Monday, November 10, 2008

We Are Getting Scammed

I used my own version of the TARP this weekend. On Saturday I raked leaves for over 5 hours onto a TARP and dragged the pile into the woods. I repeated this process many times. Where is my leaf removal bailout anyway?

Mars Phoenix Lander Goes Quiet
After what can only be described as a wildly successful mission, the Mars Phoenix Lander has gone silent. The coming Martian winter has cut down the Sun light level to a point at which the lander can no longer function. There were too many observations to list, but this was an exciting thing.

Sadly, in a coming era of cutbacks and bailouts I do not imagine space programs to live much longer. What a shame. We can keep GM open against all reasonable business sense, we can pass stimulus checks out until we are blue in the face but we cannot fund space exploration or develop cutting edge technology. Whatever. You can see a bunch of Phoenix content here:

AIG Making Fools of the Treasury and FED (Not Like That's Hard)
I have to say that the news already out on Monday has my vomit meter pegged at redline. This week should be a good one!

So AIG, the troubled giant insurer, asked for and received a new bailout deal. I will not bore you with the details, the new money amounts and the benefits to AIG are plain criminal. What I would point your attention to is instead the open and blatant way that AIG management is pushing the Treasury/FED around. For a broken down on the verge of bankruptcy firm, these guys sure are comfortable in their position.

From the site Clusterstock:
AIG: We're Already Planning To Screw The Taxpayers More
Joe Weisenthal | Nov 10, 08 5:33 PM
"This morning AIG (AIG) confirmed it had secured a sweetened bailout deal from the government, scrapping the original, high-interest bridge loan. But AIG isn't done! It's already scheming to come up with a more shareholder-friendly plan. We were incredulous when we heard that on this morning's conference call, but a check of the transcript confirms that that's a goal.
The setup is that John Levin of Levin Capital asked if there were any way to restructure the new deal, so as to give AIG more upside if the securities they're transferring to the government improve markedly in value. The response:

Edward M. Liddy - Chairman and Chief Executive Officer
Yes, John right now, the deal is... what the deal is, not fixed in concrete forever (emphasis added). As you can see the movement we made from the first transaction to the second one, is a rather quantum improvement. We'll continue to do everything we can to put AIG in the best possible position. What these two arrangements do is they stop the cash out flows for the most part.
John Levin - Levin Capital
I agree with you and congratulate you on that. (!)

There you have it. For all to hear, CEO Edward Liddy and investor John Levin are already high fiving each other on how they might stick it to taxpayers even more, wresting more cash for shareholders. As long as equity holders are left hanging around, it's inevitable that they'll keep trying. More reason they should have been wiped out long ago."

If you have the time, a read of the conference call reveals even more brutal schemes by AIG management to make sure the government has zero upside potential if they get turned around, but still carry all of the risks if AIG goes down. Sick stuff.

We Are Getting Scammed
Folks, we the taxpayers are getting scammed. The end of the financial universe that was feared has made government reactive and panicky. Our congress had no idea what they are doing and are relying on a FED/Treasury that has no idea what they are doing. We are told one thing, only for that to change sometimes within the same day. We are told some dollar amount is needed for this company or that company, and then that dollar amount is doubled or tripled up in the space of one month. We were told transparency and taxpayer protection were going to be featured structures of the bailouts, yet one has to sue just to get basic information on where all this money is going. We were told only "systemic risk" candidates were to be considered but then we find out that "systemic risk" can mean just about anything.

Some headlines to get the general feel of the day:
Bloomberg: Fed Defies Transparency Aim in Refusal to Disclose
Bloomberg: Fannie Says $100 Billion Pledge From Treasury May Not Be Enough
washington post: A Quiet Windfall For U.S. Banks; With Attention on Bailout Debate, Treasury Made Change to Tax Policy
Bloomberg: GM Plunges as Deutsche Says It May Become Worthless (Bailout Still Will Happen)

Fannie Mae will now need MORE cash. Remember when the government was going to make a profit on this thing? HAHAHA. AIG needs more cash and gets better concessions from the government to boot. HAHAHA. FED will not disclose any action it does because, wait for it..., to tell the markets who is getting what might cause, wait for it..., a "systemic risk"!!! Awesome job boys, that is a classic. The FED and Treasury having learned their lesson about going through the US Congress rewrite a tax law to give banks doing mergers almost unlimited tax relief. I mean, why debate and vote when you can just do?

The FED and the Treasury are out of control. They must be stopped, immediately. The newly elected president Obama needs to come out today and tell these jokers to cut it out. Better still he should make it clear that the game is up come January when he is sworn in.

There has been a mad rush by politicians to be seen as "doing something" for the economy. What they have done is enabled a mass looting of the treasury by Bernanke and Paulson and they have given up any ability to influence the situation. Now is the time to do one thing: NOTHING. No more money for AIG. No more money for GM and the like. No more stimulus checks. NO MORE. Just stop. Start the new year with a broad based economic panel that can think through the next 5 minutes.

Obama has a chance here to win over the libertarians like myself. If Obama can change the behavior of the Treasury and FED, if he can have guys like Paul Volcker in on the action, if he can revoke the silly TARP powers then I will fight for the guy. His message was one of "hope". Well, here's hoping he can do what is needed at this juncture.

We have been told a bunch of things by the FED/Treasury and so far none of them have been true. We are being ripped off and nobody seems motivated to do anything about it. The only silver lining I can see is that it seems clear the FED/Treasury will bankrupt the US, and the ensuing revolution will surely be most unkind to the architechs of the collapse. Makes me sick to think it, but it seems to me as of late a secession movement may be in order. Leave New York and Washington DC to themselves and start all over again. Everyone can choose sides. Is there really any other way to cleanse the corruption and poor leadership? Probably not.

Have a good night.


Lisa said...

Another great article. I love to read your blog!

getyourselfconnected said...

Thanks Lisa!
I liked tonight's post as well. I am glad you did, thanks for stopping by.

watchtower said...

TARP = Titsup for America Rest in Peace

Theives I tell ya, can you believe the American people are going to let a credit card company stick it's finger in the pie (let alone the other yo-yo's)?
What in the h*** is wrong with people?
Why is there not an outcry in the streets?
We truly are sheep breed for the sheering.
It's a d***** disgrace what we have allowed ourselves to become.
Our forefathers would be so proud...NOT!

watchtower said...

I'm so POed that I misspelled thieves.

Anonymous said...

Hey all,

Wow almost two weeks without watching CNBC or reading about all this BAD krap coming down the pipe and you would swear the world is a great place!.... oh's a dream never mind.

Don't cha like thoze low oil prices slick? What about that all mighty powerful dollar.... hell print more guys it's just going to get even stronger. Maybe if we print enough USD we can build a elevator to mars with it.... then we can say this will help NASA.

I can't wait until the holiday season gets into full swing and the prices get slashed down hard to make even mediocre sales.

The mall I work in is FREAKING EMPTY every day except Saturdays. And by empty I mean empty....


PS: I am going to get another 100oz bar of Silver soon if these prices keep dropping. Sub $10/oz is un-freaking-believable!!!!