Government Says No to Helping States and Main Street, While Continuing to Throw Trillions at the Giant BanksGo read the whole post to get the links and additional details. If you look there you will find tidbits like this:
by Guest Author
Washington’s Blog strives to provide real-time, well-researched and actionable information. George – the head writer at Washington’s Blog – is a busy professional and a former adjunct professor.
The Wall Street Journal noted last week:Federal Reserve Chairman Ben Bernanke on Friday ruled out a central bank bailout of state and local governments strapped with big municipal debt burdens, saying the Fed had limited legal authority to help and little will to use that authority.Congress has also discontinued the Build American Bond program, which was significant in temporarily financing California and other states’ budgets. See this, this, this and this.
“We have no expectation or intention to get involved in state and local finance,” Mr. Bernanke said in testimony before the Senate Budget Committee. The states, he said later, “should not expect loans from the Fed.”
That’s unfortunate, given that many states and big cities are in a dire financial situation, and given that Keynesian economists say that aid to the states is one of the best forms of stimulus.
In any event, as Steve Keen points out, giving money to the debtors is much better for stimulating the economy than giving it to the lenders.
Unfortunately, as I will demonstrate below, virtually the entire government economic policy is to throw trillions of dollars at the biggest banks.
Most independent experts say that the government’s housing programs have been a failure. That’s too bad, given that the housing slump is now – according to Zillow’s – worse than in the Great Depression.And this:
Indeed, PhD economists John Hussman and Dean Baker, fund manager and financial writer Barry Ritholtz and New York Times’ writer Gretchen Morgenson say that the only reason the government keeps giving billions to Fannie and Freddie is that it is really a huge, ongoing, back-door bailout of the big banks.
Many also accuse Obama’s foreclosure relief programs as being backdoor bailouts for the banks. (See this, this, this and this).
The PPIP program – which was supposed to reduce the toxic assets held by banks – actually increased them (at least in the short-run), and just let the banks make a quick buck.And this:
In addition, the government suspended mark-to-market valuation of the toxic assets held by the giant banks, and is allowing the banks to value the assets at whatever price they desire. This constitutes a huge giveaway to the big banks.
Even when the government has prosecuted financial crime (because public outrage became too big to ignore), the government has settled for pennies on the dollar.And this:
And it is the top executives who reap the benefit of the bailouts through huge bonuses. Since the big banks continue to engage in highly-leveraged, risky, speculative activities, the bailouts have not made them any more stable. See this, for example.