Ilargi, Friday (September 19th), from
The Automatic Earth:
Look, wherever a bunch of losers manages to make everyone else pay for their losses, you can't really keep up the pretense of any sort of moral standard, can you? I mean, I don't know if this is oligarchy, or corporate fascism, or just plain anarchy, but I do know it's nothing to do with democracy...
...These guys are not trying to solve a crisis, they're trying to keep their made men's profits and shovel the losses into the public coffers. And you're letting them do it. While everyone watches Sarah Palin's blaring incompetence, the things that matter today, small things such as your children's future, get ignored entirely. How long did you say you've been drinking?
"HOW LONG DID YOU SAY YOU'VE BEEN DRINKING?" (see above for attribution)
The head of our Federal Reserve and our Secretary of the Treasury have spent the past nine months,
knowing damn well that our economy was collapsing, as they rushed to pour $1 trillion to their friends: "bailing out" our banks and our investment houses, with a myriad of federally-based band-aids that did little more than cushion the "end-game-crash" of eight years of the financial services industry's unbridled greed.
Economics, like all things market-based, dictates that what goes up must come down. It's a basic reality of all things physical. Bernanke and Paulson knew this for a much longer time than we--the public--ever realized (from nine months ago):Top of Today's NYT: Ritholtz, "It smacks of panic...the Fed is very worried."
These guys failed us, and miserably so, while they simultaneously saw to it over the past nine months that the status quo's bets were all covered.
Stating the obvious, that's because they are the status quo. A quick review of Paulson's resume shows us that he stepped into his role as Treasury Secretary right from the CEO's office at Goldman Sachs.
Goldman Sachs pushed out more bad paper to the U.S. investment community, and to the world, than anyone. Now, moreso than anyone, as a result of Bernanke's and Paulson's bailout proposals, Goldman will, perhaps, benefit more than any other entity from our government's largesse, as these gentlemen have so conveniently packaged it for our blind consumption in today's news.
How very freakin' neat and tidy of them, huh?
I say: In the course of negotiatiing this deal, twist their arms 'til they break!
This deal sucks! Don't buy it!
The general public was lied to by our government, and by Wall Street, and those lies were propagated by an asleep-at-the-wheel (I'm being kind) MSM and a President who didn't possess the wherewithall or the philosophical desire--given his laissez faire-based philosophies and a stubbornness that may now be perceived as little more than gross ignorance--to do a damn thing but let the foxes rule the henhouse.
THEY'VE SEEN THIS COMING FOR QUITE AWHILE; THEY TOOK CARE OF THEIR COLLEAGUES AND THE STATUS QUO FIRST:
9/16/08:
Paulson/Fed Gives O.K. To Banks To Steal Your Money! (For real!)
9/15/08:
BREAKING: NY Times, 'AIG joins Merrill and Lehman in Wall Street Collapse'
9/14/08:
Obama's November Victory? In One Word: Roubini.
9/8/08:
Your typical Grand Old Party, indeed!
9/7/08:
Tell Bush/McCain: "Enough! ...Own Your (Biggest) Failure!"
7/7/08:
When will they stop lying about the economy?
7/3/08:
When "everything you know" is wrong.
7/2/08:
July 4th Liquidation Sale! Everything Must Go!
7/1/08:
"Deflation." (What we're not being told by the U.S. MSM.)
6/30/08:
6/30/08: wherein the U.S. economy enters a Depression
6/29/08:
The quickly-approaching light; time to change our agenda.
3/4/08:
It is the (near-total collapse of our) economy, stupid!
1/29/08:
The D-word
1/15/08:
1/15/08: A bleak day in U.S. history; from recession to repossession.
12/27/08:
Another Day, Another $34 Billion. Our Slo-Mo Train Wreck Continues.
12/20/07:
2008 "...could make 1929 look like a walk in the park."
12/13/07:
Top of Today's NYT: Ritholtz, "It smacks of panic...the Fed is very worried."
WHERE WE ARE
The national debt is currently $9.3 trillion.
The projected 2008-2009 annual federal budget deficit is $407 billion.
It's being estimated by many that the nationalization of Fannie Mae and Freddie Mac, two weeks ago, will cost taxpayers anywhere from $500 billion to $2 trilion--and that may even be a little on the low side--despite year-old, obsolete quotes bandied about by the media at the time, who in turn are merely parrotting government press releases, that "the estimated cost of the takeover will cost $25 billion."
