By Bob Chapman
The International Forecaster
September 18, 2008

Losses and bankruptcies of the major banks that we predicted, trouble for the taxpayer who now shoulder a trillion in debt from bank failures, Why do we have to bail out Wall Street fraud? Lehman Brothers left to expire, We are watching our Zombie economy implode, Buy-outs are just throwing good money after bad, Toxic waste eats your equity capital, eats your stocks, your bonds, and eats your retirement funds. 1929 all over again.

The business end of Hanky Panky Paulson’s bazooka is glowing red hot as it continues to fire round after round of high explosive moral hazard contains an up to 85 billion dollar, two-year bridge loan from the Fed to the world’s largest insurer, AIG, to be guaranteed by the US taxpayer via the US Treasury.

Warrants convertible to up to 80% of the common stock of AIG will be pledged as collateral to secure the US Treasury’s loan guarantee to the Fed, with proceeds from the sale of AIG’s now virtually worthless assets being supposedly used to pay down the loan. It’s just Bear Stearns mixed with Fannie and Freddie. You have a loan from the Fed guaranteed by the US Treasury being used to bail out AIG directly instead of being used to facilitate the assassination of BS by a predatory lender (i.e. JP Morgan Chase), and you have what will be ultimate taxpayer ownership of AIG’s toxic waste by having common stock pledged as collateral instead of being purchased through equity injections, as with Fannie and Freddie.

The Treasury’s potential 80% ownership greatly dilutes the value of the existing common shareholders, and the Treasury has been given the right to stop dividend payments on both common and preferred stock of AIG shareholders, which means basically that they have both just been vaporized. The Fed’s Fascist Follies continue.

You, the US taxpayer, will now not only end up owning nearly worthless stock in these corporate cesspools, you have assumed all of their liabilities up to the amount of the loans/capital injections. Remember, the bondholders are still ahead of you!!! BS was $29 billion (plus), Fannie and Freddie are $300 billion just for openers, soon to grow into a loss in excess of one trillion, perhaps even as much as two trillion or more, and now we pour another 85 billion into the pot of boiling moral hazard for AIG. As we inhale the radioactive fumes from the detonation of this latest round of DU laced moral hazard, the stock markets and the dollar rally, while gold and silver decline, all thanks to the manipulation of markets that are rigged daily by the same scum who are bailing out the fraudsters. It is nothing short of surreal.
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