On bended knee

Historic scenes are being played out in Washington as things go from the ridiculous to the incredible, the San Francisco Chronicle reports, "Atmosphere borders on panic as bailout falters," emphasis mine:

In a panicked atmosphere and amid flaring tempers, Democrats and some Republicans announced before the White House meeting that they had the outline of an agreement, but GOP leaders refused to sign off on it. Liberal and conservative interest groups railed against the bailout, while business groups insisted that Congress pass the plan with all speed, warning that tight credit already is sharply slowing business activity.

At the White House, Republican leader John Boehner expressed misgivings about the plan, and McCain would not commit to supporting it, people from both parties who were briefed on the exchange told the Associated Press. In the Roosevelt Room after the session, Treasury Secretary Henry Paulson literally bent down on one knee as he pleaded with House Speaker Nancy Pelosi not to withdraw her party's support for the package over what Pelosi derided as a Republican betrayal, according to the New York Times.

The NYT itself, reporting on the same scene, adds this tidbit of very revealing dialogue:

“I didn’t know you were Catholic,” Ms. Pelosi said, a wry reference to Mr. Paulson’s kneeling, according to someone who observed the exchange. She went on: “It’s not me blowing this up, it’s the Republicans.”

Mr. Paulson sighed. “I know. I know.”

Paulson is scared shitless. But scared for the country? Or for himself? Or for his political masters? Stay tuned. Tomorrow's episode should be ripe.

Snake Oil Warning

Now that I think about it, "King Henry" Paulson, expert though he be, is an out-and-out liar.

As he began testifying before the Senate Banking Committee on Tuesday, according to ThinkProgress.org,

In his opening statement, Paulson struck a defensive tone, blaming Congress for misunderstanding him in thinking he didn’t want robust oversight. He just didn’t want to be “presumptuous,” he explained:

We gave you a simple, three-page legislative outline and I thought it would have been presumptuous for us on that outline to come up with an oversight mechanism. That’s the role of Congress, that’s something we’re going to work on together. So if any of you felt that I didn’t believe that we needed oversight: I believe we need oversight. We need oversight.

Yeah right. Sure you believe that. But as the blog goes on to note, this is a patent, palpable lie.

Paulson is rewriting history. Far from avoiding “presumption,” Paulson’s plan released last weekend explicitly denied any review at all of his actions:

Section 8. Review: Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

It can hardly be the fault of Congress for taking Paulson’s written plan at its word. In fact, one might say it would have been “presumptuous” to assume Paulson actually meant the opposite of what he had written.

He is, after all, a Bush appointee; just what mindgame is being played here in broad daylight? Beware, beware, beware: he speaks with forked tongue.

The Royal Republicans

Clay Risen takes the measure of the Bush Administration in the New Republic, "A Matter of Trust" :

It's tempting to watch today's Senate Banking Committee hearings, with Democrats and Republicans alike tearing into Federal Reserve Chair Ben Bernanke and treasury Secretary Henry Paulson, and feel pangs of sorrow for the beleaguered duo. There to defend the administration's $700 billion rescue plan for the nation's debt markets, they faced withering charges of having cobbled together an "ad hoc" (in the words of Alabama Republican Richard Shelby) three-page proposal that was "stunning and unprecedented in its scope and lack of detail" (Connecticut Democrat Chris Dodd). Paulson could only play defense: Of course it's short on details--that's what we're here for, he told them. Oversight and other details were "the role of Congress." To think otherwise would be "presumptuous."

That's nice of him. But wait ... let's remember with whom we're dealing here.

It's hard to watch the tragicomedy unfolding on the Hill and not see the chickens coming home to roost for an administration that seems to wake up every morning with new ways to be "presumptuous"--toward Congress, taxpayers, foreign leaders, and the Constitution. To be fair, Hank Paulson probably does believe that time and decisiveness are of the essence, and I'm willing to allow that he means it when he says, "I hate the fact that we have to do it, but it's better than the alternative." But, in a perfect distillation of the mindset of the Bush administration, his original bailout plan read, "The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this act ... without regard to any other provision of law regarding public contracts."

Such brazenness is the norm for the administration. Remember, to take just two examples, when it forced Democrats to accept both the Iraq War resolution and the anti-labor rovisions in legislation creating the Department of Homeland Security in 2002, on penalty of seeming weak on national defense? It's the same thing here--that it can use the rhetoric of crisis to force through a plan granting the executive even more powers. If Bush's power-grabbing tendencies were just for his own political sake, it would be hard to see the worth in making a push this late in the game. The Paulson plan shows clearly that for the Bush team, executive power is more than just political; it's ideological. They really do believe that the executive, whoever it is, should have unchecked power over the economy, in the same way they have pushed for unchecked power over homeland security and the war in Iraq.

