This is the very acme of hubris, hypocrisy and chutzpah.

If Congress foolishly passes this travesty of a mockery of a sham of a bailout, we must hold them accountable for the unintended consequences, i.e. the final destruction of global trust in the U.S. and the takedown of the U.S. economy.

Our president and Fed Chairman Bernanke are fomenting fear by stating that if we don't bail out the corrupt banking sector, then we'll suffer a recession.

Note to Bush and Bernanke: we are already in a recession which is gathering downward momentum, and you are the only two liars left claiming otherwise. (OK, three liars--there's Paulson.)

We are threatened and cajoled with the specter of recession--as if that's not already baked into reality by a massive housing and credit bubble, higher energy prices, etc. It's already here, Mr. President, so your threats sound astonishingly moronic.

On to analogy 2: the Titanic. The "crew" of the RMS Titanic, i.e. the U.S. government, is truly shameless. They have stripped steerage/3rd class of all lifeboats and shifted them all to 1st Class, drawing huge cheers from the stock market for this betrayal.

We are told in endless propaganda loops that this is all about "restoring trust." If your business partner just ripped you off, and did so on the sly, continuously and without remorse, are you going to focus on his pleas to "restore confidence and trust"? How about focusing first on the betrayal of trust?

Here are a few reader comments on the same topic: of trust violated and then "hurry up, pass the bailout before the world implodes!"

Did you watch Bush's speech last night? This is one where watching is just as important as reading the transcript. The scared-looking group of democrats earlier this week (especially Pelosi on the viewer's right) is another good example. This entire "emergency" has been avoidable from the start. There could have been a gradual tighterning of the credit spigot, but there wasn't. "Why?" becomes the big question.

We spent 15 years with a building boom followed by 15 weeks where it comes to a complete stop? No one saw this coming? Really? A lof of sharp people on the Net saw this in 2006. Other than watching my own spending, I have zero financial skills and I saw this coming, too. Are we to believe these guys who deal with shuffling $billions for a living didn't see this coming? BS. This is a huge con and the middle class are about to get screwed as soon as they stand up to pull their thumbs out. Before they even have a chance to independently point the finger, they'll be on all fours --fast.

This "financial crisis" has a very contrived feeling to it. Americans are really not very good actors when it comes to Kabuki or Russian Theater. However, many American viewers are too passive to not only soak in the subtleties of plot, but what's going on backstage and under the stage.

After last night's pitiful address to the nation, I came into work this morning feeling like a hopeless american. I am one of the millions struggling with an out of control mortgage and could have used a break long ago. I have taken a substantial loss in my income, while trying to gain control of my ever rising mortgage. I cannot afford my mortgage now, and will soon begin the process of removing my three boys from their childhood home as well as their schools.

I've contacted the mortgage company and filled out numerous forms and statements pertaining to my situation, and they reduced my payment by $21/ mo. I'm sure you heard this all before, but what can us little guys do to be heard? I am in total agreement with allowing the banks to fail! We need to be heard!

My own proposal for a bank bailout is based on "do unto others as you would have them do to you": let's give each bank or institution $21, and require them to fill out all kinds of forms and disclosures to get the $21. Oh, and let's also require that they return every cent of profit they "earned" in the past seven years as a condition of qualifying for their bailout.

If they no longer have the money, that's OK--you can owe it to us taxpayers, with interest. Say, prime plus five?

More reader comments:

Harun I.

What we are seeing plays out in the markets all the time. Analysts and economists are wrong and yet people still listen to them. All the people who have been proven wrong 100% of the time now insist that they are right about what we must do and how fast we should do it. This is absurd.

The rhetoric they are using is true, people are going to lose their jobs, people won't be able to purchase homes (at least not on the terms of the past few years) and the economy is going to slow to a crawl. But even if the taxpayer picks up the bill all these things will happen anyway. Bill Maher said that, "Americans are too stupid to be governed." I certainly hope that he is wrong.

Shah of Plano gave me a good laugh with this one:

Bush says if we don't sign onto his BAILOUT it's a SLAM DUNK that WE are going to all SUFFER (sounds familiar)

Paulson meets with Bush for 30 minutes = 700 Billion Bailout.

Tenet meets with Bush for 30 minutes = IRAQ WAR.

I hope he does not spend 30 minutes with a LIFE INSURANCE AGENT or we are all going to end up owning a WHOLE LIFE POLICY.

And the Shah's latest:

The Gangsters of Wall St & D.C. tried to make it look like a DONE DEAL but it was NO DEAL.

The American People are rising up against the Oligarchy.

No matter how hard the Wall St. Shills and the Democrats in Congress with their Buttons in the Media try to sell this - IT DOES NOT SELL.

President Bush embarrassed himself again. Selling a TAKE IT OR LEAVE IT proposal.

This is a TURNING POINT in America - MOM & DAD are SICK of the SHILLS & The D.C. Gangsters.

To paraphrase Bush "you are either with the American People or against them" - well the Oligarchy is against them.

The Wall St. Shills & D.C. Gangsters have delcared war on the Middle Class and the Middle Class is fighting back - FINALLY!

