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Monday, September 22, 2008

Free Internet Press Newsletter - Monday September 22 2008 - (813)

Monday September 22 2008 edition
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Commentary: Paulson Bailout Plan A Historic Swindle
2008-09-21 16:56:36
Intellpuke: This commentary was written by William Greider, national affairs correspondent for The Nation and appeared in that magazine's online edition for Friday, September 19, 2008. Mr. Greider's commentary follows:

Financial-market wise guys, who had been seized with fear, are suddenly drunk with hope. They are rallying explosively because they think they have successfully stampeded Washington into accepting the Wall Street Journal

If Wall Street gets away with this, it will represent an historic swindle of the American public - all sugar for the villains, lasting pain and damage for the victims. My advice to Washington politicians: Stop, take a deep breath and examine what you are being told to do by so-called "responsible opinion." If this deal succeeds, I predict it will become a transforming event in American politics - exposing the deep deformities in our democracy and launching a tidal wave of righteous anger and popular rebellion.

As I have been saying for several months, this crisis has the potential to bring down one or both political parties, take your choice.
solution to the crisis: dump it all on the taxpayers. That is the meaning of the massive bailout Treasury Secretary Henry Paulson has shopped around Congress. It would relieve the major banks and investment firms of their mountainous rotten assets and make the public swallow their losses - many hundreds of billions, maybe much more. What's not to like if you are a financial titan threatened with extinction?

Christopher Whalen of Institutional Risk Analytics, a brave conservative critic, put it plainly: "The joyous reception from Congressional Democrats to Paulson's latest massive bailout proposal smells an awful lot like yet another corporatist lovefest between Washington's one-party government and the Sell Side investment banks."

A kindred critic, Josh Rosner, of Graham Fisher in New York, defined the sponsors of this stampede to action: "Let us be clear, it is not citizen groups, private investors, equity investors or institutional investors broadly who are calling for this government purchase fund. It is almost exclusively being lobbied for by precisely those institutions that believed they were 'smarter than the rest of us,' institutions who need to get those assets off their balance sheet at an inflated value lest they be at risk of large losses or worse."

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Wall Street Crisis Gives Obama Leverage
2008-09-21 16:39:19
Barack Obama made the calamity on Wall Street the central theme of his case against John McCain on Saturday, invoking the crisis to pound his rival on Social Security, health care and government reform.

The scope of Obama's argument demonstrated how the biggest financial bailout since the Great Depression has shifted the terms of debate in the White House contest. In two days of campaigning across Florida, the Democratic presidential nominee made it the foundation of a wide-ranging assault on his Republican opponent. McCain, in turn, has used it to sharpen his criticism of Obama.

Playing off the pocketbook anxieties of the state's huge elderly population, Obama reminded Floridians that McCain had backed President Bush's doomed effort to let Americans invest Social Security benefits in the stock and bond markets. If the Arizona senator had had his way, Obama said, millions last week "would've watched as the market tumbled and their nest egg disappeared before their eyes."

"I know Sen. McCain is talking about a casino culture on Wall Street, but the fact is he's the one who wants to gamble with your life savings," Obama told 2,500 supporters in a theater at Bethune-Cookman University.

In fact, the Republican presidential nominee has favored giving only future retirees - not current beneficiaries - the option to invest Social Security savings.
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U.S. Takeovers Of AIG, Fannie, Freddie Raise Business, Political Questions
2008-09-21 16:39:32
Uncle Sam is turning into Uncle CEO; but will the new corporate suit be a good fit?

By agreeing to bail out insurance giant American International Group Inc. and mortgage lenders Fannie Mae and Freddie Mac, the federal government has put itself in the unprecedented position of running huge private companies. In the case of American International Group, or AIG, the government is now the majority shareholder, acquiring 80% of the company in exchange for lending it as much as $85 billion over two years to keep the business out of bankruptcy as it is dismantled.

Some lawmakers and financial experts wonder whether U.S. officials are up to the task of directing large corporations through such turbulent times. AIG, for instance, has 116,000 employees and does business in about 100 countries. Fannie Mae and Freddie Mac together hold or guarantee $5.4 trillion of mortgages, about half of the nation's home loans.

"The government does not have a core competency to run an insurance company of the magnitude of an AIG," said David M. Walker, former head of the Government Accountability Office (GAO), the congressional watchdog agency. "It's clearly not going to be able to effectively manage AIG and do what needs to be done."

Top Bush administration officials say they authorized the controversial bailouts to prevent corporate failures that could have crippled the U.S. economy. Yet many details about how the government will run the companies, and for how long, are still being worked out.

Some critics of the bailouts are heartened that federal officials moved quickly to place seasoned, private-sector executives into key leadership positions at the companies. For example, Edward M. Liddy, former chairman and chief executive of Allstate Corp., was installed as the new head of AIG and told employees that he didn't think the government intended to "hamstring" the company.
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Israeli Prime Minister Olmert Resigns, Livni Likely Successor
2008-09-21 16:39:09
Israeli Foreign Minister Tzipi Livni wasted no time Sunday working to put together a new government, meeting with potential coalition partners even as outgoing Prime Minister Ehud Olmert formally resigned. Her ability to move fast in her first task could have far-reaching effects on Mideast peace talks.

Livni, who has gained respect for favoring peace deals with the Palestinians and Syria while distancing herself from the unpopular Olmert, would become Israel's second female prime minister after Golda Meir, who served from 1969-1974.

A former lawyer and one-time agent in the Mossad spy agency, Livni has 42 days to form a government.

Olmert remains in office until a new government is approved by the parliament, and he has pledged to press ahead with peace efforts as long as he is premier. That in itself might push reluctant Israeli politicians to deal quickly with Livni.

Olmert's dismal approval ratings approach single figures, and both those who favor an accord with the Palestinians and those who oppose it don't want him to be the one who presents an agreement to the people.

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