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Archive for the ‘Transparency’ Category

Blatant Data Error At The Federal Reserve

Submitted by Tyler Durden

Analyst charges that government is manipulating markets

By MarketWatch

WASHINGTON (MarketWatch) — The massive stock-market rally in the past nine months is mostly due to secret government buying of stock-index futures, a respected stock-market analyst said Tuesday.

Charles Biderman, chief executive of TrimTabs Investment Research, is the latest and most credible person to charge that the Federal Reserve and the Treasury (in league with top Wall Street firms) is rigging the stock market on a daily basis.

In a special report released Tuesday, Biderman said the $6 trillion increase in U.S. stock-market capitalization since March can’t be explained by the usual sources of funds flowing into the market — such as mutual funds, direct retail investment, pension funds, hedge funds or foreign purchases.

The only logical explanation for the extent of the rally, he suggested, is secret buying by a government committee known colloquially as the Plunge Protection Team. It’s like the dark matter that astrophysicists conjecture must be there, even if we can’t detect it.

The PPT was established by President Ronald Reagan in 1988 after the 1987 stock crash to coordinate the government’s response to market meltdowns. It consists of the Fed chairman, the Treasury secretary, the head of the Securities and Exchange Commission and the head of the Commodity Futures Trading Commission.

Biderman acknowledged that he had no direct evidence that the Fed and other agencies have intervened in the stock market. But he worried about what will happen to the market if the PPT has been buying and suddenly stops.

The Fed, of course, is a major player in the fixed-income markets, buying and selling billions in Treasurys, agency bonds and mortgage-backed securities. It’s taken on hundreds of billions in assets from Bear Stearns, American International Group Inc. /quotes/comstock/13*!aig/quotes/nls/aig (AIG 29.30, -0.03, -0.10%) and many unnamed banks to which it’s lent money. Presumably, all of those positions are duly reported by the central bank each week.

But the Fed has never said it is buying equities or equity futures. Doing so would likely violate the Federal Reserve’s investment policies, and could violate federal law if not disclosed properly.

Aside from the legal issues, the PPT would have operational constraints. It’s hard to believe that the Fed could keep such a conspiracy a secret for 20 years or more. An operation big enough to manipulate markets for months on end would be big enough to develop leaks.

With so much money at stake, anyone with direct knowledge of the conspiracy (such as a $30,000-a-year administrative aide) would be highly tempted to blow the whistle.

Yet Biderman’s accusation of PPT market manipulation is another argument in favor of a complete public audit of the Fed’s books. As any casual reader of this site’s community boards knows, there is a widespread belief that the PPT does manipulate stock prices on a daily basis to enrich its pals and screw individual investors.

It would be useful to prove them wrong. And if they are right, the PPT should be put out of business.

–Rex Nutting, Washington bureau chief

First, a little history for perspective:

“The Democrats intend to lead the most honest, most open and most ethical congress in history.”

Democratic Leaders Plan Secret Health Reform Deliberations

January 04, 2010 05:45 PM ET | Peter Roff
By Peter Roff, Thomas Jefferson Street blog

Despite their claims to the contrary, the way that House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid have handled the healthcare bill has been anything but transparent. And, if the left-wing blogosphere is to be believed, the two congressional leaders intend to keep the deliberations secret as they try to merge the House and Senate versions of the legislation into something that will pass both chambers.

The Talking Points Memo website reported Monday that Democrats in both the House and Senate are saying the process will likely follow the path of the House taking up the Senate-passed legislation, amending it and sending it back to the Senate, which will have to pass it again. “This process cuts out the Republicans,” a House Democratic aide told TPM, indicating the congressional majority intended to make sure the Republican minority would “not have a motion to recommit opportunity.”

It also, say those who are following the issue, allows Pelosi to avoid having to cut deals with problematic House Democrats like Michigan’s Bart Stupak, who has promised to do what he can to scuttle the final bill if it provides for federal funding of abortions.

Henry Waxman, the chairman of the House Energy and Commerce Committee, is saying much the same thing, according to David Dayen at FireDogLake, another prominent left-wing website.

Dayen reported that the powerful California Democrat told constituents he would be coming back to Washington Tuesday to begin negotiations with Senate leaders and the White House about what a final healthcare bill will look like—even though the House doesn’t come back into session until January 12.

According to Waxman, the process for moving will not include the standard House/Senate conference committee, because the motions to select and instruct conferees in the Senate “would need 60 votes all over again.” Instead, whatever agreements made could be packaged in an amendment to the bills passed by the House and Senate.

