Sunday, September 27, 2009

Was the Financial Crisis a Fall or a Push?

http://www.webofdebt.com/articles/economic9-11.php
ECONOMIC 9-11:
DID LEHMAN BROTHERS FALL OR WAS IT PUSHED?
Ellen Brown, September 7th, 2009

A year after the bankruptcy of Lehman Brothers on September 15, 2008, questions still swirl around its collapse. Lawrence MacDonald, whose book A Colossal Failure of Common Sense came out in July 2009, maintains that the bank was not in substantially worse shape than other major Wall Street banks. He says Lehman was just “put to sleep. They put the pillow over the face of Lehman Brothers and they put her to sleep.” The question is, why?

The Lehman bankruptcy is widely considered to be the watershed event that changed the rules of the game for those Wall Street banks considered “too big to fail.” The bankruptcy option was ruled out once and for all. The taxpayers would have to keep throwing money at the banks, no matter how corrupt, ill-managed or undeserving. As Dean Baker noted in April 2009:

“Geithner has supposedly ruled out the bankruptcy option because when he, along with Henry Paulson and Ben Bernanke, tried letting Lehman Brothers go under last fall, it didn’t turn out very well. Of course, it is not necessary to go the route of an uncontrolled bankruptcy that Geithner and Co. pursued with Lehman. . . . [But] the Geithner crew insists that there are no alternatives to his plan; we have to just keep giving hundreds of billions of dollars to the banks . . . , further enriching the bankers who wrecked the economy.”

Although Lehman Brothers filed for bankruptcy on Monday, September 15, 2008, it was actually “bombed” on September 11, when the biggest one-day drop in its stock and highest trading volume occurred before bankruptcy. Lehman CEO Richard Fuld maintained that the 158 year old bank was brought down by unsubstantiated rumors and illegal naked short selling. Although short selling (selling shares you don’t own) is legal, the short seller is required to have shares lined up to borrow and replace to cover the sale. Failure to buy the shares back in the next three trading days is called a “fail to deliver.” Christopher Cox, who was chairman of the Securities and Exchange Commission in 2008, said in a July 2009 article that naked short selling “can allow manipulators to force prices down far lower than would be possible in legitimate short-selling conditions.” By September 11, 2008, according to the SEC, as many as 32.8 million Lehman shares had been sold and not delivered – a 57-fold increase over the peak of the prior year. For a very large company like Lehman, with plenty of “float” (available shares for trading), this unprecedented number was highly suspicious and warranted serious investigation. But the SEC, which was criticized for failing to follow up even on tips that Bernie Madoff’s business was a ponzi scheme, has yet to announce the results of any investigation.

More Questions
Other questions about the Lehman collapse are raised in David Wessel’s July 2009 book In Fed We Trust. Why was Bear Stearns saved from bankruptcy but Lehman Brothers was not? How could the decision makers not realize the dire consequences of letting Lehman go down?

One possible explanation is that they actually thought the bank would be bought out at the last minute, just as Bear Stearns was. In both cases, the parties worked feverishly over the weekend after the stock’s collapse to try to negotiate a deal. For Bear Stearns, the negotiations succeeded, with the help of the New York Federal Reserve, which provided the loan used by JPMorgan Chase to complete the deal. With Lehman, however, the interested buyer was British, and the help that was needed was from the UK Chancellor of the Exchequer, Alistair Darling. The weekend after the September 11 stock collapse, intense negotiations were pursued with Barclays Bank, which was prepared to underwrite Lehman’s debts; but it needed a waiver from British regulators of a rule requiring shareholder approval. Negotiations continued until the market was getting ready to open in Japan on Sunday, but UK Chancellor of the Exchequer Alistair Darling would not give the necessary waiver. He said something to the effect that he did not want to infect Britain with America’s cancer. The sentiment was understandable, but the question was, why did he wait until it was too late for the Treasury or the Federal Reserve to move in with other arrangements?

The issue takes on more significance in light of the fact that Chancellor Darling played a similar role in another 9-11 collapse the previous year. On September 11, 2007, frantic customers were lining up outside Northern Rock, the UK’s fifth largest mortgage lender, in the first British bank run in 141 years. The bank’s shares plunged 31% in a single day. Like the collapse of Lehman Brothers in the U.S., the bankruptcy of Northern Rock changed the rules of the game. Britain’s major banks too would now be saved at any cost, in order to avoid the loss of customer confidence, panic and bank runs that could precipitate a 1929-style market crash.

With Northern Rock, as with Lehman Brothers, Alistair Darling could have saved the day but backed down. Northern Rock had a willing buyer, Lloyds TSB; but the buyer needed a loan from the Bank of England, which the Bank’s Governor, Mervyn King, had denied. Darling was advised by his staff to overrule the Governor and grant the loan, but this would have cost political capital for UK Prime Minister Gordon Brown, who had been widely lauded for giving the Bank of England its independence in 1997.

Brown is criticized domestically for precipitating the financial crisis with errors made as Chancellor of the Exchequer before he became Prime Minister. Critics maintain the British Treasury has abdicated its responsibility as the financial overseer of the British economy to the Bank of England, which in many ways controls the government, because its advice is always followed regarding the British budget. The whole scenario suggests that the much-vaunted virtues of an independent central bank are overblown. Some economists, including Milton Friedman and Ben Bernanke, blame poor policymaking by an independent Federal Reserve for bringing on the Great Depression of the 1930s.

Shock Therapy?
According to Representative Paul Kanjorski, speaking on C-SPAN in January 2009, the collapse of Lehman Brothers precipitated a $550 billion run on the money market funds on Thursday, September 18. This was the dire news that Treasury Secretary Henry Paulson presented to Congress behind closed doors, prompting Congressional approval of Paulson’s $700 billion bank bailout despite deep misgivings. It was the sort of “shock therapy” discussed by Naomi Klein in her book The Shock Doctrine, in which a major crisis prompts hasty emergency action involving the relinquishment of rights or funds that would otherwise be difficult to pry loose from the citizenry.

Like the “bombing” of Lehman stock on September 11, the $550 billion money market run was suspicious. The stock market had plunged when Lehman filed for bankruptcy on September 15, but it actually went up on September 16. Why did the money market wait until September 18 to collapse? A report by the Joint Economic Committee pointed to the fact that the $62 billion Reserve Primary Fund had “broken the buck” (fallen below a stable $1 per share) due to its Lehman investments; but that had occurred on September 15, and the fund had suspended redemptions for the following week. What dire reversal happened on September 17? According to the SEC, it was another record day for illegal naked short selling. Failed trades climbed to 49.7 million – 23% of Lehman trades.

The Larger Question Is Why?
All of this suggests that Lehman Brothers did not just fall over the brink but was pushed. Judge James Peck, who presided in the bankruptcy proceedings, said “Lehman Brothers became a victim, in effect the only true icon to fall in a tsunami that has befallen the credit markets.”

If Lehman was indeed sacrificed, who pushed it and to what end? Some critics point to Henry Paulson and his cronies at Goldman Sachs, Lehman’s arch rival. Goldman certainly came out on top after Lehman’s demise, but there are other possibilities as well, involving more global players. The month after Lehman collapsed, Gordon Brown and the EU leaders called for using the financial crisis as an opportunity to radically enhance the regulatory power of global institutions. Brown spoke of “a new global financial order,” echoing the “new world order” referred to by globalist banker David Rockefeller when he said in 1994:

“We are on the verge of a global transformation. All we need is the right major crisis and the nations will accept the new world order.”

Richard Haas, President of the U.S. Council on Foreign Relations, wrote in 2006:

“Globalisation . . . implies that sovereignty is not only becoming weaker in reality, but that it needs to become weaker.”

Sovereignty is one of these cherished rights that nations will give up only with “the right major crisis.” Gordon Brown put it like this:

“Sometimes it takes a crisis for people to agree that what is obvious and should have been done years ago, can no longer be postponed. . . . We must create a new international financial architecture for the global age.”

In April 2009, Gordon Brown and Alistair Darling hosted the G20 summit in London, which focused on the financial crisis. A global currency issue was approved, and an international Financial Stability Board was agreed to as global regulator, to be based in the controversial Bank for International Settlements in Basel, Switzerland. The international bankers who caused the financial crisis are indeed capitalizing on it, consolidating their power in “a new global financial order” that gives them top-down global control. Just some food for thought as September 11 rolls around again.

Ellen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and “the money trust.” She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her earlier books focused on the pharmaceutical cartel that gets its power from “the money trust.” Her eleven books include Forbidden Medicine, Nature’s Pharmacy (co-authored with Dr. Lynne Walker), and The Key to Ultimate Health (co-authored with Dr. Richard Hansen). Her websites are www.webofdebt.com and www.ellenbrown.com.


http://www.webofdebt.com/articles/dollar-deception.php

DOLLAR DECEPTION:
HOW BANKS SECRETLY CREATE MONEY
Ellen Brown, July 3rd, 2007
http://www.webofdebt.com/articles/dollar-deception.php

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It has been called "the most astounding piece of sleight of hand ever invented." The creation of money has been privatized, usurped from Congress by a private banking cartel. Most people think money is issued by fiat by the government, but that is not the case. Except for coins, which compose only about one one-thousandth of the total U.S. money supply, all of our money is now created by banks. Federal Reserve Notes (dollar bills) are issued by the Federal Reserve, a private banking corporation, and lent to the government.1 Moreover, Federal Reserve Notes and coins together compose less than 3 percent of the money supply. The other 97 percent is created by commercial banks as loans.2

Don't believe banks create the money they lend? Neither did the jury in a landmark Minnesota case, until they heard the evidence. First National Bank of Montgomery vs. Daly (1969) was a courtroom drama worthy of a movie script.3 Defendant Jerome Daly opposed the bank's foreclosure on his $14,000 home mortgage loan on the ground that there was no consideration for the loan. "Consideration" ("the thing exchanged") is an essential element of a contract. Daly, an attorney representing himself, argued that the bank had put up no real money for his loan. The courtroom proceedings were recorded by Associate Justice Bill Drexler, whose chief role, he said, was to keep order in a highly charged courtroom where the attorneys were threatening a fist fight. Drexler hadn't given much credence to the theory of the defense, until Mr. Morgan, the bank's president, took the stand. To everyone's surprise, Morgan admitted that the bank routinely created money "out of thin air" for its loans, and that this was standard banking practice. "It sounds like fraud to me," intoned Presiding Justice Martin Mahoney amid nods from the jurors. In his court memorandum, Justice Mahoney stated:

