From an AP article published today:
"[Obama] defended his selection of former Clinton officials to help run his administration.
"The American people would be troubled if I selected a treasury secretary or a chairman of the National Economic Council at one of the most critical economic times in our history who had no experience in government whatsoever," Obama said. "What we are going to do is combine experience with fresh thinking," he said. "But understand where the vision for change comes from. First and foremost, it comes from me. That's my job." [emphasis added.]
This quote makes two important points:
1. The President-elect understands that he has abandoned the Change mantra by his appointments, and
2. He has put the full weight of Change on his own shoulders.
From a supporter: As brilliant as you are; as tough as you may be; immersing yourself in this sea of entrenched, Establishment, old school advisers and officials will drown you. You are swimming with the (much more experienced) sharks who themselves are the root cause of the problem.
Designating Paul Volcker as the commander of your "outsider" Economic Team is the functional equivalent of designating Randy "Duke" Cunningham as the leader of your "outside" Ethics in Government Team.
Sir, the people want precisely those with "no experience whatsoever in government" to be advising you. Why? (A rhetorical question, sir.)
1. Obama's choice of his Economic (Domestic Policy) Team, as well as his Foreign Policy Team, sends one message; and that message is directed to what used to be called The Establishment. The message is: "You have nothing to fear from an Obama Presidency."
2. The refrain we hear regarding the Economy is that Obama wants to "hit the ground running." One might argue, given the last several months of Paulson & Bernanke "running" around like chickens without heads squandering public monies on policies notable only for their inefficacy, that the DIRECTION of the actions should be the paramount consideration rather than their VELOCITY.
3. The Obama Economic Team comprises the very architects responsible for the catastrophe, specifically including Robert Rubin, the "Senior Adviser" to the Citigroup Board's Executive Committee. Mr. Geithner is the third Musketeer, Bernanke and Paulson being the other two, of the un-elected triumvirate that designed the already discredited, abandoned $700 billion TARP. Mr. Summers, as well, is hardly the poster boy for Change.
The Economic Team, of course, "is what it is;" more important, "it is what it was."
1. There is no shortage of curiosities in the current Capital Holocaust.
2. But the one that most strikes me is the (what I judge to be conscious) effort to portray the Secretary of the Treasury as the key, if not sole, official of the Executive Branch, who will be granted extraordinary new powers. The current Secretary is Henry Paulson, and he certainly has been given the role of public front man for the Administration during this crisis.
3. Indeed, the legislation thus far passed, ineffectual though it has been, has specifically identified the Secretary of the Treasury as the beneficiary of the new and far-ranging powers contained therein.
4. Also conspicuous is the relative tangentiality of the current President of the United States to the public debate regarding the economic issues facing the Nation. This in stark contrast to his role in the aftermath of the terrorist attacks of 9/11.
5. The Secretary of the Treasury is appointed by and serves at the discretion of the President of the United States. Any and all powers and authorities of the Secretary vest in Article II of the Constitution, the Article establishing the office and powers of the President of the United States.
6. Yet the media, mainstream and otherwise, insists on reporting the latest events in terms of the powers being granted, by the Legislative Branch, as powers of the Secretary of the Treasury, a position whose power stems from and only from the powers of the President of the United States.
7. Is this merely a semantic quibble? I don't think so.
8. We are witnessing an abdication and creation of power by the Legislative to the Executive Branch of government, with no debate or discussion, only with the obfuscation of substituting the position of "Secretary of the Treasury" for "President of the United States" in the new legislation.
9. In other words, we are witnessing an exponential, stealth explosion in the power of the President, irrespective of party or person. This is being perpetrated by members of both parties in the Legislative Branch in concert with the current regime in control of the Executive Branch. This is as non-partisan an issue as can be constructed.
10. The grotesque dishonesty and blatant contempt for the citizenry inherent in these actions of both political parties and 2 of the 3 Branches of our federal government will been seen as a quantum leap in the de-legitimazation in the eyes of the citizenry of our government.
[The paragraphs in this article are numbered for ease of reference only.]
