September 28, 2008
You may consider my title to be unforgivably vulgar and crude. It is the truth of what the U.S. government is doing to the vast majority of the citizens it rules. To varying degrees, the government has been behaving in the identical manner for well over a century; rarely has it done so in such a blatantly dishonest and criminal manner.
I start with the point I have made in a number of posts: There Is No Fix -- not for the problem the government bailout purportedly addresses. From Mike Whitney's latest article:
Surely, the cure for hyperbolic "credit excesses and reckless behavior" cannot be "more of the same." In fact, Paulson's bailout does not even address the core issues which have been obscured by demagoguery and threats. The worthless assets must be written-down, insolvent banks must be allowed to go bust, and the crooks and criminals who engineered this financial blitz on the nation's coffers must be held to account.But the point of this exercise is not to address the massive real problems that confront the country: rather, it is to further enrich the ruling class, to protect their existing wealth and power, and to increase their wealth and power still more. You, the "ordinary" American, will pay for all of it.
Note a few points about this Washington Post piece. First, this:
"We've made great progress, but we have to commit it to paper before we can formally agree," said House Speaker Nancy Pelosi (D-Calif.), who has pledged to make the plan available to the public for at least 24 hours before the House votes on it. A vote could come as early as tomorrow in the House, with the Senate expected to follow soon after.How kind of Empress Nancy to permit the serfs who will make possible her latest act of gracious largesse to contemplate the details of how they will be forced to pay for this shit with their blood, labor and lives. And a whole 24 hours! Empress Nancy is generous to a fault.
Both Republicans and Democrats are desperately trying to make it appear that they're looking out for the well-being of the indentured servants whose lives their rulers so carelessly dispose of. That's hardly surprising in light of the notably loud groundswell of rejection at the terms of this plan. But it wouldn't do to encourage the riffraff too much, and the Democrats understand very well indeed who is actually calling the shots here:
Democrats also made a number of concessions, abandoning demands that bankruptcy judges be empowered to modify home mortgages on primary residences for people in foreclosure. They also agreed not to dedicate a portion of any profits from the bailout program to an affordable housing fund...Let them live in tents! proclaim the Democrats.
But the Democrats did succeed with certain of their demands, and in every case the solution proves to be utterly meaningless and toothless:
The administration also agreed to Democratic demands that the financial services industry should help pay for the program. Under the agreement, the president would be required to propose a fee on the industry if the government has not recovered its money through sales of the assets within five years."The president would be required to propose..." Required to propose, but it appears no one is required to impose. Tough language! And does anyone honestly believe that after all the accounting gimmicks, the shifting of funds here, there and everywhere on the impossibly incomprehensible books of many different firms, any of this will come to anything? If you do, I have a non-existent bridge to sell you. Well, look! You bought that bridge already! Aren't you the sweetest, most agreeable idiot to ever come down the pike. Yes, you are, don't deny it now.
As the Post article makes clear, the essence of the Bush administration proposal will soon be enacted: American taxpayers will be forced to pay for generations to solve a problem that cannot be solved, all so that the ruling class is spared any substantial degree of discomfort. After this, to vote for any of the leaders of the two national parties, including the two major presidential candidates, means only one thing: you're being fucked to death -- and you're rewarding the people killing you as you beg for more. If that is your choice, I have one unsolicited piece of advice for all such voters going forward: whenever you're tempted to criticize the president or other national figures for some especially awful policy decision, shut your pathetic little traps. If you reward them once you know they're killing you, exactly how in hell do you convince yourselves that they care at all what you think, or what your concerns are?
I said all of this in a post just over a year ago:
[T]he ruling elites do not care what you think. I repeat: they do not care.It's funny in a horrible kind of way to recall now that I received a number of emails in response to that post. Some readers (and some other bloggers) were terribly distressed. "Oh, Arthur!," they wailed. "Do you really think they don't care about us at all? They're really just in it..." and at this point, you could hear the microscopic gears in their pathetically tiny brains almost grind to a horrified halt, "they're just in it...for themselves?"
