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Forum Post: "Permanent Bailout State"

Posted 1 year ago on Jan. 5, 2013, 8:18 p.m. EST by TrevorMnemonic (5827)
This content is user submitted and not an official statement

Read more: http://www.rollingstone.com/politics/news/secret-and-lies-of-the-bailout-20130104#ixzz2H9cE1nOc

Secret and Lies of the Bailout

The federal rescue of Wall Street didn’t fix the economy – it created a permanent bailout state based on a Ponzi-like confidence scheme. And the worst may be yet to come

By Matt Taibbi, Rolling Stone

It has been four long winters since the federal government, in the hulking, shaven-skulled, Alien Nation-esque form of then-Treasury Secretary Hank Paulson, committed $700 billion in taxpayer money to rescue Wall Street from its own chicanery and greed. To listen to the bankers and their allies in Washington tell it, you'd think the bailout was the best thing to hit the American economy since the invention of the assembly line. Not only did it prevent another Great Depression, we've been told, but the money has all been paid back, and the government even made a profit. No harm, no foul – right?

Wrong.

It was all a lie – one of the biggest and most elaborate falsehoods ever sold to the American people. We were told that the taxpayer was stepping in – only temporarily, mind you – to prop up the economy and save the world from financial catastrophe. What we actually ended up doing was the exact opposite: committing American taxpayers to permanent, blind support of an ungovernable, unregulatable, hyperconcentrated new financial system that exacerbates the greed and inequality that caused the crash, and forces Wall Street banks like Goldman Sachs and Citigroup to increase risk rather than reduce it. The result is one of those deals where one wrong decision early on blossoms into a lush nightmare of unintended consequences. We thought we were just letting a friend crash at the house for a few days; we ended up with a family of hillbillies who moved in forever, sleeping nine to a bed and building a meth lab on the front lawn.

How Wall Street Killed Financial Reform

But the most appalling part is the lying. The public has been lied to so shamelessly and so often in the course of the past four years that the failure to tell the truth to the general populace has become a kind of baked-in, official feature of the financial rescue. Money wasn't the only thing the government gave Wall Street – it also conferred the right to hide the truth from the rest of us. And it was all done in the name of helping regular people and creating jobs. "It is," says former bailout Inspector General Neil Barofsky, "the ultimate bait-and-switch."

The bailout deceptions came early, late and in between. There were lies told in the first moments of their inception, and others still being told four years later. The lies, in fact, were the most important mechanisms of the bailout. The only reason investors haven't run screaming from an obviously corrupt financial marketplace is because the government has gone to such extraordinary lengths to sell the narrative that the problems of 2008 have been fixed. Investors may not actually believe the lie, but they are impressed by how totally committed the government has been, from the very beginning, to selling it.

THEY LIED TO PASS THE BAILOUT

Today what few remember about the bailouts is that we had to approve them. It wasn't like Paulson could just go out and unilaterally commit trillions of public dollars to rescue Goldman Sachs and Citigroup from their own stupidity and bad management (although the government ended up doing just that, later on). Much as with a declaration of war, a similarly extreme and expensive commitment of public resources, Paulson needed at least a film of congressional approval. And much like the Iraq War resolution, which was only secured after George W. Bush ludicrously warned that Saddam was planning to send drones to spray poison over New York City, the bailouts were pushed through Congress with a series of threats and promises that ranged from the merely ridiculous to the outright deceptive. At one meeting to discuss the original bailout bill – at 11 a.m. on September 18th, 2008 – Paulson actually told members of Congress that $5.5 trillion in wealth would disappear by 2 p.m. that day unless the government took immediate action, and that the world economy would collapse "within 24 hours."

To be fair, Paulson started out by trying to tell the truth in his own ham-headed, narcissistic way. His first TARP proposal was a three-page absurdity pulled straight from a Beavis and Butt-Head episode – it was basically Paulson saying, "Can you, like, give me some money?" Sen. Sherrod Brown, a Democrat from Ohio, remembers a call with Paulson and Federal Reserve chairman Ben Bernanke. "We need $700 billion," they told Brown, "and we need it in three days." What's more, the plan stipulated, Paulson could spend the money however he pleased, without review "by any court of law or any administrative agency."

