The Sinking Ship


Daniel M Pourkesali
by Daniel M Pourkesali

Following article written by Jim Quinn and posted on this morning is by far the most comprehensive and superb analysis on this very serious subject:

U.S. Titanic

by Jim Quinn

September 26, 2008

On the morning of Thursday, September 18, 2008 a tragedy almost befell the 450 billionaires and 3,000,000 millionaires that live in the United States. The billionaires were on their way to become millionaires and the millionaires were about to leave the club.

Luckily, Hank Paulson, U.S. Treasury Secretary, felt their pain. His $700 million portfolio was probably taking a bit of a haircut too. There are 305 million people living in the United States. The net worth of all the households in the U.S. as of June 30, 2008 was $56 trillion. The 450 billionaires have a net worth of approximately $1 trillion and the 3,000,000 millionaires have a net worth of approximately $11 trillion. So, 1% of the population currently owns 21% of the net worth in this country.

Many of these billionaires and millionaires have accumulated their wealth by managing other people's money. The customers never have the yachts. The money managers have the yachts. The 1% ruling elite are deciding the fate of your grandchildren in Washington D.C. this week out of public view. As they have the most to lose, whose best interests do you think they are looking out for?

As I've watched the various business networks over the last few weeks, I sense desperation and fear among the commentators, pundits, and "experts." It is a fear based upon self-interest. Their lives depend upon the masses keeping their money invested in the market. They have overwhelmingly been in favor of the bailout bill. I wonder why Jim "Mad Money" Cramer, who has a net worth of $100 million, is in favor of the bill. Larry "Free market capitalism is the best path to prosperity" Kudlow, a multi-millionaire, is 100% in favor of a socialist bailout of the criminal investment banks. They support this "blank check" to a government that is already $9.65 trillion in debt, because they want to maintain their lavish lifestyle, multiple estates, and prominent positions in society.

An honest balance sheet (as opposed to the balance sheets of US Banks) will always tell the true story. The balance sheet of U.S. households shown below explains the situation we are in today. The value of real estate rose 50% between 2002 and 2007, much faster than historical growth rates of 3% per year. The problem is that mortgage debt rose by 75% over this same time frame, resulting in owner's equity as a percentage of real estate reaching an all-time low of 45.2% in June, 2008. The assumption by homeowners that prices could only go up, supported by lies from the National Association of Realtors and Wall Street gurus, led homeowners to take $3 trillion of equity out of their homes and live a more lavish lifestyle than warranted by their income. Consumer debt has risen 30%, while durable goods assets (which naturally depreciate) have only risen 24%. Financial Assets outpaced all classes, rising 55%, as the stock market came out of a bear market in 2003. The vast majority of this financial asset wealth increase benefitted the billionaire and millionaire clubs. The rest trickled down.

Many are now learning a hard lesson. Real estate asset values declined by $500 billion during the first 6 months of 2008, while mortgage debt continued to rise. Financial assets declined by 4%. The lesson being learned is that real estate assets and financial assets can and will decline. As the recession gets deeper and the bear market growls, asset values will decline by another 10% to 20%. The debt will remain and probably increase. With this proposed bailout, horribly run financial institutions will be relieved of all their bad debt. Who is going to relieve our debt? No one. The executives of these banks will continue to reap multi-million dollar pay packages, while we make their debt payments in the form of interest payments to the Chinese and higher taxes.

Icebergs Ahead

I can't help but compare our nation's situation to the maiden voyage of the Titanic. The captain (Alan Greenspan) was handed the greatest ship (United States) ever made. It was unsinkable. The initial voyage across the Atlantic Ocean drew the rich elite ruling class (financiers & bankers) on board. But, the lower decks were filled with lowly peasants (Working Class) sneered at by those in the upper decks. A maiden voyage should always be taken slowly. A prudent captain would not take undue risks. Our captain (Alan Greenspan) wanted to make his mark on history. He declares full steam ahead (reducing interest rates to 1%). Midway through the voyage, the captain is handed a telegram warning of icebergs (potential financial catastrophe) ahead. If he slows down the ship, he will not set the speed record. He ignores the warning and steams on to his rendezvous (eternal disgrace) with history.

In the middle of the night, the lookouts (Ron Paul, among others) scream iceberg! But, it is too late. The great ship (United States) has struck an enormous iceberg (banking crisis). At first, it seemed like everything is OK. There are no visible problems. But, below the waterline the great ship (United States) is taking on water (massive mortgage write downs). The engine room (Federal Reserve printing presses) works frantically to stem the damage. The captain believes that the compartmentalization of the ship will save it. The expert on the design of the ship (Nouriel Roubini) explains that the ship will surely sink. The captain orders the band (Hank Paulson) on deck to distract the masses from their imminent fate. The owners of the ship (U.S. government) never thought it could sink, so they didn't provide nearly enough lifeboats.

