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Originally Posted by cybele
I don't recall George Bush and Hank Paulsen giving me the opportunity to opt out of their corporate welfare program. Which was of course provoked by the greed, crookedness, influence peddling and utter ineptness of the private sector.
Obama's not doing much better either. At least we're beginning to get some vague idea where these hundreds of billions of dollars have been going, but it's mostly just additional "compensation" to foreign banks and Wall Street fat cats. That doesn't exactly shore up one's faith in the supposed virtues of private enterprise.
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It is important to clearly separate the actions of the Bush administration with the actions of the Obama administration once the economic plan was finalized at the beginning of this month.
The no-strings bailout was a the original proposal that came in September out of the Bush administration. The congress allocated the money with clear guidelines and assumed that Hank would follow them. He quickly abandoned the guidelines and went back to the original plan to offer no-string bailouts to any who asked.
The first 350 billion dollar TARP was based entirely on the concept of "bailouts." The second half is being used in several new ways that are actually too complicated to explain here, but to summarize:
75 billion to work with homeowners and stem foreclosures
100 billion to support the TALF
50 billion to support the TA private-public partnership
45 billion in bailouts to companies failing after their first bailout
The last basically acts as invest protection because we will no get any of that first money back if all those companies fail anyway.
To further assist the economic recovery, the Fed has proposed buying US debt which forces interests rates down so low that assets can move into different markets that work grow investments rather than locking away capital.
The next step is changing the uptick rule and reforming mark-to-market which should come next week followed by broader regulatory and systematic reform.
Of course this is on top of the 288 billion in tax cuts, $111 billion in infrastructure improvements, and 59 billion in health care streamlining investments that already went through.
The above programs are not "mostly" going to compensation even in the original Bush bailouts.
Jim Cramer had a great piece on why the markets went up 7% today. He suggested that it wasn't because one of the administration's plans was so great, it was because the markets were getting a sense of cohesiveness finally. He said that there were so many plans that today didn't need to be the silver bullet anymore and the administration has been calming fears of anti-capitalism by acting in such a pro-markets manner. More than any rhetoric from either side, people can clearly see a line to profits across the board and so the market rallied for two weeks and counting.
Incidentally, the views of the economy have improved along with Obama's ratings recently.
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Economic Optimism Reaches 20-Month High
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