Mortgaging the White House

Hat tip: Craig Hickman

On CommonDreams.org

Published on Saturday, May 2, 2009
Mortgaging the White House
by Bill Moyers and Michael Winship


Finally, here we are at the end of this week of a hundred days. As everyone in the western world probably knows by now, this benchmark for assessing presidencies goes back to Franklin Delano Roosevelt, who arrived at the White House in the depths of the Great Depression.

In his first hundred days, FDR came out swinging. He shut down the banks, threw the money lenders from the temple, cranked out so much legislation so fast he would shout to his secretary, Grace Tully, "Grace, take a law!" Will Rogers said Congress didn't pass bills anymore; it just waved as they went by.

President Obama's been busy, but contrary to many of the pundits, he's no FDR. Our new president got his political education in the world of Chicago ward politics, and seems to have adopted a strategy from the machine of that city's longtime boss, the late Richard J. Daley, father of the current mayor there. "Don't make no waves," one of Daley's henchmen used to advise, "don't back no losers."

Your opinion of Obama's first 100 days depends of course on your own vantage point. But we'd argue that as part of his bending over backwards to support the banks and avoid the losers, he has blundered mightily in his choice of economic advisers.

Last week, at a hearing of the Congressional Oversight Panel (COP) monitoring the Troubled Asset Relief Program (TARP), Treasury Secretary Timothy Geithner tried to correct AFL-CIO General Counsel Damon Silvers. "I've practiced law and you've been a banker," Silvers said. Never, Geithner replied, "I've only been in public service."

We beg to differ. Read Jo Becker and Gretchen Morgenson's front-page profile of Secretary Geithner in Monday's New York Times, and you'll see how Robert Rubin protégé Geithner, during the five years he was running the New York Federal Reserve, fell under the spell of the big barons of banking to whom he would one day help shovel overly generous sums of money at taxpayer expense.

During "an era of unbridled and ultimately disastrous risk-taking by the financial industry," the Times reported, "... He forged unusually close relationships with executives of Wall Street's giant financial institutions.

"His actions, as a regulator and later a bailout king, often aligned with the industry's interests and desires, according to interviews with financiers, regulators and analysts and a review of Federal Reserve records."

Wined and dined at the Four Seasons, and in corporate dining rooms and fine homes by the very men whose greed and judgment helped bring on the Great Collapse, Geithner became so much a favorite of the Club that former Citigroup chairman Sandy Weill talked with him about becoming the bank's CEO.

According to Becker and Morgenson, "Even as banks complain that the government has attached too many intrusive strings to its financial assistance, a range of critics -- lawmakers, economists and even former Federal Reserve colleagues -- say that the bailout Mr. Geithner has played such a central role in fashioning is overly generous to the financial industry at taxpayer expense."

The two reporters write that Geithner "repeatedly missed or overlooked signs" that the financial system was self-destructing. "When he did spot trouble, analysts say, his responses were too measured, or too late."

In choosing a man to manage the bailout of the banks who's so cozy with its players, and then installing as his White House economic adviser Larry Summers, who in the Clinton administration took a laissez-faire attitude toward the financial industry which would later enrich him, the president bought into the old fantasy that what's best for Wall Street is best for America.

With these two as his financial gatekeepers, President Obama's now in the position of Louis XVI being advised by Marie Antoinette to have another piece of cake until that rumble in the streets has passed on by.

In fact, other Wall Street insiders -- many of them big contributors to the Obama presidential campaign, and progressive in their concern for the public interest -- privately are expressing serious concerns that Geithner, Summers and their associates are leading the president and America's taxpayers down a path toward further economic disaster.

This week, as Senate Majority Whip Richard Durbin of Illinois unsuccessfully fought for a congressional amendment he said would have helped 1.7 million Americans save their homes from foreclosure, the senator told a radio station back home that, "The banks -- hard to believe in a time when we're facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. And they frankly own the place."

He could say the same of the White House.

