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The Bailout Game Applied To All Major Banks, Automobile Companies And Even Banks Of Other Countries

PROTECTORS OF THE

PUBLIC

The Bailout game as applied in real life to Penn Central, Lockheed, New York City, Chrysler, Commonwealth Bank of Detroit, First Pennsylvania Bank, Continental Illinois; and, beginning in 2008, literally all major banks, AIG, automobile companies, and even banks of other nations.

In the previous blogs, we offered the whimsical analogy of a sporting event to clarify the maneuvers of monetary and political scientists to bail out those commercial banks that comprise the Federal-Reserve cartel. The danger in such an approach is that it could leave the impression the topic is frivolous. So, let us abandon the analogy and turn to reality. Now that we have studied the rules of the game, it is time to check the scorecard of the actual play itself, and it will become obvious that this is no trivial matter. A good place to start is with the rescue of a consortium of banks that were holding the endangered loans of Penn Central Railroad.

PENN CENTRAL

Penn Central was the nation's largest railroad with 96,000 employees and a weekly payroll of $20 million. In 1970, it became the nation's biggest bankruptcy. It was in debt to just about every bank willing to lend it money, including Chase Manhattan, Morgan Guaranty, Manufacturers Hanover, First National City, Chemical Bank, and Continental Illinois. Officers of those banks had been appointed to Penn Central's board of directors as a condition for obtaining funds, and they had acquired control over the railroad's management. The banks also held large blocks of Penn Central stock in their trust departments. Bankers sitting on the board of directors were privy to information, long before the public received it, that would affect the market price of Penn Central's stock. Chris Welles, in The Last Days of the Club, describes what happened:

On May 21, a month before the railroad went under, David Bevan, Penn Central's chief financial officer, privately informed representatives of the company's banking creditors that its financial condition was so weak it would have to postpone an attempt to raise $100 million in desperately needed operating funds through a bond issue. Instead, said Bevan, the railroad would seek some kind of government loan guarantee. In other words, unless the railroad could manage a federal bailout, it would have to close down. The following day, Chase Manhattan's trust department sold 134,300 shares of its Penn Central holdings. Before May 28, when the public was informed of the postponement of the bond issue, Chase sold another 128,000 shares. David Rockefeller, the bank's chairman, vigorously denied Chase had acted on the basis of inside information. 1

Virtually all of the management decisions that led to Penn Central's demise were made by or with the concurrence of its board of directors, which is to say, by the banks that provided the loans. The banks were not in trouble because of Penn Central's poor management, they were Penn Central's poor management. An investigation conducted in 1972 by Congressman Wright Patman, Chairman of the House Banking and Currency Committee, revealed the following: Banks provided large loans for disastrous expansion projects and then lent additional millions so the railroad could pay dividends to stockholders. This created the false appearance of prosperity and inflated the price of its stock long enough to dump it on the unsuspecting public. Thus, the banker-managers engineered a three-way bonanza for themselves. They (1) received dividends on worthless stock, (2) earned interest on loans that funded those dividends, and (3) were able to unload 1.8 million shares of stock-after dividends, of course-at unrealistically high

2

pnces.

•The company's top executives disposed of their stock in

this fashion at a personal gain of more than $1 million.3

THE PUBLIC BE DAMNED

In his letter of transmittal accompanying the staff report, Congressman Patman provided this summary:

  1. Chris Welles, The Last Days of the Club (New York: E.P. Dutton, 1975), pp. 398-99.
  2. "Penn Central," 1971 Congressional Quarterly Almanac (Washington, D.C.: Congressional Quarterly, 1971), p. 838.
  3. "Penn Central: Bankruptcy Filed After Loan Bill Fails," 1970 Congressional Quarterly Almanac (Washington, D.C.: Congressional Quarterly, 1970), p. 811.

It was as though everyone was a part of a close knit club in which Penn Central and its officers could obtain, with very few questions asked, loans for almost everything they desired both for the company and for their own personal interests, where the bankers sitting on the Board asked practically no questions as to what was going on, simply allowing management to destroy the company, to invest in questionable activities, and to engage in some cases in illegal activities. These banks in return obtained most of the company's lucrative banking business. The attitude of everyone seemed to be, while the game was going on, that all these dealings were of benefit to every member of the club, and the railroad and the public be damned.1

The company's cash crisis came to a head over a weekend and, in order to avoid having the corporation forced to file for bankruptcy on Monday morning, Arthur Burns, the Fed Chairman, called the homes of the heads of the Federal Reserve banks around the country and told them to get the word out immediately that the System was anxious to help. On Sunday, William Treiber, who was the first vice-president of the New York branch of the Fed, contacted the chief executives of the ten largest banks in New York and told them the Fed's Discount Window would be wide open the next morning. Translated, that means the Fed was prepared to create fresh money and lend it to commercial banks so they, in turn, could multiply and re-lend it to Penn Central . 2 The interest rates for these funds were low enough to compensate for the risk. Speaking of what transpired on the following Monday, Burns boasted: "I kept the Board in session practically all day to change regulation Q so that money could flow into CDs at the banks." Looking back at the event, Chris Welles approvingly describes it as "what is by common consent the Fed's finest hour." 3

Finest hour or not, the banks were not interested unless they could be assured that taxpayer would co-sign the loans and guarantee payment, so the action inevitably shifted back to Congress. Penn Central's executives, bankers, and union representatives came in droves to explain how the railroad's existence was in the best interest of the public, of the working man, of the economic system itself. The Navy Department spoke of protecting

  1. Quoted by Welles, pp. 404-05.
  2. For an explanation of the multiplier effect, see chapter eight, The Mandrake Mechanism.
  3. Welles, pp. 407-08.

the nation's "defense resources." Congress, of course, could not callously ignore these pressing needs. It ordered a retroactive, 13 1/2 per cent pay raise for all union employees. After having added that burden to the railroad's cash drain and putting it even deeper into the hole, it passed the Emergency Rail Services Act of 1970 authorizing $125 million in federal loan guarantees. 1

None of this solved the basic problem, nor was it intended to. Almost everyone knew that, eventually, the railroad would be "nationalized," which is a euphemism for becoming a black hole into which tax dollars disappear forever. This came to pass with the creation of AMTRAK in 1971 and CONRAIL in 1973. AMTRAK took over the passenger services of Penn Central, and CONRAIL assumed operation of freight services. CONRAIL is a private corporation. When it was created, 85% of its stock was held by the government. The rest was held by employees. Fortunately, the government's stock was sold in a public offering in 1987.

