Today we learned a thing or two about the big shots on Wall Street and the big shot secrets they tote around with them. For the vast majority of us—some percentage I can't quite put my 99 fingers on—Wall Street is a big ol' bubbling vat of green mysteries. One commenter gives us a pretty good look inside the life of a Dub-Streeter (and you're welcome because that is a label that will certainly catch and spread like wild fire).
Back in the summer of 2008, as the financial system teetered on the edge of collapse, no one knew what would happen to the debt-laden mortgage giants Fannie Mae and Freddie Mac—would they be allowed to go under, or would the government come to their rescue? What would become of the shareholders? Trillions rested on the answers to those questions. Oh wait, someone did know. Treasury Secretary Hank Paulson. And he told his hedge fund pals and former Goldman Sachs colleagues. He just didn't tell you. Because, really—who the fuck are you?
Tom Brokaw of all people has a funny column in today's Journal about all the distressed assets 'Main Street' types would like to sell Treasury Secretary Hank Paulson. For instance, Barney "Big Un" Baumgartner of Wyoming — a real person, I checked — is offering an 80% stake in his gambling debts and taxidermy business for $1.8 million. The column is labeled 'humor' as if the Journal needs to remind you it does not find the actual bailout to be a joke. But they are are alone in that respect! Because the great untold story of this column the Journal can't tell you because they don't use swear words is the brand-new awesome website BuyMyShitPile.com, wherein average U.S. Americans are offering to unload their most illiquid investments — like this attractive house, Hank's for $269,000,000! — at what they believe to be fair "Hold To Maturity" prices or whatever. Our favorite shit after the jump:
If you haven't been spellbound by the (HUGELY telegenic) drama consuming the nation's new financial capital over the past 36 hours, here's a big takeaway you missed: Chris Dodd is the Wonk Stud Du Jour. Chris Dodd, senator from Connecticut — Connecticut, Hedge Fund Capital of the Galaxy. Chris Dodd, onetime waitress-thrower and suitor of Carrie Fisher and Bianca Jagger who more recently became disparaged as Chris Dodd, official Friend of (and recipient of a cut-rate mortgages from) former Countrywide Financial CEO Angelo "Moz" Mozilo. Chris Dodd had a big bug crawl across his head during a debate last summer, but that has nothing to do with why he may turn out to be a most unlikely hero of this epic market meltdown. Which is to say: could Chris Dodd be so beholden to capitalists he actually understands what they do?Dodd was much-maligned for ignoring his duties as Senate Banking Committee Chair to pursue a quixotic (insane?) bid for the Democratic presidential nomination as the American financial system first began foreshadowing its collapse. But if Dodd learned anything from his strange decision to relocate his entire family to Iowa the year before a caucus in which he managed to win a whole zero percent of the vote, perhaps it was that the rest of America does not, in economic terms anyway, look very much like his flush little state or the gargantuan financial services industry that nurtured within it some of America's most preposterously wealthy zip codes. Yesterday Dodd delivered a lengthy proposal to defend taxpayers from some of the more egregious ripoffs and scams that could result from the approval of Treasury Secretary Hank Paulson's awe-inspiring $700 billion Wall Street bailout. It turns out that amid all the cheap mortgage receiving and tabloid living Chris Dodd has actually been paying attention to the industry that has been feeding his coffers all these years! Dodd's plan demands, among other things, that the government receive warrants that might convert into equity stakes in all those banks whose loans it is now proposing to buy at those possibly grossly-inflated prices. It seems like a damn good idea! Not that I would know. But Democrats and Republicans seem to agree. Could Dodd be the Giuliani of the Market Meltdown? I bet the Dems would throw in another abortive run at the presidency if he does! A telling quote from today's hearing came when Dodd asked Fed Chairman Ben Bernanke how he'd explain it to Main Street. "I was a college professor. I've never worked on Wall Street," he said. Indeed, Bernanke is a college professor who has published dozens of hugely influential papers on the critical role of decisive monetary policy in fending off the runaway deflation that begets Depressions. But he's a professor; does he fully understand how disconnected the types of immense wealth accumulated by the high-fee, ultraleveraged sectors of the financial services industry are from the types of wealth generated by businesses that run on plain-old lines of credit and investor equity? I understand a "run" on the money market of the type we saw Friday necessitated a massive intervention of some sort; I also understand taxpayers could very well turn a profit on its Bear Stearns intervention; I further understand the economic malaise that accompanies a deflationary spiral. It's hard to pass off Paulson as some Goldman shill when, seriously, no one actually capable of comprehending even a tenth of this crisis doesn't sport an attachment to one of the financial institutions whose livelihoods will be affected here. But it's hard to think Paulson and Bernanke, with their insistence that Everything Get Done Right Now, aren't overpanicking to soothe an overpanicky stock market. And it's like: well, look, there is no way this is going to be smooth for the benchmark stock indices. But the stock market has never been — it has only grown further and further away from reflecting — the actual economy. That is why 10,000 households in this country are worth more than $100 million apiece while nearly four-fifths of the nation's households get by on less than ninety grand a year (and about twenty survive on less than twenty.) This morning on CNBC I watched anchor Mark Haines tell his younger colleague Erin Burnett his own amendments for the bailout: something about wanting the Treasury to buy exclusively banks' better loans, allow the financial firms to work out the superbad ones, install some provisions to help homeowners renegotiate their mortgates and then pump the surplus generated into Medicare and Social Security. Burnett basically told him he was a communist and it was cute because as anyone who has watched Haines prior to this month he is so totally not. But it called to mind another scene between the two of them a few days ago when Burnett tried to get some money manager to offer viewers a more "glass half full" view on the stock market. "If you don't think this is that serious, you don't understand it," he said. He was right; it is serious; and the truly serious people watching it play out are abandoning their friends, their fundraisers, their inclinations and their ideologies in hopes of merely understanding it and conveying it to all those it will effect. We can only hope our elected officials — I have two in mind — can add "pollsters" to that list and prove capable of figuring out what's truly best for the country.
Hey, can you even blame all the stupid people saying stupid things about today's Freddie Mac Fannie Mae bailout? This whole thing has been stupid ever since someone decided to call it the Federal National Mortgage Association. Who names something "Federal National?" Anyway, the good news is, no one understood any of this shit back in 1968 when they "privatized" it, and no one — us especially! — seems to really understand it now. We keep LOL-ing at stupid things people say about the biggest-ever government bailout only to reflect a while longer and start to the secret genius of all of it! Let us count the ways:1. "[Freddie Mac and Fannie Mae have] gotten too big and too expensive to the taxpayers." Thanks for sharing, Elle Woods Palin! But ha ha ha, Freddie Mac and Fannie Mae are supposed to be private companies that have nothing to do with the taxpayers who are only now going to find out how "big" and "expensive" their woeful mismanagement is! Of course, in seizing upon this "gaffe" as Democrats did today they kinda missed the whole supposed reason the bailout was "necessary" to begin with, which is to say, that the government exists to protect the plutocracy but also that taxpayers have essentially "implicitly" guaranteed Fannie Mae and Freddie Mac bonds throughout their entire 80-year existences. When the Federal government first announced plans to "privatize" Fannie Mae to help balance the budget in January 1968, an economics reporter at the New York Times named Edwin Dale wrote that the whole thing was a budget "gimmick." By September 1968, Lyndon Johnson aides had appropriated the "gimmick" term themselves, in an Edwin Dale story that employed more smug quotation marks than a Tao Lin prospectus: