The liar-in-chief hard sells the bailout
Not since the race to go to an illegal preemptive war in Iraq have I seen President Bush pull out all the fear stops like he did Wednesday night, in an attempt to hard-sell the bailout of $700 billion dollars for his Wall Street friends and their banker, mortgage companies, and hedge fund buddies.
Instead of Weapons of Mass Destruction, yellowcake uranium from Niger, and mushroom clouds on the horizon any minute, we had the promises of “a widespread financial meltdown,” “a long and painful recession,” and “our entire economy is danger,” which it has been since the day he stepped into office. Hardly news from the smirking chimp!
Yet, the huckster’s fear approach, i.e. act now, don’t think, just do it, response to a three-page carte blanche blank check from Henry Paulson for his Wall Street buddies was truly amazing. Especially given the fact that from the mortgage companies, to the banks, to the investment banks, to the brokerage houses that knowingly created the predatory-lending documents called mortgages, bundled them into collateralized disaster and sold them around America and the world, the fact that these same people are now asking for a bail-out, most probably to continue this kind of casino behavior is astounding, a death knell for American justice if it is bought and sold by the Congress critters, no bright lights themselves.
This is rewarding the fox, exiting the henhouse, for its voracious appetite and providing it with an aperitif to soothe its bulging stomach. For all of these components of the lending cabal are responsible and should be facing Justice Department charges and jail sentences, just as Bush and Cheney should be facing impeachment charges and/or trials at The Hague for lying America into a similarly costly and deadly war in Iraq. For, after all is said, all of their warnings turned out to be unmitigated lies. There were no WMD in Iraq. There was no attempt to buy yellowcake uranium from Niger. It was untruth promulgated by faulty Italian intelligence. And there certainly were no mushroom clouds on any horizon, except the ones the US put there at the end of WW II at Hiroshima and Nagasaki.
What there is today is “debt crisis” not a “liquidity crisis.” And Michael Gardner provided a number of excellent solutions to that in his Will the Cure be Worse Than the Crisis -- The Paulson-Bernanke Bank Bailout Plan. One of them was to give mortgage holders facing foreclosure the opportunity to pay what they could towards the true market value of their mortgages, not the compounded-credit, penalty-laden, bubble-inflated prices. Whatever they could pay on the dollar would be a start and supplemented by the government. This would eliminate debt not inflate it. As to the disparity between the current market value and originally hyped, usurious value, let Wall Street and their fellow thieves eat the difference. Perhaps spread a little caviar on it for flavor.
The fact is these Wall Street bandits engineered a financial Katrina and the point is to save the drowning, even the drowned who’ve already lost their homes, and the communities that have been turned into shanty towns given the number of abandoned homes in them, which the banks in most cases let rot, and are often broken into for the plumbing, or inhabited by junky squatters. Cleveland lost 90,000 residents to this storm -- only one of the deadly side effects of this Mafia Ponzi scheme. In fact, the mortgage vigorish (vig on the street for interest) would make the mob look like Boy Scouts.
Giving these Wall Street bandits the bailout will only give them the confidence to repeat this kind of orchestrated (even with just an eyewink) behavior, just as before this we had the junk bond scandal in the late eighties with Michael Milliken and his financial engineers at the head, creating high risk paper with high risk dividends. Despite warnings from more sober heads back then, we ended up with Black Monday in 1987, the largest single day drop in the history of the stock market, when the junk paper hit the fan.
Before that we had the savings and loan debacle thanks to the regulations of standards for loan giving being eliminated. Bogus loans were made to many, often profiting individuals like Neil Bush, while the companies that were backed crumbled like Silverado S & L, leaving investors and the lending bank in deep trouble. Did we learn? No. We didn’t. One after another, banking regulations were eliminated, like the 1927 McFadden Act, which prohibited interstate banking, working on the theory that a bank should take care of its own community. What a quaint notion. Unfortunately, international banks were free of that very decent regulation at the time and so the US banks cried “unfair.” They wanted to be as expansive and varied in the financial products they offered as their international counterparts. Too bad.
