Must Read from Robert Reich: American Has Embraced Lemon Socialism

[flpoljunkie]

How America Embraced Lemon Socialism
by Robert Reich

The federal government -- that is, you and I and every other taxpayer -- has taken ownership of giant home mortgagors Fannie and Freddie, which are by now basket cases. We've also put hundreds of millions into Wall Street banks, which are still flowing red ink and seem everyday to be in worse shape. We've bailed out the giant insurer AIG, which is failing. We've given GM and Chrysler the first installments of what are likely to turn into big bailouts. It's hard to find anyone who will place a big bet on the future of these two.

It gets worse. While Washington debates TARP II, the Federal Reserve Board continues to buy or guarantee or provide loans for a vast and growing pile of questionable financial and corporate assets, much of which are likely to be worth far less than the Fed has paid or guaranteed or accepted as collateral. We're talking big money here -- so far over $2.4 trillion. (The entire TARP -- parts I and II -- in combination with the proposed stimulus package come to just over $1.5 trillion.)

Taxpayers are on the hook for this Fed bailout money, too, of course. We have to pay the interest on the ever-growing debt used to make these payments or guarantees and loans. Yet while TARP II and the upcoming stimulus package are receiving a great deal of attention, this much larger public commitment by the Fed is not. That's partly because the media doesn't much of understand it, but also because the Fed is doing it in secret, using provisions of its charter never before utilized, and avoiding discussion before the full Board of Governors for fear such meetings would be subject to the Freedom of Information Act.

Put it all together and at this rate, the government -- that is, taxpayers -- will own much of the housing, auto, and financial sectors of the economy, those sectors that are failing fastest.

more...

http://robertreich.blogspot.com/2009/01/how-america-has-embraced-lemon.html

[kenny blankenship]

1. Since we own everything now, could we at least insist on universal health care?

Seriously people, this is the second time in a hundred years!

[unblock]

2. "doesn't much of understand it"

heck, i don't much of understand it either.

:rofl:

aw, c'mon, i kid because i love, bobby :)

[terisan]

3. What is killing me is the role of the Democratic Party in doing this to us. Time for revolution.

[MarjorieG]

4. Want Reich opinion of stimulus breakdown; trust him, and far more than Krugman.

It's the quick stimulus and long-term benefit problem. Considering Bridge to Nowhere, and growing up with constantly reconstructed Rte 128 in Boston called Graftor's Paradise, I understand hesitation throwing everything at states (although strongly pro-infrastructure). Really confusing.

Kerry suggested giving more directly to states, even for emergency services like firemen. Lots of opinions, and the financial world needs to clean up its personnel and its troubled assets (on the balance sheet, without infusion).

[Doctor_J]

5. That's the way "free market capitalism" has always been fed to us

Nationalize the sick businesses, and privatize the healthy ones. and we continue to fall for it.