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Originally posted by noel
The banks lose hundreds of millions, so the government bails them out using our money. So rather than the banks owing hundreds of millions, we the taxpayers owe hundreds of millions. Umm must be some logic there.[}
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Noel, it's even worse than most people realise, the "logic" you refer to, by sheer coincidence I think I explained in my personal newsletter today to my select clients. I have posted the relevant part below:
Of the $1.6 trillion the US government will borrow this year, the biggest
single lender is the private sector, chipping in $700 billion.
But instead of being put to use in a way that might stimulate a real
recovery – providing credit for small business and consumers – it is
taken up by the US government and then frittered away.
The banks are happy to play the government’s game too.
They can borrow overnight money from the Fed at only one quarter
of 1%, annualised. But lending to small business is hard work.
And it is risky. Why bother? The US Treasury will pay them 4 % for
lending the money back to the government, long-term.
This is practically free money to the banks.
Both the bankers and politicians end up ahead – with a bigger piece
of the economy under their control.
The real losers? the children, and grandchildren, of the "good old" taxpayers
who's money it is in the first place.
PS The British Banks and Government are playing the same "shell game".
David
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