By blocking out the Republicans—not to mention House Democrats who object to what the Senate passed—Pelosi and Reid are setting up a protracted game of “ping-pong,” in which the legislation goes back and forth from the Senate to the House and back to the Senate again. They may be able to prevail as far as the legislation goes, ultimately, but at enormous cost to their majorities. And that may be the biggest secret of all as far as the healthcare debate is concerned, or at least the one Pelosi and Reid are most concerned about.

Despite their claims to the contrary, the way that House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid have handled the healthcare bill has been anything but transparent. And, if the left-wing blogosphere is to be believed, the two congressional leaders intend to keep the deliberations secret as they try to merge the House and Senate versions of the legislation into something that will pass both chambers.

The Talking Points Memo website reported Monday that Democrats in both the House and Senate are saying the process will likely follow the path of the House taking up the Senate-passed legislation, amending it and sending it back to the Senate, which will have to pass it again. “This process cuts out the Republicans,” a House Democratic aide told TPM, indicating the congressional majority intended to make sure the Republican minority would “not have a motion to recommit opportunity.”

It also, say those who are following the issue, allows Pelosi to avoid having to cut deals with problematic House Democrats like Michigan’s Bart Stupak, who has promised to do what he can to scuttle the final bill if it provides for federal funding of abortions.

Henry Waxman, the chairman of the House Energy and Commerce Committee, is saying much the same thing, according to David Dayen at FireDogLake, another prominent left-wing website.

Dayen reported that the powerful California Democrat told constituents he would be coming back to Washington Tuesday to begin negotiations with Senate leaders and the White House about what a final healthcare bill will look like—even though the House doesn’t come back into session until January 12.

According to Waxman, the process for moving will not include the standard House/Senate conference committee, because the motions to select and instruct conferees in the Senate “would need 60 votes all over again.” Instead, whatever agreements made could be packaged in an amendment to the bills passed by the House and Senate.

By blocking out the Republicans—not to mention House Democrats who object to what the Senate passed—Pelosi and Reid are setting up a protracted game of “ping-pong,” in which the legislation goes back and forth from the Senate to the House and back to the Senate again. They may be able to prevail as far as the legislation goes, ultimately, but at enormous cost to their majorities. And that may be the biggest secret of all as far as the healthcare debate is concerned, or at least the one Pelosi and Reid are most concerned about.

EDITORIAL: Hiding health bills behind closed doors

By THE WASHINGTON TIMES

It may be a new year, but congressional Democrats are planning the same old sorts of sleazy tactics in their bid to take over America’s health care system. Congressional Republicans, especially in the Senate, should not let them get away with it. Transparency and ethics should be Republican rallying cries, and obstruction on those grounds should be a point of pride.

By now it’s almost trite to complain that President Obama repeatedly has broken his campaign pledge to “broadcast [health care] negotiations on C-SPAN so that the American people can see what the choices are.” That doesn’t make the complaint invalid. For legislation that could so profoundly and personally affect the daily lives of every American, Congress and the White House should be more transparent and more accessible than ever before. Instead, the process has been secretive and sordid throughout.

The House passed its version of the bill on a Saturday night. The Senate held its key procedural vote at 1 in the morning, and then provided a lump of coal in our stockings by forcing full passage of its bill on Christmas Eve. The House leadership banned consideration of all but one amendment not offered by leadership itself – forbidding debate on more than 150 of them – then provided just 24 hours for members to study the bill’s final text. The Senate leadership inserted so many tawdry last-minute items that analysts are still finding jokers in the deck 11 days later.

All these shenanigans have driven approval for the government health care bills even lower in public polls than the strong majorities that already opposed them a month ago. Yet that hasn’t fazed congressional leaders. Now comes word from multiple sources that not only will Congress refuse to televise the usual Conference Committee to reconcile the two chambers’ versions of the bill, but it won’t allow a formal conference at all. Instead, a chosen few negotiators will concoct the final version out of sight, without formal rules governing the process and without a single Republican at the table.

Democratic Rep. Henry Waxman of California, chairman of the House Energy and Commerce Committee, candidly told a Jan. 3 home-state Democratic gathering that the sleight-of-hand is intended to enable his colleagues to avoid any more tough votes until the one on final passage. David Dayen of the liberal Web site Firedoglake reported from the meeting that, “this will not be a traditional conference committee, Waxman said, because the motions to select and instruct conferees in the Senate ‘would need 60 votes [in the Senate] all over again.’”