Plaintiff admitted that it, in combination with the Federal Reserve Bank of Minneapolis, . . . did create the entire $14,000.00 in money and credit upon its own books by bookkeeping entry. That this was the consideration used to support the Note dated May 8, 1964 and the Mortgage of the same date. The money and credit first came into existence when they created it. Mr. Morgan admitted that no United States Law or Statute existed which gave him the right to do this. A lawful consideration must exist and be tendered to support the Note.
The court rejected the bank's claim for foreclosure, and the defendant kept his house. To Daly, the implications were enormous. If bankers were indeed extending credit without consideration – without backing their loans with money they actually had in their vaults and were entitled to lend – a decision declaring their loans void could topple the power base of the world. He wrote in a local news article:

This decision, which is legally sound, has the effect of declaring all private mortgages on real and personal property, and all U.S. and State bonds held by the Federal Reserve, National and State banks to be null and void. This amounts to an emancipation of this Nation from personal, national and state debt purportedly owed to this banking system. Every American owes it to himself . . . to study this decision very carefully . . . for upon it hangs the question of freedom or slavery.
Needless to say, however, the decision failed to change prevailing practice, although it was never overruled. It was heard in a Justice of the Peace Court, an autonomous court system dating back to those frontier days when defendants had trouble traveling to big cities to respond to summonses. In that system (which has now been phased out), judges and courts were pretty much on their own. Justice Mahoney, who was not dependent on campaign financing or hamstrung by precedent, went so far as to threaten to prosecute and expose the bank. He died less than six months after the trial, in a mysterious accident that appeared to involve poisoning.4 Since that time, a number of defendants have attempted to avoid loan defaults using the defense Daly raised; but they have met with only limited success. As one judge said off the record:

If I let you do that – you and everyone else – it would bring the whole system down. . . . I cannot let you go behind the bar of the bank. . . . We are not going behind that curtain!5
From time to time, however, the curtain has been lifted long enough for us to see behind it. A number of reputable authorities have attested to what is going on, including Sir Josiah Stamp, president of the Bank of England and the second richest man in Britain in the 1920s. He declared in an address at the University of Texas in 1927:

The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in inequity and born in sin . . . . Bankers own the earth. Take it away from them but leave them the power to create money, and, with a flick of a pen, they will create enough money to buy it back again. . . . Take this great power away from them and all great fortunes like mine will disappear, for then this would be a better and happier world to live in. . . . But, if you want to continue to be the slaves of bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit.
Robert H. Hemphill, Credit Manager of the Federal Reserve Bank of Atlanta in the Great Depression, wrote in 1934:

We are completely dependent on the commercial Banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the Banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is. It is the most important subject intelligent persons can investigate and reflect upon.6
Graham Towers, Governor of the Bank of Canada from 1935 to 1955, acknowledged:

Banks create money. That is what they are for. . . . The manufacturing process to make money consists of making an entry in a book. That is all. . . . Each and every time a Bank makes a loan . . . new Bank credit is created -- brand new money.7
Robert B. Anderson, Secretary of the Treasury under Eisenhower, said in an interview reported in the August 31, 1959 issue of U.S. News and World Report:

[W]hen a bank makes a loan, it simply adds to the borrower's deposit account in the bank by the amount of the loan. The money is not taken from anyone else's deposit; it was not previously paid in to the bank by anyone. It's new money, created by the bank for the use of the borrower.
How did this scheme originate, and how has it been concealed for so many years? To answer those questions, we need to go back to the seventeenth century.



The Shell Game of the Goldsmiths

In seventeenth century Europe, trade was conducted primarily in gold and silver coins. Coins were durable and had value in themselves, but they were hard to transport in bulk and could be stolen if not kept under lock and key. Many people therefore deposited their coins with the goldsmiths, who had the strongest safes in town. The goldsmiths issued convenient paper receipts that could be traded in place of the bulkier coins they represented. These receipts were also used when people who needed coins came to the goldsmiths for loans.

The mischief began when the goldsmiths noticed that only about 10 to 20 percent of their receipts came back to be redeemed in gold at any one time. They could safely "lend" the gold in their strongboxes at interest several times over, as long as they kept 10 to 20 percent of the value of their outstanding loans in gold to meet the demand. They thus created "paper money" (receipts for loans of gold) worth several times the gold they actually held. They typically issued notes and made loans in amounts that were four to five times their actual supply of gold. At an interest rate of 20 percent, the same gold lent five times over produced a 100 percent return every year, on gold the goldsmiths did not actually own and could not legally lend at all. If they were careful not to overextend this "credit," the goldsmiths could thus become quite wealthy without producing anything of value themselves. Since only the principal was lent into the money supply, more money was eventually owed back in principal and interest than the townspeople as a whole possessed. They had to continually take out loans of new paper money to cover the shortfall, causing the wealth of the town and eventually of the country to be siphoned into the vaults of the goldsmiths-turned-bankers, while the people fell progressively into their debt.8

Following this model, in nineteenth century America, private banks issued their own banknotes in sums up to ten times their actual reserves in gold. This was called "fractional reserve" banking, meaning that only a fraction of the total deposits managed by a bank were kept in "reserve" to meet the demands of depositors. But periodic runs on the banks when the customers all got suspicious and demanded their gold at the same time caused banks to go bankrupt and made the system unstable. In 1913, the private banknote system was therefore consolidated into a national banknote system under the Federal Reserve (or "Fed"), a privately-owned corporation given the right to issue Federal Reserve Notes and lend them to the U.S. government. These notes, which were issued by the Fed basically for the cost of printing them, came to form the basis of the national money supply.

Twenty years later, the country faced massive depression. The money supply shrank, as banks closed their doors and gold fled to Europe. Dollars at that time had to be 40 percent backed by gold, so for every dollar's worth of gold that left the country, 2.5 dollars in credit money also disappeared. To prevent this alarming deflationary spiral from collapsing the money supply completely, in 1933 President Franklin Roosevelt took the dollar off the gold standard. Today the Federal Reserve still operates on the "fractional reserve" system, but its "reserves" consist of nothing but government bonds (I.O.U.s or debts). The government issues bonds, the Federal Reserve issues Federal Reserve Notes, and they basically swap stacks, leaving the government in debt to a private banking corporation for money the government could have issued itself, debt-free.



Theft by Inflation

M3, the broadest measure of the U.S. money supply, shot up from $3.7 trillion in February 1988 to $10.3 trillion 14 years later, when the Fed quit reporting it. Why the Fed quit reporting it in March 2006 is suggested by John Williams in a website called "Shadow Government Statistics" (shadowstats.com), which shows that by the spring of 2007, M3 was growing at the astounding rate of 11.8 percent per year. Best not to publicize such figures too widely! The question posed here, however, is this: where did all this new money come from? The government did not step up its output of coins, and no gold was added to the national money supply, since the government went off the gold standard in 1933. This new money could only have been created privately as "bank credit" advanced as loans.

The problem with inflating the money supply in this way, of course, is that it inflates prices. More money competing for the same goods drives prices up. The dollar buys less, robbing people of the value of their money. This rampant inflation is usually blamed on the government, which is accused of running the dollar printing presses in order to spend and spend without resorting to the politically unpopular expedient of raising taxes. But as noted earlier, the only money the U.S. government actually issues are coins. In countries in which the central bank has been nationalized, paper money may be issued by the government along with coins, but paper money still composes only a very small percentage of the money supply. In England, where the Bank of England was nationalized after World War II, private banks continue to create 97 percent of the money supply as loans.9

Price inflation is only one problem with this system of private money creation. Another is that banks create only the principal but not the interest necessary to pay back their loans. Since virtually the entire money supply is created by banks themselves, new money must continually be borrowed into existence just to pay the interest owed to the bankers. A dollar lent at 5 percent interest becomes 2 dollars in 14 years. That means the money supply has to double every 14 years just to cover the interest owed on the money existing at the beginning of this 14 year cycle. The Federal Reserve's own figures confirm that M3 has doubled or more every 14 years since 1959, when the Fed began reporting it. 10 That means that every 14 years, banks siphon off as much money in interest as there was in the entire economy 14 years earlier. This tribute is paid for lending something the banks never actually had to lend, making it perhaps the greatest scam ever perpetrated, since it now affects the entire global economy. The privatization of money is the underlying cause of poverty, economic slavery, underfunded government, and an oligarchical ruling class that thwarts every attempt to shake it loose from the reins of power.

This problem can only be set right by reversing the process that created it. Congress needs to take back the Constitutional power to issue the nation's money. "Fractional reserve" banking needs to be eliminated, limiting banks to lending only pre-existing funds. If the power to create money were returned to the government, the federal debt could be paid off, taxes could be slashed, and needed government programs could be expanded. Contrary to popular belief, paying off the federal debt with new U.S. Notes would not be dangerously inflationary, because government securities are already included in the widest measure of the money supply. The dollars would just replace the bonds, leaving the total unchanged. If the U.S. federal debt had been paid off in fiscal year 2006, the savings to the government from no longer having to pay interest would have been $406 billion, enough to eliminate the $390 billion budget deficit that year with money to spare. The budget could have been met with taxes, without creating money out of nothing either on a government print press or as accounting entry bank loans. However, some money created on a government printing press could actually be good for the economy. It would be good if it were used for the productive purpose of creating new goods and services, rather than for the non-productive purpose of paying interest on loans. When supply (goods and services) goes up along with demand (money), they remain in balance and prices remain stable. New money could be added without creating price inflation up to the point of full employment. In this way Congress could fund much-needed programs, such as the development of alternative energy sources and the expansion of health coverage, while actually reducing taxes.


___________________ 1 Wright Patman, A Primer on Money (Government Printing Office, prepared for the Sub-committee on Domestic Finance, House of Representatives, Committee on Banking and Currency, 88th Congress, 2nd session, 1964).

2 See Federal Reserve Statistical Release H6, "Money Stock Measures," www.federalreserve.gov/releases/H6/20060223 (February 23, 2006); "United States Mint 2004 Annual Report," www.usmint.gov; Ellen Brown, Web of Debt, www.webofdebt.com (2007), chapter 2.

3 "A Landmark Decision," The Daily Eagle (Montgomery, Minnesota: February 7, 1969), reprinted in part in P. Cook, "What Banks Don't Want You to Know," www9.pair.com/xpoez/money/cook (June 3, 1993).

