Ten Things Not to Like About the US Government Policy Actions Known as “The Bailouts”

Courtesy of Jesse at the Café Américain.

1. The Treasury and the Fed rewarded some aggressive risk takers and failing business models at the expense of those who followed sound business practices. Those who followed conservative practices have been penalized twice; first on the way up and again on the way down. Those companies that did fail appear to have been ‘targeted’ by insiders.

2. Much of the process was done in secret with minimal transparency, debate, or disclosure by people who have obvious conflicts of interest.

3. The stated objectives of freeing up credit for the real economy and stemming foreclosures have not been achieved.

4. Trillions in taxpayer money were provided with few strings attached and at minimal stipulated rates of return. Furthermore, several of these institutions are using their taxpayer money to lobby against reform and award themselves pre-crisis salaries and record bonuses.

5. Bailout actions were arbitrary, inconsistent, ad hoc, and without an apparent guiding principles of justice.

6. The banking, rating, “insurance”, and regulatory systems have not been reformed and the perpetrators of the collapse and their enablers are remain in charge, now overseeing the “recovery.”

7. Criminal investigations are minimal; few people are facing indictments or even serious regulatory scrutiny for actions that are highly questionable. Official finds are whitewashes.

8. Regulations, regulatory structures, and other safeguards were implemented, revised or swept aside in chaotic and reckless fashion. [discount window participation and collateral, short selling rules, bank holding companies, mark-to-market]

9. The insider advantages, speculative excess, and extreme leveraging of the perpetrators has been allowed to continue; in fact, allowed to expand. There is a taint of insider trading and corruption that permeates the process.

10. Wall Street is bailed out; Main Street is not. Efforts to subsidize the incomes and balance sheets of failing firms have been massive and were implemented with minimal debate, requirements, or oversight; efforts to shore up taxpayer incomes and balance sheets have been comparatively minimal, subject to extensive debate and tinkering, highly selective, and incomplete.

Thanks to Cafe patron Malcolm McMichael

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“The States racked up some serious debt in keeping the world safe for democracy in the Second World War. On a percentage basis, it has recently spent a significant amount keeping its financial sector safe from productive effort and honest labour. They will raid the Treasury, take their fill, and then compel the government to confiscate the savings of a generation by defaulting on its obligations, its sovereign debt.” -Jesse at the Café Américain

Federal Reserve needs to cut US Dollar in half over next 14 years

14 years? Jim thinks more like six months!

Brilliant

Charlie Smith at Of Two Minds weighs in on the health sick-care reform boondoggle.

There is a solution so simple and so radical that it is “impossible” (and of course you’re reading it here): shut down insurance and all government entitlements, and return to the “golden era” of the 1950s when everyone paid cash for health-care.

Be sure and check out the very interesting graphic of costs associated with giving birth at Santa Monica hospital ca. 1952.

Would returning to the days of old be regressive? Would quality of care plummet? Would the cost put the health of people living from paycheck to paycheck at risk?

The answer to each question has to be an emphatic No.

Has care gotten better since 1952? Only marginally. People are still getting sick and dying.

Quality of care will actually improve. After all, nearly all the money paid for treatment goes to insurance companies… which goes to cover inflated values of costs, and handsomely reward executives with exorbitant compensation.  After all the execs didn’t get into health-care to help people, rather it is to help themselves. Put the money where it counts, in actual care for the patient.

The free market will actually drive the cost of health-care down so that everyone would be able to actually afford it. Even people like me who are uninsured (my choice). They would also be forced to answer that wake-up call that they are responsible for their own health and not the fatherhomeland, and better quit smoking/overeating/drinking/drug usage/texting while driving.

Debate as it is purposely being framed isn’t about health care it is about health insurance
The entire health-care debate underway is completely slanted in maintaining the status quo. It isn’t about how to best maintain and support good health of our fellow man and child; it is centered on how best to compensate the middle man, i.e. the insurers and big pharma, and inflate the cost of care to guarantee big bonuses, while still having the ultimate say on quality of care you should recieve- and the healthinsco still reserves the right to refuse you any time it is deemed too costly.

It makes perfect sense to let the free market set the level of each individuals cost of care, not bureaucrats, not parties where profit motive is their primary (only) interest.

Not only would this idea of a cash-based system be the tonic necessary to eliminate fraud and waste, but the quality of care would actually rise.

But of course, rational ideas such as this are immediately shut out of the “debate” because so many special interests have their hands in the pie. They prefer to install a system that helps them to rip-off Americans, where the state and crony accomplices want to keep you alive as long as possible to squeeze the last dollar out of your cold dead hands.

[Of Two Minds]

***UPDATE***

Ilargi comments:

The difference between US and Western European health care lies exclusively in the political power acquired by corporate industries, in this case -mainly- a combination of drug manufacturers (closely linked to the chemical industry) and insurance companies (which are in turn closely linked to Wall Street banks). The US needs to fabricate its own system because it needs to satisfy the perverted influence industry has on not just health care itself, but also on the political process.

[theautomaticearth]

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***UPDATE***4:11 PM 8/5/2009

Healthcare “Reform”: Cui Bono–To Whose Benefit?

[Of Two Minds]

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“It will be many years before the masses discover just how completely they have been fleeced by the power elite.” -Richard Smith

Grok this

I was reading a brief recounting of the S&L crisis last night.

Now, my personal recollection of that particular collpase is vague. I was cognizant that it was going on, but I never used S&L’s so did not feel impacted directly.

