Backcountry Notes

Just one more question, Congressman, about the Wall Street Bailout bill. If it is true that the distressed assets they're asking us to buy are so undervalued that they may return 100% or 200% on the dollar, why aren't the rich folks with big money lining up to buy them?  Where's the line of Beemers and limos which ought to be cruising into lower Manhattan to take advantage of these fire-sale prices?

[caption id="attachment_6150" align="alignright" width="203" caption="Would You Buy A Used Asset From This Man?"][/caption]

Let's do the math.  Bill Gates and Warren Buffet could each pick up $5 billion of these assets - - and why wouldn't they, to get $10 billion to $15 billion back?  George Soros knows a bargain when he sees one - - he could be in for $1 billion.  A billion here, a billion there, first thing you know, credit liquidity problem solved!

So why are mega-rich guys like Mark Cuban moving their money to "safe" places?  Getting out ahead of the drop?  Could it be that we're being flummoxed?

Because if these assets aren't so undervalued that big investors won't buy them, then it begins to look like we're being sold a bill of goods, and that what is really happening is a bailout of the Wall Street elite by the Washington elite.

Mistake me not when I speak of the "elite."  Wall Street is dominated by graduates of eight Ivy League schools and a few others, like Wharton.  The "best and the brightest," as it were.  The Federal Government is, if not dominated, heavily influenced by the same group of folks.  Let's look at some examples, shall we? There's Treasury Secretary Henry M. Paulson - - B.A. from Dartmouth, M.B.A. from Harvard.  SEC Chairman Christopher Cox has an M.B.A. from Harvard Business School and a J.D. from Harvard Law School.  Federal Reserve Chairman Ben Bernanke has a B.A. from Harvard and a Ph.D. from MIT.  Little wonder that they tend to see eye-to-eye with people like Frank Raines, former Fannie Mae boss (B.A., Harvard; J.D., Harvard Law).  Oh, and let's not forget Barack Obama (Columbia University and Harvard Law School).  Or George W. Bush (Yale).

And don't kid yourself about the extent of the tie-ins:  I could make a very, very long list.

I don't believe that these elitist types are mean-spirited or, in most cases, criminally dishonest.  But they share a mind-set and a way of dealing with things that includes taking care of each other.  If you want an example of that mind-set, how about the chairman of Goldman Sachs sitting in on a crucial meeting of the Federal Reserve in New York?  Such a thing raises eyebrows out here in the heartland; they didn't blink an eye.  Business as usual.

So Congressman, please, before you vote on the bailout bill, do us a favor and ask some questions about the real value of those assets we are buying.

* * *

I encourage everyone who is interested in this issue to call or write his or her Congressperson before the vote is taken.  Here are links to sites where you can find e-mail addresses and telephone numbers:

Congress.org

Contacting the Congress

Official Website (harder to navigate than the above sites)