Paulson wants his other $350 billion to allocate according to his private whims. Reality has become a bad remake of Richard Pryor's Brewster's Millions. Well, except that Paulson is playing with someone else's money and burning through it like he was on a drunken shopping spree.
I'm so glad we avoided that $15 billion auto industry bailout. We saved just enough by doing that to actually give them $17.4 billion instead. But that's the current estimate, these things tend to grow like Pinocchio's nose and for the same reason.
Thanks for the American dream,To vulgarize and to falsify until the bare lies shine through. - William Burroughs
Showing posts with label Paulson. Show all posts
Showing posts with label Paulson. Show all posts
Friday, December 19, 2008
Monday, November 10, 2008
The Foxes Guarding the Hen House II
The New Trough
http://www.rollingstone.com/politics/story/24012700/the_new_trough/print
It didn't have to be this way. Five days before Paulson struck his deal with the banks, British Prime Minister Gordon Brown negotiated a similar bailout - only he extracted meaningful guarantees for taxpayers: voting rights at the banks, seats on their boards, 12 percent in annual dividend payments to the government, a suspension of dividend payments to shareholders, restrictions on executive bonuses, and a legal requirement that the banks lend money to homeowners and small businesses.
In sharp contrast, this is what U.S. taxpayers received: no controlling interest, no voting rights, no seats on the bank boards and just five percent in dividend payouts to the government, while shareholders continue to collect billions in dividends every quarter. What's more, golden parachutes and bonuses already promised by the banks will still be paid out to executives - all before taxpayers are paid back.
No wonder it took just one hour for Paulson to convince all nine CEOs to accept his offer - less than seven minutes per bank. Not even the firms' own lawyers could have drafted a sweeter deal.
...[skipped]...
sense and should be immediately scrapped - a move that would also handily get rid of most of the crony contractors. As for purchasing equity in banks, the next round of deals - and there will be more - has to start from the premise that the banks are bankrupt and will therefore accept whatever terms we choose to impose, including real regulatory oversight. The possibilities of what could be done if a chunk of the banking system were genuinely under public control - from a moratorium on home foreclosures to mandatory investment in green community redevelopment - are limitless.
Because here is what George Bush and Henry Paulson are hoping we won't figure out: When a society no longer has enough money to pay for its most pressing needs, there are worse things than discovering you own the banks.
-----
Comment:
I hate to repeat myself endlessly but all I can do is wonder why we are bailing these assholes out instead of filing charges against them. I think all we are doing is postponing the inevitable. I suppose that must seem like a worthy goal to some, but I'd rather just get the inevitable over with first and then get onto the good stuff. Kind of like saving dessert for last, if you know what I mean.
http://www.rollingstone.com/politics/story/24012700/the_new_trough/print
It didn't have to be this way. Five days before Paulson struck his deal with the banks, British Prime Minister Gordon Brown negotiated a similar bailout - only he extracted meaningful guarantees for taxpayers: voting rights at the banks, seats on their boards, 12 percent in annual dividend payments to the government, a suspension of dividend payments to shareholders, restrictions on executive bonuses, and a legal requirement that the banks lend money to homeowners and small businesses.
In sharp contrast, this is what U.S. taxpayers received: no controlling interest, no voting rights, no seats on the bank boards and just five percent in dividend payouts to the government, while shareholders continue to collect billions in dividends every quarter. What's more, golden parachutes and bonuses already promised by the banks will still be paid out to executives - all before taxpayers are paid back.
No wonder it took just one hour for Paulson to convince all nine CEOs to accept his offer - less than seven minutes per bank. Not even the firms' own lawyers could have drafted a sweeter deal.
...[skipped]...
sense and should be immediately scrapped - a move that would also handily get rid of most of the crony contractors. As for purchasing equity in banks, the next round of deals - and there will be more - has to start from the premise that the banks are bankrupt and will therefore accept whatever terms we choose to impose, including real regulatory oversight. The possibilities of what could be done if a chunk of the banking system were genuinely under public control - from a moratorium on home foreclosures to mandatory investment in green community redevelopment - are limitless.
Because here is what George Bush and Henry Paulson are hoping we won't figure out: When a society no longer has enough money to pay for its most pressing needs, there are worse things than discovering you own the banks.
-----
Comment:
I hate to repeat myself endlessly but all I can do is wonder why we are bailing these assholes out instead of filing charges against them. I think all we are doing is postponing the inevitable. I suppose that must seem like a worthy goal to some, but I'd rather just get the inevitable over with first and then get onto the good stuff. Kind of like saving dessert for last, if you know what I mean.
Saturday, October 25, 2008
The Foxes Guarding the Hen House
Paulson and Kashkari are the biggest con men we have going. These two chrome domes would stick a knife in your grandmother and then steal the gold from her teeth. Is it too ass-holy to note that one of these dudes surnames looks like it literally means "cash n' carry"? So yeah, I see Kaskkari as a man that walks off with the goods. What a pair!
So When Will Banks Give Loans?
http://www.nytimes.com/2008/10/25/business/25nocera.html?pagewanted=1&partner=rssuserland&emc=rss
It is starting to appear as if one of Treasury's key rationales for the recapitalization program — namely, that it will cause banks to start lending again — is a fig leaf, Treasury's version of the weapons of mass destruction.
In fact, Treasury wants banks to acquire each other and is using its power to inject capital to force a new and wrenching round of bank consolidation. As Mark Landler reported in The New York Times earlier this week, "the government wants not only to stabilize the industry, but also to reshape it." Now they tell us.
Indeed, Mr. Landler's story noted that Treasury would even funnel some of the bailout money to help banks buy other banks. And, in an almost unnoticed move, it recently put in place a new tax break, worth billions to the banking industry, that has only one purpose: to encourage bank mergers. As a tax expert, Robert Willens, put it: "It couldn't be clearer if they had taken out an ad."
