It seems like Paulson and Bernanke together with their partners in crime Pelosi, Reid, Frank, Dodd and Schumer have successfully arranged the biggest single wealth transfer from the people of the U.S. to the very rich.
A few weeks ago the economic problems were 'contained', the banking system 'sound'. Now the same folks who over the years produced the crisis suddenly scream "Depression!" and claim to have found the only solution: "Give me your money!!!"
This is by far not depression territory - yet. But Congress is following Bush in doing the best possible to get the U.S. there.
Most of the money that will go into the Paulson plan will be wasted to save some big bank shareholders. That money will be lacking when it will be needed for real programs that would make a difference.
From a guy who was right all along:
[I]n order to resolve this financial crisis it is not enough to take the bad/toxic assets off the balance sheet of the financial institutions (a new RTC); it is also necessary and fundamental to reduce the debt overhang of millions of insolvent households via a significant debt reduction on their mortgages (an HOLC program like the one that was implement during the Great Depression); and also recapitalize undercapitalized banks with public capital in the form of preferred shares (as the RFC did with 4000 banks during the Great Depression).
An RTC scheme without an HOLC and RFC component would not resolve two fundamental problems: millions of households are insolvent and unable to service their mortgages; the financial system is vastly undercapitalized and needs capital to avoid an ugly credit crunch and to foster new credit creation that is needed for future growth.
With $700 billion wasted for the Paulson plan, likely borrowed from China by selling out Taiwan, where will the money come from to get the other programs going? What else is for sale? Would Russia buy back Alaska? Sarah Palin should ask for an offer.
GE just cut its profit forecast. 50% of GE's earnings come from its financial business arm. That part is likely to look no better than Washington Mutual which will go belly up on Friday, if not earlier. It then will be split up and the taxpayer will be made to eat the bad parts while some rich folks will feast on the valuable ones.
Frank-Walter Steinmeier said during a visit to the U.S. Stock Exchange that Germany, Europe's biggest economy, had run into a brick wall when it called for more checks on international finance.
'I must say that we, and the finance minister (Peer Steinbrueck) in particular, were right in the recommendations that we have been making for two years,' he told reporters on Wall Street.
"The U.S. will lose its status as the superpower of the global financial system, not abruptly but it will erode," Finance Minister Peer Steinbrueck told the lower house of Germany's parliament in Berlin, according to published reports. "The global financial system will become more multi-polar."
Steinbrueck criticized the United States for failing to adequately regulate investment banks and said free-market policies embraced by the United States and Great Britain that emphasized a short-term "insane drive for higher and higher profits" were partly to blame for the crisis.
Both are right and both should shut up. Such talk only provokes anger. Germany will be hit hard too. Not as hard as the US, the UK and the neo-liberal eastern European economies but for a big exporter like Germany a recession is unavoidable under these circumstances.
But Germany is unlikely to see violent protests over the downturn or any measures like these:
"The next emergency measure will be that Americans are not allowed to buy foreign currency and transfer money overseas, and the next measure will be not permitting Americans to buy gold and so on and so forth…. It creates even more uncertainty in the market place when you continually change the rules," Faber said.
Faber's assumption is that the U.S. will massively inflate and U.S. people will try to hold their money in other currencies. Then currency controls will be needed to stop the capital outflow. He is right, so prepare yourself.
Stephen Colbert yesterday tried to explain how much $700 billion is. The easiest way, he said, is to think of it as 1 Euro.
That wasn't funny.
Source: Moon of Alabama
The thing scaring me is that there seem to be millions of people out there who really buy into this:
PALIN: Ultimately, what the bailout does is help those who are concerned about the health care reform that is needed to help shore up the economy– Oh, it’s got to be about job creation too. So health care reform and reducing taxes and reining in spending has got to accompany tax reductions and tax relief for Americans.
Source: Moon of Alabama
No time today to write something up, so for now just links to three 'atmosphere' items on Afghanistan.
At War is a documentary film shot and directed by Scott Kesterson, who spent a year embedded with US forces in Afghanistan.
With all the blind shooting going on it seems that the soldiers have no idea at all who or what they are fighting.
A WaPo reporter on growing anarchy in Kabul:
While Taliban insurgents stage increasing attacks in the Afghan countryside, equally fast-expanding violent crime -- kidnappings, carjackings, drug-related killings and highway robberies -- is plaguing the capital of 5 million and the vital truck and bus routes that connect the country's major cities. It is making some Afghans nostalgic for the low-crime days before 2001, when the Taliban sternly ruled most of the country.
"The government is weak, and it has an enormously high level of tolerance for crime, abuse and corruption," said Nader Nadery, an official of the Afghan Independent Human Rights Commission. "If you have power and money, you don't have to account for your actions. Instead of the rule of law, there is a state of impunity, which is one of the factors contributing to the growth of the Taliban."
And grow they will.
Another team found where the gun fire came from. They knew this because they found the empty brass from which the bullets came from strewn out on the ground behind a wall. The gunman had apparently fled, I guess he got want he want, the opportunity to say that he shot at Americans.
Their was nothing left for us to do now so we turned around and headed back to the trucks. Upon climbing up into the back the feelings of nausea returned. I reached over the edge of the armor and started throwing up, only a little at first, but I knew their was more to come I could feel it. I stood their, head hanging over the side, my helmet weighing it down. I moved the headset mic that hooked up to my radio so I wouldn’t throw up on it again. I looked down towards the dark asphalt trying to make the headache go away. I finally finished, it was all I had left in my stomach.
Source: Moon of Alabama