Treasury Announces B of A Bailout, What Next the Bailout of the Plane that Landed in the Hudson River?

Quite possible.

Bank of America will on Friday receive $20bn in fresh capital from the US government and a guarantee on most of a further $118bn of potential losses on toxic assets.

The package is on top of the $25bn BoA received from Tarp funds last October.

And while you weren't looking, GW insured the entire US airline industry.

According to the PEU Report, the US Airways Flight 1549, that lost power to both engines after striking a flock of geese,and the glided into the Hudson River, maybe be bailed out by the government:

President George W. Bush put the taxpayer at risk with his December 23 memo to Mary Peters. He ordered the Transportation Department to insure U.S. flagged air carriers. Did Uncle Sam insure US Airways?

Not out of the realm of possibility.

A New Low for Bush-Paulson: Kiting Checks

The Treasury has already allocated all the $350 billion that Congress authorized for the first half of its bailout program, NYT reports. They have no money left. So how exactly is the Treasury going to fund its latest bailout, $ 6 billion to GMAC?

NYT again:

...even though the Treasury Department has not yet requested the second half of the money, officials said they could provide the financing to GMAC because they have not actually used all of the money allocated for recapitalizing banks.

As Henry Blodgett points out :

This sounds equivalent to writing $1,100 of checks on a checking account with $1,000 in it because only $900 of the checks have already been cashed. In the real world, this is called "check kiting," and it's illegal.

And, keep in mind, as Robert Reich detailed, this is all for Bush to save face and keep the Big Three from failing on his watch, so that the problem is passed on to Obama.

Check kiting to save face, this will really help GW with historians.

Bush the Book Reader

WSJ, today, carries an Op-Ed by Karl Rove claiming that GW is a big time book reader.

According to Rove, he and GW even started a book reading contest:

It all started on New Year's Eve in 2005. President Bush asked what my New Year's resolutions were. I told him that as a regular reader who'd gotten out of the habit, my goal was to read a book a week in 2006. Three days later, we were in the Oval Office when he fixed me in his sights and said, "I'm on my second. Where are you?" Mr. Bush had turned my resolution into a contest.

By coincidence, we were both reading Doris Kearns Goodwin's "Team of Rivals." The president jumped to a slim early lead and remained ahead until March, when I moved decisively in front. The competition soon spun out of control. We kept track not just of books read, but also the number of pages and later the combined size of each book's pages -- its "Total Lateral Area."

GW ended up reading 95 books in 2006, 51 books in 2007 and 40 in 2008.

Among the books Rove mentions that GW read are:

In 2006, biographies of Abraham Lincoln, Andrew Carnegie, Mark Twain, Babe Ruth, King Leopold, William Jennings Bryan, Huey Long, LBJ and Genghis Khan to Andrew Roberts's "A History of the English Speaking Peoples Since 1900," James L. Swanson's "Manhunt," and Nathaniel Philbrick's "Mayflower." Eight Travis McGee novels by John D. MacDonald, Michael Crichton's "Next," Vince Flynn's "Executive Power," Stephen Hunter's "Point of Impact," and Albert Camus's "The Stranger".

In 2007, GW's books read included history ("The Great Upheaval" and "Khrushchev's Cold War"), biographical (Dean Acheson and Andrew Mellon), and current affairs (including "Rogue Regime" and "The Shia Revival").

In 2008, David Halberstam's "The Coldest Winter," Rick Atkinson's "Day of Battle," Hugh Thomas's "Spanish Civil War," Stephen W. Sears's "Gettysburg" and David King's "Vienna 1814." Biographies included U.S. Grant's "Personal Memoirs"; Jon Meacham's "American Lion"; James M. McPherson's "Tried by War: Abraham Lincoln as Commander in Chief" and Jacobo Timerman's "Prisoner Without a Name, Cell Without a Number."

Interestingly, Rove doesn't mention any economics books read by Bush.

Robert Reich Breaksdown the Auto Bailout: Loopholes and All

RR is apparently trying to pull a GW and go out the year 2008 on a high note.

He has ditched his Keynesian propoganda campaign for at least one post, and puts together the best analysis of what's behind the George Bush auto bailout that I have come across. It's very much worth reading.

The Fish Are Really Beginning to Stink in the Lehman Non-Bailout

Last week came news that GW's cousin George Herbert Walker was able to buy the crown jewel of Lehman, Neuberger Berman on the cheap for $1.2 billion with no money down.

