Saturday, August 20, 2011
By Choosing The Big Banks Over The Little Guy, The Government Is Dooming BOTH
Should Government Help the Little Guy or the Big Banks?
If the government is going to give anyone money, giving it to the little guy is arguably more fair than giving money to Wall Street fatcats.
Moreover, as Steve Keen demonstrated mathematically in 2009, giving money to the debtors is much better for stimulating the economy than giving it to the creditors.
In addition, because runaway inequality causes depressions, helping out the little guy helps to stabilize the economy.
Government Has Picked Winners and Losers
The big banks were all insolvent during the 1980s.
And they all became insolvent again in 2008. See this and this.
The bailouts were certainly rammed down our throats under false pretenses.
But here's the more important point. Paulson and Bernanke falsely stated that the big banks receiving Tarp money were healthy, when they were not. They were insolvent.
Tim Geithner falsely stated that the banks passed some time of an objective stress test but they did not. They were insolvent.
Both the creditors and the debtors were mortally wounded by the 2008 financial crisis. The big banks wouldn't have survived without trillions in handouts, guarantees, loans, idiot-proof profits courtesy of the government.
The little guy hasn't been helped since 2008. He has been left to suffer with his life-threatening wounds. See this, this and this.
So the government chose sides. The creditors were wiped out, just like a lot of Main Street was wiped out. In one sense, the government chose who would live (the giant banks and other bailed out and favored companies) and who would die (the other 99%).
But in fact, the big banks were no longer creditors after the 2008 crash. Specifically, the big banks which held the mortgages and the loans were wiped out.
The government moved the arms and legs of the big banks to pretend they were still alive ... and have been doing so ever since. But they were no longer going concerns after they went bust.
The government pumped blood back in these dead banks and turned them into zombies. They will never come back to life in a real sense ... they are still zombies, 3 years later.
By Choosing Wall Street Over Main Street, the Government Has Doomed the Economy
Many of the world's leading economists and financial experts say that by choosing creditors over debtors, the government is dooming the economy. See this and this.
The big zombie banks can never come back to life, and - by trying to save them - the government is bleeding out the little guy.
By choosing the big banks over the little guy, the government is dooming both.
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This confirms what I have been saying all along.
ReplyDeleteThe mortgage-backed security fraud cost the United States $27 trillion, according to Dylan Ratigan. That works out to a bit over $80,000 for every living American, or a quarter million per family.
Had the government moved that volume of cash in the other direction; had they given every American $80,000, nobody would have missed a mortgage payment. There would be no housing or mortgage crisis (other than the bankers going to jail, which is what Iceland did and we should have done). People would have kept up on the credit card payments. There would not have been a credit crisis and the USA would still have their AAA credit rating. Americans would have bought brand-new American cars. There would have been no need for the automotive bailouts. Americans would have gone down to the malls and bought lots of other stuff. There would be no retail crisis.
That surge of spending might have even stimulated a resurgence of American-based manufacturing, or the creation of new technology leading to new industries.
But the US Government did the absolute worst thing they could, which was to take (or indebt) every American for $80,000 and pour the proceeds all over Wall Street, so that money wound up as $100,000 French wristwatches on CEOs' wrists, or $200 hamburgers which frankly look just like the $1 special at burger world when it comes out the other end.
The reason the US Government did this is that it has failed as a capitalist society and mutated into a fascist one, and the prime article of faith of fascism is that money is too valuable to allow ordinary people to have any! Politicians claim they are following "Keynesian economics" in runaway spending, but Keynes himself, in advocating that government spend when the private sector does not, intended that spending to insert money at the bottom of that economic pyramid to re-balance the economy after the "11th Marble" mechanics of the private central bank concentrated the wealth in too few hands at the very top and the system stated to stagnate. So while the politicians may cite Keynes as the authority behind their actions, in actual fact they have perverted his design intent to justify their own greed.
You move an economy the way you move a building. You have to pick it up by the foundation. If you try to move the building by the roof, the building will shatter, just as the economy has done with this attempt to pick it up by Wall Street.
I lost all my property total of 8 homes and my life savings trying to keep them because the government stepped in and got involved where they should have let the financial markets take care of the problem not the government. If the government would have stayed out of the mortgage crisis the banks would have be more than willing to work with home owners to modify the loans.
ReplyDeleteMy solution in 2007-08: the blanket offer of a 3.5% 5-6 year adjustable 30-year mortgage to EVERY homeowner. Resultant, no housing crash, foreclosure crisis, thus no serious accounting marks beyond the massive prepayment hit to bank earnings, although confined to their actual stolen gain.
ReplyDeleteMy solution in 2007-08: the blanket offer of a 3.5% 5-6 year adjustable 30 year mortgage to EVERY homeowner. Resultant, no housing crash, foreclosure crisis, thus no serious accounting marks beyond the massive prepayment hit to bank earnings, although confined to their actual stolen gain.
ReplyDeleteMy solution in 2007-08: the blanket offer of a 3.5% 5-6 year adjustable 30 year mortgage to EVERY homeowner. Resultant, no housing crash, foreclosure crisis, thus no serious accounting marks beyond the massive prepayment hit to bank earnings, although confined to their actual stolen gain.
ReplyDelete