The Fear Card - Part 3
The White House took a clue from Hollywood, that every movie blockbuster franchise needs to be a trilogy, and played out one of their own.
In the first installment, The Fear Card, the attacks of September 11th, 2001 plunged this country into chaos and fear. In an effort to stem the panic, the White House claimed that it needed super powers in order to keep America safe from terrorists hiding within our borders. Those super powers came in the form of The Patriot Act. Congress is urged to pass it immediately in order to protect the American people from imminent danger. In a rare showing of bipartisanship, it passes without debate.
Except for Jose Padilla, no terrorist cells are discovered, or, at least publicly disclosed. There are assertions that plots have been foiled yet details remain vague, sketchy at best.
The movie ends as the hunt begins for Osama bin Laden, the evil mastermind behind the attacks, in Afghanistan. We topple the oppressive government and chase Osama's henchmen into the mountains.
In the sequel, while the public is still loving the first installment, The Fear Card 2 - WMD in Iraq gets their blood boiling again. International asshole and chemical weapons user, Saddam Hussein, is accused of shopping for yellowcake, a processed ore containing uranium. Witnesses claim that he's sleeping with Osama. Putting two and two together, President Bush warns us in his State of the Union address that it won't be long before terrorists have biological, chemical and nuclear weapons with which to use against us. Congress has to act now to protect America from this threat! Caught up in this thriller, they resoundingly give the President the authority to take action.
This movie doesn't play too well with European audiences. They find the plot unconvincing somehow. It receives lackluster support despite American certitude.
The invasion goes forth anyway and is a military success. But no weapons of mass destruction are found. Links between Saddam and Osama are disproven. "Sectarian Violence" erupts as long suppressed animosity between Sunni, Shi'a and Kurds is released. A quagmire ensues. Audiences are left wondering, what ever happened to the hunt for Osama?
The third movie in the trilogy was supposed to take place in Iran, but focus groups found little interest in the plot. Iraq redux.
Desperate to save the franchise, the White House decides to change the setting. Wall Street is now under attack by the monster Credit Crunch. It threatens to destroy Wall Street, the economy, and homeowners, plunging this country into chaos as businesses, unable to get credit, fail, thus sending the whole world down to The Great Depression 2! The only way out is for Congress to immediately pass a $700 billion bailout package that grants the Treasury Secretary unfathomable powers. "Illiquid assets" are bought from struggling financial institutions whose wounds can only be salved with taxpayer dollars.
But there are problems with the script. Members of Congress from both parties point out that it smacks of socialism. It has no regulatory oversight. The CEO villains get to keep their golden parachutes. Welfare for the rich! There's no guarantee it'll work!
Desperate, the White House is now scrambling to re-write the script and Congress doesn't know if it should buy the Fear Card yet again. "What if Bernanke and Paulson are right? What if the sky is truly falling?" "But it's more money than we've spent on the entire Iraq war!"
In all seriousness, it's not like we didn't know that there was a problem. In fact, this administration enabled it. From Barry Ritholtz:
Having that much money loaned out is insane! These guys had to know that the Fed would come to their rescue.
Even the supposedly independent ratings agencies, which are supposed to be neutral in all this were corrupted. These guys are supposed to act as a private sector check on securities to protect investors from investing without knowing the risk. Bloomberg (the company, not the mayor) shows they were complicit in falsifying ratings in order to keep the subprime mortgage-backed bond market moving. (TotH: BR)
As for the previous bailouts, they shouldn't come as a surprise. The problems with Fannie and Freddie were forecast by Ron Paul, everyone's favorite punching bag during the Republican debates, 5 years ago! And he immediately saw the Zero Downpayment Act of 2004 as a huge mistake.
For a timeline of what went wrong, go here. Watch the video too.
As for what to do, do we need to do anything? I understand the sense of urgency but are we playing into fear yet again? Buffet bought a big stake in Goldman Sachs. JP Morgan Chase bought out Bear Stearns (with gov't backing) and Washington Mutual. Is it not possible that the markets will work themselves out? The best action the government could take would be to force banks to allow people who can't afford their mortgages (the "illiquid assets") to restructure the loan: Lower the payments or put a lien on the house.
