The so-called Public Private Partnership Investment Program (PPPIP) introduced last Monday, by Treasury Secretary Timothy Geithner not only stands to bankrupt America but the global financial system as well. This is the worst yet of the bailouts, a swindle if ever there was one, which will cause President Obama’s approval rating to plummet. In fact, count me among those coming to the president’s aid. I really don’t think he understands what this means.
Consider Geithner as the face, the voice though not the brain, for this program which advocates turning over the keys to the banking system to a bunch of hedge fund sharks, and all at taxpayer’s expense. The cost could more likely end up being $6 trillion than the $1 trillion in starter money. In fact, it’s more likely that the dastardly plan was launched like a missile from jolly old London, which is in line to lose big if their offshore hedge fund empire is shut down.
So, we are not dealing with just your typical political blunder. This is a policy fiasco built to bring down the United States altogether. I believe it’s coming from a London-based financial oligarchy out to do in the US altogether. Speaker of the House Nancy Pelosi and House Financial Services Committee Chairman Barney Frank and the one and only Larry Summers, head of the Whitehouse Economic Council, are completely complicit in what amounts to an act of treason in recommending this.
Parenthetically, remember that it was Summers who, as Treasury secretary under Bill Clinton worked indefatigably to repeal the Glass Steagall Act of 1933 in 1999. And Summers worked to replace it with the 11/12/99 Gramm-Leach-Bliley Act, which was enacted on Nov. 12, 1999. The first Glass-Steagall Act was passed in February 1932 to stem deflation and expand the Federal Reserve’s power to offer rediscounts on more types of assets and issue government bonds as well as commercial paper.
The second Glass-Steagall Act was passed in 1933 when FDR took office to shore up the collapse of a large portion of the American commercial banking system. It established the Federal Deposit Insurance Corporation (FDIC), still indispensable to this day, and included banking reforms which were created to control speculation. Its most notable feature was that it prohibited a bank holding company from owning other financial companies. It made sure that a commercial or investment bank and a savings and loan bank were separate entities and never the twain should meet.
This meant you couldn’t have the likes of Citigroup, the now defunct Lehman-Brothers, Bear-Stearns, Merrill Lynch, Morgan Stanley, Deutsche Bank, et al playing spin the derivatives with your checking account or savings account money. Yet this separation of investment and savings, almost as good as separation of church and state, removed a major source of capital available to the casino side of the stock market, particularly the hedge funds like AIG’s Financial Product arm, a hedge fund stuck onto the world’s once largest insurance company, now practically worthless.
In fact, to gain a sense of the worthiness of the Glass-Steagall act, China still maintains its principle: a separation between commercial banking and the securities industries. In the wake of world financial distress, Chinese support for this grand concept remains strong. But to free market Wall Street and financiers, the Glass Steagall Act remained a moving target from day one to 1980 and on.
Returning to Geithner’s Public Private Partnership Investment Program (PPPIP), it would permit worthless or semi-worthless debt paper on the books of these “everything banks” to be bought up by taxpayer dollars at some 80 or 90 cents on the dollar, then turned over as assets for the very offshore hedge funds that have played such a major role in the unfolding of the financial debacle. Because the stakes are so great, and the president himself seems like he’s listening to the wrong people, notice must be taken, now. Promises were made to the American people to protect their assets.
This PPPIP is really an extension of Paulson’s TARP, throwing a trillion dollars in the air for hedge fund grabs. Meanwhile, the “investors” themselves would only put up a tiny fraction of the capital. The lion’s share would come from taxpayer money, pumped through the Treasury Department and the Federal Reserve. This is part of a continuing financial conspiracy. Also, to the extent that any private funds are railroaded into this black hole in financial space, it further dries up private funds for any kind of productive investment.
Its object is to force the government to come up with one giveaway program after another, which could easily end up creating massive hyperinflation.
Derivatives themselves were introduced in October of 1987, on the heels of a bust as big as the Depression of 1929, by none other than former Fed “Guru” Alan Greenspan. They amounted to nothing more really than a form of casino gambling. We can thank Greenspan and his derivatives for much of the financial devastation we see around us, particularly the AIG Financial Products disgrace.
The question now is why would we want to light a financial flame under derivative speculation with another trillion dollars from the PPPIP hedge fund bonanza, and in so doing set the global financial markets on fire? Will President Obama take hold of this situation and realize his presidency and his administration are dancing on the edge. To tie this nearly worthless mortgage paper to the economy, this paper tied to a derivatives market valued in the hundreds of trillions, dwarfing the market itself, would be to sink our economy and the world economy with it. Cut the cord.
What needs to be done is to look at the banks through the Glass-Steagall lens. Those parts of the banks that meet with Glass-Steagall standards should be protected, and be protected with available credit, not with “buy-offs.” The garbage securities should simply be frozen and saved for later inspection. We can’t bail out the garbage. It will bankrupt the United States. In fact, as Lyndon LaRouche suggests, this would be an excellent time to have a bankruptcy reorganization.
The alternative is a financial meltdown, followed by major citizen blowback, followed by the beginning of the end. And it ain’t gonna be pretty. Not for Obama, Pelosi, Frank, Geithner, Summers and the whole gang! So stop the PPPIP now!