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My two semi-grown children were asking me the other day about the Wall
Street mess. I told them that some silly men made some silly loans and some
more silly men bundled them all up and found some knaves to rate them AAA and
then found some fools to purchase them. So my beautiful daughter then asked
me but what does this have to do with us. Simple I said, "The silly men
get to keep all their profits and you and your children my dear will have to
pay for it all." "Why, that is the silliest thing I ever heard of
Daddy. Why can't the silly men accept the consequences of their foul deeds
and pay for their own mistakes? Why must we rescue the fools?" Why
indeed?
It is just that simple. When the Secretary of the Treasury said it is
too complicated and that time was critical and that no one needs to
understand all this and that we just needed to give him the biggest blank
check ever written in the history of the world and that he would be exempt
from all prosecution and his use of these funds was final... I almost burst a
blood vessel. The 700 billion dollar fund is just the start. How many times
have you heard of a deal gone bad that asks for more money only to come back
a while later and say they needed even more; and then more; and then more. Does
anyone think it a bit odd that the very man asking for dictatorial power over
the finances of these United States was the chairman of Goldman Sachs; one of
the largest culprits that got us into this mess and that profited greatly in
the process. We, as a country, are being asked to give a known arsonist the
keys to the fire truck and then look the other way? We are being told that
there is no other option but to give one of the very men who got us into this
mess by unrestrained greed a blank check to spend with his cronies to fix the
mess... with no oversight... and a get out of jail free card stapled to the
check for good measure?
Perhaps we need to all take a pill, calm down and slow down. Sure
there is a liquidity crisis because all the banksters
in the world no longer trust each other. The criminals no longer trust each
other. It sort of reminds you of that scene where Al Capone is holding a
meeting of all the crime bosses in Chicago
and in the middle of the meeting Al bashes one of his cronies with a baseball
bat in front of all the others and kills a crony just for effect. Bam... and
Bear Stearns is dead.
Maybe there are alternatives. Could FASB157 be amended and the
accounting regulations eased up on the mark to market rules? It seems like
this alone would allow for some banks to hold their long term holdings until
maturity at full value as long as they are producing assets? There are many
other options other than asking for a taxpayer bailout. We have been here
before. Perhaps a bank holiday over a week until regulators could determine
which banks are solvent and declare them so (backed by the government) and
then close those that are not and begin to liquidate their assets.
I realize that there are some fairly complicated financial assets out
there with counterparties that may not be solvent anymore thus calling into
question the value of the holding. But who allowed this situation to build to
such a dangerous situation? Many have been sounding the alarm for years. Why
is it an emergency that must be dealt with immediately? Excessive bad debt
MUST be marked down and written off or sold at discount so that we can move
forward. Any scheme to fix pricing by the government is simply that... a
price fixing scheme by the government. A quick look back through history will
show that government price fixing has NEVER worked in the past and it is
doubtful that it will EVER work in the future.
Ask an older retired banker how he feels about this mess. Most likely
he will tell you he didn't see how it went on as long as it did. The banks
were loaning money to anyone who could fog a mirror because they knew they
did not have to hold the paper and that someone was willing to take every one
of those rotten loans off their hands before the ink was dry. Investors were
desperate for some type of return on their money since the Federal Reserve
was holding interest rates so low in order to try to juice the economy. The
federal government was also an accomplice lying to the citizens with phony
inflation numbers that understated inflation in order to give the fed cover
for their monetary expansionist policy. (Why exactly do we need to give a
private bank a license to print money? Poor old Andrew Jackson must be
rolling in his grave every time they print a new $20 Federal Reserve Note
with his picture on it.)
Where were the regulators? Why is no one calling the ratings agencies
on the carpet for their part in all this? A.M. Best and Moody's rated all
this risky junk AAA so that pension funds and other institutional suckers
could buy these mortgages that few fully understand. (But they didn't have
to understand them, they were rated AAA!) Where is their liability in all
this or are they getting a "get out of jail free card" as well?
I feel like this bailout will go through because we are told that it
must OR ELSE! We have no guarantees that any of this will work. We only have
the guarantee that if we bail these reckless Wall Street banksters
out of this mess that we will have MORE of it in the future. It is always the
same unintended consequence - if you subsidize something you will get more of
it.
Grab your wallet, because this is the greatest theft in history. Tell
your congressman not to vote Bush/Paulson dictator. Remind him that the House
of Representatives cannot abdicate their fiscal responsibility without an
amendment to the constitution (ask him if he remembers the constitution since
he took an oath to abide by it). Long live what is left of the republic! Or
heaven help us into the future.
Either way, hang on tight and rig for a storm, it's going to be a
bumpy ride out of this mess the Secretary and his cronies got us into.
Larry Laborde
Silver Trading Company
www.silvertrading.net
Larry
lives in the occupied South with his wife Puddy and
sells precious metals at the Silver Trading Company. Larry can be
contacted at llabord@aol.com. You can view his web site at www.silvertrading.net.
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