Abstract: The grip of the plutocracy on the USA is astounding. Right now the economy is collapsing mostly because the Plutocracy has been punishing the People by putting the credit system in deep freeze.

The Plutocracy, this Mafia second to none, has every reason to be angry: as 10% of the People is paying mortgage reluctantly, if at all, the super giant pyramid of derivatives that made the Plutocracy so rich has collapsed. Ever since the Plutocracy has endeavored to make the People pay. The Plutocracy controls the bank holding companies, which control the banks. To appease its friendly Plutocracy, the government and its Geithner have been sending the People’s money directly to the Plutocracy. (The New York Times even revealed that the Obama administration had a plan to guarantee hedge funds returns of 20%, if they consented to invest in their little scheme).

Obviously, the government knows something we don’t, so, as a precautionary measure, since the original US Constitution had the word “people” capitalized, giving us “We The People“, I should capitalize Plutocracy too. We The Plutocracy? It goes without saying that European countries, those socialist paradises, blinded by their own Peoples, have not been exhibiting the proper respect for the hyper rich. Thus Great Britain has already nationalized 100% several big banks (nearly a year and half ago for “Northern Rock”). Yet, Great Britain’s Plutocracy, this Mafia second to none, holds the British People into a trance symbolized by the “rule of one” (“monarchy”).

It’s time to lock them up, but they own minds and government; it will be a while.

Frankly, this is painful, and it is with a heavy heart that one has to look at the truth. But what else is there to look at, when the going gets tough? Sometimes in history things do not turn out as expected. They turn into their opposite.

As the Great Depression gripped Germany, millions of honest to goodness, socialist minded Germans, revolted by “plutocrats”, voted for Adolf Hitler, thinking he would bring change for the best (as the Nazis were protesting plutocracy… while secretly bankrolled by said plutocrats!).

Average German voters had no idea that Hitler, far from being a socialist devoted to the Volk, as he claimed to be, and himself believed, was a pawn of the plutocracy. It was inconceivable to those good Germans that most of the greatest backers of the ultra nationalist Hitler, of this anti-American nationalist, were actually American (!) plutocrats. As Hitler started to reign, those (American!) plutocratic influences guided Hitler’s every step. It was going to be a traditional “bait and switch“.

Certainly most Germans who voted for Hitler, and they voted many times, would have been amazed, as they cast their votes, at how badly things would turn out to be, and they would end up with the opposite of what they wanted, and worse than they could imagine. They would have been astounded that the radical change that they had voted for, with the most audacious hope, would bring, in the fullness of time, an immense, incomprehensible disaster for Germany. (More than ten million Germans, 10% of the German population died, among other problems.)

The Obama economic team is confronting a difficult situation. Interestingly, though, in its previous incarnation under the Clinton administration, more than ten years ago, most of that economic team did more than contribute to it: it started the disaster, with fanatical market extremism.

Moreover that Obama team has not been taking the right decisions. It is as in a plane crash: too little too late can be as bad as completely wrong in all ways. The stimulus, as a stimulus, was a joke (the real stimulus was no more than 100 billion dollars; not even all the bridges scheduled for collapse are supposed to be fixed! See addendum 2).

Certainly if taxpayers voting on November 4, 2008, for Obama had know that it meant the policy of Transferring Assets to Rich People (“TARP”) would have continued unabated, even as the economy collapsed, they may have paused. As it is democracy does not have enough mechanisms to protect itself. TARP has been extremely unpopular all along. But people have no say in extremely bad decisions. The decisions are taken by 3,000 political “appointees”. Appointed by one or two elected officials.

The government of the USA has to lift the toxic assets from the banks, and remove the liabilities from the banks. Then the banks will be able to function again. As it is, the banks do not function, and credit is completely frozen. As credit is frozen, the entire world economy is suffering hypothermia. Complete freezing is not far away. The continual drop in economic activity is a disaster that mixes all of society in exploding fragments. Just an example: the city of San Francisco (750,000 inhabitants, and relatively few children) just announced that it would fire more than 500 teachers. The city of San Francisco does not have the money to keep their jobs going. It is like that all over.

