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Hang On to Your Wallets! The Government is About to Rescue Us
Dave Lindorff
Counterpunch
Friday, September 19, 2008
When the financial markets started coming undone earlier this week, the Treasury Secretary and the Federal Reserve stepped in, and with $85 billion of our money (actually our children’s money, since they borrowed it from China and Saudi Arabia), bought foundering AIG, the world’s largest insurance company, and assumed its colossal pile of crap debt.
That didn’t help, and the stock market crashed further, falling to levels not seen in three years. Banks, meanwhile, stopped lending, figuring to just hold onto their money and try to weather the crash. The US Treasury and the Fed stepped in again, this time pumping nearly $300 billion more of our money into foreign money markets, and getting European and other governments to do the same in an effort to get the credit markets open again and to stop the stock market swoon. That was on top of some $700 billion already spent on bailouts.
It didn’t work. Thursday, the markets continued to fall, well into the afternoon, and it looked like another seriously down day. But then Treasury Secretary Henry Paulson came up with a new idea. He said he and the Bush administration were considering setting up a new agency to assume all the bad debt of the banking sector–meaning all those bad loans they made, and that they lured unsuspecting consumers into taking out, by way of deceptive marketing techniques and outright fraud.
Note that we’re talking about perhaps half a trillion dollars here–of our money again. And remember, much or even most of this money will never get repaid, and we’re talking about money that could have funded reduced class sizes in every school in America, a national healthcare system, a crash R&D program into non-carbon energy and (not or) a strengthened Social Security and Medicare program.
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The drones in the Democratic Party leadership in Congress immediately jumped on the bandwagon, with House Speaker Nancy Pelosi (D-CA) urging her charges to act quickly to get some kind of a bill out there to facilitate the bail-out, which could cost anywhere from $600 billion to $1 trillion, but most estimates.
The thing to remember here is that this is not a rescue of the little guy (though the Democrats say their rescue plan, when it appears, will include some kind of relief for people unable to pay their mortgages). Don’t hold your breath. Odds are those people facing foreclosure will still be unable to pay their mortgages, and besides, there’s no way there will be relief for the majority of homeowners who aren’t missing their mortgage payments, but who are struggling mightily to meet them each month.
Primarily, who gets helped by this enforced taxpayer largesse are the fat cats who own all the stock in these financial institutions, all the executives who pay themselves outsize salaries each year for their lousy management records, all these hotshot traders who make the deals that later turn sour, long after they’ve run off to another job taking their bonuses with them.
We ordinary people, who live from check to check, will feel the pain of this “rescue” in the form of higher taxes in coming years, and in a devalued dollar–because you can bet that all that money they’re printing, and all that added debt they’re piling on to the mountain of debt already out there is going to make the rest of the world pretty queasy about holding onto dollar-denominated debt, or about buying any more of it.
When you hear a banker say he’s going to help you, it pays to hang onto your wallet. When you hear a politician say he’s going to help you, hang onto your wallet. If they’re both saying the same thing, and especially if one of them is the head of the Federal Reserve Bank, then you better really hang on tight.
Not that that will do any good.
The real answer to this crisis is, firstly, a massive dose of trust-busting, so that no bank or investment bank or insurance company is so big that its failure becomes a threat to the financial system, and thus the government has to rescue it with taxpayer money, and secondly, a return to the era of Glass-Steagall, when it was illegal for banks to also be in the investment banking busiiness.
All the talk of “efficiencies” and of “better service to the customer” that has been endlessly parroted to justify mergers like Citicorp and Travelers, or JP Morgan and Chase Bank, or now Bank of America and Merrill Lynch is fraudulent. Just to give an example, my bank, once known as Willow Grove Bank, a small family-owned institution, was bought by another bank and became Willow Financial. Almost immediately the staffing levels went down. Recently, the combined entity, which ran into trouble, was bought by another institution, Harleyville Bank. Now there are half as many tellers most of the time. As one teller confided, “Every time we get bought, they lay people off.”
Of course they do. That’s what mergers always do. To recoup the costs of the merger, management cuts back on service and employment.
The truth is, for all the talk about the efficiencies of bigness, getting a mortgage today isn’t any cheaper than it was in the 1950s, when there wasn’t even any such thing as a national bank that would be “too big to fail.”
