We just watched Treasury Secretary Henry Paulson's morning press conference on financial news channel CNBC. Yesiree, the scuttlebutt we've been hearing the past two days is true. The Treasury Department and FED will be burning the midnight oil over the weekend, working on a scheme to clean up the bankrupt banking industry's balance sheets, by forming a new government entity to buy up all the bad paper held in the so-called private financial sector. Rather than having these bad loans "clogging" up the works (Paulson's own words), the geniuses at Treasury and the FED will form a giant new sucker corporation to take this embarrassing toxic debt off the financial sector's hands once and for all. And who will be the owner of this new sucker entity, and the mountain of debt which will be dumped in its lap? The U.S. taxpayer, that's who.
We found several articles this morning which express the current sentiment of the more sensible elements of the financial and internet press on the topic of the ongoing financial meltown; and we'll reel them off with short text excepts below:
"Escape of the bankrupt":
The world's financial markets remain at the eye of a perfect economic storm. The architects of this almighty financial sell-off? The banks themselves. The markets are in complete disorder, yet they remain unable to solve the situation themselves, and so go looking for a public sector bailout. Risk management, the buzz word of the financial markets since the collapse of Barings Bank in 1995, is clearly an oxymoron."America and China Joined at the Hip":
With the government now having spent over $800 billion in less than a year shoring up tottering financial companies that had become little more than casinos (and rigged ones at that), America is looking increasingly like China, a country where the state has been gradually getting out of the business of directly owning companies."The World As We Know It Is Going Down":
In fact, it really does look as if the foundations of US capitalism have shattered. Since 1864, American banking has been split into commercial banks and investment banks. But now that's changing. Bear Stearns, Lehman Brothers, Merrill Lynch -- overnight, some of the biggest names on Wall Street have disappeared into thin air. Goldman Sachs and Morgan Stanley are the only giants left standing. Despite tolerable quarterly results, even they have been hurt by mysterious slumps in prices and -- at least in Morgan Stanley's case -- have prepared themselves for the end.We've long suspected that the notion that the U.S. was a free market economy was one bad joke. By Monday, we'll have the proof. Welcome to the brave new world of right wing socialism, folks. The American corporo-fascists are now firmly in control.
"Nothing will be like it was before," said James Allroy, a broker who was brooding over his chai latte at a Starbucks on Wall Street. "The world as we know it is going down."
The mere rumor of a new RTC sent the stock market soaring. Why not? The US Government is telling the investors that they can keep the profits from any trades, but any further losses will get transferred to the taxpayers. It's like being in Las Vegas at the Blackjack table, and every time you get 21 or beat the dealer, you get to keep the winnings, but if you bust, or the dealer wins, they take the money from the bus boy cleaning the table behind you. Such a deal! What's not to like?
Unless you are that bus boy, of course.
