discuss how to revive the economy. Here you have the basic formula of campaign contributions in a nutshell: Powerful investment bank gives big money to candidate, needed reform requires candidate to cross said investment bank, candidate pussies out and finds way to be gone at the moment of truth, candidate resurfaces later in arms of aforementioned investment bankers.

Obama's absence on oil speculation was eerily reminiscent of his previous decision to change his mind about giving retroactive immunity to telecom companies for spying on Americans. Obama withdrew his pledge to filibuster the immunity bill right around the time the Democrats announced that AT&T would be sponsoring the Democratic convention. So no filibuster on retroactive immunity from the top Democrat — but conventiongoers in Denver will get tote bags emblazoned with the AT&T logo. So that's something.

Look, we all knew this was coming. Once Obama vanquished Hillary Clinton, it was inevitable that his campaign would start roping in the Clinton moneymen for the fall confrontation with McCain. Among those snagged by Obama were Iranian millionaire and former Democratic Senatorial Campaign Committee chairman Hassan Nemazee, venture capitalist Alan Patricof and the touchingly plugged-in Wall Street power couple Maureen White (First Boston) and Steven Rattner (Morgan Stanley). Rattner and White, the former chief fundraiser for the DNC, are longtime friends of the Clintons; she quit the DNC in 2006 to build Hillary's war chest, while he backed Joe Lieberman against Ned Lamont and flirted with a Mike Bloomberg presidential run. Such are the people who are now whispering in Obama's ear.

Over the summer, the Obama camp has relentlessly pushed the notion that its record fundraising is mainly the result of small online donations. The first presidential candidate to raise so much money that he could afford to eschew the spending limits that would be imposed if he accepted federal matching funds, Obama claims that he opted out of public funding so that he could have a campaign "truly funded by the American people." And indeed, he has a record number of small donors, with some 45 percent of his campaign cash coming from contributions smaller than $200.

Which is a great percentage — but it's only eight points better than John Kerry in 2004 and only 14 points better than George Bush that same year. In truth, Obama is still raising tons of money from big corporate donors. In June alone, as Obama was raking in more than $30 million from small donors, he also bagged $6 million in a single fundraiser at Ethel Kennedy's home in Virginia and another $5 million at an event in Hollywood. But time and time again, you see Obama aides boasting about how the day of the big-dollar donor is over. "More people are involved, and I think that necessarily dilutes the impact of any individual — which is probably a good thing," one prominent Obama supporter recently declared. This staunch champion of the small donor happened to be none other than James Rubin, son of former Goldman Sachs co-chairman Bob Rubin.

Obama's decision to embrace Clinton's moneymen coincided with his decision to attend a public forum on economic policy with an A list of Clinton-era economic advisors, including Rubin and Corzine. "The message is that he's going to be a friend to Wall Street, just as Bill Clinton was a friend to Wall Street," says Pollin. "Wall Street will want to be at the head of the table."

By now it should be clear what type of service Wall Street will demand. The financial disaster dumped on us by eight years of Bush's mismanagement has left America with the prospect of short-term solutions in the form of massive government bailouts, and long-term solutions in the form of reform and regulation. A big chunk of the $1 billion in cash that will be spent on the presidential race this year represents Wall Street's desire to make sure that both candidates can be counted on to make the short-term bailouts large and passionate, and the reforms gentle and halfhearted. "They want to make sure there's socialism when they need it — bailouts — and capitalism when they need that," says Pollin.

Both candidates are already falling all over themselves to signal their business-friendly approach to the economy. McCain entered this election with a reputation as a strict Goldwater conservative.. "I have always been committed to the principle that it is not the duty of government to bail out and reward those who act irresponsibly," he declared. McCain also sounded off in the past about troubled quasi-governmental lenders Freddie Mac and Fannie Mae, pledging to "make them go away" and to strip them of their right to lobby.

But this year, McCain — perhaps emboldened by the $238,100 he got from seven JP Morgan Chase executives or the $500,000 bundled for him by Chase executive James Lee Jr. — caved in and supported Chase's outrageous government-backed acquisition of Bear Stearns. He also backed the recent bailout of Freddie Mac and Fannie Mae — no surprise given that former Fannie Mae lobbyists are serving as his chief of staff and the head of his vice presidential vetting panel...