Along with the 1927 McFadden Act, we saw the on-going demise of the Glass-Steagall Act, enacted 1933 in the heart of the Great Depression. It required that the services of commercial banks be sharply regulated and kept separate from the services of investment banks. Of course, by 1999, Phil Gramm, Republican Senator from Texas, had managed, along with various naysayers and after several decades of chewing at that excellent law, to reverse it entirely with Congress’s full approval and the lovely Bill Clinton’s signature. This opened up the one-stop shopping investment, commercial, international, hedge fund, derivatives-available, anything and everything banks of the then new millennium, most notably Citigroup, still reeling from its multi-billion losses from predatory mortgage paper, not mention like losses in derivatives.
Goldman-Sachs functions in the same league. And it is absolutely wonderful that Warren Buffett, second richest man in America, wants to lend them 5 billion bucks. Having been in the reinsurance business himself along with his dubious buddy, the lovely “Hammering” Maurice “Hank” Greenberg, he should know all the ins and outs of fleecing billions from innocent consumers who pay their bills on time and except honest, timely service. Warren, good luck! Given all the ailing companies you’ve turned around, maybe you can put some lipstick on AIG, cut it into pieces, and tell the CIA to leave it alone and not launder billions through its 160 branch offices around the world. Yes, Sylvia, these guys are dirtier than dirt. Don’t feel sorry for them because they don’t give two cents about you.
Returning to our bright light Congress, one of the reasons they’re all huddling so quickly to reach a Wall Street bailout is to get a piece of that campaign money the Street will spread their way, on both sides of the aisle, during this election season, sort of like McCain Aide’s Firm Was Paid by Freddie Mac. Freddie’s payments were a bit less than $500,000 to Davis & Manafort (McCain campaign manager Rick Davis’ company) initially. Later, Davis got $30,000 to $35,000 a month to act as president of the Homeownership Alliance, an alliance of housing industry and consumer groups (lobby) to promote homeownership. This is a key point to keep in mind . . .
This blood money coagulates with Bush’s notion of the Ownership Society, a seemingly laudable cause on the surface, that is, if you actually can afford a decent mortgage for your dream house. Well, everyone obviously could not. Thus, in order to keep the housing construction bubble booming to mask little or no real (honest) growth in the economy, we needed to unlevel the mortgage playing field and give a lot of the folks without financial bona fides loans anyway. Hey, come on down. Money’s aplenty, just 5 percent, nah, will give you a bundle for free. Just sign here, sucker, I mean sister. Don’t worry about that fine print that will blow up in your face when you miss a payment. That’ll ruin your eyes. So, the predatory lending not only enriched the mortgage touts, it helped the housing bubble inflate until it burst.
It is reminiscent of the dot.com bubble in the late 90s and early 2000s. We had dot.com companies that were in business for nine minutes and some other dot.com company was running a laudatory ad about what a great comer the new company was, and visa versa. The new comer lauded what a great dot.com company their public sponsor was. And they all pumped and dumped their crappy stock on the market, with the usual shark buying frenzy that follows the smell of big yields, sky-rocketing valuations, that is, until the crap hits the fan and you can lose your shirt. But meanwhile the administration in power had a good run in the market to show for its lame efforts. This kind of scamming is bi-partisan, the corruption favored by both sides of the aisle, which is why we’ve had three such scams in only 20 years, which cost investors, would-be-home owners, and the FDIC something like a trillion dollars.
Remember, this is money that gets stripped out of the economy into private hands, lush mansions, beautiful yachts, Rolex watches, island tax hideaways (in one of which Greenberg keeps about $20 billion stashed), expensive things of all kinds. This transfer of wealth, accompanied by the multi-trillion dollar tax-cuts for these same Richie Riches’ aid and abet that transfer to make the middle and working classes poorer, and of course the wealthy wealthier. So, it’s the same crap, different scam, all working in unison under the US government whose leaders are picked by the wealthiest of the wealthy, say George Soros, David Rockefeller, the Morgans, and so on.
