I found this comment by Robert Birdwell on this site and believe Robert best describes the real reason behind the so called bailout . I post his comment unchanged as it appeared
Comment by Robert Birdwell on
3 October 2008:
For all of the intellectualizing, a critical point has been missed. From 1970 to 1995, we all had the most powerful tool on earth, Title 18 U.S.C. Section 1964©). The congress was conned into inserting an exception into the law. That supposedly innocuous exception removed the standing of any citizen to sue for any injury as a result of any conduct in the sale or purchase of securities, and gave exclusive standing to sue to the United States. To defeat RICO, all the United States had to do was refuse to prosecute those committing securities fraud. Injured parties were left waiting for prosecutions that never came. Thus, injured citizens had no actual recourse.
1995 was also the very time banks wanted into the securities business in a big way. It was shortly after the 1995 exception that these morphing chimera called derivatives entered the market. Soon, every type of loan, mortgage, car loan, and credit card debt, was bundled and sold as derivatives. Investment Banks and brokerage houses could not get enough debt to package and sell. The fees were huge, and easy to come by.
As derivatives became worth less and less, more and more were packaged and sold. The United States SEC and the DOJ had the exclusive power to oversee, regulate, and prosecute the criminals, since all of these securities trades were done in interstate and foreign commerce, but the SEC and the DOJ were never in the fight and intentionally refused to do so.
The perfect vehicle was the insane notion that the value of your home was going to increase exponentially, forever. Unwitting people were talked into refinancing, or selling, their existing homes and talked into participating in the greatest real estate market in history. It didn’t matter if you made $10 per hour, refinance your home and buy another one you can sell for a huge profit before the payment increases. What could possibly go wrong. You were dealing with real estate and financial experts. Everybody was doing it. It was the smart thing to do and you are not stupid! Besides, all of these people are licensed and regulated by the government!
The people running the investment banks in Europe and Asia were primed to buy into these miracle investments. They invested big.
When these began to sour, it was the foreign banks and investment houses that wanted to find a back door. That back door could only exist if the Americans bought back all of the bad paper. Threats of an economic Armageddon were made. China and others would dump our currency and debt. Sanctions would be imposed. Our economy would be destroyed. Trade would end.
The Bush/Paulson remedy was to hypothecate the future production and wealth of American citizens by creating a gigantic fund - guaranteed by the citizens of the United States - that would be used to buy back the worthless paper being held by foreigners.
$700 billion, $5 trillion, you pick the number. It doesn’t matter. Not one penny will go to help American citizens in the process of losing their homes. Not one penny will go to companies being forced out of business. Not one penny will go to domestic credit. Banks don’t need it. Banks create money out of thin air when you sign a note. Your note creates the money, more notes (federal reserve notes), but you have to pay it back with money already existing that you generate from your work.
Your life, and that of your family, for generations to come, has been pledged, by congress, as security to pay all of this back. Money you didn’t steal, but money you have to pay back.
The Emergency Economic Stabilization Act of 2008, is not what the name implies. Welcome to slavery, indentured servitude.
We can overrule it. And overrule it we must