Theatre Of the Absurd

Citibank says it made "a 1.6 billion dollar profit" in the first quarter of this year. Goldman Sachs considers it its "duty" to return the 25 billion in TARP funds it received. And JP Morgan...good old JP Morgan's CEO will actually stare into a camera lens and look bewildered when you ask him about a bank bailout. "Bailout? What bailout? We didn't need that money. We were fine all the time. You guys were worried about nothing."

Riiiight.

If you don't need "government money" because you don't like "government" telling you what to do, then send back all of that "government backed money" the Fed has been handing out to Wall Street banks like it was government cheese.

What school do you have to go to to learn how to make your problems disappear simply by saying they do not exist? The Jedi Mind Trick degree must be hard to get - I only see a handful of people with it, and almost all of them seem to end up on the same little overbuilt northeastern island that sits on the Hudson River.

The entire Wall Street banking sector has devolved, going from a farce, with actors who are paraded before microphones as if they are on stage to repeat nonsensical lines of dialogue from a script that defies the boundaries of logic, to pure outrageous spectacle, even as truckloads of money from the U.S. Treasury are being delivered in the background, the actors raising their voices whenever the hydraulic lifts on the dump trucks begin to scream as they drop their payload of fresh greenbacks.

The whole performance has become one big ridiculous charade. It typifies the theatre of the absurd.

"In being illogical, the absurd theatre is anti-rationalist: it negates rationalism because it feels that rationalist thought, like language, only deals with the superficial aspects of things. Nonsense, on the other hand, opens up a glimpse of the infinite. It offers intoxicating freedom, brings one into contact with the essence of life and is a source of marvellous comedy."


Dr Jan Culík

The Theatre Of The Absurd
The West And The East

To claim "profitability" of a few billion dollars when over a trillion dollars has been pumped into the banking system is beyond surreal - it is the signal for a total and complete psychotic break with reality. I wouldn't expect these guys to ever admit this, though, which is why they all need to be fired, officers and board members alike, the way they fire people in their own organizations - with a security guard escorting them out the door as they carry that cardboard box of their belongings in their hands.

"Crisis That Was Caused By People, White With Blue Eyes"

[REPRINT FROM LAST WEEK - EVEN FUNNIER AFTER BRAZILIAN LEADER'S QUOTE ADDED BELOW]

"This is a crisis that was caused by people, white with blue eyes. And before the crisis they looked as if they knew everything about economics," he said. "Once again the great part of the poor in the world that were still not yet [getting] their share of development that was caused by globalisation, they were the first ones to suffer.

Since I am not acquainted with any black bankers, I can only say that this part of humanity that is the major victim of the world crisis, these people should pay for the crisis? I cannot accept that. If the G20 becomes a meeting just to set another meeting, we'll be discredited and the crisis can deepen."

Luiz Inacio Lula Da Silva
President of Brazil

[Could Brazil's president be an avid reader of Brown Man Thinking Hard? See for yourself]

A phrase you will hear every now and then is "when are blacks going to stop waiting for a handout?" I saw it in print last night while reading commentary by Roy Blount Jr. in the Oxford American, whose latest edition is dedicated to race (that means its only about black people in America) this month.

I chuckled a bit after reading that phrase - it wasn't a half an hour earlier that I'd watched a news clip on The Larry King Show that featured a small group of protesters going from house to house in Connecticut to demonstrate in front of the mansions and estates of AIG executives.

If you've been watching the news, reading the newspaper (SUBSCRIBE NOW - THEY NEED THE MONEY), or surfing the web the last two weeks, you can probably understand why I was busy trying out that age-old phrase, one that is often uttered by those who feel that hundreds of years of racial discrimination should be bygones, with a substitution of my own.

When are these white men going to stop waiting for a handout?

The alliteration between "handout" and "bailout" does not escape me. Because that's what it feels like right now - that there is absolutely no difference between the two.

The only people I see on my TV these days, arguing with Congress about how much they think they should make even though their businesses would closed by now without taxpayer assistance, or pouting to cable news analysts about the severity of their company’s situation, are white people. White men in particular. They all seem to be waiting for the government to do something to help them now that they are in trouble.

