Socialism for the Rich
Posted on | August 4, 2008
When banks deplete, you lose. Reuters reminds us who’s going to pay (and pay and pay) for the coming bank bailouts:
U.S. consumers, meanwhile, are “shopped out” and saving less, while the Federal Reserve’s performance in handling the crisis has been poor, [New York University Professor Nouriel] Roubini said, because it failed to see that the problem extended beyond subprime mortgage debt.
Now, Roubini told Barron’s, the government is overregulating, bailing out troubled participants and intervening in every market.
“The regulators should investigate themselves for bailing out Fannie Mae (FNM.N) and Freddie Mac (FRE.N), the creditors of Bear Stearns and the financial system with new lending facilities. They have swapped U.S. Treasury bonds for toxic securities,” he told Barron’s. “It is privatizing the gains and profits, and socializing the losses as usual. This is socialism for Wall Street and the rich.”
He said that sometimes it is necessary to use public money to rescue institutions, but in a way that does not bail out the people who made the mistakes. “In each one of these episodes, the government bailed out the shareholders, the bondholders, and to some degree, management,” Roubini told Barron’s.
As for the banks that will go bankrupt, they will include community banks that finance homes, stores, downtown areas, commercial real estate and other mainstays of U.S. towns and cities, Roubini said.
This is what happens when tax-and-spend conservatives are allowed to loot the Treasury on behalf of their wealthy contributors. The dollar weakens, and Americans hurt. Can you think of a primary cause? One that rhymes with “Iraq War”?
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