Obama also supported the Freddie Mac-Fannie Mae rescue, and that, too, is no surprise, given that he hired one former chairman of Fannie Mae to chair his vice presidential vetting panel and hired another former Fannie Mae chairman to serve as his consultant on housing issues. Most of us will never get within a hundred miles of a single Fannie Mae chairman, but Obama has already hired two — and he isn't even president yet.

This, folks, is the way of the world. Forget all the promises to make the rich pay their fair share. As the candidates get closer to office, the actual paying customers move to the front of the line.

Sadly, both candidates have an extensive history of being dependable pals of campaign contributors. Back in 2000, when Obama was a state senator in Illinois, an entrepreneur named Robert Blackwell Jr. hired him to be his lawyer, paying him a monthly retainer of $8,000 — big money for a part-time legislator with an annual salary of just $58,000. A few months later, Obama sent a letter urging state tourism officials to give a grant to one of Blackwell's companies, the amusingly named Killerspin, to fund a table-tennis tournament. Killerspin received $320,000 in public funds; Obama pocketed $112,000 in fees from Blackwell.

So far this year, Blackwell has bundled more than $100,000 for Obama's campaign. Looks like there's going to be a shitload of table-tennis tournaments all across America next year.

McCain also likes to write letters for big contributors. In 1998, four months after BellSouth contributed $16,750 to the senator, he sent a letter to the FCC asking it to give "serious consideration" to the company's request to enter the long-distance market. He later wrote letters on behalf of Paxson Communications, which donated $20,000 and let him use their company jet, as well as Ameritech and SBC Communications, which raised $120,000 for McCain at a time when they were seeking permission to merge.

McCain's still sticking by that gang. Former Ameritech chairman Richard Notebaert bundled more than $100,000 for him this year, and two of McCain's key fundraisers, Peter Madigan and Tim McKone, hail from SBC. The point is that politicians are intensely loyal to the people who give them money — and not anywhere near as loyal to the promises they've made to suckers like us. No matter who's in the White House, the direction of the government has remained remarkably stable. Clinton's treasury secretary, Rubin, was a Goldman Sachs man; Henry Paulson, the current secretary under Bush, is also a Goldman Sachs man. It'll probably be a Goldman man again next year. Meet the new boss, same as the old boss. In sickness or in health, the faces may change, but the money remains. "It's not an accident that both administrations picked for leading economic advisers people from Goldman Sachs," says Pollin.

The really distressing thing about all of this is the signal it sends to Americans. Goldman Sachs posted a record profit of $11 billion last year, much of it from betting against the subprime mortgage market they themselves helped to fuck up. That little energy exchange Goldman set up, the ICE, made a profit of $240 million last year, as gas prices skyrocketed. It may suck to be you right now, but all that pain isn't so bad if you are a big oil speculator.

When you live in million-dollar Manhattan townhouses and make billions in profits betting on the pain of the ordinary foreclosed homeowner, you shouldn't get to run around on TV with the prospective president on your arm. You should be hung by your balls. But that's not the way it works, and despite what you might have heard about "change," it probably never will be.

For all the excitement that Barack Obama has garnered, and all the talk about a new day in Washington, it would be tragic if the real legacy of his election victory was to finally expose the essentially unchanging, oligarchic nature of our political system. It's the same old story: Money talks, and bullshit walks. And don't be surprised if we're the ones still walking after November.

[From Issue 1059 — August 21, 2008]



This was all predicted in 1971 by THE CAPITALIST CONSPIRACY (By Edward Griffin)


http://www.informationliberation.com/?id=8515


And re-iterated in Alex Jones' THE OBAMA DECEPTION


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



And of course, a dying call to sense by even Paul Krugman, who thinks ZIRP will be suicidal in the USA as it was in Japan:


http://krugman.blogs.nytimes.com/2008/12/16/zirp/


The Conscience of a Liberal

Paul Krugman


December 16, 2008, 2:47 pm
ZIRP!

That’s zero interest rate policy. And it has arrived.. America has turned Japanese.

This is the thing I’ve been afraid of ever since I realized that Japan really was in the dreaded, possibly mythical liquidity trap. You can read my 1998 Brookings Paper on the issue here.

