wnyc.org / 93.9fm / am 820

It's time to get the military involved!!!! We should invade the Cayman Islands and start taxing all of that offshore 15 trillion dollar credit default swap commerce!!! If those hedge fund managers refuse to play ball, we can just snatch them off the streets in London, Paris, Rome, Anguilla....whatever and lock them up in Syrian or Egyptian dungeons until they agree to cooperate. We know this will produce "actionable intelligence"....the vice-president said so. Come on people!!! This is a national security issue. I read in Esquire last year that there's a guy in France with a guillotine for sale. He even knows how to use it.

I read of an alternative to Paulson's bailout plan in the German news magazine DER SPIEGEL (online edition from 9/22, quoted is Diemo Dietrich from the Institut für Wirtschaftforschung in Halle (IWH)(Institute for Economic Research):
(rough translation)
Instead of of preventing a market correction with the Billion Dollar ..... US .... should rather make sure their banks get fresh money. Because the institutes are actually supposed to issue new stock to raise capital. However, no bank would voluntarily issue new securities in the current situation ....

Therefore Dietrich suggests, that the US government should require all banks to issue stock, and could also promote the emission with a certain amount. Investors would then subscribe the stock of the banks they consider healthy.

The real origin of the panic is what isn't being discussed at all.

It was the "flight to safety" in investment that grew and, as a process, was the real culprit no one could escape. You can trace its beginning back at least a year. It was a society-wide spontaneous phenomenon that multiplied in intensity until no one was willing to put their holdings at risk and the system froze.

The silent 'tipping point' of the conditions behind why it took off, and consumed the trust that finance is based on, is the ultimate question. I've been studying this kind of whole system event problem for many years. This one appeared to start with the commodity price wars two years ago, beginning what you might call a 'fishtailing' of conflicts in the market regulation of resource allocation choices. This is real. It's very dangerous for us not to know about these kinds of whole system behaviors.

Best, Phil Henshaw www.synapse9.com

Levitt was not completely accurate in his last answer to Brian on the question about the firing of the SEC Chairman. While it is true that the President can demote Cox from the Chairmanship, he cannot remove Cox from the Commission. To protect the SEC Commissioners from undue political pressure, they were made safe by law from firing at will.

Unfortunately Mr. Levitt is anything but objective in this matter, and is a Clintonista apologist. The answer is NOT more regulation but more FREEDOM in markets undistorted by politics.
As John Steele Gordon wrote in the NY Times yesterday:
" at the heart of the problem is Congress and its deeply corrupt relationship with Fannie Mae and Freddie Mac. Congress was equally at the heart of the savings and loan disaster 20 years ago and, obviously, learned nothing from it."

On (the lack of) Constitutional authority of the President to fire commissioners of independent Federal agencies created by Congressional acts for political reasons:

http://www.oyez.org/cases/1901-1939/1934/1934_667/

Kevin Phillips said on the Bill Moyers' Journal Friday that the arsonists are coming back to the scene of the crime with their firemen's hats on, all the while pumping more gasoline on the flames.

Burn, baby, burn.

Takes on a whole new meaning.

Also, Naoni Klein has been pointing out that major power grabs are often committed under "emergency" conditions, some of which are created or at least used by those who wish to grab the powers.

Section 8--has Brian discussed it?--is almost a legislative offer of distatorship to Treasury (and, of course, the exec branch, Unitary Executive, babeeeee!).

"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."

Non-reviewable, must be kept secret (discretion), no review by any court of law or any administrative agency.

Wow. Has that really been taken care of in the Dodd proposal?

I would like someone to analyse this in terms of the breakdown of the separation of powers and the nullifying of our three independent branches of government. At the very least, I should think it would be unconstitutional to give the Executive branch unconsidered and unfettered control with no oversight now or in the future -- emasculating the legislative and judicial branches of our government. If Congress goes along with this then we are well on the road to dictatorship of the Executive. Chaney's plan. After nearly 8 years of this pernicious thinking we're almost incapable of recognizing this usurpation of power. This is how we go out -- not with a bang but with a whimper.

What are the scary scenarios? Why don't you get Gretchen Morgenson on here.

