Accuracy in Media

In his
classic 1932 book, Toward Soviet
Communist Party boss William
Z. Foster wrote about how “The United Soviet States of America” would
come about. As a result of various capitalist crises, the national government
would assume more and more control over the economy. “In finance,” he wrote,
“it will mean the nationalization of the banking system and its concentration
around a central State bank…”

It would be an
exaggeration to say that we are getting close to anything resembling the Soviet
system. But it is also a big mistake to call massive federal intervention in
the economy a “rescue” or even a “bailout.”

Over at Political
Affairs Magazine, a publication of the Communist Party USA, writer
John Case was gloating. His article about the crisis was headlined, “A Dose of
Socialism to Forestall Disaster.” He thought that Treasury Secretary Henry
Paulson and Federal Reserve Board chairman Ben Bernanke had been reading the
works of closet Marxists.

While many of the talking
heads and pundits on TV were providing calming words of reassurance about
federal intervention in the financial system, analyst Peter Schiff of Euro
Pacific Capital had been accurately warning for years about a financial
meltdown and says that the worst is yet to come. Asked for comment on media
coverage of the financial meltdown, he told Accuracy in Media, “Absent when
they have me on, it’s pretty bad.”

Many commentators,
Schiff said, were telling people that if the bailout doesn’t go forward, there
would be an economic crisis. However, “if we do it, there will be a bigger
crisis,” he predicts. “The politicians want to make believe we can avoid paying
the piper if we pass these bailouts,” he said. “It’s just not true. It’s going
to collapse the currency. It’s going to make a worse economic crisis because
the money they’re printing is not going to buy anything.”

While he continues to
make a number of media appearances, he says that the CNBC cable network won’t
have him on the air. “I predicted all this stuff, and they laughed at me,” he
said. “So maybe they’re embarrassed.”

Schiff, who labels the
government takeover of the financial sector as socialism and refers to the
Federal Reserve Board chairman as “Comrade Bernanke,” told AIM, “The government
doesn’t have the authority to do any of this stuff. This whole bailout bill is
illegal. They don’t have the authority to buy up mortgages. Nothing in the
Constitution says they can do this.”  “Who needs Bolsheviks when you have
the Fed?” he had written.

The author of “Crash
Proof: How to Profit from the Coming Economic Collapse,” Schiff  said that
“The government doesn’t solve problems. It makes them bigger. So if we’re
broke, which is the reality—that’s why these mortgages are not worth much
because Americans can’t afford to pay the money back that they borrowed—the
bottom line is we’ve borrowed and spent ourselves into bankruptcy following the
government’s advice. They’re the ones that encouraged all this reckless
borrowing and spending.”

Interviewed by AIM
before the House of Representatives had initially voted down the “bailout”
scheme, at a time when it looked like the plan would actually pass, Schiff had
shocking advice for ordinary Americans.

“The first thing you
do if you have a mortgage is you stop making the payments,” he said. “That’s
the number one thing for people who have mortgages based on this plan. And use
that money to buy gold or stock up on food. You’re going to need it. Meanwhile,
no one is going to kick you out of your house. You’re going to be able to live
in your house for probably a year or two before the government calls you up to
give you a lower mortgage because nobody is going to foreclose on you right
now. Why would you foreclose? You sell the loan to the government. This plan is
a huge moral hazard and it’s going to lead to a surge in mortgage

In an article on
his website, Schiff had praised House conservatives for trying to preserve
American-style capital-ism by resisting the scheme.

But when the House of
Representatives, led by conservatives, initially defeated the proposed $700-
billion takeover scheme, Michelle Caruso-Cabrera of CNBC brought up the subject
of “four ways around Congress,” adding, “I know it’s a flippant title and those
who believe in the checks and balances in the Constitution will probably be
upset by the title.” One panelist wondered if the Federal Reserve could just
intervene on its own.

What they were
entertaining was the notion of bypassing Congress and establishing an economic
dictatorship in the United
The exchange between Caruso-Cabrera and her colleagues demonstrated
that those who posture as “pro-business” can really be socialists at heart.

On CNBC, news analysts
frequently complained that the “ideology” of the House Republicans had gotten
in the way of the planned takeover of the financial sector. That “ideology” is
free enterprise capitalism. 

The Return Of Karl Marx

Libertarian thinker and writer Martin Masse captured public attention
with an article insisting that the proposed federal takeover of the financial
sector in the U.S.
represents a comeback by Karl Marx, the father of communism, who had proposed
government control of capital. “If he were to rise from the dead today,” Masse
writes, “Marx might be delighted to discover that most economists and financial
commentators, including many who claim to favor the free market, agree with
him.” He cites commentaries in favor of the “bailout” plan from so-called
conservatives at the Heritage Foundation and the Wall Street Journal and other

The Heritage
Foundation endorsed the takeover, even though it admitted that “constitutional
concerns remain” about the plan and the “centralization of power” is worrisome.

