The Two Trillion Dollar Bailout You Don't Know About

If you thought the $700 billion bailout bill was bad, think again. The Federal Reserve is apparently handing out two trillion dollars in loans to companies and financial institutions effected by the credit crisis -- and it won't disclose where the money is going to.

According to Naomi Klein:

"We don't really know who they're handing the money out to, because, apparently, it's a secret. They could be handing it out to a range of other corporations -- I think they are -- but they're saying that they won't disclose who has received these taxpayer loans, because it could cause a run on the banks, it could cause the market to lose confidence in the institutions that have taken these loans. Once again, that represents an additional $2 trillion."

What are the implications of these secret loans? Well, more than anything, it is a serious crisis in democracy. The loans do not come from nowhere -- they exist in the form of taxpayers money and loans taken out from foreign investors that must be paid back by, you guessed it, the taxpayer. Another huge problem with the massive bailout is that the tax payer is getting literally nothing in return for it. Says Klein:

"These terrible equity deals that are so much worse than what Gordon Brown negotiated in Britain. I mean, let's remember, Gordon Brown got voting rights at the banks that they bailed out, seats on the boards, 12 percent dividends for US tax -- for UK taxpayers, as opposed to the five percent negotiated in the US and no voting rights and no seats on the board. Other thing Gordon Brown did is he got it in writing that the banks had to start lending, as opposed to Henry Paulson, who didn't get it in writing, and the banks are not lending."

There aren't really words to describe how utterly outrageous this is. It is an utter failure of the democratic process and a shocking snap shot of just how corrupt the monetary system is that we live under. The United States is currently over $10 trillion in debt, a level that any other nation would collapse under. But as George Monbiot explains, the U.S. designed global money system is rigged so that it doesn't matter (for now at least). The consequences of perpetual debt, privatized profits and socialized risk are stark. As Noam Chomsky states:

"The crisis is real, it's not manufactured. Exactly how serious it is, one doesn't know. Some of the most credible specialists like Nouriel Rabbini who have a very good record of accurate prediction think it's an extremely serious crisis and that the system might just freeze up. There is also a good deal of controversy about whether the current proposal will do more than put a band aid on a serious problem."

Bloomberg News is suing the Federal Government to disclose the collateral being spread in secret, and hopefully some light will be shed on where taxpayers money is going. If the case is rejected, public protest is an absolute must. The Bush Administration is literally looting the taxpayer on its way out, and awareness must be raised to stop it.

Ben Cohen is the Editor of The Daily Banter.com

Follow Ben Cohen on Twitter: www.twitter.com/thedailybanter

Comments

[crazylikeafox]

Tell this to everyone you know. Do not let up.

The collapse has not even started to hit main street. And it is going to be worse than anything we have ever seen. Slow Christmas season! What a joke. There are going to be bread lines and homeless, unemployed people all over this country. By this time next year it is going to be a new world in America.

The people of America must understand and be angrier than they've ever been at who did this to them.

Bush and the Republicans that gave him all the power in the world to destroy our country and our future.

[olephart]

It’s more than two trillion. The Fed has handed out two trillion and the Government has authority to back 2.8 trillion more in assets. The U.S. will be bankrupted and Obama is walking right into it. Stimulus programs being touted by left leaning economists will add even more to the debts. Make no mistake this is the product of years of Republican malfeasance but the crunch will be on Obama’s watch. The Wall Street robbery will bleed this Nation to death and Obama will be left holding the bag.

[dadw5boys]

They are taking dollars and buying gold and Eruo's then moving offshore to let the working Americans sort this out.

Read up on Argentia with 700% inflation. That is what we are facing.

[research]

last chance for the GOP to:

"bankrupt the US government till you can drown it a bathtub."

Secret loans! Ya gotta be kidding me.

Why don't they make a secret loan to the

auto companies instead of the

speculators on wall street.

[JonRaymond]

They need Detroit to be the scapegoat and lead media diversion.

[research]

Let's not let this happen.

More unemployment NOW ?????????????

Are they Nuts?

[NationalTreasure]

it's time for some of these government officials to go to jail -- and Paulson should be the first one in a cell

[schatsie]

Paulson was a racketeer at Goldman Sachs and should go to jail....

[rjmiller]

Hurray for plutocracy.

[jhNY]

It's almost as if we're the citizens of a kleptocracy, wherein the once and future contents of the Treasury is being funneled out to a business class that has taken control of all the wealth and economic power of the nation, while leaving the citizens with a big bill that they can never repay!

[thepoyote]

Please explain why this is not front page news? Are these type and level of loans commonplace?

[Henry]

http://www.federalreserve.gov/releases/h41/Current/

Here is the balance sheet of the fed. It's part 5. in the link above. Transparency is a wonderful word, but there is also confidentiality in financail matters. Look for yourself, if it's 2 trill, we're not there yet, or Ben is jiggering the books.

[Henry]

Here's a link to the Fed balance sheet ( it is in part 5.)
http://www.federalreserve.gov/releases/h41/Current/
There is something serious and large going on and I for one believe it has to do with "unwinding" of highly leveraged positions. When leverage is "unwound" it extinguishes that credit (read that as money) that gave birth to its initial highly leveraged investment. So...on the way up it was the mega creation of liquid money to chase up the values of houses, stocks, and other assets (remember oil?). Now the unwinding requires a liquidation of assets purchased (at mega mega leverage), diminishing their respective values and closing the leverage line, the loan that gave birth to the initial where-with-all (money) and in the process of accounting extinguishes that money, i.e. paying off the loan extinguishes the money and the liquidity that it represents.
This is the world wide dilemma. We go from floating in liquidity to a desert with no sight but of mirage. The question boils down to: What is "real" money and how do you recognize a "conservative"?

[Henry]

The point to this is that when the Fed makes $2 trillion in loans, advances, call it what ever it is creating the liquidity (new money) in the market place that is being expunged by the unwinding of leveraged positions of speculation. If everyone wants out, the exit is a liquid exit and there is not liquidity to permit this. (this is all the talk about the credit market "freezing" up)

[sail]

"The Bush Administration is literally looting the taxpayer on its way out"

You say this as if it's something they haven't been doing every single day starting from day one.