S&P 500 (Green) Versus Goldman Sachs (Orange) Over Past Five Years

By Pam Martens and Russ Martens: September 12, 2016

European and Asian stock markets were firmly in the red overnight as Friday’s 394 rout in the Dow Jones Industrial Average fueled global concerns.

The chart above shows how the Standard and Poor’s 500 Index of the biggest companies in America has, over the past five years, traded relatively in sync with Goldman Sachs (frequently called Government Sachs for the number of its partners it has placed in top money slots in both Democrat and Republican administrations). When there has been divergences in the chart above, the relationship has gravitated back to a converged path after a time. Inevitably, the health of the country’s banks plays a critical role in the health of the overall economy. If one ever doubted that, the Wall Street bank crash in 2008 and cataclysmic economic aftermath ended that debate. (And, yes, Goldman Sachs is now a deposit-taking bank thanks to the repeal of the Glass-Steagall Act.)

The divergence investors have seen this year in big Wall Street banks selling off as the Dow Jones Industrial Average and the S&P 500 regularly set new highs was simply unsustainable. The idea that central banks had become omnipotent Gods and could wave their magic wands to levitate markets was certain to be discredited the moment any daring soul ventured into the room and screamed that the Emperor had no clothes. That message was delivered by not one, but two, daring souls last week. Markets listened – then quickly sold off.

Jeffrey Gundlach, founder and CEO of the Los Angeles-based investment management firm, DoubleLine, made a presentation to investors last Thursday, September 8, suggesting that the Federal Reserve is determined to show that it is not being held hostage by market forces and may hike rates even as markets have become complacent that the Fed won’t raise rates this year.

The one-two gut punch came the very next day when Boston Fed President, Eric Rosengren, delivered a morning talk to the South Shore Chamber of Commerce in Quincy, Massachusetts. (See full talk at video below.)

Boston Fed President Eric Rosengren Delivers a Speech on Friday, September 9, 2016. (Dow Closes Down 394 Points.)

Rosengren also raised the possibility of Fed rate hikes. One of the many slides he presented to the audience raised concerns about an overheating commercial real estate market with the potential for a bust in that sector bringing down the big banks. Rosengren’s prepared remarks explained this concern as follows:

“This historical pattern illustrates the difficulty of slowing the economy to a sustainable rate without going too far and causing a recession. This problem could be compounded if delays in tightening earlier in the cycle lead to conditions that require more rapid increases in interest rates later in the cycle, risking a more pronounced slowing in growth and rise in unemployment.

“A second risk of waiting too long to tighten is that some asset markets become too ebullient. Figure 12 shows that real commercial real estate prices have risen quite rapidly over the past five years, particularly for multifamily properties. Because commercial real estate is widely held in the portfolios of leveraged institutions, commercial real estate cycles can amplify the impact of economic downturns as financial institutions need to write down the value of loans and cut back on lending to maintain their capital ratios.”

The final sentence of Rosengren’s prepared text was likely the impetus for the nearly 400 point drop in the Dow on Friday. Rosengren stated:

“So if we want to ensure that we remain at full employment, gradual tightening is likely to be appropriate. A failure to continue on the path of gradual removal of accommodation could shorten, rather than lengthen, the duration of this recovery.”

Both the stock market and its long-tenured participants know that Rosengren is putting a politically-correct spin on his analysis. It simply wouldn’t do for him to say that the stock market has once again become irrationally exuberant and is likely to become even frothier before it crashes and burns and drives the U.S. economy into the ditch in a replay of 2008.

In reality, this “recovery” has as much staying power as a drooping sunflower after the first hard freeze of winter. While the nation’s newspapers appear to have gone out of their way to ignore this fact, S&P 500 profits have declined year-over-year for five consecutive quarters while overall corporate profits have declined by 4.9 percent over the last four quarters, according to the Bureau of Economic Analysis.

Lael Brainard, a dovish member of the Federal Reserve’s Board of Governors, will deliver a speech today in Chicago in early afternoon. Should a perceived dove on the Board also echo the potential need for a rate hike, not a particularly likely outcome, expect more wild gyrations in stocks.

