Round two of the economic crime of the century has begun. On January 12, Lawrence Summers, President Obama's designee to become director of his National Economic Council, sent a letter to congressional majority and minority leaders seeking the second half of the $750 billion approved by Congress last October.
ITEM: Reuters reported on December 30: "The Bush administration on Monday expanded its bailout of the U.S. auto industry, saying it was buying $5 billion in equity in auto and mortgage finance company GMAC and increasing a loan to General Motors by $1 billion. The action was the latest in a lengthy series of emergency government moves aimed at easing the worst credit crisis since the 1930s and limiting the severity of a year-long recession."
In an unwonted episode of lucidity, the New York Times proclaimed in a recent headlilne that the "Rescue of Banks Hints at Nationalization." Of course, the Times got most of it wrong — nothing in the recent spate of bailouts bears the remotest resemblance to President Andrew Jackson's shutting down of the Second Bank of the United States, as banking analyst, Gerard Cassidy, quoted in the Times piece, claims.
The price tag for the incoming Obama administration's proposed stimulus bill continues to rise. This morning, a few hours in advance of a planned announcement, the Associated Press, which managed to obtain an advance copy of the latest version of the stimulus bill drawn up by House Democrats, gave the newest figure for the stimulus as $825 billion, up $50 billion from Obama's earlier proposal.
According Barack Obama's presidential transition team, the new stimulus plan being prepared by the upcoming Obama administration can be expected to create between 3.3 million and 4.1 million jobs. This according to the Washington Times, which also pointed out that "the president-elect wants [the plan] to total slightly less than $800 billion but ... some Democratic leaders say [it] should near $1 trillion."
The recent decision by the federal government to bail out GMAC, the financing arm of General Motors, encouraged the illusion that the federal government has decided to "rescue" the U.S. automobile industry, saving many thousands of jobs and sparing America untold economic pain in the process. But the truth of the matter is less encouraging.
On December 16th, the Federal Reserve announced a record-setting cut in interest rates, targeting the federal funds rate at zero to a quarter of a percent. There were hosannas and flourishes on Wall Street, with the Dow surging more than three hundred points.
The world’s wealthy and well-connected are reeling from disclosures that an international investment giant – Wall Street-based Bernard Madoff Investment Securities LLC, run by 70-year old Bernard Madoff, a well-known Wall Street investor – has turned out to be a colossal pyramid scheme with worthless assets.