"Fodder units": Jeb Bush and the economic meltdown

Most Americans blame Dubya for the financial disaster, although an increasing number (incorrectly) blame Obama. Not enough people understand that Jeb Bush also played a role in this disaster -- a major one.

A few posts down, I questioned the veracity of a quote widely attributed to Jeb Bush:

The truth is useless. You have to understand this right now. You can't deposit the truth in a bank. You can't buy groceries with the truth. You can't pay rent with the truth...

The quote goes on like that for a while; you get the gist. Jeb, I now understand, did not actually utter those words. A former intelligence officer named Al Martin wrote (on page 200 of his book The Conspirators) similar words as his way of summarizing what he felt was Jeb's attitude. Martin claims that he came to know Jeb rather well in the days before the latter achieved the governor's office.

(My thanks go to reader Mike Rogers, who found the cite. I do not possess a copy of Martin's book.)

Getting to the bottom of that "false quotation syndrome" mystery was of some importance, but the following section from a Martin article is much more significant:

You must realize that most of the big, big Republican money (the trillion-dollar type money) was made by huge short positions in the market during the time frame of 1987-1989.

This was extensively discussed by Jeb Bush and others in 1985 — and rather openly so. They were shorting entire indexes, and that's what distorted the markets. That's why there was so much distortion in '87, '88 and going into '89, when all these different types of spreads came up, and people couldn't figure out what they were.

In other words, the Bush Cabal entered into a policy, which they knew would weaken the economic marketplace, the capital marketplaces of the United States, and hence worldwide, since when we sneeze, the rest of the world gets the flu, economically speaking. They capitalized on it further by instituting enormous short positions in a market because they were themselves the ones causing the economic damage to the underpinnings of the nation, which would eventually be felt in the nation's capital marketplaces.

The companies used were the same old list of favorites. Merrill Lynch. Goldman Sachs. Practically every Republican I knew at the time did business there. They would form offshore investment groups that they would all pool into. Trilateral Investment Group Ltd. was one name I remember. The Omni Investment Group Ltd. They would all be Republican-controlled, and they would institute huge short positions in the markets. A lot of times they were dealing with Republican controlled institutions, so if they got into an unsecured debit balance position, nobody ever put the arm on them for the money. They could carry positions much longer, outside of market rules.

This passage focuses on the shennanigans of 20 years ago, but the principle applies to more recent times.

I have made this contention before-that the stock market collapse in October of 1987 was caused by a massive draining of capital out of the United States, principally due to a variety of schemes originally proffered by the Bushites.

The market did not reach its bottom until December 4, 1989, and enormous amounts of money were made in that period of time.

Here's a claim that I would like to see verified by another source:

I don't know where the term came from, but "One Fodder Unit" became a popular term on the Republican cocktail party circuit in 1985. According to them, each individual American citizen equals One Fodder Unit.

The Urban dictionary offers a more restrictive definition, without (alas) favoring us with a citation:

Fodder unit -- derogatory term for a serving member of the armed forces, used in the Bush family between Jeb & Dubya after the term was originally coined by their father George H W Bush.

Elsewhere, Martin claims that Bush insiders shortened "one fodder unit" to OFU. Again, I've seen no outside evidence to support this assertion. On the other hand, I've yet to run into anyone who has debunked Martin's contention that he knew Jeb Bush and Richard Secord "back in the day." Martin has been around for a while now, and if his tale had any obvious holes, someone (I should think) would have made note of them by now.

Here's the short-and-dirty version: Martin claims that the Bush family -- by using and promoting a wide variety of frauds and scams -- intentionally damaged the economy in order to profit from well-timed short-selling.

A 2008 article in the Tampa Tribune -- Negligent Florida Let Criminals Infect Mortgage Industry -- may add credibility to this view:

A blockbuster investigation by The Miami Herald details the devastation that resulted from the state's regulatory neglect. In an eight-month investigation, the newspaper found:

• From 2000 to 2007, regulators approved 10,529 people with criminal records to work in the mortgage profession.

• Some of these criminals committed nearly $85 million in mortgage fraud, stealing customers' identities, their savings and even their homes.

• Regulators ignored a state law adopted in 2006 requiring criminal background checks on mortgage brokers. The backgrounds of more than half the people who wrote mortgages in Florida were never checked.

• Despite the epidemic of mortgage fraud in recent years, license revocations declined during the last five years.

• And regulators allowed at least 20 brokers to keep their license after committing fraud.

Florida Chief Financial Officer Alex Sink is right to call for the resignation of Don Saxon, who heads the Florida Office of Financial Regulation and oversees the mortgage industry.

Saxon's record is shameful. His office awarded mortgage licenses to bank robbers, racketeers and cocaine traffickers. It approved licenses for applicants caught lying or who admitted to crimes that should have disqualified them. Indeed, regulators had no qualms about empowering criminals to handle people's money during home sales, often the most important financial transaction of their lives.

Saxon eventually resigned in disgrace. Here's how he entered into the job that made him infamous:

Saxon became the state’s chief financial regulator in 2003, through a new office created by the Jeb Bush administration

Saxon was doing what his boss wanted. This is what Governor Jeb Bush said in his 2003 inaugural address; “There will be no greater tribute to our maturity as a society than if we can make these buildings around us empty of workers; as silent monuments to the time when government played a larger role than it deserved or could adequately fill.”

The Miami Herald (quoted by the afore-linked site; the original story is no longer online) wrote the following about the rampant criminality that Bush and Saxon unleashed on the mortgage industry:

As the housing boom exploded in 2001, so did the number of people rushing into the mortgage industry, with loan originators leading the way. But as their numbers rose each year — 66 a day in 2005 — so did the number of former criminals. With home sales rising more than 20 percent a year in parts of Florida, mortgage companies were hiring loan originators at an unprecedented rate, state records show. ”Back then, it was such a feeding frenzy,” said David Velazquez, 37, a former loan originator in Broward who served time in prison for drug trafficking. ‘People were saying, `We need loan originators. We’ll train you.’ It was so busy. They were pulling in anyone they could.’ In all, more than 5,300 people with criminal histories rushed into Florida’s mortgage industry as loan originators since 2000. Even for people who had five or more convictions, there were no impediments to getting in.

The Herald went on to assert that by 2006, one in every five fraudulent loans in the United States were written in Florida.

Obviously, the housing boom was a nationwide phenomenon. But Florida played a massive role in creating the crisis.

The scheme here is not difficult to understand, although the accusation is so large that even the most cynical minds may not easily accept it: The Bush clan intentionally created an unsustainable real estate boom and then cleaned up by short-selling when the whole thing went bust.

Is it possible? Did it happen?

I've yet to see any evidence that the Bush family personally profited from short selling. However, it is indeed true that quite a lot of short selling did occur last September. See here and here. As Martin has noted, the short selling could have occurred by proxy.