Did Hank Paulson Use TARP as a “Ruse” to Rescue Citigroup?

Be sure you’re sitting down before you read this, Okay? Barry Rithholtz speculates in his forthcoming book, Bailout Nation that the entire multi-trillion dollar boondoggle was

a giant ruse, a Hank Paulson engineered scam to cover up the simple fact that CitiGroup (C) was teetering on the brink of implosion. A loan just to Citi alone would have been problematic, went this line of brilliant reasoning, so instead, we gave money to all the big banks.

From the book:

As of October 2008, the other banks, while somewhat worse for wear, neither wanted nor needed the capital injection. None of them were in the same trouble as Citi. Even Bank of America’s problems via Merrill Lynch wouldn’t become acute until December 2008. Washington Mutual, the most troubled on the list, had already been put into FDIC receivership the month before.26 JPMorgan bought WaMu from the FDIC for under $2 billion, and Wachovia was swept up by Wells Fargo for about $15 billion. Thanks to a change in the tax law, Wells Fargo got to shelter $74 billion in profits from taxation. Instead of the FDIC absorbing a few billion in losses from Wachovia’s bad assets, the taxpayers lost 35 times that amount.

According to Rithholtz, today’s news that ten banks are going to pay back the TARP funds provides support for his thesis:

The hurry to repay this cheap cash confirms that the fix was in. If these banks were really in the bad shape Paulson suggested, they would hold onto this cheap source of credit. Instead, they want to throw the yoke of government monies off as soon as possible. The desire to return to their old compensation packages for executives cannot be the only factor . . .

In other words (or as President Obama would say, “Let us be clear”) our government spent $2.25 trillion and put our social safety net and maybe even the future of our country in jeopardy in order to rescue one huge bank that should have just been allowed to go bankrupt. I think I’m going to scream now.

Rithholtz went into more detail in an interview with Bloomberg Radio yesterday. You can listen to it here. In the interview, he makes the argument that huge corporate bailouts always seem to happen in election years. {{Sob!}} There’s a little good news in the broadcast, I guess; since Rithholtz says that while things are still getting worse, it isn’t happening as quickly as before. He thinks maybe we are going to pull out of this without falling all the way into another Great Depression.

Oh goody. But I’d feel a whole lot better about that prediction if I could see any sign that the government cares even a tiny bit about jobs and health care and such mundane needs of ordinary people as opposed to protecting banksters from their own stupidity and greed.

(See also Dakinikat’s post from earlier today.)

UPDATE: The Wall Street Journal has a new article in which they argue that Citigroup should be broken up.

Resolving Citi — by either forcing it into a strategic partnership, if anyone will have it, or selling off its assets and breaking it up — wouldn’t be cheap, but it would have a number of benefits. It would remove the leading candidate for zombie-bankdom from the financial system. It would also, finally, put an end to the slow bleeding of taxpayer money into the bank.

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Palin Derangement Syndrome

From Real Clear Politics:

While reading his top ten list Monday night, “Late Show” host David Letterman said Gov. Sarah Palin bought makeup from Bloomingdale’s to update her “slutty flight attendant” look. Palin was in New York over the weekend.

It gets worse:

VH1 comedian Chuck Nice appeared on Tuesday’s “Today” show and compared Alaska Governor Sarah Palin to the sexually transmitted disease herpes. He mocked, “But, Sarah Palin to the GOP, this is what I’ve got to say, she is very much like herpes, she’s not going away.”

What the fuck is wrong with these people?

*Failbot troll prophylactic:

This is not about “supporting” Sarah Palin.  Neither of the two statements above have anything to do with any legitimate criticism of Governor Palin’s policies or record.

They are examples of misogyny.

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UPDATE:

It’s even worse that I originally thought:

That would be Willow Palin, the 14 year old daughter that accompanied Sarah and Todd to New York.