It's funny (sad, not ha-ha) how all these good red-blooded patriotic Republicans, if pressed, will confess to some vestigial memory from junior-high civics that the American Revolution was fought over "no taxation without representation"; and of course they are very, very proud, even today, that we detached ourselves from a king in order to rule ourselves. (Cue up tear-inducing patriotic theme music in the background here.) If asked, they would all deny with various and sundry oaths that "the king can do no wrong" has any validity whatsoever in fact or philosophy.

And yet all these millions of hard-working, salt-of-the-earth little-d democrats fall down in blind obeisance anytime His Nibs #43 breathes a word: prostrating themselves and begging for more.

Ruthless arrogance gorging itself on unquestioning ignorance and utterly blind faith in the divine right of the Presidency: that is the Republican Party of the 21st century. And for this filthy perversion of all that is truly sacred about America, the trusting masses offer up unstintingly their lives, their fortunes, and their sons and daughters. But for what, exactly?

This must not continue. It shall not stand.

Your Urgent Help Needed

Brilliant satire from spencer at Angry Bear:

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

What the hell goes on here?

Both liberals and conservatives are waking up and smelling the bullshit, according to Peter S. Goodman in the New York Times, "Experts See a Need for Punitive Action in Bailout" :

“This administration is asking for a $700 billion blank check to be put in the hands of Henry Paulson, a guy who totally missed this, and has been wrong about almost everything,” said Dean Baker, co-director of the liberal Center for Economic and Policy Research in Washington. “It’s almost amazing they can do this with a straight face. There is clearly skepticism and anger at the idea that we’d give this money to these guys, no questions asked.”

Mr. Paulson has argued that the powers he seeks are necessary to chase away the wolf howling at the door: a potentially swift shredding of the American financial system. That would be catastrophic for everyone, he argues, not only banks, but also ordinary Americans who depend on their finances to buy homes and cars, and to pay for college.

Some are suspicious of Mr. Paulson’s characterizations, finding in his warnings and demands for extraordinary powers a parallel with the way the Bush administration gained authority for the war in Iraq. Then, the White House suggested that mushroom clouds could accompany Congress’s failure to act. This time, it is financial Armageddon supposedly on the doorstep.

“This is scare tactics to try to do something that’s in the private but not the public interest,” said Allan Meltzer, a former economic adviser to President Reagan, and an expert on monetary policy at the Carnegie Mellon Tepper School of Business. “It’s terrible.” . . .

The financial system got to its dangerous perch by betting extravagantly on real estate. When housing prices began plummeting and borrowers stopped making payments, financial institutions found themselves with huge inventories of bad loans. Not simple loans, but complex investments created by pooling millions of mortgages together and then slicing them into pieces. These were the investments that Wall Street bought, sold and borrowed against in cooking up the money it poured into housing.

The trouble is that these investments are so intertwined and complex that no one seems able to figure out what they are worth. So no one has been willing to buy them. This is why banks have been in lockdown mode: with mystery enshrouding both the value of their assets and their future losses, banks have held tight to their remaining dollars, depriving the economy of capital. Now, the Treasury aims to clear the fog by buying up these investments. But their value is as mysterious as ever.

“There’s a tendency for people to think these are stocks and bonds and you know what the price is,” said Bruce Bartlett, a former White House economist under President Reagan. “The problem is people are operating in a world in which nobody knows what the hell is going on. There’s some naïve assumptions about how this would function.”

If Mr. Paulson pays the market rate — whatever that is — that presumably would not be enough to persuade banks to sell. Otherwise, they would have sold already. For the plan to work, Treasury has to pay a premium.

“It’s a straight subsidy to financial institutions,” said Martin Baily, a former chairman of the Council of Economic Advisers in the Clinton administration, and now a senior fellow at the Brookings Institution. “You’re essentially giving them money.”

Mr. Baily favors the basics of the Paulson plan, albeit with some mechanism that would give the government a slice of any resulting profits. And yet he remains troubled by the dearth of information combined with the abundance of zeroes in the bailout request.

“I’d like a clearer statement of what we were afraid was going to happen that requires $700 billion,” Mr. Baily said. “Maybe they don’t want to talk about it because it would scare everybody, but it’s a bit much to ask.”

It's too scary to tell the truth?? Even for 700 billion dollars? Oh hell, what kind of damn con game is that?

Answer: the same scare-the-shit-out-of-you tactic that the Bush Administration has used on the public from day one. Is anybody really going to fall for this putrid, unconstitutional bullshit another time?

Obscene, naked power grab

Andrew Ross Sorkin writes in the New York Times, "A Bailout Above the Law" :

The passage is stunning.

“Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency,” the original draft of the proposed bill says.

And with those words, the Treasury secretary — whoever that may be in a few months — will be with vested with perhaps the most incredible powers ever bestowed on one person over the economic and financial life of the nation. It is the financial equivalent of the Patriot Act.

Treasury Secretary Henry M. Paulson Jr.’s $700 billion proposal to bail out Wall Street is both the biggest rescue and the most amazing power grab in the history of the American economy.

