The Myth of Free-Market Capitalism: The Case of Freddie Mac and Fannie Mae

[Christopher Hall]

I've been on the record for letting them fail. Nationalization is the wrong move ofr lots of reasons. I would prefer for us to take the lumps now and move forward.

The problem is that Freddie Mac and Fannie Mae is just the tip of the iceberg. The whole system is under threat. As much as it must hurt, Bush had no choice but to nationalize them. What alternative strategy do you suggest Bush should take?

Let everyone take their lumps and then lets move on. We eitther take the big hit, suffer and then rebuild or we die the death of a thousand cuts. I'll take the big hit.

I agree.

Let them, and Lehman Brothers, fail.

The market will recover, and they shouldn't and won't recover.

In the future, investment and mortgage houses will behave differently, knowing that there is no Federal safety net to stop their self-induced free falls.

[John Simkin]

I've been on the record for letting them fail. Nationalization is the wrong move ofr lots of reasons. I would prefer for us to take the lumps now and move forward.

The problem is that Freddie Mac and Fannie Mae is just the tip of the iceberg. The whole system is under threat. As much as it must hurt, Bush had no choice but to nationalize them. What alternative strategy do you suggest Bush should take?

Let everyone take their lumps and then lets move on. We eitther take the big hit, suffer and then rebuild or we die the death of a thousand cuts. I'll take the big hit.

I agree.

Let them, and Lehman Brothers, fail.

The market will recover, and they shouldn't and won't recover.

In the future, investment and mortgage houses will behave differently, knowing that there is no Federal safety net to stop their self-induced free falls.

The problem is that Bush and his economic advisers are not confident that the market will recover without help from the government. They are aware of the real losses that the banks are facing. Bush did not take Fannie May and Freddie Mac into public ownership because he has become a born-again socialist: he acted because he feared a systemic global financial crisis that would prompt the biggest depression since the 1930s.

The scale of the Fannie and Freddie failure is immense. The sum involved is £3 trillion – about double the entire annual output of the British economy.

The crisis began in August 2007. Since then central banks all over the world have cut interest rates, pumped money into the banking system, agreed to swap worthless mortgage-backed securities for rock-solid government bonds and have taken failing banks into public ownership. Yet, none of these measures have come close to solving this problem. Banks and mortgage companies are still asking their governments for more help. We are fast reaching the point where there is nothing left to give.

[Craig Lamson]

I've been on the record for letting them fail. Nationalization is the wrong move ofr lots of reasons. I would prefer for us to take the lumps now and move forward.

The problem is that Freddie Mac and Fannie Mae is just the tip of the iceberg. The whole system is under threat. As much as it must hurt, Bush had no choice but to nationalize them. What alternative strategy do you suggest Bush should take?

Let everyone take their lumps and then lets move on. We eitther take the big hit, suffer and then rebuild or we die the death of a thousand cuts. I'll take the big hit.

I agree.

Let them, and Lehman Brothers, fail.

The market will recover, and they shouldn't and won't recover.

In the future, investment and mortgage houses will behave differently, knowing that there is no Federal safety net to stop their self-induced free falls.

The problem is that Bush and his economic advisers are not confident that the market will recover without help from the government. They are aware of the real losses that the banks are facing. Bush did not take Fannie May and Freddie Mac into public ownership because he has become a born-again socialist: he acted because he feared a systemic global financial crisis that would prompt the biggest depression since the 1930s.

The scale of the Fannie and Freddie failure is immense. The sum involved is £3 trillion – about double the entire annual output of the British economy.

The crisis began in August 2007. Since then central banks all over the world have cut interest rates, pumped money into the banking system, agreed to swap worthless mortgage-backed securities for rock-solid government bonds and have taken failing banks into public ownership. Yet, none of these measures have come close to solving this problem. Banks and mortgage companies are still asking their governments for more help. We are fast reaching the point where there is nothing left to give.

Yep...the death of a thousand cuts. Let it fail...all of it if needed and then rebuild.

Everyone has a staker and a prt in the problem. The financials were greedy and snarky and the people filled themself to the brim on easy credit. People were buying houses there was no way they could afford and banks gave them loans knowing that but needing product to 'bundle". More people used falsely inflated home prices to turn their home into an ATM and used their HOME to fund trips and toys...and the banks made the loads because they needed product to "bundle". Worst of all the Government let it happen because it prevented the meltdown from the tech bubble and 9/11 from causing a recession.

Let it all fail. Then rebuild. It will come back.

[Len Colby]

This represents an unlimted bailout of international speculators. The sane alternative is to place the system into bankruptcy and freeze the debt. There is a reported $185 trillion worth of derivatives in the US banking system.

