My Latest Huffington Post Column: 'The Gifts that Keep on Taking'

Below is my latest column for the Huffington Post, entitled "The Gifts that Keep on Taking":

There have been plenty of discussions about how much the bailouts of the financial system will cost U.S. taxpayers, with estimates ranging from $2 trillion to as high as $24 trillion. But maybe the focus should be elsewhere. Even if we assume that the lower number is closer to the mark, these efforts have proved to be much more expensive than we were led to believe, and the resources committed so far have not achieved the results predicted by policymakers.

The truth is, while the banking system has -- until now, at least -- avoided financial Armageddon, conditions have not returned anywhere close to normal. Although equity investors seem to think that the worst is behind us, the banking sector remains in critical condition and dependent on the Federal Reserve for its continued survival. Meanwhile, many markets and financing mechanisms that Main Street has traditionally relied on are still frozen or broken.

Of course, our leaders in Washington will say their efforts have been successful because they prevented a full-scale meltdown of the financial system. What they forget to mention, however, is that the various bailout measures and the alphabet soup of support programs were not just put into place to stabilize the situation, as many now claim. They were supposed to get the credit system functioning again, to help revive a damaged economy.

In reality, that is is not where things stand right now. Reports indicate that lenders are tightening standards, jacking up interest rates and fees, arbitrarily slashing and cancelling credit lines, avoiding or refusing forebearance and other requests that might stir a still moribund housing market, and directing resources away from traditional lending activities towards speculative trading and other pursuits.

More galling to some, perhaps, is that instead of doing their part to counteract the rise in inequality they helped foster during the go-go years, which some observers feel contributed to the economic hole we are in right now, many financial institutions seem intent on exacerbating the disparity. They are reducing head counts among lower-paid staff and looking to boost the compensation of those who are already near the top of the pyramid, despite the unavoidable political fallout.

The fact that the mess has not gone away and is still festering in many parts of the financial world, can't just be blamed on Wall Street, of course. In some cases, government moves to "fix" things have had the opposite effect, allowing already formidable losses to grow even larger.

Examples include the bailouts of Fannie Mae and Freddie Mac, each of which continues to bleed red ink in part because serious structural problems have not been addressed and there is no real accountability or plan of action associated with previous efforts. Just this past week, for example, Fannie Mae announced plans to tap nearly $11 billion in new aid after posting yet another massive quarterly loss, the Associated Press reported. bringing the total taxpayer commitment to nearly $96 billion for these two institutions alone.

Government-sponsored efforts to repair the damage in the financial world aren't the only area where the law of diminishing -- or even negative returns -- seems to apply. Consider the $787 billion stimulus package, which proponents claimed would get the economy moving again and stem the rising tide of unemployment. So far, at least, there's no real sign that we are getting our money's worth.

In fact, while many analysts cheered July's "better-than-expected" 9.4 percent unemployment rate and 257,000 drop in nonfarm payrolls, the truth is that we are still seeing a growing number of Americans without a job. Clearly, it doesn't make sense to exclude the record numbers of long-term unemployed or those who have thrown in the towel on finding work, as some Pollyanaish economists and policymakers have done, in assessing whether taxpayer funds are producing the desired results.

The cash-for-clunkers scheme -- to use what some might view as an entirely appropriate British synonym for "plan" -- represents yet another problem-solving attempt that could end up costing much more than the $1 billion -- plus the $2 billion just approved by Congress -- that the government has committed. Among other things, it draws funds away from many equally needy parts of the economy to help one politically-connected segment. It is also a quick fix that postpones much needed restructuring and has likely brought forward future sales that leave the industry vulnerable if, as I believe, the recent bounce proves short-lived.

Yet, instead of going back to the drawing board, analyzing where mistakes were made during the heat of the moment and thinking things through a bit more carefully, Washington has decided to adopt the young entrepreneur's mantra: If at first you don't succeed, try, try again -- and fast. While such a strategy might make sense where there is some credible basis for optimism, more than a few policymakers have admitted they are operating in uncharted territory and can't be sure any of these efforts will really succeed.

