Definition of Insanity: US To Pledge Another $7.7 TRILLION To Bailouts

If an ounce of economic socialism is good, then a few megatons of it must be REALLY good, right?

This from Bloomberg.com:

Nov. 24 (Bloomberg) — The U.S. government is prepared to provide more than $7.76 trillion on behalf of American taxpayers after guaranteeing $306 billion of Citigroup Inc. debt yesterday. The pledges, amounting to half the value of everything produced in the nation last year, are intended to rescue the financial system after the credit markets seized up 15 months ago.

The unprecedented pledge of funds includes $3.18 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis. [Read full article]

I have many times heard people mock the “slippery slope” argument.  But dang if we aint rolling downhill, picking up speed, and accumulating a bunch of debris on the way down this metaphorical slope toward total catastrophic ruin.

Just a couple of weeks ago we found out that Bloomberg had filed a Freedom of Information Act request to find out where $2 trillion in loans had gone.  Turns out the government doesn’t want to tell us:

Nov. 10 (Bloomberg) — The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral.

And don’t think that the secrecy that applied to the last $2 trillion won’t apply to the next $8 trillion.

When Congress approved the TARP on Oct. 3, Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson acknowledged the need for transparency and oversight. Now, as regulators commit far more money while refusing to disclose loan recipients or reveal the collateral they are taking in return, some Congress members are calling for the Fed to be reined in.

“Whether it’s lending or spending, it’s tax dollars that are going out the window and we end up holding collateral we don’t know anything about,” said Congressman Scott Garrett, a New Jersey Republican who serves on the House Financial Services Committee. “The time has come that we consider what sort of limitations we should be placing on the Fed so that authority returns to elected officials as opposed to appointed ones.”

And:

Congressman Darrell Issa, a California Republican on the Oversight and Government Reform Committee, said risk is lurking in the programs that Poole thinks are safe.

“The thing that people don’t understand is it’s not how likely that the exposure becomes a reality, but what if it does?” Issa said. “There’s no transparency to it so who’s to say they’re right?”

The worst financial crisis in two generations has erased $23 trillion, or 38 percent, of the value of the world’s companies and brought down three of the biggest Wall Street firms.

We don’t know what the hell kind of monster it is down there in that bottomless pit, but we DO know it loves to eat money – so we’d better keep feeding it.  And don’t ask questions, lest we all turn into caricatures from Edvard Munch’s “The Scream.”

Requiring the Fed to disclose loan recipients might set off panic, said David Tobin, principal of New York-based loan-sale consultants and investment bank Mission Capital Advisors LLC.

You’re damn right it might set off a panic.  I don’t have a clue what holes the money is being poured into, and I’m already panicking.  Apparently, ignorance is bliss when you’re country’s entire economy is circling the drain.

Barack Obama held a press conference today, but pretty much avoided specifics the way I’d avoid the chained-up pit bulls in a crack dealer’s front yard.  Apparently, omerta-style secrecy only works best when everybody keeps the secret.

Barack Obama is talking about as much as $700 billion or possibly even more for an upcoming stimulus package.  But that’s no big deal, anymore.  $700 billion amounts to chump change in the new reality.  Do you remember how much we all freaked out over that first $700 billion bailout? Boy, were we ever naive back then!  We were like a bunch of kids afraid to jump into the shallow end of the pool.  And now we’re perfectly okay with being thrown in the deep end wearing concrete shoes, right?

We’ve all seen motor homes those bumper stickers that read, “We’re spending our children’s inheritance.”  Well, that’s us.  Only our bumper sticker would say, “We’re spending our great, great, great, great, great, great great, great grandchildren’s inheritance.  We’re in our old Winnebago, driving down the hill, without a care in the world.

Well, except for that whole massive hyperinflation thing as all that money we printed to pay for all those Wall Street gambling debts makes all the money we’ve got virtually worthless.

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