After Dow futures had indicated a 111-point drop prior to the market open, at 10 a.m., after 30 minutes of trading, the Dow had put in a 12 point advance.

By Pam Martens and Russ Martens: September 11, 2016

Alan Greenspan, Former Fed Chairman, Testifying to the House Oversight Committee on How He Got It Wrong, October 23, 2008

Today marks the 15^th Anniversary of the tragic events of September 11, 2001 and yet the American public remains in the dark about critical details of hundreds of billions of dollars of financial dealings by the Federal Reserve in the days, weeks and months that followed 9/11.

What has also been lost in the official 9/11 Commission Report, Congressional hearings and academic studies, is how Wall Street, on the day the planes slammed into the World Trade Towers, was on the cusp of being exposed by the New York State Attorney General, Eliot Spitzer, as the orchestrator of a fraud of unprecedented proportion against the investing public. That investigation was stalled for more than six months. It would have been politically incorrect to do perp walks outside Wall Street’s biggest investment banks as families mourned the loss of their loved ones; as U.S. savings bonds were renamed Patriot Bonds to rally patriotism around the country; and Congress paid homage to the heroes at the big banks, the stock exchanges and the Federal Reserve for getting the system back up and running in less than a week.

The loony policies of laissez-faire capitalism of Fed Chair Alan Greenspan, who worshiped at the feet of Ayn Rand, were also bailed out by the events of  9/11. Members of the Senate Banking Committee praised him on September 20, 2001 for his performance. Amazingly, at this hearing, just nine days after the attack, not one Senator asked Greenspan how much money the Fed had spent or to whom it went. The percolating collapse of Wall Street was held off for seven more years until 2008 when it finally became impossible to deny that Greenspan’s brand of financial deregulation and the repeal of the Glass-Steagall Act he had pushed for, had left Wall Street in ruins – without any assault from the skies.

Here’s where Wall Street and the U.S. economy stood on September 10, 2001, the day before an attack in lower Manhattan provided the excuse for the Federal Reserve to flood Wall Street with unquestioned amounts of cash: The Nasdaq stock market, filled with the stocks of rigged analyst research from the iconic firms on Wall Street (the target of Spitzer’s investigation), had imploded, losing 66 percent of its pumped up value and wiping out $4 trillion in wealth. While it wasn’t yet known at the time, being only officially acknowledged long after 9/11, the U.S. economy had contracted for two consecutive quarters and was looking at another negative quarter of growth.

Thus, it was quite advantageous for Alan Greenspan’s legacy as Chair of the Federal Reserve and what might have been an even worse economic slump that the Fed was given carte blanche to funnel hundreds of billions of dollars to Wall Street after 9/11 with the Federal government pumping billions more in fiscal stimulus.

According to a report from the New York Fed, an “unprecedented” amount of liquidity was pumped into the system. The Congressional Research Service quantifies the “unprecedented” amount as “$100 billion per day” over a three-day period beginning on 9/11. But the idea that the bailout lasted only a few days or weeks is misguided. The consolidated annual reports of the Federal Reserve Banks show that the Fed’s balance sheet grew from $609.9 billion at the end of 2000 to $654.9 billion at the end of 2001 to $730.9 billion at the end of 2002 and $771.5 billion as of December 31, 2003.

According to the 2001 Annual Report of the Chicago Fed, one unnamed bank was so grateful for the largess flowing from the Fed that it sent “a thousand packages of LifeSavers candy to each of the 45 Fed offices.”

A report prepared by Stacy Panigay Coleman for the Federal Reserve’s Division of Reserve Bank Operations and Payment Systems indicated that the flood of money took various forms on and after 9/11:

A handful of the largest, again unnamed, Wall Street banks were dramatically overdrafting their accounts at the Fed, resulting in daylight overdrafts peaking at “$150 billion on September 14, their highest level ever and more than 60 percent higher than usual….” According to other annual reports at regional Fed banks, fees were waived by the Fed for these massive overdrafts.

Coleman reports that “discount window loans rose from around $200 million to about $45 billion on September 12.”

