Paulson Bailout: Don't buy that rope

Ropes and cows

Note: Some sources of the ideas and opinions in this blog appear below the text, there are no links in the general opinion piece itself.

One must not be the one to gloat over serious issues but it does remind me of a story that I sometimes tell to illustrate a point we fail to see when we are to make big decisions.

A young man went to confession having battled with his conscience for longer than he could bear.

Supplicant: Father, dear Father, bless me, I have sinned

Confessor: Be at peace, my son, what have you done?

Supplicant: I stole a rope.

Confessor: Hmmm!! [He pauses in meditation then asks] Was anything attached to that rope?

Supplicant: A cow

The facts beyond the talk

It may be a cow, a bull or something completely unexpected; the fact is the confessor could have absolved the supplicant of the offence of stealing a length of rope not knowing that a good tug on the rope would bring a resounding Moo! From the other end.

How many times have we been sold rope believing that was all there was to it, till the cow stirred and dragged us across the field, we having played mock prisoner binding our hands in masochistic revelry?

But there is too much evidence before us of ropes attached to cows, Iraq being a case in point.

The rope about Iraq

The Americans were sold the idea that Saddam Hussein was in cahoots with Al Qaeda, he was culpable in the 9/11 attacks and constituted a great threat to American national security and interests.

They were going in with overwhelming force to liberate the Iraqis who were going to come out onto the streets singing Hosanna! – Bull!

After 5 years, America has lost more men in Iraq than they lost in the 9/11 disaster and people still seem to be cajoled with the idea that President Bush has prevented another attack on American soil – well, give me a break, the terrorists do not need to create some great logistical spectacle in America, they have a ready supply in Iraq and Afghanistan for a lot less planning and expense.

However, the issue here is, of all the money that has been expended on the Iraqi war a good deal of it has gone into American contract firms who are minting money like it is going out of fashion.

The war has been shamelessly privatised whilst American families back at home blinded by the rope story receive the sadness of their dead sons and daughters, the wounded in spirit, soul and body, meanwhile on a staple diet of rope someone else is running away with the cows.

The parallel between Iraq and the suggested financial bailout of banks should not be lost on anyone.

Running off with the cows

We have a great financial disaster brought on by the greed and sleight of the private sector that jettisoned the basic tenets of trust, integrity, truth and verification for the quick wins of bonuses, profits and an unending supply of gullible customers persuaded of their false wealth.

The customers were being fed rope whilst the bankers ran off with the cows, now the people have tugged on the rope and found that they are being dragged bound and gagged into the abyss – no respite in sight.

Meanwhile, the bankers having found that they have no more cows to fool others with rope have suddenly run out of business and all their models are collapsing around them – only today, the whole concept of an investment bank was completely obliterated from the financial landscape of the United States as Goldman Sachs and Morgan Stanley changed status to holding banks.

This is bad rope, seriously bad rope

But the worst case of rope is happening before our eyes, the Treasury Secretary who at one time lead Goldman Sachs now wants all the dead and rotten cows that the banks once touted as prime stock put in a pit somewhere to create some sort of fertiliser in the future – wishful thinking.

These dead cows are liabilities that have a conservative estimate of $700 billion and really no one knows how long the rope would be, but anyone who has a head had better pause for deep long thought like the confessor and find out what is at the end of the rope.

Cows, you can almost tame, however, methinks the rope has been surreptitiously place round the neck of a sleeping leviathan – the markets that were fed rope at the end of last week creating a rally of the markets have suddenly started tugging on that rope and I think some of them have cottoned onto something.

He meant quick and dirty

Mr. Hank Paulson must be playing with words here; we all know that nothing that is quick can really be clean – he has offered a quick and dirty solution and wants the Congress to sign off the rope without tugging at the rope to find out that it is attached to a beast in slumber.

Besides it is completely disingenuous to engineer an outrageous confidence trick then try to persuade everyone of its legitimacy by encouraging others to play the same tricks, it is brazen in its execution as it deigns to cajole with a face of respectability.

I am not buying that rope and I hope anyone else being offered that rope gives it a right old tug prepped with running shoes and a good gun because you might be familiar with the sounds of a mooing cow, I doubt if you have ever heard the sound of a leviathan.

