Corporate Corruption Media Articles

Excerpts of Key Corporate Corruption Media Articles in Major Media

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Just how accurate are GPS-guided precision bombs, and what is most likely to send them off-target? Now you can find out by simply reading the smart bomb’s tactical manual on the internet. No, the Pentagon didn’t slip up and post the instructions online. Rather, a whistle-blower leaked the manual via Wikileaks, a website that uses anonymising technology to disguise the source of leaked information. Launched online in early 2007, Wikileaks is run by an informal group of open government and anti-secrecy advocates who want to allow people living under oppressive regimes, or with something to say in the public interest, to anonymously leak documents that have been censored or are of ethical, political or diplomatic significance. Thanks to Wikileaks, potential whistle-blowers are now far more willing to come forward, says John Young, who runs the long-standing site Cryptome.org, which specialises in posting documents on espionage, intelligence and cryptography issues. “We started getting a lot less information after 9/11 as people became more cautious when law enforcement agencies got more draconian powers. So we are very happy to see Wikileaks doing what they are doing so aggressively.” This flood of leaked documents has been made possible by internet technology that allows whistle-blowers to post documents online without revealing their identity or IP address.

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Giant agribusinesses are enjoying soaring earnings and profits out of the world food crisis which is driving millions of people towards starvation. And speculation is helping to drive the prices of basic foodstuffs out of the reach of the hungry. The prices of wheat, corn and rice have soared over the past year driving the world's poor – who already spend about 80 per cent of their income on food – into hunger and destitution. The World Bank says that 100 million more people are facing severe hunger. Yet some of the world's richest food companies are making record profits. Monsanto last month reported that its net income for the three months up to the end of February this year had more than doubled over the same period in 2007, from $543m (Ł275m) to $1.12bn. Its profits increased from $1.44bn to $2.22bn. Cargill's net earnings soared by 86 per cent from $553m to $1.030bn over the same three months. And Archer Daniels Midland, one of the world's largest agricultural processors of soy, corn and wheat, increased its net earnings by 42 per cent in the first three months of this year from $363m to $517m. The operating profit of its grains merchandising and handling operations jumped 16-fold from $21m to $341m. Similarly, the Mosaic Company, one of the world's largest fertiliser companies, saw its income for the three months ending 29 February rise more than 12-fold, from $42.2m to $520.8m, on the back of a shortage of fertiliser. Benedict Southworth, director of the World Development Movement, called the escalating earnings and profits "immoral."

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A medical examiner must change her autopsy findings to delete any reference that stun guns contributed to the deaths of three people involved in confrontations with law enforcement officers, a judge ruled. [The] decision was a victory for Taser International Inc., which had challenged rulings by Summit County Medical Examiner Lisa Kohler, including a case in which five sheriff's deputies are charged in the death a jail inmate who was restrained by the wrists and ankles and hit with pepper spray and a stun gun. Kohler ruled that the 2006 death of Mark McCullaugh Jr., 28, was a homicide and that he died from asphyxiation due to the "combined effects of chemical, mechanical and electrical restraint." Visiting Judge Ted Schneiderman said in his ruling that there was no expert evidence to indicate that Taser devices impaired McCullaugh's respiration. "More likely, the death was due to a fatal cardiac arrhythmia brought on by severe heart disease," the judge wrote. Schneiderman ordered Kohler to rule McCullaugh's death undetermined and to delete any references to homicide. The judge also said references to stun guns contributing to the deaths of two other men must be deleted from autopsy findings. Steve Tuttle, vice president of communications for Taser International, said the Scottsdale, Ariz.-based company is pleased with Schneiderman's ruling. John Manley, a Summit County prosecutor who represented Kohler, said the judge's order went too far. The county is considering an appeal, he said. "Taser is quite a force to be reckoned with and does everything to protect their golden egg, which is the Model X26," Manley said.

