The AIG-Counterparty “Wall Street” Bailout That Smells

The controversy over the federal government taxpayer bailout of AIG’s trading partners in late 2008 seems a big deal to me. It centers on why AIG’s trading partners, counterparties to complex derivative contracts, were paid off in full even though AIG was effectively bankrupt. If AIG had in fact gone bankrupt, AIG’s trading partners, which took ordinary business risk trading with AIG, would have been paid off at some lesser amount than full face value of AIG’s obligations. So why didn’t the government team, many of them Wall Street insiders themselves, negotiate or dictate a payoff of AIG’s obligations at some amount less than 100%? One would think that these trading partners would have been happy to get some portion of what AIG owed them, especially if it was more than what they would have received under an AIG bankruptcy. The thorny issue is that these counterparties included many of the big investment banks, most notably Goldman Sachs, and then-Treasury Secretary Paulson and many others calling the shots on the government side were former, and perhaps even future, partners and employees at these firms, which were filled with friends and former colleagues (in fact Paulson is a former Goldman CEO). Lehman Brothers was allowed to fail, but Goldman got a 100% bailout via AIG. Talk about conflict of interest and appearance of impropriety, at a minimum.

We now have found out that one of these counterparties, a foreign bank, was willing to, and perhaps expected to, receive less than full value on its contracts with AIG, but nevertheless received the full amount. Also, we’ve now learned that the NY Fed, when current Treasury Secretary Geithner was in charge, instructed AIG to keep secret the names of its trading partners, a cover-up perhaps out of fear of public outrage. Geithner, although then the boss, claims he took no part in that decision.

A couple of days ago, Geithner appeared before a House Committee and received a seemingly well-deserved grilling on all this (WSJ article and editorial). His defense – AIG’s counter-parties were paid off what they were legally owed to prevent a collapse of the financial system. Paying off AIG’s counterparties at, say, 80% would have caused a collapse of the system? Count me as unconvinced and smelling something fishy. Paulson also appeared before the Committee, saying that he had no knowledge that the counterparties were paid off at 100%, claiming that that was a NY Fed decision.

All this bolsters the suspicion that the Wall Street taxpayer bailout engineered by Wall Street insiders within the Bush and Obama administrations was much more generous to certain Wall Street firms than it needed to be and likely should have been.


John M Greco

Obama Calls Bush “Indecent” in his State of the Union Address; Bashing Bush is Easier Than Actually Acting Presidential

While flipping channels this evening, I inadvertently tuned in to Barack Obama’s State of the Union Address already in progress. I regrettably and inexplicably watched for a few minutes. After regurgitating the standard ultra-liberal view of an America filled with poor, hungry, marginalized, rudderless, dazed, and confused citizens clearly needing a benevolent government to direct their lives, a recycled bit from a John Edwards “Two Americas” speech, Obama said this: “In this new decade, it’s time the American people get a government that matches their decency.”

The government of the last decade, presumably that of George Bush’s, of which I myself have been very critical on certain issues, is called indecent by Barack Obama, while his own administration is held out as finally one that is as “decent’ as the American people. Obama has been president for over a year now, responsible for many a misstep and fumble of his own and of no real accomplishment, and yet demeaning Bush is still his main act. This was a despicable comment by an ineffectual, erratic narcissist whose emptiness and nastiness is increasingly obvious to all but the willfully blind.

John M Greco

Obama Proposes a Dishonest, Cynical Token Spending “Freeze” in One Tiny Place in the Budget, While Continuing Reckless Spending Everywhere Else

Obama continues to amaze me, and not in a good way. His self-destruction continues with his ridiculous, cynical budget “freeze” proposal. Reeling in the polls and having just seen his ultraliberal agenda explicitly rejected in liberal Massachusetts via the Brown Senate election, he apparently thinks this ploy will win him bona fides among independents. To rescue our nation from the severe and unprecedented national indebtedness he and his fellow Democrats have caused, Obama now proposes a “spending freeze” to help control spending. A spending freeze sounds good, so Obama hopes it will fool the foolable.

But this proposal is a fraud even his supporters know is risible. It freezes, but does not reduce, only about 12.5% of the entire federal budget and only for three years. Says the liberal New York Times (link): “The payoff in budget savings would be small relative to the deficit: The estimated $250 billion in savings over 10 years would be less than 3 percent of the roughly $9 trillion in additional deficits the government is expected to accumulate over that time.” And even if such a “freeze” were enacted, with all the budget trickery up their sleeves Democrats would get around it anyway and spend whatever they like “freeze” or no “freeze.”

