For those of us who doubted the motivations of Paulson et al in ramming the $700bn 'bailout' legislation through the US legislature, it would appear, sadly, that our suspicions were correct.
Why were the likes of JPMorgan Chase bunged billions, when their businesses were in a pretty healthy shape to start with? Was it really to loosen up the supply of credit to desperate US families and businesses?
Of course not. Quoted in a New York Times article, an executive from JPMorgan Chase on an employee only company conference call explained that:
“loan dollars are down significantly.” He added, “We would think that loan volume will continue to go down as we continue to tighten credit to fully reflect the high cost of pricing on the loan side.” In other words JPMorgan has no intention of turning on the lending spigot.
JPMorgan Chase received $25bn from the US taxpayer so, if not used to loosen credit, what will that money be spent on? Again, our executive -- believing he was addressing company employees only -- was candid:
"Twenty-five billion dollars is obviously going to help the folks who are struggling more than Chase,” he began. “What we do think it will help us do is perhaps be a little bit more active on the acquisition side or opportunistic side for some banks who are still struggling. And I would not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some great opportunities for us to grow in this environment, and I think we have an opportunity to use that $25 billion in that way and obviously depending on whether recession turns into depression or what happens in the future, you know, we have that as a backstop.”
Acquisitions. Gobbling up the competition, as JPMorgan has already done with Bear Stearns and WaMu.
And it's not just the big boys like JPM who are getting in on the act:
Oct. 25 (Bloomberg) -- PNC Financial Services Group Inc.'s taxpayer-backed $5.2 billion purchase of National City Corp. is a blueprint for regional bank takeovers pressed for by U.S. Treasury Secretary Henry Paulson, investors said.
PNC, led by Chief Executive Officer James Rohr, becomes the fifth-largest U.S. bank by deposits with its fourth acquisition in less than two years. Pittsburgh-based PNC announced the deal yesterday after getting $7.7 billion in government funds, part of the $125 billion the Treasury is doling out to regional banks to thaw frozen credit markets.
"It's going to start to become the template," said Michael Yoshikami, president of YCMNet Advisors in Walnut Creek, California, which manages $1 billion.
But surely that can't have been what the US Treasury had in mind all along?
Oh, but it was. As the New York Times piece tells us:
In fact, Treasury wants banks to acquire each other and is using its power to inject capital to force a new and wrenching round of bank consolidation. As Mark Landler reported in The New York Times earlier this week, “the government wants not only to stabilize the industry, but also to reshape it.” Now they tell us.
Indeed, Mr. Landler’s story noted that Treasury would even funnel some of the bailout money to help banks buy other banks. And, in an almost unnoticed move, it recently put in place a new tax break, worth billions to the banking industry, that has only one purpose: to encourage bank mergers. As a tax expert, Robert Willens, put it: “It couldn’t be clearer if they had taken out an ad.”
Folks, this bailout money isn't about loosening credit for consumers or businesses, but consolidating wealth and power in fewer and fewer banking hands. That's great business for the banking elites, but lousy business for the US taxpayer. And it's all being orchestrated by one of their own, in the shape of Hank Paulson, ably assisted by Neel Kashkari, another ex-Goldman Sachs employee (with, according to the US Treasury, expertise in mergers and acquisitions -- what a surprise), and now responsible for administering the banking handouts.
Still, there's a Presidential election in the offing, and most people's attention is elsewhere; currently, it seems, on the cost of Sarah Palin's wardrobe. Meanwhile, the future earnings of US citizens are being siphoned off into supporting the empire building of the US banking oligarchy.
Stupid, stupid people.
RSS Syndication
2 comments:
I'm no expert on bankingt matters, but isn't that exactly what's going on here in Britain?
What an outrage that the banks are simply pocketing the public monies! This is socialism, a command control economy Soviet-style. Don't any of the policymakers know that style of governance doesn't work?
I'm not shocked. Anyone who's followed the alternative media knows just how indebted the US has become and how predictable this crisis was. Perhaps Europe's even greater discordance is a bit of a surprise.
Growth in the economy has become more about shuffling piles of paper around than actually building anything. We here in the US (and apparently the rest of the Industrialized World) feel that a severe recession is too big of a price to pay. We want growth, which essentially entails growth in borrowing, since borrowing is the basis of all economic growth in this new Gilded Age.
The problem stems from our money. Rather than represent a store of value, accumulation of money = accumulation of someone else's IOUs. In the macro this means the Fed owes more people more money. No net increase in wealth has increased, although a net transference to the wealthy and corporations occurs as a result of the 1) asset deflation, then 2) increased taxation and 3) inevitable inflation built into our fiat monetary systems.
I like this animated feature for an explanation of how money works; it's long but worth every minute:
http://www.informationclearinghouse.info/article18205.htm
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