AIG, Castigated for Resort Event, Plans Another One (Update2)
http://www.bloomberg.com/apps/news?pid=20601087&sid=aVXfypExIZ9M
Oct. 8 (Bloomberg) -- American International Group Inc., castigated by the White House, Congress and Barack Obama for hosting a $440,000 conference days after an $85 billion federal bailout, plans to hold another gathering for brokers next week.
The event, at the Ritz-Carlton in California's Half Moon Bay, aims to "motivate and educate" about 150 independent agents who sell AIG coverage to high-end clients, said spokesman Nicholas Ashooh.
White House spokeswoman Dana Perino today called "despicable" expenses from the first gathering, a weeklong conference last month at the St. Regis Resort in Monarch Beach. Those costs included $23,000 for spa services, according to Representative Henry Waxman, chairman of the Oversight and Government Reform Committee.
AIG considered buying advertisements to explain its position, only to be told by public relations consultant George Sard that it would be "a really bad idea."
...[skipped]...
Obama, the Democratic presidential nominee, said during last night's debate with Republican candidate John McCain that AIG should repay the U.S. Treasury for the costs of the event.
-----
Comment:
Honestly, isn't this exactly how you would act if it was clear that there was absolutely no penalty for the foolish manner in which you conducted your business? I mean, if I were handed billions of dollars for my mistakes I might be inclined to make many more mistakes in the future too!
And BTW, that's going to be about $5000+ USD per taxpayer for the bailout. I know you've been hearing $2000+ USD per person in the U.S. - but they aren't all taxpayers right now. I agree that many of them will be taxpayers and that they will likely still be paying off this kind of shit. But for now, it's on the backs of 138 million or so taxpayers we have today.
Senator Obama: this is why you should have voted "nay," you dumb-fuck! It's your job as a senator to protect the people from this kind of waste and corruption - not to vote for it and thereby force the taxpayer to pay for it.
Thursday, October 9, 2008
Monday, October 6, 2008
Good Point!
Agnosticism vs. Atheism
This is kind of a pet peeve of mine. Most people that say they are agnostic are really functional atheists, but they are making an epistemological argument to avoid confrontation and accusations of having faith or dogma.
...[skipped]...
Let’s examine the subtle difference in meaning between the following two sentences.
http://www.erik-rasmussen.com/blog/2008/10/06/agnosticism-vs-atheism/
-----
Comment:
That's truly a distinction worth noting. I like it. The dictionary folks need to get their act together. The lack of a belief is not an activity involving belief. In fact, it's not an activity at all. It is a void.
This is kind of a pet peeve of mine. Most people that say they are agnostic are really functional atheists, but they are making an epistemological argument to avoid confrontation and accusations of having faith or dogma.
...[skipped]...
Let’s examine the subtle difference in meaning between the following two sentences.
http://www.erik-rasmussen.com/blog/2008/10/06/agnosticism-vs-atheism/
- An atheist believes that God does not exist.
- An atheist does not believe that God exists.
-----
Comment:
That's truly a distinction worth noting. I like it. The dictionary folks need to get their act together. The lack of a belief is not an activity involving belief. In fact, it's not an activity at all. It is a void.
Up, Up and Away!
Lehman's Golden Parachutes Were Being Secured While Execs Were Pleading For Federal Rescue
http://www.huffingtonpost.com/2008/10/06/lehmans-golden-parachutes_n_132258.html
WASHINGTON — Days from becoming the largest bankruptcy in U.S. history, Lehman Brothers steered millions to departing executives even while pleading for a federal rescue, Congress was told Monday.
As well, executives who feared for their bonuses in the company's last months were told not to worry, according to documents cited at a congressional hearing.
...[skipped]...
Waxman questioned Fuld on whether it was true he took home some $480 million in compensation since 2000, and asked: "Is that fair?"
Fuld took off his glasses, held them, and looked uncomfortable. He said his compensation was not quite that much.
