THE COMFORT OF DISBELIEF

by thebeerdoctor

There is something quite marvelous in modern American television. It allows the viewers to be constantly distracted. A plethora of topics is available to astound. There is a man having a baby, while another baby almost falls off a cliff. A book is returned to the public library after being overdue for fifty years. And what about the bold dress color, worn by the first lady of the President-elect, on their open house visit to what will be their residence for the next four years. Then there is The Economy. An unpleasant topic filled with stories of a Dow Industrial Average continually tanking, and the need for a bailout… no strike that, a rescue plan, that involves showing how much faith the federal government has in big businesses, and the assumed fantasy known as the free market system. This is where the American citizens are told to just surrender unto corporate Caesar what is their monetary (therefore, Divine) right to. And do not fret your precious little head over the details about how this rescue plan is to be implemented. There is no need for oversight. Instead of governance laws, there are not even rules, just simply, guidelines.

Neel Kashkari, the Treasury department Santa in charge of the bailout goody bag, opposed the FDIC proposal of using $24 billion to cut the mortgage payments for homeowners threatened with foreclosure. For these true recipients of the housing crisis, who truly feel the brunt of all of this, there is not even a stocking with a lump of coal.

People who attempt to put a civil face on this mess, will say that the money is being poorly targeted. I do not believe that for a second. The so-called focus of the bailout assumes there is public service altruism involved, and that it is good for the country. No, this is a robbery. Robbery on a grand scale, but robbery nonetheless. A working synopsis would be: the game, known as the free market credit system, has been busted by the ownership class, and now there is a frantic dash to destroy all evidence of their participation, by looting everything in sight, and, in the case of treasury tax law section 382, everything that still remains hidden.
“Poverty is the most urgent crisis facing the world,” says European Development Commissioner, Louis Michel. This is certainly not Job 1 for the rescue plan, where multi-billions have already been put into our financial system, supposedly to unleash lending. But without enforced stipulations on how this money was to be used, much of this went to paying executive bonuses and buying up smaller, and often profitable, banks.

The Congressional Democrats, along with some of their appalled Republican colleagues, found themselves aghast with a toothless give-away piece of legislation, where the only remedy was to compose angry letters to the Chief Executive Officers of the corporations who stand to benefit greatly from this U.S. government largesse. What were once investment banks are now holding banks. What was once a credit card company is now classified as a bank also.

Quite remarkable is the rapidity at which this new mindset of the government existing solely for the corporate elite, has been adopted by the population in general. The television liaisons of the ownership class, such as Oprah and Dr. Phil, comfort their audiences with reassurance, saying we are all in this together. Local news carries features on how to survive on a tightened (and getting tighter) budget. Learn how to turn down the thermostat on the heater, and where to download cost saving coupons from the internet!

The Republicans, in their recently failed election campaign, loved to cite Fannie Mae and Freddie Mac as the chief culprits in the housing mortgage crisis. In reality, those two quasi, now owned by, government backed entities account for only 40% of the mortgage system. To get an idea how the other 60% participated in this robbery, former Wall Street analyst Michael Lewis’ article titled The End, speaks volumes about how mortgage backed securities became an instrument for increasing wealth, by betting, therefore shorting, that those instruments would inevitably fail. As Lewis notes: “The juiciest shorts–the bonds ultimately backed by the mortgages most likely to default.”

“The loans would have been made by one of the more dubious mortgage lenders, Long Beach Financial, wholly owned by Washington Mutual, was a great example.”
It turns out: “Long Beach Financial was moving money out the door as fast as it could, few questions asked, in loans built to self destruct. It specialized in asking homeowners with bad credit and no proof of income to put no money down and defer interest payments for as long as possible. In Bakersfield, California, a Mexican strawberry picker with an income of $14,000 and no English was lent every penny he needed to buy a house for $720,000.”

What seems to be the most shocking for Michael Lewis was the extent of the crime. Writing about analyst Steve Eisman he states: “Eisman knew subprime lenders could be scumbags. What he underestimated was the total unabashed complicity of the upper class of American capitalism.”

One time junior accountant, Vince Daniel, saw this up close, while working for the once-upon-a-time Arthur Andersen, during an audit of Solomon Brothers: “I saw how the sausage was made in the economy, and it was really freaky.”

This could easily be applied to Meredith Whitney’s observations, around Halloween 2007, when the Oppenheimer Fund analyst announced that Citigroup would have to cut its dividends in order to remain operating. People were shocked, especially when it turned out to be true. Now, a little over a year later, Citigroup announced it would have to slash ten thousand jobs, for a start, with its stock price falling from $50 to under 10. The robbery that dare not speak its name, has been involved in nearly all of this.

This makes the denials of the participants even more appalling. The people in charge at these firms claim, not unlike much of the political leadership, that they were simply along for the ride and had no idea that the vehicle they were traveling in, was actually stolen.

But then there is always the matter of the corporate image to be considered. Lloyd Blankfein, CEO of Goldman Sachs, it has been announced, will not be receiving any bonus to his $600,000 base salary, partially due to the firm’s participation in the $700 billion bailout. This seems only proper. Lucas van Praag, company spokesman said, “They believe its the right thing to do. We can’t ignore the fact that we are part of an industry that’s directly associated with the ongoing economic distress.”
What a remarkable admission. Never mind that Mr. Blankfein took in just under $70 million last year. The six hundred grand? The bare skin and bones take home pay? It will be tough, but he will manage somehow. It’s the right thing to do, like having a bowl of old fashioned oatmeal in the morning. And yes, they can’t ignore the fact that they are part of an industry… don’t you just love that word, industry? The big glass and steel building that manufactures these mysterious financial instruments, that are not only directly associated with the ongoing economic distress, but bloody near the cause of it all.

“CEO Lloyd Blankfein,” as Bethany McLean wrote in Fortune, “who took over last spring, gets credit for helping steer Goldman away from the most damaging investments. And Goldman which says it has limited exposure to the subprime mess, stands confirmed - for now, anyway - as the smartest bank on the Street.”
Of course these words of confidence were written before Goldman Sachs changed their operation mode (or modus operandi) from an investment bank to a holding bank. Which also makes me wonder if they were so smart in steering clear of the subprime mess, why are they receiving bailout money?

Unreality has its psychic advantages. If only President Bush could look into the Economy’s eyes and see its soul, and know it has a good heart. If only he could just call in an air strike and stop all this bleeding from these collateralized debt obligations. If only…

Late at night, when the other usual voices have gone to bed, you can hear the BBC radio world service, where commentators across the globe, speak of the present situation. There is not much mincing of words. They seem to know that we are in an economic global depression, whether anyone cares to admit or not. The air has been let out of the balloon, and people are genuinely worried.

As this unique winter of discontent approaches, I am strangely reminded of the song Have Yourself A Merry Little Christmas, sung by Judy Garland, in the movie Meet Me In St. Louis. It seems that Ms. Garland and her future husband, the director Vincente Minnelli, found the original lyrics too depressing, and decided to change them. So did Chairman of the Board Frank Sinatra, who wanted to “jolly it up a bit” when he recorded the song in the 1950’s. But for myself, the original draft seems much more pertinent to our present situation.

Have yourself a merry little Christmas
It may be your last
Next year we may all be living in the past

No good times like the olden days
Happy golden days of yore
Faithful friends who were dear to us
will be near to us no more

But at least we will all be together
If the Lord allows
From now on we’ll have to muddle through somehow
So have yourself a merry little Christmas now

And that’s what Wall Street is all about Charlie Brown.