James Pethokoukis suggests that the lights burned late on Friday at the White House and loud sounds of weeping could be heard by anyone nearby.

[Friday] night in a new report, Democrat-friendly Goldman Sachs dropped an economic bomb on President Obama’s chances for reelection (bold is mine):

Following another week of weak economic data, we have cut our estimates for real GDP growth in the second and third quarter of 2011 to 1.5% and 2.5%, respectively, from 2% and 3.25%. Our forecasts for Q4 and 2012 are under review, but even excluding any further changes we now expect the unemployment rate to come down only modestly to 8¾% at the end of 2012.

The main reason for the downgrade is that the high-frequency information on overall economic activity has continued to fall substantially short of our expectations. … Some of this weakness is undoubtedly related to the disruptions to the supply chain—specifically in the auto sector—following the East Japan earthquake. By our estimates, this disruption has subtracted around ½ percentage point from second-quarter GDP growth. We expect this hit to reverse fully in the next couple of months, and this could add ½ point to third-quarter GDP growth. Moreover, some of the hit from higher energy costs is probably also temporary, as crude prices are down on net over the past three months. But the slowdown of recent months goes well beyond what can be explained with these temporary effects. … final demand growth has slowed to a pace that is typically only seen in recessions. .. Moreover, if the economy returns to recession—not our forecast, but clearly a possibility given the recent numbers …

Alarms bells must be ringing all over Obamaland today. Unemployment on Election Day about where it is right now? Sputtering — if not stalling — economic growth? To many Americans that would sound like the car is back in the ditch — if it was ever out.

Christopher Chantrill explains why the democrats are completely screwed.

[T]he two political parties are diametrically opposed on recession-fighting policy. The Republican recipe to “boost growth” is to lower tax rates and regulation, and the Democratic recipe is to “invest” in stimulus spending. For Republicans, “structural economic policy changes” means reform Social Security and Medicare; for Democrats it means raise taxes.

There is no “agreement.” There is only a game of chicken to see who blinks first before August 2.

But we are conservatives. We do not just want to “win;” we want to do the right thing. How do we get out of the recession?

The best way to understand a recession is this: It is a period of adjustment during which the malinvestments of the previous boom are liquidated. Usually, in our era, booms are ignited by cheap money injected into the credit system by government. Cheap money seduces people into borrowing too much.

In the 2000s boom the malinvestments were the homes that millions of people bought with cheap credit, courtesy of Fannie, Freddie and CRA. Homebuilders expanded and sucked a ton of workers and capital goods into homebuilding. Everything looked good until interests rates rose and home prices started to decline.

You know what happened next. “Malinvestment” became nightmare investment, as the greedy bankers foreclosed on millions of homes, and home prices cratered.

But at some point the foreclosures will ease up, bottom-feeders will buy up the flood of houses, and home construction will resume.

The logic of Democratic “stimulus” is that if government shovels out enough money it will tide the economy over the crater. Home prices will recover, businesses will revive, and growth will resume. But what if home prices don’t recover before the stimulus runs out?

Back in 2009, the Obama administration made a judgment, implicit or explicit, that the housing crisis would be over in a couple of years, and that cheap money (QE1 and QE2) and a trillion dollar stimulus program would tide the economy over till then. But they were wrong. The housing market still hasn’t bottomed out, and the economy hasn’t snapped back, as this chart demonstrates.

The Obama mistake was bad enough but the Obamis made a second error. Assuming that the economy would revive in accordance with Baldrick’s cunning plan, they went ahead with their plans for expanding government spending and regulation, spraying money at their deserving supporters. They thought that the economy would soon be strong enough to increase the weight of government. With ObamaCare they increased the weight of government in health care. With regulation, spending, and subsidies pushing green energy they increased the weight of government in energy production.

That’s where the slick assumptions in Cohn’s “increase short-term deficits in ways that boost growth” kicks in. Suppose your “short-term deficit” doesn’t boost growth? Suppose it is just another wasteful government program that increases the weight of government, and postpones the day when happy days are here again?

That’s where the Obamis are sitting right now. They have shot their bolt with cheap money and stimulus spending and cranked up the National Debt by 40 percent. But here we are in Summer 2011 and there is still no light at the end of the tunnel.

To fix things the Obamis would have to adopt the Republican agenda and reduce the weight of government. They would have to repeal ObamaCare, reverse their green energy boondoggle, lower tax rates, and cut wasteful government spending.