Thursday, October 9, 2008
1. One of the few recent public appearances where McCain came across as a reasonable, not-out-of-control, contender for the Presidency. 2. Obama was Obama, though he is displaying an increasing competence in extemporaneous formats, something lacking earlier in the campaign. 3. Although he did not kiss him on the lips, neither did McCain evince personal disdain for Obama, he did in Debate I, to his disadvantage. 4. Obama abandoned the "John" references, referring to his opponent as Sen. McCain; McCain maintained his Debate "Sen. Obama", with one unfortunate slip as "that one." 5. As in Debate I, the differences between the two are frequently tactical, not strategic---we're not looking at polar opposites here. 6. The most significant distinction between the Senators is their tax policies. McCain favors the continuation of the Bush cuts which target the very wealthly, and throws in an additional $100 Billion of cuts for them an corporations. Obama proposes tax cuts for individuals and smalll businesses with incomes of $200,000 and lower, and would not extend the Bush cuts, meaning he would raise taxes on those who benefited from the Bush cuts and not add any additonal cuts for those income groups.
7. Conclusions: (a) McCain did not emotionally self-destruct and, in fact, displayed a new-found calmness in his demeanor; he showed the public that his knowledge of issues far surpasses his running mate's, and he is not, like she, a mere television personality (b) Obama performed like a well-schooled professional tennis player---Roger Federer comes to mind: smooth, powerful, got all the shots but no obvious weaknesses. If McCain needed a knock-out, he didn't get it; if Obama needed a wild-eyed erratic McCain to end the race, he didn't get it either. 8. The contest returns to the status quo ante, which means McCain's chances for victory remain slim.
MyBlog: http://ProteanPerspectives.blogspot,com
..., as powerful as is it, can crumble like a stale cookie if it loses its Legitimacy in the minds of the People.
The actions of our (well-intentioned) Leaders in the face of this Economic Holocaust have thus far proven to be inadequate.
The solutions put forth by Leadership are obviously skewed to directly benefit the few, at the expense of the many.
As the crisis grows, so too does the threat to the Nation, the greatest threat to its survival since the Civil War.
We have witnessed some of our unelected, appointed leaders taking unilateral actions involving the expenditure or commitment of 100s of billions of taxpayers funds that have already been proven to be ineffectual.
We have endured our elected leaders passing legislation blatantly in opposition to the will of the People, legislation that benefits a select few at the expense of the many, and whose efficacy is dubious.
We watch in helpless awe as the leadership squanders their legitimacy as they display their subservience to special interests, at the expense of the People.
Below are some words of the Civil War President, from his Gettysburg Address:
" Four score and seven years ago our fathers brought forth on this continent, a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal.
"It is ... for us to be here dedicated to the great task remaining before us...--- that this nation, under God, shall have a new birth of freedom -- and that government of the people, by the people, for the people, shall not perish from the earth."
Is our government a government "of the people, bythe people, for the people" any longer? Or is it now a government of, by and for Goldman Sachs?
The events of the days ahead will answer that question.
All I can say is that it is now a question.
MyBlog: http://ProteanPerspectives.blogspot.com
1. I have published 119 posts on this blog, none of which has ever been deleted or censored by the Obama campaign, despite the fact that I have been "reported" to the authorities numerous times. One of those blogs was a Thank You to this site, which is still in effect.
2. Since there is a written, dated record extant of my opinions, both here and on my own personal blog, statements made in the following post regarding past comments of mine are verifiable.
_____________________________________________________________________________________
Since at least March of this year, I have equated and compared the on-going financial crisis we are experiencing to the Great Depression of the 1930s, using such terms as "The Postmodern Great Depression" and "Capitalism Gets Re-Capitalized," among others.
The focus of my comments has been economic.
A couple of days ago, a friend with whom I had not spoken with for awhile asked me, during a telephone conversation, my opinion on the Bailout and the general politico-economic events appurtenant to it.
I found myself responding thus: "This is the most serious threat to the United States of America since the Civil War." Not only had I never said that before, I had never thought that before.
My usually composed and well spoken friend responded, "Holy shit!"
And when I myself realized what I had said, my internal response was the same.
"We've transcended the threat of a mere Depression," I said, "and moved into that rarefied realm where we must be concerned with the very existence of the Nation as we've known it since the Founding."
