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It’s Not a “Fiscal Cliff” … It’s the Descent Into Lawlessness

George Washington's picture




 

The “fiscal cliff” is a myth.

Instead, what we are facing is a descent into lawlessness.

Wikipedia notes:

In many situations, austerity programs are imposed on countries that were previously under dictatorial regimes, leading to criticism that populations are forced to repay the debts of their oppressors.

Indeed, the IMF has already performed a complete audit of the whole US financial system, something which they have only previously done to broke third world nations.

Economist Marc Faber calls the U.S. a “failed state“.   Indeed, we no longer have a free market economy … we have fascism, communist style socialism, kleptocracy, oligarchy or banana republic style corruption.

Let’s look at some specific examples of our descent into lawlessness.

Lawless Looting and Redistribution of Wealth

The central banks’ central bank – the Bank for International Settlements- warned in 2008 that bailouts of the big banks would create sovereign debt crises … which could bankrupt nations.

That is exactly what has happened.

The big banks went bust, and so did the debtors.  But the government chose to save the big banks instead of the little guy, thus allowing the banks to continue to try to wring every penny of debt out of debtors.

Treasury Secretary Paulson shoved bailouts down Congress’ throat by threatening martial law if the bailouts weren’t passed. And the bailouts are now perpetual.

Moreover:

The bailout money is just going to line the pockets of the wealthy, instead of helping to stabilize the economy or even the companies receiving the bailouts:

  • A lot of the bailout money is going to the failing companies’ shareholders
  • Indeed, a leading progressive economist says that the true purpose of the bank rescue plans is “a massive redistribution of wealth to the bank shareholders and their top executives”

And as the New York Times notes, “Tens of billions of [bailout] dollars have merely passed through A.I.G. to its derivatives trading partners”.

 

***

 

In other words, through a little game-playing by the Fed, taxpayer money is going straight into the pockets of investors in AIG’s credit default swaps and is not even really stabilizing AIG.

Moreover, a large percentage of the bailouts went to foreign banks (and see this). And so did a huge portion of the money from quantitative easing.  Indeed, the Fed bailed out Gaddafi’s Bank of Libya), hedge fund billionaires, and big companies, but turned its back on the little guy.

A study of 124 banking crises by the International Monetary Fund found that propping up banks which are only pretending to be solvent often leads to austerity:

Existing empirical research has shown that providing assistance to banks and their borrowers can be counterproductive, resulting in increased losses to banks, which often abuse forbearance to take unproductive risks at government expense. The typical result of forbearance is a deeper hole in the net worth of banks, crippling tax burdens to finance bank bailouts, and even more severe credit supply contraction and economic decline than would have occurred in the absence of forbearance.

 

Cross-country analysis to date also shows that accommodative policy measures (such as substantial liquidity support, explicit government guarantee on financial institutions’ liabilities and forbearance from prudential regulations) tend to be fiscally costly and that these particular policies do not necessarily accelerate the speed of economic recovery.

 

***

All too often, central banks privilege stability over cost in the heat of the containment phase: if so, they may too liberally extend loans to an illiquid bank which is almost certain to prove insolvent anyway. Also, closure of a nonviable bank is often delayed for too long, even when there are clear signs of insolvency (Lindgren, 2003). Since bank closures face many obstacles, there is a tendency to rely instead on blanket government guarantees which, if the government’s fiscal and political position makes them credible, can work albeit at the cost of placing the burden on the budget, typically squeezing future provision of needed public services.

In other words, the “stimulus” to the banks blows up the budget, “squeezing” public services through austerity.

Numerous top economists say that the bank bailouts are the largest robbery and redistribution of wealth in history.

Why was this illegal?   Well, the top white collar fraud expert in the country says that the Bush and Obama administrations broke the law by failing to break up insolvent banks … instead of propping them up by bailing them out.

And the Special Inspector General of the Tarp bailout program said that the Treasury Secretary lied to Congress regarding some fundamental aspects of Tarp – like pretending that the banks were healthy, when they were totally insolvent.  The Secretary also falsely told Congress that the bailouts would be used to dispose of toxic assets … but then used the money for something else entirely.  Making false statements to a federal official is illegal, pursuant to 18 United States Code Section 1001.

So breaking the rules to bail out the big, insolvent banks, is destroying our prosperity.

Lawless Justice System

A strong rule of law is essential for a prosperous and stable economy, yet the government made it official policy not to prosecute fraud, even though criminal fraud is the main business model adopted by the giant banks.

