Protectors of Wall Street
A vital new book from the TARP IG, and yesterday’s vote on a Fed audit, reveal some disturbing truths
http://www.salon.com/2012/07/26/protectors_of_wall_street/
I knew that the situation was bad, but I guess I missed out at how bad it was/is. Sixteen trillion dollars is a figure that is a bit difficult to imagine and one I can absolutely guarantee that if injected into our economy at the ‘user’ level (as opposed to the ‘abuser’ level) we would be humming along very nicely and probably back up to full employment (which, btw, is estimated to be around 4% unemployment). If we figure that Wall Street was ‘only’ able to get 1% on that money, that is $160 _billion_ dollars in pure profit (how many of the Fortune 500 need to be tallied up to get to that figure?) with not one tiny shred of risk. How, you ask? Well, the Fed lends (gives) money to Wall Street at just about zero interest rate, then Wall Street can then just turn right around and buy T-Bills or some such for a zero risk return. I am not up on the rates at the moment, but as I recall they are running below the rate of inflation (meaning investors are actually paying our government to lend it money!) and inflation is running around 1.5-2%. I think these secret loans are at a quarter percent or something link that (the Fed published those rates, they haven’t been changed for a long time and as I recall they are very close to zero).
Now, imagine that these Wall Street institutions actually use this money to do inter-bank lending (the now famed LIBOR), something that is just slightly more risky than buying US T-Bills, they can probably make 2% or even more off their nearly free money. All of this ‘lending’ doesn’t do a damn thing to stimulate the economy, but it does provide HUGE profits for the institutions that they can subsequently use to bribe (did I say bribe? I meant make campaign contributions) politicians or pay the astronomical salaries and bonuses for the airheads in charge.
Of course, the real crime here is that reporting this won’t make a damn bit of difference because the sheeple are more interested in reality TV.