"We had a compensation committee that spent a tremendous amount of time making sure that the interests of the executives and the employees were aligned with shareholders," he said. Fuld said he took home over $300 million in those years _ some $60 million in cash compensation.
Waxman read excerpts from Lehman documents in which a recommendation that top management should forgo bonuses was apparently brushed aside. He also cited a Sept. 11 request to Lehman's compensation board that three executives leaving the company be given $20 million in "special payments."
"In other words, even as Mr. Fuld was pleading with Secretary Paulson for a federal rescue, Lehman continued to squander millions on executive compensation," Waxman said before Fuld appeared as a witness.
The government let Lehman go under Sept. 15, only to bail out insurance giant American International Group the next day, in a cascading series of financial shocks and failures that put Washington on track for the multibillion-dollar rescue starting the end of that week.
Waxman described that plan as a life-support measure. "It may keep our economy from collapsing but it won't make it healthy again," he said.
That sentiment echoed on Wall Street, where the Dow Jones industrials sank below 10,000 on Monday for the first time in four years. Investors fear the crisis will weigh down the global economy and the bailout won't work quickly to loosen credit markets.
-----
World Markets Plunge On Crisis Fears
http://www.huffingtonpost.com/2008/10/06/world-markets-plunge-on-c_n_132138.html
Britain's benchmark stock index, the FTSE 100, lost 220.11 to 4,760.14 _ a 4.42 percent fall. The declines were led by the banking industry, with the mining and oil industries also suffering drops. HBOS PLC's share price dropped 15.7 percent, while the Royal Bank of Scotland Group PLC fell 13.6 percent.
Germany's DAX index fell 4.22 percent to 5,552.27. France's CAC-40 index dropped 4.85 percent to 3,882.81. In Russia, the RTS stock index tumbled more than 7 percent in first 20 minutes of trading.
Over the weekend, many European governments moved to save troubled banks, and made more promises to protect depositors from the credit crisis.
Germany on Sunday agreed a 50 billion euros (US$68 billion) package to bail out Hypo Real Estate, the country's second-biggest commercial property lender, after a rescue plan by private lenders fell apart.
France's BNP Paribas SA committed to taking a 75-percent stake in troubled European bank Fortis N, and Sweden and Denmark followed Ireland and Britain in raising the amount of savers' deposits guaranteed by the government.
Britain's treasury chief Alistair Darling said he was "ready to do whatever it takes" to get the country through the credit crunch, and was looking at a "range of proposals."
But analysts said that, like the U.S. plan, the lack of detail in many of Europe's moves failed to restore investors' confidence, resulting in the stock market tumbles. "What the markets need are some more details about exactly when and how these plans are going to come in," said Richard Hunter, head of British equities at Hargreaves Lansdown Stockbrokers, "And they need some proof that some of these measures are taking hold."
Across Asia, all markets were also in the red. Tokyo's Nikkei 225 index fell to its lowest level in 4 1/2 years, sinking 4.25 percent to 10,473.09.
Hong Kong's Hang Seng index slid 5 percent to 16,803.76. Markets in mainland China, Australia, South Korea, India, Singapore and Thailand also fell sharply. Indonesia's key index plummeted 10 percent, it's biggest one-day drop ever.
In Russia, the RTS stock index tumbled more than 7 percent in first 20 minutes of trading.
-----
U.S. Stocks Sink as Financial Fear Spreads
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/06/AR2008100600847.html?hpid%3Dtopnews&sub=AR
The Dow Jones industrial average lost more than 695 points at one point today and fell below 10,000 for the first time since October 2004. It was trading off 6.5 percent, about 672 points, shortly before 2:30 p.m. The technology-heavy Nasdaq fell about 7.7 percent, or 151 points, and the broader Standard & Poor's 500 stock index fell 7.2 percent, or 79 points.
Investors are being led by fear, analysts said. The $700 billion financial bailout plan enacted by the federal government last week has yet to loosen the credit markets and banks remain reluctant to lend to each other. The price of gold has skyrocketed as investors seek a safe haven. Oil fell below $90 a barrel today for the first time in months. Overseas, banks are increasingly facing problems of their own.