An impossibly high number $185 Trillion is:

“…the notional value of GLOBAL OTC (over the counter) interest-rate derivatives” as estimated in 2004

http://www.atimes.com/atimes/Global_Economy/GF24Dj01.html

“the total value of all real and financial assets in the U.S.” as estimated at the end of 2007

http://www.aei.org/news/newsID.27849/news_detail.asp

and

“the projected US “GDP over the next 10 years”

http://www.marketwatch.com/news/story/mone...5C%7D&dist=

Reports I’ve seen indicate the total debt of the two is about $ 50 billion which is still a huge sum of money about $ 165 per American.

.

April 1998

http://financialservices.house.gov/banking/42998eir.htm

August 21, 2008

http://bigpicture.typepad.com/comments/fil...iv_exposure.png

Even according to the Larouchite “The U.S. commercial banks, as a group, had $25.4 trillion in these derivatives at the end of 1997” but this was based on “Comptroller of the Currency, company reports, EIR” so basically we have to take his word on it.

As to the page from the blog, we don’t know the source (i.e. reliability) of the document. Who produced it based on what evidence? But let’s assume the numbers are accurate. You claimed the exposure was “$ 185 trillion” but if we add up the numbers (rounding) 38.2 + 90.4 etc it only comes to 179…

…$ 179 BILLION. A number followed by 6 digits is in the millions (2,000,000 = 2 million) by 9 digits is billions. Trillion is a number followed by 12 digits. http://www.merriam-webster.com/table/dict/number.htm

According to the document not even the banks’ total economic capital or RBC (Risk Based Capital) come close to US $ 185,000,000,000,000.00

I guess the best thing for you is to stick to insults and ad homs, its about all you’re good for. But hey I admire your Jack White like persistence in not letting continually being show to be wrong dissuade you from trying again.

Edited September 11, 2008 by Kathy Beckett

[Terry Mauro]

This represents an unlimted bailout of international speculators. The sane alternative is to place the system into bankruptcy and freeze the debt. There is a reported $185 trillion worth of derivatives in the US banking system.

An impossibly high number $185 Trillion is:

“…the notional value of GLOBAL OTC (over the counter) interest-rate derivatives” as estimated in 2004

http://www.atimes.com/atimes/Global_Economy/GF24Dj01.html

“the total value of all real and financial assets in the U.S.” as estimated at the end of 2007

http://www.aei.org/news/newsID.27849/news_detail.asp

and

“the projected US “GDP over the next 10 years”

http://www.marketwatch.com/news/story/mone...5C%7D&dist=

Reports I’ve seen indicate the total debt of the two is about $ 50 billion which is still a huge sum of money about $ 165 per American.

.

April 1998

http://financialservices.house.gov/banking/42998eir.htm

August 21, 2008

http://bigpicture.typepad.com/comments/fil...iv_exposure.png

Even according to the Larouchite “The U.S. commercial banks, as a group, had $25.4 trillion in these derivatives at the end of 1997” but this was based on “Comptroller of the Currency, company reports, EIR” so basically we have to take his word on it.

As to the page from the blog, we don’t know the source (i.e. reliability) of the document. Who produced it based on what evidence? But let’s assume the numbers are accurate. You claimed the exposure was “$ 185 trillion” but if we add up the numbers (rounding) 38.2 + 90.4 etc it only comes to 179…

…$ 179 BILLION. A number followed by 6 digits is in the millions (2,000,000 = 2 million) by 9 digits is billions. Trillion is a number followed by 12 digits. http://www.merriam-webster.com/table/dict/number.htm

According to the document not even the banks’ total economic capital or RBC (Risk Based Capital) come close to US $ 185,000,000,000,000.00

I guess the best thing for you is to stick to insults and ad homs, its about all you’re good for. But hey I admire your Jack White like persistence in not letting continually being show to be wrong dissuade you from trying again.

I think the GAO reports the off balance sheet debt of the banks, by quarter. The number I provided, $185 trillion notional value is accurate according to the GAO. Henry Gonzales Chairman of the House Banking Committee is responsible for having any kind of reporting on derivatives.Gonzales decided to push for transparency after listening to John Hoefle's testimony given before his committee in 1993.

I would also bet that the total value of derivatives in the system is much larger than $185 trillion and could be as much as $600 trillion world wide. That means the worlds financial system is finished.

The system is swimming in debt based on these derivative instruments. Derivatives came into popular use after the October 1987 Wall Street crash. And yes the banks do not have the capital to cover just a fractional loss in their off balance sheet derivatives portfolio. They are bankrupt hundreds of times over.

Len, you might want to look at the argument below. I got the derivatives chart from this website. A few folks made the same mistake that you made (with out the stupid arrogance). The value of the banks derivatives holdings is in the trillions not billions. You may want to widen your browser window to fit in all those zero's. As usual it is you who got it wrong. And as usual LaRouche is right on target.