To avoid mass panic, the crew (government bureaucrats) has locked the lowly peasants (Working Class) below deck. They will surely go down with the ship. But, here is where our story starts to deviate. The band (Hank Paulson) decides that the women and children (Middle Class) should not be saved first. The ruling elite (financiers and bankers) are piling into the boats to escape their fate. The captain (Alan Greenspan) does not go down with the ship. In a cowardly act, he leaped onto the 1st lifeboat to be launched. So, this is where we stand today. The great ship (United States) is sinking. Should we let the band (Hank Paulson) dictate who get onto the lifeboats first? If we do, we will all face the fate of Jack as he slowly freezes to death in the icy Atlantic.

The Big Lie

"If you tell a big enough lie and tell it frequently enough, it will be believed."
~ Adolf Hitler

We must pass this bailout bill before it is too late. This bailout bill is really for Main Street, not Wall Street. Trust the government, we've got the solution. The American people are tired of being lied to. Enough is enough. We've believed our government and financial "leaders." They lied to us. We don't believe them anymore. They cannot be trusted. This commitment of at least $700 billion was originally documented on 3 pages by Hank Paulson. Below is Section 8 from Paulson's proposal.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Do we live in Nazi Germany? To have this language in a document is outrageous. Herr Paulson may have been able to run Goldman Sachs this way, but he now works for you and I. He serves at our discretion along with every other politician and government bureaucrat in Washington. They are so consumed by their power that they have forgotten that "We The People" dictate the future of this country. The public is overwhelmingly against this bill. Calls and emails are flooding Senators and Representatives to vote against this bill. If they ignore the people, it will confirm that they are as corrupt as many believe. The same people who created the problem, didn't see it coming down the track, insisted there was a light at the end of the tunnel, and now see their elitist corrupt system falling apart, now want you to believe that they know best. President Bush summoned up his best WMD scare mongering speech, to try and convince the American public that we must do this before it is too late. If they pass this bill against the wishes of America, they should suffer the consequences by being voted out of office in November.

What the Future Holds

I am naturally drawn to people who tell the truth. President Bush, Hank Paulson, Ben Bernanke, Barney Frank, and Chris Dodd have been lying to the American public for years. The truth is buried under a blizzard of their lies. We are supposed to believe the words of a multi-millionaire Harvard MBA President telling us we must trust the former CEO of Goldman Sachs who is worth $700 million and never saw this coming, with at least $700 billion of our money. There is no detailed plan, because they have no idea what they are doing. They are making it up as they go. Once he has this authority, he will hire the same firms that caused the problem to manage the fund.

President Bush promised a quick Iraq war that would cost less than $50 billion with minimal casualties. The war has cost $700 billion so far. That number has a familiar ring. Over 4,000 brave Americans are dead. Over 30,000 have been wounded. This result does not give me confidence that he will be right this time.

Now the President is trying to scare the American public into supporting this bailout by saying we will go into a deep recession if we don't pass it. I've got news for Mr. Bush. We are in a recession and it will be deep and long, whether they pass that bill or not. We have entered a massive deleveraging phase in America. Americans are learning that debt can destroy companies, people, and governments. They are slowly wakening from their hedonistic stupor and will begin to pay off debt and save. It will not be pretty for the economy, as retailers, homebuilders, developers, and restaurants go bankrupt by the thousands. This is supposed to be a capitalistic society. A deep recession will purge the excesses. If this bill is passed, Jim Cramer, Larry Kudlow, and the rest of the ruling elite will keep most of their millions. The average American will be pushed closer to the abyss as their home price continues to decline, their 401k stagnates or declines, their jobs disappear, and their taxes increase.

Those telling the truth include Representative Ron Paul and Senator Jim Bunning. Their views on the bill are as follows:

Ron Paul's words:

"Whenever a Great Bipartisan Consensus is announced, and a compliant media assures everyone that the wondrous actions of our wise leaders are being taken for our own good, you can know with absolute certainty that disaster is about to strike. The events of the past week are no exception. The bailout package that is about to be rammed down Congress' throat is not just economically foolish; it is downright sinister. It makes a mockery of our Constitution, which our leaders should never again bother pretending is still in effect. It promises the American people a never-ending nightmare of ever-greater debt liabilities they will have to shoulder.

