Neel Kashkari On The Crisis: "It Would Have Been So Much Worse"

Kashkari hasn't missed a beat.  He might be chopping wood and reading Thoreau in the mountains near Tahoe, but his Wall Street bailout sales pitch hasn't lost any shine.  The fear-mongering is never far from the surface.  More vague allusion to super-galactic devastation and destruction that was avoided through righteous and swift Treasury action. 

I just puked.  Kashkari is the embodiment of Washington political capture.

Among the insights shared:

• Treasury was acting without a map and guessing at every step along the way; they were deeply unsure themselves whether their solutions would work to stem the crisis. 

Comment: throwing trillions of borrowed money at every leaky financial faucet is an excellent fail-safe plan, unless of course you're around when the bill is due.  And just to make sure there aren't any further problems, put extreme pressure on FASB to change the accounting rules to encourage fantasy mark-ups.  Then create a taxpayer-funded program, PPIP, to buy toxic assets at inflated prices, which will allow even more mis-marking of asset values on bank balance sheets, as 'the market' is deemed to have spoken with a new, higher price.

• Goldman Sachs doesn't run the government it just looks that way.  It's simply that the type of people who work at Goldman also are the types who find public service rewarding.

• Now the fear-mongering that was so prevalent during the crisis.  It could have been so much worse.  The 25% unemployment peak of the Great Depression might have been surpassed (U6 is getting close actually).  Your ATM would not have functioned.  Blood in the streets, military police on every block, pestilence, war and death.

• Each and every one of us needs to say a prayer tonight thanking the Heavens for Ben Bernanke and Timothy Geithner.  That without their strong leadership we might still be lost at sea.  Though I'm in currently lost in a haze of bullshite without an exit, I'm pretty sure I heard him say that we are so fortunate to have Ben Bernanke at the helm of our glorious (debt-laden, dollar-dropping) vessel.

Give me a freaking break.  There was a right way to stabilize the system last Fall and an irresponsible way: where incentives wouldn't change, new regulation would be forgotten, and the guilty would remain in power. 

The responsible path would also have included fair taxpayer terms for all components of a rescue given to any financial institution --this means compensation for FDIC debt guarantees, AIG back-door payments, and Federal Reserve asset dumping of unknown proportion (collateral swaps with the Fed where junk is left and Treasuries are received in exchange (HR 1207, we would like passage please, and soon.). 

In the case of Goldman Sachs (GS), and it wasn't just Goldman, there were also scores of European Banks who exploited regulatory construct (they broke the law) and used AIG to insure their way out of capital requirements -- yet like Goldman they were paid at par for their contracts, (Lehman counterparties got 11 cents and Chrysler's got 29 cents for comparison), and they were not asked to surrender any shares to the government in exchange.  No matter how you dice it, that's a lousy deal for someone, and just so happens that someone does not work on Wall Street.

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Video Interview: Neel Kashkari with CNBC's John Harwood Broadcast October 20, (7:22).

Former TARP chief Neel Kashkari discusses the government program and whether he believes it's been a success, with CNBC's John Harwood (20:08).

Comments

[James H]

"I saw the best in our political system. In a time of crisis, people from both sides of the aisle put politics aside and came together to do something very unpleasant, but that was necessary. Absolutely necessary."

It was the best of times, it was the worst of times...

If we hadn't given Wall St. a giant bailout gift, we would have been fighting in the streets over scraps of rat meat... blah blah fucking blah. Don't ask me how, or why. (Because honestly, I don't even know. I'm not even really that smart, I just act like it.) Just allow me to keep repeating this very scary story.

[DailyBail]

Hank Paulson Held A Secret Meeting With Goldman Sachs In Moscow
http://www.businessinsider.com/hank-paulson-held-a-secret-meeting-with-goldman-sachs-in-moscow-2009-10

[WestWright]

H.Paulson/GovtSachs/KGB, now I am really pissed! Time for a REVOLUTION!

[James H]

Psst. DB, it's "allusions." Although, indeed, they were f***ing illusions, alright.

[James H]

(Would Kash'n'kari like to work in govt again?): "In ten or twenty years, I'd love to have the opportunity to serve again."

Oh dear God. You reptilian freak, you should slither away in shame and never show your face again. That would be the manly thing to do. Puke on Neel Kashkari!

[Sonic Ninja Kitty]

OT, but here is a transcript of an excellent interview done by Larry Doyle, senseoncents.com Doyle is a totally stand-up kind of guy, so when he says it's something major, it is wise to listen.

"Attorney Richard Greenfield Brands Mary Schapiro and FINRA Execs as 'Liars'": http://www.senseoncents.com/2009/10/attorney-richard-greenfield-brands-mary-schapiro-and-finra-execs-as-liars/

Ginormous trouble for FINRA & Shapiro. Oh boy--this could be big. VERY interesting.

[James H]

"populist backlash," John Harwood? Yep, it's just those country bumpkins who don't understand the intricacies of the modern financial system. That's all. Puke on John Harwood! What about the friggin' bondholders, Harwood? What about the law, Harwood? John Harwood, thanks for being a bailout socialist enabler.

And as for Kashkari on "stimulus." Give me a freaking break. He has no clue. None. Zero. He doesn't even know the relevant arguments. Puke on "stimulus"!

[DailyBail]

Puke on John Harwood! What about the friggin' bondholders, Harwood? What about the law, Harwood? John Harwood, thanks for being a bailout socialist enabler.

Well done.