The $5 trillion fiasco
I just can't make up my mind: Is Hank Paulson committing premeditated murder of the U.S. economy, or merely negligent homicide?
Constant readers know I've gone back and forth on this: In September I figured the bailout bill smacked of making things up as he went along. But on Monday I took note of the phone conversation he had two months before Washington Mutual collapsed, in which Paulson told WaMu's CEO he ought to sell out to JPMorgan Chase because his company was in big trouble.
I guess it's possible Paulson knew bad things were going down, but he still didn't know what to do about it. And this morning, the making-things-up-as-he's-going-along thesis seems inescapable. I mean, really: The bailout bill was predicated on buying up toxic, er, um "troubled" assets. Then in the middle of the game it became a hybrid of buying up "troubled" assets and "recapitalizing" the financial sector (for bonuses and takeovers, natch). And as of yesterday, the buying up "troubled" assets went by the boards altogether. Now Paulson aims to "recapitalize" the financial sector and "increase the availability of student loans, auto loans and credit cards," according to the Wall Street Journal. Right, because if EZ credit got is into this mess, more EZ credit is sure to get us out.
You'd think the media could at least have trotted out some of his quotes and sound bites from September, when he warned of apocalypse if Congress didn't immediately cave to his demands that he be given unlimited authority to buy up "troubled" assets. Alas, it's all gone down the memory hole. We have always been at war with Eastasia.
Anyway, it sure looks like negligent homicide to me.
And now we have corroborating testimony from Paulson's protege and bailout point man, Neel Kashkari (a name for a villainous bureaucrat that could have come out of an Ayn Rand novel). On Monday he gave a speech with some choice quotes picked out by Phil Mattera.
Kashkari spoke of having made “tremendous progress” and of having “accomplished a great deal in a short period of time.” He bragged that his team is “working around the clock” while “ensuring high quality execution.”
Again, this was Monday — hours after AIG got a do-over on its bailout and around the same time Fannie Mae reported a $29 billion third-quarter loss.
Heckuva job, Kashie. We're staring at a bailout tab of $5 trillion as figured by the firm CreditSights. That's not including anything in the future; it's $5 trillion to date. We have experts not named Peter Schiff going on CNBC and talking about the United States losing its AAA credit rating.
Yup, negligent homicide. Guilty as charged.
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As always, agree with your writings. However, taking digs at a person’s name dilutes the argument.
M. Nam
Comment on November 13, 2008 @ 12:18 pm
Bozo the clown is the man behind the curtain. And you thought the experts knew what they were doing. Psssssh!
Comment on November 13, 2008 @ 12:50 pm
Among households that carry a month-to-month credit card balance, the average running balance is about $7500. Is Paulson’s new plan to get these up to $10,000 or more?
Comment on November 13, 2008 @ 12:59 pm
I wish he & Bennie boy would hyperinflate now so my gold & silver go to the moon now! Go Paul go! Go Ben go!
Comment on November 13, 2008 @ 1:21 pm
I’m thinking it is premeditated. I liken it to a guy who wanted to remodel part of his house and couldn’t pay it, he decides to set a fire in the area and get the insurance money to pay. But he used too much gasoline (and ran thru the rest of the house in panic as it got out of hand) and now there’s really a mess. You could say that he merely negligent by using too much gas, but it was his premeditated plan that was the problem.
Didn’t Roubini already say it was gonna cost at least $5 trillion? Not a surprise, unfortunately. On a cheekier note, if I got refinanced on all my debt at the fed discount rate (1%), I could easily triple my ability to absorb credit. I’ll be your stimulus! Gonna buy a place in some non-extradition zone with the extra money. Oh, Paulson beat me to it (so did Bush with his 100,000 acres in Paraguay).
Comment on November 13, 2008 @ 2:26 pm
Lets see now, The Executive, a man with a stellar anti-Midas touch, appoints a gentleman who shorted the securities that got us all in the mess to head the Treasury, who then proceeds to attempt a speed dialed rescue plan by Socializing the Banking System on something that might be characterized as a “spin the bottle methodology”. This, of course, all done with a backdrop of a consumptive war in regions that have beaten many before while doing everything possible to increase the ranks of the dispossessed who rope-a-doped you into the war in the first place.
Kashkari is the first honest bureaucrat to appear: “Ensuring high quality EXECUTION” indeed.
Comment on November 13, 2008 @ 3:41 pm
I agree with “invisigoth” that we are in the midst of a premeditated collapse. Even stopped clocks are right twice a day, this administration has never been right. Such an outcome would be nearly impossible without careful calculation!
Comment on November 13, 2008 @ 6:12 pm
Let’s all hope the feds can start getting matters peacefully.
settled.http://www.prosefights.org/nmlegal/hearing/hearing.htm#ncua
http://www.prosefights.org/nmlegal//libel/libel.htm#lay
For economic reasons, of course.
Comment on November 13, 2008 @ 7:22 pm
It is time we restored confidence by giving Nobel prizes to Paulson, Bernanke, and Kashkari. Even Al Gore got one for his contribution to global and local warming …
Comment on November 13, 2008 @ 9:38 pm
Before all this started, I kept thinking, gee could it be that 70+ million baby boomers (just in America alone) will actually go into retirement with an unscathed nest egg? BUZZZ WRONG!
I have turned this mess over and over in my head but I always come back to the same conclusion. That being that this was a predetermined plan for some sort of “asset deflation soft landing” that went critical mass real fast.
Comment on November 13, 2008 @ 10:40 pm
dadcss, you win a cigar! Those boomers were never going to be able to walk away with all that retirement money. How could a broker live with 1-2 trillion a year exiting the market? For some old coozer’s retirement? No way!
Comment on November 14, 2008 @ 1:08 am
Got Gold?
Comment on November 14, 2008 @ 12:27 pm
[...] ago he needs the $700 billion TARP to buy up toxic "assets." A few days ago he decides to dump the money directly into the banks instead. He promises last week to leave half of the [...]
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