Will food lines be the 'IN' thing for the winter of 2008/2009?
GLENN: I told you, well, forever I'm against government bailouts, but that ship has sailed so long ago. Now we have a bailout that is $700 billion. Do not believe $700 billion. Don't believe it. I sent an e mail out, what, 11:45 last night, Stu?
GLENN: What did I say would happen with the bailout?
STU: You said it would be more like $2 trillion.
GLENN: Sovereign funds no, that's not it. The $700 billion bailout, the latest story here is that it is probably going to be $1.3 trillion. Do not believe that. It's not $1.3 trillion. It is over $2 trillion that this bailout is going to cost. And here's the great thing, this according to Bloomberg just a few minutes ago. Bush administration widened the scope of its $700 billion plan to avert financial meltdown by including assets other than mortgage related securities.
You must hear this. Please have some meat I'll give you dessert here in a second, but you must hear this because it only makes you you'll only question me saying the bailout is a good thing even more. You'll say... what! Officials made changes two days after unveiling plans for an unprecedented intervention in financial markets. The change will potentially allow purchases of car loans, credit card debt and other devalued assets that may force an increase in the size of the package. No! It's not going to be, not going to be over $700 billion. It's going to be over $2 trillion.
Now, why is this happening and why am I willing to say AIG was the only one that I would have considered bailing out last week, but I still was not for the bail I have not been for any bailouts. Why would I now be for bailouts? Let me give you the story on what happened this weekend in Nancy Pelosi's office. Ben Bernanke and Henry Paulson, the secretary of treasury, did everything they could last week to try to bail everything out. I believe they made things worse but I know a lot of financial people don't but I believe you just, we went, we started going down the bailout route. What they were trying to do is build another firewall. Well, they didn't put the fire out. You can build firewall after firewall after firewall. You've got to put the fire out. And nothing they did fixed it, and every time they would fix it, they will say, well, this one's going to fix it, and it didn't. The fire just kept getting bigger and bigger and bigger.
So over the weekend Nancy Pelosi's office, you know, had the white hydrangeas that you, by the way, are paying for sitting there on the table and a bunch of Democrats and Republicans were sitting in there and here comes Henry Paulson and Ben Bernanke. Ben Bernanke, by the way, an expert on the Great Depression. That is his expertise. That is his field of study was what happened in the Great Depression.
Well, last week Lehman Brothers went bankrupt, Merrill Lynch, Bank of America had a shotgun wedding. They got together. Regulators pumped in another $85 billion for AIG. I said, where did you even come up with that amount, last week; it's not going to fix it; it's going to get worse. Then on Wednesday night they saw the market absolutely freeze. No one in business could borrow anything from any bank. Nobody was and that means that all business in America would have stopped Thursday morning, stopped. October 30th, 1929. That's what this that's what Wednesday was. You have to remember, the Great Depression didn't the stock market crashed in October 29. The Great Depression was up and down, stocks looked good and then bad and then things would get better and then, "We're getting better, we're getting out of it" and then it crashed again. It wasn't until government came in and just absorbed everything in 1933 after FDR that then it was done for ten years. Then it was the Great Depression for ten years.
Bernanke comes in and he says the credit lines in the financial system, lifeblood in the economy completely frozen. It was threatening to halt all lending in the U.S., forcing businesses to close and lay off workers. They were also seeing massive amounts of money being moved out of the country.
Remind me, Stu, to talk about the money that was short selling last week from Britain and Dubai.
Bernanke says you could see massive failures of businesses within days that goes beyond the banking system to large name brand companies. Big, big, gigantic companies are ready to go under in America. The people who left the meeting said they were shocked by the description of Armageddon from Bernanke. This was this weekend. They looked shaken. Chris Dodd said it was as sobering a meeting as any of us have ever attended in our careers here.
This is what's really going on behind the scenes. You are getting a little puppet show in front of you. Now, how does that bring me to the bailout? I think government being involved is really bad because I will tell you the things that they won't tell you. I have done my homework this weekend. I have as Stu will be able to tell you, I have connections to people who do not want can't go on the record, cannot go on the record.
