The Elephant In The Bailout Room

[girl gone mad]

The Elephant In The Bailout Room
http://www.businessinsider.com/henry-blodget-the-elephant-in-the-bailout-room-2009-3

Why are we so frustrated by the latest Geithner giveaway? Many reasons, starting with this:

Each of the bailed-out institutions has tens or hundreds of billions of dollars that could be used to cover losses before the taxpayer had to cough up a dime. And with the exception of Lehman Brothers (and, now, General Motors), these gigantic pools of money have been protected to the tune of 100 cents on the dollar.

Who are we talking about?

The bondholders. The folks who lent AIG, Citigroup, Bear Stearns, Lehman Brothers, Fannie Mae, Freddie Mac, and other disasters the hundreds of billions of dollars that they subsequently vaporized.

In any fair world, the bondholders would lose everything before any taxpayer money was put on the line. Ever since Lehman Brothers, however, Tim Geithner & Co. have been so afraid of a Lehman-repeat that they refuse to even publicly discuss the possibility of making bondholders share the pain. Whenever anyone suggests this idea, moreover, Geithner & Co. immediately dismiss it by saying it would lead to another Lehman.

At best, this is wrong. At worst, it's disingenuous.

The reason Lehman caused such havoc was that it was an uncontrolled and unexpected bankruptcy. No one is suggesting that AIG, Citi, et al, be forced into one of those. What LOTS of people are suggesting, including Paul Krugman, is that Citi, et al, be put into a managed receivership. This is what happened to WaMu last fall, and the process went so smoothly that few folks can even remember it.

WaMu bondholders took a hit. General Motors bondholders will take a hit. So why can't the bondholders of Citi, AIG, etc, take a hit?

[terisan]

1. This argument seems so logical. nt

[LeftHandPath]

2. Two words - Goldman Sachs

Now you know who really runs this country.

All efforts will be made to save Goldman, and all the roads of fraud and deceit lead right back to them.

[Vinnie From Indy]

4. Bingo!

The American political system was "acquired" years ago.

[Delphinus]

5. Ok.

So now how do we get our Democracy back? Or do we let it die?

[tama]

6. One place to start

would be to disband and/or nationalize Federal Reserve. Did you know it's the third in US history, the first two were disbanded for the sake of democracy.

[Delphinus]

7. No, I did not know that.

I haven't read The Creature from Jekyll Island (yet), but do know that they are not at all a part of the US government. From what I can discern, they are made up of TPTB who run the world and they really don't give a shit about our form of government.

[tama]

8. Wikipedia:

http://en.wikipedia.org/wiki/History_of_the_Federal_Reserve_System

[dixiegrrrrl]

9. Watch video on Google -The Money Masters..

Best to watch it with blood pressure meds in hand.

[Hawkowl]

3. EXACTLY

This is what are so called "progressive" economists like Krugman have been pushing for. A terrible irony that the so called "free market" economists like Geithner and Summers insist on subsidies and bailouts with little oversight.

The rich gambled their money and lost it. We should refuse to cover their gambling losses.

[truedelphi]

10. Actually, we don't even know whether things were lost or not. It has not been audited.

If they did lose, we don't know how much. AIG now claims to be only 1.7 trillion in the hole. If that is the case, where are all the other counterparty and derivative losses sitting?

[Hawkowl]

11. Didn't think of that

That is a point I have never considered. This is a real possibility. Who actually is profiting? Wouldn't it'd be something if we begin to find out the identities of the wealthy recipients of our tax dollars.

[truedelphi]

12. This book of fiction that I recently read had at its center

Various happenings that stressed again and again how enterwoven our banking system happens to be with the cartels south of the border. The cartelbigwigs "clean up" one of their family members and send him over here to buy up an entire bank with which to launder the money.

So there are an awful lot of reasons why the banking elite and the governmental elite don't want things examined. Everyone keeps shaking their heads and saying "It's so overwhelming, and so big, and we don't know how to do it."

Yet the people who did the auditing after the S & L failures are still around. It's not Mission Impossible.
Not at all.

[upi402]

13. Exactly! I want an opposition party

before my ribs start to show...

When will folks be fed up? When will the damn TV report this stuff? And after I get fair elections, I want a pony too. Stick a fork in it and get ready.

[truedelphi]

14. It is seems to be an actual fact, that the only nations with a fair

Economy, with a fair Universal Single Payer Health Care, and with a progressive system of taxes, those nations have decent third (and fourth and fifth) parties

We in America are so screwn.