Wealth Transfer

According to this article in the New York Times, the baillout money that was ostensibly given to the banks to jumpstart the economy or forestall a collapse, etc, by opening up the credit spigots is not in fact, being used for that purpose.

It’s being transferred directly to the bankers.

I am, shocked, shocked!

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2 Comments

  1. Stearns says:

    Amazing.

    I’m having trouble understanding what reason Paulson would have for:
    1) Handing out money to banks so that they can acquire each other.
    2) Telling congress and the american people that the money will be used directly for loans when he intends and knows otherwise.

    I guess I don’t understand of the ways of high finance and government, because the only thing I can think of is that Paulson is just a lame duck crook who is setting up select buddies to be operating institutions that are too big to fail. Then they can engage in any promiscuous behavior they want without fear of failure, because the government will have to rescue them.

    In my ignorance, I’m inclined to think that “too big to fail” means “too big to exist”, and that we ought to be breaking up these institutions. It seems to me that the economic reasons for ever-larger corporations — as for example, Coase’s Law — simply do not apply indefinitely. I believe the size of these institutions has grown long past the point where further increase is good for the economy. There may be short-term benefits for the shareholders IFF the firms use their size to exercise non-free-market (mob) advantages. But even that is not sustainable. I think the increase in company size is really only good for the executives.

  2. John says:

    Howard,

    You and I have both described this whole financial situation as a Ponzi scheme, which is now collapsing.

    Its originators and early investors made lots and lots and lots of money — Paulson himself made hundreds of millions.

    The public was told we needed to ante up $700B in order to protect the little guys who got ruined when the house of cards got ruined. But now we see that the money is going to the big guys who got ruined when the house of cards collapsed.

    I have a hard time seeing the large financial institutions as anything other than mafias. When I see Hank Paulson, I see Tony Soprano.

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