...[skipped]...
"We share your view," Mr. Kashkari replied. "We want our banks to be lending in our communities."
Senator Dodd: "Are you insisting upon it?"
Mr. Kashkari: "We are insisting upon it in all our actions."
But they are doing no such thing. Unlike the British government, which is mandating lending requirements in return for capital injections, our government seems afraid to do anything except plead. And those pleas, in this environment, are falling on deaf ears.
...[skipped]...
Late Thursday afternoon, I caught up with Senator Dodd, and asked him what he was going to do if the loan situation didn’t improve. "All I can tell you is that we are going to have the bankers up here, probably in another couple of weeks and we are going to have a very blunt conversation," he replied.
He continued: "If it turns out that they are hoarding, you'll have a revolution on your hands. People will be so livid and furious that their tax money is going to line their pockets instead of doing the right thing. There will be hell to pay."
-----
And this is why you don't write blank checks without significant oversight and detailed instructions as to what to do with the money. I mean, we taxpayers aren't even stakeholders in any of this. Once again we trust in the good will of free-wheeling investors and bank presidents.
Did anyone hear the guilty admission of Greenspan yesterday? He basically admitted that he is a blinkered know-nothing. Of course, this is substantially after he has profited from his supposed ignorance.
So When Will Banks Give Loans?
http://www.nytimes.com/2008/10/25/business/25nocera.html?pagewanted=1&partner=rssuserland&emc=rss
It is starting to appear as if one of Treasury's key rationales for the recapitalization program — namely, that it will cause banks to start lending again — is a fig leaf, Treasury's version of the weapons of mass destruction.
In fact, Treasury wants banks to acquire each other and is using its power to inject capital to force a new and wrenching round of bank consolidation. As Mark Landler reported in The New York Times earlier this week, "the government wants not only to stabilize the industry, but also to reshape it." Now they tell us.
Indeed, Mr. Landler's story noted that Treasury would even funnel some of the bailout money to help banks buy other banks. And, in an almost unnoticed move, it recently put in place a new tax break, worth billions to the banking industry, that has only one purpose: to encourage bank mergers. As a tax expert, Robert Willens, put it: "It couldn't be clearer if they had taken out an ad."
...[skipped]...
"We share your view," Mr. Kashkari replied. "We want our banks to be lending in our communities."
Senator Dodd: "Are you insisting upon it?"
Mr. Kashkari: "We are insisting upon it in all our actions."
But they are doing no such thing. Unlike the British government, which is mandating lending requirements in return for capital injections, our government seems afraid to do anything except plead. And those pleas, in this environment, are falling on deaf ears.
...[skipped]...
Late Thursday afternoon, I caught up with Senator Dodd, and asked him what he was going to do if the loan situation didn’t improve. "All I can tell you is that we are going to have the bankers up here, probably in another couple of weeks and we are going to have a very blunt conversation," he replied.
He continued: "If it turns out that they are hoarding, you'll have a revolution on your hands. People will be so livid and furious that their tax money is going to line their pockets instead of doing the right thing. There will be hell to pay."
-----
And this is why you don't write blank checks without significant oversight and detailed instructions as to what to do with the money. I mean, we taxpayers aren't even stakeholders in any of this. Once again we trust in the good will of free-wheeling investors and bank presidents.
Did anyone hear the guilty admission of Greenspan yesterday? He basically admitted that he is a blinkered know-nothing. Of course, this is substantially after he has profited from his supposed ignorance.
Monday, September 29, 2008
Losers Take All
Big Financiers Start Lobbying for Wider Aid
http://www.nytimes.com/2008/09/22/business/22lobby.html?_r=1&oref=slogin&pagewanted=all
Even as policy makers worked on details of a $700 billion bailout of the financial industry, Wall Street began looking for ways to profit from it.
Financial firms were lobbying to have all manner of troubled investments covered, not just those related to mortgages.
At the same time, investment firms were jockeying to oversee all the assets that Treasury plans to take off the books of financial institutions, a role that could earn them hundreds of millions of dollars a year in fees.
Nobody wants to be left out of Treasury’s proposal to buy up bad assets of financial institutions.
-----
“Is this the United States Congress or the Board of Directors of Goldman Sachs?” Rep. Dennis Kucinich Rejects $700 Billion Bailout
http://www.democracynow.org/2008/9/29/is_this_the_united_states_congress
This is a copy of the bill which will provide for a $700 billion bailout of Wall Street. It has provisions in it where it talks about helping homeowners, but when you read the fine print, you see it has language like “may” instead of “shall” and “encouraging” instead of “mandating” help for the millions of homeowners who are worried right now about whether they’re going to lose their home. There’s no help for them in this.
...
So what we have here is a rescue plan that essentially gives all the speculators a bailout and puts the bad debts in the custody of the government. The president of the Dallas Federal Reserve Bank has said that this plan could create a fiscal chasm, says that the problem isn’t tight monetary policy, it’s the reckless behavior of some of these investors who have now found themselves in a position where a government bailout is going to help reward their bad behavior.
...
Well, you know, that implies that you would accept the underlying premise. I reject the underlying premise that we needed this bill. And as a matter of fact, that we’re putting this up before an adjournment in an election season shows that Congress is being put under extraordinary pressure to bail out Wall Street. We haven’t looked at any alternatives, Amy. This is—you know, it isn’t as though, if you had a liquidity crisis, that—you know, a real one—that you’d start to look at all the alternatives. We haven’t done that. We have a bill here, a bill of more than a hundred pages, that we haven’t had a single hearing on the bill, you know—on the concept, yes, on what Paulson and Bernanke asked for initially. But, you know, we need to have hearings on this. There’s 400 economists and three Nobel Prize-winning economists who have said, “Whoa, wait a minute! What are you doing? Why are you rushing this?” You know, this thing doesn’t smell right, frankly.
