Tag Archives: Paulson

The Bail Out: Just say NO!

  Bloomberg reports today that the European Union is contemplating regulating hedge funds: 

http://www.bloomberg.com/apps/news?pid=20601087&sid=aPD_prVa1owQ&refer=home

     Nothing the U.S. Treasury or FED does will mean anything until hedge funds are regulated. The reason we are in this mess to begin with was a long period of artificially cheap credit and lax regulation of entities like hedge funds which use borrowed money and shares to leverage and speculate on anything from stocks to bonds to oil to grain… These are private pools of capital which in their heyday returned double and even triple digit percent gains with little to no regulation or tax.
     We may blame the mortgage crisis for the failure of banks and investment houses, and indeed the mortgage market was a bubble… But the real question is what supported the mortgage bubble? It’s the same thing that supported the tech bubble before it and has supported the commodities bubble since the mortgage bubble burst… Artificially cheap credit and leverage.

     Truly a casino economy in which the investment banks lend money to hedge funds which bet wildly (sometimes leveraging up to 30 times their original capital investment). This drives up the prices of investments in a bull market and drives down investments in a bear market.

     Each time the excesses of easy credit wreak havoc on a segment of investments such as technology stocks, or mortgages, or commodities… The hedge fund capital moves onto the next sector.

     The problem is now that the easy capital has dried up, the investment banks stop dealing the easy credit drug and the hedge funds act like desperate addicts and do anything to get more.  Now the US is being robed to feed the addiction.

     The banks now have the administration demanding free passage of a no strings attached bail out. What this amounts to is the banks asking the government… aka… the taxpayers, for a loan or a mortgage. When you go get a mortgage how much of a down payment do they require? How much interest do they charge? We as taxpayers should demand at least as much from the banks as they would from us as borrowers.

     The same tactics which got us into Iraq are being used again here… Hurry! Don’t think, just re-act. Give us a blank check. Just as Iraq was not responsible for 9-11 and just as the invasion of Iraq was preconceived before 9-11 as a way to reward the military industrial complex. So now this bail out is not going to go to the people who need it, but to reward the banking industry and the hedge funds. It’s a devilish model we’ve seen before… Remove all impediments to greed and let the profit gorging go on to the point of crisis, then create fear and panic in the population and rush them into giving up their money and their freedom as citizens to save those who created the problem and who have already reaped all the rewards.

     It’s corporate capitalism in the good times and corporate socialism in the bad times. Have you ever wondered how capitalism and democracy have been able to co-exist in America? The answer is they haven’t. It’s not real capitalism because the government protects the corporations. It’s not real democracy because the citizens have given up their freedom and become consumers… Locked in a debtor’s prison on the outside world.

     If the government takes on all the risky “toxic” assets of the banks do you think they will in turn wipe out your credit card debt, or your car loans, or your mortgage? Of course not. But they are trying to make you afraid that if you don’t give them your money they will stop giving new loans. My question to the American people is do we really need more loans, more debt, more credit? Show them that it’s really them that are afraid and not US.

     Stand up and say no to this. In the coming months and years economic times are going to be tough enough. We don’t need more debt from the credit-drug pushers. We need the money the government is going to use to bail the banks out to fund our schools, our social security, our new industries, our health care.

     It’s a critical juncture in American history right now and each of us can do what we can to stand up and say no more! Do you want 30 more years of the corruption, the scandals, the wars, the fear…? All in exchange for a credit card to go shopping with. Or do you want a real country where the real engines of American growth… The American workers are able to work and have time to be with their families, can afford to put good healthy food on the table, can afford health care for their children and themselves when they’re sick, can afford to clean up the environment, can afford to give their children an education?

     Do we not realize that if we agree to this bail out we agree to let the next generation of Americans be the first to do worse than their parents? And for what? For fear that we won’t get that extra credit card, or the extra vacation, or that new car.

     If we choose to let the financial version of the invasion of Iraq happen because we are afraid of the financial version of 9-11 we have really learned nothing over these last 8 years. It’s time today to do something.  Speak to people you know, write emails to your senators and congressmen, stand outside with a sign… Anything. But it must be done NOW before this bail out passes through the legislature.

     Don’t let Bush and Cheney get away with another trillion dollars of our money before they leave office. It’s our tax money and we need it more than the banks do.

     http://www.congress.org/congressorg/home/

 

 

 

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ANNUIT COEPTIS NOVUS ORDO SECLORUM: Pay no attention to the man behind the curtain

From Reuters March 29, 2008 – from Doug Palmer – “Upcoming Treasury department proposal to make the Federal Reserve the cheif regulator of U.S. financial markets and give it sweeping new powers.”

An executive summary of the Treasury proposals says a “market stability regulator” is needed and the Fed best fits that role, suggesting the central bank could use its control over interest rates as well as its ability to provide market liquidity to fulfill its functions.
“It’s become clear, I think to all, that the solution at this point is not to simply layer on more layers of regulation on a creaky outdated system, but really to step back and modernize the entire structure,” Hirschmann said.

The Paulson plan would:

  • Designate the Fed as the primary regulator for market stability, greatly expanding it ability to examine any financial institution deemed to pose a risk to the stability of the system.
  • Shift the functions of the Office of Thrift Supervision to the Office of the Comptroller of the Currency, although ultimately the plan envisions just one banking regulator.
  • Merge the Securities and Exchange Commission with the Commodity Futures Trading Commission.
  • Create a national regulator for insurance companies; they are now largely regulated by the states.
  • Establish a commission to try to address the abuses exposed in the current tidal wave of mortgage defaults.

It approved the new world order that has begun