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NY Times: Obama Treasury Operating like Bush Treasury-No Transparency-Where is $$$ going???

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terisan Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Mar-02-09 11:32 PM
Original message
NY Times: Obama Treasury Operating like Bush Treasury-No Transparency-Where is $$$ going???
Larry Summers/Rubin/Geithner --Why has Obama Outsourced our Economic Present & Future to these Characters who were Complicit in Creating the Mess ?

We need for these guy to go.


Where is the Money going?-Lack of Transparency Finally Worries NYT Editorialists

The Never-Ending Bailout

Published: March 2, 2009
Americans awoke to the news on Monday that federal officials had spent yet another feverish weekend concocting yet another bailout. This time, the Obama Treasury Department sounding a lot like the Bush Treasury Department promised another $30 billion to the American International Group, the giant insurer.

It was the fourth time since September that taxpayers have been called upon to rescue A.I.G. from collapse. It brings the bailout commitment for that one company to some $160 billion.

In a joint statement with the Federal Reserve on Monday, the Treasury justified the move, saying that the potential cost to the economy and the taxpayer of government inaction would be extremely high.

Thats a textbook rationale for any bailout. What no one is saying the Bush folks wouldnt, and the Obama team seems to have taken the same vow of Wall Street omert is which firms would be most threatened by an A.I.G. collapse. The Treasury and the Federal Reserve noted in their statement that A.I.G. is a significant counterparty to a number of major financial institutions.

That means that by enabling A.I.G. to avert bankruptcy proceedings, the taxpayer is also bailing out whom exactly?

Not knowing is not acceptable. At this stage of a deepening crisis, no one is arguing that the government should let A.I.G. collapse into a disorderly bankruptcy. It is too interconnected. During the housing bubble, it used unregulated derivatives to insure mortgage securities that turned out to be toxic without putting aside reserves in case it had to pay up. If it now went under, there could be a chain of catastrophic defaults among banks that hold the securities and related investments.

The A.I.G. bailouts fail the basic test of transparency: Who ends up with the money? Major financial institutions are not innocent victims of A.I.G.s demise. They are sophisticated investors, and they should have known the risks being taken and who profited mightily from the relationship before it all came crashing down.

Whomever the recipients are, they should be investigated for their roles in the crash and, to the extent possible, be made to pay for the bailouts.

The serial A.I.G. bailouts are especially problematic for their connection to the Wall Street bank Goldman Sachs. At the time of the first A.I.G. rescue last fall, it was reported by Gretchen Morgenson in The Times that Goldman was A.I.G.s largest trading partner, with some $20 billion of business tied into the insurer.


Rest of Editorial : <http://www.nytimes.com/2009/03/03/opinion/03tue1.html >
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Richard Steele Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Mar-02-09 11:38 PM
Response to Original message
1. K&R
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slipslidingaway Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Mar-02-09 11:44 PM
Response to Original message
2. Thanks K&R n/t
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Mojorabbit Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Mar-02-09 11:49 PM
Response to Original message
3. I read somewhere that european
banks have a lot of exposure to AIG and that if it goes down it could take down their banking system which in turn would probably take ours down too in the panic. It is the only thing that makes any sense as to why they are doing this.
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Pirate Smile Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Mar-02-09 11:54 PM
Response to Reply #3
4. After I heard exactly what AIG does and how its failure could cripple our entire system, it is a
no-brainer that we have to keep bailing them out. It would make the current crisis look minor in comparison. This isn't something that we can just let fail. We definitely have to change it and make sure one company never has this type of influence over everything in the economy again - but we can't let it fail.
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terisan Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-03-09 12:09 AM
Response to Reply #4
6. The Times is saying better to temporarily nationalize and have complete access to its
books and how bailout money is being spent; that the black hole bailouts we are doing is just freaking the market.

Would you be in favor of immediqtely nationalizing ?
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Pirate Smile Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-03-09 12:36 AM
Response to Reply #6
14. Sure and I certainly am not supporting the secrecy.
Edited on Tue Mar-03-09 01:08 AM by Pirate Smile
The market seems like a bunch of hysterical toddlers throwing a temper tantrum. Are there any adults there? It is easy to see the culture that led to such selfish, short-sighted, just disgusting decisions that led to this disaster - and then blame it on the guy who has been in office for 30+ days.

I only meant to point out that the "let it fail" contingent may not fully understand the impact it would have and why that can't happen. I don't consider nationalizing it as the same as just letting it fail.