Incidentally, there were a bunch of us at Princeton worrying about the Japan problem in the early years of this decade. I was one; Lars Svensson, currently at Sweden’s Riksbank, was another; a third was a guy named Ben Bernanke. I wonder whatever happened to him?

Seriously, we are in very deep trouble. Getting out of this will require a lot of creativity, and maybe some luck too.


It is not longer about party, but about policy

WE HAVE UNTIL JULY 6th TO TELL THE USDA WE DON'T WANT THEM TO PROCEED WITH THIS NON-SENSE!

WE HAVE UNTIL JULY 6th TO TELL THE USDA WE DON'T WANT THEM TO PROCEED WITH THIS NON-SENSE!

http://ga3.org/campaign/GEtrees

Here's why I'm making the call:
1. There's nothing wrong with the way naturemade trees. They take in carbon and release oxygen, provide shade, food, shelter. I love 'em just the way they are!!
2. Doing an open field "test" is totally reckless as they have absolutely no control over wind's transport of pollen, including the pollen of genetically altered trees.
3. If past history is any indication of future behavior, they will most certainly deny any downwind "contamination"; or as they've already done - sue anyone downwind who owns property where one of their "patented" plants happens to sprouts up!!
4. Eucalyptus trees come from Australia. I thought "environmental" groups were on a campaign to remove invasive plants brought to the U.S. from other parts of the world and return the land to its natural flora. So why are the USDA & their buddies creating and "testing" eucalyptus mutants here in the U.S.?

The link above will have you send in a nice note to the USDA. You can do that if you wish, but I'm hoping you'll join me in calling Secretary Vilsack's office 202-710-3631 and give 'em hell for even considering such a preposterous notion!! or call the toll free capital switchboard & ask for his office: 800-828-0498 or 800-459-1887 or 800-614-2803. In fact, while you've got them on the phone, you may want to tell them you don't want any GE anything! God did a wondrous thing in creating the Earth. It's time people appreciate it and take care of it, instead of destroy it & "change" it to meet their own greedy lusts!! 'cause that's what all this genetic engineering is really all about - making $$$ for a few CEO bigwigs & their government counterparts.


Don't let anyone fool you into thinking that taking care of anyone's personal greed and lust is on the list of why you're here. And don't cower to those who would try to force their selfish ways on you, either physically or by manipulation and deceit. Those people need a good swat across their bottom and be sent to the "dunce" corner as they're obviously too stupid to know why they're here and how to get along in this world.

If you agree with this message, then PLEASE SPREAD THIS CALL TO ACTION LIKE WILDFIRE - WE HAVE ONLY UNTIL MONDAY - LET'S OVERLOAD THEIR PHONES!! (just be sure to remove my email address before forwarding - thanks!)

"When you see that in order to produce, you need to obtain permission from men who produce nothing - when you see that money is flowing to those who deal, not in goods, but in favors - when you see that men get richer by graft and by pull than by work, and your laws don't protect you against them, but protect them against you - when you see corruption being rewarded and honesty becoming a self-sacrifice - you may know that your society is doomed." Ayn Rand (1905-1982) Author. Source: Atlas Shrugged, Francisco's "Money Speech"

'Politicians and diapers should be changed often - and for the same reason.' http://www.FireCongress.Meetup.com

http://www.KickThemAllOut.com

************
NOTICE: George W. Bush issued Executive Orders allowing the National Security Agency to read this message and all other e-mail you receive or send, to listen in on your phone conversations, and to "sneak & peek" into your home without your presence --- all without warning, warrant or notice. Bush ordered this to be done without any legislative or judicial oversight. Obama has NOT reversed these unConstitutional orders! SO WHAT ARE YOU GOING TO DO ABOUT IT

http://ga3.org/campaign/GEtrees

AUSTIN - Gov. Rick Perry joined state Rep. Brandon Creighton and sponsors of House Concurrent Resolution (HCR) 50 in support of states' rights

AUSTIN - Gov. Rick Perry joined state Rep. Brandon Creighton and sponsors of House Concurrent Resolution (HCR) 50 in support of states' rights under the 10th Amendment to the U.S. Constitution.

"I believe that our federal government has become oppressive in its size, its intrusion into the lives of our citizens, and its interference with the affairs of our state," Gov. Perry said. "That is why I am here today to express my unwavering support for efforts all across our country to reaffirm the states' rights affirmed by the Tenth Amendment to the U.S. Constitution. I believe that returning to the letter and spirit of the U.S. Constitution and its essential 10th Amendment will free our state from undue regulations, and ultimately strengthen our Union."

