Decisions, Decisions

Actually, we don’t have a choice to make. It has been made for us and was never in question.

We are going to save the bankers. Why? Because the bankers in government think exactly like the bankers, their friends, who are not in government. They all consider themselves and our banking system to be indispensable. Are they?

We are assured that the very ones responsible for screwing up the entire world’s economy will come to our rescue – for a price. Will they?

We are assured that they have learned their lessons. No, they didn’t. The first lesson should have been one of humility. They gave themselves bonuses with our money.The second lesson should have been appreciation. They gave themselves bonuses with our money.

We give the guys who got rich from screwing us more of our money and believe their assurances that they now know how to correct the problem. Are we stupid? Yes.

The way the Secretary of the Treasury explained how to deal with all of those ‘toxic assets’ was to seduce investors to buy them at a discount, hold them until they have appreciated in value sufficiently to provide those investors a large enough profit to interest them. First, these investors already have lots of money, or they couldn’t make those investments. Second, those ‘toxic assets’ are, largely, foreclosed homes.

Why would these ‘investors’ be willing to buy these toxic assets? Because you, I and those people who lost their homes will be guaranteeing they make a profit. Aren’t we nice? Well, maybe not nice enough because the bankers are complaining all the while.

Break, break

Since writing the above, I took more than a two-week break to do some work on a book. During that time the world turned upside-down. Let me finish the thread of my thoughts from above and then get to the upside-down part. They both concern bankers.

Here’s a quote from one of the guys that we will be trusting to get us out of this mess: “What a delicious irony this is. Last week, just as President Obama was publicly bashing the stupidity of the banks . . . his economic team [was] privately begging for input from Wall Street. The administration was conducting around-the-clock discussions and interviews with senior Wall Street executives, including many from the same firms he was theoretically appalled with, about how to fix the lingering financial crisis.” It reeks of hubris. They see themselves as still in a position to manipulate the government to get exactly what they want.

It is undeniable that the primary difference between the bankers on Wall Street and the bankers in Washington is the name on their paychecks.

Geithner was Paulson’s right-hand man when he was doling out the $350 billion to Wall Street without strings, transparency or even knowing what happened to it. Geithner was touted as the smart one, the one who could figure all of this out. Of course, before that Paulson was touted as the smartest man on Wall Street.

The only one I know of who is marginally involved in working on this mess that retains an ounce of integrity is Paul Volcker. The problem is that he is constantly being shoved aside by Geithner and the real boss, Larry Summers. Larry Summers was a major player in creating the meltdown. The next move that Obama needs to make is fire both Summers and Geithner.

One of my all-time favorite quotes is from the infamous anonymous: The more you do of what you’ve done, the more you’ll have of what you’ve got. These very same people just rotate back and forth between Wall Street and government. They have the same ideas, or lack thereof. They have the same interests and, surprise, those interests are not yours and mine. They are profit capitalists and loss socialists.

Recipients of our tax money were supposed to circulate that money in the form of increased loans. Every recipient of our tax money reduced loans after receiving it. They used the money for billions, yes, billions of dollars in bonuses, acquiring other banks, anything but putting the money to use in a way that might benefit the economy. We need to clean house, completely and immediately.

I’ll get to the upside down part in the next post.

Tagged as: bank, bankrupt, citi, geithner, graham, king, krugman, nationalization, paulson, schumer, summers, volcker, wall street