4 See Bill Drexler, "The Mahoney Credit River Decision," www.worldnewsstand.net/money/mahoney-introduction.html.

5 G. Edward Griffin, "Debt-cancellation Programs," www.freedomforceinternational.org (December 18, 2003).

6 In the Foreword to Irving Fisher, 100% Money (1935), reprinted by Pickering and Chatto Ltd. (1996).

7 Quoted in "Someone Has to Print the Nation's Money . . . So Why Not Our Government?", Monetary Reform Online, reprinted from Victoria Times Colonist (October 16, 1996).

8 Chicago Federal Reserve, "Modern Money Mechanics" (1963), originally produced and distributed free by the Public Information Center of the Federal Reserve Bank of Chicago, Chicago, Illinois, now available on the Internet at http://landru.i-link-2.net/monques/mmm2.html; Patrick Carmack, Bill Still, The Money Masters: How International Bankers Gained Control of America (video, 1998), text at http://users.cyberone.com.au/myers/money-masters.html.

9 James Robertson, John Bunzl, Monetary Reform: Making It Happen (2003), www.jamesrobertson.com, page 26.

10 Board of Governors of the Federal Reserve, "M3 Money Stock (discontinued series)," http://research.stlouisfed.org/fred2/data/M3SL.txt.


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Ellen Brown, J.D., developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and "the money trust." She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Brown's eleven books include the bestselling Nature's Pharmacy, co-authored with Dr. Lynne Walker, which has sold 285,000 copies.

How can China’s stimulus plan be working so well, when ours is barely working at all?

http://www.webofdebt.com/articles/secret_of_china.php

THE SECRET OF CHINA’S MIRACLE ECONOMY:
THE GOVERNMENT OWNS THE BANKS RATHER THAN THE REVERSE
Ellen Brown, August 17th, 2009
www.webofdebt.com/articles/secret_of_china.php

“The banks -- hard to believe in a time when we’re facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. They frankly own the place.”

-- U.S. Senator Dick Durbin, Democratic Party Whip, April 30, 2009

While the U.S. spends trillions of dollars to bail out its banking system, leaving its economy to languish, China is being called a “miracle economy” that has decoupled from the rest of the world. As the rest of the world sinks into the worst recession since the 1930s, China has maintained a phenomenal 8% annual growth rate. Those are the reports, but commentators are dubious. They ask how that growth is possible, when other countries relying heavily on exports have suffered major downturns and remain in the doldrums. Economist Richard Wolff skeptically observes:

We now have a situation in the world where we have a global capitalist crisis. Everywhere, consumption is down. Everywhere, people are buying fewer goods, including goods from China. How is it possible that in that society, so dependent on the world economy, they could now have an explosive growth? Their stock market is now 100 percent higher than at its low -- nothing remotely like that hardly anywhere in the world, certainly not in the United States or Europe. How is that possible? In order to believe what the Chinese are saying, you would have to agree that in a matter of months, at most a year, no more, they have been able to transform their economy from an export-based powerhouse to a domestically focused industrial engine. Nowhere in the world has that ever taken less than decades.”

How can China’s stimulus plan be working so well, when ours is barely working at all? The answer may be simple: China has not let its banking system run roughshod over its productive economy. Chinese banks work for the people rather than the reverse. So says Samah El-Shahat, a presenter for Al Jazeera English who has a doctorate in economics from the University of London. In an August 10 article titled “China Puts People Before Banks,” she writes:

“China is the one leading economy where the divide – the disconnect between its financial sector and the world normal Chinese people and their businesses inhabit – doesn’t exist. Both worlds are booming again and this is due to the way the government handled its banks. China hasn’t allowed its banking sector to become so powerful, so influential, and so big that it can call the shots or highjack the bailout. In simple terms, the government preferred to answer to its people and put their interests first before that of any vested interest or group. And that is why Chinese banks are lending to the people and their businesses in record numbers.”

What Wolff calls a “global capitalist crisis” is actually a credit crisis; and in China, unlike in the U.S., credit has been flowing freely, not just to the financial sector but to industry and local government. State-owned banks have massively increased lending, with local governments and state enterprises borrowing on a huge scale. The People’s Bank of China estimates that total loans for the first half of 2009 were $1.08 trillion, 50% more than the amount of loans Chinese banks issued in all of 2008. The U.S. Federal Reserve has also engaged in record levels of lending, but its loans have gone chiefly to bail out the financial sector itself, leaving Main Street high and dry. Writes El-Shahat:

“In the UK and US, the financial sector is booming, while the world of normal people seems to be going from bad to worse, unemployment is high, businesses are folding and house foreclosures are still taking place. Wall Street and Main Street might as well be existing on different planets. And this is in large part because banks are still not lending money to the people. In the UK and US, banks have captured all the money from the taxpayers and the cheap money from quantitative easing from central banks. They are using it to shore up, and clean up their balance sheets rather than lend it to the people. The money has been hijacked by the banks, and our governments are doing absolutely nothing about that. In fact, they have been complicit in allowing this to happen.”

Cracks in the Chinese Wall?

The Chinese economy is not perfect. The push to make profits, particularly from foreign investment capital, has encouraged speculative ventures, with a great deal of money going into high-rise apartments and other real estate developments that most people cannot afford. Chinese workers are now complaining of too much capitalism, since they are having to pay for housing, health care and higher education formerly picked up by the State. And while efforts are being made to make more loans available to medium-sized and small businesses, state-owned businesses and large corporations are still getting most of the loans. This is because the banks have been told to tighten their lending standards, and these larger entities are safer credit risks.

Wolff thinks China’s “miracle” is a bubble that is about to burst, with catastrophic consequences. Historically, however, when bubbles have collapsed suddenly it has been because they were punctured by speculators. When the Japanese stock market bubble burst in 1990, and when other Asian countries followed in 1998, it was because foreign speculators were able to attack their currencies with exotic derivatives. The victims tried to defend by buying up their own national currencies with their foreign currency reserves, but the reserves were soon exhausted. Today, China has accumulated so much in the way of dollar reserves that it would be very difficult for speculators to do the same thing to the Chinese stock market. A gradual stock market decline due to natural market forces is something an economy can take in stride.

Economic Role Reversal?
For the time being, at least, China’s stimulus plan is clearly working better than those of the U.S. and the U.K.; and a chief reason it is working better is that the government has a grip on its banking sector. The government can operate the banks’ credit mechanisms in a way that serves public enterprise and trade, because it actually owns the banks, or most of them. Ironically, that feature of China’s economy may have allowed it to get closer to the original American capitalist ideal than the United States itself. China is often referred to as communist, but it has never really been communist as defined in the textbooks, and it is far less so now than formerly. Communist Party leader Deng Xiaoping, who opened China to foreign investment after 1978, famously said that it doesn’t matter what color the cat is, so long as it catches mice. Whatever the Chinese economy is called, today it provides a framework that effectively encourages entrepreneurs.

Jim Rogers is an expatriate American investor and financial commentator based in Singapore. He wrote in a 2004 article titled “The Rise of Red Capitalism”:

“Some of the best capitalists in the world live and work in Communist China. . . . No matter how long China’s leaders persist in calling themselves Communists, they seem quite intent on creating the world’s dominant capitalist economy.”

Meanwhile, the U.S. has sunk into what Rogers calls “socialism for the rich.” When ordinary U.S. businesses go bankrupt, they are left to deal with the asphalt jungle on their own; but when banks considered “too big to fail” go bankrupt, we the taxpayers pay the losses while the banks’ owners keep the profits and are allowed to continue speculating with them. The bailout of Wall Street with taxpayer money represents a radical departure from capitalist principles, one that has changed the face of the American economy. The capitalism we were taught in school involved Mom and Pop stores, single-family farms, and small entrepreneurs competing on a level playing field. The government’s role was to set the rules and make sure everyone played fair. But that is not the sort of capitalism we have today. The Mom and Pop stores have been squeezed out by giant chain stores and mega-industries; the small private farms have been bought up by multinational agribusinesses; and Wall Street banks have gotten so powerful that Congressmen are complaining that the banks now own Congress. Giant banks and corporations have rewritten the rules for their own ends. Healthy competition has been replaced by a form of predator capitalism in which small fish are systematically swallowed up by sharks. The result has been an ever-widening gap between rich and poor that represents the greatest transfer of wealth in history.

The Best of Both Worlds

The Chinese solution to a failed banking system would be to nationalize the banks themselves, not just their bad debts. If the U.S. were to adopt that approach, we the people would actually get something of value for our investment – a stable and accountable banking system that belongs to the people. If the word “nationalize” sounds un-American, think “publicly-owned and operated for the benefit of the public,” like public libraries, public parks, and public courts. We need to get our dollars out of Wall Street and back on Main Street, and we can do that only by breaking up our out-of-control private banking monopoly and returning control over money and credit to the people themselves. If the Chinese can have the best of both worlds, so can we.

Ellen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and “the money trust.” She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her earlier books focused on the pharmaceutical cartel that gets its power from “the money trust.” Her eleven books include Forbidden Medicine, Nature’s Pharmacy (co-authored with Dr. Lynne Walker), and The Key to Ultimate Health (co-authored with Dr. Richard Hansen). Her websites are www.webofdebt.com and www.ellenbrown.com.

Sunday, September 20, 2009

Smart Obama and Dumb Bush gave 700 billion to Economic Terrorist "Banksters [who] have Robbed well over $100 Billion Dollars from Taxpayers"

"Since when is threatening the detonation of the economy unless 700 billion is handed over immediately not economic terrorism."

http://market-ticker.denninger.net/archives/1364-America-Is-Running-Out-Of-Rope.html

America Is Running Out Of Rope
Oh no, we don't cheat:

Goldman Sachs Group Inc. research analyst Marc Irizarry's published rating on mutual-fund manager Janus Capital Group Inc. was a lackluster "neutral" in early April 2008. But at an internal meeting that month, the analyst told dozens of Goldman's traders the stock was likely to head higher, company documents show.

Nothing like selling bonds out the front door and shorting them on your prop desk, right? Oh wait, Goldman did that too!

Securities laws require firms like Goldman to engage in "fair dealing with customers," and prohibit analysts from issuing opinions that are at odds with their true beliefs about a stock. Steven Strongin, Goldman's stock research chief, says no one gains an unfair advantage from its trading huddles, and that the short-term-trading ideas are not contrary to the longer-term stock forecasts in its written research.

Riiiight. And I'm the Easter Bunny.

