This past week I settled in to do something I rarely do: watch television. Namely, the state of the union address and then the hearings with both Tim Geithner and Hank Paulson. As I listened to these men speak, the lyrics from Don Henley's song "The End of the Innocence" kept surfacing in my head where he says: "the lawyers clean up all details, since Daddy had to lie". And this week, three daddy's all told their own version of the "whopper".
Click to Play Robert Ian's GoldSeek Radio Commentary Download mp3
The President told us that “because of the steps we took, there are about 2 million Americans working right now who would otherwise be unemployed.” In other words unemployment is "less bad" than it would have been. At least that $787 billion stimulus plan bought us something. 787 billion divided by 2 million jobs comes out to just under $400,000 per job. And they say there's no inflation.
Later in the week, Tim Geithner testified before congress. Under oath he adamantly proclaimed he didn't find out that the Fed had discussions about keeping bank names and amounts paid to AIG counter parties a secret - that is, until about a month ago. Where has he been the past year? Oh that's right, he's the Treasury secretary. And before that, guess what, he was President of the New York Fed. And he claims he didn't know the particulars of one of the most controversial and destructive back door bailouts in history? Either he's lying, or he is (and was) incompetent in his position both as President of the New York Fed, and now as Treasury Secretary. Both are grounds for immediate termination.
Hank Paulson was next on the docket and it sounded like he was reciting his publisher's talking points for his new book, which, coincidentally was released this week. Paulson claimed we faced "total annihilation" of the financial markets and a calimitous breakdown in the financial system if the American taxpayer did not bailout Wall Street. He suggested that if Wall Street was not bailed out, that law and order might not have been secured in the United States.
Had the markets been allowed to run their natural course and the big banking friends of the Fed been allowed to fail, yes, there would have rioting and civil unrest on Wall Street, but not on Main Street. At least not at that time. At that time if everything had blown up like Paulson threatened, we could have spent some of those monies on Main Street. If those trillions of dollars had not been funneled into saving big banks and their bad investments, those funds would potentially still be available to help the average American. But now that option is gone because there's nothing left with which to help the average American. Just token feel good programs announced in carefully scripted state of the union addresses that have no correlation to reality. We've blown our wad. We've spent our future. The well is dry. Wall Street got theirs in the here and now as evidenced by $80 billion of taxpayer funded bonuses paid out for 2009. No amount of jaw-boning is going to fix this problem.
When Paulson was asked what would have happened if AIG were allowed to go bankrupt, he said we'd have 25% unemployment, more housing declines, businesses would not get capital operate, more people would lose their jobs, they wouldn't be able to pay their bills and this would ripple through the economy. Well guess what: all of that has already happened. Oh, and 25% unemployment, we're almost there. U-6 unemployment is over 17% and John Williams of Shadowstats.com calculates a 22% unemployment rate. Everything Paulson said a Wall Street bailout was supposed to prevent has already come to pass.As the song says: "the lawyers clean up all details, since daddy had to lie". And this past week, three daddy's did just that.