Sources

USATODAY.com - Poll: 70% believe Saddam, 9-11 link

iCasualties: Iraq Coalition Casualty Count

Iraqi Body Count

What Does Iraq Cost? Even More Than You Think. - washingtonpost.com

The $1 trillion question: Will this gigantic bailout work? - Business Analysis & Features, Business - The Independent

US bail-out plan provokes doubts

Paulson: Plan Needs To Be "quick" And "clean", By Patrick O'Connor - CBS News

Credit Crunch Blogs - akin.blog-city.com

Paulson: Burying the dead and ignoring the murderers

Bones of the bull

That was really the week that was and just as we were about the pick the dry bones of the bulls [1] slain by the plague of lack of confidence in the desolate Wall Street the great chiefs of capitalism prophesied the breath of socialism upon the bones and the cows live again to milked dry by blood-thirsty hyena cubs.

No, certainly, the events of the last week cannot have passed anyone by and I kept my counsel for as long as I could till I flipped through the pages of the Economist that arrived in the post this afternoon.

The elevenses

Just after the letters and on page 11, eleven being the number of the chapter that Lehman Brothers wrote at the beginning of the week, a firm whose existence has been swallowed in the sands of time with an 11^th hour buyout was reliving its past in an advertisement that proclaimed Merrill Lynch connects capital to opportunity.

It ended with “Our 94-year history of leadership in the financial industry has been a source of confidence for our clients in both good and challenging markets”.

I had to check if my magazine was current, it was, the advert had been paid for and basically the Economist was putting it out despite the fact that that 94-year existence had been terminated a few days before.

Dishonourable things abound

Now, if I were unaware of the events of last week, I suppose I would be expected to buy that bull with horns protruding like ones off a devil’s face mask and throw my money into the opportunity to see it swallowed up in great loss.

It was just over a year ago when I wrote about Baling Out Trust [2] which lamented the way the basic foundation of business following the dictum “My Word is my Bond” and its counterpart of trust had been eroded by dishonest, corrupt, vice-ridden and dishonourable practices.

In December I talked about how we were Fixing Capitalist Errors with Socialist Favours [3] ending my comment with the thought that these actions would create more problems in the future and that none of it had yet begun to unravel.

People were not focused on where the problem was as they got distracted with the idea black holes would be created by the Large Hadron Collider which is since been shut down [4], a more menacing black hole was busy swallowing banks and financial institutions in the United States in the United Kingdom.

Cleaning up a no-crime zone

Whilst these events require a lot more analysis what I see is simply this – guys with big guns came into town with a swagger and 10-gallon hats banging on tables, ordering the most expensive drinks, cavorting in wanton orgies with the women and having a raucous moment allowing the occasional tips to the locals who dared to join in.

Along the way there was something approaching complete social breakdown and a few of the guys were brought in for questioning, smacked on the wrist and let go.

By the time we knew it there were a good few dead bodies on the street and no one could do anything about it that it raised up the foulest stink everyone stayed indoors.

The sheriff walks in and says “We need this to be clean and to be quick”, and we need to get it in place [5], we’ll clear up the dead and bury them in the community playground, that may clear up the stink – meanwhile no one is worrying about the murderers, they are still walking around with big guns, probably with a little less ammunition, drinking less and having a low profile around the bar.

We need to get rid of the stink because no one is coming out unto the streets, nothing else matters.

The whiff of nothing

The funny thing is the dead are still in the streets, the stink is still there but in expectation of the clear-up – the stock markets are already behaving like the town is as pristine as a spring garden.

Well, in fact, let us pretend there has been no murder because by the time we do the forensics we would only have bones to exhume.

We are back to where we started and the vicious circle begins again and no one really paid for the crimes of the past rather the community lost their playground to an impromptu cemetery and anyone who dares to go out to play at night knows never to go out there again.

Source

[1] BibleGateway.com - Passage Lookup: Ezekiel 37:4-5; Reference to a passage where Ezekiel prophesied to the dry bones in the valley

[2] Baling out trust [akin.blog-city.com]

[3] Fixing Capitalist Errors with Socialist Favours [akin.blog-city.com]

[4] BBC NEWS | Science/Nature | Hadron Collider halted for months

[5] Paulson: Plan Needs To Be "quick" And "clean", By Patrick O'Connor - CBS News