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Web of Debt

terrorism and arms controls. But to the wary, it is the road to a one-
world government headed by transnational corporations, oppressing
the public through military means and restricting individual freedoms.
Bob Djurdjevic, writing in the paleoconservative journal Chronicles
in 1998, compared the NWO to the old British empire:
Parallels between the British Empire and the New World
Order Empire are striking. It™s just that the British crown relied
on brute force to achieve its objectives, while the NWO elite
mostly use financial terrorism . . . The British Empire was built
by colonizing other countries, seizing their natural resources,
and shipping them to England to feed the British industrialists™
factories. In the wake of the “red coats” invasions, local cultures
were often trampled and replaced by a “more progressive” British
way of life.
The Wall Street-dominated NWO Empire is being built by
colonizing other countries with foreign loans or investments.
When the fish is firmly on the hook, the NWO financial terrorists
pull the plug, leaving the unsuspecting victim high and dry. And
begging to be rescued. In comes the International Monetary
Fund (IMF). Its bailout recipes “ privatization, trade
liberalization and other austerity reforms “ amount to seizing
the target countries™ natural and other resources, and turning
them over to the NWO elites “ just as surely as the British Empire
did by using cruder methods.16
Americans tend to identify with these Wall Street banks and
transnational corporations because they have U.S. addresses, but
Djurdjevic warns that the international cartels do not necessarily have
our best interests in mind. To the contrary, Main Street America
appears to be their next takeover target . . . .

Section IV

“We are all threatened,” answered the tiger, “by a fierce enemy
which has lately come into this forest. It is a most tremendous monster,
like a great spider, with a body as big as an elephant and legs as long
as a tree trunk. . . . [A]s the monster crawls through the forest he seizes
an animal with a leg and drags it to his mouth, where he eats it as a
spider does a fly. Not one of us is safe while this fierce creature is alive.”

“ The Wonderful Wizard of Oz,
“The Lion Becomes the King of Beasts”
Chapter 29 - Breaking the Back of the Tin Man

Web of Debt

Chapter 29

“I worked harder than ever; but I little knew how cruel my enemy
could be. She made my axe slip again, so that it cut right through my
“ The Wonderful Wizard of Oz,
“The Rescue of the Tin Woodman”

T he mighty United States has been in the banking spider™s
sights for more than two centuries. This ultimate prize too
may finally have been captured in the spider™s web, choked in debt
spun out of thin air. The U.S. has now surpassed even Third World
countries in its debt level. By 2004, the debt of the U.S. government
had hit $7.6 trillion, more than three times that of all Third World
countries combined. Like the bankrupt consumer who stays afloat by
making the minimum payment on his credit card, the government
has avoided bankruptcy by paying just the interest on its monster debt;
but Comptroller General David M. Walker warns that by 2009 the
country may not be able to afford even that mounting bill. When the
government cannot service its debt, it will have to declare bankruptcy,
and the economy will collapse.1
Al Martin is a retired naval intelligence officer, former contributor
to the Presidential Council of Economic Advisors, and author of a
weekly newsletter called “Behind the Scenes in the Beltway.” He ob-
served in an April 2005 newsletter that the ratio of total U.S. debt to
gross domestic product (GDP) rose from 78 percent in 2000 to 308
percent in April 2005. The International Monetary Fund considers a
Chapter 29 - Breaking the Back of the Tin Man

nation-state with a total debt-to-GDP ratio of 200 percent or more to
be a “de-constructed Third World nation-state.” Martin wrote:
What “de-constructed” actually means is that a political regime
in that country, or series of political regimes, have, through a
long period of fraud, abuse, graft, corruption and
mismanagement, effectively collapsed the economy of that
country. 2
Other commentators warn that the “shock therapy” tested in Third
World countries is the next step planned for the United States.
Editorialist Mike Whitney wrote in CounterPunch in April 2005:
[T]he towering national debt coupled with the staggering trade
deficits have put the nation on a precipice and a seismic shift in
the fortunes of middle-class Americans is looking more likely all
the time. . . . The country has been intentionally plundered and
will eventually wind up in the hands of its creditors . . . . This
same Ponzi scheme has been carried out repeatedly by the IMF
and World Bank throughout the world . . . . Bankruptcy is a fairly
straight forward way of delivering valuable public assets and resources
to collaborative industries, and of annihilating national sovereignty.
After a nation is successfully driven to destitution, public policy
decisions are made by creditors and not by representatives of the
people. . . . The catastrophe that middle class Americans face is
what these elites breezily refer to as “shock therapy”; a sudden
jolt, followed by fundamental changes to the system. In the
near future we can expect tax reform, fiscal discipline,
deregulation, free capital flows, lowered tariffs, reduced public
services, and privatization.3
Catherine Austin Fitts was formerly the managing director of a
Wall Street investment bank and was Assistant Secretary of the De-
partment of Housing and Urban Development (HUD) under Presi-
dent George Bush Sr. She calls what is happening to the economy “a
criminal leveraged buyout of America,” something she defines as “buy-
ing a country for cheap with its own money and then jacking up the
rents and fees to steal the rest.” She also calls it the “American Tape-
worm” model:
[T]he American Tapeworm model is to simply finance the federal
deficit through warfare, currency exports, Treasury and federal
credit borrowing and cutbacks in domestic “discretionary”
spending. . . . This will then place local municipalities and local

