Heading For The Cliff?

by Steve Soto

As of this moment, the Dow Jones Industrial Average has fallen over 600 700 points. Overseas markets have fallen and central banks have had to step in and firm up their economies over the last 48 hours, and the "rescue" has done little in the short term to stop the slide in confidence. When you hear talk from seasoned analysts that this is a global repricing of equity markets, then you get the feeling that we'll be in the soup for awhile, and that no flawed "recapitalization" aimed at the top will work any time soon.

Financial markets took a bleak view of the future Monday, seeing contagion in a credit crisis that threatens to cascade through economies globally despite government efforts to provide relief. The Dow Jones industrials skidded more than 500 points and fell below 10,000 for the first time in four years, while the credit markets remained under strain.

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"The fact is people are scared and the only thing they're doing is selling," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. "Investors are cleaning out portfolios and getting rid of everything because nothing seems to be working."

I would remind all of you that George W. Bush left Texas in far worse shape than he found it, and history is simply repeating itself. The man is a walking catastrophe, now with a sidekick where the both of them represent Disaster Squared.

And we find out today from Henry Waxman’s hearing into what happened with the Lehman Brothers’ bankruptcy that the Bush Administration wasn’t exactly a surprised bystander when Lehman’s executive team drained the company of millions in bonuses and separation packages at a time when they were warned that doing so risked the future of the company. How do we know this?

Because Bush’s own cousin was a Lehman executive, who rejected any idea that corporate fiscal prudence outweigh an executive smash and grab on their way out the door.

Waxman said that in January, Fuld and his board were warned the company's "liquidity can disappear quite fast."

Despite that warning, he said, "Mr. Fuld depleted Lehman's capital reserves by over $10 billion through year-end bonuses, stock buybacks, and dividend payments."

Waxman quoted Fuld as saying in one document, "Don't worry" to the suggestion that executives go without bonuses.

That suggestion came from Lehman's money management subsidiary, Neuberger Berman. Waxman quoted George H. Walker, President Bush's cousin and a Lehman executive who oversaw some Neuberger Berman employees, as responding with a dismissive tone to the idea of going without bonuses.

"Sorry team," he wrote to the executive committee, according to Waxman. "I'm not sure what's in the water at 605 Third Avenue today.... I'm embarrassed and I apologize."

And of course we are to believe that Bush never saw any of this coming, or didn't talk at all with his cousin at any time in all of 2008?