Wall Street's Manipulated Stock Market Rally

By Matthias Chang

Global Research, March 26, 2009
FutureFastForward.com

The numbers that have been bandied about is beyond the comprehension of the average Joe Six-Packs. I cannot even figure out $500 billion, what more $500 trillion. Ninety per cent of government leaders are also unable to figure out the enormity of the global debt sink-hole.

So, I have accepted the fact that 97 per cent of Americans will just accept whatever explanations and excuses thrown at them by President Obama, Fed Bernanke and Treasury Geithner for bailing out the banks and failing to prevent the implosion of the economy by summer of 2009.

Obama inherited the mess created by war criminal Bush, aided and abetted by Alan Greenspan, Bernanke and Geithner, so he can be excused for there is nothing that he can do at this late hour to change the outcome. But the rest should be lynched!

In the last two years, in several articles, I drew your attention to the fraudulent securities that have been peddled by the global banks and how they have caused the present grid-lock in the global financial system. In essence, these securities – MBS, CDOs, CLOs, etc. were all fraudulent papers. Whatever mortgages underlying these papers, were over-valued and now they have shown to be worth at the most 10 to 20 cents on the dollar.

There have been suggestions that if all these papers were to be shredded and the debts written off, the global banks’ balance sheet would be wiped clean of such toxic assets. In the result the economy would restart and the good old days of cheap credit and unrestrained consumption would usher another boom!

This is a fairy tale.

In the old days, when the hoodlums want to kill someone and have him disappear for good, they would tie his legs together and attach the rope to a heavy object or an anchor and throw the poor fellow into the bottom of the lake or sea, never to be seen again. A small weight, say 10 kg is more than enough to drag the body to the bottom!

The current financial system is not unlike the man who has been thrown overboard and being dragged down by the heavy object. The only chance for survival is if the man could somehow loosen the rope and detach the weight from his legs and swim to the surface, if he could hold his breath long enough.

What is this small weight that is dragging the financial system down? And why writing off this particular debt will not save the banks?

Compared to the global derivative market which is valued in the hundreds of trillions, the global stock market by comparison is a midget. But it is this midget that will cause the financial implosion in America and Europe and reverberate across the world.

Let me explain in simple terms.

When the Dow collapsed from the stratospheric high of 14,000 to less than 7,000 recently (though recovered somewhat) and other stock markets also went south in tandem, it was estimated that at the minimum $30 trillion was wiped out.

What are the consequences of such a drastic collapse?

Let me explain in simple terms again.

Take the share price of Citigroup. At the height of the boom, its market capitalization was over $250 billion. Today, it is less than $10 billion.

Let us say that you bought the shares when it was trading at $150. You also borrowed from the bank to purchase the shares. These shares will have to be pledged to the bank as security for the loan. The shares are now trading a few dollars, say $5.

There is just no way that you can repay the loan and or to obtain additional security to “top-up” the value of the security pledged to the bank. Where are you going to get the cash to buy more shares? Shares of other companies that you may own have also collapsed, and their value may not be sufficient to cover the difference. You are dead meat!

The bank is also in deep trouble because there is no way that they can recover the loan from selling the shares, which is worth $5.

There is the added problem that companies, whose shares are traded in the stock exchange, are not worth even at current values because their core business and operations were premised on cheap credit and were therefore highly geared! These companies are in debt to their eyeballs!

They are insolvent, bankrupt!

Try as hard, the Fed and the Treasury will not be able to engineer a stock rally back to 14,000 points. And even if they could, it does not follow that the prices of the shares of specific companies would return to its previous high. In the case of Citigroup back to $200 per share!

There is no way in the next 3 to 5 years for companies whose businesses have collapsed to be able to recover fast enough and to be profitable enough to justify a market value of at least 50 per cent of its previous high. In the case of Citigroup, back up to $100.

That is an example in the financial sector.

In the manufacturing sector, an outfit like General Motors will take at least a decade to recover. Then there are those companies which have out-sourced and or re-located overseas. To restart local production again would take time and vast amount of credit. But would they be competitive, given cheaper cost of production elsewhere?

