The Palace Prophets

A King's fatal folly: Assured by his palace prophets that his sneak attack on Ramoth-Gilead would succeed, Ahab, ruler of Israel, leads both his army and Jehosaphat's army of Judah to a crushing defeat.

(See the editorial note at the bottom of this essay.)

A wary and uneasy peace had prevailed for three years between Syria and Israel when Jehoshaphat, ruler of Judah, held a summit in Samaria with Ahab, who reigned over the Northern Kingdom of Israel.

“Hey, you know what?” Ahab asked Jehoshaphat, nudging his counterpart in the ribs. “We really ought to hook up and snatch Ramoth in Gilead away from Syria. Whadd'ya say?”

“I'm down with that,” Jehoshaphat replied, “and so are my subjects and my military – but we might want to ask what God thinks of the idea.”

Rolling his eyes in disgust, Ahab summoned his posse of prophets – all four hundred of them, who were kept on retainer by his administration. Solely for the benefit of his would-be ally, Ahab -- in a voice well-seasoned with weary indifference -- posed the question to them: “So, should I attack Ramoth-Gilead, or what?”

“Yeah, go ahead,” the court prophets replied. “God will be on your side, and stuff.”

Not surprisingly, this performance failed to convince Jehoshaphat, who was as cynical and opportunistic as the next ruler but retained a residue of genuine piety. As he examined the collection of Hierophants for hire masquerading as men of God, the King of Judah probably reflected on some version of the following thought: Take the King's shekel, follow the king's script.

“Isn't there an actual prophet of the Lord around here somewhere whom we could consult about the wisdom of going to war?” Jehoshaphat asked. This request prompted another bout of eye-rolling from Ahab.

“Well, there is this one guy, but he's not a team player,” Ahab complained. “He's such a defeatist and nay-sayer. He never says anything good about my administration, and he's outside the mainstream of prophetic thought. It's always `The Lord is displeased with your greed and corruption,' and `You are condemned by the Lord for your idolatry,' and things like that. He just dwells on the negative; he doesn't give people any hope. But I'll summon him, if you insist.”

Turning to a military aide, Ahab said: “Bring me Micaiah the son of Imlah.”

While the messenger was out fetching the prophet of the Lord, the court prophets put on a show for the amusement of Ahab and his guest, regaling them with tales of their impending military conquest. It would be a “cakewalk,” they insisted; the Syrians would be wiped out and the allied forces of Judah and Israel would hardly break a sweat.

When Micaiah was found, the royal messenger took him aside and tried to prompt him as to the message “the Lord” would offer through him.

“Look, Ahab called out the prophets, and they've reached a consensus,” the messenger explained. “They've all agreed that the war is going to be successful. So the war is going to happen; you can't change that, so you might as well try to influence the policy for good, rather than opposing it, which would just leave you marginalized anyway. This is just one of those times you have to choose the lesser of the available evils. You don't have to say exactly what the court prophets have said, but you really should let your message harmonize with theirs.”

“You don't understand, do you?” said Micaiah. “I'm not in the business of saying what the King wants to hear, or swaddling the King's policies in pious language. I'm just a messenger, like you, but my messages come from the Lord, rather than the King – and He requires that I speak only what He tells me to.”

After expelling a heavy sigh and shaking his head in resignation, the royal messenger took Micaiah back to King Ahab – and then promptly made himself scarce.

This is what all the fuss was about?! Ramoth-Gilead today.

“So, Micaiah,” Ahab said, treating him to what he thought was an intimidating look, “Should we attack Ramoth-Gilead?”

He's already made up his mind, Micaiah thought in disgust.

“Yeah, go ahead,” he said disdainfully, casting a contemptuous glance at the court prophets, who were clinging to the shadows in anticipation of a very unpleasant confrontation. “Go to war, and may the Lord prosper you.” He turned to leave, only to be find his exit blocked by the King's palace guards.

Ahab was many contemptible things, but he was not a fool, and he could recognize when he was being patronized.

“Look, why don't you tell me what the Lord says about the matter?” he said defiantly, expecting that through the force of his royal bombast he could compel the stubborn prophet to trim his sails.

“Very well,” Micaiah said, squaring his shoulders as the court prophets dove for cover. “The Lord has shown me the armies of Israel scattered in the hills, fleeing in a leaderless retreat, with every man withdrawing to his own house.”

Throwing up his hands in frustration, Ahab turned to Jehoshaphat. “Y'see? What did I tell you? He's a defeatist.”

Emboldened by the King's complaint and the fact that Michaiah was surrounded by armed guards, some of the salaried seers were able to summon a bully's simulacrum of courage. A few of them audibly rebuked Micaiah for defying the prophetic consensus.

“I mean, who is this guy to say that he's right, and we're wrong?” one of the pink-slip prophets protested, his elongated sibilants testifying of both the softness of his lifestyle and the dubiousness of his masculinity.

Boldly approaching the King, Michaiah prophesied:

“The ... men you hired didn't ask God about the truth," Michaiah declared. "They wanted to enlist Him to support their ruler's ambitions. God doesn't lie, but sometimes, after we persist in lying long enough He simply lets us live with the consequences of our deceit."

"As for me," Michaiah continued, pausing to shoot a look at the cringing "prophets" before resuming, "I saw the Lord in vision on his throne, surrounded by the host of heaven. The Lord permitted a lying spirit to work through Ahab's prophets to persuade the king to embark on this stupid war."

