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Categories - Copywriting - Shopping - Free Online Business Help - Telecommunications Services Articles: Government - The Big Bank Heist This time it's the banks that did the heisting. Our new President has his work cut out for him now that Congress, the Fed, and Bush have acted in collusion to transfer the country's wealth out of the population's hands and into the coffers of the oil companies, foreign oil industries, the military industrial complex, and the banks. The country's economy is going to get worse no matter what anyone does or says. We can only hope that our new president and bumbling legislators don’t make matters worse. The Fed, which argued for its creation in order to prevent the economic disaster that is upon us, our Treasury, and Bush created another state of emergency and went before Congress, the Senate and the American people saying that the economy was on the very brink of collapsing. In order to prevent this, they said, we had to give the banks what has turned out to be an amount that is increasing from $1 trillion dollars. In addtion to the TARP funds, the Fed has secretly loaned out another $1.2 trillion dollars without government approval and refuses to tell us who they lent the money to. They say that they are a private institution and are not subject to the Freedom of Information Act.
The reason that this was and is not going to work is, apparently, too simple for our legislators to understand. In a normal economy, the population and the companies that have grown as a result of its commerce while depositing their earnings in the banks for safe keeping and ease of use. As part of the partnership between public commerce and the banks, the banks are allowed to create loans from the population’s money and reap the interest from those loans. The fact that the loans were created from the population’s deposits is very significant because it signifies that the population and their companies have money and are credit worthy of the loans that the banks create.
In this case, the money given to the banks was not a result of deposits from successful public commerce. It was created out of thin air and deposited by the government. There is no commerce represented by earnings on the part of the population that would indicate that the banks have anyone to loan this money to. The population and their companies simply do not have the capability to borrow the money.
The measure that the banks use to determine a customer’s credit worthiness is normally been an income to debt ratio. If a borrower owes less than 31% of their income over the loan period, they are thought to be credit worthy. Some banks, in an attempt to loan more money, have allowed this ratio to creep up to 38%. At 38%, a borrower struggles to live hand to mouth and usually gets into the rob Peter to pay Paul mode of existence. The thing that is not considered in this process is credit card interest. When banks suddenly raise their interest rates on credit cards to 20%, the borrower owes that money. Unlike mortgages and auto loans, this interest is computed every month on the outstanding balance and does not show up anywhere as part of the total amount owed. Credit card interest is the hidden demon that makes all debt to income ratios invalid.
For these reasons, banks do not have anyone to loan out the money that they have been given to. The population has been stripped of its wealth by interest and they will not begin to loan it out until the population once again has money. Instead, the money is and will be used to acquire more assets and to reduce bank exposure to the many bad investment vehicles that the banks and Wall Street have created as a result of their greed.
The population, through its mutually benefiting commerce, generates over 70% of the economy. Any economic stimulus plan must benefit the population’s ability to do commerce. The ill-conceived bank bailout bill is not an economic stimulus in that it only benefits the banks. It is a bank heist of the taxpayers’ money.
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