Today, NYT's Ira Ross Sorkin is breaking news of some activities at the time of the bankruptcy that can't seem to be properly squared by Hank Paulson and company:

In the early hours of Sept. 15, after the government refused to rescue the foundering Lehman Brothers, something odd happened. The Federal Reserve lent tens of billions of dollars to a subsidiary of the newly bankrupt bank.

In other words, government officials who had refused to risk taxpayers’ money on Lehman before it collapsed did just that after it collapsed.

On Monday the Fed lent the Lehman unit $87 billion through JPMorgan Chase. After being repaid on Tuesday, it lent another $51 billion — putting the bailout, arguably, in the same league as the initial $85 billion bailout for the American International Group.

This mystery loan is just one piece of the larger Lehman puzzle. Who lost Lehman? Why, and how? Three months later, those questions still nag...

...no one, least of all government officials, has fully explained why Lehman, one of the grand old names of Wall Street, was allowed to fail while so many others were rescued...

he recently disclosed documents detailing the Fed’s loan to Lehman’s subsidiary cast some light on a failed effort to prevent Lehman’s implosion from cascading through the financial system.

The loan, according to these documents, was a “carefully thought-out decision” to stabilize the market by propping up Lehman’s broker-dealer business, called LBI New York, so it could stay afloat long enough to “facilitate an orderly wind-down” of tens of thousands of trades with the other Wall Street firms. The unit was kept out of the Lehman bankruptcy.

That might seem like a reasonable explanation. But Henry M. Paulson Jr., the Treasury secretary, and Ben S. Bernanke, the chairman of the Fed, have said that they did not have legal authority to lend any money to Lehman. The firm, officials said, did not have enough collateral.

“We didn’t have the powers,” Mr. Paulson insisted. He also said Lehman’s bad assets created “a huge hole” on its balance sheet, adding that he had actually tried to find a way for the government to provide money to help support a deal between Lehman and Barclays, but legally could not. His explanation has evolved over time, however. He told reporters the day after Lehman went bankrupt: “I never once considered that it was appropriate to put taxpayer money on the line in resolving Lehman Brothers.”...

Whatever the case, the Fed’s loan to the Lehman subsidiary makes all these explanations increasingly hard to square. Mr. Paulson said Lehman had lacked the collateral for the government to backstop a deal between Lehman and Barclays. But then the Fed turned around and lent a Lehman subsidiary billions, based on that same collateral.

Bottom line, Hank Paulson did not like Lehman and so he took it down. The payoff to the Bushies, so that they would go along, was Neuberger Berman, no money down.

(HTnick)

The Bushies Show Blagojevich How It's Done

There are no tapes of how this deal went down, but my bet is that it went down something like this.

Hank Paulson and The President, back in September:

Paulson: Lehman's a bunch of asssholes, lets take'm down.

The President: Ah, I dunno. My cousin George Herbert Walker works there and my brother, Jeb, is an advisor.

Paulson: Come on , outside of your cousin and your brother, they're assholes. I'll even let your cousin and your brother grab the crown jewel, Neuberger, from Lehman once it is in bankruptcy, and they won't have to put up any cash.

The President: Yeah?

Paulson: Yeah, consider Neuberger a new family jewel.

The President: What if somebody else tries to bid for Neuberger with cash?

Paulson: Fuck em. If anybody tries, we'll send them in an envelope an annonymous post card from Guantanamo saying "Wish you were here" and enclose a picture of former Lehman CEO Dick Fuld. They'll get the message.

Laughter all around.

High fives all around.

Bloomberg reports Wednesday:

Lehman Brothers Holdings Inc.’s planned sale of its investment-management division is valued at about $1.2 billion in stock, according to two people familiar with the transaction.

Lehman, in bankruptcy, was forced to deal away Neuberger Berman for no cash last week...

Analysts valued the money-management division at as much as $7 billion earlier this year, before market declines eroded its assets...When the business was valued at around $7 billion in August by Sanford & Bernstein analysts, it initially drew interest from some of the world’s biggest private-equity firms, including Blackstone Group LP and KKR & Co. Neither one ultimately bid...

