The Truth will prevail, But only if we Demand it from Congress!
9-11 Inside Job and Neocons Hacked 2004
* David HIrst
* June 30, 2008
*
IMAGINE the Reserve Bank of Australia, concerned that its friends in
the city of Sydney (but perhaps Melbourne) who, having wallowed in
wealth all their adult lives, were no longer gainfully employable
and their wildly extravagant lifestyles were in danger, and, having
the powers to intervene in the market, decided to do just that on
their behalf.
Imagine them offering to enter the market and buy shares that would
prop up the foolish gambles of the bankers, gambles they had
encouraged them, until recently, to take by providing them with
cheap money.
On top of that, they told this group they would provide hundreds of
billions of dollars in credits to these same profiteers on the
grounds they were so big and important to the economy they were
indeed too big to fail.
Then, imagine, despite pouring untold taxpayers money into stocks
and allowing their cronies access to vast sums, the system continued
to fail. So they announced they would need greater power and with it
more secrecy.
For its growing band of critics has, perhaps unwittingly and in the
interest of public good, this has become the principal function of
the US Federal Reserve.
If this was to happen in Australia the International Monetary Fund
would be hammering at the door of the Reserve Bank. But Australia
does not have a President's Working Group on Financial Markets,
commonly known as the Plunge Protection Team, that allows the US
Government to prop up the markets by buying shares. But to imagine
the IMF investigating the US financial system is unthinkable, or
was. But, at the weekend, Der Spiegel reported that the IMF would
conduct a full investigation into virtually every aspect of it.
Der Spiegel wrote that the IMF had "informed" Federal Reserve
chairman Ben Bernanke of plans that would have been unheard of in
the past: a general examination of the US financial system. The
IMF's board of directors has ruled that a so-called Financial Sector
Assessment Program is to be carried out in the US.
This, Der Spiegel wrote, "is nothing less than an X-ray of the
entire US financial system", adding that "no Fed chief in US history
has been forced to submit to the kind of humiliation that Ben
Bernanke is facing".
The fact that the IMF is knocking on the very doors of its parents
and waving legal papers about who lost the house, the car and the
kids will, if the past is anything to go by, be buried in the US by
pom-pom waving on CNBC telling all what a great time it is to buy.
But the news that the US Fed has now lost its last vestige of
credibility did not end with the German report.
The Telegraph from London weighed in, following the Royal Bank of
Scotland's statement last week (also lost on the US public) that it
was time to head for the crags, and reported Barclays Capital's
closely watched Global Outlook analysis that said US headline
inflation would hit 5.5% by August and the Fed would have to raise
interest rates six times by the end of next year to prevent a wage
spiral.
If the Fed hesitates, the bond markets will take matters into their
own hands. "This is the first test for central banks in 30 years and
they have fluffed it," the report found. "They have zero
credibility, and the Fed is negative if that's possible. It has lost
all credibility."
Der Spiegel reports that the IMF is threatening to seriously study
the accounts of America, something President George Bush is
determined to prevent at least while he is in the White House,
informing the IMF that it can begin its investigation but cannot
complete it until he leaves office.
But the reckoning will come and it will shine a light in places
where light has been desperately wanted for all too long.
"As part of the assessment," Der Spiegel said, "the Fed, the
Securities and Exchange Commission, the major investment banks,
mortgage banks and hedge funds will be asked to hand over
confidential documents to the IMF team. They will be required to
answer the questions they are asked during interviews. Their
databases will be subjected to so-called stress tests — worst-case
scenarios designed to simulate the broader effects of failures of
other major financial institutions or a continuing decline of the
dollar."
Under its by-laws, the IMF is charged with the supervision of the
international monetary system. About two-thirds of IMF members — but
never the US — have already endured this painful procedure.
Australian banks have been buffeted by the storms generated in the
US, but strict standards enforced by a Reserve Bank that is
independent of private banking interests has prevented such
excesses, as vouched by their performance as compared with the
broker-trader banks and the retail banks of the US. Shares in
once-massive banks and brokerage firms have been stripped by as much
as 70%, 80% and even almost 100%. We are taking a trim while US
banks are getting a full haircut and shave.
Part of the problem is the US media, which has for so long pretended
that all is or soon will be well, a bottom is near, a recovery
awaits in the second half of the financial year that will sweep away
all problems, sown over decades, in a new expansion, a cycle that is
ordained to come. The latest fantasy is that with the quarter's end,
new profit figures will invigorate the bull, which will seed
fertility.
The next President will be handed at least two wars gone horrible
wrong and, by then, an economy in similar shape. The bull will have
to be a particularly fertile beast.
Der Spiegel reports: "When the final report on the risks of the US
financial system is released in 2010 — and it is likely to cause a
stir internationally — only one of the people in positions of
responsibility today will still be in office: Ben Bernanke."
While Der Spiegel claims that IMF intervention (my expression) is a
humiliation for the US, the real significance may be that this is
another blow to American exceptionism.
While the examination is far reaching, and deeply intrusive, Canada,
Britain, Italy, indeed two-thirds of IMF members, have participated
in the program. The new President will soon discover the age of US
exceptionism is over.
Meanwhile the US markets have entered bear territory, the economy
has done likewise and we are at the beginning of a long and tortuous
process before rebuilding can even commence.
David Hirst is a journalist, documentary maker, financial consultant
and investor. His column, Planet Wall Street, is syndicated by News
Bites, a Melbourne-based sharemarket and business news publisher.
