Bail Out Total as of Nov. 18, 2008

I’ve tried to keep track of the growing amount of bail out dollars since I realized that the corporate media was focused only on Bush’s Bailout.  Little attention is being paid to what was given to AIG or Bear Stearns or Fannie/Freddie or … the list does go on.  Most of them garnered a small piece of attention when first announced, but I haven’t seen much in the way of keeping track of the total or more importantly what that total bailout means for the U.S. economy.  Others are doing a better job than I of keeping track and I will use them as a source.  One of my daily visits is to bonddad’s blog.  He notes that CNBC is his source of the following: the Bailout total is $3.8 Trillion.

The biggest heist in history is going on right now.  It is being perpetrated by George Bush and his gang of cronies.  What will happen to the U.S. economy as a result?  How long will it be before the U.S. defaults?  Will the Cons receive the blame they so richly deserve?

Bush and Banks Robbing the American Taxpayer

I’ve written about this a little since Sep 15th, when everything in the financial markets went to hell.  I didn’t trust the Bush “administration” to handle the financial crisis with any degree of honesty or integrity.  I take no pleasure in reading news reports that my worst fears continue to come true.  Bush and Sec. Treasury Paulson are taking American taxpayers for a ride; a ride that they will never be held accountable.  How bad is it already?  As detailed by Jerome a Paris, here are the up-to-date details:

• the original $700 billion bailout;
• an additional $140 billion in tax breaks for banks (quietly non-announced by the Bushies);
• $150 billion for AIG, on much sweeter terms than they were paying for the earlier $85 billion bailout (with a whoopping 5% drop in the interest rate they have to pay, for instance);
• lest we forget, the $29 billion guarantee to JPMorgan for Bear Stearns assets (but that’s almost small change now);
• and $1,200 billion new liabilities on the Fed’s (ie ultimately the taxpayers’) balance sheet, backed by mostly junk paper;

That’s $2.3 Trillion in just under two months’ time.  From a party that will whine for the next four years that Democrats are being fiscally conservative.  Is it responsible or moral to give away more taxpayer money to banks that ran around unregulated for years?  Is it responsible or moral to renegotiate the AIG deal with a lower interest rate when they blew through their original giveaway in a few weeks’ time?  Is it moral or responsible for the Federal Reserve to refuse to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral?

This is the kind of immoral and irresponsible behavior that cost the Cons the 2008 elections.  Yet, the lesson they’ve learned so far from the elections is they didn’t attack Democrats enough; they weren’t loud enough about their failed ideas and policies.  Believe me, the American voter heard more than enough disgusting Con attacks.  Voters have suffered under the Cons’ failed policies.  The problem is Con policies are too extreme for America.  If Cons want to come back toward the center-left the nation actually occupies, they’ll win plenty of elections.

More Bad Economic News: 9/17/08

How bad are things going to get? Where is the bottom to any of the markets? I don’t think we’re there yet, and that could be the worst news yet. August saw a 6.2% drop in housing starts, dropping to an annual rate of 630,000 units. That number is the smallest since 1991. Construction activity is 33% lower than it was a year ago. And yet Republican John McCain thinks our economic fundamentals are strong? It’s anything but for the vast majority of us. How is he going to fix the economy if he can’t see the problems with it in the first place? The next few months shouldn’t be any better as building permits fell 8.9% last month too.

Gone unreported so far, manufacturing has also taken a hit this year.  The Empire State Manufacturing index has been negative for nearly a year.  Also, industrial production has grown increasingly negative all this year.  industrial capacity is being utilized at levels last seen in late 2005, down consistently since early 2007.  Where are people going to get jobs if overall production is down?  Businesses wait until there is demand to increase their worker numbers.  We’ll be in the doldrums, at best, for some time to come.

The housing problems have, as we all know now, led to the biggest restructuring of the U.S. finance sector since the Great Depression. Bear Stearns was bailed out in March. Lehman is being piece-mealed for peanuts. Fannie Mae and Freddie Mac were brought back under government control, contrary to the belief of Republican Sarah Palin, who thought they already were (see my above comment regarding John McCain). Oops. Merrill Lynch was bought for pennies on the dollar. And now insurance giant AIG is getting a bridge loan from the Federal Reserve. Wait … doesn’t that mean that we’ve just nationalized another part of the financial system?  Where are the Republican cries for capitalism and free markets? The Fed also decided yesterday to keep interest rates steady at 2%, keeping ridiculous amounts of cash flowing through the system. Is it really any wonder why inflation has been steadily growing this year?

