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The Church of Ineffable Stupidity’s ‘TARP’ Sermon

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February 6, 2009

1843 – The first minstrel show in America, the Original Virginia Minstrels, opened at the Bowery Amphitheatre in New York City.


1956 – St. Patrick Center, the first circular school building in the United States, opened in Kankakee, IL. Only one major problem: teachers couldn’t tell students to “Go stand in the corner!” anymore, as there weren’t any.

 

COINCIDENCE? I think NOT!

 

"A great Industrial nation is controlled by its system of credit. Our system 

of credit is concentrated in the hands of a few men. We have come to be one 

of the worst ruled, one of the most completely controlled and dominated 

governments in the world – no longer a government of free opinion, no longer 

a government by conviction and vote of majority, but a government by the 

opinion and duress of small groups of dominant men.I am a most unhappy man. 

I have unwittingly ruined my country."

– President Woodrow Wilson, regretting his signing into law the Federal Reserve Act

 

FROM THE CHURCH OF INEFFABLE STUPIDITY, TODAY’S “TARP” SERMON

 

Due to a conspiracy led by Alan Greenspan, Robert Rubin, Chris Cox, and former senatwhore Phil Gramm, the US deregulated Wall Street. They claimed that our new financial engine would drive not only the country, but the world. They convinced Europe to follow, allowing it to share the same economic benefits we see across the globe.  Despite due diligence and many searches, I was unable to learn to which location those four thieves were aiming, but it has become clear that their intended path was off a proverbial cliff. 

 

And so, the scene was set, the curtain was  lifted, and all restraints were off. No more regulation, no SEC investigations, no federal regulators breathing down their necks. 

 

You have to hand it to our Wall Street Robber Barons. When they saw an open bank, they came equipped with wheelbarrows. Rather than engage in breaking and entering, they conspired to create an even better method of enriching themselves. If they could show a paper profit, they would reward themselves in kind. With paper.  Oblong, green paper. Many pieces of oblong, green paper. In fact, billions of them. 

 

Wall Street conspired to create the unregulated derivatives market, a gamble that relied on rising property values. The more properties that were sold, regardless of who bought it, the greater the values. The greater the values, the greater the profits when they traded the derivatives among themselves. With each “profit,” they ripped off a huge layer, called it a bonus, and vastly enriched themselves.  It did not matter that the original mortgages were high risk or almost worthless. It did not matter that with each sale, the “paper value” increased even more. All that mattered was that trades were made, over and over again, pushing up the values until the stated value of the derivatives market exceeded the net worth of the entire globe by a factor of five. 

 

With this incredible, unbelievable bubble, Wall Street’s Robber barons were little more than giant leaches, gorging themselves on the “paper value,” rewarding their own conspiracy with bonuses and payments that make your head spin:

 

Bear Stearns – $11.3 BILLION in employee bonuses. 

Lehman Bros – $21.6 BILLION in employee bonuses.

Merril Lynch  – $45.4 BILLION in employee bonuses. 

 

In some cases, the real values of the underlying mortgages was 10% of the stated value, or less. But so long as they played the derivative trading scam, along with insurance giants pretending to insure these trades, (see AIG) the “paper values” continued to balloon, as did their bonuses. 

 

Simply put, these thieves lied about the underlying value of their trades, profited from each trade, then removed substantial bonuses as their reward. When the market crashed, and the derivatives’ value came back to reality, the thieves kept their many billions. In some cases, the bonus program continued even AFTER the market crashed. 

 

CitiGroup paid its employees $34.4 BILLION in 2007, even though the whole company, with all its assets, investments, stock holdings, mortgage values, and more is now worth a mere $18 billion. They paid themselves more than twice the current value of their entire company! 

 

Banks used to be in the business of investing in society, making money for shareholders, customers, providing lines of credit and loans, and making reasonable profits for themselves.  Those days ended in the early 1990s. Since deregulation, and after the derivatives boom took off, it became little more than a scam, a confidence game, a way of sucking out billions in personal gain, based on fake “paper” values that had no relationship to the actual assets. 

