IS THE UNITED STATES 

TOO BIG TO FAIL?

ANOTHER DAY ANOTHER TRILLION

A Trillion Here, A Trillion There, And Trillions Everywhere

Is the United States too big to fail?

by Phil Staudt
blog.philstaudt.org
March 23, 2009

The DJIA went up 500 points today, which is the first time in the past nine months that the stock market went up when a big announcement was made by the government to get us into another trillion dollars in debt. Maybe Obama and Geithner should come up with a new program overnight to add another trillion dollars of debt to taxpayers so that the market will go up some more tomorrow. I felt a little better when the stock market was going up every day at the same time that the United States government was paying down debt during the Clinton years.

I was born in the United States and grew up here. I was educated by schools run by the government. I read government censored newspapers, watched government censored television, I watched movies and TV shows made by Hollywood, was influenced by advertisements for fast food and soda pop and candy bars, traveled across the country a few times, worked in various capacities for a multitude of companies, and lived in five major cities in the western part of the United States. When I woke up and watched the news for the day on CNN and FOX and CBS and NBC and ABC and BLOOMBERG and on Internet web sites, all of them owned by profit-oriented parent companies featuring their carefully screened biased analysts, I wonder if maybe I am sitting in the middle of an audience full of curious people watching a grandiose magic show. But when the show is over, will everybody get up and orderly walk to the exit and stand in line to get a taxi and go back to their hotel rooms, or will there be a big explosion on stage that catches the place on fire and everyone will rush to find exits in the smoke and panic and people trample on each other in the process while the building falls down.

This President job seems pretty simple. Keep spending a trillion a day on things like toxic assets and hope it all works out okay. In the midst of the news stories and the jousting back and forth to decide whether or not the trillion dollar toxic asset spending spree of the day will work, there is very little attention being paid to the increased debt and how, and who, will pay for all of this. 

I worked for dozens of restaurants in different towns, and most of them do well at Christmas time. People are running around spending money and racking up debt on Christmas presents and Christmas clothes and Christmas travel and Christmas groceries. So, as long as people are spending more money than they know they should, and their budgets are shot, why not get out a credit card and go out to eat and spend some more?

As long as Obama and Geithner spent a trillion last week and the week before, why not spend another trillion today for toxic assets? The House and the Senate will not call them into testify like they did AIG or the car companies, as long as the politicians can get hundreds of billions for their pet projects to get themselves re-elected. It is a good time for Obama and Geithner to take advantage of the opportunity to bury the country in debt while they are unopposed, and while the average American is still in shock after losing their retirement savings and houses and jobs and hope. Besides, the Democrats are just making up for the trillions spent by Bush primarily benefiting corporations with world record profits and individuals earning over a million a year (but at least last year I got a check for $600).

When I was 18 I moved into an apartment with a friend in Denver. We both had jobs. The first week I went and bought groceries and put them on one side of the fridge. When my room-mate saw what I bought, he told me that I did not know how to buy groceries. He was older and had lived on his own for awhile, and he assured me that if we went in together on groceries that we would save a lot of money. So we went shopping. He would pick something I did not like, so I would buy something to make up for it. I would buy something, and so he would buy something else. Everything we bought was a good deal, but together we bought an enormous amount of groceries. Of course, we just made sure we ate it all, which was no problem for a couple of skinny hard working guys. We ate good. The little old ladies at church were always inviting us over to dinner, because they figured we must be eating out of cans, and we never turned down offers for dinner, but my room-mate and I agreed not to tell them how well we ate on the nights when we cooked our own food. (If only they knew.)

All of our elected officials have all been getting in on the current Christmas-style spending spree with pledged taxpayer money, and there is a rush to fill up the government shopping cart while the getting is ripe for the taking. The only reason some companies have been called on the carpet for paying out executive bonuses and spending money on Las Vegas trips or flying their corporate jets, is because they failed to give enough of their ill-gotten gains to the right officials. (They should watch some more gangster movies about Vegas.) Meanwhile, a large percentage of Americans are waving pom poms and dancing in the streets because their new hero made it to The White House, so no matter what Obama and Geithner do to ruin the country, there is no way they are going to criticize, the same way that conservative Christians and evangelicals were joyful and having potluck dinners to celebrate when Bush and the Republicans controlled everything.

Obama is certainly a socialist in one form or another, and not all socialism is bad as long as it does not hurt the ability of a society to also be capitalist in a regulated free market environment (such as roads, police, fire departments, Social Security, etc.), but this current debt increasing toxic asset program of Geithner is not very socialistic, nor is it capitalistic, but is very oligarchic. Wouldn't being socialist mean that Obama would take hundreds of billions of dollars and put it into the hands of the common folks? But we know that is only in theory and that is what is advertised by socialists, because we know that what happens in socialist governments, in practice, is that they just end up taking away from the people, and they never get around to giving to the people, because that would not be for the common good of the people, and that part of socialism is already evident all around us in the United States, thanks to our elected officials of both big political parties during the past decade.

