Bill Moyers Speaks with NYT’ Gretchen Morgenson and Floyd Norris
Saving Capitalism from the Capitalists:
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September 19, 2008
BILL MOYERS: Welcome to the JOURNAL. The news this week drove us to pull THE GREAT GATSBY off the bookshelf and read what F. Scott Fitzgerald wrote of his protagonists, the Buchanans: "They were careless people, Tom and Daisy — they smashed up things and creatures and then retreated back into their money or their vast carelessness or whatever it was that kept them together, and let other people clean up the mess they had made."
TREASURY SECRETARY HENRY PAULSON: We must now take further, decisive action to fundamentally and comprehensively address the root causes of our financial system’s stresses.
BILL MOYERS: The news caught everyone off guard, including my colleagues and me. For technical reasons we had to record our broadcast last night, with guests who have a deep understanding of the big picture. We decided to go on with the broadcast even as the news continued to pile up, because of the light our guests shed on the roots of the crisis.
Gretchen Morgenson writes the MarketWatch column for the Sunday NEW YORK TIMES.
Floyd Norris is the paper’s chief financial correspondent.
Welcome to the JOURNAL.
FLOYD NORRIS: Thank you.
BILL MOYERS: You both have been at this a long time. Is this the biggest story like this that you’ve both covered in your long careers?
GRETCHEN MORGENSON: I think this is the biggest story in eighty years. This could be the biggest story since the Depression. And I know I’m not allowed to say the "D" word, because that makes everybody really afraid. But this is the single, you know, most traumatic financial crisis I’ve ever seen.
BILL MOYERS: How so? Why? What’s at stake?
GRETCHEN MORGENSON: Because it affects everyone. It is now possibly bleeding into the economy. We’ve had a fairly strong economy up until now, which has been a godsend, while this incredible turmoil is taking place. If banks are stopping lending, which they appear to be doing, then that’s going to affect the economy, to make the downturn. So it is affecting everyone.
There was a lack of accountability where a banker didn’t care whether the loan was repaid. And the Wall Street firm that sold the securitization trust didn’t care if it ever got paid back, because they were happy with their commission. The broker making the loan didn’t care, because he got, all the way up the ladder to the CEOs of these companies, who are allowed to walk away from a financial cataclysm with huge payments.
BILL MOYERS: Should they be required to return the loot?
GRETCHEN MORGENSON: Yes. Why not? Claw that back. But does anybody ask for that? No.
BILL MOYERS: You were here a year and a half ago. Remember that? But did you have clues then that this whole thing was going to become unraveled?
GRETCHEN MORGENSON: The problem is that this is a de-leveraging. What we’re going through now is we have to eliminate all the debt that has been amassed by not only the consumers with their credit cards, their mortgages, et cetera, their car loans, but also major corporations and Wall Street firms who were leveraging themselves, borrowing money to make their speculative bets. And now, those bets have gone bad, and they have to pay those debts back. You see, the assets shrink, but the debt doesn’t. And so, you have to pay that debt back. And that’s a difficult thing to do.
But we still, the AIG bailout proves that we don’t know how bad things are at these firms. The idea that AIG could fail over a weekend, and where the government can’t go through its books in an orderly fashion to see what it’s worth, but just has to throw money at it to make the problem go away, tells you we’re not anywhere near this.
BILL MOYERS: Well, AIG and Lehman, they kept assuring investors everything was all right, assuring the public everything was all right. Were they lying?
FLOYD NORRIS: Well, I’m sure they believed it.
BILL MOYERS: You really think they did?
FLOYD NORRIS: I believe Lehman believed it. Lehman, consistently during this, has believed that the bottom was upon us.
So they were buying as this started down last year, taking advantage of what they believed to be a temporary ridiculous decline. And they never quite realized that they were wrong. The prices on many of these assets now probably are ridiculously low. But buying them on heavy leverage is risking if you’re a little wrong, you can die. And that’s what happened to Lehman.
GRETCHEN MORGENSON: Well, the problem is that now, everything in our financial markets is super-interconnected. And so, one failure has the potential to push over other dominos.
