At times it really is breathtaking how corrupted the U.S. government has become.  Government corruption has become so endemic in our society that most people have just kind of accepted it as “normal”.  But shouldn’t we all get hopping mad when we learn that the Federal Reserve sent billions of dollars in bailout money to addresses in the Cayman Islands?  Shouldn’t we all be furious when one of the leading candidates for the 2012 Republican presidential nomination, Mitt Romney, declares that he is “not going to spend my time focusing on the Federal Reserve”?  Shouldn’t we all be alarmed when Nancy Pelosi gives a speech in which she says that “elections shouldn’t matter”?  Shouldn’t we all demand that someone be held accountable when we find out that a CBO analysis shows that the “$38.5 billion” in spending cuts will only reduce the budget deficit for this year by $352 million dollars?  On top of everything else, shouldn’t we all be absolutely horrified when the TSA gropes little 6 year old girls and virtually none of our politicians demand change?

$38.5 Billion In Budget Cuts Is Really Just $352 Million In Deficit Reduction?

Yesterday I wrote about how a close examination of the “budget cut deal” reveals that the 38.5 billion dollars in budget cuts are largely illusory.

However, even I was not ready for what the Congressional Budget Office had to say about this deal.  What I read in the Washington Post today absolutely floored me.  According to the Washington Post,  the Congressional Budget Office is saying that the budget deal will only cut the budget deficit for this year by less than one percent of what was being claimed by Republican and Democrat leaders….

The Congressional Budget Office estimate shows that compared with current spending rates the spending bill due for a House vote Thursday would pare just $352 million from the deficit through Sept. 30. About $8 billion in cuts to domestic programs and foreign aid are offset by nearly equal increases in defense spending.

What a joke.

The reality is that U.S. government is increasing by over 2 million dollars every single minute.  So the entire “savings” from this “budget deal” will account for approximately 3 hours of government spending.

Look, the U.S. government ran a budget deficit of $188 billion dollars for the month of March alone.  We are in debt up to our eyeballs and it is getting worse at a mind blowing pace.

When are people going to wake up and realize that neither political party is the least bit serious about dealing with our debt problem any time soon?

The Federal Reserve Sent Billions In Bailout Aid To Millionaires and Billionaires In The Cayman Islands

Most Americans don’t even understand what the Federal Reserve is, and yet they get to throw trillions of dollars around while being more or less completely unaccountable the entire time.

In a new article for Rolling Stone (which is a must read), Matt Taibbi exposes some of the folks that the Federal Reserve has been sending money to….

The Fed sent billions in bailout aid to banks in places like Mexico, Bahrain and Bavaria, billions more to a spate of Japanese car companies, more than $2 trillion in loans each to Citigroup and Morgan Stanley, and billions more to a string of lesser millionaires and billionaires with Cayman Islands addresses. “Our jaws are literally dropping as we’re reading this,” says Warren Gunnels, an aide to Sen. Bernie Sanders of Vermont. “Every one of these transactions is outrageous.”

How in the world does it benefit the American people to send billions of dollars to some ultra-wealthy people down in the Cayman Islands?

In light of what we have already found out, it is absolutely amazing that Congress is still refusing to authorize a complete audit of the Federal Reserve.

The corruption of the Fed is crying out to be investigated.

Unfortunately, many of our top politicians are openly declaring that they have no intention of going after the Federal Reserve.

Mitt Romney Declares That He Will Not Be Going After Ben Bernanke Or The Federal Reserve

In case anyone needs one more sign that Mitt Romney is just another shill for the establishment, just check out the two statements by Romney below.

According to Politico, Romney recently told CNBC’s Larry Kudlow that he is not concerned about the Federal Reserve at all….

“I think Ben Bernanke is a student of monetary policy; he’s doing as good a job as he thinks he can do,” Romney said when Kudlow asked what kind of job Bernanke is doing. “I’m not going to spend my time going after Ben Bernanke. I’m not going to spend my time focusing on the Federal Reserve.”

That’s just great.  The Republican candidate with perhaps the greatest amount of “establishment support” says that he thinks that Bernanke is doing a good job and he does not plan to spend any time focusing on the Federal Reserve.

So if Romney gets in the Federal Reserve will continue to be able to dish out trillions to their friends without any interference.

Nancy Pelosi Declares That “Elections Shouldn’t Matter”

How are we supposed to respond when the top Democrat in the House of Representatives declares that “elections shouldn’t matter as much as they do”?

During a recent speech, Pelosi implored establishment Republicans to “take back your party” so that elections won’t “matter” as much….

To my Republican friends: take back your party. So that it doesn’t matter so much who wins the election, because we have shared values about the education of our children, the growth of our economy, how we defend our country, our security and civil liberties, how we respect our seniors. Because there are so many things at risk right now — perhaps in another question I’ll go into them, if you want. But the fact is that elections shouldn’t matter as much as they do… But when it comes to a place where there doesn’t seem to be shared values then that can be problematic for the country, as I think you can see right now.

Apparently what Pelosi wants is for America to go back to a time when all of us just went along with the false left/right paradigm and when we were all content to sleep while the establishment agenda rolled right along.

Well guess what Nancy?  Some of us are starting to wake up.

6 Year Old Girl Molested By The TSA

How far have we fallen as a nation when a 6 year old girl has to have her private areas touched in public by the TSA before she is allowed to get on an airplane?

America is becoming a very strange place.

The following is video that was posted on YouTube of the recent incident involving a 6 year old girl….

http://www.youtube.com/watch?v=SWExPhyPeZw

So is this what we have become as a nation?

Will we subject ourselves to anything as long as the authorities insist that it will keep us a little bit safer?

Pretty soon America is going to be unrecognizable.

I have previously written about how in one town in Missouri, girls scouts have actually been banned from selling girl scout cookies in their own front yards.

How crazy is that?

In Cleveland, authorities haves announced plans to have “trash supervisors” go snooping through trash cans to ensure that people are actually recycling according to city guidelines.

The control freaks we keep voting into office seem to have an obsession with running ever detail of our lives.

In many areas of the nation we aren’t even allowed to do acts of kindness anymore.

For example, in Houston, Texas a couple named Bobby and Amanda Herring that had been feeding homeless people for over a year has been banned by the city from doing so.

So what is next?

Are they going to ban kids from taking lunches to school?

It is already happening….

At one public school in the Chicago area, children have been banned from bringing their lunches from home.  Instead, it is mandatory that they eat the food that the cafeteria serves.

Meanwhile, the Federal Reserve gets to create trillions of dollars out of thin air and they get to send it to whoever they want.

What a country we have, eh?