The White House and leaders of both parties actually agreed to this preposterous document, but it died in the House when 95 Democrats lined up against it. For an all-too-rare moment during the Bush administration, something resembling sanity prevailed in Washington.

So Paulson came up with a more convincing lie. On paper, the Emergency Economic Stabilization Act of 2008 was simple: Treasury would buy $700 billion of troubled mortgages from the banks and then modify them to help struggling homeowners. Section 109 of the act, in fact, specifically empowered the Treasury secretary to "facilitate loan modifications to prevent avoidable foreclosures." With that promise on the table, wary Democrats finally approved the bailout on October 3rd, 2008. "That provision," says Barofsky, "is what got the bill passed."

But within days of passage, the Fed and the Treasury unilaterally decided to abandon the planned purchase of toxic assets in favor of direct injections of billions in cash into companies like Goldman and Citigroup. Overnight, Section 109 was unceremoniously ditched, and what was pitched as a bailout of both banks and homeowners instantly became a bank-only operation – marking the first in a long series of moves in which bailout officials either casually ignored or openly defied their own promises with regard to TARP.

Congress was furious. "We've been lied to," fumed Rep. David Scott, a Democrat from Georgia. Rep. Elijah Cummings, a Democrat from Maryland, raged at transparently douchey TARP administrator (and Goldman banker) Neel Kashkari, calling him a "chump" for the banks. And the anger was bipartisan: Republican senators David Vitter of Louisiana and James Inhofe of Oklahoma were so mad about the unilateral changes and lack of oversight that they sponsored a bill in January 2009 to cancel the remaining $350 billion of TARP.

So what did bailout officials do? They put together a proposal full of even bigger deceptions to get it past Congress a second time. That process began almost exactly four years ago – on January 12th and 15th, 2009 – when Larry Summers, the senior economic adviser to President-elect Barack Obama, sent a pair of letters to Congress. The pudgy, stubby­fingered former World Bank economist, who had been forced out as Harvard president for suggesting that women lack a natural aptitude for math and science, begged legislators to reject Vitter's bill and leave TARP alone.

In the letters, Summers laid out a five-point plan in which the bailout was pitched as a kind of giant populist program to help ordinary Americans. Obama, Summers vowed, would use the money to stimulate bank lending to put people back to work. He even went so far as to say that banks would be denied funding unless they agreed to "increase lending above baseline levels." He promised that "tough and transparent conditions" would be imposed on bailout recipients, who would not be allowed to use bailout funds toward "enriching shareholders or executives." As in the original TARP bill, he pledged that bailout money would be used to aid homeowners in foreclosure. And lastly, he promised that the bailouts would be temporary – with a "plan for exit of government intervention" implemented "as quickly as possible."

The reassurances worked. Once again, TARP survived in Congress – and once again, the bailouts were greenlighted with the aid of Democrats who fell for the old "it'll help ordinary people" sales pitch. "I feel like they've given me a lot of commitment on the housing front," explained Sen. Mark Begich, a Democrat from Alaska.

But in the end, almost nothing Summers promised actually materialized. A small slice of TARP was earmarked for foreclosure relief, but the resultant aid programs for homeowners turned out to be riddled with problems, for the perfectly logical reason that none of the bailout's architects gave a shit about them. They were drawn up practically overnight and rushed out the door for purely political reasons – to trick Congress into handing over tons of instant cash for Wall Street, with no strings attached. "Without those assurances, the level of opposition would have remained the same," says Rep. Raúl Grijalva, a leading progressive who voted against TARP. The promise of housing aid, in particular, turned out to be a "paper tiger."

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Read more: http://www.rollingstone.com/politics/news/secret-and-lies-of-the-bailout-20130104#ixzz2H9cTDha2

43 Comments

43 Comments


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[-] 3 points by OTP (-203) from Tampa, FL 1 year ago

Perm bailout indeed.

85billion a month and counting...

Wait until the debt "crisis"...more fed injections.

So will is happen before the crisis, or after?

Im going for. Less publicity.

