The Truth Shall Set You Free!
(From Your Government Job)
How to Protect Your Nest Egg From the Biggest Liars
On Wall Street & in Washington

Dear A-Letter Reader,

I can’t help but feel like I’ve seen it all at this point.

I’ve watched the Dow tumble by over 7%...driving whole nations into panic.

I’ve watched the same index surge forward by at least as much…meanwhile inspiring a similar kind of panic in the world of investors and traders.

I’ve seen “pillars of society” – businesses so massive that they yearned to be called “institutions” – turn to the government hat-in-hand…and eventually become hybrid monstrosities that endanger the rule of law.

I’ve watched the world’s largest insurer become the world’s largest gambler…and I’ve watched as the government-sponsored Deposit Insurance Corporation followed blindly in their footsteps after the crash.

I’ve watched as representatives of the Fed and the Treasury cried “wolf” to the American people time and time again…each time scaring the government and the public into coughing up billions…hundreds of billions…or even trillions of dollars that we don’t have. Only to see them return a few months later, crying “wolf” once again.

And yet – through all this – the representatives of my government still feel like they need to lie to me…

Why is that?

Why Lie?

Well – obviously – they’ve got an agenda.

Everyone does…even my young nephew (he’s a year old this Saturday) has an agenda. But the difference between politicians and normal people – like my nephew – is that a politician’s agenda is his lifeblood. It’s his campaign platform. And – more often than not – it’s where a politician’s “bread is buttered” so to speak.

So let’s yank off the blinders and take a quick look at a few of the biggest lies making the rounds in today’s mainstream media. This is going to be fun…

Blatant Lie # 1: While speaking on the merit of his “new” “Public Private Investment Program,” Tim Geithner actually said the following…

“An attractive feature of the program is that it will allow the marketplace to establish values for the assets – based, of course, on the auction mechanism that will signal what someone is willing to pay for them – and thus might ease the virtual paralysis that has surrounded those assets up to now.”

Blatant Truth #1: Supposing Geithner had a shred of honor, dignity, decency or loyalty to the American people, the above tract would read much differently…

“This plan is the ultimate when it comes to putting lipstick on a pig. It’s attractive on the surface, because it seems like the “auction mechanism” – a crucial element of healthy free markets – is hard at work determining the real value for some fraudulent, overinflated mortgages that are on the books at my friends’ banks. In reality, it does neither. The bidders and private parties are only responsible for putting up about 7% of the auction price, so they’re essentially bidding with someone else’s money. We protected them from loss in order to incentivize higher, more reckless bids. That virtually guarantees that the auction prices will be overinflated, failing to reflect the real value of the items being traded, padding the books at seller banks, and ultimately ripping off the taxpayer on an epic scale.”

See? Doesn’t that feel better? You’re getting ripped off either way…so you may as well know how you’re being ripped off. On to Senator Dodd!

Dodds Are a Banker’s Best Friend

Blatant Lie #2: Connecticut Senator Chris Dodd’s righteous indignation at the most recent round of obscene spending at AIG (it’s bonuses this time instead of golf trips and massages). Dodd jumped on the bandwagon to decry the unconscionable greed of AIG’s executives, who received about US$160 million after the company received bailout funding. To this day, he vehemently denies that it was his language that kept these bonuses from being blocked.

Blatant Truth #2: Let’s format this truth like the last, as a statement…it’s more fun that way…

“I am shocked at the level of greed and irresponsibility now on display at AIG. It’s just not enough! I mean…if you’re going to go for it, go hard or go home."

“Take me for example; now that the spotlight is on AIG’s greedy execs, I jump in and wag my finger at them, just like the rest of Congress. Because it’s great for my public image."

“But the plain fact is that it was my committee that deliberately kept those bonuses from being blocked…language that I wrote that made sure their million-dollar paydays would be intact even after the company’s failure. And why not? They’ve been damn good to me. They’ve donated over a quarter million dollars to my campaign, over a hundred thousand in the last year alone. They gave my wife a job at one of their subsidiaries in Bermuda, where she ‘worked’ comfortably from 2001 to 2004."

“And this is “old hat” for me…I’ve even been called the ‘bankers candidate’, because my approach is so 'light handed and reliable' (kind of like a good employee). Ever since I got those steep discounts on loans from Countrywide, I’ve known that this is a chance for a major payday…so far it hasn’t disappointed me.”

It’s worth noting that my local government recently canned a city council member whose questionable ties to Bear Sterns included a spouse working at a cushy position with the firm. Good thing for Dodd that we don’t enforce that same kind of accountability on a national level.

But There’s a Twist in Here Worthy of Hitchcock…

Blatant Lie # 3: Of this great big ball of lies, Blatant Lie #3 has to be my absolute favorite.

For only in Blatant Lie #3 does the lying come full circle.

You see, in almost all the other lies, the joke’s on us.

Like the whole “Systemic Risk” gig. How can a single party pose “systemic risk,” when you’ve arguably bailed out, backstopped or otherwise supported every single player in the system? If that’s the case, then isn’t the “system” – super banks like Citi and JPM to insurers like AIG – the real problem?

Also, what about the hundreds of small regional banks and Credit Unions that are beyond the reach of the subprime bubble and the stupid tricks played by America’s super banks? Are they part of this “system”? Well…they’re not at risk. So why again do we need to throw hundreds of billions of dollars at a handful of massive, corrupt, failed institutions when we’ve got so many hard-working, scrappy little players waiting in the wings…just itching for a crack at Citi’s market share.

But I digress…onto Blatant Lie #3: There is no bailout money. The trillions in stimulus, emergency spending, Fed programs and bank bailout cash….we don’t have it!

Now that’s a twist.

There’s no wealth behind these dollars. There aren’t even any paper dollars! They’re just marks in a book…digits in a ledger. Reminds me of the scene from the movie We’re no Angels where Bogey – a former embezzler – promises a small business owner that everything will be alright, “Let me just take a look at your books,” he says.

Our government is currently about US$11 trillion in debt. Domestic Nonfinancial debt is above 300% of our annual GDP. Entitlement programs like Medicare, Medicaid and Social Security will surely break the bank, forcing our debt levels even higher in the very near future.

And yet, here we are.

With representatives from the Fed and the Treasury tripping over each other to deliver bales and bales of freshly printed dollars to America’s super banks. Only, once these banks get all their dollars; once they cash in on all those campaign contributions and see the real fruits of their labor…they’ll start to realize that those dollars didn’t come from anywhere.

This might seem like just dessert for the bankers and their employees in Washington, but it’s got frightening implications for anyone with more than ten bucks in their bank account. To further prepare yourself, to find out how you can protect your nest egg from the three most dangerous lies out there today, you should take a look at Chairman Pugsley’s full special report on “Liars” right now.