Opinion-Columns.com

WHO’S TO SAY NO? AND OTHER MYSTERIES OF TODAY’S TOO BIG TO FAIL MENTALITY

The Federal Reserve, announced a week or so ago, is poised to inject $1.2 trillion (whatever that means) into the economy (whatever that is).

Well it’s a big number, that’s for sure. And it’s not as if we actually have it in an account somewhere, to transfer as we might from some federal savings account to checking, nor are we taxing ourselves in order to create it. God, or Heaven, or Bernanke forbid. There is no one forbidding and that’s probably just as well, because the number and the event and its eventual outcome are all fictions—works of the imagination.

I have some experience with that, as a writer of fiction. But  have rather none at all of economics, but for standing up to my knees against the current of some eight decades and trying to cast the fly of my own modest life in a way that might bring security safely to the net. Security is a wary adversary these days and not quite the farmed and eager fish of recent years.

But it will not work, this dynamiting the rivers of opportunity with trillions. We chant the mantra of ‘too big to fail,’ while failure is upon us. The solutions that could work are long-term and require patience, but we’re out of patience and we’re scared and it’s getting dark and our boot is leaking. We elected Barack Obama to solve it, no matter that the engines of our financial demise have been running full-tilt for decades. Not able to solve it in this 1^st quarter of his presidency, our president’s stock may slip and his (and our) hopes for a successful IPO may fail as well.

Probably will, which is a very long way from the hopes of the Rush Limbaughs of America that it actually will fail, allowing conservatives another chance to dynamite the pond. But we’re in for a long and difficult haul. We’re not yet halfway there. The AIGs and the Bank of Americas and Goldman Sachs, who claim to have underpinned our financial security in these frenetic decades are not too big to fail. Fail they will, fail they must, to rid themselves of fraud and preserve what is worth keeping.

This online pitch comes up #2 if you Google “bank of america customer base:”

Announcing the Bank of America Preferred Real Estate Broker NetworkTM and the Bank of America Real Estate CenterTM.

Bank of America continues to reinvent the real estate partnership model by adding cutting edge technology and innovation to our suite of business building opportunities for real estate companies.

The Bank of America Real Estate Center™ enables millions of our online banking customers to connect with our Preferred Real Estate BrokersTM. Bank of America has the largest online customer base of any financial services company worldwide and is willing to leverage it to help our Preferred Real Estate Brokers grow their bottom line.

They actually wrote that and promote it online. Does that sound even remotely like the public interest is at stake? Bank of America’s boldly stated willingness to leverage is not even suggested as being in your or my interest, but instead to help our Preferred Real Estate Brokers grow their bottom line. I don’t know about you, but I have had my fill of their preferred brokers bottom-feeding to grow their bottom line. I have another suggestion for their bottoms and that is to toss them out into the street and begin prosecution.

Too big to fail is phrasing directly from the swamp of Wall Street, a non sequitur rivaling

• too fat for a heart attack
• too good to be true
• too essential to be let go and
• too old to die

The public interest is best served we are told, by hooking an already addicted investment community to a seemingly endless intravenous drip of public money. Just because these trillions do not exist does not mean they are not ours to pay off. The treachery of Wall Street got us used to the idea that the music would never stop. The continuing treason of Congress whispers in our ear that they (now) have the wisdom and character to steer beyond their own self interest.

Time out for a moment as I lightly drop this fly on the stream of gullibility and float it off in your direction: Does it make sense to you that a Senator will spend $6-8 million (expanding toward $25-30 million) to get himself/herself elected to a position that pays a $169,300 annual salary? None but the most credulous would swallow that. Bribes to Harry Reid in the past five years totaled over $12 million. Chuck Schumer, that paradigm of financial blowhardiness, sucked up more than $13 mil during the same period.

So, who’s to say no? Certainly not those with a line in the water. Apparently not the paid-off legislators, Mark Twain’ famous ‘only native American criminal class.’ Twain and a pair of Roosevelt presidents fished in these same murky and senselessly unregulated waters.

Yet here we are again

WHO WAS MADE WELL AND WHO WAS LEFT TO SWING?

Who got de dough? Seventy-five thousand million dollars of your and my personal contribution went to "trading partners of AIG Financial Products, the small subsidiary whose exotic derivatives brought AIG to the edge of collapse."

But AIG's total exposure is 30 times that much--nearly a $trillion and a half. Which insiders, do you suppose, were best able to belly up to the bar? Read on . . .

AIG Discloses $75 Billion in Bailout Payments
Insurer Reveals List of Taxpayer Funds Doled Out to Settle Debts With Companies, Municipalities

By Brady Dennis
Washington Post Staff Writer
Monday, March 16, 2009; A01

In the six months since the government's bailout of insurance giant American International Group, a rescue that has become increasingly costly and contentious, one question has loomed above all others: Where did the money go?

The answer became a little clearer yesterday when AIG unexpectedly released the names of dozens of trading partners it has paid using billions in taxpayer dollars. The disclosure, which the company said was made after consulting the Federal Reserve, revealed that AIG paid more than $75 billion in the final months of 2008 to numerous domestic and foreign banks, as well as to various U.S. municipalities.

