The Next Big Bailout "Any Day Now"

Housing is still on the rocks and prices are headed lower. Master illusionist Ben Bernanke has managed to engineer a modest 7-month uptick in sales, but the fairydust is set to wear off later this month when the Fed stops purchasing mortgage-backed securities (MBS). When the program ends, long-term interest rates will creep higher and sales will begin to flag. The objective of Bernanke's $1.25 trillion quantitative easing program was to transfer the banks’ toxic assets onto the Fed's balance sheet. Having achieved that goal, Bernanke will now have to find a way to unload those same assets onto the public. Freddie and Fannie, which have already been used as a government-backed off-balance-sheet dumping ground, appear to be the most likely candidates.

Bernanke's liquidity injections have helped to buoy stock prices and stabilize housing, but the economy is still weak. There's just too much inventory and too few buyers. Now that the Fed is withdrawing its support, matters will only get worse.

Of course, that hasn't stopped the folks at Bloomberg News from cheerleading the "nascent" housing rebound. Here's a clip from Monday's column:

"The U.S. housing market is poised to withstand the removal of government and Federal Reserve stimulus programs and rebound later in the year, contributing to annual economic growth for the first time since 2006. Increases in jobs, credit and affordable homes will help offset the end of the Fed’s purchases of mortgage-backed securities this month and the expiration of a federal homebuyer tax credit in April. ‘The underlying trend is turning positive,’ said Bruce Kasman, chief economist at JPMorgan Chase & Co. in New York."

Just for the record; there have been no "increases in jobs". Unemployment is stuck at 9.7 percent with underemployment checking in at 16.8 percent. There's no chance of housing rebound until payrolls start to rise. Jobless people cannot afford to buy homes.

Also, while it is true that the federal homebuyer tax credit did cause a spike in home purchases its effect has been short-lived and sales are gradually returning to normal. It's generally believed that "cash for clunker-type" programs (like the homebuyer tax credit) merely move demand forward and have no meaningful long-term impact.

So, it's likely that housing prices -- particularly on the higher end -- will continue to fall until they return to their historic trend. (probably 10 to 15 per cent lower) That means more trouble for the banks which are already using all kinds of accounting flim-flam ("mark-to-fiction") to conceal the wretched condition of their balance sheets. Despite the surge in stock prices, the banks are drowning in the losses from their non-performing loans and toxic assets. At the same time, they're about to get hit by the next wave of Option ARMs and Alt-As resets which will require another $1 trillion in financing.

The Fed has indicated that it's finished helping the banks for the time being. Now it's Treasury's turn. Bernanke will keep the Fed funds rate at zero, but he is not going to expand the Fed's balance sheet anymore. Geithner understands this and is working frantically to put together the next bailout that will reduce the mortgage principal for underwater homeowners. But it's a thorny problem, because many of the borrowers have second liens which could amount to as much as $477 billion. That means that if the Treasury's mortgage-principal reduction plan is enacted; it could wipe out the banks. Here's an excerpt from an article in the Financial Times which explains it all:

"A group of investors in mortgage-backed bonds dubbed the Mortgage Investors Coalition (MIC) recently submitted to Congress a plan to overhaul the refinancing of underwater borrowers by writing down the principal balances of both first and second mortgages. The confederation of insurers, asset managers and hedge funds hope to break a logjam between Washington DC and the four megabanks with the most exposure to writedowns on second lien mortgages, including home equity lines of credit.

“The private sector initiative coincides with House Financial Services Committee Chairman Barney Frank’s open letter dated March 4 to the CEOs of the banks in question – Bank of America, Citigroup, JP Morgan Chase and Wells Fargo – urging them to start forgiving principal on the second lien loans they hold.

But the banks are unlikely to take action until they get new accounting guidance from regulators that would ease the impact of such significant principal reductions on their capitalization ratios."

"Accounting guidance"? Either the banks are holding out for a bigger bailout or they want Treasury to approve looser accounting standards to conceal their losses from their shareholders. Either way, it's clear that they're trying to hammer out the best deal possible for themselves regardless of the costs to everyone else.

Financial Times again:

"The four banks in question collectively own more than $4 billion of the $1 trillion in second lien mortgages outstanding. BofA holds $149bn, Citi holds $54 billion, JP Morgan holds $101 billion and Wells Fargo holds $115 billion, according to fourth quarter 2009 10Q filings with the Securities & Exchange Commission.

“As proposed, the MIC’s plan entails haircuts to the first and second lien loans to reduce underwater borrowers’ loan to value ratios to 96.5 per cent of current real estate market prices, according to two sources.

“For the program to work, HAMP would place principal balance forgiveness first in the modification waterfall. The associated second lien would take a principal balance reduction but remain intact through the process - ultimately to be re-subordinated to the first lien, the sources said.

“A systemic program to modify second lien mortgages called 2MP does exist but Treasury has stalled on implementation because the banks that hold them can’t afford it, investors said. The sources all said implementation of the program, called 2MP, would result in ‘catastrophic’ losses for the nation’s four largest banks, which collectively hold more than $400 billion of the $1 trillion in second lien mortgages outstanding." ("Mortgage investors push for banks to write down second liens", Allison Pyburn, Financial Times)

Hold on a minute! Didn't Geithner just run bank "stress tests" last year to prove that the banks could withstand losses on second liens?

Yes. And the banks all passed with flying colors. So, why are the banks whining now about the potential for "catastrophic" losses if the plan goes forward? Either they were lying then or they're lying now; which is it?

According to the Financial Times the banks hold $400 billion in second lien mortgages. But --as Mike Konczal points out--the stress tests projected maximum losses of just "$68 billion. In other words, Geithner rigged the tests so the banks would pass. Now the banks want to have it both ways: They want people to think that they are solvent enough to pass a basic stress test, but they also want to be given another huge chunk of public money to cover their second liens. They want it all, and Geithner's trying to give it to them.

And don't believe the claptrap from Treasury that "they have no plan for mortgage principal reductions.” Baloney! According to the Financial Times:

“Treasury continues to tell investors that any day now they will be out with a final program and they will be signed up.... ‘The party line continues to be they are a week away, two weeks away,’ the hedge fund source said."

So, it's not a question of "if" there will be another bank bailout, but just "how big" that bailout will be. The banks clearly expect the taxpayer to foot the entire bill regardless of who was responsible for the losses.

So, let's summarize:

1--Bank bailout #1--$700 billion TARP which allowed the banks to continue operations after the repo and secondary markets froze-over from the putrid loans the banks were peddling to credulous investors.

2--Bank bailout #2--$1.25 trillion Quantitative Easing program which transferred banks toxic assets onto Fed's balance sheet (soon to be dumped on Fannie and Freddie) while rewarding the perpetrators of the biggest financial crackup in history.

3--Bank bailout #3--$1 trillion (or more) to cover all mortgage cramdowns, second liens, as well as any future liabilities including gym fees, energy drinks, double-tall nonfat mocha's, parking meters etc. ad infinitum. Basically, carte blanche for the banksters.