At this, Zedekiah – the royal prophet who had complained about Michaiah's presumption – strode up to the Lord's prophet and hit him flush on the jaw. The result was more of an insult than an injury.

“So, was it a lying spirit from the Lord that made me deliver that message to you?” Zedekiah sneered, only to feel every particle of boldness leave him as Michaiah's eyes, radiating the composed courage of a man who knows the truth and is at peace with it, pierced the poseur's pretenses.

Truth vs. "Consensus": Michaiah boldly prophesies against the aggressive war being plotted by Ahab and Jehosaphat.

“You're brave enough when the King and his bodyguards have your back,” Michaiah told Zedekiah, his voice the quiet but penetrating rumble of a distant, fast-approaching thunderstorm. “But I can see a day when you'll be cowering in a corner, whimpering in fear.”

“Take this guy and throw him in prison, until I return victorious!” Ahab commanded.

As a brace of bodyguards started to march Michaiah out of the throne room, the Lord's prophet shrugged his arms free and turned to utter one final warning.

“You won't return at all from this war,” he told Ahab. “If you do, you'll know that the Lord had nothing to do with my prophecy.”

Shortly thereafter, Ahab and Jehoshaphat struck out for Ramoth-Gilead.

Before the assault began, Ahab – perhaps haunted by Michaiah's prophecy – decided to hedge his bets. “You know what -- I've got an idea,” Ahab told his ally. “I'm going to disguise myself as a common soldier. Why don't you make yourself a more conspicuous target by parading around in your royal finery.”

We're not told what Jehoshaphat's reaction was to this self-serving proposal (I'd wager it involved the ancient equivalent of a barnyard epithet), but he did as he asked – with predictable consequences.

The Syrian king had told his military leaders to ignore the rank and file and concentrate on finding Ahab. In short order Jehoshaphat was swarmed by the Syrian hosts.

“Hey, I'm not the guy you're looking for!” Jehosaphat yelped.

The Syrian charioteers, seeing that this was true, wheeled about and resumed their pursuit of the disguised Ahab.

Meanwhile, some undistinguished Syrian conscript drew back on his bow and let fly at random. “I shot an arrow into the air,” as it were – and the deadly projectile hit the disguised Ahab in a seam of his armor, mortally wounding him.

With Ahab dead and Jehoshaphat's battlefield leadership compromised, the Israelite army fell apart, each man retreating to the security of his home, just as Micaiah had prophesied.

The object of sharing this rather emancipated paraphrase of I Kings 22 is to underscore the moral and practical futility of seeking wisdom from religious leaders who are on the state's payroll, or who covet the power that comes from proximity to the politically powerful.

I do not intend to interpolate my own views into the Scripture, but from what I know of human nature it seems likely that many of the payola prophets who took part in Ahab's “Faith-Based Initiative” probably believed that their compromises were necessary in order to advance some worthwhile objective or another. After all, working in partnership with the government is the key to getting things done, isn't it?

Here's a critically important principle: In any “public/private partnership,” the state is always the senior partner. When Christian leaders are on Caesar's payroll, they have to render to him things to which he is not entitled. And when Caesar's tactical priorities change, those religious leaders who thought they could co-opt the power of the state to do good will discover, to their dismay, that the state has co-opted them, leaving it stronger and more hostile toward the values those leaders supposedly served.

Opportunistic parasites: If this shark makes a meal of these helpless scuba divers, the remora it hosts will feed well, too.

For a generation, the putatively Christian Right has attached itself to the Republican Party like a remora on a Great White. During the reign of King George the Dimmer, tens of millions of dollars taxpayer money was lavished on various "Christian" groups run by religious allies of the GOP.

In many instances, the grants display every appearance of being vulgar pay-outs to shepherds more interested in herding their flocks to the polls on behalf of Republicans, rather than speaking the truth and tending to the needs of wounded souls.

Doubtless groups of this sort consider flatter themselves by thinking that they are “light and salt” to the world. But Christians who develop a taste for the state's subsidy are salt that will soon lose its savor.

Consider the fact that Bush was able to mislead the United States into a patently unjust and undeniably evil war in Iraq without provoking a protest from so much as a single significant Evangelical leader. Indeed, the conduct of major Evangelical figures in conferring their benediction on the Iraq war was more than a little reminiscent of the behavior of Ahab's palace prophets.

Chief among the GOP's Palace Prophets is Dr. James Dobson of Focus on the Family.


A bespectacled, middle-aged man with a Dick Van Patten comb-over and the adenoidal whine of a natural-born scold, Dr. Dobson commands a large and vastly influential media empire headquartered in Colorado Springs.



A decade ago, Dobson declared that he was finished with the Republican Party, citing efforts by the GOP to built a "Big Tent" with socially liberal politicians and activists. Yet after the Bushling was installed as ruler, Dobson managed to cut and stitch his convictions to meet the prevailing fashion.


One key example was Dobson's rationalization for Bush's executive order of July 2001 authorizing limited federal funding of embryonic stem cell experimentation -- a decision condemned by many pro-life figures, but supported by Dobson.


Like many of his comrades, Dobson endorsed the war of choice in Iraq. In a letter responding to one of his critics, Dobson permitted a spokesman to explain on his behalf that while the war wasn't strictly defensive, "this may be one of those moments in history when we are forced to settle for a trade-off: the lives of the few in exchange for the lives of the many. This is always tragic in the extreme; and yet we must face the fact that even more deaths and greater sufferings would probably have ensued if Saddam had been allowed to pursue his mad course of oppression, aggression, and self-aggrandizement."