If there is a consistent theme to all of this, it is that Washington seems determined to commit more and more taxpayer funds on a moment's notice and with little to show for it. In fact, now that we have seemingly crossed the rubicon into a world where many are convinced that it is only governments, with their control over the public purse strings, that can solve all our problems, we've effectively settled for just one thing: the "gifts" that keep on taking.

Comments

[Michael M. Thomas]

What an excellent blog. You'll find a kindred spirit at mine: http://midaswatch1.blogspot.com

[DDearborn]

Hmmm

As long as the media continues to let the Fed/Treasury etc., get away with labeling the 12-24 Trillion as "bailouts" nothing will change. This money was stolen from the American People. The Fed is not elected by the people. In fact it represents foreign owners of the reserve banks. The Fed answers to a few very rich people, never to the American People. This was and continues to be a simple crime. It is devious only because it has succeeded by operating right out in the open for all to see. It has managed to avoid being called by its real name only by virtue of its size and scope and its perpetrators total control of the mainstream media. But history will record that the men in charge were like so many before them, simple criminals. Until the independant media gets the guts to stand up and call a crook a crook we the people will continue to get screwed.

[HSpencer]

A young couple grow up, fall in love, get married, get jobs to support themselves, buy/rent a place to live, have children, etc. This is the basis for our economy and that is nothing new, but more and more it is something overlooked. Our nation exists to support that basis. In our previous well-oiled economy it worked almost without a zilch. It was not a matter of getting a job, it was a matter of getting the one you chose. The jobs provided enough money for the middle class couple to buy a reasonable home, car, furniture, have a good life.
Now enter the greed: The McMansion, the Lexus, the BMW, or worse the Hummer. Now dont get bent out of shape, I am all for people having what they can afford, except for most people, the above items just dont qualify as "can afford". No problem says the big bankers, "We will lend you any amount you want". We really dont care if you go "dying cockroach" on us, we will just Repo you in a New York minute. Now with all that "buy and refi" money everywhere, Joe and Jane thought the sky was the limit. Now on their front door the "Notice of Foreclosure" is posted. The job that they were forecasting their future on is gone. No one is buying the half a million dollar easy credit homes these days. They scratch their overspent heads and say to each other "What happened"?

[Gman]

I notice that this article refers to the powers behind the bailouts and Cash for Clunkers as "Washington" instead of "Obama" or "Democrats". Hmmmm. What's the matter, Michael? Is your political persuasion keeping you from being more specific on who is behind these "plans" or to call out the fact that it is Obama/Democrats who are entirely calling the shots these days?

[Peter Carlson]

Where is the accountability for Standard & Poors slapping AAA buy ratings on non-regulated junk? Aka Government, SEC, and financial executives?!?! I have to assume they are all dirty. OOOPs Ken Lewis 'we made a mistake' doesn't feed our children, keep a roof over our families heads at night. Where is the accountability for NAFTA and the exportation of our tax base middle class jobs?!?! Bastille Day will arrive for this corrupt, bought off and failing government and the hubris of the ultra rich. With that tirade momentarily exhausted, there are ~1.5 BILLION human beings without enough daily food and water . . .

What will cause the final spark of resistance and revolution? I am tired of my intellectual capital being subsumed and exhausted to that of a mindless pyramid builder.

Gasp, to quote an earlier bs artist the 'great communicator' Ronald Reagan [failed trickle down economics]:

"Could you imagine how quickly our differences would disappear if an off world presence where among us?, and I ask you, is not this already the case?!" . . .

A better world awaits the people of good neighborly hearts

God bless

[Alexandra]

Unfortunately, it is you with the selective memory farang. The surplus was an illusion that came from just these issues that we are reaping the results of today. It came from the repealing of key laws from the Great depression (Glass-Steagall) and not allowing regulation for derivatives (Greenspan, Rubin, Summers) all during the Clinton administration.

But it really started even before Clinton under Reagan. So you'll find Democrats and Republicans who are at fault here. It really doesn't matter, there are crooks on both sides of the aisle.
In this, the US elite really form only one party.