Corporate America is shutting down.

Stimulus and pump priming will not solve this huge problem.

Millions played at this casino using home equity. Pension funds risked your retirement benefits gambling at this casino and lost. Leveraging, 10, 20 or even 30 times was the norm. There is no money left in the kitty!

Quantity easing or printing money will not solve the problem, because a company’s value and market capitalization can only be enhanced through actual production of goods and services. But the Western economies in the last twenty years were skewed towards consumption and the availability of cheap credit.

Applying common sense, what was missing was the creation of surplus value, which is the result of efficient production, and savings which in turn provide the essential capital for more production and savings.

Nothing illustrates this problem better than the case of a farmer who stops farming because he had so much cheap credit, that he stopped farming. He could now easily purchase all he needed, and earned five times more gambling in the stock market casino than he would earn from farming. He mortgaged his farm to secure the borrowings. He lived and consumed like the rich and famous!

When the casino collapsed, he could not maintain the lifestyle and had to resort to selling heirlooms to survive.

Until and unless the farmer starts farming and pays off his debts, he would not be able to accumulate sufficient capital to resume what was once a profitable business.

In short, the farmer like all the millions of gamblers who have been ensnared by the global casino, are now in the debt trap and being slowly dragged down to the bottom of the lake!

Therefore, pumping hundreds of billions to the banks will not solve the problem.

You can bet your last dollar that when millions are caught in the debt trap and there is no way out, and they see billions been given to the Wall Street fat cats, lynching parties will be the order of the day!

The Count Down has started.


Disclaimer: The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of the Centre for Research on Globalization. The contents of this article are of sole responsibility of the author(s). The Centre for Research on Globalization will not be responsible or liable for any inaccurate or incorrect statements contained in this article.

For media inquiries: crgeditor@yahoo.com

© Copyright Matthias Chang, FutureFastFroward.com, 2009

The url address of this article is: www.globalresearch.ca/PrintArticle.php?articleId=12909

Counterpunch: Obama's Awful Recovery Plan

Trying To Revive The Bubble Economy

Michael Hudson

Martin Wolf started off his Financial Times column for February 11 with the bold question: “Has Barack Obama’s presidency already failed?” The stock market had a similar opinion, plunging 382 points. Having promised “change,” Mr. Obama is giving us more Clinton-Bush via Robert Rubin’s protégé, Tim Geithner. Tuesday’s $2.5 trillion Financial Stabilization Plan to re-inflate the Bubble Economy is basically an extension of the Bush-Paulson giveaway – yet more Rubinomics for financial insiders in the emerging Wall Street trusts. The financial system is to be concentrated into a cartel of just a few giant conglomerates to act as the economy’s central planners and resource allocators. This makes banks the big winners in the game of “chicken” they’ve been playing with Washington, a shakedown holding the economy hostage. “Give us what we want or we’ll plunge the economy into financial crisis.” Washington has given them $9 trillion so far, with promises now of another $2 trillion– and still counting.

A true reform – one designed to undo the systemic market distortions that led to the real estate bubble – would have set out to reverse the Clinton-Rubin repeal of the Glass-Steagall Act so as to prevent the corrupting conflicts of interest that have resulted in vertical trusts such as Citibank and Bank of America/Countrywide/Merrill Lynch. By unleashing these conglomerate grupos (to use the term popularized under Pinochet with Chicago Boy direction – a dress rehearsal of the mass financial bankruptcies they caused in Chile by the end of the 1970s) the Clinton administration enabled banks to merge with junk mortgage companies, junk-money managers, fictitious property appraisal companies, and law-evasion firms all designed to package debts to investors who trusted them enough to let them rake off enough commissions and capital gains to make their managers the world’s highest-paid economic planners.

