President Obama won't tell us in his State of the Union address. The deficit hawks won't crow about it. Don't expect the Tea Party or Rush and Beck to highlight our generosity either. But the sad fact is this: During the worst year since the Great Depression, with 30 million people out of work or forced into part-time jobs, Wall Street is awarding itself $150 billion in bonus money.....and it comes from us!
That's $500 for every man, women and child in the country -- $2,000 for a family of four. (Maybe we should try deducting it from our income taxes as a charitable donation.)
Had we not bailed out the financial sector, there would be no bonus pool this year. Zip, zero, ziltch.
It seems like financial Alzheimer's setting in as many forget how all this happened. Wall Street, and no one else, crashed the economy through its fantasy finance extravaganza. It created, sold and traded a slew of newfangled financial instruments that were supposed to remove risk from risky investments. Wall Street went begging for subprime debt in order to create and market their new financial securities, the most profitable activity in their history. As a result of their securitization casino, which leveraged bet upon bet, the housing market turned into a bubble and finally burst. Wall Street had miscalculated, big time. The risk returned with a vengeance.
Not matter what Rick Santelli proclaims, government interference didn't cause the crash. Greedy, stupid home buyers didn't cause the crash. Poor people backed by the Community Reinvestment Act didn't crash the system. And China didn't cause it either. The book should be closed on this: Wall Street's fantasy finance casino did us in. (Please see The Looting of America for a fuller account.)
Once housing prices stopped their meteoric rise, the entire precarious structure of bets piled upon subprime loans, turned toxic. The banking system froze and the real economy was tossed off a cliff. We truly were on our way to the next Great Depression.
Policy leaders of all stripes bailed out the financial system because they thought there was no choice--and that was true to an extent. Preventing total financial collapse was necessary. The choices to be made were about how to prevent a further collapse and what kinds of demands we'd make on the banks that had brought disaster upon themselves and the rest of us. Bush, Paulson, Bernanke, Obama, Geithner, Summers and Congress made their choices. They poured money into the banking sector like never before. We gave the Wall Street banks gigantic loans and enormous guarantees on their toxic assets. We gave them TARP. It all totaled to more than $12 trillion, with most of it still in play, even after the TARP repayments. (See Nomi Prins's excellent accounting..)
We can, and should, argue about whether the bailout was put together properly. A strong case can be made that the victims (the public), rather than the perpetrators (Wall Street's casinos), should have received our support. Clearly, there were much better ways to rescue the failing economy and produce jobs, which is still by far our number one problem.
Wall Street was saved from bankruptcy, including Goldman Sachs which now cavalierly insists that it didn't really need the bailout money (yet it took $12.9 billion of taxpayer support via AIG, and tossed it into its bonus pool.) Wall Streeters actually think they've earned the $150 billion in bonuses through their own cleverness. Think again. It's nothing more than taxpayer welfare.
Of course, no one wants to admit that we put the richest people in the world on welfare. It's embarrassing to acknowledge that we are rewarding those who killed millions of jobs. And worst of all, our political establishment doesn't have the nerve to take our money back.
Instead the President talks about getting back every penny of our TARP money, with interest. Not good enough, because that still leaves the $150 billion of taxpayer largess in the bankers' pockets, where it doesn't belong.
The deficit chicken hawks (who now seem to have Obama in their roost) also have no intention of clawing back our money. Instead they would rather attack domestic programs that assist unemployed workers, the old and the infirm. (Of course, you won't hear them question the wasted billions in the military budget or in the needless war in Afghanistan.)
The only group really kicking up a fuss is the Tea Party. But their ideology is so screwed up that they'd rather see the money stay on Wall Street. Their righteous indignation is fueled by blaming government, Obama, the Fed and the liberal elites for putting it there. They have no room in their ideological universe for windfall taxes on unwarranted bonuses, which they derisively call the redistribution of income, even when their own hard-earned incomes are being redistributed to Wall Street bankers. Very generous of them.
