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doublespeak alert: rewards are losses

31 August, 2009

This story, U.S. Starts to Cash In on Bailouts, in today’s Wall Street Journal begins with these stunning words:

Taxpayers are getting a reward for the trillions of their dollars U.S. authorities put at risk in a bid to save the financial system. But they still face big potential losses from the rescue effort, which will remain on the government’s books for many years.   (the emphases are clearly mine)

I would like any taxpayer who is not in any way involved with financial interests, investment, or the federal government to answer this question:  Have you received your reward yet?

I have not;  I have not even received a notice telling me that I will get a reward, nor do I expect to ever receive one because taxpayers are not the ones receiving the money.

The government has collected billions since late last year from various rescue efforts, including dividends paid by banks receiving government capital, interest on mortgage-backed securities owned by the Federal Reserve and payments the Federal Deposit Insurance Corp. gets for guaranteeing bank-issued debt.  (my emphasis again)

The money is being collected by the FDIC, the Federal Reserve, the Treasury  Fannie Mae, Freddie Mac and nowhere in that story is there any indication how taxpayers are being rewarded.  I understand that these entities are part of the government that supposedly represents my interests but as the story points out it wasn’t my interests the government set out to protect.

The government didn’t set out to turn a profit; it set out to prevent the collapse of the financial system and the damage that would have caused to the economy. Moreover, the government’s earnings are minuscule, compared with the immense budget deficits, which will hit $1.6 trillion for this year, that the government is running.

See, this is where I am having a problem.  Taxpayer money saved the big banks from the consequences of their greed, their scams, and their “credit defaults,” mortgage bundles and “swaps.”  The insiders knew of the risks, but they also knew their friends in the government would bail them out, using taxpayer money.  Huge bonuses went to those responsible for bringing the country to the brink of disaster; even Congress got a raise.

If I and my fellow taxpayers are going to face a $1.6 trillion deficit THIS YEAR and trillions more in the to come, what is my reward?   Rate increases on credit cards  since the economy was saved from collapse?   Higher prices for household goods, food, gas, clothing, and other necessary items.

I don’t believe that saddling future generations with trillion-dollar debts was good for the economy and I doubt that any of us “regular” folk will be rewarded by the rescue plan.  Read the article for yourself and then come back and tell me what part of “reward” I don’t understand.  (Only please don’t talk party politics.  And if you’ve read any of my previous posts, you already know that I don’t think much of the banks that were saved.  Otherwise, I will await your explanation.)

p.s.  Some banks were to0 small to save.

Moreover, it faces [FDIC] losses of more than $21 billion on 84 bank failures so far this year, already exceeding all of last year’s losses.

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