How the Goldman case is about the broken down system that allowed massive gambling in America’s housing market for the last decade.....

The case against Goldman Sachs is the ultimate conclusion to a decade long housing and gambling bubble fueled by easy money, no-documentation loans, and fraud spurred lending. While the investment banks nitpick whether a fraud was actually committed, many Americans are getting their first primetime dosage of how corrupt and absurd the crony banker system has become. To sum up the situation, Goldman helped hedge fund billionaire John Paulson find the ultimate toxic housing bet. Through various parties, it is alleged that Paulson pushed for certain undesirable toxic mortgages to be part of a giant pool of mortgages that unbeknownst to Goldman clients (the issue at hand), Paulson was making the ultimate short bet. Goldman collected fees upfront, Paulson made out like a bandit, and someone got the short end of the stick.

Wall Street is so out of touch with how bad things are in the real economy that they are fighting on the semantics if fraud actually occurred. But to many Americans watching this circus, they are wondering how in the world someone could make billions of dollars by betting against the implosion of the American housing market (a market where 69 percent at one point owned a home). That is the disturbing element now being leaked into the market and psyche of Americans. Goldman was one of those lucky banks that received a nice chunk of the trillions in bailout money pumped out by the Federal Reserve and U.S. Treasury. So what people are coming to grips with is the idea that the government essentially bailed out the decade long gambling spree of the biggest cronies we have seen in modern finance. Who benefitted from this kind of deal? The bets in fact, actually made things worse. In order to satisfy this gambling spree and make it even bigger, the message was sent out (with the implicit desire from Paulson and Goldman for junk mortgages) to brokers on the streets who kept pushing out option ARMs, Alt-As, and every other piece of crap we have come to witness so they can add it to one giant bet. It would be one thing if it was only Goldman but virtually every investment bank got in the game.

So where are we today? The market is still in complete disarray:

Source: First American Core Logic

The latest data shows that in January of 2010 the U.S. market with all of its home sales, had 29 percent of all these sales come from the distress pool. And as you can see from the chart above, a large number of distress sales will cut into the average sales price. That recent bump has come from artificial stimulus through the tax credit, HAMP stalling, and the Federal Reserve buying $1.25 trillion in mortgage backed securities keeping mortgage rates artificially low. But these things can’t last (the tax credit as of today has expired for new home purchases).

What is hard to understand from a psychological standpoint is how people can think things are good when we have over 7 million mortgages that are either 30+ days late or in some stage of foreclosure? We are, as of today even with all these new measures, near the peak of the foreclosure problem. Last month was the highest foreclosure filing month ever recorded! This is not good. How someone can interpret this as good news really baffles the senses. Until that distress percentage creeps down into the single digits, the market is highly volatile.

If you think mortgage fraud has gone away because option ARMs and sub-prime mortgages have gone the way of the dinosaurs, think again:

Source: CNN

“The report described several types of fraud that were detected most often. These include so-called “liar” loans, in which mortgage professionals knowingly listed false income claims for borrowers; inflated appraisals, in which mortgage loan officers or brokers pressure appraisers to overvalue a home so it would qualify for a bigger mortgage; and false occupancy claims, which is when buyers claim they will live in a home but are actually buying it for investment purposes.”

It isn’t like we have flushed out the industry with new rules and sensible financial regulation so why would we expect anything different? And what a stunner that California ranks as number three in the nation for mortgage fraud.

Some of the hardest hit areas are in the “fab four” states of California, Florida, Arizona, and Nevada:

Source: First American Core Logic

Riverside, the largest city in the Inland Empire had a distress sales rate of over 60 percent (the only large area to have this figure even beating out Detroit Michigan). Aside from looking at this data as just a statistic, think of each family and household that is struggling to make their mortgage payments. People don’t want to lose their homes (typically). Sure we have a unique market in California where thousands of homeowners are strategically walking away from their homes even though they have enough income to pay their bills. But the bulk of these distress cases are Americans that have lost jobs, have seen their mortgages recast/reset, or have seen their hours cut back. 1 out of 4 Americans with a mortgage is underwater on their mortgage. And that is why the amount of equity Americans have in their home is near an all time low:

Source: Calculated Risk

People forget that the housing bubble occurred at an arms distance. How so? Well follow the chain:

Borrower > (take on toxic loan with the hope that they would flip/sell before the mortgage payment went higher ideally with a much higher price).

Mortgage Broker > (didn’t care if you were unable to pay mortgage 1 year later, they get their commission upfront and higher for the more toxic loans).

Wall Street > (once they sliced it and diced it into crappy mortgage backed securities or other junk like CDOs, it was off their hands but not without a big fee – then they bet on it).

So who really was responsible for things once they went bust? You and everyone else in this country. Millions of borrowers have now lost their homes. Mortgage brokers and lenders are now fighting for small spots to push out government backed loans. Wall Street was the last untouched party but only thanks to trillions in bailout dollars. Yet it looks like this last bastion of protection is being eroded away with the push against Goldman, the number one investment bank on Wall Street.

I stumbled upon an article from Dr. John Grohol over at PsychCentral showing the most heavily prescribed psychiatric medications in the U.S.:

From 2005 to 2009, the biggest jump occurred with Xanax, a medication that is largely aimed at helping calm anxiety and anxiety associated conditions. 44 million of these prescriptions were given out in 2009. Without a doubt this economic recession is exacerbating underlying issues with many Americans (Xanax prescriptions jumped 29% from 2005 to 2009 even though our population only increased by 4%).

I look at indicators like this, or jobs, wages, cost of health care, food, and so far I haven’t seen what I would expect after pumping trillions of dollars into the economy. The typical American family has seen very little relief or help. Sure, Wall Street is up by over 70+ percent but that is because most of the money went to the crony bankers. And now the investment banks and Treasury are trying to say how great we are doing with TARP and it is going to cost much less than expected. Yet they don’t talk about the great mortgage casino:

$1.25 trillion in mortgage backed securities purchased by the Federal Reserve

$1 trillion in other loans and questionable debt the Fed took on through the alphabet soup of programs

$125+ billion to Fannie Mae and Freddie Mac that continue to support loans even though mortgage fraud is still rampant

4 out of 10 loans is now insured by the FHA which is seeing record defaults and is likely to see a bailout soon

Converting i-banks like Goldman and Morgan Stanley into bank holding companies to have access to the Fed so they can gamble even more

AIG? $47.5 Billion and a big chunk of this went straight through to Goldman for additional bad bets (do you notice how often we use bets as if we are talking about a bad gambler in Vegas?)

Wells Fargo $25 billion

Bank of America $45 billion

JP Morgan Chase $25 billion

GMAC $16.3 billion

GM $50 billion

And a long list of other items. So people aren’t buying that absurd spin that the cost will be so small:

“(Moneynews) One Treasury estimate put a cost of $87 billion on the financial bailout, well below the $250 billion the Congressional Budget Office estimated last year or other analyses that put the all-in number at $1 trillion or more.

“If you are going to do a ledger, you have to do a full and complete ledger,” Whalen told The New York Times.

“To talk about making money on short-term transactions with the TARP while you have this huge cost to the nation is incongruous.”

Analysts say a major factor missing from Treasury’s math is the huge transfer of wealth from investors to banks that resulted from the Federal Reserve’s near-zero interest-rate policy.

Banks benefit because they earn fat profits on the spread between what they pay for their deposits and what they reap on their loans, especially credit cards, which have a current average rate of 14 percent.

Savers and investors lose, especially those on fixed incomes.”

Just like people look back on Tulip Mania or the technology bubble, people will be asking how in the world did we allow so much gambling to take place with mortgages? But more importantly, they’ll be asking why we didn’t reform and fix such an obvious mistake even after so much economic pain was unleashed.

Greece braced for more violence as finance leaders ready to sign multi-million euro bailout with EU

Cash-strapped Greece is braced for more violence today as country leaders get ready to announce a deal with the EU for a controversial multi-million euro financial bailout.

The European Union and the International Monetary Fund are expected to confirm the aid, which will come in return for tough austerity measures, at a meeting this afternoon.

Greek Prime Minister George Papandreou is hoping the three-year deal – expected to reach up to 120 billion euros (£104.5billion) - will help stem a crisis that has hit the euro and shaken markets worldwide.

