Yet Another Reason Not To Trust Wall Street

I know, I know, there is already more than enough out there to prove the point Wall Street can't be trusted. Well, here's some more. It seems the billions in bailout money that went to the big banks were not used for what they were intended for. (Gasp!) No really, now there is serious proof. The banks were supposed to start lending more money out to make the economy going. Many CEOs claimed they were doing that in order to fend off any lawmaker who asked them about it. Unfortunately though for the rest of us, they were lying.

From The Huffington Post:

According to a Wall Street Journal analysis of Treasury Department data, the biggest recipients of taxpayer aid made or refinanced 23% less in new loans in February, the latest available data, than in October, the month the Treasury kicked off the Troubled Asset Relief Program.

The total dollar amount of new loans declined in three of the four months the government has reported this data. All but three of the 19 largest TARP recipients with comparable data originated fewer loans in February than they did at the time they received federal infusions.

The Journal's analysis paints a starker picture of the lending environment than the monthly snapshots released by the government and is a reminder of the severity of the credit contraction. One reason for the disparity: The Treasury crunches the data in a way that some experts say understates the lending decline.

Basically the bailout as it played out was wholly ineffective. The banks did not follow instructions from the government and instead went with the attitude of the market and squeezed their lending practices even further. Thanks to almost no oversight from the Congress for the TARP money, there was nothing anyone could do once those billions were doled out.

Now we were told when TARP was being drawn up that everything was going to go by the book and that the banks would do as they were told. The cynics though, we right and there was no reason to doubt them. Unless you have stringent oversight when dealing with Wall Street, the odds are everyone but them is going to get screwed in some fashion. Many of these people should be in jail but then where would they spend those fat bonuses for a job gone horribly wrong well done?

We Came So Close To Complete Economic Ruin

Questions and concerns surrounded the $700 billion that was requested by Hank Paulson in the waning days of George Bush. The number was not explained well at all and now we are starting to get a picture of what was going on between Congress and the markets at the time. I give credit to Congressman Kanjorski for telling this story below, but where was this information back in September when we needed to know it?

Wall St. Flips Out Over Obama's Proposed Executive Pay Cap

Barack Obama made the announcement today that top executives at companies receiving TARP money must cap their salaries at half a million dollars. While that is a sum more than 99% of Americans would love to claim as their own, those that make more are steamed that Obama could try to enact such a thing. Just take a look at what they had to say in reaction to it.

From ThinkProgress:

As news of the plan leaked last night, wealthy Wall Street went into panic mode, insisting that the caps would ruin the financial industry. It’s “a nightmare for any financial institution,” CNBC host Joe Kernen proclaimed this morning, while Fox Business host Alexis Glick said it was evidence of Obama being “a little anti-business.” Others insisted that the “draconian” caps would drive the “best and the brightest” away from Wall Street and that Obama’s anger over executive bonuses was misplaced:

“That is pretty draconian — $500,000 is not a lot of money, particularly if there is no bonus.” [James F. Reda, founder and managing director of James F. Reda & Associates]

“If I didn’t pay [bonuses], the people were going to go. … These people didn’t choose to cure cancer. These people didn’t choose to do public service work…These people chose to make money.” [Jack Welch, former CEO of General Electric]

Yes Mr. Welch, they did choose to go out and make money, but the problem is that they lost much more than they could have possibly hoped to take home. Their reckless handling of the economy has resulted in more than two trillion lost in pensions alone. The world economy has been rocked by their callous greed. Judging by the reaction of these tycoons to Obama, that callousness has not worn off despite having billions in TARP money coming their way. Alexis Glick can claim Obama is anti-business all she wants, but the evidence of who has been ruining countless business is not pointing in Obama's direction. These scoundrels should be happy to make half a million in salary, because in a just world, we'd have already demanded they billions upon billions in salary and bonuses they've taken in only a few short years.

More Audacity Out Of Wall Street

The bravado and greed of players in the financial district is truly astounding. Even now, after billions have been given out from the Federal treasury to Wall Street, there is no humility in their bones, whatsoever. It isn't just the companies themselves, like Bank of America spending $10 million on the Superbowl after taking $45 billion in government money. The disconnect between the average American and this small part of America is incredible on the individual level as well.

