The 'Bail Out' is nothing but 'Socialism for the Rich'

[Leftfemme22]

Barclays have taken over some of Lehman Brothwer businerss and have agreed to pay [b]2.3 billon dollars in bonosses to the staff. Surely this is obscene? The biggest socialist government in the world is the US. If thebanks had collapsed there is no evidence the poor would suffer. The reals fear of the US was that the Chinese and Arabs would bail out the banks and basically control the US financial system. All the military might in the world would not matter then.

The Chinese have already made inroads into the US banking system, a fact that came to the surface last week and caused consternation amongst the more right wing republicans.

Collapsing banks do not cause undue suffering among the poor, that is balls out rubbish.

[hopi watcher]

Interesting how after a period of time for reflection it is beginning to dawn on people the world over the sheer audacity of what the Fed has done by underwriting the debts of the US financial sector whose greed in the face of very limited regulation, resulted in this the mother of all financial messes.
It is intriguing to observe that Professor Nouriel Roubini of New York University's Stern Business School , who predicted the meltdown as long ago as late 2006 does not believe that the Fed's 'socialism for the rich' has any chance of working, what do other p.ie readers think? Does this intervention by the Fed represent merely the confirmation that the USA, once the bastion of free market economics is now in the business of privatising gain and socialising risk and the subsequent losses .....
see more details in http://unrepentantcommunist.blogspot.com/

Had the US Government not underwritten the debt, the people most affected would have been the poorest people in Society.

What most left-wing loons don't realise is that the people who are most dependent on the Market are not the rich, but the poor.

Any analysis of any Planned Economy in the 20th century provides ample evidence of this, and currently, the world's only remaining Planned Economy, North Korea, depends on Foreign Food Aid to prevent its people from starving to death.

"da-nile" or what? Incredible post.

[Thranduil]

http://www.worldproutassembly.org/ar...magic_eco.html

Do not know who or waht these guys are about (and their logo is highly suspect) but they seem to be on the ball as far as the US economy is concerned

Thanks for that really excellent link which throws much light on Bushenomics and the dismal science in general and sets it out in simple language.

I especially liked how they demolished the idea of measuring an economy's success using the GDP per Capita statistic.... This was a good line...

The joke about average income is: Bill Gates walks into a bar. The average income of every person in the room immediately goes up 10,000 percent.

And this explains a lot...

The good, old, risk for rewards version of capitalism - the burghers invest in a daring sea captain sailing to the Indies - still exists. In recent years, it's given us FedEx, Wal-Mart, Apple, Microsoft, and Google.

But alongside it, over the last 50 years, the economy of credit has grown up.

In vastly oversimplified terms the credit economy works like this:

You own a house. It's worth $100,000.

Someone buys the house, no money down. They borrow that money. Let's say it's a straight-line 8 percent, 30-year mortgage. Forget closing costs, points, and any other complications - that's a $220,000 debt. It goes on the bank's books as an asset.

Now you have $100,000. The bank has $220,000 (on paper). The buyer has a house worth $100,000. The bank has a lien on it, but the buyer will be gaining equity, plus he can get a second mortgage and home-improvement and other loans on it.

Again, this is a vast oversimplification, but that transaction has "created" something like $420,000 that is now "in play," as part of the economy.

No "thing" has been created - no new business, no product, no jobs, no idea, no intellectual property, no entertainment.

But money has been created.

Celtic Tiger since the Multinationals stopped coming in - defined.

[sandar]

Well it proves where the priorities of the US government lies (as if we needed anymore)

Healthcare, education, detention facilities, transport etc have all needed billions if not trillions worth of investment since the 1980s. Of course they have not received it. As long as Wall St. needs a bail out it's a case of "how much do you need?"

If you want something inidcative of where US priorituies lie, have a look at Lehmann Brothers.
This company went to the well wiothout any aid from any government.
There is a reason for this, noone benefits from saving Lehmann except rich traders, whereas if Fannie and Freddie had gove to the wall it would have had implications for every single person of every single class in the United States and in Europe.
That is also true, albeit to a much smaller extent with AIG.
If Fannie and Freddi had gone bust, then the amount of money in circulation would decline, causing interest rates to rise dramatically, meaning that every single person in the US or Europe with a mortgage or other loan would suffe by having to pay more of their income to repay the loans, this would mean they would have less of their income to spend on other things, such as in shops, the result would be job losses on a major scale, which beenfuits no one, least iof all the poor.
This would also mean taht banks would have less money to lend to other people, so they couldnt get mortgages, forcing house prices ever higher as they dont sell, damaging the job security of the thousands of people who work in the construction and related industries worldwide.
Because the Anerican economy has been in trouble for a long time, and has paid for itself by selling bonds, a decline in confidence in the economy which would be brought on by banking collapse would make these bonds less valuable, the consequence is that the Dollar would fall in value, making imports more expensive, every person of every class in America buys imports, so they would all suffer.
While in Europe anyone who works for an American company or a company which gets a lot of business from America would also have less job security.
Thirdly, the baliout of Fannie and Freddie has probably prevented many dozen banks across the world from expereincing serious trouble, with several going bust, that would have exported the lack of confidence and the consequences of that as is outlined above. You would be wathcing banks all over Europe going to the wall now as they are left lumbered with useless mortagage backed securities which are worth nothing.
Lastly, the biggest sharholders in most of these companies are pension funds, if funds collapse then millions of epople will be pooere worldwide, and thats anyone with a private or contributory pension plan, thats millions of opeople the world over in every class.