BILL MOYERS: But why AIG and not Lehman?
GRETCHEN MORGENSON: Because AIG was so enormous, it’s almost a paradox. It’s almost perverse. Lehman was not big enough in the derivatives market.
That has counterparties, where if you fail, then they might then push over another domino. Lehman was not large enough in those areas. AIG was enormous. AIG had those derivatives from European banks, which may have failed. And so, you see, it’s a worldwide problem.
FLOYD NORRIS: To let AIG go under now would have created an awful lot of problems for an awful lot of other institutions. And the government doesn’t have any way to know exactly who and how much. And they were scared. And they probably were right to be scared.
BILL MOYERS: Let me ask you about one telling anecdote, at least, telling to me. The Secretary of the Treasury, Paulson, calls the CEO of AIG and says, "You’ve got to go. Pack your bags and leave." That’s usually a decision for a board of directors.
GRETCHEN MORGENSON: Well, you see, the problem is the government owns it now. With the $85 billion loan, they have taken over eighty percent of the company.
BILL MOYERS: They nationalized.
GRETCHEN MORGENSON: Okay. It’s been nationalized.
So Paulson is the new chairman of the board. And he’s saying you’re gone, you’re gone.
BILL MOYERS: You called this on your blog yesterday, "21st century socialism."
FLOYD NORRIS: That’s right.
BILL MOYERS: How so?
FLOYD NORRIS: The government is nationalizing companies. They nationalized Fannie Mae and Freddie Mac. And that made a little bit of sense, since we’d always thought Fannie Mae and Freddie Mac had an implicit government guarantee, whatever that meant. And now they’ve nationalized AIG. They own eighty percent of the company. They have lent money to the company at very strict terms.
For this company to somehow pay that loan back will require amazing competence in managing things. And I don’t think anybody expects them to ever do that. They’re probably going to liquidate AIG. It amazes me. I’m not sure it was unnecessary, as I said. But I can only envision what the right wing would be saying if a liberal Democrat had decided to nationalize the biggest insurance company in America. I don’t think you’d be hearing a lot of praise for it.
GRETCHEN MORGENSON: The ugly thing about this is this is privatizing gains and socializing losses. So when things are going well, the managements make out, the shareholders make out, the counterparties are fine. All the private sector people do well. But when something goes wrong, when decisions are made that turn out to be bad decisions, the U.S. taxpayer has to take on the problem.
And there’s something very wrong about that. Because all of those people that made all that money are running off here into the distance with the money, carrying it in their bags. And the United States taxpayer is on the hook.
FLOYD NORRIS: But there’s another aspect of that, which is the biggest risks were taken in the derivatives markets, and in the markets, what I call the shadow financial system. This is a completely unregulated financial system that grew up aside our fairly heavily regulated financial system. And the government decided it would not pay any attention to it, there was no need for regulation. Alan Greenspan was very adamant on that. He believed that the derivatives they were trading would shift the risk away from the banks he was supervising, and to institutions which could better withstand it.
But he had no facts to prove that. And it turns out a lot of it ended up at the banks, which is why the banks are in trouble. And a lot of it ended up other places. And the ability to shift the risk meant that more risk was taken.
BILL MOYERS: Here’s what I don’t understand about AIG. Now, you say it’s been nationalized. And the company agreed to be nationalized, in effect, because it didn’t have the cash that it needed, right? Didn’t have the cash.
FLOYD NORRIS: Right.
BILL MOYERS: So it had to go to the government. Well, why were there no banks, or no group of banks that had the cash for AIG? Why did they have to come to you and me and the other taxpayers?
GRETCHEN MORGENSON: Well, right about now, banks are also in a very difficult spot with their capital. They, too, have absorbed enormous losses from mortgage-related securities, commercial real estate. They, too, are facing capital crunches. And so, they need to shore up their capital base themselves.
FLOYD NORRIS: But I think they could have done it if they’d had confidence that AIG was a good candidate for a bailout.
BILL MOYERS: And why didn’t they have that confidence?
