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the US Economic Meltdown - Save the US Economy and Rekindle Democracy by Giving the Workers a Raise

A specter is haunting Wall Street---the specter of insolvency. One major player, Bear Stearns, has already gone under, and from the looks of it, another may be on the way. It's getting ugly out there. The so-called TED spread---which measures the willingness of banks to lend to each other---has begun to widen ominously suggesting that the money markets believe another body will be floating to the surface any day now.The ongoing de-leveraging of financial institutions and the persistent downgrading of assets has the Fed in a tizzy. Bernanke has backed himself into a corner by stretching the Fed's mandate to include anyone on Wall Street with a mailing address and a begging bowl. Now he's taken on the larger task of fixing the plumbing that keeps credit flowing between the various investment banks. Good luck. He's already burned through nearly half of the Fed's balance sheet of $900 billion and the banking meltdown has just begun. The IMF expects the final tally will be $945 billion, that means $3 trillion in lost loans for the banks. Bernanke better pace himself; this mess could last for years.

Volumes have been written about the current crisis; subprime-this, subprime that. Everything that can be said about collateralized debt obligations (CDOs) credit default swaps(CDS) and mortgage-backed securities (MBS) has already been said. Yes, they are exotic “financial innovations” and, no, they are not regulated. But what difference does that make? There's always been snake oil and there's always been snake oil salesmen. Greenspan simply raised the bar a notch, but he's not the first huckster and he won't be the last. What really matters is underlying ideology; that's the root from which this economy-busting hydra sprung. 30 years of trickle down, supply-side gibberish; 30 years of idol worship for the waxy-haired reactionary, Ronald Raygun; 30 years of unrelenting anti-labor, free market, deregulated orthodoxy which inflated the biggest equity-Zeppelin in history. Now the bubble has sprung a leak and the escaping gas is wreaking havoc across the planet.

Paulson's plan is a power-play pure and simple. The investment Mafia wants to control the financial system lock, stock and barrel. They want to liquidate the SEC and any other government watchdog agency and put the investment banks, hedge funds and brokerages on the honor system. It's the end of transparency and accountability which, of course, are in short supply already. Comrade Paulson's blueprint fixes nothing. It's just another freebie for the parasite class. What the country really need is a few honest men who'll ride-herd on the Ken Lays and Jeffrey Skillings who presently run Wall Street. That doesn't require centralized power; just a rule book and a bullwhip.

Americas Watchdog and its National Mortgage Complaint Center are contesting U.S. Treasury Secretary Paulson's May 7, 2008 statement that the U.S. credit crisis is nearing an end, as "a self serving lie, from a U.S. political appointee." According to Americas Watchdog, "A very greedy Wall Street, and a bought and paid for Congress & Bush Administration got us into the worst real estate disaster since the great depression, and now the best they can do is lie about the very dire future for the U.S. economy? All of the perceived U.S. real estate equity supposedly gained between 2003 & 2006 has vanished, or is in the process of vanishing, and Secretary Paulson thinks the credit crisis is nearing an end? Another way of putting this is more than $2 trillion in perceived equity has vaporized. U.S. banks lent money on this $2 trillion. Now its gone. The banks sold these mortgage loans to pension funds, or long term investors. Now the banks are having to buy back an increasing number of failed loans due to something called a buy back provision. Translation, the credit crisis is about to get much worse."

Labels: US Economic Meltdown, US Economy