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Congressional Poker Face Rolls the Dice

October 3, 2008

Why did Congress really pass Wall Street bailout legislation? The answer may surprise.

bailout poker face

bailout poker face

The U.S. House of Representatives approved the U.S. financial bailout or rescue plan by a vote of 263-171. Who are they really playing to? George Bush said it best: “We have shown the world that the United States of America will stabilize our financial markets and maintain a leading role in the global economy.” The reference to “our” is all about overseas foreign investment. That investment is what politicians are looking at to sustain the nation. The sole hope of America rests firmly on central bankers and foreign investors.

The media reports that analysts cautioned that it was still unclear whether the U.S. plan would work as advertised. There are no promises, only U.S. false pride as we save the world one more time. In fact, authorities are dependent on hope rather than hard facts or any real concept of knowledge.

The U.S. government had just spent $1 trillion rushing to stabilize the banking and financial system, including the seizures of Fannie Mae and Freddie Mac, at a cost of over 7 percent of U.S. economy. Now another $1 trillion hangs in the balance. Now the nations hangs on the decision of U.S. banks to relax interbank lending and credit in exchange for a nationalized buyout of bad securities.

Interbank lending and credit to businesses as well as private individuals have seized up. Central banks have injected billions of dollars to maintain some flow of funds. The only effect will be more inflation and devaluation pressure on the dollar, resulting in deep recession and stagflation.

European politicians are furious as they refer to the crisis as an abyss created by an irresponsible system. The same crisis is occuring in much of Europe. The U.S. isn’t out of the woods at all. The bailout did very little for beleaguered State finances or the American populace. Congress promised a package to assist American homeowners. What was passed into law will have little benefit to the crisis regarding predatory loans foisted on Americans. Instead, Americans are steadily losing the ability to afford the expensive housing that they “bought” with recent loans, largely due to unprecedented job losses. This is the first bailout that the U.S. government has made for business instead of the American taxpayer. Congress hasn’t shown much concern for problems beyond cementing the current power structure in place. ~ E. Manning

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