Recently, the Federal Reserve Chairman and the United States Secretary of reasury have asked the United States Congress to give them a blank check with immunity to save the United States economy, and the world.
While at first, their titles might lead you to believe that they should be trusted, that is the furthest thing from the truth. These are two very dishonest people who have been playing in a high stakes poker game at our expense. Luckily for us, they’ve shown their cards and revealed their betrayal of the American people whom they are appointed to serve.
I’d like to point out a few select words of economist Yves Smith.
It is becoming clear that Bernanke simply does not get it. Just as he once thought subprime was contained, and has continued to misread the nature and trajectory of the credit crisis, so too he has said that there is a way out of it that involves little or no cost in terms of growth. I’ll be charitable and assume he is deluded rather than being dishonest.
I am not that charitable. Ben Bernanke, has the keys to the entire financial system of the United States. There is no possible way that he doesn’t know exactly how terrible it is. He has played us all as fools.
Again, Smith points out exactly what’s is shifty about the whole situation:
The Fed chair seems unable to accept that there are no good outcomes from where are are now, only bad and worse ones. And his final comment, which suggests that he is not self-interested, is odd, to say the least.
Moreover, even with this magnitude of program, it isn’t clear if the amount purchased will in fact restore confidence. We still have the massive overhang of credit default swaps. Bridgewater Associates estimated that banks (as opposed to securities firms) would need over $500 bilion in new equity to recapitalize themselves and had raised only roughly $160 billion. The amount of recapitalization is the amount of overpayment for assets, not the gross amount of purchases. Thus if the Treasury overpays by, say, 25%, that is tantamount to only $175 billion of recapitalization, short of what is needed.
We have said before that this program is an inefficient, covert way to recapitalize the financial system. If I were a foreign central bank, I’d have a lot more confidence if the US imposed regulatory reform, took over dud banks, got rid of top management, and then did the good bank/bad bank split. That’s a model that has worked and could be modified and improved. But for some unknown, the powers that be are refusing to employ formulas that have worked and prefer their own home-cooked brew.
Let’s move on to Secretary of the Treasury, Hank Paulson. Paul Krugman, directly accuses him of lying, and shows us why there’s no reason to trust him either:
So, this morning Hank Paulson told a whopper:
Quote:
What the proposal actually did, of course, was explicitly rule out any oversight, plus grant immunity from future review:
Quote:
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.
I’m not playing gotcha here. This is telling: if Paulson can’t be honest about what he himself sent to Congress — if he not only made an incredible power grab, but is now engaged in black-is-white claims that he didn’t — there is no reason to trust him on anything related to his bailout plan.
There is no reason to trust them on anything, period. This is betrayal of the public trust and abuse of the power they have been given. These two should be given a swift trial and marched straight to the guillotine.
Will they? Not a chance, Congress will roll over and give them their money. That’s all the current Congress is good at.
Update: Krugman and Smith not good enough sources of logic for you? How about a good old Senator of Congress? South Carolina Sen. Jim DeMint, said,
“It’s a sad fact, but Americans can no longer trust the economic information they are getting from this administration.â€
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