This derivatives debacle gives you an idea why Obama and McCain just dont fit the bill as candidates for President. What we require is another Franklin Roosevelt, while the financiers want another Hitler or Mussolini. The derivatives time bomb also demonstrates why Secretary Paulson's proposed bail out of Freddie and Fannie is really an open door policy to bail out the multi trillion dollar derivatives market. As you can see by the numbers any attempt to bail out the derivatives market would result in a new Dark Age for humanity. It cannot be done. The only sane policy would be to place the system under a government supervised bankruptcy reorganization and cancel all the derivatives obligations. The bankers would receive nothing. Then you go back to regulation.

Look at JP Morgan. Alone they are holding in derivaties debt an equivalent to 8 times annual US GDP. The financial system has reached an end point. It cannot continue on in it's present form.

http://bigpicture.typepad.com/comments/200...nk-derivat.html

WTF? $90 Trillion dollars derivative exposure for JPMorgan ?

The chart says:

JPM $91,592,580 and notes $(000s)

That's Billions not trillions.

~~~

BR: RD, thats tier 1 -- look at the 3rd column: (widen your browser window)

JPM $90,408,468,778 (All figures in $000):

Dems' trillions, baby!

Posted by: Rob Dawg | Aug 21, 2008 3:24:31 PM

Ummmm...isnt the Worlds stock market capitalization about 47 tillion? JPM has almost double the exposure of the worlds market cap? how does that even work?!?! am i missing something?

Posted by: Mika | Aug 21, 2008 3:26:38 PM

Here is my interpretation of this data. BUY GOLD!! BUY GOLD!!! BUY GOLD!!!

Posted by: GLOOMY | Aug 21, 2008 3:33:27 PM

@ Rob Dawg

Move a column to the right - you showed the Tier 1 assets - derivatives are really trillions

Posted by: crgordon | Aug 21, 2008 3:37:21 PM

Look, I think the entire Financial System in the US is F D! Get it?

The thing that amazes me is that apparently no one ANYWHERE did anything wrong???

Now, that my friend is the greatest WTF of all times!

Posted by: BG | Aug 21, 2008 3:37:22 PM

Edited September 11, 2008 by Terry Mauro

[Christopher Hall]

I've been on the record for letting them fail. Nationalization is the wrong move ofr lots of reasons. I would prefer for us to take the lumps now and move forward.

The problem is that Freddie Mac and Fannie Mae is just the tip of the iceberg. The whole system is under threat. As much as it must hurt, Bush had no choice but to nationalize them. What alternative strategy do you suggest Bush should take?

Let everyone take their lumps and then lets move on. We eitther take the big hit, suffer and then rebuild or we die the death of a thousand cuts. I'll take the big hit.

I agree.

Let them, and Lehman Brothers, fail.

The market will recover, and they shouldn't and won't recover.

In the future, investment and mortgage houses will behave differently, knowing that there is no Federal safety net to stop their self-induced free falls.

The problem is that Bush and his economic advisers are not confident that the market will recover without help from the government. They are aware of the real losses that the banks are facing. Bush did not take Fannie May and Freddie Mac into public ownership because he has become a born-again socialist: he acted because he feared a systemic global financial crisis that would prompt the biggest depression since the 1930s.

The scale of the Fannie and Freddie failure is immense. The sum involved is £3 trillion – about double the entire annual output of the British economy.

The crisis began in August 2007. Since then central banks all over the world have cut interest rates, pumped money into the banking system, agreed to swap worthless mortgage-backed securities for rock-solid government bonds and have taken failing banks into public ownership. Yet, none of these measures have come close to solving this problem. Banks and mortgage companies are still asking their governments for more help. We are fast reaching the point where there is nothing left to give.

I agree completely, John, but I would still rather see failures than massive, socialist, bailouts.

[Len Colby]

Len, you might want to look at the argument below. I got the derivatives chart from this website. A few folks made the same mistake that you made (with out the stupid arrogance). The value of the banks derivatives holdings is in the trillions not billions. You may want to widen your browser window to fit in all those zero's. As usual it is you who got it wrong.

Len, you might want to look at the argument below. I got the derivatives chart from this website. A few folks made the same mistake that you made (with out the stupid arrogance). The value of the banks derivatives holdings is in the trillions not billions. You may want to widen your browser window to fit in all those zero's. As usual it is you who got it wrong.

I stand corrected the amount of derivative exposure. It is far higher than I imagined. I did not however misinterpret the document you posted, there was no indication on it that the values were in $(000s) that info was on the hostpage which you didn’t link to. This has nothing to do with the width of ones browser. It’s not my fault if you offered evidence which doesn’t support your claims.

And as usual LaRouche is right on target.

