$700,000,000,000 @ New Ruskin College
Lecture Notes: 9-25-08
www.NewRuskinCollege.com
Upper class Warfare Part VI: Political Discourse Part II
$700,000,000,000 is what Mr. Paulson wants. For this sum he promises to collect worthless paper for us. Worthless because the housing bubble has burst and the paper was written, and even guaranteed, based on the assumption that housing prices would always go up. This is the assumption upon which the paper was underwritten.
And who were these people who made this assumption that prices would always go up and never go down? Well they are people like Mr. Paulson himself. For eight years he was the head of a Wall Street firm that made just this underwriting assumption. Mr. Paulson assures us that this is the best deal he could get for us. No equity position, no interest, just the worthless paper.
One wonders what kind of deal Mr. Paulson would have come up with if he had been working for us these past eight years and not Goldman Sachs. He would not have earned his reputed $700,000,000. But then that is the point. Where do his natural loyalties lie? With whom?
In deed why should we accept the representations of a man who thought housing would always go up? He was mistaken then why not now? Is he working for us now?
One of the largest owners of the worthless paper is the Treasury itself, due to its recent acquisition of Fannie and Freddie. Then too there are the guarantees that Fannie and Freddie improvidently made to other holders of the worthless paper. All through the bubble these two organizations, these government sponsored entities, churned out this worthless paper, as if they were on autopilot feeding the bubble. Now with the Treasury’s takeover responsibility for these guarantees falls to us. An obligation of untold hundreds of billions.
Was there no management examining the underwriting assumptions? Considering the risks? No.
We could now consider the managers of the government sponsored entities, how much they were paid, how they used their influence on Congress. We could take time to consider how all of these individuals, at Goldman Sachs, Fannie Mae, the Congress form a class of people who have been pursuing their own interests at the expense of the American people. And we could go on to argue that Mr. Paulson’s deal is really better seen as a product of this class interest than a fair appraisal of the situation with our interests in the uppermost.
But I don’t want to talk about the oligarchy right now.
What I want you to see is how confused the nation is. All through the bubble management not just at the government sponsored entities but at Goldman Sachs, and Lehman and Morgan Stanley, and Bear, and in Congress, the oligarchy taken as a class, failed to see the housing bubble. Continued to issue worthless paper and even issue guarantees on that paper right up to the present moment. Yes even now after the bubble has burst.
See how slowly things move. The realization, dimly at first, then slowly dawning into full consciousness, that all these people, some making millions of dollars, were simply wrong. Consider that Mr. Paulson thought that housing could go on up forever. He really thought so. To describe them as being part of the oligarchy implies bad faith. What I am asking you to consider is that our oligarchy was acting in good faith, they really thought they could issue this paper and housing would go on up forever, that everything would be fine.
Strange, no?
I am asking you to step back from this current crisis and to see it as just one more example of how our society deals with problems. Recall the Israeli retired colonel, head of El Al security in the 1970’s, who tried to get the FAA to secure the doors on the flight decks of passenger airliners. Our oligarchy didn’t think it important until 9-11-01.
Consider Iran. It is a country which has been hijacked just as assuredly as if someone had pulled out a box cutter and slashed the throat of a flight attendant. Day after day Iran is working to get the bomb. Though Tel Aviv is the first target, New York is the second target. And what is our oligarchy doing about Iran? Nothing.
They assure us everything will be fine. But didn’t they say the same thing about the housing bubble?
Didn’t they tell you that our National debt did not matter because “we owe it to ourselves” then later because it was “just numbers on paper?” And what about Social Security and Medicare? Here again the oligarchy tells us not to worry. Everything will be fine.
Well I am here to tell you everything isn’t going to be fine. The bomb is real. And our oligarchy is mishandling the problem just as they mishandled the housing bubble, just as they failed to secure the cockpit doors.