AMTRAK continues under political control and operates at a loss. By 1998, Congress had given it $21 billion. By 2002, it was consuming more than $200 million of taxes per year. By 2005, it requested an increase in subsidy to $1.8 billion per year. Between 1990 and 2009, it had lost another $23 billion. CONRAIL, on the other hand, since it was returned to the private sector, has been running at a profit-paying taxes instead of consuming them.

LOCKHEED

In 1970, the Lockheed Corporation, the nation's largest defense contractor, was facing bankruptcy. The Bank of America and several smaller banks had lent $400 million to the Goliath and did not want to lose the bountiful income that flowed from that, so they joined forces with Lockheed's management, stockholders, and labor unions, and descended on Washington. Sympathetic politicians were told that, if Lockheed were allowed to fail, 31,000 jobs would be lost, hundreds of sub contractors would go down, thousands of suppliers would be forced into bankruptcy, and national security would be seriously jeopardized. What the company needed was to borrow more money and lots of it. But, because of its current financial predicament, no one was willing to lend.

1. "Congress Clears Railroad Aid Bill, Acts on Strike," 1970 Congressional Almanac (Washington, D.C.: 1970), pp. 810-16.

A bailout plan was quickly engineered by Treasury Secretary John B. Connally, that guaranteed payment on an additional $250 million in loans-an amount which would put Lockheed 60% deeper into the debt hole than it had been before. But that made no difference now. Once the taxpayer had been made a co-signer to the account, banks had no qualms about advancing the funds.

The government now had a powerful motivation to make sure Lockheed would be awarded as many defense contracts as possible and that they would be as profitable as possible. This was an indirect method of paying off the banks with tax dollars, but doing so in such a way as not to arouse public indignation. Other defense contractors which had operated more efficiently would lose business, but that could not be proven. Furthermore, a slight increase in defenses expenditures would hardly be noticed.

NEW YORK CITY

In 1975, New York had reached the end of its credit rope and was unable to make payroll. The cause was not mysterious. It had become a mini-welfare state, and success in city politics was achieved by lavish promises of benefits and subsidies for "the poor." Whereas the average large city employed thirty-one people per thousand residents, New York had forty nine, and their salaries outstripped those in private industry. While an X-ray technician in a private hospital earned $187 per week, a porter working for the city earned $203. Bank tellers earned $154 per week, but change makers on the city subway received $212. Municipal fringe benefits were twice as generous as those in private industry. On top of this were free college educations, subsidized housing, free medical care, and endless varieties of welfare programs.

City taxes were greatly inadequate to cover the cost of this utopia. There now were only three options: increase city taxes, reduce expenses, or go into debt. The choice was never in serious doubt. By 1975, New York had floated so many bonds it had saturated the market and could find no more lenders. Two billion dollars of this debt was held by a small group of banks, dominated by Chase Manhattan and Citicorp.

When the payment of interest on these loans finally came to a halt, it was time to play the bailout game. The bankers and city fathers traveled down the coast to Washington and put their case before Congress. The largest city in the world could not be allowed

to go bankrupt, they said. Essential services would be halted and millions of people would be without garbage removal, without transportation, even without police protection. Starvation, disease, and crime would run rampant through the city. It would be a disgrace to America. David Rockefeller at Chase Manhattan persuaded his friend Helmut Schmidt, Chancellor of West Germany, to make a statement to the media that the disastrous situation in New York could trigger an international financial crisis.

Congress did not want to bring anarchy to New York, nor to disgrace America, nor to trigger a world-wide financial panic. So, in December of 1975, it passed a bill authorizing the Treasury to make direct loans to the city up to $2.3 billion, an amount which would more than double the size of its current debt to the banks. Interest payments on the old debt resumed immediately, which is the object of the game. New York City has continued to be a welfare utopia, and it is unlikely that it will ever get out of debt.

CHRYSLER

By 1978, the Chrysler Corporation was on the verge of bankruptcy. It had rolled over its debt many times, and that phase of the game was nearing an end. It was not interested in borrowing just enough to pay interest on its existing loans. To make the game worth playing, it wanted over a billion dollars in new capital.

Managers, bankers, and union leaders found common cause in Washington. If one of the largest corporations in America was allowed to fold, think of the hardship to thousands of employees and their families; consider the damage to the economy as shock waves of unemployment move across the country; tremble at the thought of lost competition in the automobile market if there were only two major brands from which to choose instead of three.

Could anyone blame Congress for not wanting to plunge innocent families into poverty nor to upend the national economy nor to deny anyone their Constitutional right to freedom-of-choice? So a bill was passed directing the Treasury to guarantee up to $1.5 billion in new loans to Chrysler. The banks agreed to write down $600 million of their old loans and to exchange an additional $700 million for preferred stock. Both of these moves were advertised as evidence the banks were taking a terrible loss but were willing to yield in order to save the nation. It should be noted, however, that the value of the stock which was exchanged for previously uncol-

lectable debt rose drastically after the settlement was announced to the public. Furthermore, not only did interest payments resume on the balance of the old loans, but the banks now replaced the written down portion with fresh loans, and these were far superior in quality because they were fully guaranteed by the taxpayers.

COMMONWEALTH BANK OF DETROIT

The next bailout occurred in 1972 involving the $1.5 billion Bank of the Commonwealth of Detroit. Commonwealth had funded most of its phenomenal growth through loans from another bank, Chase Manhattan in New York. When Commonwealth went belly up, largely due to securities speculation and self dealing on the part of its management, Chase seized 39% of its common stock and actually took control of the bank in an attempt to find a way to get its money back. FDIC director Sprague describes the inevitable sequel:

Chase officers ... suggested that Commonwealth was a public interest problem that the government agencies should resolve. That unsubtle hint was the way Chase phrased its request for a bailout by the government.... Their proposal would come down to bailing out the shareholders, the largest of which was Chase. 1

The bankers argued that Commonwealth must not be allowed to fold because it provided "essential" banking services to the community. That was justified on two counts: (1) it served many minority neighborhoods and, (2) there were not enough other banks in the city to absorb its operation without creating an unhealthy concentration of banking power in the hands of a few.