 

That brings us to TARP, the biggest heist in the history of mankind. Because of it, they madoff with billions while Congress dithered and while our MSM slept. 

 

Even before TARP, the Gold Dust Twins, Ben Bernanke and Hank Paulson, had their dirty fingers deep inside the derivatives scam.  In March of 2008, JP Morgan  made known its desire to buy Bear Stearns for $236 million.  The Fed (Bernanke) eventually admitted that it was underwriting the deal for 240X that figure ($55 billion).  $29 billion of that loan was a “non-recourse loan” to JP Morgan, supported by Bear Stearns’ alleged assets. (Assets which were close to zero, making Bernanke’s loan support little more than a gift to JP Morgan executives.)

 

In 2004, Goldman Chaiman Hank Paulson got the SEC to remove investment houses from the “net capital rule,” the requirement that they hold reserve capital in appropriate ratios to their trading activities. Paulson personally argued that reserve requirements tied their hands and limited their profits. They wanted the right to leverage assets, in effect multiplying the impact of their investments. (We last did this in 1929.) He won.  

 

In 1999, Phil Gramm pushed through the Gramm-Leach-Bliley Act, which put the holding companies of brokerage houses outside of SEC oversight. (Not that SEC oversight matters, given its performance in the Madoff scandal) Then, investment banks managed to limit the SEC’s role to “voluntary” asset inspections.

 

Bless their inept souls, the SEC responded by creating an office to supervise brokerage houses. Because of Paulson’s pressure on SEC Chairman Chris Cox, even that minimal supervision was cancelled. 

 

By leveraging investments, an already strong housing bubble suddenly had billions, even trillions more plowed back in as new (now unsecured) transactions. That raised the “paper value” of the housing assets even higher, and increased the alleged profits (and bonuses) to Wall Street. Like any house of cards, a collapse was inevitable. 

 

Which leads us to 2008, and the emergency meeting between an uninformed (duh) Congress, George Bush, and the Gold Dust Twins, Hank and Ben. The twins threatened catastrophic losses, mayhem, and complete & utter market meltdowns. They warned of 7% unemployment (now at 7.5% in spite of TARP), of business  collapses due to no liquidity, and finally, that Wall Street might collapse. 

 

Unless. 

 

“Give us experts (Hank & Ben) $700,000,000,000 and no supervision, and we will save the country, if not the world.” 

 

Hmm. I wonder how that worked out. 

 

Merril Lunched on its TARP dollars by paying BILLIONS out in bonuses, in a year where it lost tens of billions. AIG continued its bonuses, rewarding the very crooks who created this mess. Chase, Citi and others continued bizniz as usual, including extraordinary salaries to the people. In other words, our taxpayer money did nothing except reward those greedy thieves who created the mess in the first place. And worst of all? TARP payments and their uses are secret, ie, we cannot learn what they did with our money. 

 

TARP was nothing more than a fraud. It permitted the executives whose greed, small mindedness, and conspiratorial lying and frauds to take one more huge bite of the apple. Since they had already decimated the housing bubble (a bubble they created, leverages, and personally profited from), the only place left was Uncle Sam. And that is the only way to describe TARP. The biggest bank robbery in history.

14 Responses to The Church of Ineffable Stupidity’s ‘TARP’ Sermon

  1. almandine

    February 8, 2009 at 7:44 pm

    Top flight Rob –

    Except you forgot to mention that it was Bill Clinton who signed the Gramm-Leach-Bliley Act that deregulated the bank holding companies and the securities they peddled. In addition, Clinton appointed Alan Greenspan and Robert Rubin, who conspired with Gramm and his republican buddies to put it all in motion. Bipartisanship at its finest… aren’t you glad they don’t usually play well together?

  2. AustinRanter

    February 9, 2009 at 10:13 am

    almadine,

    To add insult to injury, Gary Gensler, former senior executive for Goldman Sachs and former Asst. Sect. of Treasury under Clinton Admin was the saleman on behalf of Clinton to strongly encourage Congress to passing the Commodities and Futures Modernization Act of 2000 (another Senator Phil Gramm bill – also known as the Enron Loophole). That bill deregulated the Credit Swap and Derivatives business. NOW FOR THE FUN PART…President Obama appointed Gensler to run the The U.S. Commodities Futures Trading Commission.

