Treasury Secretary Paulson has proposed that Congress advance $700 Billions to be directed to purchase mortgage backed assets intending to reactivate and prop up its frozen market.
There appears to me a fundamental problem with the sense of that proposal. Since the market is presently inactive – indeed “frozen” – and since the US firms active in trading mortgage backed assets are failing, the real possibility exist to simply take over and assume control of operations in exchange for infusion of equity for these firms which will make available the illiquid MBA’s for control and disposition by Paulson under the plan now being created. The cost of that plan should be far inferior to the plan being proposed and will place a much lighter burden on the American Taxpayer and the National finances while achieving the same results.
Now this idea is hardly novel. A “take over” was engineered very recently for Bear-Stearns costing some $29 Billions. And the same “take over” was implemented respecting Fanny May and Freddy Mac at a published cost of $100 Billions each. The Treasury and the Federal Reserve retained a significant control over asset derived from Bear Stearns management. And at the same time, the Secretary and Federal Reserve retained a significant control over Fanny and Freddy. Why could not a similar operation be made for each of the US firms which are under stress from an illiquid MBA market.
The result will be a far greater degree of control and at a much lower total cost to the taxpayer and the US Treasury.
There is in this observation the implication that the real purpose of the $700 Billions is not the outright purchase of illiquid assets from US Firms under stress but rather the re-purchase of fraudulent assets purchased and now held by foreign banks who are demanding to be made whole after being defrauded in their purchase of American backed securities which turn out to be worthless having no collateral mortgage assets whatsoever to back up the investment made in good faith. If that is the case, and it appears likely, then in that event, the $700 Billions is merely a down payment for the problem which will buy enough time for George Bush to vacate the office of Presidency on 20 January 09 leaving the mess for the next president to clean up.
Supporting this macabre perception is the fact that the proposal submitted by Paulson and the Bush Administration calls for a complete autonomy in terms of expenditure without review by any source including the courts. This kind of sweeping authority was previously employed by the Bush Administration in the run up to invasion of Iraq which after 6 years of costly warfare and more than 4200 American deaths plus over 100,000 Iraqi civilian deaths, we now know was a fraud on the American People. Additionally, and without recitation here, the Bush Administration’s habit in this regard is well known to be repeated in several other examples. Thus confidence in this matter should be replaced with a considerable skepticism as to motive and use of the funds and the hurry up conditions under which the proposal had been submitted. Further, the timing of Paulson’s proposal coincides with the coming Congressional recess scheduled for this Friday. All of these circumstances carry the clear implication that the sweeping proposal, the timing of its submission and the hurry up attitude carried with the proposal leads one to conclude a contrivance and a ruse to obtain extraordinary amount of Public Funds under conditions which are untoward and outrightly dangerous to the Nation.
Alternatively, could it be that the worlds Central Banks and/or nations have formed a coalition which have collectively delivered an ultimatum to Paulson and Bush to be made whole on the fraud which has been heaped upon them by Wall Street while the administration turned a blind eye to regulatory oversight of the financial and securities markets. Extreme skepticism therefore is in order.
Joseph Dale Robertson
Note: Be sure to read
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