The FDIC did not want to be accused of being indifferent to the needs of minorities or of destroying free-enterprise competition. So, on January 17, 1972, Commonwealth was bailed out with a $60 million loan plus numerous federal guarantees. Chase absorbed some losses, but those were minor compared to what would have been lost without FDIC intervention.

Since continuation of the bank supposedly was necessary to prevent concentration of financial power, FDIC engineered its sale to the First Arabian Corporation, a Luxembourg firm funded by Saudi princes. The bank continued to flounder and, in 1983, what was left of it was resold to the former Detroit Bank & Trust

1. Sprague, p. 68.

Company, now called Comerica. Thus the dreaded concentration of local power was realized after all, but not until Chase was able to walk away from the deal with most of its losses covered.

FIRST PENNSYLVANIA BANK

The 1980 bailout of First Pennsylvania Bank of Philadelphia was next. With assets in excess of $9 billion, it was six times the size of Commonwealth. It also was the nation's oldest bank, dating back to the Bank of North America which was created by the Continental Congress in 1781.

The bank had experienced rapid growth and handsome profits due to the aggressive leadership of its CEO, John Bunting, formerly an economist with the Federal Reserve. He was the epitome of the era's go-go bankers. He vastly increased earnings by reducing safety margins, making risky loans, and speculating in the bond market. As long as the economy expanded, these gambles were profitable. When the bond market turned sour, however, the bank plunged into a negative cash flow. By 1979, First Penn was forced to sell off several of its profitable subsidiaries to obtain operating funds and it was carrying $328 million in bad loans. That was $16 million more than the total invesment from stockholders. The time had arrived to hit up taxpayer for the loss.

The bankers went to Washington to present their case: Not only was the bailout of First Penn "essential" for the continuation of banking services in Philadelphia, it also was critical to the preservation of world economic stability. The bank was so large, they said, if it were allowed to fall, it would act as the first domino leading to an international financial crisis. Sprague recalls:

There was strong pressure from the beginning not to let the bank fail. Besides hearing from the bank itself, the other large banks, and the comptroller, we heard frequently from the Fed. I recall at one session, Fred Schultz, the Fed deputy chairman, argued in an ever rising voice, that there were no alternatives-we had to save the bank. He said, "Quit wasting time talking about anything else!" 1

The directors of the FDIC did not want to cross swords with the Federal Reserve System, and they most assuredly did not want to be blamed for tumbling the entire world economic system by allowing the first domino to fall. So, in due course, a bailout

1. Sprague, pp. 88-89.

package was put together which featured a $325 million loan from FDIC, interest free for the first year and at a subsidized rate thereafter; about half the market rate.

CONTINENTAL ILLINOIS

In the early 1980s, Chicago's Continental Illinois was the nation's seventh largest bank. With assets of $42 billion and with 12,000 employees, its loan portfolio had undergone spectacular growth. Its net income on loans had doubled in just five years and by 1981 had rocketed to an annual figure of $254 million. It had become the darling of the market analysts and had been named by Dun's Review as one of the five best managed companies in the country. These opinion leaders failed to perceive that the spectacular performance was due, not to expertise in banking or investment, but to financing shaky business enterprises and foreign governments that could not obtain loans elsewhere.

The gaudy fabric began to unravel during the Fourth of July weekend of 1982 with the failure of the Penn Square Bank in Oklahoma. That was the notorious shopping-center bank that had booked a billion dollars in oil and gas loans and resold them to Continental just before the collapse of the energy market. Other loans also began to sour at the same time. The Mexican and Argentine debt crisis was coming to a head, and a series of major corporate bankruptcies were receiving almost daily headlines. Continental had placed large chunks of its easy money with all of them. When these events caused the bank's credit rating to drop, cautious depositors began to withdraw their funds, and new funding dwindled to a trickle. The bank became desperate for cash to meet its daily expenses. In an effort to attract new money, it began to offer unrealistically high rates of interest on its CDs. Loan officers were sent to scour the European and Japanese markets and to conduct a public relations campaign aimed at convincing market managers that the bank was calm and steady. David Taylor, the bank's chairman at that time, said: "We had the Continental Illinois Reassurance Brigade and we fanned out all over the world."

By the end of 1983, the bank's burden of non-performing loans had reached unbearable proportions and was growing at an alarming rate. By 1984, it was $2.7 billion. That same year, the bank

1. Quoted by Chemow, p. 657.

sold off its profitable credit-card operation to make up for the loss of income and to pay stockholders their expected quarterly dividend. The internal structure was near collapse, but the external facade continued to look like business as usual.

The first crack in the facade appeared at 11:39 A.M. On Tuesday, May 8, Reuters, the British news agency, moved a story on its wire service stating that banks in the Netherlands, West Germany, Switzerland, and Japan had increased their interest rate on loans to Continental and that some of them had begun to withdraw their funds. The story also quoted the bank's official statement that rumors of pending bankruptcy were "totally preposterous."

WORLD'S FIRST ELECTRONIC BANK RUN

As the sun rose the following morning, foreign investors began to withdraw their deposits. A billion dollars in Asian money moved out the first day. The next day-a little more than twenty-four hours following Continental's assurance that bankruptcy was totally preposterous-its long-standing customer, the Board of Trade Clearing Corporation, withdrew $50 million. Word of the defection spread through the financial wire services, and the panic was on. It became the world's first global electronic bank run.

By Friday, the bank had been forced to borrow $3.6 billion from the Federal Reserve in order to cover escaping deposits. A consortium of sixteen banks, led by Morgan Guaranty, offered a generous thirty-day line of credit, but all of this was far short of the need. Within seven more days, the outflow surged to over $6 billion.

In the beginning, almost all of this action was at the institutional level: other banks and professionally managed funds which closely monitor every minuscule detail of the financial markets. The general public had no inkling of the catastrophe, even as it unfolded. Chernow says: "The Continental run was like some modernistic fantasy: there were no throngs of hysterical depositors, just cool nightmare flashes on computer screens." Sprague writes: "Inside the bank, all was calm, the teller lines moved as always, and bank officials recall no visible sign of trouble-except in the wire room. Here the employees knew what was happening as withdrawal order after order moved on the wire, bleeding Continental to death. Some cried."2

Chernow, p. 658.

Sprague, p. 153.