Don Lambro of the
Washington Times was extremely upset that conservative House Republicans had
“cowardly” listened to their constituents and had voted against the plan.
“Free-market advocates said that America’s free-enterprise
capitalist system rewards success and punishes failure, and government has no
business intervening in the marketplace to pick the winners and losers,” he
said. “That is unarguable when the economy is working as it should, but when
entire economic sectors are failing as a result of a credit collapse or a loss
of confidence in the nation’s banking and other financial institutions, then it
is sometimes necessary for government to step in to restore them. This is one
of those times.”

Indeed, Marx would be

But many
conservatives understood that, by capitulating to the political Left, McCain
and the Republican Party were ceding unnecessary ground to Barack Obama and his
“progressive” Democrats.

If they had been
honest about this debacle, they would have had to admit that, of all the
Republicans running for president, only Rep. Ron Paul had predicted the crisis
that was coming. But they couldn’t admit this because their proposed
“solution,” which amounted to more government, more spending, and more debt,
would only make things worse in the long run. And that is why Rep. Paul and so
many House conservatives so strongly opposed it. The takeover plan, in their
view, will only postpone the inevitable and leave us with a much bigger

The “debate” taking
place in Washington and the media was being carefully controlled. The
Republican Bush Administration supported the plan and Congressional Democrats
wanted to take it further. The Democrats wanted even more federal involvement
in the firms that are being acquired. In other words, it was a question of how
much socialism they want.

“Government bailouts and
takeovers are nothing new,” pointed out financial advisor Ric Edelman.

He cited the
following: “In 1971, Richard Nixon rescued Lockheed by providing $250 million
in loan guarantees. When the Penn Central Rail-road failed in 1971, Nixon
created Am-trak. Jimmy Carter gave $1.5 billion in loan guarantees to Chrysler
in 1979. Under Ronald Reagan, the FDIC in 1984 spent $4.5 billion to rescue
Continental Illinois, which still holds the record as the largest U.S. bank
failure. Then, during the S&L crisis of the 1980s, George H. W. Bush
approved the bailout of 747 savings and loans at a cost to taxpayers of $124.6
billion. In 1998, under Bill Clinton, the Federal Reserve Bank of New York bailed out Long
Term Capital Management at a cost of $3.6 billion. During the Mexican Peso
Crisis, Clinton arranged for loans and
guarantees to Mexico
totaling almost $50 billion. Then, following the September 11, 2001, terrorist
attacks, George W. Bush approved $15 billion in subsidies and loan guarantees
to aid the faltering airline industry. This year, the Federal Reserve approved
a $30 billion credit line to help JP Morgan Chase acquire Bear Stearns and
engineered takeovers of Freddie Mac, Fannie Mae and AIG. The names, dates and
amounts are different, but that’s about it.” In fact, however, the massive
scope and price tag made this plan far different. Many conservative members of
Congress called it socialism.




Meeting in
New York on
the occasion of the 63rd session of the U.N. General Assembly, members of the
Socialist International (SI) called for the establishment of a World Financial
Organization to provide “global stability” and regulate the financial systems
of the nations of the world. This will be the inevitable result of the U.S. Congress
passing a socialist-style takeover of the U.S. financial sector. This
centralization of power will make it easier to integrate the U.S. into a
global socialist system.

The U.N. has long
played host to meetings of the SI and former U.N. Secretary-General Boutros
Boutros-Ghali was a former vice-president of the SI. This year’s meeting, which
was held on September 26, included “invited guests” from the United Nations
such as Juan Somavía, Director-General of the International Labor Organization;
Kemal Dervis, Administrator of the United Nations Development Program; and
Alicia Bárcena, Executive Secretary of the Economic Commission for Latin
America and the Caribbean.

The proposed World
Financial Organization (WFO) would “fill up the gap in the existing structure
of the financial system by monitoring and regulating private capital flows,”
its proponents say. Those “private flows” represent capitalism.

The WFO, a long-time
dream of officials of the United Nations, could lay the groundwork for a global
tax to drain away some of that money for government purposes on a global basis.
A proposed “World Tax Organization,” which has been on their drawing board for
years, would collect and dispense the revenue.

The SI, which shares
the same basic economic goals as international Communism, is an association of
170 political parties and organizations from all continents, including the
Democratic Socialists of America (DSA), whose Chicago branch has backed Barack Obama’s
political career from the start.

Obama’s backers in the
Democratic Socialists of America were ecstatic and preparing for a complete
government takeover in the U.S. “While recognizing the critical limitations of
the Obama candidacy and the American political system,” the organization said
in a statement, “DSA believes that the possible election of Senator Obama to
the presidency in November represents a potential opening for social and labor
movements to generate the critical political momentum necessary to implement a
progressive political agenda.”

The DSA cautioned, however, that the Left should not
be so involved in the national presidential campaign that it ignores the
general election races for the U.S.
House and Senate. “We need more progressives in Congress as well as increased
Democratic majorities,” it said.

The Socialist
International, meanwhile, is preparing for a high-level meeting in Mexico on November 17-18, “to discuss an agenda
with the urgent world financial situation at its center, following U.S.




