When AIG took more than $170 billion in bailout money from the Federal Reserve, it insisted it was so poor that only emergency funding of public money could save it. That was before AIG revealed it was &quotcontractually obliged&quot to pay $165 million in bonuses to its executives. Which executives, exactly? The ones who lost all the money in the first place!

	People will be marching in the streets, demanding the arrest of all the rich executives and corrupt bureaucrats who took part in this massive financial theft.

But this article isn’t about the facts surrounding the AIG bailout and its subsequent payout of $165 million in bonuses to incompetent executives. This is about something far more serious: The growing discontent among taxpayers who are inching ever closer towards a popular revolt.

Yes, there is a limit to how much even the mainstream public will put up with. And the only reason they aren’t marching in the streets right now is because all this bailout money hasn’t hit them in their own pocketbooks… yet. But once the hyperinflation of the U.S. dollar begins (which is now inevitable), and the public starts to connect the dots between their own financial losses and the bailout bonus money paid to rich executives, they are going to be utterly outraged at the magnitude and arrogance of the financial theft that took place right in front of them.

I believe it is no exaggeration to say that when these issues come to a crescendo, people will be marching in the streets, demanding the arrest of all the rich executives and corrupt bureaucrats who took part in this massive financial theft.

Let’s be blunt about this: This $165 in bonus money being paid to incompetent AIG managers is essentially money confiscated from hard-working American taxpayers. It’s just like being mugged on the street, except this theft will cost you much, much more than any mugging.

What we are witnessing here with this bailout fiasco is a massive theft of money from the People. And it’s the kind of scandal that makes people hopping mad when they finally figure it out. This is the kind of stuff that leads to wars of independence (read your American history books) and breakups of entire nations. And instead of stopping this madness and telling AIG they can’t pay million-dollar bonuses using taxpayer bailout money, the U.S. Congress and President just look the other way, pretending no theft is happening at all! Only a few lawmakers like Rep. Barney Frank (and Ron Paul, of course) have dared to stand up and challenge this fiscal madness (http://finance.yahoo.com/news/Frank…).

Betting the farm on a bankrupt nation

Meanwhile, the debt situation in America has become so dire that China is once again asking for assurances on U.S. debt (http://www.nytimes.com/2009/03/15/u…).

They should be. The U.S. is so hopelessly lost in debt spending that there is no conceivable way to avoid outright national bankruptcy. So President Obama now takes to the podium and declares what every informed person in the world knows to be a lie, saying, &quot…every investor can have absolute confidence in the soundness of investments in the United States.&quot

And I have a bridge to sell ya in Brooklyn, too!

A White House spokesperson adds to the hilarity by saying, &quotThere’s no safer investment in the world than in the United States [debt].&quot (http://www.bloomberg.com/apps/news?…)

• A d v e r t i s e m e n t
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These are extraordinary statements from the world’s most highly-mortgaged debtor nation. They remind me of tobacco company executives stating, &quotNicotine is not addictive,&quot or Merck saying &quotVioxx is safe.&quot Sure, the U.S. — which needs about $2 trillion more in loans just to continue its bailout charade — is going to insist it will pay back the money. But how can it? With an economic depression now underway, and the import / export trade imbalance at dangerous levels, and the expense of fighting two wars hanging over the American Empire like a two-ton lead weight, the only person who believes the U.S. is a good credit risk is an insane person.

Buying U.S. debt is no doubt one of the dumbest things any investor could ever do, short of just pouring gasoline on dollar bills and lighting them up (which would actually help the Fed because it would slightly reduce the money supply).

Note carefully that what Madoff was arrested for (ripping off investors by running a ponzi scheme), the U.S. Treasury is pursuing as official policy! U.S. Treasury Bills are, in fact, a classic example of ponzi scheme mechanics: The only way the early investors get paid is if NEW investors can be suckered into the scheme in order to bring new money to the table! And when Obama says the U.S. is a safe investment, it echoes the words of Madoff himself who insisted that his own &quotinvestment brokerage&quot was a safe place for investors, too!

It is now obvious to every intelligent person familiar with the situation that the U.S. will default on its debt in some fashion, either by declaring a default or by paying off the debt with worthless hyper-inflated currency, which is much the same as declaring a default. The &quotone world currency&quot gang will then step in and exploit the crisis to seize control over the global money supply, and the U.S. dollar will be traded in (at pennies on the dollar) for some other global currency that’s once again controlled by the global elite.

Don’t be suckered into the U.S. dollar ponzi scheme

The only way to avoid losing your wealth during this transition is to convert your dollars to something real. Trade your dollars for gold, silver, land, storable food, seeds, tools, water filters or other things that hold value. The dollars you do not convert will be confiscated in one way or another, either through rising taxation or theft via new money creation.