From OpenLeft:

Another snippet for the I Shit You Not File: In the New York Times, a head hunter for banks defends the $18 billion in taxpayer-subsidized bonus payouts to Wall Street executives and traders by insisting that those executives and traders can't be expected to live on $150,000 to $180,000 a year - I shit you not:

"Without a doubt, $18 billion is a lot of money, but it's a drop in the bucket on Wall Street," said Gustavo Dolfino, president of the WhiteRock Group, a headhunter for the banks. "These bonuses are down, and the salaries are not enough for these people. They can't live on $150 to $180,000, so they haven't saved any money. They put it on credit lines and at bonus time, they thought they'd pay it off."

The median household income in the United States is about $49,000, according to the U.S. Census Bureau - and that's for full, multi-person households. But Wall Street would have believe that individual executives and traders "can't live on $150,000 to $180,000 a year," and so the same taxpayers whose median household income is $49,000 a year must subsidize their bonuses.

Clearly these people have no comprehension of the real world and what most people make...and get by on. The median salary is in NYC is actually about the same, or in 2007 a few hundred dollars lower than the national average. When people think of New York City, they often forget about the people that live in all five boroughs. And apparently, so do many of these financiers that barely manage on $150-$180K a year.

Wall Street Defends Their Taxpayer Funded Bonuses

Plenty of scorn has been heaped upon the titans of finance in the last few months. Politicians and plebs alike have railed against the excesses of Wall Street and clamored for reform while making the effort to restart the economy. In the last days of a Republican White House, Democrats in Congress aided the President with $700 billion in relief for Wall Street, so that credit would begin to flow yet again. Now we learn that credit is still stuck and yet, these financiers that tanked our economy took in nearly $20 billion of bonuses last month. The public outrage was not unforeseen, but the reaction to it from bankers and traders is downright obscene.

From The NY Times:

“People come here because they want to work hard and get paid a lot for working hard,” one investment banker said Friday as he wended his way, lunch bag in hand, through the World Financial Center. “I think there’s a disconnect between Wall Street and Main Street.”

Oh yeah, there is a disconnect for sure. The realities for those struggling to get by and those who struggle to wait for a table at Jean Georges are worlds apart.

“My bonus is ‘shameful’ — but I worked hard to get it,” said John Konstantinidis, a wholesale insurance broker, lunching Friday at Harry’s at Hanover Square.

“I’m a HENRY,” Mr. Konstantinidis added. “High Earner but Not Rich Yet.”

Sounds more like a SCHMUCK than anything else to me. The delusion here is high while the nation suffers miserably in a time where tens of thousands are laid off in a single day. This guy should be grateful he has a job. Then there was the criticism of the President for daring to speak ill of their kind.

“I think President Obama painted everyone with a broad stroke,” said Brian McCaffrey, 55, a Wall Street lawyer who was on his way to see a client. “The way we pay our taxes is bonuses. The only way that we’ll get any of our bailout money back is from taxes on bonuses. I think bonuses should be looked at on a case by case basis, or you turn into a socialist.”

Mr. McCaffrey wouldn't know the definition of socialism if it smacked him open-handed in the face. What does he think the bailout money is, something out of the pages of Keynes or Locke? And then there's this callously-laden gem at the end of the article:

“On Main Street, ‘bonus’ sounds like a gift,” he said. “But it’s part of the compensation structure of Wall Street. Say I’m a banker and I created $30 million. I should get a part of that.”

“There’s got to be a better term for it,” he added, turning to Mr. Novello.

“Earned income credit?” he wondered aloud.

What about the trillions you and brethren have lost over the last couple of years? Where is your contribution towards fixing that? How do you justify being rewarded with bonuses when your company is losing billions upon billions of dollars? Really, there is no excuse, none at all. I swear, in another time and place, their actions would be criminal.

The Bailout Is Bigger Than You Think And No One Is Paying Attention

If you think the $700 billion given to Secretary Paulson by the Congress was a lot of cash, then you'll be shocked to know how much our government is really coming up to bat for corporations with. The actual tab, when combined with loans, guarantees and other set ups is closer to five trillion, or to put it in long form, $5,000,000,000,000.00. That my friends (sorry for the McCain reference) is a incredible amount of money. Especially because the people who pay most of the taxes really do not see much of it. The way it breaks down is pretty simple.

From Forbes:

The Fed has taken on much of that total, including lending a cumulative $1 trillion in overnight or short-term loans since March to primary dealers through its emergency discount window and making a cumulative $1.8 trillion available through its term auction facility, a series of short-term transactions it began making available twice a month in January. It should be noted that a portion of the funds lent in these programs has been repaid and that the totals represent what has been made available.

