"Pay should be for performance, not for failure. But we need the system to work, so the reforms need to come afterward." --Treasury Secretary Henry Merritt "Hank" Paulson Jr.
Like the early days of the Coalition Provisional Authority, it's a thieves' jamboree. Cement trucks full of cash, just back up your wheelbarrow and catch some. The difference here is that we are about to give away in one week more than the CPA gave away over the course of years. The LA Times Sunday print edition at least had the decency to use the numerical form:
Bailout tab: $700,000,000,000
Who decides who gets, who doesn't? A guy named Hank. Do you think that Hank's friends and former associates will miss out on the bonanza? Please. Can you think of any financial, insurance, investment firm that won't benefit from the River of Zeros? Please. Look at Hank's career arc: John Ehrlichman to Goldman Sachs. Hank's personal net worth is estimated by Forbes as "over $700 million." When, do you guess, was the last time he had to decide between paying the rent or filling the tank with gas?
Hence: Hank's Triage: are you a firm that made disastrously shortsighted bets on bad financial instruments? Queue up: we'll make you whole. Are you a middle-class borrower (mortgage, HELOC, credit cards) up shit creek? Go away: we need a clean bill.
Says the Daily Telegraph, "Treasury Secretary Hank Paulson has intimate relations with the Chinese elite, dating from his days at Goldman Sachs when he visited the country over 70 times." Who do you think will be left holding the bag--bondholders in that country, or homeowners in ours? Two guesses. First one doesn't count.
And of course, there's someone backstopping Hank. Reviewing his decisions. Making sure, you know, that the seven zero zero zero comma zero zero zero comma zero zero zero comma zero zero zero of our dollars Hank gives away will be spent wisely, yes? Well, no. Here's the (aptly named) Section Eight of Hank's Proposed Plan:
Sec. 8. Review.Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
The chutzpah of this enterprise is something we've seen many times before. What's unprecedented is its magnitude.
Follow Howard A. Rodman on Twitter: www.twitter.com/ivanjohnson
re iran...still 4 months to go. gutting the treasury isn't the last wish on this administrations list...
I have an interview I kept from TV Guide from probably '73 or '74 conducted by Nora Ephron with you and Harlan Ellison and two other people I can't remember (it's somewhere in my files at the moment, i.e. lost within ten feet of me). You all had great insight into the world of teevee and the mentality of the corporate executives. "They don't read" was a memorable line, just as the last comment, made by you I believe, that once a year you write something of quality that has deep meaning for you, and it goes nowhere.
Glad to see you're as fiesty and dedicated as ever. Your words have enhanced my life.
Fiestiness seems to run in the family, what can I say?
Again: thanks.
Good writing runs in your family, as well.
http://calculatedrisk.blogspot.com/2008/09/bailout-proposal.html
Please send an email to your congressmen and senators..... This will be disastrous.
Peace and Be Well
(B4Now blogspot)
"It is difficult to get a man to understand something when his job depends on not understanding it."
- Upton Sinclair
We all make the bed we must lie in
I'm telling you this and it's true
And if someone is kicking, it's me dear
And if someone gets kicked, well that's you
By Nouriel Roubini
Published: September 21 2008 17:57 | Last updated: September 21 2008 17:57
Last week saw the demise of the shadow banking system that has been created over the past 20 years. Because of a greater regulation of banks, most financial intermediation in the past two decades has grown within this shadow system whose members are broker-dealers, hedge funds, private equity groups, structured investment vehicles and conduits, money market funds and non-bank mortgage lenders.
Like banks, most members of this system borrow very short-term and in liquid ways, are more highly leveraged than banks (the exception being money market funds) and lend and invest into more illiquid and long-term instruments. Like banks, they carry the risk that an otherwise solvent but liquid institution may be subject to a self�fulfilling and destructive run on its �liquid liabilities.
But unlike banks, which are sheltered from the risk of a run " via deposit insurance and central banks" lender-of-last-resort liquidity " most members of the shadow system did not have access to these firewalls that �prevent runs.
A generalised run on these shadow banks started when the deleveraging after the asset bubble bust led to uncertainty about which institutions were solvent.
http://www.ft.com/cms/s/0/622acc9e-87f1-11dd-b114-0000779fd18c.html?nclick_check=1
Maybe it's The Bank China,