Real Numbers On The Paulson Bailout

The Paulson Bailout has now cost $4.6165 trillion dollars! Hard to wrap your head around a number that big, right? Consider- this bailout is now more expensive than the cost of World War II, adjusted for inflation (which is $3.6 trillion), PLUS the Vietnam War, adjusted for inflation ($698 billion), PLUS the S & L Crisis, adjusted for inflation ($256 billion)! And that is just from Barry Ritholtz on his The Big Picture.

Over at Bloomberg, they calculate Paulson's tab at $7.76 trillion. According to that figure, every man, woman, and child in America is on the hook for (sit down) $24,000.

Thanks Wall Street for the new student loan. Can you at least send us all a BA in Business? I think we've earned it.

Somebody better get in that recording studio and record 'China, Can You Spare A Dime?'

What pisses me off most about this crisis is that Friday evening we will all watch our idiot neighbors skulk off from dying big box stores with their BluRay players and laptops. Because we shouldn't consider that thing are going to get worse, right? No, no, NEVER stop spending.

Harumph!

The Trouble With Citigroup

Citigroup became the very latest domino to fall in '08's Great American Bank Bailout. According to today's Economist, we will guarantee $306 billion dollars of bad mortgage debt and give them $20 billion in cash in return for $27 billion dollars in rapidly dropping Citgroup stock. What a deal!

How did America's largest bank find itself in such desperate straits? Greed, lack of oversight, and...did I mention greed? According to the Times, David C. Bushnell, Citigroup's senior risk officer, was buddy-buddy with the traders he was meant to oversee.

It was common in the bank to see Mr. Bushnell waiting patiently — sometimes as long as 45 minutes — outside Mr. Barker’s office so he could drive him home to Short Hills, N.J., where both of their families lived. The two men took occasional fly-fishing trips together; one expedition left them stuck on a lake after their boat ran out of gas.

Because Mr. Bushnell had to monitor traders working for Mr. Barker’s bond desk, their friendship raised eyebrows inside the company among those concerned about its controls.

"Hey, Dave, remember that time we ran out of gas on your boat?"

"Yeah, Randy?"

"That was awesome!"

"Sure was, Randy. But not as awesome as the time I helped you take on billions in unsecured mortage debt, which would later almost cause our whole bank to collapse!"

"Yeah, that was wicked. But, hey, we still have our jobs."

And there's the rub. The good news today from the Washington Post is that the Obama Deal sounds like it will be $700 billion on infrastructure and jobs. The bad news is that tax cuts are included with that package, which will make it all the more expensive eventually. And that Obama is being advised by former Clinton Treasury Secretary Robert E. Rubin, who was (who woulda thunk it?) an 'influential director and senior advisor' at Citibank!

NO, President-elect Obama. No damaged goods. They made the mess, they do not advise on the clean-up. Or do you need to be reminded of the current Treasury Mess, Hank Paulson? Send Rubin away. Now. We're watching.

Today's Big Dumb Idea

Ever want to go for a jog, but stopped because you really hate pavement? Or maybe you're just looking for another way to make that broken-wing hop you do even more ridiculous? Shambollocks presents the Treadmobile!

Wow. I'll just let that video speak for itself.

Kal-El Lands In Canada

Last night, a giant meteorite smashed into an area near the Alberta/ Saskatchewan border. The reunited Alpha Flight was believed to be on their way to inspect the extraterrestrial debris.

Water From Air

It has been said that the resource wars of the future will be not be over oil, but water. 'Water, water everywhere, but not a drop to drink' remains as true today as when it was written two hundred years ago in some areas of the world. Water surrounds us, but the ability to provide potable delivery to an increasing global population will make for one of the largest challenges of the 21st century. But what if we could pull the water simply and cleanly from the atmosphere?

Shambollocks introduces you to WaterMill, invented by the company Element Four, which went on display at Wired's bazaar of developing technologies. For the electrical cost of three light bulbs, the WaterMill, mounted outside your home, will work as a dehumidifier, providing your home with water pulled from the atmosphere. The technology will retail for a pricey $1,200 when released in the States, but don't think that will stop the hip greens on your block.

Bldgblog goes a bit further on their entry on the WaterMill, imagining a city which undergoes permanent drought because of the absence of humidity. No rain. No snow. I can do without the humidity here in Chicago, but I'll still need snow. Maybe we reenginer the WaterMills in winter.

It's The Economy, Charlie Brown!

Poor George W. Bush. Watch as his peers in the developed world refuse to shake his hand. We can learn something from this. First, nobody loves you internationally when you're down and out, especially when, as leader of the Capitalist Cult, they blame you for much of the current world financial mess. Reputations change overnight. One moment you're leading a 'Coalition of the Willing', which includes Poland and Great Britain. The next you're being snubbed by the cool kids in the International Club.

Second, we would be foolish to believe that leaders this churlish will bend over backwards for the incoming Obama administration. Diplomacy is always hard work, and when you're surrounded by people who are Number 1s in their own land it is difficult to engender deference. I believe they will immediately embrace Obama, but rhetoric and action are often strange bedfellows.

Secretary of State Hillary (maybe?) will need to work on her very best Avon push.

Detroit Broke City

Paul Ingrassia in today's Wall Street Journal writes that bailout or not, Detroit is broke.

Yesterday, congressional leaders gave the car companies until Dec. 2 to come up with viable business plans and renew their request for aid. Meanwhile, it's worth examining the myths that are shaping this debate. One is GM's assertion that "bankruptcy is not an option." In truth, GM already has conceded that it's bankrupt -- by publicly stating it's nearly out of cash and needs emergency assistance. The company hasn't made a formal bankruptcy filing, which is no small matter. But it has declared bankruptcy everywhere else. Chrysler, at this week's Senate committee hearing, did the same.

A second myth is that management changes in Detroit would be pointless. GM CEO Rick Wagoner said he wouldn't resign to secure federal aid for his company. This was like Louis XIV saying, "L'État c'est moi." Mr. Wagoner explained that he didn't see "what purpose would be served." Well, the same one served by the presidential election in this country three weeks ago: to bring in somebody new to try some fresh ideas to fix things.

Mr. Wagoner has been GM's chief executive officer for eight years. Even before this year's calamity struck (the company lost $181,000 per minute in the second quarter), the company's U.S. market share, financial results and stock price had plunged precipitously.

$181, 000 per minute! I don't know about what Paul thinks, but it takes real talent to blow that kind of money. Hell, I don't know if Hank Paulson could come up with that kind of money loser.

Let Detroit go bankrupt. Under bankruptcy protection, they can start to open up the union contracts and other legacy costs which guarantee they lose money on every car they sell (yes, you actually read that right). The restructuring should come with the resignations of Wagoner from GM and Nardelli from Chrysler.

Congress passed the first important step-a step which I was very skeptical they would make. They turned down the Detroit 3 once. They stripped Hot Rod John Dingell of his chairmanship. All very impressive. But the automakers shall return in January for round two. We must make sure we don't throw more of our money toward a broken industry.

- Mitt Romney, scion of Detroit's ruling class, wrote in Tuesday's New York Times that we should let Detroit go bankrupt.

Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check

When I agree with Mitt Romney, you better believe we're reaching some kind of consensus on this issue.