Keep Bailing?

Not too happy about the $700 billion financial bailout or billions more for the Big Three automakers? Don’t worry, that’s just peanuts!

The overall government “bailout” is quite a bit larger — as in ten times larger. The federal government — in other words, you and me (and our rulers) — is ready to provide more than $7.7 trillion to bailout whoever might need to be bailed out.

This includes $3.2 trillion already taken from the Federal Reserve by financial institutions. And it also includes money from the Federal Deposit Insurance Corporation and Federal Housing Administration mortgage guarantees.

The total amount of $7.7 trillion is equivalent to half our yearly gross national product. So, should families, when they get in financial trouble, borrow and spend half their yearly income? No, I think this is one of those “don’t try this at home” type deals.

When Congress approved the legislation for $700 billion to establish the Troubled Asset Relief Program (TARP), there was talk of the need for transparency. But there has been precious little transparency for all this other money spewing forth from the Federal Reserve and various government entities.

Paul Kasriel, chief economist at Chicago-based Northern Trust Corp. says, “given that the Fed is taking on a huge amount of credit risk now, it would seem to me as a taxpayer there should be more transparency.”

Yes, how about a smidgen of transparency? Or better yet, an end to all these bailouts.

This is Common Sense. I’m Paul Jacob.

5 Comments so far ↓

  1. Dec
    16
    7:38
    PM
    Robert E. Mangieri

    The mortgage industry/banks should not have been bailed out. They should have renegotiated the troubled loans. That would have eventually fixed the problem.

  2. Dec
    16
    9:20
    PM
    Rubicon

    We are being led by a group on nut jobs who respond to the loudest scream. From special interest groups for the environment, to those of the financial industry, to the auto industry, to radical social change groups to all too powerful unions… all have a voice & all get some or all of what they demand from members of Congress beholden to them for their significant campaign & “other” contributions.
    The only special interest group not represented, and not receiving any bailout or help in all of this financial destruction………

    the people. You remember them? They are the folks who pay the taxes & do the work & shed the blood when their country calls on them to defend her!

    Schmucks!

  3. Dec
    17
    3:43
    AM
    Kenneth H. Fleischer

    Perhaps we shouldn’t worry too much about the immense indebtedness the bailouts are giving us and our progeny, as the Federal Reserve is busily generating huge amounts of inflation, and those trillions of dollars of debt will shrink remarkably in value. Unfortunately, so will everybody’s savings. I give the process about a year or two to show that fruit.

  4. Jan
    11
    12:13
    PM
    Prudent Man, CFA

    When I became an investment professional nearly fifty years ago I found that the stock markets have little to do with investing. We had security analysts analyzing companies the size of Coke Cola, with their world wide operations, quarterly earnings to the penny. Are they serious? How does anyone know what the true earnings of a company the size of Coke or Exxon-Mobile is? After all, the depreciation and amortization expenses are pure bookkeeping entries and many an artful corporate manipulation (See Enron) can fudge those numbers all they want and they do.

    But, the real scam are the stock markets not investing – a vast difference. Does anyone every wonder why the valuation of the aforementioned stocks would vary every minute when no one even has any idea what they are worth? Well I do. It is the biggest scam in the world – Wall Street. A market should be able to “price discover” in minutes. It doesn’t need six and half hours! But, there are commissions and fees and outrageous salaries that must be paid and who pays them? Taxpayers pension funds, personal trusts anyone who has a money manager that trades (not invests) in the stock market.

    If the SEC wanted to seriously prevent fraud they would allow markets to only be open one hour a day to discover price. After all, they are completely closed after the trading dart and weekends and holidays and it doesn’t seem to upset the economy one bit.

    The most important employers and business in the world are privately owned companies and they seem to do quite well without the investment bankers breathing down their necks.

    No, the stock market has little to do with investing and less to do with the economy. Remember Dow 14,000 in 2007 – the middle of a credit bust beyond any one’s imagination. What was the genius of the stock market telling us then? That it is as clueless and crooked as Chris Dodd and Barney Frank.

  5. Feb
    16
    8:33
    AM
    Silicondoc

    I keep hearing about 7 or 8 trillion, but where is the explanation of exactly what those numbers are about ?
    It’s like those who quote so many tens of trillions in fed gov obligations, but quite deceptively never mention the fact that those obligations are ALL the payouts promised over the next 50 or 75 YEARS, and then after failing to mention that, they quote the CURRENT SINGLE YEAR federal tax intake, IGNORING the next 50 to 75 years of federal tax intake that will be used to cover those “obligations”.
    I’d sure like to hear EXACTLY what this 7.7 or 8 trillion is about… and not some decpetive babbling lies concerning it – like 50 or 75 years of “future obligations” compared to a current
    single years tax intake.
    If you’re fighting for good, don’t send out a smokescreen of lies or lack of pertinent information, I’ll probably NOTICE IT, with all the practice at detection the regular government con artists provide me.
    Anyway, an explanation of some sort would be appreciated. I suppose I’ll go off googling now, again, till I finally find someone that can actually explain this 7-8 trillion dollar accusation.

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