Saturday September 27, 2008, 7:07 am
Last weekend, U.S. President George W. Bush sent Congress a $700 billion “bailout” proposal for the financial sector, in addition to the $285 billion from the Federal Reserve for mortgage lenders Fannie Mae and Freddie Mac. The requested money is intended for the discretional and uncontrolled acquisition, by the Treasury Department, of “bad” assets and debts and expired portfolios, especially in the housing sector. To put it in layman’s terms, the Bush initiative means that the state acquires private debts and distributes them among the general population, which represents a per capita debt of two thousand dollars.

The audacity of the request has shaken Washington’s political sector, because it is obvious that, under the aegis of the proposed “bailout,” hundreds of billions of dollars of public funds would disappear in a bottomless pit of corruption, favoritism, and complications, just like what occurred in Mexico a decade ago, when the Zedillo administration orchestrated the salvation of private banking with the general public’s money. What’s more, the White House already has a precedent of unscrupulously managing multimillion dollar sums destined for the war in Iraq, a large portion of which have gone toward the establishment of suspicious or nonexistent contracts benefiting corporations from deep within the president’s circle, particularly Halliburton, of which Vice-President Dick Cheney was CEO. Amidst the upheaval, came ringing rejections of the plan by Democratic presidential candidate Barack Obama, and even Republican John McCain, who has been encouraged to distance himself from the corruption, inefficiency, and bungling of the current administration, headed by his party mate.

A third element explaining reservations to the plan is the arrogance and despotism with which it was presented – lacking a single justification, program, or any criteria for the application of the funds – in what constitutes the actions of a president accustomed, since September 2001, to acting without counterbalances, running ramshod over basic rights, and to whom the judicial and legislative branches have granted all manner of “special powers” under the pretext of “fighting terrorism.” Moreover, under the terms proposed, Bush’s initiative would permit large companies to emerge unscathed from the disastrous consequences of their own greed, but would not lend an ounce of aid to citizens who have lost their homes or are about to lose them, in the midst of the real estate crisis shaking the United States. In that respect, the “bailout” proposed by the White House also resembles the Fobaproa-Ipab operation designed and approved by members of the PRI and PAN parties in Mexico.

Beyond ethical considerations – which have never been the strong point of the current US administration – as well as electoral, political, and social concerns, it is all too evident that the approval of the proposed “bailout” by the still-president of the United States would impose a radical reorientation of public expenses, favoring stockbrokers and executives of large financial firms, paralyzing innumerable social programs and the creation of infrastructure, and consequently multiplying factors contributing to the recession of an economy itself affected by the housing crisis and high fuel prices. That is why this proposal of the sacking of the U.S. public treasury has a long way to go before legislative approval.


Although an acceleration of U.S. economic problems would have serious, undesirable repercussions throughout the world, and particularly in Mexico – no matter how hard the highest Mexican authorities irresponsibly endeavor to minimize the worrisome connection – one hopes that common sense prevails and that the steps taken to reorganize the U.S. financial sector, which undoubtedly remain necessary, emerge very different from the proposal the White House sent to the Capital last Saturday. Indeed, the proposal itself, viewed under the historical light of the trend of private appropriation of public funds that characterizes the current administration, may emerge as a last ditch attempt at pulling off a big deal by the business mafia surrounding the current president.

Saturday September 27, 2008, 4:32 pm
The crisis explained

Joe goes to the track and bets $2 on a horse.

Two guys standing nearby get into a discussion and Fred says to Sam, “I’ll bet you $5 that Joe wins his bet.”

Next to them are Bill and Bob. Bill says: “I’ll bet you $10 that Fred welshes on his bet if he loses.”

Next to them is Sally. Sally says: “For $3 I’ll guarantee to Bill that if Bob fails to pay off, I’ll make good on the bet.”

Sally then goes to Mary and borrows the $7 needed in case she has to ever pay off and promises to pay back $8. She doesn’t expect to every have to pay since she believes Bob will always make good. So she expects to net $2 no matter what happens to Joe.

A quick calculation indicates that there is now 2+5+10+3+7 = $27 riding on the outcome of the horse race.

Question how much has been “invested” in the horse race?

Wait for it:

Answer:

$50,000 by the owner of the horse who is expecting to recoup his investment from the winnings of the horse and other future deals. Everyone else is gambling, not investing.

So, when Hank Paulson and his golfing buddies go to the track and lose the rent money playing the ponies, we should pay up?

http://www.correntewire.com/the_crisis_explained

That's perfect
and it’s not even an analogy - it’s exactly how derivitives and credit default swaps work, including none of the gamblers having any financial relationship to the underlying asset (the horse, or mortgages) in a lot of cases.

Sunday September 28, 2008, 1:41 am
Perfect explanation, just perfect. Seems like something I should be reading in a comicbook though. Oops!! this is real life.

Sunday September 28, 2008, 4:22 am
Mother Jones: Where Credit is Due: A Timeline of the Mortgage Crisis

A field guide to the loan sharks and politicos who got us into the predatory lending mess

Sunday September 28, 2008, 1:13 pm
Once again, EVERYONE on this thread needs to read the following two pieces.


http://www.huffingtonpost.com/leah-mcelrath-renna/is-bush-profiting-from-th_b_120205.html


http://www.bloomberg.com/apps/news?pid=20601087&sid=av8fOkC1HHEc&refer=home

Goldman Sachs, Hank Paulson's "former" employer and the Booosh family stand to make billions off this "bail out". Of particular interest to me is the timing of the GS purchase of Litton, a "loan servicing" firm based in (surprise, surprise) Texas.

Tuesday September 30, 2008, 8:37 pm
Call or e-mail Senator Obama. Tell him he does not need to be sitting there trying to help prop up Bush and Cheney and the mess they've made. Tell him we know he has the smarts to slow this thing down and figure out what's the best route to take. Tell him the rich have to pay for whatever help is offered. Use the leverage we have now to insist on a moratorium on home foreclosures, to insist on a move to universal health coverage, and tell him that we the people need to be in charge of the economic decisions that affect our lives, not the barons of Wall Street.

Call your Representative in Congress and your Senators. (click here to find their phone numbers). Tell them what you told Senator Obama.

You have to call them now and say "NO!" If we let them do this, just imagine how hard it will be to get anything good done when President Obama is in the White House. THESE DEMOCRATS ARE ONLY AS STRONG AS THE BACKBONE WE GIVE THEM. CALL CONGRESS NOW.