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For many folks, the term "The Fed" (ie. The Federal Reserve Bank) induces drowsiness. It sounds like such a boring institution, dealing in stuff like interest rates and basis points that seem so academic. But as I explain in my newspaper column out today, while The Fed's instruments may be esoteric, its power is enormous - and it is using that power to cut Wall Street a huge check in what is a public embrace of four isms that have taken over our government.
The column really tries to break down this very complex financial crisis in terms that anyone can understand (and I'll admit, it took a heckuva lot of research to be able to boil down all the jargon into a digestible format - I hope I succeeded). It shows that the isms at work in the Fed's decision to spend $200 billion of your taxpayer money - Disaster Capitalism, Big Boy Bailout-ism, Feed the Beast-ism, and Trickle Down-ism. These are ideologies that have been around for a long time, and have been a staple of public policy for the better part of three decades.
The housing crisis is being used as a justification to hand over taxpayer cash to the same financial industry that has created economic emergency we now face. That's not surprising - this is the industry that has contributed about a billion dollars to political candidates since 2002. That money buys a lot - including a Bush-appointed Federal Reserve chairman clearly more interested in floating his Wall Street friends a loan than in helping homeowners now being foreclosed on.
This is the kind of bailout reserved for the big boys - the kind the free marketeers say shouldn't be given to regular folks. At a time of record deficits, the federal government is handing over your taxpayer money to Wall Street with no strings attached, feeding the machine that has brought out economy to the brink. And the public justification is straight "trickle down" economics. We are told that if we just help the banks, the benefits will trickle down to the rest of us.
The good news is that Congress seems to be getting a wee bit more interested in the Fed's shady behavior. Republican Chuck Grassley says he wants better transparency in the deals being cut between America's central bank and the financial industry sharks. Meanwhile, Democrats like Barney Frank and Chris Dodd are pushing back on the Trickle Down-ism with a bill that would help homeowners rather than asking them to wait for crumbs from the barons on Wall Street.
But the bad news is that all the oversight and legislation may come well after The Fed forces taxpayers to foot the bill for Wall Street's predatory lending and irresponsible speculation.
Read the whole column at Creators, Credo Action, The San Francisco Chronicle, The Denver Post, In These Times, Credo Action, TruthDig or Alternet. The column relies on grassroots support, so if you'd like to see my column regularly in your local paper, use this directory to find the contact info for your local editorial page editors. Get get in touch with them and point them to my Creators Syndicate site. Thanks, as always, for your ongoing readership and help contacting local editors. This column couldn't be what it is without your help.
Cross-posted from Credo Action and CAF
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The warning shot's already been fired...
...across the bows of anyone in government who might have been contemplating interfering with this latest looting of the public purse.
There a certain former state attorney general and now-former governor who dared last month to author an article critical of this, which due to his public reputation was run in a major newspaper.
Can you say, "Eliot Spitzer"? I KNEW you could!
spitzer was a godsend to the fascists
but they did not manufacture it like they probably did for Don Siegelman.
spitzer tripped over his own dick and fell into his own grave. goddamn retard!
It is probable that Don Siegelman was railroaded for political gain/warning.
_______"Man will never be free until the last king is strangled with the entrails of the last priest." - Denis Diderot
U.S. Defends Tough Tactics
U.S. Defends Tough Tactics on Spitzer
_______The scale and intensity of the investigation of Mr. Spitzer, then the governor of New York, seemed on its face to be a departure for the Justice Department, which aggressively investigates allegations of wrongdoing by public officials, but almost never investigates people who pay prostitutes for sex.
Is false hope better than no hope at all?
so???
a political nemesis commits political suicide and the fascists would be expected to look the other way?
if karl rove were caught with jeff gannon's cock in his mouth, don't you think hillary would make a big deal about it? OK. maybe not. But the Ds ARE cowards, after all.
