After a wild orgy of spending, rate-cutting, war-‘n-waste, what’s the responsible thing to do?
Why, more of the same!
Here’s the bill text of HR. 5140, called The Recovery Rebates and Economic Stimulus for the American People Act of 2008.
http://readablelaws.org/index.php?title=Bill_text:HR.5140:Recovery_Rebates_and_Economic_Stimulus_for_the_American_People_Act_of_2008
Yep. Seems what the American people need is more stimulation…not less.
And to think all along, we’ve been laboring under the delusion that the population was already as overstimulated as a cage of parakeets. We thought they needed haldol, not simulation.
There was too much lending… too much spending… too many houses… too many mortgages… too much debt… too much speculation… too much war… too much waste… too much consumption… too many deals…too many Goldman Sachs bankers on the fed payroll… too many orange alerts…too much patting down at airports… too much fear-mongering…too many Trump mansions…too much celebrity blather…too many Brittany Spears court appearances…
But now we know better.
There weren’t enough.
As always, the devil is in the details.
Thus, CNN tells us that it was quite the love-fest down on the Potomac:
“House Minority Leader John Boehner, R-Ohio, said, “The House gave a little, the Senate gave a little. I think that’s what the American people expect of us — to find some way to come together and deal with the problems the American people are facing.”
Indeed. Coming together for the good of the people. That’s how these things work.
Let’s see.
“The package, which passed the Senate 81-16, will send rebate checks to 130 million Americans in amounts of $300 to $600 for people who have an income between $3,000 and $75,000, plus $300 per child. Couples earning up to $150,000 would get $1,200
So say we all come out of this with about 500-1000 bucks in our hands. Now, tell me again, what’s the level of debt in the country?
From the same article:
“The crushing weight of Americans’ debt load was underscored Thursday when the Federal Reserve reported Americans owed a record $943.5 billion in credit card debt at the end of December. Including loans other than mortgages and home equity lines of credit, Americans are shouldering a record $2.5 trillion in debt….”
Two point five trillion, dear friends — T, not B.
But it’s OK, say the experts, because the population is going to go and pay off its debt with this here tax-rebate-recovering-and-yet-stimulating-some-more package.
“The money will go into the hands of lenders rather than retailers,” said Mike Niemira, chief economist of the International Council of Shopping Centers.
Ah.
In other words, the “people” whom our Congressmen are helping are the very people – the lenders – who got us into this mess in the first place.
“A survey found that about one in four Americans (26 percent) said they would spend their tax rebates. Nearly half (46 percent) said they plan to use the rebate to pay off debt and a quarter (28 percent) would save the money, according to the International Council of Shopping Centers and UBS Securities, which jointly commissioned the study of 1,005 households between January 31 and Sunday.”
UBS Securities conducts studies with shopping centers?
That’s right. Union Bank of Switzerland, UBS, if you didn’t know, is Europe’s second largest bank and despite its name, the world’s largest manager of private wealth funds. Private, as in, nothing whatsoever to do with “the people,” “der volk,” “national interest,” “homeland,””public good” and other spin put out by spin-meisters for the consumption of said public.
UBS, dear reader, is a “diversified global financial services company” headquartered in Basel and Zurich with a major US presence in Manhattan, so says wiki.
Not content with wiki, we of course supply you with further details from the bank’s own website
which tells us engagingly- if alarmingly – that it operates “everywhere — and next to you.”
Fascinating.
You’re at the casino, losing your shirt…and UBS is…..doing you a service because it’s twisting the arm of the croupier to spot you a few grimy dollars so you can go back to losing money at his table and don’t have to stagger out and throw yourself under a passing trolley?
Whatever.
And then we learn that the chief deal- maker behind this financial roulette of gargantuan proportions is none other than Henry (Hank) Paulson, former chief of Goldman Sachs and current chief of US Gov. Inc.’s personal ATM machine, the Federal Reserve.
What this proves, says the government’s main money man, is that we need…..more government money men!
