Yea it wouldn’t be fare if everyone had a free gaff now would it…
How can it be that in the world’s leading democracy, a private institution gets to appropriate 2/3 of the country’s GDP to whoever they choose?
I guess we’re beyond this being about dodgy US subprime loans then.
While it is a bit over the top to include the currency swaps with foreign central banks, the ammounts being thrown at this problem are staggering and enough to sink the ship if they do not pay-off. Even if they do, the debts will burden the next generation heavily right at a time when the US and most of the western world’s demographics go pear shaped (is there a terms for an inverse pear?).
The wealth destruction is truly incredible and I think it is lost on most people that this wealth took at least a generation to accumulate, how they expect to resume business as usual I have no idea, in my mind we are beyond the point of trying to recover to economic levels of the past decade and the objective needs to move to preservation of stable democracies, not recovery of wealth which looks impossible, it is gone!
And if the ship sinks??? Well that hardly bears thinking about
Let’s plug this into YMs semi-random number generator:
Let’s assume there are 100 mn households in the US.
That’s 100,000 per household (roughly)
Now weight it so that those who have paid most tax over the last ten years get most back, starting with 20k minimum for those who have paid no tax and so on up. For people with mortgages or other debts that exceed the amount, take it off their capital owed immediately. For anyone with an excess (of rebate over mortgage), mail a check every six months for ten years of reducing amounts. Suddenly, there isn’t a problem, is there?
If money is a worry, mail it in the form of construction coupons of asset purchase coupons that can be redeemed at repo auctions (for those with an excess).
And yes, it would probably cause another asset bubble, but it would give ten years warning that measures to deflate it and to build the real economy need to be put into place.
Does anyone else get the feeling that capitulation is kicking in in the US. The canny bankers got a few trillion out of the Fed in the past months but it has done little to get them going again. The public sentiment is so negative of the bailouts that every elected representative is now calling for more oversight of where the money goes and that will limit the ability of the Fed and FDIC to continue to prime the banks. 9 banks have gone down so far in 2009, just one mid size one going down now could cause an incredible ripple effect. I seems more and more the case each day that one trillion is not enough and the abyss is near for the financial institutions.
Maybe that is better than having them limp along for years??
The Federal reserve act of 1913. Read “The creature from Jekyll Island”, it’s must reading for financial professionals.
Stocks plunge as Timothy Geithner fudges detail of economic rescue