By Alex Smith, Radio Ecoshock
Script for Ecoshock Show October 3, 2008
[Crowd chants protest against bailout on Wall Street]
That is the Wall Street Protest crowd you never heard on TV. One reporter in a nice suit spoke over them, never offering a microphone to the public, to see what they would say. That is operation of the mainstream media: people making seven figure salaries, working for multi-billion dollar media companies, discuss the ups and downs of their stock port folios. And they are all pushing the bailout – a huge loan from the next generation, the young people already eye-ball deep in credit card debt and student loans.
Presidential candidate John McCain, with his multi multi millionaire wife Cindy, speak for the super rich. Barack Obama says repeatedly he represents the Middle Class. The rest of Americans, the working poor, the sick, the homeless, have no candidate. In fact, they don’t appear in this election at all.
They are millions of invisible people, for whom the stock market gyrations mean nothing at all. They never owned stock, and never will. Their savings are completely protected, because they have none. Nobody cares.
In the 700 billion dollar bailout, we saw an attempted coup of the United States government by finance. No oversight, a demand for absolute power. Their own ships sinking, the money pirates are leaping on board the taxpayers, as the George Bush sinks into irrelevancy. Secretary of the Treasury Paulson, with Helicopter Ben Bernanke of the Federal Reserve, are running what’s left of the country.
[Jon Stewart “It’s a Rudderless Ship!”]
The first bill was miraculously turned down by Congress, following a wave of emails and telephone calls against it. Maybe millions didn’t turn out in public squares – but they showed up by telecommunication. That’s one of our questions this hour: is the revolution already happening in Cyberspace?
Think about it. We still have the 1929 model of a Depression, where people line up for a run on the bank. But last week, the giant American Savings and Loan company Washington Mutual was grabbed overnight by the Federal Deposit Insurance Corporation, the FDIC, due to an invisible run on the bank. People don’t line up in the street anymore. WaMu depositors withdrew around $17 billion through online accounts and ATM’s. The invisible bank run. It is scaring the Hell out of bankers around the world.
We’ll also ask: which other institutions are going bankrupt? No, not on Wall Street, but in Washington D.C. and New York City. Last I heard, the FDIC, which protects up to $100,000 in all banks, had about $50 billion in reserves. Then why did the FDIC cover up to $312 billion dollars of toxic Watchovia debt? The FDIC is already bankrupt, in my opinion, and lawmakers want to raise the limit. Christmas for everyone.
What about the Federal Reserve? Is it technically bankrupt? What about the U.S. government itself?
You can be excused for believing the $700 billion dollar bailout was defeated by the people’s will last week. Not really. As we’ll discover, Secretary Paulson and Fed chair Bernanke authorized over a trillion dollars of purchases of toxic debt, using mechanisms your newspaper and television reporters didn’t even cover. These men, and their Wall Street cronies, went against the will of Congress, and did the bailout anyway, by other means. I’ll tell you how they did it.
With nationalizations, and buyout guarantees, Americans, and now the citizens of Europe, have bought into banking in a big way. But is a combination of banking and government really a good thing? How did that work for the Soviets? Just imagine the super-anti-terror state, with all computerized access to intelligence, police and political files – now adding all your credit records into the mix.
Are you protesting something the government wants done? Is it a co-incidence your recent credit card application, or mortgage, was turned down? Get the picture – it’s a nightmare slide into a kind of fascism by finance. George Bush now controls half the mortgages in America, the country’s largest insurance company, and proposes to buy into the biggest banks. That gets passed on to Sarah Palin, or who knows who.
And while the humans fixate on their bank accounts, our carbon deposits have never been higher! We are doing absolutely nothing about climate change. Remember Hurricane Ike? Remember Galveston, the second U.S. city to be wiped out in just 3 years? Galveston, Houston and the floods of the season have disappeared off our screens. We’re all looking at Sarah Palin videos instead, like a Three Stooges re-run.
[Sarah Palin on climate change]
That’s late night talk show host David Letterman going ballistic over climate change. I’ll have more of that for you, at the end of the show. I also have a few solutions for you, as we go along.
