Thursday, September 18, 2008

Reformers, My Ass

You ever get the feeling you've been cheated?

WASHINGTON - In one $85 billion (47 billion pound) fell swoop, the U.S. Federal Reserve may have wiped out what credibility it won resisting Lehman Brothers' rescue plea and opened its door to countless other companies to come calling for cash.

... By providing a massive loan to American International Group on Tuesday, just two days after refusing to use public funds to save Lehman Brothers from bankruptcy, the central bank also invited tough questions on how exactly it determined whether a company was too big to fail.

Between the $29 billion the Fed pledged to swing the Bear Stearns sale to JPMorgan in March, $100 billion apiece to rescue mortgage finance firms Fannie Mae and Freddie Mac, up to $300 billion for the Federal Housing Authority, Tuesday's $85 billion loan to insurer AIG and various other rescue deals and loans, taxpayers are potentially on the hook for more than $900 billion ...

"We're essentially continuing a system where profits are privatized and...losses socialized," Roubini said, adding that auto makers, airlines and other struggling businesses would no doubt be asking for government help too.

The government was hard pressed to say no to AIG because of concerns that its collapse would harm thousands of companies around the world and cause chaos in the $62 trillion market for credit default swaps, where it is a big player ...

But Roubini said instead of handing out money to firms that made bad bets -- which could inadvertently encourage more risky behaviour if companies think they have a safety net -- the government should be buying up mortgages and rewriting the terms so that households are not buried in debt.

And guess why we have unregulated credit default swaps? Just ask McCain economic adviser, Phil Gramm.

Of course, Mr. "Maverick", John McCain, will come bounding into town and march out propaganda that the Third Reich would have been proud of ("Original Mavericks"):

"We will never put America in this position again. We will clean up Wall Street. This is a failure."

And in a statement released by his campaign, McCain called for greater "transparency and accountability" on Wall Street.

If McCain wants to hold someone accountable for the failure in transparency and accountability that led to the current calamity, he should turn to his good friend and adviser, Phil Gramm.

... eight years ago, Gramm, then a Republican senator chairing the Senate banking committee, slipped a 262-page bill into a gargantuan, must-pass spending measure. Gramm's legislation, written with the help of financial industry lobbyists, essentially removed newfangled financial products called swaps from any regulation. Credit default swaps are basically insurance policies that cover the losses on investments, and they have been at the heart of the subprime meltdown because they have enabled large financial institutions to turn risky loans into risky securities that could be packaged and sold to other institutions.

... the Lehman fiasco--caused in part by the use of unregulated swaps--could lead to ruin elsewhere in the economy.

Gramm is responsible for the rise of the wild and woolly $62 trillion swaps market. And he was chairman of the McCain campaign and a top economic adviser for McCain--until he dismissed Americans worried about the economy as "whiners."

Not to be outdone with complete bullshit, hypocritical statements, Sarah Palin had to pipe in:

"John McCain and I will put an end to the abuses in Washington and Wall Street that have resulted in this financial crisis." She promised a McCain administration would "reform the way Wall Street does business."

... What neither she nor McCain has explained is how they plan to be able to reform Wall Street when they are being assisted by 177 lobbyists and the guy who greased the way to the current crisis with a backroom legislative maneuver.

... By the way, both McCain and Palin decried golden parachutes for CEOs. What might Carly Fiorina, a top McCain adviser and surrogate, think of that? She received a $21 million severance package when she was forced out as CEO of Hewlett-Packard, after her not-so-successful stint there--and the value of her golden parachute eventually reached $42 million.

People have different reasons for voting for someone. Social issues, patriotism, economics all come into play. And I'm generally reluctant to call into question someone's intelligence when analyzing why they've voted for a particular candidate. But, I just can't resist ... anybody that will vote for McCain/Palin for economic reasons (or any reason for that matter) is a complete moron and needs to have their head examined.


wunelle said...

The guys I work with will STILL blame Clinton for everything that's going wrong now, which seems to me hardly short of insanity. This is what we get when the (admittedly smart and cunning) people at Fox "News" get paid to dream up their own reality.

Thomas Frank reminds us that conservatism in this country is predominantly an economic stance: it's all about business being unimpeded in their quest to rake in vast sums of money. This morass we're suffering in now is the predictable outcome of a worldview the right has striven towards since the Reagan "revolution" (and before, forever). The goal, as Michael Greenberger said on Fresh Air yesterday, is to have the obscene spoils to flow up from the little people but be safely beyond reach of those little people and yet have the risks and liabilities fall squarely on those same little people. And that's just what we see: the "players" getting rich while we plebs get stuck with another couple of trillion dollars' obligations.

These are the "god and country" people, they tell us. Voting this right wing cabal out of office seems hardly enough; these ideas--the free market taken to this extreme--seem at core to be anti-democratic and a bottomless pit of greed.

John said...

hey - yes, yes Republican'ts suck, but this is EPIC. Saw it and thought of you.

dbackdad said...

John, you just made my day. That's awesome!

CyberKitten said...

Nice comment on one of our news programmes tonight:

When Capitalism fails, the State bails.... [grin]