Monday, September 8, 2008

The $ky Ain't Falling But Rome Is Burning

"McDonalds is going out of business too," my friend said today.


"Yes. Isn't it awful?"

"I can't believe that!", I exclaimed. "I knew they announced they're getting rid of their Dollar Menu and making it a $1.29 or $1.39, but this is awful. I mean, it really brings home the point that our economy is shot."

He laughed. "I was only joking. I made that up."

"Oh hell, ya had me going," I said, smiling. "But you know what? It's a perfect, concrete comparison. A lot of folks don't quite get what's going on, but I bet they'd get that."

"Yeah, I bet so too."


We were talking about the bankruptcy of Fannie Mae and Freddie Mac before he pulled my leg with the McDonalds joke. Maybe these two giant home lenders haven't served billions as the great food chain restaurant has, but they've served way over half of every single home buyer in the nation. The FMs have gone belly up and are dead in the water.

Over the weekend, they were placed in a "conservatorship" with the US Treasury, who is writing a blank check that the tax payers will pay. It's the largest government bailout of bankrupted corporations in the history of world.

As predicted by Martin Weiss, Ph.D and writer for Money & Markets, I've already been hearing this word tossed around as the feel-good media whores avoid the word "bankruptcy". He said in an article today:

"The reality: This was the same pitch we heard in August of last year when the world's central banks made a coordinated attempt to rescue credit markets with massive injections of fresh cash. It was also the same pitch we heard in March when the Fed bailed out Bear Stearns. But each time, the crisis got progressively worse... Together, both Washington and Wall Street are trying to persuade you that, "no matter what, the government will save us from financial disaster." But the real lessons already learned from these events are another matter entirely..."

Before your eyes glaze over, I wrote a past article about the scheme for the USA to be merged with Canada and Mexico into one nation, called the North American Union. This will involve the dissolution of our country, Constitution and currency by their target date of 2010. The dollar as we know it will be replaced with the Amero.

George Bush knows about the plan, and I'm somewhat certain it originated with the Council on Foreign Relations (CFR). Only Lou Dobbs of CNN reported on this - once, and the story disappeared completely from the broadcast mainstream media.

When I stumbled across Martin Weiss today, I discovered that he, like me, had similar 'radical' thoughts of an impending disaster when he presented this scenario in a fictional scene from his book, where the real Treasury Secretary, Hank Paulson, is speaking to the President. Read this carefully:

Hank says: "Let's say I'm a foreign investor and I own U.S. Treasury bonds. This implies that I trust the U.S. government; that I loaned you my money for the purpose of running your government. Now you take my money and pass it on to a third party, a private company. So I say to you, 'What did you go and do that for? If I wanted to loan the money to that company, I would have done so myself — directly — in the first place. But I didn't. I didn't do it because I don't trust the company. I trusted you. But now I can't trust you anymore either. Now you're just one of them.' So the investor stops buying our bonds or, worse, dumps the government bonds he's holding, and then we are in trouble. Then we can't sell our government bonds anymore to pay off the old ones coming due. Then we, the United States government, default."

The President hesitated for a few seconds before responding, but it seemed like hours as the tension built.

"Then what?"

The secretary could not believe his ears. The President of the United States had treated the government's default with levity, utter levity. He could no longer control his boiling frustration — and fear.

"Do you want to allow the entire market for U.S. government securities to shut down? Do you want to be the one who has to lay off hundreds of thousands of government employees because you can't raise the money to meet the government payroll? Do you want to be the last president of the United States? Do you want to risk a new republic with a new constitution? Do you want to destroy, in one fell swoop ..."

Gee, does this guy have the super power to become invisible and listen in on Bush's conversations? Was he prophetic? Or is he like so many of us, who study human nature, individual people, and has a gift for putting together or synthesizing events with the human factor?

He said
something else very important in his worst-case scenario:

The government didn't rescue large private corporations like Fannie or Freddie in his book. Not bailing them out was the only way it could save its own credit and its own ability to continue borrowing from domestic and foreign investors.

He added today that in the real and present world, the government is going forward with its bailout plan — and the plan is even more ambitious than the one he contemplated.

Okay, so he's not the only one who slightly underestimated the I don't give a fuck mentality of George W. Bush, but Weiss does teach us what we can expect - a continued meltdown, and the next sinking ship in our economy will be named Credit Crisis.

Are we on the brink of living through the modern day version of The Fall of the Roman Empire?

All that China and Russia has to do is ever so softly call in the trillions of dollar debt we owe them. My guess is that they're thinking about doing this right now, before the dollar is worthless. They might gamble that they would suffer in the short term, but after detaching their economies from ours, come out of this far better than us in the long run.

They can take us down not with bullets, bombs or nukes, but with our true religion, Mindless Consumerism.

