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The £400 Billion rescue package is a total rip-off that will mostly benefit shareholders at a huge expense for the US taxpayer. The pockets of reckless bankers and investors will be made fatter under the fake argument that bailing out Wall Street was necessary to rescue Main Street from a severe recession. This level of lie is akin to the Weapons of Mass Destruction bullshit we were all given to justify invading Iraq. The Treasury Plan is a disgrace and does nothing to resolve the major stress in money markets that are now close to meltdown.
It is pathetic that Congress did not consult any of the economists who have presented alternative plans that were more fair and efficient and less costly ways to resolve the crisis. This is a bailout for the rich, the well connected and Wall Street: A Treasury scam that does little to resolve the debt burden of millions of home owners. It is now clear that the US Financial system, and that of the world financial system, is in cardiac arrest and we are at risk of a global meltdown. To avoid another Great Depression, radical and unorthodox policy action needs to be taken in the US, the UK, Europe and other advanced economies.
Regardless of what we do from now on, the US and the UK will experience any ugly recession and a financial and banking crisis. But radical action can prevent a nasty two-year recession turning into a global meltdown and a decade long depression. A silent run on banks is under way, which will turn into a roaring Tsunami of epic proportions if emergency action is not taken. A crisis of confidence means even the most reputable and trustworthy financial and corporate firms are at risk of going bust – its already happened. To stop the run, the US and UK governments need to introduce a 6-month blanket guarantee on all deposits – not just those under £50,000.
This needs to be followed by a very rapid shutdown of insolvent institutions to prevent them acquiring more deposits and making even more risky loans. This generalized loss of confidence in financial markets and institutions must be reversed. If not the next step of this panic could become the mother of all bank runs and a systematic meltdown of the entire financial system. The scary thing is that US and UK governments seem to be clueless about what needs to be done other than protect the well connected.
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