3/21/09

Smoke and mirrors

Americans are focused on the AIG bonuses. George Bush brought us 'shock and awe' as part of the opening days of the Iraqi gambit.

Obama has brought 'shock and awe' right into our wallets.

So we should be focused on the AIG bonuses, but not exactly on da munny. We should be looking at how it happened.

Remember that 'act boldly' thing of Obama's? He acted 'boldly'. He also acted precipitously. He rammed his 'stimulus bill' through, with his homies in the Congress porking it out so badly that it is commonly referred to as 'Porculus Americanus'. Because it is going to create such a deficit that our grandchildren will be paying for it, it is also commonly known as 'The Generational Theft Act of 2009'.

Because it was rammed through so fast that no one had time to read it, much less discuss it intelligently, it included the now infamous 'Dodd Amendment'. That is what allowed the bonuses to be handed out. The bonuses were obligated contractually, and Obama, Timothy Geithner, Rahm 'The Fish' Emanuel, Dave Axelrod, Barney Frank, and Chris Dodd - just name a few key figures knew it. They knew it.

And then it broke in the news.

Now, we have all these people nailing the AIG bonus recipients to the cross, using the anger of the American people - righteous anger - to ram through yet another precipitous bill, this one using taxation as both punitive and confiscatory measures.

That isn't right. Americans should be more incensed over that than the bonuses. Such an action is contrary to the ideals for which we fought the American Revolution.

The United States Congress and the President of the United States are using the anger over the bonuses to obfuscate their direct complicity in why the problem exists in the first place. They are using taxes to show that they are 'getting even' with AIG bonus recipients. They are blowing smoke and waving mirrors to hide the fact that they caused the problem in the first place.

Colorado Democrat Jared Polis is playing it for all its worth: “We will hunt you down!” he thundered in the House last Thursday, like some kind of avenging angel.

Do we really want people like Polis knee-jerking their way through the legislative process? Do we really want Polis using his Congressional authority for vengeance and retribution?

Here is something else. The bonuses represent less than one tenth of one percent of the money that has been flushed down the AIG toilet, over $180 billion at last count. It started with a Republican administration that had obviously finally lost what few brains it had left, and continues through today with a Democratic administration that is totally unable to deal with any of it constructively. The leadership of the Congress is complicit, as is the Treasury Department and the Federal Reserve.

While Polis is shouting about hunting people down, he and his cronies - including the Obama adminstration - continue to put the lie to their apparent new-found fiscal responsibility. Obama is up there spouting his own 'anger' at the continued rewarding of failure...yet he and his Congressional toads are shoving $5 billion into the auto industry.

Timmy Geither has managed to buy up piles of 'toxic assets', leading the Federal Reserve to announce, last Thursday, that they are going to print another $1 trillion in order to buy all those Treasury bonds and mortgage securities that no one else wants.

Between the Federal Reserve, FDIC, the Treasury Department, and the FHA, the bailout is up to $8.5 trillion. That's right. TRILLION!

It does not include the $5.2 in Fannie Mae and Freddie Mac for which We the Taxpayer are now responsible.

It does not include at least $50 billion that Geithner wants for mortgage bailouts.

It does not include the $2.5 trillion he wants for the next big bank bailout.

Want more?

Browse Barry Ritholz' financial blog, The Big Picture, where we found this delightful cartoon, which helps put some perspective on the numbers: