The New Bailout

[Kaliayev]

It could just be me, but I find the bailouts quite refreshing. Its not every day your suspicions about incipient banana republicanism are proved true, after all.

For example

AIG renegotiation

The Treasury banking stress tests were fixed

White House again refuses calls to nationalize the banks, maintaining what is essentially a pretty fiction

Structural reform of the banking system is essentially nil

And these are just a few stories from the last week.

Now, that's not to say bailouts in theory are a bad idea. With the right structural reforms, proper analysis and adequate punishment for the fools in government, regulation and finance, bailouts could work. There are plenty of good bankers and financial analysts out there who did not jump on the subprime mortgage bandwagon, and have raised concerns about overreliance on credit before now.

But none of those things are happening. Its the "in practice" part of this which is the problem, as per usual. This is like trying to fill a bucket with a hole in the bottom. But then, when the bucket contributed several million in campaign related funds, and those who the money is being taken from contributed, uh, significantly less, you shouldn't really be surprised when the result is systemized looting from the former to the latter.

[tw]

Originally Posted by TheMercenary

Throw the bums into Gitmo.

Or subject them to severe oversight and regulation. That would be even worse. After these last ten years, that would be extremely painful for them.

[sugarpop]

Originally Posted by tw

Iraqi contractors (or American hired Iraqis) are not being blamed and were not a solution. 85% of all problems are directly traceable to top management. Murder of American soldiers in showers is directly traceable to top management - even if the work is done by Iraqi contractors (paid by the job) or Iraqi employees (paid by the hour).

First task was call it an accident. Therefore blame does not go to the source.

And so the joke - let Iraqi contractors do the work. Iraqis could not have done it any worse. In essense, Americans got paid to let their Iraqi employees do it without training and oversight. And then we blame the Iraqis. Or call it an accident - same thing.

Iraqis might have actually done it right, if they had been in charge.

KBR was in charge, and they claimed they were NOT required to follow US electrical safety codes. Even the DOD is losing confidence in them.
http://cellar.org/newreply.php?do=newreply&p=538077

The accidental deaths and close calls, which are being investigated by Congress and the Defense Department’s inspector general, raise new questions about the oversight of contractors in the war zone, where unjustified killings by security guards, shoddy reconstruction projects and fraud involving military supplies have spurred previous inquiries.

American electricians who worked for KBR, the Houston-based defense contractor that is responsible for maintaining American bases in Iraq and Afghanistan, said they repeatedly warned company managers and military officials about unsafe electrical work, which was often performed by poorly trained Iraqis and Afghans paid just a few dollars a day.
http://www.nytimes.com/2008/05/04/wo...ectrocute.html

http://www.msnbc.msn.com/id/29065911/

[sugarpop]

Originally Posted by Zhuge Liang

It could just be me, but I find the bailouts quite refreshing. Its not every day your suspicions about incipient banana republicanism are proved true, after all.

For example

AIG renegotiation

The Treasury banking stress tests were fixed

White House again refuses calls to nationalize the banks, maintaining what is essentially a pretty fiction

Structural reform of the banking system is essentially nil

And these are just a few stories from the last week.

Now, that's not to say bailouts in theory are a bad idea. With the right structural reforms, proper analysis and adequate punishment for the fools in government, regulation and finance, bailouts could work. There are plenty of good bankers and financial analysts out there who did not jump on the subprime mortgage bandwagon, and have raised concerns about overreliance on credit before now.

But none of those things are happening. Its the "in practice" part of this which is the problem, as per usual. This is like trying to fill a bucket with a hole in the bottom. But then, when the bucket contributed several million in campaign related funds, and those who the money is being taken from contributed, uh, significantly less, you shouldn't really be surprised when the result is systemized looting from the former to the latter.

I never agreed with the bank bailouts. I DO agree with the stimulus. AIG just makes me see red. I think they should just go down, along with some big banks. In fact, I think too many corporations have gotten too big. They should be broken up.

[sugarpop]

btw, what about all the info about Northern Trust today?

[Kaliayev]

Originally Posted by sugarpop

I never agreed with the bank bailouts. I DO agree with the stimulus. AIG just makes me see red. I think they should just go down, along with some big banks. In fact, I think too many corporations have gotten too big. They should be broken up.