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UPDATE II:

Misogyny is a bipartisan effort:

Sarah Palin has begun to get on the nerves of Republican senators who say the former GOP vice presidential nominee is taking her own White House aspirations entirely too seriously.

Yeah, like anyone would ever vote for a stupid girl.

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Promises, Promises

Via Lambert:

Here’s the transcript:

I happen to be a proponent of a single payer universal health care program.” (applause) “I see no reason why the United States of America, the wealthiest country in the history of the world, spending 14 percent of its Gross National Product on health care cannot provide basic health insurance to everybody. And that’s what Jim is talking about when he says everybody in, nobody out. A single payer health care plan, a universal health care plan. And that’s what I’d like to see. But as all of you know, we may not get there immediately. Because first we have to take back the White House, we have to take back the Senate, and we have to take back the House.” (emphasis added)

Well gee, we already took back the White House, the Senate and the House. What’s the hold up?

Wait! Obama promised to computerize our medical records, and the big bucks medical insurers are gonna kinda-sorta-maybe-notta hold down cost increases. We’re saved! Avedon Carol:

Obama, as far as I can tell, is just in it for the kabuki – pretend to give Americans a better healthcare option, but don’t actually do it. (Sort of like withdrawing from Iraq without actually doing it, closing Gitmo without actually doing it, forbidding torture without actually doing, etc.)

Arthur Silber:

It’s what I expected, because Obama lies. He lies all the time, on every matter of consequence. It’s what he does.

(Cue the Obots Failbots whinging “McCain would have been worse!)

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For a peek at how those poor Canadians suffer through with Marxist medicine, check out Debunking Canadian Health Care Myths by Rhonda Hackett:

Because if the only way we compared the two systems was with statistics, there is a clear victor. It is becoming increasingly more difficult to dispute the fact that Canada spends less money on health care to get better outcomes.

[…]

In actuality, taxes are nearly equal on both sides of the border. Overall, Canada’s taxes are slightly higher than those in the U.S. However, Canadians are afforded many benefits for their tax dollars, even beyond health care (e.g., tax credits, family allowance, cheaper higher education), so the end result is a wash. At the end of the day, the average after-tax income of Canadian workers is equal to about 82 percent of their gross pay. In the U.S., that average is 81.9 percent.

[…]

Ten percent of Canada’s GDP is spent on health care for 100 percent of the population. The U.S. spends 17 percent of its GDP but 15 percent of its population has no coverage whatsoever and millions of others have inadequate coverage.

Poor commie bastards. Aren’t we the lucky ones?  Better dead than red.

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Your Breakfast Read, Served By The Confluence

Outbushing Bush

Barack Obama invokes Jesus more than George W. Bush

The references serve at once as an affirmation of his faith and a rebuke against a rumor that persists for some to this day.

As president, Barack Obama has mentioned Jesus Christ in a number of high-profile public speeches — something his predecessor George W. Bush rarely did in such settings, even though Bush’s Christian faith was at the core of his political identity.

Dismay over Obama’s Turnabout on ‘Don’t Ask, Don’t Tell’

When Barack Obama sought the presidency, he pledged to reverse the “Don’t ask, don’t tell” policy preventing gays and lesbians from serving openly in the U.S. military. Yet on Monday, the Supreme Court rejected a gay Ohio soldier’s challenge to the law — with the legal backing of none other than the Obama Administration.

CIA Urges Judge To Keep Bush-Era Documents Sealed

The Obama administration objected yesterday to the release of certain Bush-era documents that detail the videotaped interrogations of CIA detainees at secret prisons, arguing to a federal judge that doing so would endanger national security and benefit al-Qaeda’s recruitment efforts.

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North Korean Nightmare

Jailed journalists complicate Obama’s approach to N. Korea

Monday’s conviction of two American journalists in a North Korean court and their sentencing to 12 years of hard labor for unspecified “grave crimes” will complicate President Obama’s pursuit of a tougher policy against the rogue nation.

