The Treasury Secretary’s Conflict of Interest

September 27, 2008

When Henry Paulson was nominated to be the new Treasury Secretary in 2006, he held 4.58 million (MILLION) shares in Goldman Sacs. Worth over $700 million. Wonder if he was forced to sell?

Also, Paulson didn’t bail out Goldman Sacs’s competitors (Bear Stearns, Merrill Lynch). Those stocks became worthless. But by having the government buy Goldman Sacs’s junk, their share price is protected.

Again, I wonder how much stock Paulson still holds.

But, massive deregulation of the banking industry was fully implemented by Robert Rubin—Treasury Secretary under Bill Clinton. Rubin successfully struck down the Glass-Steagall Act, a law put in place by FDR’s New Deal so that the Great Depression could never happen again. The Act basically separated commercial and investment banking. That ended in the 1990s.

So, yes, Congress and Treasury Secretary Rubin—also a former CEO of Goldman Sacs–repealed the laws that protected us from unethical banking.

Conflict of interest? F—ing the American people? Yes to both.

Advertisements

You Are Being Told That for the Economy To Be Sound, Goldman Sachs Has To Be Sound. No, It Doesn’t.

September 24, 2008
Photo by Kevin Lamarque, Reuters
Photo by Kevin Lamarque, Reuters

(U.S. Treasury Secretary Henry Paulson (left) and Federal Reserve Chairman Ben Bernanke (right) testify Wednesday before members of Congress)

Everyone wants you to think that the issues involved in the current financial debacle are too complicated to understand. That includes Arianna Huffington and other figures on the left.

But it’s not complicated at all. Much of the value of financial companies was based on their holdings in “derivatives.” These were merely financial instruments whose worth was based on, or derived from, “mortgage-backed securities.”

A security is a stock. So, these mortgage-backed securities were stocks that were bundles of various mortgages put together, an instrument that promised the presumed cash stream of tons of monthly mortgage payments.

Almost all of the mortgages in question were “sub-prime,” which can best be translated as “shaky.” Under incredibly relaxed lending laws–and because of the insane belief that absolutely nothing should be regulated–lenders were allowed to grant mortgages to all sorts of people who had no business having one.

Under the current lending laws, I can give a mortgage to just about anybody, with almost no proof of income or savings on the part of the person taking out the loan, with no down payment, and no real payments for a ridiculously long grace period.

Why would I do such a thing? Isn’t that risky? Sure, but then I put these all together and sell them off as a stock and let someone else assume the risk.

Then that buyer. in turn, puts them together with some other such instruments and turns around and sells the new “product” at a markup. If that sounds like a Ponzi scheme, that’s because it is one. A Ponzi scheme where no one expects to be left holding the bag.

Unless, of course, house prices stop skyrocketing and homeowners can no longer pull ever greater amounts of cash out of their house to pay their mortgage installments and everyone starts getting foreclosed and all at the same time. Oops.

Now no one wants to buy these derivatives, and voila’—they’re worthless. Suddenly, Lehman and Goldman and others who were buying and selling this worthless paper are forced to write off billions of dollars.

It should be noted that Treasury Secretary Paulsen made a personal mint as CEO of Goldman Sachs before becoming Treasury Secretary. Of course he thinks we all need to give our money to his friends at Goldman Sachs. No kidding.

These companies are the same ones who have been so insistent on the total deregulation of our financial system. So, since they have lived by deregulation, let them die by deregulation.

You are being told that for the economy to be sound, Goldman Sachs has to be sound. No, it doesn’t. When they go down, a company with a better, smarter model will fill the void and give a better, sounder product. Beauty of the free market.

For another article on this, go to Poynter Online. David Cay Jonston says the bailout is being packaged as urgent, no time to debate, pass it now. It is not urgent at all.

(posted by j.h.)


Economic Shock (Doctrine)

September 23, 2008

Noami Klein is a frigging genius! I heard her on the radio a few
months ago. Someone asked her what the next “shock” was going to be.
She said an economic shock. At the time, I tried to conceive of some
sort of economic crisis that they could pull to garner legislation for
bailouts. Now I know! This is exactly like the Patriot Act. We must
push legislation immediately! No time for debate or to read the
legislation.

She was on Bill Maher Friday.

(posted by Gary)


Many Journalists Jailed During Republican Convention In St. Paul, MN

September 6, 2008

 (photo by Matt Rourke | AP )

Two journalism students and their teacher, photographer Ed Mattews (pictured above), learned their lessons about the Constitution of the United States when they and many other journalists covering the RNC convention this week were arrested.

These guys were charged with felony rioting. There were hundreds arrested on Monday, but no count on how many were journalists.

Those journalists not charged are still in jail and cannot get a hearing before a judge.

Other arrested journalists also had their press passes confiscated by the Secret Service.

Remember all the gab about the press being restricted in China during the Olympics? Check out this quote from CNN: “[China] is always afraid that if it lets its own people speak freely and spontaneously organize by itself, the Chinese communist party could be endangered or even be threatened.”

I guess the Republican party feels the same way.

Oh, and here’s Pres. Bush talking about the need for freedom of expression during the opening of the new U.S. embassy in Beijing.

Where’s the main stream media now, when it’s time to take a good hard look at our own country’s repression?


Are Conservatives Depressed?

September 5, 2008

The New York Times wrote on Wednesday:  “If there is one mission Mr. McCain wants to accomplish at his convention, it is to galvanize conservative voters who have shown signs of depression this year.”

The conservative voters are depressed? Why are they depressed? Conservatives have been getting everything they’ve wanted for the past 12 … except for maybe getting John McCain as their nominee.


Palin a Red Herring

September 2, 2008

Here’s friend Gary’s prediction about McCain’s VP:

Palin will be stepping down as the VP nominee in the next day or two. [The McCain camp] knew about the trooper scandal as well as the pregnant teen. She was chosen as a rouse to get women and Christians excited about McCain while not having to actually keep her on the ticket. He will choose either Lieberman or Romney (whomever he really wanted).

Palin will talk about how she needs to be with her family during such a trying time and how much stress this has put on her family. This will get the Christians really pissed off and will get them out to vote. The Republicans will blame the liberal media and the Democrats.

The Palin pick is exactly the same as the Harriet Myers pick.