The tips usually go to top clients who have expressed interest in having the information and have short-term investment horizons, he says. Goldman doesn't want to overload other clients with information that isn't relevant to them, he says. "We are not in the business of serving thousands of retail customers," he says.

Let me guess: They also go to the proprietary (inside) traders that are gambling with the firm's money (and your "liquidity guarantee" as a taxpayer, since they're a BANK now.) Am I right?

Research-department employees prepare telephone scripts, then call top clients, typically several hours after the meeting has ended. Goldman says its in-house traders are prohibited from trading on the tips until after they've been relayed to clients.

Documents reviewed by the Journal indicate that anywhere from six to 60 clients are contacted, depending on the investment.

Oh, its even better. Let's see, we have a computer program that's engaged in a bit of "high frequency trading", and we have the guys that run our own trading (which includes that) that are in on the recommendations and they even know when these recommendations go out to the "select customers"!

There's nothing wrong with this, right? Nothing wrong with having a "slight edge' in knowing up front what's going to be said to these "good" (read: they have and swing around lots of money) customers?

Pull the other one boys.

Last year, the Financial Industry Regulatory Authority, the industry's self-regulatory body, proposed new rules meant to clarify existing disclosure obligations under the rule requiring "fair dealing" with all clients. Firms could issue contradictory ratings as long as clients were told that such inconsistencies were possible.

Yeah, ok. Shall we hire some more foxes to guard that henhouse?

What sort of scheme-laced system do we have here? These institutions have sold securities out the front door they're shorting out the back (subprime mortgage bonds), they're disseminating "short-term opinions" that differ from their published research reports, and even better, their own proprietary trading desks are in on the latter, so if and when the move starts they can get in on the action with their "high frequency trading" too!

You won't hear CNBS talking about this, I'll wager. Nor will you hear them talk about their parent company discuss their lobbying expenditures - the highest of any company in the first quarter at a mind-blowing $7.2 million dollars. Zerohedge has provided a copy of the disclosure form, which reads like a who's who of "how to screw the consumer", including issues such as the Credit Card Bill of Rights, the disapproval resolution on the second half of TARP, proposed TARP reform and accountability, the mortgage reform and anti-predatory lending bill and more.

The disclosure does not tell you which side or exactly what position has been taken by these paid hacks, but that's not hard to figure out - no corporation is going to lobby for something that would cost it money (while spending copious amounts of money), so the direction of these "contacts" is clear on their face. Nothing more need be said.

This is a serious issue for all Americans, since allegedly the "fourth estate", that is, the media, is supposed to be a check and balance on government (and corporate) behavior. But what happens when the media is the corporation? When conglomerates become entwined in the news system to the point that anything that would go against the corporation is suppressed by that very same media? When editorial independence is lost?

I have (as have others) heard CNBS anchors "slip" in the past and say things on the air that strongly hint (or outright state) that their producers don't want a certain slant covered. One wonders whether that producer just had their phone ring - and it was the executive offices of GE on the other end.

Let's be clear: These banksters have robbed well over $100 billion dollars from taxpayers and citizens via various schemes in the last decade. These scams have included securitizing loans that they either knew or should have known were laced with fraud, in some cases shorting them while selling them on to other people. It includes outrageously-complex and intentionally-obfuscated securities "packages" for municipalities which have resulted in huge losses for the town (and huge fees and profits for the bank.) It has included marketing "auction rate" securities which were claimed to be as liquid and safe as cash, when in fact nothing of the sort was true. The schemes and scams run the gamut but at their core was the intentional obfuscation of the true nature of the risk embedded in these instruments so that the dupe (that would be you, your town, your state) would wind up losing money all for their benefit: you would enter into a complex swap transaction you didn't understand, you'd buy a bubble house with an OptionARM after being told you "definitely" could refinance before payments would go up, your kid was sold an expensive educational loan package without being told that it was unable to be discharged in bankruptcy, you were given a credit card with 27 pages of fine print, and buried somewhere in there was vague language letting the company jack your interest rate to anything it wanted - including the 36% it did jack it to - if you missed an electric bill by three days.

Then, when the game of musical chairs ended and all this debt that could not possibly be paid off started to default these very same banksters went to Congress through Paulson and Bernanke, the chiefs of the bankster scam parade, and in my opinion literally committed economic terrorism: hand over $2 trillion dollars hiding all but $700 billion, or we detonate the entirety of the economy and everyone literally starves.

How does this differ from an old-fashioned Al-Quaida terrorist who calls in a nuclear bomb threat? "Hand over $2 trillion dollars or New York City will be vaporized."

Hmmmmm... sounds kinda like the same thing to me!

Now let's juxtapose this with the fact that every Congressperson took an oath to defend The Constitution against all enemies, both foreign and domestic.

So riddle me this my fellow Americans: How is it that Bernanke, Paulson, Geithner, and both Presidents Bush and Obama are still free men instead of being housed at GITMO? How is it that on that fateful night in September of 2008 when Bernanke and Paulson "briefed" Congress and demanded $700 billion in ransom and a blank check to back-door an unlimited amount in "guarantees" and "pass-throughs" to their banking buddies the Sargeant At Arms was not immediately called to place these goons under arrest pending indictment and prosecution?

The next question is equally obvious and leads one down some pretty disturbing paths: If there is NOT ONE man or woman Congress who will discharge THEIR oath of office, is there anyone left in this country who took an identical oath that will?

The worst part is that it didn't end with payment of the ransom. No, the banks didn't come clean, they didn't clear their balance sheets, they didn't take their losses using the backstop they had managed to secure through threat of imminent economic doom.

On the contrary: They lied some more! They in fact lobbied Congress and had them bring pressure on FASB, threatening to legislate legalization of accounting fraud, and twisted FASB's arm into issuing what amounted to an executive order making legal any and all lies about asset valuation! We now know this happened because in point of fact the amount of loss that has been seen in the form of write-downs when banks fail has roughly doubled from last year to this, and these are not small numbers: we're talking about going from roughly 15% to roughly 35!

Who eats that? You do. The FDIC is required to make your deposit whole, but they "assess" (tax) the banks. Who pays? You do, of course: your bank re-orders your deposits and withdrawals to generate nearly forty billion dollars in "overdraft fees" and similar penalties over the last year, they jack your interest rate to the moon and drop your CD rate to 1% and less.

In the meantime as I pointed out last week your personal "interest spread" has ballooned - more than doubling against you. In terms of GDP and economic activity this has brought a structural near-2% subtraction to GDP that will be with us until the banks either confess and are wiped out OR they "work it off", with the latter option requiring more than a decade. California's unemployment rate reflects the outcome of this idiocy, having risen to 11.9% - our largest state.

And before you believe the "green shoot" mantra on housing, you better pay attention to the California home start numbers: Permits for July were down a staggering 47.4% over the prior year.

Nor does the "good news" end here. This Friday, after the market closed (of course) the Obama Administration confessed to what the CBO had said earlier this year: Over the next 10 years the government will add $9 trillion dollars to our public debt, up more than $2 trillion from their previous claims.

Let's be clear about this: This is not a "80%" increase. Oh no, its much worse than that. You see, about 40% of the debt is in fact held in what are called "intergovernment holdings" - that is, the scams known as Social Security and Medicare (the subject of another recent Ticker.) The externally-held debt today totals about $6 trillion dollars, so this "admission" means we're going to try to add 150% to that.

I say "try" because this year's interest payments are likely to total some $400 billion or so, and against a GDP of $13 trillionish (down from the peak) that is roughly 3% of GDP for interest cost. Today.

The sustainability of this level of debt (today) requires that interest rates not rise, for if they do so will the payments. And that's a problem because historically (over the last 100 years or so) every time a nation has gotten to around 6% of GDP for interest payments both its monetary and political systems have imploded. Argentina anyone?

BUT IF WE ACTUALLY ADD 150% TO THAT $6 TRILLION IN DEBT, EVEN IF INTEREST RATES DO NOT RISE, WE WILL EXCEED THIS CRITICAL LEVEL OF INTEREST PAYMENTS BY MORE THAN 50%. INDEED, WE WILL CROSS THE 6% THRESHOLD, BY MY ESTIMATES, SOME TIME IN 2012, AND THAT EVENT HAS A HIGH PROBABILITY OF DESTROYING OUR NATION OUTRIGHT.

You might think that all these bailouts and handouts would have produced a stable banking system. You'd have thought wrong. Chris Whalen of Institutional Risk Analytics has updated his bank ratings for the second quarter: they now rate 1,882 banks as "failing" (or just "F" if you prefer) which is up a whopping 16.5% from the end of March - just three months ago. The number of banks with "A" or "A+" ratings fell by 21% during the same time.

The problem is that "hide the bad stuff" games (no matter what particular sort of fraud you're engaged in) doesn't change the outcome - it just changes the when. The "what" doesn't change. That which is dead and decomposing simply stinks up the place more, since you refused to throw it out.

The good news is that some banks have raised capital during these past few months of investor optimism. But a host of operational problems remains at many institutions. In addition to loan losses and rock-bottom recovery rates on assets they’re trying to unload, for example, banks also face rising expenses (because they’re paying to carry properties that generate scant — or zero — revenue). All of this cuts significantly into earnings, which banks desperately need to bolster their battered financial positions.

Optimisim? You mean a stock market rocketshot based on lies, right? After all, if the true condition of these institutions did not improve, then where did the "optimism" come from if not false claims of solvency and good times just ahead? Never mind the statistical nasty: the majority of the daily volume on the stock exchanges over the last couple of months has been centered in a half-dozen "liars stocks" such as AIG and Citibank. A healthy rally? Uh, no; where's the volume-based broad support? Missing, that's where.

Of course these institutions issued stock into that sort of market environment. Why not? There was no reason not to - FASB gave them a pass after being literally told to sanction lying and fraudulent reports of asset values by Congress, and they complied. This in turn let them issue "glowing" first quarter earnings that were based on nothing other than one-time gains and lightening loss reserves based on better-than-previous valuations.

The rude awakening is that the cash-flow from these "assets" does not change with the stroke of a pen, however. You can't fake a deposit ticket for very long, and a non-performing asset (for instance, a homeowner who is living free in his house because he's not paying his mortgage!) is still a non-performing asset. Nothing changes that other than actual performance, and yet that performance is and remains missing.

The so-called pundits put it this way:

Meanwhile, in the United States, the Federal Reserve said the world's largest economy appeared to be "leveling out" and many economists see a second-half rebound.

