 |
|
Add to My Group
|
September 19, 2008 at 08:42:46
Promoted to Headline (H2) on 9/19/08: by Dave Lindorff Page 1 of 2 page(s) |
|
 
|
by Dave Lindorff When the financial markets started coming undone earlier this week, the Treasury Secretary and the Federal Reserve stepped in, and with $85 billion of our money (actually our children's money, since they borrowed it from China and Saudi Arabia), bought foundering AIG, the world's largest insurance company, and assumed its colossal pile of crap debt. That didn't help, and the stock market crashed further, falling to levels not seen in three years. Banks, meanwhile, stopped lending, figuring to just hold onto their money and try to weather the crash. The US Treasury and the Fed stepped in again, this time pumping nearly $300 billion more of our money into foreign money markets, and getting European and other governments to do the same in an effort to get the credit markets open again and to stop the stock market swoon. That was on top of some $700 billion already spent on bailouts. It didn't work. Thursday, the markets continued to fall, well into the afternoon, and it looked like another seriously down day. But then Treasury Secretary Henry Paulson came up with a new idea. He said he and the Bush administration were considering setting up a new agency to assume all the bad debt of the banking sector--meaning all those bad loans they made, and that they lured unsuspecting consumers into taking out, by way of deceptive marketing techniques and outright fraud.
Note that we're talking about perhaps half a trillion dollars here--of our money again. And remember, much or even most of this money will never get repaid, and we're talking about money that could have funded reduced class sizes in every school in America, a national healthcare system, a crash R&D program into non-carbon energy and (not or) a strengthened Social Security and Medicare program.
The drones in the Democratic Party leadership in Congress immediately jumped on the bandwagon, with House Speaker Nancy Pelosi (D-CA) urging her charges to act quickly to get some kind of a bill out there to facilitate the bail-out, which could cost anywhere from $600 billion to $1 trillion, but most estimates.
The thing to remember here is that this is not a rescue of the little guy (though the Democrats say their rescue plan, when it appears, will include some kind of relief for people unable to pay their mortgages). Don't hold your breath. Odds are those people facing foreclosure will still be unable to pay their mortgages, and besides, there's no way there will be relief for the majority of homeowners who aren't missing their mortgage payments, but who are struggling mightily to meet them each month.
Primarily, who gets helped by this enforced taxpayer largesse are the fat cats who own all the stock in these financial institutions, all the executives who pay themselves outsize salaries each year for their lousy management records, all these hotshot traders who make the deals that later turn sour, long after they've run off to another job taking their bonuses with them.
We ordinary people, who live from check to check, will feel the pain of this "rescue" in the form of higher taxes in coming years, and in a devalued dollar--because you can bet that all that money they're printing, and all that added debt they're piling on to the mountain of debt already out there is going to make the rest of the world pretty queasy about holding onto dollar-denominated debt, or about buying any more of it.
When you hear a banker say he's going to help you, it pays to hang onto your wallet. When you hear a politician say he's going to help you, hang onto your wallet. If they're both saying the same thing, and especially if one of them is the head of the Federal Reserve Bank, then you better really hang on tight.
Not that that will do any good.
The real answer to this crisis is, firstly, a massive dose of trust-busting, so that no bank or investment bank or insurance company is so big that its failure becomes a threat to the financial system, and thus the government has to rescue it with taxpayer money, and secondly, a return to the era of Glass-Steagall, when it was illegal for banks to also be in the investment banking busiiness.
All the talk of "efficiencies" and of "better service to the customer" that has been endlessly parroted to justify mergers like Citicorp and Travelers, or JP Morgan and Chase Bank, or now Bank of America and Merrill Lynch is fraudulent. Just to give an example, my bank, once known as Willow Grove Bank, a small family-owned institution, was bought by another bank and became Willow Financial. Almost immediately the staffing levels went down. Recently, the combined entity, which ran into trouble, was bought by another institution, Harleyville Bank. Now there are half as many tellers most of the time. As one teller confided, "Every time we get bought, they lay people off."
Of course they do. That's what mergers always do. To recoup the costs of the merger, management cuts back on service and employment.
The truth is, for all the talk about the efficiencies of bigness, getting a mortgage today isn't any cheaper than it was in the 1950s, when there wasn't even any such thing as a national bank that would be "too big to fail."
The real reason we have mega financial institutions is that mega financial institutions pay mega bucks to managers and make mega donations to the campaign coffers of politicians. They also get to put some of those mega-buck managers into key advisory positions in each administration, Republican and Democrat, to ensure that government polices allow them to get even bigger and even richer--and to ensure that when they screw it up, they get rescued at the taxpayers' expense.