-----
Comment:
One: Foreign nations and markets were pretty smug just a few days ago - now everyone's in crisis mode. What gives?
Two: I repeat, ad nauseum no doubt, this bailout is simply a handout so far. The existing bailout does NOTHING to fix the underlying problems that will continue to hamper the smooth running of the economy. The "trickle down" economic theory simply doesn't work. When rich folks panic they hoard because they can - they don't have to spend hardly any money. When poor folks go into panic mode - not so surprisingly - they actually spend because there is nothing to hoard. But they know they are going to need that bacon, that milk, those eggs, a loaf of bread and some Huggies. In other words, the economy flows perforce.
But let's sing out the Lehman wizards of Wall Street on a pleasant tune by The Fifth Dimension. What goes up, must come down, however soft the landing.
We should be waiting with torches and pitchforks.
http://www.huffingtonpost.com/2008/10/06/lehmans-golden-parachutes_n_132258.html
WASHINGTON — Days from becoming the largest bankruptcy in U.S. history, Lehman Brothers steered millions to departing executives even while pleading for a federal rescue, Congress was told Monday.
As well, executives who feared for their bonuses in the company's last months were told not to worry, according to documents cited at a congressional hearing.
...[skipped]...
Waxman questioned Fuld on whether it was true he took home some $480 million in compensation since 2000, and asked: "Is that fair?"
Fuld took off his glasses, held them, and looked uncomfortable. He said his compensation was not quite that much.
"We had a compensation committee that spent a tremendous amount of time making sure that the interests of the executives and the employees were aligned with shareholders," he said. Fuld said he took home over $300 million in those years _ some $60 million in cash compensation.
Waxman read excerpts from Lehman documents in which a recommendation that top management should forgo bonuses was apparently brushed aside. He also cited a Sept. 11 request to Lehman's compensation board that three executives leaving the company be given $20 million in "special payments."
"In other words, even as Mr. Fuld was pleading with Secretary Paulson for a federal rescue, Lehman continued to squander millions on executive compensation," Waxman said before Fuld appeared as a witness.
The government let Lehman go under Sept. 15, only to bail out insurance giant American International Group the next day, in a cascading series of financial shocks and failures that put Washington on track for the multibillion-dollar rescue starting the end of that week.
Waxman described that plan as a life-support measure. "It may keep our economy from collapsing but it won't make it healthy again," he said.
That sentiment echoed on Wall Street, where the Dow Jones industrials sank below 10,000 on Monday for the first time in four years. Investors fear the crisis will weigh down the global economy and the bailout won't work quickly to loosen credit markets.
-----
World Markets Plunge On Crisis Fears
http://www.huffingtonpost.com/2008/10/06/world-markets-plunge-on-c_n_132138.html
Britain's benchmark stock index, the FTSE 100, lost 220.11 to 4,760.14 _ a 4.42 percent fall. The declines were led by the banking industry, with the mining and oil industries also suffering drops. HBOS PLC's share price dropped 15.7 percent, while the Royal Bank of Scotland Group PLC fell 13.6 percent.
Germany's DAX index fell 4.22 percent to 5,552.27. France's CAC-40 index dropped 4.85 percent to 3,882.81. In Russia, the RTS stock index tumbled more than 7 percent in first 20 minutes of trading.
Over the weekend, many European governments moved to save troubled banks, and made more promises to protect depositors from the credit crisis.
Germany on Sunday agreed a 50 billion euros (US$68 billion) package to bail out Hypo Real Estate, the country's second-biggest commercial property lender, after a rescue plan by private lenders fell apart.
France's BNP Paribas SA committed to taking a 75-percent stake in troubled European bank Fortis N, and Sweden and Denmark followed Ireland and Britain in raising the amount of savers' deposits guaranteed by the government.
Britain's treasury chief Alistair Darling said he was "ready to do whatever it takes" to get the country through the credit crunch, and was looking at a "range of proposals."
