There They Go Again

In an earlier blog, I pointed our that sixteen years prior to the time their financial shell game came crashing down around their heads, at least two large private investment houses realized they had no safety net to protect them in the event their reckless investment policies crumbled. Therefore, they created a system whereby the Federal Reserve System could be used to save them in the event of such a catastrophe. This safety procedure was completed in 1991.

This bill was passed basically without comment and sat for 16 years before it was used in September of 2008, when U.S. Treasurer Hank Paulson and
Federal Reserve Chairman Bernanke bailed out private lending institutions they deemed too big to fail with funds from the Federal Reserve which is funded by the U.S. taxpayer. So you and I, Mr.and Mrs. Average Taxpayer, are on the hook for the imprudent financial policies of the great private investment houses and private investment banks.


Well, seeing how well the theory of being to big to fail worked for the large private investment houses when their holdings were toxic real estate assets, credit default swaps, and bundled low rated mortgages resold as AAA rated securities, depository bands wondered why wouldn't this concept work with real estate loans and credit card debts held by large depository banks? Many depository banks were on the verge of bankruptcy in September of 2008. These depository banks had lent out far too much money for property and had retained far too little funds on hand to secure the loans. This applied not only to real property but also to commercial property. When the purchasers' could not complete their contract of sale, the banks could not simply write off the debts because they did not have the cash on hand to cover these write offs in order to balance their books; therefore, the banks continued to carry the loans at full value on their books. No private investor would purchase these properties because the banks had to sell them at full value. The private investors refused to pay full value for the properties at foreclosure sales. The properties became known as "Toxic Debts."


Believing the banks on the verge of failure, the Federal Reserve lent the
banks several billion dollars in September of 2008. The idea was for the banks to use the money to pay off their Toxic debts and free up their lending in order to spark the economy. The money given the banks was to be partially secured by preferred stock and warrants in the banks to protect the investor-the U.S. Government.


At this point the game began. The banks played the money like a big bass or trout plays an appetizing bait. They nibbled it, nudged it, mouthed it and after it was all gone spit it out. The banks used the money to pay corporate debts, pay bank officers bonus's, pay bank debts, and purchase other banks to increase their size. All in all the depository banks increased their size, eliminated competition and increased their debts. Have you ever wondered why, every time you turn around, some banks are trying to give you a credit card even when you know you have too much credit card debt now?


If a depository bank bank cannot be closed down because it has too many
outstanding home loans that are in default doesn't it stand to reason that it is equally arguable that the government cannot let a depository bank be closed down when it is holding millions of dollars of credit card debts that are in default? What about all of the businesses that are dependent upon being paid for goods purchased on credit cards to keep them afloat? Put the banks out of business and you put thousands of business's out of work and put additional thousands of workers in the unemployment lines. If the banks and investment houses were too big to fail in September of 2008, the depository banks are now bigger than ever and many times larger than before. Their Toxic Debts are still out there waiting to crash as they remain unpaid plus the banks now have billions of dollars of credit card debts that must be taken into consideration by the Federal Government. Instead of using the tax payers money loaned to them by the government to buy back their Toxic Debts and to free up their lending practices thus spurring the economy helping society raise itself out of this fiscal morass in which we find ourselves, the depository banks used the money to become even larger with the sole intent of making themselves "too big to fail."


The Federal Government tried to get a consortium of private investors purchase the current Toxic Debts in July of 09 with the intention of the buyers holding the debts for a period of time then selling them in the future when the real estate market recovered at a profit. A group of private investors showed an interest in the government plan and approached the banks. The plan fell apart as there was no agreement on the value of the debts as once again the banks wanted book value for these properties and the purchasers were willing to pay only actual value. So the Toxic Debt loom like a great star ship menacing our entire financial future and the
banks play on.

Not to worry, when the roof falls in on the banks, the banks will claim they are now clearly to big to fall plus there is less competition among them thus their failure would have an even more direct effect upon the average citizen. It doesn't matter the banks created the monopoly situation using government money, i.e. your money.


The fact is the banks are larger, their are fewer and their failure will have an even more direct effect upon the average American citizen than in September of 2008. All of this was done right under our noses. The bank executives were laughing, pardon the pun, all the way to the bank and the American taxpayer was left holding the bag. They don't care if they bankrupt us. You can bet your last dollar the bank executives were not left bankrupt. The bank executives money will be properly protected in a safe and secure account in all probability not in our country.


