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Just like the Patriot Act appeared to be written before 9/11, so does this Patriot Act of Finance appear to be written before the housing crash. And yes, both were rushed through a panicked Congress and complacent media in the middle of the night.

A nation founded by the people, for the people will be given to a very select group of bankers. Legally. Without a shot fired. Because Americans were too distracted and too dumb to know what was going on.

Brilliant.

Here’s how it will be done:

1) The key line in the proposed bill is this one:

“The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to 700,000,000,000 dollars outstanding at any one time”

What this does is give Hank Paulson, acting as an emperor with unchecked control over the nation’s treasury, a $700 billion line of credit in which he can buy up toxic debt for whatever price he’d like to pay, $700 billion at a time.

In other words – he could buy trillions. Trillions and trillions and trillions. Buying and selling, buying and selling.

He can sell the junk he buys from his banker friends for whatever price he wants, saddling the taxpayers with the loss. He keeps this process going, using his $700 billion credit card. Buy for 60 cents on the dollar, sell for 30 cents on the dollar. Buy for 80 cents on the dollar, sell for 5 cents on the dollar. He’s in charge.

$700 billion folks IS JUST THE LINE OF CREDIT. He can purchase trillions and trillions of bad debt with this credit card, as long as only $700 billion is OUTSTANDING at any one time.

2) Hank Paulson, CEO of Goldman Sachs on leave, has complete and total control over the nation’s treasure. He would be unchecked by Congress, unchecked by the President. He will be king. Here’s the text:

“The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation”

Using this power, Hank Paulson of Goldman Sachs could pay Goldman Sachs anything he wanted for their mortgage assets. Let’s say the market value was 20 cents on the dollar. Hank Paulson could pay them 100 cents on the dollar. Its his decision and his alone. No oversight. No limitations. Hank Paulson could simply give the nation’s treasure to Goldman Sachs.

Get it now?

3) Deputizing the banks and investment banks as “agents of the government”. Seriously. Here’s the text:

“Designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them”

4) Have no outside control over the firesale of assets and loss to the taxpayer. Again, Hank Paulson and Hank Paulson alone shall be in control. No auditors. No oversight. No multiple bids. No nothing. Hank Paulson and Hank Paulson alone. Here you go:

“Sale of Mortgage-Related Assets. The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act.”

5) Hank Paulson has final say. Hank Paulson knows what’s best. Hank Paulson cannot be reversed. Hank Paulson cannot be sued. Hank Paulson is king.

“Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency”

So, what can you do? Normally here I’d say contact your corrupt Congressman or Senator. Contact the media. But folks, Congress has been bought. The media have been bought.

The American people have lost.

For the student who tipped off the police, though, things were looking up.

Under an incentive scheme at Scripps Ranch, a large San Diego high school, students can call a special “tip line” – 888-580-TIPS – to report suspicious activity on campus.

Now they’re training for the same mission — with a twist — at home.

Beginning Oct. 1 for 12 months, the 1st BCT will be under the day-to-day control of U.S. Army North, the Army service component of Northern Command, as an on-call federal response force for natural or manmade emergencies and disasters, including terrorist attacks.

It is not the first time an active-duty unit has been tapped to help at home. In August 2005, for example, when Hurricane Katrina unleashed hell in Mississippi and Louisiana, several active-duty units were pulled from various posts and mobilized to those areas.

But this new mission marks the first time an active unit has been given a dedicated assignment to NorthCom, a joint command established in 2002 to provide command and control for federal homeland defense efforts and coordinate defense support of civil authorities.

…

They may be called upon to help with civil unrest and crowd control or to deal with potentially horrific scenarios such as massive poisoning and chaos in response to a chemical, biological, radiological, nuclear or high-yield explosive, or CBRNE, attack.

Training for homeland scenarios has already begun at Fort Stewart and includes specialty tasks such as knowing how to use the “jaws of life” to extract a person from a mangled vehicle; extra medical training for a CBRNE incident; and working with U.S. Forestry Service experts on how to go in with chainsaws and cut and clear trees to clear a road or area.

The 1st BCT’s soldiers also will learn how to use “the first ever nonlethal package that the Army has fielded,” 1st BCT commander Col. Roger Cloutier said, referring to crowd and traffic control equipment and nonlethal weapons designed to subdue unruly or dangerous individuals without killing them.

“It’s a new modular package of nonlethal capabilities that they’re fielding. They’ve been using pieces of it in Iraq, but this is the first time that these modules were consolidated and this package fielded, and because of this mission we’re undertaking we were the first to get it.”

The theory, according to a participant in the negotiations, is that if the goal is to solve a liquidity crisis, it makes no sense to exclude banks that do a lot of lending in the United States.

