Fed's 'backdoor bailout'

Due to a legislative push by Bernie Sanders I-vt, the ever-present Ron Paul R-tx, and Alan Grayson D-fla, it has come to light the Fed has loaned an estimated 3.3 trillion in liquidity and more than 9 trillion in short term loans and other financial arrangements to US and foreign banks and corporations at zero to near zero interest during the course of the current financial crisis.

With hundreds of billions of US money going to foreign financial institutions, Sanders asks, has the Fed become the central bank of the world? Bernanke lobbied against the amendment attached to the financial reform legislation passed this year by congress. Sanders and his allies won but not to the extent they had hoped - Ron Paul has wanted a full audit of the Fed for years. Even Wall Street is praising these guys.

Where did the money go? - banks and corporations like Verizon and Toyota. They collected trillions and the American people got little in return. The reason is that the Fed failed to require loan recipients to invest in building our economy. The paperwork from the Fed raises the prospect that the banks and corporations used the money to pad their bottom lines, which may mean the loans were direct corporate welfare to banks.

Sanders wants an investigation into whether banks took loans at near zero interest rates and then bought treasuries to provide free money to some of the largest financial institutions in the country on the backs of American taxpayers.

And yesterday 2 million Americans began having their unemployment cut off before Christmas. What's new?

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reckoner said over 3 years ago ...

I'm on the fence on this one. I'm a bit uncomfortable with the fed doing major things without being accountable to the public, but it's also clear that our political system is often incapable of acting and having a body outside of the typical political cycle.

sean_renaud said over 3 years ago ...

While there are two separate issues being discussed here as a single one, the FED bail out has nothing to do with 2 million Americans losing their unemployment. Aside from money=money which is valid but separate. Without a solid reason (and perhaps there is one I'm not closed off the idea that there was a good reason) why a single solitary cent should have gone into bailing out foreign countries.

I hate that we are so fucking stubbornly capitalist that NONE of us, even the "radical liberals" will come out and say that many of these companies need to be split up.

beyondtheveil said over 3 years ago ...

reck- I'm also bit uncomfortable (even if you do not believe the fed is privately owned) that an entity of the federal government which is the central bank is unregulated, secret, beholden to no one without any oversight or audit of any kind. As far as our system being incapable of having a body outside the political cycle, the fed was created by congress. Actually bankers created it in secret, the congress passed their little creation when constitution says congress will decide money matters. But then, I honestly don't know which is worse, (congress or the fed) it's just not right.

SR- I realize the unemployment benefits have nothing to do with this. I threw that in as side remark of how ridiculous this shit is. Do you think it's more important for companies to be split up than banks, or both?

reckoner said over 3 years ago ...

@sean the problem is that the word capitalism doesn't mean anything anymore. No one can give me a good definition of it.

sean_renaud said over 3 years ago ...

What precisely is not right about it? It seems that current hiccup included we've had seventy odd years of thinks working more often than not.

And defining capitalism, in simplistic terms, is simple. You keep what you kill. Obviously it's more complicated but if you look at the right and what they push, less benefits, less regulation, less taxes it's quite clear. You keep what you kill.

reckoner said over 3 years ago ...

You highlight exactly what I mean. People say something like "you keep what you kill" but no one actually believes in that. For example, if they did believe in that they'd be for open borders, they'd be against a government military, police, fire dept, education, etc. They'd be against public roads, food safety inspections, safety regulations of mines, etc.

No one is for that even if they pretend they are in limited contexts.

So I still have no idea what capitalism means to you. How do you define it again? ;)

d6fer said over 3 years ago ...

It means the freedom to make what you can, while the government protects your stash.

beyondtheveil said over 3 years ago ...

reck- Damn good question. I don't believe you can define it except in the broadest of terms. Same with socialism. Same with liberalism and conservatism.

People insist on a mixture of benefits which makes it almost impossible to define in the real world in an exact nature.

d6fer said over 3 years ago ...

btw....capitalism has never changed....America has changed.....we are moving towards socialism (quasi government owned business....or quasi private owned business...take your pick)

Turns out that G.E. got a big chunk of change too....weren't they big Obama contributors?....and why did they even need it? G.E. has been buying up companies for years and I never heard once that they were hurting.

reckoner said over 3 years ago ...

d6, you still haven't given a definition. Just righty talking points.

d6fer said over 3 years ago ...

I did...maybe I should expand on it....government facilitates the freedom to earn what you can, while they protect your right to do so and keep what you have earned.

reckoner said over 3 years ago ...

that still doesn't really mean anything. Why should I have to pay taxes for a military and police force. I can take care of myself, the government isn't protecting my right to keep what I've earned.

sean_renaud said over 3 years ago ...

Sorry D6. But you're defining it to mean what you want. TRUE capitalism is you keep what you kill. Period. End discussion. Full stop. Once the government is protecting your stash you've wandered into socialism. See heres the kicker. You can't have a society with socialism. The entire point of banding together whether you're a bunch of people all pitching in for an army to keep the mongols from invading or a bunch of wolves coordinating to take down a moose you're doing it because it's better, easier, possible with a group. In true capitalism you'd have a winner, eventually one guy gets all the toys.

America has taken steps to prevent this because in reality we all know that pure capitalism won't work for very long. (and ultimately disolves into might makes right) Which is why we have lists and lists of rules that we make people obey (and as we can see from the housing bubble these "regulations" are written in red ink. There is no secret cabal of liberals who set regulations with the sole purpose of destroying the economy)

Which is why we need (as america but also as us) to talk like adults about how we should run things and WHY it should be run that way. I'm for example a HUGE fan of estate/death taxes. I believe that capitalism is about keeping what YOU kill. It's directly perverted when you've got generations of people who never learned out to kill because someone at some point in their past got something so huge that it would last forever.

kruuyai said over 3 years ago ...

@d6fer... from my point of view, it's not so much government-owned business as it is business-owned government. Either way, sucks like hell.

kruuyai said over 3 years ago ...

@sean.. "you can't have a society with socialism." How do you figure? Socialism, in its purist sense, is people working together toward a common goal in mutual support. That seems pretty much to be the definition of a society and it works very well in places like Thailand where people grow up learning to support each other rather than compete and try to tear the other guy down. In fact, there, people get uncomfortable if they see someone not succeeding, and they rush in to help, so it's a win-win for everyone. That's the kind of society I'd like to live in.

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