From the beginning, there was only one serious question: how to justify fleecing the taxpayer to save the bank. The rules of the game require that the scam must be described as a heroic effort to protect the public. In the case of Continental, the sheer size of the numbers made the ploy relatively easy. There were so many depositors involved, so many billions at risk, so many other banks interlocked, it could be claimed that the economic fabric of the entire nation-of the world itself-was at stake. And who could say that it was not so. Sprague argues the case in familiar terms:

An early morning meeting was scheduled for Tuesday, May 15, at the Fed.... We talked over the alternatives. They were few-none really.... [Treasury Secretary] Regan and [Fed Chairman] Volcker raised the familiar concern about a national banking collapse, that is, a chain reaction if Continental should fail. Volcker was worried about an international crisis. We all were acutely aware that never before had a bank even remotely approaching Continental's size closed. No one knew what might happen in the nation and in the world. It was no time to find out just for the purpose of intellectual curiosity.1

This was the golden moment for which the Federal Reserve and the FDIC were created. Without government intervention, Continental would have collapsed, its stockholders would have been wiped out, depositors would have been badly damaged, and the financial world would have learned that banks, not only have to talk about prudent management, they actually have to do it. Future banking practices would have been severely altered, and the long-term economic benefit to the nation (and world) would have been enormous. But with government intervention, the discipline of a free market is suspended, and the cost of failure and fraud is passed to the taxpayers. Depositors continue to live in a dream world of false security, and banks can operate recklessly and fraudulently with the knowledge that their political partners will come to their rescue when they get into trouble.

THE FINAL BAILOUT PACKAGE

At the May 15 meeting, Treasury Secretary Regan spoke eloquently about the value of a free market and the necessity of having the banks mount their own rescue plan, at least for a part of the money. To work out that plan, a summit meeting was arranged the next morning among the chairmen of the seven largest banks:

1. Ibid., pp. 154-55,183.

Morgan Guaranty, Chase Manhattan, Citibank, Bank of America, Chemical Bank, Bankers Trust, and Manufacturers Hanover. The meeting was perfunctory at best. The bankers knew full well that the Reagan Administration would not risk the political embarrassment of a major bank failure. That would make the President and the Congress look bad at re-election time. But, still, some kind of tokenism was called for to preserve the Administration's conservative image. So, with urging from the Fed and the Treasury, the consortium agreed to put up the sum of $500 million-an average of only $71 million for each, far short of the actual need. Chernow describes the plan as "make-believe" and says "they pretended to

//1

mount a rescue. Sprague supplies the details:

The bankers said they wanted to be in on any deal, but they did not want to lose any money. They kept asking for guarantees. They wanted it to look as though they were putting money in but, at the same time, wanted to be absolutely sure they were not risking anything.... By 7:30 A.M. we had made little progress. We were certain the situation would be totally out of control in a few hours. Continental would soon be exposing itself to a new business day, and the stock market would open at ten o'clock. Isaac [another FDIC director] and I held a hallway conversation. We agreed to go ahead without the banks. We told Conover [the third FDIC director] the plan and he concurred....

[Later], we got word from Bernie McKeon, our regional director in New York, that the bankers had agreed to be at risk. Actually, the risk was remote since our announcement had promised 100 percent insurance.

The final bailout package was a whopper. Basically, the government took over Continental Illinois and assumed all of its losses. The FDIC took $4.5 billion in bad loans and paid Continental $3.5 billion for them. The difference was made up by the infusion of $1 billion in fresh capital in the form of stock purchase. The bank, therefore, now had the government as a stockholder controlling 80 per cent of its shares, and its bad loans had been dumped onto the taxpayer. In effect, even though Continental retained the appearance of a private institution, it had been nationalized.

By 1984, the Federal Reserve and the Treasury had given Continental the staggering sum of $8 billion. By early 1986, the

  1. Chernow, p. 659.
  2. Sprague, pp. 159-60.

figure had climbed to $9.24 billion and was still rising. While explaining this fleecing of the taxpayer to the Senate Banking Committee, Fed Chairman Paul Volcker said: "The operation is the most basic function of the Federal Reserve. It was why it was founded." With those words, he has confirmed one of the more controversial assertions of this book.

SMALL BANKS BE DAMNED

It has been mentioned previously that large banks receive a free ride on their FDIC coverage at the expense of small banks. There is no better example of this than the bail out of Continental Illinois. In 1983, the bank paid $6.5 million into the fund to insure deposits of $3 billion. The actual liability, however-including its institutional and overseas deposits-was ten times that figure, and the FDIC guaranteed payment on the whole amount. As Sprague admitted, "Small banks pay proportionately far more for their insurance and have far less chance of a Continental-style bailout."2

How true. Within the same week that the FDIC and the Fed were providing billions for Continental Illinois, it closed down the tiny Bledsoe County Bank of Pikeville, Tennessee, and the Planters Trust and Savings Bank of Opelousas, Louisiana. During the first half of that year, forty-three smaller banks failed without FDIC bailout. In most cases, a merger was arranged with a larger bank. The impact of this inequity is enormous. It sends a message to bankers and depositors alike that small banks, if they get into trouble, will be allowed to fold, whereas large banks are safe regardless of how poorly or fraudulently they are managed. As a New York investment analyst stated to news reporters, Continental Illinois, even though it had just failed, was "obviously the safest bank in the country to have your money in." 3 Nothing could be better calculated to drive the small independent banks out of business or to force them to sell out to the giants. Since 1984, while hundreds of small banks have been forced out of business, the average size of the banks that remain has more than doubled. It will be recalled that this advantage of the big banks over their smaller competitors was one of the objectives of the Jekyll Island plan.

  1. Quoted by Greider, p. 628.
  2. Sprague, p. 250.
  3. "New Continental Illinois Facing Uncertain Future," by Keith E. Leighty, Associated Press, Thousand Oaks, Calif., News Chronicle, May 13, 1985, p. 18.

THE SUBPRIME MELTDOWN

By 2008, the engine of destruction was running at full throttle. Decades of low interest rates had lured homeowners, speculators, and lending institutions into the real estate market where fortunes could be made by what appeared to be perpetually rising values. Knowing that they would be bailed out by the Fed if they got into trouble, large banks threw caution to the wind and offered loans to just about anyone who would sign the documents, regardless of ability to make payments. Many of them crafted fraudulent documents overstating the value of underlying properties and the incomes of borrowers and then made loans that were greater than the value of the property. The game was simple: Make as many subprime loans as possible, package them into large blocks of similar loans, give the packages impressive names such as "Prime Diversified Fund," and then sell them to unsuspecting investors. Two of the largest conduits for this scam are Fannie Mae and Freddie Mac, loan re-packagers sponsored by the government.

