By Dean Baker
Source: Guardian Unlimited
Treasury Secretary Timothy Geithner says that we don't need to bail out the banks anymore based on the results of his stress tests. We should follow up quickly on his assessment and start shutting the special Fed lending facilities enjoyed by the banks, the FDIC loan guarantee program, and the AIG slush fund.
However, given the hundreds of billions that have already gone out the door, it is still worth asking whether this bailout was necessary. The argument made by many economists was that it would cost taxpayers more money to do an FDIC-type takeover of banking behemoths like Citigroup and Bank of America than the tens of billions handed over to keep them afloat. In their story, the taxpayer bailout of bank stockholders, bondholders, and top management was an unfortunate side effect.
Subscribe to:
Post Comments (Atom)
This time, Wall Street speculators — some of them recipients of billions of dollars in taxpayers' bailout money — may be to blame.
ReplyDelete-------------------------
Only partially, because oil production has fallen three times faster than consumption, due to OPEC's timely cuts. But its true that oil prices are climbing again not just because of supply and demand, but also because the dollar has began its protracted decline due to excessive monetization used to pay debt with endless emissions of money by the FED, and to finance the huge fiscal deficit resulting from the different rescue plans implemented by Bush and Obama. Oil, gold, foodstuffs and several commodities will gradually rise in price as the dollar sinks.