Sunday, March 16, 2008



$1.2 million Bear Stearns Bldg. thrown into the deal for free

A few days ago we looked at the collapse of the Republican Party honeypot, Carlyle Capital Corporation (part of the notorious Carlyle Group). They defaulted on $16.6 billion in loans from many of the world's major banks. None of the GOP bloodsuckers, particularly the Bush family and their circle-- who have raked in unbelievable profits from their participation in Carlyle-- are in any way being held to account for this, of course. Those who write the laws, write them to effect what other people do, not what they do. In today's NY Times Gretchen Morgenson asks some questions about the Wall Street meltdown in general.
WHAT are the consequences of a world in which regulators rescue even the financial institutions whose recklessness and greed helped create the titanic credit mess we are in? Will the consequences be an even weaker currency, rampant inflation, a continuation of the slow bleed that we have witnessed at banks and brokerage firms for the past year?

Or all of the above?

Stick around, because we’ll soon find out. And it’s not going to be pretty.

Agreeing to guarantee a 28-day credit line to Bear Stearns, by way of JPMorgan Chase, the Federal Reserve Bank of New York conceded last Friday that no sizable firm with a book of mortgage securities or loans out to mortgage issuers could be allowed to fail right now. It was the most explicit sign yet of the Fed’s “Rescues ‘R’ Us” doctrine that already helped to force the marriage of Bank of America and Countrywide.

But why save Bear Stearns? The beneficiary of this bailout, remember, has often operated in the gray areas of Wall Street and with an aggressive, brass-knuckles approach. Until regulators came along in 1996, Bear Stearns was happy to provide its balance sheet and imprimatur to bucket-shop brokerages like Stratton Oakmont and A. R. Baron, clearing dubious stock trades.

On Monday one of the Republican authors of the economic collapse we are starting to experience, SEC Chair and former right-wing Congressman Christopher Cox, blatantly lied to the public by claiming the big Wall Street firms "were resting on comfortable capital cushions." They aren't-- and no one inside the Robber Baron-oriented Bush Regime knew that better than Cox. Today Bear Stearns would have had to file for Chapter 11 bankruptcy protection or sell itself to the highest (low) bidder. JP Morgan bought it at $2 a share, shares that were trading for $50 a share a few days ago-- and $170 a share one year ago. Put another way, "the price represents a startling 93 percent discount to Bear Stearns’ closing stock price on Friday."
Bankers and policy makers raced to complete the deal before financial markets in Asia opened on Monday, as fears grew that the financial panic could spread if Bear Stearns failed to find a buyer.

...The companies said that the Federal Reserve would provide special financing in connection with the transaction and that the Fed had agreed to fund up to $30 billion of Bear Stearns’s “less-liquid assets.”

This sale includes the Bear Stearns Manhattan headquarters, which alone is worth over a billion dollars. Still seems like a risky purchase for JP Morgan, although I suppose they had no choice because the size of the crash on Monday had they not done it would have been incalculable. The laissez fairies who are all hands off when ordinary Americans lose their homes and jobs and savings-- often due to corruption and incompetence at the top of the economic ladder-- but when these big corporations start to totter, due to their own malfeasance, the government steps in with our tax dollars to save the day. And no one has to give up any of those six and seven figure bonuses or severance packages. And to top it off the Fed announced today that they are lowering the interest rate by another quarter percent-- on top of the $200 billion they pumped into the system Tuesday. You notice how wan Bush looked and how he bumbled his way through his speech even more lamely than usual on Friday? Even he understands what's happening. Wait til the big banks report earnings-- losses-- later in the week.

As I hit the sack Sunday night in Los Angeles, all the Monday morning stock market openings in Asia are tumbling drastically, a big vote of no confidence in the Bush Regime's lame efforts to contain the financial meltdown. Tokyo's Nikkei index dropped 4.2% to a three year low and markets in Korea, Hong Kong and Australia are also sinking.


This morning's Wall Street Journal tries to make some sense out of the mess, or, at least, gets the facts on the table. Paul Krugman, in this morning's NY Times is, as usual, more frank and to the point: The B Word. The Bush Regime is lying about not using taxpayers' money to bail out the big financial institutions and a bailout is inevitable. Why?

1- What goes up (housing prices) must come down
2- Risk exists
3- GOP ideology that regulation is bad led to inevitable and catstrophic consequences

The U.S. markets aren't open yet. CNN says they will open 200 points lower. Markets in the rest of the world were dramatically down. And what was up? The Euro and other currencies against teh dollar and the price of gasoline (not to mention inflation and unemployment). Even the Canadian dollar is now trading higher against the U.S. dollar!

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At 6:28 AM, Anonymous Anonymous said...

SO, if this is the fault of GOP policies, should we embrace the liberal policies of complete government control over the economy?? Just thought I'd ask.

At 7:27 AM, Anonymous Anonymous said...

Wow, good idea posting anonymously, wouldn't want your false dichotomy a la home-schooled retard approach attached to your good name.

At 7:40 AM, Anonymous Anonymous said...

"The laissez fairies who are all hands off when ordinary Americans lose their homes and jobs and savings-- often due to corruption and incompetence at the top of the economic ladder-- but when these big corporations start to totter, due to their own malfeasance, the government steps in with our tax dollars to save the day."

You, my friend (in the non-McCain sense), could read this bit on Def Poetry Jam.

If the deified Market Forces were really allowed to determine what happens, Wall Street would have relocated to Bumfuck, Kentucky ages ago.

Bear Stearns corporate welfare exploits the big lie that conservatives want a government so small you can drown it in a bathtube. They want government (as it represents the people) on its knees and at their service.

At 8:25 AM, Anonymous Anonymous said...

1) I was not homeschooled. I went to a private school. Even so, I still emerged smarter than the retards that go through the government-funded public school system.

2)Government control over the economy isn't going to solve anything. The free market should be allowed to work. Besides, corruption exists in government, the difference is that the government is not accountable to anyone. At least corporate execs must answer to their shareholders.

3) As much as conservatives would LIKE to have smaller government, this has become impossible since the Great Society and the programs that it implemented (thank you LBJ, you liberal moron!)

At 9:09 AM, Anonymous Anonymous said...

Oh, my bad, then I defer to the delicate, anonymous genius nurtured at Our Lady of Informal Logical Fallacies.

Yet, the article never suggested implementing "liberal policies of complete government control over the economy." It pointed to the hypocrisy of rewarding Bear Stearns with corporate welfare after it ran a business badly and fucked over its shareholders.

Furthermore, "free market working" does not equal a government bailout. (That's 10 knuckle raps with a ruler for you.)

Your conservative hero, Bush increased federal spending by 45% in his first 5 years in office. So, you really just sound like a big, whiny pussy bringing LBJ into this.

(And for that, bend over and take it like a man from Father Peter Phile.)

At 12:14 PM, Anonymous Anonymous said...

....wait, I'm deeply sorry, wc. I did not mean "go ass-fuck yourself."

I meant I am a pussy, and I was wrong.

At 12:17 PM, Anonymous Anonymous said...

Gee, anonymous, that was very nice of you. I accept your apology.


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