_______"Man will never be free until the last king is strangled with the entrails of the last priest." - Denis Diderot
Have to disagree with this one
As an investment banker who's following this quite closely, I disagree. You would be correct to say that the Fed's recent policies -- from the late 90's low interest rates and failure to better regulate the mortgage industry, to Greenspan supporting Bush's tax cuts -- are clear giveaways to banks and the wealthy. But this particular $200 billion bailout is actually quite necessary. As bad as the coming recession may be, it will be a lot worse if a number of the major U.S. banks fail, which they might absent something like this. This bailout is what's preventing a 1930s-style run on U.S. banks -- witness Bear Stearns failure last week before this program was in effect -- and it seems to be working so far. Most banks hold crappy mortgage securities, and the domino effect of Bear Stearn's failure could well have lead to the failure of Lehman Bros, and then even banks like Citigroup. With a massive failure of the financial system, Main Street would be hit as hard as Wall Street.
I have to disagree with you
I have to disagree with you on this. Let the banks and investment companies pay their own gambling debts! They should not be allowed to rob the taxpayer--to the tune of BILLIONS--because of a perceived ability to hold the whole economy hostage. What they are basically doing is demanding to harness the whole nation to the slavery of paying off Wall Street's bad debts for the rest of geological time--or else. Or else they will go ahead and pull the trigger on the hostage economy and blow its brains out.
The first step in resolving this situation should be for the Fed and government to demand complete transparency: Show us the REAL balance sheets. Make them public. Put every business and every guy/gal on the street on notice that they'd better starting moving their assets and bank accounts to banks that are solvent. And they'd better move their investments, while they're at it.
Failure to provide a real balance sheet should be viewed as a confession of insolvency. Providing a bogus balance sheet should lead to criminal prosecution.
There are surely some banks in this country that are still solvent. They can take over the day-to-day business of making sure everyone gets a paycheck and can continue to access their bank account. Businesses that chose to stay with insolvent institutions should crash and burn right along with them.
Sure, the stock market would crash. But the garbage would be flushed out, and business could then proceed on a sane and solvent basis. The banks that picked up all the business from the demise of the other banks should be in a position to lend--in a sane and perhaps modest way.
Main Street might suffer for awhile from the collapse of the stock market and the major banks, but the suffering would be relatively short-lived. Some people would get clobbered in the rush to the exits, but, assuming the FDIC is still solvent enough to pony up FDIC insurance, even that pain should be short-lived. Many people in banking and finance would assuredly find themselves out of work--and perhaps in some difficulty when it came to getting a job with a solvent and prudent institution, given their record. So let 'em get a real, productive job--i.e., doing something that doesn't involve legalized theft. Like plumbing or something.
If Wall Street's and the banks' losses are charged to the taxpayer, we'll be paying the bill for generations.
There is an illusion most people have that "government" has a magically infinite supply of money. The government has no money; it has the power to tax. The Fed and the government in aggregate have the power to destroy the currency to disguise the fact that the taxpayer is getting stuck with the bill.
Bottom line: either they pay their gambling debts, or WE do.
Bailing these f*****s out would/will also destroy the economy. Just a little more slowly and a lot more painfully.
I'd rather not put my kids and grandkids and great-grandkids in debtor's prison to save the financial industry.
With the banks attempting to
With the banks attempting to amass assets to offset the bad paper they are holding Main Street is already getting hammered because they can’t get the regular loans they need to do business. This way only Main Street takes the hit and those responsible for writing the bad mortgages get off easy. The suckers that signed up for the mortgages are left still owing these same banks their income till they die under the new bankruptcy law. A win/win for the big boys and a lose/lose for every body else...same as it ever was...
Another reason Main Street
Another reason Main Street is getting hammered is precisely because Wall Street couldn't swallow the dose of its own "free market" medicine any time for the past few decades, and required repeated bailouts at public expense. The Real Estate Bubble was, in effect, created to bail Wall Street out after bursting of the Tech Bubble. Rather than let the stock market take a hit, the Fed under Greenspan decided to encourage a gargantuan speculative bubble in real estate.
