At the end of June, the QE2 runs out and it looks like the Fed will stop buying treasuries. That means, as of now, no more bail outs. This article talks about the global economic panic that can ensue when the bankrupt financial houses aren’t given anymore welfare checks, also known as Quantitative Easing II, or simply, a bailout.
It lays out a scenario which, from my experience, is not too far from the truth as far as the economic panic. It gives an overview of what is happening in the financial sector with all the bailouts, what most people are not aware of.
“We’d wager not one in 1,000 Americans has any idea (or at least any real understanding) of what has been going on in the market for U.S. Treasury bonds since the financial crisis. For the last nine months, the Fed has been printing up new dollars and buying huge amounts of newly issued debt from the U.S. Treasury – $600 billion of bonds. And these purchases followed a $1.75 trillion program of quantitative easing that ran from March 2009 to March 2010. “
This whole scenario, however, could be, or could have been, avoided. There is a bill right now in congress, H.R. 1489 by Marcy Kaptur, which will be voted on in about a month or so. It will bring back the provisions of the Glass-Steagall Act, which will in turn separate the speculative criminal investment banking from real, productive banking.
That is, right now there is no separation. The criminals, as I call them, take your hard earned money that you deposit in the banks and use that for international risky speculation like Credit Default Swaps, derivatives trading and other “toxic assets.” They’ve made money off of your money, but now the giant Ponzi scheme is collapsing and they took your money with it. All the bailouts haven’t saved them, or your money.
In a rational society, not controlled by Wall Street, the bank would take your money and loan it out for real, productive purposes like starting a business, or helping a business to expand. The bank makes money and pays you some in the form of interest for your savings, CDs and checking money.
Glass-Steagall would bring back rationality to banking and separate what’s left of the productive banks from the speculative banks. Let the speculative banks fall along with their international pyramid scheme, only in this case, of H.R. 1489, they won’t bring down the rest of the economy with them.
If you’re reading this article within a month or so of it being posted, call you representative to support the bill. It’s time the citizens demand change from the politicians. that is, they support Main Street, not Wall Street.