Today’s economic collapse is the direct result of their planning philosophy. It actually was taught as “wealth creation” and still is, as supposedly more productive than the public regulation and oversight so detested by Wall Street and its Chicago School aficionados. The financial powerhouses created by this “free market” philosophy span the entire FIRE sector – finance, insurance and real estate, “financializing” housing and commercial property markets in ways guaranteed to make money by creating and selling debt. Mr. Obama’s advisors are precisely those of the Clinton Administration who supported trustification of the FIRE sector. This is the broad deregulatory medium in which today’s bad-debt disaster has been able to spread so much more rapidly than at any time since the 1920s.

The commercial banks have used their credit-creating power not to expand the production of goods and services or raise living standards but simply to inflate prices for real estate (making fortunes for their brokerage, property appraisal and insurance affiliates), stocks and bonds (making more fortunes for their investment bank subsidiaries), fine arts (whose demand is now essentially for trophies, degrading the idea of art accordingly) and other assets already in place.

The resulting dot.com and real estate bubbles were not inevitable, not economically necessary. They were financially engineered by the political deregulatory power acquired by banks corrupting Congress through campaign contributions and public relations “think tanks” (more in the character of doublethink tanks) to promote the perverse fiction that Wall Street can be and indeed is automatically self-regulating -- a travesty of Adam Smith’s “Invisible Hand.” This hand is better thought of as covert. The myth of “free markets” is now supposed to consist of governments withdrawing from planning and taxing wealth, so as to leave resource allocation and the economic surplus to bankers rather than elected public representatives. This is what classically is called oligarchy, not democracy.

This centralization of planning, debt creation and revenue-extracting power is defended as the alternative to Hayek’s road to serfdom. But it is itself the road to debt peonage, a.k.a. the post-industrial economy or “Information Economy.” The latter term is another euphemistic travesty in view of the kind of information the banking system has promoted in the junk accounting crafted by their accounting firms and tax lawyers (off-balance-sheet entities registered on offshore tax-avoidance islands), the AAA applause provided as “information” to investors by the bond-rating cartel, and indeed the national income and product accounts that depict the FIRE sector as being part of the “real” economy, not as an institutional wrapping of special interests and government-sanctioned privilege acting in an extractive rather than a productive way.

“Thanks for the bonuses,” bankers in the United States and England testified this week before Congress and Parliament. “We’ll keep the money, but rest assured that we are truly sorry for having to ask you for another few trillion dollars. At least you should remember our theme song: We are still better managers than the government, and the bulwark against government bureaucratic resource allocation.” This is the ideological Big Lie sold by the Chicago School “free market” celebration of dismantling government power over finance, all defended by complex math rivaling that of nuclear physics that the financial sector is part of the “real” economy automatically producing a fair and equitable equilibrium.

This is not bad news for stockholders of more local and relatively healthy banks (healthy in the sense of avoiding negative equity). Their stocks soared and were by far the major gainers on Tuesday’s stock market, while Wall Street’s large Bad Banks plunged to new lows. Solvent local banks are the sort that were normal prior to repeal of Glass Steagall. They are to be bought by the large “troubled” banks, whose “toxic loans” reflect a basically toxic operating philosophy. In other words, small banks who have made loans carefully will be sucked into Citibank, Bank of America, JP Morgan Chase and Wells Fargo – the Big Four or Five where the junk mortgages, junk CDOs and junk derivatives are concentrated, and have used Treasury money from the past bailout to buy out smaller banks that were not infected with such reckless financial opportunism. Even the Wall Street Journal editorialized regarding the Obama Treasury’s new “Public-Private Investment Fund” to pump a trillion dollars into this mess: “Mr. Geithner would be wise to put someone strong and independent in charge of this fund – someone who can say no to Congress and has no ties to Citigroup, Robert Rubin or Wall Street.”

None of this can solve today’s financial problem. The debt overhead far exceeds the economy’s ability to pay. If the banks would indeed do what Pres. Obama’s appointees are begging them to do and lend more, the debt burden would become even heavier and buying access to housing even more costly. When the banks look back fondly on what Alan Greenspan called “wealth creation,” we can see today that the less euphemistic terminology would be “debt creation.” This is the objective of the new bank giveaway. It threatens to spread the distortions that the large banks have introduced until the entire system presumably looks like Citibank, long the number-one offender of “stretching the envelope,” its euphemism for breaking the law bit by bit and daring government regulators and prosecutors to try and stop it and thereby plunging the U.S. financial system into crisis. This is the shakedown that is being played out this week. And the Obama administration blinked – as these same regulators did when they were in charge of the Clinton administration’s bank policy. So much for the promised change!

