Mendo Island Journal — Timely. Useful. Sometimes Cranky.

A little scary…


From Michael Laybourn

At the time I first saw this it was kind of funny. Now… It’s a little scary…

Dear Beloved American:
“I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.
I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion USD. If you would assist me in this transfer, it would be most profitable to you.

I am working with Mr. Phil Gramm, lobbyist for UBS, who (God willing) will be my replacement as Ministry of the Treasury in January. As a former U.S. congressional leader and the architect of the PALIN / McCain Financial Doctrine, you may know him as the leader of the American banking deregulation movement in the 1990s. As such, you can be assured that this transaction is 100% safe.

This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.

Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.
Yours Faithfully Minister of Treasury Paulson”

Lo and behold! He got the blank check and no one can tell him what to do with it. What is left after these giveaways? No one knows, neither Congress nor the American people.

The program was supposed to work by taking the troubled assets off the market and off bank balance sheets thereby enabling the banks to regain their footing and not be forced to sell these assets at fire sale prices.  The plan was supposed to stop the downward price spiral of mortgage related securities, free up capital for loans, slow foreclosures and stabilize the financial markets.  That was the plan anyway… How about none of the above?

The act placed few restrictions on how the money could be used. So its not surprising that the use of the funds changed from purchasing troubled assets to direct injection of capital (which taxpayers provided) into a handful of financial institutions who promised to make those funds available for loans.

Oh, but wait a minute! It now appears that some of those institutions have chosen to pay bonuses and dividends that they would not otherwise been able to afford without the injection of government funds.
I think we’ve been conned again.

Representative Henry Waxman (D. – California), Chairman of the House Committee on Government Oversight and Reform, sent this letter to Mr. Vikram Pandit, CEO of CitiBank:

Earlier this month, the Treasury Department announced plans to invest $125 billion of taxpayer funds in nine major banks, including yours, as an emergency measure to rebuild depleted capital. According to recent public filings, these nine banks have spent or reserved $108 billion for employee compensation and bonuses in the first nine months of 2008, nearly the same amount as last year.

Some experts have suggested that a significant percentage of this compensation could come in year-end bonuses and that the size of the bonuses will be significantly enhanced as a result of the infusion of taxpayer funds. According to one analyst, “Had it not been for the government’s help in refinancing their debt they may not have had the cash to pay bonuses.” Chairman Waxman states that his committee will be investigating these claims and requested information from CitiBank. We hope so. You might say this is highway robbery. Maybe auto robbery…

Then along comes the U.S.automakers , needing help to stay alive. Why can’t they compete?, they say.
One reason is that U.S. companies are forced to be in the healthcare business, unlike any other company in the civilized world.

On top of that, the foreign auto companies have all gotten huge subsidies in the states where they operate. For example, in 2000, officials in Mississippi lured a $950 million Nissan plant with a $363 million subsidy deal.

Every single foreign automaker received similar subsidies.

Since 2001, the Japanese government has intervened repeatedly in currency markets to artificially devalue the yen. As a result, Toyota and the other Japanese automakers receive a $4,000 to $14,000 subsidy on every vehicle they export to the U.S. Japan’s currency manipulation is fueling the market share gains of Toyota, Honda and Nissan in the U.S. and putting downward pressure on auto workers wages and benefits. Competition is tough when the playing field is not level.

We do know, however, that one banking giant — Citigroup — has been given about $300 billion of our money, roughly 10 times what all three of Detroit’s automakers are seeking. Of course, the CEO of Citigroup is drawing at least $216 million in personal pay this year.

Sen. Bob Corker however, saw no need to demand that Citi’s CEO cut his pay. The Tennessee Republican is on the Senate banking committee that’s overseeing the bailout of America’s Big Three automakers, Economics Professor Helper, of Case Western Reserve, said the social cost to communities in Michigan, Ohio and other states where its 55 plants and other operations are located could be devastating, if G.M. were to liquidate or significantly cut its work force. Even if G.M. is not providing a return on investment, it is still providing a lot of good jobs.”

Why, that’s what bothers Sen. Bob Corker and his ilk,: As Jim Hightower notes, “by gollies, he got his dander up when the three CEOs told the committee last week that they needed a $34 billion loan to survive. No way, popped the corker, unless and until you cut jobs and slash the pay of your union workers. Before we even contemplate making a loan to these companies,” Corker lectured, “we need to put in place specific and rigorous measures.” How bizarre that Corker thinks autoworkers make too much money and wants the government to knock down their pay. The senator is paid about three times what a UAW member earns, and he doesn’t have to have any real skill, do any heavy lifting or produce a product.” He is ignorant, too, because labor is about 10% of a car’s price.

They just want a bridge loan, not a blank check bailout like the banks got.

What I would like to know is why, in a depressed economy, with jobs going out the window everyday, why is it  so hard to get this loan?

Is it that the Corker and his ilk in the Senate are trying to bust the unions? Get rid of the American middle class?  It sure looks like it.

Is that rhetoric worth another 3 million job loss? It seems to me that the politicians fighting this loan are simply trapped in their own rhetoric and refuse to do something to reverse the loss of jobs America is suffering.
This isn’t even common sense. With people like this running our country, it is truly time for a change.  Maybe we could make electric cars in Mendocino County… and  holy mackerel! I’m agreeing with the White House.


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