Good Billions After Bad
September 9th, 2009Via: Vanity Fair:
Last October, Congress passed the Emergency Economic Stabilization Act of 2008, putting $700 billion into the hands of the Treasury Department to bail out the nation’s banks at a moment of vanishing credit and peak financial panic. Over the next three months, Treasury poured nearly $239 billion into 296 of the nation’s 8,000 banks. The money went to big banks. It went to small banks. It went to banks that desperately wanted the money. It went to banks that didn’t want the money at all but had been ordered by Treasury to take it anyway. It went to banks that were quite happy to accept the windfall, and used the money simply to buy other banks. Some banks received as much as $45 billion, others as little as $1.5 million. Sixty-seven percent went to eight institutions; 33 percent went to the rest. And that was just the money that went to banks. Tens of billions more went to other companies, all before Barack Obama took office. It was the largest single financial intervention by Treasury into the banking system in U.S. history.
But once the money left the building, the government lost all track of it. The Treasury Department knew where it had sent the money, but nothing about what was done with it. Did the money aid the recovery? Was it spent for the purposes Congress intended? Did it save banks from collapse? Paulson’s Treasury Department had no idea, and didn’t seem to care. It never required the banks to explain what they did with this unprecedented infusion of capital.
What nonsense is this? The money infusion obviously kept credit flowing. It’s not rocket science. The several billions skimmed off the top by insiders for their “services” is still a drop in the bucket compared to the total which has gone to keep the late industrial superstorm going full tilt. The alternative? Aggravated collapse and the attendant social nightmare. It’s going to come sooner or later, but people always choose “later” when given the choice. You thought maybe somebody was going to “plan” our way to social, political, and economic equilibrium? It is many generations too late for that. The last reasonable accomplishment along those lines was feudalism, which was like choosing to keep yourself locked up in a dungeon for your own good. Prior to that it was primitivism, where superstition reigned supreme and every clan over the hill was your blood enemy. Let’s face it. Humans are going nowhere. Evolution will eventually show that the ability to reason is not a successful survival strategy. Might as well print and spend money for as long as Chinamart will take it.