Debt Crisis Being Used as Shock Doctrine to Steal More Money from the American People to Give to the Richest .1%

George Washington's picture

Washington’s Blog


I noted in 2008:

The powers-that-be have used the "Shock Doctrine" to pass anti-American, fascist legislation while the public was in a state of shock.

This applies to economic shocks, as well as physical attacks like 9/11.

Indeed, right now, Paulson and Bernanke are using the shock doctrine to try to ram through legislation that would help out the fat cats at the expense of taxpayers, and give the government control over the free market.

But there is some resistance. For example, Senator Leahy and the New York Times are questioning Paulson's use of shock and awe:

  • Senator Leahy said "If we learned anything from 9/11, the biggest mistake is to pass anything they ask for just because it's an emergency"
  • The New York Times wrote:

    "The rescue is being sold as a must-have emergency measure by an administration with a controversial record when it comes to asking Congress for special authority in time of duress."

    ***

    Mr. Paulson has argued that the powers he seeks are necessary to chase away the wolf howling at the door: a potentially swift shredding of the American financial system. That would be catastrophic for everyone, he argues, not only banks, but also ordinary Americans who depend on their finances to buy homes and cars, and to pay for college.

    Some are suspicious of Mr. Paulson’s characterizations, finding in his warnings and demands for extraordinary powers a parallel with the way the Bush administration gained authority for the war in Iraq. Then, the White House suggested that mushroom clouds could accompany Congress’s failure to act. This time, it is financial Armageddon supposedly on the doorstep.

    “This is scare tactics to try to do something that’s in the private but not the public interest,” said Allan Meltzer, a former economic adviser to President Reagan, and an expert on monetary policy at the Carnegie Mellon Tepper School of Business. “It’s terrible.”

The Tarp bailouts were passed using apocalyptic - and false - threats. For example, as I've previously reported:

The New York Times wrote last year:

In retrospect, Congress felt bullied by Mr. Paulson last year. Many of them fervently believed they should not prop up the banks that had led us to this crisis — yet they were pushed by Mr. Paulson and Mr. Bernanke into passing the $700 billion TARP, which was then used to bail out those very banks.

Indeed, Congressmen Brad Sherman and Paul Kanjorski and Senator James Inhofe all say that the government warned of martial law if Tarp wasn't passed:


That is especially interesting given that the financial crisis had actually been going on for a long time, but - instead of dealing with it - Paulson and the rest of the crew tried to cover it up and pretend it was "contained", and that it was obvious to world leaders months earlier that it was not a liquidity crisis, but a solvency crisis (and see this).

Bait And Switch


The Tarp Inspector General has said that Paulson misrepresented the big banks' health in the run-up to passage of TARP. This is no small matter, as the American public would have not been very excited about giving money to insolvent institutions.

And Paulson himself has said:

During the two weeks that Congress considered the [Tarp] legislation, market conditions worsened considerably. It was clear to me by the time the bill was signed on October 3rd that we needed to act quickly and forcefully, and that purchasing troubled assets—our initial focus—would take time to implement and would not be sufficient given the severity of the problem. In consultation with the Federal Reserve, I determined that the most timely, effective step to improve credit market conditions was to strengthen bank balance sheets quickly through direct purchases of equity in banks.

So Paulson knew "by the time the bill was signed" that it wouldn't be used for its advertised purpose - disposing of toxic assets - and would instead be used to give money directly to the big banks?

Senator McCain also says that Paulson pulled a bait-and-switch:

Sen. John McCain of Arizona ... says he was misled by then-Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. McCain said the pair assured him that the $700 billion Troubled Asset Relief Program would focus on what was seen as the cause of the financial crisis, the housing meltdown.

"Obviously, that didn't happen," McCain said in a meeting Thursday with The Republic's Editorial Board, recounting his decision-making during the critical initial days of the fiscal crisis. "They decided to stabilize the Wall Street institutions, bail out (insurance giant) AIG, bail out Chrysler, bail out General Motors. . . . What they figured was that if they stabilized Wall Street - I guess it was trickle-down economics - that therefore Main Street would be fine."

Even the New York Times called Paulson a liar in 2008:

“First [Paulson’s Department of Treasury] says it has to have $700 billion to buy back toxic mortgage-backed securities. Then, as Mr. Paulson divulged to The Times this week, it turns out that even before the bill passed the House, he told his staff to start drawing up a plan for capital injections. Fearing Congress’s reaction, he didn’t tell the Hill about his change of heart.

Now, he’s shifted gears again, and is directing Treasury to use the money to force bank acquisitions. Sneaking in the tax break isn’t exactly confidence-inspiring, either.”

What tax breaks is the Times talking about? The article explains:

A new tax break [pushed by Treasury], worth billions to the banking industry, that has only one purpose: to encourage bank mergers. As a tax expert, Robert Willens, put it: “It couldn’t be clearer if they had taken out an ad.”

