absurity: new fed agency to buy bad debt???

(9 pm. – promoted by ek hornbeck)

Proponents of a more systematic government role to help relieve financial institutions of their toxic securities range from Lawrence H. Summers, the former Treasury secretary under President Clinton, to former Federal Reserve chairmen Paul A. Volcker and Alan Greenspan.

New York Times above the front page fold, 17 September 2008

So. To whom will they sell these junk assets, I wonder. Like organized crime? What other type of organization can get blood from stones?

You gotta love these guys…

In Congress, the idea that is gaining traction centers on the creation of a new agency that would buy troubled assets from hobbled companies. The idea was floated on Tuesday by Barney Frank, Democrat of Massachusetts, who heads the House Financial Services Committee. Among those signaling that it merited serious consideration were Senate Majority Leader Harry Reid and the House speaker, Nancy Pelosi.

What I don’t get is this. The Republicans blather on about me keeping my tax dollars. BUT. The taxes they do collect, rather than shore up levies and bridges and invest in our country, are largely used to pay for outsourced government functions to companies like Blackwater and Halliburton in BushCo’s brilliant and heinous war profiteering scheme. AND now the Democrats float an idea to create an agency where what’s left of my tax dollars (if there is any left) will be earmarked to bail out companies like Lehman Brothers. Bloody brilliant, isn’t it?


Rather remarkable though. I keep wondering about all those tax cuts, benefitting the people who created the junk assets that have crashed our financial markets. And I have this proposal to make:

ANYBODY WHO MAKES TONS OF MONEY FROM INVESTMENTS SHOULD BE TAXED TO THE MAX. Especially CEOs, CFOs, COOs, bankers, stock brokers et al.  Use tax from their profits to provide the funds for this new agency. Let them pay.

As it is, each and every tax payer in the United States is liable for George Bush’s debts to China. And all that money he borrowed? In my opinion? Yeah, all that money went to line BushCo pockets, leaving us with the debt. What a sting operation, huh? I’m probably rambling now, because it really puts me beyond words at times.

Honestly, I am stumped here. I know there’s a great argument here. I can’t find the words, I am so overwhelmed. Anybody? Can we craft  it clear, plain, so that red or blue, we understand who the real vampires are?

The blogs have been light years ahead on this analysis. Yet, I wonder if we yet understand the total 3600 impact on retirement accounts and those who live on those accounts currently. Yeah. Privatize social security. Heckva idea.

And then, the world at large: I wonder about Putin and war games with Chavez. Another Cuban Missile crisis moment? When we have nothing left. No clout, no money, no credibility.  The Pakistanis are pissed at us. An embassy is attacked in Yemen. Iraq and Afghanistan are a mess. Storms are beating the shit out of our coasts and midwest.

And Barney Frank is thinking about an agency to bail out hobbled companies of their bad debt. Fucking wOw.

We have been left as a great sailing ship: rudderless, torn sails, beaten crew in the middle of some very dangerous waters.

Where do we go from here? Honestly.

Sorry for this ramble…


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    • pfiore8 on September 17, 2008 at 12:06

    x posted at daily kos

  1. …which was terrific under Clinton…is as rudderless as the rest of them under Dubya:


  2. Did you say “organized crime”?

    I’d say with a few exceptions, the real major Crime Families throughout American history have been the “Executive”, the “Legislative” and the “Judicial” Families, directed by their masters in “Corporate America”…

    The real problem is that since we don’t make anything in America anymore (besides chicken nuggets, cheez doodles and high-fructose corn syrup…), the Powers That Be understand that it’s absolutely necessary to prop up our modern-day Charles Ponzis at any cost.  

    Not because they’re all that we have left (which they unfortunately are at the moment…), but because we’re too ‘busy’ as a society arguing with and attacking each other over completely inconsequential bullshit (“My God rules!”  “No, MY God rules…your God sucks, and should be tortured!“), to take any action towards building a sustainable society.

    So what do we do?

    We can be adults and accept the fact that we completely screwed up 28 years ago (and give Jimmy Carter his long-overdue apology…); suck it up, accept our losses and move towards towards a truly sustainable society – rebuilding our local food systems, investing in rail (light and heavy, passenger and freight) and renewable energy; re-densifying in our urban cores and creating communities worth caring about again, while taking back control of outlying land from speculators and suburban real estate developers and returning them to sustainable agricultural usage instead…

    Or – we can scratch out a few more years (if that…) shuffling papers around, and propping up our phantom ‘wealth’ in the form of endlessly shifting mortgages and selling hamburgers to each other.  And then in the end, still dealing with the mess regardless…

    What’s it gonna be, America?  We don’t have much time, and I hope the cynic in me is proven wrong just this one time

    From here in Portland, it’s only a quick hop up to Vancouver, BC.  I’d be lying if I said I haven’t been (constantly…) considering it lately – but I’d love to be able to stay here and spend the rest of my days in my home country, and see us return to good.  But I’m only one man, and frankly I’m tired of taking on an army of apparently suicidal sociopaths seemingly by myself.  I’ve been doing it for years, and I’m feeling pretty wiped out right now…

    Sorry for the “down note” at the end here, but it’s how I feel right now.  I’ll keep fighting as I always have, but this is frankly the last chance I’m willing to give, or “take”.  This year is it.  And it’s more than a bit depressing to see my own party rallying around the perpetuators of the financial shenanigans that have brought my country down.

