Dragging heels at Treasury

At some point the process became apparent. The sky is falling, so if you are in the know and have the pull, you help yourself and your friends. Don’t plan too far ahead. Keep the green churning.

People were getting thrown out of work left and right at a significant rate on all strata. The folks reading the Times knew this. But capital - that was the animal that had to be fed.

The Treasury Dept now struggled to accomplish the task of hiring people to oversee the TARP. A bridge too far - because it lived and breathed. The breadth of the TARP plan had been continually narrowed. Why? It became much more a case of give the bankers some money and call that relief. Treasury Secretary Henry Paulson said the injections of the capital would be the best bet for stabilizing the financial sector - better than direct government purchases of distressed assets. And, anyway that would be hassle...

A story in the Wall Street Journal suggested that buying and moderating assets is just too much trouble. You'd have to hire people, you know? It too 'labor intensive.'

'Rescue Plan Strained by Lack of Staff' by Wash bureau staffer Michael R. Crittenden suggests there is a backlog of unprocessed applications for relief among banks, probably not the ones on Henry's tennis buddy list. From the Journal:

Outside observers said the difficulty of quickly building a qualified staff may be one reason the Treasury abandoned its original plans to use the TARP to purchase assets from financial institutions, deciding instead to inject capital into the banking system.

"I don't think that was a small part of why Treasury in the end abandoned the asset-purchase program. It's very people-intensive," said Wayne Abernathy, executive vice president of financial-institutions policy and regulatory affairs at the American Bankers Association.


Obviously the Bush administration has little heart for more than a shadow play on a wall. Hank looks tired, you know? America was the country of the Manhattan Project and the Moon Program. The former is a sore point with me. The IED issue in Iraq was posed as a challenge calling for an organization on par with the Manhattan project. But folks didn’t give up weekends; more than a few approached it as just another grant opportunity. There are about 40 full-time employees now working on TARP. The ratio of overseers to outflow remains pretty much on par for a Bush administration initiative. This is a real challenge for President-elect Barak Obama.

http://online.wsj.com/article/SB122783187912562983.html

WHO THE GREAT CREDIT RISK CRISIS KNEW?

No one, wise or unwise, knew or now knows when depressions are due or overdue.
–JKG, The Great Crash 1929

September 2008 – Who knew? Not the masters of the Economic Universe who lord it over the consumers. When the early waters of economic tsunami began to rise, the Secretary of Treasury proved no more prescient than the telemarketing mortgage hucksterer. And why should it be otherwise? Tweak down the interest rates. Wall Street will applaud and the banks will demur. That’s the formula. It was a familiar pattern. The waves were barely lapping the first steps of the pillared Treasury building –right next to the White House – and more impressive. It all seemed manageable - just work with Ben ‘I wrote a book about the Great Depression’ Bernake, have some trust in the masters of Wall Street - which Secretary of Treasury Henry Paulson in his mind had not yet left - and their government shadow organization, which Ben had come to run. Hadn’t they got us out of the Russian-Asian spiral of 1997? Or the Dot.Com bubble of the early 2000s? Yes they had. You have to play with the dials. But the dials seemed to have lost their influence. The markets were not acting in the way they were supposed to. So, by the middle of September, all became true believers in socialism in the form of cash infusions. The Great Credit Risk Crisis was underway. By the end of Sept Bald Headed Henry P. – he of a tremendous intelligence, drive and pragmatism - waddled on his knees for bucks from Rep Nancy Pelozi [D-Cal]. It was a bailout for the financial folks. Ben and his expert partner on depression took this and went back to their offices. And the markets were happy for more than a day. Did they sell Nancy a bill of goods? No matter, he had her at waddle. But this $800 billion [there was more to come] – got spend in piecemeal just for the bankers to be somewhat more content when looking at their vaults. It didn’t unloose the credit risk crisis. On Nov 24 T-man Henry P. would bail out usurious stalwart Citibank with some $800 billion. Just a week after he’d declared all was stable.

