$75 Billion Out Of $9.4 Trillion To Actually Attack The Problem

February 24, 2009 at 7:25 pm (Banking Crisis, National Debt)

Remember AIG, the insurance giant the US government bailed out several times last year?  First it was $37 billion, then $85 billion, then ultimately $150 billion.  After all that, they need another… $60 billion.  It appears they have more “financial challenges.”

Oh and remember when GM and Chrysler needed billions in emergency aid just two months ago to stave off collapse?  Turns out they need $21.6 billion more.  Maybe that will last another two months. 

Remember Citi?  They received $45 billion in cash last year, along with hundreds of billions more in guarantees on their assets.  They are now worth approximately $13 billion.  But not to worry, the government can always give them more money!  Bank of America is in similar straights, having recieved $50 billion in cash and along with Citibank, $400 billion in guarantees on potential losses, and is now worth less than the last injection of cash. 

Seriously, when does it stop?  When do we realize these companies are bust, and they cannot be fixed?  How much money needs to be flushed down the toilet to feed our addiction to denial?  Well, apparently we’re all mistaken and everything is going to be fine, because the head of the Federal Reserve thinks the recession could end in a few months.  If that isn’t proof the people in charge are either stupid or liars, I don’t know what is.

Meanwhile, it’s business as usual in Washington.  Just weeks after approving a $787 billion spending bill, Congress has a new $410 billion spending bill ready to go. 

The government’s official story is that overpriced mortgages caused this meltdown.  Now, I personally think the problem can be blamed on the irresponsible practices of the Federal Reserve, with regards to its monopolistic ability to change interest rates and thereby directly inflate the money supply.  But, if you believe the government’s story, it’s all due to bad mortgages.  Mortgages people bought but couldn’t afford.  The banks assumed these assets were worth more than they were, and the realization they were worth less caused a domino affect throughout the world and here we are at the bottom of the cliff.  $9.7 trillion in bailouts later, they’ve actually decided to throw some money directly at the problem.  According to bloomberg, if the government had spent that $9.7 trillion on bad mortgages, it could have paid off in full 90% of the nation’s mortages.  No matter how bad those other 10% were, there would be no mortgage problem anymore.  But instead, we threw the  money away on everything but the mortgages.

Now Obama seems to want to change that, and redirect some money to the problem.  But only $75 billion.  Peanuts.  $75 billion to help struggling homeowners is half of what we gave to the bankrupt insurance company AIG.  It won’t make a dent.  Housing prices are almost 20% lower across the board then they were last year, and last year they were almost 20% lower than the year before.  One in three homeowners owes more on his or her house than it’s worth.  How many of those people will keep paying their mortgage?  This pathetic “rescue,” target of anger, villification, and self-righteousness all over the country, is nothing; an empty pathetic gesture at addressing the official problem. 

It’s funny how people are suddenly so upset at having to “pay for their neighbor’s mortgage” but not at all that upset for having to pay for their neighborhood banks, pay for the car companies, pay for the insurance companies, not to mention allow their children and grandchildren to pay for all the government’s warmongering and pet projects, which dwarf the proposed mortgage bailout by 100 times.  Nope, none of that is too upsetting, but damn all those people getting subsidized mortgages!  Damn them straight to hell!

Today’s article of doom: Dow at 1997 levels.  And don’t even try to factor in inflation.

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