Saturday, April 4, 2009

Write Downs

The Federal Government is proposing to buy failed bank assets at 84 cents on the dollar. They say it would go like this: private investors pay 6 cents, the Treasury 6 cents and FDIC 72 cents. Which actually leaves US taxpayers holding 78 cents on the dollar on "assets" worth far less according to independent economists. This blows my mind. One can only assume that President Obama and his economic advisers are so afraid of a total meltdown they will do anything to stave it off including making up fake valuations and printing money to "pay them off." None of which will end this crisis.
The weird part is that the people President Obama has surrounded himself with are all of the Robert Rubin/Goldman Sachs school who fought, and won, the fight against the Glass-Stegall Act. By eliminating the barriers between banking and investing in 1999, Summers and Rubin managed to get rid of one of the last protections from the Great Depression Era regulatory laws. And the effect was predictable enough. Far from modernising banksters ability to compete it gave them the opportunity to cause a world wide train wreck. And that they did.
Meanwhile the people at the top walk away with our millions and here we sit facing impoverishment through unemployment, now officially listed at nearly 16 percent for all classes of unemployed in the US. They tell us 25% marks official depression statistics. We're getting there. especially as the World Bank and the Organization for Economic Cooperation and Development have decided that there will no growth at all in the world's economy though 2010. Hard times appear to be here to stay, no matter what the G20 say. I don't know about the world economy but I know I'm depressed.

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