Stu, do you trust these people?
STU: Oh, yeah.
GLENN: Okay. It is not something they are not people that are stand to make money. They are people that truly, truly care that talk to me because they believe you need to know but they can't say anything because if they said something, it's over. Correct?
STU: Yeah. And I think more importantly than that maybe even, at least for their actual comments is that they are less alarmist than you.
GLENN: Oh, yeah.
STU: They don't they are not jump to conclusions people, they are not jump to conspiracy, they are not jump to
GLENN: Oh, no. They think I'm crazy, some of the stuff I mean, I get e mail from some of them and they're like, "You don't really believe that, do you." I mean, they are really these are rock solid people.
STU: But on this issue, you know.
GLENN: And, Stu, have they ever because you know all of my conversations. Have they ever said what they said to me in the last few days?
STU: No. They're getting scarier and scarier.
GLENN: Yeah. Always optimistic, always like, "Hey, look, we can " it's a different ball game, gang. The world changed last week. Here's what's happening. We are now digging fire lines. That's what we're doing. And the choice is now. And to use this example remember, I'm a guy who believes you let the forest burn; it's good. There is something to a forest burning. It replenishes the Earth. It becomes stronger, the soil has more nutrients in it. It's actually a good thing. You let the forest burn. So understand that I believe that in the economy, I believe in failure, I believe in let the forest burn. With that being said, there comes a time when you're in a firefight that you must dig a fire line. Let the forest burn, but you've got to move everybody, "Okay, everybody come to the hospital and by the police department and city hall and grab all your belongings, grab everything and we're building a fire line right here, but we've got to save the hospital. We've got to save the grocery store or the farms. We've got to save it. So build a fire line. Do not put the forest out because the forest is going to burn."
Are you with me so far, Stu?
STU: I'm sorry. What? I was just checking out the sports center showing all the NFL highlights in it. No, I think I understand where you are.
GLENN: So where I am now is what you're being told about this bailout is that this is a bailout and it's going to help everybody. Now we can stop it. No, we're not. What we're doing is we're allowing it to burn without burning everything to the ground. We are trying to save whatever we can so we have something that we can hold onto. That's what's happening. If the fire burns out of control, it burns everything down. It burns mom and pop grocery store and it burns General Motors and it burns General Electric, it burns all of it down to the ground because there's just, the money is just not there. Nobody everybody's in panic mode and what they're trying to do is bring it down as softly as they can, but this is not going to be a soft landing.
"Ladies and gentlemen, prepare. We're about ready to hit the runway, although I have to tell you right now nobody wants you to know this, but there is no runway below us. It's actually a forest, but hey, we're doing the best we can so the plane just doesn't fall out of the sky. Buckle your seat belts." That's what's happening. The President can't get on. Nobody can get on and say, "We've got two choices, gang. We're just going to turn the engines off or we're just going to, you know, they are just going to let them go and they will eventually turn themselves off and the plane will fall out of the sky," "Or, we know that's a forest beneath us and we know this is going to do just a buttload of damage but at least we'll have pieces of the plane we can put together and there's stuff on the plane that we need." And here's a crazy idea. There's people on the plane!
That's what congress is considering right now. This, I believe, has to pass, and you will see it in the next few days. You're going to see, I think, gigantic failures. You are going to see big failures come in the next few days and it's just, it's not done yet. It's not done yet. And if the government doesn't okay this, well, that's what's going to happen.
Now, here's the semi good news. If the weasels stay out of it, the people that are writing this right now, some of them are weasels, quite frankly I think some of them are evil, but a lot of them are really good and, in fact, I believe that Wednesday night was 9/11 in the financial industry. They know what happened. However, they're still the Pentagon hasn't been hit yet and there's still somebody up in the air that's flying towards the White House. It was 9/11 the World Trade Center has been hit and that's what's happening in the financial market right now. And there are good people that are trying to they are the 9/12ers. They don't care about necessarily and I'm not talking about all of them they don't care necessarily about their one financial institution. They are trying they are doing service for America. There are good people that understand what's going on and there are good people that are involved in this plan. There are also those people, those good people, they are trying to keep the weasels away because the way this is being written right now is let's say the Glenn Bank is the good and honest bank. Let's say the Stu Bank is the evil Stu Bank.