And as far as the banks taking "haircuts"? Forget about it! Banks don't take "haircuts". It looks bad on their quarterly reports and cuts into their bonuses. Taxpayers take haircuts, not banksters. Besides, that's what Geithner gets paid for--to make sure bigshot tycoons don't have to pay for their mistakes or bother with the niggling details of fleecing the little people.

The next big bailout is on the way. Be prepared.

Mike Whitney lives in Washington state. He can be reached at fergiewhitney@msn.com

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Ron Paul - The Fed has no Exit Plan

Click this link ..... http://eclipptv.com/viewVideo.php?video_id=10808

National Debt Up $2 Trillion on Obama's Watch

The latest posting from the Treasury Department shows the National Debt has increased over $2 trillion since President Obama took office.

The debt now stands at $12.6 trillion. On the day Mr. Obama took office it was $10.6 trillion.

President George W. Bush still holds the record for the most debt run up on his watch: $4.9 trillion. But it took him over four years to rack up the first two trillion dollars in debt. It has taken Mr. Obama 421 days.

But the Obama Administration routinely blames the Bush Administration for inheriting a budget surplus and turning it into years of record-breaking deficits and debt -- and then leaving it on the doorstep of the new president.

"I walked into office facing a massive deficit, most of which was the result of not paying for two wars, two tax cuts, and an expensive prescription drug program," Mr. Obama said last month in a speech to corporate executives at a Business Roundtable conference.

"When we walked in, we had a deficit of $1.3 trillion and projected debt over the course of a decade of $8 trillion," he told the CEOs on February 24th. "The lost revenue from this recession put us in an even deeper hole. And the steps we took to save the economy from depression last year have necessarily added to the deficit -- about $1 trillion, compared to the $8 trillion that we inherited."

The most the administration says it can do is try to slow the growth of the National Debt - but its own forecasts show it doesn't look promising.

In the 2011 federal budget released last month, the administration projects the National Debt will soar ever upward to over $25 trillion in the year 2020. The total debt will amount to more than 100 percent of the national economy as early as 2012.

Mr. Obama frequently argues that one of his reasons for seeking to overhaul health care coverage in America is the costs it imposes on the government. He says "the status quo on health care is simply unsustainable."

He warns that if his health care plan is not enacted, "our government will be plunged deeper into debt."

In the belief that politicians lack the resolve to make the tough decisions needed to reduce annual deficits and slow the growth of the debt, the president signed an Executive Order last month creating a National Commission on Fiscal Responsibility and Reform to recommend steps the government can take to balance the budget by 2015 - excluding interest payments on the National Debt.

Mr. Obama set a December 1st deadline for the Commission to vote on its final report.

Senators back bill to pressure China on currency

WASHINGTON — A group of 14 U.S. senators unveiled legislation Tuesday that seeks to increase pressure on China to let its currency to rise in value against the dollar, saying Chinese "currency manipulation" is hurting the U.S. economy.

The bill calls for stiff trade sanctions if China does not act.

Treasury Secretary Timothy Geithner says the legislation is a sign of how strongly China's trading partners feel about the issue. In an interview on Fox Business Network, Geithner said that he believes Chinese officials "ultimately will decide it is in their interests to move."

Geithner declined to respond directly to a question of whether the Obama administration would support the bill backed by Sens. Charles Schumer, D-N.Y., Lindsey Graham, R-S.C., Debbie Stabenow, D-Mich., and 11 other senators.

"We are sending a message to the Chinese government," Schumer said in a statement. "If you refuse to play by the same rules as everyone else, we will force you to."

He said the issue is of critical importance at a time of high unemployment in the United States.

"There is no bigger step we can take to promote U.S. job creation, particularly in the manufacturing sector, than to confront China's currency manipulation," Schumer said.

American manufacturers contend that China's currency is undervalued by as much as 40 percent and is a big reason for the huge U.S. trade deficit with China, which totaled $226.8 billion, last year, the largest imbalance with any country.

A stronger yuan versus the dollar would make American products less expensive in China, while making Chinese goods more expensive for American consumers.

The Obama administration is hoping China will resume allowing its currency to rise in value against the dollar as a way of narrowing that gap. China allowed its currency to appreciate until mid-2008 when the global recession began to cut sharply into its exports.

The Senate bill marks the latest escalation in tensions between the two nations.

Chinese Premier Wen Jiabao on Sunday rejected American pressure on China to allow its currency to rise in value against the dollar, saying such efforts amounted to a kind of trade protectionism. His comments came after President Barack Obama in a trade speech last week said that China would make an "essential contribution" to rebalancing the global economy by moving to a more market-oriented currency regime.

On Monday, a group of 130 House members sent a letter to the administration urging the Treasury Department to cite China as a currency manipulator in a report that is scheduled to be released next month. The group also called on the Commerce Department to impose trade sanctions on China on the basis that its currency system is an unfair trade practice.

Asked about the upcoming currency report, which the administration is required to send Congress in mid-April, Geithner said it had not yet been decided whether to cite China as a currency manipulator.

Such a finding would trigger talks between the two nations with a threat of trade sanctions if the talks failed to resolve the issue. The Obama administration, following the lead of the Bush administration, has so far refused to cite China as a currency manipulator, believing that the more productive course would be to convince the Chinese that it is in their own interests to allow their currency to rise in value.

Geithner said he believes that China needs to realize its currency policy is "not just an issue between China and the United States, it's an issue for the world economy as a whole."

The issue is a complex one for the United States because China is the largest foreign holder of U.S. Treasury bonds. The United States must depend on foreign investors to keep purchasing those bonds at a time when it is running record federal budget deficits, including a $1.4 trillion imbalance last year.

Copyright © 2010 The Associated Press. All rights reserved.

China trims holdings of Treasury securities

WASHINGTON — China retained its spot as the biggest foreign holder of U.S. Treasury debt in January even as it trimmed its holdings for a third straight month. The string of declines underscored worries that the U.S. government could face much higher interest rates to finance soaring budget deficits.

The Treasury Department said Monday that China's holdings dipped by $5.8 billion to $889 billion in January compared with December. Japan, the second-largest foreign holder of U.S. government debt, also trimmed its holdings but by a much smaller $300 million, to $765.4 billion.

Net foreign purchases of long-term securities, a category that includes both government and corporate debt, totaled $19.1 billion in January, as net purchases of private corporate bonds fell by $24.8 billion, the biggest drop on record.

A month ago, Treasury initially reported that China had cut its holdings so sharply that it had lost its top spot as America's largest foreign creditor, a position it had held since its holdings overtook Japan in September 2008.

However, 10 days later, Treasury released its annual update of the figures. The revised data showed that China, while reducing its holdings, still retained the top spot. Treasury revises the data based on more detailed readings of the statistics, which do a better job of sorting out actual ownership of the bonds. This review determined, for example, that some bonds credited to Britain because they were purchased there were actually purchased on behalf of Chinese investors.