But analysts said that, like the U.S. plan, the lack of detail in many of Europe's moves failed to restore investors' confidence, resulting in the stock market tumbles. "What the markets need are some more details about exactly when and how these plans are going to come in," said Richard Hunter, head of British equities at Hargreaves Lansdown Stockbrokers, "And they need some proof that some of these measures are taking hold."
Across Asia, all markets were also in the red. Tokyo's Nikkei 225 index fell to its lowest level in 4 1/2 years, sinking 4.25 percent to 10,473.09.
Hong Kong's Hang Seng index slid 5 percent to 16,803.76. Markets in mainland China, Australia, South Korea, India, Singapore and Thailand also fell sharply. Indonesia's key index plummeted 10 percent, it's biggest one-day drop ever.
In Russia, the RTS stock index tumbled more than 7 percent in first 20 minutes of trading.
-----
U.S. Stocks Sink as Financial Fear Spreads
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/06/AR2008100600847.html?hpid%3Dtopnews&sub=AR
The Dow Jones industrial average lost more than 695 points at one point today and fell below 10,000 for the first time since October 2004. It was trading off 6.5 percent, about 672 points, shortly before 2:30 p.m. The technology-heavy Nasdaq fell about 7.7 percent, or 151 points, and the broader Standard & Poor's 500 stock index fell 7.2 percent, or 79 points.
Investors are being led by fear, analysts said. The $700 billion financial bailout plan enacted by the federal government last week has yet to loosen the credit markets and banks remain reluctant to lend to each other. The price of gold has skyrocketed as investors seek a safe haven. Oil fell below $90 a barrel today for the first time in months. Overseas, banks are increasingly facing problems of their own.
-----
Comment:
One: Foreign nations and markets were pretty smug just a few days ago - now everyone's in crisis mode. What gives?
Two: I repeat, ad nauseum no doubt, this bailout is simply a handout so far. The existing bailout does NOTHING to fix the underlying problems that will continue to hamper the smooth running of the economy. The "trickle down" economic theory simply doesn't work. When rich folks panic they hoard because they can - they don't have to spend hardly any money. When poor folks go into panic mode - not so surprisingly - they actually spend because there is nothing to hoard. But they know they are going to need that bacon, that milk, those eggs, a loaf of bread and some Huggies. In other words, the economy flows perforce.
But let's sing out the Lehman wizards of Wall Street on a pleasant tune by The Fifth Dimension. What goes up, must come down, however soft the landing.
We should be waiting with torches and pitchforks.
Sunday, October 5, 2008
Worst Xmas Evah!
No rescue in sight for what ails economy
http://www.latimes.com/news/printedition/front/la-fi-econ5-2008oct05,0,353217,full.story
"The wheels seem to be coming off the economy right now," said Brian P. Sack, vice president of the respected forecasting firm of Macroeconomic Advisers. "It's hard to see how we avoid a recession, and it could prove a tough one to climb out of."
Even if the financial bailout plan begins to work, the nation will be lucky if all it experiences is a bad slowdown. The alternative, economists say, is something much worse -- a contraction that might go on for years.
The latest sign of trouble came Friday when the government reported that American employers sliced September payrolls by 159,000 jobs, the ninth straight month of losses and one that puts the country on track to shed a million jobs this year.
But jobs are only part of the trouble; almost every major player in the economy -- which had been growing until recently, if only slowly -- is now beating a hasty retreat:
* Consumers, who account for more than two-thirds of the nation's total economic activity and who boosted their spending earlier in the year thanks in part to more than $100 billion in government stimulus checks, have reversed course and begun cutting expenditures. Real consumption, after adjustment for inflation, slipped two-tenths of a point in June, a half-point in July and flat-lined in August, the latest month for which numbers are available, according to the government's Bureau of Economic Analysis.
...[Skipped]...
As for retail, it had grown into one of the major employers in the economy as Americans saw their incomes and wealth rise and wanted to buy more stuff.
But with the incomes of the majority of Americans flat-lining and wealth declining as home values and investments plummet, the retail industry is likely to shrink as well.