As for Larouche being “on target” he and his underlings have made numerous pronouncements over the last 5 decades, odds are that by chance and luck some were at least partially accurate. But his percentage is quite low except when he repeats the pronouncements of others. I’m a poor pool (billiards) player but give me enough shots and I’ll sink a few. His racist rantings in the 70s were obviously not “on target” nor was his recent comment that the US had “no interest” in Georgia ignoring the obvious issue of the oil and natural gas pipelines, his assertion that Georgia’s invasion of S.Ossetia was part of some plot to encircle Russia was frankly bizarre.

His underling claimed in April 1998 that “We are heading into the worst financial and monetary crisis since the collapse of the Lombard triggered the Dark Age” It is obvious form context he was talking about short term but 10 ½ years later and no such financial disaster has taken place and despite your chicken little like predictions one of that scale doesn’t seem to be looming. The worst financial crisis since then happened in 2001 – 2 and had nothing to do with the factors he mentioned. Rather it was due in the most part to causes impossible or difficult to predict at the time, 9/11, the burst of the dot com bubble and the accounting scam crisis (Enron, WorldCom etc). That didn’t measure up to the recession of the early 90’s let alone, the Depression let alone the Dark Ages.

Predicting vaguely that there would be a financial crisis some time in the future involving derivatives was not prophetic. The cause of the current crisis was the bursting of the real estate bubble, the problem with derivatives is an effect not a cause. LaRouche said he’d sink the 7 ball in the corner pocket but got the 5 in a side one.

Edited September 11, 2008 by Len Colby

[Terry Mauro]

Len, you might want to look at the argument below. I got the derivatives chart from this website. A few folks made the same mistake that you made (with out the stupid arrogance). The value of the banks derivatives holdings is in the trillions not billions. You may want to widen your browser window to fit in all those zero's. As usual it is you who got it wrong.

Len, you might want to look at the argument below. I got the derivatives chart from this website. A few folks made the same mistake that you made (with out the stupid arrogance). The value of the banks derivatives holdings is in the trillions not billions. You may want to widen your browser window to fit in all those zero's. As usual it is you who got it wrong.

I stand corrected the amount of derivative exposure. It is far higher than I imagined. I did not however misinterpret the document you posted, there was no indication on it that the values were in $(000s) that info was on the hostpage which you didn’t link to. This has nothing to do with the width of ones browser. It’s not my fault if you offered evidence which doesn’t support your claims.

And as usual LaRouche is right on target.

As for Larouche being “on target” he and his underlings have made numerous pronouncements over the last 5 decades, odds are that by chance and luck some were at least partially accurate. But his percentage is quite low except when he repeats the pronouncements of others. I’m a poor pool (billiards) player but give me enough shots and I’ll sink a few. His racist rantings in the 70s were obviously not “on target” nor was his recent comment that the US had “no interest” in Georgia ignoring the obvious issue of the oil and natural gas pipelines, his assertion that Georgia’s invasion of S.Ossetia was part of some plot to encircle Russia was frankly bizarre.

His underling claimed in April 1998 that “We are heading into the worst financial and monetary crisis since the collapse of the Lombard triggered the Dark Age” It is obvious form context he was talking about short term but 10 ½ years later and no such financial disaster has taken place and despite your chicken little like predictions one of that scale doesn’t seem to be looming. The worst financial crisis since then happened in 2001 – 2 and had nothing to do with the factors he mentioned. Rather it was due in the most part to causes impossible or difficult to predict at the time, 9/11, the burst of the dot com bubble and the accounting scam crisis (Enron, WorldCom etc). That didn’t measure up to the recession of the early 90’s let alone, the Depression let alone the Dark Ages.

Predicting vaguely that there would be a financial crisis some time in the future involving derivatives was not prophetic. The cause of the current crisis was the bursting of the real estate bubble, the problem with derivatives is an effect not a cause. LaRouche said he’d sink the 7 ball in the corner pocket but got the 5 in a side one.

It's not your fault? For a guy who claims to know so much isnt it funny that you're completely unaware of a $600 trillion derivatives bubble overhanging the world economy? There has been nothing like this in all known human history! And this has been forty years in the making. Where have you been? Of course we know the answer to that question don't we.

And LaRouche has never been wrong about the worst financial collapse in history. Had you been paying attention you might have noticed the collapse of the Asian economies in 1997, followed by the Russian GKO bond crisis in 1998(when Russia defaulted on their debt) followed by the collapse of LTCM( The Fed had to broker a deal to keep the entire derivatives bubble from collapse), followed by President Clinton's speech to the CFR where he threatened to change the current IMF floating exchange rate system, going back to the FDR Bretton Woods system followed by the bankers retaliation known as Monica Lewinsky. followed by the "wall of money" policy that fueled the Y2K, Internet hoax, followed by the collapse of Nasdaq, followed by 911 , followed by Enron (that was another collapse of derivatives), World Com, followed by the latest housing bubble (which in reality was nothing more than a reflection of the bankrupt system), followed by the mortgage collapse, followed by hundreds of hedge funds collapsing, followed by Bear Stearns, Lehman, Merrill Lynch, Wachovia, Countrywide WaMu and on and on. This collapse is literally without a bottom, it's a bottomless pit.

