No Responses to “Abandon Ship: Bail The Bailout?”

1. flip11101 says:

   September 23, 2008 at 7:10 PM

   If today’s current economic meltdown seems a little familiar, there’s a good reason for that. As McCain is out there making stump speeches about how he supports regulation and wants to give $700 billion dollars in taxpayer money to Wall Street to bail them out, he’s praying that voters don’t look into his involvement in the Keating 5 Scandal.

   Here’s the story -
   Charles Keating was running Lincoln Savings and Loan during the S & L scandals of the 80’s and 90’s. During that time, he was taking people’s pension funds and investing them in highly risky investments without their knowledge. In order to keep his activities under the radar, he looked to his good friend John McCain, who went to bat for Keating in Congress.

   You see, McCain and Keating were old friends. For years Keating had been helping raise hundreds of thousands of dollars for McCain’s campaigns, and he even went on vacations with the whole McCain family, including the baby-sitter, where he’d fly them out to the Bahamas on his private jet. The McCain family didn’t pay a dime for these travels until Keating got in trouble. In return, Cindy McCain and her father invested over three hundred thousand dollars in Lincoln while Keating was at the helm.

   After convincing Congress to stop regulating the Savings and Loans companies, McCain’s friend was free to invest his clients’ money however he wanted. So he takes this money and instead of investing it in banks or stocks, he invested it into his own company. So when his company American Financial Corporation went bankrupt, Keating’s twenty-one thousand clients, most of whom were elderly, lost billions of dollars.

   But it was McCain’s intervention that allowed all of this to happen. McCain went to bat for Keating in Congress, working to get them to deregulate the industry and interfering with the investigations, so that people like Charles Keating could lie, cheat, and steal in order to line their own pockets. And it wasn’t just John McCain that was involved – Cindy helped destroy the financial documents for Lincoln Savings and Loan in order to keep that evidence away from the authorities.

   In the end, the government had to issue a bailout to the Savings and loan industry worth about 2.8 billion dollars, Keating went to prison for 4 years, but McCain managed to get off the hook with nothing more than a verbal reprimand from Congress.

   So fast forward 20 years and you’ll see the same roles being carried out today. The deregulation that McCain helped push through in the 80’s has come back to destroy the financial institutions of today, and once again, John McCain still doesn’t get it

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2. RacerX says:

   September 24, 2008 at 2:10 PM

   you got that right, Flip. check this out:

   Wall Street put a gun to the head of the politicians
   and said, Give us the money–right now–or take the
   blame for whatever follows. The audacity of Treasury
   Secretary Henry Paulson’s bailout proposal is reflected
   in what it refuses to say: no explanations of how the
   bailout will work, no demands on the bankers in
   exchange for the public’s money. The Treasury’s opaque,
   three-page summary of plan includes this chilling
   statement:

   “Section 8. Review. Decisions by the Secretary pursuant
   to the authority of this Act are non-reviewable and
   committed to agency discretion, and may not be reviewed
   by any court of law or any administrative agency.” In
   other words, no lawsuits allowed by aggrieved investors
   or American taxpayers. No complaints later from
   ignorant pols who didn’t know what they voted for. Take
   it or leave it, suckers.

   Both political parties may submit to this extortion
   because they don’t have a clue what else to do and
   bending over for Wall Street instruction, their usual
   posture, seems less risky than taking responsibility.
   Paulson and Bernanke evoked intimidating pressure for
   two reasons. The previous efforts to restore investor
   confidence had all failed as their slapdash
   interventions worsened the global panic. Besides, the
   Federal Reserve was running out of money. Nearly three-
   fifths of the Fed’s $800 billion portfolio is now
   loaded down with junk–the mortgage securities and
   other rotten assets it took off Wall Street balance
   sheets. The imperious central bank is fast approaching
   its own historic disgrace–potentially as discredited
   as it was after the 1929 crash.

