I didn't think that I could become more cynical towards Wall Street and the financial industry then I was after I realized that it was essentially a big casino with fewer rules and even less oversight. I was wrong.
Treasury tells US investors to buy American
Wall Street has spent most of the last few decades actively eliminating the middle class in this country in the name of the all powerful bottom line. They have celebrated lay offs, and bad mouthed unions. They have supported payrolls not keeping up with inflation (even the fudged numbers the government has been publishing for the last two decades forget the real cost of living) while cheering and encouraging outrageous executive pay and perks.
Then to gather more commissions, make more sales, they started selling bets on whether or not this or that investment would pay off, and selling the insurance to back up those bets. They referred to it as leveraging and thought of it as modernization.
The more I have learned about the results of the Gramm/Rubin/Summers financial modernization, the less respect I have for pretty much everyone at the top of the financial services food chain.
So call me mistrustful when it was announced that a means was being considered to allow funds to market bonds where the public could participate in the Geithner plan to auction toxic assets.
Supposedly this public participation will allow the Funds to purchase more of the assets. Uh huh. And they get to charge the usual assortment of fees to provide this 'service' to the public. Uh huh.
I think that this guarantees that ALL actual cash spent on the auction by these particular funds will be from people outside the financial sector, 'main street' bondholders. That these bonds will be coupled with the government non recourse loans to purchase the toxic assets. So isn't this just another non recourse loan for the 'down payment'.
I'm guessing this would mean that any real loss will be held by those investors while the funds themselves will make money even on assets that take in the same or less then what was paid for them, and with the fees that the funds will charge they will even make a tidy profit.
Now there is a small moment of reality in the article I linked:
"One source involved in the possible creation of these products said that
all involved were only too aware that if private investors are burned, there
is likely to be some political fall-out."
Nice of them to notice.
Unfortunately this scares me even more. Sure some of the players really hope this plan is going to work, that they really don't have to go back to basic boring banking and stop believing that financial services are actually an industry that produces something. Too bad the only bet I'm willing to make on Geithner, Summers, and most of their helpers is that they and their friends are just stripping as much as they can before the house of cards collapses.
Sadly as this madness continues and the Administration stacks the Treasury with former Goldman Sachs employees and lobbyists, I'm starting to move President Obama from the mistaken/deluded/wishful thinker group to those who are actively and knowingly refusing to stop the looting.
I wish I saw an end where this continued shell game that moves public money into private hands was stopped. And find we have a government that actively tries to protect the investments of those who labor for a living outside of Wall Street as much or more then those do. I really wish I did.