The three-pronged Treasury program seems to be only Stage One of a two-stage “dream recovery plan” for Wall Street. Enough hints have trickled out for the past three months in Wall Street Journal op-eds to tip the hand for what may be in store. Watch for the magic phrase “equity kicker,” first heard in the S&L mortgage crisis of the 1980s. It refers to the banker’s share of capital gains, that is, asset price inflation in Bubble #2 that the Recovery Program hopes to sponsor.

The first question to ask about any Recovery Program is, “Recovery for whom?” The answer given on Tuesday is, “For the people who design the Program and their constituency” – in this case, the bank lobby. The second question is, “Just what is it they want to ‘recover’?” The answer is, the Bubble Economy. For the financial sector it was a golden age. Having enjoyed the Greenspan Bubble that made them so rich, its managers would love to create yet more wealth for themselves by indebting the “real” economy yet further while inflating prices all over again to make new capital gains.

The problem for today’s financial elites is that it is not possible to inflate another bubble from today’s debt levels, widespread negative equity, and still-high level of real estate, stock and bond prices. No amount of new capital will induce banks to provide credit to real estate already over-mortgaged or to individuals and corporations already over-indebted. Moody’s and other leading professional observers have forecast property prices to keep on plunging for at least the next year, which is as far as the eye can see in today’s unstable conditions. So the smartest money is still waiting like vultures in the wings – waiting for government guarantees that toxic loans will pay off. Another no-risk private profit to be subsidized by public-sector losses.

Read More

Michael Hudson is a former Wall Street economist. A Distinguished Research Professor at University of Missouri, Kansas City (UMKC), he is the author of many books, including Super Imperialism: The Economic Strategy of American Empire (new ed., Pluto Press, 2002) He can be reached via his website, mh@michael-hudson.com

Global Economic Meltdown, Country By Country

Guardian - In Athens, it was students and young people who suddenly mobilized to turn parts of the city into no-go areas. They were sick of the lack of jobs and prospects, the failings of the education system and seized with pessimism over their future. This week it was the farmers' turn, rolling their tractors out to block the motorways, main road and border crossings across the Balkans to try to obtain better procurement prices for their produce."

International Herald Tribune - A French minister flew to the Caribbean island of Guadeloupe for talks aimed at ending a 13-day general strike over pay and prices that has paralyzed the French territory and threatens to fuel dissent at home. Business leaders have warned of economic ruin if the dispute is not resolved soon and officials are anxious to prevent any contagion to the French mainland, where unions are demanding more government action to tackle the economic crisis. . . An alliance of 47 unions and local bodies known as the Lyannaj kont pwofitasyon - whose name in Creole means "Let's stand up to fight against all sorts of abuses" - began their protest on Jan. 20 over the cost of living. They have drawn up a list of 146 demands including an increase in the minimum salary of E200, or $257, a freeze on rents and a cut in taxes and food prices. They also want an immediate 50-cent reduction in the price of a liter of petrol.

Foreign Policy - The financial crisis has gotten so severe in Britain that it has earned London a new nickname in the international media: Reykjavik-on-Thames. The question in Britain is no longer when the economy will enter a recession, but when it will enter a depression, with many bracing for a slump that could rival the 1930s in severity. . .

Guardian - More than 10,000 people converged on the 13th century cathedral to show the Latvian government what they thought of its efforts at containing the economic crisis. The peaceful protest morphed into a late-night rampage as a minority headed for the parliament, battled with riot police and trashed parts of the old city. The following day, there were similar scenes in Vilnius, the Lithuanian capital next door"

Foreign Policy - Latvia is arguably the one country that most resembles Iceland, and not just because of the cold climate. The small, developing country's lofty growth rates in recent years were fueled by heavy investment from elsewhere in Europe, massive foreign debt, booming consumption, and minimal savings. After growing at an extraordinary 12.2 percent rate in 2006, Latvia's economy is now the weakest of the 27 EU member states. . . . The International Monetary Fund has approved a $7.3 billion bailout package for Latvia, but a long road to recovery remains.

