In one of our favorite Honeymooners episodes, Ralph Kramden’s buddy Ed Norton is bragging about an investment he just made in a new firm called ”Merrill Lynch Pierce Fenner and Ziggy.”
The guy who sold him the shares was Ziggy. Ziggy worked in the sewer with Norton.
This week, the U. S. Treasury gave an $85 billion loan to the largest U.S. insurance giant, AIG, to keep it from collapsing. According to U.S. Treasury Secretary Hank Paulson, this emergency infusion of swag is a temporary, two-month ”bridge loan” that will be repaid by selling off AIG’s assets.
The loan is secured by the transfer of 80 percent of AIG’s equity to the government, which means that while they were sleeping on Monday night the American people became the proud owners of a huge financial conglomerate that is in the final stages of bleeding to death.
Not to worry. Paulson promised American taxpayers that he would try really, really hard to make sure that they aren’t stuck with the bill for AIG’s staggering debts, which of course were accumulated in the drunken speculative orgy that has consumed what used to be known as the international financial system.
The day before AIG was granted this spectacular rescue package, Paulson looked the other way while another financial giant, Lehman Brothers, bled to death. There was still a wall on Wall Street when the brothers Lehman set up shop in the mid-19th century.
Paulson is beginning to look like a haggard surgeon in an overwhelmed Army Mash unit, desperately hooking up financial transfusions in a battlefield littered with critically wounded bankers. He apparently began running low on ”blood” supplies a few weeks ago, so now he is draining the walking wounded to keep the basket cases going for another few days.
President George W. Bush, presumably busy packing up his cowboy boots in advance of his eagerly awaited retirement, trotted out his spokesperson to explain why AIG had to live and the Lehman siblings had to die. AIG’s failure was much bigger than Lehman’s, she explained, therefore AIG needed to be rescued and Lehman did not.
Message: If you are going to fail in America, fail BIG.
This lesson was quickly absorbed by America’s Big Three automakers, each of whom is teetering on the brink of bankruptcy. While everybody was distracted by the carnage on Wall Street this week, GM, Ford and Chrysler quietly tapped Congress on the shoulder and reminded it that somebody in Washington promised them a $50 billion ”bridge loan” a while back.
The U.S. auto giants, who have spent the last 10 years building armored personnel carriers disguised as luxury SUVs, promised that, this time, they would really, really try to produce fuel-efficient vehicles. They hinted they would really, really try to repay the loan well in advance of the 2050 model year.
They also reminded the government that if it didn’t cough up the dough, well, they just might fail — and it would be a really, really BIG failure.
We were watching a TV report on these fiscal shenanigans when a 21-year-old college student looked up from a bag of cookies he was ransacking, stuck out his hand and asked us for $50 ”bridge loan” so he could take his girlfriend out to dinner on Saturday night. He said she would be really, really angry and they would have a really, really BIG fight if they didn’t go out, and he would try really, really hard to pay us back by Tuesday.
Having just acquired an $85 billion stake in a dying insurance company, it occurred to us that this might be a bad time to enter into any more risky financial entanglements.
We told him to go ask Ziggy. The buck stops here.