...
I said we’re the Congress of the United States; we’re not the board of Goldman Sachs. Goldman Sachs is struggling to survive. And, you know, their former chief is now the head of the US Treasury. He’s in a position to be able to direct assets in a way that would help enhance his own financial standing. I mean, that’s a clear conflict of interest. And, you know, that’s something that needs to be said. You know, why are we permitting the person who has essentially been in a position where he’s managed assets that—you know, many of which are now in trouble, and he can come back and help clear the books for a lot of his friends? This is wrong. It’s fundamentally wrong. And, you know, it’s one of the things that adds a degree of stench to this.
...
Well, there’s many ways that you can stimulate the economy. One is that you can have massive infrastructure spending. You could get that started right away. It would have to go far beyond what Congress passed the other day. If you want to spend money into circulation and move the money in the economy, you can do that through spending on things that are tangible: bridges, water systems, sewer system. You can stimulate the economy by having a national healthcare plan. I mean, that would take a little bit longer to set up, but that would be a huge break for all these businesses that are having difficulties.
...
Well, you know, the word “oversight” has new meaning here. You know, oversight could mean “I overlooked something.” And frankly, the Securities and Exchange Commission looked the other way while all these—all this fast-paced trading was going in derivatives and derivatives of derivatives. We have about a four—$500 trillion, almost a half a quadrillion dollars of derivatives floating out there that no one really understands how that’s going to affect the underlying economy when some of these things start imploding.
...
You know, I think that—I think we’re looking at a situation here where it is precisely the lack of regulation and the lack of oversight by the administration that has caused this. Congress is going to have hearings next month, but frankly, we should be having hearings now, before we pass a bill. I mean, it’s just upside-down that you have hearings about the underlying problem after you pass a bill, because you have hearings first, you do the analysis, and then you come up with a fix that can protect investors, strengthen the economy.
...
We need to challenge again the underlying assumptions about a debt-based economy, about whether or not we should revisit the 1913 Federal Reserve Act, which has an unfortunately privatized monetary system and created a system which includes banks having the ability to create money almost out of thin air with a fractional reserve. We have to look at the implications of that, maybe put the Federal Reserve under the Treasury and have the Treasury really be responsive to the interests of the American people and keeping the economy going.
-----
I see those that want to take and how they will keep taking. Remember how Warren Buffett wanted in on the action? Here is more of the same.
And then I see Kucinich - who is normally derided as a UFO-freak - as one of the few that is making any sense whatever. But his political clout has been completely marginalized. Kucinich's presidential candidacy was of real interest me. So, of course, he didn't have a bloody prayer.
I'm with the seers of moonbeams...
http://www.nytimes.com/2008/09/22/business/22lobby.html?_r=1&oref=slogin&pagewanted=all
Even as policy makers worked on details of a $700 billion bailout of the financial industry, Wall Street began looking for ways to profit from it.
Financial firms were lobbying to have all manner of troubled investments covered, not just those related to mortgages.
At the same time, investment firms were jockeying to oversee all the assets that Treasury plans to take off the books of financial institutions, a role that could earn them hundreds of millions of dollars a year in fees.
Nobody wants to be left out of Treasury’s proposal to buy up bad assets of financial institutions.
-----
“Is this the United States Congress or the Board of Directors of Goldman Sachs?” Rep. Dennis Kucinich Rejects $700 Billion Bailout
http://www.democracynow.org/2008/9/29/is_this_the_united_states_congress
This is a copy of the bill which will provide for a $700 billion bailout of Wall Street. It has provisions in it where it talks about helping homeowners, but when you read the fine print, you see it has language like “may” instead of “shall” and “encouraging” instead of “mandating” help for the millions of homeowners who are worried right now about whether they’re going to lose their home. There’s no help for them in this.
...
So what we have here is a rescue plan that essentially gives all the speculators a bailout and puts the bad debts in the custody of the government. The president of the Dallas Federal Reserve Bank has said that this plan could create a fiscal chasm, says that the problem isn’t tight monetary policy, it’s the reckless behavior of some of these investors who have now found themselves in a position where a government bailout is going to help reward their bad behavior.
...
Well, you know, that implies that you would accept the underlying premise. I reject the underlying premise that we needed this bill. And as a matter of fact, that we’re putting this up before an adjournment in an election season shows that Congress is being put under extraordinary pressure to bail out Wall Street. We haven’t looked at any alternatives, Amy. This is—you know, it isn’t as though, if you had a liquidity crisis, that—you know, a real one—that you’d start to look at all the alternatives. We haven’t done that. We have a bill here, a bill of more than a hundred pages, that we haven’t had a single hearing on the bill, you know—on the concept, yes, on what Paulson and Bernanke asked for initially. But, you know, we need to have hearings on this. There’s 400 economists and three Nobel Prize-winning economists who have said, “Whoa, wait a minute! What are you doing? Why are you rushing this?” You know, this thing doesn’t smell right, frankly.
...
I said we’re the Congress of the United States; we’re not the board of Goldman Sachs. Goldman Sachs is struggling to survive. And, you know, their former chief is now the head of the US Treasury. He’s in a position to be able to direct assets in a way that would help enhance his own financial standing. I mean, that’s a clear conflict of interest. And, you know, that’s something that needs to be said. You know, why are we permitting the person who has essentially been in a position where he’s managed assets that—you know, many of which are now in trouble, and he can come back and help clear the books for a lot of his friends? This is wrong. It’s fundamentally wrong. And, you know, it’s one of the things that adds a degree of stench to this.
...
Well, there’s many ways that you can stimulate the economy. One is that you can have massive infrastructure spending. You could get that started right away. It would have to go far beyond what Congress passed the other day. If you want to spend money into circulation and move the money in the economy, you can do that through spending on things that are tangible: bridges, water systems, sewer system. You can stimulate the economy by having a national healthcare plan. I mean, that would take a little bit longer to set up, but that would be a huge break for all these businesses that are having difficulties.
