Paulson's bailout is a preplanned financial endgame

[Kiwi in Oz]

Funny how all of a sudden it's ok to socialize the debt, but it wasnt ok to socialize the wealth

[Abhaha]

I do not believe in TPTB as a monolithic block, not even two families, parties or whatever. Rather there are alot of people/groups at the top fighting and playing against one another (for it is all nought but a game, albeit one with very high stakes).

Perhaps, but it is a common occurrence in human psychology that when a group that is in conflict is sufficiently threatened, they may temporarily put aside their rivalries to join together to face the threat/problem. This is especially true if they have certain common interests.

This happens all the time in systems of all kinds.

[Seahorse]

More evidence that this financial crash was preplanned by the gov't.  My initial post overlooked the significant fact that the liar loans would not have been possible without the low interest rate policy of Greenspan.  Here is a nice rebuttal to the President's plan by Congressman Ron Paul.  He clearly states that Washington is responsible for this mess, not the mortgage markets.

We are told that "low interest rates" led to excessive borrowing, but we are not told how these low interest rates came about. They were a deliberate policy of the Federal Reserve. As always, artificially low interest rates distort the market.
Entrepreneurs engage in malinvestments - investments that do not make sense in light of current resource availability, that occur in more temporally remote stages of the capital structure than the pattern of consumer demand can support, and that would not have been made at all if the interest rate had been permitted to tell the truth instead of being toyed with by the Fed.

Not a word about any of that, of course, because Americans might then discover how the great wise men in Washington caused this great debacle. Better to keep scapegoating the mortgage industry or "wildcat capitalism" (as if we actually have a pure free market!).

http://www.doomers.us/forum2/index.php/topic,26063.0/topicseen.html

[Kushtaka]

Funny how all of a sudden it's ok to socialize the debt, but it wasnt ok to socialize the wealth

Let's face it, wealthy conservatives favor private enterprise for the poor and socialism for the rich. They prefer that we remove all forms of welfare and public service from the destitute individual while maintaining vastly more expensive welfare systems for multinational corporations and massive banking institutions. They privatize the profits while placing the losses squarely in the hands of the middle income and down tax payers. They are thieves and liars. They could not possibly be where they are today in the economic reality we live without being dishonest, callus, and generally scum bags. We have every right to want blood. Enough is enough.

[uberdoomer]

More evidence that this financial crash was preplanned by the gov't.

More evidence for pre-planned endgame hypothesis.
How the feds stopped the states from averting the lending mess.
http://www.slate.com/id/2182709/

An excerpt:

As the federal government scurries to prevent the subprime mortgage crisis from sending the economy into a deep recession, many of us are asking why it waited so long to intervene. As it turns out, the government wasn't exactly sitting on its hands. Instead, for reasons that now appear hopelessly shortsighted, an obscure federal agency torpedoed legislation from a handful of states that would have made institutional investors far charier of buying mortgage loans that were likely to go belly-up. If the legislation had been permitted to go into effect, the crisis we now face would probably look a lot less grim. The right question, then, is not why the feds did so little. It's why they did so much.

[ollie]

Perhaps, but it is a common occurrence in human psychology that when a group that is in conflict is sufficiently threatened, they may temporarily put aside their rivalries to join together to face the threat/problem. This is especially true if they have certain common interests.

Providing the conflict is not caused by the rivals.
Providing the common interests are common enough
Providing there is more to gain from cooperation than manipulation and sabotage.

There is far  more than just one game being played.

And I thnk that's pretty much the crux of the issue.

Y'all looking for the one enemy, when there are lots

Or to express it differently, if all you're looking for are feathers, all you're gonna find are birds

ollie

[Seahorse]

Another fact which supports the hypothesis that this was all planned.  The housing burst via liar loans was only made possible by then Federal Reserve Chairman Alan Greenspan's low interest rates.  Now, one might think that Alan Greenspan was just a fool and had no idea the low interest rates would cause a housing boom and bust, but, he was no fool.  In fact, his doctoral thesis was on housing cycles which in in bust.  Here's a snippet:

We were tickled to find that the work's introduction includes a discussion of soaring housing prices and their effect on consumer spending; it even anticipates a bursting housing bubble. Writes Greenspan: "There is no perpetual motion machine which generates an ever-rising path for the prices of homes."

http://online.barrons.com/article/SB120917419049046805.html?page=1

I'm going to go back and add this fact into the original post.