There is a reason so many of us have serious doubts about Fredo and Summers and whether they are serving The President. I'll say it: I don't think their primary loyalty is to The President of the United States, and him listening to these crooked clowns could lead to him being a one-term President.

Dr. Cornel West Takes Obama to Task On Economic Policies

In comments from this weekend, Dr. West calls for more of a fundamental shift in economic policy, criticizing Obama's effort to hold on to the traditional economic architecture. Where are the bailouts for poor and working class Americans? (I sure could use a bailout right now... a student loan bailout.... because I purchased an education that I couldn't afford).

While I tend to agree with Dr. West, I also understand that for practical purposes, Obama may see the corporate Wall Street elites who helped crash the financial system as having the solutions for getting the system running again. I personally disagree with the choice of Geithner and Corporate elites serving in the Administration. But Obama obviously sees a practical benefit from their participation.

I think there probably has to be a balance....at least for the moment. I agree that long term, this Country has to invest more time and resources improving the lives of working people. On the other hand, Obama must first fix the economy. In the short term, fixing the economy may require Obama to get cozy with the elites who West rails against.

Time for Action to Fix The Banks & Bring Back Confidence - But Geithner Is Coming Up Short

Attention Team Obama - Peter Pan is not meeting the test.

I was skeptical about Obama’s choice for Treasury Secretary from the very beginning. Here is a man who had a hand in bungling the management of the financial crisis on Wall Street last year and who couldn’t keep up with his own Federal taxes. Now he is expected to be the chief financial steward for the nation? But I was willing to wait to see how he would perform. So far I have not been impressed. He has not instilled confidence, at a time when confidence is the key. Treasury Secretary Timothy Geithner has been mostly a failure so far and, in fact, appears to be exacerbating the nations financial situation.

President Obama has not dealt with this situation very well as a whole. We still don’t have a Commerce Secretary a full month after the inauguration. In the middle of an economic situation as bad as this, it seems to me that it would be important for Obama to have a full economic team in place. Obama wasted weeks with the Judd Gregg fiasco and the Lincoln bi-partisan nonsense. Enough already!!! It’s time to get to work. We are on a ship that seems to be taking on more water by the day.

At least half of the problem that Obama, Geithner and the rest of the economic team faces has to do with a lack of confidence… a lack of confidence from investors, from voters, from bankers, and from business owners. It’s psychological. But the actions of the Obama Administration - or lack thereof- have only added to the uncertainty and anxiety in the financial sector. They have not even made any serious efforts to bring calm and confidence to the markets. Instead, Obama has played up the crisis a little too much by talking down the economy at every opportunity. That doesn’t instill confidence.

Investors and voters, uncertain about the intentions of the Bush Administration, took a pause from the panic of last year because they wanted to see what the Obama Administration would propose. Since January 20th, Americans have been waiting for a plan. They want to see details about how Banks will be stabilized. Particularly, everyone has been waiting to hear how the Obama team would deal with taking bad assets off the hands of the banks so that the banking system could rebound. Keep in mind that Americans have already witnessed the bungling of the first half of the TARP funding. Americans have also witnessed the uncertainty from Former Treasury Secretary Henry Paulson, who offered one plan (buying toxic assets or somehow relieving banks of these assets temporarily) but then changed his mind a few weeks later, and failed to follow-up with any sensible cogent alternative plan. That kept the nation in limbo for weeks.

With the inauguration of Barack Obama, people were hoping for a sense of stability and a rebound in stocks. But that hasn’t happened. Geithner tried to offer yet another plan on February 10th, but that plan was rejected outright by observers. There were not enough details offered. The reaction of the markets should have been a clue to someone that another approach was needed.

The Geithner plan calls for a system of “Stress Tests” for the nations biggest banks to determine which institutions have the most toxic assets and the most liquidity problems. According to plan, the Government would buy a greater stake in the banks that are more susceptible to the pressures of the “Stress Tests” and would need more Capital.