"We expect 8,000 stores to close this year, which is probably a record," said Howard Davidowitz, head of Davidowitz & Associates Inc., a New York retail consulting firm.
"This will be the worst Christmas shopping season in a century," he predicted.
-----
Comment:
Um, yeah...the bailout is not designed to do anything but force the taxpayer to hand over billions, possibly trillions, to the very same financial gurus that wrecked their own investment firms. If you have tracked this story at all, we are literally handing over a minimum of $700 billion to people who modeled tranches of bad mortgage securities instruments on the track record of good mortgages in order to slap on the veneer of a blue chip investment onto them and thereby woo unscrupulous investors into parting with their hard-earned cash.
There is no planned oversight to speak of in the bill that has already been passed. It's all bullshit. It is one big giveaway. There is no provision to make the taxpayer a future stakeholder in any of the wealth that may later be generated by these companies. Say bye bye to billions.
In your nightmares you might imagine that the very wealthy share their wealth with the rest of us - but that is the same sad, bullshit "trickle down" economic theory that is always trotted out to justify this exact same strategy every time. These people have more money than they can realistically spend in their lifetimes even if they spent all of their time trying to do that instead of trying to get their hands on even more money.
What the bailout doesn't do, and was never designed to do, is stimulate the economy in any meaningful way. All it does is prop up some investment firms that were going under.
Why should the American taxpayer care about that even slightly?
Where is aid for middle-america? Where is the help we need to give to people in foreclosure? When people lose their homes, and then possibly their jobs because they have become financially unstable, they go on welfare and other kinds of public assistance. Did you know that people with bad credit find it difficult to get jobs because prospective employers consider them a security risk? Isn't it better to take over these bad mortgages, renegotiate them, allow people to stay in their homes, help them keep their jobs and thereby keep the wheels of the true economy rolling along? That's how you manage a slow-motion disaster: one family at a time.
The upshot here is this: the real bailout is yet to come.
http://www.latimes.com/news/printedition/front/la-fi-econ5-2008oct05,0,353217,full.story
"The wheels seem to be coming off the economy right now," said Brian P. Sack, vice president of the respected forecasting firm of Macroeconomic Advisers. "It's hard to see how we avoid a recession, and it could prove a tough one to climb out of."
Even if the financial bailout plan begins to work, the nation will be lucky if all it experiences is a bad slowdown. The alternative, economists say, is something much worse -- a contraction that might go on for years.
The latest sign of trouble came Friday when the government reported that American employers sliced September payrolls by 159,000 jobs, the ninth straight month of losses and one that puts the country on track to shed a million jobs this year.
But jobs are only part of the trouble; almost every major player in the economy -- which had been growing until recently, if only slowly -- is now beating a hasty retreat:
* Consumers, who account for more than two-thirds of the nation's total economic activity and who boosted their spending earlier in the year thanks in part to more than $100 billion in government stimulus checks, have reversed course and begun cutting expenditures. Real consumption, after adjustment for inflation, slipped two-tenths of a point in June, a half-point in July and flat-lined in August, the latest month for which numbers are available, according to the government's Bureau of Economic Analysis.
...[Skipped]...
As for retail, it had grown into one of the major employers in the economy as Americans saw their incomes and wealth rise and wanted to buy more stuff.
But with the incomes of the majority of Americans flat-lining and wealth declining as home values and investments plummet, the retail industry is likely to shrink as well.
"We expect 8,000 stores to close this year, which is probably a record," said Howard Davidowitz, head of Davidowitz & Associates Inc., a New York retail consulting firm.
"This will be the worst Christmas shopping season in a century," he predicted.
-----
Comment:
Um, yeah...the bailout is not designed to do anything but force the taxpayer to hand over billions, possibly trillions, to the very same financial gurus that wrecked their own investment firms. If you have tracked this story at all, we are literally handing over a minimum of $700 billion to people who modeled tranches of bad mortgage securities instruments on the track record of good mortgages in order to slap on the veneer of a blue chip investment onto them and thereby woo unscrupulous investors into parting with their hard-earned cash.
