Taking the Piss

Treasury Secretary Henry Paulson continues to spend T.A.R.P. bailout money, announcing additional loans to A.I.G. today. Was it just a couple of weeks ago that the giant insurer pronounced themselves secure? It seems that $85 billion, the entire GDP for New Zealand last year, was not enough. So its been doubled.

The amount of taxpayer money given to A.I.G. alone would provide health insurance for every child in America, rebuild every school in America and provide 120,000 teachers, with enough left over to build 2 million affordable housing units. God only knows how far this money would have gone providing health care, water, and housing in the Third World.

Is anyone out there doing the math? Does it not seem strange that this $700b (oops, $850b) never seems to shrink. Every day tens of billions are earmarked for this, or that, but somehow the original figure stays at $700b. The first tranch of $250b has only $60b left. The next lot of $100b needs the President's signature. The $300b left over requires Congressional oversight.

Wells Fargo Chairman Dick Kovacevich was rewarded for his purchase of Wachovia by being kept on, past the company's manditory retirement age. And why not. TARP money paid for half of the purchase price. More importantly, a recent story in the Washington Post indicate that Wells Fargo's recent $25b quarterly losses will be absorbed by the taxpayer too. While everyone was looking at the bailout package, Henry Paulson announced changes to the IRS tax code (Section 382) that would permit companies to write off tax obligations against losses in companies absorbed in mergers and acquisitions. Effectively, this doubles the taxpayer bill for those Investment banks that were bought out.

In the end these numbers boggle the mind. It seemed absurd when the Fed bailed out Chrysler for $5b in 1979. Today's figures are surreal.