UNDERNEWS

Undernews is the online report of the Progressive Review, edited by Sam Smith, who covered Washington during all or part of one quarter of America's presidencies and edited alternative journals since 1964. The Review has been on the web since 1995. See main page for full contents

August 31, 2009

BUSH PROVES SOCIALISM WORKS

This is an amazing story written in a manner to ensure the reader misses the point: socialism can really work, even when George Bush initiates it. All the current nonsense about socialism and health care is neatly contradicted by the fact that the TARP program, started under Bush, has already produced a 14% return on the public investment in Goldman Sachs, a five percent return from JP Morgan and a 12% return on American Express. These figures are extrapolated from best estimates of how much the socialists in the Bush and Obama administration invested in each company.

Sadly, this is just a temporary achievement as America is only allowed to practice lemon socialism, i.e. the government can only put its money where the private sector doesn't want to - into things like healthcare, public schools and mass transit. But it is a wonderful insight into the nonsense with which we discuss the issue, egged on by a conventional media that accepts rightwing economic theory without question. Note the sdyncohantic line: "It has also spurred hopes that the government could soon get out of the banking business."

NY Times
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Nearly a year after the federal rescue of the nation's biggest banks, taxpayers have begun seeing profits from the hundreds of billions of dollars in aid that many critics thought might never be seen again. The profits, collected from eight of the biggest banks that have fully repaid their obligations to the government, come to about $4 billion, or the equivalent of about 15 percent annually, according to calculations compiled for The New York Times.

These early returns are by no means a full accounting of the huge financial rescue undertaken by the federal government last year to stabilize teetering banks and other companies. The government still faces potentially huge long-term losses from its bailouts of the insurance giant American International Group, the mortgage finance companies Fannie Mae and Freddie Mac, and the automakers General Motors and Chrysler. The Treasury Department could also take a hit from its guarantees on billions of dollars of toxic mortgages.

But the mere hint of bailout profits for the nearly year-old Troubled Asset Relief Program has been received as a welcome surprise. It has also spurred hopes that the government could soon get out of the banking business.

1 Comments:

Blogger Lars said...

Of course, these banks profits have come largely as a result of transparent TARP funds, and totally untransparent cash infusions in the form of cheap loans from the Federal Reserve. The Federal Reserve of course is not a government agency, and thus Ben Bernanke can shield loan receivers from daylight. Given the amoral conduct by bank leaders, I would not be surprised if these "profits" are at least partially accounting tricks of taking cheaper loaned money and moving it to another side of the ledger book. Now profitable, the banks can claim everything was just a liquidity crisis (which they never suffered from but smaller banks and businesses did) and continue to fight any new or increased regulation over their activities.

August 31, 2009 3:38 PM  

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