For many folks, the term "The Fed" (ie. The Federal Reserve Bank) induces drowsiness. It sounds like such a boring institution, dealing in stuff like interest rates and basis points that seem so academic. But as I explain in my newspaper column out today, while The Fed's instruments may be esoteric, its power is enormous - and it is using that power to cut Wall Street a huge check in what is a public embrace of four isms that have taken over our government.
The column really tries to break down this very complex financial crisis in terms that anyone can understand (and I'll admit, it took a heckuva lot of research to be able to boil down all the jargon into a digestible format - I hope I succeeded). It shows that the isms at work in the Fed's decision to spend $200 billion of your taxpayer money - Disaster Capitalism, Big Boy Bailout-ism, Feed the Beast-ism, and Trickle Down-ism. These are ideologies that have been around for a long time, and have been a staple of public policy for the better part of three decades.
The housing crisis is being used as a justification to hand over taxpayer cash to the same financial industry that has created economic emergency we now face. That's not surprising - this is the industry that has contributed about a billion dollars to political candidates since 2002. That money buys a lot - including a Bush-appointed Federal Reserve chairman clearly more interested in floating his Wall Street friends a loan than in helping homeowners now being foreclosed on.
This is the kind of bailout reserved for the big boys - the kind the free marketeers say shouldn't be given to regular folks. At a time of record deficits, the federal government is handing over your taxpayer money to Wall Street with no strings attached, feeding the machine that has brought out economy to the brink. And the public justification is straight "trickle down" economics. We are told that if we just help the banks, the benefits will trickle down to the rest of us.
The good news is that Congress seems to be getting a wee bit more interested in the Fed's shady behavior. Republican Chuck Grassley says he wants better transparency in the deals being cut between America's central bank and the financial industry sharks. Meanwhile, Democrats like Barney Frank and Chris Dodd are pushing back on the Trickle Down-ism with a bill that would help homeowners rather than asking them to wait for crumbs from the barons on Wall Street.
But the bad news is that all the oversight and legislation may come well after The Fed forces taxpayers to foot the bill for Wall Street's predatory lending and irresponsible speculation.
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