Secret bailouts, finance coups, cyber-revolution, and climate madness. Just another week in these times when history cracks open, unable to repair itself. Welcome to Radio Ecoshock. I’m Alex Smith.
Warning, you are about to hear a dirty word, used by six year olds all over the world.
[clip “I don’t Want to Buy your Toxic Shit” song, artist unknown, source Youtube]
The American mortgage melt-down has washed into banks and investment houses all over the world. Wall Street firms like Lehman and Goldman Sachs were so successful at selling so-called derivatives – packages of U.S. mortgages – all rated as AAA by the official ratings agencies.
When this turned out to be a huge scam, from the mortgage brokers right on up through trusted banks, Europeans, Asian and Australian banks were left holding trillions of dollars of bad debt. Now governments in Europe are rescuing their own banks with unheard of nationalizations and guarantees, all coming out of the taxpayers’ pocket, with no democratic choice about the matter.
Just think how happy those Europeans are, how their love and trust of America has been undermined, by the biggest financial swindle of all times, aided and abetted by the same government that brought them the fraudulent war in Iraq.
Germany has ploughed billions in taxpayer loot into their financial system. Belgium, the Netherlands and Luxembourg rescued their giant Fortis bank. Then Belgium and France had to act again, rescuing the Dexia Bank. The dominoes continued to fall in England, where the huge Bradford and Bingley bank was nationalized overnight.
The German government was forced to provide a 51 billion dollar line of credit to save it’s second largest commercial property lender Hypo Real Estate Holding AG. It was almost laughable to hear German Chancellor Angela Merkel demanding the U.S. government step up to the plate and bailout the banking system, after the failed vote in the House on Monday. Are you kidding? Why should America pay for a made-in-America scandal that rocked the world? Wait for the Americans to join the International Court and the Kyoto Protocol first.
This is another huge factor that the media is glossing over. The big European institutions, like Swiss Bank USB that lost tens of billions in bad investments, sold to them by Wall Street, and approved by the ratings agencies like Standard and Poors, are really angry they got taken for a ride. But that’s just the start. Now European governments are facing angry voters that have to pay for this fraud. And Australian voters. And Asians too. You think Iraq gave America a black eye. Just picture how these billions of people feel about paying for the Wall Street Mess themselves!
Don’t underestimate the geo-political changes that will happen just because of Wall Street’s attempt to loot the world financial system. It may be slow, it may be underground, but governments are already talking about the demise of American financial supremacy, and a new world order built outside the failing structures developed by the U.S. since World War Two.
Even little Iceland was buying out banks. Ireland took the biggest step, promising the taxpayers would guarantee every bank account in the country – for Irish banks that is. European bankers called foul, saying this unilateral action endangered the European Banking Commission, and created an unfair advantage for Irish banks.
I wonder, does the Irish government guarantee cover its wealthiest citizen, the multi-billionaire owner of the Tata empire in India, who like other billionaires became a citizen of convenience to take advantage of Ireland’s lax tax laws?
The government’s guarantee loads an estimated 400 billion pounds of new liabilities on the Irish people. It’s a race to the bottom, to enslave the next generation in permanent debt. Anything for investors!!
In Russia, after their Monday crash, the government ordered the stock markets shut down, for the second time in two weeks.
Back in America, citizens might have felt a brief victory for democracy, when the initial dictatorial bailout bill was modified, and then defeated on Monday. The big institutional investors punished the little people with a massive sell off. The big boys came back the next day, after their threat was manifest, and the American Senate went into a huddle, to vote on another bailout bill on Wednesday night.
Normally, according to a little known document called the U.S. Constitution, the Senate cannot initiate spending bills – but hey, who’s counting. Since the Senators are not all up for election in November, like their cronies in the House, they could risk the vote for their major campaign contributors, the Wall Street lobbyists.
Just to add sugar to a bitter pill, the Senate added some tax breaks – what a good idea for a country going insolvent! – and, oh yeah, an alternative energy incentive for the greens out there. Mmmm, tastes good, all the way down.
Now I mentioned that Treasury Secretary Paulson, he would be King, and Fed Chair Bernanke had already picked the public pockets of a trillion this week anyway, despite being told “no” by Congress, and the public.
