Screw Deal II
21 December 2008We know that the majority of America was against the October ‘Wall Street bailout’ due to legitimate concerns of subscribing to socialism for the rich. There were many dangers including hyperinflation, additional tax burdens and shifting bad assets on the taxpayers books to name a few. Nine weeks later, many of these concerns are coming to fruition, but in some ways, it’s even worse that we expected. |
Since the $700 billion bailout bill passed in early October, the level of transparency has been nowhere near what was promised by congress. We are being kept in the dark about where the money is going and what it’s being spent on. As predicted, the US treasury has revealed that they have already surpassed the $700 billion face value of the bill and they have increased the looting of taxpayer’s dollars to over $2 trillion within five weeks of the passage of the bill. In lieu of the original face value, $8.5 trillion has now been earmarked to the blank check termed ‘the bailout’ as reported by the Associated Press and Bloomberg.
The first big move occurred a couple weeks after the bill passed the house in early October when Secretary of the Treasury, Henry Paulsen, announced the first ‘stimulus package’ that allotted $250 billon to major financial institutions. JP Morgan Chase, Citigroup, Bank of America and Wells Fargo received $25 billion each and other big banks such as Goldman Sachs were given $10 billion by their Ex-CEO turned Treasury Secretary. The stated goal of the plan was to have these institutions sell preferred shares of the company to the Treasury, which would in turn allow the institutions to give loans to small businesses and consumers to stimulate the economy.
First of all, we have to ask ourselves why we are giving away our tax dollars to B of A, JP Morgan and Wells Fargo who reported $4.9 billion, $2.5 billion and $3.4 billion in NET earnings in the past two quarters of 08’. In addition, Wells Fargo enjoyed a record setting 2Q revenue of $11.5 billion.
So let me get this straight; we’re giving our money to institutions that are making billions in profits per quarter, so they can turn around and lend it back to us? Admittedly, their profits have declined in the last year, but why do profitable companies need help from the taxpayers who represent the genuine economy and actually produce something?
We’ve been given two answers by Hank Paulsen and Ben Bernake to the questions posed above: One, they have to issue liquidity to all banks so that people don’t know which ones are struggling and two, so that they can loan it back to us and stimulate the economy. I guess they think an incoherent answer will deflect additional questions. Anyone can pull up a banks website and pull the financial reports for the past decade if they want to know the banks financial position. No matter how the second reason is spun, taking $2 trillion from consumers first through inflation, then again through taxation, then a third time on interest payments to the Federal Reserve, just to loan it back to us at interest, is completely asinine. So we pay over $4 trillion before we ever see a dollar from the loan sharks who demand interest payments in return. That is, if they decide to loan it out at all.
Five weeks after we started paying off the bankers, they still had not lent the money back to the legitimate economy. During congressional hearings the week of November 9th, and then again on November 18th, Paulsen and Bernake said that $2 trillion dollars has been lent out to institutions, but they will not disclose where the money has gone. The original bill proposal was rejected for this very reason; it lacked congressional oversight. Now that the treasury has lent out three times the $700 billion face value of the bill, they are going back on their promise of transparency. This is astounding hypocrisy from a government who can warrant a full audit and undercover IRS investigation on taxpayers for failing to provide a 79 cent doughnut receipt written off to a business trip. Bloomberg financial is fighting against this double standard and has recently filed a federal lawsuit under the freedom of information act.
Bloomberg has now calculated that as of late November, the total amount depleted from the $8.5 trillion earmark is $3.2 trillion and growing.
As stated in Screw Deal, the bankers pulled the classic move of buying up assets, and passing the inflation to the consumer. Of the money we can track, the banks have been buying up smaller corporations, financial institutions and have been cutting off liquidity to the base of the economy. In addition, the nine big banks that received the first $125 billion payout from the treasury have already set aside $108 billion in bonuses for their executives. This does not even account for the billions going to dividends and stock options.
Banks gambled and got us into a financial crisis. To pass the expenses back to the taxpayer, they proposed the first $700 bailout bill. Congress rejected it due to the lack of transparency and the expansion of power the bankers would gain over government. Congress was then threatened with martial law if they didn’t pass the bill, so they agreed to pass it if they could add congressional oversight, and $150 billion in pork. The bill passed with a promise to exchange our tax dollars for banks assets. The treasury has given out over four and half times more than face value without ever getting congressional approval, and not one traceable asset has been transferred back to the American people. Now that Congress is asking why the Federal Reserve and the Treasury wont reveal where the money went, Bernake’s response is “we think that’s counterproductive”.
In 1832 in his veto message regarding the proposed central bank, The Bank of The United States, President Andrew Jackson said “There are no necessary evils in government. Its evils exist only in its abuses. If it would confine itself to equal protection, and, as Heaven does its rains, shower its favors alike on the high and the low, the rich and the poor, it would be an unqualified blessing”.
The bankers who got us in this catastrophe in the first place are stealing our hard earned wealth to pay off their execs and buy up the heart of the American economy. They chose to shower favor upon themselves only, and we get to live in a drought. They will keep coming back to mug us again and again. It’s time to get up from the fetal position and defend our wallets. Thieves only continue stealing because they haven’t been caught.