‘The most ass-kickin' writer to come along
in a decade!’
-The NY Times
‘Glad to see you're getting it right.!’
Assessing Taxpayers' Anger Over Financial Bailouts
December 4, 2008
The mavens of Wall Street have managed to transform legitimate, funded debt, one of the foundations of capitalism, into little more than a Ponzi scheme, and now Treasury Secretary Henry Paulsen is suggesting that in order to restart the economy, we need to make the option of increasing American consumers' debt load more "available" to them. These are the same consumers that Washington and Wall Street insiders like Paulsen have for years complained are overextended, don't save enough, and have unwisely mortgaged their assets to cover everyday expenses.
The question is, "Where does that leave us?" According to S&P Case-Schiller Index data, the collective value of American consumers' key assets, their homes, had fallen at mid-summer 2008 by about 30 percent over the previous year. This precipitous decline was triggered largely by the collapse of a mortgage derivatives market indirectly created during the Clinton Administration by Franklin Raines (who grabbed some $90 million as CEO of Fannie Mae from 1999 to 2004) and Jamie Gorelick (who took down about $26 million as that organization's Assistant Director between 1997 and 2003) and Massachusetts Representative Barney Frank, whose domestic partner during much of that time - when Frank served on the House Banking Committee, which had jurisdiction over Fannie Mae - was Fannie's Assistant Director of Product Initiatives, Herb Moses.
Their demands that Fannie Mae and Freddy Mac guarantee
mortgages for those who couldn't afford them arguably necessitated that
financial institutions find ways to hedge the ill-advised risks associated
with those loans. That need found its outlet in the creation of a derivatives
market the attempted unraveling of which brought even Warren Buffett,
who has called derivatives "weapons of mass financial destruction,"
and his analysts to their knees.
Top that off with the reluctance of many financial institutions to give up executive bonuses, or even to remove directors from their Boards after they've bankrupted their organizations - Robert Rubin, having guided Citigroup into insolvency, remains on Citi's board, and his acolytes, including Paul Volcker, Lawrence Summers, and New York Federal Reserve president and soon-to-be Treasury Secretary Timothy Geithner, will be running the bailout for the Obama administration - and you've got a recipe for Disgust and Loathing in Middle America (with apologies to the late Hunter S. Thompson).
Let's see, we pay taxes to the government, whose appointees use our money to bail out financial institutions, which in turn take our money and use it to pay exorbitant bonuses to their execs and to increase their own access to more of our money by buying other banks instead of pumping taxpayer dollars back into the economy to fund new debt . . . and Bush and Paulsen and Fed Chairman Ben Bernanke wonder why we're angry?
They obviously have no idea how foolish they look and how reviled they're becoming in the eyes of the citizens they supposedly serve because of their alleged attempts to jump start the American economy. I use the term "alleged" advisedly, because the key players in the team assembled to unravel the mess are pretty much all Goldman Sachs people, and they've been somewhat selective in the financial institutions they seek to bail out. Goldman Sachs has done reasonably well, thank you, while rivals Lehman Brothers and Bear Stearns were allowed to sink. So much for evenhandedness. So much, for that matter, for the purported critical importance of keeping our major financial institutions from failing.
As we flyover-country taxpayers are learning, the responsibility for bailing out our economy rests squarely on our shoulders. Now if we'd only stop our penurious ways and behave responsibly by spending money we don't have on things we don't need so that the people who caused this mess in the first place can get back to the business of creating the next wave of federal policy designed to insure that we go through this again in about a decade or so . . . well, you get the picture. But the further problem, and one which compounds our anger, is that even that grim picture is only valid if there's anything resembling capitalism left in ten years, after the folks currently using our money to bail out America are finished.