FLOYD NORRIS: Apparently, when they went through the books.
BILL MOYERS: They, the government? The banks?
FLOYD NORRIS: Both.
BILL MOYERS: How does this compare to the last big scandal like this, in which, after the savings and loan industry imploded, the taxpayer had to come riding to the rescue with billions of dollars to clean up the mess. Is this in any way comparable to that?
GRETCHEN MORGENSON: This is worse than that I think, Bill. Because, for instance, it’s way more complicated. The S&L crisis was largely commercial real estate, and also multi-family homes. This crisis right now is single homes, one by one by one by one. Very difficult to buy up all those assets and then sell, them, and besides which, it is monumentally bigger.
FLOYD NORRIS: But one of the interesting things that’s going to be happening is the government now is going to have to decide for an awful lot of homeowners, do we kick you out of your house? Fannie and Freddie have guaranteed, and therefore, effectively own, many, many billion dollars worth of mortgages.
GRETCHEN MORGENSON: Trillions.
FLOYD NORRIS: Trillions, yes. And it will be up to them to decide, do we restructure this mortgage, do we give you a concession, or do we tell you to go away? The FDIC, which has taken over IndyMac, which was a large, irresponsible lender, is making those decisions right now on mortgages issued by IndyMac that IndyMac still owned.
So, yeah, it’s similar to the S&L crisis. It’s also similar, the S&L crisis, of course, became immensely larger because the government, principally the Congress, found ways to postpone it. They changed rules of accounting so that people wouldn’t have to recognize losses, and they could earn their way out of the situation. Well, you know, surprise. They simply lost their way into a bigger problem.
And there is a great temptation to do that now. We’re seeing lots of pressure to relax accounting rules for banks, so they won’t have to ‘fess up, that they’re underwater. And maybe, somehow, they’ll be above water if we give them some time. And maybe they will be, and maybe there will be a little farther under.
BILL MOYERS: I don’t know two reporters who’ve tried harder to understand this. But let me ask you to take off your journalist hat for a moment. You both obviously have some pension or retirement plan at the NEW YORK TIMES. Are you scared?
GRETCHEN MORGENSON: I’m very, I’m actually sick about it. I wouldn’t say I’m scared. But I’m kind of distraught at it, just because, not for myself, but for all the people out there who worked very hard, worked two jobs, trying to make ends meet, wanted to buy a house, got ripped off by some lender. I mean, you know, call me a bleeding heart. But I’m sorry. These people didn’t understand what they were up against.
FLOYD NORRIS: You know, one of the trends over my lifetime is that people have been forced to take more and more risk. The, when I was young, most people had pension plans that worked. They, of course, had Social Security. Those pension plans said, we’ll pay you so many dollars a month.
Those kind of pension plans are vanishing. Instead, people were forced into 401ks. And they had to decide what investments to make. So we are more dependent on the state of the financial markets, this generation is, than most of our parents ever could dream of being.
BILL MOYERS: Are you scared?
FLOYD NORRIS: I’m worried, yes. This is completely unprecedented in my lifetime. I’m fascinated. Things have happened that I didn’t see coming and would have dismissed as unlikely. It was only a few months ago that I had Wall Street CEOs complaining to me that their stock prices were so low because the press was mean to them, and we didn’t appreciate what wonderful business strategies they had. And, you know, if they were cheap then, boy, they’re cheap now.
I’m worried about it. At the moment, Secretary Paulson is clearly scrambling. But that’s to be expected.
You know, we don’t fix the roof during the hurricane. We just try to deal with the winds. And once it’s over, we can discuss how the roof should be built.
BILL MOYERS: Next Friday night is the first debate between the presidential candidates. Think a moment, and if you had the option to ask the first question on this issue, what would you ask?
GRETCHEN MORGENSON: I’d like to know just what John McCain has in mind when he talks about reforming Wall Street. Because I think those are very easy words to throw out there, and people might respond to them. Because, of course, we all know that there is something broken and there is something that needs reforming. But just exactly how is he going do that?
