Could It Get Any Worse?

Markets are a yo-yo……foreclosures are rising quicker than the dead in a zombie movie….jobs are flying out of the economy….and manufacturing is at a stand still….so….could things get worse?

The quick answer is ….you bet your ass it can!

Remember all the urgency of the TARP, TALF and ARRA?  If we did not do something we would be in a sad place in the economy…….would the government, the Treasury to be exact, ever lie to the people to get their way or their money, as it were?

Want another quick answer?  Oh, you betcha ass they would!

Now I know someone somewhere, most likely in “Stumpville, Arkansas will dispute that….but I hate to be a buzz kill, but the WSJ is reporting …they did just that….

The US Treasury misled the public over the health of struggling Wall Street banks receiving emergency funds at the height of the financial crisis, creating unrealistic expectations and undermining popular trust in bailout efforts, according to an official audit.

An inspector general appointed to oversee the US government’s banking bailout has singled out president Bush’s treasury secretary, Henry Paulson, for painting an excessively rosy picture of the condition of institutions such as Bank of America, Citigroup and Merrill Lynch when the government pumped $125bn (£70bn) into America’s ten top banks in September last year.

At the time, Paulson described the banks as “healthy institutions” and said that an injection of government cash would kick-start lending in the economy. But officials in both the Treasury and the Federal Reserve had private concerns that some of them were teetering close to a financial collapse.

“The Treasury may have created unrealistic expectations about the institutions’ condition and their ability to increase lending,” says a report today by the inspector general, Neil Barofsky, who adds that the Treasury and the bail-out program “lost credibility when lending at those institutions did not in fact increase”.

He continues: “Accuracy and transparency will enhance the credibility of government programs like TARP [the troubled asset repurchase plan] and restore taxpayer confidence in the policy makers who manage them; inaccurate statements, on the other hand, could have unintended long-term consequences that could damage the trust that the American people have in their government.”

The Federal Reserve’s chairman, Ben Bernanke, and the head of the Federal Deposit Insurance Corporation, Sheila Bair, are criticised for similarly optimistic remarks in the findings, which will add to a vigorous debate about the handling of the credit crunch in the final months of Bush administration.

Paulson and Bernanke opted to pump funds into all ten of the country’s top banks to avoid creating “haves” and “have nots” that would highlight those considered to be in a more perilous state. In doing so, they tried to talk up the condition of every big institution.

Even though a couple of the big banks have repaid, at least some, of the money….they are still NOT stable and the lies of the past could very well come back to bite them in the ass.

I really hate to pee on the parade….but all the “good” news, economic good news, is made up…nothing is making Main Street feel optimistic about the chances of the economy recovering.

The final word is that the banks have done NOTHING to change the way they do business….so the conditions that caused the crash, as it were, are still in place and surviving well.

YES…things could still get worse……….

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2 thoughts on “Could It Get Any Worse?

  1. THAT’S the REAL difficulty, isn’t it? Nothing’s changed! We don’t need loads more legislation, though, just our single law – don’t be an asshole! Problem solved!

    More seriously, there needs to be a sea change in the way capitlaism is run – I believe in it, but it has to work (to some extent at least) for EVERYONE, or like communism, it will fail. At the moment capitalism is only serving the rich and, in amny cases, you have to be an asshole to get rich in teh first place.

    Sadly, hard work makes no one wealthy in the modern world anymore. That’s because the fast buck is all to most of these greedy, cheating bastards. Capitalism (like guns and so much else) is not the problem – PEOPLE are the problem! Those people are at least!

    We are fairly helpless though at the moment because, if you squeeze these people too hard they’ll simply punch a few keys, switch computers before going home and tomorrow morning you wake up and everything financial is run from Panama.

    I suppose in truth I’m just jealous that these people have managed to beat the system so effectively and I simply wish that I could be that carefree 😈

    1. The free markets died years ago…about the only true free market left is the drug culture. Competition is sadly lacking in today’s pale version of capitalism. Hell, not even the great seer Adam Smith particularly liked capitalism.

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