Doug's Darkworld

War, Science, and Philosophy in a Fractured World.

Bank Hostage Crisis Continues Into Its Sixth Month as Hostage Takers Continue to Up Their Demands

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Well, there was such jolly news about the US economy, I thought it would make a good post. The latest report said that last quarter’s GDP, roughly a broad measure of the nation’s economy, fell at an annual rate of 6.3%, the worst drop in 26 years. People making unemployment claims just rose to a new high for the ninth straight week. And this isn’t just a USA thing of course, all sorts of bad news from overseas here, and here, and here … well, the gentle reader no doubt gets the picture. In fact a lot of people are starting to get the picture: the financial wizards have screwed us all and continue to do so.

Basically starting in the seventies the wealth in the USA started to  concentrate. For the young whipper-snappers who weren’t around then, that’s when giant corporations started buying up all the smaller ones and consolidating ownership of everything. I mean there was a time in this country where things like newspapers and movie studios and factories and just about everything was independently owned. Heck, in the fifties one could drive across the USA and every gas station would have local varieties of soda in their machines bottled at local bottling plants. Now of course from Maine the Florida the sodas in vending machines are all one and the same.

While this trend was alarming enough, by the eighties it was clear that a huge upwards transfer of wealth was taking place in America. Over the past thirty years more and more wealth has been systematically “mined” from the population and into the coffers of these mega-corporations. And the statistics show quite clearly that over the same period the US middle class has been losing ground. All all of this happened with Congress’s full support. Whatever laws, regulations, or deregulations, the big guys wanted, they got.

And while there were people sounding the alarm and pointing out that there were serious problems developing here, since the mainstream media was all owned by big corporations, for the most part they ignored the warning signs and concentrated on their new function: ratings, period. The news turned into infotainment. It wasn’t overt censorship, it didn’t need to be. Just as one example, the 90s digital spectrum giveaway got almost no news coverage. The biggest handout of public assets since the railroad public land giveaways in the 1800s, and most people have never even heard of it.

Now if all this money was being re-invested in factories, infrastructure,  research, resource development, and other long term wealth producing things, it wouldn’t be so bad. Unfortunately that wasn’t the case. While a certain amount was spent building factories overseas, very little was invested in the USA. And a lot was invested in a way to facilitate more suckage of money from local economies. When someone spends money at Costco or Walmart or MacDonald’s, some of that money is leaving their local economy forever.

To make a long story short, by last year this whole financial house of cards was starting to fall apart. Huge amounts of this money was tied up in various financial instruments, and huge amounts of that was based on loans that should never have been made. In any sort of free market economy, all sorts of these financial giants would have started going belly up. It would have caused some economic disruption to be sure, but the end result would have almost certainly been a huge downward transfer of wealth as huge amounts of funny money became worthless, people’s debts evaporated, and all sorts of property was re-acquired by local economies.

And that of course could never be allowed to happen. The banks had enormous amounts of the so called toxic assets on the books, and rather than sell them for what they were worth (next to nothing,) the whole round of “bailouts” began. The purported logic being that banks didn’t know what assets they had were valuable, so they needed more money so they could start lending it out. And as this chart shows, nothing of the sort has happened. The banks have staggering unprecedented amounts of cash reserves now, why the hell aren’t they making loans?

Very simple, greed. The banks don’t want to take any losses on all these terrible real estate loans they made, heck, these guys still think they deserve multi-million dollar “bonuses” as a matter of course. And they are quite literally refusing to make loans until the government somehow compensates them for their bad lending decisions so they don’t have to take the losses. Which is pretty much what Obama’s latest “stimulus” plan seems to be about. The government will “buy” a bunch of these assets, and if it works and the economy recovers, the profit taking can roll on. If it doesn’t and the assets continue to decline in value, why, the taxpayer takes the loss!

Which of course means you and I and Joe Six-Pack are getting it in both ends. Neither solution is viable, because the ugly truth is that a money lending economy based on loan sharking, stealing worker’s pensions, and “borrowing” from the public treasury can only last so long. No matter how much money the Obama administration prints up and gives to the bankers, all it’s going to do is delay judgement day a little further, and make it all the worse when it inevitably happens.

Fortunately we do have an alternative. We can use our enormous military might to force the rest of the world to bail us out. I’ll let the gentle reader mull that one until my next post.