http://www.bilderberg.org/roundtable/emailspeech.html

You were so quick to mock and critize, [with all the arrogance of a foolish boob who knows nothing], that you didnt take the time to find out for yourself the truth of the matter. How difficult would it have been to find out for yourself that the amount of derivatives outstanding is several scores greater than the worlds combined annual GDP? Like I stated earlier, the demise of the US economy has been in progress since the time immediately following the assassination of President John F. Kennedy.

You should learn to wipe your own backside before you go sticking your nose in other places.

You would do well to study the works of Lyndon LaRouche. You might even discover for yourself what art really is.Y

You might also learn the indispenable role "culture" plays in the advancement of the human race. Destroy classical culture (see GG Allin) and you'll destroy the nation.

Edited September 11, 2008 by Terry Mauro

[Craig Lamson]

The only solution is to elect a party that has a platform with true reforms of the process for managing the U.S. economy.

Just curious...exactly what party would that be?

[Len Colby]

It's not your fault?

That you posted a document that indicated banks had a derivatives exposure of $ 179 billion to support your (apparently) correct claim that it was $ 185 trillion? Uuh, no.

For a guy who claims to know so much isnt it funny that you're completely unaware of a $600 trillion derivatives bubble overhanging the world economy?

I never claimed expertise in high finance, I'm not that interested.

There has been nothing like this in all known human history! And this has been forty years in the making. Where have you been?

I may be mistaken on this, as I said high finance is not something I’m especially interested in, but it seems that derivatives entail financial obligations between investors, normally large institutional ones. Thus some will lose while others will gain. This is not akin to a stock market or real estate bubble bursting in which wealth quickly vaporizes. NASDAQ and some major NYSE corps tike Enron melted down and the effects on the economy as a whole were reletivelly mild. From what I’ve read we could see a recession bigger than the 2001-2 one but a economic catastrophe on the scale you are roposing doesn’t seems to be in the works. Can you point to any experts, other than LaRouche and members of his sect, who scare your view?

And LaRouche has never been wrong about the worst financial collapse in history. Had you been paying attention you might have noticed the collapse of the Asian economies in 1997, followed by the Russian GKO bond crisis in 1998(when Russia defaulted on their debt) followed by the collapse of LTCM( The Fed had to broker a deal to keep the entire derivatives bubble from collapse), followed by President Clinton's speech to the CFR where he threatened to change the current IMF floating exchange rate system, going back to the FDR Bretton Woods system followed by the bankers retaliation known as Monica Lewinsky. followed by the "wall of money" policy that fueled the Y2K, Internet hoax, followed by the collapse of Nasdaq, followed by 911 , followed by Enron (that was another collapse of derivatives), World Com, followed by the latest housing bubble (which in reality was nothing more than a reflection of the bankrupt system), followed by the mortgage collapse, followed by hundreds of hedge funds collapsing, followed by Bear Stearns, Lehman, Merrill Lynch, Wachovia, Countrywide WaMu and on and on. This collapse is literally without a bottom, it's a bottomless pit.

http://www.bilderberg.org/roundtable/emailspeech.html

No of the above even if all were true changes the fact that LaRouche, or his underling at least, predicted in April 1998 that an unprecedented economic failure in the US was imminent but

1)10 ½ years later this has yet to happen and doesn’t seem likely to in the immediate future.

2) The worst economic crisis since then was rather mild and had little if anything to do with factors he mentioned

3) Except for the NASDAQ meltdown and 9/11, which had nothing to do with his prediction, the effects of the above on North American and European was almost negligible. Few were related to factors mentioned by the Larouchite.

“the collapse of the Asian economies in 1997”

That was before his 1998 testimony thus it can’t be said to conform to his prediction. In any case the effects on North America and Europe were mild.

“President Clinton's speech to the CFR where he threatened to change the current IMF floating exchange rate system, going back to the FDR Bretton Woods system followed by the bankers retaliation known as Monica Lewinsky.

[…]

http://www.bilderberg.org/roundtable/emailspeech.html"

1) I didn’t read the whole thing but there doesn’t seem to be any mention of changing exchange rates etc. Can you tell us exactly where he made such a threat?

2) Those evil bankers must be psychic because the affair started in 1995, Linda Trip started recording her conversations with Lewinsky in September 1997, Newsweek got wind of the story shortly there after but sat on it and the Drudge Report broke it January 17, 1998 but Clinton didn’t give his speech till September.

