by Peter Ewart

from Opinion250 Website


Peter Ewart is a writer and college instructor based in Prince George, British Columbia. He can be reached at 



Part 1 – Hello feudalism

September 22, 2008

There is no other way to describe it. The biggest financial institutions in the U.S., in league with Republican and Democratic leaders in Congress, are staging a kind of coup d’etat against the American people.

If allowed to proceed, they will put forward legislation later in the week that will assign dictator-like powers to the U.S. Secretary of Treasury and certain big banks, and, using these powers, dump hundreds of billions of more bad debt on ordinary Americans. The consequences are dire, not just for the economy, but also for the civil rights of Americans.

Working behind closed doors over the weekend, leaders of the political and financial elite have been putting the final touches on a plan whereby the big banks and financiers will shift up to $700 billion of bad debt and toxic mortgages (which they created) onto the backs of the American people via the federal government, as well as put themselves in an ideal position to strike a blow at other competitors, including non-monopoly financial institutions that are smaller or more community and regionally based.

All of this is in addition to the hundreds of billions that have already been pledged to bail out various big banks and other Wall Street financial institutions, as well as pump liquidity into the markets. The scale of this bailout is almost beyond description.

For example, various politicians and bankers are saying that the total amount of the bailout will be between $1 to $1.5 trillion, which is bad enough, being more than the GDP of a country like Canada. The government has already pledged $200 billion alone to prop up the mortgage companies Fannie Mae and Freddie Mac.


What the politicians who support this bailout often fail to mention is that the American taxpayer must also now take on the debt of these giant mortgage companies, a sum that adds up to around $5 trillion. If housing prices do not recover (they are already down more than 15% on average), taxpayers could be liable for a substantial portion of that amount.

Likewise with the government bailout of AIG Insurance last week which cost $85 billion and results in the government now owning 80% of the company. One of the reasons why other banks would not touch AIG with a ten foot pole was that, over the last few years, AIG has been heavily involved in what are called “credit default swaps,” a kind of insurance policy for other companies in case they go bankrupt. If the American economy tanks, which many believe it is in the process of doing, no one can really say for sure how much the U.S. government (and the American taxpayer) would get back from the sale of AIG assets, if anything.

It is important to remember that these hundreds of billions of government bailout funds are being directed to aid an extremely tiny, but unimaginably wealthy, section of the population that is notorious for its greed, corruption, high living and recklessness, and that is responsible for hatching up the schemes to spread the bad mortgages, toxic securities, and other questionable financial instruments through, not only the American, but also the world financial system, thus triggering the worst financial crisis since the Great Depression of the 1930’s.


Indeed, even the notoriously corrupt emperors Caligula and Nero of Ancient Rome would be shocked by the sheer avarice, arrogance, and egotism of this privileged 21st Century elite.

Examples of their out-of-control greed abound.


One individual, Dick Fuld, CEO of the now bankrupt Lehman Brothers, walked off with $490 million for his term of office. Goldman Sachs sold toxic securities to unsuspecting pension funds, companies and individuals around the world, while at the same time selling “short” these securities, i.e., betting that their value would decrease. It is estimated that Goldman Sachs made billions of dollars on this scheme alone, which, if not constituting fraud, certainly borders on it.


And there are numerous other examples of both questionable and criminal behavior by top investment banks and brokers. Which brings us to the legislative proposal that the White House has sent to Congress.


Who is spearheading this proposal?


None other than Henry Paulson, Secretary of the U.S. Treasury, who, surprise, surprise, was a former official with the same Goldman Sachs. The fox looking after the henhouse, so to speak.

The actual text of the Bush government’s legislative proposal sounds like the proclamation of a banana republic “coup d’etat” and is chilling in its implications. For example, the proposal gives Henry Paulson, as Secretary of the U.S. Treasury, dictatorial powers to designate any financial institutions he chooses as “financial agents of the Government.”

You can bet that the financial institutions that will be handed these extraordinary government powers will not be your local credit union, community-based bank or smaller investment house. Rather it will be the big banks associated with the Federal Reserve and other chosen financial monopolies (both domestic and foreign) that caused the crisis in the first place and are now using it to mount a sort of “coup” against other competitors (especially the smaller, non-monopoly ones), and the American people as a whole.

In other words, the same individuals who wrecked the U.S. financial system are the very ones given the lucrative contract to “rebuild it.” Many analysts are predicting that hundreds of smaller banks and financial companies across the U.S. will go bankrupt in the coming period. Guess who will be swooping in to take over their business.

Further language in the Bush government proposal gets even spookier.


Section 8 reads:

“Decisions by the [U.S. Treasury] Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.”

In essence, this is putting above the law any decisions or actions carried out under this Act by the U.S. Secretary or by any financial institutions it has chosen to be “agents of the government.” This is feudal rule, pure and simple, whereby the rulers put themselves over and above the law, and the civil right of citizens to challenge arbitrary decisions does not exist.

Using this anti-democratic legislation, the U.S. government, working on behalf of the big banks, can shift hundreds of billions of dollars of the big banks’ toxic debt onto the American people, as well as knock off other players in the financial sector that are not part of the “chosen few”. And nobody can challenge these decisions. No one can even mount a lawsuit against unfair or discriminatory practices.

How will this cabal of Wall Street financiers that is pulling the strings of the U.S. government wipe out their competition?


