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OpEdNews Op Eds    H3'ed 6/7/11

The Success of Failure

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Of course the banks must make it look like they're at least trying to help homeowners. The back log of homes on the market is as high now as it was during the beginning of the mortgage crisis so the banks make a few modifications just to keep up appearances, just to make it look good. Under Obama's Hamp program the banks can be reimbursed up to $1,800 for each home loan modified.

Hmm, let's see, what's a banker to do? Collect the full amount owed from the Federal Reserve or modify a struggling mortgage loan on a property worth 30 percent less than the day when the mortgage was originated? Sure, the bank won't get the full amount of the loan if they modify it for you and the bank must cut its profit margin but Barack Obama will send them a check for $1,800 after the bank hires employees and completes the paper work process.

So these banks are flush with cash and anxious to spend it, anxious to spend it, that is, on anything but you. This is how conservatism works. Let the free market do what is best for the free market. During Roosevelt's New Deal the government regulated the banks, they created work programs and public construction programs to restart the economy. This time around under Obama's Screw Deal the banks have taken over the government. They have through the offices of Bush and Obama obtained a free money policy.

The stock market crashed in 2007 and the banks were reimbursed for their losses and there was money to be made picking up bargains on Wall Street. Goldman Sachs made money every day of the last quarter except one. Ask yourself, if you played cards with a guy who won every hand except one, would you assume that he's just a really good card player?

"All of Wall Street is just a ponzi scheme," Bernie Madoff

Recently the Justice Department issued subpoena's to Goldman Sachs, there is an election year coming up, you know. So somebody's got to go down, somebody's going to be made an example of to appease public sensibilities and outrage. A public hanging or two ought to quell the public's appetite for vengeance.

The economy is sputtering, I wonder why? Home prices are falling faster than ever; prices are falling at double last year's rate at one percent per month. Home prices have fallen for fifty two consecutive months so the Federal Reserve tries a second round of quantitative easing, quantitative = money, easing =  add more.

Suppose then that you owned a hamburger stand and you earned a one dollar profit from each hamburger sold. The hamburger stand is one million dollars in debt; you will have to sell one million hamburgers just to break even. Suddenly the currency becomes inflated or quantitatively eased, your cost to produce hamburgers doubles. You do the only thing that you can do and raise the price of hamburgers. The price of a hamburger has doubled but you now earn two dollars for every hamburger sold. You are now only half a million hamburgers in debt.

Suppose it is not a hamburger stand that you own but a bank. Quantitative easing helps you to bury your debt through currency inflation. Wages for working people have risen on average one percent per year so in effect with three percent annual inflation working people take a ten percent wage cut every five years. This is how consumers were led to spend beyond their means. This is how the economy was brought to the brink of collapse.

This is how the banking industry is subsidized by free money from the Federal government. This is how so called Free Trade empties the treasury while filling the pockets of the investor class. This is how Wall Street is juiced; this is how the deficits soar. This is how politicians justify calling for cuts to Medicare and Social Security. This is how state and local government justify cutting 28,000 employees just last month and cutting benefits to millions more. A class war Hiroshima strike, where failure is success.

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