In the past 30+ years, we've evolved into an entitlement culture of cheap oil, delivery trucks transporting California oranges over 3,000 miles to Florida and vice-versa, where the people managers of this country have proudly and stupidly outsourced every fucking thing since the '70s.

Our kids have been sold a bunch of lies that our being an Information Society - one that produces nothing but paperwork and fast food - is a great thing.

How great will it be when we can no longer afford to buy what we need from other countries and have to repair what we've got, or build and make stuff ourselves, in a generation whose greatest strength is that they can hook up video and sound systems, text message and perform magic with the latest IPOD?

Or that our teens and young adults are so dumbed down that many don't recognize propaganda when they see it, like at the MTV Awards last night that was generously sprinkled with military ads? Or that many of the winners won on videos that promoted pleasure-seeking and warlike behavior? Or, if you believe the polls, that nearly half the country sees nothing wrong with the old guy running on a platform of a century of war?

Gee-zus! The sky ain't falling but Rome is burning...

Do we stand by and watch, and maybe burn with it? Or pack up our fiddles and leave while we can afford airfare?


  1. There's something so crooked about this whole thing. Now they're saying it'll cost taxpayers $100M. Give me a break. I also think it's awfully shady that the Fed Reserve isn't actually a fed, why would they really have a vested interest in the nation's economy other to fatten select pockets? I'd give my two cents if I weren't so sleepy. Great info, Kit!

  2. Fanny Mae? Freddie Mac? Sounds like a husband and wife pimp and hoe team. No wonder the gov't bailed them out: Birds of a feather stick together.

    Too bad they didn't do much for the American public or its citizens by way of the recently passed Housing Bill. But yet they say the republcans are all about smaller gov't.

    Oh well, we'll be paying back the Federal Reserve with interest for all the money borrowed to finance runaway spending. You're right Kit, Rome is definitely burning, and penicillin sue ain't the cure.


  3. "They can take us down not with bullets, bombs or nukes, but with our true religion, Mindless Consumerism."

    Truly profound.

  4. Damn Kit, you should be writing for somebody.
    You do the research and lay it out plain.
    Great job.
    It's been coming on like a freight train for years now, but the proles are easily lulled to sleep with promises of protection from the fear that they are injected with.
    Dumb asses will get what they deserve. Too bad so many innocents will have to suffer.

  5. Everyone, thank you so much for the comments and compliments. Really appreciate them.

    Here are some clips from an alarming article I found late this afternoon from CNN:
    Small Banks Hurt By Fannie, Freddie

    "By putting the full weight of its finances behind Fannie Mae and Freddie Mac, the government may have crushed the fortunes of about two dozen small banks...

    "On Tuesday, banking regulators met at the Treasury Department to discuss the possible impact on small minority-owned banks and thifts with dangerously large holdings of Fannie and Freddie preferred stock. Because banks hold the preferred shares as part of their core capital, they likely will have to write off those losses...

    "Among the two dozen banks most at risk are some minority-owned banks and thrifts - a few of which could suffer a severe erosion of their capital as a result.

    "A wide range of U.S. large banking and insurance companies hold tens of billions of dollars in Fannie and Freddie preferred shares..."

    My thought: they are the canaries in the coal mine and are only the first to go feet up.

  6. "Before your eyes glaze over, I wrote a past article about the scheme for the USA to be merged with Canada and Mexico into one nation, called the North American Union. This will involve the dissolution of our country, Constitution and currency by their target date of 2010. The dollar as we know it will be replaced with the Amero."

    I agree with some of this statement. I am by no means an ecomomist, but I recall years ago seeing how well the Euro was doing even them compared to the Dollar (I wanted my shoes from the UK y'all!) and thought that we could do well with a system like that.

    However, when the EU started back in the 30s or 40s I think, all the European nations in it today had yet to join, some weren't even nations yet. If we were to start a NAU, I believe it would be the US and Canada first, with some parts of the US and Canadian governments retaining supranational bodies. Mexico would probably be on a waiting list for a time until the US decided to stop building that awful wall and rebuilding some burning bridges.

    I'm not afraid of the dissolution of the American dollar, after all it is going downhill fast. Although I'm not so ignorant to think that the transition would be smooth or without some civil unrest.

  7. Thanks for your input, Estheroette. I wonder what will happen to the money people already have. I agree about civil unrest; it could be a monster which may be the true reason for the Patriot Act, FISA, over 600 refurbished but empty (and manned) prisons which I addressed in an older post, Urban Blacks Will Be Treated like Insurgents. IF this comes to pass, it will surely include almost anyone who protests too strongly and visibly about changes they want.

    I imagine all of us will be blogging about fluff like recipes and relationships (not that there's anything wrong with that per se) but not politics.


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