Bailout Bullshit Broken Down

[Tehuti-4]

Editorial New York Times October 28, 2008
Loans? Did We Say We'd Do Loans?

According to Treasury Secretary Henry Paulson, the chief proponent of the big bank bailout, flooding the banks with taxpayers' money was supposed to get them to start lending freely again. And that, in turn, was supposed to stabilize the markets and prevent the downturn from being worse than it otherwise would be.

It was not entirely clear from the start exactly how Mr. Paulson would ensure that things would go that way. Indeed, earlier this month, shortly after the bailout was enacted, The Times's Mark Landler reported that Treasury officials also wanted to steer the bailout billions to banks that would use the money to buy up other banks.

Now, lo and behold, with $250 billion in bailout funds committed to dozens of large and regional banks, it turns out that many of the recipients of this investment from taxpayers are not all that interested in making loans. And it appears that Mr. Paulson is not so bothered by their reluctance.

Mr. Paulson and the bailout recipients have some explaining to do. Congress should plan hearings as soon as possible — and take action to set a clear strategy.

In his column on Saturday, The Times's Joe Nocera told about a conference call that he had listened in on recently between employees and executives of JPMorgan Chase. Asked how an infusion of $25 billion of bailout funds would change the bank's lending policy, an executive said the money would be used to buy other banks.

"I think there are going to be some great opportunities for us to grow in this environment, and I think we have an opportunity to use that $25 billion in that way," the executive said. He added that the money could also be used as a backstop in case "recession turns into depression or what happens in the future."

There was not a word about lending — not to businesses or home buyers or car buyers or students or other consumers. Just the opposite. In response to another question, the executive said that the bank expected to continue to tighten credit.

JPMorgan Chase is not alone. The Wall Street Journal reported on Tuesday that some regional-bank recipients of the bailout money had acknowledged that only a small portion would be used for loans and the rest for acquisitions and other purposes.

It is prudent for government officials to encourage healthy banks to acquire weak banks. Doing so prevents bank failures and avoids the taxpayer costs and economic disruption that accompany such collapses.

The problem is that the Treasury has refused to put conditions on the banks' use of the bailout funds, allowing them, in effect, to make purchases of banks that are not on the verge of failure. That could help to maximize the banks' profits — a worthy goal when the capital they are using is from private investors.

However, when they're using taxpayer-provided capital, as they are now, Congress and the public have every right to require that the money be used to benefit the public directly, even if doing so crimps the banks' profits. If Treasury won't impose conditions, Congress must, including a requirement that banks accepting bailout money increase their loans to creditworthy borrowers and limit their acquisitions to failing banks, such as those listed as troubled by the Federal Deposit Insurance Corporation. The bailout should not be an occasion for banks to make a killing.
An even bigger problem is that the bailout was sold as a way to spur loans. If that never was — or no longer is — the primary aim, Congress and the public need to know that. Lawmakers should not release the second installment — $350 billion — until they have answers and guarantees that the bailout money will be spent in ways that put the public interest first.
__________________________________________________ _______________

November 11, 2008
Op-Ed Columnist
Beyond the Fat Cats
By BOB HERBERT

The most important thing the Democrats and President-elect Obama can do with regard to the economy is bring back a sense of fairness and equity.

The fat cats who placed the entire economy at risk with their greed and manic irresponsibility are trying to lay claim to every last dime in the national Treasury. Meanwhile, we're nowhere close to an economic recovery program that will help the people who are hurting most.

Back in September, with the credit markets frozen and the stock markets panicking, the treasury secretary, Henry Paulson, was telling anyone who would listen that his $700 billion bailout package had to be passed with lightning speed — no time to look at it too closely, no time for dissent.

The package was modified, but hurriedly. Now we learn that while all eyes were focused on this enormous new burden for American taxpayers, Mr. Paulson's department was also engineering — separate and apart from the bailout — what The Washington Post described as "a quiet windfall for U.S. banks. "

With virtually no public attention, and without the input of Congress, Treasury made a change in an obscure tax provision that benefited banks to the tune of well over $100 billion. Was this good policy? In the absence of proper scrutiny, how is it possible to know?

We've also learned that the government bailout of the giant insurer, the American International Group — already more than $100 billion — is apparently insufficient. Tens of billions more are needed.

When the Champagne and caviar crowd is in trouble, there is no conceivable limit to the amount of taxpayer money that can be found, and found quickly.

But when it comes to ordinary citizens in dire situations — those being thrown out of work or forced from their homes by foreclosure or driven into bankruptcy because of illness and a lack of adequate health insurance — well, then we have to start pinching pennies. That's when it's time to become fiscally conservative. President Bush even vetoed a bill that would have expanded health insurance coverage for children.

We can find trillions for a foolish war and for pompous, self-righteous high-rollers who wrecked their companies and the economy. But what about the working poor and the young people who are being clobbered in this downturn, battered so badly that they're all but destitute? Can we find any way to help them?

In an article on Sunday, The Times mentioned a young woman in Philadelphia, Kyuana Everett, who is 21 years old, has a high school diploma and is desperate for work. "I've tried everything," she said, "retail sales, office work, but the employers all say they have too many staff and they're not hiring now."

