Bailout 3: The Cranky Economist Speaks

Another comment on the "bailout" from cranky economist Dean Baker:

Congressional support for the bailout was a big victory for those who want to redistribute income upward. The bailout is about taking money from the schoolteachers and cab drivers and giving it to incredibly rich Wall Street bankers, who are so incompetent that they drove their banks into the ground.

This upward redistribution was done under the cover of crisis, just like the war in Iraq. But there is no serious crisis story. Yes, the economy is in a recession that is getting worse, but the bailout will not get us out of the recession, or even be much help in alleviating it.

Baker goes on to make a case that the reason for the bailout is a false claim of imminent freezing of the financial system. Instead, it is an empty threat by the banks to avoid being taken over by the Federal Reserve. Baker says the Federal Reserve would not allow the financial system to freeze, but would keep it going by seizing control of the banking system. Wall Street hates that idea. But you and I would still have access to ATMs, and small businesses would still have access to loans to keep themselves liquid. The ones to lose would be the executives and large financial stakeholders.

We're being scammed again by mythical weapons of mass destruction.