The American Financial Regime

CARD CHECK: “You have nothing to lose but your chains”

By Mike Whitney

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Global Research, December 9, 2008

Even though the Federal Reserve is now the biggest single participant in the financial system, the myth of a “free market” still lingers on. It’s mind boggling. The Fed has expanded its balance sheet by $2 trillion, guaranteed $8.3 trillion of dodgy mortgage-backed paper, provided a backstop for bank deposits, money markets, commercial paper, and created 8 separate lending facilities to ensure that underwater financial institutions can still appear to be solvent. The whole system is a state subsidized operation buoyed on a taxpayer-provided flotation device which bears no resemblance to an invisible hand. More astonishing, is the massive power grab engineered by the Fed which has taken place without the slightest protest from 535 shell-shocked congressmen and senators. Elected officials have either kept their finger in the air to see which way the political wind is blowing or timidly caved in to Treasury’s every multi-billion dollar demand. It’s flagrant blackmail and everyone knows it. Congressional oversight is an oxymoron.

Anyone who has followed the financial crisis from its origins knows that the Fed’s bloody fingerprints are all over the crime scene. Still, that hasn’t stopped well-meaning liberal economists (Krugman, Stiglitz, Reich) from supporting Bernanke’s increasingly unorthodox attempts to flood the financial system with liquidity (“quantitative easing”) and invoke whatever radical strategy pops into his head. In fact, many of the experts believe that Bernanke should do even more given the sheer size of the meltdown. There’s growing support for a gigantic stimulus package ($700 billion) which will focus on road construction, infrastructure, state aid, extensions to unemployment benefits and green technologies. The Obama camp hopes that government programs and deficit spending will make up for the huge losses in aggregate demand which threaten to drag prices down even further in a self-reinforcing deflationary cycle. Even so, its natural to wonder at the wisdom of giving even more power to the very people who created the mess to begin with and who seem more interested in proving their depression-fighting theories than throwing a lifeline to struggling homeowners, consumers or auto workers. Maybe its time to try something different.

December 10th, 2008 | Posted in Web-Only Content | Read More »

Proclaim Jubilee Throughout the Land!

Inscribed on the Liberty Bell is, “Proclaim liberty throughout the land unto all the inhabitants thereof” (Lev. 25:10). The next verse reads, “It shall be a jubilee unto you; and ye shall return every man unto his possission, and ye shall return every man unto his family.”

As our government reaches ever further into our wallets with corporate buyouts and printing even more money, greater burdens are heaped upon our collective backs. American taxpayers will now carry the debt loads of Freddie Mac and Fannie Mae, making us slaves of debt we never agreed to pay.

If we were to view our government optimistically, we could view it as leading by example, reminding us that forgiveness is the only way out of the failed obligations of others. Yet it is radical — is it not — that our leaders actually called for the forgiveness of debt? On the other hand, as a nation that professes to be Christian, that is exactly what Jesus taught his followers to do.

The Lord’s Prayers says, “… forgive us our debts, as we forgive our debtors…” This passage is reverently spoken by most Christians–ostensibly 85% of the American population, and reminds them to forgive those that lie, steal, hurt, cheat, kill and to forgive even the worst of sins: choosing to serve power and money over God. In other words, the Lord’s Prayer is a reminder that we are called to forgive even the people who run our government.

August 15th, 2008 | Posted in Print Edition | Read More »

The Financial Tsunami: The Next Big Wave is Breaking

The announcement by US Treasury Secretary Henry Paulson together with Federal Reserve chief Ben Bernanke, that the US Government will bail out the two largest guarantors of housing mortgage debt—Fannie Mae and Freddie Mac—far from calming financial markets, has confirmed what we have said repeatedly in this space: The Financial Tsunami which began in August 2007 in the relatively small “sub-prime” high risk US mortgage securitization market, far from being over, is only gathering momentum. As with the Tsunami which devastated Asia in wave after terrifying wave in December 2004, the financial Tsunami we are witnessing is a low-amplitude, long-wave phenomenon of trillions of dollars of financial securities being unwound, defaulted upon, and dumped into the market.

July 30th, 2008 | Posted in Print Edition | Read More »