You can see the problem. For the last 40 years, ever since the “unexpected” success of Reaganomics, liberals have been telling themselves and everyone else that supply-side economics is a mirage. Now they have to admit that everything they believe is wrong.

For the second time in some of our lifetimes, the American voting public has been treated to a full-scale, practical test of left-wing, Keynesian economics in operation. We saw all this before in the latter half of the 1970s.

Barack Obama’s great leap forward to the shiny new American European-style welfare state has turned a political version of Bernard Law Montgomery’s WWII Operation Market Garden, Obamacare being the “Bridge Too Far.” But the economics of the world of reality is actually a less forgiving, and much more formidable adversary, than the Germany Army in the Fall of 1944. The Allies went on to win WWII. Obama will be going to join Jimmy Carter in the ashbin of history and will soon be Carter’s rival for the title of worst president anyone can remember.

Ed Feulner says our current situation reminds him of one of the great moments of television history.

Twenty-five years ago, Geraldo Rivera hosted a greatly hyped TV special called “The Mystery of Al Capone’s Vaults.” It still stands as one of the highest-rated programs in television history.

On the ballyhooed night, cameras crept through the tunnel to the vault. There, on live TV, workers pulled down the concrete wall. The dust settled, and the cameras peered inside. And what did spellbound viewers behold? A pile of dirt, a few empty gin bottles and a discarded stop sign. Such were the treasures in Al Capone’s vault.

A quarter-century later, this serves as a wonderful metaphor for the grand project of progressivism. Since the dawn of the 20th century, progressives have foretold the blessings they would deliver. Ordinary citizens lack the wits to govern themselves, they said, so let’s put an elite cadre of progressive managers on the case. Give them power, and they soon would have things humming – a chicken in every pot, a Chevy in every garage.

When progressives gained power, they served us the New Deal and Social Security, followed by helpings of the Great Society and Medicare/Medicaid. Now they’re jamming the Obama smorgasbord down our throats – Obamacare, bailouts, stimulus packages, Government Motors and “quantitative easing,” a.k.a. printing money.

That isn’t all. Far from it. For decades, public-sector labor unions harnessed progressivism’s spread-the-wealth creed to extract lavish contracts from government. Workers won guarantees of lifetime health care and generous pensions, often without having to contribute a penny from their own above-market wages.

But instead of simmering in their progressive pots, the chickens are flocking home to roost. Social Security, Medicare and Medicaid are going broke and, if not reformed, will soon devour the entire federal budget, chickens and all.

Read the whole thing.

Political Wire:

June 21, 2011

“Over the last 15 months we’ve created over 2.1 million private sector jobs. (Laughter.)”
—President Obama, in an official transcript of a fundraising speech this week. The transcript was later corrected by replacing “Laughter” with “Applause”.

Walter Russell Mead argues that Barack Obama is starting to look much more like Herbert Hoover.

President Hoover brought some convictions with him to office about how the economy worked, how government worked, and what his role as President should be. As the Depression deepened, he did the best he could within those limits, but nothing seems to have made him reconsider the mix of progressive ideas that he brought with him to the White House. As months of failure and disappointment grew into years, he doesn’t seem to have questioned those core ideas or to think about ways in which the economic emergency might require steps that in normal times would not be taken. He not only failed to end the Depression; he failed to give people a sense that he understood what was happening. Over-optimistic forecasts issued in part to build confidence came back to haunt him. To the public he seemed fuddled and doctrinaire, endlessly recycling stale platitudes in the face of radically new economic problems.

That’s beginning to sound a little like the current President’s predicament. Unless Lady Luck should emerge from retirement to sprinkle some growth dust on the economy, the President could find himself looking more Hooveresque by the day. Worse, President Obama faces problems that Hoover did not have — notably the five shooting wars on his hands in Afghanistan, tribal Pakistan, Iraq, Libya and now, apparently, Yemen.

Via Theo.
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Supposed Christian group that won headlines attacking Paul Ryan’s budget funded by the very secular-minded George Soros.

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Jim DeMint: Your tax dollars at work: $2 million grant to build a “culinary amphitheater,” wine tasting room, and gift shop in Richland, Washington. That makes sense, with the federal deficit where it is, everyone needs a drink.

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Cedar Falls, Iowa wants keys to residents’ homes. It’s for their safety.
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Kayleigh via Jose Guardia: Keynesianism is the equivalent of pouring your can of soda into a glass and trying to claim that, because the soda is now in the glass, you have more soda than if you had not poured it into the glass.
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Michelle Malkin: Woe is Weiner: No skillz to pay the billz. But don’t worry, he has a job offer with a higher salary. And he has a pension.
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Leopold Bloom resigns after erotic letters leak.