North Korean labor camps a ghastly prospect for U.S. journalists

If their sentence is carried out, Laura Ling and Euna Lee face possible torture and even death in North Korea’s notorious gulag system, experts say.

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Another Award

Clinton honored for ’18 million cracks’ in glass ceiling

Yet again, Secretary Clinton receives an award. Today, she receives the Alice Award, presented annually to a woman who has made “an outstanding contribution in breaking barriers and setting new precedents for women.” Clinton is being honored for putting “eighteen million cracks” in the glass ceiling.

Hillary Speaks!

The most fascinating and important relationship in the Obama cabinet — between the president and Secretary of State Hillary Rodham Clinton — also happens to be the one we know the least about.

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Watch Out Newt, Mitt

Keynoter or Not, Palin Steals Spotlight at GOP Fundraiser

“The demagogue is one who preaches doctrines he knows to be untrue to men he knows to be idiots.” – H. L. Mencken
A little empathy for the white males

The poor guy can now add “no meaningful life story” to a list that includes sexist and clueless. I can see a third act for Defending the Caveman, the one-man show about a guy in love with a television set, in which he talks about growing up in a suburban cul-de-sac in an intact family.

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Economy Watch

Barack Obama to increase stimulus spending

America’s socialism for the rich: Corporate welfarism by Joe Stiglitz (via Mark Thoma)

With all the talk of “green shoots” of economic recovery, America’s banks are pushing back on efforts to regulate them. While politicians talk about their commitment to regulatory reform to prevent a recurrence of the crisis, this is one area where the devil really is in the details – and the banks will muster what muscle they have left to ensure that they have ample room to continue as they have in the past.

Nobel Winner Krugman Sees U.S. Recession Ending Soon

The U.S. economy probably will emerge from the recession by September, Nobel Prize-winning economist Paul Krugman said.

“I would not be surprised if the official end of the U.S. recession ends up being, in retrospect, dated sometime this summer,” he said in a lecture today at the London School of Economics. “Things seem to be getting worse more slowly. There’s some reason to think that we’re stabilizing.”

Employers’ hiring plans stuck in negative territory

Employers’ hiring plans for the third quarter didn’t budge from their record-low second-quarter outlook, according to Manpower’s latest Employment Outlook Survey.

Industries Where Employers Expect To Be Hiring

Economy Shows Cracks in European Union

The European Union is an extraordinary experiment in shared sovereignty, creating a zone of peace that now stretches from Britain to the Balkans. The union of 27 countries is the world’s most formidable economic bloc, incorporating 491 million people in an integrated market that produces nearly a third more than the United States.

Here’s for those following Ferguson v Krugman. It’s not looking good for Niall.
David Takes On Goliath and Loses: The Ferguson – Krugman Exchange

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Around The World

Shell pays out $15.5m over Saro-Wiwa killing

The oil giant Shell has agreed to pay $15.5m (£9.6m) in settlement of a legal action in which it was accused of having ­collaborated in the execution of the writer Ken Saro-Wiwa and eight other leaders of the Ogoni tribe of southern Nigeria

The corrupt nepotist who ruled Gabon for 40 years

The death of President Omar Bongo in a Spanish hospital yesterday brings an era of African history to an end. Daniel Howden reports on a man who accumulated riches with the same determination as he held on to power

All up for grabs in Iran vote

Mahmoud Ahmadinejad was Iran’s first non-cleric president in 24 years when he was elected in 2005.

Now, with his rivals blaming him for many problems ranging from Iran’s dwindling economy to the country’s pariah status in the world, he may be the first president since 1981 whose re-election is not guaranteed.

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Ever Wondered

Why your brain just can’t remember that word

Most of the time the brain works as it ought to: limbs move, memories are retrieved and experiences processed. But occasionally things go awry.

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Late Night: Video Killed the Radio Star. Literally.

Pass the bourbon.  What’s keeping you up tonight?