FLOYD NORRIS: I’d like to hear the same thing. I would hope the candidates would avoid the easy denunciations of the greedy, rich Wall Streeters who are destroying the country, which we’ve heard from both of them. Because that doesn’t tell anything about what you’re going to do about it.
BILL MOYERS: Neither Obama nor McCain have any real economic experience. And both are now talking like reformers. "Let’s reform Wall Street," McCain said this week, after 24 hours earlier, saying that he didn’t think the taxpayers should bail out AIG. He changed his mind. Obama has been looking for that populist voice that he had back in March of this year, before he got the nomination, when he was talking about Wall Street greed. But both of them are now talking about reform. What’s the first thing that either one of them could do as president, if elected, that would convince you hard-boiled reporters who have been studying this a lot longer than the presidential or vice-presidential candidates, what’s the first thing they could do to convince you that they’re serious about this?
GRETCHEN MORGENSON: I would like to see them put some very tough cops on the beat at the SEC, the Securities and Exchange Commission, in the bank regulatory units. I would like to see, and I don’t care if they come from, you know, government. I want to see them with a CV that looks like they’re willing to take on the status quo and stand up to pressure and power.
FLOYD NORRIS: One of the interesting things is that you’ve had people at any number of government agencies in recent years, who did not believe in the function of the government agency. And you know, I agree with Gretchen. They need to put in some people who will be vigilant. They also need to put in some people who are smart enough to avoid the simple clichés of economics.
BILL MOYERS: Do you think it’s true that this crisis today is the result of a sustained ideological push, to let the markets do what they want and get the government out of the way?
GRETCHEN MORGENSON: I think that the free market idea, the free market sort of constant mantra that it would bail everybody out, or it would operate in such a smooth fashion you don’t need the government, was absolutely behind, you know, the last ten to fifteen years of what we’ve seen. And I think that we now seriously need to question that. And I’m very glad that if this crisis does anything, it will question that. In fact I feel like we’re kind of lurching from problem to problem, lurching from bailout to bailout. I just feel we’re shooting from the hip.
BILL MOYERS: Floyd Norris and Gretchen Morgenson, thank you so much for being with me on the Journal and talking about these issues.
FLOYD NORRIS: Thank you.
GRETCHEN MORGENSON: Thanks, Bill.
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September 22nd, 2008 at 12:43 am
Sorry, could not finish that farce. They lied. The F*CKING lied. AND, they should be tried for it. I had to quit before I became a screaming lunatic.
September 22nd, 2008 at 12:49 am
this is eerily like 2003:
we went through unprecedented events, and the administration tells us we need the patriot act & a war with iraq for our own good.
5 years later:
again, we have unprecedented events, and now we need the TAF, PDCF, TSLF, TARP (which is really the M-LEC/Super SIV with a different acronym), bailouts of FNM, FRE, AIG, BSC, the outlaw of shorting, etc. for our own good.
the first one ended badly.
something tells me the sequel is going to suck also.
every time we give them a blank check to preserve our “safety,” we get screwed.
September 22nd, 2008 at 1:09 am
At the end of the day, I guess the days of 99 to 1 leverage are over and the days of saving 20% to purchase a home are back. God Help Us!
Oh wait, that is how our grandparents built this great country. GOD BLESS AMERICA!
In all seriousness, the crux of this is that for many of us, our core value is to believe that the American Dream is to work hard, save your money, and leave your kids a better world. It is not to work hard, save your money, and some day the government will transfer it to those who didn’t or those who are simply too rich to fail.
In all seriousness, how many people feel better today about this country than they did two weeks ago?
I worry for my kids future every day….
September 22nd, 2008 at 1:15 am
For years, as a member of the House Banking Committee and now as a member of the Senate Budget Committee, I have heard the Bush Administration tell us how “robust” our economy was and how strong the “fundamentals” were. That was until a few days ago. Now, we are being told that if Congress does not act immediately and approve the $700 billion Wall Street bailout proposal these “free marketers” have just written up, there will be an unprecedented economic meltdown in the United States and an unraveling of the global economy.