And I imagine we are about due now for another bombshell announcement in your local newspaper (THE MOST INFORMATION YOU CAN GET FOR THE MONEY) about yet another "paragon of investing virtue" whose financial chicanery will be unveiled as a total fraud. There have been several who have been uncovered in the last few months, including Allan Stanford, the "billionaire" from Texas whose tight lipped exhortations were prominently featured on CNBC on a regular basis. Haven’t seen one black face in the bunch.

This racial stereotype has gotten so bad that the CEO of Dominos Pizza, in a commercial that skewers the whole bailout fiasco, is walking down what is supposed to be a New York City street amid a gang of Dominos delivery guys who are handing out boxes of their "bailout special" pizza to everybody on the street when he pauses to snatch a box back from a pinstriped suited, grey haired, gruff looking white man, yelling "sorry, Mr. Hedge Fund."

If I see one more white guy get accused of a multi-million dollar financial fraud scheme, I'm going to call the Justice Department myself. This racial profiling has simply got to stop.

Now that I think about it, how come they aren't arresting more black Wall Street criminals? Are you telling me that the Asians aren't smart enough to commit these kinds of crimes? That East Indians don't have the resolve and fortitude necessary to carry out these dastardly deeds?

I can be in the kitchen, rinsing off the dishes while the news is on - I don't even have to look up when they start talking about "millions believed lost in the latest Ponzi scheme." I can see the straight hair, the pale skin, the blue suit, along with the affable smile that radiates nothing but goodwill without even looking at the screen.

I predict a new look will be coming into style soon among the rich well-financed. It will consist of rumpled clothes of unknown origin, a buzz cut, wrinkles, and bags under the eyes. The fashion mavens in the Style section of your local newspaper (YOU WILL MISS THEM WHEN THEY ARE GONE - SUBSCRIBE TODAY) will dub it the "I Actually Work For My Money" look. Because we all know that when white men get mad as hell, and decide they aren't going to take it anymore, they just dig in and outwork everybody else so they can regain total world domination by the sweat of their brow, right?

Nope - they revolt. Secede. Take other people's property and rename it as their own. Shoot a few folks if they get in the way.

Which is how you get British colonies that become the United States of America. Or, in its most recent incarnation, the Glen Beck led group of insurgents known as "We Surround Them", along with those infamous "Tea Parties" that are supposed to be taking place all over the country This small but determined fragment of America's white population, along with their favorite token minority self hate monger, Michelle Malkin, have decided that they are tired of their values and their way of life being rejected by the government, and the rest of the public that doesn't agree with them. They are ready to "take back the country."


When, oh when are these white people going to stop waiting for somebody to give them something?

Oh well. I guess I'll be turning on the TV in a few minutes to see yet another privileged group of white men, who insist they they and they alone are entitled to hold the opinions that count on the economy, the government, and the president.

It's only a matter of time before this bunch starts whining about losing its lack of influence.

Wall Street Bankers - Dr. Jekyll or Mr. Hyde?

Dr. Jekyll is the bailout banker you've been seeing on TV lately. They are pale, with eyes that seem to blink too much, but that’s because they aren't used to the glare of so many flashbulbs and spotlights. The voices are soothing, convivial even, which is no mean feat, given the circumstances. These Dr. Jekyll's all seem to be clear eyed, sober men who have worked hard at their chosen professions, like most of the rest of the country does, looking for breakthrough new financial products and services the way a research physician searches for a cure for cancer. By the time the designated Dr. Jekyll of the week finishes his somber statement to the news media about how much these "toxic assets" have hurt his company's business, you are almost ready to pull out an envelope and a stamp to mail the poor fellow a check.

But when these munificent Dr. Jekyll's are ensconced in the burl wood and leather confines of the company's corporate jet, or while they are pacing back and forth in their lairs atop the glass walled towers that houses their companies headquarters, it is the Mr. Hydes who often appear, their eyes bulging, their lips snarling, their breath hot and raspy as they fume about how terribly they are being treated by a finger pointing press and a raging public. These sinister alter egos reserve the brunt of their indignation, though, for the "toxic assets" on their balance sheets, those nonperforming mortgage loans that they have paid good money to have relabeled as something poisonous and alien to their corporate culture.

