The BAILOUT was a SCAM, I hope everyone who suported it knows we got screwed

[Heather MC]

http://www.infowars.com/?p=5999

Treasury Secretary Hank Paulson pulled another fast one on American taxpayers

Gene Messick
OpEdNews
November 15, 2008

Our troubles with Hank started back when he was CEO at Goldman-$achs. Hank helped launch the masked bogus financial instruments called "derivatives" which are at the Heart of the Global Meltdown of Banks around our Planet.

Next, at the invitation of GwB, Hank skipped over to the US Treasury, where his months of failures to act made things worse. When the World Economy had festered to the point of near collapse– a week before Congress was to go home to hit the Campaign Trail – Hank laid a 3-page Bailout Plan before them, and said, "take it or leave it." BTW, if you don’t take it – while you’re out of Washington — the World as you know it will collapse. There will be Rioting in the Streets of America, requiring us to declare Martial Law.

Obediently, Congress swallowed Hank’s Bailout Pig, whole.
Now, barely a month later, Hank is telling us what he already knew from the beginning: that the $700,000,000,000 he got from Congress to Bailout distressed homeowner mortgages couldn’t be done soon enough to make any difference. That’s why, thus far, his Bailout Czar Neel Kaskari (also imported from Goldman-$achs) has NOT bought ONE SINGLE distressed mortgage.

Instead, Hank announced: I changed my mind. This money is only going to Bailout my buddies who are Bankers. After all, they have lost the most from all this. Sorry: no money for homeowners! But not to worry. Someday it will trickle-down, just like Ronnie Reagan and Uncle Miltie Friedman told us it would. We’re going to give the money to big banks to buy smaller banks, so they can become "too big to fail". What Hank really means is that he hopes they will become "to big to regulate".

When Speaker of the House Nancy Pelosie – who had filled Hank’s playpen with bales of cash – announced that Congress might take back some of Hank’s money to Bailout the nearly bankrupt US Auto Industry, Hank replied sharply, "NO! This is my pile. I swiped it. You approved it. It’s mine! Go get your own pile to play with from American taxpayers. They’re too dumb to care!"

Read article
http://www.opednews.com/articles/Treasury-Secretary-Hank-Pa-by-Gene-Messick-081114-487.html

[BzaDem]

1. This is so misleading and false.

Congress did now "swallow Hank's Bailout Pig" whole. There was about 2 weeks of debate on it, and it was completely changed.

I'm glad this isn't being used to buy troubled mortgages -- the only reason that was ever proposed was because the right wing did not want to go further to intervene in the economny by buying equity stakes in banks. That was what needed to be done from the beginning, and that is what every country (including England -- with a much more progressive government) who has its own bailout is doing. We are not just giving money to banks -- we are taking stock in banks, which means when the banks start doing better, we get a profit.

There are basically two types of people against the bailout. One type is the right wing fringe that believes everything Milton Friedman says about free market economics -- that we cannot intervene, ever. The other is people who buy into meaningless populist rhetoric and don't know anything about economics. Sorry. That's how it is. If you aren't a right wing free-market absolutist, and you still oppose rescuing the finanial industry, you don't know anything about economics. It's really that simple.

[Cronus Protagonist]

3. There are WAY more than TWO types of people against the bailout

You state a false dichotomy. What about the people who knew the recipients as theives who would steal the cash? What about the people who saw this as crony capitalism or even fascism - buddies raiding the treasury from both sides? I could go on, but the fact that you see only "basically two types of people" shows me that you have blinders on, at the very minimum.

[BzaDem]

7. They might mean well -- but they belong to the second type.

Let's imagine a scenario where in the middle of a massive drought, the companies involved with bringing clean water to homes in America are about to go belly-up. In fact, let's say this was because of horrible decisions made by these companies, made for self-serving reasons. Let's even assume they were stealing.

We had a choice: do we bail them out or not? You are basically saying, I don't care that millions will be without water. We must fight "crony capitalism or even fascism" at all costs.