The Fed also took on tens of billions in debt, including $29 billion in debt of Bear Stearns, and made $60 billion of credit available to American International Group (nyse: AIG - news - people ). It is committing $22.5 billion to set up a special purpose vehicle to manage some of AIG's residential mortgage-backed securities, and it is financing $30 billion of a second fund to hold $70 billion of multi-sector collaterized debt obligations on which AIG wrote credit default swaps.

The Treasury, in addition to the $700 billion raised in the Emergency Economic Stabilization Act, agreed to guarantee money market funds against losses up to $50 billion, will inject $40 billion of capital into AIG and is backing the conservatorship of Fannie Mae (nyse: FNM - news - people ) and Freddie Mac (nyse: FRE - news - people ), to the tune of $200 billion.

The FDIC, meanwhile, is guaranteeing $1.5 trillion of senior unsecured bank debt.

And there's more to that as well, but you can start by digesting those numbers. The truth is we are dropping ridiculous sums of money in these institutions and have very little to show for it. The markets are still unhappy and fears of a long recession just make things worse. The way Wall Street has fiscally managed itself (basically no management to be seen) has had a detrimental effect on us all and what is worst of all is that Congress is doing next to nothing to make sure what they have given Paulson has worked.

Literally speaking, no oversight positions have been filled and $290 billion has already been spent out of the bailout. Many of us on the left (and yes, the conservative right too) screamed and shouted to take it easy and not act in such a brash manner that gave Paulson and Bush everything he wanted. The conditions that precipitated this collapse have been formed over many years and taking a few extra weeks would have been just fine. Now we are still in a large mess with nothing to show for the billions spent. Soon we'll be wishing for this to only cost five trillion dollars and not whatever astronomical figure it eventually ends up being.

Your Money Going To Enlarge Wall St. Bonuses

The ridiculousness of the collusion between Washington and Wall Street knows no end. Once again, we see the lax regulation and oversight of our government helping those that need no extra help while the rest of us suffer. If a regular person lost all their money, Congress would never give them billions to replace that loss and allow them to receive an additional bonus. Yet come Christmastime, Wall Street executives are going to see larger bonus checks than they thought they'd get before the government bailed them out.

From Time:

Uncle Sam has a new name on Wall Street — Sugar Daddy. Bonuses for investment bankers and traders are projected to fall by 40% this year. But analysts, compensation consultants and recruiters say the drop would be much more severe, perhaps as much as 70%, had it not been for the government's efforts to prop up the financial firms. "Year-end pay on Wall Street will be higher than it would have been had it not been for the government and mergers," says Alan Johnson, a leading compensation consultant. "You would expect it to be down much more."

Johnson predicts the average managing director at an investment bank, a title typically earned around eight years on the job, will receive a bonus of $625,000. That's down from nearly $1.1 million last year, but it is still 15 times the income of the average American household. Top bankers could receive as much as $1 million. Even a bond trader just out of business school could see his or her bank account enriched by as much as $170,000 this Christmas. "The firms have had an extremely difficult year," says Joan Zimmerman, a Wall Street career coach. "But they can't afford to lose talent either."

While the government rescue limits the salaries of five top executives of each of the participating financial firms, Congress did nothing to restrict Wall Street firms from using taxpayer funds to boost the compensation of rank and file investment bankers. "Some people might argue that these bankers should not be penalized if they weren't personally involved in the risky mortgage-backed securities," says Sarah Anderson, project director of the Global Economy Project at the Institute for Policy Studies, a progressive think tank in Washington. "My response is that average taxpayer wasn't either, but she is being asked to take a hit."

We, the average taxpayer, are being repeatedly hit in the gut, kicked in the shin and slapped across the face. In a just world, these investment bankers who supposedly have "talent" would be paying back what they lost for their company and ultimately for our economy. People are suffering out there, losing their homes, their cars, their credit...and these wealthy few are still looking forward to six-figure bonuses. Seriously, wtf? W. T. F!!!

How is this fair? Someone want to explain this to me?

The GOP And Bush Wanted To Ruin That Too

Remember back three and a half years ago when George Bush said it was crucial that we privatize Social Security? Now on November 4th, keep it in mind that the Republicans still want their dream of privatizing SSI realized.

