 |
 |
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
|
|||
 |
|||
|
|||
 |
|||
|
Additional Thoughts on the Bailout
- Text size
Paul Craig Roberts
Infowars
October 17, 2008
Just as the Bush regime’s wars have been used to pour billions of dollars into the pockets of its military-security donor base, the Paulson bailout looks like a Bush regime scheme to incur $700 billion in new public debt in order to transfer the money into the coffers of its financial donor base. The US taxpayers will be left with the interest payments in perpetuity (or inflation if the Fed monetizes the debt), and the number of Wall Street billionaires will grow. As for the US and European governments’ purchases of bank shares, that is just a cover for funneling public money into private hands.
|
|
 |
|
| If credit card debt has also been securitized and sold as investments, as the economy worsens defaults on credit card debt will be a replay of the mortgage defaults. How much debt can the Treasury bail out before its own credit rating sinks? | |
|
The explanations that have been given for the crisis and its bailout are opaque. The US Treasury estimates that as few as 7% of the mortgages are bad. Why then do the US, UK, Germany, and France need to pour more than $2.1 trillion of public money into private financial institutions?
If, as the government tells us, the crisis stems from subprime mortgage defaults reducing the interest payments to the holders of mortgage backed securities, thus driving down their values and threatening the solvency of the institutions that hold them, why isn’t the bailout money used to address the problem at its source? If the bailout money was used to refinance troubled mortgages and to pay off foreclosed mortgages, the mortgage backed securities would be made whole, and it would be unnecessary to pour huge sums of public money into banks. Instead, the bailout money is being used to inject capital into financial institutions and to purchase from them troubled financial instruments.
It is a strange solution that does not address the problem. As the US economy sinks deeper into recession, the mortgage defaults will rise. Thus, the problem will intensify, necessitating the purchase of yet more troubled instruments.
If credit card debt has also been securitized and sold as investments, as the economy worsens defaults on credit card debt will be a replay of the mortgage defaults. How much debt can the Treasury bail out before its own credit rating sinks?
The contribution of credit default swaps to the financial crisis has not been made clear. These swaps are bets that a designated financial instrument will fail. In exchange for “premium” payments, the seller of a swap protects the buyer of the swap from default by, for example, a company’s bond that the swap buyer might not even own. If these swaps are also securitized and sold as investments, more nebulous assets appear on balance sheets.
Normally, if you and I make a bet, and I welsh on the bet, it doesn’t threaten your solvency. If we place bets with a bookie and the odds go against the bookie, the bookie will fail, as apparently happened to AIG, necessitating an $85 billion bailout of the insurance company, and to Bear Stearns resulting in the demise of the investment bank.
- A d v e r t i s e m e n t
Credit default swaps are a form of unregulated insurance. One danger of the swaps is that they allow speculators to purchase protection against a company defaulting on its bonds, without the speculators having to own the company’s bonds. Speculators can then short the company’s stock, driving down its price and raising questions about the viability of the company’s bonds. This raises the value of the speculators’ swaps which can be sold to holders of the company’s bonds. By ruining a company’s prospects, the speculators make money.
Another danger is that swaps encourage investors to purchase riskier, higher-yielding instruments in the belief that the instruments are insured, but the sellers of swaps have not reserved against them.
Double-counting of assets is also possible if a bank purchases a company’s bonds, for example, then purchases credit default swaps on the bonds, and lists both as assets on its balance sheet.
The $85 billion Treasury bailout of AIG is small compared to the $700 billion for the banks, and the emphasis has been on banks, not insurance companies. According to news reports, the sums associated with credit default swaps are far larger than the subprime mortgage derivatives. Have the swaps yet to become major players in the crisis?
The behavior of the stock market does not necessarily tell us anything about the bailout. The financial crisis disrupted lending and thus comprised a threat to non-financial firms. This threat would reflect in the stock market. However, the stock market is also predicting a recession and declining earnings. Thus, people sell stocks hoping to get out before share prices adjust to the new lower earnings.
The bailout package is a result of panic and threats, not of analysis and understanding. Neither Congress nor the public knows the full story. If the problem is the mortgages, why does the bailout leave the mortgages unaddressed and focus instead on pouring vast amount of public money into private financial institutions?