That leaves the terrain wide open for a new progressive populist movement aimed directly at taking back from our $2,000 per family from Wall Street's unearned bonuses. It's not a panacea for our jobs crisis or even a solution to Wall Street's dysfunctional role in our economy, but it is a very good place to start.
Les Leopold is the author of The Looting of America: How Wall Street's Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It Chelsea Green Publishing, June 2009.
Follow Les Leopold on Twitter: www.twitter.com/les_leopold
By rewarding bad behavior so richly, we have simply encouraged them to come back for more.
We will never control the greed of the big bank CEOs. They will sip cocktails on the islands they've bought and talk about how cute the little people are in their complaints. Greed is a serious, anti-social disease. Greed is a religion. The mantra of the practitioners is simple--"God is Gelt."
So, the only solutions are to tax it appropriately and then eliminate those "financial vehicles" which are impoverishing millions and millions of U.S. taxpayers. And, tell our congressional reps. we won't vote for them again unless they explain to us why the bailouts were handled the way they were, and what they have done subsequently to correct it.
They were the major contributor to the problems that occurred and ALL of that money should be put back until all of the money that Americas lost is restored.
Why aren't some of them in jail for violating the law ?
Congress decided to bail out these companies. If their senior mgt ran their companies into the ground that is where they belong.
The US is a large country. Many innovators. The assets of these companies would have been sold off and the investors would have taken a beating but that is life in the business world. Other companies would have stepped in and quite probably done a better job of mgt.
Would congress have bailed any company that does not have a lobbyist? No.
The political spinners worked over time this year. They convinced some of us that these companies were too big to fail? Why?
Why is congress doing their dead level best to convince us the US would be in worse shape than it is now.
Just who is congress protecting. Those with more than 100k in the bank.
GM, at least we know why they were saved. Unions.
But why did congress save Wall Streeters and banks. Did govt want to hide back room deals, financing of weapons given to foreign countries, CIA ops. Or did the corps call in the markers all the donations over the years.
Look at what is happening. Govt officials from both sides of the fence(past and present) (Paulson to Geithner) have closed ranks against the American people.
It really looks as if the best thing we could do is audit the fed. Give Eliot Spitzer a free hand.
Modern society has access to highly advanced technology and can make available food, clothing, housing and medical care; update our educational system; and develop a limitless supply of renewable, non-contaminating energy. By supplying an efficiently designed economy, everyone can enjoy a very high standard of living with all of the amenities of a high technological society.
A resource-based economy would utilize existing resources from the land and sea, physical equipment, industrial plants, etc. to enhance the lives of the total population. In an economy based on resources rather than money, we could easily produce all of the necessities of life and provide a high standard of living for all."
http://www.thevenusproject.com/a-new-social-design/resource-based-economy
"the Earth is abundant with plentiful resource"
Wrong. The Earth is a tiny blue marble with finite resources that must be accurately distributed among billions of people seeking billions of individual goals.
To do so requires a healthy price system to convey accurate information to entrepreneurs, businessmen, and consumers. The price system contains information about peoples wants and needs as well as the ability of producers and workers to meet those needs. It is vital.
Politicians, planners, leaders, and you are clueless about the best way to utilize our limited resources to achieve maximum prosperity for all. Maximum prosperity can only be achieved by utilizing the combined knowledge of ALL people interacting voluntarily. Voluntary action, the free market, a healthy price system is what we need. Not more force and coercion
Just apply the time-honored method of creating faits accomplis.
Maybe the simplest way to balance this imbalance in the budget would be for banks to accidentally pay $150 bn in extra taxes. By accident.
The question is: would that suffice to restore their honor?
It came from thin air. It came from monetary inflation.
The average man will pay the cost of the bailout in the end, but he hasn't yet.
Over the coming years, as the monetary inflation flows through the Federal Reserve System and manifests itself in price inflation, as prices continue to rise faster than wages and salaries, THAT will be the average working man paying for the bailout.
We've barely made our first payments so far. The pain of this bailout will be felt by workers for years to come.
If history is any indicator, most will be too dumb to make the connection.