Treasury Secretary Henry Paulson confirmed the change on ABC’s “This Week,” telling George Stephanopoulos that coverage of foreign-based banks is “a distinction without a difference to the American people.”

“If a financial institution has business operations in the United States, hires people in the United States, if they are clogged with illiquid assets, they have the same impact on the American people as any other institution,” Paulson said.

“That’s a distinction without a difference to the American people. The key here is protecting the system. … We have a global financial system, and we are talking very aggressively with other countries around the world and encouraging them to do similar things, and I believe a number of them will. But, remember, this is about protecting the American people and protecting the taxpayers. and the American people don’t care who owns the financial institution. If the financial institution in this country has problems, it’ll have the same impact whether it’s the U.S. or foreign.”

The legislative outline that went to Capitol Hill at 1:30 a.m. Saturday had said that an eligible financial institution had to have “its headquarters in the United States.” That would exclude foreign-based institutions with big U.S. operations, such as Barclays, Credit Suisse, Deutsche Bank, HSBC, Royal Bank of Scotland and UBS.

But a Treasury “Fact Sheet” released at 7:15 Saturday night sought to give the administration more flexibility, with an expanded definition that could include all of those banks: “Participating financial institutions must have significant operations in the U.S., unless the Secretary makes a determination, in consultation with the Chairman of the Federal Reserve, that broader eligibility is necessary to effectively stabilize financial markets.”

Power has tangibly shifted – away from the United States and the Western world generally, and towards the fast-growing giants of the East. That’s been happening for some years now.

But September 2008 marks the moment when the scale of our excesses, the extent of our debts and the moral bankruptcy of our financial regulatory system finally began to be truly exposed.

I say began to be exposed. Back in March, Standard and Poor’s, the US ratings agency, estimated some $285bn (£156bn) of mortgage-backed securities would eventually be written-off by the global banking sector. On Friday, almost unnoticed amid the panic, that forecast was upped to $378bn.

In reality, total credit losses will be much higher – at least $750bn in my view. But the extent of the 33 per cent one-off increase in S&P’s estimate speaks volumes. It reflects just how little anyone truly knows about either the ultimate size of the sub-prime losses or who ultimately holds the related securities.

But with one in ten US mortgages now “delinquent” or “in foreclosure”, and house prices still falling, such “toxic waste” is burning holes in balance sheets wherever it sits. That’s why this crisis is far from over.

It’s difficult to overstate the enormity of what happened last week. By any standard, the collapse of Lehman Brothers was a dramatic – and alarming event. One of the biggest names on Wall Street, the 158-year old bank was consumed by the scale of its losses and crippled by executive feuds. Deemed by the US Federal Reserve to be “sufficiently unconnected” to the rest of the global financial system, Lehman was allowed to fold.

In contrast, American International Group, the world’s largest insurer, was judged “too interconnected” to collapse. So the Fed effectively “nationalised” AIG – the biggest rescue of a private firm in human history. And it’s only a few weeks, of course, since the even more expensive bail-out of quasi-government lenders Fannie Mae and Freddie Mac – which, between them, account for a mind-boggling $5,300bn of mortgages, around half of America’s home loans.

On top of all that, US Treasury Secretary Hank Paulson sent an $800bn financial rescue plan to Congress. He wants to create a second “Resolution Trust Corporation” – or government-owned asset management company – to take on illiquid mortgage-related debts. The original RTC was established to rescue the US Savings and Loans Associations that went bust in the 1980s.

And by the way, the Fed has also just offered another $125bn of liquidity to banks outside the US that are desperate for dollars and can’t access America’s frozen credit markets – a move co-ordinated with central banks in Japan, the Eurozone, Switzerland, Canada and here in the UK.

…

How much more can the US taxpayer take? It sounds insane, but the liabilities being taken on by the Fed and the US Treasury are now so enormous that the government itself could default. No?

Check out the chart showing the recent spikes in the US 10-year credit default swap. In other words, the market is now pricing-in the genuine possibility that the US will struggle to pay-back some of its long-term T-bills.

After a week of unprecedented financial turmoil, they predict that government borrowing is about to surge as the Treasury’s tax take is slashed by a slump in earnings from the City and the downturn.

Leading forecasters say the government will soon be forced to borrow as much as £100 billion a year, giving Britain easily the biggest budget deficit of any western country.

Any tax rises would come on top of increases imposed by Gordon Brown when he was chancellor. He repeatedly raised indirect “stealth” taxes while leaving income tax unchanged. Taxes went up by 3% of national income, equivalent to more than 10p on the basic rate of income tax.
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It was the 12th failure this year of a federally insured bank.

The Federal Deposit Insurance Corp. has been appointed receiver of the bank, based in Northfork, W.Va. It had $115 million in assets and $102 million in deposits as of June 30.

