12-27-08, 9:20 am
In the final act, setting the stage for the Federal Reserve JP Morgan and his associates crashed the stock market in 1907 then offered to prop up the American economy with money he created out of nothing with the blessing of congress. -- Andre Michael Eggelletion, Thieves in the Temple.
Corporate Welfare, corporate communism, call it what you; let's not make a deal. Let's indict. The probelms that have led to today's recession were cause by bad regulators and the short-sighted members of Congress who enabled them. And this seems to have crossed party lines.
On 12/18 President-elect Obama blamed regulators for the nation's financial troubles saying that they 'dropped the ball' and they were 'asleep at the switch.' This is one of the few times regulators were singled out, a 10/26 60 Minutes segment claims the latest downfall of Wall Street was caused by... side bets. Also known as credit derivatives or credit default swaps (CDS) and this is a 'multi-million dollar market.' These side bets were based on the performance of US mortage markets. The segment compared this to a football bet where you can wager on a game without directly participating or managing the team to the victory it is trying to accomplish. By the same token CDS allows you to gamble on stocks and bonds and mortages without actually purchasing share of them.
The only real problem was the nature of the side bets. 60 Minutes interviewed Frank Partnoy, a University of San Diego law professor who stated the bets were based whether or not people would default on their mortages: 'This is the bet that blew up Wall Street.' It goes even deeper that 60 Minutes reveals, it was Lehman Brothers, Bear Stearns, and American International Group (AIG) who were the most to blame. They made more bets than they could afford to pay off. It was the show's revelation of the Commodity and Futures Act of 2000; the bill was endorsed by then-President Bill Clinton, encouraged by then-Federal Reserve Board Chair Alan Greenspan and passed by the 106th Congress and signed by Clinton almost exactly eight years ago to the day of you're reading this (12/21/08). HR4577 was never debated on as most other bills are. 157 Democratic and 133 Republican members of congress voted the measure into law.
What I noticed is the disparity between the funds the government is granting to corporate America ($700 billion) and the loan given to the big three auto makers. This despite the gross abuse of AIG, whose top execs more than once went on lavish vacation weekends to expensive resorts running up tabs of hundreds of thousands of dollars, even while asking for an additional $37 from the Federal Reserve. But instead of a flat no! A bill was passed to actually facilitate the corporate funding: the Emergency Stabilization Act of 2008 (HR1424), which authorizes the US Secretary of the Treasury to spend up to $700 billion to purchase distressed assets and infuse money into the banks.
It's the desire of government to take care of their corporate partners, the auto industry is seen as too much of a blue collar industry because of the direct employment and trasportation they supply to white working class and minority consumers.
Regardless of the political implications one well-known Buffalo broadcaster recently aired the best spread-the-wealth idea that would make both the auto industry and corporate America recover in record time while saving the government hundreds of billions in the process. Consider it reparations for everyone, but its a can't miss. An on-air commentary by Patrick Freeman on local Public Access and You Tube on 12/6 needs to be heard nationally:
'700 billion dollars now went to companies on Wall Street. Companies that are part of mainstream corporate America... if there was such an economic crises in this country of more than 300 million people, if you were to give each person in America one million dollars, pay off all they're debts, they're house, credit cards, everything, and give them the balance of that money and tell them they could use it any way they wanted to, don't you think that the economic crises that we are experiencing today would just go away? I think so, but nobody has the equation. Why are you giving away money to private entities? I am not for in any way continuing to finance private entities with taxpayer money... the benefit is going to corporate America who has had no regulations put on it.' Now that's change I can spend on. And an idea the President-elect needs to ponder between now and January 20th. This ultimate economic stimulus would concurrently benefit America on so many different levels. A one-time distribution to adults 18 and over would bring us out of recession very quickly.
--Chris Stevenson is a columnist for the Buffalo Challenger, contact him at pointblankdta@yahoo.com.
