AND THE BEAT (AS IN BEAT-DOWN OF THE AMERICAN CITIZEN) GOES ON, PART II

Citibank joins the growing list of failing American companies that YOU are bailing out. Gee, you're sooooo generous! And so nice of you to work over the weekend to get this baby done by late Sunday night. I mean, imagine if the American people had to spend a weekday thinking about this, debating it, speaking to their representatives and all that stupid democracy shit.

This one sees YOU insuring about $300 billion of the idiotic, irresponsible, gar-bage investments that Citigroup made, plus a straight-out float of $20 billion in TARP money.

This Citigroup disaster is partly Robert Rubin's doing, for all those keeping score at home. And who is one of Rubin's proteges, you might ask? (If you're not asking, you should be. It's your money at work here). Why none other than Tim Geithner, your soon-to-be Treasury Secretary.

The same Geithner who worked over the weekend with such luminaries as Hank Paulson & Ben Bernanke to let this latest boondoggle go down. More of the same . . . and lots more to come.

Next in line for a bailout: G.M.; G.E.; the G8; the city of Pittsburgh; Romania; the Detroit Lions; a loose consortium of failed businessmen named either John, Fred, or Peter; every third bank, determined by a series of coin tosses and dice rolls . . .

FIVE BORING FACTS ABOUT ME

Ugh. Not only have I been tagged, which sucks enough, but it's one of those dreaded "open-ended" memes. Nightshift66 tagged me with the hellish "Five Things About Yourself" meme.

Apart from the obvious fact that there are no more than 1.6 interesting things about me there's also the other (semi-) obvious fact that this requires thinking. And I don't wanna have to think.

Anyhow, I did one of these a few months ago, and the response was underwhelming, to say the least. So you've been forewarned: not only will these 5 things be uninteresting, but I'm half-assing the whole process. And no, there will be no further tagging. I'm doing my part to kill the meme where it stands.

1. I was terrible at grammar in high school. By this I mean "grammar,"as a discrete topic for study in high school English classes. You know, "literature" or "essay writing" or "vocabulary." Or "grammar." Whatever your teachers had, I'm sure there was some sort of variation on the theme: Fix a fucked-up paragraph. Or identify the errors in a paragraph and explain what the mistakes were.

Anyhow, although my essay writing was as good (or bad) grammatically as you'd expect from a 14 year-old, I literally couldn't pass these quizzes. I'd get A- or whatever on essays, and 95 or 100 on vocabulary quizzes, but 36 or 54 or 49 on grammar quizzes. After a while I just gave up trying to figure out what was missing in my brain, and failed these quizzes without worrying. My teachers didn't seem too concerned either since it wasn't affecting my actual writing.

2. In the fall and winter of 1991 I worked for an organization called "Dump D'Amato in '92." Our mission was, as you'd expect from the title, to do our part to ensure Al D'Amato's defeat in the 1992 Senate election. At first our leader (who shall go unnamed to protect his rep) actually planned to run against Pothole Al in the GOP primary, to force him to spend money, answer charges of corruption, etc.

But our guy decided against it late in the game and many of us -- including your humble blogger -- decided we didn't wanna work for an over-glorified smear campaign and moved on. And of course D'Amato defeated Abrams in the 1992 general election.

3. In 1996 I worked on an execrable film called Puppet. My name is (unmercifully) not among the shortened list of crew members on IMDB, don't try looking for me. Anyhow, the film gets 2 stars out of 10, and I think that's about 1 1/2 too many.

I worked with the director from pre-production right through the whole thing. I like to say that my greatest contribution was working with him from the start to help bring the screenplay up from "utterly awful" to "really bad." Check out the cast though. Amazing how many decent actors manage to find their way into nonsense like this.

4. In 1995, when I first visited Amsterdam, I saw a live sex show. Which is just what the name suggests: people have sex on stage, right in front of the audience.

Anyhow, it definitely fell more under the "curiousity" categorization rather than "turn-on." One of the oddest things was that the "theater" was actually pretty well-maintained. The show was presented much in the way you'd expect a dinner theater production: glossy, slick, professional. And the crowd was primarily composed of middle-aged European couples and groups of Asian businessmen.

I guess one of those is surprising.