It all adds up to an improving picture ahead of an economic summit next month in Pittsburgh of the world's top 20 industrial and developing economies.

Really? May I politely ask "how"?

The entire cusp of this rests here:

But until American consumers begin spending again, and so long as jobs are still being lost, the durability of any recovery is questionable. Major retailers reported this week that U.S. consumers are continuing to rein in spending on all but basics.

Despite slight recent improvements in many U.S. economic statistics, many consumers have not seen a change in their lives.

Nor will they on a durable basis until the fraud and scamming stops because they can't. The interest spread between savings and spending, as I noted above, has been driven to historic wide levels as a means of grifting off billions of dollars from consumers to cover up the banksters frauds! That's not money the banksters bonus out and thus spend into the economy either - it literally disappears into the black hole of fraudulent accounting and coverups!

Thus far there has been no appetite for putting a stop to this in Washington DC, but the proletariat are starting to figure it out - they've been had. Had on "stimulus", had on "TARP", had on so-called "health care reform", had on their CD rates going to the floor and their credit card rates going to the moon, had on everything.

It's all one gigantic scam, and anger is seething beneath the surface, as it should be. Youtube is exploding with videos of demonstrations at "Town Hall" meetings, and those protests are not just about Health Care. I've watched over two dozen of them so far, and in virtually every one TARP and Bailouts are being discussed as well.

The people have figured it out - they said not just no but hell no back in September and October, and Congress ignored them. The people correctly surmised that this was in fact economic terrorism and correctly told their Congressfolk NOT to pay the demanded ransom. Now we're seeing our nation systematically looted and destroyed and again, Congress is ignoring the people.

The people want justice. They want the grift and fraud excised. They want those who blew these huge bubbles for their own personal aggrandizement and profit while ripping off the common man to get their just desserts - an indictment and a prison sentence, not another billion-dollar bonus.

Most Americans understand that they were gullible, they fell for it, and they're partly responsible as a consequence. They "get it" in that regard - they came, they saw, they bought - even though they knew they couldn't pay.

But their acts were not those of lone rangers. They were goaded on at every corner - "you can afford this house", "let's qualify you to see how many bedrooms you can buy", "let's work a deal on this car", "here's another credit card with a $10,000 line", "here's a 1% OptionARM refinance with a $10,000 cash-out."

All of these hucksters knew full well that the so-called "consumer" was in fact a patsy. They ran their credit, they ran their assets, they ran their employment. In many cases the brokers and bankers even falsified the numbers themselves; I've seen proof of it myself in documents sent to me where the handwriting doesn't match the signatory or the printing of the applicant's name on the income declared. Who filled it in? Not the applicant.

The people are willing to take their pain. But they demand, with solid justification, that those who ripped them off also bear their pain for what they have done.

Washington has gone tone-deaf to the facts - an intentional deafness engendered by millions of dollars of campaign "contributions" (read: bribes) being handed out like candy, all financed by the people who are being robbed!

The banksters not only ripped everyone off and got bailed out after doing it by threatening to blow up the economic world BUT THEY ARE STILL RIPPING EVERYONE OFF TODAY and using a small piece of the grift to continue to buy Congress at the same time!

Not a damn thing has changed, except that we are lurching closer and closer to the cliff of national insolvency and both economic and political failure as a nation. The inability to fund the operating expenses of our government is quite possible. Social Security and Medicare have gone into deficit years earlier than expected and these programs have no money - they have only "IOUs" and to turn them back into money Treasury will have to sell more bonds.

But who will buy them? The Chinese? Why? Bernanke is lying about monetizing the debt - in fact he lied under oath - but the currency markets are not fooled.

The dollar is in the toilet and threatening to break all support levels. If it does, it may collapse to as low as 40, which will in turn rocket oil north to $300 or more and gasoline to $10!

If that happens it is too late to stop it and too late to reverse course. What we now know as a middle class will be reduced to sheer destitution - literal destitution.

What are the odds that, under this scenario, some of the billions of rounds of ammunition that have been purchased and stockpiled by Americans who have gotten rather "uneasy" over where our nation is going find their way into unlawful use? Rather high I wager. After all, the banksters may have bought Congress and the White House but they don't own the guns, and a desperate, hungry man is a dangerous man, especially when he was formerly a middle-class American with a good job who had his future, and that of his wife and children ruined as a direct consequence of the lawless, conniving acts of a handful of "elites" who ripped him off twice - first with his "OptionARM" that gnawed his arm off and then again by going to Washington, extorting more than $12 trillion in bailouts, handouts and guarantees with which they paid themselves bonuses instead of clearing their balance sheets!

Over a year ago I started writing and calling Congress, including letters I faxed to all 535 members. In it I called for Congress to put aside $200 billion dollars - a big fat wad of money - to cover the potential need to house, feed and clothe one quarter of this nation for up to 12 months.

I meant it then and I mean it now.

We are not on the cusp of recovery, we are on the precipice of disaster. Whether we avert it is an open question but this much is certain - if we wait until external funding disappears it will be too late to prepare and too late to act in furtherance of our nation's interests. When gasoline is $10/gallon as is heating oil the price of food will more than double, heating costs in the northeast will quadruple and millions will either starve, freeze to death or both. At the same time the ability to fund Social Security and Medicare will vanish - at the precise moment when it can't.

The economy cannot survive another commodity shock - Roubini agrees, and he sees the possibility - but he calls the potential cause "speculation."

Nonsense: there is nothing speculative about money printing and intentional currency debasement. This is an intentional act being promulgated by our government for the express purpose of papering over what has been the largest fraud and scam ever run in the history of mankind. The banks are indeed using this "profit opportunity" to buy and stockpile oil along with other commodities via both physical delivery and futures contracts, but this is not speculation - a bet made on an uncertain outcome.

Rather, it is a bet made on a CERTAIN outcome that is being created by the government as a DIRECT CONSEQUENCE of the demand (which was and is being met!) by the very same banksters to legalize the fraud and deceit that got us in this mess in the first place!

On the point of "greenback emissions" Warren Buffett has it right but a prescription to fix what ails us is missing, so I'll supply it: we must detoxify the drunk and lock up the bartenders, extortionists and their accomplices - all of them.

This means the end of "stimulus", it means the end of subsidization of grift and fraud, it means prosecution of those who have scammed throughout the last ten years, it means the cancellation of the so-called "guarantees" for the banking sector and it means a relentless cadre of regulators who go bank-to-bank - literally, to each and every one of them, marking every asset to the market and closing every last insolvent financial institution, no matter how large or small, barring for life from any financial role and prosecuting to the fullest extent of the law any executive in any firm that is found to have fraudulently overstated asset valuations, no matter by how much.

It means biting the bullet and recognizing that we cannot borrow our way to prosperity, nor can we solve a "declined" credit card problem by opening another one - either individually or as a nation.

It means Congress must force The Fed to disgorge every MBS they hold that does not have a full-faith-and-credit guarantee, we must allow real rates to rise in the economy and we must allow housing and other asset prices to contract to where they are supported by the underlying economic activity.

Yes, this means homes will get cheaper - a lot cheaper. So what? Those who don't own a house now or who get foreclosed upon would certainly like to buy a house at a lower price, not a higher one!

It means that we must stop the looting and start prosecuting, we must put Glass-Steagall back in place, and we must force all of these super-conglomerates to split off any trading and asset activities from their regulated banking counterparts.

We must repudiate all CDS contracts that cannot be proved to have 100% asset backing on a nightly margin basis, without exception. That means central-counterparty surveillance and clearing for all such instruments - period.

We must add criminal and civil liability to all so-called "securitizations" so those who sell garbage through either willful ignorance or intentional deceit cannot avoid liability and neither can the purchaser claim "ignorance" and we must ban all off-balance sheet vehicles, without exception.

We must add an "or else" to every regulatory law, so that the "or else" for robbing a bank by intentionally overstating asset valuations is the same (20 years) as when you rob that same bank with a gun. We must put an "or else" into The Federal Reserve Act, the OCC and OTS' chartering documents, the enabling law for the SEC and all other agencies so that those who allegedly serve the public are held to account when they knowingly look the other way or even actively conspire with lawless action in the institutions they regulate.

The People have and continue to speak, and they're pissed. It is long past time for Congress to get off its ass and perform its job - to represent the will of the people, not the cadre of lobbyists who continually press for more grift, more fraud, more scams and more lies.

We have come to the end of our rope as a nation and we must climb back up, even though it will be difficult, even though those who stole, cheated and robbed must be imprisoned, and even though the economic fallout has been and will be harsh.

We have no alternative in that under us there is no more rope but there is an an active volcano, and if we let go, we will not only fall but be consumed by the lava below, and if we try to hang on here, without excising the fraud and grift we will slip and fall to our deaths as the monkey on our back continually increases in weight.

It is time for Americans to demand that our government do the right thing, and it is time for Congress and The Administration to shut up and listen instead of prattling on about this or that add-on to the scam of the day.

Health Care "reform" is a laudable goal, but we cannot waste our time on that or indeed any other priority until we truly stabilize this nation's currency and economic system.

Monday, September 14, 2009

How to Teach Purity

By Richard Salbato

I was asked by many people to expand on my last Newsletter, Sins Against Purity Cause Wars. Father Bart believes we should start a movement within the Church on Purity and Dating. I love the idea, but personally I am a hermit and too involved with my own family to organize anything. I will, however, offer guidelines and suggestions for those teachers and priests who want to bring Purity and Virginity back to the Church. For over ten years now I have been writing Newsletters on Moral Theology because more people today go to Hell for sins against morals than any other reason. Some of those Newsletters are linked below.

I suppose the most controversial Newsletter I have ever written on Morals is one of the first I ever wrote. It was a result of people asking me why I did not get involved in the Right to Life Marches and Sit-ins that my friends were involved in. Quickly without even thinking I said, “Abortion is not the problem.” At the time I did not even know what I meant by that but I went home and wrote out the answer. That was 10 years ago. Today I tried to find it on my web site, but it disappeared so I re-posted it. Abortion is not the Problem

I’ll try to not repeat anything here that I have already written in the above document but these two Newsletters should be read together. In the Newsletter, Abortion is not the Problem, I make the point that dating is the mother of sins against the flesh in our times. I saw this in confession when I said that I promise to “avoid the mere occasion of sin”. I remembered the movie about Vincent Van Gogh when his friend said, “You paint to fast.” He snapped back: “You look to fast.”