__________________
1 | 2
http://www.thiscantbehappening.net
The views expressed in this article are the sole responsibility of the author
and do not necessarily reflect those of this website or its editors.
 Contact Author |
Contact Editor |
 View Authors' Articles |
|
|
|
|
| 8 comments |
|
If the Democrats weren't such crooks, here's what they could
have done. They could have basically said, "OK, we agree that the financial system needs to be rescued. But we won't allow it to be rescued by placing the entire burden on the taxpaying public. Rather, we will insist that a hefty share of the funds for the rescue shall come from the ill-gotten gains of the Wall St swindlers who caused the problem in the first place. Therefore, we propose to confiscate the bonuses, oversized salaries, 2nd homes in the Hamptons, etc etc of these Wall St fat cats, whose criminal behavior led to the toxic mortgage-backed securities now polluting the balance sheets of financial institutions worldwide." The Democrats could also take it upon themselves to explain to the public what has happened, & who is really responsible for the financial system's travails. // Of course, this kind of heroic principled stance could never be assumed by our real-world Democrats, since they themselves helped the Wall St swindlers to deregulate the system & remove all oversight from it, permitting all the hanky-panky to proceed unimpeded until the whole system blew up & the present bailout became necessary. But a political party that really defended the interests of the population would take this kind of stance -- announcing loud & clear who stole all the money, protecting the public from being robbed to pay for the swindlers' crimes, educating the public, & seeing to it that the necessary funds came from the appropriate source. by Richard Mynick (2 articles, 4 quicklinks, 1 diaries, 1552 comments [255 recommended, 5 rejected]) on Friday, Sep 19, 2008 at 9:48:02 AM  (0+)
|
|
Reply: My sentimentst exactly
This whole thing just makes me sick!!!! I can't believe these corporations are being rescured with contributing very little in return. Not long ago interstate banking was illeagle. Where are all the free market Republicans crying out against this! Any corp being bailed out should have to go into recievership. If there is a bailout, it should be a very painful one for the coroporate executives, and companies should be split up. If a company gets over a certain size it should be known that they will not be eligiable for future bailouts and customers should know that also. We need either a true free market system (where there is no chance of bailout of interest manipulations by the Fed) or an anti-trust regulatory system. Nothing inbetween. We have been running an unsustainable economy for quite some time and it has to stop. Maybe Andrew Jackson was right. There also needs to be more regulation of mortgage loans - no no-doc loans or anything that would be classifed as a sub-prime loan. People should be able to afford the houses they buy, this will drive down the price of housing on lower end making that housing more affordable for lower income people. by Donald Michael Schwartz (1 articles, 0 quicklinks, 0 diaries, 8 comments) on Friday, Sep 19, 2008 at 6:23:34 PM (0+)
|
|
The bankiong crisis, its too late.
Its too late to hang onto our wallets, the politicians, bankers, investments, etc already have their hands in them, thanks to King Bush. Yes, the proper reaction to this would have been to simply step back and say, "Good luck on getting yourselves out of it, without government intervention." If AIG had gone bankrupt, the only ones hurt would have been their investors and foreign corporations, not the American people. Bush and his cronies have once again stepped in to save those who made the biggest campaign contributions, putting the American people into debt for twenty-five years or more. The United States is now the laughing stock of the world. by John Shriver (1 articles, 0 quicklinks, 0 diaries, 72 comments [3 recommended, 0 rejected]) on Friday, Sep 19, 2008 at 10:19:55 AM (0+)
|
|
"Give Us AIG and Keep Shopping"-keep your eyes on the Mall
Melt Up, Melt Down it’s the same Story of Stuff, Robert Singer by Robert Singer (31 articles, 0 quicklinks, 2 diaries, 138 comments [4 recommended, 1 rejected]) on Friday, Sep 19, 2008 at 3:04:24 PM (0+)
|
|
Re: Hang On to Your Wallet!
Nice article Dave. Have
Oh, have I got a doozy for ya.
Tonight I was listening to Jim Cramer who hosts a stock program on CNBC (General Electric) called MAD Money. Cramer is a very smart man and knows his stocks however, he went way, way over the edge by comparing Treasury Secretary Henry Paulson's recent bail out to that of (FDR) Franklin D. Roosevelt's new deal. In fact! Cramer went even further by stating that what Paulson did (averting a depression) might have exceeded that of FDR! Let me guess, it's part of that "new (fuzzy) math?" Yeah, that's the ticket! Oh, and did I mention Cramer also stated that he had lunch yesterday with not one, not two, but"three" billionares? Were we suppose ta be impressed by that? I think not!