So, the "grand plan" these geniuses have come up with seems to be, in broad strokes, $700bn to buy up all these mortgage backed securities, and, through some magic of the market, expect that they'll get some kind of return on the investment, so that it ultimately doesn't cost us $700bn; perhaps only $200-300bn.

Right? Is that what they're getting at here?

Did everyone miss the key point? The mortgage backed securities arn't really the problem here! While they are a horrifically stupid idea, they were doing alright as long as the mortgage payments kept rolling in. Am I hallucinating to suggest that this whole tragic stupid catastrophe was precipitated by the ARM resets and resultant foreclosures?

Why is no one talking about fixing the foreclosure mess instead?

Wouldn't it be more prudent to NOT purchase these crippled securities and let the banks keep them? I'm not suggesting we don't need to fix this somehow, but why don't we use that $700bn to buy up all the _MORTGAGES_ and renegotiate the terms. Sure, all of us who did the right thing and have mortgages we can afford will be pissed that some people are getting a "free ride", but wouldn't that ultimately repair the damage these mortgage-backed securities are causing?

Frankly, if my tax dollars are going to vanish somewhere, wouldn't it be better if they vanished into equity in my neighbors house, instead of going up in a puff of hyperinflation? (And speaking of inflation avoidance, why in the hell haven't we raised the bond rates!? Government needs money badly! Bonds are a great way to get people with a little excess money to give it to the government for a little while!)

Am I missing something?

Years ago, here in Argentina, there were two remarks credited to wealthy people who did not have the palest idea of what would happen should communism ever take over it our country. The first was "if communism comes I will go and live in the ranch" . Wealthy people in Argentina normally owned large ranches...the other was "if communism comes I will be all right, adding to what I own now what I will get in the sharing". I have not hear either of these in many years now, but they were brought to mind when I think of so many people in the United States right now who seem to have no idea of what is going on. A lot of thing which many people take for granted will just disappear completely. If there is a collapse there will be no retirement funds, no government health benefits,etc. And I see people concerned about student loans! There will be no student loans! And that is just one thing there will no more of...

CHS--my latest letter to my senators:

Dear Senator:

According to the Federal Reserve report released on September 18, just one day before the President announced the Administration’s $700 billion bailout proposal, the Fed estimates that the nation’s mountain of interest-bearing debts has now grown to $51 trillion.

So what good will throwing $700 Billion of borrowed money into a select few hands do? NOTHING. Please think about the other $50 TRILLION in debt it does not address.

Borrowing $200B for Fannie and Freddie, $85B for AIG and $700B for this phony bailout could double or triple the federal deficit in a very short period of time.

Such a dramatic increase in the deficit would drive up the cost of borrowing not only for the U.S. Treasury, but also for other bonds and for millions of Americans seeking a mortgage or other credit, since Treasury yields are the benchmarks against which most borrowing is based.

To the degree that the Federal Reserve purchases U.S. government securities for its own account to help support bond prices, it would devalue the U.S. dollar, risking a dollar collapse and the flight of much-needed foreign capital from the U.S.

Ultimately, either of these outcomes — sharply higher U.S. interest rates or a U.S. dollar collapse — could seriously aggravate the very debt crisis that the bailout plan seeks to address.

THIS BAILOUT ONLY MAKES THE PROBLEMS WORSE--IT SOLVES NOTHING. YOU WILL BE RESPONSIBLE FOR THE UNINTENDED CONSEQUENCES OF THE BAILOUT IF IT PASSES.

sincerely,
charles smith

The Long Emergency: Surviving the End of Oil, Climate Change, and Other Converging Catastrophes of the Twenty-First Century by James Howard Kunstler

The Misbehavior of Markets

The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb

Extraordinary Popular Delusions and the Madness of Crowds by Charles MacKay

Manias, Panics, and Crashes: A History of Financial Crises by Charles Kindleberger

Against the Gods: The Remarkable Story of Risk by Peter L. Bernstein

Devil Take the Hindmost: A History of Financial Speculation by Edward Chancellor

The Great Crash 1929 by John Kenneth Galbraith

The Crowd by Gustave Le Bon

When Genius Failed: The Rise and Fall of Long-Term Capital Management

The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities

Fiasco: The Inside Story of a Wall Street Trader

Web of Debt

Financial Armageddon: Protecting Your Future from Four Impending Catastrophes


Reader Essays:

A 70 Trillion Dollar Counterfeiting Ring
(Zeus Y., September 23, 2008)

According to several sources the market for so-called “credit default swaps” last year alone was nearly equal to the total global GDP, around 70 trillion dollars by some estimates. Yet these derivatives have no discernible “origin” or value.

I want to assure you this is not a viral ad campaign. There is going to be a point to the title because it contains a small story within a much larger one. Also, the title contains a unique spelling for a reason.

My new "little book of big ideas," Weblogs & New Media: Marketing in Crisis is now available on amazon.com for $10.99.

"Charles Hugh Smith's Weblogs & New Media: Marketing in Crisis is one of the most important business analyses I have ever read. It is the first to squarely face converging global crises from a business perspective: peak oil, climate change, resource depletion, and the junction of key social cycles will radically alter the business landscape in coming decades...."

"This guy is THE leading visionary on reality. He routinely discusses things which no one else has talked about, yet, turn out to be quite relevant months later."
--An anonymous comment about CHS posted on another blog.

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