http://www.washingtonpost.com/wp-srv/polit...on/timeline.htm

You would do well to study the works of Lyndon LaRouche. You might even discover for yourself what art really is

.

He seems to think Jazz is evil so what would he make of RnR especially those coke and Quaalude hounds you are so enamored with, the Eagles and Tom Petty? I think you are going to have to burn a good chunk of your music collection.

You might also learn the indispenable role "culture" plays in the advancement of the human race. Destroy classical culture (see GG Allin) and you'll destroy the nation.

On yeah, GG was huge - his cultural impact was almost on the same level as Picasso, Elvis and the Beatles. The Eagles did a lot more to make Beethoven roll over and tell Schindler the news than GG did - burn your CDs!

Edited September 12, 2008 by Len Colby

[Terry Mauro]

It's not your fault?

That you posted a document that indicated banks had a derivatives exposure of $ 179 billion to support your (apparently) correct claim that it was $ 185 trillion? Uuh, no.

For a guy who claims to know so much isnt it funny that you're completely unaware of a $600 trillion derivatives bubble overhanging the world economy?

I never claimed expertise in high finance, I'm not that interested.

There has been nothing like this in all known human history! And this has been forty years in the making. Where have you been?

I may be mistaken on this, as I said high finance is not something I’m especially interested in, but it seems that derivatives entail financial obligations between investors, normally large institutional ones. Thus some will lose while others will gain. This is not akin to a stock market or real estate bubble bursting in which wealth quickly vaporizes. NASDAQ and some major NYSE corps tike Enron melted down and the effects on the economy as a whole were reletivelly mild. From what I’ve read we could see a recession bigger than the 2001-2 one but a economic catastrophe on the scale you are roposing doesn’t seems to be in the works. Can you point to any experts, other than LaRouche and members of his sect, who scare your view?

And LaRouche has never been wrong about the worst financial collapse in history. Had you been paying attention you might have noticed the collapse of the Asian economies in 1997, followed by the Russian GKO bond crisis in 1998(when Russia defaulted on their debt) followed by the collapse of LTCM( The Fed had to broker a deal to keep the entire derivatives bubble from collapse), followed by President Clinton's speech to the CFR where he threatened to change the current IMF floating exchange rate system, going back to the FDR Bretton Woods system followed by the bankers retaliation known as Monica Lewinsky. followed by the "wall of money" policy that fueled the Y2K, Internet hoax, followed by the collapse of Nasdaq, followed by 911 , followed by Enron (that was another collapse of derivatives), World Com, followed by the latest housing bubble (which in reality was nothing more than a reflection of the bankrupt system), followed by the mortgage collapse, followed by hundreds of hedge funds collapsing, followed by Bear Stearns, Lehman, Merrill Lynch, Wachovia, Countrywide WaMu and on and on. This collapse is literally without a bottom, it's a bottomless pit.

http://www.bilderberg.org/roundtable/emailspeech.html

No of the above even if all were true changes the fact that LaRouche, or his underling at least, predicted in April 1998 that an unprecedented economic failure in the US was imminent but

1)10 ½ years later this has yet to happen and doesn’t seem likely to in the immediate future.

2) The worst economic crisis since then was rather mild and had little if anything to do with factors he mentioned

3) Except for the NASDAQ meltdown and 9/11, which had nothing to do with his prediction, the effects of the above on North American and European was almost negligible. Few were related to factors mentioned by the Larouchite.

“the collapse of the Asian economies in 1997”

That was before his 1998 testimony thus it can’t be said to conform to his prediction. In any case the effects on North America and Europe were mild.

“President Clinton's speech to the CFR where he threatened to change the current IMF floating exchange rate system, going back to the FDR Bretton Woods system followed by the bankers retaliation known as Monica Lewinsky.

[…]

http://www.bilderberg.org/roundtable/emailspeech.html"

1) I didn’t read the whole thing but there doesn’t seem to be any mention of changing exchange rates etc. Can you tell us exactly where he made such a threat?

2) Those evil bankers must be psychic because the affair started in 1995, Linda Trip started recording her conversations with Lewinsky in September 1997, Newsweek got wind of the story shortly there after but sat on it and the Drudge Report broke it January 17, 1998 but Clinton didn’t give his speech till September.

http://www.washingtonpost.com/wp-srv/polit...on/timeline.htm

You would do well to study the works of Lyndon LaRouche. You might even discover for yourself what art really is

.

He seems to think Jazz is evil so what would he make of RnR especially those coke and Quaalude hounds you are so enamored with, the Eagles and Tom Petty? I think you are going to have to burn a good chunk of your music collection.

You might also learn the indispenable role "culture" plays in the advancement of the human race. Destroy classical culture (see GG Allin) and you'll destroy the nation.

