THE REPAYMENT SCAM
In December of 2009, Bank of America announced that it had repaid its $45 billion "loan" from the Treasury. Government officials boasted that their actions were vindicated and that taxpayers even made a profit. The media thought it was wonderful and accepted the announcement at face value. The source of the money was said to be cash reserves and the sale of a new stock offering; but there was something very wrong with that picture.
Cash reserves were not a likely source because the bank reported a net outflow of cash and was still losing money. Its loans were continuing to go sour, and defaults had more than tripled from the first quarter to the third. Bad loans were up 15 percent.  The only way the bank could have sizable cash reserves was to receive a confidential infusion from the Tr easury - what Mr. Paulson would call "a private event". In other words, the government may have provided the money to pay itself back, in whi ch case it was an accounting trick, a publicity stunt to fool the public into thinking that bailouts were acts of great statesmanship after all.
THE SAGA CONTINUES
The saga continues. On June 12, 2010, President Obama asked Congress for $50 billion to bail out American cities and states.3 By that time, almost every state and thousands of local governments had run out of money and began negotiations with Congress and the White House to pay the shortfall, especially the cost of welfare. The argument was that, if welfare checks stop coming in the mail, there will be riots in the streets. No one wants to see that, so federal funds are assured. Along with federal money will come control, and the states may lose their last chance to exert independence and sovereignty over their own affairs.
In August, 2010, Freddie Mac was back at the payout window asking for another $1.8 billion, bringing the total to over $64 billion. The U.S. national debt had reached a record high of $13 trillion, almost $120,000 per taxpayer, and that does not include off-budget liabilities, which are at least twice that amount. It will become larger. By the time you read these words, there will have been even more bailouts and legalized plunder of the American people.
The cost of funding states and local governments in addition to the federal government in addition to the banks and insurance companies in addition to the auto companies in addition to the banks of Europe in addition to endless wars and a global standing army will crush what is left of the American middle class. How long it can continue is anyone's guess, but we do know it is coming close to completion. Chapters 25 and 26 are devoted to where it is headed and how it may end.
1. Blodget, Business Insider (Net), May 3, 2010.
2. "Federal Reserve Opens Credit Line to Europe," Fox News (Net), May 10, 2010.