This is a stickup. Paulson is trying to stampede the Congressional herd into giving him powers and money that he knows they would never give if they had time to think it through carefully. It worked with the Patriot Act. It worked with the AUMF. He's betting it'll work again. Create a crisis (or lie one into existence) then demand dictatorial powers and unlimited spending authority to deal with it.
In effect, that quibble is like you walking into your local bank and saying "I need you to loan me a million bucks. Here are the conditions I must insist are met before I let you lend me the money. First..."
Say what?
He's given his tell, that he's a liar, a thief and a scam artist.
Time for Congress to call his bluff, and to see that the financial crisis is dealt with on their terms, with strict oversight by people they can trust, not by a scam artist and liar like Paulson.
Of course, Congress didn't call his bluff and Congress did fall for it. But let's remember our history. The House voted against. Nancy Pelosi indicated that she would not pass TARP unless Republicans voted for it in the same proportion as Democrats. They weren't going to do that, so TARP was dead.
Then Barack Obama stepped in and started twisting arms. TARP is Obama's baby. If you like it, or don't like it, remember, without Barack Obama it would have died.
This is the fundamental problem right now with Democrats. They passed a lousy stimulus, they made TARP Democratic policy by passing it with majority Democratic votes and they are on their way to passing a lousy healthcare bill which won't even kick in till 2013.
Bad policy leads to bad outcomes. Bad outcomes get blamed on the incumbents (as they should). TARP, the Stimulus, healthcare and the economy become less and less the Republican's problem every month that passed. Even if they screwed it up, Democrats control the House, Congress and the Presidency. It's up to them to fix George Bush's mess, and if they don't they will be judged as failures, and that judgment will be accurate and deserved.
And the outcomes are going to be bad. The stimulus bill was both badly put together (too many tax cuts, not properly targeted) and too small. The healthcare bill should be single payor, because single payor is proven to work and the witch's brew that Congress has put together isn't proven to work and they can't afford to fail. And TARP was, and is, a piece of crap, but the differences between Bush/Paulson financial policy and Obama/Geithner are so thin as to be largely cosmetic.
Policy has consequences. The "compromise" position between "doing it right" and "doing it wrong" may work sometimes, but it doesn't work when a nation is in crisis and has spent 30 years digging itself into a hole.
By the time Obama comes up for reelection, Americans won't have better healthcare and they will have less jobs than before the recession and the stimulus.
That's what he'll be judged on, and all because he signed on for Paulson/Bush financial policies, and compromised his key domestic and economic policies to the point where they wouldn't work.
It's getting ugly out there. Right-wing business lobby outfit National Association of Manufacturer's laid off 10% of their staff about a month ago, the Family Research Council axes a bunch of staffers post-election, and now I'm hearing rumors that the big Daddy of the right-wing, the US Chamber of Commerce, is going to engage in mass layoffs. This is reflective of the trade association world in general, which is preparing for an abysmal 2009 While we often concentrate on the decline of union membership versus unorganized or disorganized workers, I've never heard anyone try to quantify the amount of 'organized business' versus 'unorganized business'. Newer ascendant lobbying outfits, like the tech lobby, are still ideologically conservative, but you can tell they just don't have it in their hearts yet to truly crush everyone in their path and steal everything in sight.
Regardless, the budget of the right-wing is going to take a serious hit. That's going to have an impact on the culture of these outfits, who will become more risk averse. For instance, it is not a good year for these kinds of meaningless but irritating scandals to break out.
Roughly 100 employees of the [US Chamber of Commerce] ran up an $8,204 tab this week at The Exchange, a sports bar just blocks away from its prime real estate opposite the White House.
The party was to celebrate the end of the "Chamber Bowl," the association's internal softball tournament.
It was certainly not a victory for the Chamber's top brass.
Chamber COO David Chavern sent out an email chiding the partiers for their spending spree.
"Fundamentally, this shows a lack of responsibility on a number of people's part including Chamber personnel and management at The Exchange," Chavern wrote in an e-mail to more 50 employees, including softball players and top managers. "I will have to reevaluate a post-Chamber Bowl celebration next year."