(Corrected paragraph:) Back in October, Rep. Vern Buchanan, Florida Republican, offered this simple resolution: “Resolved, that it is the sense of the House of Representatives that any conference committee or other meetings held to determine the final content of sweeping national health care legislation be held in full public view and not behind closed doors.”

If congressional leaders do not abide this simple request, Republicans should bring the whole Senate to a halt. Senate rules provide for so many procedural obstacles, if a determined minority wants to exercise them, that the entire body could be tied up in knots for weeks on end. In the name of open and accountable government, that’s what senators should do if the public interest continues to be trampled.

Even C-Span is crying foul:

C-SPAN Challenges Congress to Open Health Care Talks to TV Coverage

FOXNews.com

The head of C-SPAN has implored Congress to open up the last leg of health care reform negotiations to the public, as top Democrats lay plans to hash out the final product among themselves.

The head of C-SPAN has implored Congress to open up the last leg of health care reform negotiations to the public, as top Democrats lay plans to hash out the final product among themselves.

C-SPAN CEO Brian Lamb wrote to leaders in the House and Senate Dec. 30 urging them to open “all important negotiations, including any conference committee meetings,” to televised coverage on his network.

“The C-SPAN networks will commit the necessary resources to covering all of the sessions LIVE and in their entirety,” he wrote.

In a Tuesday afternoon press conference on health legislation negotiations, House Speaker Nancy Pelosi appeared to object to the premise behind the request.

“There has never been a more open process for any legislation in anyone who’s served here’s experience,” she said.

However, Republican leaders sided with C-SPAN’s calls for transparency.

“As House Republican leader, I can confidently state that all House Republicans strongly endorse your proposal and stand ready to work with you to make it a reality,” Minority Leader John Boehner wrote in response to the letter. “Hard-working families won’t stand for having the future of their health care decided behind closed doors. These secret deliberations are a breeding ground for more of the kickbacks, shady deals and special-interest provisions that have become business as usual in Washington.”

Democratic leaders could bypass the traditional conference committee process, in which lawmakers from both parties and chambers meet to reconcile differences between the House and Senate versions of a bill. Top Democrats in the House, Senate and White House were meeting Tuesday evening to figure out the final product in three-way talks before sending it back to both chambers for a final vote.

“We don’t even know yet whether there’s going to be a conference,” Democratic Congressional Campaign Committee Chairman Chris Van Hollen said responding to a question about the C-SPAN request. “It’s not clear whether or not that’s going to happen yet.”

This format would seem ideal for closed-door meetings, which congressional Democrats have used many times to figure out sensitive provisions in the health care bill — though President Obama pledged during the campaign to open up health care talks to C-SPAN’s cameras.

“That’s what I will do in bringing all parties together, not negotiating behind closed doors, but bringing all parties together, and broadcasting those negotiations on C-SPAN so that the American people can see what the choices are,” Obama said at a debate against Hillary Clinton in Los Angeles on Jan. 31, 2008.

Asked about the request to Congress, White House Press Secretary Robert Gibbs said he hadn’t seen the letter.

“I know the president is going to begin discussions today on health care to iron out differences between the House and Senate bills,” he said.

Lamb urged Congress in his letter to fling open the doors in the final stretch of the negotiations.

“President Obama, Senate and House leaders, many of your rank-and-file members, and the nation’s editorial pages have all talked about the value of transparent discussions on reforming the nation’s health care system,” he wrote. “Now that the process moves to the critical stage of reconciliation between the chambers, we respectfully request that you allow the public full access, through television, to legislation that will affect the lives of every single American.”

Lamb said his network would use “the latest technology” to be “as unobtrusive as possible” during the talks.

No Good Deed Goes Unpunished as Banks Seek Profits From Bailout

Jan. 4 (Bloomberg) — To understand the meaning of no good deed goes unpunished, Treasury Secretary Timothy F. Geithner can look no further than Wall Street where the banks that received the biggest taxpayer bailouts are seeking to reap trading profits from securities rescued by the government.

Only months after it was started, the U.S. program designed to purge debts of no immediate discernable value from the balance sheets of troubled banks has helped transform the frozen debt into a money-maker as the bonds have rallied. Bank of America Corp. and Citigroup Inc., who received 22 percent of the $418.7 billion American taxpayers loaned to troubled financial institutions, boosted holdings on their trading books of home- loan bonds that lack government guarantees while investors were raising cash for the program, according to Federal Reserve data.