...
Well, you know, the word “oversight” has new meaning here. You know, oversight could mean “I overlooked something.” And frankly, the Securities and Exchange Commission looked the other way while all these—all this fast-paced trading was going in derivatives and derivatives of derivatives. We have about a four—$500 trillion, almost a half a quadrillion dollars of derivatives floating out there that no one really understands how that’s going to affect the underlying economy when some of these things start imploding.
...
You know, I think that—I think we’re looking at a situation here where it is precisely the lack of regulation and the lack of oversight by the administration that has caused this. Congress is going to have hearings next month, but frankly, we should be having hearings now, before we pass a bill. I mean, it’s just upside-down that you have hearings about the underlying problem after you pass a bill, because you have hearings first, you do the analysis, and then you come up with a fix that can protect investors, strengthen the economy.
...
We need to challenge again the underlying assumptions about a debt-based economy, about whether or not we should revisit the 1913 Federal Reserve Act, which has an unfortunately privatized monetary system and created a system which includes banks having the ability to create money almost out of thin air with a fractional reserve. We have to look at the implications of that, maybe put the Federal Reserve under the Treasury and have the Treasury really be responsive to the interests of the American people and keeping the economy going.
-----
I see those that want to take and how they will keep taking. Remember how Warren Buffett wanted in on the action? Here is more of the same.
And then I see Kucinich - who is normally derided as a UFO-freak - as one of the few that is making any sense whatever. But his political clout has been completely marginalized. Kucinich's presidential candidacy was of real interest me. So, of course, he didn't have a bloody prayer.
I'm with the seers of moonbeams...
Tuesday, September 23, 2008
Reverse Robin Hood: Privatizing Gains and Socializing Risk
[N.B. This post is mainly a string of quotes from various sources that I have attempted to weave together into a narrative web of ideas. I wanted to engage this complex material with reputable sources to answer these three main questions: What exactly happened to the economy? How did it start? What do we do now, if anything?]
The claim is that we are faced with both a national and global financial crisis. Before we accept either assertion we need to dig into the history of recent events. Who intends to act upon this crisis and who is taking a "wait and see" approach? As you shall see, things are not what they seem and elsewhere many people seem substantially untroubled by what is taking place. Markets correct themselves. Some people win. Some people lose. We cannot save everyone. Maybe we shouldn't save anyone at all.
It starts with overweening greed and "globalization."
In the year 2000 the total amount of money available for financial transactions was the equivalent of a mere $36 trillion. Globalization and the resulting economic growth of markets doubled that amount of money so that by the year 2006 international investors were looking for ways to invest their now $70 trillion and still make a handsome profit. The problem was that there really wasn't $70 trillion worth of good investments to be had. Unsatisfied with a few paltry percentage points to be made on their money per annum with US Treasury Bonds, the investors wanted yields of 10-15%. 20% if they could get it. Now I don't care what anyone else tells you, but when the returns are that high there is risk and every investor knows that fact. But international investors wanted to be lied to and told that they realistically could be making that kind of return on their money. With that $70 trillion burning holes in pockets all over the world you just know that someone was going to step up and give those greedy bastards exactly what they wanted: a good swindling! Enter a new form of investment: the CDO, mortgage securities, etc. These various financial instruments are basically packaged up versions of bad mortgages, leveraged time and again, until they are made to look like good investments. But you've heard that old cliche: you can't make a silk purse from a sow's ear. What they were doing was taking bad mortgages - desired by greedy and unscrupulous borrowers against the equity in their homes and brokered by greedy and unscrupulous lenders who were lying their asses off in order to cash out their commissions - and selling them off as packaged deals higher up the financial food chain. The claim was that while each mortgage might be bad individually, taken as a whole they would perform very well because the real estate bubble would simply never pop and just keep expanding ad infinitum. Uh huh, that's what they wanted to believe. Sure, they could have made much safer investments but you know how it goes: live fast, spawn, and die. That's the new ethic of the globalized world. But how could anyone get away with selling this toxic waste mortgage manure to someone with the claim that it was as solid an investment as US Treasury Bonds? Isn't that a lie on its face? Yes, it is- but the reason they got away with it is that they used inaccurate data models to support the logic of these doomed to fail investment instruments. You might be wondering how and why these toxic waste mortgages exist in the first place. The answer to that is predictable: overweening greed and deregulation. As it turns out, without step by step regulation and oversight people often succumb to greed and the temptations of fraud. Who knew?! [The above is my own brutal redaction of what you could hear and read at "This American Life."]
Source: http://www.thisamericanlife.org/Radio_Episode.aspx?episode=355
Transcript (PDF): http://www.thisamericanlife.org/extras/radio/355_transcript.pdf
Every industry wants you to believe that they are owed a deregulated environment so that they can operate as they please. The claim is that the extravagantly wealthy upper class creates jobs because of the restaurants they patronize, the various services they use, the houses they buy, the cars they drive, the Manolo Blahnik shoes they buy their mistresses, the roses and jewelry they buy for their wives, and the housekeepers and gardeners that they employ. So, perhaps you want to support the bailout simply because the fallout will displace so many persons in such service and employ. But one's job is only a matter of chance. Everybody that works for Wall Street directly or indirectly would be working somewhere else if it didn't exist. Claiming that their jobs create other jobs may have some truth to it, but that's trickle down economics at its worst and ugliest - you don't get to keep your job after you screw things up, you lose your job! You don't get bailed out and you don't get a raise. Wall Street was significantly deregulated in the late 1990s but instead of creating a robust and healthy economy they have bled it almost dry. Personally, I don't think that such actions merit a reward.
