10/1/08

Time Magazine: The Truth About The Bail Out

Forbes, just yesterday, let the truth slip out about how the bail out would artificially keep your cost of living higher. Today, Time Magazine tells you to your face the facts about a bail out:

Let Risk-Taking Financial Institutions Fail
By Ari J. Officer and Lawrence H. Officer

Follow the money. Average Joes and Janes are not the holders of the other side of complicated, over-the-counter derivatives contracts. Rather, hedge funds are the main holders. The bailout will involve a transfer of wealth — from the American people to financial institutions engaging in reckless speculation — that will be the greatest in history.

Rescuing financial institutions is not the best solution.
Information and facts are the only things that will protect you from any attempts by the government to take your money and hand it over to the support the lavish lifestyles of these corrupt, reckless and foolish investors.

Bank Crisis 101 - The Simplest Explanation You Will Find

'Warren Buffett once called derivatives,
"financial weapons of mass destruction"'

They try to hide what it is using fancy words like credit derivatives. Over and over again they tell you it is too complicated for the average person to understand. They are lying to you. You can easily understand this if you read these pieces together. They keep talking about mortgages but they are the smallest part of this entire "shitpile." It is a scam and the bushies have been waiting for months to unleash this "crisis" as an election issue.


Via A Tiny Revolution (h/t Buzzflash), A few words from Abraham Lincoln on this subject:
He's referring to a dispute between private shareholders of the Illinois State Bank:
It is an old maxim and a very sound one, that he that dances should always pay the fiddler. Now, sir, in the present case, if any gentlemen, whose money is a burden to them, choose to lead off a dance, I am decidedly opposed to the people's money being used to pay the fiddler...all this to settle a question in which the people have no interest, and about which they care nothing. These capitalists generally act harmoniously, and in concert, to fleece the people, and now, that they have got into a quarrel with themselves, we are called upon to appropriate the people's money to settle the quarrel.
Lincoln's speech was given just as one of the greatest speculative bubbles in US history was bursting.
Real leadership in crisis of the likes that we have not seen in this country for decades... Perhaps, even, since the last Great Depression.

7 comments:

kathy said...

Seems we have a lot in common here, I have used some of the same examples to explain the financial crisis and horse racing. I also linked to the quote about "financial weapons of mass destruction" as well.

I do think derivatives can be explained and understood, but it does take time for the somebody to break it down into layman's terms.

Plus, there is so much conflicting information about derivatives. They are not a ssets, but investments in derivatives are listed as assets in year end financial reports for banks and brokerage houses.


My big question is, what can we do to solve this crisis, right now.

Understanding the cause will help legislate protection for the future, but it will not prevent the spiral effect that we are now seeing, which will trickle down to us little people in a big way. Got any ideas?

Connecticut Man1 said...

Let me think about it??? Because I know what the problem is, but I would be dishonest to say I have definitive answers. As would anyone else that tried to tell you they knew it all on this.

This is what I would like to say right off the top of my head:

Maybe you are missing the main point?

There is no real crisis.

There is a "shock doctrine extortion demand" and a bad attempt to use it as an election issue by Bush. There are serious problems, but there is no crisis.

There is a problem that could be solved by bringing back regulation like Glass-Stegall and other regulations. They need to stop the high stakes and reckless gambling between shadow banks. There is, also, a very real issue with market adjustment. Stocks, for the most part, need to be devalued.

Banks being forced to sell off their own commodity holdings will help to offset their gambling losses. (And drive down prices for gas, food, everything else). Banks that were too reckless will fold. Banks that were somewhat reckless would be penalized financially, as well, in the sell off of commodities.

Responsible banks will get rich. Responsible investors would get to buy stocks at realistic prices instead of artificially inflated prices.

There is no liquidity issue. There is the reality that banks are refusing to pay the market price for loans because they would rather wait for a government handout.

Why do they have have high interest rates? They have serious gambling issues and ARE A CREDIT RISK.

All we can do is add more regulation so they can't do it again - prosecute the bank fraud because there was some - and let the market settle the rest.

Giving them money under any terms is not a serious option. No matter how much progressive or conservative candy might be attached to any "Bail Out Bill" it would still be stealing from the poor to give to the criminally insane bankers. And it would be morally wrong.

As for the relatively minor mortgage crisis? The homeowners can and should be saved. But not through these reckless banks that should be left to fail. And the predatory lenders should be prosecuted as well.

That is what I would like to say off the top of my head... But I won't.:)

Regardless of what happens here... I believe we are in a recession (have been for a while) and it will get worse.

kathy said...

Connecticut Man, what's the point of telling me I don't understand the main point? We can disagree about the reality of whether or not there is a crisis or if it is just tactical, (which apparently isn't working)or just imaginary. I get that point, if I remember correctly the banks in China were bankrupt in 2002 due to all the bad, unsecured loans that they made, there wasn't a crisis there, things just kept rolling on, but in the end, big money holders do have an effect on small change, at least in my opinion.
I agree with you, nobody really knows how to solve this, whether it's a real or imaginary crisis,
Thanks for the conversation.

Connecticut Man1 said...

I am sorry. I did not mean to insult and I clearly did with the way I started that off. Clearly it was more off the top of my head and less thought out a response than even I meant it to be. Anyways, and for what it is worth, I apologize for being so flippant. There was no real excuse for that.

The one thing I am pretty certain about at this point. I can think of many better ways to spend that kind of money because I am certain handing any of it over to the banks is morally wrong.

kathy said...

Hey, Connecticut Man, thanks, no problem.

I don't know if there are any national banks left, the top banks
were totally invested in derivatives,
it's sort of ironic when you look at these financial institutions claiming derivative awards in prior months. My best guess is that the small, local banks are in good shape but the rest are bankrupt.
Ya know, it might be better for the government to pump up FDIC and SPIC and expand the limits, like as soon as yesterday. This would be the best protection for older people who have life-time savings and IRA's to get them through retirement.

sptmck said...

It's stunning how much we don't know.

Connecticut Man1 said...

What is truly even more stunning, sptmck, is that most of these politicians either know even less than us OR they know and are lying to us.

Now they are trying to tell us it is a good investment for us. What a joke.