Feel like a fool? If you don't maybe you should. How many times do we have to be taken to the cleaners before we say enough is enough. This fleecing has taken place under both Republican and Democratic congresses and administrations. Its time to put in a new group of people in both Congress and the White House who actual want to represent the people of this country. Party affiliation doesn't cut it. Duty, Honor, Country. Those three words and and concepts have meaning. Its time to put in people who hold these words near and dear top them. Its time to "LET ER BUCK."

America Your Lack of Integrity is Showing

Once again the Untied States lack of integrity is showing at a very pivotal point the mid-east more precisely Iraq. The last place our intgrity should be in question because the eyes of the world are focused on our roll in that country.


Since July the 28th, 2009, the Iraqi army and police using Humvee's and other military equipment furnished them by the United States have been conducting attacks on an unarmed Iranian opposition group living in Iraq called Camp Ashraf. This Iranian camp is composed of a group called the Mjaheddin-e Khaiq or MEK which is opposed to the current government in Iran. There are approximately 3,000 residents of Ashraaf of which 1,000 are women. The balance are men and children.


At the present time, at least eight Iranians have been killed, 400 wounded and the residents of Ashraf claim the Iraqi troops are prohibiting them from taking gravely injured people to hospitals outside the groups camp.


The Prime Minister of Iraq Nouri al Maliki personally ordered the attack on the camp at the request of the Iranian government who naturally want the group destroyed. As I am sure you are aware, the government of Iraq declared its sovereignty a month ago. United States secretary of State Hillary Clinton described the raid as a legitimate act by a sovereign nation "although the U.S. goverment remains engaged and concerned about this issue, it is a matter for the government of Iraq to resolve in accordance with its laws."


Not so fast Washington, there is a little question here about a promise made to the people of Ashraf by the United States government in 2003 when we invaded Iraq. Ashraf was an existing community at the time and MEK was listed as a terrorist organization because it wanted to overthrow the Iranian government. The United States promised the MEK's that if they would turn in their weapons the U.S. would protect them. The MEK's accepted our offer and turned in their weapons which is why they have no weapons with which to defend themselves today. In addition, they provided the U.S. with information regarding Iran's nuclear weapons plants. The U.S. in turn stationed troops around their camp and protected them until the chips were down. Now our soldiers are sitting the sideline watching this cowardly action by the Iraqi Army and Police.

It bothers me that the Prime Minister of Iraq would bow to the request of the leader of Iraq knowing he would be jeopardising the United States relationship with a group it had vowed to protect without even informing the U.S. of his intended move. It is not as if he did not know of the U.S.'s relationship to the MEK's. Both the Iraqi leader and the Iranian leader knew other MEK's under the protection of the U.S.; and yet, both leaders decided to move against Camp Ashraf. It appears to be a deliberate move to show the U.S. is indeed irrelevant in Iraq. The U.S. established Prime Minister Nour al Maliki and now he is done with us. What better way for Prime Minister al Maliki to tell the world that he is looking to Iran for leadership than to expel a thorn in the flesh of Iran by throwing out the MEK while Secretary of Defense Gates is paying a call to Iraq? I understand that Secretary Gates was making an unannounced call on Iraq but that did not deter PM Maliki from proceeding with the raid. Rather, he went forward with the forcible expulsion of the MEK without abatement during Secretary Gates' visit.

The United States gave its word and has not kept it. Don't think for a moment the rest of the world is not watching this episode. They see very clearly that our word means nothing when the chips are down.

The Afghan's, Pakistan's, Israeli's, Syrians, Pakistan's, Irani's and every nation in the mid-east have seen that we gave our word to the MEK's and then backed down. Why should they trust our word now?

One thing I was taught as a small child was don't give your word unless you intend to deep it and if you give it you better damn well keep it.

Ashraf shows the rest of the world our word means nothing. No one is ever going to accept our word because Ashraf demonstrates clearly America no longer stands up to fulfill a promise made to another group when put to the test. I never thought I would live to see the day when America failed to fulfill a promise freely made. My God what has happened to my country?

This was originally drafted on September 17, 2009. The MEK's were totally removed from Ashraf. They never received their weapons with which to defend themselves. Nor were our troops ever released to defend them.

The Great Public Fleecing

The American public has been misled into believing that the current financial crisis appeared suddenly without notice and the Government had very little time to react to it. This simply is not true.

