Vice Prime Minister/Finance Minister Taro Aso Strikes Again: "Keep TEPCO Alive to Keep Electricity Coming"

Mr. Taro Aso (pictured here, one of his better ones - probably the best one I've seen), elite fifth-generation politician and Vice Prime Minister and Finance Minister in the Abe administration, is well-known for his very candid remarks.

The last I heard him say was "Learn from Nazis" on how to change the Constitution on stealth.

From unabashedly pro-LDP Sankei Shinbun (11/1/2013):

麻生太郎財務相は１日、閣議後の記者会見で、自民党の東日本大震災復興加速化本部が了承した東京電力福島第１原発事故の除染に対する国費投入を柱とした提言について「東電という会社をきちんと維持しないと電気が回ってこない。（国費投入は）現状を踏まえて考える」と前向きな姿勢を示した。

During the press conference after the cabinet meeting on November 1, Finance Minister Taro Aso commented on the proposal approved by LDP's Headquarters for Accelerating Reconstruction from Great East Japan Earthquake to inject the government money in decontamination, and said "Unless we properly keep the company of TEPCO alive, no electricity will come. We will consider (injecting the government money) given such circumstances," indicating his favorable stance [on injecting the government money in decontamination].

Isn't the name great? "Headquarters for Accelerating Reconstruction from Great East Japan Earthquake"? (My translation, though, not official.) This administration sure likes talking about "accelerating" and "ahead of schedule" particularly when they are not the ones who actually do anything.

But what Aso says sounds all too familiar. Where have I heard this before?

Most recently, it was September/October 2008. Fed Chairman Ben Bernanke and then-Treasury Secretary Hank Paulson threatened the Congress and American people with the immediate collapse of the US and global financial system unless they were given 700 billion dollars of taxpayers' money so that they could "save" the some of the world largest banks and financial institutions who had made many billions creating the housing bubble with the Fed and the government and busting the bubble, selling financial shenanigans like MBS (mortgage-backed securities many of which turned out to be backed by no mortages), CDOs (square and cube included), CDS (credit default swap), etc., thanks in part to very lax oversight by the government regulators.

"It would be very inconvenient if there was no bank, wouldn't you agree?"

That was the message by the powerful duo, and that was what the media hyped at that time to pressure the Congress to do what Ben and Hank were saying. (It was in fact more like the foul messenger from Mordor, visiting the Dwarf King and offering friendship and wealth in exchange for information of Bilbo Baggins - "But refuse, things will not be so well. Do you refuse?")

Still, the House of Representatives dare voted down, and they duly punished them by tanking the stock market. (Instead of PPT, plunge protection team, it was PT, plunge team, in those days.) The House of Representatives folded in the second vote.

Going back in Japanese history, I have heard the similar story over Chisso, the company that polluted the Minamata bay with mercury. To pay compensations to the mercury-poisoning victims (the company and the government fought hard against), Chisso was kept alive as a corporation, instead of being declared bankrupt and having shareholders and debt holders take the hit. The national and local governments injected money into the company so that the company could keep making profit to pay the victims.

Just like Wall Street banks in 2008 and TEPCO today, taxpayers ended up paying for the mistakes of Chisso and failure of the governments to properly regulate the company.

History does repeat, even if no one pays attention.

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What Hank, Ben, and Ken Did in November/December of 2008: Lawless Government Is Right Here in the US

If you want to see a corrupt, dictatorial government in action, you don't need to sit glued to Al Jazeera's Live Feed on Egypt. It's right here in the US, and the government just gets away with breaking the law and ignoring the sub-humans (anyone who doesn't work for the government or the TBTF banks) each and every single instance.

This is just one of those, as recounted by Zero Hedge. It is about how Hank Paulson and Ben "Bernank" Bernanke illegally forced Ken Lewis, then-CEO of Bank of America, to go through with the purchase of Merrill Lynch without Ken Lewis invoking the MAC clause - that is, "Material Adverse Change" clause - and reneging on the deal.