Indeed, all of the other "emergency" economic and monetary measures - like quantitative easing - didn't help the American people, but just helped the richest .1%. And most of the bailout and "easy" money went to foreign banks (and see this, this and this).

The Same Thing Is Happening With the Debt Ceiling

The same thing is now happening with the debt ceiling.

We know that the productive actions which would reduce the debt and fix the economy are not being discussed. See this, this, this, this, this and this.

What is being discussed would just steal more money from the American people and give it to the richest 1%. For example, Congress is planning on selling off "unused federal property". Selling off and privatizing public assets and resources is a core tactic in shock doctrine schemes.

As Matt Taibbi shows, another tax holiday for big corporations is one of the main focuses of discussion in D.C.

There are numerous other giveaways to the biggest fatcats, which will be paid for by slashing social security and otherwise fleecing the elderly.

Note: As usual, it's not liberal-versus-conservative, but the top 1% versus the rest of the country, and you versus the giant corporations. See this, this, this, this, this, this, this, this, this, this and this.


And - no - the top 1% are not using the money to create more jobs. It's being used for prostitutes and other hanky panky.

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mark mchugh's picture

Thanks GW for not letting us forget what really happened.

One of my favorite details is that all profits from TARP were to be used to pay down the national debt.

So if TARP was so profitable (as many have asserted), why do we need to raise the debt ceiling again?

ATG's picture

Bravo GW

Gary North who worked in DC for Ron Paul wrote a prophetic book in the 1986 called

Government By Emergency, made similar conclusions, then moved to Texas

 

XenOrbitalEnginE's picture
(Elvis Costello predicted all of this discussion!)

I've been on tenterhooks
ending in dirty looks,
list'ning to the Muzak,
thinking 'bout this 'n' that.
She said that's that.
I don't wanna chitter-chat.
Turn it down a little bit
or turn it down flat.

Pump it up when you don't really need it.
Pump it up until you can feel it.

Down in the pleasure centre,
hell bent or heaven sent,
listen to the propaganda,
listen to the latest slander.
There's nothing underhand
that she wouldn't understand.

Pump it up until you can feel it.
Pump it up when you don't really need it.

She's been a bad girl.
She's like a chemical.
Though you try to stop it,
she's like a narcotic.
You wanna torture her.
You wanna talk to her.
All the things you bought for her,
putting up your temp'rature.

Pump it up until you can feel it.
Pump it up when you don't really need it.

...
And so on
Problem Is's picture

That's what Christmas (Kleptocracy) is all about, Charlie Brown...

f16hoser's picture

Sherman looks like he needs a "Swirley"

Obama the extortionist.......

michaelj007's picture

I'm thinking of taking advantage of the Adverse Possession laws to get me some wealth on the cheap.  Ya know, take advantage of loopholes like the FatCats always do.  Anybody have any experience with this?

i-dog's picture

"Congress is planning on selling off "unused federal property"."

They won't just stop there, George!

One of the primary objectives of TPTB is to also end private property ownership in the US ... which, IMO, they have almost achieved already through the MERS destruction of millions of clean titles. Expect more developments in this area over the coming 15 months.

the grateful unemployed's picture

you're basically ripping off the author of Shock Doctrine, the link doesn't work.

aerial view's picture

States must start to secede from the United States of Corporate Cronyism. Government is much easier to manage when it is smaller and local politicians can be held accountable. All it takes is for one state to start the domino effect. Use their strategy against them: divide and conquer!

 

Sathington Willougby's picture

If states secede they are stealing the property of the UNITED STATES OF AMERICA (global corporation).

That property would be their franchised citizens (You, me and all the other livestock).

That screamy lady too, but she doesn't know that she's pissing up a rope since they really don't answer to the people.

There is no "We the People".

Forget fixing this, it's all about the tv to 95%.

penisouraus erecti's picture

+14 trillion, except then the equality of outcomes cannot be guaranteed

cdskiller's picture

Spectacular, GW. We have all just experienced the greatest heist in the history of the capital markets. What you forget is that the only reason TARP passed is because Senate Dems and Reps in concert loaded the bill after it was defeated the first time, promising every single recalcitrant House Republican who had voted against it the first time with enough pork to feed an army.

Gold Dog's picture

Dear America,

I have said it before and I will say it again. I ain't paying. Fuck you!

Warmest,

Dog

Loco Vida's picture

My pat answer now: Fuck you and fuck it......as Loco walks off whistling "I dont care anymore"

works with any question or statement.......bwhahahhahahahhahha

Gold Dog's picture

Sorry Loco....great minds and all!

Hannibal's picture

 

USERY: THE ROOT OF ALL EVIL.

The greatest slavery of all is Not the one that is behind us but the slavery which is ahead of us.

