"A Little Suspicious? - There Is No Crisis-Summary

[kpete]

There Is No Crisis-Summary
by: Chris Bowers
Tue Sep 23, 2008 at 16:22
Things are getting a little suspicious about this "crisis."

1. Why is it that the Bush administration declared "crisis" suddenly appeared during the final two weeks when Congress would be in session before the election? Is it maybe because, after the election, Congress would know it wasn't dealing with Bush anymore? This is, keep in mind, the final week when Congress has to deal with Bush at all.

2. If this is such a sudden crisis, why is it that the Bush administration was drawing up the plan for this bill for months beforehand?
http://emptywheel.firedoglake.com/2008/09/23/bush-mouthpiece-admits-theyve-been-sitting-on-this-plan/

3. Why is it that Congress is supposed to bail out many banks and firms that are actually quite successful and profitable right now, and not just those that are failing?
http://www.openleft.com/showDiary.do?diaryId=8448

4. Why is Paulson blatantly lying to Congress about oversight?
http://thinkprogress.org/2008/09/23/paulson-oversight/

5. Where did the $700 billion figure come from?

6. Why is Paulson urging that debate on the matter be held after the legislation is passed?

The burden of proof should always be placed on those who are demanding a huge government bailout, not upon those who are skeptical that one is needed. And yet the questions keep mounting, with no answers in sight.

I am not saying that there is no need for government intervention. I am saying that the case for a $700 billion bailout is far from being made. Until the case is made, there is no need to go forward. We will elect a new President in 42 days. We will have a new Congress in 103 days. What is the rush? Why does this all of a sudden need to be done while the Bush administration is still in charge? The case hasn't been made, and answers are slow in coming, if they come at all.

http://openleft.com/showDiary.do;jsessionid=37A4C014103933A50F63768C29298884?diaryId=8451

[ixion]

1. spot on... good questions to ask

these people are grifters to core, and shouldn't be trusted for a moment.

[Jim__]

2. Why is Paulson urging that debate on the matter be held after the legislation is passed?

Because then Paulson can give you an honest answer to your questions. If he can stop laughing long enough, that is.

[LastLiberal in PalmSprings]

22. "Sentence first , verdict afterwards!" -- The Queen

It fits with the Alice in Wonderland world we've been living in since the Supreme Court appointed Bush president against the wishes of the American people. "War is Peace," "Lies are Truth" and now "No Oversight is Being Responsible." I keep expecting the White Rabbit to go bouncing through the Rose Garden (it'd probably be shot and field dressed by Sarah Palin).

[dkofos]

3. Let them eat cake!!

[bbgrunt]

4. they are cornered evil rats that will eat their own to save themselves.

[mzmolly]

5. Thankfully many of these questions were posed

by our congress critters today.

[TNOE]

6. This was great

things that make you go hmmmmmm.

[TexasObserver]

7. This is obviously another shell and pea game by Bush.

This is a bogus crisis. Yes, it's gonna hurt, like a hip replacement hurts, but it's not going to kill the economy. It's going to let all the air out of the economy, and will take down a lot of bad companies.

[bemildred]

10. Yep, they had their strategy to give us the bum's rush all planned out beforehand. nt

[TexasObserver]

12. We were supposed to be stampeded, but it hasn't happened.

These little boys have cried Wolf Wolf far too many times.

[kimmerspixelated]

8. Bingo!

As usual Kpete-you're right on the money!

[onethatcares]

9. you are spot on Kpete and what the administration really wants to do,

is get Sikorsky helicopters and take the funds out of the fed ala iraq. Just big blooming piles of cash, with no oversight at all and no investigations allowed.

Thanx for the power.

[shance]

27. It's not just the Administration.

n/t

[riverdeep]

11. They've cried 'wolf' so many times, no one believes them anymore.

Whether or not this time is actually real, their credibility is so shot, if you're not asking these questions, something is wrong with you. Actually, the whole thing sounds like a late-night infomercial pitch, "Hurry and call now, only limited supplies on hand. If you don't call within the next half hour, we can't guarantee you this low, low price! Hurry, call now!"

One of the basic rules of commission sales, get people to commit to buying it today.

[theodosis2]

13. XLNT WORK KPETE

Is this the beginning of the October surprise?
The fear tactic has worked before; why not play it again?

[felinetta]

14. This whole thing smells so foul!

The Japanese would be settling this with hari kari. But here, they're all trying to steal even more money.

[intheflow]

15. Slightly OT, but this has 18 "must read" votes and is not on the GP.

Kicking so at least it will keep getting rec'd and read in GD.

[paparush]

16. R E S I S T !! R E S I S T !! R E S I S T !! R E S I S T !!

[paulkienitz]

17. there is one element of real crisis: thousands of foreclosures

Not that the bushies care about that, except to the extent that it puts investment banks at risk.

