Corporate Welfare

The Voodooest Economics of Them All

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If you've successfully managed to keep your breakfast down for this long, don't read this Bloomberg News analysis of the bailout extravaganza. Your lead paragraph:

The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system since the credit markets seized up 15 months ago.

Gulp. Ignore the misuse of the word "rescue," and the challengable assertion that you couldn't get credit in August of 2007, and plow ahead into one of the most gruesome tabulations since the Jonestown Massacre (or the Brian Jonestown Massacre, for that matter):

The bailout includes a Fed program to buy as much as $2.4 trillion in short-term notes, called commercial paper, that companies use to pay bills, begun Oct. 27, and $1.4 trillion from the FDIC to guarantee bank-to-bank loans, started Oct. 14. […]

President Franklin D. Roosevelt's New Deal of the 1930s, when almost 10,000 banks failed and there was no mechanism to bolster them with cash, is the only rival to the government's current response. The savings and loan bailout of the 1990s cost $209.5 billion in inflation-adjusted numbers, of which $173 billion came from taxpayers, according to a July 1996 report by the U.S. General Accounting Office.

The 1979 U.S. government bailout of Chrysler consisted of bond guarantees, adjusted for inflation, of $4.2 billion, according to a Heritage Foundation report.

In other words, comparing the other government interventions during our lifetimes to what we've seen in the Late BushCapitalism era is like comparing fleas to an elephant. Well, at least they're being transparent about it!

Bloomberg has requested details of Fed lending under the U.S. Freedom of Information Act and filed a federal lawsuit against the central bank Nov. 7 seeking to force disclosure of borrower banks and their collateral.

Collateral is an asset pledged to a lender in the event a loan payment isn't made.

"Some have asked us to reveal the names of the banks that are borrowing, how much they are borrowing, what collateral they are posting," Bernanke said Nov. 18 to the House Financial Services Committee. "We think that's counterproductive."

reason on the bailout here.