   Despite its size, the gargantuan bailout is still
   designed for the narrow purpose of relieving the major
   banks and investment houses of their grief, then hoping
   this restores regular order to economic life. There are
   lots of reasons to think it may fail. The big boys are
   acting, as usual, in self-interested ways since the
   government allows them to do so. Washington’s money
   might pull firms back from the brink–at least the
   leaders of the Wall Street Club–but that does not
   guarantee the banks will resume normal lending, much
   less capital investing. The financial guys may well
   hunker down, scavenge the wreckage for cheap profits
   and wait for the real economy to get well. Likewise,
   global investors–China, Japan and other major
   creditors–have been burned and may step back from
   pumping more capital in the wobbly house of US finance.

   Secrecy and opacity are crucial to achieve Wall
   Street’s purposes. It could allow Paulson to overpay
   his old pals for near-worthless assets and slyly
   recapitalize the damaged banks while telling public and
   politicians the money is to save the system. To achieve
   this, Wall Street needs to keep control of the process
   whoever is elected president (the Wall Street Journal
   recommends John Thain, ex-chief of the New York Stock
   Exchange to succeed Paulson). Not everyone will be
   saved, of course, but high on the list of endangered
   nameplates is Goldman Sachs, Paulson’s old firm. The
   high-flying investment house looks doomed by these
   events. The Fed quickly agreed to convert Goldman and
   Morgan Stanley into banks. Think of Paulson’s solution
   as Goldman Sachs socialism.

   The most hopeful comment I heard from an astute
   economist was by Nouriel Roubini of NYU, who has been
   darkly prescient during this crisis. The bailout should
   help, he told the Times. “The recession train has left
   the station, but it’s going to be 18 months, instead of
   five years,” he said. Hope he’s right, but voters are
   unlikely to regard this as fair return on their $700
   billion. The bandits will be back in business and
   partying, while the victims are still gasping for air.

   If Paulson’s gamble fails–just as possible–then maybe
   government will finally undertake forceful intervention
   rather than friendly solicitude for Wall Street.
   Washington should literally take control of the banking
   and finance sector and employ its emergency powers to
   oversee and direct these private, profit-making
   enterprises. If any bankers do not wish to play, cut
   them off from any public assistance (and wish them good
   luck). Then government can exercise temporary
   supervisory powers that force banking to cooperate with
   economic recovery by sustaining lending and investment
   to the real economy. Washington can put profit on hold.

   Order full stop to the many financial gimmicks and
   accounting illusions that led to inflated lending and
   falsified asset valuations. Unwind the complicated time
   bombs known as credit derivatives and shut down this
   lucrative line of business. Meanwhile, instead of
   throwing millions of homeowners and debtors out of
   their homes and into bankruptcy, hold them harmless
   temporarily so people can work out reasonable terms for
   recovery. Finally, force-feed new life into the real
   economy with government spending on public projects and
   capital formation. How much spending? Rescuing America
   from irresponsible Wall Street is worth whatever it
   costs to save the bloodied bankers.

   =====

   [William Greider,

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3. Buckley says:

   September 24, 2008 at 11:48 PM

   Racer X ’s solution seems so well considered and intelligent that it seems unlikely to ever be adopted by the scared and greedy legislature that has underwritten the Bush dictatorship.

   I suggested to my Congressman’s legislative aide today that they make a return to Federally coined money from the current practice of borrowing Federally printed money and paying the interest to the private monopoly called the Federal Reserve. We have a huge, fraudulently procured load just servicing all the holders in due course of federal debt instruments exchanged for fiat money in the past. It’s no wonder that the few families who own “our” central bank have ended up owning so much more; it’s the miracle of compound interest applied to the national debt since 1913. This must end. Many feel JFK was shot for his attempt to end it, and the currency he issued (constitutionally unborrowed, for a change) during his term was quietly recalled after his debt and replaced with Federal Reserve Notes, bought with additional debt instruments in the usual manner.

   I think that all the gold that was in America’s possession
   has been shipped off to the Rothschild vaults in Switzerland. I saw tractor trailers being filled with bullion in front of the New York Fed in 1998 when I worked in Wall Street. (And lots of goons standing around with automatic weapons too.) Our gold hasn’t been audited in decades.

   Until humanity evolves to the development of widespread omniscience, we are doomed to be enslaved through extorted coercion of our governments. The only temporary fix is very small governments with limited powers, exactly as the Constitution called for. This is what we started with, and the moneymen have been out to create a slave state ever since, with long term goals, constant pressure, and lots of “lone gunmen”.

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