Were The Bank Bailouts Good For The Economy? By Anthony Cascio

by Anthony Cascio

Were the bank bailouts good for the economy? By Anthony Cascio The bailout was triggered by a record $140 billion dollars being pulled out of money-market accounts, usually considered to be the safest of investments. This occurred because investors were moving the funds to U.S. Treasuries, which caused the yields to drop to zero. To contain the panic, the Treasury agreed to insure these funds for a year. In addition, the SEC banned short-selling of financial stocks until October 2 of 2007 to reduce volatility in the stock market. The government then bought these bad mortgages because banks were afraid to lend to each other. This fear caused the LIBOR rates to be unnaturally higher than the Fed Funds rate and stock prices began to plummet. Financial firms were unable to sell their debt. Without the ability to raise capital, these firms were in danger of going bankrupt, just as Lehman Brothers did, and AIG and Bear Stearns would have without Federal intervention. It can be argued that the initial rescue phase of the bailouts program was necessary because it helped to avoid a domestic and global banking disaster. But, contrary to popular belief, that was the easiest part. To think that a powerful central bank, like the US Federal Reserve, would have the audacity to make journal entries to the credit of targeted institutions such as Citigroup, Bank of America, AIG (American International Group), JPMorgan Chase, Wells Fargo, General Motors, Goldman Sachs, Morgan Stanley, PNC Financial Services Group, U.S. Bancorp, GMAC Financial, Chrysler, Capital One Financial, Regions Financial Corporation, American Express, Bank Of New York Mellon Corp, State Street Corporation, Discover Financial, and replenish their corporate coffers by using their so called "quantitative easing" just boggles the mind. The Fed, just like the other G8 central banks, are the only entity that can create money 'out of nothing' by increasing the credit in its own bank account. That’s just what they did. They purchased a ton of treasuries from Goldman Sachs at a premium when they could have just gone to the treasury department. I presume that this was done to hide the fact that they were making a back room deal for their cronies, which is why all of the big banks that were too big to fail, received all the bailout money. The Fed started quantitative easing (printing money) because of the deflation, which is indicated from the CPI index, which indicated that prices were dropping like crazy. This means that consumers could buy more goods and services for less money. But the Fed, said that this was bad for the economy. They would rather have the inflation. When the people could have benefitted from the deflated prices during the recession, The Fed’s quantitative easing (printing money) caused the gas prices to go up, along with , food prices, health care costs, tuition prices, taxes, subway fares, stock prices, and bond prices are also higher than a year ago. The only thing deflating is the Fed’s credibility. The Fed has been wrong about every major economic development that has occurred over the past twenty years. They didn’t see the internet stock bubble, in fact they contributed to it. They also caused the housing bubble. They didn’t see the housing bubble either. They didn’t see the sub prime mortgage crisis bubble either. In fact right before the CDO’s blew up, the Fed said, that the sub prime problem was contained right before the bubble burst and Lehman Brothers failed. The Fed is run by Ben Bernanke, the Fed chairman. Ben Bernanke has no business experience, he has no policy experience, or has he ever run in an election. So what qualifies this man to play God with our economy? Is it because he has a nice beard? Who appointed this guy anyway? Well, he was first appointed by President George W. Bush, then he was reappointed by President Barak Hussein Obama, who by the way, has yet to prove that he was born in this country. In fact, Governor Abercrombie, the Governor of Hawaii, who is a big supporter of President Obama, has recently admitted to a reporter friend of his, and he stated that he used all of his powers to search all of the records to prove that the President was indeed a citizen of Hawaii. But to no avail, he could not come up with any birth certificate or hospital birth record. So let’s get back to the original question. Did anyone benefit from the bailouts beside Wall Street? The economy obviously didn’t experience a swift recovery. Unemployment is still high; the mortgage sector is still in a shambles. Banks are still reluctant to lend. Consumers still aren’t buying like they have been before. The stock market may be up but, the "real economy" is still down. The government is also manipulating the gold and silver markets by trying to keep them down in order to make the dollar look good. Even though, the banks had a lot to do with causing the financial crisis, financial intermediaries are necessary to keep our financial and economic system running. Today, a majority of banks today are more profitable than a year ago even though some pockets of the industry are still recovering from it's liquidity problem that has devastated them since the recession erupted. Regrettably, nothing has changed. These institutions are resorting again to the leveraging practices that wrought havoc to the economy in the first place, under the guise of a regulatory body that is blind, deaf , dumb, and tongue-tied. Banks, should be encouraged to pursue and make profits, but when making profits comes at the expense of an entire system, this is just immoral. The problem is that speculators use derivatives to bet against their benefactors. Such practices are treason if one considers that the speculators only help the private interests of elites (their foreign investors) who seldom factor morality into the profitability equation. It's all about the money to them. In summary, it is necessary to point out once again that the only people who benefitted by the bank bailouts were Goldman Sachs and his friends the big banks and insurance companies, and the federal government. The tax payers and future generations of tax payers will ultimately suffer. They think that their money is safe in a bank because their money is insured up to $250,000. Technically, they are insured up to this amount. But what they fail to realize is that because of the bailouts and the fact that our deficit and the interest is growing at an exponential rate, due to the careless spending by the Fed and the Obama administration, that $250,000 will be worthless when they have to go to the store to buy a loaf of bread.

Quantitative Easing Explained in Simple Terminology. This is why we need to Abolish the FED.