Gail Makinen, Coordinator Specialist in the Economic Policy, Government and Finance Division of the Congressional Research Service delivered a 60-page report on other flows of money as a result of 9/11. Makinen found that New York City received the following in Federal aid as of the date of her report in September 2002:

“$11.2 billion appropriated in September 2001 for debris removal and direct aid to affected individuals and businesses [again, the businesses go unnamed]; just over $5 billion in economic development incentives was approved in March 2002; and another $5.5 billion for a variety of infrastructure projects for New York City was approved in August 2002.”

Greenspan’s weak economy received another form of bailout. Makinen writes:

“Although legislation initially introduced was directed at workers adversely affected by 9/11, the legislation that ultimately passed dealt with the economy-wide recession. It extended unemployment compensation (UC) benefits 13 weeks for those who had exhausted their basic benefits, and for UC exhaustees in ‘high-unemployment states,’ it provided 13 weeks of benefits beyond the initial 13-week extension.”

The Congressional Research Service also noted that “overtime wages of police and firefighters raised national income by $0.8 billion” in the third quarter of 2001.

Then there was the bailout of the airlines. Makinen reports:

“At the time of 9/11, the industry was already in financial trouble due to the recession. 9/11 severely compounded the industry’s financial problem. Even though the federal government quickly responded with an aid package that gave the airlines access to up to $15 billion (consisting of $5 billion in short-term assistance and $10 billion in loan guarantees), it is by no means certain that the industry will not have to undergo a major reorganization typified by U.S. Airways filing for Chapter 11 bankruptcy and United suggesting that it may take a similar course of action.”

The Fed’s rapid cuts in the Federal Funds Rate and Discount Rate after 9/11 was worth hundreds of billions of dollars more to the big Wall Street banks by lowering their borrowing costs. On September 17, before the stock market opened for the first time since the 9/11 attack, the Fed announced it was cutting both the Fed Funds Rate and the Discount Rate by 50 basis points (half of one percent). Two weeks later, on October 2, the Fed slashed both the Fed Funds and Discount Rates by another 50 basis points. Stunningly, on November 6, one month later, it again cut both rates by 50 basis points, bringing the Fed Funds Rate to 2 percent and the Discount Rate to 1-1/2 percent. On December 11, both rates were cut again but this time by just 25 basis points. The Fed Funds Rate was now trading at the lowest level in 40 years.

The Fed then went on pause until November of the following year, when it again slashed 50 basis points from both the Fed Funds Rate and the Discount Rate. At this point, the Fed Funds were at 1-1/4 percent while the Discount Rate was a miniscule ¾ percent.

When President George W. Bush submitted his budget in January 2002, it carried this often repeated misstatement of fact: “The terrorist attacks pushed a weak economy over the edge into an outright contraction.” That was the official narrative – which served to soften Greenspan’s gross bungling of his job as Fed Chair.

Using 9/11 as a handy source of blame would go up in smoke on March 26, 2002 when the National Bureau of Economic Research announced that the U.S. economy had entered a recession in March 2001, six months before the attacks. The Commerce Department weighed in on July 29, 2002 with data showing that GDP had contracted in the first, second and third quarters of 2001. Rather than pushing a “weak economy over the edge into an outright contraction,” it is highly likely that the unprecedented amounts of money infused by the Federal Reserve and the government after 9/11 actually bailed out a seriously contracting economy.

The Chicago Fed’s 2001 Annual Report contains further information on the enormous amount of money flowing from the Fed. The report notes the following regarding the actions immediately after 9/11:

“The Fed begins to flood the financial system with record levels of liquidity by executing repurchase agreements. These overnight loans collateralized with government securities are used routinely in open market operations, but seldom top a few billion dollars each day. On Wednesday [September 12], the Fed injects $38 billion, more than double the previous record. Thursday [September 13], the Fed shatters that mark with $70 billion. The next day, the Fed injects even more — $81 billion. [Which banks were at the other end of these trades with the Fed? The public, to this day, has no idea.]

“In addition, the Fed does not offset the float generated by check-processing delays. Typically, if check deliveries are delayed, the Fed ‘soaks up’ the float through open market operations. The Fed opts to let the float remain, providing additional liquidity. The result is $23 billion in float on September 12 and a daily average of $28 billion in float for the week ending September 19.”

