The Guys from Government Sachs

Robert Scheer:

The people I want to know more about are the superrich who expect to be rewarded for their failures, like the folks at Goldman Sachs who will receive $16.71 billion in bonuses—an average of $530,000 per employee—this year after their company did as much as any to bring the world economy to the brink of disaster.

“The Guys from Government Sachs” is what The New York Times once called them in recognition of their chokehold on the federal government. Their power is marked by the two treasury secretaries who led the fight to legally enable and then reward Wall Street for its obscene excesses. Why wasn’t there a CNN stakeout at the homes of former Goldman-execs-turned-treasury-chiefs Robert Rubin and Henry Paulson aimed at finding out how they feel about the almost $7 billion profit that Goldman Sachs made in the last two quarters in the wake of the government’s bailout of the firm?

They were both deeply involved last fall, along with Rubin protégé and current Treasury Secretary Timothy Geithner, then head of the New York Fed, in saving Goldman as archrival Lehman Brothers was forced to go belly up. As opposed to Lehman, Goldman was allowed to change its status and become a commercial bank qualifying for Federal Reserve and TARP funding. Goldman received $10 billion in immediate bailout funds, and we are supposed to be grateful that the company has paid it back in return for an end to any pretense of government control over its executive compensation. The additional cool $12.9 billion that Goldman received from the government as a pass-through from the bailout of AIG to cover Goldman’s toxic paper is money the investment bank has no intention of ever paying back.

Read the rest. Nothing that you didn't know, but seeing it nicely condensed is always ... mindboggling.

Let the wild rumpus begin

Rewriting history:

...In an article about the Obama administration's "effort to undo bonuses at A.I.G.," The New York Times reported, "The Treasury and Federal Reserve officials said they had known about the bonus program as far back as last fall." But at no point in the article did the Times note that the Treasury Department at the time was then-President Bush's Treasury Department. Indeed, the article did not mention Bush or his Treasury Secretary Hank Paulson at all, much less report that the Bush Treasury Department worked with the Federal Reserve in carrying out last year's bailouts and bought AIG stocks notwithstanding the existence of these bonus contracts.

The fake uproar about Gibb's joke about Dick Cheney:

Dick Cheney is one of the most divisive -- and disliked -- political officials in memory. Maybe Chip Reid and Rick Klein haven't heard, but he just presided over the virtual collapse of the American economy and is directly implicated in severe war crimes and other pervasive criminality. Yet they speak of him -- and demand that everyone else treat him -- as royalty: This is the former Vice President of the United States you're talking about; have you no decency?

Journalists love to depict themselves as hard-nosed, rambunctious, ornery adversaries of establishment orthodoxies and political power. The reality is the opposite: there simply is no class of people more reverent of the political establishment and more devoted to protecting and defending its prerogatives.

Good for you, Canada! Thank you!!:

CALGARY, Alberta (Reuters) - More than 100 protesters chanted "war criminal" and flung shoes in Calgary on Tuesday, angry that former U.S. President George W. Bush was in the Canadian city to give his first speech since leaving the White House.

At least two demonstrators were hauled away by police after brief skirmishes, as 1,500 business people in the oil patch city waited outside a convention center for an hour to pass through tight security and enter the C$400-a-plate ($315) luncheon.

Media were barred from the invitation-only event, during which Bush had been expected to reflect on his eight years as president.

Falling through the cracks

Paul Krugman warns us that we are entering into the most dangerous period of all: the transition:

There is, however, another and more disturbing parallel between 2008 and 1932 — namely, the emergence of a power vacuum at the height of the crisis. The interregnum of 1932-1933, the long stretch between the election and the actual transfer of power, was disastrous for the U.S. economy, at least in part because the outgoing administration had no credibility, the incoming administration had no authority and the ideological chasm between the two sides was too great to allow concerted action. And the same thing is happening now.

How much can go wrong in the two months before Mr. Obama takes the oath of office? The answer, unfortunately, is: a lot.

[snip]

Most obviously, we’re in the midst of the worst stock market crash since the Great Depression: the Standard & Poor’s 500-stock index has now fallen more than 50 percent from its peak. Other indicators are arguably even more disturbing: unemployment claims are surging, manufacturing production is plunging, interest rates on corporate bonds — which reflect investor fears of default — are soaring, which will almost surely lead to a sharp fall in business spending. The prospects for the economy look much grimmer now than they did as little as a week or two ago.

Yet economic policy, rather than responding to the threat, seems to have gone on vacation. In particular, panic has returned to the credit markets, yet no new rescue plan is in sight. On the contrary, Henry Paulson, the Treasury secretary, has announced that he won’t even go back to Congress for the second half of the $700 billion already approved for financial bailouts. And financial aid for the beleaguered auto industry is being stalled by a political standoff.

