Friday, May 14, 2010

U.S. posts 19th straight monthly budget deficit

A tourist gazes up towards the dome of the U.S. Capitol, January 25, 2010. REUTERS/Kevin Lamarque

WASHINGTON (Reuters) - The United States posted an $82.69 billion deficit in April, nearly four times the $20.91 billion shortfall registered in April 2009 and the largest on record for that month, the Treasury Department said on Wednesday.

Greece

It was more than twice the $40-billion deficit that Wall Street economists surveyed by Reuters had forecast and was striking since April marks the filing deadline for individual income taxes that are the main source of government revenue.

Department officials said that in prior years, there was a surplus during April in 43 out of the past 56 years.

The government has now posted 19 consecutive monthly budget deficits, the longest string of shortfalls on record.

For the first seven months of fiscal 2010, which ends September 30, the cumulative budget deficit totals $799.68 billion, down slightly from $802.3 billion in the comparable period of fiscal 2009.

Outlays during April rose to $327.96 billion from $218.75 billion in March and were up from $287.11 billion in April 2009. It was a record level of outlays for an April.

Department officials noted there were five Fridays in April this year, which helped account for higher outlays since most tax refunds are issued on that day.

But for the first seven months of the fiscal year, outlays fell to $1.99 trillion from $2.06 trillion in the comparable period of fiscal 2009, partly because of repayments by banks of bailout funds they received during the financial crisis.

Receipts in April -- mostly from income taxes -- were $245.27 billion, up from $153.36 billion in March but lower than the $266.21 billion taken in during April 2009.

Receipts from individuals, who faced an April 15 filing deadline for paying 2009 taxes, fell to $107.31 billion from $137.67 billion in April 2009.

The U.S. full-year deficit this year is projected at $1.5 trillion on top of a $1.4 trillion shortfall last year.

White House budget director Peter Orszag told Reuters Insider in an interview on Wednesday that the United States must tackle its deficits quickly to avoid the kind of debt crisis that hit Greece.

(Reporting by Glenn Somerville, Editing by Diane Craft)

Schwarzenegger's Revised Budget Plan Is Expected to Eliminate Some Billion Dollar Health Programs

Administration officials declined to reveal which specific programs the governor would eliminate. But officials involved in the budget process, who spoke on condition of anonymity because they are not authorized to speak publicly, said they would probably include home healthcare for the elderly and disabled, a nearly $2-billion program that serves 440,000 Californians, reports LaTi.

Schwarzenegger may also propose the dismantling of the Healthy Families program, which uses federal money to help provide health insurance for about 900,000 low-income children. The administration warned in January that it would try to abolish the program if the state's budget situation did not improve – which it has not.

Schwarzenegger's proposals, meanwhile, would face stiff opposition in the Legislature, where there is limited support for taking apart the state's healthcare system. Providers and advocacy groups that have successfully sued the state to block the previous cuts are also working with the Democrats who control the Assembly and Senate to preserve services.

The state budget deficit remains around $19 billion.

Geithner Briefs Super Power Elite, Friday Afternoon

The heavyweights want a report from the Treasury Secretary, including David Rockefeller and Lynn Forester de Rothschild (Forester was introduced to soon to be husband, Sir Evelyn de Rothschild, by Henry Kissinger at the 1998 Bilderberg Group conference in Scotland. They spent their honeymoon at the White House.)

In addition to Rockefeller and Lady de Rothschild, on Friday afternoon, Treasury Secretary Geithner will also meet with the other members of the Board of Directors of the Peter G. Peterson Institute for International Economics to discuss the Administration’s agenda for economic growth and strengthening the global financial system.

Here's the hefty list of the Institute's Board of Directors:

Peter G. Peterson (Chairman of the Board)
Founder and Chairman, Peter G. Peterson Foundation; former Senior Chairman, The Blackstone Group; former Secretary of Commerce. and Assistant to the President for International Economic Policy.

George David (Vice Chairman of the Board)
Chairman, United Technologies Corporation.

Reynold Levy (Chairman of the Executive Committee)
President, Lincoln Center for the Performing Arts.

Leszek Balcerowicz
Former Deputy Prime Minister, Poland; former Chairman, Center for Social and Economic Research, Warsaw, Poland; former Minister of Finance of Poland; President, National Bank of Poland.

Ronnie C. Chan
Chairman, Hang Lung Properties Limited.

Chen Yuan
Governor, China Development Bank; former Deputy Governor, Peoples Bank of China.

Andreas C. Dracopoulos
Director and co-President, Stavros Niarchos Foundation.

Jessica Einhorn
Dean, SAIS, Johns Hopkins University; former Visiting Fellow, International Monetary Fund; former Managing Director for Finance and Resource Mobilization, World Bank.

Mohamed El-Erian
PIMCO, Co-CEO and Co-CIO; former President and CEO, Harvard Management Company, Inc.

Stanley Fischer
Governor, Bank of Israel; former Vice Chairman of Citigroup. See more: http://www.piie.com/fischer/index.html

Jacob A. Frenkel
Former governor of the Bank of Israel and former IMF economic counselor and director of research.

Maurice R. Greenberg
Chairman and CEO, C.V. Starr and Co., Inc.; former Chairman, American International Group.

Herbjorn Hansson
Chairman and CEO, Nordic American Tanker Shipping Ltd.

Tony Hayward
Group Chief Executive, BP p.l.c.

Carla A. Hills
Chairman, Hills & Company; former United States Trade Representative; former Secretary of Housing and Urban Development; former Assistant Attorney General of the United States.

Nobuyuki Idei
Chief Corporate Advisor, Sony Corporation.

Karen Katen
Senior Advisor, Essex Woodlands Health Ventures; former President, Pfizer Human Health; and former Vice Chairman, Pfizer Inc.

W. M. Keck II
President, Coalinga Corporation.

Michael Klein
Former Vice Chairman, Citigroup.

Caio Koch-Weser
Vice Chairman, Deutsche Bank Group; former Deputy Minister of Finance for Germany; former Managing Director, Operations, World Bank.

Lee Kuan Yew
Senior Minister and former Prime Minister of the Republic of Singapore.

Andrew N. Liveris
Chairman and Chief Executive Officer, The Dow Chemical Company.

Sergio Marchionne
Chief Executive Officer, Fiat S.p.A. and Chrysler Group LLC.

Donald F. McHenry
University Research Professor of Diplomacy and International Affairs, Georgetown University; former US Ambassador to the United Nations.

Mario Monti
President, Bocconi University.

Paul O'Neill
Former Secretary of the Treasury.

David O'Reilly
Retired Chairman and Chief Executive Officer, ChevronTexaco Corporation.

Hutham Olayan
President and CEO, Olayan America Corporation.

James W. Owens
Chairman and CEO of Caterpillar.

Samuel J. Palmisano
Chairman of the Board, President and Chief Executive Officer, IBM Corporation.

Frank H. Pearl
Chairman and CEO, Perseus LLC, and founder and chairman, Perseus Books/Perseus Publishing.

Victor Pinchuk
Founder of Interpipe Corporation.


Joseph E. Robert, Jr.
Chairman and Chief Executive Officer, J. E. Robert Companies.

David Rockefeller
Former Chairman and Chief Executive Officer, Chase Manhattan.

Lynn Forester de Rothschild
CEO and President, E.L. Rothschild Limited.

Renato Ruggiero
Former Italian Foreign Minister; former Vice Chairman, Salomon Smith Barney International Ltd.; former Director-General, World Trade Organization; former Chairman, Fiat.

Richard E. Salomon
Managing Partner, East End Advisors, LLC.

Sheikh Hamad Saud Al-Sayari
Former Governor, Saudi Arabian Monetary Agency.

Edward W. Scott, Jr.
Chairman of the Board of the Center for Global Development, philanthropist, and cofounder of BEA Systems.

Frederick W. Smith
Chairman and CEO, FedEx Corporation.

Jean-Claude Trichet
President, European Central Bank; former Governor, Banque de France; former Director of the Treasury, government of France.

Laura D'Andrea Tyson
Dean, London Business School; former Dean, Haas School of Business, Professor of Economics and Class of 1939 Chair, University of California at Berkeley; former National Economic Adviser to the President; former Chair, Council of Economic Advisers.

Paul A. Volcker
Henry Kaufman Visiting Professor, New York University Stern School of Business; Frederick H. Schultz Professor (Emeritus) of International Economic Policy, Princeton University; former Chairman, Wolfensohn and Co, Inc.; former Chairman, Board of Governors of the Federal Reserve System, and President of the Federal Reserve Bank of New York and Under Secretary of the Treasury for Monetary Affairs.

Jacob Wallenberg
Chairman, Investor AB (Sweden)

Edward E. Whitacre, Jr.
Chairman and CEO, General Motors.

Marina v.N. Whitman
Professor of Business Administration and Public Policy, University of Michigan; former Vice President and Group Executive, General Motors Corporation; former Member of the Council of Economic Advisers.

Ernesto Zedillo
Former President of Mexico.

Honorary Directors

Alan Greenspan
Former Chairman, Board of Governors of the Federal Reserve System; former President and Chief Executive Officer, Townsend-Greenspan and Co.; former Chairman, Council of Economic Advisers.

Frank E. Loy
Chairman, Board of Directors, Resources for the Future; Acting Chair, Board of Directors, Populations Services International; former Under Secretary of State for Global Affairs; former Chairman of the Board, League of Conservation Voters; former President, German Marshall Fund of the United States; former Deputy Assistant Secretary of State for Economic Affairs.

George P. Shultz
Honorary Fellow, Hoover Institution; former Secretary of State; President and Director of Bechtel Group, Inc.; Secretary of the Treasury; Director, Office of Management and Budget; and Secretary of Labor.

Ex Officio


C. Fred Bergsten
Director, Peterson Institute for International Economics; former Assistant Secretary of the Treasury for International Affairs.

