To alleviate the depressing reality that Congress is fiddling with the deck chairs of the Titanic as its bow slips ever lower into the cold waters of financial fascism, I've assembled an image-centric post today.

Reader comments follow.

Here's the reality you are leaving as you enter Fantasyland:

Consumers are increasing their debt burden even as they pay less and less on their credit cards. Card payments fell 6.2% YOY (year over year) in July, for the 9th month even as consumer borrowing on credit cards grew at 4.8% YOY.

Leverage will drop from 30-to-1 to 10-to-1 overnight, and stay there, greatly decreasing money floating around looking for a quick return.

Global confidence in the U.S. is utterly broken and cannot be repaired in a few months. Given our dependence on foreign capital inflows, that's an economy-killer.

The fact that this bailout is so haphazard, so hasty, and demands so much power for the Treasury with no counterbalances by the courts or Congress will lower confidence even further, not repair it.

It's the Iraq War and the Patriot Act all over again--hasty, stupid, based on lies and a phony propaganda build-up of "emergency," with many unintended side-effects--that's what the drop in the dollar and the rise in gold and the market's plummet is telling us. Some are looking out to a new Administration, hoping for a "bottom" and a "rebuilding of confidence," but 25 years of excess cannot be unwound in 6 months or even 6 years.

If the Devil seeks to destroy the U.S., He wouldn't pick a wild-haired anarchist--He would pick someone like Paulson: a smooth liar, a "trustworthy" insider. He is the ideal Devil's Mole, and his actions speak loudly that he is truly the Devil's Pawn.


A few books of related interest:

The Long Emergency: Surviving the End of Oil, Climate Change, and Other Converging Catastrophes of the Twenty-First Century by James Howard Kunstler

The Misbehavior of Markets

The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb

Extraordinary Popular Delusions and the Madness of Crowds by Charles MacKay

Manias, Panics, and Crashes: A History of Financial Crises by Charles Kindleberger

Against the Gods: The Remarkable Story of Risk by Peter L. Bernstein

Devil Take the Hindmost: A History of Financial Speculation by Edward Chancellor

The Great Crash 1929 by John Kenneth Galbraith

The Crowd by Gustave Le Bon

When Genius Failed: The Rise and Fall of Long-Term Capital Management

The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities

Fiasco: The Inside Story of a Wall Street Trader

Web of Debt

Financial Armageddon: Protecting Your Future from Four Impending Catastrophes

Reader Comments:

K.G.K.

Here comes the crash...bring it on!....what are working guys gonna do about it anyway? My fellow philosopher/artist/musician friends and I have been seeing this coming for a long time...we're no financial soothsayers....just people observing human behaviors and keeping a dialogue going about it through the years...that's real philosophy... not some textbook university study of some abstract thing Hagel wrote...but observation and discussion of real human events and behaviors.

Your blog has all of that and more, with all your fiscal analysis tied into our social structure. Thank you for your daily work, it is unique and helps clarify the complex schemes that the financial social engineers have been scamming us with through the years. As it all unravels into a gooey mess, it's kind of funny how it's becomes really simple in some respects. ..The money has to eminate from something, somewhere...and these thieves have been profiteering from some black hole of nothing but shady number schemes, and now the taxpayer is bailing them out! Private profit while it goes up, public bail-out when it tanks. Saying it's criminal doesn't even describe it! The game's almost over.

Unfortunately, we are in a darker, more desperate place than the 30's...people are much less self-reliant than then, and we did still have passenger trains and local trolleys to move people around. There were more Family Farms supplying local food to folks. We're going to have to learn from how Cuba got through tough times when the Soviets stopped supporting them. They forged ahead with an impressive hand-made organic agriculture program that is now a model. Unfortunately, Americans don't want to do that kind of work...and good luck getting together with your neighbor, who's either obese, lazy, wearing backwards baseball caps, on meth, riding around in a blinged-out SUV, with his head up his ass....

there's too many clueless people out there with no idea what's coming...that's the biggest fear for me when the crash comes to every nieghborhood. The thugs and gangs will overwhelm our already short-staffed police forces...It does not look pretty, and our "leaders" don't have a plan for how to handle the coming crisis.

