Time for a Bank Holiday?

Time for a Bank Holiday?

www.thenation.com

Henry Paulson's $700 billion plan to save the world is dead or dying, but the bailout was not killed by his arrogance or his grossly misleading claims about what the public's money would buy. The plan collapsed because it didn't work. The Treasury secretary has launched a PR offensive to revive his falling influence. Too late. The Democrats should be equally embarrassed. In September their leaders in Congress rushed to embrace the Paulson solution, no hard questions asked. They now claim they were duped.

Paulson's squad at Treasury pumped $250 billion into the largest banks, buying their stock at inflated prices on the assumption it would persuade investors to step forward with their capital too. Instead, savvy financial players realized Paulson was spitting into a high wind, trying to save a system with stout talk.

Here is the ugly, unofficial truth that neither Wall Street nor the government will acknowledge: the pinnacle of the US financial system is broke--with perhaps $2 trillion in rotten financial assets on the books. Nobody knows, exactly. The bankers won't say, and regulators won't ask, or at least don't dare tell the public. Official silence naturally feeds the conviction that banking's problems are far worse than we've been told. The Levy Economics Institute of Bard College puts it plainly: "It is probable that many and perhaps most financial institutions are insolvent today--with a black hole of negative net worth that would swallow Paulson's entire $700 billion in one gulp."

The scale of this disaster explains why the Treasury secretary had to abandon his original plan to buy up failed mortgages and other bad assets from the banks. If government paid the true value for these nearly worthless assets, the banks would have to write down huge losses or, as Levy economists put it, "announce to the world that they are insolvent." On the other hand, if Paulson pumps the purchase price high enough to protect the banks from losses, $700 billion "will buy only a tiny fraction of the 'troubled' assets."

(visit the link for the full news article)

[edit on 24-11-2008 by grover]

This is a very interesting article by William Greider on the current financial mess.

Like it or not the widening crisis facing our nation and the world should highlight in no uncertain terms the notion of an unregulated free market financial system is just plain stupid.

It sounds good on paper and in sound bites but the reality is this... greed drives the financial market and as long as greed is at the steering wheel any opprotunity to game the system will be taken without regard for the consequence and the rest of us end up paying for and suffering because of it.



www.thenation.com
(visit the link for the full news article)

So what do we do? If we let them fail we are in for a long haul mess... if we prop them up same deal.

Let em drowned and lets just get on with it already.

The longer you wait to jump out of an ascending airplane with no fuel the longer the fall.

I think I just threw up a little bit . . . especially when I read the part that the current level of toxicity would eat up the initial $700 billion in one big gulp.

This whole mess has me so uneasy . . . downright scared and almost convinced we're headed for a complete collapse shortly after the holiday season.

Just looking at the CITI thing . . . how does one have over $300 billion of 'questionable loans' on the books? How does that happen . . . apart from clear abrogation of fiduciary responsibility, how does that happen?

If the answer is as painfully obvious as it appears, why are we bailing them out . . . again?

Who's next . . . what's next . . . how much more is there that we don't know about . . .

If we allow the major banks to fall and crash will our finaial system crumble. In reality, yes. However, upon theory, maybe not. I mean we have these wonderful things called Credit Unions that work in our community and seem insulated from these events. So, considering that huge banks came from orginizations of Credit Unions, would it not be time to re-vert and go back to the banks that take care of us and our community? Any thoughts?

reply to post by Jkd Up

I completely agree with you the only problem with what you propose is credit unions are too closely monitored none of the Wall Street fat cats could get their greedy paws on the cash in turn no pillaging of billions. So where's the motivation to set up a system that works for the American community? Who could get rich off what you suggest?

The greedy majority that run this country and always will don't think like the rest of us. They are still using that same old ploy that if a portion of this country is filthy rich the rest of us will glean the benefits when it trickles down. Many average Americans honestly feel this is ok.

BS I think we all know what rolls down hill and it's not money!

Thanks for claerifying... I wasn't sure if I was brilliant or utterly insane. Evidently... Not CEO type

What does anyone else think about initating a massive pole switch to our local Credit Unions?

