As I write these lines CNN runs reports on how most of the money from the TARP bill disappeared in the bank’s vaults and banks won’t report on what happened to it. It is obviously clear what happened to it: Genius Ben Bernanke announced in October that the Federal Reserve would pay interest on reserves and excess reserves. Why should a bank lend out money to an overleveraged and overstretched public which already forecloses on one loan after another? Why, especially, should it loan out one dime if it can keep it at the Fed and earn interest income at no risk whatsoever? If anyone of these deplorable fools understood the basic workings of the business cycle, in particular phase 8, they would understand that there is simply no demand for any more credit on the part of the people. Why should there be? People are sick and tired of debt. The nation is broke. People realize that they need to cut back on their consumption and begin saving and producing more.
It shall be duly noted that CNN was the #1 network beating the drums in favor of the bailout scam, asking Congress to do what is “in the nation’s interest”.
Congress and the media are acting surprised about the fact that banks won’t report what happened to the TARP bailout money. They are either fooling the public or have the intellect of a donkey. What do they expect? That within a few days you pass a 450 page bill that provides for a $700 billion bonanza to the most disastrously and unethically managed businesses in decades and everything will run through smoothly and will be accounted for?
Of course Congress will approve the second part of the TARP bailout. They will announce that this time they will do it right and oversee and regulate everything much better than they did with the first half. This bill is a complete disaster but Congress will obviously not admit it. They think that by enhancing oversight and regulation for the second check they will save the bill and make it a successful one in the eyes of the public.
The same problems will arise in a few months and Congress will once again act outraged. After all is said and done and more money is squandered on bonuses to incompetent bankers, we will all look back at a complete utter failure and ask ourselves “How could they approve that?“