 

Escapeclaws's picture

You make a good point. Here's what usury and abortion have in common: With abortion, there is no specific point at which the fetus becomes human, scientifically speaking. Thus the fact that it is still inside the mother has been taken to mean that you can morally kill it, though most people don't like late term abortions. With usury, there is no specific interest rate that scientifically separates normal interest rates from usury. Consequently, you can legally charge mafia rates, as they do on credit cards.  Now that it has been accepted practice for so long to charge even 35% on credit cards, that is no longer considered usury. If late term abortions became accepted practice, that would certify that the fetus remains non-human up to birth. Perhaps that will one day be the case if doctors decide to anesthetize the fetus before aborting it. Usury is the Dr. Mengele of finance, in this sense.

Usury doth make debt-slaves of us all.

lolmaster's picture

Let's get libtarded! Yea! Let's get libtarded in here!

Mongrel's picture

I will be glad to see the day when rope and lampposts are the best investments in the country. We are in bad need of some real justice.

honestann's picture

Let's be clear about one thing.  Either earth becomes a permanent slave planet for the pleasure of the top 0.001%... or these predators must be hung in public and their carcasses and skeletons left hanging from lampposts in DC until their bones turn to dust.

There cannot be wrist slaps for these predators, or the certain result will be permanent worldwide slavery of all mankind to the hyper-predators.  These predators need to be treated as predators, and indeed, predators more harmful than your worst nightmares.

Everyone in the last two administrations, and probably everyone in all administrations back to Johnson at least, should suffer the same fate.  Round them all up, try them for treason and crimes against humanity, and hang them from the lampposts for everyone to see from that day forward.  Otherwise, kiss humanity goodbye and good riddens.

penisouraus erecti's picture

makes some good sense honestann

JustACitizen's picture

In the "good old days" of ancien regime all of the money and power were concentrated too. It's too bad that the folks at the top nowadays do not spend any time learning anything or even dipping a toe into history... If they did - what might they find?

Decadent societies - not dynamic societies - very little economic growth. Remember it was the rapine brought about by the voyages of discovery that powered spurts of wealth in old Europe.

The top 1% or so spent all of their time politick-ing and bootlicking for the supposed advantage of being nearer to the center of power - sounds like good times to me...

A jaded group of people who were always looking for something new - because their own existences were largely without meaning. Can you say ennui?

Does any of this sound like what is going on today?

Bansters-in-my- feces's picture

Cum,cum,now.....theGoverment would'nt blow YOUR load for you would they....

These bastards need hung.

nah's picture

U.S. Ambassador to the United Nations Susan Rice this week issued a blistering rebuke of Russia, China and other countries that blocked the Security Council from adopting a statement linking the threat of climate change to international peace and security.

http://www.foxnews.com/politics/2011/07/21/rice-lashes-out-at-russia-for-blocking-un-council-from-tackling-climate-change/#ixzz1SmO75wQx . . global war on energy could last a while... betcha its good money too, big markets, the ladies love energy...
nah's picture

choosey globalists choose crisisis...

http://www.youtube.com/watch?v=6LOT78zhA5w

since 911

.

letting the government assume private corporate liabilities en masse is fucking stupid

 

Escapeclaws's picture

We need to fight that bogus CPI thingy for social security and medicare. They have undoubtedly come up with that strategem because they are anticipating runaway inflation in the near future. That is how they operate.

Does anyone know what date these changes to social security are scheduled to occur and whether they will apply across the board for all recipients? Additionally, somebody had previously posted an exhaustive list of congress pigs and their email, telephone numbers, and addresses for correspondence, but I stupidly didn't copy it. If you can post that, it would be much appreciated.

This is the surest indication to stock up on gold and silver now.

 

 

 

rocker's picture

Great Post George. What we are watching is simply  Why Greed is NOT Good. 

                            When the Banksters and Greedy CEO's want every available penny for themselves alone. 

Insiderman's picture

Greed is okay except when greedy money finds its way into a politician's pocket... which it invariably does.  So the answer is not to eliminate greed--an impossibility--but to eliminate politicians.

RKDS's picture

It's actually quite easy to eliminate greed.  All we need is for every man, woman, and child to incorporate.  Once they have a charter and shareholders (perhaps even government) to hide behind, we can handwave away all "greed" as the class warfare slander it is.  Only people who work for a living are ever capable of being greedy, for such lavish luxuries as continuing to be able to afford food and shelter, and once everyone lazes about producing nothing but perhaps a little fraud there will be no evil workers to conjure up this sinful emotion.  It's right here on page 3 in my copy of the script...