The decline in Chinese holdings is coming at a time of increased tensions between the two nations. Chinese Premier Wen Jiabao on Sunday rejected American pressure on China to allow its currency to rise in value against the dollar, saying such efforts amounted to a kind of trade protectionism.

A group of 130 House members sent a letter to the administration on Monday urging the Treasury Department to cite China as a currency manipulator in a report that is scheduled to be released next month. The group also called on the Commerce Department to impose trade sanctions on China on the basis that its currency system was an unfair trade practice.

"If the administration fails to act on this issue it will hold back our economic recovery and hurt the ability of American small businesses and manufacturers to increase their production, keep their doors open and create jobs," said Rep. Mike Michaud, D-Maine, one of the signers of the letter.

Treasury spokeswoman Natalie Wyeth said Treasury was still reviewing the congressional letter. She said there would be no direct response to Wen's comments beyond President Barack Obama's comments in a trade speech last week. Obama said that China would make an "essential contribution" to rebalancing the global economy by moving to a more market-oriented currency regime.

The Obama administration is hoping China will resume allowing its currency to rise in value against the dollar as a way of trimming the huge trade gap between the two nations. The United States ran a deficit of $226.8 billion with China last year, the largest deficit recorded with any country. A cheaper dollar would make American products less expensive in China while making Chinese goods more expensive for American consumers.

Treasury's latest report on international capital flows showed that foreign holdings of Treasury securities increased by $17 billion in January to $3.71 trillion.

While China and Japan decreased their holdings, oil exporting countries boosted their holdings to $218.4 billion, up from $207.4 billion in December, and holdings of Treasury securities in Great Britain rose to $206 billion, up from $178.1 billion.

Rick McDonald, an economist at Action Economics, said the January report reflected a normalization of purchasing activities following a two-year credit crisis in which investors had flocked to the safety of U.S. securities in the wake of severe turmoil in global financial markets.

Julian Jessop, chief international economist at Capital Economics, said the Treasury report just affirmed market information in January that showed the dollar rising in value against most currencies with Treasury interest rates falling. Jessop said this pattern did not support concerns that foreigners were losing their appetite for U.S. bonds.

Strong foreign demand for U.S. Treasury debt helps to keep the interest rates that the government pays for that debt from rising. However, there are other factors that influence U.S. interest rates beyond foreign demand, including decisions by the Federal Reserve.

Fed policymakers have kept a key short-term interest rate at a record low of zero to 0.25 percent for more than a year and many economists believe that the Fed will continue to pledge to keep rates exceptionally low as a way to boost the economy when they conclude their regular meeting on Tuesday.

The federal budget deficit hit an all-time high of $1.4 trillion in 2009, and the Obama administration is projecting that this year's deficit will climb even higher to $1.56 trillion. But the administration is also pledging to get the deficits under control once the economy has resumed sustained growth.

Copyright © 2010 The Associated Press. All rights reserved.

Corporate Debt Coming Due May Squeeze Credit

When the Mayans envisioned the world coming to an end in 2012 — at least in the Hollywood telling — they didn’t count junk bonds among the perils that would lead to worldwide disaster.

Maybe they should have, because 2012 also is the beginning of a three-year period in which more than $700 billion in risky, high-yield corporate debt begins to come due, an extraordinary surge that some analysts fear could overload the debt markets.

With huge bills about to hit corporations and the federal government around the same time, the worry is that some companies will have trouble getting new loans, spurring defaults and a wave of bankruptcies.

The United States government alone will need to borrow nearly $2 trillion in 2012, to bridge the projected budget deficit for that year and to refinance existing debt.

Indeed, worries about the growth of national, or sovereign, debt prompted Moody’s Investors Service to warn on Monday that the United States and other Western nations were moving “substantially” closer to losing their top-notch Aaa credit ratings.

Sovereign debt aside, the approaching scramble for corporate financing could strain the broader economy as jobs are cut, consumer spending is scaled back and credit is tightened for both consumers and businesses.

The apocalyptic talk is not limited to perpetual bears and the rest of the doom-and-gloom crowd.

Even Moody’s, which is known for its sober public statements, is sounding the alarm.

“An avalanche is brewing in 2012 and beyond if companies don’t get out in front of this,” said Kevin Cassidy, a senior credit officer at Moody’s.

Private equity firms and many nonfinancial companies were able to borrow on easy terms until the credit crisis hit in 2007, but not until 2012 does the long-delayed reckoning begin for a series of leveraged buyouts and other deals that preceded the crisis.

That is because the record number of bonds and loans that were issued to finance those transactions typically come due in five to seven years, said Diane Vazza, head of global fixed-income research at Standard & Poor’s.

In addition, she said, many companies whose debt matured in 2009 and 2010 have been able to extend their loans, but the extra breathing room is only adding to the bill for 2012 and after.

The result is a potential financial doomsday, or what bond analysts call a maturity wall. From $21 billion due this year, junk bonds are set to mature at a rate of $155 billion in 2012, $212 billion in 2013 and $338 billion in 2014.

The credit markets have gradually returned to normal since the financial crisis, particularly in recent months, making more loans available to companies and signaling confidence in the pace of economic recovery. But the issue is whether they can absorb the coming surge in demand for credit.

As was the case with the collapse of the subprime mortgage market three years ago, derivatives played a big role in the explosion of risky corporate debt. In this case the culprit was a financial instrument called a collateralized loan obligation, which helped issuers repackage corporate loans much as subprime mortgages were sliced, diced and then resold to other investors. That made many more risky loans available.

“The question is, ‘Should these deals have ever been financed in the first place?’ ” asked Anders J. Maxwell, a corporate restructuring specialist at Peter J. Solomon Company in New York.

The period from 2012 to 2014 represents payback time for a Who’s Who of private equity firms and the now highly leveraged companies they helped buy in the precrisis boom years.

The biggest include the hospital owner HCA, which was taken private in 2006 by a group led by Bain Capital and Kohlberg Kravis & Roberts for $33 billion, and has $13.3 billion in debt payments coming due between 2012 and 2014. Another buyout led by Kohlberg Kravis, for the giant Texas utility TXU, has $20.9 billion that needs to be refinanced in the same period.

Realogy, which owns real estate franchises like Century 21 and Coldwell Banker, was taken private by Apollo in the spring of 2007 just as the housing market was beginning to unravel and as the first tremors of the subprime crisis were being felt.

Realogy was saddled with $8 to $9 of debt for every $1 in earnings, well above the “$5 to $6 level that is manageable for a company in a highly cyclical industry,” according to Emile Courtney, a credit analyst with Standard & Poor’s.

Realogy has survived — barely. “The company’s cash flow is still below what’s needed to cover the interest on its debt,” Mr. Courtney said.

