Paulson's Reasons for Delaying Day of Reckoning
Jonathan Weil
Oct 02, 2008
http://www.bloomberg.com/apps/news?pid=20601039&
refer=columnist_weil&sid=aMaWyNFImi4o
If you think this bailout is expensive, just wait until you see the next one.
The $700 billion rescue plan approved by the U.S. Senate won't fix the core problem with the nation's ailing financial institutions. And it almost guarantees that you and I will have to pony up for an even costlier bailout someday, maybe soon, if the House of Representatives passes it tomorrow.
Treasury Secretary Hank Paulson has correctly identified the quandary: Lots of shaky banks and insurance companies are showing strangely high values for assets that aren't worth squat in the market. Many need more capital and can't raise it. And he's right in saying the outlook is grim if we don't get this fixed.
What's stunning is how little the taxpayers would get in return for their money under Paulson's package, and how illusory much of the banks' newly minted capital would be.
Under the plan, Treasury would buy some companies' troubled assets at above-market values. To boost their capital, Paulson would have to pay the companies more than what their balance sheets say the assets are worth. Then other companies would use the rigged prices to write up, or avoid writing down, the values of similar holdings on their own books.
So, the taxpayers get hosed on the asset purchases. Other banks use the trumped-up prices to cook their books. And investor confidence supposedly is restored.
That brings us to this question: Why would a smart guy like Hank Paulson -- the former boss of Goldman Sachs -- advance such a dumb, shady plan? Let us count the reasons:
No. 1: It delays our national reckoning until after the presidential election.
No. 2: The reckoning will be worse than you can imagine.
No. 3: He's helping his friends.
No. 4: There's an excellent chance the Congress will pass it. Leave someone else to figure out the costs another day.
Internet Censorship Alert
Internet Censorship Alert: Alex Jones exposes agenda to 'blacklist' dissenting sites (March 14, 2010)
As I predicted, the Obama Administration is trying to shut down the Internet - at least the parts he doesn't like. Barack Obamas regulatory czar, Cass Sunstein has stated that he wants to ban conspiracy theories from the internet. Think about what this means - Every video, every website, every blog, every email, that exposes or just criticizes the government for any reason whatsoever could be labeled a "conspiracy" and taken down. Your home could be raided in the middle of the night, and you could be carted of to jail for criticizing the government. All they have to do is call it a "conspiracy theory".
http://www.youtube.com/watch?v=aqAWmBLFodE
Saturday, October 4, 2008
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