The Chicago Fed’s report also indicates that an additional “$90 billion in liquidity” was added by the Fed setting up 30-day dollar swap agreements with the European Central Bank, the Bank of Canada and the Bank of England.

Then there was the stimulus added to the economy through the creation of the juggernaut known as the Department of Homeland Security. According to a Government Accountability Office report in 2011, that Federal agency in 2011 was  “the third-largest federal department, with more than 200,000 employees and an annual budget of more than $50 billion.”

The Fed was not the only Wall Street regulator to be given a free pass during and after 9/11. The Chair of the SEC at the time, Harvey Pitt, a long time lawyer to Wall Street banks, testified before the Senate Banking Committee on September 20, 2001 that the SEC had, for the first time, “invoked the emergency powers that you bestowed upon us.” According to testimony from U.S. Treasury Secretary Paul O’Neill at the same hearing, the emergency relief the SEC invoked “included providing relief under Rule 10b–18 which provides a safe harbor from liability for manipulation in connection with purchases by an issuer of its own stock. The relief gives issuers greater latitude to provide buy side liquidity this week.”

Typically, corporations are not allowed to buy back their own stock during the opening minutes of trading on the stock exchanges. It is likely that requirement was waived when the market reopened on September 17, 2001 according to O’Neill’s statement at the Senate Banking hearing.

On April 14, 2002 – seven long months after 9/11 – the public finally found out what Eliot Spitzer knew about how the public had been hosed by the iconic investment banks on Wall Street. Spitzer released an affidavit he had filed with the New York State Supreme Court which indicated that his investigation had commenced in June of 2001.

The New Yorker’s John Cassidy perfectly described the mess that Greenspan and the Bill Clinton administration had ushered in by getting Congress to repeal the Glass-Steagall Act, which had separated banks holding insured deposits from the trading and underwriting firms on Wall Street:

“Long-standing restrictions on the financial industry were relaxed, allowing firms of all kinds to join together. Union Bank of Switzerland acquired PaineWebber; Salomon merged with Smith Barney, which was owned by Travelers Group, which then merged with Citicorp. These deals, and many more like them, blurred the traditional line between retail brokerages, such as Merrill Lynch and Dean Witter, which catered principally to the investing public, and investment banks, like Morgan Stanley and Goldman Sachs, which dealt primarily with corporations. The new all-purpose financial supermarkets that resulted from the merger wave, such as Citigroup, J. P. Morgan Chase, and Morgan Stanley Dean Witter, were, in the words of Paul Volcker, a former chairman of the Federal Reserve Board, ‘bundles of conflicts of interests.’ ”

Spitzer’s office would later uncover thousands of emails at Salomon Smith Barney, the investment bank and retail brokerage arm of Wall Street banking behemoth, Citigroup, showing that in 2000 and 2001, prior to 9/11, retail brokers at Salomon Smith Barney were livid at Jack Grubman, the telecommunications analyst that had issued buy ratings on startups that repeatedly crashed and burned. One broker wrote in an email that Grubman was “an investment bank whore.” One email from Grubman explained the corrupt scheme in simple terms: “Most of our banking clients are going to zero and you know I wanted to downgrade them months ago but got huge pushback from banking.”

At some of the biggest banks on Wall Street, research analysts were telling the public to buy, buy, buy while secretly emailing their colleagues that the companies were “crap,” “junk” or a “piece of sh*t,” as illustrated by the emails released by Spitzer.

In April 2003, 10 of the banks investigated settled charges for $1.4 billion – marking the beginning of an era of massive fines and little meaningful change on Wall Street. The heads of the divisions that oversaw this massive fraud were never prosecuted. PBS reported the slaps on the wrist as follows:

“Two of the most well known analysts, who came to symbolize the conflicts of interest of the 1990s bull market, were fined and banned for life from the securities industry. Henry Blodget of Merrill Lynch was ordered to pay $4 million in fines and Jack Grubman of Salomon Smith Barney was ordered to pay $15 million as part of the terms of the settlement. In addition, Sanford I. Weill, CEO of Citigroup, was banned from talking to his firm’s analysts about their research outside of the presence of company lawyers.”