Like most people when I saw that Padre Pio had separate confessions for men and women, even separate rooms, I though he was just a little too old fashioned. When I read that boys and girls never went to the same schools, I thought they were just old fashioned. When I learned about “going out parties”, I just thought they were old fashioned. When I learned about “finishing schools”, I just thought they were old fashioned. I watched old black and white movies from the 50s and 60s and saw that even when in love people never even touched, but thought how old fashioned that was. Perhaps I thought: “Maybe I am looking to fast.

Maybe people back then knew things we have forgotten. Maybe they were the smart ones and we are the stupid ones. Maybe I should investigate why they did what they did and why we do what we do. Maybe we are accepting as moral what is the root of immorality.

Lets look at the problem today of sex outside of marriage, homosexuality, the rise of divorces, the rise of people living together without marriage, the rise of pedophilia, the rise of abortions, and the lack of morals throughout society. Why has sex replaced love? Why is there a rise in frigidity among men and women?

Teaching Sexual Relationships

I teach my grandchildren, 13 years of age to 19 years of age, weekly religion classes. For adults I have structured classes but for teens I just answer questions. In this age bracket they want to know about relationships more than anything else. They want to live in the world but by God’s rules. This is hard. To understand how hard, you have to know the peer pressure and the need to be accepted. I had to first teach them what is natural to our nature and why it is good. God created what is natural for good reasons, but He also gave us the moral law that we might regulate what is natural. When you teach about sex, you must not make it a bad thing, because it is a wonderful and holy thing that God created.

I use the example of soil and dirt. Both are the same thing, but soil is in place used for what God intended. Dirt is soil out of place and not used for what God (nature) intended.

God created man to be attracted to women, and he starts this attraction at a very young age, 8 to 10 years old. Man does not know why but he just likes women. Women start younger because they mature much faster. A woman is sexually mature about 10 years sooner than man is. She is also more sexually aggressive. You are going to disagree with me right now, but I will explain this later.

God designed this in man and women because He said be fruitful and multiply. Even in the animal world it is almost emotionally and physically forced on animals to have sex for the continuation of the species. In the animal world we call this being “in heat” but we fail to see it in humans. We also fail to see the family structure of animals, birds and fish, and we think of family as a man made thing rather than something natural to our nature. When ever we violate what is natural to our nature, we end with a disoriented nature, a sick nature.

God designed woman to mature physically and mentally faster than man, because the nature of man is not so social or loving, whereas woman is both social and loving at an early age. It takes longer for man to mature and to even be able to support a family and wife. Because of this difference I advise both men and women to keep this ten year difference in mind when looking for a wife or husband.

In the old days a woman’s “coming out party” was about when she was 16 years of age. This is when the family invited all the young men to their home (with their parents) to show off their daughter, who was now of age to look for a husband. For the first time in her life she would dance with boys, in front of her parents. Before going to this Coming Out Party, she would go to Finishing School. In this school she would not learn language or math, but how to walk, how to act, how to greet people of different classes, how to eat, and in short, how to be a lady. Men also went to Finishing School but they did not call it that. They learned manors, a trade and manliness, even sometimes how to fight. The boys were also taught dancing and proper dress for different occasions.

Today the average age for women starting their period, and therefore their sexual yearning, is about 12 to 13 instead of 16 years. I think it is because of TV and the promotion of sex in everything we do. The brain affects the body and this exposure to sex causes people to mature physically too soon. I say too soon because mentally they are not ready. The balance of mental and physical maturity is disrupted.

Now I am going to say something that will surprise most people unless you think about it a great deal without looking too fast. Men do not really want sex before they are at least 17 or 18. They do not even want to make out or get too involved with girls other than keeping them company. Boys really want romance but not sex.

The reason we think this is crazy is that boys seem so aggressive today, but this aggressiveness is caused by peer pressure. Boys are made to think they are not men unless they have sex and even press for it. In truth even when pressured by other boys and even the girls, they are hoping the girl says, “No!” Sometimes a girl will even drop a boy who does not want sex. This is true today and common but not true in the past. Because of peer pressure and a lying promotion of open sex on TV, most girls think they are not loved unless the boy at least tries to have sex with them.

This is a huge problem for boys between 12 and 17 years of age because although they are capable of sex they are not ready for it mentally or physically. They feel like they have to do it but often this will cause problems in them that may last the rest of their lives. This might become a hidden dislike for women, or at least disrespect. This mental and physical difference in age of men and women sometimes produces homosexuality in men because they are threatened by women but do not know why. Unlike what you read, homosexuality in American is only ½ of one percent of the people and not 10% but they do not want to admit that they are mentally sick caused from some sexual trauma. This mental sickness borders on the demonic because it so violates nature. It often leads to pedophilia, because sex for nothing but personal satisfaction and not out of love ends up by hating all that is pure. It is even a way of showing hatred for God. The pedophile hates God and everything pure.

Female homosexuals have a different cause. They are not born that way as our “tolerant” society wants you to believe. A woman’s sexuality is more mental than physical and the physical is mostly external and not internal. A man can somewhat enjoy sex even with someone he does not like. But a woman must be somewhat romanced and treated kindly before she really enjoys sex. When she continually has unfulfilled sexual experiences over and over she turns to the person who understands female sexuality, another woman.

“My children might “make out” a little bit but they do not have sex.” This is what some parents say to me but it is bull crap. I have an easier time explaining what is wrong with this to children than I do to adults. Think about the soil and the dirt. God designed the human body perfectly. It get hungry when it is time to eat but it can be trained to only be hungry once a day, like in my case.

God wants married people to have sex because it is good and even wonderful. But their first has to be some stimulation that makes sex possible. God designed the human body in such a way that tender touching and kissing stimulates the body so that it is capable of sex. In the man it even causes the sperm to be generated so that birth is possible. In the woman it lubricates so that sex is possible. This can start by just holding hands.

This is good and even wonderful when two people are married. It is even sacramental and one of the greatest expressions of love there is. However, what happens then when two people stimulate their bodies for sex but then do not have it. The stimulation calms down a little but does not go away. It builds up in the same way that smelling good food over and over and not eating it effects the body. The next day the sexual drive still lingers and might manifest itself in many ways. If this continues it could produce aggressive behavior or even ways to escape the feelings through alcohol or drugs.

This must to be explained so that “making out” is not thought about as innocent or sinless. It is very sinful and is at the root of all sexual sins. This is why un-chaperoned dating is so wrong and the root of sexual sins, the main road to Hell.

Men are voyeurs, meaning that they can be sexually stimulated by visual things. God created man this way for the same reason he created women so beautiful. As the bible says, even the angels are tempted by the beauty of women. Since sexual stimulation without sex causes all kinds of root problems that are all sinful and even mentally harmful, it behooves women to be very careful how they dress or act. This does not mean not to dress for beauty but just not to dress provocatively. It also means that good men should understand that any visual sexual stimulation on TV or the printed media should be avoided for good mental health and good morals. Personally I do not understand why people would even want to watch two people kiss. These things are personal and not any more public than going to the bathroom.

What then is purity? Purity is not sexless although many sacrifice all sex for the Kingdom of God. Married people who have very active sexual lives can be very pure and even saintly. Many married people with lots of children have been canonized as saints. Purity is not dressing in sackcloth. Purity is not avoiding the opposite sex. Purity starts and stops in the brain. Purity is a mental attitude more than a physical compliance. One can do all the right things according to God’s will and law but without being pure of heart, you cannot be called pure.

When you want to obey all the laws of nature and the laws of God because it is the best way to be charitable to yourself, to others and to God, then you can be called pure of heart. This is what it means to love God and others with your heart and soul. Prudish, Victorian people are not pure, they are selfish. The pure of heart wants to give all to God and others using the gifts God gave for good.

This is not the time to talk about this because I want parents and children to read this, but just before marriage men and women should be taught that it is God’s will and the law of love to make sure that your loved one enjoys sex. This might seem obvious but it is a big problem in marriages and does not have to be. I do not think this should be taught until just before marriage because it can lead to sinful thoughts and acts if done too soon.

You would be surprised to know that in some societies in the Middle East and Africa they castrate women because they do not believe women should enjoy six. This is also a sin against nature and God, because God designed sex as an expression of love, joy and pleasure. It is a lack of love when someone does not care if the other does not have this joy and pleasure. I will not talk more on this, but those who want information on this can email me.

Our Lady of America calls all Americans to purity. Our Lady of Nicaragua predicts World War III. The two apparitions go hand in hand, because there will be a World War III and if America changes her ways regarding sex and abortion, we can escape the brunt of this war and even lead the world back to peace. The main recruiting tool of Radical Moslems is the moral corruption of the west. Let us take that tool out of their hands, and put God on our side. Let us also take the tool of justice out of God’s hand by ending the root cause of abortion, dating and free sex.

Stop un-chaperoned dating.

Richard Salbato



Dear Friends and Benefactors

"The debasement of noblest things is the worst." This famous apothegm is no more applicable than to matters of purity and impurity.

One of the most wide spread vices of our day and age is that of impurity. It is a vice so easy to fall into yet once it takes hold seems impossible to overcome. Part of the reason for this is that, as St. John Climacus says:

Our relentless enemy, the teacher of fornication, whispers that God is lenient and particularly merciful to this passion, since it is so very natural. Yet if we watch the wiles of the demons we will observe that after we have actually sinned they will affirm that God is a just and inexorable judge. They say one thing to lead us into sin, another thing to overwhelm us in despair.

Another reason why many are not victorious in battling this vice is that they do not value the opposing virtue of purity. They fail to realize that as there is no vice more loathsome and horrible than impurity, so the most charming and beautiful of all virtues is purity. But why is this so?

In the first place, purity is so highly valued because it is the crown of all other virtues. It presupposes the presence of many if not all other virtues. The pure of heart love prayer and have the virtue of piety. They must at all times consider their infirmity and pray for grace and strength thus practicing humility. They also love the virtues of penance, self-denial and charity and they must have the virtues of meekness, patience and zeal for the glory of God. They must also practice the virtues of Faith, Hope and Charity, in such a perfect manner that the other virtues find strength and support in them.

Another reason is that there is no virtue which demands greater sacrifice and more care than purity. St. Jerome calls this virtue a living martyrdom since it lasts for one’s entire life. We must guard not only one of our senses or faculties, but all of them. All of our senses and faculties are exposed to temptations against holy purity, and so we must keep them all under careful control. It is this constant watchfulness and self-denial which the Fathers of the Church regarded as a martyrdom.

