Charlie Rose

tartufe  03/18/2009 06:55 PM Report

Obama, Summers, Bernanke are too entwined with the big banks and hedge fund orthodoxy, which was largely - primarily in fact - initiated by the Paulson (three page) rush to throw money unregulated and unmonitored at the perpetrating institutions a la AIG, later Citigroup et al.

Consequently, their sentiments for these institutions imo precludes the possibility of meeting the cause of the financial crisis head on. The too-big-to-fail assertion emphasizes this. This merely obscures the underlying solution, which is they’re too-big-to-survive, as their very growth was due in part on creating the bubble on which to grow to be too-big. In short their size is a sham and is not an asset to be preserved. Indeed they’re liabilities that should be left to filter down to their own natural level. Laissez faire capitalism at it’s best.

The gimmicky financial instruments CDOs (Collateralized Debt Obligations) packaged and repackaged, leveraged and re-leveraged, then compounded by more leverage through CDS (Credit Default Swaps) is intertwined mostly between and within the largest banks and hedge fund institutions. These instruments are so convoluted they are 100s to 1000s of pages long. Determining the NET liability for each institution could take years. Throw in legal delaying tactics and it will run into decades. IMO this has to happen with or without government money. The viability of these participating institutions will be burdened and distracted with their own mess interminably. The so-called systemic risk is largely (80%?) Interlocked within the top 50 or so banks (out of 9,000 +/-?).

Consequently, they should be left out of the future of integral banking. The resulting dislocation imo will not be all that different - but sans the tax vulnerability on the common man’s descendants.

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RESTITUTION:

Confidence will be restored if the people could see that justice was achievable and achieved. The populous clamor against AIG bonuses bear that out. REAL investigations (FBI, SEC, etc), trials, convictions, proportional fines and imprisonment are due and sorely needed. Ways need to be examined to include the enabling legislators in these convictions. Oligarchies need collusion from the government to be successful. Lobbying for repeal of Glass-Steagall, e.g.

Indeed, consideration and action against Henry Paulson should include putting him under house arrest (at least) with a pardon to put him on notice that a thorough investigation of his flagrant and abusive scare tactics which were insidious and capitalizing on the known ignorance of the financial mess by Congress. He used this known lack to bulldoze his three page abstraction into law solely to bailout his ilk - the cronies that created the mess. Paulson's actions initiated the wrong approach from the outset and he and his enablers should be held accountable. Bailouts in the long run is exactly what should NOT have happened.

Paying the perps bonuses for trashing the world’s financial system is anathema. Bonuses in lieu of prison makes a mockery of decency, playing by the rules, abiding by laws, and paying taxes. Makes anarchy more practical than usual. BUT THEY TRASHED THE WORLD!!!!