Note: This AP article was not picked up by any major or even local media other than this Phoenix, AZ talk radio station. Considering the lack of reporting on Taser International's stunning 69 victories before its first loss in the courts, do you think there might be some bias in the news coverage?

The battle over dioxin contamination in [the Saginaw, Mich.] region had been raging for years when a top [EPA] official turned up the pressure on Dow Chemical to clean it up. On Thursday, following months of internal bickering over Mary Gade's interactions with Dow, the [Bush] administration forced her to quit as head of the U.S. Environmental Protection Agency's Midwest office. Gade told the Tribune she resigned after two aides to national EPA administrator Stephen Johnson took away her powers as regional administrator and told her to quit or be fired by June 1. Gade has been locked in a heated dispute with Dow about long-delayed plans to clean up dioxin-saturated soil and sediment that extends 50 miles beyond its Midland, Mich., plant into Saginaw Bay and Lake Huron. Gade, appointed ... regional EPA administrator in September 2006, invoked emergency powers last summer to order the company to remove three hotspots of dioxin near its Midland headquarters. She demanded more dredging in November, when it was revealed that dioxin levels along a park in Saginaw were 1.6 million parts per trillion, the highest amount ever found in the U.S. Dow then sought to cut a deal on a more comprehensive cleanup. But Gade ended the negotiations in January, saying Dow was refusing to take action necessary to protect public health and wildlife. Dow responded by appealing to officials in Washington, according to heavily redacted letters the Tribune obtained under the Freedom of Information Act. On Thursday, Gade said of her resignation: "There's no question this is about Dow. I stand behind what I did and what my staff did. I'm proud of what we did."

Note: For many powerful reports on government corruption from the major media, click here.

Gary Rinehart clearly remembers the summer day in 2002 when the stranger walked in and issued his threat. Rinehart was behind the counter of the Square Deal, his “old-time country store,” as he calls it, on the fading town square of Eagleville, Missouri, a tiny farm community 100 miles north of Kansas City. As Rinehart would recall, the man began verbally attacking him, saying he had proof that Rinehart had planted Monsanto’s genetically modified (G.M.) soybeans in violation of the company’s patent. Better come clean and settle with Monsanto, Rinehart says the man told him—or face the consequences. But Rinehart wasn’t a farmer. He wasn’t a seed dealer. He hadn’t planted any seeds or sold any seeds. He owned a small—a really small—country store in a town of 350 people. On the way out the man kept making threats. Rinehart says he can’t remember the exact words, but they were to the effect of: “Monsanto is big. You can’t win. We will get you. You will pay.” Scenes like this are playing out in many parts of rural America these days as Monsanto goes after farmers, farmers’ co-ops, seed dealers—anyone it suspects may have infringed its patents of genetically modified seeds. As interviews and reams of court documents reveal, Monsanto relies on a shadowy army of private investigators and agents in the American heartland to strike fear into farm country. They fan out into fields and farm towns, where they secretly videotape and photograph farmers, store owners, and co-ops; infiltrate community meetings; and gather information from informants about farming activities. Farmers say that some Monsanto agents pretend to be surveyors. Others confront farmers on their land and try to pressure them to sign papers giving Monsanto access to their private records.

Note: For a revealing summary on the health impacts of genetically modified food, click here.

The Food and Drug Administration has ordered Merck & Co. to correct numerous manufacturing deficiencies at its main vaccine plant. The agency ... released a warning letter sent to Merck's chief executive, Richard T. Clark, that states FDA inspectors determined manufacturing rules are not being followed at the plant in West Point, Pa., just outside Philadelphia. The plant, which recalled two vaccines in December over sterility problems, makes a number of children's vaccines and four for adults. The nine-page letter states FDA found "significant objectionable conditions" in the manufacture of vaccines and drug ingredients during repeated inspections from Nov. 26 to Jan. 17. According to the heavily redacted warning letter, Merck officials didn't thoroughly investigate when vaccine batches inexplicably failed to meet specifications, even if batches had been distributed, and some combination measles-mumps-rubella shots that failed "visual inspection for critical defects" were distributed anyway. Production of two vaccines made at West Point — PedvaxHIB, to prevent Haemophilus influenza type B, and Comvax, a combination vaccine for Haemophilus B and hepatitis B — stopped last year and 1.2 million doses of them were recalled after a sterility problem was discovered in October. The plant also makes ProQuad, which protects children against measles, mumps, rubella and chickenpox; hepatitis A, hepatitis B and meningitis vaccines for children and adults; and Gardasil, to protect young women against cervical cancer.