But this is not the plan that people were waiting all this time for. People don’t want to hear anything about “Stress Tests”. This doesn’t seem to be a well thought out plan, and in fact, it’s only making matters worse. The lack of detail on what will happen next is also compounding the crisis. Investors and voters want to hear details on what the Obama Administration plans to do to remove the toxic assets from the balance sheets of the banks. This was the single most important thing that observers and investors were concerned with. But Geithner failed to address it.

Dealing with the bad assets is the most logical approach proposed so far. Henry Paulson and Ben Bernanke should have stayed with this original plan of parking bad assets until their values could improve (and they would have improved once the housing market and the overall economy began to recover). So why did the Obama Administration decide to float this idea? It only introduced more uncertainty. The situation is not likely to improve anytime soon unless and until the issue of the toxic assets is dealt with clearly and with certainty.

Obama misfired in his initial attack of the economic crisis. He allowed himself to get bogged down in too much political nonsense, spending far too much time selling the Stimulus bill and impersonating Abraham Lincoln, and not enough time dealing with the task at hand. He lost several weeks on his bi-partisan experiment, which ironically ended up being extremely partisan, when time was of the essence. Obama should have attacked these issues simultaneously - the banking system - jobs/recession - and the crisis in the housing market. Instead, he tried to take on these issues, almost one by one…. And in the wrong order. The fact is, team Obama appears to be just as clueless about how to tackle this problem as the Bush Administration was. Obama has assembled two economic advising committees, made up of what are supposed to be some of the greatest economic minds in the nation. Yet, no one seems to understand that at least half the problem (if not the majority) is psychological and that confidence is key to restoring some semblance of order. Why is this so hard for these people to understand? This problem is just as much about human psychology as it is about economic theory.

And after the pathetic Geithner announcement earlier this month (Feb.) regarding the “Stress Tests”, while the market tanked yet again… the Obama Administration failed to offer any sort of follow-up. We haven’t heard anything from Geithner since then. They allowed the uncertainty to fester….allowed rumors to swirl and left too many unanswered questions lingering. This has only exacerbated the crisis. The stock market has dropped around 700 points since Geithners’ announcement.

Eight years of the Bush Administration and the constant negative news reports have led to a sort of psychological malaise among Americans. People are now sitting around waiting for the next batch of bad news to react to, rejecting anything positive. And we have been stuck in this mindset for years. Obama managed to use his hope message to break through some of that during the campaign, but now, when hope is needed more than ever, he seems to be embracing the old politics of fear.

And I’m afraid that the temporary reprieve that investors and voters gave Obama might be about to end. Americans might resume their panic, now that they see that the toxic assets won’t be managed as originally thought and since plans keep changing. Geithner’s “Stress Test” approach will likely only lead to more speculation (and less certainty and confidence) about which banks might be in trouble. This could lead to crashes in bank stock and potentially a run on those banks. A run on any major bank may spread to even the healthy banks, causing a run on those banks as well. Remember, much of the problem is psychological and Americans, especially investors, are not behaving rationally at the present time. Anything can spook the financial markets.

The stock market…and banks may tank even further in the next few days and weeks… unless Obama and his economic team can find their voice and begin to instill some kind of confidence. Obama will be giving a big speech on Tuesday and it will be a chance to instill confidence & hope. And it would be nice if he offered a plan to fix the financial mess.

Rick Santelli's Offensive Rant Against the Housing Bailout

Rick Santelli's Rant about President Obama's Housing Plan on CNBC



I wonder if this mofo was this outraged when WALL STREET went begging for 700 BILLION DOLLARS.

President Obama's housing plan is ONE-TENTH of the money that went to WALL STREET, and I bet his ass didn't say JACK about THAT money.

And you wonder why folks like me didn't want to give Wall Street ANYTHING?

Give it to Wall Street with no provisions...