There is no planned oversight to speak of in the bill that has already been passed. It's all bullshit. It is one big giveaway. There is no provision to make the taxpayer a future stakeholder in any of the wealth that may later be generated by these companies. Say bye bye to billions.
In your nightmares you might imagine that the very wealthy share their wealth with the rest of us - but that is the same sad, bullshit "trickle down" economic theory that is always trotted out to justify this exact same strategy every time. These people have more money than they can realistically spend in their lifetimes even if they spent all of their time trying to do that instead of trying to get their hands on even more money.
What the bailout doesn't do, and was never designed to do, is stimulate the economy in any meaningful way. All it does is prop up some investment firms that were going under.
Why should the American taxpayer care about that even slightly?
Where is aid for middle-america? Where is the help we need to give to people in foreclosure? When people lose their homes, and then possibly their jobs because they have become financially unstable, they go on welfare and other kinds of public assistance. Did you know that people with bad credit find it difficult to get jobs because prospective employers consider them a security risk? Isn't it better to take over these bad mortgages, renegotiate them, allow people to stay in their homes, help them keep their jobs and thereby keep the wheels of the true economy rolling along? That's how you manage a slow-motion disaster: one family at a time.
The upshot here is this: the real bailout is yet to come.
Friday, October 3, 2008
Bailout Double Hostage
http://www.c-spanarchives.org/flash/player-time.html?start=2008-10-02%2020:06:57&stop=2008-10-02%2020:18:45&net=1
-----
Comment:
Chicken Little politics. More importanly, this...
...Senate roll call vote:
http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=110&session=2&vote=00213
...House roll call vote:
http://clerk.house.gov/evs/2008/roll681.xml
My personal hit list:
Senators -
***Dianne Feinstein (D)
***Barbara Boxer (D)
Representatives -
*** Dennis Cardoza (D-18)
*** George Radanovich (R-19)
I am voting for the opposition. No mercy.
-----
Comment:
Chicken Little politics. More importanly, this...
...Senate roll call vote:
http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=110&session=2&vote=00213
...House roll call vote:
http://clerk.house.gov/evs/2008/roll681.xml
My personal hit list:
Senators -
***Dianne Feinstein (D)
***Barbara Boxer (D)
Representatives -
*** Dennis Cardoza (D-18)
*** George Radanovich (R-19)
I am voting for the opposition. No mercy.
The Wrong Bailout
Wary of Public Outcry, Revised $800B Wall St. Bailout Stuffed with Earmarks to Sway Election-Year Incumbents
http://www.democracynow.org/2008/10/3/wary_of_public_outcry_revised_800b
ROBERT JOHNSON: I think this bill, five weeks before an election, is illustrating for the American people, when there are two currencies of power—votes and money—that even at this time, when the power of votes is at its cyclical high, meaning just before the election, they are almost laughing at the American people, in the—by the nature and structure of this bill. This is a very sad result.
...[skipped]...
JUAN GONZALEZ: Robert Johnson, you mentioned Henry Paulson. The New York Times has an article today, a fascinating look at how this crisis unraveled, and they claim that back in 2004, it was Paulson himself, who, as head of Goldman Sachs at that time, had meetings with all the other major investment banks and the Securities and Exchange Commission and convinced the SEC to allow them to reduce the amount of money that they kept in reserves to back up any debt that they had, in essence, that he pushed the SEC to reduce regulation and allow them to take the risks that ended them up where they are today.
ROBERT JOHNSON: I read that story, as well, and while I can’t comment in the sense of having been there, it doesn’t surprise me. Investment bankers were trying to relieve constraints, diminish capital and give themselves the freedom to take more leverage, and that is a very significant part of why we’re in this mess today.
