BF: Secretary of the Treasury Hank Paulson's $700 billion so-called bailout, first called "The Plan", was defeated in the House. Then a modified version called "Troubled Asset Rescue Plan or (TARP)" was passed by Congress in it’s "Emergency Economic Stabilization Act of 2008". Still others refer to this legislation as "Cash for Trash". What would you call it?
MH: Cash for trash is exactly what it was, and the emphasis should be placed on "Emergency" for Emergency Plan. It was rushed through without giving any opportunity to debate. Dennis Kucinich protested, for instance, that this was the first time a major plan that was going to create the equivalent of 700 billionaires, people who are going to become the next power elite to govern America for the next century --that this act was done without any hearings, without specialists--despite hundreds and hundreds of major economists throughout the world saying that it was a disaster and a giveaway. It is cash for trash. It will not resolve the problems.
The dollar will plunge. The stock market already plunged.
It is purely a giveaway to Mr. Paulson's colleagues on Wall Street and a giveaway to Mr. Obama's and Mr. McCain's campaign contributors. The Democrats were the major supporters of Mr. Paulson while even the Republicans sought to dissociate themselves from the plan so they couldn't get blamed when the inevitable failure of the plan shows that all that was done was a giveaway of $700 billion to Mr. Paulson's colleagues and pals on Wall Street.
It is important to note who was behind this.
President Bush is the kind of Republican that the left loves to point fingers at, because they can't make up their mind whether he is so blatantly corrupt, or so completely incompetent. This doubt will help Bush, come the day when he is on trial for all of this, because the prosecution will need to prove beyond reasonable doubt that he has been corrupt and not stupid.
So, we know that Bush is not a true Republican as we Republicans understand that word. He never had any attachment to the core principles of the Republican Party or to "his" Republican base, but only satisfied us as much as it was felt he needed to in order to win the election. He long ago abandoned us, and for the most part, we have only reluctantly begun to return the favor in recent years.
But we need to understand that the same is true of our straight-talking standard-bearer, John McCain.
Notice how Senator Obama's name came up here.
How much money has Senator Obama raised for his campaign? In a recent post, I quoted the figure of $605 million dollars, and added the comment "That's obscene."
Yeah, Senator Obama is change we can believe in, alright.
But, Senator McCain got right in line with this giveaway of taxpayer dollars, and President Bush signed it into law.
All three of them need to be investigated criminally for this.
BF: Well, now what and who are being bailed out? People now are saying it's a $700 to an $850 billion revolving money fund.
MH: The Secretary of the Treasury said that he really just picked the amount out of the air. There will be another $700 billion next month, another $700 billion after that. Trillion after trillion will go to create a financial elite of kleptocrats. What's happened here by Mr. Paulson of Goldman Sachs is almost a mirror image of what the other Goldman Sachs' Treasury Secretary Robert Rubin did in Russia: he's creating and endowing a class of kleptocrats by giving them liquid treasury securities in exchange for basically worthless junk. It’s actually called the "Worthless Assets Recovery Program, (WARP)".
The United States of America has become a banana republic.
This is pretty much what was done in Russia to create Russian kleptocrats. In Russia’s case they gave State ownership of raw materials and fuels, oil, other assets to individuals who then diversified their portfolios by selling as much as they could to the West and taking their money out and putting them into dollars and sterling and euros. What’s happening here is that the Wall Street beneficiaries are going to take the money and run and put it in safe economies such as Russia, China and any other non-US economy they can find: the result will be a huge capital outflow, a capital flight that will put downward pressure on the dollar.
The final paragraphs from White House tells banks to stop hoarding money give us an insight into what is being done with this money:
The Federal Reserve began a program Monday to purchase the short-term debt of businesses, known as commercial paper. This market has been frozen since the collapse of Lehman Brothers spooked credit markets last month.
Under the authority of the $700 billion financial bailout plan approved by Congress and signed by President Bush earlier this month, the administration also plans to dole out $250 billion to banks in return for partial ownership. The Treasury Department, which is overseeing the massive capital injection program along with the rest of the bailout, will pour $125 billion into nine of the country's largest banks this week. Another $125 billion will go to other banks.
Treasury Secretary Henry Paulson has said the money was aimed at rebuilding banks' reserves so that they would resume more normal lending practices. But reports then surfaced that bankers might instead use the money to buy other banks. Indeed, the government approved PNC Financial Services Group Inc. to receive $7.7 billion in return for company stock and, at the same time, PNC said it was acquiring National City Corp. for $5.58 billion.
Officials have said that there are few strings attached to the capital-infusion program because too many rules would discourage financial institutions from participating.
"But reports then surfaced that bankers might instead use the money to buy other banks. Indeed, the government approved PNC Financial Services Group Inc. to receive $7.7 billion in return for company stock and, at the same time, PNC said it was acquiring National City Corp. for $5.58 billion."
They are using the money to take over the competition.
Have I not written about this in recent weeks?
I told you so.
Back to The New Kleptocracy: Biggest "Giveaway" in American History -- Interview with Dr. Michael Hudson:
BF: You know Dr. Hudson, I was just about to ask you what the difference is between the Russian Kleptocrats and the American Crony Capitalists? Is there any difference at all that you see?