Foreign Policy -The Greek economy, burdened by a debt-to-GDP ratio of more than 90 percent, is one of the shakiest in the European Union. . .

Foreign Policy - Economic damage: Nicaraguan President Daniel Ortega, an old U.S. enemy from the Cold War, explained the financial crisis by stating, "God is punishing the United States." But the ripple effects from the crisis will likely reach all the way to his own country. Nicaragua's economy is heavily dependent on remittances, with the central bank estimating that Nicaraguans abroad send back between $800 million and $1 billion every year. The U.S. economic downturn means that fewer Nicaraguans will have money to send home. The financial crisis has also pushed down the price of coffee, Nicaragua's main export, as investors have abandoned the commodity market.

Guardian, UK - Gordon Brown condemned wildcat strikes as "indefensible" amid efforts to prevent the row over foreign labor escalating into mass industrial action. The prime minister said he recognized that people were worried about jobs being taken by workers from other countries, but stressed that the UK was part of a single European market. . . The protests were prompted by a decision to bring in hundreds of Italian and Portuguese contractors to work on a new plant at the Lindsey oil refinery, in North Lincolnshire. Unions claim Britons were not given any opportunity to apply for the posts.

Reuters - - Peru's largest federation of mining unions said over the weekend it has agreed to call a nationwide strike starting on March 15, to protest mounting job cuts and to pressure Congress to lift caps on profit sharing.. . . Mine workers are upset by job cuts spurred by the global economic crisis, which has slammed prices for most of Peru's metal exports, the government's largest revenue source. According to the mining federation, more than 5,500 workers have lost their jobs since December, while the Labor Ministry puts the figure at 4,000.

Times, UK - The collapse of the export trade has left millions without work and set off a wave of social instability. . . China's new year of the ox portends calm but there is little sign of it as workers in Shezhen protest over unpaid wages as factories shut. Bankruptcies, unemployment and social unrest are spreading more widely in China than officially reported, according to independent research that paints an ominous picture for the world economy. The research was conducted for The Sunday Times over the last two months in three provinces vital to Chinese trade - Guangdong, Zhejiang and Jiangsu. It found that the global economic crisis has scythed through exports and set off dozens of protests that are never mentioned by the state media.

Ana, Greece - Farmers from Iraklio and Lasithi on Crete embarked on ferry boats bound for the port of Piraeus, along with their tractors and pick-up trucks, determined to take their protest to the capital. . . Amid government appeals that they leave their tractors behind, farmers on Crete had earlier disbanded their five-day road block at Linoperamata and Platani and arranged to meet at the island's port the same evening.

Reuters - Hundreds of nuclear workers joined nationwide protests against the use of foreign-contracted labor, saying Britons were losing out at a time of rising unemployment and economic recession. About 900 contractors at the Sellafield nuclear processing plant in northern England walked off the job, joining more than 1,000 others in the fuel and energy industries who have carried out impromptu strikes over foreign labor in recent days.

Guardian - Burned-out cars, masked youths, smashed shop windows and more than a million striking workers. The scenes from France are familiar, but not so familiar to President Nicolas Sarkozy, confronting the first big wave of industrial unrest of his time in the Elysee Palace. . . The latest jobless figures were to have been released yesterday, but were held back, apparently for fear of inflaming the protests."

Times, UK - Wildcat strikes flared at more than 19 sites across [Britain] in response to claims that British tradesmen were being barred from construction jobs by contractors using cheaper foreign workers."