The funds were paid from the government's initial $85 billion emergency loan in September and included major firms such as Goldman Sachs, Societe Generale, Deutsche Bank, Merrill Lynch, Morgan Stanley, Bank of America and Barclays.

The payments were made between Sept. 16 -- the date that government assistance began -- and Dec. 31.

--read entire article--

__________________________________________________________

AIG shines a whole new light on who will serve and who will eat in this newly manufactured financial society. Unsurprisingly, Henry Paulson's old firm, Goldman Sachs sat at the head of the table, wiping its chin with other people's money. Bank of America got a plateful and (through their acquisition of Merrill Lynch) went back for a second helping.

105 days spent shucking financial oysters and the guys behind the bar must be dead tired. That's nearly a half-million dollars a minute, 24 hours a day, seven days a week. Even God got a day off, but not these shuckers.

"There are a lot of terrible things that have happened in the last 18 months, but what's happened at AIG is the most outrageous," Lawrence H. Summers, chairman of the White House National Economic Council, said yesterday during an appearance on ABC's "This Week." "What that company did, the way it was not regulated, the way no one was watching, what's proved necessary, it is outrageous."

Summers has been quoted elsewhere as saying we are a country of laws, which indeed we pride ourselves as being. But that's somewhat subjective and there are times when we as a nation rise above the law. Rising above our petty differences is a good thing. Rising above the law is not.

A staple of that law we so revere and to which we pay homage, depends upon those in the game recusing themselves from cases in which they have an interest. An interest might include being a friend of the defendant, making a buck from one or both of the litigants, having done business with either the prosecution or defense--you know the kind of thing, from jury duty or watching Boston Legal.

Yeah, Larry. The way no one is still watching, yourself included, is setting itself up as next year's outrage.

Another dozen oysters? You want hot sauce with that?

FINALLY--AS ALL ELSE FAILS--THE EXTORTION OF AMERICA

U.S. to Invite The Wealthy To Invest in The Bailout

By David Cho
Washington Post Staff Writer
Friday, March 6, 2009; A01

The government is seeking to resuscitate the nation's crippled financial system by forging an alliance with the very outfits that most benefited from the bonanza preceding the collapse of the credit markets: hedge funds and private-equity firms.

The initiative to revive the consumer lending business, outlined by officials this week, offers these wealthy investors a new chance to make sizable profits -- but, thanks to the government, without the risk of massive losses.

The idea is to entice them to put their huge cash piles to work to stimulate the financial system. They would be invited to buy up recently issued, highly rated securities. These securities finance consumer lending, such as credit cards and student and auto loans.

The program, which could involve the government lending nearly $1 trillion to these investors, exceeds the size of every other federal effort to address the crisis so far.

--read entire article--

___________________________________________________

A trusting nation watched as this new president surrounded himself with old guard and privileged insiders. We knew there was an agenda to be served, but we trusted him to select that agenda with care and reverence to the principles he so eloquently espoused in the run-up to election. No one expected the extortion of Barack Obama.

Extortion (noun) The felonious act of extorting money (as by threats of violence)

Winston Churchill said that "America can always be depended upon to do the right thing--after exhausting all other efforts." We are, by allowing the rich who sold us out to profit again and profit from the resuscitation of their own criminal efforts, at but a mid-point of all other efforts. The shame of this bright and shiny new administration is its absolute and complete lack of guts (which would have now, to include a lack of integrity).

It pains me beyond words to admit that. As a nation, we are better than that. We are not cowards, we are mostly not idiots.

The solution to our national extraction from this current financial death-spiral is--and always has been--the establishment of a parallel and unfettered system of Federal Banks, financed by the several trillion dollars we are currently throwing down the rat-hole of failure and avarice. Such a banking system would attract capital and loan to the credit-worthy businesses and individuals who need money for purposes other than the perpetuation of consumer-spending.

Consumer-spending (among other things) got us here. We need not restart that engine. We seriously need once again to become a productive nation of industrial, agricultural and innovative activity. In a national priority aimed at our salvation, we must have the courage and integrity to build upon what is sound and let fall that which has brought us to our knees.

It's painful. It's necessary. It's a national agenda worth following; one for which we put an elegant majority of electoral trust and purpose into the hands of a new man and a new administration.

The worst possible failure of that trust and purpose is to succumb to the extortion of this vicious and unprincipled investment cabal of co-conspirators who so nearly destroyed America.

IF THE 'SHADOW BANKING' WORLD SOUNDS SHADOWY--AND SCARY--READ ON

Financial Rescue Turns to Toxic Assets

New Funds to Vie for the Securities, Setting A Market Price So Banks Could Sell Them

By David Cho and Neil Irwin
Washington Post Staff Writers
Wednesday, March 4, 2009; D01

The Obama administration is aiming to solve one of the toughest riddles at the heart of the financial crisis -- how to value the toxic assets weighing down the books of banks -- by setting up several funds to vie for these securities, sources familiar with the plans said yesterday. By competing to buy assets, the funds could set a market price that would finally allow banks to sell them off.

. . . Federal officials in the Bush and Obama administrations have struggled for months to find a way to price these distressed assets, which are backed by troubled mortgages and other loans, that is high enough to help banks but low enough to protect the government from massive losses. Establishing several funds, run by private managers, would take that vexing problem out of the government's hands, allowing market forces to determine what these assets are worth.

