Are the bailouts by both Bush and Obama the right thing to do? In my opinion, and in one word: NO
Let me explain: The logic behind the bailouts, that those institutions were too big to fail, is wrong, plain and simple. Why? Glad you asked. By seeming to make yourself too big a player to fail, you are attempting to create an entity that can claim itself to be not responsible for it’s own actions. Sound familiar? Isn’t that pretty much what the giants of industry claimed as they lined up at the public trough to feed off the taxpayers?
Peter Schiff was Jon Stewart’s guest last night. He was laughed at when he said the bubble was going to burst, and the financial house of cards would fall with it. It turned out he knew exactly what he was talking about. And he said last night nothing has changed, which it hasn’t, except for the fact we’re all in it for a total of well over a trillion dollars. The sad fact is these institutions should have been allowed to fail, and the CEOs, CFOs, COOs and the rest of the major principals involved should have been brought up on fraud charges and bunking with Bubba.
An example of how nothing’s changed: CDS . . . Credit Default Swaps. This is the financial industries way of bypassing federal insurance regulations. CDSs are insurance, make no mistake about that, but because they are not called insurance, they don’t have to be backed by an equal amount of real money. In other words, if you sell an insurance policy to someone for a million dollars, you have to have a million dollars of real money to backup that policy. That is a federal regulation. When you sell someone a CDS, you don’t have to back it with real money.
When the financial bubble burst, mainly due to unrealistically low interest rates, and the subsequent increase, which nobody could pay, those CDSs became due. When that happened, and there was no real money to back them, the cards started falling like week old fruit flies.
So how has that changed? It hasn’t. CDSs, part of the whole derivative scheme, are still legal, and still out there. Both the Bush and Obama administrations have failed miserably in dealing with this legal ponzi scheme. The very fact Obama’s asking for the American people to rely on more credit does nothing more than feed the financial beast. Remember over extended credit was part of the problem. While much of what Obama is doing is, in my opinion, the right thing to do, such as health care and open dialogue with both our friends and enemies, his handling of the financial nightmare we are still facing is just plain wrong. Business is still running Washington, and, sadly, that has not changed.
One response to “Bush . . . Obama and the fatcat bailouts.”
Funny how the news cycles change, we find something else to be outraged about, and the last outrage never gets resolved.
The good news is that some very large banks have already repaid what they were given.
The bad news is, business as usual.
Lobbyists, corruption, and the endless raping the public with boom to bust cycles and bailouts.