The perpetrators of the biggest financial crime in world history, the largest insider trading scandal of all time, illegal raiding of customer accounts and blatant financing of drug cartels and terrorists have all gotten away scot-free without any jail time.

There are two systems of justice in America … one for the big banks and other fatcats, and one for everyone else.

While Iceland prosecuted its top criminal bankers, and thus quickly got through its financial problems and now has a vibrant economy, the American government has done everything it can to cover up fraud, and has been actively encouraging criminal fraud and attacking those trying to blow the whistle.

The rule of law is now as weak in the U.S. and UK as many countries which we would consider “rogue nations”.    See this, this, this, this, this, this, this, this, this, this and this.

This is a sudden change.  As famed Peruvian economist Hernando de Soto notes:

In a few short decades the West undercut 150 years of legal reforms that made the global economy possible.

Moreover, U.S. government personnel are on the take.  They have become so corrupt that regulators are literally sleeping with industry prostitutes … while they pimp out the American people.

The corruption of government officials is staggering, and the system of government-sponsored rating agencies had at its core a model of bribery.

We’ve gone from a nation of laws to a nation of powerful men making one-sided laws to protect their own interestsin secret. Government folks are using laws to crush dissent. It’s gotten so bad that even U.S. Supreme Court justices are saying that we are descending into tyranny.

It’s not a “fiscal cliff” … it’s an attempt to rape America … just like Greece and Ireland have been plundered.

Economics professor Randall Wray writes:

Thieves … took over the whole economy and the political system lock, stock, and barrel. They didn’t just blow up finance, they oversaw the swiftest transfer of wealth to the very top the world has ever seen. They screwed workers out of their jobs, they screwed homeowners out of their houses, they screwed retirees out of their pensions, and they screwed municipalities out of their revenues and assets.

 

Financiers are forcing schools, parks, pools, fire departments, senior citizen centers, and libraries to shut down. They are forcing national governments to auction off their cultural heritage to the highest bidder. Everything must go in firesales at prices rigged by twenty-something traders at the biggest and most corrupt institutions the world has ever known.

Economics professor Michael Hudson agrees … saying that the banks are trying to roll back all modern laws and make us all serfs.

Professor Hudson explained in 2008:

You have to realize that what they’re trying to do is to roll back the Enlightenment, roll back the moral philosophy and social values of classical political economy and its culmination in Progressive Era legislation, as well as the New Deal institutions. They’re not trying to make the economy more equal, and they’re not trying to share power. Their greed is (as Aristotle noted) infinite. So what you find to be a violation of traditional values is a re-assertion of pre-industrial, feudal values. The economy is being set back on the road to debt peonage. The Road to Serfdom is not government sponsorship of economic progress and rising living standards, it’s the dismantling of government, the dissolution of regulatory agencies, to create a new feudal-type elite.

Indeed:

Foreign Policy magazine ran an article entitled “The Next Big Thing: Neomedievalism“, arguing that the power of nations is declining, and being replaced by corporations, wealthy individuals, the sovereign wealth funds of monarchs, and city-regions.

 

Indeed, this isn’t the “Great Recession”, it’s the Great Bank Robbery. The big banks have pillaged and looted the rest of the world.

A lawless justice system is ruining the economy.

Lawless Central Bank

The non-partisan Government Accountability Office calls the Fed corrupt and riddled with conflicts of interest.   Nobel prize winning economist Joseph Stiglitz agrees, saying that the World Bank would view any country which had a banking structure like the Fed as being corrupt and untrustworthy. The former vice president at the Federal Reserve Bank of Dallas said said he worried that the failure of the government to provide more information about its rescue spending could signal corruption. “Nontransparency in government programs is always associated with corruption in other countries, so I don’t see why it wouldn’t be here,” he said.

Moreover, the Fed has broken the law by withholding information from Congress, letting unemployment rise in order to keep inflation low, and otherwise exceeding its authority under the Federal Reserve Act.

Acting in a lawless and unaccountable fashion is hurting the economy.

Lawless Attack on Democracy

The ability of the people to participate in their government’s decision-making is vital for a nation’s prosperity. But we no longer have democracy or a republican form of government in America.

The big banks own Washington D.C. politicians, lock stock and barrel.  See this, this, this and thisTwo leading IMF officials, the former Vice President of the Dallas Federal Reserve, and the the head of the Federal Reserve Bank of Kansas City, Moody’s chief economist and many others have all said that the United States is controlled by an “oligarchy” or “oligopoly”, and the big banks and giant financial institutions are key players in that oligarchy.

