Alberta, Julio/July 2009
16
ALTERNATIVA Latinoamericana
ENGLISH SECTION
By Nora Fernández
EDITORIAL:
We will know them by their deeds. . .
Crisis: Planned "De-regulation
"
Government regulators working together with
Banks celebrating de-regulation
Left to right: James E Gilleran, James D
.
McLaughlin,
Harry Doherty, John Rich & Ken
Guenther
Marina Portnaya (Russia Today)
interviewed Gerald Celente -CEO of the
Trends Research Institute, and famed
trends forecasting, on February 2009.
Celente, an American celebrity
described as "expert and visionary"
predicted all types of trends through his
journal (Trends Journal) and books
(Trends 2000; Trend Tracking). In this
interview, Celente explained that the US
(and the world) is facing an "economic
meltdown" more serious than the Big
Depression. During the Big Depression,
he said, the US was not in debt, it was a
productive power with a strong
infrastructure to fall on, the country was
on the rise rather than "going down" like
now. People were not indebted as they
are: our parents did not carry mortgages
and debts as we do today
(
www.youtube.com/watch?v=9nJ7LM3iyNg
).
We are witnessing a merger of corporate
and government power in the US; and, although
the right calls it "socialism" it is not. Socialism,
said Celente, is egalitarian. We are facing
fascism: state controlled capitalism, if unsure we
can ask Mussollini who knew it well, he said. In
the US we have a one party system with two
heads controlled by two "mafia families" -the
Bushes and the Clintons, he said. Although
Obama talks about "change," there is no relevant
change taking place. Obama would not have
selected the team he selected, people from
previous governments, like Lawrence Summers
and Timothy Geithner, if he were thinking change
(
www.youtube.com/watch?v=9nJ7LM3iyNg
).
The subprime collapse, he warned, was the
first, commercial real estate collapse will follow. It
will be worse because of its total amount and its
impact on the economy. There will be "ghost
malls." Unemployment will get to Great
Depression era levels (25%). There will be food
riots and "Armageddon" by 2012 when the US
economy collapses, he said. Ben Bernanke
(Federal Reserve Chairman), is doing the two
things he knows how to do, he argued, lower
interests and print more money. Eventually,
money printed without back up will mean nothing
but it will create hyperinflation and the crash of
the American dollar.
No doubt we have been witnessed major
bankruptcies (banks, insurance companies,
retailers). Circuit City, the electronics mega store,
closed. Linens' n Things, KB Toys, Bennigans,
Mervyn's (59 year old), Sharper Image, Steve and
Barry's, Gottschalks, Lyondell Basell, Merivant
Worldwide (Equal), Tribune Co (LA Times and
Chicago Tribune), Minneapolis Star Tribune,
General Growth, all closed. Many others had to
let people go: ING(Dutch), Caterpillar, Best Buy,
FedEx, Home Depot, Harley Davidson, even
Google. Some may not survive even after this
and are at risk: Dillard's, Sears, Claire's, Sealy
Mattresses, Footlocker, Pacific Sunwear, Zales
Jewelers. The poster child of American success,
Starbucks, closed 900 of its 16 000 plus stores,
letting go more than 6700 employees, cutting
salaries. Even attorneys are not safe as the
number of firms letting them go, some by the
hundreds, increases. Power Goldstein, a well-
known law firm, is merging with its rivals. Thelen
and Heller Ehrman just collapsed
(
www.coolmindset.com
).
People worry not only about their jobs and/or
homes but about their sanity, or better, about
their "neighbours' sanity." Americans are the most
depressed nation of the world and they have
been taking more antidepressants than anybody
even prior to this crisis, added Celente.They also
used street drugs. He predicted a rise in the level
of crime as never before, rivalling Third World
countriesparticularly kidnappings for money
(
www.youtube.com/watch?v=9nJ7LM3iyNg
).
This Apri, Bill Moyers invited William K. Black
to PBS. Black, the author of a recent book on
banks, explained the subprime scandal as a
fraud: the fraud of the liars' loans or the "ninja
loans" (no income verification, no job verification,
no asset verification). Fraudulent loans made by
fraudulent bankers, or "banksters" as he calls
them, who wanted to be rich fast, receiving huge
commissions and who counted on government to
bail them out at the expense of American people.
Timothy Geithner, Black said, could not have
ignored what was going on because the FBI
publicly warned government and people about
the mortgage fraud epidemic in September 2004.
At that time Geithner was president of the Federal
Reserve Bank of New York. Chris Swecker, a
senior FBI official, made the announcement
explaining that, if allowed to continue, this fraud
would produce a crisis at "least as large as the
Savings and Loan debacle" (
www.pbs.org/moyers/
journal/04032009/Watch.html/
).
The Bush Administration, essentially, got rid
of regulation. If nobody was looking it was
impossible to detect the frauds and the
fraudsters. They could do fraud with total
impunity, he said. You have to look at the
specialty lenders to find out. They were the ones
committing the most fraud: "IndyMac (Bank)
specialized in making liars' loans. In 2006 alone,
it sold $80 billion dollars of liars' loans to other
companies" (
www.pbs.org/moyers/journal/
04032009/Watch.html/
).
