It's A Pig, with Lipstick, and She Likes To Be Called Bear Stearns ...

Well, so much for our advice last Friday.

Kelly Evans, from the WSJ, speaking on MSNBC this morning, glossed over the failure and collapse of Bear Stearns as a "unique situation".

Really?

Just about everyone else writing or commenting on this believes this is the start of a conga line (hmmm, Prez Prado's Mambo No. 5 might be a good soundtrack) and we'll be reading about future financial institution failures like a baseball box score.

It took the Bush Grindhouse nearly a week to respond to devastation in New Orleans, brought by Hurricane Katrina, yet they snap into action - ON A SUNDAY - to bailout a corporate bandit like Bear Stearns.

Did they bury the footage?

Were investment bankers, mortgage officers, bond traders, standing on the roof of Bear Stearns, waving white sheets with "Help" scrawled on them?

Were masses of these greedheads huddled in the lobby of the Bear Stearns building, perhaps having gone for hours, without a cappuccino, or bottle of mineral water?

Maybe, to pass the time, they simply played cards.

Heaven forbid, one of the Bush Grindhouse's corporate cronies be inconvenienced.

If they had a television in the lobby yesterday morning, and were tuned into the Sunday news programs, their spirits would have been lifted by Treasury Secretary Henry Paulson.

Paulson trotted from show-to-show, putting lipstick on the all the pigs, still singing a happy song.

From Gretchen Morgenson/NYT, yesterday morning;

"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."

This is a good read, as Morgenson goes on a blistering listing of Bear Stearns' failure, greed, arrogance, mismanagement, like a DA reading a long rap sheet.

As to Paulson, here's Krugman this morning;

"It’s true that Henry Paulson, the current Treasury secretary, still says that any proposal to use taxpayers’ money to help resolve the crisis is a “non-starter.” But that’s about as credible as all of his previous pronouncements on the financial situation."

And this;

"As I said, the important thing is to bail out the system, not the people who got us into this mess. That means cleaning out the shareholders in failed institutions, making bondholders take a haircut, and canceling the stock options of executives who got rich playing heads I win, tails you lose.

According to late reports on Sunday, JPMorgan Chase will buy Bear for a pittance. That’s an O.K. resolution for this case — but not a model for the much bigger bailout to come. Looking ahead, we probably need something similar to the Resolution Trust Corporation, which took over bankrupt savings and loan institutions and sold off their assets to reimburse taxpayers. And we need it quickly: things are falling apart as you read this.

$2 per share.

Yeah, J.P. Morgan got a steal, and likely that price was inflated, but we hope that Bear Stearns is held accountable, beyond the embarrassment of just ending up Penny Stock aisle.

And, no doubt, start counting the times The Bailout Commander, and his surrogate son, John McCain, call for making the Bush Tax cuts permanent.


Bonus Bailout Baloney

Scarecrow/Firedoglake: Bush Is Becoming Hoover; Where is FDR?

Cernig/The Newshoggers: Bush Says White House In Control Of Financial Rout

Jeff Fecke/Shakesville: Moral Hazards are for Poor People

Prairie Weather: Financial markets: "Like waking up in summer with snow on the ground"

Brilliant at Breakfast: But if you lose your job, do you think for one minute the government will help YOU

emptywheel/Firedoglake: Credit Crises

Pay No Attention To That Man Behind The Bailout Curtain!

Sorry to rain on your gateway day to the weekend (and a long, three-day weekend for those living in Suffolk County, Cambridge and Somerville, Massachusetts - and no, it's not because it's St. Patrick's Day), but lost in the din of Eliot Spitzer's sexcapades, and Geraldine Ferraro's Stars and Bars sermon, some seriously huge financial news was quietly slipped into the news cycle;

Fed Hopes to Ease Strain on Economic Activity

"In an action that sent stock prices soaring, the central bank offered to let the biggest investment banks on Wall Street borrow up to $200 billion in Treasury securities in exchange for hard-to-sell mortgage-backed securities as collateral. And the Fed made clear that it was prepared to do more as needed.

The Fed’s hope is to relieve some of the pressure on institutions to sell at fire-sale prices, easing the strains on economic activity and making the credit markets feel more comfortable in buying mortgage bonds again."

