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Betrayed by the Bailout: The Death of Democracy

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On this date, October 3, 2008, the American people were betrayed by those whom they had elected to represent them. The members of Congress who voted for the Wall Street "bailout" violated their oath of office to "support and defend the Constitution" ... "that I will bear true faith and allegiance to the same" ... "and that I will well and faithfully discharge the duties of the office on which I am about to enter: ..."

Without holding any meaningful hearings or public discussions and listening only to those most responsible for the economic disaster, Federal Reserve Board Chairman Ben Bernanke and Treasury Secretary Henry Paulson, Congress abdicated its responsibility to the American people.

Locking out most members from all discussions, the congressional "leadership" emerged from their backrooms with legislation that grants Secretary Paulson the ability to spend at least $700 billion to "take such actions as [he] deems necessary" ... " to promote financial market stability."

Entrusting tremendous political and financial power (and a ton of borrowed money that taxpayers will have to repay with interest) into Paulson’s sole discretion, members of Congress must have been aware that, prior to his cabinet appointment in 2006, Paulson worked for 32 years at Goldman Sacks, one of the Wall Street firms that stands to benefit greatly from his "actions."

Paulson, who cashed out his Goldman stock valued at $575 million to become the Secretary of Treasury (without having to pay any taxes on the sale), earned more than $53 million in pocket change during just his last two years at Goldman Sacks for innovations such as a new line of "Mortgage Backed Securities." Gambling more than a trillion dollars on risky subprime second mortgages, Paulson cleverly converted them into AAA-rated "secure" investments by purchasing guarantees from the American International Group.

AIG, coincidentally, was just "bailed out" two weeks ago by Secretary Paulson for $85 billion (of borrowed money that taxpayers will have to repay with interest), averting a devastating loss by Goldman Sacks, which was holding more than $20 billion in otherwise worthless second mortgages.

Is it surprising that Lloyd Blankfein, Goldman’s current CEO, was present with Paulson when the decision was made to bailout AIG?

The bailout’s $700 billion price tag is only an arbitrary guess by Paulson and is most likely just the first installment of many more to come. Other economists, with more successful track records, believe the total will be much greater, perhaps $5 trillion, as concealed losses are uncovered and foreign companies dump their toxic investment waste into their American offices.

In passing the "Emergency Economic Stabilization Act of 2008," Congress ignored the "great concern" expressed by almost two hundred of the nation’s leading economists who pleaded with Congress "not to rush, to hold appropriate hearings, and to carefully consider the right course of action,..."

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In addition to its ambiguity and long-term effects, the economists believed the bailout plan to be "a subsidy to investors at taxpayers’ expense" and to be "desperately short-sighted." Ultimately, more than 400 top economists, including two Nobel Prize winners, voiced opposition to the bailout.

The economists were not alone in being ignored by the politicians. It is widely reported that calls and emails to Congress from constituents were running as high as 300 to one against the bailout. Mike Whitney reports one analyst saying that "the calls to Congress are 50 percent ‘No’ and 50 percent ‘Hell, No’." The percentages adjusted as the stock market tumbled, but public opposition to the bailout remains strong.

An AP poll only identified 30 percent of the public in favor of the bailout, and a CNN Money opinion poll found 77 percent of the people believing the bailout would benefit those most responsible for the economic downturn.

Who Benefits?

The Latin adage, Cui bono, asks "to whose death are you going?" Law enforcement investigators quickly learn that the guilty party can usually be found among those who stand to gain from a murder or other crime.

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There is no doubt the bailout will most benefit some of the richest and highest paid individuals in the American economy. But, why did the politicians betray the wishes of those who elected them in favor of the criminals who committed the fraud? Perhaps the answer can be found in another Latin phrase, quid pro quo, meaning "what for what; something for something."

Individuals working for Wall Street finance, insurance and real estate companies and the companies’ political action committees have contributed more than $47 million to the campaigns of Senator Obama (three of top five sources) and Senator McCain (top five sources), both of whom voted for the bailout.

More to the point, Wall Street has contributed more than $1.1 billion dollars to congressional candidates since 2002. Nine of the top ten House recipients of Wall Street largesse, who each received an average of $1.5 million, are on the financial oversight and taxation committees.

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William John Cox authored the Policy Manual of the Los Angeles Police Department and the Role of the Police in America for a National Advisory Commission during the Nixon administration. As a public interest, pro bono, attorney, he filed a class action lawsuit in 1979 petitioning the Supreme Court to order a National Policy Referendum; he investigated and successfully sued a group of radical (more...)

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This was a bad move!I am not happy that both, of t... by Yvonne on Friday, Oct 3, 2008 at 7:49:58 PM
The article did not address whether we should... by William John Cox on Saturday, Oct 4, 2008 at 6:11:06 AM
keep thinking like that... by TRADESMAN on Saturday, Oct 4, 2008 at 8:45:46 AM
God loves his children. His children must speak to... by Wolfie on Friday, Oct 3, 2008 at 8:38:10 PM
Truly those who worship at the altar of greed are ... by William John Cox on Saturday, Oct 4, 2008 at 6:13:24 AM
unless freedom does not exist here---big daddy is ... by TRADESMAN on Saturday, Oct 4, 2008 at 8:50:22 AM
Freedom still exists, otherwise we wouldn't be... by William John Cox on Saturday, Oct 4, 2008 at 9:30:58 AM
Lucifer is the God of light and illumination, and ... by pft on Saturday, Oct 4, 2008 at 5:55:43 PM
Check out "Protocols for Economic Collapse in... by sandra ray on Saturday, Oct 4, 2008 at 6:17:37 AM
For accord on why the Bailout is hush money t... by William John Cox on Saturday, Oct 4, 2008 at 6:28:40 AM
$810 to bail out the people that got us into this ... by Harmony Hackney on Saturday, Oct 4, 2008 at 8:22:54 AM
Harmony, you're not alone.  Together, we ... by William John Cox on Saturday, Oct 4, 2008 at 9:36:34 AM
I am not surprised that yet again the people elect... by Step on Saturday, Oct 4, 2008 at 8:45:02 AM
Step, I do know how your feel.  I was once th... by William John Cox on Saturday, Oct 4, 2008 at 9:43:08 AM
You will still go re-elect that rep just because h... by Gallaher on Saturday, Oct 4, 2008 at 8:58:59 AM
Not this voter!  I'm a registered Indepen... by William John Cox on Saturday, Oct 4, 2008 at 9:46:01 AM
Whereas, I can agree with much of what you say----... by virginius "gin" arnold on Saturday, Oct 4, 2008 at 12:55:24 PM
If a person cannot afford to buy a house, they don... by reasonableperson on Saturday, Oct 4, 2008 at 1:32:33 PM
I think the writer also mentioned something about ... by virginius "gin" arnold on Saturday, Oct 4, 2008 at 2:43:46 PM
I sincerely hope that what is on the table here is... by reasonableperson on Saturday, Oct 4, 2008 at 4:23:11 PM
The next to last paragraph was included in the art... by William John Cox on Saturday, Oct 4, 2008 at 6:14:51 PM
I think you’ve made your point quite well &n... by reasonableperson on Sunday, Oct 5, 2008 at 1:23:27 AM
In addition to Richard Cook and Ellen Brown cited ... by William John Cox on Saturday, Oct 4, 2008 at 2:51:24 PM
Wallstreet could have recovered on it´s own.... by Don Gist on Saturday, Oct 4, 2008 at 10:44:40 PM