The $5 trillion fiasco
I just can't make up my mind: Is Hank Paulson committing premeditated murder of the U.S. economy, or merely negligent homicide?
Constant readers know I've gone back and forth on this: In September I figured the bailout bill smacked of making things up as he went along. But on Monday I took note of the phone conversation he had two months before Washington Mutual collapsed, in which Paulson told WaMu's CEO he ought to sell out to JPMorgan Chase because his company was in big trouble.
I guess it's possible Paulson knew bad things were going down, but he still didn't know what to do about it. And this morning, the making-things-up-as-he's-going-along thesis seems inescapable. I mean, really: The bailout bill was predicated on buying up toxic, er, um "troubled" assets. Then in the middle of the game it became a hybrid of buying up "troubled" assets and "recapitalizing" the financial sector (for bonuses and takeovers, natch). And as of yesterday, the buying up "troubled" assets went by the boards altogether. Now Paulson aims to "recapitalize" the financial sector and "increase the availability of student loans, auto loans and credit cards," according to the Wall Street Journal. Right, because if EZ credit got is into this mess, more EZ credit is sure to get us out.
You'd think the media could at least have trotted out some of his quotes and sound bites from September, when he warned of apocalypse if Congress didn't immediately cave to his demands that he be given unlimited authority to buy up "troubled" assets. Alas, it's all gone down the memory hole. We have always been at war with Eastasia.
Anyway, it sure looks like negligent homicide to me.
And now we have corroborating testimony from Paulson's protege and bailout point man, Neel Kashkari (a name for a villainous bureaucrat that could have come out of an Ayn Rand novel). On Monday he gave a speech with some choice quotes picked out by Phil Mattera.
Kashkari spoke of having made “tremendous progress” and of having “accomplished a great deal in a short period of time.” He bragged that his team is “working around the clock” while “ensuring high quality execution.”
Again, this was Monday — hours after AIG got a do-over on its bailout and around the same time Fannie Mae reported a $29 billion third-quarter loss.
Heckuva job, Kashie. We're staring at a bailout tab of $5 trillion as figured by the firm CreditSights. That's not including anything in the future; it's $5 trillion to date. We have experts not named Peter Schiff going on CNBC and talking about the United States losing its AAA credit rating.
Yup, negligent homicide. Guilty as charged.