Daily Mail, UK - Russia was rocked by some of its strongest protests yet as thousands rallied across the vast country to attack the Kremlin's response to the global economic crisis. The marches, complete with Soviet-style red flags and banners, pose a challenge to a government which has faced little threat from the fragmented opposition and politically apathetic population during the boom years fuelled by oil. Pro-government thugs beat up some of the protesters. . . About 2,500 people marched across the far eastern port of Vladivostok to denounce the Cabinet's decision to increase car import tariffs, shouting slogans urging Prime Minister Vladimir Putin to resign. . . . Meanwhile in Moscow arrests were made as about 1,000 diehard Communists rallied in a central square hemmed in by heavy police cordons.

Dave Lindorff: The Ugly Truth

The American Economy Is Not Coming Back

Via Counterpunch:

President Barack Obama and his economic team are being careful to couch all their talk about economic stimulus programs and bank bailout programs in warnings that the economic downturn is serious and that it will take considerable time to bounce back.

I’m reminded of an experience I had with Chinese medicine when I was living in Shanghai back in 1992. I had come down with a nasty case of the flu while teaching journalism at Fudan University on a Fulbright Scholar program. A Chinese colleague suggested I go to the university clinic. When I told him there wasn’t much point since doctors couldn’t do much for the flu besides recommend fluids and bed rest, he said, “That’s Western doctors. You could go to the Chinese medicine doctors at the clinic. They can help you.” I figured, what the hell, and we went. The doctor inquired into the lurid details of my illness—how my bowel movements looked, the color of the mucus in my nose, etc. He didn’t really examine me physically. Then he prescribed an incredible number of pills and teas and sent me home with a huge bag of stuff, and instructions on the regimen for taking them through the course of each day. I followed the directions dutifully, and my colleague came by each day to check on my progress. By the fifth day, when I was still running a fever and feeling terrible, I told him I didn’t think the Chinese medicine was working. He replied confidently, “Chinese medicine takes a long time to work.”

I laughed at this. “Sure,” I said. “But the flu only lasts a week or so, and now, when I get better, you’ll say it was the Chinese medicine, right?”

He smiled and agreed. “Yes. You are right.”

Obviously the Obama administration recognizes that it needs to keep the finger of blame for the current economic collapse squarely pointed at the Bush administration, which is certainly fair in large part (though the Clinton deregulation of the banking industry played a major part in the financial crisis and its enthusiastic promotion of globalization began the massive shift of jobs overseas that has left the nation’s productive capacity hollowed out). But it also seems to recognize that it cannot tell the bitter truth, which is that our national economy will never “bounce back” to where it was in 2007.

America, and individual Americans, have been living profligately for years in an unreal economy, propped up by easy credit which inflated the value of real estate to incredible levels, and which led people to spend way beyond their means. Ordinary middle-class working people have been encouraged to buy obscenely oversized homes at 5% down, or even no down payment. They have been lured into buying cars the size of trucks, one for each driving-aged member of the family (in our town, so many high school kids drive to school that the school ran out of parking spaces and the yellow school buses, largely empty on their runs, are referred to by the students as the “shame train,” an embarrassment to be seen riding). They’ve installed individual back-yard swimming pools, unwilling to share the water with their neighbors in community pools. Boring faux ethnic restaurant franchises of all kinds have befouled the landscape, filling up with families too stressed out to cook, and willing to endure over-salted, over-priced and tasteless cuisine and tacky plastic décor night after night.

Now this is all crashing down. Property values are in free-fall. Car sales have fallen off a cliff. Joblessness is soaring (At present, it’s approaching an official rate of 8%, but if the methodology used in 1980, before the Reagan administration changed it to hide the depth of that era’s deep recession, were applied, it would be 17% today, or one in seven workers).

Eventually, the economic slide will hit bottom and begin its slow climb back, as all recessions do, but there will be no return to the days of $500,000 McMansion developments, three-car garages and a new car every two or three years for both parents plus a car for each highschooler. Not only will banks no longer be able to offer such credit to clients. People, having been burned, will not be willing to borrow so much. Company health care benefits, pension programs or 401(k) matching programs that were slashed during this downturn will not be restored when the economy picks up again.

Over the last 20 years, America has degenerated into a nation of consumers, with 72 percent of Gross Domestic Product (sic) now being accounted for by consumer spending—most of it going for things that are produced overseas and shipped here.