I believe if you look into our current economic crisis you will find it was slow developing and created by our leading economic institutions. These financial institutions were not only aware of its potential failure but planned their escape years in advance in the event their risky financial dealings brought their fiscal house of cards crashing down upon their over extended financial empires.

In 1991, Goldman Sachs and other leading private investment Banks realized they had no safety net in the event their over leveraged financial dealings started falling apart and suddenly had to come up with cash to cover their financial transactions. Since they were private investment banks and not depository Banks, they were not covered by the security of the Federal Reserve System.

These private investment houses went to Senator Christopher Dodds, chairman of the senate sub-banking, Housing and Urban Affairs Committee, who agreed to author an attachment to a "bill whose primary purpose was to reform the Federal Deposit Insurance Corp, which guarantees commercial Bank deposits." (Washington Post, (5-20-2009 Congress's Afterthought, Wall Street's Trillion Dollars. Binyamin Appelbaum and Neil Irwin). Senator Dobbs submitted this attachment the evening congress adjourned for their Thanksgiving recess. This procedural move kept those voting on the bill from debating or questioning the changes to the bill.



It is interesting to note the Head of Investment Banking for Goldman Sachs in 1991, who obviously should have had knowledge of the fact there was no safety net in place for it, was Henry Paulson Jr., who was also the first United States Treasurer to use the powers granted by the Dodd's bill of 1991 to save Bear Sterns in 2008 funding its purchase by J. P. Morgan, a depository bank that technically did not fall under the authority of the Federal Reserve Board at that time.



Large investment institutions enact financial plans years in advance so they can be prepared for the future. The very basis of their accounting system makes this necessary. Yes, they have yearly accounting systems but they also have 5 year, 10 year, 15 year, and 20 year plans. As a result of this long range planning, investment institutions have a very good idea what their financial needs are going to be 15-20 years down the line.



Did the fact these giant economic institutions knew they had the ability to be bailed out by the Federal Reserve cause them to become ever more reckless in their financial dealings? I do not know if that will every be proved or disproved but it certainly was an incentive to force them to become less cautious. It is clear that during the years 2000-2008, Wall Street became increasingly more reckless in their financial dealings even creating financial packages that had no relationship to economic reality.



When the financial House of Cards crumbled, the public was told by then United States Treasury Secretary, Henry Paulson, and the Current Federal Reserve Board Chairman, Ben Bernanke, "These financial institutions are too big to fail, they must be saved." Secretary of the Treasury Paulson and Chairman Bernanke, using Federal Reserve funds, stepped in and saved these large financial institutions from failure. Of course they were using U.S. taxpayer funds so now we are on the hook for saving these giant private financial conglomerates. Private financial institutions that the average taxpayer is not even able to enter. Socialism for the largest private investment institutions in America. The very institution Wall Street rails against is the first one it relies upon to survive. I find that very strange.



So now you and I are on the hook to save these huge financial institution, who have known for 16 years they had a safety net in the event of a financial collapse made up of public funds not of private funds. As Jackie Gleason used to say portraying Ralph Cramden the bus drive, "How Sweet it is."



There was one very large private investment house not invited to the party by Secretary Paulson and that was Lehman Brothers, his chief competitor when Paulson was the CEO of Goldman Sachs. Lehman Brothers was the only large investment house allowed to fail. It was much larger than many of the companies saved by the federal government. I assume its failure was purely coincidence.



A sorry epitaph in any one's biography and one that will haunt Paulson to his grave.

He Speaks With Forked Tongue

When I was a young lad, I was fascinated with western m0vies and one of the lines I have never forgotten was one often spoken by an Indian Chief referring to American leaders with whom the Chief was forced to negotiate. He referred to the U.S. leaders as men who spoke with "forked tongues." The Chiefs', of course, were referring to snakes whose integrity has been questioned by every society since the story of Adam and Eve.

I continue to read in the papers and hear on the news advisers, political pundits and many government leaders tell the American public that by keeping our troops in Iraq and Afghanistan and fighting terrorists there, we are protecting ourselves from being attacked by terrorists in the United States. These sound bites are comforting and seemingly give us a strong reason for keeping our young service personnel in Iraq and Afghanistan but the question remains are they correct? Let's see if we can determine if the statement is in fact truthful.

First, We need to determine if there was ever a terrorist attack on United States soil by a foreign terrorist group prior to 9-11-2001. (I am intentionally excluding any attack on any foreign U.S. Embassy as such an attack is technically an attack on U.S. soil and restrict attacks to those occurring within the continental limits of the United States.)