    By the way, the U.S. is the only industrial nation on the planet that has a separate SEC and CFTC. All of major players have those two authorities combined.

    We just gotta love it.

  3. AustinRanter

    February 10, 2009 at 9:12 am

    Stay Tuned Boys and Girls, the circus is coming to town!

    Banking executives are scheduled to testify (Wed 2-11-09) 10 a.m. before the House Financial Services Committee on how they used public funds from the Troubled Asset Relief Program.

    Lloyd Blankfein, Goldman Sachs

    James Dimon, J.P. Morgan Chase

    Robert Kelly, Bank of New York Mellon

    Ken Lewis, Bank of America

    Ronald Logue, State Street

    John Mack, Morgan Stanley

    Vikram Pandit, Citigroup

    John Stumpf, Wells Fargo

    Uh huhhhhhhh…sure they will. Their hollow speeches will be thrown on deaf ears. What a silly waste of Congressional time. Just another hustle by Congress.

    How about send warrants out for the arrest of these men listed above for fraud and embezzlement of the most profound magnitude…and try them in an International Court of Law. These crooks have stole “TRILLIONS” from people and companies around the world.

    And as assessories to the Banker’s and Marketeer’s crimes…a fairly large number of “on-the-take” Congressional members should be tried along with the other crooks.

    When will enough be enough? When these folks steal your last dollar will you finally be pissed off?

  4. bryan mcclellan

    February 6, 2009 at 4:37 pm

    Typical Asinine Republican Policy.

  5. Carl Nemo

    February 6, 2009 at 5:35 pm

    Thanks Rob Kezelis for the superb expose’ concerning the business of grand theft at the highest levels of our government.

    So what makes any of us believe that this current one trillion package being negotiated would be run any differently? It also explains why the “rethugs” have little interest in supporting this newly hatched scheme of obscene public indebtedness unless they get to benefit in some way. Voracious pol-slugs are never satisfied until they munch down the last greenback…no?!

    It is my supreme hope that this so-called bill to help Americans goes down regardless of the insult it will bring to Obama’s newly launched presidency. I’ve notified both my Senators that I’m strongly opposed to this current plan to steal a trillion more bucks from us. Evidently it’s simply now the Dems turn to engage in the game of “grand theft national”… : |

    Carl Nemo **==

  6. Rob Kezelis

    February 6, 2009 at 5:43 pm

    carl, check out Raw Story:

     

    Ironically, the "subsidy" itself was doled out by Bush Treasury Secretary Henry Paulson, the former chief executive of investment bank Goldman Sachs. According to the report, Goldman got an effective $2.5 billion subsidy from the Treasury Department.

    While at Goldman, Paulson earned upwards of $10 million a year and was the richest member of the Bush Administration at the cabinet level or above.

    The largest other purported subsidies were paid to: Citigroup ($9.5 billion), JP Morgan Chase ($4.4 billion) and Morgan Stanley ($4.2 billion).

    The second round of bailout financing also added another $10 billion to Citigroup’s alleged subsidy, and the second AIG bailout, $25 billion.

    By contrast — the entire amount the US government spend on higher education in 2006 was just over $50 billion — less than the "subsidies" issued to the banks in the first round.

  7. Carl Nemo

    February 6, 2009 at 6:46 pm

    Soon, I feel the chickens are going to come home to roost concerning this mind-boggling criminally inspired enterprise hatched at the highest levels of our government.

    Foreign investors are already fleeing from U.S. debt. China, Japan, Denmark, the Saudi’s and a host of other deep pockets entities that have been floating our national profligacy for some time now are running for the exits.

    Interest paid is a function of risk vs. reward and the high risks they are now taking by floating our out of control debt in no way reflects the interest “reward” they should be getting.

