Sold to the Taxpayer: A $700 Billion Lemon
Rauf Naqishbendi
October 09, 2008
In a sweeping bailout to detoxify major financial institutions´ balance sheets from undervalued debts, lawmakers agreed on a $700 billion rescue package. The crisis has been building through years of bad lending and unethical and greedy practices, all permitted by government deregulation and imprudent monetary policy by the Federal Reserve Bank. The rescue package, combined with the bailout of other institutions, is one of the costliest government interventions in the history of our republic, and the final bill will be in the trillions of dollars.
Government is a necessary evil, with its regulations subduing natural propensities and temptations harmful to the public. Hardcore capitalists have been lobbying for less government regulation, citing that regulation stands in the way of economic progress. They were successful in their lobbying efforts during Mr. Clinton´s presidency. When Mr. Bush took office, instead of remedying Mr. Clinton and former Fed Chairman Alan Greenspan´s damage, he made it even worse, insisting on deregulation. Thus, regulation relented, and crooks got into business, helping themselves and setting traps for others.
Alan Greenspan served as head of the Federal Reserve Bank under both Presidents Clinton and Bush. He became one of the most popular Fed Chairman in American history, enjoying utmost popularity with Wall Street cheerleaders, for he was in agreement with their profiteering sentiment. For Wall Street it was all about making money, and Greenspan was on their side. In a nutshell, this sickening of the ailing American economy originated during President Clinton´s years, and President Bush inherited such and made it even worse.
Now the bailout is underway, the optimist giving the impression that this can turn into a lucrative deal whereby the government assumes depressed properties at low prices and sells them for profit when economic conditions improve. First of all, a good portion of these assumed loans are worthless, and second, no one knows when the economy will improve.
The process calls for the Treasury Department to purchase bad assets from banks with the price to be determined by market value. The problem, however, is that most of the foreclosures have no market value, because there are no buyers for those properties. This is a common problem in an illiquid market. In spite of the bailout, real-estate price recovery is unforeseeable in the near future, meaning more and more foreclosures. It would have been a relief for government to assume bad debts from financial institutions as a onetime event to get it over with. But the problem is that these institutions can come back as many times as they deem necessary with their newly rotten loans, dumping them on the government´s coffers until the end of next year. Some may think Wall Street´s fraud is over with, but not as long as the crooks can rebound with their discovery of new ways to beat the system.
For some time, senior Wall Street economists have been telling us that economic recovery is near. Late last year and earlier this year Wall Street predicted the economic downturn would bottom out, as well as the real-estate decline. It is now the second half of the year, and we are experiencing deeper fundamental economic deterioration. It is absurd that the Fed Chairman told Congress that we will enter recession if Congress were not to pass the bailout bill on time. How people think about the status of our economy and the economic hardships they endure is what the recession is about, not what the government tells us. Now that the bailout bill has passed, does it mean we are spared from recession? It is astonishing that things feel like another Great Depression or like we are heading toward one, yet according to our government, our economy´s numbers keep on growing. Amazingly, as people see it and feel it, everything is directed downward, but yet government numbers are pointing upward. It isn´t number manipulation and playing with statistics, but rather a conspiracy by the government against the people. There goes the founding democratic principle where government is for the people and by the people.
The exact cost of rescue package is unknown, but it will be in excess of $1 trillion. Add to that trillions more from Fraudy Mac and Phony May (as someone correctly labeled them) just to discern how costly this bailout is. The consortium of government officials and lawmakers have frightened the public by insisting that if the bailout is not in place soon this nation will encounter one of its most calamitous stages in its history, and that is a fact. But for now the bailout has been assented upon in the wake of an economy consumed by accumulated years of mismanagement and feeding into the greed of the insatiable American rich. This rescue bill is not a panacea for our ailing economy; it is rather a bandage upon our bleeding prosperity and prestige. For now we have received a reprieve from the calamity. No one knows how long it will be before the sins of the past return to haunt us, but their return is inevitable, bringing with them pain and suffering for many.
America is at the verge of economic downfall. The way out of this ominous ruin is political and economic reformation, requiring sacrifice by and hardship for every citizen for years to come. The problem is that the poor and middle class of our nation have been an instrument to allow the rich to practice their ravenous greed and get richer at any cost. The poor and middle class have been thinned to the bare bone, and any additional sacrifice will increase their hardship and sufferings. Why not ask the top one-percent income earner, whose annual income is more than half a million dollars annually, with the luxury of disposable property and money, to make the sacrifices?