Laws are being passed in secret, and not even Congress knows what’s going on.

In other words, not only the justice system, but the entire system of American representation has been corrupted, thus harming the economy.

Lawless Infringement of Freedom

Personal freedom and liberty – and freedom from the arbitrary exercise of government power – are strongly correlated with a healthy economy, but America is descending into tyranny.

Authoritarian actions by the government interfere with the free market, and thus harm prosperity.

U.S. News and World Report notes:

The Fraser Institute’s latest Economic Freedom of the World Annual Report is out, and the news is not good for the United States. Ranked among the five freest countries in the world from 1975 through 2002, the United States has since dropped to 18th place.

The Cato institute notes:

The United States has plummeted to 18th place in the ranked list, trailing such countries as Estonia, Taiwan, and Qatar.

 

***

 

Actually, the decline began under President George W. Bush. For 20 years the U.S. had consistently ranked as one of the world’s three freest economies, along with Hong Kong and Singapore. By the end of the Bush presidency, we were barely in the top ten.

 

And, as with so many disastrous legacies of the Bush era, Barack Obama took a bad thing and made it worse.

But the American government has shredded the constitution, by subjecting us to indefinite detention, taking away our due process rights, deploying drones above our heads, spying on all Americans, and otherwise acting in attacking our freedoms.

Indeed, rights won in 1215 – in the Magna Carta – are being repealed.

Economic historian Niall Ferguson notes, draconian national security laws are one of the main things undermining the rule of law:

We must pose the familiar question about how far our civil liberties have been eroded by the national security state – a process that in fact dates back almost a hundred years to the outbreak of the First World War and the passage of the 1914 Defence of the Realm Act. Recent debates about the protracted detention of terrorist suspects are in no way new. Somehow it’s always a choice between habeas corpus and hundreds of corpses.

Of course, many of this decades’ national security measures have not been taken to keep us safe in the “post-9/11 world” … indeed, many of them started before 9/11.

And America has been in a continuous declared state of national emergency since 9/11, and we are in a literally never-ending state of perpetual war. See this, this, this and this.

In fact, government has blown terrorism fears way out of proportion for political purposes, and “national security” powers have been used in many ways to exempt big Wall Street players from the rule of law rather than to do anything to protect us.

So lawlessness infringement of our liberty is destroying our prosperity.

Lawless Initiation and Prosecution of War

It is well-documented that war destroys the economy.

Top U.S. government employees lied us into war, and used illegal torture, assassinations and other crimes of war in prosecuting the wars they unnecessarily started. They were – at a minimum – criminally negligent for failing to stop 9/11 (and see this).

In the name of fighting our enemies – the U.S. has directly been supporting Al Qaeda and other terrorist groups for the last decade. See this, this, this, this and this.

Our use of torture has also created many more terrorists than it has prevented.

Security experts – including both conservatives and liberals – agree that waging war in the Middle East weakens national security and increases terrorism. See this, this, this, this, this, this, this and this.

Indefinite detention, drone-strikes on innocent civilians, occupation of foreign countries, and most of America’s other tactics in the “war on terror” increase terrorism.

Terrorism feeds the cycle of war … and is thus harming our economy. (and because terrorism spooks people, they spend less, which further harms the economy).

So lawlessness in starting and prosecuting war is destroying our prosperity.

Postscript:  We’re not facing a “fiscal cliff”.  We’re facing a descent into lawlessness.  Stopping the fraudulent schemes, endless bailouts and imperial adventures is the place to start.

 
 

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Mon, 12/24/2012 - 12:57 | 3093098 Chartist
Chartist's picture

The big banks just followed orders which was to lend with impunity....I personally know of one guy who defaulted on $20K in credit card debt and $50K to Citigroup on a second mortgage allowing him to buy with nothing down......

Now, it's guys like me who pay their bills on time who really got screwed.  We really can't expect the banks to be left holding the bag but it pisses me off that they got their bonuses to boot!.

Mon, 12/24/2012 - 13:16 | 3093156 shovelhead
shovelhead's picture

Excuse me?

I, personally, have absolutely no problem expecting the banks to hold the bag. Who's bag is it?

Hint: Not mine. I only make bad loans to family.

Mon, 12/24/2012 - 13:19 | 3093172 Chartist
Chartist's picture

I have no problem with banks holding the bag, but I also had no expectation that it was going to happen.  Why the hell are no bankers being prosecuted?  It's because the scandal reaches all the way to the top of government.

