This just in on the afternoon NYT feed: “Treasury Secretary Henry M. Paulson Jr. announced a major shift in the thrust of the $700 billion financial-rescue program on Wednesday.”
Remember back in September – I know, it seems like a long time ago – when we were breathlessly told that, if Congress didn’t pony up the $700 billion immediately (sometimes reported as $750 billion; sometimes $700 billion – a billion here, a billion there . . . pretty soon you’re talking about real money) – all hell would break loose, the world as we know it would end . . . and lots of bad stuff would happen?
Well, here it is November and I think the old shell game is being played. I first watched a friend get his clock cleaned – financially that is – on the streets of Berkeley in 1971 by an old man who looked like he couldn’t walk across the street. The old man had a board with a green felt cloth stapled to it and three shells and one pea. My friend swaggered up and took the old man’s bet because my friend was young and foolish and thought like the young that nothing could hurt him and he knew everything.
Youth is truly wasted on the young. Well, that old man kept taking $20 bills from my friend and that pea kept showing up under different shells and you would swear that it was magic.
I think that George W, Bernanke and Paulson may have pulled that old shell game on Congress and the taxpayers. We are now told that the $700 or 750 billion, which has attracted a swarm of Lobbyists like you-know-what attracts flies on a hot day, to see if they could grab that brass ring and bring home some of that federal largesse to their patrons, is not going to be spent as promised back in September.
Well, how IS it going to be spent you ask?
The NYT release says: “Mr. Paulson said the $700 billion would not be used to buy up troubled mortgage-related securities, as the rescue effort was originally conceived, but would instead be used in a broader campaign to bolster the financial markets and, in turn, make loans more accessible for creditworthy borrowers seeking car loans, student loans and other kinds of borrowing.
Huh? You mean all those subprime loans stinking up all those balance sheets are going to keep stinking up all those balance sheets because this triumvirate have changed their minds as to how to spend that nearly three-quarter trillion dollars? Except, of course for AIG, who seems to have special privileges when it comes to handouts.
“During times like these with a slowing economy and some deterioration in credit conditions, even the healthiest banks tend to become more risk-averse and restrain lending, and regulators’ actions have reinforced this lending restraint in the past,” Mr. Paulson said at a news conference, reported the NYT. It appears that Paulson is learning Greenspan-speak – that wonderful way of saying things where you are not at all sure what was just said, but, it sounds very erudite. And, he added, we are not going to bail out Detroit. None of this money will go to help America’s Big Three auto makers out of the hole that they are in. So there, Detroit.
What is going on with our total lack of leadership right now? The program to spend that $700 billion now has a fancy newspeak name: the Troubled Asset Relief Program – affectionately known as TARP – like that cloth thing with all the paint stains that you use to cover furniture at your vacation house when you close it for the season. And, the big Washington question for the month now seems to be what to spend TARP’s money on and what not to spend TARP’s money on.
One thing we have learned since September. Congress’ approval to spend all that money that we were told then absolutely had to be appropriated immediately or the world would come crashing down, has not loosened the credit freeze and lenders are still not lending. This, along with consumers not consuming.
For my tax dollars, it’s just the old shell game. Played big-time. Really big-time.