Foxes Invited To Henhouse Robbery Investigation, Less Fences Recommended

I got to admit, listening to the "bigwigs" of the financial industry is quite comical. They'd actually be funny sideshow freaks if it weren't for that fact that they have helped to destroy our national economy. Their ridiculous amount of greed has given the few at the top millions upon millions while the majority of us suffer. Now that the crisis is deepening with no end in sight, the Wall Street Journal and the Partnership for New York City decided to get the politicians and the principals of the big financial companies to come up with ideas. Needless to say, nothing much got done.

From The NY Times:

There were differences of opinions, but all seemed to agree that now was not the time to raise taxes or impose new regulations on their businesses.

The chief executives who spoke at the meeting, which was organized by the Partnership for New York City and The Wall Street Journal, were also reluctant about predicting that New York would remain the world’s financial hub after this crisis runs its course.

James L. Dimon, the chief executive of JPMorgan Chase, said high taxes discourage companies from hiring here. “New York tries to tax everything we do around the world,” he said. “If you have a choice where you put a job, it will not be here. That’s a terrible thing to say.”

A terrible thing here is that Dimon and others like him get to say anything at all, save for "Guilty as charged" or a cowardly "Not Guilty" when the judge asks them how they plead for their crimes against our country and its economy. These men are criminals, they have no right to decide on where to go from here. This is caused by their malfeasance and lack of regulation that the politicians in Albany (but mostly Washington) legislated for their financial contributors. Now the foxes are crying "not me" while looking fully fattened by their greed of the last ten years or more.

Wrong Again Sarah, Main Street Was Screwed By Wall Street

During last night's debate, Sarah Palin blamed the actions of Main Street for the problems on Wall Street. Despite whatever pseudo-populism she has tried to trick people with, the end of this video shows who she blames....and wants to punish with her potential policies.

The Progressively Minded "No BAILOUTS" Act

Why is "bailouts" in all caps? That's because not only did the Progressive caucus put together a comprehensive package that reforms the way things are done on Wall Street, they made an acronym out of it too. The "Bringing Accounting, Increased Liquidity, Oversight and Upholding Taxpayer Security" Act does almost everything that the original plan floated by Paulson did not.

From Congressman DeFazio (co-sponsor of the bill):

1) Require the Securities and Exchange Commission (SEC) to require an economic value standard to measure the capital of financial institutions.

This bill will require SEC to implement a rule to suspend the application of fair value accounting standards to financial institutions, which marks assets to the market value, no matter the conditions of the market. When no meaningful market exists, as is the current market for mortgage backed securities, this standard requires institutions to value assets at fire-sale prices. This creates a capital shortfall on paper. Using the economic value standard as bank examines have traditionally done will immediately correct the capital shortfalls experienced by many institutions.


2) Require the Securities and Exchange Commission to restricting naked short sells permanently

This bill will require SEC to implement a rule that blocks naked selling, selling a stock short without first borrowing the shares or ensuring the shares can be borrowed. Such practices many times harm the companies represented in the sales and hurt their efforts to raise capital. There is no economic value produced by naked short sales, but significant negative effects.


3) Require the Securities and Exchange Commission to restore the up-tick rule permanently.

This bill will require SEC to implement a rule that blocks short sales without an up-tick in the market. On September 19, 2008, the SEC approved a temporary pause of short selling in financial companies “to protect the integrity and quality of the securities market and strengthen investor confidence.” This rule prevents market crashes brought on by irrational short term market behavior.


4) “Net Worth Certificate Program”

This bill will require FDIC to implement a net worth certificate program. The FDIC would determine banks with short-term capital needs and the ability to financially recover in the foreseeable future. For those entities that qualify, the FDIC should purchase net worth certificates in these institutions. In exchange, these institutions issue promissory notes to repay the FDIC, counting the amount “borrowed” as capital on their balance sheets. This exchange provides short term capital, with not cash outlay. Interest rates on the certificates and the FDIC notes should be identical so no subsidy is necessary.

Participating banks must be subject to strict oversight by the FDIC including oversight of top executive compensation and if necessary the removal of poor management. Financial records and business plans should be subject to scrutiny while participating in the program.

In 1982, Congress approved a program, known as the Net Worth Certificate Program, that allowed banks and thrifts to apply for immediate capital assistance. From 1982 to 1993, banks with total assets of $40 billion participated in the program. The majority of these banks, 75%, required no further assistance beyond the certificate program.


5) Increase the FDIC Insurance limit from $100,000 to $250,000.

The bill will require the FDIC raise its limit to provide depositors confidence that their money is safe and help eliminate runs on banks which are destabilizing to the industry.

