Bernanke, Paulson Lies

Thursday, June 18, 2009

Par for the course. Reflate those popped tires and keep driving towards that vast chasm in the distance.

Who trusts anyone right now?

From Austrian Filter via Zero Hedge:

February 28, 2007 – Dow Jones @ 12,268

March 13th, 2007 – Henry Paulson: “the fallout in subprime mortgages is “going to be painful to some lenders, but it is largely contained.”

March 28th, 2007 – Ben Bernanke: “At this juncture . . . the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained,”

March 30, 2007 – Dow Jones @ 12,354

April 20th, 2007 – Paulson: “I don’t see (subprime mortgage market troubles) imposing a serious problem. I think it’s going to be largely contained.” , “All the signs I look at” show “the housing market is at or near the bottom,”

April 30, 2007 – Dow Jones @ 13,063

May 17th, 2007 – Bernanke: “While rising delinquencies and foreclosures will continue to weigh heavily on the housing market this year, it will not cripple the U.S.”

May 31, 2007 – Dow Jones @ 13,627

June 20th, 2007 – Bernanke: (the subprime fallout) “will not affect the economy overall.”

July 12th, 2007 – Paulson: “This is far and away the strongest global economy I’ve seen in my business lifetime.”

August 1st, 2007 – Paulson: “I see the underlying economy as being very healthy,”

October 15th, 2007 – Bernanke: “It is not the responsibility of the Federal Reserve – nor would it be appropriate – to protect lenders and investors from the consequences of their financial decisions.”

December 31, 2007 – Dow Jones @ 13,265

January 31, 2008 – Dow Jones @ 12,650

February 14th, 2008 – Paulson: (the economy) “is fundamentally strong, diverse and resilient.”

February 28th, 2008 – Paulson: “I’m seeing a series of ideas suggested involving major government intervention in the housing market, and these things are usually presented or sold as a way of helping homeowners stay in their homes. Then when you look at them more carefully what they really amount to is a bailout for financial institutions or Wall Street.”

February 29th, 2008 – Bernanke: “I expect there will be some failures. I don’t anticipate any serious problems of that sort among the large internationally active banks that make up a very substantial part of our banking system.”

March 16th, 2008 – Paulson: “We’ve got strong financial institutions . . . Our markets are the envy of the world. They’re resilient, they’re…innovative, they’re flexible. I think we move very quickly to address situations in this country, and, as I said, our financial institutions are strong.”

March 18th, 2008 – Bear Stearns Bailout Announced

May 7, 2008 – Paulson: ‘The worst is likely to be behind us,”

May 16th, 2008 – Paulson: “In my judgment, we are closer to the end of the market turmoil than the beginning,” he said.

May 30, 2008 – Dow Jones @ 12,638

June 9th, 2008 – Bernanke: Despite a recent spike in the nation’s unemployment rate, the danger that the economy has fallen into a “substantial downturn” appears to have waned,

July 16th, 2008 – Bernanke: (Freddie and Fannie) “…will make it through the storm”, “… in no danger of failing.”,”…adequately capitalized”

July 20th, 2008 – Paulson: “it’s a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation.”

July 31, 2008 – Dow Jones @ 11,378

August 10th, 2008 – Paulson: “We have no plans to insert money into either of those two institutions.” (Fannie Mae and Freddie Mac)

September 8th, 2008 – Fannie and Freddie nationalized. The taxpayer is on the hook for an estimated 1 – 1.5 trillion dollars. Over 5 trillion is added to the nation’s balance sheet.

September 16th, 2008 – $85 Billion AIG Bailout “Loan”

September 19th, 2008 – $700 Billion Bailout Plan Announced

September 19th, 2008 – Paulson: “We’re talking hundreds of billions of dollars – this needs to be big enough to make a real difference and get at the heart of the problem,” he said. “This is the way we stabilize the system.”

September 19th, 2008 – Bernanke: “most severe financial crisis” in the post-World War II era. Investment banks are seeing “tremendous runs on their cash,” Bernanke said. “Without action, they will fail soon.”

September 21st, 2008 – Paulson: “The credit markets are still very fragile right now and frozen”, “We need to deal with this and deal with it quickly.”, “The financial security of all Americans … depends on our ability to restore our financial institutions to a sound footing.”

