Tag: Taxpayers

A Bailout By Any Other Name

For the second time in four months, the US government has intervened to rescue major financial firms and prevent an imminent collapse of the American and global banking system.

The government bailout of the mortgage giants Fannie Mae and Freddie Mac announced Sunday goes well beyond the $29 billion injection of Federal Reserve funds used to subsidize the takeover of Bear Stearns last March by JPMorgan Chase.

The plan outlined by Treasury Secretary Henry Paulson would give him virtually unlimited and unilateral authority to pump tens of billions of dollars of public funds into the mortgage finance companies. At the same time, the Federal Reserve Board announced that it would allow the companies to directly borrow Fed funds.

It is generally conceded that a failure of the two government-chartered mortgage finance companies would have consequences even more cataclysmic than those which would have likely followed a collapse of Bear Stearns. Between them, Fannie Mae and Freddie Mac, which purchase mortgage loans from banks and other lenders, bundle them into securities and sell them to financial institutions and big investors around the world, hold or guarantee more than $5 trillion in mortgage debt. They currently account for some 80 percent of all new mortgages in the US. Were they to lose the ability to borrow at a discount, the US housing market would come to a grinding halt.

The bailout with public funds of Fannie Mae and Freddie Mac will set a precedent for a far broader use of taxpayer money to rescue major financial companies. Last week Paulson and Bernanke went before the House Financial Services Committee to demand legislation institutionalizing federal intervention to bail out failing Wall Street firms. The response of key Democrats such as Frank was to urge the regulators to call for such measures now, rather than after the new Congress takes office next year.

Will you allow your tax dollars to be used to bailout these speculators, which btw, your president said he was not going to bailout speculators–so much for that promise.

Candidates And Autos

republican John MCCAIN

• Would launch a $300-million award for developing a battery for hybrid and plug-in hybrid vehicles.

• Would provide a $5,000 tax credit to buyers of vehicles that emit no carbon or other pollutants, with smaller credits for other advanced vehicles.

• Would force automakers to expand the number of models that can burn E-85 fuel; speed up the timeline of Detroit automakers who have pledged that 50% of new vehicles by 2012 will be flex-fuel capable.

Democrat Barack OBAMA

• Would set up a $150-billion fund to develop new technologies, including plug-in hybrids.

• Would offer loan guarantees and tax credits for revamping plants to build more efficient models.

• Would set a target for automakers to average 50 miles per gallon by 2030.

You now have the major candidates positions on autos in a nutshell.  McCain’s ideas are to tax cut the way into a brighter future.  Not gonna work.  Has not worked in the past, will not work now.  Obama’s is similar tax cuts and massive government infusion of cash to bring the industry back.

Think about it!  The industry made billions upon billions for investors, but yet did not expand the capability for the approaching storm, which many economists predicted 10+ years ago.  Sorry, but they should be held accountable for their mismanagement, it should fall on their shoulders to bring the industry into the 21st century.  The taxpayers have done all they should to bail out industries suffering from extreme greed.

News Of The Absurd

Does anyone remember the Arabic speaking TV station started by the US?  It is called al Hurra.  I believe it was started in 2004 with the purpose of cutting through the BS and the hate of the region and give the listener the truth.

The station has not quite delivered on its promise.  As a matter of fact, it is airing anti-Israeli, anti-American programing; it also does pro-Iranian reports and has even aired a militant that has been calling for the death of an American prisoner.

But all that is not the absurd part, that is that the American taxpayer has paid $500 million for the operation of this TV station.  Now there is money well spent by your government.

Americans Will Pay For Wall Street Crisis

The Federal Reserve Board, with the full backing of the Bush administration, Congress and both political parties, has carried out a massive and unprecedented intervention to avert an imminent collapse of the US banking system and bolster the major Wall Street finance houses.

The Fed’s decision in March to underwrite with $29 billion of its own funds the takeover of investment bank Bear Stearns by JPMorgan Chase, in order to prevent the collapse of Bear Stearns, and its even more extraordinary move to allow major investment banks to avoid a similar fate by borrowing directly from its coffers, was a signal that the US government would marshal whatever resources were necessary to rescue the banking system from the consequences of the speculative binge that had generated billions in salaries and bonuses for the Wall Street elite.

While the government bailout, ultimately to be financed from public funds, has seemingly averted an immediate banking collapse, it has done nothing to address the underlying crisis. Rather, the Fed and the US corporate-financial establishment hope that it has created the conditions for a more orderly “deleveraging” of the financial system, i.e., a liquidation of trillions in vastly inflated and unmarketable assets, in which the social and economic pain is borne overwhelmingly by working class and middle class families.

The voter should be looking at this type of bail out and demanding that it stop.  Taxpayers cannot afford to let the government help speculators and bad investment decisions by Wall Street.  Now ask, the money spent to help Wall Street, where could it be better spent?  Possibly on programs that help Americans?