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