The Walker [Group also] beat a bid of $2.15 billion for the whole division by private-equity firm Bain Capital LLC.... Carlyle Group [with $40 billion in cash on the sidelines]...weighed a bid... though it didn’t make an offer.

“Neuberger management [Lead by George Herbert Walker] received the deal of a lifetime by obtaining 51 percent of the common stock for no cash, because that will take control of Neuberger away from the Lehman bankruptcy,” said Martin Bienenstock, who heads the restructuring group at the law firm Dewey & LeBoeuf and represents Lehman creditors, today in a telephone interview.

In addition to cousin George Herbert Walker as CEO, GW's brother Jeb will remain an advisor. Plus they both most assuredly received tons of stock, no money down.

Blago, eat your heart out.

Cuban's Insider Trading Charge: Payback For Anti-Bush Movie?

Wow, when I made the post below, I did not expect the Mark Cuban story to develop this quickly, bizarrely and intensely.

A person close to Mark Cuban, has told DealBook that an SEC employee had sent Cuban e-mails several times over the last year or so, accusing him of being unpatriotic. Cuban was today charged by the SEC with insider trading. The emails from the SEC employee raised concerns about Cuban’s involvement as producer of “Loose Change”, a documentary that accuses the Bush administration of engineering the Sept. 11 terrorist attacks as a pretext for the Iraq war.

The Cuban camp contends this semi-coherent email was sent by SEC employee Jeffrey Norris:

From: Norris, Jeffrey B.
Sent: Saturday, May 05, 2007 2:27 PM
To: Mark Cuban
Cc: Cox, Christopher

Subject: RE: “Lose Change”

I AM SHARING THIS WITH CHAIRMAN COX. NEITHER HE NOR THE COMMISSION ENDORSE MY OPINIONS, BUT IN LIGHT OF YOUR THREAT, I THOUGHT SHOULD SEND THIS TO HIM.

Mark:

If this upsets you, I wonder how George Bush feels. I assume that Mr. Cox would view your involvement with “Loose Change” much as I do. After all, he served his country as a Republican Congressman from Orange County for nearly 20 years and was appointed by President Bush. If you feel like sharing my thoughts with Chairman Cox, be my guest.

Previously, I thought you were merely foolish and naïve (sic). Now, however, I see that you are also a hypocrite. I guess your belief in free speech has severe limitations. If someone else is the victim of an absurd conspiracy theory, you defend your right to participate in smearing the good name of of a patriot like President Bush. But, when you are the subject of a parody of the attack you have endorsed, you suddenly issue threats.

I think I will e-mail this to Chairman Cox myself. I think he will enjoy it. I’m sure he is also a Laker (sic)fan.

Since Chairman Cox may not know the background, I will explain. Mark Cuban is the owner of the Dallas Mavericks and has participated in distributing the vicious and absurd documentary, “Loose Change,” which posits that President Bush planned the demolition of the World Trade Center as a pretext for going to war against Iraq. We have had some past exchanges about my opinion the Mr. Cuban’s support for this project is irresponsible and immoral. Below, I parodied his position that every opinion, no matter how absurd and vicious, deserves to be broadly disseminated.

Curiously, SEC chairman Christopher Cox recused himself from the commission vote on whether to bring charges against Cuban.

In a statement, an S.E.C. spokesman told DealBook that the insider-trading investigation was run out of the Commission’s Washington headquarters. Norris worked out of a regional office and had no role in or knowledge of the investigation. He was “referred for disciplinary action,” the spokesman said.

But, the regional SEC office turns out to be Fort Worth, TX and Norris is listed on numerous public court filings (See here, here and here) as a Senior Trial Counsel, U.S. Securities & Exchange Commission, Fort Worth, TX Cuban lives next door in Dallas.

Bush Plans Summit of World Leaders Over Crisis

At the urging of French President Nicolas Sarkozy (His half-brother, Oliver Sarkozy, is a Managing Director and co-head of the Global Financial Services at The Carlyle Group), President Bush will plan to hold a summit of world leaders "to discuss the global response to the financial crisis and ideas to prevent such a crisis from recurring in the future and to preserve our free market system."

At this point in his administration, it is clear that Bush "preserving our free market system" is the equivalent of Hitler favoring national healthcare for Jews, just before shipping them to Auschwitz.

Sarkozy in particular has pressed for the economic summit to be held in New York City, where, he says, "everything started".

This should be quite the show.