He was silent.
Thinking aloud, I blurted out, "We are witnessing the destruction of representative democracy, a bloodless coup, the only opposition to which is coming from the 'lunatic fringe,' on both poles of the political spectrum, a coalition of the absurd and the powerless."
We chatted for a brief time, agreed that we were both astonished that Hedge Fund Managers could exert more influence on our elected representatives--and do so with such blatancy, such arrogance--than the outcry of perhaps 80% of the citizens of the Nation who opposed the Bailout, even in the face of the relentless and thoroughly ramified propaganda campaign mustered by the Elites, endorsed by the mainstream of both parties, and propagated by the most "noble" of media outlets.
But the fact is the Hedge Fund Managers triumphed. And they know it. And when they win, they don't pick up their winnings and move along---they Double Down.
The country's Changed over the last two weeks; there can be no argument with that proposition.
Obama ran/runs on Change.
And he's going to be the next President of the United States:
The first President of the United States of a New America, for better or worse.
Good Luck, sir.
The boys have broken the dike...and they know it.The Goldman Sachs Bailout Plan passes Congress, just what the "markets" have been waiting for, so the extortion talking points went.The Bailout passed; the Prez promptly signed it into law.And the relieved markets rocketed up to the moon---oh wait!Seems our bellwether Dow Industrial Index, which had been up 313 points before the bill passed, reversed course upon its passage and wound finished the day DOWN 157 points, a loss of 470 points subsequent to the capitulation. Ain't them markets something?This reaction signals Round 2. Round 1 was the extortion round. Round 2 will be the thievery round.Expect all sorts of comments from the Elites--led by sundry mouthpieces of the investment industry--alluding to the fact the the Bailout, while "a step in the right direction" is not a cure-all for what ails the economy. The mantra: MORE, MORE MORE.These guys are so smart that they've probably calculated what each 100 point drop in the Dow is worth in new taxpayer funds. They sense the floodgates have been breached; like in New Orleans, the dikes couldn't hold...and now the sky's the limit.There was some fear a few weeks ago when the new Super Collider was cranked up in Switzerland that there was a possibilty of creating man-made Black Holes during the high speed collision of protons, Black Holes that possibly could consumes the Earth itself. That scenario pales in comparison to what the alliance of Bankers, Wall Street Traders, Insurance Titans and Hedge Fund Managers have succeeded in creating: A Financial Black Hole with enough gravity to suck in, never to escape, a significant percentage of the nation's GDP, all in the name of protecting the Average Joe's and Jane's 401k plans and paychecks.Over the weekend, the victors will be deploying their finest, most erudite troops/spokespeople to prepare the groundwork for additional extortions of taxpayer money. The reasoning underlying the requests will be as plausible, elegant and recondite as those used in Round 1 of this match.Only this time, the boys have an additional $700 Billion of what used to be taxpayer funds on-the-come to finance an even more comprehensive propaganda assault.The Black Hole we've created has infinite depth, prodigious gravity and an insatiable appetite.
If ever a clearer reason existed that the Public and its elected representatives should not be stampeded into action by the machinations of the Stock Market((s), yesterday's and today's trading on the New York Stock Exchange (NYSE) could not be a clearer indication of the irrationality that always underlies these speculative markets.
Yesterday was the 778 point bloodbath in the Dow (and the broader market as well) that the Elites have been indicating would be the result of failing to pass the Goldman Sachs Bailout Plan. It was the largest point decline in the Dow's long history, ostensibly "wiping out" $1.2 trillion of on-paper wealth.
That was yesterday. Today, with no passage on the Plan, that same market recouped 485 of those lost points, the second largest point GAIN in the history of the Dow, earning back 64% of the alleged $1.2 trillion loss, or a mere $768 billion, coincidentally, the approximate cost of the Goldman Sachs "rescue" plan.
Was that plan voted on and passed today? Nope. But did the usual (suspect) analysts explain this rally as renewed hope the plan would pass? Yep. Do these analysts have any better idea than you or I why the market dropped yesterday and exploded up today? ABSOLUTELY NOT!
