Pissing away $700 billion
Half of the bank bailout is being paid out as dividends ! These bastards are shameless!
U.S. banks getting more than $163 billion from the Treasury Department for new lending are on pace to pay more than half of that sum to their shareholders, with government permission, over the next three years.
And in case you missed it two weeks ago: one of every ten dollars of the "bailout" is being used to pay bonuses! That's right - the bastards are getting $70 billion in bonuses for destroying the financial system and wrecking the economy.
Joe Nocera reported in The New York Times on an Oct. 17, internal conference call for senior employees of JPMorgan Chase, in which a Morgan Chase employee had the bad grace to ask,
“Chase recently received $25 billion in federal funding. What effect will that have on the business side and will it change our strategic lending policy?”
That would be a key question, wouldn’t it? Afterall, the whole purpose of the $700 billion bank rescue was to unfreeze the credit markets and get banks lending again.
Someone taped the conference call, and Nocera was allowed to hear it. Read carefully the reply of Morgan Chase chief executive, Jamie Dimon:
“Twenty-five billion dollars is obviously going to help the folks who are struggling more than Chase,” he began. “What we do think it will help us do is perhaps be a little bit more active on the acquisition side or opportunistic side for some banks who are still struggling. And I would not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some great opportunities for us to grow in this environment, and I think we have an opportunity to use that $25 billion in that way and obviously depending on whether recession turns into depression or what happens in the future, you know, we have that as a backstop. . . . We would think that loan volume will continue to go down as we continue to tighten credit to fully reflect the high cost of pricing on the loan side.”
And I’ll add a link here about how many banks getting bailout money are using the funds to buy up other banks. Note the observation that the bailout is all about consolidation. Haven’t we learned yet that too big to fail is too big to exist?
So the $700 billion rescue of the financial system is being pissed away. And what’s starting to happen in the real economy is frightening. The economic news this morning is that U.S. gross domestic product shrunk by three tenths of one percent in the third quarter. Hidden in the GDP numbers is a shocking decline of 14.1 percent in sales of durable goods. The havoc being wreaked on the manufacturing sector is appalling – and it’s the manufacturing sector that we desperately need to rebuild, if we are to stop consuming more than we produce.
Nondurable goods dropped 6.4 percent, and real personal consumption expenditures fell 3.1 percent.
But those are the official numbers. The reality is much worse.
In Unapologetic economic stupidity, Richard Daughty,, writing as the Mogambo Guru, cites the most recent statistics from DeepCaster.com and shadowstats.com: "Real US Consumer Price Inflation is running at around 13% annually, Real US Unemployment at about 14.5% annually, and Real US GDP is at a negative 2%, while real M3 (monetary creation) is running at 14% annually according to the quite credible calculations of shadowstats.com." (Unfortunately, a subscription is required for both DeepCaster.com and shadowstats.com, so I am not able to furnish a more direct link.)
Daughty also notes that while the U.S. government has now sunk into over $10 trillion in debt, interest payments are being held down by artificially low interest rates. In fact, he states that "the sustainability of the government, consumer spending and the economy rests on the continuation of artificially low interest rates." Right now, 10 cents of every tax dollar collected is required just to pay the INTEREST on the debt. Now think about THIS: The yield on a 10-year Treasury note right now is 4.01%, but the historical average, going back 46 years, is 7.04%. Which means that we can expect just the interest on the U.S. government debt, never mind paying back the principal, to reach nearly 20 percent of all government revenues collected.
Obama can NOT do anything on his own. He will be facing the hordes of angry white men stirred up by the likes of Limbarf and O'Reilly. He will be facing the entrenched power of oligarchical wealth - insurance companies, financial companies, hedge funds, big oil, big pharma, and the Reps and Senators they own, both Dem and Rethug. He will be facing a judiciary packed these past eight years with the worst conservative hack ideologues.
And he will be surrounded by economic advisers who are part of the problem. Dismay and disgust has often been voiced here on the blogosphere over who Obama has selected as economic advisers. The sad fact is that Obama voted for this bailout, despite a raging flood of anger and opposition, by bloggers as well as many others. Obama ignored us then. But he’s not going to be able to ignore reality. He was wrong, and we were right. The problem is that a lot of innocent people are going to get hurt by his being wrong.
Folks, our work is just beginning.