This proposal as presented is an unacceptable attempt to force middle income families (and our children) to pick up the cost of fixing the horrendous economic mess that is the product of the Bush Administration’s deregulatory fever and Wall Street’s insatiable greed. If the potential danger to our economy was not so dire, this blatant effort to essentially transfer $700 billion up the income ladder to those at the top would be laughable.
Let us be clear. If the economy is on the edge of collapse we need to act. But rescuing the economy does not mean we have to just give away $700 billion of taxpayer money to the banks. (In truth, it could be much more than $700 billion. The bill only says the government is limited to having $700 billion outstanding at any time. By selling the mortgage-backed assets it acquires — even at staggering losses — the government will be able to buy even more, resulting is a virtually limitless financial exposure on the part of taxpayers.) Any proposal must protect middle income and working families from bearing the burden of this bailout.
I have proposed a four part plan to accomplish that goal which includes a five-year, 10% surtax on the income of individuals above $500,000 a year, and $1 million a year for couples; a requirement that the price the government pays for any mortgage assets are discounted appropriately so that government can recover the amount it paid for them; and, finally, the government should receive equity in the companies it bails out so that when the stock of these companies rises after the bailout, taxpayers also have the opportunity to share in the resulting windfall. Taken together, these measures would provide the best guarantee that at the end of five years, the government will have gotten back the money it put out.
Second, in addition to protecting the average American from being saddled with the cost, any serious proposal has to include reforms so that we end the type of behavior that led to this crisis in the first place. Much of this activity can be traced to specific legislation that broke down regulatory safety walls in the financial sector and allowed banks and others to engage in new types of risky transactions that are at the heart of this crisis. That deregulation needs to be repealed. Wall Street has shown it cannot be trusted to police itself. We need to reinstate a strong regulatory system that protects our economy.
Third, we need to address the needs of working families in this country who are today facing very difficult times. If we can bail out Wall Street, we need to respond with equal vigor to their plight. That means, for example, creating millions of jobs through major investments in rebuilding our crumbling infrastructure and creating a new renewable energy system. We must also make certain that the most vulnerable Americans don’t freeze in the winter or die because they lack access to primary health care.
Finally, we need to protect ourselves from being at the mercy of giant companies that are “too big to fail,” that is, companies who are so large that their failure would cause systemic harm to the economy. We need to assess which companies fall into this category and insist they are broken up. Otherwise, the American taxpayer will continue to be on the financial hook for the risky behavior, the mismanagement, and even the illegal conduct of these companies’ executives.
These are the last days of the Bush Administration, the most dishonest and incompetent in modern American history. It is imperative that, at this important moment, Congress stand up for the middle class and for fiscal integrity. The future of our country is at stake.
Sen. Bernie Sanders was elected to the U.S. Senate in 2006 after serving 16 years in the House of Representatives. He is the longest serving independent member of Congress in American history.
Bernie is the man with the plan!
September 22nd, 2008 at 1:30 am
Man,
This really sucks. I am listening to people actually believe the very same people that screwed us as they say all of this BS (don’t worry everything is going to be fine). Fine for who? All the rich elite criminals that have screwed us and our children. WAKE UP! We have had everything and then some taken from us are you really just going to sit there?
When bad men combine, the good must associate; else they will fall one by one, an unpitied sacrifice in a contemptible struggle.”
Or if you prefer,
All that is necessary for the triumph of evil is that good men do nothing.
Econ 101
September 22nd, 2008 at 1:58 am
The real question they should ask Obama/McCain is, how are you going to save the dollar? This is the REAL threat facing America.
They can save banks, insurance companies, and mortgage behemoths every single day but what does it really mean when the dollar isn’t worth wiping your bottom with it???
It’s utterly ridiculous to think that the American tax payer will pay for anything with play money. Actually, everyone should be celebrating that we financially engineered ourselves to death and now we only have to pay for it with worthless paper.
Disclaimer: Celebrations should only commence after you have purchased your fair share of gold.