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Government Warned 9/11 Commission ‘Not To Cross The Line’

Documents recently obtained by the ACLU show that the government warned the 9/11 Commission against getting to the bottom of the September 11 terror attacks in a letter signed by Attorney General John Ashcroft, Defense Secretary Donald H. Rumsfeld and CIA Director George J. Tenet.

In a letter dated January 6, 2004, the Commission was refused permission to question terrorist detainees, with inquiry leaders Hamilton and Kean being told there was “A line that the Commission should not cross,” in the course of its investigation.

A PDF of the letter (page 26) can be read here.

The government urged the Commission, “Not to further pursue the proposed request to participate in the questioning of detainees,” according to the letter, citing the need to “Safeguard the national security, including protection of Americans from future terrorist attacks.”

The warning was just one example of how the Bush administration fiercely struggled to prevent the 9/11 Commission from conducting a deeper probe into the attacks. Bush and Cheney refused to appear before the Commission separately and both refused to testify under oath, instead meeting with panel members informally and in private, with no recordings of the meeting allowed.

“It appears that David Addington took the lead on refusing the 9/11 Commission’s request,” writes the FireDogLake blog. “It appears Addington got the draft of the letter from 9/11 Commission–which was addressed to Rummy and George Tenet. Tenet and Addington clearly had a conversation about how to respond. But it seems that Addington drafted the response, got Condi, Andy Card, and Alberto Gonzales to review it, and then sent it to Tenet (and, presumably, Rummy) to okay and sign the letter.”

As FireDogLake rightly points out, this was part of an attempt to cover-up the systematic torture of detainees which did not fully come to light until the Abu Ghraib scandal was exposed in April 2004.

However, the refusal to allow access to detainees was also undoubtedly so that the Commission members couldn’t later blow the whistle on the fact that the men were nothing more than patsies and goat herders who had nothing whatsoever to do with the 9/11 attacks.

As we have constantly emphasized in the face of establishment media spin that has demonized the mere act of questioning the official 9/11 story, the majority of the 9/11 Commission members themselves have all gone on record to publicly slam the official story as untrue.

The senior counsel to the 9/11 Commission – John Farmer – said that the government agreed not to tell the truth about 9/11, echoing the assertions of fellow 9/11 Commission members who concluded that the Pentagon was engaged in deliberate deception about their response to the attack.

Senator Max Cleland, who resigned from the 9/11 Commission after calling it a “national scandal”, stated in a 2003 PBS interview,

“I’m saying that’s deliberate. I am saying that the delay in relating this information to the American public out of a hearing… series of hearings, that several members of Congress knew eight or ten months ago, including Bob Graham and others, that was deliberately slow walked… the 9/11 Commission was deliberately slow walked, because the Administration’s policy was, and its priority was, we’re gonna take Saddam Hussein out.”

Cleland, speaking with Democracy Now, said,

“One of these days we will have to get the full story because the 9-11 issue is so important to America. But this White House wants to cover it up”.

In 2006 the Washington Post reported that several members of the 9/11 Commission suspected deception on part of the Pentagon. As reported,

“Some staff members and commissioners of the Sept. 11 panel concluded that the Pentagon’s initial story of how it reacted to the 2001 terrorist attacks may have been part of a deliberate effort to mislead the commission and the public rather than a reflection of the fog of events on that day, according to sources involved in the debate.”

9/11 Commissioner Bob Kerry also has unanswered questions. As reported by Salon, he believes that there are legitimate reasons to believe an alternative version to the official story.

“There are ample reasons to suspect that there may be some alternative to what we outlined in our version,” Kerry said. The commission had limited time and limited resources to pursue its investigation, and its access to key documents and witnesses was fettered by the administration.

Commissioner Tim Roemer, speaking to CNN, stated that Commission members were considering a criminal probe of false statements. As quoted,

“We were extremely frustrated with the false statements we were getting,” Roemer told CNN. “We were not sure of the intent, whether it was to deceive the commission or merely part of the fumbling bureaucracy.”

Despite the fact that the majority of 9/11 Commission members have openly attacked the official story, the corporate media still frames any suspicion surrounding 9/11 as baseless conspiracy fodder at best, and at worst – terrorist and extremist propaganda.

The next big bailout is on the way. Prepare to get reamed!

Housing is on the rocks and prices are headed lower. That's not the consensus view, but it's a reasonably safe assumption. Master illusionist Ben Bernanke managed to engineer a modest 7-month uptick in sales, but the fairydust will wear off later this month when the Fed stops purchasing mortgage-backed securities and long-term interest rates begin to creep higher. The objective of Bernanke's $1.25 trillion program, which is called quantitative easing, was to transfer the banks "unsellable" MBS onto the Fed's balance sheet. Having achieved that goal, Bernanke will now have to unload those same toxic assets onto Freddie and Fannie. (as soon as the public is no longer paying attention)

Bernanke's cash giveaway has helped to buoy stock prices and stabilize housing, but market fundamentals are still weak. There's just too much inventory and too few buyers. Now that the Fed is withdrawing its support, matters will only get worse.

Of course, that hasn't stopped the folks at Bloomberg from cheerleading the nascent housing turnaround. Here's a clip from Monday's column:

"The U.S. housing market is poised to withstand the removal of government and Federal Reserve stimulus programs and rebound later in the year, contributing to annual economic growth for the first time since 2006. Increases in jobs, credit and affordable homes will help offset the end of the Fed’s purchases of mortgage-backed securities this month and the expiration of a federal homebuyer tax credit in April. Sales will rise about 6 percent this year, and housing will account for 0.25 percentage point of the 3.6 percent growth, according to forecasts by Dean Maki, chief U.S. economist for Barclays Capital in New York...“The underlying trend is turning positive,” said Bruce Kasman, chief economist at JPMorgan Chase & Co. in New York."

Just for the record; there has been no "increases in jobs". It's baloney. Unemployment is flat at 9.7 percent with underemployment checking-in at 16.8 percent. There's no chance of housing rebound until payrolls increase. Jobless people don't buy houses.

Also, while it is true that the federal homebuyer tax credit did cause a spike in home purchases; it's impact has been short-lived and sales are returning to normal. It's generally believed that "cash for clunker-type" programs merely move demand forward and have no meaningful long-term effect.

So, it's likely that housing prices--particularly on the higher end--will continue to fall until they return to their historic trend. (probably 10 to 15% lower) That means more trouble for the banks which are already using all kinds of accounting flim-flam ("mark-to-fiction") to conceal the wretched condition of their balance sheets. Despite the surge in stock prices, the banks are drowning in the losses from their non performing loans and toxic assets. And, guess what; they still face another $1 trillion in Option ARMs and Alt-As that will reset by 2012. it's all bad.