It may not be perfect and certainly not all-encompassing, but this is far better than what Henry Paulson put on the table with the full-backing of the President (for whatever that is worth these days). Congress should also move to rollback anything with Phil Gramm's name on it along with much of the de-regulation that the Republicans went with while they were in control from 1994-2006. I'd also love to see a tax on trades like others have suggested. A quarter ($0.25) surcharge per transaction is nothing for these people and in the end the government can raise billions of dollars a year to help undo the damage the industry has to our economy. Then break up the big banks so that the market will not have to rely on a few giant actors and give the taxpayers and homeowners a break (think foreclosures) to make up for the egregious behavior we have seen from the financial elites. The time for corporate welfare is over and we can right the wrong by giving the money they "stole" back to the people...and certainly disallow them from stealing even more, like Paulson tried to do.

While McCain Was Busy Gimmicking, Congress Derails Bailout For Time Being

While most of the candidates were out campaigning, John McCain stayed behind at his Arlington headquarters so he could pretend he was in Congress being a bi-partisan maverick, or something like that. In fact, he had his whole brigade claiming that he was there to bring the bill in and get passed, when in reality we saw a majority of Republicans and some Democrats opposing it. The defeated bill then caused the largest drop in the Dow ever recorded, nearly a seven percent loss of the total value. There were many reasons to vote against it for Democrats and Republicans and in the end the American people were saved from the largest legit robbery of the poor to pay the rich. And to top it off, the media is now blaming McCain for coming in and screwing everything up.

From Crooks and Liars:

Chris Matthews cuts through the spin and pins the blame squarely where it should be: On House Republicans and John McCain who promised to deliver their vote.

“McCain said he was going to lead the Republican charge, he was going to make sure that this was a bipartisan success. He called charge, and the Republican retreated. That’s what happened here. “

Politico’s Mike Allen writes:

McCain takes credit for bill before it loses

Sen. John McCain (R-Ariz.) and his top aides took credit for building a winning bailout coalition – hours before the vote failed and stocks tanked.

The rush to claim he had engineered a victory now looks like a strategic blunder that will prolong the McCain’s campaign’s difficulty in finding a winning message on the economy.

Think about how bad this is for McCain. He “suspended” his campaign last week and promised to get the House GOP on board. The bill failed today because those very same Republicans bailed once Pelosi hurt their feelings. McCain put his leadership credentials on the line and failed. Not a little fail, but an Epic Fail. And the worst part about it is he and his campaign have been claiming for the past 48 hours that it was McCain’s leadership that got the bill passed.

So John, when will we see the humble side of you and admit that your intervention helped make this mess even larger? Oh, that's right, never. McCain's leadership skills are in the gutter, proven by his inability to rein in his party after saying repeatedly that he would. John may have acted heroic in Vietnam, but as a Senator and Presidential nominee, he is clearly anything but.

Bailout, No Bailout, Bailout, No Bail....How About A Real Solution?

While Warren Buffett prays to heaven to alleviate our fiscal crisis, another large bank fell last night as regulators swooped in and sold Washington Mutual off to JP Chase for pennies on the dollar. It helped the FDIC by not having to deplete more billions from the fund, but it hit Wall Street hard as the financial center lost their sixth largest bank. Now, this was their fault of course, by dabbling in the irresponsible lending and trading bad mortgage securities. I don't take any pity on the rich bastards that made this happen but there does need to be a solution.

Congressman Peter DeFazio (D-OR) had a great one:

Rep. Peter DeFazio, D-Ore. [...] advocated a new government fee of .25 percent of every stock transaction to ensure that the government can recoup funds to pay for the aid that it provides to lenders. “If this is truly such a catastrophe, I don’t see how anybody can object to a one-quarter of one percent fee,” DeFazio said. Others who attended the session said that proposal seemed to be gaining little traction.

Obviously making Wall Street pay to clean their own mess isn't thought of so highly down in D.C. Basically the majority of the House wants to give a bailout but the Dems want oversight and the Republican leadership (but not all Repubs) want to give out a giant blank check for the President. Its funny (and also tragic) that Bush and his remaining followers want to go the socialist route for their buddies while the Socialist in the Senate probably has the best plan in the room.

Bernie Sanders knows whats up. The rich benefitted by screwing the rest of us and now that they ran out of credit they are begging to be able to continue the status quo. In an ideal world, Sanders would have the power to make them pay. While it won't happen now, with enough primary and general elections, perhaps one day we can accomplish that by electing all of the challengers out there that see this bailout as one big giant mess.