The claim that the market caused all this is so staggeringly foolish that only politicians and the media could pretend to believe it. But that has become the conventional wisdom, with the desired result that those responsible for the credit bubble and its predictable consequences – predictable, that is, to those who understand sound, Austrian economics – are being let off the hook. The Federal Reserve System is actually positioning itself as the savior, rather than the culprit, in this mess!

The issue boils down to this: do we care about freedom? Do we care about responsibility and accountability? Do we care that our government and media have been bought and paid for? Do we care that average Americans are about to be looted in order to subsidize the fattest of cats on Wall Street and in government? Do we care?

When the chips are down, will we stand up and fight, even if it means standing up against every stripe of fashionable opinion in politics and the media? Times like these have a way of telling us what kind of a people we are, and what kind of country we shall be."

Jim Bunning's words:

"Most pressing is the $700 billion Treasury proposal that is being negotiated with the Chairman of the House Financial Services Committee. The Paulson proposal is an attempt to do what we so often do in Washington – throw money at a problem.

We cannot make bad mortgages go away. We cannot make the losses that our financial institutions are facing go away. Someone must take those losses. We can either let the people who made bad decisions bear the consequences of their actions, or we can spread that pain to others. And that is exactly what the Secretary proposes to do – take Wall Street's pain and spread it to the taxpayers. The plan has not even passed, and already Americans are paying for it because of the fall in the dollar as a result of all the new debt we will be taking on.

I know there are problems in the financial markets, and I share a lot of the same concerns that our witnesses do. However, the Paulson plan will not fix those problems. The Paulson plan will not help struggling homeowners pay their mortgages. The Paulson plan will not bring a stop to the slide in home prices. But the Paulson plan will spend 700 billion taxpayer dollars to prop up and clean up the balance sheets of Wall Street. This massive bailout is not the solution, it is financial socialism, and it is un-American."

The "American Rulers" are telling you we have no alternative. That is false. Smart thoughtful people like Dr. John Hussman and NYU professor Nouriel Roubini have been right on this issue for years and have proposed alternative solutions. John Hussman's solution relies upon the rule of capitalism and wipes out the stockholders and bondholders of these bankrupt banks before placing any burden on the American people. The problem with this solution is that Jim Cramer, Larry Kudlow and the rest of the ruling elite would lose millions. To see Dr. Hussman's proposal, go to his webpage.

The time to act is now. This bailout bill will punish your children and their children. The only way to stop it is by swamping your Representatives and Senators with phone calls, faxes and emails. Do it before it is too late. Remember the Government Motto: If you think the problems we created are bad, wait until you see the solutions.

If this bill is passed, I see the following implications to various passengers onboard U.S. Titanic:

Rich ruling elite

  • In the short-term they will be joyous. The stock market will briefly soar as their millions will be protected.
  • I would recommend that they buy some books about the French Revolution and the Russian revolution. The huddled masses have had just about enough. Class warfare is closer than it has ever been. The anger in this country is building. The passing of this bill against the wishes of the vast majority will be the trigger for civil unrest.

The Poor

  • You're screwed
  • You don't have any money or investments, so you have nothing to lose. There will be fewer jobs. The money that Obama and McCain have promised you will be used to keep rich bankers rich. Sorry, you're going down with the ship.

The Middle Class

  • You're really screwed.
  • The dollar will decline. You will pay more for gas, food, and other basics.
  • Interest rates will go up, making your debt more burdensome.
  • Taxes will be raised and/or benefits will be decreased because the rich will need to maintain their lifestyle.
  • Your home value will continue to decline for the next five years.
  • Your salary, investments and 401k will not keep up with inflation, thereby reducing your standard of living.
  • I recommend that you: pay off your car and use it for 10 years or 150,000 miles, whichever comes first; stop buying crap you don't need; pay off your credit cards; try brown bagging your lunch; wash your car in the driveway; cut your own lawn; let your kids play outside rather than trying to dictate all their time; use your appliances until they break; if the cushion on your couch is ripped or stained, turn it over; contribute as much to your 401k as possible; and buy generics.
  • If you own a home, stay in that home for the rest of your life. Pay down your mortgage. Make necessary repairs. Do not get a new kitchen or bathroom because your neighbor did. Do not borrow against your equity to buy stuff you don't need.
  • If you rent, continue to rent until you have at least 20% to put down on a house and can easily make the monthly mortgage payment using a 30-year fixed mortgage.
  • If your Congressman or Senator voted for the bailout bill, vote them out in November.