The Fed has signaled that it's done all it can to help the banks. Now it's Treasury's turn. Bernanke will keep the Fed funds rate at zero for the foreseeable future, but he is not going to expand the Fed's balance sheet anymore. Geithner understands this and is working frantically to put together the next bailout that will reduce mortgage-principal for underwater homeowners. But it's a thorny problem because many of the borrowers have second liens which could amount to as much as $477 billion. That means that if the Treasury's mortgage-principal reduction plan is enacted; it could wipe out the banks. Here's an excerpt from an article in the Financial Times which explains it all:

"A group of investors in mortgage-backed bonds dubbed the Mortgage Investors Coalition (MIC) recently submitted to Congress a plan to overhaul the refinancing of underwater borrowers by writing down the principal balances of both first and second mortgages. The confederation of insurers, asset managers and hedge funds hope to break a logjam between Washington DC and the four megabanks with the most exposure to writedowns on second lien mortgages, including home equity lines of credit.

The private sector initiative coincides with House Financial Services Committee Chairman Barney Frank’s open letter dated 4 March to the CEOs of the banks in question – Bank of America, Citigroup, JP Morgan Chase and Wells Fargo – urging them to start forgiving principal on the second lien loans they hold.

But the banks are unlikely to take action until they get new accounting guidance from regulators that would ease the impact of such significant principal reductions on their capitalization ratios."

(Ed.--"Accounting guidance"? Either the banks are holding out for a bigger bailout or they're looking for looser accounting standards to conceal their losses from their shareholders. Either way, it's clear that they're trying to hammer out the best deal possible for themselves regardless of the cost to the taxpayer.)

Financial Times again: "The four banks in question collectively own more than USD 400bn of the USD 1trn in second lien mortgages outstanding. BofA holds USD 149bn, Citi holds USD 54bn, JP Morgan holds USD 101bn and Wells Fargo holds USD 115bn, according to fourth quarter 2009 10Q filings with the Securities & Exchange Commission.

As proposed, the MIC’s plan entails haircuts to the first and second lien loans to reduce underwater borrowers’ loan to value ratios to 96.5% of current real estate market prices, according to two sources close.

For the program to work, HAMP would place principal balance forgiveness first in the modification waterfall. The associated second lien would take a principal balance reduction but remain intact through the process - ultimately to be re-subordinated to the first lien, the sources close said.

A systemic program to modify second lien mortgages called 2MP does exist but Treasury has stalled on implementation because the banks that hold them can’t afford it, six buyside investors said. The sources all said implementation of the program, called 2MP, would result in “catastrophic” losses for the nation’s four largest banks, which collectively hold more than USD 400bn of the USD 1trn in second lien mortgages outstanding." ("Mortgage investors push for banks to write down second liens", Allison Pyburn, Financial Times)

Hold on a minute! Didn't Geithner just run bank "stress tests" last year to prove that the banks could withstand losses on second liens?

Yes, he did. And the banks passed with flying colors. So, why are the banks whining now about the potential for "catastrophic" losses if the plan goes forward? Either they were lying then or they're lying now; which is it?

Of course they were lying. Just like that sniveling sycophant Geithner is lying.

According to the Times the banks hold $400 billion in second lien mortgages. But --as Mike Konczal points out--the stress tests projected maximum losses at just "$68 billion. In other words, Geithner rigged the tests so the banks would pass. Now the banks want it both ways: They want people to think that they are solvent enough to pass a basic stress test, but they want to be given another huge chunk of public money to cover their second liens. They want it all, and Geithner's trying to give it to them. Wanker.

And don't believe the gibberish from Treasury that "they have no plan for mortgage principal reductions". According to the Times:

“Treasury continues to tell investors that any day now they will be out with a final program and they will be signed up"....“The party line continues to be they are a week away, two weeks away,” the hedge fund source said. ”

So, it's not a question of "if" there will be another bank bailout, but "how big" that bailout will be. The banks clearly expect the taxpayer to foot the entire bill regardless of who was responsible for the losses.

So, let's summarize:

1--Bank bailout #1--$700 billion TARP which allowed the banks to continue operations after the repo and secondary markets froze-over from the putrid loans the banks were peddling.

2--Bank bailout #2--$1.25 trillion Quantitative Easing program which transferred banks toxic assets onto Fed's balance sheet (soon to be dumped on Fannie and Freddie) while rewarding the perpetrators of the biggest financial crackup in history.

3--Bank bailout #3--$1 trillion to cover all mortgage cramdowns, second liens, as well as any future liabilities including gym fees, energy drinks, double-tall nonfat mocha's, parking meters etc. ad infinitum.

And as far as the banks taking "haircuts"? Forget about it! Banks don't take "haircuts". It looks bad on their quarterly reports and cuts into their bonuses. Taxpayers take haircuts, not banksters. Besides, that's what Geithner gets paid for--to make sure bigshot tycoons don't have to pay for their mistakes or bother with the niggling details of fleecing the little people.

The next big bailout is on the way. Prepare to get reamed!

Can the 'Bush Lied' Deniers Handle the Truth?

Bring it on.

Conservative apologists for the George W. Bush crew are swinging hard these days to defend their man -- and themselves -- from the charge that W. and his gang misled the nation into war. They must worry that they are going to end up on the wrong side of history. After all, a 2008 Gallup poll found that 53 percent of Americans believed that the Bush administration "deliberately misled the American public about whether Iraq had weapons of mass destruction." (This was a big change from a poll taken two months after the 2003 invasion that noted that 67 percent believed that Bush had played it straight.)

Still, my PoliticsDaily.com colleague, Peter Wehner, who worked in the W. White House, wants to mix it up over this. In a recent column, he took issue with a piece I had written decrying Iraq war triumphalism. Wehner disagreed on several fronts, but he zeroed in on what he derisively called the " 'Bush lied' mantra"-- meaning the assertion that his former boss bamboozled the public about Iraq's WMD capabilities. He scornfully wrote, "I fully understand that this remains an article of religious faith among many of those on the left. But there is no real evidence for it." And Karl Rove, who claims in his new book that Bush did not "lie us" into war, cheered on Wehner, tweeting on Tuesday, "Fantastic piece by fmr WH colleague Pete Wehner responding to @DavidCornDC on Iraq." Moreover, in a column this week, New York Times op-edder Ross Douthat, while assailing Matt Damon's "Green Zone," scoffed at "the comforts of a 'Bush lied, people died' reductionism." Accusing Bush of misrepresenting the case for war, Douthat huffs, is "glib" and "lame" scapegoating; the real explanation for what went wrong in Iraq, he asserts, is, well, more Shakespearean.

So let's get down to it. Wehner rests much of his case on a classified October 2002 National Intelligence Estimate, a summation of the intelligence community's assessments. It stated:

We judge that Iraq has continued its weapons of mass destruction program, in defiance of U.N. resolutions and restrictions. Baghdad has chemical and biological weapons, as well as missiles with ranges in excess of U.N. restrictions. If left unchecked, it probably will have a nuclear weapon during this decade.