Oh, yes, they care to some extent when elections come around -- but any such concern Democratic politicians might have for certain voters' views is obliterated by one consideration loudly and repeatedly announced by almost every liberal and progressive blogger. As I've noted before (with regard to the vacuous, narcissistic bloviating of that great political thinker, Markos Moulitsas), the Washington Democrats know you will continue to vote for them no matter what they do.
When you approach the negotiating table and tell your opponent you'll give him everything he wants before you even sit down, exactly how successful do you think those negotiations will be from your perspective? Yet this is precisely what the liberal and progressive bloggers do time after time after time -- and then they profess amazement when the Democrats act in ways opposed to those same bloggers' views. And note this is not even about all voters' views, just the views of some of them. Since you'll vote for them anyway no matter what they do, why the hell should they care? Sure, you're "alienated" for the moment -- but who are you gonna vote for in November 2008, hmm? They already know the answer to that question.
The ruling class does not care about you or your views. The MoveOn denunciation is an aspect of the performance put on by one part of the ruling class for the benefit of another part. They may criticize each other in certain predetermined ways and within certain narrowly circumscribed limits -- but you may not criticize any of them in ways that go beyond what the ruling class as a whole has decided is acceptable. ... Your role -- and your only role -- is to vote for them as required, and then to shut up.
Reality has now delivered a powerful blow to the skulls of idiots of this kind. Perhaps they will take the lesson, although now I don't think it matters in the least. And of course, many of these same people will still vote for the top of the Democratic and Republican tickets. But this game is over for your lifetime. You lost. Sure, the stock market and the financial world may appear to be fine for a while -- wouldn't you, if the government had just given you a huge fortune stolen from someone else? But watch what happens in three or six months, or in a year. The devastation is far from over; in many ways, it's just beginning.
Toward the conclusion of "A Time Bereft of Heroes," written on September 20, I said:
I expect the Democrats to extract certain modifications and perhaps make a few additions to the monumentally destructive plan proposed by the Bush Administration. The final plan may be marginally less awful than in its current form -- but it will remain entirely awful.Compare this to Paul Krugman, one week later:
The Dodd-Frank changes make the plan less awful, mainly by creating an equity stake. Essentially, this makes it possible for the plan to do the right thing through the back door: use toxic-waste purchases to acquire equity, and hence inject capital after all. Also, the oversight means that Treasury can be prevented from making the plan a pure gift to financial evildoers. But it's still not a good plan.Stick with me, and you can read the news at least a week early.
Krugman also says, "the financial crisis is all too real." There are two aspects of what is happening: one is real, and one is manufactured in significant part, precisely to create the kind of crisis atmosphere that makes abominable legislation like the bailout possible. In various discussions and blog posts, I see people struggling to make all these events fit into one category or the other: either it's all real, or it's all "strategic behavior on the part of big financial players who stand to benefit from the bailout." This is exactly the kind of dualistic error I discussed in this essay. It's not either-or: it's both. The basic problem is very real; in significant part, the theatrics that have been orchestrated around it are not.
Here is Whitney on the real problem at the opening of his new article:
The financial system is blowing up. Don't listen to the experts; just look at the numbers. Last week, according to Reuters, "U.S. banks borrowed a record amount from the Federal Reserve nearly $188 billion a day on average, showing the central bank went to extremes to keep the banking system afloat amid the biggest financial crisis since the Great Depression." The Fed opened the various "auction facilities" to create the appearance that insolvent banks were thriving businesses, but they are not. They're dead; their liabilities exceed their assets. Now the Fed is desperate because the hundreds of billions of dollars of mortgage-backed securities (MBS) in the banks vaults have bankrupted the entire system and the Fed's balance sheet is ballooning by the day. The market for MBS will not bounce back in the foreseeable future and the banks are unable to roll-over their short term debt.They're stealing your money and that of your children and grandchildren and of their children and grandchildren -- all for something that cannot possibly work. It's not designed to work in that sense: it's designed to prop up our rulers for a while longer. That's all. That's the whole disgusting, sickening, criminal scheme.
The Federal Reserve itself is in danger. So, it's on to Plan B; which is to dump all the toxic sludge on the taxpayers before they realize that the whole system is cratering. It's called the Paulson Plan, a $700 billion outrage which has already been disparaged by every economist of merit in the country.
