Remember that $700 billion bailout that was supposed to cure the financial woes by buying all that “toxic debt”? Well, seemingly it ain’t going according to plan:

U.S. Treasury Secretary Henry Paulson plans to use the second half of the $700 billion financial rescue program to help relieve pressures on consumer credit, scrapping an effort to buy devalued mortgage assets.

“Illiquidity in this sector is raising the cost and reducing the availability of car loans, student loans and credit cards,” Paulson said today in a speech at the Treasury in Washington. “This is creating a heavy burden on the American people and reducing the number of jobs in our economy.”

His remarks are an acknowledgement that the pitch he made to Congress for the bailout hasn’t delivered what was promised. Paulson sold the Troubled Asset Relief Program as a way to rid bank balance sheets of illiquid mortgage assets, and he may encounter resistance from Congress for the remaining $350 billion after using most of the first half to buy bank stakes.

…

Paulson said he has no regrets for the revised plan. “I will never apologize for changing a strategy or an approach if the facts change,” he said.

Treasury and Federal Reserve officials are exploring a new “facility” to bolster the market for securities backed by assets, Paulson said, adding that the program would be “significant in size.” Officials are considering using a portion of the bailout money to “encourage private investors to come back to this troubled market,” he said.

…

Paulson has committed all but $60 billion of the initial $350 billion allocated by Congress to take equity stakes in banks and in insurer American International Group Inc. Lawmakers, who could reject Treasury requests for the remaining $350 billion, are pushing for aid to automakers including General Motors Corp. Paulson is resisting.

House Financial Services Committee Chairman Barney Frank today proposed giving General Motors Corp., Ford Motor Co. and Chrysler LLC $25 billion in loans from the Treasury rescue fund.

…

Paulson said he has no timeline for notifying Congress of his intent to use the remaining TARP funds, and reiterated that he’s “comfortable” that $700 billion is “what we need” to stabilize the financial system.

With less than three months left in the Bush administration, demands for assistance from foundering companies will likely escalate. The Treasury two days ago took a $40 billion stake in AIG. American Express Co. this week converted into a bank-holding company, making it eligible for funds.

WTF? Back in September, the financial world was coming to an end because of the “toxic debt” that everyone held without knowing what (if anything) it was really worth, and the great $700 bailout was supposed to solve everything by buying the stuff up. Here’s something from BusinessWeek dated September 20:

As Congressional staffers met with Treasury and Fed officials over the weekend to begin working out the details of the proposed plan for the government to ease the strains on the banking system by buying up toxic mortgage-related assets that are behind the credit crunch, a few more details emerged. According to a three page outline of the plan prepared by the Treasury, they would like authorization to buy up $700 billion in assets; that’s on top of the roughly $200 billion that could be spent shoring up Fannie and Freddie and the $85 billion for AIG.

Now it turns out that not only wasn’t the “toxic debt” buyout good enough, but we aren’t even going to buy the stuff at all. Say what?? If everyone’s hunky-dory continuing to hold this “toxic” stuff, which seemingly isn’t all that toxic, then why in the hell do we need the government buying equity in banks? And now what he wants to do is provide money for student loans and credit card purchases. Huh? Wasn’t people buying shit they can’t afford with little or no means to pay the money back apart perhaps from the illusory “equity” in their overvalued houses what got us into trouble in the first place?

This begins to sound simply like a vastly expanded version of that stupid idea of giving people an “economic stimulus refund” back in May. And that in turn just sounds like a convoluted and deceptive way of continuing to buy on credit shit that you really can’t afford, except that the debt is now taken on by the astronomical national debt.

And on top of that, we have talk of shoveling vast sums of money at Detroit to go on with the retarded idea of grossly overpaying UAW workers to produce crappy, ill-conceived vehicles for people not to buy. Well, that certainly sounds like a great way to put the US on a more productive economic path.

This is beginning to sound less and less like a plan to cure a manifest problem of over consumption and more and more like a boondoggle to let everyone get back on the gravy train that’s still heading for the cliff.

Should this be a big surprise? Well, the fact that Paulson was a big shot at Goldman Sachs, and so is up to his eyes in culpability for the financial stupidity that landed Wall Street (and the rest of us) in this mess in the first place should make us just a teensy bit suspicious. At least, it turns out that there is honor among thieves, after all. That idiot Bush put one of the CEOs of Financial Mismanagement Inc. in charge of the treasury, and he’s using his office to make sure that his buddies don’t suffer any undue harm from their own stupidity–at vast expense to the taxpayers, present and future. Now there’s a legacy that Warren G. Harding would be envious of.

[This pig's trotter was swiped surreptitiously from the slaughterhouse over at Keyser's Lair.]

This entry was posted on Wednesday, November 12th, 2008 at 8:03 pm and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.