Now Bernanke and Paulson made me a lot of money on Thursday and Friday, although it was only making up money that their failures had previously cost me. That is in my retirement account, which is tax deferred (and has net losses, any way, over the terms of Paulson and Bernanke). That means I won't have to be "patriotic" (Joe Biden), and pay more income taxes because of Paulson and Bernanke. Was this action by Bernanke and Paulson, in asking to be given control of the entire financial system after provign their incompetence over the past two and more years, necessary to save my retirement account, and the financial lives of almost everyone else in the country? Maybe. I can't say it isn't necessary (which id the problem the President and Congress face). It is a little like those lying predictions of "certain death" on Hurricane Ike. I did not believe them, but I would still have evacuated Galveston island and low lying areas. If I had been a person directly warned with "certain death", I would surely have evacuated (even while knowing I was being probably lied to). I don't have the information Paulson and Bernanke have. You can also say I don't have the expertise, but how much "expertise" does it take to allow the financial system to get to this point--where Paulson and Bernanke are, in effect, asking for the full resources of the Federal Government to be placed behind them, after the abject failure of the previous two and more years. You could make a conclusive case that Paulson should be fired, whether we feel compelled to go along with his bail out plan (using taxpayer dollars) or not.
Where did Paulson come from? He came from Goldman Sanchs, a Wall Street investment banking firm that has been part of the problem. He succeeded Governor John Corzine of New Jersey in that post of CEO of Goldman Sachs, illustrating the incestuous relationship of Wall Street insiders and Washington--also illustrating that Democrats now probably have more power and connections on Wall Street than Republicans. Franklin Raines was a Democrat who was part of the Clinton Administration, and used that political position to become CEO of Fannie Mae (yes, the big "government sponsored" entity which the government just had to bail out)--incest again. The Washington Post reported at least three times that Raines has been an "economic advisor" to Obama--Raines himself so told the Washington Post. Raines is definitely a Democratic Party insider. He got some 90 million dollars in compensation from Fannie Mae, much of it in bonuses that were inflated by the unsound practices and accounting at Fannie Maw. Rainnes had to resign under pressure in 2005, which is the time John McCain supported that reform bill to try to do something about Fannie Mae and Freddie Mac (a bill which did not pass). Fannie Mae is a major cause of our present problems. Jim Johnson was a former CEO of Fannie Mae. Jim Johnson also happens to be one of the main advisors to Obama--being appointed by Obama to be one of the three person committee looking for a VP for Obama (incest again; and do you begin to see why Obama is included in this award?). Jim Johnson had to resign that post, even before this mess was disclosed, when it was discovered that he had received major (sweetheart?) loans from Countrywide Financial--one of the first casualties of, and a major offender in, the mortgage crisis. Countrywide has also been connected to Democratic Senator Christopher Dood, who has been a major player on the Senate Finance committee (incest?). Again, the first scandal with FAnnie Mae came out in 2005, and the Countrywide scandal (it was bought out by Bank of America) is a year or so old by now. Problems were obviously surfacing years ago. This long paragraph is an attempt to show you how many players were involved here, and how much time everyone had to address problems which were becoming obvious. Back to Henry Paulson.
Henry Paulson was appointed Secretary of the Treasury in May-June of 2006. The first scandal at Fannie Mae had already happened, with Democrat Franklin Raines being forced out. Before that, Paulson was CEO of investment banker Goldman Sachs--up to its neck in the same kind of practices that eventually doomed Bear Stearns and Lehman Brothers. Now Goldman Sachs was stronger than the rest (the strongest investment banker on Wall Street), but it had the same sorts of problems. Its overall profits have suffered because of the same excesses that brought down Bear Stearns and Lehman. Where is the evidence that Paulson fought against unsound practices at Golman, or--more to the point, maybe--that he sounded the warning about the unsound practices going on? When he became Treasury Secretary, where is the evidence that Paulson brought his "expertise", and what should have been inside knowledge, from Goldman Sachs to sound the warning then. where is the evidence that Paulson pushed measures, in 2006, which would have prevented 700 billion dollars from the taxpayer being necessary.
Yes, Goldman Sachs has survived, but what was the wildfire sweeping Wall Street before the bail out of AIG, and even after the bail out of AIG did not seem to calm Wall Street. The "smart" money seemed to be that Morgan Stanley was going down (Morgan Stanley being the only other surviving, independent investment banking firm on Wall Street), and that Goldman Sachs was in danger of following. Even the bail out of AIG did not quell this sentiment.
Let us back up a little here. You know that Dick Cheney was previously CEO of Halliburton. There has never been any evidence that Cheney used his position as VP to help Hallibrton. Nope, as I have said before, you are a kook if you believe that Cheney went to war in Iraq for Halliburton. The worst you can letitimately argue about Cheney is that his association with Halliburton made him too insensitive to too much power and influence by the oil industry. Consider, however, if Cheney had ever proposed a government bail out of Halliburton. That is exactly what Paulson has done here.
Paulson has failed to prevent the situation from becoming this bad, despite being part of the very industry that has put itself in this position by too much leverage and too many risks--not to mention using (abusing) suspect mortgage instruments which could not survive a bursting of the (obvious?) housing "bubble". Now--having failed, along with Bernanke--Paulson is proposing to bail out the very firm of which he was previously CEO (along with all of his other former "friends" on wall Street!!!! How can this be?
It is amazing to me that Democrats, and others, have not made a big pint of this. There is no better evidence out there that McCain is right. Washington needs "shaking up". One thing McCain should do is to promise to appoint a Secretary of the Treasury not a Wall Street insider. I would make that the policy for all financial posts in the government, including budget posts. I would try to find some people who actually warned about the "housing" bubble, and had constructive ideas about what to do about it. That obviously did not include Paulson and Bernanke.
Still, how can Paulson get away with being called a "hero" when he is so incestuously involved in the whole problem, including proposing that he be given control over 700 billion taxpayer dollars (really, he is proposing that he, as a central planner, have the whole Federal Government--the checkbooks of all of us--at his disposal). That includes measures to bail out his old firm.
Nope. Paulson is going to get attacked on this (by people besides me). He deserves to be. He is not a hero. He is a failure--one of the worst ever (along with Bernanke). Paulson deserves the criticism, as he deserves the "Finger".
This ends Part I of the analysis of where the Flying, Fickle Finger of Fate pointed this week. As readers of this blog know, this is my reincarnation of the old "Laugh In" award for outstanding stupidity and/or evil in the previous week. The evil people at CNN, despite effort (see Cafferty entry and other mentions), failed to become the first consecutive "threepeat" winner of the "Finger". The "Finger" is represented by the statuette of an INDEX finger, and can be seen by reviewing old "Laugh in" episodes (although his is an unauthorized reincarnation of the award). The actual award ceremony will await Part II (or however many parts there are) of this week's award to Ben Bernanke, Hentry Paulson, and Barack "World" Obama. Be assured that they all deserved this week's award.
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