Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.�� —Ronald Reagan
An administration official, who spoke late Tuesday on condition of anonymity because no decision has been made, said the $700 billion rescue package passed by Congress last week allows the Treasury Department to inject fresh capital into financial institutions and get ownership shares in return.
Treasury Secretary Henry Paulson told reporters that Treasury was moving quickly to implement the $700 billion rescue effort and he specifically mentioned reviewing ways to bolster the capital of banks.
“We will use all the tools we’ve been given to maximum effectiveness, including strengthening the capitalization of financial institutions of every size,�� Paulson said at a Wednesday news conference.
His statements came on the heels of Britain’s move to pour cash into troubled banks in exchange for stakes in them — a partial nationalization.
Asked whether he would try something like the British plan, Paulson said: “We have a broad range of authorities and tools. … We’ve emphasized the purchase of liquid assets, but we have a broad range of authorities. And I’m confident we have the authorities we need to work with going forward.�� SOURCE:AP NEWS
“Corporations employ accounting practices promulgated by the Financial Accounting Standards Board (FASB) that established Generally Accepted Accounting Principles (GAAP).
Fannie Mae, Freddie Mac and government agencies have accounting practices that don’t come close to, and never did, the honesty of private accounting practices. Accounting fraud and deception are the dominant features of government agencies. If a private business kept and cooked the books, like government agencies do,(example is the non-existent Social Security Trust Fund) the top executives would go to jail. Shouldn’t the accounting standards businesses have to meet be applied to Washington? My answer is yes and if a congressman says no, I’d like for him to tell us why?” SOURCE; WALTER WILLIAMS
The dictionary describes Socialism thus:
1: any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods
2 a: a system of society or group living in which there is no private property b: a system or condition of society in which the means of production are owned and controlled by the state
3: a stage of society in Marxist theory transitional between capitalism and communism and distinguished by unequal distribution of goods and pay according to work done.
WE have entered the first stage of socialism with he so called “bail-out”, and we are moving even deeper into the beginning of item two above, by the Federal government announcing that IT will put money into banks.
Since the government makes no money! What this announcement means, is they will make more worthless paper available, and the tax payers will have to pay for it in higher taxes. All this is nothing more than taking control of the banking system, with incumbent regulations and demands that ran the Freddie and Fannie into the ground!
In the 1930’s Roosevelt called in all the privately held gold and closed the banks, and now we have a sitting President who is reacting to the fear tactics and politics of the moment to push the USA further down the road to Socialism!
An example of the road map we are following is the small country of Iceland, where people and corporations did the same thing as Americans. Over extended their liabilities via cheap loans, and the consequences are so dire that the government took complete control, as this following excerpt indicates.
People go bankrupt all the time. Companies do, too. But countries?
The global financial crisis has laid waste to some major banks and other financial institutions in the United States and Europe, but Iceland may be the first country to face the prospect of going bust along with them.
After a decade-long binge in which Iceland’s banks, and some of its citizens, expanded beyond their means, the bill has come due. While the full effects of the potential crash have not hit yet, some Icelanders like Bubbi Morthens are already feeling the pain.
“There is a lot of fear in society and there are people who are losing everything,” Morthens said Wednesday after singing at an impromptu midday concert in central Reykjavik intended to lift people’s spirits.
Morthens is a former fish industry worker turned rock singer who is now known as the Elvis of Iceland. Like many of his compatriots, he did well when Iceland was riding high, accumulating considerable wealth.
Then, the financial crisis gripping his country intensified last month. The government seized control of Iceland’s third-largest bank. Morthens said he lost his life savings, which he had invested mostly in the bank’s stock.
Government attempts to get ahead of the problems cascading through its financial system have not restored confidence. In just 24 hours, for instance, it abandoned an effort to peg its currency to a basket of others.
And on Thursday, the government seized Kaupthing Bank, the country’s largest lender, effectively completing the nationalization of the banking system.
Meanwhile the prime minister,Mr. Haarde, was drawing some practical conclusions, as Fitch Ratings downgraded the country’s debt and Iceland awaited a possible loan from Russia! source :Reuters News
It is not unusual to learn of government intrusion into private industry in Europe and Great Britain. Most of the Countries in the EU and Britain have or have had Socialist governments for years. The situation at this time, in England, is a radical shift to the left for the present government.
The British government’s plan to inject capital into its ailing banks has been embraced by a European continent with a long tradition of encouraging a state role in the economy. And it is rapidly being seen here as an improvement – philosophical as well as functional – over America’s $700 billion fund to purchase defunct mortgage assets from troubled financial institutions.In announcing his take over, Prime Minister Gordon Brown had this to say.
“Brown pointed out that time for buying toxic assets had passed – a not so subtle dig at the plan sponsored by the U.S. Treasury secretary, Henry Paulson Jr. Many analysts agree that the U.S. government will have to move beyond its own $700 billion fund to ultimately stabilize the housing market and recapitalize American banks”. source: International Herald Tribune
There is plenty of blame for this financial crisis to go around. Congress with the leadership of Senator Dodd and Congressman Frank over looked or ignored the facts that government mandates on Banking and Mortgage companies to accomplish ideological,and Social/welfare aims were bad business!
But also some blame has to be laid at the feet of the Economic “guru” Greenspan. It was he that promoted and supported HEDGE Funds that helped make billionaires like George Sorros richer, and when they were adversely affected by the housing slow down, they were the tipping point for the “house of cards” that is our Economy!
Greenspan’s credentials and confidence reinforced his reputation — helping him to persuade Congress to repeal Depression-era laws that separated commercial and investment banking in order to reduce overall risk in the financial system.
“He had a way of speaking that made you think he knew exactly what he was talking about at all times,” said Senator Tom Harkin, a Democrat from Iowa. “He was able to say things in a way that made people not want to question him on anything, like he knew it all. He was the Oracle, and who were you to question him?”
In 2000, Harkin asked what might happen if Congress weakened the CFTC’s authority.
“If you have this exclusion and something unforeseen happens, who does something about it?” he asked Greenspan in a hearing.
Greenspan said that Wall Street could be trusted. “There is a very fundamental trade-off of what type of economy you wish to have,” he said. “You can have huge amounts of regulation and I will guarantee nothing will go wrong, but nothing will go right either,” he said. It would seem that the “worm has turned”!
Brown’s political salvo could well serve as a model across Europe, as well as other emerging economies where the idea of the state taking supervisory stakes in strategic economic entities is an accepted one. Already, governments in France and Italy have said they would consider buying stakes in their banks if it would improve their financial conditions.
Britain’s decision to effectively nationalize any bank that accepts public funds to rebuild its shrunken capital base rolls back more than 20 years of accepted political and economic thought. That view held that financial institutions, charged with the responsibility of protecting a nation’s savings, should do so with minimal supervision and aid from the government.
Look for the USA banks to follow the path of the Iceland and Banks in England toward more decimation of the Constitutional rights of Americans, in the ruse of saving US from financial disaster.