[Seahorse]

I will also add the following to the original post:

Greenspan, a expert in housing booms and bust, first lowered rates allowing the massive surve in housing with liar loans, but then began raising rates in 2006 to cause a slow down, aka bust.

EXPECT ECONOMIC GROWTH TO CONTINUE IN 2006, although at a slower pace, as the housing market dials down and interest rates rise, predicted experts at the National Association of Home Builders' (NAHB's) Construction Forecast Conference in Washington, D.C., in October.

After years of locomotive-like momentum, the housing market is "seeking out a peak," and there is some evidence that the Federal Reserve's quarter-percentagepoint incremental rate hikes will finally have the desired effect of cooling some of housing's fire, said NAHB Chief Economist David Seiders.

"[Federal Reserve Chairman Alan] Greenspan has discovered it's no longer as easy to slow down housing as it used to be, and the Fed has run into difficulty in taking some of the steam out of a boom that it believes has been running too hot and cannot be sustained," said Seiders.

The Fed will continue to boost its Federal Funds rate by one-quarter percentage point, bringing it to 4.5 percent by the end of January, when Greenspan's term ends, said Seiders. Maury Harris, chief U.S. economist and managing director, UBS securities LLC, New York, agreed.

http://www.allbusiness.com/finance/3596691-1.html?yahss=114-3470923-3596691&siap=1

Even back in 2006, everyone knew there was a potential "crisis" brewing in housing.  Check out this quote from the above article:

Greenspan appears to be determined to leave monetary policy in a neutral statewhere it is neither a source of stimulus nor a drag on the economy, in order to afford his successor the flexibility to loosen or tighten as needed in the event of a crisis, said Harris.

Even back in 2006, everyone knew which markets were "juiced up" or, destined for a crisis.  Check out this quote yet again from the same article.

However, Mark Zandi, chief economist of Economy.com, West Chester, Pennsylvania, warned that housing has become "increasingly overvalued," especially in metro areas throughout California and Florida and in "juiced-up" markets such as Washington, D.C., and Boston.

The above article clearly shows that the current crisis we see in housing was not an unforeseen event, but was clearly anticipated as early as 2006.  However, there is simply no way that Greenspan, who wrote his doctoral thesis on booms and busts in housing, was not aware of the effect his lowering interest rates would have on housing nor the effect of killing that bust by raising them.

Interesting, and no coincidentally, just as housing peaked in 2006 and was destined for a crisis, Greenspan retired and was replaced with Ben Bernanke.  Why is this interesting?  Because just as the housing crisis was beginning, Greenspan is replaced by Bernanke, who was a specialist on the causes of the Great Depression. 

Bernanke is particularly interested in the economic and political causes of the Great Depression, on which he has written extensively. On Milton Friedman's ninetieth birthday, November 8, 2002, he stated: "Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve System. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again."[10][11][12]

In 2002, when the word "deflation" began appearing in the business news, Bernanke gave a speech about deflation.[13] In that speech, he mentioned that the government in a fiat money system owns the physical means of creating money. Control of the means of production for money implies that the government can always avoid deflation by simply issuing more money. (He referred to a statement made by Milton Friedman about using a "helicopter drop" of money into the economy to fight deflation.) Bernanke's critics have since referred to him as "Helicopter Ben" or to his "helicopter printing press". In a footnote to his speech, Bernanke noted that "people know that inflation erodes the real value of the government's debt and, therefore, that it is in the interest of the government to create some inflation."[13]

[url][http://en.wikipedia.org/wiki/Ben_Bernanke/url]

Again, these appointments show a preplanned crisis.  Greenspan is the specialist at booms and busts, and Bernanke is deemed the specialist at handling the bust.

