Friedrich von Blowhard writes:

Dear Blowhards,

I don’t know about you, but I’ve had the breath sucked out of me by the events of the past few days:

(1) The new new $150 billion bailout of AIG, which seems to have been designed chiefly to benefit…Goldman Sachs! And which was negotiated without public input or oversight of any kind! (And people thought we didn’t have enough debate on whether or not to invade Iraq…!)

(2) The outright refusal of the Fed to provide details on who it is extending loans to and what collateral it is taking in return.

(3) The bizarre ambiguity about the pressure being put on banks (most recently by the Fed ) to lend the bailout money which was injected (by the Treasury) in a manner carefully designed to leave banks total discretion as to how to spend or hoard it.

Beyond my many, many questions about the practicalities of what The Powers That Be are doing (i.e., handing hundreds of billions of dollars of taxpayer dollars to whomever they want on whatever basis they want, and no questions asked thank you very much) -- questions which could only be answered by information carefully withheld from us mere voters -- my brain is grappling with a larger question: whatever happened to our government, our constitution, our entire philosophy of public life?

Did some revolution occur and noboby told me? Are we now governed by a Gang of Four, a.k.a. Treasury Secretary Paulson, Fed chief Bernanke, FDIC head Sheila Bair, and Interim Assistant Secretary of the Treasury for Financial Stability Kashkari? Will actual fighting break out between these powerful warlords? Who is likely to come out on top and successfully eliminate their rivals? Do I need to memorize a new pledge of allegiance, or start stockpiling water and food until it’s clear that it's safe to stick my head up?

Words fail me. So I will quote Randy Steve Waldman of Interfluidity:

What kind of society is compatible with an economy managed by a cadre of large, politically connected firms whose operations and those of the state are intimately connected, and which cannot be permitted to fail since that would bring "chaos"? Friedman would have remembered. "Mussolini-style corporatism" [polite term for “fascism”] can't be quarantined at the corner of Liberty Street and Maiden Lane [address of the NY Fed]. Trillion dollar bail-outs represent claims on scarce resources. If times get hard, the idea of scarcity will become a lot less abstract…

And by scarcity, he's talking about how a couple or three trillion to the financial services industry leaves a whole lot less for paying unemployment benefits, etc., for Joe Sixpack. Let's face it, even the term "crony capitalism" seems to understate the scale of what is going on here.

I think it’s time that portion of America outside Wall Street starts getting a clue as to what is going on here. Maybe it’s time for a large crowd of citizenry to visit the NY Fed with baseball bats and loose cobblestones. I urge this because it’s apparent that our representative institutions – Congress and the courts and yes, even the press – appear to have cowtowed completely to our new overlords. I'm not ordinarily a fan of mob violence, but I'm beginning to think it is the only responsible option. Somebody's got to grow a pair around here.

Cheers,

Friedrich

P.S. I'd love to think that our new president and his administration will deal with all this in a less banana-republican way, but at least one of his early steps, the appointment of Rahm Emanuel as chief of staff, has me very, very worried.

With Rahm as a former director of Fannie who took large sums of money from Wall St., expect to see more of the same.

Posted by: Tupac Chopra on November 12, 2008 6:18 PM

The thievery and self-dealing are so overt and outrageous that it's hard to formulate a response.

The Karaoke Queen said it best: "They're ripping us off right in front of our faces."

Stoning, tarring and feathering... well, these seem like good responses... but I'm too old to lead the mob.

No, Obama isn't going to be better. He's buried in this shit up to his neck. Along with ACORN, he led the way in pushing the subprime mortgage scam. Since he played such a major role in precipitating this bizarre heist, why would he be a likely suspect for fixing the mess?

The best way to steal is to gain the reins of government and legitimize your method of theft. Both parties are in on this. The bailouts are just a continuation of the scheme.

Posted by: Shouting Thomas on November 12, 2008 7:40 PM

I would really like a lot more accountability on all this stuff. In March 2008, the Fed issued a $29B loan against mortgages and derivatives held by Bear Stearns so the remnant of BS could be merged into JP Morgan Chase. (JPMC was going to pay $2/share - down from $93 in Feb 2008 - but after the shareholders sued, paid $10.)

Supposedly the securities in question were really worth about the amount of the loan - perhaps more - but were just "illiquid"; they would be sold off over time and the Fed would be repaid on the loan.

Maybe that was true, maybe it wasn't, But I have seen no results published. The entire transaction fell off the screen. I want to know: have any of those securities been resold, and for how much compared to what was loaned against them? How much, if anything, has the Fed been repaid?

