Night of the Living Public-Private Investment Program: The Boneheaded Idea That Just Won't Die
Shoot it in the head!
In honor of TARP's first birthday, PPIP appears to have returned (again) and we're (not at all) happy to report that the boneheaded idea to beat all boneheaded ideas is still plugging along. Like swine flu outbreaks, PPIP seems to appear when economic data point to doom. I know it's been a whole year but in case you have forgotten, the initial intention of TARP (at least the line King Henry used to con Congress into passing it) was to buy up these toxic assets. The old bait-and-switch was no surprise and frankly neither is the fact that PPIP just won't die.
What's a few billion more?
The Treasury Department said on Sunday that its scaled-down program to help banks unload their troubled mortgages and mortgage securities would begin operating at full strength by the end of this month, more than a year after Congress authorized $700 billion for that purpose.
Treasury officials said that five out of the nine money-management firms it selected to buy up unwanted mortgage-backed securities had raised the minimum amount of money from private investors — $500 million each — to qualify for matching investments and loans from the federal government.
Administration officials said they expected the remaining four firms to complete their financing by the end of this month.
Three of the biggest investment firms — BlackRock, a group led by the Wellington Management Company and a group led by AllianceBernstein — closed deals for private financing totaling about $1.9 billion. Two other firms, Invesco and the TCW Group, lined up their private investors last week.
Hold on, let me put on my mathlete hat and add this up real quick... $500 million + $500 million + $500 million + $500 million = $2 billion! Well damn! That's no drop in the bucket, is it?
Don't let the name fool you, these "toxic assets" should be dubbed liabilities, otherwise why would banks be so anxious to unload them? That part is simple. What Tim Geithner hopes you don't pick up is that they will never be worth anything, they are akin to what's leftover after you play 21 and hit on 17 instead of standing. With me, kids? I sure hope so.
Anyone remember when I wrote the fake post about the Somali pirates asking for a bailout? It was a joke, of course, but there might be a painfully obvious set of dots worth pointing out here and if you aren't outraged yet (huh?), you better be when we're done.
Somali pirates, ruthless as they are, have often claimed that were it not for (mostly) UK-based companies dumping their toxic waste on their shores to save a few billion in disposal costs, they wouldn't be forced to hijack ships and terrorize the seas. Whether or not this argument is valid, it certainly does make one wonder.
See also my April 12 The Parable of Somali Pirates for more dot-connecting terrorist (economic or otherwise) deliciousness.
In September eight people died and over 80,000 had to seek medical treatment for symptoms including vomiting, nosebleeds and breathing difficulties in Abidjan, the main city of the West African country of Ivory Coast. The cause of the deaths and medical problems was the dumping of toxic waste at around 14 sites around the city.
The toxic waste, over 500 metric tonnes, had been brought from Europe by an old tanker, the Probo Koala. The Greek owned ship registered in Panama was on hire to the Dutch oil trading company Trafigura Beheer BV.
Salif Oudrawogol explained to the New York Times how the foul smell of rotten eggs, garlic and petroleum hit him when he was woken by his son gasping for air. “The smell was so bad we were afraid ... it burned our noses and eyes.” A BBC report quoted one resident, “I am ill, I was intoxicated in my neighbourhood, Akouedo ... I am asthmatic and I passed out.”
There were protests in Abidjan over the deaths and illness caused by the toxic waste. The cabinet of Prime Minister Charles Konan Banny resigned as a result of the health emergency, though Banny has quickly formed a new cabinet containing most of the previous ministers. The environment and transport ministers—held to account by the protesters—were replaced. At one point the protesters had dragged the then transport minister, Innocent Anaky Kobenan, from his car and beat him. They also set fire to the house of the port director Marcel Gossio.
The waste from the ship had been brought in the hold of the Probo Koala along with a shipment of petroleum that was delivered to Nigeria. After offloading the petroleum the ship put into Abidjan in mid-August. Once there the waste was transferred to tanker lorries that—under the cover of night—dispersed the foul substance at 14 different dump sites around the city. Many sites were near fields growing food or near water supplies.
According to an article in the September 18 International Der Spiegel, a company called Tommy carried out the tankering of the waste. The company, which was only set up in July this year, was awarded the contract to dump the waste by a company called Puma Energy. According to the Der Spiegel article both the Dutch Trafigura company and members of the family of the Ivorian president, Laurent Gbagbo, hold shares in Puma Energy. Local newspapers came under pressure and two journalists were arrested after investigating what they described as the “Ivorian Chernobyl.”
3 years later, banks are slipping out under cover of night with Tim Geithner as captain to dump billions in garbage onto taxpayer's backs and if you think it's outrageous to consider this anywhere near the experience on the Ivory Coast, you might do well to remember an unstable dollar may not be able to take one more hit.
The powers that be assume that this is just your average downturn. They count on the fact that the United States has foreign investors by the nuts and are somehow under the collective delusion that we can print trillions of dollars without anyone noticing. How much longer can we keep this up?
You're being looted, America, when the hell are you going to put down the remote and start turning over cars and setting the joint on fire?
[legal disclaimer: JDA does not support nor encourage any illegal behavior due to outrage. Letter writing, blogging, tweeting, screaming, protesting, and firing Congress are all totally allowed. Crime never is. Calm down, kids, and just take your damn country back already.]