Paulson Takes His Cue From Nigerian Scam Artists

Almost everyone with an email box has received spam messages that offer too-good-to-be-true proposals that "guarantee" millions in profit. All you have to do is send a small amount of money to Mr. So and so from xxx bank and you are on you way to living like a millionaire. I feel bad for the few unfortunate suckers that actually believe that garbage and lose money. Of course, it'll be nowhere near as devastating if Congress believes the junk that just showed up in their inbox.

From RawStory:

Dear American:

I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.

I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.

I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transactin is 100% safe.

This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.

Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.

Yours Faithfully Minister of Treasury Paulson

Those of us that use our cerebral cortex would hit the delete button instantly, yet Congress is actually taking its time on this crap. If they are seriously that dumb, I'm going to draft my own Nigerian letter, stash a billion or two in my bank account and retire to some place tropical. This bailout/giveaway/scam has no business being on the table for discussion.

Congress should get a group of real, independent economist and draft a proposal that will put the American people first and the bankers who put us in this mess dead last, where they belong. Actually, they probably belong in jail. I wouldn't mind some of my taxpayer dollars going to keep them in lockup, far from being able to influence the financial markets.

Lehman Bros. Gives One Last F.U. To Its Employees And The Rest Of Us

Last week Lehman Brothers started off the unbelievable financial action by declaring Chapter 11 bankruptcy. The gigantic swings in the market haven't stopped since while other monolithic companies teetered on the brink of collapse. Now the Congress is considering a $700 Billion dollar package to save the market from the greed and carelessness within itself. You would think that while the financial sector is trying to pull one over us that they'd be on good behavior, at least until they get their money.

You thought wrong:

Up to 10,000 staff at the New York office of the bankrupt investment bank Lehman Brothers will share a bonus pool set aside for them that is worth $2.5bn (£1.4bn), Barclays Bank, which is buying the business, confirmed last night.

The revelation sparked fury among the workers' former colleagues, Lehman's 5,000 staff based in London, who currently have no idea how long they will go on receiving even their basic salaries, let alone any bonus payments. It also prompted a renewed backlash over the compensation culture in global finance, with critics claiming that many bankers receive pay and rewards that bore no relation to the job they had done.

A spokesman for Barclays said the $2.5bn bonus pool in New York had been set aside before Lehman Brothers filed for chapter 11 bankruptcy in the United States a week ago. Barclays has agreed that the fund should continue to be ring-fenced now it has taken control of Lehman's US business, a deal agreed by American bankruptcy courts over the weekend.

Set aside? Set aside??? If I were employed by Lehman in Europe I would be seething at this news, and I'm sure many are. It just goes to show that these "captains of industry" have no concept of right and wrong and that any money we as taxpayers give them will be wasted away into the abyss of their cold, greedy hearts just as the bad loans were given out over the past few years. The fact that Barclays excuses this behavior is ridiculous.

Conservatives may argue that it is up to the shareholders to allocate $2.5 Billion dollar bonuses to faltering companies, but it isn't the shareholders propping up this faltering system. The people with their backs breaking on this deal includes all of us that mail checks to the I.R.S. every year. Yet these bastards do not even want us to see a return on this escapade in the event that the bailout works.

Wall Street Wants Us To Bail Them Out To Screw Us Over Again

Everyone has paid at least a little attention to the massive fiscal crisis that Wall Street felt last week. If you are confused as to what happened, you should check out this must-read piece by Devilstower at DailyKos. Now this week the President and Congress are trying to remedy the situation but have very different views on how to go about that.

Basically Bush, Paulson and the rest of the GOP wants us to let Wall Street off the hook for their excesses and make the taxpayers shoulder the burden (what's another trillion when we already owe $9.6 trillion?). Leaders in the Democratic caucus better take heed of some important questions though. Listening to Bush beforehand got us into a lot of trouble, no matter what the topic, so lets not just go and bend over for his "solution" this time. There is some sort of positive agenda forming from the majority party, but you never know what you'll get when Pelosi is in charge of something that challenges Bush's authority.

One Senator who is neither a Democrat nor a Republican (but sides with the Dems) is on to the right idea:

By Senator Bernie Sanders

The current financial crisis facing our country has been caused by the extreme right-wing economic policies pursued by the Bush administration. These policies, which include huge tax breaks for the rich, unfettered free trade and the wholesale deregulation of commerce, have resulted in a massive redistribution of wealth from the middle class to the very wealthy.