[-] 2 points by TrevorMnemonic (5827) 1 year ago

Help I'm being trolled by vq who needs some facts on inflation and the rise of prices in the US and the value of the dollar. LOL

Candy bar used to be 5 cents. now it's 1.09. hmmmm

[-] 1 points by john32 (-272) from Pittsburgh, PA 1 year ago

Feds buying up 85 billion worth of assets per month - half of which stem from mortage related assets. People wonder why the housing market is improving...hmmm.

Awesome graphical site on increase of money supply and commodity prices:

http://hmscoop.com/MoneySupplyvsCommodities.html

If you calculate inflation like it used to be calculated by our government(1980s), instead of the current fudged numbers people are forced to accept to mitigate social security, interest on our debt and other CPI tied payments- we're sitting at around 9% right now:

http://www.shadowstats.com/alternate_data/inflation-charts

[-] -3 points by VQkag2 (16478) 1 year ago

When was it 5 cents? Was it also larger?

Have I said prices haven't gone up.? NO! Prices ONLY ever go up!

Of course there is inflation. I'm simply telling you inflation is at historic lows. And has been for several years.

Do you disagree?

[-] 2 points by TrevorMnemonic (5827) 1 year ago

if everything is more expensive and going up as time goes on... inflation is happening.

All time lows? What does that even mean? Everything is still more expensive than it was in previous years. You're just saying something to say it.

[+] -4 points by VQkag2 (16478) 1 year ago

"You're just saying something to say it." Please make sense. What does this mean?

Inflation is measured some years have been almost 15% (1979) remember that year.? Whew those were tough times. Others are low 1.6% 2012.

So that's why I say inflation isat all time lows. Because it is!!

Here is a chart for you.

http://www.usinflationcalculator.com/inflation/current-inflation-rates/

[-] 2 points by TrevorMnemonic (5827) 1 year ago

You have no point. You don't have one. Your repeated trolling on my post has nothing to do with the post nor does it have anything to do with the FACT that prices are at all time highs and are going up. It has nothing to do with the fact that the purchasing power of the dollar is weak. Why are you saying what you are saying?

You are just saying what you are saying just to say it. That is why you came here.

Prices at all time highs.

Inflation is happening. There is nothing to celebrate when prices are STILL going up and wages are stagnant.

Inflation is bullshit and all must be done to counter it and keep wages up to match.

If you feel like you have something more important to add than Matt Taibbi in this original post, then call Rolling Stone and see if they'll hire you.

according to your link from 1913 to 2012 - Annual rate of inflation change: is 2225.5%

[-] 3 points by Builder (4202) 1 year ago

We should remind this poster that he created users to up-vote himself, and the admin of this site busted him for it.

Look up NPD sufferers, and you'll see exactly the kind of person you're dealing with here.

[Deleted]

[-] 3 points by Builder (4202) 1 year ago

Quite simple, really.

Only a narcissistic imbecile would create multiple user accounts to upvote their own comments.

You are a basket case. End of story.

[-] -1 points by VQkag2 (16478) 1 year ago

You don't know what you're talkin about. Your accusations are unfounded and untrue.

The numbers are meaningless. Except to shallow fools.

[-] 4 points by Builder (4202) 1 year ago

We should remind this poster that he created users to up-vote himself, and the admin of this site busted him for it.

Look up NPD sufferers, and you'll see exactly the kind of person you're dealing with here.

[-] -2 points by VQkag2 (16478) 1 year ago

Your childish personal attacks simply reflect the impotence of your arguments.

You confirm your fear of me. LOL

[Removed]

[-] -3 points by VQkag2 (16478) 1 year ago

Prices always go up. Are you suggesting some actions to change that reality? NO.

You suggest only the '68 min wage proposal.

I have submitted many proposals that will address the agreed upon stagnant wages.

[-] 2 points by TrevorMnemonic (5827) 1 year ago

Monetary reform like HR 2990. I've been posting on it since I joined the forum.

living wage. I've posted on that a bunch too. I recently talked with bensdad today about HR 2990 and I linked a wage increase bill to you today as well.

All you've done is go around this post today and troll me about something that had nothing to do with what this post is about, nor what I was talking about.

[-] -3 points by VQkag2 (16478) 1 year ago

HR 2990 was last congress. It is dead. The repubs killed that Dem proposal.

How does that make you feel?

[-] 2 points by TrevorMnemonic (5827) 1 year ago

Actually no one sponsored it. No D or R tried to help pass that bill. The only one was Dennis.

How many other democrats have proposed to reform monetary policy like Dennis? Reform monetary policy that is currently giving trillions to Wall Street? Isn't it zero? The same number as the republicans isn't it?

Sorry but both parties are "2 factions of the corporate state" - Noam Chomsky

Noam Chomsky discusses the political system for 7 minutes http://www.youtube.com/watch?v=mk8pxyAWTBk

Hopefully Alan Grayson can pick up where Dennis left off.

[-] -3 points by VQkag2 (16478) 1 year ago

Well there was oneDem who supported it. DENNIS! And yes Grayson IS an excellent progressive who might possibly pick up Dennises workload.

But there will be NO repubs who wouldsupport anything Dennis did.

Right?

[-] 3 points by Builder (4202) 1 year ago

We should remind this poster that he created users to up-vote himself, and the admin of this site busted him for it.

Look up NPD sufferers, and you'll see exactly the kind of person you're dealing with here.

[Deleted]

[-] -1 points by VQkag2 (16478) 1 year ago

Whatever the number/process is, it is as it's always been. So if you wanna add something to the low annual 1.6% inflation of 2012. fine. Then add it to the previous years and the fact remains that the inflation rate is at it's lowest level.

Addressing stagnant wages is a useful endeavor, arguing whether 1.6% annual inflation is high is ridiculous.

[Deleted]

[-] -1 points by VQkag2 (16478) 1 year ago

If you say. Whatever shall we do?

[Deleted]

[-] -2 points by VQkag2 (16478) 1 year ago

"mad as fubar" huh?.

Well I guess if there's nothing we can do might as be as mad as fubar.

good luck in all you good efforts

[-] 2 points by TrevorMnemonic (5827) 1 year ago

If you want to see inflation first hand, go to the grocery store.

Also read up about the effects the drought is going to have on food prices.

Stagnant wages, rising prices. It's been happening for a long time. One of the many ways they keep the middle class down.

[-] -3 points by VQkag2 (16478) 1 year ago

Yeah right. Inflation is at all time lows. What are you talkin about?

[-] 2 points by TrevorMnemonic (5827) 1 year ago

One of the main reasons wages need an increase is due to inflation.

[-] -3 points by VQkag2 (16478) 1 year ago

More likely corp exploitation, outsourcing. Inflation is at an all time low. Corp profits are way up, while wages/benefits are way down.

Laws stating that execs can't have 400x the average salary ofworkers is a good approach.

Arguing about the current low inflation is ludicrous

[-] 2 points by TrevorMnemonic (5827) 1 year ago

Why are prices up at the grocery store in comparison to 1990?

Gas is up. Milk is up. Eggs are up. Meat is up. That is called inflation.

One of the main reasons we need a wage increase is to keep up with trends of inflation. Please look into the Catching up to 1968 Act that would increase wages.

"Catching Up To 1968 Act of 2012 - Amends the Fair Labor Standards Act of 1938 to increase to $10.00 an hour (adjusted annually based on increases in the Consumer Price Index) the federal minimum wage for employees."

http://www.govtrack.us/congress/bills/112/hr5901#summary

Do you really think inflation talk is a myth?

[-] -3 points by VQkag2 (16478) 1 year ago

Prices compared to 1990? Almost a quarter century ago? What a surprise prices are up. Irrelevant. We measure inflation, it is at an all time low.

the 1968 catching up effort is great. That is minimum wage related. Sure I support that. I prefer a living wage w. colas law, but of course I support that.

[-] 2 points by TrevorMnemonic (5827) 1 year ago

How are increased prices and stagnant wages irrelevant?

Costs of products are not at an all time low. Costs of milk, meat, gas, electric bills, etc ALL UP and at an ever increasing rate as time goes on. The dollar does not have the same purchasing power as it did years ago.

Go look up the word inflation. you're using it wrong.