The same sort of questions apply to AIG.

I can see having a special body with power to intervene in liquidity crises and such as necessary. But ISTM that there should be complete reporting of everything that happens: not only outlays during the crisis, but redemptions afterward; with a clear statement of what discounts and "haircuts" were applied, if any.

BTW, FWIW I heard this weekend about the room where big interbank loans are processed - which went from hundreds of transactions a day to almost none, and is back to normal. So maybe there was a real "mechanical" problem that had to be addressed quickly.

Posted by: Rich Rostrom on November 12, 2008 8:49 PM

Enduring, big government, fueled by your taxes, will definitely make a comeback next year, if not sooner.

Posted by: Bob W. on November 13, 2008 12:17 AM

As a right wing bastard I'm no friend of the Left. So then its with a fair degree of objectivity that that what's happening right know is junta economics.

The Bush administration is damn well corrupt, but do do remember people that this idiocy could not have happened if the senate stood its ground.

The Anointed One approved of this idiot scheme. More fun ahead.

Posted by: slumlord. on November 13, 2008 1:13 AM

Nice rant. It's quite a moment, isn't it? I like Slumlord's "junta economics" too, and will be using it in future small-talk sessions with friends, who will be dazzled.

Posted by: Michael Blowhard on November 13, 2008 8:04 AM

have no fear. it seems that we'll be bailing out the auto companies soon. According to Tom Friedman, GM CEO said that global warming is a crock of shit... That's the sort of company we need to be helping in the 21st century. Ouch--my brain!

Posted by: Robert Nagle on November 13, 2008 10:18 AM

This one feels big, big, big. The last two major hijackings of the US constitution were accomplished by Lincoln and Roosevelt. O'Bama reminds me of both; indeed, he takes pains to do so. His creepy thirties-style posters feel heavy-handedly social realist WPA/collectivist, and he made a pointed reference to Lincoln, whose long-winded biblical rhetoric he constantly echoes, during the Chicago victory speech.

Swell handle, Tupac Chopra.

Oh, and by the way - at risk of impeaching any credibility I might have - global warming IS, in all probability, a crock of shit, Robert. Be that as it may, I hope GM dies without any more money being poured into it by US taxpayers.

Posted by: robert61 on November 13, 2008 3:54 PM

Also, maybe I'm the only guy around here who watches Entourage, but how reassuring is it that O'Bama's chief of staff is Ari Gold's big brother?

Posted by: robert61 on November 13, 2008 3:56 PM

This situation kind of makes you think that you don't really run anything, doesn't it? Kind of scary, huh?

Just think, we just had an "election" and over 95% of the public doesn't have a clue that this is happening, or what it means. Yeah, we're the people who really run the country!

The people who run things don't run for office. They just buy off the people who do. The cookie jar has been open for a long, long time. Its just that the stealing now seems so huge and desperate--kind of like something big and bad is around the corner, and everybody's trying to grab what they can before its all gone.

You can take your pitchforks out into the street if you want, but you'll be just like those little guys in Iraq who are getting blown to bits trying to defend what's left of their country and their families. It can't happen here--oh really? Why, because the oligarchs love us? It must be tough love, I guess.

Remember, this is just the beginning. there's lots more to come. stay tuned.

Posted by: BIOH on November 13, 2008 8:33 PM

There's no one to complain to who will respond to public pressure. In the last election, California Rep. Howard Berman ran unopposed. It wouldn't matter if 50,000 of his constituents emailed him or camped out in front of his office. All he ever needs to stay in office is 1 vote. He has a permanent incumbency, if he wants it.

Posted by: Peter L. Winkler on November 13, 2008 9:56 PM

"Did some revolution occur and nobody told me?"
I agree with Garet Garet that FDR implemented Marxism within the nominal form of the US Constitution. What's happening now--looting the treasury while the dollar is still viable--is basically the death throes of the US system of government. For the economic/political future, look south of the border (maybe we'll be able to export our own underclass to Canada).

http://www.rooseveltmyth.com/docs/The_Revolution_Was.html

Posted by: James O. on November 17, 2008 5:04 AM

Perhaps when politicians and their enablers start dying violently and mysteriously, things will change,
because I sincerely doubt that any significant change will come without bloodshed. I'd rather it be the criminal perpetrators than the citizens who have had this nonsense foisted on them.
One man's terrorist is another man's freedom fighter.
John Ross and Vince Flynn have both related interesting accounts on how this could be done...

Posted by: narky on November 20, 2008 12:27 AM






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