Your Tax Dollars At Work

Banks of America is using bailout money — your money — to fire US workers and hire workers in India.
They’re also using your bailout money to “lobby” (pay people in) the government to let them continue to do anything they want with … your money.
Why do we let corporations use money to influence government policies and public opinion? Does that really make any sense? OF COURSE they will use that ability to change policies and opinion to benefit a wealthy few at the expense of the rest of us. What else would a corporation do? A democracy should never allow this camel’s nose into the tent. It inevitably leads to the camel sleeping in the tent with the rest of us outside.

1 thought on “Your Tax Dollars At Work

  1. Don’t miss the bigger picture. Bush/Obama are executing the same policy. Use tax dollars to bail out bank bond holders. Borrow from the Chinese, let the children pay it off, and print American peso aka dollars to monetize the debt. Job one protect bank Investors aka bondholders.
    A Hussman update
    Consider the economic landscape. The U.S. government is running huge deficits, selling debt to foreigners in order to make the bondholders of mismanaged financial institutions whole. This will put a claim on our future national output and allow foreign owners to scoop up U.S. businesses in the years ahead. We are also running a large current account deficit (though somewhat smaller than in recent years thanks to a collapse in U.S. gross domestic investment).
    In order for U.S. financial institutions to earn their way out of the losses, they will have to accrue and retain an amount on the order of 25% to 35% of GDP. From where will they reallocate that amount? Well, prior to the recent earnings downturn, corporate profits were running at about 8% of GDP, a figure that was already based on unusually high profit margins (the sustainable norm is less than 6%). The personal savings rate was about zero, but has increased to about 4% as consumers have scaled back consumption. If banks were able to sustainably charge high interest rates on loans and pay low interest rates on deposits, the earnings of the banks would come at a cost to what would otherwise have been retained: corporate earnings and private savings. Essentially, savers will earn less, and corporate borrowers will pay more. To accrue 25-35% of GDP to cover the debt losses (which is a mainstream estimate, not a worst-case by any means), you would have to persistently depress non-financial corporate profits and personal savings by about 25% for well over a decade.
    So yes, we can indeed abuse the U.S. public in order to make the bondholders of U.S. financial institutions whole and protect them from any losses. This was the policy of the Bush Administration, and has tragically become the policy of the Obama Administration as well. By doing so, we will commit our future production to foreign hands, or we will commit about a quarter of U.S. non-financial profits and personal savings to these bondholders for at least the next decade.
    We can also allow bureaucrats to commit public funds that have not even been allocated by Congress, which is what we have done. We have all become dangerously de-sensitized the the sheer volume of money being tossed around here, and the potential for enormous fraud, misappropriation, cronyism, and misuse.
    What we cannot do is create all of this out of thin air. Understand that the money that the government is throwing around represents a transfer of wealth from an unwitting public to the bondholders of mismanaged financial corporations, even while foreclosures continue. Even if the Fed buys up the Treasuries being issued, and thereby “monetizes” the debt, that increase in government liabilities will mean a long-term erosion in the purchasing power of people on relatively fixed incomes.

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