[Marion Shaw]

Last week I posted the first part of an old Scottish story called The First
and Second Marriage. Since there were no demands for the second part, I will
tell it anyway. The first marriage ended when the fool quit spending his pennies
on a daily visit to the pub and turned his small earnings into solvency and
wealth, with the aid of a frugal and dutiful wife. She died. Now the second
marriage is quite allegorical of our own national dilemma. A beautiful young
thing, attractive and coquettish ,heard about the wealthy middle age widower.
She set out to seduce him into marriage; succeeded, much to the dismay of his
grown chidren, and within five years had bankrupted him with demands for
a mansion, travel, clothes from Paris, parties and finally a handsome carriage
in which she could be seen riding about the fashionable districts of town.
He died of heart failure and she ended up on the streets. Fortunately, the
children were not entirely cruel and the son put her up in a backroom until
she too died of old age. There is nothing new under the son except that not
many children today will take in an elderly, difficult, demanding parent or a step parent that did not necessarily belong in the first place.

[Marion Shaw]

erratum: "sun" not " son" re: Scottish story

[Codger dodger]

People like Gman, aka God man(?), have turned this country's citizens in to a nation of sheeple. Their belief system/dogma is it's OK to suffer when you're alive because everything will be so much better when you're dead. And it's so simple to achieve, all you need is a "good neighborly heart". To Gman and his fellow kool aid drinkers I say...Wake up. Be here now, not there when!

[roger]

In my life time ,world population as tripled
horse buggies where still widely used, T ford
was slowly taken over, airline travel zilch,,,
extraction of crude oil doubled every decade,
climate change never heard off, small towns
have grown into mega cities. Today science
is turning into it’s opposite, from positive
amelioration of our lives,to a negative quality
and is destroying the environment . If profit
alone is the motive of society, then society is on
the way to self destruction. Problem #1: right wing reactionaries will do anything to sabotage present administration Problem #2 wide spread corruption
in both parties. Problem #3 industrial civilization
must be downgraded, bailing out a failed system will not work

[edgar]

It's only fedres clownbucks. Hell, let them steal whatever they want.

[Gman]

Hah, well "Codger Dodger" you can't always pigeon-hole a person based on their login name. The "G" in Gman does not stand for "God", and in fact I don't go to church at all. My politics are best described as Jeffersonian.

"When a government is big enough to give you everything you want, it is strong enough to take everything you have"

[roger]

when corporations are big enough to employ 80%
of the working population,corporations are big
enough to put the whole country/world out of a job

[Morocco Bama]

You will agree then, Gman, that we need to cut defense spending 90%? Right? I can't hear you, Gman! Right?

[roger]

Jefferson was just a man,not a God.Lots of things I
agree with him /lots I don't.His world was very different
from ours,for one thing he did not have to contend with
an oppressive corporate structure far more powerful than
any government

[Gman]

I don't know about 90%, but what I would do is to shut down 90% of our overseas military bases and bring those troops home. There is no reason for us to have troops in Germany anymore for instance. Also, I would immediately shut down the Afghanistan War instead of expanding the conflict as Obama is doing. There is absolutely no reason for us to be in Afghanistan.

[Jaime D.]

This is a story along the lines posted above about the young woman that seduced the wealthy elderly gentleman and ruined him.

In Dallas, Texas, a senior oil tycoon in his
early 90s, was being seduced by a 35 year old woman.
He fell for her and announced to his family plans
of marrying her.

Of course, all family members were concerned. At his age, his soon to be fiance may want to engage
in sexual activity and the outcome could prove
fatal.

At a family meeting, they voiced their concerns
to the senior oil tycoon. They warned him that
this young woman will want to have sexual relations
and that it could have fatal results.

He looked at every family member present at the meeting, took a deep breath, and announced to them all - "If she dies, she dies".

[Jaime D.]

quote from Gman: "I don't know about 90%, but what I would do is to shut down 90% of our overseas military bases and bring those troops home. There is no reason for us to have troops in Germany anymore for instance. Also, I would immediately shut down the Afghanistan War instead of expanding the conflict as Obama is doing. There is absolutely no reason for us to be in Afghanistan."

TPTB i.e. NWO want a military presence everywhere
to control oil and other natural resources, including
people.

The reason they don't leave Afghanistan is for the opium. Taliban? B.S., Opium, illegal profits
for power hungry control freak fools.

Iran contra? Oliver North? The U.S. runs more
illegal product than any cartel known on earth.