Sorry if my short comment left a lot of room for interpretation. :hi:
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terisan Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-03-09 07:16 AM
Response to Reply #14
26. Your comment seemed thoughtful to me. I just wanted to hear more of your ideas. Thanks. nt
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JackRiddler Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-03-09 12:10 AM
Response to Reply #4
7. So you think it's okay to cover the bets speculators made on third-party failures?
Even if these are nominally valued at amounts greater than the world GDP? Criminality should be rewarded? At the cost of future generations paying for it for the rest of the century out of their taxes (instead of having that money for spending?).

This money could be creating a new national and public banking sector.

Set that up, and let the scam artists fail. You let them get away with it, they will do it again.
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leftstreet Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-03-09 12:13 AM
Response to Reply #7
8. "You let them get away with it, they will do it again"
Exactly!

NO ONE is talking about preventing this shit from happening again.
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Pirate Smile Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-03-09 12:21 AM
Response to Reply #8
11. There is going to be a HUGE re-regulating of the entire industry. It is coming. It just isn't the
focus at the moment because we are still in the crisis.

They haven't even got the Bankruptcy cram-down legislation through the House yet which is the stick to the rest of Obama's carrots in the Housing plan.

You really think Congress and the President aren't going to try to regulate the financial industry so this crap doesn't ever happen again? I think that is a given.

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leftstreet Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-03-09 12:34 AM
Response to Reply #11
13. Barn door. Horse. Uh....
What's the point after shoveling BILLIONS down the banking black hole, all the while not requiring any transparency?

It's a giant joke.
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eridani Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-03-09 12:17 AM
Response to Reply #4
9. And just why should this include complete absence of transparency? n/t
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girl gone mad Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-03-09 12:19 AM
Response to Reply #4
10. Would you buy an insurance policy from a company you knew didn't have..
the capital to pay out?

That's what AIG's counterparties did. And now we're bailing these gamblers out at a cost that is increasingly threatening to undermine our national economic security.
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terisan Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-03-09 12:05 AM
Response to Reply #3
5. I think that might be true; if so there is no good reason for them to not say so-I suspect
big investors and Wall street bankers know what is going on. i think we need to have the same information the insiders have.

The other problem is that the secrecy can cover money transfers that may not be in our best interests at all and may not even be necessary. The Times specifically mentioned Goldman Sachs, for example, and their close relationship with AIG.

This all reminds me too much of the missing billions send to Iraq in the startup of the Iraq war--and never accounted for.

The Times is now calling these bailouts "black hole" bailouts --seems like an apt term.


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Median Democrat Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-03-09 12:32 AM
Response to Original message
12. Maybe The Ugly Truth Is That The Entire Financial Industry Is A Ponzi Scheme, And We're Hosed?
You want transparency? Well, think of applying transparency to Madoff? The entire ponzi scheme falls apart. The problem is how do you back out of this will causing the entire economy to collapse? I understand the moral outrage of the article, but once you pull that string, perhaps the entire sweater instantly unravels.

Let me put it this way. If there was an elegant solution, it would have been implemented by now. There is no easy or clear solution. Worse, perhaps there is not even a hard solution. We assume that there is some solution out there. Maybe the truth is that the financial industy is largely based on an inflated lie, and if you were to recognize the loss in value in the bank's collateral, we would be underwater by trillions of dollars.

There is a reason why two separate administrations from opposite sides of the political spectrum are dragging their feet. And, while we say we honesty, I don't think any of us wants to here Obama say, "Honestly, we are really screwed up, and get ready for Great Depression II," because we simply cannot afford to pay our liabilities.

Let me put it this way. Lets say there was a full scale nuclear war. Is there some magical solution that will deal with all the Fallout? No.

To keep things in perspective, compare Obama's first 100 days to that of any other President. Obama has accomplished far more than nearly any other President. Yet, we expect him to have a solution within two months? Amazing and unrealistic. The current crisis is due to clusterfuck of unimaginable proportions. Perhaps the answer is that there is no quick and easy solution. Yup, our 24/7 news cycle would love that.

Why don't we just elect Rush Limbaugh President. He always has the answers. The answers are wrong, but at least they satisfy our need for instant gratification.
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Pirate Smile Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-03-09 12:44 AM
Response to Reply #12
15. Great response.
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aquart Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-03-09 03:22 AM
Response to Reply #12
20. Yes, but.
We haven't a shred of proof that AIG did anything but party with our money, so it is utterly natural that we would be reluctant to give those proven assholes more.

Because we haven't heard a word that would convince us that they won't need billions next week or the week after.

If they're too big to fail, MAKE THEM SMALLER.
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JackRiddler Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-03-09 09:53 AM
Response to Reply #12
30. so to use your metaphor you're saying...
"Lets say there was a full scale nuclear war. Is there some magical solution that will deal with all the Fallout? No."

Which is why in that case, by your logic, the government should strive to keep it secret that there was a nuclear war?