Our system has become corrupted beyond all recognition.  Government corruption is out of control and it is getting worse with each passing day.

So when are the American people going to get sick of all this nonsense?

When are….

Wait.

American Idol is on tonight.

Perhaps all of this can just wait for another time.

After all, who wants to miss what J-Lo and Steven Tyler are going to say tonight?

Those two are really a couple of characters!

Our leaders know what they are doing, right?

We can trust our politicians to act in our best interest, right?

So instead of writing about all of this “doom and gloom”, perhaps I should just lighten up and focus on fun things like American Idol a little bit more.

The Economic Collapse

Truth Peeks Out From Under The Blanket

Posted by Karl Denninger

Gee, you think?

Dear Santa:

Since you give away stuff for free, I hope you aren’t a socialist and ignore my wish list during the annual potlach. By the way, it seems that the Obama Administration is way ahead of you in giving out free stuff to everyone. I hope you can catch up.

I think I’ve been a pretty good boy this year. I have regularly bitten my tongue in my commentary so as not to be accused of being a flamer. I don’t think I’ve defamed anyone. And I try to write as much original material as possible to avoid being labeled a “scraper” (lifting stuff off the Net and publishing it under my own name). And, I haven’t sold out my opinions for mere money. For a blogger, that’s a pretty good record.

Here’s my wish list. I couldn’t find where to post it on Amazon, so here goes:

1. Kill The Bill

No, not the Uma Thurman thing. I’m talking about the health care “reform” bill going through Congress right now. If your magical powers extend that far, please put economic sense into our politicians’ collective heads that government control over the system is not a way to “save money” or create “efficiency.”

2. Put in the Fix

Instead of eliminating market forces in health care, please convince Congress to fix it by peeling back the convoluted rules and regulations that have screwed it up in the first place. Suggest these four little things we could try first that actually would work, save billions, and cover more people:

Give Medicare enrollees a voucher and the freedom to choose any health plan on the market;

Give workers control over their health care dollars with “large” health savings accounts which would allow them to purchase secure health coverage from any source;

Break up state monopolies on insurance and allow insurance companies to compete across state lines; and

Block-grant Medicaid and the State Children’s Health Insurance Program to prevent massive waste and encourage states to target resources to the truly needy.

3. Turn the Sausage Makers into Sausage

I understand it’s Christmas and it would be kind of negative to wish political ill fortune on someone, but, there’s this especially despicable sentator, Ben Nelson, that I would like for you to arrange to catch him with a hooker or taking a bribe. Whatever you think would work, Santa. Make sure there are tapes. I have lots more names, but I’d be happy with Ben.

4. Firing Suggestions

Please arrange for Obama to fire Ben Bernanke, Larry Summers, Timmy Geithner, and Christina Romer.

5. Hiring Suggestions

To replace the above, how about Ron Paul at the Fed, and the following economic advisers: Walter Block, Russ Roberts, and Joseph Salerno. They are all fine economic scholars and would steer our President in the right direction.

6. Freeze Congress

Don’t let Congress pass any more bills until they’ve all read, and discussed with the No. 5 guys, Economics in One Lesson by Henry Hazlitt, the best little book on economics, ever. Televise it.

7. Bring Back the Real Constitution

Please have Obama appoint strict constructionists to the Supreme Court. Nominees who understand natural law, and that the Ninth and Tenth Amendments actually mean something. Maybe we’d get our individual sovereignty back.

8. Make Work is No Work

Let Mrs. Pelosi and Mr. Reid see the folly of the American American Recovery and Reinvestment Act of 2009, a useless $787 billion bill that is nothing other than intergenerational theft. Someone has to pay for it and I’m afraid it will be my children, grandchildren, and ten generations of my great-grandchildren.

9. Beautiful Sunsets

Require Congress to sunset every spending law they pass. You know how they promise that a program will be very effective and that it will only cost so much? Make them prove it, say every two years. If the bill fails to cure the perceived ill, get rid of it. If the program exceeds its budget, get rid of it. It will also provide us with a handy voting guide at election time.

10. Let a Thousand Flowers Bloom

Sprinkle some free market magic dust on the economics departments of our major universities. Maybe that will help the sheep break from Keynesian orthodoxy and actually begin to think.

Thank you, Dear Santa. I’m forever hopeful.

Econophile

WASHINGTON (Dow Jones)–The U.S. House of Representatives on Wednesday approved a short-term $290 billion extension in the nation’s debt ceiling, delaying a decision until February about a larger increase in the borrowing cap.

The vote comes less than a week after House Majority Leader Steny Hoyer (D., Md.) said he intended to seek a $1.8 trillion increase in the ceiling to support federal government borrowing through 2010.

A decision was made to seek the more modest increase after it became clear the larger increase may have failed to win support in the Senate.

The Senate must still take up the two month increase, which it is expected to do next week.

House lawmakers voted by a razor thing margin of 218-214 to pass the borrowing increase. On most major pieces of legislation, 218 votes are required for approval in the House.

Not a single Republican lawmaker voted to support the hike. They argued that increasing the debt ceiling was giving the Democratic majority and the Obama administration a license to spend more money.

The increase in the debt limit raises the total debt the federal government can hold to $12.394 billion from $12.104 billion.

Treasury officials have warned the current cap will shortly be hit, requiring the ceiling to be increased.

Increasing the debt ceiling is largely symbolic as the public debt is the accumulation of past deficits, or money already spent.

But were the U.S. to breach its debt limit, it would default on its obligations, potentially lose its prized top-shelf credit rating and have to pay significantly higher interest to its creditors

Such a scenario, albeit an extremely unlikely one, would have tremendous ramifications for the wider financial markets.

The federal budget deficit reached historic levels of $1.4 trillion in fiscal 2009. Through the first two months of fiscal 2010, the government is on pace to surpass that level.

As my readers know, every so often I really get fed up with what comes out of Washington (Our Nation’s Capital) and feel the need to vent. My recent irritation is a letter Christina Romer, the president of Obama’s Council of Economic Advisers, published in the Wall Street Journal.

The letter is an apologia for the economic policies she and Summers and Geithner have been recommending to the president. She seems like such a nice lady, and she’s the wife of economist David Romer. Both were econ professors at Berkeley and both studied economics at MIT. But …

Here are some excerpts from her letter, with my comments:

Within a month of taking office, the administration had announced its Financial Stability Plan and signed the American Recovery and Reinvestment Act. The Recovery Act helped stem the decline in spending caused by consumers and businesses reeling from the fall in asset prices and the drying up of credit. Real GDP, which had fallen at a 6.4% annual rate in the first quarter of 2009, began to grow again just two quarters later. …

She seriously believes this. But she has a slight problem with the cause and effect, post hoc ergo propter hoc*, thingie. That is, there is no evidence, theoretical or empirical, that the Recovery Act did anything positive or lasting. Even assuming Keynesian stimulus works, the government hadn’t spent enough money to make it work according to the Keynesian formula. At least that’s what Paul Krugman said. Whatever, no one has ever offered any proof that such stimulus works.

