Tag Archive for ‘Bailout’
If you’re old or sick and have a lot of money, I suggest taking a trip out of the country, away from your heirs, until January 1, 2011. And don’t tell them where you’re going. On that date, the death tax for rich folks goes from the current 0 percent to 55 percent. So your heirs will get less than half of what they would have if you went to the Great Walmart in the Sky a day earlier.
The Bush-Obama financial-rescue plan is premised on saving the big banks that caused the trouble. The theory is that we need to help Wall Street to help Main Street.
Even lifelong Democratic pol Steny Hoyer, majority leader of the U.S. House, is balking at Barack Obama’s latest bailout proposal. “I think there is spending fatigue,” said Steny. “It’s tough in both houses to get votes.”
Economic news remains focused on banks and housing, while the threat mounts to the U.S. dollar from massive federal budget deficits in fiscal years 2009 and 2010.
Both the Bush and Obama administrations decided they would not let the bankrupt go bankrupt. Natural forces, if allowed to work, would quickly put the weak to sleep, leaving stronger firms to pick up the business. The problem with the decision to intervene is that, once made, there is no reasonable way of stopping.
Look at the bailout carefully. The whole business constitutes an astonishing evasion of moral responsibility on the part of a ruling establishment. A plan by which the ordinary citizens and their descendants are made to pay for the mistakes of the capitalists and politicians and to continue to provide them with the wealth to which they have become accustomed.
The Federal Reserve is handing out money to banks deemed “too large to fail” without knowing how much funding will be required and how long it will take for them to be restored (or to fail). The regulators would be wise to consider the experience of the state of Texas, which went through a very severe recession, accompanied by a collapse of banking, in the 1980’s.
The unaddressed question remains: Is the U.S. dollar’s status as world reserve currency threatened by the massive debt monetization and multiyear, multitrillion dollar issuance of new Treasuries?
Since America is in its worst economic mess in 70 years and since President Obama’s designated Mr. Fixit is Treasury Secretary Tim Geithner, you’d think the Obama presidency is in desperate shape. The reason? Mr. Fixit is surely the most derided man running the U.S. Treasury since Andrew Mellon cut spending and raised taxes amid the onset of the Great Depression in 1932. Even the bounce on Wall Street after the launch of Geithner’s most recent effort to bail out the banks didn’t stem the chorus of abuse.
The Federal Reserve says that its purchase of $1 trillion in existing bonds is part of its plan to revive the economy. Another way to view the Fed’s announcement is to see it as a pre-emptive rescue. Is the Fed rescuing banks from their bond portfolios prior to the destruction of bond prices by inflation?