But, the Auto Industry - which affects MILLIONS of jobs - it can only be a LOAN..
and, we must talk about the EARNING potential of UAW workers.

And now, that we're trying to help people on the ground - sure, some of them took out loans that they couldn't afford. But, how about those who were straight up DEFRAUDED. How about the ones who SHOULD have qualified for CONVENTIONAL mortgages, but because of INSTITUTIONAL RACISM IN THE BANKING INDUSTRY, were herded into SUBPRIME mortgages.

How entire communities of this country - on MAIN STREET - are being wiped out because of this foreclosure crisis. And, foreclosures just don't devastate those who lost their homes. Their neighbors see their property values plummet with every foreclosure in their neighborhoods. This is the reality on MAIN STREET.

Oh, to drop his ass off on Main Street, give him a megaphone, and see if he'd be that big and bad THEN.

Oh Now All Of A Sudden He's For The Middle Class?

Apparently McCain is holding a strategy session today with his top advisers, regarding shaking up the campaign. They reportedly plan to retool their campaign to focus on the Middle Class. Now all of a sudden he has discovered the existence of the Middle Class? Does this mean that he will renounce his tax cuts for the rich and will steal Obama's idea of a Middle Class tax cut? (Prepare for a lot of stealing of ideas that we have already heard from Obama and other Democrats this campaign season). McCain will simply slap his name brand on the ideas and hard work of others. Of course they are counting on the fact that Americans have a very short memory, hoping that they fall for this nonsense.

But I hope Americans don't fall for another McCain ploy. He waits until 3 weeks before the election for a major change in his strategy? Will it work?

Unfortunately I think it just might work in States where the electorate is gullible... and where voters are receptive to McCain's message- States like Ohio, Virginia, Florida, North Carolina, and even Pennsylvania (although Obama should still win that State). This seems to be an effort by McCain to shore up support in States that were considered Red and that he expected to win prior to Mid September.

I expected something like this to happen....and it will probably lead to a tightening of the poll numbers (but I hope i'm completely wrong). Fortunately, I don't think this ploy will work in all of the contested States. Obama should still eek out a win but it won't be the landslide that some people were hoping for.
We could be in for more of a nail-biter on November 4th.

An Ordinary Person's View of the Bailout

The Mess We Are In

I am not an economist nor do I claim to be an expert on finance and economic matters. I am, however, an ordinary citizen, a voter, and a taxpayer who is being asked to bear the brunt of paying for the mess created by the greed, irresponsibility, and recklessness of those who made out like bandits in the deregulated atmosphere of the financial system for decades.

When I make mistakes with my money and finances, or if me and my family get into financial trouble we don't get a bailout. But now we, the taxpayers are being asked to do that very thing -- supposedly, for the sake of the country's financial well-being and survival -- at the behest of those who created the conditions for the financial crisis and who mismanaged the economy in the first place.

Voting on the Bailout

I opposed the bailout as it was originally drafted and which was defeated in the House of Representatives vote. There were many good reasons to oppose the original bill as this list from David Sirota points out.

After the bill was defeated in the House revisions were made to the legislation and a vote was taken in the Senate where it passed.

Regarding the second version of the bill, economist Paul Krugman agrees with James Galbraith’s assessment:

In short, as I said at the beginning, the bill is a vast improvement over the original Treasury proposal. Given the choice between approving or defeating the bill as it stands, I would urge supporting the bill. I do so without illusions. There need be no pretense that it will solve our underlying financial and economic problems. It will not. The purpose, in my view, is to get the financial system and the economy through the year, and into the hands of the next administration. That is a limited purpose, but a legitimate purpose. And it may be the most that can be accomplished for the time being.

Alternatives to the Bailout Are Out There

Contrary to leaders like Bush, Paulson, and leaders within the Congressional Republicans and Democrats that say pass the bailout as it stood or face certain catastrophe, there are alternatives to the bailout and I supported taking a good, long look at these alternatives and make them part of the criteria by which any bailout should be structured.