Reagan made the economy look good by racking up huge national debt, so why shouldn't Obama? Five years ago I was criticized by my Bush supporting friends for warning them that if they re-elected Bush, after knowing what a crook and liar and scoundrel he was during his first term, that the repercussions of anointing him to run the country for another four years was going to result in having an administration in the future that would be worse than what we would have had if Kerry had won. Once again, voting for evil to fight evil is still voting for evil and the end result is always going to be more evil. It would be nice if everybody stopped voting for bad people for the sake of voting against the other bad people. That is how we got into this mess, and it is a mess, and the mess will get worse as long as we play into the agendas of the Republicans and Democrats. Until a sizable percentage of voters refuse to vote for anyone, liberal or conservative, as long as the only politicians, Republicans and Democrats alike, are selling us down the river and sinking our boats, then we will keep sinking in the quick sand until it is too late.

This toxic asset program from Obama and Geithner is just another program to "take care of the rich and they will take care of us", no matter how much debt is piled up, which was the philosophy of Bush and Cheney and Karl Rove. How has that has been working out for us?

by Phil Staudt
blog.philstaudt.org
September 25, 2008

"Nobel laureate Krugman slams Geithner bailout plan"
REUTERS Mar 23, 2009
WASHINGTON (Reuters) - Nobel-prize winning economist Paul Krugman said in remarks published on Monday that the latest U.S. Treasury bailout program is nearly certain to fail, triggering a sense of personal despair.
U.S. Treasury Secretary Timothy Geithner on Monday unveiled a plan aimed at persuading private investors to help rid banks up to $1 trillion.... READ_THE_ARTICLE

"Geithner Banks on Private Cash"
Treasury Secretary Says Investors Needed to Help U.S. Rid Balance Sheets of Bad Assets
WALL STREET JOURNAL MARCH 23, 2009
By Deborah Solomon
WASHINGTON — Treasury Secretary Timothy Geithner said the only way to remove troubled assets clogging banks' balance sheets — which lie at the heart of the financial crisis — is to work with the private sector, even at a time when Wall Street moneymakers are being vilified by the public and politicians.
In an interview with The Wall Street Journal Sunday, Mr. Geithner said the government cannot fix the financial crisis alone...the creation of a series of public-private investments to soak up $500 billion, and maybe as much as $1 trillion, in troubled loans and securities...Banks still holding troubled assets at relatively high values may be reluctant to sell for fear they won't get a high enough bid to avoid having to take a huge write-down... READ_THE_ARTICLE 

"K. Denninger gets it!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!"
MOTLEY FOOL March 23, 2009
alstry's CAPS Blog
...Now that the Treasury Plan to "cleanse" the market of "toxic assets" has been put forward, I have noted that The FDIC is the entity that will both guarantee the debt issued and vet the bidder list...The taxpayer gets hosed for the remaining $71.25 billion dollars.
This can and will be done if the "sellers" of these assets are allowed to bid either directly or indirectly as it provides a means for banks to intentionally dump bad assets at a certain loss that is much smaller than their expected realized loss over time, shifting the rest of the loss to the taxpayer.
This program has the potential to shift literally $500 billion or more in losses onto the taxpayer, not through the operation of "bad luck" but rather through what amounts to a bid rigging operation... READ_THE_ARTICLE

"Hey, It’s Only a Trillion (or More)"
FOX NEWS BLOGS March 23rd, 2009
By Phil Kerpen
...the Trouble Asset Relief Fund (TARP) bill was passed because it would have been too expensive and because there was no agreement over how to price the assets–set the price too low and banks would be hurt instead of helped by the deal, set the price too high and taxpayers get ripped off. The private part of the Obama-Geithner plan solves that problem, but the public half–the reliance on substantial taxpayer funding–is another misstep, and could ultimately cost trillions of dollars...This FDIC guarantee would be capped at a 6 to1 debt to equity ratio–but remember that half the equity came from the TARP, so private investors would actually have $12 of taxpayer funding for every dollar of their own money they put in. That’s a huge amount of taxpayer risk for every dollar of private risk-taking, which creates an incentive for funds to overbid at auction, taking a chance that loans may overperform expectations because taxpayers are on the hook for downside risk... READ_THE_ARTICLE

"Geithner Relies on Investors for $1 Trillion Plan"
BLOOMBERG.COM March 23, 2009
By Rebecca Christie and Robert Schmidt
...The plan is aimed at financing as much as $1 trillion in purchases of illiquid real-estate assets...Barely two months after President Barack Obama took office, he and Treasury Secretary Timothy Geithner are staking much of the new administration’s economic credibility on the theory that removing the devalued loans and securities from banks’ balance sheets will help them start lending again and resuscitate the economy...Today’s announcement is the latest in a series of government attempts to end the worst financial crisis in seven decades; the Bush administration abandoned an earlier plan to buy the toxic securities in November. Obama officials still have to pick private asset managers and banks have yet to commit to selling their illiquid investments... READ_THE_ARTICLE

Tags: Geithner Geithner toxic assets toxic assets