Bail and Switch
America was sold the $700 billion (plus who knows what for Fannie Mae plus who knows what for Freddie Mac plus $85-million-make-that-$125-billion-make-that-$150-billion for AIG) bailout as a way of loosening up credit markets by buying up troubled assets (hence the Troubled Asset Relief Program), thereby providing a floor for assets that couldn’t be valued.
Then this week, Hank Paulson springs on us that the new plan … or was it always the plan? … is to buy up interests in a range of financial services companies. Democrats in Congress want to stretch the scope further to include the Incredibly Shrinking 3 (formerly Big 3) auto companies.
Bail and switch.
Michelle Malkin in her weekly column — republished on her blog – lays out the whole sorry narrative in revolting detail.
In September, Paulson offered his lofty pledge: “The ultimate taxpayer protection will be the stability this troubled asset relief program provides to our financial system, even as it will involve a significant investment of taxpayer dollars. I am convinced that this bold approach will cost American families far less than the alternative - a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion.” Two months later, Paulson’s conviction melted faster than microwaved butter. “Our assessment at this time is that this is not the most effective way to use TARP funds,” he sheepishly told the nation Wednesday.
So the vaunted Troubled Asset Relief Program no longer involves troubled assets at all. It’s about shoveling money into banks so that they can buy other banks (my own bank, Chevy Chase, is said to be in the sights of Citigroup) and continue to pay their executives massive bonuses for managing their institutions badly enough to require federal funds.
I read an article today characterizing the proposed GM bailout as “good money after bad.”
If only that were the case.
The auto industry bailout … and it’s coming as part of the big “bail and switch” within weeks of Sleek Barry’s inauguration … will be bad money after bad. All these bailouts represent trillions of dollars that will be borrowed from my future and my retirement and worse yet, my kids and possibly even my grandkids and great-grandkids.
The more the mountains and mountains of debt pile up … the longer the rollercoaster rides up and down on Wall Street continue … the more I understand where the term “number” came from.
It’s what my brain feels like every time I try to process the latest economic news.
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