The real reason we have mega financial institutions is that mega financial institutions pay mega bucks to managers and make mega donations to the campaign coffers of politicians. They also get to put some of those mega-buck managers into key advisory positions in each administration, Republican and Democrat, to ensure that government polices allow them to get even bigger and even richer–and to ensure that when they screw it up, they get rescued at the taxpayers’ expense.
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20 Responses to “Hang On to Your Wallets! The Government is About to Rescue Us”
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September 19th, 2008 at 2:12 pm
St. Paul dropping all misdemeanor charges for journalists arrested during RNC
Charges will be dropped against journalists who were arrested and charged with misdemeanors for unlawful assembly during the Republican National Convention, St. Paul Mayor Chris Coleman said today.
Many reporters, photographers and bloggers were among the 818 people arrested during the Sept. 1-4 convention. Many were trapped on a bridge with protesters on the Thursday night, just before Sen. John McCain made his acceptance speech. Police had warned the large group to dissipate, then closed in from both sides of the bridge and made mass arrests.
with the proliferation of alternatative media covering the convention (Sorry Alex Jones missed this one), the definition of journalist will be broadly applied as they try to ascertain identities and credentials. City officials said they’re not sure how many people this will affect.
September 19th, 2008 at 2:24 pm
Wow! Suddenly Mayor Coleman and the Saint Paul police acknowledge the existence of the Constitution of the United States as a reference document worthy of consideration??!?!?
What suddenly changed their minds? Pending lawsuits sure to drain the city’s coffers of millions of dollars? Certainly not personal integrity for that would have shown up in advance of all the negative publicity their actions and pathetic inaction have engendered.
This tiny admission of wrongdoing does nothing to rewind the abusive experience endured by Amy Goodman and her two producers. This does nothing to replace the valuable video footage that was lost do to confiscated cameras that would have documented the true behavior of the security forces – good or bad. This does nothing to change the fact that for a night or so, dozens of journalists were political prisoners of the City of Saint Paul at the behest of the Republican Party and the Bush Administration’s Homeland Security Department along with fellow citizens whose crime was simply trying to express their opinions as if they lived in a free country.
This also does nothing to help the hundreds of innocent citizens attempting to express their 1st Amendment Rights who were rounded up like so much cattle – ushered onto the bridge in order to be detained, NOT, as this article claims, violating orders to disperse. They were herded and cornered like wild animals, and then once trapped with no place to go, were intimidated with pepper spray, concussion grenades, rubber bullets and threats like: “If you don’t keep your hands on your head and remain seated you will be shot”. This I heard with my own ears while on the phone with a friend who was being detained.
This is a tiny baby step away from the fascistic crackdown that was enforced, but not nearly enough. Mayor Coleman, County Sheriff Bob Fletcher and other local officials have a lot to answer for regarding their behavior and their jobs should hang in the balance if Twin Cities’ residents have the spine to stand up to this Gestapo wannabe nonsense.
Question… With Bob Fletcher’s #1 Lieutenant incarcerated for fraud, what kind of deal to keep him out of jail did Fletcher make with the FBI and Homeland Security to allow this over-the-top, abusive police state action boot to be placed on the neck of citizens attempting to speak the truth to power during the RNC? How much did he compromise the integrity of his officers to save his own ass?
Coleman? What can I say? He simply aided, abetted and enabled war criminals to hold sway over our State and the City of Saint Paul for a price.
Thirty pieces of silver no doubt.
September 19th, 2008 at 2:49 pm
@Alex Kahuna Jones
Wake up and smell the fascism…
What about nailing the boot-jack pigs to the wall along with the Mayor and DA for enabling these knowingly unlawful arrests and false imprisonment?
September 19th, 2008 at 3:04 pm
We had the same shit some years back when the Chinese Premier visited the UK. Hoardings were put up to block the protesters in London. And, these people have the audacity to claim we live in a ‘DEMOCRACY’ dream on.
September 19th, 2008 at 4:00 pm
Does this mean that I geet to keep gettin me goverment checks. I got 6 kids and I am pregnant wet anothera. I can’t find a job because day car wud cost too much and if I make ova 600 extra income, I loose me welfare. Maybe da foot pantry has some extre diaps and foot for me chitlens.
September 19th, 2008 at 4:02 pm
2.3 trillion tax dollars missing from the pentagon now another trillion or two keep bending over tax payers …..
