Trillions in Financial Bailouts: After 2 years, the major Beneficiaries are Banks and Wall Street
If I had to characterize the current economic environment, it would have to consist of two completely different sets of beliefs. On one hand, you have banks and Wall Street receiving massive bailouts from the U.S. Treasury and the Federal Reserve, bailouts of the magnitude that would gear up for a Great Depression and imply that the banking system of our country is insolvent. Then on the other hand, you have Wall Street and the crony banks trying to convince the public that this is a minor recession and all will be well in Q3 and Q4 of 2009. The problem of course is that this is not your typical recession yet the public is being led to believe that all is well while bailouts are being dolled out by the truckload to the wrong locations. The actions we are taking keeps in place the banking oligarchy and sacrifices the public under the guise that this is good medicine for the general economy.
The latest housing data shows that nationwide we have just shattered all records for monthly foreclosure filings in one month. Take a close look to the chart above. Foreclosures are moving higher and higher. We are now approaching the 2-year anniversary of this housing and credit crisis yet the core issue of housing is still not being dealt with. What we are doing is bailing out banks while the public is left to deal with the fallout. The hypocrisy is creating deep anger, as it should. When TARP 1 came out, banks were given the first $350 billion with no questions asked. That money of course has been squandered. However, when it comes to modifying the mortgage of struggling homeowners, banks conveniently find every excuse to avoid reworking the mortgage. And when I say reworking, I mean cutting the principal down not extending the term out to 40 years or cutting the interest rate by a point. This is their idea of working with the public.
Can you imagine if they told the public the real reason for the bailouts:
“Hi everyone. We are going to need to commit trillions of your dollars to bailout a banking system that failed you. A system that didn’t exercise due diligence. A structure that fueled the housing bubble. What will you get in return? You get to keep us going. The system that failed you appreciates your support.”
In the last few weeks, cram-down legislation was introduced again and failed, again. Why? Because this isn’t your bailout, this is a bailout for the banks and the cronies on Wall Street. It is social welfare for the banking oligarchs. And guess what? Our representatives from both sides of the aisle voted it down. Wall Street and the banking system are the biggest contributors to both political parties. Who are they really representing?