Weill walked away from Citigroup with compensation that had made him a billionaire. Grubman paid $15 million in fines but his compensation at Citigroup’s Salomon Smith Barney had “exceeded $67.5 million, including his multi-million dollar severance package” according to the SEC. (Note that on Wall Street one gets a severance package for fraud.) Blodget went on to found the financial news web site, “Business Insider,” which was sold last year for $343 million, a nice share of which Blodget will keep.

How did the shareholders in Citigroup and Merrill Lynch make out? Citigroup is currently trading (despite a 1-for-10 stock split attempting to dress up its price) at 10 percent of where it was trading on this date a decade ago. Merrill Lynch succumbed into the arms of Bank of America during the Wall Street crash of 2008, taking Bank of America shareholders on what the Wall Street Journal rightly called the “$50 Billion Deal from Hell.” The Journal notes further that the CEO of Merrill, John Thain, had “furnished his office with an $87,000 rug, arranged $25 million goodbye packages for his own hires, and handed out billions of dollars in last-minute bonuses to his staff before the acquisition closed.”

Where did Wall Street learn about how to funnel billions without going to jail? At the knee of the Federal Reserve, of course.

By Pam Martens and Russ Martens: September 9, 2016

Richard Gage, AIA, Founder and CEO of Architects & Engineers for 9/11 Truth (AE911Truth.org)

Fifteen years after 9/11, an expanding international body of scientific researchers and legal experts continue to challenge the official narrative of 9/11. They will host a two-day symposium this Saturday and Sunday in the historic Great Hall of Cooper Union in New York City to present the science-based evidence they have compiled.

Tickets will be available at this site for a limited period of time. (See the two-day program and lineup of speakers here, here and here.)

Saturday’s program will include a presentation by Dr. J. Leroy Hulsey on the preliminary findings of a computer modeling study of the collapse of World Trade Center Building 7, a 47-story skyscraper in lower Manhattan that was not hit by a plane but collapsed to the ground within seconds at 5:20 p.m. on the afternoon of 9/11. The study is being conducted at the University of Alaska Fairbanks (UAF) using finite element modeling. Dr. Hulsey is the Chair of UAF’s Civil and Environmental Engineering Department. He is being assisted by two Ph.D. research assistants. (See video below.)

One of the special guest speakers at the symposium will be Bob McIlvaine, a retired school teacher from the Philadelphia area. McIlvaine’s son, Robert Jr., worked for Merrill Lynch and perished on 9/11. Robert Jr. was among the many to die on the 106^th floor of the North Tower where a conference had attracted attendees from across Wall Street that morning. Bob McIlvaine is one of the few family members of 9/11 victims who has openly challenged the official narrative for many years.

Also speaking at the symposium will be Richard Gage, AIA, a San Francisco Bay Area architect of 25 years, a member of the American Institute of Architects, and the founder and CEO of Architects & Engineers for 9/11 Truth (AE911Truth.org), a nonprofit that includes more than 2,000 licensed architects and engineers who have signed a petition calling for a new, independent investigation, with full subpoena power, into the destruction of the Twin Towers and Building 7.

The Master of Ceremonies for the first day of the symposium will be Mark Crispin Miller, Professor of Media, Culture and Communication at New York University, and a noted author and speaker. Master of Ceremonies for day two of the symposium will be William Pepper, a barrister from the United Kingdom who is engaged in Human Rights Law, for a time convening the International Human Rights Seminar at Oxford University.

By Pam Martens: September 8, 2016

BBC Correspondent Jane Standley Reported the Destruction of WTC 7 Before It Collapsed – Even Though the Building Could Be Seen Behind Her.(Photo Courtesy of Architects and Engineers for 9/11 Truth.)

This Sunday will mark the 15th anniversary of the 9/11 tragedy – one of those seminal events in human memory that is seared forever on the brain. Because of the emotional toll 9/11 took on the human psyche — watching U.S. commercial airline planes converted to killing machines on U.S. soil — America’s collective memory of exactly what happened on 9/11 has more to do with repetitive TV clips of the Twin Towers collapsing and a rush to war than specific details of the actions of those pulling the monetary levers on Wall Street.