D.C. and Wall Street people have been whining about how important and necessary the bailout is and how it has to happen right now to save the global economy. United States Treasury Secretary Henry Paulson had this to say:
"The credit markets are still very fragile right now and frozen...We need to deal with this and deal with it quickly." Source: http://www.huffingtonpost.com/2008/09/21/paulson-resisting-democra_n_128035.html
Who is this guy Henry Merritt Paulson Jr? He served under John Ehrlichman in the Nixon administration. He's the former chief executive of Goldman Sachs. Could he just be there to enrich his buddies at Goldman Sachs and also his elite pals in China? Did you know that they were planning to enrich foreign banks and investors with the bailout?
"Paulson's Conflicts Of Interest Spark Concern"
"I think that Hank Paulson's corporate...record is very important. While he was a Goldman Sachs, the company was buying up a lot of Chinese banks in particular, and at the time of his nomination, there were very serious questions raised about the conflicts of interest involved, and where his priorities are, and who he really is looking after."...Moreover, as Bloomberg News reported: "Goldman Sachs Group Inc. and Morgan Stanley may be among the biggest beneficiaries of the $700 billion U.S. plan to buy assets from financial companies while many banks see limited aid..."
Source: http://www.huffingtonpost.com/2008/09/22/paulsons-conflicts-of-int_n_128476.html
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." Source: http://www.politico.com/news/stories/0908/13690.html
Hey, it makes a difference to me! I want to support a way of life similar to my own, not the way of life under the quasi-capitalistic, totalitarian regime of communist China! These gamblers at the tables on Wall Street need to be made to live with the result of their own foolish greed just like all the idiots that go Las Vegas every day. These guys gamble their fortunes away and now want to pass the hat around. And who will join the American people in this show of extravagant largesse to the sad investor class? No one is who:
But there was little appetite to mimic Paulson's scheme to buy up toxic mortgage-related debt from financial firms..."At the moment, I don't think Japan needs to launch a program similar to that of the United States," Japanese Vice Finance Minister Kazuyuki Sugimoto told reporters in Tokyo, echoing similar comments from France, Britain and Germany...The European Union also made it clear that it would not be joining a rescue package. EU Monetary Affairs Commissioner Joaquin Almunia told a conference in Slovakia that individual national governments would have to decide on their own..."It's up to them to consider whether they can follow this initiative," he said. Source: http://www.reuters.com/articlePrint?articleId=USLM62629820080922
We have to go this one alone. So, how much is it going to cost Joe and Jane Sixpack? Oh, you know, not too much...
With the cost of the proposed bailout effort equal to about $2,000 for every man, woman and child in the United States, Democrats began pushing for language in the rescue plan that would steers additional aid to homeowners struggling to stay in their homes and prevent foreclosures. Source: http://www.miamiherald.com/news/politics/AP/story/695587.html
Well, that's an interesting point. But don't these wizards of Wall Street really need the money quite badly?
In 2007, Wall Street's five biggest firms-- Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch, and Morgan Stanley - paid a record $39 billion in bonuses to themselves...That's $10 billion more than the $29 billion loan taxpayers are making to J.P. Morgan to save Bear Stearns...Those 2007 bonuses were paid even though the shareholders in those firms last year collectively lost about $74 billion in stock declines --their worst year since 2002...If split equally among the approximately 186,000 workers at the former Big Five Houses, that bonus money means an average of $201,500 per person -- more than four times the $48,201 median household income in the U.S. last year. Source: http://blogs.abcnews.com/politicalpunch/2008/09/last-years-big.html
It almost seems as if you could take the bonuses handed out last year to these wizards of Wall Street and pay for parts of the bailout that way, right? Like gamblers at a fantasy high stakes table, these idiots want to gamble with the security of knowing they can't lose. Representative Barney Frank, Democrat of Massachusetts and chairman of the House Financial Services Committee, offered up the following comment on the bailout as from the perspective of one of the Wall Street wizards that put themselves into this mess:
"Heads I win, tails I break even." Source: http://www.nytimes.com/2008/09/21/business/21cong.html?pagewanted=print
Paulson's solution is simply to buy out the private losses with public funds. That is exactly the equivalent of reverse Robin Hood: privatizing gains and socializing risk! Here's more on his solution:
Paulson and the Federal Reserve are trying to replay the bailout approach used in the 1980s for the savings and loan crisis, but this situation is utterly different. The failed S&Ls held real assets--property, houses, shopping centers--that could be readily resold by the Resolution Trust Corporation at bargain prices. This crisis involves ethereal financial instruments of unknowable value--not just the notorious mortgage securities but various derivative contracts and other esoteric deals that may be virtually worthless...Despite what the pols in Washington think, the RTC bailout was also a Wall Street scandal. Many of the financial firms that had financed the S&L industry's reckless lending got to buy back the same properties for pennies from the RTC--profiting on the upside, then again on the downside. Guess who picked up the tab? I suspect Wall Street is envisioning a similar bonanza--the chance to harvest new profit from their own fraud and criminal irresponsibility. Source: http://www.thenation.com/doc/20081006/greider
What Paulson wants is a blank check and absolute authority.