In fact, this situation is much worse, because if credit dries up, no one can pay for their water bills, or food, or anything else.

So in the end, there are people who saw this as crony capitalism and didn't like the bailout for that reason -- but these people fall into the second type, because only those that don't understand basic economics would be willing to go down the road of a dead credit industry, just to rail against corporate greed.

[geckosfeet]

6. The problem is, there was a bank handout with bUsh I, and now there

is another even grander one with bUsh II.

Of course England is bailing out their banks - the ones that have collapsed because they were invested in our banks and financial institutions.

The point is proper regulation should have prevented the need for any bailout. And the same thieves who made a living fighting regulation are now standing in line with their hands out. And from what I can see they are getting their piles of money with few if any strings attached.

Yeah. We have stock in failing banks. Hand them some more of our cash. When that cash disappears, they fail again, and we continue to throw good money down a rat hole.

Until I see some real regulation and some real enforcement and some real reform, I will with-hold judgment on the populist rhetoric.

[BzaDem]

9. You are absolutely right in that much stronger regulation would have prevented this mess.

And now that Democrats control Congress and the Whitehouse, we can probably get this regulation passed.

But in reality, we didn't have this kind of regulation and we are in the situation we are in. And in this situation, the bad outcome of rewarding banks for their own malfeasance is MUCH, MUCH better than the alternative of letting credit die. That is where a basic understanding of economics comes in -- some people don't realize exactly what would have happened if we let the financial industry fail, and they think this is simply a decision to reward bad decisions or not to reward bad decisions (with no adverse consequences if we did not).

[geckosfeet]

13. I will simplify - it is a bad decision because we are not reforming the industry. eom

[BzaDem]

14. If we do not reform the industry, that would be a horrible decision

though the decision to take a temporary measure to save the system before reforming the industry was the right one.

Coming up with the right mix of regulations is an incredibly complicated business that even the best economists would have trouble doing on the fly. But in the end, if Democrats on the hill don't reform the industry within the next two years, they have noone but themselves to blame.

[geckosfeet]

42. This is like steering a mega battleship. It will be years before people

see any benefit to these bailouts while the banks realize it almost immediately. The banks suddenly have a better looking balance sheet. But for how long? There are gaping holes in their business models that should have been plugged up before we threw billions into them.

I for one would have been content to wait a few more weeks to develop sound policy before throwing money at it. I feel congress was stampeded and dissenting voices were shouted over by the alarmists and fear mongers.

In essence I think we agree - something had to be done. We disagree on the methods and the terms.

[girl gone mad]

12. The bailout was a bad deal.

Hundreds of economists were opposed to it, including Roubini and Stiglitz. You want to say they are Friedmanites or don't know anything about economics?

There was no debate allowed. The bill was not allowed to go to committee, as it should have. It was rushed through under threat of a stock market collapse and Marshall Law, as the OP states. There were many better options at our disposal which could have solved the credit crunch. In fact, some of those options were later taken, such as direct infusions into the CP market.

While the revised TARP was an improvement on the original 3 page document, it wasn't much of an improvement. Recapitalization was only added by certain members of congress who had the good sense to know that what Paulson wanted wouldn't work. Paulson was only forced kicking and screaming into equity stakes by foreign leaders, and even then, he got us a deal far, far worse than what any of the European governments got.

You're simply wrong, and it doesn't appear that you've followed the saga very closely. We got screwed.

[BzaDem]

16. Before you accuse others of not following the saga very closely, a Google search might be in order.

http://www.gata.org/node/6688

Roubini was opposed to buying up bad assets and not going taking the next step and recapitalize banks. Well, guess what -- we are no longer buying bad assets, and we are instead using the money to recapitalize banks.

From his own article:

"In the Scandinavian banking crises (Sweden, Norway, and Finland), which are a model of how a banking crisis should be resolved, there was not government purchase of bad assets. Most of the recapitalization occurred through various injections of public capital in the banking system. Purchase of toxic assets instead -- in most cases in which it was used -- made the fiscal cost of the crisis much higher and expensive (as in Japan and Mexico)."

