David Sirota: Did America Get Punk'd on the Bailout?

[marmar]

via AlterNet:



Did America Get Punk'd on the Bailout?

By David Sirota, Campaign for America's Future. Posted December 18, 2008.

The answer is yes ... now here's what to do about it.



Editor's note: David Sirota appeared on Rachel Maddow's MSNBC show on Dec. 16 to discuss the bailout. You can watch the clip at the end of the article.

When I went on Rachel Maddow's show on Tuesday, she asked a question about the bailout that is really the question of our time: Did we get punk'd? As progressive bailout critics have been saying since the current Wall Street bailout was first proposed, the answer is yes.

As the Minneapolis Federal Reserve reports, the major claims about a credit crisis that justified Congress cutting a trillion-dollar blank check to Wall Street were demonstrably false. And new data and reports show they remain demonstrably false.

For instance, take a look at line 1 and line 5 of this December Federal Reserve report on bank lending. That's right -- you see no significant decrease in lending, and in some cases, an increase. Interbank lending has dropped some, but certainly not at the crisis levels the Bush administration and banks claimed.

Then take a look at this story from Reuters, recounting a big report from a widely respected financial analysis firm:

"The credit crunch is not nearly as severe as the U.S. authorities appear to believe, and public data actually suggest world credit markets are functioning remarkably well, a report released on Thursday says. ... The report, much of which is based on U.S. Federal Reserve data, challenges a long list of assumptions one by one, arguing that there is indeed a financial crisis but that, on aggregate, the problems of a few are by no means those of the many when it comes to obtaining credit.

"It is startling that many of (Federal Reserve) Chairman (Ben) Bernanke and (Treasury) Secretary (Henry) Paulson's remarks are not supported or are flatly contradicted by the data provided by the very organizations they lead," said the report.

Regarding U.S. business access to credit, the report says: Overall U.S. bank lending is at its highest level ever; U.S. commercial bank lending is at record highs and growing particularly fast since May 2007; corporate bond issuance has declined, but increased commercial lending has compensated for this; (interbank) lending hit its highest level ever in September 2008 and remained high in October and that overall interbank lending is up 22 percent; the cost of interbank lending ... dropped to its lowest level ever in early November and remains at very low levels; (consumer credit) was at a record high in September; and local government bond issuance had continued at similar levels to those before the credit crisis, while bank lending for real estate reached a record level in October 2008, it says. (emphasis added)

............(more)

The complete piece is at: http://www.alternet.org/workplace/113758/did_america_get_punk%27d_on_the_bailout_/

[liberal N proud]

1. More like we got robbed

The fat cat CEO's with the aid of Paulson, bu$h and Congress ripped the US Treasury off like no one ever has thought of.

This will go down as the single biggest heist in American history.

[depakid]

2. Sirota's a bright guy, with an astute politcal mind, but he's no economist...

[MannyGoldstein]

3. Krugman Says The Bailout Was Needed, And Worked

Although it was done in a wasteful and stupid way.

[Selatius]

4. Yeah, some of the banks used the bail-out money to buy out other banks or executive perks.

Very lax standards led to appalling waste.