The bailout seems to be just as murkey and illegal and greedy as the wall street bananza that got us into this mess.
According to Naked Capitolism, the fed's lending has topped 2 trillion dollars last week(with bernake promising loans up to 7 trillion today november 24), even though congress only approved 700 billion. The reason for this is that the 2 trillion dollars is a loan from the FED, which does not have to be approved by congress, i guess. And the 700 billion is the congressional approved tarp program, handed out by Treasury.
The Banks are not lending money like they said they would once they recieved this much needed capitol injection from Washington. The Fed and Treasury who lent the money attached no strings. They could have. The Government in England did.
And while the Fed is not pushing banks to lend, they are pushing banks to merge.
A little side note. While the Fed is lending money to the banks, the Fed is actually a private bank, composed of 12 banks. Guess who is getting all the bailout out money? The 12 banks that own the Fed. Just to clarify, 12 banks that own the Fed are printing money to loan to, umm, themselves.
And, Just released today by Naked Capitolism is news that in the bailout, the Treasury secretary snuck something in. Im not sure if its actually in the bill or some executive order approved by bush. But it is a law that allows banks to write off losses on their tax returns, basically saving money in taxes, or paying zero taxes. Its estimated the law will save banks 110 billion dollars in taxes. This is not a new law, but overiding a law passed by congress, that congress deemed illegal, and now Bush has found a way to change laws without congress.
In a time when our economy is hurting and our government is up to its eyeballs in debt, treasury secretary Paulson deems it necessary to cut taxes for big banks.
Another aspect of the story is how the treasury promised transparency in its bailout plan. Remember the problem with wall street was a 60 trillion dollar derivatives market, where little information is available. So far the treasury has yet to live up to this promise, prompting bloomberg news outfit to sue in court, under the freedom of information act to obtain information on 1. how much contracts are worth that the treasury department outsourced to manage the bailout, and 2. what the collateral is for the Fed loans to the banks.
Another part of the Economic story is the risky loans to those with no collateral, and how banks leveraged against these risky mortgage backed securities because standards and poors rating agency blindly gave them AAA/ no risk rating. So for years, until the collapse, wallstreet used bad collateral ( mortgage backed securities) for loans. And now treasury refuses to tell the public what type of collateral it has accepted in return for loans from the same public.
On the AIG front, once again Naked Capitolism reports in a great story how sweet of a deal AIG is getting. There originaly loan of 85 billion has doubled to 140 billion. And there payment plan has been changed from a 2 year loan at 8.5% interest to a 5 year loan at 3% interest. NC wants to know if homeowners will also get a 60% decrease in there interest rate.
A quote used from Naked Capitolism and analized:
"We said in our title that the AIG case constitutes looting. We refer to notion as set forth by Nobel prize winner George Akerlof and Paul Romer in their 1994 paper, "Looting: The Economic Underworld of Bankruptcy for Profit." Its abstract:"
"Our theoretical analysis shows that an economic underground can come to life if firms have an incentive to go broke for profit at society's expense (to loot) instead of to go for broke (to gamble on success). Bankruptcy for profit will occur if poor accounting, lax regulation, or low penalties for abuse give owners an incentive to pay themselves more than their firms are worth and then default on their debt obligations."
"This is precisely what happened at AIG. Executives there are handsomely paid, yet senior management cast a blind eye as one unit earned outsized profits while taking risks that would have driven AIG into bankruptcy were it not for the Fed's rescue. Before you say, "Well, it was just a few bad apples," the biggest single job of senior management in a financial institution ought to be to assure the health and survival of the entity, which means risk management and control is top of the list (it was at Goldman when it was a private firm). Anytime a unit starts reporting very large profits, managers should be all over it like a cheap suit to make sure the earnings are not the product of massive risktaking. It only takes one aggressive trader plus inattentive management to bring down an entire firm, as Nick Leeson demonstrated with Barings."
While the US is throwing money at banks to solve the recession, China has chosen to spend a portion of its bailout money on low-rent housing, roads, railways and airports and infrastructure in rural areas.
One of my favorite writers on the web is Michael Chossudovsky, and he blows the lid off the economic crisis over at Globalresearch.ca today with an article about how what we are seeing is a coup detat. Where the financial industry who:
1.caused the collapse of the economy, and
2.who has taken over the Federal reserve banking system and the Treasury department
and 3. who has gotten treasury and congress to approve 700 billion dollars to be given to the Financial industry men who created the mess in order to solve the mess. and
4. Now we find out the money given to the financial industry to solve the mess will be, according to michael, used to buy up corporations throughout america and who have fallen on hard times.
With the stock exchange in free fall, public companies stocks have fallen tremendously. Many companies are in trouble. Car makers, retailer stores, etc. And who is there to pick all the pieces, the heavy hitters of the financial industry.
Michael views this, as i see it, as a coup detat by the financial sector, that soon will take over the industrial sector. Right now he argues, and in the past, the financial sector makes its money without producing anything, very soon they will take over the production sector of our economy.
"Paper wealth accumulated through insider trading
and stock market manipulation is used to acquire control over real economic assets, displacing the preexisting ownership structures. "
Here are my questions. We know corporate america runs the country by buying political muscle so why are some companies winning and some losing? Does this show who are the power players in the corporate world. Why did wall street firms, who caused the crisis, get so much money without question, without strings attached and now the detriot car manufacturors are jumping through loops to get any money? Why hasn't anyone been arrested yet, wtf? why hasn't anyone been fired? If your job is to look over the economy and it crashes and burns you didnt just make a mistake you screwed up big time, and your out.
Unless, just like 9-11, and katrina, and iraq, the crash, the chaos, the destruction, was all part of the plan. Plan for what? To make rediculous amonts of money. How much money has gone missing in iraq? How much money has been appropriated to rebuild Lousiana and how much of Lousiana has been rebuilt? How many laws were passed that could not have been passed because of 9-11? How much power did the executive branch grab that he would not otherwise have been able to grab, unless we had a 9-11? You see where I am going with this? If so go read shockdoctrine by Naomi Klein, she writes all about this.
Are our elected officials that dumb? Or would they rather be called incompetent than criminals? And what do you do when the supreme court, executive branch, and legistative branch have been taken over by thugs in suits?
Its all bush's fault, he is an idiot. Really? Did he force every member of congress except a handfull to pass the illegal patriot act? Or was that done by a Democratic congress? Its congress that runs the country not the president.