The article noted that Ms. Everett cannot even afford to rent a room for herself. She stays with her grandmother, secretly, in a home for the aged.

This is no ordinary recession. With brokerage houses, banks and a mammoth multinational insurance company depending on the Treasury for resuscitation, and with automakers like General Motors staring bankruptcy in the face, it has the feel of a monster downturn, a recession on steroids.

That kind of downturn buries people at the bottom of the economic ladder. We have an obligation to look out for them as well as for the banks and the A.I.G.'s of the world.

If I could place a message on the desk of the incoming president, it would have just one word: Jobs.

With credit cards maxed out, the stock market in the tank, family savings depleted and home equity evaporating, that weekly or monthly paycheck has never been so important.

Congress and the new administration need to think big — bigger than the stimulus package of $100 billion or so, which is being kicked around. Now is the time for a coast-to-coast "Rebuild America" infrastructure program. Put people to work repairing and rebuilding roads and bridges, decrepit schools and ancient sewer systems. Get the construction industry back on its feet.

And now is the time to get going on candidate Obama's promise to move the country as close as possible to a system of universal health insurance. Pump the money from that vast project into the economy and get those jobs up and running.

And let's get some help, quickly, to the families who are suffering most from the housing crisis — the ones trembling and heartbroken in the dark shadow of foreclosure.

The naysayers will claim that all of this is too expensive, that we can't afford it. Where were they when we invaded Iraq? And how do they feel about the staggering amounts being funneled, with nothing like the proper oversight, to the banks and Wall Street?
Let's try investing in America and its people for a change, rather than just hurling our billions into the abyss.
__________________________________________________ ___________________________
Bailouts for banks: Layoffs for workers
12 November 2008

Working people in the United States are confronting a wave of layoffs that is sweeping through every sector of the economy, with devastating social implications. The same prospect confronts workers in a host of other countries.

With the US economy now shedding approximately a quarter million jobs a month, the ranks of those officially counted as unemployed have swollen to more than 10 million. Over 6 million more have been relegated to involuntary part-time work, and nearly 2 million have fallen off the charts because they have ceased actively looking for a job. Younger workers trying to get their first job are increasingly finding the door to entry-level employment slammed shut.

Nearly one out of eight American workers is now unemployed or underemployed, and this at what most economists acknowledge to be only the onset of a recession and the beginning of what looks to be a very cold winter.

In the first week of this month alone, a range of companies announced a combined total of 15,000 layoffs. The past several days have provided ample evidence that the pace of job destruction is accelerating.

• The German-owned parcel delivery company DHL Express announced Monday that it is ceasing domestic shipping operations in the US, wiping out 9,500 jobs and threatening to turn Wilmington, Ohio, where 7,000 of those jobs are located, into a ghost town.

• On the same day the electronics retailer Circuit City filed for bankruptcy, laying off another 700 workers on top of the 7,000 layoffs it announced a week ago, together with the closure of 155 stores.

• Financial analysts and industry executives told the Financial Times of London that soon-to-be-announced budget plans for the financial industry will entail another 70,000 layoffs in the US.

• In New York City, Mayor Michael Bloomberg announced last Thursday that the city will cut 3,000 jobs from its workforce. Similar actions are being taken by local and state governments and other public agencies throughout the country, as they face declining tax revenues and increasing difficulty obtaining credit.

Among the sectors hardest hit by the deepening financial crisis is the auto industry, with the Big Three US carmakers—General Motors, Ford and Chrysler—all teetering on the edge of bankruptcy.

GM Tuesday announced that it will place nearly 2,000 more autoworkers on indefinite layoff in the first quarter of 2009. This comes on top of another 3,900 workers who are facing indefinite layoff as of this Friday. Ford announced 2,600 job cuts last Friday.

GM's announcement came as the company's stock price plunged by 15 percent, hitting the lowest level since the middle of the Second World War. Following third-quarter losses totaling $4.2 billion, the country's biggest auto company reported that it is running dangerously low on cash needed to maintain operations, prompting fears that it could soon go bankrupt. According to some estimates, such a bankruptcy could result in the destruction of up 2.5 million jobs as the impact spreads from GM and its own 325,000 employees to its suppliers, dealerships and related sectors of the economy.

In the face of this unfolding catastrophe, the political establishment has begun discussing an extension of the government bailout of the major US banks and Wall Street finance houses to the auto industry. Democratic President-Elect Barack Obama reportedly discussed such a proposal with President Bush at their White House meeting Monday, and Democratic House Speaker Nancy Pelosi said Tuesday that the House will convene next week to vote on a proposal to provide the Big Three with aid from the Treasury Department's $700 billion financial rescue program.

While Democratic politicians are pitching the proposed aid to the auto companies as a matter of spreading the bailout from "Wall Street to Main Street," the real aim on both streets is the same: Rescuing the private fortunes and property of capitalist investors and executives, while forcing the working class to foot the bill.

