Friday, September 19, 2008

The Foundations of U.S. Capitalism Shattered

Welcome to the brave new world of right wing socialism, folks

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.
"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.
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.

11 comments:

Fascists? said...

All the corporo-fascists are in the current government establishment. Democrat and Republican alike. This is a Washington Problem, a Big Government Problem, and it will never be solved if we keep voting in Big Government Republican(McCain) or Bigger Government Democrat(Obama). They are the same!

They are taking us down the same road, and that road will end in a revolution. I think Obama will get us to that revolution faster.

Oh interesting statistic. By the same method Obama uses to claim McCain Votes with "Evil War mongering G.W. Bush" 90%, it appears that Obama votes with the "far left liberal agenda" 97% of the time.

althepal said...

A few years ago, military planners got all excited over a new kind of fuel-air explosive known as MOAB — the Massive Ordnance Air Blast bomb, or informally, the Mother of All Bombs.

Welcome to Financial MOAB — the Mother of All Bailouts. All those rotten debts the finance sector has racked up? Uncle Sam will just take 'em off their hands. Voila, problem solved.

The price tag? Washington Post columnist Steve Pearlstein reckons "$200 billion to $500 billion, on top of the money already committed for Fannie Mae, Freddie Mac, AIG and Bear Stearns." Funny, there's that $200 billion figure yet again. (Update: Oh hell, let's just go for an even $1 trillion.) Feel free to place your own bets in the comments section.

How Uncle Sam proposes to pay for this, no one has adequately explained — because no adequate explanation is possible.


Financial MOAB

Curmudgeon said...

Rudi:

Oh, you must be joking. Why, I remember clearly how Republicans assured us all in 2000 and 2004 that if we elected Bush, we would finally have someone who was a CEO of a business before he became president, and so finally national economic policy would be managed with intelligence and competence and the resulting rising tide would lift all boats.

That's right, Rudi. Your party said that. Of G.W. Bush. So surely all this heart burning now must be exaggerated and unjustified, right?

althepal said...

"Once again the Fed has put the taxpayers on the hook for billions of dollars to bail out an institution that put greed ahead of responsibility and used their good name to take risky bets that did not pay off," said Sen. Jim Bunning, a Republican from Kentucky.

Bunning has introduced a bill that would strip the Federal Reserve of its authority to use taxpayer dollars to bail out private companies like AIG.

"The only difference between what the Fed did and what Hugo Chavez is doing in Venezuela is Chavez doesn't put taxpayer dollars at risk when he takes over companies. He just takes them," Bunning said.


Lawmakers Balk at Bush Administration's Approaches to Financial Crisis

K.M. said...

Barack Obama ranks second among donations from Fannie Mae and Freddie Mac among all members of congress since 1989.

Remember, in four years Obama has received more money from Fannie and Freddie than any other member of congress in the past two decades except for Chris Dodd, and Chris Dodd has been in federal office since 1975. Obama's only been in office since 2005.

He's second among donations from Lehman Brothers among all members of congress since 1989. The top executives at Lehman Brothers, or what was Lehman Brothers are bundlers now.

These are chief fundraisers for Obama, Ted Janulis and also John Ray. And by the way, one of them was a part of the head of Mortgage Capital at Lehman Brothers. Former CEO Fannie Mae, former Obama advisor Jim Johnson, he's the guy who was there on the committee to help select a vice president.

He also said that he received preferential treatment from Countrywide mortgage. Who else got preferential treatment from Countrywide mortgage? Chris Dodd.

Again it's the old boy network here. These guys are all buddies.

Now you have Frank Raines. This guy was in an accounting scandal. He cooked the books to the tune of $6.3 billion. You might ask yourself why is he not in jail. Why weren't the hearings done?

googleboy said...

Capitalism is Dead, SEC Bans Shorting, Fed’s I.O.U.S.A. Bailout Plan, Russia is Cheap, and More!

Dave M. said...

Thank you,K.M.

I was hoping someone would point out the people who would be advizing Obama, if he would be elected.

Curmudgeon said...

Just for the record, Frank Raines is not one of Sen. Obama's economic advisors. He has not been advising the Senator of the campaign on economic matters. That is yet another inaccuracy put out by a desperate Sen. McCain. He hasn't got facts to work with, so he has to make them up. As he did on this.

And we might also mention that that the men running McCain's national campaign all are Washington lobbyists. Not to mention McCain's long history of doing favors for his big money contributors, beginning with Mr. Keating, and continuing down through the present.

McCain has been a charter and fully paid up member of the Washington establishment for more than a quarter of a century. Lots of luck trying to market him as an outsider. Though you might pull it off. After all, the Republican Party successfully marketed G. W. Bush as a fiscal conservative. Anything's possible if you're willing to lie enough.

I love McCain said...

Thanks Curm the Neo-cons were beginning to bash the "liberal left" with all their wisdom. Most likely passed down through the media i.e. Fox news.

So is K.M. ready to vote for a third party candiate? Or will he/she just decide to bash the choices the media has selected and stay home?

Vote for the Red it has worked out so well!

Curmudgeon said...

Quote of the Day:

John McCain: "Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation."

Vote Red it works great said...

We need better health care not more insurance.

My mother has insurance through a local hospital but is scared to go get a standard checkup.

That is just F&%^$*&^ Wrong.

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