"Dirty Secret Of The Bailout: Thirty-Two Words That None Dare Utter"
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. Source: http://www.huffingtonpost.com/2008/09/22/dirty-secret-of-the-bailo_n_128294.html
The rescue plan would give sweeping powers to the U.S. Treasury to buy up toxic mortgage-related debt from financial groups, including U.S. subsidiaries of foreign banks. Source: http://www.reuters.com/articlePrint?articleId=USN1945959820080922
I just love that foreign banks bit. It really makes you wonder who our supposed representatives really represent. If they represented us wouldn't they be taking money from the investors and giving it to us taxpayers to compensate us for all the stuff they have been doing to gut the economy and offshore production? Instead, they would seem to want money from every man, woman and child to help feed the greed of Wall Street and international investors. Does that make any sense to anyone? Barney Frank again:
"I don't want the American taxpayer to get this bad debt and then the guy (whose company once held the bad loans) gets millions of dollars on his way out the door." Source: http://www.huffingtonpost.com/2008/09/21/paulson-resisting-democra_n_128035.html
But...Paulson claims his plan should make the taxpayers whole, once the housing market recovers and the mortgage securities are resold. Source: http://www.miamiherald.com/news/politics/AP/story/695587.html
Resold to whom? Why in all the circles of hell would anyone want to buy up all of those toxic waste mortgages? Right, they wouldn't want to! But if you put a legislative gun to their heads via taxation you can make the American people pay for anything: private oil/resource wars, investment failures, whatever...
These fancy toxic waste mortgage investment instruments are often worth absolutely nothing. I am sure you've been reading about foreclosed homes that are being vandalized and looted of everything inside them. All the valuable appliances are gutted from the houses. Even the copper electrical wires are taken by thieves for their weight as scrap metal. Those houses either have to be torn down or substantially rebuilt! There's hardly any money left in them.
But Paulson doesn't know that. Is that right?
I don't believe that for one moment.
The whole thing is a fraud. At the prices we taxpayer's will pay it's going to be one big con with nearly zero chance that we will ever recovery anything from the transaction. Bush is arguing that the government isn't even going to really take managerial control of these decimated companies - just hand them money and hope for the best. Quick money, no oversight, and hope for the best! That's the keen financial insight of "acting" president Bush for you: garbage in, garbage out.
Chuck Collins at The Nation says we should "Tax the Speculators." Hey, maybe we can wring something good from this great financial evil after all. Here are Collins' main recomendations, but you should go read them in detail too:
1. Institute a Financial Transactions Tax.
2. Impose an Income Tax Surcharge Rate on Incomes Over $5 Million.
3. Eliminate the Tax Preference for Capital Gains.
4. Progressive Inheritance Taxes.
5. Eliminate Taxpayer Subsidies for Excessive CEO Pay.
6. Close Offshore Corporate Tax Havens.
Source: http://www.thenation.com/doc/20081006/collins
You might want to read this one too:
"10 Things You Should Know About Bush's Trillion Dollar Fleecing Plan"
Source: http://www.alternet.org/module/printversion/99876
But I wouldn't hold my breath hoping for those changes. If those things were to ever happen I would think it would have been on the heels of a bloody revolution...
It's all so fucking funny. Everything that "they" do matters so much. If they keep or lose a job it matters. If they profit or go bankrupt it matters so very much. Whole factories close and no one really does much for the workers except offer some early retirement and severance packages. Those jobs go offshore to India, Thailand, Malaysia, China, etc. No one cares. But if a Wall Street gambler loses big we have to bail him out.
Why is that?
This is a great example of the kind of protectionism that our supposedly "free markets" actually operate under. There is no free market anywhere on earth - just one class of people that are very well connected and the many other groups of people that are very not. There is no free enterprise. What we have is socialism of the investor class but not of our society as a whole. The select get protected and the rest of us get the shaft. We don't own the means the means of productions. We don't own anything except our extravagant debts - the debts we hold individually and as the citizens of this once great nation. But that was all before the looting began. Now we shall be forever in debt: taking the financial risks while the wizards of Wall Street make the money. They get bailed out while you can't even declare bankruptcy any longer - it just gets renegotiated over a longer period of time. The investor class gets off the hook while you remain on the hook. And so it goes...
They want a blank check, unlimited authority to unload their debts onto you, no regulation and no oversight.
I recommend that you call and email your elected officials and send them the clear message that this bailout stinks and that you won't stand for it. Even if you support the bailout (yikes!), take a stand on the many important oversight powers that such a deal should entail. Don't let them gloss over the details and hand Wall Street a blank check.
Find your elected officials:
http://www3.capwiz.com/c-span/home/
When was the last time you were handed a trillion dollars with no accountability?
The claim is that we are faced with both a national and global financial crisis. Before we accept either assertion we need to dig into the history of recent events. Who intends to act upon this crisis and who is taking a "wait and see" approach? As you shall see, things are not what they seem and elsewhere many people seem substantially untroubled by what is taking place. Markets correct themselves. Some people win. Some people lose. We cannot save everyone. Maybe we shouldn't save anyone at all.
It starts with overweening greed and "globalization."
In the year 2000 the total amount of money available for financial transactions was the equivalent of a mere $36 trillion. Globalization and the resulting economic growth of markets doubled that amount of money so that by the year 2006 international investors were looking for ways to invest their now $70 trillion and still make a handsome profit. The problem was that there really wasn't $70 trillion worth of good investments to be had. Unsatisfied with a few paltry percentage points to be made on their money per annum with US Treasury Bonds, the investors wanted yields of 10-15%. 20% if they could get it. Now I don't care what anyone else tells you, but when the returns are that high there is risk and every investor knows that fact. But international investors wanted to be lied to and told that they realistically could be making that kind of return on their money. With that $70 trillion burning holes in pockets all over the world you just know that someone was going to step up and give those greedy bastards exactly what they wanted: a good swindling! Enter a new form of investment: the CDO, mortgage securities, etc. These various financial instruments are basically packaged up versions of bad mortgages, leveraged time and again, until they are made to look like good investments. But you've heard that old cliche: you can't make a silk purse from a sow's ear. What they were doing was taking bad mortgages - desired by greedy and unscrupulous borrowers against the equity in their homes and brokered by greedy and unscrupulous lenders who were lying their asses off in order to cash out their commissions - and selling them off as packaged deals higher up the financial food chain. The claim was that while each mortgage might be bad individually, taken as a whole they would perform very well because the real estate bubble would simply never pop and just keep expanding ad infinitum. Uh huh, that's what they wanted to believe. Sure, they could have made much safer investments but you know how it goes: live fast, spawn, and die. That's the new ethic of the globalized world. But how could anyone get away with selling this toxic waste mortgage manure to someone with the claim that it was as solid an investment as US Treasury Bonds? Isn't that a lie on its face? Yes, it is- but the reason they got away with it is that they used inaccurate data models to support the logic of these doomed to fail investment instruments. You might be wondering how and why these toxic waste mortgages exist in the first place. The answer to that is predictable: overweening greed and deregulation. As it turns out, without step by step regulation and oversight people often succumb to greed and the temptations of fraud. Who knew?! [The above is my own brutal redaction of what you could hear and read at "This American Life."]