Nancy Birdsall
President, Center for Global Development, was Executive Vice-President of the Inter-American Development Bank from 1993 to 1998. Former Senior Associate and Director of the Economic Reform Project at the Carnegie Endowment for International Peace.

Richard N. Cooper
Chairman Emeritus, Advisory Committee, Peterson Institute for International Economics; Maurits C. Boas Professor of International Economics, Harvard University; former Chairman, National Intelligence Council, former Chairman of the Federal Reserve Bank of Boston, former Under Secretary of State for Economic Affairs, former Provost, Yale University.

Barry Eichengreen
University of California, Berkeley

CEO Predicts Market Armageddon: Dow To 5,000

Hefty says real estate collapse in China before end of 2010 will send shockwaves through global economy

CEO Predicts Market Armageddon: Dow To 5,000 130510top2


Cornerstone Wealth Management CEO David Hefty agrees with a growing number of other financial experts that a real estate collapse in China before the end of the year will send shockwaves through the global economy, leading to a stock market collapse which will send the Dow into free fall below the 5,000 level.

Although Hefty said that the Dow would push higher beyond 12,000 by July, the fact that the market is “still in complete denial of what’s going on around the world and here at home” would soon lead to a dramatic reversal, Hefty told skeptical CNBC hosts.

Hefty said that when the market turns it will go into a “complete free fall” mirroring the collapse in oil prices in 2008 and could push the Dow below 5,000 by the end of this year – which would represent a decline of around 60 per cent.

The catalyst for such a plunge according to Hefty will be a combination of lower than expected GDP results, a surge in the number of foreclosures in the U.S., as well as a financial collapse in China.

“You can’t build cities for millions of people and have them half full – there’s problems with that, and not only are they going to be facing this real estate crash themselves but they’re facing inflation, so they’re going to have to slow their economy down in the midst of a real estate crash, and I didn’t even mention Europe,” said Hefty.

Many other financial experts are predicting problems in China with stagflation and a property market collapse before the end of 2010, which would send shudders through the global economy.

Marc Faber told Bloomberg that China would collapse in 9-12 months, a sentiment shared by hedge fund manager Jim Chanos and Harvard University’s Kenneth Rogoff.

Nouriel Roubini has also warned that the Chinese economy faces the risk of “significant slowdown”.

With real estate set to crash as a result of government measures to reign in out of control prices, the amount of bad loans that were handed out like confetti during the boom will be exposed, leading to the need to recapitalize Chinese banks, which in turn will eat up reserves and leave the country facing a mountain of debt.

Watch the clip below.

INSTANT CLASSIC: Irish Parliament Bailout Video -- Paul Gogarty & Emmet Stagg (WATCH -- NSFW)

Click this link ...... http://tinyurl.com/2em4tkl

Peter Schiff: Real Estate didn't bottom yet

Click this link ..... http://eclipptv.com/viewVideo.php?video_id=11831

Cool G-15 heads take the heat

TEHRAN - Cavalcades for eight presidents and more than a dozen foreign ministers may raise tensions among Tehran's drivers, yet their presence in the city for a Group of 15 summit throws cold water on the West's sizzling criticism of Iran.

The summit is both politically and globally timely as the United States and its Western allies do their best to isolate Iran at the nuclear Non-Proliferation Treaty (NPT) review conference in New York (May 3-28). They are counting on serious divisions within the 118-nation Non-Aligned Movement (NAM) as a prelude to applying more pressure at the meeting of the ''Iran Six'' nations next month over the nuclear standoff with Tehran, with a view to applying more sanctions on the country over its nuclear-enrichment program.

That India, Brazil, Argentina, Indonesia and Nigeria will be represented at the highest level at the May 15-17 conference will



likely boost Iran's bargaining position at the ongoing discussions in New York, where the NAM, led by Egypt, has already focused the spotlight on Israel's nuclear program. The Tehran meeting also provides a chance to gather momentum against a Western "sanctions strategy" that discourages foreign direct investment (FDI) in Iran, in light of initiatives aimed at bolstering "south-south" direct investment.

"This summit focuses on improving south-south cooperation, addressing global inequities and assessing the impact of global economic recovery on developing nations," says a professor of political science at Tehran University.

Brazilian President Luiz Inacio Lula da Silva's attendance may mean that Iran and Brazil are "getting closer on the nuclear fuel deal", according to the professor. Both countries have been talking about the possibility of Brazil assisting with the a Tehran nuclear reactor that provides radioisotopes for hundreds of Iranian hospitals.

Aside from the nuclear issue, the measure of a successful summit for Iran would be the extent to which it culminates in greater capital inflows from other G-15 countries, such as India, Brazil, Venezuela and Malaysia, many of whom act as both recipients as well as sources of FDI.

Iran's foreign economic policy under President Mahmud Ahmadinejad has already brought tangible dividends in terms of greater investment by G-15 countries. Investments by Indian companies OVL, Oil India and IOC in the development of the Farsi oil and gas blocks as well as the South Pars Gas field in Iran are cases in point.

Tata Steel has invested in steel plants, while Indian public-sector companies like Rites and Ircon helped develop the Chahbahar container terminal project in southwest Iran. Among other countries, Venezuela has also invested some $760 million in Iran's South Part oil fields and $700 million in a joint petrochemical project in Assaluyeh.

Still, despite tangible evidence of progress in Iran's "south-south" cooperation, Tehran's overall trade with partners in the G-15 bloc stands at about 6% of its global trade, with India its biggest trading partner. Last year, Iran's imports from the G-15 comprised about 11% of the nation's total imports. Tehran's relations with the governments of the G-15 nations vary, in light of its relatively small trade with Algeria, Jamaica, Nigeria and Senegal, compared with growing ties to Brazil, Malaysia and a few others.

The trans-regional G-15 [1] plays a pivotal role in offsetting Western cultural and economic hegemony and in many ways ensures the viability of non-aligned countries in the post-Cold War era - much like the smaller D-8 group. Five members of the largely Islamic D-8 (Iran, Indonesia, Egypt, Malaysia and Nigeria) are also in the G-15.

Having held the G-15 presidency since 2006, Iran passes on the mantle to Sri Lanka this week. This may present a unique opportunity for Sri Lanka, whose "globalized" economy depends heavily on exports to countries such as the US and the United Kingdom, to bolster its position through the expansion of south-south trade and investment.

Since 2008, the global financial crisis has led to drops in Sri Lanka's exports and inflows of remittances, FDI and foreign aid. The nation's export earnings declined 15% in 2009 compared with the previous year, while remittances were down 6%, according to a recent G-15 working paper. One of Sri Lanka's economic steps, fitting nicely with its G-15 agenda, has been its engagement in swap arrangements (rupees for other currencies) with friendly central banks; these and Sri Lanka's large expatriate labor force will benefit from its G-15 role, should this translate in greater economic ties with other member nations, including Iran.

The Tehran summit is likely to repeat previous calls for restructuring of international financial institutions and a more equitable representation of developing countries in those institutions.

Furthermore, in line with the G-15's initial agenda to serve as a "dialogue partner" with the Group of 20 nations, the Tehran summit is also likely to address the issue of food security and, perhaps, mobilize billions of dollars for a food bank to assist developing countries. Improving water resources has also been a priority and there is talk of a "water fund".

In discussing the G-15 summit, Tehran dailies are abuzz about addressing egregious inequities in world trade and the importance of easier access of the global market to the goods and services of the developing world.

The developed world may not necessarily like the message from the Tehran summit, yet for the majority of the world's population inhabiting the developing world bemoaning the Western world's domination of airwaves, news of this summit is music to their ears.

Note
1. The Group of 15 was established at the ninth Non-Aligned Movement summit meeting in Belgrade, Yugoslavia in September 1989. It was set up to foster cooperation and provide input for other international groups, such as the World Trade Organization and the Group of Eight rich industrialized nations. It is composed of countries from North America, South America, Africa and Asia with a common goal of enhanced growth and prosperity. The G-15 focuses on cooperation among developing countries in the areas of investment, trade and technology. The membership of the G-15 has expanded to 18 countries, but the name has remained unchanged. The members are Jamaica, Mexico, Argentina, Brazil, Chile, Peru, Venezuela, Algeria, Egypt, Kenya, Nigeria, Senegal, Zimbabwe, India, Indonesia, Iran, Malaysia, Sri Lanka. Iran accepted the presidency of the G-15 in 2006.

Kaveh L Afrasiabi, PhD, is the author of After Khomeini: New Directions in Iran's Foreign Policy (Westview Press) . For his Wikipedia entry, click here. His latest book, Reading In Iran Foreign Policy After September 11 (BookSurge Publishing , October 23, 2008) is now available.

(Copyright 2010 Asia Times Online (Holdings) Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)



Time for a nuclear samba (May 7, '10)

Israel, Iran feel the heat (May 5, '10)


1. US satellites shadow China's submarines

2. India steals a march on the high seas

3. The American Taliban are coming

4. Superpower dreams interrupted

5. Global sovereign debt crisis

6. Thai power grows from the gun barrel

7. Talk of a nuclear deal gains steam in Iran

8. Victory at all costs in Afghanistan

9. Ignore Keynes behind the arras

10. Indians fear Kasab could slip the noose

(24 hours to 11:59pm ET, May 12, 2010)


Click Me!

Economist Tim Madden: The PIIGS Brief: understanding how oligarchs rig, loot our economies. 4 of 4

Tim Madden is an economist with expertise on credit and banking. Tim and I are colleagues in lobbying government for public banking, with concentration in the US for state-owned banks (and here). The good news is that structural solutions to our economic controlled demolition are obvious and simple; and explained beautifully by many of America’s brightest historical minds. The bad news is that we’re still mired in oligarchic looting of our economies.