Here are a few examples from the Progressive sphere:

• The Service Employees International Union
• The Congressional Progressive Caucus
• Campaign for America’s Future
• Robert Reich guidelines
• Bernard Sanders guidelines
• James Galbraith guidelines

The Main Point

Paul Krugman and James Galbraith, among many other economists, agree that this latest revision of the bailout is, at best, a stopgap, band-aid gesture so that the economy does not collapse completely—for the short term. They estimate that short term being establishing the next administration after the November elections. For such an important bill and vote, that doesn’t inspire much confidence in me as a citizen.

Senator Bernard Sanders argues:

This bill does not effectively address the issue of what the taxpayers of our country will actually own after they invest hundreds of billions of dollars in toxic assets. This bill does not effectively address the issue of oversight because the oversight board members have all been hand picked by the Bush administration. This bill does not effectively deal with the issue of foreclosures and addressing that very serious issue, which is impacting millions of low- and moderate-income Americans in the aggressive, effective way that we should be. This bill does not effectively deal with the issue of executive compensation and golden parachutes. Under this bill, the CEOs and the Wall Street insiders will still, with a little bit of imagination, continue to make out like bandits.

This bill does not deal at all with how we got into this crisis in the first place and the need to undo the deregulatory fervor which created trillions of dollars in complicated and unregulated financial instruments such as credit default swaps and hedge funds. This bill does not address the issue that has taken us to where we are today, the concept of too big to fail.

And THAT’s the point. Any bailout or any solution to the financial mess we are in must address these underlying causes that led to the crisis in the first place. And nobody who is in a position of power or leadership seems to be listening to the glaringly obvious common sense of people like Sen. Sanders.

The bailout may very well pass the House on its second go round, but the underlying causes for the crisis will remain and will be unaddressed. As one of my friends put it to me in an e-mail:

There will be NO addressing of stronger regulatory action on Wall Street down the road. There will be no punitive measures against the speculators who caused this mess in the first place. You will not see any Congressional checks on executive power from the Treasury Department. There is NO later. It doesn't matter if it is McCain or Obama who sits in the White House either.

Once the bailout money jump starts the credit flows between the banks, all of the talk about changing the culture of Wall Street and reigning in the excesses of market capitalism will die away. Finance industry lobbyists will shower members of Congress with un-reported gifts and reported campaign contributions. It's business as usual once again.

The Final Word

So if you are in favor of the bailout there is good news for you in that momentum seems to be on the side of the Senate version passing the House. But you better not have any illusions that what you are supporting is THE solution to the crisis. I agree with the Krugman-Galbraith camp that says what the bill represents is, at best, a stopgap measure designed to have the economy limp its way along until the next administration is established.

I’m in the camp of Sanders and others who offered alternatives to the bailout and who argued that the underlying causes of the finance crisis must be addressed. The only reason the Progressive vision cannot be articulated into a viable alternative to the bailout as it was presented by Bush, Paulson, and Republican and Democratic Congressional leaders is that the Progressive movement does not have the political juice to set the agenda. That doesn’t mean they are wrong. That just means politically, they largely function in the margins and are not players.

Don’t let the debate begin and end along the terms of whether the bailout bill should be passed or not. The problem goes much deeper than that and doesn’t deserve to die down whether or not the bill passes.

Cross-posted in An Ordinary Person

CNN: Obama Tried to Rescue Meeting, McCain Was Silent

From DailyKos:

CNN: Obama Tried to Rescue Meeting, McCain Was Silent
by EmperorHadrian
Thu Sep 25, 2008 at 08:38:41 PM PDT

Fourty years of republican misrule has brought us to this. Financial ruin at every level. But CNN reported on what happened inside the meeting at the White House today. Its failure seems to have caused the failure of this deal, and this meeting would not have occured if McCain hadn't demanded it. He took another huge gamble, and lost. After the cameras left, Boehner started ranting about the right wing "plan" (deregulation, capital gains tax cuts, and an insurance plan that Paulson said won't work). Bush was silent, and McCain said nothing. It seems as though Obama was the only one who tried to lead the meeting to some productive conclusion. CNN said that Obama first tried to reason with Boehner, and ask him to detail what his plan was. After he did this, Obama calmly asked Paulson if it would work, and Paulson said that it definately would not work (which was why house republicans didn't ask him about this at the meeting yesterday). Obama continued with his attempts to salvage the mess that McCain created and refused to correct, but was unable. Again we see how much we need Obama and his leadership, and how disastrous McCain would be.