This NIE was, of course, wrong. Iraq had no active WMD programs, no stockpiles. But Wehner and others point to it as a holy writ that justifies everything Bush, Dick Cheney and other administration officials said. Which is odd, because the Bush White House admitted after the war began that Bush had not bothered to read the entire 93-page document. Had he done so, he would have seen that the report contained important caveats regarding key aspects of the case -- particularly Bush's claim that Saddam Hussein was actively pursing nuclear weapons and close to possessing them.

But Bush needed to read the intelligence only if he cared about presenting a bound-by-the-facts argument. Instead, he and his aides consistently overstated the iffy intelligence (which itself overstated Saddam's WMD capacities) and they made stuff up. Really. They repeatedly issued provocative assertions that were not backed up by even the flawed intelligence.

Here's a far-from-comprehensive sampling.

- In August 2002, as the administration was preparing to kick-off its campaign for war against Iraq, Cheney said in a speech, "Simply stated, there's no doubt that Saddam Hussein now has weapons of mass destruction. There is no doubt he is amassing them to use against our friends, against our allies, and against us." Yet a few months earlier, Vice Adm. Thomas Wilson, the head of the Defense Intelligence Agency, had testified in Congress that Iraq possessed only "residual" amounts of WMD. And there was no intelligence suggesting Saddam's intention was to build up a WMD arsenal so he could deploy it against the United States -- which would have been a suicidal act. In fact, the existing intelligence indicated Saddam was not interested in a WMD showdown with the United States. As the NIE would later state, Saddam was not likely to mount "terrorist attacks with conventional or [WMD] against the United States, fearing that exposure of Iraqi involvement would provide Washington a stronger cause for making war" against Iraq. What was the factual basis for Cheney saying Saddam was beefing up his WMD so he could attack the United States? There was none.

- At a Sept. 7, 2002, joint news conference with Prime Minister Tony Blair of Britain, Bush declared that a 1998 International Atomic Energy Agency report had found that Iraq had been "six months away from developing a [nuclear] weapon. I don't know what more evidence we need." One problem: There was no such IAEA report. In 1998, the IAEA actually had reported there were "no indications" that Iraq was producing nuclear weapons. Bush wasn't citing bad intelligence. He had concocted a nonexistent report to bolster the case for war.

- That same month, Cheney claimed there was "very clear evidence" that Saddam was trying to build nuclear weapons: Iraq's acquisition of aluminum tubes to be used to enrich uranium for bombs. But at the time, there was a heated dispute within the intelligence community concerning these tubes. One CIA analyst claimed they had no other purpose other than for uranium enrichment, but scientists at the Department of Energy, the nation's top experts on nuclear weapons, disagreed. Guess who the White House listened to? (The NIE, which neither Bush nor national security adviser Condoleezza Rice would read, reported this dispute.) The aluminum tubes episode offers strong evidence that the White House was cherry-picking its intelligence to build a political case, not assessing the available information to determine what was true.

- Bush and his aides repeatedly asserted Iraq was loaded with chemical weapons. In a Rose Garden speech on Sept. 26, 2002, Bush insisted that "the Iraqi regime possesses biological and chemical weapons. The Iraqi regime is building the facilities necessary to make more biological and chemical weapons." Yet a September 2002 report by the Defense Intelligence Agency, which was widely distributed to government policymakers, said, "There is no reliable information on whether Iraq is producing or stockpiling chemical weapons, or where Iraq has -- or will -- establish its chemical warfare agent production facilities."

- During an Oct. 7, 2002, speech in Cincinnati, Bush said that U.N. inspectors had "concluded" that Iraq in the 1990s had actually produced "two to four times" the 30,000 liters of anthrax and other deadly biological agents than it had acknowledged making. Bush continued: "This is a massive stockpile of biological weapons that has never been accounted for, and capable of killing millions." But U.N. inspectors had concluded no such thing. They had reported destroying key facilities Iraq had used to develop chemical, biological, and nuclear weapons. The inspectors had encountered discrepancies in the accounting of Iraq's weapons and WMD material and had noted that Iraq could have produced more weapons than the inspectors had uncovered. Bush was misstating the facts to turn a possible stockpile of WMD into an actual arsenal.

- On Nov. 7, 2002, Bush said Saddam "is a threat because he's dealing with al-Qaeda." Yet as the 9/11 Commission later noted, there had been no intelligence confirming significant contacts between Iraq and al-Qaeda that added up to an operational relationship. And this was not a one-off claim. On Sept. 26, 2002, Defense Secretary Donald Rumsfeld had said that he had "bullet-proof" evidence that Saddam was tied to Osama bin Laden. He never produced that evidence. In March 2003, Cheney claimed Saddam had a "long-standing relationship" with al-Qaeda. But that was not so. (Cheney also repeatedly referred to an intelligence report that 9/11 ringleader Mohammed Atta had met with an Iraqi intelligence officer in Prague -- even though the CIA and FBI had discounted this report. The 9/11 Commission later said this report was bunk.)

- At a Dec. 31, 2002, press conference, Bush asserted, "We don't know whether or not [Saddam] has a nuclear weapon." This made it seem that perhaps Saddam already had these dangerous weapons. But there was no intelligence at the time suggesting that the Iraqi dictator might possess nuclear weapons. The faulty NIE had errantly declared that Iraq was "reconstituting" its nuclear weapons program, but it had concluded Iraq would not be able to produce a nuclear weapon for years. (The NIE also reported that the State Department's intelligence outfit had concluded there was no "persuasive evidence" that Saddam had an active nuclear-weapons program.) Bush had no basis for hinting that Saddam could already be nuclear-armed. Yet that's what he did.

- When Bush issued his ultimatum to Saddam Hussein on March 17, 2003, he proclaimed, "Intelligence gathered by this and other governments leaves no doubt that the Iraq regime continues to possess and conceal some of the most lethal weapons ever devised." But there was doubt -- and plenty of it. Intelligence analysts had registered uncertainty regarding central elements of Bush's case for war. These doubters had been correct.

So let's review. Bush and Cheney again and again made statements that were not true and that were not supported by the available intelligence. Moreover, once U.N. inspectors entered Iraq in late 2002 and eventually began reporting that there was no evidence of significant WMD programs, Bush and Co. ignored these experts and continued to claim that Saddam was up to his neck in WMD. They insisted Saddam had been shopping for uranium in Africa, even though the intelligence on this point was dubious. All together, they waged a willful campaign of misrepresentation and hyperbole. And to such an extent, it can be branded a lie.

Or let's put it this way: Can Wehner, Rove and Douthat state that Bush carefully reviewed the intelligence in order to present to the public an accurate depiction of what was known and not known about the WMD threat possibly posed by Saddam? Bush and his aides were looking for ammo. They wanted this war -- and they made unsubstantiated claims to get it. The truth was not a priority.