The day’s events were so bizarre and triggered such cognitive dissonance that millions of Americans did not realize for years that a third World Trade Center skyscraper had collapsed in lower Manhattan that day. World Trade Center Building 7, a 47-story skyscraper not hit by a plane, collapsed at 5:20 p.m. on 9/11 in an almost identical fashion as World Trade Centers One and Two had collapsed in the morning. The organization, Architects and Engineers for 9/11 Truth, which consists of more than 2,000 licensed architects and engineers, do not believe the official version of how these buildings collapsed and have signed a petition calling for a new, independent investigation of 9/11 by a body with full subpoena power.

This is the first time we are writing about 9/11 in any detail. Our small town of Garden City, Long Island, New York, where we lived at the time, was heavily impacted. The memories are painful. Long Island as a whole experienced almost 500 deaths out of the almost 3,000 who died on 9/11. Our next door neighbor, a wonderful husband and father to two young sons, lost his life that day. We stood by a colleague at work watching the news unfold on TV on the morning of 9/11 and painfully remember his dash to race home to his family. His brother worked for Cantor Fitzgerald, a Wall Street firm that lost 658 of its 960 employees that day, including his young brother.

What has been lost in the emotional toll of that day is the reality that the massive bailout by the Federal Reserve of Wall Street in 2008, had its test run on 9/11. We know a great deal about the $13 trillion that the Fed secretly infused into Wall Street banks and foreign banks in cumulative loans from 2007 through 2010 because Bloomberg News battled in court for years to unleash the information from the iron grip of the Fed. The public knows much less about the massive Fed bailout during 9/11 and Fed Chair Alan Greenspan, according to a transcript from a teleconference after 9/11, demanded that those in the know at the Fed coordinate any public comments with the Fed before making them.

What few Americans remember is that the stock market was in terrible shape prior to 9/11 because of corrupt analyst research practices on Wall Street. The Nasdaq had closed at 1695 on the day before 9/11 – a stunning 66 percent drop from its peak in March of 2000. The dot.com bust had led to one of the largest destructions of U.S. wealth in stock market history. The U.S. economy was also in a swoon as a result.

The New York Times’ Ron Chernow wrote about the abysmal state of Wall Street six months before 9/11: “Let us be clear about the magnitude of the Nasdaq collapse. The tumble has been so steep and so bloody — close to $4 trillion in market value erased in one year — that it amounts to nearly four times the carnage recorded in the October 1987 crash.” Chernow compared the Nasdaq to a “lunatic control tower that directed most incoming planes to a bustling, congested airport known as the New Economy while another, depressed airport, the Old Economy, stagnated with empty runways. The market functioned as a vast, erratic mechanism for misallocating capital across America,” wrote Chernow.

The Federal Open Market Committee (FOMC) minutes of August 21, 2001, just a few weeks before 9/11, confirm the sorry state of both the economy and the stock market as follows:

“Business spending on equipment and software declined substantially in the second quarter after falling somewhat in the preceding two quarters…orders data for June were extraordinarily weak, led by a steep decline in communications equipment. Those data, as well as numerous anecdotal reports, suggested further weakness in spending for equipment and software going forward. Nonresidential construction, which had held up well in the first quarter, was down substantially in the second quarter, as spending for office, industrial, and lodging facilities contracted sharply. Vacancy rates, particularly in high-tech centers, had increased significantly in recent months, as demand for office space and data centers plunged…

“A spate of weak second-quarter earnings reports and sizable reductions in analysts’ earnings projections for the remainder of the year took a toll on equity markets, however, and broad stock market indexes moved down appreciably over the intermeeting interval…”

The 9/11 tragedy gave the Fed the freedom to crank enormous sums of liquidity into Wall Street within just a few days. Its minutes and transcripts show the following:

On September 12, 2001, the FOMC voted unanimously to establish a $50 billion swap line with the European Central Bank;

On September 13, 2001, the FOMC voted to increase the swap line with the Bank of Canada from $2 billion to $10 billion;

On September 14, 2001, the FOMC voted to establish a $30 billion swap line with the Bank of England;

On Monday morning, September 17, 2001 – prior to the opening of the New York Stock Exchange for the first time since it closed on 9/11, the Federal Reserve announced it was cutting its Fed Funds Rate and Discount Rate by 50 basis points (one-half of one percent), giving Wall Street a windfall in lowered borrowing costs. Over the next three months, the Fed would cut its benchmark Fed Funds rate by another 125 basis points.