Perry continued: "Millions of Texans are tired of Washington, DC trying to come down here to tell us how to run Texas."

A number of recent federal proposals are not within the scope of the federal government's constitutionally designated powers and impede the states' right to govern themselves. HCR 50 affirms that Texas claims sovereignty under the 10th Amendment over all powers not otherwise granted to the federal government.

It also designates that all compulsory federal legislation that requires states to comply under threat of civil or criminal penalties, or that requires states to pass legislation or lose federal funding, be prohibited or repealed.

81R5789 MMS-F
By: Creighton
H.C.R. No. 50 (State of Texas)
CONCURRENT RESOLUTION

WHEREAS, The Tenth Amendment to the Constitution of the United States reads as follows: "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people"; and
WHEREAS, The Tenth Amendment defines the total scope of federal power as being that specifically granted by the Constitution of the United States and no more; and
WHEREAS, The scope of power defined by the Tenth Amendment means that the federal government was created by the states specifically to be an agent of the states; and
WHEREAS, Today, in 2009, the states are demonstrably treated as agents of the federal government; and
WHEREAS, Many federal laws are directly in violation of the Tenth Amendment to the Constitution of the United States; and
WHEREAS, The Tenth Amendment assures that we, the people of the United States of America and each sovereign state in the Union of States, now have, and have always had, rights the federal government may not usurp; and
WHEREAS, Section 4, Article IV, of the Constitution says, "The United States shall guarantee to every State in this Union a Republican Form of Government," and the Ninth Amendment states that "The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people"; and
WHEREAS, The United States Supreme Court has ruled in New York v. United States, 112 S. Ct. 2408 (1992), that congress may not simply commandeer the legislative and regulatory processes of the states; and
WHEREAS, A number of proposals from previous administrations and some now pending from the present administration and from congress may further violate the Constitution of the United States; now, therefore, be it
RESOLVED, That the 81st Legislature of the State of Texas hereby claim sovereignty under the Tenth Amendment to the Constitution of the United States over all powers not otherwise enumerated and granted to the federal government by the Constitution of the United States; and, be it further
RESOLVED, That this serve as notice and demand to the federal government, as our agent, to cease and desist, effective immediately, mandates that are beyond the scope of these constitutionally delegated powers; and, be it further
RESOLVED, That all compulsory federal legislation that directs states to comply under threat of civil or criminal penalties or sanctions or that requires states to pass legislation or lose federal funding be prohibited or repealed; and, be it further
RESOLVED, That the Texas secretary of state forward official copies of this resolution to the president of the United States, to the speaker of the house of representatives and the president of the senate of the United States Congress, and to all the members of the Texas delegation to the congress with the request that this resolution be officially entered in the Congressional Record as a memorial to the Congress of the United States of America.

The Obama Deception

A must see film (2 hours) by Alex Jones of Infowars.
The Obama Deception HQ Full length version

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

For Christ's sake, KISSINGER is working with Obama, if that isn't a red flag, you have a lot of reading to do.

The Obama Deception is a hard-hitting film that completely destroys the myth that Barack Obama is working for the best interests of the American people.

The Obama phenomenon is a hoax carefully crafted by the captains of the New World Order. He is being pushed as savior in an attempt to con the American people into accepting global slavery.

We have reached a critical juncture in the New World Order's plans. It's not about Left or Right: it's about a One World Government. The international banks plan to loot the people of the United States and turn them into slaves on a Global Plantation.

Covered in this film: who Obama works for, what lies he has told, and his real agenda. If you want to know the facts and cut through all the hype, this is the film for you.

Watch the Obama Deception and learn how:

- Obama is continuing the process of transforming America into something that resembles Nazi Germany, with forced National Service, domestic civilian spies, warrantless wiretaps, the destruction of the Second Amendment, FEMA camps and Martial Law.

- Obama's handlers are openly announcing the creation of a new Bank of the World that will dominate every nation on earth through carbon taxes and military force.

- International bankers purposefully engineered the worldwide financial meltdown to bankrupt the nations of the planet and bring in World Government.