Tim’s following article explains collusion of government and judicial “leadership” to facilitate criminal looting through parasitic credit practices. This four-part article explains the principle and law, details a legal example of criminal looting with “official” collusion, and applies this to our international economy.
Tim can be reached at: timothypmadden@gmail.com
For a US face to what Americans are discovering as rigged-casino economics, also consider Fred Burks’ work, like this one.
The article is in four parts (links will be added; one each day: Part 1, Part 2, Part 3, Part 4).
Hell claims his right, and with a roaring voice
Says, “Faustus, come; thine hour is almost come!”
- Christopher Marlowe, The Tragical History of the Life and Death of Doctor Faustus
Won’t fly in an international court or breach-of-treaty determination
The legal and equitable significance of the foregoing is to make it clear that the necessary defence of Canada and its courts/legal profession cannot and will not stand before an international court or breach-of-treaty determination proceeding.
At the initial level Canada is dead-in-the-water because under ss. 347(7) of the Criminal Code it provided for a scheme of dispensation under which it could, and subsequently did, permit mainstream financial institutions based in Canada to illegally and criminally convert interest-in-fact into pretended principal on the face of registered securities, so as to facilitate the general trade and traffic in securities so falsified. The general mechanism of the scheme was to trivialize the substance of the offence by unlawfully and illegally making criminal prosecutions subject to the selective consent of the provincial Attorneys-General, so as to bring down the full weight of the criminal law on an accused living human while concurrently aiding and encouraging commercial traffic in the same offences by corporate persons.
At the same time, and regardless of the legality or lack thereof of the said dispensation provision, Canada made express contractual agreements with Iceland (and the others) that it would not trivialize any such “enterprise crime” offence (now called “designated offences”) but on the contrary would treat it as racketeering/money-laundering and would seize any proceeds within its jurisdiction.
As such Canada and its private-Crown-owned commercial/civil courts will be compelled to rely upon a genuine and sincere belief in its on-the-record legal justification for its breach of the treaty(ies), being that offences under the criminal law are not fundamentally illegal, and for the reason stated.
Here too, Canada is dead-in-the-water. The Court are “persons” in law and “have the capacity of a natural person”. Because the converse is impossible, the words have to mean that the courts “have the legal capacity of a natural person” and that puts them quasi-technically under the ambit of the Mental Health Act. And of course the living judges are all subject to the Mental Health Acts regardless.
At the risk of accusations of inciting ridicule, and with all due respect to said courts/judges, the stated reasoning of “not fundamentally illegal” is just plain stupid and of itself an utter contempt of the broadly-defined Canadian (and Icelandic) people (as well as a prima facie act of internal treason/sedition/fraud upon the Parliament) . It also falls under the definition of a psychopathic delusion or disorder directly or indirectly provided under the various provincial Mental Health Acts. Sufficient to note that if an inmate at a psychiatric facility expressed a genuine and sincere belief that any potential felonies which they might commit are severely punishable, but not fundamentally illegal, and for the reasons given by the courts in Thomson, then they would not be getting out anytime soon.
The fine point of law is not that the court/judge, as a natural-person-in-law, is necessarily a dangerous psychopath, but rather that if the accusation were to be made, the Mental Health Act would estop (legally prevent) the court from denying the accusation.
Assume that a given judge persistently writes decisions that encourage and accommodate more conventionally-recognized criminal behaviour, and to the point where he or she would be properly seen by colleagues to fall within the ambit of the Mental Health Act. Because of the very nature of many psychopathic delusions and disorders the only reliable evidence would be the decisions/writings themselves, and those writings confirm, and do not contradict, the appearance of the disorder.
Of course there are myriad other more conventional legal and equitable flaws in the courts’ reasoning that will result in an award of damages against them, but the essential point here is that they have allowed themselves to be so manipulated by their financial handlers (Canada’s private banks and financial institutions and associated law firms from which a majority of appellant judges are selected-in-fact) that their published decisions cannot be reconciled with reality without raising the spectre of mental illness. The decision appears to be crazy because it is crazy (not fundamentally sane) - to everyone but bank solicitors and former bank solicitors (i.e., commercial court judges).
Ironically, however, if it were possible to charge the Ontario Court of Appeal as a body for sedition, its decisions in Thomson and in Beer et als. would together estop or preclude the Court from an insanity or diminished capacity defence. There is a clear intent to deprive the legislature of its lawful authority by manifestly unlawful incremental steps. It looks like treason because it is treason.
Four centuries of English law confirm that “The principle of law is clear – the courts... will not enforce a contract that Parliament... has made unlawful” (and certainly where it has made it criminal, racketeering, and international money-laundering (and for very good reasons)).
As a final irony, Iceland especially can recover its damages from Canada under the treaty(ies) or type of treaty (Agreement(s) for the prevention of international money-laundering and the financing of terrorist activities), that was invoked against it (Anti-terrorism, Crime and Security Act of 2001) by Britain in late 2008 to assert jurisdiction over banks based in Iceland. (Note that it is difficult to make a clear distinction between tort and treaty because the fact of the treaties is also a material element of the tort (wrongful act). Once a means of remedy is settled (tort versus treaty) that will not be a problem).
Global financial crisis easily preventable
Regardless of whether Portugal, Iceland, Ireland, Greece and/or Spain, proceed(s) under a treaty or in tort, the fact of proximate causality is obvious and objectively provable. Beginning in 1981 Canada and its civil/commercial courts, secured jointly and severally by the bonds and malpractice insurance of its broadly-defined legal profession, had repeated opportunity backed by moral, lawful, and legal direct responsibility not to allow Her Majesty’s courts to be used as clearinghouses for falsified-in-fact nominal securities.
The 1981 amendment to the criminal law was directly tied to, and intended to replace, the 1939 Act whose preamble spelled out the evil of front-loading and the Act expressly prohibited it:
The cost of any such loan or any part thereof[loan fees] ... shall not be compounded or deducted or received in advance.
The criminal amendment under what is now s. 347(1)(b) stipulates, and was intended to stipulate, against precisely the same act:
Every one who receives [including converts] a payment or partial payment of interest [loan fees] at a criminal rate [in advance] is guilty of an indictable offence [a felony].
Through malfeasance of office, and in reckless disregard of the foreseeable consequences, Canada’s private commercial courts wilfully, persistently, unlawfully, and illegally subverted, through both positive action and actionable negligence, any and all laws intended to prevent either the practice of front-loading, or the concealment of same through either or both of false attestations of principal amount on the face of the securities, or the deliberate and fraudulent omission to disclose collateral side-agreements requiring redirection and/or ownership by the nominal creditor of the proceeds in whole in part.
Had Canadian courts simply obeyed the criminal law and done their jobs in good faith, they would have caused a major disruption in the global financial markets by the fact of it. Canada’s privately-owned financial institutions are major players in the global markets and among the leading global exploiters of securities falsified by undisclosed side agreements that convert legally-defined and recognized interest illegally into principal in advance. They issue securities in the international markets that are secured by what the issuers know and admit to be underlying criminal contracts that are expressly tied to international anti-money-laundering treaties.
And that is the undoing of Canada’s only remaining legal or actual defence; that it did what it did because by enforcing the criminal law it would have caused chaos in the domestic and global financial markets. But that is the victims’ whole point in law and in equity (damages). Iceland, Greece, Spain, Portugal, and Ireland have all had their economies destroyed not only because Canada failed to do what it was legally required to do under its own laws, and in breach of its international treaties also, but more damningly because of the unlawful and illegal means by which it sought to conceal its initial and continuing wrong-doing.
For those of my fellow Canadians who may take my own actions here as a betrayal of Canada, it is critical to bear in mind that Canada has already been illegally seized by its commercial/civil courts which function as private corporations in their own right and as de facto agents of private banks. Canadians need to get their country back from the technically criminal cabal that has plainly seized unlawful and illegal control of it.
In 1981 at the height of the then current global insolvency crisis, the CIBC invited a Mr. Brian Mulroney to join the board of directors of the bank. Two years later Mr. Mulroney stepped down from the bank to run an exceedingly well financed campaign for leadership of the federal Conservative Party. He was elected and became prime minister in September of 1984 and for the next eight years appointed an inordinate number of “corporate, commercial, and financial law specialists” to the appellate courts across the country. In many provinces it is difficult to separate a sitting of the court of appeal from a meeting of former senior bank solicitors – all of whom are personally financially liable on a massive scale for any losses, and whom often reaped personal fortunes from front-loading prior to being appointed judges.
Conclusion
To be clear, this entire brief applies equally to Portugal, Iceland, Ireland, Greece and Spain, the so-called PIIGS nations of the EU (and the rest of the world for that matter). Each of these nations has a separate and distinct action against Canada and its commercial courts in law, in equity, and in contract (treaty), for damages caused directly or indirectly from Canada having fostered and encouraged an environment conductive to the international commercial trade of securities known to have been acquired in the commission of felonies.
Front-loading is not some quaint legal technicality – it is the legal and actual technicality that has driven the fraudulent global financial economy for at least the past 200 years. “I will loan you $100,000 at 30% as long as you agree to give me a negotiable security that claims that I loaned you $130,000 at 6%, and a secret/unregistered side agreement for a $30,000 kick-back to me from the nominal proceeds. It is much easier to defraud and steal from domestic and international financial markets if I can conceal the real terms and underlying risk.” Virtually every high (and low) finance transaction in the world today follows the same model while secretly channelling literally billions in kick-backs to select members (or sectors) of the legal profession.
There are many techniques that financial institutions use to steal from their customers and from society, some more flagrant than others. Front-loading, however, is directly analogous to “the one ring that rules them all”, the master technique that dominates all others in terms of leverage and therefore profitability.
Canada had a clear opportunity to destroy that ring in 1981 but “the will of men failed”, and twenty-five years later the whole global system began to massively unravel. Front-loading is a disease that infects the global financial economy. Canada’s legal system had the cure in 1981 and chose instead to conceal its knowledge of the disease and of the cure from the rest of the world in order to exploit and profit from it.
Now as the rest of the financial world lies in smouldering ruins, one country’s privately-owned banks appear to have miraculously escaped the carnage – and that country is Canada. The mainstream media, effectively owned and operated by those same banks, brag to the rest of the world how superior management is behind Canada’s escape. The reality is that Canada is the central global clearinghouse for the falsified securities that caused the collapse itself. A virtual pyramid-central by reason of its official accommodation of racketeering and other organized crime activities.
Canadian banks criminally skimmed all the gravy and sold the diseased husks into the international markets. It has been a 30-year run, but, as with Dr. Faustus, eventually Hell demands his due.
So when will banker-saturated and controlled Canada be held accountable for its flagrant and self-admittedly criminal activities? The answer according to Canada’s banker/judges is: “When pigs fly!”
Be careful gentlemen. These PIIGS got wings. And teeth.