A mere paragraph apart, this article tells us our government is planning to 'set' market prices and then 'allow market forces to determine what these assets are worth.' (Econ 101: Market price--the price at which buyers and sellers trade the item in an open marketplace) Anything in the above article that resembles an open marketplace is purely by sleight-of-hand.

. . . The government would give these private investors loans to help buy the securities and offer to cover some losses.

So your and my government is going to loan your and my money to private investors, helping to cover their losses, while you and I lose our homes and can't get a loan to keep our lawn-care business afloat.

What a brilliant idea.

. . . Both of these initiatives look to tap private investment funds, bond traders and some hedge funds, which are key players in what is often called the "shadow banking system" -- the financial markets beyond traditional commercial banks that provided about 70 percent of credit to borrowers before the crisis.

Let me get this straight. These shadow bankers, unregulated all, are the guys who toxified the financial market with their 70%.

. . . Government officials said lending could not return to normal without helping the shadow bankers. . . The government's terms give private firms the potential for making tremendous profits, while limiting the losses private investors could face.

Now our elected government of change is prepared to give these same dodo investment dudes the potential for making tremendous profits to de-toxify what they toxified.

"I think if the government is prepared to partner with the private sector as well as put up leverage to facilitate certain kinds of investment it could be quite interesting to a private-sector investors," Schwartzman said. He added it is very difficult today for most private investors to get such favorable opportunities.

Well, I'll just bet that would be interesting and that last line understates the situation by about 300 million to one. It is increasingly difficult today for most private citizens to survive, keep their kids in school, stay in their home, have some hope of retirement and not find themselves on the street with no job and no health insurance.

Maybe the government could put up some leverage for that.

--read entire sorry mess of an article--

______________________________________________________

That screwing sound you just heard was the public being filleted, sauteed and served up for dinner to the same people who wrecked a worldwide financial system.

Bon apetit.

FIAT (FIX IT AGAIN, TONY) AND CHRYSLER IN A MARRIAGE OF CONVENIENCE

Chrysler CEO Bob Nardelli and I share a birthday, but there the similarity ends. We were both born under the astrological sign of Taurus and the irony is not lost that this distinction may put us closer to Ford than either Chrysler or Opinion.  Those of us born under this sign are said to be dedicated, determined and disciplined, reliable, patient and tenacious. Somewhere in there is stubborn, but not to worry, that’s a trademark of the auto industry in general.

Nardelli is a tough guy, but he’s been a top gun (GE) or CEO (Home Depot) at ever weaker companies over his career, always landing on his feet after being let go with one of those cash-rich parachutes. Light bulbs, the two by fours and now cars—is there an end to all this somewhere and is it a happy ending?

Enter potential merger partner Sergio Marchionne, FIAT Group CEO and brand new 35% suitor of Chrysler. Daimler Benz couldn’t make a similar marriage work, but then they had an already large U.S. presence and not much upon which to build cross-markets. Embarrassingly, Daimler paid some $38 billion to buy Chrysler in 1998 and recently had to pay a dowry of $650 million to get a private investor group (Cerberus) to take it off their hands.

Somewhere there is a meeting in the great beyond, where Walter Chrysler and Henry Ford are both getting drunk.

For his part, astrologically, Sergio is a Gemini—adaptable and versatile, communicative and witty—how Italian of him. The dark side of his sign is nervous and tense, superficial and inconsistent, cunning and inquisitive. Can this marriage be saved? I admit to a long and tireless campaign against the stubbornness and superficiality of Detroit as the American automobile industry sank beneath the waves of one failed non-strategy after another.  Detroit held fast to muscle-cars long after the muscle had left the industry.

They brought disaster upon themselves the old-fashioned way—they earned it.

All that off my chest, Chrysler has been an engineering giant in the industry and now builds a pretty damn fine (if somewhat upscale) car, supposing they can survive to see the market come back. FIAT, for its side of the bargain, has a 20% market share in Europe and none in America, which is still the world’s largest single buyer of cars. Chrysler hasn't much in the way of small, fuel-efficient cars and could use the FIAT line to bolster their dealer network. Hmmmm . . . might work.

The Washington Post reports,

The alliance of the two companies provides no cash to Chrysler, but the company's chief executive, Robert L. Nardelli, told stakeholders in a letter that he hoped the deal would bolster the automaker's case for an additional $3 billion of federal loans by strengthening its offerings. The nonbinding agreement is subject to approval by the Treasury, and Chrysler said it hoped it would be complete by April.

 "You're taking two big automakers who have gaps in both their products and geographic reach, and you're filling those gaps," said David Elshoff, a Chrysler spokesman. "They fit like pieces in a puzzle."

That was perhaps an unfortunate metaphor. Being puzzled is not something you want to admit when you’re courting. Someone at the Treasury Department might just reasonably begin to ask if there are any other significant pieces missing; like perhaps unsustainable commitments to health and welfare obligations. The Italians are not likely to contribute much to that synergy.

Mercedes out almost $30 billion and now Chrysler, divorced after that short marriage, is trying to stagger to the altar with FIAT and Alfa Romeo.

“Romeo, Romeo, wherefore art thou, Romeo?”

FIAT, itself formerly and briefly married to GM, was paid some $2 billion to annul that matrimonial disaster. Automobile companies, like Elizabeth Taylor, seem somehow unfit for marriage, no matter the doggedness of their intentions.