The 700 billion was refused Monday, but that very evening, the Federal Reserve lent out 620 billion to the banks, U.S. banks, and foreign banks, to prop up the world financial system. Previously, the Fed lent maybe $40 billion overnight, then a week ago, 188 billion overnight, now 620 billion dollars – and not just for overnight, if I understand their own publication correctly.
The Fed statement is arcane for most of us. They will increase their 84 day loans to $225 billion, from $75 billion. Then something called the Federal Open Market Committee provided, quote:
“an increase in swap authorization limits with the Bank of Canada, Bank of England, Bank of Japan, Danmarks Nationalbank (National Bank of Denmark), European Central Bank (ECB), Norges Bank (Bank of Norway), Reserve Bank of Australia, Sveriges Riksbank (Bank of Sweden), and Swiss National Bank to a total of $620 billion, from $290 billion previously.”
Of course, the Federal Reserve takes collateral for the huge sums it lends out.
Those with a very long memory, say 6 months or so, will recall that in the Bear Stearns debacle, the Fed modified the types of collateral banks, or later even investment firms, could leave for collateral. Mysteriously, the Fed agreed to take even the most toxic sub-prime, Alt-A, derivative blunk and give out solid U.S. treasuries or cash in return. There was a rush to dump the most poisonous financial papers into the Federal Reserve.
According to an article in the seekingalpha blog on September 29th, 2008 by Avery Goodman, quote:
“The Federal Reserve is a quasi-private institution, capitalized and supported with taxpayer dollars. However, for years it has been used as a slush fund for private banks on Wall Street. Over the past year, the banks managed to unload about $777 billion worth (in terms of par value at maturity) of their most toxic debt paper onto the Fed balance sheet. “
Let’s continue with this Avery Goodman article, titled “Close Down the Federal Reserve”.
“No rational private industry player would have agreed to have its balance sheet polluted by the combined mistakes of its clients. However, according to the Wall Street Journal, the Fed was willing to take in this toxic waste “collateral” on a non-recourse basis, giving the banks cold hard cash, or valuable T-bills in return. Non-recourse is a legal term which means that if the borrower fails to pay back the loan, the only thing the Fed can do is sell the collateral. The other assets of the bank, are immune from attachment. The bad collateral consists of mortgage backed paper and other currently depressed paper instruments, worth about $0.22 on the dollar, or much less, on the free market. I use the $0.22 figure, because that is the price obtained at a recent sale of such assets by Citi group. Yet, in spite of the free market value of this collateral (and $0.22 on the dollar is being very liberal about valuation), the Federal Reserve has paid 90% of par value for this trash.
Lehman Brothers is an example of a bank which was allowed to use its close connections at the New York branch of the Federal Reserve, to borrow tens of billions of dollars, based on bad collateral. During the time it borrowed money, everyone had to know, including Timothy Geithner, President of the New York Federal Reserve Bank, that the company was insolvent. Now, Lehman is officially bankrupt. It will never pay back the debt. In short, under the leadership a Board of Governors heavily influenced by Wall Street, the Fed has already managed to lose a fortune of taxpayer money.”
There you have it. Wall Street got the Federal Reserve to eat three quarters of a trillion dollars of garbage. The American taxpayers will eat the bill.
Moving on from the Federal Reserve, that headquarters of capitalism, we find another government backed institution, the Federal Deposit Insurance Corporation also being fed more toxic trash, for you and your descendents to pay off.
This one really sucks. Every lowly citizen of America counts of the FDIC to at least give cover up to 100,000 thousand dollars of their bank accounts, should some banksters make off with their hard-earned savings. The FDIC doesn’t have anything like that kind of money, should a string of major banks fail. This week, instead of having to pay off the depositors, the FDIC has declared two banks insolvent, grabbed them overnight, and marched them off to a shotgun marriage to still larger banks. Thus Washington Mutual was sucked into JpMorgan Chase, and Watchovia went to Citi Group. It’s a huge concentration of the banking industry.
Even though, by law, no American bank is allowed to hold more than 10 percent of deposits – another alleged protection for depositors and the public – we emerge this week with a third of deposits held by just three banks: Bank of America, Citi group and JpMorgan Chase.
