US claims profit on bank bailout program

© AFP/File Saul Loeb

AFP

WASHINGTON (AFP) - The United States said Wednesday its bank bailouts had earned a profit, 30 months after the Treasury committed hundreds of billions of dollars to rescue financial institutions as the economy plunged into crisis.

After enduring deep criticism over the use of taxpayer funds to rescue banks run aground by billionaire executives, the Treasury said bank repayments to the Troubled Asset Relief Program had brought in $251 billion, compared to outlays of $245 billion.

"While our overriding objective with TARP was to break the back of the financial crisis and save American jobs, the fact that our investment in banks has also delivered a significant profit for taxpayers is a welcome development," said Treasury Secretary Tim Geithner.

US bank bailout was 'critical': Congress watchdog

© AFP/File Nicholas Kamm

AFP

WASHINGTON (AFP) - The US government's multi-billion-dollar bank bailout helped avert a second Great Depression and cost taxpayers much less than expected, but was far from perfect, a congressional watchdog said Wednesday.

The Congressional Oversight Panel said the controversial $700 billion dollar bailout, launched in 2008, provided "critical" support for financial markets at a key time and will cost $25 billion -- a fraction of the original estimate.

The Troubled Asset Recovery Program (TARP), which was signed into law by then president George W. Bush and taken up by Barack Obama, "provided critical support to markets at a moment of profound uncertainty," it said in its final report.

The comments come nearly three years after the government stepped in to oil the wheels of the financial markets after Lehman Brothers' collapse prompted vital inter-bank lending to dry up, leaving many household names in jeopardy.

Another Economic 'Martial Law in the Streets' Moment Approaches

Eric Blair
Activist Post

In the fall of 2008, during the lead up to the TARP bailout of the financial industry, Treasury Secretary Henry Paulson warned members of Congress that there will be Martial Law in America should they fail to pass the multi-trillion dollar looting of the taxpayer.

Well, despite the American public being overwhelmingly against the bailout, the blackmail worked and the banks got their money. If it worked once, why not try it again?

With the economy no better off for having borrowed trillions to "stabilize" criminal financial institutions, the national debt ceiling is rapidly approaching.  As some Republicans begin to float the notion of blocking this extension of credit, the Treasury Department, Democrats in Congress, and Ben Bernanke issued apocalyptic warnings clearly showing how pathetically fragile the U.S. economy is.

These threats, reminiscent of Paulson's 2008 ransom demands, once again appear to be offering two black-and-white choices: Armageddon or more debt.  The coordinated pitch for higher debt levels is echoing the same urgency as the TARP looting, as Treasury Secretary Geithner said the government is insolvent and will run out of money in about two months' time unless Congress votes to raise the federal debt ceiling.


The AFP reported Thursday that Senate Democrats warned that the government would "shut down" if the debt ceiling was not raised.  Chuck Schumer (D-NY) explained what that would mean if a shutdown were to occur: "citizens couldn't get their checks, veterans couldn't get their benefits, military payments would stop."

Ben Bernanke doubled down on the debt-fear campaign in a rare press conference where he said, "Beyond a certain point . . . the United States would be forced into a position of defaulting on its debt. And the implications of that on our financial system, our fiscal policy and our economy would be catastrophic."

Fiscal conservatives who oppose raising the debt ceiling say it is just delaying necessary belt-tightening and massive spending cuts, and say that raising the debt ceiling further only forestalls needed austerity moves to avoid a more catastrophic collapse in the future. House Republicans presented a plan to cut $32 billion from the budget, which is laughable given the impossible-to-pay-off debt levels.

The U.S. national debt is approaching the ceiling of $14.29 trillion; unfunded liabilities like Social Security and Medicare are estimated to be around $100 trillion; and the total cost of stabilizing the financial industry is reportedly upwards of $23.7 trillion.  And these numbers say nothing of the fraudulent $600-trillion derivatives scam. No amount of tax increases, spending cuts, or economic growth will be sufficient to satisfy this equation.

The notion that America can somehow pull itself out of this mess if average citizens, who had no part in creating the national debt, would only "tighten their belts," seems preposterous.

None of the options are exactly attractive to the already over-burdened taxpayer. Indeed, the people are being given a lose-lose-lose scenario: 1) the status quo of slow economic demolition through raising the debt ceiling; 2) crippling austerity cuts and public asset looting; or, 3) catastrophic collapse.

