Monday, October 27, 2008

The Biggest Heist in History

By Len Hart, The Existentialist Cowboy

The bailout is the biggest overt theft in history. Only healthy banks get funding --so why do they get a bailout? The 'bailout' is yet another monumental instance in which 'wealth is spread around' to those who do not need it, did not create it, did not earn it, and did not do anything productive to create it! Why doesn't Bush and his 'base' just load up a convoy of armored trucks at Ft. Knox --then drive like hell to the border?

Most big recipients of 'bailout monies' are using the 'bailout' to gobble up smaller, less favored banks. In simpler times, we might have called them the "Savings and Loan". In "It's a Wonderful Life" with Jimmy Stewart, it was called the "Building and Loan". If you've seen this classic film, you will recall that when the Great Depression came, it was the "Building and Loan" that was faced with collapse --not Potter, the richest man in town who sought to own it all.

Several major U.S. banks are leaning toward spending a portion of their federal rescue money on acquiring other financial firms rather than for issuing new loans, the primary purpose of the government's $250 billion initiative to invest in banks.

J.P. Morgan Chase, BB&T, and Zions Bancorporation have all said in recent days that they are considering using some of their federal money to buy other banks.

About 10 financial institutions belonging to the Financial Services Roundtable, which represents 100 of the nation's largest financial services firms, are also considering making acquisitions with the money, said Scott Talbott, the group's senior vice president.

There is a growing consensus among Treasury and other federal officials that allowing healthy banks to use the money to acquire banks in jeopardy of failing could stabilize the economy and bolster confidence in banks. This could also save money for the Federal Deposit Insurance Corp.

Treasury Secretary Henry M. Paulson Jr. confirmed yesterday that some banks may use the capital they receive through the Treasury program to buy weaker banks and that this could benefit the financial system.

--Banks Weighing Other Uses for Bailout Money
Moreover --banks are not supposed to hoard monies! Banks are supposed to 'lend' money, right?
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.”

--New York Times
Moreover, bailouts are supposed to restore confidence. This 'bailout' has had the opposite effect. Bush responses to the 'crisis' vary from day to day. As a result, the crisis now feeds upon itself, driven primarily by Bush's rhetoric and the market's negative response to it.
Because real wages have not been rising, the growth in consumer spending could only have been financed through borrowed money. Debt, which allows consumers to have cash on hand that hasn’t been earned or saved, has given Boobis Americanus the ability to live beyond his means, at least for a little while. And a great many have taken up this “pay later” lifestyle, accumulating a great many houses, cars, and other things.

A favored form of debt for funding extraneous purchases has been the home equity line. During the housing bubble, homes became virtual ATMs. Whereas home equity was once used for purposes of improving the home for the long-term, it became a source of quick cash for reckless buyers eager to turn their home into an instant showplace. First there’s the actual house, then comes the Martha Stewartization, followed by the furniture, the landscaping, the lighting, the additions, the appliances, and on and on.

The government’s mantra since the days of the New Deal has been the “right to own a home.” In the modern version of “the American Dream,” a starter home is treated as a humiliation, as everyone has the right to own a great, big home in an esteemed neighborhood, and preferably one of new construction and with all the bells and whistles. The term “being house poor” used to be a negative connotation. During the bubble it became a bragging right.

Even worse, home equity has been funding the purchase of everyday consumer durables, especially those items that tend to be discretionary in nature. Home equity has funded the kind of purchases that should be funded from earned, saved monies. A perpetually (and rising) line of credit induces consumers to “bite” at the availability of easy money at low rates, and thus they take the cash and spend their way to a perceived prosperity.

--New York Times, The Standard of Living Bubble is About to Pop
Other 'Presidents' in other times sought to restore the nation's confidence. The GOP has done the opposite. It subverted 'confidence' and tried to exploit the crisis. The 'healthy' banks and those already among the nation's very richest elite are making out like bandits while most Americans face the real prospect of losing their jobs, their homes and, perhaps, even their lives. The GOP doesn't have a bailout for them. The GOP has a bailout for its base, the richest one percent which owns 90 percent or more of the nation's total wealth. [See: The L-Curve]
One could start with Paulson himself, whose former bank stands to benefit handsomely from the bailout which he has authored. While at Goldman Sachs, Paulson amassed a personal fortune of $700 million.

The list continues:

According to Forbes magazine, Ken Lewis last year brought in a salary of $20.13 million, and his holdings of Bank of America stock are worth an estimated $112 million.

Jamie Dimon received a 2007 Christmas bonus of $14.5 million and holds $190 million in JPMorgan stock.

Lloyd Blankfein received a Christmas bonus of $68 million and his holdings of Goldman Sachs stock were worth $414.5 million last year.

