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by Cliff Kincaid
Business cable network CNBC is asking, in a special report, whether investment manager Bernard Madoff pulled off the “scam of the century.” But Madoff is only accused of a $50 billion heist. That’s peanuts compared to what the politicians have done to us.
On Monday, December 15, in a story that went unnoticed, the General Accountability Office (GAO) reported that the federal government has failed another financial audit. It was the 12th year in a row that the federal government has been unable to accurately report on its fiscal condition. Frankly, nobody knows precisely where the money is going. But we know where it’s coming from - the beleaguered taxpayers.
We have all seen the film footage of Madoff leaving his New York apartment and being pushed around by a horde of photographers and cameramen trying to get a shot of him. Why aren’t the politicians being surrounded in similar fashion for destroying the financial stability of our country?
Almost every day we see a story that misses the big picture. On Thursday, President-elect Obama announced his pick to run the Securities and Exchange Commission (SEC). Politicians are demanding to know why the agency failed to detect the Madoff fraud and what it will do in the future to uncover other fraudulent financial schemes. But what about the federal government’s own massive financial fraud, as documented by the GAO itself?
The GAO report was released one day before President Bush told CNN’s Candy Crowley that, in order to avoid economic collapse, he had to abandon freedom in order to save it. “I’ve abandoned free-market principles to save the free-market system,” he declared.
When I heard that Bush had made that statement, I thought it had to be a misquote. But then I played the tape of the interview and heard it for myself. “Stop me before I throw a shoe” was conservative commentator Michelle Malkin’s reaction to Bush’s CNN comments.
“I feel a sense of obligation to my successor to make sure there is not a huge economic crisis,” Bush told Crowley. So he was panicked by Treasury Secretary Henry Paulson into pushing Congress to approve a $700-billion Wall Street bailout plan. What he got was a huge economic crisis. Our salvation now lies in Obama, a socialist who wants to spread the wealth around and spend even more money, perhaps as much as $1 trillion in a new “stimulus.”
The Bush comments about destroying free markets to save them wasn’t much of a controversy in the major media. Perhaps this was because so many media personalities were busy with other things. Some were lining up at the White House Christmas Party on Tuesday night to get a photo with the President. On Fox News on Wednesday morning, the hosts were blubbering over their attendance at the event and told viewers to go to their website for photos of the affair.
Unfortunately, when the President claimed “there’s a lot of blame” to go around for the financial and economic crisis, Crowley didn’t follow up by citing the Celent study finding that the claims made by Paulson and Federal Reserve chairman Ben Bernanke to justify a socialist takeover of the financial industry were demonstrably false. The study suggests that the result of the bailout could be Weimar-style hyperinflation.
“Celent’s report is exhibit A in a trial for putting Paulson in jail,” is how one person responded to my column on the study. This feeling can only grow as awareness spreads through the alternative media about the looting of the taxpayers. It is time for talk radio to make this into the number one issue as we enter a new year. We are increasingly facing a federal government that is acting in a lawless fashion.
Nevertheless, Bush confirmed that his administration was working on a federal financial bailout of the auto industry. A good question would have been: how is that justified when Congress declined to provide the funds?
Bush said the financial system had become “inebriated” and this led to the current crisis. What kind of “democratic” system do we have when the people’s representatives in the House and Senate are bypassed by an executive branch or a Federal Reserve drunk with power?
Why is the Federal Reserve refusing to comply with a Freedom of Information Act request from Bloomberg News for information about “emergency” loans in the crisis? Bloomberg has been forced to go to court to get the information.
In regard to the auto bailout, comedian Jay Leno probably had the best line. He said, “Don’t you love watching congressmen lecture auto executives on how to run their business? I mean, you got people that put us a trillion dollars in debt lecturing people who put us a billion dollars in debt?” The trillion dollar figure, of course, is only a reference to the current projected federal deficit. It could get far larger.
Asked about Madoff, Bush told CNN’s Candy Crowley that he didn’t know much about the case. She should have asked him why the federal government copies Madoff’s accounting procedures.
Peter Schiff of Euro Pacific Capital points out that “The Social Security Administration runs its ‘trust funds’ with precisely the same methods used by Madoff and Ponzi. As money is collected from current workers, the funds are then dispersed to those already receiving benefits. None of the funds collected are actually invested, so no investment returns are ever generated. Those currently paying into the system are expected to receive their returns based on the ‘contribution’ made by future workers.”
He adds, “The United States Government runs its own balance sheet based on the Ponzi principal as well. Our national debt always grows and never shrinks. As existing debt matures, proceeds are repaid by issuing new debt. Interest payments on existing debt are also made by selling new debt to investors. The whole scheme depends on an ever growing supply of new lenders, or the willingness of existing lenders, to continue to roll over maturing notes. Of course, as was the case with Madoff, if enough of our creditors want their money back, the music stops playing.”
In terms of the financial “rescue” package, Bloomberg’s latest estimate is that the cost has reached a staggering $7.7 trillion.
A more recent estimate, provided in a Politico.com story by Jeanne Cummings, is $8.7 trillion. She reported, “According to Bianco Research President James Bianco, who crunched these numbers, that amounts to more government aid and assistance than nine other historic bailouts and big government outlays combined.”
A December 10 GAO Report dealt with the so-called TARP (Troubled Asset Relief Program), which was supposed to “rescue” the financial system. Paulson changed his mind and TARP became the CPP, a capital purchase program that had provided taxpayer funds to 87 financial institutions as of December 5. However, GAO found that the Treasury Department “has yet to address a number of critical issues. These include determining how it will ensure that CPP is achieving its intended goals and monitoring compliance with limitations on executive compensation, dividend payments, and stock repurchases. Moreover, it has yet to formalize transition planning efforts given the upcoming shift to a new administration or to establish an effective management structure and an essential system of internal controls.”
In other words, there is really no effective oversight and no accountability to the taxpayers providing the money.
Can we start to have some media scrutiny of America’s descent into socialism and national bankruptcy before President Obama asks Congress to “save” us by spending more money and going further into debt?
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