Fear & Loathing

Suicide Still Isn't Right

Maybe populism has gone too far. The Weekly Standard noted this morning that U.S. Senator Charles Grassley in a radio interview remarked that the AIG executives who ran the insurance company into the ground, and then accepted taxpayer-funded bonuses, should resign and kill themselves, Japanese-style. Grassley to AIG: It's Seppuku time.

Now you know I have absolutely no sympathy for these AIG morons and think the bailout is absolutely stupid. We should have let the company fail and the chips fall where they may. But this is way over the top. What sets America apart from Japan is that we do not embrace their culture of "face" and respect, which is what drives executives to resign in shame and then, not infrequently, commit suicide. In the U.S., you are what you do and what you represent, not to whom you report. Organizations are important but have no real meaning aside from the individuals who make them up.

So as far as I am concerned, AIG should "claw back" those bonuses and fire these idiots.  (It's not like that so-called talent helped the company do anything other than rack up the largest quarterly loss in the history of capitalism anyway!)  But suggesting Seppuku is just out of line and un-American.

Posted via email from glenn's posterous

Bank of America Next to Feed at US Bailout Troth

So, $165B so far is still not enough for those imbeciles! The New York Times is reporting that Bank of America will need $100 billion in equity within the next 100 days. That is in addition to the $45 billion in cash and $120 billion financial backstops that the government already committed to shore up Bank of America’s capital base.  

What a complete waste of money and attention.  None of these people, whether in the government or the financial system, has any idea what is happening or how to fix it.  So what they do is what has always been done -- throw money (ours), and lots of it, at the problem.  But nothing is sticking.

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There They Go Again

$345 billion later and CitiGroup wants yet another handout. Citi on Fire? [Forbes.com]. Let them fail, I say! It is way past time for this totally mismanaged, complete waste of taxpayer money to stop. Accounts are insured and it is most definitely not the responsibility of the US taxpayer to maintain the financial solvency of financial institutions, no matter how large. A little fiscal discipline from the marketplace may be just what those morons on Wall Street need, for some real change!

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Wasting More Tax Dollars

So exactly why are we paying for the "DTV transition" anyway? One can argue that taxpayers have a moral obligation to subsidize lower-class people in times of economic change. Obama urges Congress to postpone DTV transition [CNET News]. But did we pay for folks in the 1920s to switch from horses to automobiles, or in the 1960s to switch from B&W to color televisions? No way. 

In my view, having taxpayers foot the bill for "DTV converter boxes" would be like sending everyone a check from the Treasury so they can subscribe to cable or satellite television. It's completely absurd and a waste of money.  Sorry, Rachelle Chong, but that's how I see it.

He's Back? Go Away

Had I noticed Bernie Ebbers, former WorldCom/MCI thief, seeking an 11th-hour pardon from the Bush Administration last week, I surely would have ranted. Ebbers Trying to Join the Bush Pardon Party [WSJ.com]. His sleaze never ends. Bernie was fairly convicted for some really serious financial crimes and deserves all the punishment he was handed. He absolutely ruined the life savings of scores of my friends, clients and colleagues from MCI by driving the company, and its stock price, into the ground. I for one hope he rots in prison.

Spitting in the Wind

So the Federal Reserve has decided to donate yet another $800 billion to U.S. banks in a move dubbed "quantitative easing." Bloomberg News calls it Spitting in the Wind. I call it madness. Throwing money at problems never worked for social problems and is unlikely to work for liquidity problems. The Fed can "urge" banks to lend all it wants, but so long as fear is the ultimate driver and lenders are able to hang onto this money, or use it for M&A deals, little is going to change. These guys are fumbling around in the dark. They're lurching from one bonehead move to another, while doing everything wrong when the issue is confidence, not fundamentals.  

Why not try letting some of these institutions fail, since depositors are insured, and let stockholders -- not taxpayers -- take the hit?  Nah, that might be dubbed "socialism"!!  What do you call what's been happening already?  As the Wall Street Journal observed, "in a year when many of the nation’s banks have effectively been nationalized by a Republican administration, “socialism” is very much in the eye of the beholder."  Will Obama Usher In a Socialist Economy?  I don't want to own CitiBank, AIG and Bear Sterns, let alone General Motors. Neither should you, and certainly not through our government.

Two Steps Back

Now the Treasury Department has backed away from using the $700 billion bailout fund passed by Congress to buy toxic mortgage assets as originally intended, and says it will focus instead on shoring up financial institutions with direct investments.  Wasn't reducing exposure to devalued real estate mortgages the whole point?  What an absurd system, since as we now unfortunately know, the banks are just sitting on those billions and still not lending.  This is the Keystone Cops of financial oversight, IMHO.  And the bully pulpit crap just won't work here.  Regulators to Banks: Get Off Your Butts and Lend [L.A. Times]

Again AIG

We have already given AIG $113 billion (yes, with a "B"), and now the Treasury is proposing another $40 billion in the name of "stability."  U.S. Provides More Aid to Big Insurer [NYTimes.com]. When will the fiscal discipline of the marketplace be imposed?  Consumers aren't affected at all by AIG, and certainly do not care about credit default swaps.  So this is straight corporate welfare and very annoying.  Stop it already!

Update:  Contrast this with the very controversial proposal to loan the embattled U.S. auto industry a whopping $25 billion, or less than 1/6th of what a single insurer has already been given, gratis.  It's just insane.

No Ds Here

Reid Looking to Remove Lieberman as Committee Head [AP.com]. Seems perfectly appropriate to me, indeed long overdue, because he ain't no Democrat anymore!

WTF

The $750 billion "rescue" plan passed by Congress was supposed to increase bank liquidity to ease the credit crunch and encourage commercial and mortgage lending. Instead, it has already turned into an M&A slush fund. Yesterday, PNC Bank announced that it is buying National City for $5.2 billion, financed by the sale of $7.7 billion in preferred stock to the U.S. Treasury. US Bail-Out Cash Buys Rival Bank [BBCNews]. 

What this means, pure and simple, is that we -- American taxpayers -- are now the financial backers paying for banking deal-making.  Despite what Paulson may say, it's yet another example of good intentions gone bad. There is no excuse at all for allowing bailout funds to be used for mergers & acquisitions. That does nothing help the mortgage or housing markets or to ameliorate the credit crisis. To top it off, PNC has made an all-cash deal. That's our money and I want it back!!