These oracles, like their religion counterparts, can rationalize PAST action in words so plausible that they almost must be true. And since there are essentially no competing views to theirs that garner media attention, both the Public and their Reps are sucked into the rational verbiage these pros have been dishing out since time immemorial.
Remember the Oil Bubble? Explanations, by these same analysts, ranged from hurricanes, to planned terrorist attacks, to the sudden discovery that China and India existed as the justificatory discourse in the speculative orgy of Hedge Funds and others to capitalize in newly-unregulated oil futures contracts.
The bubble popped at a little over $147/barrel, dropped like a lead balloon nearly 40%. The analysts duly noted the slowdown in in the world economy---as if the world economy or China's or India's economy has slowed down 40% in a couple of months!
The gyrations of speculative markets--be they stocks or oil--must be bracketed when decisions regarding the looting of the Treasury for private interests is concerned.
The People have the common sense to do that; it's their elected Reps, of both parties, that will find it harder to resist the big guns of speculative Wall Street.
Primus inter pares.
Know what that means? It's Latin for "First Among Equals."
So why do I lead this post with that Latin phrase?
Because primus inter pares of Obama's economic advisers during this crisis has been Robert Rubin.
Robert Rubin is currently employed by Citigroup, one of only three remaining mega-banks, the other two being JP Morgan Chase and Bank of America, whose current employer stands to be one of the major beneficiaries of the Goldman Sachs Bailout Plan. And, most important, Mr. Rubin is, like current Secretary of the Treasury Henry Paulson, a former CEO of Goldman Sachs. (Mr. Rubin also served as Secretary of the Treasury for Bill Clinton.)
If Candidate Obama were serious about "Change," he would not have Robert Rubin whispering the self-serving ideas of Goldman Sachs into his ear. For all intents and purposes, Rubin=Paulson.
Neither of these guys are crooks. Both of these guys are brilliant. But as a masonry journeyman friend said to me recently, "If you have a carpenter build the whole project, everything's going to be built with a hammer."
That's the problem with having two carpenters, honest and talented ones for sure, advising both the President and the President-in-Waiting. (McCain is a non-factor in this crisis, demonstrably in way over his head, and incapable intellectually of contributing to the debate.)
Obama, as the candidate of Change, must liberate himself from Goldman Sachs, Citigroup and the entire ensemble of Establishmentarians now advising him. Otherwise, his Presidency will be held hostage by them.
Similarly, Obama's Foreign Policy, though more thoughtful and realistic than McCain's, also seems to be guided by the establishmentarian Council on Foreign Relations, hardly an exemplar of Change.
I know I am asking for too much. To distance oneself from the mainstream to this magnitude would ensure defeat. But the fact that Obama cannot do so makes me wonder how much Change we are likely to see during his tenure as president.
Obama website readers all know we live in a representative democracy wherein the elected representatives of the people are not compelled to cast votes congruent with the views of their constituents.The assumption by the Ruling Class--usually called the Elites-- was that the Goldman Sachs Bailout Plan was going to be just another example of representative government: the elected representatives voting in opposition to the views of the vast majority of their constituents, namely, for approval of Goldman's self-bailout plan.I am not a right wing conservative by any definition of the term, and am aware that the defeat of the measure was spear-headed by rightest Republicans.But if the reports are true that public input to Congressional and Senatorial offices was running something like 100-1 against Goldman Sachs' Plan, and if one has even the slightest vestige of confidence in the concept of actual democracy, and the possibility implicit therein that there is a certain collective wisdom that resides in the unwashed masses, then today's vote should be cause for jubilation. Why?Because for once there appears to be near unanimity on the part of the People. No, they can't explain a Credit Default Swap or a Collateralized Bond Obligation or perhaps even the generic term Derivative, but they can smell a rat, or in this case, a whole bunch of rats.One fact cannot be argued: The Ruling Class got the country into this mess, be they Democrats, Republicans, Wall Street traders, bankers, Hedge Fund managers, Senators or Presidents. The public is saying to them, "We don't trust you to get us out of this mess."That's my view as well.Paulson-Bernanke have an examinable track record in place: They've poured, essentially unilaterally, $600 billion or so into the Bear Stearns "solution," the Fannie, Freddie "solution," and the AIG "solution" (as well as countless 100s of billions directly into the banking system through the Fed.) Those actions proved not to be "solutions." The current Plan is more of the same, with a minor switch in targeting.The problem, like a Black Hole, has enough gravity to suck a virtually infinite amount of capital into its abyss, never to escape, never enough to sate the monster. The people can sense this; the Ruling Class cannot.
