The Great Depression Online

Great Depression Online Archive Issue:

Missing the Point

Great Depression Online
Long Beach, CA
March 10, 2009

Inside This Issue You Will Discover…

*** The Scum of the Earth
*** The Outer Frontier of Arrears
*** Missing the Point
*** And More

The Scum of the Earth

Everyone’s a scoundrel and a scalawag these days…bankers, CEOs, Senators, the whole lot.  Former master of the universe personas off Wall Street have been marked down to junk grade status.  In fact, their fall from grace has dropped so far they’re now persona non grata at rotary clubs in Bergen County, New Jersey.

And there’s Bruce Karatz.  The former CEO of KB Home was indicted last Thursday for backdating stock options.  ‘Everyone else was doing it,’ he must be thinking, ‘why me?’  So, too, let’s not forget Bernie Madoff.  Last we heard the Charles Ponzi reincarnate’s being forced to pawn off his prized artwork to provide some ‘relief’ to those he swindled.

Then there’s Bill Clinton.  He hasn’t done anything disgraceful that we’re aware of for at least a week…but good grief.  What happened to the guy?  Have you seen him lately?  The former President now looks like the doorman at Caesars Palace in Las Vegas while his wife’s off inking nuclear missile treaties with the Russians in Geneva.  He should really keep her on a shorter leash.

~~~~~~Confidential Report~~~~~~

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Dick Fuld, Daniel Mudd, James Cayne, Franklin Delano Raines, Alan Fishman, Ken Lewis, Ken Thompson, Angelo Mozilo, Richard Syron, Kerry Killinger…the list of crooks swells with each passing day.

But there’s one exclusive title reserved for one exclusive organization.  Not for deceit, duplicity, or dishonesty alone do they garner this exclusive title; but rather it’s for all three of these things, and more… 

American International Group, Inc. (i.e. AIG), they must be, without a doubt, the scum of the earth.

The Outer Frontier of Arrears

During the heyday of the great housing bubble, when subprime mortgages were ground up with the primes in the financial butcher shop to miraculously create triple-A rated collateralize debt obligation (CDO) sausage dogs, AIG threw its business into the mix, writing insurance policies, known as credit default swaps, on the CDOs.  And, as you well know, the fundamental premise of the financial gimmickry was that housing prices always go up.

But somehow, someway, the impossible happened…housing prices didn’t go up; they went down.  The CDOs then went bad, as suddenly no one knew what they were worth, and AIG was on the hook to insure their many counterparties against the default of the entire mortgage industry.

Last week AIG was granted another bailout…their fourth one.  With this latest $30 billion, they’ve run up their tab with the Fed to over $170 billion.  Only an organization of geniuses or jackasses would have the brilliant foresight or foolish recklessness to venture their business so far to the outer frontier of arrears.

That the Federal Reserve’s willing to keep writing the checks to AIG is what scratches our prefrontal cortex.  Yet no one at last weeks Senate Banking Committee meeting seemed too perturbed about why AIG keeps getting bailout funds.  What has the group of Senators so provoked, is not knowing where the money’s going.

With their central position in the financial folly, it is now evident the $170 billion bailout is not just a bailout of AIG…in effect, it’s a bailout of all the perpetrators of the whole fiasco.

Missing the Point

Some intense theatre took place last Thursday when Federal Reserve Vice Chairman Donald Kohn denied Senate Banking Committee members their request for the names of where the AIG bailout money went.  In Kohn’s judgment, whether true or not, revealing names risked jeopardizing AIG’s continuing business.

“It’s not clear who we’re rescuing -- whether it is whatever remains of AIG or its trading partners,” said Senate Banking Chairman Christopher Dodd.

“We need to know who benefited, and we’re going to find out,” said Senator Richard Shelby.

What lack of imagination.  In our estimation the question isn’t whose being rescued; but who isn’t being rescued?

On Friday the Wall Street Journal reported a partial list of institutions who’ve received payment from AIG following the bailouts.  Such notables include, “Goldman Sachs Group Inc, Deutsche Bank AG, Merrill Lynch, Societe Generale, Calyon, Barclays Plc, Rabobank, Danske, HSBC, Royal Bank of Scotland, Banco Santander, Morgan Stanley, Wachovia, Bank of America, and Lloyds Banking Group.”

“It’s reasonable,” said Senator Dodd, “to ask why holders who would have received only pennies on the dollar for their credit-default swaps absent any government intervention would expect or deserve payments for what essentially is a bankrupt company.”

And therein lies the grand irony…only Senator Dodd seems to be missing one very important thing: The point!  For that’s what bailouts are precisely for…giving money to those that expect it, even when they don’t deserve it. 

“That we find ourselves in this situation at all is...quite frankly, sickening,” said Senator Dodd.

We agree.  Yet for different reasons entirely.


M.N. Gordon
Great Depression Online

P.S.  Hidden behind all the market mumbo-jumbo and misinformation lies a code.  A code ferociously guarded by a ‘secret society’.  Access to the ‘hidden’ money mountain and this Insider Code is all that’s needed to gain financial security forever.  Discover more in this Confidential Report: Insider Code.


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