September 22nd, 2008 at 2:06 am
Bit o’ the old Stockholm Syndrome with Gretchen and Floyd.
Moyers was starting to get a little peeved at their sycophancy, esp. when he asks them both why AIG just didn’t go to IBs for $85 billion and why the banks would not loan them $85 and why the government did. This exchange is priceless:
—-
BILL MOYERS: Here’s what I don’t understand about AIG. Now, you say it’s been nationalized. And the company agreed to be nationalized, in effect, because it didn’t have the cash that it needed, right? Didn’t have the cash.
FLOYD NORRIS: Right.
BILL MOYERS: So it had to go to the government. Well, why were there no banks, or no group of banks that had the cash for AIG? Why did they have to come to you and me and the other taxpayers?
GRETCHEN MORGENSON: Well, right about now, banks are also in a very difficult spot with their capital. They, too, have absorbed enormous losses from mortgage-related securities, commercial real estate. They, too, are facing capital crunches. And so, they need to shore up their capital base themselves.
FLOYD NORRIS: But I think they could have done it if they’d had confidence that AIG was a good candidate for a bailout.
BILL MOYERS: And why didn’t they have that confidence?
FLOYD NORRIS: Apparently, when they went through the books.
BILL MOYERS: They, the government? The banks?
FLOYD NORRIS: Both.
—
Basically, Norris is saying that the banks were not fool enough but the taxpayers are.
Thanks Floyd.
Nice knowing who you think you work for.
Stockholm Syndrome.
September 22nd, 2008 at 2:08 am
This is all going to fail anyway. Paulson is trying to monetize the shadow banking system, and it just can’t be done, the money simply isn’t there.
All this can do is make the dollar worthless.
September 22nd, 2008 at 2:30 am
sharing: Numerian from the Agonist
Dear Senator Obama-
Chances are most if not all of the major commercial and investment banks are insolvent. Not one of them is opting out of the do-not-short list, and they don’t seem to have the confidence in their survival to opt out of the L3 asset swap program Secretary Paulson is proposing.
It is also very likely that acutely dangerous systemic risk already exists, not merely from direct lines of credit among the banks, but especially from credit default swaps, which if activated by more than one large bank default would probably bring down many others. Remember, though, that this systemic risk is highly concentrated in the top 25 or so banks in the world, and does not jeopardize the 6,000 other community banks in the U.S.
Third, it is also highly probable that as this recession worsens, and as housing values continue to sink, forcing more foreclosures, the large banks will be even closer to collapse.
Having worked for many years in the banking industry and been closely involved with risk management and derivatives, I can tell you that it looks like catastrophe is already here.
What Sec. Paulson wants you to believe is that catastrophe is approaching, but it can be averted if only Congress acts urgently to give him the extraordinary authority he is requesting. The implication is if you don’t give him $700 billion in borrowing authority within a week, markets will collapse and it will be all your fault.
We’ve seen this drill before, with the Patriot Act and with the Iraq War authorization. The scare tactics, the urgency, the implied threat of blame for any failure – this is what the Bush administration does. Some of you in the Senate were able to stand up to this pressure, and that type of strength is desperately needed now.
If insolvency is here now for the big banks, the last thing you want to do is throw $700 billion of money that is not yours at bailing out the banks who created this disaster. You’ll need every bit of that money to protect the taxpayers and their deposits in these banks when these financial companies are thrown into the bankruptcy courts. You’ll need that money to make sure consumer deposits are protected with insurance, and you’ll need it to keep the healthy parts of these banks that deal with consumers and businesses functioning until they come out of bankruptcy.
And forget about comparing Paulson’s plan to the RTC. These L3 assets aren’t homes, condos, or commercial real estate that can be easily sold at the right price. They are bits of paper giving the bond holder the right to some small portion of thousands of mortgages, a right that is shared with all the other investors, who are required to agree on what is done with foreclosed properties in the pool. This is one of the reasons no one wants to buy this stuff, and no one will for many years until it is crystal clear what the final losses will be.
