Mar 17, 2008
The financial system has continued to unravel. The fall of house prices is greater than any time since the great depression. Big financial companies are slumping under a mountain of bad debt. Month after month, U.S. statistics confirm that unemployment has been growing and spreading, like a toxic plume. Top government officials, business leaders and economists, who only a few months ago oozed smug self-confidence and publicly pooh-poohed any talk of recession, are now in full panic mode because they are in danger of losing a lot of money.
What to do?
Since last summer, the U.S. Federal Reserve has again and again opened the flood gates and let loose a wall of money. Then on March 7, the Fed outdid itself with an even bigger bailout program than before. It announced a 100 billion dollar short-term loan program for banks, allowing the banks to offer bad debts as collateral, basically offering something for nothing. When that didn’t calm the markets, four days later, the Fed added on an even bigger lending program worth another 200 billion dollars.
On that news, the Dow Jones Industrial Average shot up by 411 points, its biggest one-day gain in over five years. And why not? Basically, the Fed has opened up the vaults of the U.S. Treasury to the biggest banks and investment companies in the world. The Wall Street Journal even published a chart showing that the Fed is stocked with 713 billion dollars in U.S.-backed securities, bonds and bills. All that hard-earned money taken from ordinary taxpayers will soon be gone. For these big banks and brokerage houses, it is Christmas all over again.
What an incredible waste. That money could be used to meet the needs of the population – to keep people in their homes, feed the hungry, provide much-needed jobs, better education and health care. Instead, it is being used to bail out the wealthiest people in the world.