EmperorHadrian's diary :: ::
Barney Frank just said that Lindsey Graham is now saying that the plan to allocate 20% of profits made to housing assistance for low income home owners is not acceptable, even though Senators Corker and Bennett said it was acceptable this morning. This goes further to the point that McCain is actively trying to kill this deal. You can't reason with a house full of ideologues any more than you can teach a dog calculus.

It is plainly obvious that McCain was principaly responisble for the failure of this bailout deal. And, for everyone here, this is a bailout of main street, not wall street. Without credit, main street cannot function. Plus taxpayers will probably make a profit, or at least lose very little money. Without it, we are possibily looking at Great Depression II, and the sequel is always worse than the original.

Update: The New York Times does mention this incident in a new article.

Instead he [McCain] found himself in the midst of a remarkable partisan showdown, lacking a clear public message for how to bring it to an end.

At the bipartisan White House meeting that Mr. McCain had called for a day earlier, he sat silently for more than 40 minutes, more observer than leader, and then offered only a vague sense of where he stood, said people in the meeting.

...

Still, by nightfall, the day provided the younger and less experienced Mr. Obama an opportunity to, in effect, shift roles with Mr. McCain. For a moment, at least, it was Mr. Obama presenting himself as the old hand at consensus building, and as the real face of bipartisan politics.

Update 2: Remember this Kossacks, what do all great presidents have in common? Think Lincoln or FDR. They all came into office during a time of extreme crisis. Good times don't make great presidents. Bad times make great presidents, or in McCain's case, absolute disasters.

Obama being Presidential. I'm not surprised.

McCain is a joke, a fraud, and a Punk @#%$+~^@%!

More on the Wall Street Meltdown

Joseph Stiglitz on the Wall Street Crisis

Joseph E. Stiglitz, professor at Columbia University, was awarded the Nobel Prize in Economics in 2001 for his work on the economics of information and was on the climate change panel that shared the Nobel Peace Prize in 2008. Stiglitz, a supporter of Barack Obama, was a member and later chairman of the Council of Economic Advisers during the Clinton administration before joining the World Bank as chief economist and senior vice president. He is the co-author with Linda Bilmes of the "Three Trillion Dollar War: The True Costs of the Iraq Conflict."

For all the new-fangled financial instruments, this was just another one of those financial crises based on excess leverage, or borrowing, and a pyramid scheme.

The new "innovations" simply hid the extent of systemic leverage and made the risks less transparent; it is these innovations that have made this collapse so much more dramatic than earlier financial crises. But one needs to push further: Why did the Fed fail?

First, key regulators like Alan Greenspan didn't really believe in regulation; when the excesses of the financial system were noted, they called for self-regulation -- an oxymoron.

Second, the macro-economy was in bad shape with the collapse of the tech bubble. The tax cut of 2001 was not designed to stimulate the economy but to give a largesse to the wealthy -- the group that had been doing so well over the last quarter-century.

The coup d' grace was the Iraq War, which contributed to soaring oil prices. Money that used to be spent on American goods now got diverted abroad. The Fed took seriously its responsibility to keep the economy going.

For the rest of the article including Prof. Stiglitz’s prescriptions to address the crisis go to CNN.com

On a related note regarding the AIG bailout and the massive Federal bailout planned to be unveiled next week, Jonathan Tasini over at the Working Life blog had some excellent questions to ask:

1. What is this going to cost us?

2. Since many of the very people who made this crisis happen made off with billions of dollars over time in compensation, shouldn't this tab be paid for by a tax hike on the wealthiest Americans?