Notice how disarming they are.

The employ words and phrases such as "ease strain" and "relieve some of the pressure", like this is merely someone stubbing their toe and that these prescribed remedies will do the trick.

From the same article;

“They are essentially creating a $300 billion bank out of nothing,” said Lou Crandall, chief economist at Wrightson ICAP, a financial research firm.

The new twist is that the investment banks will be allowed to pledge as collateral a wide variety of securities that include hard-to-sell, privately issued mortgage-backed securities.

Fed officials, in a conference call with reporters on Tuesday, said that they were minimizing risk by accepting only securities that still had the highest triple-A ratings and that they would impose a “haircut,” or discount, on mortgage bonds that appear to carry additional risk."

There, don't you feel better now?

Good thing Federal Reserve Bank Chairman Ben Bernanke is only accepting as collateral, those dead, decaying "highest triple-A ratings" housing securities, or we'd really be in a pickle.

Well, Paul Krugman today has taken in a look in that barrel, and it ain't just pickles that he's seeing.

"So Mr. Bernanke and his colleagues have been doing the usual thing: printing up green paper and using it to buy bonds. Unfortunately, the policy isn’t having much effect on the things that matter. Interest rates on government bonds are down — but financial chaos has made banks unwilling to take risks, and it’s getting harder, not easier, for businesses to borrow money.

As a result, the Fed’s attempt to avert a recession has almost certainly failed. And each new piece of economic data — like the news that retail sales fell last month — adds to fears that the recession will be both deep and long.

Officially, the Fed won’t be buying mortgage-backed securities outright: it’s only accepting them as collateral in return for loans. But it’s definitely taking on some mortgage risk. Is this, to some extent, a bailout for banks? Yes."

Ohhh ... Why didn't the government just say that in the first place - a bailout!

We like bailouts ... Chrysler certainly likes bailouts...

The people being bailed out like bailouts, they'll, most likely, never have to pay back the bailout because Jane and Joe Doe, taxpayers residing on Main Street USA will be the ones doing the bailing via they're the ones stuck with the paying.

The people, in this case, Chairman Bernanke and the U.S. Government, like bailouts, because it hides (and delays) one huge, MF'ing problem that they can't figure out, and they must, simply must, serve their corporate masters ... And, if they are lucky, they'll be out of office before the ramifications of the bailout take place, leaving it to the next schmucks who take office.

Fester, over on Newshoggers, sees a ray of sunshine in this bailout;

"The Pain Caucus is much weaker today than it was five years ago or twenty years ago, so Baby Boomer retirement programs are relatively safe. The other big pool of cash floating around in the government is the defense budget and the biggest discretionary portion of that budget is Iraq. $200 billion per year is some serious money. There are already large pre-existing political groups (most of the Democratic Party) that thinks this is a damn dumb idea for one reason or another already, and as we move forward more people will be screaming for relief. The ability to propose non-trade-off solutions will decrease.

A debt crisis could provide very convenient political cover to withdraw from Iraq and save $150 billion per year in expenditures (some money will be spent to maintain 'containment forces', and other funds will be used to pork out the supplier's districts). And pulling out of Iraq could be one of the strings attached to any implicit or explicit foreign bail-out."

Now, that would be nice, and certainly would be a good spin on the bailout.

However, in the, at least, short term, as we rocket towards paying $5 for a gallon of gas, $5 for a half-gallon of milk and $5 for a loaf of bread, remember that bailouts are "good" and that the pain you suffer is only part of "easing strain" and "relieving some of the pressure".

And, depending on when you receive it, you may very well be able to spend your $600 Government Tax Rebate Check all in one place.


Bonus Bailout Riffs

Bloomberg News: Bush Says Policy Makers to Take `Appropriate Steps' (Update5)

Bridget Magnus/TMV: All Hell Breaking Loose in our Columbo Economy

Yahoo News/Reuters: Bear Stearns gets Fed funding, shares plummet

CNBC/Reuters: US Faces Severe Recession, Feldstein Says

Danny Schechter: "An Entity We Can't Even See" - Mythifying Markets and Mystifying The Public About The Financial Crisis