The Republican’s economic policies slam up against reality

Having been brutally raped by a Wall Street gang, aided and abetted by Bush and his congressional cronies, Americans are now being required to buy the rape kit, as well as bear and raise the mutant child.

Watching 60 Minutes last night made my blood boil. It’s opening segment was titled “A Look At Wall Street’s Shadow Market,” which describes an unregulated casino operation whose scale is mind boggling— $60 trillion, 6x the size of the entire US debt.

You can imagine what kind of commissions were generated by the investment banks that have now effectively transferred their “toxic assets” to thee and me.  Said the report:

“These complex financial instruments were actually designed by mathematicians and physicists, who used algorithms and computer models to reconstitute the unreliable loans in a way that was supposed to eliminate most of the risk.”

Not to mention to defy analysis and oversight, whether by government regulators or the stockholder risk boards of the companies involved. According to testimony before Henry Waxman’s House Oversight and Government Reform Committee today, the risk boards overseeing companies like bankrupt Lehman Brothers are often staffed by clueless retirees that meet only twice a year.

One economist testified that Lehman used leverage of 37:1 to speculate in the market— i.e., they were borrowing $37 for every dollar of their (net capital) asset value. Even at a ratio of 30:1, a batch of collateralized mortgage securities can be totally wiped out after a drop in home prices of just 3.3%.

Previous to a rule change by the SEC in 2004, investment banks were limited to a leverage ratio of 12:1 (commercial banks are limited to 4:1.) After that, leverage was expanded to 40:1, AND the five biggest investment banks were exempted from previous rating agency requirements, as explained in this 9/28/08 article in The New York Sun:

[Read more →]

As the world turns stranger and stranger, we find ourselves quoting George Will:

In a letter to Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke, the RSC decried the improvised torrent of bailouts as a “dangerous and unmistakable precedent for the federal government both to be looked to and indeed relied upon to save private sector companies from the consequences of their poor economic decisions.” This letter, listing just $650 billion of the perhaps more than $1 trillion in new federal exposures to risk, was sent while McCain’s campaign, characteristically substituting vehemence for coherence, was airing an ad warning that Obama favors “massive government, billions in spending increases.”

The political left always aims to expand the permeation of economic life by politics. Today, the efficient means to that end is government control of capital. So, is not McCain’s party now conducting the most leftist administration in American history? The New Deal never acted so precipitously on such a scale. Treasury Secretary Paulson, asked about conservative complaints that his rescue program amounts to socialism, said, essentially: This is not socialism, this is necessary. That non sequitur might be politically necessary, but remember that government control of capital is government control of capitalism. Does McCain have qualms about this, or only quarrels?

Remember, McCain is the monkey who said he did not share his own economic adviser’s “views” when Gramm’s mouth brought attention to his flaming incompetence and responsibility for the current fiasco. Since McCain’s views can move from one side of his mouth to the other in a matter of minutes, who the fuck knows when a “qualm” will become a “quarrel”??

On “60 Minutes” Sunday evening, McCain, saying “this may sound a little unusual,” said that he would like to replace Cox with Andrew Cuomo, the Democratic attorney general of New York who is the son of former governor Mario Cuomo. McCain explained that Cuomo has “respect” and “prestige” and could “lend some bipartisanship.” Conservatives have been warned.

Conservatives “have been warned” that their entire philosophy of governance is a rotting maggot-infested corpse. The Republican Party has wrecked the nation. [Read more →]

As ye sew, so shall ye reap…

A list of what this latest, inevitable crash of Wall Street has cost some of its leading enablers (from yesterday’s NY Times).

Surprising how, in the case of former Goldman Sachs CEO Henry Paulson, a $300 million loss to his portfolio would lead him to demand absolute, non-reviewable power to spend $700 billion of taxpayers money to save his and his buddies’ butts.

Actually, the tab is estimated to have risen to $1.8 trillion as a result of lobbying from the likes of UBS vice chair Phil Gramm to add foreign banks with American branches to the soup line.

Sarah Palin holding Trig, while Willow and Piper keep mom upright.

First, a little context.

When our self-proclaimed CEO president, George W. Bush took office the week of January 22, 2001, the Dow Jones Industrial average was 10,659. Yesterday, it closed 50 points under that.

Bill Clinton left a budget surplus of over $250 billion. Bush will leave office with a budget deficit of nearly $400 billion, as well as a doubling of the long term debt to some $10 trillion- more than the cumulative total of all 42 presidents before him. And that’s not counting the trillions of off-budget costs of the Iraq and Afghanistan invasions and their anticipated aftermaths, such as the long term health care for grievously wounded vets.

Enter John McHoover. As Wall Street roils in its worst financial crisis since the Great Depression, he announced his analysis of the problem and its solution. The problem– greed. The answer– appoint a 9/11 style commission to study the problem. Feel better now?

The problem here is not human nature, of course, but the checks and balances that civilized societies impose on its excesses. McHoover has an unblemished 26 year long record in the Senate as a fierce opponent of regulation. In March, he told the Wall Street Journal:

“I’m always for less regulation.” [Read more →]

Stupid Fingers!

