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Half of the bank bailout is going for dividends !
These bastards are shameless!

U.S. banks getting more than $163 billion from the Treasury Department for new lending are on pace to pay more than half of that sum to their shareholders, with government permission, over the next three years.

And in case you missed it two weeks ago: one of every ten dollars of the "bailout" is being used to pay bonuses! That's right - the bastards are getting $70 billion in bonuses for destroying the financial system and wrecking the economy.

Joe Nocera reported in The New York Times on an Oct. 17, internal conference call for senior employees of JPMorgan Chase, in which a Morgan Chase employee had the bad grace to ask,

"Chase recently received $25 billion in federal funding. What effect will that have on the business side and will it change our strategic lending policy?"

That would be a key question, wouldn’t it? Afterall, the whole purpose of the $700 billion bank rescue was to unfreeze the credit markets and get banks lending again.

Someone taped the conference call, and Nocera was allowed to hear it. Read carefully the reply of Morgan Chase chief executive, Jamie Dimon:

"Twenty-five billion dollars is obviously going to help the folks who are struggling more than Chase," he began. "What we do think it will help us do is perhaps be a little bit more active on the acquisition side or opportunistic side for some banks who are still struggling. And I would not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some great opportunities for us to grow in this environment, and I think we have an opportunity to use that $25 billion in that way and obviously depending on whether recession turns into depression or what happens in the future, you know, we have that as a backstop. . . . We would think that loan volume will continue to go down as we continue to tighten credit to fully reflect the high cost of pricing on the loan side."  

And I’ll add a link here about how many banks getting bailout money are using the funds to buy up other banks.

So the $700 billion rescue of the financial system is being pissed away. And what’s starting to happen in the real economy is frightening. The economic news this morning is that U.S. gross domestic product shrunk by three tenths of one percent in the third quarter. Hidden in the GDP numbers is a shocking decline of 14.1 percent in sales of durable goods. The havoc being wreaked on the manufacturing sector is appalling – and it’s the manufacturing sector that we desperately need to rebuild, if we are to stop consuming more than we produce.

Nondurable goods dropped 6.4 percent, and real personal consumption expenditures fell 3.1 percent.

But those are the official numbers. The reality is much worse.

In Unapologetic economic stupidity, Richard Daughty, writing as the Mogambo Guru, cites the most recent statistics from DeepCaster.com and shadowstats.com: "Real US Consumer Price Inflation is running at around 13% annually, Real US Unemployment at about 14.5% annually, and Real US GDP is at a negative 2%, while real M3 (monetary creation) is running at 14% annually according to the quite credible calculations of shadowstats.com." (Unfortunately, a subscription is required for both DeepCaster.com and shadowstats.com, so I am not able to furnish a more direct link.)

Daughty also notes that while the U.S. government has now sunk into over $10 trillion in debt, interest payments are being held down by artificially low interest rates. In fact, he states that "the sustainability of the government, consumer spending and the economy rests on the continuation of artificially low interest rates." Right now, 10 cents of every tax dollar collected is required just to pay the INTEREST on the debt. Now think about THIS: The yield on a 10-year Treasury note right now is 4.01%, but the historical average, going back 46 years, is 7.04%. Which means that we can expect just the interest on the U.S. government debt, never mind paying back the principal, to reach nearly 20 percent of all government revenues collected.

Obama can NOT do anything on his own. He will be facing the hordes of angry white men stirred up by the likes of Limbarf and O'Reilly. He will be facing the entrenched power of oligarchical wealth - insurance companies, financial companies, hedge funds, big oil, big pharma, and the Reps and Senators they own, both Dem and Rethug. He will be facing a judiciary packed these past eight years with the worst conservative hack ideologues.

And he will be surrounded by economic advisers who are part of the problem. Dismay and disgust has often been voiced here on the blogosphere over who Obama has selected as economic advisers. The sad fact is that Obama voted for this bailout, despite a raging flood of anger and opposition, by bloggers as well as many others. Obama ignored us then. But he’s not going to be able to ignore reality. He was wrong, and we were right. The problem is that a lot of innocent people are going to get hurt by his being wrong.

Folks, our work is just beginning.

Originally posted to NBBooks on Thu Oct 30, 2008 at 08:26 AM PDT.