Charlotte, North Carolina-based Bank of America along with Citigroup, Morgan Stanley and Goldman Sachs Group Inc., all based in New York, added a combined $2.74 billion of the debt, for which there were few buyers as recently as March, to their short-term trading assets during the third quarter, up 13 percent from the second quarter, the most-recent data show.

Prices of these securities may slump again, leaving the banks exposed to potential losses that the Treasury Department’s rescue plan was designed to mitigate, said Joshua Rosner, a managing director at New York-based Graham Fisher & Co., which advises regulators and institutional investors.

“It’s a trade that will likely work out, but it’s still a speculative trade, which is not what a taxpayer should want from firms that have only recently come out of critical care,” Rosner said.

‘Making a Killing’

The Public-Private Investment Program was introduced in March by Geithner as a means of helping struggling banks by reviving the market for unpackaged loans and mortgage securities that aren’t backed by government-supported institutions, such as Fannie Mae or Freddie Mac. Under the program, asset managers were supposed to raise money from investors and, with additional capital and loans from taxpayers, buy as much as $1 trillion in toxic assets from U.S. banks, freeing up money for lending.

It’s “absolutely ridiculous” that banks, which were expected to reduce their holding of such volatile mortgage securities, bought them before the government program was running and may now profit, said Michael Schlachter, managing director of Wilshire Associates, the Santa Monica, California- based investment-consulting firm. “Some of them created this mess, and they are making a killing undoing it.”

Officials for Bank of America, Citigroup, Goldman Sachs and Morgan Stanley declined to comment on the Fed data, as did Treasury spokeswoman Meg Reilly.

Scaling Back

Geithner, 48, scaled back PPIP as the Fed declined to provide additional financing and banks balked at selling non- agency mortgages at a loss. It wasn’t until July that the Treasury chose New York-based BlackRock Inc., Invesco Ltd. in Atlanta and seven other firms to start PPIP funds.

To date, funds participating in the program have raised about $6 billion of equity capital from private investors, which the government has matched. The Treasury also provided $12 billion of debt capital, bringing the funds’ purchasing power to $24 billion. Neither the Treasury nor the funds have disclosed how much and what debt has been bought.

Prices for some of the securities that the funds were supposed to buy have almost doubled since March. The rally was fueled in part by traders jumping in before PPIP funds could get off the ground, said Steve Kuhn, who helps oversee about $440 million of mortgage-bond investments for Pine River Capital Management LLC in Minnetonka, Minnesota.

“Anytime people know there’s a buyer coming, they position for that, and that’s clearly what happened here,” said Kuhn, who is co-manager of the Nisswa Fixed Income Fund.

Market Rally

The rally was boosted further by investors seeking riskier fixed-income assets to offset record low yields on Treasuries and by the stabilization of the housing market, he said.

Typical prices for the most-senior bonds backed by hybrid Alt-A mortgages stood at about 58 cents on the dollar by mid- December, up from lows of around 35 cents in mid-March, according to Barclays Capital data.

Prices rose as high as 60 cents on the dollar in November. Fixed-rate prime jumbo mortgage securities were at 84 cents, up from 63 cents in March.

Before the credit crisis, senior non-agency home-loan securities didn’t typically trade below 95 cents on the dollar, JPMorgan Chase & Co. data show.

Alt-A loans fall between prime and subprime in terms of projected defaults. Jumbo mortgages are larger than government- supported Fannie Mae and Freddie Mac are allowed to finance.

Non-Agency Debt

The Fed data on bank holdings of mortgage securities don’t distinguish between changes in value from buying or selling and those that result from rising or falling market prices. The higher values at Citigroup and Bank of America reflect in part purchases of non-agency debt, according to people familiar with each bank’s positions.

The value of non-agency debt designated by the four banks as held to maturity or available for sale fell a combined $593 million to $70.8 billion in the third quarter from the previous three months. Under accounting rules, securities in these categories are usually held for longer than those designated as trading investments, helping to avoid writedowns. Debt available for sale can be sold more easily at a later stage than notes held to maturity.

Bank of America’s Wager

Bank of America, the largest U.S. bank by assets and deposits, added the most non-agency debt on its trading book in the third quarter, with an increase of $945 million, or 34 percent. The value of securities designated held-to-maturity or available-for-sale also rose, by 8.2 percent to $37.3 billion.

The Charlotte, North Carolina-based firm, now led by Chief Executive Officer Brian Moynihan, reported $80 billion in writedowns and losses from the credit crisis, much of it related to defaulted home loans and bonds backed by them. The lender received $45 billion in federal bailout funds in October 2008 under the Treasury’s Troubled Asset Relief Program, which it repaid Dec. 9. The U.S. still holds warrants in the bank.

