This essay is about three recent books that explain
how we lost our economy, the Constitution and our civil liberties, and how peace
lost out to war.
Matt Taibbi is the best -- certainly the most
entertaining -- financial/political reporter in the country. There is no better
book than Griftopia (2010) to which to turn to understand how stupidity,
greed, and criminality, spread evenly among policymakers and Wall Street,
created the financial crisis that has left Americans overburdened with both
private and public debt. Taibbi walks the reader through the fraudulent
financial instruments that littered the American, British, and European
financial communities with toxic waste. He has figured it all out, and what in
other hands might be an arcane account for MBAs is, in Taibbi's hands, a highly
readable and entertaining story.
For the first 65 pages, Taibbi entertains the reader
with the inability of the public and politicians to focus on any reality. The
financial story begins on page 65 with Fed chairman Alan Greenspan undermining
the Glass-Steagall Act leading to its repeal by three political stooges,
Gramm-Leach-Bliley. This set the stage for the banksters to leverage debt upon
debt until the house of cards collapsed. When Brooksley Born, head of the
Commodity Futures Trading Commission, attempted to do her regulatory job and
regulate derivatives, the Federal Reserve, Treasury, and Securities and Exchange Commission got her bounced out of office. To make certain that no other
regulator could protect the financial system and its participants from what was
coming, Congress deregulated the derivatives markets by passing the Commodity
Futures Modernization Act.
As an Ayn Randian mentality of a self-regulating
private sector crowded out prudence, the media cheered. Taibbi captures the era
in a sentence: "In was in the immediate wake of all these historically
disastrous moves -- printing 1.7 trillion new dollars in the middle of a massive
stock bubble, dismantling the Glass-Steagall Act, deregulating the derivatives
market, blowing off his regulatory authority in the middle of an era of rampant
fraud -- that Greenspan was upheld by the mainstream financial and political press
as a hero of almost Caesarian nature. In February 1999, Time magazine put him on
Mortgage securitization allows lenders such as banks
to issue mortgages that can be sold to third parties. Instead of making money
from the interest from mortgages in its portfolio, the bank issues mortgages for
a fee and sells the mortgages. The mortgages are then combined with mortgages
sold by other lenders and resold to investors. This development resulted in
lenders being less interested in the credit-worthiness of
In order to assure investors about credit-worthiness
and to appeal to risk-tolerant hedge funds, the next development was to take a
pool of mortgages of varying credit-worthiness and to organize them into three
tranches. The mortgages were separated into AAA, B grade, and high-risk stuff.
The triple A tranche could be sold to pension funds and institutional
investors. Hedge funds would take the high-risk tranche for the high-interest
rate that they offered, intending to get rid of the mortgages before they had
time to go bad. The middle tranche was the one hard to sell. The interest rate
on the B-grade tranche was not high enough to appeal to hedge funds, and pension
funds were restricted to investment grade.
So what did the banks do? Well, they lumped
together all the B-grade tranches and started the process all over. The best of
the lot were turned into -- you guessed it -- AAA, then came the B grade, and then
the worst of the lot became the third tranche. And then the process was
This was bad enough, but even worse was happening.
Many of the triple A and B grade mortgages had that rating only because of
fraudulent credit scores and rating agencies assigning investment grade ratings
to lower grade mortgages. Everyone was focused on short-term profits, from the
lenders who churned out mortgages for fees to hedge funds that had no intention
of holding the high-risk tranches beyond the short-run. You can see how toxic
waste was spread throughout the financial system.
Then it became possible to "insure" the AAA
mortgages (many of which were not AAA). Once this happened, financial
institutions that were required to maintain reserves against deposits or to
capitalize obligations, such as insurance policies, could now substitute
higher-paying mortgage derivatives for U.S. Treasury notes and still meet their
reserve requirements for a ready cash reserve. Treasury notes are so liquid that
they are considered the equivalent of cash, and insured AAA-securitized
mortgages acquired similar status.
AIG became the big provider of "insurance" in an
operation run by Joe Cassano. Cassano's "insurance" product is called a credit
default swap. It is not insurance, because AIG did not set aside capital to pay
any claims. And claims there would be. Not only were the AAA mortgages that
were being insured littered with toxic waste, investment banks and hedge funds
could purchase swaps against mortgages that they did not even own. As Taibbi
puts it, people were gambling in a casino in which gamblers did not have to
cover their bets or own the financial instruments that they were
While Cassano was collecting fees for bets that he
could not cover, Win Neuger on the other side of AIG was lending the insurance
giant's long-term portfolio of sound investments to short-sellers for a
Short-selling works like this: A short-seller thinks
a company's stock price is going to fall in value. He borrows the stock from AIG
by putting up collateral equal to its market price the day the stock is borrowed
plus a small fee, sells the stock, pockets the money and waits for the stock to
fall. If his hunch or inside information is correct, and the stock falls in
value, he buys the stock and returns it to AIG, pocketing the difference in the
Normally, people who lend stock to short-sellers are
content with the fee and with the interest on the collateral (cash) invested in
safe instruments like Treasury bills. The lender of the stock cannot take any
risk with the cash collateral, because the cash must be returned to the
short-seller when he returns the borrowed stock.