Nardelli and Marchionne—the names sound like a couple of expensive desserts at an Italian restaurant. Yet Marchionne was the author of a remarkable turnaround at FIAT—known alternatively as Fabbrica Italiana Automobili Torino and Fix It Again Tony, the latter with a usually benign chuckle. The man booted FIAT into a 20% market share in Europe, but it’s depressing to think that the American taxpayer is supposed to come up with a $3 billion dowry to get Chrysler to the church on time.

Supposing FIAT actually has hopes for successful entry into an already crowded and declining (read that plummeting) American auto market, they could do worse than avail themselves of Chrysler’s 3,372 authorized dealers across the land. Currently faced with the very expensive and very demoralizing shutdown of huge numbers of dealers, Chrysler might find blood enough in the FIAT econo-box line to keep the patient alive until help arrives. It better arrive quick.

(WaPo again) . . . By mid-February, Chrysler must submit a restructuring plan to achieve long-term viability, international competitiveness and energy efficiency. If it doesn't show progress on that plan, by May 1 the government can call back the $4 billion loan, effectively pushing the company into bankruptcy.

That’s a week from now.

. . . A critical element to the deal is the acceptance by dealers, who would likely be asked to sell Fiats. 

"This is phenomenal," said Hayden Elder, co-chair of Chrysler's national dealer council and the owner of Elder Chrysler Dodge Jeep in Athens, Tex. "We've got a partner now."

It sounds like, given the alternative, dealer acceptance is not going to be a problem. Which would be great news for a stressed industry, were it not for the fact that automobile sales (worldwide) are at the very tip of the economic spear—and that shaft is in an almost vertical downward free-fall. Which might bring a whole new meaning to the term shafted.

THE STRUGGLE FOR PATIENCE IN AN IMPATIENT NATION

It seems time to climb back into the saddle at Opinion-Columns after a sojourn afoot, leading my no longer trembling horse back toward the home stable. The election has been won and, with it, my almost psychopathic need to gallop off in this or that direction, dispensing opinion like scattered shots at disappearing rabbits. I’m on foot. I’m relaxed, as my president seems to have not yet put a foot wrong.

And yet . . .

It’s my hunch that we are not 10% into the economic bad news to come and my concern is not that we will be unable to deal with the collapse—Americans are good at that—so much as unwilling to wait. We are not good at waiting. We are a nation of doers and sometimes the work that needs to be done is less productive and requires more of a steady hand. I am reminded of the photos from post-war Germany. While Europe largely stood around in shock, kicking its toes in the dust and waiting for rescue, the Germans cleaned mortar from rubble and neatly piled the bricks. They would need bricks. It was certainly not enough, there was no such thing as enough in a nearly destroyed Germany. But it was what was there to be done and they did it.

It remains a question if Americans are sufficiently stoic to pile the bricks that have come cascading down during the last year of the Bush administration. In fairness, the stage was set for collapse decades ago. Pick your administration of choice; Johnson with his great society, Nixon taking us off the gold standard, Jimmy Carter and his inability to deal with 22% interest rates, Reagan deregulating, Bush Senior adventuring in Panama and the Persian Gulf, Clinton allowing Alan Greenspan to loose the dogs of Wall Street, Bush the Younger privatizing essential government services. And the walls came a tumbling down.

The celebration of Barack Obama has not yet peaked. The promise of his message has not yet lost its ring of truth and call to action. The bipartisanship alluded to in the Congress of the United States has not yet been tested. We are eager, perhaps even inspired by this man.

But will we pile bricks for him?

The Dow Jones Average dropped 332 points on the day Obama was sworn in as 44^th President of the United States. The audacity of hope, offset by the reality of markets gone to hell—and as Randy Bachman sang, "you ain't seen nothin' yet." We have yet to deal with nearly $60 trillion in credit default swaps out there somewhere, essentially insurance policies with no financial backup. That alone is sixty times the much vaunted bailout fund allocated to the Federal Reserve/Treasury. Thus far, the $350 billion thrown at banks has yet to produce a loan to a consumer or businessman. Not much into brick-piling, the banks merely paid themselves dividends and bought other banks.

That sounds grindingly true to the attitudes that got us into this mess, but the guys and the institutions into which we are pouring (and printing) money, all have familiar names;

·        Citigroup, Vikram Pandit, $45 billion

·        AIG, Martin Sullivan (fired) Robert Willumstad (ex Citigroup) $40 billion

·        J.P.Morgan Chase, (Jamie Dimon) $25 billion

·        Wells Fargo, (John Stumpf) $25 billion

·        Bank of America, (Kenneth D. Lewis) $25 billion

·        Goldman Sachs, (Lloyd C. Blankfein) $10 billion

·        Morgan Stanley, (John Mack) $10 billion

and on and on and on . . .

Ten months ago, (March 2008), Wells Fargo CEO John Stumpf said the financial crisis is presenting the bank with more acquisition opportunities. How’s that workin’ out for you, John?

Lloyd Blankfein over at Goldman kicked off this year with a ‘letter’ to investors that opened,

“At Goldman Sachs, we regard diversity as a business imperative – it is at the very core of our ability to serve our clients well and to maximize return for our shareholders.”

