Paul Allen's Tatoosh slums it at the Cape Grace Hotel, V&A Waterfront
The moral of ancient and modern history alike is that a critical point inevitably arrives at which economies either adopt hard creditor-oriented laws that impoverish the population and plunge downward socially and militarily, or save themselves by alleviating the debt burden. What is remarkable today is the almost total failure of political leaders to provide an alternative to Mr. Paulson’s bailout of Wall Street from the Bear Stearns bankruptcy down through the government takeover of Fannie Mae and Freddie Mac to last week’s giveaway to the banks. Nobody is even warning where this destructive decision is leading. Governments ostensibly representing "free market" philosophy are acting as the lender of last resort — not to households and business non-financial debtors, and not to wipe out the debt overhang in a Clean Slate, but to subsidize the excess of financial claims over and above the economy’s ability to pay and the market value of assets pledged as collateral.
Michael Hudson | Parsing Mr. Paulson’s Bailout Speech
The 301-foot Tatoosh is Paul Allen's 'second' yacht. He has another, the 414-foot Octopus, up his sleeve.
That's a big sleeve.
Hank Paulson also has a big sleeve. In fact, he'd like us to believe he has a bigger sleeve than Paul Allen.
"I pulled $700 billion out of it a coupla weeks ago," he boasted.
I seriously doubted it.
"Sure thing, Hank. I believe you," I told him.
Fact is, I was terrified. And not by his sleeve either. I was looking at a photograph of Hank in Wikipedia, the ultimate arbiter of all that is good, noble, and just on the Web — or anywhere else for that matter. It has been scientifically proven that Wikipedia — not Hank, is far more reliable than Encylopaedia Britannica. And The Bible.
The picture was morphing into weird alien shapes and beings as I stared at it. The left-hand side of Hank's face took on the appearance of one of those guys out of Star Wars or Star Trek or whatever they called those stupid bloody shows that destroyed the minds of a generation.
Hank Paulson, stared at long enough, looks a seriously evil dude.
Wikipedia's entry is quite interesting. It tells us "Paulson received his Bachelor of Arts in English from Dartmouth College in 1968 ... and he was an All Ivy, All East, and honorable mention All American as an offensive lineman." A wrestler in high school, it seems our Hank went to varsity on what they politely call a "football scholarship".
On graduating, our BA went on to get an MBA at Harvard. He then became ".... Staff Assistant to the Assistant Secretary of Defense at The Pentagon from 1970 to 1972. He then worked for the administration of U.S. President Richard Nixon, serving as assistant to John Ehrlichman from 1972 to 1973, during the events of the Watergate scandal for which Ehrlichman was convicted to a prison sentence."
I guess that qualified him for business.
The Tatoosh? US$100 million. Table Mountain? Priceless.
"He joined Goldman Sachs in 1974, working in the firm's Chicago office for Manmeet Taneja. He became a partner in 1982. From 1983 until 1988, Paulson led the Investment Banking group for the Midwest Region, and became managing partner of the Chicago office in 1988. From 1990 to November 1994, he was co-head of Investment Banking, then, Chief Operating Officer from December 1994 to June 1998; eventually succeeding Jon Corzine (now Governor of New Jersey) as its chief executive. His compensation package, according to reports, was US $37 million in 2005, and US $16.4 million projected for 2006. His net worth has been estimated at over US $700 million."
Paulson was nominated by George W. Bush to serve as Secretary of the Treasury on May 30, 2006.
Quite a career ... for a footballer ... with an MBA.
Which is what makes Michael Hudson's article quoted above so good — it could be titled The Paulson Coup: For Dummies.
It's one of those articles that clearly and succinctly spells out the nature and consequences of the fiscal catastrophe about to engulf us.
It also spells out, with the assistance of Pam Martens's article, The Charmed Lives of the Crony Capitalists, and the graphic Six Degrees of Hank Paulson, that which the The New York Times gives us today.
If you read nothing else, read The Guys from Government Sachs. I think the Gray Lady is starting to 'get it'.
"Hank?" I asked him. "You wanna buy a yacht. I have one to sell you."
What most Americans do not understand, because mainstream media rarely explains it, is the incestuous relationship between the U.S. Treasury and this small band of financial marauders who busted the entire financial system with insane levels of leveraged derivative bets.
Pam Martens | The Charmed Lives of the Crony Capitalists
I mean, hey look ... there may be sunny days here and there but, ultimately, you have to listen to the lady, i.e. Pam Martens. When she says "... busted the entire financial system ..." that's what she means.
Swinging through 1,100 points to close at 8,522...
In his excellent article of earlier today, Wall Street Hustlers Built a $100 Trillion House of Cards and Stuck You with the Fallout, Joshua Holland quotes Nouriel 'Dr. Doom' Roubini.
"... today any wealthy individual can take $1 million and go to a prime broker and leverage this amount three times; then the resulting $4 million ($1 equity and $3 debt) can be invested in a fund of funds that will in turn leverage these $4 millions three or four times and invest them in a hedge fund; then the hedge fund will take these funds and leverage them three or four times and buy some very junior tranche of a CDO that is itself levered nine or ten times. At the end of this credit chain, the initial $1 million of equity becomes a $100 million investment out of which $99 million is debt (leverage) and only $1 million is equity. So we got an overall leverage ratio of 100 to 1. Then, even a small 1% fall in the price of the final investment (CDO) wipes out the initial capital and creates a chain of margin calls that unravel this debt house of cards. This unraveling of a Minskian Ponzi credit scheme is exactly what is happening right now in financial markets.
Nouriel Roubini | Non-Priceable Knightian “Uncertainty” Rather Than Priceable Market “Risk”
It kind of spells it out, doesn't it? This is not a liquidity or credit crisis. It's a debt crisis of incomprehensible proportions. Never mind. I'm sure we'll all get through it just fine. Ho ho.
The free-wheeling, fast-living, high-flying Roubini, who beat Krugman to the Nobel Prize for Economics, appears to have run afoul of one Nick Denton.
Some of you might remember Nick from the days of Mike Sanders and that Owens chap. They're a bunch of rabid, self-loathing Zioncon terrorists. Denton appalled me then as he does now, but he is easily dispatched. A veteran of considerable experience (I happily recall the story of Mike Sanders, Nick Denton, and the donkey), I gladly volunteer my services to the good professor.
As long as I get an invite to one of his parties. At close on ZAR12.00 to the US dollar, I need a free ride.
