Nation Realizes Money Just A Symbolic, Mutually Shared Illusion

WASHINGTON—The U.S. economy ceased to function this week after unexpected existential remarks by Federal Reserve chairman Ben Bernanke shocked Americans into realizing that money is, in fact, just a meaningless and intangible social construct.

What began as a routine report before the Senate Finance Committee Tuesday ended with Bernanke passionately disavowing the entire concept of currency, and negating in an instant the very foundation of the world's largest economy.

"Though raising interest rates is unlikely at the moment, the Fed will of course act appropriately if we...if we..." said Bernanke, who then paused for a moment, looked down at his prepared statement, and shook his head in utter disbelief. "You know what? It doesn't matter. None of this—this so-called 'money'—really matters at all."

"It's just an illusion," a wide-eyed Bernanke added as he removed bills from his wallet and slowly spread them out before him. "Just look at it: Meaningless pieces of paper with numbers printed on them. Worthless."

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The Full Story Of How Tim Geithner Secretly Bailed Out Wall Street And Screwed The Taxpayer Last Fall
Henry Blodget,
Oct. 28, 2009,
The Business Insider

When the historians finally finish sorting through the appalling decisions that have been made in the past two years, this one will probably be at the top of the heap.

Last fall, as AIG began to realize how screwed it was, it started negotiating with the counterparties to all the credit default swaps it had written.  One of the AIG's goals was to persuade these counterparties--including Goldman Sachs--to accept buyouts discounts of as much as $0.40 cents on the dollar.

These sorts of negotiations are exactly what should happen when a company gets in trouble.  It goes to its creditors and says, look, we can't pay you everything, so here's your choice: Take something, or take your chances in banktuptcy court.  (And, in this case, this wouldn't have been much of a choice, given the standing of CDS holders in the liquidation line).

But then Tim Geithner, head of the New York Fed, stepped in. 

A few weeks later, the counterparties--all of whom voluntarily did business with AIG and understood the risks--were bailed out at par: 100 cents on the dollar. 

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Max Keiser: “Does the US Secretary of the Treasury Tim Geithner work for the people or does he work for the banking system on Wall Street?”

Fmr. Asst. Sec. of Treasury Dr. Paul Craig Roberts: “He works for Goldman Sachs.”

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Matt Renner is an editor and Washington reporter for Truthout. He can be reached at Matt@truthout.org.

This article was originally published at Truthout.

Washington - Today, the Obama administration will present a plan for reregulating the financial industry - one of the most highly anticipated policy reforms on the president's long list. But critics charge that the key to the future of the financial system is accountability for crimes.

The collapse of the financial industry and the subsequent government bailouts have enraged Americans, who see their government using tax dollars to save a system which failed to protect the interests of the little people. Now that the world financial system has taken as small step back from the brink of disaster, Americans want to see how much control and protection their unprecedented lending has bought them.

The president's top economic advisers, Treasury secretary Timothy Geithner and Director of the National Economic Council Lawrence Summers, outlined the planned reforms in an op-ed piece published in The Washington Post on Monday.

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In a move reminiscent of Bush era signing statements, the Obama administration according to a Washington Post article today is attempting to sidestep legislative restrictions enacted by the U.S. Congress, including caps on pay and bonuses to investment banking executives.

Administration Seeks an Out On Bailout Rules for Firms
^{Officials Worry Constraints Set by Congress Deter Participation}
By Amit R. Paley and David Cho
Washington Post Staff Writers
Saturday, April 4, 2009; Page A01

The Obama administration is engineering its new bailout initiatives in a way that it believes will allow firms benefiting from the programs to avoid restrictions imposed by Congress, including limits on lavish executive pay, according to government officials.

Administration officials have concluded that this approach is vital for persuading firms to participate in programs funded by the $700 billion financial rescue package.

The administration believes it can sidestep the rules because, in many cases, it has decided not to provide federal aid directly to financial companies, the sources said. Instead, the government has set up special entities that act as middlemen, channeling the bailout funds to the firms and, via this two-step process, stripping away the requirement that the restrictions be imposed, according to officials.
...
This strategy has so far attracted little scrutiny on Capitol Hill, and even some senior congressional aides dealing with the financial crisis said they were unaware of the administration's efforts. Just two weeks ago, Congress erupted in outrage over bonuses being paid at American International Group, with some lawmakers faulting the administration for failing to do more to safeguard taxpayers' interests.

In a related story (below the fold) moves by the G20 to regulate and cap investment bank executive pay has raised ire and sparked rage and loud protestations from bankers...

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Thomas Ferguson is a political scientist and author who studies and writes on politics and economics, often within an historical perspective. He is a Political Science professor at the University of Massachusetts Boston, a contributing editor of The Nation, and is also the author of several books, the most recent of which is Golden Rule: The Investment Theory of Party Competition and the Logic of Money-Driven Political System.

Today, in the fourth of a series of interviews with Real News CEO Paul Jay, Ferguson calls the Obama/Geithner/Summers plan a "recipe for disaster".


Real News - April 4, 2009
Obama should save the banks, not the bankers Pt.4
Tom Ferguson: Obama's plan is a "recipe for disaster, if the US reflates, the rest of the world doesn't"

(Full transcript below)

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Real News - March 28, 2009
Obama held hostage by PPPIP
Pepe Escobar: If Geithner's plan does not work, the President sinks

President Obama's destiny - more than his foreign policy decisions - will be sealed by how he deals with the US financial crisis, argues Pepe Escobar.

The verdict of top economists on Treasury Secretary Tim Geithner's new PPPIP (Public Private Partnership Investment Program) has not been auspicious.

Some speak of taxpayer rip-off while Nobel Prize winner Paul Krugman foresees a "lost decade of zombie banks".

The President has been trying to appease Wall Street while at the same time appeasing America's anger directed at anything bank bailout-related.

On a global level the Chinese have made it known their patience with America's addiction to debt has limits.

The upcoming G-20 meeting in London is bound to discuss more radical steps, while back in the US some already dream of a new saviour, post-Geithner.

Geithner's Treasury $500 Billion to $1 Trillion Plan to Purchase Legacy Assets PPPIP Whitepaper is here (.PDF)

The AIG scandal and ensuing economic crisis is ubiquitous in news again this morning and as William Greider whom Intrepid Liberal Journal interviewed yesterday last year had "been saying for several months, this crisis has the potential to bring down one or both political parties, take your choice".

Reuters is reporting this morning that:

Documents turned over to the Connecticut attorney general show that American International Group Inc paid out over $218 million in bonuses, more than the previously disclosed $165 million, published reports said on Saturday.

The reports said the documents were turned over to Attorney General Richard Blumenthal's office late on Friday in response to a subpoena.

The documents show that bonuses of at least $1 million were paid to 73 people, and five received more than $4 million.

The giant insurance company has been widely criticized for granting bonuses after receiving federal bailout funds exceeding $180 billion.

An AFP report via RawStory explains that Obama plans to unveil a sweeping financial regulation plan:

The administration of President Barack Obama will move to increase oversight of executive pay at all banks, Wall Street firms and possibly other companies as part of a sweeping plan to overhaul financial regulation, The New York Times reported.

Citing unnamed government officials, the newspaper said on its website that the plan was expected to be unveiled this week in preparation for Obama?'s first foreign summit next month.

The proposal would seek a broad new role for the Federal Reserve to oversee large companies, including major hedge funds, the report said.

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