Like Bush, Obama Wants Us To Go Shopping

Hmmmm ...

On a day where someone in the Administration (or a friendly) leaks out that "Hey, surprise, the banks are acing those Stress Tests", comes another floater that, get this, we, the public, should buy stocks and bonds of those toxic assets that the banks don't want to keep (but want to get paid for, just the same).

U.S. Imagines the Bailout as an Investment Tool

During World War I, Americans were exhorted to buy Liberty Bonds to help their soldiers on the front.

Now, it seems, they will be asked to come to the aid of their banks — with the added inducement of possibly making some money for themselves.

As part of its sweeping plan to purge banks of troublesome assets, the Obama administration is encouraging several large investment companies to create the financial-crisis equivalent of war bonds: bailout funds.

The idea is that these investments, akin to mutual funds that buy stocks and bonds, would give ordinary Americans a chance to profit from the bailouts that are being financed by their tax dollars. But there is another, deeply political motivation as well: to quiet accusations that all of these giant bailouts will benefit only Wall Street plutocrats.

WTF!

Is this the Summers and Geithner version of the Clean Skies Act?

And, right there is the rub.

All those billions in bailouts are benefiting only those "Wall Street plutocrats"

Christ, I mean, the whole game has been rigged for them.

Now, the Obama Team wants to go into to backwoods carny mode, telling us to "Step right here ...Have we got a deal for you"?

So, along with already giving the dwarfs, finks, phonies and frauds of Wall Street our tax dollars, we are supposed to slip on the Uncle Sam suit, go all-jingoistic and start giving them our "disposable income"?

Will there be retro-Dough Boy posters, substituting soldiers, with slimy "financial instrument" sellers, extorting us to "Get into the Fight - Buy Toxic Asset Bonds"?

The embrace of smaller investors underscores the concern in Washington and on Wall Street that Americans’ anger could imperil further efforts to stimulate the economy with vast amounts of government spending. Many Americans say they believe the bailout programs — and the potentially rich profits they could yield — will benefit only a golden few, including some of the institutions that helped push the economy to the brink.

No shit, Dick Tracy!

For the investment managers, the benefits are potentially large. These big firms can charge healthy fees to investors for taking part. They will also have the marketing prestige of being the firms the government turns to at a time of crisis to help sort out the country’s financial mess.

Oh please, give me a break!

Translation here is "They will also have the marketing prestige of being the Governments' hand-picked front man"

We made reference to this once, already, but it looks more-and-more like the Obama Administration has hired the Lincoln Group to hawk their shit.

And those Bank Stress Tests ...

"Romper, bomper, stomper boo. Tell me, tell me, tell me, do. Magic mirror, tell me today. Have all banks had fun at play?"

From Yves Smith;

The whole point of this charade exercise was to show the big banks weren't terminal but still needed dough, and I am sure it will prove to be lots of dough before we are done. But they now have the Good Housekeeping seal, so the chump taxpayer can breathe easy that the authorities are taking prudent measures to make sure his money is being shepherded wisely.

If you believe that, I have a bridge I'd like to sell you.

[Snip]

How does one parse tripe like this? First, the public private partnership program, aka cash for trash, is voluntary. Banks are not being compelled to sell. The idea that the banks "have to sell" is a canard. Second, the gaming of the program has already started (notice no lecture from Geithner about that?), so there is pretty much no risk that anyone will take a loss on the values they have in their books. The best summation of how bad this will get is from Rortybomb, who expects all the old Enron tricks to be employed (notice the terms of the PPIP prohibit the fund managers from gaming the process, not the banks trading among themselves. You can drive a truck through this oversight. And the Treasury has remained silent as the banks themselves have been loading up their balance sheets with toxic sludge, paying more than private investors are willing to bid).

I'm sure all the bankers understand full well the massive disconnect between talk and action, and are dutifully following Treasury's lead in maintaining appearances.

It’s been awhile, but this is a legitimate moment of crises;

Help Me Mr. Wizard!

Top Ten Cloves: Ways Tim Geithner Will Fire Bank CEO's

News Item: Geithner Grows A Spine!

