Jesus Vish, you sound like that old best freind I had in middle school. The communists and radical enviromentalists are conspiring with the illuminati and the catholic church to strip America of its industrial base to turn the US into a slave state for the New World Order™.
And Derek, how is any of that Obamas fault? Bush was president for the last 8 years, that $700 billion (actually closer to $1.1 trillion) that Bush spent just on his bankers handout didn't seem to bother you much at all, nor did the nearly $2 trillion spent on the butcher festival in Iraq.
The laws that this latest bailout is based upon, were written back in the 1950s and added to in the late 60's and early 70's by the Eisenhower and Nixon administrations respectively. This money is required by well-established law. The Goldmann Sachs and Shearson Lehmans of the world were protected by laws requiring them to back their issuances of bonds and capital by the US government. The full faith and credit of the US Treasury. Thats why they were able to continue with their stripping of the economy for so many years. The
relevant laws passed by the GOP dominated congress (with a totally veto-proof majority) in 2000 and later re-enforced by the Bush/Cheney administration as well as Greenspan stripped the laws of any teeth and re-legalized the
bucket house industry that was banned back in the 1920's.
Thats all "credit swap derivatives" are. Bets on debts. Bets on stock pricing. Bets and gambling based on the presumption of future prices of currency trades. It opened up the entire stock market, and the banking industry to open manipulation. This entire mess rests squarely on the previous administrations, including Clintons. They legalized bucket house operations and the gamblers went totally apeshit. The US Government is $42 TRILLION in the hole based on these bond issuances.
The mess left by the Bush administration is so massive, and so utterly beyond the pale of anything that can be construed as competance it will probably take several decades to unfuck. Those debts accrued by the banks must be paid, or the countries like China and Japan and Germany that bought US bonds and securities will dump that currency back on the world market. That means $25 banannas and $50-$100 gallons of gasoline. It already happened once, back last September. Thats where the first bailout happened.
Don't blame the doctor for the damage caused by that drug you were taking before you went to him, for you being sick. Obama has a godawful mess to deal with, and there isn't any single person that is qualified to clean up the mess. Let the man work. He has a LOT of opposition from the banks and their lapdogs in Congress and the Federal Reserve.
How the "conservative economy" has worked since Reagan:
Typical scenario for the last 18 years:
January -
A Private Equity Investor (PEI) has $20 million. He uses it as security to borrow $200 million from Bank1 to buy a company we shall call "Widgets Co". Widgets Co. is a solid manufacturing business with assets of land, factories, patents, a brand, good will, and no debts.
March -
Widgets Co., under "New" ownership, borrows $300 million from Bank2 – no problems, it's a solid business – but here comes the bit where it all goes criminal, but not illegal...
Widget Co. pays out $300 million to PEI its new owner as a dividend. PEI then repays $200 million to Bank1. PEI now has $100 million cash, and has done nothing for it. Widget Co, however, now has to pay $20 million in interest per year to Bank2. PEI now has $100 million.
July –
Widget Co. by direction of it's new owner (PEI) , sells its assets: land, patents and so on and leases them back for $30 million a year.
The sales bring $200 million which Widgets also pays out to PEI its owner. PEI now has $300 million.
August -
Widget Co's Pension Fund is 'restructured' bringing a liquid 150 million onto the balance sheet. Widgets has liabilities to its pensioners with little to back them. 150 million is paid out to PEI as a special dividend., PEI now has 450 million.
December -
PEI sells the business to a pension fund, for $100 million. Far less than he paid as it now has a lot of debt, but, it is a good business. PEI now has $550 million.
Recap:
Widgets now has $300 million in debt which gives rise to $20 million a year in interest payments, plus $30 million in leasing payments. It has pension liabilities and the pension fund is almost worthless.
Meanwhile … PEI started this little scheme with $20 million and now has $550 million. But … the business is still viable, as Widgets can meet its payments.
5 years later -
Sadly hard times come. Turnover drops, prices drop, costs are cut, people lose their jobs, including engineers, managers, the shop floor and the sales team who did real work for years, created real value, invented the patents, built the brand. It doesn't help.
The company has no stores of fat - it goes bust. The banks loans sour. People lose their jobs, the pensioners cannot be paid. This happens 100 times so the banks are bust too, but get bailed out by the taxpayer (that's those guys who lost their jobs and pensions at Widgets), PEI lives happily in The Bahamas with the 550 million which he 'earned' in a fabulous year of 'value creation' made possible by the power of free and light touch regulated markets.
Thats what is happening now.
.