News3 mins ago
The $700bn smash and grab by the rich
Have the rich just staged the biggest smash and grab raid in history?
They have been handed $700bn with no strings attached, of US taxpayer money. They have been operating a pyramid selling scheme, and now it is collapsing, Joe Public is having to pay for the mess.
The bailout effectively wipes out their bad debts. They can continue to pay themselves multi million dollar salaries and bonuses, financed by the taxpayer.
Lehman Brothers went bust after posting a $3.9bn loss. Last year it paid its executives and traders $8.7bn in bonuses. Under the bailout, such malfeasance is now underwritten by the taxpayer and the instead of going bust, it is business as usual.
The rich have been given blank cheques funded by $700bn of taxpayers money.
How do they get away with it?
They have been handed $700bn with no strings attached, of US taxpayer money. They have been operating a pyramid selling scheme, and now it is collapsing, Joe Public is having to pay for the mess.
The bailout effectively wipes out their bad debts. They can continue to pay themselves multi million dollar salaries and bonuses, financed by the taxpayer.
Lehman Brothers went bust after posting a $3.9bn loss. Last year it paid its executives and traders $8.7bn in bonuses. Under the bailout, such malfeasance is now underwritten by the taxpayer and the instead of going bust, it is business as usual.
The rich have been given blank cheques funded by $700bn of taxpayers money.
How do they get away with it?
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sorry, Dave, my screen blew up before I could finish my last post. Here's Robert Peston's take on it on the BBC blog (and he's proved pretty acute on the crisis so far):
"And if you wish to know which economies are perceived by global investors to be most flawed and vulnerable, you could do worse than look at the price of insuring sovereign debt in the credit default swap market.
"Those CDS prices tell you that Austria, Belgium, Denmark, Finland, France, Germany, Sweden, and the Netherlands are all perceived to be more credit-worthy - to be in a better position to service their national debt - than either the US or the UK."
Clearly some countries are not on that list, notably Iceland, a smaller economy where one bank has got into trouble. And I realise that things may yet turn out for the worse. But I still think this is more of a crisis in the USA and UK than elsewhere and that their systems are to blame.
"And if you wish to know which economies are perceived by global investors to be most flawed and vulnerable, you could do worse than look at the price of insuring sovereign debt in the credit default swap market.
"Those CDS prices tell you that Austria, Belgium, Denmark, Finland, France, Germany, Sweden, and the Netherlands are all perceived to be more credit-worthy - to be in a better position to service their national debt - than either the US or the UK."
Clearly some countries are not on that list, notably Iceland, a smaller economy where one bank has got into trouble. And I realise that things may yet turn out for the worse. But I still think this is more of a crisis in the USA and UK than elsewhere and that their systems are to blame.
THE MONEY HAS TO BE REPAID. In the US not until 2010 BUT - IT HAS TO BE REPAID. Net cost to any tax payer nothing.
I understood that the US Bailout will buy (not underwrite or loan) the bad debts (they are calling assets). The Government would then own the assets and try to sell them at some future date. I took your advice and searched the internet, but I could not find a 2010 payback for the bailout, maybe you could supply a link?
I did find this however...
�Much of the discussion of the cost of the bailouts is getting it wrong,� David Colander, an economist at Middlebury College, says. �What matters is what price they buy the assets for and the price they sell them for. That�s where the real action is.�
http://www.nytimes.com/2008/09/24/business/24l eonhardt.html
I understood that the US Bailout will buy (not underwrite or loan) the bad debts (they are calling assets). The Government would then own the assets and try to sell them at some future date. I took your advice and searched the internet, but I could not find a 2010 payback for the bailout, maybe you could supply a link?
I did find this however...
�Much of the discussion of the cost of the bailouts is getting it wrong,� David Colander, an economist at Middlebury College, says. �What matters is what price they buy the assets for and the price they sell them for. That�s where the real action is.�
http://www.nytimes.com/2008/09/24/business/24l eonhardt.html
Typical of the lfefties on this site.
PLEASE look further than you noses.
Why do you think all parties, democrat/republican Tory/labour are uniting.
Gromit, you clearly dont have a grip on current moden day economics and would rather you blinkered view of the US etc take preference.
When you have read up on exactly what is invovlved in this current problem pleas feel free to post again,
PLEASE look further than you noses.