Once you give Paulson the authority he seeks, he will buy these securities at 65 cents/dollar, then quietly auction them off at a nickel each. It will be “unfortunate but necessary” to revitalize the banking industry, even though you will discover the banks won’t be lending after this is all over to any but the finest credits. You will have rewarded the banks for their calamitous decisions, stuffed the taxpayers with huge losses, squandered your remaining ability to shore up the FDIC, not prevented the big banks from collapsing anyway, done nothing to help the community banks that will constitute the new banking system in this country when these problems are solved, and in the end made the situation much worse.
If you want to do something practical, require the SEC to go into these banks, open up their L3 holdings to public scrutiny, auction off a sampling of these securities, and apply those prices to the L3 portfolios of all the banks. In this way we will know which banks are insolvent. You won’t need to go through this charade of having the Treasury take ownership of these assets, because the core of the problem is not that these assets are clogging up bank balances sheets, as Paulson says (which is tantamount to saying, by the way, that no one will buy them). The core of the problem is that there is no transparency about these portfolios and their real worth. Congress doesn’t need $700 billion of our money to create that transparency, and if it shows as I suspect that many of these banks are insolvent, that’s why we have bankruptcy courts. You can certainly protect the banks from bank runs while they are in bankruptcy.
Paulson is basically rolling you and the rest of Congress into giving him unprecedented power to protect his friends on Wall Street. This decision you are making is probably as momentous as the Iraq War resolution. Don’t fall for this bailout disguised as the only way to prevent Armageddon. Armageddon is already here – at least for the big banks – and it needs an entirely different solution. Spend our money protecting us, by ensuring the FDIC is properly funded, by throwing these too-big-to-fail banks into bankruptcy if they truly are insolvent, by preserving the healthy parts of these banks while in bankruptcy, and bringing them back out again so they function under much better safety and soundness regulations. We’ve had airlines functioning properly and safely for years while in bankruptcy, and there is no reason we can’t do the same with banks.
Please, please, do not fall for some useless compromise or bipartisan agreement that gives the administration what it wants in the end. Kill this proposal here and now, protect us from this bailout, and deal with the real problem – the insolvency of the major banks, not the paper that is supposedly blocking their lending capabilities.
September 22nd, 2008 at 2:46 am
The SEC restriction on financial short selling will cause heartburn for some hedge funds, which will drive the market down in spite of the SEC. Markets RULE.
September 22nd, 2008 at 2:53 am
Any mortgaged homeowner, bailed out by the public, should lose their mortgage tax deduction.
September 22nd, 2008 at 3:14 am
Neh, not so much. Dancing around the hard truth of Paulson and Bernake.
FAR better video here: watch TRUTH break out the lead pipe and blowtorche and go to work on Paulson.
http://www.youtube.com/watch?v=MO6P_yjKFR4
September 22nd, 2008 at 5:30 am
GRETCHEN MORGENSON: I would like to see them put some very tough cops on the beat at the SEC, the Securities and Exchange Commission, in the bank regulatory units…
I bet there is a lot of dirty laundry buried that would come to the surface if the SEC would institute a bounty program for all illegal information. Right now, they only offer rewards for inside trading violations. There is MUCH more that could come out.
September 22nd, 2008 at 5:54 am
If this is such a rush that the deal needs to be, “taxpayers give them the money now, and trust someone to work out fair details later”, then why should the burden of trust be on us? Why not require anyone needing a bailout to agree to unspecified fair details later? That may include even clawing back ill gotten gains, stock if their paper turns out to be worthless etc… If they don’t agree, then let them swim on their own.
This is just totally stealing as it is. Obviously the paper is worth nothing, and that is what will be unloaded.
September 22nd, 2008 at 6:17 am
Local protest info -
http://www.tickerforum.org/cgi-ticker/akcs-www?forum=FedUp
http://www.fedupusa.com
September 22nd, 2008 at 6:29 am
Apparantly, the problems with the financial institutions are only minimal, and if the US-taxpayers don´t make their unprecedented gift attractive enough, Wall Street doesn´t want it:
… But Mr. Paulson said that he was concerned that imposing limits on the compensation of executives could discourage companies from participating in the program [!!!]