In many ways, it is classic Wall Street: a big, bold roll of the dice that one trade can save the day. But at the same time, the hypocrisy is thick. The lack of transparency and oversight that got our financial system in trouble in the first place seems written directly into the proposed bill, known as TARP, or the Troubled Asset Relief Program.

Just take a look at the original draft: “The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this act,” the proposed bill read when it was first presented to Congress, “without regard to any other provision of law regarding public contracts.”

It goes on to say, “Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure.”

Slowly but surely, as new versions of the bill are making the rounds in Washington, some legislators are pressing to include new language to give them at least a modicum of oversight. Democrats have complained that the bill gives the Treasury Department “a blank check” — and they’re right.

But given the rush to push the bill through, even if Congress cobbles together some oversight language, it will almost surely be inadequate. Joshua Rosner, a managing director at Graham Fisher & Company, says TARP should stand for “Total Abdication of Responsibility to the Public.” He says it is “a clear abdication of all Congressional oversight and fiscal authorities to a secretary of Treasury that has bungled this crisis from the beginning.”

He argues that the bill grants “greater powers to the secretary of the Treasury than even the president enjoys.”

The bigger issue is that the bill effectively creates protections not just for the Treasury, but for the executives on Wall Street who created this near Armageddon. Mr. Rosner says that the draft bill “prevents judicial review that could allow the protection of decisions that create false marks, hide prior marks, or could be used to prevent civil or criminal prosecution in situations where a management knowingly provided false marks that aided the growth of this crisis of confidence.”

False marks — using mark-to-market accounting to hide the true value of security, rather than disclose it honestly — has a lot to do with why Jeffrey Skilling, the former Enron chief executive, is in jail. . . .

In other words, if the government drives a hard bargain — as it should — the banks don’t have to take write-downs based on the price the feds pay to take junk off their balance sheets.

Watching Wall Street double-dip makes even some in the industry’s top tier cringe.

“Maybe I should move to Russia,” one titan of finance said to me. “It’s obscene, the whole thing. I’m embarrassed for myself.”

If even the Wall Street fat cats are ashamed of the deal, what should we the people be feeling at this breathtaking grab by "King Henry"--so very, very typical of the fuck-the-peasants Bush Administration--for unlimited, un-Constitutional power?

The $700 billion pinata

"Lobbyists, bankers and Wall Street types are already hopping up and down like over-excited children, ready to burst into the government’s $700 billion piñata." So says columnist Bob Herbert in the New York Times.

Does anyone think it’s just a little weird to be stampeded into a $700 billion solution to the worst financial crisis since the Great Depression by the very people who brought us the worst financial crisis since the Great Depression?

How about a second opinion?

Everything needs much closer scrutiny in these troubled times because no one even knows who is in charge, much less what is going on. Have you ever seen a president who was more irrelevant than George W. Bush is right now?

The treasury secretary, Henry Paulson — heralded as King Henry on the cover of Newsweek — has been handed the reins of government, and he’s galloping through the taxpayers’ money like a hard-charging driver in a runaway chariot race.

“We need this legislation in a week,” he said on Sunday, referring to the authorization from Congress to implement his hastily assembled plan to bail out the wildly profligate U.S. financial industry. The plan stands at $700 billion as proposed, but could go to a trillion dollars or more. . . .

The sky was falling, he seemed to be saying, and if the taxpayers didn’t pony up $700 billion in the next few days, all would be lost. No time to look at the fine print. Hurry, hurry, said the treasury secretary.

His eyes, as he hopped from one network camera to another, said, as salesmen have been saying since the dawn of time: “Trust me.”

With all due respect to Mr. Paulson, who is widely regarded as a smart and fine man, we need to slow this process down. We got into this mess by handing out mortgages like lollipops to people who paid too little attention to the fine print, who in many cases didn’t understand it or didn’t care about it. . . .

Time is indeed short, but alternative voices desperately need to be heard because the people who have been running the economy for so long — who have ruined it — cannot be expected to make things right again in 48 or 96 hours.

Mr. Paulson himself was telling us during the summer that the economy was sound, that its long-term fundamentals were “strong,” that growth would rebound by the end of the year, when most of the slump in housing prices would be over.

He has been wrong every step of the way, right up until early last week, about the severity of the economic crisis. As for President Bush, the less said the better.

The free-market madmen who treated the American economy like a giant casino have had their day. It’s time to drag them away from the tables and into the sunlight of reality.

I am still searching for a news article or analysis that explains the crisis in depth but in layman's terms that I can understand. But even though I don't quite understand it all, as a Texan I can sure recognize bullshit when I smell it.

"King Henry" may or may not know what he's doing; but seems like a might big stink drifting across the country from Wall Street right now. Just hand over 700 billion, no questions asked? Aw, hell. You know that money will never been seen again, don't you?