The purpose of regulation is to restrain greed and to prevent leveraged speculation from threatening the wider society. Congress needs to restore financial regulation, not reward those who caused the crisis.
-
- Social bookmarks
- Email this article
-
- Print this page
- Share on Twitter
October 17th, 2008 at 9:25 am
vote four more years of utter disaster , vote mcsame
October 17th, 2008 at 9:53 am
Hmmm. The election this year is soooooo important! Its all like historyalic and stuff. Yeah. I hope that God freak doesn’t like get it. That other dude though….yeah, he like…..gets it and shit.
Above is what I typically hear from people I converse with about the coming election. Sadly, even the mildly intelligent sheeple are committed to either John McBama or Barrak OCain. It just makes me sick .
October 17th, 2008 at 10:05 am
Big Government insiders from both parties are designing even worse legislation for the next Congress. Obama and McCain are the power elites chosen insiders.
October 17th, 2008 at 10:09 am
of all times to pull out the white man against the black man card just couldn’t have occurred at a better/worse time. distractions distractions. i still can’t understand why people can’t see it. do black people want to be white that bad. i’m a minority so before i get slammed for that comment its nothing personal just an observation. i see that with other minority groups such as the native americans if you can’t beat them join them mentality and casinos popping up everywheres. mccain was born in panama and obama was born supposably in hawaii. from what ive heard if its true obama was born in kenya so technically if your not born in the u.s. your not eligible for the presidency.
October 17th, 2008 at 10:12 am
Salvation is all over the News today. “Financial Armaggeddon has been averted” and “if the Government had not acted, the financial system would have collapsed”.
Also, something about how its not that bad because uneployment during the depression was at 60% while we are only at 6%.
Everything is okay now!! It seems the multi-trillion dollar infusion of fiat money saved the fiat system from a fiat depression and fiat american way of life!!
Buy now, pay later! Even Warren Buffet says is everything is A-Okay!!
October 17th, 2008 at 10:38 am
Congress passed legislation incentives that basically forced financial institutaions to oan people with less than worthy credit to no credit at all discriminatory opportunuties to buy homes that they couldn’t possibly afford. And they found out they couldn’t, the banks are suffering, Congess escapes free of their own srewup and now the citizen is paying.
Credit cards- 50 years ago the avaerage Joe/Jane didn’t have a credit card. Banks made them easy to get so they could profit off the high interest rates ..knowing “instant credit” in credit card form would allow people “instant” buying power without actually seeing the total cost. The average credit card is somewhere between 18-22% interest and those who could least afford them generally are the ones who max them out and default.
Many LIVE on credit cards and only pay the minimum..thinking some day they “will get the money and be able to pay them off’> The banks know better.. they are that way by design.
Solution to the problem – Get Congress out of the money business and get them to focus on doing what they do best(whatever that is).. and educate people on how the financial system works so that even to most stupid individual can figure it out.
Keep finances at the local level….
October 17th, 2008 at 10:40 am
To answer Dr Paul Craig Roberts’ question on why the government does not fix the problem at it’s source. Perhaps it wants the problem? It wants to send all those trillions out to it’s friends. To get further control of the system. The big payoff before Bush and company leave office and country.
October 17th, 2008 at 11:11 am
All bad financial news, all the time.
http://www.screwedcountry.com
October 17th, 2008 at 11:22 am
This is huge! America will never be the same. What a disaster. There are literally going to be dead bodies everywhere…..Hyperinflation is going to snuff the pulse, and snap the neck of the United States.
October 17th, 2008 at 11:29 am
amen comrade paul. i’d just say that besides protecting the republican base and lining their own pockets, the federal govt is also trying to cover the way they spend money, by issuing bonds china etc buy up. if default looks real, no one buys us govt paper and the pyramid debt scheme fails.
October 17th, 2008 at 11:55 am
They can say whatever they want but I know that I am getting tired of interviewing for a job. I am not on the list of unemployed. I have always had a job and now it doesn’t matter what you interview for they are barely going to hire. At least I know what is really happening thanks to this site and so I am using my time to get educated and get people I know to come to this website and wake up. If I get back to work I would buy some stock. How long before we are going to see the Amero?
October 17th, 2008 at 12:20 pm
I believe America will recover.. But not without damages.
The first thing that needs to happen while everyone is violently mad if figure out where the disease is and eliminate it and do so in such a way that an example it set world wide for history to recall for eons…
People like things “easy”.. and the saying always holds true..