And, as far as I know, PCE (consumer spending) is still very low, asset prices are still declining, and credit is worse.

We’ve already seen from the Recovery Act that spending on infrastructure—everything from roads and bridges to schools and municipal buildings—is an effective way to put people back to work while creating lasting investments that raise future productivity. …

Yadda, yadda, yadda. Again more spending on things the government wants, not the things that the market wants. The jobs are already fizzling. See this excellent article in the WSJ, ironically published on the same day as Mrs. Romer’s piece. The gist is that when the government money ends, the jobs dry up.

Subsequently the president pushed for the Cash for Clunkers program that was successful in boosting demand and job creation. …

All this did was to junk a bunch of good cars, fill the pockets of auto dealers, and appease the UAW. Auto sales are already declining again. It just accelerated future sales of people who would have bought cars anyway.

[A]bout a month ago the president announced the latest in a series of measures to encourage banks to lend to small businesses. …

As we all know credit is still shrinking, not growing. They have tried every trick in the Keynesian book to loosen credit but to no avail. I’m sure this new legislation will be different.

[I]n early November the president signed into law a measure that would provide relief and spur job creation by adding additional weeks of unemployment insurance, cutting taxes for businesses, and expanding and extending the home-buyer tax credit. …

That must have worked really fast, because unemployment, according to the Bureau of Labor Statistics, dropped from 10.2% to 10% in November. Wow, that’s great legislation. But, as we all know, Things Are Not What They Seem. As David Rosenberg pointed out in one of his reports, the government stats look funny because they are so different from what ADP reported. 

Despite these positive developments, the job market remains very weak. … American businesses appear hesitant to hire, and are producing more with fewer workers. …

Didn’t she just say that things are getting better?

Tomorrow [the President] will convene a meeting of business and labor leaders, small-business owners, economists and community representatives to discuss our ideas and solicit others for accelerating hiring. … [W]e need to harness the private sector, bringing large and small firms in off the sidelines to boost job creation. …

This is the part that really upset me. First, this is a typical political move. “Let’s all get together and come up with some great ideas!” No offense to the community organizers out there, but getting a bunch of people in a room like this gets nowhere. The best thing they could do is cancel all meetings, and get the hell out of the way.

But what really got me was the “harness the private sector” comment. I hope she didn’t mean it in the way I’m thinking, but if she didn’t then it’s even worse because she doesn’t realize the implications of her policies. When government gets together with business and labor to create policies for political benefit, it is called fascism, or national socialism. The words she used were rather telling: a “harness” is not something I would want to be in. You know who has the whip.

While the words seem innocent, it is all about losing our freedoms. Here’s the conclusion from a piece I wrote about the takeover of GM (in homage to Ayn Rand):

Sometimes it’s hard to see what is happening in front of your eyes. It seems rather benign and logical when you read about it, but it’s not. Nationalizing GM is just good old fashioned fascism–just like what happened in Italy in the 1920s and ‘30s … And now us. If you think I’m exaggerating, it’s probably because you think everything the government does is OK because we’re having a crisis. As Wesley Mouch said in Atlas Shrugged, “We’ve got to act!” That’s how we are losing our freedom, by a thousand cuts.

*Since that event followed this one, that event must have been caused by this one.

WASHINGTON – The U.S. Department of the Treasury released the
text of identical letters sent today from Secretary Tim Geithner to
Speaker Nancy Pelosi and Senator Harry Reid outlining the
Administration’s exit strategy for the Troubled Asset Relief Program
(TARP) established by the Emergency Economic Stabilization Act of 2008
(EESA). The text of the letter to Speaker Pelosi follows.

December 9, 2009

The Honorable Nancy Pelosi
Speaker          
U.S. House of Representatives
Washington, DC 20515

Dear Madam Speaker:

I am writing to update you on the status of the Obama
Administration’s financial policies, including programs initiated under
the Troubled Asset Relief Program (TARP) established by the Emergency
Economic Stabilization Act of 2008 (EESA), the results they have
achieved, the challenges ahead, and our plan for exiting TARP.

These policies are working.  When the Obama Administration took
office, the financial system was extremely fragile and the economy was
contracting sharply.  The Administration’s financial and economic
policies have helped to shore up confidence in our financial system. 
Credit is starting to flow again to consumers and businesses, and the
economy is growing.  Further, private capital is replacing public
capital in our major institutions.

As a result of improved financial conditions and careful stewardship
of the program, losses on TARP investments are likely to be
significantly lower than previously expected.  We now expect a positive
return from the government’s investments in banks.  These banks will
soon have repaid nearly half of the TARP funds they received.  We also
expect to recover all but $42 billion of the $364 billion in TARP funds
disbursed in FY2009.  Further, we plan to use significantly less than
the full $700 billion in EESA authority.  As a result, we expect that
TARP will cost taxpayers at least $200 billion less than was projected
in the August Mid-Session Review of the President’s Budget.

But significant challenges remain.  Too many American families,
homeowners, and small businesses still face severe financial pressure. 
Although the economy is recovering, foreclosures are increasing, and
unemployment is unacceptably high.  Businesses are still cautious in
the face of uncertainty about the strength of the recovery, and many
small businesses face very difficult credit conditions.  Although bank
lending standards are starting to ease, many categories of bank lending
continue to contract.  This contraction has hit small businesses very
hard because they rely heavily on such lending, and do not have the
ability to substitute credit from securities issuance.  Commercial real
estate losses also weigh heavily on many small banks, impairing their
ability to extend new loans.

Further, the recovery of our financial system remains incomplete. 
And near-term shocks to that system could undermine the economic
recovery we have seen to date.

Exit Strategy for TARP

Our exit strategy for TARP balances the mandate of EESA to address
these challenges with the need to exercise fiscal discipline and reduce
the burden on current and future taxpayers.  There are four broad
elements to our strategy.