The situation seems to be this: there are banks, the banks in turn are owned by bank holding companies, which are themselves in turn owned by hedge fund managers, private equity and other elements of the worldwide plutocracy, a Mafia of a size which overwhelms understanding. The Obama people are trying to save the later, the richest of the rich. The view me as a fool, because I think beyond myself. Meanwhile, the world economy needs the banks’ core functions to be restarted. Or there will be a catastrophe, within weeks.

The credit system is frozen because the banks themselves are insolvent, their capital requirements are completely violated, they cannot lend without getting deeper in the hole. Actually, they cannot lend, by law. The rescue of TARP money has been given to the bank holding companies, which transmitted very little of it to the banks themselves. The bank holding companies kept most of the money for themselves, the salaries and bonuses of their plutocratic officers, and organized the usual happy events such as mergers and acquisitions. During these events, money splashes all over to the rich and happy class.

When banks are insolvent, or when banks simply cannot function because they have violated capital requirements, it is very well known what to do. One separates the banks from their bad assets, and give them enough capital to operate. If Bank of America was cleaned of its bad assets, and given 80 billions, it could lend a trillion (this tremendous leverage is the advantage of nationalization, as I pointed out many months ago). Since it would be a profitable business by then, private capital would come in, even from normal people themselves, and the bank could lend even more. In any case, by doing this with the handful of giant banks that need it, the lending crisis would be over. (Two-third of the banking system is owned by ten banks in the USA.)

This is the traditional way to do it. It is traditional to do it even in the USA, where it has been done for thousands of banks before. As Paul Krugman puts it, it is “as American as apple pie”. Bill Seidman’s resolution Trust Corporation did it for 747 banks. Actually apple pie is a dish enjoyed all over the world. This sort of quick solution to the bad assets problem was done all over Scandinavia, and in many other places. One speaks of “nationalization”. But it is a TRANSITION TO LIBERATION of the banks. And these are the words that ought to be used.

So, as Professor Doctor Nobel Krugman wonders, why is this not happening? (New York Times, Feb. 21 2009.) Why is the Obama administration leaving the entire world economy in free fall?

Well, people advising Obama have worked for banks (Emanuel was making more than eight million dollars a year, in a bank, for example). One can assume that they intent to work for hedge funds, private equity, etc., when they come out of the administration. So they want that system to still be out there when they come out. Geithner was the boss of all the banks in New York. So the Obama advisers are desperately trying to please their once and future masters. It’s a mafia at work, as simple as that. They did not reinstate the short sell rule, so that their friends the hedge funds can keep on organizing bear raids as the stock markets collapse. They keep on having their friends the masters of the financial universe be taxed at a maximum rate of 15%. It’s socialism for plutocrats. Let secretaries and teachers pay the high tax brackets!

The Obama economic advisers come up with mumbo-jumbo lip service and weird semantics to hide the plot, conscious or subconscious, to which their nature has fatally led them to. Their plot is that they use the pretext of the banks’ failure to transfer more taxpayer money to their relations, the private equity, the hedge funds, and various overseas investors, all very friendly. So taxpayers send money and the trusted economic advisers send the money to the richest of the rich, and, lo and behold, more has to be sent, because the banks still did not get any.

It does not seem to matter too much to Obama’s “outstanding” advisers what happens to the world economy as they try to contrive a way to send a lot of money to their plutocratic friends and colleagues, past and future. When you stand out, nothing compares.

But the truth is simple: those “geniuses”, the “outstanding” friends of the Obama advisers, contrived the greatest pyramid scheme, the greatest Ponzi scheme of all times, the derivative system, with a peak value of 600 trillion dollars. The world is worth much less than 100 trillion dollars. No taxpayers of the world can fill that hole for the rich. But still the hyper rich try to have taxpayers fill it for them. The hyper rich had it so good for so long, that is all they know.

Let’s notice in passing that some modern and well balanced states, such as France have wealthy capitalists and industrialists, but they do not have as thick a plutocratic layer as the USA. French banks are generally profitable (with profits in the billions for the big ones in 2008). The largest of these banks are as large as large USA banks. The still profitable insurance giant AXA owns the USA’s Equitable, among others, But the CEOs of these French giants are paid 5%, a twentieth, of their USA colleagues.  Thus the American plutocratic situation is not a necessity of a modern economy (the French economy is at least as diversified in high technology as that of the USA, and arguably more).