The idea of a bailout plan that consists of keeping failing borrowers in their houses is one that could benefit both the country and the banks... and might even make the taxpayer a profit when things turn around. What we'd have to do is make sure that the government mortgage buyer squeezes them away from the banks that don't want them at the lowest possible price. That sure doesn't sound like what they're asking for now...

[JohnnyBoots]

18. My question is: Was this original gameplan of -create crisis, rely on fear, ram through

legislation as quickly as possible, reap the benefits for the power elite created pre or post 9/11? It is like conspriacy theory chicken or the egg.

[Alcibiades]

19. Not exactly

The crisis itself is inevitable. These egg-sucking weasels want one last suck at the egg before Obama gets in, is all.

[The Blue Flower]

20. Yes--and they know McCain will lose

They're shifting the center of power to whoever controls the $700 billion because their boy won't be in office come next January.

[Merlot]

31. Exactly.

They're shifting the center of power to whoever controls the $700 billion because their boy won't be in office come next January.

[NoUsername]

23. That's my take on it too.

They created the crisis by bailing out Freddie Mac and Fannie Mae.

The U.S. government's seizure of Fannie Mae and Freddie Mac has triggered more than $1 trillion of credit default swaps tied to the mortgage giants. The International Swaps and Derivatives Association said in a memo on Monday that 13 major credit default swap dealers unanimously agreed that a credit event had occurred.
...

All year long the Federal Reserve has been swapping out the liquid treasury bonds in its portfolio for somewhat questionable mortgage-backed securities from investment banks. This week the Fed expanded this program to include largely worthless and illiquid securities from banks.

So why is this important? Because the Fed portfolio was largely already poisoned with illiquid assets and the treasury bonds were mostly depleted. Which brings up the problem of how the Fed can expand this program. The answer: more borrowing by the treasury.

The Treasury has added almost $300 billion in extra borrowing to offset the impact of central bank programs aimed at helping troubled financial markets and the economy, Karthik Ramanathan, director of the Treasury's debt management office, said in the text of a speech at a conference in New York.

What this means is that the Treasury is borrowing money from the Federal Reserve, at interest that the taxpayer is paying, that it doesn't need to borrow. To put it another way, the taxpayer is now subsidizing the Federal Reserve so it can bail out the Wall Street banks.

Much more at http://www.economicpopulist.org/?q=content/what-hell-just-happened

Looks to me like this was planned all along. They were just waiting for the right time to implement it. One week before Congress goes into recess before the election sounds about right.

[Joe Chi Minh]

21. A telling point.

[brindis_desala]

24. It's real all right. The question is how to "handle it"

Remember Spitzer went after AIG for "Enron style" 'double' accounting. From February,08: AIG said last week that the change in estimated losses came after its auditor, Pricewaterhouse-Coopers, noted a “material weakness” in AIG’s internal control over the financial reporting and fair valuation of the CDS portfolio, which is held by its subsidiary, AIG Financial Products.

Realizing this could play havoc with the New York bond market Spitzer had gotten Buffet to provide back up. The problem is these credit swaps are opaque and so when the home foreclosures started to mount the rabbit hole was far deeper than anticipated.

The first tumble:
AIG said last week that paper losses on its CDS portfolio climbed to over $5 billion as of the end of November from a previously estimated $1 billion. Counterparties to CDS contracts written by AIG are mostly banks, which bought them to hedge their exposure to collateralized debt obligations.

“Counterparties tend to be banks that wrote the mortgages and then packaged them,” said Chris Winans, spokesman for AIG, who said that AIG executives weren’t available to comment
http://www.financialweek.com/apps/pbcs.dll/article?AID=/20080218/REG/794188688

This is not just a bail-out although I think there's a lot of hopeful CYA, it's a back up in case the dominoes start falling. They need to separate the backers from the players and get all the actors involved (foreign and domestic) to open their books.

[Dover]

25. Why indeed. And if, as is being promised, these forced taxpayer 'investments'

would eventually (when?) bring a good return, then why aren't these companies selling on the international markets at fire sale prices? And why are the Dems, once again, sugar coating this blatant theft in attempts to make it more palatable? And if the company's worth is so complex and difficult to ascertain, how can they even know that?
Do we not have more important national concerns and projects that we could nationalize (like energy, water, global warming preparations, universal health care, etc.?) Will there be any money to do these things if we spend our wad on these insolvent companies?

Why haven't the Dems FIXED and prosecuted voting fraud in 8 years?
Why do they insist we 'move on' whenever we bring up that and any number of criminal behaviors?


Why is being a Dem supporter like being an abused spouse who refuses to leave a cheating, lying, alcoholic husband? Are we, as Dem supporters enabling our lying cheating incompetent party who has already sold us down the river by refusing to uphold our laws and Constitution and Bill of Rights in order to support their habit? Are we in denial?

I want a divorce!!!!