This article argues that this current bailout was pre-planned, a smash and grab of US taxdollar to benefit the few, namely the investment bankers.  Well, as I write, we know that only two investment banks are left standing.  Those are Goldman Sachs and JP Morgan.  So, the facts would have to prove that this administration is working for the benefit of at least Goldman Sachs.  Do the facts show that?  Yes they do.  In 2006, just as housing peaked and was starting to bust, Paulson was appointed as Secretary of the Treasury.  Why is this significant?  He left his position as CEP of Goldman Sachs to take this appointment.  Paulso was known as "Mr. Risk" having been the reason for GS being so profitable, through leverage.  Look and read these quotes from Business Week discussing his appointment in light of what we know about his current bailout because the US investers are overleveraged.

Washington
Hank Paulson's profound understanding of risk and reward makes him the perfect pick for the Treasury

The next quote shows how Wall Street and Paulson view the US, as a means to make a profit.

Indeed, some economists have characterized the U.S. as a giant venture capital fund that sucks in money from overseas and invests it in high-risk, high-return projects.

The next quote shows that he is well aware of the problems facing overleverage in the investment sector.

Think of Paulson as Mr. Risk. He's one of the key architects of a more daring Wall Street, where securities firms are taking greater and greater chances in their pursuit of profits. By some key measures, the securities industry is more leveraged now than it was at the height of the 1990s boom. It has also extended its global supremacy since then.

Paulson was admittedly appointed, at the peak of the housing market and inevitable decline, to take a greater role than any previous Secretary of the Treasury.

According to an individual close to Paulson, the President told the Goldman chief he wanted a "very senior person" from Wall Street. He also said he wanted Paulson to play a broader role in his Administration than had previous Treasury secretaries, taking on the role of Bush's "principal adviser" on economic matters and driving economic policy.

He was appointed in part to be a communicator, someone who can persuade Congress and the public, key, obviously, in getting people to accept this bailout.

Within Goldman, Paulson is known as an exceedingly effective communicator. If he can translate Wall Street's language of speculation into something the public and politicians understand, the President's gamble in appointing him will pay off for everyone.

[url][http://www.businessweek.com/magazine/content/06_24/b3988001.htm/url]

The key appointments of Greenspan, Bernanke, and Paulson, show that the events of boom to bust were orchestrated by three men, all experts at each very important part of an unfolding plan.

[kimberley862]

But I'm confused at who benefits from it.

[Abhaha]

But I'm confused at who benefits from it.

The bailouts are designed to save the asses of the Banksters that created this whole mess in the first place: these are the people who have RUINED the economy. They profited hugely by taking risks they ought not to have taken. If you or I take a risk that ends in failure, it is our tough luck--we get no rescue at all. But in this case the uber rich financiers who created this mess are getting a ticket to ride courtesy of the taxpayers because if not, the whole economy will meltdown completely TOMORROW. This is no exaggeration either.

It is called capitalism for the common people and socialism for the RICH. They cannot be allowed to fail.

The bailouts merely buy more time....it doesn't solve the fundamental problems that caused it in the first place.

For people here, it would buy about 6 months more time for preps....if the bailout did not happen, the feces hits the fan MONDAY.

Yesterday I listened to Jim Puplava's program just now for Sept 20th Part 1.  They said they are inflating the currencies WORLDWIDE through these bailouts. They also said that due to the fact they are running the printing presses to do it, we are in line for a hyperinflationary depression like Zimbabwe.

I suggest you LISTEN TO IT.

[Seahorse]

Even Newt Gingrich is now saying Paulson is "un-American plan" and should resign and questions Paulson previous connections to Wallstreet.

'Un-American' Bailout, Paulson Should Have Quit, Gingrich Says
 Email
 Share September 28, 2008 12:46 PM

ABC News' Tahman Bradley and Arnab Datta Report: Former House Speaker Newt Gingrich, R-Ga., on Sunday described Treasury Secretary Henry Paulson's request for billions of dollars to buy debt from struggling Wall Street financial firms as "un-American" and said the secretary should have stepped down.

Gingrich even expressed concern with Paulson's connections to Wall Street.  The treasury secretary served as the chairman of a major global investment banking and securities firm before joining the Bush administration.

