Oh Captain My Captain

So, when you read the fine print of El Bailouto, you discover its underlying themes, which have also been discovered by other Congress members uncooperative enough to actually read the damn thing.  To wit,

“The bill is very clear. Assets now held in China and London can be sold to US entities on Monday and then sold to the Treasury on Tuesday. Paulson has made it clear he will recommend a veto of any bill that contained a clear provision that said if Americans did not own the asset on September 20 that it can't be sold to the Treasury. Hundreds of billions of dollars are going to bail out foreign investors. They know it, they demanded it and the bill has been carefully written to make sure it can happen." Representative Brad Sherman (D, CA).

This approach, of course, is perfectly consistent with the overall Bush strategy of avoiding, wherever possible, anything straightforward and unabashedly patriotic.  Just not the way the Cowboy-in-Drag-in-Chief rides his pony.  We know from one or two bailouts ago that the Fannie/Freddie rescue, that earlier episode of the Perils of Paul(ine)son, was not so much about its putative rationale, the rescue of America's big mortgage guarantor and MBS Trash Compactor of Last Resort, as it was about calming down a sovereign wealth fund riot erupting far from America's shores.  Namely, banks in China, Japan, Riyadh, et alia were very hacked off about having bought this collateralized dogshit at full value on the implied promise of the bunko-artist head honchos at Fan/Fred that Uncle Sam was fully behind it; only to learn that "government sponsored" was not really the same as "government backed."  To which the Asians from the Mid- to the Far- East replied: oh really?  Well, how would you like to find out what happens if your government is not backed by ours?

At this point Henry Paulson, in the strangled squeal that was the only voice he had left, yelled for help and put Bernanke in a hammer lock, forcing him to bail out Fan/Fred so at least the junk they had sold could be made good for Ali, Wang & Yoshi, that most feared of all international collection agencies (their corporate slogan: Pay On Time Or Die).  The ship righted itself for a few minutes but then sprang another leak, this one amidships below the water line. All these foreign banks also hold a ton of this non-GSE MBS (it's the initials that are eventually going to do us in - bankruptcy by acronym), sold to them by the croupiers of the Big Wall Street Investment Banks.  You remember them - they existed as late as a couple of months ago.

Henry, working with the panicked frenzy of a one-armed paper hanger on a tipping step ladder, then rushed to Bush and sounded General Quarters again.  The foreigners, they're just so much less forgiving than the dumb American taxpayers who cheerfully accept being buried beneath mountains of toxic financial sludge, the sovereign dudes just refuse to make fine distinctions between being owed by America and being owed by an American investment bank.  They're unreasonable that way.  And we owe them so much damn money, over two trillion dollars at this point.  And we're about to ask them to buy in with another $700 billion in order to...I don't know, this whole thing's getting circular, George!  I guess we need it to service the vig on what we already owe them so we can...

Well, you add the half trillion deficit we were already running for the year and you dump another point 7 trillion on top of that and you're talking about 1.2 trillion for the year, and then we've got those damn wars we need to win! dammit, and the one trillion we spend every year on "defense," and then the 800 billion yearly trade deficit and and and

Aiiiiiiiiyyeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee!  Paulson blacked out at this point.  Please stop asking him hard questions about what he's going to do with the money.  Yes, he's going to give it to the foreign banks who finance us so we can maintain our bloated military because we're just not going to cut that back whether we can afford it or not.  There!  I said it!  Satisfied?