10. Use them as Human Shields, when Obama goes to speak at Notre Dame

9. Throws'em in Debtors Prison

8. Put them through the Obama Team Vetting process - They'll quit after months of frustration, waiting ...and waiting ...and waiting

7. Label them as Toxic Assets so they will move in the upcoming auctions

6. Rounds'em all up and ships them to Sweden

5. Beats them to within an inch of death with a new, giant bailout check

4. Gets Rush Limbaugh to take them out of town with him

3. Hires Rick Santelli to browbeat them, yelling and screaming, until they run out the door

2. Have one of his staff do the deed ... Oops!

1. Well, actually, before he does any firing, he has to talk Larry Summers, and get approval for the plan


Bonus Secretary of the Treasury Timothy "What's that, Lassie? (Woof, woof!!) Timmy Geithner's in the well?!!" Geithner Riffs

James Doran: US watchdog calls for bank executives to be sacked

Henry Blodget: The Question Tim Geithner Refuses To Answer

John Carney: Geithner Wrong, Crap Assets Correctly Priced, Say Harvard And Princeton Profs

Jeffrey Sachs: The Geithner-Summers Plan is Even Worse Than We Thought

Robert Reich: Will Geithner Fire Corporate America?

Glen Greenwald: Larry Summers, Tim Geithner and Wall Street's ownership of government

Mike Madden: Pay no attention to the treasury secretary behind the curtain ...President Obama figures out the key to selling his economic policies: Hide Tim Geithner

Obama Spams The World

Boy, that had to turn some heads this morning.

And, you know, a few of them had to be thinking, was the Lincoln Group back in business, retained by the new administration?

Those, picking up Le Monde, or the Saudi Gazette, or about 30 other newspapers around the world, and seeing President Barack Obama on the Op-Ed page, "A time for global action."

In case their satellites went out, or they don't watch CNN International any longer (maybe in protest, after Zain Verjee couldn't stop from spouting "penis" during a broadcast), Obama wanted to be sure that they all knew our economy was in the tank, and Obama wanted to play "Tag", that they all have to pitch in as well

It was, kind of, an economic Knute Rockne thing, or Mickey Rooney/Andy Hardy "Hey gang, let's put on an economy!"

He didn't say so in the article, but I think he's going to hand out laminated, autographed copies at the G-20, just in case they missed it.

Maybe, they'll put a Gordon Brown-type package together, throw in some DVD's of his Tonight Show appearance, or his speeches.

Raw Story has a copy of it.

So does the Chicago Tribune.

No word yet, if Obama, just to piss off the Flying Monkeys of the Right Wing Freak Show, was chewing gum, or not, while writing the piece.

We're All In The Dance

Gee, I guess I should be jumping for joy, ignoring the cumbersome day on the homefront experienced this day, because the Stock Market jumped 500-points.

And, all because Secretary of the Treasury Timothy "What's that, Lassie? (Woof, woof!!) Timmy Geithner's in the well?!!" Geithner announced his Public-Private Investment Scheme.

Emphasis added to "Public" and "Scheme".



About the only difference between the plan today, and the one Heistin' Hank Paulson was looking to run with last fall, is that Geithner has more hair on his head.

Tbogg, over on Firedoglake sums it up, pretty good;

Geithner isn't Michael Brown. He's Hurricane Katrina.

Reaction today (exempting the Stock Market, of course) was mixed, many still holding on to the point-of-view that this is garbage, and will do nothing, with nationalization of the diseased banks and companies inevitable, others in the middle, saying, ehh, we gotta do something, and maybe, just maybe (perhaps this is a hint, that we should be buying stock in the companies that manufacture "Lucky Rabbit Foot" charms) it will work, and a much smaller crowd openly heralding the Obama-Geithner plans as opening the skies, so the sun can shine, and the money rain down.



Evidence of that center crowd exemplified by quoting Mr. Wind, T. Boone Pickens;

My dad said a fool with a plan can beat a genius with no plan.

Paul Krugman was unwavering in his despair (and added to it with some 'rithmatic'), and gets defended by Digby, against the some in the Obama Administration, and the "noses-in-the-air" folks at MSNBC, who want to wish Krugman away to the cornfield.

Kevin Drum lays down that, perhaps, this is akin to a gauntlet we have to go through, on "The Road to Nationalization?"

Oh yes, there were a couple of reminders, one from Jane Hamsher, that Timothy "What's that, Lassie? (Woof, woof!!) Timmy Geithner's in the well?!!" Geithner is "Making Countrywide Executives Rich Again".

And, Dan Froomkin points out the "Basic questions Treasury still hasn’t answered"

Steve Clemons, on The Washington Note, points to "Simon Johnson's excellent blog, the Baseline Scenario, for "Finally, a Brilliant Idea on Toxic Assets"

And, finally, Henry Blodget, was about the only one out there, proverbially, doing the "lipstick-on-a-pig" thing, calling it like he sees it;

In short, because the plan is yet another massive, ineffective gift to banks and Wall Street. Taxpayers, of course, will take the hit.