Source: http://www.thisamericanlife.org/Radio_Episode.aspx?episode=355
Transcript (PDF): http://www.thisamericanlife.org/extras/radio/355_transcript.pdf
Every industry wants you to believe that they are owed a deregulated environment so that they can operate as they please. The claim is that the extravagantly wealthy upper class creates jobs because of the restaurants they patronize, the various services they use, the houses they buy, the cars they drive, the Manolo Blahnik shoes they buy their mistresses, the roses and jewelry they buy for their wives, and the housekeepers and gardeners that they employ. So, perhaps you want to support the bailout simply because the fallout will displace so many persons in such service and employ. But one's job is only a matter of chance. Everybody that works for Wall Street directly or indirectly would be working somewhere else if it didn't exist. Claiming that their jobs create other jobs may have some truth to it, but that's trickle down economics at its worst and ugliest - you don't get to keep your job after you screw things up, you lose your job! You don't get bailed out and you don't get a raise. Wall Street was significantly deregulated in the late 1990s but instead of creating a robust and healthy economy they have bled it almost dry. Personally, I don't think that such actions merit a reward.
D.C. and Wall Street people have been whining about how important and necessary the bailout is and how it has to happen right now to save the global economy. United States Treasury Secretary Henry Paulson had this to say:
"The credit markets are still very fragile right now and frozen...We need to deal with this and deal with it quickly." Source: http://www.huffingtonpost.com/2008/09/21/paulson-resisting-democra_n_128035.html
Who is this guy Henry Merritt Paulson Jr? He served under John Ehrlichman in the Nixon administration. He's the former chief executive of Goldman Sachs. Could he just be there to enrich his buddies at Goldman Sachs and also his elite pals in China? Did you know that they were planning to enrich foreign banks and investors with the bailout?
"Paulson's Conflicts Of Interest Spark Concern"
"I think that Hank Paulson's corporate...record is very important. While he was a Goldman Sachs, the company was buying up a lot of Chinese banks in particular, and at the time of his nomination, there were very serious questions raised about the conflicts of interest involved, and where his priorities are, and who he really is looking after."...Moreover, as Bloomberg News reported: "Goldman Sachs Group Inc. and Morgan Stanley may be among the biggest beneficiaries of the $700 billion U.S. plan to buy assets from financial companies while many banks see limited aid..."
Source: http://www.huffingtonpost.com/2008/09/22/paulsons-conflicts-of-int_n_128476.html
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." Source: http://www.politico.com/news/stories/0908/13690.html
Hey, it makes a difference to me! I want to support a way of life similar to my own, not the way of life under the quasi-capitalistic, totalitarian regime of communist China! These gamblers at the tables on Wall Street need to be made to live with the result of their own foolish greed just like all the idiots that go Las Vegas every day. These guys gamble their fortunes away and now want to pass the hat around. And who will join the American people in this show of extravagant largesse to the sad investor class? No one is who:
But there was little appetite to mimic Paulson's scheme to buy up toxic mortgage-related debt from financial firms..."At the moment, I don't think Japan needs to launch a program similar to that of the United States," Japanese Vice Finance Minister Kazuyuki Sugimoto told reporters in Tokyo, echoing similar comments from France, Britain and Germany...The European Union also made it clear that it would not be joining a rescue package. EU Monetary Affairs Commissioner Joaquin Almunia told a conference in Slovakia that individual national governments would have to decide on their own..."It's up to them to consider whether they can follow this initiative," he said. Source: http://www.reuters.com/articlePrint?articleId=USLM62629820080922
We have to go this one alone. So, how much is it going to cost Joe and Jane Sixpack? Oh, you know, not too much...
With the cost of the proposed bailout effort equal to about $2,000 for every man, woman and child in the United States, Democrats began pushing for language in the rescue plan that would steers additional aid to homeowners struggling to stay in their homes and prevent foreclosures. Source: http://www.miamiherald.com/news/politics/AP/story/695587.html
Well, that's an interesting point. But don't these wizards of Wall Street really need the money quite badly?