On yeah, GG was huge - his cultural impact was almost on the same level as Picasso, Elvis and the Beatles. The Eagles did a lot more to make Beethoven roll over and tell Schindler the news than GG did - burn your CDs!

Look, you could have taken some time and researched it on your own and found out that I was correct. Instead you decided to give me a lesson on how to count zero's.

And I never wrote that Clinton threated to change "exchange rates". Our current system is refered to as a "floating exchange rate" system. Former President Nixon ended the "fixed exchange rate" system when he canceled the Bretton Woods system on August 15, 1971. President Nixon on the advice of George Schultz canceled FDR's post war monetary system called Bretton Woods and put the US on a floating exchange rate system. And on the path to hell. President Clinton knew the system to be failing after the Russian GKO crisis and decided to take action. That's what his speech to the CFR was about.

And your mistaken about 1998 being the first time LaRouche warned about the collapse of the system. He actually issued his warning all the way back in May 1994.

And yes the Clinton and Lewinsky affair occured prior to 1998. Big deal, it proves nothing. They exposed his affair only after Clinton threatened to pull another FDR on them, and take their power away. Look at John Edwards, you see a similiar situation. Some people wanted to make sure he wasnt selected as VP on the Democratic ticket with Obama...so they exposed his cheating ways and as a result he's essentially finished for the 2008 election.

The financial system has been blowing apart for years. The fact that they've pumped trillions of dollars into the system to keep it afloat a while longer does not change the fundamental fact that the system is finished. All they did with this hyperinflationary money pumping was guarantee that the collapse will be that much more explosive and chaotic.

This crisis has little or nothing to do with high finance. You're mistaken if you view these derivatives contracts between counter parties as simply a "zero sum" game. The derivative mongers have been selling that lie for years. You mentioned ENRON in one of your earlier messages. ENRON was all about derivatives. That's what blew out causing ENRON to collapse.

Edited September 13, 2008 by Terry Mauro

[John Simkin]

I've been on the record for letting them fail. Nationalization is the wrong move ofr lots of reasons. I would prefer for us to take the lumps now and move forward.

The problem is that Freddie Mac and Fannie Mae is just the tip of the iceberg. The whole system is under threat. As much as it must hurt, Bush had no choice but to nationalize them. What alternative strategy do you suggest Bush should take?

Let everyone take their lumps and then lets move on. We eitther take the big hit, suffer and then rebuild or we die the death of a thousand cuts. I'll take the big hit.

I agree.

Let them, and Lehman Brothers, fail.

The market will recover, and they shouldn't and won't recover.

In the future, investment and mortgage houses will behave differently, knowing that there is no Federal safety net to stop their self-induced free falls.

Let us look at the history of government involvement in the US economy. FDR was accused of being a socialist when he introduced government regulation as part of the New Deal. FDR's actions brought the US out of the recession. This was in direct contrast to the economic policies of the previous president Herbert Hoover. Although FDR was attacked by the Republicans for his policies, there was no real effort to deregulate the US economy.

This consensus lasted to well after the Second World War in both the US and Europe. In the UK deregulation began under Margaret Thatcher in the 1980s and as a result we suffered a period of high employment. Deregulation in the US took off under George Bush. As Larry Elliott has pointed out: "The world is in a mess it is today not because state regulation of the banks was too stringent in the face of demands for deregulation, liberalisation and privatisation. The upstart was excessive speculation, and economics in which the financial sector wields far too much influence and reward structures invite foolishness."

Free market advocates have no answers to the problem than to let the banks go under. Remember, the first thing that FDR did was to pass the "Bank Act". Even people like Bush realize that the global financial community now has institutions that are simply too big to fail. In exchange, Bush needs to impose tougher regulations such as "controls on the ability of banks to create unlimited amounts of credit, to restrict the more toxic forms of derivatives, to rein in the activities of hedge funds, to insist that remuneration structures are not biased in favour of reckless speculation, and to use anti-trust law to break up the power of the big institutions".

[Len Colby]

I never wrote that Clinton threated to change "exchange rates".

You wrote: “he threatened to change the current IMF floating exchange rate system, going back to the FDR Bretton Woods system”

If you change from a fix to floating system or vice-versa this will cause rates to change. If however by some odd magic they stay the same then the change was irrelevant. I did not see any mention of changing exchange rates or exchange rate systems in the speech.

