Financial Bailout Emperor Paulson Is Naked

If you were preoccupied with trying to sniff out just which charity Sarah Palin donated her campaign wardrobe to (but watch eBay just in case…!), you may have missed the fact that Treasury Secretary Paulson has now flip-flopped on buying those “toxic mortgages” with the $750 billion blank bailout check he suckered Congress into giving him.  This reversal vindicates the opposition that I, and millions of others, had to the bailout.

More importantly, it shows just how naked Emperor Paulson is.  He insisted to Congress that purchasing these toxic mortgages was the core of the government’s effort to staving off financial collapse.  He basically predicted another Depression if there was no bailout on these mortgages.  As with the “slam dunk case” for WMDs in Iraq, a frightened Congress took him at his word and gave him a $750 billion check.

Now, just a few weeks later, he reverses course and advises that no toxic mortgages need be purchased.  So either (a) he has no clue how to address the situation or (b)…(enter your conspiracy theory here).  Does it matter which one is correct?

Bottom line: he sold the Congress and the country a pig in a  poke, which I suspected all along.  Just what have we gained from the bailout so far?  The stock market is still acting like a roller coaster.  Some banks that received bailout funds used them to buy up other banks.  Congress is hollering that the banks are still not extending credit, which was a goal of the bailout.

And now GM is clamoring for a piece of the bailout even though they were never mentioned as part of the equation.  At least the lame duck Republicans seem to have grown just a teeny bit of spine and are opposing a bailout for GM.  But they would not even be in that position if they had stopped the bailout when they had the chance.

Just how big a donkey (and I use it in the poker sense, not the political symbol sense) does one have to be not to understand that when someone is urging that you must act now because time is running out that the probability is very high you are being scammed? The donkeys in Congress were scammed…again.

I was surprised that a compatriot in blogging, PTFan1, expressed support for the bailout when it was proposed even though his posts suggest he is a conservative. It appeared to me that his sudden interest in government intervention stemmed from the fact the situation was very “personal” to him.

Well, it has been very “personal” to me as well.  Let’s just say it more than a lot of folks earn in a year.  But It’s all just a “paper” loss since I’m not ready to retire so I’m not in a panic.  It’s just a question of when the economy recovers, not if.  I see this as an opportunity to buy low and ride the recovery up to a nice profit since I’m still investing. A recovery which will happen without, or in spite of, government intervention.

Which is why I opposed the bailout.  And why I still oppose it.  I’m not a believer in an easy fix.  And the government is better at getting us into a fix than out of one.  There’s a saying that once the dogs of war are loose, you never know what will happen, which is why nations should be very careful about getting into any war.  Similarly, once you give government power, you really can’t constrain it.

The $750 billion dog of government bailout power is now loose. I hope those of you who supported it are happy.  I’m not happy….

And if you’re not happy, I’ve got a special deal for you: anarchism is on sale! But for this week only! You must buy now! Time is running out! Hurry!

(Next Sunday: since I’ll be in Vegas that week, I’ll be maintaining a Vegas trip journal here during that week in lieu of a Sunday post.  Look for the special “Vegas Journal” page at the top of the screen. My first entry may not be until Monday, depending on whether the La Quinta we’re staying at Saturday night has Internet access.  The Orleans only has Internet access on weekdays.)

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14 responses to “Financial Bailout Emperor Paulson Is Naked

  1. Well, I can’t say you didn’t tell me so 🙂 I can still understand the rationale for the bailout, and the people at the NYT that I respect, like Thomas Friedman and Paul Krugman still say it’s necessary. The problem is in the implementation. Namely, Paulson doesn’t seem to have a frigging clue what he’s doing! And neither does anyone else. This week CBS News tried to find out what the banks are doing with the millions or billions the government has already given them (since as you pointed out, they aren’t using the money to lend to actual people), and the banks said: We aren’t going to tell you, and we don’t have to. And that turns out to be true. There is no requirement that they disclose how they’re using the money. One bank (I forget which one) is planning to spend $6 million in bonuses for its executives this year, but they said they aren’t using the money the government gave them…they’re using their own money that they just happened to have lying around, I guess. What the hell???!!!
    Now there is some plan in the works to provide help to individual homeowners to prevent foreclosures, and even Friedman today said many people will be “bailed out” who don’t “deserve” it. People like me who have been scraping by, paying the mortgage and not defaulting, while the cost of food, gas, utilities, etc. takes an ever bigger piece of my pie, will not be helped. So now I am mad. It doesn’t get too much more personal than survival. I could go on and on!

  2. When I heard Paulson say what he did I nearly threw something through the television. These lying bastards all should be thrown in jail or shipped to Afghanistan and be put on point!