The Panic Is On!

What this country is coming to
I sure would like to know
If they don’t do something bye and bye
The rich will live and the poor will die
Doggone, I mean the panic is on!

–Hezekiah Jenkins

As the Great Depression of the 1930’s was getting underway, President Herbert Hoover refused to acknowledge it. In the weeks following the events of Black Tuesday, Hoover called the economy “fundamentally sound.” Months later, he still insisted that the strength of the American economy was “unimpaired.” However, by 1931 he could no longer hide the truth. With the economy in shambles, Hoover was forced to declare that America was indeed in a ‘depression’. He chose the word ‘depression’ because he believed it to somewhat innocuous and far less provocative than terms like ‘panics’ or ‘crises’ that had previously been used to refer to significant economic downturns.

That same semantic game is being played on us today. What we now call a ‘recession’ is what was known as a ‘depression’ back in the 1930’s. As economist John Williams explains:

“The Great Depression was one that was so severe that in the post-World War II era, those looking at economic cycles tried to come up with a euphemism for “depression.” They didn’t want to create the image of or remind people of the 1930s. Basically, they called economic downturns recessions, and most people think of a depression now as a severe recession.”(1)

The lies propagated by our government and their paid shills are perhaps their greatest crime. Deceiving the people concerning the scope and magnitude of our financial crisis denies them the opportunity to prepare for the tough days ahead. Even the word depression does not fully impress upon the people the serious predicament we now face. Perhaps its time we do remind people of the 1930’s and draw parallels between those tragic times and our current situation.

Today’s unemployment rate is fast approaching the worst levels seen since the Great Depression. The official unemployment rate (U3) released by the Bureau of Labor Statistics is currently at 9.9%. This is the number often reported by the mainstream media for public consumption but is far removed from reality.

To get closer to the real number we must consult the (U6) figure that is often touted as ‘true unemployment’. This figure adds into the equation those who fall under the contemporary definition of ‘discouraged worker’ and those who can only find ‘part-time’ work. That number puts the ‘true unemployment’ rate at 17.2%. But wait, there’s more!

Today’s definition of a discouraged worker is one who has not found work within the last year. Prior to 1994, a discouraged worker was defined as one who had not found work within the last month. That’s a big discrepancy. If we add those lost souls back into the equation, we come up with a more realistic unemployment rate of right around 22%. That’s just three clicks shy of the 25% often cited for the worst levels of the Great Depression in 1933. That 25% unemployment figure was reflective of all workers both on and off the farm.

Many economists, intent on disproving any comparison of today’s unemployment with that of the ‘Great Depression’, will often site the non-farm unemployment figure of 34%. But it should be pointed out that during that time, 27% of America’s employed worked on the farm. Today that number is only 2%.

Unlike today, The Great Depression of the 1930’s was deflationary. The Consumer Price Index was at 17.3% when it began in 1929. By 1933 it was down to 12.6%. In other words, as the depression progressed, the cost of things dropped; what cost $1.00 in 1929 only cost 73 Cents in 1933.(2)

Not so with the depression of today. Ours is an inflationary depression that is fast becoming hyperinflationary. Hyperinflation comes when the increase in the money supply causes prices to rise so rapidly that the highest denominated bank note becomes less valuable than toilet paper. This is being facilitated by industry bailouts, unnecessary wars, foreign aid to Israel and entitlement programs that were not factors in 1933.

Since 1933, inflation has increased 1,627.23%. To calculate its decimal equivalent you need to move the decimal point two places to the left. So 1,627.23%=16.2723 in decimals. This means that what cost $1.00 in 1933 costs approximately $16.27 today.(3)

The average American’s annual income in 1933 was $1,550.00. Today, that would be the equivalent of $25,218.00. According to the last Bureau of Labor Statistics report for 2009(4), the average American’s annual income was $28,592.00 (mid range between highest and lowest by State for 1 person). This may seem like we’re ahead of the game compared to the Great Depression. However, when you consider that the lowest bracket of income tax was levied at 4% in 1933 compared to 15% in 2010, you can see that we are almost on par. But you also must consider the plethora of other taxes and deductions that have since been siphoned out of the average American’s paycheck. Contemporary sales taxes and compulsory enrollments like mandatory insurance (both auto and health) must also be added into the equation to get a better gauge as to where we are now compared to days gone by.(5)

Prices of things, on average, were much more affordable back during the Great Depression than they are now. Here are some basic items for comparison:

Cost of a new house 1933: $5,750.00 (equivalent to $93,565.72 in 2010)

Cost to rent a house in 1933: $18.00 per month (equivalent to $292.00 in 2010)

Brand New Plymouth in 1933: $445.00 (equivalent to $7241.17 in 2010)

Gallon of gas in 1933: 10 Cents (equivalent to $1.62 in 2010)

Loaf of Bread in 1933: 7 Cents (equivalent of $1.13 in 2010)

1 Lb. Of Hamburger Meat in 1933: 11 Cents (equivalent to $1.79 in 2010)

Can of Campbell’s Vegetable Soup in 1933: 10 Cents (equivalent to $1.62 in 2010)

Dozen Eggs in 1933: 5 Cents (equivalent to 81 Cents today)

Take the equivalent monetary values listed above for 2010 and do your own research. Can you buy the same items today for that little cash? According to the 2009 census, the cost to rent a house is approximately $775.00 per month, on average. The cost of even the cheapest automobile is in the tens of thousands and I don’t need to tell you about everyday household goods. Consider these the good times. When hyperinflation sets in, these prices will soar. We don’t live today like they did back in the 1930’s when people were, at most, one generation removed from the farm. As was pointed out previously, 27% of American workers made their livings on the farm and were able to provide many of their own basic needs from that culture. Today, that number is only 2%.

Despite this data, deniers will refuse to believe that they are living through a depression. Some need tangible, salient evidence. They need to feel the depression, or at least have a cognitive reference point that coincides with the black and white images they have come to associate with a depression. Where are the soup lines? Where are the shantytowns? Where are the armies of disheveled hobos playing harmonica as they roast a can of beans over a roadside campfire?

The complexion of today’s depression is certainly different from the hard luck images of the 1930’s. But these are just cosmetic differences. When you strip away the veneer, you find that we are afflicted with the same problems as they were back then. Today’s soup lines come in the form of food stamps. Public housing and tent cities are today’s shantytowns. Hobos are now called ‘the homeless’, and many of them are disappearing from the streets and ending up in a burgeoning penal system that swallows them up on petty drug charges.

There are other factors that keep this depression suppressed in the minds of the American public. The most significant of these is unemployment benefits. This did not exist during the Great Depression. When you were out of work, you were out of money. This hit people immediately and many had no way to obtain even the most basic subsistence to feed their families. The welfare system is another contemporary mechanism that was not in place during that time. Right now, these are perhaps the only two things that distance the human suffering from our true economic reality. But they weren’t built to last, and the only reason they have lasted this long is because the government has a vested interest in keeping these entitlement programs going. Providing basic subsistence keeps the people dependent and apathetic to their plight. As long as people have a roof over their head and enough to eat they will allow those who provide those things to take everything else they have.

The Federal infusions of funds into the unemployment and welfare systems will continue only for as long as it takes the bankers to fully rob the American people of everything they own. In the meantime, unemployment will continue to rise and the depression will deepen to levels unimaginable as the unsuspecting unemployment recipient spends his jobless days as if he were on a paid vacation. He’ll waste his checks on beer and porn and stretch out on the couch until the final week. Then he’ll get serious, only to find that things are not as rosy as the liars on CNBC promised they’d be.

Unlike 1933, our depression comes at a time when there is increased foreign war spending and many of our potentially unemployed youths are serving overseas. Imagine what would happen to the unemployment rate if these wars came to an end. Then imagine what would happen if unemployment benefits and welfare entitlement programs ceased to exist. When you do, you can understand why all of these things continue to be funded.

This is a robbery, and the hostages are being held in the back of the store learning to love their captors. Most Americans are under a spell best described as the ‘Stockholm Syndrome’. In psychology, Stockholm syndrome is a term used to describe a paradoxical psychological phenomenon wherein hostages express adulation and have positive feelings towards their captors that appear irrational in light of the danger or risk endured by the victims. The syndrome is named after the Normrmalmstorg robbery of Kreditbanken at Norrmalmstorg in Stockholm, in which the bank robbers held bank employees hostage from August 23 to August 28, 1973. In this case, the victims became emotionally attached to their captors, and even defended them after they were freed from their six-day ordeal.(6)

Until the American people snap out of their trance, they will refuse to believe that they are in a depression, recession, panic or crisis. To them, it will be a loving embrace by a charismatic savior. Only until they feel the peircing bite of cold air on their necks and the pains of an empty stomach will they finally come around to the realization that the panic is not coming—but that the panic is on!

(1) http://www.theaureport.com/pub/na/6199

(2) http://www.gold-eagle.com/editorials_08/amerman021209.html

(3) http://inflationdata.com/Inflation/Inflation_Calculators/Inflation_Rate_Calculator.asp#calcresults

(4) http://www.acf.hhs.gov/programs/ocs/liheap/guidance/SMI75FY09.pdf

(5) http://www.thepeoplehistory.com/1933.html

(6) http://en.wikipedia.org/wiki/Stockholm_syndrome

Ron Paul: Audit the Fed, End the Inflation Tax - Before It's Too Late!

Find out who the 63 that didn't vote yes are, and kick them out.