The scheme worked for a while, because the Fed's artifically low interest rates created a real estate boom with rising home prices. Those who had been enticed into loans they could not afford were able to sell their properties at a profit and come out ahead even if they could not afford payments. Foreclosures were rare, and the investment packages appeared to be solid. However, as with all booms caused by manipulation of market forces, the real estate boom came to an end. When it did, it was compounded by rampant inflation, high taxes, crippling regulation, and loss of jobs to other countries, all of which combined to create an economic recession.

As foreclosure rates began to climb, Fannie Mae, Freddie Mac, large banks and loan brokers were in trouble. Not only were their loans not performing, they became defendents in hundreds of law suits from institutional buyers of their fraudulent investment packages. It was time, once again, for the Federal Reserve to bail them out, which it did with over a trillion dollars of newly created money. Ambrose Evans-Prichard with the London Telegraph reports:

The emergency bail-out gives the US Treasury sweeping authority to inject capital into the giant mortgage lenders Fannie Mae and Freddie Mac, which together own or guarantee half the country's $12 trillion stock of home loans. The ceiling on the US national debt has been lifted by a further $800bn, giving the Treasury almost unlimited resources to prop up the two lenders. In parallel, the Federal Housing

Authority (FHA) is to guarantee up to $300bn of fresh mortgages for struggling homeowners trapped with soaring loan costs, often the result of "honeytrap" contracts.

The scheme aims to avoid an avalanche of fresh defaults as the housing market continues to deteriorate. Over 740,000 homes fell into foreclosure in the second quarter. ... The share prices of Fannie and Freddie, the world's two biggest financial institutions, have dropped by almost 85pc. 1

COLLAPSE OF THE HOUSE OF CARDS

Everything up to this point was but the sleepy beginning of what rapidly became a mad rush of new financial disasters and mega-bailouts. It was at this point that the house of cards began to collapse. In September of 2008, the federal government took over Fannie Mae and Freddie Mack and pumped over $100 billion into them. In that same month, the government loaned $85 billion to MG Insurance Co. to keep it in business. The money for both infusions was created by the Federal Reserve. No one seriously expected repayment. The cost was passed to consumers in the form of future inflation. (Incidentally, Fannie Mae and Freddie Mack previously had given $4.8 million in campaign donations to Congressmen.2) Shortly after the bailout, MG executives came together for nine days to celebrate their good fortune and plan future strategies. They did this at the St. Regis in Monarch Beach, California, a $500 per-night resort. 3

One of their high priority strategies was how to pay bonuses to themselves without calling them that, because taxpayers were upset over seeing their hard-earned money going to executives as rewards for running their business into the ground. AIG decided to describe these bonuses as "retention payouts." Later, when the public demanded a legislative limit to retention payouts, the executives dropped the word games and simply increased their salaries and perks.4

  1. "Fannie Mae and Freddie Mac: Congress backs rescue package," by Ambrose Evans-Prichard, Telegraph.co.uk (Net), Ju17 28, 2008.
  2. "Fannie Mae and Freddie Mac Invest in Lawmakers," by Lindsay Renick Mayer, Open Secrets (Net), September 11, 2008.
  3. "Executives at bailed-out AIG stayed at $500 a night California resort," by Andrew Clark, Guardian (Internet), Oct. 7, 2008.
  4. "AIG Says More Managers Get Retention Payouts Topping $4 Million," by Hugh Son, Bloomberg (Net), Dec 9, 2008.

$700 BILLION BANK BAILOUT (OR WAS IT $5 TRILLION?)

In October of 2008, Congress passed a $700 billion bailout bill to save the largest banks in the nation, all of which were tottering on the edge of bankruptcy. Congressmen who voted for this had received 54% more in donations from banks than those who voted against it.1 The White House urged news services to stop using the word "bailout" and say "rescue" instead. They complied.

While the world was stunned by the sheer size of a $700 billion bailout, the reality was even worse. Credit Sights, an independent research firm in New York and London, looked at the total commitment, including deals made by the Federal Reserve and the FDIC that were not widely publicized, and concluded that the real figure was $5 trillion . 3 That represents an additional $16,500 in lost savings and purchasing power for every American.

Shortly thereafter, American Express received $3.39 billion. Executives from the steel industry were lobbying for a similar deal. GMAC, the financial services division of General Motors, was allowed to change its structure to a commercial bank so it, also, could be eligible for bailout. Just before Thanksgiving Day, the government bailed out Citigroup to the tune of $45 billion. Goldman Sachs announced a $2.1 billion loss and began negotiations for a bailout. In November, the Bank of America received $15 billion and then invested $7 billion in China's Construction Bank. 4 A few days later, the Treasury announced that the budget deficit would be $1 trillion, the highest in American history-up to that point.

BILLIONS FOR THE AUTO MAKERS

It was a busy time in Washington. Executives from the auto industry were making weekly trips to the Capital in private jets. They wanted billions of dollars, and they wanted them now. They were having trouble making interest payments on those pesky bank loans, and time was running out. GM and Chrysler wanted cash. Ford preferred credits, because they wanted to continue borrowing from banks, not the government, but the banks saw

"House Members Who VotedYes on Bailout," Think Progress (Net), Sep. 30, 2008.

"The White House Says "Rescue" not "Bailout," and Fox Does as It's Told, News Hounds (Net), Sept.30, 2008.

'Washington's $5 Trillion Tab," by Elizabeth Moyer, Forbes (Net), Nov. 12, 2008.

"Bank of America's stake in China Construction Bank may play well," New York Times, Oct. 18, 2008.

them as a bad risk and refused any new loans. The solution was simple. Ford asked the government to be a co-signer and guarantee repayment. What bank wouldn't loan money on that kind of a deal? Taxpayers would be on the hook either way. All together, the auto companies were given $17.4 billion. Two months later, Ford, which already had plants in Mexico, Germany, and Spain, began producing cars in China. 1 GM soon followed suit and announced that it, also, would build more cars overseas. 2

TAXPAYERS PAY TO SEND THEIR JOBS OVERSEAS

Among bailout recipients, it is common to see the money used in ways that destroy jobs for the same American taxpayers who pay the bill. During the time when U.S. banks were receiving more than $150 billion from American workers, they were requesting special visas to import 21,800 personnel from other countries to replace Americans in upper echelon jobs, including corporate lawyers, investment analysts, programmers, and human-resource specialists.3 This disdain for the American work force is partly because of corporate pursuit of maximum profit above all else and partly because decision makers consider themselves to be internationalists, with no special interest in America except as a cash cow to be milked as regularly and thoroughly as possible. As will be illustrated in the following chapters of this book, some of these people, acting through organizations such as the CFR (Council on Foreign Relations), are consciously pursuing policies designed to lower the economic stature of America so it can be more comfortably merged into global government. Taking money from American workers to build up the economies of foreign countries has done much to advance that goal.