The middle class has really been under assault. Since President Bush has been in office, nearly 6 million Americans have slipped into poverty, median family income for working Americans has declined by more than $2,000, more than 7 million Americans have lost their health insurance, over 4 million have lost their pensions, foreclosures are at an all time high, total consumer debt has more than doubled, and we have a national debt of over $9.7 trillion dollars.

While the middle class collapses, the richest people in this country have made out like bandits and have not had it so good since the 1920s. The top 0.1 percent now earn more money than the bottom 50 percent of Americans, and the top 1 percent own more wealth than the bottom 90 percent. The wealthiest 400 people in our country saw their wealth increase by $670 billion while Bush has been president. In the midst of all of this, Bush lowered taxes on the very rich so that they are paying lower income tax rates than teachers, police officers or nurses.

Now, having mismanaged the economy for eight years as well as having lied about our situation by continually insisting, “The fundamentals of our economy are strong,” the Bush administration, six weeks before an election, wants the middle class of this country to spend many hundreds of billions on a bailout. The wealthiest people, who have benefited from Bush’s policies and are in the best position to pay, are being asked for no sacrifice at all. This is absurd. This is the most extreme example that I can recall of socialism for the rich and free enterprise for the poor.

In my view, we need to go forward in addressing this financial crisis by insisting on four basic principles:

(1) The people who can best afford to pay and the people who have benefited most from Bush’s economic policies are the people who should provide the funds for the bailout. It would be immoral to ask the middle class, the people whose standard of living has declined under Bush, to pay for this bailout while the rich, once again, avoid their responsibilities. Further, if the government is going to save companies from bankruptcy, the taxpayers of this country should be rewarded for assuming the risk by sharing in the gains that result from this government bailout.

Specifically, to pay for the bailout, which is estimated to cost up to $1 trillion, the government should:

a) Impose a five-year, 10 percent surtax on income over $1 million a year for couples and over $500,000 for single taxpayers. That would raise more than $300 billion in revenue;

b) Ensure that assets purchased from banks are realistically discounted so companies are not rewarded for their risky behavior and taxpayers can recover the amount they paid for them; and

c) Require that taxpayers receive equity stakes in the bailed-out companies so that the assumption of risk is rewarded when companies’ stock goes up.

The rest of the Op-Ed addresses the need for a jobs program, re-regulating the industry that took advantage of GOP policies and ensuring that these corporate entities never get as big as they have.

Sanders is exactly right that we need to fight back, because there are so many agents that are trying to keep the status quo going at the expense of all of us. For example, the Fed gave Goldman Sachs and Morgan Stanley a big wet kiss yesterday by changing their status to bank holding companies, ensuring that they get a piece of the potential government bailout. Some champion this as a way to regulate the two giants, but really it is a giveaway to firms that contributed to the fiscal disaster we are in. Even foreign banks like UBS are trying to cash in on this financial raping of the American taxpayer.

This is a crucial time in the fight between the middle class and the wealthy elite. Now is the time for Dems to stand up tall along with Sanders and say, enough is enough!

Paterson Readies His Budget Axe Yet Again

Sunday night was the first I had heard of the Lehman Brothers bankruptcy and Bank of America's acquisition of Merrill Lynch. One of the first things I wondered yesterday morning was when Governor Paterson would call legislators back up to Albany for more budget cuts. While Congress may act first on a stimulus package, a crisis on Wall Street can be felt far and wide but the epicenter is still New York. So what is a Governor to do that has already slashed almost $500 million from the budget?

From The Times-Union:

"I would not be surprised if the budget deficit we just cut down may skyrocket back up, and I may have to call on the Legislature to come back and grapple with it again," Paterson said Monday during an interview on the New York City-based NY1 news channel. He repeated that contention on the regional cable TV channel Capital News 9.

Paterson's remarks came during a tumultuous day on Wall Street, as the Dow Jones industrial average plunged 500 points -- its worst drop since Sept. 11, 2001 -- on the news of Lehman Brothers' bankruptcy filing, the takeover of Merrill Lynch by Bank of America, and the state's plan to devise a lifeline for American International Group insurance company.

The upheaval will likely mean mass layoffs and a drop in state income tax revenues. Officials say the results of their midyear financial report, usually finished in late October, will dictate whether lawmakers need to impose another round of cuts.

