Counterpunch, September 22, 2008
Will the Cure be Worse Than the Crisis?
The Paulson-Bernacke Bank Bailout Plan
By MICHAEL HUDSON
Saturday’s $700 billion junk mortgage bailout is the largest and worst
giveaway since a corrupt Congress gave land grants to the railroad
barons a century and a half ago. If it goes through, it will shape the
coming century by giving finance unprecedented power over debtors –
homebuyers, industry, state and local government, and the federal
government as well.
But what threatens to be even worse is the government’s move to let the
financial sector make even higher, unprecedented gains by working its
way out of negative equity to “make taxpayers whole” by repaying the
government’s bailout by bleeding the economy at large. Anticipating
congressional capitulation in this license to engage in predatory
credit, the latest Sunday evening surprise is that Treasury Secretary
Henry Paulson’s own firm, Morgan Stanley, is to become bank holding
company picking up the financial wreckage now that the government is
covering the bad loans and investment gambles Wall Street has made.
What did Mr. Paulson not say in his weekend TV interviews, organized as
what he hoped would be a series of victory laps. Neither he nor Fed
Chairman Ben Bernanke nor any other Wall Street spokesman has
acknowledged that the government has helped promote today’s $46 trillion
debt bomb. This enormous overhead consists of the product that banks are
selling – interest-bearing debt that is being added to real estate,
corporate industry and personal income to price the U.S. economy out of
world markets.
full: http://www.counterpunch.org/hudson09222008.html
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