By the end of 2008, bailout of just the financial-services industry during the Bush Administration had reached over $7 trillion, which was ten times the amount originally estimated. It was more than twice the cost of World War 11. 4 Although this was many times greater than anything like it in history, it was considered to be a

"Ford starts making Fiesta in China," Raw Story (Net), Jan. 15, 2009.

"Under Restructuring, GM To Build More Cars Overseas," by Peter Whoniskey, Washington Post (Net), May 8, 2009.

"AP Investigation: Banks sought foreign workers," by F. Bass and R. Beamish, Yahoo (Net), Feb 1, 2009.

"Financial Crisis Tab Already in Millions and Counting," CNBC, Nov. 28, 2008.

temporary solution, leaving final decisions for the incoming Obama Administration.1 Although many voters thought there would be a change under Obama, the handwriting was already on the wall: 90% of the donations to Obama's inauguration fund came from Wall Street firms that received billions in bailout and were anticipating more of the same. 2 They were not to be disappointed.

MERRILL LYNCH: A GIFT TO BANK OF AMERICA

In the Fall of 2008, the giant brokerage house, Merrill Lynch, was out of money and on the verge of closing its doors. Bank of America agreed to buy the ailing firm for $50 billion, a strange offer considering that the Bank, itself, was in trouble and recently received $25 billion in bailout. When the staggering fourth-quarter losses of Merrill Lynch were finally known, the Bank decided to back out of the deal. But this was not to be allowed. According to the sworn testimony of Ken Lewis, Bank of America's CEO, Treasury Secretary Hank Paulson threatened to remove the bank's board of directors and its management if they didn't acquire Merrill as agreed. This threat was made at the request of Ben Bernanke, Chairman of the Federal Reserve. 3 When Lewis asked if the government would cover the banks inevitable losses, Paulson said yes but was not willing to put it in writing, because a written commitment, he said, "would be a disclosable event, and we do not want a disclosable event."4

On December 30, the bank's board dutifully approved the merger. Two weeks later, the Treasury delivered to Bank of America an additional $20 billion plus a $118 billion guarantee to pick up further losses from Merrill's assets. All of that was placed on the backs of the American people.

AN ICON FOR CONFLICT OF INTEREST

Henry Paulson (NYSE:CFR) was the epitome of the fusion between the banking cartel and government. As former CEO of Goldman

"U.S. Throws Lifeline to Detroit," by J. McKinnon and J. Stoll, Wall Street Journal (Net), Dec. 20, 2008.

"Wall Street Is Big Donor to Inauguration," by C. Cooper, Wall Street Journal (Net), Jan. 9, 2009.

Letter from Andrew Cuomo, Attorney General, State of New York, addressed to Christopher J. Dodd, Chairman, U.S. Senate Committee on Banking, Housing, and Urban Affairs, apr 23, 2009, (cached at www.realityzone.com/footnotes.html).

"Threats and Secret Promises: Bank of America's Merger with Merrill Lynch,'by Mack Sperling, Business Litigation Report (Net), April 24, 2009.

Sachs, he was instrumental in using the power of his office to destroy three of his old rivals. He arranged the sale of Bear Sterns to JP Morgan Chase, allowed Lehman Brothers to collapse, and forced the absorption of Merrill Lynch by Bank of America, all the while providing a generous bailout for his alma mater, Goldman Sachs. This left only Goldman and Morgan as major investment banks. Documents obtained by a citizen watchdog group, Judicial Watch, revealed that Paulson had told bankers they must accept bailout money even if their banks were in fair condition and didn't need it. The reason was so as not to "stigmatize" the weaker banks by allowing a comparison to well run banks.1

By March of 2009, Fannie May asked for an addition $15 billion. The government complied and then approved retention bonuses of $1 million or more to each of Fanny May's top executives.2 In its final days of existence before being purchased by Bank of America (with government funds), Merrill Lynch paid $3.6 billion in bonuses with the knowledge and approval of the Bank of America.3 The Bank, on the other hand, said it was considering raising the salaries of its own investment executives by as much as 70% to avoid the bad publicity associated with bonuses. 4

BONUSES BECOME A DISTRACTION

This incredible record of self dealing and plunder of the public treasury was given full attention in the press, which led to a national outcry against "greedy" corporate executives. Scores of politicians made impassioned speeches about the need for new laws and regulations to tame this "bonus monster." It was the perfect decoy to divert public attention away from the greater issue. To be sure, million-dollar bonuses for executives who led their companies into bankruptcy are worthy of attention, but that issue is microscopically small compared to the fact that these companies were being bailed out in the first place, that the process was unconstitutional, and that the astronomical amount of money involved literally was killing the nation. The media had framed the

Henry Paulson, Wikipedia (Net).

"Fannie Plans Retention Bonuses As Outlined by the Government." By Zachary Goldfarb, Washington Post (Net), March 19, 2009.

"Top Four Merrill Lynch Bonus Recipients Got $121 Million," by Karen Freifeld, Bloomberg (Net), Feb 11, 2009.

"Bank of America May Increase Salaries for Investment Bankers," by J. Simmons and J. Fineman, Bloomberg (Net), March 28, 2009.

debate so that the really important issues were not even part of it.

All that was left for the public to think about was how much bailout should be given, who should get it first, and how to limit the bonuses. To "let the corrupt banks fail and let the economy recover in the absence of fraud" was not allowed in mainstream debate.

THE REPAYMENT SCAM

In December of 2009, Bank of America announced that it had repaid its $45 billion "loan" from the Treasury. Government officials boasted that their actions were vindicated and that taxpayers even made a profit. The media thought it was wonderful and accepted the announcement at face value. The source of the money was said to be cash reserves and the sale of a new stock offering; but there was something very wrong with that picture.

