Bill
04-08-2008, 06:28 AM
Interesting reading, I thought. While the republicans cheer, the Fed gives billions and billions of taxpayer money to the very people whose mismanagement caused the problem in the frst place. This article bitches about it. I guess bitching is all we taxpayers can do anymore, with the republicans in charge
But no, it's gone ahead and damned the depression by doing what the New York Times described as the "unthinkable": bailing out Bear Stearns while giving away hundreds of billions to banks and other institutions whose labyrinthine securitization of our debt economy started this whole mess in the first place.
In other words, rewarding the criminals and screwing the victims.
"The Fed is trying to encourage more reckless borrowing and spending," argues Peter Schiff, president of Euro Pacific Capital and a longtime caller of bullshit on the irrational exuberance that debt securitization. "Obviously, its bailout of Bear Stearns creditors means that Americans are going to absorb their losses. The Fed is monetizing the mess and spreading out the losses among those who own dollars, whether in their savings or income. They're the ones being asked to shoulder the burden."
People like my parents, retirees living off their investments - which are worth profoundly less today.
If recession is what we need, then postponing it won't help. We've got to restore order to the economy, and the Fed doesn't want to process that short-term pain, so its replacing the pain with one that will hurt even worse later."
"Where are we?" asks Danny Schechter, award-winning producer for CNN and ABC, graduate of the London School of Economics and the man behind the prescient debt economy documentary In Debt We Trust. "We're in a disaster zone. It's like bird flu in the financial system. Buyers overseas who bought all of these securities have found out that they've been scammed. No one knows how to value this stuff. The Fed has unsuccessfully injected hundreds of billions into the system as well as slashed rates. But it hasn't solved the problem."
Why? If the Fed is just a bunch of highly credentialed money wonks rather than the dark-hearted star chamber that conspiracy theorists make it out to be, then why wasn't it smart enough to realize that just throwing money at the wall wouldn't stick? After slashing rates down as low as 2.25 percent and handing out billions in duffel bags like Wall Street was Baghdad, how is it possible that the collective economic genius of the Fed hasn't been able to make a single noticeable dent in the oncoming depression? How could so many smart people be so stupid?
The answer is as boring as you think: greed.
So, if the Fed puts off the pain for another year - who does that help? Who benefits? The Republicans, clearly, would be the big beneficiary.
"Regardless of what the Fed does, the dollar is going to keep going down," Schiff agrees. "If the Fed keeps doing what it is doing, it won't make it out of this as a functioning currency."
"I'm sorry to tell you this," Palast adds, "but higher oil prices and weak dollars is not a failure of policy. That is the policy. Clinton had a strong dollar policy and Bush hated it. The weak dollar is a way to temporarily hike exports to create short-term pretend juice for the economy. But the weak dollar also made it easier for foreigners to buy up U.S. assets. The capitalists are cashing out of America. They're keeping condos in New York, Palm Beach and Malibu, but their investments are where the returns are fatter: Malaysia, China, India. A weak dollar helps the transfer of capital ownership."
http://www.alternet.org/workplace/80501/?page=entire
But no, it's gone ahead and damned the depression by doing what the New York Times described as the "unthinkable": bailing out Bear Stearns while giving away hundreds of billions to banks and other institutions whose labyrinthine securitization of our debt economy started this whole mess in the first place.
In other words, rewarding the criminals and screwing the victims.
"The Fed is trying to encourage more reckless borrowing and spending," argues Peter Schiff, president of Euro Pacific Capital and a longtime caller of bullshit on the irrational exuberance that debt securitization. "Obviously, its bailout of Bear Stearns creditors means that Americans are going to absorb their losses. The Fed is monetizing the mess and spreading out the losses among those who own dollars, whether in their savings or income. They're the ones being asked to shoulder the burden."
People like my parents, retirees living off their investments - which are worth profoundly less today.
If recession is what we need, then postponing it won't help. We've got to restore order to the economy, and the Fed doesn't want to process that short-term pain, so its replacing the pain with one that will hurt even worse later."
"Where are we?" asks Danny Schechter, award-winning producer for CNN and ABC, graduate of the London School of Economics and the man behind the prescient debt economy documentary In Debt We Trust. "We're in a disaster zone. It's like bird flu in the financial system. Buyers overseas who bought all of these securities have found out that they've been scammed. No one knows how to value this stuff. The Fed has unsuccessfully injected hundreds of billions into the system as well as slashed rates. But it hasn't solved the problem."
Why? If the Fed is just a bunch of highly credentialed money wonks rather than the dark-hearted star chamber that conspiracy theorists make it out to be, then why wasn't it smart enough to realize that just throwing money at the wall wouldn't stick? After slashing rates down as low as 2.25 percent and handing out billions in duffel bags like Wall Street was Baghdad, how is it possible that the collective economic genius of the Fed hasn't been able to make a single noticeable dent in the oncoming depression? How could so many smart people be so stupid?
The answer is as boring as you think: greed.
So, if the Fed puts off the pain for another year - who does that help? Who benefits? The Republicans, clearly, would be the big beneficiary.
"Regardless of what the Fed does, the dollar is going to keep going down," Schiff agrees. "If the Fed keeps doing what it is doing, it won't make it out of this as a functioning currency."
"I'm sorry to tell you this," Palast adds, "but higher oil prices and weak dollars is not a failure of policy. That is the policy. Clinton had a strong dollar policy and Bush hated it. The weak dollar is a way to temporarily hike exports to create short-term pretend juice for the economy. But the weak dollar also made it easier for foreigners to buy up U.S. assets. The capitalists are cashing out of America. They're keeping condos in New York, Palm Beach and Malibu, but their investments are where the returns are fatter: Malaysia, China, India. A weak dollar helps the transfer of capital ownership."
http://www.alternet.org/workplace/80501/?page=entire