There was such an attack and remarkably it was against the Twin Towers. This attack occurred on Friday, February 26, 1993, when a group of eight Islamic fundamentalists engineered an attempt blow up the "Twin Towers" by planting a car loaded with explosives in a parking lot under the North Tower of the Twin Towers Complex and remotely detonating the bomb. The plan was to force the North Tower to topple into the South Tower causing both towers to fall. The resultant explosion produced a crater five floors deep and 140' in diameter rupturing sewer and water mains and cutting off electricity to the Tower Complex. The blast further killed six people and injured more than a thousand but the infra-structure of the Twin Towers held and the New York Subways System which ran beneath the Trade Center Complex was only slightly damaged. The subway was up and running on Monday and business returned to normal in the Twin Towers and the Trade Center Complex in a very short period of time.

Was this initial terrorist attempt to destroy the Twin Towers sufficiently comparable to the attack on 9-11-2001 such that it might be used as a historic comparison? There are definite similarities: (1) The group that executed the attack were all Islamic jihadists: (2) The leader Ramzi Yousef received training at a terrorist training camp in Peshawar, Pakistan on how to build a bomb. This training camp was also used by Al Queda; (3) Ramzi Yousef received funds from his uncle Khalid Sheikh Mohammad, a top figure in Al Queda; (4) The targets in both instances were the same-The Twin Towers; and (Sheikh Omar Abdel Rahman, a blind Egyptian Cleric. who had ties to Al Queda masterminded the Attack. While the method of attack is not the same, the intent to destroy is the same, the people funding the attack is the same, the group attempting the attack is the same, the group planning the attack is the same and the reason for the attack is the same-hatred for the U.S. I believe the factual events involving the two attacks are similar enough to enable us to historically review the actions the United States government took against its attackers in 1993 with those it took against its attackers on 9-11-2001 and be on solid ground.

The United States responded to the 1993 attack against the Twin Towers by utilizing local, national and international police agencies and apprehended everyone involved in the attack. All of the terrorists involved in the attack on the attack on the Twin Towers were caught, tried, convicted and remain in U.S. prisons except one. The one person not in a U.S. prison is in an Iraqi prison and his name is Abdul Ramad Yasim. Yasim was arrested by the Iraqi police in 1994. When Saddam learned the FBI was offering a 25 million dollar reward for Yasim, Saddam tried to turn Yasim over to the FBI in exchange for the reward. The FBI never picked him up. When Leslie Stahl of "60 Minutes" found out about the situation in 2002, she flew to Iraq and interviewed Yasim and confirmed his identity. When Stahl left Iraq, Yasim was still in custody. There has never been a press release stating Yasim has been picked up by the FBI. The question lingers why the FBI has never picked up Yasim as it is obvious the entire world knows where he is located; yet, Yasim languishes in an Iraq jail with a $25 million dollar reward posted for his capture.

What the U.S. did not do following the 1993 attack on the Twin Towers was invade another country. It limited its action to standard police action supplemented by international police activity and it captured, tried, convicted and placed in prison every one of the men involved in the attack on the Twin Towers in 1993 less one who has remained in custody the entire time in an Iraqi jail. Therefore a period of eight and a half years passed without an attack on the U.S in spite of the fact we did not have any troops in either Iraq or Afghanistan.

Perhaps,, our news advisers, political pundits and governmental leaders,who backed our entry into the war in Iraq against the advice of our own intelligence leaders and continue to back our troops presence in these countries are "speaking with forked tongues" to protect their own fading political careers. Perhaps, they should simply admit they made a terrible mistake that has cost us and continues to cost us the lives of fine young men and women each day we coninue to remain in Iraq. We Have the finest military force in the world. They have done everything we have asked of them and more. It is time they be treated as such and brought home.

Will Roger's had a saying that I think is very applicable to this situation, "When you find yourself in a hole, the best thing to do is to quit digging."

We Have Lost Our Moorings

Following a cowardly attack on the United States on 9-11-2001 that killed over 3,000 unarmed civilians and destroyed millions of dollars of property, the United States had a very defined enemy. The enemy was a group of Islamic radicals living in Afghanistan who practiced terror against unarmed civilians. These fanatics had a camp in Afghanistan where they taught young Islamic men terrorist tactics with the blessings of the Taliban government of Afghanistan. This group was, and is known as Al Queda. Its leader was in September of 2001 and continues to be, Osama bin Laden.