Cash reserves were not a likely source because the bank reported a net outflow of cash and was still losing money. Its loans were continuing to go sour, and defaults had more than tripled from the first quarter to the third. Bad loans were up 15 percent. 1 The only way the bank could have sizable cash reserves was to receive a confidential infusion from the Treasury - what Mr. Paulson would call a non-disclosable event". In other words, the government may have provided the money to pay itself back, in which case it was an accounting trick, a publicity stunt to fool the public into thinking that bailouts were acts of great statesmanship after all.

The sale of bank stock had similar problems. The general public was dumping Bank of America stock at that time, not buying it. So who were the buyers? Could they be the Treasury itself - directly or indirectly? Could they be a few trusted institutional buyers who were given "non-disclosable" guarantees by the Treasury to cover their losses? We know that, by March of 2010, the Treasury was auctioning warrants given to it by various banks as securities against their loans. Could these have been the so-called stocks that were sold? Warrants are not stocks. They are contracts that give buyers the future right to buy stock at a stated price. Warrants are derivatives, and those who purchase them are speculating, not investing. Could whoever bought them be privately assured by the government and the Federal Reserve that they will be bailed out if

1. "Bank of America TARP Repayment Premature, Analyst Says," Huffington Post (Net), Dec. 4, 2009.

their gamble goes sour? In view of the recent record of the Treasury and the Fed in similar matters, these are not unreasonable questions, but no one in mainstream media was asking them.

The Federal Reserve of New York reported that the assets acquired when AIG was bailed out were showing a "paper profit." That means, if they were sold on the open market, they would generate a profit over their purchase price. 1 If so, one can only speculate why they did not sell them. The plausible answer is that the Federal Reserve "economists" are like a man who bought a clunker automobile for $900, then claimed a "paper profit" because he says he can sell it for $1000 when, in fact, he would be lucky to sell it for $100. Until these assets actually are sold, any claims of paper profits should be viewed with great caution.

News that the Bank of America had repaid its loan had a tranquilizing effect on the public temper, and so it wasn't long before other recipients announced that they, too, were repaying their loans even though, they, too, were continuing to operate at a deficit. Citibank and General Motors said they would repay their loans by issuing new stock. In April of 2010, General Motors announced it actually had paid back its loan. But wait! Upon investigation, we discover that it paid back its first bailout with money from the second bailout. None of it came from car sales or even stock sales. The whole thing was a con game to fool the public.2

NATIONALIZATION BECOMES A REALITY

What the government funds, it controls; and what it controls, it owns. This point was made crystal clear when, on April 1, 2009, Treasury Secretary, Timothy Geithner , announced he was prepared to oust the CEO of an3y bank that received a bailout if he doesn't run the bank correctly. Geithner was not planning to fire anyone. The purpose of his statement was to convince the public that the government was being conscientious and responsible with the handling of so much money, but the significance of his statement is that the Secretary of the Treasury now holds the power to oust bank CEOs without concern for the wishes of their boards of

"Federal Reserve NY reports paper profit," BBC News (Net), July 30, 2010.

"Grassley Slams GM, Administration Over Loans Repaid with Bailout Money," Fox News (Net), Apr 22, 2010.

"Ousting bailed-out U.S. bank CEOs: Geithner," Reuters (Net), Apr. 1, 2009.

directors. That represents the ultimate privilege of ownership. The new reality is that the financial industry and major chunks of the insurance and automobile industries now have been nationalized, which is a soft word for saying they are owned by the government.

In May, 2009, the government pumped another $7.5 billion into GMAC (the finance arm of GM), another $3.8 billion in December, and another $3.8 billion in January, 2010, for a total of $16.3 billion. This gave the government a controlling ownership of 56%.1 By early 2010, the government had given a total of $57.6 billion to General Motors, itself, and held controlling interest. It now runs the company as it wishes.

By February of 2009, AIG (broke again) was 80% owned by the government.2 In that same month, Alan Greenspan, former Chairman of the Federal Reserve, openly called for nationalization of all failing banks (which means most of them). 3

The new business model for America is clearly recognizable. Its dominant feature is the merger of government, real estate, and commerce into a single structure, tightly controlled at the top. It is the same model used in Soviet Russia, Nazi Germany, Fascist Italy, and Communist China.

THE SYSTEM ALREADY IS GLOBAL

One of the most revealing episodes in this drama was played out in a federal hearing room on March, 3, 2009, when Fed Chairman Bernanke testified before the Senate Budget Committee. When Senator Bernie Sanders asked if he would provide the names of the financial institutions that received bailouts, Bernanke paused for a moment and then said, flatly, "No!" The excuse for this amazing refusal was that to reveal their names might cause the public to lose confidence in those banks and withdraw their deposits, which would cause further problems. There may have been a less praiseworthy motive for the secrecy. Rumors were flying that billions of dollars had been sent overseas to banks of

"US bails out General Motors-related company GMAC with further $3.8bn," by David Teather; Guardian (Net), Jan. 1, 2010.

"AIG Seeks More US Funds As Firm Faces Record Loss," by David Farber, CNBC (Net), Feb. 23, 2009.

"Greenspan backs bank nationalization," by K. Guha and E. Luce, Financial Times (Net), Feb. 18, 2009.

other countries, and such information would not have set well with American citizens.

Were the rumors true? Subsequent events indicate that they were. Two months later, the IMF announced it was bailing out banks in Greece to the tune of $145 billion, 20% of which was provided by the U.S. Indeed, American citizens were giving $8 billion to Greek banks. 1

The following week, the Federal Reserve announced it would provide funding to bail out European banks without Congressional approval. The part about bypassing Congress was not news, because Congressional approval was never a serious obstacle. The newsworthy aspect was that the Fed now admitted it was operating as a money machine for the world, not just the United States. The new program is integrated with the central banks of Canada, England, the EU, Switzerland and Japan. Money for future bailouts of banks in other countries now can be created by the Federal Reserve at the expense of American citizens (without their knowledge or consent) and be moved to the central banks of those countries who will determine how to distribute it to their local commercial banks.2 That was big news, but mainstream media treated it as just a dry press release and said nothing about the certain pauperization of American taxpayers. The primary reason Bernanke said no to Senator Sanders is that a yes answer would have brought all of this to light.