Here in Napa, they're still sending the mayor out to toast with champagne new hotels and parking garages, hoping the oil dependant tourists will be able to fund all the programs and promises.... they can't even fund the maintaining of all the broken streets and sidewalks they've let go to hell. They can't build this crap fast enough, and I wonder who the hell is going to fill these buildings? One huge sign on a gigantic 3-story retail/housing structure that is currently under construction says "future home of Morgan Stanley". I had to laugh and ask, are they going to finish the building before this economy tanks?

Jed H.

Final few nails in the coffin will be : A) Dollar/ $USD$ will go into freefall ; B) Inflation will SOAR , & USA living standards fall also ; C) As result , US STK MKT & USTBond MKT will collapse --- also a Black Swan event; D) There will be more " Global Unrest " , POSS a major WWIII over Oil / Food/ Real Commodities --- to wit , Russia is making a move for Nat Gas & Oil pipes in Caspian / Chechnia; Socialists in Cuba & Venez , likely to link w/ Russia , NorKorea & others .

The " Grand ~ 200 YR Goods / COMMOD SUPER CYCLE " has just been fueled by those IDIOTS , CROOKS, & POLITS , who feed their friends on Wall St @ Expense of US Taxpayers ---- in 18 th CENT France , this led to ....1789 Bastille Day !! Bring on the Clowns , Circus, & Chips !!!

Pam and Pat

“I don’t like the fact that we have to do this. I hate the fact that we have to do this,” Mr Paulson said on Sunday. “But it is better than the alternative.”

Excuse me, better than WHAT alternative?? I do not hear any decent alternatives to an almost trillion dollar bailout to those who should be remanded to jail, and giving Hank Paulson, who should be fired, unlimited power over the treasury and plunging the public into debt servitude. Just suggesting this plan should be enough to have him tossed out on his ear and investigated for treason.

If this bill passes, I hope the rich will understand that there will be consequences. After all, "it's just business," as Don Corleone advised. Nothing personal. Them against us. Us against them.

Let's see... what could we debt serfs do to return the favor?

Stop using our credit cards? Cut them up and send them back in little pieces? Stop paying our credit card bills? Tell them "We are waiting for our bail out." Withdraw our funds from the banks? Need to buy food before the dollar crashes. Cancel our subscriptions to the complicit media and their "pundit" stooges? Stop paying our mortgage payments until someone can tell us who owns the title? Cancel our 401K's?

Demand an end to the Federal Reserve? Let the government print our money and we won't have to pay interest on it. Vote for only third party candidates in the up-coming election?

Yeah, that would be a start.

Send this on to every pissed off working class person you know.

David V.

As I read your post, I was wondering what it would take for there to be a revolution in America....? What could/would it look like...? What could be the final trigger...? Not the youth, maybe the 26% unemployed in 2011...? I am thinking the TRUTH might be the trigger...NO....I got'it....no TV, a solar flare fries some transmission wiggit, and there is no TV, now that would cause a revolution.

Steal 3 trillion dollars from the tax payers to buy some smoke and mirrors to hide the fradulant financial system, who cares...? No TV for a week, and some ass is going to get kicked. Funny what matters. Did Alan Watt write a book, What Matters"....?

Nine cords of split.dry firewood and snow coming down the mountains, that is what matters in my world. But I gotta wonder what runs Hank Paulson.....?????

John L.

Loved your piece today.

I've contacted my reps and am trying to spread the word.

I always thought the litmus test for any crisis management plan was that, if it didn't work, you shouldn't be worse off than when you started.