(The above image is claimed as Fair Use under US copyright law. It is not being use for profit, is central to illustrating the post, and its use here in no way interferes with the copyright holder’s commercial use of the image. Credit and copyright: Getty Images. People should be getting angry, and I suspect they are going to get a  lot angrier this summer. And yes, my analysis is somewhat superficial and simplistic, but unless someone can convince me otherwise, I’m sticking to it.)

Written by unitedcats

March 26, 2009 at 9:57 am

Posted in Business, History, World

5 Responses

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  1. Scary possibility- forcing the rest of the world bail us out. Had never thought of it that way. Looking forward to next post.

    Après4

    March 27, 2009 at 1:17 pm

  2. I am a small business owner, with one employee, (myself) I just recently was expanding my business. Putting precious time and money aside to further my future and my community’s then was poison by the environment that I was working in to set up my studio. Now I’m in the my recovery stage, I’m upside down trying to plant my feet in some of the most unstable ground I ever seen, and I lived in CA. I like many others has a story of bad business events, unforeseen or otherwise. Where’s my bonus? With all of the intelligence that is facilitating the multiplying bail outs, you would think someone would point out that sometimes you need to be accountable for your actions and regroup than just extending the inevitable. None of the actions that I have seen implemented has been helping the foundation that is our country. Jobs are scarce, the lines for assistance are growing longer, food prices (all prices) are raising, and what do we think to do… give more money to people that need to go on a diet… they have shown in action their mismanagement of funds and not just AIG. When faced with a problem I try to find the source of the upset not just cover up the symptoms so that it stays unnoticed temporarily, but trying to tell someone to do without that has never, well I hope that it would go better than speaking to a Brick Wall.
    This all seems to be a game to me… I hope that we can change the world into a better place but I wonder if we’ll help it come to fruition, being so busy in our hamster wheel of delight, only to relent after the bomb has dropped.
    Doug your one of my favorite things that I have come across, keep being you.

    Owen Denero

    March 31, 2009 at 6:43 pm

  3. 742,000 jobs LOST in March.

    Soup lines? YES! One in ten getting foodstamps certainly qualifies, yet the lines are invisible.

    More money being pushed ‘upstairs’, so much for “change”.

    ET

    April 2, 2009 at 3:13 pm

  4. This is all about collapsing the economy, forcing a world-wide one currancy and soon to be one world government…yep folks big brother is here. This actually started in the 60’s when Nixon took us off the gold standard. The U.S. already has made detention camps to hold U.S. citizens when civil unrest begins to occur. Already there is a shortage of ammo being sold to private gunshops in Montana, Idaho and California…knowing that Americans will not give up their right to bear arms, the government is not allowing for ammo for your guns. Next will be gold and by that I mean they are forcing the middle class now to lose all their assets and spend what little money they have. It’s a classic takeover. And it is because of Amercian Apathy; enslavement to the almighty dollar, the anesthetizing effects of TV, exhaustion from trying to keep up with the Jones’s and full fat bellies of chemically treated fastfood that the middle classs has become the real sucker in the biggest ongoing ponze scheme of alltime, right now as the banks hold the American people hostage and all the big money, our money, pour into criminal hands.
    Goodbye Democracy, Goodbye middle class, hello Dictatorship.

    Ann

    April 3, 2009 at 10:25 am

  5. Democracy: 1 government by the people; a form of government in which the supreme power is vested in the people and exercised by them… wait a minute… exercised by them, the people.

    When was the last time you have seen someone exercise for more than aesthetic value and forgive me for mentioning it’s limited to temporary stretches, (the convenient life-style).

    Before I have started any goal, I catch myself limiting the possible, truly placing the barriers of any & all magnitudes with my own 2 hands. (H-Factor)… The eyes wide shut mollification of the general with instantaneous media, numbing and dumbing the herd. All wanting 2 believe in something and someone, few relating that it is humanity and themselves with which they are already connected. The light truth can burn, as too self-analysis and yet we must be agile to confront, acknowledge, and change bad behavior patterns. To be accountable for our perfectly imperfect self’s.
    ‘’It is always the right time to do what’s right’’ M.L.King Jr.

    One item of advice that I hold so dear, never complain about problems if you are free of having a solution or two to mention as well.

    Owen Denero

    April 4, 2009 at 10:30 am


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