08 September 2008

ANALYSIS LaRouche on "Treasonous" Bailout of Freddie Mac and Fannie Mae; We are heading for Hyper-Inflation; Obama & McCain approve (of course!)...

Fannie/Freddie Nationalization --> Global Stocks Rise (temporarily) + US Treasury Slides
"Thanks Mr. Paulson; Please Rob Us Some More..."

Paulson Commits Treasonous "Unlimited" Bank Bailout (LaRouchePAC.com - 7 Sept 2008)
Excerpts: "September 7, 2008 (LPAC)--Economist and statesman Lyndon LaRouche has denounced U.S. Treasury Secretary Hank Paulson's `unlimited' bank bailout announcement today, as "tantamount to treason" against the United States and its Constitution. Paulson's action completely confirms the warning of the Lyndon LaRouche Political Action Committee--ever since authorization of this Federal bailout action was demanded by Paulson in July--that the Treasury is not assisting Fannie Mae or Freddie Mac; it is using them to pass through a huge new taxpayer bailout to international banks holding Fannie and Freddie and other mortgage securities. These banks are being aided by the Treasury in postponing the inevitable write-off of trillions in worthless securities, which would expose their bankruptcy. The bailout will not work, except to worsen the ongoing financial crash... Both Republican John McCain and Democrat Barack Obama announced they backed the bailout... Paulson refused to name a figure for the bailout over any time period: Both the new capital being put into Fannie and Freddie by the Treasury, and the Treasury "Secured Credit Lending Facility" opened up to them, are open-ended and unlimited (except by the current U.S. Federal debt ceiling). Worse, Paulson announced that the Treasury is mandating the two government-sponsored enterprises to use this Federal credit line to buy more, riskier toxic mortgage-backed securities (MBS), and more subprime and undocumented mortgages, through the end of 2009, than they have been buying in 2008... Worse still, Paulson announced the Treasury itself will start buying MBS directly from Fannie and Freddie, whether issued by them or bought by them from investment banks..."

"Tantamount to Treason"; Bailout of Fannie and Freddie (LaRouchePAC.com - 6 Sept 2008)
September 6, 2008 (LPAC)--The Bush Administration and the Federal Reserve are moving to put mortgage-lending giants Fannie Mae and Freddie Mac under Federal control this weekend, in a move economist Lyndon LaRouche bluntly described as “tantamount to treason.” The government's claim that this is being done to protect housing is a fraud--this is bailout of the banking system, pure and simple… Fannie Mae was created by Franklin Roosevelt in 1938, as a government agency to buy mortgages from lenders, as a way of funding the purchase of homes in the Great Depression. In more recent years, Fannie Mae and its sibling Freddie Mac, were taken over by what FDR attacked as the “economic royalists” and turned into vehicles for derivatives speculation. Under the great Greenspan bubble, Fannie and Freddie were turned into money machines to feed the run-up in real estate values to provide assets--in the form of mortgage debt--as fuel to the derivatives markets. This scheme was bound to fail, as it spectacularly has, leaving Fannie and Freddie, and the U.S. banking system, bankrupt… However, Fannie and Freddie are at the heart of Treasury Secretary Henry Paulson's and Federal Reserve Chairman Ben Bernanke's insane scheme to bail out the banks by dumping all their bad mortgage paper into the two government-sponsored enterprises, effectively transferring the banks' losses to the government, and ultimately to the taxpayer… The government has already spent trillions of dollars in the attempt to save the banks, in schemes ranging from the economic stimulus program to the ongoing and accelerating loan programs to the banks from the Fed… Some estimate that the bailout will cost $20-$30 billion, but these estimates are meaningless, since the government is effectively committing itself to an unlimited bailout. Essentially, the government is bailing out the debt by doubling it, creating a even bigger pile of debt that will have to be bailed out, doubling again in a geometric progression. Since there isn't enough money in the world to make this scheme work, it cannot succeed, and the attempt to do it will trigger a hyperinflationary explosion reminiscent of Weimar Germany, such that the very value of the dollar itself will vaporize… Not only is this scheme insane, LaRouche stressed, but it is “tantamount to treason” in that it puts an attempt to save the parasitic financial system ahead of the welfare of the nation and its people... We cannot bail out the dead system, and we should not try. What we must do instead, is build our way out of this mess by returning to the principles of the American System. To do otherwise is not only insane, it is fatal.

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