(I did something this morning which makes me sad, in rejecting a Commentary which was interesting simply because it was way too long--something like 8 paragraphs. Commentators should limit their commentary to three short paragraph length maximums.)
It is hard to tear the results from this Post, but doing so lets Us identify Criminal Intent if true. The Investment Banks recognizes the worthlessness of AIG underwriting, but hid the information from the Public in order to continue writing and selling their CDOs. The Investment Banks sold these CDOs, knowing that fund recovery was becoming more unlikely with high counter-party risk. They continued to sell these CDOs, even when recovery ratios approached zero. They did so to attain the personal gain coming from the sale of these instruments–deliberate fraud. Court-sponsored recovery of fraudulent funds should be ordered, but these Bankers are still in control of Treasury, Fed, and Congress. It is about time for the American Taxpayers to start getting Mad.
Do you think This will happen? Special Interests have always known that splintering the decision-making process was the best method to attain passage of their own desired program. Consensus has always been their enemy, and playing on the members of Congress to incite their turf defense, was the best avenue to achieve their unholy aims. Activists must learn to compete with the Big Boys in the established Committees, not follow whimsical follies of creating a new power inside Congress itself; something which threatens the power base of the current Congressional leadership. It is dirty in the Trenches, but One learns How, or fails to survive as the heavy artillery kicks in.
What is wrong about the Investment Banks funding the Treasury Debt expansion? The Investment Banks are not lending the Money received from the Treasury, except to the Treasury at a small, but no risk, rate. Two factors will occur when Times get better; 1) the Treasury will find a shortage of Lenders to sell their Treasuries, and, 2) the inflow of funds will be massive and Inflationary. We may find shortly that the Fed and Treasury found the worst policy possible to adopt, that of underwriting the Investment Banks when they should have been busted out. Let me be the first to proclaim that the current mistakes are worse than ever accomplished by Fed and Treasury in the Great Depression; then, they at least maintained the solvency of the federal government. lgl