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A riot policeman jumps over metal railings after being set on fire by protesters throwing petrol bombs. Colleagues rushed over to him to put out the flames

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As a petrol bomb explodes at their feet, policemen leap out of the way at a May Day rally in Athens

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Part of his uniform on fire, an officer sprints to safety

However, thousands of angry protesters took to the streets of Athens yesterday over proposed conditions to the bailout, including draconian budget cuts which demonstrators believe will only affect the poor and will drag the country further into recession.

Clashes broke out between anarchists throwing petrol bombs and rocks towards riot police, who used tear gas to control the crowds at the May Day rallies.

Protesters could be heard chanting, ‘No to the IMF's junta!’, referring to the military dictatorship which ruled Greece from 1967 to 1974, and: ‘Hands off our rights! IMF and EU Commission out!’

More than half of Greeks say they will take to the streets again if the government agrees to the robust measures, according to an ALCO poll.

Foreign Office officials were 'monitoring' the situation in Greece, a popular destination for British holidaymakers. An estimated three million visited the Mediterranean country last year.

The protests came as it was revealed the economic crisis there can be traced back to a 'cover-up' by Labour governments in the Seventies.

But Whitehall files kept secret for 30 years show the chaos could have been averted if Harold Wilson and James Callaghan had vetoed the country’s entry to the then European Community.

The documents show that Callaghan, who was Foreign Secretary in Wilson’s Cabinet before succeeding him as Prime Minister, told the Cabinet that he feared Britain being ‘a minority of one’ in Europe if he opposed the Greek bid to join the EC.

One memo, written by a diplomat at the British Embassy in Athens, stated: ‘In the negotiations for Greek entry, we would do well not to rely wholly on Greek sources for our description of Greek reality.’

Another said: ‘We would be asking for trouble if Greece was allowed to join first and adopt
EC regulations later.’

Callaghan not only ignored these warnings, he also urged Ministers to make no public reference to them. Greece’s accession was ratified in 1981 – but without a proper ‘look at the books’.

Callaghan also cautioned against calling publicly for a study on problems that Spain and Portugal – both of which applied in 1977 – would cause the EC. Both have now had their economies marked down.

Shortly after Callaghan moved into No10, the Foreign Office warned about Greece’s entry: ‘The economic disadvantages for us will be substantial and it will be difficult to run the Community in ways satisfactory to us.’

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A demonstrator throws a stone to riot police during the Athens protest

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Demonstrators and police fight outside the Greek Parliament during a Mayday demonstration to protest against impending austerity measures

Yesterday, angry Greeks took part in rallies that saw riot police using tear gas to disperse protesters armed with petrol bombs and rocks in Athens.

Thousands of people took part in protests called by unions against EU demands for spending cuts in exchange for a bailout deal.

Protesters hit two television trucks with petrol bombs and vandalised a hotel.

The rescue package is expected to amount to £100billion over three years. The Greek Cabinet was due to meet at 7.30am today to ratify the aid deal. Finance Minister George Papaconstantinou is due to announce them at noon and then immediately fly to Brussels for an emergency meeting of eurozone finance ministers.

British visitors were told the Foreign Office was monitoring the protests as holidaymakers were further warned they face further disruption on Wednesday, when flights in and out of Greek airports will be cancelled during a 24-hour strike.

The International Monetary Fund believes it will take 10 years for Greece to overcome its financial crisis, according to a report to appear in Monday's Der Spiegel magazine.

Without citing any sources, the newsweekly said the IMF expects it to take that long for economic reforms to be pushed through and then bear fruit.

The International Monetary Fund has said it will provide the money over three years, along with Greece's partners in the eurozone.

IMF and EU negotiators began talks in Athens on April 21 and continued through Friday.

French Finance Minister Christine Lagarde said after a meeting of French government officials yesterday that she was confident eurozone finance ministers would approve the package by the end of the weekend.

Governments are discussing a package of up to £104billion over three years, she said.

Greece's additional austerity measures are likely to include raising consumer taxes, while docking pensions and public service pay.

Unions are furious and called on workers to rally in central Athens Saturday.

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Police walk in front of a burning broadcast van belonging to state TV. It was set on fire by a petrol bomb

'These measures are death. How people are going to live tomorrow, how they're going to survive, I do not understand,' said Nikos Diamantopoulos, who was participating in a rally organised by pro-Communist unions.

Union members were marching toward the Athens offices of the European Union and continuing to the U.S. Embassy.

Minor clashes broke out between rock-throwing anarchists and police, who responded with pepper spray.

In the northern Greek city of Thessaloniki, where more than 5,000 people demonstrated, anarchists briefly clashed with police and smashed a few storefronts and ATMs.

Conservative opposition party New Democracy and the Right-wing populist LAOS have been critical of the government but are seen as likely to support the package of measures.

Left-wing parties have vowed to escalate protests.

'The Greek people do not owe anything to anybody. Those who have brazenly robbed public money and pension funds,' Left Coalition leader Alexis Tsipras told reporters at one of the Athens rallies.

Accountant Virginia Kalapotharakou, who joined striking seamen and dockworkers rallying in the port of Piraeus, called the potential measures 'very reactionary'.

'They're trying to do away with all the rights we gained through struggles in previous years,' she said.

A default would be a serious blow to the euro currency and could hit Greek and European banks that invested in Greek government bonds. The bailout is designed to prevent that and to keep the Greek crisis from spreading to other countries that use the euro.

Greece spent freely for years and ran up debt equal to 115 percent of gross domestic product.

It has been effectively shut out of bond markets to refinance its debt pile because investors fear default and are demanding high rates of interest the government says it cannot pay.

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Supporters of Greek Communist party gather during a May Day rally at central Syntagma square in Athens

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Policemen charge at protesters who turn and flee. Left-wing parties have vowed to escalate protests

Signs that the help will soon be approved have calmed markets, which previously pushed Greece's cost of borrowing to untenably high levels high as EU and German officials showed little urgency in addressing the problem.

On Friday the interest rate gap, or spread, between Greek 10-year bonds and their benchmark German equivalent narrowed to 6.20 percentage points, from a staggering 10 points Wednesday.

But Athens was in for more bad news as credit agency Moody's Investor Services downgraded the debt rating of nine Greek banks: National Bank of Greece, EFG Eurobank Ergasias, Alpha Bank, Piraeus Bank, Emporiki Bank of Greece, Agricultural Bank of Greece, General Bank of Greece, Marfin Egnatia Bank and Attica Bank.

Moody's said the banks' might face further downgrades - a move that would come alongside Moody's ongoing review of the country's sovereign debt rating.

On Thursday, the agency confirmed that it is awaiting to see details of an EU-IMF rescue package before a possible revision of Greece's credit rating, but that a 'multi-notch downgrade' remained likely.

Testing the Limits of Freedom of Speech: Ernst Zundel Speaks Out

Foreign Policy Journal's exclusive interview with one of Europe's most well-known political prisoners.

Ernst Zundel

(TEHRAN) - Ernst Zundel is a German author and historian who has spent seven years of his life behind bars as a result of expressing his controversial viewpoints and opinions. He is a revisionist who has denied the Holocaust as described by most historians. He has been one of the most prominent political prisoners in Europe and has been jailed in three countries on two continents.

After his arrest in the U.S. in 2003, he was deported to Canada, where he was kept in prison as “a threat to the national security” for two years. After deportation to Germany in March 2005, he was convicted and sentenced in 2007 to five additional years of imprisonment on charges of holocaust denial. He was finally released on March 1, 2010.

This is the first interview Ernst Zundel has given since his release, published in the Foreign Policy Journal.

Firstly, I would like to extend my congratulations on your recent release. Were you ever mistreated or subject to any type of mental or physical punishment in breach of international conventions?

My entire treatment these past seven years by those arresting me, trying and convicting me, and keeping me in prison has been in brutal breach of international conventions. I was arrested in broad daylight on American soil by officials of the U.S. government who acted as hit squads for a nefarious lobby. There was no arrest warrant. I was not read my rights. I was whisked away in handcuffs without being allowed to get my wallet, to call my attorney, to be allowed to make my case before an American Immigration Judge or even hug my wife goodbye.

I was incarcerated in six different prisons on two continents in three countries—the USA, Canada, and Germany—without relief of any kind. In effect, I have had 10 percent of my life stolen from me – and for what “crime”? For having “overstayed my U.S. visa”?