The rating companies also played along with
the fraud. Triple-A- ratings emerged in
connection with these loans. "Such rating was
supposed to mean zero risk but it did not. You
take something that not only has significant, it
has crushing risk...And you create this fiction that
it has zero risk. That itself, of course, is a
fraudulent exercise. And again, there was nobody
looking, during the Bush years" (
www.pbs.org/
moyers/journal/04032009/Watch.html/
).
"A year ago, we started to have a
Congressional investigation of some of these
rating agencies, and it's scandalous what came
out. What we know now is that the rating
agencies never looked at a single loan file. When
they finally did look, after the markets had
completely collapsed, they found, and I'm quoting
Fitch, the smallest of the rating agencies, "the
results were disconcerting, in that there was the
appearance of fraud in nearly every file we
examined."" Then Black adds: "Our financial
system...Became a Ponzi scheme (Madeoff was a
spike, he joked). Everybody was buying a pig in
the poke. But they were buying a pig in the poke
with a pretty pink ribbon, and the pink ribbon
said, "Triple-A"" (
www.pbs.org/moyers/journal/
04032009/Watch.html/
).
Moyers asked Black whether there is a law
against liars' loans. "Not directly but (there are)
many laws against fraud, and liars' loans are
fraudulent...Because they are not going to be
repaid and...are false representations. They
involve deceit, which is the essence of
fraud...(but) they didn't even begin to investigate
the major lenders until the market had actually
collapsed -contrary to what we did successfully in
the Savings and Loan crisis...Even while the
institutions were reporting they were the most
profitable savings and loan in America, we knew
they were frauds. And we were moving to close
them down" (
www.pbs.org/moyers/journal/
04032009/Watch.html/
).
It goes like this: the bank, or lending
company, created fraud. The ratings agencies
knowingly entered into the fraud. And, the
investment banker put together the bad
mortgages, the ninja loans and created toxic
waste of these derivatives. Black added that the
Bush administration refused to replace
the missing 500 FBI agents. "So even
today, again, as you say, this crisis is
1000 times worse, perhaps, certainly
100 times worse, than the Savings and
Loan crisis. There are one-fifth as many
FBI agents as worked the Savings and
Loan crisis" (
www.pbs.org/moyers/
journal/04032009/Watch.html/
).
The FBI was removed from the
scene and only 15 full time agent-
equivalents (of 13000) were
investigating mortgage fraud in 2004.
This number grew to 177 by October
2008. FBI was investigating Freddie
Mac, Fannie Mae, AIG, the Lehman
Brothers and so on. They had asked
repeatedly, according to Litchblau,
Johnson and Nixon in their The New
York Times article online, for more agents but
were not attended to (
http://finance.yahoo.com/
banking-budgeting/article/105989/.F-B.-I.-
Struggles-to-Handle-Financial-Fraud-Cases
).
And, what about the Clinton administration?
"Two really big things (took place) under the
Clinton administration: One, they got rid of the law
that came out of the real-world disasters of the
Great Depression. We learned a lot of things in
the Great Depression. And one is we had to
separate what's called commercial banking from
investment banking. That's the Glass-Steagall
law. But... we got rid of that law, and that was
bipartisan. And...we passed a law -Summers,
Rubin, and Phil Gramm came together to block
(a) particular regulation (devised by Brooksley
Born to control derivatives) (and) passed a law
saying you can't regulate...this type of derivative
is most involved in the AIG scandal -AIG by itself
cost the same as the entire Savings and Loan
debacle," said Black.
Today you do not really go bankrupt in the
US, not if you are big enough; the taxpayers, the
people, pay. Black argued that, under "Secretary
Geithner and under Secretary Paulson before
him... we took $5 billion dollars, for example, in
U.S. taxpayer money. And sent it to a huge Swiss
Bank called UBS...At the same time that that
bank was defrauding the taxpayers of America,
and we were bringing a criminal case against
them. We eventually get them to pay a $780
million fine, but we gave them $5 billion. So, the
taxpayers of America paid the fine of a Swiss
Bank. Why are we bailing out somebody who is
defrauding us?" (
www.pbs.org/moyers/journal/
04032009/Watch.html/
).
In May 2009, Celente argued that the
"biggest financial bubble in history is being
inflated in plain sight...this is the Mother of all
Bubbles, and when it explodes it will signal the
end to the boom/bust cycle that has
characterized economic activity throughout the
developed world." Unable or unwilling to call the
process by its name, the Media, Wall Street and
Washington keep talking about "rescue
packages, stimulus plans, buyouts, takeovers" as
emergency measures needed to save the
economy. All these terms are untrue, he said, "it
is like calling torture `enhanced interrogation
techniques.' Washington is inflating the biggest
bubble ever, the `Bailout Bubble'."
How is Washington doing this? With
"phantom dollars, printed out of thin air, backed
by nothing...and producing next to nothing...
While we cannot pinpoint precisely when the
`Bailout Bubble' will burst, we are certain it wil," he
said. "When it does, it should be understood that
a major war could follow...Given the pattern of
governments to parlay egregious failures into
mega-failures, the classic trend they follow, when
all else fails, is to take their nation to war." (
http://
revolutionarypolitics.com/?p=956
).
Jim Rogers, Chairman of Rogers Holdings, a
success story of American finances, argued on
the need to "stop bailing these people" making
them accountable. They are not, because of
constant government bail out. Government needs
to remove the assets from the hands of
incompetent managers too, he added. He
expressed worry about the future of the US dollar.
Is this the end of the "American Era," the end of
the US empire? It is possible!