For the press, FDIC officials bragged about shuffling off bad banks with no hit to the taxpayers. Then we find out the FDIC swallowed 312 billion in toxic mortgage debt liability in the Watchovia deal. That’s right. The FDIC, guardian of the people’s money, took the very unusual route of guaranteeing $312 billion of the worst mortgages and so-called “underperforming assets” to Citigroup.
In fact, Citigroup stands to make out like bandits from the Wall Street bailout and the financial woes. On September 29th, Sara Lepro, business writer for the AP wire service reported, quote:
“The government’s proposed $700 billion rescue plan for financial
institution, being voted on Monday by the House of Representatives,
likely will prove of added benefit to Citi.
While the plan broadly aims to prevent banks from profiting on the sale
of troubled assets to the government, there is an exception made for
assets acquired in a merger or buyout, or from companies that have filed
for bankruptcy. This could allow Citigroup to sell toxic mortgages and
other assets it gained from Wachovia for a higher price than the bank
actually paid for them.”
Now the elite chorus is calling for even higher limits of protection from the FDIC, which is already technically insolvent. The Senate wants to raise the limits to $250,000. Cramer, the same idiot who told viewers to buy Watchovia stock the very night the bank disappear into thin air – Cramer, wants a million dollars of coverage from the taxpayer.
[Cramer clip suggests FDIC cover hundreds of millions in corporate debt as well]
Hell, why not cover everything, everywhere! Guarantees for all! It’s the invisible hand of capitalism! In my mind, I keep hearing James Howard Kunstler, author of the Long Emergency, in the speech I recorded last January. Here are a few clips from that two hour session, which you can find in our archive of past Radio Ecoshock programs:
[Kunstler clips – in which Jim explains the deep reasons behind the coming collapse. He accurately describes the housing bubble, fraud mortgages, and derivatives dreams – in October 2006! These clips from his blog in 2006, an item called “Swan Dive” – and then a speech I recorded in Vancouver in late January 2008.]
Grow yourself big, little piggies, at the taxpayers’ risk! Where can I get a bailout? I guess I have to toss a few more million dollars into my Congressmen and Senators to get this action.
What we have here is a total disconnect between the average citizen, and the elites who claimed to manage the economy. As the toilet flushes pensions, investments, and rules down the drain, the scamsters rake in more power and money. It is now impossible to see any dividing line between a tiny elite of billionaires and the government of the people.
This is Radio Ecoshock. I’m Alex Smith.
As the marriage of billionaires and the Federal Government goes ahead, following the rape of the future and the common worker, this passion play works out two ways. Not only has Wall Street captured the government – but the government is increasingly capturing control of banking. And why not, they print the fake money anyway.
There are minor problems. For example, if the government is supposed to regulate a big company like AIG, but also owns 80 percent of it, how does that work? Not that there has been any effective regulation, as we now see.
The ultimate danger, as critics like Paul Craig Roberts warns, is a new kind of financial fascism. The Bush administration has set many dangerous precedents about interference with civil liberties. They spy on the people both legally and illegally. Now they are going to get your banking records, and have control of a huge portion of the lending pie.
You can see the risk that Big Brother will react to criticism, or protests, or civil disobedience by quietly lowering your credit worthiness. Suddenly, you can’t get a car loan, or a mortgage. Don’t laugh this off. The Federal government now owns more than half of all mortgages in the United States, and is claiming interest in various banks, insurance companies, and more.
The same applies in Great Britain, which is already the world’s most developed spy state, when it comes to its own citizens. Now the UK has nationalized several large banks, beginning with Northern Rock, and continuing into this week with more to come.
What is this new financial government hybrid emerging before our eyes? How will it be used by a Sarah Palin, or who knows who? How will rogue government agencies abuse your savings or credit line? Who could stop them?
Too paranoid? Just remember the Red Scare of the 1950’s, right in America, the land of the free. Librarians were fired, executives, government workers, because they at one time went to Communist Party meetings. Left leaning journalists were fired. Folk singer Pete Seeger was banned from American TV for decades. Now they won’t have to be so obvious. They can just decline your card at the checkout stand. Good luck with your life outside the electronic grid, now that the government and the banks are married.