I do also want to underscore that I believe it was Secretary Paulson who made the call to let Lehman Brothers go bankrupt, that led to the very, very violent restructuring of AIG with taxpayers’ money, which led to the crisis that led to this bailout bill. I believe, when people take the zoom lens out and look at the history of this bill, they will look at Henry Paulson as being the person who made the critical error that has sent us not only into a national, but a worldwide, credit freeze right now. He’s got a lot of work to do to earn his reputation back with the taxpayers’ $700 billion in the next chapter, and I am nowhere near as comfortable as Warren Buffett is about having him be the person to do that.
...[skipped]...
What I would like to see in this bill, I would like to have seen the money injected as capital infusion by buying preferred stock into the banks, so that the taxpayer would retain some rights, existing stockholders would be deluded. Existing stockholders, after all, are the owners of the companies that made this mess. Then, in the recovery, the Treasury could make back as much as, some estimate, $300 billion on that stock ownership, instead of having those existing stockholders make that money.
Secondly, and perhaps a place where we should have started, was the Home Owners’ Loan Corporation acknowledging the overhang of these—and unaffordability of all these mortgages and developing a restructuring, which, by the way, would raise the value of the securities, these mortgage-backed securities, that are toxic assets sitting in all the banks.
I do believe we need a bailout. As I said the other day when I was talking with Bruce Marks, I do not think this is a synthetic or fake crisis. We do need to inject what you might call life back into the organs of the economy. There was a story this morning. The Federal Reserve reports that bank lending to small businesses is being cut off very rapidly. And this does not portend well for the economic health of every region of the United States.
But homeowner relief, some significant regulatory reform, equity capital injections into the banks, which, by the way, because of the use of capital and the leverage of capital, you get ten to twelve times the impact on the credit flow in the economy as when you pay—when you overpay for toxic assets as the TARP facility would.
I think it was a very misconceived bill. Paul Krugman, Joe Stiglitz, John Makin on the American Enterprise Institute, Alex Pollock, the American Enterprise Institute, Lucian Bebchuk at Harvard Law School and Olin Foundation—these are conservatives and liberals all standing around saying, “Why are you doing the wrong thing, Secretary Paulson?” And Congress went along.
...[skipped]...
Yes. It went up by roughly $150 billion for those kinds of special pork-related projects. Now, what you’re seeing is the Congress and the Senate are daring the American people to get mad and throw them out. As David Sirota said in his first book, Hostile Takeover, this isn’t about choosing between Rs and Ds; this is about a bipartisan money machine working against the population. They’re daring you. They’re daring you to turn out in five weeks and, in essence, support challengers against incumbents, because the incumbents are the ones responsible for doing this bill.
-----
Comment:
Democracy inaction or the beginning of some kind...?
My advice: vote every motherfucker that voted for this travesty - this great social and financial injustice - out on his ass!
Seriously.
There were and are dozens of ways to do this better and far more wisely.
And let's be very clear about one other thing. This really doesn't fix anything. It's just a money-grab. Who gives a shit if some investment firms go belly up? Who cares if foreign investors cry like bitches? This is very specifically about how to spend money for which we taxpayers work very hard. We were all just robbed - every person in the U.S. now owes a part of this handout worth a few grand and rising. Because that's the real problem: they didn't fix the underlying problems, those will still need to be fixed and escalate the price of this bailout.
I don't like to be alarmist, but this could be the final looting that is even possible. When you fall back from your current position, is there another to which you can fall back to the next time? Or is this it - the final belt-tightening before the end?
http://www.democracynow.org/2008/10/3/wary_of_public_outcry_revised_800b
ROBERT JOHNSON: I think this bill, five weeks before an election, is illustrating for the American people, when there are two currencies of power—votes and money—that even at this time, when the power of votes is at its cyclical high, meaning just before the election, they are almost laughing at the American people, in the—by the nature and structure of this bill. This is a very sad result.
...[skipped]...
JUAN GONZALEZ: Robert Johnson, you mentioned Henry Paulson. The New York Times has an article today, a fascinating look at how this crisis unraveled, and they claim that back in 2004, it was Paulson himself, who, as head of Goldman Sachs at that time, had meetings with all the other major investment banks and the Securities and Exchange Commission and convinced the SEC to allow them to reduce the amount of money that they kept in reserves to back up any debt that they had, in essence, that he pushed the SEC to reduce regulation and allow them to take the risks that ended them up where they are today.