This isn't a statement growing out of Christian ethics; it's a rationalization rooted in utilitarianism, and nourished by unadulterated falsehood. Saddam's regime, evil as it was, committed not a single act of international aggression without either the active support, or knowing permission, of Washington. How a fifth-rate dictatorship penned inside two no-fly zones -- a regime that didn't even control all of its own territory for a dozen years -- could be described as pursuing a course of "aggression ... and self-aggrandizement" isn't obvious to un-Hannitized minds.


Last year, Dobson was conspicuous among the Christian leaders summoned to a White House strategy session to help plan for another war of aggression in the Middle East, this one targeting Iran.


One would think that Dobson, given his, ahem, focus on the family, would take issue with the damage the wars in Afghanistan and Iraq are doing to families -- children left fatherless, motherless, or orphaned outright; women being deployed in combat roles; husbands and wives deployed simultaneously; the financial burdens of prolonged overseas service, and the resulting disruption of marriages and families; the maimed and mangled young bodies, the invisible but just as grievous injury to thousands of traumatized minds....


As I said, one would think that Dobson would take issue with at least some of this. One would be wrong.


Given his incontinent zeal to support war and bloodshed abroad, Dobson would seem to be a natural supporter of John McCain. Yes, there are some disagreements between them regarding gay "marriage," the McCain-Feingold restrictions on campaign speech, and other matters.


But, hey -- Pat Robertson, the only serious competition Dobson faces for primacy among the GOP's Palace Prophets, managed to choke down his bile and support Rudolph Giuliani, who not only supports the social agenda of left-wing hedonism, he lives it. Robertson's excuse, of course, was that the "war on terror" trumps all other issues.


But Dobson was different where McCain was concerned. Dobson was resolute -- immovable as the Himalayas, as fixed as the Northern Star: "I would not vote for John McCain under any circumstances," Dobson declared during a January 2007 radio interview.


Well, guess what?


Mountains, like the continents themselves, can move. The "fixed" stars are nothing of the sort. And Dobson's position on McCain has, ah, evolved. 'Course, it takes millennia for those natural changes to take place. Dobson's position on McCain changed in about a year and a half.

"I never thought I would hear myself saying this," Dobson said in a radio program broadcast just days ago (Monday, July 21). "While I am not endorsing Senator John McCain, the possibility is there that I might."

"There's nothing dishonorable in a person rethinking his or her positions, especially in a constantly changing political context," Dobson rationalized in a statement given to the Associated Press. "Barack Obama contradicts and threatens everything I believe about the institution of the family and what is best for the nation. His radical positions on life, marriage and national security force me to reevaluate the candidacy of our only other choice, John McCain."

Rather than telling the truth without fear or favor, we see Dobson embracing the role rejected by the prophet Michaiah in the midrash examined earlier: He's choosing what he believes to be the lesser of the available evils, as dictated by the prevailing consensus.


Actually, as I've pointed out before, the "lesser" evil isn't; when it is chosen it is always the greater evil, because it's the one that is actually done, rather than serving as a convenient rhetorical device.


Regarding every matter of public consequence, John McCain and Barack Obama -- for all their differences in style (Obama actually has one; McCain does not) are entirely fungible. They are both products of the bipartisan corporatist consensus, surrounded by retainers from the Power Elite and devoted to enhancing the Welfare/Warfare/Homeland Security State. Neither poses any threat to the existing architecture of power.


Whichever is elected will become the latest in a long line of presidential perjurers when he takes the oath of office next January.


Perhaps the only substantive difference between them is that one is a sleeper agent for the Jihad, the other for the Vietnamese. I'm only kidding. I hope.


Innocent blood: What do "pro-lifers" like James Dobson say about the death and mutilation of these Iraqi children as a result of Mr. Bush's war of choice?



But I suspect that Dobson's chief complaint against Obama is that his election would result in the installation of a different cohort of Palace Prophets.


Many of Obama's critics believe that the much-criticized Jeremiah Wright would be prominent in that group. I suspect the opposite would be the case: For all of his theological errors and misguided political views, Rev. Wright did give voice to unpopular but sound criticisms of Washington's imperialist foreign policy.



Genuine, principled critics of political corruption aren't welcome in the Emperor's court, and they usually have more integrity than to seek a position of that sort in the first place.


The first part of this essay is adapted from an earlier version published on March 23, 2006 in the old Birch Blog. I wish to emphasize that the style in which the first section is written is in no way intended to convey disrespect for its Source, and any embellishments that appear in this version are not to be taken literally – although the story, in its original form, is the literal truth.

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The Economic Show Trials Begin

The inverted pyramid of corporate socialism: The wealthiest are subsidized, through inflation, by those who can least afford it.



Could it be that our ruling elite has effectively transcended hypocrisy? As the aphorism informs us, hypocrisy is the tribute that vice pays to virtue; it is the product of a person's capacity for decent shame, the fig-leaf garment concealing one's naked corruption.


Shame being a vital precursor to hypocrisy, those who rule us -- not only the politicians, but the banksters and image-molders as well -- can't be accused of hypocrisy. This would be a bit like criticizing the fashion sense of somebody who's color-blind. This doesn't mean, however, that they should be allowed an indulgence for the evil that they do.