(NOTE: All one has to do is realize that Fannie and Freddie, together, hold somewhere in the neighborhood of $5.3 trillion in mortgages, between paper they're issuing, and portfolios that they manage, internally. If real estate valuations fall 30%, which is now a semi-conservative projection, that's a booked loss of over $1.5 trillion, just from devaluation on the paper they hold, that--for the most part--has already occurred.]
The cost of the Bear Stearns bailout included a $28+ billion, government "backstop" (guarantee) for their shotgun wedding spouse, JPMorgan Chase.
The AIG bailout (purchase) will cost taxpayers $85 billion.
The FDIC will easily need another $100 to $200 billion, just to cover anticipated losses from projected bank failures in the next 15 months. (West Virginia-based Ameribank, this past evening, became the 12th U.S. bank to fall into goverment receivership, this year. It is expected that many, many more will follow.)
That's as much as $12 trillion in government obligations already on our books, as I write this.
WHERE WE'RE GOING (THEY'RE CLOSING THE DEAL NOW THAT IT'S DOWN TO THE ELEVENTH HOUR AND THEY WAITED 'TIL OUR BACKS WERE AGAINST THE WALL.)
Like all good businessmen, Paulson and Bernanke waited until the very last moment, so we are put upon with the illusion that we have no choice but to accept their terms! (This is standard operating procedure in all things business; back 'em into a corner; force them to accept the deal.)
DO NOT LET THEM CLOSE THIS DEAL. As is, it would be insane for us to allow this to happen.
Make them pay for this! Demand (at the very least) a share of Goldman Sachs' and Morgan Stanley's (and all the other firms that will benefit from this bailout) equity, going forward, for allowing them (and funding them) to do that now.
Now is the time to tell Paulson, Bernanke and our senators and congressmen: if we're paying for this, we want IN on this action, going forward! And, make no mistake about this, I'm just following the advice of Carl Icahn, from yesterday.
Financier Carl Icahn, made the following statement on CNBC yesterday, which I'll now paraphrase: 'The backstopping of these respective firms' money funds is understandable. But, these guys running these firms know there's a market for this other paper (the CDO's, MBS's and whole loans). They do not have to swap it out with the government. But, their jobs are on the line. It's in their best interests, and probably critical to many of those that want to keep their jobs, that they obtain the best price possible for all of this paper. The possibility that taxpayers could retain equity in the firms they're bailing out now is on the table, too.'
To wit, if Bush's financial gurus are the ones running the show, as they're practically demanding that be the case now, we'll have a former CEO of Goldman Sachs, U.S. Treasury Secretary Paulson, negotiating with his former employer--now the largest investment house on Wall Street--doing a "workout," supposedly on behalf of little old us, the taxpayer(s).
"THE DICK CHENEY SCHOOL OF BUSINESS ADMINISTRATION"
This sure looks like shades of Dick Cheney, being a key member of the Bush Administration, while simultaneously being in the ultra-convenient position of supporting former employer Halliburton's bottom line back when the U.S. was only considering getting into a conflict with Iraq in 2002. And, in fact, there are dozens of top alumni from Wall Street running various aspects of the Treasury and Fed shows in D.C., as I write this, with many of them participating in these negotiations with their former firms, now.
Paulson's and Bernanke's propopsals for the "recovery" of our economy are heavily weighted in favor of the very financial services firms which got us into this mess in the first place. In the course of concluding this so-called bailout, it is time to make these entities BLEED! I don't care if we have to twist their arms until they break.
After all's said and done, they didn't give a damn about us; and the Bush Administration's minions, even now, are sociopathically attempting to put this on our plate and make us eat this crap.
To that I say, "Hell no!" Make them relinquish much of what they've built on our taxpayer's backs up until now. It is time for them to pay the piper.
We must demand a federal takeover--or at the very least major equity--in the firms benefiting most from this bailout now. To not get that would be one of the biggest travesties of all!
Or, did you really think Paulson would voluntarily include the partial federal takeover of Goldman Sachs and Morgan Stanley (and all of the other entities that will benefit from this) in his proposals to us now? At the very least, if we're going to enable them to survive we, the TAXPAYERS, deserve the benefits that come with allowing them to go forward into better times, too.
I'll close with this rather timely comment Nobel Prize-winning economist Joseph Stiglitz, as mentioned on The Automatic Earth:
Nobel Prize-winning economist Joseph Stiglitz said that the haphazard nature of the bailouts may discourage investors from putting money in the U.S. because it increases uncertainty about who will survive and who will fail.
"We used to believe that America was a country or a government that was based on the rule of law," the Columbia University professor said in a Sept. 16 interview on Bloomberg Radio. "Today, we appear to be a law of discretion. Who gets bailed out seems to be totally up to the discretion of Paulson, of Bernanke."