Much of the American public has come to understand this. But if Wehner, Rove and Douthat insist on defending Bush, let them explain the pattern detailed above. I dare any of them to attempt a line-by-line response. The evidence is clear: Bush, Cheney and other administration aides engaged in reckless disregard of the truth to sell a war. That is not an article of faith or a Hollywood fantasy -- it's what happened.

THE LIE OF THE CENTURY

The Downing Street Memo is only the beginning of the proof we were all lied to.

Michael Rivero

[Text only version]

[Italian translation provided by reader]

[pdf version]

"All war is based on deception." -- Sun Tzu, The Art of War

There is nothing new in a government lying to their people to start a war. Indeed because most people prefer living in peace to bloody and horrific death in war, any government that desires to initiate a war usually lies to their people to create the illusion that support for the war is the only possible choice they can make.

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President McKinley told the American people that the USS Maine had been sunk in Havana Harbor by a Spanish mine. The American people, outraged by this apparent unprovoked attack, supported the Spanish American War. The Captain of the USS Maine had insisted the ship was sunk by a coal bin explosion, investigations after the war proved that such had indeed been the case. There had been no mine.

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Hitler used this principle of lying to his own people to initiate an invasion. He told the people of Germany that Poland had attacked first and staged fake attacks against German targets. The Germans, convinced they were being threatened, followed Hitler into Poland and into World War 2.

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FDR claimed Pearl Harbor was a surprise attack. It wasn't. The United States saw war with Japan as the means to get into war with Germany, which Americans opposed. So Roosevelt needed Japan to appear to strike first. Following an 8-step plan devised by the Office of Naval Intelligence, Roosevelt intentionally provoked Japan into the attack. Contrary to the official story, the fleet did not maintain radio silence, but sent messages intercepted and decoded by US intercept stations. Tricked by the lie of a surprise attack, Americans marched off to war.

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President Johnson lied about the Gulf of Tonkin to send Americans off to fight in Vietnam. There were no torpedoes in the water in the Gulf. LBJ took advantage of an inexperienced sonar man's report to goad Congress into escalating the Vietnam War.

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It is inescapable historical reality that leaders of nations will lie to their people to trick them into wars they otherwise would have refused. It is not "conspiracy theory" to suggest that leaders of nations lie to trick their people into wars. It is undeniable fact. This brings us to the present case. Did the government of the United States lie to the American people, more to the point, did President Bush and his Neocon associates lie to Congress, to initiate a war of conquest in Iraq? This question has been given currency by a memo leaked from inside the British Government which clearly indicates a decision to go to war followed by the "fixing" of information around that policy. This is, as they say, a smoking gun. But the fact is that long before this memo surfaced, it had become obvious that the US Government, aided by that of Great Britain, was lying to create the public support for a war in Iraq.

First off is Tony Blair's "Dodgy Dossier", a document released by the Prime Minister that made many of the claims used to support the push for war. The dossier soon collapsed when it was revealed that much of it had been plagiarized from a student thesis paper that was 12 years old! The contents of the dossier, however much they seemed to create a good case for invasion, were obsolete and outdated. This use of material that could not possibly be relevant at the time is clear proof of a deliberate attempt to deceive.

Then there was the claim about the "Mobile biological weapons laboratories". Proffered in the absence of any real laboratories in the wake of the invasion, photos of these trailers were shown on all the US Mainstream Media, with the claim they while seeming to lack anything suggesting biological processing, these were part of a much larger assembly of multiple trailers that churned out biological weapons of mass destruction.

The chief proponent of this hoax was Colin Powell, who presented illustrations such as this one to the United Nations on February 5th, 2003. This claim fell apart when it was revealed that these trailers were nothing more than hydrogen gas generators used to inflate weather balloons. This fact was already known to both the US and UK, as a British company manufactured the units and sold them to Iraq.

Click for full sized image

Colin Powell's speech to the UN was itself one misstatement after another. Powell claimed that Iraq had purchased special aluminum tubes whose only possible use was in uranium enrichment centrifuges. Both CIA and Powell's own State Department confirmed that the tubes were parts for missiles Saddam was legally allowed to have. Following the invasion, no centrifuges, aluminum or otherwise were found.

Click for full sized image

Powell also claimed to the United Nations that the photo on the left showed "Decontamination Vehicles". But when United Nations inspectors visited the site after the invasion, they located the vehicles and discovered they were just firefighting equipment. Powell claimed the Iraqis had illegal rockets and launchers hidden in the palm trees of Western Iraq. None were ever found. Powell claimed that the Iraqis had 8,500 liters (2245 gallons) of Anthrax. None was ever found.

Powell claimed that Iraq had four tons of VX nerve gas. The UN had already confirmed that it was destroyed. The only VX ever found were samples the US had left as "standards" for testing. When the UN suspected that the US samples had been used to contaminate Iraqi warheads, the US moved quickly to destroy the samples before comparison tests could be carried out. Powell claimed that Iraq was building long-range remote drones specifically designed to carry biological weapons. The only drones found were short-range reconnaissance drones. Powell claimed that Iraq had an aggregate of between 100 and 500 tons of chemical and biological warfare agents. Powell gave no basis for that claim at all, and a DIA report issued the same time directly contradicted the claim. No biological or chemical weapons were found in Iraq following the invasion. Powell claimed that "unnamed sources" confirmed that Saddam had authorized his field commanders to use biological weapons. No such weapons were ever used by the Iraqis to defend against the invasion and, of course, none were ever found in Iraq. Powell claimed that 122mm warheads found by the UN inspectors were chemical weapons. The warheads were empty, and showed no signs of ever having contained chemical weapons. Powell claimed that Iraq had a secret force of illegal long-range Scud missiles. None were ever found. Powell claimed to have an audio tape proving that Saddam was supporting Osama Bin Laden. But independent translation of the tape revealed Osama's wish for Saddam's death.

Colin Powell's UN debacle also included spy photos taken from high flying aircraft and spacecraft. On the photos were circles and arrows and labels pointing to various fuzzy white blobs and identifying them as laboratories and storage areas for Saddam's massive weapons of mass destruction program. Nothing in the photos actually suggested what the blobby shapes were and during inspections which followed the invasion, all of them turned out to be rather benign. In at least one case, the satellite Powell claimed had taken one of the pictures had actually been out of operation at the time. And many questioned why Powell was showing black and white photos when the satellites in use at the time over Iraq took color images.

Another piece of evidence consists of documents which President Bush referenced as in his 2003 State of the Union Speech. According to Bush, these documents proved that Iraq was buying tons of uranium oxide, called "Yellow Cake" from Niger. Since Israel had bombed Iraq's nuclear power plant years before, it was claimed that the only reason Saddam would have for buying uranium oxide was to build bombs.