How much should we worry about what looks like two months of policy drift? At minimum, the next two months will inflict serious pain on hundreds of thousands of Americans, who will lose their jobs, their homes, or both. What’s really troubling, however, is the possibility that some of the damage being done right now will be irreversible.

Fasten your seat belts, it's going to be a bumpy ride....

It's our money you're spending now

So you corporate guys get to be accountable to us, right?:

Nov. 10 (Bloomberg) -- The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral.

Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency in a $700 billion bailout of the banking system. Two months later, as the Fed lends far more than that in separate rescue programs that didn't require approval by Congress, Americans have no idea where their money is going or what securities the banks are pledging in return.

``The collateral is not being adequately disclosed, and that's a big problem,'' said Dan Fuss, vice chairman of Boston- based Loomis Sayles & Co., where he co-manages $17 billion in bonds. ``In a liquid market, this wouldn't matter, but we're not. The market is very nervous and very thin.''

Bloomberg News has requested details of the Fed lending under the U.S. Freedom of Information Act and filed a federal lawsuit Nov. 7 seeking to force disclosure.

The Fed made the loans under terms of 11 programs, eight of them created in the past 15 months, in the midst of the biggest financial crisis since the Great Depression.

``It's your money; it's not the Fed's money,'' said billionaire Ted Forstmann, senior partner of Forstmann Little & Co. in New York. ``Of course there should be transparency.''

Hmmm. Okay, at least you'll rein in your profligate spending?:

AIG is hurting so bad that we just gave them another $40 billion, while execs live it up at another luxury junket, this one costing $343,000. KNVX uncovered another high-priced conference taking place at the Pointe Hilton Squaw Peak Resort in Phoenix, AZ. They reported that AIG made efforts to disguise its presence, making sure no AIG iconography was out in the open. One hotel employee said that staff was forbidden from even saying the word AIG. AIG said seminars like this, which was for independent financial advisers who steer customers to AIG, are essential to its business. They also said that most of the seminar's costs would be picked up by other corporate sponsors. AIG said in a statement, "We take very seriously our commitment to aggressively manage meeting costs."

This 'conference' happened AFTER the pheasant shoot and the negative news AIG received from that. Slow learning curve or an incurable sense of entitlement?

Bush's legacy: Femafication

Paul Krugman: (my bold)

Meanwhile, the British government went straight to the heart of the problem — and moved to address it with stunning speed. On Wednesday, Mr. Brown’s officials announced a plan for major equity injections into British banks, backed up by guarantees on bank debt that should get lending among banks, a crucial part of the financial mechanism, running again. And the first major commitment of funds will come on Monday — five days after the plan’s announcement.

At a special European summit meeting on Sunday, the major economies of continental Europe in effect declared themselves ready to follow Britain’s lead, injecting hundreds of billions of dollars into banks while guaranteeing their debts. And whaddya know, Mr. Paulson — after arguably wasting several precious weeks — has also reversed course, and now plans to buy equity stakes rather than bad mortgage securities (although he still seems to be moving with painful slowness).

As I said, we still don’t know whether these moves will work. But policy is, finally, being driven by a clear view of what needs to be done. Which raises the question, why did that clear view have to come from London rather than Washington?

It’s hard to avoid the sense that Mr. Paulson’s initial response was distorted by ideology. Remember, he works for an administration whose philosophy of government can be summed up as “private good, public bad,” which must have made it hard to face up to the need for partial government ownership of the financial sector.

I also wonder how much the Femafication of government under President Bush contributed to Mr. Paulson’s fumble. All across the executive branch, knowledgeable professionals have been driven out; there may not have been anyone left at Treasury with the stature and background to tell Mr. Paulson that he wasn’t making sense.

Luckily for the world economy, however, Gordon Brown and his officials are making sense. And they may have shown us the way through this crisis.

Forrest Gump Explains Mortgage Backed Securities

An email making the rounds...

Mortgage Backed Securities are like boxes of chocolates. Criminals on Wall Street stole a few chocolates from the boxes and replaced them with turds. Their criminal buddies at Standard & Poor rated these boxes AAA Investment Grade chocolates. These boxes were then sold all over the world to investors. Eventually somebody bites into a turd and discovers the crime. Suddenly nobody trusts American chocolates anymore worldwide.

Hank Paulson now wants the American taxpayers to buy up and hold all these boxes of turd-infested chocolates for $700 billion dollars until the market for turds returns to normal. Meanwhile, Hank's buddies, the Wall Street criminals who stole all the good chocolates are not being investigated, arrested, or indicted. So far
nothing is back to normal.