Vikram Pandit received a $165 million signing bonus from Citigroup last year, together with a $2.7 million salary for a few months of work and $48 million in stock options.

John Mack received $41.8 million in compensation last year, and his 2007 holdings in Morgan Stanley stock were worth $220 million.

These firms’ stock, and particularly that of Goldman Sachs and Morgan Stanley, rose rapidly on news of the meeting with Paulson. Goldman stock rose 25 percent to $111 a share, and Morgan Stanley stock rose 87 percent to $18.10 per share.

--Global Research, Banks dictate conditions of US Financial Bailout
The very origins of the crash may be found --not on Wall Street but K-street. K Street is best compared to older portions of LA's Santa Monica boulevard, a less glamorous section of the nation's movie capital where various 'talents' are marketed, bid on and sold. On K-Street, the government whores itself out to major lobbyists by way of its pimps --think tanks, lobbyists, and advocacy groups. The difference is this: on Santa Monica Boulevard, 'John' has to pay his own way if he wishes to 'play'. On K-street, a good time is had by all, but it's you who gets the bill. When the bill is not paid, the crash ensues.

Am I being unfair to the 'exiting' (hopefully) administration? Impossible! It is not possible to express the depths of pure evil this administration has indulged in your name!
First, the $700 billion rescue for the economy was about buying devalued mortgage-backed securities from tottering banks to unclog frozen credit markets.

Then it was about using $250 billion of it to buy stakes in banks. The idea was that banks would use the money to start making loans again.

But reports surfaced that bankers might instead use the money to buy other banks, pay dividends, give employees a raise and executives a bonus, or just sit on it. Insurance companies now want a piece; maybe automakers, too, even though Congress has approved $25 billion in low-interest loans for them.

--Uses for $700 billion bailout money ever shifting
The best evidence that the bailout is a cover for a yet another huge transfer, a 'spreading around of wealth, to Bush's 'base' may be found in the following letter by the CEO of a so-called 'healthy' bank.
There is no panic on Main Street and in sound financial institutions. The problems are in high-risk financial institutions and on Wall Street. ...

The primary beneficiaries of the proposed rescue are Goldman Sachs and Morgan Stanley. ... Treasury is totally dominated by Wall St. investment bankers. They do not have knowledge of the commercial banking industry. Therefore they cannot be relied on to objectively assess all the implications of government policy on all financial intermediaries. The decision to protect the money funds is a clear example of a material lack of insight into the risk to the entire financial system.

--John A. Allison of BB&T, A healthy bank's CEO rejects the bailout: An open letter to Congress
A financial 911? Perhaps! By any name, the Bush crime family in cooperation with the GOP, the MIC, K-street, and Wall Street have just sold out the future of every American except those of the very, very, very, very rich.
Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.

Surely some revelation is at hand;
Surely the Second Coming is at hand.
The Second Coming! Hardly are those words out
When a vast image out of Spiritus Mundi
Troubles my sight: somewhere in sands of the desert
A shape with lion body and the head of a man,
A gaze blank and pitiless as the sun,
Is moving its slow thighs, while all about it
Reel shadows of the indignant desert birds.
The darkness drops again; but now I know
That twenty centuries of stony sleep
Were vexed to nightmare by a rocking cradle,
And what rough beast, its hour come round at last,
Slouches towards Bethlehem to be born?

--WB Yeats - The Second Coming
See: The Widening Gyre by Paul Krugman

By way of addendum, the following poem which made its first appearance about two yeas ago in the comments section of this blog.
When tomorrow all the things are gone,
We’ve worked for all our lives,
And the Right has saved the Nation,
From homosexuals and their wives,

I’ll wish on every star,
We’d had Clinton here today.
Or perhaps to hear that Howard Scream
And make it go away.

And it’s hard to be a Republican,
Where I thought my lunch was free.
And I won’t forget the ones who lied,
And sold that crap to me.

And I’d give my tax cut if I could,
But my job moved to Bombay.
‘Cause there ain’t no doubt I bought the scam,
That screwed the USA.

From the words of Bill O’Reilly,
That I heard on my TV,
From Bob Novak, and Rush Limbaugh,
It all made sense to me.

Anyone who spoke against us,
Was playin’ a dangerous game.
But now my country’s become a laughing stock,
And the GOP’s to blame.

And it’s hard to be a Republican,
Where I thought my lunch was free.
And I won’t forget the ones who lied,
And sold that crap to me.
And I’d take my vote back if I could,
Now my grandkids have to pay.

‘Cause there ain’t no doubt I bought the scam,
That screwed the USA.

--A. Nony Mous

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