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Comment Preferences

  •  Tip jar (11+ / 0-)

    Tips, screams, screeds, rants, raves, and the usual fun

    A conservative is a scab for the oligarchy.

    by NBBooks on Thu Oct 30, 2008 at 08:27:35 AM PDT

  •  Anyone surprised? (4+ / 0-)

    I expected them to continue doing what they have been doing for years. Why wouldn't they? Its not like they are afraid of adult supervision, they can do anything they want - the money has been given to them and it is theirs to do as they please. Why anyone expected different behavior is beyond me.

    I voted with my feet. Good Bye and Good Luck America!!

    by shann on Thu Oct 30, 2008 at 08:31:43 AM PDT

    •  I think I am a little bit surprised-- (0+ / 0-)

      --but I'm a gullible sort, one of those who would rather buy the Brooklyn Bridge than sell it.

      I really thought that the crisis, of a depth and breadth unseen in most of our lifetimes, would scare some of the Wall Street and banking types into a fit of common sense.  No, I didn't think it would last, and I know that a leopard cannot change its spots.  But good heavens, this is really ... mind-boggling to me.

      "It's not getting any smarter out there. You have to come to terms with stupidity, and make it work for you." (Frank Zappa)

      by cinnamondog on Thu Oct 30, 2008 at 08:43:33 AM PDT

      [ Parent ]

    •  I hope, I really, really hope (2+ / 0-)
      Recommended by:
      YucatanMan, Roydeeboy

      that Obama and his advisers, and all the other Democratic Representatives and Senators who voted for the bailout are surprised. And chagrined.

      A conservative is a scab for the oligarchy.

      by NBBooks on Thu Oct 30, 2008 at 08:45:16 AM PDT

      [ Parent ]

    •  Not one bit surprised (0+ / 0-)

      We were conned. The 'bankers' relief bill' is a cotton candy cone for mergers and acquisitions. Money only available to banks with $100 million in properties under management. Feh! Paulson and Bernanke went 'boo" and got us all to make their rich friends richer.

      A total swindle.

      I found within myself an invincible summer - Camus

      by Roydeeboy on Thu Oct 30, 2008 at 08:48:36 AM PDT

      [ Parent ]

  •  THE SKY IS FALLING!!!!!! (0+ / 0-)

    RUN, OR PUT ON YOUR TIN FOIL HATS!!!!

    •  Huh? (3+ / 0-)
      Recommended by:
      YucatanMan, NBBooks, Roydeeboy

      Did you actually have something to add here? Or does your reply indicate what I think it does--that you don't understand the diary at all so you dropped a smart ass comment to cover your own stupidity?

      The faux mask of anonymity amplifies the courage just like whiskey. And it just as graceful and eloquent as whiskey.

      by Pager on Thu Oct 30, 2008 at 08:38:33 AM PDT

      [ Parent ]

      •  BUY AMMO, GOLD AND CANNED FOOD!!!! (0+ / 1-)
        Recommended by:
        Hidden by:
        eightlivesleft

        DISASTER IS RIGHT AROUND THE CORNER!!!!!!

        •  Stop screaming. (2+ / 0-)
          Recommended by:
          YucatanMan, NBBooks

          You're making an ass out of yourself.

          The faux mask of anonymity amplifies the courage just like whiskey. And it just as graceful and eloquent as whiskey.

          by Pager on Thu Oct 30, 2008 at 08:43:25 AM PDT

          [ Parent ]

          •  But it's fun! (0+ / 0-)

            Chill out, conspiracy theorists.  Things will work out over time.  Eventually, banks will have to make loans in order to make a profit.  That's what they do.

            •  the whole point of these *emergency* loans (1+ / 0-)
              Recommended by:
              YucatanMan

              was to ease things up sooner than later. Hoarding, even in the short-term, makes things worse than they need to be. And I don't see how retail banks consolidating in a huge way helps anything at all. So why shouldn't I be angry about how the bailout is being managed?

              Sufficiently advanced incompetence is indistinguishable from malice.

              by m3 on Thu Oct 30, 2008 at 09:01:32 AM PDT

              [ Parent ]

              •  Don't be angry, be rational (0+ / 0-)

                To answer your second question first, it's not clear to me that more banks are better than fewer.  I'd rather have 100 strong banks in America than 100 which are in good shape and another 100 which are continuously teetering.

