by Washington's Blog
November 11, 2010
In case it's not crystal clear, this isn't the "Great Recession". It's
really the Great Bank Robbery.
First, there was the threat of martial law if the $700 Billion Tarp bailout
wasn't passed. Specifically, Treasury Secretary Hank Paulson warned
Congress that there would be martial law unless the Tarp bailouts were
As I pointed out
The New York Times
wrote on July 16th:
In retrospect, Congress felt bullied by Mr. Paulson last year. Many of
them fervently believed they should not prop up the banks that had led
us to this crisis - yet they were pushed by Mr. Paulson and Mr. Bernanke
into passing the $700 billion TARP, which was then used to bail out
those very banks.
Congressmen Brad Sherman and Paul
Kanjorski and Senator James Inhofe all say that the government
warned of martial law if Tarp wasn't passed:
Bait And Switch
Indeed, the Tarp Inspector General has
said that Paulson misrepresented some
fundamental aspects of Tarp.
And Paulson himself has
During the two weeks that Congress
considered the [Tarp] legislation, market conditions worsened
It was clear to me by the time the bill was
signed on October 3rd that we needed to act quickly and forcefully, and
that purchasing troubled assets - our initial focus - would take time to
implement and would not be sufficient given the severity of the problem.
In consultation with the Federal Reserve, I
determined that the most timely, effective step to improve credit market
conditions was to strengthen bank balance sheets quickly through direct
purchases of equity in banks.
So Paulson knew "by the time the bill was
signed" that it wouldn't be used for its advertised purpose - disposing of
toxic assets - and would instead be used to give money directly to the big
But at least the bailout money was used to help the economy by stabilizing
the financial sector, right?
As I wrote in
The bailout money is just going to line the
pockets of the wealthy, instead of helping to stabilize the economy or
even the companies receiving the bailouts:
Bailout money is being used to
subsidize companies run by horrible business men, allowing the
bankers to receive
fat bonuses, to
redecorate their offices, and
gold toilets and
A lot of the bailout money is going
to the failing companies'
Indeed, a leading progressive
says that the true purpose of the bank rescue plans is
"a massive redistribution of wealth to the bank shareholders and
their top executives"
The Treasury Department
banks to use the bailout money to buy their competitors, and
pushed through an amendment to the tax laws which rewards
mergers in the banking industry (this has caused a lot of
companies to bite off more than they can chew, destabilizing the
And as the New York Times
"Tens of billions of [bailout] dollars
have merely passed through A.I.G. to its derivatives trading
In other words, through a little
game-playing by the Fed, taxpayer money is going straight into the
pockets of investors in AIG's credit default swaps and is not even
really stabilizing AIG.
But at least the government is trying to help
the struggling homeowner, right?
Well, PhD economists
John Hussman and
Dean Baker (and fund
manager and financial writer Barry Ritholtz) say that the only reason the
government keeps giving billions to Fannie and Freddie is that it is really
a huge, ongoing, back-door bailout of the big banks.
Many also accuse Obama's foreclosure relief programs as being backdoor
bailouts for the banks. (See
But certainly quantitative easing is helping the little guy?
Unfortunately, QE only helps the
big banks and giant corporations, and the
small number of investors who hold
most of the stock.
And now, the government has announced that it will
maintain tax breaks for
the wealthiest while considering slashing social security and medicare.
Warren Buffet famously
said a couple of years ago:
There's class warfare, all right, but it's
my class, the rich class, that's making war, and we're winning.
The proof is in the pudding: a small handful of
people have ended up with
a lot more loot in their safes, while everyone
else has gotten a lot poorer. And, unfortunately, radical concentration of
destroying both capitalism and democracy.
The government has not only
failed to enforce any laws to prevent theft, but
has been so busy helping the big boys carry their bags of cash that - even
with the sheriff's badges - it is
difficult to tell who is who.