Throughout my imprisonment, basic human rights principles were trampled underfoot repeatedly and with impunity. The worst prisons were the Canadian detention centers at Thorold, Ontario and at Toronto West, where I was held for two long years in isolation cells, ice-cold in the winter, no shoes or socks allowed. The electric light in these cells, bright enough to be able to read, was kept on 24 hours a day. Through a glass slot in the door I was checked every 20 minutes, and my activities were meticulously noted by the guards: one sheet for every day. No dignity, no privacy. My toothbrush was kept in a plastic bin in a hall. I was not allowed to speak to other prisoners.

Bed sheets were changed only after three months. No pillows. No chairs. When I wrote to my wife or to my attorneys, I had to sit on a makeshift pile of my court transcripts. No radio, no television, not even an electrical outlet to sharpen my pencils. No ball point pens, only pencil stubs, cut in half with a saw. No spoons, forks, or knives were permitted; only a white plastic spoon with a fork called a “spork” that had to be returned every time at the end of the meal. With very few exceptions when furtive guards showed me some kindness away from the surveillance cameras, I was treated as though I was the worst of criminals. That’s Canada for you, where I have lived and worked without a criminal record for more than 40 years.

It was somewhat better, but not much, in the United States. In Germany, it was quite a bit better in terms of the basic necessities, but personal mail was routinely withheld – 1,700 letters for up to five years – even after I forced a court to order that it be given to me. My so-called trial in Mannheim was a political show trial in the Stalinist mode in that my guilt was a foregone conclusion. I requested that exculpatory exhibits be allowed as validation for what I believed and had written and said. No meaningful defense was allowed. I could not put on record any forensic evidence, any historical documents, or even expert witnesses... That very request to be allowed to offer evidence was held to be a new offense of criminal behavior and could have resulted in new criminal charges – as were, in fact, lodged against my lawyers during that very trial who tried to overcome these restrictions.

Along with the rest of EU members, Germany regularly criticizes other countries for violations of free speech and human rights. However, your case demonstrated the emptiness of such claims within Europe. What’s your take on that? Is Europe really a utopia of liberty and freedom of speech?

Most European countries have only selected free speech for officially approved and sanctioned views on history. Almost all EU countries have laws in place that restrict freedom of speech under the guise of one fig leaf or other, such as the prevention of racist or neo-Nazi activities. The state decides selectively who is and what is racist. These laws are hypocritical, in Germany’s case superseding even their own Basic Law.

Dissidents are allowed very little opportunity to be read or heard in the mainstream corporate media channels of the West. The control mechanisms of the press are many, often subtle but widely understood and obeyed – fear of loss of jobs, diminished circulation, the withholding of government advertisements etc. There is no longer unrestricted freedom in any Western country, not even in the U.S. with its wonderful Constitution and Amendments such as the Bill of Rights.

Allow me here to point out to your readers the outline of a censorship practice known by its neutral term “rendition”, but more honestly defined as political kidnappings to force the silencing of dissident speech or alternate thoughts. Renditions in the West are ever more frequently practiced not only against alleged “terrorist suspects” but against ordinary political activists and writers whose viewpoints are frowned upon by such outfits as AIPAC and similar Zionist lobby and interest groups, B’nai Brith, the Canadian Jewish Congress etc.

In order to spell out what I can only describe to you in broad strokes, I’d like to briefly shed light on the period preceding my arrest in the U.S. and Canada; the conniving and the similarity in other cases like mine, where an innocuous or alleged infraction is used as a fig leaf to silence a political opponent.

Viet Dinh, a Georgetown University law professor and director of their Asian Law and Policy Studies Program who helped craft the Patriot Act, put it succinctly, as reported in an American publication called Wired that deals with freedom of speech on the net. That interview reads:

Wired News: An estimated 5,000 people have been subjected to detention since 9/11. Of those, only five — three noncitizens and two citizens — were charged with terrorism-related crimes and one was convicted. How do we justify such broad-sweeping legislation that has resulted in very few terrorist-related convictions?

Dinh: I’ve heard the 5,000 number. The official numbers released from the Department of Justice indicate approximately 500 persons have been charged with immigration violations and have been deported who have been of interest to the 9/11 investigation.

It may well be that a number of citizens were not charged with terrorism-related crimes, but they need not be. Where the department has suspected people of terrorism, it will prosecute those persons for other violations of law, rather than wait for a terrorist conspiracy to fully develop and risk the potential that that conspiracy will be missed and thereby sacrificing innocent American lives in the process.

This is exactly what happened to me. The initial reason given was an alleged immigration infraction – namely a “visa overstay”. I was no terrorist; I was a dissident writer. My political detractors knew perfectly well that I was in America legally, awaiting adjustment of status due to my marriage to an American citizen. I was in Immigration Adjustment of Status proceedings, meticulously following all the prerequisite steps. I was living openly in a rural area in Tennessee and was listed by address in the local telephone book. The U.S. government had given me a Social Security number, a work permit, a document that allowed me to leave the country and return unmolested. I had undergone and passed an FBI check and a health clearance. The only last step missing was a personal interview by an immigration official to ascertain a valid marriage to my American citizen wife.

We had been notified in writing that this interview could take as long as three years, and that no status report would be given. We were patiently waiting for that last step, a routine interview with an immigration official. Our immigration attorney had requested such an interview in writing – twice! Under oath, he testified that he had written those letters. These letters have mysteriously disappeared from our immigration file. When I was arrested, it was claimed that I had negligently “missed a hearing” which gave them grounds for an arrest due to a visa overstay. In other words, a simple bureaucratic loophole was found or fabricated that has cost me seven years of my life.

What happened to me in the context of a deliberate state policy of deception has also happened to others. Similar ruses via false accusations were used in cases like Germar Rudolf, likewise married to an American citizen, El Masri of Germany, Maher Arar of Canada, Gerd Honsik of Spain, Siegfried Verbeke of Belgium, David Irving, and now Bishop Williamson of England, to name only a few individuals who were caught between the grindstones of a criminal policy possible only under the Patriot Act in the U.S. and similar legal instruments in other countries. Embedded in that background of a widespread covert policy and practice to force political conformity, my case makes eminent sense. We are no longer dealing with an aberration. These extrajudicial renditions give 9/11 and the Patriot Act a new light as a global policy instrument of brutal censorship of unpopular thinkers and writers.

The thrust of a prestigious publication such as yours would normally deal with the policies of foreign governments, renditions, kidnappings, and incarcerations not only of foreign enemies but, as in the case of Vanunu, an Israeli-born-and-raised atomic scientist. He was no neo-Nazi, no racist, no Holocaust Denier, yet he was relentlessly pursued by the Mossad and ultimately kidnapped and jailed for 18 years.

The patterns of the breaking of international law and conventions, the use of false identities, and the brazen practice of breaking and entering by spy and intelligence agencies, etc. – these criminal activities are daily in the news. This sets the stage and makes my case a logical progression of an old, established policy, with this one difference: we are no longer talking about hunting and kidnapping alleged “Nazi war criminals” like Eichmann or stone-throwing Palestinians or even “Arab terrorists”, but instead the targeting of writers and other political dissidents in Western countries calling themselves “democracies”.

My story does not even end there. In my case, my “Holocaust Denier” profile was convenient, but passé. It was not even, as is so commonly and falsely claimed, “Denial of the Holocaust” or even more bizarre, my “visa overstay”! I was told what actually happened by a friend of ours with high-level UN connections. In his own words: “It was the Blue Booklet that did it! That’s when it was decided at the very highest level to take you out for good!”

Here is what happened, briefly: In the early months post-9/11 my wife, an avid Internetter, discovered a compelling research document entitled Stranger than Fiction: An Independent Investigation of 9/11 and the War on Terrorism by Anonymous, 11-11-02. She gave it to me over breakfast. I read it, found it interesting, and ran a few copies off on my printer for people on my mailing list. I did not write that lavishly footnoted paper. I did not research it. I merely copied it. Somebody must have concluded that I, with my background of thorough forensic investigations in other areas, showed more than ordinary interest in 9/11 as a potential political false flag common in intelligence agency operations!

During my trial in Mannheim, ostensibly for “Holocaust Denial”, portions of my monthly newsletter, where I mentioned this booklet and the 9/11 topic, were referenced by the prosecution as criminal offenses. Only after it became clear that I welcomed the opportunity to have my attorneys present forensic evidence of a potential 9/11 cover-up were those portions of the accusation against me hastily dropped, and my trial became a “Holocaust Denial” show trial in the traditional Stalinist mode, “… accuse wildly but don’t allow a defense!”

