The last eight years we have been fed a load of b.s from the White House, the political establishment and the media over a host of issues from the Iraq war to the economy that has many people skeptical about the true nature of the current financial crisis or what CNBC's Erin Burnett called
"Economic Armageddon" yesterday.
Cunning Realist, himself an investment professional,
captures that dubiousness here:
Part of the public's skepticism is a natural reaction to the now-transparent language of deception and hysteria. When you've trafficked in mushroom clouds and Persian Hitlers for eight years, "imminent financial Armageddon" loses a bit of its edge. Hearing the administration and its media flacks suddenly and in concert (almost as if a memo went out, eh?) warn of a latter-day Great Depression and push this as "it's not a bailout, it's a buy-in" sets off alarm bells for anyone who's been sentient in recent years. Orwell's revenge, maybe...
That's it exactly - it feels like the White House, coordinating with the RNC, Drudge, Murdoch's FOX News/Wall Street Journal, and their shills in the rest of the media, are sending out a load of jive about potential Economic Armageddon to scare America into supporting a huge bail-out of Wall Street firms and banks that took huge risks and now want a safety net for them.
Notice that these same folks crying for $700 billion dollars to buy up bad debts and mortgages were the same folks telling us that the odious bankruptcy bill of a few years had to passed into law so that individual bankruptcies would be harder to come by for Americans, even those in financial trouble due to medical bills.
They were also the same people telling us the "Bush Boom" was the best story never told while only the top 5% of the country made any economic gains throughout the past eight years.
It's funny how that works - the big guys who scored big-time the last eight years get the bail-outs while the little guys, the ones who didn't score big-time the last eight years, get the shaft - even if their debts came from enormous medical bills, lack of medical insurance, etc.
In the meantime, the guys who created this mess, the smarmy financial CEO's and crooked hedge fund managers,
all seem to be getting out with golden parachutes, as the cliche goes:
the seizure and the deal with JPMorgan came as a shock to Washington Mutual’s board, which was kept completely in the dark: the company’s new chief executive, Alan H. Fishman, was in midair, flying from New York to Seattle at the time the deal was finally brokered, according to people briefed on the situation. Mr. Fishman, who has been on the job for less than three weeks, is eligible for $11.6 million in cash severance and will get to keep his $7.5 million signing bonus, according to an analysis by James F. Reda and Associates. WaMu was not immediately available for comment.
No wonder congressmen and congresswomen were receiving calls 100-1 against this bail out bill. People are pissed off that at the same time all the usual hysterics are declaring mushroom clouds over Wall Street and Economic Armageddon if taxpayers don't write a $700 trillion check to them, the WaMu CEO is jumping from his sinking ship with almost $20 million for a couple of weeks work.
And yet, some people who are not part of the Bush/Greenspan/Murdoch team of hysterics,
are saying we really do need this bail-out bill to pass or the consequences will be dire:Everywhere you turn, focus is fixated on the financial crisis and the merits of proposed solutions. We discussed the shifting structure numerous times—Martial Law for the Markets, Back in the U.S.S.A.!, Shock & Awe—and offered time and price are the only true solutions for what ails us.
The caveat in allowing that natural process to take place resides in the DNA of the disease. As a card-carrying free market guy—someone who built several careers on the backbone of capitalism—I would like nothing better than to see the markets self-correct.
As a derivatives trader of 17 years however—someone who earned his stripes at Mother Morgan (MS), ran a multi-billion dollar derivative portfolio and was president of a $400 million hedge fund—I understand the profound consequences of letting them do so.
We live in a finance-based economy, one that is tied together with upwards of $500 trillion notional derivatives. Allowing institutions to fail—in many cases, deservedly so—would set off a chain reaction like dominoes laced with dynamite that would suck any corporation with finance-based operations into a cataclysmic abyss.
That list could conceivably include the likes of General Motors (GM), General Electric (GE), Target (TGT), Ford (F) and yes, JP Morgan (JPM), Bank America and Citigroup (C).
In other words, it would be game over, freeze and seize, complete chaos.
Scary stuff - but words like these lose their meaning after so many other "crises" these past few years where we were told we had to act within 48 hours or the world would end. The fact that the Dow is up over 200 points as of 10:10 AM and world markets didn't collapse overnight also leads me to be skeptical of the need for a bail-out.
It seems to me the boys on Wall Street and in the corporate board rooms want to have taxpayers take their bad debts off the books for them so that they can start with a clean slate and DO THE WHOLE THING OVER AGAIN.
To paraphrase Atrios, the Wall Street boys are sad the party is over and they want the punch bowl back so that can restart the party.
Stories like the $20 million severance packages to the WaMu CEO for a few weeks' work surely don't dispel this feeling do they?
In the end, the Congress will probably pass a bail out bill by the end of the week, the markets will be back up on the news, the boys on CNBC and elsewhere will be saying we've finally hit bottom in this (how many times have we heard that from the supposed "experts") and then in a few more weeks the credit market will seize up again and we'll be told we need to write another $___ billion dollar check or the world will end.
And in the meantime, what is all this printing of money at the Fed going to do to price stability in the future? So far we have fought a war in Afghanistan and a war in Iraq, financed the Bush tax cuts and spent $1.3 trillion dollars on bailouts of Bear Sterns, Fannie & Freddie, AIG and perhaps the bail out bill and put it all on the nation's credit card.
Isn't that kind of debting the behavior that set this financial crisis into motion in the first place?