September 23rd, 2008 – Paulson: “We must [enact a program quickly] in order to avoid a continuing series of financial institution failures and frozen credit markets that threaten American families’ financial well-being, the viability of businesses, both small and large, and the very health of our economy,”

September 23rd, 2008 – Bernanke: “My interest is solely for the strength and recovery of the U.S. economy,”

October 31, 2008 – Dow Jones @ 9,337

March 31, 2009 – Dow Jones @ 7,609From

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Super Sizing the Crap Sandwich

Wednesday, October 1, 2008

The Senate will vote today on a revised bill that now includes the higher FDIC limit of deposits and a bunch of tax breaks favored by the GOP.

From the AP:

[The ideas include] …AMT relief, $8 billion in tax relief for those hit by natural disasters in the Midwest, Texas and Louisiana, and some $78 billion in renewable energy incentives and extensions of expiring tax breaks. All told, it would cost about $112 billion over five years.

In a compromise worked out with Republicans, the bill does not pay for the AMT and disaster provisions, but does have revenue offsets for part of the energy and extension measures.

Earlier Tuesday, House Democratic leaders discussed adding an extension of unemployment benefits, while Republicans pressed to make it easier for financial institutions to hold questionable long-term assets. House Democratic Whip James Clyburn, D-S.C., floated the idea of boosting a recently passed property tax deduction for homeowners who don’t itemize on their returns.

The bill will now contain some combination, if not all, of the above.

There are, at this time, however, still no legitimate curbs on executive compensation. From Henry Blodgett (himself a disgraced former Wall Street sleaze):

There’s another absurd section that makes all compensation above $500,000 for the three highest paid employees at the company not tax-deductible for the company. This is LUDICROUS. It means the company can pay the executives anything it wants and that the penalty for this will be exacted on the company and its shareholders. (Unless we’re mistaken, Americans are furious that CEOs make $50 million a year for running companies into the ground, not that the $50 million is tax deductible).

Did you understand that? There is no curb other than a tax hit to the company’s bottom line. The same toothless boards that overpaid for failure will be responsible for determining how much executives will get paid with only your 401K to take the hit. Every time I read about this it makes my blood boil. It makes me want to bust out the torches and pitchforks.

The reason that this weak provision is in the bill is because Paulson warned that companies would not participate if there were mandatory curbs on pay.

AYFKM?

Can you think of a greedier, more selfish act that refusing to aid your company/country because your pay will be reduced to the merely opulent from the Croesus-like?

And that’s just the start of what’s wrong with this legislation.

And yet…I support Congress passing something. I trust Bernanke and Buffett on this one. But don’t expect me to like a super-sized crap sandwich, and don’t expect to win praise for doing your jobs badly. This bill is a necessary disgrace and I, for one, am ashamed of it. We should never have been in this position in the first place.

This is, indeed, a dark day for America.


On Housing: Hold Your Nose and Bail

Monday, July 28, 2008

I have previously written of my opposition to this legislation in its earlier form. It is, once again, the moral hazard writ large. But I am feeling somewhat chastened by the near collapse of Fannie and Freddie, and, since that piece of the bailout puzzle is folded into this bigger bill, I now support it.

But, once again, with my nose held and a serious case of pissedoffia.

The reasons not to support his bill are manifold, but I won’t go into them all again. Read the post linked above if you’re interested. There is, however, one key piece of this bill that should tell you all you need to know about it. The bill includes a provision that raises the federal debt ceiling by $800 billion to a grand total of $10.6 trillion (yes, with a T).

That cushion, which I guarantee you will be borrowed and spent, will bring our national debt to over ten trillion dollars! You, the American taxpayer, owe that money. You, the renter who waited patiently until you could afford a home, will bailout the dickweed who couldn’t afford the McMansion but bought it anyway with an ARM. You the responsible borrower will see your (or your children’s) taxes go up because Wall Street, banks and mortgage companies, and irresponsible borrowers decided home prices would go up forever (and by double digit percentages).

This legislation may well help put a floor under the housing freefall. Our economy needs this. But more importantly, our economy needs to evolve from the Reagan/Bush borrow and spend policies of the past to become a society of savers who balance their budgets and live within their means. Furthermore, Fannie and Freddie need to be radically altered and our financial system need serious regulation and reform.

This bill starts that ball rolling, but it doesn’t go far enough. There must be limits to the greed that created this crisis. It is clear the market cannot self-regulate. So if we’re going to bailout Wall Street and Main Street, then the whole town is going to have to start playing by new rules. Read up on the bill here and then get pissed (and do something about it).