A look at my personal bank account will quickly reveal that I am not a financial genius.
Still, even without a degree in economics or any investment track record, I want to go on record right now as saying that something stinks about this 700 billion dollar bailout of Wall Street companies. For starters, let’s all admit that the 700 billion is just… for starters. When has the government — no matter who’s been in charge — brought anythingÂ in within budget? Say it with me now: Never. But that’s not my real complaint. Heck, 700 billion here, 700 billion there — once you get the numbers up in that category, what’s the difference, unless they’re literally trying to see if they can spend all the money in the world?
At first I had the typical knee-jerk reaction: “Who the hell do these assholes think they are? They’re making millions of dollars in salaries and bonuses, rockin’ and rollin’ all over Wall Street, operating with no restrictions or government oversight, and all the profits are private, and now that they’re in trouble — trouble of their own making — they want me to pick up the tab for the party, and put the empty cognac bottles in the recycling bin?”
But then I admit I took a pretty big pull from the “too big to fail” kool-aid. You know the argument: These financial institutions hold so much paper, and so many homeowners and business owners and banks and corporations are interconnectedly dependent on their stability that we must save them, just this once, and then we’ll figure out some new regulations and get back to business and this will never happen again and we’ll all be part of The Ownership Society and everyone will be happy.
But now I’m back to my original “what the hell?” position. Over the weekend, Secretary of the Treasury Henry Paulson jotted down a three-page memo that he would like to have Congress pass into law. The law would give him a metric buttload of cash (see above, 700 billion dollars) to do with as he pleases. What he says he wants to do — I think — is buy a whole bunch of bad mortgages, which — I think — will ease the “credit crunch” (sorry, don’t know what that is really), which will in turn restore stability to the economy, and then everyone will be happy. I haven’t read the whole thing, but here’s my favorite part so far:
Sec. 8. Review.
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
Nice, huh? No pesky legislators or — AARGH! — judges nosing around and asking questions. Every hedge fund manager knows those guys don’t know squat about money and shit. They’d have everybody in three-piece pin-striped suits, and reading credit applications all the way through before granting loans. How can you make any money that way?
Speaking, as I am, from a position of not really knowing anything for sure about this big money meltdown, I can only say that I am freaked the fuck out.
- Bear Stearns out of business.
- Fannie Mae and Freddie Mac nationalized.
- Lehman Brothers out of business.
- AIG bought by the government.
- Merrill Lynch sold to Bank of America.
- 4 million homes foreclosed (no one knows how many more are at risk).
- No one seems to know which lenders are holding whose loans and whether the borrowers are willing — or even able — to pay.
That last one is another way of saying that we haven’t seen the bottom of this plunge yet and we don’t know how far we are going to fall or even how close to the bottom we are. Don’t try to argue with me on that. Anyone who says they know what’s going to happen next is bullshitting.
So if that’s true, what is Paulson going to do with the 700 billion, really? I think we can stipulate that it would only be a down payment on what is really needed. It’s probably enough to prevent total global economic failure at least until November 4, which might or might not help John McCain get elected. It seems like a lot of money, doesn’t it? I know it does to me. But if you estimate the world’s total global production at around 60 trillion dollars, which a lot of smart people do, it’s only 1.17% of that. Barely lunch money.
So who’s kidding whom? I agree that something must be done. Maybe the 700 Club is the way to go, maybe not. But not without some adults watching to make sure Paulson doesn’t just use it to help his friends on Wall Street, while stiffing everybody else. Hey, he was the CEO of Goldman Sachs before he was the Treasury Secretary, right? And guess where he’s going when he’s done with this little government job?
Bail all you want, Henry. But I hereby require that Congress amend your little memo to include some accountability to me, one of your bosses and one of the ones who’ll be paying the bills you run up. Also, I want those profligate CEO’s, hedge fund managers, investment brokers and other Wall Street ne’er-do-wells all to be given $40,000 a year jobs, and when they need a bailout, they can call their parents.