Last week, during a brief digression in the ongoing efforts to socialize the losses suffered by the super-rich kleptocrats at Fannie Mae and Freddie Mac, Congress conducted an authentic Orwellian hate-fest directed at "super-rich" people who had earned their money through legitimate enterprise.


The Fannie/Freddie nomenklatura built huge profits through the government-subsidized generation and "securitization" of bad mortgages and criminally corrupt bookkeeping. Last week's hearings by the Senate Subcommittee on Investigations focused on people who had made large sums of money through honest, productive commercial activity -- and then tried to preserve their honest earnings for their posterity by protecting it in bank accounts in Liechtenstein.


Congress and the ruling elite it serves are eagerly stealing everything in sight, through taxes, subsidies, and inflation. But as last week's Senate hearings-cum-show trial illustrate, they are tuning up the machinery of mass hatred in anticipation of scapegoating authentic capitalists for the ongoing economic collapse.


The fault, we will be told, lies not with our corrupt and incurably profligate government, or the incorrigible official counterfeiters at the Federal Reserve, or the government-subsidized corporatist interests who are their clients -- but rather those who greedily insist on keeping what they earn instead of paying their "fair share" in the name of the "common good."


The calculation here is that a hate campaign of that sort can keep the public from noticing how the phrase "common good" always seems to refer to policies that confer benefits on one particular elite. And it's quite likely that members of that elite have their own numbered accounts in places like Switzerland and Liechtenstein. Which is probably another reason they're so eager to go after well-heeled people who aren't part of their club.


As I have noted before, Liechtenstein, unlike the United States, is a relatively free country. It is presided over with a gentle hand by Prince Hans-Adam II, rather than being ruled by a degenerate fascist oligarchy like the one entrenched in Washington. Hans-Adam II is on record saying that a top tax rate higher than 6% is "tyrannical." This puts him well ahead of any other political leader I can think of in pursuing the truth, which is that taxation is always and everywhere nothing but officially sanctioned theft.


As would be the case in any civilized country, Liechtenstein's banking secrecy laws were designed to protect the assets of depositors from the scrutiny of predators serving the ruling class. Many foreign depositors have, in accordance with the sound and commendable laws of that estimable alpine country, set up foundations to protect their earnings from rapacious tax-gatherers in their own afflicted nations.


Weasel at large: Heinrich Kieber, convicted of fraud in Liechtenstein, esteemed informant for the tax gestapo of various governments. He is what I call an "SOS" -- someone who should be Slapped On Sight (I only use a closed fist on a real man).


Unfortunately, a squalid little creature named Heinrich Kieber who had been a clerk at Liechtenstein's LGT Group, pilfered several CDs worth of data regarding foreign depositors from the United States and Europe. Driven by a variant of the invidious impulses that sixty years ago would have led him to rat out those who protected Jews from the Gestapo, Kieber -- as viscous as he is vicious -- oozed into the offices of Germany's BND intelligence service and sold his stolen information for $7.3 million stolen at gunpoint from German taxpayers.

Kieber conducted similar transactions with ruling criminals in London, Paris, Rome, and Washington. His information This led to last week's hearings, chaired by the loathsome Senator Carl Levin (D-Michigan), who -- in the interests of "bipartisanship" -- gave a prominent co-starring role to the even more repulsive Senator Norm Coleman (R-Minnesota). Kieber himself, who has been taken into the "witness protection program," testified by way of a videotaped statement from a secret location.


The target of Comrade Levin's show trial was the reported $1.5 trillion cached by wealthy Americans in offshore accounts, including those in Liechtenstein, Switzerland's UBS, and elsewhere. Those banks, Levin complained, had employed "tricks" that made it "impossible for the Internal Revenue Service to follow the money, bring tax cheats to justice, and bring back into the US treasury the tens of billions of dollars owed to Uncle Sam."


Well, sure: The banks that sought to protect the assets of Jews during WWII employed the same methods to protect the assets of honorable people from the contemporary tax gestapo, who are the true moral heirs of the Nazi officials who sought to seize the assets of persecuted Jews. Impeding the efforts of criminals to steal wealth is not a "crime," and it's interesting that Levin didn't use that word to describe the "tricks" he protested.

And, if I can be permitted a brief digression, Levin's statement that the money should be brought "back to the US treasury" in order to pay "the tens of billions of dollars owed to Uncle Sam" is a Marxist lie sandwiched between two crusty slices of chutzpah.


For the purposes of this discussion, we'll refer to the fraudulent fiat currency issued by the Fed as "money."


Any quantity of "money" honestly earned does not belong to the Treasury; it belongs to the individual or enterprise that earned it, until he or they decide to spend it for some purpose. Accordingly, that money cannot go "back" to the Treasury, although it can be diverted there to be wasted on corrupt government undertakings of various kinds.


Furthermore, taxes are not "owed" to the federal government; they are seized by the federal government. One "owes" money to another party from whom he has received goods or services pursuant to a legitimate contract. "Contracts" imposed through duress (such as extortion pay-offs) are illegitimate. Those of us who pay taxes do so not because a legitimate contract exists between us and the Regime that extracts our wealth; we do so because of a desire to stay out of prison, or to avoid violent death at the hands of the State's hired killers.


Levin is a nearly ideal representative of the parasite class. His mind, or what passes for it, is entirely hostage to collectivist assumptions. Just as a dog cannot discern colors, Levin can't see anything amiss in extending official protection to a foreign criminal (Kieber was convicted of fraud in Liechtenstein) so he can testify against those who have done no injury to persons or property, or in treating foreign bank officers as if they were under Washington's jurisdiction by demanding that they testify before his committee.


