Hell, the public is screwed, anyway. The article that quoted Reid also pointed out that there’s only $53 billion of FDIC insurance to cover $6.84 trillion in bank deposits. That is, deposits the banks show on paper. Against that paper amount, the banks have a mere $273.7 billion in cash on hand.
Paul Craig Roberts, a former assistant treasury secretary in the Regan administration, and no flaming liberal, summed it up nicely when he said, “A country that had intelligent leaders would recognize its dire straits, stop its gratuitous wars, and slash its massive military budget, which exceeds that of the rest of the world combined. But a country whose foreign policy is world hegemony will continue on the path to destruction until the rest of the world ceases to finance its existence.”
This brings us to the loud silence that has accompanied this proposed bailout. Nobody, but nobody, is suggesting that maybe we might want to cut back on our military spending. Our leaders believe it is far better to beggar the public than to do anything that might endanger our empire. How would the old men of the Beltway entertain themselves if we did that?
The Democrats are making noises about throwing a few scraps to the public. They want to amend the bankruptcy laws so a bankruptcy judge can reset the terms of a mortgage; they want to cap executive pay and they want some sort of oversight of the bailout.
Paulson want a “clean bill” without any nitpicking conditions attached to it.
This brings us to the second loud silence that is accompanying the bailout: Nobody, but nobody is demanding that the unregulated shadow banking system that caused this problem be brought into the regulatory tent. It’s that free-market fairy dust at work, again. The invisible hand will take care of everything.
No doubt there were passengers on the deck of the Titanic, as it slipped beneath the waves, who believed God would save them.
Paulson got to the real worry when he said that doing nothing would “make it harder for consumers to get the credit they need for car loans and other purchases.” And there’s the problem: with seventy percent of our GDP addicted to an ongoing consumer orgy, our leaders must force the public deeper into debt if the system is to survive. Paulson seems to think that if a drop of poison makes you sick, the antidote is more poison.
Part of the bailout package calls for increasing our national debt from $10.6 trillion to $11.3 trillion. This would increase our need for foreign capital to keep our Ponzi scheme afloat and would bring us even closer to the junk bond status that would cut off this flow of foreign capital.
So it goes and goes and goes.
It is an iron rule of economics that when the sh*t hits the fan, only the bottom of the pyramid gets sprayed.
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).