In 2007, Wall Street's five biggest firms-- Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch, and Morgan Stanley - paid a record $39 billion in bonuses to themselves...That's $10 billion more than the $29 billion loan taxpayers are making to J.P. Morgan to save Bear Stearns...Those 2007 bonuses were paid even though the shareholders in those firms last year collectively lost about $74 billion in stock declines --their worst year since 2002...If split equally among the approximately 186,000 workers at the former Big Five Houses, that bonus money means an average of $201,500 per person -- more than four times the $48,201 median household income in the U.S. last year. Source: http://blogs.abcnews.com/politicalpunch/2008/09/last-years-big.html
It almost seems as if you could take the bonuses handed out last year to these wizards of Wall Street and pay for parts of the bailout that way, right? Like gamblers at a fantasy high stakes table, these idiots want to gamble with the security of knowing they can't lose. Representative Barney Frank, Democrat of Massachusetts and chairman of the House Financial Services Committee, offered up the following comment on the bailout as from the perspective of one of the Wall Street wizards that put themselves into this mess:
"Heads I win, tails I break even." Source: http://www.nytimes.com/2008/09/21/business/21cong.html?pagewanted=print
Paulson's solution is simply to buy out the private losses with public funds. That is exactly the equivalent of reverse Robin Hood: privatizing gains and socializing risk! Here's more on his solution:
Paulson and the Federal Reserve are trying to replay the bailout approach used in the 1980s for the savings and loan crisis, but this situation is utterly different. The failed S&Ls held real assets--property, houses, shopping centers--that could be readily resold by the Resolution Trust Corporation at bargain prices. This crisis involves ethereal financial instruments of unknowable value--not just the notorious mortgage securities but various derivative contracts and other esoteric deals that may be virtually worthless...Despite what the pols in Washington think, the RTC bailout was also a Wall Street scandal. Many of the financial firms that had financed the S&L industry's reckless lending got to buy back the same properties for pennies from the RTC--profiting on the upside, then again on the downside. Guess who picked up the tab? I suspect Wall Street is envisioning a similar bonanza--the chance to harvest new profit from their own fraud and criminal irresponsibility. Source: http://www.thenation.com/doc/20081006/greider
What Paulson wants is a blank check and absolute authority.
"Dirty Secret Of The Bailout: Thirty-Two Words That None Dare Utter"
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. Source: http://www.huffingtonpost.com/2008/09/22/dirty-secret-of-the-bailo_n_128294.html
The rescue plan would give sweeping powers to the U.S. Treasury to buy up toxic mortgage-related debt from financial groups, including U.S. subsidiaries of foreign banks. Source: http://www.reuters.com/articlePrint?articleId=USN1945959820080922
I just love that foreign banks bit. It really makes you wonder who our supposed representatives really represent. If they represented us wouldn't they be taking money from the investors and giving it to us taxpayers to compensate us for all the stuff they have been doing to gut the economy and offshore production? Instead, they would seem to want money from every man, woman and child to help feed the greed of Wall Street and international investors. Does that make any sense to anyone? Barney Frank again:
"I don't want the American taxpayer to get this bad debt and then the guy (whose company once held the bad loans) gets millions of dollars on his way out the door." Source: http://www.huffingtonpost.com/2008/09/21/paulson-resisting-democra_n_128035.html
But...Paulson claims his plan should make the taxpayers whole, once the housing market recovers and the mortgage securities are resold. Source: http://www.miamiherald.com/news/politics/AP/story/695587.html
Resold to whom? Why in all the circles of hell would anyone want to buy up all of those toxic waste mortgages? Right, they wouldn't want to! But if you put a legislative gun to their heads via taxation you can make the American people pay for anything: private oil/resource wars, investment failures, whatever...
These fancy toxic waste mortgage investment instruments are often worth absolutely nothing. I am sure you've been reading about foreclosed homes that are being vandalized and looted of everything inside them. All the valuable appliances are gutted from the houses. Even the copper electrical wires are taken by thieves for their weight as scrap metal. Those houses either have to be torn down or substantially rebuilt! There's hardly any money left in them.
But Paulson doesn't know that. Is that right?
I don't believe that for one moment.
The whole thing is a fraud. At the prices we taxpayer's will pay it's going to be one big con with nearly zero chance that we will ever recovery anything from the transaction. Bush is arguing that the government isn't even going to really take managerial control of these decimated companies - just hand them money and hope for the best. Quick money, no oversight, and hope for the best! That's the keen financial insight of "acting" president Bush for you: garbage in, garbage out.
Chuck Collins at The Nation says we should "Tax the Speculators." Hey, maybe we can wring something good from this great financial evil after all. Here are Collins' main recomendations, but you should go read them in detail too:
1. Institute a Financial Transactions Tax.
2. Impose an Income Tax Surcharge Rate on Incomes Over $5 Million.
3. Eliminate the Tax Preference for Capital Gains.
4. Progressive Inheritance Taxes.
5. Eliminate Taxpayer Subsidies for Excessive CEO Pay.
6. Close Offshore Corporate Tax Havens.
Source: http://www.thenation.com/doc/20081006/collins
You might want to read this one too:
"10 Things You Should Know About Bush's Trillion Dollar Fleecing Plan"
Source: http://www.alternet.org/module/printversion/99876
But I wouldn't hold my breath hoping for those changes. If those things were to ever happen I would think it would have been on the heels of a bloody revolution...
It's all so fucking funny. Everything that "they" do matters so much. If they keep or lose a job it matters. If they profit or go bankrupt it matters so very much. Whole factories close and no one really does much for the workers except offer some early retirement and severance packages. Those jobs go offshore to India, Thailand, Malaysia, China, etc. No one cares. But if a Wall Street gambler loses big we have to bail him out.
Why is that?
This is a great example of the kind of protectionism that our supposedly "free markets" actually operate under. There is no free market anywhere on earth - just one class of people that are very well connected and the many other groups of people that are very not. There is no free enterprise. What we have is socialism of the investor class but not of our society as a whole. The select get protected and the rest of us get the shaft. We don't own the means the means of productions. We don't own anything except our extravagant debts - the debts we hold individually and as the citizens of this once great nation. But that was all before the looting began. Now we shall be forever in debt: taking the financial risks while the wizards of Wall Street make the money. They get bailed out while you can't even declare bankruptcy any longer - it just gets renegotiated over a longer period of time. The investor class gets off the hook while you remain on the hook. And so it goes...
They want a blank check, unlimited authority to unload their debts onto you, no regulation and no oversight.
I recommend that you call and email your elected officials and send them the clear message that this bailout stinks and that you won't stand for it. Even if you support the bailout (yikes!), take a stand on the many important oversight powers that such a deal should entail. Don't let them gloss over the details and hand Wall Street a blank check.
Find your elected officials:
http://www3.capwiz.com/c-span/home/
When was the last time you were handed a trillion dollars with no accountability?
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