RichardP's picture

It's simpler just to eliminate pockets.

dexter_morgan's picture

That is why we have laws, or should, so that these top .1% psychopaths cannot do this. But we deserve it actually, because we keep sending the same enablers to DC election after election which let them have the keys to the kingdom. Sadly, we rarely have a choice really, it's either full blown assclown, or assclown light, so until these .1% are unable to buy their people in to power (form both parties) via the election funding process (hows Mcain Feingold working for ya) nothing much will change.

G. Marx's picture

It didn't take long for Naomi Klein's lap dog to drag out the discredited "shock doctrine" thesis yet again.

I like bubbles's picture

I logged in and wasted my first post just to junk you.  

Ad Hominem much?

Escapeclaws's picture

I would be interested in some references to back up your use of the the word "discredited". Discredited by whom, Rush Limbaugh, the Hoover Instititution, the American Enterprise Instititute? Discredited on what basis?

G. Marx's picture

The Klein Doctrine: The Rise of Disaster Polemics

by Johan Norberg

http://www.cato.org/pub_display.php?pub_id=9384

I gave it to GW to read the last time he unfurled the branding flag of Ms. Klein. I'm guessing the only thing he reads are his own articles (after all that's all he seems to link to).

slowimplosion's picture

Cato, AEI, Heritage, stink tanks all designed to brainwash the weak of mind into thinking stinky ideas smell good.  They still stink.

penisouraus erecti's picture

G., if it isn't a Soros accredited "news" site it does not count. Notice nobody is picking apart flaws or discussing content, but rather casting aspersions upon the source, and attempting to distract via demonization. We don't live in a thinking man's world anymore G., people are only able to regurgitate and ejaculate talking points from the media propaganda machines.

 

G. Marx's picture

They don't want to read Norberg's paper because they either know it will contain rebuttals that show Klein to be an uniformed hack or they are just to lazy to bother. Such is the state of intellectual curiosity in today's society, I'm surprised they even bother to read ZH.

Escapeclaws's picture

Thanks for the reference, I did try to download the paper but no success so far.

Further question: Have you read Klein's book? In its entirety?

G. Marx's picture

I have read excerpts. I have watched her on youtube. I have watched her videos on youtube and seen interviews with her. I have read some of her blog entries and seen clips of her husband's show on as posted youtube. I visited The Shock Doctrine website after the book came out. I have read the exchange between her and her critics. I understand her thesis, her historical timeline and analysis of said time line. Final judgement? She's an ideologue playing a game of confirmation bias. In effect, she has a conclusion and then cherry picks only that data which fits her desired conclusion, to the exclusion of any data which does not confirm said conclusion. She takes other people's writings and/or opinions out of context or reinterprets those comments in a way the commentator never intended. In effect, she's no different than Rush Limbaugh and she isn't worth my time.

penisouraus erecti's picture

Ha, must be new to ZH - that would describe the vast majority of ZH'rs based on comments

Bubbles's picture

Oh, I see it was the Cato institute, not Hoover, AEI or Heritage foundation.  Well, I'm so much more impressed!  These are the same clowns that support capital gains tax rates for hedge fund managers.  Wouldn't be fair unless John Paulson paid a lower marginal tax rate than his maid, would it? 

penisouraus erecti's picture

I knew Bubbles, and you are no Bubbles sir. Should be ashamed to use that fine mans monicker.

So, after taking inflation in to accout, real inflation not cooked CPI number, aren't you actually losing money on most long term capital 'gains' in terms of purchasing power? King of like taxing losses. And, we all know that taxation, or lack of it is the problem in this country and not the fucking spending............ Perhaps we all should give all of our income to DC and let them divvy it out more equitably?

 

Canaduh's picture

Cato

Board of Directors
  • K. Tucker Andersen, Director, Above All Advisors
  • Edward H. Crane, President, Cato Institute
  • Richard J. Dennis, President, Dennis Trading Group
  • William A. Dunn, PhD, President, Dunn Capital Management
  • Kevin Gentry, Vice President for Strategic Development, Charles G. Koch Charitable Foundation
  • Ethelmae C. Humphreys, Chairman, Tamko Roofing Products, Inc.
  • David H. Koch, Executive Vice President, Koch Industries, Inc.
  • Robert A. Levy, Chairman, Cato Institute
  • John C. Malone, Chairman, Liberty Media Corporation
  • William A. Niskanen, Chairman Emeritus and Distinguished Senior Economist, Cato Institute
  • Nancy M. Pfotenhauer, President, MediaSpeak Strategies
  • Lewis E. Randall, Board Member, E*Trade Financial
  • Howard S. Rich, Chairman, Americans for Limited Government
  • Donald G. Smith, President, Donald Smith & Co., Inc.
  • Jeffrey S. Yass, Managing Director, Susquehanna International Group, LLP
  • Fred Young, Former Owner, Young Radiator Company

I'd trust them with my infant.

Plumplechook's picture

LOL.  The Koch brothers strike again.  Who'd have guessed.  As with everything now - just follow the money.