Mon, 12/24/2012 - 15:17 | 3093496 Race Car Driver
Race Car Driver's picture

Er ... what's in the proverbial bag, anyhow?

Nothing! Nothing is in the bag because it was only ever filled with empty digital digits created out of ... nothing!

Fuck the banks and the banksters who run this scam. The only things holding this whole shebang toghether is misplaced moral obligation by the little guy on one side - and the ability to create money out of thin air by .gov on the other and pushed like street crack by the banks on the other.

 

Mon, 12/24/2012 - 16:58 | 3093661 Winston Churchill
Winston Churchill's picture

Totally agree.

Used to be that I was an honorable guy that paid all my bills.

I still do to anyone else except banks.

Whats sauce for the goose is sauce for the gander.

If the banks will not be held accountable for CRIMES,screw them.

The only law in force now is the Law of the Jungle.

 

A very merry Christmas to all here.

Mon, 12/24/2012 - 12:25 | 3092997 Winston Churchill
Winston Churchill's picture

We really are in a race between total collapse ,and tyrany.

Its neck, and neck going into the last furlong of a two mile race.

 

 

Mon, 12/24/2012 - 19:19 | 3093851 Dr. Sandi
Dr. Sandi's picture

It's not a race between total collapse and tyranny. It's a stroll, hand in hand to the end of the street where the can has been kicked.

Mon, 12/24/2012 - 12:22 | 3092993 donsluck
donsluck's picture

Meh, so what? If you cannot change it, you must work within it. This article presents no solutions, so it devolves into bitching.

Tue, 12/25/2012 - 03:55 | 3094337 ebworthen
ebworthen's picture

donsluck paraphrase:  "Please sir, do that again as my ass is not nearly chapped enough to succor sympathy from my henpecking partner."

Just shear your wool off yourself and cut off your back two legs for a nice leg of lamb roast; I'm going down fighting not bleating.

Mon, 12/24/2012 - 15:53 | 3093561 negative rates
negative rates's picture

If there is a law that needs to be changed, and you can not change it. You must break it!

Mon, 12/24/2012 - 22:58 | 3094110 mkkby
mkkby's picture

Because the law is corrupt and too complex even for judges and profs to fully understand, I refuse to accept it.  I will only follow one law -- harm no one.  No moral person needs any other law.

Mon, 12/24/2012 - 17:36 | 3093717 nmewn
nmewn's picture

This.

Mon, 12/24/2012 - 12:22 | 3092988 jayman21
jayman21's picture

George - you always put together a great list of facts with some of your opinion and I enjoy reading your stuff.  You leave out on how do we get started?

 

I am going to try this one.  Take personal responsibility.  Big banks are bad, but why does anyone still have a checking account there or a savings account?  Chase still has over a trillion dollars worth of deposits.  We are to blame as much as the evil doers.  I would love to see a list of things we the little guy can do to take personal responsibility.

 

 

Mon, 12/24/2012 - 19:29 | 3093885 tango
tango's picture

Many posters are still confusing "banks" with BANKS.  The idea of a bank, as a respository of funds, a location for loans, a builder of community, etc is part of modern society.   Many community and rural banks fared well during the downturn since they were run conservatively, did not invest their capital in wild ass schemes or give loans for 1% down without a job.  

Islam finally bit the bullet and began banking last century when it became apparent that "personal loans" could not sustain a modern society with payrolls, constant transfers and all that is inherent in a modern financial system.  I bank locally since we know the owners and know they run a tight ship, watching carefully their loans vs capital balance.

Mon, 12/24/2012 - 15:22 | 3093507 casfoto
casfoto's picture

I totally agree with you. Boycott everything. Quit buying junk for starters. Quit buying new cars. Don't go to the malls. Stop eating junk and get in physical shape, mental shape and moral shape. Take control of your money and put it in a safe. Sqeeze the bastards till they go broke. This has to be unified action across the board. Save money and buy just the essentials. Quit feeding the beast. We, the 70% could control the monster. Through your TV out the DOOR. Put Murdoch on Trial in the US for lieing and cheating the public along with all the rest of the MSM.

 

 

Mon, 12/24/2012 - 19:19 | 3093862 Dr. Sandi
Dr. Sandi's picture

Sounds like a lot of work. Isn't there just a pill or a DVD or something I can buy that will give the same results?

Tue, 12/25/2012 - 03:32 | 3094326 Ctrl_P
Ctrl_P's picture

This might help.