5. I think Gladiator is a terrible movie. Terrible, terrible, terrible. The plot is filled with enormous holes, the characters do stupid things that make no sense based on their ostensible motivations, and the acting isn't good.

I won't say it's the "worst movie I've seen." Not when I've seen Puppet. But in comparison to its reputation, its stature, its reception when it came out, Gladiator must be the most-overrated movie in history. What a suckfest.

So there you have it folks. Five utterly unremarkable facts about me. None of which really tell you anything about me you didn't already know.

A SPECTER IS HAUNTING AMERICA

I'll admit before starting that this could be a bit rambling and inarticulate. I'm still trying to figure out exactly what I'm after here. But I guess the long & short of it is that we've entered a new phase, and that phase is nothing short of socialism.

Oooooo, socialism. The monster, the invader, the scary beast at the door we've been warned of forever. Hell, McCain and Palin invoked this specter during the election. Obama "promised" it in his own way.

But the socialism that we're living under, the socialism that will surely keep coming in the next few years, is not the socialism that Marx awaited, nor that American capitalists feared. Hell, it's not the watered-down socialism that FDR introduced either.

This is bottom-up socialism.

And as the cartoon at right demonstrates, the bottom that the bottom is under is BIG. Make no mistake, the "wealth" of the middle class is shifting inexorably upward. U.S. government bailouts, cushy loan packages, debt-for-equity swaps, purchases of bad assets at grossly discounted prices. These are redistributions of wealth. There's no other definition.

All of this wealth, this money, this capital comes from the U.S. citizenry. Taxation in one way or the other. Not to wade to deeply into economics I don't understand well enough to explain clearly, but there are three ways the U.S. government "creates" this wealth that it's floating upstream. And all three of those are "taxes" on our savings, on our future earnings, on our children and children's children:

Direct tax, debt, inflation. That's it. The government is not creating -- via investment, via manufacturing, via market-denominated lending -- any wealth. No. It's pulling money, or the promise of future money, out of its ass and out of our pockets.

Taxes? I think we all get that one. Debt? I hope we're all starting to get that one one too. Future debt needs to be serviced. Interest paid off. Additional principal to sit on the balance sheet. And . . . individuals, enterprises, banks, and foreign nations willing to buy the gar-bage the U.S. government is peddling. And what happens when those buyers stop appearing at the discount window, asking for those junk bonds with the eagle on them?

Well that, as they say, is the rub. And that's where the most insidious beast, the scariest specter of them all, shows up: Inflation. Simply put, when no one buys the debt -- the future debt needed to pay for the things we've previously paid for with the older debt, plus the interest on that older debt -- the Federal Reserve prints money and buys the debt that no one else wants.

"Prints money," for those of you who don't wanna acknowledge it means it pulls money out of thin air. Which increases the money supply. You don't have to be an economist to understand that this graph is pretty indicative of an incomprehensible increase in the money supply.

"So what?" you may ask. Well, an increase in the money supply, chasing a static (or even falling) demand for goods, services, credit, and investment is inflation. In-fla-tion. For the moment, as we all know, the banks aren't lending, the consumers aren't purchasing, and the investors aren't investing. But when they do? Oh boy, is the cost of living gonna go up. Waaaaaayyyy up. And that is a tax on us. A hideous, nefarious, tidal wave of a tax, a tax with no loopholes. It takes a bite out of savings, out of salaries, out of investments, out of the future. It's eats away at wealth and leaves nothing.

But for the moment, that extra money is just sitting. No price inflation yet. And that brings us back to where I started.

Because who's been getting this massive increase in wealth? Well the answer lies in the news we read every day: any and all who've received bailout money, or below-market rate loans. AIG, American Express, Goldman Sachs, the list goes on. The very wealthy, the most powerful, the best-connected. Those who helped get us into this mess in the first place. They've been getting this money. And for now, they aren't sharing it.

Thieves tend not to share the spoils of their pilfering with their victims.

We've been bamboozled, hoodwinked, ripped off as we slept. I'm not sure what we can do at this point, but realizing it may be the first step. Not participating in, or approving of, your own victimization is the second.

The third? I have no idea, but it'll be something if and when the day comes.