The world economy is getting so damaged by the refusal of the Obama administration to fix the banks that a bellicose issue is to be feared. Maybe the vested advisors subconsciously feel that a good war in the future would be the best of distractions. It is so abysmal, abysmal explanations are only natural.

The USA needs a new Resolution Trust Corporation, run the banks through it, clean them, and get them out of their zombie states. We are out of time. If still nothing much happens, it may be time for people to push for RICO. The Racketeer Influenced and Corrupt Organizations Act covers several of the activities that seem in plain sight. People can be convicted under RICO, not for specific acts, but for a pattern of behavior. There are 35 of those. One of them is bankruptcy. Another is securities fraud. Others are obstruction of justice, money laundering, theft, fraud…

The hyper rich in the USA have led the democracy by the nose with their plutocracy. They established for themselves fiscal paradises, places where their money was channeled to escape the IRS. Channeled by the very bank holding companies that have been getting TARP money. Not only is the People getting fleeced, it pays for getting fleeced. What we are facing, what we are contemplating, maybe the world’s largest criminal organization ever, the greatest Mafia, ever . Yes, time for RICO.

Patrice Ayme

Addenda: 1) At the peak the part of the derivative system known as Credit Default Swaps, that Summers, Rubin and Greenspan obstinately refused to regulate, were “worth” 64 trillion dollars. (They are particularly sensitive to the collapse of housing.) The reasoning that Rubin and Summers were following was that if derivatives were regulated in the USA, they would go somewhere else. Those guys know some financial words, but they clearly do not know geography. The other great economic power in the world is the European Union, and the EU is cracking down on the plutocracy and fiscal evasion. If the USA and the EU agree, everybody else with (except in outrageous cases like the 300 billion dollars of USA-EU agricultural subsidies). So the truth is very different: derivatives made USA plutocrats hyper rich. No other country was crazy enough to develop derivatives to that extent.
Anyway, back in 1998, according to Newsweek, proceeded to “dress down, loudly and rudely” the chairwoman of the Commodity Futures Trading Commission (because she wanted regulations). Literally an old boys network.

2) The stimulus comprises many expenses that are not so, like the AMT (70 billion, always budgeted, and not a stimulus anyway), and huge payments to states to compensate in part for collapsing state budgets.  There is eight billion dollars for high speed rail, enough for 100 miles of one high speed line in a flat plain. For the entire USA. That was added at the last second, to look good.

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9 Responses to “TIME FOR RICO?”

  1. LibertyOrDeath Says:

    Did you even think about what you are spouting? The way to solve the credit crunch is to separate the debt from the bank? How do you propose that? How does the government do that pray tell? The government can buy all the bad debt up, but with what money? 2 options, gain the money from taxing the people or gain the money by printing it. And then what? Now the government owns all this bad debt but it can’t sell it, no one wants it. If they repudiate the debt then all that taxpayer money was just thrown out, assuming they taxed people to get the money. If they printed the money then the inflation remains from the money that was printed to buy the mess. How about the untried and true method for solving these problems? Let the bad banks go bankrupt. Then, the debt would be wiped out and people would have actually LEARNED A DAMN LESSON. People mistakenly blame free market capitalism for this mess but the United States has not had a free market system for a very very long time. This was not the result of deregulation and free markets. This was the result of too much government intervention; too many regulations that benefit big companies and prevent competition. Too many bailouts have encouraged the moral hazard of risking other people’s money because the taxpayer was ultimately always on the hook. Blathering idiotic socialist non-sense will not solve this crisis. Bankruptcies and free market economics would. Just think, while the unemployment level and bankruptcies would have been high for the past 2 years, we probably would be doing a turnaround at this point and making ready for the next leg up in a real economic recovery.


    • Patrice Ayme Says:

      We are all angry about what is happening. I think you and me agree about many of the things you say. I just do not agree with the conclusions (Patrice don’t think, but “spouts”, etc…). I also do not agree that there was too much government intervention. Quite the contrary (although sometimes the gov made the banks too big, and that was bad, say by removing the separation banks/investment banks, or by allowing monster derivatives (Summers, 1998), or huge leverage (2004)).