Note: For further revelations from reliable sources on the dangers of vaccines, click here.

A new analysis concludes that the Food and Drug Administration approved experiments with artificial blood substitutes even after studies showed that the controversial products posed a clear risk of causing heart attacks and death. The review of combined data from more than 3,711 patients who participated in 16 studies testing five different types of artificial blood, released yesterday, found that the products nearly tripled the risk of heart attacks and boosted the chances of dying by 30 percent. Based on the findings, the researchers questioned why the FDA allowed additional testing of the products to go forward and why the agency is considering letting yet another study proceed. "It's hard to understand," said Charles Natanson, a senior investigator at the National Institutes of Health who led the analysis. "They already had data that these products could cause heart attacks and evidence that they could kill." An artificial blood substitute that has a long shelf life and does not need refrigeration could save untold lives by providing an alternative to trauma patients in emergencies, especially in rural areas and in combat settings. But attempts to develop such products have been marred by repeated failures and fraught with controversy, in part because some products have been studied under rules allowing researchers to administer them without obtaining consent from individual patients. After the Washington-based consumer group Public Citizen sued the FDA to gain access to data submitted to the agency, Natanson and colleagues at NIH and Public Citizen pooled data from studies conducted between 1998 and 2007.

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An audit of US-funded reconstruction projects for Iraq has found millions of dollars have been wasted because many schemes have never been completed. The Special Inspector General for Iraq Reconstruction blamed delays, costs, poor performance and violence for failure to finish some 855 projects. Many other projects had been falsely described as complete, found the audit of 47,321 reconstruction projects. Iraq reconstruction has cost US taxpayers more than $100bn so far. USAID, the body responsible for overseeing Iraqi reconstruction, has responded that the database used for the review was incomplete. The audit by Senator Stuart Bowen found US officials had terminated at least 855 projects before completion. Of this number, 112 were ended because of the contractors' poor performance. Danielle Brian, executive director of the watchdog group Project on Government Oversight, said: "The report paints a depressing picture of money being poured into failed Iraq reconstruction projects. Contractors are killed, projects are blown up just before being completed, or the contractor just stops doing the work." Last year, congressional investigators said as much as $10bn (Ł5bn) charged by US contractors for Iraq reconstruction had been questionable.

Note: Why is the U.S. spending over $100 billion to "reconstruct" Iraq? That's over $500 for each taxpayer in the U.S., with little to show for it. For more, see what a highly decorated U.S. general has to say on all this by clicking here.

Despite more than 100 published studies by government scientists and university laboratories that have raised health concerns about a chemical compound that is central to the multibillion-dollar plastics industry, the Food and Drug Administration has deemed it safe largely because of two studies, both funded by an industry trade group. The compound, bisphenol A (BPA), has been linked to breast and prostate cancer, behavioral disorders and reproductive health problems in laboratory animals. The FDA's position on the compound was called into question earlier this month when a National Institutes of Health panel issued a draft report linking BPA to health concerns. As part of his investigation, Rep. John D. Dingell (D-Mich.), chairman of the House Energy and Commerce Committee, wants to examine the role played by the Weinberg Group, a Washington firm that employs scientists, lawyers and public relations specialists to defend products from legal and regulatory action. The firm has worked on Agent Orange, tobacco and Teflon, among other products linked to health hazards, and congressional investigators say it was hired by Sunoco, a BPA manufacturer. From 1997 to 2005, 116 studies of the compound were published, many of them focused on its effects in low doses. Of those funded by government, 90 percent showed a health effect linked to BPA. None of the industry-funded studies found an effect; all of them said BPA is safe. There is a clear bias in studies funded by industry, said [David] Michaels, who ... runs the Project on Scientific Knowledge and Public Policy at George Washington University and wrote the book Doubt is Their Product, which details how various industries have used science to stave off regulation.