This financial crisis has been sending its alarm signal for some time, and most of us knew it was coming. Yet, it was beyond anyone´s guess that it would come so fast. The crisis caught everyone off guard, not even allowing time for the issue to be debated in the houses of our government. The fragility of our prosperity, which we have taken for granted for so long, is frightening. This all proves how vulnerable our world is and how fast things can change.
Government is a necessary evil, with its regulations subduing natural propensities and temptations harmful to the public. Hardcore capitalists have been lobbying for less government regulation, citing that regulation stands in the way of economic progress. They were successful in their lobbying efforts during Mr. Clinton´s presidency. When Mr. Bush took office, instead of remedying Mr. Clinton and former Fed Chairman Alan Greenspan´s damage, he made it even worse, insisting on deregulation. Thus, regulation relented, and crooks got into business, helping themselves and setting traps for others.
Alan Greenspan served as head of the Federal Reserve Bank under both Presidents Clinton and Bush. He became one of the most popular Fed Chairman in American history, enjoying utmost popularity with Wall Street cheerleaders, for he was in agreement with their profiteering sentiment. For Wall Street it was all about making money, and Greenspan was on their side. In a nutshell, this sickening of the ailing American economy originated during President Clinton´s years, and President Bush inherited such and made it even worse.
Now the bailout is underway, the optimist giving the impression that this can turn into a lucrative deal whereby the government assumes depressed properties at low prices and sells them for profit when economic conditions improve. First of all, a good portion of these assumed loans are worthless, and second, no one knows when the economy will improve.
The process calls for the Treasury Department to purchase bad assets from banks with the price to be determined by market value. The problem, however, is that most of the foreclosures have no market value, because there are no buyers for those properties. This is a common problem in an illiquid market. In spite of the bailout, real-estate price recovery is unforeseeable in the near future, meaning more and more foreclosures. It would have been a relief for government to assume bad debts from financial institutions as a onetime event to get it over with. But the problem is that these institutions can come back as many times as they deem necessary with their newly rotten loans, dumping them on the government´s coffers until the end of next year. Some may think Wall Street´s fraud is over with, but not as long as the crooks can rebound with their discovery of new ways to beat the system.
For some time, senior Wall Street economists have been telling us that economic recovery is near. Late last year and earlier this year Wall Street predicted the economic downturn would bottom out, as well as the real-estate decline. It is now the second half of the year, and we are experiencing deeper fundamental economic deterioration. It is absurd that the Fed Chairman told Congress that we will enter recession if Congress were not to pass the bailout bill on time. How people think about the status of our economy and the economic hardships they endure is what the recession is about, not what the government tells us. Now that the bailout bill has passed, does it mean we are spared from recession? It is astonishing that things feel like another Great Depression or like we are heading toward one, yet according to our government, our economy´s numbers keep on growing. Amazingly, as people see it and feel it, everything is directed downward, but yet government numbers are pointing upward. It isn´t number manipulation and playing with statistics, but rather a conspiracy by the government against the people. There goes the founding democratic principle where government is for the people and by the people.
The exact cost of rescue package is unknown, but it will be in excess of $1 trillion. Add to that trillions more from Fraudy Mac and Phony May (as someone correctly labeled them) just to discern how costly this bailout is. The consortium of government officials and lawmakers have frightened the public by insisting that if the bailout is not in place soon this nation will encounter one of its most calamitous stages in its history, and that is a fact. But for now the bailout has been assented upon in the wake of an economy consumed by accumulated years of mismanagement and feeding into the greed of the insatiable American rich. This rescue bill is not a panacea for our ailing economy; it is rather a bandage upon our bleeding prosperity and prestige. For now we have received a reprieve from the calamity. No one knows how long it will be before the sins of the past return to haunt us, but their return is inevitable, bringing with them pain and suffering for many.
America is at the verge of economic downfall. The way out of this ominous ruin is political and economic reformation, requiring sacrifice by and hardship for every citizen for years to come. The problem is that the poor and middle class of our nation have been an instrument to allow the rich to practice their ravenous greed and get richer at any cost. The poor and middle class have been thinned to the bare bone, and any additional sacrifice will increase their hardship and sufferings. Why not ask the top one-percent income earner, whose annual income is more than half a million dollars annually, with the luxury of disposable property and money, to make the sacrifices?
This financial crisis has been sending its alarm signal for some time, and most of us knew it was coming. Yet, it was beyond anyone´s guess that it would come so fast. The crisis caught everyone off guard, not even allowing time for the issue to be debated in the houses of our government. The fragility of our prosperity, which we have taken for granted for so long, is frightening. This all proves how vulnerable our world is and how fast things can change.