September 19th, 2008 at 4:05 pm
we put the lemon in the tidybowl for you
September 19th, 2008 at 4:14 pm
IF YOU ARE NOT NATIVE AMERICAN INDIAN, THAN YOU’RE ALL JUST A BUNCH OF DAMN FOREIGNERS. AS WE SAID WHEN YOU WACHICHYOUS FIRST CAME HERE, “WELL MOTHER THERE GOES THE NEBIGHORHOOD”
September 19th, 2008 at 4:24 pm
HEY MABE WE SHOULD GO TO D.C. WITH OUR GUNS&NOOSES AND GET RID OF THESE BUGGERS AND SEND IN STATE DELIGATES TO RUN CONGRESS UNTILL WE GET A NEW PRESIDENT AND CONGRESS ELECTED BUY THE PEOPLE FOR THE PEOPLE, AND OF THE PEOPLE.
September 19th, 2008 at 4:29 pm
GET MY VEGGIES AND MY PIZZA, PUT IT ON MY CREDIT CARD VISSA AND YOU KNOW I’M LIVING LARGE ON MASTER CHARGE.
September 19th, 2008 at 5:01 pm
All I am going to say is that the entire federal government is at Triple AAA Junk Bond Status. If I tried to pile up debt like these investment banks, I would be in so much trouble I could be put to death just for piling up debt. All we are seeing here is the creation of another credit card after the last 10 trillion have reached their limit.
September 19th, 2008 at 5:25 pm
WAIT UNTIL THE GOVERNMENT BRINGS BACK THE RESALUTION TRUST CORP. WHICH MEANS THE TAX PAYER WILL BE PAYING FOR ALL OF THESE BAD MORTAGES AT INFLATED PRICES. THE R.T.C. WILL BE HAVING BANKER BOX AUCTIONS OF REALESTATE FOR PENNYS ON THE DOLLAR, WHICH MEANS ALL OF THE FED BAILED OUT COMPANIES WILL BE BUYING BILLIONS OF DOLLARS OF REALESTATE FOR JUST MILLIONS BECAUSE US DUMBASS TAX PAYERS WILL MAK IT ALL POSSIBLE.
September 19th, 2008 at 5:33 pm
FOLKS THIS IS WHAT WE GET FOR LETTING A CRIMINAL CARTEL RUN OUR COUNTRY AND OUR FIANANCES
September 19th, 2008 at 5:42 pm
all i can say is get your hands out of my wallet cause the moths cant pay the bills
September 19th, 2008 at 5:47 pm
By 2002 the mainstream business media were SHRIEKING that meltdown was imminent in the mortgage market.
There’s no excuse for allowing the collapse of the U.S. economy to happen.
No amnesty, no pardons.
Pursue the Bush administration beyond January 20 until they are brought to justice.
FREE AMERICA
REVOLUTIONARY (DIRECT) DEMOCRACY
September 19th, 2008 at 6:46 pm
Why is it that Americans are so blind as to not see that the media and government are blowing the stock market crisis out of proportion to hide whats going on with Russia, Iran, and Venezuela.
What is America allowing this warmonger to do right in front of us. Warn your family and friends that “he” is starting more wars and trying to hide it by having the media cover the financial crisis so heavily. In deed America is looking at another attack, not by terrorist but by other countries defending themselves against this super power warmonger. Ron Paul would never allow this to happen if he were our pres.
September 19th, 2008 at 8:21 pm
Political revolution, civil disobedience and armed citizenry now!
September 19th, 2008 at 8:34 pm
WTF people! I Don’t know what to tell you … I am 29 yrs old ,have no credit cards , and around 10grand in savings.I’m pulling all my savings from the bank tomorrow and investing the majority in metals. I already own a few hundred in silver and know some basic farming and survival skills.I don’t know what to think about what is going on in the financial market, but if you read anything at all about history ,you will see that this closely follows pre wwII germany with hyperinflation ,and the US before 1929. I’m not sure what to do but to prepare for the worst. I am not an alarmist or a extremist in any sense , but I think that city wide riots and food shortages are coming soon!
September 19th, 2008 at 8:46 pm
This is one BIG setup to slowly by surely bring in the N.A.U and the Amero.
September 19th, 2008 at 9:35 pm
I wuz wonderin when da money be wort notin, will da govment give me free nursin home to stay in. I be hearin they be good community to be in cuz people be there nice and freindly and they be givin free meels.