Diversity, in Goldman-speak, no doubt includes ten-thousand-million dollars in taxpayer bailouts to maximize Lloyd’s return for shareholders. The guy who signed the check was Treasury Secretary Henry Paulson—ex CEO of Goldman. Nice lateral pass as you work your way downfield, Henry.

This whole thing appears to be about acquisition opportunities and maximized return for shareholders, when it was sold to we doddering taxpayers as a way to bring equity to Main Street and scrub Wall Street with a wire brush, like a derelict in a bathtub. Equity—fairness in the common language of common folks. Derelict—a person without home, job or property—a ship abandoned on the high seas. Wall Street, having swindled us out of homes, jobs and property and then abandoned us on the high seas of an economic hurricane, talks of acquisition opportunity and maximized profits as if it was not on life support. Brain-dead, its heart and lungs operated by endless cash infusion, there appears to be no cure outside of grand jury indictments and prison terms.

Bernie Madoff swindled his friends out of $50 billion and isn’t even in the news today, six weeks after his arrest. Madoff is not an anomaly, he was Chairman of Nasdaq, a major American stock exchange. Listing over 3,000 companies, it has more trading volume each and every day than any stock exchange in the world—and its chairman is a thief, a crook and a swindler. It’s rumored that he may even evade jail time, plea-bargaining his way to a soft landing in his twilight years. Certainly he is not today in the slammer. Bernie is a letter-writer as well, penning this mea-culpa to his fellow occupants at 133 E. 64th Street in Manhattan;

Dear neighbors,

Please accept my profound apologies for the terrible inconvenience that I have caused over the past weeks. Ruth and I appreciate the support we have received.

Best regards,

Bernard Madoff

Apologies for crowding the elevator with the cops on duty to watch his sorry ass, but not so much as a quick scrawl to those who trusted him personally and are now left holding the bag. In true Wall Street egocentricity, the fault is all forces beyond Bernie’s control and he’s but a hapless victim of circumstance.

When there are bricks to be piled against the long, hard work of reconstructing our blown-apart economic structures, don’t look in the streets for Bernie or Hank. Nor will you find Vikram, Bob, Jamie or John dusting off and stacking blocks of clay. Feet of clay perhaps, but Ken Lewis, Lloyd Blankfein and John Mack will all be viewing the destruction they caused from the decks of yachts and villas in Europe.

There is no Nuremberg Trial for financial crime, but the patience of this historically impatient nation is soon to become threadbare as the true breadth and depth of what has been stolen reveals itself. Financial advisors—those same idiots who were unable to see the coming train-wreck, are now declaring the tracks to be clear if only the taxpayer would take these terrible toxic investments off their hands. Barack Obama will have to deal with that, among his thousands of other crises.

Will we have the patience?

A BAILOUT LIMERICK by Jim Freeman

The Limerick is poetry’s worst

Never written by those who are versed

In the headier climes

Of purposeful rhymes

But this is a moment that’s cursed

 

So I write of a system in chaos

Compounded by those who betray us

With promises bold

That quickly turned cold

As suddenly off they would lay us

 

The tag-team of Henry and Ben

Ignoring the why, where and when

Supported the bankers

Those fraudulent wankers

Making dough by a factor of ten

 

These guys in the pin-stripey suits

Standing drinks at the bar in cahoots

All covered each other

While running for cover

And bailing with gold parachutes

 

So Paulson came in with the facts

And a plan to bail out Goldman Sachs

Details were obscure

The Congress unsure

So he fed them a bevy of snacks

If you look to be healed of your pain

And be rid of this terrible stain

Then let me assure

Those who made you poor

Will do it again and again

 

So what the hell can we do

To stay out of this simmering stew

I’m afraid it’s too late

The rich have all ate

And left dirty dishes for you

 

Wall Street was rolling in dough

With too few good places to go

With derivatives dicey

And way over-pricey

Investors lined up at the do

 

It mattered not what they were fed

Or how by the nose they were led

Liar-loans soared

And the money it poured

To the monsters under the bed

 

A slim retribution remains

On this tablecloth covered with stains

Paulson’s friends who all wail

Should be sent off to jail

And we’ll count that as capital gains

BAILING OUT WOODEN ARROWS WITH WOODEN NICKELS

According to the gurus over at Wikipedia, “A wooden nickel, in the United States, is wood token coin, which are usually issued by a merchant or bank as a promotion, sometimes redeemable for a specific item such as a drink. Wooden nickels were most commonly issued in the US in the 1930s, after the Great Depression.”

Which is fine (as far as it goes), although in the sense of the current bailout of fraudulent and specious investment vehicles, it seems the wooden nickel is upon us almost before the fact. We have been snookered out of our underwear before the game began.

Investment ‘vehicles’ are well named, invented as they are to drive off with your money. In case you missed the point of the failure in the House of Representatives to pass Hank Paulson’s giveaway to his former partners in crime over at Goldman Sachs, it was to provide political cover for the coming election, while allowing the Senate to unashamedly lard the legislation.

Seldom does the Senate step in ahead of the House, but paid-off Senators were well paid and only a third of them are standing for reelection. Thus are leaders made. Such is the power of a corrupt two-party system that badly needs a viable third party to disrupt partisanship where stalemate and power-plays have all but replaced representative government.

