Sun 30 Mar 2008
Submitted by YOUR NEW REALITY
Former US Treasury Secretary Paul O’Neill supplies what is easily the best, and most simple, explanation so far for why the subprime mortgage financial massacre continues to do so much damage :
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If you have 10 bottles of water, and one bottle had poison in it, and you didn’t know which one, you probably wouldn’t drink out of any of the 10 bottles; that’s basically what we’ve got there.
Paul O’Neill also explains the Bear Stearns ‘buyout’ :
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Q: Do you think it was appropriate for the Federal Reserve to lend a helping hand to Bear Stearns and save a private investment company from its own bad decisions?
A: I would say they didn’t save Bear Stearns. They saved the financial system from a panic collapse. I reject the notion that they helped Bear Stearns. Bear Stearns was destroyed.
Q: No it wasn’t. It was purchased by JPMorgan, which will keep it alive.
A: They’re going to keep the book alive. But the institution of Bear Stearns has been destroyed. They’ve gone from $158 to $2 of equity. It’s wallpaper. It’s not even good wallpaper. It’s butcher paper.
A massive American financial institution reduced to “not even good wallpaper” in a matter of days, and if the US taxpayers hadn’t coughed up billions, O’Neill says the financial system would have suffered a “panic collapse.”
Not very reassuring, is it? After all, those on Wall Street, behind the big desks in our banks, the stock market trading ‘geniuses’, are supposed to be so much more intelligent and brilliant than the average plebian. That’s why they get paid so well, because they’re so smart. Right?
Smart, yes. But not in the way the myth-making and propaganda tells us. Institutions like Bear Stearns only have to be smart enough to know that if they wrack up so much bad debt that it threatens to collapse the US financial system, and tsunami most international markets,
the US government will step in and use sandbags filled with taxpayers dollars to shore it up.
Bear Stearns wasn’t filled with people smarter than you. Those on the executive floors just knew they could never really lose, which meant they didn’t truly give a fuck.
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