- Obama plans to loot the middle class, destroy pensions and federalize the states so that the population is completely dependent on the Central Government.

- The Elite are using Obama to pacify the public so they can usher in the North American Union by stealth, launch a new Cold War and continue the occupation of Iraq and Afghanistan.

The only reason we aren't in a Nazi-Germany style fascist totalitarian authoritarian police state is because the Internet keeps hope alive with the likes of Ron Paul and others who seek to help us in the fight against the oligarchs.

The world of democratic republics is coming to a close, its up to YOU to try and stop these people at every level every day. Tell someone else about how the Federal Reserve and currency manipulation is being used to break us into submission.

I missed the Animal Farm "More equal than others" clause in the constitution too

Here is a debate on general welfare and how stuff like this came to pass, but was clearly no intended by the authors of the document of root law.

In Federalist No. 41, James Madison asked rhetorically: "For what purpose could the enumeration of particular powers be inserted, if these and all others were meant to be included in the preceding general power?" (In reference to the general welfare clause)

So strongly did the founders believe that "general welfare" wouldn't be expanded as written:

In Federalist No. 84, Alexander Hamilton indirectly confirmed Madison’s point. (That the "general welfare" clause was "clearly" nota free pass for government)

Hamilton argued that a bill of rights, which many were clamoring for, would be not only unnecessary, but dangerous. Since the federal government was given only a few specific powers, there was no need to add prohibitions: it was implicitly prohibited by the listed powers. If a proposed law — a relief act, for instance — wasn’t covered by any of these powers, it was unconstitutional.

"why declare that things shall not be done which there is no power to do? Why, for instance, should it be said, that the liberty of the press shall not be restrained when no power is given by which restrictions may be imposed?"

Hamilton goes on to argue that making Amendments (eg, enumerating Free speech, press and assembly) and enumerating the 'right' would have the following effect:

(A bill of rights) "would furnish, to men disposed to usurp, a plausible pretence for claiming that power — that is, a power to regulate the press, short of actually shutting it down. "

"With respect to the words 'general welfare,' I have always regarded them as qualified by the detail of powers (enumerated in the Constitution) connected with them. To take them in a literal and unlimited sense would be a metamorphosis of the Constitution into a character which there is a host of proofs was not contemplated by its creators." --James Madison [The US Supreme Court has found the meaning of "general welfare" in the Constitution to be much more elastic than did Mr. Madison. But as the "author of the Constitution," what does he know?]

James Madison, when asked if the "general welfare" clause was a grant of power, replied in 1792, in a letter to Henry Lee,

If not only the means but the objects are unlimited, the parchment [the Constitution] should be thrown into the fire at once. [6] [p.257]

Dwight Eisenhower's Secretary of Agriculture, Ezra Taft Benson met with USSR's Nikita Khrushchev and related:

"I have talked face to face with the godless communist leaders. It may surprise you to learn that I was host to Mr. Khrushchev for a half day when he visited the United States, not that I'm proud of it. I opposed his coming then, and I still feel it was a mistake to welcome this atheistic murderer as a state visitor. But, according to President Eisenhower, Khrushchev had expressed a desire to learn something of American Agriculture - and after seeing Russian agriculture I can understand why. As we talked face to face, he indicated that my grandchildren would live under communism. After assuring him that I expected to do all in my power to assure that his and all other grandchildren will live under freedom he arrogantly declared in substance:

"You Americans are so gullible. No, you won't accept communism outright, but we'll keep feeding you small doses of socialism until you'll finally wake up and find you already have communism. We won't have to fight you. We'll so weaken your economy until you’ll fall like overripe fruit into our hands."

"And they're ahead of schedule in their devilish scheme."

(Ezra Taft Benson "Our Immediate Responsibility." Devotional Address at Brigham Young University. 1968.) [access the audio file on this page.]
http://www.awakeandarise.org/media/EzraTaftBenson-selection7min.mp3
http://www.awakeandarise.org/media/StandUpForFreedom-by_Ezra_Taft_Benson.mp3

Glen Beck:
http://www.youtube.com/watch?v=VMzLgSuBr54

Closing with:

"...We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed. That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it...it is their right, it is their duty, to throw off such Government , and to provide new Guards for their future security. ..." --The Declaration of Independence

I guess some are more equal than others.