As we later found out through various freedom of information requests in various countries, there was in place for years a deliberate, convoluted plan to arrest and detain me under false pretenses so as to take me out and put me behind bars.

I mention this only as an overarching, logical example as to how diabolically clever my political opponents are in using the accusation of “Holocaust Denial” and persecution of Holocaust Revisionists as arrows in their arsenal of weaponry to shore up, consolidate, and protect their deceptively acquired power and influence.

What’s the reality behind Holocaust? Didn’t it happen at all? What about people such as Elie Wiesel, Thomas Blatt, Wladyslaw Bartoszewski and Leopold Engleitner who are Holocaust survivors and describe their own accounts of those painful days, when they personally witnessed the heart-rending demise of their parents in concentration camps and bone-crushing machines. How should we resolve these contradictions?

I will not answer this question. I would risk five more years in jail if I answered these questions honestly and truthfully. However, in the age of the Internet, others less known than I am find ways to simplify a painful, multifaceted problem, as the cartoon [Prevent Holocaust, Bomb Iran by Carlos Latuff] makes plain.

Many people of other countries have come to the categorical conclusion that the Western world is a beacon of liberty and unrestricted freedom of speech. But it sometimes seems that the reality is something else, and that people can be easily prosecuted merely for publishing views that are disliked. The booklet you published, Did Six Million Really Die?, is an example. What do you think?

Here is just one more example of what I already outlined above: We have faxes and other documents that prove on official embassy letterhead that the much vaunted and propagandized U.S. Judiciary has run interference for these kidnappers and renditioners via behind-the-scenes ex parte communication, thus engaging in a cover-up and whitewash worse than the ones practiced by those the U.S. government always blames for human rights violations in their hypocritical press campaigns, like against China in Tibet, Lukashenko in Belarus, Putin in Moscow and, of course, Iran during the recent so-called Green Revolution.

Many Zionist websites have introduced you as a white supremacist. Is that a fair characterization?

This claim is a convenient character assassination technique. I have never been a white supremacist and have stated so for decades, publicly, in countless interviews, newsletters, speeches, broadcasts, etc. It is my opponents’ modus operandi to broad-brush complex issues by politically expedient demonization.

You’re opposed to the regime of Israel because of its discriminatory and atrocious approach against the nation of Palestine. You consider yourself a pacifist who advocates stability and peace; aren’t these beliefs incompatible with your viewpoint regarding Hitler, who is internationally considered to be a notorious dictator and relentless killer? How can your peace-seeking stance come together with your approval of Hitler?

I cannot answer this question due to legal restraints. An honest and complete answer would land me in jail as a re-offender very quickly. Implicit in your question is the toxic image of me that my detractors would like you to have. To be called a Nazi is worse than being called a leper. For decades I have been on the receiving end of just such a targeted character assassination campaign. I have been jailed many times - not for advocating an ideology - but for expressing a dissident, alternative viewpoint on many topics, including Adolf Hitler’s role in history. Revisionism is not an ideology. It is merely a scientific method of re-examining historical events and of trying to understand the movers and shakers who made history a footnote to their personalities.

Let me answer your question this way: I have always abhorred any kind of violence in the pursuit of political goals. By anyone! Politically, I was and am a pacifist, much in the Gandhi style. I advocate a sober, neutral look at history, including the period known as the Third Reich. The peoples of the world, regardless of what system of government they live under, owe it to themselves to emancipate themselves of the simplistic images of propaganda and deceit posing as history.

On May 1995, your Toronto residence was the target of an arson attack which resulted in $400,000 worth of damage. A few days later, some of your extremist opponents were caught trying to break into your property. Again a few days later, you received a parcel bomb which the Toronto police detonated. Have you ever tried to lodge a complaint against them? Have they ever been lawfully sentenced?

This is the flip side of some of the questions above. While I have never advocated or engaged in violence, egregious acts of violence have been repeatedly practiced on me, of which the political kidnapping in 2003 was merely the latest. As to the fire and the bomb, no, nothing was ever resolved. The police apprehended the bomb builders and senders, but the charges laid were stayed. There seems to have been no political will at the highest levels of the Canadian government. There was no political coin to be garnered by prosecuting Jewish arsonists, who even confessed to the deed.

Do you differentiate between the Zionists and Jews as the followers of a divine, monotheistic religion?

Yes, the two are totally different. Some Orthodox Jews who are united against Zionism, such as the Neturei Karta, believe that also. They know the godfathers of Communism and Zionism followed identical policies. The guiding spirit behind the two systems is the same. Neturei Karta rabbis attended the 2006 Teheran Conference sponsored by your President in an attempt to distance themselves from what they consider to be a dangerous atheist clique in the pursuit of illegal politics of conquest of which they want no part.

The mainstream corporate media, while having already vilified you, remained silent about your release. What do you think about this? Are you going to continue your ideological path or would you prefer to keep a low profile and forget about the intellectual activities?

Ironically, that was exactly what I intended to do when I moved to Tennessee and married Ingrid; keeping a low profile and turning to private endeavors such as my love for art and music. I felt that my revisionist outreach was finished, concluded to my inner satisfaction. Let others read both sides and then judge for themselves. All the arguments, all the information needed on the Holocaust is out there, on the Internet, in tens of thousands of websites, all for the taking. How often do you have to dig up an archeological site to find yet one more bone, yet one more implicating shard? My wife likes to say that you don’t have to eat a camel to know what a cutlet tastes like. I was quite ready to retire and satisfy my creative needs and desires. I could leave the political mopping-up activities for others to complete. But could my political opponents bring themselves, as rational people might have, to likewise call it quits? No; that is simply not in their nature.

As you point out so cogently, a powerful vilification campaign is still going full blast. It keeps my name in the media for people to decide for themselves who I am. Upon my release, my wife has collected thousands and thousands of letters from readers, only three of which were negative! Not a bad record, of the millions of dollars spent and millions of words dispersed in an attempt to paint me as as a devil with horns.

Let me ask you – would your prestigious publication have cared to interview me if you thought that I deserved the label of Evil Incarnate?

[FPJ's editor note: The views and beliefs of Ernst Zundel are his own, and not those of Foreign Policy Journal. It is the policy of FPJ to uphold the principle of freedom of speech, which means freedom to say things that others may find despicable. It is otherwise a meaningless principle. It is also the position of FPJ that both sides to a story deserve to be heard. It's up to readers to draw their own conclusions and make their own judgments.]

Peter Schiff – How an Economy Grows & Why it Crashes

If We Broke Up Standard Oil, We Can Break Up the Giant Banks

If we broke up standard oil, we can break up the giant banks.

Says who?

Senator Ted Kaufman (interviewed recently by The American Prospect's Tim Fernholz):

You and Senator Sherrod Brown have proposed an amendment that would cap the size of the largest banks and, in effect, break them up. How do you sell this to people who are leery of what seems like a radical move?

First off, we've broken up things before. We broke up Standard Oil, we broke up AT&T, we broke up the accountants, too. A lot of the changes we're talking about, the mergers, are just new. When you look at the reasons these banks are so big -- and you know how big they are -- remember the reason JP Morgan Chase is so big is because they bought Washington Mutual when it was in trouble, and Wells Fargo bought Wachovia, and Bank of America bought Merrill Lynch [during the crisis]. It is pretty straightforward, now that these are back on their feet, that it makes sense to break them up.

Alan Greenspan:

U.S. regulators should consider breaking up large financial institutions considered “too big to fail,” former Federal Reserve Chairman Alan Greenspan said.

Those banks have an implicit subsidy allowing them to borrow at lower cost because lenders believe the government will always step in to guarantee their obligations. That squeezes out competition and creates a danger to the financial system, Greenspan told the Council on Foreign Relations in New York.

“If they’re too big to fail, they’re too big,” Greenspan said today. “In 1911 we broke up Standard Oil -- so what happened? The individual parts became more valuable than the whole. Maybe that’s what we need to do.”

At one point, no bank was considered too big to fail, Greenspan said. That changed after the Treasury Department under then-Secretary Hank Paulson effectively nationalized Fannie Mae and Freddie Mac, and the Treasury and Fed bailed out Bear Stearns Cos. and American International Group Inc.

“It’s going to be very difficult to repair their credibility on that because when push came to shove, they didn’t stand up,” Greenspan said.

