9/26/2008

The Americans are angry

NEW YORK, (AFP) - - An angry US public and Congress demanded to snip the rip cord on golden parachutes used by fat cat CEOs to escape Wall Street's mayhem.... Their push caught the mood of a nation sickened at watching the titans of finance walk away from Wall Street disasters not only unscathed, but enriched.... Those gigantic pay checks, bonuses, and Midas-like farewells encapsulate what the public sees as Wall Street's greed-is-good philosophy.... Public anger at such figures underlies skepticism about the entire government rescue. "We'll never see that money again," said Mathew May, a 24-year-old economics student who skipped lectures to attend a small demonstration at the iconic bronze bull statue near the New York Stock Exchange. "They deregulated the markets and ran wild. Now we're bailing them out." Arun Gupta, an editor of alternative New York newspaper The Indypendent, said there was "socialism for the rich and dog-eat-dog capitalism for the rest of us." "Think about it," he wrote in an email that quickly circulated to thousands of activists and appeared on several websites. "They said providing healthcare for nine million children, perhaps costing six billion dollars a year, was too expensive, but there's evidently no sum of money large enough that will sate the Wall Street pigs." But left-wingers are not the only ones speaking out. Newt Gingrich, the fiercely conservative former speaker in the House of Representatives, wrote in the National Review that the bailouts, likely to top a trillion dollars, smack of "crony capitalism." "Doesn't that mean that we're using the taxpayers' money to hire people to save their friends with even more taxpayer money?" he asked. Forbes, the magazine for and about the rich, also says enough is enough.... " One worker in the New York finance sector, who asked not to be named, told AFP that his colleagues are as angry as the general public. "A lot of people are very upset that managers in their own companies and captains of industry in other areas made some really, really bad decisions," he said. "The most insulting thing is the golden parachutes where these jackals from Fannie and Freddie, having destroyed the company, walked away with millions ... It all comes down to greed." The above are just samples of angry comments by Americans at the greedy fat pigs that threw the American financial sector into disarray.

13 comments:

Anonymous said...

The Paulson plan - if passed through Congress - is the biggest swindle, the biggest transfer of wealth from the poor to the rich in the history of mankind.

I've parsed through about 200+ comments from Americans - only one of them has expressed explicit support. If Congress is to truly reflect the wishes of the people, there is no way this bailout should fly.

Let Paulson and Bernanke lead by example - take out some money from their personal coffers to purchase some American houses at inflated prices.

This is a swindle of monstrous proportions - how about countenance the idea of allowing taxpayers to have an equity stake? Oh, but that wouldn't be very nice to current shareholders.

Bush is again donning on his 9/11 attire and trying to force the hand of the Congress, to incite fear into the American people - the last time he was given carte blanche, he came up with the USA Patriot Act and Iraq war.

At this rate America is becoming more socialist/fascist/communist than China.

Is this the end of American liberty?

Bush - destroyer of civil liberties, individual rights, and economic freedom. May justice be done to Bush in the annals of history.

Anonymous said...

RON PAUL FOR PRESIDENT!

Anonymous said...

To call it a 'rescue plan' is doublespeak - well, not exactly... but who is being rescued?

Anonymous said...

This is fascist grab for power, for control over the entire economy, to reduce the American populace to feudal serfs.

Anonymous said...

If the bailout goes through, it will be, as anon 3.48 said, the biggest swindle in history and based on the most stupid arguments put forward by Paulson and the Bush administration.

How on earth could the USA, with such depth of talents, ever got to put Paulson there is beyond imagination, but you can never be surprised with the repeated blunders of the whole Bush administration.

This whole fiasco is the consequence of putting selfish people with selfish motives in positions of power. There are obviously selfish reasons for wanting the $700b bailout going directly to the banks. They are only interested in helping the filthy rich and powerful. Nothing else matters, not even destroying the future of the next generation to come.

redbean said...

i am surprised and disgusted that they are still talking about golden parachutes and how to save the thieves. these thieves have too much money for their own good. they should be sent to prison for the mess they have created.

redbean said...

agree. rescue who, who stands to benefit most?

tough questions. luckily it is america and there are some hopes of balancing the interests of the people with those in power.

in authoritarian states, the problem will be solved quicker. they just decided what should be done and no question asked.

Matilah_Singapura said...

redbean, IMO it is unfair to blame the fat-cat liberals of Wall Street.

When the sub-prime fueled US property bubble was growing, it did so because of (among many things) US Federal Govt Banking Legislation. A specific community banking act FORCED banks to make credit available “bad risks” -- people who under normal more logical conditions would be denied loans in the first place.

Low-income, already debt ridden individuals were encouraged to take loans by banks so that the banks COMPLIED WITH THE GOVT'S LAWS. In the middle of the boom in Las Vegas for example, many waiters, waitresses, janitors and other low-paid workers were given loans.

Since the market was rising (mainly due to many sub-prime borrowers buying homes), many of these low-income people were pulling out equity of their original homes, and using to either spend on luxuries or buy more homes. Many sub-prime mortgages were “no money down”, coupled with a low “teaser” rate of interest.

It goes like this:

I borrow $100k on a mortgage for a house. 6 months later, the market value goes to $130k. I re-finance the loan and pull out $30k of “equity”. I use that $30k to buy 2 more properties and take out 2 more mortgages. The market continues upward, so I pull out more “equity”... and buy more houses, maybe buy a new car and take a vacation too. Why worry? Real estate never falls... right?

