There is something to be said about a system that not only ensures the rich get richer, but rapes its citizens to give the wealthy the extra boost they so richly deserve. Most remember that when the Financial Crisis began, the banks had a great deal of trouble dealing with their toxic assets. While many blamed the banks for taking on these assets, claiming that these risky dealings were a major factor in causing the financial crisis in the first place, the government was quick to bailout the banks, ensuring they would dominate the market for years to come.
The Treasury Department then unveiled the Public-Private Investment Program, or PPIP, in order to allow investors to buyout these toxic assets from the banks, easing the banks debt and allowing for a faster recovery. While this may have seemed like a good idea to some at the time, any moderately intelligent Financial Analyst should have been able to predict what was to come. Apparently, the bar for entry into the Treasury Department is even lower than most government offices, which is extremely low to start with.
Eric Petroff, director of research at Wurts & Associates, a Seattle-based investment advisory firm, told Bloomberg: "Any time the government says, ‘We’re going to buy something in the securities market,’ they’re putting out a sign that says, ‘Free money, come and get it’."Source: www.huffingtonpost.com
This really shouldn’t come as a big surprise. If you were a multi-billion dollar company and the government was handing out money, you too would get in line.
So what did the banks do, exactly, that is wrong?
… as Bloomberg reports this morning, some of the nation’s largest banks have actually bought more risky home loans instead of getting them off their balance sheets.
In other words, the program that was supposed to help banks dispose of these toxic assets instead made those assets so marketable that banks actually bought more — and are now at even greater risk. The banks apparently decided that the government’s entry into the mortgage security market was simply a guaranteed money-making opportunity.
Per Bloomberg’s figures, Bank of America, Citigroup, Morgan Stanley and Goldman Sachs added $2.74 billion of this kind of mortgage debt since March. The value of the debt was up 13 percent from the second quarter.
With hindsight, this seems extremely obvious to me. I would have done the same if I were in such a position. Who cares that my risks have increased substantially, I can always depend on the US Government, and more importantly the taxpayers money, to ensure I will not only be fine in the future, but a few extra yachts are just around the corner.
People, we are being taken for fools. It is time to make your voices heard. An internet presence is a great start, make it known that you are outraged. However, you must be willing to take it a step further. Why should we be paying for someone’s Yacht, or some Oligarch’s kids cocaine habit? We need to make sure that our tax dollars go to use to improve the economy, not ensure that companies can fulfill their bonus obligations. Make your internet presence known, write your congressman, tell your friends … this must stop.