If you have read The Strange Case of Dr. Jekyll and Mr. Hyde, you understand that the phrase "Jekyll and Hyde" has been misused almost as much as "toxic assets". The original story by Robert Louis Stevenson, first conceived in a dream, is an allegory that explores the concept of duality - in this case, man's inner conflict between good and evil through the genial Dr. Henry Jekyll and his frightening alter ego, Mr. Edward Hyde. To say that the CEO's of our banks who need to be bailed out are the personification of evil would be misleading. Nor are they qualified to be the standard bearers for all that is good in our financial systems.

An outward show of respectability and an inward money lust, urges that exist in us all to some degree, were magnified unequally in these financial Jekyll and Hyde's. The derivative potion that the Dr. Jekyll side of the bankers created worked so well at generating cash that its success seemed to inflame the Mr. Hyde in them. Just like in the story, as time wore on it took more and more of the derivative potion to achieve the same profitability. So the sincere Dr. Jekyll side had to go to work, utilizing all of his considerable charm and established goodwill to get government officials to remove the boundaries of common sense from SEC and banking regulations, in order that his Mr. Hyde side might partake more freely of the derivative potion.

Now Dr. Jekyll is back before us, terrified to death of this dark side of them that has delved into the very depths of financial depravity, horrified at what calamitous results have been begat by their very own hand. It is the Mr. Hyde side of their nature, a dark side whose illusions of power have fed on themselves so long that he no longer needs any more doses of the derivatives potion to sustain him, a dark side who lunges out at his benefactors even as they try to help, who spins around after receiving fresh funds from the government to help cover his losses and hands some of this cash infusion right back out to those very same mad scientists who helped create the potion in the first place.

Near the beginning of The Strange Case of Dr. Jekyll and Mr. Hyde, when Dr. Jekyll's lawyer questions him the relationship between he and Mr. Hyde, Dr. Jekyll exclaims

"I will tell you one thing: the moment I choose, I can be rid of Mr. Hyde. I give you my hand upon that."

it is a promise the doctor cannot keep. This is the part of the Stevenson story that we are most familiar with, where Dr. Jekyll loses control of his experiment when Mr. Hyde begins to take over his body and mind without the aid of Jekyll's potion.

Why is the American public so upset at our own homegrown Jekyll and Hydes? Because we wonder if the Dr. Jekyll's of the banking industry can keep their promises better than the original.

Being A Deserver Is A Lot Like Being A Decider

Believe it or not, there are people out there who are trying to explain why the guys at AIG (and Goldman Sachs and JP Morgan) deserve their bonuses/deferred compensation/ransom money for starting the financial wildfire that threatens to burn down the whole country.

Their numbers are few, but the rhetoric is strong, the tone is aggrieved, the righteousness is sanctimonious. "You people are dead wrong", they assert. "We're not going to take it any more."

I'll have to admit, I see why these people got to be executive vice presidents or so called economic whiz kids - it takes a well educated mind and a stupendous amount of motivation to concoct the elaborate straw man arguments these guys come up with. It is as if they are trying to maneuver us around the scene of the derivative wildfires that destroyed all the equity in our homes without letting us stare the charred remains of our own financial lives.

Being a deserver is a lot like being a decider - it's one of those things that can't be earned. You have to confer it on yourself.

This means if you are an auto industry chieftain who hasn't figured out how to convince the O-Team in D.C. that letting the domestic transportation industry die is a "systemic risk", they will give you your gold watch (and parachute) and tell you to clean out your desk.

I can see that President Obama is a dispassionate decision maker. He doesn’t seem to have any particular loyalty to a position, but to the logic behind "why this position is important." Which makes the disparity between the way his administration has treated Wall Street execs and the way they are treating the Big Three auto execs make even less and less sense.