The FDIC said Friday the bank’s insured deposits will be assumed by Pioneer Community Bank Inc. of Iaeger, W.Va., and Citizens Savings Bank in Martins Ferry, Ohio.

Its branches in West Virginia will reopen Monday as offices of Pioneer Community Bank and its Ohio branches will reopen Sunday as offices of Citizens Savings.

Then others appeared – people who had lost their jobs to the ailing economy, or newcomers who had moved to Reno for work and discovered no one was hiring.

Within weeks, more than 150 people were living in tents big and small, barely a foot apart in a patch of dirt slated to be a parking lot for a campus of shelters Reno is building for its homeless population. Like many other cities, Reno has found itself with a “tent city” – an encampment of people who had nowhere else to go.

From Seattle to Athens, Ga., homeless advocacy groups and city agencies are reporting the most visible rise in homeless encampments in a generation.

Nearly 61 percent of local and state homeless coalitions say they’ve experienced a rise in homelessness since the foreclosure crisis began in 2007, according to a report by the National Coalition for the Homeless. The group says the problem has worsened since the report’s release in April, with foreclosures mounting, gas and food prices rising and the job market tightening.

“It’s clear that poverty and homelessness have increased,” said Michael Stoops, acting executive director of the coalition. “The economy is in chaos, we’re in an unofficial recession and Americans are worried, from the homeless to the middle class, about their future.”

The phenomenon of encampments has caught advocacy groups somewhat by surprise, largely because of how quickly they have sprung up.

“What you’re seeing is encampments that I haven’t seen since the 80s,” said Paul Boden, executive director of the Western Regional Advocacy Project, an umbrella group for homeless advocacy organizations in Los Angeles, San Francisco, Oakland, Calif., Portland, Ore. and Seattle.

The relatively tony city of Santa Barbara has given over a parking lot to people who sleep in cars and vans. The city of Fresno, Calif., is trying to manage several proliferating tent cities, including an encampment where people have made shelters out of scrap wood. In Portland, Ore., and Seattle, homeless advocacy groups have paired with nonprofits or faith-based groups to manage tent cities as outdoor shelters. Other cities where tent cities have either appeared or expanded include include Chattanooga, Tenn., San Diego, and Columbus, Ohio.

The Department of Housing and Urban Development recently reported a 12 percent drop in homelessness nationally in two years, from about 754,000 in January 2005 to 666,000 in January 2007. But the 2007 numbers omitted people who previously had been considered homeless – such as those staying with relatives or friends or living in campgrounds or motel rooms for more than a week.

In addition, the housing and economic crisis began soon after HUD’s most recent data was compiled.

“The data predates the housing crisis,” said Brian Sullivan, a spokesman for HUD. “From the headlines, it might appear that the report is about yesterday. How is the housing situation affecting homelessness? That’s a great question. We’re still trying to get to that.”

In Seattle, which is experiencing a building boom and an influx of affluent professionals in neighborhoods the working class once owned, homeless encampments have been springing up – in remote places to avoid police sweeps.

“What’s happening in Seattle is what’s happening everywhere else – on steroids,” said Tim Harris, executive director of Real Change, an advocacy organization that publishes a weekly newspaper sold by homeless people.

Homeless people and their advocates have organized three tent cities at City Hall in recent months to call attention to the homeless and protest the sweeps – acts of militancy, said Harris, “that we really haven’t seen around homeless activism since the early ’90s.”

In Reno, officials decided to let the tent city be because shelters were already filled.

Officials don’t know how many homeless people are in Reno. “But we do know that the soup kitchens are serving hundreds more meals a day and that we have more people who are homeless than we can remember,” said Jodi Royal-Goodwin, the city’s redevelopment agency director.

Those in the tents have to register and are monitored weekly to see what progress they are making in finding jobs or real housing. They are provided times to take showers in the shelter, and told where to go for food and meals.

Sylvia Flynn, 51, came from northern California but lost a job almost immediately and then her apartment.

Since the cheapest motels here charge upward of $200 a week, Flynn ended up at the Reno women’s shelter, which has only 20 beds and a two-week limit on stays.

Out of a dozen people interviewed in the tent city, six had come to Reno from California or elsewhere over the last year, hoping for casino jobs.

“I figured this would be a great place for a job,” said Max Perez, a 19-year-old from Iowa. He couldn’t find one and ended up taking showers at the men’s shelter and sleeping in a pup tent barely big enough to cover his body.

The casinos are actually starting to lay off employees.

“Sometimes I think we need to put out an ad: ‘No, we don’t have any more jobs than you do,'” Royal-Goodwin said.

The city will shut down the tent city as soon as early October because the tents sit on what will be a parking lot for a complex of shelters and services for homeless people. The complex will include a men’s shelter, a women’s shelter, a family shelter and a resource center.