THE SAGA CONTINUES

The saga continues. On June 12, 2010, President Obama asked Congress for $50 billion to bail out American cities and states. 3 By that time, almost every state and thousands of local governments had run out of money and began negotiations with Congress and the White House to pay the shortfall, especially the cost of welfare. The argument was that, if welfare checks stop coming in the mail, there will be riots in the streets. No one wants to see that, so federal funds are assured. Along with federal money will come control,

"Guess Who's Paying for the Greece Bailout? That's Right - YOU," by Henry Blodget, Business Insider (Net), May 3, 2010.

"Federal Reserve Opens Credit Line to Europe," Fox News (Net), May 10, 2010.

"Obama pleads for $50 billion in state, local aid," by Lori Montgomery, Washington Post (Net), June 13, 2010.

and the states may lose their last chance to exert independence and sovereignty over their own affairs.

In August, 2010, Freddie Mac was back at the payout window asking for another $1.8 billion, bringing the total to over $64 billion. The U.S. national debt had reached a record high of $13 trillion, almost $120,000 per taxpayer, and that does not include off-budget liabilities, which are at least twice that amount. It will become larger. By the time you read these words, there will have been even more bailouts and legalized plunder of the American people.

The cost of funding states and local governments in addition to the federal government in addition to the banks and insurance companies in addition to the auto companies in addition to the banks of Europe in addition to endless wars and a global standing army will crush what is left of the American middle class. How long it can continue is anyone's guess, but we do know it is coming close to completion. Chapters 25 and 26 are devoted to where it is headed and how it may end.

SECOND REASON TO ABOLISH THE FEDERAL RESERVE

A sober evaluation of this record leads to the second reason for abolishing the Federal Reserve: Far from being a protector of the public, it is a cartel operating against the public interest.

SUMMARY

The game called bailout is not a whimsical figment of the imagination, it is real. Here are some of the big games of the past and their final scores.

In 1970, Penn Central railroad became bankrupt. The banks that lent money to it had taken over its board of directors and put it further into the hole, all the while extending bigger loans to cover the losses. Directors concealed reality from stockholders and made additional loans so the company could pay dividends to keep up a false front. Directors and their banks unloaded their stock at unrealistically high prices. When the truth became public, stockholders were left holding the empty bag. The bailout, involved government subsidies to other banks to grant additional loans. When Congress was told that the collapse of Penn Central would be devastating to the public interest, it responded by granting $125 million in loan guarantees so banks would not be at risk. The railroad failed anyway, but the banks were covered. Penn Central was nationalized into AMTRAK and continues to operate at a loss.

In 1970, as Lockheed faced bankruptcy, Congress heard essentially the same story. Thousands would be unemployed, subcontractors would go out of business, and the public would suffer greatly. So Congress guaranteed $250 million in new loans, which put Lockheed 60% deeper into debt than before. Now that government was guaranteeing the loans, it made sure Lockheed became profitable by granting lucrative defense contracts at noncompetitive bids. The banks were paid back.

In 1975, New York City had reached the end of its credit rope. It had borrowed heavily to maintain an extravagant bureaucracy and a mini-welfare state. When Congress was told that the public would be jeopardized if city services were curtailed and that America would be disgraced in the eyes of the world, it authorized $2.3 billion of additional loans, which more than doubled the size of the current debt. The banks continued to receive their interest.

In 1978, Chrysler was on the verge of bankruptcy. Congress was told that the public would suffer if the company folded, and that it would be a blow to the American way if freedom-of-choice were reduced from three to two makes of automobiles. So Congress guaranteed up to $1.5 billion in new loans. The banks reduced part of their loans and exchanged another portion for preferred stock. The banks' previously uncollectable debt was converted into a taxpayer-backed, interest-bearing asset.

In 1972, the Commonwealth Bank of Detroit, with $1.5 billion in assets, became insolvent. It had borrowed heavily from Chase Manhattan to invest in high-risk and potentially high-profit ventures. Now that it was in trouble, so was Chase. The bankers went to Washington and told the FDIC the public must be protected from the great financial hardship that would follow if Commonwealth folded. So the FDIC pumped in a $60 million loan plus federal guarantees of repayment. Chase took a minor write down but converted most of its potential loss into taxpayer-backed assets.

In 1979, the First Pennsylvania Bank of Philadelphia became insolvent. With assets in excess of $9 billion, it was six-times the size of Commonwealth. It, too, had been an aggressive player in the '70s. Now the bankers and the Federal Reserve told the FDIC that the public must be protected from the calamity of a bank failure of this size, that the national economy was at stake, perhaps even the entire world. So the FDIC gave a $325 million loan-interest-free for the first year, and at half the market rate thereafter. The Fed

offered money to other banks at a subsidized rate for the purpose of relending to First Penn. With that enticement, they advanced $175 million in immediate loans plus a $1 billion line of credit.

In 1982, Chicago's Continental Illinois became insolvent. It was the nation's seventh largest bank with $42 billion in assets. The previous year, its profits had soared as a result of loans to high-risk business ventures and foreign governments. Although it had been the darling of market analysts, it quickly unraveled when its cash flow turned negative. Fed Chairman Volcker told the FDIC it would be unthinkable to allow the world economy to be ruined by a bank failure of this magnitude. So, the FDIC assumed $4.5 billion in bad loans and took 80% ownership of the bank in the form of stock. In effect, the bank was nationalized, but no one called it that.

Bailouts up to this point pale by comparison to the trillions of dollars pumped into banks, insurance companies, automobile manufacturers, and banks of other countries beginning in 2008. It started with what was called the subprime meltdown, caused by a calculated policy of the nation's largest banks to entice low-income families into accepting mortgages in excess of what they could afford. The assumption was that the value of houses would rise forever, so people could pay off old loans by taking out larger new loans based on the increasing value of real estate. These doomed mortgages were packaged together, given fancy names, and sold to naive investors and investment funds. When the day of reckoning arrived, millions of mortgage holders lost their mythical equity (and their homes) while millions of investors lost their money.

The banks that created this bubble were on the brink of collapse but, carefully following the rules of the Game, they told Congress they were too big to fail, because, if they did, so would America itself. Congress dutifully approved virtually every request for taxpayer funding regardless of the amount. This legalized plunder was coordinated by two Secretaries of the Treasury, Henry Paulson and Timothy Geithner, who came from the banking fraternity and used their positions of public trust to protect and enrich the cartel.

All of the money was provided by the Federal Reserve acting as the "lender of last resort." That was one of the purposes for which it had been designed. We must not forget that the phrase "lender of last resort"means that the money is created out of nothing resulting in the confiscation of wealth through inflation.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.