Either Obama believes in the Deserver Doctrine - "I am the only one capable of deciding what is best for me and my company, despite all evidence to the contrary that may exist, and am not to ever be to judged, questioned, or doubted" - or there is something so bad in the banking system's books that bribing these guys to stay on and start more fires, the way they do in California to keep wildfires from spreading, is the only way to have a chance with this God awful mess.

You have to live in a bubble to feel the way the deservers on Wall Street do. I've dubbed them the "double bubbliers" (pronounced DOO - BLAY BUBE - LEE - AY - an extraordinary pronunciation for extraordinary people) because they live inside two bubbles. Not only has their lifestyle been unaffected - these people's outlook on their future is unaffected too, as though, despite all the financial carnage and the evaporation of value in the United States, they don't have to make any adjustments to their career paths, or their business plans, or their retirement plans.

The Double Bubbliers are not just symbols of a class divide between the haves and the have nots; they are a symbol of the way the nature of the relationship between the deservers and the deserve not's are finally being revealed in full detail. President Obama has to come up with a better reason than the ones he and his team have been giving us as to why he's standing with the deservers, because being on the wrong side of this is like wearing a capital "E" for elitist on your chest.

Fargo, North Dakota was nearly washed away by flooding last week. The Red River was the highest it had been in decades, and was threatening to set a new record when it crested on Saturday. The ENTIRE community - rich and poor, working and jobless, young and old, tired and tireder - filled sand bags, transported sand bags, and stacked sand bags against the river's onslaught. I don't have any visual evidence of this, but I'm sure an enterprising reporter looking for an angle could find a few bankers who put their boots on and stood next to their borrowers as the whole town toiled frantically day after day to hold back the rising waters.

The next time somebody starts shooting at our soldiers fulltime, we will wish we had GM and Chrysler and Ford - domestic automakers are the only place you can turn out mass produced tanks and light armored vehicles in a hurry. "Strategic strikes" haven’t won a war yet - bodies on the ground are the only way to bring major military conflicts to an end. I would hate to think we’d have to order our light armored transports from KIA, or beg Toyota to retool so they can build us some tanks.

We are throwing trillions out of the back door of the Fed - why is it so hard to send the 50 or 60 billion to Michigan? If their unemployment rate gets any higher it will be hard to get the state's economy back on track. If this industry disappears, or shrinks severely, it will be next to impossible. Can we as Americans in good conscience stand by and watch millions of our fellow Midwestern citizens get left out in the cold for being a part of the food chain of a failed industry while we hock everything we've got to keep the deservers living in high style, deservers who are also a part of the food chain of a failed industry?

Unless our deservers can get off of their high horses and out of their high rise mind sets, and figure out how to become preservers in a hurry, they may not get enough help from the rest of us when they need it the most to keep the whole financial system from going up in smoke.

Mr. President, that means you too.

Acknowledging the idea of the White House "bubble" is cute, but since you went to the trouble of keeping your precious Blackberry, why don't you use it. Call some people who don't sit at government desks all day so you can get some perspective on how bad all this looks to the deserve not's.

A Nation Of Outsiders

I was talking to my buddy on the phone yesterday, just a casual conversation about the perils of joining Facebook, when I said "hey man, I've been meaning to tell you something."

"What’s up?"

"You know that wish list you have of all the stuff you'd like to buy because you always wanted it?"

"Uh, yeeeah," my buddy answered, wondering what list I was referring to, and why it was important now.

Old friends, especially smart ones, are usually pretty good at quickly figuring out when you are talking about something that actually exists, and when you are talking about its metaphorical equivalent, like I was yesterday.

"You need to take that list," I continued, "fold it up, and stick it in a desk drawer somewhere. This thing is badder than it looks. Brotherman, you need to be saving some money."

There is nothing more exasperating to a person who feels financially secure than to have someone begin to lecture them on their finances - particularly when the someone giving them advice has less money than they do. But these people didn't get where they were by ignoring advice, but by sifting through it and selecting the nuggets of wisdom from among the bushels of bull. I could almost hear my buddy lean forward at his desk. "So what indicators are you seeing that tell you this thing is so bad?"

I tried to think of the ones we all use - the Dow, the unemployment numbers, new home sales - before finally settling on interest rates. "If anything else happens, the Fed has nowhere to go. Interest rates can't get any lower unless they go negative."