All of this is being done, Levin insists, to bring "tax cheats to justice." Leaving aside, for the nonce, the fact that the word "justice" when uttered by the likes of Levin is like the word "love" in the mouth of a whore, the cruel fact is that tax avoidance is impossible for anyone who conducts business using the Federal Reserve's fraudulent scrip.


This brings us to one history-making admission offered last week by Fed Commissar Ben Bernanke beneath the avuncular but relentless cross-examination of Rep. Ron Paul (R-Texas) during Bernanke's recent congressional testimony.

Actually, this illustration is deceptive regarding the innate value of the Federal Reserve Note: The paper grade used in creating that bogus currency is ill-suited to such use.



“Inflation is a tax," Rep. Paul observed during his colloquy with Bernanke. "And if the Federal Reserve, and you as chairman, have this authority to increase the money supply arbitrarily, you’re probably the biggest taxer in the country."


"I couldn't agree with you more that inflation is a tax," admitted Bernanke, quickly seeking to evade responsibility by saying that "inflation currently is too high." The criminal syndicate over which Bernanke presides imposes taxation without representation or accountability.


Furthermore, it exports that inflation world-wide, thanks to the fact that the instrument of debt the Fed calls the "dollar" is the world's reserve currency. This means that nearly everyone who uses the dollar to conduct business is paying the tax called inflation. This is a unique form of withholding, in that the Fed steals an increment of value from each dollar before it ends up in the hands or accounts of private actors in the economy.


Pity poor Emmett Neverend: Once a rational and respected academic, he lost his wits when he finally came to understand the moral implications of the Regime's financial system.


Where a government exercises the power to tax through inflation, no other taxes are "necessary," including the income tax. Furthermore, where governments tax through inflation, no tax evasion is possible, as long as people conduct business in that adulterated currency.


The redoubtable G. Edward Griffin points out that former Fed Chairman Beardsley Ruml admitted that, because of the Fed's ability to tax via inflation, "Taxes for Revenue are Obsolete" -- the title of an essay Ruml published in the January 1946 issue of American Affairs. As Ruml wrote,"given control of a central banking system and an incontrovertible currency [that is, a fiat currency not backed by gold], a sovereign national government is finally free of money worries and need no longer levy taxes for the purpose of providing itself with revenue. All taxation, therefore, should be regarded from the point of view of social and economic consequences."(Emphasis added.)


Thus, where Washington is concerned, taxation exists purely for the purpose of social manipulation through vulgar redistribution of wealth, not to pay the operating costs of government. And as carried out by the IRS, taxation is an instrument of intimidation and terror used to compel social conformity.


By keeping their money in dollars, or any currency "pegged" to the dollar, so-called "tax cheats" aren't evading taxes. They, like the rest of us, are being taxed through the Fed's relentless inflation. Their only hope to evade being taxed by the Fed would be to take the advice offered by Jim Rogers last fall: Get out of dollar-denominated assets entirely.


There are only two ways to acquire wealth: It can be earned through mutually beneficial voluntary action, or it can be stolen through force and fraud. Any effort to acquire wealth that involves any degree of force or fraud is theft.


Senator Levin and his comrades, who are preparing to bail out the politically favored thieves running Fannie and Freddie, spent many taxpayer-funded hours last week dilating upon the supposed iniquity of those "super-rich" Americans who seek to protect what they earn from people whose professional lives are nothing but one prolonged exercise in theft.


It would avail nothing to point out such hypocrisy to Levin and his ilk; they can no more feel honest shame than a chimpanzee can compose a cantata.


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Women And Children Last

Compelling confirmation that we're in the early phase of a world-historic economic collapse can be found in this fact: Our rulers are moving quickly to redistribute blame for the disaster from those who precipitated it to those who are seeking to protect themselves from it.


In the fashion of Stalin deflecting blame for the failure of central planning onto the backs of faceless "wreckers" or randomly selected "saboteurs," the Regime in Washington is literally preparing to criminalize the act of "talking down the economy."


If you're an investment broker caught speaking ill of the federal bailout of Fannie Mae and Freddie Mac, or advising your clients to short those two federally supported deadbeat institutions, you could incur the wrath of the Securities and Exchange Commission. Under the Clap-for-Tinkerbell assumptions being imposed on the markets by the Regime, such actions quite likely will be designated a form of "market manipulation" -- what the SEC, in a July 13 press release timed to coincide with Commissar Paulson's bailout announcement, called "the intentional spread of false information intended to manipulate securities prices."


"Spreading false information," in this context, means "the publication of facts incompatible with the Regime's priorities," which at present means "bolstering confidence" in the terminally insolvent, fatally corrupt fascist entities called Fannie Mae and Freddie Mac.


This is why legendary investment guru Jim Rogers was asked, in a July 15 CNBC interview, if he was "talking down" Fannie and Freddie. Rogers breezily acknowledged he has been "short" on them for three or four years, and is in the same position regarding "a lot of banks." The SEC's advisory against spreading "false information" was followed on July 15 by an emergency order from the SEC curtailing short selling in financial stocks, particularly those of Fannie and Freddie.


That fact that an executive branch agency can simply issue such an order (or, in this case, reiterate an earlier order), with the supposed force of law, should prompt at least some people to ask: in what sense are the investment markets a form of "free" enterprise?