Mama always said: "Sniff the chocolates first Forrest".

Mush!

The credit crisis as Antarctic expedition from Marketplace on Vimeo.

Maybe a virgin sacrifice into a volcano...

Sorry Georgie. It won't work. The finals are in and you've failed. Big time. There aren't any reset buttons or do overs. You and your neocon cronies have broken the United States of America. Congratulations.



Don't forget to read the top ten Republican idiots of the week.

I'll just leave you with a quote that will serve Palin well in the upcoming debates:

PALIN: I'll try to find you some, and I'll bring them to you.

Check your spam

You might have missed this one:

Dear American:

I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.

I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.

I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transactin is 100% safe.

This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.

Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.

Yours Faithfully Minister of Treasury Paulson

And the walls came tumbling down...

The top ten list of the week.

And a quote:

Treasury Secretary Henry Paulson last week insisted that the price tag for bailing out Wall Street would come to a princely $700 billion - cha-ching! - a vast pile of cash that we could somehow never seem to find when it was needed for silly things like healthcare or education or fixing Social Security. But here comes Wall Street, cap in hand, and what do you know? There it is.

crossposted at SteveAudio

What's that crashing sound?!!

Click the picture to go and see Tengrains's Hanky's Panky!! Playing now at theaters near you!

Asian economy vs. Cheney or Hillary

This journalist says Asian countries don't like either one:

Perhaps a diversion to consider the fragile reputation of America's politics is necessary here. The lost war in Iraq has failed to make the US government honest - indeed, the opposite appears to have happened. Like an alcoholic on the run from his treatment clinic, wrecking drink cabinets, Vice President Richard Cheney stomped into the capitals of US allies as the unapologetic face of the most unpopular US administration in recent history.

In so doing, he caused more damage to America's friends than its enemies could possibly inflict in a one-week window. To name just two, Cheney's visit has virtually guaranteed Prime Minister John Howard's re-election defeat in Australia, [4] and rendered precarious the position of Pakistan's unelected President General Pervez Musharraf, who had the indignity of being admonished by the petulant "veep".

At home, the conviction of Lewis "Scooter" Libby has added another layer of concern for the besieged White House, while the poor treatment of its war veterans in hospital will likely depress even diehard Republicans. That leaves the field wide open for a Hillary assault on the presidency next year. I expect that on her way, Senator Clinton will put into play everything that the Republicans stood for, including free trade and a measured approach to China.

This is where the Asian response becomes critical. Expecting no help from the American consumer is one thing, but also to confront political assaults is an entirely different matter. The upshot is that Asian countries will be forcefully cajoled into allowing their currencies to appreciate against the US dollar in coming months, with people like US Treasury Secretary Henry Paulson urging action (as he did this week) sooner so that these countries do not have to confront something worse later on, viz a Hillary presidency.

More here:

Washington, DC (AHN) - Even as China is finally making some moves to liberalize its markets, U.S. Treasury Secretary Henry Paulson is urging it to do so more quickly. While the Republicans controlled the U.S. Congress, they watched as China protected its export market by depressing the yuan's value instead of allowing it to float against the U.S. dollar.

The yuan is undervalued by as much as 40 percent, which makes its exports extremely cheap and gives its exporters an advantage that is unfair, Bloomberg news reported on Friday.

But with record high U.S. deficits for both the federal budget and in American trade compared to China's massive budget and trade surpluses, it is unlikely that the Democrats will follow the failed Republican economic policy regarding China.

In a speech Thursday at the Shanghai Futures Exchange Paulson, saying that "time is of the essence," gave a nudge to the Chinese.

"An open, competitive and liberalized financial market can effectively allocate scarcer resources in a manner that promotes stability and prosperity far better than government intervention," Paulson said, according to Bloomberg news reports.

Telling the Chinese that their economy was unbalanced, Paulson listed steps they could take to bring it into balance, including letting the yuan float.

The need for the Chinese to balance their economy away from its focus on exports might help Paulson avert a growing bipartisan trend in Congress to move toward protectionism because the U.S. trade deficit, at $232.5 billion last year, is at a record high, Bloomberg news reported Friday.

Surging Chinese imports are costing American workers jobs and small manufacturers business.

Last year Sen. Lindsey Graham, R-SC, pulled back from legislation that would have added a 27.5 percent tariff on Chinese imports.

But this year he is working with the Senate Finance Committee as they develop legislation to conform to rules of the World Trade Organization, while still putting pressure on the Chinese, according to Bloomberg reports.