Now that the Plan has been defeated, what's next for government to do?
That will be by next post.
By Jody Shenn
Sept. 22 (Bloomberg) -- Goldman Sachs Group Inc. and Morgan Stanley may be among the biggest beneficiaries of the $700 billion U.S. plan to buy assets from financial companies while many banks see limited aid, according to Bank of America Corp.
``Its benefits, in its current form, will be largely limited to investment banks and other banks that have aggressively written down the value of their holdings and have already recognized the attendant capital impairment,'' Bank of America debt analyst Jeffrey Rosenberg wrote in a report today, without identifying particular investment banks.
___________________________________________________________________________________________
If the above, from Bloomberg, is accurate, Henry Paulson should recuse himself from the design and management of any federal bailout program forthwith. Before his appointment as Treasury Secretary, Henry Paulson was CEO of Goldman Sachs. Enough said.
________________________________________________________________________________________
The article below from the Associated Press should serve as a reminder of the Paulson approach to solving this mess.
AssociatedPress August 8, 2008
(AP) The Treasury Department said Tuesday it had hired investment firm Morgan Stanley to help the government assess the risks facing mortgage giants Fannie Mae and Freddie Mac. For $95,000 to cover the company's expenses, Morgan Stanley will assess the state of the mortgage market and give the government a financial profile of the two firms. The two mortgage firms received a promise of support from the federal government as part of a sweeping housing rescue bill passed by Congress and signed into law by President Bush last week. Treasury spokeswoman Brookly McLaughlin said the contract would help ensure the Treasury Department had good advice to decide how to support the two mortgage firms, which together own or guarantee half of all U.S. mortgages.
The Federal Reserve announced at 9:30 PM on Sunday that--presto!--Morgan Stanley and Goldman Sachs are now officially "banks," in the traditional sense of the word.
What the hell is going on here?
Both these alleged "fierce "competitors petition the Fed for the same action at the same time and both get approved at the same time....There's no doubt that they, Morgan and Goldman, are just ensuring that they're going to feed at the Public trough without any nasty semantic impediments getting in their way.
Cui bono?
That's Latin for "who benefits" and is generally a term one encounters in legal proceedings; as in "who benefits from the commission of such and such crime?" It's one way of pinpointing possible suspects.
It's also the primary question that needs to be addressed regarding the Bush Administration instant-Plan for National Economic Survival hastily put forward by King Henry of the Treasury Department Friday evening, after having leaked its essential nature a day earlier.
Let's try a little detective work here.
Who benefits? One might begin the investigation at the New York Stock Exchange (NYSE), and find corroborating evidence at Stock Exchanges around the world.
On Friday, the world's Stock exchanges enjoyed, in some cases, their best day in history, the NYSE, as measured by the Dow Jones Industrial Average, gaining over 400 points at the close, and seeing a 600 point gain from its low of the day. Quite remarkable.
Did those exchanges rally because their participant traders thought the Paulson Plan was a fair, equitable approach to the crisis that allocated risks and rewards in an even-handed manner (assuming there should be any rewards handed-out to the culprits responsible for this mess)? Or did they rally because they saw that the entirety of direct, current benefits were targeted at them? You answer the question. But I'll answer it too.
All of the direct, current benefits go directly to Capital, as represented by Mega- Banking and Wall Street .
That is a fact.
The supporters of the Plan will argue that the Public-in-general will enjoy indirect, time-delayed benefits from the Plan, the most significant being the avoidance of the total collapse of our economic system. This proposition is at least debatable, since no one knows if this Plan will actually work as intended. Remember, the same people who put this Plan together have already pissed away nearly $600 Billion of taxpayer monies on Fannie Mae, Freddie Mac, Bear Stearns and AIG, thinking those actions were going to save the system---they didn't!
The benefits to Mega-Banking and Wall Street are Direct, Timely, Quantifiable and Certain. The benefits to the Public are Indirect, Time-Delayed, Unquantifiable and Uncertain.