Stern Paulson / high blood pressure guy / tie askew, these days /

On Nov 25 the federal reserve said it would commit another $800 b in mortgage, housing and consumer credit markets.. That via Fannie Mae and Freddie Mac and Ginnie Mac and their securities. And consumer securities backed by student loans, credit cards and other consumer credit too…but not a penny for the poor fops on the other end of those telemarketer calls, the consumers. It is very clear that the Republican administration out going and its sponsor bankers are getting the banker bailout done on their watch. If there’s a glitch, it must be fixed. Of course, programmed trading is largely to blame. But the people who fate had rewarded with responsibility here, were not like Lassie. When the Penn Railroad train was headed down the cliff they doubled their bets on Union Pacific. More to the point, they shorted Penn and prepared to chorttel. As the center lost hold, they set off the conflagration by effort making money on the bruthers' bad luck. Moreover, they did it on cheap credit. But now, they cant take the interest rate lower than zero. Hey, Junior try to get a 1% loan if you can!

My father was a credit manager, and he saw the automation of that function. He barely owned anybody anything. From this event to date: not outsourcing your credit analysis is the only take away. Dad couldn’t figure out the point of a paper shredder, and I don’t think he would have countenanced the big government rescue that assured the bank interests could weather the storm they’d finagled.

No they didn’t know what was coming. They were masters of no more than the sum of their accounts. Yes they were growing more incredibly rich with a marvelous Ponzi scheme. And yes they were mere bison in a herd. When you pay the referees, you got a jump on the rest.

Maxwell Street Radio

It was a Sunday open air market of music and flea bit items. Caught a good film [DVD] about Maxwell Street in the '60s. It is called "Chicago's Legendary Maxwell Street ... And This Is Free." Very vivid depiction of the Chicago Blues. Of course, now, piano players wasnt on Maxwell Street. Didnt no piano players play in the street. But Robert Nighthawk, Johnnie Young and J.B Hutto [his hand anyway, I think; this is a wild guess - maybe it's Homesick James] appear. Lots of gospel too. Much in the way of Hucksterism. It is not a representation of what the blues would be like in a South Side Club in the '60s or '70s , but it is a more accurate representation than most any blues show you may go to today.

I got down there once when it was way past it's prime. Remember this guy who had this giant collection of hub caps on sale. The joke to me in those days was selling so many hub caps. That was a very prominent stolen item back in time.

There is a CD accompanying the DVD with J.B.Hutto, Floyd Jones, Blind Percy. others. There is a booklet also, that includes an intersting piece by George Paulus.

Paulus recalls one day skipping church on Sunday to go with a friend to Maxwell St. This vignette struck me..

Some Sundays later we walked into Maxwell Street Radio, also a record shop. There were dead or half dead televisions piled precariously on tables, on the floor, in corners and yes they sometimes reached almost to the ceiling. This was where TV's came to die or be resurrected. Radios fared no better ... they were carefully balanced on shelves and atop TVs. There must have been years of repairs. The floor was wood, varnish long since worn away with nail heads gleaming ...

The store also sold records; it also had been the site of recordings. Demo Acetates.

The sides of the [wooden sales] counter were decorated with vintage promo pictures of Muddy, Little Walter, Jimmy Rogers ... all the Chicago greats plus photos of other R& B stars.

The proprietor spins some 78 rpms that were sparkling new. The boys by ‘the fragile shellac.’

~~~~~~ ~~~~~

P.S. While researching this [looking for a picture of Maxwell Street Radio] I came across an interesting account of Tempo-Tone records, the one on which Sunnyland and Floyd Jones cut "Hard Times

The Indian in the group

Bad news that Jimmy Carl Black [second from right, above] of Mothers of Invention died. He was 70. Will always remember him as "Jimmy Carl Black, the Indian of the group." Heard him on the radio this summer, and he seemed like a nice guy. Here's a link to the Zappa write up of a year ago. The Shroud of Zappa.

Mothers of Invention drummer Jimmy Carl Black - Washington Post

Jimmy Carl Black at 70 - L.A. Times