Last night the New York Times released a column that could possibly place the source of blame on Wall Street for our current financial crisis (Agency’s ’04 Rule Let Banks Pile Up New Debt, and Risk). Now, will the House of Representatives move forward in passing the current Economic Stabilization Act? I hope not. Financial firms less than ten years ago have been misrepresenting their accounting, if at all publicizing factual assets. In 2004 major investment banks came to the Security and Exchange Commission to beg for "exemption from an old regulation that limited the amount of debt they could take on". Now hold on to your seats, because it gets even more atrocious. These five investment banks, "including Goldman Sachs, which was headed by Henry M. Paulson" the current U.S. Treasury secretary, were now being funneled billions of dollars from the Federal Reserve, in order to have "a cushion against losses on their investments" further down the road. This was a precedent to being bailed out, and yet their financial structure was hedged on failing, and these Wall Street institutions took full advantage of deregulation in the name of profiting at the cost of the American taxpayer.
Now, Congress intends to give these thieves another Federal hand out. These firms had full intention of getting permission from the government to perform unrestricted lending, and by getting this, would have the potential for what the New York Times calls a sharply increasing leverage ratio. In other words each company, for example Bear Stearns, had more debt than they had in value of all its assets. They were pretty much in the situation of every foreclosed homeowner in America at this point in time, because these firms took full advantage of deregulated lending and authorized loans on overvalued assets, for which they could not afford. How do you payback debt on a loan that has undefined of fuzzy value boundaries? This made Wall Street in all senses of the word, deadbeats.
This is why the Fed is buying out all these companies, and may get the chance from Congress to funnel some more money up the pipe. Instead of going back to stricter regulation, like it should have been all these years of shady Bush administration tactics, and failed domestic policies. No financial rescues will make the economy sickness better, simply on principle. These companies were expected to responsibly "police" themselves. It is ridiculously laughable that the Fed would allow this to happen, and then put the burden of expectation on the taxpayers, the financially broken homeowners, and responsible Americans in general.
Of course the Bush administration wouldn't rescue its own citizens. It sent its country men and women into a war to protect its energy sector cronies interests in the Middle East. So it was about money at the top. It spent billions and billions of dollars a year waging war against a billionaire terrorist, and oil rich Iraq, while back home Wall Street acted like a band of pirates pillaging American taxpayers, who were struggling to pay off their overvalued debts, and struggle to get proper health coverage. Not to mention, that most of the "war on terror", or should I call it the "price is right on terror", was a war fought by mercenaries, all of which were private contractors and cronies of the Bush administration, all of whom made off with billions of dollars in taxpayer money also.
Now, this morning, it seems inevitable that the House of Representatives will simply pass an unpopular bill, having not listened to the people, but instead listening to a fear-mongering Bush administration. The administration is partially at fault for our financial problems, by neglecting its responsibility of keeping Wall Street in check, by injecting fear, proposing the bail outs, injecting fear into the minds of our representatives in Washington, and by rushing them to make a decision, has made confidence dwindle among all parties, whether it be Wall Street or the taxpayer, Republican or Democrat.
The theft, and intentional plundering of our financial system by Wall Street, has driven our government into helping a system that does not work. It cannot work because as has been stated many times before, the debt heavily outweighs the actual value. Every entity, from the individual all the way up to financial giants, subsists on borrowed value. Look at today's news about Governor Schwarzenegger, asking Paulson to bail out the state of California. California has been in financial decline for years, and is only a glimpse at how deep this financial crisis truly goes, and how Wall Street has been the main contributor to causing America's financial sickness. Who will ask for a bail out next? Cities, then towns, then actual taxpayers? It is a system of cyclical bailout, which at this point in time is increasing the risks, and beginning to wear down the intrinsic value of outright ownership. There is no permanent safety net for anyone, and the only ones that are safe, are those who can swindle the government to "help a big brother out", in so many words. It is absurd how shortsighted the U.S. leadership can be.
No comments:
Post a Comment