    So the next market to crash after reaching it’s lofty minimal yield highs is the U.S. long bond market. A rising bond market reflects lower interest yields and vice versa for those that aren’t familiar with how the bond market operates. It’s already started. Anyone foolish enough to have bought into this imagined safe haven is going to have their heads handed to them when the bond auctions go bust and the U.S. is going to be forced to pay stiff interest in order to entice investors to purchase our mind-boggling national debt. This action will cause existing issues to crater in value.

    Again, the taxpayer is stuck because we have to pay the interest on these bond debts too, but at least it will give people with money in savings a chance to make a decent return on their investments as interest rates relentlessly ratchet upwards. The safest way to participate when the time is right is in a Long Bond Mutual Fund with a short to intermediate duration. Duration refers to the average length of bond maturities held in their portfolio. The longer the duration the riskier the returns in a strong down bond market.

    There are voracious, “interest” hungry chickens looking into the White House windows and they’re hellbent on having their appetites satisfied and soon! : |

    Carl Nemo **==

  8. AustinRanter

    February 7, 2009 at 11:44 am

    Carl,

    Maybe KY Jelly Kiosks setup in the malls, outside public libraries, in front of major work places, at the neighborhood grocery store parking lots, or even H. & R. Block Tax Prep Stores. I’m sure we could all think of many other cool places to run a Kiosk. I have a feeling that would be one sure-fire-way of getting rich. Then we could donate 50% of our earnings to the government to aid the TARP efforts.

    Anybody game?

  9. Warren

    February 7, 2009 at 8:48 pm

    Can I have the inflatable doll concession?

    —W—

  10. Warren

    February 7, 2009 at 8:42 pm

    I’ve been in the wrong biz.

    Judging by the 2006 and 2007 annual reports, anyway. Bear Stearns reported 13,566 employees in 2006. Assuming that number didn’t change much, that’s $833,000 in bonuses PER EMPLOYEE. Presuming the secretaries didn’t get all that much, most of the rest did VERY well. Lehman Brothers reported 25,936 employees in their 2007 report. Again, $833,000 in bonuses per employee. But, the place to be was Merrill Lynch. They reported 12,300 employees in their 2007 report. That’s a staggering $3,660,000 per employee.

    I’ve been working for peanuts, literally!

    —W—

  11. griff

    February 7, 2009 at 11:49 pm

    What are you some kind of conspiracy theorist? This was all just an unfortunate accident. Just a bunch of highly paid and highly educated people making poor decisions. Not with their money, mind you, but with ours. Theirs is safe and sound off-shore, where the selectively effective government has created all of those wonderful havens for those that ultimately sign their paychecks.

    And it’s always the same. Oh we’re sorry. We’ll fix it this time. We screwed up. Just grant us more power and more money, and we may just give you another three hundred dollars of your own money as compensation.

  12. AustinRanter

    February 8, 2009 at 12:20 pm

    Griff,

    While we can’t deny the extremely inappropriate, corrupt, or even criminal like behaviors of our bad boy-girl Congressional members…who hired them? Who repeatedly re-elects them year and year?

    We can no longer deny the truth…and that is that voter behaviors, or the lack of them, are the core problem with the integrity and quality of our government.

    We have surrendered to them the open-ended credit cards, and as of the past 10 years even access to our savings and investments.

    Who are we throwing rocks at?

  13. f33dback

    February 8, 2009 at 12:04 pm

    Get the top dogs responsible for this, erect a gallows in front of the Lincoln Memorial, gather the “MSM” and video the executions of those responsible for (what will amount to) destroying the country.
    After the have been tried and found guilty of course.

    Anything else is pointless chatter.

  14. griff

    February 9, 2009 at 7:34 pm

    I can proudly say that I did not vote for any of them. That being said, we can only vote for whomever is on the ballot. And out of those on the ballot, the vast majority will vote their own party line, thereby accepting whomever their party has selected.

    We either need to rebuild the parties from the bottom up or start voting for more third party candidates. But without media coverage, those candidates have no platform.

    So we can blame the voter all we want, but they can only vote for what is put before them. I have three bathrooms in my house. No matter which one I use, the waste always ends up in the same sewer.

    By and large, I think the American voter is starting to wake up – to what extent and to what effect will remain to be seen. A little late, to be sure, but better late than never.