Without new purchases, bank holdings tracked by the Fed usually decline as the underlying loans are refinanced or default. That shrank the overall market by 5 percent in the third quarter and by 30 percent since its peak in mid-2007, separate Fed data show.

Citigroup’s holdings of non-agency residential mortgage bonds designated for trading rose by $421 million to $13.5 billion in the third quarter, the Fed data show. Other holdings fell $2.3 billion, or 6.9 percent, to $33 billion.

$117.8 Billion Loss

The New York-based bank was among the largest and earliest losers on toxic home-loan securities and has posted $117.8 billion of writedowns and credit losses. The U.S. injected $45 billion of taxpayer capital into the company and extended guarantees for $301 billion of its assets, including mortgage debt. Citigroup, led by CEO Vikram Pandit, agreed last month to pay back $20 billion and cancel the insurance. The U.S. owns 27 percent of the bank’s common shares.

At Goldman Sachs, CEO Lloyd Blankfein increased non-agency home mortgage bonds designated for trading by $593 million in the third quarter, to $2.71 billion, and Morgan Stanley’s jumped $785 million to $4.25 billion, the Fed data show. Goldman Sachs’s other holdings climbed $76 million to $449 million. Morgan Stanley, now overseen by CEO James Gorman, classified all its holdings as trading assets, according to the Fed data. Both companies are based in New York.

‘Free Money’

Of the seven biggest owners of residential mortgage-backed securities, only San Francisco-based Wells Fargo & Co. reduced holdings of the debt on its trading book, by $130 million to $44 million. JPMorgan added $49 million to the trading book, while cutting its other holdings of the securities by $1.47 billion to $12.7 billion, according to the Fed data.

Eric Petroff, director of research at Wurts & Associates, a Seattle-based firm that advises institutions on $30 billion in investments, said it’s no surprise that banks added to their holdings following the unveiling of PPIP.

“Any time the government says, ‘We’re going to buy something in the securities market,’ they’re putting out a sign that says, ‘Free money, come and get it’,” he said.

The renewed interest by banks in holding the bonds has helped restore liquidity, said Scott Buchta, head of investment strategy at Guggenheim Securities LLC in Chicago. Higher prices have also eroded potential profits of PPIP funds and increased the risk of losses, making it harder for asset managers participating in the program to attract investors, he said.

Returns Shrink

Four of the nine PPIP managers missed the original Sept. 30 deadline for raising the minimum $500 million by more than a month. One manager, Marathon Asset Management, was allowed to make its initial closing after raising $400 million.

“If you were looking at returns in the high teens to low twenties in PPIP, now you’re looking at the low-to-mid teens,” said Joel Paula, senior analyst at Cambridge, Massachusetts- based NEPC LLC, which advised Connecticut’s state pension board on its decision to invest $200 million with three PPIP managers.

Higher prices are also slowing the pace at which PPIP managers can and want to buy, because they must be more careful when examining securities and their underlying collateral, NEPC’s Paula said.

“If you do your homework, you can still find value, but you’re not getting 20 percent for doing nothing anymore,” Paula said in an interview.

Locked In

While fundraising and investing is moving slowly, time could ultimately play to the PPIP investor’s advantage, said Alan Papier, of consulting firm Mercer, a unit of New York-based Marsh & McLennan Cos. Under PPIP’s terms, investors are locked in for eight years and managers have up to two years from their initial closings to invest the money, giving them time to wait for prices to drop.

“Managers are trying to figure out whether the rally in residential mortgage-backed securities is sustainable, or if there will be some sort of pullback,” Papier said.

Bill Eigen, manager of the $5.4 billion JPMorgan Strategic Income Opportunities Fund, said he bought residential mortgage- backed securities in the spring. Since then, he has sold and begun shorting both residential and commercial mortgage-backed securities, anticipating that their price would fall.

“This stuff was supposed to trade on fundamentals and will again trade on fundamentals,” he said in an interview. “PPIP is not going to fill up buildings.”

To contact the reporter on this story: Christopher Condon in Boston at ccondon4@bloomberg.netJody Shenn in New York at jshenn@bloomberg.net

The reason for posting this article is that I see many people who are in the state described by Dr. Levine below.

In his article Are Americans a Broken People? Why We’ve Stopped Fighting Back Against the Forces of Oppression… he asks, “Have consumerism, suburbanization and a malevolent corporate-government partnership so beaten us down that we no longer have the will to save ourselves?”

