Posted on 09/24/2008 8:01:29 AM PDT by ZGuy
Here’s a rundown of the recent government actions to help the economy, which have not worked and are driving our nation deeper and deeper into debt. Even a conservative estimate of these actions shows that at least $1.4 trillion in new debt has been imposed on American taxpayers.
We’ve also dug quotes from Treasury Secretary Paulson where he predicts these actions will help the economy and protect taxpayers. His predictions have been wildly off the mark and have rightly destroyed his credibility.
The Stimulus Plan
Cost: $152 billion in direct spending
“I talked with knowledgeable people in all parts of the economy and reviewed the data with our economic team…. the potential cost of not acting has become too high. We must act now to support our economy this year. The president laid out today clear principles that should guide the creation of an effective growth package. We are focused on working with Congress to quickly reach consensus on a plan that gets cash to consumers and gives businesses incentives to invest, to grow and to hire. We know from experience that these policies work to stimulate growth in the short term. The package should be robust enough to make an impact this year and should be temporary, so that it doesn’t significantly impact our long-term fiscal position.” – Secretary Paulson, January 18, 2008
Bear Stearns
Cost: $29 billion in Federal Reserve non-recourse loans
“For some months now, reduced access to short term funding and liquidity issues have created turmoil in our capital markets. In the midst of these conditions, Bear Stearns found itself facing bankruptcy. The Federal Reserve acted promptly to resolve the Bear Stearns situation and avoid a disorderly wind-down. It is the job of regulators to come together to address times such as this; and we did so. Our focus was the stability and orderliness of our financial markets.” – Secretary Paulson, March 26, 2008
Housing Bill (H.R. 3221)
Cost: $42.5 billion in direct spending
“I commend the Senate for moving swiftly to pass important GSE legislation that will provide temporary authorities to give confidence to markets and will create a strong, independent regulator better able to address the risks these enterprises pose. [I]t is of the utmost importance to our market and economic stability that the GSE portions of this bill become law. These components are orders of magnitude more important to turning the corner on the housing correction.” – Secretary Hank Paulson, July 26, 2008
Fannie and Freddie Takeover
Cost: $200 billion in stock warrants
“I strongly endorse both the decision by FHFA Director Lockhart to place Fannie Mae and Freddie Mac into conservatorship and the actions taken by Treasury Secretary Paulson to ensure the financial soundness of those two companies. These necessary steps will help to strengthen the U.S. housing market and promote stability in our financial markets. I also welcome the introduction of the Treasury’s new purchase facility for mortgage-backed securities, which will provide critical support for mortgage markets in this period of unusual credit-market uncertainty.” – Federal Reserve Board Chairman Ben S. Bernanke, September 7, 2008
“Based on what we have learned about these institutions… I concluded that it would not have been in the best interest of the taxpayers for Treasury to simply make an equity investment in these enterprises…. And let me make clear what today’s actions mean for Americans and their families. Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets…. This turmoil would directly and negatively impact household wealth: from family budgets, to home values, to savings for college and retirement. A failure would affect the ability of Americans to get home loans, auto loans and other consumer credit and business finance. And a failure would be harmful to economic growth and job creation.” — Secretary Hank Paulson, September 7, 2008
Lehman Brothers
Cost: $87 billion in advances backed by the Federal Reserve
Other Costs: $70 billion (from Federal Reserve & FRBNY)
“I strongly support the actions announced tonight by SEC Chairman Chris Cox, Federal Reserve Chairman Ben Bernanke and market participants. These changes will strengthen and enhance our financial markets. These initiatives will be critical to facilitating liquid, smooth functioning markets, and addressing potential concerns in the credit markets.” The SEC action included requiring segregation of customer securities and case from those of Lehman. – Secretary Hank Paulson, September 14, 2008
AIG Bailout
Cost: $85 billion in loans
“We are working closely with the Federal Reserve, the SEC and other regulators to enhance the stability and orderliness of our financial markets and minimize the disruption to our economy. I support the steps taken by the Federal Reserve tonight to assist AIG in continuing to meet its obligations, mitigate broader disruptions and at the same time protect the taxpayers.” – Secretary Hank Paulson, September 16, 2008
Money Market Mutual Fund Backings
Cost: $50 billion in pledged assets
“The U.S. Treasury Department today announced the establishment of a temporary guaranty program for the U.S. money market mutual fund industry. For the next year, the U.S. Treasury will insure the holdings of any publicly offered eligible money market mutual fund - both retail and institutional - that pays a fee to participate in the program. President George W. Bush approved the use of existing authorities by Secretary Henry M. Paulson, Jr. to make available as necessary the assets of the Exchange Stabilization Fund for up to $50 billion to guarantee the payment in the circumstances described below.” – Treasury Department Press Release, September 19, 2008
Latest Plan: Socializing Bad Loans
Cost: $700 billion for the latest proposal
“The federal government must implement a program to remove these illiquid assets that are weighing down our financial institutions and threatening our economy. This troubled asset relief program must be properly designed and sufficiently large to have maximum impact…. I am convinced that this bold approach will cost American families far less than the alternative - a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion. I believe many Members of Congress share my conviction. I will spend the weekend working with members of Congress of both parties to examine approaches to alleviate the pressure of these bad loans on our system, so credit can flow once again to American consumers and companies. Our economic health requires that we work together for prompt, bipartisan action.” – Secretary Hank Paulson, September 19, 2008
Total Paulson Bill to Date: $715.5 billion
New Requested Authority: $700 billion
Total Since January 2008: $1.416 TRILLION
They may prevent a run on banks, but they may cause a more disasterous run on the dollar.
