The Gaming Den

The state of affairs of the world and the political mires have left me often irritated and angry. But the recent revelation of the 7.7Trillion$ secreted away rankles my every physical part of me. But, again, I do not have the facts of what exactly the money was given to and if it is truly something to rankle me.

Can someone explain the whole bailout scheme starting with (or even before) TARP and how it was decided that was not, in anyway, close to enough? How was an amount as exorbitant as 7.7 trillion dollars ascertained to be necessary? Was this much money actually necessary.

I am outraged. But my questioning mind wonders if just the sheer number is what sets me seething mad. I know that I don't know enough about the situation. So educate me, please. I say this to gain an earnest and necessary knowledge as to actually have the mental processing power to know how fucked or how not fucked I am.

Love & Rockets

Arun K. Raman (cynic)

That's not a bailout, that's a loan (actually many smaller loans), and it has since been paid back. Not only that, but the way the loans are reported vastly inflates the amount. They're quickly taken out (often on a daily basis), then repaid, then taken out again, then repaid again. However, each loan taken out is added to the total. It's like expressing your personal credit card's expenditures just by totalling up how much you've spent on it ever (and ignoring how much you've paid back), rather than looking at the maximum amount owed to the bank at once or the maximum line of credit.

These loans are why the Federal Reserve banks exist, they are completely unrelated to TARP, and the alternative is runs on banks causing liquidity crises. That's not really an acceptable alternative.

Yeah, temporary loaning of money to banks in order to allow them to cover minute to minute transactions is what a central bank is for. That part is not a scandal. The part that is a scandal is the part where the banks asked for more loans than they actually needed and then took the money and invested it at a higher interest rate. Because that is straight corruption. They apparently did enough of that to make 10 billion dollars, which is razor thin margins against the amount of money being thrown around (less than one seventh of one percent of the total dollars pass through their hands), and actually "only" $30 per person embezzled from the American people - but it's still symbolic of how reflexively criminal the banking industry has become.

Even when the Federal Reserve was in the process of guaranteeing minute to minute emergency loans at essentially zero interest to keep the gears of the economy from grinding to a halt over their over leveraging and cronyism, they still could not resist the urge to over report their needs and invest the excess into profit making ventures. The ratio of scam dollars to real dollars is apparently very small, since even buying Treasuring bills at 3% with the total would have earned twenty three times their reported profits - but it's disgusting in principle. And in principal.

-Username17

Basically if governments had not bailed out the financial industry they would have needed to take over all the important tasks of finance (so a couple percent of it, since most of it is outright speculation and bubble building). In the US the Fed would have had to basically taken over the bond market and the FDIC would have essentially become the small business lender (since they would have owned most small banks). Pensions would have had to be nationalized and restructured outright or more likely through inflation (just like they are being restructured now). Only insurance companies would have been able to pull through. Republicans would never have been able to accept the necessity of government intervention and neither party would have allowed their sponsors to lose a fuckton of money ... so the alternative was handing out money to cover short term losses and kicking the can.

Really though the bailouts are better seen as just a small part of the enrichment of the 0.1%.