Jim Rogers can afford to be candid about his successful investment strategy, given that he has fled the proto-totalitarian United States for the relatively free shores of authoritarian Singapore. Other honest investors are not so fortunate.


Yesterday (July 16) the SEC began issuing subpoenas to wreckers ... er, "market manipulators" suspected of contributing to the collapse of Bear Stearns and the 78 percent drop in Lehman Brothers' share value so far this year. As far as the SEC is concerned, we're not dealing with people who make an honest living, so truth is not going to be considered a suitable defense for those accused of propagating "false information" about Fannie and Freddie, or any other entities on the receiving end of federal bail-outs.


And of course, it will avail nothing to invoke sound logic by pointing out that the SEC is an enforcement instrument of a Regime guilty of wholesale "market manipulation," with plans for much, much more of the same. With Fannie and Freddie now assured of a place on the lifeboat, we can expect many others to fall in line -- Lehman Brothers, Goldman Sachs, Bank of America, Detroit's "Big Three".... Federal bailouts will be an immense boon to bond-holders, while wiping out shareholders. The former group includes the wealthiest and most powerful investment houses in the world; the latter includes the retirement plans of millions of small investors who are already being devoured alive by inflation.


SEC Chairman Christopher Cox explains that the Stalinoid crack-down on short-selling and propagation of "false" information is a "preventive" measure intended to prevent catastrophic bank runs. "If an institution is to fail in the marketplace, it should be for legitimate reasons based on the market's appraisal of objective information," insisted Cox, leaving the rest of us gagging on the stench of his hypocritical sanctimony. "It should not be based on the deliberate manufacture of false information and illegal naked short selling. We're simply trying to remove tools of mischief so that markets can operate efficiently."


The "efficient" operation of the marketplace, apparently, demands nothing less than giving nineteen failing financial institutions special access to the Federal Reserve's "discount window" -- making them the immediate beneficiaries of currency and credit inflation that will literally steal the bread from the tables of working Americans -- and then swaddling them in immunity from market discipline by prohibiting investors from acting rationally based on the obvious implications of such federal intervention.

Perfectly rational panic: Depositors line up at the Encino, California branch of the failed IndyMac Bank, eager to withdraw their savings.


Apparently, American investors have a patriotic duty to be bullish on those financial institutions favored by the Regime -- and, starting next Monday, confront the prospect of ruinous SEC investigations and other harassment should they be found insufficient zealous in pumping up those collapsing entities.

I'm exaggerating, but just barely.


Meanwhile, the FBI is pursuing a separate but complimentary track by investigating the possibility that fraudulent mortgage loans contributed to the collapse of California's IndyMac Bancorp, which -- after being nationalized -- is operating under the name of IndyMac Federal Bank.


That fraud was involved in the failure of IndyMac -- and the impending collapse of dozens or hundreds of other institutions -- is indisputable: It was, after all, a satellite of the Federal Reserve. The FBI is an appendage of the Regime, so it will dutifully focus on purported fraud committed at the retail level by individual mortgage officers, rather than dealing with the wholesale fraud carried out as a matter of policy by the Federal Reserve.


The purpose of these enforcement actions, once again, is to fortify "confidence" in the financial markets in order to avoid bank runs. But the markets are not entitled to our confidence, and a comprehensive run on the banks and the markets is really the only rational course of action -- that is, panicking now, before we're given official permission to panic, by which time it will be too late.


It is because they didn't panic in a timely fashion that many investors and depositors in IndyMac are now caught in what the Los Angeles Times correctly calls a "financial hostage drama."

They're told that their money is "safe" now that it is in an institution owned and operated by the FDIC, only to learn that the funds they need are "frozen." This means, of course, that the money is "safe" from being used by those who earned it and to whom it properly belongs.





Not surprisingly, this news has riled up many of IndyMac's depositors, who are now being told that they must accept the federal impoundment of their money with grace and equanimity, lest they be seized and incarcerated by the local branch of the Homeland Security State (still quaintly known to many as the "local" police).

Remember when police used to pursue thieves? In an increasingly familiar role, Los Angeles police personnel aid the robbers by threatening to arrest any victims who don't remain properly calm and docile as their life savings are plundered at the newly nationalized IndyMac Bank.



I suppose it's not unprecedented for the wealthy and powerful, in their eagerness to comandeer lifeboats on behalf of their "kind," to shove aside women and children aside.


The new wrinkle in this catastrophe is the requirement that those denied access to the lifeboats, and forcefully discouraged to take any individual action to save themselves, are required to maintain a cheerful, grateful demeanor even as they begin the long, frigid descent into the abyss.


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Dum spiro, pugno!

It Begins

Saddled up and not sparing the whip: The Four Horsemen of the Apocalypse.





"If they're hungry, they can eat grass, or their own dung, for all I care." --

Andrew J. Myrick, a trader affiliated with the notorious mid-19th Century "Indian Ring," responding to complaints from Sioux that they were starving on the meager, worm-ridden rations provided by the Indian agency, August 15, 1862.


Andrew Myrick was a trader working at the Lower Sioux Agency in southwest Minnesota when desperate Chiefs representing the Sioux arrived, pleading for food. Thomas Galbraith, the federal Indian Agent, wasn't inclined to help.


The Chiefs had no money, and Galbraith had better business to attend to than helping out a bunch of starving Indians. Galbraith's business, and Myrick's too, was to maximize profits realized through the federal Indian management system. This meant padding expense vouchers, arranging kickbacks, distributing spoiled or otherwise unusable rations to Indians, and generally finding ways of milking the federal subsidies to their advantage and that of their allies.