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Who rules the world? The rise of nation states produced national ruling classes. It would be odd if the current integration of the world economy did not produce new global elites — business people and financiers who run global companies and global politicians who steer supra-national organisations such as the European Union (EU) and the International Monetary Fund. David Rothkopf, a visiting scholar at the Carnegie Endowment for International Peace, argues that these elites constitute nothing less than a new global “superclass”. They have all the clubby characteristics of the old national ruling classes, but with the vital difference that they operate on the global stage, far from mere national electorates. They attend the same universities. They are groomed in a handful of world-spanning institutions such as Goldman Sachs. They belong to the same clubs — the Council on Foreign Relations in New York is a particular favourite — and sit on each other's boards of directors. Many of them shuttle between the public and private sectors. They meet at global events such as the World Economic Forum at Davos and the Trilateral Commission or — for the crčme de la crčme — the Bilderberg meetings or the Bohemian Grove seminars that take place every July in California. Mr Rothkopf is anything but a crank, and he is right when he says that, these days, the most influential people around the world are also the most global people. He is also admirably ambivalent about his subject. He worries about surging inequality — the richest 1% of humans own 40% of the planet's wealth — and about the rumbling backlash against so much unaccountable power.

Note: For reliable, verifiable information the secret societies of which the global elite are a part, click here. Superclass: The Global Power Elite and the World They Are Making by David Rothkopf is available here.

In the summer of 2005, the Bush administration confronted a fresh wave of criticism over Guant�namo Bay. The detention center had just been branded �the gulag of our times� by Amnesty International, there were new allegations of abuse from United Nations human rights experts and calls were mounting for its closure. The administration�s communications experts responded swiftly. Early one Friday morning, they put a group of retired military officers on one of the jets normally used by Vice President Dick Cheney and flew them to Cuba for a carefully orchestrated tour of Guant�namo. To the public, these men are members of a familiar fraternity, presented tens of thousands of times on television and radio as �military analysts� whose long service has equipped them to give authoritative and unfettered judgments about the most pressing issues of the post-Sept. 11 world. Hidden behind that appearance of objectivity, though, is a Pentagon information apparatus that has used those analysts in a campaign to generate favorable news coverage of the administration�s wartime performance. The effort, which began with the buildup to the Iraq war and continues to this day, has sought to exploit ideological and military allegiances, and also a powerful financial dynamic: Most of the analysts have ties to military contractors vested in the very war policies they are asked to assess on air. Those business relationships are hardly ever disclosed to the viewers. But collectively, the men on the plane and several dozen other military analysts represent more than 150 military contractors either as lobbyists, senior executives, board members or consultants.

Note: This excellent article should be read in its entirety. For a related video presentation, click here. For an analysis, click here.

The drug maker Merck drafted dozens of research studies for a best-selling drug, then lined up prestigious doctors to put their names on the reports before publication, according to an article ... in a leading medical journal. The article, based on documents unearthed in lawsuits over the pain drug Vioxx, provides a rare, detailed look in the industry practice of ghostwriting medical research studies that are then published in academic journals. The article cited one draft of a Vioxx research study that was still in want of a big-name researcher, identifying the lead writer only as "External author?" Vioxx was a best-selling drug before Merck pulled it from the market in 2004 over evidence linking it to heart attacks. Last fall the company agreed to a $4.85 billion settlement to resolve tens of thousands of lawsuits. The lead author of Wednesday's article, Dr. Joseph S. Ross ... said a close look at the Merck documents raised broad questions about the validity of much of the drug industry's published research, because the ghostwriting practice appears to be widespread. "It almost calls into question all legitimate research that's been conducted by the pharmaceutical industry with the academic physician," Dr. Ross said, whose article ... was published Wednesday in JAMA, the journal of the American Medical Association. Although the role of pharmaceutical companies in influencing medical journal articles has been questioned before, the Merck documents provided the most comprehensive look at the magnitude of the practice.

