28 December 2007

America's Black Budget & Manipulation Of Markets

OK. Let me start off with a story. When I became Assistant Secretary of Housing, I left Wall St. and went to Washington in 1989, and I walked into the FHA Jim, which at the time was a $300 billion portfolio of mortgage insurance, about 80% of that was single family. So it’s homes, homes that Americans buy, and it’s sort of broad middle class/lower middle class. And I walked in and I said to the guy who was supposed to be the Controller, and I said I’d like to see our financial statements.

So he delivered to my office about 20 pounds of books all on the budget, and I read it twice, and I called him and said “Look, I’ve read this thing twice – a couple of thousand pages – and I can’t find out how much we are making or losing in the single family fund.

“Well that’s because”, he said, “It’s not in the budget”. And I said, “Well where is it?” And he said, “Well the Accountants have it”. And I said, “Well where can I find them?” And he said, “They report to a different Assistant Secretary, you’re not allowed to speak to them”.

2001 we did an estimate, and it turned out that 85% of the first Bush administration budget [was] going to agencies that weren’t in compliance with the audited financial statements rules and reliable financial systems.

And throughout government in fiscal 1999 thru 2000/2001, there were reports of not only failure to produced audited financial statements, but about $3.4 trillion of undocumentable adjustments. Very, very significant. That works out to about $11,000 per American resident.

Now, when people say to me “What is $3.3 trillion of undocumentable adjustments?”, let me give you an example. In fiscal 2000, the Department of Defense had $2.3 trillion in undocumentable adjustments. OK now, there’s no way for us to know Jim, how much of that translates into cash. ‘Cause $2.3 trillion is more than total taxes paid in a year by … say tax payers in that year would have paid taxes of about $1.6 trillion. So, there’s no way to know if $2.3 trillion translates into how much cash, or how much cash is missing.

What we do know is that under the laws of the Constitution, which say money cannot be spent unless it is appropriated. It is essentially a violation of the Constitution to do that, with one exception. And this is where the black budget comes up. There are provisions under the National Security Act of 1947 and the CIA Act of 1949 for military and military intelligence to crawl money from outside of different agencies’ budgets, and spend it on non-transparent purposes. That’s sometimes why it’s called the “black budget”.

And what I found out both as Assistant Secretary of Housing, and then what I found with my company … and with the group of honest guys kicked out of HUD, was you had an agency whose legal purpose and political purpose was to help finance the mortgage markets, whose mortgage insurance programs were increasingly caught up in financing black budget operations. And this is very much tied to what’s going on in the mortgage markets.

Last year we appropriated $87 billion for Iraq, but the administration has repeatedly says it can’t explain where half of that money is going. It was interesting, one of the top reporters who followed the $3.3 trillion of missing money, I asked him the other day, I said, “Where do you think the $87 billion went to?” And they said, “Well, we think it went to finance the states’ deficits, because they were screaming about the states’ deficits, and then all of a sudden it stopped.”

We’ve had a complete implosion of internal financial controls in the governmental apparatus. $3.3 trillion missing from government is a financial coup-d’etat. You can keep a bubble going as long as you can finance it. And my guess is, again very much credited to Bill Murphy, what we’re watching is a securities operation both with the Federal agencies, the mortgage agencies, and the U.S. Treasury, which are financing a political economy. The money that comes in from those debt operations are being used for other than their lawful purposes.

Here’s the question: If we’re manipulating the gold market, who’s financing that? Who’s financing the money that it costs to manipulate the gold market? Well, if $2.3 trillion is missing in a year, that’s plenty enough to manipulate the gold market and a lot of other markets.

We’re running the economy to centralize wealth. We’re using what I call a negative return on investment Governmental apparatus, both the budget and the credit and regulation, to centralize bank deposits, centralize purchases, centralize investments. We’re centralizing political and economic power. And in the process of that, we’re doing not what I call privatization – privatization is when you transfer government assets to private investors at market price. "Piratization" is when you transfer government assets to private investors at significantly below market prices. So we’re going through the process of using the Governmental apparatus to centralize economic power and wealth in a way that shrinks the total pie. And Greenspan’s job is to put a pretty face on that. And the mortgage bubble’s job, and the U.S. Treasury securities fraud, is to finance that.

I think there are two scenarios. One is the bust, which is this thing keeps going as long as it can be financed by the U.S. governmental apparatus, and at some point, you know, as the Japanese and everyone else says we’re not buying any more of this, we’re not taking more dollars, the thing busts. And when it busts, what you’re going to have is, it’s going to be 1929 but worse. Because in 1929, there was a lot of social capital in America. It was a much kinder, gentler place I think than it is now. And you had many more people that knew how to grow their own food, or knew how to function. So one scenario is the bust.

The other scenario though Jim is the Orwellian scenario, which is we’ve reached a point, and I’ve written many articles about this, where rather than let financial assets adjust, the powers that be now have the control of the economy through the banking system and through the governmental apparatus, they can simply steal more money, keep financial assets, you know whether it’s the stock market pumped up, the derivatives going, or the gold price manipulated down. And they simply liquidate all living things rather than let the economy go bust. In other words, you can adjust to your economy not by letting the value of the stock market or financial assets fall, but you can use warfare and organized crime to liquidate and steal whatever it is you need to keep the game going. And that’s the kind of Orwellian scenario whereby you can basically keep this thing going, but in a way that leads to a highly totalitarian government and economy … corporate feudalism.

Catherine Austin Fitts
, former Assistant Secretary of Housing under President George H.W. Bush Prior to her appointment to the first Bush administration, Ms. Fitts served as Managing Director and Member of the Board of Wall Street investment bank, Dillon, Read & Co. She previously was President of The Hamilton Securities Group.

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UQ Wire: What's Up With the Black Budget?
Blowback chronicles
"According to some estimates we cannot track $2.3 trillion in transactions," Rumsfeld

GAO says government failed yet another financial audit
By Dan Friedman - CongressDaily
December 17, 2007

For the 11th straight year, the federal government failed its financial audit, GAO announced Monday, in a widely anticipated finding that Comptroller General David Walker used to underscore the government's troubled fiscal health.

Just before his address, GAO issued a statement saying it could not express an opinion on the government's fiscal 2007 consolidated financial statements, mostly due to the Defense Department's "financial management problems."(Black budget)

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