As for Stiglitz, he also wanted direct capital infusions (not buying up of bad assets), which we are now doing:

http://www.sfbg.com/blogs/bruce/2008/09/stiglitz_bailout_blues.html

"We could do more with less money. The holes in financial institutions’ balance sheets should be filled in a transparent way. The Scandinavian countries showed the way two decades ago. Warren Buffet showed another way, in providing equity to Goldman Sachs. By issuing preferred shares with warrants (options), one reduces the public’s downside risk and ensures that they participate in some of the upside potential.

This approach is not only proven, but it also provides both the incentives and wherewithal needed for lending to resume. It avoids the hopeless task of trying to value millions of complex mortgages and the even more complex financial products in which they are embedded, and it deals with the “lemons” problem – the government gets stuck with the worst or most overpriced assets. Finally, it can be done far more quickly."

So I think my characterization remains sound. There may be non-right-wing economists who opposed particular provisions in the bill, but by and large they supported doing something along the lines of what we are doing now (capital injection).

[rockymountaindem]

27. Get out of here with your logic and facts

It seems that for one side, any government involvement in the economy is a sure sign of communism and for the other side it is a sure side of fascism. We all know that no massive government program is ever going to get handled without some share of corruption in any country. We have to ask ourselves whether that risk is greater than the risk of a wholesale breakdown in the credit system.

[girl gone mad]

31. Again, you are revising history.

Roubini was in favor of a recapitalization deal with good terms.

TARP had no provisions for recapitalization until a few rogue congressmen demanded that they be added.

Unfortunately, because the bill was hastily rushed through without debate, we got a very bad deal.

So, once again, as you yourself have now admitted, the bailout was a huge mistake.

[BzaDem]

38. I don't think you understand what I'm saying.

I'm not saying that the original terms were great, or that economists all agreed that each original term was correct. I'm saying that given the choice between what we got and nothing (where nothing is what many people on DU want -- they want the companies to fail), there is no serious disagreement. (I'm not including Friedman's following in "serious.") As you said, Roubini was in favor of direct recapitalization, which is what we are doing now (which is allowed, as you said, because of changes to the bill). Maybe he preferred better terms, but that doesn't mean he would rather have no bailout. If you can find me an article where he specifically says that he would rather NOTHING happen instead of the direct capital injections that Paulson is doing now, then I will stand corrected (on Roubini's attitude towards this).

[MadHound]

41. Actually I know a few Keynesian's who are against the bailout also

For very cognizant reasons, namely the fact that all this spending by the government will drive our credit rating down and screw all of us. But I suppose that they're doctorates don't count eh?

[fascisthunter]

2. On Top of It All... They Blame the Workers and Regulation

talk about agendas.... no matter what, in the face of all they are directly responsible for, they lie and blame everyone else. If they were not in government and I knew these fucks personally, I would kick their asses till they begged for mercy. Then I'd take every asset of theirs and make it part of the Commons, while they rot in prison. I'd make sure they knew how exactly every penny of theirs is helping the poor and those most definitely effected. What they are doing is 100 times worse than my hypothetical so save it!

People are dying, losing homes, losing jobs, because of their lies, and yet they have the audacity to look the camera in the eye and basically say to every tax payer in this country, "Too bad and it's your fault we stole your money!"

[ProSense]

4. The bailout wasn't a scam, it's simply that

Bush is a criminal:

The Bush administration isn't going to lift a finger to help the bailout

[lostnotforgotten]

5. Yep And Remember All the DUers Screaming From The Rooftops - The Sky Is Falling!

eom

[BzaDem]

11. Um -- yes, and they were exactly right.

If nothing passed, we would have eventually been in a situation where chicken little would have been right.

[girl gone mad]

15. They were wrong and you are wrong.

Paulson got what he demanded and then never used it. He went with a scheme that many bailout opponents had suggested, except in his version we get next to nothing.

We would have been better off allowing time for our legislative process to work as it is supposed to and helping ease the credit crunch through direct lending or dealing with the mark to market rule (still hasn't been addressed).