“If it seems too good to be true, it probably is…”
There is not shortage of crooks in this delimna… and they need to be held to task by any means possible.
October 17th, 2008 at 12:39 pm
ALE IS A GOOD MAN
What’s wrong with you people? He’s told you many times he’s not an intelectual, He’s just a plain and passionate gay who is putting all his energy to work for you, so you’ll wake up for once and all, just like he did years ago. How many of us could have the strenght and the courage to do what he does day after day , and bring all this for us to see………I can’t believe how so many of you have gone against him after all the work and effort he has put into this project…. shame on you!!!
PS. I’ve nothing to do with him, and I’m thousands of miles away across the ocean.
October 17th, 2008 at 12:42 pm
If the 2012 crowd is right it won’t matter.
October 17th, 2008 at 12:48 pm
This is the beginning of the end for Alex and his show, take a good look at the decline of comments since his attack on Peter Joseph. Alex parted the sea and alienated a whole lot of his followers, say goodbye to all of this because it will be a matter of time before Alex following will diminish and all that will be left are the tin foil hat following that would follow Alex into a burning building. END GAME LOL
Don’t worry 9/11 truth will move along, the conspiracy movement will go on and will thrive under a new leadership.
This isn’t the end of the cause, but rather the end of Alex Jones at the helm, so many people have abandon this site by next week we will see a true decline in the interest of Alex Jones. Just check out the comments decline in the past couple of days, as a matter of fact the only interest at this site right now is the Zeitgeist Addendum.
RIP Alex you intolerant piece of shit!!!
October 17th, 2008 at 1:26 pm
WRONG! His audience will grow and he will reach more people then he ever could have dreamed of because he stands for TRUTH and he is not allowing himself to be used for evil purposes like the “zietgeist” people are. If you want to follow the pied piper, peter joseph then go, just remember on the eve of your destruction, that you recieved the TRUTH and you denied it
October 17th, 2008 at 1:39 pm
Joseph has good observations with regard to the mind-bend with marketing; however, he behaves like a brainwashed, my brand of Communism will work this time around, new age utopian.
Alex Jones’ passion and commitment drives him to so loudly express factual information to the point where I plug my ears and mute the show until he settles down.
Both of these gentlemen have faults.
October 17th, 2008 at 2:06 pm
WORLD MONETARY SLAVERY IS HERE!
..started in 1913…ending right now..2008!
October 17th, 2008 at 2:47 pm
There has already been an evaluation in crossroads of ignorance.
Ignorance is the root of deception.
October 17th, 2008 at 3:02 pm
Post 11, Donna, I agree, I have been looking for work since 4-21 and in Michigan it could be a long look.
October 17th, 2008 at 3:07 pm
to #15:
If you are celebrating the (false) demise of Alex Jones based upon an interview that hurt your itty bitty feelings, you were and are not what we as a community would want to have around anyway.
Who wants to play ‘The Weakest Link?
Bye bye baby.
ah hell you’re prolly cointelpro anyway.
lick them boots boy!!
October 17th, 2008 at 4:24 pm
The day all this comes out and Bush is found to have had treasonist actions in his presidency, will be the day we all will watch his court session on TV to make sure he is punished to the fullest allowable by law. Maybe even bring back the Death penalty for the embezzeling from the people Billions to “HIS BILL” a burden on all AMERICANS.
October 17th, 2008 at 5:20 pm
In those days and at that time, did you know the USA is leading the nations of the world to divide the Land that the MOST HIGH gave to Israel forever…the housing collapse began in the states when the USA told Israel not to build any more settlements in the west bank. This is no suprise though, the ten worst natural disasters monetarily in the states have occured within 24 t0 48 hours after pressuring Israel to divide God’s Land.. Katrina hit the same week that 8,000 Israelites had to move out of the Gaza (us plan). Parting God’s Land brings about the judgment of the nations, the Great Tribulation. Unless you repent (turn from your sins) receive YESHUA HaMashiyach you are without hope in the soon coming plagues, when men will seek death and it will flee from them…None of the wicked will understand. The righteoss will shine forth in the Kingdom and only with their eyes will they see the fate of the wicked.