 

http://www.fukitol.com/

Mon, 12/24/2012 - 14:03 | 3093284 Dick Buttkiss
Dick Buttkiss's picture

Only keep as much money in a bank demand (checking) account as you need to pay your bills each month. Store hard cash in small denominations at home, along with bag silver. Buy as much gold as you can afford for the financial system reset (default) to the "unadulterated gold standard" -- http://www.zerohedge.com/news/2012-12-21/guest-post-unadulterated-gold-s... -- aka "freegold" -- http://fofoa.blogspot.com/2011/05/return-to-honest-money.html

Along the way, follow these steps as best you can:

http://readynutrition.com/resources/52-weeks-to-preparedness-an-introduc...

The state can kiss my ass.

Mon, 12/24/2012 - 13:17 | 3093164 sun tzu
sun tzu's picture

I would bet that most of their deposits are corporate or government.

Mon, 12/24/2012 - 12:26 | 3093007 Winston Churchill
Winston Churchill's picture

They no longer require deposits.They will just 'model' them.

Mon, 12/24/2012 - 12:25 | 3092998 Enslavethechild...
EnslavethechildrenforBen's picture

Gold

bitchez

Mon, 12/24/2012 - 12:26 | 3093006 jayman21
jayman21's picture

good one

Tue, 12/25/2012 - 06:15 | 3094367 new game
new game's picture

my contribution;goodbye wells fargo, welcome credit union. silver and gold. no debt.

cheap fucker with toyota corolla and 2 bikes - i hate tv adds and prosperity by consumerism.

fucking losers that think they are special or shall i say shallow because they drive a lexas, dress designer,

look down on you because....

truely the meek will inherit what is left of this mess.

the day will arive when these tauwdy fucks are begging for a handout and that

will the day you have to make a decision-feed a bankster????

NOT...

 

Mon, 12/24/2012 - 12:12 | 3092960 otto skorzeny
otto skorzeny's picture

we'll get a cold slap of reality here in the US after tomorrow's orgy of gluttony and consumerism subsides and the credit card bills shows up in Jan-Merry Christmas Bitchez!

Mon, 12/24/2012 - 12:34 | 3093026 northerngirl
northerngirl's picture

That is why all the Christmas presents I bought this year were paid in cash.  I try to avoid funding financial thugs when ever possible.  

Mon, 12/24/2012 - 13:12 | 3093141 weyes1
weyes1's picture

NORTHERNGIRL!

Mon, 12/24/2012 - 13:58 | 3093272 DavidPierre
DavidPierre's picture

Lucy Pringle ... http://www.lucypringle.co.uk/photos/index.shtml ... is one of the world's leading crop circle photographers.

Hers are among the best photographs available portraying the enigmatic crop circle mystery.

Foreign Intelligence - Binary Message

http://www.youtube.com/watch?v=LNeAnOGK9og

 

15th Aug 2002

http://www.lucypringle.co.uk/photos/2002/uk2002dl.shtml

Mon, 12/24/2012 - 19:09 | 3093848 ZeroAvatar
ZeroAvatar's picture

DavidPierre:  Aren't you the douche that follows Quinn and knocks all of his posts? 

 

I find crop circles interesting as hell, but, no lead-in, no reason?  And now your'e advocating smoking dope? 

 

FUCK OFF YOU LIBERAL DOPE-SMOKING ZOMBIE.

Tue, 12/25/2012 - 10:31 | 3094528 Blythes Master
Blythes Master's picture

Yes, Douche Pierre is a coin tel pro scrotum.

Mon, 12/24/2012 - 19:09 | 3093846 Dr. Sandi
Dr. Sandi's picture

Thanks DavidPierre. Your contribution to the discussion of the rule of law is well appreciated, as always.

We all know that NO HUMAN could create crop circles. Particularly the humans who have shown us how they've been doing it for years.

Mon, 12/24/2012 - 14:24 | 3093337 weyes1
Mon, 12/24/2012 - 15:02 | 3093455 DavidPierre
DavidPierre's picture

Wonder indeed!

An amazing collection of photos which can not be denied by those with an open mind.

Good to know WE are not alone in the universe.

A dual design featuring a set of nested crescents neighbouring a symmetrical inverse pattern. 

http://www.lucypringle.co.uk/photos/2006/uk2006ak.shtml#pic2

Mon, 12/24/2012 - 15:50 | 3093551 negative rates
negative rates's picture

Great spenders, are bad lenders.

Do NOT follow this link or you will be banned from the site!