3. What assurances will the public get that we are now going to clean house? The CEOs and managers and their ilk should be permanently barred from having a hand in this business.

Is Everyone For Sale?

I wonder if Obama will really change Washington when I read stories like this. Both of the "reform" and "change" candidates (although McSame is as phony as can be on "change") have gotten tons of money from Fannie and Freddie lobbyists. I will be watching to see whether he reforms campaign finance.... will he require all candidates to drink from the same Public cup...with a limit on how much money can come from the Democratic or Republican Parties (or any other Party)? Will he stop the system of "bundling"? or will he keep the same corrupt system in place?

I understand that this time around he had to go private, because he would have been steamrolled by Republican Party money. But will he change it once in office? This is something he will have to tackle in his first term... that's if he is able to somehow defeat John McSame.... which will likely require a miracle.

I will give Obama the benefit of the doubt, and give him a chance to change the system once elected. He was in a tough position this time around. But these reports still raise questions.

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Related Articles

Democrats are the Darlings of Wall Street

Both Candidates taking money from Wall Street

Report from Reuters

Report from the Charlotte Observer

Privatize the Profits, Socialize the Risk

Here are several excellent articles on the recent financial meltdown in Wall Street from the last two weeks. (cross-posted in An Ordinary Person)

Wall Street Socialism from CommonDreams.org

So now the Bush administration proposes to make the federal guarantee explicit and even to offer taxpayer money to help recapitalize the two banks if needed. Everything has been nationalized -- except the profits and the pay scales of the bank's executives.

That's right. If the guarantees work, private speculators, having driven the stock down, will clean up on the upside. And the bank's CEO's will continue to pocket the multi-million dollar salaries that are de rigueur on Wall Street. Call it Wall Street socialism. Their losses are socialized; their profits are pocketed. You and I will pay for their failures. And if conservatives have their way, their families will pocket their successes, without even having to pay a tax for the transfer of the estates we've helped to create.

Wall Street's Just Deserts from the Washington Post

At the risk of speaking ill of the dead, what good was Lehman Brothers, anyway? And if Merrill Lynch was so bullish on America, why is it that, despite the torrent of foreign investment that flowed in to Lehman, Merrill and their Wall Street peers over the past half-decade, so few jobs were created in America during that period of "recovery"?

During the late, lamented Wall Street boom, America's leading investment institutions were plenty bullish on China's economy, on exotic financial devices built atop millions of bad loans, and, above all -- judging by the unprecedented amount of wealth they showered on the Street -- on themselves. The last thing our financial community was bullish on was America -- that is, the America where the vast majority of Americans live and work.

The Joys of Ownership from the New York Times

So, ladies and gentlemen, how does it feel to be the new owner of those two big and banged-up mortgage companies, Fannie Mae and Freddie Mac? Not exactly the kind of real estate you were looking to buy, you say? Felt you had swallowed enough garbage after the Bear Stearns bailout tapped you for $29 billion?

Make no mistake: we, the American taxpayers, are amassing quite a portfolio of flotsam and jetsam in the mortgage bust. It certainly brings new meaning to the notion of an ownership society, doesn’t it?

To be sure, the terms of the Mac ’n’ Mae rescue deal are still sinking in. And it will be years before we know how much taxpayers will have to pay for the privilege of backing these out-of-control entities. But in the meantime, here are some of the joys that ownership in Mac ’n’ Mae might bring.

The proud new owners — the taxpayers — could be asked to cover such niceties as the pay packages awarded to the chief executives, Daniel H. Mudd at Fannie Mae and Richard F. Syron at Freddie Mac, as they exit the accident scene. Estimates for what these arrangements might cost: $24 million in severance, retirement benefits and deferred compensation for both men.

