Wall Street Is Licking Its Chops at the Bush Team's Multi-Hundred Billion Dollar Giveaway Plan

[babylonsister]

Wall Street Is Licking Its Chops at the Bush Team's Multi-Hundred Billion Dollar Giveaway Plan

By William Greider, TheNation.com. Posted September 21, 2008.

If Wall Street gets away with this, it will represent an historic swindle of the American public.


Financial-market wise guys, who had been seized with fear, are suddenly drunk with hope. They are rallying explosively because they think they have successfully stampeded Washington into accepting the Wall Street Journal solution to the crisis: Dump it all on the taxpayers. That is the meaning of the massive bailout Treasury Secretary Henry Paulson has shopped around Congress. It would relieve the major banks and investment firms of their mountainous rotten assets and make the public swallow their losses -- many hundreds of billions, maybe much more. What's not to like if you are a financial titan threatened with extinction?

If Wall Street gets away with this, it will represent an historic swindle of the American public -- all sugar for the villains, lasting pain and damage for the victims. My advice to Washington politicians: Stop, take a deep breath and examine what you are being told to do by so-called "responsible opinion." If this deal succeeds, I predict it will become a transforming event in American politics -- exposing the deep deformities in our democracy and launching a tidal wave of righteous anger and popular rebellion. As I have been saying for several months, this crisis has the potential to bring down one or both political parties, take your choice.

Christopher Whalen of Institutional Risk Analytics, a brave conservative critic, put it plainly: "The joyous reception from Congressional Democrats to Paulson's latest massive bailout proposal smells an awful lot like yet another corporatist lovefest between Washington's one-party government and the Sell Side investment banks."

A kindred critic, Josh Rosner of Graham Fisher in New York, defined the sponsors of this stampede to action: "Let us be clear, it is not citizen groups, private investors, equity investors or institutional investors broadly who are calling for this government purchase fund. It is almost exclusively being lobbied for by precisely those institutions that believed they were 'smarter than the rest of us,' institutions who need to get those assets off their balance sheet at an inflated value lest they be at risk of large losses or worse."

Let me be clear. The scandal is not that government is acting. The scandal is that government is not acting forcefully enough -- using its ultimate emergency powers to take full control of the financial system and impose order on banks, firms and markets. Stop the music, so to speak, instead of allowing individual financiers and traders to take opportunistic moves to save themselves at the expense of the system. The step-by-step rescues that the Federal Reserve and Treasury have executed to date have failed utterly to reverse the flight of investors and banks worldwide from lending or buying in doubtful times. There is no obvious reason to assume this bailout proposal will change their minds, though it will certainly feel good to the financial houses that get to dump their bad paper on the government.

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http://www.alternet.org/workplace/99660/wall_street_is_licking_its_chops_at_the_bush_team%27s_multi-hundred_billion_dollar_giveaway_plan/?page=entire

[chimpymustgo]

1. Greider is one of the few we can trust. We have to stop this GIVEAWAY NOW

[BlueManDude]

2. Atrios put it simply and perfectly about this Welfare for Wall Street

"And just for the record, none of this will usher in a new golden age of sensible financial regulation or anything like that. We're bringing the punchbowl back to the party."

[chimpymustgo]

3. Here's more:

-snip-
A serious intervention in which Washington takes charge would, first, require a new central authority to supervise the financial institutions and compel them to support the government's actions to stabilize the system. Government can apply killer leverage to the financial players: Accept our objectives and follow our instructions or you are left on your own -- cut off from government lending spigots and ineligible for any direct assistance. If they decline to cooperate, the money guys are stuck with their own mess. If they resist the government's orders to keep lending to the real economy of producers and consumers, banks and brokers will be effectively isolated, therefore doomed.

Only with these conditions, and some others, should the federal government be willing to take ownership -- temporarily -- of the rotten financial assets that are dragging down funds, banks and brokerages."
-snip-

[APPLE_PIE]

4. How much should you pay for a house with the plumbing stripped?

After the wiring and plumbing are gone and all that is left is a collection of strategically placed holes in the walls, what is a home worth? How many homes will be in a vandalized state when it comes time for the government to assume responsibility by assuming their notes? The lots these homes are on do have value, but probably not until the homes are rehabilitated at public expense or razed at public expense. Who pays the property taxes on these mansions? Who will cut the weeds in the yards? Who will pay for killing the rodents? Who do you sue when someone gets hurt on the property? Who pays the back taxes on these properties when the government assumes responsibility?

I truthfully suspect that the government will wind up with a huge portfolio of absolutely worthless garbage.

[MindMatter]

5. Of course. That's the point. They aren't ever trying to make that a secret/

Bankers went nuts making loans with the Fed's cheap 1% money. They peed all over themselves at ever opportunity to write a new load, now matter how poorly qualified the borrower was.

The bailout simply takes the crappy loans off their books and leaves them with the good loan -- with absolutely no consequences.

This program is insane. If they wanted to address the housing problem, they should start from the other end. Provide assistance to the homeowners who are in trouble. Make it MANDATORY for lenders to renegotiate loand that they wrote to unqualified customers who are now facing eviction. If the taxpayers have to put some money into this, that's where it should go.

[Tierra_y_Libertad]

6. I wonder what the polticians' excuses will be when it blows up in our faves?

"I didn't know"

"I was misled"

"What else could I do?"

"It was an election year and we had to do something"

"I didn't understand the bill"

"I was drunk"