Archive » December 11, 2008
By Donald M. Gallagher
Bailouts: We’ve Only Just Begun
President-elect Barack Obama recently appointed Timothy Geithner as Treasury Secretary and Larry Summers, a former Treasury Secretary under President Clinton to head the administration’s economic council. We can now be certain that the congressional bailouts have only just begun.
“Mr. Geithner,” reports Robert Romano, editor, ALG News Bureau) “was the architect for opening the Fed’s discount window to investment banks that resulted from the Fed’s decision to loan JP Morgan some $30 billion to buy the failing Bear Stearns.” Thus, it was Geithner who was responsible for the beginning of the bailout process.
“Mr. Summers is an old hand at bailouts,” says American Prospect, “beginning with the Mexican bailout of 1994, to the intervention that saved a wildly leveraged hedge fund named Long Term Capital Management in 1998. Mr. Summers consistently supported the use of public funds and government clout to rescue Wall Street speculators during his time in the Clinton administration”
President–elect Obama has promised “change,” but with so many Clinton retreads joining his new administration, rather than the advertised “change,” it’s beginning to look a lot like Mr. Obama is reinventing the past.
Bailouts will be commonplace in the new Obama administration, which will enjoy loyal support from a cooperative Democratic Party-led congress largely responsible for the mortgage meltdown in the first place.
We can expect an unending number of banks, major financial institutions and troubled corporations to be queuing up to congress’s trough. They will ask for $25 billion here and later $50 billion or so more, which will accomplish very little toward streamlining terribly flawed business practices, underperforming products and a dismal failure of senior management.
The greatest transfer of major corporations and institutions from the public sector to federal government control is occurring before our very eyes and no one has either the will or the means to stop this march toward socialism madness.
Democrat logic tells them the multi-billion-dollar bailout of Citigroup was needed because the bank is simply “too large to fail.” Republican philosophy should tell them that such groups need to file Chapter 11, reorganize, fire the CEO and senior management and get a new board of directors. In other words, restructure.
Concomitant with the federal government participating in an unending bailout of failing corporations and institutions is the effect all this will have on the average taxpayer who ultimately pays for the follies of congress. The dollar has been strengthening in recent months, but with hyperinflation looming at the doorstep, the dollar will surely fall against other major currencies in the not too distant future.
Who’s to blame? Democrat leaders in congress caused this perfect storm by forcing banks to finance toxic loans to citizens that could not really afford them. Who is in charge of fixing the problem? Why, the very same people that caused this gigantic meltdown.
And, guess what? Their constituents rewarded many of those leaders with re-election for yet another term. You can see them prominently standing behind Senate majority leader Reid and Speaker of the House Pelosi when the cameras are rolling.
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