The situation seems to be this: there are banks, the banks in turn are owned by bank holding companies, which are themselves in turn owned by hedge fund managers, private equity and other elements of the worldwide plutocracy. The Obama people are trying to save the later, the richest of the rich. Meanwhile, the world economy needs the banks' core functions to be restarted. Or there will be a catastrophe, within weeks.
The credit system is frozen because the banks themselves are insolvent, their capital requirements are completely violated, they cannot lend without getting deeper in the hole. Actually, they cannot lend, by law. The rescue of TARP money has been given to the bank holding companies, which transmitted very little of it to the banks themselves. The bank holding companies kept most of the money for themselves, the salaries and bonuses of their plutocratic officers, and organized the usual happy events such as mergers and acquisitions. During these events, money splashes all over to the rich and happy class.
When banks are insolvent, or simply cannot function because they have violated capital requirements, it is very well known what to do. One separates the banks from their bad assets, and give them enough capital to operate. If Bank of America was cleaned of its bad assets, and given 80 billions, it could lend a trillion. Since it would be a profitable business by then, private capital would come in, even from normal people themselves, and the bank could lend even more. In any case, the lending crisis would be over.
This is the traditional way to do it. It is traditional to do it even in the USA, where it has been done for thousands of banks before. Bill Seidman's resolution Trust Corporation did it for 747 banks. It was done all over Scandinavia, and in many other places. One speaks of "nationalization". But it is a TRANSITION TO LIBERATION of the banks. And these are the words that ought to be used.
So, as Professor Doctor Nobel Krugman wonders, why is this not happening? Well, people advising Obama have worked for banks (Emanuel was making more than eight million dollars a year, for example). One can assume that they intent to work for hedge funds, private equity, etc., when they come out of the adminstration. So they are desperately trying to please their once and future masters. They did not reinstate the short sell rule, so that their friends the hedge funds can keep on organizing bear raids as the stock markets collapse. They keep on having their friends the masters of the financial universe be taxed at a maximum rate of 15%. It's socialism for plutocrats. Let secretaries and teachers pay the high tax brackets! They come up with mumbo-jumbo semantics to hide their plot. Their plot is that they use the pretext of the banks' failure to transfer more taxpayer money to their friends, the private equity, the hedge funds, and various overseas investors, all very friendly. So taxpayers send money and the trusted economic advisers send the money to the richest of the rich, and, lo and behold, more has to be sent, because the banks still did not get any.
It does not seem to matter too much to Obama's advisers what happens to the world economy as they try to contrive a way to send a lot of money to their plutocratic friends.
But the truth is simple: those geniuses, the friends of the Obama advisers, contrived the greatest Ponzi scheme of all times, the derivative system, with a peak value of 600 trillion dollars. The world is worth much less than 100 trillion dollars. No taxpayers of the world can fill that hole for the rich. But still they try. They had it so good for so long, that is all they know.
The world economy is getting so damaged by the refusal of the Obama adminstration to fix the banks that a bellicose issue is to be feared. Maybe the vested advisors subconsciously feel that a good war in the future would be the best of distractions. It is abysmal.
It may be time to consider RICO. The Racketeer Influenced and Corrupt Organizations Act covers several of the activities that seem in plain sight.
Patrice Ayme
http://patriceayme.wordpress.com/
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