Yet another bailout

So AIG is the next bailout. I guess some of the preferred stock holders in AIG had a more powerful presence in government than Lehman Brothers did. This bailout is basically a loan by the government (using your tax dollars) so that AIG can go out of business in an orderly manner. Here is choice a quote by Tami Luhby, a senior writer at CNNMoney.com:

An eventual liquidation of the company is most likely, senior Fed officials said. But with the government loan, the company won't have to go through a tumultuous fire sale.

(for the CNN full article click here)

So what happens in such a liquidation? Well the bulk of the proceeds in the liquidation go, of course, to the preferred stock holders (the wealthy elites) while the regular stock holders (you, through your 401k) get the shaft. And of course, the management of AIG (more wealthy elites) can always take that loan money and run, let the corporation default on the loan. In other words, they will just mail the keys to the office to the Federal Reserve Board a corporate version of jingle mail.

Market Crash?

Is today the day where the Great American Ponzi Scheme collapses? I say no. One of the key aspects of a dark age is the breakdown of the commerce web. Today a few important strands are breaking as some big banks fail, but the web is still there…at least for a few more months. Currently, I still hold that the real crash will be in February of 09 when the much more tangible sector of the economy, retail, begins to fail after a dismal holiday season.

I can tell you this though, the crash is inevitable. The Elites know it. They are scrambling to gather their wealth before it happens so that when the New Dark Age descends they will be in a position to become the New Aristocracy. But, despite the enormous power they already wield, they cannot stop the crash (nor do they necessarily want to).

You’ll notice I mentioned the “Great American Ponzi Scheme”. “What is it?” you ask. The GAPS, is one of the primary mechanisms that the Elite has been using to transfer the collective wealth of the American middle class into the coffers of those who will become the New Aristocracy. It works like this:

1) First, the Elites convince the middle class to give up the concept of pensions and replace them with 401k plans.

2) At the same time, the Elites buy preferred stock in various institutions in which they have some control over the business decisions made.

3) Using their influence, they get those institutions to artificially inflate their value. For example, banks stuff their books with mortgages - they may not expect many to get paid back, but they still show as a full valued asset on their books.

4) They wait for the 401k plans to use middle class American’s retirement money to buy the regular (not the preferred) stock in those institutions. This is the important step where the wealth is transferred from the middle class to the Elites. Actual capital is used to buy stocks with only a virtual (imaginary) value.

5) Now the Elites can, at this point, sell their preferred stock and cash out. Or, they can just wait. They carry no (or at least a significantly lesser) risk. If the scheme fails, they own PREFERRED STOCK. That is, they will benefit from a bailout while the regular stock holders are shafted. Even if the institution is not bailed out, they are still the ones who get reimbursed during the liquidation of the institution, not the regular stock holders. Either way the capital has been transferred to them.

Now, you might be able to see why conservatives have pushed so often to privatize Social Security. Such an action would allow that money to buy stock in their companies, further transferring the remaining wealth of the middle class to them.

I smell bailout!

So will Lehman Brothers be deemed to big to fail? According to Reuters:

Shares of Lehman (LEH.N: Quote, Profile, Research, Stock Buzz), the fourth largest U.S. investment bank, fell 44 percent to $7.91 on the New York Stock Exchange.

I believe I see another opportunity for some fat bankers and their preferred-share-holders to snag some federal tax revenue. I suppose it depends on how many of those preferred-share-holders are neocon elites whispering into the President's ear.

More on the Fannie/Freddie debacle.

Naturally Fannie and Freddie are barely registering in the news today. I'm sure the neocons timed this so just such a thing would happen. For those who are interested I found a pretty good discussion going on over at HousingPANIC that talks about the true consequences of this taxpayer bailout.

And yes, I do believe that one of the primary goals of the neoconservatives is to establish an American aristocracy (though they are not the only ones with such a goal).

Weclome

Welcome to Collapsium. Today the shit is hitting the fan with Fannie Mae and Freddie Mac being seized by the government. I figured it would be a great starting point for my new blog about the collapse of modern society and the beginning of the New Dark Age.

One of the most important aspects of the new Dark Age will be concentration of wealth (money, property, and resources) to an elite few. These people will be the new aristocracy, and, much like the dark ages of the early European medieval period, these elites will be free to run amok and abuse their power at will.

The emergence of this new aristocracy is contingent upon the transfer of wealth from the middle class to the elites. Today’s seizure of Fannie and Freddie is the new model for how this will occur (warfare being the older model). Basically, it goes like this:

1) Institutions that are deemed “too large to failure” that are run by elites will become involved in various forms of the ponzi schemes, pyramid schemes or bubble schemes to quickly run up a high virtual value.

2) When the scheme begins to fail, the government will seize the institution.

3) The government will then used wealth taken from the middle class (taxes) to prop up these institutions converting that virtual value from step 1 into actual value.

4) The elites in charge of these institutions then bail out with “golden parachutes”.

Today this is happening with Fannie and Freddie. If you check out this CNN article, one of the most important things to note is how the bail out is only for the holders of preferred stock, i.e. the elites.