If the Paulson plan fails, we will have spent every dime and future dime of the Treasury on worthless assets and, when the real crisis hits, there won't be a penny left to care for the sick, elderly, and poor...to fund schools...or to keep roads open...provide relief for real disasters like earthquakes and floods...because every penny will be in the pockets of Paulson's buddies. But I am sure they will be willing to loan it back to us at usurious rates when we really need it.

Utterly sickening.

Harun I.

Today's post called it for what it is. Bravo Zulu!

My compliments to Mr. Zeus; he gets it.

Some are attributing the CFMA of 2000 to President Bush and Phil Graham. This is incorrect. The bill was signed into law by President Clinton Dec. 21, 2000. The CFMA gave "legal certainty" to swap agreements (credit default swaps) but stopped short of declaring them or not declaring them securities or futures contracts.

SEC. 304. 7 U.S.C. 1 SAVINGS PROVISIONS.
Nothing in this Act or the amendments made by this Act shall be construed as finding or implying that any swap agreement is or is not a security for any purpose under the securities laws. Nothing in this Act or the amendments made by this Act shall be construed as finding or implying that any swap agreement is or is not a futures contract or commodity option for any purpose under the Commodity Exchange Act.

Not enough credit is given to Bill (Clinton) for all of his effort regarding NAFTA, CPI adjustments that render it fraudulent, BLS Employment stats adjustment that too rendered them fraudulent, and a very minor surplus created by raiding Social Security funds, which, based on unfunded liabilities is insolvent. Thanks Bill.

But this grand swindle, this simple theft started in 1910 when a meeting of elites on Jekyll Island concocted a private banking cartel with monopoly powers to counterfeit US currency, the Federal Reserve System. Fraction reserve lending is inherently a swindle as the bank produces more receipts for cash that it has reserves.

Add in a policy of inflation and consumer debt fueled growth and disaster is assured as the exponential nature of the curve goes vertical indicating a requirement of infinite inputs infinitely.

But Thomas Jefferson called it two centuries before:

"If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that willgrow up around them, will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered."

Riley T.

I hope I can go back to being an observer. Participating in the debate causes me so much grief. Giving these people billions instead of sending them to prison. CEOs of public companies getting 100s of millions then we want to bail them out. I can't believe that the nation will survive this much pirating.

There are so many poor, so many with no medical or dental, so many in our prisons.

Most of the prisoners would live with no problems if we paid them half of what it takes to keep them in prison.

I hope to continue to be an avid reader and supporter.

Chuck D.

I have only one word to say about today's (September 23) entry:

Amen.

I have been thinking this way for some time now, ever since I first ran across the concept of The Fascist Business Model proposed by Jim Willie in his web writings. As much as I wanted to deny it, I couldn't. The bailout bill now should make it apparent for anyone who wants to see it.

There seems to be confusion among even among the writers on the net who think about these things. Some keep referring to this as "socialism for the rich," and "privatizing profit, socializing losses." Even Nouriel Roubini, who clearly should know better, keeps making this mistake.

The fact that you have to qualify the term "socialism" with the phrase "for the rich" should tell you that there is something wrong in the logical construct of the phrase.

Socialism is a transfer system of money from the rich to the poor. Witness all the programs from public assistance on the county level of government all the way up to Social Security and Medicare at the national level.

This is something different. This is about the government stepping in to protect and possibly benefit certain chosen companies or industries at the expense of the middle class (read: taxpayer).

Yes, the effect is to privatize the profits, and spread the risk of loss out over the broader base of society as a whole to "minimize" it. It is the socialization part of this process that causes the confusion I mentioned earlier. But that doesn't make it be socialism.

The key is understanding the structural difference between socialism and fascism, or how fascism operates structurally. There are two general characteristics of fascism that are relevant here:

1. The government is controlled by or at least operated by private interests for their benefit as you pointed out. Government policy is designed and actions are taken accordingly. Over time this tends to produce a transfer from the poor or middle class to the wealthy.