The banks may be better in better shape now, but they still aren't lending (just as most bailout critics predicted) and our economic picture has only grown more dire.

[BzaDem]

17. Paulson never used it? The nine largest banks already accepted a 125 billion capital injection

As far as direct lending, do you mean having the Federal reserve be the lender of only resort? I don't think anyone was proposing that. Just because things aren't much better now does not in any way mean that things would not have been MUCH worse had we have done nothing. The fact that all the other countries involved in this are basically doing the same thing should send a signal.

[w4rma]

21. To buy up other banks with, but not to lend out. (nt)

[uponit7771]

29. +1

[girl gone mad]

33. Who, besides Ron Paul, was arguing "do nothing"?

certainly not me.

We had many tools at our disposal that could have gotten us to the same place we are at now. We could have at least bought ourselves enough time to get a better bill passed.

Now we're in the unfortunate position of having to hold hearings whereupon Kashkari and Paulson are asked to explain what's happened to all of the money.

I have no idea why you would continue to defend the piece of garbage known as TARP. The vast majority of observers, even those who promoted it, have by this point acknowledged that it was poorly crafted and are moving forward with plans and ideas to spend the money less unwisely going forward.

ETA: you didn't read what I wrote, btw.

Paulson demanded money to buy up toxic mortgage assets, remember? Congress was told if they didn't buy up those bad assets immediately, Financial Armageddon would reign down on us all. Then Europe forced Paulson's hand, and thank FSM that congress had the foresight to include provisions for recapitalization (which were put in against Paulson's wishes, according to Roubini) or that little bill that Paulson said we absolutely had to pass -or else- would have been utterly worthless.

[BzaDem]

39. I think we agree.

I'm not saying that buying up the toxic assets was a good idea. Looking back, I think we should have gone with direct capital infusions from the beginning, as most of the other countries did, and I'm glad we are doing that now (and I hope we will eventually mandate that banks use the money to lend). I'm more arguing with the people who are saying to "do nothing." (The OP title makes it sound like he/she was in that camp, which was why I responded to this thread, and many others on DU also frequently say this, such as the poster below this post.)

As for the original terms of the bailout (which I agree were wrong), I'm not as outraged as some are here (such as the OP, who thinks it was a scam). I think it is unfortunate that we spent so much time trying to get a bill to buy assets when that was a bad idea, but I don't think Paulson was actually trying to scam us, at least with regard to this particular bill. Most people realized that we need to get a bill passed very quickly to avert disaster, and while the results aren't great, I don't think Paulson was trying to pretend there was more of a problem than there really was so that he could rip us off later. I also think part of the reason he wanted to buy assets was ideological (because it would involve less government intervention than the government partially owning banks). This is unfortunate, but he did in the end come around to the idea of buying equity stakes, which is much more than anyone can say about the Republican free market absolutists in the house who still want to essentially do nothing.

This is not to say that I trust Paulson on everything -- he completely ripped us off by illegally changing the tax code to benefit corporations to the tune of $140 billion dollars while no one was looking.

[lostnotforgotten]

26. A Resounding Party Of One

eom

[earth mom]

8. Yep it was a SCAM of epic proportions.

And there were several bailout cheerleaders here on DU who have yet to admit they were wrong = Disgusting. :puke:

[Oceansaway]

10. ...

The day Hank Paulson lied....

A long, long time ago...
I can still remember
Seeing houses used to make me smile.
And I knew if I got a loan
That I could call some house my own
And, maybe, we’d be happy for a while.

But the predatory lies and fees
Left me shaking on my knees
Locked out on the doorstep;
I couldn’t take one more step.

I can’t remember if I cried
When we first had to sleep outside,
But something touched me deep inside
The day Hank Paulson lied.

So bye-bye, oh America why?
For jobs, health, and education,
All the wells have run dry.
And friends of Henry Paulson, not a tear in their eye
Singin’, "nothing kills as good as a lie.
Now watch this old democracy die."