Chavern detailed where the money went: One-hundred-and-fifty-five pitchers of beer, 37 bottles of beer, 208 mixed drinks, 111 shots, 43 margaritas and 11 open bottles of liquor.
Sources who attended the party described it as something akin to a Cancun booze cruise. They reported that drinkers ordered multiple pitchers of vodka and Red Bull and full bottles that they drunkenly left behind at the end of the night.
The Chamber, they said, had set no limits on the open bar.
The bill, attached to Chavern's e-mail, was reportedly several pages long.
Party-goers put some of the blame on the bar, saying that the waiters who served them had - among other things - slapped an 18 percent gratuity on the bill.
Member organizations do not like the prospect of trade association employees partying on their hard earned dime. Not in 2009, though to be fair, it was the bar's fault, since the bar forced them to tip their serving staff.
I'm having trouble wrapping my head around the politics of the current bailout and transition. The government is now going to lay out $7.2 trillion in lending to the financial system, which Congress ratified with the bailout vote. And that TARP program is rumored to be enlarged to $1.2 trillion from its current $700 billion amount. Citigroup is being bailed out with a remarkably awful deal for taxpayers, where the government takes a small percentage of the company in return for hundreds of billions of dollars. Robert Rubin, who should be living in disgrace, is going to be an important force in the White House, Larry Summers, who helped cause a lot of the policy problems, will run the Fed in 2010, and Tim Geithner, a Rubin disciple, is going to be the Treasury Secretary.
All of this is in the name of 'stability.' Of course, the automakers are on the brink of devastation, Blanche Lincoln is 'undecided' on the Employee Free Choice Act (so much for that 60 votes in the Senate threshold), and that promise to revise Bankruptcy Laws is far in the distance. This would be mindblowing if I hadn't watched the runup to the war in Iraq, the impeachment of Clinton, and the elite self-protection games that have gone on for years. I never expected Obama to be a progressive (since he kept saying he didn't believe in ideology and wasn't part of the left), and took a lot of heat here for saying that repeatedly. And he's obviously not. But more than that, I'm just kind of floored by the automatic pilot this political system is on, even after ten years of obviously horrible and embarrassing public policies.
It's just simply awful. The law? Pff, whatever. The WTO? No, the rich people want subsidies, that's cool. Congressional authority? Nah, it's obvious that the executive branch is going to be dominant for the foreseeable future, and that the public has very little input into, well, anything. The Very Serious People are still as powerful as they've ever been; we might have helped shuffle around the Village a little bit, but that is it.
Man I hope there is an Obama movement, distinct from Obama himself and with leaders who can create oppositional and proactive stances. This is really really bad.
Hank Paulson is an idiot. People on Wall Street quietly think he's one of the worst cabinet picks of Bush's entire term, and while there are no standards for whether the bailout is working, there's no way that you're going to hear honest opinions about his performance because Very Serious People believe that saying what everyone knows is obvious will rattle confidence in the market.
The new Treasury Secretary, Tim Geithner, is embroiled in the last twenty years of monetary mismanagement without the tarnish of being in the private sector (and thus profiting from it). He helped construct the bailout and he was part of the decision to let Lehman fail, Paulson and/or Bernanke's single worst decision so far. I'm slightly more positive towards Geithner since he's younger and more technocratic than ideologically oriented, but not that much.
The appointment of Larry Summers as senior advisor in the White House, despite his ridiculous work in the 1990s pushing through financial deregulation and his utter failure to even admit Enron's manipulation of California's energy market, is evidence that the same people who got us into this mess are in charge of getting us out. But you're not going to hear honest evaluations from anyone, even the very kickass AFL-CIO lawyer Damon Silvers who should be screaming bloody murder as part of the newly appointed oversight board, because they are all being quiet.
Lest they spook the markets. So get ready for more awesome confidence.
I bought a copy of the homeless written and sold Street Sense magazine today, after seeing this poster. That's good marketing.
