By David Vaughn
Sep 29 2008 4:57PM
We’ve heard that before, huh? But this time it is real.
“The US stock market could suffer a devastating crash with shares losing a third of their value this week…” “…a meltdown of 1929 proportions…” “Officials close to Paulson are privately painting a far bleaker portrait of the fragility of the global economy than that advanced by President George W Bush…” “…the message from government officials is that “the economy is dropping into the john.” “…We could see falls of 3,000 or 4,000 points on the Dow…” “That could happen in just a couple of days.” “We’re looking at catastrophe, huge, amazing catastrophe.” “It’s going to be really, really nasty.” “This has the potential to make 1929 look like a walk in the park.”
Below is an email I received this last week from a reader.
“Mike M. – “You see I am the person you were talking about. I have lived in a 1200 square foot home for 31 years and I served in the military for 4. I drive a truck for a living, 31years and still going. I live below my means and try to always watch what I spend money for. In the end these people and every single government figure will be held accountable. I wish to God I could put each one of them in the electric chair and just pull the level down for full power. I would personally laugh as each one of them…fried. You say damn this man is crazy; no I am not crazy I just believe in vengeance and fairness. I am sick and tired of a crooked government and a crooked system.”
And what is the average sentiment of our congressional leaders at this moment?
“For the most part, it seemed lawmakers were afraid to vote for the bill, yet afraid to vote against it.” usatoday.com, 9-25-2008
We witnessed a few years ago Enron, WorldCom, and other CEOs with failed companies. But those fellows were small potatoes to AIG, Meryl Lynch, Lehman Brothers. These large banking and insurance institutions understood the measure of the risk they were taking on these past 5 years. Or are we to understand that these Ivy League whores are just stupid?
“Lehman Brothers Chief Executive Richard Fuld…took the blame for the company's staggering second-quarter loss…” "This is my responsibility…" aol.co.nz, 6-17-2008
And how was Lehman Brother’s CEO rewarded for his admitted responsibility?
“…Fuld (Lehman Brothers CEO), a 30-year veteran of the once-venerable Wall Street investment bank that filed for bankruptcy protection…was awarded $22 million…” forbes.com, 9-15-8
And a few years back?
“In the 40 years that Richard S. Fuld, Jr., 60, has been with Lehman Brothers, he has seen the Firm undergo many changes…” “…Fuld's leadership abilities stand out.” "Real leaders earn the right to lead," Fuld said…” “…Fuld was named to Barron's "World's Most Respected CEOs" list in 2006…” harbus.org, 10-16-2006
And what can we say about the largest US bank failure?
“Washington Mutual collapses in biggest bank failure in U.S. history” haaretz.com/hasen, 9-26-2008
Were there any internal warnings within Washington Mutual sending out red flags a few years ago?
“…Washington Mutual was careless, analysts say. The company failed to integrate a number of rapid acquisitions fully and didn't build sufficient room into its financial plan to weather an expected drop-off in mortgage lending…” “…that's meltdown time." marketwatch.com/news/story/failure-heed-rate-warnings, 6-24-2004
But, hopefully, the CEOs were being prepared financially so that they personally would not experience Washington Mutual’s coming failure! Thank the good Lord as this seems to be the case!
“Washington Mutual, the largest U.S. savings and loan, reduced Killinger's (Washington Mutual CEO) total compensation…$5.25 million from $14.2 million in 2006.” “Killinger's salary remained the same at $1 million last year to maintain the tax deductibility of his full salary…” in.reuters.com/article/governmentFilingsNews
Let’s hear now about the new CEO who has replaced outgoing Killinger and how much this new dude will make at Washington Mutual as the new CEO.
“Golden parachute for Washington Mutual CEO” “Washington Mutual's new CEO Alan Fishman -- who had been on the job a measly 17 days -- was paid nearly $20 million in the last month.” “That includes a $7.5 million bonus when he was hired Sept. 8. And it includes a mind-blowing $11.6 million cash severance now that the company has gone under. That's on top of his base salary -- a cool $1 million a year. Plus, he was eligible for annual bonuses worth up to 365 percent of his base pay.” “All this while the company was posting billions in losses. (Yesterday, it became the biggest bank failure in U.S. history…) “ Read over all that again -- and explain to me why something doesn't need to be done about CEO compensation.” dallasmorningviewsblog.dallasnews.com, 9-26-2008
Why isn’t the general public and lawmakers automatically jumping and demanding President George Bush’s 700 billion recovery plan? For over 20 years the American public has been trained to always look for that magic silver bullet. Folks, there are no more silver bullets.
“How did things go so badly? The simple answer: greedy, fat cat investment bankers who used these complicated derivatives no one could understand to leverage themselves, make tons of money at the expense of the typical mortgage holder, and who will never experience any down side from their profligacy.” economist.com, 9-23-2008
These “Masters of the Universe” that created this chaos will ultimately down the road profit in some way off of the very mess they created. It always works that way.”
“Despite steep declines in the performance and stock price of the three companies, Mr. Mozilo (CEO of Countrywide Financial), Mr. O’Neal (Merill Lynch CEO), and Mr. Prince (Citicorp CEO) were rewarded generously.” “… Mr. Mozilo (Countrywide CEO) received over $120 million in compensation…” “Also Mr. Mozilo (Countrywide CEO) received over the past 5 years a total of $391.88 mil.” “…Mr. O’Neal (Merrill Lynch CEO) departed with…$161 million…” “…Mr. Prince (Citicorp CEO) was awarded a $10 million bonus, $28 million in unvested stock and options, and $1.5 million…upon his departure from Citigroup.” oversight.house.gov 2008 & forbes.com
Ready to throw up yet folks?
These mega bankers are the elite of the world and will remain so. Whatever seeds of corruption they plant for others their personal harvest will still be bountiful. The banks rule the world. Even when this depression finally sets in for real these worms will ride the surf, smile and profit.
“…the Mortgage Banker Association is here for the banks, not the people.” “They would throw your grandma under the bus as they foreclose on her home and kick her to the curb in a heart beat.” loanworkout.org, 1-20-2008
The following below is a good explanation and summary written by the venerable Gary North. Well worth reading and absorbing.
Gary North, lewrockwell.com/north, 12-19-7 - “This is the domino effect. The subprime mess cannot be contained. It is like an untreated cancer cell. It will spread.” “If they (banks) knew about the fraud, they should have to buy the bonds back.” “…this bubble is like no other in my lifetime. It is tied to housing, and the entire Western world has been affected.” “The economic losses are gigantic and will grow.”.” “…has sucked in the best and the brightest people on earth, those who allocate capital. They trusted Alan Greenspan. They trusted artificially low interest rates. They trusted fiat money. That trust has been betrayed, as always. But this time, it has been betrayed on a scale that puts the world's banking system at risk. The bailouts have only just begun.”
Gary North, lewrockwell.com/north, 2007
But don’t you worry folks. The perpetrators of this financial crisis will be guaranteed to profit as I stated earlier.
“Golden parachutes here to stay” “…those hoping for an end to golden parachutes - the large pay packages that top executives get when they leave a company - may end up disappointed.” "We're not abrogating contracts," said a Treasury official who briefed reporters Sunday.” “Another Treasury official said that even future golden parachutes could be paid…” CNNMoney.com, 9-28-2008
Gold Letter, Inc.