First, we will continue terminating and winding down many of the
government programs put in place last fall.  In September, Treasury
ended its Money Market Fund Guarantee Program, which guaranteed at its
peak over $3 trillion of assets.  The program incurred no losses, and
generated $1.2 billion in fees.  The Capital Purchase Program, through
which the majority of TARP investments in banks have been made, is
effectively closed.  Before this Administration took office, nearly
$240 billion in TARP funds had been committed to banks.  Since January
20, we have committed about $7 billion to banks, much of which went to
small institutions.  Major U.S. banks subject to the “stress test”
conducted last spring have raised over $110 billion in high-quality
capital from the private sector.  And banks will soon have repaid $116
billion of TARP funds

Second, we will limit new commitments in 2010 to three areas.

• We will continue to mitigate foreclosure for responsible American
  homeowners as we take the steps necessary to stabilize our housing
  market.
• We recently launched initiatives to provide capital to small
  and community banks, which are important sources of credit for small
  businesses.  We are also reserving funds for additional efforts to
  facilitate small business lending.
• Finally, we may increase our commitment to the Term
  Asset-Backed Securities Loan Facility (TALF), which is improving
  securitization markets that facilitate consumer and small business
  loans, as well as commercial mortgage loans.  We expect that increasing
  our commitment to TALF would not result in additional cost to taxpayers.

Beyond these limited new commitments, we will not use remaining EESA
funds unless necessary to respond to an immediate and substantial
threat to the economy stemming from financial instability.  As a nation
we must maintain capacity to respond to such a threat.  Banks are still
experiencing significant new credit losses, and the pace of bank
failures, which tend to lag economic cycles, remains elevated.  At the
same time, many of the Federal Reserve and FDIC programs that have
complemented TARP investments are ending.  This creates a financial
environment in which new shocks could have an outsized effect –
especially if an adequate financial stability reserve is not
maintained.  As we wind down many of the government programs launched
initially to address the crisis, it is imperative that we maintain this
capacity to respond if financial conditions worsen and threaten our
economy.  However, before using EESA funds to respond to new financial
threats, I would consult with the President and Chairman of the Federal
Reserve Board and submit written notification to the Congress.  This
capacity will bolster confidence and improve financial stability,
thereby decreasing the probability that it will need to be used.  This
is the third element of our exit strategy.

In order to accomplish these goals, pursuant to Section 120(b) of
EESA, I certify that I am hereby extending the authority provided under
the Act to October 3, 2010.  This extension is necessary to assist
American families and stabilize financial markets because it will,
among other things, enable us to continue to implement programs that
address housing markets and the needs of small businesses, and to
maintain the capacity to respond to unforeseen threats, as described
above.

While we are extending the $700 billion program, we do not expect to
deploy more than $550 billion.  We also expect up to $175 billion in
repayments by the end of next year, and substantial additional
repayments thereafter.  The combination of the reduced scale of TARP
commitments and substantial repayments should allow us to commit
significant resources to pay down the federal debt over time and slow
its growth rate.

Even with this extension, we expect that TARP will cost taxpayers at
least $200 billion less than was projected in the August Mid-Session
Review of the President’s Budget, including $25 billion in potential
costs from new TARP commitments in 2010.  We expect that the vast
majority of these potential costs would come from mitigating
foreclosure for responsible American homeowners as we take the steps
necessary to stabilize our housing market.

The final element to our exit strategy is how we manage equity
investments acquired through EESA while protecting taxpayers.  We will
continue to manage those investments in a commercial manner and seek to
dispose of them as soon as practicable.  We will exercise our voting
rights only on core issues such as election of directors, and we will
not interfere in the day-to-day management of individual companies.  In
addition, as the steward of taxpayers’ funds, Treasury will continue to
manage investments in a manner that ensures accountability,
transparency and oversight.  And we will work with recipients of EESA
funds and their supervisors to accelerate repayment where appropriate. 
We want to see the capital base of our financial system return to
private hands as quickly as possible, while preserving financial
stability and promoting economic recovery.

History suggests that exiting prematurely from policies designed to
contain a financial crisis can significantly prolong an economic
downturn.  We must not waver in our resolve to ensure the stability of
the financial system and to support the nascent recovery that the
Administration and the Congress have worked so hard to achieve. 
Improvements in the financial performance of EESA programs put us in a
better position to address the economic and financial challenges many
Americans still face.  I look forward to continuing to work with you to
achieve these
goals.                                                               

Sincerely,

Timothy F. Geithner

Identical copy of this letter sent to:
            The Honorable Harry Reid

cc:       The Honorable Barney Frank
           The Honorable Spencer Bachus
           The Honorable David Obey
           The Honorable Jerry Lewis

In what is the start of the biggest uphill battle in D.C., arguably even bigger than deposing the printing press leprechaun, five democrats are proposing an amendment to reinstate Glass-Steagal, whose repeal, through the Larry Summers orchestrated Gramm-Leach-Bliley Act, in 1999 set the economy on the collision course that culminated with the implosion of every single Goldman Sachs FICC competitor in 2008. The five Democrats who have undertaken the sisyphean task of taking on both Wall Street and their direct boss, are Maurice Hinchey of New York, John
Conyers of Michigan, Peter DeFazio of Oregon, Jay Inslee of Washington,
and John Tierney of Massachusetts.

If adopted, the measure would give banks one year to choose between
being commercial banks or investment banks. The nation’s biggest –
those now commonly referred to as “too big to fail” — would be broken
up. The Obama administration opposes the measure.

Obama, presumably a Democrat, continues to persist in endorsing each and every Republican legacy when it comes to Wall Street’s landed interests (and risk “management” practices). Of course, the last thing the administration needs is for the populace to comprehend the chameleonic nature of the administration’s action.

More from HuffPo:

The act was repealed in 1999 at the urging of, among others, Larry
Summers, now President Barack Obama’s chief economic adviser.

The five congressman all voted against the repeal then — and now they want it back.

Former Federal Reserve Chairman Paul Volcker is one of a number of
financial luminaries calling for at least a partial return to
Glass-Steagall. The Wall Street Journal’s
editorial page also endorsed the concept in a recent editorial as a way
to “reduce moral hazard” and “limit certain kinds of risk-taking by
institutions that hold taxpayer-insured deposits.”

The law’s repeal ushered in an era marked by big banks getting even
bigger. The country’s four largest — Bank of America, JPMorgan Chase,
Citigroup and Wells Fargo – now control more than half of the nation’s
mortgages, two-thirds of credit cards and two-fifths of all bank
deposits.

And because their deposits are taxpayer-insured, there’s a growing
concern that they will feel overly confident about making risky bets
through their investment arms because they know that should they suffer
huge losses, taxpayers will ultimately be there to bail them out.

The five Democrats face big obstacles, including their own leadership and the Obama administration.

