The Mullahs' Revenge

The "Hindenburg Omen", a term owed to the 1929 crash that brought on the Great Depression is said to be in the offing whenever there are a large number of both new 52 week highs and 52 week lows on the NYSE.

The stars were thus aligned in the fall of 2005. Unfortunately the Federal Reserve then decided it could outflank history. Greenspan resigned as Fed chairman the following January after agreeing to add $38 billion in govt. reserves. At the very same time Ben Bernanke, Bush's budget adviser, was appointed to replace him while the Fed quietly reported that the following quarter it would hide M-3, the broadest measure used to estimate the supply of money within an economy. Why the secrecy?

The Iranian Bourse

Despite a complete absence of coverage from the U.S. media conglomerates, a financial nightmare was unfolding. By invading Iraq and toppling Saddam Hussein Bush had empowered the country most able and determined to undermine U.S. influence. If successful an Iranian bourse that allows international buyers to buy oil in euros would mean the demand for U.S. dollars would collapse, staunching credit and liquidity.

So when Arianna Huffington asks who are these mysterious, unconfirmed counterparties to AIG's serial recklessness we must recognize that the CIA also functions through "legitmate companies". AIG had long been exposed for its lawbreaking. Its executives had confessed to criminal charges but Spitzer's investigations may have only scratched the surface. A paper trail stretching back a decade reveals that AIG regularly used offshore shell companies to skirt the law.

One current scam worked like this: Marsh, an insurance broker, was supposed to find the best insurance policies for its clients from a wide range of companies. Instead it steered the policies to companies such as AIG that agreed to pay kickbacks. It solicited phony competitive bids for insurance contracts to deceive customers into thinking there was real competition for their business. Marsh made $800 million on kickbacks in 2003 alone – over half its $1.5 billion profit. With a 40-percent share of the global insurance brokerage market, its fraud drove up prices for everyone. But as Business Insurance bemoaned, AIG received "little more than a tap on the wrist. The message delivered here is that a company of AIG's power have things pretty much its own way."

So where did all those billions of taxpayer dollars go? My guess is to pay off China, and perhaps Russia and Saudi Arabia.

From the London Telegraph: "Fannie and Freddie - the world's two biggest financial institutions - make up almost half the $12 trillion US mortgage industry. But that understates their vital importance at this juncture. They are now serving as lender of last resort to the housing market, providing 80pc of all new home loans.

Roughly $1.5 trillion of Fannie and Freddie AAA-rated debt - as well as other US "government-sponsored enterprises" - is now in foreign hands. The lion's share of US mortgage debt is held by the central banks of China, Russia and petro-powers. These countries could all too easily precipitate a run on the dollar in the current climate and bring the United States to its knees, should they decide that it is in their strategic interest to do so.

George W. Bush should be hailed as hero ... in Teheran.