A friend told me that a year ago Cambodian children were selling trinkets to American tourists and prefacing their sales pitch with 'George Bush should lose the election'. That's really good marketing.
The world has really changed, hasn't it? Oh, and the stock market crashed today, again. I hope the automakers get help and a serious overhaul. One of the best ideas out there to do this is scrappage, where the government simply buys new small cars and gives them to people in return for old inefficient clunkers. It's immediate stimulus, puts idle factories to work, and reduces fuel consumption.
You get a car! And you get a car! And you get a car!
Despite promising an "open and transparent program with appropriate oversight', Neel Kashkari's Treasury Department program has blacked out the compensation section of its contract with Bank of New York Mellon.
This follows an earlier blackout of the contract rate for its deal with a high powered law firm. One of the little noticed parts of the bailout is that the legislation allows Kashkari to sidestep standard Federal government hiring procedures. As Robert Dugger says, "This bill does not provide the institutional infrastructure to manage $700 billion in distressed assets." That was only one out of many reasons to oppose this deal, but it alone
No one could have predicted a Bush administration official would ask for enormous power, Congressional Democrats would grant it, and the administration would use that power unwisely and with enormous secrecy. The election can't come soon enough.
Via Barry Ritholtz, here's Richard Whitney, President of the New York Stock Exchange, advocating against regulation of the markets in 1934. Ah, conservatives. Whitney was put in jail a few years later for theft.
The IMF and the G8 met this weekend, and Neel Kashkari, Hank Paulson's henchman, is speaking at 8am ET to discuss what he's going to do with the $700B bailout. The Europeans are announcing their plans, and it sounds like coordinated global leadership is actually happening (according to Soros). The market is extremely oversold and traders are talking about a bounce, so we won't know if this works for awhile (unless the markets continue to crash).
Anyway, I'm going to be following Mr. Kashkari. Supposedly, he's a very quiet man, so when he speaks the words will be well-considered.
Hank Paulson may have deliberately helped engineer the current financial crisis, for the benefit of Wall Street cronies to not only consolidate their hold on US banks, but banking around the world (especially Europe). This follows a pattern used by Wall Street traced back to as far as 1835.
As I document in my forthcoming book, Power of Money: The Rise and Decline of the American Century, in every major US financial panic since at least the Panic of 1835, the titans of Wall Street-most especially until 1929, the House of JP Morgan-have deliberately triggered bank panics behind the scenes in order to consolidate their grip on US banking. The private banks used the panics to control Washington policy including the exact definition of the private ownership of the new Federal Reserve in 1913, and to consolidate their control over industry such as US Steel, Caterpillar, Westinghouse and the like. They are, in short, old hands at such financial warfare to increase their power.
Ben Bernanke's Fed today announced it's going to start buying short term commercial paper. The commercial paper market is normally used to fund solid corporate activity, but in the last few years it has become rife with questionable financing operations.
One tiny problem is that it's not legal for the Fed to do this (read Secrets of the Temple for a great book on how secretive and powerful the Fed really is). Another tiny problem is that this plan by the Fed is probably larger than the $700 billion bailout, and there's no Congressional authorization for any of this. Yet another tiny problem is that it's not going to restore confidence to the market.
So Paulson puts 35 year old tech investment banker from Goldman Sachs, Neel Kashkar, in charge of the $700 billion fund. I'm trying to find out more, this guy was a donor to George Bush and a tech banker in San Francisco that worked on 'advising public and private companies on mergers, acquisitions and financial transactions.' He's a senior advisor to Paulson at Treasury and he's also in charge of Treasury's website.
In general, I'm not a huge fan of 2004 Bush max out donors. Goldman people are extremely tight, and it looks like Kashkari is one of Paulson's key lieutenants, and he negotiated the bailout deal itself.
And a new Villager arrives.
... Watching his confirmation hearings, his responsibilities at Treasury were to increase free trade, reduce our dependence on oil through conservation and alternative energy deployment, and respond to the Housing crisis by working to ensure a flow of capital through the private sector to the housing sector while minimizing the spillover of the housing deflation to the rest of the economy.
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