One way - Designated as “financial agents” of the government, these chosen banks will have huge influence over which financial institutions get to unload their bad debt and which will not. If you are a small bank or credit union somewhere in rural America that has some bad mortgages on your balance sheets and you are not one of the Wall Street chosen few – watch out!

Another way – The big banks will sell their toxic mortgages at top price to the government, say 40 cents on the dollar. Then watch the government turn around and sell these same mortgages back to another arm of the same banks at a big loss, say 10 cents on the dollar. Thus the big banks make bundles of money “going up” and “going down.”


This situation is not farfetched at all.


Similar shady banking schemes were exposed in the aftermath of the U.S. savings and loans scandal of the 1980s.

To their great shame, both Republican and Democratic Party leaders in Congress, are cheerleading this scheme of the moneybags. The role of the Democrats is particularly treacherous, in that they are proposing a “sweetener” to the scheme, i.e., some form of help for homeowners and ordinary people to add to the “cocktail”.

But people should not be fooled.


No matter how much sweetener you add to a poisonous brew, it still remains toxic...


Part 2 – Pay, pay and pay again...
September 23, 2008

Sometimes in history, events can go by so slowly it seems as if we are on a train chug-chugging up a long and steep hill. But inevitably the train, puffing smoke and steam, labours its way to the crest, and then … the wild ride down begins.

We are on such a wild ride now, both politically and economically, and, as the old saying goes, “everyone better hold onto their hats” - events are developing very fast.

Since I wrote the first part of this series of articles two days ago, The American people, and people around the world have had time to learn about the brazen coup d’etat that the Bush government is trying to pull off. This coup will grant sweeping, dictatorial powers to the Secretary of the Treasury and his Wall Street backers, and will foist $700 billion dollars of bad debt, like heavy sacks of coal, onto every man, woman and child living in the United States.

All of this, of course, is in addition to the hundreds of billions of dollars that the U.S. government has spent on bailing out or propping up other financial institutions, like Freddie Mac, Fannie Mae, and AIG Insurance, as well as the taking on of potentially trillions of dollars of debt from these same institutions.

Over the weekend, the American people were told by both the Republican and Democratic leadership, as well as various big media and Wall Street pundits that there is no alternative to this massive bailout, that the financial system will collapse unless the big financial institutions are paid off, that workers will lose their jobs, pensioners their savings, and so on. In short, like the story of Chicken Little, the sky itself will “fall in” unless the moneybags are rescued.

Is there any truth to the allegation that the financial system will collapse if the big financial institutions are not bailed out with taxpayer’s money? Such scare tactics have been typical of the Bush regime, which, as the entire world now knows, used a similar method to justify the invasion of Iraq.

The fact of the matter is that the U.S. financial system is already in a state of collapse and, many analysts believe a severe recession is almost certain to happen. The attempted “coup” by the Wall Street bankers and the Bush government is not so much aimed at staving off the inevitable downturn that is coming, but rather to make a grab for taxpayer cash while they still can.

To put it another way, in the coming economic storm, the Wall Street financiers want to be sheltered, all dry and comfortable, in their taxpayer-funded limousines, while everyone else is on foot trudging through the rain, getting soaked to the bone.


One thing for sure – When the moneybags get those limousines, don’t count on them picking up any hitchhikers.

If this financial “coup d’etat” by the Bush government goes through, it will actually make the looming recession much worse.




Because such huge government debt (which ultimately Americans will have to pay for in one way or another) will severely damage the purchasing power of the American people as a whole, which is already under tremendous stress from high gas prices, falling house prices, the slumping dollar, usurious credit card debt, and so on.

In other words, a “crisis of overproduction” will be hastened, and it will be longer and deeper as a result of the bailout. A crisis of overproduction is triggered not because too many goods and services are produced. Rather it is because the purchasing power of ordinary people is weakened to the point that they simply can’t afford to buy the goods and services.


As a result, sales plummet and there is massive deflation of prices. Factories close. Unemployment skyrockets. And the results are not pretty.


The most famous crisis of overproduction? The Great Depression of the 1930s.

Thus, it is in the interests of the American people to not allow the government to rob the treasury and bailout the moneybags (who, through their greed and recklessness, caused the credit and mortgage crisis in the first place). A much better solution is to demand that the big banks and financial institutions be made to dig into their own extensive assets and holdings to clean up the mess.

In any case, the reaction of the people across America has been swift and splendid. Newsrooms report that people are overwhelmingly against this bailout. Online discussion boards are raging with opposition. A polling agency found that only 28% of those American’s polled supported the government’s proposal.

Now, as a result, some media pundits are beginning to get cold feet, suggesting that the “cure might be worse than the disease.” Even some Democratic and Republican leaders, perhaps worrying about their electoral skins, are backtracking. What appeared to have been a “coup” several days ago on the part of big government and the big banks, could well turn into a humiliating “rout.”

That being said, the Wall Street bankers are determined to dump their problem onto someone somewhere, and Americans will have to be vigilant about any “new” or “modified” bailout schemes that come via either the Democratic or Republican Party leadership.

In this time of crisis, the people of the world are with the American people and wish them all the best in this important struggle.


Americans do not deserve to have to pay for the greed, abuses and crimes of the Wall Street financiers, who are no friends to them or, for that matter, anyone else in this wide world.


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