My buddy exhaled a bit. I could see his mind working - was that it? "So Greenspan screwed us."

"Dude, it sounds simple to blame Greenspan, but he had to work with the hand he was dealt. We've been operating on credit for decades. Ever since-"

"Gold," my buddy interjected. "You know, I was just thinking about that last night - why did we ever get off the gold standard?"

"That's kind of water over the dam. Credit isn't bad. It's the way it's been used lately that is the real problem." My buddy was too calm now - I could hear his regular, easy breaths, could see him looking out the window of his high rise office, wondering why I was wasting his time with this when we could be talking about something more salacious.

"You know," I said, "I've been writing a lot about this bank bailout stuff this week, which means I've had to root around the internet to do some research on what was happening. The real problem is the amount of liabilities the major banks owe versus the amount they have in assets. It will take a few trillion to fill the hole."

I had his attention again - fully, this time. I could hear him sigh a few times. "So I guess these guys have really fucked this up."

"Yeah."

We went on for awhile about how this could have happened, with my buddy wondering out loud why no one could see this coming. I wasn't until this morning, while reading Eugene Robinson's column in the Washington Post, that I understood some of my buddy's frustration when I came across the phrase "a nation of outsiders".

Being "in the know" is a hallmark of having arrived in America. Getting useful information before everybody else confers status as well as power. Sometimes it is as simple as understanding what the information means before everyone else figures it out. And for quite awhile in this country, an intimate understanding of the world of finance often meant those "in the know" could act faster on public information, because they were the only ones who had any real interest in deciphering it.

We're all "in the know" today. The guy spraying around your home for bugs knows more about how the 10 year bond prices affect mortgage financing than he does about insect nervous systems. The guy who gets your car running again at the repair shop comprehends the fundamental theory behind collateralized debt obligations the same way he understands the fluid dynamics in your car's hydraulic systems.

We're all "in the know", and what we know is this - something terrible has been taking place on Wall Street for quite some time, something terrible enough to knock the metaphorical Wall Street bull off of its figurative feet.

Whether or not we will remain a nation of outsiders, willing to accept any half-assed idea, whether its from President Obama, or Tim Geithner, or Congress, to help get the nation out of this economic nightmare, or fight to become a nation of insiders, who demand that we get to see exactly how they make the sausage from now on, is up to us.

Congressman Compares CEO's To Bank Robbers

The soundbite is the currency of TV news, the primary political information source for most of America - simple, nice, neat, easy to pronounce phrases that an announcer can whip off after the guy behind the camera starts waving that they have ten seconds left until the commercial break.

If we lived in soundbite sized homes, and worked at soundbite sized factories, and got soundbite sized bills, and had soundbite sized problems, soundbites might remotely begin to have a chance at being relevant.

But until the majority of the public gets tired of wallowing in their stupidity – and if it offends you because I am saying this, yes I mean you - it will remain the currency that counts, because we don't demand any better.

I’ll use Massachusetts Representative Michael Capuano as an example of what happens when you substitute soundbites for the real thing. Capuano went on a tear this afternoon during the bailed out bank hearings today on Capitol Hill.

If you’ve saw Capuano on the news last night, or read about what he had to say in today's paper, you probably got this brief clip:

"You come to us today on your bicycles, after buying Girl Scout cookies and helping out Mother Teresa, telling us: 'We're sorry. We won't do it again,' "said Rep. Michael Capuano (D., Mass.). "America doesn't trust you anymore."

Or this one:

"You come to us today on your bicycles after buying Girl Scout cookies and helping out Mother Theresa and telling us, 'We're sorry, we didn't mean it, we won't do it again, trust us.' Well, I have some people in my constituency that actually robbed some of your banks and they say the same thing."

But it just so happened that I saw Representative Capuano speak live during the hearings, and listened to his remarks in their entirety. No soundbite in the world can begin to do justice to what he had to say to the panel of bankers.

