Tuesday, December 28, 2010

No Recovery Under Rule of Bankers

There will be no economic recovery for the masses of people in the United States. A real recovery, with decent jobs at decent wages under secure terms of employment, is now impossible absent a social upheaval such as the United States has never experienced. The reason is structural, and in some ways, simple. Wall Street has effectively captured the apparatus of government, and is methodically stripping the country of both its assets and the nation’s ability to pull out of the death spiral.

When the history of the era is written, Barack Obama’s term in office will be remembered as the period when Wall Street achieved its definitive conquest of the American state, thus depriving the society of the means to avoid economic and social disaster. Two men helped give us stark evidence of the theft of the American state as it was occurring. Neil Barofsky was the former prosecutor charged with overseeing the $700 billion TARP bank bailout program. But back in the summer of 2008, just six months into Barack Obama’s presidency, Barofsky reported that the federal government had already funneled about $14 trillion to bail out financial institutions. That’s 20 times as big as the TARP bailout, about the size of the annual real economy of the United States. The Obama administration and the Federal Reserve, acting on their own, were giving the banks 20 times as large a bailout as the Congress had voted for. Then, a year later, in July of 2009, Neil Barofsky dropped another bomb: the total federal bailout of the financial class could be $23.7 trillion, about 34 times the TARP bailout and approaching twice the gross domestic product of the United States. But it gets worse.

This fall, Sen. Bernie Sanders of Vermont, the other key person in providing evidence of Wall Street’s seizure of the American state, forced the Federal Reserve to submit to a one-time, snapshot audit. It showed that the Fed had provided American and foreign banks with $12.3 trillion in taxpayer money. That’s about six trillion dollars more from the Federal Reserve than Barofsky had discovered, a year before, bringing the total to about $30 trillion. That mind-boggling figure is about half the size of the entire economy of the planet Earth!

But the theft is even bigger than that. The Federal Reserve routinely lends banks money at virtually no interest, which the banks then use to buy U.S. Treasury bonds for which the banks are paid interest. This is a daily taxpayer subsidy to Wall Street that also amounts to trillions of dollars. The banksters bet some of this money in their derivatives casinos, which are valued at 600 to 1,000 trillion dollars – many times more than the real economy of the planet – and they spend a portion of their stolen loot to buy politicians to help them steal more money from the government. But they will not invest in productive enterprises that provide decent jobs, and they will not allow the government to invest in jobs, because that would reduce the amount of money the banks can steal. And that is why there will be no economic recovery worthy of the name, under the current structure of power in the United States.