[shance]

26. Great way to thoroughly dismantle the power of everyone but the super duper rich

n/t

[AzDar]

28. K & R ...

:kick:

[Kablooie]

29. IT'S COMING FROM THE BUSH ADMINISTRATION! OF *COURSE* IT'S A SCAM!!!

[SlipperySlope]

30. The Honest Answers:

> 1. Why is it that the Bush administration declared "crisis" suddenly appeared during the final two weeks when Congress would be in session before the election?

Bush&Co were in their typical "you're doing a great job Brownie" self-denial. They are idiots and couldn't fathom how quickly everything they touched turned to shit. They've been spending the past several months throwing everything they had, including the kitchen sink, at this crisis trying to keep it corked up. But then, on September 17th, the inconceivable happened. The Federal Reserve Bank went broke. Let that sink in for a second. The FEDERAL RESERVE BANK went BROKE. They had no more money to keep the charade up. So, in a desperate act, the US Treasury lent the Federal Reserve Forty Billion Dollars. But the Treasury cannot lend money to the Federal Reserve indefinitely and without authorization, so the game was up, and Congress had to get involved.

http://www.marketwatch.com/news/story/treasury-provide-cash-fed-market-liquidity/story.aspx?guid={4CE4C5D0-57A8-4EB0-85F7-E346035085AE}&dist=hplatest

> 2. If this is such a sudden crisis, why is it that the Bush administration was drawing up the plan for this bill for months beforehand?

Simplest answer: They are lying. This plan wasn't written months ago. The first draft of this plan that the Treasury department wrote read like an intern had slapped it together after an all-nighter. The frigging thing didn't even have a name for crap's sake. If this administration had written this months ago it would have had some spiffy name like the "GOD BLESS AMERICA ACT". The first draft was so awful that the only thing that motivated them to accept the shame of claiming it was written well in advance was trying to avoid the shame of admitting they had no fucking idea what they were doing and that they had fiddled while Rome burned (surprise! surprise!)

> 3. Why is it that Congress is supposed to bail out many banks and firms that are actually quite successful and profitable right now, and not just those that are failing?

Because they are STILL lying. Most of those banks are "dead men walking" unless someone does something. But there is no way in hell that the government can admit how screwed up things are without causing wide panic. Let me give you an example of how screwed up things are. Let's look at the situation of just one bank - Washington Mutual. Not too long ago their stock was at $40, today it is at $2:

http://chart.finance.yahoo.com/c/2y/w/wm

Washington Mutual bonds have been downgraded to "junk" status by all three ratings agency.

Washington Mutual is holding about $180 Billion in consumer deposits. The FDIC, the insurer of ALL consumer deposits for ALL banks in the United States has $45 Billion to cover failed banks. Think about that - the failure of ONE bank, Washington Mutual, could completely wipe out the reserves of the FDIC, which is supposed to protect ALL banks.

> 4. Why is Paulson blatantly lying to Congress about oversight?

"Why", you ask? Because he is a liar, as I already pointed out in my answers to #2 and #3. Ok, ok, maybe that is a little harsh. Maybe he isn't a liar, in which case the only possible explanation is that he is incompetent. Take your choice.

> 5. Where did the $700 billion figure come from?

They made it up. They just couldn't imagine asking for more. Besides, the real total is $1.8 Trillion, but for some reason everybody keeps focusing on the $700 billion number. $700 Billion is just a balance sheet number. Here's how it would work:

Paulson: Hey, Goldman-Sachs, sell me a pile of shit for $700B.
GS: Sure Henry, here you go.
(The Balance sheet is now $700B, the total debt is $700B).

Paulson: Hey, Goldman-Sachs, buy back this pile of shit for $1B
GS: Sure Henry, here you go.
(The Balance sheet is now $0, but the total debt is $699B)

Paulson: Hey, GS, let me have that pile of shit again, here's another $700B.
GS: You sure are a genius Henry!
(The Balance sheet is now $700B, but the total debt is now $1399B)

-REPEAT AS NEEDED-

> 6. Why is Paulson urging that debate on the matter be held after the legislation is passed?

Uhm, because he was hoping nobody would notice what an incredibly stupid plan it was until it was too late?

> The burden of proof should always be placed on those who are demanding a huge government bailout, not upon those who are skeptical that one is needed. And yet the questions keep mounting, with no answers in sight.

I saw this crisis coming two years ago and did the best I could to prepare myself. I was watching when it started unfolding last August, and I've been staring slack-jawed at the unprecedented level of fuckery these people have been up to for the past few months. Believe me - THERE IS A CRISIS. But this plan is not a solution for the crisis. This plan is a naked attempt by the Bush Administration to give the taxpayer one last reaming, and give the country one last screwing over, and to slip $1.8T into the pockets of Bush and Paulson's friends, all before the wheels fall completely off the bus. But believe me you, if we waste this $1.8T now, we are going to wish to hell we still had it to spend come January.