Now did you write the Emergency Economic Stabilization Act of 2008?
And is your soul filled up with hate?
My family has no place to go.
Do you believe in trickle down?
Did the speaker buy you a plastic crown?
Where should my children sleep when there's snow?

Well, I know that you’re in love with cash
I saw lobbyists shoving it up your
As soon as you're done playing the fool
Man, can you try to recall the golden rule?

I was a lonely teenage broncin’ buck
With two jobs, a mortgage, and a pickup truck,
But I knew I was out of luck
The day Hank Paulson lied.

I started singin’,
bye-bye, oh America why?
For jobs, health, and education,
All the wells have run dry.
And friends of Henry Paulson, not a tear in their eye
Singin’, "nothing kills as good as a lie.
Now watch this old democracy die."

Now for eight years we’ve been on our own
Living in a Bushville, missing our home,
But that’s not how it used to be.
When the Congress sang for the beauty queen,
Palin jumped into the scene,
And nobody gave a damn for you and me,

Oh, and while the king was looking down,
The Alaskan stole his thorny crown.
The Republic was adjourned;
The Kingdom was returned.
And while wars happen with a spark,
There's lighter fluid in the park,
And we sang dirges in the dark
The day Hank Paulson lied.

We were singing,
bye-bye, oh America why?
For jobs, health, and education,
All the wells have run dry.
And friends of Henry Paulson, not a tear in their eye
Singin’, "nothing kills as good as a lie.
Now watch this old democracy die."

Helter skelter in a summer swelter.
There ain't no bankers in the homeless shelter,
Stock market's high and falling fast.
It landed foul on the grass.
The Congress tried for a forward pass,
The Constitution on the sidelines in a cast.

Now the half-time air was sweet perfume
While the sergeants played a fascist tune.
We all got up to dance,
Oh, but we never got the chance!
`cause the people tried to take the field;
The ninja turtles wouldn't yield.
Do you recall what was revealed
The day Hank Paulson lied?

We started singing,
bye-bye, oh America why?
For jobs, health, and education,
All the wells have run dry.
And friends of Henry Paulson, not a tear in their eye
Singin’, "nothing kills as good as a lie.
Now watch this old democracy die."

Oh, and there we were all in one place,
Pinnned in by cops from outer space
With tasers, guns, and pepper spray.
So come on: Jack be nimble, Jack be quick!
The blood and smoke have made Jack sick,
Cause fire is Dick Cheney's only friend.

Oh, and as I watched him on the stage
My hands were clenched in fists of rage.
No angel born in hell
Could break that Fuhrer’s spell.
And as the flames climbed high into the night
To light the sacrificial rite,
I saw Cheney laughing with delight
The day Hank Paulson lied.

He was singing,
bye-bye, oh America why?
For jobs, health, and education,
All the wells have run dry.
And friends of Henry Paulson, not a tear in their eye
Singin’, "nothing kills as good as a lie.
Now watch this old democracy die."

I met a girl who sang the blues
And I asked her for some happy news,
But she just smiled and turned away.
I went down to the barren shore
Where I’d heard the truth told years before,
But the man there said the truth just didn't pay.

And in the streets: the children screamed,
The lovers cried, and the poets dreamed.
But not a word was spoken;
Democracy was broken.
And the three men this delighted most:
Dubya, Poppy, and Prescott's ghost,
They drove their limos to the coast
The day Hank Paulson lied.

And they were singing,
bye-bye, oh America why?
For jobs, health, and education,
All the wells have run dry.
And friends of Henry Paulson, not a tear in their eye
Singin’, "nothing kills as good as a lie.
Now watch this old democracy die."

They were singing,
bye-bye, oh America why?
For jobs, health, and education,
All the wells have run dry.
And friends of Henry Paulson, not a tear in their eye
Singin’, "nothing kills as good as a lie.
Now watch this old democracy die."

[Morning Dew]

37. Hey, nice. It's a lot of work to do that whole song.

good job, well done.

[Oceansaway]

44. i can't take the credit...but ty....n/t

[pansypoo53219]

18. shoulda waited for Jan.

georgee has the midass touch.