At this point the whole systemic regulation debate is getting glaringly amusing. At the core of every conflict are proposed reforms that are so obvious from a risk mitigation debate: audited Fed, split up banks which are now bigger than ever before, propping a bankrupt FDIC, which in turn is backing up bankrupt institutions, and a bankrupt country which is trying to fool the world into a game of M.A.D. knowing full well if the US taxpayer goes down directly or indirectly, the world, and the proverbial flood, follow after. And the only sensible reforms are those getting the biggest push back from Obama, and of course, Wall Street. How these two seemingly traditional opponents have ended up on the same side of the page is testament enough to the cataclysmic legacy of Bernanke and Summers. Of course, nothing will be done about anything, in tried and true American fashion, until it is too late, and Main Street is left sorting through the rubble of Goldman’s new glass-plated headquarters, even as all inhabitants have long-ago departed the country and left the U.S. with a few quadrillion in I.O.U.’s. At this juncture the best option before politicians is to simply delay for one year until mid-term elections provoke some vestige of sensibility in the ruling class.

Since the biggest financial collapse in world history was built on credit related to housing, it is pretty obvious that we should be paying very close attention to that market. The reasons are complex, but a recovery must be based on the liquidation of bad debt. The sooner that happens the quicker a recovery will happen.

When we mean “liquidation of debt” we are talking about a mountain of credit built on the housing bubble. This phony bubble wealth permeated the entire economy. When home owners saw the price of their home rising, they saw it as a source of capital to use for a variety of things, but let’s face it, most people spent it.

New stores opened, malls were built, financial institutions grew, cars and boats, second homes, vacations, and restaurants all flourished. Credit card debt mushroomed. Home mortgages were increased to pull cash out for spending. Yes, some of it went to good things, like our children’s education, helping our aged parents, and paying off bills. But the reality was that our debt kept growing.

The clever lads created even more phony wealth under the guise of insurance, but as we found out, companies like AIG really had no idea how large their obligations were for credit default swaps written against almost any financial risk. And these instruments were further leveraged without understanding the magnitude of these triple-counted obligations or their relationship to housing.

It all comes back to housing as the fuel for the 70% of our economy that was consumer spending. The thought was that housing has always gone up, and if it went down, it really never went down if you averaged growth since the post-WWII-period. A drop of 10%? Never has happened. 20%? Not even a 6th deviation possibility.

My thesis has been that this was all fueled by the Fed through monetary policies that created and supported the bubble. Aided and abetted by governmental policies and financing schemes that favored housing and risky loans. This was not a “free market” phenomenon. Far, far from it.

My thesis has also been that we can’t recover until all this bad debt is liquidated, and capital generated by savings is created and ultimately invested in profitable enterprises. It would be a mistake to rekindle the bubble. But, as we know, that’s what our government is trying to do. The government creates uncertainty as it flails around with programs, spending, and debt schemes to revive the economy. As a result mark-to-market accounting is thing of the past and banks are guarding their balance sheets, corporations are sitting on a lot of cash, cutting costs, and becoming leaner, and Mr. and Mrs. America still favor savings and debt instruments over equities and spending.

The big question: is the housing market bottoming out? Because once it does, debtors and debt holders will then have a handle on how great their losses are. When the bottom is falling out, it is difficult to get lenders to lend if they are afraid their remaining cash reserves will be needed to shore up the bank because of loan losses. The holders of subprime debt find it difficult to value their assets while housing values are still dropping.

Lenders have been shepherding their cash, reducing debt obligations, and cutting back lending and new investments because they do not know how deep their hole will be until housing bottoms out. Keynes called this a “liquidity trap.” More reasonable people, especially the Austrian school economists, call this a reasonable and necessary response to uncertainty.

The Fed and the federal government have been flogging this liquidity trap issue without let up and basically credit is still drying up. A 0.25% Fed Funds rate is basically a negative rate and they still can’t get banks to lend. The Fed’s balance sheet is at a record high. They have bought $850 million of mortgage backed securities. They are injecting cash into lenders. They have basically suspended mark-to-market accounting.

In Q3, the FDIC reported that bank lending still contracted by 3%:

Loans and leases held by U.S. commercial banks have declined for 10 straight months, falling to $6.7 trillion as of Oct. 28 from $7.2 trillion at the end of 2008, according to a separate statistical release from the Fed.

 

Commercial and industrial loans have dropped to $1.37 trillion from $1.6 trillion, commercial real-estate loans have declined to $1.66 trillion from $1.72 trillion, and consumer loans have fallen to $847 billion from $857 billion at the end of last year.

What do banks do? They have decided they would rather hold Treasury paper instead of make loans. This chart shows what’s been happening. No wonder T-rates have stayed so low despite massive deficit financing.

This is what makes Bernanke, Geithner, and Summers lose sleep at night. “It’s supposed to work, dammit!” Maybe this is why Summers is always falling asleep. No matter what they’ve tried, they can’t get banks to lend. I think they are very worried about this and while they say the economy is recovering nicely, they are crossing their fingers at the same time.

Back to housing.

I have been saying that I think the housing market is finding a bottom. I thought that low prices and rising affordability was the main driver of the housing market. If this were so, then housing prices would reflect real market valuations and this would finally bring about the liquidation of assets and debt wastefully invested during the prior artificial credit cycle. Lenders would know where they stood financially and would liquidate bad assets and rebuild their balance sheets. No more waiting around wondering what the Fed or the government would do to save housing.

I was wrong.

The housing market I now believe is being sustained almost entirely by the Fed and the federal government. This rekindling of the housing bubble is counterproductive and will hinder a real recovery of the economy because an artificially backed market will delay the necessary liquidation of the prior cycle’s malinvestment of capital.

Here is why I changed my mind:

First, 59% of new home buyers are relying on government-backed FHA, the Veterans Administration, and the Department of Agriculture loans. Most of these sales are driven by the first-time home buyers tax credit. The tax credit program has been extended through April, 2010.

Second, existing home sales are being driven by the tax credit and by foreclosure and short sales. Existing home sales are up 10.1%. Distressed sales — mainly foreclosures and short sales — accounted for 30% of transactions in the third quarter. And. according to the NAR, home sales are being driven by first time home buyers trying to make the previous November deadline.

This will have a negative impact on future sales. Like Cash for Clunkers, these government-driven sales may just be eating into sales that would have occurred in 2010. Many economists are referring to this phenomenon as “payback.”

Third, mortgage rates are now at 30 year lows. Another Fed related gift to home buyers. The average 30-year mortgage rate was 4.95% in October, down from 5.06% in September, according to Freddie Mac. Today, Freddie said the rate was down to 4.7%.

