Dirty Diapers and Sinking Economies

Dear George,

Talk about burnishing your legacy, Paulson’s Wall Street bailout is going to make it look like a Simonized® turd.

For an administration that has hustled one scam after another, this is the mother of all scams. It’s daring and enormity awe. Wall Street shits and the public gets to change its diaper. It doesn’t get much better than that.

As one writer puts it:

America will give between US$700-$800 billion to the Treasury to buy any bank assets it wants on any terms, with no possible legal recourse. It is an invitation to abuse of power unparalleled in American history, in which ill-paid civil servants will set prices on the portfolios of the banking system with no oversight and no threat of legal penalty.

He goes on to ask why should American households struggling to get by on $50,000 a year be asked to bailout Goldman Sachs partners who make $5 million a year.

The short answer is that the struggling householder will bail the Goldman partners out because Paulson used to head up Goldman Sachs. In crony capitalism, capitalists take care of their cronies.

This same writer goes on to sketch out what a brilliant scam the bailout plan is:

Contrary to what the Bush administration says, it is not the case that the banks’ troubled mortgage assets cannot be sold in the private market. Those are the so-called “Level III” assets that the banks say they cannot value. But that is only a dodge that banks use to postpone taking losses. There is a ready bid for these assets from hedge funds in multi-hundred-billion-dollar size. The trouble is that the market bid is 25% to 30% below the prices that banks carry these assets on their books.

He explains that the funds are offering 55 to 60 cents on the dollar for the Level III assets, but the banks are holding out for 75 to 80 cents on the dollar.

So-o-o, why not have the taxpayers cough up the 75 to 80 cents?

A former International Monetary Fund (IMF) official tells us, “They presented this as a comprehensive, decisive solution, but it’s clearly not comprehensive and probably not decisive.”

Who cares? What the official doesn’t understand is that the bailout has nothing to do with resolving the financial crisis. It will probably make it worse as foreign investors decide that there are better deals besides our treasury bonds. Once our economy sinks beneath the surface, the only lifeboat still afloat will be the one carrying Wall Street executives, all of whom will be rowing madly towards the nearest foreign shore.

So get out the Simonize® and start polishing. The world is certain to remember you for all eternity.

Your admirer,
Belacqua Jones