"The essence of Government is power; and power, lodged as it must be in human hands, will ever be liable to abuse." -- James Madison - (1751-1836)


"We are fast approaching the stage of the ultimate inversion: the stage where the government is free to do anything it pleases, while the citizens may act only by permission; which is the stage of the darkest periods of human history, the stage of rule by brute force. " : Ayn Rand in "The Nature of Government"


"Throughout history there have been tyrants and murderers. And for a while they seem invincible, but always they fall. Always."-Mahatma Gandhi

Science may have found a cure for most evils; but it has found no remedy for the worst of them all -- the apathy of human beings: Helen Keller

The notion that a radical is one who hates his country is naive and usually idiotic. He is , more likely, one who likes his country more than the rest of us, and is thus more disturbed than the rest of us when he sees it debauched. He is not a bad citizen turning to crime ; he is a good citizen driven to despair.--H.L Mencken


"When even one American-who has done nothing wrong-is forced by fear to shut his mind and close his mouth-then all Americans are in peril" Harry S. Truman


"The power of the Executive to cast a man into prison without formulating any charge known to the law, and particularly to deny him the judgment of his peers, is in the highest degree odious and is the foundation of all totalitarian government whether Nazi or Communist."- Winston Churchill, Nov. 21, 1943


"When you see that in order to produce, you need to obtain permission from men who produce nothing - when you see that money is flowing to those who deal, not in goods, but in favors - when you see that men get richer by graft and by pull than by work, and your laws don't protect you against them, but protect them against you - when you see corruption being rewarded and honesty becoming a self-sacrifice - you may know that your society is doomed: Ayn Rand - (1905-1982) Author - Source: Atlas Shrugged, Francisco's "Money Speech"

"Loss of freedom seldom happens overnight. Oppression doesn't stand on the doorstep with toothbrush moustache and swastika armband -- it creeps up insidiously...step by step, and all of a sudden the unfortunate citizen realizes that it is gone." ~ Baron Lane

U.S. Constitution - R.I.P.

Tuesday, January 8, 2008

Bush convenes Plunge Protection Team

Bears beware. The New Deal of 2008 is in the works. The US Treasury is about to shower households with rebate cheques to head off a full-blown slump, and save the Bush presidency. On Friday, Mr Bush convened the so-called Plunge Protection Team for its first known meeting in the Oval Office. The black arts unit - officially the President's Working Group on Financial Markets - was created after the 1987 crash.

 It appears to have powers to support the markets in a crisis with a host of instruments, mostly by through buying futures contracts on the stock indexes (DOW, S&P 500, NASDAQ and Russell) and key credit levers. And it has the means to fry "short" traders in the hottest of oils.
The team is led by Treasury chief Hank Paulson, ex-Goldman Sachs, a man with a nose for market psychology, and includes Fed chairman Ben Bernanke and the key exchange regulators.

 Judging by a well-briefed report in the Washington Post, a mood of deep alarm has taken hold in the upper echelons of the administration. "What everyone's looking at is what is the fastest way to get money out there," said a Bush aide.

 Emergency measures are now clearly on the agenda, apparently consisting of a mix of tax cuts for businesses and bungs for consumers. Fiscal action all too appropriate, regrettably.

 We face a version of Keynes's "extreme liquidity preference" in the 1930s - banks are hoarding money, and the main credit arteries of the financial system remain blocked after five months.

 "In terms of any stimulus package, we're considering all options," said Mr Bush. This should be interesting to watch. The president is not one for half measures. He has already shown in Iraq and on biofuels that he will pursue policies a l'outrance once he gets the bit between his teeth.

 The only question is what the president can manage to push through a Democrat Congress.

 The Plunge Protection Team - long kept secret - was last mobilised to calm the markets after 9/11. It then went into hibernation during the long boom.

 Mr Paulson reactivated it last year, asking the staff to examine "systemic risk posed by hedge funds and derivatives, and the government's ability to respond to a financial crisis", he said.

 It seems he failed to spot the immediate threat from mortgage securities and the implosion of the commercial paper market. But never mind.

Got to build false consumer confidence and keep that credit flowing to prop up the smoke and mirrors economy. Convincing consumers who are already up to their eyeballs in debt to spend more..on credit of course...is the economic "strategy" of the times apparently.

Posted by Melinda L. Secor at 8:08 PM

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