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The Biggest Heist in History

By       Message Len Hart       (Page 1 of 2 pages)     Permalink    (# of views)   No comments

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The bailout is the biggest overt theft in history. Only healthy banks get funding --so why do they get a bailout? The 'bailout' is yet another monumental instance in which 'wealth is spread around' to those who do not need it, did not create it, did not earn it, and did not do anything productive to create it! Why doesn't Bush and his 'base' just load up a convoy of armored trucks at Ft. Knox --then drive like hell to the border?

Most big recipients of 'bailout monies' are using the 'bailout' to gobble up smaller, less favored banks. In simpler times, we might have called them the "Savings and Loan". In "It's a Wonderful Life" with Jimmy Stewart, it was called the "Building and Loan". If you've seen this classic film, you will recall that when the Great Depression came, it was the "Building and Loan" that was faced with collapse --not Potter, the richest man in town who sought to own it all.

Several major U.S. banks are leaning toward spending a portion of their federal rescue money on acquiring other financial firms rather than for issuing new loans, the primary purpose of the government's $250 billion initiative to invest in banks.

J.P. Morgan Chase, BB&T, and Zions Bancorporation have all said in recent days that they are considering using some of their federal money to buy other banks.

About 10 financial institutions belonging to the Financial Services Roundtable, which represents 100 of the nation's largest financial services firms, are also considering making acquisitions with the money, said Scott Talbott, the group's senior vice president.

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There is a growing consensus among Treasury and other federal officials that allowing healthy banks to use the money to acquire banks in jeopardy of failing could stabilize the economy and bolster confidence in banks. This could also save money for the Federal Deposit Insurance Corp.

Treasury Secretary Henry M. Paulson Jr. confirmed yesterday that some banks may use the capital they receive through the Treasury program to buy weaker banks and that this could benefit the financial system.

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--Banks Weighing Other Uses for Bailout Money
Moreover --banks are not supposed to hoard monies! Banks are supposed to 'lend' money, right?
I caught up with Senator Dodd, and asked him what he was going to do if the loan situation didn't improve. "All I can tell you is that we are going to have the bankers up here, probably in another couple of weeks and we are going to have a very blunt conversation," he replied.

He continued: "If it turns out that they are hoarding, you'll have a revolution on your hands. People will be so livid and furious that their tax money is going to line their pockets instead of doing the right thing. There will be hell to pay." --New York Times
Moreover, bailouts are supposed to restore confidence. This 'bailout' has had the opposite effect. Bush responses to the 'crisis' vary from day to day. As a result, the crisis now feeds upon itself, driven primarily by Bush's rhetoric and the market's negative response to it.
Because real wages have not been rising, the growth in consumer spending could only have been financed through borrowed money. Debt, which allows consumers to have cash on hand that hasn't been earned or saved, has given Boobis Americanus the ability to live beyond his means, at least for a little while. And a great many have taken up this "pay later" lifestyle, accumulating a great many houses, cars, and other things.

A favored form of debt for funding extraneous purchases has been the home equity line. During the housing bubble, homes became virtual ATMs. Whereas home equity was once used for purposes of improving the home for the long-term, it became a source of quick cash for reckless buyers eager to turn their home into an instant showplace. First there's the actual house, then comes the Martha Stewartization, followed by the furniture, the landscaping, the lighting, the additions, the appliances, and on and on.

The government's mantra since the days of the New Deal has been the "right to own a home." In the modern version of "the American Dream," a starter home is treated as a humiliation, as everyone has the right to own a great, big home in an esteemed neighborhood, and preferably one of new construction and with all the bells and whistles. The term "being house poor" used to be a negative connotation. During the bubble it became a bragging right.

Even worse, home equity has been funding the purchase of everyday consumer durables, especially those items that tend to be discretionary in nature. Home equity has funded the kind of purchases that should be funded from earned, saved monies. A perpetually (and rising) line of credit induces consumers to "bite" at the availability of easy money at low rates, and thus they take the cash and spend their way to a perceived prosperity.

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--New York Times, The Standard of Living Bubble is About to Pop
Other 'Presidents' in other times sought to restore the nation's confidence. The GOP has done the opposite. It subverted 'confidence' and tried to exploit the crisis. The 'healthy' banks and those already among the nation's very richest elite are making out like bandits while most Americans face the real prospect of losing their jobs, their homes and, perhaps, even their lives. The GOP doesn't have a bailout for them. The GOP has a bailout for its base, the richest one percent which owns 90 percent or more of the nation's total wealth. [See: The L-Curve]
One could start with Paulson himself, whose former bank stands to benefit handsomely from the bailout which he has authored. While at Goldman Sachs, Paulson amassed a personal fortune of $700 million. The list continues:

According to Forbes magazine, Ken Lewis last year brought in a salary of $20.13 million, and his holdings of Bank of America stock are worth an estimated $112 million.

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Len Hart is a Houston based film/video producer specializing in shorts and full-length documentaries. He is a former major market and network correspondent; credits include CBS, ABC-TV and UPI. He maintains the progressive blog: The (more...)

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