Sunday, September 28, 2008

Bailout idiocy continues

Clap if you want the banks to live h/t Ian Welsh

First, Gretchen Morgenson in the New York Times reports that Goldman and no other Wall Street firm was involved in the AIG rescue talks and an AIG failure would have created a hole as big as $20 billion in Goldman's balance sheet.

I was speaking about this to my father. Here we see Paulson's cronyism, he has been at Goldman Sachs from 1974-2006. Lehman Brothers and Goldman Sachs were rivals. AIG's failure would have taken out Goldman Sachs, so Paulson saves AIG AND involves Goldman's in the talk. Only Goldman Sachs was involved. ref: naked capitalism

This is one of the major reasons why I am deeply suspicious of the bailout. It seems clear to me that Paulson isn't worried about the markets but worried about his firm Goldman Sachs.

The deal itself is crap. Let me quote Ian Welsh at FDL

In short, while this plan is an improvement on the original Paulson plan, which is saying, well, almost nothing. It's still a plan that, at the end of the day, won't work. That doesn't mean we won't see some short term benefits. Throw 700 billion bucks at the economy and the financial sector and it will do something. That's still a ton of money. But it won't fix the problem permanently, it will only patch it for a time and even during that time, things will continue to get worse. (For example, expect this to cause oil inflation.)

It's a bad plan that won't fix the economy or the financial sector. So we'll be revisiting this issue in 6 to 9 months or so when it becomes clear that the problem hasn't been solved, and that not solving it is costing a hell of a lot of money which could have been used to actually fix things.

For me one of the worst parts about this is no protection for homeowners in bankruptcy. They still lose their house, the bankruptcy judge has no power to save them. And idiots like Mayor Nickels are forcing homeless out of tent cities like Nickelsville when he doesn't have enough shelters to put them in.

In short I am losing hope for humanity. It looks like we are still digging the hole we are in, not realizing we need to do something different to get out of this mess.

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