The government is slowly starting to do something about the situation. What’s depressing is they didn’t do anything when the only news was sub-prime mortgage problems. Once prime mortgages started failing and housing prices started falling due to last year’s sub-prime foreclosures, the big, unregulated financial giants started writing their assets down. They had been gambling big time with people’s mortgages, trying to create profit where they shouldn’t have. They lost on their gambles and now Americans are losing their homes. Now that the big houses are discovering their assets are wroth far less than what they’ve been reporting, Wall St. has noticed. Following Monday’s 500 point DJIA drop, the Dow is down over 300 more points today. One year ago, the Dow sat at 14,000. Now, it’s at 10,750. And now, finally, the Republican’s government is doing something about it. Not when regular Americans were starting to lose their homes a year ago, but when millionaires and billionaires are seeing their portfolios shrink.

These problems were accurately predicted by more than a few people as far back as five years ago. Corrective action could have taken place even then. But greed was rampant and rich people convinced themselves that they could write new rules for the system. Ideologues like George Bush and John McCain keep trying to convince Americans that everything is fine and under control. It was their failed economic policies that got us into this mess. There is no way they’ll get us out of it.

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[Update]: I guess if the FDIC runs out of money, that’s a sign of economic fundamentals’ strength, correct?  It’s a good thing no one tried to help those sub-prime mortgage owners renegotiate their mortgages.  I’m sure they’re learning their lessons now…

Random Pieces 3/17/08 – Updated

Happy St. Patrick’s Day!

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I’m sure more than a few of us read that the Federal Reserve and JP Morgan Chase bailed out the large investment firm Bear Stearns last week. Actually, we’re the ones that bailed the bank out. Jeff Blum at OpenLeft has some darn good questions. For instance, why can’t we provide a few billion dollars to help out the borrowers? What benefit will bailing out this firm provide the rest of us?

My feelings on this are: we shouldn’t be bailing out large investment firms that knowingly took on incredibly risky investments. It’s interesting to listen to the economic elite put all the blame on the sub-prime mortgage mess on the people who signed the papers. According to the lenders, if people didn’t know what they were signing for, they shouldn’t have signed. Therefore, they deserve what happens to them. Well guess what, turnabout is fair play. If the borrowers should have known what they were getting themselves into, what responsibility should the lenders have? Apparently none.

Additionally, I find it very interesting that this move is reminiscent of activities last undertaken … in the Great Depression. But according to Bush, the economy is doing just fine! Why do Democrats constantly have to clean up Republican’t messages?

I also think it’s disgusting that these same elitists want government to stay out of their business with regard to application of regulations, but as soon as things look bleak they think it’s the government’s responsibility to bail them out. Seriously, WTF?! Does the ‘free market’ work or does it not? Really, who are the real welfare queens? Bear Stearns and the other large firms got themselves and the rest of us into this mess, more knowingly than those who borrowed from them. I have absolutely no pity for these entities who operated for years as though they were above the law. They should reap what they sowed – maybe a couple large firms’ failures would serve as a wake-up call to the remainder of them to work with regulators in the future. Bailing this firm out sends a message to all of the firms that taking on too much risk is okay since the taxpayers allow themselves to be fleeced time and time again.

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I love conservative economic policies. The U.S. is no longer the world’s largest economy.

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Update – Well isn’t this interesting: Bonuses handed out in 2006 at Bear Stearns totaled $2.6 BILLLION. As of today, the company is only worth 1/10 of that, down from $40B back in January. Tell me again why taxpayers got saddled with a multi-billion dollar bailout please. Oh yeah, because regulation is bad and greed is good.

Remember this when you pay your next insurance premium: we can’t afford universal health care because it’s more important to bail out Bear Stearns.

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Update 2 – Granny Doc nails it.