If Wall Street is bailed out yet again (which may or may not be possible, given the vast amount of money required), look for another speculative bubble--this time in commodities, which will have the effect of driving the price of food and gasoline to the moon. That bubble, too, would eventually burst, and there would be yet another demand for a bailout.
Overall, the whole business is yet another transfer-of-wealth from the middle and lower classes to the rich. It's already noticable that the general tendency of all this is to reduce the vast majority of Americans to peonage.
The fifth "ism" afflicting America....
Dumb-Fuckism
_______Is false hope better than no hope at all?
Some Here Are Failing To Grasp The Reality
...of the situation.
It IS true that the banking industry needs to be more tightly regulated. Unfortunately, that won't alleviate the current crisis.
It may make you cringe to think that the Fed is releasing another $200 billion into the banking system (not "taxpayer dollars" btw, since this is newly circulated currency and was never anyone's to begin with). This will, in fact, devalue our currency further. It will, in fact, "bail out" some banks.
But consider the alternative. If enough banks fail, it will hurt those of us at this level even worse than it will affect the "big boys". What will you do when your paycheck bounces? When you suddenly have no access to the money in your checking account?
I have a client who is a retired FDIC auditor. Recently, they have tried to coax him out of retirement. They are telling him that they need the extra help because about 100 or so banks are on the brink of failure. When he started talking to his former coworkers, he found out that the "word on the street" was more like 200 banks on the brink.
It doesn't matter where you are on the economic scale, the failure of 200 US banks is going to be a disaster for YOU. Better to have a near worthless dollar than to have no money at all.
_______"If you're not part of the solution, you're part of the precipitate."
--Steven Wright--
Eliot Spitzer
I subscribe to Brasscheck tv for videos you can't see anywhere else. I just received this one about Eliot Spitzer, and you might want to watch it and pass it on:
http://www.brasschecktv.com/page/291.html
Why Eliot Spitzer was assassinated
I'm sorry Bluebird, he
I'm sorry Bluebird, he assisted in his assassination, he was the one holding the gun to his head, just waiting for someone to pull the trigger.
_______"Americans will always do the right thing, but only after they have exhausted all possible alternatives."
Sir Winston Churchill
The Federal War on Gold
Below is a excerpt from: The Federal War on Gold,
by Jacob G. Hornberger, http://www.fff.org/freedom/fd0608a.asp
A close reading of the Constitution — the document whose purpose was to protect the American people from federal officials — leaves little room for doubt about the intentions of the Framers. As you read the following excerpts from the Constitution, ask yourself: Did the Framers intend for our country to have a monetary system based on gold and silver coins or on paper money?
Article 1, Section 8:
The Congress shall have Power . . . To coin Money, regulate the Value thereof, and of foreign Coin . . . ; To provide for the Punishment of counterfeiting the Securities and current Coin of the United States . . . .
Article 1, Section 10:
No State shall . . . coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts....
On April 5, 1933, newly inaugurated President Roosevelt issued Executive Order 6102, which prohibited the “hoarding” of gold by U.S. citizens. Americans were required to turn their gold holdings over to the federal government at the prevailing price of $20.67 per ounce.
Pursuant to Roosevelt’s executive order, anyone caught violating the law was subject to a federal felony conviction, 10 years’ confinement in a federal penitentiary, and a $10,000 fine. Soon after the confiscation, U.S. officials announced that the government would sell its gold in international markets for $35 an ounce, thereby devaluing the dollar by almost 70 percent and immediately “earning” a potential profit of almost $15 an ounce on the gold it had confiscated.
Two months later, Congress enacted legislation nullifying gold clauses in both government and private contracts, thereby requiring creditors in such contracts to accept devalued paper money in payment of such contractual obligations, even though the contract itself stipulated payment tied to gold.
