Paulson's Bank Bailout: The Biggest Swindle Ever Pulled!

By John Hoefle

September 20, 2008 (LPAC)--Lyndon LaRouche has a clear warning to the pack of fools pushing the largest bank bailout in history: Don't do it, and if you do, don't expect to get away with it. There will be consequences for such treasonous stupidity, far beyond what you can imagine.

The plan, presented by Treasury Secretary Henry Paulson and supported by Fed chairman Ben Bernanke, President George W. Bush and a gaggle of international bankers and other idiots, would transfer most of the enormous losses incurred in the death of the global financial system, from the books of the banks to the Federal government, and the U.S. taxpayer.

This scheme is being marketed to a frightened public as a "bold'' plan to "solve'' the financial crisis once and for all. What it really is, is the biggest theft in history, a act of monumental stupidity which will destroy everything in its path: the economy, the nation, and the people. There is nothing good about it.

- Absolute Insanity -

"This is the biggest swindle ever pulled,'' LaRouche said. "It is absolute insanity. The public is being duped.''

Virtually nothing Paulson has said is true--it is all lies designed to dupe Congress and the American people into believing that this gigantic ripoff is both necessary and in the public interest, when neither is true. The lies began well before Paulson, when we were told that finance, not production, was the road to wealth. For the past four decades, we have seen the systematic dismantling of American industry and agriculture, and the turning of our economy into a giant casino. Our banking system has been turned over to the speculators, and we have watched a relatively small portion of our population get rich--some obscenely so--while a growing portion fell into poverty, and others were pushed over the edge. Every protection put into law to stop such looting has been systematically repealed, including the Glass-Steagall Act which forbade commercial banks from engaging in investment banking. Now that system has collapsed, and we are being told that the people must bail out the crooks.

The final phase of this collapse began last year, with the mythical "subprime crisis,'' a deliberate misnomer. Then this "subprime crisis'' somehow morphed into a "credit crunch,'' infecting an "otherwise healthy'' banking system. It was, from start to finish, a lie carefully constructed to support the ultimate demand for a bailout.

Here's what really happened, and it all starts with the banking system. The banks built up a huge derivatives bubble in the 1990s, a pyramid scheme which constantly needed more money fed into its maw to keep it going. One of the prime sources of fuel was mortgages, which were used to spawn mortgage-backed securities and even wilder forms of casino chips like CDOs. The more mortgage money came in, the larger the profits that could be made from speculating in the securities, yielding more money for new mortgages. It was this securities machine which drove housing prices--and the mortgages on those houses--into the stratosphere. However, the machine worked so well that it drove housing prices beyond the reach of many Americans, so, in order to keep the mortgages flowing in, the banks began to relax loan standards, and in the end were selling homes to people who could not afford them, just to keep the game going. It finally got to the point that prices were so high, that even with the lax lending standards they couldn't keep the game going, and the whole house of cards collapsed. The subprime loans collapsed first because they were the shakiest, made at the top of market, so the banks painted the subprime lenders and borrowers as the villains, as a way of covering up their own role. It was a classic "blame the little guy'' scam.

Now we see Paulson asserting that the banks have been infected by this "housing crisis'' and that in order to protect the American people we must launch the biggest bank bailout in history. But it was Paulson, a former investment banker, and his investment banking buddies and their predecessors, who created this mess in the first place, and are now demanding that they be saved from the consequences of their folly, and handing the bill to the people they have been victimizing for decades. The foxes are demanding that the chickens pay for cleaning up the blood in the chicken coup.

September 20, 2008:
Lyndon LaRouche, and John Hoefle of EIR, on "When the Crash Comes: Whom Will You Trust?" Hosted by Harley Schlanger.
http://www.larouchepub.com/radio/archive_2008.html