A dramatic slow down in the economy means a big drop in consumption, whether it's oil or material goods. Using less oil is good for the environment, bad for Petrol Dictators as lower demand drops the price per barrel, and good for the dollar. Forcing people to live within their means and abandon the rampant materialism that's a plague in this country seems like a good idea to me.
Is this an oversimplification? Yes, it is. People will get hurt. But government can put taxpayer money to better uses to assist them directly rather than bailing out Wall Street.
As of today, an impasse has been reached. Some members of Congress (mostly House Republicans from what I hear) just can't do a bailout. Others are willing (House Democrats and both parties in the Senate) but only if strict taxpayer protections are built into the plan. Either way, there's no deal happening today or this weekend. And that's a good thing, not only for us but for Congressmen who want to keep their jobs.
I got drafted into a Robocall Town Hall last night. It was hosted by the Republican challenger in my Congressional District. For the 20 minutes I was able to listen in as people asked the candidate questions. Everyone said how much they hated the bailout idea (and Senator Dodd). It's looking like political suicide right now. The Republicans realize this and it gives them an opportunity to run against Bush without appearing disloyal to the party (or their constituents).
\_/
DED
In the first installment, The Fear Card, the attacks of September 11th, 2001 plunged this country into chaos and fear. In an effort to stem the panic, the White House claimed that it needed super powers in order to keep America safe from terrorists hiding within our borders. Those super powers came in the form of The Patriot Act. Congress is urged to pass it immediately in order to protect the American people from imminent danger. In a rare showing of bipartisanship, it passes without debate.
Except for Jose Padilla, no terrorist cells are discovered, or, at least publicly disclosed. There are assertions that plots have been foiled yet details remain vague, sketchy at best.
The movie ends as the hunt begins for Osama bin Laden, the evil mastermind behind the attacks, in Afghanistan. We topple the oppressive government and chase Osama's henchmen into the mountains.
In the sequel, while the public is still loving the first installment, The Fear Card 2 - WMD in Iraq gets their blood boiling again. International asshole and chemical weapons user, Saddam Hussein, is accused of shopping for yellowcake, a processed ore containing uranium. Witnesses claim that he's sleeping with Osama. Putting two and two together, President Bush warns us in his State of the Union address that it won't be long before terrorists have biological, chemical and nuclear weapons with which to use against us. Congress has to act now to protect America from this threat! Caught up in this thriller, they resoundingly give the President the authority to take action.
This movie doesn't play too well with European audiences. They find the plot unconvincing somehow. It receives lackluster support despite American certitude.
The invasion goes forth anyway and is a military success. But no weapons of mass destruction are found. Links between Saddam and Osama are disproven. "Sectarian Violence" erupts as long suppressed animosity between Sunni, Shi'a and Kurds is released. A quagmire ensues. Audiences are left wondering, what ever happened to the hunt for Osama?
The third movie in the trilogy was supposed to take place in Iran, but focus groups found little interest in the plot. Iraq redux.
Desperate to save the franchise, the White House decides to change the setting. Wall Street is now under attack by the monster Credit Crunch. It threatens to destroy Wall Street, the economy, and homeowners, plunging this country into chaos as businesses, unable to get credit, fail, thus sending the whole world down to The Great Depression 2! The only way out is for Congress to immediately pass a $700 billion bailout package that grants the Treasury Secretary unfathomable powers. "Illiquid assets" are bought from struggling financial institutions whose wounds can only be salved with taxpayer dollars.
But there are problems with the script. Members of Congress from both parties point out that it smacks of socialism. It has no regulatory oversight. The CEO villains get to keep their golden parachutes. Welfare for the rich! There's no guarantee it'll work!