  3. Now Fakename, I’m not one to say “I told you so”; that satisfaction lasts maybe a minute.

    I don’t have a problem with the “equity” portion of the bailout, where the taxpayers are taking an ownership position in some institutions which can be sold for profit after the recovery. But I suspect a lot of those billions will go in various directions no one imagined.

    I just hope that the next time someone comes to Congress with a “wolf at the door” story, they take a long hard look and ask hard questions. That didn’t happen with the bailout and we see how it’s now springing Titanic-size leaks like GM.

    As for the foreclosure assistance, I think I heard something about that. I know almost $4 billion is out there to buy already foreclosed homes at average 15% discount from current value and then resell them for primary residence to folks with no more than 120% of median income for the area, probably with down payment assistance from another program.

  4. Nick,

    > I nearly threw something through the television

    Maybe there’ll be a TV replacement program!

    > These lying bastards all should be thrown in jail or shipped to Afghanistan and be put on point!<<

    That’s too humane! Ship ’em off to Gitmo and give them some waterboarding and other harsh interrogation methods to find out what they knew and when!

  5. Folks,

    If you have strong stomach and want all the bloody details on how the bailout is going over the cliff, check out that third link above, which begins with: Stop the Bailout Fiascos.

  6. On NPR, I heard last week that the homeowner “Bailout” plan may consist of helping people who have already defaulted, for say, 90 days, but who are not yet in foreclosure. This in order to prevent more people from deliberately defaulting in order to get help. As Fakesister and I discussed yesterday, some of those people should never have been in homes anyway nor should they have received loans, and it’s a pity you can’t make a massive program like this more specific to weed out them and their lenders. And last night on 60 Minutes, the whole program was an interview with Barack and Michelle Obama, and Steve Croft, who did the interview said point blank: The bailout has changed nothing. What will you do? (So far, no specific answers from Obama.)

  7. “I was surprised that a compatriot in blogging, PTFan1, expressed support for the bailout when it was proposed even though his posts suggest he is a conservative. It appeared to me that his sudden interest in government intervention stemmed from the fact the situation was very “personal” to him.

    uh ………..yeah the timing could not have been worse for me personally.

    I was also sickened by Paulsons and Greenspans lack of insight into this mess. The really scary part is that we still don’t know what we don’t know and so much is still shrouded in secrecy. Many books will be written by economists over the next 50 years on what happened. We may never know but one thing seems certain the people in charge walked away with lots a money and many of us find our lives unsuitably altered.

    It’s not just a paper loss for me.

    btw you never answered my about who will protect us from technology other than Bill Gates

  8. Nice article.. Henry Paulson is running scared right now and this is the reason he has done a complete turn about in his decisions……..check this web link out and you will know the reason why.

    http://www.marketwatch.com/news/story/bush-nominates-neil-barofsky-oversee/story.aspx?guid=%7B4C831211-BBF0-492A-82F3-2A24E07A5CC5%7D&dist=morenews

  9. Socialism here we come. Now did you rally think that the government was telling you the truth when it said it needed to bail out the home industry. Now lets look at this. Can anyone tell me even one time that the government sold we the people a “must” have program or told us that if we did not do something all hell would rain down with fire and stones. Lets makes this easy. name one thing in the past NOT 5 year lets even go back 10 no wait lets try 20 years. Every time they open their mouths they all speak with forked tong. It is FREE money if we the people ran our business like to government we would be broke in a few weeks. But yea we can not keep taxing as for the gov. they just print more so the value drops and guess what we are were we are today. Lets forget socialism I think we need a Dictatorship. We are headed towards a 3rd world country anyway so lets just make it official. My thoughts . . . As they may be.

  10. PTFan1….

    > The really scary part is that we still don’t know what we don’t know and so much is still shrouded in secrecy.

    I don’t want to know! This may be a case where ignorance is indeed bliss…. (But The Shadow knows…. muhahaha!)

    > Many books will be written by economists over the next 50 years on what happened.

    The great economist bailout!

    > who will protect us from technology

    Protection? Technology is our friend! 😉

  11. Lizzy,

    Interesting that a lawyer is overseeing the bailout for what’s left of Bush’s term. Why not a financial type, I wonder?

    BTW, what is the location of that photo you’;re using on your blog. Very scenic!

  12. Libertine,

    > I think we need a Dictatorship.

    I am prepared to serve! When do I start? 😉

  13. Protection? Technology is our friend!

    Untill it is smarter than us and gains the ability to protect its self against the inferiority of man.

  14. PTFan1…

    You will be assimilated! Resistance is futile! 😉

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