So, again, cui bono?
The asymmetry of the benefit distribution must be addressed, even if it means the Dow will drop 400 on Monday.
Obama has done well to utter only sweeping generalizations thus far. He's kept himself from being put into a box--any box--on this profound matter.
I, for one (Obama supporter), trust that he will at all times keep in mind that many of his most prominent economic advisers are themselves products of or currently employed by the very institutions that, under the Paulson Plan, will benefit most by its adoption as is.
[Note: The most comprehensive, cogent and thoughtful commentary I have seen on this question has come from the Independent Senator from Vermont, Bernie Sanders.]
The following is the text of the proposed legislation which I refer to as the Paulson Bailout Act.
I have highlighted some passages.The Act speaks to the powers granted to the Secretary of the Treasury. But it is best understood as granting these powers to the President of the United States, as the Secretary is appointed by and serves at the pleasure of the President.
The Founders would shit in their pants if they ever saw something like this. It is nothing less than handing dictatorial, new powers to the Executive Branch without regard to the "checks and balances" written into the Constitution.
If this has already been published here, sorry for the duplication.
________________________________________________________
LEGISLATIVE PROPOSAL FOR TREASURY AUTHORITY
TO PURCHASE MORTGAGE-RELATED ASSETS
Section 1. Short Title.
This Act may be cited as __________________.
Sec. 2. Purchases of Mortgage-Related Assets.
(a) Authority to Purchase.--The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.
(b) Necessary Actions.--The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:
(1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties;
(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;
(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;
(4) establishing vehicles that are authorized, subject to supervision by the Secretary, to purchase mortgage-related assets and issue obligations; and
(5) issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities of this Act.
Sec. 3. Considerations.
In exercising the authorities granted in this Act, the Secretary shall take into consideration means for--
(1) providing stability or preventing disruption to the financial markets or banking system; and
(2) protecting the taxpayer.
Sec. 4. Reports to Congress.
Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.
Sec. 5. Rights; Management; Sale of Mortgage-Related Assets.
(a) Exercise of Rights.--The Secretary may, at any time, exercise any rights received in connection with mortgage-related assets purchased under this Act.
(b) Management of Mortgage-Related Assets.--The Secretary shall have authority to manage mortgage-related assets purchased under this Act, including revenues and portfolio risks therefrom.
(c) Sale of Mortgage-Related Assets.--The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act.
(d) Application of Sunset to Mortgage-Related Assets.--The authority of the Secretary to hold any mortgage-related asset purchased under this Act before the termination date in section 9, or to purchase or fund the purchase of a mortgage-related asset under a commitment entered into before the termination date in section 9, is not subject to the provisions of section 9.
Sec. 6. Maximum Amount of Authorized Purchases.
The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time
Sec. 7. Funding.
For the purpose of the authorities granted in this Act, and for the costs of administering those authorities, the Secretary may use the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under chapter 31 of title 31, United States Code, are extended to include actions authorized by this Act, including the payment of administrative expenses. Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure.
Sec. 8. Review.
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
Sec. 9. Termination of Authority.
The authorities under this Act, with the exception of authorities granted in sections 2(b)(5), 5 and 7, shall terminate two years from the date of enactment of this Act.
Sec. 10. Increase in Statutory Limit on the Public Debt.
Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof $11,315,000,000,000.
Sec. 11. Credit Reform.
The costs of purchases of mortgage-related assets made under section 2(a) of this Act shall be determined as provided under the Federal Credit Reform Act of 1990, as applicable.
Sec. 12. Definitions.
For purposes of this section, the following definitions shall apply:
(1) Mortgage-Related Assets.--The term “mortgage-related assets” means residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before September 17, 2008.
(2) Secretary.--The term “Secretary” means the Secretary of the Treasury.
(3) United States.--The term “United States” means the States, territories, and possessions of the United States and the District of Columbia.
In one fell swoop, after having already committed PUBLIC FUNDS equaling $600 billion to bailout PRIVATE businesses and their bondholders, King Henry (Paulson) and his Crown Prince, Fed Chairman Bernanke, have announced a new, far-reaching, allegedly systemic bailout of PRIVATE businesses with PUBLIC funds that could--and will-total the magic trillion dollar number.
