RECKLESS RESCUEPALOOZA PROTECTS FAILURES AND FRAUDS
November 13, 2008
The federal government's Rescuepalooza has brought us to this: We are now pledging American tax dollars to bailout or beef up not just American banks, banks' customers, automakers, insurance companies, homeowners who can't pay their mortgages, and quasi-governmental mortgage firms. We are now rescuing other countries, says Steve Stanek, a research fellow with the Heartland Institute.
The Federal Reserve last week announced it would commit up to $30 billion each to Brazil, Mexico, South Korea and Singapore so they can more easily swap their currencies for dollars. That came in a week that saw the Federal Reserve, Treasury, and Federal Deposit Insurance Corporation announce (singly or in combination) an astonishing amount of new spending, including:
- Allocating money to accept up to $600 billion in liabilities on three million troubled home loans.
- Possibly using taxpayers' money to buy shares of U.S. automakers to funnel them another $25 billion on top of $25 billion the government pledged to loan them just a few weeks ago.
- Another $21 billion for American International Group (AIG), on top of $38 billion the huge insurance company received from taxpayers last month, which came on top of $85 billion the government loaned in exchange for an 80 percent stake in the company just a few weeks before that.
- A cut in the Fed's benchmark interest rate to 1 percent, the lowest in 50 years and well below consumer price inflation, continuing the easy-money policies that helped cause the housing bubble that sparked the financial crisis.
Now President George W. Bush, Fed Chairman Ben Bernanke, Treasury Secretary Henry Paulson, and others inside the agencies and institutions that the congressional committee blames for causing the crisis want to add to those mistakes by throwing trillions of new dollars at select private corporations and homeowners who took out loans they cannot repay -- more of the policies through which they caused the problems in the first place, says Stanek.
All of this has sent the projected federal budget for the new fiscal year to $1 trillion and skyrocketed the national debt to $11 trillion, up from about $7 trillion when Bush took office. This will be repaid through taxes and probably higher inflation that will reduce our standard of living, says Stanek.
Source: Steve Stanek, "Reckless Rescuepalooza Protects Failures and Frauds," Heartland Institute, November 11, 2008.
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