This hoax fell apart fast when it was pointed out that Iraq has a great deal of uranium ore inside their own borders and no need to import any from Niger or anywhere else. The I.A.E.A. then blew the cover off the fraud by announcing that the documents Bush had used were not only forgeries, but too obvious to believe that anyone in the Bush administration did not know they were forgeries! The forged documents were reported as being "discovered" in Italy by SISMI, the Italian Security Service. Shortly before the "discovery" the head of SISMI had been paid a visit by Michael Ledeen, Manucher Ghorbanifar, and two officials from OSP, one of whom was Larry Franklin, the Israeli spy operating inside the OSP. In July, 2005, the Italian Parliament concluded their own investgation and named four men as suspects in the creation of the forged documents. Michael Ledeen, Dewey Clarridge, Ahmed Chalabi and Francis Brookes. This report has been included in Patrick Fitzgerald's investigation into the outing of Valerie Plame, and Paul McNulty, the prosecutor of the AIPAC spy case. A recently declassified memo proves that the State Department reported the fact that the NIger documents were forgeries to the CIA 11 days before President Bush made the claim about the Niger uranium based on those documents. In the end, the real proof that we were lied to about Iraq's weapons of mass destruction is that no weapons of mass destruction were ever found. That means that every single piece of paper that purported to prove that Iraq had weapons of mass destruction was by default a fraud, a hoax, and a lie. There could be no evidence that supported the claim that Iraq had weapons of mass destruction because Iraq did not have weapons of mass destruction. In a way, the existence of any faked documents about Iraq's WMDs is actually an admission of guilt. If one is taking the time to create fake documents, the implication is that the faker is already aware that there are no genuine documents. What the US Government had, ALL that they had, were copied student papers, forged "Yellow Cake" documents, balloon inflators posing as bioweapons labs, and photos with misleading labels on them. And somewhere along the line, someone decided to put those misleading labels on those photos, to pretend that balloon inflators are portable bioweapons labs, and to pass off stolen student papers as contemporary analysis. And THAT shows an intention to deceive. Lawyers call this "Mens Rea", which means "Guilty Mind". TV lawyer shows call it "Malice aforethought". This means that not only did the Bush Administration lie to the people and to the US Congress, but knew they were doing something illegal at the time that they did it. All the talk about "Intelligence failure" is just another lie. There was no failure. Indeed the Army agents who erroneously claimed that missile tubes were parts for a uranium centrifuge received bonuses, while the Pentagon smeared Hans Blix, and John Bolton orchestrated the firing of Jose Bustani, the director of the Organization for the Prohibition of Chemical Weapons, because Bustani was trying to send chemical weapons inspectors to Baghdad. The President of the United States and his Neocon associates lied to the people of the United States to send them off on a war of conquest. Defenders of the government will point to the cases listed at the top of the page as proof that lying to the people is a normal part of the leader's job and we should all get used to it. And because "Everybody does it" that we should not single out the present administration. But this is madness. We do not catch all the murderers, yet when we catch a murderer, we deal with them as harshly as possible, in order to deter more murderers. Right now, we have the criminals at hand. and, while other leaders in history have lied to start wars, for the first time in history, the lie stands exposed while the war started with the lies still rages on, to the death and detriment of our young men and women in uniform. We cannot in good moral conscience ignore this lie, this crime, lest we encourage future leaders to continue to lie to us to send our kids off to pointless wars. Lying to start a war is more than an impeachable offence; it the highest possible crime a government can commit against their own people. Lying to start a war is not only misappropriation of the nation's military and the nation's money under false pretenses, but it is outright murder committed on a massive scale. Lying to start a war is a betrayal of the trust each and every person who serves in the military places in their civilian leadership. By lying to start a war, the Bush administration has told the military fatalities and their families that they have no right to know why they were sent to their deaths. It's none of their business. Our nation is founded on the principle of rule with the consent of the governed. Because We The People do not consent to be lied to, a government that lies rules without the consent of the governed, and ruling without the consent of the governed is slavery. You should be more than angry. You should be in a rage. You should be in a rage no less than that of the families of those young men and women who have been killed and maimed in this war started with a lie.You need to be in a rage and you need to act on that rage because even as I type these words, the same government that lied about Iraq's nuclear weapons is telling the exact same lies about Iran's nuclear capabilities. The writing is on the wall; having gotten away with lying to start the war in Iraq, the US Government will lie to start a war in Iran, and after that another, and after that another, and another and another and another because as long as you remain silent, and as long as you remain inactive, the liars have no reason to stop. As long as you remain inactive, the liars have no reason to stop. None. It is time to fire the liars. "The only thing necessary for the triumph of evil is for good men to do nothing" . --Edmund Burke

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U.S.C. TITLE 18 > PART I > CHAPTER 47 § 1001. (a) Except as otherwise provided in this section, WHOEVER, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully— (1) falsifies, conceals, or covers up by ANY trick, scheme, or device a material fact; (2) makes any materially false, fictitious, or fraudulent statement or representation; or (3) makes or USES any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry; shall be fined under this title or imprisoned not more than 5 years, or both. (b) Subsection (a) does not apply to a party to a judicial proceeding, or that party's counsel, for statements, representations, writings or documents submitted by such party or counsel to a judge or magistrate in that proceeding. (c) With respect to any matter within the jurisdiction of the legislative branch, subsection (a) shall apply only to— (1) administrative matters, including a claim for payment, a matter related to the procurement of property or services, personnel or employment practices, or support services, or a document required by law, rule, or regulation to be submitted to the Congress or any office or officer within the legislative branch; or (2) any investigation or review, conducted pursuant to the authority of any committee, subcommittee, commission or office of the Congress, consistent with applicable rules of the House or Senate.

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SO HERE IS WHAT WE ARE GOING TO DO The Bush administration and their friends in the media want this story to go away. More than want it to go away, they are in a panic, and will do everything they can to stop it. They will use every dirty trick, every paid shill, every presstitute that they can. Already there is a report that the Michael Jackson jury is "expected" to reach a verdict just before the Conyers hearings. So, I want YOU to copy this article off, post it everywhere. This article is placed in the public domain. Mail it to your friends. Then send it to your local media and your Congresscritters and have everyone you know do the same. Get on the phones. Flood their offices. The term is "Viral Marketing" where you get the people who need a product to market it for you. Well, this nation NEEDS this "product". It needs to know that this war was started with lies. INTENTIONAL lies. And they need to know there is something they can do about it, and that is to start pounding on the doors of power. Because when a flood of such messages reaches the Congress and the media, what they will hear is that there is no more time. Either they will deal with these lies and the liars, in full, or they will lose all credibility as a government and as media. A government that lies to the people cannot be the legal government of this land. Make sure that they understand that YOU understand that the Constitution does not allow the government to lie to the people. Calling themselves the government does not make it so if they act unconstitutionally and illegally. The Constitution is the original "Contract with America" and a government that lies stands in clear breach of that contract. MORE MEDIA CONTACTS MORE CONGRESSIONAL CONTACTS But when a long train of abuses and usurpations, pursuing invariably the same Object, evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security. -- "The Declaration of Independence"

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