Note: Vioxx may have been responsible for 500,000 premature deaths. For more along these lines, see concise summaries of deeply revealing news articles on Big Pharma corruption from reliable major media sources.

The tax audit rates of the largest companies are less than half what they were 20 years ago while more small and mid-size businesses are coming under scrutiny, according to an organization that monitors the Internal Revenue Service. The Syracuse University-based Transactional Records Access Clearinghouse described what it said was a "historic collapse" in audits for corporations holding assets of $250 million or more. About 26 percent of them were audited in the 2007 budget year compared with 34 percent in 2006 and 43 percent in 2005. The IRS did not dispute the numbers, based on agency data. The TRAC report concluded that the IRS also was concentrating on regular small and mid-sized companies to boost audit numbers. "Moving the focus of the corporate auditors away from the large corporations and toward the smaller ones has been quite effective when it came to increasing the overall number of these kinds of audits but actually was counterproductive in financial terms," the researchers said. TRAC also questioned the financial benefits of the shift. The group said that last year the government uncovered $682 in additional recommended taxes for every revenue agent hour spent auditing the smallest corporations, compared with $7,498 in additional taxes for audits of the largest corporations. Dean Zerbe, national managing director for Houston-based alliantgroup, which provides tax services for medium-sized companies, said his fear was that "in the IRS' zeal to show Congress improved numbers in corporate audit, it is America's small and medium businesses that are taking it on the chin."

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In a major shift of policy, the Justice Department, once known for taking down giant corporations, including the accounting firm Arthur Andersen, has put off prosecuting more than 50 companies suspected of wrongdoing over the last three years. Instead, many companies, from boutique outfits to immense corporations like American Express, have avoided the cost and stigma of defending themselves against criminal charges with a so-called deferred prosecution agreement, which allows the government to collect fines and appoint an outside monitor to impose internal reforms without going through a trial. In many cases, the name of the monitor and the details of the agreement are kept secret. Deferred prosecutions have become a favorite tool of the Bush administration. But some legal experts now wonder if the policy shift has led companies, in particular financial institutions now under investigation for their roles in the subprime mortgage debacle, to test the limits of corporate anti-fraud laws. Firms have readily agreed to the deferred prosecutions, said Vikramaditya S. Khanna, a law professor at the University of Michigan who has studied their use, because “clearly it avoids a bigger headache for them.” Some lawyers suggest that companies may be willing to take more risks because they know that, if they are caught, the chances of getting a deferred prosecution are good. “Some companies may bear the risk” of legally questionable business practices if they believe they can cut a deal to defer their prosecution indefinitely, Mr. Khanna said. Legal experts say the tactic may have sent the wrong signal to corporations — the promise, in effect, of a get-out-of-jail-free card.

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Intelligence centers run by states across the country have access to personal information about millions of Americans, including unlisted cellphone numbers, insurance claims, driver's license photographs and credit reports, according to a document obtained by The Washington Post. One center also has access to top-secret data systems at the CIA, the document shows, though it's not clear what information those systems contain. Dozens of the organizations known as fusion centers were created after the Sept. 11, 2001, terrorist attacks. The centers use law enforcement analysts and sophisticated computer systems to compile, or fuse, disparate tips and clues and pass along the refined information to other agencies. Though officials have publicly discussed the fusion centers' importance to national security, they have generally declined to elaborate on the centers' activities. But a document that lists resources used by the fusion centers shows how a dozen of the organizations in the northeastern United States rely far more on access to commercial and government databases than had previously been disclosed. The list of information resources was part of a survey conducted last year, officials familiar with the effort said. It shows that, like most police agencies, the fusion centers have subscriptions to private information-broker services that keep records about Americans' locations, financial holdings, associates, relatives, firearms licenses and the like. "Fusion centers have grown, really, off the radar screen of public accountability," said Jim Dempsey, vice president for public policy at the Center for Democracy and Technology, a nonpartisan watchdog group in the District. "Congress and the state legislatures need to get a handle over what is going on at all these fusion centers."