I see this reaction from many people regarding actually implementing Freedom’s Vision. Some people believe that there is just no way we could ever overcome our oppressors and institute those ideas. Well, I call B.S.! We are the ONLY ONES who do possess the power to implement change – and we’re going to!

Freedom’s Vision is designed to get us from our current debt and derivative saturated existence to one where the majority of that has been cleansed from the system and our money can once again go to work for us. It does so in a way that directly benefits most people in our society – it gives them an incentive to back it. The SWARM concept is meant to do exactly what Dr. Levine suggests, give the people small morale building victories on their way to achieving significant change.

Are Americans a Broken People? Why We’ve Stopped Fighting Back Against the Forces of Oppression…

By Bruce E. Levine

A psychologist asks: Have consumerism, suburbanization and a malevolent corporate-government partnership so beaten us down that we no longer have the will to save ourselves?

Can people become so broken that truths of how they are being screwed do not “set them free” but instead further demoralize them? Has such a demoralization happened in the United States?

Do some totalitarians actually want us to hear how we have been screwed because they know that humiliating passivity in the face of obvious oppression will demoralize us even further?

What forces have created a demoralized, passive, dis-couraged U.S. population?

Can anything be done to turn this around?

Can people become so broken that truths of how they are being screwed do not “set them free” but instead further demoralize them?

Yes. It is called the “abuse syndrome.” How do abusive pimps, spouses, bosses, corporations, and governments stay in control? They shove lies, emotional and physical abuses, and injustices in their victims’ faces, and when victims are afraid to exit from these relationships, they get weaker. So the abuser then makes their victims eat even more lies, abuses, and injustices, resulting in victims even weaker as they remain in these relationships.

Does knowing the truth of their abuse set people free when they are deep in these abuse syndromes?

No. For victims of the abuse syndrome, the truth of their passive submission to humiliating oppression is more than embarrassing; it can feel shameful — and there is nothing more painful than shame. When one already feels beaten down and demoralized, the likely response to the pain of shame is not constructive action, but more attempts to shut down or divert oneself from this pain. It is not likely that the truth of one’s humiliating oppression is going to energize one to constructive actions.

Has such a demoralization happened in the U.S.?

In the United States, 47 million people are without health insurance, and many millions more are underinsured or a job layoff away from losing their coverage. But despite the current sellout by their elected officials to the insurance industry, there is no outpouring of millions of U.S. citizens on the streets of Washington, D.C., protesting this betrayal.

Polls show that the majority of Americans oppose U.S. wars in Afghanistan and Iraq as well as the taxpayer bailout of the financial industry, yet only a handful of U.S. citizens have protested these circumstances.

Remember the 2000 U.S. presidential election? That’s the one in which Al Gore received 500,000 more votes than George W. Bush. That’s also the one that the Florida Supreme Court’s order for a recount of the disputed Florida vote was overruled by the U.S. Supreme Court in a politicized 5-4 decision, of which dissenting Justice John Paul Stevens remarked: “Although we may never know with complete certainty the identity of the winner of this year’s presidential election, the identity of the loser is perfectly clear. It is the nation’s confidence in the judge as an impartial guardian of the rule of law.” Yet, even this provoked few demonstrators.

When people become broken, they cannot act on truths of injustice. Furthermore, when people have become broken, more truths about how they have been victimized can lead to shame about how they have allowed it. And shame, like fear, is one more way we become even more psychologically broken.

U.S. citizens do not actively protest obvious injustices for the same reasons that people cannot leave their abusive spouses: They feel helpless to effect change. The more we don’t act, the weaker we get. And ultimately to deal with the painful humiliation over inaction in the face of an oppressor, we move to shut-down mode and use escape strategies such as depression, substance abuse, and other diversions, which further keep us from acting. This is the vicious cycle of all abuse syndromes.

Do some totalitarians actually want us to hear how we have been screwed because they know that humiliating passivity in the face of obvious oppression will demoralize us even further?

Maybe.

Shortly before the 2000 U.S. presidential election, millions of Americans saw a clip of George W. Bush joking to a wealthy group of people, “What a crowd tonight: the haves and the haves-more. Some people call you the elite; I call you my base.” Yet, even with these kind of inflammatory remarks, the tens of millions of U.S. citizens who had come to despise Bush and his arrogance remained passive in the face of the 2000 non-democratic presidential elections.

Perhaps the “political genius” of the Bush-Cheney regime was in their full realization that Americans were so broken that the regime could get away with damn near anything. And the more people did nothing about the boot slamming on their faces, the weaker people became.