Rob Stafford writes over at HufPo:

“. . .here are four questions I’d like someone to ask Senator McCain, and that I’d like him to answer — without parsing, without equivocating, just answer. And if he doesn’t answer — we keep asking. And if these questions no longer seem topical—we ask something else. I don’t want to act like the Republicans, but I do want to make sure our narrative gets equal play—that’s what gets “teh Googles” to wake up and pay attention.

Well, I think McSame is so gosh-darn predictable, I’d like to answer those questions for him, Rob; so fire away, the Senator is awake, alert, and will not now answer your questions:

1. Senator McCain, it’s my understanding that Karl Rove, known to some as “Bush’s Brain” is acting as an informal advisor to your campaign. Are you aware that Rove is currently evading a congressional subpoena, that he has left the country & shows no inclination to appear?

Ah, Mr. Rove does not speak for me, or my campaign. And as far as I am aware, I’m totally aware, that he feels he has a right to declare executive privilege, regarding his activities in the government, and now it is an issue for the activist bench at our courts to decide. I wish him luck.

2. Are you aware that several members of the Bush White House have now failed to respond to congressional subpoenas? What is your opinion of people who show contempt for you & your fellow congresspersons in this way?

Well, I’d take issue with your use of the word “contempt,” even summers can be hectic in Washington, and the Bush team is pretty busy these days. My friends, it would probably be closer to the truth to believe that they’ll be getting round to the subpoenas just as soon as they can.

3. You have supported President Bush on many issues, including his handling of the war and his stance on tax cuts (which, before you were running for president you opposed), you have been photographed publicly embracing him, and yet now you have a little old lady arrested for holding up a sign that reads “McCain = Bush.” Please tell us why you would not like to be associated with President Bush? Why is he a political liability to you now?

Presdent [sic] Bush and I agree on the transcendent issues of today, and always have. He is not a political liability to me, or my campaign. The woman that, the protester that was arrested, was in violation of the rules governing the use of the facility, and it was only fair to the other attendees that she follow the rules as they did. Instead, she chose to be arrested. (shrugs)

4. I understand that you have distanced yourself from Phil Gramm’s comment to the effect that “We have sort of become a nation of whiners,” and yet, I find it hard to believe that you chose this man to work on your campaign on economic issues, you have worked with him closely for a year, and yet you were unfamiliar and/or in disagreement with this sentiment. Clearly, if Mr. Gramm had known this statement would embarrass you, he wouldn’t have said it. Do you think it would be unfair, given this context, to argue that you have distanced yourself from the public declaration of this comment, but not of the sentiment itself?

Yes, it would be unfair, I said before that Phil Gramm doesn’t speak for me, and that is still the case. But I think the press was making too much of his comments, in that he was pointing out the steady drumbeat of the blame America first crowd, who always take the negative over the positive, and overlook the power of the psychological over the minds of many Americans, who think the country is in worse shape than it really is, because that’s all they hear about from the cable monsters.

Well, Rob, there you have it. Milquetoast answers, all neatly packaged in mind-fog you can believe in.

Hateful to me, as are the gates of hell,
Is he who, hiding one thing in his heart,
Utters another.
—Homer, Iliad

McSame demonstrates he no longer needs his wife to access the internets

Frank Rich begins his New York Times Sunday column yesterday by noting what a favor Barack Obama did for his presidential rival, John McSame, by traveling overseas this weekend:

THE best thing to happen to John McCain was for the three network anchors to leave him in the dust this week while they chase Barack Obama on his global Lollapalooza tour. Were voters forced to actually focus on Mr. McCain’s response to our spiraling economic crisis at home, the prospect of his ascension to the Oval Office could set off a panic that would make the IndyMac Bank bust in Pasadena look as merry as the Rose Bowl.

Or at least Pasadena’s annual Dooh Dah Parade. With the Rethuglicans‘ economic legacy in mind, I’m expecting a gaggle of gay guys to compete in a yanked-from-the-wall, ATM drag race down Colorado Blvd. But I digress.

Frank continues:

In 2000, he told an interviewer that he would make up for his lack of attention to “those issues.” As he entered the 2008 campaign, Mr. McCain was still saying the same, vowing to read “Greenspan’s book” as a tutorial.

Consulting former Fed Chairman Alan Greenspan for advice on the economy is like reading a book on military tactics by General George Custer. Greenspan as much as anyone is responsible for the present economic catastrophe, which promises to be the most severe economic recession since the Great Depression.

Last weekend, the resolutely analog candidate told The New York Times he is at last starting to learn how “to get online myself.” Perhaps he’ll retire his abacus by Election Day.

[See image and caption above.]

Mr. McCain’s fiscal ineptitude has received so little scrutiny in some press quarters that his chief economic adviser, the former Senator Phil Gramm of Texas, got a free pass until the moment he self-immolated on video by whining about “a nation of whiners.”

Only a couple of weeks have passed since The Wall Street Journal speculated that Gramm would be McSame’s Treasury Secretary (should the Rethuglicans hit the electoral trifecta and steal yet another presidential election).

