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