ROBERT JOHNSON: I read that story, as well, and while I can’t comment in the sense of having been there, it doesn’t surprise me. Investment bankers were trying to relieve constraints, diminish capital and give themselves the freedom to take more leverage, and that is a very significant part of why we’re in this mess today.
I do also want to underscore that I believe it was Secretary Paulson who made the call to let Lehman Brothers go bankrupt, that led to the very, very violent restructuring of AIG with taxpayers’ money, which led to the crisis that led to this bailout bill. I believe, when people take the zoom lens out and look at the history of this bill, they will look at Henry Paulson as being the person who made the critical error that has sent us not only into a national, but a worldwide, credit freeze right now. He’s got a lot of work to do to earn his reputation back with the taxpayers’ $700 billion in the next chapter, and I am nowhere near as comfortable as Warren Buffett is about having him be the person to do that.
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What I would like to see in this bill, I would like to have seen the money injected as capital infusion by buying preferred stock into the banks, so that the taxpayer would retain some rights, existing stockholders would be deluded. Existing stockholders, after all, are the owners of the companies that made this mess. Then, in the recovery, the Treasury could make back as much as, some estimate, $300 billion on that stock ownership, instead of having those existing stockholders make that money.
Secondly, and perhaps a place where we should have started, was the Home Owners’ Loan Corporation acknowledging the overhang of these—and unaffordability of all these mortgages and developing a restructuring, which, by the way, would raise the value of the securities, these mortgage-backed securities, that are toxic assets sitting in all the banks.
I do believe we need a bailout. As I said the other day when I was talking with Bruce Marks, I do not think this is a synthetic or fake crisis. We do need to inject what you might call life back into the organs of the economy. There was a story this morning. The Federal Reserve reports that bank lending to small businesses is being cut off very rapidly. And this does not portend well for the economic health of every region of the United States.
But homeowner relief, some significant regulatory reform, equity capital injections into the banks, which, by the way, because of the use of capital and the leverage of capital, you get ten to twelve times the impact on the credit flow in the economy as when you pay—when you overpay for toxic assets as the TARP facility would.
I think it was a very misconceived bill. Paul Krugman, Joe Stiglitz, John Makin on the American Enterprise Institute, Alex Pollock, the American Enterprise Institute, Lucian Bebchuk at Harvard Law School and Olin Foundation—these are conservatives and liberals all standing around saying, “Why are you doing the wrong thing, Secretary Paulson?” And Congress went along.
...[skipped]...
Yes. It went up by roughly $150 billion for those kinds of special pork-related projects. Now, what you’re seeing is the Congress and the Senate are daring the American people to get mad and throw them out. As David Sirota said in his first book, Hostile Takeover, this isn’t about choosing between Rs and Ds; this is about a bipartisan money machine working against the population. They’re daring you. They’re daring you to turn out in five weeks and, in essence, support challengers against incumbents, because the incumbents are the ones responsible for doing this bill.
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Comment:
Democracy inaction or the beginning of some kind...?
My advice: vote every motherfucker that voted for this travesty - this great social and financial injustice - out on his ass!
Seriously.
There were and are dozens of ways to do this better and far more wisely.
And let's be very clear about one other thing. This really doesn't fix anything. It's just a money-grab. Who gives a shit if some investment firms go belly up? Who cares if foreign investors cry like bitches? This is very specifically about how to spend money for which we taxpayers work very hard. We were all just robbed - every person in the U.S. now owes a part of this handout worth a few grand and rising. Because that's the real problem: they didn't fix the underlying problems, those will still need to be fixed and escalate the price of this bailout.
I don't like to be alarmist, but this could be the final looting that is even possible. When you fall back from your current position, is there another to which you can fall back to the next time? Or is this it - the final belt-tightening before the end?
Thursday, October 2, 2008
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