Because of this self-denial, which purity demands, some may have the impression that the life of the pure is sad and gloomy; they are mistaken. The Garden of Paradise contained many trees but only one was forbidden to our first parents. The fruit they were allowed to eat was far more choice than that of the one forbidden to them. Because they chose to enjoy the forbidden fruit they were no longer able to enjoy the others. Likewise, the pure of heart know many more joys, pleasures and consolations that are withheld from those who give themselves up to impurity.

Purity is reflected in our bearing and character even though it be too subtle to analyze or explain. The pure young man or young woman will be of a happy mind having a cheerfulness that does not depend on the weather. Their eyes sparkle with a fire not of this world and they see beauty and charm where the sinful see only the commonplace. The mountains, trees and flowers, lawful gratification, labor and rest, all give to the pure a gratification of which the worldly minded have no idea. How much better it is to enjoy such peace and tranquility of mind, than to suffer the tortures of conscience living in fear that hidden sins will become known.

Nothing in all Creation is grander than the sight of a pure boy or girl growing up in all their strength and beauty of health, with an innocent look in their eyes. Purity ennobles and elevates our body, giving it a charm that is the delight of God and His angels. Even the wicked, who are unwilling to be pure themselves, are compelled to admire and respect purity in others.

Nor is it just the body of the pure that God in His infinite generosity adorns but He beautifies the soul far more. They that go to heaven upon the path of purity receive the choicest blessings and graces. Through these graces they receive warning beforehand of impending temptations and danger. Because of the greater and more pure love which purity gives they are able to undergo any sacrifice, even to suffer death, rather than forfeit the priceless jewel of purity.

Many saints were of the opinion that most people lose their salvation through impurity. If so, we may say that the virtue of purity is one of the safest marks of belonging to the elect. Our Savior has told us little about the joys and rewards of the world to come, but He did reveal that the pure will receive a special reward standing nearest to His Throne, where they will sing a song of praise that no one else will be able to sing.

Living in a world steeped in immodesty and impurity it may seem impossible to go unscathed. But we can preserve this precious jewel and pass through life unmarked if we rely on God’s grace and put forth the effort, following the example of the saints.

The saints were able to fight off temptation because they constantly lived in the presence of God. They had one thought uppermost in their minds —wherever they were, God was by their side. By constantly keeping God before their mind, they had the strength to suffer anything for love of Him and thus turned suffering into joy and trials into victories. When others were overwhelmed by even the smallest temptations because they had lost sight of God, the saints accepted and conquered even the fiercest assaults as a matter of course. The thought of God’s presence gave them strength, consolation, hope and happiness.

The saints were able to keep God before their minds because they lived in a spirit of prayer. They did not make the mistake of thinking prayer to be a merely formal affair; a few minutes set apart in a completely different atmosphere from the rest of their day. Rather they had the constant pious disposition to connect everything they did or saw with God. Every act became prayer for them. Every act of penance, self-denial and charity was nothing else than prayer. Their entire life was transformed into one constant prayer.

If sinners would go to Confession and Holy Communion as frequently and with the same zealous dispositions as the saints, they, too, would become saints. Generally speaking, however, those that need the Sacraments the most are the most negligent in receiving them.

Besides the presence of God, the saints also are shining examples of devotion to our Blessed Mother. True devotion to the Blessed Virgin Mary is taken as a guarantee of eternal happiness. She does not fail to obtain favors and blessings for those who honor her. Hence it should not surprise us that her special admirers receive special benefits; as shown in the lives of the saints. Thus Mary can and will obtain for the children that love her most one of the greatest favors, the jewel and crown of all virtues.

The virtue of purity is, therefore, worth our every effort and its beauty cannot be over-rated. It is something so refined and heavenly that our weak human vision can scarcely grasp the greatness of its grandeur. We shall only fully appreciate it in heaven. But until then we must fight for it, and keep its beauty, as far as we can, before us.

Sincerely yours in the Precious Blood of Jesus,

Fr. John D. Fullerton

Why do the Leftists and Gay Culture’s Rejection of Objective Truth leads to Sexually Abusing Children?