Two more
bailouts are pending before Congress—both of them sponsored by Senator Barack
Obama. One is the Jubilee Act, which would cancel as much as $75 billion worth
of Third World debt, and the other is the
Global Poverty Act, which would cost an estimated $845 billion. Total potential
cost: $920 billion.

If they don’t pass
Congress this year, they could come back in an Obama Administration.

Citing AIM research on
the topic, commentators such as Andrew C. McCarthy pointed out that Obama’s
Global Poverty Act (S. 2433) would cost even more than the $700 billion  socialist takeover of the U.S. financial
sector. Obama’s bill passed the House and Senator Joe Biden’s Foreign Relations
Committee and now awaits full Senate action. But the Jubilee Act (S. 2166),
which is co-sponsored in the Senate by Barack Obama, has also passed the House
and awaits Senate action.

presidential candidate John McCain is not an official sponsor of the Jubilee
Act or Obama’s Global Poverty Act. But the pressure was mounting on McCain, as
well as running mate Sarah Palin, to endorse the legislation. In fact, McCain
recently asked the wealthy rock star Bono, an advocate of more U.S. foreign
aid spending, for advice on how to help the rest of the world. 

“The ONE Campaign and
co-founder Bono spoke by telephone this afternoon with Senator John McCain,
Governor Sarah Palin, and members of the McCain campaign policy staff about the
issue of extreme poverty, especially in Africa,”
a September 24 ONE campaign news release declared. “The call today was part of
ongoing conversations between ONE and both the McCain and Obama presidential
campaigns.” No details of the conversations were provided.

The ONE campaign
organization has been urging Senate passage of the Jubilee Act, which would
cancel the debts of 26 foreign countries even while the U.S. suffers
through its own financial crisis and Americans are losing their homes and
savings. It passed the House in April on a 285-132 vote. 

While the Global
Poverty Act has started getting more serious attention, the implications of
passage of the Jubilee Act have been generally ignored. Yet, a representative
of the Treasury Department, Assistant Secretary For International Affairs Clay
Lowery, testified at a Senate hearing in April that “The Jubilee Bill
represents an unfunded international mandate to fully cancel roughly $75
billion worth of debts owed by the potentially eligible countries to official
bilateral and multilateral creditors.” This is on top of the $110 billion in
debt reduction already being granted to various countries, he said.

Despite foreign aid
having cost the American people $2 trillion since World War II, Bono’s ONE
organization believes in “allocating more of the U.S. budget toward providing
basic needs” for the rest of the world. 

ONE also promotes
compliance with the U.N.’s Millennium Development Goals, the same expensive
effort set forth legislatively in Obama’s Global Poverty Act.

Hypocrite Bono

Bono, the lead singer
of the rock band U2, is one of the richest entertainers in the world and gets
tremendous access to the media—and politicians—because of his anti-poverty
campaign. Less well-known is the fact that his band came in for criticism two
years ago when it transferred part of its business empire out of Ireland to
avoid high tax rates.

ONE campaign “partner”
organizations include the United Nations Association, the pro-U.N. lobbying
group, and Ted Turner’s United Nations Foundation, which financially supports
the U.N.

While the ONE
campaign is generally regarded as a left-wing organization, it claims support
from such notables as Pat Robertson of the Christian Broadcasting Network and Purpose
Driven Life
author and pastor Rick Warren.

Also bowing to the Left, before he came to Washington,
D.C. to work on the $700-billion federal
takeover plan for the U.S.
financial sector, McCain had taken time to attend and speak at the “Clinton
Global Initiative,” a campaign underwritten by big companies and rich
individuals to promote the pet causes of the disgraced former president. One of
these causes has been an international tax on airline tickets to generate funds
to fight HIV/AIDS. 

Obama, as well as
Bono, also spoke at the Clinton

On September 25,
after conversing with McCain and Palin, Bono and his collaborators were scheduled
to hold a “United Nations emergency summit on the Millennium Development
Goals.” Bono’s ONE organization described them as “eight goals” that were
“drawn from the targets contained in the Millennium Declaration that was
adopted by 189 nations—and signed by 147 heads of state and governments during
the UN Millennium Summit in September 2000.”

Similar language is
incorporated in Obama’s Global Poverty Act, which has passed the House and
Senator Joe Biden’s Foreign Relations Committee, and now awaits full Senate
action. As AIM has documented repeatedly, a careful analysis of the
legislation, as well as the follow-up 2002 U.N. Financing for Development
Conference, which was designed to make the “goals” into a reality, leads to the
conclusion that the U.S. will have to provide $845 billion in increased foreign
aid spending, generated if necessary by a global tax on the American people.

At the Clinton Global
Initiative meeting, Obama reaffirmed a “commitment” to “embracing the
Millennium Development Goals, which aim to cut extreme poverty in half by
2015.” He added, “This will take more resources from the United States,
and as President I will increase our foreign assistance to provide them.”

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