Although the banks and their pocket-change politicians describe market conditions that would result in a collapse should the ceiling not be raised, it seems obvious that the only power capable of drastically changing economic conditions are the banks themselves.  Therefore, market conditions appear to be an increasingly insignificant part of a bigger illusion.

As if the sun would not rise if a piece of legislation was not passed, the gun-to-the-head urgency will likely result in raising the debt ceiling.  If the level of resistance comes close to the near unanimous public disgust over the TARP bill, you can bet we'll hear new warnings of "martial law in the streets" in order to keep the illusion in tact.  If for some reason collapse is unavoidable, the U.S. military is actively war gaming "large scale economic breakdown" and "civil unrest" should they choose otherwise.

Enter your email address to subscribe to our newsletter:


Delivered by FeedBurner

TARP Inspector Exposes Fed Secrets to Dylan Ratigan

Visit msnbc.com for breaking news, world news, and news about the economy

Fresh food that lasts from eFoods Direct (Ad)

Live Superfoods It is time to Wake Up! You too, can join the "Global Political Awakening"!

Print this page

Bernanke: Fed wrestles with size of aid program

Jeannine Aversa
Associated Press

WASHINGTON — The Federal Reserve is prepared to take further steps to rejuvenate the economy by buying Treasury bonds but is wrestling with how big the program should be, Chairman Ben Bernanke said Friday.

Bernanke also indicated that Fed policymakers are trying to craft a plan to lift inflation from super-low levels. He made his remarks in a speech delivered to a Fed conference in Boston.

Bernanke said the Fed must weigh the risks of a Treasury-buying program and determine how the debt purchases would be paced. The Fed's bond purchases would be intended to lower long-term interest rates to stimulate buying and spending and help lower unemployment.

Fed policymakers are widely expected to announce a Treasury buying program at their next meeting Nov. 2-3.


"There would appear – all else being equal – to be a case for further action," Bernanke said.

World stocks rose after Bernanke's remarks. But the prospect of more dollars swirling around the financial system did nothing to help the dollar itself, which slid further after the Fed chief spoke.

The economy is growing at a pace "less vigorous than we would like," Bernanke acknowledged

Unemployment, now at 9.6 percent, has been stuck near double digits for more than a year. Bernanke indicated that the Fed is concerned that economic growth is likely to remain lackluster and that unemployment will decline only slowly next year. High unemployment is likely to keep consumers cautious in their spending.

During the recession, the Fed launched a $1.7 trillion program, buying a mix of mortgage securities and government debt. The effort was credited with forcing down mortgages rates and providing support to the weakened housing market. The new program is likely to be smaller. One Fed official has suggested a $500 billion program, while another has suggested it be $100 billion or less.

The Fed is again resorting to such unconventional methods – called quantitative easing – to stimulate the economy because it has already sliced its key interest rate to a record low near zero. The anticipated second round is being dubbed quantitative easing two.

Read Full Article



RELATED ARTICLE:
The After-the-Fed Solutions Debate Begins: Greenbackers Vs. Goldbugs

Fresh food that lasts from eFoods Direct (Ad)

Live Superfoods It is time to Wake Up! You too, can join the "Global Political Awakening"!

Print this page

TARP is Done, but Count on Sequels

Gretchen Morgenson
NY Times

THE government is pulling a sheet over TARP, the Troubled Asset Relief Program created during the panic of 2008 to bail out the nation’s financial institutions. With the program’s expiration on Sunday, we can expect to hear lots of claims from the folks at the Treasury that it was a great success.

Such assertions would be no surprise from a political class justifiably concerned about possible taxpayer unhappiness, the continuing economic turmoil and the midterm elections. But if we have learned anything during this crisis, it is that the proclamations emanating from the Washington spin machine must be taken with an extra-hefty grain of salt.

Consider the claims made last summer that the Dodd-Frank financial reform act reduces the threats that large, interconnected banks pose to taxpayers and the economy when the banks are deemed too big to fail. Indeed, as regulators hammer out the rules governing derivatives transactions, it’s evident that the law has created a new set of institutions that will almost certainly be deemed too important to fail if they ever get into trouble. And that means there won’t really be an effective way to keep those firms from taking big, profitable, short-term risks that are dumped on the taxpayers when the bets fail.

Read Full Article

Fresh food that lasts from eFoods Direct (Ad)

Live Superfoods It is time to Wake Up! You too, can join the "Global Political Awakening"!

Print this page