Guest Author - Tony Daltorio
This past week was another eventful week in the financial markets. The stock market continues to gyrate wildly as the problems worsen. President-Elect Obama's task of fixing the US economy looks to be more and more difficult.
This week the government scrapped its plan to use most of the $700 billion bailout to buy bad mortgages from the banks. Instead the government is using the money to inject capital directly into banks and support markets that securitize consumer loans such as credit card loans, car loans, etc.
This week we also the government bailout of insurance giant AIG grow from $85 billion to $150 billion. Expect even more taxpayer funds to be sucked down the black hole at AIG. AIG wrote an incredible number of CDS (credit default swaps). They collected the premiums for the CDS but have no money to pay any of the claims on them. So US taxpayers will pay the claims.
This week also saw mortgage giant Fannie Mae, which the government took over a few months ago, announce a $29 billion quarterly loss. That $29 billion loss will once again be absorbed by US taxpayers. And just today, Freddie Mac announced that they lost over $25 billion. Again, that will be put on the taxpayers' tab.
Here is the item that really has me steamed. The Federal Reserve has so far "loaned" in excess of $2 TRILLION to various US financial institutions. The kicker is that the Federal Reserve REFUSES to disclose who got these "loans" and if any sort of collateral was put up for these "loans".
So in effect $2 trillion of additional burden has been put on the back of taxpayers and yet we don't have a right to know who received the money? This is absolutely outrageous! It looks like we are going to be paying for this mess for decades to come.
A LONG LINE of BAILOUTS
It looks like next in line at the bailout window will be the US auto companies.
They will need $50 billion just to keep them in business for another year. One humorous item about that proposed bailout is how hard Wall Street is fighting against it. I guess Wall Street thinks ALL bailout money should go to them and none of it to Main Street.
The line at the bailout window does not end with the auto companies. It is a very long line! Look for bailouts for insurance companies, airlines, home builders, etc. I could go on and on. What has happened to this country?