Furthermore, any spending freeze at all, however insignificant, seems to contravene what the Democrats have argued all year as they racked up this huge deficit -- that more government spending of any kind for any purpose is exactly what is needed to “jump start” our economy out of recession. So now at the same time that the Democrats are talking about another massive spending bill to improve the economy (i.e., to lower unemployment) after the first $787 billion failed (in fact, unemployment has risen), Obama proposes less spending in one small place because of the massive deficit. So should the federal government now spend even more money (which it has to borrow mostly from foreigners) or less?

Should Republicans support this proposed “freeze” for its symbolic value even if there’s no meat to it? Perhaps so. But for Obama, it is incoherent, and only a sign of his desperation to halt the well-deserved slide in his fortunes.


John M Greco

Why Obama’s Soft Stance on Islamic Terror?

It has always been clear to me that one has to draw conclusions from what Barack Obama does rather than from what he says. His recent missteps in protecting Americans from Islamic terrorists is drawing me to a much harsher opinion of him than I ever imagined a year ago when he started his term.

In recent weeks, we’ve seen Obama and his team:

* Screw up in not “connecting the intelligence dots” to keep the Nigerian Muslim Christmas Day “underwear” bomber from boarding a plane to Detroit.

* Proclaim the “the system worked” when the airplane bombing attempt narrowly failed because of the bomber’s difficulty in detonating the device and the quick action of a passenger, the “Flying Dutchman.”

* Grant the “underwear” terrorist Constitutional rights, despite his not being an American citizen or resident, despite quickly ascertaining that he was a radical Muslim who just tried to blow up a plane, and despite knowing that his own father had told American authorities that his son had been radicalized and had spent time in Yemen.

* Bungle the interrogation of the “underwear” terrorist : Obama’s team only briefly and ineffectively questions him before he’s “lawyered up” and goes silent; also, for the interrogation they fail to call in the “High-Value Detainee Interrogation Group” that Obama touted as his solution to interrogating terrorists because, as explained by Obama’s Director of National Intelligence Dennis Blair, the unit is not “fully operational.” Then, Obama spokesman Gibbs states that in its 50 minute interrogation the FBI got all the information it was possible to get, an astounding and frankly ludicrous claim.

* Grant some of the terrorists held at Guantanamo, captured overseas and not ever having set foot in this country, Constitutional rights and proclaim the intent to transfer them to New York City for trial in federal court rather than a hearing before a military commission.

* Release an official report on the Fort Hood American-born and raised Muslim jihadist mass murder that is widely regarded as a complete whitewash, overflowing with liberal political correctness which doesn’t even mention Islam by name.

* Overrule a longstanding ban in order to allow terrorist-linked Islamist academic Tariq Ramadan to enter the US.

* Refuse to release the names of the attorney pals of AG Holder whom he has brought into the US Justice Department and who, like lawyers at Holder’s own firm, have defended Guantanamo Islamic terrorists and have advocated granting them full Constitutional rights.

* Release a captured Islamic terrorist to Algeria, which may put him back in action against us.

I can’t help thinking that Obama’s soft stance on Islamic terrorism evidences a deeply conflicted view of America, which in part sees America as a racist and imperialist country that’s getting what it has coming. He may disagree with terrorist methods, but I can’t help feeling, especially lately, that there’s some sympathy with their views of America. He’s certainly repeatedly apologized to the world for what he perceives as the multitude of American sins, particularly to Muslims, and in fact, prior to his nomination, even his wife said she had never felt proud of America.


John M Greco

Chicago's Insurance Exchange Building

Chicago's Insurance Exchange Building, still beautiful, still vibrant, on a crisp January day in 2010. Occupying one square block directly west of the iconic Chicago Board of Trade Building in the south Loop, between Jackson and Van Buren Streets, it was once home to the Mid-America Commodities Exchange and, per Leslie A. Hudson in Chicago Skyscrapers, to the headquarters of more insurance companies than any other building in the world. Completed in 1912 by D.H. Burnham, with a southward expansion in 1928, it shows the classic tripartite structure with a well-defined base and top, here punctuated by ionic colonnades separated by an unadorned middle.

Pictured above is the east face of the building.

Pictured on this vintage postcard is the initial northern half of the building, viewed from the northeast across Jackson Blvd; the northwestern corner of the old Board of Trade Building is visible on the extreme left.

Richard Balsamo

Side Notes on the Scott Brown Senate Election Win

Regarding Republican Scott Brown’s upset victory in the Massachusetts special election for the US Senate seat previously held by the late Democrat Edward Kennedy:

* Remarkable, and ominous for Democrats: I read that Brown won in the Kennedy family’s spiritual base of Hyannis Port and in ultra-liberal Rep. Barney Frank’s district as well.

