the great big giant bailout of the banking system

from bloomberg this past sunday:

the fun continues:

http://www.bloomberg.com/news/2011-...y-got-1-2-trillion-in-fed-s-secret-loans.html

well, here we have it, sports fans. plutocracy in action.
the amounts involved here are staggering.
and it's remarkable, even by my cynical standards, that this was to happen in secret.

i haven't seen much of anything in the mainstream press about this.
there's been some echo in the european press, but that's about it.
i was steered back to it via a link posted on facebook to a trotskyist paper:

http://www.wsws.org/articles/2011/aug2011/pers-a23.shtml

which is to this point among the few us-based outlets to pick this up.

what do you make of this action?
was it justified in the face of the meltdown of the derivatives trade?
if so, why do you think it was secretly done?
this was all in addition to the tarp money, btw.

i can't imagine anyone from the right who isn't a libertarian being able to say anything about "fiscal responsibility" and not be laughed at after this information surfaced. i mean, seriously.
at the same time, does this indicate something of the libertarian critique of the fed is accurate--or is it doing what it's supposed to do, act to shore up capitalism in crisis, distribute vast amounts of cash to the financial aristocracy and keep it under wraps, saying nothing as the moronic debate about "debt ceilings" unfolded...

and why do you imagine there's been no new regulation of the banking sector?
there's been no prosecutions for anything.
there's been nothing done about the cras.

what do you think can or should be done about this after the fact?

 

That this much money was thrown around in secret like that just pisses me off to be frank. When tax payer money goes to a public institution like this, there should be full on the spot disclosure. I'm to the point where I am ready to tell the banks they can fuck off, and all the money we would be lending them can go to pay off the deficit instead.

 

I'm going to sound like a Tea partier but:

Throw out the government. It's effing defunct. The SEC is in bed with the banks they're supposed to police (http://www.rollingstone.com/politics/news/is-the-sec-covering-up-wall-street-crimes-20110817), and we're using billions of billions of dollars to help banks who then just sit on the money without providing liquidity. Meanwhile, the economy and the credit rating of this country is going in to the shitter, while everyone is too tight-fisted to even consider tax increases.

 

This didnt just happen in America you know.

 

well, no. but the information about the scale and timing of the us action--which was also a transnational action (details in the article above) only came out on sunday, and this after a protracted legal battle to prevent it from doing so. so in this case, there's both the action itself--which is pretty astonishing and this in the most cynical possible sense---and the attempts to keep it under wraps---which resulted, as the last paragraphs i quoted from the article in this amounting to a huge, cheap loan that banks took in part for profit's sake. greasing the capitalist wheels, dontcha know. this was of course under the bush people. now we have---well----exactly the same fucking people doing exactly the same fucking things.

 

Why was it done in secret?
Because Americans don't pay a lot of attention to a lot of things.
But they do pay attention to large sums of money.
Unless, of course, it is large sums of money that have already been spent.

As for you other questions, why? how? what?
I don't know enough to answer them but I suspect that there is so much invested in keeping "America" (and all that entails) with at least a semblance of itself as a strong, reliable machina perpetua that no price is too great. Not when faced with the prospect of it falling apart. I suspect we came closer to a complete and utter breakdown than we ever imagined.

 

http://www.spiegel.de/international/business/0,1518,781590,00.html

this piece is an overview of the general situation that allowed for this.
and it is a very interesting read. a wholesale debunking of the neo-liberal palaver about rational markets, about the captains of industry, all of it. and not coming from the left any more.

 

We live in a kleptocracy.
There is a political elite, bought and sold by a financial elite that are licensed to steal.
Everyone else can pound sand.

 

Matt Taibi's articles on this are infuriating. Interest free loans to the banks, who then turn around and buy US Treasuries to collect the interest? Christ on a cracker....

 

Actually we have plenty of regulations.
Getting the Fed, SEC, et al. to actually enforce them is where our problem lies. The Fed is too busy trying to goose the stock market to be bothered with little annoyances like actually performing their regulatory duties.

 

the repeal of glass-steagal was a real mistake. it should be re-instituted. that'd put a considerable check on much of the more lunatic excesses of wall st. a friend suggested a fee on cancellations of stock orders too, which would put a real brake on computer-based flash trading. simple things, see if they work. if not, go further.

 

I think that the problem is with the system that inevitably needs the bailouts than with the bailouts themselves. In the current scenario, letting these big institutions fail would certainly make things much, much worse. The lesson not learned, of course, is that things shouldn't be this way. Even the timid regulations passed last year are already being eliminated.

And regulations as complex as they currently are will hardly be enforced. The main thing should be to make regulations significantly simpler and broader. Margin calls and disclosure obligations should apply to all investments, not only those deemed to be "speculative grade," for example.