Barack Obama, Today show, February, 2009 (around 4:27): “Look, I’m at the start of my administration. One nice thing about the situation I find myself in is that I will be held accountable. I’ve got four years. ... A year from now, I think, people are going to see that we are starting to make some progress. There’s still going to be some pain out there. If I don’t have this done on three years, then there’s going to be a one term proposition.”

Hat tip to Aplusplusplus via Ace via Allahpundit.

James Taranto: “Unlike homosexuality, heterosexuality is amenable to therapeutic remedies—or so Anthony Weiner and his fellow House Democrats would like us to believe.”

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Pam Geller quotes Muslim woman (throwing a backpack onto the DC Red Line train and exiting): “Praise Allah. I’m going to kill the world.”
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Jeff Dunetz: Obama’s Israel Policy: “F*** The Jews, They Will Vote For Us Anyway!”
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Mark Steyn (reporting on last night’s NH debate): “John King makes Tim Pawlenty look like Lady Gaga.”
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Barack Obama: “I wish I could tell you there was a quick fix to our economic problems. But the truth is, we didn’t get into this mess overnight, and we won’t get out of it overnight. It’s going to take time.”

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Iowahawk: “The world is not a high school regional moderated debate & clarinet competition. It’s a high school parking lot gang fight.”

Thomas Jefferson

A little patience, and we shall see the reign of witches pass over, their spells dissolve, and the people, recovering their true sight, restore their government to its true principles. It is true that in the meantime we are suffering deeply in spirit, and incurring the horrors of a war and long oppressions of enormous public debt. If the game runs sometimes against us at home we must have patience till luck turns, and then we shall have an opportunity of winning back the principles we have lost, for this is a game where principles are at stake.
—From a letter to John Taylor of Caroline (June 1798)

Walter Russell Mead (who has recently been on a roll, producing a series of very intelligent articles) argues that the imminent end of the entitlement era marks as profound a change in the American way of life as the century ago passing of the family farm and the transition to majority employment in towns and cities.

The death of the family farm didn’t kill the American republic for several reasons. First, to some degree Jefferson was wrong and Hamilton was right. A strong manufacturing and financial sector can strengthen democracy under the right conditions; ancient, slave-holding Rome was less like modern capitalist New York and London than Thomas Jefferson thought.

But under American conditions there was something else: the end of the family farm did not mean the rise of a propertyless proletariat in the United States. Bankers like A.P. Giannini made the argument that the thirty year mortgage was a weapon against Marx: if the average American family no longer owned a farm, it could still own a house.

Thanks to home ownership, post-agricultural America remained a land of mass property ownership and that experience continued to inform American political and social values. American neighborhoods are still schools of political engagement; it’s clear who keeps up their property, who takes the lead in community activities, who leads the PTA and who coaches the youth league. Property ownership continues to serve as a political tutor; American voters want better municipal services, and they don’t like high property taxes. They have to think about the relationship between the two in every election, and their experience in local affairs continues to inform their ideas about national policy.

At the same time, the fact that most Americans buy their homes through mortgages, and that they have to keep those payments up or lose the old homestead, teaches responsibility and steady habits. If the farmer didn’t get up at dawn to plow the north forty, there was nothing to eat in the winter. If the suburbanite doesn’t get in the car and head onto the freeway every morning, the bank balance sinks and the repo men will come and take the house away. Home ownership also teaches people about investments and compound interest (although lately it has been giving us a painful introduction to bubbles and downturns).

Both versions of the American Dream had this in common: the farm in the valley and the box in the burbs helped the American people develop the skills and the values necessary for successful republican government.

From this standpoint, suburban America looks like a watered down but still potent blend of the original American farmer’s republic. The inherited values and culture coming to us from the old days plus the still potent force of mass home ownership have kept the United States from retracing the steps of older democracies on their slow decline. So far.

But our consumer republic is clearly in trouble. Economically, as I wrote earlier this week, the model is breaking down. The consumer republic is based on debt and depends on high consumption. We are nearing the limits of that kind of economy. The country’s external debt, the explosive growth of federal debt and the weak balance sheets of consumer households are all pointing in the same direction.

The cultural and social weaknesses of the consumer state are if anything more troubling. While suburbia is not the kind of alienating horror show that Marxist critics make it out to be, it is a less effective school for citizenship and character than the family farm. Daniel Bell wrote about the cultural contradictions of capitalism more than thirty years ago; life in a consumer society does not support the virtues and ideas that a healthy society requires.