What forces have created a demoralized, passive, dis-couraged U.S. population?

The U.S. government-corporate partnership has used its share of guns and terror to break Native Americans, labor union organizers, and other dissidents and activists. But today, most U.S. citizens are broken by financial fears. There is potential legal debt if we speak out against a powerful authority, and all kinds of other debt if we do not comply on the job. Young people are broken by college-loan debts and fear of having no health insurance.

The U.S. population is increasingly broken by the social isolation created by corporate-governmental policies. A 2006 American Sociological Review study (“Social Isolation in America: Changes in Core Discussion Networks over Two Decades”) reported that, in 2004, 25 percent of Americans did not have a single confidant. (In 1985, 10 percent of Americans reported not having a single confidant.) Sociologist Robert Putnam, in his 2000 book, Bowling Alone, describes how social connectedness is disappearing in virtually every aspect of U.S. life. For example, there has been a significant decrease in face-to-face contact with neighbors and friends due to suburbanization, commuting, electronic entertainment, time and money pressures and other variables created by governmental-corporate policies. And union activities and other formal or informal ways that people give each other the support necessary to resist oppression have also decreased.

We are also broken by a corporate-government partnership that has rendered most of us out of control when it comes to the basic necessities of life, including our food supply. And we, like many other people in the world, are broken by socializing institutions that alienate us from our basic humanity. A few examples:

Schools and Universities: Do most schools teach young people to be action-oriented — or to be passive? Do most schools teach young people that they can affect their surroundings — or not to bother? Do schools provide examples of democratic institutions — or examples of authoritarian ones?

A long list of school critics from Henry David Thoreau to John Dewey, John Holt, Paul Goodman, Jonathan Kozol, Alfie Kohn, Ivan Illich, and John Taylor Gatto have pointed out that a school is nothing less than a miniature society: what young people experience in schools is the chief means of creating our future society. Schools are routinely places where kids — through fear — learn to comply to authorities for whom they often have no respect, and to regurgitate material they often find meaningless. These are great ways of breaking someone.

Today, U.S. colleges and universities have increasingly become places where young people are merely acquiring degree credentials — badges of compliance for corporate employers — in exchange for learning to accept bureaucratic domination and enslaving debt.

Mental Health Institutions: Aldous Huxley predicted today’s pharmaceutical societyl “[I]t seems to me perfectly in the cards,” he said, “that there will be within the next generation or so a pharmacological method of making people love their servitude.”

Today, increasing numbers of people in the U.S. who do not comply with authority are being diagnosed with mental illnesses and medicated with psychiatric drugs that make them less pained about their boredom, resentments, and other negative emotions, thus rendering them more compliant and manageable.

Oppositional defiant disorder (ODD) is an increasingly popular diagnosis for children and teenagers. The official symptoms of ODD include, “often actively defies or refuses to comply with adult requests or rules,” and “often argues with adults.” An even more common reaction to oppressive authorities than the overt defiance of ODD is some type of passive defiance — for example, attention deficit hyperactivity disorder (ADHD). Studies show that virtually all children diagnosed with ADHD will pay attention to activities that they actually enjoy or that they have chosen. In other words, when ADHD-labeled kids are having a good time and in control, the “disease” goes away.

When human beings feel too terrified and broken to actively protest, they may stage a “passive-aggressive revolution” by simply getting depressed, staying drunk, and not doing anything — this is one reason why the Soviet empire crumbled. However, the diseasing/medicalizing of rebellion and drug “treatments” have weakened the power of even this passive-aggressive revolution.

Television: In his book Four Arguments for the Elimination of Television (1978), Jerry Mander (after reviewing totalitarian critics such as George Orwell, Aldous Huxley, Jacques Ellul, and Ivan Illich) compiled a list of the “Eight Ideal Conditions for the Flowering of Autocracy.”

Mander claimed that television helps create all eight conditions for breaking a population. Television, he explained, (1) occupies people so that they don’t know themselves — and what a human being is; (2) separates people from one another; (3) creates sensory deprivation; (4) occupies the mind and fills the brain with prearranged experience and thought; (5) encourages drug use to dampen dissatisfaction (while TV itself produces a drug-like effect, this was compounded in 1997 the U.S. Food and Drug Administration relaxing the rules of prescription-drug advertising); (6) centralizes knowledge and information; (7) eliminates or “museumize” other cultures to eliminate comparisons; and (8) redefines happiness and the meaning of life.

