A nation's economy is a reflection pool. The face that looks back from the water; is the face of the culture and the prevailing ethos. It's no different with America. The stewards of the US economic system--Paulson and Bernanke--are inextricably linked to a political/military establishment which has been thoroughly marinated in a culture of violence and corruption. Paulson's "Marshall Plan" for subprime homeowners is just the gloved hand of the despot. The other hand is still busy gouging out eyes at Guantanamo, or clubbing foreign nationals at CIA black sites, or dropping incendiary bombs on schoolchildren in Falluja. It's all the same. The culture of war and demagoguery has its roots in the economic system. Its financial leaders are just as culpable as any low-ranking GI at Abu Ghraib.

The Paulson plan has nothing to do with saving working class people
from the ravages of foreclosure. Oh, no. The Bush administration is
ideologically opposed to helping people in need. We know that already.
Just look at Katrina. The real purpose of the proposed "bailout" is to
allow enough people to keep making minimal payments on their mortgages so the banking system doesn't shatter into a million pieces. That's it. It doesn't take a genius to see that desperation has set in at the
Federal Reserve. The last time the government orchestrated a bailout
of this magnitude was during the '30s. And, guess what? George Bush is
no F.D.R.

The truth is, the system is cratering and the Fed's panic-button is
"blinking red". It's obvious. They are doing everything in their power
to keep the train on the tracks, but they're not succeeding. They're
slashing rates, accepting dodgy collateral (like Commercial paper and
shaky mortgage-backed securities) as repos, and they've extended the
length of the repos indefinitely, which is the same as "monetizing"
the debt. Paulson has tried to set up a Super SIV to help the major
investment banks off-load their mortgage-backed junk on the wary
public, but that isn't working either. Nothing is working. Meanwhile,
the headwinds keep getting stronger, the waves keep crashing over the
bow, and ship-o-state keeps listing perilously on its side. It's a
mess.

The banks are the conduit for the paper-money scam run by the Federal
Reserve. It's a crooked business run by the same people who send our
kids to war while rewarding themselves with tax cuts. It stinks. Now
the system is in dire straights. Are we supposed to feel bad?

Foreign central banks and investors are dumping their dollars and
dollar-backed assets, the Gulf States are threatening to de-link
petroleum from the dollar, and investors everywhere know they've been
ripped off by a shoddy mortgage-laundering swindle that got the "green
light" from US regulators. It's a bad scene all around. And now the
chickens are coming home to roost.

Cluck, cluck.

The meltdown in the real estate market continues to send tremors
through Wall Street. Trillions of dollars in complex bonds (CDOs and
MBSs) are being downgraded as foreclosures increase and housing
inventory soars. Banks, insurance companies, pension funds, bond
insurers, hedge funds; are all among the living-dead. Many are already
insolvent and many more will follow. It's just a matter of time. The
foundation of the financial markets is crumbling. The scheme to
transform the liabilities of loan-applicants with bad credit into a
reliable source of fat profits has failed. Alchemy still doesn't work.
Never has.

The subprime crisis and (subsequent) credit crunch originated at the
Federal Reserve. The Fed triggered a speculative frenzy by lowering
interest rates below the rate of inflation for over 31 months between
2002 and 2004. Trillions of dollars were fed into the banking system
creating the biggest equity bubble in history. Now that the housing
bubble is crashing to earth--and trillions of dollars in shaky bonds
are headed for the landfill--the Fed is trying to distance itself from
any responsibility. But we know the truth. The plan was authored and
executed by the Fed and that's where the blame lies. Everyone else is
just a "bit player".

What matters most, is that the system is collapsing. It is being
slowly crushed by the accumulated weight of its own corruption. When
the system crashes, the flag will be lowered over Guantanamo Bay, the
present oligarchy of racketeers will be removed from office, and the
troops will come home from Iraq. Sometimes positive results derive
from tragedy.

There could be anarchy or tyranny or martial law or detention camps.
Who really knows? It's understandable that the public is worried about
"what could happen" in the near future. But, consider this: can we
continue moving in the same direction that we are now? Can we keep
pouring the blood of innocent people all over the planet while
claiming to own the world and all of its resources? Can we keep
ignoring the species-threatening challenges of global warming, peak
oil and nuclear proliferation?

No.

Well, then, is there any chance that the media, the congress, the
courts, or the president will come to their senses; chart a different
course, restore civil liberties, stop the human rights abuse, and
withdrawal the troops?

No.

So tell me, dear reader, what hope is there for change apart from a
full-system economic collapse?

Political systems do not have to be perfect to be acceptable. I'm not
naive. But---for many of us---there are basic moral criteria that have
to be observed to win our support. The Bush administration has
elevated killing, torture and kidnapping to a level of state policy.
This is unacceptable by any standard, and yet, all the levers of power
are controlled by people who support the present doctrine.

Isn't that so?

The United States is not a beacon of hope or a light unto the world. It is a menace and a growing threat to survival on earth. America's political and military belligerence is just an extension of a
domineering economic system which serves the sole interests of the
rich and powerful. The Central Bank plays a critical role in this
paradigm. Nation's don't go to war without the blessing of their main
financial institutions. The "big money" guys are the silent partners
in the plunder and bloodletting.

The men who own and oversee the US financial system; created the
cancer which is presently devouring it from the inside. Now the tumor
has metastasized and spread through the entire organism. The situation
is irreversible. The economy is on its last legs and headed for a
fall. US political leaders will have to accept a world in which
America is just one of many states of equal power and significance.
Military funding will slow to a dribble. The killing will stop.
Finally.

By Mike Whitney