President Obama (I can say that now that it is official) is warning America that we need to support his $750B bailout. Specifically, he warned that failure to take “dramatic action” on the package as soon as possible would have devastating long-term consequences for America.
Funny thing, Hank Paulson said four short months ago about the proposed $700B bailout, “I am convinced this bold approach will cost American families far less than the alternative — a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion.”
This after taxpayers were asked to fund Bear Stearns, Fannie Mac, Goldman Sachs, Morgan Stanley, AIG, $150B for the original “economic stimulus” and the big three auto makers. What reason do Americans have to believe or even listen to Obama for this time? More of the same, second verse, same as the first. Given our government more money is like giving a debt-ridden spendaholic a brand new credit card. When will this insanity stop?
I found a very interesting brief article at time.com today. Read it. Here’s the part that caught my eye (emphasis mine):
Do not be fooled. The $700 billion (ultimately $1 trillion or more) bailout is not predominantly for mortgages and homeowners. Instead, the bailout is for mortgage-backed securities. In fact, some versions of these instruments are imaginary derivatives. These claims overlap on the same types of mortgages. Many financial institutions wrote claims over the same mortgages, and these are the majority of claims that have “gone bad.”
At this point, such claims have no bearing on the mortgage or housing crisis; they have bearing only on the holders of these securities themselves. These are ridiculously risky claims with little value for society. It is as if many financial institutions sold “earthquake insurance” on the same house: when the quake hits, all these claims become close to worthless — but the claims are simply bets disconnected from reality.
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
So basically, most of the money Congress is begging us for is needed to bail out financial institutions that have created and benefited from multiple fraudulent financial schemes, all for profit and bonuses. These financial institutions used less than stable home loans as collateral or capitalization to support their own loans. That’s like a consumer using his only car as collateral for multiple home improvement loans. That’s like claiming the same hail damage on your car to your insurance company two or three times.
To me this behavior is criminal. Politicians pawning this off to the public as a dire emergency that Americans need to approve is equally criminal. The American people deserve better than this. Kudos for all that voted against this legislation. Let me quote the Time article again:
Let financial institutions fail, merge or be bought out. The faltering institutions will see their shares devalued and will be likely to be taken over by stronger institutions — as has already started happening. This consolidation of the financial sector is both efficient and inevitable; government action can only delay the adjustment.
And one more thing: In the world I live in I sometimes need to work long hours, nights and weekends. I dont give a crap if Congress worked all day Saturday, how dare Nancy Pelosi convene until Thursday. If this is such a friggin’ emergency, don’t you think that it merits their attention NOW? Get back to work you spoiled, out-of-touch officials. Then again, I think the bailout is pure crap so maybe it makes sense for you to stay home where you can’t hurt America more than you already have.