The United States had a clear legal and moral right to invade Afghanistan, to destroy the terrorist group that attacked it, to destroy the government of Afghanistan that condoned such activity and to seek, capture and destroy the leadership of the militant group that planned and initiated the attack against it.


Our mission was clear and our nation moved with extreme efficiency. Our troops made short work of the Taliban army and government. Al Queda offered little military resistance to our military and fled in a hasty and forced retreat into the mountains of Afghanistan known as the Tora Bora region with our troops in hot pursuit. Our troops were on the brink of of completing a circle around the fleeing enemy leaving Al Queda trapped in Afghanistan isolated in the mountains where it could be totally eliminated by our troops as our army meticulously closed the noose surrounding the entire leadership of Al Queda. We had the leadership of Al Queda right where we wanted them. The very men who planned the 9-11 attack on our country were within our grasp.


At this point, things suddenly turned terribly wrong. Instead of completing our planned encirclement of Al Queda, the troops needed to perform this task were taken out of Afghanistan and sent to Iraq. Instead of being caught by our encircling army, the leadership of Al Queda was able to escape into the Tora Bora heights, which is partly in Pakistan and partially in Afghanistan, where they allegedly remain free to this day. The truth of the matter is we do not know precisely where the leadership of Al Quesa is at this point other than they are free and not in our custody.


I do not know the reason for moving our troops out of Afghanistan and taking them to Iraq. I have my opinions but that is not relevant. The fact is we did not finish our initial task in Afghanistan and we have yet to recover from that error and we still do not have a clear military policy to take its place.


The American public has never had a clear statement from Washington as to why it took our troops into Iraq and abandoned our attack on Al Queda in Afghanistan. Our lack of a clear plan has been a plague on us from our initial invasion of Iraq. There has been at least five different reasons given for our being in Iraq: (1) Rid it of Weapons of Mass Destruction; (2) Rid it of Saddam (3) Help Iraq Formulate a Constitution, as a by product Help it form a Democratic Government; (4)
Help it form a Self Defense Force; and (5 ) Help it Control its Own Destiny, as a by product, Help it Become a Sovereign Nation. Five separate reasons sounds like no plan at all. It reminds me of a bunch of kids playing football the street making up plays as they go along.

Our military has done all of the things asked of it by our government at a terrible cost to our young men and women in uniform. Iraq has now declared itself an independent and sovereign nation and has its own army. Yet, our troops are still in Iraq. Every time we announce a time frame to bring our troops home, an emergency seems to arise in Iraq that holds up or delays or changes or postpones our plans on bringing our troops home.


In the meantime, we are pouring more troops into Afghanistan to help fight the Taliban. Excuse me, but didn't we defeat the Taliban in 2003 over six years ago? How is it we let the Taliban morph into a new group with new leaders unconnected to the old group and gain control of nearly one-half of Afghanistan? Until recently, I have heard nothing about our troops in Afghanistan going after Al Queda who was the group that perpetrated the attacks on the Twin Towers in 2001. Once again, we have lost our moorings and we seem to be moving without a plan connected to the parties that caused this entire national migraine.


I think it is time for us to fall back, regroup and rethink this entire matter. Are we after the people who inflicted the attack on us on 9-11-2001 or are we suddenly protecting every corrupt form of government that happens to call itself a democracy? If protecting a corrupt form of government is our goal, we are doomed to failure and rightly so. Our moral and legal right to be in Afghanistan is predicated on our seeking justice for the harm inflicted upon us by Al Queda on 9- 11-2001 not upon the type of government allegedly chosen by a corrupt Afghan government following that event.


History shows that Alexander the Great, The Ottoman Empire (An Islamic Empire), The British Empire (At its zenith), and The Russian Empire could not conquer Afghanistan. History can be a valuable teacher if we pay attention to it.

I believe we should do what we set out to do in 2003 and that is go after Al Queda and its leadership and those who support it in Afghanistan. I do not believe the Pakistani government will oppose helping us in this limited fashion. The Pakistani and Afghani governments will both gain by ridding themselves of a thorn in their flesh just as we will gain by obtaining justice against those who killed so many innocent Americans. By going back to our initial plan, we will limit the number of men we deploy to Afghanistan, limit the area in which they are to be involved, limit the time our men are there and provide our men a clear moral and legal purpose for being there. We will once again have a goal our troops understand and a clear purpose they can achieve.

This blog was originally written by John F. Jackson on September 17, 2009 and brought to this blog on March 5, 2010.