Hope for a future lies in meaningful coalition governance. What we have allowed in Washington simply will not suffice. Consider what Nancy Pelosi (rhymes with Bela Lugosi) has given us for this month’s monster under the bed;

(Rescue Sweetened With Tax Incentives, by Cecilia Kang, Washington Post)

The House of Representatives yesterday approved $107 billion in tax breaks for businesses and consumers as part of a sweeping financial rescue package designed to stave the credit crisis.

Saddled onto the 450-page bill is a provision to shield as many as 25 million Americans from the alternative minimum tax and $18 billion in tax credit extensions for wind and solar energy production.

Yet to appease lawmakers and make the bill more attractive, several more prosaic tax provisions are included, according to a government budgetary watchdog group.

Saddled. Well chosen metaphor. Indeed, the nation’s economic horse very nearly sank to its knees under the load. Any vague hope that “the best Congress money can buy” would seek anything other than its own unending grip on Democratic dominance (under an Obama administration) sank as well.

Pelosi, who has an absolute majority in the House, said, “We were dealt a bad hand; we made the most of it.” This witless Speaker of the House has made nothing but excuses for the deplorable job she has done since the 2006 mid-term election gave her what she wanted and cannot find a way to use—control.

In the week that was, last week’s $700 billion refusal became this week’s acceptance--larded with an additional $150 billion in earmarks and other buried treasures. Republicans have been watching all year, like cats at a mouse hole, for a bill that could not be refused to which they could attach pet legislation.

They got it this week on a platter, thanks to the Pelosi-Reid dumbo combo. Less able 'leadership' has seldom haunted the halls of Congress. Republicans are not always civic-minded, by by god they are able and showed it by their expansive mood.

(Time Magazine) Paulson's original request was barely three pages long, whereas the bill passed today runs well over 400 pages.

Pork, of course, is not exactly speech-writing, but it does take language and language takes pages. Fortunately, that language was at the ready, loaded, primed and parsed, eager to be fired so everyone could go home and leave the mess to Obama or McCain. With change like this, who really cares who occupies the White House?

(Washington Post again) NASCAR will be able to write off racetrack costs over 7 years and manufacturers of wooden arrows for children will be shielded from an excise tax applied to other shafts. The NASCAR provision was introduced by Rep. Mike Thompson (D-Calif.), who voted in favor of the bill.

Nice job, Mike. That certainly bails out the auto-racing industry, which grosses more than any other organized sport and is awash in profits. A friend of mine, just today, sent me a pretty good idea--that those in Congress be required to wear NASCAR-like uniforms, so we could readily see their sponsorship. I don't know the attribution, it's not original with him, but it's pretty accurate and (would be) funny if it didn't cleave so close to the bone.

The bailout package also provides tax rebates on rum imported from Puerto Rico and the Virgin Islands and tax credits for economic development on the island of American Samoa.

"In the midst of a debate over a historic bailout package, Senate pulled out an old bag of tricks: piling billions of dollars of unrelated legislative provisions into the package and daring the House to reject the bailout again," said Ryan Alexander, president of Taxpayers for Common Sense. "Many of these provisions are tax extenders that have been waiting in the wings for months, hoping for a legislative train to leave the station."

The bill passed the House yesterday 263 to 171. It was a last-ditch effort of sorts for proponents of renewable energy to get tax provisions extended before they were set to expire by the end of the year. Those extensions, estimated at $18 billion, had repeatedly failed to pass legislative muster in both the Senate and House over the past year.

The tax breaks in the legislation total $149 billion over 10 years, and are offset by $42 billion in tax increases. The hikes include a new levy on hedge-fund managers who avoid taxes by transferring income offshore, a provision that would raise $25 billion over 10 years.

It was an absolutely bi-partisan effort. Everyone got their hand in the till, regardless of race, creed, gender or political affiliation. No cause was too large ($150 billion in tax breaks) or too small (39 cents on wooden arrows).

(Bloomberg) Senators attached a provision repealing a 39-cent excise tax on wooden arrows designed for children to an historic $700 billion financial-markets rescue that passed tonight by a vote of 74-25. The provision, originally proposed by Oregon senators Ron Wyden [D] and Gordon Smith [R], will save manufacturers such as Rose City Archery in Myrtle Point, Oregon, about $200,000 a year.

Senators Widen and Smith can’t get any more bi-partisan than that.

(Wikipedia) It was during this (depression era) decade that some banks and chambers of commerce in the United States issued wooden nickels with expiration dates to mitigate difficulties faced by merchants in making change at times of instability.

Wooden arrows—wooden nickels—guess we’ve now seen the closing of the circle. We can hope, but not be assured, that the circle is not a noose in disguise.

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Media comment:

• Houston Chronicle-Equal treatment
• Boston Globe-Benevolence amid an orgy
• National Post-Canada-Bailout bill more about shafts than building confidence
• Guardian-UK-Now Wall Street may shun $700bn bail-out
• The Australian-Australia-Paulson bailout won't impress sceptics

A CHEAP SHOT AT CRAVING CHEAP CREDIT

Don’t Talk to Me About Craving Cheap Credit to Spend on Imported Goods.

