Political Cortex: Brain Food for the Body Politic

"Alan Greenspan took part in a very quiet collective effort to ensure that America didn't experience an economic meltdown, taking the rest of the world with it.  There was good reason to fear the worst:  The stock market crash of October 1987, the first major crisis as Federal Reserve Chairman, occurred just weeks after he assumed control.  How much closer than even today is generally known, to freezing the financial system and triggering a general financial panic."

October 13, 2008 the economic panic shook the economies of the entire world.  The White House is hosting a G-8 economic conference of the major nations of the world.  They will analyze precisely what caused this economic meltdown which has frozen the credit markets.  It is essential to discover what happened and who is responsible and determine what penalties should be invoked, including possible jail terms.

To understand how the Federal Reserve works, the Honorable Louis McFadden, Chairman of the House Banking and Currency Committee in the 1930's, made this statement:

"Some people think that the Federal Reserve Banks are United States Government institutions.  They are private monopolies, which prey upon the people of these United States for the benefit of themselves and their foreign customers, foreign and domestic speculators and swindlers; and rich and predatory lenders."

Global Research.com tells how the power of the Fed works.  It is revealed in an October 8, 2008 article:

"The Federal Reserve (or Fed) has assumed sweeping powers in the last year.  In an unprecedented move in March 2008, the New York Fed advanced the funds for J.P. Margan-Chase Bank to buy investment bank Bear-Stearns for pennies on the dollar.  The deal was particularly controversial because James Dimon, CEO of J.P. Morgan who sits on the board of the New York Fed., participated in the secret weekend negotiations."

When Washington Mutual, the leading lender for those notorious high-risk sub-prime mortgages was collapsing, the Fed move in, took over and suddenly it was sold to J.P. Morgan-Chase Bank.  But sadly, not before a $7 billion plus bonus was granted to a new Washington Mutual CEO the moment he signed to attempt to salvage the bank.

De-regulation was the key to the multiple banks collapsing syndrome that set in.  Banks were cashing in on a dirty little scheme.  By giving mortgages to high-risk, poor-credit customers, they simply packed these bad mortgages with good mortgages and sold them.  

Wall Street hastily bundled them and sold them to U.S. banks and other banks world-wide.  They called them mortgage securities, about as secure as the pipe dreams of a drunken bum.  The trick word was of course "securities"!

When the awful truth of what these horrendous bankers had done as the principal kicked in on these no-interest-loans didn't have sufficient funds for both principal and interest.  The world-wide economic meltdown sent Wall Street crashing to the economic depths.

It has long been known that Alan Greenspan fought against regulating banks vigorously.  The New York Times on October 9 reported in an article by Peter S. Goodman the following:

"Over the years, Mr. Greenspan helped enable an ambitious American experiment in letting the market forces run free.  Now, the nation is confronting the consequences.

"If Mr. Greenspan had acted differently during his tenure as Federal Reserve Chairman from 1987 to 2006, many economists say, the current crisis might have been averted or muted."

Perhaps the single most significant factor in this entire economic debacle happened the day Greenspan persuaded the compliant U.S. Congress to see things his way.  Peter S. Goodman explains:

"Mr. Greenspan's credentials and confidence reinforced his reputation -- helping him to persuade Congress to repeal Depression-era laws that separated commercial and investment banking in order to reduce overall risk in the financial system."

Another Greenspan viewpoint prompted him to argue for de-regulation:

"Throughout the 1990's some argued that derivatives had become so vast, so intertwined and inscrutable that they required federal oversight to protect our financial system.  In meetings with federal officials, celebrated appearances on Capitol Hill and heavily attended speeches, Greenspan banked on the good will of Wall Street to self-regulate as he fended off restrictions.

"Economists from across the ideological spectrum have criticized his decision to let the nation's real estate market to continue to boom with cheap credit and low interest rates, rather than snuff out price increases with higher rates."

Alan Greenspan's ideological idol is well known to be none other than Ayn Rand, author of "Atlas Shrugged" and "The Fountainhead".

In the book "Greed III" by Julian Edney the following is stated concerning Friedrich Nietzsche:

"Nietzschean values are war-like.  Nietzsche was openly contemptuous of the average man ... They are teeming, petty, judgmental and they are scared of change, and in their small-minded large numbers they try to smother progress with bureaucracy and democracy.  Helping the teeming masses is counter-productive said Nietzsche.  It weakens culture and altruism in the form of welfare, only encourages people who stumble around bleating Christian virtues."

Edney then focuses on Ayn Rand:

"Ayn Rand's world copies this.  It is the world of the strong versus the weak.  Anything that subsumes the individual to the group is wrong because it hinders personal freedom.  Altruism is opposed to individual rights and is the enemy of advancing civilizations.  Absolute laissez-faire was Rand's ideal with no government constraint on business and no assistance to the poor."

This is Alan Greenspan's idea -- no government control.  Now we know what a devastating concept this is, as our stock market crashes.

Thank you, Alan and Ayn.  

Jeff Walker, one of Ayn Rand's biographers, in researching her personal journals found an entry she wrote when she was thirty:

"One puts oneself above all and crushes everything in one's way to get the best for oneself.  Fine!"