END OF AN EXPERIENCE

I just read that Mitch Mitchell, best known as the Jimi Hendrix Experience's drummer, died last night. This means, of course, that all three members of a groundbreaking act are dead. Unlike Noel Redding, Mitchell continued to work with Jimi after The Experience broke up.

Mitchell was only 61 years-old.

No one needs to explain how revolutionary Jimi was, in terms of his guitar prowess, his arrangements, his recording techniques, his stage persona. Even non fans are aware of what he brought to the table.

But Mitch Mitchell, too, was a trailblazing drummer. No rock drummer before him, and very few after, played the way he did -- attacking the snare and cymbals with a nimble, quick, almost melodic style. More like jazz drumming in its way. Think of his work on "Fire."

Anyhow, I'll leave the analysis of his artistry to those who know what they're talking about, and the eulogizing to those who knew the man.

But I know how great he was, and how much he drove the music of one of those meteors that flies across the musical landscape from time-to-time.

R.I.P., Mitch

AND THE BEAT (AS IN BEAT-DOWN OF THE AMERICAN CITIZEN) GOES ON

Seems that American Express, a credit card lender, is now a "bank holding company."

What does this mean, you may ask? It's simple really. The Federal Reserve (a "quasi-governmental" entity with private components, headed by non-elected governors and non-elected chairman) declared that AmEx is a bank holding company.

Just as it declared that investment banks like Goldman Sachs are bank holding companies.

And what does it mean to such a company when the Federal Reserve unilaterally declares it to be a bank holding company? That's simple too: access to cheaper credit, loosened rules for issuing stock, tax-free treatment of certain debt, etc.

I guess AmEx is "too big to fail." Incidentally, AmEx happens to be an unsecured creditor to lots of consumer debtors in a time when consumers are reducing their debt financing and finding it harder to pay off existing debt.

Funny thing is, even though we're paying to keep AmEx and Goldman Sachs and AIG afloat, through debt now, taxes soon, and inflation later, I can't seem to remember when I got to vote on which companies qualify as "too big to fail."

Taxation. Representation. You know the rest.

BUYING WALL STREET'S BULLSHIT (AND ITS SHITTY BALANCE SHEET), ONE STINKING LOAD AT A TIME

More on the AIG Bailout, Version 3.0. A solid post from Naked Capitalism, explaining just what a disgraceful boondoggle this third bite at the apple is. A few highlights:

The loan was ALREADY collaterallized by ALL the assets. So despite the form of the transaction, the Fed is simply lending more money against the same pool of collateral.

Now given AIG's liquidity needs, and the object of this exercise (not to have AIG go under) the second loan was presumably necessary, but the efforts to dress it up as as a loan against collateral is an amusing fiction (all this second loan does is degrade the collateral against the original loan. There are no free lunches here, except, of course, for AIG). Again, if we go back to the felon metaphor, the state had budgeted X for his care, but it turns out he has a really nasty disease that really has to be treated or it will infect the entire prison population and the guards too, so the cost of his incarceration has gone from X to X + Y.

But now we get to the heinous part. AIG should have no rights at this point. Zero. Zip. Nada. The government already on the hook for an open-ended liability. Yet the Fed is treating AIG as a party that has rights and is negotiating with them, as opposed to dictating terms.

* * *

And lo and behold, the Treasury is going to buy crap assets at amazing prices:

Under the terms being finalized on Sunday night, the government would replace its original $85 billion loan with a two-year duration with a $60 billion loan with a five-year duration. Interest on the loan would drop from 8.5% plus three-month Libor interest-rate benchmark to 3% plus Libor. (Libor, the London interbank offered rate, is a common short-term benchmark.)

We aren't to the dud asset part yet, but behold the nonsense. AIG gets a 5 year term, up from two, and a massive gift in the form of a 5% reduction in its rate of interest. A complete gimmie.

Every mortgage borrower in America whose bank has gotten any money from the TARP should write their Congressman asking to know why they aren't getting a their interest rate reduced by nearly half. Ah, but I forget. Your bankruptcy, sadly, does not pose a threat to the financial system.