What Is It Called When Everything is More Expensive than it was Years Ago?

in·fla·tion - A general increase in prices and fall in the purchasing value of money.

[-] -3 points by VQkag2 (16478) 1 year ago

I didn't say stagnant wages are irrelevant. That's you resorting to blatant lying cause you can't argue the facts in an honest way.

What prices were almost a quarter century ago is not relevant to me.

Raising wages matters to me. living wage w colas, laws forbidding salaries 400x more than workers, punishing outsourcing, and other actions.

That's the right approach, not arguing about the current low inflation. That's a waste of time.

[-] 2 points by TrevorMnemonic (5827) 1 year ago

How is rising prices during stagnant wages irrelevant?

You said "What a surprise prices are up. Irrelevant." You said prices going up is irrelevant. Sorry to break this to you... but rising prices/costs of living are the most important aspects when calculating a living wage.

[-] -3 points by VQkag2 (16478) 1 year ago

I didn't say "rising prices during stagnant wages are irrelevant. That's you resorting to blatant lying cause you can't argue the facts in an honest way.

You said prices going up is irrelevant. No ididn't. I said prices up compared to 1990 is irrelevant. Because OBVIOUSLY they are up. Prices only EVR go up.

What kind of moron doesn't know that, or is surprised.

I have listed several steps we must take to address the agreed upon stagnant wages.

You have not offered anything but lies about what I have said.

How about another right wing lobbying groups memos on the issue.? Got another one of those.

LMFAO

[-] 3 points by TrevorMnemonic (5827) 1 year ago

What kind of moron blindly accepts rising prices for the same product?

Why are you on this forum post again? What was your purpose here today? You have yet to comment on the permanent bailout state that this forum post is about.

[-] -2 points by VQkag2 (16478) 1 year ago

I am responding to you. You want me here! Otherwise your ridiculous post get's no attention. (Like the rest of your nonsensical posts)

Ignorant fool

[-] 3 points by Builder (4202) 1 year ago

We should remind this poster that he created users to up-vote himself, and the admin of this site busted him for it.

Look up NPD sufferers, and you'll see exactly the kind of person you're dealing with here.

[-] 2 points by TrevorMnemonic (5827) 1 year ago

Not really. I'd prefer you just left.

How about this. Stop commenting on my posts. You ever notice how I never comment on yours? I stopped doing that a long time ago when I figured out you were just a troll.

You stop commenting on my forum posts, and I'll stop replying to you. Hell I'll even stop now.

[-] -2 points by VQkag2 (16478) 1 year ago

You do what you like. As will I.

Freedom boss. That's the American way. You responded to me today, That is why we are having this conversation.

[-] 2 points by TrevorMnemonic (5827) 1 year ago

Say that to the wages in 1968

Prices of grocery items more expensive than 10 years ago.

I'm paying 6.99 for a pound of meat that used to cost me 2.99 or 3.99 when I sold it working for a Hy-Vee at 16.

[-] -3 points by VQkag2 (16478) 1 year ago

Heres some Richard Wolff. He's the best.

I love me some Richard Wolff!!

[+] -4 points by VQkag2 (16478) 1 year ago

1968!!!

C'mon. let's focus on this millenium, this century, this decade.

Wages have stagnated for decades it is true. Prof Richard Wolffhas great opinions on this.

We must agitate all pols for living wage w/ colas, strengthen labor unions punish outsourcing, reward insourcing.

Many actions must be agitated for.

but we can't pretend inflation is high when it is at all time lows. Wages ARE low. We can agree on that. but I can't convince people that inflation is high when it ain't.

[-] 2 points by TrevorMnemonic (5827) 1 year ago

Again I will direct your outlandish comments to this

"Catching Up To 1968 Act of 2012 - Amends the Fair Labor Standards Act of 1938 to increase to $10.00 an hour (adjusted annually based on increases in the Consumer Price Index) the federal minimum wage for employees." http://www.govtrack.us/congress/bills/112/hr5901#summary

[-] -3 points by VQkag2 (16478) 1 year ago

Sure I support that. I prefer a $15 living wage w colas, but yes I support that.