2. Risks are shifted elsewhere away from the chosen private beneficiaries. (Otherwise the benefits that would accrue to them would be at risk.) Traditionally the middle class has been made to bear these risks. This can be done in a number of ways -- anything from the overt power grab in a time of crisis to the simple hidden tax of inflation over time. But the end result is always the same. The middle class eventually collapses under the burden that has been dumped on it.

Looked at this way, the bailout bill is simply a blatant manifestation of a process that more or less obviously has been going on at least since the 1980s, or possibly earlier if you look for the less obvious. One could cite the creation of the Federal Reserve in 1913, FDR's comment about the bankers running the country since at least the Civil War, or the creation and failures of the U.S.National Banks pre-1830s.

What type of government follows after the middle class eventually collapses can take different forms. But it probably won't be a republic or even a democracy as they require the presence of a middle class as a pre-existing condition.Obviously the ones in the best position to determine this are the ones who were benefitting previously.

I have come to think that the history of the United States can be understood and taught in the context of two things:

1. The Elliott Grand Supercycle Wave that seems to start about 1785 as the wave up after the 1720 collapse of the European economies in the South Sea and Mississippi bubbles.

2. The American Revolution, the Civil War, the Great Depression and the Second World War. Now possibly the events of today. If so, while I haven't read the book, it doesn't seem so far removed from the sort of thing Strauss, et al are talking about in The Fourth Turning.

However, that is a discussion for another time. For the discussion right now, it seems pretty clear that what we are talking about is fascism, plain and simple.

Ralph Y.

A while ago, I raised the parallel between post-war German civilian guilt over the fascist attrocities, and the same guilt we will face, having watched, (but not acted) while our leaders throw away the best part of America.

When I raised guilt before, the article deflected around the core point: as a society, we will have to face our children, and respond to their judgment on our stewardship, now, of America.

Perhaps raising this ugly concept now can put our thoughts into perspective and lead us toward some real action.

Albert T.

My email to Schumer:

Please DO NOT GIVE them 700 billion. Look at the alternatives if all the working people got $6000+ there would be the same amount of inflation with less in-equity created. Let the prudent banks survive and the foolish fail.

Any email you get advocating for the bailout comes from the bank employees who are probably paid to send them and urge the dire need for their bank getting its "fair" share. This would be cheating the prudent and rewarding those whom dug this hole.

IF the bailout is provided we will go into a true recession, not the simulated one we have now with banks witholding credit. The dollar will collapse and the amount of outflow will overcompensate any stability this measure may have brought. The capital markets will reprice overnight and oil will be worth $150 or 200 instantly with Goldman Sachs reaping the benefits of their bets on it getting there and on the shifting of its MBS losses to the taxpayer. Please do not make me poorer for once capital markets reprice wages will not for they are sticky and will make all of us(bar banks) not only poorer by 700 billion but by a measure beyond it for the forseeable future to come.

I urge you to impeach secretary Paulson because he is a schill and get someone impartial whom actually will work for the taxpayer into the job. Please work together with the Republicans to impeach secretary Paulson. If they are urging the expansion of the money supply to increase the deposit base to shore up lending give the money to the taxpayers in the form of rebates etc it will be a more honest function than giving it to the banks.

Dear Senator:

According to FDR (President Franklin D. Roosevelt), Sec. Paulson is a fascist. Please read FDR's definition of fascism--it perfectly describes Paulson's Bailout Bill:

"The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is fascism--ownership of government by an individual, by a group, or by any other controlling private power."

Treasury Secretary Paulson will have sole power to disburse trillions of dollars to whomever he pleases, without recourse, oversight or control by the courts or Congress. That is fascism, pure and simple.

Somebody has to stand up and defend the Constitution froim this coup d'etat. I hope it is you. If not, I will NEVER vote the Democratic ticket again.

sincerely,
charles smith

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