It’s our cravings that are at fault, the fraudsters on Wall Street bray. Consumers demanded cheap credit and we just didn’t know what to do except provide it—even at the personal cost of having to take those hundred million dollar salaries. They made us do it, with their lifestyle demands. Wal-Mart wasn’t a scheme to wreck Main Streets across America, centralize all the purchasing in the Walton family private coffers—it was the cry of manic consumer demand for Chinese TVs and toxic toys for the kids.

We had a gun at our head to create credit default swaps out of the whole cloth that used to be collateralized lending. Remember when you went to your bank for a loan? In those creaky old horse-and-buggy days, the banker wanted some reasonable idea you were going to pay him back. He cared about such things, because it was your (and his) neighbors’ money he was lending. Your reputation might count for something back then, because he knew your reputation. But every month at the loan committee meeting, you were smiled or frowned upon.

I never craved cheap credit, worthless goods or seven credit cards. Credit cards weren’t even in common use until Visa and MasterCard rolled out in the sixties. Oh yeah, you might have carried a Texaco or Standard Oil card for buying gas, maybe had a department store charge account, but the swiping of card-readers came with the usury-friendly 18% interest rates for unpaid balances.

Texaco, Standard Oil or the department store merely got angry with you, cancelled the card and hounded you into court. Visa, MasterCard and the other big guys made a profit out of a great new business opportunity. Why make 5% warehousing, transporting and selling a sofa, when you can make three times that loaning out the money and the Congress of the United States will enable the process.

You can’t get a more prominent enabler than that.

Everyone jumped on the band-wagon of marketing and consuming because they had made the actual manufacture of goods a pauper’s business. No longer able to invent and build, the world’s most successful nation of inventors and builders turned to selling each other cheap crap and calling it the new economy. In a scant forty years, the core values of a nation were cored like apples.

So, the race was on and in four decades that race essentially boarded up the Main Streets of small towns, outsourced our jobs to the cheapest offshore producer, transformed us from the world’s largest lender to the world’s biggest debtor, put college educations out of common reach, changed the relationship between worker productivity and reward, busted the unions, set off an advertising based feeding-frenzy of consumption and—now that it has busted the bank—hands us both the bill and the blame.

Unlike your friendly neighborhood bank of forty years ago, the new-age swindlers who arranged a home mortgage or line of credit for the un-creditworthy, needed a place to offload the offal. Bingo, derivatives were invented—not regulated, but invented—the not regulated part was just another low and outside curve-ball lobbed to a well-fed and well-paid-off Congress.

Derivatives were a hedge-fund invention, a way to whistle up large fees and churn the money pump, essentially hiding rotten apples at the bottom of otherwise shining and radiant barrels of produce. The language in these shell-game contracts was so arcane as to be un-understandable to those who took their cut, closed their eyes, held their nose and shoveled them on down the line.

Rating agencies knew of the stink and approved them AAA in spite of it, for (what else) money. Mortgage bankers, investment bankers, rating agencies and insurers—essentially all the guys looking for bailouts now—knew and collaborated and stirred the conspiracy-pot for a classic RICO indictment.

Instead, Henry Paulson is Santa Claus to save the financial markets.

(TARP—Your Money at Work) those unregulated derivative contracts that allow investors to bet on a debt issuer’s financial prospects, loomed so big on balance sheets that they now drive every bailout decision.

. . . “The last eight years have been about permitting derivatives to explode, knowing they were unregulated,” said Eric R. Dinallo, New York’s superintendent of insurance. “It’s about what the government chose not to regulate, measured in dollars. And that is what shook the world.”

Don’t bother to save the co-conspirators, Henry. Rhett Butler nailed it when he looked deep into Scarlett’s eyes and said, “Frankly, my dear, I don’t give a damn.” As a taxpayer, I’m still reeling from the $11 trillion we’ve accumulated in national debt since Ronnie Reagan (the communicator) deregulated me out of my underwear.

Now you guys have come after the underwear.

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Media comment:

• Bloomberg-Treasury Seeks Asset-Buying Power Unchecked by Courts
• Guardian-UK-US Treasury takes on the house in high-stakes game
• Wall Street Journal-Paulson Presses Congress to Act On $700 Billion Bailout Plan
• Reuters-Treasury plan lacks taxpayer protection: Sen.Schumer
• Boston Globe-Can America afford it?

SUNNIS LAYING LOW IN IRAQ AND WAITING FOR THE PULLOUT

A changing of the guard, in the form of General Petraeus handing over the keys to General Odiermo, presages by a couple months the changing of the guard in American politics. No one can really know, in either case, what the outcome will be and/or whether it will be good for the nation.

Take your pick, the political weather is cloudy and tending toward storms in both Iraq and America.

(Reuters) BAGHDAD: General Raymond Odierno took command of U.S.-led forces in Iraq on Tuesday, faced with the challenge of ensuring that security gains do not unravel at a time when American troop levels are being reduced.

Odierno replaced General David Petraeus at a ceremony presided over by Secretary of Defense Robert Gates, who said the two generals had formed an "incredible team" during the deployment of 30,000 extra U.S. troops to Iraq last year in the so-called "surge."

Odierno served as the second-ranking U.S. commander in Iraq for 15 months until February.