Capuano's opening questions really served as a rhetorical introduction of sorts for the five minute statement he made, a monologue that married the emotions on Main Street with a solid understanding of Wall Street accounting chicanery to perfectly articulate the disgust so many Americans have right now with the entire industry.

I've transcribed the ubiquitous Youtube video of his performance below:

REP. CAPUANO
"I've got a couple of more detailed questions. Of all of you, just by a show of hands, how many of your banks, either directly or indirectly, and by indirectly, I mean by loaning money to people you knew would be using this money to invest in credit default swaps, how many of you engaged in that?

None of you engaged in that?"

UNIDENTIFIED BANK CEO
"We engaged in credit default swaps - but, uh, when you asking the question 'are we lending money for them to do that - I'd have to come back to you with specifics - I cannot tell you."

REP. CAPUANO
"Okay, how many of you directly engaged in purchasing or investing in credit default swaps? How many of you directly or indirectly engaged in credit, uh, in CDO’s? How many of you have, uh-"

COMMITTEE CHAIRMAN FRANK
"Excuse me - very good recorder, but recording raised hands doesn’t work - we'll need something oral–"

REP. CAPUANO
"We can fill that in later. How many of you, um, how many of your banks had or currently have Special Investment Vehicles - those off the books, somehow unregulated subsidiaries of the bank, or sister corporations?

UNIDENTIFIED BANK CEO
"We have SPV's"

REP. CAPUANO
"So, basically all or most of you engaged in all or at least some of the activities that actually created this crisis in my opinion.

Because every one of those activities, especially the SIV's, especially the SIV's – to me I think they're illegal. I cannot believe no one has prosecuted you on this, but then again, we’ve had no prosecutorial action whatsoever from the last administration and the new administration has a little time to figure this out. We’ll find out whether anybody really cares.

How can possibly any regulated bank have something on its books that's totally unregulated that for all intents and purposes does the same thing the bank does? That's for your lawyers to answer, and I my hope is that you will be answering those questions in court someday - we'll find out later on.

But basically, you come to us today, on your bicycles, after buying Girl Scout cookies, and helping out Mother Teresa, telling us 'we’re sorry, we didn’t mean it, we won't do it again. Trust us.'

Well, I have some people in my constituency that actually robbed some of your banks, and they say the same thing. 'They’re sorry, they didn't mean it, they won't do it again. Just let 'em out.'

Do you understand that this is a little difficult for my constituents to take, that you 'learned your lesson?' And it’s all the same people doing this - the same people who created SIV's, who created CDO's, who created credit default swaps - that never existed a few years ago - you created them, you created the mess we’re in, and you're not the only ones - you just happen to be the ones here today. I can’t wait to get the credit rating agencies here some day again.

And now you’re saying 'sorry, trust us, and by the way, we don't even want the money.'

Interesting, no one has ever come to me and said, 'you must take billions of dollars.'

And as I heard earlier, you have an option. Basically, they said 'you have to capitalize better, because we no longer trust your books.' You can either take this money and do it, or you can do it on your own – if you don't want the money, you can give it back, you just have to come up with the capital. As I understand it, and if you can't do it, I think many of us would be happy to change that law.

You have to understand, I don't really have a question, but I was told I can use the five minutes, cause the questions I have, you've answered them, and you're going to continue to answer them, and that's all well and good.

The problem I have is that honestly, none of us - America doesn’t trust you anymore.

I for one, between myself and my various campaigns and my own personal business stuff, I get a lot of money to put in banks. I don't have one single penny in any of your banks.

Not one.

Not one.

Because I don't want my money put into CDO's and credit default swaps and making humongous bonuses - me personally. Until that changes, none of us really believe - I don't believe - anything will change.

Until you change the people who brought you into SIV's - who was the brilliant person who came and said 'let’s do credit default swaps?'

Find him.

Fire him.

Tell me you fired him.

Get out of CDO's. Start loaning the money that we gave you. Get it on the street. And don't say 'oh well, we’re not using that money for bonuses.' Come on! Money's all of a sudden not fungible in your entities. It’s fungible everywhere else, but not in your entity.

Get our money out on the street. And if you don't want to give it back, don’t come here and tell me that you can't. Yes you can. As long as you live up to the requirements of the program you're in now.

