Who’s On First
OK! Let’s get it straight. Who’s on first, What’s on second, I Don’t Know is on third. The left fielder is Why, Center Field is Because, the pitcher is Tomorrow and the catcher is Today. Wrap it up with a shortstop named I Don’t Care and you have the makings of a great comedy sketch or the minutes of last meeting between Treasury Secretary Tim 1040 Geithner, Fed Chairman Ben Bernanke and President Barack Obama.
After a solid month of vitriol being spewed from every corner of Washington DC in the direction of Wall Street the Treasury Secretary is about to unveil his long awaited plan to rid the credit markets of the toxic waste clogging every financial institution’s aorta.
Congress has successfully misdirected the public’s rage toward Wall Street in order to keep their own actions from gathering too much unwanted attention. The congressionally orchestrated fury has reached such a fever pitch that AIG is warning their employees to not display their company name badges in public lest they risk a confrontation and the possibility of physical harm.
Even though voters are mad as hell with the recent spending binge and deficits this congress has seen fit to heap on the backs of the next 3 or 4 generations of taxpayers, most of the public still believes that the economic collapse was caused by greed on Wall Street. Very few are looking at the actions of congress that led us to the brink of national bankruptcy, but instead are listening to their rhetoric and that of the lapdog media which repeatedly places the onus on unscrupulous Wall Street investors taking too much risk and making too much money.
It is before a backdrop of increased governmental restrictions and oversight of investor risk and rewards that Tim 1040 Geithner steps before the microphone to finally announce the details of his toxic asset removal plan. Geithner made a hugely promoted statement several weeks ago that was as thin on details as it was bloated on rhetoric. Stock market investors reacted immediately to this muddled attempt by dumping investments and sending the market into a tailspin.
The new announcement will likely be stronger on details as it would be impossible to have fewer, but it is anticipated the new plan will rely heavily on the same investors that congress has been demonizing for the past several months.
With the nonpartisan Congressional Budget Office announcing their projection of national budget deficits in excess of $9.3 trillion dollars over the next ten years, and congress showing no signs of reining in their outrageous spending binge, investors may be less than eager to participate.
It is clear that the single most important action congress can take in stabilizing the credit markets is to remove the toxic assets they created with their misguided attempt to alter credit reality through Fannie Mae and Freddie Mac. But now looking to the same investors whose compensation they have capped, whose bonuses they have unconstitutionally taxed out of existence and whose methods and motives they have duplicitously and fallaciously vilified, to make the plan work would be almost comical if it weren’t so sad.
There is no incentive for major investors to get involved in a program of high risk without having at least some ability to project a suitable return. The Democratically controlled House and Senate have shown that they have no hesitation at changing the rules in the middle of the game. There is no reason to believe that they will not do the same here if public sentiment becomes negative toward those who could actually make money out of this mess. With deficit spending and budget shortfalls in the trillions of dollars it seems a much safer investment to bet against the US dollar than to invest in it.
That is of course if anything could be considered a safer bet in the “Who’s on first” routine this administration and congress are currently playing.
