August 11, 2010

The Strange Case of Charles ‘Paulson Put a Gun to All Their Heads’ Gasparino

CharlesGasparino0810At crunch time, he sided with statism.

What follows confirms an item covered originally at NewsBusters by Warner Todd Huston.

Today Lachlan Markey at NewsBusters covered that confirmation.

The news in April 2009 via Huston:

CEO Jeffery Immelt and NBC Universal President Jeff Zucker are reported to have called some of CNBC’s on-air talent to a secret meeting … The meeting was called to scold the cable yackers for being too harsh on the Obammessiah, with the … Jeffs warning that CNBC is turning into “the Obama bashing network” and that the cable outlet is becoming “too conservative.”

This week, as Markey reports, Fox Business Channel’s Charles Gasparino told Fox News’s Bill O’Reilly that this is indeed what happened:

O’REILLY: You worked at CNBC, that’s a business network.

GASPARINO: Sometimes opinion.

O’REILLY: Did you see left-wing stuff there?

GASPARINO: Well it was interesting. There was – and it turned out to be true, I think the New York Post reported it – there was this issue where Jeff Immelt, chairman of GE, which used to own NBC Universal, called in some of the senior staff, and clearly was worried, according to the people I spoke to who were in that meeting, about the possibility that we were becoming too anti-administration. This was when the Obama administration first took over, and some of the spending plans came out, and the markets reacted.

O’REILLY: So Immelt himself intruded on the editorial position of CNBC because he felt that you weren’t giving Obama a fair shake?

GASPARINO: They will deny it, officially, but from what I understand, and I spoke with people there, people got called into this meeting, and they were basically, not exactly read the riot act, but the question of whether they were being fair to the president was brought up. I’ve never heard that before.

Inmelt’s motivation was quite transparent, as Markey notes: “General Electric at the time was hoping to profit handsomely from policies that would benefit a few companies, including GE, at the expense of the majority of the economy” — specicially, cap and trade.

But speaking of motivation: What’s with Gasparino?

The easy answer would be that sometime in the past two years he has seen the light and realizes his past reporting at CNBC was lacking in fairness and balance. Despite his move to Fox, there’s reason to doubt that.

In October 2008, Gasparino and CNBC’s Dylan Ratigan smirked their way through their report on what has turned out in retrospect to have been the event that marked the official beginning of Washington’s financial tyranny (“arbitrary or unrestrained exercise of power; despotic abuse of authority”) over the banking system. That tyranny has largely been codified into law in the recently passed and laughably misnamed “Financial Services Reform” legislation.

On October 14, 2008, less than two weeks after Congress passed legislation creating the Troubled Assets Relief Program (TARP) with the supposed intent of using the money to buy up specific “toxic assets,” mostly subprime mortgages, Treasury Secretary Hank Paulson radically shifted course, forcing the nation’s largest banks to take TARP money directly (i.e., to accept government “investment”) regardless of whether they wanted it or believe they needed it.

What follows is a transcript containing most of the early portion of what Ratigan and Gasparino reported before going to other talking heads for their comments (video is still here at CNBC, and must be seen to fully appreciate the conversation’s smarmy arrogance, especially with Gasparino; bolds are mine):

Ratigan: Well we all know that obscene amounts of risk (were) taken inside of the banking system, leaving some banks crippled, some banks frozen, and other banks with huge opportunities.

Uh, many of the banks didn’t want to be tainted with the government bailout funds because they didn’t want to be mistaken for a fool when they actually felt that they were the smart one that didn’t do it.

Well Hank Paulson said “The heck with that.” He stuck all of them with some of the bailout money. And he said “Listen, we’re going to reset the clock here and move forward.” Charlie, how are the banks that felt they basically didn’t commit the crime, as it were, of excess or reckless risk, uh, respond to the fact that even they will be stuck with this capital?

Charlie Gasparino: Well y’know they were all kind of stupid to some extent …..