[to2bene]

19. Chrysler Execs Getting Million $ Bonuses This Year

http://www.freep.com/article/20081113/BUSINESS01/311130002/1014">Good Article

[Cleita]

20. If I remember correctly most of us weren't in favor of it.

Yet, our Congressional Democrats passed it. :shrug:

Most of us felt that if a similar plan didn't work for Herbert Hoover to stop the Depression, why would it work this time?

[democracy1st]

22. I hope everyone is smart enough to understand why both candidates couldn't oppose it at that time

[tomp]

23. sure...

...because opposing the rip off of ordinary americans by corporate fascism is something neither party is interested in doing, right?

Democracy first, my ass.

[democracy1st]

28. goto hell I understand that was a piece of junk

[Zhade]

24. But... "Thank God It Passed!"

The rallying cry of the woefully misinformed.

[TheWraith]

25. Gee, who am I going to trust, Paul Krugman, or paranoid internet people?

They're so exactly even in credibility. :sarcasm:

[vanderBeth]

32. Bwahahaha

What a hard choice.

[girl gone mad]

34. Turns out Krugman was wrong about the TARP..

just like he was wrong when he said that $200 ppb oil was here to stay because it was all based on peak oil, not speculation.

Why put all of your faith into one economist? As smart as he is, he's not 100% right. None of them are.

I'd go by the law of averages. Most good moderate to liberal economists said oil was in a speculative bubble. They were right. Most good moderate to liberal economists said TARP didn't need to be rushed through and it was bad legislation. They were right.

[Lorentz]

30. What a steaming pile of crap!

Who the hell wrote this? You believe this? Holy shit.

I especially love the utter believability of this paragraph (mis-spellings, and all):

When Speaker of the House Nancy Pelosie – who had filled Hank’s playpen with bales of cash – announced that Congress might take back some of Hank’s money to Bailout the nearly bankrupt US Auto Industry, Hank replied sharply, "NO! This is my pile. I swiped it. You approved it. It’s mine! Go get your own pile to play with from American taxpayers. They’re too dumb to care!"

[TheKentuckian]

35. Its not a scam. It was a stick up.

Pay or we freeze the credit markets and take more later.

Like they wouldn't, couldn't, and didn't begin to freeze credit to get their pay out. It makes zero effective difference if it was a "scam" or not.

We are not in control. There is no reforming of what we have. Play the game or bring it down and take the licks but there's no waving a magic wand to take away the "bad" parts and we can go on as we have in the past into the future.

The whole economy is a scam, complaining about this bailout when you support the system is pretty much just like the Republicans calling a raise on the top brackets in the progressive tax socialism. Its just a little uptick of the status quo.
I think the preaching about the "screwing" is lame but folks are entitled to their own opinions. Mine is that if we didn't go forward on the bailout that the economy would have taken a good rack to the nuts on reflex from the banks and we'd be signing up for much more with less strings in reaction to a little show of force from those that really hold the strings.
Which is why anyone who is really anybody was on board and simply working for concessions. Just a little flex, a few tens of millions of delayed deposits and a few days moratorium on new small business loans and the outcry to give them the moon would be deafening.

We can play nice or they will serve us our balls on a platter and then we can play nice or we we can say fuck off and probably serve ourselves our balls served up in our hands but at least have our balls as free people. The biggest scam is halfstepping, it ain't gonna happen because the puppetmasters are far too entrenched to remove and continue. Without the puppetmasters, there is no system.

[sampsonblk]

36. Agreed. The bailout was bad business. Very bad business. (nt)

[bedazzled]

40. without using common sense, logic or knowledge, ANYTHING bush wants is a crime

i can't think of a single thing he has done
to improve this country in the last eight
years. except to supply his cronies with
money. for the bulk of us, nothing is better
than it was eight years ago.

it was the crime of the century.

[AZSlacker]

43. What I want to know is, when does the part where banks start lending again happen?

Because it was my understanding that was the whole point of this to begin with.