I did notice a lot of them were collapsing, and using moral hazard (“thank Ged for the FSLIC”) to attract investment in their CD’s with ginormous (15% and up- imagine that today) rates for CD’s. I didn’t have any money, so I couldn’t play.
But why this massive failure was taking place was kind of mysterious. How did so many similar institutions find themselves in such similar dire straits?

The one institution that I recall some detail of was Colorado’s Silverado S&L [Wikipedia][Austin Chronicle]. Fortune did a story about it (ca. 1988). This was the S&L run by Neil Bush, whose father was VP at the time.

Interesting fact: there was so much irrational exuberance during the boom times, that Neal sipped champagne out of a cowboy boot. Whether it was his own boot- or someone elses’- well, that particular detail escapes me.

But now I’ll get to the point.

While I assumed there were similarities with today’s housing bust, I didn’t realize how far off my hazy memory was.

Our current housing boom and bust have played out *exactly* the same way. It’s as if the same playbook is being used!

Some of the mechanisms are more up to date (new! improved!), making the bezzle more Ponz-friendly IYSWIM. Essentially it is the very same kind of fraud being committed- legal fraud. The kind only the banks get to use with impunity.

And of course the outcome- transferring the losses to the taxpatyer, while the fraudsters get to keep their gains- is exactly the same.

One other interesting fact: the bailout of the FSLIC and the FHLB (both eventually rolled into the FDIC) were set to be paid back over thirty years.

That means, yep- we’re still paying for it- and still will be for another ten years.

Plus, now we’re gonna get the extra added privilege of paying for this Benron/Paulson/Shitener/Bush-Obama madness.

If any body out there could recommend any good books about the S&L crisis, I’d a be interested in hearing from you.

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The S&L crisis, Global Crossing, Enron, techbust.com, Long Term Capital Mgt, Continental Illinois, Indy Mac Bank et al; where did the debt go? Why, it’s been socialized, and by Ged we’re still paying for it becaue that’s just how stupid we are.

*Tilt*

We are viewing the slow failure of the US Government. It may not be for years or decades, but the lack of willingness of the current administration to address the growing shortfall shows that they are more similar to the Bush, Jr., administration, than different from it. After all, who ran the biggest deficits? Obama, by a long shot.

-David Merkel [Aleph blog]

Let’s try and not go overboard next time, folks

The End of Personal Finance
Decades of advice turn out to be so much garbage.

“For more than two decades, as income inequality increased and job security decreased, Americans lapped up personal finance columns, books, and television shows. We thrilled to stock tips and swooned at sensible strategies for using dollar-cost averaging to invest in no-load index funds. Buy and hold, my friends! The annualized gain for the S&P 500 stock index over time is more than 10 percent! You, too, can turn into the millionaire next door. Carpe diem, folks! Seize the financial day!”

[The Big Money]

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Will there even be a next time?

Downward pressure

Hank Paulson is a MUCH bigger criminal than OJ Simpson

So to everyone celebrating his conviction, FUCK YOU, you’ve been paying attentionto this while the CRIME OF THE CENTURY was being committed right over there —> (you just had to look).

You’ve just been screwed outof TRILLIONS of dollars which will overseen by the very person most responsible for the creation of the financial crisis- the former CEO of Goldman Sucks.

You are gloating that some broken-down athlete finally got his comeuppance, as if THAT had some importance or bearing on YOUR life.

Well, congratulations, YOU are about to experience what PAYBACK IS A BITCH really means.

“Payback, but for what?” you might well ask. For taking your eye off the ball. For dereliction of duty.

For being distracted. For being stupid.

See, that’s the problem with bread and circuses.  Under the guise of a “bailout” (more like a down-payment) when it was in fact nothing more than a government-backed MONEY-LAUNDERING SCAM as well as an UNPRECEDENTED giveaway of national wealth (i.e., your taxes are about to increase by 100%), most of you were distracted by the irrelevance of OJ, American Idol, Sarah Palin, 99.9999% of television, bombast radio, Faux Nooze, et al.

Talk about fiddling while the empire is burning!

Are you prepared? Of course not, you’re an idiot who voted in crooks.

Here’s your reward for not paying attention:

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“There is no constitutional authority for the government to bail out private enterprise at taxpayer expense.” -Mike Shedlock

This is what we get

... when those responsible for creating the mess are allowed to “solve” this fuckup-of-all-fuckups and bailout their mistakes (and their friends) and so they don’t lose face. [Paulson's true lies]

Comrade’s, work hard, shit well, make the oligarch’s richer for it is glorious and reflects well on you (& you are fucked anyway)!

[Mish] [Naked Capitalism] [Jesse's Café Américain] [Bloomie]

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“I always thought this country would come to a bad end because of a nuclear incident, instead we are being destoyed by overpriced sticks & bricks.” -Anonymous

Required reading

For every American:

“I always wondered why the tallest buildings in every city I have ever visited are banks. What do these people do? They don’t actually add anything to society. They don’t produce food or widgets. They simply transfer wealth from one class to another. The more I studied finance the more I realized it was simply the mother of all multi-level-marketing pyramid schemes. The central bank creates wealth out of thin air, or more accurately, robs it from the lower classes through inflation and then charges people down the line in order to use it. Talk about adding insult to injury. It lends it to other banks at interest who then lend it to consumers at an even greater interest rate.” [Jonathon]

A valuable outsiders perspective.