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For 30 years, Lew Ellingson loved being a telephone man. His job splicing phone cables was one that he says gave him “a true sense of accomplishment,” first for Northwestern Bell, then US West and finally Qwest Communications International. But by the time Mr. Ellingson retired from Qwest last year at 52, he had grown angry. An insider trading scandal had damaged the company’s reputation, and the life savings of former colleagues had evaporated in the face of Qwest’s stock troubles. “It was a good place,” he said wistfully. “And then something like this happened.” Now, Mr. Ellingson is the public face of a proposed ballot measure in Colorado that seeks to create what supporters hope will be the nation’s toughest corporate fraud law. Buttressed by local advocacy groups and criticized by a Colorado business organization, the measure would make business executives criminally responsible if their companies run afoul of the law. It would also permit any Colorado resident to sue the executives under such circumstances. Proceeds from successful suits would go to the state. If passed by voters in November, the proposal would leave top business officers [with] unprecedented individual accountability, said Mr. Ellingson. “If nothing else, these folks in charge of the corporations and companies will think twice about cutting corners to make themselves look more profitable than they really are,” he said. The plight of Mr. Ellingson’s former employer, Qwest, based in Denver, was a motivation for the proposal. Last April, a jury in Denver convicted Qwest’s former chief executive, Joseph P. Nacchio, of 19 of 42 counts of insider trading. Mr. Nacchio was sentenced to six years in prison and ordered to pay a fine of $19 million and forfeit $52 million in money he earned from stock sales in 2001.

Note: As reported in the Washington Post, Joseph P. Nacchio, the former Qwest CEO, has claimed that he was singled out for prosecution because he refused to cooperate with the National Security Agency's electronic surveillance of American citizens, which began before 9/11.

When the nation's intelligence agencies wanted a computer network to better share information ... they turned to a big name in the technology industry to supply some of the equipment: Google Inc. The Mountain View company sold the agencies servers for searching documents. Many of the contracts are for search appliances - servers for storing and searching internal documents. Agencies can use the devices to create their own mini-Googles on intranets made up entirely of government data. Additionally, Google has had success licensing a souped-up version of its aerial mapping service, Google Earth. Spy agencies are using Google equipment as the backbone of Intellipedia, a network aimed at helping agents share intelligence. [The system] is maintained by the director of national intelligence and is accessible only to the CIA, FBI, National Security Agency and an alphabet soup of other intelligence agencies and offices. Google supplies the computer servers that support the network, as well as the search software that allows users to sift through messages and data. Because of the complexities of doing business with the government, Google uses resellers to process orders on its behalf. Google takes care of the sales, marketing and management of the accounts. Google is one of many technology vendors vying for government contracts. On occasion, Google is the target of conspiracy theories from bloggers who say it is working with spy agencies more closely than simply selling search equipment.

An internal JPMorgan Chase memo entitled "Zippy Cheats & Tricks" offers a peek into just the sort of dubious lending tactics that underpinned the U.S. housing market's deepening downward spiral. The memo outlines step-by-step instructions on how to beef up mortgage applicants' stated incomes in order to help them qualify for home loans. They read as follows: "1. Make sure you input all income in base income. DO NOT break it down by overtime, commissions or bonus. 2. If your borrower is getting a gift, add it to a bank account along with the rest of the assets. Be sure to remove any mention of gift funds. 3. If you do not get (the desired results), try resubmitting with slightly higher income. Inch it up $500 to see if you can get the findings you want. Do the same for assets." In the context of a broader housing debacle, the memo [provides] some clues into just what lengths bankers went to [to] push loans through the system. Over the past six months, rising defaults on home loans have not only battered the mortgage sector, threatening recession, but also sent the banking industry into a tailspin. Many large banks repackaged mortgages and held them on their balance sheets as complex derivatives securities, essentially bonds backed by other types of loans. The conclusion of the JPMorgan memo, written in bright purple letters, certainly hints at a credit system gone awry: "It's super easy! Give it a try!" it reads. "If you get stuck, call me ... I am happy to help!"