So much is going unreported. What happens to the millions of American loosing their homes? Where are they going? Did you know Congress did manage to do some work this week? They gave a $25 billion dollar rescue loan to the auto industry. General Motors can’t borrow anywhere else. Their credit rating has dropped below junk bond status. The car companies don’t have to repay this money for five years. Any bets any of them will be around then? Do you really believe any of this $25 billion will be paid back?
Car sales have slumped around the world, and thanks be. Maybe it will help the atmosphere breathe long enough to find another way to get around, without wrecking the climate.
Oh yeah, and Congress quickly approved another 620 billion for the military, much of it due to the Iraq War. Hey, I have an idea – why not close the overseas bases, and use the 620 billion to rescue Americans in debt? Here is Dmitri Orlov, from a Radio Ecoshock interview last spring:
[Orlov clip on bases – get the troops and weapons home, while we still can…]
All this reckless spending, deficit spending, money America hasn’t got. The government will hock the future to the Saudi’s, the Chinese, who knows. Either of those two could pull the plug at any time, and guess what, they don’t love America all that much.
It’s not like America can keep borrowing forever. Again, here is Dmitri Orlov:
[Orlov on using oil as collateral, a shrinking economy leads to non-payment of foreign debt, i.e. bankruptcy for America]
The White House is empty, the banksters are emptying the last gold from the treasury, and where are the riots in the streets? Even the ‘Washington Post asked “Where Have All the Protests Gone?” Are the students too in debt to speak up?
California lefty icon Tom Hayden wondered the same thing this summer, when I recorded his speech in Vancouver.
Washington Post writer David Segal quotes Rachael McMillan, a senior at Columbia University saying “”Most college students just don’t feel like they have a vested interest in what is happening today,” she said. “I hate to say it, but a lot of my peers calculate the opportunity cost of coordinating with others — or planning a sit-in or a walkout or just some protest — against the urge to write a paper, get an A and go to Harvard Law School.”
Radio Ecoshock goes out to at least nine college radio stations that I know of. You tell me. Why are college students letting the baby boomers take all your future taxes now? For wars, and now to repay bad debts by Wall Street gamblers. Is anybody out there? Write me at firstname.lastname@example.org.
As I said earlier in this broadcast, there is a chance, just a chance, that protest is happening, but not like anything known in the sixties. Facebook is sizzling. Blogs are humming. Emails to members of the House nearly shut down the government system, for the first time, by shear volume last Monday as the Vote came down on the bailout.
We accept that the financial world has moved to computers, why not social change as well? Is there a silent revolution already happening in cyberspace? I slogged through blogland using Technorati. Google yielded little, Youtube a bit more.
But basically, even given the complete lack of coverage given by the major media, it still sounds like a lot silence to me. If I were in any place of power these days, in a corporation, a bank, or government, I’d be very worried about that silence. It could be the lull before a storm which will bring down the house.
With all this excitement – does anyone even remember Hurricane Ike? There are still 400 people unaccounted for. Galveston is still a wreck. Another Gulf city gone. Scientific experts, American and internationally, say climate disruption is just beginning. More cities will be destroyed or damaged around the world. We know it. But climate disruption is not even mentioned in the Presidential debates. Off the radar. Not happening.
Humans have such short attention spans. We are easily distracted by bank crashes and wars, or just the latest celebrity scandal. We are only interested in our selves, not in the disappearance of the natural world.
We’re screwed, as late night talk show host David Letterman explains in his recent rant. That’s coming up in a second, but first …
Thanks for listening to Radio Ecoshock. I’m Alex Smith, and I approved this message. Next week I’ll shut up and play you a hot new speech from Paul Ehrlich. He came out in the late 60’s with the book “The Population Bomb”, and has been publishing best sellers ever since. His latest, co-authored with his wife Anne, is “The Dominant Animal: Human Evolution and the Environment.” On September 24th I recorded his speech at the University of British Columbia – and you won’t want to miss it.
Here is Paul Erhlich on the bailout:
The elections, the climate, population, the idiocy, and threats to our whole human project, next week with Paul Ehrlich on Radio Ecoshock.
Won’t you join us then?
[David Letterman’s amazing rant on climate change (“We’re So Screwed”)]
Find Radio Ecoshock at ecoshock.org