The plan has several key but so far loosely defined components. The Federal Government (meaning us poor slobs) will become the final resting place for the essentially worthless securities--mostly mortgages--that the geniuses on Wall Street found themselves being strangled by. Before these securities became toxic, it would not be overstating the matter to say that their owners made 100's of billions of dollars in profits from trading and/or investing in these things over the past 5 or 6 years. There will be no attempt to re-claim those profits by the U.S. Treasury, of course. The price that will be paid for these pieces of toilet-paper has yet to be determined. Of course, if you don't own any of these bonds/securities, there's NO DIRECT BENEFIT TO YOU.
The Federal Government will also get into the business of guarantying Money Market Funds (MMF) for the first time, perhaps $100 billion worth of them. In postmodern Capitalism, MMFs became a de facto sort of bank to many: risk free places where excess cash could be parked with a minimal payment of interest. Of course, if you don't have any cash in a MMF, there's NO DIRECT BENEFIT TO YOU.
Finally, the Securities and Exchange Commission will henceforth prohibit short selling in the stock of any of the firms on a list of 799 names, including all of the powerhouse PRIVATE financial institutions out there. Unless you own some shares of one or more of those companies, there's NO DIRECT BENEFIT TO YOU.
So we see that there are DIRECT BENEFITS TO THREE CLASSES: (1) Holders of the toxic securities; (2) MMF depositors, and; (3) Holders of shares in the "special" list of 799, whom I'll call 799ers.
In other words, PUBLIC funds will DIRECTLY benefit three select and hardly underprivileged groups.
The PUBLIC, on the other hand, will benefit, we are solemnly told, INDIRECTLY.
The argument being advanced by CAPITAL, and those in its service, like now-King (and formally CEO of Goldman Sachs) Henry Paulson and Fed Boss Bernanke, is that the entire system was in jeopardy of collapsing, an event that would indeed have pernicious consequences for everyone, rich, poor and in the middle. That's the justificatory argument for these actions in a nutshell.
Is it a valid argument? The collapse of the financial system would have unimaginably malign consequences for all inhabitants of modern or near-modern societies. That proposition is beyond debate.
The three questions that are open to debate are: (1) Would the financial system have collapsed without these specific actions? (2) Will these specifics actions prevent the system's collapse? (3) Has there been adequate input into the decision-making process so as to ensure that other approaches were presented and evaluated before the Paulson Plan was adopted?
This is a link to a long, detailed article on the subject of the financial collapse that analizes, from a partisan viewpoint, the causes of the problem:
www.globalresearch.ca/index.php?context=va&aid=10268
The NYTimes is reporting that a new far-reaching and financially stupendous rescue plan is being advanced by King Henry at the Treasury and Chairman Bernanke at the Fed--two unelected, appointed officials--to address the systemic exposed by the collapse of Capitalism being played out on Wall Street.The Dynamic Duo, who hitherto had preferred the quite and isolation of boardrooms to hatch their thievery, have deigned to brief members of the Legislative Branch on their scheme, the details of which have not been announced to the public, and might not have been briefed to the legislators either.The Times reports that the plan centers around the Treasury, the Federal Government purchasing from private organizations securities that are essentially worthless, and doing this with countless hundreds of billions of taxpayer dollars.No details have been reported regarding any financial sacrifices these bailed-out private entities will be compelled to endure. But it is clear the taxpaying public will, once again, be compelled to foot the bill for the gross miscalculations of individuals whose annual earnings, perhaps whose monthly earnings, surpass the lifetime earnings of the vast majority of United States citizens.They ask a question in courtrooms: cui bono? Translated: who benefits?We are going to be deluged with the usual platitudes: "All of society benefits." "We are saving the system." "Every citizen will be better off by what we propose to do."That should not be enough this time around.How much is Bill Gross, who runs the Pacific Investment Management Company (Pimco) going to make off this public handout? His firm manages approximately $162 Billion of credit securities (bonds.) Pimco reportedly saw their net asset value increase by almost 2% immediately following the announcement of the Fannie and Freddie bailouts. Two percent of $162 Billion equals $3,240,000,000. Not a bad day's work, huh? [Please do not misinterpret this as an attack upon Mr. Gross; he's one helluva bond guy who enjoys a stellar reputation as a straight-shooter. I do not know him personally, but have followed his commentaries for years, and have no reason to disagree with the straight-shooter rep he has earned.]But how many Wall Street and hedge fund already-multimillionaires are going to find their pockets swollen by the Paulson-Bernanke Plan? AT ALL COSTS, THAT CANNOT BE ALLOWED TO HAPPEN.