From Reuters: "Borrowings by primary dealers via the Primary Dealer Credit Facility, and through another facility created on Sunday for Goldman Sachs, Morgan Stanley, and Merrill Lynch, and their London-based subsidiaries, totaled $105.66 billion as of Wednesday, the Fed said."
See what I mean; they're all broke. The Fed's rotating loans are just a way to perpetuate the myth that the banks aren't flat-lining already. Bernanke has tied strings to the various body parts and jerks them every so often to make it look like they're alive. But the Wall Street model is broken and the bailout is pointless.
One of the more monumental lies in the Washington Post story comes in these brief excerpts:
Administration officials have stressed that the ultimate cost of the bailout would be much less than $700 billion because the government would eventually sell the assets it purchased and recover most, if not all, of its investment.It appears that Hoyer operates on the premise that everyone is as big a moron as he is. He seems to think the final tally will be less than $700 billion.
Democratic leaders have emphasized to rank-and-file members that Paulson has told them that he could only spend about $50 billion a month on the securities purchase program [!!!]. Of the $700 billion figure, House Majority Leader Steny Hoyer (D-Md.) said: "Nobody believes that's going to be the final cost."
But Hoyer is entirely correct to note that $700 billion isn't even close to the real cost. Mike Whitney again:
How did Treasury Secretary Paulson figure out that recapitalizing the banking system would cost $700 billion? Or did he just estimate the amount of money that could be loaded on the back of the Treasury's flatbed truck when it sputters off to shower his buddies at Goldman Sachs with freshly minted greenbacks? The point is, that Paulson's calculations were not assisted by any economists at all, and they cannot be trusted. It is a purely arbitrary, "back of the envelope" type figuring. According to Bloomberg: Swiss investor Marc Faber, known for a long track record of good calls, believes the damage may come to $5 trillion:In connection with the deliberately orchestrated panic and doom that will shortly succeed in stampeding the Congress into passing what may amount to one of the final death blows to the struggling U.S. economy, Whitney first notes the "strategic behavior on the part of big financial players who stand to benefit from the bailout" that I discussed the other day.
"Marc Faber, managing director of Marc Faber Ltd. in Hong Kong, said the U.S. government's rescue package for the financial system may require as much as $5 trillion, seven times the amount Treasury Secretary Henry Paulson has requested....
"The $700 billion is really nothing," Faber said in a television interview. "The Treasury is just giving out this figure when the end figure may be $5 trillion."
Whitney then goes on:
"Market Ticker's" Karl Denninger confirms that the Fed has been draining the banking system of liquidity in order to blackmail Congress into passing the new legislation. Here's Denninger:A crime syndicate is running the executive and legislative branches of the U.S. government. No, that's not accurate. A crime syndicate is the executive and legislative branches of the U.S. government.
"The Effective Fed Funds rate has been trading 50 basis points or more below the 2% target for five straight days now, and for the last two days, it has traded 75 basis points under. The IRX is demanding an immediate rate cut. The Slosh has been intentionally drained by over $125 billion in the last week and lowering the water in the swamp exposed one dead body - Washington Mutual - which was immediately raided on a no-notice basis by JP Morgan. Not even WaMu's CEO knew about the raid until it was done....The Fed claims to be an 'independent central bank.’ They are nothing of the kind; they are now acting as an arsonist. The Fed and Treasury have claimed this is a 'liquidity crisis’; it is not. It is an insolvency crisis that The Fed, Treasury and the other regulatory organs of our government have intentionally allowed to occur."
Whitney has still more, including basic guidelines from Market Ticker for "a workable solution" to the real problem that exists. Those guidelines are remarkably sensible and would probably be effective -- which means there is not a chance in hell Congress will ever seriously consider them.
Look at it this way. Perhaps you've secretly dreamed of a life of great wealth and power, of a life of crime. Now your mother won't have to lie and make up stories about what you do for her neighbors and friends. She can just tell them you've gone to work on Wall Street, or in Washington. Everyone will be happy and proud.
Everyone, that is, except for the overwhelming majority of Americans, whose lives have been thrown away and who will stumble through the joyless days remaining to them struggling to pay for the luxuries and amusements of their rulers. Welcome to the nation of crime that is your home.