More broadly, Huck Finn was right and the Widow Douglass was wrong: a holistic life in which family, work, education, leisure and production are all blended and mixed is healthier than an existence in which every sphere of life is rigidly set off from the others. it is not good for children to work long hours in textile mills; it is also not good for them to grow up without participating in and learning about the productive labor that is such a big part of what it means to be human. Family bonds are weaker now that husbands and wives spend so much less time together and mostly cooperate to spend money rather than working together to make it. The family is less of a unit because the real business of each member of the family takes place in some other environment be it the office, the factory or the school.

The special shape of modern and suburban family life is part of the blue social model I’ve been posting about on this blog and the hollowing out of blue society is increasingly felt within as well as around the contemporary American family. The suburban consumption based nuclear family is increasingly under stress; family budgets and time are increasingly on the edge.

More, the very entitlements most under pressure economically are those that have allowed the multigenerational family to yield to the suburban nuclear idyll. Defined benefit pensions, Social Security, home equity and Medicare allowed older Americans to live independent lives and reduced the need for solidarity between the generations. The generations, like the widow’s vittles, were all cooking in their separate pots. ...

The one thing I do know is that change is on its way — more fundamental, more challenging, and also perhaps more exhilarating than many of us are ready for. The health of the American economy is going to require us to move away from the credit card economics of the consumer republic. The health of American society and democracy require that we move beyond the life of the last eighty years.

Read the whole thing.

Nobel Prize winning economist Robert Lucas contended in his Milliman Lecture (.pdf), delivered May 19th at the University of Washington, that US economic growth has been roughly a consistent 3% per year over the last two centuries. There have been deviations from the pattern as a result of wars and financial downturns, but the American economy has consistently returned to the same trend line.

The recession which began in 2008, however, seems possibly to represent a fundamental change. Economic activity has not resumed growth. We have not returned to our customary trend line.

Instead, policies adopted by the Obama Administration and the democrat party congress elected in 2008 may have systematically reduced the American rate of economic growth to levels comparable to those of major European countries.

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You or I read all this and shudder at the terrible news, but the progressive Matthew Yglesias basically accepts Lucas’s analysis and sees this as cause for awarding Obama laurels.

[A]ccording to Lucas, is that Obama’s policies have caused us to deviate permanently to a lower, European-style growth path. The initiation of Social Security didn’t do that. Nor did its expansion in the 1950s. Nor did the creation of Medicare, Medicaid, Title I federal aid to schools or the War On Poverty. The Clean Air Act didn’t do it. Nor did the Clean Water Act or the Americans With Disabilities Act. George W Bush’s expansion of Medicare didn’t do it. Nothing about the growth of the welfare state in postwar America was able to jar America off the American-style growth path and put it on the European path. And then along came Barack Obama, the Affordable Care Act and a few other bills, and like magic we’re Sweden. Forget the economic implications of this. Think about the history! Think about all the unfair knocks Obama’s gotten from the left. A leading economic scholar thinks Obama’s domestic agenda has been far-and-away the most consequential in American history. It’s kind of a big deal.

In other words, when we look around at the ruins of the US economy, the devastated housing market, massive unemployment, a crisis forcing Americans to reduce their life-styles and expectations, a shrinking economy, the financial industry departing overseas, the possible end of the US dollar as reserve currency, and a forced American retreat from military investment and commitments, as most of America despairs, we find the American left rejoicing over the fulfillment of their hopes and dreams.

If there was ever any question as to what the left’s agenda was ultimately directed, as to exactly what its goal really was, well, now you know.

The Fiscal Times reports that the United States is experiencing a level of dependency on government unknown since the depth of the Great Depression.

For the first time since the Great Depression, households are receiving more income from the government than they are paying the government in taxes. The combination of more cash from various programs, called transfer payments, and lower taxes has been a double-barreled boost to consumers’ buying power, while also blowing a hole in the deficit. The 1930s offer a cautionary tale: The only other time government income support exceeded taxes paid was from 1931 to 1936. That trend reversed in 1936, after a recovery was underway, and the economy fell back into a second leg of recession during 1937 and 1938.

Hot Air Pundit: U.S. Debt Jumped $72 Billion Same Day The U.S. House Voted to Cut Spending $6 Billion.