    I can only say two things – Ugh, and bah.

    • Edger on September 17, 2008 at 16:25

    “Them who has the gold makes the rules…”

  3. Well, so am I.

    All these failures and, of course, BushCo had absolutely NO part in any of it.

    Now, we should pick up the tab?  How many generations will be paying for this sordid administration.

    I’m sure it goes without saying that AIG is a mammoth insurance company, worldwide.

    I have no answers — I’m not an economist, but I agree with you, we should NOT PAY FOR IT!

    A thought I do have is that all other insurance companies could pick up so much equal percentages of AIG’s business, and its business continue as usual.

    BTW, here is an Action Page from Avaaz.org.  Be sure to read and sign petition.


  4. …but what I start wondering is, WTF does AIG insure?  And what happens when in a year’s time if the deepest foundations of 10 or 15 global financial giants has resolved to…kaka…tiddly-winks…games of chance on layered marginal changes which no longer behave in anything like the same ways….and the people in charge are American political appointees?

    Just wondering this, ever so paranoid, over coffee.  

  5. which, to me, makes the most sense of anything I’ve read so far “As Wall Street Collapses, Will Washington Get a Clue?”:

    . . . . The Fed was right to turn Lehman Brothers away from its window during those final moments of doom on Sunday night. As such, the resulting $613 billion Chapter 11 filing, the largest bankruptcy in U.S. history (WorldCom dropped to second with a mere $104 billion in assets) was secured.

    It was wrong to back the $30 billion bailout of Bear Stearns in March, which facilitated JPM Chase’s acquisition of Bear. It should not be the Fed’s responsibility, or the government’s, to back investment bank speculation. Instead, regulators should have been more vigilant as speculation outpaced available capital, and transparent quantification of risk went out the window.

    However, it should be the government’s job to stabilize the financial system; the question is how. Unfortunately, neither the Federal Reserve, nor the government, nor the presidential candidates have the slightest clue. Neither a blame game nor desperate piecemeal fixes will work. This is not about Republican or Democratic policies, but systemic bipartisan deregulation. Only a quick bout of sweeping and decisive regulation can fix what’s broken. . . .

    Decisively, the Glass-Steagall Act forced institutions within the banking community to pick a side. If you want to deal with the population at large, take their deposits, give them a safe place for their savings and make reasonable loans for which you are as responsible as the borrowers — terrific. As a commercial bank, you will have the newly established Federal Deposit Insurance Corporation (FDIC) backing your depositors. We, the federal government, will regulate you. . . . .

  6. Hindsight is 20/20 of course, but what do you suggest?

    Let me be clear about this: if A.I.G. is allowed a hard crash, they will unravel the worldwide market in credit default swaps.  That market, as I and others have pointed out, is $45 trillion dollars – equal to annual worldwide GDP.  There is not enough money on earth to pay for it.

    I’m as ideologically opposed to government assistance as anyone here.  But there is no longer anything resembling another option.  We’re not trying to preserve the fortunes of rich people anymore – we’re trying to preserve, ultimately, the existence of credit and ultimately that of fiat currency.  If the Fed doesn’t pull this off, the notion of taxation itself may become quaint.  As it stands already, New York is panicking because without the jobs of Lehman, Bear, AIG et al, there isn’t tax revenue for the bulk of state services.

    So I’ll put it simply: if this works and saves the markets, then it won’t cost the taxpayer much of anything because those assets will have significant value.  If it fails, it probably won’t matter much, because the next round of bad debts are much, much bigger.

  7. I mean, as long as we’re nationalizing risk and all…

  8. . . . i.e., their eternal mantra that government should mind its own business and not interfere (where these public bailouts of failed financial institutions are concerned), and the Democrats aren’t listening.  

  9. to Congress, back in 1991:

    If Congress again opens up banking to Wall Street speculation, as it opened up S&Ls and banks to real estate speculation, regulators will quickly lose control over the complex series of events that a pervasive marketplace will immediately set in motion. Insider abuse, self-dealing, and back scratching relationships between institutions will run rampant.


    Though these scenarios are simplified versions of what would no doubt be almost incomprehensibly complex transactions – to hide them from regulators – the fundamental point is this: A business in deep trouble, seeing a chance to make a killing, will use all the assets at its disposal (particularly those belonging to someone else), even federally insured ones, and will worry about the consequences later.


    An historical look at one bank, Continental Illinois Bank & Trust Co. of Chicago, says reams about bank deregulation. In 1933 it was the first major bank in the country to be bailed out by the federal government as a result of the Great Depression. In 1984 the federal government bailed it out again, to the tune of $4.5 billion. Both times, according to FDIC chairman Irvine Sprague, the problems were the same:

    “Concentration of assets, out-of-territory lending, pursuit of growth at any cost encourage institutions to go for the fast buck; a bigger bank means more compensation for its management.” Prior to the second bailout, Continental had hooked up with the flim-flam crowd at Penn Square Bank in Oklahoma City, where wild speculation, insider abuse and fraud sucked the life from both Penn Square and Continental.


    Read the whole thing, if you’re interested–it’s quite scathing.

  10. and Clinton stripped the Glass-Seagall Act of ability to regulate speculators. I agree with p8 why are we bailing these crooks out? Don’t think it’s going to help. Why can’t they get Wall Street to pony up and bail out their fellow fallen Viking looters? They have freakin privatized everything except our taxes which they now want to cover their losses.  

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