U.S. Probes Morgan Stanley

U.S. prosecutors are investigating whether Morgan Stanley misled investors about mortgage-derivatives deals it helped design and sometimes bet against, people familiar with the matter said, in a step that intensifies Washington's scrutiny of Wall Street in the wake of the financial crisis.

Morgan Stanley arranged and marketed to investors pools of bond-related investments called collateralized-debt obligations, or CDOs, and its trading desk at times placed bets that their value would fall, traders said. Investigators are examining, among other things, whether Morgan Stanley made proper representations about its roles.

Among the deals that have been scrutinized are two named after U.S. Presidents James Buchanan and Andrew Jackson, a person familiar with the matter said. Morgan Stanley helped design the deals and bet against them but didn't market them to clients. Traders called them the "Dead Presidents" deals.

The probe is at a preliminary stage. Bringing criminal cases involving complex Wall Street deals is a huge challenge for prosecutors. The government must prove beyond a reasonable doubt that a firm or its employees knowingly misled investors, a high bar. The government launches many criminal investigations that end without any charges being filed.

Morgan Stanley wasn't among the biggest players in the CDO market. Although the firm made money on the Dead President deals, any profit was overshadowed by the $9 billion the firm lost on bullish mortgage bets in 2007, a person familiar with the matter said.

In a step that intensifies Washington's scrutiny of Wall Street, prosecutors are investigating whether Morgan Stanley misled investors on mortgage-derivatives deals it helped design and sometimes bet against. Amir Efrati discusses the story along with Bob O'Brien. And Sudeep Reddy discusses the Senate's decision to force the Fed to disclose key details of its loans during the financial crisis.

The investigation grew out of an ongoing civil-fraud investigation launched by the Securities and Exchange Commission in 2009, examining the mortgage-bond business of more than a dozen Wall Street firms, the people said. The Manhattan U.S. Attorney's office now is investigating some of those firms' activities in a criminal probe.

"We've not been contacted by the Justice Department about any transactions that were raised in The Wall Street Journal article and we have no knowledge whatsoever of a Justice Department investigation," Morgan Stanley Chief Executive James Gorman said during a news conference in Tokyo on Wednesday.

Mr. Gorman said Morgan Stanley has looked into the "Dead Presidents" deals itself and has "no reason to believe that there is any substance behind any supposed investigation."

Spokespeople for the Manhattan U.S. Attorney's office and the SEC declined to comment.

The news sent Morgan Stanley's shares lower in New York. In midmorning trade, the shares fell 4.2% to $27.20.

But William Blair analyst Mark Lane said the probe shouldn't be a surprise to investors.

"Every investment bank has been receiving subpoenas about CDOs and the marketing of CDOs," Mr. Lane said. "They've been exchanging information with regulators as they look at how products are being marketed in this area, related in particular to the residential housing market."

Mr. Lane said that the investigations will likely have some influence on financial-services reform and that the damage to any individual firm's reputation is much less now given that the probes are much broader.

"Investment banks and what they do and the liquidity they bring and their ability to raise capital are fundamental to the way capital markets work," he said. "Business is not going to go away, and if everyone is being scrutinized, it dampens the potential negative impact on any one firm."

Mr. Lane said the news is likely good for Goldman Sachs Group Inc. "to see some other companies in the headlines as well so that people understand they're not the only firm that is being scrutinized in this."

The Wall Street Journal previously reported that federal prosecutors also are investigating whether Goldman or its employees committed securities fraud in connection with its mortgage trading. Goldman declined to comment on the criminal probe.

[Morgansub] European Pressphoto Agency

Morgan Stanley offices in New York. Federal investigators are looking at mortgage securities the firm helped create.

Last month, the SEC filed a civil suit against Goldman in a New York federal court, alleging the firm and one of its mortgage traders created a product secretly designed to fail for the benefit of a hedge-fund client, without disclosing the hedge fund's role in picking investments for the 2007 deal, called Abacus.

Goldman has vigorously denied the allegations of the civil case but recently began settlement talks with the government, according to people familiar with the matter.

Goldman's shares were up 2.5% at $145.48 in midmorning trade in New York.

In both the Goldman and Morgan Stanley deals, investigators are examining whether there were proper representations made to investors.

Among the Morgan Stanley deals that have been scrutinized are the Jackson and Buchanan CDOs, created in mid-2006. Those deals essentially were portfolios of derivatives that aped the performance of dozens of residential and commercial mortgage-backed securities. Morgan Stanley helped to create the deals, which each issued about $200 million in bonds. Citigroup Inc. underwrote and marketed the Jackson deal to investors, while UBS AG did the same for the Buchanan deal.

A Citigroup spokesman said the bank wouldn't comment on this specific transaction. It earlier disclosed that it is cooperating with inquiries from the SEC and other regulatory agencies about its activities in the subprime-mortgage market.

A UBS spokeswoman declined to comment. In its quarterly financial update this month, UBS said it is "responding to a number of governmental inquiries and investigations" related to mortgage securities.

One feature of the Morgan Stanley deals was a structure that could increase the magnitude of the bullish investors' exposures to the underlying mortgage bonds. This feature, which was disclosed in some offering documents, made it more likely that such investors could lose money if the underlying bonds performed poorly.

Morgan Stanley traders took the more profitable, bearish side of these transactions, according to traders. These positions weren't disclosed in some deals. It couldn't be determined how much money Morgan Stanley made with these wagers.


The SEC's industry-wide civil investigation into Wall Street activities in selling CDOs began in 2009. Beginning earlier this year, prosecutors from the Manhattan U.S. attorney's office began showing up to meetings arranged by SEC investigators who were questioning individuals about their firms' practices, people familiar with the matter said.

There have been several rounds of SEC subpoenas issued in the probe, a person familiar with the matter said.

Last summer, the SEC asked Wall Street firms about any of their clients that were betting against CDOs, the person says. In the fall, Morgan Stanley provided offering documents to the SEC about CDOs, including its Dead Presidents deals. Morgan Stanley and other firms received a subpoena in December 2009 asking about its sale and marketing of CDOs, people familiar with the matter said.

In the past six weeks, a fresh round of SEC subpoenas have asked a smaller number of Wall Street firms for a broad range of information on CDO deals, including prospectuses, offering documents and other data that would include disclosure statements.

On an April 21, 2010, conference call with investors and analysts, Morgan Stanley Chief Financial Officer Ruth Porat responded to an analyst question, saying "we have not received a Wells notice in connection with our CDO business." Wells notices inform firms or individuals that the SEC's enforcement staff plans to recommend that the agency bring charges.

After the SEC filed its civil-fraud case against Goldman last month, a Morgan Stanley spokeswoman said: "Morgan Stanley did not make any misrepresentations to investors concerning the selection of the collateral for CDOs underwritten by Morgan Stanley."

—Serena Ng, Alison Tudor and Shara Tibken contributed to this article.

Wall Street Pursues Profit in Bundles of Life Insurance

After the mortgage business imploded last year, Wall Street investment banks began searching for another big idea to make money. They think they may have found one.

The bankers plan to buy “life settlements,” life insurance policies that ill and elderly people sell for cash — $400,000 for a $1 million policy, say, depending on the life expectancy of the insured person. Then they plan to “securitize” these policies, in Wall Street jargon, by packaging hundreds or thousands together into bonds. They will then resell those bonds to investors, like big pension funds, who will receive the payouts when people with the insurance die.

The earlier the policyholder dies, the bigger the return — though if people live longer than expected, investors could get poor returns or even lose money.

Either way, Wall Street would profit by pocketing sizable fees for creating the bonds, reselling them and subsequently trading them. But some who have studied life settlements warn that insurers might have to raise premiums in the short term if they end up having to pay out more death claims than they had anticipated.

The idea is still in the planning stages. But already “our phones have been ringing off the hook with inquiries,” says Kathleen Tillwitz, a senior vice president at DBRS, which gives risk ratings to investments and is reviewing nine proposals for life-insurance securitizations from private investors and financial firms, including Credit Suisse.

“We’re hoping to get a herd stampeding after the first offering,” said one investment banker not authorized to speak to the news media.

In the aftermath of the financial meltdown, exotic investments dreamed up by Wall Street got much of the blame. It was not just subprime mortgage securities but an array of products — credit-default swaps, structured investment vehicles, collateralized debt obligations — that proved far riskier than anticipated.

The debacle gave financial wizardry a bad name generally, but not on Wall Street. Even as Washington debates increased financial regulation, bankers are scurrying to concoct new products.

In addition to securitizing life settlements, for example, some banks are repackaging their money-losing securities into higher-rated ones, called re-remics (re-securitization of real estate mortgage investment conduits). Morgan Stanley says at least $30 billion in residential re-remics have been done this year.

Financial innovation can be good, of course, by lowering the cost of borrowing for everyone, giving consumers more investment choices and, more broadly, by helping the economy to grow. And the proponents of securitizing life settlements say it would benefit people who want to cash out their policies while they are alive.

But some are dismayed by Wall Street’s quick return to its old ways, chasing profits with complicated new products.

“It’s bittersweet,” said James D. Cox, a professor of corporate and securities law at Duke University. “The sweet part is there are investors interested in exotic products created by underwriters who make large fees and rating agencies who then get paid to confer ratings. The bitter part is it’s a return to the good old days.”

Indeed, what is good for Wall Street could be bad for the insurance industry, and perhaps for customers, too. That is because policyholders often let their life insurance lapse before they die, for a variety of reasons — their children grow up and no longer need the financial protection, or the premiums become too expensive. When that happens, the insurer does not have to make a payout.

But if a policy is purchased and packaged into a security, investors will keep paying the premiums that might have been abandoned; as a result, more policies will stay in force, ensuring more payouts over time and less money for the insurance companies.

“When they set their premiums they were basing them on assumptions that were wrong,” said Neil A. Doherty, a professor at Wharton who has studied life settlements.

Indeed, Mr. Doherty says that in reaction to widespread securitization, insurers most likely would have to raise the premiums on new life policies.