Curt from Flopping Aces forwarded a lengthy posting by MataHarley which raises the question of whether the near financial collapse of 2008 was deliberately engineered, and whether a further stage of the same anti-American offensive remains to be completed.

MH summarizes and discusses the hypotheses advanced in a highly provocative paper on Economic Warfare written in 2009 by Kevin D. Freeman via the DOD contracting system for the Department of Defense Irregular Warfare Support Program (IWSP).

It is undeniable that if the collapse of the financial system was deliberately engineered by calculated attacks aimed at perceived vulnerabilities, those attacks were tremendously successful and resulted in enormous economic losses.

The hypothesis discussed in this paper suggests the very real possibility that financial terrorism may have cost the global economy as much as $50 trillion, roughly 1000 times greater than Bernie Madoff’s fund and equal to nearly four years of American productive output.

[A]n estimated $50 trillion of global wealth virtually vanished. At least $15 trillion of that loss was experienced by Americans, as measured by the combined declines in the value of stocks, bonds, real estate, and other assets.

The hypothesis under consideration is that a three-phased attack is underway with two of those phases completed to date.

The first phase was a speculative run-up in oil prices that generated as much as $2 trillion of excess wealth for oil-producing nations, filling the coffers of Sovereign Wealth Funds, especially those that follow Shariah Compliant Finance. This phase appears to have begun in 2007 and lasted through June 2008.

The rapid run-up in oil prices made the value of OPEC oil in the ground roughly$137 trillion (based on $125/barrel oil) virtually equal to the value of all other world financial assets, including every share of stock, every bond, every private
company, all government and corporate debt, and the entire world‘s bank deposits. That means that the proven OPEC reserves were valued at almost three times the total market capitalization of every company on the planet traded in all 27 global stock markets.

The second phase appears to have begun in 2008 with a series of bear raids targeting U.S. financial services firms that appeared to be systemically significant.

An initial bear raid against Bear Stearns was successful in forcing the firm to near bankruptcy. It was acquired by JP Morgan Chase and the systemic risk was averted briefly. Similar bear raids were conducted against various other firms during the summer, each ending in an acquisition. The attacks continued until the outright failure of Lehman Brothers in mid-September. This created a system-wide crisis, caused the collapse of the credit markets, and nearly collapsed the global financial system. The bear raids were perpetrated by naked short selling and manipulation of credit default swaps, both of which were virtually unregulated. The short selling was actually enhanced by recent regulatory changes including rescission of the uptick
rule and loopholes such as ―the Madoff exemption.

While substantial, unusual trading activity can be identified, the source of the bear raids has not been traceable to date due to serious transparency gaps for hedge funds, trading pools, sponsored access, and sovereign wealth funds. What can be demonstrated, however, is that two relatively small broker dealers emerged virtually overnight to trade ―trillions of dollars worth of U.S. blue chip companies. They are the number one traders in all financial companies that collapsed or are now financially supported by the U.S. government. Trading by the firms has grown exponentially while the markets have lost trillions of dollars in value.

The risk of a Phase Three has quickly emerged, suggesting a potential direct economic attack on the U.S. Treasury and U.S. dollar.

Such an event has already been discussed by finance ministers in major emerging market nations such as China and Russia as well as Iran and the Arab states. A focused effort to collapse the dollar by dumping Treasury bonds has grave implications including the possibility of a downgrading of U.S. debt forcing rapidly rising interest rates and a collapse of the American economy. In short, a bear raid against the U.S.financial system remains possible and may even be likely. Phase Two may have concluded with the brief market rebound that was supported by an emerging regulatory response calling for greater transparency across the board.

Freeman observes: “[W]e remain left with the critical unanswered questions of who and how?”

One important clue must be the bizarre and confusing story of the seizure of $134.5 billion of apparently counterfeit US Treasury bearer bonds being smuggled across the border from Italy into Switzerland in June of 2009 by two Japanese nationals.

St. Louis Adjusted Monetary Base (BASE)

Freeman says that incident “may be as significant as the Japanese radio intercepts were before December 1941.” A hundred and thirty four billion dollars worth of counterfeit treasury bonds here and a hundred and thirty four billion dollars worth of counterfeit treasury bonds there adds up to a lot of money very quickly. The Obama Administration’s expansion of the US Monetary Base already threatens major inflation and jeopardizes the role of the dollar as reserve currency, additional counterfeit-based inflation could easily constitute a tipping-point factor changing our worst fears into reality.

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Freeman refers to, and quotes points made in, an anonymous, non-publicly-available 65-page paper titled Red Flags of Market Manipulation Causing a Collapse of the U.S. Economy, distributed to law enforcement agencies, members of Congress, and regulators.