Once, however, toxic waste got AAA ratings plus
insurance from Cassano, higher-paying insured investment grade toxic waste could
displace of US Treasuries as a place for Neuger to hold the short-sellers'
collateral. You can see the untenable position into which Cassano and Neuger
Enter Goldman Sachs as a buyer of swaps from Cassano
and a borrower of stocks from Neuger. Once the real estate bubble that the
crazed Federal Reserve had caused popped, all the fraud that had been disguised
by rising real estate prices appeared in its naked glory. AIG couldn't cover
Cassano's swaps, and it could not return the collateral to short-sellers that
Neuger had invested, unknowingly, in toxic waste.
This was the origin of the TARP bailout, which was
perceived by Goldman Sachs (whose former executives, as Taibbi relates,
controlled the U.S. Treasury, financial regulatory agencies, and the Federal
Reserve) as an opportunity not merely to have U.S. taxpayers make good on its
exploitation of AIG, but also to fund with free capital supplied by hapless
taxpayers more money-making opportunities for "banks too big to
As Taibbi shows, Goldman Sachs had yet more ruin to
bring to Americans. Goldman Sachs managed to get the position limits that
regulation imposed on speculators in order to prevent speculation from taking
over commodity markets (for example, grains, metals, and oil) secretly
repealed. This allowed Goldman Sachs to create a new product, index speculation,
which brought hundreds of billions into commodities markets and drove up the
price of gasoline in 2008 to $4.50 per gallon despite the fact that there was no
change in supply or consumer demand. It was entirely a profit rip-off from
speculation in oil futures contracts.
From here on Taibbi's book really rolls. If the
U.S. had a media worthy of the name, instead of mere shills for private
oligarchs and propagandists for government, Matt Taibbi would be the editor of
an independent Wall Street Journal with a regiment of investigative reporters. Then Americans would have a prospect of reclaiming their country and their
Charlie Savage is a summa cum laude graduate of
Harvard with a Master's degree in law from Yale. As a Boston Globe reporter, he
documented the Bush-Cheney-Yoo-Bybee-et.al. destruction of U.S. civil liberties
and the constitutional separation of powers as they occurred during the reign of
the 43rd president of the United States. Savage draws on this disillusioning
experience to give us another important book, Takeover (2007). Savage
documents completely how American civil liberty was destroyed by Dick Cheney and
the traitors he was able to place in key positions in the Bush
President George Bush, an inconsequential person,
gloried in the increase in his power that the Cheney forces and the Federalist
Society achieved by a fabricated doctrine of "inherent power" that allegedly resides in the
presidency. This power, its tyrannical advocates assert, places the President
above Congress, the Judiciary, and the law itself during times of war. The
advocates of this doctrine used war to advance their claims, but actually
believe that the President, as long as he is a Republican, is, in fact, a Caesar
who is unaccountable.
Savage is a clear, masterful writer. He shows that
the Bush/Cheney traitors have left Americans with an executive branch that is
unaccountable to statutory law, treaties, international law such as the Geneva
Conventions, and Congress. What one reads in Takeover is not opinion but
documented fact. There is no better way for gullible flag-waving Americans to
sober up than to read Takeover.
Anyone who has any remaining faith in the U.S.
government after reading the Taibbi and Savage books will lose it completely
when they read James W. Douglass' JFK And The Unspeakable (2008).
Douglass' book is more gripping than the best thriller or murder mystery;
yet, it is based on hard evidence documented in 100 pages of footnotes. Douglass presents the solution to the greatest murder mystery of the 20th
century -- that of President John F. Kennedy.
Douglass is not the first to take on this task. Millions of people in the U.S. and abroad have been convinced by years of
investigation by many competent researchers that President Kennedy was murdered
by his own government. What differentiates Douglass book is that he proves it
several times over with official government documents that have been
declassified in the years that have passed, with personal and careful interviews
with eye-witnesses whose testimony was excluded from the Warren Commission's
report and whose mouths where shut by threats that silenced them into old age
when they had nothing left to lose, and with circumstantial evidence that is so
overwhelming that it could not be a mere coincidence.
In brief, JFK, who began political life as a cold
warrior was brought face-to-face with reality in the Cuban missile crisis when
the U.S. military insisted that the crisis be resolved by military attack on
Cuba and a first-strike nuclear attack on the Soviet Union. Kennedy found his
intelligence and humanity isolated within his own government and turned via back
channels to Soviet leader Khrushchev for help.