….. the Treasury Secretary Hank Paulson put all these egos in the room, and basically put guns to their heads, forcing them to take the money to bolster the banking system.

Some of the firms say they didn’t want the cash, but it’s pretty clear that all of them did need to take the cash, given the continued upheaval in the banking system that crushed shares last week of Morgan as well as Goldman Sachs and just about everybody else.

So this is essentially, uh, Dylan, a case where, y’know, you can deny you have any problems. Even the best-capitalized banks have problems. They own this stuff. And Paulson at one point said, “Listen, if you don’t want it, it doesn’t matter, gun to your head, you gotta take it.”

Ratigan: Yeah, whether you think you’re sick or not, you’re taking the medicine.

Gasparino: Because you’re sick anyway.

Ratigan: Exactly.

Part of my reax at the time:

It was very unsettling to see the two CNBC reporters basically smile and smirk their way through the opening segment of the clip, with what I saw as an air of insufferable “we know it all” arrogance.

… This “bailout” was originally advertised as being targeted towards troubled loan situations, principally mortgages. Instead, Paulson, Bernanke, and Bush have turned it into a de facto, no good deed goes unpunished (i.e., responsible lending) tool for partial nationalization.

How many Congresspersons, or presidential candidates, thought this was what they were voting for, or that this is what the people wanted?

Commenter dscott’s reax at the time:

Something is up because this is not how a government official acts in a Democracy.

“Something” was up all right. We should never forget that the congressmen and senators from both parties, including each party’s presidential candidate, voted TARP into existence despite the intense opposition of the vast majority of Americans, thereby allowing a loophole-laden law to open the door to what has since transpired.

Then, less than two weeks later, virtually everyone just stood around while tyranny took its first sweeping steps.

Charles Gasparino thought it was sort of funny at the time, as if the financial system’s private players were getting a richly deserved comeuppance. That attitude is consistent with the theme of his most recent book, and of the one that will be released shortly.

In November of last year, Gasparino’s “The Sellout” was subtitled “How Three Decades of Wall Street Greed and Government Mismanagement Destroyed the Global Financial System.” Given what we have learned about the frauds by design known as Fannie Mae and Freddie Mac in the two years since they went into government conservatorship, it’s more than a little odd that he would mention Wall Street first.

Gasparino is releasing a book in October whose title is, “Bought and Paid For: The Unholy Alliance Between Barack Obama and Wall Street.” The book’s tagline: “A top reporter exposes the deep ties between the Obama administration and the big banks that are bankrupting our country.”

I’m sure there’s no shortage of material. But fundamentally, Charles, how could it be that Wall Street perpetrated this mess with just a bit of cooperation from and co-opting of Uncle Sam, when it’s Fan and Fred who led the way in compromising prudent lending standards, and it’s Fan and Fred who lied about the underlying quality of their securitized mortgages for about 15 years to the tune of hundreds of billions and perhaps trillions of dollars, doing damage that Wall Street couldn’t hope to do even at its most malicious?

Someone –maybe Bill O’Reilly — should ask Gasparino if he still thinks Wall Street is the primary culprit. He clearly did at crunch time in October 2008.

Cross-posted in shorter form at NewsBusters.org.

The Fed Is Largely Out of Bullets, As 2Q10 GDP Seems Headed for a Steep Fall

Filed under: Economy,Taxes & Government — Tom @ 10:05 am

Not that it was a particularly impressive insight, but an IBD editorial’s take on the results of yesterday’s Federal Reserve meeting confirmed what yours truly asserted was the second nasty element in Ben Bernanke’s “unusual uncertainty” Congressional testimony in July (bolds are mine):

After meeting Tuesday, the Federal Reserve signaled that it believes the economy isn’t performing as well as it should. But there’s not a whole lot left that the Fed can do.

