I SMELL A TURD! -- Geithner and Poulsen Defend Backdoor Bailouts of Goldman Sachs and Other Wall Street Banks

There's a rule of thumb that guides common sense thinking, hard working taxpayers -- if it looks like a turd and smells like a turd, it's a good bet, it is a turd.

When the history books are written on what has transpired this past decade -- from a Dot Com bubble to ginormous corporate frauds to unprecedented levels of federal stimulus (tax credits, tax cuts, interest rates cuts, etc) to a Real Estate bubble to the bailouts of Bear Stearns, Fannie Mae and Freddie Mac, AIG and the backdoor bailouts of Goldman Sachs, to auto bailouts of GM and Chrysler, to more bank bailouts of Citigroup and Bank of America, to even more government stimulus and money printing -- the history books will confirm what we thought we were smelling and seeing all along, a gigantic turd of Kong-like proportions.

Geithner and Poulsen are playing revisionists, trying to convince us that what we thought we were smelling - a huge turd, is actually a bouquet of roses. Their claim is essentially this: "The backdoor bailouts of Goldman Sachs through AIG were necessary, and beneficial - trust me."

Umm, ok... sure, I guess I can... trust you...

But NO! I smell a turd.

Here's the story. A couple of Wall Street cronies meet up with their Wall Street buddies behind closed doors, and make a unilateral and secretive decision to use billions of dollars of taxpayer equity to payoff an enormously bad investment decision by Goldman Sachs and other investment banking firms. The basis for their decision, they claim, is that had they not done so, the situation would have been worse. Really?.

There was no question that some version of a bailout was needed -- but was it necessary to bailout failed securities investments? No. Bailout money could have been used as Poulsen originally told Congress it was going to be used, to directly purchase actual mortgage assets to stabilize the housing market. Instead, the funds were used to buy securities that are derivative of those assets. What's the difference between buying the actual underlying asset as opposed to purchasing Goldman's securities through AIG? The difference is that Goldman Sachs and other investment banking divisions would have gone under -- whoopty whoop, and instead, the liquidity would have been injected directly into smaller, local banks where the mortgages originate. That decision wasn't made and as a consequence, well over a hundred smaller, regional banks have collapsed. Meanwhile, Goldman Sachs pays its employees the highest bonuses in the history of the U.S.

Wall Street just dropped a ginormous turd on the forehead of the American public. That's what it smells like. That's what it looks like. That's what it is - A BIG TURD.

Peace

Jeremy