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    • Should NATO Exist? Will It?
      One of Trump’s constant cries is that American allies aren’t spending enough on their militaries and that the US is thus carrying them. While there is a temptation to scorn this argument because it was made by Trump, it has a fair bit of truth to it, as Matt Stoller suggested today: The American military […]
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Did Hank Paulson Use TARP as a “Ruse” to Rescue Citigroup?

TheScream

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.

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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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Late Night Open Thread

Howard Dean is such a busy little bee, isn’t he? The Real Barack Obama has an interesting post up.  Months ago when they were called Rezkowatch, they posted a fascinating piece on Howard Dean’s role in enabling Barack Obama to get into the Senate so he would have a launching pad to move up to the White House.

Basically, about a month after Howard Dean lost his bid for the Democratic nomination in 2004, he morphed his campaign into Democracy for America and began working toward electing Obama in 2008. Somehow Dean got control of Move on also–or maybe Move on was working with him all along. Now The Real Barack Obama has more details on how Obama’s rapid march to power was planned.

Check it out, along with the earlier piece if you haven’t already read it. That Howard Dean. It’s amazing how he was able to accomplish this. And how on earth did he come out of nowhere in 2004 and end up taking over the Democratic Party? There is certainly a lot going on under the surface that I never suspected. My eyes are open now though. I don’t trust anyone in the Democratic “leadership” one bit. Continue reading

Hillary OpEd piece in WSJ while Obama’s in “Uh Uh Rehab”

Hillary Rodham Clinton, again displays her brilliant Solutions for America that actually will help everyday Americans .  Please click on link to read, here are a few excerpts.

I’ve proposed a new Home Owners’ Loan Corporation (HOLC), to launch a national effort to help homeowners refinance their mortgages. The original HOLC, launched in 1933, bought mortgages from failed banks and modified the terms so families could make affordable payments while keeping their homes. The original HOLC returned a profit to the Treasury and saved one million homes. We can save roughly three times that many today. We should also put in place a temporary moratorium on foreclosures and freeze rate hikes in adjustable-rate mortgages. We’ve got to stem the tide of failing mortgages and give the markets time to recover.

The time for ideological, partisan arguments against these actions is over. For years, the calls to provide borrowers an affordable opportunity to avoid foreclosure as a means of preventing wider turmoil were dismissed as government intrusion into the private marketplace. My proposals over the past two years were derided as too much, too soon. Now we are forced to reckon with too little, too late.

…Corporations that will benefit must be held accountable, not only to large shareholders but also to the American people, who are rightly tired of business as usual: short-term profit at the expense of long-term viability; lax oversight and regulation; obscene bonuses and golden parachutes regardless of performance; reckless risk-taking that has placed the markets in jeopardy; rewards for foreclosing on middle-class families and selling mortgages designed to fail; and outsourcing good jobs to serve short-term stock prices instead of America’s long-term economic health.

This is a sink-or-swim moment for America. We cannot simply catch our breath. We’ve got to swim for the shores. We must address the conditions that set the stage for the turmoil unfolding on Wall Street, or we will find ourselves lurching from crisis to crisis. Just as Wall Street must once again look further than the quarterly report, our nation must as well.

Meanwhile the Democratic Candidate, Emperor Barack O’Nero,  fiddles with debate dress rehersal in Tampa, or as I call it, “Uh Uh Rehab”: 

Obama is staying at the historic Belleview Biltmore until Thursday to get ready for his first debate with John McCain, to be televised from Mississippi on Friday. 

Choosing the Tampa Bay area for his debate prep and making sure to work in a few photo opportunities while he’s here is a way for Obama to keep his name in headlines in a battleground state while he is staying secluded to work toward the debate.  

Seclusion?  From what?  Reality, maybe?   Why would you need so much practice at something you’re already supposed to know?  Like DancesWithPumas said in MYIQs post below, “this crisis is above his pay grade.” 

But that’s what tutors are for!

Washington lawyer Greg Craig will play the role of McCain in Obama’s debate rehearsals. Craig, a foreign policy expert and member of President Clinton’s impeachment defense team, also played President Bush in John Kerry’s preparations in 2004.

Ooh, an expert pretend Republican with a recurring role! 

One goal of the prep work will be to make sure Obama gets to the point quicker than during the primary debates, an aide said. The often loquacious Illinois senator has been delivering snappier sound bites recently on the campaign trail at the encouragement of his campaign advisers. 

So it is “Uh Uh Rehab!”

So let me get this straight: Senator #1 has the solution to the financial meltdown which in turn will help everyday Americans affected by the crisis and the economic model that Senator #1 presents helped the US get out of the Great Depression in the 1930s.  

Senator #2 plays dress-up for 3 days for a debate that may not happen which took his opponent, Senator #3,  a couple of hours to prepare and said opponent suspended his campaign to return to Congress and help solve the meltdown.  This is Obama’s “My Pet Goat” and “Katrina” moment.  And the AMerican people are supposed to feel confident in Obama’s “leadership” and support the DNC’s choice for a candidate?  RD once again is right, it’s a fiasco. 

Can we PLEASE have Hillary back? 

¡Que viva los PUMAs!

Lanny, your friend from Yale is NOT vice-presidential material!

Doesn't look VICE-presidential to me, Lanny.

(As Big Tent Democrat says on Talk Left, “Speaking for me only.”)

Lanny, I apologize for my rude behavior when you were on No We Won’t Radio with Sheri Tag.  I had a “Satire on a Budget” moment that was quite crass.  It was rude, I admit it, and I promise to not let my satirical moments take the best of my Conflucian tastes.  But I’m really upset at your remarks, especially after your new Wall Street Journal opinion piece from yesterday – so I decided to address my frustration with your “Hillary as VP!” schtick head on:

Lanny Davis Op-Ed:

Why Obama Should Pick Hillary

By LANNY J. DAVIS
July 31, 2008; Page A15

Picking a vice president is obviously Barack Obama’s decision to make. He must be comfortable with who he picks. Comfort level between a president and vice president may be the most important factor of all.

So I can only offer my argument, based on some facts and subjective impressions, as to why I believe it would be in Sen. Obama’s personal and political interest to select Hillary Rodham Clinton as his vice presidential running mate. Not just to enhance his chances of winning — but, more important, to help him be a more effective president.

So basically what you’re saying is that Obama should pick someone who he knows he can boss around and have them do his homework for him while taking all the credit for it.  And you think Hillary is going to be the best at helping Obama be MORE “effective” – shouldn’t he be “effective” all by himself first? Continue reading