This institutional corruption would eventually become known, under President U.S. Grant, as the "Indian Ring." In 1862, with Washington's attention focused on the conquest of the Confederacy, an embryonic form of the Ring was already in operation, sowing misery among the Sioux that blossomed into a full-scale uprising that would claim the lives of hundreds of settlers.


It would also lead to the largest mass execution in American history, the hanging -- on Lincoln's orders -- of 38 Sioux Indians convicted by a military commission, a Barrelhead tribunal in which the average "trial" lasted ten minutes. The original orders called for the public execution of 3,000 Sioux; conscious that such a spectacle would alienate world opinion, but eager to placate demands for vengeance from Minnesotans, Lincoln modified his instructions to allow the hanging of 38 and the mass expulsion of the Sioux from the state.


The Sioux Uprising was the predictable result of federal policy. Under Lincoln the federal government reneged on solemn treaty "promises" to pay the Santee Sioux annuities totaling $1.5 million for their lands. Lincoln likewise authorized additional land grabs and incursions by illegal immigrants -- now called "settlers" or "pioneers" on lands supposedly set aside for the Santee.


When crop failures reduced the Santee to starvation, they sent emissaries to Galbraith to plead for access to food supposedly stockpiled on their behalf pursuant to treaty. They were met with Galbraith's pretense of punctiliousness (he insisted, incorrectly, that the food could only be bought by the Sioux, rather than given to them to alleviate the famine) and Myrick's triumphant, bigoted sneer.


Roughly a week after Andrew Myrick threw his taunt into the gaunt, stoic faces of desperate Sioux chiefs, he was killed in front of his store. His body was found some time later and some distance away; appropriately, the mouth that had been twisted in a sadistic smirk was stuffed with grass.


Nothing can justify the butchery of innocent people committed by the rampaging Sioux, but the fury that fueled those atrocities reflected the desperation of trapped, starving people, and that fury could have been extinguished had the Feds dealt honestly with the Indians.

"Unlawful enemy combatants" sentenced to death by military commissions: 38 Sioux are executed in December 1862.

In a letter to Abraham Lincoln amid the uprising, George A.S. Crooker, a critic of the Indian system, lamented "the cohesive power of public plunder [that] cements rogues together stronger than party or any other ties." By abetting the misery of the Indians, the Feds had "not only cost a large sum of money but ... deluged our western border in blood."


A similar verdict was rendered by Episcopal Bishop Henry Whipple of Minnesota. Disgusted by a system that immiserated the Indians while enriching corrupt federal Indian Affairs officials, likewise warned that public plunder of this kind "'commences in discontent and ends in blood."


I don't know what it says about the way my mind is wired, but I was driven to reflect on the 1862 Sioux Uprising by the news that the Regime plans to bail out Fannie Mae and Freddie Mac. Perhaps that's because few if any institutions so perfectly embody what Crooker, as quoted above, described as "the cohesive power of public plunder."


Then again, perhaps it's because I sense dynamics at work today similar to those that led up to the rampage: Crop failures, an increasingly impoverished population (Americans, burdened with debts much larger than they realize, are actually poorer than 19th Century Indians), a federal government entirely uninhibited by law and utterly brazen in deploying its power on behalf of the politically connected uber-rich, at whatever expense to the rest of us. Or maybe I'm just looking for an excuse to get my Little Crow freak on.


However the connection was made between that 19th century tragedy and the one unfolding today, there is one unambiguous theme binding them together. The Official Message now, as it was then, is this: The Important Persons Who Matter will be taken care of; those of you who are mere people can eat sh*t and die, for all we care.


Right now, Fannie and Freddie are being backstopped by the Feds; eventually, they will be bailed out and then fully nationalized (developments I predicted in detail more than four years ago). Among Those Who Matter to the architects of this new entitlement program for the super-rich are the oligarchs and princelings who run China's banking system.


Financial analyst Mike Shedlock of SitkaPacific Capital Management points out: "There is $376 billion in Chinese agency bond holdings subject to taxpayer bailout proposals...." "If China and Japan were dumb enough to invest in US agencies," continues Shedlock, "then China and Japan should suffer the consequences, not US taxpayers."


From the perspective of our rulers, however, the US taxpayers are the very last link in the Great Chain of Being. Beijing must be placated; after all, they're the ones paying for Washington's imperial errands in Iraq, Afghanistan, and elsewhere.


Fannie, a creation of FDR's corporatist New Deal, and Freddie, its Great Society bastard offspring, supposedly exist to help middle-class Americans and those who aspire to that status buy affordable housing. In fact, they have been indispensable instruments in the perverse alchemy whereby mortgage debt is transmuted into profitable securities and derivatives.


In fact, if I'm not mistaken (given the opacity of the subject, I probably am, along with everybody else), Fannie and Freddie might have pioneered the art of "securitizing" loans of different qualities and risk levels, owing to changes made by Congress in their regulations in 1989.


That's right: Fresh from the S&L catastrophe, Congress loosened the regulatory reins on Fannie and Freddie for the specific purpose of channeling investment into those "government-sponsored entities."


A few years later Alan "Destroyer of Worlds" Greenspan began to pump "liquidity" into what would become the Housing Bubble. Fannie and Freddie bought practically every mortgage it could find. Meanwhile, the upper management of those GSEs -- as was the case with Enron, Tycho, WorldCom, Global Crossing, and other notoriously corrupt corporations -- brazenly and habitually mis-reported earnings in order to enhance their annual bonuses.


