In a classic example of how Washington works our government has just
shown us how to get things done. Wall Street, in a paroxysm of self indulgence
parlayed share holders equity, counterparty funds and investor money into one
of the greatest busts in financial history. Billions upon billions were
invested in what might well have been termed, in another time, in
another place, as enough 'luft-papier' to fill myriad Zeppelins whereas here better
known as subprime loans and mortgages, Collateralized Debt Obligations,
or simply "junk"
But hey, don't worry. To make good all that "junk" there is a lender, or
better put, spender of last resort and that's us, the public and its Treasury.
If you have enough access, enough influence, enough well connected
friends in Washington, help is on the way. The keepers of our Treasury,
our Federal Reserve stand ready to dole out our treasure to keep our
drunken sailor friends on Wall Street on the high, and keep those slightly
tarnished golden parachutes sailing in the wind. Yes, a sacrificial lamb was
needed to exculpate the Street's sins and set a public display of penance and
punishment, and Bear Stearn's, Chairman Jimmy E. Cayne, sad for his
employees, pulled the short straw.
The Federal Reserve has mounted a sweeping intervention counting into the hundreds
of billions. It has changed the ground rules of its mandate by opening its
discount window, for the first time in history, to investment banks in
order to deal with the disaster. And just as well they did and do, because
Wall Street would have taken all of us down with them. Correction, we
would have plummeted down while those nimble golden parachutes would
have provided a soft and cushioned landing to the Street's top honchos.
While Washington was busily coming to the aid of their well connected
friends another constituency in this nation also asked for help. Those
distributors of heating oil, fuel dealer groups from Maine to Massachusetts,
New Hampshire, and on, responding to the pleas of their customers savagely
impacted by low temperatures and resulting low inventories and the high price of heating oil especially in the Northeast, were petitioning that outpost of the oil industry, our Department
of Energy, to release stockpiles from the Northeast emergency reserve.
According to Reuters the U.S. Department of Energy had declined to
By comparison, unlike Wall Street, the plight of heating oil users is not a
self inflicted disaster, but the culmination of this government's energy policies
that have indeed been an unmitigated disaster not only for those
dependent on heating oil but for the nation altogether.
Well you see, releasing product from the 'emergency' reserve would have
two consequences. It would be of immediate help to a beleaguered segment
of our citizenry, and have a salutary impact on oil and downstream product
prices. Well we can't have that. While in the Wall Street scenario there is
no constituency for keeping Zeppelins afloat, here the oil industry through
their friends in the Administration and Congress have successfully sought
to keep the price of oil and oil products high and higher still. If you ask
those representing us in Washington, they will deny it of
course, but how else did we get to where we are, transferring our wealth
to oil interests both domestic and foreign.
And any way, those people in towns, on the farms, in the shops of Maine,
New Hampshire, Minnesota, North Dakota and on, well heck, they don't visit Washington
much, after all.