Fed officials have suggested imposing a tax or requiring higher capital ratios on larger banks to ensure the firms’ safety and reduce some of the competitive advantage from the implied subsidy. Greenspan said that won’t work.

“I don’t think merely raising the fees or capital on large institutions or taxing them is enough,” Greenspan said. “I think they’ll absorb that, they’ll work with that, and it’s totally inefficient and they’ll still be using the savings”...

“If you don’t neutralize that, you’re going to get a moribund group of obsolescent institutions which will be a big drain on the savings of the society,” he said.

“Failure is an integral part, a necessary part of a market system,” he said. “If you start focusing on those who should be shrinking, it undermines growing standards of living and can even bring them down.”

Former chief IMF economist Simon Johnson:

Writing in the New York Times today, Joe Nocera sums up, “If Mr. Obama hopes to create a regulatory environment that stands for another six decades, he is going to have to do what Roosevelt did once upon a time. He is going to have make some bankers mad.”

Good point – but Nocera is thinking about the wrong Roosevelt (FDR). In order to get to the point where you can reform like FDR, you first have to break the political power of the big banks, and that requires substantially reducing their economic power - the moment calls more for Teddy Roosevelt-type trustbusting, and it appears that is exactly what we will not get.

Former Secretary of Labor Robert Reich:

Neither the draft bill, nor the Committee, nor anyone on the Hill having anything to do with financial regulation, is raising what I consider to be the two key reforms necessary for avoiding another financial meltdown -- resurrecting the Glass-Steagall Act that once separated commercial from investment banking, and applying antitrust laws to the remaining five biggest Wall Street banks so none is "too big to fail."

One of the world's leading economic historians, Niall Ferguson:

What's needed is a serious application of antitrust law to the financial-services sector and a speedy end to institutions that are "too big to fail."

***

[Geithner is proposing that] there should be a new "resolution authority" for the swift closing down of big banks that fail. But such an authority already exists and was used when Continental Illinois failed in 1984.

Indeed, even the FDIC mentions Continental Illinois in the same breadth as "too big to fail" banks.

And William K. Black - the senior regulator during the S&L crisis, and an Associate Professor of both Economics and Law at the University of Missouri - says that the Prompt Corrective Action Law (PCA), 12 U.S.C. § 1831o, not only authorizes the government to seize insolvent banks, it mandates it, and that the Bush and Obama administrations broke the law by refusing to close insolvent banks. And see this. Whether or not the financial giants can be broken up using the PCA, no one can doubt that the government could find a way to break them up if it wanted.

Break 'em up ...

36. Money & Banking

Banking institutions, paper money, and paper speculation are capable of undermining the nation's stability and could be a danger in time of war. The Constitution does not empower the Congress to establish a National Bank. Rather than trust the nation's currency to private hands, the circulating medium should be restored to the nation itself to whom it belongs.

---

"Specie is the most perfect medium because it will preserve its own level; because, having intrinsic and universal value, it can never die in our hands, and it is the surest resource of reliance in time of war." --Thomas Jefferson to John Wayles Eppes, 1813. ME 13:430

"Paper is poverty,... it is only the ghost of money, and not money itself." --Thomas Jefferson to Edward Carrington, 1788. ME 7:36

"Experience has proved to us that a dollar of silver disappears for every dollar of paper emitted." --Thomas Jefferson to James Monroe, 1791. ME 8:208

"It is a [disputed] question, whether the circulation of paper, rather than of specie, is a good or an evil... I believe it to be one of those cases where mercantile clamor will bear down reason, until it is corrected by ruin." --Thomas Jefferson to John W. Eppes, 1813. ME 13:409

Specie as a National Resource

"In such a nation [as ours], there is one and one only resource for loans, sufficient to carry them through the expense of a war; and that will always be sufficient, and in the power of an honest government, punctual in the preservation of its faith. The fund I mean, is the mass of circulating coin. Everyone knows, that although not literally, it is nearly true, that every paper dollar emitted banishes a silver one from the circulation. A nation, therefore, making its purchases and payments with bills fitted for circulation, thrusts an equal sum of coin out of circulation. This is equivalent to borrowing that sum, and yet the vendor receiving payment in a medium as effectual as coin for his purchases or payments, has no claim to interest. And so the nation may continue to issue its bills as far as its wants require, and the limits of the circulation will admit... But this, the only resource which the government could command with certainty, the States have unfortunately fooled away, nay corruptly alienated to swindlers and shavers, under the cover of private banks." --Thomas Jefferson to John W. Eppes, 1813. ME 13:274

"One of three great measures necessary to insure us permanent prosperity... should insure resources of money by the suppression of all paper circulation during peace, and licensing that of the nation alone during war. The metallic medium of which we should be possessed at the commencement of a war, would be a sufficient fund for all the loans we should need through its continuance; and if the national bills issued be bottomed (as is indispensable) on pledges of specific taxes for their redemption within certain and moderate epochs, and be of proper denominations for circulation, no interest on them would be necessary or just, because they would answer to everyone the purposes of the metallic money withdrawn and replaced by them." --Thomas Jefferson to William H. Crawford, 1816. ME 15:30

"It would be best that our medium should be so proportioned to our produce, as to be on a par with that of the countries with which we trade, and whose medium is in a sound state." --Thomas Jefferson to John W. Eppes, 1813. ME 13:430

Dangers of Paper Money

"That paper money has some advantages is admitted. But that its abuses also are inevitable and, by breaking up the measure of value, makes a lottery of all private property, cannot be denied. --Thomas Jefferson to Josephus B. Stuart, 1817. ME 15:113

"The trifling economy of paper, as a cheaper medium, or its convenience for transmission, weighs nothing in opposition to the advantages of the precious metals... it is liable to be abused, has been, is, and forever will be abused, in every country in which it is permitted." --Thomas Jefferson to John W. Eppes, 1813. ME 13:430

"Scenes are now to take place as will open the eyes of credulity and of insanity itself, to the dangers of a paper medium abandoned to the discretion of avarice and of swindlers." --Thomas Jefferson to Thomas Cooper, 1814. ME 14:189

"The States should be applied to, to transfer the right of issuing circulating paper to Congress exclusively, in perpetuum." --Thomas Jefferson to John W. Eppes, 1813. ME 13:276

"The evils of this deluge of paper money are not to be removed until our citizens are generally and radically instructed in their cause and consequences, and silence by their authority the interested clamors and sophistry of speculating, shaving, and banking institutions. Till then, we must be content to return quoad hoc to the savage state, to recur to barter in the exchange of our property for want of a stable common measure of value, that now in use being less fixed than the beads and wampum of the Indian, and to deliver up our citizens, their property and their labor, passive victims to the swindling tricks of bankers and mountebankers." --Thomas Jefferson to John Adams, 1819. ME 15:185

"Private fortunes, in the present state of our circulation, are at the mercy of those self-created money lenders, and are prostrated by the floods of nominal money with which their avarice deluges us." --Thomas Jefferson to John W. Eppes, 1813. ME 13:276

"It is a cruel thought, that, when we feel ourselves standing on the firmest ground in every respect, the cursed arts of our secret enemies, combining with other causes, should effect, by depreciating our money, what the open arms of a powerful enemy could not." --Thomas Jefferson to Richard Henry Lee, 1779. ME 4:298, Papers 2:298

"I now deny [the Federal Government's] power of making paper money or anything else a legal tender." --Thomas Jefferson to John Taylor, 1798. ME 10:65

Paper Speculation

"A spirit... of gambling in our public paper has seized on too many of our citizens, and we fear it will check our commerce, arts, manufactures, and agriculture, unless stopped." --Thomas Jefferson to William Carmichael, 1791. ME 8:230

"Our public credit is good, but the abundance of paper has produced a spirit of gambling in the funds, which has laid up our ships at the wharves as too slow instruments of profit, and has even disarmed the hand of the tailor of his needle and thimble. They say the evil will cure itself. I wish it may; but I have rarely seen a gamester cured, even by the disasters of his vocation." --Thomas Jefferson to Gouverneur Morris, 1791. ME 8:241

"All the capital employed in paper speculation is barren and useless, producing, like that on a gaming table, no accession to itself, and is withdrawn from commerce and agriculture where it would have produced addition to the common mass... It nourishes in our citizens habits of vice and idleness instead of industry and morality... It has furnished effectual means of corrupting such a portion of the legislature as turns the balance between the honest voters whichever way it is directed." --Thomas Jefferson to George Washington, 1792. ME 8:344