Why does Tim Geithner keep repackaging the same trash-asset-removal plan that he has been trying to get approved since last fall?

In our opinion, because Tim Geithner formed his view of this crisis last fall, while sitting across the table from his constituents at the New York Fed: The CEOs of the big Wall Street firms. He views the crisis the same way Wall Street does--as a temporary liquidity problem--and his plans to fix it are designed with the best interests of Wall Street in mind.

If Geithner's plan to fix the banks would also fix the economy, this would be tolerable. But no smart economist we know of thinks that it will.

Something tells me that either President Obama, or Sectretary of the Treasury Timothy "What's that, Lassie? (Woof, woof!!) Timmy Geithner's in the well?!!" Geithner will turn towards each other in the coming weeks, summoning up the best spirit of Laurel and Hardy, and one will say to the other;

"Well, that's another fine mess you've gotten me into."

FEIST - La Meme Histoire - We're all in the dance

In A Nutshell ...

They should have a big, confetti-falling, band-playing, ribbon-cutting ceremony at 30 Rockefeller Center in the coming days.

Perhaps to distance themselves from their own folly, their front-row cheering of the Wall Street Meltdown, General Electric will be changing the name of its' flagship business channel, giving it a dose of "truth in advertising".

No, they don't need to do esoteric, like Xe.

In fact, they can keep the same call letters, CNBC.

Just now, they translate to Can Not Be Credible.

For CNBC's Mark Haines to say to someone (and elected member of Congress, to boot), criticizing the Wall Street Meltdown, the naked, obscene raping of the financial system, to the point of complete ruin, that the steps to correct it are "Witch Huntery", says, in the nutshell, how in-the-tank Can Not Be Credible is, and how screwed the "media" really is (or, how screwed we really are).

Rep. Sherman (D-CA) vs. CNBC's Mark Haines



"What do people on Main Street know about running a financial system?"

Well, Mister Mark Haines, we don't have to look back to sepia-colored history, to turn that question around on you, and ask "What do people on Wall Street know about running a financial system?"

Hilzoy, over on Obsidian Wings, in fact, illustrates that point rather well;

A couple of years ago, it would have been hyperbole to suggest that we would all be better off if the senior executives at all our major financial firms were people picked entirely at random out of the phone book. Now, it's arguably true. People picked at random would, admittedly, be likely not to have been to business school. They might not know a lot about futures or derivatives or put options. But so what? At least they might have been more likely to know that they were clueless, and a few of them might have had the common sense to ask questions like: will housing prices really go up indefinitely?

In any case, what's the worst they could have done? Bankrupted their companies with ludicrously risky gambles that fell apart once markets went south? Destroyed trillions of dollars in value? Brought the world financial system to the brink of collapse? Left taxpayers across the globe on the hook for trillions of dollars? Bankrupted entire countries?

Oh, right.

And Now, We Come To The Sanity Clause

It may, or may not, be accidental, that news of the long-awaited Geithner-created, Obama Administration plans for the failed banks, stocked to the brim with those "toxic assets", was leaked out, just as March Madness was getting underway.

Perhaps they were looking for a "Cinderella Story" run with it, however, the early reviews coming in show it getting bounced, in the first round.

Nobel Prize winner Paul Krugman was brought to "Despair" over it, citing "The zombie ideas have won";

The Obama administration is now completely wedded to the idea that there’s nothing fundamentally wrong with the financial system — that what we’re facing is the equivalent of a run on an essentially sound bank. As Tim Duy put it, there are no bad assets, only misunderstood assets. And if we get investors to understand that toxic waste is really, truly worth much more than anyone is willing to pay for it, all our problems will be solved.

[Snip]

But it’s immediately obvious, if you think about it, that these funds will have skewed incentives. In effect, Treasury will be creating — deliberately! — the functional equivalent of Texas S&Ls in the 1980s: financial operations with very little capital but lots of government-guaranteed liabilities. For the private investors, this is an open invitation to play heads I win, tails the taxpayers lose. So sure, these investors will be ready to pay high prices for toxic waste. After all, the stuff might be worth something; and if it isn’t, that’s someone else’s problem.

A few hours later, Krugman, still despaired, added;

Why am I so vehement about this? Because I’m afraid that this will be the administration’s only shot — that if the first bank plan is an abject failure, it won’t have the political capital for a second. So it’s just horrifying that Obama — and yes, the buck stops there — has decided to base his financial plan on the fantasy that a bit of financial hocus-pocus will turn the clock back to 2006.

