image courtesy of ft.comThe one true stab at stemming this crisis presents the new Treasury secretary pushing banks to make more loans to already over indebted consumers. Next, he blames the consumer for borrowing too much. Wow. Mr. Geithner further states "Our policies must be designed to mobilize and leverage private capital, not to supplant or discourage private capital." Well, that statement is designed to confuse, for this reason - Government investment crowds out private investment. Concerning these derivatives, the private investment will never replace the government investment, because the value on these WILL NOT go up, no matter what. That leaves the taxpayer with total exposure.
The other half of the equation is a bill the democrats filled with idiotic spending that has little chance of stimulating anything except more campaign contributions from the recipients of the money.
Please, do not think because a few republicans are crying foul now, that they would have voted differently had McCain been elected. Their actions for the past 15 years show where their true allegiance lies. In all likelihood, McCain's solution would have been to just give all this money to the banks with no strings attached.
The only solution to this mess is to allow those most responsible to live with the consequences. They will go bankrupt because they are bankrupt. We should demand all monies given to them be paid back, immediately, and that they should have no influence over markets going forward.
Yes, it would make our current situation seem worse. To do what the government has been and is doing will ensure a much worse outcome. $9.7 Trillion has been committed to the banks, so far, to cover their bad housing bets. $9.7 Trillion dollars, if given directly to homeowners, would have eliminated 90% of all mortgages.
Now, please tell me, how should that money be spent?
Sometime in the very near future, many good people are going to awake one fine morning. Within minutes, they will be immersed in a horrible epiphany. Their hard earned money, sitting in accounts they thought were safe, will have evaporated.
Do you think a money market account is safe, because your advisor told you it was? Think again. Many money market managers bought derivatives, because they were rated AAA. Pension funds? Same thing. Retirement accounts? Stocks and asset backed securities (derivatives).
Republicans and Democrats are equally to blame. The folly of deregulation of the banking industry removed well placed safeguards established after the great crash of 1929. Though a noble (and Christian) cause of helping the less fortunate , the welfare and supplemental programs have inadequate oversight, and have created a situation where some families have not seen an adult go to work for four or five generations.
The Bush administration, while focusing on 9/11 (this is the most polite way to state this), allowed the banks and investment houses to build a profit center that we now realize was rooted in deception.
The US economy has been rambling towards the soon to come morning for quite some time. Unions allowed corruption and mediocre performance. This gave the heads of big business the ammunition they needed to start opening plants in cheaper labor markets. Wall Street realized this was very profitable, and thus started the great trade-off of good paying manufacturing jobs for cheaper imports.
Somehow, someway, it had to end. Sooner or later you would run out of good paying jobs to trade. Yes, the trade off did create some jobs in the finance, insurance and real estate sectors. Yet, when the number of manufacturing jobs dwindled to such a small amount that there were not enough to trade any longer, Big Business began a new form of trading, that of outsourcing.
With the advice of Wall Street, big firms began sending the good paying jobs created by the increased profits from trading manufacturing jobs for cheaper imports, overseas. Same game, different name.
Now, the big firms and banks have full control. Congress, two administrations and the Fed have been and are doing what they say.
Many great leaders of this country have warned us about this:
Thomas Jefferson - I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
Theodore Roosevelt - "Let the watchwords of all our people be the old familiar watchwords of honesty, decency, fair-dealing, and commonsense."... "We must treat each man on his worth and merits as a man. We must see that each is given a square deal, because he is entitled to no more and should receive no less.""The welfare of each of us is dependent fundamentally upon the welfare of all of us." In reference to the "Square Deal" program of limiting corporate power.
Woodrow Wilson - “I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world - no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men.”
Congressman Louis T. McFadden, Former Chairman of the Committee on Banking and Currency - "... the Federal Reserve Board and the Federal Reserve Banks ... This evil institution has impoverished and ruined the people of the United States... Some people think the Federal Reserve Banks are United States Government institutions. They are private credit monopolies which prey upon the people of the United States for the benefit of themselves and their foreign customers...
"The Federal Reserve (Banks) are one of the most corrupt institutions the world has ever seen. There is not a man within the sound of my voice who does not know that this Nation is run by the International Bankers.
"Mr. Chairman, ...The Fed has cheated the Government of the United States and the people of the United States out of enough money to pay the Nation's debt... The wealth of these United States and the working capital have been taken away from them and has either been locked in the vaults of certain banks and the great corporations or exported to foreign countries for the benefit of foreign customers of these banks and corporations. So far as the people of the United States are concerned, the cupboard is bare.
"When the Federal Reserve Act was passed, the people of these United States did not perceive that a world banking system was being set up here.
A super-state controlled by international bankers and industrialists... acting together to enslave the world... Every effort has been made by the Fed to conceal its powers but the truth is -- the Fed has usurped the government."
Dwight Eisenhower - "We annually spend on military security more than the net income of all United States corporations.
This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence -- economic, political, even spiritual -- is felt in every city, every State house, every office of the Federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society.
In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the militaryindustrial complex. The potential for the disastrous rise of misplaced power exists and will persist.
We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together"
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