Ben Bernanke’s testimony over the past two days gives us our best clue yet about where the administration and the Fed are going with bank rescue. And the answer seems to be … nowhere.
Simon Johnson and James Kwak read it the same way I do:This is another sign of the serious brainpower that has been expended on finding ways to avoid or minimise government ownership of banks, and to avoid the slightest possibility of offending shareholders – shareholders whose shares have positive value primarily because of the expectation of a further government bail-out.
And The Economist’s Free Exchange puts it bluntly:At this stage, I joked, I’d be just as happy with them just saying, “We have a strategy, we will continue to inject capital to prop up zombie banks indefinitely. That’s pretty much the whole plan and we’re counting on it bringing the financial sector back to life someday, somehow”. Is it just me or is that pretty much what Ben Bernanke said yesterday?
No, it’s not just you.
Well, that's good to know. I mean, it seems like a whole bunch of us have been saying this makes no sense, and we don't want our hard-earned taxpaying dollars going down the drain, but we felt like voices crying out in the wilderness. Perhaps we are not alone afterall:
I’d add a political-economy point. Here’s Noam Scheiber, in the new TNR economics blog:
Yesterday afternoon I spoke to a senior Democratic aide in the Senate who repeatedly emphasized that, the way things stand now, it would be almost impossible to get another cent for the banks. Congress has “bailout fatigue,” the aide said.
Indeed. As long as capital injections are seen as a way to bail out the people who got us into this mess (which they are as long as the banks haven’t been put into receivership), the political system won’t, repeat, won’t be willing to come up with enough money to make the system healthy again. At most we’ll get a slow intravenous drip that’s enough to keep the banks shambling along.
More and more, it looks as if we’re headed for the decade of the living dead.
I couldn't have said it better myself. But like I said, I'm not a major economist who won a Nobel Peace Prize. Krugman is and did, so I'm gonna listen to him.
So speaking of banks wanting more money, guess who is back at the trough asking for more money from us, the taxpayers I'll give you a hint - it's an alphabet company. Yep - you got it, AIG:
Hell freakin' yeah, they're back. Some nerve, too, if you ask me, especially after their lavish spending ways. They want us to continue to subsidize them when tey have not demonstrated any fiscal restraint or responsibility?? Are you kidding me?
And while I am on this topic, it is high past time for the Democrats to stop blaming this situation totally on the Republicans. I can understand WHY they are trying to convince everyone that they had absolutely NOTHING to do with this, but the reality is that they have been in charge of BOTH Houses of Congress for over two years now. Where was their oversight of the SEC, in its non-existent oversight of people like Bernie "Made-Off"? Where were they when Franklin Raines ran Fannie Mae into the ground (and Raines, who left in disgrace, was one of Obama's advisers)? Where were they when Jim Johnson ran Freddie Mac into the ground (and we know where Tim Johnson is - he was on Obama's Veepstakes Search)?
So, yeah - Bush was horrible - we know that. But for the past 2 years, the DEMOCRATS have been the ones in charge of the purse-strings and the oversight, so stop the blame game, start taking some responsibility, and STOP HANDING OUT OUR MONEY LEFT AND RIGHT!!! Enough already!!
And that ESPECIALLY goes for you, Nancy Pelosi, with this new $410 BILLION dollar package chock-full of pork the House is proposing!! ENOUGH!!!