But … home prices are still falling. The S&P/Case-Shiller index of prices fell 8.9% for the July-through-September period from a year earlier. That was an improvement from the 14.7% drop in the second quarter and the 19% decline in the first three months of 2009. Median prices of existing homes fell in 123 of 153 metropolitan areas during the third quarter compared with a year earlier. The national median price was $177,900, down 11.2% from the third quarter of 2008. [Don't ask me to explain the disparity. Case-Shiller and NAR measure this differently.] Last month the median price for an existing home was $173,100, down 7.1% from $186,400 in October 2008.

Thus, despite record interference in the housing market by the government, home prices are still falling. There are several reasons why it is likely that home prices will continue to fall.

Almost 25% of home owners are upside down with their mortgages. Nearly 10.7 million households had negative equity in their homes in the third quarter, according to First American CoreLogic. This shadow market is huge:

Home prices have fallen so far that 5.3 million U.S. households are tied to mortgages that are at least 20% higher than their home’s value, the First American report said. More than 520,000 of these borrowers have received a notice of default, according to First American. …

 

But negative equity “is an outstanding risk hanging over the mortgage market,” said Mark Fleming, chief economist of First American Core Logic. “It lowers homeowners’ mobility because they can’t sell, even if they want to move to get a new job.” Borrowers who owe more than 120% of their home’s value, he said, were more likely to default.

 

Mortgage troubles are not limited to the unemployed. About 588,000 borrowers defaulted on mortgages last year even though they could afford to pay — more than double the number in 2007, according to a study by Experian and consulting firm Oliver Wyman. “The American consumer has had a long-held taboo against walking away from the home, and this crisis seems to be eroding that,” the study said.

This overhang will continue to drive prices down. There is no way the Feds can force lenders to modify enough loans to make a serious dent in this overhang. It’s imply too big. Eventually the losses from forced modifications will mount and the FHA or any other agency will not be able to pay off their guarantees to lender. Nor should they try.

Mark Zandi, who correctly predicted a crisis in the housing market, but not the Crash, said on Wednesday, “The housing crash is not over.” He said the lull in foreclosure sales for the past few months, due to the government’s pressure on lenders to modify loans, has resulting in higher prices. He expects Case-Shiller to bottom by Q3 2010 with an overall price decline of 38% (now at 32%).

“Foreclosure sales will increase, and home prices will resume their decline by early 2010 as mortgage servicers figure out who will not qualify for a modification,” he said.

 

Zandi said 7.5 million foreclosure sales will have taken place between 2006 and 2011. The majority of these sales, however, have not emerged yet, with 4.8 million foreclosure sales expected between 2009 and 2011.

What this means is that the housing supply, now down to a 7+ months supply, will rise again, and prices will continue to decline. We haven’t seen the bottom yet.

Supporters of an escalation of the Afghanistan war often ask that we give military options a chance.  They also respond to criticism of the surge by asking “okay smart guy, what would YOU do to fight Al Qaeda in Afghanistan?”  Several pro-war posters also asked that pro-military arguments be given a chance.

Well, initially, the U.S. admits there are only a small handful of Al Qaeda in Afghanistan. As ABC notes:

U.S. intelligence officials have concluded there are only about 100 al Qaeda fighters in the entire country.

With
100,000 troops in Afghanistan at an estimated yearly cost of $30
billion, it means that for every one al Qaeda fighter, the U.S. will
commit 1,000 troops and $300 million a year.

There are
probably more than 100 homicidal maniacs in any large American city.
But we wouldn’t send soldiers into the city to get those bad guys.

Indeed, a leading advisor to the U.S. military – the very hawkish Rand Corporation – released a study
in 2008 called “How Terrorist Groups End: Lessons for Countering al
Qa’ida”. The report confirms what experts have been saying for years:
the war on terror is actually weakening national security.

As a press release about the study states:

Terrorists
should be perceived and described as criminals, not holy warriors, and
our analysis suggests that there is no battlefield solution to
terrorism.

There are additional reasons why prolonging the Afghan war may reduce our national security, such as weakening our economy.

But if you want a military solution anyway, Andrew J. Bacevich has an answer.

Bacevich
is no dove. Graduating from West Point in 1969, he served in the United
States Army during the Vietnam War. He then held posts in Germany,
including the 11th Armored Cavalry Regiment, the United States, and the
Persian Gulf up to his retirement from the service with the rank of
Colonel in the early 1990s. Bacevich holds a Ph.D. in American
Diplomatic History from Princeton University, and taught at West Point
and Johns Hopkins University prior to joining the faculty at Boston
University in 1998. Bacevich’s is a military family. On May 13, 2007,
Bacevich’s son, was killed in action while serving in Iraq.

Last year, Bacevich wrote in an article in Newsweek:

Meanwhile,
the chief effect of allied military operations there so far has been
not to defeat the radical Islamists but to push them across the
Pakistani border. As a result, efforts to stabilize Afghanistan are
contributing to the destabilization of Pakistan, with potentially
devastating implications. September’s bombing of the Marriott hotel in
Islamabad suggests that the extremists are growing emboldened. Today
and for the foreseeable future, no country poses a greater potential
threat to U.S. national security than does Pakistan. To risk the
stability of that nuclear-armed state in the vain hope of salvaging
Afghanistan would be a terrible mistake.

All this means that the
proper U.S. priority for Afghanistan should be not to try harder but to
change course. The war in Afghanistan (like the Iraq War) won’t be won
militarily. It can be settled—however imperfectly—only through politics.

The
new U.S. president needs to realize that America’s real political
objective in Afghanistan is actually quite modest: to ensure that
terrorist groups like Al Qaeda can’t use it as a safe haven for
launching attacks against the West. Accomplishing that won’t require
creating a modern, cohesive nation-state. U.S. officials tend to assume
that power in Afghanistan ought to be exercised from Kabul. Yet the
real influence in Afghanistan has traditionally rested with tribal
leaders and warlords. Rather than challenge that tradition, Washington
should work with it. Offered the right incentives, warlords can
accomplish U.S. objectives more effectively and more cheaply than
Western combat battalions. The basis of U.S. strategy in Afghanistan
should therefore become decentralization and outsourcing, offering cash
and other emoluments to local leaders who will collaborate with the
United States in excluding terrorists from their territory.

This
doesn’t mean Washington should blindly trust that warlords will become
America’s loyal partners. U.S. intelligence agencies should continue to
watch Afghanistan closely, and the Pentagon should crush any jihadist
activities that local powers fail to stop themselves. As with the
Israelis in Gaza, periodic airstrikes may well be required to pre-empt
brewing plots before they mature.

