Filed under: Uncategorized | Tags: economics, finance, goldman sachs, honor, immigration, lettuce, mccain, politics, wall street
This is disgusting. In fact, as far as I’m concerned if the man who did this had any honor, he would resign:
US Treasury Secretary Henry Paulson was humbled as tempers rose and threatened to scupper a deal to prevent world economic meltdown.
In a dramatic gesture to keep hopes alive, he got down on bended knee to plead with Democratic leader Nancy Pelosi to stay and keep talking.
From the moment I first heard talk of this “bailout”, I had my suspicions. This little episode does nothing to dispel them.
Henry Paulson got to his position as Treasury Secretary by way of Goldman Sachs. Now he “gets on his knees” to “beg” members of Congress – personally beg – them to throw taxpayer money at….well, at Goldman Sachs and other Wall Street firms. Throw money at them in exchange for their junk.
On the face of it this is disreputable, dishonorable, nauseating, sickening, corrupt, and shameless.
Paulson is clearly too close to the issue. Wall Street folks are cloistered in their little world, which they think is the whole world. Indeed, they mostly tend favor a bailout. Why wouldn’t they? It will probably help them. That’s understandable enough. Steelworkers favor steel tariffs and Wall Street workers favor bank bailouts.
My problem is that the people – like Paulson – who are salivating over a bailout are so self-deluded they actually tell themselves their position comes from a genuine concern over the country. To sheltered, privileged Wall Street, Wall Street is the country.
I have seen chicken little article after article over why a bailout is so necessary from Wall Street insiders and followers (and heard the same thing in private conversations), and it always boils down to things like, The commercial paper market will seize up!
There are two fascinating observations to make here.
One is just that when people spend their daily lives highly focused on one aspect of the economy – be it commercial paper, or last-cash-flow senior tranches of subprime HELOC deals that take losses pro rata, or whatever – they often seem to start deluding themselves that whatever they’re focusing on is the entire world. And this is not a knock against Wall Street because it’s not only true of Wall Street, not by any means. Medical doctors think that medical-research funding is the most important thing in the world. Physicists think that funding for particle accelerators is the most important thing in the world. And so on. I’ve seen this pattern recur time and time again, and it always makes me uncomfortable. Get out of your little circle and look around, it makes me want to say.
But the second point is something I hadn’t previously suspected about Wall Street types: they don’t believe a free market works. They really don’t.
They’re all scared that commercial paper, or whatever, will seize up and stop. And then companies who need to roll over debt won’t be able to? at all? ever?, and the economy will…come to a grinding halt? Forever? In other words, the story they’re telling themselves is: supply will not surface to meet demand. What kind of people believe this?
People who don’t believe a free market works.
Don’t get me wrong, I’m not disputing that the credit bubble can and has and will lead to disruptions in the market. But the idea that companies will need to roll over debt and won’t be able to because somehow no one on the earth will be willing to lend to anyone else (at any price??) strikes me as ridiculous, dystopian, and economically illiterate.
In fact, it is John McCain-style economic reasoning.
John McCain, you may recall, rather famously (and idiotically) made the argument, in the context of the immigration issue, that if Mexicans weren’t imported to pick lettuce, lettuce would not get picked.
Do you agree with the economic philosophy of John McCain? Because Wall Street does. McCain was claiming that the whole lettuce industry would undergo a meltdown – lettuce won’t get picked!! – if that particular price for labor weren’t available. Paulson, and Wall Street in general, believes something precisely analgous: that the entire economy will undergo a meltdown – commercial paper won’t sell!! – if they don’t get the particular price they desire for asset-backed securities.
Two of a kind, in my book. Equally economically illiterate. And equally embarrassing. But between McCain and Paulson, one of those guys has no economic training or background, so it’s understandable. The other guy, though, should know better.
And if we die before the battle’s through, tell your mom, tell your dad, we were super rad.
Cheerful little song, eh?
Filed under: Uncategorized | Tags: banality, lameness, politics, wimpiness
Didn’t watch the debate (don’t have the stomach for such things), but from what I understand the primary topic of conversation was which guy had more jewelry.