Khrushchev sensed sincerity in JFK's plea and
withdrew the Soviet nuclear missiles from Cuba in exchange for Kennedy's promise
that the US would not invade Cuba. Kennedy added the promise to remove U.S. strategic
missiles from Turkey in six months but not as a public part of the
The U.S. Joint Chiefs of Staff, the CIA, and even
the Secret Service entrusted with the protection of the president concluded that JFK was
soft on communism and a national security threat.
Kennedy had not gone along with the Bay of Pigs
invasion of Cuba, calling off the U.S. air support. He had nixed the Operation
Northwoods project conceived by the Joint Chiefs of Staff to conduct black ops
terrorist operations against American citizens in Miami and Washington D.C., to
hijack and shoot down American airliners ("real and simulated"), to strafe and
bomb Cuban refugee ships headed for Florida and to blame it all on Castro in
order to create public support for "regime change" in Cuba.
When Kennedy signed the nuclear test ban treaty with
Khrushchev, it brought him more condemnation from within his own government. In
the eyes of the Joint Chiefs, the CIA, and the Secret Service, America had a
national security risk in the White House who was selling out the country to
The decision was made to eliminate the security
risk. Douglass presents in fascinating detail every inch of the story. I can't
reproduce it here. Suffice it to say that Oswald was on both the CIA and FBI
payrolls. He was set up as the patsy without realizing it until he was in the
Dallas jail where he was shot by Jack Ruby, another CIA asset.
The FBI at headquarters level was not part of the
plot, although local offices were infiltrated by the CIA. The CIA had set the
assassination up so that the patsy, Oswald, was linked to a KGB assassin and to
Castro. The goal was to use Kennedy's murder to enrage the American public and
to attack Cuba and the Soviet Union. I know, it sounds to naive Americans like a
far-fetched conspiracy theory, but I have never seen a better proven
After JFK's assassination, J. Edgar Hoover clued in
Lyndon Johnson that the linkages of Oswald to the KGB and Cuba were fabricated
by the CIA.
The problem for President Johnson was that the CIA
had assassinated Kennedy in a manner that was too transparent. The CIA had
overdone its setup of Oswald, for example, to the point that it was
transparently a CIA operation.
What to do? If Johnson ordered the arrest of the
CIA operatives responsible, the responsibility rose high up into the ranks. What would be the effect on the American public during a difficult time of the
cold war if they learned that they could not trust their own government not to
murder their own president? In addition, liberals were concerned that if the
truth came out, Americans' trust in their government would evaporate. Heaven
Johnson made the decision to cover up the crime and
that was the task assigned to the Warren Commission.
J. Edgar Hoover knew the truth, but went along with the
Johnson and Earl Warren were thinking short-run and
did not understand the unintended consequences of the cover-up. They thought
that by blaming Oswald as a lone deranged assassin, that they had done service
by eliminating the CIA plot to implicate Cuba and the Soviet Union. Johnson did
not realize that he had handed the U.S. government over to the CIA, and that he
would soon be involved in an escalating war in Vietnam -- a war that JFK had
ordered wound down -- which would deny him a second term.
Evidence continues to pile up that the Warren
Commission covered up JFK's murder by a conspiracy within the U.S. government. In his multi-volume, Inside The Assassination Records Review Board,
Douglas P. Horne, Chief Analyst for Military Records, Assassination Records
Review Board, provides voluminous incontrovertible evidence that fraud was
introduced into the autopsy reports that served as the basis for the Warren
Commission's conclusion that JFK was shot from behind by a lone
Out of JFK's assassination came Robert Kennedy's
assassination, the Oklahoma City bombing, Waco, and 9/11.
Niels Harrit, a professor of nano-chemistry at the
University of Copenhagen, together with U.S. physicists and engineers published
a paper in the Open Chemical Physics Journal in 2009 that proves that
nano-thermite was used to bring down the World Trade Center towers.
In the U.S. this startling finding is unreported
except on 9/11 truth sites. The researchers say that in the dust from the World
Trade Towers destruction they found unreacted nano-thermite, some of which they
tested to confirm their identification. The researchers say that they have
enough of the unreacted nano-thermite left for others to examine.
There have been no takers in America. Not a single
U.S. physics department, most of which are totally dependent on federal
government grants, will touch the subject.
The campaign that has been organized against the
finding of Harrit and his associates is that the dust has not been in certified
custody, and the explosive material could have been added. This claim overlooks
that nano-thermite is a material that is not available to anyone except the
In America today the financial press says we cannot
believe Taibbi. Law professors hoping for elevation to the federal bench say we
cannot believe Savage. The mainstream media and some left-wing Internet sites say
we can't believe Douglass.
It is in this disbelief of hard evidence that
America is dissolving.