Monday, October 10, 2011


I will participate in this process by talking about our government's response to the financial crisis. They have essentially socialized the losses while the corporate thieves got away with the loot. Here is an excerpt from my book on childhood.

Many critics have expressed concern that the majority of government spending aimed at the recession has not been dedicated to policies and programs that will directly re-vitalize the nation’s infrastructure, its businesses, or its populace.

Instead, critics argue, most government spending has been targeted at a bailout of fundamentally insolvent financial institutions (e.g., see Simon Johnson 46-56). These “zombie” institutions remain too weak to lend as they struggle to accumulate capital reserves. Simon Johnson, a former chief economist at the IMF, argues that the government bailout priorities and strategies point to a “quiet coup” of the nation by financial institutions (46).

Indeed, the disbursement of federal funds outlined in the May 2009 Atlantic reinforces Simon’s argument: only $787 billion went to the stimulus spending (i.e., “American Recovery and Reinvestment Act”) compared to $3.25 trillion for the bailout (“Cash Machine” 58-59).

The trillion dollar bailout of financial institutions has been represented by official U.S. policy makers as necessary in order to reignite lending, thereby re-igniting consumption and production. Critics describe this process as re-inflating the bubble. Critics who see current government policies as aimed primarily at re-inflating the bubble argue that this pseudo-Keynesian response is simply a massive transfer of wealth from the populace at large to a small group of wealth holders. Accordingly, Michael Hudson argues that the financial bailout is “This is the largest and most inequitable transfer of wealth since the land giveaways to the railroad barons during the Civil War era” (Hudson “Financial Bailout”).
The transfer has occurred with the socialization of private losses as government has bailed out financial institutions and backstopped losses. David Einhorn argues in a speech titled “Private Profits and Socialized Risk” that the owners, employees, and creditors of the financial institutions responsible for the meltdown are “rewarded when they succeed, but it is all of us, the taxpayers, who are left on the hook if they fail. This is called private profits and socialized risk. Heads, I win. Tails, you lose. It is a reverse-Robin Hood system” (7).
Joseph Palermo describes the process whereby government has assumed responsibility for private losses as “Socialism for the rich and laissez-faire capitalism for everybody else.” Socialization of risk means that the public is absorbing the costs of the bailout as the Federal Government bails out, backstops, and insures private losses....
end excerpt from my book
Meanwhile the states are left to collapse. The federal government can spend trillions on the financial sector but only billions on mostly ill-devised stimulus plans (e.g., cash for clunkers). Now that the simulus has mostly expired, the cities, counties, and states are going to resume their collapse because unemployment has not been addressed and the housing crisis continues as even those with incomes find it impossible to pay inflated mortgages when their wages are stagnating or declining.
The Center for American Progress issued a report titled, “Recession, Poverty, and the Recovery Act: Millions at Risk of Falling Out of the Middle Class” in February 2009 (Kvaal & Furnas, 2009). The report cites rising unemployment, loss of health insurance, and growing poverty before concluding, “Our economy is in a perilous state. Millions of middle-class families are likely to fall into poverty if Congress does not take swift action.”
In September of 2011, 49.9 million Americans had no health insurance and employer-sponsored private insurance covered only 55% of the population (“Bleak News,” 2011). If you believe John Williams at Shadowstats, real unemployment is over 20%. The U.S. stimulus, the National Recovery Act, fell short of delivering adequate relief and job growth to an increasingly fragile middle-class and an increasingly desperate working class (Hilsenrath & Leo, 2009; Kroll, 2011)....
The Harm: A hollowed out US economoy that is collapsing while the financial institutions continue to pillage
Those Responsible: Corporate greed driving outsourcing and a financial sector that is essential running the country in cahoots with the military-industrial-surveillance complex.
Those Implicated: Democrats, Republicans, and most elected officials
Those Who Must Be Made Accountable: US political officials, US financial institutions, and those corporations and entitites that benefit from pillaging of our nation and the world.

1 comment:

  1. Fed gov wants states to collapse, classic economic hit man approach, withhold funds for projects, or loan state money for unemployment and then extract concession from them when forced to pay back.

    Extract concessions, state rights...transfer power formerly of the states (the way it was meant to be) to the Fed, it is all about power and control. Reality, sad, the way it is, learn it and play it the way it is.


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