October 17th, 2008 at 5:36 pm
How about them taking the Zeitgeist review down? Haha. What?? Was hundreds upon hundreds of comments and hits bad for the site? Too bad everyone shot down your little review. Ha.
October 17th, 2008 at 5:58 pm
http://ca.youtube.com/watch?v=.....re=related
October 17th, 2008 at 6:23 pm
hey poet…….ur right …this site should be called info/fox news…….ive lost alllll respect for alex jones/hannity………….
October 17th, 2008 at 6:39 pm
PALM BEACH GARDENS, Fla. – U.S. Rep. Tim Mahoney, embroiled in an adultery scandal and a tight race for re-election, admitted Friday to having at least two affairs but insisted he broke no laws and will not resign. The first-term Democrat conceded that one of the affairs began as he was running on a family values platform to replace Mark Foley, a Republican who resigned amid revelations that he sent lurid Internet messages to male pages who had worked on Capitol Hill as teenagers.
ANOTHER FINE EXAMPLE OF A POLITICIANS AT WORK
October 17th, 2008 at 8:02 pm
Exactly how much toxic waste is still is floating around in these foggy waters of the markets?
- Have the bad mortgages been separated from the good ones and have the the mortgage-backed securities been revalued?
- Has the counerparty risk in the credit default swaps and the interest rate swaps been sorted out?
- Has the expansion of consumer and credit card debt reached its limits?
- Have the bad mortgages been separated from the good ones and have the the mortgage-backed securities been revalued?
- Are expensive wars stopped. (Paying of the Taliban is costly Business, where does Obama gets his bribing money needed when prez- probably from the Blackop Afghaan poppiez
- Are expensive bailouts stopped? (Quess not, 5 what?)
October 17th, 2008 at 8:36 pm
When we as a nation cohesively get tired of being rooked by our so called “leaders” and take action. It is obvious no action less than physical will be adequate and I hate that will be required, but as I said..It is obvious and they(the politicians) are secure that we as citizens will remain apathetic.
My question.. is when will enough in numbers growed tired enough of being deceived to actually do something about it?
We wouldn’t tolerate this from our neighbors or common thieves..why do we tolerate it from people who seem to have immunity through self voted laws in WA DC?..
I remain under the radar.. and sit quietly watching while all around me question but take no action… I find it amusing to see people who hate the “system” yet refuse to withdraw from it..
October 17th, 2008 at 9:35 pm
I called my congress critter and said no money for wall st. He is a republiscat and he first said no, but then yes the next time. What part of no, do you think he doesn’t understand? Anyway you all know the rest. Just saw the CNN interview with Ron Paul, once again he tells them like it is. Funny thing, the twit doing the interview after he says how bad the whole dollar system is and we’re watching the end of a monetary system and that the number of freedom loving people is growing and will get bigger after the coming collapse, she dismissively says at the end, you brought up some good points. Like he had just made a some small remark. They just don’t understand the power they are going to stir with the coming end of the dollar, it’s going to be like the french revolution and she better get on that plane with the rest of the trash we’re gonna be coming after. I do believe that Ron is calling us to arms. Get ready and get mean!
October 18th, 2008 at 11:54 am
The US isnt paying on interest. Now we have a 800 trillion amero’s going to China. How many Amero’s will we get for a dollar!
October 18th, 2008 at 12:23 pm
I would like for someone to provide ONE credible site that the Amero even exists.. much less is used to pay someone in another country by the US.
Just one site that is credible.. That is all I ask.
October 18th, 2008 at 1:30 pm
“WHO LED US INTO THE BURNING THEATER?” ~ZDLR~
Seek those who led you here. And let a small group of Iraq Veterans “Smoke’em”.
October 18th, 2008 at 7:11 pm
Exactly #32.
I wish the big collapse would hurry up and get here, I’m sick of waiting. Then we can eat our gold coins.
October 18th, 2008 at 9:17 pm
@31 its not how mnay ameros for the dollar, its vice versa. The only way people will usher in the amero is the dollar will go so low the amero will be welcomed as an alternative by the masses as a positive thing. And there will be incentives to switch to the new currency (amero or not, recent talks of a global currency cause me to doubt the reality of the amero in these new circumstances) and more than likely a “stimulus package” to those that change 1st… so disgusting.
http://www.latruth.com
independant, unbound
October 19th, 2008 at 3:09 am
Check out what my man Congressman Tim Ryan (17th district Ohio) had to say about the bailout bill. Hit the nail right on the head!!!!
