Saturday, December 4, 2010

U.S. bails out Europe, not its own jobless

Here's a great rant from David Rothkopf in Foreign Policy (thanks to naked capitalism) about the stupidity of bailing out foreign banks.  Calling his screed "Empire of Schmucks," he writes,
Beijing appears to have enough money to commit $1.5 trillion dollars to prime the pumps for seven "strategic" industries (as they announced they were considering doing this week)… while we don't seem to have enough cash to pay for extending unemployment benefits for victims of the economic downturn. Mull that one over for a second: We have enough money to bail out big European financial institutions and their fat, happy shareholders, but not enough to help out struggling American families? We're paying for euro problems and unwinnable wars in the Middle East and China is saving its yuan for other activities -- like figuring out how to clean our clocks in the global marketplace of five minutes from now?
We are not just the uncontested Megapower of Schmuckdom, we are a deeply confused nation led by people with profoundly twisted priorities -- who clearly believe they report to higher powers than mere American citizens.
Today we discovered that U.S. unemployment is at 9.8 percent, that we have broken the 1980's record for most consecutive months of unemployment above 9 percent, and we are nonetheless forced to stomach the current charade on Capitol Hill in which the Republican party fights for tax cuts for millionaires while callously allowing Americans in need twist in the wind. All this, while it turns out that across town in the Fed's corner of Foggy Bottom it doesn't even take a vote to provide handouts for rich foreigners in want?
Meanwhile, in other fallout from the Federal Reserve's revelations this week about who it loaned money to, the New York Daily News reports on potential conflicts of interests (on Wall Street, of course) that arose from the Fed's emergency lending programs. Reports the Daily News,

the central bank used companies to help design or run programs they could then use to their benefit.
One firm gave advice on a program to prevent a run on money-market funds, then borrowed $8.9 billion from the same program.

Others helped the Fed value stocks -- and then traded in those same stocks.

The Fed consulted with GE on a program to give corporations short-term loans -- and then GE borrowed $16 billion from the program.

Read the whole thing here.