Thursday, October 16, 2008
London Banker on Paulson's Plan
"As I write this I don't know the outcome of the attempt to ram through legislation for looting the US Treasury of $700 billion before the end of the Bush administration. I suspect that Congress will force the passage of the bill in some form because the media and political narrative on the necessity of the measure is unremitting and so horribly biased. ... Having listened to all 42 minutes of the late night Treasury briefing of investment banks on Sunday, there is no doubt in my mind that this legislation represents the sort of federal largesse for Goldman Sachs, Morgan Stanley, Citibank and JPMogan Chase that the Iraq war provided for Halliburton and Blackwater. ... America is now a centrally planned economy where the Treasury will determine which firms survive and prosper through allocation of scare capital to an undercapitalised financial sector. ... What is going on here is a blatant attempt to provide government funds to a select cadre of firms (not all banks) which are chosen to be the survivors feasting off the carcasses of their less fortunate and less well-connected brethern as the downturn intensifies in the years to come. ... The basic plan is to set up a federal money laundering operation. Bad assets come in, get laundered by the Treasury and put in a new AAA 'wrapper' (as it's termed on the call), and good assets go out, issued as Treasury guaranteed securities. ... If there is no agreement on what an asset is worth, it is worth whatever the firm holding it says in its Level 3 accounts or the Treasury Secretary accepts in buying it. ... A factor which is probably critical but has received little discussion is that literally thousands of Bush administration apparatchiks will need jobs come January, and a fair selection of GOP House and Senate legislators and their aides too. What better way to enhance their CVs in their final months in power than to distribute $700 billion or so in pre-Christmas largesse to the most remunerative employers in the world? ... Deflation is going to happen--globally. ... I would like to believe Americans expressed the courage to change over last weekend when they 25 to 1 rejected an unconstrained and unconditional bailout of Wall Stret in favor of cold turkey deleveraging of the economy", London Banker (LB) at http://londonbanker.blogspot.com/2008/10/financial-eugenics-paulson-plan-for.html.
I don't know how LB listened to 42 minutes of Paulson's nonsense. The only thing I disagree with LB about is: deflation. There ain't gonna be none. The MSM coverage of the "crisis" and Paulson Plan has Paulson as our "champion" sallying forth into battle with the luddities. What a joke. Dianne Feinstein (DF), California Senator, said she got 91,000 e-mails and faxes on the Plan of which 85,000 or 93% were opposed. She still voted for the Plan because her constituents just don't understand why its necessary. Isn't DF courageous?