That is not an economic model that is sustainable, and it is a model that has just suffered what is certainly a mortal blow.

What we are now seeing is the beginning of an inevitable downward adjustment in American living standards to conform with our actual place in the world. As a nation of consumers, and not producers, with little to offer to the rest of the world except raw materials, food crops, military hardware and bad films (none of which industries employ many people), we are headed to a recovery that will not feel like a recovery at all. Eventually, productive capacity will be restored, as lowered US wages make it again profitable for some things to be made here at home again, but like people in the 1930s looking back at the Roaring 20s of yore, we are going to look back at the last two decades as some kind of dream.

It would be better if the new administration would be honest about this, because with honesty, we could have a recovery program that would actually address the real critical issues facing the country—the decline of our educational system, the irrationality of official promotion of home ownership that has led to the proliferation not just of suburbs but of exurbs, the over-reliance on the automobile for transportation, the unprecedented waste of resources, the pillaging of the environment, not to mention the decimation of the retirement system and the creation of a vast medical-industrial complex that is sucking the life-blood out of families and businesses alike.

With honesty, we could also confront the other big obstacle to national recovery—the nation’s obsession with militarism and foreign wars. The honest truth is that the US is technically bankrupt and in a state of chronic decline, and yet the nation persists in spending a trillion dollars a year on war and preparations for war, as though America were in mortal danger from foreign enemies.

The truth is that we are not threatened by Communism, by drug lords, or by Muslim Jihadists in any serious way. Rather, we have become our own worst enemy.

The administration could start by telling us all this straight up, but the problem is, most of us probably don’t want to hear it, which explains why we’re not hearing it. It also explains why we’re about to blow another trillion or so dollars on propping up failing banks, funding pointless highway and bridge construction, and blowing up illiterate peasants in remote places like Afghanistan and Pakistan.

DAVE LINDORFF is a Philadelphia-based journalist. His latest book is “The Case for Impeachment” (St. Martin’s Press, 2006 and now available in paperback edition). Lindorff spent five years reporting on China and Hong Kong for Business Week magazine. His current work is available at www.thiscantbehappening.net

THE MEN HE DIDN’T LIKE

By Will Rogers, from a recording released May 31, 1923, by Victor Records. The origins of the speech are unknown; Rogers may have been speaking before the annual convention of the American Bankers Association in 1922, in New York City. The document is included in The Papers of Will Rogers, Volume Four, published by the University of Oklahoma Press.

Loan sharks and interest hounds—I have addressed every form of organized graft in the United States, excepting Congress, so it’s naturally a pleasure for me to appear before the biggest. You are without a doubt the most disgustingly rich audience I ever talked to, with the possible exception of the bootleggers’ union, Local No. 1, combined with the enforcement officers.

Now, I understand that you hold this convention every year to announce what the annual gyp will be. I have often wondered where the depositors hold their convention. I had an account in the bank once, and the banker, he asked me to withdraw it. He said I had used up more red ink than the account was worth.

I see where your convention was opened by a prayer, you had to send outside your ranks to get somebody that knew how to pray. You should have had one creditor there; he’d have shown you how to pray. I noticed in the prayer the clergyman announced to the Almighty that the bankers were here. Well, it wasn’t exactly an announcement. It was more in the nature of a warning. He didn’t tell the devil, as he figured he knew where you all were all the time anyhow.

I see by your speeches that you’re very optimistic of the business conditions of the coming year. Boy, I don’t blame you. If I had your dough, I’d be optimistic too.

Will you please tell me what you all do with the vice presidents the bank has? I guess that’s to get anybody more discouraged before they can see the main guy. Why, the United States is the biggest business institution in the world. They got only one vice president. Nobody’s ever found anything for him to do.

You have a wonderful organization. I understand you have 10,000 here, and what you have in federal prisons brings your membership up to around 30,000. So goodbye, paupers. You’re the finest bunch of shylocks that ever foreclosed a mortgage on a widow’s home.