Matt Taibbi and Byron York Butt Heads Over Whether McCain Deserves Blame for the Wall Street Meltdown
M.T.: Oh, come on. Tell me you're not ashamed to put this gigantic international financial Krakatoa at the feet of a bunch of poor black people who missed their mortgage payments. The CDS market, this market for credit default swaps that was created in 2000 by Phil Gramm's Commodities Future Modernization Act, this is now a $62 trillion market, up from $900 billion in 2000. That's like five times the size of the holdings in the NYSE. And it's all speculation by Wall Street traders. It's a classic bubble/Ponzi scheme. The effort of people like you to pin this whole thing on minorities, when in fact this whole thing has been caused by greedy traders dealing in unregulated markets, is despicable.
- Cronytopia: What the World Knows -- and Americans Don't -- About the Bailout
Readers of The Guardian were greeted with this leading story -- front-page, up top -- on Saturday morning:
Wall Street banks in $70bn staff payoutHaving laid out the thrust of the story very plainly in the headline and sub-head, the paper then detailed the way that the Bush-Obama bailout (the most apt moniker for a scheme devised by the top echelons of the bipartisan elite) is yet another inside job by the Beltway bandits who move in and out of the revolving door between "public service" and vast feeding troughs of Cronytopia.
Pay and bonus deals equivalent to 10% of US government bail-out package
- Not Enough Money in the World: The Real Monster in the Meltdown Closet
What has struck mortal fear in the heart of markets and governments is not bad mortgages, but the almost incomprehensibly huge and complex market for "derivatives," based in part on mortgage debt -- but also on a vast array of other sources that were "securitized," turned into tradable if ghostly commodities then sold off in a bewildering variety of increasingly arcane forms. This was accompanied by the expansion of yet another vast market in insurance mechanisms designed to protect these derivatives -- mechanisms which themselves became "securitized."
It is 100 percent certain now that Paulson’s plan to use the $700 billion bailout to buy-back the non-performing loans and bad mortgage-backed securities from the banks would have failed and led to disaster. Paulson stuck by his wacko plan even though more than 200 economists opposed him and the stock market tumbled 8 straight days in a row losing more than 15 percent of its value. Paulson's Wall Street bias is so great that he would have driven the country off the cliff just to reward his dodgy friends with lavish cash giveaways from the US taxpayer.Pam Martens: How the Banksters are Making a Killing Off the Bailout
In fact, right after the European plan was announced, Paulson convened a meeting of the country's largest banks so he could hand out $125 billion of freshly-minted, taxpayer-generated loot to shore up their flimsy balance sheets. Citigroup got $25 Billion, as did JPMorgan Chase and Bank of America. Goldman Sachs and Morgan Stanley both netted $10 Billion each. None of these banks had to submit to any type of regulatory investigation to see how much of their asset-base was held in worthless mortgage-backed slop or other structured garbage. Paulson never even tried to find out if they are even solvent! On top of that, taxpayer gets no voting rights, no position on the board of directors, and no limits on executive compensation for the $125 billion contribution to Wall Street's biggest white-collar criminals. On Thursday, all of the aforementioned banks reported horrendous quarterly losses, multi-billion dollar write-downs, and more grim warnings on future profits. It's clear that Paulson wanted to deliver the bailout money before the public discovered the extent of the carnage
The bulk of the $125 billion will be dispersed among Uncle Sam’s own brokers, or in street parlance, Primary Dealers. Primary dealers are those financial firms anointed by the Federal Reserve to participate in the Fed’s open market activities and are required to participate to a significant degree in buying up Treasury securities at every Treasury auction. In other words, without these firms, the U.S. Government would have no means of financing its own funding needs.
. . .
In 1988 there were 46 primary dealers. That number had shrunk to 30 by 1999. In June 2008 there were 20, in no small part as a result of the mergers facilitated by Simpson, Thacher & Bartlett. In rapid succession since July, three more have disappeared from bad bets: Countrywide Securities (shotgun marriage with Bank of America); Lehman Brothers, bankrupt; Bear, Stearns (shotgun marriage with J.P. Morgan Securities). That currently leaves 17 and that number will drop to 16 when Merrill Lynch is folded into Bank of America. (The rest of the 16 primary dealers that are not getting part of the $125 billion are foreign banks.)