And the best way to bring about this realization is for us to focus on the current crisis on Wall Street. A second great depression is coming and it does not really matter if you take an equity stake in the firms you bail out or not. But as you watch it unfold think about the oligarchy and how well they have performed. Then remember the bomb.
www.NewRuskinCollege.com
www.NewRuskinCollege.com
Upper class Warfare Part VI: Political Discourse Part II
$700,000,000,000 is what Mr. Paulson wants. For this sum he promises to collect worthless paper for us. Worthless because the housing bubble has burst and the paper was written, and even guaranteed, based on the assumption that housing prices would always go up. This is the assumption upon which the paper was underwritten.
And who were these people who made this assumption that prices would always go up and never go down? Well they are people like Mr. Paulson himself. For eight years he was the head of a Wall Street firm that made just this underwriting assumption. Mr. Paulson assures us that this is the best deal he could get for us. No equity position, no interest, just the worthless paper.
One wonders what kind of deal Mr. Paulson would have come up with if he had been working for us these past eight years and not Goldman Sachs. He would not have earned his reputed $700,000,000. But then that is the point. Where do his natural loyalties lie? With whom?
In deed why should we accept the representations of a man who thought housing would always go up? He was mistaken then why not now? Is he working for us now?
One of the largest owners of the worthless paper is the Treasury itself, due to its recent acquisition of Fannie and Freddie. Then too there are the guarantees that Fannie and Freddie improvidently made to other holders of the worthless paper. All through the bubble these two organizations, these government sponsored entities, churned out this worthless paper, as if they were on autopilot feeding the bubble. Now with the Treasury’s takeover responsibility for these guarantees falls to us. An obligation of untold hundreds of billions.
Was there no management examining the underwriting assumptions? Considering the risks? No.
We could now consider the managers of the government sponsored entities, how much they were paid, how they used their influence on Congress. We could take time to consider how all of these individuals, at Goldman Sachs, Fannie Mae, the Congress form a class of people who have been pursuing their own interests at the expense of the American people. And we could go on to argue that Mr. Paulson’s deal is really better seen as a product of this class interest than a fair appraisal of the situation with our interests in the uppermost.
But I don’t want to talk about the oligarchy right now.
What I want you to see is how confused the nation is. All through the bubble management not just at the government sponsored entities but at Goldman Sachs, and Lehman and Morgan Stanley, and Bear, and in Congress, the oligarchy taken as a class, failed to see the housing bubble. Continued to issue worthless paper and even issue guarantees on that paper right up to the present moment. Yes even now after the bubble has burst.
See how slowly things move. The realization, dimly at first, then slowly dawning into full consciousness, that all these people, some making millions of dollars, were simply wrong. Consider that Mr. Paulson thought that housing could go on up forever. He really thought so. To describe them as being part of the oligarchy implies bad faith. What I am asking you to consider is that our oligarchy was acting in good faith, they really thought they could issue this paper and housing would go on up forever, that everything would be fine.
Strange, no?
I am asking you to step back from this current crisis and to see it as just one more example of how our society deals with problems. Recall the Israeli retired colonel, head of El Al security in the 1970’s, who tried to get the FAA to secure the doors on the flight decks of passenger airliners. Our oligarchy didn’t think it important until 9-11-01.
Consider Iran. It is a country which has been hijacked just as assuredly as if someone had pulled out a box cutter and slashed the throat of a flight attendant. Day after day Iran is working to get the bomb. Though Tel Aviv is the first target, New York is the second target. And what is our oligarchy doing about Iran? Nothing.
They assure us everything will be fine. But didn’t they say the same thing about the housing bubble?
Didn’t they tell you that our National debt did not matter because “we owe it to ourselves” then later because it was “just numbers on paper?” And what about Social Security and Medicare? Here again the oligarchy tells us not to worry. Everything will be fine.
Well I am here to tell you everything isn’t going to be fine. The bomb is real. And our oligarchy is mishandling the problem just as they mishandled the housing bubble, just as they failed to secure the cockpit doors.
And the best way to bring about this realization is for us to focus on the current crisis on Wall Street. A second great depression is coming and it does not really matter if you take an equity stake in the firms you bail out or not. But as you watch it unfold think about the oligarchy and how well they have performed. Then remember the bomb.
www.NewRuskinCollege.com
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