"We are now taught to believe that legerdemain tricks upon paper can produce as solid wealth as hard labor in the earth. It is vain for common sense to urge that nothing can produce but nothing; that it is an idle dream to believe in a philosopher's stone which is to turn everything into gold, and to redeem man from the original sentence of his Maker, 'in the sweat of his brow shall he eat his bread.'" --Thomas Jefferson to Charles Yancey, 1816. ME 14:381

The Importance of Personal Economy

"I own it to be my opinion, that good will arise from the destruction of our credit. I see nothing else which can restrain our disposition to luxury, and to the change of those manners which alone can preserve republican government. As it is impossible to prevent credit, the best way would be to cure its ill effects by giving an instantaneous recovery to the creditor. This would be reducing purchases on credit to purchases for ready money. A man would then see a prison painted on everything he wished, but had not ready money to pay for." --Thomas Jefferson to Archibald Stuart, 1786. ME 5:259

"We should try whether the prodigal might not be restrained from taking on credit the gewgaw held out to him in one hand, by seeing the keys of a prison in the other." --Thomas Jefferson to Thomas Pleasants, 1786. ME 5:325, Papers 9:472

"The maxim of buying nothing without the money in our pockets to pay for it would make of our country one of the happiest on earth." --Thomas Jefferson to Alexander Donald, 1787. ME 6:192

"Every discouragement should be thrown in the way of men who undertake to trade without capital." --Thomas Jefferson to Nathaniel Tracy, 1785. Papers 8:399

"Would a missionary appear, who would make frugality the basis of his religious system, and go through the land, preaching it up as the only road to salvation, I would join his school, though not generally disposed to seek my religion out of the dictates of my own reason and feelings of my own heart." --Thomas Jefferson to John Page, 1786. ME 5:305

"I look back to the time of the war as a time of happiness and enjoyment, when amidst the privation of many things not essential to happiness, we could not run in debt, because nobody would trust us; when we practised by necessity the maxim of buying nothing but what we had money in our pockets to pay for; a maxim which, of all others, lays the broadest foundation for happiness. I see no remedy to our evils, but an open course of law. Harsh as it may seem, it would relieve the very patients who dread it, by stopping the course of their extravagance, before it renders their affairs entirely desperate." --Thomas Jefferson to Fulwar Skipwith, 1787. ME 6:188

"It is a miserable arithmetic which makes any single privation whatever so painful as a total privation of everything which must necessarily follow the living so far beyond our income." --Thomas Jefferson to William Hay, 1787. ME 6:223

"I know of no remedy against indolence and extravagance, but a free course of justice. Everything else is merely palliative... Desperate of finding relief from a free course of justice, I look forward to the abolition of all credit, as the only other remedy which can take place." --Thomas Jefferson to Alexander Donald, 1787. ME 6:192

Banking Institutions

"That we are overdone with banking institutions which have banished the precious metals and substituted a more fluctuating and unsafe medium, that these have withdrawn capital from useful improvements and employments to nourish idleness, that the wars of the world have swollen our commerce beyond the wholesome limits of exchanging our own productions for our own wants, and that, for the emolument of a small proportion of our society who prefer these demoralizing pursuits to labors useful to the whole, the peace of the whole is endangered and all our present difficulties produced, are evils more easily to be deplored than remedied." --Thomas Jefferson to Abbe Salimankis, 1810. ME 12:379

"The system of banking [I] have... ever reprobated. I contemplate it as a blot left in all our Constitutions, which, if not covered, will end in their destruction, which is already hit by the gamblers in corruption, and is sweeping away in its progress the fortunes and morals of our citizens." --Thomas Jefferson to John Taylor, 1816. ME 15:18

"The banks... have the regulation of the safety-valves of our fortunes, and... condense and explode them at their will." --Thomas Jefferson to John Adams, 1819. ME 15:224

"The States should be urged to concede to the General Government, with a saving of chartered rights, the exclusive power of establishing banks of discount for paper." --Thomas Jefferson to John W. Eppes, 1813. ME 13:431

"I sincerely believe... that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale." --Thomas Jefferson to John Taylor, 1816. ME 15:23

A National Bank

"The incorporation of a bank and the powers assumed [by legislation doing so] have not, in my opinion, been delegated to the United States by the Constitution. They are not among the powers specially enumerated." --Thomas Jefferson: Opinion on Bank, 1791. ME 3:146

"It has always been denied by the republican party in this country, that the Constitution had given the power of incorporation to Congress. On the establishment of the Bank of the United States, this was the great ground on which that establishment was combated; and the party prevailing supported it only on the argument of its being an incident to the power given them for raising money." --Thomas Jefferson to Dr. Maese, 1809. ME 12:231

"The idea of creating a national bank I do not concur in, because it seems now decided that Congress has not that power (although I sincerely wish they had it exclusively), and because I think there is already a vast redundancy rather than a scarcity of paper medium." --Thomas Jefferson to Thomas Law, 1813. FE 9:433

"[The] Bank of the United States... is one of the most deadly hostility existing, against the principles and form of our Constitution... An institution like this, penetrating by its branches every part of the Union, acting by command and in phalanx, may, in a critical moment, upset the government. I deem no government safe which is under the vassalage of any self-constituted authorities, or any other authority than that of the nation, or its regular functionaries. What an obstruction could not this bank of the United States, with all its branch banks, be in time of war! It might dictate to us the peace we should accept, or withdraw its aids. Ought we then to give further growth to an institution so powerful, so hostile?" --Thomas Jefferson to Albert Gallatin, 1803. ME 10:437

Meeting the Banking Problem

"The monopoly of a single bank is certainly an evil. The multiplication of them was intended to cure it; but it multiplied an influence of the same character with the first, and completed the supplanting the precious metals by a paper circulation. Between such parties the less we meddle the better." --Thomas Jefferson to Albert Gallatin, 1802. ME 10:323

"In order to be able to meet a general combination of the banks against us in a critical emergency, could we not make a beginning towards an independent use of our own money, towards holding our own bank in all the deposits where it is received, and letting the treasurer give his draft or note for payment at any particular place, which, in a well-conducted government, ought to have as much credit as any private draft or bank note or bill, and would give us the same facilities which we derive from the banks?" --Thomas Jefferson to Albert Gallatin, 1803. ME 10:439

"If treasury bills are emitted on a tax appropriated for their redemption in fifteen years, and (to insure preference in the first moments of competition) bearing an interest of six per cent, there is no one who would not take them in preference to the bank paper now afloat, on a principle of patriotism as well as interest; and they would be withdrawn from circulation into private hoards to a considerable amount. Their credit once established, others might be emitted, bottomed also on a tax, but not bearing interest; and if ever their credit faltered, open public loans, on which these bills alone should be received as specie. These, operating as a sinking fund, would reduce the quantity in circulation, so as to maintain that in an equilibrium with specie. It is not easy to estimate the obstacles which, in the beginning, we should encounter in ousting the banks from their possession of the circulation; but a steady and judicious alternation of emissions and loans would reduce them in time." --Thomas Jefferson to John W. Eppes, 1813. ME 13:275

"Bank paper must be suppressed, and the circulating medium must be restored to the nation to whom it belongs. It is the only fund on which they can rely for loans; it is the only resource which can never fail them, and it is an abundant one for every necessary purpose. Treasury bills, bottomed on taxes, bearing or not bearing interest, as may be found necessary, thrown into circulation will take the place of so much gold and silver, which last, when crowded, will find an efflux into other countries, and thus keep the quantum of medium at its salutary level. Let banks continue if they please, but let them discount for cash alone or for treasury notes." --Thomas Jefferson to John W. Eppes, 1813. ME 13:361

"Put down the banks, and if this country could not be carried through the longest war against her most powerful enemy without ever knowing the want of a dollar, without dependence on the traitorous classes of her citizens, without bearing hard on the resources of the people, or loading the public with an indefinite burden of debt, I know nothing of my countrymen. Not by any novel project, not by an charlatanerie, but by ordinary and well-experienced means; by the total prohibition of all private paper at all times, by reasonable taxes in war aided by the necessary emissions of public paper of circulating size, this bottomed on special taxes, redeemable annually as this special tax comes in, and finally within a moderate period." --Thomas Jefferson to Albert Gallatin, 1815. ME 14:356