STU: What kind of example is that? Why aren't we
GLENN: That's a good one.
STU: Why are you talking
GLENN: So the Glenn Bank is in trouble. No fault of Glenn, but he's got all kinds of problems and many of them psychological in nature, and the money, the assets that he has, some of them are defaulting and if he doesn't get them off his books, he's going to go away and he's going to go out of business.
Same thing with the Stu Bank. Well, the way this bailout is going to work is everybody comes, "Bring out your dead, bring out your dead." And so you wheel it up and the Glenn Bank brings out the dead and they really are dead and they're like, I'm really sorry, man, I did everything I can to save them. And the Stu Bank comes out and they're like, "You're not dead yet, I'm not dead yet." They're like, "Yes, he is." "No, I'm not." "Yes, he is," "no, I'm..." [gunfire]. The Stu Bank was intentionally coughing on people.
STU: You are calling me a murderer, aren't you?
GLENN: And he was saying, "What? My people aren't sick at all." And now he's saying, "What? Look, they should be over here." So Stu gets an F for the way he handled his business. I get an A for the way I handled my business. Everybody brings out their dead, they are evaluated and they're marked, Stu Bank, Glenn Bank. They are marked. Stu Bank gets an F. Glenn Bank gets an A. The federal government is taking all of these assets and they are holding them. And they are holding them for three or four years. In the meantime the Stu Bank and the Glenn Bank need to raise money and to need to get their financial house in order to be able to buy these things or offset the losses when they come back. So I get an A. So when it's time for the government to sell these assets, let's say I bought a dollar's worth of stuff for $10 is the government, that's what's going to happen. I'm going to say, "All right, you know what, all you dead people at the Stu Bank, I'm going to give you 10 cents for every dollar's worth." And Stu takes that, okay? And he gets his financial house in order. When we sell them, here's what happens. We sell them and we go, "Oh, Stu, that's right. You were really a shifty company, yeah. We just sold it for 80 cents. No soup for you." And we get the 70 cents and it goes right directly into the treasury of the United States.
The Glenn Bank comes and they say, "Oh, yeah, I remember you. You were a good guy. Yeah, we just sold yours for 80 cents. We're going to give you 20 cents of that 80. We're keeping the rest. And Stu, by the way, still no soup four." That way they are going to punish the bad and reward the good. Those who were just swept up into it and weren't doing anything, they're going to get it, except because the American people remember this is the way it's supposed to work. The American people get money out of it because those assets aren't always going to be bad. The market will come back and you'll be able to sell those assets. But the guy who was screwing us, he shouldn't get help. He shouldn't get any. He's got to pay for it. He's going to get screwed in the end. That's the way it's supposed to be.
Me personally, I don't believe a single weasel in Washington. I don't believe any of these people are actually going to do jack and not put, you know, gummy bears and the big huge presents under the Christmas tree. They are looking at this as, you know what, this is what I'm going to get out of this; so I don't buy it. I will just tell you the plane is falling out of the sky. We must land the plane as softly as we can. This is going to be very bad. It is not going to it is something that we are it's worse. I mean, it's now you've got the government involved as well, but you've got to save somebody and you've got to have some of these assets when you land the plane.
Help you at all, Stu?
STU: Yeah, I mean, you are right it doesn't make me it doesn't make me feel anything but dirty because I mean, the source of my optimism on the economy is that we have the free market and our economic resiliency is based on capitalism which I believe not only to be the most effective but also a moral system.
STU: So the problem with this is we're taking that out of the equation.
STU: We're taking capitalism out of capitalism.
GLENN: Well, no, you are trying to put some of the capitalism back in and the capitalists are doing it, not the Washington people. The capitalists are doing it. The people, some of the people involved in this are actually pushing for the capitalism to remain in there. They do not want the government in here. They just don't feel that they have any choice. The bad ones are saying, "Yeah, sweet deal." The good ones want those penalties still in there for capitalist reasons.