Part from Zero Hedge:

Mr. Corngold: Before we do that, did you have an understanding of what powers the Treasury Department had to remove the board and/or the management of the bank?
The Witness: It was my understanding he said – that’s why I said I think he said government. I think – my impression is that was the language of the Fed used to use in Texas, basically saying, Don’t do something.
Mr. Corngold: You had an understanding that the Fed could remove the board and/or the management of a bank that it regulated if it found certain things.
A: Yes
Q: Do you know what it has to find?
A: They had been so strong about the fact that they strongly advised use not to do it and that it would cause harm to the bank and the system and they system wouldn’t be good for us, either – that it would damage the system. That’s kind of how it was being portrayed.
Q: Was this the first you heard about the government – to use your term – was considering that threat.
A: Yes

Q: Did you ask him, “By the way, what do you mean by that” – I’m sorry, the comment about the removal?
A: No. It was pretty clear.
Q: And at the time, did you sort of have that preexisting understanding of the Texas Fed way of communicating.
A: I had heard that at some point. I don’t know why that’s in my mind, but I’ve heard of that before that’s a way of telling you not to do something.
Q: Have you heard any kind of communication like that from a federal official to you before?
A: No

A: This was about just a shear magnitude of loss, and either you do it or you don’t. Behavioral changes, or whatever, wouldn’t fill that hole that we thought was $12 billion, which turned out to be $15 billion.

The bottom line, however, is that Ken Lewis wanted to hang on to the CEO job at Bank of America. He could have called their bluff and disclosed everything out in the open. That might have blown up the financial markets, but I doubt it. Merrill didn't have the kind of extensive reach that Lehman had. Even if that triggered the blowup, it might have been far better than what we have now - a market that has stopped pricing in anything meaningful, whether it is an on-going crisis in Egypt, dismal job numbers, housing market that keeps on collapsing, sovereign debt crisis, "non-core" inflation, skyrocketing commodities prices .... etc...etc... In other words, the market is dead.

Read the whole deposition at the link, and wonder aloud why isn't any of them, Hank, Ben, or Ken, in jail or permanent exile.

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Vanity Fair: "Henry Paulson's Longest Night"

It looks like a campaign is on at CNBC with the help of Vanity Fair to exonerate the former Treasury Secretary Hank Paulson, or at least paint him in a very sympathetic color. According to this video that was posted at Market Ticker, Paulson was very pleased with Nancy Pelosi, and Barney Frank had a high respect for him.

The Vanity Fair writer then reveals that 10 days before he was to present the TARP plan to Congress to buy troubled assets from the nation's banks, Paulson told him that he would use the TARP money to inject capital into the banks.

(Of course) CNBC crew pay absolutely zero attention to what he's just said.

And here's the link to the Vanity Fair article, "Henry Paulson’s Longest Night" (Vanity Fair, October 2009 issue).

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Paulson Did Threaten Bank Of America CEO Ken Lewis

Paulson says told BofA's Lewis Fed could oust him (7/15/09 Reuters UK)

"WASHINGTON, July 15 (Reuters) - Former Treasury Secretary Henry Paulson says in prepared congressional testimony that he told Bank of America Chief Executive Kenneth Lewis the Federal Reserve could oust the bank's management and board if they walked away from a planned merger with Merrill Lynch.

"Paulson also said in testimony prepared for delivery to the House Oversight and Government Reform panel on Thursday that he was never instructed by Fed Chairman Ben Bernanke to indicate to Lewis any actions the Fed might take. (Reporting by Mark Felsenthal; Editing by Jan Paschal) "

So Secretary Paulson did threaten Bank of America CEO after all not to walk away from Merrill deal. Something doesn't feel right: the US Treasury Secretary threatening a publicly traded national bank with an action to be taken by privately-held institution (the Federal Reserve) which is not answerable to the government and the bank capitulates.

Mr. Lewis should have called Paulson's bluff. Instead, he and his board failed in their fiduciary duty to the shareholders of Bank of America.

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