* This election result is about much more than just a referendum on nationalized health care. From the Brown campaign: “from our own internal polling, the more potent issue here in Massachusetts was terrorism and the treatment of enemy combatants”. In his acceptance speech, Brown said “with respect to those who wish to harm us, I believe that our Constitution and laws exist to protect this nation — they do not grant rights and privileges to enemies in wartime. In dealing with terrorists, our tax dollars should pay for weapons to stop them, not lawyers to defend them.”

* Barack Obama said recently in referencing the fate of Democrat national health care legislation vis-a-vis the Massachusetts special senate election: we are at a “precipice.” Obama used a completely wrong word -- “precipice” has a negative connotation in this context, something to step back from; he meant something like “threshold” or “crossroads” or “pivotal moment”. If George W. Bush, or just about any Republican for that matter, had made this significant linguistic mistake the ultraliberal media would have mocked him mercilessly. When Obama, a part-African-American Harvard Law graduate makes the mistake, that media is silent.

* Particularly reality-challenged ultraliberal theories have surfaced to explain Brown’s win: voters’ racism against Obama (Donny Deutsch and Keith Olbermann on the ultraliberal MSNBC); sexism (two female analysts writing at the liberal Politico web site); Brown’s physical attractiveness (liberal writer Sally Quinn on O’Reilly’s program); and the obligatory, reflexive, vapid, delusional It’s All Bush’s Fault (Barack Obama: “people are angry … because of what’s happened over the last 8 years”; note to BHO -- GWB's presidency ended a year ago, and you've been president since).

* Even relatively mature Democrats still can’t fully face reality: Democrat California Senator Feinstein on the election results: “You see anger. … everything is jobs and the economy and education;” Jobs yes, absolutely, but education? I think not. Here’s Republican winner Scott Brown's view: “Raising taxes, taking over our health care, and giving new rights to terrorists is the agenda of a new [Democrat] establishment in Washington.”

* The irony: the Massachusetts Democrats’ disgraceful behavior this past Fall in changing the rules to allow the Democrat governor to appoint an interim replacement for the deceased Kennedy rather than holding an immediate election (link), which had been the law, backfired on them. If the election had been held months ago, before the revolting behavior of Democrats all Fall on their push for nationalized health care and their hapless response to the Christmas Day airplane terrorist attack, the Democrats almost certainly would have won the election then.

* The two big state-wide post-2008 elections in traditionally Democrat states, New Jersey and Massachusetts, both of which Republicans have won, have come in states that Hilary Clinton won over Obama in 2008 primaries (link). Other Clinton-won states with 2010 Senate races with increasingly nervous Democratic incumbents: California (Barbara Boxer) , Nevada (Harry “The Undertaker” Reid), Pennsylvania (Arlen “Benedict Arnold” Specter), and Arkansas (Blanche Lincoln).

It’s going to be a long year for Democrats.

John M Greco


Related Posts:

The Massachusetts Persecution on False Charges of the Innocent Amirault Family and Democratic Senate Candidate Coakley’s Disgraceful Role in It

Democrat Kennedy Proposes New Approach to Government – One Rule for Republicans and a Better One for Democrats

The Massachusetts Persecution on False Charges of the Innocent Amirault Family and Democratic Senate Candidate Coakley’s Disgraceful Role in It

About 15 years ago, the Wall Street Journal began a shocking and compelling series of articles by Dorothy Rabinowitz about the truly unbelievable and horrific persecution by numerous Massachusetts authorities of an innocent family on clearly false child-molestation charges (link). The family was a mother, daughter, and son named Amirault who ran the Fells Acres day care center. Rabinowitz’s stories contained about the most powerful writing I have ever read, as she systematically dissected the absurd charges, the biased legal processes, and the despicable and disgraceful conduct of so many of the Massachusetts authorities. I was deeply moved by the tragedy Rabinowitz so carefully related.

Martha Coakley, the Attorney General (no less) of Massachusetts who is now running as the Democratic nominee against Republican Scott Brown in the special election for the US Senate seat formerly held by the late Edward Kennedy, played a significant role in this horrific case. She appeared in it years after the convictions based on non-credible, fantastical manufactured testimony from young children without a shred of physical evidence, but at a time when most sane people, even in Massachusetts, recognized the egregious miscarriage of justice.

Dorothy Rabinowitz writes (link) about this case now once again in the Wall Street Journal:

In 2000, the Massachusetts Governor's Board of Pardons and Paroles … met to consider a commutation of Gerald's sentence. After nine months of investigation, the board, reputed to be the toughest in the country, voted 5-0, with one abstention, to commute his sentence. Still more newsworthy was an added statement, signed by a majority of the board, which pointed to the lack of evidence against the Amiraults, and the "extraordinary if not bizarre allegations" on which they had been convicted. Editorials in every major and minor paper in the state applauded the Board's findings.