Couple this with the off-shoring of hundreds of millions of jobs, the elimination of pensions, health-care, and the breakdown of unions, the hoped-for diminution to disappearance of Social Security, Medicare, Medicaid, and you will see in the distance, a slave class of Americans, happy they’re working for peanuts. That’s the end endgame: America as banana republic.
It will be much worse than letting these Wall Street turkeys suffer, that is, having to take responsibility for their sins, and sins they are, creating schemes like derivatives that are so many chips in a financial casino, lacking transparency, but pouring trillions of funny money into the system that only a few, a small few, can track and profit, while many will sufferer when they fall like stacks of plates on everyone’s heads. While we’re at it, add to that the huge drug trade that money-launders a trillion dollars or so into the economy via financial entities. America, like many countries around the globe has become the playground of the Devil as well as the rendition grounds of the angels, whistle-blowers of all kinds.
Speaking of whistle-blowers, let’s consider the politically-assassinated ex-Governor, ex-Attorney General of New York State, Eliot Spitzer. On February 24, 2008, the crusading governor had the guts to run an editorial in the Washington Post called Predatory Lenders’ Partner in Crime -- How the Bush Administration Stopped the States From Stepping in to Help Consumers. Here are the opening paragraphs for your reading pleasure. I hope you read every word of it. It cost a man his career. A month later, he was politically dead by sexpionage.
“Several years ago, state attorneys general and others involved in consumer protection began to notice a marked increase in a range of predatory lending practices by mortgage lenders. Some were misrepresenting the terms of loans, making loans without regard to consumers’ ability to repay, making loans with deceptive ‘teaser’ rates that later ballooned astronomically, packing loans with undisclosed charges and fees, or even paying illegal kickbacks. These and other practices, we noticed, were having a devastating effect on home buyers. In addition, the widespread nature of these practices, if left unchecked, threatened our financial markets.
“Even though predatory lending was becoming a national problem, the Bush administration looked the other way and did nothing to protect American homeowners. In fact, the government chose instead to align itself with the banks that were victimizing consumers . . .”
Remember, Spitzer was also the guy that brought Hank Greenberg down from his perennial gig as CEO of AIG in a series of investigations. The various frauds perpetrated on consumers cost AIG $1.6 billion in fines. Hank was kicked out, though I’m sure he smells the money and would love to sneak back in. Nevertheless, hats off to Spitzer. He is not the lascivious demon painted by the media. And he never invited a thousand dollar a night male hooker, so-called reporter Jeff Gannon/Jim Guckert to sleep over at his house like Bush did without the Secret Service even knowing about what nights G/G was there or not.
Despite all this, the jerks of Congress are making sounds like they’re already reaching an agreement (if they haven’t already and are just too scared admit it; waiting to see how many of their phones are ringing off the hook). Speed is not the issue. Quality of agreement, making the right decision is the issue. Speaking of that, pick up your phone and call them right now and tell them you don’t want to make a deal with Wall Street. You want Wall Street and Friends to buy back their dirty paper from the foreclosure candidates and victims with the financial assistance of the US government. And you want them to buy back their mortgages at the everyday-low Wal-Mart prices they are now going for. Then the America citizen, the everyday working stiff, the family man and woman, the people of this country, will have a chance for a decent life, a comeback to sane living, a hope for a green future in more ways than one.
In fact, we can start with going green, and building the infrastructure and cars and houses to go with it that can make us a prosperous, brilliant people again, winners not losers to the trash on Wall Street, the Geckoes who think “Greed is good.” Greed sucks. It’s the Common Good, that FDR knew so well, that can save this country from the dregs. Don’t turn your back on it, not even for a piece of this rotten apple pie on the congressional table. And if they do the dirty deed, keep on calling them and telling them what you think of them. And when voting time comes, get even.
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