"You have the former Chairman of Goldman Sachs asking for 700 billion dollars, and in his initial request, asking for it in such an un-American way that I think he should have resigned," said Gingrich. "I think Paulson has terminally misunderstood the nature of the American system. Not just no review, no judicial review, no congressional accountability. Give me 700 billion dollars, 700 BILLION dollars! 'I'll be glad to spend it for you.'  That's a centralization of power that is totally un-American."

Watch Gingrich's remarks HERE.

Watch "This Week's Sunday Sound" webcast HERE.

Early Sunday, congressional leaders and the Bush administration reached a tentative agreement on the $700 billion Wall Street bailout proposal. The bill is expected to come up for a vote in the House on Monday.   

Gingrich, who made his remarks on the "This Week with George Stephanopoulos" roundtable, conceded that he would probably vote for the plan if he were still in U.S. House because Congress was left with little choice.   

Last week, Gingrich described the bailout plan as a "dead loser on Election Day" and urged Republican presidential candidate Sen. John McCain of Arizona to speak out against the plan.  McCain, who appeared as the headliner on "This Week", signaled he's likely to vote for the bill in its present form.

September 28, 2008 in Washington, White House | Permalink | User Comments (186)

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[Brother]

Seahorse, thank you for that well-documented look at Greenspan and Bernanke's appointed roles in the mess.

I'm still a little fuzzy on the "who benefits?" aspect. I mean beyond the totally obvious: rich looking after each other, etc. IMO that's too general. To say the whole thing, from bubble to bailout, was "pre-planned" suggests either a massive "bank heist" (my father's words) to benefit certain specific individuals (behind GS or JPM ?), who would have had the foresight and power to install Greenspan and Bernanke years ago; OR a more general - fatalistic? - economic strategy for the US, envisioned by a wider swath of banking/governmental operatives, with the appointed experts steering the ship.

Can you or anyone be more specific on this aspect of the endgame?

[PsuSouthpaw]

Gingrich is the MAN for calling out this plan.  Everyone on here should write and commend him, then let your congressmen and senators know they need to follow his lead on this.

[Seahorse]

Brother, the culprits are Goldman Sachs and JP Morgan which are the two last men standing, along with the Federal Reserve Bank which is a private bank.  If you go back and look at Paulson, aka "Mr. Risk", he was commended for making GS profitable using all that leverage "off books" and "off shore" and un-regulated, he simply is using his position as Secretary of the Treasury to do the same to maintain the dominance of the US Federal Reserve and GS.  If you read the full Business Week article I posted concerning his appointment, there is a quote in there about how Wallstreet viewed the US as a way to use leverage, something to that affect.  Notice how Buffet recently invested in Goldman Sachs, he knows who the lone survivor will be. 

[Brother]

Brother, the culprits are Goldman Sachs and JP Morgan which are the two last men standing, along with the Federal Reserve Bank which is a private bank.  If you go back and look at Paulson, aka "Mr. Risk", he was commended for making GS profitable using all that leverage "off books" and "off shore" and un-regulated, he simply is using his position as Secretary of the Treasury to do the same to maintain the dominance of the US Federal Reserve and GS.  If you read the full Business Week article I posted concerning his appointment, there is a quote in there about how Wallstreet viewed the US as a way to use leverage, something to that affect.  Notice how Buffet recently invested in Goldman Sachs, he knows who the lone survivor will be. 

Got it. I see a lot of familiar names among the Goldman Sachs alumni (from a UK Independent article)..

"Robert Zoellick

The World Bank nominee is formerly a deputy to Condoleezza Rice. He was a key diplomat in Washington's China policies before joining Goldman Sachs as managing director and vice-chairman for international strategy.

Joshua Bolten

The White House chief of staff is also a former Goldman Sachs executive.

Robert Rubin

The former United States treasury secretary is a former partner with Goldman Sachs.

Jon Corzine

The governor of New Jersey was co-head of Goldman Sachs with Mr Paulson until he left due to a power struggle.

Henry Paulson

The US Treasury Secretary was formerly Goldman Sachs' chief executive. As a China expert for Goldman Sachs, he helped to manoeuvre the investment bank into pole position in China as the country joined the World Trade Organisation."