Legislative leaders took a wait-and-see attitude toward another crisis session.

The wait-and-see won't last long and Albany could become a center of chaos as early as next month, before election day. Paterson talked about tax hikes as well as budget cuts, so that is better than this past special session where it was all about cutting services from the Republican Senate and the Governor's office.

As TU points out, this upcoming session should be even more intriguing than the last, as voters across New York will decide if control of the State Senate swings to the Democrats or not. Only two seats will make a difference, that is if you don't count the DINOs in there at the moment. Legislators definitely have big decisions as they face their constituents in a few weeks and will have to judge whether they balance the budget by raising taxes or cutting programs, because revenues are going to drop even further thanks to Wall Street.

Greenspan Laments Faltering Economy He Created And McCain's Wish To Continue It

Alan Greenspan rightly slammed McCain for his proposal to lower taxes again for the rich while not reducing spending. It is just idiotic to keep borrowing money from other countries at the rate that we do and not expect dire consequences to our market. Now that "Black Monday" is upon us and European markets are already off by five percent, we are about to get a taste of what McCain wants to continue.

From The Huffington Post:

Former Federal Reserve Chairman Alan Greenspan offered a woeful outlook of America's economic situation on Sunday, saying the crisis with the country's financial institutions was as dire as he had ever seen in his long career, and predicting that one or more of those institutions would likely collapse in the near future.

"Oh, by far," Greenspan said, when asked if the situation was the worst he had seen in his career. "There's no question that this is in the process of outstripping anything I've seen and it still is not resolved and still has a way to go and, indeed, it will continue to be a corrosive force until the price of homes in the United States stabilizes. That will induce a series of events around the globe which will stabilize the system."[...]

In light of these dynamics, Greenspan noted that the government was left with tough decisions: which institutions are "so fundamental to the functioning" of society that they demanded a federal safety net? Earlier in the week, the former fed chairman noted that such choses extended to tax policy as well. In an interview with Bloomberg Television, Greenspan argued that the country couldn't afford the tax cuts being proposed by John McCain without an equally massive reduction in spending.

"I'm not in favor of financing tax cuts with borrowed money," he said. "I always have tied tax cuts to spending."

Now those comments are well and good now, but Greenspan did not admit to all the trouble he helped create throughout his tenure as Federal Reserve Chairman. Entire websites are dedicated to chronicling his failure to guide our economy away from exactly what he is decrying now. We've been borrowing for far too long and now multiple factors are helping take down an Investment Bank institution that has stood on Wall Street since 1850. The same factors led to Merrill Lynch selling itself to Bank of America and now Washington Mutual threats of going under as well.

We are in a serious economic crisis and any Republican (like McCain) that says the fundamentals are strong have no right to be near any levers of power that can affect the teetering system. The rich can always ride out downturns like this, but they don't give a shit about the poor...don't expect McCain to be any different. As for Greenspan, he helped start this mess so for anyone to be listening to him without a skeptical ear is just beyond absurd.

Bush Wants To 12-Step Wall Street

Wow, just wow:



How much longer is this moron going to be around?

$147 For A Barrel Of Oil, Would That Be Imaginary Bad News Mr. Gramm?

John McCain can say that Gramm's callous comments do not reflect his feelings, but we know that isn't true because they both say pretty much the same thing when it comes to our nation's economic crisis. Well today oil prices touched $147 for a barrel and that is much more than just "psychological," its means a harder hit for American consumers and Phil Gramm can go Dick Cheney-himself if he thinks differently.

From Yahoo News:

NEW YORK - Oil prices briefly spiked to a new record above $147 a barrel Friday, as rising hostilities between the West and Iran and unrest in Nigeria sent investors rushing back to energy markets.

A decline in the U.S. dollar and concerns about an oil worker strike in Brazil contributed to the higher price.

The resurgence in crude prices stokes concern that $4-a-gallon gasoline is here to stay for U.S. drivers and means home heating could get much more expensive this winter.

Heating oil futures surged on the New York Mercantile Exchange to a record of more than $4.15 a gallon. Natural gas futures turned lower, but are still about twice as high as a year ago.

"If you think your gasoline bills are expensive now, wait till you get your home heating bill this winter," said Stephen Schork, an analyst and trader in Villanova, Pa.

That may not mean much to wealthy people like McCain and Gramm, but it does matter to millions who make far less than those that have beer baron heiresses to rely on.