Commericalism of Damn Near Everything: While spirituality, music, and cinema can be revolutionary forces, the gross commercialization of all of these has deadened their capacity to energize rebellion. So now, damn near everything – not just organized religion — has become “opiates of the masses.”

The primary societal role of U.S. citizens is no longer that of “citizen” but that of “consumer.” While citizens know that buying and selling within community strengthens that community and that this strengthens democracy, consumers care only about the best deal. While citizens understand that dependency on an impersonal creditor is a kind of slavery, consumers get excited with credit cards that offer a temporarily low APR.

Consumerism breaks people by devaluing human connectedness, socializing self-absorption, obliterating self-reliance, alienating people from normal human emotional reactions, and by selling the idea that purchased products — not themselves and their community — are their salvation.

Can anything be done to turn this around?

When people get caught up in humiliating abuse syndromes, more truths about their oppressive humiliations don’t set them free. What sets them free is morale.

What gives people morale? Encouragement. Small victories. Models of courageous behaviors. And anything that helps them break out of the vicious cycle of pain, shut down, immobilization, shame over immobilization, more pain, and more shut down.

The last people I would turn to for help in remobilizing a demoralized population are mental health professionals — at least those who have not rebelled against their professional socialization. Much of the craft of relighting the pilot light requires talents that mental health professionals simply are not selected for nor are they trained in. Specifically, the talents required are a fearlessness around image, spontaneity, and definitely anti-authoritarianism. But these are not the traits that medical schools or graduate schools select for or encourage.

Mental health professionals’ focus on symptoms and feelings often create patients who take themselves and their moods far too seriously. In contrast, people talented in the craft of maintaining morale resist this kind of self-absorption. For example, in the question-and-answer session that followed a Noam Chomsky talk (reported in Understanding Power: The Indispensable Chomsky, 2002), a somewhat demoralized man in the audience asked Chomsky if he too ever went through a phase of hopelessness. Chomsky responded, “Yeah, every evening . . .”

If you want to feel hopeless, there are a lot of things you could feel hopeless about. If you want to sort of work out objectively what’s the chance that the human species will survive for another century, probably not very high. But I mean, what’s the point? . . . First of all, those predictions don’t mean anything — they’re more just a reflection of your mood or your personality than anything else. And if you act on that assumption, then you’re guaranteeing that’ll happen. If you act on the assumption that things can change, well, maybe they will. Okay, the only rational choice, given those alternatives, is to forget pessimism.”

A major component of the craft of maintaining morale is not taking the advertised reality too seriously. In the early 1960s, when the overwhelming majority in the U.S. supported military intervention in Vietnam, Chomsky was one of a minority of U.S. citizens actively opposing it. Looking back at this era, Chomsky reflected, “When I got involved in the anti-Vietnam War movement, it seemed to me impossible that we would ever have any effect. . . So looking back, I think my evaluation of the ‘hope’ was much too pessimistic: it was based on a complete misunderstanding. I was sort of believing what I read.”

An elitist assumption is that people don’t change because they are either ignorant of their problems or ignorant of solutions. Elitist “helpers” think they have done something useful by informing overweight people that they are obese and that they must reduce their caloric intake and increase exercise. An elitist who has never been broken by his or her circumstances does not know that people who have become demoralized do not need analyses and pontifications. Rather the immobilized need a shot of morale.

I want to caution that I believe that, indeed, there are some people who do need to be on medication and that not all psychological medication is bad. That’s not my point in posting this article which centers more around his notion that debt and corporatism have created a society of compliant but sometimes unhappy people controlled by debt. They are happy when the bubble is growing and the prices of their “assets” are increasing, but the game is exposed for what it truly is when asset prices begin to fall.

We don’t have to accept this system as our fate. We do have the power to change it. Money, after all, is simply an invention of man which at its core is meant to be a medium of exchange so that we may all trade the fruits of our labors. Breaking free of the shackles of DEBT is entirely possible and achievable. Give it a try at the personal level, you will be far more likely to find happiness and meaning in your own life when you are no longer shackled! And together we will unshackle our nation for future generations, that is our intention.

The first audio link is the portion of the Two Beers with Steve interview with Bill Still:

Bill Still on Two Beers with Steve (.mp3)

This link is a question and answers format explaining the basic concepts of Freedom’s Vision with both Bill and Nathan.

Nathan and Bill – Freedom’s Vision beginning questions… (.mp4)

Again, questions and comments are welcome. At some point in the near future we would like to have a call in question and answer session.

Treasury Department Releases Text of Letter from Secretary Geithner
to Hill Leadership on Administration’s Exit Strategy for TARP

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