The summit is likely to include the member states of the Group of Eight – the U.S., Japan, Germany, the U.K., France, Italy, Canada and Russia – as well some developing countries that haven't traditionally had a seat at the table, such as China, India, Brazil and South Korea. Saudi Arabia, South Africa, Switzerland and Australia also are being mentioned as possible invitees, according to WSJ.

Fact Checking "W"

Oliver Stone's movie about George W. Bush, "W", opens Friday. It is fact checked today by Rupert Murdoch's New York Post. Warning, the fact check could be considered a spoiler. You may want to save the link until after you see the movie. It's detailed and appears objective. You can find it here.

Blame The Current Mess On Ben Stein's Father?

Writes Chris Westley:

By demeanor, Herb Stein was a lovable and funny man, and very smart. (I worked a few steps from his office once, as a college intern.) But in terms of his professional contribution as Richard Nixon's chief economic advisor, Stein played the role of buffer between Nixon's desire to socialize and the market's desire to correct, and in the process he set the standard for many DC-based economists who advocated the bailout last week. The early 1970s were similar to today in that they followed years of political manipulation of the economy, leading to a major correction, which led to a crisis for the political class and the need to socialize in order to avoid it. In Stein's case, it was his reputation as an economist working behind the scenes that enabled Nixon to close the gold window and establish the dollar as a fiat currency and therefore enable the largest wealth redistributions in history. Stein's example reminds one of the full cost of public financing of intellectual activity. Let's add the bailout to this cost.

Westley also blames, among others, Milton Friedman, George W. Bush, Karl Marx and Barney Frank. His full list with thumbnail descriptions of their evil deeds is here.

Alert: Bush To Speak To Nation Tomorrow

Presdent George W. Bush will address the nation tomorrow to tell Americans they should remain ``confident'' amid falling stock markets and a worldwide credit crisis, administration spokeswoman Dana Perino said.

The statement will be given at 10:25 a.m. ET, Perino said.

Transcript of Bush Statement on the Economy

President Bush just made brief comments at the White House on the economy. Here is a transcript of the remarks, provided by the White House.

10:15 A.M. EDT

THE PRESIDENT: The American people are concerned about the situation in our financial markets and our economy, and I share their concerns.

I've canceled my travel today to stay in Washington, where I will continue to closely monitor the situation in our financial markets and consult with my economic advisors. I spoke to Secretary Paulson this morning, and I will meet with him later on today.

In recent weeks, the federal government has taken extraordinary measures to address the challenges confronting our financial markets. We've taken control of Fannie Mae and Freddie Mac -- the home finance agencies -- to help promote market stability and to ensure they can continue to play a role in helping our housing market recover. This week, the Federal Reserve acted to prevent the disorderly failure of the insurance company AIG -- a development that could have caused a severe disruption in our financial markets and threatened other sectors of the economy. Yesterday, the Security and Exchange Commission took action to strengthen investor protections and step up its enforcement actions against illegal market manipulation. Last night, the Federal Reserve, in coordination with central banks around the world, took a substantial step to provide additional liquidity to the U.S. financial system.

These actions are necessary, and they're important. And the markets are adjusting to them. Our financial markets continue to deal with serious challenges. As our recent actions demonstrate, my administration is focused on meeting these challenges. The American people can be sure we will continue to act to strengthen and stabilize our financial markets and improve investor confidence.

Thank you.

Bush Cancels Trip Amid Financial Crisis

GW has canceled a political trip to Alabama and Florida.

"President Bush is canceling his planned travel to Alabama and Florida tomorrow, and will instead remain in Washington to continue to work with his economic advisers on the serious challenges confronting our financial markets," spokesman Tony Fratto said. "The health of our financial markets is critical to the nation's economy, and the president remains focused on taking action to stabilize and strengthen our markets and to restore investor confidence."

On Monday,Bush offered reassurances following last weekend's emergency actions, but U.S. equity markets plunged anyway.


-EPJ Newsdesk

Obama Might Pursue Criminal Charges Against Bush

Elna Schor reports for Guardian.co.uk:

Democratic vice-presidential nominee Joe Biden said yesterday that he and running mate Barack Obama could pursue criminal charges against the Bush administration if they are elected in November.

Biden's comments, first reported by ABC news, attracted little notice on a day dominated by the drama surrounding his Republican counterpart, Alaska governor Sarah Palin.