“If we design it so it’s punitive and so institutions aren’t going to participate, this won’t work the way we need it to work,” Mr. Paulson said on “Fox News Sunday.”
http://www.nytimes.com/2008/09/22/business/22paulson.html?pagewanted=2&_r=1&hp
September 22nd, 2008 at 6:42 am
If this is such a rush that the deal needs to be, “taxpayers give them the money now, and trust someone to work out fair details later”, then why should the burden of trust be on us? Why not require anyone needing a bailout to agree to unspecified fair details later? That may include even clawing back ill gotten gains, stock if their paper turns out to be worthless etc… If they don’t agree, then let them swim on their own.
This is just totally stealing as it is. Obviously the paper is worth nothing, and that is what will be unloaded.
Posted by: debreuil | Sep 22, 2008 5:54:13 AM
These are great questions, if there isn’t any reflexivity, it’s, usually, Frog’s Hair.
and, this:
Posted by: yk | Sep 22, 2008 6:29:01 AM
Is right on, too. Need no ear to hear, or eye to see, the aroma is obvious.
It’s All threats and coercion from these peep–what’s worse is, if we let this slide, they’ll be using more than words, all too soon..
September 22nd, 2008 at 7:03 am
No sign of a recession here:
“But right now the number of [credit card rejections] we have been getting from people has been going up,” Gould said Friday of potential vacation customers. “People obviously have less money to spend on vacations.”
—
Millinocket call center halts focus on travel
By Nick Sambides Jr.
BDN Staff
MILLINOCKET, Maine — Facing a slumping market for foreign vacations, G&G Marketing LLC has retooled its Spring Street call center to handle cell phone advertising and emergency notifications, but still hopes to have 100 workers on staff by Jan. 1.
Effective Friday, the Millinocket firm temporarily suspended work for Cancun Travel Unlimited Inc. selling Cancun and Costa Rica vacations to customers in the U.S., Canada and Great Britain, owner Mel Gould III said Friday.
G&G’s 22 employees are taking on paging work for Employee Notification Services of Florida, which has 1,500 toll-free telephone numbers and has call centers in Mexico, Florida, Texas and several other states, said Melissa Kelly, director of notification programs for ENS.
Given that the fourth quarter is typically slow for vacation providers, G&G might have opted to broaden the services it offers even if the U.S. economy wasn’t slumping, said Gould, who came from Florida to open G&G with other family members in June.
“But right now the number of [credit card rejections] we have been getting from people has been going up,” Gould said Friday of potential vacation customers. “People obviously have less money to spend on vacations.”
G&G might resume selling vacations after the first quarter of 2009 if the economy improves, Gould said.
http://www.bangornews.com/detail/51225.html
September 22nd, 2008 at 7:15 am
re the topic of “tough cops”-
What if Elliot Spitzer was still behind his desk, instead of under the sheets, would he have nailed AIG and those other losers “in the act” of their financial indiscretion and caught these clowns before it was too late????
Inquiring minds want to know.
September 22nd, 2008 at 7:32 am
Let it all crumble and then pick up the pieces…in the end that will be the cheapest alternative. (and besides it is going to happen with or without government money). Once real value is realized (market equilibrium or lower), tons of good money will come rushing in. If you let free-markets work in good times let them work in bad. With some collective intestinal fortitude we can get through this. (But no, this will not be done, because the people with super wealth and those in government who depend on their hand-outs won’t let it.) And please don’t tell me that there is value in their “off balance sheets.” When your dumb enough to leverage 30, 40, 50, 60 and 70/1, there is no true value anymore, because “goods” become so inflated all true value is lost.
September 22nd, 2008 at 10:46 am
The video by Denninger at http://www.youtube.com/watch?v=MO6P_yjKFR4 was right on. Thanks for posting it d’zoner.
He wasn’t the only one who wondered if that was chicken blood on the fox’s whiskers when he was approved as guardian of the henhouse keys not so long ago.