That’s not all. When the inevitable shareholder lawsuits are filed against Mac ’n’ Mae’s executives, who professed until the bitter end that their companies were in fine financial shape, who might cover the costs of defending those suits?

Why, you and I, the taxpayers, silly.

Wall Street and Washington: How the Rules of the Game Have Changed from CommonDreams.org

The undoing of that New Deal regulatory regime, and its replacement, largely under Republican administrations (although Glass-Steagall was repealed on Clinton's watch), with what some have called the "socialization of risk" has contributed in a major way to the mess we're in today. Beginning most emphatically with the massive bail-out of the savings and loan industry in the late 1980s, Washington committed itself, at least under conditions of acute crisis, to off-loading the risks taken by major financial institutions, no matter how irrationally speculative and wasteful, onto the backs of the American taxpaying public.

Despite free market/anti-big-government rhetoric, real-life Washington has tacitly acknowledged the degree to which our national economy has become dependent on the financial sector (Finance, Insurance, and Real Estate -- or FIRE). It will do whatever it takes to keep it afloat.

Who Will Transform The Economy? Obama or McCain?

Hear a great discussion from On Point Radio, regarding the current state of the economy, particularly the poisoned financial system, and who has the best foresight to change it.

Robert Kuttner, editor of The American Prospect, and the author of "Obama's Challenge: America's Economic Crisis and the Power of a Transformative Presidency", discusses what the next President must do.

It's amazing how McCain is suddenly the candidate of "Change" and can all of a sudden fix Wall Street... when his track record shows that he repeatedly blocked efforts to regulate the financial markets during his 26 years in Washington. It seems like this man reinvents himself every other week. Why isn't the MSM calling him on this flip flop (the biggest flip flop of all).... Not to mention his role in the S&L mess several years back?

This is a must listen.... Listen Here.

Wall Street Collapse?

A series of articles in the NYTimes indicate very bad times on Wall Street.

In Frantic Day, Wall Street Banks Teeter

By ANDREW ROSS SORKIN, BEN WHITE and JENNY ANDERSON
Published: September 14, 2008

In one of the most extraordinary days in Wall Street’s history, Merrill Lynch is near an 11th-hour deal with Bank of America to avert a deepening financial crisis while another storied securities firm, Lehman Brothers, hurtled toward liquidation, according to people briefed on the deal.

The dramatic turn of events was prompted by the cataclysm of losses that has shaken the American financial industry over the last 14 months.

The moves came after a weekend of frantic negotiations between federal officials and Wall Street executives over how to avert a downward spiral in the markets. Questions still remain about how the market will react and whether other firms may still falter like A.I.G., the large insurer, and Washington Mutual, both of whose stocks fell precipitously last week.

Coming just a week after the government took control of mortgage lenders Fannie Mae and Freddie Mac, the magnitude of the industry’s reshaping is staggering: two of the most powerful firms on Wall Street, Merrill Lynch and Lehman, will disappear.

The weekend’s once unthinkable outcome came after a series of emergency meetings at the Federal Reserve building in downtown Manhattan in which the fate of Lehman hung in the balance. In the meeting Federal Reserve officials and the leaders of major financial institutions were trying to complete a plan to rescue the stricken investment bank.

But as the weekend unfolded, Barclays and Bank of America, which had both considered buying all or part of Lehman, decided that they could not reach a deal without financial support from the federal government or other banks.

As a result, people briefed on the matter said late Sunday that Lehman Brothers would file for bankruptcy protection, in the largest failure of an investment bank since the collapse of Drexel Burnham Lambert 18 years ago.

Other articles:
Wall St. Goliath Teeters Amid Fear of Wider Crisis

Bank of America in Talks to Acquire Merrill Lynch

Rush Is On to Prevent A.I.G. From Failing

Just one of these stories would be enough to make you stand up and go WTF....the combination of them all..........

This country is in SERIOUS FINANCIAL TROUBLE.