/chronicle

Let’s recap on Americas recent conversations with Henry Paulson regarding the $700+ billion dollars we’ve given him.

(Transcript started September 22, 2008…)

America: Good morning Henry.

Paulson: The sky is falling.  Give me $700 billion dollars immediately or we won’t have an economy tomorrow.

America: Wait, what?

Paulson:  Yes, the end is near and unless you give me this money no questions asked it’s over for all of us.

America: This sounds serious.  What are you going to do with the money?

Paulson: Buy toxic debts from the banks to help stabilize the banks and keep people in their homes.

America: So you’re doing this for us, not your friends on Wall Street and bankers in Charlotte right?  You want to help all Americans?

Paulson: Yes.  No more questions.  Write the check.

America:  Alright Henry.  Do right with our money.

(Jump to 11/13/08…)

Paulson: You remember those toxic assets I was going to buy to help you and the banks?

America: Yes.

Paulson: Forget it.  I’m giving it all to the banks.

America: What?  Why?

Paulson: Because the situation has changed.

America: In what way?

Paulson: Quit asking questions.  The situation changed and I’m adapting.  That’s it.  And I’m not apologizing.

America: By changed you mean the toxic mortgages were bundled into securities too complex to sort out for government acquisition, as you were warned?

Paulson: No.  The situations changed.  What did I tell you about the questions?

America: So exactly what are you going to do with our money?

Paulson: Ah, another question.  I see you’re paying attention.  Like I said, I’m giving it to the banks.

America: Sorry but this is $700 billion we’re talking about.  We’re asking questions.  Why are you giving it to the banks?

Paulson: So they’ll start lending again.

America: But few of us have any money.  We Americans can’t afford to pay the debts we have.  Why would we want to borrow more money?

Paulson: Because it creates jobs.

America: So consumers borrowing money they can’t afford to repay creates jobs?

Paulson: Yes.  You and you’re incessant questions…

America: Well maybe bank jobs and collections jobs but what about other struggling industries?  Like auto?

Paulson: No.  Nothing for them.  They were mismanaged and need to regroup on their own or fail.

America: By mismanaged you mean like the bank officers who loaned money to people who couldn’t pay it back?  Or companies who over sold credit default swaps and could not meet obligations on even the lowest spreads?

Paulson: No.  Nothing like that.  Enough with your questions.  The Federal government is buying shares in these banks and that’s the end of it.  We don’t have to answer to you.  Haven’t I explained that?

America: Well, isn’t this like starting socialism?

Paulson: No, it’s supporting the free market.  Now go away, you’re starting to annoy me.

America: The land of the free, owned by the banks and their political cronies who are ruining the world in the name of wealthy shareholders everywhere.

This Bloomberg article uses the headline phrase a couple of times to detail the economic woes of General Motors. Here’s the deal: If they manufacture unattractive, over priced cars no one wants to buy then the company will fail regardless of another government bailout. The big question is: How is bailing out GM, using tax payer dollars, going to make people want to buy their unfordable autos in a time people are struggling and can’t assume a new car payment even if they qualify for an elusive loan? Simple, it won’t.

Enough with the bailouts. STOP THE MADNESS. No company is “too big to fail”.

On another note related to this article: Obama I like. Pelosi can burn. Don’t be surprised if they do not get along.

David Kelly, chief market strategist for JPMorgan Funds is proof positive that the guys in the best paying chairs at investment banks are out of touch. He was quoted this morning as saying “The market is in a manic phase…It’s like a kid throwing a tantrum. At some point you have to let them cry themselves out because there’s no reasoning with them. Eventually, the market will respond more to fundamentals.”

Uh, David, the market is responding to fundamentals. Low and stagnant wages, growing unemployment, the rising costs of goods and services. Does any of this sound familiar? David must be talking about the same “strong fundamentals” McCain was preaching about as late as September. His statement personifies the main problem our country faces finding a consensus agreement on fixing this economy. The rich want to fix the problems effecting their precious portfolios but fail to realize it won’t happen until the micro economy is repaired first. But creating jobs and wages is a more complicated problem than analyzing stock values so the mighty trust and hedge fund managers don’t want to go there. Furthermore, God forbid, it might cost money.

Wall Street pundits haven’t hit the point of not being able to afford Doctor’s visits or put gas in their $50K SUV’s. They are so far insulated from the financial crisis on Main Street that they turn their heads as if to keep from watching a bloated African kid eat dirt and swat flies. They stay in denial using Wedgwood china to create a happy place. Retail sales are going to be real bad around the holiday’s this year. People could start losing their very ability to take care of their families day to day. Meanwhile a segment of trust fund honchos will continue to sit around debating whether or not we’re in a recession. John McCain should be flat out embarrassed that he endorses this Save the Yacht Club through his campaign.

Understand this Senator McCain: Main Street is not concerned about making sure you and your rich friends continue to prosper. Your prosperity is not helping the MAJORITY of Americans who do not share in your wealth. Many struggle day to day and week to week. And this word “struggle” is not just feel good campaign jargon. For you to argue that it’s “wrong” to “spread the wealth” because so many wealthy Americans “worked hard” for all they’ve accumulated is bullshit sir. To this end I will challenge you to provide provide me one example of truly “hard work” your wife performed that is deserving of her wealth during her tenure on this planet. I will counter with an offering of a day labor job that would probably kill her. That’s right, I brought your Beer Heiress wife into it.

Nobody’s asking for a handout John. People are demanding fair pay for a fair days work. The “take it or leave it” offer of low wages for serious labor is no good for the working men and women of America. Like so many other wealthy Americans the trust funds your children will inherit are the benefit of your wife’s good fortune – not her hard work.

And now the US government is encouraging mergers between institutions that have been deemed “too large to fail”.  Once upon a time we relied on things known as antitrust laws to prevent this.  These were not only meant to make companies spur competition and diversity, keep them from growing so large that their failure would be detrimental to the economy as a whole but also keep them from gaining too much political power and influence. Just listen to the Republicans rant about the “average Joes”, who are nowhere near average with incomes above $250K per year, and you can understand where the current complacency regarding the aggregation and concentration of wealth comes from.

This excessive greed and sense of entitlement on the part of the wealthy in America is specifically what got us into our current economic crisis.  The argument from the wealthy is that anything less is “socialism”.  This is far from the truth.  For every law that has been passed in the name of consumer protection or to stop the aggregation of companies beyond a level considered tolerable to maintain a functional economy there has been an army of lawyers ready to find the loopholes in these laws so that powerhouse mergers can continue.  Large corporations like the idea of being able to buy the competition instead of actually competing against them with superior products and services.  It’s become the Corporate American standard.

And now the government has entered the business of negotiating and mandating these mergers through the Federal Reserve.  They are also funding non-financial companies deemed “too large to fail”, which did anyway.   This is not just a slippery slope.   It’s a triple diamond run covered in Crisco.  There’s a real problem on the horizon here.  In the case of a fine, fee or public protection issue from these institutions who do we think is going to protect the consumer?  Regardless of how damaging one of these institutions actions may be for many Americans the government will let them press ahead if it means a “return for the tax payer”, which sounds a lot like “return for the share holder”.  And we all know share holder returns trump everything when it comes to corporate policy.

I’d like to know exactly how spending the tax dollars of future generations to bail out companies, that may or may not result in a return, benefits the tax payer at all.  In the future it will help build more military equipment?  Will it help build more highways?  I got news:  Those things would be done anyway using the same pretend money that was used to bail out the institutions that were “too big to fail” in the first place.  Sucker.