Originally Posted on MyBlog: http://ProteanPerspectives.blogspot.com
Russia, two days ago, closed their stock market in the face of a two-day decline of of approximately 27%. That market has not yet re-opened for trading.What can be expected next in the United States?Today's trading on the New York Stock Exchange saw the Dow Jones Index lose 450 points. Shares of the venerable and sole-surviving independent investment banks, Morgan Stanley and Goldman Sachs fell as much as 44%(!!!) and 27%, respectively. Morgan is doomed for sure, Goldman, most likely too.As the logo's in the post below this one indicate, these two firms have plenty of company.Does the USG dare halt trading? Do they dare call a "bank holiday," as was done during the other Great Depression in the 1930s? Will such actions only exacerbate the problems?As of now, there have been no indication of a 1930s-style run on the banks taking place. The public, either because of ignorance or blind faith, has yet to line up at their local bank branch and demand their money. Right now, the first priority of the USG is to prevent such a scenario from developing.One can surmise that the USG in concert with the Federal reserve System has realized that they cannot be the "lender of last resort" to EVERYONE.The question now is: Who shall be allowed to fail and how can the consequences of these failures be mitigated, if at all?
Original Posting At: http://ProteanPerspectives.blogspot.com
Just being announced (unofficially)is another taxpayer bailout: This time giant insurance company AIG.The report in the NYTimes says the Treasury Department is going to lend AIG--a private company with private investor ownership--$85 billion of taxpayer funds. AIG, in turn, will pledge all of its assets as collateral for this loan. Shareholders will see some dilution, but will not be wiped out.Once again, this is Government-by-Fiat. All done behind closed doors by men "obligato" to the very industries that created this fiasco. Apparently, Henry Paulson, current SecTreasury and ex-CEO Goldman Sachs, is endowed with powers that allow him to supersede Congress when it comes to allocating taxpayer money.Yes, it's an emergency; yes, it's a crisis. But do we want to abdicate any semblance of democracy and permit one or two men to distribute public funds as they--and only they!--see fit?How much money is being made by hedge funds that bought AIG securities betting that Goldman Sachs' King Henry would, once again, come to the rescue with boat-loads of "other people's money?" And who are the "other people?" They are us!
Originally Posted on: http://ProteanPerspectives.blogspot.com
The one apparent fact that is emerging from the Crisis-in-Capitalism now being played out on Wall Street is: Nobody knows nothing.
No one knows the true causes of this calamity andno one knows of any systemic approach to stem the tide of the collapse of the modern financial system.
Right now, and since at least March of this year, we are witnessing the Treasury Secretary and the Fed Chairman playing the roles of Battalion Chiefs as they scurry from one brushfire to the next, dousing them with untold 100's of billions of taxpayer funds, most of which wind up in the pockets of bond holders like the Bank of China, hedge funds who bet the USG would bailout Fannie and Freddie and who therefore accumulated large holdings of the depressed debt securities of those "private sector" firms.
Nobody knows nothing.
When bewilderment reigns, it's generally a good idea to say and, especially, to do as little as is praticably possible. It's not the time to run-off at the mouth; it's not the time to assume nearly $5 trillion of private mortagage debt, as has already been done---with absolutely zero public discussion.
Obama's support should be done in the spirit of "National Unity" in a time of crisis. He should emphasize "crisis." He should emphasize Hoover-Bush-McCain. He should tie his (tepid) support to his sense of patriotism, not enthusiasm. He should make it explicitly clear that he is putting partisan politics on the shelf regarding this matter; but he should implicitly exploit the partisan advantages that this scenario gives the Democrats.
