10
8
7
Mining operations continued as before. Meaning horrendous messes were left behind. When the meses were discovered, ABC mining companies declared bankruptcy. Corporate assets, usually consisting only of a worn-out backhoe and a dilapidated dump truck, were liquidated for each of the companies. DEF mining companies with different well-used backhoes and dump trucks were formed to exploit the next sites.
As to ABC's sites: The state called upon the insurance company's performance bonds so the state could clean up the messes. And the state did.
Reclamation work "estimated" by the mine operators to cost about $6 million was performed, at a cost of about $70 million. All but about $250,000 was paid for by the taxpayers, after the insurance company filed bankruptcy.
Substituting A.I.G. and similar institutions for the name of the miner's small insurance company will explain much of America's current situation.
As with reclamation of strip mines, the insurance companies will file for bankruptcy. Government, via a $700 billion emergency rescue plan, will step up to the plate. The costs will be paid by taxpayers who have seen only losses and no gains. Pursuant to a rescue plan that prohibits any and all forms of congressional or judicial oversight or opportunity to object.
Except for reports, to be filed twice yearly. Something akin to the fox being required to periodically report how many chickens he stole from the hen house, without being required to return any of the stolen chickens. And who will keep this count? The fox.
The inevitable bankruptcy of A.I.G? What other option exists for a company with a market value of $12 billion and liabilities of about $450 billion on credit default swaps written to hedge funds, many of which are headquartered offshore and thus pay no taxes in the United States. For this, the government is paying $85 billion in taxpayer's money. In return, the government, meaning the taxpayers, will be entitled to receive 80 percent of the company's stock. Stock that is all but assured to be totally worthless.
For insurance company executives, financial risks of corporate bankruptcy are all but non-existent. Lehman Brothers is a prime example. On September 15, Lehman filed bankruptcy - the biggest in America's history. Hours before, the New York headquarters was scrambling for cash. Other banks were refusing to provide loans to Lehman. Banks with loans outstanding were demanding immediate repayment. Counter parties to Lehman's credit default swaps were selling out at ten cents on the dollar.
Lehman's response: Hours before the bankruptcy filing, Lehman transferred $2.5 billion from the London office to the American holding company. This money had "accrued as part of group profits from the first nine months of the year" and will be used to pay employee bonuses. As a result, the London office had no funds with which to make the payroll.
Presumably. part of that money will be used to pay a bonus to Lehman CEO Richard Fuld, Jr. Last year he made $71 million. In better times, namely 2006, he was the fifth-highest paid CEO in America. His total compensation was $122.67 million.
Working American taxpayers rightly question whether firms such as this, managed by people such as this, should be bailed out. And question if the bailout will be administered fairly.
Just cause exists for questioning. Should taxpayers be concerned (or outraged) that the fox who wrote the emergency plan and will be responsible for guarding government's $700 billion hen house is Treasury Secretary Hank Paulson?
Paulson, who amassed a fortune estimated to total $700 million during his 32-year career at Goldman Sachs, the main competitor of Lehman?
Paulson, who will be allowed to purchase worthless securities from Goldman Sachs and offshore hedge funds at prices that he alone will determine but probably not disclose, without being subject to congressional or judicial oversight of any sort?
Paulson, who refused to even consider bipartisan calls for tighter regulation or reform after sending his emergency proposal to Congress at 1:30 A. M. last Saturday?
Paulson, whose previous employer Goldman Sachs was granted a request to convert to a bank holding company with full access to the Federal Reserve's emergency loan program by his buddy Bernanke?