Why do you think all parties, democrat/republican Tory/labour are uniting.
Gromit, you clearly dont have a grip on current moden day economics and would rather you blinkered view of the US etc take preference.
When you have read up on exactly what is invovlved in this current problem pleas feel free to post again,
-- answer removed --
The US congress are looking out for their tax payers, unlike th UK. The bill will undoubtedly get passed once the safegaurds are in place and far from loosing mony they will actually make it.
From your post I dont see that you have any grasp over the way economies work. Indeed, you could easily work for the Daily Mail with your one sided sensationism.
I (and others) have previously posted what the problem is here but for you I will repeat it:
The problem is perceived not actually real. Yes there is bad debt but the extent is not actually known. This has lead to mistrust between banks and as a consequence an unwillingness to lend to each other. Contrary to pnerally on kiboropular belief Banks are not cash rich, indeed they dont have to carry anywhere as much as Buildos, they all rely on interbank loans based generally on libor.
The theory goes that if the perceived debt it removed then the banks will then know that that there is nothing to worry about so they will start the loan cycle again. Once this starts then business can flourish and GDP etc grows,
The US government will not loose 700bn, in fact, if properly manged (which is what congress is insisting on) will in time gain.
Is that simple enough ?
From your post I dont see that you have any grasp over the way economies work. Indeed, you could easily work for the Daily Mail with your one sided sensationism.
I (and others) have previously posted what the problem is here but for you I will repeat it:
The problem is perceived not actually real. Yes there is bad debt but the extent is not actually known. This has lead to mistrust between banks and as a consequence an unwillingness to lend to each other. Contrary to pnerally on kiboropular belief Banks are not cash rich, indeed they dont have to carry anywhere as much as Buildos, they all rely on interbank loans based generally on libor.
The theory goes that if the perceived debt it removed then the banks will then know that that there is nothing to worry about so they will start the loan cycle again. Once this starts then business can flourish and GDP etc grows,
The US government will not loose 700bn, in fact, if properly manged (which is what congress is insisting on) will in time gain.
Is that simple enough ?
Gromit your being obtuse here.
Its very simple why the Republicans voted it down, as with all right wing voters first and foremost is me. me, me. Rightly or wrongly it was perceived by Joe Soap as help for the fat cats and they said so. There elected representatives, if you belive the media, listened and voted accordingly.
Which
1) shows that the US media didn't explain it properly.
2) The 228 reps who voted against it either put themselves ahead of their country or are so stupid they shouldn't have been elect.
There is also the point, again represented in the media, that a number of Republicans simply voted NO because the felt slighted by the Democratic speaker.
In such hands lies your future.
Its very simple why the Republicans voted it down, as with all right wing voters first and foremost is me. me, me. Rightly or wrongly it was perceived by Joe Soap as help for the fat cats and they said so. There elected representatives, if you belive the media, listened and voted accordingly.
Which
1) shows that the US media didn't explain it properly.
2) The 228 reps who voted against it either put themselves ahead of their country or are so stupid they shouldn't have been elect.
There is also the point, again represented in the media, that a number of Republicans simply voted NO because the felt slighted by the Democratic speaker.
In such hands lies your future.
sadly, it does appear to have been entirely Nancy Pelosi's fault, as she hurt the feelings of some Republicans.
http://www.guardian.co.uk/world/2008/sep/30/co ngress.wallstreet
http://www.guardian.co.uk/world/2008/sep/30/co ngress.wallstreet
It amazes me how this problem has spun thro 180%. It started off with people defaulting on their mortgages. This affected the lenders or banks. Then the whiz kids saw the banking shares slide and bet on them falling further. Then the banks were in real trouble.
Their solution. Enable the banks to reclaim the defaulted mortgages by putting up the $700 billion. The banks are now heavily subsidised and secure. Because the bank share price is low those same whiz kids will buy these shares and make a handsome profit twice over. Meanwhile the poor house owner will be evicted and will not be able to claim from anyone. Capitalism gone mad!
Their solution. Enable the banks to reclaim the defaulted mortgages by putting up the $700 billion. The banks are now heavily subsidised and secure. Because the bank share price is low those same whiz kids will buy these shares and make a handsome profit twice over. Meanwhile the poor house owner will be evicted and will not be able to claim from anyone. Capitalism gone mad!
-- answer removed --
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