      There is obviously a lot of misunderstanding going on. First of all, the conservative model is to do what the republican administration under the first president Bush did. The RTC. I do not understand why this was not done long ago (the Scandinavians pulled the trigger at much lower level of catastrophe, so of course did Bush I). I would be less dissatisfied if such a policy had been started. But it has not.
      The bad banks should have been stopped long ago, per international regulations. Post Great Depression II (the one of the 1930s), one does not let banks go bankrupt. There is no reason to wait; a bank that cannot lend is as bad as a bankrupt one. Anyway, the big US banks are bankrupt as we speak. So they keep functioning because the goverment gives them money.
      The economy needs functioning banks that can lend, and that means yanking them away from debt, away from their bank holding companies, and derivatives, bad assets, however you want to define them. In extreme emergency debt can be written off, that has been done thousand of times, and sometimes, as with entire countries, on a gigantic scale.

      The Credit Default Swaps, an exchange of risk, should be made null and void.

      Nationalization is actually a form of pre-privatization.

      Frankly, I understand your pain. I criticize the Obama administration for reasoning from a rosy scenario (“just wait a few months and the economy will go up, and so will the housing prices”).
      Anyway I thank you for your contribution. You are reasoning out of indignation. There is plenty of evidence that one main ingredient in the crash has been rising leverage enormously up to 40. “Free market capitalism” is a set of theories. Everybody agrees it’s good, but they are not talking necessarily about the same version. Nowadays, free market capitalism cannot sell people, for example. Before, it could. Or are you against these laws? I don’t think so. Let me remind you Aztecs distributed primate meat in their own market.

      There is enormous evidence that an enormous amount of new regulations is needed, and I made many propositions a few months ago on how to do that.

      The chairman of Citigroup, Pandit, came in as the stock was at 40. Now it’s at one buck. Why? Because Pandit did nothing. I am not happy because, so far, Obama has not been doing much either. Pandit, bandits, whatever, we cannot keep on doing nothing.


  2. Susan Says:

    My prediction is that RICO will not happen, and Madoff, Stanford, the Sandlers – all top donors to the Democratic Party elite – will not do any time whatsoever. The timidity of the Obama administration in dealing with the bank holding companies and principal owners and executives, and his choice of cabinet was predictable from his top campaign contribution and bundler lists on http://www.whitehouseforsale.org/candidate.cfm?CandidateID=C0009&SortOrder=Amount%20desc&StartRow=1


    • Patrice Ayme Says:

      I prefer not to make predictions anymore, in this particular arena. But I am afraid that you may be right. The situation is getting more catastrophic everyday, and the right decisions are not taken, and it seems pretty clear why. So far no country has gone crazy yet in response to the situation, but there are no guarantees that this will go on.


  3. Way Out For Obabush, Bushama, and Oblahblah. « Some of Patrice Ayme’s Thoughts Says:

    The biggest banks and AIG ought to be examined by the justice department under RICO, the anti-Racketeering Act, as I advised long ago (https://patriceayme.wordpress.com/2009/02/24/time-for-rico/). If the conspiracy between Goldman Sachs and AIG was not racketeering, I wonder what was.


  4. To Save The World, Please Default! « Some of Patrice Ayme’s Thoughts Says:

    […] So why am I for a Greek default, as I have suggested forever? Actually I was also for the default of the Too-Big-To-Fail banks in the USA. Within a month of the election of Obama, I was enraged that Obama had decided to send to the banksters all the way in the world, no questions asked. I saw the criminality of it all, very clearly. See: https://patriceayme.wordpress.com/2009/02/24/time-for-rico/. […]


  5. Obama, Neo-Con | Patrice Ayme's Thoughts Says:

    […] without any counterparts. This was an outrageous theft of public money. I advocated it was “Time for RICO“. I may as well have told the mafia to summon the […]


  6. Britain’s Mafia State | Patrice Ayme's Thoughts Says:

    […] It’s good to see a famous journalist confirm what I have been saying for many years: the West is turning into an organized crime state of affairs. The world’s greatest Mafia, ever. […]


  7. Radical: Queen Of England A Loan Shark, Plutocratization Proceeds, Disinformation Blossoms | Patrice Ayme's Thoughts Says:

    […] soon follow. Here what we have, hopefully, is a giant sloshing of information previously deduced and guessed by the ilk of yours truly, but now available to all. Hopefully vast quakes will follow and shatter the […]


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