MF: Only that the Russian Kleptocrats were supported by Clinton's Democratic Administration and the American's Kleptocrats are supported nominally under a Bush Administration but primarily by Mr. Obama and the Democrats led by Barney Frank in the Congress, and Nancy Pelosi and by Reid. These are Democrats that must go and if there is any sign of Mr. Obama keeping them on then you know that the Democratic Party has been firmly captured by the Democratic Leadership Committee, i.e. Wall Street's lobbying group within the Democratic Party.
BF: Well now, since you've brought up Barack Obama, he was the one that lobbied "for" the passage of this, isn't he?
MF: That’s correct and the amazing thing was that McCain did too. Last Friday I was attending the American Monetary Institute Conference in Chicago and we had some of the smartest financial brains around at that. It was at Roosevelt University and we all went down to the Student Union to watch the debate. And let's take a look at what happened last Friday. The previous Thursday Mr. McCain had said there might not be a Friday debate because he was going to suspend the campaign until he could straighten out Washington regarding the bailout. So he went to the White House. There was reportedly not much very much that he said during the meeting but the Republican Congressional Leader Boehner made some very good suggestions. He suggested instead of the bailout the government use the money to set up a bank insurance fund of say anywhere from $250 billion to the $700 billion that was mentioned.
The insurance fund would lend money to banks in exchange for their preferred stock. This fund would be financed by levying an insurance charge on the entire US banking system, just like the Federal Deposit Insurance Corporation levies insurance rates on the banks. And the rates that would be levied, under the Republication proposal, would have reflected the actual risks involved. So that if the banks got together and lobbied politicians and supported the political campaigns of politicians who wanted to deregulate the industry that’s’ fair enough but let them pay the risks. Let them pay 1% or 2% or even 3% of their deposits for this because that’s what it would take the government to bail out policies that Alan Greenspan and others have supported. Instead of supporting this plan and instead of saying that he’d come to Washington to save American taxpayers from the giveaway, Mr. McCain did absolutely nothing. He was blamed by the media on Friday morning (Friday afternoon too) for saying, "Oh he's come to disrupt a done deal. Look what happened. He went to the White House. Now you have the Congressional Republicans opposing it."
Mr. McCain could have said, "Absolutely," that's just what he's done because he's a maverick and he's going to protect American taxpayers from the bipartisan attempt to both reflect the campaign contributions of their largest contributors--Wall Street. And he's not going to let it happen. He could have jumped in front of the parade. Jumped in front of the opposition to the Act, that reportedly 90% of voters were supposed to oppose, and this would have put Mr. Obama on the defensive. McCain could have said, "I'm opposed on the giveway and supporting taxpayers."
Mr. Obama is the man who is giving it all way to Wall Street and his major campaign contributors. Look at what's happening with Mr. Rubin, there's no difference at all between his financial advisor Robert Rubin and the Treasury Secretary Hank Paulson." Instead Mr. McCain shifted gears, reversed himself, gave in and said, "now I'm supporting the plan too". So the result of the Friday debate, if you remember the first half hour, Mr. Lehrer kept trying to press both presidential candidates on "how do you feel about the bailout, what do you think?"
And they talked about anything else. Mr. Lehrer tried to be more polite and finally he was laughing, and he said, "Aren't either of you guys going to answer my question?" And they both of them said, "No." Now when they refused to give their position to the bailout to the American people. When they refused to take a position on a plan that most voters "overwhelmingly" opposed and then they support the plan this shows they're just in the hands of their financial backers.
Our "maverick" John McCain -- but when it comes right down to it, he joins Senator Obama in giving taxpayer dollars to the rich elite of this country, allowing that elite to take over the competition.
Senator Obama -- change we can believe in -- leading the charge in stealing tax dollars from the poor, giving to his rich cronies; McCain agrees with it, and Bush signs off on it. The only change was in control of our wealth -- and it wasn't Robin Hood Socialism, it was banana republic graft, enriching the elite.
Now there's change we can believe in, right Senator Obama?
I now finish with a blurb from The Lessons of Greed by Thomas Fleming:
Here is this question in a nutshell. If the government's leading economic advisers knew what was going on and allowed it to happen, they are criminals who should be locked up for a long time and have their possessions distributed among their victims; if they did not know, they are incompetent and should be fired and have their possessions distributed among their victims. But is good old Hank Paulson out on the street selling apples to unemployed money managers? No, he is too busy hiring his croneys from Goldman Sachs and giving them the power to cartelize the entire US economy as a wholly owned subsidiary of Goldman Sachs–or, rather, Government Sachs, as the firm is beginning to be called. Is he stupid or a criminal? Fortunately, that is a question to which the answer may be: "Both."
Small wonder that so many people are pinning their hopes on the Democrats–who, unfortunately, were neither more prescient nor less corrupt than the Republicans. When Senator Obama blames John McCain for the crash, he proves what a liar he is. [snip]
Obama -- a liar. Imagine that!
There needs to be a criminal investigation into the graft, corruption, influence-peddling and other crimes that are obviously going on, and Senators Obama and McCain, together with President Bush and Treasury Secretary Paulson, need to answer some questions posed by criminal investigators.