In June 2003, Freddie Mac was forced to own up to $5 billion in misrepresented earnings over the previous three years; the result was a plunge in stock value that essayed a course quite similar to the typical waterfall.


More than a year earlier, St. Louis Federal Reserve President William Poole warned that Fannie and Freddie "hold capital far below that required of regulated banking institutions" -- a truly shocking statement, when it's remembered just how little capital "regulated" banks are required to hold -- but Poole's warning was kept from the public for months.


Fannie was forced to remove CEO Franklin D. Raines and CFO J. Timothy Howard. Congressional hearings were called, and a report eventually produced, documenting that "extensive fraud" had taken place at Fannie for the express purpose of lavishing bonuses on top executives; Raines, for instance, collected $52.8 million in bonuses between 1998 and 2003.

The objective of Fannie's fraudulent math was to boost the company's Earnings Per Share (EPS) to a level suitable to justify extravagant executive bonuses. In 2000, for instance, the target was an EPS of $6.46. Just as the Bush Regime "fixed the intelligence around the policy" of war with Iraq, Fannie Mae fixed the accounting around the objective of executive bonuses, and created "earnings" figures accordingly.


"By now every one of you have 6.46 branded in your brains," ranted one Fannie official in a 2000 motivational harangue for employees. "You must be able to say it in your sleep, you must be able to recite it forwards and backwards, you must have a raging fire in your belly that burns away all doubts.... Remember, Frank [CEO Franklin Raines] has given us an opportunity to earn not just our salaries, benefits, raises ... but substantially over and above if we make 6.46. So it is our moral obligation to give well above our 100% and if we do this, we would have made tangible contributions to Frank's goals."


That speech -- something of a cross between the "always be closing" lecture from Glengarry Glen Ross (definitely not family-safe) and, what's much the same thing, a cult indoctrination session -- was delivered by Sam Rajappa, Fannie's Senior Vice President for Operations Risk and Internal Audit. His audience was composed of Fannie's internal auditors. These were the watchdogs who were supposed to preserve the integrity of the company's bookkeeping -- and here they were being told that the unassailable Prime Directive was to reach, by any means necessary, an EPS of 6.46 in order to justify bonuses.


Under Raines, Fannie -- its board larded with political luminaries, many of them former Democratic politicians and White House aides under Bill Clinton -- was guilty of tax-subsidized accounting fraud that dwarfed the crimes committed by Enron's "smartest guys in the room." Rather than going to prison, however, Raines was the beneficiary of a settlement involving the surrender of a small portion of his corrupt earnings and some now-worthless stock options.

Just as some financial institutions are "too big to fail," some crooks are too big to prosecute. After all, why make life needlessly difficult for a political insider like Raines, when the taxpayers take the fall?

Just last week, the St. Louis Fed's William Poole warned that Fannie and Freddie are insolvent. Not surprisingly, since this guy works for the Regime's Official Counterfeiting system, the Federal Reserve. But Poole also insists that they are "too big to fail," and that if they do the result will be "a worldwide financial crisis of unspeakable magnitude...."


Many analysts claim, plausibly, that the failure of Fannie and Freddie -- which have in excess of $5 trillion in debts -- would mean that no one could buy or sell a house in the United States. This underscores just how deeply cartelized the housing market has become thanks to the fascist policies imposed on it under the New Deal.


The failure of the GSEs would likewise ignite a holocaust in the global derivatives market -- a prospect that helped precipitate the Fed's bailout of Bear Stearns a few weeks ago. But the crisis Poole predicts is unavoidable. This is why the Fed is prepared to monetize Fannie and Freddie's debts if investors don't play the role written for them by throwing their money into those insolvent, hopelessly corrupt, incurably debt-ridden GSEs. So far, investors have not warmed to the opportunity. Which means that Ben has his helicopter fleet revving its engines.

It seems likely that the political class will do whatever it can to try to hold the collapse in abeyance until after this fall's election. Owing to the analysis of people much better informed than myself, I suspect that the crisis will erupt in September of this year, although I would be tearfully grateful if my fears fail to materialize.

Bank run: Customers of the Pasadena-based IndyMac Federal Bank -- which was taken over by the FDIC just days ago -- wait to pull their money out of that failing financial institution.


Already, Americans are beginning to queue in front of banks and other financial institutions like hungry Santee Sioux lining up in front of federal storehouses in the forlorn hope of receiving food rations.


Even if the inevitable collapse of Fannie and Freddie is deferred for a season, there will be ample opportunities for smaller financial institutions -- and even some very large ones -- to fail.


Is this "It" -- the Big It many of us have anticipated with growing dread since the U.S. effectively declared bankruptcy in August 1971?


I haven't a fraction of the wisdom to say for sure. I will say this: When the Big It happens, It will look an awful lot like this.


While not neglecting the political dimension of our predicament, we would be suicidally foolish not to be making practical provisions to withstand a full-spectrum political and economic meltdown. This would include securing the material means for physical survival, as well as networking with like-minded people to provide mutual support in the event of severe economic dislocations and (God preserve us) social turmoil.

If you don't live near family, and can afford to move closer to them, do so.

This may not be the Big It. If it is, and we're not ready, we'll be left to dine on grass, or worse.


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Dum spiro, pugno!