Were U.S. resources unlimited
and U.S. interests in Afghanistan more important, upping the ante with
additional combat forces might make sense. But U.S. power — especially
military power — is quite limited these days, and U.S. priorities lie
elsewhere.

Rather than committing more troops, therefore, the
new president should withdraw them while devising a more realistic —
and more affordable — strategy for Afghanistan

In other
words, America’s war strategy is increasing instability in Pakistan.
Pakistan has nuclear weapons. So the surge could very well decrease not
only American national security but the security of the entire world.

I think that diplomatic rather than military means should be used to
kill or contain the 100 bad guys in Afghanistan. But if we are going to
remain engaged militarily, Bacevich’s approach is a lot smarter than a
surge of boots on the ground.

Moreover, it would save hundreds of billions or trillions of dollars…

War hawks also ask “what would YOU have done after 9/11?”  Gee, I don’t know . . . maybe gotten the Taliban to turn over Bin Laden?

BONUS UPDATE 2-FOR-1 AFTER THANKSGIVING PACKAGE DEAL SPECIAL: If you don’t hear about alternative plans such as Bacevich’s from the corporate media, here is why …

5 Reasons that Corporate Media Coverage is Pro-War

There are five reasons that the mainstream media is worthless.

1. Self-Censorship by Journalists

Initially, there is tremendous self-censorship by journalists.

For example, several months after 9/11, famed news anchor Dan Rather told the BBC that American reporters were practicing “a form of self-censorship”:

There
was a time in South Africa that people would put flaming tires around
peoples’ necks if they dissented. And in some ways the fear is that you
will be necklaced here, you will have a flaming tire of lack of
patriotism put around your neck. Now it is that fear that keeps
journalists from asking the toughest of the tough questions…. And
again, I am humbled to say, I do not except myself from this criticism.

 

What we are talking about here – whether one wants to recognise it
or not, or call it by its proper name or not – is a form of
self-censorship.

Keith Olbermann agreed that there is self-censorship in the American media, and that:

You
can rock the boat, but you can never say that the entire ocean is in
trouble …. You cannot say: By the way, there’s something wrong with
our …. system.

As former Washington Post columnist Dan Froomkin wrote in 2006:

Mainstream-media
political journalism is in danger of becoming increasingly irrelevant,
but not because of the Internet, or even Comedy Central. The threat
comes from inside. It comes from journalists being afraid to do what
journalists were put on this green earth to do. . . .

 

There’s
the intense pressure to maintain access to insider sources, even as
those sources become ridiculously unrevealing and oversensitive.
There’s the fear of being labeled partisan if one’s bullshit-calling
isn’t meted out in precisely equal increments along the political
spectrum.

 

If mainstream-media political journalists don’t start
calling bullshit more often, then we do risk losing our primacy — if
not to the comedians then to the bloggers.

 

I still believe that
no one is fundamentally more capable of first-rate bullshit-calling
than a well-informed beat reporter – whatever their beat. We just need
to get the editors, or the corporate culture, or the self-censorship –
or whatever it is – out of the way.

2. Censorship by Higher-Ups

If
journalists do want to speak out about an issue, they also are subject
to tremendous pressure by their editors or producers to kill the story.

The
Pulitzer prize-winning reporter who uncovered the Iraq prison torture
scandal and the Mai Lai massacre in Vietnam, Seymour Hersh, said:

“All
of the institutions we thought would protect us — particularly the
press, but also the military, the bureaucracy, the Congress — they
have failed. The courts . . . the jury’s not in yet on the courts. So
all the things that we expect would normally carry us through didn’t.
The biggest failure, I would argue, is the press, because that’s the
most glaring….

 

Q: What can be done to fix the (media) situation?

 

[Long
pause] You’d have to fire or execute ninety percent of the editors and
executives. You’d actually have to start promoting people from the
newsrooms to be editors who you didn’t think you could control. And
they’re not going to do that.”

In fact many journalists are warning that the true story is not being reported. See this announcement and this talk.

And a series of interviews with award-winning journalists also documents censorship of certain stories by media editors and owners (and see these samples).

There are many reasons for censorship by media higher-ups.

One is money.

The media has a strong monetary interest to avoid controversial topics in general. It has always been true that advertisers discourage stories which challenge corporate power.
Indeed, a 2003 survey reveals that 35% of reporters and news executives
themselves admitted that journalists avoid newsworthy stories if “the story would be embarrassing or damaging to the financial interests of a news organization’s owners or parent company.”

In addition, the government has allowed tremendous consolidation in ownership of the airwaves during the past decade.

Dan Rather has slammed media consolidation:

Likening
media consolidation to that of the banking industry, Rather claimed
that “roughly 80 percent” of the media is controlled by no more than
six, and possibly as few as four, corporations.

This is documented by the following must-see charts prepared by:

• Media Channel

• The Nation

• Free Press

And check out this list of interlocking directorates of big media companies from Fairness and Accuracy in Media, and this resource from the Columbia Journalism Review to research a particular company.

This image gives a sense of the decline in diversity in media ownership over the last couple of decades:

The
large media players stand to gain billions of dollars in profits if the
Obama administration continues to allow monopoly ownership of the
airwaves by a handful of players. The media giants know who butters
their bread. So there is a spoken or tacit agreement: if the media
cover the administration in a favorable light, the MSM will continue to
be the receiver of the government’s goodies.

3. Drumming Up Support for War

In addition, the owners of American media companies have long actively played a part in drumming up support for war.

It
is painfully obvious that the large news outlets studiously avoided any
real criticism of the government’s claims in the run up to the Iraq
war. It is painfully obvious that the large American media companies
acted as lapdogs and stenographers for the government’s war agenda.

Veteran reporter Bill Moyers criticized
the corporate media for parroting the obviously false link between 9/11
and Iraq (and the false claims that Iraq possessed WMDs) which the
administration made in the run up to the Iraq war, and concluded that
the false information was not challenged because:

“the
[mainstream] media had been cheerleaders for the White House from the
beginning and were simply continuing to rally the public behind the
President — no questions asked.”

And as NBC News’ David Gregory (later promoted to host Meet the Press) said:

“I
think there are a lot of critics who think that . . . . if we did not
stand up [in the run-up to the war] and say ‘this is bogus, and you’re
a liar, and why are you doing this,’ that we didn’t do our job. I
respectfully disagree. It’s not our role”

But this is nothing new. In fact, the large media companies have drummed up support for all previous wars.

For example, Hearst helped drum up support for the Spanish-American War.