In a teleconference meeting by the FOMC on September 13, 2001, just two days after 9/11, Jerry Jordan, President of the Federal Reserve Bank of Cleveland at the time, gave this description of the $100 billion the Fed had thus far pumped into Wall Street:

JORDAN. “Mr. Chairman, this is Jerry Jordan in Cleveland. As we demonstrated yesterday, our ability to inject liquidity into the system as needed is very, very large. It appears to me — with the combination of discount window borrowing yesterday, RPs, overnight overdrafts, and the Fed float — that we’ve added about $100 billion worth of liquidity. So it would be hard to imagine the availability of liquidity as an issue. And for the sophisticated people in the financial industry, I think that has already had a very calming effect.”

At another teleconference call on the morning of September 17, Fed Chair Greenspan effectively warned the Fed governors to keep a lid on how much they shared with the public. According to the transcript of the call, Greenspan stated:

GREENSPAN: For the time being, all of our remarks should be coordinated and made as official statements of the Federal Open Market Committee. As a consequence, when you are out talking — as indeed I think you obviously have to be — there is no reason why you cannot discuss what we have in fact done in areas such as the payments system and the swap lines. We can discuss issues relating to the effects of this disruption, including the bulging of the Federal Reserve’s balance sheet and the ultimate expectation that within a reasonably short period of time it will converge back to normal, as well as other issues of that nature. I would stay away from commenting on what we did just now and I would refrain from speculating about the American economy. There is no way to discuss the outlook for the American economy without discussing monetary policy or implying in somewhat precise form what the options may be…If there are any statements coming out of the Federal Reserve, we have to make certain that they are coordinated and that we all effectively agree on the statements that we make.”

In the same call, William J. McDonough, President of the New York Fed which is headquartered just blocks from the New York Stock Exchange, explained what else was being done to rally spirits on Wall Street: “we have the building wrapped in bunting, we have a big flag flying, and we’re playing patriotic music from the parapet.”

When I returned to work after 9/11, there were American flag lapel pins for every employee placed by an unseen hand on our desks. But flags and patriotic music blaring from the parapets is not the same thing as truth and facts.

The families of the victims, the public, the architects and engineers who have thoroughly discredited the official story, and all of us who are repulsed by watching Wall Street bailed out of its crimes, time after time, deserve facts from a truly independent commission with meaningful subpoena power.

By Pam Martens and Russ Martens: September 7, 2016

Wall Street was determined that a Democratic Socialist like Senator Bernie Sanders would never occupy the Oval Office. In hindsight, Wall Street may come to seriously regret that it and a full blown conspiracy at the Democratic National Committee blocked the ascendancy of one of the most popular and trusted presidential candidates in a generation.

Trust and confidence are essential ingredients for a healthy stock market and U.S. economy. According to the Bureau of Economic Analysis, U.S. consumers spent over $12 trillion last year “on all kinds of stuff, including new cars, furniture, clothes, groceries, beauty products, electronics, visits to doctors and dentists, and tickets to sporting events and movies.” The total U.S. GDP for 2015 was $17.947 trillion. That makes the consumer the Decider in Chief of what happens in the U.S. The consumer’s willingness to spend represented 66.86 percent of total GDP last year.

Consumers are also workers. Sanders wanted to give them a bigger piece of the corporate profits pie that would likewise bolster the U.S. economy. Consumers are also taxpayers. Sanders wanted to help consumers by making the super wealthy pay their fair share in taxes. Consumers are also voters – Sanders wanted to give them a President who represented the people, not special interests.

But dark forces prevailed and “the people” have ended up with two presidential candidates with the lowest approval ratings in memory. According to a Washington Post-ABC News Poll taken between August 24-28, 2016, 56 percent of Americans have an unfavorable opinion of Hillary Clinton. The Washington Post notes for good measure that this is “the worst image Clinton has had in her quarter-century in national public life.” Donald Trump weighs in with an unfavorable opinion by 63 percent of Americans. If you look at just registered voters, according to the poll, Clinton and Trump are running almost neck and neck with an unfavorable rating of 59 percent for Clinton and 60 percent for Trump.

