Outa Sight & Outa Their Minds
The good news for ordinary American taxpayers just keeps coming. Monday’s formal announcement of Treasury Secretary Geithner’s oft floated It-Ain’t-Really-a-Bailout Plan thrilled Wall Street.
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The good news for ordinary American taxpayers just keeps coming. Monday’s formal announcement of Treasury Secretary Geithner’s oft floated It-Ain’t-Really-a-Bailout Plan thrilled Wall Street.
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Why wouldn't it? Not only will it turn the losers into winners at the rest of the country's expense. It will create a brand new game for the fine folks that gave us those other great games, like Credit Default Swap.
If you don't have the time to figure out how they got in our pocket again, here's a short explanation.
At the heart of Geithner's plan is the so called "partnership" between private and public investors. If you don't have a program, fat cats are the private, and the taxpayers are the public part. And what a partnership it is.
The fat cats put up thirteen percent, (who in the world came up with that lucky number!) and then we loan 'em the rest. Then they buy toxic assets from banks that want to sell at an auction of some kind. If the mortgages that underly the securities they buy pay off, the fat cats win.
If they don't the fat cats lose their little piece. But then we lose the big part because these are no recourse loans we've made. That means we can't go after the fat cats to repay us.
So there you have it, the upside for them, the downside for us. What a deal. The boys at Enron couldn't have thought up a better off the books scheme. And we're their partners! But it ain't a bailout.
Think about it a little more. Who's bidding at this auction? Well you can bet a lot of the folks that are holding these toxic assets, or their agents.
Why? Because if they bid the price of their toxic junk up to what they're carrying 'em on their books for (or more), bingo, the most they can ever lose is the thirteen percent. They're looking at losing a lot more if they don't bid 'em up.
And as a bonus, they get the cash we put up now. Makes coming up with their little piece pretty easy, huh?
So there you have the Geithner Plan in a nutshell.
Bail the fat cats out of 87% of their problems and kick the can way down the road, and hope the taxpayers won't remember they bailed these guys out and gave 'em a big shot in the arm at the same time so they can buy new planes, redecorate their offices and pay themselves some more bonuses.
Oh right; they're going to use the money for new loans to folks who can't make their car payments, pay the mortgage and cover the minimum on their credit cards.
This is nothing more than an elaborate "Hail Mary" play. Maybe, just maybe the economy will miraculously recover. Joe the plumber and all his pals will be going back to work right a way.
And hopefully inflation and deficits won't swamp the sinking ship of state while they're frantically bailing.
Don't you just wish there was a program like this for you in this Obamanation?
Comments by Readers
Doug Karlberg
Mar 24, 2009It makes me sick to my stomach to think about how they are treating us like we are stupid, and cannot figure out that…
... the game is rigged.
Doesn’t really matter which party is in charge; Does it?
At the core of this mess was a political desire to get more people in their own homes. For a brief moment people thought that they were rich as their homes sky-rocketed in value, like no other time in history. Home-owners and government spent like it was real, but it was really an illusion.
And Congress publicly berates those who were paid extravagant sums, for poor performance.
Congress should get a mirror.
~
John Servais
Mar 24, 2009Obama is putting loyalty to Geithner above doing the right thing. He is helping Wall Street with our taxpayer dollars. He is stealing from us and giving the loot to Wall Street.
I strongly supported Obama and still hold out hope. I want him to succeed. But he seems to be naive and afraid to break with the powers that be. If his toxic asset purchase works it will be simply because we folks who make much less than $250,000 - we who make less than $50,000 - are giving our money to the very wealthy bankers and wall street brokers. Not to mention the taxes on us and our children for decades to come.
And they will then set us up again and again. The market failed itself via their greed - and the market must correct itself or it will never learn. All is confusing - and trillions are being spent helter skelter in blind attempts to fix it.
I have left my opinion at the White House website - and urge all to leave their comments there.
http://www.whitehouse.gov/contact
This is sad and tragic. Very sad.
g.h. kirsch
Mar 24, 2009I would like to provide an additional remark. While I was skeptical of the unknown, and reticent because it was so hard to understand where Obama might weigh in, I still hope he will figure out his and our futures more intelligently.
That being said, I fear his immersion in the Harvard club will handicap him horrendously. What a sad joke that the first black president (I assume there will be more) may turn out to be an “Uncle Tom.”
Now is the time for all good Obama supporters to come to the aid of their country.
It is critical that our President understand that the ordinary people of this country will remain behind him, should he go out on the proverbial limb and put their economic ahead of his political future.
Similarly, it is imperative that our Congressional representatives know that their political lives are on the line.
Please do not assume we will just muddle through. These are events that will easingly overwhelm us and render the experiment of our founders mute.
Craig Mayberry
Mar 24, 2009It is his supporters on the left that need to call him on this one. This could well define his presidency and maybe he makes up for it on other fronts, but this seems to egregious that nothing else may matter. For all the talk about transferring wealth from the rich to the poor/middle class, this is an awfully large transfer of wealth to the rich. I am still amazed the the mainstream media continues to play the game and not ask more pertinent questions.
It may also be time to get more serious about discussing plan C (Bush didn’t work, Obama is not looking good, what is after that?)
Tip Johnson
Mar 25, 2009Feel like structural change is needed? There are examples of economies that subordinate capital to social aims. The structure of the Mondragon Cooperative Corporation, one of the most successfully productive economies of our time is
HERE
Craig Mayberry
Mar 25, 2009Tip,
This is like the 3rd or 4th time you have brought up on the Mondragon Co-op idea. It is an intriguing model and would work much better in many situations to what we have today. It is a much more local solution and puts the governance authority in the hands of those that it rightfully belongs to- the workers. I have a couple of editorials I need to write, but one is along this line. Way to frequently we turn to government and multinational corporations to solve the problems when the real issue is we overuse those institutions and underuse co-op’s and other models that are local and more effective.
g.h. kirsch
Mar 27, 2009For those who just think I’m the one out of my mind, you might enjoy the article by Wall Street economist Michael Hudson at: http://www.counterpunch.org/hudson03272009.html