Note: Though this highly revealing news was reported by the venerable Reuters news agency, why did no major media pick it up? For numerous reports of financial corruption from verifiable sources, click here.

Hillary Rodham Clinton and Barack Obama, who are running for president as economic populists, are benefiting handsomely from Wall Street donations, easily surpassing Republican John McCain in campaign contributions from the troubled financial services sector. It is part of a broader fundraising shift toward Democrats, compared to past campaigns when Republicans were the favorites of Wall Street. The flow of campaign cash is a measure of how open-fisted banks and other financial institutions have been to politicians of both parties. Concern is rising that "no matter who the Democratic nominee is and who wins in November, Wall Street will have a friend in the White House," said Massie Ritsch of the nonprofit Center for Responsive Politics, which tracks campaign donations. "The door will be open to these big banks." Sen. Clinton of New York is leading the way, bringing in at least $6.29 million from the securities and investment industry, compared with $6.03 million for Sen. Obama of Illinois and $2.59 million for McCain. Those figures include donations from the investment companies' employees and political action committees. The candidates' receipts reflect a broader trend that demonstrates how money follows power in Washington. It suggests that the nation's money managers are betting heavily that either Clinton or Obama will capture the White House and that Democrats will retain control of Congress. "What that Wall Street money means is that few people in Washington, including the leading presidential candidates, say a thing when the government moves to bail out Wall Street before it helps homeowners," said David Sirota, a liberal activist and former congressional aide.

Note: For more insight into the relationship between big finance and big government, click here.

What are the consequences of a world in which regulators rescue even the financial institutions whose recklessness and greed helped create the titanic credit mess we are in? Will the consequences be an even weaker currency, rampant inflation, a continuation of the slow bleed that we have witnessed at banks and brokerage firms for the past year? Or all of the above? Stick around, because we’ll soon find out. And it’s not going to be pretty. Agreeing to guarantee a 28-day credit line to Bear Stearns, by way of JPMorgan Chase, the Federal Reserve Bank of New York conceded last Friday that no sizable firm with a book of mortgage securities or loans out to mortgage issuers could be allowed to fail right now. It was the most explicit sign yet of the Fed’s “Rescues ‘R’ Us” doctrine that already helped to force the marriage of Bank of America and Countrywide. But why save Bear Stearns? “Why not set an example of Bear Stearns, the guys who have this record of dog-eat-dog, we’re brass knuckles, we’re tough?” asked William A. Fleckenstein, president of Fleckenstein Capital in Issaquah, Wash., and co-author with Fred Sheehan of Greenspan’s Bubbles: The Age of Ignorance at the Federal Reserve. After years of never allowing any of our financial institutions to fail, they have become so enormous that nobody will be allowed to sink beneath the waves. Otherwise, a tsunami would swamp the hedge funds, banks and other brokerage firms that remain afloat. If Bear Stearns failed, for example, it would result in a wholesale dumping of mortgage securities and other assets onto a market that is frozen and where buyers are in hiding. This fire sale would force surviving institutions carrying the same types of securities on their books to mark down their positions, generating more margin calls and creating more failures.

Note: This excellent article should be read in its entirety by anyone who wants to understand the impending financial meltdown and the government's response to it.

Important Note: Explore our full index to key excerpts of revealing major media news articles on several dozen engaging topics. And don't miss amazing excerpts from 20 of the most revealing news articles ever published.