"Our people... will give you all the necessaries of war they produce, if, instead of the bankrupt trash they now are obliged to receive for want of any other, you will give them a paper promise funded on a specific pledge, and of a size for common circulation." --Thomas Jefferson to James Monroe, 1815. ME 14:228

"Instead of funding issues of paper on the hypothecation of specific redeeming taxes (the only method of anticipating, in a time of war, the resources of times of peace, tested by the experience of nations), we are trusting to tricks of jugglers on the cards, to the illusions of banking schemes for the resources of the war, and for the cure of colic to inflations of more wind." --Thomas Jefferson to M. Correa de Serra, 1814. ME 14:224

"It is literally true that the toleration of banks of paper discount costs the United States one-half their war taxes; or, in other words, doubles the expenses of every war. Now think but for a moment, what a change of condition that would be, which should save half our war expenses, require but half the taxes, and enthral us in debt but half the time." --Thomas Jefferson to John W. Eppes, 1813. ME 13:364

"The State legislatures should be immediately urged to relinquish the right of establishing banks of discount. Most of them will comply, on patriotic principles, under the convictions of the moment; and the non-complying may be crowded into concurrence by legitimate devices." --Thomas Jefferson to Thomas Cooper, 1814. ME 14:190

The Issuance of Treasury Notes

"Necessity, as well as patriotism and confidence, will make us all eager to receive treasury notes, if founded on specific taxes. Congress may borrow of the public, and without interest, all the money they may want, to the amount of a competent circulation, by merely issuing their own promissory notes, of proper denominations for the larger purposes of circulation, but not for the small. Leave that door open for the entrance of metallic money." --Thomas Jefferson to Thomas Cooper, 1814. ME 14:189

"Treasury notes of small as well as high denomination, bottomed on a tax which would redeem them in ten years, would place at our disposal the whole circulating medium of the United States... The public... ought never more to permit its being filched from them by private speculators and disorganizers of the circulation." --Thomas Jefferson to William H. Crawford, 1815. ME 14:242

"There can be no safer deposit on earth than the Treasury of the United States." --Thomas Jefferson to Lafayette, 1825. ME 19:281

"The government of the United States have no idea of paying their debt in a depreciated medium, and... in the final liquidation of the payments which shall have been made, due regard will be had to an equitable allowance for the circumstance of depreciation." --Thomas Jefferson to Jean Baptiste de Ternant, 1791. ME 8:247

Commercial Banking

"The art and mystery of banks... is established on the principle that 'private debts are a public blessing.' That the evidences of those private debts, called bank notes, become active capital, and aliment the whole commerce, manufactures, and agriculture of the United States. Here are a set of people, for instance, who have bestowed on us the great blessing of running in our debt about two hundred millions of dollars, without our knowing who they are, where they are, or what property they have to pay this debt when called on; nay, who have made us so sensible of the blessings of letting them run in our debt, that we have exempted them by law from the repayment of these debts beyond a give proportion (generally estimated at one-third). And to fill up the measure of blessing, instead of paying, they receive an interest on what they owe from those to whom they owe; for all the notes, or evidences of what they owe, which we see in circulation, have been lent to somebody on an interest which is levied again on us through the medium of commerce. And they are so ready still to deal out their liberalities to us, that they are now willing to let themselves run in our debt ninety millions more, on our paying them the same premium of six or eight per cent interest, and on the same legal exemption from the repayment of more than thirty millions of the debt, when it shall be called for." --Thomas Jefferson to John W. Eppes, 1813. ME 13:420

"The bank mania... is raising up a moneyed aristocracy in our country which has already set the government at defiance, and although forced at length to yield a little on this first essay of their strength, their principles are unyielded and unyielding. These have taken deep root in the hearts of that class from which our legislators are drawn, and the sop to Cerberus from fable has become history. Their principles lay hold of the good, their pelf of the bad, and thus those whom the Constitution had placed as guards to its portals, are sophisticated or suborned from their duties." --Thomas Jefferson to Josephus B. Stuart, 1817. ME 15:112

"Put down all banks, admit none but a metallic circulation that will take its proper level with the like circulation in other countries, and then our manufacturers may work in fair competition with those of other countries, and the import duties which the government may lay for the purposes of revenue will so far place them above equal competition." --Thomas Jefferson to Charles Pinckney, 1820. ME 15:280

"But it will be asked, are we to have no banks? Are merchants and others to be deprived of the resource of short accommodations, found so convenient? I answer, let us have banks; but let them be such as are alone to be found in any country on earth, except Great Britain. There is not a bank of discount on the continent of Europe (at least there was not one when I was there) which offers anything but cash in exchange for discounted bills." --Thomas Jefferson to John W. Eppes, 1813. ME 13:277

"No one has a natural right to the trade of a money lender, but he who has the money to lend. Let those then among us who have a moneyed capital and who prefer employing it in loans rather than otherwise, set up banks and give cash or national bills for the notes they discount. Perhaps, to encourage them, a larger interest than is legal in the other cases might be allowed them, on the condition of their lending for short periods only." --Thomas Jefferson to John W. Eppes, 1813. ME 13:277

"If the debt which the banking companies owe be a blessing to anybody, it is to themselves alone, who are realizing a solid interest of eight or ten per cent on it. As to the public, these companies have banished all our gold and silver medium, which, before their institution, we had without interest, which never could have perished in our hands, and would have been our salvation now in the hour of war; instead of which they have given us two hundred million of froth and bubble, on which we are to pay them heavy interest, until it shall vanish into air... We are warranted, then, in affirming that this parody on the principle of 'a public debt being a public blessing,' and its mutation into the blessing of private instead of public debts, is as ridiculous as the original principle itself. In both cases, the truth is, that capital may be produced by industry, and accumulated by economy; but jugglers only will propose to create it by legerdemain tricks with paper." --Thomas Jefferson to John W. Eppes, 1813. ME 13:423

"Everything predicted by the enemies of banks, in the beginning, is now coming to pass. We are to be ruined now by the deluge of bank paper. It is cruel that such revolutions in private fortunes should be at the mercy of avaricious adventurers, who, instead of employing their capital, if any they have, in manufactures, commerce, and other useful pursuits, make it an instrument to burden all the interchanges of property with their swindling profits, profits which are the price of no useful industry of theirs." --Thomas Jefferson to Thomas Cooper, 1814. ME 14:61

"Certainly no nation ever before abandoned to the avarice and jugglings of private individuals to regulate according to their own interests, the quantum of circulating medium for the nation -- to inflate, by deluges of paper, the nominal prices of property, and then to buy up that property at 1s. in the pound, having first withdrawn the floating medium which might endanger a competition in purchase. Yet this is what has been done, and will be done, unless stayed by the protecting hand of the legislature. The evil has been produced by the error of their sanction of this ruinous machinery of banks; and justice, wisdom, duty, all require that they should interpose and arrest it before the schemes of plunder and spoilation desolate the country." --Thomas Jefferson to William C. Rives, 1819. ME 15:232

"It is said that our paper is as good as silver, because we may have silver for it at the bank where it issues. This is not true. One, two, or three persons might have it; but a general application would soon exhaust their vaults, and leave a ruinous proportion of their paper in its intrinsic worthless form." --Thomas Jefferson to John W. Eppes, 1813. ME 13:426

"To the existence of banks of discount for cash... there can be no objection, because there can be no danger of abuse, and they are a convenience both to merchants and individuals. I think they should even be encouraged, by allowing them a larger than legal interest on short discounts, and tapering thence, in proportion as the term of discount is lengthened, down to legal interest on those of a year or more. Even banks of deposit, where cash should be lodged, and a paper acknowledgment taken out as its representative, entitled to a return of the cash on demand, would be convenient for remittances, travelling persons, etc. But, liable as its cash would be to be pilfered and robbed, and its paper to be fraudulently re-issued, or issued without deposit, it would require skilful and strict regulation." --Thomas Jefferson to John W. Eppes, 1813. ME 13:431

"I am an enemy to all banks discounting bills or notes for anything but coin." --Thomas Jefferson to Thomas Cooper, 1814. ME 14:61

Regulating Banking Institutions

"The principle of rotation... in the body of [bank] directors... breaks in upon the espirit de corps so apt to prevail in permanent bodies; it gives a chance for the public eye penetrating into the sanctuary of those proceedings and practices, which the avarice of the directors may introduce for their personal emolument, and which the resentments of excluded directors, or the honesty of those duly admitted, might betray to the public; and it gives an opportunity at the end of the year, or at other periods, of correcting a choice, which on trial, proves to have been unfortunate." --Thomas Jefferson to Albert Gallatin, 1803. ME 10:437

ME, FE = Memorial Edition, Ford Edition. See Sources.