Alan Greenspan

  • His legacy has already been discredited. His actions in the last ten years will be seen as the root cause of all the financial problems America is experiencing today.
  • Because of his reckless reduction in interest rates to correct the excesses of previous bubbles, the world economic system is on the brink of collapse.
  • History will not be kind to Alan Greenspan.

Hank Paulson

  • This multi-millionaire, former CEO of Goldman Sachs, will go down in history as the most pompous Treasury Secretary in the history of the United States.
  • He isn't the CEO of the United States. Harvard MBAs have already done enough damage to this country because they think they are smarter than the rest of us. They are not. They are responsible for this mess. It is time they leave the scene of the crime.

George Bush

  • George Bush's administration will be another for the history books. It will surely be considered one of the worst in U.S. history. He entered office with budget surpluses and leaves office after saddling future generations with $4 trillion more debt and the promises of much more.
  • He can retire to his Texas ranch, write his memoirs for $10 million, and make speeches at Neo-con conventions for $1 million a shot, knowing that the average hard-working American is on the hook for $9.65 trillion of debt. I hope he enjoys his retirement. Millions of Americans won’t be enjoying theirs.

My final thought comes from a real working-class American who emailed me this week with the suggestion for a bumper sticker.

"Imagine, who would Jesus give a trillion dollars to? The money lenders or the poor, (and about to become) homeless."

Jim Quinn is Senior Director of Strategic Planning at an Ivy League university. This article reflects the personal views of Jim Quinn. It does not necessarily represent the views of his employer, and is not sponsored or endorsed by them.



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more from Daniel M Pourkesali
Farhad Kashani

Anonymous-today, I'm not

by Farhad Kashani on


I'm not gonna response to your name calling cause I think you misunderstood me big time!

I meant "lack" of oversight and regulation, not excessive amount of it.

Farhad Kashani

IRANdokht aziz, I’ve said

by Farhad Kashani on

IRANdokht aziz, I’ve said numerous times that I’m not Republican or pro-bush, not that I have anything against anyone who is a Republican or anyone who is pro Bush. Most of them are great citizens of this country. This is a democracy and everyone adheres to the rule of the game, so I respect other people’s position in this great democracy.


I am not in “secure financial place”, believe me! But this is not about me. That being said, I clearly distinguish between someone who “criticizes” specially if its constructive criticism, as I have done on some U.S and bush policies myself, and between someone who “bashes” this great country and is simply anti American and waiting for America to go down. Some “white” Americans are like that too, like the self loathing, Noam Chumsky, but that doesn’t mean we have to agree with them. Again, like I said before, the great thing about this country is you can be as anti American as you can be, and still enjoy all the freedoms this country has to offer, but,  what really is unacceptable to me, and I will continue speaking out about this is, when some of these Iranians “bash” the U.S in favor of the Islamic regime. As in, their criticism is not out of love for the country they live in, or have become part of, but rather, out of pure hatred for this country and supporting the regime that has destroyed our country. Very few of them are ultra nationalists and Islamists, but mostly former leftists and current –brainwashed-by-left-in-college- young Iranian Americans. Cause if you make your enemies look bad, then, you will look good. That’s their philosophy.


Lets make clear distinctions.




by Anonymous-today (not verified) on

"Farhad Kashani" has finally proven beyond the shadow of a doubt that he is brain-dead. To actually say the current financial crisis, the unhindered subprime load fiasco, is the result of regulation and oversight displays a dogmatic Hezboallahi mind. Turst a right-wing Beveley Hills Iranian to be be "daghtar az aash." Even the zealot followers of free markets aren't making claims like this. Why don't you write a few lines and tell the rest of us how too much regulation have resulted in this crisis?

Food for Thought

Sir Josiah Stamp Quote

by Food for Thought on

"Banking was conceived in iniquity and was born in sin. The Bankers own the earth. Take it away from them, but leave them the power to create deposits, and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of Bankers and pay the cost of your own slavery, let them continue to create deposits."

 [Stamp was President of the Bank of England in the 1920's and the second richest man in Britain]

Nothing really changes except when the proverbial hits the fan, some people wake up...

The truth is the power elite never wanted a strong, free, independent USA run according to the constitution because such a country would be a threat to their hegemony...

Zeitgeist is spot on even if some don't like to believe it.

Both McCain and Obama are members of the elitist in-crowd - CFR.

There is systematic corruption right to the core.


Creature from Jekyll Island

by Parsa nejad (not verified) on


Dear Mr Kashani

by IRANdokht on

I don't think anyone is waiting for the US ship to sink. This is not about what party we belong to, this is not about who we're going to vote for, this is about our life long savings, the equity we lost on our homes and the retirement that may never come.