“I will not vote for a blank check to bailout Wall Street bankers. Any legislation must have vastly increased oversight and regulation of the financial services industry, prohibitions on excessive executive compensation, relief for homeowners facing foreclosure, and prohibitions on taxpayer money going to foreign banks.
“More importantly, every American should be outraged that the Bush Administration and the Republicans in Congress continually block small increases for education funding, expanded health care and increased middle-class tax cuts on the grounds that we can’t afford them, yet when it’s time to bailout the big money people on Wall Street, there’s no time to spare and no check too large. If only we could get this kind of timely attention for gas prices, consumer protections and other initiatives that benefit average Americans. ”
I would vote for him for president any day any time, this guy is truly the ballsiest politician in Washington. He just young enough and moral enough to say no to the elite at every turn!!!
I would recommend googling some of his speeches in congress because this guy is truly passionate and influential beyond his years.
October 19th, 2008 at 6:19 am
Casual Observer stated… “Solution to the problem – Get Congress out of the money business”. The observer fails to realize that the Federal Reserve, a bank of issue, is unconstitutional to start with because the administrators of the central banks are subject to executive approval by the President thus removing the system from Congressional control. Article 1, Sec. 8, Par. 5 of the Constitution expressly charges Congress with “the power to coin money and regulate the value thereof”. The reason the gov likes the unconstitutional FED is the easy/unlimited access to “dollars” without having to deal with the taxpayers directly and the huge hidden tax they receive through “inflation”. And of course the banking cartel gets to collect interest on NOTHING (fractional banking). This criminal syndicate has bankrupted the US to the tune of $13,000,000,000,000 while making a fortune for themselves. The “solution” is to get rid of the FED and return to the “republic” and its constitution and its constitutional MONEY (regulated by congress). This system worked just fine and the national debt was next to nil.
October 19th, 2008 at 9:31 am
Lex Quadruplator #37-
I know exactly whatthe FED is and how it came to be.. I have posted as such many times.. unbeknownst to you.
The FED became “conveinient for the GVT in 1913 when The big banks knew GVT was weak enough to be using W. WIlson.
GVT promotes one thing efficiently.. MORE GVT.
When I say out of the money business.. I mean do away with “freebY” programs that are not free.. i.e welfare, subsidized farming, Dept of Education, Child Protective Services,,,, basically everything that came along with LBJ’s “Great Hnadout Society”.. All these programs seem too be “free” to the recipients.. but cost the citizen through GVT…
When I say out of the money business.. I mean the Federal GVT must finance itself withing the bounds of the Constitution through taxes and tariffs as it did, for the most part, except during the Civil War. If it cannot finance itself withing the bounds of the Constitution it must make cuts as necessary.. INSTEAD OF GROWING, as it has under GWB.
Ever notice the GVT jobs have the best pay, benefits and perks.. That is not by accident. It is attractive and creates a sort of citizen “nepotism” good ole’ boy system..
“Inevitable.
What’s happening now is precisely what the Founding Fathers were so eager to prevent.
It’s not that any one person is plotting tyranny- but when the concentration of power reaches critical mass, ordinary public servants mutate into tyrants, and we are seeing this at all levels.
The duty of a patriot is to protect his country from its government.” — Thomas Paine”
October 19th, 2008 at 9:41 am
I cannot wait until the US GVT has to start cutting social programs where the second and third generation “careeer welfare recipients” get their checks cut off.. and throw in the “Baby Boomer” social ecurity recipients who have paid in all their lives now.. and all these young girls who have produced you children on short term WIC, Subsedized housing, telephones and utilities.
Throw in when GVT has to cut all these “fine GVT jobs” that pay so well..and you have to pull the GVT emplyee from the citizen who pays taxes access to automatic pay increases..and throw these GVt employees bank into the ranks of the dregs of society who paid their income through taxation so wrong. They will declare to the high heavens how wrong they were done by the GVT and yet not consider a moment that the person they complain to was living on less..and paying theri income while doing so.
Again… GVT has become a 40 pound tick on a 10 pound dog’s back.. the dog cannot survive the parasite.. one or the other has to go.. or both will die.
Which President wants to come out and make that announcement?..