Maurizio Blondet 23 Settembre 2008

The current rush on the stock market, hectic, incredible, contains something sinister. Is like the cancer inferm whose been offered a micracle drug, feeling better only with the news. The miracle medicin, is the Resolution Trust Corporation Act a gigantic rubbish bin where the gvernement will throw out, after a discount purchase, the toxic derivatives ( those which noone can sell today) with the hope to be able to resell them hand to mouth, in years to come, with a potential small margin, as the optimist praise.

Why the hell we forget whats behind these toxic products?. Home owners who cannot pay the mortgage, causing a real state collapse. But may be, in five or ten years, they will be worth something, and the bail out cost, collossal today, will be balanced.

It is not the first time to have Resolution Trust Corporations, they were stablished on the 1930s, during the New Deal, without any positive inffluence. The depression was sorted out by WAR.

Lets think the optimists are right. The question then is why to inject money in finances instead of helping the citizens to pay their deffaulted mortgages?.

We are not talking of paying the whole banquet, just to give them the difference between todays and former insterest rate,with just a fraction of what the Fed has given to speculators, there wouldnt have occurred mortgage defaults, millions of home owners that have had their houses taken away would still hold them; the price crash wouldnt have happened, stopping the social unrest to come, the derivates wouldnt be toxic, and I wouldnt be writting about it.

A little bit of liquidity on the bottom end, to the poor debtors, to provide stability to all of us. Naturally the neocon theologist, the gurus of the free market will reply, why to gift people who dont deserve it?. If you get it wrong, you pay for it. High ethics lecture, indeed.

Weak objection, destroyed by the fact that the Fed has given enourmous quantities of cash to crooks, to speculators, to the wrong people.

In the one before last injection, the Fed,, assisted by the ECB and the japanese, has put into criminal pockets 180 billion ( 10 times Nasas budget), as it wasnt enough, a further 247 billion.

As mentioned, the amount of intervention nearly reaches the 1 trillion. Enough to provide every american citizen with health care for free, enough to create gigantic public infrastructures, enough to find an energy alternative, a dozen the apple rebuilding programs.

Resuming, the power has helped the megarich rather that helping the citizens, those on which any economical system rely on.

All creative finances, all sophisticated derivates, are based on the fact that citizens, with a decent job and salary, pay their bills, honour their commitements. Now the base is rotten, and thus theres no solution.

Globalization has exported the decently paid manufaturing jobs to Asia. Americans couldnt afford any more to pay the mortgage, the credit card, the car monthlies if it wasnt for a second or third mortgage on their homes, based on everising real state values; not any more.

The globalization phanatics have unsettled the job market; if you have a three month contract, you dont access to credit, so no purchase power, so everything halts.

The access to easy credit is the core of the american way of life. The american dream is based on monthly due. The mechanism now  is broken from the base. Thats why to put money on speculators hands is unperforming.

Wtih those free funds, banks should restart interbank lending. Instead, they have bought public debt, they have run for reassurance. Wether to increase their reserves, or because they know other banks are left like them, insolvent.
How far the losses go, how many other holes they have on their balance sheets, it is a fact banks hide. It would be like an open poker game, too bloody risky.

Thats why they are so happy with the Resolution Act. They will show their cards all together at the same time. They can recommence de debit game, the credit card, the toxic mortages. But if the labour force in the bottom of the pyramid is not there any more, the game is over.

The actual generation will not do it again. To forget, to have their memories erased will take at least 15 years; it will be difficult to convince again to play roulette at the stock, to accept credit.

One of the most stupid comments heard, is that the US govermenet is heading towards sociliasm. Stupid thrice
It is not socialism, but economical fascism. The italian IRI helped firms to produce goods, to save jobs and keep the skills in the country, to hold to modernity and excellence.

The america IRI helps banks, that produce nothing. Fascist IRI nationalized Ansaldo Steels. America IRI, Las Vegas
I want to see if the American IRi will be passed on the derivatives. Only Morgan has 90 trillion, seven times the US output, twice the whole worlds. Losses forecasts can reach 9 trillion, enough to make the fittest wrestler tumble.

Maurizio Blondet

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