Yes folks, it’s Lincoln-Douglas all over again.
Filed under: Uncategorized | Tags: interesting, middle class, romance, society
Most important among the factors that create new generations of middle class people is the nature of romantic choice.
Do I agree with this? I need to think about it.
Filed under: Uncategorized | Tags: bailout, economics, finance, idiocy, magic, paulson, reverse auction, subprime
I’ve made another comment on the bailout somewhere random (note: may not be approved; ‘awaiting moderation’). This time it’s a paean to the magical ability of reverse auctions to make prices go up (?) that has rankled me.
I’m not sure how resolving “ambiguity” as such is supposed to help banks’ balance sheets if the resolution of that ambiguity ends up being: “Yes, indeed, these bonds are worth pennies on the dollar. Now you know”.
The winning bidder in a reverse auction (correct me if I’m wrong) is the one who offers the lowest price. In practice, such a bid will likely come from whoever is most desperate to shed its balance sheet of the bond in question. As you say, that bond now becomes market data and establishes a price for that bond and all similar bonds (which, whatever they were before, will now have to be valued as Level 2 assets). This is so even if banks were carrying those bonds at a higher mark – and regardless on whether they bid in the auction.
So I’m not sure I understand how such an auction achieves any other result besides a flood of writedowns. Is that the goal? If so, how does that help banks? If not, why won’t an auction cause this result? What kind of reverse auction leads to “rising prices” exactly? A rigged one?
Perhaps the belief is that the winning bid in these auctions will somehow tend to be above the marks at which banks are currently carrying their toxic waste, and this is why “resolving ambiguity” is a good thing and will “lift prices”?
I question the basis for such a belief. Where does it come from? Certainly not from people who have actually looked at the collateral behind these deals, and the cashflows of the bonds we’re talking about, in detail.
See if you can spot the typo.
Filed under: Uncategorized | Tags: biden, brazil, de villepin, foreign policy, french, lefties, palin, politics
The issue of how much “foreign policy experience” Governor Palin does/doesn’t have still seems to come up an awful lot. (How much “foreign policy experience” did Bill Clinton, Governor of f**king Arkansas, have prior to running for President in 1992, I wonder? But I digress….)
What I wanted to say here is just that “foreign policy experience” is one of those phrases that maybe sounded meaningful the first time I heard it, but with repetition I become less and less sure just what the hell it’s supposed to mean.
So please, someone, tell me, just what in the heck is “foreign policy experience”?
All I can really tell is that supposedly Joe Biden has it (whatever it is) while Sarah Palin doesn’t. But what is it?
I’ve given it some thought and from what I can tell, it probably boils down to going to International Conferences in exotic locales like Brazil, and stuff like that. You sign up for an International Conference (taxpayers pay the fee), you’re flown there first class, get picked up from the airport, you stay in a nice hotel, during the day you’re given a bunch of glossy brochures and papers, you get a bit of swag (tote bag, etc.), every night there are fancy dinners in restaurants and such, and there’s a few Important Keynote Speakers such as Henry Kissinger or, like, Dominique de Villepin on the schedule. You probably skip a few of the talks but go to the most Important one (de Villepin).
In the process, you learn all the important International Relations buzzwords, the latest research into solving poverty, you clap for whatever great work this or that UN organization has been doing. During the cocktail-parties or afternoon wine-and-cheese breaks, you shake some hands of people with French accents. Do all this and voila, you now have “foreign policy experience”.
Is there any more to it? Because if there is, I can’t imagine what it would even be.
UPDATE: Bottom line, I’ll admit it’s a bad thing that Sarah Palin “has no foreign policy experience” just as soon as someone either (1) explains to me just where the f**k a freaking STATE GOVERNOR is supposed to get “foreign policy experience” (or even, why they should do so, even if they could), or (2) admits that Governor Bill Clinton, 1992, was supremely unqualified to run for President of the United States.
Go ahead, (1) or (2). You choose. I’ll wait.