District Attorney Coakley was not idle either, and quickly set about organizing the parents and children in the case, bringing them to meetings with Acting Gov. Jane Swift, to persuade her to reject the board's ruling. Ms. Coakley also worked the press, setting up a special interview so that the now adult accusers could tell reporters, once more, of the tortures they had suffered at the hands of the Amiraults, and of their panic at the prospect of Gerald going free. On Feb. 20, 2002, six months after the Board of Pardons issued its findings, the governor denied Gerald's commutation.

Gerald Amirault spent nearly two years more in prison before being granted parole in 2004. He would be released, with conditions not quite approximating that of a free man. He was declared a level three sex offender—among the consequences of his refusal, like that of his mother and sister, to "take responsibility" by confessing his crimes. He is required to wear, at all times, an electronic tracking device; to report, in a notebook, each time he leaves the house and returns; to obey a curfew confining him to his home between 11:30 p.m. and 6 a.m. He may not travel at all through certain areas (presumably those where his alleged victims live). He can, under these circumstances, find no regular employment.

Attorney General Martha Coakley—who had proven so dedicated a representative of the system that had brought the Amirault family to ruin, and who had fought so relentlessly to preserve their case—has recently expressed her view of this episode. Questioned about the Amiraults in the course of her current race for the U.S. Senate, she told reporters of her firm belief that the evidence against the Amiraults was "formidable" and that she was entirely convinced "those children were abused at day care center by the three defendants."

If the current attorney general of Massachusetts actually believes, as no serious citizen does, the preposterous charges that caused the Amiraults to be thrown into prison—the butcher knife rape with no blood, the public tree-tying episode, the mutilated squirrel and the rest—that is powerful testimony to the mind and capacities of this aspirant to a Senate seat….

Wall Street Journal reader Paul McCoy posted this comment to Rabinowitz’s article:

During the time the Amiraults were in jail, there was time to step back from the lynch mob daycare sex hysteria. Dozens of other cases around the country- CA, WA, etc. were prosecuted in exactly the same way, yet in all of those cases there were rational judges and people who stepped in to stop the madness and throw out the cases. So in the wake of the wave of all the other cases being dismissed, here comes Martha [Coakley], despite the overwhelming evidence to the contrary, despite the overwhelming vote of the parole board, [who] substitutes her own judgement that somehow, despite the overwhelming evidence pointing to a tragic miscarriage of justice, the Amiraults are guilty. She was a political toadie protecting the former prosecutor and now prominent Democratic politician Scott Harshbarger and the other cronies who prosecuted the case. She fought to keep the Amiraults in jail so those politicians wouldn't have to admit to themselves and the public they committed one of the most horrific miscarriages of justice in American judicial history.

What is it about Massachusetts and witch trials? Some people there seem to still relish them, as Martha Coakley, with all this history, won the contested Democrat nomination to run for the Senate just a few short weeks ago. Some Democrat Massachusetts voters apparently don’t mind the egregious miscarriage of justice.

Regardless, there will be a special place in Hell for Martha Coakley and all others from this horrible affair who misused their authority to persecute and destroy three lives for their own political and financial gain.


Dorothy Rabinowitz’s series is available at the Wall Street Journal online here and here.


John M Greco

Twelfth Night

Tonight is Twelfth Night, an evening of festivity ending the 12 Days of Christmas, which, along with tomorrow’s Feast of the Epiphany, closes out the traditional Christmas season, or Christmastide. In recent years, though, the masses seem to take their cue from retailers, so their Christmas season starts around November 5th and lasts till about mid-day December 25th, quickly followed by the clearing out of all Christmas decorations to make way for stuff for Valentine’s Day (formerly and properly known as Saint Valentine’s Day, before liberal political correctness took over).

I have long been confused by conflicting references to Twelfth Night as either the evening of the 5th or of the 6th of January. Wikipedia’s take (link):

It is defined by the Shorter Oxford English Dictionary as "the evening of the fifth of January, preceding Twelfth Day, the eve of the Epiphany, formerly the last day of the Christmas festivities and observed as a time of merrymaking". However, there is currently some confusion as to which night is Twelfth Night: some count the night of Epiphany itself (sixth of January) to be Twelfth Night. One source of this confusion is the Medieval custom of starting each new day at sunset, so that Twelfth Night precedes Twelfth Day.

So tonight it is – the Twelfth Night, with then the Feast of the Epiphany tomorrow closing out Christmastide.

R Balsamo