Why we bailed out the Banks

When the economy cratered last year there was much blame to spread around and myriad causes to be analyzed. When Secretary Paulson, in a condition of abject panic, went to congress with the request for emergency funding to rescue the economy he spoke of a stimulus package. Nobody can deny that one of the main causes of the overall crisis was in the housing market, and the related mortgage backed securities market. This stimulus package was allegedly going to recharge the credit market, stimulate the housing market and provide a safety net for the economy. It is debatable that any of these actually occurred as a result of the stimulus package.

In China they had a stimulus package as well, it involved huge investment in infrastructure and commodities. The Chinese economy is clearly benefitting from this policy. We appear to have learned nothing from this.

Many of us spoke loudly in favor of an infrastructure based stimulus program, and the Treasury, the Fed, and the Congress made promises of much funding going towards this effort.

We spoke of rescuing the derivative securities market and stimulating the credit market, and the Treasury, the Fed, and the Congress made promises of much funding going towards this effort.

But what actually happened is, we bailed out the banks, and allowed the bankers to not only survive but prosper on the backs of our tax dollars. Heck they didn't even spend all of the money, treasury wants to hang on to a few hundred billion dollars "in case they need to use it in the future".

So why did we bail out the banks?
The answer is remarkably simple, the people we had in charge of the bailout, Mr. Paulson, Mr. Bernanke, and Mr. Geithner are Bankers. Shocking right? We give a trillion dollars to a bunch of bankers and they save the banks! Go figure. Perhaps next time we should give the money to a group of construction contractors.


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