Critics of life settlements believe “this defeats the idea of what life insurance is supposed to be,” said Steven Weisbart, senior vice president and chief economist for the Insurance Information Institute, a trade group. “It’s not an investment product, a gambling product.”

After Mortgages

Undeterred, Wall Street is racing ahead for a simple reason: With $26 trillion of life insurance policies in force in the United States, the market could be huge.

Not all policyholders would be interested in selling their policies, of course. And investors are not interested in healthy people’s policies because they would have to pay those premiums for too long, reducing profits on the investment.

But even if a small fraction of policy holders do sell them, some in the industry predict the market could reach $500 billion. That would help Wall Street offset the loss of revenue from the collapse of the United States residential mortgage securities market, to $169 billion so far this year from a peak of $941 billion in 2005, according to Dealogic, a firm that tracks financial data.

How the French Revolution Worked

Introduction to How the French Revolution Worked

French Revolution
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guillotine
Hulton Archive/Getty Images
The guillotine became a symbol of terror in the French Revolution. See more pictures of the French Revolution.

Since the Middle Ages, France had been divided into a three-class system. The nobility made up the first class, the clergy the second and the peasantry the third. There was no room for social climbing: Kings gave birth to kings, paupers gave birth to paupers. For centuries, the Old Regime held all the power in France. The nobility and clergy represented only 3 percent of the French population, but their minds conceived of the policies that governed the entire country [source: History Channel]. This system was rigid and uncompromising, but no one paused to consider -- or dared to say -- that it was unfair.

By the 18th century, the Enlightenment was dawning. Philosophers like Voltaire and Jean-Jacques Rousseau advocated for equality and reason. They asked why people put their faith in political and religious leaders who disregarded their needs. In salons, the wealthy members of Parisian society debated these issues. Their eyes were on the American colonies, where the Americans had gone to war to claim their rights to life, liberty and the pursuit of happiness. (Meanwhile, Thomas Jefferson, who'd described these principles in the Declaration of Independence, had also declared that if France's queen Marie Antoinette had been shut up in a convent, France could have avoided the revolution [source: Smithsonian].) While the French nobles pondered the unfairness of the universe, peasants went hungry in the streets of Paris and in the outlying provinces.



One of the medieval precedents that persisted in the 18th century was brutal execution. Criminals were burned, drowned, tortured and maimed -- all under the consenting eyes of the Old Regime. However, the French nobility were entitled to execution by decapitation. While it seems a particularly grisly way to die, decapitation is relatively swift and straightforward, a real gentleman's death. When Dr. Joseph Ignace Guillotin joined France's Constituent Assembly in 1789, he proposed that all capital criminals sentenced to death be decapitated [source: Hibbert]. Guillotin advocated for the creation of a decapitation device like the ones used in England, Germany, Italy and Scotland. The device was prototyped in Germany by the secretary of the Academy of Surgeons, who ensured that it was humane. By 1791, after a trial period during which the device sliced through countless cadavers, it was appointed France's national death-sentence machine. It was called the guillotine.

The guillotine was just a small part of an enlightened equal rights movement sweeping through France. While Guillotin advocated for equality in death, the French people were fighting for equality in life. And ironically enough, the guillotine would be misappropriated in this struggle. It became a tool of terrorism in the French Revolution as the undiscerning blade silenced nobles, radicals and ordinary citizens.

It's a question for the ages: What could turn a group of loyal subjects into a bloodthirsty mob? The movement that began as a reformation steadily devolved -- or evolved, depending on whom you ask -- into a full-fledged revolution. The French Revolution lasted for 10 years, from 1789 to 1799. But trouble began brewing in France years before dissident political factions went on witch hunts for counter-revolutionaries.

So did the revolution actually accomplish anything it set out to? Was it just about brotherhood and bread, or were there darker forces at work? The events of the French Revolution and the motley crew of characters responsible for them are as varied, complicated and painstakingly interwoven as a juicy soap opera plotline. We'll begin at the seat of power, in Versailles.

Once Upon a Time at Versailles: Before the French Revolution

The Palace of Versailles, in all its gilded architectural glory, was completed by 1682. Louis XIV had taken it upon himself to relocate the French monarchy 12 miles (19 km) from the squalor of Paris.

Versailles
Iconica/Getty Images
The Palace of Versailles was an opulent haven from the squalors of Paris.

If Louis XIV's reign had been distinguished by extravagance, Louis XV's was characterized by carelessness. Louis XV was a perfect example of the Old Regime's dysfunction. He preferred to satisfy his mistresses (notably Madame de Pompadour and Madame du Barry) rather than his kingdom. But he did pull himself away from the boudoir long enough to get France into some serious financial scrapes. Under his reign, France was involved in the War of Polish Succession (1733-38), the War of Austrian Succession (1740-48) and the Seven Years' War (1756-63). France lost valuable land during these battles, and the Seven Years' War nearly drained the treasury.

At Versailles, it was easy to forget about the French people -- and also pretty convenient for a despised king like Louis XV. The people couldn't be ignored, though. For many years, diseases like the plague had kept the peasant population in check. Now, the population was booming and clamored for sustenance [source: Doyle].

When Louis XV died in 1774, the crown went to Louis Auguste, who famously intoned, "Protect us, Lord, for we are too young to reign." No one had much confidence in Louis XVI's ability to lead France, much less pull it out of debt. His young wife, Marie Antoinette, only compounded his troubles. Marie Antoinette had been married off to Louis to cement the relationship between the Austrian Hapsburgs and the French Bourbons. They were teenagers when they wed, but already shy Louis and tentative Marie Antoinette were under pressure to create the next heir to the throne. The couple floundered in the bedroom for nearly seven years before producing a child -- and their first was a girl.

Marie Antoinette
Imagno/Getty Images
Young Marie Antoinette, blissfully oblivious to the fate that awaits her

When she wasn't reproducing, Marie Antoinette was spending. Her reputation as Madame Deficit was well-deserved: She amused herself by ordering hundreds of gowns, trying out elaborate hairstyles and hosting lavish parties at her private retreat, Petit Trianon, on Versailles' expansive grounds. Marie Antoinette had a yearly wardrobe allowance of $3.6 million, but she easily surpassed that by ordering dresses trimmed with silver and gold and dripping with precious jewels -- even diamonds [source: Thomas]. Her focus was on pleasing the courtiers and her new family, and she may very well have been ignorant of the conditions in Paris. After a brief excursion to the city in 1773, she wrote to her mother, "What was really affecting was the tenderness and earnestness of the poor people, who, in spite of the taxes with which they are overwhelmed, were transported with joy at seeing us" [source: Modern History Sourcebook].

The third class was fully aware of its spendthrift queen, though. Pamphlets circulated with lewd cartoons of the queen at court orgies and with her eccentric stylist sweeping up her hair into impossibly high bouffants. It wasn't just her extravagance on display -- her lack of reproductive success was, too. Where was the male heir, the people wondered. Louis couldn't govern the bedroom; could he govern France?

Emasculated by this negative publicity and still smarting from criticisms at court, Louis exacted military vengeance. He pledged 2,000 million livres to the American Revolutionary War; for that massive sum, he could've fed and sheltered 7 million of his own people for a year [source: History Channel]. This mistake wouldn't be his last, however. And the French would see to it that he was duly punished.

Estates General Resurrected

Louis was aware of his powerlessness. He exacted authority through financial initiatives, but these ill-advised policies only burdened the poor and pardoned the rich. His deregulation of grain may have been the very worst of these new policies. The cost of bread increased more than tenfold in some instances, and the people could no longer afford the mainstay of their diet. Mobs lynched bakers and looted precious loaves from their shops. While the court of Versailles ate to excess, the people of France went hungry in the streets.

Robespierre
Pierre Roch Vigneron
Maximilien Robespierre

Royal advisers prodded Louis to elect a finance minister. Obligingly, he appointed Jacques Necker in 1789. Necker was a pragmatic Enlightenment thinker who set out to reform government finances so that they'd serve the people. Necker's boldest move was calling a meeting of the Estates General, a legislative body made up of deputies (or representatives) from each of the three estates. The Estates General hadn't been assembled since 1614 [source: Hibbert].

Though 175 years had passed since its last meeting, not much had changed in the Estates General. Power still rested with the first and second estates: the clergy and the nobility. The deputies' votes carried equal weight, but the first and second estate represented a sliver of a fraction of the French population. Because the first and second estate usually voted the same way on issues, the upper classes benefited from governmental policies while the third estate shouldered the burden of the wealthy.

The French wanted the justice of a three-chambered parliament to solve this imbalance (similar to how the American colonists rallied for no taxation without representation). The people began clamoring for identity. Pamphlets and newspapers flooded the streets of Paris as the people tried to define themselves in terms of class. In January 1789, theorist Emmanuel Joseph Sieyes put it like this: "[W]hat is the Third Estate? Everything; but an everything shackled and oppressed. What would it be without the privileged order? Everything, but an everything free and flourishing. Nothing can succeed without it, everything would be infinitely better without the others" [source: Modern History Sourcebook].

Tennis Court Oath
Hulton Archive/Getty Images
An artist's depiction of the Tennis Court Oath, by which the French vowed to write a constitution for the people.

A lawyer named Maximilien Robespierre was less poetic than Sieyes, but he was an active, incendiary speaker. In early May of 1789, Robespierre went to Versailles to serve as a deputy at the Estates General. He was a true representative of the people; from the beginning, he incited unrest among the staid deputies when he proclaimed that all estates should pay taxes. Robespierre's perspective was guided by Enlightenment logic, and it quickly gathered popularity as well as derisive ire.

Nearly two months of heated debate fueled the long-dormant Estates General, and the members of the third estate even won over some members of the clergy and nobility to their cause. But discussion was silenced on June 20, 1789, when members of the first and second estates bolted the doors of the Estates General shut. Undaunted, deputies found an unoccupied indoor tennis court and reconvened there. They identified themselves as the National Assembly and passionately swore to write a constitution for the people of France, in what became known as the Tennis Court Oath.