A government can “stimulate” a dead economy in only two ways. One is to print money and risk inflation — monetary policy. The other is to cut spending and lower taxes — fiscal policy.

Unfortunately, as the results of Tuesday’s Fed policy meeting show, we’ve pretty much exhausted our monetary policy arsenal.

… GDP growth in the second quarter was a disappointing 2.4% — and looks like it’s trending lower.

… In its statement Tuesday, the Fed admitted that “the pace of recovery in output and employment has slowed in recent months.” In other words, despite what the Fed, President Obama and Congress have done, the risk of a double-dip recession is growing.

So what’ll the Fed do now, besides hold interest rates near record lows? To prime the economy’s pump, the central bank said it will “(reinvest) principal payments from agency debt and agency mortgage-backed securities (from the stimulus and bailouts) in longer-term Treasury securities.”

Translation: As bailout and stimulus funds get repaid, the Fed will use the money it created out of thin air to help fund the nation’s budget deficits, now running at more than $1 trillion a year.

But it won’t work. The Fed has already pumped an estimated $2 trillion into the banking system to encourage lending. All that new money may have kept us from deflation, but it didn’t boost real economic output.

… If anything, the Keynesian medicine prescribed by the president and Congress is making the patient sicker.

Speaking of “real economic output” and “trending lower,” Zero Hedge has identified two credible reasons to believe that second quarter GDP is going to get revised downward — wayyyyyy downward (internal link is in original; bold is mine):

As JPM (Michael Feroli at JP Morgan) reported earlier, revision in BEA (Uncle Sam’s Bureau of Economic Analysis) assumptions on wholesale and non-durable inventory alone will push Q1 GDP from the official 2.4% to 1.3%. Today’s data (on trade) is the last nail in the Q2 GDP number, and according to analyst(s) will take out another 0.4% from the GDP, meaning that when all is said and done, Q2 GDP will come out to sub-1%.

Geez, in my July 30 GDP post, I was hoping that the trade data foreshadowed upward revisions, not downwards.

The late August and late September revisions to GDP will come out just as many in the 85% of the population that is relatively disengaged are beginning to really pay attention to the fall electoral contests (okay, maybe thanks to the Tea Party movement it might — emphasis might — be more like 75%-80%). If the GDP revisions are as bad as JPM and ZH are estimating (conceivably they could be worse, given the track record of downward revisions for other reasons in recent quarters), the political fallout will be immense.

(Written hopefully in jest) If I were running the BEA, I would consider completely cutting off incoming phone and e-mail access from the White House for the next 51 days until the second quarter’s final scheduled revision hits the wires.

Positivity: FOCUS reaching 50 schools with addition of eight new campus programs

Filed under: Positivity — Tom @ 8:30 am

From Denver, Colorado:

Aug 11, 2010 / 01:03 am

The Fellowship of Catholic University Students (FOCUS), a college campus outreach program, recently added eight more universities to the number of campuses it serves. The organization now has affiliates at 50 campuses in 27 states and the District of Columbia.

Teams of four or more men and women are sent to be FOCUS missionaries at university campuses at the invitation of the local bishop and with the support of the local Newman Center or Catholic campus ministry. According to a press release from FOCUS, more than 250 missionaries will work on the 50 campuses this year.

Missionaries are typically recent college graduates and devote two or more years to reach out to their peers on a full-time basis. FOCUS says it seeks to communicate the Gospel to young adults in “a dynamic and culturally relevant way,” inviting them to a relationship with Jesus Christ and to the fullness of the Catholic Church.

The eight new campuses that will receive FOCUS teams are: Colorado School of Mines, George Washington University, Georgia Southern University, Northern Arizona University, Texas State University, the University of Kansas, Florida Gulf Coast University, and the College of Saint Mary in Omaha, Nebraska.

FOCUS founder Curtis Martin said the organization is excited to see “the increasing demand and desire for FOCUS missionaries throughout the country.” …

Go here for the rest of the story.