Web of Debt

Share of capital income earned by top 1% and bottom 80%,
1979-2003 (Shapiro & Friedman, 20064)

60% top 10%
bottom 80%
leadership in a highly vulnerable position “ one that will allow
them to be persuaded with bogus but high-minded sounding
arguments to further cut resources. Then, to “preserve bond
ratings and the rights of creditors,” our leaders can be persuaded
to sell our water, natural resources and infrastructure assets at
significant discounts of their true value to global investors. . . .
This will all be described as a plan to “save America” by
recapitalizing it on a sound financial footing. In fact, this process
will simply shift more capital continuously from America to other
continents and from the lower and middle classes to elites.5

The Destruction of the Great American Middle Class

In 1894, Jacob Coxey warned of the destruction of the great
American middle class. That prediction is rapidly materializing, as the
gap between rich and poor grows ever wider. The Federal Reserve
reported in 2004 that:
• The wealthiest 1 percent of Americans held 33.4 percent of the
nation™s wealth, up from 30.1 percent in 1989; while the top 5
percent held 55.5 percent of the wealth.

Chapter 29 - Breaking the Back of the Tin Man

• The poorest 50 percent of the population held only 2.5 percent of
the wealth, down from 3.0 percent in 1989.
• The very wealthiest 1 percent of Americans owned a bigger piece
of the pie (33.4 percent) than the poorest 90 percent (30.4 percent
of the pie). They also owned 62.3 percent of the nation™s business
• The wealthiest 5 percent owned 93.7 percent of the value of bonds,
71.7 percent of nonresidential real estate, and 79.1 percent of the
nation™s stocks.6
Forbes Magazine reported that from 1997 to 1999, the wealth of
the 400 richest Americans grew by an average of $940 million each,
for a daily increase of $1.3 million per person.7 Note that lists of this
sort do not include the world™s truly richest families, including the
Rothschilds, the Warburgs, and a long list of royal families. Whether
they consider it to be in bad taste or because they fear retribution from
the bottom of the wealth pyramid, the super-elite do not make their
fortunes public.

Debt Peonage: Eroding the Protection of the Bankruptcy Laws

While the super-rich are amassing fortunes rivaling the economies
of small countries, Americans in the lower brackets are struggling with
food and medical bills. Personal bankruptcy filings more than doubled
from 1995 to 2005. In 2004, more than 1.1 million consumers filed for
bankruptcy under Chapter 7. A Chapter 7 bankruptcy stays on the
debtor™s credit record for ten years from the date of filing, but at least
it wipes the slate clean. In 2005, however, even that escape was taken
away for many debtors. Under sweeping new provisions to the
Bankruptcy Code, many more people are now required to file under
Chapter 13, which does not eliminate debts but mandates that they be
repaid under a court-ordered payment schedule over a three to five
year period.
Homestead exemptions have traditionally protected homes from
foreclosure in bankruptcy; but not all states have them, and the statutes
usually preserve only a fraction of the home™s worth. Worse, the new
bankruptcy provisions require home ownership for a minimum of 40
months to qualify for the exemption. That means that if you file for
bankruptcy within 3.3 years of purchase, your home is no longer off

Web of Debt

limits to creditors.8 In the extreme case, the homeowner could not just
lose his home but could owe a “deficiency,” or balance due, for
whatever the creditor bank failed to get from resale. This balance
could be taken from the debtor™s paychecks over a five-year period. In
some states, “anti-deficiency” laws prevent this, allowing the purchaser
to walk away without paying the balance owed. But again not all
states have them, and they apply only to the original mortgage on the
home. If the buyer takes out a second mortgage or takes equity out of
the home, anti-deficiency laws may not apply. The push to persuade
homeowners to take out home equity loans recalls the 1920s campaign
to persuade people to borrow against their homes to invest in the stock
market. When the stock market crashed, their homes became the
property of the banks. Elderly people burdened with medical and
drug bills are particularly susceptible to those tactics today.
Another insidious change that has been made in the bankruptcy
laws pertains to insolvent corporations. The law originally provided
for the appointment of an independent bankruptcy trustee, whose job
was to try to keep the business running and preserve the jobs of the
workers. In the 1970s, the law was changed so that the plan of
bankruptcy reorganization would be designed by the banks that were
financing the restructuring. The creditors now came first and the
workers had to take what was left. The downsizing of the airline
industry, the steel industry, and the auto industry followed,


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