During the early days of the National Assembly, there was a shred of hope that Louis might endorse this constitution. But when 30,000 of the king's troops were positioned around Paris, the people realized that reform wouldn't be won through politicos' promises and hopeful treatises [source: History Channel]. They responded by creating a homespun militia. The people broke into armories and swept the stores clean of firearms.

Then, Louis made the fateful decision to dismiss Necker from his position as minister of finance. The people viewed this as a direct retaliation to their cause. There was no mobilization of troops, no grand pronouncement of attack. On July 14, sheer chaos broke out in the streets of Paris, and the people headed for the Bastille.

The Bastille Falls and Louis Falters

The Bastille was an imposing relic of 14th-century warfare. In its prime, it was a medieval fortress; for centuries since, it had served as a prison and storehouse for gunpowder. But the Bastille was no ordinary prison: It quartered prisoners of the state who were convicted for crimes outside the realm of common law [source: Hibbert]. The prison was shrouded in mystery, and legends abounded of the torture incurred by the men who resided within its eight stoic towers. The Bastille was symbolic of the monarchy in many ways -- it was a silent institution that answered to no one, yet doled out punishment as it saw fit.

On the morning of July 14, the mob that marched to the Bastille was out for gunpowder and revenge. The first order of business was getting past the guards -- a pretty simple feat when you're armed with all manner of blades. Then, the crowd dispersed within the fortress, setting loose prisoners and gathering gunpowder. Two symbols of the coming French Revolution were brandished that day: the tricolour (the people's flag of red and blue divided by Bourbon white) and heads of the massacred on pikes. The march on the Bastille proved how ruthless and determined the French people were about their fight for freedom. Even after the last guard was killed and the last prisoner set free, the people stayed behind to dismantle the prison. The Bastille didn't exactly fall; rather, it was decimated from the top down in a laborious process unaided by modern wrecking balls and dynamite.

march on the Bastille
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The chaos surrounding the fall of the Bastille resulted in bloody death and the desecration of the 14th-century fortress.

At Versailles, Louis could scarcely believe the news, but the National Assembly took it in stride. It was a victory for the people, and bloodshed was natural in revolution, wasn't it? But this was an important turning point for France. There was no longer any possibility for reform -- the movement had organically become a revolution.

The National Assembly quickly drafted the Declaration of the Rights of Man, in which Louis was essentially written out of authority. All men were declared equal, the class system a distant memory of France's feudal past. Ever a man of the people, Maximilien Robespierre authorized freedom of the press so that information could quickly be disseminated to the streets of Paris.

Freedom of the press paved the way for irresponsible journalism, however. Jean Paul Marat and Jacques Rene Hebert, respective authors of L'Ami du people and Le Pere Duchesne, were reckless propagandists. In many ways, their newspapers kept stride with the mounting tension, but they also stoked the fires of revolution. What Robespierre did for the Estates General and the National Assembly, Marat and Hebert did for the people of France. Their words excited the third estate, confirming in their minds that the revolution was a natural and just movement. But with increasingly vulgar language and paranoid indictments, the newspapers were less credible sources of information than they were death warrants for the clergy and nobility.

When Marat printed that the king and his courtiers had desecrated the tricolour at a recent party at Versailles, it unleashed another frenzy. Marat urged the people to take up arms and fight back -- and he pointed to the increasing number of Louis' troops around the city as evidence that the monarchy was preparing to wage its own retaliation against the revolution.

The Trouble with Traitors: French Revolution Events

On Oct. 5, 1789, an agitated assembly of women demanding bread marched to Versailles. They surged effortlessly past the palace guards and thundered into the queen's bedroom mere minutes after she fled. The mob wanted the royal family to come with them to Paris, and the ever-faltering Louis at last acquiesced to the people's demands. With a heavy heart, he added his signature to the Declaration of the Rights of Man and loaded his family into the royal carriage. As they rolled somberly alongside the crowd, the heads of their dead guards bobbed mockingly beside their windows.

women's march on Versailles
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When Parisian women marched to Versailles, they wanted two things: bread and Marie Antoinette's head. They triumphantly returned with flour and the entire royal family.

But Louis wouldn't be content as puppet king for very long. Even though he was imprisoned by the people in the Tuileries Palace, he had allies beyond France's borders who wanted to see him regain the throne.

As the events of the French Revolution slowly unfolded, the rest of the world had been watching guardedly from a distance. Britain and other European nations were delighted to watch the superpower implode, but they'd later be horrified at the escalating bloodiness of the revolution. Americans were a degree more sympathetic; France had largely funded their revolution. One difference between the nations was that the United States had emerged as a republic (a government in which the power lies in the people's hands and popular vote decides the leaders), and France was still a constitutional monarchy (a limited monarchy in which the king or queen is limited in legislative powers).

As prisoner of the people in the Tuileries, Louis was surrounded by all the revolutionary action in Paris. The National Assembly had followed suit behind the king, shifting their headquarters from Versailles to Paris. The city was veritably bursting with the spirit of change. And for at least two years, the degenerating monarchy cooperated with the National Assembly. Louis signed the new government's legislative policies while Marie Antoinette looked on in disbelief.

Tuileries Palace
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The royal family was moved to the Tuileries Palace. Not too shabby for political prisoners.

With her family members reigning as active monarchs in neighboring Austria, she saw no reason that Louis should relinquish control to bloodthirsty peasants. At last, she won her husband over. (For more on Marie Antoinette's perspectives, read Top 5 Marie Antoinette Scandals.) They planned an escape and broke from the Tuileries on the night of June 21, 1791, under the guise of servants. The royal family was close to the Austrian border when its carriage was apprehended at the town of Varennes.

When Louis and his family were brought back to their quarters at the Tuileries, they were kept under heavier watch. At this point, even the king's sympathizers could no longer feel affection for the monarch -- in France's darkest hour, he'd scurried away like a rat in the night. The French people began to suspect that Marie Antoinette's connections in Austria might be planning to wage war against them, so under the booming recommendation of Jacques Pierre Brissot, the National Assembly declared war on both Austria and Prussia in April 1792.

Suspicions against the royal family continued to mount, including founded or unfounded beliefs that Marie Antoinette was writing to her family about confidential military maneuvers. In an act of misguided duty to the monarchies of Europe, Prussia's Duke of Brunswick wrote that he would raze Paris to the ground if the king were harmed. The Parisian press printed the letter for the whole city to see, and an enraged mob stormed the Tuileries. Louis was made to go on trial as an ordinary citizen, and he was quickly proclaimed guilty.

The matter of what to do with a dethroned traitor effectively split the National Assembly in two.

The National Convention: The Moderates, the Radicals and Those Who Refuse to Wear Breeches

sans-culottes
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The sans-culottes shunned breeches.

The National Assembly was born out of shared interest in liberty, equality and brotherhood, but as the French Revolution wore on, differences in political ideologies became more obvious. Essentially, the assembly -- known from Sept. 20, 1792, on as the National Convention -- split into two major factions: the moderate Girondins and the radical Jacobins (the most prominent of whom was Robespierre). On the city streets of Paris, another political faction was gaining steam. The sans-culottes, or "those without breeches," became the leaders of local government while the convention governed the entire nation of France. These localized rebels were typically artisans who identified themselves by wearing full-length pants rather than the knee-length breeches that the style of the Old Regime had dictated.

On Sept. 21, 1792, the Convention officially declared France a republic [source: Encarta].

To cut ties completely with the Old Regime, the Convention even created a new Republican calendar for France. All references to religion found in the old calendar's name were stricken, and the advent of a 10-day week was intended to make French citoyens (citizens) forget about Sunday, the proverbial day of worship and rest.

One of the first major issues to divide the Convention was the trial of Louis XVI, now known by the egalitarian surname Capet. Louis Capet had no allies in the Convention, but the Girondins at least wanted to spare his life. The Jacobins wouldn't hear of it; Louis must die. Robespierre convinced the people that the monarch must die for the republic to live. Louis ominously prophesied, "I trust that my death will be for the happiness of my people, but I grieve for France…" On Jan. 20, 1793, he was guillotined.

Louis Capet's trial
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Louis Capet appears before the National Convention to await his verdict. It would be a glum one: He was sentenced to be guillotined.

Louis' death didn't put to rest any controversies within the Convention, though. The poorly waged French Revolutionary Wars against Austria and Prussia only divided the factions further. While the wars began in an effort to protect France's borders from other European monarchies who would seek to restore Louis to the throne, they'd become an ideological mission of spreading revolutionary fervor through Europe.

The Jacobins were split on the matter of war. Georges Danton and Robespierre, once political allies, refused to see eye to eye. Danton was a rotund, convivial man with jarring opinions and a loud voice. His priority was the battlefield while Robespierre concerned himself with more immediate threats in the city of Paris. The threat of foreign troops encroaching on French soil finally convinced the Convention to send revolutionary militia to the outskirts of France, and the city of Paris thereby became devoid of protection.

Marat stepped in again to rally the people to action. This time, the Jacobin journalist's directive was straightforward: Kill all the political prisoners. He feared that with the population of Paris outnumbered by the imprisoned counter-revolutionaries, the revolution would be squelched. The sans-culottes rose to the occasion and wiped out thousands of prisoners -- men and women, aristocrats and clergy -- in just a few days. The bloodbath became known as the September Massacre.

The massacre brought Europe's critical gaze zeroing in on France. Was this still a revolution for democracy, or was it just gratuitous bloodshed? The French reconsidered their stance, too. In the outlying provinces, the rural French people were outraged by urban violence. Robespierre decided that someone would have to govern the frenzied French. And for a time, Robespierre, known by his contemporaries as the "Incorruptible," was a steady and righteous leader. But even he lost his cool in the subsequent years.