Economist James K. Galbraith;

If I'm right and the mortgages are largely trash, then the Geithner plan is a Rube Goldberg device for shifting inevitable losses from the banks to the Treasury, preserving the big banks and their incumbent management in all their dysfunctional glory. The cost will be continued vast over-capacity in banking, and a consequent weakening of the remaining, smaller, better- managed banks who didn't participate in the garbage-loan frenzy.

Publius, on Obsedian Wings, heralds that "This banking business may well be Obama’s Vietnam ...", while Frank Rich, today, slaps Obama upside the head, respectfully, but forcefully, pointing out that his "Katrina Moment" has arrived.

Digby, perhaps, got it down, on what Obama, Summers and Geithner must need, to either breath life into the plan, or themselves, with "Clap Louder".

Well, not only "Clap Louder", but yell, scream, jump up-and-down, louder, until it is a deafening roar, is, apparently what is needed.

After the last eight-years, "trust us" isn't going to cut it, something Glenn Greenwald got into yesterday;

This anti-anger consensus among our political elites is exactly wrong. The public rage we're finally seeing is long, long overdue, and appears to be the only force with both the ability and will to impose meaningful checks on continued kleptocratic pillaging and deep-seated corruption in virtually every branch of our establishment institutions. The worst possible thing that could happen now is for this collective rage to subside and for the public to return to its long-standing state of blissful ignorance over what the establishment is actually doing.

[Snip]

Atrios has been writing a version of the same key observation virtually every day for weeks -- that almost every plan to "solve" the financial crisis involves nothing more than transfers of enormous amounts of public money into the pockets of the same unchanged system and the same people who caused the collapse in the first place:

The issue is that [Geithner] and friends never distinguished between bailing out the system and bailing out the players. There was a way to do that, and they didn't do it.

[Snip]

The AIG scandal vividly reveals how corrupt and self-interested are the people who are still exerting primary control over this process, which is why our establishment class is so eager to demand that everyone look away. For months, Americans have been told that they must sacrifice and trust the Government to engage in extraordinary actions if they want to stave off another Great Depression, only to watch as hundreds of billions of dollars fly to the very people who are the prime culprits. As Jane Hamsher put it: "The 'populist rage' that the pundits find so unseemly is actually the appropriate response."

But Wait!

Matthew Yglesias is optimistic, and Brad DeLong weighs in on the positive side;

Q: This sounds very different from the headline of the Andrews, Dash, and Bowley article in the New York Times this morning: "Toxic Asset Plan Foresees Big Subsidies for Investors."

A: You are surprised, after the past decade, to see a New York Times story with a misleading headline?

Q: No.

A: The plan I have just described to you is the plan that was described to Andrews, Dash, and Bowley. They write of "coax[ing] investors to form partnerships with the government" and "taxpayers... would pay for the bulk of the purchases..."--that's the $30 billion from the private managers and the $150 billion from the TARP that makes up the equity tranche of the program. They write of "the Federal Deposit Insurance Corporation will set up special-purpose investment partnerships and lend about 85 percent of the money..."--that's the debt slice of the program. They write that "the government will provide the overwhelming bulk of the money — possibly more than 95 percent..."--that is true, but they don't say that the government gets 80% of the equity profits and what it is owed the FDIC on the debt tranche. That what Andrews, Dash, and Bowley say sounds different is a big problem: they did not explain the plan very well. Deborah Solomon in the Wall Street Journal does, I think, much better. David Cho in tomorrow morning's Washington Post is in the middle.

Krugman still isn't on-board;

And a final point: I’m with Atrios here. If getting the prices of toxic assets “right” isn’t enough to rescue the banks, that doesn’t mean that we’re doomed; it means that we actually have to, you know, rescue the banks, Swedish style, rather than rely on fancy financial engineering to make the problem go away.

"I'm with Atrios?"

Actually, it's worse than that, it's "If Timmeh is wrong about the ponies in Big Shitpile then it's Mad Max for all of us."

But, this all gets put in motion, tomorrow morning, before the opening bell of trading, when Tim "What's that, Lassie? (Woof, woof!!) Timmy Geithner's in the well?!!" Geithner meets with reporters and lays it all out.

Then, we wait and see.

Either the economy starts its' Herculean rise, and money is flooding the streets like a summer cloudburst, or, it's Harry Lime time;

"...and don't be so gloomy. Remember what the man said: under the Borgias there was warfare, bloodshed and murder and they had Michelangelo, Leonardo da Vinci and the Renaissance. In Switzerland they have brotherly love, 500 years of democracy and peace. And what have they produced? The cuckoo clock! ..."