Gulf Coast residents brace for potential calamity

Officials anticipate that oil floating toward Louisiana is likely to reach land sometime Friday.

(Update 9:13 p.m.) EPA administrator Lisa Jackson said Friday there is a chance that workers will be able to stop the flow of oil into the Gulf of Mexico, but warned that the EPA is preparing for the worst.

"There is still the opportunity and the possibility that they would be able to shut it down," Jackson told CNN Chief National Correspondent John King. "Of course as responders we have to look at the worst case, and keep planning for that."

Jackson's comments come as the federal government is ramping up the pressure on BP to do more to stop well leaks gushing thousands of barrels of oil into waters off Louisiana. The government is also pushing BP to beef up its response as a giant oil slick approaches the Louisiana coast.

In the interview on CNN's John King USA that aired Friday, Jackson responded to questions about the level of trust the Obama administration had in BP immediately following the April 20 oil rig explosion that also resulted in 11 presumed deaths.

"I don't think it was ever a question of trust in the company, I think it was a question of responding to the set of facts as we came to understand them," Jackson said. "The situation has certainly worsened. It began as a human tragedy, it is now what I think is an environmental challenge of the highest order."

(Update 7:42 p.m.) Sen. David Vitter announced the closure of several oyster beds in eastern Louisiana, but kept the western parts open, CNN affiliate WDSU reports.

The director for Rouses Supermarket, which has stores across the Gulf Coast, including southern Louisiana and Mississippi, said all seafood on the shelves is safe, according to WDSU.

"Everything that is coming into the markets and restaurants is coming from the west part of the Mississippi River," Seafood Director James Bruel told WDSU.

"Everything we get is traceable. Anything that comes through our back doors has an invoice of where it came from. Everything right now is 100 percent safe to eat," he said.

(Update 6:48 p.m.) U.S. Secretary of Defense Robert Gates has approved Louisiana Gov. Bobby Jindal's request to mobilize 6,000 National Guard troops in response to the massive oil spill expanding in the Gulf of Mexico, according to a Defense Department spokesman.

(Update 5:25 p.m.) The federal government is heightening the pressure on BP, pushing the oil company to do more to stop well leaks gushing thousands of barrels of oil into the Gulf of Mexico and to beef up its response to the potential environmental impact on the coast.

"We'll continue to urge BP to leverage additional assets," U.S. Secretary of Homeland Security Janet Napolitano told reporters Friday as the massive oil slick approached the Louisiana coast. "It is time for BP to supplement their current mobilization as the slick of oil moves toward shore."

BP, which owns the ruptured well, said officials expect oil to reach land sometime Friday, with Venice and Port Fourchon the first places likely to be affected.

Doug Suttles, chief operating officer of BP, said the company has had only three priorities since the April 20 rig explosion that led to the oil spill: stop the flow of oil, minimize its impact and keep the public informed.

"We've so far mounted the largest response effort ever done in the world," Suttles said at the same news conference. "We've utilized every technology available, we've applied every resource request. ... We welcome every new idea and every offer of support."

(Update 3:47 p.m.) U.S. Interior Secretary Ken Salazar has ordered inspections of all deep-water operations in Gulf of Mexico.

The Department of Interior will also establish a new Outer Continental Shelf Safety Board to conduct a review of offshore drilling practices and safety issues and tighten the oversight of equipment testing, he said.

(Update 3:41 p.m.) The American Bird Conservancy, the nation's leading bird conservation organization, released a list of key bird sites they say are most immediately threatened by the ongoing Deepwater Horizon oil spill in the Gulf.

They are: the Gulf Coast Least Tern Colony; the Lower Pascagoula River – including the Pascagoula River Coastal Preserve; the Gulf Islands National Seashore; Breton National Wildlife Refuge – including the Chandeleur Islands; Dauphin Island; Fort Morgan Historical Park; Bon Secour National Wildlife Refuge; Eglin Air Force Base; Delta National Wildlife Refuge; and Baptiste Collette Bird Islands.

(Update 2:20 p.m.) A roundup of some of the latest developments:

– More than 217,000 feet of boom, or barrier, is assigned to contain the spill. An additional 305,760 feet is available.

– 139,459 gallons of dispersant have been deployed and an additional 51,000 gallons are available.

– Gov. Bob Riley of Alabama met with members of his Cabinet to give them the latest information on the oil slick in the gulf and to tell them to reach out to citizens and businesses that could be affected.

– Biloxi Mayor A.J. Holloway discussed oil-spill preparations with key department heads and will ask the City Council to declare a state of emergency.

– Two Air Force Reserve C-130s from 910th Airlift Wing out of Youngstown Ohio have arrived at Stennis Airfield in Hancock County Mississippi to help.

– BP has set up a "Vessel of Opportunity" program for vessel owners to offer their services to assist with response efforts.

– To supplement its Houma, Louisiana incident command post, BP is now establishing a similar onshore incident command post in Mobile, Alabama to oversee the onshore response in Mississippi, Alabama and Florida.

(Update 2:12 p.m.) A number of organizations are recruiting volunteers to help with the effects of the oil spill. Here’s how you can help.

(Update 1:31 p.m.) Attorney General Eric Holder is sending a team of Justice Department attorneys to the Gulf Coast to meet with federal prosecutors and response teams, the Justice Department said in a statement released Friday.

"The Justice Department stands ready to make available every resource at our disposal to vigorously enforce the laws that protect the people who work and reside near the Gulf, the wildlife, the environment and the American taxpayers," the statement said.

(Update 1:10 p.m.) The oil spill could threaten hundreds of species of wildlife, some in their prime breeding season, environmental organizations said.

"The terrible loss of 11 workers (unaccounted for after the rig explosion) may be just the beginning of this tragedy as the oil slick spreads toward sensitive coastal areas vital to birds and marine life and to all the communities that depend on them," said Melanie Driscoll, director of bird conservation for the Louisiana Coastal Initiative, in a statement.

(Update 12:57 p.m.) Track the oil spill with this map and tell us how it is affecting you.

(Update 11:58 a.m.) President Barack Obama is ordering Interior Secretary Ken Salazar "to conduct a thorough review" of the explosion of the Deepwater Horizon rig and subsequent oil spill.

He said domestic oil production continues to be "an important part of our overall strategy" but said "it must be done responsibly for the safety of our workers and our environment."

(Update 11:54 a.m) Florida Gov. Charlie Crist has declared a state of emergency in the Panhandle coastal counties of Escambia, Santa Rosa, Okaloosa, Walton, Bay, and Gulf.

Officials anticipate that oil floating toward Louisiana is likely to reach land sometime Friday, with Venice and Port Fourchon, being the first places affected, said BP spokesman Mike Abendhoff.

Officials monitoring the Gulf oil spill have not yet confirmed reports that oil reached land in the morning hours. Full story

A roundup of other developments:

– Louisiana's Gov. Bobby Jindal has declared a state of emergency and asked the Defense Department to approve funding for the deployment of 6,000 National Guard troops.

– Along the Gulf coast business owners are concerned about the potential impact on the bottom line. The oil slick coming ashore "would put us out of business," fisherman Rene Cross in Venice, Louisiana, told CNN affiliate WDSU.

– Dave Rauschkolb who owns three restaurants on the Florida Panhandle says: "We are a seasonal economy. If I don't have my summer business, I am out of business." Full story

Here are highlights from the latest briefing Friday by the Joint Information Center, which is coordinating response to the oil spill.

– Nearly 2,000 personnel are involved in the response

– More than 217,000 feet of boom assigned to contain the spill. An additional 305,760 feet is available.

– To date, the oil spill response team has recovered 20,313 barrels (853,146 gallons) of an oil-water mix.

– 75 response vessels are being used including skimmers, tugs, barges and recovery vessels.

– Five staging areas are in place and ready to protect sensitive shorelines: Mississippi; Pensacola, Florida; Venice, Louisiana; Pascagoula, Mississippi; and Theodore, Alabama. A sixth staging area is being set up in Port Sulphur, Louisiana.

– Winds on Friday are from the southeast at 20 knots Seas are 5- to 7- feet, with slight chance of afternoon showers.