It was not uncommon for a waiter or janitor to have a multi-property portfolio. One hero mentioned in a news report – a gardener on the minimum wage – had 14 properties! All had been financed by this pyramid-scheme game of “get rich quick”.

Now,if the “poor”can play this game, everyone else can too, and they did. I subscribe to a few property newsletters, and most of them suggested pulling out the “equity” and buying more, and more and more. I didn't believe any of this. If it were that easy to get RICH – form no money down loans – then we could have wiped out poverty FOREVER on this planet in a very short time.

Of course complicit with all this private-sector activity, was the US Fed's constant inflation of the money supply, made WORSE by the banks lending out more money than they held (fractional reserve banking), pyramiding credit upon credit upon credit (creating credit-fueled asset bubbles), not only in the US, but all over the world. Banks held a 2% reserve. I think it's time for a bank run, because most of the money simply isn't there. Remember in a bank run: first come, first served.

Freddie and Fannie structured the mortgages, bought form the banks and re-sold them to “investors”. Banks got an influx of money from the sales, ensuring liquidity and thus having more (credit-backed) money to lend and pyramid some more.

All was going well in a low-interest rising market. Defaults on mortgages by borrowers were in the single digits. When the interest rates rose and the markets fell, defaults started to rise and when they hit 40+% (!!!) all those fancy investments turned to worse than junk bonds.
Defaults meant more bank foreclosures, and to this day the UNSOLD inventory of houses in the US continues to rise.

Remember, the rich folks were DEVELOPING property. Why not? Low interest, healthy market sales... strong demand.

It is all to easy to blame the “greed” of people, especially those on Wall Street. But it isn't their fault.

PEOPLE RESPOND TO INCENTIVES

As always, it is The Government who makes laws which encourage “morally hazardous” behaviour. Some people simply should not be allowed to borrow money until they have a certain degree of financial security. Not everyone can afford to buy a home, and no one is ENTITLED to own a home, even though the govt – always acting against reality and common sense – makes it so that CREDIT is a RIGHT without any demonstration of RESPONSIBILITY.

Now we have a serious damaged financial system, people who have ruined credit records, people who had their life savings invested in mutual and pension funds which invested in sub-prime “securities” (SIV etc), then looming threat of more govt controls and nationalization of private sector financial institutions... putting us closer and closer to socialism and state-controlled everything.

Anyone who still thinks the govt is a “good” is best advised to re-think their position. Democracy didn't help much did it? Lovers of democracy are always yelling out for the govt to “help the poor”.

In this debacle, the poor who were supposed to be helped by offering them credit to buy homes are now WORSE OFF than they were before. Many of them will never be able to repay what they owe. Before they were poor, but making it through life anyway. Now,because of “government help”,many of them are poor AND bankrupt, without a home, and with no money to rent.

Moral of the story: If you believe the government will help you, you are one day going to wake up as a victim of brutal sustained anal rape.

Anonymous said...

Do you support government intervention in the event of potential large systematic failure? Like the Swedish nationalization of banks in the 90's - which they later resold and even net a profit.

Anonymous said...

And what would happen in the (likely event that a (modified) Paulson plan is passed through Congress?

It's not too bad for us (non-Americans) in the short term, is it?

If the Fed prints enough money to try sustaining the toxic debt at nominal values, the prices of other stuff would be inflated - bringing them into 'equilibrium' over time. But that ruins savings.

One thing which I don't fully understand about the Austrian theory of business cycles is why monetary inflation has to be followed by an inevitable monetary contraction.

redbean said...

the fat cats are not solely to be blamed for this fiasco. yes, the fed plays a big part in contributing to the bubble and the mess.

what i cannot accept is that the fat cats have been paying and receiving millions and billions. should they step aside and take some losses? even without the golden parachutes, they are all still filthy rich.

the poor guys who joined the fun in speculating and got burnt? just like our ah peks and ah mahs.

did not know enough of what they did to contribute to the mess and their plight.

Matilah_Singapura said...

It is not unreasonable to expect people to protect their "gold" as best they can.

The Wall Streeters have not acted "immorally" IMO — they're just being human.

Losing money just because someone else has lost (for whatever reason) has no basis in logic or rational thinking. If you are paid to do a job, your responsibility is to do your job and make sure you get paid. It's that simple.

I don't support govt intervention of any kind in the marketplace — unless it is to prosecute theft or fraud (after the fact, and only on irrefutable evidence).

The "morality" based on envy has to go. To be envious just because some have "won" fair and square and others have lost is nonsense. Everyone has the right to profit from whatever legal enterprise. Banking is a legal enterprise.

The only way "fat cats" in the private sector can make money is if you give them your money. If you want them to not make so much, then don't give them your money.

I don't believe keeping your money in banks is that good idea anyway. What for? They use your money and give you fuck all, sometime they even CHARGE you for keeping your money "safe" (yeah right) and lending it out. Unfortunately, banks are a necessary evil in the sense that one still needs cheque accounts, plastic, deposits, loans etc. However there are other uses for money instead of just stuffing it in a bank and letting the "fat cats" go nuts.

If the govt didn't pass the laws in the first place, and actively enforce them, then none of this would BE ABLE TO OCCUR. It would be an impossibility. No one in their right mind will lend so much money to BAD RISKS unless they were FORCED to do so.

redbean said...

justice needs to be served. and the thieves hanged.