There Will Be (More) Blood: French Revolution Violence

One of the most fascinating and haunting aspects of the French Revolution is that no one was spared from its gory violence. There was no effort to shield women and children's eyes from the heads that lolled at the base of the guillotine. Dainty aristocrats became hardened from years languishing in dank prisons. A man who'd been your political ally and friend on Tuesday could very well turn you in for counter-revolutionary plotting on Wednesday. In Paris, the steady thud of the guillotine's blade meeting flesh and bone became white noise to city inhabitants. People generally accepted that they were beholden to the greater cause of the revolution, and that common goal made the conditions more tolerable.

Marat's death
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An artist's depiction of Marat's murder. Marat would become a martyr for the French Revolution.

While city-dwellers may very well have been desensitized to the violence of the revolution, the provincial people of France were deeply disturbed by it. In the provinces, counter-revolutionary uprisings were more frequent, but the Republic put them down by mass executions. People were bound together and made to face firing squads, and their bodies were weighted and tossed off boats in open water [source: History Channel]. Moderate members of the National Convention began to suspect that civil war may very well break out in France before the revolutionary wars with Austria and Prussia could be won.

An unsuspecting figure from the provinces arrived in Paris in mid-July, 1793: Charlotte Corday. She tried twice to arrange a meeting with Jean Paul Marat, under the premise that she had information about counter-revolutionary activity in the province of Caen. Corday was convinced that Marat was the chief agitator of the revolution, and she thought that if he were dead, peace would be restored in France. He refused to see her, and she finally forced her way into his apartment, where he lay soaking in a medicinal bath. With a modest dinner knife, she stabbed Marat in the chest, instantly killing him [source: Hibbert]. She was seized, put on trial and guillotined. Had Charlotte Corday lived to see the fallout from Marat's death, she'd doubtlessly have been heartbroken. She couldn't have foreseen it, but the man who was a riotous journalist in his life became a martyr in his death.

Marie Antoinette's prayer book inscription
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Marie Antoinette's last inscription in her prayer book, which reads, "My God, have pity on me! My eyes have no more tears to cry for you my poor children; adieu! adieu!"

Months later, another major figure of the Revolution was put to death: Marie Antoinette. She'd been put to trial under charges of treason and other counter-revolutionary activity. One of the most shocking charges was molestation of her son. While Marie Antoinette had borne the weight of the other indictments, she couldn't bear this one. It was false, she decried, and she begged all other mothers present to reconsider the implication of such a statement. For a moment, the former queen had her sympathizers, but the people's bitter hate outweighed the poignancy of her plea. On Oct. 16, 1793, a cart delivered her to the guillotine. Marie Antoinette was the last queen of France, and she had left a legacy of wasteful extravagance in the midst of starvation.

The machinery of the revolution growled for more victims to feed the cause. Who would be sacrificed next?

The Reign of Terror

In 1793, the divisiveness in the Convention was even more apparent. The fledgling government was overturned in the name of counter-revolutionary paranoia. Led by Robespierre and Danton, the Jacobins arrested the remaining Girondins in the Convention, claiming that they were supporting counter-revolutionary activities.

With the moderates out of the picture, the Jacobin leaders persuaded the Convention members to endorse the Great Terror, an initiative designed to purge France of all counter-revolutionaries. France essentially became a police state, and Robespierre, who had disdained measures of violence and fought so hard for the implementation of the Republican constitution, condoned the execution of counter-revolutionaries. He also agreed to reverse -- temporarily, at least -- the rights guaranteed by the constitution as well as censor the press. While he'd encouraged sensational press under journalists like Marat and Hebert, Robespierre didn't want the kind of chaos that their fiery rhetoric inspired. He wanted to keep the city tightly controlled and bound to his directives.

Danton at the guillotine
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On his way to the guillotine, Danton supposedly said, "My only regret is that I am going before that rat Robespierre."

Two important organizations grew out of the Great Terror. The revolutionary tribunal was designed to try citizens who were suspected of counter-revolutionary activity. These offenses ran the gamut from idle gossip about the Convention to downright denouncement of the Convention -- or even as innocuous a charge as mistakenly addressing someone as monsieur or madame instead of citoyen [source: History Channel]. Any deed or word that went against the Republic was considered an act of treason. And with the looming threat of France's aristocratic emigres returning to the country to re-establish the monarchy, the Convention kept a close watch on citizens.

The other organization, the Committee of Public Safety, was an abbreviated assembly that governed France in its police state. Robespierre sat at the head of this committee and watched approvingly as the guillotine fell several times a day. Under this tightly controlled government, France at last gained traction in the wars along its borders, and the impromptu violence that reigned in the streets was restrained by Robespierre's iron hand. There were no more chaotic massacres; Robespierre decided who lived and who died. He reasoned, "Terror is nothing other than justice, prompt, severe, inflexible; it is therefore an emanation of virtue" [source: Modern History Sourcebook].

As Robespierre's influence grew, Danton became rather uneasy. If the revolution continued along the path of death and destruction, its leaders would be next. But when Danton spoke about the necessity of ending the revolution, he was sent to the tribunal for his counter-revolutionary rhetoric. He and his allies, the Dantonists, were guillotined. Danton prophesied that Robespierre would soon follow, and he was right -- but before he died, Robespierre unraveled a little more.

Robespierre on a Rampage: The Great Fear

Marat was dead, the Girondists were dead and now Danton was dead. Robespierre was swiftly killing off his opponents, but he was also making enemies with his supporters. Those who survived the Great Terror feared that any misstep might sign their own death warrants. People obeyed Robespierre lest they be sent to the guillotine next. But by mid-1794, his long-silent detractors couldn't stay quiet much longer.

Robespierre's final ploy for wresting the counter-revolutionaries from France was the Great Fear. During this nationwide witch hunt, Robespierre was responsible for nearly 800 executions a month [source: History Channel]. As if national genocide weren't enough, Robespierre began isolating the people even further with his unexpected endorsement of a new religion.

Robespierre's final note
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A copy of Robespierre's last declaration to the people of France. It's stained with blood from his failed suicide attempt.

The Cult of the Supreme Being was ostensibly something that Robespierre made up himself. The supreme being was, naturally, reason. Robespierre had long fantasized about a perfect republic in which people participated in government and heeded the universal guiding lights of reason and logic. But would the French people willingly worship this non-god? They'd been forcibly cut off from their Catholic roots -- Christianity had been purged from the nation in an effort to rid the people of their superstitions and faith in non-Republican entities. With the surviving French people becoming increasingly wary of their police state, they wondered: Was Robespierre power hungry or just plain mad?

Their answer seemed divinely delivered on June 6, 1794, the day Robespierre appointed as the Festival of the Supreme Being. In the center of Paris, a papier-mache replica of a mountain was constructed, and Robespierre appeared on top of it, clad in a toga [source: History Channel]. This seemed to clinch popular opinion that Robespierre was no longer a viable leader -- he'd been deluded into thinking that he was a god.

Robespierre sensed the people's change in attitude and retaliated by drafting a new list of public enemies who would be sent before the tribunal and executed. When he arrived at the Convention to deliver the list, he was seized and carried off with his allies to city hall. He was supposed to have been tried the very next day, but he couldn't bear the thought of the guillotine. Robespierre shot himself in a foiled suicide attempt. It was a poor shot -- he blew off his jaw and survived. When the Convention members came to collect him, they found Robespierre lying in agony and a few of his other allies dead. He was guillotined later that day.

But Robespierre's death didn't solve much. If anything, the latest Convention coup had only confused matters more. Floundering, the Convention deputies hastily created a new government. Under the Directory, a three-chambered system with two legislative bodies called the Council of Ancients and the Council of Five Hundred, there was a complex system of checks and balances. The Directory wanted to prove to the people that it was true to the ideals of the early people's republic (circa 1789) and not Robespierre's state of terror [source: Doyle]. In its efforts to toe the line between right and left, however, the Directory pleased no one.

The Directory and the War Hero

The Directory wasn't a real republic. Where, the people wondered, were the liberty, equality and brotherhood of the early reformation? For one, the members of the Directory weren't elected into position -- they were appointed by members within the organization. The people weren't getting a say, and they wouldn't until the first round of open elections. When those came around, it became apparent that the Directory was inching back toward France's monarchical past. Only about 30,000 wealthy French men were eligible to vote.

Napoleon Bonaparte
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Napoleon Bonaparte, the answer to France's monarchical and Republican woes.

There were complications with the new constitution, too. The Directory was walking a fine line, politically speaking, and it wanted to cater toward the growing number of royalists in France as well as the remaining Jacobins and sans-culottes who favored the Republic. The new constitution caused riots in the streets of Paris on Oct. 5, 1795, and the military was called in to quell the uprising. One notable militiaman present at the scene was the French Revolutionary War hero Napoleon Bonaparte. (His military valor would become a major factor as France struggled to regain political identity, as we'll see soon.)

As conditions worsened in Paris, fingers pointed at the flippant Directory. It was trying so hard not to offend the opposing royalists and Republicans that it had neglected the people of France -- the very group for whom the constitution had originally been written. In 1795, one Parisian wrote, "Great God, what a Republic. And the worst of it is, one can't tell when or how it will end. Everybody is dying of hunger" [source: Doyle]. Popular opinion of the Republic continued to dwindle, and as the aristocratic emigres who'd left France to escape death returned home, it looked as though France was ready to re-embrace a monarchy. Newspapers and pamphlets that had once decried the king and queen now blasted the Directory. The Republic had failed.

On the borders, however, there was much to celebrate. France was at last wrangling victories out of the far-flung and poorly planned Revolutionary Wars. In Italy, Napoleon Bonaparte's victories had been the talk of Europe -- and he'd even managed to establish a peace treaty with Austria. When the war hero returned home, a swift and decisive coup turned power from the Directory to him. Napoleon installed himself as the new leader of France, a fresh alternative for the people who thought that only a return to monarchical society would bring them "security" [source: Doyle]. He even reinstituted the Church in France, which had been dechristianized under the revolution.

But there would be no happily-ever-after for France quite yet. In its fall from monarchy to police state, there was another bottom rung to hit: complete dictatorship.