* * *

But the worst is that not only was the initial AIG de facto bankruptcy a case of looting, the government has now decided to aid and abet AIG management in further looting. What pro-taxpayer purpose is there in the improvement of terms above? None. As we pointed out, there were only a couple of reasons for easing up on AIG, and they could have been provided for with minor changes that would not leave the taxpayer materially worse off. Instead, major concessions have been made to AIG, all to the detriment of the taxpayer. AIG management now has job security for five years (and AIG top brass is very well paid) and better odds of salvaging something for themselves when the five years are up thanks to the government giving them an unwarranted subsidy.

When the TARP was announced, we called it "Mussolini-Style Corporatism in Action." Sadly, it looks as if events are panning out as foretold.

Ignore this stuff at your peril, folks. It matters big picture (the future of America's economy, its democracy, its moral center) as well as small picture (what the hell are you gonna do with your savings, or lack thereof, in the face of enormous debt, price & asset deflation in the short term, and scary-as-hell inflation in the mid-to-long term). It's not funny, it doesn't really lend itself to snark, and it requires reading beneath the surface of mainstream press coverage, and listening miles below what both parties are peddling from DC.

But it matters, yet most Americans don't wanna think about it.

Bad idea.

PARDON SIR, WE WANT SOME MORE

Well whattaya know? Seems that AIG is asking the U.S. government for more money. (H/T CunningRealist)

(Cause that first $122.5 billion wasn't quite enough.)

Let's all let fly with the standard stuff, shall we: out-rageous! Un-be-lievable! The nerve of those guys! Blah, blah, blah, and some blahddy blah blah.

But you know what? They're gonna get it! If they were "too big to fail" last month, and the "largest insurer in the universe is too important to let die" and all that jazz, what's changed?

You know what else is gonna happen? Sometime between now and January 20 when Paulson steps down -- and Obama replaces him with some other entrenched Wall St. guy at Treasury -- he's heading back to Capitol Hill to ask for more money that the banks can horde. And use for executive bonuses. And distribute as dividends to their shareholders.

And in the unlikely event that it doesn't come to pass, the new guy can ask on his own. Afterall, the new guy's boss voted for the first bailout, right?

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***UPDATE*** Well that didn't take too long, did it?

Reduction of the previous $85 billion loan to $60 billion. But replacing the prior $37.8 billion loan with a $52 billion float. A new $40 billion, with some debt-for-equity particulars. Hmmm.

So it's about $150 biilion for AIG now. How long til they come back for bite number 3? Any predictions? I say next April . . . late April. After Uncle Sam soaks us for the bill on the 15th. And well before the massive inflation all this crap will engender starts to kick in full force.

Only question is, of course, when does Treasury crawl up to Capitol Hill for its second course? Mmmmm good, people. The feeding trough is open and slop's being served!

WOW

That's all.

HERE WE GO

The last time I voted for a Democrat (or a GOPer for that matter) in a presidential election was 1992, when I pulled Slick Willy's lever. But other than that, I always vote Green or Libertarian in these things. Being a New Yorker admittedly makes that choice easier, but that's what I've done nonetheless. Not this year.

(And the fact that GOPer-masquerading-as-Libertarian Bob Barr and crazy Cynthia McKinney are the third party choices makes my decision easier than usual.)

I plan to vote third party in 2012 and every election after that. I plan to vote for zero Dems in every category except Prez today. I'll probably piss & moan about the resident of 1600 Pennsylvania Ave every day for the next four years no matter who wins. Hell, I could win and I'd bitch.

But in an hour or so, I'm voting for Obama. Put more clearly, in an hour or so, I'm voting against McCain, against Palin, against Bush & Cheney & Rove, against O'Reilly & Kristol & Van Susterin & Malkin. Against Robertson & Dobson. Against Scalia. Against the ghost of Ronald Reagan.

I'm voting against them. Fuck them. I want them out. I want them gone. I want those Neidermeyers, those Marmalards, those Wormers, those America-hating bastards out of my life, out of my face. At least for 4-8 years.

(And hey, as someone who's white, yet married to a yellow gal and hoping to spring a beige kid or two on the American landscape, I have a bit of a soft spot for the notion of the country's first brown President. Not reason enough, alone, to vote for him, but plenty of reason to smile at the possibility.)

But mostly I'll smile tonight if "they" lose tonight. Their loss is our win. Here's hoping for some good returns later.