Also Grover we can not forget the littler extras that that money has bought for all the cronies and dirty rats that received the bail out at the expenses of tax payer.

A shame is not enough because you can not take the word corruption out of the whole deal.

While Paulson was able to get away selling the biggest scam in American history to congress, congress been the morons they are with mental impairments due to the excess and decadence that lobbyists in Washington can buy agree to the stealing of all that tax payer money.

Paulson dares to give the finger to the US tax payer when he is asked about the money that went wasted on redirection of funds

Let's see where the hard earned tax payer money has gone.

Just weeks after receiving their initial $85 billion Federal Reserve bridge loan, American International Group executives enjoyed a luxurious resort retreat paid for by the taxpayers. The amount of money going into AIG from both the Fed and the Treasury has increased, yet so have AIG’s incomprehensible actions. AIG now plans to pay out $503 million to employees in deferred compensation. Certainly these employees in large part did earn their bonuses, but it is hard to argue in favor of extra salary benefits when a company is essentially insolvent and being propped up completely through government agencies.

www.washingtonpost.com...

When was the last time any hard working America was able to enjoy a luxurious resort retreat paid for by the taxpayers?

The degradation of our political system is just beyond repair right now.

It is a terrible position for us as a nation to be in and the other nations are right in blaming us for the global aspect of this mess.

I am a firm believer in regulations... nothing absolutely nothing has convinced me that the industry... any industry will police itself especially the financial industry where their product is dreams fueled by both hope and greed.

I guess our nation is going to sink so low economically that even our government will be at the mercy of our foreign buyers to regulate how our government works.

Interesting but that brings the question of who is regulating the government and its actions that actually are hurting the citizens of this nation?.

Isn't that the job of us the tax payer and citizens of this nation?

Or are we to allow foreign government to do that for us.

I knew we were in a mess when I learned that the oversight of the privatization of government was itself privatized.

at marg.

I still say that all of this was planned... key figures in the GOP and others like Grover Norquist are on record saying that the goal is to run up so much red ink that the state and federal governments will have no choice but to eliminate services.

[edit on 24-11-2008 by grover]

it's a shame... we can do better......but this is the way the world has been (or reverted back to ) for thousands of years

the cabal of self serving bankers and the strong hold they have on the economy is the biggest culprit...........it's like you have this gigantic tumor growing on you and the doctor says, sorry we can't cut it off, because otherwise you would die during the surgery. This is how our economy is today, dependent on a blood sucking parastic banking elitist culture, there goal WAS to make the rest of the economy dependent on them and AFTER they established this .....they can throw a greedy leverage party (making sure all there cronies (On regulatory boards look the other way) and then when the excrement hits the inevitable fan the economy is in such a perilous and dependent condition on these blood-suckers that they must be bailed out. you may want to re-read that and understand this was a business plan to generate the most money possible by fat cats, fat cats who believe in survival of the financially fittest. The media is compliant and paints the perspectives that agree with BIG FINANCE plan to fleece you. This painting of the perspectives is called "NEWS" on the MSM. It is crucial for the banks and corporations that information is passed on to the public that shows these institutions in the best light possible, media cheerleaders rationalize it by believing this is needed to instill "confidence" and not spook the economy or sheeple with the truth of the fraud or corruption of back room deals, that would sink the economic ship. So people think so long as they follow this pespective and keep there minds off the dirty laundry, that the economy will actually be better (markets/consumers more confident) and it usually is (less panics, etc). Our society is stuck in this sort of mind-f*(K when it comes to "fixing the problem"

Originally posted by GoalPoster
Just looking at the CITI thing . . . how does one have over $300 billion of 'questionable loans' on the books? How does that happen . . . apart from clear abrogation of fiduciary responsibility, how does that happen?

Just imagine what Citi and other financial institutions have off the books.

You are now free to throw up a lot.

reply to post by anachryon

Maybe that's what we should all do! Since they won't let us protest without beating us down and dragging us away maybe we should all show up in DC to all the nice historical spots and collectively start puking all over everything!

Wonder how many cops would run up to a projectile vomiting person?

Could one be arrested for puking in public?