Based on the way things are headed right now, I fully expect to see Americans rioting in the streets at some point in the next few years when the real pain of the bailout money fiasco starts to be felt by Joe Public. There are things you need to do in order to prepare for that, and I’ll write more about those topics here on CounterThink as events unfold.

Research related articles:

1. Borrowing from Peter to Pay Paul: The Wall Street Ponzi Scheme Called Fractional Reserve Banking
2. Kucinich calls for probe of bonuses for Wall Street aid recipients
3. Wall Street Bank Run

Ryan Grim

Huffington Post

March 13, 2009

Before financial institutions have collapsed over the past several months, they have come to the Financial Accounting Standards Board, pleading for a change in mark-to-market accounting rules so that they can continue to appear to be solvent on their balance sheets.

Robert Herz, head of the FASB, told a panel of lawmakers Thursday that the loudest critics of fair market accounting practices have been the very same banks that have gone belly up when regulators would not let them adjust their accounting.

&quotThere seems to be a clamoring for changing mark-to-market rules that seems to come largely from institutions that may be insolvent,” Rep. Alan Grayson (D-Fla.) said to Herz at a meeting of the Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises.

Grayson said that, from Herz’ testimony, it seemed that &quotthere may be institutions that are insolvent and they haven’t been forced to write down their books to the point [of insolvency] yet, and those are maybe the same institutions that are asking us to modify the mark-to-market rules so that they won’t have to admit that they’re bankrupt. Is that correct?”

Herz said that it was.

&quotI share your point of view and I will tell you that I get calls and visits from some of those institutions that are now in government hands, about two weeks before they get taken over, trying to get the accounting changed,” he said.

&quotClearly some of the most vocal opponents of fair value and mark-to-market have been some of those institutions that ultimately failed and have had to have billions of taxpayer dollars put into them.”

Mark-to-market accounting requires banks to value an asset at its most current market value. In a frozen market, where assets can’t be sold for anything more than a fire-sale price, that value is extremely low, forcing banks to write-down a loss on their balance sheets. With a loss on the books, the bank can lend less money and is required to raise capital to meet regulatory lending standards. With enough losses on the books, the bank is no longer solvent.

The exchange comes at about the 4:40 mark in this video:

Grayson, reached in Florida, said the he was grateful for Herz’ candidness and insisted that changing mark-to-market accounting rules was no way to get out of the current economic mess.

&quotThat’s representative of exactly the kind of thing that’s put us in this position in general,” he said. &quotWe have people who break every rule in the book and then they think that the answer to their problems is to break more rules. It’s given us some real insight into the human nature and the pathology of the people who have created these problems for America.”

Just as the the institutions Herz referred to were requesting accounting changes, large banks are again calling for modifications.

&quotWhy are we having this conversation now at all?” Grayson asked.  I think the real reason this has come up now is because a lot of the institutions are genuinely insolvent and don’t want to admit it. The people who are in charge of those institutions don’t want to have to give up their multimillion-dollar jobs and turn companies over to receivers who will see all the mistakes they have made.”

For Grayson, the rules exist for a reason. &quotThe reason why we have these rules in the first place is to be able to distinguish the successful companies from companies that are broke. That’s why we have these rules. That’s why we have accounting,” he said. &quotThere’s an underlying truth to accounting, and it’s very important to preserve that truth.”

Megan Davies and Walden Siew
Reuters
March 13, 2009

NEW YORK (Reuters) - Private equity company Blackstone Group LP (BX.N) CEO Stephen Schwarzman said on Tuesday that up to 45 percent of the world’s wealth has been destroyed by the global credit crisis.

“Between 40 and 45 percent of the world’s wealth has been destroyed in little less than a year and a half,” Schwarzman told an audience at the Japan Society. “This is absolutely unprecedented in our lifetime.”

But the U.S. government is committed to the preservation of financial institutions, he said, and will do whatever it takes to restart the economy.

U.S. Treasury Secretary Timothy Geithner plans to unfreeze credit markets through a new program that will combine public and private capital in a fund that would buy bank toxic assets of up to $1 trillion.

“In all likelihood, that will have the private sector buy troubled assets to clean the banks out in terms of providing leverage … so that we can get more money back into the banking system,” Schwarzman said.

He expects the private sector to end up making “some good money doing that,” but added there were complex issues on how to price toxic assets.

He put part of the blame for the financial crisis to credit rating agencies.

“What’s pretty clear is that, if you were looking for one culprit out of the many, many, many culprits, you have to point your finger at the rating agencies,” he said.

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