Kong Sez:

    Last week, we investigated Secretary of the Treasury, Timothy Geithner, who got caught sending out e-mails to AIG, in which he instructed the AIG executives to keep secret the fact that they sent their bailout money to the big banks to pay off their failed derivatives.

    Public outrage, we are thankful to say, is building. According to Dr. Gary North, on his members-only website, the public isn't the only outraged bunch of folks: Congress is also discovering that it was played for a fool.

    Considering the fact that elections are always coming up for members of Congress, it's pretty obvious that something has gotta be done. Congress will need a scapegoat, and according to Dr. North, the most likely scapegoat will be Geithner. Read on and see why:

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Bernanke: Too Big to Fail.
Geithner: Not Big Enough Not to Fail.
There Will Be Blood.

Gary North
Jan. 11, 2009

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The news about Geithner's advice to AIG -- "Keep quiet!" -- is all over the Web. The House will hold hearings. He is going to be grilled. A MarketWatch reporter offers his view:

Geithner looks bad enough by being in the same room with AIG. He looks downright filthy in trying to keep the nosy public from following the money -- its own money.

He may survive the outcry and the congressional hearings being threatened, but as an effective proponent of Wall Street reform, he's lost credibility.

Geithner was head of the New York FED (private) in 2008, which is where the power is, not the Board of Governors (government). This is the biggest scandal ever to leak out of 33 Liberty Street.

We are seeing the beginning of a loss of confidence in the Federal Reserve System. Never before has anyone this high up in the FED faced hearings like these. Congress does not understand the FED, but it understands inside tip-offs.

The timing of this story is bad for the New York FED. In August, a Federal district court judge ruled that the New York FED must turn over reports to Bloomberg News relating to the 2008 bailouts. The FED is appealing the decision. The court of appeals will hear the case starting today.

My guess is that Congressmen's kid gloves will come off at the hearings. He got away with the Turbo Tax story last time. Not this time. The public is still outraged at the bailout and the bonuses. Congress got snookered in 2008. Everyone knows this, including Congress. Congress is under pressure to find a scapegoat. Bernanke is too big to fail. Turbo Tim isn't.

Congressional staffers are now as busy as beavers. They are looking under logs for bugs. They will find them. Never before has Congress turned loose staffers to go looking for dirt inside the New York FED. Bernanke was Time's Person of the Year. He is untouchable. Geithner is eminently touchable.

This is good news. The staffers will find more than their bosses have bargained for.

The hearings will likely expose more dirt on the FED than the public has seen before. This is a Big Story. The media cannot resist a Big Story. This is Paparazzi stuff. They smell blood the way sharks do. There will be a feeding frenzy. The interrogators will play to the cameras. YouTube will be filled with these segments.

This will help Ron Paul's "audit the FED' bill. Bernanke will be under pressure to make concessions.

If the stink gets bad enough, Obama will ask Geithner to go. His days of wine and roses will end. No more $400,000 a year job at the NY FED. Any Wall Street firm that hires him will immediately come under suspicion. He will be a pariah.

News. The media cannot resist it. This time, the scent of scandal will bring the sharks coming where they normally never come: inside the FED. To save the FED, Geithner will be thrown overboard.

This is good news. The more publicity the bailout's dark underbelly gets, the worse for the FED. Fear of public exposure is what keeps bureaucrats in line.

Cynicism and distrust about Wall Street are at all-time highs. The hearings will increase this.

It couldn't have happened to a more deserving guy. Bernanke is more deserving, but he's too big to fail.

Scrutiny of the FED by Congress will increase. The FED's free ride has ended. The media will not reveal why the FED is a threat to financial stability, but they will report on the hearings. They will not be able to resist.

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Kong Sez:

    There you have it, folks. It looks like the public isn't the only crowd running for their torches and pitchforks. Congress has an even bigger stake in this fight, and it looks like your local congressman is going to be leading the mob!

    We don't know about you, but we here at the ChemBio headquarters are already mad! The more these truths emerge, the madder people will get. It won't be long before they start stockpiling torches, pitchforks, and nasty signs, all in preparation for a great march on Wall Street and the beginning of La Revolución!

    People are mad folks...really mad....we hear from them every day! It won't be long before they take some sort of action. There will be blood!

    If the economy keeps cratering and the government keeps doing dumb things, then we have a situation building in which the people are left to become angrier and angrier, until finally . . . La Revolución !

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Viva La Revolución !!!

    "Is it a rebellion?" asked Louis XVI of the count who informed him of the fall of the Bastille.

    "No, sire," came the reply. "It is a revolution."

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