BLODGET AND BECK TRY TO CREATE A PARANOIA BUBBLE

A decade ago, Henry Blodget was caught fraudulently hyping tech stocks and was banned from the securities industry. Now Glenn Beck is peddling a ridiculous story that's also being hyped by Blodget at Business Insider -- a story about (wait for it) the coming destruction of capitalism in America by an ex-union guy and his massive leftist army of ... well, you'll just have to read Blodget's write-up:

CAUGHT ON TAPE: Former SEIU Official Reveals Secret Plan To Destroy JP Morgan, Crash The Stock Market, And Redistribute Wealth In America

A former official of one of the country's most-powerful unions, SEIU, is detailing a secret plan to "destabilize" the country.

... The former SEIU official, Stephen Lerner, spoke in a closed session at a Pace University forum last weekend.

... Lerner's plan is to organize a mass, coordinated "strike" on mortgage, student loan, and local government debt payments--thus bringing the banks to the edge of insolvency and forcing them to renegotiate the terms of the loans. This destabilization and turmoil, Lerner hopes, will also crash the stock market, isolating the banking class and allowing for a transfer of power.

Lerner's plan starts by attacking JP Morgan Chase in early May, with demonstrations on Wall Street, protests at the annual shareholder meeting, and then calls for a coordinated mortgage strike.

... Lerner was ousted from SEIU last November, reportedly for spending millions of the union's dollars trying to pursue a plan like the one he details here. It is not clear what, if any, power and influence he currently wields....

First of all, I would be ecstatic if I thought something like this could possibly be done successfully in America in 2011. But not only is organized, widespread progressive action of this kind extraordinarily unlikely, but Lerner's notion of how it would play out (if the voice on the tape is his -- Blodget admits he can't verify this) is ridiculously naive. We're told that he says:

... 10% of homeowners are underwater....

If you could double that number you would you could put banks at the edge of insolvency again....

We have an entire economy that is built on debt and banks so the question would be what would happen if we organized homeowners in mass to do a mortgage strike if we get half a million people to agree it would literally cause a new finical crisis for the banks...

The hell it would. If there were even a hint that something like this had been organized -- even in the absence of this tape's disclosure -- the establishment, including the "liberal" president, would agree that it simply could not be allowed to persist. Serious economic, civil, and criminal penalties would be meted out to at least some of those who willfully withheld payments, and who participated in any civil disobedience or trespassing, and certainly to anyone who "conspired" to get others to withhold funds. What's more, the government would spare no expense to repair the damage done to the banks.

If necessary, the propaganda response would be that the dirty radicals were trying to hurt you, Mr. and Mrs. America, by throwing sand in the gears of the recovery and making borrowing and lending (and credit card spending) impossible for you (and for the selfless employers who'd dearly love to hire more of you, if only they could). The right-wing and centrist media would be in full agreement on that message. And soon, so would Mr. and Mrs. America.

Maybe I'm wrong about this. Maybe the public, starved for a messenger who actually says bad things about the fat cats, would rally to the protestors' side. I'll admit that's possible.

What I'm 99% certain is impossible is a protest of this king that would be big enough to even put a scare in the banks -- though I'd really love to be wrong about that.

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(Rumproast has more. And, needless to say, right-wingers are accepting the "economic terrorism" talking point uncritically.)