The Little Guy gets the shaft, yet again.
CEO’s make hundreds of millions and then run the company’s they run into the ground (thus screwing the stock and bond holders).
They all sit on each others Boards of Directors, so they can approve these absurd pay packages. Then, when they get bored, they get appointed to a Treasury job in DC, where they go to look out for the interests of their buddies.
And who pays for it all?
People like you and me, small business owners, who would never have half a chance to get “bailed out” if we went under.
As Chester A. Reilly (The Life Of Reilly) used to say back in the day, when our country was the greatest country in the world....
“What a revoltin’ devlopement this is”..
Socialism here we come, thanks to a couple of generatios of rotten people and rotten politicians!!!!
As Chester A. Reilly (The Life Of Reilly) used to say back in the day, when our country was the greatest country in the world....
“What a revoltin’ devlopement this is”..
Socialism here we come, thanks to a couple of generatios of rotten people and rotten politicians!!!!
Along with 100 million citizens & non-citizens who suckle on the public teat from birth 'til death.
Rich people love socialism, especially since only the peons will have to live under it, and it eliminates their competition.
Milton Friedman said something to the effect of “All businessmen are all capitalists, until it comes to their own businesses.”
Ain’t that the truth.
From the crybaby owners of Professional sports teams (Like the Fla Marlins) begging for tax money to build their play-pens to the fat cats on Wall Street who are predicting fires, earthquakes and volcanic eruptions if WE don’t extend to them UNLIMITED cheap credit!
This country has been FINANCIALLY bankrupt since the days of FDR. Now its going for the grand slam: morally and spritually bankrupt, as well.
Joseph Schumpeter and capitalism’s demise
Schumpeter’s most popular book in English is probably Capitalism, Socialism and Democracy. This book opens with a treatment of Karl Marx. On the surface level, this piece seems to support socialism. Schumpeter’s reasoning was that an overt defense of capitalism would prompt the book only to be read by those who already supported capitalism. Therefore, he believed that he must masquerade as a supporter of socialism to entice the young socialist to read his work. In the end, he hoped to awaken self-recognition in the reader to the flaws of socialism. [3] While he is sympathetic to Marx’s theory that capitalism will collapse and will be replaced by socialism, Schumpeter concludes that this will not come about in the way Marx predicted. To describe it he borrowed the phrase “creative destruction,” and made it famous by using it to describe a process in which the old ways of doing things are endogenously destroyed and replaced by new ways.
Schumpeter’s theory is that the success of capitalism will lead to a form of corporatism and a fostering of values hostile to capitalism, especially among intellectuals. The intellectual and social climate needed to allow entrepreneurship to thrive will not exist in advanced capitalism; it will be replaced by socialism in some form. There will not be a revolution, but merely a trend in parliaments to elect social democratic parties of one stripe or another. He argued that capitalism’s collapse from within will come about as democratic majorities vote for the creation of a welfare state and place restrictions upon entrepreneurship that will burden and destroy the capitalist structure. Schumpeter emphasizes throughout this book that he is analyzing trends, not engaging in political advocacy. In his vision, the intellectual class will play an important role in capitalism’s demise. The term “intellectuals” denotes a class of persons in a position to develop critiques of societal matters for which they are not directly responsible and able to stand up for the interests of strata to which they themselves do not belong. One of the great advantages of capitalism, he argues, is that as compared with pre-capitalist periods, when education was a privilege of the few, more and more people acquire (higher) education. The availability of fulfilling work is however limited and this, coupled with the experience of unemployment, produces discontent. The intellectual class is then able to organize protest and develop critical ideas.
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