Desperate, the White House is now scrambling to re-write the script and Congress doesn't know if it should buy the Fear Card yet again. "What if Bernanke and Paulson are right? What if the sky is truly falling?" "But it's more money than we've spent on the entire Iraq war!"
In all seriousness, it's not like we didn't know that there was a problem. In fact, this administration enabled it. From Barry Ritholtz:
The current excess leverage now unwinding was the result of a purposeful SEC exemption given to five firms.
You read that right -- the events of the past year are not a mere accident, but are the results of a conscious and willful SEC decision to allow these firms to legally violate existing net capital rules that, in the past 30 years, had limited broker dealers debt-to-net capital ratio to 12-to-1.
Instead, the 2004 exemption -- given only to 5 firms -- allowed them to lever up 30 and even 40 to 1.
Who were the five that received this special exemption? You won't be surprised to learn that they were Goldman, Merrill, Lehman, Bear Stearns, and Morgan Stanley.
Having that much money loaned out is insane! These guys had to know that the Fed would come to their rescue.
Even the supposedly independent ratings agencies, which are supposed to be neutral in all this were corrupted. These guys are supposed to act as a private sector check on securities to protect investors from investing without knowing the risk. Bloomberg (the company, not the mayor) shows they were complicit in falsifying ratings in order to keep the subprime mortgage-backed bond market moving. (TotH: BR)
As for the previous bailouts, they shouldn't come as a surprise. The problems with Fannie and Freddie were forecast by Ron Paul, everyone's favorite punching bag during the Republican debates, 5 years ago! And he immediately saw the Zero Downpayment Act of 2004 as a huge mistake.
For a timeline of what went wrong, go here. Watch the video too.
As for what to do, do we need to do anything? I understand the sense of urgency but are we playing into fear yet again? Buffet bought a big stake in Goldman Sachs. JP Morgan Chase bought out Bear Stearns (with gov't backing) and Washington Mutual. Is it not possible that the markets will work themselves out? The best action the government could take would be to force banks to allow people who can't afford their mortgages (the "illiquid assets") to restructure the loan: Lower the payments or put a lien on the house.
A dramatic slow down in the economy means a big drop in consumption, whether it's oil or material goods. Using less oil is good for the environment, bad for Petrol Dictators as lower demand drops the price per barrel, and good for the dollar. Forcing people to live within their means and abandon the rampant materialism that's a plague in this country seems like a good idea to me.
Is this an oversimplification? Yes, it is. People will get hurt. But government can put taxpayer money to better uses to assist them directly rather than bailing out Wall Street.
As of today, an impasse has been reached. Some members of Congress (mostly House Republicans from what I hear) just can't do a bailout. Others are willing (House Democrats and both parties in the Senate) but only if strict taxpayer protections are built into the plan. Either way, there's no deal happening today or this weekend. And that's a good thing, not only for us but for Congressmen who want to keep their jobs.
I got drafted into a Robocall Town Hall last night. It was hosted by the Republican challenger in my Congressional District. For the 20 minutes I was able to listen in as people asked the candidate questions. Everyone said how much they hated the bailout idea (and Senator Dodd). It's looking like political suicide right now. The Republicans realize this and it gives them an opportunity to run against Bush without appearing disloyal to the party (or their constituents).
\_/
DED
Labels: corruption, debt, economy, government_waste, Ron_Paul, scam, unconstitutional
posted by DED at 12:39 PM
2 Comments:
Hear, hear.
You left out only one part of the analysis: this is THEFT. Paulsen, Bernanke, Bush, Cheney . . . and Barney Frank and Chris Dodd (and John McCain and Barack Obama) are LOOTING the U.S. Treasury.
I do not overstate it when I say this is shaping up as one of the most shameful episodes in US history: every one of us taxed twice. Once with our "tax dollars" going to those who need it the least . . . and then taxed again as inflation erodes our savings and assets and salaries from the bottom up.
I'm absolutely sickened.
As far as I'm concerned, you're not "overstating" at all. I think this could be the beginning of the end for this country. In all seriousness, we'd better start learning Mandarin.
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