People are talking about the Great Depression. That's your answer.

from a friend: "why isn't anyone bringing up all that money the Iraqis supposedly made in oil money this year when the price of crude was skyrocketing? Can't we ask for some of that to countermand the price we pay each month to keep the troops in Iraq and then do some fancy accounting-work to channel some of those funds back into our economy now when we most need it?"

This all sounds like the same BS we heard before Iraq, the same tactics. I don't trust anything about this administration or our recent financisl system as far as I can throw them.

how can anyone say that these no doc, sub prime, arm, balloon mortgages should be traded as anything resembling an instrument with anything behind it?
i am really tired of hearing this bull.
don't forget that alot of people at all levels of the finance industry made alot of money making these loans, bundling them, trading them.
why should i be forced to pay them even more?

Let's not forget that Senator Schumer has been the defender of hedge funds and has blocked legislation to regulate them.... and the hedge fund billionairs have rewarded his campaigns in kind

So mush of Schumer's posturing is all about smoke and mirrors.

jf

Bernard's analysis cont'd--quote follows:

If this becomes law, Paulson and whoever replaces him in January will have the authority to buy Asset Backed Securities from car loans and credit card loans. He will be able to buy and sell derivatives based on ABS that have build in leverage effects. The Treasury may even deal in synthetic Collateral Debt Obligations and derivatives base on those. It can buy and sell shares of public dealt companies, precious metals, future contracts on these and it can speculate on interest moves of Russian government bonds.

Are there any big long future positions on the Canadian dollar the U.S. president does not like? Just get the Treasury buy them up. Congress is giving it the right to do so.

With a capital of $700 billion and the authority to buy and sell any highly leveraged financial instruments, the Treasury will become one gigantic hedge fund that can and may well act to move multi-trillions.

If such an entity makes one wrong move, it can bankrupt its owners within a few hours. The Treasury is too knowledgeable to make such mistakes? So were two Nobel Price winners at LTCM.

Brian, please discuss DCS's--Credit Default Swaps, kinda insurance but also derivatives.

Ask Levitt, please.

Bernhard at Moon of Alabama blog is saying the Paulson Fix includes buying up these financial horror show creatures, and Treasury, the US Gnv't may become the Mother of All Hedge Funds.

http://www.moonofalabama.org/2008/09/the-treasury-mo.html#more

Bernhard says the plan has morphed from "morgage related instruments" to:

"The Dodd version gets lauded by Krugman, DeLong and other 'liberal' luminaries.

This while the bailout language morphed from "mortgage related assets 'to "any financial instrument.'"

To be cont'd--

Would you please ask Mr. Levitt, if the "meltdown" warrants criiminal investigation against the executives of these failed companies?

Arthur Levitt is connected to the Carlyle Group which is, in turn, caught up in the mortgage chaos.

So what reason do we have to believe that Levitt is free of a conflict of interest?

Can your guest Mr. Levitt explain to us how this bailout will solve the credit, panic, trust crisis in the financial markets?
How is it that a lack of openness/transparency for this $700B bailout is ok when lack of transparency is what has led to the distrust at Wall Street?

how's this for a bail out plan -- according to the latest census, there are 218 million adults in the US. Let's have the government give each one of us $100,000. That comes out to about 22 billion, more or less, and I think most Americans would be quite happy to use those funds to pay down debt, fight off foreclosure, send kids to college or get that new kitchen they were fantasizing about before the economy tanked ... and this infusion of 22 billion (more or less) into the economy may stimulate enough of a come back, in terms of bank revenue (paid loans) and new spending (that kitchen!) to enable us to leave a good portion of that other 675 billion currently slated for the wall street bail out safely in the treasury... thoughts anyone?

The Treasury secretary Paulson is screaming for a blank check to bailout banks in order to avoid financial Armageddon. The media is not questioning anything and trust him on his words.

Now, let's replace Treasury by Defense, Paulson by Rumsfeld, bailout banks by invade Iraq, and financial by WMD:

The Defense secretary Rumsfeld is screaming for a blank check to invade Iraq in order to avoid WMD Armageddon. The media is not questioning anything and trust him on his words.

Humm....