Unlike Sanders, who has enjoyed a scandal-free quarter century in the House and Senate, both Clinton and Trump have citizens walking on pins and needles waiting for the next scandal to unfold and bring further disgrace to the country.

The worry among Americans that the unbridled tongue of a President Trump could sack U.S. relations with its allies and trading partners is getting a test pilot rollout in the form of Philippine President Rodrigo Duterte. According to the Guardian newspaper, Duterte has recently called President Obama “the son of a whore,” labeled the U.S. ambassador to Manila a “gay son of a whore,” and told the Catholic Church, “don’t f*** with me.” The Philippine stock market has responded in kind by selling off as foreign investors yank their money.

Trump’s refusal to release his tax returns has also cast a pall over his campaign as Americans worry that his presidency would be dogged with financial scandals and conflicts of interest.

The ubiquitous scandals swirling around Hillary Clinton have Americans equally on edge. And they can be multiplied by a factor of two since both Hillary and Bill Clinton will inhabit the White House if she is elected President. The Associated Press moved the scandal meter into the red zone on August 23 with an investigative report on the Clinton Foundation, a charity set up by the Clintons. The report found that: “At least 85 of 154 people from private interests who met or had phone conversations scheduled with Clinton while she led the State Department donated to her family charity or pledged commitments to its international programs, according to a review of State Department calendars released so far to The Associated Press. Combined, the 85 donors contributed as much as $156 million. At least 40 donated more than $100,000 each, and 20 gave more than $1 million.”

The article portrayed a pay-to-play operation on steroids. The Associated Press had to go to Federal court to get the State Department to release Clinton’s detailed daily schedules and now the State Department is saying it will not release the other half of these records until after the election. (This Federal agency is starting to sound like it’s putting its finger on the scale for Clinton similar to what happened at the Democratic National Committee.) Based on what it has obtained so far, the AP concluded that “more than half the people outside the government who met or spoke by telephone with Clinton during her tenure as a Cabinet secretary had given money – either personally or through companies or groups – to the Clinton Foundation. The AP’s analysis focused on people with private interests and excluded her meetings or calls with U.S. federal employees or foreign government representatives.”

Can either of these candidates rally confidence and trust in a nation where S&P 500 profits have declined year-over-year for five consecutive quarters. Where overall corporate profits have declined by 4.9 percent over the last four quarters, according to the Bureau of Economic Analysis. Where most Americans feel the fix is in and no matter how hard they work, they’re never going to get a fair deal under either of these candidates in the Oval Office.

Senator Bernie Sanders uniquely understood what is ailing America after the greatest financial collapse since the Great Depression — brought on by new-age Wall Street robber barons in 2008. Sanders set up a special web page to describe his brand of Democratic Socialism, comparing what he sees today to what Franklin Delano Roosevelt saw when he took office in the 1930s: millions “denied the basic necessities of life”; families living on “incomes so meager that the pall of family disaster hung over them day by day”; “millions lacking the means to buy the products they needed and by their poverty and lack of disposable income denying employment to many other millions.”

Sanders further points out that almost everything FDR proposed was called “socialist” at the time. He writes:

“Social Security, which transformed life for the elderly in this country was ‘socialist.’ The concept of the ‘minimum wage’ was seen as a radical intrusion into the marketplace and was described as ‘socialist.’ Unemployment insurance, abolishing child labor, the 40-hour work week, collective bargaining, strong banking regulations, deposit insurance, and job programs that put millions of people to work were all described, in one way or another, as ‘socialist.’ Yet, these programs have become the fabric of our nation and the foundation of the middle class.”

The reality was that FDR put the policies in place to allow a more humane form of capitalism to succeed in America. Those restraints are desperately needed again today.

What does it say about the American system of elections when a voice of substance and reason like that of Senator Bernie Sanders can be kicked to the curb while two deeply discredited and disliked candidates enter the last leg of the campaign for the highest office in the land?