Wall Street Weasels get their Welfare...

There was a simple solution the banking crisis:

Guarantee ALL normal banking deposits. That's what European countries are doing.

With bank deposit guarantees, individuals and real businesses would have access to their money and to normal credit.

But the White House took a different path...

A multi-trillion dollar "no strings attached" checkbook controlled by the White House through the Treasury Department to buy the toxic assets of Wall Street and other reckless investors.

Who will pay?

The US tax payers.

Who will benefit?

Wall Street CEOs, their deep pocket clients here and abroad and members of the Bush regime.

What will the US do in the future when it needs money to repair crumbling infrastructure, take care of public health, and deal with natural and man made catastrophes?

The answer will to all these problems will be simple and consistent: We have no money.

How did this insane legislation get passed?

Congressman Brad Sherman lays it out:

* Fraud (fake phone calls from paid stooges in support of the bill),
* Bribery (hundreds of pages of pork added to the bill by the Senate at the last minute), and
* The threat of government violence (the claim that without the bailout martial law was a certainty.)

All of this is morally, ethically, universally WRONG! Poor Mr. Sherman is probably marked for death now, for telling the truth.

The truth of the matter is, all of this could have been avoided, but for one thing- greed. The "Fractional Reserve Banking System" is a fraud, a big lie. It allows banks to create the illusion of having wealth, when in fact, they are debtors to the printing presses that make their fiat currency. They get deposits from you and me, then proclaim that they have money to loan. In a simple, lawyer-free world with morals, if you have the money to lend, you can lend it. However, it gets trickier when you start trading in speculative debt instruments, such as what we face now. CDSes, or "Credit Debt Swaps", are essentially legalized casino gambling engaged in by banks to make insane profits on the defaults of loans. Our National Debt is now measured at somewhere around $53 TRILLION dollars. OK, you say, I can't count that high, I don't have enough fingers and toes. No matter. The principle of leverage is at work here, making your $400 paycheck you deposit do the work of $4,000,000. But not for you, wage slave annoyance. The BANK is using your money to leverage it's loans.

The Fractional Reserve Banking concept allows banks to overstate it's holdings by a rate according to it's ratings. For instance, Bank 1 has an arrangement with the Fed to have access to capital 10 times it's net deposits. Since it has 10 million in physical deposits, it can therefore lend out 100 million. Bank 2 down the street deals less in the retail banking sector and instead concentrates more on commercial loans. It has 10 million in physical deposits, and it's arrangement with the Fed is for 36 times holdings. So it now has 360 million to lend. It simply accesses the funds through the Fed, and cuts it's loan checks. Usually, the bigger the bank, the higher the margin it has. So, the behemoth banks had multipliers as high as 100 times holdings, and lots of their loans were subprime. What they did to minimize risks was to develop CDSes as a way of "self-insuring". They'd get together with other banks, package up the loans they had out, and sell the packages to each other. That way if one defaulted on a mortgage, it was bundled up in a package held by one or more other banks. That's fine and dandy if you only have one or two loans go bad. But when a sizable chunk went bad, it was MUCH harder to cover. That's really basic, but it is where we are now. Banks won't loan to each other, there are massive collapses due to these WMD's of the banking world, and everyone pays. A friend of mine put it cleverly- "Everyone got pregnant and nobody wants the responsibility."