Gramm certainly has the support of McSame’s best boy, South Carolina Sen. Lindsey Graham. Lindsey once called Phil: “A legend in terms of fiscal discipline.” A legend also known for engineering the Enron Loophole that has enabled unregulated hedge funds to help rocket energy prices into the stratosfear. And who as vice chairman of the UBS investment bank helped usher in the era of sub-prime mortgage loans, collateral damage evident in the collapse of Fannie Mae and Freddie Mac and the whole Bush-damned housing market.

[Meanwhile, Phil seems to have taken a page from Rudi Guiliani's book. He was last seen dressed as a platter toting Marie Antoinette haranguing people in line at the Austin unemployment office: "Ya'll want some nice soft, squishy brie to go with that whiiine?"]

Frank proceeds to point out McSame’s multiple-economic flip flops on everything from tax cuts for the rich, to social security reform, mortgage bailouts, and off-shore oil drilling. The latter is supposed to lower gas prices a couple of pennies a gallon before the sun goes nova.

Then there are the self-defeating pander plays like his summer gas tax “holiday” that would in many communities suspend road maintenance, costing consumers more at the repair shop than they would save at the pump. Senator Pothole is probably unaware that the $40 billion federal highway trust fund already expects a $3.2 billion deficit next this year as a result of people driving less and using more fuel efficient cars. Senator Patty Murray (D-WA), head of the Senate transportation appropriations subcommittee, says that we are now less than a year from total bankruptcy!

And in a perfect fusion of flip flopping pandering, McSame promised in February of this year to balance the budget by the end of his first term, then in April said he’d do it by the end of his second term, and then just this month went back to predicting economic nirvana by his first term. No wonders his intended base is suffering from cognitive whiplash.

Rich puts the capstone atop McSame’s pyramid of absurdities by pointing out what has to be a record– a mere 24 hour interval between him saying that “great economic progress” has been made under Bush to saying that “Americans are not better off than they were eight years ago.”

The only way to make sense of McSame’s economic policies is to follow the advice he himself gave when asked how he would go about choosing a vice president:

Well, basically, it’s a Google.

[Image credit to Marc Luscher @luscher.org]

Phil Gramm slinks off into the Time Horizon

Phil Gramm, a once overly proud and supposedly well-educated Republican who succumbed to the corruption of the evil influence of power and politics, was sent down the McCain Mountain of Straight Talk Slag late Friday night, slinking off into the violent storm brewing on the “time horizon.”

A “time horizon” is a supposedly fixed point in the future at which processes are assumed to end. A “timetable” on the other hand, provides a time in the future at which processes are assumed to take place. This distinction is lost on a “Nation of Whiners,” as Gramm pointed out in a recently published magazine interview.

John McCain, who has been reaping the wisdom of Gramm as his chief economic adviser, said in February, “There is no one in America that is more respected on the issue of economics than Senator Phil Gramm.” However, a McCain campaign official said the Republican presidential candidate does not share Gramm’s views. Go figure.

Gramm will be scurrying back to his number two position at USB in Switzerland, where it is thought he will continue to elaborate on the negative effects of the “mental recession” that is gripping the United States, and has so many whiners acting out over their psychological financial health.

Obama campaign spokesman Hari Sevugan responded:

“The question for John McCain isn’t whether Phil Gramm will continue as chairman of his campaign, but whether he will continue to keep the economic plan that Gramm authored and that represents a continuation of the polices that have failed American families for the last eight years.”

Senator McCain has not yet announced a timetable for announcing a new source for economic advice, but one may safely assume the new adviser is out there somewhere on the time horizon, furiously planning how we can obfuscate the nation out of the deepening mental recession.

Wondering what this 1967 Viet Kong propaganda photo of POW McCain smoking in bed on clean sheets in a hospital has to do with the current state of the economy? So are we. It’s no more helpful in solving our economic problems than the political ads showing it right now on a TeeVee near you.

GREAT NEWS! That little bit of money that’s no longer there at the end of the month? You’re vanished savings? $4 gas? Rising food prices? No health insurance? ALL IN YOUR HEAD.

juan787:

I lost my job due to the economy going down the hole and I have been looking for a steady job that can pay me enough to feed my family. I even tried to work at a store [where] I was spending 35% of my check on gas and the rest on bills and have no money for food. So I don’t pay some bills so my family can eat, and I am losing everything that I ever worked hard for.

ALL IN YOUR NOGGIN‘, Juan.

Phil Gramm, John McCain’s top economic adviser— yeah I’m serious— says we’re just experiencing “A mental recession.” “We have sort of become a nation of whiners,” he said. This means you can shred all those bills there’s no mental money to pay them with at the end of the month. Just stop whining about it.

Also in your head, hopefully, is the fact Gramm played a key role in the subprime meltdown during his time in the Senate. Now he’s busy throwing volatile liquids on the mental recession, a buzzkill phrase for a fucked-up economy that’s crushing the middle class like a Death Star trash compactor.

So buck up, you nation of whiners mental cases. Your “real world” problems are all in your head, and all you have to do to keep them there is vote for John McCain in November.