This report discusses extensive research that shows significant red flags‘ of danger to the world‘s economy from what appears to be market manipulation in the global financial markets, which includes trading in common stocks, options,futures, commodities, currencies, oil, and bonds.

Two companies…are at the heart of this trading and they consistently work in concert. These firms became, virtually overnight, the largest traders in the U.S. financial markets. These companies provide a one-stop-shop for trade execution, back office clearing and bookkeeping that cater to hedge funds and small broker dealers. To give perspective, the amount of trading executed by these two firms in October 2008 exceeded the trading of securities firms Goldman Sachs, JP Morgan and Merrill Lynch combined in the NASDAQ market participant reports.

Key points

1) The firms have traded trillions of dollars worth of U.S. blue chip companies. They are the number one traders in all financial companies that collapsed or are now financially supported by the U.S. government. Trading by the firms has grown exponentially while the markets have lost trillions of dollars in value.

2) These firms appear to own few or no shares of blue chip companies they are number one traders in. There is no doubt that the magnitude of their trading impacted the marketplace. Since the direction of the market place has been in a severe downward trend, the impact from the firms has been and remains, negative to the marketplace.

Some other starling findings in the report, based almost exclusively on reviewing basic trading data, include:

The two previously small broker dealers mentioned in the report are market makers for every major financial services firm under attack.

These firms have a combined 76 different symbols under which they act as market maker (by contrast a major firm such as Citigroup has just 6).

Both firms offer sponsored access.

Both firms offer access to dark pools.

From June through September 2008, the two firms appeared to concentrate on Lehman Brothers, trading 1.04 billion shares while the stock price collapsed from $33.83 to $0.21 on 15 September. This pattern seemed to repeat in every other major financial stock.

The report estimates that the two firms completed as many as 641,000 trades per hour in October 2008 (based on market participation statistics and average trade size from the last available data).

Total trading volume by month in the financial sector listed for these two firms grew from approximately 350,000 shares (less than 1% of all market participant trading) in September 2006 to approximately 600,000 shares in the sector (about 6% of all market participant trading) in September 2007, to over 8 billion shares in the sector (about 19% of all market participant trading) by September 2008. That‘s an increase of 2.4 million percent in two years.

While both firms have been around for several decades, their rapid growth began in 2006 for one and 2007 for the other.

Both firms seem to specialize in the same stocks at the same time, appearing to work in concert.

Combined, the two firms traded 203 billion shares, mostly concentrated in major financial services companies. This compares to a total of 427 billion shares outstanding of all issues on the New York Stock Exchange.

The report estimates trading of at least $5 trillion over the 25-month period ending in November 2008.

The trading appears to represent new money to the marketplace by new participants.

From July 2008 through September 2008, the two firms ―traded more shares of Fannie and Freddie than were issued even as the share prices were collapsing.

The firms were also the largest traders of the UltraShort funds as well as the financial spider (symbol ―XLF) during the reporting period.

The firms also became the largest traders of energy stocks.

The two firms did not and do not hold major equity positions on their books.

The names of these two firms have been purposely withheld in this report because trading data alone is insufficient to consider any accusations against them. But, this trading data is specifically the type of red flag that should prompt further investigation. In addition, even in the event that trades were entered with the purpose of manipulating markets,there is no evidence to suggest that either of the brokerage firms discussed had any knowledge of, or in any way participated in any wrongdoing. They simply could have been conduits through which orders were placed as the laws and regulatory authorities currently allow. Nevertheless, this trading activity does lead to numerous questions:

Who had the capital to effect $5 trillion worth of trades in such a short period?

Who are the clients behind the trades? Are they foreign or domestic?

Why would two long-standing but relatively minor broker dealers be selected for such massive trading rather than the major firms? Did they have more permissive rules for sponsored access?

Why was trading concentrated in the financial firms that failed (Lehman, AIG, Bear Stearns, Fannie, Freddie) or were under threat of failing (Citigroup, Bank of America, Merrill Lynch, and Wachovia)?

There is obviously no definitive evidence here that the Financial Collapse of 2008 was the result of a deliberate strategic plan to bring down the US economy carried out by hostile foreign agencies, but many of the details noted, particularly the scale of bear raids on major US financial institutions, certainly do provoke suspicion. The US Government is hardly about to share what it knows, so the rest of us can only file all this away for future reference, and keep an eye out for further related coverage.