The social interests being defended by this vast outlay of taxpayer funds were spelled out in a column written for the New York Times last week by two prominent Harvard University economists, David Scharfstein and Jeremy Stein. They warned that the bailout of the banks placed no restrictions on the payout of dividends to their wealthy shareholders—not to mention the absence of any other requirements on how the banks use the hundreds of billions of dollars in public funds they receive. If such dividends are paid out at current levels, fully $25 billion of the $125 billion in taxpayer money going to the country's nine biggest banks will be paid out in the form of dividends to these shareholders in the first year alone.

The government's outlay to prop up insurance giant AIG was nearly doubled to $150 billion Monday. It was also revealed that the Federal Reserve's lending topped $2 trillion for the first time last week. In this ever-expanding bailout, seemingly unlimited funds have been made available to secure Wall Street's fortunes, while Washington has failed to make available any significant aid to the millions of unemployed or the millions more facing the loss of their home.

There should be no illusions that a bailout of the Big Three would be any different. Its aim would be to restore profitability, and it would be conditioned on demands for a sweeping rationalization and downsizing of the auto industry, together with new attacks on wages and on health and pension benefits for both active workers and retirees.

The answer to the jobs crisis created by the parasitism of Wall Street and the looming bankruptcy of the auto industry and other sectors of the economy lies not in the bailout of their owners, but rather in the struggle for socialist policies, including the nationalization of these giant corporations and their transformation into public utilities, subject to the democratic oversight and control of the working population.

Instead of pouring billions more dollars into the private coffers of America's financial elite, the huge bonuses and compensation packages that the executives have awarded themselves while leading their companies into bankruptcy should be confiscated and utilized to improve conditions of life for those facing unemployment, the loss of their homes, the shutoff of their utilities and the loss of their life savings.

Nationalization under workers' control would establish the foundations for reorganizing economic life in the interests of the majority and protecting working people from the return of conditions not seen since the Great Depression. It would create the framework within which production could be geared to the satisfaction of human needs, rather than the generation of profit and the accumulation of personal wealth by the financial aristocracy.

It would allow the rehiring of the unemployed and the provision of jobs to young people by reducing the work week to 30 hours, with no reduction in pay.

The incoming Obama administration will carry out no such measures. It will be committed to the defense of the corporate and banking interests which dominate both the Democratic and Republican parties and which financed the Obama campaign. It will impose whatever conditions are required to defend these interests at the expense of working people.

The struggle for nationalization under workers' control can be advanced only through the mobilization of working people independently of the Democrats and the entire two-party system, through the building of a new mass political movement based on a socialist and internationalist program. This is the aim of the Socialist Equality Party.

Bill Van Auken

[Tehuti-4]

We mos def need to spread the 411 on this bullshit. People should be angry as hell about this outright thievery. I mean this is gangsterism and cronyism on the most blatant level ever. I mean they doin this right in front of mf's faces. The arrogance and avarice of these bastards is just astonishing. Poor folk can barley eat...can't take care of their children for working 80hrs for these fuckers, can't afford to pay your damn light bill or heat your damn house, can't afford to go to a fuckin dentist to get your teeth fixed and they have the unmitigated gaul to take what little hard earned money we have and hand it over to these greedy savages!!!!

I'm announcing right now the Obama party is over, put the champagne glass down get your shit and report to the front lines. Time to light the fire...cause if we don't this screwing will continue until we all need colostomy bags.

[Langalibalele]

Originally Posted by Tehuti-4

We mos def need to spread the 411 on this bullshit. People should be angry as hell about this outright thievery. I mean this is gangsterism and cronyism on the most blatant level ever. I mean they doin this right in front of mf's faces. The arrogance and avarice of these bastards is just astonishing. Poor folk can barley eat...can't take care of their children for working 80hrs for these fuckers, can't afford to pay your damn light bill or heat your damn house, can't afford to go to a fuckin dentist to get your teeth fixed and they have the unmitigated gaul to take what little hard earned money we have and hand it over to these greedy savages!!!!

I'm announcing right now the Obama party is over, put the champagne glass down get your shit and report to front lines. Time to light the fire...cause if we don't this screwing will continue until we all need colostomy bags.

Americans like getting it raw, no Vaseline! (Just like the ancient Greeks, LOL) That is the weakness in the Imperialist centers, and if we can cut off their sources of capital, reduce the power and influence of money, while simultaneously getting people to take the streets and making a revolution, Imperialism will be finished.

[Tehuti-4]

Originally Posted by Langalibalele

Americans like getting it raw, no Vaseline! (Just like the ancient Greeks, LOL) That is the weakness in the Imperialist centers, and if we can cut off their sources of capital, reduce the power and influence of money, while simultaneously getting people to take the streets and making a revolution, Imperialism will be finished.

'

LOL yea I suppose you right. Amazingly you still got fools arguing the virtues of capitalism. ROTFLMBAO. any mf not a multi millionaire talkin that shit is demented.

[G1deon]

Originally Posted by Tehuti-4

... get your shit and report to the front lines. Time to light the fire....

Originally Posted by Langalibalele

... simultaneously... making a revolution, Imperialism will be finished.

NOW THAT"S WHAT I LIKE TO HEAR!!

I'm built for this