In the new world that you created and we have to clean up."

Soundbites have made their own contribution to this mess, by allowing otherwise sane adults to believe that they can remain fully informed about the world around them by watching a thirty minute or an hour long program on TV that is made up of dozens of these little news chicklets.

Wall Street And The Art Of The Big Con

The movie The Sting, with Robert Redford and Paul Newman, was one of my favorite films growing up. I didn’t really know much about Redford or Newman or con men or gambling, but I was awed anyway by every turn in the convoluted plot, by every piece of the elaborate plan Paul Newman's character devised to rob a mob banker of his money.

Their performances won the movie an Oscar for Best Picture.

Today, we will have a similar production take place on Capitol Hill. Rich men who run our nation's largest banking institutions will leave their private jets in their hangers for the day and get on trains and commercial flights to commute to Washington, as if they are ordinary Americans.

They will be ushered in front of a committee of Congress. Camera crews from all the major news networks will jockey for position. Lights will shine. And the committee members will peer over their glasses, frown, glare, and explode in righteous anger at these bank executives for half a day or so.

And after the lights go off, when the executives are on their way home and the members of the committee are through answering questions from political reporters, you and the rest of the American citizenry will be in exactly the same position the mob banker in The Sting was - wondering what the hell happened.

You won't know anymore by tonight than you do right now, because the entire setup is just like the make believe gambling parlor in movie, designed to give you the impression that what you are seeing and hearing is the real deal.

You won't come any closer to knowing, for instance, what it is that is so God awful in the books of these banks that has our government racing to hand them billions upon billions of dollars at the blink of an eye.

The anecdote President Obama used on Monday night to explain in a thumbnail sketch what the banking crisis was all about - "what got us into this mess initially were banks taking exorbitant, wild risks with other people's monies based on shaky assets and because of the enormous leverage, where they had one dollar's worth of assets and they were betting thirty dollars on that one dollar, what we had was a crisis in the financial system" - pretty much laid it all right out there in front of everybody, except he forgot to tell you how many trillions of dollars worth of assets these banks wagered.

You won't be getting that number today either.

According to Ian Welsh, over at FireDogLake:

"...the Fed and the Treasury together have spent, loaned, and guaranteed in excess of 8 trillion dollars at this point. That's more than the entire loans and leases portion of the domestic banking industry. Given the net assets of the banking industry are only about 1.3 trillion dollars, for a fraction of that price, they could have bought out the entire banking industry."

Now you should understand why there is such antipathy towards spending any real time, money, and energy on the educational system here in the United States. The entire gambling industry relies on the fact that most of us don't understand probability. And the men who will gather at Capitol Hill today to put on their show are counting on our ignorance to see them through.

The mob banker in The Sting ended up losing half a million dollars because he had a little success at first based on inside information, which is pretty much the same thing that happened to the nation's banks when they first started fooling around with derivatives. So the mob banker started making bigger and bigger bets. Robert Redford's character sucked him in gently, slowly ratcheting up the level of the mob banker's trust as he fed him tips that always won. By the time Redford and Newman were ready for their big score, the mob banker was hooked on Redford's system. He couldn't live without it, so he literally bet the bank.

The men whose faces you will see on your TV's all day today, or on the news tonight, got hooked on the same kind of sure thing.

I've seen some numbers bandied about the internet lately that attempt to "guestimate" how big the gap is between our nation's banking liabilities and the actual value of our nation's banking assets. I'm not going to print them here because they are likely to be pure speculation. The actual numbers, for all practical purposes, aren't important anyway - whether it's a twenty dollar difference or a twenty trillion dollar difference between what they have and what they owe, if it's more than they've got, then it's more than they've got.

So even though what you see and hear today will have very little relationship to the truth about the bank bailout, and even though the men testifying really represent the failings of an industry-wide corporate culture, you need to pull for these rich bankers this afternoon. You need to hope they get those investors who watch CNN International from around the world to believe enough to place their next bet at the Wall Street window.

Irony of ironies - just like in the movie, you end up pulling for the bad guys.



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