“Today’s meeting gave us the opportunity to discuss policy responses to these downside risks as well as the need to craft effective policy and regulatory responses that institute sounder frameworks better able to withstand risks and stresses,” said Hank, according to Bloomberg.com.
But back to that shopping center group that ran the study with UBS.
A google search takes us to its website, which tells us that the ICSC (International Council of Shopping Centers) is “the global trade association for the shopping center industry” and that “its 70,000 members in the U.S., Canada and more than 80 other countries include shopping center owners, developers, managers, marketing specialists, investors, lenders, retailers and other professionals as well as academics and public officials.’
That’s to say, ICSC is a big player on the international commercial real estate scene, not just an unbiased observer checking the pulse of the consumer.
You’d think that CNN might stop and mention that before quoting its studies like scripture.
A ‘regular’ member of ICSC “develops, owns or manages shopping centers” continues another page of the ICSC website, or “is a merchant located in a shopping center,” or – get this – “is engaged in business as a lending institution that provides equity, interim or permanent financing shopping centers from its own funds.”
At ICSC’s New York National Conference and Deal Making conference last year, December 4-6, at the Hilton New York Hotel & Towers, the speakers included Matt Fassler, retail analyst & managing director of Goldman Sachs, and the focus was on the trend in mixed-use development and public-private partnerships. Speaking on that topic were experts like Barry Dinerstein, deputy director of Housing, Economic Development and Infrastructure Planning of the City of New York.
The widely used ICSC-UBS US retail chain store sales index is a weekly publication of ICSC and UBS Securities, LLC, a unit of UBS. UBS Securities “is considered something of a barometer for the fortunes of foreign firms trying to build a presence in American investment banking,” according to this NY Times piece (February 8).
The piece describes the recent, unexpected resignation of UBS Securities’ Victor Cohn, co-chief of its investment banking division. Cohn’s departure followed on the heels of the dismissal last week of UBS Securities’ Government bond trading chief, J. Patrick Rothstein.
The exit of these two reinforces “longstanding doubts about the ability of foreign banks to break into the American investment banking market,” says the Times owlishly. Translation – this major European bank lost its derriere trading US financial markets – $14 billion in losses in the housing market, according to another NY Times piece ……..with more to come.
Would UBS have an interest in a US tax payer bail-out of its losses? We guess so.
Would it have any credible way to get it unless it managed to hoodwink the American public?
We think not.
Meanwhile, UBS has also turned to the foreign reserves held by tax payers elsewhere. It’s sold a 9% stake to the Government of Singapore Investment Corp. (a sovereign wealth fund of the Singapore government), following on the sale by Citigroup (C), the largest U.S. bank, of a 4.9% stake to the Abu Dhabi Investment Authority, a sovereign fund owned by the government of the United Arab Emirates.
So when CNN quotes a study about all the nice things consumers plan to do with the tax rebates handed to them by Hank Paulson you’d think it would mention that it was quoting a study conducted by the trade association of the business (commercial real estate) in which both Paulson’s former firm, Goldman Sachs, and UBS are elbow-deep. And that’s the very business now reeking with the stench of loans gone bad (some analysts think bank losses in the housing market might be around $800 billion.)
And that the banks being bailed by the taxpayer are now – as a result of their own blunders – partly owned by foreign governments.
So much for the national interest and the public good.
Note also that the ICSC economist quoted in the CNN study above, the one describing just how consumers would spend their tax rebates, is the same Michael Niemira who noted on January 29 that the weekly ICSC-UBS index was showing a flat to negative reading of consumer sentiment.
Outside the circle of the “public good” this would normally be considered a major conflict of interest.
The banks make the diagnosis: consumer spending down. The banks suggest the remedy: more money. The banks grind up the medicine: a tax-rebate. The rebate goes via the consumer back to the banks.
Result: Gain for Paul (banks, debtors, and borrowers). Loss for Peter (tax-payers, savers, and creditors).
Lesson learned: Ever a borrower or a lender be in these United States of Debt and Delusion.