And an official summary of America’s overthrow of the democratically-elected president of Iran in the 1950′s states, “In
cooperation with the Department of State, CIA had several articles
planted in major American newspapers and magazines which, when
reproduced in Iran, had the desired psychological effect in Iran and
contributed to the war of nerves against Mossadeq.” (page x)

The mainstream media also may have played footsie with the U.S. government right before Pearl Harbor. Specifically, a highly-praised historian (Bob Stineet) argues
that the Army’s Chief of Staff informed the Washington bureau chiefs of
the major newspapers and magazines of the impending Pearl Harbor attack
BEFORE IT OCCURRED, and swore them to an oath of secrecy, which the
media honored (page 361) .

And the military-media alliance has continued without a break (as a highly-respected journalist says,
“viewers may be taken aback to see the grotesque extent to which US
presidents and American news media have jointly shouldered key
propaganda chores for war launches during the last five decades.”)

As the mainstream British paper, the Independent, writes:

There
is a concerted strategy to manipulate global perception. And the mass
media are operating as its compliant assistants, failing both to resist
it and to expose it. The sheer ease with which this machinery has been
able to do its work reflects a creeping structural weakness which now
afflicts the production of our news.

The article in the
Independent discusses the use of “black propaganda” by the U.S.
government, which is then parroted by the media without analysis; for
example, the government forged
a letter from al Zarqawi to the “inner circle” of al-Qa’ida’s
leadership, urging them to accept that the best way to beat US forces
in Iraq was effectively to start a civil war, which was then publicized
without question by the media..

So why has the American press has consistenly served the elites in disseminating their false justifications for war?

One of of the reasons is because the large media companies are owned by those who support the militarist agenda or even directly profit from war and terror (for example, NBC – which is being sold to Comcast – was owned by General Electric, one of the largest defense contractors in the world — which directly profits from war, terrorism and chaos).

Another seems to be an unspoken rule that the media will not criticize the government’s imperial war agenda.

And
the media support isn’t just for war: it is also for various other
shenanigans by the powerful. For example, a BBC documentary proves:

There
was “a planned coup in the USA in 1933 by a group of right-wing
American businessmen . . . . The coup was aimed at toppling President
Franklin D Roosevelt with the help of half-a-million war veterans. The
plotters, who were alleged to involve some of the most famous families
in America, (owners of Heinz, Birds Eye, Goodtea, Maxwell Hse &
George Bush’s Grandfather, Prescott) believed that their country should
adopt the policies of Hitler and Mussolini to beat the great
depression.”

Moreover, “the
tycoons told the general who they asked to carry out the coup that the
American people would accept the new government because they controlled all the newspapers.“

See also this book.

Have you ever heard of this scheme before? It was certainly a very large one. And if the conspirators controlled the newspapers then, how much worse is it today with media consolidation?

4. Access

Politico reveals:

For
$25,000 to $250,000, The Washington Post has offered lobbyists and
association executives off-the-record, nonconfrontational access to
“those powerful few”: Obama administration officials, members of
Congress, and — at first — even the paper’s own reporters and editors…

The
offer — which essentially turns a news organization into a facilitator
for private lobbyist-official encounters — was a new sign of the
lengths to which news organizations will go to find revenue at a time
when most newspapers are struggling for survival.

That may
be one reason that the mainstream news commentators hate bloggers so
much. The more people who get their news from blogs instead of
mainstream news sources, the smaller their audience, and the less the
MSM can charge for the kind of “nonconfrontational access” which leads
to puff pieces for the big boys.

5. Censorship by the Government

Finally,
as if the media’s own interest in promoting war is not strong enough,
the government has exerted tremendous pressure on the media to report
things a certain way. Indeed, at times the government has thrown media owners and reporters in jail
if they’ve been too critical. The media companies have felt great
pressure from the government to kill any real questioning of the
endless wars.

For example, Dan Rather said, regarding American media, “What you have is a miniature version of what you have in totalitarian states”.

Tom Brokaw said “all wars are based on propaganda.

And the head of CNN said:

There
was ‘almost a patriotism police’ after 9/11 and when the network showed
[things critical of the administration's policies] it would get phone
calls from advertisers and the administration and “big people in
corporations were calling up and saying, ‘You’re being anti-American
here.’

Indeed, former military analyst and famed Pentagon Papers whistleblower Daniel Ellsberg said that the government has ordered the media not to cover 9/11:

Ellsberg seemed hardly surprised
that today’s American mainstream broadcast media has so far failed to
take [former FBI translator and 9/11 whistleblower Sibel] Edmonds up on
her offer, despite the blockbuster nature of her allegations [which
Ellsberg calls "far more explosive than the Pentagon Papers"].

 

As
Edmonds has also alluded, Ellsberg pointed to the New York Times, who
“sat on the NSA spying story for over a year” when they “could have put
it out before the 2004 election, which might have changed the outcome.”

 

“There
will be phone calls going out to the media saying ‘don’t even think of
touching it, you will be prosecuted for violating national security,’” he told us.

 

* * *

 

“I am confident that there is conversation inside the Government as to ‘How do we deal with Sibel?’” contends Ellsberg. “The
first line of defense is to ensure that she doesn’t get into the media.
I think any outlet that thought of using her materials would go to to
the government and they would be told ‘don’t touch this . . . .‘”

Of course, if the stick approach doesn’t work, the government can always just pay off reporters to spread disinformation.

Famed Watergate reporter Carl Bernstein says the CIA has already bought and paid for many successful journalists. See also this New York Times piece, this essay by the Independent, this speech by one of the premier writers on journalism, and this and this roundup.

Indeed,
in the final analysis, the main reason today that the media giants will
not cover the real stories or question the government’s actions or
policies in any meaningful way is that the American government and
mainstream media been somewhat blended together.

Can We Win the Battle Against Censorship?

We
cannot just leave governance to our “leaders”, as “The price of freedom
is eternal vigilance” (Jefferson). Similarly, we cannot leave news to
the corporate media. We need to “be the media” ourselves.

“To stand in silence when they should be protesting makes cowards out of men.”
- Abraham Lincoln

“Our lives begin to end the day we become silent about things that matter.”
- Dr. Martin Luther King Jr.

“Powerlessness
and silence go together. We…should use our privileged positions not
as a shelter from the world’s reality, but as a platform from which to
speak. A voice is a gift. It should be cherished and used.”
– Margaret Atwood

“There
is no act too small, no act too bold. The history of social change is
the history of millions of actions, small and large, coming together at
points in history and creating a power that [nothing] cannot suppress.”
- Howard Zinn (historian)

“All tyranny needs to gain a foothold is for people of good conscience to remain silent”
- Thomas Jefferson