Reflect for a moment on the significance of what Roosevelt did. Gold coins and gold bullion were private property, just like a person’s automobile, clothing, home, and food. On the mere command of the president of the United States, federal authorities simply confiscated gold holdings that were the private property of the American people and made it a grave federal offense to own such property in the future.
The gold seizure was no different in principle from Fidel Castro’s seizure of homes and businesses more than 25 years later in Cuba, an episode that U.S. officials still rail against while praising what Roosevelt did.
Hey peasful-amerkin,
How is it that a guy can spend his own money for sex and he loses his job? Have you ever looked under 'Escort services' in the Yellow pages? It is one of the biggest categories in the book. Millions of American men have bought sex and they have kept their jobs. How is it that a guy who goes after the Bush government gets nailed?
Either this guy got nailed because the Bush gang wanted him removed or this ain't the land of the remotely free.
bfearn
"Either this guy got nailed
"Either this guy got nailed because the Bush gang wanted him removed or this ain't the land of the remotely free."
Take your pick, you're right on both counts.
I really could care less how much money he spent on hookers, or how many hookers he spent it on. If he was any regular Joe, nobody would have given two shits, and he sure as hell wouldn't have been fired, but he wasn't just a regular Joe.
If you are going to back assholes against the wall like Spitzer did, you better have your cards in order and know they are going to be searching for that"GOTTCHA" moment. He gave it to them. Is it fair.....hell no.
What the hell ever happened to considering the consequences of your actions BEFORE you set yourself up for a big damn fall? Should he have used the larger of his two heads, probably.
_______"Americans will always do the right thing, but only after they have exhausted all possible alternatives."
Sir Winston Churchill
Here's a link that will help
Here's a link that will help in understanding the magnitude of the problems in the financial industry--and the possible cost of bailing it out:
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/23/ccfed123.xml
Some relevant quotes:
"Bear Stearns had total positions of $13.4 trillion. This is greater than the US national income, or equal to a quarter of world GDP...."
"Under the rescue deal, JP Morgan Chase will take over Bear Stearns' $13.4 trillion contracts - lock, stock, and barrel.
"But JP Morgan is already up to its neck in this soup, with $77 trillion of contracts. It will now have $90 trillion on its books, a sixth of the global market."
Recall that these are the liabilities of only two players--now reduced to one--involved in this mess.
Here's a link showing the derivative exposure of the top 25 US banks:
http://bp2.blogger.com/_H2DePAZe2gA/R9sT8yG-HKI/AAAAAAAAA7k/A-SlM2Kotng/s1600-h/OCCpg1.png
Notice that the figures show how many millions of dollars of derivatives exposure--so figures shown as millions are actually trillions. Nor does this list include "non-banks," such as Bear Stearns.
I am having a little trouble understanding why the sheer magnitude of the problem is considered justification for bailouts. These institutions would like for us to be made resposible for these liabilities--and the heavier the liabilities, the greater the cost to the taxpayer. The cost would be astronomical.
Note, too, that in the first article linked, James Melcher, president of the New York hedge fund Balestra Capital, remarks, "I am still not sure the Fed can maintain the solvency of the US banking system."
If the objective is to save the US banking system from insolvency, we could easily go broke trying and still not succeed--when the liabilities of Bear Stearns alone were greater than the US national income.
...DUH!...
the fact that neither D candidate is addressing this, AT FUCKING ALL, is ominous.
imagine if FDR had only poured tax money on the failed banks and brokerages and their rapacious holding company pyramids..... We'd still be IN that depression AND would have likely lost WWII.
There is hostoric precedent for this that would be relevant to review. Why can't the media ask them about it? why won't they talk about it unprompted?
because they are owned by finance. simple answer.
And barney frank and chris dodd are espousing government bail-out-ism too. Their stated focus might be the consumers, but the effect of their proposal would be to prop up and insulate the very bidness that their committees are supposed to oversee. They have sold out, obviously.
_______"Man will never be free until the last king is strangled with the entrails of the last priest." - Denis Diderot