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Where the Next 2 Trillion is Going to

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Obama is now considering putting 1-2 trillion into a so-called Bad Bank by buying up all the toxic assets of the banks.  Even leaving aside the near impossibility of  identifying these assets and pricing them, such a sum will explode both the national debt and the goodwill of both progressives and economic conservatives toward the president.  See "New Bank Bailout Could Cost $2 Trillion" at click here for a fuller description of how this Bad Bank is a bad idea.

This is supposed to be a progressive president?! Is he kidding? Maybe Geither has become the "Decider" instead of Obama - after all, it was under his watch at the NY Fed that Citigroup was able to speculate its way into insolvency.
Like many others, including Joseph Stiglitz, who ought to have become Treasury Secretary, not Banker Best Bud Geithner, I say let the banks fail - either directly or through nationalization.  Even Senate Banking Committee Co-chair Richard Shelby's quasi-plan to inject half a trillion into the FDIC to insure depositors while letting the banks fail or merge - perhaps with some government assistance NOT involving taxpayer money - is better than fleecing the American public for yet another 1-2 trillion!

By the way, isn't it amazing how $350 billion in new TARP money now barely raises an eyebrow, and how quickly we've become accustomed to talking about rescue package in the trillion dollar range? These astronomical sums will prove to be Obama's overreach and could torpedo his standing among both progressives and economic conservatives alike.

Stimulate the real economy through infrastructure and other projects to rebuild the REAL economy, yes, but don't bailout the bankers so they can finish the country once and for all.  This is a debt so gargantuan it can never be repaid - we will have enough trouble repaying the 11 trillion debt that Bush ran up, while doubling the national debt during his tenure.

For why this doesn't seem to panic the elites, see http://video.google.com/videoplay?docid=-9050474362583451279

This film provides an excellent and terrifying animated analysis on how the bankers have made 95% of what we think of as money out of our debt. Only 5% of money is dollars and coins made by the mint - and that percentage is dropping rapidly as the Fed just invents money out of thin air repeatedly.  But the world's bond market knows better and will stop loaning us money indefinitely, even for supposedly safe treasuries. 

The solution is to stop the debt based money system and go to a fair and equitable tax on natural resources (the single tax), while untaxing labor and capital for maximum productivity.  This was the proposal put forth by Henry George in his all-time best-selling economic policy book "Progress and Poverty" in 1879 and it remains the fairest and most workable solution today.  

 

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http://newthinking.blogspot.com/

Scott Baker is a Managing Editor & The Economics Editor at Opednews, and a blogger for Huffington Post, Daily Kos, and Global Economic Intersection.

His anthology of updated Opednews articles "America is Not Broke" was published by Tayen Lane Publishing (March, 2015) and may be found here:
http://www.americaisnotbroke.net/

Scott is a former President of Common Ground-NYC (http://commongroundnyc.org/), a Geoist/Georgist activist group. He has written dozens of articles for (more...)
 

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