A few could do with being shaken down, its true. I would tend to think that any single corporate or banking entity large enough to pose a threat to the economy should a run on them happen (like with Citigroup, for example) is probably too much power in the hands of too few. I'm not entirely sure the benfits outweight the particular costs when it comes to the investment giants, at least those who play it fast and loose with everyone's money.

But apparently such companies are "too big to fail" and we should not worry ourselves about such things. Or so I was told when I asked about the potential risk, a few years back.

[Kaliayev]

Originally Posted by sugarpop

btw, what about all the info about Northern Trust today?

I hadn't heard about this until you mentioned it, but Bloomberg, as per usual, has the goods:

http://www.bloomberg.com/apps/news?p...xUwbY&refer=us

Feb. 25 (Bloomberg) -- U.S. lawmakers are asking companies to repay taxpayer money spent on private jets and other perks after Northern Trust Corp., the Chicago-based custody bank that got $1.6 billion, hosted a golf tournament this month.

Representative Barney Frank, the chairman of the House Financial Services Committee, yesterday co-signed a letter with 17 colleagues demanding that Northern Trust return money spent on the event. Senator John Kerry said he would introduce a bill banning firms getting U.S. aid from paying for conferences and parties.

“I’m sick and tired of picking up the newspaper and reading about another idiotic abuse of taxpayer money while our country is on the brink,” Kerry said in a statement yesterday. He and Frank are both Massachusetts Democrats.

[classicman]

Fed chief Bernanke: recession could end in '09

WASHINGTON – America's recession "probably" will end this year if the government succeeds in bolstering the banking system, Federal Reserve Chairman Ben Bernanke said Sunday in a rare television interview.

Bernanke stressed — as he did to Congress last month — that the prospects for the recession ending this year and a recovery taking root next year hinge on a difficult task: getting banks to lend more freely again and getting the financial markets to work more normally.

"We've seen some progress in the financial markets, absolutely," Bernanke said. "But until we get that stabilized and working normally, we're not going to see recovery.

"But we do have a plan. We're working on it. And, I do think that we will get it stabilized, and we'll see the recession coming to an end probably this year."

Even if the recession, which began in December 2007, ends this year, the unemployment rate will keep climbing past the current quarter-century high of 8.1 percent, Bernanke said.

A growing number of economists think the jobless rate will hit 10 percent by the end of this year.
Asked about the biggest potential dangers now, Bernanke suggested a lack of "political will" to solve the financial crisis.
He said, though, that the United States has averted the risk of plunging into a depression.
"I think we've gotten past that," he said.

It's rare for a sitting Fed chief to grant an interview, whether for broadcast or print. Bernanke said he chose to do so because it's an "extraordinary time" for the country, and it gave him a chance to speak directly to the American public. (A transcript of the interview was provided in advance of the broadcast.)

Bernanke spoke at a time of rising public anger over financial bailouts using taxpayer money. Battling the worst financial crisis since the 1930s, the government has put hundreds of billions of those dollars at risk to prop up troubled institutions and stabilize the banking system.

Democrats and Republicans on Capitol Hill have questioned the effectiveness of the rescue efforts and have demanded more information about how taxpayers' money is being used.

Bernanke's TV interview seemed to be part of a government public relations offensive.

So we are facing a catastrophe or things will be better this year? Which is it?

[ZenGum]

“I’m sick and tired of picking up the newspaper and reading about another idiotic abuse of taxpayer money while our country is on the brink,” Kerry said in a statement yesterday.

Idiotic abuse of taxpayers money? That is what politicians are for. When business gets in on the act, what next? The government giving themselves bonuses?

[xoxoxoBruce]

He didn't say things will get better this year.

[classicman]

Apparently he did in the interview.

[ZenGum]

Well, the "end of the recession" might not be the return to growth, it might be the begining of full-on depression.

[sugarpop]

Surprisingly, I was a little bit comforted by his interview tonight, something I can't say about listening to Larry Summers this morning. I reeeally, reeeally hope they know they are doing. At least I learned Ben Bernanke did not grow up with a silver spoon in his mouth, and he never worked for Wall Street.

[xoxoxoBruce]

Originally Posted by classicman

Apparently he did in the interview.

No, he said if a bunch of things happen, and they can do what they set out to accomplish, the recession will end at the end of the year.

But despite his optimism they can meet those targets in spite of Republican obstructionists, what he's actually talking about is ending the plunge into a full fledged depression.

[classicman]

Well then they cut the video REALLY WELL this morning. I wanted to see the whole thing myself after your posts - Thats what it looked like to me.