He did happen to make one sane cogent comment. The 500 billion we're wasting in Iraq each month ought to be spent here, in the US.
by Munich (1 articles, 86 quicklinks, 14 diaries, 1125 comments [86 recommended, 1 rejected]) on Friday, Sep 19, 2008 at 7:13:11 PM (0+)
|
|
Hang On to Your Wallet! The Government is About to Rescue U
Comment from Ratings: Mr. Lindorff's insights cut through the fuzzy economic jargon that has led us into this unfortunate morass. His commentary is refreshingly logical and candid, and as bad as the situation is, his insights show a way out...learn from this sorry truth and don't repeat it! by ladyguru (0 articles, 0 quicklinks, 1 diaries, 36 comments) on Friday, Sep 19, 2008 at 9:17:03 PM (0+)
|
|
I have said before in these pages...
that the economy would make this November's election a challenge for incumbents to hold their seats. That prediction was based on a steadily declining economy where the administration would forestall the worst until after the election. Now consumers and citizens have been afforded a glimpse into the abyss of economic collapse. Now, they get a peek at the invoice that is past due and realize that they can be stuck with the entire bill while the banks ride off into the sunset with the profitable investments in their portfolios intact. Not many of them, nor many of us can visualize what a trillion dollars is, but they sense the enormity from the simple fact that this number is so rarely used in their experience. And now Nancy Pelosi and Harry Ried will be driving their herds to those voting buttons to do something about it. But if they leave the average citizen holding the bag, if they do not legislate a mountain sized dollop of responsibility and accountability into the relief package, I wouldn't give a plugged investment bank for incumbents' chances of holding a single seat in November. by John Sanchez Jr. (9 articles, 0 quicklinks, 25 diaries, 1791 comments [148 recommended, 3 rejected]) on Saturday, Sep 20, 2008 at 7:54:14 AM (0+)
|
|
Landlords and moneylenders.,
So much is being said about the economy, there is only one solution, rid the world of landlords and moneylenders, If you investigate all the dealings in the money market you will find, those in control are landlords and moneylenders, If you investigate, the political system you will find most of the politicians are landlords and moneylenders, If you investigate the legal system you will find most of our judges and lawyers are landlords and moneylenders, landlords and moneylenders rule they are bludging of the workers, If you investigate the cost of a loaf of bread, from the seed of wheat to the supermarket shelf, you will find thousands of landlords and moneylenders have taken a slice, I would say 95% of the cost has gone into the pocket of landlord/moneylender, try to prove that statement wrong, you cant because the finace system is so complicated, rigged in favour of the landlords and moneylenders, I have spend two decades investigating greed and hatred, once I realised the landlords and moneylenders were in control, all the answers fell into place,, we have landlords and moneylenders passing laws to protect themselves, . we have landlords and moneylenders handing out trillions of dollars to the greedy. we have landlords and moneylenders in charge of the rules of law, In Australia about seven years ago our government handed out $14.000 to first home buyers, this was the deposit on a house valued at $140.000, the government handed out about $60million, within weeks house prices had risen by 20% , so the grant was creating a $28.000 higher mortgage, that put more into the moneylenders pocket. The State governments collected tens of billions of dollars in extra taxes from the sale of property, the final outcome , $14.000 grant created four trillion dollars in extra equity on property Australia wide. this extra equity, was then used as security to buy more property investments, so we have tens of trillions of dollars of money that never existed before the $14.000 handout....it was created in the greedy mind of a parasite. I could go on and on.proving how the system is so currupt. legalised theft, landlords and their agents force up the rents this forces up the cost of propery, eg-- in West Australia a house that should be worth $15.000 sold for $1.400.000 because the rent being charged was $2000 a week, the house was close to a iron -ore mine , and the local council would not release land for new houses to be built, the question that should be asked is. how many of those people in control, are landlords and moneylenders, The government will not rescue us, they rescue themselves, LANDLORDS AND MONEYLENDERS RULE. how many properties do McCain and Obama 0wn, how many tenants are paying for those properties, by Athair Siochain (0 articles, 0 quicklinks, 0 diaries, 1 comments) on Monday, Sep 29, 2008 at 5:40:06 PM (0+)
|
Want to post your own comment on this Article? 
|
||||
|
||||||||||||||
Must Read (0) 
Well Said (0) 
News (0) 
Touching (0) 
Funny (0) 
Supported (0) 
Interesting (0) 
Inspiring (0) 
Valuable (0)
|
|
|
|
|
|
|
|
|
Tell a Friend:
|
Copyright © 2002-2009, OpEdNews |
