The 16 Trillion dollar Con

…. Or “16 Trillion for Bankers and Sacrifice for us” …. It hardly seems fair.

From Bernie Sanders today comes this heart-stopping news:

Veil of secrecy lifted at the Fed

More than two years ago, I asked Ben Bernanke, the chairman of the Federal Reserve, a few simple questions that I thought the American people had a right to know: Who did the Fed bail out? How much did they receive? What were the terms of this assistance?

Incredibly, the chairman of the Fed refused to answer these fundamental questions about how trillions of taxpayer dollars were being put at risk.

Thanks to an amendment that I included in the Wall Street Reform and Consumer Protection Act to audit and investigate the Fed, the American people are finally getting answers to these questions.

A few days ago, the nonpartisan Government Accountability Office completed the first independent investigation into the emergency actions taken by the Federal Reserve. As a result of this investigation, we now know that the Federal Reserve provided a jaw-dropping $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the world.

Among the investigation’s key findings is that the Fed unilaterally provided trillions of dollars in financial assistance to foreign banks and corporations from South Korea to Scotland. In my view, no agency of the United States government should be allowed to bail out a foreign bank or corporation without the direct approval of Congress and the president.

The GAO also determined that the Fed lacks a comprehensive system to deal with conflicts of interest, despite the serious potential for abuse. In fact, according to the report, the Fed provided conflict-of-interest waivers to employees and private contractors so they could keep investments in the same financial institutions and corporations that were given emergency loans.

For example, the CEO of JP Morgan Chase served on the New York Fed’s board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed. Moreover, JP Morgan Chase served as one of the clearing banks for the Fed’s emergency lending programs.

Let me repeat:

we now know that the Federal Reserve provided a jaw-dropping $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the world.

Where the heck does the Federal Reserve GET this kind of money?  And why can’t they give it to prop up Social Security and Medicare?

Monday Morning News and Views

Good Morning Conflucians! I know I’ve been a bit out of if for the past few days–is that why I have a feeling that there is no news worth discussing? Sure, there is another earthquake, this time in Turkey; there are elections in Iraq, there is a new “Al Quaeda” arrest in Pakistan, and there is the ongoing nightmare of “health care reform.”

So why do I feel as if nothing is really happening? Is it just me, or is this country paralyzed, waiting for–what? The other shoe to drop? Another depression er– “recession?” Is there anything that can get us moving? Can anything force this scaredy-cat President to do something–anything!–to change the disastrous course we are on?

In the big media and at “progressive” blogs Rahm Emanuel is being blamed for the paralysis. The Hill had a long piece by Sam Youngman about this “controversy” yesterday.

A spate of recent reports have portrayed Emanuel, known for his aggressive brand of Washington politics, as either the voice of reason in a weak, liberal White House or the wet blanket preventing President Barack Obama from pursuing the kind of change he promised as a candidate.

Emanuel has become the flash point in those arguments as liberals express betrayal over Obama’s failure to convince Congress to pass a public option in healthcare reform and close the detention facility at Guantanamo Bay, Cuba.

According to Youngman, “Democratic strategists” are blaming the netroots for the attacks on Rahm, but other anonymous sources say that efforts to undermine him are coming from inside the White House. The article references Huffington Post pieces by Dan Froomkin and Michael Moore. As we at TC know all too well, these “progressives” still can’t face the fact that they helped elect Bush III. They want to believe that Obama is being duped by Emanuel–and the subtext is that it’s the Clinton’s fault. From the Hill article:

But what Rahm represents to the left dates back to liberal anger with Clinton and his kindred spirits at the centrist Democratic Leadership Council (DLC). Emanuel is seen by some progressives as wanting to win, to a fault by sacrificing principles of the party.

“Rahm believes in being elected; not in the glory of losing or failing,” the strategist said.

In another “think piece,” at Business Week, veteran Village insider Al Hunt calls this “faux White House intrique.” Hunt doesn’t seem to want to blame Obama either, but he nibbles around the edges of doing that:

Yet there is a larger self-created problem for which Emanuel and Axelrod are only partly to blame. Go back to the remarkable Obama campaign of 2007-2008. More than any of its rivals, it had a strategic sense of what it was, where it wanted to go.

This provided a shield against setbacks: losing the New Hampshire primary, the candidate’s careless remarks about rural Pennsylvania voters or even the incendiary remarks of Obama’s pastor. These became speed bumps in the strategic narrative.

That is missing in the Obama presidency. Too often it seems situational rather than strategic, reactive more than proactive. Thus setbacks, from minor ones, such as the handling of the Christmas Day bomber, to major ones, like the loss of the Senate seat in Massachusetts, throw team Obama off stride, and leave voters confused.

Hint, hint…but no one wants to come out and say it: Obama is clueless–he has no idea how to lead our country and no goal in mind even if he could lead. How are we going to survive three more years of this kind of inertia?

We already practice socialism

Scarecrow at FireDogLake has a sobering post this morning. The Republicans are well on their way to making over the US economy in the Iraq model. We are headed into a recession, boys and girls, and it will be a hard landing, complete with rampant inflation, tight credit and a falling dollar. Congratulations, George! You have managed to compare favorably to Hoover. Nice!

Both NPR and Marketplace: Morning Report had extensive coverage of the takeover of Bear Stears by J.P. Morgan this morning. Over the past week, Bears Stearns, “not the nicest bank in town”, went from trading at $30/share to $2/share. And the scary thing is that Bear Stearns investors might have gotten more than the bank is worth at $2. Now, Morgan turns around and borrows the money from *us*, the taxpayers, to buy Bear Stearns. So, essentially, we now own a worthless company, but the people who drove Bear Stearns into the ground are not going to go bankrupt. Hallelujah for them! Not so much for the poor home owners who were suckered into paying extravagant prices for modest housing by getting an adjustable rate mortgage with a teaser rate. Their investments are worth less than the mortgage and they can’t unload it on the government like J.P. Morgan can. So, what we have here is socialism for the rich where we redistribute tax payer wealth from the people who work to the people who invest. What a sweet deal for the well-heeled.

At least one of the interviewees this morning makes this point and goes one further. He says we ought to let the market take care of itself. The impact will be deep if the investment community starts to go bankrupt but it will be soooo much worse if we keep bailing them out. When will they ever learn? What’s the worst that can happen other than some very rich people become suddenly not so rich? If we keep them above water, we just cover up the rot at the hollow core of the finance industry. Cut them loose, let us take the hit and get on with rebuilding.

And it goes without saying that when the $#@% hits the fan, you aren’t going to want a neophyte or a economic lunkhead (by his own admission) be in charge of the fallout. I suspect you want someone who’s actually seen a crisis up close and personal to be in charge.