At any rate, lying about the real state of the economy only makes things worse. (And is wrong. Period.) Therefore, of course they should stop pumping more taxpayer money down the bottomless hole to meet AIG's gambling losses. Own up to the full scale of the financial catastrophe, which cannot be disguised for long, and recognize that insolvency is not nuclear fallout. There are solutions, once the problem is acknowledged. Corporations have gone into receivership, debts have been written down, national banks have been launched before!
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Median Democrat Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-03-09 11:16 AM
Response to Reply #30
31. Ponzi Schemes Collapse When Confidence Falters
In answer to your question. You will probably respond, "well, let them collapse then." The problem is that such a collapse could make Madoff look like pocket change.

What happens when we all recognize that with all the layers of leverage artificially inflating the value of securities that are backed by real assets that are a fraction of the value of the securities?

*pop* goes the economy.
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JackRiddler Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-03-09 11:36 AM
Response to Reply #31
32. You mean, what happens when the inevitable happens?
Well, it happens. Inevitably.

How do you propose that lying about it makes anything better?
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FrenchieCat Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-03-09 01:23 AM
Response to Original message
16. I'll leave you with this,
because this post may be all that you have by the time this is over.....

"But we should be very clear: Obama has decided to cast his lot with those of us who have been fighting for big, transformative change. If he succeeds, we succeed, and if he fails, we fail - and we fail for at least another generation, because no Democrat will take big risks again for a very long time if Obama loses this gamble."
http://www.huffingtonpost.com/mike-lux/obama-and-the-pr...

Continue to blame Barack Obama and those he has selected
after 40 days on the job,
instead of blaming the real fuck up.
If there was an easy answer to this ponzi scheme
that's about to unravel, it would have been done. Doh!

So Go ahead and continue to stir the shit, and demanding heads,
and buying into the New York Times and its wisdom.
Just don't look at me when your life and mine
are even more fucked up then you could have
ever imagined.

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BostonMa Donating Member (183 posts) Send PM | Profile | Ignore Tue Mar-03-09 03:46 AM
Response to Reply #16
21. drink that koolaid
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FrenchieCat Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-03-09 04:01 AM
Response to Reply #21
22. It's better than eating that shit that NYT has been feeding us for 8 years!
That's for damn sure!
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burythehatchet Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-03-09 05:50 AM
Response to Reply #22
25. exactly. Because if it is printed in a journal we don't always like
then it is by, definition, bullshit
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burythehatchet Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-03-09 05:48 AM
Response to Reply #16
24. So its like God? Have faith and He shall deliver. Do not question His ways
because He will smite you?

Your non-stop trip to LaLa land continues.
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depakid Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-03-09 01:38 AM
Response to Original message
17. "more of the same black-hole bailouts are failing to restore stability or confidence."
Edited on Tue Mar-03-09 01:39 AM by depakid
The American public is losing both patience and faith with the economic team- who they increasingly see as protecting their own, rather than acting for the overall good of the nation.
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FrenchieCat Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-03-09 01:50 AM
Response to Reply #17
18. NYT Editorial is the master, apparently......
cause I translate that quote like this.....40 days in, the American public, because we are telling it to and it is obeying, is losing patience and faith with the economic team--because 8 years of giant nearly unbelievable fuck ups can be cleaned up as soon as we say so.

Talk about dumbass propaganda fed to the What-have-you-done-for-me-in-40-days crowd! :eyes:

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Romulox Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-03-09 07:29 AM
Response to Reply #17
28. ...
:hi:
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mopinko Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-03-09 02:08 AM
Response to Original message
19. the new york times is shocked, simply shocked
get used to it. the media is not our friend. they are gonna ride any skin and bones, half dead nag of an issue they can find.
i want my 100 day honeymoon, k?
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Romulox Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-03-09 07:29 AM
Response to Reply #19
27. Err, the TRILLIONS of taxpayer $$$ being shoveled to private equity isn't a "half dead" issue.
It is very much a live and ongoing issue.
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mopinko Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Mar-03-09 09:29 AM
Response to Reply #27
29. and they not only sat on their hands for 8 years, they led the cheers
and there are perhaps a million people dead.
i want my 100 day honeymoon. the bushies got an 8 year one.
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wuvuj Donating Member (874 posts) Send PM | Profile | Ignore Tue Mar-03-09 04:55 AM
Response to Original message
23. Somebody has to take on the crap paper?
If they told you all the details...then markets would react in unpleasant ways in these specific instances? Looks like the idea is to clean it up here and there...where most needed...so as not to totally destabilize the financial system. Looking pretty destabilized as it is.

The only entities with big enough pockets to take on the losses are governments and you...the taxpayer.



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