                As for your fist point, banks need to assess risk when lending money, which is something that was not done properly with these with these collateralized debt obligations.  If you walk into a bank and have good credit and want to buy a house, you can still get a mortgage.  Our lenders need to get back to a solid footing; raking up even more bad loans is not good idea.

                •  Since you obviously have some cogent points to (2+ / 0-)
                  Recommended by:
                  eightlivesleft, Pager

                  make, why didn't you begin by stating some, rather than the odd behavior above?

                  I mean, seriously, I was ready to throw a couple zeros your way. There's no reason to behave like that - shouting out senseless statements - particularly when you've actually got a thought or two going on.

                  droogie6655321 lives!

                  by YucatanMan on Thu Oct 30, 2008 at 09:16:09 AM PDT

                  [ Parent ]

                •  Anger is (0+ / 0-)

                  a perfectly rational response to wasteful use of my tax money.

                  Local banks keep money in local economies, which means that the same people in New York and London are not making all the financial decisions, which centralization has been a major contributing problem in the crisis. Smaller banks, smaller loans, better distribution of risk. Not to mention consumer choice on the retail side.

                  People who have good credit cannot, in fact, get mortgages very easily right now. The NYT has run a number of articles about this. However, the hoarding I am talking about is in relation to banks not lending to each other, regardless of credit rating, because they don't trust the credit ratings anymore. It is panic behavior and it is preventing good loans as well as bad ones. The whole point of the cash infusion was to get the good loans going again, and it is not working.

                  You don't have to get angry, if for some reason you don't care. But there's no need to mock people who do.

                  Sufficiently advanced incompetence is indistinguishable from malice.

                  by m3 on Thu Oct 30, 2008 at 10:36:31 AM PDT

                  [ Parent ]

            •  There's no conspiracy theory promoted in this (1+ / 0-)
              Recommended by:
              Pager

              diary. Have you got a grip, yourself?

              droogie6655321 lives!

              by YucatanMan on Thu Oct 30, 2008 at 09:17:35 AM PDT

              [ Parent ]

        •  Umm, actually (2+ / 0-)
          Recommended by:
          YucatanMan, eparrot

          disaster has been here awhile. Since early summer of last year, to be exact. That's when the collapse of two Bear Stearns hedge funds initiated the financial collapse.

          And listen, there is nothing, absolutely nothing, in these financial and economic crises that you can shoot that will make anything better. So save your money, you can't use the ammo to good effect.

          A conservative is a scab for the oligarchy.

          by NBBooks on Thu Oct 30, 2008 at 08:48:16 AM PDT

          [ Parent ]

          •  great line (0+ / 0-)

            nothing you can shoot that will make it better.  And yes, I know it's true.  Great diary.

            Want a progressive global warming novel, not a right wing rant? Go to www.edwardgtalbot.com for a free audio thriller.

            by eparrot on Thu Oct 30, 2008 at 08:54:30 AM PDT

            [ Parent ]

    •  nothing tinfoil about this diary (1+ / 0-)
      Recommended by:
      YucatanMan

      You've either got to be kidding me, or you've been living under a rock for the last eighteen months.  These are your tax dollars and our remaining national treasure, squandered to preserve a status quo brought to us by greedy fools who aren't even willing to sanction a modest decline in their gilded age standard of living.

      Borderline trollish.

  •  Devaluation (4+ / 0-)

    Excellent reporting as always NBB!

    I fail to see a distinction between ATM muggers and the financial industry.  Both indulge unearned lifestyles by stealing.  Until we have an economy where those who create value are rewarded for it, we will continue the rapid descent toward total human devaluation.

    The Shock Doctrine by Naomi Klein -- best book ever, I nominate for a Nobel Prize!

    by xaxado on Thu Oct 30, 2008 at 08:46:24 AM PDT

    •  distinction between ATM muggers and the financial (2+ / 0-)
      Recommended by:
      xaxado, Hens Teeth

      The distinction between ATM muggers and the financial industry is that the financial industry can hire lobbyists to make their stealing legal.

      A conservative is a scab for the oligarchy.

      by NBBooks on Thu Oct 30, 2008 at 09:19:49 AM PDT

      [ Parent ]

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