"He knows that we are at a pivotal moment, where progress remains fragile and caution should be the order of the day," Gates said of Odierno. The ceremony took place in one of Saddam Hussein's former palaces, now part of a sprawling U.S. military base.

Handovers are a time of reflection and I aim to reflect on a war I’ve never supported and criticized for nearly a year prior to the Bush plunge from the high-board.

My gut tells me we have been on the wrong side of strategic decisions from the get-go, because our president and vice-president saw this as an awarding of democracy, rather than a Yugoslav style imbroglio. Strong-men (as heads of state) leave bitter rivalries and we need not look to dictatorships for example. Our own near-shattered civic condition is the result of a near-dictatorship on the national political scene.

Near enough. Nearer than we need ever be again, if we are to prevent the unraveling of our national fiber. Much lip-service is given to coming together, to being the nation’s uniter rather than divider. But the fact is that ‘deciders’ are not all that likely to unite.

So, we came with a flawed strategy to Iraq and that complicates our decisions over what is best for that nation, as well as our own. I reflect, I opine. I am an opiner. Everyone seems to be these days . . . no license required.

Odierno and Petraeus came together last year to implement a new counter-insurgency strategy that helped drive violence down, allowing Iraq to begin seeking foreign investment to rebuild after decades of war and UN sanctions.

Petraeus leaves behind a very different Iraq from the one he faced when he took over in February 2007, when Iraq was on the brink of civil war.

Or not. We tend to see things as we would see them instead of as they are, especially from the outside of cultures, the inside of which we know very little. My personal view, standing bravely in opposition to my president and his four-star general, is that violence has gone down in Iraq because it suits the purposes of the Sunni population to get us the hell out so they can climb back in the saddle.

The Sunni minority ran Iraq until we overthrew Saddam Hussein and ushered in the majority Shiites. Remember our American Civil War? You can free the slaves, but you damned well better not walk off the stage after having done so. Exactly what we did in Lincoln’s time and it spawned a hundred years of lynchings, carpetbaggers, Jim Crow and segregation.

We somehow feel Iraqis are different in their ethnic ambitions because we don’t speak their language, move them like pawns on a chessboard and fail to understand their culture (which outdates ours by 4,000 years). Winston Churchill famously (and accurately) said, “America always makes the right decision…. after they have exhausted all other possibilities.”

The coming confrontation between Sunni and Shiite is inevitable, but it will be bloodier and more destructive of the national fabric because of decisions we made in desperation.

We were desperate to show progress—any kind of progress to slow the troop deaths and injuries. Those were described as ‘insurgent attacks,’ because it was politically untenable to call them what they were. What they were was the Sunni army (which we had sent home and pauperized) showing their anger at being sent home and pauperized. Additional anger accrued to street hatreds against the new guys in power—those Islamists who followed a different rightly-guided caliph fourteen centuries ago.

How do you understand that, when you sent everyone home over at the State Department who knew what the hell was at risk?

That’s a hatred of some proportion, an aging cheese of a hatred or, as Saddam himself might have said (before the trap was sprung at his hanging) the mother of all hatreds. Those who harbor that hatred have very little interest in George Bush or his war, but every interest in his weaponry. And therein, the plot thickens.

In order to satisfy our desperation for progress, we didn’t actually make progress, but redefined the enemy instead. A paper-victory worthy of a paper-tiger. We took the guys from the streets that were bombing us, renamed them Awakening Councils, armed them to the teeth and suddenly they were no longer counted as insurgents, but became partners against al Qaeda. No wonder deaths went down, we partnered with the insurgency. That’s an easy thing to do when you don’t actually have a definition of al Qaeda forces and can move them around at will on the chessboard that the Middle East has become.

Now, of course, we’re using that lessening of violence to draw down our troops. We got into this war on false pretenses and are planning to get out by sleight of hand as well. Petraeus is leaving for a promotion. Odiermo is going to oversee our orderly withdrawal, everyone stateside will breathe a sigh of relief, the troops are going to Afghanistan and the fragile Iraqi coalition government is going to get its ass handed to it.

Iraq's Shiite-led government will also soon take control of Sunni Arab tribal units that joined forces with the U.S. military to fight Al Qaeda. Some analysts fear the tribal units, which include many former Sunni Arab insurgents, could turn their guns on the government if their demands are not met.

Which will be ever afterward known in Baghdad as National Getting Our Ass Handed to Us Day.

But America will be out, China will have the first shot at the oil, nearly 5,000 kids will have been killed under false pretenses, Cheney will be either on the rubber-chicken circuit or under indictment, Bush no longer able to chain-saw the Constitution and what’s left of the fabric of America searching for what went so terribly wrong.

But not very hard. There’s a failing economy to deal with. Iraq will quickly become last week’s story—except for Iraqis. They will likely remember for the next fourteen centuries. Islam has a long memory.

My guess is blanket presidential pardons will be served like after-dinner mints on the way out the door.

Can a president do that? Probably. This is a president who gets away with stuff.

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Media comment:

• US News and World Report-Four Challenges Petraeus Leaves Behind for His Successor in Iraq
• New York Times-Odierno Succeeds Petraeus in Iraq
• Associated Press-Bush: 'We are at war with extremists'
• Guardian-UK-The conflict continues
• Irish Times-Ireland-Violence surges in Iraq amid political stalemate as Gen Petraeus departs