But his statements represent the Democrats' strongest vow so far this year to investigate alleged misdeeds committed during the Bush years.

"If there has been a basis upon which you can pursue someone for a criminal violation, they will be pursued," Biden said during a campaign event in Deerfield Beach, Florida, according to ABC.

"[N]ot out of vengeance, not out of retribution," he added, "out of the need to preserve the notion that no one, no attorney general, no president -- no one is above the law."

Crude Oil Soars on US Mischief With Russia

GW has found a new way to drive up the oil price. The war in Iraq and the threat of war with Iran are not enough. GW has decided to surround Russia. First by turning Georgia into a US proxy and then by placing a military defense shield in Poland.

The plan(?) is working.

Crude oil futures are above $120, again.

Crude for October delivery rose $5.64, or 4.9%, to $121.20 a barrel on its first full trading day on the New York Mercantile Exchange.

To understand the national psyche of Poland that would allow the US to plant a missile defense shield there, see Peter S. Rieth's important analysis,Oh, Me! Me! Shoot Me!: A Summary of Contemporary Polish Foreign Policy

Bob Woodward's New Book Is Out Sept. 8

"There has not been such an authoritative and intimate account of presidential decision making since the Nixon tapes and the Pentagon Papers," Woodward's longtime editor, Alice Mayhew, said Tuesday in a statement. "This is the declassification of what went on in secret, behind the scenes."

The War Within: A Secret White House History 2006-2008 will have a first printing of 900,000 copies.

The Washington Post, where Woodward currently serves as an associate editor, will run excerpts on Sept. 7. That night, Woodward will be interviewed on CBS television's "60 Minutes.

GW Looking To Cause Some Trouble

GW said this morning that the breakaway regions of South Ossetia and Abkhazia must remain part of Georgia.

Bush said in a speech at his ranch in Crawford, Texas that the two regions are "a part of Georgia," and "they will remain so."

"There is no room for debate on this matter," Bush added.

What the hell does this mean?

Are US troops going into Georgia to enforce this declaration?

Buchanan On Agitating The Bear

Pat Buchanan writes:

Bush, Cheney, and McCain have pushed to bring Ukraine and Georgia into NATO. This would require the United States to go to war with Russia over Stalin's birthplace and who has sovereignty over the Crimean Peninsula and Sebastopol, traditional home of Russia's Black Sea fleet.

When did these become U.S. vital interests, justifying war with Russia?

The United States unilaterally abrogated the Anti-Ballistic Missile treaty because our technology was superior, then planned to site anti-missile defenses in Poland and the Czech Republic to defend against Iranian missiles,though Iran has no ICBMs and no atomic bombs. A Russian counter-offer to have us together put an antimissile system in Azerbaijan was rejected out of hand.

We built a Baku-Tbilisi-Ceyhan pipeline from Azerbaijan through Georgia to Turkey to cut Russia out. Then we helped dump over regimes friendly to Moscow with democratic "revolutions" in Ukraine and Georgia, and tried to repeat it in Belarus.

Read Bucahnan's complete commentary here.

Russia: Poland Risks Nuclear Attack

A top Russian general, Gen. Anatoly Nogovitsyn, said Friday that Poland's agreement to accept a U.S. missile interceptor base exposes the ex-communist nation to attack, possibly by nuclear weapons, the Interfax news agency reported.

Poland and the United States on Thursday signed a deal for Poland to accept a missile interceptor base as part of a system the United States says is aimed at blocking attacks by rogue nations. Moscow, however, feels it is aimed at Russia's missile force.

"Poland, by deploying (the system) is exposing itself to a strike — 100 percent," Nogovitsyn, the deputy chief of staff, was quoted as saying.

Clearly, the United States is egging on Russia on many fronts. It appears it was first moves by American influenced Georgia that provoked Russia's attack into Georgia.

Is this George Bush's endgame to his presidency, to get the entire world at war?

Bush Signs "Housing" Bill

It's law.

President Bush signed the bill without any fanfare or signing ceremony, in the Oval Office in the early morning hours. He was surrounded by top administration officials, including Treasury Secretary Henry Paulson and Housing Secretary Steve Preston.

The bill contains provisions to fingerprint mortgage brokers, requires that all credit card transactions be forwarded to the IRS, and it raised the national debt ceiling by $800 billion.