I envy you for being in such secure financial place that you don't see these times as scary. Unfortunately, I don't have that luxury. I have always had to work for a living and I have lost all the savings that I was counting on. The bank that owns the mortgage on my house went down today and I find this situation beyond scary. 

This is about 700 billion dollars (actually 1 Trillion) of tax money that people like me pay so the CEO's of these failed institutions can get paid millions a year and huge sums of money after their wrong decisions have brankrupted me and people like me.

The market was a game for rich people to get richer, and for the middle class to lose its savings. Now they are going to approve a bail out that is going to make the same middle class pay for the bad decisions of the players. 

It's amazing to me that the government of the people who is supposed to work for the people will go against the people's best interest and bail out these market giants anyway.

Being scared and against the bail out is also not a partisan event. So please don't put everyone who's uncomfortable with this situation in one category and blame them for being upset and scared.

by the way: even Bush and McCain stopped claiming that the economy is solid in this country. The institutions are falling one after another too.

Thank you


Farhad Kashani

These people are waiting

by Farhad Kashani on

These people are waiting for the U.S to go down. Keep waiting! They can't understand that the current economic issues are result of oversight and regulatory issues, not institutional issues. The institutions are solid, and will never "sink".

Pathetic how these guys behave.

Mehdi Mazloom

Q - Got a tip for you

by Mehdi Mazloom on

It is the Jews who "control" the world.

Yap, it is rea......................lly frightning.


Zeitgeist : final part

by IRANdokht on

I keep thinking about the movie Zeitgeist I saw a couple of years ago, especially where it explained the way the financial market worked and what they can do... I am getting scared enough to believe the slavery prediction of it too




really frightening

by Q on



Who runs the world?

by Anonymous-today (not verified) on

The ideological lie in the heart of American experience, that there is no class struggle in America, that this is a pure meritocracy; that the deck is not stacked, that the super rich folks are just like us, and that this is representative democracy, is exposed for the tissue of nonsense it is in times of extreme crisis like this. The mask is off and the emperor is naked. The game is fixed, the ruling elite pretty much controls the political structure while the rest of the suckers are in front of TV or fighting out the "culture war." Welcome to the wasteland of the real.


What Is This Money Even

by Anonymous... (not verified) on

What Is This Money Even For?
by Hunter from dailykos

Fri Sep 26, 2008 at 07:00:05 AM PDT
What Devilstower said in an earlier post can't be repeated enough. The $700 billion figure isn't an explainable one, given the purported problem at hand of "bad mortgages".

And that's where we get that math problem. 1% of all mortgages -- the amount now in default -- comes out to $111 billion. Triple that, and you've got $333 billion. Let's round that up to $350 billion. So even if we reach the point where three percent of all mortgages are in foreclosure, the total dollars to flat out buy all those mortgages would be half of what the Bush-Paulson-McCain plan calls for.

Then we need to factor in that a purchased mortgage isn't worth zero. After all, these documents come with property attached. Even with home prices falling and some of the homes lying around unsold, it's safe to assume that some portion of these values could be recovered. In the S&L crisis, about 70% of asset value was recovered, but let's say we don't do that well. Let's say we hit 50%. Then the real outlay for taxpayers would be around $175 billion.

Which, frankly, is a number that Wall Street should be able to handle without our help. After all, the top firms on Wall Steet payed out $120 billion in bonuses alone between 2000 and 2006. If they've got that kind of mad money, why do they need us to step in now? And why do they need twice as much as all the mortgages that are even likely to implode?

What I don't get
is why it wouldn't be just as viable and perhaps more effective to redirect that money to the bottom, and refinance into regular mortgages as many people as possible, the ones who have jobs and could pay something but just can't pay outrageous ARM. That would keep more people in homes, keep up the values of the homes around them and slow the collapse of entire neighborhoods.


But $700bn is EXACTLY the cost of the Iraq war (2+ / 0-)
Recommended by:Bronxist, Mrs Olbermann
$600bn spent so, with $100bn to cover the ongoing troops until thre mission is wound down.

Coincidence? I don't think so.

Food for Thought

Lou Dobbs reports on the practice of Bills being approved

by Food for Thought on

Lou Dobbs reports on the practice of Bills being approved by the Senate without formal voting:


Time to join the Ron Paul revolution...


Thank you Mr Pourkesali

by IRANdokht on

I read this article twice today and all I can say is that I am depressed. As a barely middle class citizen, I have to do whatever I can to keep my head above the water for as long as I can.

All the dreams of nice vacations, remodeling my house, retiring early etc... is already down the drain.

The rich man's world is a cruel world

Thank you for posting this great article.