But, more importantly,
HAPPY BIRTHDAY, KID FURIOUS!
HAPPY BIRTHDAY, KID FURIOUS!
Last week the Minnesota Supreme Court ruled that bong water is an illegal drug. Under state law, a controlled substance includes any "mixture" containing that substance, "regardless of purity." The consequences of reading that definition literally can be severe. In the case before the court, a woman whose bong contained 37 grams of water with traces of methamphetamine will now be treated as if she possessed 37 grams of speed, which converts possession of drug paraphernalia, a petty misdemeanor punishable by a $300 fine, into a a first-degree drug offense, punishable by seven or more years in prison. Three dissenting justices wrote that the majority's interpretation of the statute "misapplies the plain-meaning rule...runs counter to the legislative structure of our drug laws, does not make common sense, and borders on the absurd."
Back in 1993, I wrote a piece for Reason in which I highlighted the ridiculously unjust results of including the "carrier medium" for LSD (typically blotter paper) in calculating the drug's weight for sentencing purposes:
Under federal sentencing guidelines, selling 100 doses of LSD in pure form triggers a minimum sentence of less than a year, but selling the same amount on paper will get you a sentence of at least two years, three months. And if you were old-fashioned enough to drop your acid onto sugar cubes, you will end up behind bars for no less than 15 years, eight months.
What really happened to Bear and Lehman is that an economic drought temporarily left the hyenas without any more middle-class victims — and so they started eating each other, using the exact same schemes they had been using for years to fleece the rest of the country. And in the forensic footprint left by those kills, we can see for the first time exactly how the scam worked — and how completely even the government regulators who are supposed to protect us have given up trying to stop it.
This was a brokered bloodletting, one in which the power of the state was used to help effect a monstrous consolidation of financial and political power. Heading into 2008, there were five major investment banks in the United States: Bear, Lehman, Merrill Lynch, Morgan Stanley and Goldman Sachs. Today only Morgan Stanley and Goldman survive as independent firms, perched atop a restructured Wall Street hierarchy. And while the rest of the civilized world responded to last year's catastrophes with sweeping measures to rein in the corruption in their financial sectors, the United States invited the wolves into the government, with the popular new president, Barack Obama — elected amid promises to clean up the mess — filling his administration with Bear's and Lehman's conquerors, bestowing his papal blessing on a new era of robbery.
To the rest of the world, the brazenness of the theft — coupled with the conspicuousness of the government's inaction — clearly demonstrates that the American capital markets are a crime in progress. To those of us who actually live here, however, the news is even worse. We're in a place we haven't been since the Depression: Our economy is so completely fucked, the rich are running out of things to steal.
[...] early on the morning of Friday, March 14th, Bear's CEO, Alan Schwartz, struck a deal with the Fed and JPMorgan to provide an emergency loan to keep the company's doors open. When the news hit the street that morning, Bear's stock rallied, gaining more than nine percent and climbing back to $62.
The rally proved short-lived — Bear ended the day at $30 — but it suggested that all was not lost. Then a strange thing happened. As Bear understood it, the emergency credit line that the Fed had arranged was originally supposed to last for 28 days. But that Friday, despite the rally, Geithner and then-Treasury secretary Hank Paulson — the former head of Goldman Sachs, one of the firms rumored to be shorting Bear — had a sudden change of heart. When the market closed for the weekend, Paulson called Schwartz and told him that the rescue timeline had to be accelerated. Paulson wouldn't stay up another night worrying about Bear Stearns, he reportedly told Schwartz. Bear had until Sunday night to find a buyer or it could go fuck itself.
Bear was out of options. Over the course of that weekend, the firm opened its books to JPMorgan, the only realistic potential buyer. But upon seeing all the "shit" on Bear's books, as one source privy to the negotiations put it — including great gobs of toxic investments in the subprime markets — JPMorgan hedged. It wouldn't do the deal, it announced, unless it got two things: a huge bargain on the sale price, and a lot of public money to wipe out the "shit."
So the Fed — on whose New York board sits JPMorgan chief Jamie Dimon — immediately agreed to accommodate the new buyers, forking over $29 billion in public funds to buy up the yucky parts of Bear. Paulson, meanwhile, took care of the bargain issue, putting the government's gun to Schwartz's head and telling him he had to sell low. Really low.
On Saturday night, March 15th, Schwartz and Dimon had discussed a deal for JPMorgan to buy Bear at $8 to $12 a share. By Sunday afternoon, however, Geithner reported that the price had plunged even further. "Shareholders are going to get between $3 and $5 a share," he told Paulson.
But Paulson pissed on even that price from a great height. "I can't see why they're getting anything," he told Dimon that afternoon from Washington, via speakerphone. "I could see something nominal, like $1 or $2 per share."
Just like that, with a slight nod of Paulson's big shiny head, Bear was vaporized. This, remember, all took place while Bear's stock was still selling at $30. By knocking the share price down 28 bucks, Paulson ensured that the manipulators who were illegally counterfeiting Bear's shares would make an awesome fortune.
Punditry is the journalistic equivalent to the newspaper astrology column. Punditry doesn’t have to be right, it’s just gotta be entertaining and provide comfort for those who need to believe easily digestible bullshit.
|The Daily Show With Jon Stewart||Mon - Thurs 11p / 10c|
If the 2008 election happened in Africa or the Middle East it would seem obvious that an opposition leader who restored the rule of law and set about reintegrating his country into the family of nations would be racking up points towards a Nobel Peace Prize before he even took the oath of office.