By Fred Martinez

Professor Allan Bloom, author of "The Closing of the American Mind, " said that the only virtue 50 years of Nietzsche's influence on public education – and he could have said 30 years of Catholic education – has achieved is relativity of truth. Bloom said relativism "is the modern replacement for the inalienable natural rights that used to be the traditional ground for a free society."
The move away from objective truth leads to universal rights being replaced by Nietzsche's will to power. Bloom, for example, showed how the old civil rights movement "relied on the Declaration of Independence and the Constitution." But the new Black Power movement considered the Constitution "corrupt" and demanded a "black identity, not universal rights. Not rights but power counted."
The liberal "Catholics" speak the jargon of the Catholic while following Nietzsche's will to power. They understand power and hold most of the power positions in the infrastructure of the American Church.
According to Catholic scholar James Hitchcock, the leftist "clerical homosexual network" extends to "bishops, seminary rectors, chancery officials, [and] superiors of religious orders."
The "real" Catholics, the ones not infected with relativism and will to power, not realizing that their opponents use words as ploys to attain power, still use logic in an attempt to reason them back into objective truth. So they control many publications, as well as the EWTN Cable Network, but they have power over only a few dioceses, colleges and high schools, where the real power is.
Meanwhile, the Nietzschean "Catholics" are going for the throat by going after the young. They control the American Catholic high school system, which is pro-homosexual, and filter out Roman Church documents such as the Catechism of the Catholic Church. The Catechism states that "homosexual acts are intrinsically disordered ... [and] under no circumstances can they be approved."
That the Catholic schools are not teaching the Catechism of the Catholic Church is shown by recent polls which found that the vast majority of Catholic high school students are pro-gay. That is, they buy the whole gay agenda and even have gay clubs at their Catholic schools.
Norman Mailer, in his book "Prisoner of Sex," shows why this relativism and moving away from natural objective truths such as heterosexual sex can lead to will to power:
"So, yes, [homosexuals] in prison strive to become part of the male population, and indeed – it is the irony of homosexuality – try to take on the masculine powers of the man who enters them, even as the studs, if Genet is our accurate guide, become effeminate over the years. ... Homosexuality is not heterosexuality. There is no conception possible, no, no inner space, no damnable spongy pool of a womb ... no hint remains of the awe that a life in these circumstances can be conceived. Heterosexual sex with contraception is become by this logic a form of sexual currency closer to the homosexual than the heterosexual, a clearinghouse for power, a market for psychic power in which the stronger will use the weaker, and the female in the act, whether possessed of a vagina or phallus, will look to ingest or steal the masculine qualities of the dominator."
This is the end result when universal truths and responsibility toward those truths are denied. The only "currency" left to the left is stealing of power, because they are insecure in any truth including their own objective masculinity.
Unsure of their own objective masculinity – or any objective truth, for that matter – they will not tolerate truth, calling it intolerance. They will not tolerate the truth of the purpose of sex, which is married love, with the creation of a secure family for the children of that love.
Leftists replace the traditional family with sexual power struggles that lead to the death mills of the abortion industry and the graveyards of AIDS and the abandonment of children and women at the altar of free sex.
Sex is not free. It was once a responsibility that a mature man entered into for life, for the security of his beloved children and wife.
Likewise, liberals replace the Constitution with sex and ethnic power struggles that lead to the breaking of the rule of law. If a president can sexually abuse women and possibly even rape them, then obstruct justice and lie under oath, are we under the rule of law? If our society will not tolerate truth, then men and women are not secure in their "inalienable natural rights that used to be the traditional ground for a free society," as Bloom said.
If we reject the rule of law and natural rights, our society will progress toward the Clintonian power tactics of prison homosexuals. The leftists in the Church and the media rejecting objective truth no longer want to be identified as men of objective faith and reason, but rather as Nietzschean post-modernists to be identified with the "culture" of the gay and Clintonian playboy slogans of the media elite.
The media elite uses management tactics on anyone who wants to be identified as a man of objective morals, faith and reason. They redefine the meaning of words like morals, faith and reason through association and repetition, then isolate those who don't accept the new definitions, after which they ostracize the good name of any person or group that doesn't accept the new "culture" and isn't a "team player."
The very respected scholar Edgar H. Schein of MIT Sloan School of Management explains the process in "Organizational Learning as Cognitive Re-definition: Coercive Persuasion Revisited":
"It may seem absurd to the reader to draw an analogy between the coercive persuasion in political prisons and a new leader announcing that he or she is going 'to change the culture.'
"However, if the leader really means it, if the change will really affect fundamental assumptions and values, one can anticipate levels of anxiety and resistance quite comparable to those one would see in prisons. The coercive element is not as strong. More people will simply leave before they change their cognitive structures, but if they have a financial stake or a career investment in the organization, they face the same pressure to 'convert' that the prisoner did. ... Consider, for example, what it means to impose a 'culture of teamwork' based on 'openness and mutual trust' in an individualistic society."
By using this process, the leftists with the media's marketing ability learned they could create massive peer pressure – some would call it a "mob mentality," which changes the worldview of people with weak morals, weak faith or the Judas mentality. These types of people see themselves as the "elite" because they accept the "culture of teamwork" and have "openness" to the new definitions.
These persons wishing to be part of the "culture" or "team" are open to cognitive re-definition. Schein explains how the process works:
"'Cognitive redefinition' involved two different processes. First, concepts like crime and espionage had to be semantically redefined. Crime is an abstraction that can mean different things in different conceptual systems when one makes it concrete. Second, standards of judgment had to be altered. Even within the western concept of crime, what was previously regarded as trivial was now seen to be serious. The anchors by which judgments are made are shifted and the point of neutrality is moved. Behavior that was previously judged to be neutral or of no consequence became criminal, once the anchor of what was a minimum crime was shifted. These two processes, semantic re-definition and changing one's anchors for what is good or bad, acceptable or unacceptable, are the essence of cognitive re-definition."
Bloom thought that Nietzsche was the father of modern America culture. He said, "Words such as 'charisma,' 'lifestyle,' 'commitment,' 'identity,' and many others, all of which can easily be traced to Nietzsche ... are now practically American slang."
But the most important Nietzschean slang word is "values."
"Values" are the death of Christian morality because values simply mean opinions. If opinion is how things are decided, then might makes right.
One must remember that whenever someone talks about values in modern America – family values or religious values or place-the-blank-in-front-of values – they are saying there is no real or objective right or wrong – only opinions of the self and its will to power.
Nietzsche's philosophy is summed up by Bloom as
Commitment values the values and makes them valuable. Not love of truth but intellectual honesty characterizes the proper state of mind. Since there is no truth in the values, and what truth there is about life is not lovable, the hallmark of the authentic will is consulting one's oracle while facing up to what one is and what one experiences. Decisions, not, deliberations, are the movers of deeds. One cannot know or plan the future. One must will it.
As a philologist, Nietzsche believed there was no original text and transferred this belief to reality, which he thought was only pure chaos. He proposed will to power in which one imposes or "posits" one's values on a meaningless world.
Previous to Freud's psychoanalysis, Nietzsche's writings spoke of the unconscious and destructive side of the self. In fact, Freud wrote that Nietzsche "had a more penetrating knowledge of himself than any other man who ever lived or was likely to live."
Max Weber and Sigmund Freud are the two writers most responsible for Nietzschean language in America. Few know that Freud was " profoundly influenced by Nietzsche," according to Bloom. Freud, much more than Weber, profoundly changed America from a Christian culture to a therapeutic or self-centered culture.
The therapeutic approaches, which started with Freud, have a basic assumption that is not Christian. The starting point is not the Christian worldview, which is summed up in the parable of the prodigal son: a fallen and sinful world with persons needing God the Father to forgive them so they can return to be His sons and daughters.
Unlike the Christian worldview, the therapeutic starting point is that the individual must overcome personal unconscious forces, in Freud, and in Carl Jung the person must unite to the collective unconscious, which is shared by all humans.
In both cases, the therapist assists his client to change himself to 'become his real self.' Forgiveness and returning to God are not needed. What is needed are not God and His Forgiveness, but a therapist assisting a self to reach the fullness of its self.
Freud, under the influence of Nietzsche, moved psychiatry away from the mechanistic and biological to the previously "unscientific" model of the "symbolic language of the unconscious."
Freud's pupil Carl Jung took the symbolic language of the unconscious a step further. Unlike his mentor, Jung's unconscious theory is not just about making conscious sexually repressed or forgotten memories. His symbolic therapy used what he called the "active imagination" to incorporate split-off parts of the unconscious (complexes) into the conscious mind.
He believed with Freud that dreams and symbols are means to the unconscious, but for Jung the dream and symbol are not repressed lusts from stages of development. They are a way to unite with the collective unconsciousness.
Many Christians thought this "language of the soul" was a step forward from what they considered the cramped scientific reality of modernity. What they didn't understand was that Jung's theory was part of a movement that led to the rejection of objective morality and truth.
Jungian (and Freudian) psychoanalysis reduces Christian concepts such as God, free will and intelligence to blind reactions, unconscious urges and uncontrollable acts. Even more disastrous, Jung inverted Christian worship.
Leanne Payne, a Christian therapist, considers Jung "not a scientist, but a post-modernist subjectivist. Jung's active imagination therapy is hostile not only to the Judeo-Christian worldview, but to all systems containing objective moral and spiritual value. Within this world the unconscious urge becomes god. What the unconscious urge wants is what is finally right or moral. These psychic personae [complexes] are literally called 'gods' (archetypes),' and so an overt idolatry of self follows quickly."
Within the modern French Nietzschean schools of thought, a type of Jungian unconscious urge is replacing the old existential conscious self who chooses. The post-modernist is moving from the idolatry of self to the idolatry of autonomous inner "beings" that, according to Payne, are similar to pagan "gods."
As C.S. Lewis predicted in "The Screwtape Letters," we are moving to a "scientific" paganism. C.S. Lewis' name for the "scientific" pagan was the Materialist Magician and the name of the autonomous inner "beings" was the "Forces."
In "The Screwtape Letters," his character who is a senior evil spirit said:
I have high hopes that we shall learn in due time how to emotionalise and mythologise their science to such an extent that what is, in effect, belief in us (though not under that name) will creep in while the human mind remains closed to the Enemy [God]. The "Life Force," the worship of sex, and some aspects of Psychoanalysis may here prove useful. If once we can produce our prefect work – the Materialist Magician, the man, not using, but veritably worshipping, what he vaguely calls "Forces" while denying the existence of "spirits" – then the end of the war will be in sight.
Some of the largest audiences for this "scientific" paganism with its inversion of worship and the Judeo-Christian worldview are followers of Christ. By using Christian symbols and terminology, Jungian spirituality has infiltrated to a large extent Christian publishers, seminaries, even convents and monasteries.
Many Christians are using Jung's active imagination as a method of prayer. Psychiatrist Jeffrey Satinover, M.D., thinks this is dangerous "because this fantasy life has no moral underpinnings, because it helps to reinforce an experience of autonomous inner 'beings' accessible via the imagination, and because it is a defense against redemptive suffering, it easily allies with and quickly becomes a Gnostic form of spiritually with powerfully occult overtones."
If one is under the influence of the autonomous inner "beings," uncontrollable urges can overpower the self. One can go temporarily or permanently insane. And in the Christian worldview, the autonomous inner "being" is not always just an imaginary being, but can be a personal being, which then makes possession a rare, but not impossible, occurrence.
In fact, according to one Jungian therapist, Nietzsche himself went insane permanently when an autonomous inner "being" (archetype) overpowered him. So, unfortunately with the widespread acceptance of Jungian spirituality, mainstream Christianity seems to be moving to post-modern Nietzschean insanity and possibly, in some cases, possession.
Jung's autobiography is full of insane or occult experiences. He was continually hearing 'voices.' In his autobiography he said his home was "... crammed full of spirits ... they were packed deep right up to the front door and the air was so thick it was scarcely possible to breathe."
During the Hitler regime, which itself was obsessed with the occult, Jung edited a Nazi psychotherapeutic journal where he said, "The 'Aryan' unconscious has a higher potential than the Jewish." Keep that word "potential" in your mind. It will be used by American psychology.
Once opinion is master, then might makes right. In "Beyond Good and Evil," Nietzsche proclaimed a new morality, "Master morality," which was different from Christian morality – or "slave morality," as he called it. He thought the weak have the morality of obedience and conformity to the master. Masters have a right to do whatever they want; since there is no God, everything is permissible.
In what Nietzsche considered his masterpiece, "Zarathustra," he said the new masters would replace the dead God. The masters were to be called Supermen, or the superior men.
After Freud and Jung came Alfred Adler, also a follower of Nietzsche, with "Individual psychology," which maintains that the individual strives for what he called "superiority" but now is called "self-realization" or "self-actualization," and which came from Nietzsche's ideas of striving and self-creation.
The "human potential movement" and humanistic psychology of Abraham Maslow and Carl Rogers are imbedded with these types of ideas. The psychologists of "potential" teach the superior man.
Edvard Munch said:
Alfred Adler translated Nietzsche's philosophical idea of "will to power" into the psychological concept of self-actualization. Thus, Nietzschean thought forms the foundation for and permeates Alfred Adler's Individual Psychology, Abraham Maslow's Humanistic Biology, Carl Rogers's Person-Centered Psychology, and has influenced many other psychological ideas and systems. ... Alfred Adler was the first psychologist to borrow directly from Nietzsche, making numerous references to the philosopher throughout his works. Adler took Nietzsche's idea of "will to power" and transformed it into the psychological concept of self-actualization, in which an individual strives to realize his potential.
Mary Kearns, in an address to the Catholic Head Teachers Association of Scotland, spoke of the Nietzschean ideas now being taught in Catholic schools in the name of "scientific" psychology. Kearns said:
The methods are based on "the group therapy technique" first developed in America in the 1970's by two psychologists, Carl Rogers and Abraham Maslow. They described how emotional conditioning should be carried out by a group "facilitator". The facilitator does not impart knowledge like the old fashioned teacher. Instead he/she initiates discussions encouraging children to reveal their personal views and feelings. The facilitator's approach is "value free". There is no right or wrong answer to any religious or moral question. Each person discloses what is right or wrong for them. All choices are equally valid even if they are opposites. Everything depends on feelings or emotions. Reason and conscience are discouraged. If anyone attempts objective evaluation, they are to be treated as an "outsider" and there will be a strong emotional reaction against such "judgemental intolerance".

If it is true that Catholic education now uses these techniques in "teaching religious and moral education," then the Catholic education system has entered into the Nietzschean insanity. If these are the techniques being used in education and in the seminaries, then sexual misconduct charges against priests are a symptom of "scientific" paganism replacing Christianity.
Santa Rosa priest Don Kimball, who is charged with sexual misconduct, is an example of someone whose "approach" was "value free" – that is, there was "no right or wrong answer to any religious or moral question."
In 1996, Karyn Wolfe and Mark Spaulding of Pacific Church News said, "THE WEDGE! You can't do youth ministry (any ministry for that matter) without it. ... Basing his theory on psychologist Abraham Maslow's 'Hierarchy of Needs', the Rev. Don Kimball developed this model for the growth and maturity process of a group."
Another example of the value-free approach is Thomas Zanzig, a major leader in the Catholic Church for youth ministry, plus an editor and writer of Catholic textbooks.
According to Marks S. Winward, Zanzig, in a book on youth ministry, "bases his 'Wedge Model' on a similar model developed by Fr. Don Kimble." Homeschool leader Marianna Bartold said, "Sharing the Christian Message by Thomas Zanzig has students come up with as many slang or street words as possible for penis and vagina in three or four minutes."
Now, many might say these are only isolated cases of misuses of Maslow and Adler until one reads the original text. According to William Coulson, a former collaborator of Carl Rogers,
Maslow was always a revolutionary. ... In 1965, working a radical idea about children and adult sex into his book about management, "In Eupsychian Management: A Journal," [Maslow said]: "I remember talking with Alfred Adler about this in a kind of joking way, but then we both got quite serious about it, and Adler thought that this sexual therapy at various ages was certainly a very fine thing. As we both played with the thought, we envisioned a kind of social worker ... as a psychotherapist in giving therapy literally on the couch."
As one can see, the basic therapeutic assumption leads to certain results in the real world. These thinkers don't believe in the basic Christian assumption that there is a need for forgiveness from God. Instead, they believe there is no sin, only selves needing to reach the fullness of themselves.
It is understandable that atheists such as Maslow , Adler and Gay activists could hold these basic assumptions that sexually abusing children is okay, just as Hitler thought killing Jews was okay since all have the basic assumption is that there is no right or wrong.
But that Christians and priests hold these assumptions is a disgrace. The denial of original sin and personal sin is, in large part, behind the headlines of the Boston catastrophe and other dioceses