Our current system is refered to as a "floating exchange rate" system. Former President Nixon ended the "fixed exchange rate" system when he canceled the Bretton Woods system on August 15, 1971. President Nixon on the advice of George Schultz canceled FDR's post war monetary system called Bretton Woods and put the US on a floating exchange rate system. And on the path to hell.

Can you explain in your own words why floating exchange rates are so bad? Do any economists not associated with your guru share this view?

President Clinton knew the system to be failing after the Russian GKO crisis and decided to take action. That's what his speech to the CFR was about.

Then I’m sure you can cite excerpts of the speech were he threatened to put the US back on fixed rates.

What did the Russian crisis have to do with floating vs. fixed exchange rates?

And your mistaken about 1998 being the first time LaRouche warned about the collapse of the system. He actually issued his warning all the way back in May 1994.

I never indicated he 1st made such a prediction in ’98. It is my impression he has been claiming catastrophic failure of the economy was imminent since the time of Methuselah or there ‘bouts. I was disputing the accuracy of the 1998 claim, 10 ½ years later no such catastrophe has struck or seems likely to anytime soon (not on the scale his underling suggested). If he made such a claim 4 years earlier so much the worse for the reliability of his predictions.

And yes the Clinton and Lewinsky affair occured prior to 1998. Big deal, it proves nothing. They exposed his affair only after Clinton threatened to pull another FDR on them, and take their power away.

Wrong again. As I already pointed out, the story broke in January 1998 the speech was 8 month later in September - pay attention.

Look at John Edwards, you see a similiar situation. Some people wanted to make sure he wasnt selected as VP on the Democratic ticket with Obama...so they exposed his cheating ways and as a result he's essentially finished for the 2008 election.

If they were so threatened by him why didn’t they reveal this when he was in the running for president? That would have killed his chances of becoming VP as well. If they prefer the GOP to Dems. the smartest thing would have been to hope he was made the VP nominee and then expose him.

I’m basically done with this line of discussion, don’t expect further replies except to correct factual errors on your part (or mine)

[Craig Lamson]

I've been on the record for letting them fail. Nationalization is the wrong move ofr lots of reasons. I would prefer for us to take the lumps now and move forward.

The problem is that Freddie Mac and Fannie Mae is just the tip of the iceberg. The whole system is under threat. As much as it must hurt, Bush had no choice but to nationalize them. What alternative strategy do you suggest Bush should take?

Let everyone take their lumps and then lets move on. We eitther take the big hit, suffer and then rebuild or we die the death of a thousand cuts. I'll take the big hit.

I agree.

Let them, and Lehman Brothers, fail.

The market will recover, and they shouldn't and won't recover.

In the future, investment and mortgage houses will behave differently, knowing that there is no Federal safety net to stop their self-induced free falls.

Let us look at the history of government involvement in the US economy. FDR was accused of being a socialist when he introduced government regulation as part of the New Deal. FDR's actions brought the US out of the recession. This was in direct contrast to the economic policies of the previous president Herbert Hoover. Although FDR was attacked by the Republicans for his policies, there was no real effort to deregulate the US economy.

This consensus lasted to well after the Second World War in both the US and Europe. In the UK deregulation began under Margaret Thatcher in the 1980s and as a result we suffered a period of high employment. Deregulation in the US took off under George Bush. As Larry Elliott has pointed out: "The world is in a mess it is today not because state regulation of the banks was too stringent in the face of demands for deregulation, liberalisation and privatisation. The upstart was excessive speculation, and economics in which the financial sector wields far too much influence and reward structures invite foolishness."

Free market advocates have no answers to the problem than to let the banks go under. Remember, the first thing that FDR did was to pass the "Bank Act". Even people like Bush realize that the global financial community now has institutions that are simply too big to fail. In exchange, Bush needs to impose tougher regulations such as "controls on the ability of banks to create unlimited amounts of credit, to restrict the more toxic forms of derivatives, to rein in the activities of hedge funds, to insist that remuneration structures are not biased in favour of reckless speculation, and to use anti-trust law to break up the power of the big institutions".

Did FDR's New Deal policy bring the US out of the depression or did it in fact, as many argue, actually POSPONE the recovery and actually HARM those it was designed to promote...the poor and the low wage worker?

[John Simkin]

Did FDR's New Deal policy bring the US out of the depression or did it in fact, as many argue, actually POSPONE the recovery and actually HARM those it was designed to promote...the poor and the low wage worker?

Maybe you could explain who these "many" people were. Maybe you could give us the name of just one respectable historian or economist who argued this. It definitely was not the American electorate who went onto re-elect him in 1936, 1940 and 1944.