The Wall Street Coup and the Bailout Scam by Ismael Hossein-zadeh The "rescue" plan is not only fraudulent, it is also the wrong medicine for the ailing economy.
The Wall Street took the US (and the world) hostage and extracted a heavy ransom. But while the enormous ransom was successfully extracted, there are no guarantees that the hostages will be set free from the shackles of trickle-down economics. On the contrary, there are strong indications that the fraudulent (and perhaps criminal) bailout may turn the current crisis into a protracted agony of a long-bleeding economic depression. Why the Bailout Scam Is More Likely to Fail than to Succeed The bailout scam is doomed to fail because it avoids diagnosis and dodges the heart of the problem: the inability of more than five million homeowners to pay their fraudulently inflated mortgage obligations. Instead of trying to salvage the threatened real assets or homes and save their owners from becoming homeless, the bailout scheme is trying to salvage the phony or fictitious assets of Wall Street gamblers and reward their sins by sending taxpayers' good money after the gamblers' bad money. It focuses on the wrong end of the problem. The apparent rationale for the bailout plan is that, while the injection of tax payers' money into the Wall Street casino may not be fair, it is a necessary evil that will free the "troubled assets" and create liquidity in the financial markets, thereby triggering a much-needed wave of lending, borrowing, and expansion. There are at least five major problems with this argument. The first major problem is that the current financial disaster is not really a liquidity problem as it is repeatedly portrayed to be. It is a problem of faith and trust, or lack thereof, which in turn stems from the disproportionately large amount of junk assets or mortgages relative to real assets. It is true that lending and credit expansion has almost come to a halt and, in this sense, there is a serious liquidity crisis. But this illiquidity is not really due to a lack of good money or real assets in the system. It is rather because owners of such valuable assets are unwilling to lend their precious possessions to owners of troubled assets, or worthless papers. As Herman E. Daly, University of Maryland economist, puts it, "The value of present real wealth is no longer sufficient to serve as a lien to guarantee the exploding debt. Consequently the debt is being devalued in terms of existing wealth. No one any longer is eager to trade real present wealth for debt even at high interest rates. This is because the debt is worth much less, not because there is not enough money or credit." The second major problem with the bailout scheme is that it is simply unfeasible and ineffectual because there is just not enough good money to redeem all the bad money that has ballooned or bubbled to a multiple of the good money and/or real assets. full: http://mrzine.monthlyreview.org/hossein-zadeh111008.html This message has been scanned for malware by SurfControl plc. www.surfcontrol.com _______________________________________________ Marxism-Thaxis mailing list [email protected] To change your options or unsubscribe go to: http://lists.econ.utah.edu/mailman/listinfo/marxism-thaxis
